CPH127

As part of the recent AO2005 Innovation Summit, Morgan McLintic, a vice president and senior partner at Lewis Global Public Relations, interviewed David Kelley, the founder and chairman of product design firm IDEO and a professor of mechanical engineering at Stanford University. This is a four part post from that session.

From part one:

What are your thoughts about the state of innovation today?

Kelley: I’m happy to say that innovation is still playing as a
concept throughout the world. You know, it surprises me sometimes when
we sell innovation strategy services in different places: I’m always
thinking that innovation will have a pendulum effect, that it will run
its course and then come back. But the truth is, everybody is
interested in innovation. We had the slowdown in the economy, and now
if you look at where companies think they’re going, you’ll see that
they’re dusting off their old stuff and that they really want
innovation. If I were in some kind of fad business, I would be a little
concerned, but it seems like year after year people want to hear about
how they can become more innovative. I think the thing that has
changed a bit is that when companies come to me, they don’t necessarily
want or need a new product or service; they want to actually change the
whole innovation culture. They want to get so that they routinely
innovate in their culture. That, I believe, is a change—and a welcome
one.

McLintic: You’ve spoken in the past about fostering a culture of
innovation that becomes deeply embedded in organizations. If I were a
CEO, how would I go about doing that?

Kelley: I think the trick is trying to understand the barriers
to innovation in your organization. Some organizations are fear based;
others are focused on one aspect of the innovation equation rather than
the whole thing. The thing that’s interesting about building a culture of innovation
(and that I try to teach my students as well as the people who work
with me at IDEO) is that you need to have empathy for every aspect of
innovation. You have to be empathetic about technology, which we’ve
been very good at focusing on. And then you need to think about
business viability. As a techie graduating with an electrical
engineering degree, I was really irritated when I got out into the
world and found that businesspeople were driving the bus. I thought,
‘Well, jeez, it’s all about electrical engineering; if you don’t know
about semiconductors, you aren’t going to be important within an
organization.’ But it turns out that business viability is something
you must  understand. The same thing goes for human values.

Our bias—my bias and the thing I’m most excited about—is that there
exists a new way into innovation, which people are just beginning to
pay attention to. We know how you go in from a technological point of
view; we kind of know how you go in from a business point of view.And we’re now finding innovation by going in through a human-centered point of view.
Once you ask, What do people need?, you can pursue technical
feasibility and business viability from that point of view. This
human-centered view of innovation is just now starting to be funded and
valued in the innovation space.

McLintic: Is there a difference, then, between analytical thinking (the sort of logical left-brain way of thinking) and design thinking.

Kelley: Yes. What’s happened is that universities have been very
good at developing analytical thinking—making outlines, approaching
problems analytically—and I don’t want anybody to stop doing that. Now,
however, Stanford and other universities are beginning to focus on design thinking.
The reason for that is that if you take great analytical thinkers and
teach them ways to be better at design thinking, you get what we call
T-shaped people—people who have depth and an integrative approach to
thinking. This will lead to different kinds of innovations. We’ll be
looking in different places and finding different things.

In academia, we have these tall towers of knowledge, and mining those
towers of knowledge is really important. Let’s get more Nobel prizes;
let’s go as deep as we can. But I think that by putting different
people together and having them think in this integrative way, we’ll
achieve new kinds of innovation.

Read the whole series here.

STEEP
(Societal, Technological, Economic, Ecological and Political) was a new acronym I learnt at the Futuring 101 workshop on Friday, Sept 16th, the day before the Accelerating Change 2005 conference. A full day workshop, there were three lecturers, Dr Peter Bishop, Tom Conger of Social Technologies and George Gilder.

I was most impressed by Tom Conger’s presentation. He is a practicing futurist and founder of Social Technologies, a futures consulting firm based out of Washington DC. As he described his approach and methodology for future consulting, I could see why he had a client base like Nokia, Kraft and McDonalds. What I could not understand, however, is why aren’t those focusing on long term scenario building and forecasting for a 10 year span, as important, if not more than those consulting on short term, immediate return/profit innovation alone. While coming up with ideas for your next big paradigm shifting product is certainly valuable, the futurists take a longer term, holistic view and facilitate innovation in a more profound way.

Certainly, Conger shared with us the limitations of being a consultant and a change agent, the need for long term commitments to projects, and the sometimes off track requirements of Wall Street that business must meet. But more and more I could see how the work the futurists are doing can map on to the work the product planners, design planners and strategists do. Social Technologies is already hiring an ethnographer, in an effort to better understand the impact of the now on the future. I believe that both designers and design managers, new product managers and strategists, need to start taking a larger contextual worldview into consideration before recommending tactics for the short term.

NB: I found this blog post by Jon Udell which is an excellent and comprehensive overview of the conference.

Since its from the beginning of August, some of you might allready have read this Business Week article written by Roger L. Martin, Dean of Rotman School of Management on what differentiates traditional companies from "design-oriented companies".

Martin has identified the key characteristics  of the design-shop’s approaches to problem solving and argues that to generate meaningful benefits from design, corporations will have to change in fundamental ways. This will help them work like design consultancies and thus get the benefit of design by embed design into - not append it onto - their business.

So Martins basic idea is that companies that want to exploit the full potential of design and design thinking needs to work like design consultancies. Or at least use them as a benchmark.

Design organizations vary significantly from traditional firms along five key dimensions:

1. flow of work life
2. style of work
3. mode of thinking
4. source of status
5. dominant attitude

That an internal design department can be inspired by this and organize themselves as their external counter-part makes good sense. That an entire company (also the departments not traditionally related to design) can transform the way they work, organize themselves, create incentives and basically the way they think, based on this model is challenging to say the least.

For a long time I have been arguing that design thinking can be used as an "opportunity identifier" and "problem-solver" on a more general level i.e. that its also a relevant way of life for companies in relation to traditionally non-design related issues (e.g. as a method to improve internal processess, as a way to create new business models, as a way to conduct market research, as a method to create business strategy etc.).

I believe that Martin are right in saying that these 5 dimensions are improved by design. I also believe that Design Thinking can help traditional business in a much broader sense then "only product & service development and marketing". Even though Design Thinking presents business with alot of new methodology and skills, the true value of Design Thinking is that it effects the whole company, starting with its culture. This is also the reason Design Thinking can help companies innovate - it all starts with how people work. All the design tools and methodology in the world won’t help you if you work the wrong way.

But if Design Thinking really can have an positive effect on corporate culture and thus build the basis for innovation - shouldn’t we include HR people in the sense-making around it? What do you think?

Here we go again! It almost sounds like an ultimatum.

I would like to share with you something I read in the newspaper yesterday – under the title “Innovate or Die”.

Innovation may be one of the greatest buzzwords of our time. We reorganise production and co-operations now more than ever, and in relation to this innovation is still very interesting. However the question is how and in what pace this renewal happens.

Last week Morgan Witzel from the Financial Times wrote, that gradual readjustment often seems to be much more fertile than radical changes. He explains, that the world is full of companies, which have been very successful without being very innovative or have made radical changes.

Dell, for instance, didn’t invent the PC, Airbus didn’t design the first jet plane with room for people, Campbells soup in cans wasn’t the first of its kind, nor did McDonalds invent the hamburger. And still they have all been very successful. On the other hand was Enron appointed as the worlds most innovative company for six years in a row until the total breakdown in 2002, which also resulted in one of the world’s largest financial scandals.

Morgan Witzel argues that the conclusion to ‘Innovate or Die’ must be opposite. The companies, which have stuck to their original business plan and products instead of reinventing the world, have to a great extent survived.

Innovation is necessary for improving products and working processes to meet changing customer expectations, but the most successful – and profitable renewals – are usually those, that happens step-by-step and along the way.

Do you agree?
Is it a question of either or? Maybe Dell didn’t invent the PC, but the way they designed their distribution is in my opinion rather innovative.

Joyce writes about the importance of Sustaining a Culture of Innovation. I agree with her and the link to Mr. Schein is "right-on".

I think that we all can agree that the 21st century organization is enormously complex and difficult to
understand — and even more difficult to manage. A volatile mix of
dynamics are triggering changes in the workplace:

    * growing international competition
    * expanding industry deregulation
    * increasing diversity in the workforce
    * shrinking product life cycles
    * rapidly evolving communication and information technologies

As the complexity increases, effective managers must have a strong
knowledge of the people in the organization and the tasks they perform.
And they must have the skills to use that knowledge in practical and
flexible ways.

The importance of factors such as strategic organizational design,
informal networks, leadership styles, negotiation skills, and cultural
diagnoses cannot be underestimated. Each has a pivotal impact on an
organization’s performance.

So, take a look at this very interesting book. It was part of my readings last year – part of my Master Thesis.

And do I dare to ask? How do you cope with those difficult matters?

Read the rest of this entry »

I came across this research paper, "Crucial Challenges Facing Contemporary Global Corporate Strategies" by Camila de Sousa Braga and Hélène Bertrand and am posting their posited Model of Global Strategic Thought below.

1. Strategic actions need to be thought through using a rational and deliberative process, based on the corporations global objectives and targets, in order to encourage the collective learning process in complex organizations, but without being excessive to the point of putting the organization’s growth at risk.
2. The figure of strategist represented by the central command should coordinate the formulation, implantation and control of strategies. As organizations contain many potential strategists, the central command should be open to ideas and information from local units. This enables the organization to achieve a fit between external opportunities and internal capabilities, and retro-feed the system, in order to gradually acquire the characteristics of transnational corporations.
3. There should be a concern with content, focus, a sense of direction, integration,context and strategic processes, without however foregoing the quality of the creative process involved in the formulation of strategy;
4. Central command should be able to promote strategic changes, without losing sight of consistency, of the organization’s recourses and competencies, and preventing the organization’s life cycle ruptures from destroying it;
5. Perfect strategic management techniques, including the environmental analysis of competitive, technological, political, economic and social impacts and risk dimensions of capital markets;
6. Develop plans, standards, positions, project, economic feasibility studies, analyze needs of demanding consumers, manage information in complex environments and the entry into new markets, considering organizational strengths and weaknesses, and making the necessary adjustments;
7. Possess a group which is specialized in risk management focused on developing risk and return simulation techniques, in order to seek financial diversification in capital markets and also protect the organizations total value, faced with financial market imbalances and disintegration;
8. Use teams of catalyzers, including expatriates who move around the local units of the global organization, and who have planning expertise to stimulate different types of strategic behavior by encouraging insights, creativity and fresh syntheses, and seek to mediate conflicts and promote organizational integration;
9. Promote the integration of functional areas with networks between firms, with strategic alliances with local partners, with a value chain of key suppliers and key manufacturers and distributors, linked by data, so that together they are able to discover better profitable solutions and enhance their competitive position, as well as monitoring their competitors’ moves.

While the entire model is valuable for deploying and maintaining a transnational’s global strategy, I would like to point out No. 3 and No. 8 as particularly valuable from the perspective of continuous innovation as a globally competitive corporate strategy.

7-8 years back I bought a fantastic book – at that time “Net Gain: Expanding Markets Through Virtual Communities” was THE book for me and my business when dealing with consultant practices and business development in my company back then.

CPH127 is a virtual community - isn’t it? - and some of the learnings from back then is definitely in use here

Mr. Hagel is now living his book – with Edge Perspectives he is blogging about innovation. I hope that I’ll succeed when inviting him to take part in the conversation here at CPH127. What do you say – okay? Other important passengers we should invite on our flight?

While putting together a presentation, I found myself doing a Google Image search for the word Innovation. I was bemused with what I found; obviously a search for an image that represents a concept is a low-fidelity way of tapping the zeitgeist. I thought I’d share the first results of that image search, for your own consideration. What do you think?

I am trying to catch up here with some of the blogs that I subscribe to. I’ve been working hard on the wiki and therefore posting to cph127.com has been a lower priority. Now that has to change.

I wanted to point you to a blog post some weeks ago by Boris from the Corporate Innovation Blog on a HBS article on Operational Innovation. It features six steps:

1) Process focus - focusing your innovation efforts on
a very small area, means that you are also limiting the scope of the
benefits you’ll get from innovation.

2) Process owners -
Assign a process owner (a senior executive empowered to make the
changes needed) to own the process for the whole enterprise.

3) Full-time design team
- Use a full-time team to conduct the necessary process redesign rather
than asking team members to do this part-time. Then invest in them -
their education, methodology, etc.

4) Managerial Engagement
- Actively engage the senior management team in the implementation
process to make sure the projects don’t languish in limbo and to ensure
that departmental heads are released from their narrow focus to instead
consider the end-to-end implications.

5) Building Buy-In
- Engage participants throughout the redesign process so as to engage
and enable buy-in into the process as it is developed, and to reduce
the stress of future changes.

6) Bias for Action
- Develop a solution that provides most but not all desired
capabilities, get into the field quickly, and then enhance it over
time. This approach allows concepts to be tested, builds momentum and
credibility, and delivers early benefits that silence critics and sway
doubters.

Yesterday I attended a conversation on innovation hosted by MIG at Berkeley’s Haas School of Business. It was a small informal gathering, and Victor Lombardi had kindly invited me to join the discussion. It was kicked off by Scott Hirsch, a principal of MIG with a definition of innovation he had found on the web. I’d link to it, I think it’s wikipedia but as there was no source given I’m not wholly sure. This is what he used,

Innovation: An implementation of a new or significantly improved idea, good, service, process or practice intended to be useful. [ I would add the words revenue or profit in there, for the business context, else why innovate?]

And then they opened the floor to all the participants to take turns to answer three questions 1. who are you? 2. What do you do? 3. What you think of innovation? I’m going to cover that discussion in detail later, perhaps in another post or on my own blog as there is much food for thought, but for CPH127, I want to focus on one of the three short formal presentations that were given.

Harry Max, who is responsible for the Intranet at Dreamworks Animation, gave a short talk on his thoughts on innovation. What I really liked about his talk was that he had divided the presentation into two parts, the first part, where he said he was still trying to define innovation but here were four things that it wasn’t,

1. Reacting - Innovation wasn’t reacting, that is, responding to changes in technology or the market
2. Dreaming - Innovation was not dreaming, that is, envisioning a better future as dreaming was not time dependent but free floating.
3. Planning - Innovation was not planning, as that was nothing more than structured dreaming, or creating a road map to achieve a goal or get somewhere
4. Designing - Innovation was not designing, as designing is making an idea or concept tangible, solving a problem or making something better.

He then went on to say, that whatever innovation was, and as you all know, we have been struggling with an "Aha, yes" definition of innovation here on CPH127, it was a process that could benefit from these five key things from Improv. These were concepts that were conducive to atmospheres that were inherently innovative,

1. Trust.
2. Listening & Self-Awareness
3. Accepting and making offers (Yes, And…)
4. Moving into action with full commitment
5. Staying nimble

There is a lot that can be said about each of these points but I believe that they are self explanatory for the most part. I will however expand a little on the "yes, and…" full commitment concept. This is the opposite of "No, but" which is a negative, or a thought breaker, in the brainstorming process (unless you’re Irish, in which case it’s illegal) whereas, saying "Yes, and …" taking the thought further with full commitment continued the forward momentum of the innovation process. The complete explanation of the key points of Improv are here, but I must add that I was also taught at The Second City when I worked there was "Rule #1" =  "Make the other person look good."

He ended with pointing to Wells Fargo, Yahoo,Foveon and Toyota as innovative organizations whose culture supported these concepts from Improv.