At the Workspring meeting space in Chicago on June 19th, eleven executives from a diverse group of professional services firms came together to discuss innovation in times of economic challenge and answer the questions:
How can we innovate now?
What happens when you can’t continue doing things the same way you did before?
What happens when you have to innovate?
Innovation, as this group defined it, goes well beyond the high-profile innovations in technology and infrastructure that governments, economists and the media are discussing every day. Most innovation needs to happen at an everyday business level where companies change their go-to-market strategies, their business models, their operations and their products in order to acquire customers, manage expenses, stay viable and grow into the future.
Even though innovations must happen at an everyday level, the changes required challenge everyone’s assumptions of what they do for a living, how things get done, and what needs to be done in the first place.
Innovation is about finding unintended or overlooked uses for the properties of a given situation and then applying them in new and inventive ways to solve a problem - whatever it may be. Innovation is about doing something differently tomorrow than you do today. Innovation makes people better at what they do – or happier to do it.
Innovation is about seeing the present clearly for what it is, warts and all – then making it work better.
According to a recent study by the Kauffman Foundation, 78% of Americans believe innovation is important to our economic health. Western governments are trying to figure out how to stimulate innovation. CEO's speak eloquently about innovation as their strategic advantage.
And yet...
According to one leader at the summit, “Too often, leaders are not asking for enough. They may believe that innovation is not mission critical, or urgent, and yet it is, especially in a downturn.”
Most companies seem to be doing anything they can to avoid real change. Instead, they are using the standard and sometimes necessary playbook that calls for laying off workers, closing lines of business, selling assets, and praying that the economy will change before they run out of money. Changing a business model or process, creating a new product or new market is often overlooked as expensive or risky ventures.
Despite the excitement of finding something new, despite the potential success of a breakthrough concept, despite the honor history affords to innovators like Thomas Edison, Steve Wozniak, Orville and Wilbur Wright, Madame Curie, Galileo, Henry Ford and many others, innovation remains a high-risk, difficult and painful process. Innovators routinely face mistakes, dashed hopes, financial stress, and constant uncertainty. It’s hard, painful, unpredictable, and sometimes even embarrassing. Innovations that are ahead of their time have a tendency to fail. Innovations that are too late are usually eclipsed by others. Recent history is filled with expensive and publicly known failures such as the Apple Newton, the Sony Betamax, credit default swaps and Crystal Pepsi. Most organizations have any number of failed new projects and initiatives that no one really wants to talk about.
Most people and organizations aren’t very good at innovation. It’s hard to do, it’s expensive, and it, quite often, doesn’t work.
And yet…
Companies are losing customers every day. New customers are difficult, sometimes impossible to acquire. Without innovation, there may not be a business tomorrow.
The conflict between what needs to be done to survive and what should be done to succeed in the future is playing itself out in companies throughout the world. Innovation is needed, now more than ever – and yet what will it take to innovate now that times are so challenging?
What might help create more innovation now? After two hours of spirited discussion, three important drivers for innovation repeatedly bubbled up to the surface. There are others that could have been discussed, but on June 19th, this roundtable discussed Fear, Laughter, and Discomfort in particular.
Fear
There’s quite a bit of fear in the economy today. But that can be seen either as an advantage or a disadvantage for innovation. In some ways, it’s both.
Fear pushes companies to try new ideas and new approaches. As one leader put it, “We would be out of business three years ago if we hadn’t innovated.” Most of these executives listed fear as a source of strength. If you are losing customers, if money is scarce, and there is no other choice; you have to innovate.
At the same time, more than lack of capital, lack of good ideas, or lack of economic imperative; fear of change can be the most stubborn impediment to innovation.
According to David Johnson, CIO of Jones Lang LaSalle, “Middle managers think Innovation is such a big word. Innovation is too scary.” Employees have their fill of change right now, and innovation is just one more demand for change.
And fear can cripple innovation. Different people react differently to an environment that challenges their existence, and many will deny a new reality, resist change, and sometimes become paralyzed. As Tony Reynes, partner in a recruiting firm that is re-writing their entire business model, put it, “Some people just freeze up but I think a successful innovator says, “Okay, I’ve got to do something different.” Everyone is facing the same fear and everyone has the same opportunities. The innovators act on the new environment.”
Tracy Williams, a leader in agricultural ventures and former military officer, pointed out that the responsibility of a leader is to create a feeling of safety, to help those who are paralyzed take action. As he put it, “Look, part of my job is keeping my people safe from the people on top. Go make a mistake. As long as you haven’t done anything illegal, as long as it makes business sense, as long as you tell me when things go wrong, I can get you out of anything you get into. So let’s go do something.”
Another, more Machiavellian approach may be to avoid telling everyone that they are innovating. With some projects, it is possible to position the work in such a way that it does not seem to overtly threaten the status quo. Eventually, innovation always changes things – but to avoid unduly frightening the people whose work lives will change some innovators will use a Trojan Horse approach.
The Trojan Horse approach presents something new as if it were merely a slightly modified version of something old. The iPod, for example, was really just a digital version of a Walkman. A personal computer could be seen as just a typewriter with a screen. A car as a horseless carriage. Televisions, at first, were perceived as radios with pictures. Look at most successful innovations, and likely you will also find an analogue to an older technology or process that was used to get people comfortable with the idea.
At times, the Trojan Horse approach goes well beyond offering comfort. It can also cloak the true implications of an innovation - forcing us to change our lives without realizing it. Few people buying a computer in 1990 were buying into the complete transformation of our work and personal lives that took place in the next 15 years. If companies knew that the Internet would force them to share more information than they had ever shared before, would they have started creating Internet sites?
According to David Johnson, “anytime you are saying that you are innovating, you will get an initial buzz. But, as soon as everyone sees it as changing what they do, they become very opposed to it. So, when there is the slightest problem with developing a new innovation, everyone jumps to, “Aha, I told you this was never going to work! And the project gets killed.” Instead, try “…unveiling bits and pieces of it at a time. Emphasize how a certain function is made simpler, but avoid talking about any larger plans or potential for industry change.”
Jonathan Rutman uses a three ring binder to make fear of innovation less of an issue, “Every step of the process will go into this binder, every study, every point of data, and every decision we make will be captured on paper and put into your binder. Fear can be managed if you package it.”
But if you don’t use a Trojan Horse, it is important to acknowledge fear upfront, to be honest about what the real dangers, the real risks of any new project might be. Instead of pretending that there is no danger, there is a real need for innovators and leaders to be able to say, “This is difficult. It could fail. Let’s see what we can do to make it succeed.”
Brian Marshall, a consultant in innovative sales strategies, offered a different way to think about fear that could help explain why some are able to innovate now and others cannot. “Fear is nothing more than pain that hasn’t happened yet…the most compelling emotional motivator is pain – more so than fear.” The immediate pain of changing something right now will always trump the fear of something that might happen.
An example Brian used was the US auto industry, “The unions are now suddenly the most innovative group of people you will ever meet – but it may be too late. They are now able to make substantial change because they are in tremendous pain. The fear they felt two years ago was not enough to overcome the immediate pain of change.”
“What is innovation? It is a direct threat to the status quo. So those who are a part of that status quo will kill innovation if they see it threatening how they do things now. When they start to feel real pain, then they become the champions of change and innovation.”
Brian continued, “Great leaders and drivers of change are those that can take the fear of the future and bring it into the pain of the present before it’s too late.”
Fear is a powerful motivator for innovation, but it must be controlled, acknowledged, and worked with to overcome the natural resistance to change.
Laughter
Another crucial ingredient for innovators appears to have something to do with laughter. When there’s innovation, when teams are solving problems, when individuals are able to overcome their fears and create solutions – more often than not, they are having fun. Several leaders commented that they know when breakthroughs were more likely when there was laughter.
When Brian Marshall ran a technology company, he described his engineers, “working 12, 16, 18 hours a day, sleeping in their offices…and they were high-fiving each other, telling jokes, having a good time. We just gave them a deadline, near impossible objectives, some t-shirts, beer on Friday nights and an unlimited amount of free soda pop – and they were in heaven.”
And they delivered innovation. Without the laughter, chances are very good that nothing new will happen. According to Patrick Lamb, Founding Member of Valorem Law Group, “you know when people are in survival mode when they aren’t laughing.”
David Johnson sees tangible risk to this loss of fun in his development teams, “It is hard to hold on to your best people when they’ve been so demoralized by cost cutting, project cancellations, and an ever increasing load of administrative work. As the markets improve, they will be tempted by new jobs in new companies that let them innovate. For this type of employee, change is a good thing.”
But maintaining a sense of humor may be a good place to start mitigating that risk. According to Buckley Brinkman, innovation consultant, “the fun thing is trying to figure out how to get people engaged even when things are tough. The ship is burning; we’re five miles from shore, its taking on water, but stay anyway.”
Fun and laughter can be managed, and even encouraged. According to Patrick Lamb, “The people who run things need to be out there walking, talking and joking. Take a fair amount of time doing stuff that gets people comfortable. If you make it easier for people to laugh, they will laugh.” If they are laughing, they can start to solve problems.
According to Kevin Conlon, president of Conlon Public Strategies, “the intangibles of values and culture with our team and our clients make a big difference when times are difficult. We’ve even had to say no to client opportunities that didn’t fit – but staying true to our shared values and chemistry helps us weather the difficult times.”
One leader pointed out that when he hired people, he always tried to figure out if the candidate enjoyed his colleagues’ sense of humor, but getting people together over a meal and allowing everyone to joke around a bit in the presence of the candidate. If the prospect laughed or even joined in with their goofiness, it was a leading indicator that there may be a strong cultural fit. Laughter, for that group was almost a requirement for collaboration.
Shared values, fun and laughter can help promote more innovative teams, but it can also indicate when people are starting to work on the problem instead of being paralyzed by it. As we begin the second half of 2009, more and more business leaders seem to be joking about how difficult business is – instead of just complaining about it or worse yet, denying that there might be a problem. This may suggest that the economy will be able to improve in the second half of 2009.
Discomfort
There’s an interesting paradox inherent to innovation teams. In order to change something, a team has to be comfortable with each other, but at the same time they have to be uncomfortable with the status quo. They have to be uncomfortable enough to want to change it – and willing to use untried approaches, unfamiliar skills, and even the wrong tools to make something better.
Tony Reynes commented, “Instability and comfort with being off-balance certainly is a big part of why I’m an innovator.”
Patrick Lamb’s experience with a physical trainer helped illustrate the importance of discomfort. The trainer required Patrick to stand on an unstable platform whenever he performed an exercise. According to the trainer, the instability of the platform helps to build core muscles that are constantly compensating and trying to maintain some kind of internal balance. “In a business setting, if we are able to operate in an unstable way, we become stronger and better able to emphasize the positive sides of change.”
If workers are unable to accept discomfort, innovation may leave them, skilled as they may be within their comfort area, irrelevant and out of work. As Kevin Conlon related to the group, traditional printers in the seventies and eighties, when negotiating new contracts with newspapers passed up the opportunity to take control of emerging electronic printing and remote printing technologies. “They were given the opportunity to embrace new and unfamiliar technology – and instead opted for contracts that allowed them to be traditional printers forever with no burden to evolve professionally. There are now virtually no traditional printers at any of the major newspapers.”
Brian Marshall observed that unlike the early 1980’s when a slower pace of technology improvement was holding up people’s desire to change, now “human beings are the bottleneck…people are not embracing change as quickly as the technology allows them to change.”
Innovators often seem to straddle multiple worlds, multiple cultures, and quite often don’t completely fit in. They often don’t have the standard credentials or formulas for a problem – and therefore by default look at things in a fresh or unique way. And when they know the formulas well, they are willing to put them aside.
When confronted with a problem, innovators are unlikely to apply standard processes because they often don’t even know what the standard processes are.
People who are comfortable with how things are done right now, have little reason to change. The rational course of action for someone in that position is to avoid changing what they are doing, even if it doesn’t improve anything.
Innovators are better able to find new solutions to old problems, not because they choose to – but because they have to. A lack of comfort is essential for anything to happen.
As Jonathon Rutman pointed out, “Those people who are the most successful in an old system are the last to see the reason to change – or to make any kind of change. Why give up what you have?”
A Time for Innovation
If ever there was a time for innovation, that time is now. As Bill Moller put it, “The tech bubble was a warning sign that no one listened to. The financial bubble was ten times worse. Something systemic has to change.”
As the financial system tries to put itself back together and companies that rely on access to credit are quickly adjusting to a new and more difficult global environment, there seems to be a positive change in business culture and attitudes emerging. People are reaching out to friends and colleagues, networking, assisting, and collaborating with an enthusiasm that seemed scarce only two years ago.
Buckley Brinkman commented, “I think that one of the really positive things coming out of the downturn is this: a lot more people are working together to help each other make it through the downturn. Sales as a discipline has changed from pushing products or demonstrating features to getting closer to a client and helping them solve real problems. The relationship is transcending any business that takes place.”
Jonathan Rutman added, “When I’m selling, I’m actually focused more on helping. It’s more satisfying, and more people are moving towards this model all the time.”
Communication technology has transformed itself dramatically in the last few years – just in time for companies in challenging times to pick them up and redefine their business models. Facebook, Flickr, You Tube, Blogging, Twitter and LinkedIn have now evolved from toys to become tools and perhaps even platforms for a different kind of business approach.
If one is connected to a large network of people in an information and media rich environment, new business models cannot help but emerge. According to Tony Reynes, “We’ve become a communal world. We can no longer do it alone. We have to form alliances. We have to rely on others to help us understand what’s going on and act on it.”
The environment has already changed. Capital, labor, energy, communication, and information have all changed significantly from only two years ago. Now the work of innovators is to take advantage of all those changes, manage the Fear, the Laughter and the Discomfort and build the new and exciting businesses of tomorrow.
Innovation is a natural byproduct of difficult times. Over half of the Fortune 500 companies started during recessions1. How can we innovate now? The possibilities are endless.
1 The Economic Future Just Happened by Dane Strangler of the Kauffman Foundation, June 9, 2009
How are we going to innovate when everyone’s hiding under their desks?
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