A few years back, I was talking to the then CEO of Ford Motor Company. He was sharing how he helped turn Ford around after the near-collapse of the US Auto industry in the mid-2000s. He indicated that one of the big problems they had to overcome was the massive fear of failure, which reduced risk-taking and resulted in disappointing cars that people didn’t want to buy.
What made the conversation particularly interesting was his off-the-cuff comment, “no one better take risks with the market-leading F150.” This comment left me thinking that he didn’t understand the need to let people take reasonable risks even though it was what he was advocating.
This last week, I was on a panel for the World Economic Forum on creating entrepreneurs with a focus on emerging markets. Part of our discussion was about how education doesn’t teach reasonable risk-taking—nor does it teach practical skills. We discussed how this has hurt diversity efforts.
Amidst the pandemic, a lot of industries like hospitality and transportation are failing. Industries that aren’t known for innovating must now innovate or fail. The problem is not unlike the problems new companies must face. With the exception, however, that the new company doesn’t have to overcome the entropy of past practices or relearn the concept of sunk cost.
Let’s talk about what we collectively think we need to fix with our educational and entrepreneurial shortcomings this week.
The Thomas Watson Jr. rule
Some time ago, I attended the 100th-anniversary celebration at IBM. The then CEO, Sam Palmisano, spoke of Thomas Watson Jr.’s most compelling rule for long-term survival: “Be willing to change everything but who you are.” This rule is particularly critical today with industries changing and firms of all sizes suddenly discovering the markets they depended on were either rapidly changing or becoming obsolete.
We often talk about the capability to change in terms of agility, and it seems the more significant the firm, the less agility it has. Historically, we’ve talked about how past companies have failed because they didn’t realize the industry they were in, or more accurately, mixed the product up with the industry. For instance, a horse buggy company thinks they’re in the horse buggy business rather than in the transportation industry. As a result, they do not pivot to cars, motorcycles, or some other form of personal transportation.
Google was able to eclipse tech companies at its launch by realizing the web should be about advertising-funded navigation and that the money was in ads—not browsers (sorry Netscape). At times like this, companies should be spending quality time assessing their strengths against the changing opportunities to determine the most likely path for a successful pivot.
On that panel, we talked about a failing hotel owner due to the hotel business going south. Yet, there were opportunities that weren’t being explored, such as overcrowded hospitals using vacant rooms. Besides, the skill set would be helpful for logistics work regarding field hospitals or supplementing staff at existing hospitals that have become infected or unable to work.
In the transportation space, there are two aspects tied to that industry: personal and professional travel. Personal travel does require movement, but most professional travel can be, as we have found, replaced by virtual technology, which is far from mature. In effect, the airlines are in the collaboration space concerning professional travel, but I doubt they see Zoom as the competitor it currently is. For instance, were I Disney, I’d be putting plans in place for an end-to-end travel solution. I’d control the entire experience and could maintain consistent quality and better assure traveler safety. I’d also be rethinking my entire approach to the problem, so the next pandemic was something I could better weather and factor in the related risk to my long-term planning.
Education and risk
One of the big problems is that we tend to train out risk-taking in school, and yet we know it is critical to the success of companies of any size. Our excessive focus on blame and punishment makes risk-taking highly undesirable, yet we know that success comes out of repeated failed attempts. An inability to take risks generally assures ultimate failure because the decision-maker is unwilling to change to avoid failure and instead assures it.
Just as important and even more critical, the pandemic has caused the collapse of internship programs that teach kids how to function in companies. This capability should have always been part of higher education so that kids coming out of school can hit the ground running as opposed to hitting the wall of changes for which they are inadequately prepared.
Finally, there is a lack of educational breadth in higher education, resulting in a higher probability that students won’t find a job because they are less able to pivot to the world that exists post-graduation. That world, as many are realizing, is vastly different than the world that existed when these students chose their major.
These shortcomings not only increase the risk of initial employee failure, but make it far harder than it needs to be for students trying to start businesses.
Education is also at the heart of our inability to aggressively increase diversity. This problem is because groups, particularly women, aren’t making it into programs in high enough numbers to give them the education they’ll need in industries like technology.
Finally, at a time when there is a critical need for mentors, we aren’t ramping up training mentors. We aren’t providing resources to help the mentors free up time to mentor, and we aren’t giving the mentors credit for good results. When it comes to minorities, mentors are critical for advancement and inclusion. Still, efforts like #metoo has made mentoring between men and women appear dangerous, reducing the number of good mentors substantially available.
Wrapping up: Recovering from the pandemic
Both governments and businesses need to step up if they want to minimize the adverse job impact coming out of the pandemic. Industries in trouble should be assessing their core skills and real industry to formulate a pivot that will allow them to benefit from the new normal. Educational institutions need to build in risk taking, collaboration, and work early on in order to promote minorities, particularly women, into more valuable career paths. Finally, leaders need to take into account Thomas Watson Jr.’s advice to his firm to “be willing to change everything, but who you are.” Otherwise, the industry they depend on is likely to move on without them.
In a time of massive change, the companies that survive and flourish will be those that take the necessary risks to pivot to the new normal. IBM survived for over 100 years because of accepting and pivoting to change. But in this changing world, that advice not only applies to companies, but educational institutions and individuals. Maybe rather than “publish or perish,” which is applied to professors, our term should be “pivot or perish,” which is very relevant to the economic crisis many firms are experiencing today.