Tuesday, November 27, 2018

The "whole product" is more relevant than ever

You simply must tip your hat to Geoffrey Moore and others who created the concept of the "whole product".  I've written about this concept several times, and I raise it again because the underlying ideas are about to become really important in innovation circles.  If you haven't read Crossing the Chasm or aren't quite familiar with what a "whole product" is, then it may make sense to go and read up.  When you are done, come back and let's continue the conversation about why whole products are about to become a lot more interesting.

Whole product (1.0)

When Moore and others conceived of the original "whole product", they were making a point about the differences between technology (which many inventors, entrepreneurs and early adopters find interesting) and "whole products" - adding features, capabilities, instruction manuals, user hot-lines and other features and services around a core technology to make the eventual solution more useful and valuable for people who aren't early adopters.  It turns out that most of the market prefers well-conceived and fully developed solutions rather than core technologies.  If that sounds surprising to you, you are probably a tech enthusiast or an entrepreneur in an emerging technology, and about to get a rude awakening when your technology doesn't sell as you expect it to.

Moore's point was that the vast majority of customers wanted more than the technology, they wanted additional capabilities that expand beyond the core generic product to an "expected" product and onward to a "whole product".  When the technology is finally wrapped in the additional features, services, offerings and data that make up a "whole product" then the vast majority of the market is willing to acquire.

Moore went on to say that features that were in the expected, whole or ideal product always migrate into the core product.  For example, seat belts.  Years ago seat belts were a feature, then become standard equipment, then became almost an afterthought as more and more safety devices were added.  Today, cars are designed with a vast array of safety devices that were almost unimaginable to manufacturers even 20-30 years ago.  Safety has become a component of the core product.

Whole Product (2.0)

The reason that whole product is becoming even more interesting is that the notion of product is expanding and many companies will soon be shifting to innovation "beyond the product".  The very nature of product offerings is changing rapidly, as Uber and other asset-less companies demonstrate.  As Software as a Service and other "as a service" models demonstrate, increasingly there isn't a "product" per se, but a number of services wrapped up as a product offering.  Thus, service innovation, business model innovation, channel innovation are becoming more important, and the definition of a "whole product" - what the vast majority of customers want to acquire - is rapidly expanding.  In fact the whole nomenclature may be wrong - it may be that we should be calling this the "whole solution" to move away from "product" nomenclature.  Somewhere in the offering there may be tangible products, but increasingly the services, business models, data, platforms and even ecosystems will be what draw customers to a solution.

Impacts on Innovation

This is, and will, have a huge impact on innovation.  First, product innovation is almost passe.  That's not to say we won't continue to innovate products - we will - but increasingly many innovations will happen "beyond the product" or to augment the tangible product. In fact I suspect much of the value of the innovation in the future will be in the augmented services, channels and business models.

Second, while many corporations and consultants are relatively good at incremental product innovation, there's far less experience around innovation outside of tangible products.  If you thought disruptive innovation around a tangible product was challenging, wait until you try to imagine the services, experiences and business models that must be provided to attract customers in the future. 

Third, the expansion of innovation beyond the product means that innovation change will be more dramatic, more sweeping.  Companies will need greater cross-functional participation in innovation because so many different components of their capabilities will be required, from channels to distribution to marketing to product management, and even finance.  This doesn't necessarily make innovation more difficult, just demands more strategic direction and more collaboration.

Fourth, this means that future innovation activity will need to be much more customer-centered, less technology centered and much more integrative.  As innovators we need to think about the second and third level needs and expectations of customers, well beyond the core product.  This will lead to thinking about how and where the product is acquired, used, supported, connected to the Internet or other data exchange systems, how the acquisition or use is funded and many other concepts that are either ignored or outsourced to third parties today.

What's your new "whole product" definition?  What do your customers need in order to acquire the newer intangible services you'll offer?  Do you have the skills to conceive, design and implement around the innovation beyond the product requirements?
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posted by Jeffrey Phillips at 7:13 AM 0 comments

Tuesday, November 20, 2018

Getting the right question is half the battle

I return once again to one of my favorite sayings, by Stephen Covey, who said (I'm paraphrasing): sharpen the saw before you start cutting the wood.  It's a really simple thought - do the right things to prepare before you start a big task, but we lose sight of what adequate preparation looks like in so many activities.  There are several reasons for this.

First, many corporate activities are second nature.  We know how to do them by heart, so preparation feels like wasted time.  Second, we are used to last minute requests for information that don't seem to allow time to think or prepare.  This way of working has become second nature.  Third, in a very time bound and time restricted world, preparation doesn't always feel like value added time.  It can easily feel like time that was lost.  Fourth, time spent in preparation calls into question the knowledge and capabilities of the individual or team.  Shouldn't they already know this stuff?  Thus it is that so many non-standard corporate activities and projects end up with poor preparation, later lamenting the fact that if only they'd taken more time to prepare, they would have done a much better job.

Everything I've written to this point is true about just about any corporate task that isn't a regular, regularly repeated task, but it is especially true about innovation.  And while we could spend the next few minutes exploring the concept of learning about innovation tools and methods, or spending time doing deep exploratory research or discovery, I'm going to spend my time today on one of the most important preparatory activities - getting to the right question.

The Right Question

The reality is that once a framework or goal is established, everything you do is restricted or enabled by that question or framework.  I was participating in a strategic planning session recently when I witnessed first hand how much a poorly thought out question can derail a good working session.

Something as simple as how a question was worded left the team perplexed and confused.  Was the purpose to explore how to generate more revenue, or more profit?  Was the purpose to create really differentiated products, or should the team explore alternative solutions - business models, experiences and channels?  Since the question was not thought out in advance and did not align to the work that was being done, it caused more confusion than it created clarity.

The concept of a really well defined question is so important that Warren Berger wrote a book about it.  He calls this book A More Beautiful Question.  Getting the correct context, purpose and intent in a question or framing provides direction for any team, but especially for an innovation team.  If you need more proof about the importance of getting the framing right, go back to Einstein.

Einstein was asked:  if you had an hour to solve a difficult problem, how would you spend that hour?  Einstein replied:  I'd spend the first 55 minutes thinking about the problem and the last five minutes generating a solution (again paraphrasing). 

Generally Applicable Everywhere

Unlike a lot of other tools and methods, stopping to get the question right is an approach that is useful and applicable to almost any business activity that is new or unusual, whether the topic is growth, innovation, a significant course correction or something else.  Yet this is another capability that we simply do not teach, do not practice and do not appreciate.

For innovators, getting the question right helps shape the activity, the anticipated impact and the potential range of outcomes.  For example, if I phrase my need or question as:  How might we create new types of food that require less water, I'm likely to generate ideas about plants that need less water to grow.  If I phrase my question as:  How might we reduce water usage throughout the food value chain, I may receive ideas about more drought tolerant plants, but also methods to reduce water usage in food cleaning and in food production.

A simple primer

You've probably noticed a few things about these questions.  First, I started them with a "How might we".  How might we is an aspirational opening, seeking to find viable alternatives.  Use this instead of "Can we", which suggest we might not be able to find such alternatives.  How might we is also inclusive, seeking ideas from everyone (the "we") in the phrase.

Further, these questions follow a pattern.  The "how might we" is almost always followed by a directional verb (increase, decrease, etc) and in many cases with a measurement.  So I could have asked How might we decrease water usage by 20%...  That measurement signals how disruptive the ideas must be.  5% reduction may be easily achieved (incremental) but 20% may be a major shift and require radically new and different ideas.

Another portion of the question may describe a location, place or process.  This further refines the question to make it more specific.  In my first question I did not address where in the food cycle to remove water usage, so the most likely outcome is to remove water that irrigates crops.  In the second question I was more specific - in the food value chain - I open up ideas from any place water is used, whether that is in irrigation, washing the crops, processing, shipping, freezing or preserving and so on.

A pause that inspires and accelerates

There was an old marketing slogan about soft drinks when I was growing up - Coca-Cola marketed its soft drinks as a "pause that refreshes".  In the same way I'd like to introduce the idea that creating a valuable, meaningful question is a pause - it does take a little bit of time - that can inspire and accelerate you and your team to the best possible ideas.

There are some really basic skills that you can teach people in your organization, that will help them in their strategic and innovation tasks immensely.  Creating a good question that adequately frames what they hope to accomplish and communicate that effectively to others may take a few moments, but it will empower the team to move more effectively, create better outcomes and save time down the road.
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posted by Jeffrey Phillips at 5:23 AM 0 comments

Monday, November 19, 2018

The End of the Beginning, for innovation

It's a sign of maturity and experience to be able to determine just where you are in a journey, and I think the time has come to put some stakes in the ground about just exactly where we all are in regards to our innovation journeys.  While some companies have made tremendous strides, becoming much more innovative than their peers, the real truth is that most corporations are still at the very beginning of their innovation work, and as I've written in other places the emerging new management fads around digital transformation combined with the fact that innovation often hasn't lived up to its promises means that our innovation journeys may end before they really got started.

Because while it seems many companies have been on an innovation journey for quite some time, the honest reality is that they haven't moved very far.  There's been a significant amount of sound and fury, signifying not so much, to paraphrase a much more ancient bard.  The reality is that right now, after almost 20 years of innovation as a corporate phenomenon, most companies are closer to the end of the beginning of innovation, rather than the beginning of the end.

We're going to innovate like its 1997

You may wonder why I date the beginning of innovation as a management phenomenon to 1997.  Two significant things happened that year that in my mind gave credence to innovation as a management philosophy in corporate settings.  First, Steve Jobs returned to Apple after years in the wilderness, and second, Clayton Christensen published the Innovator's Dilemma.  Two notable thought leaders emphasizing innovation in two very different but influential spaces - Silicon Valley and the Harvard Business School.  For geological purposes I date the beginning of the corporate innovation phenomenon to 1997.

Since then Apple has moved from near bankruptcy to insane profits, and has shifted from a real innovator in experience, channels and business models to an innovation laggard currently.  Clayton Christensen went on to found Innosight, which was recently acquired by Huron, an IT and consulting firm focused on healthcare.  Both of these avatars seem to have flared up and cooled down, much like innovation over the last 20 years.

They are to some extent representative of the phenomenon that is corporate innovation. Time was that innovation was the key mantra for executive.  The word innovation showed up in public pronouncements and annual reports.  Innovation became a buzzword for basically anything new and different.  Over time we've managed to codify some basic syntax and taxonomy for innovation, but it still remains a highly fragmented, diverse industry with solutions ranging from design innovation to "open" innovation to crowdsourcing and the latest twist:  digital innovation, I suppose combining digital transformation and innovation.

Like Sisyphus we persist

But like Sisyphus no matter how much energy goes into innovation we still seem to end up far too often at the same place, with the same result.  For innovation the rock represents the work we do and the hill represents real innovation outcomes.  Too many innovators push the innovation rock through uncompromising cultures, with too little resource and too little buy-in, obstructed by the importance of day to day operations and near term profitability.  

Thus there's a lot of energy and motion involved in corporate innovation, but not nearly enough outcomes, and other concepts or ideas will start attracting more management attention as innovation doesn't provide enough return.  The emergence of digital transformation will simply make innovation more difficult in the next few years, and many "hangers on" in the innovation space will jump to digital transformation solutions, which will be easier to implement, but in the end these solutions won't recognize significant returns because they'll be used to improve efficiency.

The end of the beginning

Many corporations need to make a choice - to decide to fully commit time, resources and energy to innovation and stop asking their innovators to become Sisyphus, or to decide to focus elsewhere and acquire innovation as it emerges.  There is no real alternative to these solutions.  Customers and investors are beginning to see through what has been politely called "innovation theater". 

When Churchill declared the end of the beginning the Battle of Britain was just ending.  He wasn't promising an easy road - in fact he and others knew that many years of warfare remained.  He was taking an honest look at the state of affairs and what would happen next, and sharing that with the English population, to ready them for what was coming next.  In the same way we should take an honest look at corporate innovation and ask ourselves, after all this time, where are we?  What are the appropriate milestones and standards?  What comes next?

Now, at the end of the beginning, we innovators have choices.  There is now enough education and experienced innovators that we can create real change.  There are enough codified tools and processes to do innovation well.  What we need are executives and companies willing to fully commit to innovation - to discover needs and emerging opportunities, to reach for transformative and disruptive ideas, to invest in new capabilities that may shift customer demand and even cannibalize existing products.  We've got the critical mass, finally, after almost two decades.  It would be a shame to shift management focus to digital transformation or other management concepts just at the point where we've finally reached the end of the beginning, but that's what I fear could happen.

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posted by Jeffrey Phillips at 7:13 AM 0 comments

Wednesday, November 07, 2018

Breaking the patterns for innovation

As far as one-hit wonders go, there are few bands that I listened to more than a band called the Godfathers back in the 80s and early 90s.  They had a song that was meant to encapsulate our lived experience.  The title?  Birth, school, work, death.  This is the pattern that we all live.  More importantly, each of us has a fairly regular pattern for our work lives:  get up, go to work, go to meetings, work on some deliverables, drive home, eat dinner.  Rinse and repeat.  These patterns are comfortable and familiar.  More importantly, these patterns - how we work, what we do, decisions we make, risks we take - become ingrained and begin to govern how we think, how we work and even the types of ideas that we contemplate.

The more comfortable we become with our patterns of life - breakfast, commute, work, lunch, work, commute, dinner, TV, bed - the more we cling to familiarity and stability.  I think that these patterns and familiarity also create real issues for creativity and innovation.  When we consider how important it is to create viable new products and services, and how quickly markets are shifting and customer demands are growing, we either need new patterns or we need to break the patterns we have.

Are patterns wrong?

First, let me say that patterns by themselves aren't "wrong".  Many very creative people are very proscribed by their patterns.  Many famous artists were very particular about where and when they would paint.  Many writers have a practice of getting up very early and spending hours at a typewriter or a word processor before lunch, day after day.  In many cases these patterns are about constant focus and productivity more than creativity however.  Patterns of work aren't necessarily wrong, until they influence patterns of thinking and creativity, and create resistance to new information, shifts in the market or the unwillingness to observe and predict new technological trends.

Patterns create familiarity and repeatability which in turn creates greater efficiency.  Again, nothing wrong with repeatability and efficiency until it's time to create something new and different, which may introduce variability, risk and inefficiency.  It's at this point that patterns may stymie good thinking or narrow the scope of inquiry.

Breaking the pattern

Leaving a trusted pattern or process can be difficult, but to innovate you almost always will need to break a pattern.  As long as you attempt to innovate and preserve an existing pattern - either a physical pattern or a decision making pattern - you are very likely to shape your ideas to fit your trusted pattern rather than change your pattern to fit your new ideas.

It is with this in mind that good innovators will need to insist on at least leaving the existing pattern in order to innovate.  I've witnesses countless numbers of teams trying to create more interesting and innovative ideas who were frustrated by the subtle pressures their existing physical and psychological patterns forced on them.

To break these patterns we often ask people to meet in a different location - away from their office, in a place that doesn't feel like work.  We may set the stage for them by removing anticipated constraints - telling them that during the activity they have the funding and resources they need - or can access these - to achieve their ideas.  We try to immerse people in new thinking and patterns by exploring future scenarios, showing them that other patterns or possibilities exist and asking them to live in that very uncomfortable place between a new pattern and an old one.

Creating a new pattern

 Good innovators and especially entrepreneurs are really good at recognizing existing patterns and spotting the weaknesses in the existing pattern and creating a vision of the new pattern.  They realize that people crave patterns, so innovations that don't port people from an old pattern to a new pattern will likely be short-lived.  In some instances they build new solutions that look a lot like the old pattern (Tesla and Airbnb come to mind).  These innovations are primarily based on the old models and patterns but with a new, compelling value proposition. 

Even what we might consider really radical innovations either build or adopt concepts from the previous pattern or they are well-conceived and relatively complete and holistic new patterns.  Geoffrey Moore explored this idea in his book Crossing the Chasm, where he referred to "whole products" in the way I am referring to patterns.  The difference between these is most innovation when he was writing 20-30 years ago resulted in mostly physical products, whereas most innovation today will eventually end up as services, channels, business models and data.

These intangible outcomes make forming new patterns more difficult, but not impossible for emerging generations who are more comfortable with digital solutions rather than physical solutions.  But don't kid yourself - while the nature of the solution may shift from more tangible to more intangible, the expectation of patterns will still exist.

What does this mean for innovators?

There are several takeaways if this assessment is true.  First, good innovators must both understand and respect existing patterns but understand their flaws and limitations.

Second, innovators must understand how to create solutions that safely port people from their existing expectations and patterns to new solutions that either build on some of the existing patterns or have a fully realized new pattern that is easy to adopt.

Third, to do this, innovators must be willing to step out of their own patterns - to become uncomfortable and examine patterns and needs from a objective perspective.  They cannot objectively rework or remodel patterns from within the existing process or pattern.

This last point means that - as we've known for quite a while - that good innovators will likely be either boundary-spanners, people who can easily move from following existing patterns to environments where few patterns existing, or they will be people who are constantly dissatisfied with the existing patterns, always seeking a new pattern.  These latter people are often branded as 'complainers' in many organizations.  The true boundary spanners are relatively rare.

Fourth, you may need patterns or processes to help you break your existing patterns.  This may seem a bit unusual but just as we cannot leave customers in an uncertain place without patterns, innovators may simply need new methods and tools once they step out of their existing patterns.  Trying to work in a new space with no patterns, tools or processes will lead to frustration.  This is why I've spent much of my career working on front end tools and methods.  Existing patterns and tools will not create interesting new ideas, but the reverse - trying to work without patterns or tools in an uncomfortable, unfamiliar environment - is simply a recipe for failure.

So, who are your pattern breakers?  Who among your team can exist outside of the existing patterns, and who among you can introduce new ways of thinking and new tools and methods to help solve problems in the "in between" spaces between your old patterns and the new patterns you are dreaming up?  Which member of your team has the vision to create a new pattern that can provide comfort to customers as they move from an old pattern to the new pattern?  Who ensures the new pattern is complete?  If you can answer these questions, you have a team for future investigation and discovery, no matter how unlikely they may seem on the surface.

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posted by Jeffrey Phillips at 6:09 AM 0 comments

Friday, October 12, 2018

How much innovation energy does your bureaucracy have left?

One factor I've been considering for some time has to do with the power of a corporate bureaucracy to create or block change.  On one hand, bureaucracies are good, in that they codify practices, principles and processes and allow people to get more done quickly as a unit than they might get done alone.  Bureaucracies were created to allow people to scale concepts, inventions, products and ideas.

However, any bureaucracy comes with a certain amount of baggage.  That baggage is the inverse of the promise of the bureaucracy.  These issues are exhibited in cultures that are resistant to change, processes that become too rigid when agility is required, limits on decision making and risk taking.

In fact I think one could easily say that there are real strengths and real barriers to any bureaucracy, whether that bureaucracy is housed in a government agency - think the driver's license bureau - or a corporation.

Where this exploration of the strengths and challenges of bureaucracy becomes interesting is in the exploration of innovation.  Bureaucracy could, in some forms and fashions, improve and accelerate innovation if the bureaucracy was structured and organized to do innovation.  However, as most of us know, most bureaucracies are established to deliver the status quo in the most effective and efficient manner possible.  This means that most bureaucracies can perform some incremental innovation well, because incremental innovation is a small change to an existing product or process, which is already accepted within the bureaucracy and doesn't cause inordinate risk or change.

On the other hand, disruptive innovation by its very nature and name threatens a bureaucracy.  Disruptive innovation may break apart long-lasting processes, structures, business models and channels that the bureaucracy has spent decades building and perfecting.  This is when you will see a bureaucracy defend itself, something most do very well.

In fact I think we could establish an innovation capacity index based solely on one factor - how much effort a bureaucracy expends in merely defending the status quo.  One could consider that a bureaucracy, like any entity, must consume a certain amount of energy just to exist.  Even humans burn calories when we sleep, so a bureaucracy, a living, breathing organism, must expend some energy simply to sustain itself.

The real question is:  how much energy, of the total amount of energy available to the bureaucracy, does it spend mainly to defend its operations and existence?  The energy that is left over is the energy available to innovate or introduce change.

Think about the dichotomy of an entrepreneurial startup and a large corporation.  The startup has little structure, governance, culture to sustain - in fact it may be trying to build some.  This lack of structure can make common work more difficult, but for the most part it enables more exploration and more innovation.  On the other hand, corporations have a lot of process, structure, governance and culture, which by their nature focus and limit innovation.  The more effort given to sustaining structure and culture and the existing business model, the less energy left over for innovation, the less scope for exploration.

In short, we don't need innovation maturity models or other mechanisms to understand how much innovation capacity exists in a specific company.  All we really need to do is look at the existing bureaucracy and how much effort it expends to sustain itself, and how much energy is left over.  The more investment in the existing structure and culture, the more pride and arrogance in the culture, the more it is defended and protected, the less likely it is that innovation can occur.
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posted by Jeffrey Phillips at 7:53 AM 0 comments

Tuesday, September 25, 2018

Innovating what we innovate

It finally came to me last week.  For over a decade I've been working with corporations, trying to help them accelerate their ability to generate new, interesting ideas to market as viable products and services.  In some instances we've been successful, and in other instances there were interesting failures.  I've recognized for a while that some major challenges exist.  I wrote Relentless Innovation as a way to frame some of the things I'd learned about the way culture resists change, and how a "business as usual" approach can stymie innovation.  But even with these obstacles it would seem we should have more innovation than we do.

What came to me finally is that we are trying to do new chemistry in old equipment, equipment that is tailored for a more conservative, slow paced way of working where there is less change and more certainty.  Our businesses are "built to last" and meant to gain scale quickly and then lock in customers and channels to drive more revenue and profits.  In a day and age (say 20-30 years ago) when markets were more stable and there was less innovation, building a company with this intent made sense.  Those days are over.

In fact we can look back 20 to 30 years ago at some key events and agreements that at the time seemed relatively benign, but in fact have accelerated competition and innovation.

The unintended consequences of free trade

Just under 30 years ago, President Bill Clinton signed the NAFTA agreement, which allowed for mostly free trade between Mexico, Canada and the US.  This was the start of many more free trade agreements, as other countries began to reduce trade barriers and increase global competition.  It should come as no surprise that the European Union is also almost 30 years old.  These agreements and others like them were good for consumers, because they lowered prices, but often bad for established businesses that were used to competing behind tariffs.  These agreements also increased the migration of lower skilled work to places where costs were lower.  This migration isn't new - any task with a high labor component has always migrated to lower labor cost areas.  The difference was that instead of moving from North to South, it moved from the US to Mexico, as an example.

Globalization and free trade increased competition dramatically and introduced a shift in valuable skills.  In the US, manual labor and low skills jobs began to disappear while IT and finance skills gained credibility.  This is also the beginning of the new imbalance we see today, why there is an increase in disparity in incomes between people who offer the market manual labor or few skills versus those who can move financial markets or program software.

The internet boom

The internet also begins to appear about 30 years ago, moving from an interesting collegiate experiment to a system that connects people across the globe.  Yahoo, and then Google began to organize the data on the web.  Google is 20 years old this year (2018), meaning it is leaving its awkward teenaged years and becoming an adult.

The advent and rapid advancement of the internet as a communication tool, then a content tool and now thanks to Amazon a sales and fulfillment tool has shifted how we consume content, how we acquire goods and services and has significantly changed entire industries.  Just ask Sears, the Amazon of the previous century.

The evolution of the internet now means that I can do business with just about anyone, anywhere in real time.  Existing companies now have far more competitors and the consumer has far more options.  Thousands of new companies can compete to provide goods and services, increasing the opportunity for innovation dramatically.

Apple and Amazon

The third leg of this stool, beyond globalization and the internet is the emergence of new and somewhat rapacious companies.  Amazon and Apple are the avatars.

Amazon was founded in 1994 as a book seller and has gained scale quickly by increasing its dominance over physical retail, while innovating its business models and entering entirely new markets (web services as an example).  Amazon demonstrated that people were willing to wait for the company to grow before becoming profitable, and cheered Bezos on to greater heights rather than demanding immediate profits.  Jobs returned to Apple in 1997 and created a company based on a few simple ideas - simplicity and integration.  Both of these companies explored new value propositions and new ways of working with customers.  Both are closing in on market dominance not seen since the guilded age.  Both give hints about new operating models and structures.

Stuck in the railroad age

Yet most corporations are stuck with a command and control organizational structure that dates to the age of railroads, which were the first large corporations.  It won't be a surprise to learn that the railroads adopted their operating models and organizational structures from the military, the other large and bureaucratic organization of its day.  These organizational structures worked well when change was slow and many organizations had monopoly or near monopoly power, and when few people were educated.  Today, most of these stipulations aren't true.  Change is constant and accelerating.  Few firms, other than Amazon and Google have anything close to monopoly control, and workers are far more educated and interesting in the meaning and mission of their work.

Corporations operate like glaciers, moving slowly and inexorably toward an almost predetermined goal, difficult to steer and with deep sources of internal, informal power that seem oblivious to the environmental changes all around.  Our business structures and models are for the most part still based on top down command and control, very regimented (a word straight from the military) and hierarchical, when we need to be more open to investigation, more flexible, more adaptable, more nimble.

Innovating org structures and business models

What we innovators should focus on are new organizational structures and new business models rather that products and services.  We can see evidence of some org structure and business model innovation in the "asset-light" companies like Airbnb and Uber, who have reworked their models to demonstrate that they don't need to own the assets to deliver a valuable product or service. 

But these are just the beginning.  As both Uber and Airbnb have demonstrated, once an organization reaches a certain size they take on trappings of bureaucracy and perhaps arrogance and lose sight of customers and their needs.  They become increasingly rule-bound and inflexible, losing some of their advantage and creativity.  If we can innovate new products and services with such alacrity, certainly we can innovate new organizational structures and business models that allow businesses to scale and remain nimble, become relatively large but still able to respond to emerging trends and needs.  This is the new "holy grail" of innovation - creating organizational structures and business models that are able to shift as customers shift, completely flexible and nimble while still scalable.
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posted by Jeffrey Phillips at 5:58 AM 0 comments

Tuesday, September 11, 2018

The quiet desperation of corporate innovators

Over the last year I've been conducting a one person listening tour, talking to a lot of my peers in consulting, as well as prospects, customers and friends who work in government and industry.  Of course many of these conversations revolve around innovation and new product or service development (or the lack thereof), and how people are engaged in their work and their roles.

One recurring development that has really troubled me over this period is the uniformity of feedback about innovation, about growth and about large companies' willingness to embrace the evolving future.  I've had the good fortune to talk to hundreds of people, in different industries, in different roles and across different geographies and countries.  One resounding consistent message I'm hearing is that the majority of the people I've spoken with are frustrated by the lack of innovation focus and effort within their organizations and the lack of engagement or emphasis placed on new growth and revitalization in large organizations.  While there is a lot of noise about innovation from all quarters, it appears from my discussions that there is little activity.  And this dissonance between noise and activity is beginning to impact senior people in significant ways.

In fact I'd go so far as to suggest that many people involved in innovation, new product development and who want to focus on growth in major corporations would gladly leave their current companies if they could find companies that would place more emphasis on innovation and growth.  It's strange to see so much frustration at a time when we hear that business is doing so well.

Enter the concept of Flow

Those who follow my blog know that I write fairly frequently about the concept of "flow", because it relates so perfectly with innovation.  Flow was first recognized and documented by a psychologist named Csikszentmihalyi.  He documented the idea that in some activities, people can lose themselves in their work. Time passes without notice.  People are deeply engaged and get great enjoyment from their work.  He defined flow as the confluence of the experience doing a task and the challenge of doing a task.  Too much experience with too little challenge?  Boredom.  Too much challenge with too little experience?  Fear.  The right match of challenge and experience?  The result is flow.

Note that the subtitle of the book is:  creating meaning, enhancing creativity.  These are factors that many people are searching for in their work.  People want to work with passion, on items that create or have meaning for them and others, leveraging their knowledge and creativity.  Talking to many people over the last year it's clear many of them want work that challenges them, creates meaning for them and is interesting and creative, yet they feel constrained by costs and efficient processes, trapped by cultures that are risk adverse, bound by short term thinking.  While corporations claim that people are their most important assets, few companies create structures or cultures or strategies that allow these workers to obtain the most value from their work.

Life in the silo

While many companies have shifted their work environments to more team-oriented work and more open plan offices, the majority of people still work in a very siloed model, constrained by their job title or description.  These job descriptions or titles define what the employee is supposed to do, day to day, but often don't reflect 1) what the company really needs from the employee and 2) what skills and capabilities the employee has that he or she could offer.  In other words, there are operational, psychological and structural mismatches between the actual needs of a company, the structures within which it asks people to operate, and the desires and goals of the employees. 

I'll argue that most large organizations waste 30-40% of their employees' knowledge, time and capabilities by defining roles and responsibilities too narrowly, and further distract or frustrate their employees by failing to create meaningful strategies and fully engaging their staff on a visionary goal.

Corporations are still too hierarchical, too top down, too siloed, too rigid in their definition of work and roles at a time when people are more capable, more educated and want to be more engaged than ever before.  Why are so many potential innovators in large corporations so frustrated?  Why are so many feeling unleveraged and underappreciated?  Because they are given so little leeway, so little support and the expectations and goals for their teams are so limited.

This is especially disappointing because more people have more education and more capabilities than ever before, and access to far more information about their customers, products and markets.  Many people don't need information interpreted for them in order to spot emerging opportunities - they can see the opportunities that their company is ignoring.  What's more, these same people have ideas about how to address those underserved markets, but can't get their ideas heard, supported or funded.

Good to Great

Jim Collins created at least one great idea in his book Good to Great:  the idea that we need to get the right people in the right seats on the bus.  In many cases in business we have the right people, but they are in the wrong seat or the seat doesn't define everything they can do.  Collins also suggested that some people might need to change seats or get off the bus entirely.  Increasingly however I think we might need to look at the drivers, because no matter how good the people on the bus are, if they aren't given effective direction and the freedom and challenges to live up to their skills, then the driver is at fault.

What does it say when an entire generation of people who are tasked with a very important and conceptually interesting task like innovation are frustrated and somewhat defeated by their roles and their work?  What does it say when this attitude is consistent across industries and geographies?  When people speak with passion about doing more, getting more engaged, doing more innovation but feeling constantly thwarted and frustrated by their own management?  

We are at an inflection point in business, where automation and artificial intelligence will cause some rather dramatic changes in how we organize and staff companies.  Now is the time to rethink how we engage people, and fully leverage their passion and energy.  We need to be thinking about how to get the right people in the right seats, and give them the right direction.  It's possible that with new thinking we could have a much more engaged workforce creating far more innovative products and services.  It's possible that we could actually create the conditions for "flow" in our organizations and that they would benefit from those conditions.

The alternative is underutilized people and assets, underachieving and feeling underappreciated, who float from job to job and eventually leave to go start something new where their energy and passion can be fully brought to bear.  Thoreau said many people live lives of quiet desperation.  I'm concerned that this is especially true among a very important subset of corporate employees - those who have the will and the passion for innovation.

What to do?

What can we do?  First, recognize that people ARE the most important assets, especially where growth, creativity and innovation are concerned.  These should be the places where we unleash our people and provide the time and funding necessary for them to create amazing new products and services.  Second, rethink how organizations are structured, the risk adverse cultures that have grown like kudzu, spreading slowly through the organization to stifle new growth and sustain the status quo.  Third, put the right opportunities and metrics in place and tell the innovators to "put up or shut up".  If you believe these folks can innovate, then get out of their way and reap the benefits.  If you think they can't, give them a fair opportunity and measure the outcomes.  Corporations that do this will benefit either way.

I can assure you that any company that demonstrates that it welcomes and encourages innovators will find itself overrun with high quality talent, and if it can put that talent to good use will create compelling new products and services that separate it from its competitors.

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posted by Jeffrey Phillips at 5:46 AM 0 comments