Tuesday, November 08, 2022

Do you have plans or planners?

 I'm diverging a bit from my normal focus on innovation and strategy to write a brief piece on planning.  You see, planning is vital for strategy and for innovation, and is so ubiquitous that no one in corporate America believes that they lack for planning.  Planning is vital for innovation because planning is the concept of thinking ahead - getting ahead of the market, of competition, of customers.  There is no innovation without planning - you simply cannot innovate a new product or service immediately.  Most real innovation take years of development, or years of trial and error before they get it right.  We often only see the result, not realizing that a successful innovation was actually a twelve year overnight success.

Likewise, planning is important for strategy.  Thinking about strategy is thinking about how to win in a competitive marketplace and making decisions about investments and differentiations that will happen in the future and be realized in real time.  Planning is the art of thinking ahead, and if done well, thinking further and more deeply than your competition, leading to better ideas, but not necessarily better outcomes.  While I'll focus today on planning, obviously good planning without execution is worse than doing nothing at all.

A few quotes will guide us through our look at planning.  First, Ben Franklin.

Failing to plan is planning to fail

This quote is somewhat paraphrased, but it means basically the same thing as what Ben Franklin wrote as one of his many quoted sayings.  Few individuals can live by luck or happenstance alone, and this fact becomes reinforced and enlarged when we pull back to the larger scope and issues of a business.  Planning is vital for success and failing to plan is akin to driving down the highway at night with your headlights off.

Ah, you'll say, but we know this.  All of us plan regularly.  Don't we all have annual planning cycles in which we develop detailed plans about the next 12 months?  I'll acknowledge that many companies go through an annual planning cycle, but they do it in a rote manner, merely shifting the demands and timelines forward, repeating many of the same activities as in previous years.  Planning in many companies is formulaic, simplistic and very narrowly focused, looking only at what the company does, ignoring customers, markets, competitors, economies and so forth.  

When doing a little research (a fancy way to say Googling) on quotes for planning I came across one of my new favorites, from an unlikely source - Tolkien - who said, roughly paraphrased again, that it does not make sense to leave dragons out of your plans if they live in your neighborhood.  In other words, there are issues and challenges in your markets, competitors and environment, and if you are paying attention your plans should include these challenges to your business.  Far too often, corporate planning is conducted as if the company lives in a sealed bubble, impervious to what happens in the wider world.

Plans are useless, but planning is everything

The quote just above is attributed to Eisenhower and sometimes to Churchill, but it doesn't really matter who said it.  The concept is true.  Eisenhower was thinking about fighting a war, when an army has a plan but circumstances, weather, the enemy and other factors get in the way.  His point was that a plan, any plan, is, by itself, useful in one set of conditions, and an interesting artifact if the circumstances change.  Or, as Mike Tyson famously said - Everybody has a plan until they get punched in the mouth.

A plan is an artifact about what you thought might happen at a specific point in time, with fixed parameters and assumptions.  It is useful as long as its scope and assumptions hold true and becomes significantly less valuable as those assumptions or scope changes.  This is why Eisenhower and Churchill both recognized the value of planning - the activity - rather than the value of the outcome, the plan.  Planning, thinking about the possible futures, the things that will work in your favor and those elements that will work against you, and being able to foresee them and prepare for them, is what is valuable.

Companies today talk about being "agile" and nimble but make annual plans that are fixed to a specific set of conditions and assumptions.  If those assumptions change, or conditions aren't what were anticipated, plans go out the window, and little additional planning or thinking is done.  What is done is reacting to conditions.  A good planner understands the sensitivity of his or her plan to various conditions and assumptions, and carefully watches to track which of his or her assumptions or conditions are changing or are no longer true. The concept of being agile is valuable but being agile requires good planning.  Being reactive is not the same as being agile.

If your planners create dynamic, flexible, adaptable plans, they will identify the areas of sensitivity in their models and plans and will adjust to meet emerging challenges and conditions.  Planning, therefore, isn't an activity you conduct once a year in advance of the budgeting season and neglect the rest of the time.  Planning is a verb, an action verb, and should be engaged all the time.  The more competitive the market, the more change is underway, the more planning you need.

Don't just do something.  Stand there.

This is one quote I'd like to claim as my own, but I'm sure others have thought of it as well.  It turns the well-known demand - don't just stand there, do something - on its head.  I always think of this idea when I am reminded of how Einstein approached problems.  If given an hour to solve a complex problem, he said he'd use 55 minutes planning and considering the problem and 5 minutes defining an answer.  In the same way, we could bring into this discussion the Stephen Covey principle about "sharpening the saw" or Abe Lincoln's idea about sharpening the axe before cutting the tree.  These are all ideas about taking time to do the prep work and the planning correctly before plunging into the work.

Corporate America is often very ready to get the plans done, so that their teams can move out to do the "real work", so planning often gets very little time or focus, and once completed, plans are rarely reconsidered unless a business unit or product group is well off-plan.  And, when that happens, few people stop to consider whether or not the plan was wrong from the beginning, or if the conditions have changed.  No, if a team is off plan, it must be the team's fault.  For putting so little actual thought into a plan, we definitely make very high-quality plans.  That last sentence was entirely tongue in cheek.

Plan. Do. Check. Act.

I like the PDCA cycle because it starts with planning, has an action verb (do) and then has a review step (check), meaning that you should go back to check your plans.  Too often we treat these activities in a linear fashion, always moving forward but rarely going back to the source to confirm what we thought then is true today, or how we may need to adjust our thinking or actions.

In this brief post, I wanted to highlight the importance of an activity that we all think is important, but that we rush through, do once instead of honoring the fact that planning is an active verb, and rarely revisit even when the conditions the plan was built for have changed.

The faster the world works, the more change that is upon us, the more strategy and innovation we want and need, the more we need planning.  Plans are vital, but they are ephemeral, here today and gone tomorrow.  The skill of planning, and the regular exercise of planning, is what will create real market opportunity and differentiation.  Plans are useless, but planning is indispensable.

Do you have plans or planners?  Do your plans ever change?  Do you know which assumptions or conditions the plan is based on create the most sensitivity and upend the plan?  Do you regularly check your assumptions and conditions and update plans as the conditions change?  Are your plans gathering dust on the credenza in your office? Planning is an art, a verb and creates value.  Plans are an artefact, a noun and are useful in a moment.  It's important to know the difference.

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posted by Jeffrey Phillips at 5:58 AM 0 comments

Wednesday, November 02, 2022

Time for Innovation 2.0

 I've been writing about innovation for close to 20 years.  During most of that time, I've had the good fortune to lead innovation projects for clients as well. The work I get to do, and the material I see online and read in (yes, I still read paper magazines) has provided a lot of fodder for this blog over the years. There are kids out there, getting ready to graduate from college, who were just being born when I started doing innovation work.  Not to say I have a lot of experience, because equating years on the job with experience is a risky proposition.  Longevity is one thing, results is another, and renovation and renewal are a third.  It's really time to renovate innovation, or perhaps redefine or reclaim it from those who misunderstand or abuse it.

The problem with the word innovation is that it has multiple meanings.  It means whatever the person speaking intends it to mean and is often interpreted far differently by the listener.  Many executives understand this truth, so they litter their annual reports with the word innovation, hoping that the reader will assume the company is actually a leader in creating new products, services or business models.  This is yet another thing about innovation that needs to change.  Much like the green movement identifies greenwashing as talking about the environment without acting, we need to identify the use of innovation without results as what it is:  hype.

Innovation.  We're so over it

Sometimes I feel like Luther, asking the janitor to post the arguments for next week's debate on the church door.  Luther was frustrated with the way the Catholic church operated.  He felt that the Church needed to look closely at its practices and that it needed to reform.  He did not start out to overturn the Catholic Church or create the grand Reformation, or to create a new Protestant faith.  But, in the time and in the space in which he lived, his focus and passion, and the growing distance between the origin of the Church and what it had come to stand for, meant that many people were as frustrated as he was, and wanted to see change.

I'm no Luther, no deep thinker or scholar, but I can tell that corporations need change.  The economy is in a state of flux - the market up 500 points today, down 600 points tomorrow.  In a recovery from a pandemic, we are still working out supply chain issues.  Inflation is causing people to adjust their spending habits.  A futile and unnecessary war in Ukraine is creating global instability.  

In the midst of this Volatility, Uncertainty, Complexity and Ambiguity (VUCA), many corporations are frozen.  They need new revenue streams, new growth opportunities, but are terrified of making the wrong bets.  Managers, who have been taught to avoid risk and uncertainty, are now living in a period where every decision seems risky and uncertain.  In a period of high volatility and a lot of uncertainty, doubling down on what worked before is not a recipe for success.

Time to stop talking and start defining

We need to stop talking about innovation.  We need to start defining what it is, why it matters and then how we can deliver on its promise.

Recently, a good friend who works at a university asked me to provide some questions for an interview.  I asked:  what's the role?  Why do you need questions from me?  My friend replied that there was a new role opening up for innovation at a local university.  My first question was:  how are they defining innovation?  As tech transfer of intellectual property out of the university?  As a way to innovate the way the university works - content delivery and student experience?  To teach innovation to students?  All of these and more are possible.  The answer came back - they aren't sure.  My sense is that it seemed like a good idea to have a senior person at the university who had "innovation" in their title.

We need to stop playing word games, stop using innovation when we mean incremental change, stop implying that we are creating larger change than we really are.  The word innovation, and the act of innovating need to mean something.

What role should innovation play in your business?

Once we've defined what innovation is, we can next decide what role it will play in your organization.  Innovation can be very strategic - helping companies identify new opportunities and to create radically new products and services.  Innovation can also be rather incremental - improving existing products, services and business models.  The role and scope of innovation is important, and often poorly defined, which leads to confusion.  The speaker talks about innovation and the hearer thinks - innovation = big change, radically new ideas.  But in the end, what is delivered is an incremental change to an existing product or service.  The gap between the definitions, and between expectations, creates a lot of cynicism about innovation.  It seems to be more ephemeral, more filled with magic and possibility, that never fully delivers.  This is wrong, and it is detrimental to businesses and to those who could fully engage innovation if it were defined correctly, implemented fully and embraced by executives.

Right now, as inflation grows, uncertainty presides, and we have a looming election and very unsettled global trade and economy.  businesses need to accelerate their growth while defending their margins.  Few companies are going to take on large, uncertain projects at what could be the cusp of a recession.  Except history shows that many innovative firms were launched in a recession, and because they were new and different as the economy emerged out of the recession, they grew much faster and were more profitable than the firms that merely hunkered down.

There's never a right time to innovate, just as trying to time the market is a fool's errand.  In investing, dollar cost averaging, doing a little bit of investing each month, is a proven winner.  Similarly, doing some innovation all the time is far more effective than a periodic spurt of innovation followed by no activity.

Innovation 2.0

Meet the new innovation.  Makes many of the same promises as the old innovation.  New revenues, new profits, new market share.  Increased differentiation. What could be different about this innovation is its application and its purpose.  Rather than simply talking about innovation, perhaps we can actually "do" innovation, and do more than extend the life of existing products and services.

What's going to be important in 2023 and for the next few years is addressing the post-pandemic needs.  More virtual work, less 9-5.  More people juggling more things with less time and bandwidth.  A rising young segment who feels left out of the Boomer prosperity and wants some of that for themselves.  An old political guard that may finally step aside and let new voices, with perhaps more radical ideas, take over.  

This leads me to believe we'll need innovation in our government, in our societal structure, in how we interact with each other.  It leads me to believe that corporations will spend time innovating on climate change, becoming more carbon neutral.  Companies will evolve their business models to become more flexible for their employees, to allow people to work when and where they can.  Businesses will finally understand that services business are people-centric businesses and move away from ideas like shifts and recognize output rather than clock hours.

Older, larger, more entrenched companies will find this difficult to do.  Newer and younger companies will find that creating value and generating margins is more difficult than their young managers had been led to believe.  All will need to innovate their business models.  

Innovation 2.0 will be about innovating business models and business processes, along with government structures.  As we become more diverse, and a younger generation with new ideas and attitudes presents itself to take on the leadership mantle in both the economy and the government, we can expect change.  And change opens the door for a new, more purposeful innovation.

Mostly though, Innovation 2.0 will be about being honest about what innovation is, the role it plays, how it is defined.  Innovation 2.0 will be about fully funding and supporting what are risky and uncertain projects, hoping to gain new insights and create meaningful new products, services and business models.  A new generation of leaders who are more open to experimentation and change may be coming on the scene.  They are less steeped in Jack Welch's GE models and perhaps more open to learning, discovery and experimentation.  Or, at least, I hope they are.

Let's get innovation right this time.

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posted by Jeffrey Phillips at 7:21 AM 0 comments

Tuesday, September 20, 2022

Success results from deeper engagement and more holistic thinking

 I've been a consultant most of my working life, doing all kinds of consulting - starting out in software development, moving on to process improvement, data analytics, new product development and strategy.  To paraphrase an old saying, all consulting is good, and some of it is useful.

I want to talk today about a point I keep seeing get repeated in many of my strategy and innovation customers, a problem that should be easy to solve but it isn't.  That is the problem of solving for symptoms instead of solving for root causes.  Or, conversely, solving for a specific problem when the real solution needs to be much more holistic.

Why do we miss the trees?

In the first instance, we stand in front of a forest, admiring the scenery, but completely miss the individual trees.  We are so taken by the enormity and complexity of the opportunity that it can be hard to see the component parts.  Some of those components may be working really well, while others aren't working so well or are failing. It can be hard to see which components aren't working well or failing when all you do is see the big picture.  It's entirely possible that the whole forest looks healthy, while many individual trees are sick or dying.  While the entirety is beautiful, getting into the weeds to look at selected individual components is vital.  Unfortunately for many executives, this takes time and could uncover issues that they aren't familiar with, or simply don't want to know about.

Zeroing in on a problem

A lot of times I see clients anxious to fix what seems to be an important problem, not realizing that it is a component of a larger whole.  I'm reminded of the old song about the thigh bone and how it is connected to the hip bone, and so forth.  It turns out that the skeleton, even when attached correctly, with all the bones in the right place, can't stand up without ligaments and tendons and muscles.  Even if I correct a problem with one of the thigh bones, if the rest of the machine isn't working correctly, I've solved a point problem but haven't solved the holistic problem.

The ability to identify a problem is valuable, the ability to understand how that problem or issue affects the entire whole is also really important.  Fixing the problem without considering what knock-on effects a discrete solution creates is almost worse than ignoring the problem at all.

Two dramatic but different errors

The first problem, the forest and trees problem, comes from remaining too abstracted from your business and its needs.  Flying along at 30,000 feet, it can seem like everything is working pretty well, while some people have their feet up on the desk and others are killing themselves to meet client expectations.  Problems can take root throughout the organization but it can still deliver a reasonably good quality product on time due to heroic actions by individuals.  The operations work, but they are not sustainable over time, and the machine will break down.

The second problem is a blinkering problem - that is, it is easy to find a problem and isolate it, but more difficult to consider how the small problem as you've chosen to frame it interacts and infects other parts of the business.  For example, you could be deciding to implement a new computer system to support machine learning.  If you rush out to acquire new machine learning algorithms, it can feel like the job is 80% done.  Most people who know anything about data can tell you that cleaning and normalizing the data, getting it ready to be used in machine learning, can take months.  But that isn't fun and seems like drudgery, so it gets overlooked so someone can claim that the company has machine learning algorithms.  Just don't look too close at the output.

Not an intelligence gap

Smart people in smart businesses make these two mistakes all the time.  This isn't an error of intelligence, its an error of not allocating the appropriate time to deeply understand the opportunity or problem, or an error of wanting to solve easy challenges.  Identifying the weak trees in a big forest is not something you can do with a snap of the fingers, but culling weak trees makes the entire forest healthier.  Likewise, taking time to be more holistic when you frame problems to solve may expand the scope or timeframe to resolution, but it makes the solution better.

This is where an overemphasis on time and a lack of emphasis on management engagement has led us - not seeing the problems because we are too abstracted (or distracted) or narrowing in to solve a small portion of a larger problem, because we cannot be bothered with actually thinking through the solution.

Time and engagement are the enemy, and only careful discernment and holistic thinking can solve these challenges.

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posted by Jeffrey Phillips at 5:51 AM 0 comments

Thursday, September 08, 2022

When innovation is most important

 I don't know why, but I am a huge fan of Monty Python.  Perhaps my favorite film of theirs is the Search for the Holy Grail.  If you've never seen it, take a few minutes to watch it now.  I'll wait.

Some of my favorite parts are the over-the-top instances in the film where, for instance, the Black Knight has his arm cut off but insists on fighting. He claims "it's only a flesh wound".  Or, perhaps, when the people collecting dead bodies come to collect an older gentleman, he insists that he's "not dead yet" and feeling better.  The movie is funny, silly and makes a point with its constant hammering of the inane and obvious points it wants to make.

Sometimes, in writing about innovation, I feel like Eric Idle or John Cleese, not because I am a great comedian or an actor, but I feel I need to make a point ad infinitum.  That is, make the same point over and over again, because for some reason the concepts and reality about innovation don't seem to stick. Therefore, we need to return to them again and again, hoping against hope that repetition will make them seem more realistic.  

What are the important concepts about innovation that we need to constantly revisit?  Well, they are legion, but here are a few:

  • Innovation is vital for a company's growth and differentiation
  • Innovation is not magic - it is a process that can be learned and implemented
  • Innovation requires risk and creates uncertainty
  • Not everyone is great at innovation
There are plenty more truths where those came from, but I only have a few minutes to write this post so I won't bore you with all the things you should know.  There is one other topic I do want to address today, and that is this:  like having a baby, there is no perfect time for innovation, but there are opportunities almost all the time.

When is innovation important?

If you have to ask this question, then you might want to check how fully you believe in the power and change that innovation can deliver.  Innovation is important when a company has a commanding lead and wants to stay ahead of its competition.  Innovation is important in a dog fight with competitors, when you've decided that matching feature for feature leads only to declining prices and margins.  Innovation is important when your firm is a new contender, entering an established market, seeking to gain traction and differentiation.

Innovation is important and valuable when you want to improve an existing product or process.  Innovation is important when you want to create new relationships with customers or to rethink a business model.

The better question, quite frankly, should be:  is there a time when my company should avoid innovation?  I thought long and hard about this question, and you won't be surprised to learn that I struggled to think about a situation where innovation would not contribute to good strategy or good thought, even if innovation is not the final answer.  For example:

A company could argue that innovation isn't necessary when margins are at risk and costs need to be eliminated.  However, I've seen companies use innovative thinking to shift the question or to rework processes and staffing models.

A company could argue that in the midst of an acquisition or merger that innovation isn't necessary, but I can imagine rethinking or revising business models, products or customer service in the middle of a merger to create better products and services.

Innovation deserts

If we agree that there are a few times when innovation is not necessary (I am still struggling with that possibility, but I'll allow it is possible) then we ought to ask:  If there are so few instances when it is not useful or necessary, why is it so rarely applied?  Why do we treat innovation like a fire alarm, stuck behind the "break glass in case of emergency" installation on the wall?

It's because we treat innovation as a black art, rather than a learnable and teachable capability, that we are so suspicious of its power.  If executives and corporate team members simply took the time to understand what innovation is, and how to do it effectively, I think we'd see a lot more innovation and in a lot more circumstances.  As it is, we act as if only a few people can innovate, and they are reading from secret tomes that the rest of us cannot understand.  Or, we act as if innovation is so uncertain and so risky that to attempt it is to put the company at risk.

There's no time like the present

In reality, there's no better time to innovate than right now.  If you are in a company that is trying to grow, trying to differentiate its products or services, trying to increase profits or simply change its business model or improve customer experience, you should be innovating.  And if you aren't doing any of the things I listed, then your company is slowly dying, and until you decide to thrive, innovation isn't going to help.

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posted by Jeffrey Phillips at 12:37 PM 0 comments

Tuesday, August 16, 2022

Working in, Working on, Working for the business

In a previous blog post, I wrote about the differences between working "in" the business for strategy and innovation versus working "on" the business for strategy and innovation.  This dichotomy is a somewhat classic way of thinking about how people spend their time - either "in" the business doing the day to day work that propels the company forward, or time spent "on" the business, thinking about how the business is positioned, its strategy, how it operates.  For most executives, the majority of time is spent "in" the business, with far too little time spent "on" the business.  You can read that previous post here to get more detail.

What about a third option

That post got me thinking that the tradeoffs between "in" and "on" are incomplete.  That is, there is at least one other perspective that managers and leaders must assume beyond in and on.  As described above, in the business is doing day to day work - going to meetings, completing emails, assigning projects and so on.  Doing work on the business is stepping back and examining how the business actually operates, and trying to define future opportunities or new strategies.

What's missing - at least from my perspective - is the idea of actually running the business.  That is, ensuring the business does the right things day to day, has the right resources and is focused on the right targets.  In other words, actually managing the business, making decisions, establishing priorities.

In vs On vs Running

When you are "in" the business, you may neglect the aspects you would consider if you were in the "on" perspective.  That's because the urgent overwhelms the important.  What needs to get done today becomes more important.  As managers and executives, we must be careful to do today's work effectively but not allow it to consume all of our time and energy.  Executives and leaders should not do work that belongs to their subordinates, and should not become firefighters or paramedics unless it is absolutely necessary.

In the rare times when you are "on" the business - usually when preparing for a board presentation or in an executive offsite, you are considering big picture questions.  Where is the business going?  What are our best opportunities?  The "in" the business issues will constantly hound you even when you are trying to be on the business.  The vast majority of businesses already spend too little time in the "on" perspective, because it does not feel like work.  

Running the business is a critical third perspective that I think often gets overlooked or ignored.  In some sense, we denigrate this task because it has connotations of "managing" the business, and we've been led to believe that good businesses should manage themselves.  Nothing could be farther from the truth.  A business without good management is like a ship without a rudder - it will go wherever the wind and the tides decide to take it.  This is especially true in companies that are growing quickly.  Without clear strategy (on the business) and clear leadership and management (running the business), a company will follow the easy money, pursue trends and find itself in a business cul-de-sac.

Good management (running the business) takes good strategy (from the on the business perspective) and creates a business that realizes the best outcomes of the strategy.  Good outcomes don't happen by accident, or simply by having a good roadmap.  Decisions have to be made, people put into important positions, priorities set and upheld.

What's so hard about running a business

What's difficult about the third option - running a business - is that it often seems uninteresting and is considered overhead.  Great management of a company, especially a growing company, means implementing operations and tactics that feel like bureaucracy.  It means optimizing the way things work, putting in processes, getting staffing right, getting the right people in the right seats.  It can mean hard decisions that bring in new people with skills to help grow a business beyond its current state.  Good management also brings with it the sense of planning and accountability - holding people to the plans they created and ensuring that what was promised is delivered.

Running the business is often overlooked because to some degree it sits between the "on" the business strategy pronouncements and the "in" the business sense of getting things done.  Running a business seems somewhat operational, not that interesting or sexy for entrepreneurs who want to grow a business and take it public.

Which perspective matters most?

An interesting question arises:  where should executives spend their time, and how much of their time should they devote to each perspective?

I think for many executives this is a difficult decision, and in many cases they revert to form.  Entrepreneurs are often deep experts in coding or software or technology, and may prefer to spend their time "in" the business, especially where they believe their company has a competitive advantage.  In mid-sized and larger firms, many executives come from finance, so they are entranced by the numbers.  In the modern, "data driven" companies (and I put data driven in quotes because there is a lot of talk about being data driven without a lot of outcome), people become entranced by the data they get.  

Running the business requires action and decisions, placing bets and improving operations, motivating people, moving assets around.  This is a vital orchestration function, and without it, businesses reach a point where the organic nature of the business and lack of operational management hamper direction and growth.  Can these decisions be influenced by having a deep knowledge of technology, or having expertise in numbers or finance?  Of course, but each of those perspectives is limited.  Companies need management expertise and leadership beyond one business function or technical expertise.

In my mind, once a company leaves the entrepreneurial phase, executives should spend far more time on running the business and time "on" the business, leaving the "in" the business activities to those closer to product or customers.  It's difficult to say just when this shift needs to occur, but many companies that I work with suffer from too little direction, too little day to day operational management.  Executives spend too much time enthralled with data, or dividing into the business, rather than thinking about the future growth opportunities (on the business) or making the business operate more effectively.

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posted by Jeffrey Phillips at 5:50 AM 0 comments

Friday, August 12, 2022

Creating the conditions for disruptive innovation

 In what is probably one of the most revered books among innovators, Edward De Bono wrote about six "thinking" hats.  The point of his book is to recognize and acknowledge that many people, either intentionally or often unintentionally, play roles or "wear hats" that represent a specific point of view.

De Bono identified six perspectives or "hats" that people wear.  The hats he defined are:

  1. The conductor hat - the role that drives a meeting
  2. The creative hat
  3. The emotions hat
  4. The optimist hat
  5. The judging hat
  6. The factual hat
Whether we mean to or not, it's likely that when we attend meetings, listen to pitches, create ideas, we are listening and participating in one or more of these perspectives.  Often, many people will be wearing either the factual hat - like the famous detective, just give me the facts, or the judging hat - does what is being said meet with my experience?  Conversely, few people are willing in most business settings to wear the emotions hat - it seems too illogical in businesses where we have divorced ourselves from emotion, or the optimist hat - no one wants to be seen as naïve or too optimistic in a business setting.

So, many businesses, for many different reasons, start out with unbalanced perspectives, typically over weighted toward what is reasonable and expected today.  If what you hope to do is approve approaches or ides that fit into the existing standards, this approach is probably OK, although it will only reinforce the status quo.  If you are hoping to "shake things up" or create new products or services, these perspectives will simply block most ideas.

New perspectives needed

In fact, the more your environment is changing, the more competitors you have, the more intense the competition within your industry is, the more you need new perspectives.  Whether you refer to this as the "creative hat" as de Bono did, or refer to it as a naive or uninformed opinion, or think about it with the wonder of a child, your teams need this perspective.

The more change you want to create, the more you need the creative hat, the wonder and discovery inherent in child-like thinking.  And this flies in the face of everything we hold near and dear in a business setting, where hard facts and past experience are supposed to hold sway.  As if personal gains, politics, favoritism and other factors never play a part in what is decided!

Getting naïve to get ahead

There is an old saying, attributed to African tribes, that says if you want to go fast, go alone, but if you want to go far, go together.  I'd suggest a corollary to this idea:  if you want incremental ideas, rely on the existing perspectives.  If you want new, fresh and radical ideas, get new perspectives and don't shout them down.

But let's be honest - no business worth its salt is going to welcome in a bunch of naive idea generators or better yet children into the boardroom to create new products and services, even if the businesses need these perspectives.  Every growing business needs someone, internal or external, who is willing to contribute insights and ideas that are outside the norm.  

Some companies have successfully partnered with third party idea generators who are active provocateurs - who openly question the status quo.  Third parties don't have a stake in the way things work today and can question existing norms in ways that internal personnel can't or won't.  In other settings, I've watched de Bono fans use the hats - actual hats in a meeting - to ensure someone is playing the role.  But playing a part, like an actor who may or may not truly believe in the concepts, is different than expressing ideas from a sense of new discovery or wonder.

Who within the business can take on the role of the naïve perspective?  How long can someone last in that role?  

Why can't we innovate?

I get asked quite frequently - why can't large firms create interesting new ideas?  I have a litany of answers, but ultimately they boil down to this:  lock-in.  Once a company reaches a certain size and has an investment to protect, the thinking shifts from creativity and growth to defend and protect.  Good ideas are often going to call existing products, services and even business models into question.  

It's not that people lack creativity or can't think in child-like exploration and wonder, it's that they will be ridiculed for creating ideas that call the existing product line or business model into question, or that they are so well compensated within the existing model that it is anathema for them to think outside of it.

By the way, I have had the opportunity to work with some large firms on some relatively disruptive ideas.  Those that were able to bring those ideas to market were most successful doing so in a way that did not disrupt their existing operations.  This means that many disruptive ideas need to be launched as a new business or in new channels or markets.

Outside the box?  Hardly

CEOs will often say they want ideas that are "outside the box" meaning that they want new ideas that create new value.  You can get new ideas from old sources - just look at Einstein.  You can get new ideas from a team wedded to the existing operating models.  To do so, you simply need to make the status quo untenable.  As long as the status quo is reasonably safe, and other options are reasonably risky, the only ideas you'll get are incremental ideas, and the folks who do manage to generate and sponsor radical ideas will be considered difficult troublemakers who "don't get the business we are in".

There's a leadership gap here as well.  Executives need to tell their teams that "what got us here won't help us succeed in the future".  If that is the case, then segregate the core business and its operations from innovation, and run them separately.  Insulate the existing core business from your new ideas, to protect the nascent ideas from the resistance the existing business will create, and protect your core business from the disruption you are going to cause.  Otherwise, don't ask for interesting ideas, you'll only waste time and anger some of your best thinkers.

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posted by Jeffrey Phillips at 7:24 AM 0 comments

Tuesday, August 02, 2022

Why expertise is a seductive trap for innovation

 I've been thinking for years that we have innovation all wrong.  We treat innovation as it if requires years of experience, deep knowledge of an industry or a technology, or mastery of a specific subject.  I think far too often we fall into the fallacy of expertise, and look for great ideas from people who are deeply experienced in one technology or field.  This seems like a logical approach.  People who have deep experience must know where opportunities lie, right?

The problem with innovating with experts in a field is that they think they have explored every nuance and pathway, or that someone else in the field has.  These are the people who are most likely to say an idea "won't work" or that "it has been tried before".  And, in many cases, they are probably right.  But not always.  Experts told us that heavier than air flight was impossible.  Lord Kelvin, one of the brightest scientific minds of his day, felt that nothing heavier than air could fly.  Scientists expected that any craft exceeding the speed of sound would break apart.  In 1942 Thomas Watson, the CEO of IBM, was quoted as saying that the world market would need a maximum of 5 computers.  All were experts in their field, and all either accepted the received wisdom, were too confident in their own knowledge, or could not forecast how much and how rapidly technologies would change.

No, it took a couple of bike mechanics to develop the first viable heavier-than-air plane.  A couple of enthusiasts who tinkered and explored, while other, more well-known scientists received thousands of dollars in government grants failed.

We come not to bury experts

I'm not interested in castigating experts, except when it comes to innovation.  We, all of us, become experts in our chosen paths and fields, and most of us, when confronted with a "new" idea, will search our memory banks to consider whether this idea has been presented before (some version probably has) and what happened the last time it was presented.  We call on our store of knowledge to rapidly eliminate ideas, rather than our store of wonder, to consider what could be possible.  Don't worry, like a lot in modern life, it's not your fault.  You've been taught to use your time efficiently, to place bets only where there is a significant return on investment and winnowing out a list of any proposed alternatives is something we've perfected.

What we often don't recognize are the fallacies that lie within the questions we ask.  For example, are "old" ideas always useless?  There are Roman aqueducts that still carry water thousands of years later.  If an idea failed previously, is it possible that technologies have adapted, market needs have changed in such a way that the idea is now valid?  In our haste to reject ideas, we ignore our own narrow viewpoints.

From the mouths of babes and neophytes

You know who won't express concerns about most ideas?  Children.  Children are filled with wonder and are naturally creative.  You will rarely hear a kid exclaim "that won't work" about a new idea and they never say "that's been tried before", Of course, some ideas that children have are probably far-fetched and impossible, but that's what childhood is for.  Our educational system, unfortunately, squeezes all of the creativity and wonder out of us by the time we reach high school, in the hopes that we will all learn the same facts and regurgitate them in the same way.  No wonder so many of our best innovators and entrepreneurs seemed like such outsiders.  Most did not fit into the standard educational mold that we created.

Children don't run businesses

Ah, but you'll say, we cannot trust the future growth of our company to kids with crazy ideas. Again, there is a strange dichotomy at work.  Venture Capitalists are shoveling money into companies run by recent college grads with little professional experience but deep belief in ONE IDEA.  As an established corporation, it makes sense to ask:  are we ready to outsource our idea generation and next generations of products and services to startups, assuming we can afford to license their products or acquire their companies?

Established businesses need solid, business-ready ideas that are practical with a high degree of success to invest in.  This is true, to a point.  As anyone who has been in or adjacent to innovation work in the past 20 years knows, there is a need for consistent, predictable innovation that moves the needle just a bit (incremental innovation) to create the next version of an existing product.  This is vital work but should not consume more than 50% of your innovation budget.  What, don't have an innovation budget?  That's another sign your company isn't serious about innovation.

In-source or Out-Source the other 50%

Which leaves 50% of your company's time, resources and funds to do real exploration.  Who do you want to lead that?  An expert who is likely to tell you what's wrong with your ideas before they leave the drawing board?  The scientists who said that airplanes could not fly?  Is this who you want leading the portion of your work that will dictate future product and service offerings?  Corporations have a choice - start evaluating the startups and neophytes who are attacking your industry and gobble them up as they become viable, or do your own homework.

The department of wonder

Every decision and every department in your organization seeks predictability and efficiency.  You have a strong finance team that can calculate your EBITDA to three decimals.  You have a top notch sales team that hits its sales targets quarter after quarter.  You have product teams and engineering teams that work at exceptional rates of efficiency.  All of these in service to current state.

You need one team that focuses on what's next, what unlikely combinations may occur, what new markets and needs may emerge.  There's no one doing that work - R&D is looking for new technologies, so you may not need to sweat that side of things, but they aren't responsible for seeking out new markets, new needs, new combinations.  

You need a department of wonder.  This department would exist to explore new opportunities, finds new emerging needs and markets, consider unlikely mash-ups of technologies and capabilities, seek out adjacent opportunities.  While this seems entirely unscientific and a likely source of ridicule, done correctly, it will generate far more, and far better ideas, than anything you are doing today.

In case you think this recommendation is unusual, hark back to Edison and his Menlo Park team, a number of people who were experts in emerging technologies, trying to create mash-ups.  Or the original Bell Labs, where scientists from different disciplines were in regular interaction, seeking happy accidents.  

You don't need to entrust your future innovation decisions to children or neophytes, but you do need a sense of child-like wonder and the ability of the people who are focused on that work to suspend disbelief if you are to create any really interesting ideas.  After all, Airbnb was not created by experts in the hotel business, but by a couple of guys who decided to rent out a spare room.  

In the end, the choice is yours, and you won't be alone if you follow the safe and proven path of trusting in experts to delivery near-term product improvements.  Most companies in most industries follow this path. It's not until some upstart, some college kid with venture backing, two guys with a spare bedroom create a solution that becomes more valuable than the established competitors that someone says - how did we miss this opportunity?  Were the Airbnb guys smarter than the combined intelligence in Marriott?  I seriously doubt it.  Moreover, I'm willing to bet you lunch that there were people at Marriott who have presented plans that looked a lot like Airbnb before Airbnb existed.

And, if I am wrong about Marriott having prior exploration about the potential market opportunity that Airbnb explored, what does it say about Marriott's leadership and its sense of possibility and wonder?

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posted by Jeffrey Phillips at 6:53 AM 0 comments