Jeff Degraff's Blog, page 15

Why Courage Is More Important Than Creativity

A crisis is the perfect start to your revolution. When an organization is at its most vulnerable point, it is also most poised to rebuild itself. At these seemingly disastrous moments, the risks and rewards normally associated with innovation are reversed: you have a little to lose but a lot to gain. It is only when a firm is compromised that it truly engages its people and enlists them in their own survival. Out of the apparent chaos can come wildly generative energy.

This is exactly the situation I faced when leaders at a financial information services provider on the verge of collapse called me to help them navigate through their dire situation. I had worked with them five years earlier to develop an executive-training program. Back then, we discussed potential game-changing innovations over sumptuous meals in beautiful locations. The atmosphere was a carefree one–things were looking good. The disruptive future seemed too far away to warrant immediate action. Now, five years later, the organization was close to bankruptcy in an industry that was changing more quickly than they could keep up with. All the time they spent focusing on their current corporate clients and known competitors, they failed to pay attention to the trends emerging in the world around them and the wide array of small upstarts that were quickly capitalizing on these new opportunities. The company was looking for a new start.

They asked me to help plan their upcoming annual meeting. Usually an event held in a sunny, tropical place where the organization’s best and brightest could enjoy themselves as they celebrated their successes, the annual meeting this year would be something very different. We agreed to have the meeting at a renovated truck manufacturing plant in the company’s home city–a large open space with no chairs, where everyone would have to stand or move about to get their creative juices flowing.

We created a frenetic, experimental process where individuals from all levels and sectors talked through the five central problems that we collectively diagnosed: the speed at which the organization moved to adopt new technology, the development of a 21st-century workforce, the mining of big data, superior client management and a culture of innovation.

On the first day of the retreat, we approached the future in a three-step process:

We started with an honest evaluation of the things that worked and the things that didn’t work now. Instead of dwelling on the things that didn’t work, we focused on building onto the things that were already working.
We looked at macro trends–larger forces outside of the organization–in the world, specifically things that had both high probability and high impact.
We brainstormed initiatives and projects to run that would offset all the barriers we anticipated.

They conversation was hot and moved too quickly for many of these bright leaders who wanted more time to study the situation carefully. But there was not time. They needed to take action now. There was a deep sense of foreboding at the end of day one.

On the second day of our retreat, we determined precisely what kind of talent the firm would need to make all of these plans a reality. Everyone reported back to each other the concrete steps they would take as individuals in contributing to these larger efforts. They began to see real opportunities to reinvent the business and were gaining momentum. The mood had shifted from despair to possibility.

At the end of the summit, one of the organization’s most talented leaders stood up with a piece of paper that he originally intended to be his official resignation. He ripped the paper into many pieces and threw them all around him. The session had been so promising and encouraging to him that he not only abandoned all plans to resign but also publicly pledged to buy thousands of shares of the company. He sat down and someone else stood up, doubling his pledge. Next, one of the organization’s senior executives vowed to buy triple the shares. This continued as several others followed suit. The spark of hope spread through the room like a wildfire.

This story has both a happy and a sad ending. Rebuilding the company from the inside-out required major downsizing. This meant thousands of layoffs and massive restructuring. In short, the organization had to give up a lot in order to reinvent itself. The next three years were painful, yet the outcome was overwhelmingly positive. The company found itself once again at the top of the industry.

When things are good, there is little immediate reason to change your business, your customers and look beyond your current competitors. The perceived distance between now and then, cause and effect, makes the best of us delusional. This is why those of us who were once entrepreneurial find ourselves surprised when the next wave of innovators arrives to find out of position.

Innovation hurts. There is no way around this fact: innovation entails tough sacrifices in often drastic circumstances. It’s harder to stop doing old things than it is to start doing new things. The first step of all innovations is destruction. For this reason, innovation takes something much stronger than creativity: it takes courage.

How to See the Future First

One of the biggest challenges innovators face is to truly understand the market opportunity space before they start creating a strategy and well in advance of product development. Since we can’t see the future, we need to gain some real insight from deep domain experts and make sense of possible scenarios. Even if the innovations are disruptive and the future is discontinuous, all we can really know is based on the data we have today. So it is through diligent inquiry and sense making that we get some general idea as to what will likely happen next. But creating innovations that we believe will succeed in the future requires that we first develop some clear foresight.

I was given such a challenge when a celebrated medical device company came to me with the following questions: 1). “How do we develop a vision of the future that is highly probable?” 2). “Given that probable future, how do we develop innovations that will have a high impact?”

This organization had mastered incremental innovation, smaller and less intrusive devices for example. Now they were looking for a breakthrough new product: something that moved them beyond cost competition.

Innovations often get stuck in the strategic planning cycle where excessive data collecting about the future often postpones their development. So we needed to do something quickly to create momentum and give the organization a good look at what the next three years might bring.

We decided to hold a one day summit at an airport hotel and invite a diverse group of domain experts. In attendance were a wide range of physicians: radiologists, cardiologists and vascular surgeons. Some were well established while others were young up-and-comers. Others attending the summit were product engineers, marketing staff and senior leaders from the company: about 50 people in all. The goal of the summit was to develop three scenarios of the future and identify what products would be needed to succeed in each one:

Health care is driven by breakthrough technologies and cost is not the primary driver
Health care is driven by cost and breakthrough technologies are slow to be adopted
Health care is driven by personalized patient care and costs and breakthrough technologies are secondary

Each group was given a one page written scenario that they were asked to discuss and adjust to be more realistic given their experience. Within each scenario group, physicians were asked:

What are the future opportunities and challenges you will face?
What types of innovative products and solutions will you need to capture these opportunities and overcome these challenges?
What attributes and functions will these products and solutions need to posses to be adopted by your organization?
What will these products and solutions need to cost to be adopted by your organization?

Leaders from the medical device company watched on as the scenario groups of physicians answered these questions. Afterwards, they joined the physicians to gather more detailed information on what would be needed for future success and to discuss potential trajectories for further research and development.

The one-day summit was adjourned and attendees headed home. The responses of physician scenario groups were recorded, codified and worked into strategic pathways and technology roadmaps with regular review for revisions based on changing conditions in market demand, innovation breakthroughs and the competitive landscape.

After several months of work, the medical device company developed a game changing new product that capitalized on the foresight of the physicians. Sales and profits grew quickly. They had created a winning innovation.

Unfortunately this story of this innovation doesn’t end here. While the forward thinking members of the medical device company created the new product and the new market, they failed to engage the more conservative financial and manufacturing leaders. They were organizational orphans: given enough resources to survive but not enough to thrive. Competitors soon invested heavily in copycat technologies that could be produced faster and cheaper and drove the medical device company out of the market it had created.

So what’s moral of the story?

You can’t see the future first from the boardroom

Gather a diverse group of deep domain experts and engage them in the sense making process to quickly understand the real barriers and opportunities for specific innovations


Commercializing your innovation requires much more than a product and market launch

Enlist early the operational leaders in your organization and beyond that can quickly take a proven product or service and get it to scale


Once you move on an innovation you will rapidly pursued by larger and better resourced rivals

Use your advantage as an entrepreneurial firm to move faster with ever more radical variations

Seeing the future first is worthless. Getting to the future first is priceless.

How to Develop the Next Generation of Innovators: Stop Treating Everyone the Same Way

You may have never heard of Joseph Schumpeter, an eccentric Austrian economist who taught at Harvard in the 1930s and 40s. But to those of us who study the strategic and financial dynamics of innovation, he is far more influential than his peers John Maynard Keynes or Milton Friedman. Schumpeter is the guy who made the entrepreneur the engine of growth for an economy, and several Nobel Laureates since have suggested that he was right on most counts.

Schumpeter’s most famous and controversial work is his disjointed and rambling classic, Capitalism, Socialism, and Democracy. In it, he warns that as capitalism advances, it becomes more efficient and seeks better and cheaper ways of getting the work done even if it means replacing jobs with machines or sending them abroad. In other words, corporations use innovation to do more with less. But he warns that capitalism is not sustainable because, in a democratic society, majorities vote for the creation of a planned economy where the wealth is distributed equitably by the state. You need only look to the current European economy as a whole to see what Schumpeter saw 75 years ago. No friend of socialism, Schumpeter cautioned that democracy taken too far will destroy meritocracy, where the best and brightest advance through personal initiative, resourcefulness, and innovation–the essential attributes of entrepreneurism. Schumpeter has a Darwinist view of innovation where only the fittest excel.

What if we are going about jumpstarting our own economy the wrong way? I’m not talking about any political party. I’m talking about our modest sensibilities: our belief that giving our best and brightest special consideration is elitist and wrong.

The good news is that many of our sons and daughters are indeed the best and brightest. The bad news is that we treat them the same as anyone else, and inevitably they leave for places where they are considered special.

Here’s an oldie but goodie idea: Let’s invite those who have proven themselves to be the best and brightest entrepreneurs and ask them to identify a dozen students from our top institutions of higher learning and other competitive venues where talent and ambition are rewarded: special innovation training, one-on-one mentoring with proven entrepreneurs, fast track funding and easy access and terms for business work space development. But before we develop any rewards, let’s try something different this time and ask them what they need to succeed. Let’s do our best to give it to them. Most importantly, let’s make them feel special, because they are.

With time and a little luck, we will gain momentum and begin to re-establish our creative culture and become more inclusive. Who knows? Our best and brightest might just prove old Joe Schumpeter wrong and find a way to balance democracy and meritocracy here in America.

What Are You Willing to Give Up to Get Innovation?

Most descriptions of innovation end up in overreaching hyperbole: groundbreaking, disruptive, radical. This shouldn’t surprise anyone because innovation is basically a type of positive deviance, a form of useful novelty. What separates a new soft drink that has a hint of cherry flavor from a vaccine that prevents the onset of Alzheimer’s Disease is the magnitude and speed at which it deviates from the norm. Put another way, it’s how much and how fast the innovation makes the way we do things now obsolete.

The trouble is that most people aren’t particularly good at recognizing which innovations will change our world and which ones are simply the latest in a series of enhancements or improvements. For example, your iPhone is a beautifully designed assembly of the latest stock parts made by an integrated federation of East Asian manufacturers. What makes this gadget innovative is the digital ecosystem in which it exists: a family of interrelated electrical devices, an easy to use system of content delivery and an operating system that syncs it all up.

While we swoon about the latest technology toy, some of our biggest innovations are going relatively unnoticed. For example, while it’s widely known that 3D printing is a powerful way of prototyping products, few realize that the next step is to bypass conventional manufacturing altogether. Boeing and General Electric are already producing large-scale parts for highly complex aircraft and turbines. Mass producing one of a kind automobiles can’t be far behind.

Perhaps the most exciting use of this type of additive manufacturing is happening in the field of medicine where they are creating artificial organs from biological materials. It’s very likely that sometime in the not-so-distant future your artificial heart will be a new and improved replica of the one that is now out of warranty. This takes the idea of personalization to a new level.

The point is this: one size never fits all. And it really never did. Variety is indeed the spice of life and the basis of real innovation. But to get real variety we have to give up a few things: most notably, efficiency. You see, efficiency is created by reducing variability and replacing it with replicable standards. McDonald’s has a turnkey formula that functions the same way everywhere. There are no surprises. But the hidden cost of doing more with less is the elimination of deviance, or innovation. Giving up the tried and true is the real cost of getting to the new and improved.

So, the next time you start talking about the need for standards at work or school, ask yourself “What are you willing to give up to get them?” Look to the past to see the future. The most standardized jobs are easily off-shored or replaced by low-level applications. Talk to anyone who was a telephone operator, a travel agent, or worked on an assembly line. The required skills for our innovation economy will require us to purposefully apply our creativity. In your world that is strapped for time and resources, are you willing to deviate from the efficiency of your routine to create something extraordinary?

The Top Innovations We Should’ve Seen in 2014

With everyone else in the year-end spirit of looking back, I’m ready to look forward. Forget smart watches, 3-D printers, and hoverboards–the year’s most outstanding innovations were the ones we didn’t see. My best-of list is a wish-list. Here’s the top innovations we should’ve seen in 2014. In a perfect world, we’ll see them in 2015.

Reckless Driver Identification App: The concept is simple. You see a vehicle driving recklessly. You point your phone at the vehicle and the car is scanned, tagged, and added to a database. An image of the reckless car appears on your smart phone GPS app. Every time that driver is in your vicinity, his or her car appears on your GPS as someone to avoid. You can share your Reckless Driver database with friends and colleagues. When the reckless drivers inevitably cause a wreck, this data base information is admissible to law enforcement, the legal system and, of course, their insurance company. Think of it as the social network you don’t want to be a part of.

Stat Boy for Facebook: If you’ve ever seen ESPN’s sports talk show, Pardon the Interruption, you get the idea. The two sports columnists Tony Kornheiser and Michael Wilbon argue the key issues of the day. Like any good argument in a sports bar, they play fast and loose with the facts. So at the commercial breaks, the “stat boy” Tony Reali jumps in and corrects all the errors. It completely changes the arguments and shows who’s really right. Now let’s apply this role to Facebook. How many times have your friends from work, church, or high school posted things that are just factually incorrect and then go on to rant about them? For a small fee, you can anonymously enlist a Stat Boy for Facebook. Your Facebook Friends can still post their opinions, but at least everyone will know who’s right.

Smart Airport Ticket Scanners: Have you ever tried to board a plane only to see the line over-run by those over-eager, pushy people who try to board before it’s their turn? Is it any wonder that we have so many late flights? Here’s the solution. If you try to board before your section is called, your ticket is immediately downgraded to the last group that boards and you are required to check your luggage. Similarly, the Smart Airport Ticket Scanners can immediately access your profile. The airlines and airports keep a database. If you are a repeated offender, you get on the no-fly list. Conversely, if you board as directed and are identified as helpful to those who need a little help, you can be upgraded to business class. This will protect us from all the poor manners that even TSA can’t screen for.

Of course these are just the beginning. What about a reverse crowd-sourcing app that takes money away from people with stupid ideas? Because for every Kickstarter, we also need a Kickstopper. Or how about a fantasy politician league where you can draft, drop, and trade players online and the real politicians get to see their statistics, standings, and wins and losses. It’ll be March Madness year-round.

I’ve made my list–now check it (twice). Tell me what’s missing–the nice and the naughty. Which innovations that never came to be in 2014 would you like to see next year?

How to Lead Innovation like Superheroes: Knowing When Your Strength Becomes a Weakness

Your biggest strength–the quality that makes you stand out from other people–can also be your greatest downfall. We all have an underlying worldview that determines the way we approach all of the challenges we face. Some people are big-picture thinkers. Others fixate on particulars. Some people are pragmatic and by-the-book when it comes to solving problems. Others are dreamers who go outside the box. Some people are goal-oriented, driven by the thrill of competition. Others are patient listeners, inspired by a co-operative community that they build around them. We call this fundamental perspective your core competency or dominant logic.

The problem is that our dominant logics overpower all other points of view. Each of us sees the world in such a prescriptive way that it’s hard–indeed, impossible–to consider anything without being overwhelmed by our own preferred method of thinking. Our dominant logics are so intense that we lose the ability to think outside of them. They give us blind spots. We become prisoners of our own ideology. Left by themselves, the pragmatic thinkers become bureaucrats. The big-picture thinkers become chaotic. The goal-oriented thinkers become control freaks. The patient thinkers become irrationally enthusiastic.

This is one of the biggest obstacles to overcome in our current political situation, where stubborn leaders and decision-makers, paralyzed by their dominant logics, unwittingly block progress. Take a look at the political schisms and ideological battles happening around us, stalling forward movement and change. When we’re too committed to our own dominant logics, we start thinking irrationally.

In order to achieve an innovative mindset, we need to overcome our own dominant logics. The only way to fully understand something is to look at it from multiple viewpoints. This is about communicating with people who are unlike us, understanding that no single outlook is better than another. We are most likely to create something new when we put diverse outlooks together.

I’m not suggesting that we all abandon our dominant logic and become different kinds of thinkers. Rather, the goal is to embrace our dominant logic while we complement it by surrounding ourselves with thinkers of all kinds.

The best teams are like bands of superheroes: each member acknowledges and makes use of his or her gifts and talents but they don’t let those superpowers limit them. They use them at the appropriate moments and then stand back and let their partners take over at other moments.

Do things that make you feel uncomfortable. Talk to people with whom you have nothing in common. Remember that the ideal solutions to the most complicated problems will never involve just one mode of thinking. They always require a cross-boundary, interdisciplinary approach that takes advantage of multiple–and often seemingly contradictory–mindsets and ranges of skills.

Innovation is not about alignment. It is about constructive conflict–positive tension. What happens when pragmatic thinkers work with big-picture thinkers? What happens when the quick thinkers meet the patient thinkers? This is exactly how and where innovation happens: you need to surround yourself with people who are not like you. Who knows, they just might be superheroes with their own special powers.

The Upside of Discovering Your Incompetencies

How well do you know yourself? Do you know your weaknesses as well as you know your strengths? Having deep self-awareness about your own shortcomings isn’t just important when working collaboratively in any organization–it’s essential. Consider this tale of a whiz kid fresh out of graduate school, hired as an operating officer for a rapidly growing company. In the wake of wild success, he unexpectedly found that things weren’t getting done. When he confided in his boss, he claimed that the problems were with the people he managed. But the CEO told him that what they all had in common was him. He was the source of his own problem.

“Ask everyone on your team what you’re incompetent at,” the CEO said. And he did. One by one, they told him what he couldn’t do. “You’re not very good with finances,” one said. “Marketing just isn’t your thing,” another said. When he went back to his boss, the CEO told him they were all correct. “Well, they’re right. Now make other people do all those things so you can have the time to do what you’re best at–which is, of course, strategy. No one can come up with solutions to complicated problems like you can.”

The whiz kid learned to delegate. He learned to rely on the talents of others as he showcased his own talent.

Now, look at your own skills as an innovation leader and classify them according to these four categories:

Incompetent: things you simply can’t do
Competent: things you can do with mediocrity
Masterful: things you can do with ease and skill
Unique: things you can do with superior talent

First, decide objectively where you think you might be incompetent. Give those kinds of tasks and responsibilities to another member of your team. Next, look at the areas where you are merely competent and assign these actions to other members of your team to supplement your own competency. Then, find the areas where are masterful and choose a member of your team whom you can train as your understudy in those tasks. Finally, determine the areas in which you are unique–your one-of-a-kind gifts or skills. Here is what you always need to focus on. This is the way to maximize your own value to the team.

Whether you’re a finance guru or a marketing mastermind, we all really have only one thing that we’re exceptional at. It’s simply not possible to be a genius in everything. But it is possible to surround yourself with people who can do the things that you can’t.

Need to Get Creative? How to Create an Idea Space

Where you work is how you think. Your immediate surroundings determine your mindset, the way you generate ideas and solve problems. You can’t break institutional barriers within the walls of your everyday workspace. If radical change is what you seek, create your own idea space–a discrete location away from workplace distractions where you can cultivate and share new knowledge. Think of it as a retreat, a refuge, an escape from the constraints of office culture.

An idea space is as much mental as it is physical. Idea spaces spark wild energy as like-minded people come together and brainstorm new initiatives. Dislocating from the typical task-oriented work mode helps us gain the freedom of mind and insight necessary to produce great ideas.

Hallmark is an organization that understands and benefits from the power of idea spaces. Next-door to its headquarters, the company has a giant innovation facility full of studios for crafts like glass-blowing, ceramics, and papermaking. These activities allow employees to take a break from the day-to-day grind and rejuvenate their spark. Hallmark also invites workers to take sabbaticals and travel. These sabbaticals give people the permission to try something they would not try at home–and they can return to inject some of their inspiration back into the company by initiating new product lines. The world is their office.

The development of an idea space can help you achieve any of these goals:

Provide a sanctuary from institutional thinking
Give employees a place to free their minds and develop creative thinking ability
Offer a ‘test track’ to experiment with new ideas
Develop communities of practice for sharing knowledge and experience

Give your space a metaphor or theme. This will shape how people use and think about the space. By calling an idea space “kitchen of the mind” or “corporate garage,” you express the real purpose to an uninitiated participant. You can use the theme to develop the physical space as you would a theme restaurant.

Idea spaces come in many forms, but often fall into one of four categories:

Stimulation: Spaces that stimulate people’s imagination through new interaction. These include art, music, and dance studios, field trips, and sabbaticals
Facilitation: Spaces that bring in seasoned “travel guides” to assist small groups in their journey toward breakthrough ideas and action. These include jumpstart programs and creativity coaching.
Experimentation: Spaces that provide a workshop or laboratory for the development of ideas into products, services, and learning. These include virtual labs, idea banks, incubators, and accelerators.
Education: Spaces that develop creativity competencies in individuals and groups through teaching and partnership. These include training sessions and mentorship programs.

Don’t expect fast, quantifiable results. Be patient as you build your sanctuary. Remember that the predictability of routine is what you’re getting away from. In an idea space, chaos is your friend.

How to Do More With Less

Innovation is not an event. It’s a long process that depends on incremental changes along the way. These small adjustments may not seem momentous on their own. Yet in their context, they can be game-changing. Figuring out how to cook a pizza thirty seconds faster doesn’t sound like a big deal, but when you make seven million pizzas a day, that tiny alteration suddenly has a major effect.

These kinds of modifications to an existing procedure are called process improvement systems. This form of innovation emphasizes the craft of production. Implementing apparently small but ultimately significant enhancements is a reliable and stable way of ensuring sustainable growth.

Process improvement systems will lead you to any of the following goals:

Optimizing resource use
Managing complex activities effectively
Aligning organizational design with key processes
Establishing and articulating clear roles and responsibilities

First, discuss the issue at hand and identify the problem that needs to be fixed. Ask yourself these questions: how does it occur? Where does it occur? When does it occur? Whose problem is it? These will help you select opportunities for improvement.

Try multiple options at the same time and then reconvene in two or three weeks to see what’s working and what’s not working. Now, determine the opportunity with the highest success rate and integrate these process improvements on a large scale.

Once you’ve made the change, it’s time to extend what you’ve learned. Develop simple rules of thumb based on the lessons learned–rules that you incorporate into the existing structure and procedures of your organization:

Technical rules: best ways to perform certain tasks, tricks of the trade, safety procedures
Situational rules: time allocation, priorities, boundaries
Behavioral rules: actions, values, attitudes
Leadership rules: leadership styles, mission, esprit de corps
Financial rules: expense approvals, rates of return, budgets

In our age where big data reigns, it’s easier than ever to find out what’s going wrong. And it’s just as easy to quickly model the things that we can do to fix these mistakes. Innovation doesn’t always have to be radical. The beauty of process improvement systems is that nothing big or unexpected happens. Surrender your imagination to the facts at hand. Don’t try to seek out a grand vision when a smaller change will do. Remember that sometimes doing more with less is the best solution.

How to Weed Out Projects That Aren’t Worth Your Time

Forget what you’ve heard about comparing apples to oranges. It’s often helpful to put your organization’s diverse projects alongside each other and compare them. This is the point of maintaining a portfolio: to treat initiatives like investments and to weigh them against each other, balancing and maximizing the relative worth of these projects through disciplined decision-making and resource allocation.

Portfolios are objective, decisive tools that ensure a safer path to value. Since a portfolio depends on quantitative data and logic, it is an effective way of evaluating priorities in your organization. It will help you determine which projects are worth pursuing and which ones you should throw out.

Thinking in terms of portfolio management can help you achieve any of the following outcomes:

Putting the best ideas on a clear and fast track to success
Making sure the ideas with the most promise get the most resources
Aligning new products and services with strategy
Reducing risk in experimentation with new projects

First, determine the desired goals of your portfolio. These might include reducing failure rates, diversifying types of innovation, launching higher-impact initiatives, or leveraging innovation across business units and locations. Once you’ve agreed on a set of targets, you need to come up with tangible criteria for reward and risk measures so that you can concretely measure the potential success of an initiative.

Most people get too attached early on to ideas that simply won’t pan out. It’s harder to stop projects than it is to start new ones. Portfolio management is a quick way to see which ideas you need to abandon and which ones you need to support. Ask yourself these two questions: Does it maximize our value? Are we progressing? The answers to these questions will help you understand whether or not the given project is aligned with the goals of your organization.

For all the fast, reliable results of portfolio management, there are some downsides. A portfolio sometimes creates too few projects, depends on biased criteria, and encourages short-sighted thinking. Keep in mind these pitfalls as you make portfolio management work for you. Overcome this bias and be careful not to over-rely on the portfolio.

Think of the portfolio as a funnel: you launch many ideas at the beginning but, as you measure and compare their current and future values, you hold on to just a few. In the end, only the fittest will survive.