Part 3 - Three Innovation Distinctions

by Stephen Shapiro

This is the third of my "Innovation Distinctions" entries.

In the first part of this series, I wrote why you should focus on "Challenges, not Ideas." Next, I addressed the distinction of "Process, not Events."

In this final entry, I discuss why innovation requires "Diversity not Homogeneity." Be sure to read the previous two articles before reading this one.

As mentioned in the other blog entries, I first shared these distinctions with a group of speakers and authors who were brainstorming ways to improve the learning experience for other speakers and authors who attend their conferences. Here's the Catch 22: Having only speakers and authors speaking to other speakers and authors does not lead to much creativity. Most of the "ideas" presented are well-worn and don't address the "real world" outside of the industry.

Therefore, my last suggestion to the group was to increase the level of diversity at these learning experiences. This would provide a wider range of ideas, suggestions, and points-of-view.

How does diversity apply to an organization?

Diversity can mean a wide variety of things:

• Diversity of race, creed, color, sex, etc.
  
• Diversity of innovation styles
  
• Diversity of disciplines

I won't address the first point as that has been a topic of discussion for decades. Let me tackle the next two.


Diversity of Innovation Styles

The second point ties directly to my Innovation Personality Poker system.

In the card-based game, I discuss the four primary innovation styles: analytical, creative, planning/action, engagement. Most organizations favor one over another and therefore do not have a good balance of styles. There's a reason for this.

Although homogeneous teams are often more efficient (i.e., you get things done faster), having a bunch of "yes men" working for you is not the answer for long-term growth. When people think too much alike, new ideas struggle to surface. In these homogeneous climates, innovation and growth (i.e., effectiveness) suffer.

The essence of successful companies, then, is the ability to be both efficient and effective. They are able to focus on both production and innovation, not just doing things right but also doing the right things.

There's plenty of evidence that team diversity translates directly into corporate profits. Sigal Barsade and colleagues at the University of Pennsylvania's Wharton business school studied top management teams at large corporations in the United States. Interestingly, the more diverse the functional roles of the members of those teams were, the greater the average, market-adjusted financial return in those companies. Diversity of the top leaders translated into bottom-line results.

In Personality Poker, there are four key concepts:

• You need people in your organization "play to their strong suit." That is, make sure that everyone understands how they contribute to and detract from the innovation process. This includes ensuring that you have the right people with the right leadership styles in your organization.


• As an organization, "play with a full deck." You must embrace a wide range of innovation styles. Instead of hiring on competency and chemistry, also hire for a diversity of innovation styles. Every step of the innovation process must be addressed. You need people who are great at conducting research, delivering results, developing plans and reports, building relationships, and creating new ideas, amongst other things.


• "Deal out the work." That is, you must divide and conquer. You can't have everyone in your organization do everything. Instead, get them to divvy up the work based on which style is most effective at a given task. You can't have everyone generating ideas, or focusing on planning.


• Recognize that in order to treat everyone the same, you must treat everyone differently. People have different needs in terms of how they like to be managed, how they like to be praised, and how they want to contribute to the organization. In order to attract and retain a well-balanced organization you must be prepared to treat people as they want to be treated. To do this, you must overcome the inertia of your company's personality and embrace the needs of the individual personalities.

I could write a whole book on the value of diverse teams. Oh, wait, I did! My Personality Poker book will be published by Penguin's Portfolio imprint Fall 2010. Throughout, I provide examples of, and evidence for the value of having a diversity of "styles" within your organization.

But what about the third type of diversity: The diversity of disciplines.


Diversity of Discipline

A discipline is any area of expertise like biology, chemistry, physics or mathematics. You can have an organization comprised of diverse innovation styles while sharing only one discipline.

A while back, I spoke with Al Bredenberg, Senior Researcher from ILO Institute. He subsequently wrote an excellent blog entry on the topic of diversity where he quotes me. He also mentions a Harvard Business Review article by Lee Fleming that suggests that companies with less diversity of discipline produce better overall financial results than highly diverse ones.

"The financial value of the innovations resulting from such cross-pollination is lower, on average, than the value of those that come out of more conventional, siloed approaches. In other words, as the distance between the team members' fields or disciplines increases, the overall quality of the innovations falls. But, my research also suggests that the breakthroughs that do arise from such multidisciplinary work, though extremely rare, are frequently of unusually high value - superior to the best innovations achieved by conventional approaches... When members of a team are cut from the same cloth, you don't see many failures, but you don't see many extraordinary breakthroughs either."

However, as the diversity of disciplines increases, "the average value of the team's innovations falls while the variation in value around that average increases. You see more failures, but you also see occasional breakthroughs of unusually high value."

Therefore, although there is value to diversity of disciplines, the challenges seem to outweigh the benefits.

What's the solution to having a diversity of disciplines without having to deal with the inherent complexities?

Open Innovation. By working with companies like InnoCentive, you get the value of discipline diversity while having few of the downsides. You get the take advantage of a wide range of experiences while only paying for successful solutions.

I will write more on Open Innovation in subsequent entries.

The Bottom Line

Diversity can create incredible value for an organization. It can help facilitate the innovation process. It can help increase the quantity and quality of breakthrough ideas. The key is knowing the right way of managing and engaging a diverse set of perspectives.

Related posts:

• Challenges, not Ideas
  
• Process, not Events

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Stephen Shapiro is the author of three books, a popular innovation speaker, and is the Chief Innovation Evangelist for Innocentive, the leader in Open Innovation.

Innovate or Die - Tactics #17-42 of 110

by Tom Peters

This is the second of four parts of the list of 110 Innovation Tactics.

• Click here to view Part One - Innovation Tactics #1-16

We Are What We Eat. (And Who We Hang Out With.)

17. Hang out/"We are what we eat" We are what we eat/We are who we co-habit with, and variants thereof are of infinite importance to the effective innovator. Managing "the hang-out factor" is of the utmost strategic importance - and usually an under-tended lever.


18. Hang out/Basic axiom. Hang out with weird - get more weird. Hang out with dull - get more dull.


19. Hang out/Customer portfolio. Consider one's customer portfolio. Perhaps a few giant customers account for 85% of one's revenues. One must listen to them, but the odds are that these giants are relatively conservative. Hence one must purposefully and urgently recruit oddball-"on the frontier" customers. Their revenue stream may be limited, but these folks force you to play with novel products and services to meet their peculiar needs. Hence careful construction of the total customer portfolio is an essential practice.


20. Hang out/Customers everywhere. Customers at various staff meetings, on various teams, etc.


21. Hang out/Our folks at customer sites. Imbedded staff at lead customer locations. The success watchword is "intermingle."


22. Hang out/Vendors/Outsourcing Partners Portfolio. Instead of a few "strategic suppliers," as important as they may be, one needs "far out" vendors and outsourcing partners whose innovations force you into an innovation mode. I.e., repeat #19 and #20 and #21 for vendors.


23. Hang out/Locale (Hotbed). Company or unit HQ location is important beyond measure. Working in a "hotbed" (e.g., Cambridge MA and biotech) is an immeasurable spur to innovation. (Beware: Hotbeds eventually become lookalike and-or complacent - think Detroit, 1920 vs 1980-2008.)


24. Hang out/Team placement. An offsite team in an innovation hotbed often takes on the attributes of a gang of on-the-make pirates. A team near a plant takes plant-derived considerations particularly seriously. Etc. Want weird? Start with consideration of locale.


25. Hang out/Space management. Space management is arguably the singlemost important strategic lever. Designer moved next to the CEO? Design vaults up the importance scale. Etc.


26. Hang out/Consultants Portfolio. Types of consultants brought in influences who we talk to-live with, how we approach problems. There are "hot" consultants, and "not-so-hot" consultants. Again, purposefully and strategically manage the portfolio.


27. Hang out/Crowdsourcing. Crowdsourcing stands a good chance of radically changing the world of innovation! You simply must experiment vigorously. The tool is powerful, but the process is not automatic - it needs lots of thought and oversight. (And it applies to every nook and every cranny of the enterprise - and to small enterprises.)


28. Hang out/Clubs, learning networks, etc. Electronic, physical, any and all formats. Turning the enterprise into a de facto university, with learning and growing honored and ubiquitous and fast and furious and fun, is the point here.


29. Hang out/Staff. Where staffers live relative to their line customers is critical. A finance person imbedded in the logistics department, for example, changes both perspectives.


30. Hang out/Lunchmates. Never waste a lunch!!!! Lunch is 5 opportunities per week, 220 opportunities per year, to get to know interesting outsiders, folks from other functions, customers, vendors, frontline staffers. This is remarkably important. "Lunch management," a "lunch culture" is not an amusing aside.


31. Hang out/Meeting Attendees. We spend enormous amounts of time in meetings. Never waste a meeting. Invite interesting outsiders, folks from other functions, etc. (See #30 immediately above.)

Diversity Per Se. Sine Qua Non.

32. Diversity/Every flavor/Management & Measurement. Diversity with a lower-case "d." Black, white, brown, purple ... tall, short ... North American, Asian ... public school, private school, no school ... etc. ... etc. (Etc.) Decision-making of every sort is far, far better with diverse views of any flavor. Period. I have come to view this as a gamechanger - for a 6-person project team, a 20-person company, a huge enterprise.


33. Diversity/Hiring. Search every oddball corner of the world for interesting people. Hire dull, get dull results. (Duh.) (This holds across the board - and irrespective of the size of the enterprise.)


34. Diversity/Freak Acquisitions. I'm an enemy of 99% of mega-mergers, and a vigorous ally of small acquisitions that allow skipping steps in obtaining interesting new pieces of the puzzle for an enterprise. This can be the purchase of an intriguing 2-person accountancy by a 15-person accountancy, as well as a small-acquisition overall strategy by the likes of Cisco Systems.


35. Diversity/Promoting. Diversity of every stripe at every level, achieved by design. Remember, diversity-qua-diversity works.

100% Enthusiasts. 100% Innovators. HR = Supercool.

36. "What do you think?" Innovation - an innovation culture engages one and all. (All = All.) Getting everyone to think about improvements small and large comes from, de facto, constantly asking "What do you think?" - perhaps the 4 most important words in the innovator's vocabulary. Treating every voice as valued yields more value from every voice.


37. Hire enthusiasts. Innovation is about active engagement. The more enthusiasts, the more people want to "opt in" and fully engage. Enthusiasts are innovators almost by definition. (Or, at the least, non-enthusiasts are guaranteed non-innovators.)


38. Promote enthusiasts. Enthusiasts are important in all roles. Enthusiasts as bosses is a "no option" imperative - if you want to create an "innovation machine" in organizations of any size.


39. Innovative behavior is the best predictor of innovative behavior. Want to discover an innovator? Best test: a history as an innovator, apparent at the latest by, perhaps, age 10 or 12 or 14.


40. Re-invent HR to be a Center of Innovative People. It's not that HR has to "support" a culture of innovation. HR must be a chief carrier of the culture of innovation, must model innovative behavior 100% of the time. An "innovation culture" in HR is arguably more important than an innovation culture in marketing and new product development. (Think about it.) (Alas, this is ever so rare.)


41. Get the incentives right! Profitability, quarter by quarter, is essential - in organizations of all sizes. But a commitment to innovation as evidenced by the likes of share of revenue from products introduced in the last 24 months should be a major component of discretionary compensation. Equivalent measures must be developed for logistics, purchasing, HR, IT, etc. Incentive schemes must "speak" innovation.


42. Get the evaluations right! Per #41 immediately above, the evaluation process must focus on risk-taking, innovations launched, "excellent failures" as one exec puts it. Department bosses might be evaluated by comparative innovativeness at similar departments in peer-competitor firms. Etc. Innovation-in-evaluation is a 100% affair.

If you missed Part One - Innovation Tactics #1-16 - Click here.

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Tom Peters is the author of "In Search of Excellence" and twelve other international bestsellers, and a consultant, columnist, seminar lecturer, and more at the Tom Peters Company

Innovation Perspectives - Fighting our Stereotypes

This is the second of several 'Innovation Perspectives' articles we will publish this week from multiple authors to get different perspectives on "What roles do engineers and marketers play in an innovation setting, and what conflicts can arise based on their perspectives and approaches?" Here is the next perspective in the series:

by Mark Roser

People interested in the topic of new product development and innovation are likely already familiar with many aspects of bringing technologists together with marketers. There is no shortage of opportunities for both groups to take credit for success but lay the blame for product problems with the other group.

Having studied marketing at Wharton while getting my engineering degree at the University of Pennsylvania, I was fortunate to start my career seeing how both types speak about the other.

Engineers can caricaturize marketers as talkative, image-sensitive, fashionistas who are more interested in socializing than in working. Marketers can caricaturize engineers as dull, narrow-minded techies who buy generic shampoo and could use a change in wardrobe.

These age-old stereotypes are quick to point out the whimsical notions of our varied personalities, but rarely speak to the value of what each of us can truly contribute.

Innovation programs can only succeed when a diverse set of skills, ideas and capabilities are brought together. If two people think the same way on a team, one of them is redundant. Yet, though we all logically know this, we often find it a challenge to feel comfortable working with people who are different from us.

If these assumptions are true, then we see that the success of innovation is related to a team's capacity to endure discomfort.

Discomfort can arise from many points of difference:

• Ownership of the product - Who gets to prioritize the specifications?


• Organizational boundaries - Who holds more turf?


• Ego structure - Where do we find self-worth?


• View of the client - Am I able to see the world through others' eyes?


• Language - Do I speak the same language? (Jargon, idioms, private jokes)


• View of technology - What features are possible, are required?


• Sense of urgency - When do we need results?


• View of success - Is success measured by revenue, by engineering marvel?

Solving these differences is not something that can be addressed in a one-page article. But, the solutions to each of these challenges requires three foundational elements:

• A willingness to accept a level of discomfort, knowing that it is a required part of the game of innovation (New ideas, new people, new personalities, new thinking)


• A willingness to be a model of tolerance for others' thinking, knowing that if we are open to others, they will be more likely to be open to us (and conversely if we step on others ideas or solutions, they will step on ours)


• A willingness to be stewards of the customer's best interest and to hold the customer's needs as a higher priority than any conflict between us and others on the team

Through these three fundamental steps, teams grant each other a safe place where differences can become strengths and not just irritants.


You can check out all of the 'Innovation Perspectives' articles from the different contributing authors on "What roles do engineers and marketers play in an innovation setting, and what conflicts can arise based on their perspectives and approaches?" by clicking the link in this sentence.

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Mark Roser has been working with companies internationally for over 12 years to identify new markets, clarify product & service growth opportunities and lead exploratory development programs. He can be reached at mark.roser*at*openinnovators.com

Part 2 - Nature's 10 Simple Rules

Here's the second half of my thoughts on Nature's 10 Simple Rules for Business Survival (read Part 1 here). Send me your views on this list. Also, make sure you pin it up on your wall, your company's survival may depend on it.

Nature's # 6. Integrate metrics. Nature brings the right information to the right place at the right time. When a tree needs water, the leaves curl; when there is rain, the curled leaves move more water to the root system. OK, I'm not a big metrics guy. Experience has shown me that a quick decision grounded in intuition often beats the 100 page report and meeting from hell. But I also find inspiration in understanding how the world works, and for that big picture we need numbers - just numbers from a lot of different sources. Smart, revealing, insightful numbers. For example, James Dyson worked through around 5,000 prototypes before coming up with the wildly successful Dyson vacuum cleaner. Let the truth of that number hit you around the head. When did any of us make 5,000 attempts at anything? If all you read are balance sheets, that's how you'll see the world and you will fail. Too many factors impact on us for any one perspective to show the way forward. If you think otherwise, ask a banker about subprime.

Nature's # 7. Improve with each cycle. Evolution is a strategy for long-term survival. The long-term is the only term if you want to survive. Short-term thinking - like the ridiculous obsession with quarterly earnings - has taken more eyes off the ball than a couple of streakers at a football match. The magic mix? Big, long-term ideas combined with the spirit of "Fail fast, learn fast, fix fast". We can all learn from the frenzied world of fashion. In my first job at Mary Quant, we had nine months to conceive, produce, launch, sell, and then discontinue, a complete line. We got better at it - I promise you.

Nature's # 8. Right size regularly, rather than downsize occasionally. If an organism grows too big to support itself, it collapses. If it withers, it is eaten. When businesses start there are usually just a few people doing everything. Then there comes a time when more people are on the job than can comfortably fit around the lunch table. Thus middle management kicks in and, as Kurt Vonnegut put it in Slaughterhouse-Five, "So it goes". Right size is such a great term. The right size of a business depends on the business. This is where business gets specific and where clarity counts. If you want to manufacture cars for the world to drive, your right size is nothing like that of a boutique fragrance. The key though is to know what's right - right size, right people, right choices - and to take action.

Nature's # 9. Foster longevity, not immediate gratification. Nature does not buy on credit and uses resources only to the level that they can be renewed. Since joining Saatchi & Saatchi, one of my great pleasures has been the opportunity to speak to the P&G Alumni. These are people who have worked for P&G and believe in P&G principles. Best of all, they keep the P&G flag flying long after they have left the company. They are in it for the long-term and the long-term extends beyond a job at P&G and even their working life. They are an amazing renewable source for P&G that promotes the company, attracts more great people to work there, and connects P&G in rich and complex ways to the communities and countries it works in. Longevity is about making a worthwhile contribution. Gratification is about an immediate sensation.

Nature's # 10. Waste nothing, recycle everything. Some of the greatest opportunities in the 21st century will be turning waste - including inefficiency and underutilization - into profit. This rule can transform businesses, regions, nations, and people. One area of waste that I take very personally is the waste of human potential. That's why TYLA - Turn Your Life Around - is very close to my heart. This remarkable program based in New Zealand helps kids at risk start to make positive choices about their lives. We use mentors, fresh opportunities, experiences, support - whatever it takes to transform these young people into hard-working, energetic and joyful citizens. In today's tough climate, we want every hand to the pump. Waste not, want not.

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Kevin Roberts is the CEO worldwide of The Lovemarks Company, Saatchi & Saatchi. For more information on Kevin, please go to www.saatchikevin.com. To see this blog at its original source, please go to www.krconnect.blogspot.com.

Part 1 - Nature's 10 Simple Rules

I've done the helicopter view of Adam Werbach's book "Strategy for Sustainability: A Business Manifesto" but now's the time to dig deeper. Right at the front of Adam's book (and picked up by Fast Company) is a list of Nature's 10 Simple Rules for Business Survival. In this list Adam draws from nature a tough bottom line for sustainable business. "Nature is far harsher than the market: If you are not sustainable, you die. No second chances and no bailouts." I'm not usually a fan of rules but these ten make sense to me. They are big-scale - forest-scale. Ocean-scale. Planet-scale. I've jotted down my own thoughts on each one. I'll share them with you here - five this week and five next.

Nature's # 1. Diversify across generations. This idea has certainly inspired me to write a number of posts here that I've called Stella's World. Of course they are about my and Ro's first grandchild but they are also about what change across generations can really mean. How few companies have that aspiration! In principle we all want our businesses to thrive across generations, but how few succeed. Adam tells me that fully one-third of the companies profiled in Jim Collins' "Built to Last" as out-performers, are now under-performers. Think Ford and Citibank. They lost the juice of excitement, wonder and delight and got lost in expectations and self-obsession.

Nature's # 2. Adapt to the changing environment - and specialize. To get to the future first you have to take on what I call the three A's - Adapt, Adopt and Act. It's worked for children, for animals - for all living things and never forget that businesses are living things too. People are often held back by the feeling that the challenges we face are so great that they can't effect any meaningful change. My response? If you can’t change the situation, change yourself. At Saatchi & Saatchi we have a True Blue sustainability program called DOT. Do One Thing. In other words, don't take on the world; specialize. Sure, some of the things people chose to change are small, but put them together and we're talking serious action. Action that can build as we get more confident about Adapting, Adopting and Acting.

Nature's # 3. Celebrate transparency. Every species knows which species will eat it and which will not. I like to see transparency as opportunity rather than threat. Take the emotional transparency of Lovemarks. You can't hide love - and few of us want to. Check out Lovemarks.com and see how that community responds to the brands it loves; openly, without hesitation, with pride. When consumers can push a brand like Tropicana to revert to its traditional packaging in just a few months, something's up. And what's up is that consumers are in control. They want confidentiality for themselves and transparency from their Lovemarks. No one said it would be easy.

Nature's # 4. Plan and execute systematically, not compartmentally. Every part of a plant contributes to its growth. Anyone who has been in business understands the damage caused by silo thinking. Community is key. All of us are better than some of us. In Peak Performance we demonstrated the power of inspirational leadership and teams. Groups of like-minded people working together to overcome all odds and achieve impossible goals. At Saatchi & Saatchi we sum this up in our spirit 'One team, one dream'. And our dream? "To be revered as the hot-house for world-changing ideas that create sustainable growth for our clients."

Nature's # 5. Form groups and protect the young. Most animals travel in flocks, gaggles, and prides. Packs offer strength and efficacy. This is a fantastic rule and the best argument ever for playing in teams. Most young people aren't educated into creativity; they are educated out of it. At Saatchi & Saatchi we give people an elastic-sided sand box, a problem, a deadline, and we get out of their way. To make sure they reach their full potential we have some older folk around to guide, mentor and run protection when it's needed. Usually it's not needed because what they want is responsibility, learning, recognition and joy. All that they get.

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Kevin Roberts is the CEO worldwide of The Lovemarks Company, Saatchi & Saatchi. For more information on Kevin, please go to www.saatchikevin.com. To see this blog at its original source, please go to www.krconnect.blogspot.com.