The Complete Innovator

Bearing in mind that I work in the innovation industry, I really shouldn’t be surprised anymore when people approach me with unusual propositions – and yet when my friend Renee Callaghan of Innosight approached me with this idea for a virtual book tour for Scott Anthony’s new book, The Silver Lining, it still took me a while to believe that she was serious.

Scott, after all, is already pretty well known in the innovation arena, having co-authored at least one seminal innovation book with the famed Clay Christensen – and also having then co-founded Innosight with that same person. And yet I guess it’s a sign of the networked world we live in that, instead of the traditional road trip involved in launching a book, Scott, and the Harvard Business School Press, have decided to innovate and instead pick a series of influential bloggers, podcasters, and v-loggers to have exclusive access to Scott for this first week of its proper launch.

I was of course, honored to be included in this exclusive group – and throughout this week you’ve probably been following the virtual tour across the internet which started at Chris Flanagan’s video interview at the Business Innovation Factory on Monday;  followed by a podcasted interview with Principled Innovation’s Jeff de Cagna on Tuesday;  FutureThink’s Josh Kutticherry on Wednesday; and then yesterday (Thursday)Jim McGee who in a spurt of over-achievement organized both an interesting podcast panel interview on his FastForward Blog as well as a full book review on his personal site,  McGee’s Musings.

That left me with today, Friday the 24^th July, and the anchor leg of the virtual whistle-stop tour for Scott. There was, admittedly, a certain sense of both comfort and dread in being the last on the list of people covering a book tour – not least of which my concern that it was kind of like drawing the 4pm speaking slot of a big two day conference – with the leftover people desperately sucking down coffee in a last ditch effort to make it through one last set of powerpoint slides.

However, there are as it turns out, some definite benefits – not least of which the rare opportunity to not only read Scott’s ideas in his book, but to also watch this reknown thought leader’s progress through the tour and grill him with some follow up questions from his other interviews.

Unsurprisingly, Scott’s not exactly short of a sharp insight or two – if anything, talking to him is very much similar to reading his book – a virtual flood of useful thoughts and ideas – that really require you to stop and think about them in order to get the full benefit of them – so I ended up being thankful to be the last one to get passed the baton so to speak.

With that in mind – here are the highlights from my conversations with Scott these last few weeks:

————Start of Interview———

>>Scott – love the new book, and not just because of the shiny silver cover – but why this, and why now? There’s no shortage of new books on innovation on the market – why do we need another one? And what sets this book apart from the others?

The idea for The Silver Lining came in an October meeting of the Innosight leadership team. As it seemed like the business world was collapsing, we were deciding what was the right message to bring to our clients. It didn’t take more than a half day of research to realize that innovation was still possible, no matter how dark the times. We knew that innovation was growing increasingly critical. And we knew that despite the sense of gloom that innovation was increasingly within the grasp of managers everywhere. Hence, the idea for a book describing what to do to seize the still ample opportunities that exist in today’s markets. My hope is to inspire entrepreneurs and corporate innovators, and to provide them with practical guidance that can help them seize their own silver lining.

>>Throughout the book, you refer to it being “a playbook for uncertain times”,  do you think innovation processes need to be different in good times versus bad?

Honestly I don’t think there are as many differences between innovation in good times and innovation in bad times. The funny thing is that the practices that feel more natural when times are bad – limit resources, focus on learning as quickly as possible, shut down flawed projects early – actually are the right practices in ANY time. That’s the silver lining of today’s tough times – it forces companies to do what they should have been doing already. Some things do become more important in tough times. Pruning has to happen more rapidly. Loving the low end becomes more important. I think the more important question is what do you have to do differently as change accelerates. The guidance of my colleague Dick Foster rings true here: you have to change at the pace and the scale of the market, without losing control. That means quickly iterating towards successful strategies, and developing an individual competency to grapple with the paradoxes that increasingly characterize today’s world.

>>Like you, I’ve also been observing the increasing pace of change in the world and urging people to react and plan accordingly – but, in your opinion, what are the key drivers of this increasing pace of change? – and do you think that pace is here to stay? And at what point does that pace flatten out? Surely it can’t just keep on increasing indefinitely.. (just imagine – you come up with something and instantly “poof!” it’s out of date already! Quite a frightening thought..) !

To be completely honest, I see no reason why the pace of change won’t continue to accelerate. There have been three primary – and interrelated – drivers over the past decade. The first is the dramatic improvement in technologies, which makes communication, collaboration, coordination, and creation much simpler. The second is the growing importance of emerging economies like Brazil, India, and China, which have growing classes of entrepreneurs. The final has been a huge amount of capital to help fund entrepreneurial ventures and further improve technologies. Now, some might argue that capital has dried up, but there’s still a lot of money out there. Further, it’s a lot cheaper and easier to start and scale a business than it was a decade ago. I’ve been thinking about this a lot recently, and I’m coming to the viewpoint that the only two real sources of competitive advantages are brands and business models. Brands because they can cause people to do some irrational things. Business models because they are incredibly difficult to copy. But technological based advantages are transitory. Cost advantages are transitory. It’s scary, because it means the only thing you can be sure about is that tomorrow’s business will bear little resemblance to today’s business.

>>Does Innosight itself uses the principles outlined in your book internally to sustainably innovate itself?  Could you give me some examples?

We most certainly have put the principles in the book (and more broadly the disruptive principles) to work. On a general level, one of Innosight’s premises is that by using well-grounded theory we can solve seemingly complicated problems more quickly and cheaply than a company that uses “unstructured problem solving” to guide its approach. We constantly prune our innovation portfolio. This year we have accelerated efforts that we think are critical to long-term competitive advantage, such as building deeper competency in market understanding, business model innovation, and new business creation, and decelerated lower-priority areas, such as developing a disruptive design capability. We have made sure that we are investing in areas that are critical for us to deliver distinctive service (e.g., training), but curtailing investment in areas that are less important (e.g., legal services).

We always think about the smart management of strategic experiments. For example, when we were thinking about building that disruptive design capability, we designed a very simple test: we gave the idea to our sales force (our leadership team) and said “go pitch this to current and prospective clients.” Six weeks later, we had no market interest. Part of this I suspect is because selling disruptive design services is very different from selling management consulting services. That doesn’t mean disruptive design services is a bad idea, but it means if we have to move it through our current sales force it won’t work, and since we’re not building a new sales force this year, the idea goes on ice.

>>I guess one big question that Corporate America is still asking though is “where does the future of innovation as a corporate competency lie?” – Already it means so many different things to different industries – in Pharma, R&D dominates; in Tech, IT runs the show; and in CPGs the Innovation Manager is frequently a fancy name for what used to be a brand manager – will Innovation continue to be narrowly focused in the future? Do you see it spreading out across the enterprise to be more all encompassing?  Or will it simply devolve to be a general competency that’s seen as “everyone’s job” with no set leadership (something I’ve heard way too often if you ask me; and frequently ends up being a euphemism for “we’re too lazy to do anything about this”…)?

My own personal view is it is an “and.” The companies that are really far along in their innovation journey do expect it to be the job of the many. That is, they ask their legal department, external relationship department, and so on to constantly think of doing old things differently or doing new things. But if you only have a “everybody innovate” approach with no focused efforts the odds that you do anything truly breakthrough are pretty low. So I see a hybrid model, where there is a general culture of innovation supported by innovation “hot spots” that tackle specific problems. P&G is an instructive example. The company certainly thinks innovation is one of its core competencies and expects everyone to think and act innovatively. But it also has specific structures, like a Corporate Innovation Fund and a division designed to create new businesses (FutureWorks). It’s seeking the “and.” That’s usually a good thing.

>>You mentioned in your interview at the Business Innovation Factory earlier this week that “the only thing you can predict with a fairly high degree of  certainty is that there will be less certainty in the future”  – that’s a pretty daunting warning of the state of affairs to most business executives in established companies out there. How do you manage in an era of such uncertainty? – The obvious implications of that outlook are things like higher failure rates, lower returns, and less predictability in the business of the future – which makes it pretty hard to do many traditional actions and functions like corporate and financial planning – let alone a change in mindsets of the executives in the future. What kinds of changes are necessary to survive and thrive in a permanently uncertain world?

I was talking to a client this week about their strategic planning process. It was done by a small group of specialists once a year. I told them that had to change. It had to be a continuous activity with broad contribution. That’s broadly true now. The world moves too fast for people to sit back and ponder. Now, thinking is still important, but you have to increase the pace with which you take the pulse of the market, or you are going to miss an important signal. These implications don’t have to be dire if people act in the right way. That is, to embrace that your assumptions aren’t right and to be ready to course correct as you learn. I’d argue that acting in the right ways will actually increase OVERALL success rates and returns, because the failures will happen much faster, which means you find the success sooner and don’t throw good money after bad going in the wrong direction.

>>You also mentioned at the end of that interview that your goal at Innosight was to help clients introduce “greater predictability and reliability” into their innovations – isn’t that an oxymoron bearing in mind your previous comment about less certainty in the business world? Won’t the lack of certainty also make innovation less predictable?

At a micro level, yes, I think any singular innovation effort based on assumptions about a market is going to de facto have less predictability because there is a greater chance that those assumptions won’t pan out. At a macro level, however, the right process and approach that allows companies to go after the right opportunities and to quickly learn about those assumptions completely changes the frequency with which they succeed in a way that overwhelms the micro changes.

>>I think one of the things I like most about your book is the sheer practical nature of it – you include a lot of practical tools for following your recommendations – BUT a lot of the things you recommend for companies to do are pretty scary/alien concepts for most companies (and quite rightly so!) – but as a manager trying to implement these techniques at a company, you’d be facing an uphill battle against the status quo – how would you go about overcoming those objections and introducing your company to these techniques, concepts and measures?

The notion of smart strategic experiments doesn’t apply just to new products. It applies to new processes and approaches inside a company. I would recommend that managers try to find a “safe place” to run an experiment. In other words, don’t try to convince leadership with logic, or what’s in a book, demonstrate to them the results of doing things differently. Actions always speak louder than words. One simple thing I’ve seen people do is get together a group of senior leaders to kick around these concepts. Almost always, one of the leaders walks away with an insight that causes them to want to learn more.

>>In the FastForward Blog you said “There has been academic research that shows that the better organizations get at six sigma kinds of processes, the better they get at incremental innovation and the worse they get at disruptive innovation.” – and I fully agree with you in the need to bring in discipline into the innovation process – heck, my clients probably even get bored of hearing me say the words  “process” and “discipline” at meetings – but in a world that has embraced (and rightfully so to an extent) Six Sigma processes that, as you mentioned, have a tendency to choke out the possibility of disruptive innovation – how do the two things co-exist? How can you institute both the “error-free” culture of Six Sigma with the “failure tolerant” Innovation culture?

There is no company that I’ve seen that has embraced disruptive innovation in any serious way that hasn’t create substantial organizational space for disruption. The extreme is a fully autonomous “skunkworks,” but I’ve also seen people keep efforts internal, but have disruptive innovation efforts follow a different process, at least at the front end of the innovation funnel. Six Sigma processes aren’t bad of course. And the principles of Six Sigma around swarming problems, testing hypotheses, and constant learning, actually are very good for all types of innovation. The application can be troublesome though.

>>When you spoke to Jeff de Cagna in his Principled innovation Podcast, you talk briefly about the need for a new generation of managers to emerge with a brand new set of “muscles” that have yet to be evolved in the current generation of “operators” – can you expand upon this idea – what are those muscles, and how do you see companies hiring and developing this new talent?

It’s a great question. Again, I’ll make a macro and a micro comment. At a macro level, managers have to learn how to operate in ambiguous circumstances where they can’t “get” data that shows them the way – they have to create it. They have to learn to grapple with paradoxical demands, such as using core capabilities to beat competitors but being willing to walk away from those core capabilities to beat competitors (different competitors of course). At a micro level, innovators need all sorts of skills. They need to hear what the customer can’t articulate. They need to be able to “pitch” an idea before it’s fully formed in ways that leadership and customers can understand. They have to be able to translate customer insight into opportunity. They have to be able to “un pack” an idea to find its most critical assumptions. And a whole bunch more. Once you begin to understand what these things are, you can look for people who have experiences that suggest they have confronted similar challenges in the past (what Morgan McCall calls “schools of experience”). And you can begin to consciously expose managers to circumstances where they have no choice but to develop these skills. Of course, I think reading fine books like The Silver Lining and The Innovator’s Guide to Growth helps!

————End of Interview———

So all in all, what do I think about this book:

Let’s start with the negatives – Certainly it’s a very thorough book – covering most of the key aspects around corporate innovation. At times however, it had a very academic feel to it – a fact underpinned by a 10 page “Notes” section at the back of the book containing all the references mentioned in the previous 184 pages – and many of the chapters do sometimes read as a recap of other books and concepts that Scott has written in the past.

I also found Scott’s frequent use of ‘anonymous’ examples likewise a bit frustrating – “For example, one company was thinking about developing a disruptive strategy in the real estate market”- but WHO are they??

I’ve seen authors doing this as a way to build surprise when you find out the answer later in the chapter that the “small technology company” doing everything differently ended up being someone like Google – but for many of the examples in the Silver Lining that “reveal” never happens – and to me, it’s the equivalent of starting a joke that should be “A Priest, a Rabbi and a Vicar walk into a bar….” with “Three gentlemen of varied faiths walk into  an establishment selling alcohol…” – Sure, you get the point, but it just isn’t as powerful or as memorable – and the ability to make examples like that memorable (and thus reuseable) are a key element to a top notch book in my mind.

However – when it comes to the key questions:

Was the book useful? Absolutely – the book covers a wide range of topics and even if you see it as a “Best of Scott Anthony, et al” – there’s no denying the sheer thoroughness of the ideas in the book.

Was the book practical? Absolutely – the book is loaded with a powerful set of tools at the end of each chapter that far transcends the usual business book model of a few 2×2 grids and 100 pages of filler. Rarely do you see a book that gives away so much, and in such a compact manner.

Would I recommend it? Absolutely – the book is a fantastic addition to anyone’s innovation library and a ready reference for any practitioner in the innovation field – for, to paraphrase something I heard Scott himself say earlier this week, “every time you run an experiment, you learn new skills and new capabilities that could open up new opportunities in the future” – and if nothing else, this book will arm you with ideas and tools that will inspire you to experiment, learn, and find new opportunities.