Monday, June 16, 2014

The Signal to noise ratio for innovation

You hear people talk about the "signal to noise" ratio in a number of settings.  Signal to noise simply compares how much of the message you want to transmit is encapsulated and accompanied by "noise" - information, misinformation and clutter that you didn't intend to transmit.  In common business terms, the signal is the core essence of your goals, strategy, intent, vision and action plans that you want people to understand.  Noise is all the other stuff that gets communicated, translated, heard or interpreted along the way.

Innovation suffers from a huge signal to noise ratio, and both the numerator and denominator play a role.  The numerator, the signal, presents difficulties because we are so inexact and inexperienced with innovation.  We lack clear strategic goals, we are inexperienced with innovation tools and processes.  This leads to watery communications full of flowery, empowering language that fails to describe shared definitions, specific goals and definitive actions.  You'll get a message along these lines:  "XYZ corporation needs to innovate, to engage its workforce and harvest the best ideas for competitive advantage".  Which sounds great, especially if it is read out in the radio announcer voice, but is vague and leaves interpretation to the listener.  Far too much communication about innovation is indistinct, inexact and vague, leading to interpretation by the listener, who acts with very little established frameworks or experience.

The noise portion of the equation - the denominator - also plays a significant role in the failure of innovation communications.  In many cases the "noise" portion isn't what's communicated, but the filters and interpretations of the communication, or the many "waterfall" conversations that happen after the initial communication or goal setting.  For many companies, an initial communication from an executive sets off a waterfall of communications, as the CEO's reports interpret and communicate goals and directions to their reports, and their reports interpret and communicate to their reports ad nauseum.  If the communications are vague, they simply get watered down or ignored through the waterfall.  Even if the communications are distinct and memorable, they are still subject to change as different managers read out and interpret the messages to their staffs.  Years of cultural acclimation encourage the middle managers to read into any communication the need for efficiency, cost cutting and doing more with less, so innovation is either quickly incrementalized or bucketed into cost saving activities. 

How do you improve the signal to noise ratio, which is vital for innovation success?

1.  Improve your signal - create clear vision statements, goals and expectations for innovation.  Create clear definitions.  Establish what you are willing to invest in innovation, the risks you will take, the failures or setbacks you will accept.  Set out the tradeoffs between efficiency and innovation, short term results and long term goals.  Be definitive, be clear, communicate consistently.
2.  Change your filters - work with your middle managers and resource managers to change their thinking and interpretation.  Help them recognize the importance of innovation, and the vital role that communication plays.  Don't allow them to interpret everything through the filter of efficiency.  Help them make resource allocations and prioritization tradeoffs.
3.  Eliminate noise - ensure common definitions throughout the organization.  Remove distractions and align rewards and compensation to the outcomes you hope to achieve.  Reward some notable failures.  Reinforce your message with your actions.

We've found that many of the best innovators are often those firms that understand the value of change and change management.  The more innovation you do, the more change you encounter.  The better you are at change, the better at innovation.  And both change and innovation are enabled by excellent, consistent and concise communication.
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posted by Jeffrey Phillips at 9:57 AM


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