In times of uncertainty we search high and low for answers to our overarching question, “How do we dig ourselves out of the deep pile of…stuff we’re in?” If there are qualifications for uncertain times, present economic indicators demonstrate that all criteria are not only met but exceeded. And our search for answers (and perhaps a shovel) continues in haste.

With very few macro-economic levers left for government officials and public policy experts to pull as they try to shift the economy into a growth pattern, our range of vision and influence narrows. We won’t find big fixes no matter how hard we look. Larger businesses have cut costs dramatically and now find themselves with large cash reserves, waiting for the economy to turn around. They patiently await orders for more products and services, before they place any orders or invest in anything themselves. Essentially, each large enterprise is waiting for the next firm to blink.

Instead of waiting for bail-outs or big business-driven economic up-ticks, we must turn to one of the greatest sources of scalable economic activity and innovation, the small to medium enterprise, for our answers. When highly functioning, these smaller enterprises know how to: make scarcity work for them (they live it every day); work closely with their customers to meet their most pressing needs; and make rapid learning the activity that gives them momentum in the marketplace.

More with less
No complaint … is more common than that of a scarcity of money.
- Adam Smith

In the popular press (whatever that might be today!), it’s difficult to get a firm handle on what’s going on, or better yet, what could go on with small businesses. By their nature, small businesses are harder to classify and quantify than their big business brothers and sisters. If we consider the small enterprise to be a business of fewer than 200 people, it still leaves a bulk of the economic activity of most developed countries and nearly every developing country. These are the firms for whom bootstrapping is not something done only during times of economic distress, but all the time. They know how to stretch a dollar, or euro, or peso. But that’s not the only thing they know how to stretch.

Time, not just money, is a malleable resource, too. How you invest your time—and on what—drives a higher return on investment. For small businesses stretching time, doing more in a shorter period, gives them an economic leg up, especially when it comes to embracing and extending technology. Smaller firms have many advantages as innovation sources because they are quick to adopt new and high-risk initiatives; they facilitate structures that value ideas and originality; and they have a better capacity to reap substantial rewards from market share in small niche markets. This first-mover advantage was created by and for the small enterprise. It enabled them to get closer to customers other firms little-realized existed.

Closer to our customers
There’s a lot more business out there in small town America than I ever dreamed of.
- Sam Walton

By decreasing their cycle time, small enterprises can do more for their customers than most large enterprises would commit to. The small enterprise, which usually carries with it a smaller customer base, can remain closer to their customers’ various needs—a distinct advantage over many larger businesses. This means smaller firms can pick and choose where and when to provide innovative products and services. By virtue of their size, the small business can choose to invest a larger proportion of time, energy, and expertise to discover the depth of their customers’ needs, and then pursue those needs by creating innovative solutions.

This closeness to the customer experience is also driven by the need to maximize their share of their customers’ expenditures. By remaining close to the customer, the small enterprise can seize newly arising opportunities to provide value and increase revenues simultaneously. Correspondingly, by seeking to win more business by remaining close to existing customers, the cost-of-sale is driven down, which has a positive benefit to the bottom line: a positive, deep relationship is usually a more profitable relationship. And when there a fewer customers, it’s usually easier to read which ones will be more profitable than not, and that means more effective targeting for higher risk efforts that may yield greater innovation benefits.

Faster mistakes
With any loss, you want to try to regroup and learn from mistakes.
- Elena Leon

Which leads us to another reason why small enterprises are a better bet for long-term economic recovery—they are learning machines. For an employee to add to an innovative process, it may take time for them to understand the research agenda of, and challenges faced by, the firm in which they are employed; in other words, an employee may need to move up the learning curve before adding to the innovative activity of the firm. In a smaller enterprise, that learning curve may be much shorter. Existing processes and systems may be much more fluid. The amount of information to be learned and retained as working knowledge may be smaller. Better yet, the social network through which so much learning and experimentation takes place is smaller and easier to navigate, too.

For the smaller enterprise, the whole employee pool can be geared toward discovery. Each interaction, whether with an internal peer, or an external client or supplier, can be seen as an opportunity to explore possibilities. Within that exploration will be a series of hits and misses. This doesn’t mean that the inherent failures associated with trying something new within a smaller enterprise are less impactful—far from it, but it does mean that the recovery from those missteps may be easier and often shorter.

This is not to negate the impact of the larger enterprise on economic recovery, because without them there would be no recovery, as they provide a stable foundation for the broader economy. But it is to the smaller enterprise we should look for more rapid improvements. The smaller enterprise is thrifty by nature, eager to embrace its customers’ experiences, and willing to risk—through innovation—for greater reward. Unlocking the power resident within small enterprises is key to broader economic recovery. We’ll explore some of those methods in future posts.

I would gladly pay you Tuesday for a hamburger today.
- Wimpy

The way companies position their investments in research and development (R&D) or capital programs speaks volumes about the kind of innovation culture they possess. Increasingly, large companies stick to their innovation investment programs in the face of broader internal cuts in expenses. According to Booz & Co.’s special report “Profits Down, Spending Steady: The Global Innovation 1000,” by Barry Jaruzelski and Kevin Dehoff, some companies are even increasing their innovation spending in the hope of being better positioned for the longed-for economic upturn. Which would seem to be a sign that things will improve soon, right?

Not so fast.

Big Business does not represent the national economy
An article by Zachary Karabell in Time magazine recently described the divergence of large, market-capitalized companies’ performance from the respective economic performance of their headquarter nation-states, where previously they were linked quite closely:

Stocks are no longer mirrors of national economies; they are not — as is so commonly said — magical forecasting mechanisms. They are small slices of ownership in specific companies, and today, those companies have less connection to any one national economy than ever before.

The key message was that because of their ability to spread both their exposure and investment across multiple geographies, large companies had inoculated themselves against the impact of any single national economy. The ability of USA-based companies to straddle economies, in some cases by deriving more than 50 percent of their revenues overseas, has meant that they’re no longer profoundly impacted by the US economy, nor are they a true indicator of US economic status.

The economic upturn fake-out
While the US economy languishes with unemployment near 10 percent, faces housing foreclosures once again on the rise, and wrestles with a multi-trillion dollar plus-sized deficit, companies live in a different world (or possibly a parallel universe). The majority of publicly traded companies are beating analysts’ earnings estimates (250 beat estimates and 54 disappointed) and sales estimates. The gap between the US economy’s performance and US-based companies’ performance is also reflected to a lesser extent in the dire straits of the European economy and the reasonable success of EU-based companies. They, too, continue to thrive and spend on innovation.

At the heart of our success lies our commitment to innovation.
- Steve Ballmer, Microsoft CEO

Why are companies spending big on innovation when all indications say that we are in this economic mess for the long haul? The problem with a strategy that cuts back on all expenditures during an economic downturn is that you discover unpleasant consequences years later — when you’re lagging behind your competitors. By then it’s too late. It seems today’s companies have learned the lessons of the past. Immediately following the dot-com bust of the early 2000s, companies pulled back so far that their response to the economic upturn was delayed to the extent that competitors gained toeholds, or their enterprises folded, origami-like, in on themselves. They became small, misshapen relics of their former glorious selves.

Consider the examples of Nortel, Corning, and Cisco. Nortel died (its shares trading on their final day at $0.185, down from a high in 2000 when it comprised a third of the S&P/TSX composite index). Corning has taken the better part of a decade to recover (notwithstanding the emergence of its current breakthrough product—Gorilla Glass—discovered in, oh yes, 1962!). And Cisco, once the most valuable company in the world, finally figured out that having all one’s eggs in a single basket wasn’t a safe bet under any economic conditions, and is now built for survival.

Diversification via innovation is now seen as key. Hurray! Which is fine, but what happens if all this innovation takes place but there’s no one willing to buy it? Consumers without jobs don’t consume.

Is innovation really the answer to our economic woes?
Certainly the consumer space in the USA has tightened up remarkably, an indication that things won’t be turning upward any time soon. During this recession, the trend of consumers switching to store-brand labels and other cheaper alternatives has dug into the profits and dominant market shares of brands owned by P&G, the world’s biggest consumer-product maker and seller of many of the most premium-priced household products on store shelves. Of note was the recent news that for many of its core brand staples, P&G has reduced prices by as much as 10 percent. As for its premium-priced brands, the so called “nice-to-haves,” expect those prices to increase to offset the high volume product price drop.

The reality is that if you are doing well in this economy, either as a company or an individual, you will continue to do well regardless of a statistical double dip.
- Zachary Karabell, “A Double Dip Recession? Who Cares?” Time Magazine

The challenge with the current economic situation, and its associated strong company performance, is that investment in innovation by large companies will do little to improve the lot of the many people still living in recession conditions. In a report released earlier this month, the US Congress Joint Economic Committee observed fragile and uneven growth for the US manufacturing industry. The report cites 136,000 new jobs that the manufacturing sector created in the first half of 2010, but notes that inventory restocking may be responsible for much of those gains. For the millions of jobs lost, adding a little more than a hundred thousand is but a drop in an ocean. The unemployment rate is just under 10 percent, but that doesn’t begin to cover the enormous chaos on the job front.

The “true” unemployment rate (combining figures for workers who have dropped out of looking for work, to the underemployed working multiple part-time jobs, and those actually counted in the unemployment roster), is figured at closer to 17 percent. Total hours worked and total compensation have both declined. And the easy consumer credit and housing-backed affluence have gone, never to return. Essentially the economy has bifurcated.

Are we cheered up yet? No? There is a way forward.

Each month 400,000 new small and micro-businesses start in the USA. At present, there are 5 million (yes, million) small businesses (100 employees or less) employing far more people than the Fortune 100. If we are going to look to innovation as a transformative tool for unleashing creativity and improving the economic outlook of the majority of the population, it is to small businesses that we must turn. If we help build them, more could come to the table to promote a stronger economic upturn. They could be active participants in energizing an economy that not only helps people survive, it could once again be an economy where many could thrive.

Big business innovation is not the answer. It simply can’t create the number of jobs fast enough to pull us out of this economic funk. What can we build together to unleash the innovation residing in small and mid-sized enterprises?

Jointly hosted by Behance and Cool Hunting, and their respective Founder / CEO’s Scott Belsky and Josh Rubin, this conference is like catnip to designers and creatives alike. (Side note: as the only visible person wielding a Dell in this very, very Mac-centric universe, it was very interesting how little play technology received.) The conference itself has been run incredibly professionally (which is fantastic considering that this is only the second year it has been run.) From the attendee materials, to the integration with the conference space (The Times Center on 41st), the 99% conference is a very well-designed experience.

To kick things off Eve Blossom, the Founder / CEO of Lulan Artisans, gave an impassioned presentation on her awakening as a social entrepreneur as a result of her response to witnessing the impact sex trade first-hand. She has created a network of designers and weavers who, as artisans, practice their centuries-old techniques while being paid sustainable wages, growing their local economies, and embracing low environmental-impact bheaviors. Her recommendation when faced with the execution of your idea was to recognize that: “It’s bigger than you think. It’s not what you think.” Being open to the possible beyond your initial idea was something that came up in later presentations, too.

The next in the line-up was Fred Wilson, the Founder / Managing Partner of Union Square Ventures. His focus was on how to create the most appropriate framework as you begin to execute your ideas and take them to market. His topic was, 10 Ways to Be Your Own Boss, during which he covered everything from husband and wife partnerships (DailyLit founders, Susan and Albert Danzinger) to the Tour Bus model (Hype FM’s Anthony Volodkin). The classic, much-tweeted, line from Fred was a comment posted to one of his sites by Nassim Taleb: “The three most harmful addictions in the world are heroin, carbohydrates, and a monthly salary.”

Stefan Sagmeister, master-designer-prankster, delivered a presentation that was very close to his recent TED presentation. Which was okay, but when so many conferences are live-streamed and/or edited and posted for HD review almost immediately, it makes it hard not to feel a little deflated (as Tina Roth Eisenberg alluded to). In all fairness to Mr. Sagmeister, he was not feeling well (a little feverish, he said) and his work does warrant an additional look as it is exceptional

When Jack Dorsey, Founder / Chairman (seems to be a lot of Founders today) of Twitter presented he immediately struck a nerve for me. His early fascination with maps, especially the way in which his desire to overlay live data of activities on a map could give you a better understanding of how a massively integrated system like a city works, gave me the most compelling insight into why Twitter works for me. Additionally it was great to hear his acknowledgment of the power of Twitter users in changing the Twitter experience. Users generated the Hashtag, the use of RT and the @ symbol. His principals for execution were also clear and pointed: Draw (to get the idea out of your head), Luck (being able to recognize a situation that allows build-out of an idea), and Iterate (know your idea must evolve, but also know when to stop it’s evolution so you can move onto the next idea’s execution.) Mr. Dorsey also shared images from the ideation of his latest venture Square.

Jonah B. from HTC rapidly presented the design approach behind the new HTC Incredible phone and landed the execution model they used which was design from the inside out. The phone – she is very pretty.

In one of the most interesting presentations for me, based on the focus of re-envisioning a public space (which leads me to think of re-envisioning cities…but that’s for another post), was delivered by Leslie Koch the President of the Governor’s Island Preservation and Education Corporation. Her past experience in the corporate world was on display as she shared her 5 lessons she has learned in order to execute effectively:
1. Listen and ask the right questions
2. Understand the customer, product and market
3. Develop a strategy and stick to it (but make sure your mother can understand it!)
4. Think big. Act small.
5. Marketing is all.
My favorite line from Ms. Koch came in relation to number 5, to paraphrase: You need to market, but you may not be able to call it that. It’s outreach to some (in the government arena), or cultivation (in the non-profit world), but really it’s all just marketing (business). And you need it too close the credibility gap between what you want to achieve and what you achieve in the short term on a day-to-day, week-to-week basis.

As the creator of the 99% Conference and newly minted author, it was great to see Scott Belsky present his vision for tackling the perspiration part of bringing ideas to life. He labeled the problem we face as “The Project Plateau” that time when the energy for implementing an idea dissipates and our progress with it. His new book (mine’s signed!) is Making Ideas Happen and covers key practices such as:
- Generate ideas in moderation
- Act without conviction to keep momentum and rapidly refine ideas (e.g., don’t fall in love with your ideas)
- Encourage fighting within your team (conflict creates opportunity
- Seek competition (it boosts accountability and strengthens the defensibility of your approach)
- Reduce bulky projects to discrete, actionable units (increments of time, milestones and tasks)
Overall, Mr. Belsky’s response is to develop an approach to, “have an idea find a way to survive the project plateau.”

The master storyteller, Jay O’Callahan, captivated the attendees with his imagined dialogue between Neil Armstrong and a failing Navy Admiral in a nursing home. In the story, part of a larger work Mr. Callahan was asked to create for NASA, Neil Armstrong recounts the landing on the Moon. In the telling, Mr. O’Callhan highlighted that stories are dramatic because stories are people, places and a bit of trouble, and that by telling stories people can imagine themselves into the situation. A great lesson for creating stories, but also for execution was that there needs to be Listeners (someone who is a part of yet listening to the story), Appreciations (the way in which a positive aspect of the story is highlighted as “they can be gold”) and Suggestions (on how to improve the story when the story is strong enough to take it.)

The armchair panel discussion between wife and husband partners in Antenna Design New York, Inc., Sigi Moeslinger and Masamichi Udagawa and Scott Belsky and Josh Rubin offered up many gems on the role of effective partnership in enabling execution…
Partnership should be based on need – the need to find complementary traits and match up with them in another. – Masamichi Udagawa
Do a trial project together to test the viability of a working partnership – Sigi Moeslinger
Successful partnerships must yield both a result and the enjoyment of working together – Masamichi Udagawa
Be willing to share the ownership of an idea that comes from the partnership. – Udagawa & Moeslinger
It was obvious that with the give and take in their dialogue that Mr. Udagawa and Ms. Moeslinger’s partnership seems to be a profitable one for them.

As the Executive Director of the Hawthorne Valley Association, Martin Ping wove a tale of the ways in which all aspects of the association in the valley come together to support a self-nourishing system. For Mr. Ping, the work of execution is never-ending. Based on holistic and biodynamic methods everything from farming, to the market garden, dairy, organic bakery, grocery store and school are part of an interdependent system. And it all comes down to an inner picture of what might be and what needs to be. “Everything we know and everything we do started with an inner picture.”

In what was perhaps the fastest and most boisterous presentation, Franz Johansson the Founder /CEO of The Medici Group, talked about the catalyst for new ideas coming from the intersection between disciplines. His book on the subject, The Medici Effect, is a fantastic read. When it came to execution, his approach was to ask yourself the question: “What is the smallest executable step you can take to go where you want to go?” And then when you have defined the response – do it. Then ask the same and do it again. By taking smaller leaps of faith you can test your thinking as you go. Your original idea may only serve as the catalyst for your long-term success and the two may be quite different.

In the last presentation of the day, John Maeda the President of the Rhode Island School of Design (RISD) extolled the virtues of awkwardness in creativity. As a creative himself, Mr Maeda found that becoming a leader (reluctantly) under the direction of a soon to be departing Nicholas Negroponte at MIT, was an awkward process of discovering how a leader creates. One of his colleagues note that, “all artists yearn to struggle, when they struggle they know they’re alive and you lose that when you lead,” as a way of explaining why a student would say she was feeling guilty (she had struggled to fit in but was no longer struggling.) For Mr. Maeda, execution will increasingly rely on the leadership of creatives because they (we) are at the forefront of being okay with ambiguity. It was a great insight which I hope will be willingly embraced by participants.

Finally, I would be remiss in not highlighting two great contributions from the team at Cool Hunting. First, was that the often tedious but all-important job of hosting and emceeing the conference fell to Josh Rubin who did a great job in keeping things moving. Second, Cool Hunting produced a series of videos that were featured throughout the day including snapshots of the work of Hastens, a hand-crafted bed manufacturer in Sweden, Jamie Oliver, the chef who is challenging us all to feed our school children and ourselves better, and the Mast Brothers (master chocolate craftsmen) from Brooklyn (thanks for the chocolate guys!) The videos were great snapshots and were a nice sidebar to the featured speakers.

All in all, a great day out. Much to digest. Much to put into practice. And loads to share with clients

This doesn’t mean to say that there is still not a wealth of information to be gleaned from cognitive psychology, behavioral psychology, and social psychology as they relate to the way in which people learn. Neuroscience will simply afford us another window into the way our minds work. And what will we do with that knowledge?

What both the behavioral observation of learning and the physical understanding of learning agree on is that for learning to be lasting it must be practiced. In fact, the best learners not only practice, they study – hard. Malcolm Gladwell proposes that for true excellence to emerge the magic number of hours required to dedicated practice and ever-increased proficiency is 10,000. Less than that and the learning may be substantial but will not result in elevated performance. The same can be said of innovation. Unpracticed innovators make fewer cognitive leaps, fewer bold choices, have fewer insights and their innovations are poorer for it.

The approach of IDEO, the design shop headquartered in Palo Alto, takes the concept of the learner even further and describes “T-shaped” people. These are learners who have not only gone deep into an understanding of a particular field of interest (the perpendicular stroke in the “T”), they have also developed a broad awareness and understanding of many subjects (the horizontal stroke in the “T”). A consistent attention to both types of learning increases the utility of these people in the design and innovation domain. Perhaps the Gladwell number needs to be an equation, i.e., 10,000 x 1000 x n? Where “n” is the number of separate domains of learning pursued?

Think differently for different results
Tell me and I’ll forget; show me and I may remember; involve me and I’ll understand.
- Chinese Proverb
Innovation fosters new thinking, including the way we learn to think. The way we create the promoters (activities or environmental factors) that support learning is a key component to improving learning and development outcomes. Did you know that there are five key promoters to consider? They are:
1. Innate learning programs (the things we just know, you know?) (Gallistel, 2002)
2. Repetition of information. (Repetition of information – get it?!) (Squire and Kandel, 2000)
3. Excitement at the time of learning (Woo Hoo!) (Cahill & Gorski, 2003; LeDoux, 2002)
4. Eating carbohydrates at time of learning (A personal favorite) (Korol, 2002)
5. 8-9 hours of sleep after learning (To sleep perchance to dream) (Kuriyama, Stickgold, & Walker, 2004)

Very few learning programs actually consciously accommodate one or two of these promoters, let alone all five. Is it any wonder that the process of learning may seem draining and even futile at times? To maximize the learning and development outcomes change the nature of the learning environment, change the perspectives of the participants, and change the delivery mechanism. All can be achieved in simple ways. Use a rapid prototyping method – what can you change in under an hour for less than $100 (or less than $10)?

When considering learning and development focused on innovation practices the inclusion of elements that actually promote learning might be worthwhile, might it not? Take two innate learning programs for example; the first allows us to rapidly associate words and labels to objects within situations, and a second enables us to compute social status and insults to social status. If we acknowledge and fold into our learning and development activities these innate learning programs we can structure experiences that capitalize on them. Improvisational activities, like improv theatre games, could help us unlock the influence resident within these learning programs so that the experience fosters increased innovative behaviors (resilience, risk-taking, generosity, etc.)

Letting go and leaving justification behind
Being ignorant is not so much a shame, as being unwilling to learn.
- Benjamin Franklin
Lessons learned are not necessarily procedural or systemic, they are predominately behavioral and social. One of the key learned behaviors is that with success comes praise and possibly adulation. Well, the process of innovation actually requires that we be less-than-successful at times. Yes, we sometimes have the glorious opportunity to fail (perhaps not the first time, bust certainly more publicly than we would like.)

There are two essential behaviors to learn and develop in order to “make it” as an innovator. The first is the ability to let go of an idea. The concept of ownership within corporate organizational life is one that people learn early. The people with the best ideas not only “win” they also receive the reward of advancement. That may mean access to things previously unavailable, i.e., the offer of increased responsibility, or even greater compensation, perks and benefits.

A successful innovator needs to understand that her idea may actually find greater success when used by another or in conjunction with another person’s idea. They also need to understand that while their idea might be a great idea, if there is no passion for it among the people who need to capitalize on it and bring it to market then it is as good as dead and useless to all. Letting go is an essential learning that is counter to so much we have learned in order to survive in organizations. But letting go is not the hardest lesson to learn for many.

Perhaps a more damnable habit to break is that of justification.

Justification is the hard-earned ability to defend your position in the face of withering opposition. It brooks no alternate view, nor does it easily accommodate modifications to its core or demarcated essential truth. The power of justification is that it makes ideas unassailable (especially when carried out by a master or mistress of the art.) The only problem with justification is that as a practice it allows no room for the new, the additive, or the tangential. Justification creates cul-de-sacs in which innovation goes to die.

Learning how to combat holding onto an idea too tightly and justifying an idea to the point of lunacy are essential practices. Which leads us to the role of exactly that in innovation – practicing what we have learned.

Practice makes permanent – practice with feedback makes perfect
Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so.
- Douglas Adams
Most have heard of that old aphorism, “practice makes perfect.” My experience, and the firm word of a former business associate, Tom Doyle, is that practice does not make perfect, “practice makes permanent; only practice with feedback makes perfect.”

In order to become better at the art and substance of innovation it is necessary to work on it. In working on this skill set it is also critical to receive feedback and coaching. The application of observational assessment and associated feedback to an innovator enables them to see their mental models reflected in the words of others as well as the way a life time of habits influences how they not only see the world, but seek to change it in the present.

Having a subject matter expert observe and provide feedback, even if they are not a practiced innovator, may be of great benefit to those seeking to innovate. The critical eye is an essential ingredient in improvement. To borrow another Gladwell-popularized concept, that of the maven – a trusted specialist or subject matter expert connected to other like-minded practitioners across a community – it is a given that mavens make the best mentors. Their deep expertise, and the authority with which they can observe, mean that the feedback that they provide can not only provide clear opportunities for growth but may also provide ways to create a step-change in our approach to innovation and the challenges at hand.

After all, while it has been said that those who can – do, and that those who cannot – teach, it is preferable to think on Seneca:

While we teach, we learn.

The crisis in our economy is shedding harsh light on the absence of any true understanding of how to overcome the organizational need to protect the bottom-line while also leveraging the most creative asset any organization can access, its people. Instead, jobs have been cut in record numbers. The unemployment rate, not just in the USA but in many Western economies, is approaching record highs. All the while the usual levers are being pulled. Reductions in capacity. Reductions in expenditure. Reductions in our expectations for a more positive future. And this means that a pervasive, innovation averse, risk-avoiding mindset is prevailing in most quarters. It’s simply all, too, hard.

As an aside, it is fascinating that one of the major beneficiaries of the economic downturn is global climate change. Apparently the idling of the voraciousness of the economic engines which has been burning so hot last decade has been a significant boon to the limitation of the emission of greenhouse gases. Thank you for small mercies, I guess. That problem set is still not solved but we seem to have bought some additional time in which to avoid doing anything meaningful. It’s too complex. And hard.

What happens when people stop, well, everything? A cascade occurs, and not a good one. It certainly doesn’t mean resources become instantly abundant and available. No, we can thank the remarkable export of the Toyota Production System (as Lean initiatives) across many manufacturing sectors for the fantastic ability to only produce to demand. This latest cascade means everything becomes scarce. There is no excess. Nothing with which an innovator may play, or test, or prototype. Just like a faucet being turned off. The flow of goods, services, and money has slowed to a trickle or even stopped altogether.

All we are left with, all that we have available to us, are the people who comprise our organizations. And what have we done to them? Nothing save lower their expectations or show them the door.

Serve more than one purpose
The greatest achievement of the human spirit is to live up to one’s opportunities and make the most of one’s resources.
- Marquis de Vauvenargues

Let’s reframe the challenge. What if we take as true that oft-quoted phrase, “our people are our greatest assets”? How does that mindset begin to influence the choices we make about innovating our way out of our current mess?

One creative agency in Toronto, Zulu Alpha Kilo, decided that the best way to advertise itself was to actually take what it does to the streets. They setup a “box” in Dundas Square in the heart of downtown Toronto and on the first really cold day of the season in the city. They placed a team of eight interdisciplinary thinkers into the plywood box where they solicited creative challenges from passers-by – over 117,000 in all some of whom waited over two hours to present their challenges. Twelve hours later not only had the team presented solutions for many problems they had also cracked open the façade of a design agency so the public could see the workings inside. Not a bad piece of self-promotion either to put creativity on display.

Organizations like the agency above that choose to create a meaningful creative bargain with employees seem to be finding their way. Organizations like Google, SAS and 3M, which even in downturns still expect their employees to devote a percentage of their work time to personal projects, also will continue to see the benefit of a similar trust over time. It will be returned in goodwill, enthusiasm and commitment, to say nothing of the possibility of new products and services that might drive top and bottom-line growth. Their people are asked to do more than one thing, they have a “job” to do for sure, but they are also expected to explore and contribute in other ways, too.

While contemplating setting new expectations for our human resources why not also consider setting the expectation that all resources be used in more than one way. Paper being reused for notepads is nothing new, but what about expired materials such as this novel idea from a design student involving expired prophylactics. Yes, the humble condom as haute couture. But the concept of reuse is nothing new. Making it an embedded and expected part of all aspects of production and trade is.

Many technology firms are leading the way. Oracle is continuing to support the work that Sun began even after the acquisition; usually this would be a signal for abandoning “non-additive” projects to the bottom-line. HP has also made reuse a fundamental part of its approach to its business. Now if only “Big Ink” could figure out a way to reclaim the ink on paper destined for recycling! It seems Xerox has a similar idea but has taken a different tact.

These efforts are good first steps but this mindset needs to be seeded as widely as possible. The innovation required to do that may point to a way out of the economic doldrums and toward a vibrant alternative economic reality closer to the cycles presented in William McDonough’s “Cradle to Cradle”. Which doesn’t begin to cover what might be accomplished by repurposing from the private sector to the public sector or from the for-profit to the non-profit.

It’s now how much – it’s how well
Time is the scarcest resource and unless it is managed nothing else can be managed.
- Peter Drucker

Many artists relish resource constraints, although they might initially grumble at the limitations. Instead they often apply themselves within limitations to create art that is unique and surprising. Sometimes those constraints aren’t only material; their constraints may be social, cultural or even political. Yet still they find a path to success by not taking the box they are handed at face value. This ability to look beyond what is in hand to what is possible with that resource applies in all cricumstances in which innovation can and must thrive.

The work of Inc. Magazine’s Entrepreneur of the Year, Kevin Surace the CEO of Serious Materials, is a case in point. He is picking up bankrupt firms that have been strip-mined of all their resources (and their human resources previously carelessly set aside.)He is willing to invest in the R&D and building out production capacity to ensure his company’s long-term health. He is willing to forgo profit to do so, too. He is applying his limited resources, placing bets now, to ensure his economic future. How many other companies are willing to do that today?

Here’s the thing. If we don’t invest time, energy, effort and our resources in innovation now, when we need it most, we are in for a long and painful ride. We need to take the time to innovate. To find the better way. Those who do will be most successful in the long-term. Not because they happen upon a great idea, but because the habit of spending resources on innovation even during down times sets a pattern for revitalization that is necessary for any organization.

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

Due to its popularity and high visibility in the marketplace, the ownership of innovation has become a part of many organizations’ power struggles. Not necessarily innovations themselves. Mostly the levers and resources that may (or may not) drive innovation outcomes. Whoever controls the conversation about the concept also ends up controlling, if not outright budgetary and expense authority, a certain amount of power that comes with the imprimatur of being responsible for the “new and sexy.” Innovation has become something to be batted about and the result is a poorer focus on outcomes.

It’s Not Bi-partisan – It’s A-political
Those who understand innovation also understand that breakthrough products can transform business. True innovations are greater than the desire to improve existing business practices; innovation can drive positive transitions into the future. They enable an organization to achieve a growth trajectory beyond its present state. They unleash huge revenue and profit potential. Because of this inherent capacity for disruption they also often foster competing objectives among an organization’s leaders. Each leader might view innovation from their unique perspective and lose sight of the overall value the business might derive. The result is a breakdown in cross-organizational support due to a reinforcement of functional silos. Within innovation resides the potential for enormous power. Is it any wonder there is a struggle to control it?

Mine. Mine. Mine. Mine. Mine. Mine. Mine. Mine. Mine…
- The Sydney Seagulls in “Finding Nemo” (Pixar)

Much like the Sydney Seagulls in the Pixar animated classic, Finding Nemo, everyone has declared innovation, “Mine!” The battle for control over innovation is not unique to any single organization. Within that struggle, and just as pedestrian, is that fact that many senior leaders are hard-pressed to define what they are wrestling over. There are no organized parties around innovation. In fact, the factionalism that occurs is often driven by territorial concerns rather than growth outcomes. The turf battles over the control of innovation-focused resources and the portfolio of innovation initiatives is also hampered by other political matters. One of which would be, the “tyranny of the urgent over the important.” The objective of which is not necessarily to be focused on creating value, but to be focused on the appearance of making a contribution.

The Politics of Survival
This is the politics of self-preservation; which is completely at counter-purposes to the risk required for true innovation. For the sake of political expediency, innovation is often sacrificed as the organization’s attention turns to other, seemingly more important, concerns. In publicly-traded firms, the omnipresent attention of the “market” drives concerns into 30 day-defined horizons. Or, for the longer-minded, that might be stretched out to the end of each quarter. Where the demands of the business require control and systematic delivery of results, in order to meet the market’s demands for consistency and reliability, innovation is quite another animal altogether. It requires an acknowledged risk and the commitment of resources with the desire to deliver a future unknown benefit.

Fortunately, there are a few individuals in some organizations who have come to understand that by neutralizing organizational politics they might better facilitate first a breakthrough idea’s acceptance into development, and then develop that concept into a viable product. They start with a thorough understanding of the social network that exists within the organization. With this in mind they can knit together a coalition of supporters who can provide cover and guidance that exists separately from the organization structure as it is defined in purely functional terms. This gives them the ability to dodge the leadership seagulls. If innovators became more aware of the political actions that contribute to successful project acceptance and became more capable of motivating and taking such actions, perhaps more break-through products would be developed. Politics may make for strange bedfellows, but unless organization politics are either neutralized or circumvented the likelihood of innovations making their way to market may be severely impeded.

How do you navigate the seagulls of your organization to bring your innovations to life?

Afterlife: An Essential Guide To Design For Disassembly, by Alex Diener – Core77.

Genius Marketer Markets Book Ingeniously

I’ve long been an avid reader of Seth (to call him Mr. Godin, while proper, seems inappropriate given the long acquaintance we have had, however one-sided as it has been.) I’ve succumbed to the Ideavirus; I’ve Dipped; and, I’ve fallen for a Purple Cow. When the opportunity arose to make a donation to The Acumen Fund (established by Jacqueline Novogratz – featured at the number two slot on the book jacket blurb) in order to receive an advance copy of this book, I jumped at the chance. Contribute to a good cause? Read the latest from a favored author? What’s not to love? The genius of this is that I talked about the unique promotion of the book widely. I talked about my anticipation as I awaited my advance copy. I talked to people as I read the book. And now, I’m fulfilling my final obligation (willingly) as part of the original promotional bargain, I’m writing about the book. Like I said, ingenious genius.

Recognizing that what worked isn’t any longer
I have a background in education and have long recognized that the structure of much Western education continues to represent a response to the needs of the newly Industrial Age. I cannot begin to count the number of ages that have been (and gone) since that time. When Linchpin identified that educational indoctrination as something that prevents as from achieving our potential, in all its self-fulfilling messiness, I crowed. Finally, arguments long had in academic circles were to receive a wider airing and I couldn’t be happier.

If an aversion to risk is hardwired into us, taking that to its extreme and designing and living a system of education that only prepares us for managing that risk is a crying shame. Seth’s response, that we have created and continue to create a dispensable, interchangeable workforce when the present cries out for something much more robust, is refreshing to say the least. If we are what we do, then let’s do something new, because what we used to do won’t do any more. In short, Seth is inviting us to each become a “linchpin”.

Choosing to be something new and true
Keith Ferrazzi in his book, Never Eat Alone, talked about the power of abundance and notes that, “the currency of real networking is not greed but generosity.” Seth takes this concept of the power of generosity and, instead of applying it to networking, he applies it to personal insight, productivity and market growth. Being generous, being capable, and being indispensable – in short, being a linchpin – “leads to more opportunities and ultimately a payoff for everyone involved.”

In this book, Seth wrestles with what it means to be a linchpin. It isn’t glamorous. It isn’t necessarily singular. What it is, is essential to organizational success. With the linchpin an organization frays and begins to fall (in some cases fly) apart. Linchpins, through their perseverance, talent and charm, create organizational momentum. Their self-awareness of their capabilities, combined with the application of that knowledge and the soundness of their judgments make their contribution to organizations exponential in terms of impact.

On the benefit of hard labor
Perhaps where Linchpin seemed to really come into its own for me was when Seth began to re-frame the concept of work. He offers up the concept of hard work as something physical, or boring, or mundane; then he concludes that perhaps the important work, the investment of our emotional selves in our efforts, is a more important form of hard work. The emotional life of the workforce is often relegated to the backwaters of Human Resources practices, something around which everyone should tread lightly. Seth, gloriously wades into the middle of this and calls out emotional labor for what it is.

Having done my share of work both in the human resources domain and in the volunteer world, where emotional laboring is the order of the day, to have someone describe that work accurately as “a gift” is wonderful. It requires engagement. It demands the best of us. It draws on our creativity, or passions, our insight, our willingness to take risks and to be generous. I love that this kind of work lies at the heart of being a linchpin in Seth’s eyes.

The job is not your work; what you do with your heart and soul is the work.
- Seth Godin, Linchpin

Make your own way – make art through connection
One of the only challenges I would have had with the linchpin concept was that for all its generosity of spirit this was obviously only going to be an individualized call to action. What I wanted, certainly needed, was an understanding of how being a linchpin connected to others. After all, that’s what a linchpin does, it holds stuff together. Just when was getting worried, I was granted comfort when read into the chapter “The Culture of Connection” with the lead sub-header, “The Linchpin Can’t Succeed in Isolation.”

After all, for a linchpin to be effective, they need the connection of others. Because if they are not connecting, and giving, what the heck are they doing? Take a look at Linchpin, I think this book is not only an invaluable tool I think it is a great and necessary call to action.

*The Sir Donald Bradman reference (p.62) was especially appreciated, Seth.

One Of These Things Is Not Like The Other

Strategy should provide a picture of the organization as it want to look in the future. Strategy is vision directed at what the organization should be, and not how the organization will get there. We define strategy as the framework which guides those choices that determine the nature and direction of an organization.- Charles Kepner & Benjamin Tregoe

While strategy, in its purest form, is a clear demarcation of what an enterprise wants to become as defined by what it will and will not do, innovation is different in that it is focused directly on the activities to create and enact something new. Does innovation tie to strategy? Absolutely. Strategy is an essential antecedent to innovation. Without it an organization’s resources may be miss-spent or wasted in fruitless pursuits. Strategy points the way and innovation is one of the ways in which its vision is accomplished.

The Desire To Swim In A Deep Blue Sea
One of the most compelling ways in which innovation may be seen to be directly derived from strategy may be found in the work of W. Chan Kim and Renee Mauborgne the authors of, Blue Ocean Strategy. In this book they describe a pattern of behavior identified in action over 100 years and across 30 industries in which strategy is driven not from “me-too-ism” but from truly unique differentiation. The companies they describe have successfully created “blue oceans” of uncontested market space priming themselves for growth. Such strategic practices, which the authors termed “value innovation,” have helped these companies build tremendous leaps in value for both themselves and their buyers; their actions render rivals obsolete and unleash hidden demand.

The kind of innovation that Kim and Mauborgne describe demands a fundamental understanding of the business that you are in to be able to develop a clear strategy to achieve your “blue ocean.” They propose a lens for assessing your business that is tied to a specific sequence of questions relating to: buyer utility (the reason why a mass of people might buy a product or service), price (its accessibility to buyers), cost (linking cost to produce to the profitability of your strategic price), and adoption (the hurdles to the business idea represented by the blue ocean.) Armed with answers to the questions they propose you can then determine where and how best to innovate.

We’re Going Down, Way Down
One of the primary tools for determining the level of investment as a result of the strategy formulation is a relatively simple nine box matrix called the Product / Market Matrix. This tool was originally developed by Igor Ansoff in 1957 in his article in the Harvard Business review titled, “Strategies for Diversification”. The matrix identifies a range of options for investment based on the core competencies of the organization. It facilitates deep introspection so that a commonly held vision of the organization’s key capabilities, critical concerns, and commitment to act can be understood. This tool allows an organization’s strategic stakeholders to essentially put the organization “on the couch” to conduct the business equivalent of a psychoanalysis and arrive at the truth of what is and is not feasible.

Within the Product/Market Matrix you can also clearly see where “blue oceans” might be found or created. Look to the bottom right of the matrix. You can also see how great the level of effort it may be to create a “blue ocean” from scratch in this context. It will require a significant commitment of the organization’s resources in order to make the desired market a viable reality. And that requires being able to answer the hardest question in strategy formulation…

What Won’t You Do?
The most important question that can be asked to test the limits and value of a strategy is,
“What won’t we do as we implement this strategy?” In the answer to that question lies the extent and value of the focus that strategy formulation represents. If the answer is, “Nothing. We will do anything,” then the strategy may be deemed to be worthless. All strategy formulation should enable the strategic stakeholders to clearly define what success looks like and what will be done to accomplish that goal.

The mark of a valuable strategy, one that will help you define the focus of your organization’s resources, time and energy, is one that more clearly tells you and your organization what you will not pursue. It tells you in which products and services to invest. This assessment of emphasis will also determine how much effort, resources, and commitment the organization will put behind specific parts of the business in order to achieve the strategy. It will set priority for your implementation efforts, including the innovation focus.

How Will You Get There From Here
Too many organizations confuse strategy and innovation. They conflate them unwittingly, or worse yet, don’t know the difference and treat them as interchangeable synonyms. That is simply not the case. One must follow the other. And they each require the other to be in place for them to be effective. Without a clear strategic framework to guide decision making and resource allocation most attempts to innovate will result in failure. And without the clear application of innovation thinking and execution, the likelihood of an organization’s strategic goals being attained is minimal at best.