Brilliant post by fellow Corante contributor Grant McCracken this week. Just brilliant. In Innovation for The Innovator, Grant spells out the fundamental shift (and struggle for survival) faced by corporations today:

"The corporation once had a "perfect world" scenario: create an extraordinary product in a blue ocean (i.e., new) category and defend a fountain of profit with good strategy and smart tactics.

In the perfect world, change came in increments. Some competitors would enter the category with some variation on the theme. Others would look for "nook and cranny" weaknesses. The corporation would secure it's position with incremental responses...and profit poured forth.

The world changed."

Per Grant:

"Now, the corporation is subject to blind side hits. Now the problem is not incremental challenges, but fundamental shifts. For Time Warner, this was the rise of an advertising based revenue model. For The Coca-Cola Company, it was the rise of the non-corbonated soft drink. For Microsoft, it was the rise first of the internet and then server-based software. For Detroit, it was Japan. (The irony: while American corporations are being encouraged to set out in search of "blue oceans," the real challenge are the great masses of water that come looking for them.)"

And here's the rub:

"These changes require fundamental shifts in corporate assumption and practice. And this is hard. Corporations rise to greatness because they are good at, say, CSDs (carbonated soft drinks). The advent of Snapple and Gatorade forces them to take on the new, but often this feels like a betrayal of the very things that make the corporation exceptional. "Sure," goes the complaint, "we can make fruit juice, but what we exist to make CSDs!"

It is, finally, a cultural problem. CSD assumptions supply not just the "what" and the "why" of the corporation, but it's deepest, most powerful, and least visible assumptions, the "unknown knowns," we might call them (with apologies to Donald Rumsfeld).

The problem at corporations like Time Warner, the Coca-Cola Company, Microsoft and "Detroit," is not intellectual laziness, a failure of the imagination, or, God knows, a failure of will. The problem is that non-incremental change forces the corporation off its game, out of its competence, and away from its deepest understandings of the world. Adaptation is possible, but a voice of warning sounds in the head of the senior manager: that way lies the destruction of the extraordinary intellectual, strategic, and cultural capitals that make us who we are. That way lies chaos."

Fear? Say it isn't so! For young companies, fear of the unknown and an aversion to risk seemeasy to overcome, but an aversion to change is pretty much a survival mechanism for our larger, much older incumbent competitors and friends. That aversion to change, that conservative need to stick by core competencies, proven methodologies and core product lines are part of their corporate DNA. You can't fault them for holding on to what they know. For holding to to their core. To the very foundations of their brands.

Yet, in order to survive... no, to strive in this new and ever changing business landscape, a few changes need to be made, and Grant offers a few keen suggestions:

"There are lots of ways to rethink the corporation so that it can address the problem of non-incremental change. (...) The corporation is learning new tricks. The new corporation is being invented fitfully, gradually, and painfully. But it's coming.

Innovator's innovation 1

What I would like to see, for deeply self interested reasons, is the creation of an observation platform from which we can keep an eye out for the next new things. In keeping with our Tsunami references, let's call it a wheelhouse, a conning tower, or a ship's bridge.

The trick would be to find 5 or 6 really smart, well educated, well informed, well connected, deeply curious, utterly practical people. These qualifications create a tiny Venn intersection, but, hey, we only need 5 or 6 people.

Innovator's innovation 2

Once potential changes are identified, it is time to see what difference their difference will make. How will the corporation as it is presently constituted in these particular waters? This will help us to find, extract and replace the "unknown knowns" in the corporate culture.

Innovator's innovation 3

Ok, now we need to build a series of simulated corporations, fit them out, run them in a tub somewhere, and refit as necessary. (Will someone please scuttle the naval metaphor, please!) We can't wait till the future is here to start the work of adaptation. We want to have done the conceptual work for eventualities well before they eventuate."

This sounds dangerously like... another "think tank" but because of its focus on practical applications, it might actually have some merit. Only there are just too many industries and different kinds of companies making different kinds of products for a small team of brilliant Rennaissance men to cover anywhere near enough ground.

Perhaps another way to help transform the corporation into an adaptive, evolution-savvy entity is instead to rethink the way business management is taught and practiced around the world. The very structure of corporations may also need a healthy revision.

The key here is to incorporate into corporate cultures the very notion that change is not only inevitable, it is also the natural vehicle by which corporations evolve. (And yes, I am talking about evolution here, and not just growth. There is a difference.) Corporations, through their leadership and processes, should be energized by change instead of being paralyzed by it. The way to accomplish this is to make change easy to assimilate. In other words, corporations should learn to become more agile. More nimble. More flexible.

Grant's idea of creating corporate conning towers is excellent. Why not form an advisory group composed of trend-savvy multi-dimensional executives (or consumers) to help point the way and make course adjustments? Make these people completely independent from Senior management. Don't even pull them from the corporation's ranks. Set them up with offsite offices. Pay them as consultants instead of employees. Keep them completely outside of the sphere of influence exerted by the corporation's board and leadership. Make them accountable, sure, but protect their independence and insulate them from any unwanted political/financial influence.

More importantly - and for this to work - corporations must fill their ranks and executive suites with intellectually curious, practical, open-minded, men and women. Leaders instead of just managers. This requires a fundamental shift in corporate culture and HR practices. It also requires a fundamental shift in the way that Business management is taught in Universities and business schools. And lastly, it requires a certain measure of courage (and faith in our own abilities) on everyone's part. There are no failsafes. Proven methodologies only prove that they have worked in the past. The past is nice, but the present and future are a little more uncertain. Facing them both with the knowledge that fifty years of success are not enough to ensure the same success for another fifty, or twenty,or five takes huevos. It takes the wisdom and confidence to be able to readily admit that as a CEO, you have absolutely no idea if what you're doing now is the best way to address your company's goals.

Sure, everything might look good. The numbers and research might be supporting your hunch... but you really don't know. Plan A: Your Germans had better be better than their Germans. Plan B: You had better be at the helm of the kind of corporation that can make quick course adjustments when it turns out that their Germans were better than yours after all. (Plan C: Make sure you're hiring the right kinds of Germans... and that they have a great reason to stay.)

Safety in the world of business is an illusion. At best, it's a crutch. It's 4% growth. It's always being second or third to market. It's being a player but never a leader.

Wait... did I say "at best?" Darn.

I guess it depends how you choose to look at it.

Times, they're a-changing. The corporation that will adapt and evolve to the new market and business landscape will survive and grow. The corporation that doesn't evolve will simply wither away and die.

Welcome to the new jungle. Welcome to the real world. Welcome to the world of endless business and innovation possibilities.

Now... about that corporate conning tower team...

Welcome to Day 3 of our back to school week special focus on Corante contributor Tom Asacker's Ten Truths. Today, the countdown brings us to truths #6 and #5:

Truth Six - From Fact Telling to Storytelling

"Facts don’t persuade, feelings do. And stories are the best way to get at those feelings."

"We’re up to our eyeballs in information and sick and tired of 'Buy . . . Buy . . . Buy!' Give us an engaging and meaningful story. Something we can connect with and - heaven forbid - believe in."

"Storytelling was the original form of influence, and all through the ages great communicators have stirred people’s emotions and influenced their behavior through story. I know you know this. So why haven’t more business people embraced this powerful, persuasive form of communication? Think back to your last encounter with a salesperson. What was it like? Can you recall a recent advertisement? Describe it. Or how about your last meeting at work? My guess is that they were all fact-filled and uninspiring. What my friend Dick Orkin describes as "announcements." Which means that, by and large, they were ineffective means of influence. No engagement, no visualization. No visualization, no personal, emotional impact. No emotional significance, no change in behavior.

"(...) We believe what we internalize, what we decide for ourselves, not what we’re told. A story allows us to experience the knowledge in our minds eye and make the meaning for ourselves."

"Stories are the quickest way to communicate. They instantly transmit complex ideas; they’re a kind of cognitive shorthand. Stories are the most memorable, because they are laced with emotion. Want to be remembered? Tell a good story. Stories also put people at ease and help build relationships. And believe it or not, stories are the most believable form of communication. We are more deeply influenced by one person’s story, than we are by mounds of data. And by the way, don’t we love stories? Of course we do! Stories are embedded in our livesbusiness and personal. We love stories in song, in books, on TV, in film, and around the proverbial campfire and water cooler. We love to hear them, we love to tell them, and we love to participate in them. Stories are how we make sense of the world. We are storytelling creatures by nature. It’s in our DNA.

"So, tell me a story. Tell me a true story of someone you’ve recently helped with your products or services. That’s the first request I typically make to an executive team, prior to working with them to develop their brand. It may sound like a simple request, but I rarely hear a story. Instead, I hear all about the facts - when they started, the number of employees, their products and services, etc. But a brand is not about facts. A brand is a story. An engaging, authentic story that everyone in a company lives and tells. So, stop and ask yourself: What story does my audience conjure up in its imagination about itself when purchasing or experiencing my company or products? Do we complement and enhance that story in every single thing that we say and do? Do we even know what that story is?

"(...) Tell brand stories so people can live the experience in their own minds. So it becomes real to them, stimulates their emotions and helps them understand the ideas and behavior required to live the brand. Stop trying to change people’s minds with information or coercion. It doesn’t work. They feel manipulated. Instead, capture their imaginations with heartfelt stories so they can make their own meaning. And never - never! - stop telling those stories with conviction and passion."

Truth Five - From Branding to Bonding

"A brand is not a logo, and branding is not a communication strategy. A strong brand is a strong bond, and branding is your business."

"For the past 250 years, companies have leveraged their power to influence and - in many situations - control commerce. They’ve used various barriers to entry to curtail competition and grow significant mindshare and marketshare. The most common marketing related barrier employed was brand preference, created with mega spending on advertising and control of distribution channels. Building a strong brand was all about "top of mind awareness." I say "beer!" and you shout . . . "Budweiser!" And it's still that way in the case of habitual buying, which occurs when involvement is low and differences between brands is small. But for considered purchases - like choosing a new car or home - and ones involving a strong emotional connection - like deciding where to invest or donate hard earned money - building a brand requires much more than that. Today you’re competing for heartshare, not marketshare. Top of mind without goose bumps is a waste of money.

"Of course to those with a dated, mass-market mentality, branding is still all about image and awareness. It's about tag lines, logos, cute little animal mascots or clever jingles. It's about spending megabucks on Super Bowl commercials, hiring celebrities to sing your corporate praises, and covering cars with advertising banners. Now don't get me wrong. I'm not saying that awareness is unimportant. (...) But, does well-known equal strong? Not any longer. The rise of the global economy, the rapid adoption of the Internet, and unprecedented access to capital, have all ignited commercial innovation, and put an end to those days forever.

"And please, don’t get hung-up on the word "brand." Schools, nonprofit groups, high-tech firms, and small businesses tend to fall into a camp that believes that branding is either too commercial, too expensive, or otherwise not appropriate or applicable to them. And that may have been true in the heydays of mass marketing, when branding conjured up ideas of spin, manipulation, and "in your face" corporate propaganda. But not any more.

Today, the word "brand" is shorthand for the gut feeling people have about something, some group, or someone. It’s a kind of Platonic Ideal, which stands for the essence of a business, school, organization, person, or even place. If you add up the tangible and intangible qualities of something - the gestalt - and wish to represent the meaning and distinctive character this greater whole conveys to its audience, today we call it . . . "brand."

"Think of your brand as a "file folder" in your audiences' minds (not a perfect metaphor, since memory is malleable, but stick with me anyway.). When they’re exposed to you (e.g., through advertising, design, a salesperson, word-of-mouth, etc.), a feeling is immediately filed away in that "brand file folder." As time passes, much of what your audience has filed away - the details - will become inaccessible. However, they will remember where they stored the folder: in the front (positive feelings) or pushed to the back (negative feelings). Given the sheer volume of brands trying to find a place in your audiences' overloaded "brand file cabinets," you must not only get their attention and be relevant (a file folder labeled with your brand name), but you must also get it placed in the front of their file cabinet (elicit strong, positive feelings of intense personal significance).

"(...) Despite what the Madison Avenue folks may tell you, the strength of your brand lies not in the fact that you own a folder with your name prominently displayed on it. Repetition does not create memories, relevance does. The strength lies in your folder's position in your audience's file cabinet (the emotions that linger in their memory). The strength lies in the bond! So make your brand about feeling, not just familiarity. Make it about shared values and trust. About honesty, vulnerability and presence. Because a brand is not simply a promise. How can it be, with everything changing at breakneck speed? A brand is a living, breathing relationship. Revel in the messy world of emotions and create a brand that’s about leadership and differentiation; about customer insight and radical innovation; and about clarity of purpose, passion and a sense of humor."

I'd love to comment on all of this, but... what's the point? I don't think I could put it any better myself.

Tomorrow, we will look at Truths #4 and #3: Reaching your audience, and (at long last) the crucial role that metaphors play in all of this marketing and business stuff we keep talking about.

Until then, have a great Wednesday, everyone. :)

Have a great Tuesday, everyone. :)

Technorati Tags: Tom Asacker, marketing, storytelling back to school, business lessons, customer service, marketing 101, corante, branding