Monthly Archives: February 2008

Why can’t we just admit we don’t know???

I was teaching about innovation and new business creation this week in an Executive program at a Danish university. Eight Danish companies sent teams of 2-3 people each, expecting that by the end of the course they’ll have a jumpstart on a new business platform that will invigorate new growth in their firms via game-changing innovation. Companies sponsor teams to come into the program because they are seeking new methods for developing new businesses.

Here’s the jist of part of the conversation, which has played out in nearly every executive class I’ve taught:

Project team members are extremely concerned with being able to show senior management hard numbers, because, they tell me, ‘that’s what senior management expects.’ This means sales predictions, market share, Return on Investment….at the Concept stage of development!!! When I ask if they realize they’d be lying, since the markets they’re supposed to forecast don’t even exist yet, they laugh and admit it’s true. When I ask if senior management realizes they’re lying, they admit this, too, is likely the case. So why, I ask, do we keep doing this?

“What is the option???”

How about admitting you don’t know, I suggest, and working out a plan for learning?

“We’re supposed to know before we go speak with management”, they tell me.

How? You have no funding for the project, and learning takes resources.

“What should we do ?”, they ask.

Learn how to learn, and let senior management know what you’re doing. Get funding to learn a little, then evaluate, then decide, with senior leadership, whether or not what you need to do next.

“Ah!”, they say. “Makes sense… Who’s going to convince our senior leadership that this approach is appropriate?”

Good question. Here is one approach: We need a course for senior management as well. Not all senior leaders are clueless about this. IBM’s Emerging Business Opportunities program is run and sponsored by senior leadership. IBM states that an EBO focuses on ‘white space’ opportunities that can become profitable, billion-dollar businesses within five to seven years. Their senior leaders conduct project reviews as problem solving sessions…not as evaluation sessions. Pretty cool. Others are catching on as well. But it’s not easy when they’ve been rewarded for being decisive in the face of inadequate data. When that’s how you’re trained, the easiest response to risk and uncertainty is to kill the project before it gets off the ground.

I know that the companies that have participated in the program in Denmark have benefited, because they continue to send teams year after year. Perhaps these people will one day be the senior managers in those companies.

Innovation Need Not Start at the Top

Some people are passionate about innovation, while others shy away from new ideas. In its recent publication the McKinsey Quarterly observes that: In some organizations managers who are most frequently sought out for advice on new concepts often have the most negative attitudes towards innovation—partly because they have difficulty balancing new ideas with current priorities.

One way around these bottlenecks is to intentionally create networks of managers charged with encouraging new ideas. This kind of decentralized team can identify promising new concepts and prioritize them so that they receive the attention they deserve.

So the question “Are Middle managers innovation bottlenecks?” is surely an interesting one. On the one hand, they are correct in recognizing that managers are burdened with current priorities, meaning, in general, day to day operations. Putting out fires. Planning for this quarter. Hiring. All of that. And that’s what their performance is measured on. They have to follow those rules to be promoted.

But it’s not that simple. And here’s where we disagree. We find, time after time, that middle managers can be very frustrated, and in fact, initiate new business creation activities in their companies. Some of them are concerned about the company’s future health. Others are brimming with ideas they’d like to see come to fruition. Still others are bored with their jobs, or have people working for them who are bored and frustrated.

Half, (fifty percent, six of the twelve) of the breakthrough innovation management systems we’ve studied in some detail over the past 4 years were initiated by middle managers. So the next time you hear that ‘it has to start at the top…’ don’t believe it. It’s true that the middle managers who initiated these innovation systems had to ultimately convince senior leadership of their worth. It’s also true that they were not all successful in doing so. But some were. And that’s what counts.

McKinsey suggests that the way to get around the bottleneck of middle managers is to identify those who are interested in innovation and connect them in a decentralized network fashion. Their job, McKinsey suggests, is to generate ideas and prioritize them. That’s a great start, but doesn’t it leave a lot of work on the table? For example, where’s the connection of those priorities to the strategic intent of the company? Also, who’s supposed to develop the ideas? Nurture them? Experiment in the marketplace? Access or develop the technology? Once again, we see a lack of attention to that critical incubation competency.

Feedback appreciated

We’ve written a book about building an innovation function in established companies. It’s coming out in two days. Grabbing Lightning: Building a Capability for Breakthrough Innovation develops the ideas we’ve alluded to on this blog. We describe the companies we studied and their efforts to develop the Innovation Function. More about it here.

Why did we write this book? Because it became so clear to us, after having studied the twelve radical innovation projects that we discuss in our first book (Radical Innovation: How Mature Firms can Outsmart Upstarts), that companies can get better at this.

Everyone treats innovation like a mystery, like an art form, like an unnatural organizational occurrence. But it needn’t be. So, we wanted to watch companies who were focused on building a sustainable breakthrough innovation competency. That’s what this second book is about. Anyone who’s involved in making breakthrough innovation happen in their organizations over and over, or who wants to, will relate to this book.

We invite you to read it and let us know what you think!