Innovation, Leadership And Still No Satisfaction
December 19 2004 by Chief Executive
WHAT do the Rolling Stones and the Salvation Army have in common? They are both among the world’s 10 most enduring institutions, according to a study commissioned by Booz Allen Hamilton. The others on this very select list are Dartmouth College, Oxford University, the modern Olympic Games, General Electric, Sony, the United States Constitution, the International Telecommunications Forum and the Rockefeller Foundation. Here are excerpts from a conversation about the study with Ralph W. Shrader, Booz Allen’s chief executive:
Q. How did you pick these organizations?
A. We put together a set of seven criteria, such as innovation and legitimacy, and then bought in a group of academics to make the picks.
Q. Are the Rolling Stones really in the same league as Oxford University and the United States Constitution?
A. Clearly, the Rolling Stones is the most provocative name on the list because of their image. The reality is, they weren’t just lucky. It was a very studied group that actually did a lot of homework and understood how to make themselves successful. They cultivated the bad-boy image in a way that allowed them to keep having relevance and resonance to their audience. The fact that they can come to the United States today at their age and still attract sellout crowds is testament to the fact that they found a great formula.
Q. What makes General Electric and Sony special?
A. You have, in General Electric, a paragon of innovation. It was really born of innovation and creativity. That’s what their organization is all about. They’ve been relentlessly focused on research and development, understanding the market and leading the market. They’ve been very relentless in marching toward their business goals. Yet at the same time, they’ve maintained a value system that has made them an employee- friendly organization.
Q. Why did Sony make the list?
A. Sony is a much newer company; it’s really a post-World War II creation. But Sony’s also been at the very cutting edge of creativity and innovation. They are no less relentless on the innovation side, not just using existing technology but also looking out to where the next technology wave is going. They moved into color and smaller televisions before everyone else, at a time when others were worried about black and white. They’ve had creative and innovative marketing and distribution channels. But they’ve worked with a very different organizational structure compared with G.E. It’s very flat and encourages employee input. It’s a more egalitarian model.
Q. At the moment, would you say that Sony is doing very well?
A. Everything goes in cycles. At this particular time, the Sony cycle may not be as bright as it has been at times in the past. But if you look at the ability of the organization to understand its markets, to make change and to be committed to the next wave of success, I would be reasonably optimistic Sony will be here for quite a while. They regroup and they move on.
Q. What has been the role of leadership in all these institutions?
A. That’s an important element for all enduring institutions. Enduring institutions need enduring leaders. One of the characteristics of G.E. is that it has had only about nine leaders during its entire history. It has such an ingrained leadership structure and a leadership ethic.
Q. What do the Salvation Army and the Rockefeller Foundation have in common?
A. The Salvation Army has a very strong, fervent commitment to doing good in a way that manifests faith. It’s very hierarchically driven, almost militaristic, in how it sets up its command structure. It focuses on loyalty and membership. You wear a uniform. It has a clearly focused mission — you have to go out and generate money to take care of others. They’ve executed against that for a long time.
When you look at the Rockefeller Foundation, it’s another end of the spectrum. The money already exists. In fact, you have great wealth. The question becomes, what is the mission? They don’t go looking for how to use that wealth to cure symptoms. They go looking for root causes to change the world, to change the outcomes. Their challenge has been, how can they be open enough and inclusive enough? And can they gather sufficient information and maintain the credibility about their mission by using that information appropriately? We have great contrasts between these two institutions, but they both generate great power because of how they pursue their missions.
Q. Is the adaptability of the United States Constitution the key to its longevity?
A. The Constitution was created in a way that allowed for amendment. It has been able to reflect the norms and behaviors of a particular era to serve the current citizenship base. Take the case of Prohibition. The Constitution allowed for the creation of a prohibition against alcohol, but when the country changed, the Constitution was modified and changed. The Constitution has been changed many times, yet it still has that fundamental validity and strength that at the core of American society.
Q. What defines an institution that will last?
A. Clearly, it’s a company or government body or other organization that has met this test of time. How have they done it? They’ve been able to change and grow so that they remain successful and relevant over long periods of time. But they don’t change their very essence.