Innovators are risk takers

At the recent Business Innovation Conference in Chicago, we did a small sample exercise using Nobel Prize winner Daniel Kahneman's Prospect Theory question. Yes, innovators are risk takers, but they are just like the regular population in one respect. See the PDF

HBR December 2009 article: The Innovator's DNA

Last month I’d glanced at the Harvard Business Review’s December 2009 article called The Innovator’s DNA, by J.H. Dyer, H.B. Gregersen, and C.M. Christensen and didn’t think to blog on it. Then this week, Chris Broxon pointed the article out again and I reread it. It is a fairly narrow piece, and as Chris was saying on Thursday, often people talk only about the idea generation part of innovation and not the implementation. This article is about people who come up with these ideas.

The thrust of the article is that “Five ‘discovery skills’ separate true innovators from the rest of us.” Strangely the article points to Steve Jobs, Jeff Bezos, eBay's Pierre Omidyar, and A.G. Laffley at P&G asking "how these people come up with groundbreaking new ideas? If it were possible to discover the inner workings of the master's minds, what could the rest of us learn about how innovation really happens?"

The authors go on to say that most top executives facilitate innovation. But “in stark contrast, senior executives of the most innovative companies…don’t delegate creative work. They do it themselves.”

This is a strange statement especially when I think of Steve Jobs or particularly A.G. Laffley. Laffley is famous for expanding innovation at P&G by getting ideas from outside the company. That’s delegating creativity at the extreme.

If we look at Jobs, one of the earliest things Apple Macintosh had before Microsoft was the windows interface. But that wasn’t invented by Jobs, it was done first by Xerox at PARC. Likewise, Jobs didn’t come up with the idea for the iPod. The digital audio player was invented by Kane Kramer of England, who is credited with inventing the device in 1979. For iPod's software, Apple also went outside and used 3rd party PortalPlayer's platform. To top off the theme, the name ‘iPod’ came from outside of Apple, created by Vinnie Chieco, a freelance copywriter.

Even the icon of the great innovator, Thomas Edison was hardly the sole inventor the mythology portrays. He worked closely with folks in his Menlo Park lab. Charles Batchelor was the fellow he worked most closely with. In fact, why would the ‘sole inventor’ Edison split all patent royalties 50-50 with Batchelor. Because Edison was not the sole inventor! One of the lab assistants once said “Edison is in reality a collective noun and means the work of many men.”1 Thomas Edison was an amazing front man, the salesman/showman dealing with clients and investors.

Likewise, that’s what Jobs, Bezos, Omidyar, and Laffley are. They are salesmen and leaders first. What makes their companies successful is their openness to other people’s invention. They are networkers. Today the key to innovation progress is found in the way companies exploit the internal network structures and connect them to the outside world. And that is not new, it’s what Edison and Henry Ford did so well.

Next time we’ll look at the authors’ five 'discovery skills'.

[1] Andrew Hargadon Focus vol. VIII/1 pp 32-35 2004

Hey, What Are We Anyway – Automatons?

Yesterday I was listening to a BusinessWeek podcast when the guest said:

“Too often we hire people to solve our problems, when we’re supposed to be hiring them to carry out our solutions.”

Do I agree? Well, Perhaps. That is, if you’re mowing lawns for a living and have just one truck.

The rest of us have to ask ourselves: ‘What business am I in”? And there’s really just one answer – as pointed out by Craig Stull, Phil Myers, and David Meerman Scott in their book Tuned In:

‘We’re in the business of continuous problem solving for our market’.”

If you’re really just hiring people to ‘carry out your solution’ then you’re going out of business. Markets move quickly these days. If , like chimpanzees brachiating through the tree tops, you’re not moving from solution to solution, you’ll be overtaken by competition.

As a business leader, you are very susceptible to mindset that endorses the current solution. You need problem solvers at every level of your business to keep the pool full of new ideas. And don’t expect you’ll know a good idea when you first hear it. Chances are, that at first, you will think the best idea you hear this year is utterly stupid. You’ll be in the company of famous leaders who’ve done the same thing – Thomas Edison, Henry Ford, Thomas Watson of IBM, Ken Olson of Digital Equipment, William McKnight the legendary Chairman and CEO of 3M, and many others.

Success = Hire problem solvers and give them space to work.

HBR Dec 2008 Article: “Finding and Grooming Breakthrough Innovators”

Missing the mark:

Broadly this is mostly an insightful article attempting to address the two key problems one encounters when dealing with the issue of innovation talent. First, how do you find your innovators? And second, what do you do with them once you do? But it misses the mark in a very crucial way - which adds to the understanding of why innovation is such a difficult thing to manage.

Stories like this lump into “innovation talent” two distinctly different types of talent. One talent is the creative design talent. This is a key talent in artistic enterprises such as art, music, movies, architecture, etc.,. It is also key in some aspects of business like the design that Apple builds into its products. The other key talent is problem-solving. Problem-solving is the talent most useful for gaining competitive advantage in business. We innovate to gain competitive advantage. When we innovate, we gain competitive advantage by solving a customer problem better than the competition. We do this by creating new knowledge in solving the problem, and we protect this knowledge to the extent possible.

The authors fail to recognize the valuable talent for innovation in business is a talent for problem-solving, plain and simple. While they don’t talk specifically about problem-solvers, they do describe what great problem-solvers are capable of doing. “The best innovators have very strong cognitive abilities including excellent analytic skills…They can frame and reframe challenges from multiple vantage points[1]…They zero in on the most important points and waste no time on peripheral issues[2]… innovators home in on the most critical components, see connections, and discern how to bridge different parts; they work hard and efficiently to recombine these pieces…[3]” This describes a great problem solver.

A great example of this skill is found in looking at how Nobel Prize winner Richard Feynman backed up his off-hand, but specious boast in the Princeton lounge: “It’s easy to calculate e raised to any power using the series [4]:
”[5]

Of course Feynman’s fellow PhD students knew this was nonsense, and immediately challenged him:
“Oh yeah, well, then, what’s e to the 3.3?”
“That’s easy.” Says Feynman. “It’s 27.1…”.
Did he use this complicated series formula to calculate this? No. He had that great problem solving knack for seeing connections and discerning how to bridge them.
Here are the facts, which somehow popped into his head:
e = 2.71828…(he memorize e just because he used it a lot)
e to the 2.3 ≈ 10 (mathematician need to be able to convert base e to base 10 which Feynman had eventually memorized: e2.3026 =10)
e to the (x+y) = e to the x * e to the y.
Thus, Feynman calculated e to the 3.3 is equal to e to the (1+2.3) = e to the 1 * e to the 2.3 which is 2.71828*10, or 27.1…and he adjusted by estimating the difference between 2.3 and 2.3026 as the exponent. The answer was slightly less than 27.1828. When he got that right his colleagues gave him two more:
What is e to the 3?
What is e to the 1.4?
He used one additional fact he knew as a physicist who had to calculate half lives of radioactive materials, which is that e to the .7 ≈ 2 (e to the .69315 = 2). With this knowledge and the formula e to the (x+y) = e to the x * e to the y even you could estimate e to the 3 ≈ 20 or e to the 1.4 ≈ 4. Of course Feynman was more precise because he estimated for slight differences.

The point is Feynman had that very analytic mind which was capable of coming up with ways to break a problem down and synthesize a solution using those facts. In business, this is the basic talent you need in your innovators. It’s problem-solving.

The authors then go into outer space with statements like innovators can “identify which solutions are likeliest to be embraced by the influential people in their organization…[6]” and innovators are “ridiculously social aware of their surroundings at all times…[7]” That hey can “walk into a conference room…and quickly discern the underlying motivation of each one. They leverage that information to craft and communicate a message that resonates with every constituent.[8]”

Wow! This is not consistent with my experience. Nor is it consistent with Feynman’s. Perhaps the title of his last book tells it all: What Do You Care What Other People Think?
Dr Robert Sutton at Stanford wrote about the real characteristics of talented innovators in his book Weird Ideas That Work. It is pretty much exactly the opposite. Sutton says that the kind of people the company has to have to come up with these innovative ideas are your “deviants, heretics, eccentrics, crackpots, weirdoes and just plain original thinkers.”[9]

These are usually ‘low self monitors’. They are unable to, or at least don’t try to read other people’s non-verbal communication. Aside from being creative problem solvers, they tend to avoid contact with coworkers, have notoriously high self esteem, and are guided by an inner compass that pays little attention to how other people feel.

Actually, reading the HBR article, you get the intuition that the authors aren’t so sure about this high EQ talent idea. After all, why would you need to mentor someone who was such an extraordinary innovator who could walk into a room and command the emotional environment in a convincing way. The authors later in the article talk about taking innovators with ‘high potential’ (whatever that means) and mentoring them to defend their ideas and recognize their weaknesses[10]. In many respects, it is a fool’s errand to try to teach great problem solvers to develop a high sensitivity to other people’s individual underlying motivations. They really don’t care what other people think, and are disinclined to develop that talent. It is much more profitable to identify people with problem solving talent and marry them up to people who are savvy about interpersonal politics to work together in delivering results.

The also get right the idea that normal jobs may not be the right place for these problem-solving innovators suggesting that companies should be “careful to place innovators outside the regular structure” indicating that, for example, JP Morgan Chase “…creates new positions for rising stars if appropriate ones don’t exist.” The activity of finding great problem solvers and determining the best ways to apply their talents is what my company is all about. You cannot let this talent bubble up, because in most hierarchical companies it won’t. You have to aggressively search it out and that is our specialty. Then you need to tailor the business environment and assignments for the individual problem-solver based on his or her talents and baggage.




[1] Paragraph 9
[2] Paragraph 8
[3] Paragraph 6
[4] R. Feynman, Surely You’re Joking Mr. Feynman, W.W. Norton &Co., New York,1985, p. 192
[5] http://en.wikipedia.org/wiki/Exponential_function
[6] Paragraph 9
[7] Paragraph 10
[8] Paragraph 10
[9] R Sutton, Weird Ideas That Work: How to Build a Creative Company,Free Press, New York, 2002 P. 36
[10] Page box “Idea in Practice”

Human Resources and Innovation

As an innovation talent coach, I find the single most important aspect of culture in a company defined in how people interact. There are two crucial factors. First, in many hierarchical companies interactions often have an undercurrent of position and privilege. The notion of superior/subordinate translates into a adult-to-child relationship where the ‘child’ looks to respond to the ‘adult’ to avoid displeasure. We hire people for their brains. This relationship undercuts that key asset. If you think about it, when an adult is present in a room full of children, the children look to the adult to solve problems. This sort of relationship is evident in many of the stories Bob tells related to his No Asshole Rule. It is an unpleasant environment for everyone except perhaps the CEO.

Many companies are adept at avoiding this trap. Gore is a company that does this well. I consulted for an Australian company where the new turn-around CEO established a single internal job title: ‘Colleague’. He inverted the organization chart putting the customer on top and the people who interacted with customers just below them, and all the management team (he called ‘team leaders’) underneath them. The chart underscored the role management plays in supporting the work done by the people who actually produce the goods and services for customers. He did some other clever organizational shifts as well. The results were phenomenal: – a 16-fold increase in sales; ROE reached 35% after tax, and increased market share from 4% to 16%.

In the famous example of the NUMMI plant in Freemont California just across the bay from Stanford, the old hierarchy was thrown out and replaced with three levels for the entire plant – Team Leader (a union worker), Group Leader, and Plant Management. The plant was managed by (drum roll please) HR! At NUMMI everyone actually working was ‘Team Member’ with a single pay grade.

Second, is a two step engagement process: 1) Link the sense of personal worth to the job. This is the 5 why-is-that-importants. You ask why a function is important, and then why that (the answer to the first why) is important, until you reach something like ‘because it help people’ or ‘because it makes life better’. You’re a tax collector, why is that important? … ‘Because good roads and excellent schools make the world a better place.’
2) Organize the work such that it is team work. Now you have a team that is working together ‘to make the world better’. Nothing is more fun than working on a team with a great purpose, and nothing drives the desire for excellence more strongly than working together to make the world better. It is the most powerful workplace motivator.

Adam Hartung at MENG

Yesterday I attended the MENG Chicago meeting as a guest of Buckley Brinkman.  Buckley and his partner Dan Wallace have just launched their new company Launchpad Partners with the mission to help company owners triple the value of their businesses in 12-18 months.

 

The guest presenter was Adam Hartung, author of the book Great Marketplace Disruption.  He and I presented at the Business Innovation Conference here in Chicago last month, and I did not get to see his talk since our presentations were simultaneous.  But Yesterday, I was fortunate enough to attend his MENG presentation.  If you ever get the chance to attend a talk by Adam, don’t miss it.  He is interesting, insightful, and entertaining.