Jeff Degraff's Blog, page 14

Next Idea Q&A With Charlie Moret

Michigan will never be the next Silicon Valley.

Michigan can’t compete with the allure of the Coasts, or even Chicago, for the nation’s best talent.

Michigan investors and politicians are too conservative to support true innovation.

If you live here and follow the economy, you’ve likely heard these slights before. You may even be guilty of uttering one or two yourself. Yet, even though Michigan has seen its share of economic setbacks in recent years, silver linings have emerged. Some are harder to spot than others, and often it takes a fresh set of eyes to help us appreciate what we have. That’s where Charlie Moret, president and CEO of Invest Michigan, comes in.

Before Moret moved to Detroit from the East Coast nearly three years ago, he had only been to Michigan once, for a two-day conference. Working in economic development in Connecticut, however, Moret heard about the momentum building in Michigan’s entrepreneurial ecosystem. After working with entrepreneurs at Tech Town Detroit, Moret now administers the Michigan Pre-Seed Fund 2.o, a nearly $7 million state fund to help emerging Michigan entrepreneurs.

Moret sees Michigan’s future as a glass that’s “three-quarters full,” and says Michigan is actually out in front of many states when it comes to building a robust entrepreneurial ecosystem.

From a professional point of view, what attracted you to Michigan?

What I saw from the outside was just an incredible amount of start-up activity at all levels. Not only were there a lot of companies starting up, but what really excited me was the combination of all the entities that were supporting entrepreneurship. You had private individuals and companies supporting entrepreneurship; you had the state with its very vast, strong program supporting entrepreneurship; you have the philanthropic organizations that were also supporting it.

There was a collaboration going on that, from the outside, looked just incredibly supportive of getting start-ups going and creating an environment that is so desperately needed for the future of technologies and the companies that we hope will generate those jobs of the future.

In Connecticut, I understand there was a shortage of available funds – of venture capital and private investors. When there is a shortage like that, what happens?

Connecticut had a unique situation. It had a tremendous amount of venture capital funds but most of them were really investing outside of the state. I was working at a quasi-public state organization where we were investing in start-ups within the state, but we were the only ones doing that. Most of the other organizations were investing out of state.

And that’s what I think is very unique about Michigan. Because of the state-sponsored programs, we actually have over 30 venture capital firms and those venture capital firms are investing in start-up activity in the state. So it’s a very different dynamic going on in Michigan than in Connecticut.

At Invest Michigan you manage a pre-seed fund. For those who aren’t familiar with the start-up world, can you explain what a pre-seed fund is?

Sure. Our fund comes from the State of Michigan. It looks at companies – or opportunities, I should say – that are pre-revenue. These are entrepreneurs that have know-how, that have a new type of technology, and now they’re trying to build a company around it. So our job is to look at these from the perspective of technology and business – do they have something that’s innovative? Do they have the right management team? Do they have the right business plan? And then we support them in the early stages to get them up and running and allow them to hire staff and, hopefully, many of these will move forward to actually generate revenue.

In order to support these companies to really get them off the ground, it’s very high-risk capital. Therefore, especially at the pre-seed level, we do a tremendous amount of due diligence before we invest, because we’re trying to deploy state funds in the most expeditious, but also in the most prudent way to ensure that many of these companies do have a good shot of creating new businesses, new employment, and new revenue in the state of Michigan.

Without venture capital, what other options do companies have to build their businesses, especially ones involving science and technology?

There’s a myriad of resources. There are things like federal programs, like the Small Business Innovation Research program, which helps supports innovative research. The universities often have funds that are associated with technology transfer coming out of their schools.

The thing about Michigan that I was very surprised by was actually the level of angel investing that occurs in this state. When I was in Connecticut, we had one angel organization that was somewhat active and the amount of capital that went into these companies was not all that great. But here in Michigan, you have a well-developed group of angel investor groups that are highly sophisticated, well organized and supporting these entrepreneurial companies.

Coming from Connecticut, how does your view of Michigan’s economy compare to the way most native Michigan residents see it?

Right now what I’m seeing from the outside and coming in here and seeing all this activity is, if this is able to continue and people support this, I think what you’re going to end up having is Michigan being viewed someday – someone saying, “Wait a minute. Where did Michigan come from with all of this start-up activity and all these companies?”

Actually, I’ll put it in the words of a professor I was working with back on the East Coast. I told him I was really thinking about going to Michigan and that I was very intrigued about the activity level and entrepreneurship. He said: “Charlie, if there is one place that I would recommend anyone go, it’s Michigan. You’re absolutely right. You’re on the cutting edge. You’re ahead of the game if you go there because there are great things happening in that state.”

And that was the view of another Nutmegger, as we call Connecticut folk. So it was not only myself viewing Michigan that way, but a professor from a very prominent university there saying the exact same thing that I was thinking while looking at Michigan from the outside in.

I think, like anything, there’s always this tendency to say, “Oh, we don’t have this. We don’t have that.” Oftentimes I sit there and a lot of Michiganders, they complain about there’s not enough going on. I would say that the glass is not half full, I think it’s three-quarters full here. There is just so much more activity going on that it’s a great place to be.

What has to happen for this momentum in Michigan to continue?

People have to stay the course. Silicon Valley did not happen in five or 10 years. I think it’s really critical that all the organizations stay focused and say, “Hey, we’re committed to this area. We know this can yield benefits in the future but we’ve got to stay the course.”

When I look at the state-level, I see a lot of strong adjustments taking place. So there’s recognition that, when they started this, they had to get it off the ground, so they took a lot of risk, as you do with any investment. Then as you become stronger and start to understand more aspects of it, I see this fine-tuning going on, which I think is very important for the system. When money is invested, it takes a while to get the return and you have to keep improving that investment formula to have better outcomes in the future. But what I’ve seen in Michigan is that everybody is very focused on the outcomes.

To listen to the interview, click HERE.

Originally published by MichiganRadio on March 23rd, 2015.

The Future Has Come and Gone: You Just Missed It

The fundamental difference between leading and leading innovation is simply this: there is no data on the future where breakthrough innovation happens. Try guessing what will be the hot consumer electronics item in three years or what miracle medical treatment will emerge in four or what the newest fashion will be in five and you get the point. The future is highly variant and ambiguous. This is why the number one form of resistance to innovation is excessive data collection. Have you been to the meeting about the meeting? Have you seen the report about the report? While you were stuck in the planning cycle others were out launching meaningful experiments and moving forward with a reasonable sense of destiny.

No one can see the future. Even visionary director Stanley Kubrick had the astronauts bound for Jupiter call earth from a phone booth in 2001: A Space Odyssey. Innovation is a time bound form of value. It goes sour like milk. So, leading innovation requires building the bridge as you walk over it.

Guessing about how the latest gadgets will make our post-modern lives more effective or why the internet of things changes everything about everything is to focus on the trivial. Technology marches ever onward, aggression and avarice are sadly still part of the human condition and our relationship with our environment remains fragile and precarious as it has for millennia. Yes, everything changes: that’s what doesn’t change. But look beyond the obvious for the deeper, slower and wider patterns and you just might see how leading innovation will be substantively different in 2020.

For the first time, in 2015 there will be more Millennials than Boomers in the US. These Millennials, digital natives, inhabit a values driven democratic world that operates horizontally. They share everything from Airbnb to Zipcars. Conversely, Boomers, digital immigrants, have held sway for decades in a goals driven meritocracy where the best and brightest reap a disproportional amount of the riches and rewards. They have competed for everything from college grades to senior triathlons. Boomers have taken the innovations of the Great Generation that emerged from the Second World War and advanced them to their logical ends: hand held technology, non-invasive medicine, predictable financial instruments, global networks and the like. Millennials take a radical turn at this bend in the road where the very institutions that define leadership are quickly disappearing: family, company and church. They will not and cannot be lead in any way that resembles previous generations. It’s time to rewrite the books on leadership.

So what are these big changes? Let’s start with three that have already occurred and you probably don’t even know it:

The End of Marriage: According to a recent New York Times article, over half of all births to American women under thirty now occur outside of marriage. When adjusted for levels of education and economics the numbers skew dramatically higher. Lest we believe this is simply an issue of a rising underclass one only need look to Scandinavian countries, which rank among the highest educated in the world with a standard of living positioned well atop of our own, to see the same downward trend for marriage among the young. Their society has not collapsed, their children are well attended and by most discernible standards they are prospering.

The End of Capitalism: Well before the collapse of the economy in America and Europe young people started cultural movements that shifted the center of balance from economics to social values. According to Pew Research, this change is creating an enormous generation gap between Boomers and Millenials that is still widening. This may be driven by worst employment prospects in almost a century and a renewal of the idealistic frontierism with the Old West being the New Urban Corridor. Former examples of blight are now shining lights for our youth–Brooklyn, Cleveland and Detroit come to mind. Look around and you can see signs of the new anti-commercialism everywhere: shared houses and cars, urban farm collectives and the end of intellectual property rights, etc. A recent issue of the Utne Readerwas dedicated as a “Millenial Survival Guide” and filled with dozens of useful suggestions for living in a post-capitalist world. Pass the beer nuts comrade.

The End of Religion: Yikes! Where to start? According to the Washington Posttwenty five percent of Millennials don’t affiliate with a faith based tradition and almost twice as many don’t belong to a church. A recent poll in the New York Times set off a maelstrom of controversy when it suggested that an increasing majority of Jewish youth no longer identify themselves with their religion. Adding to the palaver a Pew Research study suggests that an astonishing low number of youth believe in the existence of a God. While religious participation, affiliation and even belief are waning in the West–both post-Christian Europe and the Americas–atheism is now among the fastest growing denominations albeit an anti-faith.

If you want 2020 vision, you have to be willing to face reality without malice or prejudice. Our young are seeking new answers to their questions–not ours. Perhaps marriage, capitalism and religion continue to work for this next generation but in innovative new ways and in new forms. Big ideas bring big change.

So what’s the big so what? The very institutions that have defined how we lead in our modern world are being abandoned or morphed into new forms. We need to run a wider array of experiments to learn what really works and doesn’t in the undiscovered country. We need to leave room for the stuff we don’t know now. We need to start making up the new rules of leadership as we go along. Most importantly, we need look beyond the simple thingness of innovation to make sense of the emerging complex patterns that drive change and create growth.

Want Radical Innovation? Here’s Where to Look

Innovation happens behind-the-scenes. It’s often not the faces of a company–the directors and managers–who come up with breakthrough ideas but the individuals working out of public view, in the background. These are the people who can see where the dots connect, who can tell where there are opportunities for change.

Think of the structure of any large organization in terms of a mid-office and a back-office staff. Mid-office and back-office team members work in legal, IT, and HR departments. Most of these units in larger and more complex organizations are traditionally vertically oriented so that everyone reports to their own sector’s manager. The few places in an organization that are also horizontally oriented are these back-office departments. Here, people can look across the business: back-office workers see where the points of contact are between all the parts of the larger company.

That is the insight that helped spark a wildly successful innovation in a large, well-respected Wall Street investment bank at a key moment of transition.

When the Chief Financial Officer first brought me in, it was the end of the go-go 90s, when all the mega-mergers were ending and all of the powerful investment firms were looking for new ways to make money. This venerable, old banking institution was out of position: while other banks were experimenting with different strategies or trying to put together mergers, this bank had stayed traditional, maintaining the same structure it had relied on for nearly one hundred years.

As a result of this dependence on the old way of doing things, the company was disjointed. Each of its locations around the world was successful, but there was very little–if any–communication between each of those locations. Now, the executives wanted its regional chief financial officers to be more active in advising the leaders at the center of the company, to be more anticipatory and responsive and planning for the future.

I recognized that there was an opportunity for a new source of revenue–a previously untapped area of income: the strategies developed by the legal team and other behind-the-scenes sectors. These back-office teams had come up with effective solutions to the company’s problems, to issues that many other big global companies face. In particular, they had mastered the process of moving and repositioning the assets of client companies so that they had limited legal and tax exposure. These now controversial maneuvers where not highly valued by the bank and where merely considered part of the complicated details that had to be worked through to mitigate risk for their clients.

I suggested that the company take these problem solving strategies and processes developed by back-office members and repackage them so they could sell them as a service to other industries.

The issue was that the financial officers and controllers of the organization were simply not aware of how their company worked, what went on behind-the-scenes. They gave directives and all they really knew was that the back office simply carried them out. Once these financial officers learned what they could do with these invaluable sources of creativity, they made use of these back-office solutions. The back-office started creating a book of business policy and sold it worldwide. This new initiative brought in a huge amount of revenue for the banking firm. While some business that bought these strategies didn’t replicate the original success, many–especially those in similar cultural environments–did recreate that success.

The point is this: everyone always talks to the new technology people and the trend experts when they want to achieve radical innovation, but the people you should talk to first are the ones in your own back-office. These are the people who really know where and how the business comes together–they see the opportunities for growth before anyone else does. They are the ones who can search for and reapply great ideas quickly. Don’t look far for new talent. Your brightest stars are likely already shining in your backyard.

Distinguished Achievement Awards Nomination

Every two years the Thinkers50 (T50) ranks the top 50 thought leaders in management and innovation. Because it relies on community voting, the Thinkers50 is a trusted record of real innovators. The T50 voting takes place on two lists: the Top Management Thinkers and the Distinguished Achievement Award.

Your support means everything to me, and I’m humbly asking you to vote for me in both Thinkers50 awards.

Below are descriptions of both awards and how I’m competing for them.

Top Management Thinkers. Jeff has advised many of the world’s leading corporations, using the Competing Values Framework that he co-created, on how to grow, change and ultimately move forward to see positive results. Jeff’s previous clients include Eaton, American Airlines, Coca-Cola, Microsoft, General Electric, Prudential and Pfizer. Vote HERE.

Distinguished Achievement Award. Time and time again, clients have been enthralled and inspired by Jeff’s speaking abilities and unorthodox view of innovation. He commands the room as he combines theory and practice to instill the mindset needed to make innovation truly happen. Jeff is competing for the “Innovation”, “Strategy”, and “Global Solutions” awards, Vote HERE.

Jeff DeGraff is the Dean of Innovation: professor, author, speaker and advisor to hundreds of the top organizations in the world. You can learn more about his groundbreaking University of Michigan Certified Professional Innovator Certificate Program and Innovatrium Institute for Innovation at www.jeffdegraff.com/cpi.

I am grateful for all of you who have voted and for your continue support.

Best

Jeff

The New Rules of Innovation

Go back to the basics. That is the imperative of radical innovation: take a look at the underlying rules and principles that guide your organization and see what happens when you change them. This often means disrupting and unsettling rules that your company or industry has taken for granted as given for years. No rule is a timeless truth. With new environments, new technologies, new clients, so, too must come new rules. The challenge is having the courage to break old rules.

For one small Midwestern art museum, innovation was about not merely questioning the rules of the institution but also re-imagining the very definition of art itself.

This once-vibrant museum that had played a major role in the cultural and economic life of its community was quickly losing relevance and its building had fallen into disarray. The directors needed to find a way to both raise money to repair the building and to regain the institution’s artistic reputation.

At the center of this crisis was a large source of money that the museum couldn’t use: a giant trust that had been established by donors in the early-nineteenth-century, with the stipulation that these funds be used solely for the acquisition of new art. So the current museum directors simply weren’t allowed to tap into the trust to renovate the building or develop new education initiatives.

When the executive board of the museum brought me in to help come up with new ways of creating income, I saw that this was a deeply hierarchical institution. Everyone had their own designated responsibilities, which rarely overlapped, and only a very small group of people had a real influence when it came to change.

We put together cross-functional innovation teams that paired staff members with local volunteers and community leaders. The jumpstart sessions were energetic and empowering, generating many great ideas.

But when it came to actually carrying out these ideas, the curator–an old bowtie-wearing, Ivy League-educated man–shot everything down. “We can’t do that,” he said to nearly all of our plans. The similarly conservative Chairman of the Board sided with the curator. At this standstill, there wasn’t much we could do.

Then, something curious happened at the other side of the country. The news came out that a well-known, prestigious East Coast historical society was going under. Instead of selling a few of its valuable artifacts, the group chose to shut down its exhibition space and warehouse all its treasures because its directors believed that the central role of an historical society is to preserve art for studying and not to exhibit it to the hoi polloi.

Back in the Midwest, the curator took the position of the historical society directors. He thought that they did the right thing in closing their doors. He, too, thought that fine art was meant to be studied by trained scholars, not appreciated by an uninformed public.

This sparked a vibrant discussion among the museum directors about the fundamental role of art in the world. The deputy director–a younger man committed to making art accessible to as many people as possible–took a meeting with one of the most famous museums on the East Coast. He had the idea to organize a traveling exhibition of his own museum’s collection of the Dutch Masters. It just so happened that this small, underdog museum in the Midwest had one of the world’s top collections of seventeenth-century Dutch painters.

The curator didn’t want to see these paintings on the road. He claimed there was too much risk in protecting these works in transit, that it would cost too much money to insure them. Here was the deputy director’s way in: the giant nineteenth-century trust may not have provided funds for renovating the building, but it did make provisions for exhibitions. So the museum could use that money to insure the paintings.

The traveling exhibit was a major financial and cultural success. Soon, people from all over the globe came to this small Midwestern city to see these world-class masterpieces they couldn’t see anywhere else. With this new income, the museum re-established its relevance to the community, rebuilding its facilities and launching new education programs for underprivileged children.

The deputy director–the brains behind this breakthrough innovation–went on to take a position as the head of the major museum association, becoming a kind of cultural hero for small museums everywhere. The traveling exhibition is now a commonplace form of sharing work for a wider viewership and gaining aesthetic and fiscal capital for less-known institutions.

Sometimes, the solution to your innovation initiative is right in front of you–if you’re willing to break existing rules. In this case, the solution itself wasn’t hard. It just required a rethinking of the traditional boundaries of a museum.

The Old Guard is not your enemy. Here, the curator was not a bad person–he was merely attached to a pre-existing set of rules that needed to be updated. It wasn’t about antagonizing him. It was about navigating him through the changing world we shared.

Every generation has its avant-garde–the visionary artists and thinkers who are eager for revolution. But the same people who established the rules they want to throw away were once themselves the avant-garde. Instead of considering your predecessors the enemy, think of them as individuals to learn from and commune with, Old Masters whose techniques we can re-imagine in our own future.

The Inverse Innovation Cycle: How Failure Becomes Success and Success Becomes Failure

There’s something that leaders don’t tell you about success. It occurs in a seemingly inverse order: after failure and then before it. It’s the strange cycle that characterizes all innovation: the failure that comes with experimentation actually teaches us the lessons necessary for success and the success that comes with growth encourages complacency and failure.

I saw firsthand this phenomenon of the failure cycle when I worked with a major multinational manufacturer. The organization sold a wide array of products–indeed, so wide that it had little ability to synchronize or leverage them to its advantage. Spread over dozens of brands in a multitude of markets, the company grew through acquisitions but never really integrated its products or coordinated its marketing of them. Despite its seeming overall success, the growth of organization stalled. While its products were known around the world, the company itself had never became a household name. Troubled by too many conflicting purposes and lacking a shared strategy, the leaders didn’t know how to make the company worth more than the sum of its parts.

The CEO had heard me talk at an industry conference and asked me to work with his executive team on ways to develop the hybrid innovation competencies necessary to work across a wide array of organizational boundaries. This was a matter of connecting the dots: synching up divisions, disciplines, and regions that were previously separate entities. The goal was to build the common architectures and establish the shared processes that would make the organization a more cohesive, powerful presence.

The company needed a radical overhaul of its culture and strategy. It needed its leaders to think differently. Unfortunately, many of its senior leaders were daunted by this abstract task and preferred the comfort and reassurance of the operating rhythm checklists they had relied on all along: linear technology roadmaps, tight product portfolios, and sequential metrics.

One division stood out among the others both in their ability to conceptualize the opportunity and to develop a wide array of integrated breakthrough solutions. Through ideation, experimentation and a little luck, they pierced some of the fog of the future and pieced together some existing products and services to create something truly original and compelling. This division eventually achieved significant growth while the others didn’t. It was so successful that the organization sold this division to another manufacturer for a substantial profit.

In its new home, though, the once-successful division encountered the same types of my way or the highway rules and tools posing as strategy: overwhelmed by process and too dependent on the rigidity of checklists, it stalled in its growth.

Over time, the star talent–the individuals willing to engage the uncertainty and complexity of opportunity–left for smaller, more cutting-edge firms, and yet, the stock price of the multinational manufacturer continued to grow at the same incremental rate it always did.

It’s an uncomfortable fact we simply can’t get around: innovation happens in the future for which we have no data now, so it is ambiguous and requires constant course corrections. Innovation does not have an end date: as soon as you think you’ve reached your goal, you’re susceptible to falling into a new rut. While processes may add momentary stability and safety to an organization, they also eliminate deviance. You can’t innovate if you don’t first deviate.

It may be true that a checklist will help you reach an opportunity more efficiently. But if that opportunity is a dynamic work in progress then that checklist just brings you a little faster and closer to the same well traveled places where failure knows how to find you. The next best idea is always the one that never makes the list anyway.

Innovation Starts in the Belly of the Beast

In the Biblical parable, God commands Jonah to make a journey to a foreign land and preach against the wicked. Instead Jonah sets sail in the opposite direction believing that the unrighteous were unworthy of salvation. The almighty raises a storm and the crew sacrifices Jonah by casting him into the turbulent sea where he is swallowed whole by a great fish or whale. Penitent, Jonah is expelled from the leviathan and washed ashore so that he may travel to the land of the wicked where they are moved by his words to repent and are thus saved.

The journey of Jonah is the same journey of the true innovator. It starts in the belly of the beast.

Innovation chooses you. Sure, you cultivate your own sets of talents and interests and bring those to any project you join, but there is only so much agency you have over any given innovation initiative. If you want to change the world, you need to go where the world needs changing. This isn’t something that you decide. Innovation is greater than any individual who wants to achieve it. When we sign on to enact change, we also have to agree to go wherever it takes us.

This is the struggle that two radically different practitioners both trying to reach the same goal grappled with: they couldn’t see that, if they really wanted to make their ambitions a reality, they needed to go places where they didn’t want to be.

Andr was a young renaissance man who wanted to effect big change in the world. Well-educated, slightly cynical, and insanely creative, he was committed to saving the environment. He walked and rode the bus everywhere and imagined everyone would do the same one day.

Marcel was the heir to a family business. He turned his organization into a world-class company–one of the leading manufacturers of plastic bottles and containers–and now he wanted to make it more eco-friendly.

When Marcel came to me for help with going green, I immediately thought of Andr and brought the two together. For all their obvious dissimilarities, they had a fundamental goal in common: to reduce our environmental impact in a meaningful way.

After a series of initial meetings, Andr and Marcel simply couldn’t find a middle ground. Despite their shared objective, they couldn’t get past their own agendas. Andr had a predetermined set of innovative processes he wanted to implement, and Marcel wouldn’t budge on changes that were so extreme that they would compromise his company’s position in the industry.

The negativity gained momentum. Andr and Marcel each had their own set of allies who refused to engage in genuine conversation with the opposing side. They both wanted to see their own version of innovation strategy enacted immediately and failed to see that they needed a hybrid step-by-step plan to get from here to there.

While failure is an essential part of the innovation process, sometimes it cannot be overcome.

In this case the biggest failure was me. I got involved as an ambassador to both sides too late in the process. A disagreement on how to approach innovation had turned into personal aspersions. There was too much ill will to move forward.

Andr quit the venture and went to work for a small consulting firm with like-minded individuals. In his new position, he found accord, though he ultimately faced few challenges–and had little impact.

Likewise, Marcel’s company continued to produce its plastic bottles and containers much as it had before and never realized its eco-friendly goals.

What it took me too long to understand was that sometimes people can’t find a way to get together and make their way to the new and unknown places on their own. They need an emissary who can go back and forth to facilitate translation and productive communication.

What innovators need more than anything else, though, is the willingness to go where innovation calls them. If they try to go where they want to change–instead of the place that needs to be changed–then they’ll meet the same fate as Jonah did when he decided to go his own way.

Innovation often requires us to walk and work among the uninitiated and unwashed. The favored few have little need for the novel and new. So they do not venture into the dark and dangerous places where innovation is born. It is only in the belly of the beast that innovation swallows innovators whole.

Critics Make the Best Innovation Evangelists

Smart people can make bad innovators. The brilliant thinkers at the top of their field are often the individuals least willing to take the risks required to implement deep change. Innovation is a highly iterative process based on trial and error. When we’re moving toward the uncertainty of the future, the only way to find the best solution is to learn from our mistakes. For this reason, failure is not only inevitable–it is necessary. This is something the smartest people around just can’t bring themselves to do: go through the failure cycles. Because they’re convinced of their own apparently effortless superiority, the greatest intellects often believe that they simply don’t have to experience the failure cycle the way everyone else does.

This is the beguiling paradox I encountered when I was called on to develop and implement an innovation process to help improve the quality and efficiency of patient care at a leading university medical center: the most gifted, experienced surgeons were also the least open to implementing change. In fact, the rock-star surgeons were reluctant to acknowledge that there even was a problem to be fixed. This was in the early 1990s, when insurance companies paid whatever the medical centers charged, but that was quickly changing. However, in the surgeons’ small world, all they saw was that the operating room timeslots were consistently filled and everything was perfect except finding a last minute parking spot for their luxury cars. To them, there was no reason to innovate in the first place. They didn’t understand that emerging technologies were making it possible to dramatically increase the speed and effectiveness of medical care, and insurance companies were leading the change.

So when I came into the picture, the surgeons didn’t want to hear what I had to say. The way they saw it, even though I had experience leading innovation, I didn’t have sufficient background in medical practice or research and had no business advising top medical professionals what to do.

I decided to engage an outside expert, a brilliant physician with both an M.D. and Ph.D., and extensive experience in medical innovation, in order to increase my own understanding the situation, develop a viable strategy and most importantly improve my standing with the prominent medical faculty. After a month of extensive evaluation, we both concluded that the medical center needed more than just an innovation process, it needed a partner to be sustainable. So we started merger talks with the CEO of the other leading medical center in the region.

Recruiting this outside specialist didn’t get me any more support from the still-skeptical surgeons, who remained set in their old ways. I even brought in extensive data from various studies conducted on medical efficiency to emphasize why these innovations were so important, and the surgeons dismissed the information as ungrounded and irrelevant.

Then, in a move that I was convinced would finally bring the surgeons to my side, I took them to visit another medical facility, where innovations had greatly improved all aspects of patient care, so they could see first-hand what could be done. Whereas the average cardiovascular surgery at our hospital took 20 days in the step-down unit before the patient was discharged, the same procedure at this other hospital took only 4 days.

And yet the surgeons refused to see the light. They came up with far-fetched explanations and excuses as to why their procedure took so much longer: existing rules and regulations that they supposedly couldn’t get around, differences in climate, less healthy and older patients.

Nine months into this project, I was at a standstill. Then one day, I learned that one of the most well-respected–and notoriously out-spoken–of the surgeons had something in common with me: we both graduated from the same university. I told him about our shared alma matter, and this became a starting point for a real conversation. I asked him honestly what he thought we should be doing with our plan for change. I asked him for his input and, through our talks, I enrolled him as a supporter of the initiative. He went from being our most vocal critic to our most ardent evangelist–all because I made what was once my innovation his innovation. By transferring the ownership to him, I helped turn his reactive position into a proactive one.

Soon after our breakthrough conversation, this senior surgeon enrolled his colleagues and the junior doctors who all looked up to him. With this new base of support, the project very quickly gained momentum. Nearly 120 days later, we saw big results: the 20-day patient turnaround average turned into an 8-day average with improved patient recovery rates.

Amidst all this advancement, the two CEOs involved in the merger sued each other. The news came as a shock to me: what I initially took to be an issue of using innovation to improve efficiency and quality of care had turned into a power struggle over who would be king. But this proved to be the unavoidable pattern of medical mergers in the coming years: these unions were powerful but short-lived, coming one after the other, not unlike someone on their fifth marriage. So this wasn’t a source of discouragement–it was merely the reality of the industry and the way growth took form.

The biggest challenge was enlisting the support of my harshest critics–the surgeons themselves. It wasn’t until we established our rapport and trust that we achieved the momentum that led to big change. With every important innovation comes resistance. The more meaningful the innovation, the more resistance you’ll meet. And if you don’t encounter any resistance, then you’re likely doing it wrong: you need to take more risks and increase the speed and magnitude of your project. The wonder of it all is that your most relentless adversary just might turn out to be your greatest ally.

Innovation in Higher Education: Here We Go Again

According the Chronicle of Higher Education and National Public Radio, competency based education is the new thing. Actually, it’s the old thing. Vocational education, once the main road to middle class prosperity in America, has returned with a new name and an updated version of the same approach: see one, do one, teach one. Electricians, plumbers and even physicians are all still apprenticed and routinely evaluated to gauge their level of skill and expertise.

John Dewey, the great American philosopher and leading prognosticator of a school of thought we now call pragmatism built schools and universities at the turn the Nineteenth Century that influenced the entire American educational system to become more practical, applicable and measurable. This functional approach to education worked so well that the United States innovated its way past more established nations in less than a century.

So if competency based education is such a great idea, why did we return to the more general and rarified curriculum and pedagogy of a liberal arts approach? Because higher education is not just about the acquisition of skills. It has become the central socializing system in a post-industrial economy and the dynamic exchange where new ideas are created and shared, or bought and sold, depending on your point of view.

The campus has become the breeding grounds for innovators and the cradle for their progeny. Pick any major research university in the western world and observe the prosperous amalgamation of businesses and institutions nicely situated across the street. They vigilantly stand watch for the next new thing. It turns out that knowledge isn’t just power: it’s money as well.

A recent cover story of the Economist, America’s New Aristocracy, points out that our most prestigious universities are getting ever more selective. Anyone who was lucky enough to go to a top tier institution quietly wonders if they would in fact be admitted to their alma mater today. A liberal arts degree from an elite school has come to mean so much more than the development of any number of competencies. It has become a premium brand: something valuable and rare. It suggests status and gives entre to those talented few who can speak the arcane languages of medicine, law, physics and finance. It’s little wonder that studies on social immobilitynicely correlate to the astonishing rise in the cost of a quality college education. It’s among the best of all possible investments if you can afford it. There’s the real rub and reason behind the push for new approach to higher education.

Thomas Edison, arguably the greatest inventor this nation has produced, famously espoused a hands-on experiential approach to education: on the job training. While Edison was the prototype for the journeyman inventor and entrepreneur, the complexity of emerging scientific discoveries quickly outpaced his practical understanding of electromagnetism and the mathematics required to calculate its transmission over distances. His competency based education became his limitations. It left him insolvent for years.

Over a decade ago I created a leading innovation institute and certification program to develop highly practiced innovators. I’ve been lucky enough to work with many of the top companies and organizations celebrated for their innovation prowess. What I have learned firsthand is that contemporary innovators need to understand both theory and practice to be successful. While certifications are a viable means of demonstrating the acquisition of relevant competencies, much in the same way that Girl Scouts earn badges, they do not replace the requirement for deep domain expertise which is developed over time through an integrated curriculum and commensurate pedagogy. Furthermore, competency is merely the price of admission for anyone wishing to truly create anything better or new. That also requires an ongoing understanding of the complex fundamental principles and forces that move our world.

As an outspoken proponent of competency based education for over three decades, what I’ve learned from trial and error on the front lines is that the reason things fail is usually because we confuse why they work with how they work. While new technology and an alternative accreditation system will make higher education better, cheaper and faster, it won’t make it any more valuable. To do that would require changing our perspective on who we value and why we value them. Now that’s a competency worth developing.

Leading Innovation: How to Jumpstart Your Organization’s Growth Engine

Productivity is no longer enough. Today, growth means pushing strategic innovation initiatives across the enterprise – to everyone, everywhere, every day.

Join me, Jeff DeGraff, professor of management and organizations at the University of Michigan’s Ross School of Business as I present a simple approach for leaders to recognize, develop and launch creative ideas that become winning solutions.

In this webinar, learn more about the DeGraff Hypothesis, which explains:

That productivity is no longer enough
Why too many organizations lack culture, competencies and leadership practices required to execute and sustain innovation
How to develop leaders who can systematically add innovation to existing business practices
And more…