Stifling Innovation
The Decline of American
Economic Power
Quotes on Innovation
• …but if to grow success, then one must wake up anew
every morning and keep awake all day. I saw great
businesses become a ghost of a name because
someone thought that could be managed just as they
were always managed….
Henry Ford, My life and Work
• “pursuing incremental improvement while rivals reinvent
the industry is like fiddling while Rome burns”
Gary Hamel, “Strategy as Revolution,” Harvard
Business Review (July/August 1996
30 Sept 2003
(C) 2003, KPJ Squared, Inc.
Slide 2
What’s Innovation?
If you have a lot of off-the-wall thoughts,
you’re creative
If you can turn them into something of
value, you’re innovative
30 Sept 2003
(C) 2003, KPJ Squared, Inc.
Slide 3
Where Innovation Thrives
Software
Software
High Technology,
Finance, Fashion
Fashion,
Finance
Aerospace, High
Technology
Entertainment,
Aerospace
Pharmaceuticals
Pharmaceuticals
30 Sept 2003
Communications
(C) 2003, KPJ Squared, Inc.
Slide 4
Where Innovation Suffers
Farming
Manufacturing
Banking / Insurance
Service Industries
Retail
Energy
30 Sept 2003
(C) 2003, KPJ Squared, Inc.
Slide 5
Dour economic news for Ohio
Poverty Climbs, Incomes drop
• Many of Ohio’s best-educated and skilled workers – who
tend to be more successful at weathering an ailing
economy – are moving to other parts of the country.
• “It’s not surprising the Mid-west is the only region that
actually saw increases in poverty”
Daniel Lichter,
Ohio State University
Professor of Sociology
Columbus Dispatch
27 Sept 2003
30 Sept 2003
(C) 2003, KPJ Squared, Inc.
Slide 6
Where Innovation Suffers – Int’l Example
• Japan
– A culture where innovation is NOT generally
condoned
– A reputation of ‘copy-cat” manufacturing, done better,
faster, cheaper
– When the labor cost to quality balance made off-shore
manufacturing effective, Japan suffered
– A strikingly similar situation to the US,
and the Mid-West in particular
– Japan is showing signs of recovery. Interestingly, they are also
showing signs of some of the world’s top innovations
30 Sept 2003
(C) 2003, KPJ Squared, Inc.
Slide 7
Why is Innovation so Important?
• #1 – the Internet as a whole….
– Not many years ago,
• Your market was local
• Your customers did not know it was cheaper someplace else, or even
that there were alternatives
• #2 – … and eBay as a specific example
– One big swap meet
• What you used to have to find driving to (a limited number of) garage
sales, now can be done millions of times instantly on eBay
• The need to buy new, because you could not find what you need at
yard sales, has been reduced
• #3 – Return on Innovation
– A study on 17 successful innovations
• Mean return of 56% vs. an average ROI of 16%
– Innovation accounts for almost 50% of all growth in the US
30 Sept 2003
(C) 2003, KPJ Squared, Inc.
Slide 8
Case Study – Proctor and Gamble
• P&G (Cincinnati Ohio)
– A huge consumer products company
– Last major innovation – Pampers, 1962
– Recognized that internal innovation was non-existent
• hired new CEO, 2000 - Fired 17 months later
• WSJ Conclusion – “Tried to change the culture too fast”
– Current Innovation Strategy
• Buy Innovation
– Set up team of people that do nothing but scour the country looking for
companies that innovate, and try to acquire them
• Will it work?
– Cultures that can’t innovate, will typically stifle purchased
innovators
30 Sept 2003
(C) 2003, KPJ Squared, Inc.
Slide 9
Myths that Challenge Innovation
• Budgets are key
– by putting budgets above innovation, companies avoid the risk,
but they stifle the innovation
• Outsourcing saves Money
– Short term, yes, but long term, your talent, core competencies,
and capacity to innovate disappears
• The Best Product Wins
– If only…..First to market forces us to rethink the value and
profitability of quality
• Nothing is wrong in the existing environment, so there is
no need to change
– Your competitors are; if not the ones you know, then the ones
you don’t
30 Sept 2003
(C) 2003, KPJ Squared, Inc.
Slide 10
Symptoms of “Innovation Challenged” Cultures
• Diversity of Opinion (Dissent) not Well Received
– “We’ve always done if this way, and it worked, so leave it alone”
– When you challenge the status quo, “You’re being arrogant”
• Courage to Make Decisions is minimally existent
• Efficiency (and associated “best practices”) are counter
to trying new things
• Innovation? Something the engineers and researchers
did. Regular people just followed their bosses lead
• Success stifles innovation
– If what you are doing works, why change?
• Change is always difficult; most people like “routine”
30 Sept 2003
(C) 2003, KPJ Squared, Inc.
Slide 11
7 Stages of Suppressing Dissent 1 – 1 & 2
• Stage 1 – Arguing
–
–
–
–
It’ll never work
The boss will never go for it
It is not what we do around here
Things are OK just the way they are
• Stage 2 – Listening but not Hearing
(persisting with a wrong-headed view)
– Yes, we’ve heard from you on that. Anybody else got some
different ideas
– Thanks for your contribution
– Maybe you should put that in writing so we all have a good idea
of what you mean
1
30 Sept 2003
(C) 2003, KPJ Squared, Inc.
“Creating the Innovation Culture”, Frances Horibe
Slide 12
7 Stages of Suppressing Dissent 1 – 3, 4 & 5
• Stage 3 – Laughing it Off
–
–
–
–
“If you’re so smart, how come you aren’t rich?”
“Can I give you a quarter so you can call someone who cares?”
The focus moves from the idea to the dissenter himself
This idea may be inconvenient, a CLM, or difficult
• Stage 4 - Ignoring
Ridicule didn’t work, let’s try silence.
Rolling eyeballs and sighs are prominent
– “I don’t think we will get to your item today. Maybe next time”
• Stage 5 – Invisibility
– Not notified of Meetings, removed from memo distribution,
decisions without input
1
30 Sept 2003
(C) 2003, KPJ Squared, Inc.
“Creating the Innovation Culture”, Frances Horibe
Slide 13
7 Stages of Suppressing Dissent 1 – 6 & 7
• Stage 6 – Forbidding
– “I forbid you to work on that.”
– “Deal with your assigned tasks only.”
– Any idea the dissenter has would never be done now
• Stage 7 – Getting Rid of the Dissenter
–
–
–
–
“I don’t think your skills are up to this position.”
“You need to report to Bob now. He’ll vet your ideas.”
“We don’t have a place for you in our organization.”
“Somebody has to be laid off. I regret it has to be you.”
1
30 Sept 2003
(C) 2003, KPJ Squared, Inc.
“Creating the Innovation Culture”, Frances Horibe
Slide 14
Strategies for Success 2
• Dissent does not have to be subversive
• Dissenters almost always have the best interest of the
company are heart
• Keep dissent in the open. The open flow of ideas invites
reflection.
• Reward failure as well as success
• “Group speak” is not always best – individual
contributions outside group dynamics often return great
ideas
• Speak truth to power
The Assumption Here is Management Supports Dissent
2
30 Sept 2003
(C) 2003, KPJ Squared, Inc.
Slide 15
Why is Innovation Discouraged?
• Your parents probably told you….
– “It is not you that is bad, it is your behavior”
• Now if the parents could only learn that lesson……
– Every time you question some existing product, process, effort,
etc. you are challenging the person, not the thing
– Those that are threatened by open ideas, typically have low selfesteem, or been rewarded for consistency
• “Shooting the Messenger” sends a message that you
can’t tolerate hearing bad news
• Passion, drive, out-of-the-box thinking – cause difficulties
for organizations which see them as arrogance,
unreasonableness, and an inability to compromise. You
can’t get one without the other.
30 Sept 2003
(C) 2003, KPJ Squared, Inc.
Slide 16
Teamwork
• What makes a team work?
– A bunch of people that “get along”
– A group that has a similar objective
• True? disband the team – drive individual performers
• If a team is a collaboration of different ideas, that,
collectively, lead to a higher purpose, or greater good, then
that is “teamwork”
• Years ago, the controversial Judge Borke was to be
nominated to the Supreme Court. Protest arose, as his
views were contrary to the rest of the court and
mainstream thinking.
– My opinion: If you want 9 judges with the same perspective, fire 8
of them
30 Sept 2003
(C) 2003, KPJ Squared, Inc.
Slide 17
Teamwork – What is Healthy?
• From “IS Survival Guide” by Bob Lewis
– If Julie thinks Fred’s idea is all wet, don’t you think it would be
refreshing for Julie to say “Fred, that idea is all wet. Here is why I
think so, here’s what I think is better and why.”
– If your team had that kind of conversation, and nobody takes
offense, you have a healthy team. Otherwise, it’s time to figure
out how to fix your team.
• Cultures that support the free flow of ideas, without
“personalizing” the activity, excel at innovation.
• You need to ask “why?”, an average of 5 times in any
situation, to get to the root reason for performing an
activity.
30 Sept 2003
(C) 2003, KPJ Squared, Inc.
Slide 18
Conclusions
• E Pluribus Unum – Out of Many, One
– Diversity made this country great
– Striving for efficiency, and the associated consistency, has
discouraged looking at alternative approaches
– Diversity, particularly of Opinion, is Key to Driving Innovation
• Typical US Coastal Cultures Encourage this process
• Success stifles this process
• NOT suggesting leaving Mid-West; this should be
recognized, not as a problem, but as an opportunity
– Strategies for mitigating this situation are another discussion
• Your teams need to NOT discount any option and
encourage dissenting opinions, as diverse viewpoints
often bring clarity to direction, EVEN IF IT DOES NOT
CHANGE THE DECISION!
30 Sept 2003
(C) 2003, KPJ Squared, Inc.
Slide 19