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Innovation Insights by Stephen Shapiro

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Last night I went to a seminar.  On the whiteboard, the seminar leader drew an oft-used framework:

There are things you “know.”  For example, I know I can speak English.

There are things you “know you don’t know.”  I know I can’t speak Chinese.

And there are things you “don’t know you don’t know.”  Obviously I don’t have any examples of this.

But it got me thinking.  There is one dimension that is never mentioned…

There are things you “don’t know you know.”

Inside of organizations, there is so much untapped knowledge.  To combat this, over the past two decades, companies have invested millions of dollars in knowledge management systems.  The objective has been to capture the company’s knowledge.

The problem is, the knowledge management databases usually become so large and unwieldy that they are unusable.  I can attest from experience that these systems often end up becoming digital piles of untapped information.  Finding what you want can be like finding a needle in a haystack.  Or, more accurately, it is like finding a specific needle in a stack of needles.

What’s the solution?

You might call it, “reverse knowledge management.”

Instead of posting knowledge which sits passively in a database waiting for someone to find it, you post your question to your “community” so that it can be answered at the time of need.  Of course, asking the world for an answer to your question is not new.  Yahoo/Google Answers did this a few years back.

But internally, especially when you have already invested in knowledge management systems, the dynamics can be quite different.

If you are using an internal collaboration tool like InnoCentive@Work, you might find that reverse knowledge management is an unintended benefit.  When you have a challenge you want solved, the odds are, someone else within your organization has already solved a similar problem.  But you probably don’t know who knows the solution or where to find the solution.

Sometimes the solution can be sitting in your knowledge management system…and you don’t even know it because it is too difficult to find.

Interestingly, “requests for information” posted on internal collaboration tools are sometimes solved not by the individuals with the expertise, by rather by the knowledge management team.  When a question is posted, the knowledge management team masterfully scours their databases to find a solution.  The advantage of this approach is that those with expertise in navigating the knowledge management systems do what they do best, thus freeing the rest of the organization to focus on what they do best.  And it has the added benefit of breathing new life into your old knowledge management initiatives.

So, what is it that you organization doesn’t know what it already knows?

P.S. I have to admit that I am a bit surprised.  If you Google “reverse knowledge management” (in quotes) you will see that the only place this term is used on the entire internet is in this article.

A magazine asked me to write a book review of Innovation Tournaments by Christian Terwiesch and Karl Ulrich. The book arrived in the mail yesterday and I immediately turned to the index to see if InnoCentive was listed. Sure enough, we are mentioned in several places in the book.

This got me thinking: Is InnoCentive a tournament?

The word tournament is derived from the French word for “medieval sport” and is now used to describe a wide variety of competitions.

Most competitions/tournaments are quite entertaining. And by their very nature, there is always a winner. One could argue that tournaments are “spectacles designed to find a champion.”

Given this widely held point-of-view, using the word tournament as a descriptor of InnoCentive seems to be inaccurate.

The NCAA basketball championships are a tournament. The “World Series of Poker” is a tournament. American Idol is a tournament. With each of these, there is always a winner. The purpose of the tournament is to find that winner while (usually) providing entertainment value.

InnoCentive is not interested in finding a winner for the sake of naming the champion. The objective is to find workable solutions to real business problems. Their approach is one I call a “contingency-based, value-driven pricing model.” Admittedly, that does not sound as sexy as calling it an innovation tournament.

Here’s how it works. A company has a problem they want solved. They decide the “value” of finding a workable solution and they offer a “bounty” to anyone who can provide one. The bounty is only paid when they get what they need. This “pay for solution” model outsources the risk associated with complex problem solving.

Here are other examples that illustrate the key difference between the bounty-based approach with the tournament-based approach.

The NetFlix Prize was not a tournament.  They only paid the team that improved the recommendation engine by 10%.  This makes is a bounty-based approach. You only pay the bounty when you get a successful solution.

In contrast, The Cisco iPrize, can be thought of as a tournament. According to their website, they will “select up to 32 semifinalist teams that will work with Cisco experts to build a business plan and presentation… Up to eight finalist teams will present their business ideas to a judging panel to compete for the grand prize: a $250,000 award shared equally by members of the winning team.”  The LG Electronics competition (read my article on it here) was also a tournament-based approach.

The key difference is the way the challenge is articulated.  With the bounty-based approach, the success criteria is clearly defined and you know if someone provided a successful solution:  Did you improve the recommendation engine by 10%?  Did you find a chemical compound that has specific properties?  Did you develop a mathematical model that optimizes solves a specific problem?  The “winner” of the bounty is determined by this success criteria.  If the criteria is not met, the bounty is not paid.

With the tournament-based approach, the success criteria is not defined.  The winner is the “best” of the submissions.  Although these types of competitions can yield excellent solutions, I know from inside-information that the results are often less than stellar.  One company that uses this type of tournament described the results as a “PR success yet a commercial failure.”

Both approaches can provide value to any organization.  It’s just important to recognize that they are useful in different ways.  Tournaments can be great to get a broad set of ideas for an undefined space.  Bounties are great for when you are hunting down usable solutions.

This is the third of my “innovation distinctions” entries. [for your convenience, all three articles have been packaged into one pdf file]

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.

I have been working ’round the clock to finish my Personality Poker manuscript.  It goes to the publisher Feb 1.  After that, I will be back and blogging in full force…

Today I learned that one of my favorite authors, Robert B. Parker, passed away.

He is probably best know for his “Spenser” books.  These fast-paced crime stories are based in Boston (my hometown) and were the  inspiration for the ’80s TV show, “Spenser: For Hire.”  I read every book and loved them all.

He is also the author of the Jesse Stone books which were made into several made-for-TV movies starring Tom Selleck.  And he wrote Appaloosa which was turned into a major motion picture featuring Ed Harris.

You can read a tribute to him in the Wall Street Journal.

Bob, you will be missed!

The picture is of me with Robert Parker at his home in 2008.  He and his wife Joan hosted a lovely dinner party there for me and 20 of my friends.  It will be a night I always remember.

In the first part of this series, I wrote why you should focus on challenges, not ideas. You should read that article before proceeding. [for your convenience, all three articles have been packaged into one pdf file]

In this second entry, I will focus on “Process, not Events.”

I first shared these three distinctions with a bunch of speakers and authors.  In the speaking industry, conferences/conventions are the primary model for professional development.   That is, a bunch of people get together for a few days.  The days are comprised of presenters on the stage who share their “wisdom” with attendees.  When the event is over, the learning ends.  And for most individuals, progress ends.

People who attend these events leave with a laundry list of ideas.  Most people never implement any of the ideas.  They just sit on the shelf in a binder.

This, in a nutshell, is what happens in the innovation programs of many businesses.  They hold ad hoc brainstorming sessions. Or maybe they run a campaign using a crowdsourcing tool.   They develop new ideas.  If they are lucky, those ideas do get implemented. But quite often, the event ends and progress ends.  Regardless, innovation does not happen again until someone has another stroke of inspiration and decides to hold another event.

Innovation in most organizations is episodic.  It is unpredictable.  And it is certainly not repeatable.

But what if you had a systematic way for ensuring that innovation continued long after the event?  What if you didn’t need to wait for divine intervention for your next big idea to sprout?  What if you could make innovation repeatable?  To do this, you want to move from “innovation as an event” to “innovation as a process.”

Back to the authors and speakers…what if, instead of just events, there was a process that helped people see their ideas through to fruition?  What if everyone came to the event with some challenges?  The process could involve regular mentoring or an online community.  There could be measures in place to help monitor progress.  The point is, there is a process to help ensure progress.

In the business world, we have the opportunity to take this process-driven innovation concept a bit further.

For this “event to process” transition to be successful, the first step is to start treating innovation like you would treat any other part of the business. For example, your organization’s finance department has skilled experts, measures, supporting technology (e.g., Oracle or SAP), processes (e.g., processes for closing the books at year end), an owner (the CFO), and a strategy.

The innovation “process” requires all of these elements, and more, including skilled innovation experts (e.g., an innovation center of excellence aka innovation master blackbelts), innovation measures (e.g., return on investment for each idea), innovation management technologies (e.g., InnoCentive’s @Work solution), an innovation process, an innovation “czar” (aka advocate, Chief Innovation Officer, VP Innovation), and a clearly articulated innovation strategy (what you expect to achieve with your innovation program).

I call this level either “innovation as a process” or more accurately, “innovation as a discrete capability.”  You can read more about this in my “Innovation Philosophy” page.

With these fundamentals in place, you can begin to make innovation a repeatable and predictable process whereby creativity is encouraged throughout the organization and the best ideas are implemented.

It’s worth noting that after successfully moving through the process level of innovation, the highest level of innovation is embedded innovation (aka embedded capability or environment). With both the event- and process-driven levels, innovation tends to be reactionary and discrete. It is somewhat separate from the business. With embedded innovation, people not only innovate to deal with “problems/challenges” that are presented to them, but in everything they do. They continuously, even radically, improve their products, processes and organization.

Look for the third and final installment of this three part series sometime soon.

I need your help!

I am in the process of finishing the manuscript for my next book, “Personality Poker.”  The book will be published by Penguin’s Portfolio books and is expected in stores September 2010.

We have been working on a subtitle for the book – and I would love your input.

I realize that you don’t know the details of the book.  But in general, it is about creating high performing innovation teams through the use of my specially designed poker cards.  There are a few key concepts:

  1. Individuals should “play to their strong suit.”  In Personality Poker, the four suits correlate to the four primary innovation styles and the four steps of the innovation process.  Therefore, if you understand your innovation style/suit, you can maximize your contributions to your team.   [NOTE: “strong suit” is actually a term from bridge and not poker]
  2. Organizations must “play with a full deck.”  That is, companies must have all of the styles (and sub-styles) in order to truly be innovative.  Most organizations are out of balance and have too many of just one or two styles.  This inhibits innovation.
  3. Deal out the work.”  Once everyone is clear about their role in the innovation process, you want to divide and conquer.  Avoid having everyone do everything.  Give people specific tasks and roles.

That’s the 10,000 (maybe 30,000) foot view.  You can learn more – and watch a video – on the Personality Poker page.

So, the question is, what is a good subtitle? Here’s a list of some ideas we had…

  • “[How to] Play Your Best Hand to Win Big in Business”
  • “[How to] Play with a Full Deck to Win Big in Business”
  • “[How to] Play to Your Strong Suit to Win Big in Business”
  • “[How to] Play with a Full Deck to Create High Performing Teams”
  • “[How to] Play to Your Strong Suit to Create High Performing Teams”
  • “[How to] Play Your Best Hand to Create High Performing Teams”

Do you like any of these?  Note that the “How to” is optional as each subtitle can stand on its own without those words.

Better yet, I would love to get new ideas for a subtitle.

Please leave your suggestion (either a new idea or a vote for an existing idea) as a comment.  If we end up using your subtitle, we will send you the Personality Poker system (a $200 value).  Plus, when the new book is published, we will send you a signed copy (with an additional deck of the redesigned cards).

Thanks in advance for your help.

A couple of days ago I wrote an article entitled – “Why Best Practices Are Stupid.”  You can read my rationale there; I won’t bother reiterating it here.  Besides, there is a video in that post.

But there are situations when best practices are NOT stupid.

Core & Support Capabilities
In an even earlier article I talk about innovation targeting.  Again, I won’t repeat what was said there.  But in summary, best practices are not a good idea for your “differentiating” capabilities.  But they can be quite useful for optimizing your “core” and “support” capabilities.  Read the article to learn more.

Cross-Industry Best Practices
Don’t get too excited about best practices that are from within your industry.  But certainly “steal with pride” from other industries.  You can get some incredible innovations from companies who are not your competition and are from an entirely different industry.  Watch my TEDx NASA video (only 6 minutes long) or read the speech transcript for some examples.

The Innovation Process
Here’s a question for you: Should you innovate  the innovation process?  Here’s my two cents.  Although innovation is used primarily for your differentiating capabilities, the innovation process itself is, for most companies, only a core capability.  Therefore the answer is “no, you should not innovate the innovation process.”  Or in other words, innovation best practices are extremely useful (and not stupid).

For example, if you are an insurance company, you might want to apply innovation to your claims processing.  Claims processing might be a differentiator.  But innovation is a core capability.  Therefore you want to use innovation best practices rather than inventing new approaches for innovating.

The one exception to the rule however, is if you are indeed an innovation company.  For example, for companies like InnoCentive, innovation is their differentiator.  Using innovation best practices would not be enough.  They differentiate themselves in the marketplace via the thought leadership on the innovation topic.

As you can see, although it is fun to say that best practices are stupid, they do in fact serve a useful purpose if used in the right way.

Some things never change.

October 7, 2008 I wrote an article about how our airport security measures are messed up.  I contended back then that we needed to move from a reactive model to a proactive model.  Instead of responding to terrorist threats after the fact, we need to predict what will happen next.  In the article I discuss why we have to take off our shoes and can’t bring liquids on planes.  It was not because we predicted the use of shoe bombs or liquid explosives.  Instead these inconveniences are solely (pun intended – shoe reference) due to the acts of terrorists.  They do something nasty, we respond.  But we never predict what will happen to prevent an attack in the first place.  In this article I also discuss how to predict the next innovation for your company.

Guess what.  Some things never change.

On Christmas day 2009, 14 months later, there was the same reactive response.  Umar Farouk Abdulmutallab attempted to blow up a Northwest Airlines plane on its way into Detroit.  He tried to light his crotch on fire.  What do our crackpot security agents do?  They react once again just as they have so many times before. Now you can’t keep anything on your lap for the last hour of certain flights.

In 2001, in my book, 24/7 Innovation: A Blueprint for Surviving and Thriving in an Age of Change, the pervasive theme was about “connecting the dots.”  This term appeared dozens of times in the book.  Sometimes I used the term “boxes” and “lines” instead.  For example, in the prologue I wrote:

“I find it useful to think of a business as being, quite simply, a pattern of boxes and lines.  Boxes can be tasks, people, departments, computers or units within a business. Lines are the inter-relationships and dependencies that connect these boxes together. It seems to me that too often businesses have focused on the boxes rather than the lines.”

The point being that businesses need to get better at connecting the dots within and across organizations.  For your enjoyment, you can read the entire prologue of 24/7 Innovation here (pdf).

I received my first copy of the book, hot off the press, on September 12, 2001.  Clearly given the events of the previous day, the receipt of my book was not the joyous occasion I had hoped it would be.

In the years following the book release, I searched for interesting examples of organizations who successfully and unsuccessfully connected the dots within their organization.  Then one day, I found an excellent quote that I used frequently during my speeches.

“In looking back, I believe that… the inability to connect the dots was really structural. We couldn’t be dependent on chance that something might come together… [Since then] we have made some very important structural changes… That is an extremely important innovation.”

Any guesses as to who said that and about what situation? It was Dr. Condoleeza Rice, who at the time was Assistant to the President for National Security.  She was talking about the failure of the intelligence agencies prior to the 2001 terrorist attacks. Eight years ago she too understood the need to connect the dots.  And according to her statement which was made in front of the 9/11 committee in 2004, “structural changes” were made to improve the situation.  You can read the full quote in a transcript of her testimony on the NYT website.

Some things never change.

Just last night, President Obama said that the Christmas Day attack was the result of a “failure to connect the dots.

Anti-terrorist agents “had sufficient information to have uncovered this plot … but our intelligence community failed to connect those dots. This was not a failure to collect intelligence; it was a failure to integrate and understand the intelligence that we already had.”

Sound familiar?

My questions to you is…

What things never change within YOUR organization? Are you predicting the next innovation or are you just waiting for your competitors to beat you to the punch?  Are you connecting the dots within your organization, or are you still operating in silos?

Bring Stephen’s innovation insights to your next event!