Issue 21 (emailed version), Easter Monday, April 16, 2001
Made in New Zealand - twice winners of the America's Cup

An email magazine dedicated to making you a better leader, by providing:
— provocative thinking about what it means to be a leader
— the tools, techniques and best-practices that drive leadership improvement


In this issue
ONE BIG IDEA
That's all. Whaddaya think?

To access Portable Document Format (.pdf) files you'll need Adobe's® free Acrobat® Reader.
ONE BIG IDEA!® – Here's an approach that might grow some legs – take a single topic each fortnight, and dig it over a bit.

Last issue, we looked at Colmar Brunton Research CEO Dick Brunton's
ONE BIG IDEA. The meaning-focused organisation. Just why:
why we're going to do - for you, the customer - what we're going to do.

Seemed useful. No-one whined.

So this issue, let's take a couple or three runs at innovation.

Months ago, your editor wrote a think-piece for Peter Kaufman's Stickyideas.com web site. It's still there, by the way, at http://www.stickyideas.com/guest/archive/index.html.
The essential message was that innovating is just another business process. If your organisation needs a continuous flow of new ideas to compete and survive, I wrote, isn't hoping for 'bolt of lighting' good ideas during the ride to work or while standing in the shower just a tad unpredictable? Sure, great ideas can and do come thundering out of the blue (or maybe creep up and surprise you … out of the blue). But would you, should you, bet the company on bolts of lightening?
Turns out, of course, you don't have to.
Andrew Hargadon and Robert Sutton have spent the last five years studying businesses that innovate brilliantly, and they've got some good news (Harvard Business Review, May-June 2000). The best innovators aren't lonely geniuses, AH and RS say, they're people who can take an idea that's obvious in one context and apply it in not-so-obvious ways somewhere else. And the best companies (this is the good news) have learned how to do it again and again - how to systematise that process.
Knowledge brokering is the name given to the people and organisations that collect and re-work old ideas. It's not a new process, of course - steam engines were used to pump water in underground mines for 75 years before Robert Fulton tried one for propulsion and invented the age of the steam boat.
The process of managing innovation - the knowledge brokering cycle - has four steps: capturing good ideas, keeping them alive, imagining new uses for them and testing the best to gauge just how useful they are.

Capturing good ideas. If old ideas are the best source, then knowledge brokers need to be organised about where to look for them, how to look, and what to look for. Engineers at product design firms like IDEO Product Development of Palo Alto, Ca, noodle endlessly with anything they can lay their hands on - napkin containers, digital cameras - and field trip to unlikely places - The Barbie Hall of Fame, an airplane junkyard - in search of old ideas that might spark something new.

Keeping ideas alive. Collecting the stuff is one thing. Remembering where you put it is quite another. It seems bizarre, but IDEO engineers keep boxes of cool things, from glow-in-the-dark fabric to silver-plated walnuts, collected over the years (and curated just like museum pieces - documented on the firm's intranet), and constantly play with them. The head curator (head curator!) of this 'idea library' calls branch offices every week to track who's been playing with what, and to keep the collection records up to date.

Imagine new uses. Why is it that the best ideas seem so simple: the threaded socket that holds light bulbs, designed by an Edison inventor after screwing the cap onto a kerosene can way back at the beginning of electric light, still in use today; the inexpensive pump from a kid's squirt gun used to power a medical lavage; Reebok's Pump shoe, derived from inflatable splints, IV bags and powered medical equipment?

Testing the best. Brokers with the best track records go through lots of ideas, quickly and painlessly discarding the dogs. Hargadon and Sutton call this the 'nothing-is-invented-here' attitude - help is accepted from any quarter, no-matter who offers it. Testing might involve physical prototyping - like IDEO's full-size foam Amtrak train used to test internal layouts - or virtual, like Idealab!'s on-line car dealership that accidentally sold four cars on day one of a 90-day experiment and spawned CarsDirect.com.

The detail and the case studies are not important. They're fun, but they're not important. What matters is that you change how you think about innovation and creativity. Don't be afraid to borrow, imitate, and copy shamelessly (but legally). Reward the people who do any of those things successfully. Make it everyone's job to collect new stuff, but put someone in charge so none of it is lost. Finding new ideas and making them pay is not a work of lone romantic genius, it's an organised, systematic business process.
Brendan Boyle, who runs IDEO's toy-invention studio, keeps a spreadsheet to track ideas and where they end up. In 1998, he generated 4,000 ideas with his team: Of those ideas, 226 resulted in a model or prototype, 12 were sold, and 2 - 3 were moderate commercial successes.

Innovative Thinking in Scottsdale, Arizona
Roll forward to March 2001. Polly LeBarre. Writing in Fast Company (on-line at http://trax.fastcompany.com/ft?cutedge32701) starts by headlining:
In a fast-changing economy powered by ideas, nothing's more valuable than an original approach to creativity.

Le Barre's recipe for innovating thinking: Gather several hundred influential businesspeople devoted to the subject of creativity, add a few pundits and gurus to offer big ideas, stir briskly - and watch what happens.
That, in a nutshell, is the simple logic behind the Innovative Thinking Conference in Scottsdale, Arizona.
Since 1989, Will Rodgers, a self-styled protégé of the Technology, Entertainment, and Design Conference impresario Richard Saul Wurman, has organised the event to explore the cutting edge of creativity. The format was stark: two days of straight, 75-minute one-person presentations, with 15 - 30 minutes of audience questions. No breakout sessions, no cyber café, no special activities – just a stage and a coffee lounge. Not even a bound agenda, just a schedule, a badge, and a clipboard with a fact sheet.
The audience was a big part of the vibe, largely high-level executives in strategy, product development, and marketing from major companies like Ford, BMW, Cargill, Coca-Cola, General Mills, and Roche.
Two keynote speakers made a big impression. Harry Dent, the author of best-selling books like The Roaring 2000s, can come off as a ranting, self-promoting windbag. But Le Barre took away one Harry Dent big idea … there are, Dent claims, just three new business models. First is the "direct producer-to-consumer" model – Dell Computer Corp. Second is the "direct warehouse-to-consumer" model – Amazon.com. Third is the "human-browser" model, which takes real-time, personalised customer service and relationships to the next level.
According the Dent, Dell can survive the next economy and get out of the commodity computer business by moving away from its current system to a more complex system that handles its customers' whole problems.
Human-browser companies design around their customers to such an extent that they begin to dissolve their own organisation – and become more like a network.
This idea has huge leadership implications. In the human-browser model, the new job of leaders is to design networks and network rules that enable frontline workers to perform and serve customers with what they've been promised for years: real-time, truly personalised service.
This is the conversation leaders need to have now if they want to lead a company or an industry in 2008 – and beyond.
Problem is, Dent says, that while new-economy companies may have figured out just-in-time production of computers or routers, they have a legacy inventory: workers and customers. Workers line up on highways and slog through traffic to get to the office; customers wait in line in stores for customer-service reps. It's insane! That corporate model doesn't empower workers, and it certainly doesn't value customers' time. There's something very wrong with the idea of someone who's worth $300 an hour sitting on the phone, waiting for $7-an-hour workers to provide "service."
Already Dent sees companies like Dell and Charles Schwab beginning to migrate from the producer-to-customer model to the human-browser model – built from the bottom-up around customer solutions.
Which reminds me (your editor) of a story I read somewhere recently (Business Week?) about the GE division that makes jet engines. They don't sell engines, they sell 'thrust'. You rent GE's jet units, along with so many hours of full-service support. Say, 10,000 hours of trouble-free thrust, so much per. Not a product, a solution. Not an engine. Thrust.

Then, writer Le Barre discovered Sutton and Pfeffer. Stanford professor Robert Sutton (Dent's antithesis, apparently) has collaborated extensively with fellow Stanford professor Jeffrey Pfeffer on the “knowing-doing gap”. We've got the book (and thoroughly recommend it).
Sutton says "There is no knowledge advantage unless your organisation also has an action advantage." Ask Michael Dell, "What's your competitive advantage?" and he'll answer, "Execution. Implementing is not as easy as it looks."
Here are some big lessons on closing the knowing-doing gap:

You have to have a philosophy of action. A set of beliefs used to guide execution across a range of situations. But as IDEO Product Development's philosophy states, "Enlightened trial and error outperforms the planning of flawless intellects." If you know by doing, then there is no gap between what you know and what you do. By this token, the worst management-education sin is the case study. A better learning model is pilot or surgeon training. Pilots or surgeons in training hear about a flying or surgery challenge, they see one, and then they conquer one themselves.

The best single diagnostic question for the knowing-doing gap is, "What happens when people fail?" There is no innovation without trying new things, and new things have a high failure rate. The trick is coping with the inevitable mistakes. For example, Capital One did 45,000 experiments in 2000. Some were really silly, like testing a platinum Master Card for middle income hikers who drive Saturns. But the result was more than 30 million new accounts.
Sutton told a great story about Annette Kyle, the manager of Celanese's Bayport, Texas terminal – a loading facility three miles down the railroad track from the chemical plant. The story is well known and has been written up extensively, but it bears repeating. When Kyle took over as manager, the facility was a disaster: Three billion pounds of chemicals were loaded off barges and onto trucks to get to the plant, and in 1994, the company had $2.5 million in $10,000-per-hour waiting charges from those ships.
Kyle showed up, put on a fireproof uniform, and went to work trying to fix the system from the ground up. At first, she tried to introduce change incrementally but got nowhere. Then she went to a Tom Peters Wow! Projects Workshop and took away two valuable lessons: You have to create completely new ways of doing things, and you have make it impossible to return to the old ways.
So Kyle went ahead and hatched a revolution in January 1996 with an all-hands meeting – a first for the terminal facility – telling workers, "This is your new world." Changes ranged from no more shift supervisors, to self-managing operations, to a simpler measurement system, to demolishing the walls inside the terminal, to a "no whining" patch sewn on every uniform. She even auctioned off her desk for $65. The effects were immediate and stunning: Waiting charges dropped from over $2 million in 1995 to about $1200 in 1996.
Next issue Thursday, May 3 (ish), 2001 - reader contributions warmly received
Copyright © 2001, Macpherson Publishing All rights reserved
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Written and edited by Malcolm Macpherson
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