Business leaders drive job growth, not policymakers
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Around the world, politicians and pundits are fixated on job creation. Some discussions focus on addressing persistent un- and underemployment among certain socio-economic segments. Others center around creating enough meaningful jobs as robotics and artificial intelligence threaten to displace increasing swaths of workers. In both cases, however, discussion inevitably focuses on policy levers, such as taxation, immigration policy and education. 

Those levers matter, but business leaders shouldn't wait for action from policymakers in Washington, London, Brussels, or Beijing. Rather, they can use innovation to generate growth and create an employment engine. 

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We recently conducted research into companies that use innovation to fundamentally transform their businesses. Specifically, we sought to identify and learn from companies that adapted their traditional businesses to disruptions in their markets while simultaneously investing in the new business models and products that will become the future of the company.

 

Our findings suggest these companies — and their leaders — can be models for how to navigate disruptive change, create new markets and, importantly, generate impressive job growth.

Consider Adobe, one of 18 companies our research highlighted as an exemplar of “dual transformation” – i.e., fortifying the traditional business, while also building new businesses. Shantanu Narayen took over as Adobe's CEO in 2007, when the organization seemed to be in its twilight stage as core products like Photoshop and Pagemaker reached maturity.

Over the next 10 years, however, Adobe shored up its core business by moving from packaged software to a software-as-a-service model and created a new growth engine in digital marketing services and analytics. Its stock price has surged more than 200 percent over the past decade. 

In 2004, Adobe employed a bit more than 3,000 people. Today, it employs close to 16,000 — a five-fold increase. Contrast Adobe's performance to AutoDesk, a company that was in a similar circumstance to Adobe's. In 2004, AutoDesk employed 3,500 people. Today, it employs about 9,000. That's strong growth by any count, but can't match Adobe's performance. 

Overall, the 18 companies in our research sample increased employment by more than 500,000 during the course of their respective transformations. This represents aggregate 27-percent growth over their starting point base of 1.9 million. Like-for-like paired comparisons in similar industries, in similar circumstances, over similar time periods, with companies that did not pursue similar efforts, increased employment by 160,000, an aggregate increase of only 4 percent. 

We freely admit that this analysis is directional and subject to all sorts of biases, but the headline finding is notable: Companies that embraced dual transformation grew employment by 23-percent more than similar companies that did not.

Along some dimensions, this finding should not be surprising. Rapid, widespread job growth comes from the creation of entirely new markets, and the transformation of businesses — even entire industries — to meet new consumer demands. Politicians can shape the context, but only bold actions by business leaders can drive this kind of dramatic progress.

There is a defensive component to transformation as well. The stories of companies stumbling in the face of disruptive change, such as Kodak, Blockbuster, RadioShack and Blackberry are well documented. Less well publicized perhaps are the second and third-order impacts these stumbles have on local communities that lose anchor employers. When a factory shutters, or an iconic company folds, it can rip the soul out of a community.

How can leaders improve the odds of driving dual transformation — renewing their companies in ways that create value and jobs? Our experience suggests leaders first need the courage to choose to change before the need is crystal clear. Convincing data about the need to transform typically arrives only after it is too late to respond. Adobe started its transformation journey while its core business was on solid footing, giving it space for the inevitable false starts and fumbles. 

They will also need the curiosity to explore in the face of uncertainty. Innovation success is never a straight line. There will be mistakes, misdirection and some failures. As most organizations are wired to improve by doing what they’re currently doing better, faster and cheaper, grafting curiosity onto the corporate DNA presents challenges.

It is, however, a prerequisite for success. Singtel, Southeast Asia's leading telecommunications company, has dramatically increased its corporate curiosity by investing in startups, forming a separate group to pursue new digital ideas and running meetings in far-flung locations, like Silicon Valley, Beijing and Tel Aviv, to give its leaders first-hand experience with disruptive change.

By envisioning and investing in opening and operating in new markets, companies can create jobs, pump lifeblood into communities and the economy. There has never been more opportunity for large organizations to innovate, and there has never been a more pressing need. It's now up to today's business leaders to, well, lead.

 

Scott D. Anthony is the managing partner and Mark W. Johnson is senior partner of the growth strategy consulting firm Innosight. They are co-authors of the new book, "Dual Transformation: How to Reposition Today’s Business While Creating the Future" (Harvard Business Review Press).


The views expressed by contributors are their own and not the views of The Hill.