(Question and Answer): You are the President of a large plumbing company serving Middle-Tennessee

You are the President of a large plumbing company serving Middle-Tennessee. The plumbing company is a successful family business, and you are the founder’s child. In recent years, the company’s growth has slowed dramatically, as the company saturated the market. You and the Board of Directors (BOD) have decided that the company should explore adding other services (e.g., electrical services, a/c and heating services, cleaning services, as a few possibilities). You must lead your management team and BOD in planning that transition.

4. As the company enters new service areas, the current culture may not best apply to new divisions or departments. Related to Principle 3 on page 79 of the article (Embrace Inconsistency), provide two specific leadership approaches you would engage to ensure your top-management team is open to potential necessary organizational culture differences between the current plumbing company and new business units offering different services. Use bullet points with complete sentences.

Principle 3 is listed below.

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PRINCIPLE 3 Embrace Inconsistency In many companies, innovation units find themselves measured against the performance standards of the core business. This puts the innovation unit at a disadvantage as it struggles to match up to a wellestablished business that has proven itself. The successful top teams we studied did not fall into this trap. They held core and innovation units to diff erent standards, demanding profi t and discipline for some and encouraging experimentation in others. They look at each unit on its own merits so that they can focus on what’s important for a business at its particular point in its growth cycle. Take former USA Today president Tom Curley, who grew his company’s online business even as he scaled the newspaper into a publishing phenomenon. Curley’s expectations for everything from fi nancial performance to dress code were markedly different for the two channels. In the newspaper, deadlines were daily, and professional journalists relied on their well-tended sources to break fresh content. In the online business, 600 deadlines a day were met by a young, web-savvy team who packaged wire service content. Curley created two fundamentally contrasting units, kept them physically and culturally distinct, and each reported directly to him.When a CEO embraces inconsistency in this way, the company’s mission and strategy can seem incoherent, with diff erent parts of the business focusing on sometimes confl icting time horizons and metrics. A CEO and his team might support a given strategy in one part of the business yet seek to cannibalize it in another. For example, Analog’s Ray Stata continued to build out and invest in a fab for manufacturing analog chips even as he was aggressively investing in research for digital chips. At Cray, Pete Ungaro managed the core business tightly on revenues and profi t, but “we would celebrate if somebody went for a cup of coff ee with their partner in an exploratory business,” he recalls. Similarly, at Zensar Technologies, a midsize Indian IT services fi rm, CEO Ganesh Natarajan built a distinct business unit, reporting directly to him, for a potentially disruptive software solution when he saw that the fi rm’s product-oriented general managers were ignoring the innovation. In 2005, Natarajan pushed his senior team to attend to the tensions between their known technologies and this new platform. Today, much of Zensar’s growth is rooted in the new solutions platform.
Supporting core businesses and innovation units requires leaders to be consistently inconsistent. They must live with a dual agenda. The approach runs counter to conventional thinking on leadership, but we believe that too much consistency in a company’s strategy is a danger sign, indicating that the company has run out of ideas or is relegating innovation to lower levels. It’s not always possible to give both innovation and core units everything they need—resources are scarce. Successful top teams, therefore, move resources between businesses as shifting needs demand. They may tilt capital investments in favor of the core business at one moment, and soon after may ring-fence funds for the innovation unit. Top talent also moves fl exibly between the units to make sure that the best people are placed where they’re needed most. For example, in IBM’s software group, general manager Janet Perna created sales SWAT teams to sell a new content-management system. Perna saw this as a way to focus resources on launching the new product for a short time, before pulling them back into an integrated sales team.
IN LATE 2010 Curley’s successor at USA Today, David Hunke, announced that the paper was shifting all operations to the web, shedding 10% of the print workforce in the process. The fi rm was also planning to launch a new, all-digital, USA Today Sports off ering, focused on winning share in the tablet and mobile phone news market. As once-great newspapers like the Washington Post struggle for survival, USA Today has positioned itself for reinvention. It could do this because Curley embraced inconsistency and tension at the top levels of the company. When leaders take an ambidextrous approach, they force their senior teams to abandon feudal battles and engage in forward-looking debate about the tensions at the heart of the business. Their capacity for taking advantage of the opposing objectives, needs, and constraints of core businesses and innovation units enables them to deliver extraordinary performance, time and again

Expert Answer


As the President of the company, the two leadership approaches that I would encourage for my company’s management and BODs to engage in, to enable diversification, will be:

  • Different Performance Metrics:
    • I will make sure the metrics of success and performance for both of my businesses, (plumbing as the core business, and the new service as an innovation unit) stay completely separate and different.
    • I would make sure the top management of the company does not expect the new service business to match up the levels of the core plumbing business when assessing its performance.
    • The plumbing business will be judged based on its profit and discipline and the new service business will be judged on it experimentation abilities.
  • Shifting of resources between the businesses:
    • Supporting our core plumbing business and the new service business simultaneously will require the management of the company to have a dual agenda.
    • Resources are limited; hence, they will be moved between both the businesses based on their respective needs.
    • This will not just include the investments and capital, but also the top talent will move between the two businesses to ensure they are placed where they are needed the most.

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