Category Archives: Innovation

The Role of KPIs in Measuring Innovation Performance

The Role of KPIs in Measuring Innovation Performance

GUEST POST from Art Inteligencia

In today’s rapidly evolving business landscape, innovation has become an imperative for survival and growth. Organizations around the globe are striving to harness innovation to drive competitive advantage, increase market share, and improve customer satisfaction. However, measuring the performance of innovation initiatives poses a significant challenge. Enter Key Performance Indicators (KPIs) – a vital tool in quantifying success, identifying areas for improvement, and driving innovation forward. But how can KPIs be effectively utilized to measure innovation performance? Let’s explore.

Understanding Innovation in Organizations

Innovation is not just about groundbreaking products or novel services; it encompasses processes, business models, customer experiences, and even organizational culture. Measuring its performance, therefore, requires a multilayered approach tailored to the strategic objectives of the organization. KPIs can provide a structured framework and a clear direction to streamline the measurement process.

Defining KPIs for Innovation

KPIs are quantifiable metrics that reflect the critical success factors of an organization. In the context of innovation, KPIs must be carefully selected to align with the organization’s vision and strategic goals. Effective innovation KPIs typically fall into a few categories:

  • Input Metrics: These measure the resources and efforts invested in innovation, such as R&D expenditure, number of innovation projects, or employee training hours.
  • Process Metrics: These KPIs evaluate how innovation is managed and executed within the organization, reflecting the efficiency of innovation processes, speed to market, and development cycle times.
  • Output Metrics: These assess the outcomes of innovation efforts, including number of patents filed, new products launched, and incremental revenue from new offerings.
  • Impact Metrics: These KPIs measure the broader effects of innovation on business performance. This includes customer satisfaction, market share, and long-term financial performance.

The Importance of Tailored KPIs

The challenge with measuring innovation through KPIs is ensuring they are relevant to the unique context of each organization. A one-size-fits-all approach is likely to falter. Instead, organizations should customize KPIs based on their innovation maturity, industry specifications, and strategic goals. The right KPIs can uncover insights that lead to actionable strategies for enhancing innovation performance.

Case Study 1: 3M’s Commitment to Innovation

3M is often hailed as a model of innovation, boasting a track record of transforming inventive ideas into profitable products. For decades, 3M has successfully used KPIs to drive its innovation strategy. The company has set a specific KPI: 30% of its sales must come from products developed in the past five years.

This KPI fosters a strong culture of innovation, incentivizing teams to consistently innovate and refresh their product offerings. By regularly assessing the percentage of sales from new products, 3M ensures a steady pipeline of innovative ideas while maintaining focus on customer needs and market trends. The KPI is embedded across the organization, with executive compensation often linked to performance in this area. As a result, 3M continues to push the envelope, sustaining its competitive edge in various industries.

Case Study 2: Google’s Use of OKRs in Innovation

Google’s prolific innovation engine can be attributed in part to its use of Objectives and Key Results (OKRs), which are a complementary approach to KPIs. OKRs facilitate a robust framework for fostering and measuring innovation efforts. At Google, these objectives are set quarterly and revolve around ambitious, oftentimes audacious, innovation goals.

Key Results are established alongside these objectives to track progress and ensure alignment with company-wide priorities. For instance, an objective could be to “improve user engagement on YouTube,” with key results related to the duration of video watches, number of content uploads per day, or specific feature rollouts. Through this dynamic approach, Google remains agile and enables teams to seek moonshots, while maintaining accountability and visibility into innovation activities.

Implementing and Iterating KPIs

Successful implementation of KPIs for innovation requires thorough planning, cross-functional collaboration, and ongoing assessment. Organizations should regularly revisit and refine their KPIs to reflect changing strategic priorities and market conditions. Introducing a feedback loop from employees, customers, and other stakeholders can provide valuable insights into the effectiveness and relevance of KPIs.

Remember, KPIs aren’t an end in themselves; they are tools to guide decisions and enhance innovation capabilities. It’s important for organizations to cultivate a culture of learning and experimentation, where KPIs evolve alongside innovation processes.

Conclusion

KPIs play a pivotal role in measuring innovation performance, driving accountability, and aligning efforts with strategic goals. By carefully selecting and implementing KPIs that resonate with the organization’s unique innovation context, companies can navigate the complexities of the innovation landscape more effectively. Through case studies like 3M’s commitment to sales from new products and Google’s use of OKRs, we see the tangible impact of KPIs in fostering a culture of continuous innovation. Ultimately, in this age of rapid transformation, those organizations that adeptly leverage KPIs in their innovation endeavors are better positioned to thrive and lead the future.

Extra Extra: Futurology is not fortune telling. Futurists use a scientific approach to create their deliverables, but a methodology and tools like those in FutureHacking™ can empower anyone to engage in futurology themselves.

Image credit: Pexels

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Why Good Ideas Fail

(And How to Help Yours Succeed)

Why Good Ideas Fail

GUEST POST from Greg Satell

In 1891, Dr. William Coley had an unusual idea. Inspired by an obscure case, in which a man who had contracted a severe infection was cured of cancer, the young doctor purposely infected a tumor on his patient’s neck with a heavy dose of bacteria. Miraculously, the tumor vanished and the patient remained cancer free even five years later.

You would think that such an accomplishment would be hailed as a breakthrough, but much like Ignaz Semmelweis a half century before, Coley’s work was met with skepticism. In fact, it would take over 100 years, until the first drug was approved in 2011, for immunotherapy to become widely accepted by the medical community.

This is far more common than you would think. We tend to think that if we get an idea right, that others will recognize its worth. That’s hardly ever true. In fact, if your idea is truly new and different, you can expect to encounter stiff resistance. Success or failure depends less on the actual value of an idea than how you overcome resistance and scale to impact.

The Tyranny of Paradigms

The use of the term paradigm shift has become so common that we scarcely stop to think where it came from. When Thomas Kuhn first introduced the concept in his classic The Structure of Scientific Revolutions, he described more than an event, but a process, which had pervaded the history of science.

It starts with an established model, the kind we learn in school or during initial training for a career. Models become established because, at least on some level, they work. So the more proficient we become at applying a good model the more favorable others view our performance. It’s what allows us to rise through the ranks and become successful.

Yet all models are, in some way, incomplete. Newton’s dynamics, to take just one famous example, work perfectly well for objects we encounter in everyday life and survived more than three centuries with little modification. It was only when scientists started looking closely at objects that were very small and very large that a need for Einstein’s theories arose.

That’s why new paradigms almost always face significant resistance and need to be championed by outsiders or newcomers. Or, as the physicist Max Planck put it “a new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.”

An Idea In Its Infancy

Pixar founder Ed Catmull once wrote that “early on, all of our movies suck.” The trick, he pointed out, is to go beyond the initial germ of an idea and put in the hard work it takes to get something to go “from suck to not-suck.” He called early ideas “ugly babies,” because they start out, “awkward and unformed, vulnerable and incomplete.”

There’s something romantic about the early stages of an idea, but it’s important to remember that, much like Catmull’s, ugly babies, your idea is never going to be as weak and vulnerable as those early days before you get a chance to work out the inevitable kinks. You need to be careful not to overexpose it or it may die an early death.

So it’s important to overcome the urge to start with a bang and, at least in the beginning, focus on a relatively small circle who can help your ugly baby grow. These should be people you know and trust, or at least have indicated some enthusiasm for the concept. They should also be people who will be willing to point out early flaws.

For example, in his efforts to reform the Pentagon, Colonel John Boyd began every initiative by briefing a group of collaborators called the “Acolytes,” who would help hone and sharpen the ideas. He then moved on to congressional staffers, elected officials and the media. By the time the top brass were aware of what he was doing, he had too much support to ignore.

Learning What You Don’t Know

While your idea is still an “ugly baby, there’s still much that you don’t know and the evidence is rarely clear. In the case of Dr. Coley and immunotherapy, injecting cancer patients with toxins to make them sick was not only counter-intuitive, it often didn’t work. It seemed to help in a few rare cases, but not in most others and Coley couldn’t explain why.

As it turned out, the story was far stranger than anyone could have imagined. Coley and his supporters assumed that injecting toxins jump-started the immune system, but that wasn’t the case. In reality, our immune system is perfectly capable of identifying and attacking cancer cells. In fact, it seems that it kills off potentially cancerous cells all of the time.

Unfortunately, some cancers develop counterattacks. They evolve molecules that bind to specific receptors in our immune system and turn off the immune response. That was the reason why immunotherapy efforts kept failing, until Jim Allison made his breakthrough discovery in 1995.

What Allison figured out, more than a century after Coley’s experiment, was that we can engineer molecules that can “ block the blockers” and cure previously incurable cancers. Even then, it wasn’t an easy path. By the time he came around, many had tried and failed to develop an immune approach to cancer. It would take three years to find a firm willing to fund his work.

The drug based on Allison’s work, called Yervoy, received FDA approval in 2011, 16 years after his initial discovery. Finally, the floodgates opened and the work of countless immunotherapy researchers over more than a century began to bear fruit. Today, there are thousands of active scientists working in the field.

Ideas Need Ecosystems

Today, both William Coley and Jim Allison are celebrated scientists. However, while Coley’s work was never widely accepted during his lifetime, Jim Allison won the Nobel Prize for his work. Both had essentially the same idea, that the immune response could be used to fight cancer and save lives.

The truth is that ideas need ecosystems to scale to impact. Coley worked tirelessly to promote the potential of immune approaches to cancer and, after his death in 1936, left a small but dedicated cadre of disciples determined to continue his work. His daughter, Helen, set up the Cancer Research Institute to fund further discovery.

By the time Jim Allison came around there were powerful molecular analysis techniques that allowed he and his colleagues to identify specific molecules within the immune system and understand their function. There were also networks of venture capital that funded firms like the one that supported Allison’s work.

Power in an ecosystem lies not at the top but emanates from the center and you move to the center by connecting out. That’s what separates great innovators from people who merely have ideas. They understand that no idea can stand on its own. Much like Catmull’s ugly babies, they need to be nourished and protected if they are to grow and make a real impact on the world.

— Article courtesy of the Digital Tonto blog
— Image credit: Pexels

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Innovative Approaches to Accessibility in Technology

Innovative Approaches to Accessibility in Technology

GUEST POST from Chateau G Pato

In the rapidly evolving landscape of technology, the importance of accessibility remains a crucial focus. As we advance into a world increasingly intertwined with digital tools and platforms, ensuring that all individuals, regardless of ability, can operate these technologies is more important than ever. Creating technology that is accessible not only serves those with disabilities but enriches the user experience for everyone. In this article, we explore innovative approaches to accessibility and offer insights into how companies are successfully integrating these strategies to create a more inclusive digital environment.

Redefining Accessibility

Traditional accessibility in technology often focused on compliance-driven adaptations, which, while necessary, sometimes missed the bigger picture of user experience and inclusivity. Innovative approaches begin with empathy and a deep understanding of diverse user needs, leading to solutions that are not only compliant but also delightful to use.

Universal Design Principles

Universal design, a concept originally from architecture, has transcended into the tech sphere, emphasizing that solutions should be usable by everyone to the greatest extent possible, without the need for adaptation. By applying universal design principles, designers and developers can create products that are inherently accessible right out of the gate. This approach fosters innovation as teams are challenged to think outside the box and create interfaces and interactions that are intuitive for all users.

Artificial Intelligence and Machine Learning

Advancements in artificial intelligence (AI) and machine learning (ML) are paving the way for more insightful accessibility solutions. AI can automate and enhance accessibility features such as voice recognition, real-time translation, and image recognition, thus opening new realms of possibility for people with disabilities. By training AI models on diverse and inclusive datasets, accessibility can become more personalized and responsive to individual user needs.

Case Study: Microsoft’s AI for Accessibility

Microsoft’s commitment to accessibility is prominently showcased through its ambitious “AI for Accessibility” program. Launched in 2018, the initiative invests in leveraging AI technologies to amplify human capabilities for those with disabilities, focusing on employment, daily life, and communication.

One of the flagship outputs of this initiative is the Seeing AI app, designed for visually impaired individuals. This app utilizes AI to narrate the world around the user using a smartphone camera, identifying objects, reading text, and recognizing faces. Seeing AI delivers on multiple fronts of accessibility, offering an intuitive user experience underpinned by cutting-edge technology.

“By augmenting human abilities with artificial intelligence, we can achieve more inclusive outcomes and ensure that technology empowers all users,” says Jenny Lay-Flurrie, Microsoft’s Chief Accessibility Officer.

Microsoft’s dedication to inclusive design highlights not just the potential of AI, but also the importance of a commitment across the organization. By fostering a culture of accessibility from leadership to product teams, companies can ensure that accessibility is not an afterthought but an integral part of the innovation process.

Case Study: Apple’s VoiceOver

Apple has long been a pioneer in integrating accessibility features directly into its products. VoiceOver, a screen reader built into iOS and macOS, is a prime example of innovation in this space. Unlike traditional screen readers, which are often third-party applications that must be purchased and installed separately, VoiceOver comes pre-installed and integrated deeply with the operating systems.

VoiceOver utilizes gesture-based navigation with touch commands on iOS devices, allowing visually impaired users to explore their devices in an intuitive manner. What makes VoiceOver particularly innovative is its synergy with Apple’s ecosystem, enhancing the overall accessibility across different devices, including Mac, iPhone, iPad, and Apple Watch.

This integrated approach has far-reaching implications for user empowerment and independence. It reflects Apple’s belief that accessibility should be central to the user experience, not a mere add-on. By equipping all of its devices with robust accessibility features, Apple ensures that users with disabilities have the tools they need to thrive in an increasingly digital world.

Design Thinking for Accessibility

Integrating accessibility into the design thinking process is crucial for creating solutions that truly meet user needs. This begins with empathy and understanding, engaging with people with disabilities in the research phases of product development. Through methods like journey mapping and prototyping with diverse populations, teams can uncover unique insights and innovate in ways that standard testing may not reveal.

Inclusive Testing and Feedback Loops

To ensure that accessibility is woven into the fabric of technology solutions, businesses must incorporate inclusive testing and feedback loops. Involving users with varying abilities in testing stages ensures that products are genuinely accessible and valuable. Continuous feedback loops enable organizations to iterate on their products, continuously refining and enhancing accessibility features.

Future Directions

As we forge ahead, the future of accessibility in technology is promising yet requires commitment from all stakeholders. Educating teams within organizations about the importance and techniques of accessibility will drive innovation. Furthermore, as technologies like augmented reality (AR) and virtual reality (VR) continue to evolve, they hold the potential to significantly enhance accessibility, creating immersive experiences that are accessible to all.

Moreover, as global connectivity increases, collaboration across industries and borders will be instrumental in developing universal accessibility standards. By working together, sharing knowledge, and championing inclusivity, we can cultivate a digital world where technology serves as a bridge to opportunity rather than a barrier.

Conclusion

The journey towards accessible technology is ongoing and demands an innovative mindset. By embracing emerging technologies, conducting empathetic research, and fostering inclusive design, we can create digital environments that are not only accessible but also empowering for all users. As technology leaders, it’s our responsibility to champion accessibility as a core value, ensuring that everyone has the opportunity to thrive in our connected world.

Extra Extra: Because innovation is all about change, Braden Kelley’s human-centered change methodology and tools are the best way to plan and execute the changes necessary to support your innovation and transformation efforts — all while literally getting everyone all on the same page for change. Find out more about the methodology and tools, including the book Charting Change by following the link. Be sure and download the TEN FREE TOOLS while you’re here.

Image credit: Unsplash

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Impacting Communities via Innovation Empowerment

Impacting Communities via Innovation Empowerment

GUEST POST from Chateau G Pato

In today’s rapidly evolving world, innovation is much more than just a corporate buzzword; it is a foundational element for empowering people and transforming communities. When harnessed effectively, innovation can catalyze positive changes that generate long-term social, economic, and environmental benefits. This article explores how communities can be empowered through innovation by focusing on collaborative efforts that engage citizens as co-creators of sustainable solutions. We will delve into two inspiring case studies highlighting creative empowerment strategies that have yielded significant impacts.

Case Study 1: Solar Sister – Harnessing the Sun to Empower Women

Solar Sister is a remarkable case study demonstrating how innovation can empower an entire community. Founded with the mission of eradicating energy poverty while promoting women’s entrepreneurship, Solar Sister has become a beacon of hope across Sub-Saharan Africa. By equipping women with clean energy technology such as solar-powered lamps and phone chargers, this initiative not only addresses critical energy shortages but also provides economic opportunities.

Solar Sister’s approach is both simple and profound: train, support, and mentor women as they build clean energy businesses in their communities. This model not only ensures widespread access to affordable, reliable clean energy but also empowers women by providing them with leadership skills, financial independence, and increased social standing. The innovation lies in its grassroots-driven approach that turns beneficiaries into active participants in transforming their own communities.

“Solar Sister illuminates the lives of women and their communities through the power of the sun, demonstrating that sustainable energy solutions can come from the most unlikely innovators.”

The impact of Solar Sister has been widespread. Thousands of women entrepreneurs have joined the movement, providing clean energy to over one million people. The benefits extend beyond individual families, impacting the environment by reducing dependency on kerosene and diminishing carbon emissions, thus helping fight climate change.

Case Study 2: CityBee – Redefining Urban Mobility

In Lithuania, urban mobility innovation is revolutionizing how communities interact with their cities, thanks to CityBee. Recognizing the traffic congestion and pollution challenges faced by modern cities, CityBee devised a car-sharing service that blends technology, community involvement, and sustainable transportation solutions.

CityBee’s model is incredibly intuitive: through an app, users can locate and unlock cars or bikes, use them for short trips, and park them at strategic city locations. This service reduces the necessity for private vehicle ownership, alleviates parking demands, and decreases urban air pollution. CityBee reimagines mobility as a flexible, on-demand service that embraces technological innovation to meet the evolving needs of urban dwellers.

The community impact has been profound. By championing a shared economy model, CityBee has encouraged users to fundamentally change how they perceive transportation—shifting from ownership to access. This transformation not only positions cities as spaces designed for people rather than vehicles but also empowers communities to participate in more sustainable urban living practices.

“Innovative solutions like CityBee prove that rethinking and reshaping urban mobility isn’t just a possibility—it’s a necessity for sustainable, vibrant city landscapes.”

Innovative Pathways to Empowerment

The profound lessons from these two case studies underscore the limitless potential of innovation as a mechanism for empowerment. By involving communities in innovation processes, leveraging locally driven solutions, and fostering inclusive environments that uplift underrepresented voices, we can ensure sustainable development and community well-being.

Communities empowered through innovation are better equipped to navigate the complexities of the modern world—transforming challenges into opportunities, sparking economic vibrancy, and nurturing social cohesion. As we continue to explore and harness the boundless potentials of innovation, our commitment to human-centered design should remain steadfast. By creating platforms for shared learning, meaningful engagement, and collaborative co-creation, we lay the foundation for empowered, resilient communities.

Conclusion

Empowerment through innovation is not just an ideal; it is a pragmatic strategy for fostering sustainable growth and collective responsibility across our diverse global communities. As demonstrated by Solar Sister and CityBee, the innovative forces that empower individuals simultaneously invigorate the communities they inhabit. By prioritizing people-centric innovation and nurturing community involvement, we catalyze positive changes that transcend generations. Together, let us embrace the transformative power of innovation as a conduit for empowerment and social good, nurturing a world where communities thrive, and hope flourishes.

Extra Extra: Because innovation is all about change, Braden Kelley’s human-centered change methodology and tools are the best way to plan and execute the changes necessary to support your innovation and transformation efforts — all while literally getting everyone all on the same page for change. Find out more about the methodology and tools, including the book Charting Change by following the link. Be sure and download the TEN FREE TOOLS while you’re here.

Image credit: Unsplash

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Best Practices and Pitfalls of Building an Innovation Ecosystem

Best Practices and Pitfalls of Building an Innovation Ecosystem

GUEST POST from Art Inteligencia

In today’s rapidly evolving business environment, fostering innovation isn’t just a strategic advantage—it’s a survival imperative. An effective innovation ecosystem integrates diverse elements, harnessing external and internal synergies to fuel sustained creativity and growth. But as with any complex system, crafting a robust innovation ecosystem comes with its own set of best practices and potential pitfalls. In this article, we’ll delve into both, supported by case studies that illustrate these critical points.

Best Practices for Building an Innovation Ecosystem

1. Foster a Collaborative Culture

The cornerstone of any successful innovation ecosystem is a culture that champions collaboration. Organizations must cultivate environments where ideas are freely exchanged without fear of judgment, encouraging cross-pollination between departments and disciplines. Providing platforms for collaboration—both physically and digitally—enables diverse teams to work together towards breakthrough innovations.

2. Leverage External Partnerships

In the journey to foster innovation, no organization is an island. Building partnerships with startups, academic institutions, and even competitors can inject fresh perspectives and capabilities. Open Innovation, driven by interfacing with external entities, is a key strategy many successful businesses employ to enhance their innovative potential.

3. Invest in Continuous Learning

An innovation ecosystem thrives on continuous learning and development. Encouraging employees to engage in ongoing education, whether through formal programs or earmarked “innovation time,” keeps the ecosystem agile and forward-thinking. It’s about creating a learning organization that can adapt and evolve as new challenges and opportunities arise.

Case Study 1: 3M

The Post-it Note Phenomenon

3M stands out as a paragon of innovation, with the famous invention of the Post-it Note serving as a testament to the company’s innovation ecosystem. Initially, the adhesive technology behind Post-it was considered a failure because it wasn’t strong enough for its intended use. However, 3M’s culture of openness and experimentation enabled this “failure” to be repurposed. The internal 15% rule, where employees could spend a portion of their time on projects of their own choosing, played a crucial role in nurturing this innovation.

3M’s approach highlights the value of a corporate culture that not only tolerates failure but also turns it into opportunities. By encouraging a culture where ideas can be recycled and reused creatively, 3M successfully transformed a dud product into a blockbuster staple. Their innovation ecosystem thrives on sustained encouragement of exploratory projects and cross-departmental collaborations, a model many other companies strive to emulate.

Common Pitfalls in Building an Innovation Ecosystem

1. Over-reliance on Internal Resources

A major misstep in fostering an innovation ecosystem is the tendency to solely rely on internal talents and resources, often leading to echo chambers. Without external input, solutions may be limited to existing knowledge and conventional thinking. This not only stifles creativity but also undermines competitive advantage in the long run.

2. Lack of Strategic Alignment

Innovation efforts that aren’t aligned with an organization’s overarching goals can lead to disjointed initiatives and wasted resources. Ensuring that innovation strategies sync with the broader business objectives is crucial. Strategic misalignment often results in minimal support from top management, under-funding, and ultimately, failure.

Case Study 2: Kodak

The Fall of a Giant

Kodak’s story is often cited as a cautionary tale for organizations attempting to foster innovation ecosystems. Despite inventing the digital camera in 1975, the company failed to capitalize on its potential due to an internal focus that prioritized film sales over technological advancement. This case illustrates a pitfall of missing strategic alignment and over-reliance on existing business models.

Kodak’s downfall underscores the necessity of aligning innovation with future-oriented business goals. Their internal culture, focused heavily on their traditional cash cow, was unable to adapt quickly enough to the disruptive technology they themselves had pioneered. The innovation ecosystem failed not from lack of technological prowess, but a failure to strategically embrace and integrate emerging technologies.

Conclusion

Building a thriving innovation ecosystem is a complex yet rewarding endeavor that requires thoughtful planning and execution. By fostering a collaborative culture, leveraging external partnerships, and investing in continuous learning, organizations can create a fertile ground for innovation. However, avoiding pitfalls such as over-reliance on internal resources and lack of strategic alignment is equally important. The contrasting case studies of 3M and Kodak serve as a poignant reminder that the path to innovation lies not merely in novel ideas but in the capacity to strategically harness and integrate them within a supportive ecosystem framework.

Extra Extra: Futurology is not fortune telling. Futurists use a scientific approach to create their deliverables, but a methodology and tools like those in FutureHacking™ can empower anyone to engage in futurology themselves.

Image credit: Pexels

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Cognitive Bandwidth – Staying Innovative in ‘Interesting’ Times

Cognitive Bandwidth - Staying Innovative in ‘Interesting’ Times

GUEST POST from Pete Foley

‘May you live in interesting times’ is the English translation of an ancient Chinese curse. Superficially presented as a blessing, its true meaning is of course far from positive. As memes go, it has lasted quite a while, perhaps because from a cognitive perspective, that little twist, and the little puzzle it forces us to solve makes it more subtle, but also more impactful than a more direct insult. But the ‘blessing and a curse’ dichotomy that it embodies is also a fundamental insight. Opportunity usually brings potential for trouble, and trouble usually bring potential for opportunity, largely because both involve change. So many are going through an awful time on many fronts at the moment, but if that has a silver lining, it is that with it comes change. And ultimately that creates an opportunity for innovation, and hopefully better times.

Big Issues Create Big Opportunity: I’ve written before about the opportunity that Covid-19 presented for innovation. The shattering of habits and established behaviors, combined with dramatic shifts in personal and work situations opened the door to trial of new products and services to a degree not seen in a generation. But as we (hopefully) continue to emerge from Covid, we’ve been sucker punched by numerous other things. The horror of war in Europe being the most shocking, but we are also facing enormous economic challenges in the form of energy shortages, inflation, supply chain issues, the great resignation and rapidly changing socio-political landscapes.  And of course, we still have numerous other pressing ‘pre-Covid’ issues such as climate change, pollution and economic inequality that also require urgent attention.

That is a lot of problems that need solving. And as awful as Covid was for everyone, the current issues around supply chain, global economic instability, inflation and increased cost of debt likely create at least as immediate operational issues for many organizations, and hence an equally urgent need for innovation.

Another Innovators Dilemma. Unfortunately, the time when we need most innovation is often when it is hardest to deliver it. Innovation doesn’t happen overnight, and usually needs clear strategy, resources, funding, creativity and knowledge. And all of these are currently in short supply. An uncertain and rapidly changing world makes setting long-term strategy challenging. Supply chain challenges can have huge short-term operational impact, and suck up resources and expertise normally allocated to longer-term innovation. The great resignation and early retirements reduce available expertise. And on top of all of this, inflation, increasing interest rates, raw material prices and labor costs are squeezing finances. None of this is terribly new news, or insightful, but it does provide context for another, sometimes less obvious barrier to innovation that I want to talk about: One that operates more on the individual level – the squeeze of cognitive bandwidth.

Cognitive Bandwidth: The innovation journey needs creativity everywhere from the nascent front end through to launching into market. Ultimately that creativity comes from individuals. That in turn requires those individuals to be allowed the cognitive bandwidth, or ‘quality thinking time’ to ideate. We can only effectively think deeply about one thing at a time. This is our ‘cognitive bandwidth’, and it is a finite resource. There are only so many hours in a day, and most of us can only allocate a small fraction of those to think deeply about problems or process information. And of course the more problems we are facing, the less bandwidth we usually have. The more difficult the situation, the more of our time is spent distracted, jumping from one issue to another, or attempting to ‘multi-task’. Even when we carve out time, the current climate means all too often we are stressed, or in an elevated emotional state. This reduces the quality as well as quantity of our thinking, and so further narrows our individual cognitive bandwidth.

The Covid Squeeze: Covid-19 of course sucked up a lot of cognitive bandwidth. We had to find new ways to work, learn new tools, and new ways to manage personal lives and work-life balance as many found themselves taking on new roles as educators, care givers, chefs, simply learning how to share an office with a spouse for the first time. There were some compensating effects, such as reduced travel, but even that likely had some less obvious and hard to measure impacts on the creative process that I’ll discuss later. But perhaps the biggest, albeit largely intangible impact on cognitive bandwidth was the impact Covid had on our collective emotional state. Covid, and the changes it brought was hard on everybody. Everyone has there own stories, and we’ve all seen the increase in mental health issues that accompanied the pandemic. But this is almost certainly the ‘tip of the iceberg’. Virtually everyone has experienced some degree of increased stress and negative emotions during Covid, and this directly impacts cognitive bandwidth and hence individual innovative capacity.

The Post-Covid Sucker Punch: One thing I think we were all looking forward to was a return to some semblance of normal. But unfortunately, as Covid (hopefully) subsides, reentry into the post Covid world is proving to be very bumpy, and we are facing the cornucopia of other issues described above.   This not only creates a host of ‘fires’ that need to be put out, but it also inevitably takes an emotional toll. After two years of disrupted work and home-life, we are now asking people to again step up and be ‘unusually’ innovative in difficult circumstances, and against a backdrop of war and human suffering. Fatigue and burn-out are almost inevitable.

At a practical level, I see this on a day-to-day basis. I sit in a lot of innovation teams, and one pattern I observe consistently is the workforce getting increasingly stretched; both from a time and emotional perspective. I see more and more people getting pulled out of meetings to fight fires, people attempting to double task, or stepping in and out of meetings, or simply looking frazzled and overworked. Of course, none of this is new, overwork and stress existed log before Covid. But it’s also not surprising that it appears to be increasing during a long period of constant change.

The Neuroscience of the Creative Moment. Innovative thinking comes in multiple forms, but it all requires time. We need time to think deeply, and consciously about problems, and to assimilate data and knowledge.  But ‘downtime’ is also a critical, if less understood part of the creative process. There is a very good reason that Eureka moments often happen in the bath, shower, or middle of the night. When the mind is relaxed, has time, and not focused on an immediate problem, it is more likely to make surprisingly obvious connections, or see things in different ways. This is often when the biggest ideas occur. We need conscious thinking to build essential foundations of knowledge, but the most interesting ideas and connections often happen when we are not trying. Have you ever had a name on the tip of your tongue, but no matter how hard you try, you cannot find it? Then a few hours later when you are not trying, it pops into your head? This is an analogous mechanism, where conscious focus simply reinforces and repeats converging on the same, sometimes unwanted result, but when we relax, it opens the channel to the needed connection. There is a lot of research around how this works, which includes the interaction between default mode and executive function, the role of alpha waves and flow state, and the conceptual blending process. It’s still very much an evolving science, but one thing that is fairly consistent across this research is that downtime and periods of reduced stress play an important role in the creative process and making connections. Unfortunately, for many, the pandemic reduced relaxation and ‘own time’.   Needing to learn new skills and new ways of working, while also having to solve a myriad of new and ever changing problems sucked up time. Even the loss of commutes took away a period of solo reflection where many of us consciously or unconsciously processed and synthesized the day’s information.   But perhaps the hardest pill to swallow has been that while we all hoped that the end of Covid would have provided some relief, if anything the news cycle has got worse. This takes an emotional toll.  Part of this reflects the ratings competition within media that favors an ever-increasing stream of bad news.  But unfortunately it also reflects a very challenging global reality and very real problems and suffering.

What Can We Do?

There are of course limits to what we can do within our sphere of influence. Most of us cannot directly impact the war in Ukraine, the supply chain crisis or global diplomacy. But we can take steps to reduce pressure on our teams, and ourselves, and thus make innovation and creativity a little easier.

1. Make tough strategic priority decisions. Primarily this is a leadership task, but it’s also something we can to some degree manage in our personal portfolios. One reason we see so much innovation during crisis is focus, and a willingness to sacrifice some goals or standards for more important ones. For us to replicate this means being very selective about what fires to fight, while also being willing to let others burn themselves out. This is not without risk, as short-term survival is of course a prerequisite for any successful long-term strategy.   But during periods of rapid change, we also see rapid reversals. For example, spikes in raw material costs are often short-term, and developing alternatives can often take longer than the problem lasts. It sounds obvious, but is often deceptively difficult, especially as deciding to let the wrong fire burn itself out can be quite career limiting. But making difficult priority calls, and saying ‘no’ can be critical to maintaining our innovative and competitive edge, by keeping limited cognitive bandwidth focused of the most important tasks.

2. Help talent to focus on what is really important, and to grow skills that are most relevant to the future. There has been an ongoing trend to increasingly ask talent to handle their own administrative and organizational work. This is partly driven by technology that reduces the need for specialized knowledge to manage many logistics tasks. And eliminating support roles looks good on margins and fixed costs. But asking a highly skilled technical expert to cover their own admin not only adds to their workload, but it is also inefficient, as we are effectively overpaying them to complete tasks that often don’t play to their core skills. Conversely, there is also a lot of skill on the sidelines at the moment, while many have developed skills in working remotely. So is one option is to leverage this to free up innovators and experts. Let them focus more on their areas of expertise, by bringing back more general support roles. Or bring in temporary outside help where short-term issues require expertise that is not anticipated to be part of long-term strategy.

3. Schedule down-time, and create a culture where it is encouraged. Build protected spaces in calendars when meetings are not allowed. Encourage lunch breaks, and enable casual team-building events and wellness practices. It’s easy to view these as non-essential, and the type of activities that we cut first when times get tough. But they are critical to an innovative culture. Mental downtime is not a luxury or a perk, but an essential part of the creative process.   And in too many cases, we’ve been in crisis mode for so long, that tool has become blunt or burnt out.

4. Further support this with the design of our physical environments. Another trend has been the move to open offices and shared space. This has benefits for both collaboration, and for space efficiency as hybrid home/office working models emerge. But studies have also shown more innovative ideas emerge when people work alone than in brainstorming environments. So it is critical to provide both physical spaces and a culture that enable private reflection and quiet concentration where people can potentially synthesize information and make connections. The key to a cognitively diverse innovation culture is to provide options for different thinking styles. And this also means that acknowledging that benefits of work from home are not one size fits all. For some it’s a blessing, but both work style and personal circumstance can make working from home a challenge for others. To support a cognitively diverse workforce, some people, especially those early in their careers, may need work as a sanctuary, and a bigger physical footprint at work than others.

5. Finally, distribute work evenly. I remember someone telling me early in my career that, ‘if you need something done quickly, go to the busiest person’. There is some truth in that, and some people thrive on high workload. But it only works to a point, and if taken too far, we risk overloading the cognitive bandwidth of our most creative people, even if they may not realize it themselves. By all means give the most challenging and most important tasks to the best people. But don’t overload them too much. They will often be happy to take on more, but it may not be best for them, their creativity, or the organization. Look very hard to see if the load is evenly distributed within an organization, and if not, ask hard questions why not? And if you are the person everyone comes to, practice saying ‘no’ occasionally!

The good news is that humans are pretty resilient, so it doesn’t always take huge changes to get significant results. We are all the progeny of ancestors who survived wars, famine, disease, social upheaval and natural disasters. And it’s worth noting that we are often at our most creative during periods of greatest tragedy.

Technology advanced at a phenomenal pace during WW-II, and more recently the speed of development of Covid vaccines was staggering. But there are clues in those situations that we can learn from. Resources and focus were unprecedented. During WW-II virtually everything was thrown against the war effort, and tough, sometimes brutal priority calls were the norm.

Project Warp Speed put enormous resources against the Covid vaccine and took huge risks on uncertain bets. Of course, most of us working in innovation don’t have these almost infinite resources, but we can be very strategic in how we use what we have. And keep in mind that wartime mentality is meant to be short-term, while Project Warp Speed was designed to last about a year.

We are in the business of creating a sustainable innovation culture. So, we are not just about protecting the cognitive bandwidth of individuals in the short-term, but also preventing burn out, and creating a sustainable cognitive culture.

Image credit: Pixabay

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A New Frontier for Creative Innovation with AR and VR

A New Frontier for Creative Innovation with AR and VR

GUEST POST from Chateau G Pato

Welcome to the brave new world where pixels and reality dance together in a mesmerizing ballet, opening doors to creative innovation that is reimagining industries and how we engage with them. Yes, we’re talking about Augmented Reality (AR) and Virtual Reality (VR)—technologies that are no longer just for sci-fi fans or gaming geeks. They’re here, now, weaving transformative magic into the fabric of business. Let’s buckle up and explore this frontier where imagination meets implementation, shall we?

The New Magic Wand: AR and VR

Picture this: a universe where digital enhancements enrich the real-world view through your devices, be it your smartphone, tablet, or headgear. That’s AR for you—an innovative magic wand that’s augmenting our perception and interaction with our surroundings. Meanwhile, VR is a wonderland that immerses us wholly into a computer-generated environment, providing experiences that can span the spectrum from peaceful strolls in sun-dappled forest glades to interstellar voyages in distant galaxies.

AR and VR are not just kit and caboodle for entertainment. They’re catalysts for change, sparking innovation across enterprises. From reshaping marketing strategies to revolutionizing customer experiences and employee training, these technologies offer a sandbox of endless possibilities.

Case Study 1: Architectural Alchemy

The Visionary Architects

In a world where bricks and mortar meet bits and bytes, architecture firms are leveraging AR and VR to redefine how structures are designed and experienced before they’re even built. One such example is the ingenious firm “Skyline Wonders,” which has been pioneering the use of VR in architectural models. With VR headsets, clients can now walk through the melody of marble and glass of their future offices or homes before a single beam is erected. This immersive preview not only dazzles stakeholders but also allows designers to spot potential flaws and tailor designs to clients’ preferences with pinpoint accuracy.

But Skyline Wonders isn’t stopping at VR. They’ve augmented reality checklists for construction teams, which overlay blueprints on-site, ensuring precision in real-time. This hybrid of virtual and tangible realities fosters a seamless dialogue between concept and creation, reducing costly post-construction revisions and grounding fantastical designs in practical reality.

Case Study 2: Retail Renaissance

The Fashion Forward Retailer

Step into the world of “Style Savvy,” a trailblazing fashion retailer that’s turning the AR and VR trend into a new runway show. Their approach? Allowing customers to plunge into the fitting room of the future using their “Magic Mirror” VR experience. Amidst trying out stylish outfits without leaving home, customers are delighted as these virtual mirrors show not only fitting but also alter the environment’s mood lighting to match gown selections—hello, evening gala feels!

Moreover, Style Savvy’s AR app is like having a fashion consultant in your pocket. Customers can point their phone cameras at any item of clothing, and voilà—wardrobe compatibility data arrives, helping them avoid that regrettable paisley-on-stripes look. Not only does this enrich customer engagement, but it also positions Style Savvy as a beacon of tech-forward retail innovation, crafting personalized experiences that drive brand loyalty.

The Future is Here

Now, you might be wondering, is this a passing trend or a permanent evolution? AR and VR are becoming the new gizmos in the toolkit of tomorrow’s business. They aren’t just improving efficiencies or sprinkling a coat of ‘cool’ on our practices but entirely re-wiring the circuits of how business value is delivered and perceived.

As AR and VR technologies evolve, and as devices become more accessible and affordable, we’ll see increased adoption across more sectors. Whether it’s precision surgeries in healthcare, enhancing learning with immersive education platforms, or crafting unprecedented customer journeys in theme parks, the only real limit is our collective imagination.

Embrace the Pixels

As we straddle the divide between the physical and digital realms, businesses are encouraged to step into these digital paradigms poised to revolutionize how we perceive, interact, and innovate. The once clear lines between reality and fantasy blur into opportunities ripe for the picking. Companies that embrace these shifts not only bolster their innovative prowess now but carve out leadership positions in their respective industries for the future.

So, let’s fasten our headsets and step boldly onto this new stage, turning our imaginative dreams into a tangible reality where pixels transform practice. And remember, in the realm of AR and VR, we are all creators.

This article aims to provide an informative yet engaging exploration of AR and VR as tools for innovation, enhanced by illustrative case studies in architecture and retail. Let me know if there are any additional elements or revisions you’d like to see!

Extra Extra: Because innovation is all about change, Braden Kelley’s human-centered change methodology and tools are the best way to plan and execute the changes necessary to support your innovation and transformation efforts — all while literally getting everyone all on the same page for change. Find out more about the methodology and tools, including the book Charting Change by following the link. Be sure and download the TEN FREE TOOLS while you’re here.

Image credit: Unsplash

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Innovation Dashboards Create Real-Time Insights for Strategy

Innovation Dashboards Create Real-Time Insights for Strategy

GUEST POST from Art Inteligencia

In today’s rapidly evolving business landscape, staying ahead of the competition often boils down to an organization’s ability to innovate better and faster. While numerous tools and strategies are employed in this quest, innovation dashboards have emerged as a critical component for companies aiming to gain real-time insights into their innovation strategy. These dashboards provide a visual representation of key metrics that guide decision-makers in anchoring their ongoing innovation efforts to market demands, internal capabilities, and strategic goals.

Understanding Innovation Dashboards

At its core, an innovation dashboard is a management tool that collates relevant data from various organizational processes, translating them into a consolidated view that highlights the company’s innovation health. These dashboards often include key performance indicators (KPIs) such as idea generation rates, time-to-market statistics, R&D investment effectiveness, portfolio balance, and customer feedback loops.

The primary value of an innovation dashboard is in its ability to present complex data in an easily digestible format. It serves as a navigational tool, not only for innovation managers but for all stakeholders, to track progress, identify bottlenecks, and uncover new opportunities in real-time. Moreover, when used effectively, these dashboards cultivate a culture of transparency and data-driven decision-making, empowering teams to operate at their optimum capacity.

Key Features of an Effective Innovation Dashboard

  • Real-Time Data Integration: Today’s business decisions demand access to real-time data. An effective innovation dashboard collects data from multiple sources, updating it continuously. This real-time integration allows teams to react swiftly to changing market conditions and internal project developments.
  • Customizable and Scalable: Every organization is unique with varying strategic goals and industry challenges. Therefore, a dashboard should be adaptable, offering customization to fit different parameters relevant to diverse teams and scalable to grow alongside the organization.
  • Predictive Analytics: Beyond just presenting historical data, powerful innovation dashboards leverage predictive analytics to forecast trends, identify potential new markets or areas for innovation, and optimize resource allocation.
  • Intuitive User Interface: An intuitive and user-friendly interface encourages widespread adoption across the organization. The easier it is to interpret the information, the more likely it is that team members will utilize the dashboard in their daily decision-making.

Case Study 1: Tech Innovator Amplifies R&D with Dashboards

Consider a leading technology innovator, TechNova Inc., which faced challenges correlating its R&D efforts with market success. It found itself tangled in intricate, siloed research projects with little visibility into overall portfolio performance. By implementing an innovation dashboard customized to their particular needs, they embarked on an insightful transformation.

Implementation Highlights:

  • Data Transparency: By incorporating data from their R&D labs, customer feedback platforms, and market intelligence sources, the innovation dashboard enabled cross-functional teams to view consistent data sets. This data transparency encouraged collaboration and coherence across departments.
  • Balanced Portfolio Management: The dashboard’s real-time insights allowed TechNova to maintain an appropriate balance between incremental innovations and disruptive technologies. The visuals made it easier for executives to spot gaps or overinvestment in particular areas.
  • Improved Time-to-Market: With clearer oversight, TechNova trimmed average project times significantly by identifying bottlenecks early in the process. This agility in product development translated into timely market entries and higher product success rates.

Outcome: TechNova saw a 30% increase in successful product launches and positioned itself as a market leader, delivering what customers didn’t even know they needed. The dashboard became a key component of TechNova’s strategic playbook, fostering a culture of continuous innovation.

Case Study 2: Retail Leader Revitalizes Customer-Centric Innovation

On the other hand, let’s look at RetailMax, a global retail chain renowned for its rapid-response supply chain strategy. Despite its success, RetailMax struggled to translate customer insights into groundbreaking innovations. They resorted to an innovation dashboard tailored to focus on customer feedback and market trend analytics.

Implementation Highlights:

  • Customer Insight Integration: RetailMax used their dashboard to amalgamate customer interactions, reviews, and feedback from both in-store experiences and e-commerce channels. Real-time sentiment analysis helped the company stay attuned to customer expectations.
  • Trend Identification and Action: RetailMax employed the dashboard’s predictive analytics to unveil latent market trends before they fully materialized. This predictive capability empowered them to shape consumer behavior through targeted innovative offerings.
  • Operational Streamlining: The dashboard’s ‘idea funnel’ visualization helped RetailMax streamline its innovation process from concept to delivery, allowing them to focus resources on high-potential ideas that aligned with emerging customer needs.

Outcome: As a result of the strategic insights provided by the dashboard, RetailMax launched a series of successful customer-centric initiatives. Their ability to quickly tailor offerings to evolving consumer preferences solidified their place as a top choice for trend-savvy shoppers, boosting their market share and customer loyalty.

Conclusion

Innovation dashboards are not just technical tools; they are transformational catalysts. By leveraging these dashboards, organizations, irrespective of their size or industry sector, can foster a more informed, agile approach to innovation. They bring together disparate data points into a cohesive narrative, guiding strategic decisions that can propel a company toward sustained value creation and competitive advantage.

In a world where the pace of change is relentless, an innovation dashboard stands as a beacon for forward-thinking companies, illuminating the path to meaningful innovation. By investing in these real-time insight platforms, organizations position themselves to not only keep up with the rapid pace of market changes but to lead with confidence and foresight in the unfolding future.

Extra Extra: Futurology is not fortune telling. Futurists use a scientific approach to create their deliverables, but a methodology and tools like those in FutureHacking™ can empower anyone to engage in futurology themselves.

Image credit: Pexels

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Fueling a Culture of Innovation with Diversity and Inclusion

Fueling a Culture of Innovation with Diversity and Inclusion

GUEST POST from Art Inteligencia

In today’s rapidly evolving business landscape, the capacity for innovation stands as a critical differentiator among leading organizations. At the heart of fostering this innovation is the commitment to diversity and inclusion (D&I). The melding of varied perspectives, backgrounds, and experiences not only drives creative outcomes but also builds resilient, adaptive business enterprises. As thought leaders at the helm, we must champion a culture where diversity and inclusion are not mere policies but key drivers of innovation.

The Power of Diverse Perspectives

Diverse teams bring a wealth of perspectives that ignite creativity and challenge entrenched assumptions. A study by Boston Consulting Group found that diverse management teams lead to a 19% increase in revenue due to innovation. When individuals from different cultural, gender, and generational backgrounds convene, they contribute unique viewpoints that enhance problem-solving capabilities and stimulate breakthrough innovations. The convergence of these perspectives facilitates more rounded and comprehensive decision-making processes, which can yield novel products and services.

Case Study 1: Global Tech Innovators

Consider the case of a leading global technology firm that set out to invigorate its product development process. By championing a diverse workforce, the firm curated project teams inclusive of members from varied cultural backgrounds, educational disciplines, and genders. This not only mirrored their diverse customer base but also fueled unprecedented growth in innovation-led initiatives.

One notable success involved a team working on a next-generation wearable technology. By leveraging insights from team members in Asia, Africa, and Latin America, who understood the regional health and wellness nuances, the team developed features that resonated globally, driving product adoption in markets previously untapped. This was achieved through a continuous dialogue fostering an inclusive atmosphere where all team members felt empowered to voice their ideas without fear of dismissal or ridicule.

Fostering an Inclusive Culture

Building a truly inclusive culture involves more than just assembling a diverse team. It entails creating an environment where all employees feel valued and heard, and where contributions are recognized and rewarded. Organizations should implement training programs that underscore the importance of inclusivity, where leaders are equipped to nurture and mentor diverse talent.

“An inclusive culture is one where every employee can bring their full selves to work and contribute towards the innovation journey.”—Anonymous

It’s crucial for leadership to model inclusive behaviors that permeate throughout the organizational culture. This can include forming employee resource groups that celebrate diversity or establishing forums for open dialogue and collaborative ideation sessions. The net result is a fertile environment ripe for innovation.

Case Study 2: Healthcare Innovators

The healthcare industry illustrates another compelling example where D&I powered innovation. A national healthcare provider faced the challenge of designing patient outreach programs that connected with a wide array of demographics. By integrating a diverse group of healthcare professionals, the provider was able to tailor communication strategies to suit different cultural norms and practices.

The diversity within the team ensured that the insights went beyond mere language translation, addressing deeper cultural contexts, and resulting in higher patient engagement and satisfaction rates. The innovative outreach models developed were expanded into full-scale implementations that fundamentally transformed patient-provider interactions across various communities.

Sustaining Innovation through Continuous Commitment

To sustain innovation, organizations must maintain a steadfast commitment to D&I. It is an ongoing journey requiring regular reflection and renewal of strategies. Metrics should be in place to measure the impact of D&I efforts on innovation outcomes, with goals evolving in response to the shifting dynamics of the workforce.

Success stories and best practices should be shared throughout the organization, highlighting how diversity and inclusion have propelled improvements and sparked new initiatives. This storytelling not only inspires but also reinforces the value of D&I as fundamental pillars of innovation.

Conclusion

Fostering a culture of innovation through diversity and inclusion is not optional in today’s competitive business world—it is imperative. The cases presented exemplify how embracing a broad set of voices leads to solutions that are not only innovative but also deeply resonant with a global demographic. As leaders, our role is to build and sustain environments where diversity and inclusion are integral to our organizational DNA, driving forward our vision for continuous innovation.

This article is designed to provide a thoughtful exploration of how diversity and inclusion fuel innovation, along with practical case studies to illustrate these principles. Let me know if there are any further changes or additions you’d like to make!

Extra Extra: Futurology is not fortune telling. Futurists use a scientific approach to create their deliverables, but a methodology and tools like those in FutureHacking™ can empower anyone to engage in futurology themselves.

Image credit: Pexels

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Silicon Valley Has Become a Doomsday Machine

Silicon Valley Has Become a Doomsday Machine

GUEST POST from Greg Satell

I was working on Wall Street in 1995 when the Netscape IPO hit like a bombshell. It was the first big Internet stock and, although originally priced at $14 per share, it opened at double that amount and quickly zoomed to $75. By the end of the day, it had settled back at $58.25 and, just like that, a tiny company with no profits was worth $2.9 billion.

It seemed crazy, but economists soon explained that certain conditions, such as negligible marginal costs and network effects, would lead to “winner take all markets” and increasing returns to investment. Venture capitalists who bet on this logic would, in many cases, become rich beyond their wildest dreams.

Yet as Charles Duhigg explained in The New Yorker, things have gone awry. Investors who preach prudence are deemed to be not “founder friendly” and cut out of deals. Evidence suggests that the billions wantonly plowed into massive failures like WeWork and Quibi are crowding out productive investments. Silicon Valley is becoming a ticking time bomb.

The Rise Of Silicon Valley

In Regional Advantage, author AnnaLee Saxenian explained how the rise of the computer can be traced to the buildup of military research after World War II. At first, most of the entrepreneurial activity centered around Boston, but the scientific and engineering talent attracted to labs based in Northern California soon began starting their own companies.

Back east, big banks were the financial gatekeepers. In the Bay Area, however, small venture capitalists, many of whom were ex-engineers themselves, invested in entrepreneurs. Stanford Provost Frederick Terman, as well as existing companies, such as Hewlett Packard, also devoted resources to broaden and strengthen the entrepreneurial ecosystem.

Saxenian would later point out to me that this was largely the result of an unusual confluence of forces. Because there was a relative dearth of industry in Northern California, tech entrepreneurs tended to stick together. In a similar vein, Stanford had few large corporate partners to collaborate with, so sought out entrepreneurs. The different mixture produced a different brew and Silicon Valley developed a unique culture and approach to business.

The early success of the model led to a process that was somewhat self-perpetuating. Engineers became entrepreneurs and got rich. They, in turn, became investors in new enterprises, which attracted more engineers to the region, many of whom became entrepreneurs. By the 1980’s, Silicon Valley had surpassed Route 128 outside Boston to become the center of the technology universe.

The Productivity Paradox and the Dotcom Bust

As Silicon Valley became ascendant and information technology gained traction, economists began to notice something strange. Although businesses were increasing investment in computers at a healthy clip, there seemed to be negligible economic impact. As Robert Solow put it, “You can see the computer age everywhere but in the productivity statistics.” This came to be known as the productivity paradox.

Things began to change around the time of the Netscape IPO. Productivity growth, which had been depressed since the early 1970s, began to surge and the idea of “increasing returns” began to take hold. Companies such as Webvan and Pets.com, with no viable business plan or path to profitability, attracted hundreds of millions of dollars from investors.

By 2000, the market hit its peak and the bubble burst. While some of the fledgling Internet companies, such as Cisco and Amazon, did turn out well, thousands of others went down in flames. Other more conventional businesses, such as Enron, World Com and Arthur Anderson, got caught up in the hoopla, became mired in scandal and went bankrupt.

When it was all over there was plenty of handwringing, a small number of prosecutions, some reminiscing about the Dutch tulip mania of 1637 and then everybody went on with their business. The Federal Reserve Bank pumped money into the economy, the Bush Administration pushed big tax cuts and within a few years things were humming again.

Web 2.0. Great Recession and the Rise Of the Unicorns

Out of the ashes of the dotcom bubble arose Web 2.0, which saw the emergence of new social platforms like Facebook, LinkedIn and YouTube that leveraged their own users to create content and grew exponentially. The launch of the iPhone in 2007 ushered in a new mobile era and, just like that, techno-enthusiasts were once again back in vogue. Marc Andreessen, who founded Netscape, would declare that software was eating the world.

Yet trouble was lurking under the surface. Productivity growth disappeared in 2005 just as mysteriously as it appeared in 1996. All the money being pumped into the economy by the Fed and the Bush tax cuts had to go somewhere and found a home in a booming housing market. Mortgage bankers, Wall Street traders, credit raters and regulators all looked the other way while the bubble expanded and then, somewhat predictably, imploded.

But this time, there were no zany West Coast startup entrepreneurs to blame. It was, in fact, the establishment that had run us off the cliff. The worthless assets at the center didn’t involve esoteric new business models, but the brick and mortar of our homes and workplaces. The techno-enthusiasts could whistle past the graveyard, pitying the poor suckers who got caught up in a seemingly anachronistic fascination with things made with atoms.

Repeating a now-familiar pattern, the Fed pumped money into the economy to fuel the recovery, establishment industries, such as the auto companies in Detroit were discredited and a superabundance of capital needed a place to go and Silicon Valley looked attractive.

The era of the unicorns, startup companies worth more than a billion dollars, had begun.

Charting A New Path Forward

In his inaugural address, Ronald Reagan declared that, “Government is not the solution to our problem, government is the problem.” In his view, bureaucrats were the enemy and private enterprise the hero, so he sought to dismantle federal regulations. This led to the Savings and Loan crisis that exploded, conveniently or inconveniently, during the first Bush administration.

So small town bankers became the enemy while hotshot Wall Street traders and, after the Netscape IPO, Internet entrepreneurs and venture capitalists became heroes. Wall Street would lose its luster after the global financial meltdown, leaving Silicon Valley’s venture-backed entrepreneurship as the only model left with any genuine allure.

That brings us to now and “big tech” is increasingly under scrutiny. At this point, the government, the media, big business, small business, Silicon Valley, venture capitalists and entrepreneurs have all been somewhat discredited. There is no real enemy left besides ourselves and there are no heroes coming to save us. Until we learn to embrace our own culpability we will never be able to truly move forward.

Fortunately, there is a solution. Consider the recent Covid crisis, in which unprecedented collaboration between governments, large pharmaceutical companies, innovative startups and academic scientists developed a life-saving vaccine in record time. Similar, albeit fledgling, efforts have been going on for years.

Put simply, we have seen the next big thing and it is each other. By discarding childish old notions about economic heroes and villains we can learn to collaborate across historical, organizational and institutional boundaries to solve problems and create new value. It is in our collective ability to solve problems that we will create our triumph or our peril.

— Article courtesy of the Digital Tonto blog
— Image credit: Pixabay

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