Tag: innovation

Writers Write, and Innovators Innovate
How big does a new idea have to be to qualify as an innovation?

I read another blog post this morning that tried to tell us that only really big ideas count as innovations. It started something like this:

Innovation is a buzzword now – it’s used so much that it’s lost meaning. Every firm in the world claims to be innovative. But are they really? Does a new flavour of gum really count as innovation? Of course not. Here are five easy steps that will help you do real innovation – big innovation.

The post is, like the many others on this theme, nonsense.

Look – I’ve argued before that we need to be aiming higher, and this is still true. BUT, that doesn’t mean that only big ideas can be innovative.

Austin Kleon has a great way to think about this in his excellent new book Show Your Work. He says:

Amateurs are not afraid to make mistakes or look ridiculous in public. They’re in love, so they don’t hesitate to do work that others think of as silly or just plain stupid. “The stupidest possible creative act is still a creative act,” writes Clay Shirky in his book Cognitive Surplus. “On the spectrum of creative work, the difference between the mediocre and the good is vast. Mediocrity is, however, still on the spectrum; you can move from mediocre to good in increments. The real gap is between doing nothing and doing something.” Amateurs know that contributing something is better than contributing nothing.

I highlighted the key point – the real gap is between doing nothing and doing something.

In other words, we think that the gap is here:

In this view, the opposite of awesome work is terrible work. But it’s not – the opposite of awesome work is no work at all:

That’s why so many people write about how to get work started – because that is actually the big hurdle that we face. Kleon addresses this some in Show Your Work, and it as a big theme in the books from The Domino Project, including Do The Work by Steven Pressfield and Poke the Box by Seth Godin, and in The Flinch by Julien Smith (still available for free on amazon). That’s why Anne Lamont says that the biggest step in writing is getting down a, well, [lousy] first draft.

It’s the same with innovation. The big gap isn’t between people and firms doing incremental innovations and those doing big disruptive ones. The big gap is between those that aren’t innovating at all in any form, and those that are.

Here is why the “only big ideas are innovative” meme is dangerous:
- You need to be on the innovation spectrum. If I’m working with a firm trying to improve their innovation outcomes, it is much easier to have an impact with the firms that are at least doing something. They’re on the innovation spectrum. The firms that are tough are the ones that aren’t doing any innovating at all. The biggest gap is between doing nothing and doing something.
- You can’t tell which ideas are big in advance. Big innovations usually start small. If we start screening for size too early, we’ll knock out too many ideas that could actually be big. That’s why we need to build our skills in experimenting – this is how we figure out which small bets are promising.
- It’s too easy to be critical if you’re in the “doing nothing” group. The biggest issue is that the critics are almost always in the “doing nothing” group. The people that have already done it know how hard it is, so on average they tend to be more generous with people that are putting in the work. The people that tend to be the hardest on incremental innovators are the people that have never done anything innovative themselves.
Here’s the deal:

Writers write.

Painters paint.

Photographers shoot.

And innovators innovate – even if it’s just small stuff.

Remember that from little things, big things grow. Start trying new stuff now.
1 March 2014
Why Experimenting Builds an Innovation Culture – Interview with DK

I met DK a couple of years ago at a conference we were both speaking at. Since then, we’ve kept in touch, and recently he asked me to do a podcast with him for his new series on Defining Innovation.

Here is one of my favourite bits from the podcast (although I clearly say “so” way too much):

DK: But what’s the cultural shift that organizations have to do then to get their heads on the conditional side of innovation?

Tim: Yeah so that’s a great question and I think there’s a couple of key issues there. One is that if we’re talking about organizational habits or routines or the processes that we try to put in place, I think for me the most critical one is building up a skill for experimenting.

DK: A skill for experimenting.

Tim: Yeah or a habit, right but basically having that system in place where basically somebody says, “Hey I’ve got this great idea,” and then the response is, “That’s pretty cool. Let’s see if it works.” And the whole point, there’s a few I think critical points with that.

One is that when you’re seeing if it works, if it’s an experiment, we’re just testing. And so we’re not trying to prove that it works. We’re not assuming all the way through oh yeah that’s the right idea. We actually have to figure out well how would we test it? So is there a way that we can build a prototype? Is there a way that we can scale it down to a really small level to see if it’s going to work to gather some data and then to see if that’s something that’s worth building more?

The other thing with experimenting is that with an experiment you don’t fail. The whole thing with an experiment is we try it, and then the thing that we expected to happen either happens or it doesn’t and in both cases, then we have data. So either we’ve learned hey we have this idea and in this particular setting and under these circumstances it doesn’t work, so either we need to try different circumstances or a different way to approach it or do it with a different set of people or maybe it’s not right for us right now. But it’s not a failure.

But then if it does work then we can say okay we learned something and let’s do more of that. But I think that habit of experimenting gets around a lot of problems that we run into with innovation including just getting hung up on the idea because if you’re experimenting we have to actually execute to figure out if the idea’s any good.

The second thing that it does is it gets around this issue of well what happens if we try an idea and it doesn’t work as we’re going out to learn?

And I think the third thing that experimenting does is it just gets you into that habit of action. So if you talk about what’s the core skill of innovating, for me that’s it. And a lot of everything else that’s really important for innovation builds on that.

So we have that habit of experimenting and that culture of experimenting and learning in place, then you can build a lot on top of that. And so if we’re saying well how can we be more innovative, a lot of people say well let’s go get an idea management tool. Or let’s get an innovation (inaudible) or all this other stuff. And for me all that stuff can be fine and it has it’s place but all the other stuff doesn’t really help you that much. So for me that whole thing is to experiment because that where an innovation culture then comes from.

He made this clip to illustrate the next part:

Defining Innovation Podcast Pearl | #003 Tim Kastelle from justadandak on Vimeo.

You can listen to the whole podcast here, or read the transcript, or both.

DK is doing really good work on innovation – his previous podcast with Mike Arauz from UnderCurrent is outstanding.

He is thinking hard about how to ask better questions – this is a core skill for innovation. You should follow him on twitter and check out his blog.

28 February 2014
The Innovation Loop

It’s sad but true that most initiatives designed to improve innovation within organisations fail.

This is frustrating, because we actually know a fair bit about what makes innovation work. Our results should be better. But still, countless organisations are having brainstorming sessions, adding idea management systems, building idea diffusion networks or implementing some other well-meaning innovation idea, only to fail to deliver better results.

Why?

I think that there’s a missing ingredient in many of these efforts, and it can be summed up in this diagram:

It’s The Innovation Loop – and it is this core set of skills and processes that you need to underpin a successful innovation effort.

Innovation starts with ideas – they are the lightning bolt that ignites things. The ideas can be for products and services, new ways of doing things, new markets to serve, or new business models. If we have better ideas, we are more innovative. If we have lots of ideas, we are more innovative. Taking steps to improve both the quality and the quantity of ideas in our organisations is important. However, good ideas are necessary, but not sufficient for innovating.

The other parts of The Innovation Loop are also critical. These are the monkey wrench – the hard work that makes the idea real.

Next, we need to formulate a hypothesis about our idea – what change do we expect to see if we implement it? Will people buy more of our stuff? Be happier? Tell their friends about us? We need to link our ideas to expected outcomes.

Now – test the idea! Pilot it, prototype it, build a minimum viable product, or a wire-frame, or a mock-up. Figure out how to test your idea – preferably as cheaply and as easily as possible.

Experimenting is the core innovation skill.

Ok, you’ve run your experiment – now, measure the results. Was your hypothesis correct? Did you get change in the direction (positive or negative) that you expected? As much change as you expected? Did something cool but completely unexpected happen? Or something bad but completely unexpected?

Figure out if the idea worked or not.

If your idea did work, now you have to scale it. Do more of it, apply it in a different setting, get people to buy into it. All of these are parts of scaling. It’s not straightforward – but since you’re taking an experimental approach, at least you’re not trying to sell a guess. You’re pitching data-driven results instead, which is a bit easier.

As you start to scale, you will have many new ideas about what will work and what won’t – put them through this process too.

What if your hypothesis was wrong? Well, then, you have to learn from it. Every experiment yields data – and this helps us learn. Why didn’t it work? Was the idea bad, or was it just the wrong setting for it? Are we targeting the wrong people? Do we need better execution? Does it not fit with our skills or values?

Learning is the key to making the experimental approach work.

The Innovation Loop is at the heart of successful approaches to innovation. It is a core component of the ideas in lean start-up, and in discovery-driven growth. It is well-documented that using these approaches will increase your chances of success. Your idea management system will work much better if you have this loop working underneath it, and so will your stage-gate process.

Experimenting effectively builds your innovation capability.

There are other factors that are also important. Nilofer Merchant and I are working on identifying what these are. You need to open up your network to more (and new) people – this helps with getting better ideas, and it helps with scaling. And you need to have purpose – this is what helps you devise hypotheses about what will create value for people. You have to get these two things right to innovate. The Innovation Loop is simply the process that drives success.

The key point, though, is that this is simple, but not easy. This is a very simple model. But executing it is not easy – it often requires significant change in the way that we do things. Experimenting means that we have to be comfortable with seeing some of our ideas fail. Or, at least, some won’t work in the way we expected them to.

It also means that we have to push decision-making authority out towards the front-line. Innovative cultures are experimental – but experimenting well means that everyone has to be involved with the process. This was the key to the success of the Toyota Production System. Jeffrey Pfeffer and Bob Sutton point out that:

The Toyota Production System is about philosophy and perspective, about such things as people, processes, quality, and continuous improvement. It is not just a set of techniques or practices: On the surface, TPS appears simple…

What is important is not so much what we do—the specific people management techniques and practices—but why we do it—the underlying philosophy and view of people and the business that provides a foundation for the practices.

The Innovation Loop is a tool that will help you build a philosophy and perspective that supports innovation. It also appears simple, but if you implement it, the changes may be profound.

24 February 2014
Five Questions that Will Help You Build an Innovation Culture
The Problem with Top-Down Innovation

Peter Drucker once said “culture eats strategy for lunch.” And that can be a problem for people that want to innovate – they often work inside of organisational cultures that don’t support innovation very well.

So, if you’re in that situation, what can you do?

One suggestion that I hear a lot is: “We need to get top management behind innovation.”

That’s true, as far as it goes. When senior leaders see the value of innovation, and they support the efforts of people trying to do new things, then you can build an innovation culture more quickly.

However, I’ve known firms whose top managers passionately believe that innovation is important, and they do all they can to support it, yet their organisations still fail to become more innovative. Often, this is an “air sandwich” problem, or it reflects a poor understanding of how innovation works.

Top-level support for innovation can be useful, but it’s no guarantee of success.

There are two problems with the “wait for the managers” approach to building an innovation culture. One is that you are playing the victim – you would innovate, if only the evil managers would let you. This is a trap, and, ultimately, a handy excuse for not innovating.

The second issue is that waiting for someone else to solve the problems breeds passivity, and you can’t passively innovate. Innovation is an action sport.

Solution: Bottom-up Innovation

What should we do?

Let’s start at the bottom – with culture. People often talk about culture as though it’s an immovable force that smashes into them. That’s what “we have a risk-averse culture” is saying – and I hear this all the time.

But culture isn’t an external thing that we have no control over. An organisational culture is simply what we do every day: it is the sum total of the interactions between all of the stakeholders in an organisation on a day-to-day basis.

In other words, we are the culture.

As Harold Jarche says:

Culture is an emergent property of people working together. Leadership is also an emergent property, I am becoming more convinced…

And, that means that we can change it. Every single day, we face choices about how we interact with people, and with ideas. Most of the time, we don’t even think about these choices – they’re habits. The first step to building an innovation culture, then, is to examine the habits that you take for granted.

The good news is the we re-build our own culture every day, through the choices we make – we can control culture. The bad news is that it’s hard work – that’s why we need the monkey wrench to make innovation work.

Five Questions to Build Your Innovation Culture

Here are five questions that you can ask that will help you identify the hidden habits that make it hard to build your own innovation culture:
1. How do I respond to the ideas of others? The answer should be: in the same way I want others to respond to mine i.e. supportive, constructive and fair. The reality is that often we don’t do this. If we have had our ideas shot down in the past, then we sometimes don’t respond to the ideas of others as well as we should. If we want our organisations to be more innovative, we have to act in the ways that we want everyone else to act – by supporting the innovative ideas of others.
2. Do I understand what adds value for others in the firm? Getting your ideas to spread is an important part of innovation – and you can’t do this if you don’t have a clear idea of the value that you are creating for people. Inside of organisations, this means that we have to have a good understanding of the goals and values of those we are trying to convince to take up our new idea. If we can effectively align our new ideas with their goals, then our chances of success just went up.
3. Who is in my innovation tribe? There is strength in numbers. And also, innovation works more effectively in groups – it is a collaborative effort. The best way to build an innovation culture is to find the like-minded people, and build on stuff that works. This is much more effective than trying to knock down barriers. Here’s a bonus to working within a tribe: they can’t fire everyone. Even if your overall culture is “risk-averse” (and this is not true nearly as often as people assume that it is), if everyone starts to innovate, it’s a lot harder to shut down many new ideas than it is to stamp out one.
4. How much can I get away with? How much room to move do you have in your current position? If you’re reading this, it’s likely that you have the authority to make at least some decisions. What are they? How much experimenting can you try within those boundaries? Even if you have $0 to spend, it’s more than you think.
5. What can I do right now? When she was starting out her business, Coco Chanel said that her philosophy was “Do what you can, with what you have, where you are.” That’s a pretty great innovation philosophy. I’ve outlined a seven-step program for innovating RIGHT NOW! Try it.
The bottom line message is this: don’t wait for someone to empower you, empower yourself. We create the cultures that we live and work in – and that means that we can change them. Not instantly, and not easily – but we can.

If you want your organisation to be more innovative, start building your innovation culture right now.

Postscript: if you don’t want to click on the link, here is the seven-step program for innovating RIGHT NOW!
1. Think about how much you can get away with – if you manage a budget, how much discretion to you have? If you don’t have a budget, what are the parts of your job that you control?
2. Make a list of 10 things that you can do within the current scope of your work that will make things better for the people with whom you interact – customers, co-workers, bosses, whoever.
3. Do those things.
4. Figure out which ones worked, and do those more.
5. Figure out which ones didn’t work, learn why not, then forget about them.
6. Apply what you learned to the next set of ideas.
7. Do it all again.
17 February 2014
Ideas Change Lives: How Tom Peters’ Changed Mine
In Which I Try a Bunch of Ideas

My first job when we moved to New Zealand was a 12 month contract. I was filling in for a woman on maternity leave, and I knew that if I wanted to work at the local polytechnic for more than 12 months, I had to have an impact fast. I was managing the student recruitment section, and the management wanted us to increase enrolments by as much as possible. In addition to the limited time, I had another constraint – even though our section’s budget was more than $1.5 million, I couldn’t sign off on anything myself. Any expenditure had to be approved by my manager.

I did the first thing I always do when faced with a new challenge: I started reading. As Valeria Maltoni reminded me recently, books change lives. In the first two weeks on the job, I did a lot of managing by walking around, and I re-read Thriving on Chaos by Tom Peters. Based on this, I did a lot of thinking, and I made a list of 48 things I could try in the 12 months that I had.

And in that time, I ended up trying 44 of them.

They didn’t all work. But a lot of them did. Here is an example of one of the experiments:

One of my teams handled enquiries about classes – both walk-ins and phone calls. After watching them for a week and talking with them, we agreed that they were understaffed. Walk-ins were about twice as likely to apply for a course as phone calls. But one big problem is that the team had to interrupt face-to-face talks to answer the phone.

I asked them to use very simple logs like this one to track how many people they were interacting with. After two weeks, we had enough data to demonstrate to my manager that we needed another person in the Info Centre.

Overall, all the stuff that we tried ended up increasing enrolments by more than 10%. That’s a better than $2 million return on trying 44 experiments that cost nothing.

More importantly, we learned a lot. By collecting data on all of the ideas, we learned a lot about how the student recruitment process really worked. This meant that our decision-making became much more data driven. And by working together on the ideas, my teams and I built a lot of trust.

After all of that, I did end up with a permanent job at the polytech – and I could even sign for my own budget!

Innovation Lessons

There are several innovation lessons in this story:
- You don’t need permission to innovate. All of those 44 ideas were cheap, and they fell within my scope of control as a manager. So we just did them. I had asked permission, the answer probably would have been “no.” Once we had a track record of results, the our scope of control expanded.
- Experiments drive change. We needed to increase enrolments, but we didn’t have the resources to make a big bet. So we made a lot of small ones instead. Once we got into the habit, my teams started to test their own experiments as well. Experimenting is the best way to build an innovation culture.
- The biggest innovations are often ideas. The idea with the biggest impact was deceptively simple. We started finishing every single enquiry by asking the person “would you like to put in an application for the course?” The innovation here was changing the way the Info Team viewed their roles. Originally, they thought their job was to provide information. This question came from thinking about the job as helping people achieve their goals through education. That was a huge innovation.
People often focus on the constraints that make it hard to innovate. But if I hadn’t had the budget constraint, I’m not sure that I would have approached that job as creatively as I did. It was the constraints that created the innovation opportunity.

Ideas Change Lives

The bigger lesson here is that ideas change lives. Reconceptualising the role of the Info Team ended up having an impact on all of the people that went into a higher education program that they might not have otherwise.

And Thriving on Chaos changed my life. I had a fair bit of management experience before this job, but this is the one where I really learned how to manage. I had built my people skills on previous jobs, and that was crucial. But this is where I learned how to convert ideas into action. One of Peters’ favourite innovation quotes is from Herb Kelleher, CEO of Southwest Airlines:

We have a ‘strategic plan.’ It’s called doing things.

Here’s another one from Peters – quoting John Masters, a gas and oil wildcatter:

This is so simple it sounds stupid, but it is amazing how few oil people really understand that you only find oil if you drill wells. You may think you’re finding it when you’re drawing maps and studying logs, but you have to drill.

That’s the big idea I got from Tom Peters, and acting on it made me a much better manager. This was where I developed many of my core ideas about how to innovate.

This is important for one more reason. In the social era, language is a critical source of competitive advantage. Talk is the technology of leadership – and this means that there is a huge innovation opportunity in language.

Read, write, talk – and work on improving on all three skills. Ideas change lives – we need to get better at working with them.
8 December 2013
How to Use Experiments to Build an Innovation Culture
When you were learning how to ride a bike, did you work out the theory of how to do it, jump on the bike, and start riding flawlessly? No. You started with training wheels and worked it out through trial and error.

When Thomas Edison invented his version of the light bulb (the 24^th to be patented!) did he discover that tungsten was the best thing to use as a filament through logic? No. He famously found 9,999 things that didn’t work before settling on Tungsten – through trial and error.

When Caterina Fake and Stewart Butterfield launched Flickr, did they work out the perfect business model in advance, then launch the site? No. They started out building massively multiplayer online game – Game Neverending, which became relatively successful, just not successful enough to keep the company afloat. So the team built a site around a photo-sharing protocol that they developed for the game, and that became Flickr. It was business model development through trial and error.

Experimenting is a critical innovation skill. None of us think twice about learning to ride a bike through trial and error, so why is it so rare in business?

There are two main reasons. One is risk aversion. In a work setting, people don’t like to make mistakes, and they don’t like to look foolish. Trial-and-error can cause both of these things to happen when things don’t work out as expected. The second reason is that our organizational cultures are often not amenable to experimenting. In larger organizations, we are often trying to improve efficiency. Doing this means that we must reduce variation. But innovation and experimentation increase variation. There is a tension between efficiency and innovation.

But the benefits of experimenting outweigh these issues. The problem that experimenting solves is this: it’s nearly impossible to know in advance which ideas will work and which won’t. If we experiment, instead of guessing which ideas will work, we can test them. This helps us get better making decisions based on data.

Steve Blank recently wrote Why the Lean Start-up Changes Everything and he talks about this as the fallacy of the perfect business plan. The approach is built around identifying your assumptions about how your idea will work, and then gathering data from customers to validate or disprove these hypotheses.

Eric Ries has outlined a methodology for Lean Start-up – Build-Measure-Learn.

This is the core method for experimenting. This version works for tech-based startups, but the general principles apply more widely. We need to use this build-measure-learn loop more in larger organizations as well.

There are many advantages to experimenting. The first is that it keeps failures small. The key to this is building prototypes and testing them. As Diego Rodriguez says:

Anything can be prototyped. Prototypes aren’t just for physical products. I routinely see people prototyping services, complex experiences, business models, and even ventures.

You can prototype with anything. You want to get an answer to your big question using the bare minimum of energy and expense possibly, but not at the expense of the fidelity of the results.

Prototyping is the Build-Code steps in the Lean Start-up loop, and it leads to better results than predicting does.

The second advantage to experimenting is that it gets us out of the trap of over-thinking. The further away we are from our customers, the easier it is to believe that we can just figure out what they need most through logic. But we can’t. We have to test the ideas out – trial and error helps us find what will really work.

Finally, experimenting is a great way to get rid of air sandwiches. That is what Nilofer Merchant calls the gap between management aspirations and the reality down at the coalface. This is a frequent problem with innovation. It is rare to find a CEO that doesn’t want their organization to be more innovative – but few have tangible plans for how to achieve this vision. Experimenting can help.

If we build a culture of experimentation, people will be more comfortable with examining and testing their assumptions. This is a great way to build the skills that you need to innovate, and it is also useful for finding the best way to make new ideas real.

Here is a method that anyone can apply:
1. Idea: Think about how much you can get away with – if you manage a budget, how much discretion to you have? If you don’t have a budget, what are the parts of your job that you control?
2. Build: Make a list of 10 things that you can do within the current scope of your work that will make things better for the people with whom you interact – customers, co-workers, bosses, whoever.
3. Prototype: Do those things.
4. Measure: Figure out which ones worked, and do those more.
5. Data: Figure out which ones didn’t work, learn why not, then forget about them. Do more of the ones that did work.
6. Learn: Apply what you learned to the next set of ideas.
If you’re a manager, encourage those on your team to do this as well. As people get better at, things will start to improve. And you’ll start to build a culture of experimentation.

It’s a lot like learning to ride a bike.

Note: I’d like to thank Sarah Green from Harvard Business Review Blogs for help with editing this post.
19 November 2013
You Can’t Benchmark Your Way to Greatness

If you want to make your organisation more innovative, you need to figure out how to embed innovation throughout the entire organisation. This is hard work. It means that you have to have a clear strategy, and a clear point of difference. Innovation then needs to be central to improving that advantage.

This takes time, thought and commitment.

You can’t make this change by simply copying the tools and techniques that you see other firms using. The subtitle of The Circle of Innovation by Tom Peters is: You Can’t Shrink Your Way to Greatness.

That’s true, and it’s also true that you can’t benchmark your way to greatness either.

Jeffrey Pfeffer and Bob Sutton talk about this in their outstanding book The Knowing-Doing Gap. Their objective in the book is to figure out why managers and firms don’t do the things that they know they should.

Why has it been so difficult for other automobile manufacturers to copy the Toyota Production System (TPS), even though the details have been described in books and Toyota actually gives tours of its manufacturing facilities? Because “the TPS techniques that visitors see on their tours—the kanban cards, andon cords, and quality circles—represent the surface of TPS but not its soul.” The Toyota Production System is about philosophy and perspective, about such things as people, processes, quality, and continuous improvement. It is not just a set of techniques or practices: On the surface, TPS appears simple…. Mike DaPrile, who runs Toyota’s assembly facilities in Kentucky, describes it as having three levels: techniques, systems, and philosophy. Says he: Many plants have put in an andon cord that you pull to stop the assembly line if there is a problem. A 5-year-old can pull the cord. But it takes a lot of effort to drive the right philosophies down to the plant floor.

…

What is important is not so much what we do—the specific people management techniques and practices—but why we do it—the underlying philosophy and view of people and the business that provides a foundation for the practices. Attempting to copy just what is done—the explicit practices and policies—without holding the underlying philosophy is at once a more difficult task and an approach that is less likely to be successful. Because of the importance of values and philosophy in the management processes of many successful companies, the emphasis on the tangible, explicit aspects of knowledge that characterizes most knowledge management projects is unlikely to provide much value and may be, at worst, a diversion from where and how companies should be focusing their attention.

Here’s the problem with benchmarking. It does nothing to change your underlying philosophy, and without doing this, the tools won’t work.

Peters has recently put together a great summary of what he’s learned over the years on a site called Excellence Now!. Here is one of the quotes from his slide deck on innovation:

A friend who’s CEO of a Fortune 500 company explained his learning experience from benchmarking:

“First, Tom, it’s not about, ‘Here are the benchmarks—they are your new standards.’ It’s very likely that the outlier who has produced exceptional results has changed the culture of his unit—this was the case in our safety campaign. So if others simply copy his successful procedures, they will amount to nothing, or very little, or be un-sustainable, or even counter-productive, unless an altered culture is in place. Second, situations differ from unit to unit—one can learn from the benchmark, but one must adapt to local circumstances, not follow it slavishly. Third, to slavishly follow someone else’s process is often de-motivating—at best you are a copycat; leaders of other units need to give it their own stamp to ensure ‘ownership.’”

Obsession with tools is the large firm equivalent to the start-up’s obsession with features. And the solution to this problem is the same too: don’t focus on tools, focus on the value that you’re creating.

The value created by the Toyota Production System was cars of extremely high quality. This in turn led to an array of tools and techniques that supported and created that value: just-in-time delivery, continuous improvement, the andon cord, and so on.

To replicate Toyota’s success, you can’t just replicate these tools. Instead, you need your own purpose. Every route to success will be different – you need to make your own map. That’s innovation.

Once you have your purpose, then you can take in tools from elsewhere, and adapt them to fit your organisation. That’s innovation too.

But you can’t just take ideas from outside and bolt them on to an organisation that isn’t working. You can’t benchmark your way to greatness. You need to do the hard work of finding a purpose, and build on that.

17 November 2013
The Discipline of Innovation
Why The Discipline of Innovation

In the introduction to a reprint of Peter Drucker’s article The Discipline of Innovation in a best of Harvard Business Review edition, the editor writes:

How much of innovation is inspiration, and how much is hard work? If it’s mainly the former, then management’s role is limited: Hire the right people, and get out of their way. If it’s largely the latter, management must play a more vigorous role: Establish the right roles and processes, set clear goals and relevant measures, and review progress at every step. Peter Drucker, with the masterly subtlety that is his trademark, comes down somewhere in the middle. Yes, he writes in this article, innovation is real work, and it can and should be managed like any other corporate function. But that doesn’t mean it’s the same as other business activities. Indeed, innovation is the work of knowing rather than doing.

In other words, innovation is not an art, it’s a discipline – and that’s why I’m changing the name of the blog to The Discipline of Innovation.

Here is how Drucker himself describes the issues in his article:

Innovation is the specific function of entrepreneurship, whether in an existing business, a public service institution, or a new venture started by a lone individual in the family kitchen. It is the means by which the entrepreneur either creates new wealth-producing resources or endows existing resources with enhanced potential for creating wealth.

Today, much confusion exists about the proper definition of entrepreneurship. Some observers use the term to refer to all small businesses; others, to all new businesses. In practice, however, a great many well-established businesses engage in highly successful entrepreneurship. The term, then, refers not to an enterprise’s size or age but to a certain kind of activity. At the heart of that activity is innovation: the effort to create purposeful, focused change in an enterprise’s economic or social potential.

The Skills of the Discipline

If innovation is a discipline, what are its basic building blocks? There are a few:
- Manage innovation as a process.
- Innovation is also a practice – you get better by repeating the process of building something, testing it to gather data, and learning.
- You don’t need the best tool to innovate, you need the right culture.
- Disciplined experimentation is a critical skill to build.
- Action is better than logic.
All of this means that there are no shortcuts to building your innovation capability.

What This Means

Here is the new logo:

There are a few important ideas embodied in this.

I’ve drawn it by hand to illustrate that innovation is a process where you need to get your hands dirty. You can’t automate it, you can’t outsource it. It’s not polished, professional and efficient – innovation is messy, like my handwriting!

The lightning bolt is the great idea that lies at the heart of innovating. The monkey wrench is the hard work. The monkey wrench is also the spanner in the works – innovating nearly always causes problems. Someone loses, things change. Change can be threatening, but people can embrace it when they have input into the process. When you’re driving innovation, you can avoid the surprise of change, and spring that surprise on others.

If you look at the full picture for the logo, you can see the earlier iterations to the left. Innovation is about experimenting, iterating, and learning. And this is the third title for this blog. It feels the most right, but we’ll see how it goes. It’s another experiment.

And finally, despite the iterations, the drawing isn’t great. I’ve always been a visual thinker, but a so-so artist. But if I’m willing to put my drawings in front of people, you should be willing to put your ideas out there too. You don’t have to be an expert (though knowledge helps). It doesn’t have to be perfect. Just get the ideas out, then you and others can build on them. It’s an example of Nilofer Merchant’s saying: not everyone will, but anyone can.

My goal here is to help people that are trying to build a better world. I want to help make work more interesting. I hope that we can work together to do that.

Hence, The Discipline of Innovation.

Let’s get to work!
25 August 2013
The Unknown Knowns of Innovation
The Most Common Innovation Mistake in the World

A while ago I was talking to a local CEO who wanted to make his organisation more innovative. As we talked, he got increasingly excited, and after 30 minutes he went out and called in as many as his senior leadership team as he could find. So we had 9 people crammed into his office talking about innovation.

After a bit of discussion, one of the managers hesitantly said “You know, we had an innovation program before.” And then everyone in the room got this strange look on their face.

I thought for a minute, and then said “Let me guess. You made a big internal announcement for your new program, and then you asked everyone in the organisation for their innovative ideas. You were flooded with submissions and everyone was excited. But then you didn’t have any way to choose the best ones, and no money or time to execute them, so nothing happened. Then everyone that put in their ideas got pissed off, and at the end of it, things were worse than when they started.”

It turns out that’s exactly what happened. How did I know this? It’s not that I had any inside information, or that I’m all that smart. It’s just that this is the most common innovation mistake that I run into.

The biggest mistake people make is confuse having ideas with innovation. They’re two different things – innovation is actually the process of idea management.

The Problem with Unknown Knowns

We’ve all heard about known unknowns, and unknown unknowns, and how it’s the things we don’t know we don’t know that cause trouble. This is true.

But there are also things that we know are true, that seem to be unknown because no one ever acts on them. Here’s an example I took this picture a couple of minutes ago at 10:39 am at the coffee shop here at the business school:

That’s the line of people that left their desks at exactly 10:30 to get their morning coffee. If you had left your desk at, say, 10:25 instead, the number of people in line was 0.

At some level, everyone knows this. But still, everyone still leaves their desk at 10:30, not 10:25. It’s an Unknown Known.

The Unknown Knowns of Innovation

There are some things about innovation that we know from many years of observation and research. Here are three of the most important ones that we know, but don’t act upon:
1. If you want different outcomes, you have to manage differently.
2. You build an innovation capability by changing your culture, which requires a lot of hard work.
3. You only see the results of this hard work over time.
If you think about the “innovation program” that failed, you can see that it didn’t take any of these three things into account.

There have been a bunch of great posts about this topic over the past couple of days. I recommend that you read all of them. Here are some highlights:

Jorge Barba speaks about how hard it is to become innovative through copying:

To innovate you must overcome the need for step-by-step recipes.

Yes, I’m serious. As I’ve said before, there are plenty of methodologies that you can use to get started. But there is a much deeper reason for discounting methodologies…

Perception separates innovator from imitator.

That is why there is nothing linear about innovating. While other practitioners are infatuated by frameworks and templates, I believe template thinking does not equal innovation.

Jorge was building on a post by Henry Doss, who says that innovation can’t simply be something that you bolt-on to business as usual:

Applying overtly linear thinking to innovation strategy leads us to a kind ofpost hoc ergo propter hoc world, which goes something like this: “Look, this (company, geography or organization) is innovative. These are the things that seem to be different about them. So, let’s do those ‘different things’ the same way, and we’ll be innovative too!” Then, various mixes of components and features of innovative cultures are identified, extracted, and sprinkled into non-innovative organizations, stirred around and . . . well, usually, organizations just keep on operating more or less the way they did before they attempted innovation. We may refer to this as the “law of innovation inertia.”

Jeffrey Phillips responded to Jorge’s post by reiterating the fact that building innovation capacity requires time and effort:

Copying a “best practice” method or set of tools will take only a month or two. Developing your people and changing a culture can take several years. Here you begin to see the crux of the problem. Management teams aren’t especially good at long term thinking or committing to long term, slow change projects, especially ones with unpredictable outcomes. Quick and dirty, aiming for the proverbial “low hanging fruit” will always win out over slow, careful, constant change. But that slow, careful, constant change is what you can’t copy, and must have, for innovation success.

And, as usual, Seth Godin makes the point succinctly:

Bullet points, step by step processes that are guaranteed to work overnight, proven shortcuts…

If it was easy, everyone would do it.

…

It will take you less time and less effort to do it the difficult way than it will to buy and try and discard all the shortcuts.

To innovate, we have to do things differently. We have to manage differently, and we have to do this over time. If we do, we’ll be more innovative. It’s not easy, and there are no shortcuts. But we know that if we do this, we’ll build our innovation capability.

Oh, and it’s 11:08 now, and there is no line for coffee at all. We know how to get better outcomes – we just have to stop treating the steps to do so like Unknown Knowns simply because they’re hard.
20 August 2013
Hacking Innovation

I just got home from the Brisbane Innovation Network‘s field trip to HackerSpace Brisbane. It was a great evening. William Gebers gave us a tour of their PortHack operations, and there are some important innovation lessons to be learned from what they’re doing there.

You Have to Fail to Learn

HSBNE has all kinds of tools to play with. They have metal and wood shops, blacksmithing, a chem lab, and a big workspace for 3D printing and other digital projects. When he was showing us the metal shop, William talked about how people learn skills there. It all comes through failing – that’s how we all learn. He said that there are enough parts around that you can screw up a project 10 times, until you finally get it right.

We often forget this when we’re trying to innovate. There is so much pressure to not waste resources that we ignore the best way to learn – testing stuff. HSBNE is built for trial and error, and we need to build this capability into our own organisations.

Some woodworking experiments at HSBNE

Collaboration Drives Innovation

Why not just do this trial and error in your own garage? There are a couple of reasons. HSBNE can pool resources to get tools and equipment that might be too expensive for one person on their own. But more importantly, it’s a collaboration space. The whole idea behind putting people with such diverse interests together is that they can learn from each other, build on each other’s ideas, and make something bigger and better than one person alone could.

Again, this is something that we often forget in our larger organisations. Here is how Nilofer Merchant puts it:

There are two ways of holding an idea. One is with a closed fist, and one is with an open palm.
When you hold an idea in a closed fist, you control it. It is yours. And no one else can access it. Ideas held tightly — as if in a fist — can’t be seen. Sure, if you try really hard, you might be able to see the little bits between the cracks. But they’re hard to see, share — or steal.

But an idea held in an open hand can evolve. It has space to grow bigger. Ideas are actually organic, living things. If they have room to expand, they can quite possibly spread, and be picked up by others and grow into something much, much bigger than what you imagined.

William shows us the 3D printers, with hackers hacking in the background

Cheap Prototypes Rule

William told us about one of the recent projects they’ve done. One person invented a new medical device. After getting a patent on it, he sent the design to a firm in Adelaide to build a prototype – and paid them $10,000 for it. After too long with no news, he chased them up. They told him that the design was flawed and it couldn’t be built. So he took the design and printed it out on one of the HSBNE 3D printers. This showed the expensive shop how to make it.

There is enormous value in building a prototype for your great idea. At HSBNE most of these prototypes are physical objects, but as Diego Rodriguez says, anything can be prototyped:

Anything can be prototyped. Prototypes aren’t just for physical products. I routinely see people prototyping services, complex experiences, business models, and even ventures.

You can prototype with anything. You want to get an answer to your big question using the bare minimum of energy and expense possibly, but not at the expense of the fidelity of the results. It’s not only about aluminum, foamcore, glue, and plywood. A video of the human experience of your proposed design is a prototype. Used correctly, an Excel spreadsheet is a wonderful prototyping tool. GMail started out as an in-market prototype.

A wise person operates with the worldview that anything can be prototyped, and we can prototype with anything.

That’s one of his 21 principles of innovation, which you should check out.

DeLorean!

We Need to Hack Business Models Too

The last lesson comes from observation. HSBNE is a space for making ideas real. All innovation starts with a great idea, but a great idea alone isn’t innovation. To innovate, you have to generate value from that idea. That means that you need to build a business model to go with your great idea.

This is often a problem for inventors. They like to hack stuff, not business models. That’s why many successful startups have both technical and business founders. The technical founder hacks the stuff, and the business founder hacks the business model. The catch is that to successfully hack the business model, you need deep knowledge of the field you’re entering, so the business founder usually needs some technical knowledge as well.

This is true in startups, and it’s also true in larger firms. Just as an example, what would a hacked business look like for an accounting firm? That’s the discussion I had with another person this afternoon – and it’s a question worth considering for a lot of markets in addition to accounting.

I know that the HSBNE mob is working on hacking their own business model, which is great. I think there are a lot of lessons that can be drawn from their experience.

Let’s start hacking innovation.

13 August 2013
Are Creativity, Entrepreneurship & Innovation the Same Thing?
Who Owns Idea Execution?

Scott Belsky tries to unravel the mechanics of creativity in his book Making Ideas Happen. He includes this equation:

Making Ideas Happen = (The Idea) + Organization and Exuction + Forces of Community + Leadership Capability.

He goes on to say “Ideas are worthless if you can’t make them happen.”

Now consider this from Daniel Isenberg in Worthless, Impossible and Stupid: How Contrarian Entrepreneurs Create and Capture Extraordinary Value:

Most of us would agree that innovation has something to do with the tangible manifestation of novel ideas. But entrepreneurship is about the creation of tangible value. Ideas help, but the sine qua nons for entrepreneurs – hard work, ambition, resourcefulness, unconventional thinking, salesmanship, and leadership – will usually trump brilliant ideas.

When he says “innovation” he clearly doesn’t mean the same thing that I mean when I say it:

Innovation is executing new ideas to create value.

Here is one way to picture it:

Thinking of it visually emphasises that all three parts of the definition. Everyone gets the “new idea” part of it. But it’s not enough to have a great idea, you also have to execute it. And even after you’ve done that, you’re not finished. It’s not innovation if you’re not creating value for people.

So the people talking about creativity, entrepreneurship and innovation all make a distinction between having ideas, and creating value with those ideas. And none of us want anything to do with just the “having ideas” part of the whole thing.

Does that mean that we’re talking about the same thing?

Innovation, Entrepreneurs and Entrepreneurship

Strangely, this confusion didn’t exist 100 years ago. When Joseph Schumpeter wrote about innovation, he was talking about the process of creating value from ideas. My definition of innovation basically builds on his. The “entrepreneur” was the person that innovated. And “entrepreneurship” didn’t exist.

Check out these stats from Google NGram tracking the use of the three words in books published between 1900 and 2000:

Innovation is the most commonly used of the three words, and “entrepreneurship” as a concept was basically born in the 1950s. Why? Because the nature of innovation changed.

When Schumpeter was writing, innovation basically happened in startups. So entrepreneurs were people that created innovation by starting new firms. But the first half of the 20th century saw the rise of corporate innovation – which meant that we had to be able to distinguish between innovation taking place in large organisations and in startups.

That’s when we started to distinguish between innovation (which usually meant ideas executed in established firms), and entrepreneurship (ideas executed in new firms).

So Where to Next?

To answer my earlier question, I don’t think that we’re quite talking about the same thing when we talk about creativity, entrepreneurship and innovation.

In his forthcoming book The Myths of Creativity, David Burkus says:

Although there is still no precise and agreed-on definition of creativity despite nearly one hundred years of research on the subject, there appears to be at least a small consensus. Creativity is seen by most experts in the field as the process of developing ideas that are both novel and useful.

Again, there is an emphasis on use (value!) – but the main concern is the processes through which we generate and execute these ideas.

This is obviously an issue of great importance in innovation, because better ideas lead to better outcomes. Provided, of course, that we execute them!

Innovation, then, is this process of idea management. Entrepreneurs are still the people that innovate, and entrepreneurship is doing this through the vehicle of a new venture.

If we accept all of this, there are a few important implications:
- Everyone focuses on idea execution for a reason. Why do all three fields want to own idea execution? Because trying to improve your performance by simply generating more ideas is one of the biggest mistakes that both people and organisations regularly make. All of us focus on execution because this is where the gap is. The great news here is that it means you don’t have to be a genius to be a creative entrepreneur. You can do this by being really good at executing.
- We need to put entrepreneurs back into innovation. It’s too easy to forget that innovation is driven by people. We need to put more focus on entrepreneurs – the people that are creating value out of ideas – and less on tools. It’s people that create value. If we’re in a big organisation, we need to figure out how to liberate and support our entrepreneurs. If we’re in a startup, we need to figure out how to build a business model that creates value out of our great ideas. Both approaches are people-based.
- We need to be clear on our definitions. Creativity, entrepreneurs and innovation are all important, and they all intersect. People that study or practice any of these fields should be working together, rather than creating artificial distinctions between them. My definitions might not be the best, but I do think that they have some historical weight to them, as well as reflecting fairly common usage. But I’m definitely willing to have a discussion about what’s what!
This important because while the three areas have slightly different meanings, they share the same goal – to create value for people. This is what leads to longer lifespans, higher standards of living, and more interesting and fulfilling work.
7 August 2013
10 Ways to Select Ideas
One Big Innovation Stumbling Block

Innovation is the process of idea management:
- Of course, you need ideas.
- But once you have them, you have to select which ones are most promising because we never have enough time and resources to execute them all.
- And we do have to execute – that’s a critical step.
- Because innovation takes longer than we expect it to, we have to keep the people within our organisation engaged with the process as it is happening (often an issue in big firms).
- And in addition to all of that, we have to get the idea to spread.
Most organisations have plenty of ideas – their innovation failures happen in other stages of the process. There are tools available to measure how well you do in each of these steps.

This is what the results look like for many firms:

The scores are the average for each group, and low scores are better. If there is a score of 5 in a category, then the firm is as good as they could possibly be, but if the score is 15, then they have major problems.

This firm has their biggest problems in selecting which ideas to pursue – and this is a very common, very big innovation stumbling block. This is important because if you are choosing the wrong ideas to execute, it doesn’t really matter how many great ideas you have, or how good you are at executing them.

Poor selection can ruin the whole process.

10 Ways to Select Ideas

If this is a problem in your organisation, here are 10 ways that you can select ideas.
1. Most interesting to you: this is the way that many scientists choose problems to work on, and it’s pretty common in startups as well. The advantage to this approach is that by choosing the most interesting idea, you keep your engagement level high. The drawback is that the most interesting idea isn’t necessarily the one that creates the most value for people, so this approach can lead to major idea diffusion problems.
2. Guess: this is surprisingly common (just like it is in choosing prices). There aren’ many clear advantages to this – I guess the main one is that this is the easiest process to follow. So it can work well when market uncertainty is really high, or if you have an incredibly deep understanding of customer needs. The drawback is that in every other situation, processes with a bit more analysis work much better. Another version of guessing is going with whatever idea the CEO likes best.
3. Most valuable to customers: you can get information on this in a few ways: customer validation, focus groups, crowdsourcing, customer co-creation. The big advantage to choosing ideas based on customer input is that it gives you a pretty good idea about what your potential market is – so getting your new idea to spread is easier. The drawback is people often don’t know what they want, so this approach only gives you incremental innovation.
4. Innovation portfolio: if you use an innovation portfolio, you try to ensure that you have in development a good mix of incremental ideas, extensions into adjacent markets, and radical innovations. Google and many others aim for a 70/20/10 ration across these three categories. The disadvantages to this approach is that it can be a bit bureaucratic, which can slow down innovation, and it only works when your organisation has a lot of ideas to work on – it’s no good for startups. For nearly every other organisation, though, this is a terrific way to select ideas.
5. Formal process: formal selection processes can take different forms. This category includes things like stage-gate, using idea management software, sending all ideas to an Innovation Coach, and so on. The advantages and disadvantages to these approaches are very similar to those for innovation portfolios. The trap to avoid here is starting with tool – instead start with your strategies, objectives and culture, and then find a tool that works in your context.
6. Solve the most urgent problem: like guessing, this approach is both common and deeply flawed. It works ok in a crisis. At other times, this approach will lead to strategic drift – which can be disastrous.
7. Experts: you can use experts to help you rate the ideas that you are choosing from. These can be internal experts with either deep technical knowledge or great innovation experience. Or it can be external experts or stakeholders. This process can work well for bigger, riskier ideas. But it’s much too slow for small ideas.
8. Voting: again, this can be done internally or externally. You can crowdsource your feedback like threadless, or use innovation jams using your own people plus important stakeholders, or have people vote within a piece of innovation management software. The advantages and disadvantages to this approach are the same as choosing what’s most valuable to your customer.
9. Experiments: this is my favourite. One good way to choose ideas is to prototype or try as many as possible on a small scale. Then do more of the ones that work, and make sure that you learn from the ones that don’t. The advantage here is that this is a very data-driven approach, it works well when you face uncertainty, and even little bets can lead to radical innovations. The advantage is that you have data on what works and what doesn’t, which is the best way to choose ideas that merit further development. The disadvantage is that you burn resources (time, money) on the prototypes that don’t work.
10. Combination: many organisations use a combination of these tools. Google uses “choose the most interesting to you” with its 20% time rule – engineers can work on whatever projects appeal to them. But then they use an Innovation Portfolio approach to make decisions about which ideas to scale up.
How to Choose One

Actually, you can use one of these tools to choose the best tool. You could be experimental – make a hypothesis about which approach will work best for you, then test it. Or you can ask a panel of experts. Or guess.

The main point is to evaluate which method you’re using right now. If you have an idea selection problem, then figure out a new one to try out, and try it. Track data on your success rates, so that you learn. If things don’t get better, try another tool.

Which method does your organisation use?

Are there any I’ve forgotten? I’d be curious to hear what you’re using.

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2 August 2013