8 - Sparking Strategic Innovation
In this chapter, the authors will consider specific qualities that can be fostered in a corporate culture to encourage strategic innovation: diversity, naivety, curiosity, urgency, and thinking beyond best practice. The first two attributes create an openness to new ideas, the next two create a more proactive orientation, and the last seeks to overcome apathy and inertia.
Diversity
In cultures where conformity is valued, innovation does not arise and is actively discouraged. Consider that the power of the church during the dark ages discouraged scientific inquiry and new ways of thinking, stifling progress for an entire continent. The same is accomplished, to a lesser degree, in firms that stress tradition and conformity to a single culture.
Diversity, meanwhile, stimulates thought and discussion, causing people to question the reasons something is thought to be "right" rather than passively accepting it, and in the process discovering that their assumptions were incorrect and that there is potential for more positive outcomes.
The authors again turn their eyes toward America, a culture in which there is a great deal of diversity, and stunning progress and innovation. These are not coincidental - there is a causal relationship. What happens in America today is similar to what occurred in Florence, Venice, and other cities of the European Renaissance: people of various perspectives were brought together and their interaction sparked a tremendous amount of creativity.
However, in addition to being in close proximity, people of different cultures must have the ability to communicate and interact freely, without constraint. The point is not to make diverse people agree and conform, but to make them interact. This approach has been termed the "Medici effect," for one of the Florentine families that is credited with sponsoring the renaissance by patronizing the arts and sciences without interfering in the work of their proteges.
Naivety
To discover something new, it helps to not be an expert. Experts tend to be blinded by their own expertise - they rely overmuch on their knowledge and expertise, expect reality to follow in line with theory, and assume they have a complete understanding. All of this makes them very efficient at dealing with the known, but not very proficient in observing or anticipating the unknown.
Novices, on the other hand, are more observant to details and must think in greater detail because they have no existing framework against which to match what they encounter. A naive person does not have the sense that anything is impossible, and does not have any shortcuts.
Curiosity
Curiosity is a drive to seek knowledge. It goes beyond the ability to be momentarily distracted by something new or unusual, to the discipline to look deeper and seek more information. Rather than dismissing something unusual as being unimportant, the curious person seeks to understand it.
Curiosity is also an attribute of an organization - an organization that seeks to be industrious will often focus on what is normal, feel that the majority deserves their utmost attention, and dismiss anomalies as being too small or insignificant to be bothered with. If an organization wishes to be innovative, it must question the reasons why certain things fall outside the bell curve and investigate the reasons they should be so.
Urgency
Urgency is at the core of innovation - there are many instances in which people will recognize that something could be done better, but without the pressure to act promptly, many of these ideas are procrastinated away. This is especially true in the corporate environment, in which there is resistance to change without a compelling reason.
Typically, the compelling reason comes in the manner of a threat. An opportunity may be attractive, but there is the sense that pursuing it is optional and can be delayed. A threat is immediate, and comes with the sense that harm is certain unless there is a swift reaction. As a result, many organizations wait for a crisis to occur, and then attempt to be innovative.
In a competitive environment, there is the constant threat of being overtaken by competitors, and this should drive the urgency of the need to innovate in order to prevent that from happening. It should also be understood that the pursuit of opportunities cannot be delayed - as competitors are often pursuing the same course and will not be as hesitant.
The authors speak of the value of creating an artificial sense of urgency at firms in order to motivate employees. (EN: I'll not pursue that further - it's an unethical practice to begin with, and often results in dysfunctional behavior that does the firm more harm than good.)
Beyond Best Practice
Firms attempt to identify and follow best practices, which at first seem like a good thing - but on further consideration, it represents complacency. To suggest that something is a "best" practice is to abdicate the responsibility to discover one that is even better, and to be satisfied with a given level of results as the best that can be done. Moreover, following best practices means acting mindlessly according to an established pattern, rather than actively thinking and taking the lead.
The author considers four alternatives for practices: bad practices, good practices, promising practices, and next practices.
Bad practices
A bad practice represents a plan that failed to achieve the desired results, or which had negative effects that outweigh the value of the results it managed to achieve.
Of particular importance is that there is much to be learned from failure - to simply dismiss and refuse to give further consideration to a plan that did not work is to overlook the potential that adjusting the plan may have resulted in success or mitigated the negative side effects.
The notion of failure has been an anathema in business - an executive who failed would not be given the opportunity to try again, but instead replaced with a new executive who would not have learned from the mistakes. As such, the "play it safe" mentality of some organization prevents them from innovating.
The authors suggest creating a culture that is tolerant of failure, based on these principles:
- Embrace failure as a possible outcome, right from the start
- Create a high tolerance for failure, though not for making the same mistake repeatedly
- Give employees a "failure budget" as encouragement to take risks
- Set fault tolerances for projects and stick to them. Do not kill a project if it is within the accepted level of failure, and do not hesitate to kill one that crosses the line
- Create a failure database as part of knowledge management
- Consider offering a failure award, which can be a bit comical, but should focus on recognizing the signs of impending doom
Taking these measures enables a firm to embrace failures as learning opportunity. To discourage failure is to discourage innovation, and to make failure shameful is to ensure the lessons are never learned.
There is brief mention of a brainstorming exercise in which participants think of the worst possible ideas (bad brand names, worst choices, etc.) - which seems interesting in that identifying the reasons that something is a really rotten idea helps to get people to recognize the qualities of a good idea.
Good practices
Companies need no encouragement to go out and steal good ideas from other firms, as it is a common practice. However, it is not without its pitfalls.
The first problem is that positive outcomes are easy to observe, but the exact process that was undertaken to achieve those outcomes is difficult to see. As such, a firm may end up pantomiming the obvious behaviors of another and fail to achieve anything.
A second problem is the assumption that best practices are transportable. Companies, products, markets, environments, and other factors are highly variable - and a practice that achieved success for one firm in a given situation may not achieve success for another firm in a different situation.
This means that a good idea should not be hastily adopted without a thorough investigation to ensure that the practice is understood and has the potential to be applied. In so doing, it is also possible to identify ways in which a good practice could be improved - such that you are not merely following your competitor, but surpassing them.
Promising practices
A promising practice is one in which the results cannot be seen, but are imagined.
The authors return to the example of Google giving employees one day a week to pursue research at their own discretion. This sounds like a good idea that could have positive results, but no-one outside of the organization can say for certain that it does.
It is not uncommon for firms to mindlessly mimic the actions taken by their competitors, assuming that there is some reason behind them. But a better approach is, again, to apply a bit of analysis to consider what the outcome of a certain action might be (to seek a logical connection between the activity and an outcomes, not merely assume that correlation means causation).
Next practices
A "next process" is a complete innovation that begins with a clean slate. Innovation is not concerned with adopting practices from another firm, nor with merely adjusting present practices, but with inventing completely new practices that will "change the game" in a way that will presumably confound the competition.
Considering next practices requires a high level of creativity, and stimulates the minds of an organization's employees and create enthusiasm. By contrast, merely imitating or analyzing existing practices tends to have a dulling effect on the imagination, and turns people pessimistic as they are constantly looking for flaws rather than considering opportunities.
Pursuit of next practices has the potential to deliver as promised - a stunningly fresh idea that enables a company to leap ahead of competitors - but more often, further analysis leads to the conclusion that the new idea isn't better than present practice, but that using some aspects of the new idea can improve present practices.
Babble
Having exhausted their intended topic, the authors round out the chapter's page count by injecting some random material:
- The type of innovation a company does depends on its culture and the thinking styles of the individual employees. Some are more inclined to explore the unknown, others to analyze the known, by varying degrees.
- Idea generation need not be structured - people can brainstorm ideas and later group them into the categories described above.
- This approach to categorizing ideas is a tool that can be used as a starting point, but becomes counterproductive if applied too rigidly.
- Analysis and exploration should be done in separate steps. Brainstorm ideas, then later decide if they have merit. To be analytical too early stifles creativity.
There follows an analysis of the innovation that led to the Model T. Not only does this fail to introduce any new information, but it is highly speculative and confabulatory in suggesting what Ford's employees might have thought about in the process. The same is applied to Apple's innovation of the iPod, in an equally feckless and uninformative manner.