Why Is Innovation So Hard?

The article “Why Is Innovation So Hard?” outlines cultural challenges that prevent innovation from taking root. As we have discussed many times, development of disruptive capabilities can often fail to achieve their intended results.

This means that in order to innovate we need to change our attitude toward failures and mistakes. Contrary to what many of us have been taught, avoiding failure is not a sign that we’re smart. Being smart is not about knowing all the answers and performing flawlessly. Being smart is knowing what you don’t know, prioritizing what you need to know, and being very good at finding the best evidence-based answers. Being smart requires you to become comfortable saying, “I don’t know.” It means that you do not identify yourself by your ideas but by whether you are an open-minded, good critical and innovative thinker and learner.

Yahoo!’s new CEO

Sorry I have been gone for a while – starting a business requires a lot more effort than I had thought. The rewards more than make up for effort, but some important things like this blog get dropped along the way…

A quick post about Yahoo!’s new CEO from INSEAD Knowledge. The article provides many interesting facts about the new CEO, however one stands out:

“Some Googlers who worked with Mayer found her style abrasive and her pace hard to sustain. In her early years, apparently, her interpersonal skills were inferior to her user focus and technical prowess. Many engineers relished working for her nevertheless, and her management skills improved with experience”

The key points here is that R&D teams are willing to put up with a lot of hardship as long as the leaders are engaged in the development. As long as the leaders are able to provide the teams with a long-term vision, progress can be made. Finally, leaders need to provide challenges that the teams can utilize to innovate. Each of these themes we have discussed many times on this blog.

The media frenzy about Mayer’s appointment, however, requires some examination on our part. The author of the article has summarized it so well, I have reproduced it below (even though it is not quite related to R&D)

The lessons we must draw from this exceptional event, which reveals less about Mayer and Yahoo! than it does about our norms, is the following: Leaders, especially such visible ones, have to accept constant and ruthless scrutiny that won’t stop at their results. Followers, opponents and observers will always question their motives and lives. And they will account for the leader’s story in ways that reveal and serve their interest. Good leaders know it and work with it.

At the same time, we must take this opportunity to scrutinise, for once, not just the leader but also ourselves. To cast a light on the ways in which the stories we tell about our leaders – the patterns of thinking and feeling, actions and talk, which we take for granted – affect the efforts and opportunities to lead of those who appear different from us, and may not be as different as we make them to be.

Amgen CEO: Why I’m a listener

McKinsey Quarterly has an interview of Amgen CEO Kevin Sharea (Why I’m a listener: Amgen CEO Kevin Sharer) where he emphasizes the importance of listening for leaders. We have talked about listening a couple of times in the past (here and here).

He says that the best way to listen is to do so with just one objective – comprehension. It is important not to be focused on criticism or arguments for or against what the other person is saying.

““Because I learned to listen.” And I thought, “That’s pretty amazing.” He also said, “I learned to listen by having only one objective: comprehension. I was only trying to understand what the person was trying to convey to me. I wasn’t listening to critique or object or convince.””

Listening for comprehension can also help demonstrate respect and teach your team to be flexible by example. It builds and environment of trust, partnership and teamwork.

Listening for comprehension helps you get that information, of course, but it’s more than that: it’s also the greatest sign of respect you can give someone. So I shifted, by necessity, to try to become more relaxed in what I was doing and just to be more patient and open to new ideas. And as I started focusing on comprehension, I found that my bandwidth for listening increased in a very meaningful way.

Listening can help leaders immerse themselves in the organization and gather the right information, generate new connections and spark creativity / innovation. Leaders need to talk with different people – not just their direct reports because useful pieces of information reside in different places.

My method of gathering the tiles involves regularly visiting with, and listening to, people in the company who don’t necessarily report to me. I also read as much as I possibly can: surveys, operating data, analyst reports, regulatory reports, outside analyses, and so on. I meet with our top ten investors twice a year to listen, and at shareholder conferences I consider the Q&As very important. The key is making yourself open to the possibility that information can and will come from almost anywhere.

Listening can help us become more engaged and innovative leaders. Listening can also help us question assumptions and get our teams to experiment more.

Steve Jobs: Innovation is the only way to succeed

INSEAD Knowledge has published an interview with Steve Jobs from 1996 which has a few very important points for R&D managers: Innovation is the only way to succeed – you can not cut costs to get out of problems.

“All I can say is I think it was true back when we built Apple and I think it is just as true today which is innovation is the only way to succeed in these businesses. You can’t stand still.
You can’t cut expenses and get out of your problems. You can’t cut expenses and get out of your problems. You’ve got to innovate your way out of your problems.

image from Insead Knowledge

So, lets dig in…
We have discussed many of these points in the past, but this interview provides a few more details. First is the recurring theme of user-centric design – products should not require customers to learn underlying technology:

Well, one of the reasons I’m so interested in graphics is that it makes things accessible to people without them having to know how it works. So as an example, the Macintosh was really that – we used graphics to make it easy to use; it was the computer for the rest of us. And you didn’t really have to know all this computerese to use it because of the great graphics and user interface.

Even more interesting is the fact that Jobs took the same approach with Pixar: Movie goers should be able to enjoy the experience without worrying about 10 years of R&D that went into creating the movie. We have discussed this in detail in the post about focus on your niche.

And it’s the same way with Toy Story at a much higher level. An audience between 80 and 100 million people will hopefully see Toy Story by the time it rolls out throughout the world, and yet none of them had to read a manual before they saw the movie to appreciate it. None of them had to understand the technology and the ten years of R&D and investment that went in to be able to create that movie to enjoy it, and that’s what’s so wonderful.

Another foundation of successful R&D management is a long-term vision. Steve Jobs again demonstrates his ability to think long-term. He was working towards removing keyboard input back in the mid 90s:

And I see more and more of that infusing society where you have a tremendous technology but it has a face which is very approachable and you don’t have to understand the technology to interact or use the product….

You know I think that’s the potential of the Internet. We’re certainly not there today. Typing an H-T-T-P slash slash colon w-w-w, you know, is arcane. I mean, you shouldn’t even need a keyboard to use the Internet but we still do. And I think we’ll get to where it really is very simple, but we have a few years to go.

The next lesson for us R&D managers is that of hands-on involvement. An engaged leader is critical to motivating teams and delivering innovation (by overcoming problems such as valley of death). Jobs was not had the vision of where products need to go, he was involved in detailed technology development and the business models that need to be developed to support the new technology. In this case, he was developing a vision about iTunes in mid-90s…

We look at the internet and it looks very exciting to us, but we don’t see how to make any money from it. We haven’t seen any business models emerge where we can put content on the Internet and end up being rewarded for that. And since our talented people always have opportunities to work on things where we do get financially rewarded, we’re not about to take them off that and put them on the Internet until we see a business model that makes sense. And I think we will, you know, in the next one to two years.

We have a lot of interesting posts about innovation management…

Unilever’s Kees Kruythoff: Enthusiastic Employees Key to Success

A quick post about a lecture by Unilever’s Kees Kruythoff in Knowledge@Wharton (Global Leadership Lessons from Unilever’s Kees Kruythoff ). Kruythoff mentions that a sense of enthusiasm and excitement is key to a company’s success and makes progress possible. He sees that sense of enthusiasm has been a key to his own success:

“Kruythoff said that his enthusiasm for his job has always been what has propelled him. There is really no substitute for that, he noted, and, in reality, enthusiasm should be the primary reason anyone should work for an organization. “When you join a business, the most important part is to ask yourself how you can improve the values of the company,” Kruythoff stated. ”

One way to get an enthusiastic workforce is to hire employees that clearly demonstrate the sense of excitement:

A new employee should have a sense of excitement, he added, and make sure that he or she is a good fit with the company. “Wherever you go, if it feels like the place where you want to be, then in all likelihood it is.”

However, the leaders still need to maintain and fuel that excitement. A sense of excitement will help overcome any hurdles in the organizations path and build a positive environment.

Enthusiasm makes progress possible, Kruythoff said, and leaders must build that excitement and fire among their employees. Not every decision is a winner, but when employees are optimistic about the future of the firm, that atmosphere will help move the company in the right overall direction.

The article does not quite talk about how to build and maintain this sense of excitement. Here is what we have learned in this blog:

One way to do this would be to create and communicate a vision for the organization. Steve Jobs did this very effectively – so much so that the employees were willing to put up with extreme work hours and his tantrums.
Once an organization is enthusiastic, it may be necessary to provide challenges to spark the creativity (and hence enthusiasm) in the organization.
Another key to building enthusiasm is to be thoroughly engaged in the company’s business. Teams get really excited when they find that their work is important to the leadership. It may be important to roll up your sleeves and participate in some detailed work from time to time. Again, Steve Jobs provides a good example.
Finally, forming teams and providing them a clear challenge, charter and resources may be another way to build enthusiasm. This is hard to is multi-location virtual teams, but still very important to overall performance.

How to Become a Better Leader

The McKinsey Quarterly article How centered leaders achieve extraordinary results has five pointers to become more effective leaders:

Meaning: Find and communicate what the work actually means. When building momentum around long-term R&D strategies, stories on how the product will impact the customer is extremely important. Using effective stories can generate team ownership in the vision (Steve Jobs provides a great example of how).

…leaders often talk about how their purpose appeals to something greater than themselves and the importance of conveying their passion to others. Time and again, we heard that sharing meaning to inspire colleagues requires leaders to become great storytellers, touching hearts as well as minds.
Connecting: Innovation requires connection between multiple technologies. Creativity requires connections between multiple concepts. And delivering innovative products to market requires teams of creative people to come together. An innovative leader should build/leverage connections and encourage networks to form within the organization.

CEOs have always needed to select exemplary leadership teams. Increasingly, they must also be adept at building relationships with people scattered across the ecosystem in which they do business and at bringing together the right people to offer meaningful input and support in solving problems.
Positive Framing: By reframing problems, leaders can convert fear or stress into opportunity, and engender creativity. Leaders are also are aware of their impact on their teams.

Psychologists have shown that some people tend to frame the world optimistically, others pessimistically. Optimists often have an edge: in our survey, three-quarters of the respondents who were particularly good at positive framing thought they had the right skills to lead change, while only 15 percent of those who weren’t thought so.
Engaging: Leaders listen and engage their teams. They encourage balanced risk taking, act rationally in the face of risk and encourage experimentation.

But for many leaders, encouraging others to take risks is extremely difficult. The responsibility CEOs feel for the performance of the entire organization can make the very notion of supporting risk taking extremely uncomfortable. What’s more, to acknowledge the existence of risk, CEOs must admit they don’t, in fact, have all the answers—an unusual mind-set for many leaders whose ascent has been built on a virtuous cycle of success and self-confidence.
Sustaining energy: Changing / improving organizations and culture is hard. Leaders need to be able to create a sense of urgency and maintain it for the duration necessary to implement the change.

All too often, though, a change effort starts with a big bang of vision statements and detailed initiatives, only to see energy peter out. The opposite, when work escalates maniacally through a culture of “relentless enthusiasm,” is equally problematic. Either way, leaders will find it hard to sustain energy and commitment within the organization unless they systemically restore their own energy (physical, mental, emotional, and spiritual), as well as create the conditions and serve as role models for others to do the same. Our research suggests sustaining and restoring energy is something leaders often skimp on.

The article has some benchmark data on what could happen if we master these skills:

A recent McKinsey global survey of executives shows that leaders who have mastered even one of these skills are twice as likely as those who have mastered none to feel that they can lead through change; masters of all five are more than four times as likely. Strikingly, leaders who have mastered all five capabilities are also more than 20 times as likely to say they are satisfied with their performance as leaders and their lives in general (for more on the research, see “The value of centered leadership: McKinsey Global Survey results”).”

How to get the best from corporate R&D

MIT Sloan Review has an interesting article about corporate functions (Are CEOs Getting the Best From Corporate Functions?). Many of the larger organizations I worked with have a central R&D organization that focuses on longer term, disruptive or innovative research. Some of the lessons in the article are quite useful to these organizations. Overall it appears that most corporate functions feel that they are not tightly coupled in to the business and their performance is rarely evaluated for their true contributions:

In our survey, fewer than one in 10 function heads felt they had received sufficient guidance on how their function should contribute to the company’s overall strategy. Instead, they were expected to develop their own ideas and functional strategies.

The root cause seems to be poor strategic alignment and inadequate guidance from the executive team. The result is that the corporate functions become self serving and are not incentivized to provide practical support to business divisions:

Without sufficient guidance, corporate functions can become — often unintentionally — self-serving. Instead of developing policies and processes to give divisions the practical support they want and need, corporate functions measure themselves against industrywide best practices or implement initiatives that increase their influence or simplify their own work. The result is often a lack of cooperation from operating managers.

Here is my interpretation of the four suggestions from the article to address this situation:

1. Define key performance measures beyond division (P&L) goals: Develop a strategy for how the corporation can function better. Express the strategy in three to seven sources of corporate value creation. Ask each corporate functions to develop a plan on how they will contribute to the said value creation. In case of corporate R&D, this can be as simple as number of technologies or innovations transitioned into product development. We have discussed many such metrics for R&D in the past. We can even develop similar approaches for functions such as training:

A Danish company recently defined three main sources of added value at the corporate level: helping businesses make better capital investment decisions, ensuring that businesses drive down costs even in good years and building a pool of executive talent superior to its competitors’. All corporate functions were then asked to assess their activities against these objectives. Significant changes resulted.

2. Monitor and guide corporate function performance to meet the defined measures: The article suggests at least annual reviews to ensure that functions are progressing along the defined strategy. As we have discussed in the past, large reviews and meetings tend to waste a lot of time, so these reviews need to be focused:

Most companies occasionally conduct a major review of the size and value of the corporate headquarters. However these large-scale projects can engender a defensive response that gets in the way of the objective, and any staff reductions that result often disappear again in the following years. Annual reviews allow the CEO and the heads of divisions to nudge corporate functions regularly toward better performance.

3. Develop a comprehensive approach to corporate improvement initiatives: Many disjointed initiatives from different functions may reduce the effectiveness of initiatives AND reduce morale in corporate functions. We have discussed that organizations need to build a sense of urgency before taking on change initiatives. This article suggests that the corporations develop a central matrix of all ongoing initiatives and coordinate their impact:

This helps different functions take an integrated approach and helps anticipate potential problems. For example, the CEO can see whether an initiative is likely to place unreasonable demands on an individual business unit, given the unit’s commercial pressures. The head of IT can assess whether IT resources are sufficient to support all initiatives.

4. Break out shared services from corporate functions: Pretty self explanatory. Services should be managed differently from functions.

The result is often an order of magnitude change in performance: better service at lower cost in the shared-services division, as well as clearer policies and controls that focus on adding value within the remaining corporate functions. In the early 1990s, Shell was one of the first companies to create a separate services division, transforming its sprawling corporate functions into a headquarters team of 100 and a professional services division of some thousands. More recently, the Dutch specialty chemicals company DSM completed a major project to separate all of its corporate services into a shared-services division.

The executive’s guide to better listening

A quick post about an interesting article in the McKinsey Quarterly: The executive’s guide to better listening:

“Listening is the front end of decision making. It’s the surest, most efficient route to informing the judgments we need to make, yet many of us have heard, at one point or other in our careers, that we could be better listeners. Indeed, many executives take listening skills for granted and focus instead on learning how to articulate and present their own views more effectively.”

The article provides three very useful suggestions:

1. Show Respect: We need to trust our colleagues, give them a chance explain their perspective, and more importantly, give them some time to work their way to a solution instead of just providing one to them. May be encourage them to experiment a bit more.

Our conversation partners often have the know-how to develop good solutions, and part of being a good listener is simply helping them to draw out critical information and put it in a new light. To harness the power of those ideas, senior executives must fight the urge to “help” more junior colleagues by providing immediate solutions. Leaders should also respect a colleague’s potential to provide insights in areas far afield from his or her job description.

2. Keep Quiet: Something very hard to do for me, but the rule is to only speak for 20% of the time and keep quite for 80%.

Many executives struggle as listeners because they never think to relax their assumptions and open themselves to the possibilities that can be drawn from conversations with others. … But many executives will have to undergo a deeper mind-set shift—toward an embrace of ambiguity and a quest to uncover “what we both need to get from this interaction so that we can come out smarter.”
… Too many good executives, even exceptional ones who are highly respectful of their colleagues, inadvertently act as if they know it all, or at least what’s most important, and subsequently remain closed to anything that undermines their beliefs.

3.Question Assumptions: It is important to question assumptions (both our own and those of our colleagues to have a meaningful conversation:

So it takes real effort for executives to become better listeners by forcing themselves to lay bare their assumptions for scrutiny and to shake up their thinking with an eye to reevaluating what they know, don’t know, and—an important point—can’t know.

Here is a useful technique to question assumptions:

Duncan uses a technique I find helpful in certain situations: he will deliberately alter a single fact or assumption to see how that changes his team’s approach to a problem. This technique can help senior executives of all stripes step back and refresh their thinking. In a planning session, for example, you might ask, “We’re assuming a 10 percent attrition rate in our customer base. What if that rate was 20 percent? How would our strategy change?

How leaders kill meaning at work

I have been meaning to summarize the article How leaders kill meaning at work from McKinsey Quarterly:

“In our book and a recent Harvard Business Review article,3 we argue that managers at all levels routinely—and unwittingly—undermine the meaningfulness of work for their direct subordinates through everyday words and actions. These include dismissing the importance of subordinates’ work or ideas, destroying a sense of ownership by switching people off project teams before work is finalized, shifting goals so frequently that people despair that their work will ever see the light of day, and neglecting to keep subordinates up to date on changing priorities for customers.”

But specifically, the article points out the following traps:

1. Mediocrity Signals: Executives encourage mediocre behavior through their actions, while describing greatness in missions statements. For example, some executives talk at length about innovation, but innovation projects never receive investments. In one company the top executive asked to eliminate non-strategic R&D investments. The portfolio manager ranked all the projects and developed a list lowest ranked projects. The executive overruled the entire list without any justification (they were his pet projects).

2. Strategic “Attention Deficit Disorder”: Executives do not allow adequate time to mature strategic initiatives and see their results. I have seen this many times. Most new technology or product development takes time. Executives loose interest and change priorities. This is very demoralizing for R&D teams.

3. Complex bureaucracies lacking accountability: Many times executives set up complex organization structures to satisfy (mainly) executive politics. Other times, there are overlapping roles and responsibilities. In either case, there is lack of accountability for different functions. One part of the organization not working hard impacts morale everywhere.

4. Unactionable strategies and goals: Many times executives set up big goals but most teams do not know what to do to achieve those goals. In one company the executives wrote a strategic plan which said cut costs and improve innovation (literally). They then proceeded to tell everyone to achieve those goals. No one knew what to do!

It is essential for managers to avoid these traps. One key would be to keep employee perspective in mind and provide clarity on how everyone can contribute. Other is to assess if there is a disconnect between the executive team perspective and that of employees at large.

Creating Leaders

The article The NY Jets’ Mike Tannenbaum and SAP’s Bill McDermott: Creating Leaders On and Off the Field in Knowledge@Wharton has some interesting pointers for all R&D managers.

1. Provide precise and candid feedback (even when negative):

“The most important thing a leader can do is give people feedback,” McDermott said, recalling a meeting where an executive was complaining about a mistake made by an employee. “‘What did he say when you told him about it?’ I asked, but there was silence.” Employees deserve the respect of candor, McDermott noted, and they need to know what is expected of them and have a clear understanding of their employer’s strategy and culture.

2. Provide a big long-term vision that can get the team excited.

McDermott and Tannenbaum agreed that a leader has to focus on promoting an overall vision for his or her organization rather than dwelling on the small stuff.
…
“Our thing is to go big or go home,” McDermott said, noting that SAP has had many opportunities to buy companies that would catapult the firm into a new business category.

3. Be careful in selecting team members and look beyond resume / technical capabilities:

“When he was on the cell phone in the car, did he treat the person on the other end with respect? … How did he act with the waitress? Your character is what you do when no one is looking. That will make for a better team, where everyone knows what everyone else’s job is, and we all work together.”

Something we can all learn…