What is your book, Re-energizing the Corporation, about and what perspectives do each of you bring?

Jonas Ridderstråle: Business and society are increasingly characterised by surprise. We don’t know what’s round the next corner or even where the corner is going to be. The company has to decide how to relate to that.

In my book Funky Business I said the answer was to go for innovation. I thought a lot of companies would use the golden opportunities of new technologies and deregulation that allow for more experimentation plus the new values forming among younger generations.

I was surprised by how many didn’t… maybe all the uncertainty led them to focus on trying to reduce rather than produce change.

The title for my second book, Karaoke Capitalism, came out of this frustration. I saw too little innovation from a management and leadership point of view. The criticism we received for these books [both co-written with Kjell Nordström] was, “yes, it’s fun and interesting and written in an appealing way – but how do you actually do it?”

Working with Mark I realised there was a way to translate the fuzzy, weird and sometimes wired stuff I talk about into something more action-oriented and useful – not by providing lists of bankable propositions but by posing the right questions and providing a map and a compass to help you navigate. The new book is a positive message that innovation is necessary and that there are practical tools to help you translate the big picture into delivering change.

Mark Wilcox: The point of us writing together is that Jonas is an integrative thinker – he brings ideas from all aspects of economics, society, and business, and interprets what’s going on. My focus is translating that into practical strategies. The business world is changing. That is the reason why companies need to re-energise. But you get a lot of cynicism and disengagement from staff if they are just told what to do, not why. We have tried to bring those two elements together: why+how=wow! Implementation is straightforward if you understand the fundamentals, but only if you can engage so that modern workers are able to answer the question, “What’s in it for me?”

What do you mean when you say the talent war is over?

MW: A truce has been called in the talent war. Enticing people with money is going about it the wrong way; if you create the right organisation they will seek you out instead. We say, “Build it and they will come.” People need to be around other talented people in an environment that recognises their ability.

JR: We need to change our definition of talent. Of course, intellectual capital in the form of education, experience and creativity matters, but what comes through in this book is the importance of psychological capital – how confident, optimistic and resilient you are in dealing with positive and negative surprise. As a leader this will influence those around you at a deep physiological and psychological level.

The idea of social capital also has an important impact on how people work. People want to belong to something and have something to believe in. We are not only individualistic creatures. We can believe in countries, football clubs, family, God, and many different things, including companies.

I believe highly successful corporations have this. It’s a change from having a relationship with employees that’s purely transactional to having one that’s at least partly emotional.

Leadership is central to your vision of how companies achieve innovation and creativity. What are the essential qualities of leadership and how do you identify or develop them?

MW: The things that matter in selecting leaders are competence, confidence and courage. This is a model that we developed at Sony.

Competence is not a narrow definition of a behaviour or skill – but intellectual horsepower. You need a brain that can look at the big picture and turn that into operational goals: this is the dream and these are the building blocks. So pick people who are smarter than the average bear.

Confidence is the idea of EQ (emotional quotient). Leadership by definition requires followers and following is a choice. Leadership implies enough confidence and ability to build relationships throughout the organisation that give you followership, so it is about being able to understand and relate to others.

Courage, or MQ – motivation quotient – is being driven to succeed not only personally but having ambition for the company too. All change gets worse before it gets better, creating anxiety and resistance. That’s where you need courage in leadership to reassure and re-engage people, or to have the humility to admit when things are wrong. Absence of one of these qualities makes it difficult to sustain leadership through change.

JR: Since psychological and social capital are so important, we have to rethink a lot of the basics in management. Most traditional management presumes you can move from envisioning straight to execution, forgetting engagement. It equates great leaders with those who have Eureka moments. But to deliver real change you have to be able to tap into people’s emotional capital too.

The next step is to create an organisation where the whole is greater than the sum of its parts. This starts with using positive deviance, rather than trying to exterminate the negative. Instead of spending their time dealing with the worst-performing products or people, re-energising leaders develop strengths – individual and corporate.

Aren’t all these creative “positive deviants” difficult to manage? How can you do this in an organisational set-up without creating chaos?

JR: We’re not asking everyone to become a positive deviant; we’re asking organisations not to kill all the positive deviants they already have. Innovators thrive on diversity. However, organisations also need to rely on a number of shared principles that keep people together.

Thinking outside the box requires two things: thinking creatively and a box. We must have a box. To have the courage to take a leap into the great unknown, people need to be standing on firm ground.

You suggest companies might follow the model of religions, or the American dream, in recreating themselves. What implication does this have for people management?

JR: People are tribal: always have been and always will be. Here’s what’s new. The tribe of yesterday was geographically structured – an Indonesian tribe, an Indian tribe, an Italian tribe. Today, place is less relevant than purpose. Global tribes are now made up of people who have something in common: think Hell’s Angels or hip-hoppers. The people’s republic of Paris Hilton has more members than many European nation states have citizens!

Both talent and consumers will search for organisations that can provide them with meaning. We usually find the most extreme levels of social capital in religious organisation, so the logical implication is for leaders to start thinking of their teams or organisation in such terms. Companies with a differentiated and well-aligned tribal bible, such as Virgin or Nike, stand a greater chance of succeeding. We want to belong, but we choose what we belong to.

MW: Being connected to a dream is probably best seen in organisations that are about ideals not profit, for example Médecins Sans Frontières, which has a collective view of humanitarian support in conflict.

What’s HR’s role in all of this and which aspect is most important for HR professionals to take on board?

JR: When something becomes critically important, it needs to become a responsibility for everyone rather than a single department. Otherwise, people will say “that’s not my responsibility: that’s HR’s, or quality control’s, or security’s”. In some senses I see that happening in HR. People have more in common with their HR colleagues in other organisations than with people in their own company. That’s dangerous.

This is a golden opportunity for HR to play a much more strategic role, but it needs to understand and be integrated with operations to add to the differentiation of the company. That starts with the people you attract and retain. Unless they are differentiated from a psychological and intellectual point of view, you won’t be differentiated in the products you sell.

MW: The best days for HR are still to come, but they will be different and more demanding. Rutgers University in New Jersey in the US has done some excellent work with empirical evidence (published in The Workforce Scorecard, see below) showing that differentiation not only works but is the way to maximise organisational value, in terms of share price and sales per employee.

How can you be creative and outstanding if you employ people who fit a certain mould and manage against a framework with no chance for innovation? We need positive deviants. Research suggests that the best thing is to recruit people you really don’t like! It’s the discomfort that suggests they are different enough to bring a new vision.

JR: Never forget that you are unique – just like everyone else! Then, aspire, inspire and transpire to produce change.

Further info

Jonas Ridderstråle and Mark Wilcox will deliver a masterclass at the CIPD’s HRD learning and development event (14-17 April) which is being held at London’s ExCeL. • www.cipd.co.uk/hrd

• Jonas Ridderstråle and Mark Wilcox, Re-energizing the Corporation: How Leaders Make Change Happen, Jossey-Bass (2008). For more information visit www.wiley.com

• Jonas Ridderstråle and Kjell Nordström, Karaoke Capitalism: Managing for Mankind FT/Prentice Hall (2004)

• Jonas Ridderstråle and Kjell Nordström, Funky Business, FT (2001)

• Mark A Huselid, Brian E Becker, and Richard W Beatty, The Workforce Scorecard: Managing Human Capital To Execute Strategy, Harvard Business School Press (2005).

• Jonas Ridderstråle is a visiting professor at Ashridge, consultant and author. Mark Wilcox is a consultant and was formerly director of people and organisational development at Sony Europe.