Are You Playing to Win, or to Play?


Play 2 WinEvery company I can think of has a strategy.  Some are documented more formally than others.    When I teach strategy to MBA students I would argue that it involves making specific choices about where and how we would like to compete with the sole purpose of producing a Sustainable Competitive Advantage vis-à-vis others in our market.   This means that a good strategy is one with the intention of winning.  And as in an intense football game, your game plan does not operate in a vacuum.   The opposing team is watching  your plays from the box at the top of the stadium, sending observations and insights to the sideline so that their executives can shift their play calling to exploit your new-found weaknesses.  Business competition is a dynamic event.

So here is a question for you – is your company playing to WIN or playing to play?

The challenge of course is having the courage to choose.    In my article (see other resources) on the Three-Box system describing three sets of strategic initiatives that companies should consider, one of the “boxes” is about addressing what programs, projects,  departments, divisions, or businesses to close, drop, or exit.   This should be as natural a part of corporate life as pruning is to a garden (something my wife has taught me).  Pruning away the unproductive or ineffective things frees up resources that can be deployed in other areas of the business that can yield better and healthier growth.

Steve Jobs had a phrase.  He called it being willing to “knife the baby”.   The imagery surrounding that phrase is so unpleasantly evocative, it’s no wonder people don’t want to do it.

So these choices are hard.  Executives can get pretty feisty defending their own “turf”, whether motivated by a genuine concern for people, or a thirst for power and responsibility.  Either way a CEO wanting to clear out the withering vines most assuredly faces strong head winds.

Many just don’t quite “get it”.

I am struck by the number of companies I see who really don’t do strategic planning at all.  What they do is planning, including building budgets and possibly deciding on what items to hold different executives accountable for.  There isn’t much strategic about it.   Many don’t see a reason to be strategic.   If you have a successful product, the market is growing and sales and profits are good; everything seems OK so “don’t fix what ain’t broke”.

The problem is, your success is likely to attract worthy competitors.  (Just ask Apple what they think about Androids.)  The next thing you know, your market share is being eroded and you’re your ink turns from black to red in the blink of an eye.   In addition, the market is subject to continuing evolution due to new technology, economic, political and social trends.    Strategy must be continually adapted to the things that today seem only specs on the distant horizon.  Time is not your friend, and there is no such thing as status quo.  You are either getting better or worse.  There is no staying the same.

Even when companies try, they don’t often get it right.   Steve Tobak’s article (see Other Resources) he criticizes Yahoo for having no sense of strategy.   In their case, they even hired a prestigious management consulting company to assess the situation.   The outcome was that the company announced it was restructuring and laying off 2,000 people.  Sure, that will bring another $200 million to the bottom line, but is that a strategy?   No, argues Tobak, strategy must be a clearly articulated plan to defeat Google, Bing, and AOL who are increasingly dominating their industry.

Even if you get the strategy right, that is not enough.

In his book Making Strategy Work: Leading Effective Execution and Change, professor Lawrence Hrebiniak points out that while we may be able to graduate generations of smart MBA’s who can formulate interesting strategies, they don’t always succeed in the marketplace as a result of weak execution.   Some of the common missteps include:

Shifting Focus:   HP’s Carly Fiorina tries to shift the company direction by moving into services buying Lotus, and then trying unsuccessfully to buy PricewaterhouseCoopers to launch a consultancy.  In the end, she ends up buying Compaq and leads the organization on an aggressive struggle to cut costs.  In the end, she loses her job while on the search of the synergies that didn’t materialize fast enough for her Board.  (One minute, we are talking about differentiation based on superior development of services, and the next minute we are trying to play the high volume/low-cost game.   The organization doesn’t know which way to turn.)

Poor Alignment with Core Strengths and Culture:  United Airlines once launched TED, a subsidiary intended to compete with low-cost innovator (Southwest Airlines).   However United did not have a culture or set of relationships with its unions that permitted the kinds of flexible work habits used by SWA, and their intended productivity never materialized.  They also kept most of the legacy infrastructures in maintenance, scheduling, airport gates, reservations, etc. used by the mother company.  They never came close to Southwest’s cost structure and the initiative was soon abandoned.

Poor Communication:  Strategies that are hatched in the C-suite may be thoughtful, but getting the entire organization to get it is challenging.    Hrebniak says when he is hired as a consultant, he often will travel down 4 or 5 levels in the company to ask people how things are going only to learn that no one even KNOWS that a new strategy has been initiated.   A colleague of mine, Guy Hocker (former Senior VP of Strategic Initiatives for JetBlue) says that people who sat in the room for six months debating and creating the strategy may understand it, but those who were on the outside seldom appreciate the justification for it, the context within which it was created, the assumptions upon which it was based, or the key success factors to make it work.   The senior people try to explain it, but they might as well be speaking Klingon.    (The winning approach is to involve a wide swath of the organization in creating the strategy in the first place).

Lack of Clarity in the Business model:   In the C-suite we might conclude that to defeat our competitor (say Dell – who has a low-cost model), we want to compete based on superior technology (something Dell is not well equipped to provide by itself).   At the 50,000 foot level, that sounds right.   But It isn’t nearly enough to guide what the rest of the organization must do to make this strategy succeed.  We need to define What technology(ies)?   What customer segments we are developing new technology for?   How will we measure our success (Metrics)?   How much money we are willing to invest in this initiative above what we must spend on sales, marketing, IT and so forth?  What new people skills we may need to develop the products we need?    Until these pieces are defined, we don’t have an executable strategy.

Other Resources:

Do you really have a strategy? Here’s what P&G’s A.G. Lafley thinks, by James Ritchie, the Cincinnati Business Courier

Three-box system: Balancing Break-through Innovation with the short term, by Len Brzozowski

Why most business strategies fail, by Steve Tobak, CBS Moneywatch

Three Reasons Why Good Strategies Fail: Execution, Execution…, by  Lawrence G. Hrebiniak, Knowledge@wharton

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Leading with Impact: Backing Away from the Day-to-Day


Talent Survey graphic

Look at the chart on the left.  It is based in a survey I ran on our website asking one simple question.   Do the numbers surprise you?   70% of people responded that they are called on to use “less than half” of what they are capable of, or say that their boss doesn’t “know how to use me”.

This seems like bad news.   Although the GOOD news is that there is a tremendous amount of untapped potential in many of our organizations that exists right under our very noses.

So why aren’t we tapping into it?

In one leadership workshop I facilitate, I often get to work with highly motivated, “high potential” middle managers.   A purpose of the program is to get them to consider their leadership style in the context of what helps produce the best output from their team members.

My observation is that often times high potential managers who are career driven, can act in ways that are self-limiting without realizing it.  They sort of fall into a trap that catches most of us (certainly it caught me during the earlier phase of my career.)

Here is the trap.

High potential middle managers are generally pretty talented.  They got where they are today because of that fact.   They are good problem solvers, comfortable with making decisions and generally possess strong technical skills related to the team, department or division they are charged with running.

They are good.  In fact, they are better than most who surround them.   They not only know it, but TAKE A GREAT DEAL OF PERSONAL PRIDE in it.  These are people who believe they add value to the business by being such effective problem solvers and decision makers.

Now take people like this, and put them in an environment where they are responsible for the performance of a unit.  People are watching the department’s output, and it is clear that the accountability for success ultimately rests on the shoulders of the department head.   This is a formula that promotes micro-managing (even when you don’t see yourself that way.)   People like this often feel that they can solve the problems better and faster than their subordinates, and it is easier and more expedient for them to do so.   In addition, they often talk during this workshop about the fact they can’t see taking the risk to delegate and empower more because failure can have career limiting consequences.

For me, one of the most difficult things to do was to let my subordinates try something their way when I was convinced my idea would likely produce a better outcome.   I always rationalized this by telling myself that the mission was paramount.

This attitude is based on a fallacy.

I have had some program participants tell me that they solve problems every day and often avoid some crisis because of their intervention in the work going on in their departments.   Well that is probably true.   So the fallacy is that if you had not solved that particular problem then a crisis would have certainly occurred.   This is not always true.  Would the problem have remained unsolved, or would someone else have “stepped up” when it was essential, dealing with the situation in a reasonable manner?

I had the pleasure to spend some time learning Marine Corps leadership at Officer Candidate School at Quantico.   One of the Marine officers put it to me this way.  “In battle, any officer may fall at a crucial moment.  I have never seen a case where, when this happened, that someone, some lower ranking Marine, did not step up and lead.  In fact, sometimes it is the person you would not have expected.”

Often I will ask the program participants at this point, what would happen in your company if we were all on a cruise right now and out of cell phone range?  Would they send home all the employees and stop taking orders because you weren’t there to tell people what to do?  No, of course not.   They would make the best decision they could under the circumstances, and either it would have worked or not.   If it worked, then it is worthy of acknowledgement.  If it didn’t, you may have some damage control to do when the boat returns to port, but even in that case, this represents a LEARNING opportunity for your team, and a COACHING opportunity for you.  If you hired good people, they will learn from the experience and be stronger for it.    Helping coach your team to learn from past experiences – isn’t that more what your MAIN job should be?

Three elements of your role.

When your team is small (say 3-5 people) everyone, including you, needs to be involved in the transactions that are the responsibility of your team.    You are more a working supervisor than a manager.   But as the organization grows in size and complexity, your role also needs to grow.   The trouble is – it seems hard to make this transition when you began as a working supervisor.   How do you let go?  When is the time right?  How do you become a manager?  Most of us accomplish this by putting in extra hours.    We have to attend meetings, file reports, do performance appraisals and develop budgets and other managerial stuff.  So, we work 42 hours, then 45, then 50 until we finally reach the point where we can’t stretch ourselves any further.  At that point, we need a new bag of tricks.  (It is a common complaint among the middle managers I encounter, that they are overworked and not managing their own work-life balance very well.)

Your job must become less about solving your people’s problems for them, and more about helping define the new problems that you want them to solve (hopefully aligned with company strategy and to the important objectives you have).    Your role must evolve to where these three things represent the principal part of your “day job”.   These are:

  • Set the Agenda – defining a purpose and direction for your team – call it mission and strategy if you wish but you need to assure everyone understands what you are trying to accomplish so that they can see how their role fits into it
  • Build the Team – hiring better, developing, training, coaching, and (the hardest part) dealing with the people who shouldn’t be there
  • Define and Create the Culture – Everyone acknowledges that we are all influenced by the culture within our organization, and it is a more powerful force than most rules, policies, or formal procedures.  So why leave culture to chance?  Be deliberate to create the environment that biases your people in a direction consistent with what you are trying to accomplish.

Think about it.  Wouldn’t everything in your world get better if you did those three things just a little better?    So, help make sure your people understand what you want to accomplish (ideally considering their ideas and input).   Get rid of the 10% of your workforce that should not have been hired in the first place, and help the others learn and grow.   Create an environment that makes it easier to do the “right” things.

Everything will get better.

So why wait?

When I present this model in class, most middle managers will say it seems logical.   However most can’t see themselves moving towards it today because the performance pressure is too intense. They feel if they back away from the daily challenges to work on the other things, then performance will suffer and then who knows what evil will ensue?

This, of course, is a delusion.  The longer you wait to start making the transition, the more you are retarding the ability of your team to learn and grow.   You also will be missing out on the opportunity to really get the best out of your people.

 

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Project Management: Are we Solving the Right Problems?


Wrong way

I have met many project managers who approach their roles with dedication, thoughtfulness, and considerable diligence.  The body of knowledge in the PM field is growing, aided by the efforts of such groups as the Project Management Institute.  Rigorous certification programs are offered around the world, and many motivated people have pursued learning the Project Management Body of Knowledge (PMBOK).

Yet, in spite of all this effort, the evidence shows that we are not getting better at managing projects in our organizations.

Depending on the study you look at, between 37% and 68% of projects (in the IT field) are judged to be “failures” in that they did not meet expected outcomes (70% or lower completion of objectives), ran seriously over budget (by 160% or more), or blew past their timeline goals by a wide margin (180% or more).   The data for ERP (Enterprise Resource Planning) and BI (Business Intelligence) projects is even worse.

So, what are we missing?

As you read through the analytical studies, a theme begins to emerge.  One researcher ascribes the shortcomings to our inability to analyze the business problems we choose to solve.   The IAG Consulting study referenced below explains the consequence in this way:  “Companies with poor business analysis capability will have three times as many project failures as successes.”

The PM solutions report referenced below asserts that the leading causes of project failures have to do with:

  • Resources: Lack of resources, resource conflicts, turnover of key resources, poor planning.
  • Schedules: Too tight, unrealistic, overly optimistic.
  • Planning: Based on insufficient data, missing items, insufficient details, poor estimates.
  • Risks: Unidentified or assumed, not managed.

But like the IAG people  they concluded that the NUMBER ONE cause of project failures is related to:

Requirements: Unclear, lack of agreement, lack of priority, contradictory, ambiguous, imprecise.

What makes matters worse is that even if the project is technically successful, too often it was just not worth the effort.   Who cares if we meet the requirements and meet our timeline and budget if the outcome did not materially impact our business?   Now if I reflect on my own personal experiences, I can recall numerous projects where we actually delivered on what our documented requirements were only to have the client (whether internal or external) say “well. . . thank you but this isn’t what I was imagining”, or “could you change it to do this or that instead”?   Who among us hasn’t been to that movie?   In fact I can recall a meeting with one of my past clients where we were discussing the question of requirements definition and the Senior VP of IT stood up and said to his people “if at the end the client is not happy, you just show them the requirements list!”   Yikes!  Really?  Let’s rub their face in it?  How did we degenerate into that kind of defensive action where the requirements list becomes little more than a “CYA” tool?

What was interesting to me about this example was that the executive I am describing was highly intelligent and worked for a well-regarded and quite sophisticated company.   But he was operating in a political climate where other operating executives were criticizing his team for their lack of responsiveness and effectiveness.  We are all a product of our organizational culture.

When you spoke to the project managers in that company, they, of course would describe how difficult it was to get clients to sit down and focus in a meaningful discussion about what they needed.

Why is this so hard?

I believe this is because we often ask the wrong questions.   When you sit down and ask someone what they want, they often can’t tell you.  If you show them some type of prototype, they can typically tell you what they like or dislike, but not everyone has a good imagination.   We are limited in our ability to articulate requirements because of our limited life experiences and our knowledge of what might be possible technologically.   It is hard for me to imagine something I have never seen or experienced.  This is why focus groups have gone out of fashion, as market researchers across the planet look for better ways to understand their customers.  The game is more about understanding what customers think and feel, instead of relying solely on what they say.

A BETTER line of questioning has nothing to do with requirements, but with what PROBLEMS I am trying to cope with as I conduct my job?  Let your customer service people express:

“I don’t have the information to answer customer phone questions about delivery status”; or “I feel if I had access to information about our products and pricing, I think I could sell the caller on different products or services.  Sometimes they order the wrong things”; or “we are way too slow in responding to requests for emergency service”.   Then, let your inventive technical people try to imagine how they might help with those things.  Once they have some ideas, they can share them with their client to test the viability.   Speak to them within the context of THEIR world, not yours.

creative problem solving frameworkThe Creative Problem Solving Process is one way I know to do a better job with the challenge of problem definition.  It uses an 8-step sequence of actions.   The orange section (steps 1-3) is all about understanding the problem(s) more deeply, and then choosing the most relevant ones to solve.   The yellow section (steps 5 and 6) is about generating solution ideas and choosing the best ones.  The green section (steps 6-8) is about execution planning. 

The main (and often surprising) insight is that the first three steps (1-3) consume as much as 50-60% of the time in the process! The discovery part of this section does not come from an interrogation of clients to solicit a list of requirements, but from the art of empathetic observation.    Here we are trying to go beneath the layer of superficial knowledge to gain a deeper insight into client emotions, biases, and motivations.

Too often we reject this notion because we allow ourselves to be trapped in a paradigm where we need to take immediate action, producing solutions – so that we are efficient.  I’m all for efficiency, but efficiently solving the wrong problem is not helping anyone.

Sometimes it pays to slow down.  Slower, often can be faster . . . and better.

Other Resources

Poor requirements definition is the number one reason for poor outcomes. (you can tell this article was written by a person with traditional PM training.) Why 37% of Projects Fail?

And another — which reinforces the issue that we aren’t solving the right problems (and are generally poor at defining requirements) Study: 68 percent of IT projects fail

And this one — argues that we haven’t improved at all in the last decade (in spite of the energy put into better PM skills) 62 percent of IT projects fail. Why?

Source Data from IAG Consulting, their Business Analysis Benchmark

Source Data from PM Solutions Study

A reasonable primer on “Why Do Projects Fail?: Learning How to Avoid Project Failure”

More details on the idea that sometimes slow is fast. Slowing Down to Move Fast, by Len Brzozowski

Innovation management vs. project management thinking, Design thinking: A new approach to fight complexity and failure

More on market and client intelligence gathering. Driving Innovative Strategy Through Empathetic Observation, by Len Brzozowski

 

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Running the Gauntlet for Innovation


B787

If you Google the phrase “Boeing Stock Price and the 787”, you will find 1.7 million references.  Now I would have to say that I did not review every one, but all of the references on the first three pages were negative and critical of the company, its leaders, or the product.  Several bordered on being “alarmist”.

 

As reported in the article by Brad Stone and Susanna Ray, the Boeing 787 Dreamliner’s carbon-fiber body and new electrical system give it a reduced weight, which allows it to burn 20 percent less fuel than the 767 midsize airplanes it’s meant to replace. The interior cabin features cathedral-like archways to reduce the sense of claustrophobia and enlarged windows that dim at the touch of a button. Because of the new, stronger composite materials, the cabin can also be maintained at higher pressure and humidity, so travelers feel fresher at landing.   A remarkable piece of technology.  But this apparently isn’t what we like to read about. 

 

B787 InteriorAfter a battery caught fire after landing in Boston, and another one triggered a fault on a plane bound for Tokyo, the FAA grounded the entire fleet, casing Boeing and their customers some serious heartache.

 

The behavior by regulators, reactions by Wall Street analysts, and reporting by the world press just makes it that much easier to see how today’s CEO’s should act with more reserve, be less tolerant of risk, and more inclined to narrower visions.   There are considerable forces that seem to conspire to punish those who push the envelope.

 

I was thinking about Boeing this week after making a stop at Sarasota International Airport where the organization Freedom Flight landed three beautiful WWII bombers and fighters so that people like me could walk through them.  Events like this also brought out a number of veterans, many former pilots during that war, who were there with their hats on – pictures in hand – proud to tell their stories to the people they met.

 

I had the extreme pleasure to be standing in line with one of these veterans.  When he was 18 years old he was stationed in the Pacific as a part of the ground crew responsible for patching up the bombers after they returned from a mission – shot up, broken and limping.   He told me how excited they were in 1942 to receive the first of the new B29 Super fortresses from Boeing.  They were bigger, carried heavier bomb loads, were more heavily armed and flew farther than the B24’s, and B17’s they  were built to replace.

 

On one Sunday, he recalled vividly, we were all awakened at 0300 hours (that’s early) because of a crisis.    On one of the early missions, the hydraulic lines were found to be freezing so that the bombers could not retract their bomb-bay doors.  If you were ever a bomber pilot, you know how serious a problem this could be.   It turns out that Boeing had not anticipated that our pilots would fly these planes routinely at such high altitudes (which I imagine we all would do to avoid enemy anti-aircraft fire).   In the days when the cabins were not insulated or pressurized, the temperatures could drop below freezing pretty fast.

 

B17The maintenance crews worked around the clock to convert the hydraulic actuators to electrical ones far more impervious to the cold.  In this case, while the oversight by the aircraft engineers was serious, the attention of everyone was on “how to fix it” and move on.  That was the environment.

 

I don’t know for sure, but I imagine that was not the only engineering SNAFU to have happened on the various new versions of planes that were introduced during the Second World War.   Each one was introduced as an improvement on the ones that came before.   We always sought to learn from our prior air combat experiences and bombing runs so that we could innovate and improve on prior models.  In this way we steadily came to fly higher, faster, farther, and safer than ever before.

 

One thing is true about innovation.  Whenever you try something that you never have before, things do not always work as planned.  Innovation has risk, and without the acceptance of some risk, no innovation is likely.   Yes, we made mistakes, but we learned from them, quickly.   We fixed the defects and built onward from there.

 

In today’s world where we report on your mistakes, globally, within minutes, it is no wonder that CEO’s and their Boards get skittish.  This was especially so in 2003 for Boeing when the Dreamliner project was born.  The company had just been eclipsed by Airbus as the largest airplane manufacturer on the planet. After the 2001 terrorist attacks in New York, airlines were reluctant to make massive new investments in airplanes.  So perhaps while Boeings execs and their Board needed something big, they couldn’t stomach the risks associated with such a massive undertaking.  If they stumbled, so too would their stock price.

 

So, in addition to all the exciting new technologies introduced on the Boeing 787 Dreamliner, the company also conducted a bold experiment with regard to its business model.  Designing and introducing a new generation airliner is a big task, costing billions of dollars.   To reduce their own risk, Boeing decided to partner with key external suppliers who would be asked to take responsibility for large subsections of the plane which could be built by them and then shipped to Everett, Washington for final assembly.   The suppliers took on a share of the overall project risk and in return were entitled to a share of the net profits.   In total, Boeing outsourced about 70% of the components and systems comprising the Dreamliner – something never before attempted.

 

Coordinating the manufacture of the more than 6 million parts was no small task even if it is all happening in your own back yard.  Doing so on a global scale proved massively challenging.   Coordinating design and manufacturing in this way proved extremely complex and the project was fraught with cost overruns, technical problems, and delays.

 

To many this whole story is symptomatic of a larger problem – – how to create innovation in mature economies – as most Western ones are.  Venture capitalist Peter Thiel is one who has seen it coming.    In the Stone and Ray article, he is quoted as saying “There is so much incrementalism now. Even back in the ’90s there were companies like Amazon (AMZN) that were willing to do big things. That has gone out of fashion now.” Thiel points to SpaceX and the electric car company Tesla Motors (TSLA), both run by Elon Musk, as the rare examples of recent attempts to leap forward boldly. Yet Musk often gets portrayed as a quixotic dreamer. “I think this reflects the insanity of our country, that anything non-incremental is seen as insane,” Thiel says.

 

.  .  .  .  .  .  .  .  .  .  .

 

This situation at Boeing in 2013 all seems far removed (both physically and philosophically) from the bases in the Mariana Islands in 1943 where my veteran colleague spent his later teen age years fixing what needed to be fixed in order that we could do what needed to be done.   It didn’t matter who was to blame, only what needed to be done to fix it.  Too bad we are forgetting where we came from.

 

Leading into the headwind

 

Standing up against the kind of public pressure faced by Boeing can be a challenge, but research is now revealing that innovative companies are typically led by innovative CEO’s (see the reference article by Hal Gregersen).  These are people who have the courage to ignore the noise and act in a hands-on way that demonstrates to their organization that bold ideas are indeed welcomed and anticipated.

 

Innovative CEO’s are innovation researchers. They read, go to TED conferences, visit supplier and competitor companies and venture out into the front lines where customers and employees live.  They ask provocative questions, and are always making surprising observations.  They network with other creative thinkers who think it is fun to speculate about the future.  They encourage idea generators inside their own businesses.  They encourage experimentation and are genuinely excited to learn the outcomes.

 

Maybe Elon Musk is a California nut-job dreamer.  But without people like him, would we ever take steps forward?

 

Do you want to be an innovator CEO?

 

First, stop talking—start doing. Pick a problem that matters to you. Start asking better questions about it. Make surprising observations, build on the ideas of others, build prototypes and see if you can make them work.  Get your hands dirty in invention.

 

You just might surprise yourself by how far your organization can go.

 

Other Resources:

 

Stanford Study Finds Going Public Hurts Innovation,by  Bernhard Warner on January 17, 2013, Businessweek.com

 

Closing the Great Innovation Gap, by Hal Gregersen on June 06, 2012, Businessweek.com

 

Boeing’s 787 Dreamliner and the Decline of Innovation, by Brad Stone and Susanna Ray on January 24, 2013, Businessweek.com

 

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Innovation Management vs. Project Management


innovation PicProject management skills are in great demand today.  We all know the consequences of being weak at this important skill.  I can think of a number of projects where my teams came in over budget AND failed to meet expected performance requirements.   I can recall projects we completed where the end-user was largely unimpressed by the outcomes which did not meet user expectations.  I can also speak to a natural tendency in my R&D and engineering functions to over-design products, making them better in subtle ways important to our engineers – but not necessarily to any of our customers.  All these things need to be managed with some reasonable level of discipline.

OK. So we need to be more efficient, and more disciplined.  We get it.  But more and more people are recognizing the need to be more innovative as well.  As we get good at the art of project management, we also create barriers to innovation.  While it is an extreme case – just watch this NASA project management training video to see what I mean.

The idea of innovation and project management, to some seems an oxymoron.    This may be especially so if your idea of innovation is something that should be disruptive, game changing, or breakthrough in nature.  We do live in a world where we need cost cutting, efficiency, speed and focus as much as at any previous time.   We hear the rallying cries at the office: “Define the requirements precisely!”; “We need to guard against ‘scope-creep!’”; “Don’t over design this!”; “We must hit our milestone dates!”; “The user defines how much quality they are willing to pay for.”; “Time is money!” and so forth.

So how on earth are we supposed to innovate in that environment?  Innovation requires exploration, insight, divergent thinking, occasional blind alleys, and sometimes trial-and-error.  These seem incompatible with conventional Project Management thinking and training.

If one of the first steps in the project management process is to “define the requirements”, one key problem is that customers do not always know how to describe what they want.  I discussed this briefly in my article on Apple’s amazing market success with the iPOD.  The Apple device’s predecessor was the MP3 player.  At the time, these were expensive and lacked memory.   But Apple’s focus was much broader than designing a better, cheaper MP3 player.  They recognized that loading music content into MP3’s was awkward.  They saw that without an applications store (iTunes had not yet been invented – but was about to be), the MP3 movement would never win over mainstream users.   If you asked users what they wanted in their playback device, they may not have described iTunes as a need.  Why would they, they had no prior experience with such a marketplace.   We are all limited by our own life experiences and knowledge to what is possible when we set out trying to imagine anything new.   Defining requirements with an Innovation mind-set requires a different perspective.

In his intriguing article (see below), Jeff Belding argues that managing innovation projects does require a whole different approach – which is pretty similar to the Creative Problem Solving and Design Thinking methodologies taught by the Sarasota Center for Innovation.   In the table below, here are differences between what Belding calls INNOVATION MANAGEMENT as compared to traditional PROJECT MANAGEMENT:

Five Key Factors of Successful Project Execution

Key PM Factors

This innovation management approach is a fundamentally different way of thinking.  The main difference is in the SEARCHING and EXPLORING phases (essentially the problem definition – and requirements definition work) is considerably longer and more expansive that we traditionally consider.  Innovation management requires looking for new perspectives, divergent thinking, and multiple levels of problem defining.

While this may seem more energy-consuming (more costly), I think I would argue that a quick mediocre solution is less advantageous to a slower one that delivers much better outcomes.

I suppose it is possible to conclude that not all projects require innovative solutions, and perhaps more traditional project management methods may work just fine.  But if your project “problems” have to do with developing products, services, improving customer experiences or creating new business models – then the Innovation Management approach may be very useful.

Two other project management thinkers, from Delft University in The Netherlands also suggest that “radical innovation” is fundamentally different and must be managed differently.   In the table below, Sergey Filippov and Herman Mooi argue that a percentage of your projects call for breakthrough R&D, even if they involve more uncertainty and broad/vague project goals. 

Innovation Strategy

The implications of their paper (to me at least) suggests that if we have a wide array of projects on our to-do list, some portion of these call for an Innovation Management approach.  This is sort of the same conclusion reached by Professor Vijay Govindarajan, from Dartmouth’s Tuck School (read more in:  Three-Box System: Balancing Break-through Innovation with the Short-term).  He argues that organizations need three distinctly different sets of projects – hence the three boxes.   Projects in box 1 are about improving what we already do today.  The 2nd box, perhaps the most difficult, is about pruning away (killing) the projects products or even business segments that are chronic under performers.  (At Apple, one of Steve Jobs favorite sayings was “you have to be willing to ‘knife the baby’”.  And Apple repeatedly demonstrates a willingness to drop or cannibalize its own products that don’t live up to expectations, choosing instead to try introducing something else they hope will be better.)   The 3rd box is about creating the future and calls for bold innovation.

The Leadership factor

In addition to using an Innovation Management process, one more thing has to be in place.   We need a suitable leadership culture.

In my article Looking for Breakthrough Innovation I tell the story of one project, led by an inexperienced summer intern.  His internal customer was our operations department which was looking for a new process for achieving rapid die changes (as was being introduced with awesome results by the Japanese).   The intern, however, saw that by changing our manufacturing process design approach he could completely eliminate the need for die changes at all!  This was an innovative idea that ultimately produced substantial increases in productivity.   The problem was, his client didn’t want any part of it (at first).  They felt engineering wouldn’t support it, customers would not approve, and so on.   But the intern persisted and wrote his own set of requirements over the objections of his sponsor.

When to controversy was brewing – and our operations leader was expressing doubts about burning precious time and resources exploring a solution that would not be viable.  I weighed in and encouraged the innovation experiment.   Now, as CEO, my vote counted more than everyone else’s but without providing my support for the experimentation of this intern, we would never have achieved the innovation results.  True, it might have failed, and in that case my vote of support for this approach absolved everyone else of the responsibility for a failure or budget overrun.  Without this, I do not believe the innovation would have occurred.

Sometimes we as leaders need to set an expectation that we need to occasionally be bold, try the untested, and see what happens.   We as leaders need to create the cultural environment where innovation can thrive.

Other Resources

Change Must Be Pulled from the Top, Pushed from Below, by Len Brzozowski

Looking for Breakthrough Innovation, by Len Brzozowski

The Project Manager’s Approach to Innovation, by Paul R. Williams

Innovation Project Management: A Research Agenda, By Sergey Filippov and Herman Mooi, Delft University of Technology, Department Of Innovation Systems (The Netherlands)

Project Management and Innovation, by Jeff Belding 

Barriers to Innovation in Project Management, from PM Student.com

 

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Bodymetrics—Innovation in Strategy and Business


BodymetricsI love to find interesting examples of new businesses or business models that are unique or reflect a subtle understanding of emerging trends.  I have found a good one, I think, in the company Bodymetrics, a British firm that started from a university research project. 

More and more of us choose to buy our products (including shoes and clothing) from on-line merchants.   But until now, finding out if they fit couldn’t be done until the product arrived and you found you couldn’t zip your new jeans, or perhaps found them to be undesirably baggy.

Bodymetric’s technology creates 3D body maps. Unlike the controversial systems used by TSA which take X-ray-like images, the Bodymetrics version only measures the outside dimensions of your body, converting them into a virtual 3D image.  They moved from the laboratory into British retailer Selfridges installing a pod that a customer could walk into and have their measurements taken.  It would then recommend which sizes and styles of clothes would be a perfect fit.

Here is a clip of one of these in-store pods.

The in-store pods, while expensive, were a big hit in London and in Palo Alto.   But the high price would not support a widespread expansion of the system.   The next generation is an in-home version selling for about $150 that uses Microsoft Kinect technology (the same motion sensing system used for video gaming on products like the Wii).  Now, at home in your work-out clothes, you can shop for, virtually try on, and add clothes to your shopping cart and make a purchase.   Check out this video featuring the in-home version.

What this story illustrates is that their business success is based on tuning into important shopping trends and emotional motivations, and responding to them in a creative manner.  Bodymetrics seems to recognize:

1)      that shopping can be a frustrating and overly time-consuming activity.

2)     that many people prefer to shop on-line, even though buying clothes in that way can be very “hit-or-miss”.  Yet many of us still would prefer the convenience of shopping from home.

3)     that we want and appreciate a customized shopping experience (similar to what Amazon does by feeding us suggested items based on our past browsing history).  We want to be communicated with as if the seller of services is speaking to and interacting with us on a personal level.  (As social media guru Seth Godin says, we don’t want to receive e-mail anymore.  What we want is “ME-mail”).

4)     the trends in mass-customization and democratization of fashion (putting consumers more in a position to influence shopping experiences and trends.)  Note the company Polyvore whose web site allows visitors to create mix-and-match outfits, publish them and then see what styles are “trending” based on consumer submissions rather than the opinions of elite fashion designers.

The entire notion that we want to take greater control over our lives accessing and using information and technology to better serve us is at the core consumer motivation.  We live in a world where we have more choices and less time.   This means we ignore most of the traditional marketing messages aimed at us as we seek out situations that speak to us on a personal level – and put US in control.

Who knows, the term Kinect Shopping might someday soon become part of our lexicon. 

Two Approaches to Innovative Strategy Development

We spend a lot of time in business school teaching strategy as a process of understanding the competitive landscape, assessing the strengths and weaknesses of competitors and trying to figure out how to beat them.   That is one approach, and it is sometimes inevitable.

The other approach is to forget about competitors, and focus instead on the consumer.  What if we could understand their emotional drivers more deeply than anyone else?  What if we could see things that elude our main competitors?  This can be possible because we worked harder too empathetically understand customer needs.  Such is a path to leadership in your industry or segment.  In fact, we might even find ourselves on the forefront in shaping a whole new segment, product or service.  Isn’t that the magic of Steve Jobs and Apple?

It comes from exercising our powers of observation BEFORE engaging our powers of imagination.   We need to observe the world around us, sense which way the winds are blowing, and then ask how we might take advantage of key trends and serve unmet needs. 

This is not necessarily the domain of large corporations

Some of us think of Apple, with all their financial and human resources and think innovation is the domain of big companies.  Not so, as discussed in the article on Creative Disruption by Waldeck and Hopkins-Callahan (see below).   Small businesses are equally capable.

Consider the case of the owner of a small pool company who offered pool and water quality services for municipal, commercial and residential customers.   He charged per service call.  He also sold heaters, pumps, and other related pool care equipment as well.   In the case of their municipal customers, water quality monitoring was a big deal, but the systems to provide it were more expensive than most commercial and residential consumers were willing to pay.  Smaller pool owners wanted good water quality, but it had to be reasonably priced.  When the pool company owner attended a trade show, he saw some moderately priced new technology.   So he purchased a few systems himself, and offered the monitoring service to his smaller clients with a modest monthly monitoring fee.

In a sense, he saw the opportunity to exploit the new technology by changing his business model, getting into the equipment leasing business.  This was an innovative solution (I think) that was enabled by a new technology, and required flexibility on his part to change.

This is not unlike the Bodymetrics story – In their case the enabling technology was the Microsoft Kinect technology, which opened the door to a low-priced in-home solution rather than the expensive walk-in pods they had sold to Selfridges and Bloomingdales.

In both cases (pool and body-mapping) there was a common thread – the understanding of consumer desires, needs, and preferences.   They also were open to the possibility of changing their service offering and delivery method.

Too often we turn our attention internally, to our own R&D departments where our own very smart people think they know best what our products should look like.  Or, we turn to our marketing departments to the word out better.   Looking outside is much more likely to produce a sustainable competitive advantage, products that WOW users, and breakthrough innovations.  

Other Resources

How Bodymetrics and Razorfish are out to Change Retail, by Shareen Pathak

Creative Disruption: Innovation Lessons From Small Business, by Andrew Waldeck and Renee Hopkins Callahan 

Mass customization is trending so hard right now, by treehouselogic

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Converting Empathetic Observations Into Solutions


IPODSIn my last article, Driving Innovative Strategy through Empathetic Observation, I introduced the Empathy Map as a technique to aid your team in conducting insight generating field immersion research.  It is intended to supplement the hard research you collect as a part of any planning process, and should promote a deeper understanding of your industry, business product, service or customer.

The goal of conducting Empathetic Observations is to enable you to go deeper into the motivations that drive customer behavior.  This helps you to ask better questions to identify the more important problems to solve.  This is the path to achieving breakthrough ideas.

Imagine Apple, a strictly computer company in 2000.  How did they transition from making Mac and Apple computers to the revolutionary iPOD?    At that time we mostly listened to our music on CD’s.   A number of companies–including Creative Labs, and Sony-had been selling MP3 players for a few years but none of them had been big hits.   So, in this case, Apple didn’t invent the concept, but it was about to revolutionize it, by understanding consumer attitudes and desires better than all the competitors at that time.

The Apple Team was somehow able to sense the possibility of the congruence of computers, the internet, and a lightweight (MP3-like) portable and personal device that could really change the game.  They did their own assessment of the market and consumer needs.   They recognized that the slow adoption of MP3 devices was partly due to price, partly due to its features, and partly due to the lack of an enabling infrastructure.

The 1999 Creative Labs Nomad had 32 MB of memory.  That’s enough for about 1 or 2 CDs and cost US$429.   In 2000, the digital music market was still pretty young and people were being pursued in court over the violation of copyright laws when they downloaded or copied “illegal” music.   There was no organized “store” from which you could download music.  Using MP3’s was cumbersome and risky. Yet Jobs and his team saw the possibility of delivering mass customized music on demand – listeners could hear what they wanted, anywhere, and at any time.

Apple spoke with consumers and thought about the problem holistically.   Their solution:

1)      Increased memory – the first iPOD could store about 1,000 songs

2)      Simpler operator interface  –  not buttons or hard to read dials, but a circular touch-sensitive element you could direct with the light touch of a finger

3)      Lower cost  –  the first iPOD cost $250 – about half of the Creative Labs version

4)      A convenient and legal platform for easily transferring music content to the device –  Apple’s APP store was created to offer this and it ultimately morphed into iTunes

5)      Easy integration to your PC  –  by downloading iTunes on your PC, you had now one simple way to organize, categorize and manage  your music collection, create customized playlists and to easily plug-in and download to your iPod

So now a holistic solution was present, and the iPOD took off, selling a quarter billion units in 7 or 8 years, leaving the competition in the dust.  It totally transformed how we all think about media.  WE are in control.  It led to the creation of “podcasting”, and is behind the trend of streaming video, TV programs, and books.

My hypothesis is that Apple’s competitors chose to see themselves as device makers – good at mass production.  They expected the retail sector to suck their products out the end of their supply chain as they had in the past.  The Apple team (under Steve Job’s direction) came to understand it needed to integrate all the above elements to satisfy consumers.

Using Your Empathy Map

The Empathy Maps your teams create are what lead to these insights – to more problems to solve that can bring about revolutionary change.  The “problem” for the tech industry was NOT how to make a better MP3 player.   Above I listed five major problems that ALL needed to be solved, and integrated together (price, memory, user interface, access to content, and integration.)   All five needed solutions for the revolution to take place.   While I’m not sure, it is plausible that the engineers at Creative Labs looked at the problem one dimensionally, like we need to lower cost, or we need bigger memory.  (Check out the link below suggesting that by as late as 2007, Creative’s designers still didn’t get the whole picture.)

So how do you go from the empathy maps to these innovative solutions?  Here are the steps.

1)      Have your teams share with the whole group their empathy maps and their main conclusions – 3-4 bullet points from each section of the Empathy Map

2)      Invite the assembled group to begin defining as many “problems” as possible by reading each of the bullet points and allowing your mind to run free.  Remember the Linus Pauling quote when he was asked how do you come up with a good idea?   “It helps”, he replied, “to begin with a lot of them!”    Write down these problems in the form of a “how might we” statement, such as “How Might We: make it easier for customers to transfer music to their device? Write each of these How Might We statements down on individual post it notes, and transfer them to a large board or wall.  Get as many ideas down as possible.

3)      Then group the ideas according to which ones seem to be related and put a heading on each grouping.   I am imagining in the iPOD case at least five main categories as outlined above:  price, memory, user interface, access to content, and integration.    Can you picture it?   5 labels with multiple post it notes grouped nearby.

4)      Assign teams to work within each problem area to generate ideas to solve these problems.

Some of you might argue that a process such as I am advocating may be too time consuming and requires too many resources pulled away from their day jobs.   If that is your impression, I would ask only “what is the cost of failing to do the kind of thorough analysis that leads to the holistic solution?”   Apple’s market share in the iPOD business was over 75% by 2007.   It enjoyed a zero share in 2000.  Those share points came from someone.

Other Resources:

How Apple Transformed Music and Our Lives, by Sam Costello, About.com

Creative Labs NOMAD MuVo² 4 GB MP3 Player–A Failed Attempt to Rival the IPod Mini, from Yahoo Tech

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