Tuesday, January 24, 2023

ChatGPT did not write this blog

 There are a lot of folks thinking about the implications of ChatGPT, the new AI that has many writers worried about losing their jobs.  I've seen posts online where people provided prompts to ChatGPT and found the resulting document to be comparable to a well-written, college level paper.  Which has led, inevitably, to the claim that AI will replace humans and take their jobs.  All that is left now is for the Luddites to grab their spanners and wreak havoc on the knitting machines.  

As someone who writes a lot, I am concerned about any AI with the ability to write or argue points in the same manner, voice and frequency that I do.  In fact, it might be interesting to load all 1200+ posts I have written and train an AI to simply continue to write posts for me, while I while away the afternoons sipping pina coladas.  Don't judge me - I like coconut.  And, yes, some jobs are likely to be replaced, but in case no one has noticed, AI has been writing short new snippets and even full-page web articles for several years.  Daniel Pink wrote years ago that anything that could be broken down into a defined process would be first outsourced and then automated.  Years later, what we are discovering is that anything with patterns and some descriptive underlying logic, like a language, can be automated.  This does not mean the end of humans, or even copywriters, because the AI still requires interesting prompts.  In other words, it knows HOW to write, perhaps even more effectively and fluently than we do, but it does not know WHAT to write, and in many instances, it may miss the point about WHY to write at all.

Having a specific point of view is vital.  After all, would you rather read a piece about the English language and its uses from Orwell or Churchill, or Mick Jagger?  Orwell and Churchill understood the use of language, first to shape how people think (Orwell) or to move and motivate people (Churchill).  Jagger uses language as a way to evoke thoughts or emotions and to entertain people.  And, yes, you could create an AI that became expert at mimicking Orwell - what would he have thought of that?  A whole book could be written just about the speculation about how Orwell would have reacted to ChatGPT and its potential use or disuse.  But AI cannot replace Orwell, because Orwell had several characteristics that the AI will never have - lived experience, a point of view, ideas about the current state and visions about the future.

A single AI won't have all of these facets - at least not yet.  It would take several AIs working in tandem, all trained to Orwell's writing style, perspective, politics, life experienes and more, to adequately reflect how Orwell wrote, and to begin to try to fully replace Orwell.  Not saying it isn't possible, just very difficult right now, when AI could be put to better use.

Where is the creative spark?

A good friend of mine likes to say that all programming code is a derivative of the original line of code ever written.  Likewise, most music is derivative of original notes and beats that humans created thousands of years ago.  The beats per minute may change, the instruments may change, the different chords and keys may change, but eventually all music is derived from an original source.

So it is with most things.  I like Hemingway's books and find his style and usage and word choice interesting.  It is the combination of his choice of words, his characters and his settings, as well as his point of view that make his work interesting.  So, is the creative act the process of putting words on a page, words that have been used again and again for centuries?  Or is the creative act in the selection and choice of words, the short sentences and the long, run-ons?  Where does the actual creative spark lie, and what creates or generates that spark?  Because ultimate that's what will differentiate humans from our AI partners. Note that I say partners, not overlords, as some will suggest.  If and when multiple AIs are joined together, all of which can do very different things, and all the AIs band together to work against us, we may be in trouble, but fortunately that's a problem for my kids' generation to solve.

Weavers, whip makers and copy writers

So, yes, some jobs and roles will be threatened by the onset of AI in language processing.  Just as manual weavers gave way to automated looms and whip makers were out of business when the automobile became popular, creative destruction as envisioned by Schumpeter will continue.  Innovation and technology will create new capabilities that replace or in some instances destroy jobs and even industries.  We can stand athwart history, fighting the emergence of new technologies, or we can adjust and reframe capabilities to take advantage of new opportunities.  The Luddities tried to destroy the weaving machines.  Less is recorded about the demise of whip makers, although I am sure they did not go silently into that good night.  What will those of us whose occupations and incomes depend on developing great copy do?  Perhaps we'll learn to train machines and AI to do the bulk of the work for us and put the final touches on ourselves.  Is what AI is doing really so different from what James Patterson is doing - writing story outlines and having other authors flesh out the story?

One day, an AI may write this blog, but if it does, I'll provide the context and the prompts and the ideas and will probably rework the draft.  You'll be able to tell it's my own work when there are run-on sentences, misplaced metaphors and poor subject/verb agreement.  But hopefully the good ideas will shine through.

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posted by Jeffrey Phillips at 12:19 PM 0 comments

Monday, January 16, 2023

Why campfires are the perfect analogy for innovation

 I grew up in Scouting and really enjoyed my time as a scout.  What I think most of us enjoyed the most were the weekend campouts, where we could sleep in tents, roam in the local forest and, best of all, build fires.  I've never fully understood why boys are so attracted to fire.  Perhaps it is fire's potential destructive nature. Perhaps it's the concept of controlling such an awesome power.  Perhaps it's just cooking hot dogs and marshmallows over an open flame.  All I know is, we loved to build fires and cook over the open flame.

Campfire 101

Every scout knew that a good fire begins by preparing the ground, scraping away the dead leaves to expose bare soil, so that when the fire was burning, it was contained in a small spot.  We'd often gather rocks to contain the wood in a small circle.  These were simply good practices and safety measures.

Next, we'd spread out and gather as many small dry twigs as we could find for kindling.  You need something to catch fire quickly, that doesn't take too much effort to get started.  Then your kindling will burn hot enough and long enough to allow larger branches and eventually logs to catch fire.  Good fire-makers know that the wood - kindling and the larger logs - needs to be good and dry and ready to burn, not freshly cut green trees full of sap, but older, dead logs that have dried out.  The older, dead and dry wood catches fire more quickly and burns more cleanly.  Once you have a real fire going, you can burn green wood, but fresh, green wood kicks up a lot of smoke.

If you've built your fire correctly, preparing the ground, building up your dry kindling with good dry branches and logs ready, a few small sparks will be all it will take to get your fire going.  We used to challenge each other to see who could start a fire with the fewest matches.  Some more intrepid scouts had learned to create sparks by striking flints.  I've even once witnessed someone start a fire with a fire bow, but that takes a lot of work.

So, what's this interesting flashback to scouting days have to do with innovation?  A lot - and we forget far too much of the symmetry.

Innovation and campfires

There's a reason so many innovation tools and methods are associated with light or fire.  Ideas are often considered "sparks" that will catch flame to create new ideas.  When scouts are striking matches or striking flints, they are creating sparks directed to their kindling, in hopes that the spark will ignite the kindling and then the rest of the wood.

When you are generating ideas, through individual work, or brainstorming, or some other means, you are sparking ideas.  While idea generation can often seem challenging to introverts or people who don't think of themselves as "creative", it is the easiest activity in the innovation realm.  Anyone can do it, anytime, in any location, with little preparation.  And, often, that's what's wrong with idea generation - it can be too easy to do - just like striking a match.

As I noted above, we would never strike a match without first preparing a fire circle and building a good platform of kindling.  A lot of preparation went into building the right conditions for that spark to catch up a flame.  Yet in most businesses, we are apt to go into an idea generation activity with little preparation, and with little connection between ideas generated and how they will be realized.  There's often a big gap in companies between idea generation and the work necessary to develop an idea into a new product or service.

As scouts, we'd build a small mound of kindling, ready to catch the spark, with more wood prepared to feed the fire as it grew.  As innovators, we need to have the right conditions, the right preparation, but also the right next steps for a good idea.  Who will manage the idea?  What are the processes to develop and validate the idea?  Who will build a prototype and test it?  These concepts need to happen BEFORE the idea is generated, not afterwards.  Too often, we expect that simply generating good ideas will be enough - that ideas have value in and of themselves and will mature naturally with little help or guidance.  No, ideas are like matches that flare for a moment but will burn and die unless they become the spark for something else.  

Wet wood

Scouts know that dry wood matters when you build a fire.  It's far simpler to ignite dry wood than wood that is wet or green.  The same concept applies to innovation - using the right people and setting the right conditions and ingredients matter.  Working with people who are not ready to innovate, or who have doubts about the ideas, is like trying to catch wet wood on fire - it is possible, just not the best approach.  Here, we can also talk about corporate culture.  If the culture of the business is to focus on existing products, to avoid risk, then you are metaphorically working with wet wood.  It is as important to describe how ideas will evolve and mature as it is to find the right people with the best motivations and help them overcome any corporate culture or challenges to innovation or innovative thinking.


We scouts didn't get good at building fires by doing this occasionally, but by trial and error and by learning from our peers and our scout leaders.  We had our scout manuals to tell us how to build a good fire, and we built fires every time we went camping, because that was the source of heat, and how we cooked our food.  And yes, we did challenge each other to build fires using the fewest matches (or no matches).  To earn one specific merit badge, you were sent off into the woods by yourself to build your own shelter, to find and cook your own food, for a weekend with a knife, a blanket and two matches.  Believe me, you learn to build your fires carefully when you have a limited supply of matches.

Starter Wood

Those of us who had a little more experience would often carry a few shavings of what we called "fire starter".  Fire starter (or what some call fat wood) comes from the joints or roots of an old pine tree, filled with resin, which catches fire really easily and burns very hot and fast.  It acts as a catalyst for the other kindling and will burn even when other wood won't.  You may find that you need a catalyst as well - someone from outside your group, or perhaps outside your company, to spark ideas.  Or, you may want to have your team read magazine or web articles about what competitors are doing or new emerging technologies in order to spark creative juices or create a competitive challenge.  Smart innovators will use any catalyst they can to engage their audience and create heightened competitive challenge.

Campfires and Innovation

So, there are at least five ideas to take away from this reminiscence:

  1. Ideas are sparks, and without the right preparation and good processes and responsibilities defined, you are wasting your time generating ideas.  Build your firepit, stack your kindling and know how to fuel a fire before you generate ideas.
  2. Sparks don't burn wet wood.  Find the right people, prepare them, help overcome cultural objections.  Establish the best conditions possible, in the room and beyond the initial meeting.
  3. Nobody does this right the first time.  It takes practice to learn to build a fire with a single match.  It takes practice to learn to generate and manage ideas.  If innovation is important in your company, it will be something that you practice and do regularly.
  4. Have a clear purpose.  While this discussion may sound like it borders on pyromania, we also knew that our leaders would send us home if we started fires that did not have a purpose.  Fire is a tool, useful and occasionally dangerous, and not to be invoked lightly or carelessly.  When we started a fire, we had to have a purpose - warmth or cooking.  When you do innovation work, you need to have a clearly defined purpose, that everyone understands and agrees on.
  5. Identify a catalyst or create a challenge.  We'd use or find fat wood whenever we could, because it made starting the fire easier.  You may need to introduce a catalyst who can generate ideas that your team would not normally consider or produce information or a competitive challenge to push your team to be more creative.

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posted by Jeffrey Phillips at 6:11 AM 0 comments

Wednesday, December 21, 2022

Will you shape innovation, or will it shape you?

 There's a famous quote about tools we use, which says that we first shape our tools, and then they shape us.  Meaning, I think, that we are natural creators, meant to solve problems, to create new things.  When we create new things, they become valuable and in demand, and to a great extent, at least initially, unattainable until produced in mass quantities.  Once attainable and proven useful, those tools change the way we live and work.  Thus, the tools we created and shaped will eventually change and shape the way we live and work.  If you doubt this is true, look no further than the iPhone.  What was an incredible innovation is now changing how we work and live.  And to some degree, creating new humans with more flexible and useful thumbs!

Through creativity and innovation, from the earliest origin of man, we have been creating and shaping tools - fire, sharpened sticks for tools and weapons, the wheel and thousands upon thousands of other tools and devices.  Now, we are surrounded by the evidence of centuries of innovation:  indoor air conditioning on a hot summer day.  Automobiles that can travel hundreds of miles on a single electrical charge.  The ability to sit and write a blog that others may read (or ignore) at their leisure.  And all of these tools and services are built on dozens of other innovations, that we all too casually accept and ignore.

The question I'd like pose today is:  when do we stop shaping innovation and when does it start shaping us?  One of my biggest concerns is that we are losing sight of the power of innovation, and its ability to constantly change (and often improve) our lives.  To a great extent, we are becoming complacent, waiting for others to change or improve or modify our lives, rather than dreaming up big ideas and developing them ourselves.  Too many times we've outsourced the development of ideas to others, waiting for them to take the risks, to scale the ideas, rather than get involved and participate in the learning, experimenting and yes, sometimes failing process.  This lack of larger engagement in innovation and creativity means that the development of interesting new products and services is left more and more to people who are willing to take risks, and those people, unfortunately, may include people who don't care about risk or who don't care about you.  Facebook, as an example, has proven to be an exceptionally valuable innovation that generates a lot of social interaction, for good and for bad, driven by Mark Zuckerberg, who, it seems, is happy to share your data with anyone for payment.  And Facebook is just one example.

When people become passive, and when we fail to innovate, we risk turning over innovation and creativity to people who don't have our best interests at heart, but more importantly we risk abdicating the act itself to others, and eventually to machines.  While I recognize that this sounds futuristic, good innovation often involves the combination of unexpected features or solutions in new or novel way.  Artificial intelligence can spot and discard thousands of connections that would take humans years to even consider.  A significant amount of drug discovery is already working in this way.  

The advent of innovation by AI does not preclude people from working in innovation and certainly won't prescribe the activity, but as long as we continue to focus our attention in the educational system on rote memorization and de-emphasize risk taking and creativity, the more and more these acts become acts of rebellion or resistance against a system, by people who do not fit into the mainstream.  This is not to suggest that there will be an "us vs them" mentality, but most good innovators are somewhat outside of the mainstream, and the current environment and movement to more automated methods of innovation may make it even more so.  

Plus, there are some innovations and some breakthroughs that simply require human involvement and innovation.  While AI can combine existing capabilities and molecules to decide if a new combination has value, AI (at least not now) can't imagine new possibilities, new services and business models, new experiences that consumers value.  There are entire vistas of innovation possibility out there, waiting to be explored and, yes, monetized, if only businesses would be more active in seeking out the possibilities.  Yet, most companies stick within a very narrow range of new product development options, unable or unwilling to shift the frame and think differently.  Little wonder, since the population seems to be moving in that direction as well.

The dystopian future of Terminator is bleak but unrealistic.  Machines and AI will become more powerful, but the relationship will be symbiotic, just not in the way of Terminator or The Matrix.  We will become more dependent on machines and AI for more of our thinking and even our creativity if we aren't careful.  True creativity and innovation are almost purely human characteristics, exceptionally difficult for machines to create, but these acts aren't always useful or beneficial.  However, in the right conditions they lead to new learning and new discovery.

The question is:  are we willing to relegate our lives, our thinking and our innovations to a small group of people who continue to work and innovate, and to machines and AI that won't explore all the innovation possibilities and options?  Will we be happy with a continuous supply of incremental and safe ideas that aren't all that interesting and fail to explore new opportunities?  If what I am saying as a warning seems to reflect the current reality, then get ready for more of it.

If you want more, if you think people and society is capable of more, then start by training your kids and students in creative thinking and innovation.  Encourage them to explore beyond the rigid academic boundaries, to combine new thoughts and new experiences.  As Heinlein said - specialization is for insects.  We need people who are open to new ideas and new experiences, who will push further into creativity and innovation, to re-invigorate innovation in society, in government and in business.

And it cannot come soon enough.  Otherwise, complacency, lethargy and satisfaction with the current state will settle in, and we'll create an entire generation of people who are completely satisfied with staring at photos and short video clips on a handheld device.  Oh, maybe we've failed this generation.  Maybe they'll recognize that life and experiences and risk beyond the handheld are out there and reject the trap of social media to go well beyond.

It's time to move beyond relying on Zuckerberg, Elon Musk, Sam Bankman-Fried and other "innovators" to create new things.  SBF didn't create, he merely masked a Ponzi scheme and bamboozled a willing press.  We, all of us, are responsible for what we want to buy, consume and experience.  Stop waiting for others to innovate, stop waiting for the next band leader to bring the music to town.  Start innovating on your own, in small groups, with your friends, with teams at work.

Start defining and shaping your own innovations, rather than waiting for someone to sell you one of theirs.

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posted by Jeffrey Phillips at 1:06 PM 0 comments

Monday, December 05, 2022

Innovation Portfolio Gymnastics

 There's been a significant number of posts on LinkedIn and other social media about innovation lately, especially focused on the type of innovation that companies perform.  The traditional way of thinking about this, which is really just a loose rule of thumb, is to suggest that companies SHOULD plan for 70% of their innovation efforts (and hopefully, results) to be focused on incremental innovation, and 20% on transformative innovation and 10% on disruptive innovation.  The 70/20/10 allocation was originally created by one of the big strategic consulting firms and seems reasonable on its face, but was never intended to be a fixed proportion, but a signal that every company should be innovating across all three horizons. 

The idea of diversification across the three horizons was the key point, not the amount of innovation in each horizon.  There may be companies or industries where the appropriate division is 70/20/10.  More than likely, there are a few companies where this is the correct investment across the portfolio.  However, there are several issues with this allocation.  First, it isn't gospel.  Clayton Christensen didn't carve it on stone and hand it down to the rest of us.  It is a rule of thumb that should be understood as such, and then modified by every company based on competition, the pace of change in the marketplace, the amount of impact or disruption the company wants to create and so on.  It is lazy thinking to believe that your innovation investment should be the same as every other company.

Second, the original 70/20/10 split really only addresses one dimension - that is what new products should we create.  I think more than ever, it's reasonable to ask what the portfolio of new services, new customer experiences and business models we should be creating, and across all three horizons.  We need to free ourselves from a limited way of thinking about innovation outcomes.

Third, we need to recognize that few firms will ever fully embrace or realize the third horizon.  While some firms may espouse the goal of innovating to disrupt their market or other markets, the near-term incentives to protect what exists, and the risks associated with disrupting a home market are too significant for the vast majority of companies.  There's a reason most if not all disruptive innovation happens from outside an industry.  The upstarts and external actors don't have an investment in the status quo.  So, it's generally been my rule, let's call it the Phillips rule, that all disruptive innovation will be realized by companies innovating in an industry they hope to enter or to create.  This does not mean you should not plan for third horizon innovation, but if you do, you must ask how the innovation will be realized.

Building a real innovation portfolio

If you want to truly understand the power and depth of an innovation portfolio across these horizons, then we need to examine what criteria are important.  

First, it is clearly important to sustain and extend existing products and services.  Thus, the incremental segment of the three horizons is important.  What is critical here is knowing which products and services are worth extending or adding on to, and which should be culled from the portfolio.  Most companies are loath to cull products and services, so they spread too few innovation dollars across the entire portfolio, making meager changes that do not thrill customers.  The best action in the existing portfolio is first to go on a zombie hunt, to remove the weakest products and services to free up more innovation dollars for the best remaining products.  All incremental innovation should first begin with subtraction, to free up room and funds for future growth.

Second, you need to consider what new products and services and business models you'd like to create to add to your existing portfolio.  This will represent the second horizon of innovation, the transformative horizon.  It's in this segment that you create new products, introduce new technologies or target new customers.  In all of these cases, learning is involved.  You must invest in exploration, in learning and in engaging customers and prospects.  You should also do a good amount of work in trend spotting and scenario planning.  This segment is where you make the most important bets on your mid-term future, so the more you can learn, the better off you'll be.

Third, you will want to understand what disruptive innovation looks like, while recognizing that disruptive innovation can and will happen in your industry (likely by an upstart or outsider) AND that you can be a disrupter to other companies or industries.  It helps to understand how your industry might be disrupted, so you can anticipate the entrants and significant changes that could occur.  It's also valuable to see how your capabilities, products and services could disrupt another industry, opening up new markets and new customers.  It is important that you do both - understand how your market or company could be disrupted, so you can defend against it or prepare to move if necessary and examine where your capabilities could allow you to enter or disrupt other markets.  As Eisenhower said, plans are nothing, but planning is everything.

Who should do this work

The challenge with all I've identified above is that there is no one person or even one function that can do all of this work.  Few companies have competent planning departments that can spot future trends and build scenarios or spot important competitive movements.  Most innovation happens in R&D or in isolated product groups, so forming a true innovation portfolio means cobbling together different innovation pipelines from vastly different organizations, and most of those will be product innovations since customer service or business model innovation is rarely considered.

What this points out is that while innovation seems important, it is not well-organized, often not strategic and not carefully planned or executed, and does not have a single point of responsibility or accountability.  I've been in the innovation space for over 20 years, and I've seen a lot of improvement in corporate innovation but compared to the way many other business processes operate, there's another 20 years' worth of work before innovation gets the kind of attention it deserves.

What to do now

Where to start?  Define a corporate-wide innovation portfolio, to get a sense of all the innovation work underway.  Classify it as incremental, transformative or disruptive.  Determine the ratio of the three.  Gasp when you realize that the vast amount of innovation underway is incremental and unlike to move the needle.  Examine your markets, your competitors and your customers to determine just how much innovation you should be doing.  Cull your innovation portfolio and enforce the right ratios across the three horizons.  Invest in learning, discovery, customer engagement to gain more insight for transformative innovation (horizon two). Research disruptive innovations that you can create to attack other industries.  Research the disruption that is going to happen in your industry.  Learn, adapt and then change your innovation portfolio.  Make sure to track not just product innovation, but services, customer experience and business model innovation as well.

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posted by Jeffrey Phillips at 11:45 AM 0 comments

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