Wednesday, April 29, 2020

Innovation traits that are vital now: Beginner's Mind

In the face of so much change and uncertainty during the COVID crisis, it is imperative that we do several things simultaneously and well.  First, as executives or managers, we need to find ways to cut costs and find somewhat stable footings for businesses.  With so much uncertainty and volatility, it can be hard to know when you've reached "bottom" and how to respond when the economy begins to grow again.  This is an important role, but not the only role.

Second, you should be asking about the best ways (and best people) to start innovating again.  Even before everything settles down and your business returns to some new normal, you want to start thinking about serving your customers and prospects in these new conditions.  Competition for customers, fierce before COVID, will be even more cut-throat.  Companies are desperate to capture customers and market share, and to generate revenue, so new entrants will come into your space from unexpected quarters, and people who worked for large organizations previously will be opening new businesses to serve your customers.  Good innovation is more important than ever.

Who are your best innovators?

With innovation outputs at a premium, now is a good time to think about who your best innovators are, and how you can fully engage them to create new products, new services, new experiences and new business models that your customers will demand.

As I've explained previously, your "best" people - those who are really good at managing existing products and services, who are good at holding costs in line and doing things effectively and efficiently - will mostly be good at incremental innovation - small changes to existing products or services.  For new products and services, and to enter white spaces or confront new competitors, you need to find the best innovators, not the people who are best at managing day to day operations.

How do you identify the best innovators?  After a lot of reading, research and experience in the innovation space I wrote a short paper entitled The Unusual Suspects, which identifies key characteristics or traits of good innovators.  Good innovators in your organization are often found at the margins of the business.  They are people who have been dissatisfied with the status quo products and processes.  They are often considered dreamers or complainers.  Through my research and with some help from some psychologists, I identified a number of key traits and characteristics that can help you identify the people who are best at innovating.  In the next couple of posts, I'm going to tell you about some of the best characteristics for innovating.  Finding the people with these skills and characteristics and putting them in charge of new innovation is critical to your long term success.

Key Trait:  Beginner's Mind

One of the most important traits we found when thinking about transformative and disruptive innovation is what has been labelled "beginner's mind".  This was a favorite topic of Steve Jobs, who adapted it from Buddhism.  The concept simply means that when confronted with a challenge or problem, we should examine it as if for the first time, or as a beginner, or even a child, would see the problem.

Too often, once you have experience in a setting or a field, you view problems and challenges within a framework or context based on your past experience.  This can create functional blindness, a lack of exploration or discovery based on the known and accepted constraints.  Converging around experience is reasonable if you want incremental innovation, because experience will accept many of the past constraints and conditions and tell you what you can and cannot do.

A beginner's mind approach, on the other hand, looks at a problem with fresh eyes and fresh thinking.  It asks:  why does this problem exist?  What would happen if I could eliminate the problem or ignore the problem?  What are all the possible ways to solve the problem?  How might this problem become a solution or a component of another opportunity?  Beginner's mind thinking starts expansively and explores all options.  To many executives, this approach seems to waste time when all we need is an incremental solution.  But to find the best options, the best new ideas, we need to explore the problem with fresh eyes and fresh thinking.

Why this approach is vital now

Beginner's Mind is vital for disruptive innovation generally, but it is even more important in light of the COVID pandemic.  The reasons for this are obvious. First, there are relatively few people who have any expertise in a pandemic.  That's why Dr Fauci is so comforting to so many people, but there are few Faucis.  Second, the people with any experience in a pandemic of this size and nature were people who lived through the Spanish Influenza outbreak of 1919-1920.  They are mostly dead, and even if they were alive their expertise would be limited.  In fact, we have little expertise to draw on in this case, and much of the expertise we are using draws on examples from decades, if not centuries past.  That does not make the expertise wrong, simply points out how limited our expertise is.

Since beginner's mind takes a "Fresh Look" approach, and since we have so little practical experience in recovery from pandemics of this size and nature, thinking about innovation from a beginner's mind perspective is vital now.

Finding these people

OK, so let's assume you accept the importance of beginner's mind.  Where do you find these people?

First, you want to look internally.  Who are the people in your team who are often expanding the scope of a project, wanting to explore and discover more information about the problem before converging around a solution?  Who are people who constantly introduce new solutions to old problems that "might" be possible but for some reason just aren't practical?  These people may possess beginner's mind thinking.

Second, find people you trust from outside of your company, sector or industry.  The best innovators are often people who make connections or bring ideas or perspectives from different industries or even geographies.  Working with friends or consultants who don't have a lot of experience in your industry - who aren't afraid to ask "why do you do this" - who have expertise in thinking, in problem solving and in innovation but may lack expertise in your field or industry - may inspire new thinking.

Ask your prospects, or the people who could acquire your product or service but don't.  Asking your customers about new realities when they are still dealing with change and know and trust your products isn't helpful.  Go talk to people who don't use your product or service, or who don't use any of the products or services that your industry provides.  What are they inventing?  How are they operating?

Ask yourself - what might a new and somewhat hungry entrepreneur with no experience in this industry do?  Because that's happening right now.  People are going to start new businesses and provide services and products to customers based on what they think customers need, regardless of their knowledge or experience in a market.  What would you do if you were a new entrepreneur seeking to enter your industry or sector, especially one with little or nothing to lose.

If you need help

If you need help, contact me.  I've worked in the innovation space for over 15 years, in a range of industries (financial services, health care, medical device, household appliances, high tech, insurance, the DoD, etc) on a wide variety of products and services. I've helped identify people within corporations who can provide beginner's mind insights, and helped find people outside to provide this insight as well.  Read the Unusual Suspects paper to learn more about beginner's mind and other traits I'll be reviewing in the next few days.

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posted by Jeffrey Phillips at 7:22 AM 0 comments

Thursday, April 23, 2020

Why diversity is important to innovation

We've just finished the 11th Annual Innovate Carolina conference, and since this is the year of COVID we held a virtual conference rather than our traditional in person event.  It was good to spend time talking about innovation and hearing from others who had different experiences, rather than focusing on the illness and all the negative reporting.

We had a good turn out and I think a good panel of speakers, and I found that even though I've been doing innovation related work for over 15 years there are still plenty of things to learn.  I've long believed in the concept of diversity and what a strong and diverse team can bring to an innovation program. But we had some compelling discussions today that stretched my thinking.

Diversity is itself diverse

When we talk about diversity we often fall into a trap, thinking that we can create diverse teams by ensuring there are people of different ethnicities on the team.  While different people from different backgrounds or races do bring new perspectives, diversity is far more, well, diverse, than just ethnicity or race.  From our talk today it incorporates:

  • Personality types - using Myers-Briggs or other assessments to find introverts and extroverts, hard headed factual thinkers and people directed by emotion.  
  • People with different levels of experience.  Blending a team of experts with people who are encountering the problem or challenge for the first time means that not everyone brings all of their experience, or history, to solving the problem.  Some naive observers may wonder why the problem exists at all.
  • People from different functional areas.  One speaker noted that engineers are convergent thinkers, hammers looking for a nail.  As a recovering engineer I can say that's not true of all engineers but it is a reasonable expectation.  Engineers look at problems differently than do people from a legal function, and differently again from people in medicine, or procurement.
  • Blending people of different ages.  If we asked how to overcome boredom forced upon us by staying at home, younger people who are more facile with technology may answer one way, while older people who grew up with fewer technologies and had to "create their own fun" would probably arrive at different answers
  • People with disabilities.  In one of my favorite talks, Lindsey Braciale from Advocations in Charlotte talked about a market that goes unnoticed - people with different abilities or disabilities - and their innate ability to innovate, because they often are forced to.  Yet many innovations intended for this smaller segment work their way quickly into the general population.
  • The emerging diversity of smart machines, AI, robots and other digital transformation.  Our speaker - Ken Hubbell from Wells Fargo - asked us to consider if it is unethical to NOT tell your employer that your AI or machine learning algorithm is actually doing your job.  We are already engaging smart machines and predictive analytics to make decisions, and soon AI or other smart devices will work alongside us.  Are you ready for the diversity of a transhuman workforce?
The problem with a diverse team

However, we also know that without a lot of social engagement and team building, a truly diverse team can be difficult to manage, because each of these categories have different ways of looking at a problem and different ways of creating solutions.  Rarely does any innovation team take a truly holistic view toward solving a problem.  Instead, most teams are formed by people who are already comfortable working in a shared context and model.

Working with a really diverse team will take more time, to socialize the team and get everyone on-board and comfortable with a shared approach.  This places more responsibility on the team leader, who may not be familiar with managing so many different perspectives.  We need better leadership and facilitation skills, in order to recruit more diverse teams, in order to do better and more proficient innovation work.  Instead we settle for limited scope and homogeneous teams.

COVID as a discontinuity

It remains to be seen how different business operations will be after the COVID pandemic, but one can imagine that innovation will be more relevant in the future, because of operational and business model changes required by COVID, and the need for new perspectives and ideas will be high.

Companies that revert to old models - assembling the usual suspects, organizing a limited investigation or discovery and generating the same old ideas - will be disappointed in the results.  Now is the time to consider new team structures and new participation, which will require more upfront team development but will lead to better ideas.

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posted by Jeffrey Phillips at 12:29 PM 0 comments

Wednesday, April 15, 2020

Changing after COVID - the Why, the How and the What

Let's face it, the COVID pandemic and the following economic freeze-up are likely to have a lasting impact.  Experts are constantly telling us that the future will be different - things can't go back to the way they were.  No one is quite sure what the future holds - many have ideas or predictions - but there are few definitives.  There is one thing you can count on - change - and the faster you decide not WHAT to change, but the WHY and HOW to change, the better off you'll be.

We'll get signals over the next few quarters about what to change, but so will everyone else.  Strategies, prior commitments and resistant existing platforms and models will become barriers to change.  But what executives need to be doing now is thinking about how to create the context for change, how to get their teams to embrace change, and how to ensure change is not a once and done phenomenon.

Why change?

I think most people understand that COVID will likely create changes in the way we work and live.  The fact that people understand that change may be necessary does not mean that they are comfortable or accept the need for change, or that they understand the purpose or goals of change.  Executives must be planning communication programs to demonstrate a program of change that takes COVID and the aftermath into consideration, communicates sound and reasonable change objectives and let's people see their role and their responsibilities in the change. 

The communication does not need to be definitive - we are all learning in this discontinuity - but it does need to path a broad outline of the reasons for change, the potential impacts and what it means for the business.  Open, honest and consistent communication about the impact of COVID, the change it will create and how your company is moving proactively to change is vital.  While the need for change may seem evident, that does not mean that everyone accept that change is important, imminent or will impact them.

How change?

How to change is equally important.  We have to recognize that employees and customers are comfortable with the existing status quo, even as they acknowledge that change is likely. There are also different attitudes about change - some are ready to change, and were pushing for it before COVID. Some are nervous about change, and some really don't want to change.  You will need different strategies for each group:  ready, aware but unready, and the unwilling.

Moreover this change needs to be more than window dressing.  Tweaking a few things here and there in the overall scheme of things won't be convincing.  Change is likely to come to many facets of your business - how customers find and interact with you, the channels they use, how you source and create value, your customer experiences and your business models.  And, of course, there's a concurrent digital transformation on as well.  All of these factors are likely to change.  The question is:  how much do they need to change, and what does the future look like?

Of course, you will want to think about making the organization more agile, more nimble and faster to respond, because the COVID pandemic and its aftermath are likely to create more volatile conditions for quite some time.  Choosing one new static way of operating and ignoring the potential for further societal, political or economic shifts is shortsighted.

What to change?

Now that you've done the important stuff first, we can turn our attention to what needs to be changed.  In order of importance, you'll find that it is easier to change processes and people than systems, and very difficult but perhaps necessary to change business models and revenue models, but they all may need to change.

Let's start with information systems.  In my days as an SAP consultant, we liked to say that enterprise software is like cement - easy to work and shape when "wet" - while being implemented, and very rigid and hard once it sets - thereafter. Unless you are implementing a new ERP, CRM or other enterprise application, much of the hard work will be realigning the software to support new operations, processes or business models.  This is a significant investment, and in some cases may be better to simply start over rather than try to re-implement a large enterprise system.  Developing a new strategy or operating model in concept will not be difficult, but given how reliant we are on IT systems and data to support operations, the impact to existing enterprise systems cannot be underestimated.

People can be more difficult to change than processes.  A business process can be mapped out and issues or challenges within the process identified quickly using tools like the Customer Experience Journey.  However, getting your people to adapt to a new process or decision making model or new operating model or business model can be much more challenging.  We've addressed above why it's important for people to understand WHY they need to change, and then WHAT they need to do.  The more expertise people have, the more difficult it will be for them to adopt new ways of working.  You'll need to consider the training people need in order to do new or different jobs, and how they are recognized, rewarded and compensated.  Do these align with new strategies and processes?

Finally, consider the idea of business models.  COVID is showing us, at least in the restaurant industry, which companies can adapt to take out and curb side service, and which cannot.  This is an operational, revenue and business model shift that likely none planned for.  Changing a business model or revenue model while trying to remain solvent or even profitable is very difficult, because near term demands for revenue and profit can overwhelm the logic to prepare for and build to a future operating model.


If this strikes you as a lot of work - it is.  You need good thinking and good strategy in order to define WHY to change and WHAT to change.  You need good communication skills to get buy in from your customers, partners and most importantly your employees.  You need to understand the key value drivers in your business and which are going to be the most difficult to change.

Most importantly, you need to realize that change, at least for the next 18 months to 2 years, will be constant, volatile and a bit unpredictable, so you need to build more acceptance and resiliency into your organization.  Inertia, rigidity, bureaucracy, hierarchy and rules may need to be toned down or eliminated all together.  The goal isn't to survive until a new normal emerges - it is to thrive in any circumstance.

To thrive in an uncertain and volatile future, you'll need to build more agility into your organization, allow decisions to be made closer to the customer or the process, build speed into all facets of the business and gain and use data far more quickly than you have previously.

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posted by Jeffrey Phillips at 7:42 AM 0 comments

Thursday, April 09, 2020

Riding the VUCA storm

It's really crazy in the marketplace right now.  Presidents are making medical pronouncements and doctors are making economic projections.  The stock market can whipsaw through a thousand points of gain or loss in a day.  We think we know something about COVID, until that is proven wrong a few days later.  We are in the midst of a VUCA (Volatility, Uncertainty, Compexity and Ambiguous) whirlwind right now.  It will settle down somewhat in the near future, but your expectation should be that like entropy, VUCA conditions will only increase.

The real challenge now is to stop fighting VUCA, stop trying to create a company that is resistant to volatility and change, and start create corporate structures and cultures that embrace VUCA.  The markets and economic conditions have already been changing dramatically, even before VUCA.  The EU could splinter, looking to the UK as an example.  China is beginning to dominate the eastern hemisphere.  Digital technologies will shift where work is done and who (or what) does the work.  We are always living with VUCA conditions, it's just that they are more pronounced right now in the midst of the COVID pandemic.  And, we are more likely to see more uncertain and volatile conditions for months or years after COVID is reasonably addressed.

What's a company that hopes to grow and thrive to do?  You can either resist the wave, duck under the wave, or learn to ride the wave.  My suggestion:  learn to surf.

Rigid and Slow

Today, most larger businesses are relatively rigid, built on an hierarchical model that reflects business structures from the past when change was slower, people had less education and communication was inadequate.  None of these factors is true today, yet most companies are still organized in siloes, with a lot of top-down command and control.  This creates bureaucracy and removes local decision making responsibility, which is needed when change accelerates.  Many executives making decisions are removed from the issues or needs, and can't understand the severity of the issue.

Of course, this isn't just the executives' fault.  Word of an issue gets passed up the chain of command, and gets modified, tweaked, and made palatable so that once it reaches a true decision maker, the challenge seems far less formidable.

The rapid change in the marketplace, compounded by the complexity of business operations and the uncertainty and ambiguity of the conditions and what will happen next will either freeze your organization to inaction (bad) or cause a thousand decisions and policies to be issued in the face of rapid change (often worse).  Or, you can create an organization that is built to embrace more VUCA

What does it take to surf

First, understand what's happening and what's likely to happen.  Some change is truly unpredictable, but we are seeing that there were plenty of reports of what COULD happen with COVID, far in advance.  It's likely that this information was discounted because the risk seemed low (uncertainty) or perhaps the data was inconvenient or not trusted (ambiguous).  Companies that want to be able to surf the VUCA wave must be able to conduct consistent trend spotting and scenario planning and interpret the results.  If you are watching people on TV or on Twitter talk about "bending the curve" they are talking about shifting the nature of a trend.  We have more than enough data to determine what could happen next.  Actually working with trends and making predictions about the various outcomes and creating plans for likely outcomes is what helps.  Understanding and predicting what can happen will make you more adept at what to do when it does happen.

Second, decide what your values, mission and strategy tell you about your company.  What things will you or must you stand FIRM on?  What factors or conditions will you be FLEXIBLE about?  In the middle of a VUCA whirlwind, decisions are often made in the reverse.  Things that should be FIRM and unchanging often get sacrificed, while factors where we should be FLEXIBLE suddenly become issues we cannot sacrifice.  If you and your team know your values, your mission and your strategy, it should be relatively easy to communicate to everyone what should remain a FIRM commitment and where there is great FLEXIBILITY.

Third, make your organization a learning organization.  I like Microsoft's approach, in which they've decided to move from a "know it all" organization to a "learn it all" organization.  Your knowledge is important, but many times past experience does not guarantee future success when conditions change.  Deep knowledge is important, but so is constant learning and applying new perspectives to new conditions.  Companies need to be able to learn quickly, and put new learning to work quickly, constantly adapting to volatility and change.

Fourth, be more nimble and agile.  This may require reducing structure, or delegating decision making, or flattening the organization, but nimbleness and agility in key situations, allowing the right people at every level to make good decisions and act on their initiative (within the FIRM and FLEXIBLE guidelines) will pay off.

Fifth, get all the insight and data that you can to reduce uncertainty and ambiguity, but also learn to trust your team and your gut.  Too often large companies get caught in analysis paralysis, waiting for just one more piece of data to make a decision.  Conditions are uncertain, the world and its future state is ambiguous.  Doing good data collection and analysis is important, but so is trusting your team and going with your instincts.  Better to move quickly, learn and pivot than to wait and miss opportunities all together.

Finally, address your points of fragility and sensitivity.  For too long we've honed business operations to a fine degree, but missed sight of the fact that in doing so we've created exceptionally fragile operations with many sensitivity points that will fail in a VUCA world.  Take just in time manufacturing.  Works well when goods flow consistently and predictably, falls apart when new barriers go up (UK and EU) or when there are sudden shocks to the supply system.  What components of your business have very critical sensitivities that a VUCA world will expose? How fragile is your operating model?  Try to find these sensitivity points and make your business a bit more robust.

There's no better time

It's not like some of your senior team are really busy right now.  Assign a few of them to start adapting your business models and operational structures to become surfers, to ride the wave, rather than the reef, constantly pounded by changing wave patterns.  In the midst of a crisis, developing and implementing a change strategy is perhaps the best thing you can do - to position your company for what comes next.  We won't return to comfortable, status quo operations anytime soon, and even after COVID we can expect more VUCA conditions.  Use this time to build the organization that can thrive in a VUCA world.
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posted by Jeffrey Phillips at 5:39 AM 0 comments

Wednesday, April 01, 2020

Digital Transformation: Focus on three underappreciated outcomes

It's good that the concept of digital transformation is being talked about at senior levels in industry and in government.  Digital transformation - the transition of our businesses and operations from a somewhat digitally enabled capability to a fully digital enabled capability  - will change a lot about how people work, how they interact with others and the insights and offerings created.  The continuing COVID-19 epidemic will in many ways simply accelerate the transition to a more digital world.

Every business is going to change, and the outlines of that change are not hard to see.  Whether we are talking about manufacturers or companies dedicated to the service economy, or even government agencies and other large entities, every organization will need to change, and pay close attention to the four factors that I've hinted at in the title, and will explore in this post.

The four factors are not necessarily new, but aren't being carefully considered by larger entities, as to the amount of change, or the impact if change does not occur.  The four factors are:
  • Data - how much more data will be generated, and how that data empowers more digital transformation, how we'll extract new insights from the data.  This is the "obvious" factor.
    Less obvious are the following factors, which will be empowered by the data:
  • Experience - customer experience, user experience and what digital does to improve these
  • Business models - how digital sustains and reinforces existing business models - occasionally, and how it reworks or creates new business models - more frequently
  • Ecosystems - what partners you have you need to keep, and what new relationships and partners you are going to need, which partners can evolve and add value, and which cannot.
Note that these don't operate in isolation, and we built from the bottom up.  New data and new insights from data can drive new experiences and create new business models.  New data or the need for data may increase the need for new ecosystem partners.

I'm not going to say a lot about the data component, other than to note its importance and the explosion of the volume and velocity of data.  We will all learn the many Vs (Volume, Velocity, Variety, Veracity and Variability) of big data soon.

What's less explored

What we are at risk of overlooking or ignoring are the secondary and tertiary factors of digital transformation.  As our activities, processes and businesses are more data driven, we have the opportunity to radically rethink experiences - at each touchpoint at a minimum, but rethinking and rearchitecting customer and user journeys as a whole.  With more data we can move from merely reporting on activities and journeys to predicting and prescribing activities and journeys, which will improve customer experience.

Prediction:  When digital transformation happens in your organization, customer experience professionals will be as important as data scientists.

Business models

How do we shift to "transportation as a service" as one example?  We need the digital transformation of self-driving or autonomous vehicles married with the power of data and connectivity.  Uber and Lyft are but a half-step toward full autonomy, and all of these are powered by data and drive new business models.

Resistance, as they say, is futile.  Larger organizations which have an existing model to protect may ignore or try to enforce existing models through regulation or legislation.  Ask the hotels and taxi companies how that is working.  Every organization must be willing to rethink and restructure its business models or construct entirely new models.

Question:  Who in your company or organization is thinking about the new business models that must emerge in your industry, and the implications for your existing business model?


The new business models and experiences will spawn new ecosystems.  No firm today can provide all the features and functionality required - partners are essential.  As more data is created, there is more to hack, so cybersecurity will become more important.  As new experiences become important, understanding and managing the customer experience becomes critical, so having partnerships with companies that understand customer experience is vital.  Your ecosystem needs to grow, and increasingly ecosystems will be built around key infrastructure partners or technology backbones.

Question:  what capabilities does your product or service require that others can provide more effectively or at less cost than you can?  What new ecosystem do you need to sponsor, or what ecosystem do you need to join?

Digital Transformation Maturity

When I hear companies start talking about improvements or opportunities in experience, in business models and in ecosystems, I'll know that they are moving into a higher order level of maturity for digital.  Talking only about data when considering digital transformation is far too narrow and does not consider the components that will add the most value over time.

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posted by Jeffrey Phillips at 8:28 AM 0 comments