Wiley & sas business Series

    Figure 8.2   Dynamic Value 

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of the real-world challenges that might prevent good ideas from being 
executed. 
 Finally, revolutionary innovation is often best left to a separate, 
dedicated team. Their names vary; often named SWAT or Tiger teams, 
their focus is on developing creative solutions to challenging problems. 
Usually multidisciplinary, they are granted signifi cant freedom and 
encouraged to challenge and question assumptions. By nature, they 
are usually in direct confl ict with the performance engine. Because 
of this, their sustainability is heavily dependent on the support they 
receive from their leadership team. They often also act as the bridge 
between the research and development team and the business as a 
whole, looking for opportunities to apply novel inventions in a com-
mercial context. 
 Managing the dynamic tension between these groups is both the 
challenge and the solution. Tension lies at the heart of innovation. Too 
little and the organization becomes complacent and lazy, comfortable 
in the belief that it ’s doing the right thing. Every empire has eventually 
ended, from the Babylonians to the Romans to the British. Whether 
it ’s measured in months or years, complacency is inevitably the start of 
the end in a competitive market. 
 However, too much tension and the organization becomes para-
lyzed by political gridlock. Each of these groups usually offers a wildly 
different perspective on what ’s important to the business. And, each 
is usually right in their own way. Groupthink is a dangerous force and 
too much time spent in a self-reinforcing culture can lead to irrational 
or ineffi cient decision making.  
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 In the worst cases, the chasm between 
these groups becomes so signifi cant that it fractures the organization. 
 The trick to managing this tension is to create counterbalancing 
forces that sustain and temper. Creating tension is as easy as estab-
lishing different groups with directly confl icting objectives. While 
there should be no overlap in the  outcomes  owned by each group, there 
are signifi cant  benefi ts to having these outcomes being somewhat 
contradictory. 
 For example, every bank maintains one group responsible for risk 
management and one or more groups responsible for customer acqui-
sition. Objectively, these groups are in direct confl ict. To minimize risk, 
all a bank needs to do is to set acceptable risk thresholds as low as 

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possible. This would minimize defaults and signifi cantly  improve 
profi tability across all products. However, doing so would usually 
severely impact market growth and share value—in avoiding  all  risk, 
the bank would forgo customers who, while risky, might never default. 
This would also put their customer growth rates lower than the mar-
ket average. 
 In this model, each group is responsible for a different outcome. 
The risk group is responsible for measuring and managing portfolio 
risk while the customer acquisition team is responsible for ensuring 
competitive or market-leading customer growth volumes. While dis-
tinct, these outcomes are interrelated. And by maintaining this con-
fl ict, the bank ’s leadership team can ensure they have access to equally 
valid (if different) points of view when making decisions. 
 These different points of view help create tension. They also help 
sow discord; more than one organization has collapsed into a collec-
tion of holding companies or personal fi efdoms because of it. While 
some tension encourages creativity and debate, too much creates a 
dysfunctional culture. The trick to tempering this tension is to create 
de facto diplomats, knowledgeable about the organization ’s broader 
context and capable of balancing the otherwise-polar positions these 
groups will sometimes take. While not usually an explicit part of their 
job description, their diplomacy comes through a combination of colo-
cation and professional mobility. 
 Rather than being tied solely to one of the three groups, they 
move between them on a relatively regular basis, gaining exposure 
to all aspects of the business. Not only does this help temper political 
differences but it helps develop their understanding of the business, 
 building their domain competencies and encouraging career progres-
sion and retention through exposure to new opportunities. To build 
trust and understanding, they work alongside their peers while in a