Archive for May, 2013

It’s All Connected

There’s a natural tendency to simplify, to reduce, to narrow. In the name of problem solving, it’s narrow the scope, break it into small bites, and don’t worry about the subtle complexities. And for a lot of situations that works. But after years of fixing things one bite at a time, there are fewer and fewer situations that fit the divide and conquer approach. (Actually, they’re still there, but their return on investment is super low.) And after years of serial discretization, what are left are situations that cannot be broken up, that cut across interfaces, that make up a continuum. What are left are big problems and big situations that have huge payoff if solved, but are interconnected.

Whether it’s cross-discipline, cross-organization, cross-cultural, or cross-best practice, the fundamental of these big kahunas is they cross interfaces. And that’s why they’ve never been attacked, and that’s why they’ve never been solved. But with payoffs so big, it’s time to take on connectedness.

For me, the most severe example of connectedness is woven around the product. To commercialize a product there are countless business process that cut across almost every interface. Here are a few: innovation, technology development, product development, robustness testing, product documentation, manufacturing engineering, marketing, sales, and service. Each of these processes is led by one organization and cuts across many; each cut across expertise-specialization interfaces; each requires information and knowledge from the other; and each new product development project must cooperate with all the others. They cannot be separated or broken into bits. Change one with intent and change the others with unintended consequences. No doubt – they’re connected.

Green thinking is much overdue, but with it comes connectedness squared. With pre-green product commercialization, the product flowed to the end user and that was about it. But with environmental movement there’s a whole new return path of interconnected business processes. Green thinking has turned the product life cycle into the circle of life – the product leaves, it lives it’s life, and it always comes back home.

And with this return path of connectedness, how the product goes together in manufacturing must be defined in conjunction with how it will be disassembled and recycled. Stress analysis must be coordinated with packaging design, regulations of banned substances, and material reuse of retired product. Marketing literature must be co-produced with regulatory strategy and recycling technologies. It’s connected more than ever.

But the bad news is the good news. Yes, things are more interwoven and the spider web is more tangled. But the upside – companies that can manage the complexity will have a significant advantage. Those that can navigate within connectedness will win.

The first step is to admit there’s a problem, and before connectedness can be managed, it must be recognized. And before it can become competitive advantage, it must be embraced.

Acceleration Is King

Everything is about speed – speed through process reengineering, waste elimination, standardization, modularity, design reuse. All valid, but not all that powerful. Real speed comes from avoiding rapid progress in the wrong direction, from avoiding a blistering pace on the wrong stuff. Real speed comes from saying no to the work that creates drag in order to say yes to work that accelerates.

It’s healthy to have time limits and due dates, finite resources, and budgets. These constraints are helpful because they force a cutoff decision: what work will get done and what won’t. And thankfully, all businesses have them – take them away and eliminate all hope of profitability and sustainability. But from a speed perspective, sometime we look at them in a backward way.

Yes, that work would change the game, but we don’t have time. That argument is a little misleading. Truth is, there’s the same amount of time as last year – a week is still a week, and there are still 52 of them in a year. It’s not about time; it’s about the work done during that time. With a backwards view, the constraint calls attention to work won’t get done, but the constraint is really about work that will get done. If the work that doesn’t make the cut is less magical than the work that does, the constraint creates a speed problem – too slow on the game-changing work. The speed problem is realized when the new kid on the block makes magic and you don’t. If the constraint helps say yes to magic and no to lesser work, there’s no speed problem.

Yes, we could reinvent the industry, but we don’t have resources. No, we have resources. But the constraint isn’t really about resources, it’s about the work. And not any old work, the constraint is about the work that will get done. (Not the work that won’t.) If the constraint causes us to stuff our fingers in the holes in the dyke at the expense of eliminating it altogether, the constraint caused a speed problem. It’s a problem because while we’re plugging holes, an eager competitor will dismantle the need for the dyke. Speed problem.

Sure, we’d leapfrog the competition, but we don’t have the budget. No, we have a budget. But, like the other constraints, the budgetary one is also about the work that will get done. If the constraint prioritizes same-as-last-time over crazy, it creates a speed problem. New competitors who don’t have to protect the old guard products will work on crazy and bring it to market. And that’s a problem because you’ll have more of what you’ve always had and they’ll have crazy.

Yes, in all cases, choose the bigger bet. Choose crazy over sane, magical over mundane, and irregular over regular. And choose that way because it’s faster. And here’s why faster is king: The number of countries with a well educated work force is growing; there’s an ever increasing number of micro companies who can afford to bet on disruptive technologies; and the internet has shown the world how their lives could be and created several billion people who will use their parental fortitude to do whatever it takes to make life better for their kids. (And there’s no stronger force on earth.) And it all sums to an incredible amount of emotional energy relentlessly pushing the pace.

The world isn’t just getting faster, it’s accelerating – yes, next month will be faster than this month, but that’s not the real trick with acceleration. With acceleration the faster things get, the faster they get faster. Is there really any question how to use your constraints?

Product Thinking

Product costs, without product thinking, drop 2% per year. With product thinking, product costs fall by 50%, and while your competitors’ profit margins drift downward, yours are too high to track by conventional methods. And your company is known for unending increases in stock price and long term investment in all the things that secure the future.

The supply chain, without product thinking, improves 3% per year. With product thinking, longest lead processes are eliminated, poorest yield processes are a thing of the past, problem suppliers are gone, and your distributers associate your brand with uninterrupted supply and on time delivery.

Product robustness, without product thinking, is the same year-on-year. Re-injecting long forgotten product thinking to simplify the product, product robustness jumps to unattainable levels and warranty costs plummet. And your brand is known for products that simply don’t break.

Rolled throughput yield is stalled at 90%. With product thinking, the product is simplified, opportunities for defects are reduced, and throughput skyrockets due to improved RTY. And your brand is known as a good value – providing good, repeatable functionality at a good price.

Lean, without product thinking has delivered wonderful results, but the low hanging fruit is gone and lean is moving into the back office. With product thinking, the design is changed and value-added work is eliminated along with its associated non-value added work (which is about 8 times bigger); manufacturing monuments with their long changeover times are ripped out and sold to your competitors; work from two factories is consolidated into one; new work is taken on to fill the emptied factories; and profit per square foot triples. And your brand is known for best-in-class quality, unbeatable on time delivery, world class performance, and pioneering the next generation of lean.

The sales argument is low price and good payment terms. With product thinking, the argument starts with product performance and ends with product reliability. The sales team is energized, and your brand is linked with solid products that just plain work.

The marketing approach is stickers and new packaging. With product thinking, it’s based on competitive advantage explained in terms of head-to-head performance data and a richer feature set. And your brand stands for winning technology and killer products.

Product thinking isn’t for everyone. But for those that try – your brand will thank you.

The Flux Lines of Innovation

There are countless books, tools, processes, methodologies and frameworks for innovation.

And cutting across all theory and practice, the biggest fundamental of innovation is fear.

We define fear as bad because it limits new thinking and new actions, but there’s another way to look at it. We should look at fear as a leading indicator of innovation potential.

When inputs, outputs, or contexts are different than expectations, our bodies create physical symptoms we recognize as fear.  It’s this chemical change in the body, manifested as cold sweats, tingling hands, difficulty in breathing, or knotted stomachs, that’s the tell-tale sign innovation is in the house.

If things are predictable, knowable, understandable, there is no fear.  And if things are predictable, knowable, understandable there is no innovation.  By the associative theorem: no fear, no innovation.

We should learn to use our bodies as innovation barometers.  When pressure builds, especially when we don’t know why, we should recognize our fear, not as a blocker of innovation, but as a leading indicator of it.

Innovation, especially the type that reinvents, is not an in-the-head thing, it’s an in-the-chest thing.  It’s indescribable, un-scriptable, and almost spiritual. Just as migratory birds sense weak magnetic fields to guide themselves home, we can use our bodies to sense fear and guide ourselves along the flux lines of innovation.

Fear is scary and can be uncomfortable.  But for innovation, it’s scarier if there’s no fear.

Wrestle Your Success To The Ground

wrestle success to the groundInnovation, as a word, has become too big for its own good, and, as a word, is almost useless. Sure, it can be used to enable magical reinvention of business models and revolutionary products and technologies, but it can also be used to rationalize the rehash work we were going to do anyway. The words that send angry chills down the back of the would-be-innovative company – “We’re already doing it.”

When company leaders talk about doing more innovation, there’s a lot of pressure in the organization to point to innovative things already being done. The organization misinterprets the desire for more innovation as a negative commentary on their work. The mental dialog goes like this – We’re good at our work, we’re working as hard as we can, and we’re doing all we can to meet objectives – hey, look at this innovative stuff we’re doing. Clearly this isn’t what company leaders are looking for, but the word does have that influence.

What can feel better is to describe what is meant by innovation. Wherever we are, whatever successes we’ve had, we want to change our behaviors to create new, more profitable business models; create new products and technologies that obsolete our best, most profitable ones; and change our behaviors to create new, more profitable markets. The key is to acknowledge that our existing behaviors are the very thing that has created our success (and thank them for it), and to acknowledge the desire to build on our success by obsoleting it. When we ask for more innovation, we’re asking for new behaviors to dismantle our current day success behind us to create the next level of success.

There’s a tight link to innovation and failure – risk, learning, experimentation – but there’s a missing link with success. Acknowledgement of success helps the organization retain its self worth and helps them feel good about trying new stuff. However, even still, success is huge deterrent to innovation. Company success will retain the behaviors that created it, and more strongly, as new behaviors are injected, the antibodies of success will reject them. Our strength becomes our weakness.

Strong technologies become anchors to themselves; successful, stable, long-running markets hold tightly to resources that created them; and time-tested business models are above the law. New behaviors almost don’t stand a chance.

Fear of losing what we have is the number one innovation blocker. Where failure blocks innovation narrowly in the blast zone, success smears a thick layer of inaction across the organization. What’s most insidious, since we celebrate success, since we laud customer focus, since we track and reward efficiently doing what we’ve done, we systematically thicken and stiffen the layer that gums up innovation.

Instead of starting with a call-to-arms for innovation, it’s best to define company values, mission, and strategic objectives. Then, and only then, define innovation as the way to get there. First company objectives, then innovation as the path.

Innovation, as a word, isn’t important. What’s important are the new behaviors that will wrestle success to the ground, and pin it.

Mike Shipulski Mike Shipulski
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