Culturematic by Grant McCracken Makes a Great Case for Experimenting
Posted by Tim in book riffs, experiments on 14 May 2012
Experiments are a critical innovation skill, and it’s one that you can use to build your Innovation Competence. A culture of experimentation is one of the elements that distinguishes highly innovative firms from those that arene’t quite as good at it.
The best thing that I’ve run across recently on the importance of experimentation is Grant McCracken’s new book Culturematic: How Reality TV, John Cheever, a Pie Lab, Julia Child, Fantasy Football . . . Will Help You Create and Execute Breakthrough Ideas.
Here is how he defines a Culturematic:
Eventually, I found an idea that helps explain these oddities. I call it Culturematic. A Culturematic is a little machine for making culture. It is designed to do three things: test the world, discover meaning, and unleash value.
And here is a video where he gives a bunch of examples:
I’m in the middle of reading a string of outstanding books right now, and this is one of my recent favourites. Here are some quotes from it about experimenting:
Start-ups are inclined to put all their eggs in one basket, all their bets on a single idea. And this is wrong. If nothing else, it’s an evolutionary error. What we want instead is a Culturematic cluster, a bundle of experiments, investigating the world in a variety of ways, defined with enough intellectual generosity that several outcomes—some of them quite different—are possible. Are there venture capitalists out there who understand the Culturematic proposition? Are there people looking to fund ingenuity bundles instead of this-one-idea-take-it-or-leave-it? I hope this book will encourage a new approach.
This is a fairly novel view of startups, but it has some merit. It certainly applies to larger, more established firms that are trying to innovate. Build a bundle of experiments, test them out, and amplify what works.
Another quote:
The search for the future is an exercise in edge finding. We don’t know what we are looking for. We are not even sure what it is when we find it. We are working by instinct, by intuition. We are flying by the seat of our pants. To find the innovation that returns lots and lots of value, we will have to try many things that return next to nothing. It’s the nature of the hunt.
Experimenting is another tool that helps us when we are faced with a mystery rather than a puzzle. Mysteries are typified by large amounts of uncertainty, and in these situations, we must tools built for that – like Culturematics.
Innovation is a messy, multiple business. There is no single method. The sensible approach is to keep trying stuff—to provoke the world and let it start talking to you. As Sims puts it, invention and discovery emanate from the ability to try seemingly wild possibilities; to feel comfortable being wrong before being right; to live in the world as a careful observer, open to different experiences; to play with ideas without prematurely judging oneself or others; to persist through difficulties; and to have a willingness to be misunderstood, sometimes for long periods, despite the conventional wisdom.
The reference there is to Little Bets: How Breakthrough Ideas Emerge from Small Discoveries,
We know two things. First, we are obliged to innovate. This is the only way to survive the killing fields of the contemporary marketplace (where only 14 percent of the Fortune 500 survive for more than fifty years). Second, we’re hard-pressed to tell which innovations will flourish and which will die. Sometimes, we are not even sure where to start. In a world like this, we want lots of little experiments. So says the IPO prospectus for Google in an almost perfect expression of the Culturematic logic: We will not shy away from high-risk, high-reward projects because of short-term earnings pressure. For example, we would fund projects that have a 10 percent chance, [placing] smaller bets in areas that seem very speculative or even strange. As the ratio of reward to risk increases, we will accept projects further outside our normal areas, especially when the initial investment is small … Most risky projects fizzle, often teaching us something. Others succeed and become attractive businesses.
There’s not a whole lot more to add. Experimenting is a crucial part of innovation. If you want to improve your innovation capability, improving your capacity for experiment is a great first step to take. It’s probably more effective than the more symbolic steps, like making it a core value or integrating innovation with strategy (though you’ll eventually want to do both of those too).
We talk about experimenting a lot here, because it’s so important.
If you want to make your organisation better right now, what’s an idea that you can go out and test? If you can’t think of one, Culturematic will give some excellent suggestions about where to start.
So go to it.
Why You Should Care About Network Structure
When carbon atoms connect, they most commonly form molecules built on rings of six atoms. The things that are built out of these six atom rings of carbon are amazingly diverse.
Here are the structures of two of these things: graphite (A) and diamond (B):
You can see the rings in both. Same material, same basic building block, very different materials. Why? Because of their structure.
I ran across this example in Howard Rheingold’s new book Net Smart: How to Thrive Online.
In the chapter on building network skills, Rheingold includes a quote from Nicholas Christakis, from this talk:
One of the key ideas about human social networks is that in the addition of ties between people and specific patterns of ties that obey particular mathematical rules the whole becomes greater than the sum of its parts. The collection of human beings have properties that do not reside within the individuals, and this collection of human beings is now able to do things that they previously were not able to do. And one of the illustrations or examples that I most like to give about this is something that most people are familiar with from high school or college chemistry and that is the example of carbon. So you can take carbon atoms and you can assemble the carbon atoms into graphite and here we put particular hexagonal pattern of ties and you get sheets of graphite and this graphite is soft and dark. Or we can take the same carbon atoms and assemble them differently into a kind of a perimetral structure with the ties between them, the bonds between the carbon atoms and we get diamond, which is hard and clear and these properties of softness and darkness or hardness and clearness first of all differ dramatically, not because the carbon is different. The carbon is the same in both, but rather because of the ties between the carbon atoms. And second these properties are not properties of the carbon atoms. They’re properties of the group, properties of the collection of carbon atoms. Therefore, when we take constituent elements and assemble them to a larger whole, this larger whole can have properties that we could not have foreseen merely by studying the individual elements and properties which do not reside within the individual elements.
What does this mean for us? It means that our network structure is very important. The value of your network is not just determined by who you’re connected to, or how many people you are connected to, but also (and mainly) by the structure of these connections.
You can have the same number of connections to the same people in two different networks, and one can be like graphite, while the other is like diamonds. This has some practical implications for innovators:
- Your network can be too connected. When I talk with managers about the networks that John and I have mapped, and how their structures are (often) not very good for information sharing, their first inclination it to try to connect everyone up with everyone else.
This is not a good idea. When they say this, I reply with: “Imagine if you had to read every single email sent and received by every other person in your organisation. That’s what you get when you connect everyone up.”
Most interpersonal networks work best when they have somewhere between 3 and 10% of the total number of connections that they could have if everyone was connected to everyone. This leads to the best structures for sharing information, which is critical in getting your new ideas to spread.
- Strong Networks are Diverse. There’s no point in connecting up only with people that think the same way that you do. If you do this, you’ll just keep getting the same old ideas. You need to build links to people that are interested in different things that you are, to people that know different people than you do, and to people that view the world through a different lens than you do. That’s the best way to generate innovative new ideas.
- Connecting people that aren’t already connected to each other is very powerful. Check out this more detailed discussion of this idea. The basic principle is that if you build the network by connecting people to each other, you make the network stronger. You give up a little bit of power, because if they stay unconnected you can act as a broker. In exchange, you gain reputation and social capital.
Again, this helps you get your own ideas to spread.
The last point is important – when you start thinking in network terms, you start to realise that reputation and social capital are the main currencies in networks, not power. This is a critical insight. Once you understand this, you can start to build a network that fits your needs.
Graphite and diamond are two very different materials, and they fill different roles. If you’re trying to communicate by leaving marks on a piece of paper, graphite will be much more useful to you than a diamond. One of the things that John and I are learning in our research is that different network structures serve different purposes.
The network that is best for idea generation often isn’t best for idea execution. But just as graphite and diamond are made from the same thing, so are your networks: people and connections. And the structures that they form have a big impact on how you perform.
Note: Here’s a video that Rheingold made to explain the network issues he addresses in the book:
Are You Solving a Puzzle or a Mystery?
Posted by Tim in book riffs, innovation strategy on 10 May 2012
Innovation is all about coming up with new solutions to solve problems.
But here’s an interesting question: is the problem that you’re trying to solve a puzzle or a mystery?
The distinction was made by Gregory Treverton and highlighted by Malcolm Gladwell in a piece he wrote on Enron a few years ago.
According to Treverton, a puzzle is a problem that can be solved if you have more information (or the right information). On the other hand, more information doesn’t help with a mystery, which is characterised by high levels of uncertainty, and the need for judgement. Here’s Gladwell:
The national-security expert Gregory Treverton has famously made a distinction between puzzles and mysteries. Osama bin Laden’s whereabouts are a puzzle. We can’t find him because we don’t have enough information. The key to the puzzle will probably come from someone close to bin Laden, and until we can find that source bin Laden will remain at large.
The problem of what would happen in Iraq after the toppling of Saddam Hussein was, by contrast, a mystery. It wasn’t a question that had a simple, factual answer. Mysteries require judgments and the assessment of uncertainty, and the hard part is not that we have too little information but that we have too much. The C.I.A. had a position on what a post-invasion Iraq would look like, and so did the Pentagon and the State Department and Colin Powell and Dick Cheney and any number of political scientists and journalists and think-tank fellows. For that matter, so did every cabdriver in Baghdad.
The distinction is not trivial…
If things go wrong with a puzzle, identifying the culprit is easy: it’s the person who withheld information. Mysteries, though, are a lot murkier: sometimes the information we’ve been given is inadequate, and sometimes we aren’t very smart about making sense of what we’ve been given, and sometimes the question itself cannot be answered. Puzzles come to satisfying conclusions. Mysteries often don’t.
Puzzles are attractive because, as Gladwell points out, they come to clean conclusions. Ironically, by these definitions, all of the Agatha Christie books are puzzles, not mysteries – they can always be solved if you just pay attention to the right information, which is all there for you.
We are strongly drawn to puzzles because of how clear-cut they are.
Unfortunately, many of the big problems that we face are not puzzles, but rather mysteries. Mysteries are messy, and the methods that solve puzzles don’t work for mysteries, and they might actually make them worse.
Jeanne Liedtka and Tim Ogilvie pick up on this distinction in their outstanding book Designing for Growth: A Design Thinking Toolkit for Managers.
They say that incremental innovations are puzzles. The parameters are basically known, we just need to find the right information to develop the innovation that will solve the problem. But then:
There’s another category of problem called mysteries, where there is no single piece of data, there is no level of data disclosure that will actually solve a problem. In fact, there might be too much data and it’s about interpreting all the data that’s there. And that’s a richer, harder problem that requires more systems thinking, that requires prototyping and piloting. That’s really where the designers are often most adept.
Their contention is that the high levels of uncertainty in mysteries requires a different, more experimental approach. Their solution to this is design.
Third, design is tailored to dealing with uncertainty, and business’s obsession with analysis is best suited for a stable and predictable world. That’s the kind we don’t live in anymore. The world that used to give us puzzles but now dishes up mysteries. And no amount of data about yesterday will solve the mystery of tomorrow. Yet, as we’ve already noted, large organizations are designed for stability and control, and are full of people with veto power over new ideas and initiatives. They are the “designated doubters.” The few who are allowed to try something new are expected to show the data to “prove” their answer and get implementation right the first time.
The bulk of the book is taken up with describing tools and processes that you can use to implement design thinking. This is how they picture the process:
If you look at this model, it maps onto the idea management process model that we have discussed here on numerous occasions.
Their model is based around four questions. The first – What Is? – is the place for problem definition.
The next step is asking “What If?” This is idea generation. And it’s the same question that Grant McCracken identifies is critical in his book Culturematic – discussed here. This is the divergent step in the process.
Question three is “What Wows?” This is the idea selection step. Liedtka and Ogilvy outline an method for assumption testing and rapid prototyping here. In other words, experiments.
The final question is “What Works?” This is the execution and diffusion phase of the process. This is where you co-develop with your customers to converge on a solution.
The approach in Designing for Growth is sound. It is a very practical book, with clear instructions on how to implement design thinking in your innovation process, and with plenty of examples and case studies to make the ideas real.
The problems that lead to disruptive innovations are often mysteries. This means that we need a different toolkit to solve these problems than we use when we solve puzzles. Experimentation and design thinking are two excellent approaches to use when facing a mystery.
Which kind of problem do you face right now?
How to Improve Your Innovation Competence – Experiment!
Posted by Tim in book riffs, The Innovation Matrix on 9 May 2012
Note: This is part of a series of posts explaining the individual parts of The Innovation Matrix. See this post for a description of the full model and what can be done with it.
I presented The Innovation Matrix at a conference last week. After the other three speakers in my session had given their talks (all excellent!), the first question we got threw me for a bit of a loop. The point that was raised was that the guy thought that everything that we had presented was very linear, and not very systems-oriented.
This made me realise that I didn’t make one of the key points that underpins The Innovation Matrix – it’s actually based on complex system thinking. And the key insight that I get from it is this: there is a (sometimes huge) disconnect between the effort you put into innovating, and the return that you realise. The relationship between the two is non-linear.
You can have an extremely high level of Innovation Commitment, and sink large amounts of time and resources into it, and still be lousy at innovating.
The whole point of the matrix is that this non-linearity exists, it surprises people, and we need to be aware of it.
What is the best way to address this?
The most important skill to deploy in complex systems is experimentation. When faced with high levels of uncertainty, and systems that respond non-linearly, we can’t predict in advance which ideas will succeed.
This is why building a culture of experimentation is an essential part of Innovation Competence. This is the approach that is outlined by Peter Sims in his excellent book Little Bets: How Breakthrough Ideas Emerge from Small Discoveries.
I just read another equally outstanding book that discusses a similar approach. It’s by Grant McCracken – Culturematic: How Reality TV, John Cheever, a Pie Lab, Julia Child, Fantasy Football . . . Will Help You Create and Execute Breakthrough Ideas.
In his last book, Chief Culture Officer: How to Create a Living, Breathing Corporation,
Nearly all of his examples come from popular culture (the Old Spice campaign, Andy Samberg on Saturday Night Live, etc.), but the approach that he outlines is actually a general one. Here is how he describes it:
Eventually, I found an idea that helps explain these oddities. I call it Culturematic. A Culturematic is a little machine for making culture. It is designed to do three things: test the world, discover meaning, and unleash value.
Why does Samberg’s standalone production studio work so well for SNL?
It was to give SNL a little spaceship that could go places and do things out of the range of the SNL players. At 30 Rock, no one invests so much as a second in something that might not work. Because the clock is ticking. But The Lonely Island can try stuff until something works. Here, failure is acceptable, because, as Michaels puts it, it’s the guys, not the cast, who “take the risk.”
…
Many Culturematics return nothing. This is not to say they fail. They tell us that this is a tree up which we no longer wish to bark.
That’s experimenting! And that’s how we innovate.
Here is how McCracken describes innovation at Unilever – think about where this would put them on The Innovation Matrix:
British researcher John Kearon recently looked at the innovation record of Unilever, a Dutch-British corporation. The results were surprising. Unilever has a great track record, creating not just new brands and products but entire categories in the U.K. consumer market: laundry powder, fabric softener, margarine, and moisturizing soap. Kearon noticed that none of these discoveries came from the innovation centers Unilever set up in the 1990s. Everything about the innovation centers looked right. They hired the best people. They spent real money. They centralized Unilever’s creative efforts. And as Kearon explains, by and large they failed: The innovation center model is good at creatively farming existing brands and has added significant value to the likes of Dove, Lynx and Flora. However, as a model of innovation it is too centralized, too evidence-based, too marketing-science orientated to have the freedom and contrariness to originate new categories that can create even greater value. Kearon recommends another approach. If you want to innovate as Google, Apple, and Red Bull have, he says, you should follow a couple of rules: Don’t look for big ideas. Seek small ideas that can grow. Fail fast. Fail often. Keep learning and never give up. Excellent, very Culturematic advice.
Very Culturematic, and very Little Bets.
The question at the conference threw me because I hate linear models – they almost never describe the real world. And The Innovation Matrix is not linear. It actually describes a non-linear problem: that we can’t predictably increase our innovation capability simply by increasing our commitment to innovation, or simply by throwing more resources at it.
There is always mystery about which ideas will actually work. This is part of what creates the disconnect.
In a non-linear world, the best strategy is to innovate through experimentation. As Saul Kaplan says: Think Big, Start Small, Scale Fast.
Figuring out how to do this is the best possible first step if you are trying to change your position on The Innovation Matrix, because it’s the best way to actually get better at executing ideas.
(And if you want some tips on how to proceed, I can’t recommend the books by Sims and McCracken strongly enough)
Nearly Great Innovators – The Innovation Matrix
Posted by Tim in The Innovation Matrix on 6 May 2012
Note: This is part of a series of posts explaining the individual parts of The Innovation Matrix. See this post for a description of the full model and what can be done with it.
Potential Stars
Some firms have a high level of Innovation Commitment, and they also have a reasonably high level of Innovation Competence.
They have all of the processes and structures in place that need to be outstanding innovators, but they aren’t quite great. I call them Potential Stars.
Characteristics
These firms have everything in place that they need for innovation success – their Innovation Commitment is high. This means that they have innovation as a core value, and it is integrated into their strategy. They have resources committed to innovating, including high-level management time and attention. They have tools, systems and processes in place to support innovation, and they have good metrics for measuring innovation success.
And with all of this in place, they are pretty good at executing ideas, so their Innovation Competence is about average. This might be viewed as a problem, though, since they are investing a lot into innovation. They want to be stars but they’re not quite there yet.
What is missing?
Typically, firms in this category will be very good at executing one particular kind of idea, but not a broad range of ideas. They’ll be pretty good at all of the components of the idea management process – generating ideas, selecting the best ones, executing these and then getting the to spread. If they have a weakness here it will usually be either in their selection process or in idea diffusion.
The area that prevents them from being World Class Innovators is their breadth of innovation. Maybe they are only good at product innovation, but don’t do anything with services, ways of doing things or business models. Or they are great at incremental innovation, but not very good at executing bigger ideas. Or perhaps risk aversion has crept in so they are not very good at learning from failure.
One way or another, they have a gap in their Innovation Competence that prevents them from getting a full return from their Innovation Commitment.
Examples
John and I ran into a great example of a firm in this category recently. They have adopted Lean principles whole-heartedly, and the consequences of this have been very good. They have a great participatory culture (in an industry that is not known for this at all), and they are exceptionally good at executing incremental innovations. The outcome has been that they have been able to use this innovation to drop their operating costs by about 20% over the past three years.
So what’s the problem?
The main problem for this firm is this: they are terrible at executing big ideas that might be potentially disruptive innovations. They have tried multiple times over that same three year period to execute ideas that could change their industry, and they have failed each time. Normally, this might not be a big issue. However, their industry is in flux right now, which means that they really do need to succeed with some of these bigger ideas.
Otherwise, they will end up getting increasingly efficient at executing a business model that is no longer relevant.
They are an example of a firm that has become a Potential Star by building up their innovation capability. They still have some gaps to address, but their success to date suggests that they will. You can also end up in this box when your innovation capability is in decline. Often, this is the where World Class Innovators end up when they start to lose it.
When that happens, they still have all of the infrastructure in place that made them great – their Innovation Commitment remains high. The problem is that their results are starting to slip. This can happen for a few reasons. Often, this is a result of business model lock-in. If you stop innovating business models, it is difficult to continue to be world class. This can come about through a decrease in experimentation, or by an increase in fear of failure.
For example, think about Nokia. They were highly innovative, and on top of their market not that long ago. However, they have not adapted well to the rise of smart phones (business model lock-in), so even though their Innovation Commitment is just as high as it was when they were dominant, their Innovation Competence has slipped.
Innovation Strategies
There are two very different prescriptions for firms in this category. The first thing that you have to do is figure out if your innovation capability is on the rise, or in decline.
If you are on the rise, then you have to identify the remaining gaps in your Innovation Competence. Once you have done this, you need to try to fill in these gaps. One of the tricky parts here is that this often requires you to build management skills. In the example of the firm that is great at Lean, they need to build the skills that support projects that do not fit into the Lean methodology. The skill sets are different, which is one of the reasons that there are plenty of tensions in managing high-level innovative firms.
If you here because your innovation capabilities are declining, it’s a different story. This requires some forensic work to figure out what went wrong. What has caused the reduction in Innovation Competence? The first place I would look is the breadth of innovation that you are undertaking.
Whether you are on the rise, or slipping a bit, firms in this category still have the potential to be World Class Innovators. In both cases, the biggest obstacle that you have to fight is complacency. The firms on the rise are usually doing well, so why should they worry about improving their innovation? On the other hand, the firms that are slipping are coming from a position of strength, which makes it hard to find the urgency you need to change.
This is why Stephen Elop at Nokia sent the “Burning Platform” memo – to try to shake the firm out of its comfort zone.
In either case, this isn’t a bad place to be. Your innovation capability is good, you just have to figure out the last few steps that you need to make it better. That’s why firms here are Potential Stars.
Odds & Ends
Posted by Tim in innovation on 2 May 2012
We have a few pieces of blog news to share today, and one request.
First up, we’re very pleased that Kevin Hendry is going to join us for a while as a guest author. Kevin has had a significant influence on both John and me. He is an expert on corporate strategy and governance. He has a wide range of work experience, including a long stint as a Vice President and Managing Director at Monsanto, a Director at Competitive Dynamics, and an interesting mix of consulting and teaching in recent years.
Kevin works with John in the delivery of the Strategy in Action Executive Education courses, and they also collaborate on research and consulting.
Kevin has one of the best business minds that I’ve ever run across, and we’re thrilled to have him contributing here.
The second announcement is that my edited book, Handbook of the Knowledge Economy, Volume 2 is due out at the end of the month. I edited this with David Rooney and Greg Hearn, and I’m very pleased with the way it turned out.
If you follow the link you can see the full Table of Contents. There are some terrific chapters in it. John has one with our PhD student Sam MacAulay on using social network analysis in innovation studies, there is a good one from Roland Harwood and David Simoes-Brown (both from 100Open) on Open Innovation, and cracking chapters from Jason Potts, Richard Lanham, and Neil Kay as well. I’ve contributed one on digital business models, which uses the aggregate, filter and connect framework developed here on the blog.
The chapters are a mix of practical and academic, and the book will probably be a bit dry for many of you. And as is often the case with academic books, the pricing is structured more for libraries than it is for people. But if enough libraries buy it, a more reasonably-priced paperback edition should be released. I’ll be sure to let you know when that happens.
Finally, I have a favour to ask. If you haven’t connected up with me yet on LinkedIn, please do so – my profile is here. The favour I’d like to ask is this: if you’ve enjoyed reading the blog, could you please write a recommendation for my work here on LinkedIn? I’m starting to work on trying to get a book contract for the work around The Innovation Matrix. Since this one will be targeted at you more than libraries, it would be great to be able to show that the work here has been useful.
Thanks for the help!
And thanks for all of the tweets, comments and other help that all of you have given us here since we started the blog. It’s been great to see people respond to and interact with our ideas here. We really appreciate all of the support that we have received.
How Much Innovation Commitment Do You Need? The Innovation Matrix
Posted by Tim in The Innovation Matrix on 2 May 2012
Note: This is part of a series of posts explaining the individual parts of The Innovation Matrix. See this post for a description of the full model and what can be done with it.
Stars (at Risk)
How do you describe firms that have a high level of Innovation Competence but no Innovation Commitment? My contention is that these firms don’t exist – so I call them Unicorns.
However, there are some firms that are awfully good at executing new ideas and getting them to spread who don’t have huge levels of Innovation Commitment. This is a pretty interesting category. They are innovation stars, but the big question is whether or not that success is sustainable. I call them Stars (at Risk).
Characteristics
This is an interesting category because in some ways, this seems like the best place to be. Your innovation outcomes are excellent – that’s why you’re a star. But your investment is smaller than that of the World Class Innovators. This is because the Innovation Commitment for Stars (at Risk) is lower. Typically, this shows up by having fewer resources invested in innovation – less employee time earmarked for it, lower R&D spend, etc.
The same results for less investment has to be good, right?
Well, not necessarily. The issue with firms in this category is that because their innovation commitment is lower, their success is at risk. The tricky balancing act here is figuring out how much investment in innovation is enough. The fact of the matter is that if you want to make your innovation success a consistent, repeatable process, then it requires commitment.
Examples
The kinds of firms that end up in this category are often rising stars. They may have just made the transition from being a startup to being an established firm. Startups usually begin life as Accidental Innovators. As they cross the chasm into serving mainstream markets, they must add management capability and processes in a number of areas. One of these is innovation. As they do this, some make the transition from Accidental Innovator up to Stars (at Risk) by using this increase in structure to really start cranking out innovation.
Facebook a few years ago is probably a pretty good example of a firm in this category.
The other route to here would be an established firm that is a Fit for Purpose innovator who gets better at idea execution. I have a harder time coming up with examples here, because this is a much harder route to take. Once you are an established firm, with routines and processes in place, it is hard to make this jump in Innovation Competence without either changing your processes or increasing your Innovation Commitment.
Innovation Strategies
The critical issue for Stars (at Risk) is balance. They are innovating very well – that’s why they are stars. Adding more structure through increasing Innovation Commitment can be risky, because the threat is that doing this will introduce bureaucracy, which might actually reduce innovation outputs.
Here are some steps to take for firms in this category:
- Assess why you are successful: it’s likely that there is still an element of randomness to the success that firms in this category are seeing. Consequently, it is important to try to understand what is working so well. Try to figure out what works, and what it is that is driving your current innovation success.
- Identify ways to increase your Innovation Commitment: once you have a better understanding of why you are currently successful, the next step is to increase your Innovation Commitment in a way that supports your current strengths, eradicates current weaknesses, or both. It may be the case that there is limited top management involvement in innovation – particularly if you are a transitioning startup. Now would be a good time to increase that. Or to integrate innovation into your overall strategy. Or to increase the resources available for innovation by giving your people more time and opportunity to innovate.
- Figure out how to differentiate yourself through innovation: this ties in closely to the idea of integrating innovation with strategy. What is it that makes you distinctive? Now is the time to implement processes that will enable you to use innovation to emphasise this point of difference.
Overall, being a Star (at Risk) isn’t a bad place to be. After all, the level of innovation success is high, while investment is low. That seems like a great situation. The key issue is to work out how to make that success sustainable. Firms in this category have the opportunity to build a competitive advantage based on their innovation prowess. If they do this, then they’ll be a World Class Innovator.
What’s Stopping You?
Posted by Tim in experiments, selection on 30 April 2012
I solved a mystery recently that had been bothering me for months.
There’s about a seven minute walk from the main faculty parking lot on campus to my office. About halfway through this walk, there are two paths that you can take – one covers significantly less distance. I’ve always taken this shorter route.
One day last year, I came out of the parking lot, and saw a guy that is a few doors down from me walking about 100 meters ahead of me. He is not a fast walker. By the time we had gotten to the split in the routes, I had caught up with him. He took the longer route, and I took the shorter one.
The shorter route involves going in through a building that is connected with ours, then crossing through onto our floor. When I came around the corner into the hallway, Peter was back in front of me.
How could this be??
I was clearly a faster walker, and I had taken the shorter route. I’m pretty sure that he didn’t start running the minute he left my sight, only to fall back into a saunter once I could see him again.
I just couldn’t figure it out.
But, given the evidence, the longer route was clearly faster somehow. So that’s the one that I started taking.
Then last week I saw a chance to try another experiment. Victor was leaving our building at the same time as me, and I knew that we walked at about the same pace, and that he regularly took the longer route. So I took the short route to see what would happen.
We split up at the elevators in our building, and I headed across into the connected one. I took the elevator down, walked out onto the road, and went over to where the two routes meet up. Victor, who had taken the longer route, was 100 meters in front of me.
And that’s when I finally figured out what was going on.
The thing that makes the difference is not the route, or your walking pace. It’s how long you wait for the elevator. The elevators in our building are very fast, and few people use them. So you get one almost instantly, and it usually goes to the floor you want without stopping for other people. In the connected building, they are slow, and they are always stopping at nearly every floor. They are what make the shorter route slower.
I noticed a similar thing last week while I was driving around Silicon Valley. It’s the first time I’ve used a GPS in the car, and watching the estimated arrival time was interesting. Driving fast had no impact on the estimated arrival time. The only thing that changed it was getting stopped in traffic.
I’m going to extrapolate these experiences out to a general rule:
When you’re trying to get somewhere, how fast you’re moving isn’t nearly as important as how often you stop.
Now, stopping is important when we’re trying to figure out where to go. If you don’t know, then thinking about it is pretty useful.
But if you have a target, it is stopping that slows down your progress. You don’t have to run to get there, and plotting out the shortest route doesn’t really help much. The main thing is to keep moving.
If you think about the goals that you are trying to reach right now, answering this question can help you get there:
What’s stopping you?
(Photo from flickr/Beppie K under a Creative Commons License)
Mythical Innovators – The Innovation Matrix
Posted by Tim in The Innovation Matrix on 27 April 2012
Note: This is part of a series of posts explaining the individual parts of The Innovation Matrix. See this post for a description of the full model and what can be done with it.
Unicorns
In the last post, I discussed the three stable states in the Innovation Matrix. These are the places where Innovation Commitment is roughly equal to Innovation Competence. The consequence of this balance is that for firms that are Not Innovating Very Much, Fit for Purpose and World Class Innovators, the returns to their innovation efforts should seem about right.
It’s not the same story for the firms at the other two corners – firms that are either Bewildered or Unicorns. Firms can’t be Bewildered for too long because with no Innovation Competence, they are seriously overinvesting in innovation. If they don’t make progress and improve their competence, then they will eventually give up.
On the other hand, it would be great to be a Unicorn wouldn’t it? You don’t invest any effort into innovation, and yet you’re still very good at it. Well, you know what they say about things that sound too good to be true…
Characteristics
One of the insights that got me thinking about this Innovation Matrix is the fact that I keep running across firms that are actually reasonably good at innovating, even though they don’t put a lot of effort into it. This seemed like a paradox.
And it leads to a question: if firms can be pretty good at innovating with no effort, can they be also be great with no effort?
I don’t think so, and that is why this square is named for a mythical creature – the Unicorn.
The Accidental Innovators may be in a position where they have to do new things just to survive, or they have developed a culture that supports experimentation, or they are good at learning. Experimentation and learning from failure are two of the elements of Innovation Competence, and it’s possible to do these without explicit processes in place to support them. And some organisations are naturally good at generating, selecting, executing and diffusing ideas.
It’s the other components of Innovation Competence that are pretty hard to come by without trying. Doing both incremental and more radical innovation at the same time takes conscious effort, because it’s really hard to do. You don’t automatically have an innovation portfolio. And it’s hard to practice multiple types of innovation without making an effort.
That’s why Unicorns are mythical – they don’t exist.
Innovation Strategies
The main issue here is to avoid magical thinking. I was talking with Michael Raynor today, and he said an interesting thing: innovating in established firms is a solved problem, but the reason that more firms don’t do it is because it’s really hard. The analogy that he used is that anyone can run a marathon if you do the following things: run 20 miles a week for six months, doing at least four days a week, slowly ramping up the mileage. If you do this, you can run a marathon. If you don’t do this, you probably can’t.
It’s the same with innovation. To do it, you have to put in the effort. Because it’s hard work, most firms don’t.
If you expect to innovate without commitment, you might as well go to the forest looking for unicorns. It will be an equally productive use of your time.
PS: Michael gave a terrific talk today at PARC’s Power of 10 Conference – more on this next week.
How Much Innovation is Enough? The Innovation Matrix
Posted by Tim in The Innovation Matrix on 26 April 2012
Note: This is part of a series of posts explaining the individual parts of The Innovation Matrix. See this post for a description of the full model and what can be done with it.
Fit for Purpose and World Class Innovators
In a perfect world, as firms increase their Innovation Competence, their Innovation Commitment, should increase at the same rate. A mismatch between the levels of Innovation Commitment and Competence leads to an unstable state. If you are highly committed to innovation, but still not very good at it, it leads to frustration, cynicism, and the perception of wasted effort. On the other hand, if your Innovation Competence is high, but you are not very committed to innovating, then it is very likely that your success will fade over time due to lack of innovation process.
This means that there are three stable states in the innovation matrix: Not Innovating Very Much, Fit for Purpose, and World Class Innovators.
Characteristics
Earlier, I outlined the circumstances in which it is a reasonable to strategy to be Not Innovating Very Much. The identifying characteristics of firms in this square is that there isn’t much going innovation-wise. There is little Innovation Commitment, so there aren’t really any processes in place to support innovation. And there is also little Innovation Competence, so there aren’t too many new ideas being executed either.
Firms that are Fit for Purpose are better. They share all of the characteristics described for firms that are Thinking About Innovation, but they are significantly better at executing ideas. In practice, this means that they are probably reasonably good at the idea management process. They have the ability to capture ideas, the have a process for selecting the best ones, they can execute the ideas, and they can get them to spread.
Firms that are World Class Innovators up the ante in both categories. They are more committed to Innovation. This means that they have a full complement of processes in place to support innovation. And they are outstanding at executing ideas, they undertake different forms of innovation – not just innovating new products, the do both incremental and more radical innovation, and they manage a portfolio of different innovation efforts across multiple time horizons.
Examples
The examples of World Class Innovators are not always obvious. Of course there are firms like Google, Apple, and Procter & Gamble. But John and I have run across some much smaller firms that do pretty well too. You don’t have to be a huge multinational to fit into this category.
The firms that are Fit for Purpose are even harder to find. They are usually not undertaking innovation that grabs your attention. But they still consistently seem to come up with interesting new ideas that they have executed. A good example here is probably Microsoft.
Microsoft’s major innovation in the 1980s was actually their modular business model structure. Since then, most of the things that they have introduced originated somewhere else. However, to integrate ideas that arrive through collaborations or acquisitions still requires quite a bit of internal innovation skill.
Innovation Strategies
The first strategy to pursue is to concentrate your innovation efforts on whatever makes you distinctive. This is where the linkage between innovation and your overall strategy is crucial. If you are in either of the Fit for Purpose or the World Class Innovator categories, then your innovation effort and your innovation output are pretty well balanced. This is good. The critical question to ask then is: which of the two categories do we need to be in?
My answer would be: if you are differentiating yourself on innovation, then you need to be a World Class Innovator. However, if your point of difference is something else, then you just need to be Fit for Purpose, but you need to focus most of your innovation efforts on whatever your point of difference is.
Take a look again at the diagram that John uses a lot:
If you use this framework, then you can use best practice approaches to meet the minimum required levels in whichever areas you’re not concentrating. The one that makes you distinctive, however, is where you need to innovate. This is true both for Fit for Purpose and for World Class Innovators.
The second point is that for both of these, you need to have absorptive capacity. Absorptive capacity is one of those ugly academic terms that is actually fairly useful. Paul Hobcraft does an excellent job of explaining it, and you should check out his post. The official description is a firm’s “ability to recognize the value of new, external information (knowledge), assimilate it, and apply it to commercial ends.”
Research on absorptive capacity has consistently shown that in order to take advantage of good ideas that come from outside of your firm, you have to good at generating and executing good ideas inside the firm already. This point is critically important if you are looking into open innovation as a strategy, and it is especially important for firms that are Fit for Purpose. Here, you are often relying on adapting ideas that others have come up with – but in order to do this you need to have enough absorptive capacity to recognise good ideas, and to be able to execute them effectively.
So the prescription for firms in these two boxes is this:
- First, determine if your innovation capability is adequate for whatever strategy you are trying to execute.
- If it is, then keep doing what you’re doing.
- If you’re a Fit for Purpose Innovator that wants to move up to World Class, then you have to devise steps that will get you there. The first place to look is at both your Innovation Commitment and your Innovation Competence to find your current gaps. Then figure out which skills you need to add, and in what order. Then do it.
The good news about both of these categories is that they are stable. As long as your environment is stable, then you will be fine if you just keep doing what you’re doing. If your environment is changing rapidly, then you might want to think about how to become a World Class Innovator, because the best way to deal with uncertainty is to create the future yourself.
Upcoming Events
28 May - 1 June: John's Strategy in Action course
4 - 8 June: Tim's Innovation Management course.
Tim's book Handbook on the Knowledge Economy, Volume 2, co-edited with David Rooney and Greg Hearn, will be released on 30 May 2012.
Metrics
Tim was named #5 in the Top 40 Innovation Bloggers in 2011 at Innovation Excellence.
Tim and John were both named in the Top 40 Innovation Bloggers in 2010 at Innovation Excellence.
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