Today's news and tomorrow's business strategies

Two stories caught my attention this morning – one from Reuters on a new web site designed to bring crowd sourcing to fashion, and the other from booz&co’s strategy+business magazine – an interview with Henry Mintzberg "Management by reflection”.

Both were radical and inspiring. Both turn general business assumptions on their head – a key for innovation.

• For the fashion world it was that you don’t need to rely on retailers to fund up and coming designers
• With Mintzberg, it was the value of MBA’s, and in particular, the way we learn

“Management by reflection” was a great title. It gets straight to the heart of the problem – not just the solution.

Think about your business. Why do you do things the way you do? Because they have always been done that way? Or because it’s simply the best, most efficient way of doing it? If the latter, when did you come to that conclusion – last week, or years ago? More importantly, what evidence or proof was used?
In my experience, the majority focus on maintaining the status quo. They don’t want to rock the boat, risk ruining their reputation or career. They may feel overworked and under empowered, so why highlight something that may cause more work? Or perhaps they are complacent – the company has always prospered so why change? To those I’d shout “look out the window!” the market has changed.

Most people intuitively know right from wrong. But many “assume” someone else, far smarter than themselves has researched options. In turn, whether they agree or not, they “reflect” the attitudes and approaches of others to conform. There will always be exceptions, mavericks and inspired leaders, but they will be the minority … and not always privy to what happens in the day to day business of getting things done.

Back in the early nineties, I came across the work of Tony Robbins. He says beliefs and attitudes are shaped by the environment around us. Through a series of experiments and experiences (growing up), we build “assumptions” that direct our actions. Most of the time, we can’t even explain why – we put it down to intuition. But what if those assumptions are wrong? What if they are blinding or constraining us? Tony would encourage you to challenge them on a regular basis - free yourself from the bad and introduce positive ones.

In Art Kleiner’s interview with Mintzberg, MBA professors challenged their role. Instead of lecturing, they leveraged the wisdom of crowds. Each student has on average, 15 years of managerial experience. Each brings real world challenges to the classroom and now collectively aims to solve them. Not from decades old text books, but from practical experience. The idea is they have a better chance of getting an answer for today’s problems.

Tor Dahl uses this principle to help organizations lift productivity. Thus far, following a structured path, he has accumulated over ten thousand years of experience and improved productivity for each of his clients by a minimum 300 percent – without them shedding a single job.

I can’t help thinking about Mintzbergs students and Tony’s philosophy. What experiences have enlightened or clouded their judgment? If there are 30, 60 or even 90 students – is that enough of a sample to remove the blinkers? Probably better than the traditional method, but is there another way? What if you could capture all those experiments and experiences and test them – analytically – in other words “prove it”.

You can. Tor has written a whole thesis on it. But let’s take strategy as an example. It starts life as a hypothesis. A hypothesis built on experience and assumptions. A 2008 Harvard Business School paper looked at how you could test strategy with multiple performance measures. They studied the use of a Balanced Scorecard in a company that pursued a flawed strategy for a number of years. Their conclusion “formal statistical tests of the hypotheses underlying the firm's balanced scorecard and strategy map reveal problems with the strategy on a timelier basis.” The lesson here is that you must challenge the status quo regularly – never assume that a method or strategy will always be best. SAS Strategy Management has recently been updated to make this process easier than ever before – check it out.

The bigger challenge is that you probably don’t have all the data, because you have never perhaps questioned what really drives value – you’ve relied on assumptions and data that are easy to get. Dig deeper, ask the questions, begin collecting and proving.

And so to the article on crowd sourcing and fashion – what’s the link? Answer: unstructured data. People are communicating faster than ever. They are sharing experiences and preferences via facebook, myspace, twitter, blogs and online forums – everyone is connected. Through their words, they influence others. Take a look at your own online forums. Your customers are probably providing great insights based on their experiences – good and bad. The challenge is there’s just too much of it. It would take forever to merely read, let alone recognize the connections and act on them.

Take heart. Tor conducts many interviews. He listens. He takes notes – reams of the stuff. But then he uses text mining to find patterns. Patterns that help explain instinct. Patterns that cut through the noise to zero in on root causes and linkages to that over than ten thousand years of experience he has collected. Our language shares far more than numbers alone. But today’s technology makes it a snap to decipher.

The world is changing. Business is reinventing itself. Are you ready to leverage the experience of others, or do you assume someone else has that under control? What’s your evidence?

It’s as easy as one, two three right? … maybe.

Earlier this week I attended the first in a three part series hosted by The Economist – The Ideas Economy. The session was focused on “Innovation – fresh thinking for the ideas economy” held at the Haas School of Business, Berkeley, CA.

The conference was a mix of innovative ideas and best practices for innovation. Very inspiring and a credit to Vijay Vaitheeswaran the conference chair and global correspondent for The Economist.

Here are my top 3 observations:

1. Ideas are cheap

The real challenge is how to nurture an idea and bring it to life. There were many examples of how teams got into trouble, failed, lost respect and funding. The biggest risk in this scenario is the negative impact on the flow of good ideas and more importantly, the number of people prepared to run with an idea.

Without innovation, we become a “me too” and face competitive threats, so you need to keep that conveyor belt of ideas flowing – particularly when ideas are cheap and the economy is about to surge.
2. Innovation isn’t for everyone

Innovation is about taking an idea and making it work at scale. That takes considerable skill/ experience. Paul Saffo, a visiting scholar at Stanford University said this was an “elite” group - one not for the faint at heart. Innovation happens through experimentation, failures and “restarts”. Bound it in a predetermined plan or process and it isn’t about innovation - it’s about optimization.

Ed Catmull, President of Pixar talked about restarting Toy Story 2. Half way through the film they realized it would flop, so went back to the beginning and (pardon the pun) got their story back on track. He talked about the need for management to provide both the innovators and the vision 100% support.

In his view, management act as a mentors and facilitators – they are not typically as smart on the subject or as creative as the innovators and should never assume otherwise. Their role is to help the innovator reach the finish line – not pass judgment.

Ed had a great tip. When an innovator hits a block, get other innovators to help. Each person tries to rip the current work to shreds in order to unearth the root cause of the problem. This is done behind closed doors as a group of peers. No notes are taken – this isn’t a blame game. It’s done in a constructive way and is seen and received as a positive.

The idea is that innovators are too close to the subject to see their own errors – fresh eyes (from peers) bring perspective and get them back on track. Management facilitates the process, ensure people speak their minds and provide the innovator with plenty of TLC and support – particularly during tough times – after all, even the greatest can lose their way!

3. True innovators add personality to the project

If not, they are probably detached from the idea and won’t have the perseverance to make it a success. The reality is that innovators are going to face rejection – both within their own company and outside. The trademark of a great innovator is their ability to soldier on – even if they are told by superiors to stop.

I can’t remember whether it was Amy Edmondson a professor at Harvard Business School or Kris Halvorsen, the Chief Innovation Officer at Intuit that said your best innovators are those that come to work each day willing to be fired over their project. Regardless, both had great insights on this topic.

The discussion prompted an example from the audience. A guy at HP had an idea and was given room to execute against it. Midway, budgets and priorities came under attack and he was told to stop. He put up a good fight to defend it, but ultimately he was fighting with politics.

Robert Reich, a professor at Berkeley and an ex secretary of labor for Bill Clinton provided a great definition of “Politics”. He said “Poli” comes from the Latin for “many” and that “tics” are nothing but bloodsuckers – you don’t stand a chance!

Our innovator at HP pursued the project in his own time – he was personally committed to it. When the politics were right, he delivered the completed idea – it went on to be a best seller and he was given a “golden foot” award for perseverance.

Scott Berkun, author of “the myths of innovation” reminded us of the early days at Google. Larry Page and Sergey Brin had their page ranking ideas turned down by AltaVista and Yahoo! – the dominant search companies of the day. All of which tells us that innovators may not be the best communicators and the general public not smart enough to spot a great idea until it has been proven over and over again.

As Geoff Moore explained in my book “Radical action for radical times”, innovators tend to over engineer things. They are great at cracking a problem, but few others recognize or understand how or why they did it. At some point, they have to hand over to “deployers” – people that dumb down the brilliance and prepare the offer for scale. In turn, the “deployers” get too wrapped up in serving the customer to realize they are eating into margins and have to handover to “optimizers”. Throughout, the role of management is to ensure that the appropriate skills and resources are deployed at the right time.

Perhaps it is as easy as one, two, three after all:

• Create a never ending conveyor belt of ideas
• Protect and encourage the innovators
• Use the most appropriate resources throughout the innovation life cycle

What’s your experience?