Thursday, August 30, 2012

A Culture of Innovation or Learning - Which Do We Need More?

Do organizations want to establish a culture of innovation or a culture of learning?  Put another way, is it more meaningful and realistic for an executive to ask his or her people, "What have we innovated this week?" or "What have we learned; what insights have we gained this week?"

It's very easy to get caught up in the buzz surrounding innovation.  After all, who doesn't want to be innovative?  A Google search of the term "culture of innovation" yields about 3.4 million hits while a search of "culture of learning" yields about 1.3 million hits.  This provides some perspective on what the current emphasis is.

Yet, while innovation (a change in the way people do things because of a new product or service accompanied by the significant adoption of that new or changed product or service) is by definition, an outcome, an organization's culture is not an outcome.  Instead, it is a performance enabler and many would say, the most important enabler.  The values reflected in an organization's culture enable outcomes like innovation.

Therefore, the meaningful question is:  What core cultural values should an organization that values innovation emphasize?

There are three cultural pre-conditions / values for innovation.  These are critical thinking, discovery, and learning.

Critical thinking is not just about questioning the status quo.  It's about reframing the situation and imagining the possibilities through deeper and more probing questions to achieve those possibilities.  Phil McKinney (@philmckinney), former vice president and chief technology officer for Hewlett-Packard's personal systems group wrote:  "There are many ways to generate new input, but the most effective is to learn to ask the kinds of questions that can lead you to a real discovery. This is true both of the kinds of questions you ask other people, and the ones you pose to yourself."

Critical thinking skills that drive the right questions can be a differentiator in today's business environment.
  • What's the change / impact that we want to achieve?
  • What can be improved to achieve this impact?
  • How can it be improved?
  • Is a change likely to resonate with one customer or market segment more than others?  Why?
  • What improvements have been previously attempted?   Can those efforts be leveraged?  Why did those efforts fall short?
  • What are the risks with this change?
  • What are critical success factors for this change to succeed?
  • Are those factors within our control and can risk be effectively mitigated?
  • If not within our control, how can we effectively mitigate risks?
  • Who's likely to embrace such a change?
  • Who's likely to challenge it?
These are just some examples.  Most importantly, critical thinking recognizes that there are consequences and implications associated with actions and seeks to proactively determine what those are and what additional actions might be needed - within reason.

Discovery via experimentation, research, and reflection is the linchpin that connects critical thinking and learning.  Questions posed during the critical thinking process should be addressed by structuring experiments or pilot projects to discover what the possible answers and insights are.  There is a rigor that should be applied to the conduct of experiments.
  • What insights are sought as a result of the experiment or pilot?
  • What's the current performance baseline?
  • What people and processes should be involved in the experiment?
  • Who are the stakeholders who will be interested in this experiment?
  • What is each stakeholder's involvement?
  • What resources are needed?
  • What data is needed?  Is the data accurate?
  • What conditions should be replicated?
  • What are the hypotheses?
  • How will these hypotheses be validated or invalidated?
  • Is there a common agreed upon definition of success and failure between the key stakeholders?
These questions are presented because it's important to recognize that valuing and emphasizing a culture of learning requires investment and the commitment of resources.  Such a culture recognizes that there are also likely to be failures.  Most importantly, failures and successes need to be accompanied by learning.  Celebrate and value learning, whether it be from failures or successes. The learning that results from experiments and pilots can be a risk mitigator in the actual product or service roll-out or implementation.

Apple is often referred to as a successful innovating company.  It's worth remembering that Apple also had some notable failures such as the "first commercial PC [named Lisa] to use a graphical interface and then-cutting-edge concepts such as preemptive multitasking" but with a $10,000 price tag, "Lisa was slow, ungainly, and amazingly expensive."  The Apple Newton had an "ungainly size, woeful battery life, and hard-to-read screen."  Nevertheless, Steve Jobs ensured that Apple learned from these failures to produce the Macintosh personal computer and the iPhone.

Peter Sims (@petersims), the author of "Little Bets:  How Breakthrough Ideas Emerge from Small Discoveries," in addressing the importance of discovery to innovation, wrote:  "Leaders, managers and collaborators ... must to be willing to learn from mistakes. Affordable risks should be encouraged, and small failures celebrated - these are the mark of learning organizations. Otherwise, risk aversion will lead to stagnation and decline."

Discovery can also result from querying front-line employees and customers, conducting customer and market research, monitoring social media platforms, analyzing data, and putting one's self in the role of a customer purchasing products and/or services from one's company.  Although these are some examples of discovery actions that may be conducted separate from experiments, it is critical to track, coordinate their execution with other discovery initiatives (Are there elements common to more than one discovery initiative?), and share knowledge gained from these actions.  The worst kind of discovery is that which is siloed and whose results are not shared.

Another important but often-times undervalued means of discovery is the knowledge that can come from being part of relationship-based formal and informal networks that provide an opportunity for reflection and exposure to ideas and information that one might not necessarily learn outside of these networks.  Reading books, journals, and newspapers about what others have done and are doing can also provide an opportunity for reflection and discovery.

Steven Johnson's (@stevenbjohnson) book, "Where Good Ideas Come From: The Natural History of Innovation" has great examples of people who who valued discovery and leveraged the insights of others in the development of their innovations.

Per Bill Gates' (@BillGates) review of Steve Johnson's book:  "In the 1870s, a French doctor, Stephane Tarnier, saw incubators for chicken hatchlings at the Paris Zoo and hired the zoo’s poultry-raiser to build incubator boxes for premature newborns at his hospital. Other hospitals at the time were using devices to keep babies warm, but Tarnier was the first to conduct research showing how incubators significantly reduced the infant mortality rate, leading to their widespread use in Paris and beyond."  The impact of this 1870s discovery has had a huge ripple effect in the years since.

Adam Hartung (@adam_hartung), a Forbes columnist, CIO magazine columnist, and the Editor of the International Journal of Innovation Science, in the wake of Neil Armstrong's passing, wrote an excellent column about the importance of discovery via the NASA space program.  He cites a number of NASA innovations "that have driven economic growth" and created ripple effects.  These include the microwave oven, frozen food, water filtration, high powered batteries, and scratch resistant lenses.  When President Kennedy articulated the goal "of landing a man on the moon and returning him safely to the earth," we did not foresee these innovations.  Yet, as Adam writes:  "The journey of discovery unleashes opportunities which create their own benefits – for society, and for our economy." 

Taking what has been learned, extracting insights, and determining what decisions, actions, and adaptations should be taken may be the most challenging step that accompanies the establishment of a learning culture.  Decisions, actions, and adaptations may require changes in a product or service line, lines of business, associated profit centers, and intra- and/or inter-enterprise relationships, to cite a few.  Another challenge is recognizing and accounting for biases that may exist that can affect the actions decided upon.  Nevertheless, the application of critical thinking, discovery, and learning in getting to this step provides leaders with a solid basis for making informed insight-driven decisions.

Leaders recognize the importance of innovation.  This is not enough.  Recognize, value, and institutionalize the pre-conditions for its success to have organizations be seen as innovative market leaders and influencers.  Look no further than to Steve Jobs for the importance of learning.  "After creating great products that only reached the few, he returned, learned and adapted his vast creative talents to create whole new product categories, distribution models, creative platforms and customer experiences that have positively impacted the lives of millions."

Don't just celebrate success.  Take the harder steps to learn from success as well as failure and build a culture of learning to be truly innovativeTeaching an organization to learn how to learn can result in an important legacy with meaningful ripple effects.

Friday, August 24, 2012

Strong Leadership Makes Core Competencies Work

Daniel Rasmus posted an intriguing article on Fast Company, "How Clinging To Core Competencies Is Breaking Your Organization’s Heart."
The focus on an "organization's heart" and its "emotional infrastructure" is good but an emphasis on core competencies does not break that "organization's heart."  Instead, a lack of leadership will do that.

A leader's two most important qualities are authenticity ("Walk the talk") & credibility ("Do the do" / be competent).  If leaders profess to care about their employees but don't back that up via their actions, that's what breaks hearts.  If leaders don't know how to take care of their employees, that breaks hearts.

Likewise, strong leadership makes core competencies work, not just by leveraging knowledge and skills but by inspiring people to understand, see, and believe in the impact of their work.  Per Daniel's post, "passion and dedication creates value as much as seamless execution."

A focus on core competencies does not necessarily result in organizations "becom[ing] less able to adapt." A core competency's value should be evaluated not just on its execution but also its market value.  Assessing its market value should be driven by two questions:  1) Does it resonate with customers?  2) Are there market changes that can impact this competency?

If the answer to the second question is yes, then possible adaptation and change issues should be addressed.  Successful adaptation cannot be accomplished without knowing what to adapt to and how to to adapt.  This requires knowledge and learning.  Speaking of core competencies, learning to adapt one of the new ones.  This is a leader imperative and responsibility - especially now given the increasing speed and frequency of changes in market dynamics.

Daniel's point that "emotional infrastructure is the binding element that keeps an organization together in times of challenge, and facilitates celebration in times of plenty" is excellent.  An organization's "emotional infrastructure" can either enable or degrade its performance.  It also doesn't happen by itself.  Leaders create that infrastructure - for better or worse.

Marketing differentiating core competencies supported by a positive emotional infrastructure creates a compelling value proposition. 

Thursday, June 28, 2012

Effective Risk Management Prepares Businesses and Organizations for Difference-Making Rescue Management

This post reflects my comments to a article, Risk Management vs Rescue Management by Steve Denning, a columnist whose posts I very much enjoy reading.  Steve's columns are thought-provoking and usually challenge conventional thinking and ways of doing things.
Steve's post is influenced by a post, Failure and Rescue, by Atul Gawande.  Mr. Gawande states:  "The difference between triumph and defeat ... isn’t about willingness to take risks. It’s about mastery of rescue."
While "mastery of the rescue" can be "the difference between triumph and defeat," this issue is not about the "willingness to take risks."  People in all walks of life take risks everyday; it's called living.  Instead, private, public, and non-government organizations should focus on their preparedness for dealing with risks when they happen.  "Mastery of the rescue" is a direct reflection of risk preparedness.
A risk management plan is only the beginning.  As a former Army officer who exercised contingency plans on a regular basis and a consultant who has helped organizations develop risk management and associated contingency plans, I recognize that the the real value of such plans is in exercising the actions called for in these plans, including contingency plan operational rehearsals.  There are other factors such as organizational leadership, processes, knowledge, and training that also impact risk and the effectiveness of any risk mitigation strategy.
Rescue management and risk management are very much linked.  They should not be viewed from a perspective of one "versus" the other.  Risk management is the act of preparing for rescue management
The University of Michigan study, Variation in Hospital Mortality Associated with Inpatient Surgery, cited by Mr. Gawande, includes a number of factors contributing to "low surgical mortality."  These include "multiple complex processes, including the timely administration of antibiotics in patients with sepsis, the rapid transfer of a patient to an intensive care unit (ICU), and the availability of interventional cardiologists during an acute myocardial infarction. ... A system of daily rounds with a certified intensivist [a physician who specializes in the care of critically ill patients] was associated with a reduction in in-hospital mortality by a factor of three and an increased nurse-to-patient ratio was associated with a halving of in-hospital mortality. ... Intra-operative checklists have become an increasingly promising and popular approach for reducing risks of complications." 

The hospitals that have adopted and institutionalized these actions recognize that effective rescue management is only possible if there's effective risk management reflected in risk mitigation actions that are exercised on a daily basis.  Therein, is the key to effective risk management - the institutionalization of processes and activities designed to create a culture that mitigates risks that are part of its business processes and enables effective and efficient rescue actions when things go wrong. 

The failures in the BP oil disaster cited in Mr. Denning's post, "failure to recognize a problem, "adopting the wrong plan," and "failure to implement even the rescue properly," have their roots in a lack of knowledge, poor decision-making, inadequate training, and ineffective contingency operation plans per testimony before the U.S. House of Representatives in February 2011.  In effect, the personnel on the BP oil drilling platform, Deepwater Horizon, were not prepared for events that took place on April 20, 2010. 

Strong leadership could have prevented these failures.  Leadership is the most important risk mitigator as pointed out by Colonel Eric Kail in his HBR post, "Lessons From the Military: Your Risk is My Risk, Too."  COL Kail makes the excellent point that as a leader, "you can't become someone in 30 seconds that you haven't practiced being for the last 30 days. ... You also can't be everywhere all the time, so you need to know that other leaders in your organization are making decisions that support your intent regarding acceptable risk."  The U.S. Navy's Blue Angels pilots in the picture for this post know by virtue of their training, knowledge, and procedures what acceptable risk is.  Knowing that acceptable risk mitigates the need for rescue management. 

One of the best examples of the value of leadership, training, and established processes (all risk mitigators) in enabling effective rescue actions when things go wrong were the actions that Captain Chesley "Sully" Sullenberger and his flight crew took to safely land US Airways Flight 1549 and its passengers in the Hudson River on March 15, 2009.

It wasn’t heroism that brought Flight 1549 down safely. It was rigorous training that’s inbred in the U.S. aviation system. Pilots have to fly for years before they can command an airliner, and even experienced pilots must routinely train in simulators and pass ‘check rides’  at least once a year under the supervision of Federal Aviation Administration inspectors. … ‘In simulator training, we’re doing nothing but flying in all sorts of emergencies.’”

Actual rescue management operations provide an excellent opportunity for the organization to learn, enhance its risk management knowledge base, and have people better prepared to deal with the next challenge.  Rescue management participants should be debriefed and lessons learned identified, validated, disseminated, and made available for others to access.  Knowledge gained from this activity may necessitate changes to training, processes, and operations and potentially influence innovations to existing portfolios of products and/or services.  Do not limit the applicability of lessons learned to the same function or industry; look for non-linear applicability as well.  This post began with a focus on hospital care and moved to aviation safety.  It's fitting then to provide a link to an excellent lessons learned report, "What Went Right - Lessons for the Intensivist From the Crew of US Airways Flight 1549."  This report shows the applicability of effective aviation risk management that can "can help intensivists ... remain as focused and prepared for any emergency as the crew of Flight 1549."

In an interview, Captain Sullenberger stated:  "One way of looking at this might be that for 42 years, I've been making small, regular deposits in this bank of experience: education and training. And on January 15 the balance was sufficient so that I could make a very large withdrawal."

Organizations should view their risk management actions in the same way - deposits "to **prepare** for the possibility" of things going wrong."  That's only way difference-making rescue management will happen.