CEO Conversation Is Changing--From Cost Cutting To Top-Line Growth

Posted by: Bruce Nussbaum on August 4, 2009

I recently did a swing through a number of major innovation consultancies and the buzz this summer is that top-line growth is again a topic of conversation inside US and European corporations. The obsession with cutting costs and survival is ebbing and CEOs are looking to the Fall to begin boosting sales and revenues.

This is good news for the innovation and design industry, good news for consumers and good news for the global economy as a whole. We’ve been in lock-down mode for nearly a year, just trying to get by. With the crisis in the financial system in abeyance for the moment, stock prices rising strongly, housing showing signs of life in the US and the UK and China and India pulling the global economy ahead, animal spirits are rising in the managerial class once again.

Of course, this is the same managerial class that got us in this pickle. Strangely, most of the CEOs of most banks and most corporations are still where they were two years ago—in the corner office. To deal with the New Normal of this recovery—and this recovery will be very different from others—we need fresh leadership and insight.

One of the big differences in this recovery is that the US consumer won’t lead it. The US consumer is being replaced by the Chinese consumer as the economic driver of first resort. At least that’s the hope and theory.

Which brings us back to innovation. There was a huge embrace of innovation by US CEOs from the mid-90s to the period before the Great Recession but much of that has turned out to be superficial. The same two dozen corporations make up virtually every list of innovative and design-centric companies. Most corporations have launched innovation intitiatives, only to silo them off and contain them. Most CEOs have championed innovation programs only to leave it to others to lead them. Most managers talk about innovation and actually mean technology. They don’t understand the critical cultural and social science components of it.

If the US is to stop its slide in the global economy by reseting its manufacturing base and advancing its service sector, CEOs will have to deal seriously with innovation. This generation of chief executives, with a number of important exceptions, has not. They should be replaced.

Reader Comments

Claudia Johnson

August 4, 2009 8:08 PM

Hello Mr. Nussbaum,
This text is in RE: Delta's passenger "MIA" luggages.
Yesterday, I ran into your letter from Delta's CEO G. Grinstein. Reason being, my elderly mother was supposed to arrive in Brazil with her 2 pieces of luggage on Aug 3, 2009 early morning. Besides being held for over 2hrs at Orlando Apo, to arrive 40min delayed past her direct flight connection to Sao Paulo from Atlanta; her luggages were "mia" for a period of 48hrs. I personally have spent over 8hrs of my time doing fact-finding between Delta and Tam airlines to find out that her luggages were/are still stored with Delta's facility at Atlanta Apo, and it may or may not shall be dispatched to Brazil on their night flight DL 0105 today, 8/4/09. The most intriguing detail is that on the night of her original flight 8/2/09, I personally called Delta's Baggage Dept at 800-325-8224 and spoke to their representative to ascertain that her luggages were to travel along with her. Their rep stated that she would send a message to Delta's Atlanta Apo facility to reflect the same.
Now, 2 days later, we still do not have the issue at hand resolved. In addition, their Baggage Claim Dept. refuses to contact their Delta Apo facility to ascertain that her luggages are dispatched to Brazil, today.
I wondered if Mr. Grinstein is in accord with said policy. Furthermore, I too am curious to find out if in fact he flies with his carrier and agrees that his employees loose his personal luggage and after 48hrs, numerous phone calls, being held on Q for over than 40 minutes each time you call his Baggage Claim Dept, are up to his STANDARD?
Am I wrong to assume that they still need customers (passengers) like myself or relatives to generate revenues and present the same in their financial statements to satisfy current and attract prospective investors?
As I write this message to you, I am repetitively calling Delta's number for the Atlanta Apo (404-765-5009) and no one is answering the calls.
Will passengers ever learn that their time, trust, preferences and spending income ARE valuable and not to be wasted on an Airline carrier which clearly does not have any interest in meeting their needs?
I thank you for your time. I trust this information into your capable hands and own discretion to give furtherance should you see fit.
Sincerely,

Joy B

August 4, 2009 10:49 PM

"...we need fresh leadership and insight."

Smart CEOs should look to A.G. Lafley's tenure at P&G as an innovation role model.

By mandating "Connect & Develop" Lafley pushed his internal teams to source the best innovation thinking and doing they could find.

Further, by partnering with experts that had to deliver against set metrics, P&G could mitigate risk and ensure a consistent supply of marketable innovation.

CEOs who are serious about accelerating their innovation pipeline no longer need to go it alone.

Innovation is a discipline. Proven innovation expertise is a product and a power companies can purchase.

Innovation consultancies like Fahrenheit 212 specialize in delivering new products & businesses that grow top-line revenue.

Sergei Dovgodko

August 5, 2009 5:20 AM

Bruce,

Innovation will remain a corporate gimmick until large businesses are fundamentally redesign to allow integrative thinking, plus putting people in the front and center of business activities.

The industrial revolution dehumanized business in many ways, promoting such concepts as "shareholder value", financial/P&L operating management and "process thinking".

In the meantime, creation of value for employees (with the exception of Wall St. firms :-), communities, and the society became a wrapper for the pursuit of quarterly profit.

Innovation is not about hiring or firing CEOs or other captains of the industry. It is about a redesign of the entity called the "corporation".

Fortunately, there is a new generation of firms that operate in much more people-centric manner, while using higher ethical standards. Let's hope those firms will succeed sooner and will replace old-fashioned outfits together with their cadre of upper management.

Humanistic firms are better designers.

Larry Irons

August 6, 2009 3:42 AM

The Chinese consumer will not come close to meeting expectations.

Matthew Maier

August 7, 2009 5:40 AM

Well, replacing them would be innovative. Since they're in charge, and they're not innovative, how would they be replaced?

A post I wrote on my blog is partially in response to this post, and quotes it, so I'd like to invite you to respond.
http://disruptivation.blogspot.com/2009/08/spontaneous-misorganization-stifles.html

sms

April 15, 2011 2:34 PM

You have a great talent of writing.Best of luck and keep going.And yes i have tweeted your site www.businessweek.com .

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About

Want to stop talking about innovation and learn how to make it work for you? Bruce Nussbaum takes you deep into the latest thinking about innovation and design with daily scoops, provocative perspectives and case studies. Nussbaum is at the center of a global conversation on the growing discipline of innovation and the deepening field of design thinking. Read him to discover what social networking works—and what doesn’t. Discover where service innovation is going and how experience design is shaping up. Learn which schools are graduating the most creative talent and which consulting firms are the hottest. And get his take on what the smartest companies are doing in the U.S., Asia and Europe, far ahead of the pack.

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