NZC Fellow Dr Stephen Cummings in Tsinghua Management Review
12/05/2017 - Stephen Cummings, Professor at the School of Management, Victoria University in New Zealand, provided a keynote address entitled "Purple Ocean Strategy" at Tsinghua Management Review’s first annual Enterprise Management Innovation Forum at Tsinghua University late last year. Cummings believes that organizations should have the courage to develop their own unique ‘creative strategies’, rather than blindly following industry benchmarks or seeking to copy ‘best practice’. TBR interviewed him after his lecture. The interview is published in the latest edition of Tsinghua Business Review.
The New Zealand Centre at Peking University is pleased to provide readers with a translation of the interview upon which the article on Dr Stephen Cummings was based, as published in the Tsinghua Business Review. It serves as a strong example of how Visiting Fellows can make good use of Peking University's location to connect with academics and organizations across the Beijing landscape. You can access a link to the completed article in Chinese by clicking here (Weixin platform). To learn more about his visit to Peking University as a NZC Visiting Fellow in 2016 click here.
THE RISE OF CREATIVE STRATEGY IN CHINA
TBR: What are the aims and characteristics of a ‘Creative Strategy’?
Creative strategy involves proposing and doing something new and unique, something that hasn’t been done before. In other words, creative strategy means not copying. So, for example, even though the concept of ‘best practice’ has become very popular in recent decades, creative strategy means not just following best practice.
Front cover of the Tsinghua Management Review, alongside first page of the article.
TBR: Not following best practice sounds counter-intuitive. What are the alternatives to doing this?
It does sound counter-intuitive. But remember that ‘best practice’ is the distillation of what worked for others in the past. Leading in the future will require different approaches. It is tempting as a manager or an organization to follow a strategy of copying best practice, it seems less risky. But while following best practice may make you more efficient for a while, it doesn’t make you a leader. It makes you a follower. You are following and replicating rather than leading and creating something new or different. And this will lead to diminishing returns over time.
Subsequently, in our book Creative Strategy: Reconnecting Business and Innovation we outline a number of alternatives in a framework called the Next Practice Matrix. These include discussing and learning from many different worst practices and good practices, not just one view of best practice; looking within your company or city or country to discover new and distinctive promising practices that you can support and help grow; and, rather than just latching on to best practice, using your unique indigenous characteristics to figure out what you can do to leapfrog or go beyond best practice: this is what we call ‘next practice’.
This is why I think the Chinese government’s ‘Made in China 2025’ and its focus on indigenous innovation and entrepreneurship is such an important development. You can only go so far by doing what others have already done. To take a leadership position you must learn from the good practices of others, build on the promising ideas of your internal people, and encourage the creation of next practices: creating things that you can do differently and better than anyone else and that others would find hard to copy.
TBR: Which companies do you think have successfully implemented creative strategies recently?
We provide examples from across all industries and organizations in our recent books Creative Strategy and Strategy Builder. We include the more obvious ones like Tesla, SpaceX and Amazon, but it’s a mistake to think that being creative, or developing next practice, is something that only some organizations and not others should do: every organization that wants to be a leader can develop creative strategies. So we also include examples of less well-known start-ups, cities and government departments too.
An organization that we focused on throughout the Creative Strategy book is the Royal Shakespeare Company. Here we charted the RSC from a time where they were in decline: regarded as just a conservative purveyor of classical Shakespearean performances in a world where Shakespeare was seen to be less and less relevant; to an organization where the leadership sought to involve a whole range of new stakeholders (from staff, to teachers, to school children, to young directors) in developing strategies to make it more relevant in the present and more sustainable for the future. These strategies included getting Shakespeare back as a feature in the UK’s school curriculum, encouraging new and different interpretations of Shakespeare plays, and a competition to reduce Shakespearean passages into short 140-charcter ‘tweets’ which was widely promoted in the media.
Further excerpts of Dr Cummings article, courtesy of Tsinghua Business Review.
Learning to build a strategy process that is open to creativity
TBR: How should we understand the role of strategy in organizations?
A good strategy outlines how it is that we are going to ‘win’ as an organization. Winning means different things to different organizations (for a start-up it might be earning a particular revenue target in the first year, for a not-for-profit it might be helping people in their community lead better lives), but I believe that defining what winning looks like, and the things we are going to do to get there, are the two essential components of a good strategy. Many strategies actually make ‘how do we win’ less clear because they are too complicated and difficult for people to relate to, and too prescriptive. Good leaders make an organization’s strategy seem clear through their actions, their words, their stories and their ability to ‘paint a picture’, either literally or figuratively, of what winning looks like, what needs to happen to get there, and how people can contribute.
TBR: Strategy is often associated with the top of an organization. We also have strategy as a separate capstone class or discipline in business school. Are there any misunderstandings in the real business world?
I think it is a misunderstanding to think that strategy is a separate discipline or a separate activity. Strategy should not exist in isolation from other parts of an organization. It should not just involve people at the top who then impose it on lower levels. Strategy is the thinking that cuts across or integrates all parts of an organization or the classes of a business or management degree. So you are thinking about accounting or marketing strategically when you think about which aspects of our accounting or marketing practices enable us to win as an organization. This approach means that everybody can think and contribute strategically in an organization.
But I also think that this is why it is good to see strategy as a capstone course in a business degree. After learning about how the parts of an organization work, a strategy course can effectively explore ideas, cases and projects that help students think about how the parts of a business can be organized to contribute to winning overall.
In organizations it’s the same thing: a strategy should bring together all the parts of an organization and help them see how they can contribute and work together towards the same overarching aims. Thus, strategic clarity in this regard is something that good leaders can develop and communicate, and that all staff in all parts of an organization should feel some association with. If they don’t feel an association or connection, they are less likely to discuss the virtues of different good practices and how these could be combined in new ways, bring forward promising practices, and help develop next practices.
TBR: What are the most important purposes that good strategies need to fulfill?
A strategy should inspire confidence among stakeholders, both in the organization’s ability to make progress into the future, but also among staff and other partners that their skills can contribute to this progress and so feel connected and committed to the cause. In a framework we developed for an earlier book called Images of Strategy we outlined how a good strategy should both orient or give people a clear sense of direction; and animate or motivate them to contribute to this direction and help build upon and develop it with their ideas.
When we looked further at this in the Creative Strategy book, we found that being able to ‘build bridges between key stakeholders’ within and outside of the organization to enable them to work together effectively; ‘distilling the essence’ of what a company is about in to simple phrases and stories that outline a visions; and being able to picture or ‘map’ a pathway to this desired future, were all key skills in leading the development of creative strategy. And following on from this, our last book Strategy Builder: How to Create and Communicate More Effective Strategies explores how leaders can develop diagrams or ‘maps’ that express strategies in simple ways that provide clearer orientation and more animation.
Combining innovation, entrepreneurship, leadership and organization
TBR: Innovation is ideas or products that are both novel and useful. What makes an innovation a ‘strategic innovation’? Any examples?
An innovation is strategic if it opens a new pathway for an organization to win. This is why we see strategic innovation as the heart of creative strategy. But in the book Creative Strategy we outline why it is important to see innovation as part of a sustainable process that also requires entrepreneurship, leadership and organization. Just creating a good innovation is not enough, you have to be entrepreneurial in taking that idea to market, display a leadership approach that provides direction for the future but also enough scope for creative people in the company to develop this innovation further, and an organization that supports ongoing innovation and entrepreneurship.
Good examples that we write about in Creative Strategy include Ford at the beginning of the 20th century and Apple at the beginning of the 21st. While it’s easy to focus on their innovative technologies, we shouldn’t overlook the other elements of their creative strategy systems: their entrepreneurial ideas about how to use a network of dealerships or signature stores to market their products; Henry Ford, Steve Jobs and their teams, leadership styles; and the unique organizational forms they developed; were just as big a part of their lengthy success.
In the Strategy Builder book we also look at how LEGO’s mission and vision statements (‘inspiring and developing the builders of tomorrow’ and ‘inventing the future of play’) provide a simple organizing framework to guide the development of new products, ideas and distribution channels, led by staff and customers in combination.
TBR: How do we know at first whether something new will come to be a strategic innovation?
We don’t. If we did it wouldn’t be so difficult to succeed! But we do know that organizations that try to do new things, encourage promising practices, seek to leapfrog best practice to get to next practices, and learn quickly from what has worked and what didn’t, these companies will not become complacent and stagnant. They will keep evolving. And in a world that is changing fast, organizations that evolve have a much better chance of survival – or ‘winning’ across the long term. James Dyson is fond of saying that people focus too much on the success stories and not enough on seeing failure are part of the evolution process. He notes that everybody focusses on the successful Dyson vacuum cleaner and overlook the 2000+ failed prototypes that came before it.
Bisociative strategy sounds difficult, but it doesn't need to be...
TBR: A lot of the Creative Strategy book is founded on the idea of bisociation: the notion that being creative means combining two opposing ideas. How can we spark the bisociative thinking in the continuing process of strategy making?
Even the idea that you don’t know if your plan for particular innovation will be successful, but you act as if it will be anyway, is a form of bisociation in this respect. If you go ahead with the right attitude and good systems you will at least learn valuable lessons from the failure that will help you next time. If you don’t try you have learned nothing. So encouraging your people to try, succeed or fail, and then learning quickly and adapting strategies based on this learning, is one way to spark creative strategy.
I think that Professor Jin Chen’s term ‘Purple Ocean Strategy’, which he has used to describe these ideas, is a good way to think more deeply about this. Rather than just focusing on the ‘red’ of science or the ‘blue’ of the arts for ideas as to how we should progress, we should look to combine art and science to create ‘purple’ next practices. Rather than thinking that the blue of the West or the red of China is the most creative part of the world, or has the best creative organizations, we should look to learn from and combine good and promising practices from both to create next practices. Rather than seeking a strategy so well defined that it creates a predictable order, or a strategy that is so loose that it enables people to do whatever they feel (which would likely create chaos), we should look to develop strategies that provide a framework for action while allowing people some license to adapt and build upon to create new things.
TBR: Does this thinking style have some similarities from ancient philosophies?
Yes, both in the East and the West a philosophy of bisociation being a key to creativity has a long history. My first book, Recreating Strategy, argued that strategies often become too rigid in organizations: too much about top-down ‘planning’ and order and not enough about a broad ‘pitch’ that would provide some sense of direction but allow enough chaos so that people could contribute to development and change things as good ideas and unforeseen opportunities emerged. Recreating Strategy argued that we could learn a lot in this regard from the Ancient Greek bisociation of Apollo and Dionysis. Greek philosophers believed that valuable creativity came from combining the order and rational thinking associated with the character of Apollo and the spirit and free-thinking of Dionysis. In modern times, we have focused more on developing Apollo-like characteristics in organizations: detailed and inviolable plans based on forecasting, transferring best practice and so on, and sought to marginalize Dionysian attributes such as flexibility, ambidexterity, change, and difference.
Western thinking was founded on Greek thought, although much of this was moved beyond in the industrial age, so I think it is interesting too that premodern Chinese philosophy has a similar basis with its focus on yin and yang: how seemingly opposite or contrary forces may actually be complementary and should be combined to promote creativity, and that Chinese people are looking back to rediscover these pre-modern ideas now too. Recreating Strategy argued that as we move from a modern production-oriented world focused on efficiency, to a post-modern world focused more on satisfying consumption and encouraging differences, rediscovering this kind of premodern thinking can be useful.
TBR: You have talked about the ancient past, but what about the future? Young people are often seen as creative, passionate and dare to challenge the mindset of previous generations. But what do you think this new generation can bring to our companies?
Having been in China on my fellowship for the past three months, one area in which I think China is already leading the world creating next practices is in mobile communication and social media. I have been very impressed by the way in which Chinese companies, big and small, have created an ecosystem where so much can be created and developed in regard to how people interact with their smart-phones, and how this is happening so quickly. New apps and systems emerge, are tried, succeed, and fail every day. Lessons are learned and adaptations made extremely quickly based on the analysis on ‘big data’. Tech savvy young people are the key producers of interesting new apps and other creative ideas within big companies or in their own start-ups. They are also early adopters (and rejecters) of new products and services, and their consumer behavior and social media interactions provide invaluable data and Chinese tech companies have developed systems that enable them to aggregate and learn quickly.
I think China’s indigenous differences give it a unique advantage here in terms of developing promising and next practices: massive populations of young urban people spend so much interacting on mobile devises as they are commuting or on large university campuses or socializing. And services such as WeChat have become vast and dynamic information networks and communities. Encouraging the continuation of this youth-driven innovation with rediscovering ancient ideas could be a fantastic creative bisociation that could lead to some really interesting new next practices in the new China.
Dr Cummings prepared his visit to Beijing as part of a Visiting Fellowship with the New Zealand Centre. If you are a member of the academic staff from any of our eight partner institutions and you are interested in attending a fellowship at Peking University, get in touch with our liaison officers to learn more about the application process. Visiting fellowships for New Zealand academics are held year-round at Peking University, across a broad range of departments, forming a significant contribution to the advancement of academic exchange between China and New Zealand.