August 2017

Military leaders are shaped by the nature of the conflicts they face. When they become business leaders, as they often do, their leadership styles reflect the times in which they served. I was reminded of this when I spoke recently with Chris Fussell, the managing director of a consultancy called the McChrystal Leadership Institute.

Until recently, the prevailing view of optimal business leadership has been a “top-down” approach. Top-down business leadership centralizes decision making and requires concerted actions by subordinates who are evaluated by how well they perform against strictly defined duties and goals.

The top-down approach has been strongly influenced by military experience. Militaries everywhere, including the U.S. military, have traditionally followed a top-down model. The types of wars they fought (or prepared to fight) required highly orchestrated activities of tens or hundreds of thousands of people on a battle front. It also required managing highly complex logistical chains, to support the movement of these large armies.

For this reason, 2oth century experience was that when military leaders entered the business arena, their skills were a good match for prevailing conditions. At that time, the world economy was dominated by large companies making and selling complex industrial products that required strict manufacturing conformity. Success meant achieving economies of scale that would keep costs down and sales high.

By the beginning of the 21st Century, however, the business world was rapidly and irreversibly changing. Companies like Google, Microsoft, Facebook, Amazon and others were disrupting existing business models. Companies based on new technologies in transportation, biotechnology and energy were challenging existing market leaders. Meanwhile, instantaneous communication was changing how people coordinated and interacted around the world. Success in business now required agility. Top-down leadership was often too slow to respond to rapidly changing market conditions.

While this was occurring in the private sector, people like Fussell were coming of age as military leaders. They realized that the trends that were changing business were also prevalent in warfare. Instantaneous communications and the broad availability of technology had created adversaries that used small coordinated groups to act quickly. It was no longer sufficient for the military to prepare to fight wars along a battle front. These adversaries would never fight that way

What was required were “servant leaders,” people who Fussell describes as having the skills to create an organization that combines strategic oversight with small group agility. Servant leaders provide transparency to subordinates. They don’t prescribe in granular detail the “how” to execute strategic vision, but fully express the “why.”

Subordinates are given autonomy to make rapid decisions in the moment, if necessary, to achieve the strategic goals of leadership. But it is not complete autonomy. Servant leaders require accountability against their expressed goals. This ensures that key values such as ethics and compliance with legal and other norms are honored and that the overall strategic objectives articulated by the leader are followed.

For Fussell, the key to servant leadership is that it is “not enough to talk about it. You have to create a process that drives communication with enough speed and transparency.” This allows groups to form and operate with autonomy, but within a structure of accountability. You get people to work together not by telling, but by showing.

Now an organizational expert helping businesses grow, Fussell regularly sees that the skills he and his peers gained through military service have broad application in today’s rapidly changing economy. He has helped many businesses use servant leadership to make a significant difference.

And in the process, he follows in the footsteps of so many prior military leaders who successfully applied their leadership lessons to business.

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Successful entrepreneurs learn from failure as well as success. I was reminded of this last week when I looked into Loci, a start up in the DC region that a growing number of people are talking about.

Loci is a very interesting mash-up of two big market opportunities: intellectual property creation and Blockchain database application. In talking with John Wise, Loci’s founder, I found his journey in creating the business as interesting as the business itself. His story of failure and reinvention is valuable for anyone who either is thinking about starting a business or is mired in the weeds of trying to succeed and wondering if it’s time to quit.

Wise’s vision was to create a marketplace of invention ideas – a place where inventors could see not only what had been patented, but also what had been invented and had not been patented. He believed that a comprehensive catalogue of inventions would dramatically change how inventions were created, protected and sold. The problem was that the technology didn’t exist to implement that vision.

Over time, after a number of failures, he and his team were able to develop a technology approach that supported the comprehensive information collection his marketplace needed. But commercial success did not follow.  There was an unexpected issue: solving the technology problem wasn’t enough.  As Wise learned, “inventors didn’t want to freely share their unprotected ideas.”

What had been a technology challenge became a business model challenge: how to allow inventors to use and benefit from his marketplace without giving up confidentiality. Wise solved this problem by selling his technology to lawyers, who could then remarket Loci’s technology to inventors. Selling the technology in this way, Wise and his team could utilize the confidential relationship that exists between attorney and client.

Now that Wise had solved the technology challenge and the customer adoption impediment, he had created something that all entrepreneurs dream of: a successful business model that matched his technology with paying customers.

Yet he was still not satisfied, and he asked himself how he could grow his business more quickly. Was there a way to make his marketplace large and complete his original business vision? How could he protect an invention’s confidentiality without using lawyers as intermediaries?  

The missing piece was Blockchain, a rapidly emerging data storage methodology. Blockchain is becoming widely known in startup circles as the backbone of Bitcoin and other cryptocurrencies, but it has broader application. Wise and his team were drawn to its permanence and to the inherent confidentiality of a Blockchain database, features that made it very attractive as the last piece of the puzzle.

Applying this last insight, Wise believes that after a number of failures, he and his team have learned and positioned his business for rapid commercial growth. He views the growing interest in his company and its approach to inventions as validation for his vision and is excited for Loci’s future. But he doesn’t ignore how far he has come, finding recent workdays “almost a lucid dream.”  

Moreover, Wise believes that his experience dealing with prior adversity makes him more confident and prepared. He says that “a year ago I would be freaking out. Instead, today I propose a deal” when he gets calls from much larger potential partners.

Having gone through his startup experience, what advice does Wise give to other entrepreneurs? For him, it is essential to embrace failure and learn from it. It’s an inevitable part of being an entrepreneur, and you “must accept and understand that you are never right, and there is always a better way to do it.”

His conclusion? “Everyone has the will to succeed, but few have the energy.”

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