Tuesday, August 13, 2013

Can you spare an innovation dime?

In the Great Depression - the real Great Depression in the 1930s - it wasn't at all uncommon to see able bodied men selling apples on a street corner, or worse, holding a sign asking for spare change.  The phrase "can you spare a dime" became synonymous with the era, as people sought any job, any way to earn money they could find.  Of course, back then a dime was real money.

Today, there's a new cry heard in many organizations.  Street corners aren't the only place where scarcity is found - most modern corporations are symbols of scarcity.  Today, the first issue anyone interested in innovation must face is:  can you spare a body?  What happens when money is cheap, and people are expensive?

The blessings of Efficiency

I come today not to praise efficiency but to bury it.  Because of efficiency and effectiveness, and their cohorts in crime, Lean, Six Sigma, downsizing, outsourcing and right sizing, most organizations run today on the bleeding edge of staffing efficiency.  This means that the bottom line in most corporations looks good, and the top line is often stagnant.  Firms have placed so much emphasis on efficiency and cost cutting that there's little time, focus or resource to think about growth.

Strangely, money is not the key roadblock - any corporation can find money to spend on innovation, whether that money goes to external consultants, or to fund research or acquire new intellectual property or ideas.  Money as the traditional barrier to getting things done has been supplanted.  Today, resources are the real barrier.

In work teams and business functions working on the bleeding edge of efficiency, there are simply no additional resources to place on inefficient, unproven innovation activities.  Anyone who is "freed up" to work on innovation activities is a "critical" component of an existing product or workstream, and their work must be taken on by other people.  There's no slack in the system, and further, rewards and compensation follow the individuals that sustain efficiency.

A new iron triangle emerges

As a young engineer, I learned the rule of the iron triangle - cheap, fast and reliable.  An engineer gets to pick any two, and the third is then dictated.  Choose cheap and fast, and you sacrifice reliability.  In the innovation world, the iron triangle is composed of three components:  people, money and ideas.  Today, ideas and money are cheap, people are expensive.  Yet without people to identify needs, generate ideas and build new products, innovation is virtually impossible.  The value of inputs has been completely inverted.  Time was that people were cheap and ideas and money were expensive.  As more education came online and trade barriers fell, ideas and intellectual property became cheap.  Even money is cheap, thanks to the Fed and the profit streams of many organizations.  That leaves only staffing or resources as the critical bottleneck.

While innovation relies on three components, the most important of the three - people, money and ideas - is people, yet that is the most difficult component to get in the right quantities and quality. 

Solving the People Problem

In any organization that hopes to innovate successfully, the availability problem must be addressed.  As many of you know, it's not just "any staffer" that can become a good innovator.  The people problem is compounded because innovation requires, demands the best people in your organization.  There are only a handful of methods to solve the problem:
  1. Add staff to create some slack in your resource system
  2. Ask the existing staff to do even more, to free up a few individuals to focus on innovation
  3. Outsource critical tasks or the entire innovation process
The first option, strangely, is almost a non-starter, even with the abundance of people available.  Most firms want to limit hiring.  It's become too hard to hire and to train, and too difficult to let people go as needs change.  The second option - shifting responsibilities - is what many firms attempt, but when people are already overtaxed, they struggle to do a good job at innovation in a very limited timeframe and with no training or tools.  This is why most innovation in incremental at best.

The third option is the easiest but often the most dangerous.  Outsourcing innovation to consultants or designers means that your internal organization never learns to innovate, never gains skills or capabilities.  You can easily become dependent on third parties who don't share your perspectives or who want to re-use insights or ideas from other clients.  Yet outsourcing is fairly common, when people are expensive and money is cheap.

There's a final option, which is to make innovation so central to your activities and processes that it everyone is doing it all the time, almost effortlessly.  I've written before about shifting your "business as usual" to incorporate innovation, so that innovation is "business as usual".  When everyone is doing it and innovation is part of the fabric of how you work, the people problem won't disappear, but it will become far less of a concern. 
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posted by Jeffrey Phillips at 6:17 AM


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