Innochat Transcript – 5 August – Fixing an Innovation-averse Corporate Culture
August 5, 2010 by Andrew (Drew) · 3 Comments
Another fun time with the excellent moderation of Renee Hopkins – always a pleasure. A great topic which was well turned over by those present, but as with all #innochat topics there is always room for more. Take a look and weigh in.
And next week it looks like we may discuss: cultural problems in an org where ALL is innovative and nothing actually gets done!
Innovation Folklore & Fairytales – Self deception and the stories we tell
July 6, 2010 by Andrew (Drew) · 1 Comment
The most erroneous stories are those we think we know best – and therefore never scrutinize or question.
- Stephen Jay Gould
As a process to connect people and transmit ideas within organizations, effective communication is essential for fostering innovation. 
Aristotle told us, nearly two and a half thousand years ago, that if communication is to change behavior, it must be grounded in the desires and interests of the receivers. Organizational life relies on folklore and myth to create a connection between its members that influences their behavior, including the creation of innovation.
Folklore serves as mental scaffolding to help us gather, sort, organize, and support our thinking about the world around us. From an organizational standpoint, folklore provides what Ronald A. Heifetz termed in Leadership Without Easy Answers a “holding environment.” A holding environment enables a witness to the folk tale to distance her or himself from present reality. It enables the conception of possibility, and is a key ingredient in sense-making. To understand how it can inform, or impede, innovation, it’s necessary to explore folkloric communication and the way it helps define boundaries for action and dialogue in the life of organizations.
A billion little pieces
The universe is made of stories, not atoms.
- Muriel Rukeyser
Storytelling reveals and explores the potential of individuals and the social context in which they find themselves. Stories open the organization to the power and relevance of innovation as the organization members seek to grow and evolve it over time. Folkloric communication helps to define organizational reality, providing deeper levels of meaning. By capturing reflections of the past and displaying them in ways that are engaging to the present, it brings to light the fundamental building blocks of the organization which can then be used for creative ends.
In their reflective work on the possibility of a more holistic model of organizational life, A Simpler Way, Rogers and Wheatley note that “most people have a desire to love their organizations.” This notion drives much of the latent, often unexamined, innovation in organizations. It also means that organizations embrace stories about themselves that may not be factually accurate.
From the big reveal to the big conceal
Storytelling reveals meaning without committing the error of defining it.
- Hannah Arendt
The identity of the organization as it is expressed–its potential–speaks to participants’ own potential. Participants, through folklore and stories, envision places for themselves in the organizational whole. They see ways they might add to, or live out, a part of organizational history. Organizational folktales become ways for building shared coherence, defining the “fundamental integrity about who we are.” The key is shared commitment to the intent behind a story. Regardless of whether it’s a tall tale or true account, if enough people in the organization recognize its validity, it will have enough weight to influence practices.
The boundary-making qualities of folklore show organizational participants how to transgress, to reach beyond them, and build new tales. The dual nature of folklore is its ability to define both the boundaries of organizations and the people within it. Folklore in this manner is fundamental to the culture of an organization through its constant interaction with the organization’s own social dynamics.
Culture is both a product and a process. As a product, it embodies accumulated wisdom from those who came before us. As a process, it is continually renewed and re-created as newcomers learn the old ways and eventually become teachers themselves.
– Bolman & Deal (1997, p. 217)
At its root, folklore in organizations is a metaphoric framing device, providing a context in which newcomers to organizations see ways they might engage with the organizational whole and leave their own mark. For this reason, the guardians of organizational folklore have significant power within it. They set the tone by determining when and where folklore may be revealed. They choose the focus of the delivery. Their opinions and attitudes directly color the way in which others may view the organization. Stories are a filter through which others catch glimpses of past organizational life. For any person new to an organization, this may be intimidating or welcoming, depending upon the manner with which the mythology is engaged.
It is vital, however, for people to feel at ease with an organization’s folklore if they are to become an engaged component of the systemic whole and add their own creative spark. Avoiding folktales, or denying their power within the organization, is the denial of an elemental part of how the organization operates. Folktales exist for numerous reasons, and each serves a unique purpose for the organization, be it framing patterns of behavior, orienting newcomers, or galvanizing the weary. For many organizations, however, the concept of a place for myth and folklore is not only foreign to them, it is anathema to their technical and rationalistic worldview. What need do they have for stories when there is a budget to be balanced and a headcount to be reduced?
There are a thousand stories in the naked city
To be a person is to have a story to tell.
- Isak Dinesen
The dark side of organization myths and folklore is that they may be the result of confabulation or impression management. They are tales told with willful, ill intent, and can play havoc with an organization’s success. Sometimes these tales may be used to create distractions, or to hide the true intent of storytellers.
In the case of confabulation, the reporting of events that never happened, it creates confusion and distraction. Rather than reinforcing a deep-seated truth about the organization which all may tap into as a source of inspiration, like the most powerful folktales, it causes chaos and distraction. Think of this factitious behavior as a mild version of Münchausen’s Syndrome, without the tendency to invent illness.
That and four bucks will get you a cup of Starbucks
Stories are the creative conversion of life itself into a more powerful, clearer, more meaningful experience. They are the currency of human contact.
- Robert McKee
A more hazardous practice is that of impression management. In both sociology and social psychology, impression management is a goal-directed conscious or unconscious process in which people attempt to influence the perceptions of others about a person, object, or event. Usually this practice is adopted for the improvement of their own standing within a given social context, and is accomplished by regulating and controlling information in social interactions: access to information, the way that information is presented, and the rules by which it might be shared are controlled.
The resulting distractions, as people seek to sort fact from fiction, cause confusion and frustration. One other victim in this process is the truth, without which clear thinking about innovation is sacrificed.
Impression management is usually synonymous with self-presentation, in which a person tries to influence the perception of their image. Impression management also refers to practices in professional communication and public relations, where the term is used to describe the process of forming a company’s or organization’s public image.
An organization that embraces its mythic traditions and openly embraces its folkloric symbols is one that is living with rare vigor. If the folklore and myth resident in an organization are used to galvanize and energize existing members, and create engagement points at which new members can find a way to contribute and belong, the resulting creativity and innovation will be remarkable.
A good story cannot be devised; it has to be distilled.
- Raymond Chandler
A Better Yardstick / A Better Meter Rule – Measuring Innovation Performance
April 6, 2010 by Andrew (Drew) · Leave a Comment
Just because you can measure it doesn’t mean you should
Any measurement must take into account the position of the observer. There is no such thing as measurement absolute, there is only measurement relative.
- Jeneatte Winterson
One of the great challenges for those focused on improving their organization’s innovation culture is the desire, at the end of the day, to be able to point to something and say, “that’s better than it was before.” That desire, to measure our performance against an agreed upon set of measures, is not a bad thing. The way that need is acted out in the organization is where it comes undone. This is most problematic when the push is to measure in purely financial terms.
The drive to see some kind of return on innovation investment has a strong pull. In a time when every penny, cent, fen, or kopek is being counted with scrupulous accuracy, the notion of not counting the programmatic contribution of innovation in monetary terms seems ludicrous. Unfortunately, if you were going to spend money on a program that offered fast return on your investment, spending on changing your innovation culture would not be the wisest investment. Investing on your innovation culture is a long-term play, as they say. Yet, it should be a focus for investment and it should be measured.
The key initial measures to watch for when building an improved innovation culture are:
Overall we are talking about a process that reduces cycle time.
In fact, the Boston Consulting Group’s 2009 Annual Innovation Report highlighted the fact that cycle time, specifically “time to market,” was one of the most “chronically underutilized metrics” in their survey of companies. Which they also saw as being highly ironic given that many companies identified a lack of speed as their greatest weakness.
I’ll know it when I see it
Our scientific age demands that we provide definitions, measurements, and statistics in order to be taken seriously. Yet most of the important things in life cannot be precisely defined or measured. Can we define or measure love, beauty, friendship, or decency, for example?
- Dennis Prager
Cycle time reduction is a great first measure because it can be applied across all aspects of the innovation processes at play in your organization. From decision-making, to selection of team members, applying the measure of cycle time reduction sharpens the way all innovation is approached. It has a distillation effect. In helping you to focus on speeding up the process of concentrating the right resources on the most beneficial projects, cycle time reduction also demands attention on quality, too.
Poor quality actually results in a systemic drag later in your innovation process. That initial poor quality may also have a knock-on effect, causing an escalation of poor quality further down the line as corners are cut in order to meet the initial cycle time reduction. By managing all cycle times and aligning them with quality practices your organization becomes more robust and resilient. The outcome is not only better performance but faster performance which can be seen across the whole organization.
I can count it but I can’t count on it
The only man who behaved sensibly was my tailor; he took my measurement anew every time he saw me, while all the rest went on with their old measurements and expected them to fit me.
- George Bernard Shaw
In a world of constraints, meting out investments may be a matter of short-term economic survival, but it will not build a foundation for long-term success. To create and improve and innovation culture – a culture that fosters economic expansion and delivers to the top and bottom lines – organizations need to invest in those processes and practices that change behavior. In the post, Working The Processes of Innovation – Learning to Love & Live Failure, we explored the power that comes from building a tolerance for appropriate failure. Recently this was reinforced in Megan McArdle’s piece in Time magazine, In Defense of Failure,
It sounds like a dubious aspiration, but one of the more pressing priorities for America this decade is to preserve our cherished freedom to fail in this country…America allows its citizens room to fail — and if they don’t succeed, to try, try again. Somewhere between two-thirds and three-quarters of all Americans report that they have considered starting their own business, whereas in Europe that number is only 40%.
Here McArdle talks about the power of this freedom:
McArdle on America\'s Need to Support Failure
How do we measure failure and the power of failure in moving us toward a better, brighter, more abundant future? It should be interesting to note that measuring innovation is also top of mind of one of the world’s most active philanthropists, Bill Gates. His concern is not that we aren’t measuring innovation failure, although he did popularize the concept of “fail forward fast” during his time leading Microsoft, his concern is that most people are failing to measure innovation at all.
When all is said and done – have the right satisfaction measures improved?
Without a measureless and perpetual uncertainty, the drama of human life would be destroyed.
- Winston Churchill
Once again the Boston Consulting Group’s 2009 Annual Innovation Report offers another key insight into the dynamic tension that exists in measuring innovation performance in terms of outcomes. The top measure employed by companies seeking to assess their innovation performance was customer satisfaction but the second highest measure was overall revenue growth. The expense of increasing the former measure would seem to have a direct negative effect on the latter and yet there they are parked beside each other at the top of list of robust measures for innovation performance.
The performance of any innovation truly is measured in the eyes of the customer, be they an internal customer or a market-based customer. Customer satisfaction is the end-of-the-line measure for all innovation. If an innovation cannot drive the performance of that measure then what purpose does it serve? One of the most powerful tools for revealing the impact of an innovation is the Net Promoter® Score (NPS). This concept was first widely made known through the work of Fred Reichheld in his book, The Ultimate Question.
The NPS is both a loyalty metric and a discipline for using customer feedback to directly influence behavior within an organization. One company using NPS to measure its innovation effectiveness is Logitech, the computer peripheral manufacturer, which uses it as the final consumer acceptance testing measure. By using this score Logitech can tweak late-stage products to maximize their effectiveness on release to market. They test. They measure. They tweak. They hold or go to market. It should be noted that the best performing products, with the highest NPS, are also the products with the highest revenue on release.
So, it would seem you can serve one goal with two measures, after all!
There are two possible outcomes: if the result confirms the hypothesis, then you’ve made a measurement. If the result is contrary to the hypothesis, then you’ve made a discovery.
- Enrico Fermi
What have you discovered as you attempt to measure your innovation?
Innovation Culture: Analytical and Intuitive Thinking
March 21, 2010 by Andrew (Drew) · Leave a Comment
Innovation Culture: Analytical and Intuitive Thinking Framing Post
This post is to trigger dialogue on innovation in the moderated Twitter #innochat on Thursday, March 25 at Noon, EST (USA) – all interested parties are welcome to join in. Follow #innochat to join at that time.
Fred Collopy, a professor at the Case Western Reserve University in the Weatherhead School of Management, explored the architect/artist/designer Maya Lin’s design method in a great chapter in the book, Managing as Designing. The quote that struck me as being very apropos for innovators is from Lin, when she stated, “My creative process balances analytical study, based very much on research, with, in the end, a purely intuitive gesture.” I see that this combination of approaches to innovation challenges, marrying the analytical and intuitive, as essential to discovering and creating the best solution to meet the existing need.
Below is a scan of the map that Collopy developed to describe Maya Lin’s process. (Click to enlarge)
An innovation culture is one that strives to create solutions to its most pressing challenges, including (perhaps, especially) those of its clients. It is a robust, searching culture. Intellectually curious and driven to results, it rides a line between the discovery of the new and the direct and specific application of that discovery to meet a present need.
Innovators act differently than analysts or decision-makers. They act differently than artists. Innovators need to borrow from both to be successful. Innovation can be an extreme practice. It tends to call on all of the faculties of those engaged in it. It is driven by the immediate context. It is driven to specific outcomes. It engages the whole person’s mind. It doesn’t reside solely in the domain of analysis or solely in the domain of creativity. It straddles both, or better yet, leans into one or the other as necessary for the task or challenge at hand.
That balance is key.
Questions to ponder:
1. Do you agree that innovation demands both analytical and intuitive thinking? (Why?)
2. How do you combine both of these practices in your innovation work (with clients in particular)?
3. What challenges do you experience in trying to accommodate both ways of thinking (and acting)?
Additional readings in the following links if you’d like to explore further:
A series in John Nofsinger’s blog at Psychology Today on Analytical/Intuitive Thinking
Part I – Determine your thinking process
Part II – Know yourself
Part III – Risk aversion
Part IV – Patience
The home of the website supporting Managing by Design at the Weatherhead School of Management
Knowledge Management – the Engine for Innovation
March 20, 2010 by Andrew (Drew) · Leave a Comment
In advocating for innovation it seems as though “innovation happens” is the mindset carried by many mistaken adherents to the cause. You just have to trust it and it will come, they say (or not). This is the equivalent of saying “magic happens” when faced with a “Mechanical Turk”. Data goes in one end, magic happens, and a desired output comes out the other end. I’m sorry – innovation is not based in gold-pooping unicorns, nor is it something that should be left to the whims of inevitability or caprice. Innovation needs to be specifically and studiously fed a fuel of knowledge in order to succeed. And if knowledge is the fuel, then knowledge management is the engine that drives innovation.
It’s not what you know, it’s what you do with what you know
Of central importance is the changing nature of competitive advantage – not based on market position, size and power as in times past, but on the incorporation of knowledge into all of an organization’s activities.
- Leif Edvinsson Swedish Intellectual Capital Guru
When Peter Senge defined The Fifth Discipline (as opposed to The Fifth Element) in 1994, one of the tenets of embracing the concept of becoming a “learning organization” was the use of effective knowledge management. Knowledge management in his model was a way to accelerate the performance of the organization so that it might better think holistically and systemically, and thereby design better solutions to its challenges faster. It required that organizations not only attract and retain bright people, but that they harness the thinking of those bright people in such a way that their efforts could be captured and populated across the organization.
The issue with knowledge in organizations is not that it isn’t available; the problem is that knowledge is not readily available at the time and point of need. As this dilemma relates to innovation, it is an even bigger issue. Innovation places huge knowledge demands on organizations. To be truly effective it must reach across all knowledge sources both internal to the organization and increasingly, thanks to open innovation practices, external to it. Knowledge must be easily and freely available for recombinant thinking approaches and to be applied directly to pressing challenges. Unfortunately, many knowledge management solutions sacrifice ease and access to the twin overlords or taxonomy and ownership.
Permission-based knowledge management systems, the ones that sequester information into functional groups with associated administrative and rights management restrictions, do not foster and promote the kind of knowledge transfer for which the learning organization calls. They kill it. Is there a place for intellectual property protection and management? Absolutely. But knowledge management need to head towards greater freedom to be of better value for innovation.
Groups filled with big brains and bright ideas applied to thorny issues equals…
Imagination is more important than knowledge
- Albert Einstein
What is the promise of knowledge management? For one thing it enables organizations to leverage their tacit knowledge more broadly among their members. By applying knowledge management to key data sources, and capturing the experience of organization members in an explicit and coordinated manner, the opportunities to decrease the innovation cycle time are correspondingly increased.
To better coordinate knowledge management, via systems and processes not only technologies, user-led innovation communities may be created. Innovation communities when people within an organization who work together explore and create new approaches and then implement them. They are usually a subset of communities of practice or information communities (both of which are commonly tied to functional expertise.) Communities of practice are communities or networks of individuals and/or organizations that coalesce around an information commons, usually a body of knowledge that is open to all on equal terms. The Project Management Institute is one such community of practice.
Knowledge management will never work until corporations realize it’s not about how you capture knowledge but how you create and leverage it.
- Etienne Wenger
From communities of practice, innovation communities may form to directly apply their shared knowledge in new and interesting ways. As the costs of diffusing knowledge are getting steadily lower, as computing and communication bandwidth expand, the geographic dispersion and cultural diversity of these groups may increase, too. This makes the notion of having the big brains all in the same room for innovation to occur (e.g., the Manhattan Project) is no longer a necessity. But as a proponent of both knowledge management and face-to-face communication (and relationship-building) I see a place for them both to continue to coexist.
Dick Brandon once said that, “documentation is like sex: when it is good, it is very, very good; and when it is bad, it is still better than nothing.” In a sense, knowledge management exists in a similar vein. Some, no matter how rudimentary, can be helpful in the development of innovation. The challenge is to “wire up” knowledge so that it is readily available to inform innovation practices, such as, design thinking, ethnographic study, and prototyping. That process is often best addressed at the human interface level.
The innovation wisdom of individuals, crowds, communities, countries
Knowledge without wisdom is a load of books on the back of an ass.
- Japanese proverb
The purpose of knowledge management is to help an organization marshal and management it’s knowledge for the best gain. Knowing who to connect and what to connect them to is a part of the wiring up previously mentioned. It takes a clear understanding of the social network at play in an organization to understand who those people might be that can most benefit from both access and connection. It takes a form of organizational wisdom that many organization’s lack.
In a previous post I discussed a variety of impacts that may be felt through an over-reliance on the formal power resident in the organization chart. Knowledge management cannot fall prey to the turf battles that organization charts so often represent. Instead it must be liberated so that the cross-pollination often necessary for the greatest innovations might occur. Because even if you manage your knowledge carefully – you organize it, structure and store it, within an inch of perfection – if people aren’t using it to help make your organization more effective, efficient, and successful, what’s the point. A better filing system is not the heart of creativity. But knowing and using what you know?
There’s genius lurking in those files. It is just waiting for the right people to use it.
There’s no such thing as knowledge management; there are only knowledgeable people. Information only becomes knowledge in the hands of someone who knows what to do with it.
- Peter Drucker
Customers in Innovation – Sound and Fury Signifying…
March 12, 2010 by Andrew (Drew) · Leave a Comment
The watch words for innovation at present are “open innovation” and “customer-centricity”. The idea that the customer should not only be invited into the innovation process, they should be at its very heart, is of paramount significance. The oft-quoted Henry Ford, “If I’d asked my customers what they wanted, they’d have said a faster horse,” for years held sway over product development. The thinking was that customers don’t know what they want until we tell them and sell them. That may have worked in the era of Mad Men, but customers’ access to data and ability to wield it to their own purposes means that that they can be excluded from product and service innovation at a producer’s peril.
We don’t know what we don’t know
If you’re not serving the customer, you’d better be serving someone who is.
- Karl Albrecht
The fact remains that most companies producing products and services have only a limited perspective on their customers’ needs (as those needs relate to their set of offerings). Which means often the stewards of innovation are flying blind. Recently April Dunford, of Rocket Watcher, posted on why it might be important to run a customer advisory board. Her directives speak to the need to include a customer perspective in the mix that not only provides insight into the customer experience of your products and services, but one that also reaches beyond the horizon to provide a glimpse into potential new markets.
Without customers’ perspectives it is very hard to know limits of what you do and do not know. Inviting them into the mix means that even if you can’t name the dragons at the end of your world (read: market) you can at least see them. The other opportunity to be created by including customers’ views in your thinking is that not only will the community that they form will feed you new ideas and innovation options, that same community will also generate the goodwill that comes from an expanded network. You can create the opportunity for customers to share and network with each other, which may not have an immediate benefit to you, but you better believe it will have a positive return.
One of my personal guides as I ventured into the world of consulting services many years, Nancy Truitt Pierce (the Founder and CEO of Woods Creek Consulting Company in the Seattle, Washington state area) was a great proponent of the customer advisory council. She actually turned the advisory council concept on its head and made networking the heart of its reason for being. She now has a model of consortia that encompass the needs of her customers: technology sector executive peers, senior executive peers, sales executive peers, and CFO’s. Each group meets to share insights, advise each other, and Nancy moderates. Long term many members have become Nancy’s clients and she brings their insights back into her firm to innovate her service offerings
Our customers don’t know but they can show us
Be everywhere, do everything, and never fail to astonish the customer.
- Marshall Field
For many companies though, the customer cannot conceive what they need because they are too close to their issues. No matter how hard they might try to articulate their concerns they fall short. This leads to poor communication and inadequate responses on the part of market to meeting their needs. This is not satisfactory for anyone.
Again, the key is to get closer to the customer so that the path to innovation is as pain-free as possible. The design power-house, IDEO, when working on product design opportunities for their clients uses ethnographic study (targeted, field-based observation) to achieve this end very readily. They have perfected a multi-layered approach to observing the customer experience, that may include questioning, but more often than not involves direct experience of customer’s challenges live, in real-time. Sometimes it involves their staff essentially moving into the home of a customer in order to glean first-hand experience. One of IDEO’s partners, Proctor & Gamble has actually adopted this concept and uses it to drive their own innovation processes.
P&G’s approach is called the “Living It” program. Living It creates opportunities for P&G’s ethnographers to live with customers (willing participants), to observe how they go about their everyday lives. The ethnographers get to rapidly identify customers’ needs first hand by seeing what their customers are trying to do, and how they might be hampered by their environment or the inadequacy of their tools. They can then use these insights to identify potential new products that would make customers’ everyday lives easier. This focus on understanding customers’ needs through jobs and desired outcomes is absent from the question and answer-based innovation process that passes for customer involvement in many companies today.
Opening innovation to the customer experience
The purpose of business is to create and keep a customer.
- Peter F. Drucker
The next step beyond experiencing the customer live and in real-time is to actually open the innovation process so that they are not passively observed; open innovation brings customers into the mix to co-create and design solutions that meet their needs without the filter of internal enterprise interpretation. This kind of inclusion would have been considered nightmarish in past generations. “Invite the customer to develop their own products?! Why the heck would I do that?!” might have crossed the mind of more than one researcher or product developer. The inherent fears at play driving that reaction were loss of control and like Nosferatu, once they were invited into the process they might never leave. The shock was that not only did customers behave themselves, but given their vested interest in the design outcome, they were enthusiastic collaborators.
Stefan Lindegaard, the founder of innovation consultancy 15inno based in Copenhagen, is one of the most vocal proponents of the open innovation model. His advocacy for open innovation is breaking open the discussion about its utility for all types of companies. Previously open innovation was reserved as the practice of larger companies with the funds to develop a customer engagement model (see P&G above), yet Stefan is making the case that open innovation should not only be embraced by all companies, no matter how small, but that it should tap the widest global network possible. His reasoning, why limit yourself when who knows where you might make the best solution connection?
Not every suggestion warrants action (but they all warrant a response)
Innovation comes from the producer — not from the customer.
- W. Edwards Deming
What happens when your open innovation network comes with ideas that are not the right fit for your organization? One of the failings of inviting the customer into the innovation experience is that companies do not actively manage that experience. If you think a customer having a poor purchasing experience can cause havoc you haven’t seen anything until you have seen a customer relationship poorly managed when it is invited into a closer discussion about product development and is ignored, or worse yet, discounted.
Including the customer in your innovation processes requires just as much planning and management as your marketing and sales management processes. To neglect this preparation, or poorly implement the management of the customer experience as you bring them into your organization’s systems and processes can not only damage the immediate client relationship it can actually damage their total lifetime value to your enterprise.
Before a customer suggests an idea that you know you cannot and will not implement, develop a plan to address that potential problem. Either, remove the circumstances in which that request might be formed by developing a set of clearly defined and constantly visible expectations against which you can manage their experience. Or, develop contingent strategies that acknowledge their contribution and defuse its impact. Failure to do so might result in disastrous consequences. Losing customers while trying to meet their needs is certainly not a good result from your innovation efforts.
After all, you are trying to meet their needs not create new ones that they will seek another provider to solve!
Innovation Is Not Clockwork – The Challenges of Innovation Systems
February 19, 2010 by Andrew (Drew) · Leave a Comment
A system is a network of interdependent components that work together to try to accomplish the aim of the system. A system must have an aim. Without the aim, there is no system.
- W. Edward Deming
Everything is connected so beware the tragedy of the commons
Previously we addressed the need to create innovation processes that bear the risk of innovation. This boils down to two aphorisms, “if you can’t stand the heat get out of the kitchen” and “it is okay to make mistakes as long as you learn from them.” Not earth-shaking concepts, certainly, but creating an environment within existing business systems that might allow practicing that behavior is a true challenge.
Businesses are complex systems. They are not clockwork mechanisms. They contain myriad subsystems each of which is responsible for producing value through a series of interdependent relationships. This doesn’t even consider the ecosystem within which the business resides; such as, the external competitive market, supply chain and customer segments. The common mistake when attempting to build innovation practices within an enterprise is to “ring-fence” the practice within a functional domain. Relegating innovation to Research & Development or Product Development may provide it with a home but does not necessarily mean it will flourish. This misunderstanding, that innovation is not connected to anything else, almost always backfires as other functional subsystems respond in unanticipated ways.
Ignoring the interconnections between organizational subsystems causes havoc when innovation is demanded of all areas of the business, instead of one function, and the competition for resources becomes fierce. The heart of this conflict is called, “the tragedy of the commons” and it occurs when the subsystems in an organization are placed in a competitive relationship with each other and are forced to act in ways that are destructive to the organization overall. The current push for “innovation everywhere” is a pattern that is reinforcing this dilemma.
For example, without establishing strategic priorities, a consumer products firm I worked with decided that all departments without failure were going to improve their processes. The number of performance improvement projects proliferated tenfold overnight. As a result, project resources were spread so thin nothing was accomplished, but the effort was not canceled until six months had been burned. The result was “initiative fatigue”, a loss of support for organizational leadership, and a drop in market performance. The very opposite of what was desired.
Don’t control the players – change the rules
Is the system going to flatten you out and deny you your humanity, or are you going to be able to make use of the system to the attainment of human purposes?
- Joseph Campbell
If we cannot change the system via simple choices how can we create a better environment for innovation within our organizations? Rather than telling people what to do, guide their behavior by changing business rules within existing business systems that drive the behavior you wish to see.
In his great book, Predictably Irrational, behavioral economist Dan Ariely explores how expectations, emotions, social norms, and other embedded social and psychological forces influence our behavior. One great insight he presents is the way in which the human brain is wired to adopt certain patterns of behavior based on first impressions and decisions. These impressions are imprinted on our brains and govern our approach to similar circumstances. We have “anchored” our experience and even in the face of evidence may act against our own interests because of its influence in our thinking. I also explored this process, which is directly related to priming, in a previous post.
To change this imprinted pattern of thinking it is necessary to change the rules. Luxury goods manufacturers understand this explicitly, as Ariely explains. He notes the case of black pearls which when first introduced to market were a flop. They were gun-metal grey and looked like oversize ball bearings. It took James Assael, an Italian diamond and pearl dealer, to change the rules. He made a deal with Harry Winston to display them in the window of his 5th Avenue jewelry store in Manhattan surrounded by other precious gems. Assael also placed full page advertisements in glossy magazines to promote this new luxury item. Suddenly, black pearls were all the rage. Why? In order to make someone want something he changed the rules and made it scarce. DeBeers has done this for years with diamonds, too.
It is much more effective to change the rules of the game so that it is to most people’s advantage to make choices that are good for the whole system of innovation. What current rules of innovation could you invert, subvert or otherwise transform to create the behavior you’re looking for in your organization?
Foresight always wins and preparation trumps reaction
Everything affects everything else in one way or another. Whether you are aware of that or not does not change the fact that this is what is happening.
- John Woods
Innovative solutions to problems affecting complex systems take time to design, develop, test and implement. If we wait until the problem develops before applying our resources to addressing its root cause, we may be too late to take meaningful action. In the previous post on processes I addressed the notion of anticipatory behavior. That kind of foresight applied to present need can be a powerful tool for ongoing successful innovation.
Too many organizations pull the innovation trigger when faced with a crisis. Be it a market crisis or, more commonly, a product crisis the circumstances reinforce reactive behavior. If not outright panic, this scenario does not foster the use of structured and reasoned thinking to guide decision-making. Instead rapid fire solutions to address the changing conditions on the ground don’t solve the problem in the market and they may make the effects of the problem worse.
Across an organization’s innovation systems, looking ahead to anticipate problems is key. In the current pharmaceutical marketplace, many larger firms were faced with greatly diminished drug development pipelines yet they carry large commercialization operations. Blockbuster drugs are increasingly few and far between. With this realization, the action that most firms have taken is to re-double their development efforts in R&D as well as to identify as many smaller firms with potential marketable drugs as possible to acquire. What if their leadership teams had decided that, rather than reinforce their old business model (shoot for the blockbuster), they were going to anticipate changing market conditions and transform their companies from drug manufacturers to providers of comprehensive health services or another alternative business model. Would they not be better off heading off problems before they disrupt their market (and cash flow) entirely?
Why no great change? Because change is often painful, awkward and a dreadful inconvenience.
Don’t be fooled by system cycles – it’s not the climate it’s the weather
As human beings we love stability. Many of us are simply unable to recognize cyclical patterns around us, especially when they take years to unfold. The boom/bust cycle in the US economy is one such pattern which seems to elude many. This cycle seems to be on a fairly regular 20 year cycle and yet, during the peak (just prior to the bust) many people only see the positive “upside,” regardless of the Cassandras crying in the wilderness about the impending doom. And then the inevitable happens – the dip, slip, or worse yet, crash.
On the other side, when at the bottom of an economic recession, many struggle to see positive signs that economic systems might manifest. Their pessimism is only countered when they feel the positive impacts of the expanding economy directly. This cycle is present all around is. When job categories are oversupplied or undersupplied the negative feedback loops that cause people to go into a particular career usually lag the changing market needs. It’s also present in the climate. With recent record snows on the East Coast of the USA many were heralding the end of global warming. However, it is not case. The weather system is not representative of the climate system, it is a subsystem, and its cycle-time can be measured in months, weeks and days. The climate system is measured in decades, centuries and millennia.
As with the economy, the best time to capture the market is when everyone is contracting. When the present hoopla about “innovation everywhere” dies down those organizations that have embedded innovation into their business systems will find the opportunities ripe for capitalizing on others’ short-term thinking and rapidly fading memories.
Working The Processes of Innovation – Learning to Love & Live Failure
February 12, 2010 by Andrew (Drew) · 1 Comment
Failure is simply the opportunity to begin again, this time more intelligently.
- Henry Ford
Creating A Structure To Support Things Not Yet Seen
The crucial variable in the process of turning knowledge into value is creativity.
- John Kao
To talk about innovation and processes in the same breath seems oxymoronic. While most organizations are designed to take inputs and convert them through a series of conversion efforts into products or services for sale, they are singularly ill-prepared to bring new things to market. Why?
Existing organizations apply functional expertise in the form of departments like; Design, Product Development, Sourcing, Manufacturing, Marketing, Sales, Customer Support, HR, IT, and Finance, etc. They take known inputs, apply existing business processes for conversion into value, and produce recognizable outputs. Where’s the point of inflection? Where is are the processes that foster innovation? The whole enterprise is an inherently stable system designed to retain that stability.
To create innovation there must be a structure that can support the exploration, the risk-taking, the resource expenditure without direct monetary return. A structure that supports innovation must capture and support an organization’s ability to reach beyond what it produces in the present to what it might produce for the future. It demands a structure that can seek and use unknown resources, to build the unknown for unknown customers (or at least meet current customers’ unknown needs!)
The challenge is to reach into that unknown and pull some sense of meaning into the present. To use questioning and learning to first understand, then conceive, then sketch, then model, then prototype an innovation into existence. Part and parcel of that process is to be resilient enough to survive the inevitable hazards of the associated failure.
A Framework For Failure
Half the failures in life arise from pulling in one’s horse as he is leaping.
- August Hare
When planning for innovation how we create space for and manage risk (and the possibility of failure) is a primary factor in long-term success. Creating an organizational framework that not only can accept that risk is a primary ingredient in development of the truly new, but one that also has the operational flexibility and resilience to survive the unanticipated failure, is crucial. Yes, the desire to create more first-time successes is strong and should be recognized and valued. But nothing in innovation is ever perfect. Chaos and failure must be expected regardless of whether or not their extent might be anticipated.
A basic process model for innovation might be the following:
At each step there are a series of actions that happen, some sequential and some parallel, but all requiring a vigilance in terms of risk. The paramount question used throughout this process is not framed by “What” or “How” or “How much” but by “Why?” The inquiry contained within “Why?” demands that we constantly test our thinking through every step in the process of innovation. It helps us look beyond the expected and the commonly understood data embodied in the embedded business rules, behavioral norms and measures of our success. This inquiry generates awareness of the wider system of interdependent elements around a design challenge. It also gives us comfort in that it helps us frame possible responses to potential failures. It inoculates us against the pain of failure, keeping us strong for the next attempt.
Beyond High Reliability Organizations
One very important aspect of motivation is the willingness to stop and to look at things that no one else has bothered to look at. This simple process of focusing on things that are normally taken for granted is a powerful source of creativity…
- Edward de Bono
One of the off-shoots of social psychology and organization theory explores the concept of “sense-making”. One of pioneers in this area is Karl Weick. He noted that people try to make sense of organizations, and organizations themselves try to make sense of their environment. They are both navigating an ever-changing situation. What does this mean for innovation processes? Weick asks us to focus our attention on questions of ambiguity and uncertainty in this sense-making. Sense-making is the process of creating situational awareness and understanding in situations of high complexity or uncertainty in order to make decisions. This is a process of inquiry and seeking understanding in a dynamically changing environment. In terms of innovation the environment is the formed by the process of creating something new.
Moving from situational awareness in individuals, to shared awareness and understanding, to collaborative decision-making is a socio-cognitive activity. This approach considers that the individual’s cognitive activities are directly impacted by the social nature of the exchange and vice versa. This is, in a form, a process of co-creation. And the culmination of that sense-making process is one that Weick was also one of the co-developers of, the concept of the “high reliability organizations”. (Others involved in this development were, Karlene H. Roberts, Herbert Simon, and James March.) As noted in Wikipedia.org, “A High Reliability Organization (HRO) is an organization that has succeeded in avoiding catastrophes in an environment where normal accidents can be expected due to risk factors and complexity.” In short is an organization that can be best described as resilient in the extreme.
Organizations that must be successful all of the time continually reinvent themselves. For example, an aircraft carrier uses its functional units slightly differently depending on whether they are on a humanitarian mission, a search and rescue mission, or are engaged in night flight operations training. The same can said for an organization that delivers robust innovations time and time again. They may in fact be termed “highly reliable innovation organization”. They continually reinvent themselves. They build flexible systems that marshal their resources, via their innovation processes, to capitalize on opportunities as they arise. They take great risks, fail often, and yet they endure.
Life is a process of becoming, a combination of states we have to go through. Where people fail is that they wish to elect a state and remain in it. This is a kind of death.
- Anaïs Nin
Twitter: DrewCM
- Last few days in Australia before returning to the USA. Great trip.
- Greetings from Uluru / Ayers Rock! Where it is raining but the views and surroundings are spectacular. (And the internet access is spotty!)
- Better late than never: #innochat Transcript – 19 August – Innovation Backwards? With thanks to @CASUDI & @Renee_Hopkins http://ht.ly/2tOe3
- For those looking for #innochat transcript this weekend - it is coming - just a little slowly due to the time difference! (mine, that is)
- Thanks for #FF and RTs @innovatorsmix @MeghanMBiro @Jabaldaia @CreativeSage @FHInnovation @Renee_Hopkins @Gwen_Ishmael and #innochat gang