Change your risk disposition.

royal army parachute dogInnovation creates things that are novel, useful and successful.  Something that’s novel is something that’s different, and something that’s different creates uncertainty.  And, as we know, uncertainty is the enemy of all things sacred.

Lean and Six Sigma have been so successful that the manufacturing analogy has created a generation that expects all things to be predictable, controllable and repeatable.  Above all else, this generation values certainty.  Make the numbers; reduce variability; reduce waste; do it on time  – all mantras of the manufacturing analogy, all advocates of predictability and all enemies of uncertainty.

With the manufacturing analogy, a culture of accountability is the natural end game (especially when it comes to outcomes), but what most don’t understand is a culture that values accountability of outcomes is a culture that cannot tolerate uncertainty.  And what fewer understand is a culture intolerant of uncertainty is a culture intolerant of innovation.

By definition, innovation and uncertainty are a matched pair – you can’t have one without the other.  You can have both or neither – that’s the rule.  And though we usually use the word “risk” rather than “uncertainty”, risk is a result of uncertainty and uncertainty is the fundamental.

When a product is launched and it’s poorly received, it’s likely due to an untested value proposition. And the reason the value proposition went untested is uncertainty, uncertainty around the negative consequences of challenging authority.  Someone on high decreed the value proposition was real and the organization, based on how leadership responded in the past, did not challenge the decree because the last person who challenged authority was fired, demoted or ostracized.

When the new product is 3% better than the last one, again, the enemy is uncertainty.  This time it’s either uncertainty around what the customer will value or uncertainty around the ability to execute on technology work.  The organization cannot tolerate the risk (uncertainty), so it does what it did last time.

When the new product has more new features and functions than it has a right to, intolerance to uncertainty is the root cause.  This time it’s uncertainty around the negative consequences of prioritizing one feature over another.  Said another way, it’s about uncertainty (and the resulting fear) around using judgement.

These three scenarios are reward looking, as the uncertainty has already negatively impacted the innovation work.  To mitigate the negative impacts on innovation, uncertainty must be part of the equation from the outset.

When it’s time for you to call for more innovation, it’s also the time to acknowledge you want more uncertainty.  And it’s not enough to say you’ll tolerate more uncertainty because that takes you off the hook and puts it all on the innovators.  You must tell the company you expect more uncertainty.  This is important because the innovators won’t limit their work by an unnaturally low uncertainty threshold, rather they’ll do the work demanded by the hyper-aggressive growth goals.

And when you ask for more uncertainty, it’s time to explicitly tell people you expect them to use their judgment more freely and more frequently.  With uncertainty there is no best practice, but there is best judgment.  And when your best people use their best judgement, uncertainty is navigated in the most effective way.

But, really, if you ask for more uncertainty you won’t get it. The level of uncertainty in the trenches is set by your risk disposition.  People in your company know, based on leadership’s actions – what’s rewarded and what’s punished – the company’s risk disposition and it governs their actions. If you take the pulse of your portfolio of technology projects you will see your risk disposition.  The thing to remember is your risk disposition is the boss and the level of innovation is subservient.

When the CEO demands you change the innovation work for the better, politely suggest a plan to change the company’s risk disposition.  And when the CEO asks how to do that, politely suggest a visit to Jim McCormick’s website.

Image credit – Suzanne Gerber

Bookmark and Share

Innovation is alive and well.

Old barn with ivyInnovation isn’t a thing in itself; rather, it’s a result of something. Set the right input conditions, monitor the right things in the right ways, and innovation weaves itself into the genetic makeup of your company.  Like ivy, it grabs onto outcroppings that are the heretics and wedges itself into the cracks of the organization.  It grows unpredictably, it grows unevenly, it grows slowly.  And one day you wake up and your building is covered with the stuff.

Ivy doesn’t grow by mistake – It takes some initial plantings in strategic locations, some water, some sun, something to attach to, a green thumb and patience.  Innovation is the same way.

There’s no way to predict how ivy will grow.  One young plant may dominate the others; one trunk may have more spurs and spread broadly; some tangles will twist on each other and spiral off in unforeseen directions; some vines will go nowhere.  Though you don’t know exactly how it will turn out, you know it will be beautiful when the ivy works its evolutionary magic.  And it’s the same with innovation.

Ivy and innovation are more similar than it seems, and here are some rules that work for both:

  • If you don’t plant anything, nothing grows.
  • If growing conditions aren’t right, nothing good comes of it.
  • Without worthy scaffolding, it will be slow going.
  • The best time to plant the seeds was three years ago.
  • The second best time to plant is today.
  • If you expect predictability and certainty, you’ll be frustrated.

Innovation is the output of a set of biological systems – our people systems – and that’s why it’s helpful to think of innovation as if it’s alive because, well, it is.  And like with a thriving colony of ants that grows steadily year-on-year, these living systems work well.  From 10,000 foot perspective ants and innovation look the same – lots of chaotic scurrying, carrying and digging.  And from an ant-to-ant, innovator-to-innovator perspective they are the same – individuals working as a coordinated collective within a shared mindset of long term sustainability.

Image credit – Cindy Cornett Seigle

Bookmark and Share

Compete with No One

Peace VanToday’s commercial environment is fierce.  All companies have aggressive growth objectives that must be achieved at all costs.  But there’s a problem – within any industry, when the growth goals are summed across competitors, there are simply too few customers to support everyone’s growth goals.  Said another way, there are too many competitors trying to eat the same pie.  In most industries it’s fierce hand-to-hand combat for single-point market share gains, and it’s a zero sum game – my gain comes at your loss.   Companies surge against each other and bloody skirmishes break out over small slivers of the same pie.

The apex of this glorious battle is reached when companies no longer have points of differentiation and resort to competing on price.  This is akin to attrition warfare where heavy casualties are taken on both sides until the loser closes its doors and the winner emerges victorious and emaciated.  This race to the bottom can only end one way – badly for everyone.

Trench warfare is no way for a company to succeed, and it’s time for a better way.  Instead of competing head-to-head, it’s time to compete with no one.

To start, define the operating envelope (range of inputs and outputs) for all the products in the market of interest.  Once defined, this operating envelope is off limits and the new product must operate outside the established design space.  By definition, because the new product will operate with input conditions that no one else’s can and generate outputs no one else can, the product will compete with no one.

In a no-to-yes way, where everyone’s product says no, yours is reinvented to say yes.  You sell to customers no one else can; you sell into applications no one else can; you sell functions no one else can.  And in a wicked googly way, you say no to functions that no one else would dare.  You define the boundary and operate outside it like no one else can.

Competing against no one is a great place to be – it’s as good as trench warfare is bad – but no one goes there.  It’s straightforward to define the operating windows of products, and, once define it’s straightforward to get the engineers to design outside the window.  The hard part is the market/customer part.  For products that operate outside the conventional window, the sales figures are the lowest they can be (zero) and there are just as many customers (none).  This generates extreme stress within the organization.  The knee-jerk reaction is to assign the wrong root cause to the non-existent sales.  The mistake – “No one sells products like that today, so there’s no market there.”  The truth – “No one sells products like that today because no one on the planet makes a product like that today.”

Once that Gordian knot is unwound, it’s time for the marketing community to put their careers on the line.  It’s time to push the organization toward the scary abyss of what could be very large new market, a market where the only competition would be no one.  And this is the real hard part – balancing the risk of a non-existent market with the reward of a whole new market which you’d call your own.

If slugging it out with tenacious competitors is getting old, maybe it’s time to compete with no one.  It’s a different battle with different rules.  With the old slug-it-out war of attrition, there’s certainty in how things will go – it’s certain the herd will be thinned and it’s certain there’ll be heavy casualties on all fronts.  With new compete-with-no-one there’s uncertainty at every turn, and excitement. It’s a conflict governed by flexibility, adaptability, maneuverability and rapid learning.  Small teams work in a loosely coordinated way to test and probe through customer-technology learning loops using rough prototypes and good judgement.

It’s not practical to stop altogether with the traditional market share campaign – it pays the bills – but it is practical to make small bets on smart people who believe new markets are out there.  If you’re lucky enough to have folks willing to put their careers on the line, competing with no one is a great way to create new markets and secure growth for future generations.

Image credit – mae noelle

Bookmark and Share

Purposeful Violation of the Prime Directive

Live Long and ProsperIn Star Trek, the Prime Directive is the over-arching principle for The United Federation of Planets.  The intent of the Prime Directive is to let a sentient species live in accordance with its normal cultural evolution.  And the rules are pretty simple – do whatever you want as long as you don’t violate the Prime Directive.   Even if Star Fleet personnel know the end is near for the sentient species, they can do nothing to save it from ruin.

But what does it mean to “live in accordance with the normal cultural evolution?” To me it means “preserve the status quo.”  In other words, the Prime Directive says – don’t do anything to challenge or change the status quo.

Though today’s business environment isn’t Star Trek and none of us work for Star Fleet, there is a Prime Directive of sorts.  Today’s Prime Directive deals not with sentient species and their cultures but with companies and their business models, and its intent is to let a company live in accordance with the normal evolution of its business model.   And the rules are pretty simple – do whatever you want as long as you don’t violate the Prime Directive.  Even if company leaders know the end is near for the business model, they can do nothing to save it from ruin.

Business models, and their decrepit value propositions propping them up, don’t evolve.  They stay just as they are.  From inside the company the business model and value proposition are the very things that provide sustenance (profitability).  They are known and they are safe – far safer than something new – and employees defend them as diligently as Captain Kirk defends his Prime Directive.  With regard to business models, “to live in accordance with its natural evolution” is to preserve the status quo until it goes belly up. Today’s Prime Directive is the same as Star Trek’s – don’t do anything to challenge or change the status quo.

Innovation brings to life things that are novel, useful, and successful.  And because novel is the same as different, innovation demands complete violation of today’s Prime Directive.  For innovators to be successful, they must blow up the very things the company holds dear – the declining business model and its long-in-the-tooth value proposition.

The best way to help innovators do their work is to provide them phasers so they can shoot those in the way of progress, but even the most progressive HR departments don’t yet sanction phasers, even when set to “stun”.  The next best way is to educate the company on why innovation is important.  Company leaders must clearly articulate that business models have a finite life expectancy (measured in years, not decades) and that it’s the company’s obligation to disrupt and displace it.them.

The Prime Directive has a valuable place in business because it preserves what works, but it needs to be amended for innovation.  And until an amendment is signed into law, company leaders must sanction purposeful violation of the Prime Directive and look the other way when they hear the shrill ring a phaser emanating  from the labs.

Image credit – svenwerk

Bookmark and Share

Systematic Innovation

John BoydInnovation is a journey, and it starts from where you are.  With a systematic approach, the right information systems are in place and are continuously observed, decision makers use the information to continually orient their thinking to make better and faster decisions, actions are well executed, and outcomes of those actions are fed back into the observation system for the next round of  orientation.  With this method, the organization continually learns as it executes – its thinking is continually informed by its environment and the results of its actions.

To put one of these innovation systems in place, the first step is to define the group that will make the decisions. Let’s call them the Decision Group, or DG for short. (By the way, this is the same group that regularly orients itself with the information steams.) And the theme of the decisions is how to deploy the organization’s resources.  The decision group (DG) should be diverse so it can see things from multiple perspectives.

The DG uses the company’s mission and growth objectives as their guiding principles to set growth goals for the innovation work, and those goals are clearly placed within the context of the company’s mission.

The first action is to orient the DG in the past.  Resources are allocated to analyze the product launches over the past ten years and determine the lines of ideality (themes of goodness, from the customers’ perspective).  These lines define the traditional ideality (traditional themes of goodness provided by your products) are then correlated with historical profitability by sales region to evaluate their importance. If new technology projects provide value along these traditional lines, the projects are continuous improvement projects and the objective is market share gain. If they provide extreme value along traditional lines, the projects are of the dis-continuous improvement flavor and their objective is to grow the market.  If the technology projects provide value along different lines and will be sold to a different customer base, the projects could be disruptive and could create new markets.

The next step is to put in place externally focused information streams which are used for continuous observation and continual orientation.  An example list includes: global and regional economic factors, mergers/acquisitions/partnerships, legal changes, regulatory changes, geopolitical issues, competitors’ stock price and quarterly updates, and their new products and patents.  It’s important to format the output for easy visualization and to make collection automatic.

Then, internally focused information streams are put in place that capture results from the actions of the project team and deliver them, as inputs, for observation and orientation.  Here’s an example list: experimental results (technology and market-centric), analytical results (technical and market), social media experiments, new concepts from ideation sessions (IBEs), invention disclosures, patent filings, acquisition results, product commercialization results and resulting profits.  These information streams indicate the level of progress of the technology projects and are used with the external information streams to ground the DG’s orientation in the achievements of the projects.

All this infrastructure, process, and analysis is put in place to help the DG make good (and fast) decisions about how to allocate resources. To make good decisions, the group continually observes the information streams and continually orients themselves in the reality of the environment and status of the projects.  At this high level, the group decides not how the project work is done, rather what projects
are done.  Because all projects share the same resource pool, new and existing projects are evaluated against each other.  For ongoing work the DG’s choice is – stop, continue, or modify (more or less resources); and for new work it’s – start, wait, or never again talk about the project.

Once the resource decision is made and communicated to the project teams, the project teams (who have their own decision groups) are judged on how well the work is executed (defined by the observed results) and how quickly the work is done (defined by the time to deliver results to the observation center.)

This innovation system is different because it is a double learning loop.  The first one is easy to see – results of the actions (e.g., experimental results) are fed back into the observation center so the DG can learn.  The second loop is a bit more subtle and complex.  Because the group continuously re-orients itself, it always observes information from a different perspective and always sees things differently.  In that way, the same data, if observed at different times, would be analyzed and synthesized differently and the DG would make different decisions with the same data. That’s wild.

The pace of this double learning loop defines the pace of learning which governs the pace of innovation.   When new information from the streams (internal and external) arrive automatically and without delay (and in a format that can be internalized quickly), the DG doesn’t have to request information and wait for it. When the DG makes the resource-project decisions it’s always oriented within the context of latest information, and they don’t have to wait to analyze and synthesize with each other.  And when they’re all on the same page all the time, decisions don’t have to wait for consensus because it already has.  And when the group has authority to allocate resources and chooses among well-defined projects with clear linkage to company profitability, decisions and actions happen quickly.  All this leads to faster and better innovation.

There’s a hierarchical set of these double learning loops, and I’ve described only the one at the highest level.  Each project is a double learning loop with its own group of deciders, information streams, observation centers, orientation work and actions.  These lower level loops are guided by the mission of the company, goals of the innovation work, and the scope of their projects.  And below project loops are lower-level loops that handle more specific work.  The loops are fastest at the lowest levels and slowest at the highest, but they feed each other with information both up the hierarchy and down.

The beauty of this loop-based innovation system is its flexibility and adaptability.  The external environment is always changing and so are the projects and the people running them.  Innovation systems that employ tight command and control don’t work because they can’t keep up with the pace of change, both internally and externally.  This system of double loops provides guidance for the teams and sufficient latitude and discretion so they can get the work done in the best way.

The most powerful element, however, is the almost “living” quality of the system.  Over its life, through the work itself, the system learns and improves.  There’s an organic, survival of the fittest feel to the system, an evolutionary pulse, that would make even Darwin proud.

But, really, it’s Colonel  John Boyd who should be proud because he invented all this.  And he called it the OODA loop. Here’s his story – Boyd: The Fighter Pilot Who Changed the Art of War.

Where possible, I have used Boyd’s words directly, and give him all the credit. Here is a list of his words: observe, orient, decide, act, analyze-synthesize, double loop, speed, organic, survival of the fittest, evolution.

Image attribution – U.S. Government [public domain]. by wikimedia commons.


Bookmark and Share

The Certainty of Uncertainty

Eye Of The StormWhen the output cannot be predicted, that’s uncertainty.  And if there’s one thing to be certain of it’s uncertainty is always part of the equation.

With uncertainty, the generally accepted practice is minimization, and the method of choice is to control inputs.  The best example is a high volume manufacturing process where inputs are controlled to reduce variation of the output (or reduce the uncertainty around goodness).  Six Sigma tightens the screws on suppliers, materials, process steps, assembly tools and measurement gear so the first car off the production line is the same as the last one.  That way, customers are certain to get what they’re promised.  Minimization of uncertainty makes a lot of sense in the manufacturing analogy.

But there’s no free lunch with uncertainty, and the price of all this control is inflexibility.  The manufacturing process can do only what it’s designed to do – to make what it was designed to make – and no more.  And it can provide certainty of output only over a finite input range.  Within the appropriate range of inputs there is certainty, but outside that range there is uncertainty.  Even in the most well defined, highly controlled processes where great expense is taken to reduce uncertainty, there is uncertainty.  Even the best automotive assembly lines can be disrupted by things like tsunamis, earthquakes, epidemics and labor strikes (100% certainty doesn’t exist).  But still, in the manufacturing context minimization of uncertainty is a sound strategy.

When the intent of a process is to do things that have never been done and to bring new things to life, minimization of uncertainty is directionally incorrect.  Said a different way, creativity and innovation demand uncertainty.  More clearly – if there’s no uncertainty in the trenches, there’s no innovation.

The manufacturing analogy has been pushed too far from the factory.  Just as Six Sigma has eliminated variation (and uncertainty) from things it shouldn’t (creativity work), lean and its two uncertainty killers (best practices and standard work) have been jammed into the gears of innovation and gummed up the works.

Standard work and best practices were invented to reduce variation in how work is done with the objective of, you guessed it, reducing uncertainty. The idea is to continuously improve and converge on the right recipe (sequence of operations or process steps) so the work is done the same way every-day-all-day.  By definition, innovation work (the process steps) is never done the same way twice.  The rule with best practices is simple – it should be reused every time there’s a need for that exact process.  That makes sense.  But it makes no sense to use a best practice when a process is done for the first time.

[Okay, the purists say that all transactional elements of innovation should follow standard work, and theoretically that’s right.  But practically, the backwash of standard work, even when applied to transactional work, infects the psyche of the innovator and reduces uncertainty where uncertainty should be bolstered.]

Uncertainty is an important part of innovation, but it should not be maximized (it’s as inappropriate as minimizing).  And there is no best practice for calculating the right amount.  To strike a good balance, hold onto the fact that uncertainty and flexibility are a matched pair, and when doing something for the first time flexibility is a friend.  And when standard work and best practices are imposed in the name of innovation efficiency, remember it’s far more important to have innovation effectiveness.

Image credit – NMK Photography


Bookmark and Share

Clarity is King

Transparent ClarityIt all starts and ends with clarity.  There’s not much to it, really.  You strip away all the talk and get right to the work you’re actually doing.  Not the work you should do, want to do, or could do.  The only thing that matters is the work you are doing right now.  And when you get down to it, it’s a short list.

There’s a strong desire to claim there’s a ton of projects happening all at once, but projects aren’t like that.  Projects happen serially.  Start one, finish one is the best way.  Sure it’s sexy to talk about doing projects in parallel, but when the rubber meets the road, it’s “one at time” until you’re done.

The thing to remember about projects is there’s no partial credit.  If a project is half done, the realized value is zero, and if a project is 95% done, the realized value is still zero (but a bit more frustrating).  But to rationalize that we’ve been working hard and that should count for something, we allocate partial credit where credit isn’t due.  This binary thinking may be cold, but it’s on-the-mark.  If your new product is 90% done, you can’t sell it – there is no realized value.  Right up until it’s launched it’s work in process inventory that has a short shelf like – kind of like ripe tomatoes you can’t sell.  If your competitor launches a winner, your yet-to-see-day light product over-ripens.

Get a pencil and paper and make the list of the active projects that are fully staffed, the ones that, come hell or high water, you’re going to deliver.  Short list, isn’t it?  Those are the projects you track and report on regularly.  That’s clarity. And don’t talk about the project you’re not yet working on because that’s clarity, too.

Are those the right projects?  You can slice them, categorize them, and estimate the profits, but with such a short list, you don’t need to.  Because there are only a few active projects, all you have to do is look at the list and decide if they fit with company expectations.  If you have the right projects, it will be clear.  If you don’t, that will be clear as well.  Nothing fancy – a list of projects and a decision if the list is good enough.  Clarity.

How will you know when the projects are done?  That’s easy – when the resources start work on the next project.  Usually we think the project ends when the product launches, but that’s not how projects are.  After the launch there’s a huge amount of work to finish the stuff that wasn’t done and to fix the stuff that was done wrong.  For some reason, we don’t want to admit that, so we hide it.  For clarity’s sake, the project doesn’t end until the resources start full-time work on the next project.

How will you know if the project was successful?  Before the project starts, define the launch date and using that launch data, set a monthly profit target.  Don’t use units sold, units shipped, or some other anti-clarity metric, use profit.  And profit is defined by the amount of money received from the customer minus the cost to make the product.  If the project launches late, the profit targets don’t move with it.  And if the customer doesn’t pay, there’s no profit.  The money is in the bank, or it isn’t.  Clarity.

Clarity is good for everyone, but we don’t behave that way.  For some reason, we want to claim we’re doing more work than we actually are which results in mis-set expectations.  We all know it’s matter of time before the truth comes out, so why not be clear?  With clarity from the start, company leaders will be upset sooner rather than later and will have enough time to remedy the situation.

Be clear with yourself that you’re highly capable and that you know your work better than anyone.  And be clear with others about what you’re working on and what you’re not.  Be clear about your test results and the problems you know about (and acknowledge there are likely some you don’t know about).

I think it all comes down to confidence and self-worth.  Have the courage wear clarity like a badge of honor.  You and your work are worth it.

Image credit – Greg Foster

Bookmark and Share

The Lonely Chief Innovation Officer

lonerChief Innovation Officer is a glorious title, and seems like the best job imaginable.  Just imagine – every-day-all-day it’s: think good thoughts, imagine the future, and bring new things to life.  Sounds wonderful, but more than anything, it’s a lonely slog.

In theory it’s a great idea – help the company realize (and acknowledge) what it’s doing wrong (and has been for a long time now), take resources from powerful business units and move them to a fledgling business units that don’t yet sell anything, and do it without creating conflict.  Sounds fun, doesn’t it?

Though there are several common problems with the role of Chief Innovation Officer (CIO), the most significant structural issue, by far, is the CIO has no direct control over how resources are allocated. Innovation creates products, services and business models that are novel, useful and successful.  That means innovation starts with ideas and ends with commercialized products and services.  And no getting around it, this work requires resources.  The CIO is charged with making innovation come to be, yet authority to allocate resources is withheld. If you’re thinking about hiring a Chief Innovation Officer, here’s a rule to live by:

If resources are not moved to projects that generate novel ideas, convert those ideas into crazy prototypes and then into magical products that sell like hotcakes, even the best Chief Innovation Officer will be fired within two years.

Structurally, I think it’s best if the powerful business units (who control the resources) are charged with innovation and the CIO is charged with helping them.  The CIO helps the business units create a forward-looking mindset, helps bring new thinking into the old equation, and provides subject matter expertise from outside the company.  While this addresses the main structural issue, it does not address the loneliness.

The CIO’s view of what worked is diametrically opposed to those that made it happen.  Where the business units want to do more of what worked, the CIO wants to dismantle the engine of success.  Where the engineers that designed the last product want to do wring out more goodness out of the aging hulk that is your best product, the CIO wants to obsolete it.  Where the business units see the tried-and-true business model as the recipe for success, the CIO sees it as a tired old cowpath leading to the same old dried up watering hole.  If this sounds lonely, it’s because it is.

To combat this fundamental loneliness, the CIO needs to become part of a small group of trusted CIOs from non-competing companies. (NDAs required, of course.)  The group provides its members much needed perspective, understanding and support.  At the first meeting the CIO is comforted by the fact that loneliness is just part of the equation and, going forward, no longer takes it personally.  Here are some example deliverables for the group.

Identify the person who can allocate resources and put together a plan to help that person have a big problem (no incentive compensation?) if results from the innovation work are not realized.

Make a list of the active, staffed technology projects and categorize them as: improving what already exists, no-to-yes (make a product/service do something it cannot), or yes-to-no (eliminate functionality to radically reduce the cost signature and create new markets).

For the active, staffed projects, define the market-customer-partner assumptions (market segment, sales volume, price, cost, distribution and sales models) and create a plan to validate (or invalidate) them.

To the person with the resources and the problem if the innovation work fizzles, present the portfolio of the active, staffed projects and its validated roll-up of net profit, and ask if portfolio meets the growth objectives for the company.  If yes, help the business execute the projects and launch the products/services.  If no, put a plan together to run Innovation Burst Events (IBEs) to come up with more creative ideas that will close the gap.

The burning question is – How to go about creating a CIO group from scratch?  For that, you need to find the right impresario that can pull together a seemingly disparate group of highly talented CIOs, help them forge a trusting relationship and bring them the new thinking they need.

Finding someone like that may be the toughest thing of all.

Image credit – Giant Humanitarian Robot.


Bookmark and Share

Innovation is a Choice

motivationA body in motion tends to stay in motion, unless it’s perturbed by an external force.  And, it’s the same with people – we keep doing what we’re doing until there’s a reason we cannot.  If it worked, there’s no external force to create changes, so we do more of what worked.  If it didn’t work, while that should result in an external force strong enough to create change, often it doesn’t and we try more of what didn’t work, but try it harder.  Though the scenarios are different, in both the external force is insufficient to create new behavior.

In order to know which camp you’re in, it’s important to know how we decide between what worked and what didn’t (or between working and not working).  To decide, we compare outcomes to expectations, and if outcomes are more favorable than our expectations, it worked; if less favorable, it didn’t.  It’s strange, but true – what we expect delineates what worked from what didn’t and what’s good enough from what isn’t.  In that way, it’s our choice.

Whether our business model is working, isn’t working, or hasn’t worked, what we think and do about it is our choice.  What that means is, regardless of the magnitude of the external force, we decide if it’s large enough to do our work differently or do different work.  And because innovation starts with different, what that means is innovation is a choice – our choice.

Really, though, external forces don’t create new behavior, internal forces do.  We watch the culture around us and sense the external forces it creates on us, then we look inside and choose to apply the real force behind innovation – our intrinsic motivation.  If we’re motivated by holding on to what we have, we’ll spend little of our life force on innovation.  If we’re motivated by a healthy dissatisfaction with the status quo, we’ll empty our tank in the name of innovation.

Who is tasked with innovation at your company is an important choice, because while the tools and methods of innovation can be taught, a person’s intrinsic motivation, a fundamental forcing function of innovation, cannot.

Image credit – Ed Yourdon

Bookmark and Share

The Best Leading Indicator of Innovation

Balancing ActEvaluation of innovation efforts is a hot topic. Sometimes it seems evaluating innovation is more important than innovation itself.

Metrics, indicators, best practices, success stories – everyone is looking for the magical baseline data to compare to in order to define shortcomings and close them. But it’s largely a waste of time, because with innovation, it’s different every time. Look back two years – today’s technology is different, the market is different, and the people are different. If you look back and evaluate what went on and then use that learning to extrapolate what will happen in the future, well, that’s like driving a Formula One car around the track while looking in the rear view mirror. You will crash and you will get hurt because, by definition, with innovation, what you did in the past no longer applies, even to you.

Here’s a rule – when you look backward to steer your innovation work, you crash.

When you compare yourself to someone else’s innovation rearward looking innovation metrics, it’s worse. Their market was different than yours is, their company culture was different than yours is, their company mission and values were different. Their situation no longer applies to them and it’s less applicable to you, yet that’s what you’re doing when you compare yourself to a rearview mirror look at a best practice company. Crazy.

We’re fascinated with innovation metrics that are easy to measure, but we shouldn’t be. Anything that’s easy to measure cannot capture the nuance of innovation. For example, the number of innovation projects you ran over the last two years is meaningless. What’s meaningful is the incremental profit generated by the novel deliverables of the work and your level of happiness with the incremental profit. Number of issued patents is also meaningless. What’s meaningful is the incremental profit created by the novel goodness of the patented technology and your level of happiness with it. Number of people that worked on innovation projects or the money spent – meaningless. Meaningful – incremental profit generated by the novel elements of the work divided by the people (or cost) that created the novel elements and your level of happiness with it.

Things are a bit better with forward looking metrics – or leading indicators – but not much. Again, our fascination with things that are easy to measure kicks us in the shins. Number of patent applications, number of people working on projects, number of fully staffed technology projects, monthly spend on R&D – all of these are easily measured but are poor predictors innovation results. What if the patented technology is not valued by the customer? What if the people working on projects are working on projects that result in products that don’t sell? What if the fully staffed projects create new technologies for new markets that never come to be? What if your monthly spend is spent on projects that miss the mark?

To me, the only meaningful leading indicator for innovation is a deep understanding of your active technology projects. What must the technology do so the new market will buy it? How do you know that? Can you quantify that goodness in a quantifiable way? Will you know when that goodness has been achieved? In what region will the product be sold? What is the cost target, profit margin and the new customers’ ability to pay? What are the results of the small experiments where the team tested the non-functional prototypes and their price points in the new market? What does the curve look like for price point versus sales volume? What is your level of happiness with all this?

We have an unhealthy fascination with innovation metrics that are easy to measure. Instead of a sea of metrics that are easy to measure, we need nuanced leading indicators that are meaningful. And I cannot give you a list of meaningful leading indicators, because each company has a unique list which is defined by its growth objectives, company culture and values, business models, and competition. And I cannot give you threshold limits for any of them because only you can define that. The leading indicators and their threshold values are context-specific – only you can choose them and only you can judge what levels make you happy.  Innovation is difficult because it demands judgment, and no metrics or leading indicators can take judgment out of the equation.

Creativity creates things that are novel and useful while innovation creates things that are novel, useful and successful. Dig into the details of your active technology projects and understand them from a customer-market perspective, because success comes only when customers buy your new products.

Image credit – coloneljohnbritt

Bookmark and Share

Constructive Conflict

Dragoon Jumping and Double SpearsInnovation starts with different, and when you propose something that’s different from the recipe responsible for success, innovation becomes the enemy of success. And because innovation and different are always joined at the hip, the conflict between success and innovation is always part of the equation. Nothing good can come from pretending the conflict does not exist, and it’s impossible to circumvent. The only way to deal with the conflict is to push through it.

Emotional energy is the forcing function that pushes through conflict, and the only people that can generate it are the people doing the work. As a leader, your job is to create and harness this invisible power, and for that, you need mechanisms.

To start, you must map innovation to “different”.  The first trick is to ask for ideas that are different. Where brainstorming asks for quantity, firmly and formally discredit it and ask for ideas that are different. And the more different, the better. Jeffrey Baumgartner has it right with his Anticonventional Thinking (ACT) methodology where he pushes even further and asks for ideas that are anti-conventional.

The intent is to create emotional energy, and to do that there’s nothing better than telling the innovation team their ideas are far too conventional. When you dismiss their best ideas because they’re not different enough, you provide clear contrast between the ideas they created and the ones you want. And this contrast creates internal conflict between their best thinking and the thinking you want.  This internal conflict generates the magical emotional energy needed to push through the conflict between innovation and success.  In that way, you create intrinsic conflict to overpower the extrinsic conflict.

Because innovation is powered by emotional energy, conflict is the right word.  Yes, it feels too strong and connotes quarrel and combat, but it’s the right word because it captures the much needed energy and intensity around the work. Just as when “opportunity” is used in place of “problem” and the urgency, importance, and emotion of the situation wanes, emotional energy is squandered when other words are used in place of “conflict”.

And it’s also the right word when it comes to solutions. Anti-conventional ideas demand anti-conventional solutions, both of which are powered by emotional energy. In the case of solutions, though, the emotional energy around “conflict” is used to overcome intellectual inertia.

Solving problems won’t get you mind-bending solutions, but breaking conflicts will. The idea is to use mechanisms and language to move from solving problems to breaking conflicts. Solving problems is regular work done as a matter of course and regular work creates regular solutions.  But with innovation, regular solutions won’t cut it.  We need irregular solutions that break from the worn tracks of predictable thinking. And do to this, all convention must be stripped away and all attachments broken to see and think differently.  And, to jolt people out of their comfort zone, contrast must be clearly defined and purposefully amplified.

The best method I know to break intellectual inertia is ARIZ and algorithmic method for innovative solutions built on the foundation of TRIZ.  With ARIZ, a functional model of the system is created using verb-noun pairs with the constraint that no industry jargon can be used. (Jargon links the mind to traditional thinking.) Then, for clarity, the functional model is then reduced to a conflict between two system elements and defined in time and place (the conflict domain.)  The conflict is then made generic to create further distance from the familiar.  From there the conflict is purposefully amplified to create a situation where one of the conflicting elements must be in two states at the same time (conflicting states) – hot and cold; large and small; stiff and flexible.  The conflicting states make it impossible to rely on preexisting solutions (familiar thinking.)  Though this short description of ARIZ doesn’t do it justice, it does make clear ARIZ’s intention – to use conflicts to break intellectual inertia.

Innovation butts heads and creates conflict with almost everything, but it’s not destructive conflict.  Innovation has the best intentions and wants only to create constructive conflict that leads to continued success. Innovation knows your tired business model is almost out of gas and desperately wants to create its replacement, but it knows your successful business model and its tried-and-true thinking are deeply rooted in the organization.  And innovation knows the roots are grounded in emotion and  it’s not about pruning it’s about  emotional uprooting.

Conflict is a powerful word, but the right word.  Use the ACT mechanism to ask for ideas that constructively conflict with your success and use the ARIZ mechanism to ask for solutions that constructively conflict with your best thinking.

With innovation there is always conflict.  You might as well make it constructive conflict and pull your organization into the future kicking and screaming.

Image credit – Kevin Thai

Bookmark and Share
Mike Shipulski Mike Shipulski
Subscribe via Email

Enter your email address:

Delivered by FeedBurner