207 Innovation Is A Symphony, A Harmony, And A Romance

To be an effective business leader these days takes more than the usual business skills. What has become necessary is developing "soft skills". The CEO’s position now demands the skill set of a symphony orchestra conductor. That means having a deep love not only for the company but also for all its stakeholders. While no one seems to put it this way, the healthiest organizations run best when the CEOs romance their people. That deep caring is critical when balancing and harmonizing the many dynamics in the organization. Orchestrating that special music throughout the company is what innovation is really all about. When the corporate citizenry feel valued and important, they become more disciplined, more intense and more creative. Not every CEO has the courage to be a romantic or an innovative pacesetter.

Who really wants to innovate? Who wants to take small, manageable risks in order to achieve a blockbuster success? Who is deliberate in planning a breakthrough?

Stuck in the Status Quo

According to Keith McFarland (author of The Breakthrough Company, a five year study of 7000 growth firms) only 14% of CEOs want to transform their companies. The truth is the other 86% really just want to preserve their status quo; they want their future to be an extension of the present… as if going from "here” to “there" is some type of linear, predictable process. Managing the present with (1) performance excellence and (2) continuous improvement amidst (3) astonishing complexity and (4) hyper competitiveness, all this seems to be more than enough for them. Who would want to do more than just navigate “the numbers” for the next quarter or two? "Get lean. Stay lean. Push marketing for another 5%, somehow." These three (lean, lean, push) items often top the CEO’s wish list.

The uneasy feeling comes from (1) risk aversion, (2) discomfort from uncertainty, (3) the unwillingness to cannibalize faltering business units, and (4) the inability to do more than project the future from past success. In a fast changing world filled with technological and social change, treading water is a scary thought. The reality is driving the numbers from current operations is the lifeblood and sustenance of any company: it will provide the cash flow for future growth. The current "performance engine" must fund future performance engines, whatever those engines turn out to be.

Risky Business

Innovation is thought to be a very risky business (and it can be if not well managed) but the risk of staying the same is also be fraught with peril. The gnawing feelings are too often not acted upon as the tyranny of the urgent tends to offer a salve to both conscious and unconscious concerns.

Still some of the 14% of CEOs manage to be proactive, balancing the needs of the present with the need to invent their future. Condemning the dying parts of the past is always painful. Judging what to keep and what to throw away compounds the pain but making such decisions eventually makes everything easier. Realizing that risk really can't be avoided, and that doing nothing is in itself is a very real (and possibly an even greater) risk, adopting a well-thought-out proactive plan of change is perhaps one of the best ways to achieve a more peaceful business life. Uncertainty tends to no longer matter as soon as commitment is made to create a new future.

Innovation Ambition

Authors Chris Trimble and Vijay Govindarajan (T & G) of the Tuck School of Business say "innovation begins with ambition" as leaders go beyond the realm of the “mere” possible. They take on smaller, bite sized problems, within their capabilities that they deem "worthy" of their corporate resources. They decide to build new capabilities and deepen learning in their core skills. Building new skills not only tends to ensure the long-term viability of their company as a whole, but it also satisfies the itch to seek out new opportunities.

Unfortunately, the moment a commitment is made to innovate the future, "ongoing operations" (the current performance engine) naturally goes into a resource competition with those responsible for developing that future. That political battle is the nature of the beast. It's why innovation is frustrating and difficult. It's why CEOs need to act as romantic symphony conductors.

Resistance

It falls to the CEO to anticipate the specific organizational dynamics that will confront any real effort to innovate. Organizations need to be organic and evolving; “homeostasis” is the watchword for counteracting growth and becoming sterile. To overcome this resistance to change a CEO must be the chief driver of the innovation initiative(s) – – it's a job that can never be delegated. The CEO is the only position with the knowledge and power to balance the competing demands for scarce resources of the current performance engine with the need to create new performance engines. This can only be done with CEO leadership power and romance.

Ironically, innovation runs into even stiffer resistance after it begins to demonstrate a show of success and promise. T & G state "innovation and ongoing operations are always and inevitably in conflict" because "organizations are not designed for innovation but for ongoing operations to deliver consistent and reliable performance". That's why power from the top is critical; innovation champions and heroic inventors on their own will always be crushed on the wheel of predictable earnings. That's why the CEO must balance all parts of the orchestra.

Harmony & Collaboration

The unlikeliest partnership can be made to work powerfully when natural competitors become collaborators. According to T & G, the CEO achieves the resource balance (between ongoing operations and the commissioned innovators) by taking six specific steps:

  1. Divide the Labor
  2. Assemble the Dedicated Team
  3. Manage the Partnership
  4. Formalize the Experiment
  5. Break down the Hypothesis
  6. Seek the Truth

Dividing the Labor

Work on the innovation initiative can be shared between (a) staff in day to day operations and (b) those charged with developing the approved big idea. In that way, the assets and resources of the current performance engine can be leveraged for maximum benefit. Basically this means having the people in ongoing operations solving problems in the way they usually do, at their normal pace, under their same managers, at their own workstations. Work outside of the usual routine must be given to those on the creative team. The symphony conductor needs to feature the soloists in harmony with the orchestra.

Assembling the Dedicated Team

This team consists of the best people available both within the company and those that can be hired or contracted from without. These “go to” people form a talent pool that needs to be organized as if it was a new firm being developed from scratch. In smaller companies, the people involved will not be totally dedicated, working on the initiative only on a part-time basis. This is fine; the point is about their special skills, devotion and uncommon focus.

The goal is to create an organization (within an organization) that is qualitatively different than the core company with its tried and trusted business routines. That's why having outsiders, youngsters and even corporate mavericks with fresh perspectives are so important. Every process is considered:

  • Incentives & rewards (psychological & financial)
  • Metrics
  • Titles & structure
  • Job descriptions
  • Interaction methods
  • Cultural norms
  • Supervisory power
  • Forces that shape behavior

Not everyone is comfortable in this environment: insiders and team members who find themselves uncomfortable should have an "out" to go back to ongoing operations. The “conductor” knows where to locate each instrument.

Manage the Partnership

The core company or current performance engine seeks to make every task, process and activity as repeatable and predictable as possible. The innovation team trying to create new performance engines is by nature the exact opposite: it lives in an uncertain, non-traditional, exceptional world of disrupting routine, status quo and assumption. Polar opposites can be synergized but only by anticipating and mitigating the inherent and inevitable strains and conflicts. Left unto itself tensions and rivalries will develop and may even escalate hostility or all-out war or perhaps, more dangerous, guerilla tactics.

Thus the senior leaders, led by the CEO, must constantly build and reinforce a relationship of mutual respect. Both functions must be seen as doing good work that is vital to each other's future. Conflicts must be addressed from high places and quickly resolved. Rewarding shared staff from ongoing operations with incentives and targets is very helpful in keeping the collaboration "well oiled" and energized. There is a tendency for the innovators to get all the glory so building mutuality in success with the small things is very important. Hiring contract labor to help the shared staff with their routine tasks will help everyone put more heart and energy into their "big idea" initiative. Communication and alignment about the need for both the conventional and the innovative is the key to developing peaceful co-existence and harmony. Creative brilliance must be supported by the whole orchestra.

Formalize the Experiment

Each big idea pursued must be separated into its own project with its own distinct custom plan, unique forms of metrics and cost categories. Assumptions must be identified and then tested for their truth. Metrics need to be ranked and then turned into a scorecard that measures progress and success. The numbers are all about learning. Learning is a process of turning speculative predictions (or assumptions) about the big idea into reliable predictions; in other words, learning is about converting assumptions into knowledge. Experimenting is about writing down the plan and the prediction - - the “hypothesis” of what is expected to happen and why - - and then analyzing the differences between the expectation and the reality. Learning comes from the analysis and understanding the disparity between prediction and outcome. The discipline of openly discussing the data and results leads to the better understanding of what will work. In this manner failure can yield corporate learning and enable different approaches for the future. This progression minimizes the cost of failure and maximizes the probability of success. A brilliant symphony comes from extreme work in the details.

Breakdown the Hypothesis

Both diagnosis and learning from the unexpected happen more quickly when there is a clear hypothesis or predictive statement of cause and effect. In the early stages of the experiment, sketching out diagrams of cause (and potential) effect on large pieces of paper or whiteboards is far more helpful than a bunch of data on a spreadsheet. The sketch represents a set of conjectures about relationships, causal actions, possible outcomes as well as subsequent outcomes. The sketch creates a cause-and-effect map that creates a mind-map of the unknowns as well as linkages and assumptions. After best guesses are made, then relationship predictions can be tested with score-carding dashboards. Eventually the most critical unknowns will be identified. The whole orchestra needs to know and understand what is going to delight the audience.

Seek the Truth

As learning takes place, it is critical to be aware of emotions, attitudes and biases that will distort the interpretation of the data or results. Our human trait of being able to filter out data that does not reinforce our own pet theory can be lethal. Pre-existing beliefs make it hard to see straight and rationally. A cross-disciplinary business perspective from very different people on the team will help with the discovery process. Further, setting up “accountability" for (1) customizing planning processes, (2) results testing, (3) learning and new action in the uncertainty - - in a fair, disciplined and motivational way - - is a key responsibility for the CEO. This means creating a right mix of incentives and modestly positive rewards when initiatives fail despite good leadership. Motivational accountability greatly reduces risk and paves the path for a more certain and lucrative reward. Only the true learners will achieve breakthrough innovation. Emotional maturity, self-awareness, personal sacrifice and working for the whole orchestra's greater good is where the harmony lies.

Keeping both ongoing operations and the creative team closely engaged in a rigorous learning process has the potential for unprecedented growth in the company. Humility, respect and visionary leadership on the part of the CEO can achieve this. Jim Collins in his groundbreaking Harvard Business Review article Level 5 Leadership points out that the most effective chief executives avoid the limelight in order to bring to the surface the very best in the people throughout the organization. It's as if they establish a “collective will" to bring about the mission and vision of the company. Above all they love their people beyond any romance. Acting as a collective in harmony brings about the best of innovation. Innovation is a symphony of its own.

T & G suggest forward-looking CEOs must do three things to reinvent their companies to meet the challenges of their rapidly changing marketplaces:

  1. Keep managing the present
  2. Selectively forget the past
  3. Create a new future

Most business leaders work under the assumption that their industry is relatively stable and static; however, these are the ones that realize - - too late - - that changing the direction of their company actually takes years while their business environment is evolving and shifting far more rapidly than their expectations. Critical change actually takes place in a nonlinear quantum leap fashion.

If you are supported by senior people invite them to join you in completing this useful exercise that will help the CEO balance the demands of both managing the present and creating future:

Write down all the important initiatives underway (or contemplated) in the company. Put them on 3 x 5 cards and separate them into the three categories above. Now might be time to leave them on a wall overnight and then revisit them the next day to be sure all the initiatives Are covered and in place. Put business performance improvement ideas into pile one. Put obsolescent or underperforming products and services into the second pile. Ideas for the far future, several years out, into the third pile. Then rank order the ideas in each pile. Consider the values, dreams and vision of the stakeholders, founders and other people who energize the company. Finally balance or harmonize what can be done now, over the course of the next 24 months. Use this analysis to develop a top 10 with at least two cards from each category. Have one card from each category to work on during the coming quarter. In order for there to be a future, the present needs to be well managed. Parts of the past need to be abandoned. Then go catch up with the future.


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