The Innovative Enterprise

This is a grab-bag of notes and commentary on Harvard Business Review on the Innovative Enterprise, rather than a structured summary or review.

Apollo 13

Everybody brings up Apollo 13. That seems to be the role model for a high-performance, results-oriented team working under high pressure. Could we maybe pick something a little less dramatic? Remember, this is the same crew of people who put the first man on the moon less than a year earlier. They were working at the height of American Big Science. They were educated and trained as if the future of America, Democracy, and the world rested in their hands, which it arguably did. At the very least, three lives, millions of dollars of equipment, and the scientific prestige of the nation hung in the balance. I don’t care how cool your business plan is, or how much VC money you have, you’re not getting that kind of talent and motivation.

Cost of Creativity

There’s a rant in the “Creativity is not Enough” article about how organizations aren’t supposed to be creative. They are anti-creativity, anti-chaos. The whole point of an organization is to constrain and coordinate people’s actions to focus them on a task. Creativity is mostly a distraction.

It’s not that this guy is an idiot and you should just ignore him; they wouldn’t have published him. He was writing in a different time, with a different focus. For large industrial firms, the goal is well understood, and the main effort is in execution. He wouldn’t think of incremental process innovations as Creativity - that’s just doing things better/faster/cheaper. In a service economy, most of the effort is in figuring out what to do. Success is based more on adapting to the customers - understanding and meeting their needs. And the folks in the trenches have more insight into that than the big boss back in HQ.

But the main point that he’s trying to make is still valid - that creativity and change have a cost. The time you spend figuring out how to do things better is time not getting things done. The time you spend on one innovation is time not spent on others. The payoff has to justify that. And trying to do a dozen new things at once probably means that none of them will be well done.

Summary

Now a quick summary of the key points of the book. Since it’s a number of essays written by different people on the same topic, there’s a fair amount of overlap. There’s also a wealth of supporting detail for these principles.

Pressure always hinders creativity. Don’t confuse a surge of relief at dodging a bullet for the true rush of creativity. If you have real and meaningful causes of pressure, make sure they’re communicated. Meaningless or arbitrary pressure is even worse.

Focus helps. Pressure plus task switching equals stress without productivity. If you have a bunch of different things to do, sequence them; don’t multiplex. Meetings with more than one or two others are fragmented, undirected.

To motivate people, pick an enemy and cast yourselves as the underdogs. The enemy can be imaginary, or just a concept.

Innovation should be constant and pervasive. Everyone should always be thinking of how to improve, how to do their work better. Build a portfolio of ongoing experiments at different stages of maturity. A portfolio spreads the risk. You need both short-term/incremental and long-term/disruptive. You need both blue-sky research and radical solutions to known problems. You need to be willing both to take risks and to abandon unsuccessful projects. Allow for failure; make it cheap. Once an idea is proven, go all-out to make it happen.

Innovation needs to focus on competitive advantage. It has to either benefit your customers, expand your market (meet the new needs of your not-yet-customers), or give you an edge over your competition. Be alert for solutions in search of a problem, innovation for the sake of novelty. Measure performance, cost, benefits, risks. You compete on price, performance, or features. You may need to segment your customers so you can focus on the specialized needs of one group. Plan for your competitors’ response to your innovation.

Build networks of innovation through trusted third parties - investors, executive search firms.

Collaborate with your customers. Quick feedback is better than a polished release. Get them involved before the big investment. Get to know them better than they know themselves. Learn what they do, not what they say they do. Give them what they need, not what they ask for. Show them how it will be used - mock it up, tell a story.

Try to make technology invisible to normal users. Make failure transparent - give the user the information they need to solve the problem. Build tools for power users, so they can scratch their own itches and help others. People learn from experience and peers, not so much from formal training.

Each innovation needs four kinds of support: An on-the-ground champion, an executive logistical supporter, creative idea generators, and practical implementors.

Get outsiders’ perspectives. If you want people to think outside the box, hire from outside the box. Get fresh eyes on your business. Varied backgrounds produce better problem-solving skills. Focus on people who are bright, verbal, assertive, and creative. You’ll need enough outsiders to form a critical mass.

Look at your company through the eyes of your competitors. What are your limits, weaknesses and vulnerabilities? Your competitors are doing your market research for you. If they do better, it’s because they’re meeting a customer demand that you aren’t. If they don’t, you know not to try that.

Learn from the potential customers that don’t choose you. What are you failing to provide them?

Project groups focus on goals, not resources. They minimize turf battles. Align the organization’s goals with employees’ intrinsic motivations.