Karen Morris is a strategic innovation advisor to public and private sectors specializing in insurance strategy. Previously, Karen served as a strategic advisor at DUAL International Limited, the world’s largest international underwriting agency, and as Chief Innovation Officer at AIG. She also held the roles of International Underwriting Counsel and Head of Product and Service Development and SVP for Southern Europe for Chubb, as well as Growth and Innovation Advisor for WR Berkley. She is a Senior Fellow of The Institute for Innovation in Large Organizations with over 25 years’ experience in law, management, underwriting and multinational business.
Christopher P. Skroupa: Could you describe the latest trends in 21st century innovation, from your perspective, and the impact they may have on the modern company?
Karen Morris: We see continuity and dramatic disparity. Twenty-first century innovation continues the traditional spectrum of traditional genres and degrees of innovation, be it product/service, process and business model or sustaining and incremental through to disruptive. The new “trends” concern previously inconceivable velocity and scale of innovation-led change.
The indisputably most impactful trend, unsurprisingly, is the tsunami of technological innovation. We have almost limitless, almost free computational power. The dissemination of tools to the many and the unspecialized turns yesterday’s customer into today’s accomplished self-satisfying amateur and into tomorrow’s new expert. Information asymmetry is a declining business proposition. And in our Information Age, ultimately, almost no sector will be immune to the transformative force of Big Data and analytics, from pharma to farms; neither will many workers, as these trends compound with advances in AI, advanced automation and robotics to displace a plethora of human industrial and professional actors. Machine learning will mandate that we learn to innovate the what and how of human commercial activity.
Coextensively, globalization and hyper-connectivity have shrunk our world and woven global economies together inextricably, challenging the very possibility of a purely local business. Additionally, trends in financial innovation and sourcing create new pathways to capital and entrepreneurship, dissolving barriers to entry and with them, the circumferences of established industry segments. Today’s businesses’ biggest competitive threat may not come from their competitor, as evidenced by, say, the so-called “sharing economy” or social media phenomena, or that unlikely little low-budget start-up.
Skroupa: You have described the 21st century organization as a “happy oxymoron.” Could you explain what you mean by that, and how we may be departing from a century of established management science?
Morris: The “happy” qualifier was optimistic—maybe bittersweet is more apt? So, it’s an oxymoron in that all companies operating now do so literally in 21st century conditions but some are more ideologically 21st century than others. We have had almost a hundred years of management science spurred by that phenomenon, under-recognized as an innovation, the professional corporate manager, and we thought we knew how the good got great, about winning and quality about sizing, sourcing and optimization, execution and efficiencies. The strategic story with its cast of three—resources, processes and values—romped through various thematic twists familiar to us all. In practice, however, the residual management preoccupation remained counting, controlling and predicting what the company does to make money. It often still does despite the evaporation and decline over the last 16 years of a vast number of previously gargantuan organizations.
My instinct is to look at those three things every company gets to make choices about—resources, processes and values—through a fresh lens. My working definition of the modern company (putatively perplexing for some) is “a community of people united around a common purpose.” This perspective puts people first but not individualistically, rather in how they interact, collaborate and communicate in union as a community. I stress purpose because that is what animates and engages us; it is the antidote to cynicism and complacency and it provokes a shift in emphasis from the mere what that you sell to the richer and more compelling notion of why you exist. It urges the dual reflection comprised in one question: What are we for? Intended operationally in the sense of what job it is that the customer hires our goods and services to accomplish and also what do we stand for, what values bind us? Vitally of course, purpose encompasses the central, immutable purpose of every for-profit organization that of attracting and keeping desired customers profitably. In my work, I have seen this approach liberate and inspire creative thinking, a shift that favors inquiry and understanding over quick answer, discovery and insight over prediction and blinkered certainty and clarity over confusion.
Skroupa: There has been a clear rise in stakeholder regard for ESG and CSR within the 21st Century. How do you see that shaping the future of shareholder engagement and company value?
Morris: As co-founder of The Global Sourcing Council and its UN hosted awards for socially sustainable sourcing, (The 3s Awards), I applaud the elevation in recent decades of investor and stakeholder regard for ESG. The momentum will continue. In part, this is pragmatic. Demonstrable negative consequences inevitably unfold financially, reputationally and legally from governance failures and adverse environmental and social impact.
Economic theories critical of ESG considerations have been soundly discredited in the last ten years by academic research and concerns about fiduciary duty conflicts robustly resolved. The investment community generally accepts that ESG factors do not conflict with superior returns; indeed evidence exists of a curvilinear relationship between social responsibility and financial performance. The UN’s Global Compact and the 2030 Sustainability Agenda supported by the Sustainability Development Goals will both spur industry’s visible commitment to sustainability and encourage discourse and innovation. CSR and CSI will also evolve but I think that profit with purpose will prove to be a stronger and more resilient approach than isolated philanthropy.
Conscious capitalism and impact investing (as if there were investment without impact!) remain nascent, but have impetus. The expanding trend towards mindfulness and compassion as leadership principles and corporate capabilities are also conducive to social sustainability. For all our sakes, for future generations and for the planet, I must trust that unalloyed shareholder value and the self-interest of the pure bottom line have no place in the investment architecture or behavior of the 21st Century company. No one and no corporation can opt out of changing the world. The only question is how much and how well.
Skroupa: As an innovation specialist, how have you seen the capacity for innovation in a company’s internal and external operational strategy shift going into the 21st century? What does that mean for shareholders?
Morris: I believe I was the first person in insurance to have the title Chief Innovation Officer (a title freighted with problems, but that is another story). Back then, despite significant academic literature, innovation as an organizational competence and a management discipline was not widely understood. Innovation subsequently became “fashionable,” at least rhetorically, and no annual report left home without its liberal sprinkling of self-awarded adverbs and adjectives.
But innovation is not what you proclaim but what you do, and in business, it must be done repeatedly, sustainably and scalably. I think the business imperative is indisputable now but still the overwhelming majority of CEOs surveyed report frustration with innovation. Myriad approaches to innovation exist. There are no secrets or miracle formulae. There are, however, tools and practices that massively augment the potential for successfully constructing an innovation capability. Every organization is perfectly designed to do what it does. If it is not innovating, it is a design question. Those of us who have children, or were one once, should know that we are born innovative. The barriers at work tend to be contextual.
The most common obstacles arise if the company cannot make “space” deliberately and uncompromisingly for innovation: temporal, mental and even physical space. As for shareholders, the mantra “innovate or die” is often not true…yet. So, it’s essential to have an innovation agenda, a strategic and tactical plan, even if the current core business appears healthy. If it’s not broke, this may be your only chance to fix it. That takes serious commitment from the top because innovation tends to be uncertain, messy and frustrating and the magnetic pull of the current business is hard to resist.
Each company needs an individualized plan reflective of many considerations from sector to maturity, business model, competitive forces, appetite for risk and interdependencies in the value chain to cite just a few. For some outsourcing innovation, such as open innovation or using an innovation agency may work. Others want to build or buy the capability. The point is to prioritize, plan and then make informed choices on the innovation strategy best suited for your particular environment.
Our world is volatile and change is certain. I think we can confidently assume that investors will choose organizations intent not on replicating yesterday’s success but demonstrably equipped and committed to creating tomorrow’s success today.
Christopher P. Skroupa is the founder and CEO of Skytop Strategies, a global organizer of conferences.