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(originally published by Booz & Company)


The Life Cycle of Great Business Ideas

KANNAN: My first company developed software to manage e-mail and chat. I remember evangelizing the idea of online marketing to companies just starting to use the Internet. And I ran into a lot of resistance. For example, I told the head of customer care at a major bank how our technology could help make it easy for consumers to ask questions. He said, “We don’t want it to be easy for them to reach us. That’s a cost.”

I sold that company in 1999 and came up with the idea of handling customer care calls from offshore locations. I pitched it to the former real estate and travel company Cendant, which owned Avis and Ramada. The man said, “We’d like to start with 200 or 300 agents at an offshore location.” I said we could do that, and he asked, “How big is your company?” I told him I hadn’t started it yet — it was just an idea. So he asked, “Where do you plan to start it?” And I told him Bangalore. Naturally he asked if I had lived or worked there, and I told him I’d visited about 15 years ago. He asked me how many employees I’d ever managed, and I told him: 60.

“Let me understand,” he said. “You’re proposing to start a call center in India, where you’ve never lived or worked. And you want to start with 300 people, and you’ve never managed more than 60? If this darn thing doesn’t work, nothing will.” Today, we have about 7,000 people worldwide, thanks to one individual who believed in an idea.

WHEELER: It’s unclear to me that there are that many truly new business ideas out there. Instead, I see a lot of rehashing and reconfiguration of existing ideas. One thing that brought that home to me recently was Peter Drucker’s book The Effective Executive: The Definitive Guide to Getting the Right Things Done. In 1967, Drucker wrote that the most enlightened executives complement themselves with people whose skills work alongside their own. In other words, the notion of team-based leadership, especially to make change happen, as opposed to the typical sort of single-person-in-charge leadership approach, is not a new idea. But people lost track of it in the heyday of godlike leader figures like Jack Welch. These ideas come and go, and after a while, you start to see patterns. With experience, you can pick out the ideas that will endure versus those that will be fads.

C. SEASHORE: There are cycles within cycles. There will often be a very broad, historical wave of progress in advancing an idea, but within that we’ll see the sine wave pattern coming and going.

I have seen the concept of interdisciplinary teams come into and fall out of fashion four different times. Each time, the power of the group has been undone by leaders who get nervous about distributed authority. At this moment, teams are a well-accepted part of any management process. But right around the corner, the issue of authority and control could change that. We’ve seen that kind of shift back and forth in our U.S. national policy, in politics, and in our organizations.

Learning to Discern

S+B: How do we learn to tell a good idea from an idea that’s not worth much?
We need to have some notion of the performance impact we’re looking for and how to measure it. Over the years, I have found that most executives are smart and hardworking, and want to do the right thing. But they are terrible at critical thinking and analytical rigor — usually because they confuse the factors that lead to high performance with attributions based on that performance. They confuse drivers and results. We see this in everything from corporate culture to leadership to employee satisfaction to customer orientation.

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