Leading Innovation

What’s the leader’s role in fostering innovation?

My first guest expert was Anna Kirah, the former Senior Design Anthropologist at Microsoft, and now a principal at CPH Design in Copenhagen, Denmark.

Anna was trained as an anthropologist, and got started in corporate innovation when Boeing hired her to find out what people needed in a new airplane, what would become the 787 Dreamliner.  She studied the problems and challenges experienced by passengers and crew.

She was originally hired to create a survey, however surveys are not good at identifying the “gaps” – where people have a problem with the status quo yet don’t realize that anything better is even possible.

An example of a “gap” of this sort is the baggage handling process in airlines – there is a new product called a “Rampsnake” that replaces four baggage handlers, manually loading the belly of an airplane with luggage, with a flexible conveyor belt that snakes deep into the cargo hold and carries the luggage to a single worker who arranges the bags.

Is innovation just about products and new product design?

No, says Anna – in fact, she goes so far as to say that “the whole idea of ‘products’ is dead” – in her view everything is a service.  The key moment is when a person chooses to purchase your product or service.  The service starts before anybody knows you exist, and a product is part of a service.

Innovation, then, is much more than new product design – it has to do with improving the way companies work.

So, what is “innovation”?  To Anna, innovation is a product, service or organizational change that provides value to both the company providing it and the person consuming it.  It has to be meaningful, relevant, meaningful, valuable and useful.

Too often, in Anna’s view, we call incremental change “innovation” when it’s just an incremental change.  (I partially disagree with that.)

We are in an “Age of Turbulence” where we don’t know what we don’t know – and old school (or “Industrial Age”) attempts to solve modern problems, such as traditional cost-cutting driven by a finance department, are at much higher risk of failure.

We need to hire people who are not like ourselves.  We need to hire younger workers, and those who respond to the world and experience the world very differently from the way we do.

We need to look at the Value Chain with a “helicopter view” – from start to finish – to look for all the places we could innovate.

Consider a restaurant.  How do we entice people into the restaurant?  Why do people come in?  Why do others not come in?  We focus far more on the current customers and often fail to even identify those who aren’t yet coming in.

Next, look at the dining room experience.  What do you do when things go wrong?  Do you have a strategy?  In a Copenhagen sushi place, if you get your take-out and the restaurant doesn’t include the soy sauce, they’ll send you your soy-sauce by taxi — which is very expensive.  This mimics the Toyota Production System approach of highlighting mistakes and making them potent, so that systems fixes become more attractive.

The single most important thing is the final part of the interaction — how people walk away feeling about you and about their experiences.

How do I find the customer who didn’t walk in?  Try other restaurants, try people who never go out to eat.  Start with friends-of-friends (never use your friends, always go to friends-of-friends).  Ask them and study what they actually do.

Many companies spend enormous amounts studying customers, however the big opportunities are in working with customers and in breaking down silos.  If information travels through your organization by hand-offs across silos, you lose an enormous amount of accuracy and completeness.  It’s like the “whisper game” or playing “telephone” – the real information is distorted very quickly.

US Hospitals have found these handoffs to be a huge source of medical errors, because patients are handed off between workers, and often the information transfer at that time is incomplete.  In response the IHI (Institute for Healthcare Improvement) has proposed a standard called “SBAR” to formalize this communication: the handoff always includes reporting the Situation, Background, Assessment, and Recommendation.

You can break down silos by creating cross-functional teams that include customers.  At Microsoft, Anna worked with a 75-year-old couple who she worked with for eight years.  The developers and support people worked closely with them for all that time, and it helped the programmers to see who they were working with and working for.

NuCor Steel sends steelworkers to visit the customers, such as bicycle makers, to see their steel being used.  It helps them see the meaning and significance of their work.  You can dramatically raise morale just by connecting people throughout your firm with the customers.

At Microsoft, one product development team created a tele-presence product in part because the team members included a grandmother who wanted to see and hear her distant grandchild.

What do leaders do that help innovation?

First, avoid traditional cost-cutting.  Imagine an airline that tries to save money by outsourcing lounge staff – which is a key touch point with customers.

Second, share the problems with the staff.  Not only will you find out who your crisis superstars are, you’ll also figure out who wants to put their head in the sand – so if you do have to cut staff, now you know whom to cut.  Better than that, the staff are the source of most innovation ideas.

Third, by empowering staff to solve the big problems, you raise their morale because they are no longer powerless and helpless in the face of the crisis.

Fourth, become humble.  Share burdens and share information and don’t pre-judge answers.  Embrace tension and challenge.

Fifth, define the boundaries of what is in-scope and out-of-scope.  At the same time, Anna suggests you “zoom in” and “zoom out” in order to look outside our silos and boxes.

Sixth, start small and try pilot projects.

My second guest was Pamela Harper of Business Advancement Inc, and author of “Preventing Strategic Gridlock“.

How can an organization be systematic in innovating, and what’s the leader’s role?

Pam believes innovation is never an accident.  She recommends that a company start by asking itself “what does innovation mean to us?”  The conversation itself is an effective way to begin to align people around innovating as a shared value.

Some companies Pam has worked with will define innovation as “useful changes” where another defines it as “number of patents.”

Does innovation need to be breakthrough?  Can it be incremental?

Innovation stakeholders and partners can extend outside the walls of the organization – it can and should include suppliers and customers.

You want to share your biggest problem with your folks, however, the problem you think you have is often not your actual problem.  That’s why the Toyota Production System recommends asking “Five Whys” – in order to drill down to the real root cause.

Otherwise you innovate around a symptom rather than the real cause.

Suppose you have a surge of customer support calls, and they are not being handled quickly enough.  What’s the fix?  That depends on the root cause.  If the cause is a new manufacturing flaw, compounded by no instruction to support on how to fix it in the field, then any fix of the symptom will fail.

One of Pam’s experiences was with a company that tried to embrace innovation, yet the innovators were punished.

What happened was, the CEO announced a new culture of innovation and empowerment.  People began to innovate.  However the performance review process and the promotion process was not updated, so raises and promotions went to people who were reinforcing the old status quo.

These old patterns were blocking the desired innovation.

So one best practice when adopting innovation is to create checkpoints where we look for the early signs of that innovation actually happening.  Are people collaborating?  Are they investigating and trying new things?  Are we collecting feedback from the workers to find out what their real experience is?

As my friend Dave Moss used to say to spark conversations in project teams was, “I predict we are going to fail – why will that be?” as a way to unlock the concerns and fears of the members.  This gets people out of the “rah rah” cheerleader mode of only wanting to say positive things, and gives them permission to share the problems that perhaps only they see.

Then, for each potential cause of failure, come up with mitigations for each.

Another best practice is to bring in suppliers and customers as part of the innovation team.

Yet another is to manage expectations.  While you can fail without innovating, you cannot innovate without failing.  The goal is, to “fail small, fail fast, and fail forward” – which means what?

Failing small can be done with pilot programs and trails.

Failing fast means you have checkpoints.  One firm of Pam’s decided to answer every phone call by the third ring.  That’s a great one for a checkpoint – we announce the plan, and add “…by the end of the week.”  So you can find out quickly if there are problems.  Design these around your own levels of risk tolerance.

For checkpoints, earlier is better.

There are often cultural norms that prevent people from saying “I need this thing in order to move forward.”  Leaders need to give folks permission to report their blocks and ask for what they need.

Failing forward can mean having quick yet formal after-action reviews.  What did we think was going to happen? What actually happened?  What caused that?  How do we fix it?  That would be a great definition of a checkpoint.

Pam is strongly convinced that we are already in an Age of Turbulence – indeed we have been for as much as 20 years.  The pace of global change is huge, and we cannot count on much of anything remaining the same.

There’s a new pressure on firms regarding sustainability.  We’ll all be judged in future on this new criterion of sustainability.  Are we ready to be responsive in that area?  Wal-Mart is now increasingly requiring its suppliers to be more and more sustainable in their practices.

One great technique for handling this Age of Turbulence is to constantly ask, “What does this mean to me?”

Pam believes any effort to embrace innovation should start with the question, “What does innovation mean to us?”  Then ask, “What are the outside influences we need to respond to?”

There’s a lot of innovation in software programming around “extreme programming” and one of the common themes there is to deliver working software very frequently – perhaps every two weeks – in order to effectively deliver rapid prototypes and get frequent feedback from the customers.  That model is useful well beyond the programming universe.

Another valuable tool is to listen for lip-service agreement not matched by behavior change.  Look for problems that are repeated, where you think you fixed it yet the complaints continue.  Look to see if your costs are creeping up.

And never stop with what you think the problem is – always ask that next “Why?” and drill down to the deeper level root cause.

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