Archive for June, 2017

Companies don’t innovate, people do.

Big companies hold tightly to what they have until they feel threatened by upstarts, and not before. They mobilize only when they see their sales figures dip below the threshold of tolerability, and no sooner. And if they’re the market leaders, they delay their mobilization through rationalization.  The dip is due to general economic slowdown that is out of our control, the dip is due to temporary unrest from the power structure change in government, or the dip is due to some ethereal force we don’t yet fully understand. The strength of big companies is what they have, and they do what it takes only when what they have is threatened.  But once they’re threatened, watch out. But, the truth is, big companies don’t make change, people within big companies make change.

Start-ups want to change everything. They reject what they don’t have and threaten the status-quo at every turn.  And they’re always mobilized to grow sales.  Every new opportunity brings an opportunity to change the game. In a ready-fire-aim way, every phone call with a potential customer is an opportunity to dilute and defocus. Each new opportunity is an opportunity to create a mega business and each new customer segment is an opportunity to pivot. The strength of start-ups is what they don’t have. No loyalty to an existing business model, no shared history with other companies, and no NIH (not invented here). But, once they focus and decide to converge on an important market segment, watch out.  But, truth is, start-ups don’t make change, people within start-ups make change.

When you work in a big company, if your idea is any good the established business units will try to stomp it into oblivion because it threatens their status quo.  In that way, if your idea is dismissed out of hand or stomped on aggressively, you are likely onto something worth pursuing. If you’re told by the experts “It will never work.” that’s a sign from the gods that your idea has strong merit and deserves to be worked. And this is where it comes down to people. The person with the idea can either pack it in or push through the intellectual inertia of company success.  To be clear – it’s their choice. If they pack it in, the idea never sees the light of day. But if they decide, despite the fact they’re not given the tools, time, or training, to build a prototype and show it to company leadership, your company has a chance to reinvent itself. What causes and conditions have you put in place for your passionate innovators to choose to do the hard work of making a prototype?

When you work at a start-up the objective is to dismantle the status quo, and all ideas are good ideas. In that way, your idea will be praised and you’ll be urged to work on it. If you’re told by the experts “That could work.” it does not mean you should work on it. Since resources are precious, focus is mandatory. The person with the idea can either try to convert their idea into a prototype or respect the direction set by company leadership. To be clear – it’s their choice. If they work on their new idea they dilute the company’s best chance to grow. But if they decide, despite their excitement around their idea, to align with the direction set by the company, your startup has a chance to deliver on its aggressive promises. What causes and conditions have you put in place for your passionate innovators to choose to do the hard work of aligning with the agreed upon approach and direction?

When no one’s looking, do you want your people to try new ideas or focus on the ones you already have? When given a choice, do you want them to focus on existing priorities or blow them out of the water? And if you want to improve their ability to choose, what can you put in place to help them choose wisely?

To be clear, a formal set of decision criteria and a standardized decision-making process won’t cut it here. But that’s not to say decisions should be unregulated and unguided. The only thing that’s flexible and powerful enough to put things right is the good judgment of the middle managers who do the work.  “Middle managers” is not the best words to describe who I’m talking about. I’m talking about the people you call when the wheels fall off and you need them put back on in a hurry. You know who I’m talking about.  In start-ups or big companies, these people have a deep understanding of what the company is trying to achieve, they know how to do the work and know when to say “give it a try” and when to say “not now.” When people with ideas come to them for advice, it’s their calibrated judgement that makes the difference.

Calibrated judgement of respected leaders is not usually called out as a make-or-break element of innovation, growth and corporate longevity, but is just that.  But good judgement around new ideas are the key to all three.  And it comes down to a choice – do those ideas die in the trenches or are they kindly nurtured until they can stand on their own?

No getting around it, it’s a judgment call whether an idea is politely put on hold or accelerated aggressively. And no getting around it, those decisions make all the difference.

Image credit Mark Strozier

Working with uncertainty

Try – when you’re not sure what to do.

Listen – when you want to learn.

Build – when you want to put flesh on the bones of your idea.

Think – when you want to make progress.

Show a customer – when you want to know what your idea is really worth.

Put it down – when you want your subconscious to solve a problem.

Define – when you want to solve.

Satisfy needs – when you want to sell products

Persevere – when the status quo kicks you in the shins.

Exercise – when you want set the conditions for great work.

Wait – when you want to run out of time and money.

Fear failure – when you want to block yourself from new work.

Fear success – when you want to stop innovation in its tracks.

Self-worth – when you want to overcome fear.

Sleep – when you want to be on your game.

Chance collision – when you want something interesting to work on.

Write – when you want to know what you really think.

Make a hand sketch – when you want to communicate your idea.

Ask for help – when you want to succeed.

Image credit – Daniel Dionne

Rule 1: Allocate resources for effectiveness.

We live in a resource constrained world where there’s always more work than time.  Resources are always tighter than tight and tough choices must be made. The first choice is to figure out what change you want to make in the world. How do you want put a dent in the universe? What injustice do you want to put to rest? Which paradigm do you want to turn on its head?

In business and in life, the question is the same – How do you want to spend your time?

Before you can move in the right direction, you need a direction. At this stage, the best way to allocate your resources is to define the system as it is. What’s going on right now? What are the fundamentals? What are the incentives? Who has power?  Who benefits when things move left and who loses when things go right?  What are the main elements of the system? How do they interact? What information passes between them? You know you’ve arrived when you have a functional model of the system with all the elements, all the interactions and all the information flows.

With an understanding of how things are, how do you want to spend your time? Do you want to validate your functional model? If yes, allocate your resources to test your model. Run small experiments to validate (or invalidate) your worldview.  If you have sufficient confidence in your model, allocate your resources to define how things could be.  How do you want the fundamentals to change? What are the new incentives? Who do you want to have the power? And what are the new system elements, their new interactions and new information flows?

When working in the domain of ‘what could be’ the only thing to worry about is what’s next. What’s after the next step?  Not sure. How many resources will be required to reach the finish line? Don’t know. What do we do after the next step? It depends on how it goes with this step. For those that are used to working within an efficiency framework this phase is a challenge, as there can be no grand plan, no way to predict when more resources will be needed and no way to guarantee resources will work efficiently. For the ‘what could be’ phase, it’s better to use a framework of effectiveness.

In a one-foot-in-front-of-the-other way, the only thing that matters in the ‘what could be’ domain is effectively achieving the next learning objective. It’s not important that the learning is done most efficiently, it matters that the learning is done well and done quickly.  Efficiently learning the wrong thing is not effective. Running experiments efficiently without learning what you need to is not effective. And learning slowly but efficiently is not effective.

Allocate resources to learn what needs to be learned. Allocate resources to learn effectively, not efficiently. Allocate your best people and give them the time they need.  And don’t expect an efficient path. There will be unplanned lefts and rights. There will be U-turns. There will times when there’s lots of thinking and little activity, but at this stage activity isn’t progress, thinking is. It may look like a drunkard’s walk, but that’s how it goes with this work.

When the objective of the work isn’t to solve the problem but to come up with the right question, allocate resources in a way that prioritizes effectiveness over efficiency. When working in the domain of ‘what could be’ allocate resources on the learning objective at hand. Don’t worry too much about the follow-on learning objectives because you may never earn the right to take them on.

In the domain of uncertainty, the best way to allocate the resources is to learn what you need to learn and then figure out what to learn next.

Image credit – John Flannery

The WHY and HOW of Innovation

Innovation is difficult because it demands new work. But, at a more basic level, it’s difficult because it requires an admission that the way you’ve done things is no longer viable. And, without public admission the old way won’t carry the day, innovation cannot move forward. After the admission there’s no innovation, but it’s one step closer.

After a public admission things must change, a cultural shift must happen for innovation to take hold. And for that, new governance processes are put in place, new processes are created to set new directions and new mechanisms are established to make sure the new work gets done.  Those high-level processes are good, but at a more basic level, the objectives of those process areto choose new projects, manage new projects and allocate resources differently. That’s all that’s needed to start innovation work.

But how to choose projects to move the company toward innovation? What are the decision criteria? What is the system to collect the data needed for the decisions? All these questions must be answered and the answers are unique to each company. But for every company, everything starts with a top line growth objective, which narrows to an approach based on an industry, geography or product line, which then further necks down to a new set of projects. Still no innovation, but there are new projects to work on.

The objective of the new projects is to deliver new usefulness to the customer, which requires new technologies, new products and, possibly, new business models. And with all this newness comes increased uncertainty, and that’s the rub. The new uncertainty requires a different approach to project management, where the main focus moves from execution of standard tasks to fast learning loops. Still no innovation, but there’s recognition the projects must be run differently.

Resources must be allocated to new projects. To free up resources for the innovation work, traditional projects must be stopped so their resources can flow to the innovation work. (Innovation work cannot wait to hire a new set of innovation resources.)  Stopping existing projects, especially pet projects, is a major organizational stumbling block, but can be overcome with a good process. And once resources are allocated to new projects, to make sure the resources remain allocated, a separate budget is created for the innovation work. (There’s no other way.) Still no innovation, but there are people to do the innovation work.

The only thing left to do is the hardest part – to start the innovation work itself. And to start, I recommend the IBE (Innovation Burst Event). The IBE starts with a customer need that is translated into a set of design challenges which are solved by a cross-functional team.  In a two-day IBE, several novel concepts are created, each with a one page plan that defines next steps.  At the report-out at the end of the second day, the leaders responsible for allocating the commercialization resources review the concepts and plans and decide on next steps. After the first IBE, innovation has started.

There’s a lot of work to help the organization understand why innovation must be done. And there’s a lot of work to get the organization ready to do innovation. Old habits must be changed and old recipes must be abandoned. And once the battle for hearts and minds is won, there’s an equal amount of work to teach the organization how to do the new innovation work.

It’s important for the organization to understand why innovation is needed, but no customer value is delivered and no increased sales are booked until the organization delivers a commercialized solution.

Some companies start innovation work without doing the work to help the organization understand why innovation work is needed. And some companies do a great job of communicating the need for innovation and putting in place the governance processes, but fail to train the organization on how to do the innovation work.

Truth is, you’ve got to do both. If you spend time to convince the organization why innovation is important, why not get some return from your investment and teach them how to do the work? And if you train the organization how to do innovation work, why not develop the up-front why so everyone rallies behind the work?

Why isn’t enough and how isn’t enough. Don’t do one without the other.

Image credit — Sam Ryan

Mike Shipulski Mike Shipulski
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