Over the past months, Engage // Innovate has been working with the South Island Prosperity Partnership, the City of Victoria, the Association of BC Marine Industries and Urban Systems to lay the groundwork for the development of an ocean economic ecosystem on Southern Vancouver Island and Pacific Canada.

Building the Ocean Futures Hub & Cluster in Atlantic Canada

With the longest coastline in the world, Canada has access to an array of marine resources. With the world rapidly shifting to a more sustainable model known as the blue economy, the Ocean Futures Hub & Cluster (OFH&C) will be a vehicle for industry leaders, entrepreneurs, researchers, governments, and investors to accelerate Canada’s position in the global ocean technology sector with a blue economy focus.

By 2030, the Ocean Futures Hub & Cluster (OFH&C) aims to become a global ocean technology hub, create new high-value jobs in British Columbia and transform ocean industries for the 22nd century.

Over the past months, Engage // Innovate, together global accelerator Hatch and Canadian firm Urban Systems, has been supporting the development of the business case, cluster framework and feasibility study of the OFH&C through research, facilitation and custom designed tools.

Working virtually with over 120 stakeholders towards a common goal

Together with Urban Systems and HATCH, Engage // Innovate engaged and worked with over 120 stakeholders to co-design the OFH&C concept – completely digital, across borders.

Working together with over 100 participants on a digital whiteboard – engagement requires well-planned tools

Split into 10 smaller breakout groups, the ocean and marine leaders worked through strategic questions and tools to discuss the strategy, structure, governance, financing and key strategic initiatives for the OFH&C, as well as the current challenges and future of the blue economy in Pacific Canada.

The stakeholder engagement process identified several key factors, which has been worked into a report released in December by Urban Systems.

Click here to read the report Business Case for an Ocean Futures Hub & Cluster on Southern Vancouver Island.

Helping government leaders accelerate national transformation

Over the past ten years, Engage // Innovate’s team has helped government leaders accelerate national transformation, develop new high-growth industries, build Innovation Supercluster Programs and transform economic growth.

Recognized as a global authority on Building Innovation Superclusters, the Shifting Energy Arena and how to drive corporate transformation, Engage // Innovate currently has active projects running in the Americas, Asia, Africa, Middle East and Europe. Despite the challenges of international business travels, all programs are delivered on schedule using a highly innovative blended approach to secure a successful project delivery.

Contact Information

Christian Rangen
CEO, Partner
Christian@engage-innovate.com
+ 4792415949

www.engage-innovate.com

In our work with corporate transformation, we have identified five distinct leadership scenarios. In this blog post, inspired by the 2020 Drucker Forum’s ideas on leadership everywhere, we explore these five scenarios and what “leadership everywhere’’ might mean for large scale strategic transformations.

This blogpost is written for the Global Drucker Forum 2020, Leadership Everywhere

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She was not the obvious leader in the room. As a female CFO, she was not the obvious go-to-leader, but it was very clear once you got to know her and the work she did, that for all practical purposes, she was the one that was driving the transformation at this oil and gas service company.

When the transformation program had first started a couple of months ago, everyone looked to the CEO, a long-term industry executive, to own and lead the transformation. Neither the staff nor the board was particularly engaged in, nor did they see the need for transformation. When my team and I was first invited in, we quickly got the impression that the CEO was leading the strategic transformation process, with the rest of the organization following many steps behind him.

But working with the management team up close, following the interactions with the board and, notably, seeing the interaction with financial markets, it became clear to us that the CEO was not the one in charge. It was, if you will, a strategic CFO that was leading the transformation journey. Together with the internal strategy team, she was clearly out in front, taking the lead to reinvent the firm.

It was a powerful reminder that transformational leadership does not always sit at the top of the hierarchy. Transformational leadership can be found everywhere.

Figure 1: Self-Assessment with the strategic CFO, using the Transformation Starters Map (Rangen, 2020)

Over the last 10 years, we have worked extensively with large-scale corporate transformation in industries and geographies around the world.

While the traditional literature may imply the big man CEO theory with a CEO firmly leading the transformation, our experience has been that there are, in fact, five distinct and quite different way of leadership or organizational power dynamics that create and shape successful transformations.

In this blogpost, we will explain these five and share our insights on them. In doing so, we will follow the Transformation Starters Map, a visual tool that was developed during the research on Building the Transformation Company.

The Transformation Starters Map helps visually identify where transformation starts, who leads it and who is actually in charge of leading the transformation successfully. It allows the CEO, strategy leader or a consultant to map out and identify who is driving – and who is blocking – the transformation.

The map is built on nine groups, that all can have critical roles to play in leading a transformation.

Figure 2: Transformation Starters Map (Rangen, 2020)

In our work we have often come across various scenarios. They may not be clearly visible at first, but they always emerge over a period of time. Five of these scenarios on transformational leadership is mapped out below.

Scenario One: The Existing CEO

Figure 3: CEO Leadership  

‘’It should be illegal to focus (only) on the core business’’, a favorite slogan of CEO of Lyse, a Norwegian utility-turned-technology company.

Under the two-decade leadership era of Mr. Eimund Nygaard, Lyse has transformed from a traditional local utility to a rapidly growing energy- and technology company. Nygaard has been leading the transformation by following a structured approach to innovation, new market opportunities and making strategic industrial deals. One of the secrets to his success has been the collaboration and engagement with the board during these two decades.

This is a common scenario, with the CEO clearly leading the transformation. He is working well with the management team, and collectively they involve the board in the transformation process. Based on frequent interaction between the management and board, the management team engages the wider organization throughout the transformation journey.

This scenario follows the traditional CEO-led, top-down approach to transformation, possibly with the board waking up late to the need for transformation.

In our experience, external orientation and an early recognition of industry shifts is a core capability in CEOs who are able to reinvent the firms they lead.

Scenario Two: CFO Leadership

Figure 4: CFO leadership

As suggested in the opening story, in some companies we see the CFO leading the transformation, even to the extent of leading the entire ‘future-oriented’ part of the management team’s agenda. The CFO also takes the point in activating and collaborating with the strategy team.

This is a rare kind of strategic CFO, being the connecting part between the management team and internal strategy team. Over the past decade we have had the pleasure of working with this strategic CFO across several industries, over time growing to really appreciate this transformational leadership.

One benefit; it is much easier for the CFO to understand the full financial implications of introducing the Core-Growth-Explore framework. Niel, one of the CFOs we worked with in Denmark, was instantly able to assess both cap.ex (capital expenditure), op.ex (operational expenditure), impact on revenue, impact on margins and finally impact on market cap when we worked through various business model portfolios for his firm.

One challenge; in this scenario the CEO if often more in the background, sometimes causing a potential conflict on who is actually in charge.

Scenario Three: Bottom-Up Leadership from Employees

Figure 5: Bubbling up leadership  

When Norwegian energy giant Equinor announced a range of open positions in their new New Energy Solutions unit, the small team was flooded with internal applications.  Across the company, the new positions in the fields of solar, battery and offshore wind generated a massive buzz. But the high interest did not come as a total surprise.

For years, the conversation had been bubbling up. ‘What should we do with renewables?, ‘what is our position in the energy transition?’, ‘how do we position ourselves for an accelerating energy transformation?’, these questions had been surfacing in small pockets across the firm for years, both forcing and inspiring a larger conversation across the firm.

We call this phenomenon bubbling up organizational conversations. In this scenario, the transformation journey really begins with a 1000’s of questions being asked, and small conversations being had. Over time, this conversation spreads from the frontlines, to managers and eventually finding its way to the management team and up to decisionmakers.

To quote Professor Rita McGrath, ‘’snow melts at the edges’’ , and the people at the edges are also the leaders that are driving the bubbling up scenario.

Granted, this scenario can take years to emerge and may not be suitable in more formal high-power cultures. But in highly innovative, decentralized organizations, the bubbling up transformational leadership relies on leaders to emerge from anywhere.

Scenario Four: The Board Selecting a New CEO (Internal)

Figure 6: Board leading the transformation

When Equinor was recruiting for a new CEO recently, the board was left with four candidates, all internal. When one of the candidates, Mr. Anders Opedal was announced as the upcoming CEO, the media reported ‘’It was Opedal’s presentation to the board of directors about a clear reinvention of the company in the direction of greater renewable investment that made an impression on the board. The leading candidate at the time, Mr. Lars-Kristian Bacher, placed a greater emphasis on a gradual transition in line with the company’s current strategy.’’

In this scenario, the board takes a leading role in driving the transformation journey. Transformational leadership starts with the board. In hiring a new transformational CEO, the board puts a new leader in place to drive a top-down transformation.

In the case of Mr. Opedal, he is currently working with a large transition team. The team is a larger-than-usual number of company leaders, supporting the new CEO’s transition phase into the official CEO role later this year.

Scenario Five: Activist Investors Changing the Board, Recruiting an Outside CEO 

Figure 7: Activist investors forcing the transformation through


“The most feared investor in America” has Twitter’s CEO in his sights
, read the headline on the Verge. Activist investor Elliott Management Corporation had just taken a 4% stake in the social media platform and was pushing for a new CEO.

Step one, assemble a new board. ‘’Elliott Management quickly put forth four new nominees for the company’s board, with the goal of replacing Jack Dorsey as CEO’’, leading to the headline ‘’Jack Dorsey is in for the fight of his life’’.

With Twitter stock wildly underperforming other social media platforms, investors had had enough. It was time for a CEO change. It was time for an activist investor.

Figure 8: Facebook vs. Twitter 2015 – 2020, Bloomberg Chart

In a December 2019 letter, investor and marketing guru Scott Galloway penned a letter to the board of Twitter. “To be clear, my primary objective is the replacement of CEO Jack Dorsey,” Galloway said in an open letter to the company’s executive chairman, Omid Kordestani. “However, your firm’s weapons of mass entrenchment include a staggered board that may force shareholders to seek to replace other directors, including yourself, first.”

Welcome to activist investors. When leaders – and boards – do not perform and transform, the stage is set for the activist investor. The transformational leadership is violently different in a scenario of activist investors forcing through an early transformation.

Often, we see the activist investor replacing the entire board before swiftly recruiting a new, outside CEO. This CEO will come in, expecting to change most if not all of the management team, needs to engage with the wider organization, the frontline staff and the lower ranks of the company. She may engage with operational issues on the frontlines, not strategizing in the headquarters, all a part of engaging the wider organization in the accelerated, investor-initiated transformation journey.

The activist fights over Darden Restaurants and Red Robin are great illustrations of the transformational powers of an activist investor, all the way down to how the new management spends weeks on the frontlines, transforming customer experience, employee engagement and removing internal blockers by actively leading through the transformation.

While this scenario is not frequently recognized in the leadership literature, there is little doubt of the power and impact of the right activist investors. But, as in the case of Blockbuster’s demise, an activist investor is not guaranteed to lead to a successful transformation.

Conclusion

Despite popular ideas of a visionary, strong-willed CEO, we find there are multiple kinds of leadership to drive a successful transformation. In this blogpost we have identified five such scenarios.

In our work with transformation in organizations around the world, we frequently find that transformational leaders can emerge from anywhere. From strategy leaders in Brazilian unicorns, to young managers in oil & gas to middle managers in Asian utilities, transformational leadership does not have to start at the top, in fact, it frequently does not.

As we strive to gain a better understanding of successful transformational leadership, we hope that the ideas and visual tools shared can help companies create more successful transformational leaders for the future. Looking ahead, we are firm believers that truly transformational leadership can and will be found everywhere.

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About the Author

Christian Rangen, founder and CEO of Engage // Innovate and Strategy Tools – the Modern Strategist’s Platform, is a strategy and transformation advisor to companies and leaders around the world.

He has developed more than 120 visual strategy canvases helping leaders everywhere solve their top strategy and transformation challenges. His upcoming book on Building the Transformational Company is out in 2021.

This article is a part of the Drucker Forum’s “Shape the Debate” series.

Globally there are some 7000 innovation clusters. In many countries, these clusters fuel a critical part of the national competitiveness, future growth industries and a large percentage of GDP. Yet, leadership in these critical innovation networks is poorly understood and little researched. Leading up to the 2020 Global Drucker Forum, we explore the topic and challenges of leading in an innovation cluster networked organization.

By: Christian Rangen and Tanja Hoel

This blogpost is written for the Global Drucker Forum 2020, Leadership Everywhere

Why Clusters Matter

Clusters can play a significant role in shaping national growth industries and accelerate national transformation. Countries like Denmark, Norway, Germany and Spain has invested significantly over the past few decades in building out high-performing national cluster programs. More recently, countries like Canada, Thailand, Malaysia, Saudi Arabia and Costa Rica has started exploring future-oriented cluster and Supercluster programs.

Today, as many countries face an urgent need to transform their fossil energy-based economies, clusters can play a crucial role in developing the new high-growth, high-value industries of the future. In successful clusters and cluster programs, clusters become the central point where government aspirations, public policies, industry leadership, corporate transformation and innovative ecosystems meet and interact.

Leading and Organizing Clusters

While clustering, the natural evolution of co-locating naturally interacting companies, often is a naturally emergent process, Innovation Clusters are purposefully built, designed and led over time. They are legal organizations, with boards, annual budgets, reporting and operating staff. Yet, these Innovation Clusters follow an interesting mix of organizing principles. It is fascinating today, to look at how clusters are led in light of Peter Drucker’s teachings on leadership.

In clusters, we genuinely need to see ‘leadership everywhere’, ranging from the informal powers of a board member, to the influence of a working innovation group manager. Contrary to most traditional organizations, with top-down power structures and hierarchies, clusters function much more like informal ecosystems with distributed leadership and relationship-based, networked leadership principles. One of us frequently call successful cluster leadership a ‘superhuman task’, due to the distributed power principles found in most cluster systems.

Offshore floating wind energy: a new growth industry driven by an innovation cluster

Case: Offshore and Energy Wind Cluster

Consider the example of the Norwegian Offshore Wind Energy Cluster. This cluster is now taking a central leadership role in shaping the Norwegian industry for floating offshore wind energy on the global stage. With the aspiration to become ‘the strongest supply chain for floating offshore wind worldwide’  the cluster could help unlock billions in value over the coming decades.

While the ‘market opportunities’ of offshore wind energy has been on the horizon for years, the cluster has now taken a critical role in pulling government interest, government policies, industry interest and market development together into a single, coherent cluster strategy. Founded of the idea of knowledge-transfer from oil & gas to new, high-growth industries, the cluster is designated a critical part of building out Norway’s economy post-oil & gas.

Today, the Offshore Wind Energy Cluster is critical to building out global market opportunities, establishing a better collaboration culture amongst private-public stakeholders, establishing stronger value chains and accelerating industry-level innovation for decades of growth in the global market for offshore wind energy.

Yet, clusters come with some unique organizing principles, balancing collaboration and competition, full-time employees (few) with active members (many) and formal roles (few) with informal power influence (many). The cluster has a general assembly (annual), Board of Directors (ten), CEO (one), Employees (four), Innovation Working Groups (nine, seven depicted below) and a total membership base of 173 members, and counting.

Figure 1: Organizing model for the Offshore Wind Cluster

With that kind of collaborative, member-led organizing model, a number of new questions of leadership and leadership principles emerge.

What is an Innovation Cluster?

An Innovation Cluster is a public-private, non-profit, membership organization. These clusters are built and developed over time, typically with a mix of public and private financing. Most clusters are organized around a specific domain like, Smart Mobility, AI, Fintech, Clean Energy or Aquaculture. The best clusters are built around the key, national growth industries, what we often refer to as Industries of the future.


From Five to Eight Levels of Leadership

In our work with Innovation Clusters and Superclusters around the world we have studied leadership practices, interviewed dozens of cluster CEOs and board members and observed numerous cluster CEOs in action. This work has led us to conclude that leading in clusters, networks and ecosystems is a fundamentally different practice of leadership that our traditional management models. Grappling with a theoretical framework, we landed upon leadership expert and business school faculty, Mr. Morten Emil Berg’s Five Levels of Leadership (note, one of us have taught this framework extensively in Executive Leadership programs).

Building on Mr. Berg’s Five Levels of Leadership, we realized there were three critical components missing for successful cluster leadership. This led us to build upon and expand from five to eight levels of leadership, adding Networked leadership, Influencing Leadership and Member-focused leadership.

Figure 2: From Five to Eight Levels of Leadership (Rangen, 2019)

Describing the Eight Levels of Leadership

Visionary


The leader must build a large coalition of industry leaders, government leaders, politicians, ecosystem builders and unite them around a strong vision for the cluster. A cluster CEO has little formal power over these stakeholders and must use new and innovate approaches to achieve the herculean task of co-creating a shared vision and a shared ambition across the entire cluster landscape.

Networked


In our research, we find all successful cluster leaders to emphasize the importance of the network and having access to the right networks. Either directly, or through their key stakeholders (often, the Board of Directors at the cluster level), the leader fully recognized the critical importance of working in and across personal networks to build and scale the cluster.

Strategic


Just like Drucker is quoted, “Strategic planning is the first priority of the leader”, a successful cluster leader needs to work strategically. This is often echoed in our findings. “A good cluster leader has to be strategic – always”. The statement came from the CEO of one of Norway’s largest innovation clusters. The cluster had a roadmap to 2050, with a target to 5X the industry’s value impact. To achieve this mission, the CEO knew that strategic thinking, sensing the landscape across the entire industry, from CEOs, policymakers, educators, researchers, startups, investors, corporate innovators, and regulators was of the outmost importance. A great cluster will develop a bottom-up long-term strategy, define strategic areas and targets, future business models (critical), KPIs, roadmaps and a culture of execution at all levels.

Influential


How strong influence does the cluster leader have in her network? With hundreds of members, many of them industry CEOs, Professor and policymakers, the leadership role changes fundamentally from “boss” to “influencer”. Soft power, diplomacy, nudging and invisible influence can be far more important than any formal decision making. In our research, we found that few cluster leaders were fully aware of this area, acting rather like they were operating within formal, hierarchical leadership structures. Our findings are very clear; they don’t.

Administrative


Most leaders we found struggle through this, experiencing an overload of reporting, systems and reviews, often caused by the financing and requirements by the national cluster programs.Fully in line with Drucker’s  ideas on leadership, we find that the administrative tasks simply “must get done” within the innovation clusters. Good leaders will ask ‘what must get done?’ and keep administrative work to a minimum. Surprisingly, a number of cluster leaders do not use the administrative supporting tools and reporting platforms, designed to ease their job.

Member-Focused


“We work to serve our members”, is a common statement found in our interviews. While this is obviously true, it is also a dangerous trap to fall into. If the cluster leader overly spends his time and resources on serving the existing cluster members, he is unlikely to achieve the larger, strategic goals of the cluster. The right cluster leader will focus on the architecture and structure, building an organization that can serve the members, not trying to do everything himself.

Operational


In traditional companies, business units, departments and teams, people are organized in a hierarchical and largely formal manner. This is not the case in most innovation clusters. On average, an innovation cluster will often have a CEO and 3-4 employees. While the number of formal employees tend to be small, the number of people and staff that fall under the operational management is large, and in some cases very large. This creates highly complex leadership structures and challenges. In our interviews, we find a clear and repeatable pattern that management has clearly shifted from hierarchies to managing ecosystems.

Self-Leadership


The importance of self-leadership has been on the rise since the 1980’s. The ability to set goals, focus on personal performance, strengths-based development, self-imposed positive psychology in practice and a positive developmental belief system are all key pillars of self-leadership. They also echo many of the criteria cluster leaders mention in their own talks about leadership and leadership challenges in clusters.

Designing a Cluster Leadership Map

Based on early feedback on our work from national government leaders, we developed an early map for cluster leaders. The Cluster Leadership Map was first put to the test in the early summer of 2019.

Figure 3: The Cluster Leadership Map (Rangen, 2019)
Figure 4: The Cluster Leadership Map: Two Leadership Examples (Rangen, 2019)

Working with a group of Norwegian Innovation Cluster CEOs we started putting the eight principles of leadership to work, with self-assessment, individual reflections, and short action-items for personal developments. This quickly led to shared insights in three areas.

  1. Cluster CEOs have widely different leaderships styles
  2. Most Cluster CEOs apply industrial management ideas to their cluster leadership
  3. The topic of cluster leadership was poorly understood and rarely reflection upon

What everyone could agree on was that the challenges of leading in an Innovation Cluster was critical to its success and urgently needed more work and better understanding. Many commented on the challenges of leading without formal authority, leading across widely different stakeholders (from different sectors and backgrounds) and leading without having the traditional leadership levelers and tools available.

Reflections of a Cluster CEO

by TANJA HOEL, FORMER CEO OF NCE SEAFOOD INNOVATION CLUSTER

Tanja Hoel (Back), former CEO, and Solveig Holm (front), Project Manager, NCE Seafood Innovation Cluster.

For nearly four years, from May 2015 to February 2019, I had the privilege of serving as founding Managing Director (CEO) of the leading Norwegian seafood cluster.

During this time, we founded, designed and scaled the innovation cluster with a strategy to 3X the value creation of the Norwegian Seafood and Aquaculture industry by 2030. Our strategy was to increase the industry collaboration through knowledge, innovation and entrepreneurship. In my experience, cluster leadership is creating a community engagement to achieve a common vision.  Making all members understand the value of co-opetition and co-creation. Utilizing resources and knowledge from the cluster community to accelerate cluster members innovation capabilities.

For many industry CEOs, working together with competitors goes against all they have learnt in business school. Board of Directors reward them on their competitive skills and ability to perform better than their competitors. So how can a cluster CEO succeed to change the behavior of an industry CEO? Two key words; leadership and trust.

A cluster CEO needs to have a a visionary leadership skill with an ability to demonstrate how co-operation can make them reach their business targets faster, smarter and better.  The cluster CEO is central to build trust across competitive CEOs and cluster members. Setting up clear lines on what are competitive and what are non-competitive collaboration areas for the cluster to address.

In my personal experience, this starts with four critical steps:

First, it requires investment of time to build your relationship with key industry CEOs and cluster members. Getting a clear understanding of the cluster members business goals, challenges and need of support, capabilities and resources to succeed.

Second step is analyzing this information and setting up a business plan how a cluster model will support cluster members to achieve their business targets.

Third step is to quickly get some success stories. Identify some cluster community building projects that quickly can provide results and value to cluster members.  This will encourage the CEOs to see the business value of the cluster and lead to further investment of resources in the cluster community.

The fourth step is requires strategic leadership, co-creating a visionary project, that fully utilizes the knowledge, expertise and resources from the cluster community to enable a more transformative change; i.e new business models, solving key sustainability challenges that lead to the creation of new revenue growth.

And last; key success criteria for the cluster CEO is to have focus on the member’s needs. It is not the cluster CEOs vision, but the vision on behalf of the cluster members.

A cluster CEO plays the role of an underdog, making the members of the cluster succeed and encouraging other key CEO from the cluster members to take ownership and supporters of the cluster community.

The Cluster Leadership Map in Action

Having worked closely with Tanja as a strategy advisor and consultant, I was intrigued by how Tanja would assess herself using the Cluster Leadership Map. One of the strengths of Tanja’s leadership, as witnessed during our many months of collaboration, was her ability to drive the vision, build strong relationships and deeply understand her members and key stakeholders. While she held little formal power and few traditional leadership tools, she was able to achieve a profound shift in industry collaboration working with her small team of innovation manager and project managers.

Tanja’s leadership style in action was one of ‘leadership everywhere’, by creating energy around the cluster’s 3X value creation target and enabling a culture of openness, collaboration, and bottom-up engagement. Leadership happened in a very distributed way throughout the entire cluster ecosystem. This leadership style is clearly apparent in Tanja’s self-assessment of her leadership role as the CEO of the NCE Seafood Innovation Cluster below.

Figure 5: The Cluster Leadership Map: Tanja Hoel, CEO self-assessment

Key Lessons for Leaders of Ecosystems, Clusters and Networks

A key challenge for many leaders today are ‘how do I lead without formal authority?’,  ‘How do I lead without a formal hierarchy in place?’ and ‘how do I lead in a largely networked organization?’. We believe these questions are being asked worldwide and will become even more mainstream in the coming years.

We offer three key lessons for leaders leading under these circumstances:

  1. VISION Develop a strong shared vision – but expect this to be far more challenging than in a traditional organization. The breath of stakeholders you have to deal with is many times larger than in a regular company-based organizational structure.
  2. RELATIONSHIPS Your power lies in your relationships – invest a disproportional amount of your time and energy into building deep, personal and professional relationships with all key stakeholders.
  3. TRUST Build trust between your cluster members. This is fundamental to ensure engagement and openness of cluster members. Be sure to clearly communicate competitive and non-competitive areas for the cluster to focus on. Expect participants to be sensitive to having competitors in the room tackling industry level challenges. But, get this right, and the impact can be significant for everyone.

What Would Peter Drucker Say?

Looking at the state of leadership in Innovation Clusters, it begs the questions, ‘What would Peter Drucker say?’, and more importantly, ‘How can Drucker’s teachings help us develop even better leadership in clusters?’

Drucker’s ideas have helped shape modern leadership practices for decades. Working with global cluster leaders and their top challenges, we find that a great deal of Peter Drucker’s ideas on leadership fully resonates with the challenges of today’s cluster leaders. We hope and think that a new generation of cluster leaders will equally find both inspiration and guidance in the ideas of leadership first developed by the leading management thinker Peter Drucker.

Global innovation clusters, we believe, mirror many of the challenges modern organizations will face in their challenges to develop ‘leadership everywhere’. In this quest, we again suggest look to Drucker to guide leaders in their quest for great leadership in modern, networked organizations.

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About the authors:

Christian Rangen, founder and CEO of Engage // Innovate and Strategy Tools – the Modern Strategist’s Platform, is a strategy and transformation advisor to companies, innovation clusters and governments around the world. His next book on Superclusters explore leadership, strategy and business models for innovation clusters around the world.

Tanja Hoel, Innovation Manager at Hatch – global aquaculture accelerator. Former CEO of the Norwegian NCE Seafood Innovation Cluster (2015-2019). She has helped start, design and scale multiple cluster initiatives around the world, currently supporting several cluster initiatives in North America, Asia and Europe.

This article is a part of the Drucker Forum’s “Shape the Debate” series.

In the wake of COVID-19, Engage // Innovate has seen a sharp shift in client needs around the world. Over the past few weeks, the company has secured multiple new economic development contracts in North America, Latin America and the Nordics.

Economic revival in a post-COVID environment

The majority of contracts secured this month are large-scale government initiatives to revive and kick-start economic growth in a post-COVID era. These contracts are all entered into with ‘entreprenurial government leaders’, leaning in to come up with large-scale economic recovery initiatives.

We see key government leaders really start thinking about what are our next growth are industries? What are our industries of the future? Then, laying down rapid-action plans to accelerate the development of these key future industries”, says Partner Christian Rangen of Engage // Innovate.

Building next generation ocean cluster in Western Canada

On the island of Victoria, in Canada’s British Columbia, visionary Mayor Lisa Helps is already leading the work on Victoria 3.0, a long-term strategic economic development initiative. Under the pillars of Recovery Reinvention Resilience, Victoria 3.0 lays out the economic growth model for 2020 – 2041.

Central to the economic recovery plan is creating an ocean futures cluster, accelerating western Canada’s value creation in the ocean space. While Canada has the world’s longest coastline, the economic activity and value from its ocean industries lag behind other major ocean economy nations. Combining the ocean cluster with the larger city-development of a brand-new innovation district is expected to provide an influx of high-value jobs for the region.

The project is the full development of a feasibility study, cluster framework and operating structure for a successful innovation cluster in Canada’s emerging ocean space.

“I see a massive potential for new economic activity in the ocean space, combining new technologies, venture capital and scale ups with the existing infrastructure and economic leaders in British Columbia”, says Rangen.

“This investment in the Ocean Futures Innovation Hub is an investment in the future of B.C.’s economy,” says Melanie Joly, Minister of Economic Development and Official Languages and Minister responsible for Western Economic Diversification Canada.

Read the full press release from South Island Prosperity Partnership and City of Victoria here.

Engage // Innovate is partnering with global accelerator Hatch and Canadian firm Urban Systems to deliver the end-to-end project on a significantly accelerated timeline.

Developing new medical technology growth industries in Latin America

Under the leadership of the Latin American team, Engage // Innovate has recently secured a key contract with CINDE – Costa Rica’s Investment Opportunity Agency. Tasked with developing Costa Rica into a high-knowledge, high-value country in the medical technologies, manufacturing and devices industries, CINDE plays a key leadership role in accelerating the development of a new Life Sciences Hub in the region.

“This is a superb Innovation Supercluster Initiative, and I am very excited for the potential I see in Costa Rica. In line with the global transformation of the medical technologies industry, Costa Rica can really take a leading role”, says Rangen.

The project is designed to pull all the key stakeholders together to co-design and co-develop a new strategy for the country’s significant medical devices and medical technology industries. Ever since the launch of a national medical technology program 20 years ago, Costa Rica has been able to attract talent, foreign direct investments, multinationals and manufacturing companies to the country.

Today, Costa Rica is looking to grow in the areas of high tech, software, innovative business models, scale ups and further talent development.

“I look forward to following Costa Rica’s ambitious journey in the medical technology space”, says Rangen.

Helping government leaders accelerate national transformation

Over the past ten years, Engage // Innovate’s team has helped government leaders accelerate national transformation, develop new high-growth industries, build Innovation Supercluster Programs and transform economic growth.

Recognized as a global authority on Building Innovation Superclusters, the Shifting Energy Arena and how to drive corporate transformation, Engage // Innovate currently has active projects running in the Americas, Asia, Africa, Middle East and Europe. Despite the challenges of international business travels, all programs are delivered on schedule using a highly innovative blended approach to secure a successful project delivery.

Contact Information

Christian Rangen
CEO, Partner
Christian@engage-innovate.com
+ 4792415949

www.engage-innovate.com

“Why is there a need to transform?” was one of the questions that has been coming up quite frequently after we published the report Building the Transformational Company. While this wasn’t part of the original report, we went back to our work, our notes and our case studies, and looked into why there was a need to transform.

What we found was that there were six fundamental reasons why companies need to transform. You may have other perspectives and have probably seen other reasons why, and we would really encourage you to share your thoughts and opinions with us, and have a discussion around how that fits in.

Six Fundamental Reasons Why Companies Need to Transform

1. Declining Profits

With profits steadily on the decline, and limited opportunities to turn that around, being locked in a declining core business model is a recipe for disaster. You may be locked in the newspaper business, or oil and gas, or maybe an outdated software business. If your declining profits can’t be solved, the need for transformation is imminent. If it’s not already too late, and you end up in a “shock” type of scenario.

2. Structural Industry Change

Deep, structural changes to how an industry operates and how value is created and captured. These structural changes may take decades to play out, but you can’t fight against them. It is like the surf and the tide, you can try to compete it, swim against it, but deep structural changes will play out, no matter how you position your business. An example of this would be the gradual shift from oil & gas to renewables. Most executives today would say that, “over a timeline long enough, we will transition. It is just a question of when,”.

3. Rapid Technology Shifts

Swift and rapid technology shifts are similar to structural industry change, but happens at a much faster pace. They’re much more dynamic and much quicker. Expect to see a significant number of startups, scale ups and investors operate in this space.

You can already see examples of this playing out in the mobility space with ride-sharing, micro-mobility, scooters, and in tourism with the sharing economy like Airbnb.

4. Financially Under performing

Companies financially under performing on the stock market will often be pushed to transform – even against their own will. Activist investors, PE fund and other investors may acquire enough leverage to force through a radically new direction. 

Example of this abound, but are often less known from the outside. Starboard’s transformation of Darden Restaurants is a great example how an active investor came in, sacked the board, changed management and led a transformation. While Blockbuster is another example where an activist investor actually blocked a transformation into streaming (you can learn more about this in the online program).

5. Strategic Preemptive

Often led by an internal strategy review or a new CEO, the strategic preemptive route is often driven by foresight, some level of anxiety about a shifting landscape and a desire to transform before it is required.

Often, a new CEO will have the momentum and opportunity to lead this reinvention easier than an established, internal CEO will. 

6. Markets Fallen Off a Cliff

In times of economic shocks and crisis, markets may vanish virtually overnight. The oil and gas crisis back in 2014, the financial crisis back in 2008, 2009, and today in 2020, the economy fallout thanks to COVID-19. These economic shocks happen, and when they do, companies go through three phases – they start with “shock”, they cut, and for those that make it, they transform. From hospitality to oil & gas crisis, these moments will push many firms into bankruptcy, while others are able to use the crisis to generate a compelling case for swift transformation. Very challenging. 

So those are the top six reasons that we find. Again, these are just based on our own findings. I would love your insights and would be very happy to discuss this further with you.

One of the many conversations we had in our early findings was this question:

“is it only just the one reason, or can it be multiple?”

So we did a little bit of research, and what we found was that very often, there are several reasons that come together at the same time. For example, a company could be seeing declining profits over time, experiencing structural industry change, and also on top of that, going through some more rapid technology shifts. Of course, if you are going through all of these, it is a very challenging environment to manage a transformation in.

Another example, one that is more crisis-driven, would be a company (like many today in the wake of COVID-19) facing markets that have fallen off a cliff, and rapidly declining profits.

Finally you could have a company which is transforming due to a strategic preemptive, maybe through a new CEO or a strategy review, rapid technology shifts, and also a deeper underlying structural industry change.

So what are the implications for you? You may be a consultant, an executive, a strategy leader or a HR, L&D executive?

We have developed a tool that can guide you on this journey – and here we are sharing a beta version of it.

The Why Transform Canvas is specifically designed to assess whether you are in need of transformation.

Assess Your Organization’s Need to Transform

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It’s a simple and straightforward tool – which you can use to assess your company on a scale of 6 – 30. The higher your total, the lower your need is to transform. Check your score here.

You can access the PDF and high quality JPEG format of the Why Transform Canvas – as well as the entire toolkit and know-how you will need to guide your company’s transformation within the online certification program – Building the Transformational Company.

Innovation Superclusters and innovative ecosystems are both crucial engines of growth. In our research, we have looked into future trends and how governments can actively build Innovation Superclusters around the industries of the future. 

SUPERCLUSTERS VS. ECOSYSTEMS

Globally, there are around 7000 formal Innovation Superclusters. Of these, around 15 – 25 may be recognized as genuine Innovation Superclusters. On the other hand, most startup ecosystem ranking will often rank the top 150 – 200, with Silicon Valley, Beijing, Boston, Shanghai, New York, and Tel Aviv topping the list. One ecosystem, let’s say Beijing, may count 30 – 100 clusters. While one cluster, possibly the Norwegian seafood cluster in Finmark, could be a single cluster, it does not have much of an ecosystem to lean on.  While both these systems of innovation are important, they are also fundamentally different.


SUPERCLUSTERS ARE ACTIVELY BUILT

Innovation Superclusters are the result of both active government programs, long-term industry leadership, and hands-on organizational development.  

A cluster will always have an operating organization, a (small) management team, a board or steering commit, an operating budget, members and reporting. No matter what size, from early “baby clusters”, to Growth Clusters and Superclusters, these traits are always in place.  

Two examples are the two ocean-centric clusters, NCE Seafood Innovation Cluster, located in Bergen, Norway and Canada’s Ocean Supercluster, based in St. John, Newfoundland. Both are led by a CEO, co-funded by Government and industry alike and working to solve industry-level challenges to unlock sustainable economic growth in the ocean space.  

ECOSYSTEMS ARE PASSIVELY NURTURED

Ecosystems, on the other hand, are far more passively nurtured. Granted, governments will invest heavily in various elements of ecosystem development, including Singapore’s recent announcement of a $500M investment into building Singapore into one of the world’s leading AI ecosystems.  

This will likely propel Singapore forward and put it even more firmly on the world map of most innovative tech hubs. 
But you are unlikely to find a CEO, a single member-based operating unit, a cluster-based strategy document and the close collaboration found in the best clusters around the world.  

CB Insights, an analysis firm, recently published an overview of the world’s leading tech hubs, or ecosystems. Much along the methodology lines of Startup Genome, CB Insights maps out the best tech hubs, based on a number of key variables.  

LOOKING AHEAD

Looking ahead, our research shows Innovation Superclusters are on the rise. At the same time, regions and nations are competing more than ever to attract, build and scale the best tech firms. Whether in life sciences, AI, smart mobility, clean energy or platform-based business models; expect to see both Superclusters and ecosystems become an even higher focus for governments, policymakers and nation builders in decades to come.  

Around the world, Innovation Superclusters are on the rise. But what, exactly, are Innovation Superclusters and why do they matter?  

INNOVATION SUPERCLUSTERS IN SIX POINTS

While often misunderstood due to various policies, structures, funding models, strategies and capabilities, we find that Clusters and increasingly Innovation Superclusters can be identified and understood through six key points.  A Cluster initiative on Taiwan, in Korea or the Thai Supercluster program, will be different in context, industry need, and government program, but the six principles are equally valid across geographies and culture.  

1. Engines of Growth

Successful Innovation Supercluster is first and foremost Engines of economic growth, by connecting 100’s of members and partners. From a policy- and GDP-development point of view, Clusters are expected to produce value that far exceeds the national averages across all industries.  

2. Collaboration Networks

Second, Superclusters are immense collaboration networks built around the industries of the future. These clusters exist to build out larger, more connected networks around future key industries. By pulling together industry executives, academics, investors, startups and government leaders, the Superclusters aims to build close and personal ties across domains, roles, hierarchies, and traditional silos.  

3. Private-Public Partnerships

Third, Superclusters ae large-scale private-public partnerships, developed by design. While they do require certain foundational capabilities in terms of local industry, local talent and local investors, it is really the co-development of private and public partners that make the cluster initiative a success.  

4. Trust-based

Forth, Superclusters are trust-based collaboration platforms. While the level of trust and preferred route to develop trust may vary, the essence is that industry leaders, researchers, startups and other members in the cluster should work to create trust across the entire cluster base. This translates into collaborating on projects, sharing research data, pool company data into cluster collaboration projects (Seafood industry sharing fish health data for machine learning development).  

5. Solution Creators

Fifth, great clusters are solving industry-level challenges & opportunities. Think, open innovation across a close community of stakeholders. Using our open innovation software platform, clusters can identify industry-wide challenges, challenges that then can be addressed by the cluster through joint innovation projects or innovation working groups. Over time, Superclusters should be able to take on and solve “challenges that are too big for anyone of us”, in the words of an industry CEO.  

6. Magnets

Finally, strong Superclusters become magnets. Think of magnets that attract talent, capital, researchers, and companies into the region and cluster membership base. In Canada, the Digital Supercluster is already seeing a growing number of corporates and startups relocating into the greater Vancouver region to be a part of the rapidly developing Digital Supercluster. 

PULLING IT ALL TOGETHER

We are seeing a rising interest in and understanding of building a new breed of Innovation Clusters. Governments from Canada to Thailand already have Supercluster programs in place. The EU, the Nordics, South-East Asia, Latin America, and the Middle East are all in various stages of exploring their own Supercluster Initiatives.  

Whatever model and policy they may choose, they will all need to follow the six principles listed here to Build Successful Innovation Superclusters.  

Five years ago we attended our first Drucker Forum, aptly titled The Great Transformation. Little did we know at the time that the experiences from the Forum would result in the creation of Transform! a powerful experiential learning simulation, potentially changing how we teach, train and build deep transformational capacities.  

OSLO, NOVEMBER 13, 2019

“No, that could never happen”, shouted one of the participants.
“Well, actually it could”, sighted her CFO teammate.  

The pair, acting as management of case company Rail1 – a European railway operator, was just getting acquired.  

“We have partnered with Juppz, secured a 500M funding structure, and can now execute a hostile take-over”, said the deal manager, CFO of Flight – the electric scooter company, as he officially announced the deal to the table. Working closely with the ride-sharing company Juppz, Flight was now implementing its innovation strategy; having recently shifted from a collaborative partner-approach to the more aggressively buy-strategy.  

Having previously acquired CarWagon; Rail1 had built a broad business model portfolio beyond its legacy core business of operating trains in Europe, secured financing for new ventures and hit a 23,3BN market cap, all on its way to transform into a mobility winner of the future.  

Collectively, the four companies were battling it out in a highly competitive mobility arena. Their mission: transform a legacy company stuck with two low-margin business models into a thriving company with a healthy mix of business models across the Core-Growth-Explore framework. At the same time, build an innovation strategy, secure financing, lay a transformation roadmap, deal with Booms and Busts, all while making 100’s of micro-decisions effectively replacing any well-planned strategy with split-second decisions. What could possibly go wrong?  

TEACHING SMART PEOPLE HOW TO LEARN

The group, a part of Open Innovation Lab Norway, was running Transform! a highly engaging learning simulation, designed to help people learn how to build transformational companies and execute successful transformation strategies. Transform! is built on the research and development work by Christian Rangen and the team at Engage // Innovate and Strategy Tools.  

Built on top of eight visual strategy tools, Transform! is designed to be a learning and development simulation to teach people and companies how to build transformational capacities. In essence, it aims to solve the problem of teaching smart people how to learn and develop a stronger absorptive capacity in light of ever-faster industry shifts.  

LEARNING THROUGH SIMULATION

Inspired by the work of Swedish Professors Johan Roos (Lego Serious Play) and Karl Erik Sveiby, coupled with the latest thinking in strategy from Rita McGrath, Scott D. Anthony, Roger L. Martin, Henry Chesbrough, Alex Osterwalder, Yves Pigneur, Gary Hamel and Clay Christensen, the Transform! simulation is designed to be a highly engaging and powerful learning experience.  

By combining new strategy thinking, new visual strategy tools, and a table-based, role-based simulation, the participants combine a number of different learning elements into a single multi-faceted learning experience. 

Having run close to 85 sessions across three different simulators over the past eleven months, it has become clear to us exactly how powerful the power of simulation-based learning can be. From Board members, CEOs, Policymakers, Professors, innovation agencies; every single participant quickly get absorbed into the competitive dynamics of strategy simulation. Designed to transfer new learning, new tools, and a new strategy mindset, the simulation teaches strategy, innovation, transformation, finance, corporate venturing, decision-making and mental models in one single session. The Transform simulation helped us explore and uncover some big strategic mental models to our company, said one Danish CFO we worked with on a large scale transformation strategy.   

THE TRANSFORMATION GAP

“On average, 2,3, maybe” summarized one of the participants in Oslo. 
The group of eight has just answered the two key questions. 
“Over the next ten years, how significant a transformation will we require?” 
As a group, they averaged 7,9 out of 10, with executives from larger firms tending towards 9 and 10.  

The follow-up question, however, got a different response. 
On how ready are we for this transformation?” the group barely scored 2,3 out of 10. A number that drew a loud sigh from the participants.  

“What does this mean”, I asked.
“It’s the transformation gap”, came the instant reply from the corporate innovation manager. 
“It is the massive gap between our aspirations, our intellectual need for transformation in light of external industry shifts, and our internal ability, our capability to actually do it”, she continued, to the active nodding of several of her group members, and a not too concealed tone of frustration in her voice.   

The Transformation Gap. The gap between our fully understood need for large-scale transformation vs. our ability, our organizational capacity for transformation. We find the Transformation Gap virtually everywhere we go. In fact, it has been a passion, a driver and a source of deep motivation for us over the past seven years, trying to better understand this gap. Is has fueled questions, conversations, and research across countries, industries and organizational hierarchies.  

Today, with the first year of Transform! experiences behind us, we believe hands-on experiential learning can significantly close this Transformation Gap. The a-ha moments, the deep individual reflections, the new tools, the group-wide insights, and new collective thinking absorbed through the gamification mode and the many new conversations that start during a simulation, only to carry over into real-life company context all combine into building company-wide transformational capacities. 

BACK TO VIENNA

Professor Rita McGrath once said, “We are working with outdated tools & assumptions”. Referring to how most companies work on strategy, McGrath asks if companies are set up to work, successfully on strategy in the light of a new strategy paradigm.  

We share McGrath’s concern. From energy, mobility, technology, finance, healthcare, we see industries shift into arenas and companies facing a brand new strategy landscape. Traditional strategic thinking is no longer sufficient. Competing on transformation will be the new rally cry.  

The conversations that started at the Drucker Forum in 2014 still resonates, perhaps as important and relevant as ever. The insights and inspiration we gained in 2014 have fueled new strategy tools, insights and transformation programs. Now, as we prepare to depart for Vienna yet again, we look forward to a new set of conversations, this time on how companies can master new ecosystems and continue to accelerate their transformation.

Surely, we will need it.