Author Archives: Stephen Shapiro

About Stephen Shapiro

Stephen Shapiro is the author of five books including “Best Practices Are Stupid” and “Personality Poker” (both published by Penguin). He is also a popular innovation speaker and business advisor.

Opposites Don't Attract

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GUEST POST from Stephen Shapiro

I remember a project I worked on many years ago. I was leading a large team and had a very large budget. I chose John to co-lead with me because we got along so well. I am a creative, spontaneous, and enthusiastic person and John was pretty much the same. The team loved working with us. We were fun, engaging, and motivating.

And the project was a huge waste of money.

The problem was that John and I got caught up in the novelty of our work. We were too focused on developing new ideas and making sure people were happy. But we never got any work done. We were a total failure.

In hindsight, this failure probably could have been predicted. Our styles were too similar.

In fact, if you look at any group of people who effortlessly work well together, odds are the individuals share a lot in common with each other. They might have similar backgrounds, expertise, interests, or personalities. This is natural.

The reason?

Contrary to conventional wisdom, opposites do not attract.

When it comes to interpersonal relationships, we are attracted to people who are like us. Psychologists have extensively documented the power of similarity when it comes to liking other people. In general, we tend to like those individuals the most who seem the most similar to us.

Therefore we surround ourselves with people who share similar thought processes, similar energy levels, and similar personalities.

But as I learned on that project many years ago, partnering with people who are too much like you can lead to disastrous results.

Contrast that experience with the project that immediately followed. Learning from that failure, I brought in a great planner, Ray, as my wingman on the team. I made sure I treated him as my equal. He was in my face on nearly a daily basis, forcing me to stay on plan and budget. I wanted to avoid the rigors of his planning as I felt that they were limiting and restrictive. But he was unrelenting.

In the end, although we may have annoyed each other, it was one of the most successful projects I’ve ever worked on. In fact, it was one of the most successful initiatives of the firm, one people still talk about nearly fifteen years later.

From this project, I learned something incredibly important:

“The person you like the least may be the person you need the most.”

Although Ray annoyed me on nearly a daily basis, it was because of his persistence that we were so successful. Left to my own devices, I would be chasing “bright shiny objects.” He forced me and the team to stay focused on the plans, deliverables, and timeframes. The combination of my creativity blended with his rigor was the key to success.

Although it is human nature to want to be around people who are like you, in order to be successful you need to partner with people are different. You need to surround yourself with people that complement your abilities and illuminate your blind-spots.

When you have a difficult problem to solve, instead of going to some someone who thinks like you, find someone who is your opposite. Yes, it is quite possible that that individual will annoy you and not give you the answer you secretly want. But that might be the very reason they have something powerful to contribute to you.

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Don’t Do The Wrong Things When Things Go Wrong

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GUEST POST from Stephen Shapiro

No company is perfect. Something will eventually go wrong, even if you have the greatest Six Sigma or quality program on the planet.

And it is how you handle these problems that can determine your relationship with your customers.

For example, I needed a taxi from my hotel in Paris to the airport. According to the front desk, it was supposed to take only seven minutes. After ten minutes, the woman apologized and walked outside to see what was going on. The police had blocked the road and no cars could get down the street. She walked with me to the corner to see if my taxi was waiting there. It was not. She had me wait at the corner while she ran back to the hotel to call for another taxi. Given the road problems, they would not send another car. Instead of giving up, she walked me several streets away to a taxi stand where she made sure I was off safely.

That is customer service! That goes beyond what I suspect any manual told her to do. And it left me with only positive thoughts of my experience with that hotel.

To me, this is the true essence of innovation. It is about improvising in the moment to do what makes sense right then and there.

Or, after checking into my hotel in the suburbs of Chicago, I went up to my room to discover that the key did not work. I went all the way back down to the front desk. The gentleman there apologized, fixed the keys, and without hesitation handed me some chocolate chip cookies. No, I wasn’t staying in a Doubletree where all guests get cookies. I was in a Hampton Inn. I doubt this was standard protocol.

That one small gesture removed any annoyance and made me happy… sort of. Since I am trying to lose a few pounds, I did silently curse the front desk clerk as a devoured the delicious cookies.

But sometimes companies do the wrong things when things go wrong…

I have had service with a mobile phone company for a long time, spending $2,000 a year on service. A year ago I decided to get their VoIP home phone service which was one third the cost of a traditional copper wire line.

From the beginning, I had problems with the VoIP phone with poor call quality and dropped calls. I called the phone company’s technical support repeatedly to see if they could fix the problem, but they could not. Finally, I called customer service to tell them about my problems and that I wanted to cancel my account. The man I spoke with informed me that I was under contract and that I would be charged $200 for canceling. I explained that I have had issues from the beginning and have spent nearly $10,000 dollars with them over the years. Did he really want to risk losing my $2,000 a year mobile service by forcing to adhere to a contract for a substandard home product? After 20 minutes of pleading my case, he did not waver.

I hung up and decided to call customer service again. I explained the situation to the new person on the line. Within two minutes, he canceled my home contract without penalty. Clearly it was not that difficult to do. Why didn’t they do that in the first place?

You can make or break a relationship with a customer through a single interaction. And what is most telling is how you respond to a customer when something goes wrong.

I know someone who worked for Bose. She once told me: “When a customer buys Bose speakers, they become a fan of the product. But when they buy Bose speakers and something goes wrong, they become a fan of the company for life.” Their customer service is second to none.

What do you do when things go wrong? Do you follow the “instruction” manual? Or do you color outside of the lines and do what is right? One interaction can change your relationship with your customers.

Whatever you do, don’t do the wrong things when things go wrong.

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Cathederal or Chaos?

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GUEST POST from Stephen Shapiro

The other day I gave a speech on open innovation at a conference primarily focused on open source software.

One of the presenters at the event suggested that instead of trying to create a cathedral by controlling software development, we should instead be comfortable with a mess. The point of open source is to let creativity emerge from the mess.

I thought that was an interesting point and was curious if this is how open source really works.

Just then an audience member made a comment (paraphrased here) – “Nearly every major, successful open source software effort has been backed by (and loosely controlled) by a large group. For example, Mozilla’s support of Firefox and Oracle’s support of Open Office.” He listed a few others and concluded that the only one that was not organized this way was Apache. He implied that maybe the “mess” is not best.

I’m not an open source software expert, but I don’t find that surprising.

When there is no structure, chaos ensues. Structure, even simple structure, can help bring together people so that they can work together more efficiently AND creatively (we know that even creativity requires some structure; innovation more-so)

As the morning progressed, I realized that the conference itself was an example of what can happen when there are no controls. It quickly became apparent that there was no formal emcee, no one in charge of the running of the conference, and no well-defined agenda.

The morning plenary was scheduled to go from 9AM until 10:30AM followed by a 30 minute break. After the break were concurrent breakouts, including the one where I was presenting. Immediately after my speech, I would hop off the stage, hop into a taxi for the airport, and head to my next speech in Italy.

At 10:30, when the break was supposed to start, another speaker took the stage. I assumed we were running a little late, but it was hard to tell how late since they did not list who was supposed to speak. And then a parade of speakers continued. It seemed like it would never end. I think there were four or five speeches that went on after the scheduled end time. And quite a few of the speeches were nothing more than long-winded commercials from sponsoring companies. It was 11:30 – a 60 minute overrun on a 90 minute session – before the speeches were done. And then, no one was given instructions. Should they take a break? Should they go to their breakout? People were confused. They did not know what to do. I didn’t know what to do. And I wasn’t 100% sure I would make my flight given the delay.

Although it would be an exaggeration to call this event “chaotic,” it certainly was not orderly or efficient. And it demonstrated what can happen when things are left on their own without any kind of process.

I realize that innovation requires a bit of flexibility and comfort with ambiguity. Nothing is totally predictable in the world of innovation and you can’t schedule everything as neatly as you do in the world of operations or manufacturing. I also agree that new ideas can emerge from chaos that might not otherwise come to the surface (reminds me of the infinite monkey theorem). And when you have millions of people donating their time to the open source movement, the resulting inefficiency associated with the mess can be tolerated.

But can your business afford this level of inefficiency? Probably not. I have written frequently about the “signal-to-noise” ratio of your innovation efforts. If you modeled your business after the “uncontrolled, mess model,” you will almost certainly end up with an extremely low signal-to-noise ratio.

The real objective of your innovation “process” is to put in just enough structure to help make it efficient, while not putting in so much that it stifles creativity.

I’ll close this post with something I wrote back in 2001 in my first book, and reused in a blog entry a year ago:

(As innovators,) we are architects of companies and industries. An architect is not a ‘reengineer.’ To illustrate this point, I often ask clients what is the difference between an optimist, a pessimist, a reengineering consultant, and an architect. The optimist looks at a half filled glass of water and sees it as half-full. The pessimist looks at the same glass and sees it as half-empty. The reengineering consultant sees too much glass. Cut off the top. Downsize. An architect looks at the same glass and asks questions such as “Who’s thirsty?” “Why water?” Or “Is there another way to satisfy the thirst?”

We need to architect our innovation efforts. And in order to do that, we need to ask better questions.

In fact, one of the most critical skills for accelerating innovation is to – ask the right questions, the right way, of the right people.

With this approach, you get both the efficiency of the controlled cathedral building process and the emergent creativity associated with the messier forms of open source software.

P.S. The picture is one I took of St. Marks Basilica while in Venice, Italy. Although your business might not want to create a cathedral, this one was pretty impressive!

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One Simple Action Can Change Your Life

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GUEST POST from Stephen Shapiro

Recently, a number of people have asked me how I became an author and professional speaker. I reflected upon it and realized that it all started with one simple action. And maybe, to make major change happen, that’s all you need: one small move.

The year was 1993. I was a relatively junior person at Andersen Consulting (now Accenture). I was 7 years out of college and was working on projects like everyone else. I blended into the woodwork and was not distinguished from any of the other 40,000 consultants.

And then one day I had an idea: I realized that I was interested in “cultural transformation” work and felt that Andersen’s culture could use a little transforming. Therefore I decided to call the CEO, George Shaheen, and ask for a meeting to discuss this, um, idea. Yes, I admit, it sounds a little crazy.

I moved into action. I found a company directory, looked up the direct dial number for George, and placed the call. I remember the call well. His executive assistant answered the phone and asked what I wanted. I said, “I want to speak with George Shaheen about transforming Andersen Consulting.”

I am certain she must have looked at the phone and thought, “Who is this crazy person?” She responded, “Excuse me. What do you want?” I repeated myself. She was polite and said, “Ok, let me see what I can do.” She hung up and I assumed that would be the end of things.

The next day, the partner leading the project I was working on came to my desk. Although he was many levels down the totem pole, word got to him quickly. He asked me, “Did you call George Shaheen?” I confirmed that I had. I’m sure HE thought I was crazy. He said, “Maybe I can help you.” I proceeded to tell him my idea about transforming the company’s culture. His response – “I know someone, Bill Stoddard, who is involved with an effort called ‘Enterprise Transformation.’ Maybe you want to meet him instead.” I said, “I would love to meet with Bill. And I still want to meet with George.”

Long story short, I did eventually meet with George, and it was an interesting meeting. But the person who changed my career forever was Bill Stoddard. Meeting him put my career on a totally different trajectory. For some reason he liked me and asked me to work with him on a new initiate he was leading called Value Driven Re-Engineering (he was only an adviser to the Enterprise Transformation initiative). I stopped doing full-time client work and started working with Bill. Our re-engineering work turned out to be big. VERY big. At one point, over one-third of the company’s revenues could be tied back to re-engineering. I was busy leading training sessions and giving speeches around the world.

This started me on the path towards the career I have now. A career I absolutely love.

And none of this might have happened if it weren’t for that one phone call to George.

Sometimes one action can forever change the course of your life, or your business.

Of course, I did not realize that this call would lead me down a totally new path. But sometimes, we can predict possible futures based on actions.

What action can you take TODAY that could change the course of events for you or your business. If the action doesn’t seem outrageous or crazy, keep on thinking.

  • Who can you call that you would never typically have the guts to call?
  • What can you do that is out of your comfort zone, but could have life changing implications?
  • Where could you go that you would never go, but might open up new opportunities?

Sometimes, just taking the first step on a new path can change the course of future events.

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Everything Has a Personality

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GUEST POST from Stephen Shapiro

While developing Personality Poker, one thing I discovered is that lots of things have personalities: People, Political Parties, Products, Places, and Organizations (I could not find a “p” for this last one).

When you look at everything through the lens of a personality, you begin to see why individuals gravitate towards (or away from) certain people, companies, political affiliations, products, and geographies.

Contrary to convention wisdom, opposites do not attract. Human beings prefer to be surrounded by people who are “like” them.

Therefore, the desire for “sameness” creates homogeneous personalities in everything we see.

Saying that people have personalities is nothing new. Personality typing has been around for over 2,000 years, since the days of Hippocrates.

But organizations also have personalities. In some circles, this might be referred to as a company’s “culture.” The personality of a company impacts the people they hire and the methods they use to motivate and retain employees. People who don’t fit the mold, never join or eventually leave. The result? More of the same. Although highly creative individuals may thrive in a company with an innovation-driven personality, they will most likely whiter in one which is overly bottom-line, short-term focused. If you want to change your company culture, a good first step is to distinguish its personality.

The same is true with political parties, which are basically organizations with common points of view. The Republican party has a very different personality than the Democratic Party. Because like attracts like, the beliefs associated with each party get cemented. It also makes it difficult to understand and appreciate the perspectives of opposing party beliefs.

Even products have personalities. The personality of an Apple MacBook is quite different than that of a Window’s based PC. And the people who buy each product is a reflection of the individual’s personality. A person who drives a BMW is making a statement about their personality. Someone driving a Ford F150 is saying something quite different. Yes, sometimes we buy a product for its features and functions. But more often, we buy things because they are a reflection of our personality. [Or maybe we buy a product based on what personality we want others to think we are, such as buying a Ferrari during a midlife crisis].

Places (cities, states, and countries) have personalities too. Although both are in Texas, Austin has a very different personality than Dallas. Austin is weird (proudly so) while Dallas is more conservative. Due to the perceived differences in personality, the influx of new residents into each city helps cement their personality over time. What’s the personality of your hometown? Does it reflect who you are? Are there cities where you would not live because the personality clashes?

Maybe everything has a personality. In a class I am taking, I am supposed to ask people a number of questions about me. One of them is, “If I were on the cover of a magazine, which one would it be? And what would be the title of the article?” Nearly everyone I spoke with gravitated towards business magazines, saying that Fast Company, Wired, or Entrepreneur were the right choices for me. Most felt that Forbes or Fortune were too serious. Clearly that says something about my personality, and the personalities of the magazine.

It is fun to look at everything through the lens of personality. And when you remember that we naturally gravitate towards those (people, places, products, etc) with similar personalities, you will begin to see why we make the decisions we make.

From an organizational perspective, there is a greater opportunity. If you are struggling to innovate, it might be because you do not have a wide range of personalities in your organizations. Your company’s personality might be repelling potential and current employees. As a result, you attract and retain only those who fit the personality. This is the enemy of innovation. But more on this in future blog entries…

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How Can Goals Enhance Creativity?

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GUEST POST from Stephen Shapiro

Over the years, I have written numerous articles on “The Performance Paradox” that show how an obsession with the future reduces performance in the present. And typically, creativity is significantly diminished in the process.

But given that businesses are driven by goals, how can we leverage them as a tool for enhancing creativity?

One way is to use stretch targets. REALLY stretch targets.

For example, one client that I was with last week has a target of doubling their business over the next 5 years. I know MANY organizations that have exactly the same goal. That equates to a 14% growth rate each year (assuming compounding). I’m sure, with hard work, they could hit those numbers, even though it would certainly not be easy.

But what if they set a target of growing by 50% a year? It might have a fundamentally different impact on the organization. That level of growth is unprecedented. It will certainly stretch the way they think. A 14% improvement can most likely be attained through conventional thinking. But a 50% growth target would require some breakthrough thinking; radical ideas.

It might also have an interesting psychological impact on the organization.

Because a 14% growth rate is viewed as doable, it might create an attachment in the minds of the executives and employees. “We should be able to hit these targets. Therefore it we don’t, there is something wrong.”

But a 50% growth rate is unheard of. Clearly no one in the organization would be “attached” to that outcome. Surely the executives would not expect employees to deliver on those targets.

As a result, the 50% target becomes a “game” without attachment. Everyone knows it is designed to shift their thinking and to help create enthusiasm.

The future gives them the present, rather than present giving them the future.

As long as everyone in the organization believes they are playing a game which is designed to get them energized today, and it is not specifically about hitting the target, I can assure you that people will be more motivated. Creativity will be stimulated. And even if the company does not hit 50% growth rates, they will certainly have a better chance of hitting the 14% improvement than if they focused on that as the goal.

Goals that are not goals, can enhance creativity.

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Using Energy Management to Improve Innovation Success

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GUEST POST from Stephen Shapiro

A while back I had lunch with Scott Westover, a pilot, a business executive and an aspiring speaker. He shared with me some thoughts on how what he learned from aerobatic flying could be applied to business success. I asked him to write a blog entry on this topic. His philosophy is called “Energy Management.” I love it because it appears to be an irrefutable law, much like the Third Law of Motion which states that for every force there is an equal and opposite force. More importantly, it explains why many innovations fail. Here is Scott’s story.

About four years ago I started flying aerobatics. During one of my early flights confidence exceeded skill as I attempted an advanced maneuver. It was one thing to practice emergency recoveries with a well-qualified instructor in the back seat and a different thing entirely to problem solve on my own while the trees were getting bigger in a hurry. I got lucky, and after a series of control inputs I rolled back upright and pulled out of the dive. After landing, I found my instructor and confessed what had happened. He offered a simple explanation: I had been reacting to the forces of energy acting on the airplane rather than managing them to maintain control. It had only taken a moment, and once control was lost things escalated quickly.

The energy he referred to that day includes the forces of gravity, lift, drag, and thrust. As a pilot I learned to manage the relationships between these forces to control the airplane. After spending a few more hours in the cockpit, I realized that managing energy in an airplane is related to managing energy in business.

As a healthcare administrator I have an appreciation for the impact change has on business. I have found that thinking about my business in terms of gravity, lift, drag, and thrust allows me to implement decisions faster and to navigate the grey area between “strategic planning” and “business objectives.” Priorities become clear and there are fewer surprises and distractions. Consider the following energy definitions and think about the changes facing your business. I guarantee you will recall things that fit these descriptions:

Gravity pulls you down. Think about gravity in terms of things that pull you down and may be beyond your control. Changing market conditions and new competitors represent gravity. In healthcare there is an expectation that a hospital will have the best technology with which to diagnose patients. A hospital that ignores advances in technology will eventually lose a service line or go out of business. It will crash.

Lift fights gravity. When the market changes, what are you going to do about it? Using the healthcare example, new technology represents lift. The obvious answer is to make regular capital investments in Information Technology, yet every business knows there will always be more available technology than money can buy. Since it is impossible to increase lift without increasing drag it becomes important to anticipate the drag each opportunity represents.

Drag holds you back. Every time lift is introduced the amount of drag is increased. Implementing a piece of new technology, even though it may ultimately allow you to become more competitive, will increase drag in the form of staff time, lost productivity, cash and a shift in focus away from your customers.

Thrust propels you forward. Regardless of where it comes from, thrust is essential to overcoming drag. In this healthcare example, thrust can be found in letting referring physicians and patients know about the improvements you are making while listening to staff to uncover hidden barriers to implementation.

By thinking in four dimensions rather than “problem/solution,” businesses know how much thrust is needed to get ahead and where thrust will come from before the launch of any lift-generating initiative. The amount of available thrust determines how much drag an organization can overcome, so ultimately thrust determines how many lift strategies can be implemented at a given time while maintaining control.

Scott’s powerful analogy helps explain why so few innovations are successful. Businesses are often:

  • blind to the force of gravity (e.g., disruptive innovations by new entrants) pulling on their industry
  • ill-prepared to invest the necessary lift (e.g., financial investment, resources)
  • dragged down by old cultural norms that seek the status quo
  • are not creative about how to take their new innovations to the market in a way that can give it the necessary thrust

Use these four factors as a checklist to make sure your innovations move upward…rather than allowing them to crash and burn.

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Doing Nothing to Enhance Creativity

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GUEST POST from Stephen Shapiro

We are in such a fast paced society that we are always focused on achieving our goals. In business, these goals might be hitting quarterly earnings targets, sales quotas, or operating budgets. Even innovation initiatives are goal-driven. We measure ideas generated, time-to-market, and percent of revenue from new products.

We are indeed a goal-driven society. And there is nothing wrong with that. But there are times when this obsession can be counter-productive.

In previous posts, I’ve talked extensively about the “Performance Paradox”. This is the phenomenon whereby a hyper-focus on your goals is the very thing that prevents you from achieving them. Dan Pink also wrote about this concept in his recent book, Drive.

Yesterday it was a beautiful, sunny day here in Boston, so I decided to walk the ocean near where I live. I spent most of my time walking up and down the beach, listening to my iPod, and eating a delicious lobster roll. As I started to walk back home, I decided to walk into the water and just stand there. I did nothing for about 20 minutes. The picture above is what I looked at (you can click on it for a larger version). I just stood there. My mind wandered. At first I wondered what others were thinking of my “statue-like” position. Then my mind drifted towards work…in particular the marketing efforts for my new book, Personality Poker. I let my mind meander, but I stayed focus on the book. After about 5 minutes, a flood of ideas started to come through. By the end of the 20 minutes, I had more ideas than I had in the previous few weeks.

I have been incredibly busy lately. And I never felt I had the time to reflect. But what I realized very quickly was that I needed to detach myself from my goals in order to help me achieve the goal of a New York Times best seller. The more I hyper-focused on the work I needed to do, the less it seemed I could develop new ideas and solutions.

As I walked back home, I realized very quickly that the phenomenon I experienced is something I had written about many times before. I forgot the value of doing nothing.

In my book, Goal-Free Living, when discussing the process for clearing the mind, I wrote…

The word Mushin is used extensively in Japan. It means silent mind, empty mind. A mind that is void of thought patterns and mental chatter. The ability to listen to that inner voice is critical on the journey to self-awareness. It is said that Aristotle used to lie in bed with a ball in his hand so that when he would fall asleep the ball would drop and bang a copper plate below. The noise would wake him up, keeping him in a quasi state of sleep and consciousness. This is where he generated his best ideas and insights.

In Personality Poker (due in stores November 2010), I provided some of the neuroscience behind this…

A particular area of the brain known as the dorsolateral prefrontal cortex is most active during conscious thought. This is among the most advanced parts of the brain, parts which separate us from other animals that cannot analyze and calculate the way humans can. However, when we are in a state of “flow,” this part of the brain is quiet, and we move into a more playful mindset. Flow casts the human brain back to a more primitive state where thoughts and sensations come through without being controlled, judged, or censored. Anyone who meditates knows what it’s like to be in this state, as the purpose of meditation is to go behind the judgmental veil of that prefrontal cortex and enter a state of flow. When the conscious part of the brain is activated, the flow state is interrupted. Interestingly, in children, the prefrontal cortex is not fully developed, which allows them a more natural state of play.

Research by Northwestern University neuroscientist Mark Jung-Beeman shows that people who are in a good mood not only tap into different parts of the brain, but also solve more problems through “flashes of insight.” Playfulness helps to put us in a good mood and enjoy a more relaxed frame of mind. Studies have shown that people in this state generate more unusual ideas when brainstorming. This explains why we get so many good ideas while showering or half-dozing; a relaxed frame of mind is conducive to insight, helping us bring forth new knowledge or ideas without forcing them. Like playfulness and a positive mood, the “drowsy” brain induces a relaxed state and encourages insights. How many times have you been bombarded by an amazing idea or thought, or solved a problem in your mind just seconds before falling asleep? This “stroke of genius” is a flash of insight thanks to your brain’s calm state.

I realize that businesses are designed to provide financial returns to the shareholders. And as a result, there is a lot of goal-setting going on.

But in order to achieve long-term goals, innovation is a must. And one component of innovation is the development of creative ideas. And sometimes the best way to develop those new insights is to stop focusing on innovation.

So, take time to do nothing. Sit and stare out the window. Relax. Meditate.

And if your boss asks you what you are doing, tell him/her, “I am quieting my dorsolateral prefrontal cortex in order to be more innovative.”

I’m sure after that, they will stop asking you questions.

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Are You Smarter than a PhD?

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GUEST POST from Stephen Shapiro

“Are You Smarter Than A 5th Grader?” is an entertaining show.

In the world of innovation, the biggest question is, “Are you smarter than a PhD?”

Here’s what I mean…

In Personality Poker we address four primary innovation styles. The spades are the ones who are, as we would say in Boston, “wicked smaht.”

We find that spades are analytical, fact-driven, and often quite intelligent.

One of the challenges with driving innovation into organizations is that smart people are often more interested in being right than doing right. That is, experts want to believe that they can solve every problem under the sun. Although this isn’t true, this pervasive belief can circumvent your innovation efforts.

Here’s a simple example…

A few years back, an InnoCentive client identified a very complex challenge they wanted solved. They posted this challenge to the InnoCentive.com website. Anyone who could solve this problem would get a cash prize. Dozens of solutions were submitted.

One of the solutions was submitted by an employee of the client. Let’s call her Sally.

Sally went to the individual who sponsored the challenge and said, “Why did you go outside to find a solution? I already had the answer.” She was clearly upset that her company went externally to find a solution.

Interestingly, Sally’s actions were the catalyst which helped this client build the case for open innovation.

When the evaluation team evaluated all of the solutions submitted, Sally’s was not viewed as innovative. It was the same type of solution the company had been considering for years. The breakthrough idea came from someone outside of their company and even outside of their industry.

The company now had proof positive of the value of open innovation.

To be clear, the objective of open innovation is not to replace the smarts you already have in your organization. It is to augment this brilliance. Most companies don’t have enough time to solve all of the challenges they are working on. Unfortunately, R&D people often get spread thin working on a lot of different types of challenges, some of which could be better solved by others outside the company.

Stephen Shapiro - Bell CurveHere’s a simple model I use to help companies determine which challenges should be solved externally, versus those that can be solved internally. Challenge fall into roughly three broad categories:

Simple: These are challenges that someone else has probably solved. Although you could solve them internally, this is not the best use of your resources. The odds are that someone else already has a solution that you could buy or license for less money in less time. Why waste your highly specialized experts on these types of challenges?

Unsolved: There are some challenges that are exceptionally complex that may have remained unsolved within your organization for years. Or maybe it is something that is viewed as outside your area of expertise. A well-worn, but useful example of this is the oil spill recovery in Alaska after the Exxon Valdez accident. For 20 years, oil/gas experts futilely tried to find a way to pump out the almost solidified oil at the bottom of Prince William Sound. Eventually, through a challenge posted on InnoCentive, they found a solution from the cement industry, not the oil/gas industry. John Davis, a chemist with expertise in cement, figured that if vibrating cement can keep it from hardening, then a similar concept can be adapted to keep the oil in the tanks from freezing. It worked and solved a two decade old problem. These challenge are also best solved externally because you can increase the level of diversity in your solver base.

Differentiator: These challenges fall into the sweet-spot of your organization. These are the challenges that your experts are best equipped to solve. By “outsourcing” the simple and unsolved challenges, you can allow your team to focus on what they do best. This will increase your ability to solve the problems that differentiate you from your competition. For these types of challenges, it is often useful to post challenges internally, using a tool like InnoCentive’s @Work solution. This allows you to tap into the collective intelligence of every employee, regardless of where they reside organizationally or geographically.

Smart people want to be (and should be) appreciated for their brilliance. They have dedicated their lives to the pursuit of knowledge. But as the late, great Will Rogers said, “There is nothing so stupid as an educated man, if you get off the thing that he was educated in.”

Everyone can not be educated in everything. Therefore, figure out what you (and your organization) do best, and find others to help with everything else.

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You Failed! Now What?

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GUEST POST from Stephen Shapiro

Last week, I had three conversations with three different companies. And each had a complaint about the same group of people: lawyers.

If you think about it, innovators and lawyers have completely opposite objectives.

Innovators want to grow the business. They believe that risk and failure are a natural part of the innovation process. Their mantra is “expansion.”

Lawyers, on the other hand, want to guard the business. Their objective is to minimize risk and avoid failure. Their mantra is “protection.”

But the issue isn’t really lawyers versus innovators. The issue is how to balance an organization’s need to protect the business while enabling it to expand at the same time.

In my previous blog entry, I discussed how to redefine failure. The model proposed was to treat everything like an experiment. While using this mindset, failure only occurs when the experiment does not give you the feedback you require.

However, sometimes even experiences can give you false positives. That is, the experiment tells you a new product, service or market is a good idea, yet in the end it proves to be a total flop.

In those situations, you have a good old fashioned failure on your hand. What do you do then? Beat up the people involved?

I was having a conversation with the former head of innovation for a giant retailer. In their quest for big successes, they had some colossal failures. Instead of chastising the people involved with the failed venture, they celebrated. They held a massive funeral. There was even a coffin in which the project (not the project team) was buried. In my mind I can imagine a New Orleans style funeral with music.

Several years back, Intuit, decided to target a younger population by linking tax filing with hip-hop. They made large marketing investments and created partnerships with companies like Expedia and Best Buy. But in the end, their marketing effort proved unsuccessful. They attracted very few new customers and killed the program.

How did they handle the failure? According to BusinessWeek:

“The team that developed the campaign documented its insights, such as the fact that Gen Y-ers don’t visit destination Web sites that feel too much like advertising. Then, on a stage… in front of some 200 Intuit marketers, the team received an award from Intuit Chairman Scott Cook. ‘It’s only a failure if we fail to get the learning,’ says Cook.”

Successful companies don’t punish failure. They don’t necessarily celebrate them either. But there should be serious consequences if:

  • You try to sweep your failure under the rug
  • You try to blame someone else for your failure
  • You don’t learn from your failure and as a result make the same mistakes again
  • You create a colossal failure without first doing enough due diligence, often in the form of experiments

The point is not to glorify failure. Although failures can give you useful input, success can do the same, at a much lower price. But if you do fail, be sure to deal it head on. Learn from the experience.

Or as Reverend Lawrence G. Lovasik once said:

“Any fool can try to defend his mistakes – and most fools do – but it gives one a feeling of nobility to admit one’s mistakes. By fighting, you never get enough, but by yielding, you get more than you expected.”

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