Executive interview: Innovation requires radical choices

The family

In Uncharted, Heffernan explores how organisations can develop long-term business strategies built on innovation and, in particular, a culture that encourages true experimentation. Among the challenges she recognises is the idea of longevity of tenure, something that erodes loyalty among staff and prevents organisations from making long-term commitments. “The reason we struggle with leadership is because leaders treat jobs as a short-term gig rather than a long-term legacy,” she says.

The book describes the rationale that Sophie Howe, future generations commissioner for Wales, took in challenging a 25-year proposed extension of the M4 motorway at Newport, which aimed to ease congestion. Explaining the future generations example, Heffernan says: “As you make decisions that are long term, you can’t just look at today’s data to solve today’s problems that will be paid for by tomorrow’s generation. You need to look at greater trends.”

In the case of the M4, says Heffernan, Howe argued that the plan overlooked the fact that fewer young people were driving, fewer people were commuting to work and the plans had not accounted for Wales’ carbon reduction targets. “Through the Future Generations Act, the Welsh Assembly found a political way to give a voice to the children not yet born,” she says.

Heffernan says prime minister Boris Johnson and the current Conservative government will not be paying for the future consequences of the HS2 rail link. “Is it an appropriate solution for the people who will pay for it and end up being stuck with it?” she asks.

Such long-term planning is key to success in businesses. In the business sector, while some companies are not made to last, others, such as Japanese construction business ‎Kongō Gumi, have been around for hundreds of years. What gives businesses like that such extraordinary longevity, says Heffernan, is that people feel they can identify with it.

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Many of the companies that have lasted for decades and centuries are family run, she points out. “There is a really deep emotional connection. It’s not just a job,” she adds. There is a sense of responsibility to pass on the business in a strong and healthy state to the next generation.

Creating a sense of family in a corporation is also a powerful motivator for staff, who will work towards a common goal and the greater good of the business, says Heffernan. In Uncharted, she describes how Standard Life survived a $1bn shortfall by making the painful decision to stop paying commission to financial advisers who sold its insurance products.

Although the switchover to making customers pay for financial services advice was very painful for the company, its staff trusted that the decisions being made were the right ones. The changes it made allowed Standard Life to be ahead of the pack following the 2008 banking crisis, which, at least in part, had been fuelled by the commission-based sales approach encouraged in the financial sector.

To survive any crisis, businesses need staff who are 100% committed to the company. This is something Heffernan believes any leader or executive should be aware of as they assess the pros and cons of outsourcing, using contractors or adopting a gig economy model for staffing.

“You can instil family values in business,” she says. “It is the opposite of the gig economy. A close relationship between people at work keeps them functional. One of the dangers of the gig  economy is that while it looks super-efficient, when the chips are down, who cares?”

Similarly, in outsourcing, Heffernan says businesses will often find they have lost the level of commitment they previously had with their own staff. “You also lose the expertise,” she adds.

A company with the right experts in-house, and a corporate culture that is analogous to the loyalty found in a family business, has the potential to be truly innovative, she concludes.