PANERA CEO: Companies Need An Autocracy To Get Ideas Off The Ground

Ron Shaich

Photo: YouTube/TedX

These days, anyone can get a radical idea off the ground. Technology and social networks have made the world more democratic.  The same thing is happening in companies; there’s a more decentralized way of innovating. This unstructured approach has worked well in the digital space and for small companies like data startup SumAll, where salaries are transparent and the entire company helps make decisions.

Because of these successes, people argue that leadership from the top-down is a dying strategy, because it stifles the flow of ideas.  

But Panera Co-CEO Ron Shaich, in a post on LinkedIn, argues that that isn’t the case. He points out that companies like Google crowdsource and use a grassroots approach during “Phase 1,” but when it comes to “betting and executing” on something, democracy has to end.

While Google engineers spend 20 per cent of their time on innovative projects, and the company has small, self-managing teams, Shaich says that its cofounders Larry Page and Sergey Brin devote “100 per cent of their time—or close to it—to focusing on innovations that dramatically advance the company’s performance.”

Shaich writes:

“…in the all-important second phase, where a promising idea evolves into a game-changing strategy, innovation works best when democracy yields to autocracy. Einstein once said, “If at first, the idea is not absurd, then there is no hope for it.” Who but the CEO has the influence—and, yes, the power—to marshal the company’s resources behind an “absurd” idea and drive it through the organisation?”

See LinkedIn for the full post

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