Category Archives: Leadership

An Innovation Lesson From The Rolling Stones

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An Innovation Lesson From The Rolling Stones

GUEST POST from Robyn Bolton

If you’re like most people, you’ve faced disappointment. Maybe the love of your life didn’t return your affection, you didn’t get into your dream college, or you were passed over for promotion.  It hurts.  And sometimes, that hurt lingers for a long time.

Until one day, something happens, and you realize your disappointment was a gift.  You meet the true love of your life while attending college at your fallback school, and years later, when you get passed over for promotion, the two of you quit your jobs, pursue your dreams, and live happily ever after. Or something like that.

We all experience disappointment.  We also all get to choose whether we stay there, lamenting the loss of what coulda shoulda woulda been, or we can persevere, putting one foot in front of the other and playing The Rolling Stones on repeat:

“You can’t always get what you want

But if you try sometimes, well, you might just find

You get what you need”

That’s life.

That’s also innovation.

As innovators, especially leaders of innovators, we rarely get what we want.  But we always get what we need (whether we like it or not)

We want to know. 
We need to be comfortable not knowing.

Most of us want to know the answer because if we know the answer, there is no risk. There is no chance of being wrong, embarrassed, judged, or punished.  But if there is no risk, there is no growth, expansion, or discovery.

Innovation is something new that creates value. If you know everything, you can’t innovate.

As innovators, we need to be comfortable not knowing.  When we admit to ourselves that we don’t know something, we open our minds to new information, new perspectives, and new opportunities. When we say we don’t know, we give others permission to be curious, learn, and create. 

We want the creative genius and billion-dollar idea. 
We need the team and the steady stream of big ideas.

We want to believe that one person blessed with sufficient time, money, and genius can change the world.  Some people like to believe they are that person, and most of us think we can hire that person, and when we do find that person and give them the resources they need, they will give us the billion-dollar idea that transforms our company, disrupts the industry, and change the world.

Innovation isn’t magic.  Innovation is team work.

We need other people to help us see what we can’t and do what we struggle to do.  The idea-person needs the optimizer to bring her idea to life, and the optimizer needs the idea-person so he has a starting point.  We need lots of ideas because most won’t work, but we don’t know which ones those are, so we prototype, experiment, assess, and refine our way to the ones that will succeed.   

We want to be special.
We need to be equal.

We want to work on the latest and most cutting-edge technology and discuss it using terms that no one outside of Innovation understands. We want our work to be on stage, oohed and aahed over on analyst calls, and talked about with envy and reverence in every meeting. We want to be the cool kids, strutting around our super hip offices in our hoodies and flip-flops or calling into the meeting from Burning Man. 

Innovation isn’t about you.  It’s about serving others.

As innovators, we create value by solving problems.  But we can’t do it alone.  We need experienced operators who can quickly spot design flaws and propose modifications.  We need accountants and attorneys who instantly see risks and help you navigate around them.  We need people to help us bring our ideas to life, but that won’t happen if we act like we’re different or better.  Just as we work in service to our customers, we must also work in service to our colleagues by working with them, listening, compromising, and offering help.

What about you?
What do you want?
What are you learning you need?

Image Credit: Unsplash

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Measuring Employee Engagement Accurately

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Measuring Employee Engagement Accurately

GUEST POST from David Burkus

Employee engagement has been a hot topic for several decades. And for good reason. Business teams with highly engaged employees have a 59 percent lower turnover rate than those with less engaged staff. Highly engaged teams are 17 percent more productive. Engaged teams receive 10 percent higher customer reviews. And yes, businesses with engaged employees have higher profit margins than non-engaged competitors.

But getting employees to feel engaged is no small feat. Even how to measure employee engagement can be a difficult question to answer for many leaders. But there are good reasons to try. Measuring employee engagement helps identify cultural strengths for the organization. Done well measuring employee engagement builds trust through the company. And measuring employee engagement helps understand and respond to potential trends, both in the organization and across the industry.

In this article, we’ll outline how to measure employee engagement through the most commonly used method and offer the strengths and weaknesses of each method.

Surveys

The first method used to measure employee engagement is surveys. And this is also the most commonly used method as well—mostly for commercial reasons. After the Gallup Organization launched their original Q12 survey of engagement, dozens of competing companies with competing surveys sprung up all promising a different and better way to measure employee engagement. Most of these surveys present a series of statements and ask participants to rate how much they agree or disagree on a 5- or 7-point “Likert” scale. Some include a few open-ended questions as well.

The biggest strength of the survey method is that it scales easily. For an organization with hundreds or thousands of employees, emailing out a survey invitation and letting the system do the rest of the work saves a lot of time. In addition, surveys allow for objective comparisons between teams and divisions, or between the company and an industry benchmark. But while the comparisons may be objective, the data itself may not be. That’s the biggest weakness of surveys, they most often rely on self-reported data. And as a result, those taking the survey may not be completely honest, either because they want to feel more engaged or because they don’t trust the survey to be truly anonymous.

Proxies

The second method used to measure employee engagement is proxies—meaning other metrics that serve as a proxy for engagement. Because we know that employee engagement correlates to other measurements, we can assume a certain level of engagement based off those measurements. For example, productivity has a strong correlation to employee engagement when looking at teams or entire organizations. So, if productivity is high, it’s safe to assume employee engagement isn’t low. Likewise, absenteeism and turnover tend to rise as employee engagement falls, so changes over time on those metrics point to changes over time in engagement. (And comparisons between engagement in departments/teams can sometimes be made based on these proxies.)

The big strength of proxies is that they’re usually measurements that are already being captured. Larger organizations are already tracking productivity, turnover, and more and so the data are already there. The weaknesses of proxy measurements, however, are that they’re not a perfect correlation. It’s possible to be productive but not engaged, and there are often other reasons certain roles have higher turnover than others beyond employee engagement. In addition, some of these proxies are lagging indicators—if turnover is increasing than engagement has already fallen—and so they don’t provide leaders a chance to respond as fast.

Interviews

The third method used to measure employee engagement is interviews. And this method is the least common one but it’s growing in usage. Sometimes these are called “stay” interviews, in contrast to the exit interviews that are common practice in organizations. The idea is to regularly interview employees who are staying about how the company (and leaders) are doing and how things could be improved. While the questions used should provide some structure, the open-ended nature allows leaders to discover potentially unknown areas for improvement.

The biggest strength of stay interviews is that they’re a useful method for team leaders who may not have senior leader support for measuring engagement. Conducting stay interviews with ones’ team doesn’t require senior leadership approval or data from Human Resources. So, it’s available to leaders at all levels. And while that’s true, the weakness of stay interviews is that they’re hard to scale. Training thousands of managers on conducting a stay interview isn’t as easy as emailing out a survey. Moreover, because different managers would conduct these interviews differently, cross-comparison would be subject to bias. Stay interviews are a powerful way to measure engagement on a team, but they’re most potent when they’re used by managers who truly want the feedback their team provides (and not merely because they were told to conduct interviews).

Conclusion

While all three methods are a way to measure employee engagement, it’s not enough to merely measure. We measure things so we can improve them. So once the measurement is done, leaders need to have a plan in place make progress. That plan should include sharing out the results of the measurement and sharing the lessons learned from analyzing those results. In addition, leaders should share what changes are planned based on those lessons. And while it doesn’t need to be shared, it’s worth thinking ahead of time how the effects of those changes will be themselves be measured.

Done well, these measurements and the resulting plans will create an environment where everyone can do their best work ever.

Image credit: Pixabay

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3 Ways to View Your Innovation Basket

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(including one that makes Radical Innovation easy)

3 Ways to View Your Innovation Basket

GUEST POST from Robyn Bolton

You are a rolling stone, and that means you gather no moss!  You read the September issue of HBR (and maybe last week’s article), tossed out your innovation portfolio, and wove yourself an innovation basket to “differentiate the concept from finance and avoid the mistake of treating projects like financial securities, where the goal is usually to maximize returns through diversification [and instead] remember that innovation projects are creative acts.”   

Then you explained this to your CFO and received side-eye so devastating it would make Sophie Loren proud.

The reality is that the innovation projects you’re working on are investments, and because they’re risky, diversification is the best way to maximize the returns your company needs.

But it’s not the only way we should communicate, evaluate, and treat them.

Different innovation basket views for different customers

When compiling an innovation basket, the highest priority is having a single source of truth.  If people in the organization disagree on what is in and out of the basket, how you measure and manage the portfolio doesn’t matter.

But a single source of truth doesn’t mean you can’t look at that truth from multiple angles.

Having multiple views showing the whole basket while being customized to address each of your internal customer’s Jobs to be Done will turbocharge your ability to get support and resources.

The CFO: What returns will we get and when?

The classic core/adjacent/transformational portfolio is your answer.  By examining each project based on where to play (markets and customers) and how to win (offerings, profit models, key resources and activities), you can quickly assess each project’s relative riskiness, potential return, time to ROI, and resource requirements.

The CEO: How does this support and accelerate our strategic priorities?

This is where the new innovation basket is most helpful.  By starting with the company’s strategic goals and asking, “What needs to change to achieve our strategy?” leadership teams immediately align innovation goals with corporate strategic priorities.  When projects and investments are placed at the intersection of the goal they support, and the mechanism of value creation (e.g., product, process, brand), the CEO can quickly see how investments align with strategic priorities and actively engage in reallocation decisions.

You: Will any of these ever see the light of day?

As much as you hope the answer is “Yes!”, you know the answer is “Some.  Maybe.  Hopefully.”  You also know that the “some” that survive might not be the biggest or the best of the basket.  They’ll be the most palatable.

Ignoring that fact won’t make it untrue. Instead, acknowledge it and use it to expand stakeholders’ palates.

Start by articulating your organization’s identity, the answers to “who we are” and “what we do.” 

Then place each innovation in one of three buckets based on its fit with the organization’s identity:

  • Identity-enhancing innovations that enhance or strengthen the identity
  • Identity-stretching innovations that “do not fit with the core of an organization’s identity, but are related enough that if the scope of organizational identity were expanded, the innovation would fit.”
  • Identity-challenging innovations that are “in direct conflict with the existing organizational identity.”

It probably won’t surprise you that identity-enhancing innovations are far more likely to receive internal support than identity-challenging innovations.  But what may surprise you is that core, adjacent, and transformational innovations can all be identity-enhancing.

For example, Luxxotica and Bausch & Lomb are both in the vision correction industry (eyeglasses and contact lenses, respectively) but have very different identities.  Luxxotica views itself as “an eyewear company,” while Bausch & Lomb sees itself as an “eye health company” (apologies for the puns). 

When laser-vision correction surgery became widely available, Bausch & Lomb was an early investor because, while the technology would be considered a breakthrough innovation, it was also identity-enhancing.  A decade later, Bausch & Lomb’s surgical solutions and ophthalmic pharmaceuticals businesses account for 38% of the company’s revenue and one-third of the growth.

One basket.  Multiple Views.  All the Answers.

Words are powerful, and using a new one, especially in writing,  can change your behavior and brain. But calling a portfolio a basket won’t change the results of your innovation efforts.  To do that, you need to understand why you have a basket and look at it in all the ways required to maximize creativity, measure results, and avoid stakeholder side-eye.

Image Credit: Pixabay

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Avoid These Four Myths While Networking Your Organization

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Avoid These Four Myths While Networking Your Organization

GUEST POST from Greg Satell

In an age of disruption, everyone has to adapt eventually. However, the typical organization is ill-suited to change direction. Managers spend years—and sometimes decades—working to optimize their operations to deliver specific outcomes and that can make an organization rigid in the face of a change in the basis of competition.

So it shouldn’t be surprising that the idea of a networked organizations have come into vogue. While hierarchies tend to be rigid, networks are highly adaptable and almost infinitely scalable. Unfortunately, popular organizational schemes such as matrixed management and Holacracy have had mixed results, at best.

The truth is that networks have little to do with an organization chart and much more to do with how informal connections form in your organization, especially among lower-level employees. In fact, coming up with a complex scheme is likely to do little more than cause a lot of needless confusion. Here are the myths you need to avoid.

Myth #1: You Need To Restructure Your Organization

In the early 20th century, the great sociologist Max Weber noted that the sweeping industrialization taking place would lead to a change in how organizations operated. As cottage industries were replaced by large enterprises, leadership would have to become less traditional and focused on charismatic leaders and more organized and rational.

He also foresaw that jobs would need to be broken down into small, specific tasks and be governed by a system of hierarchy, authority and responsibility. This would require a more formal mode of organization—a bureaucracy—in which roles and responsibilities were clearly defined. Later, executives such as Alfred Sloan at General Motors perfected the model.

Most enterprises are still set up this way because it remains the most efficient way to organize tasks. It aligns authority with accountability and optimizes information flow. Everybody knows where they stand and what they are responsible for. Organizational restructures are painful and time consuming because they disrupt and undermine the normal workflow.

In fact, reorganizations can backfire if they cut informal ties that don’t show up on the organization chart. So a better path is to facilitate informal ties so that people can coordinate work that falls in between organizational boundaries. In his book One Mission, McChrystal Group President Chris Fussell calls this a “hybrid organization.”

Myth #2 You Have To Break Down Silos

In 2005, researchers at Northwestern University took on the age old question: “What makes a hit on Broadway.” They looked at all the normal stuff you would imagine to influence success, such as the production budget, the marketing budget and the track record of the director. What they found, however, was surprising.

As it turns out, the most important factor was how the informal networks of the cast and crew were structured. If nobody had ever worked together before, results were poor, but if too many people had previously worked together, results also suffered. It was in the middle range, where there was both familiarity and disruption, that produced the best results.

Notice how the study doesn’t mention anything about the formal organization of the cast and crew. Broadway productions tend to have very basic structures, with a director leading the creative team, a producer managing the business side and others heading up things like music, choreography and so on. That makes it easy for a cast and crew to set up, because everyone knows their place.

The truth is that silos exist because they are centers of capability. Actors work with actors. Set designers work with set designers and so on. So instead of trying to break down silos, you need to start thinking about how to connect them. In the case of the Broadways plays, that was done through previous working relationships, but there are other ways to achieve the same goal.

Myth #3: You Need To Identify Influentials, Hubs And Bridges

In Malcolm Gladwell’s breakaway bestseller The Tipping Point, he wrote “The success of any kind of social epidemic is heavily dependent on the involvement of people with a particular and rare set of social gifts,” which he called “The Law of the Few.” Before long, it seemed like everybody from marketers to organizational theorists were looking to identify a mysterious group of people called “influentials.”

Yet as I explain in Cascades, decades of empirical evidence shows that influentials are a myth. While it is true that some people are more influential than others, their influence is highly contextual and not significant enough to go to the trouble of identifying them. Also, a study that analyzed the emails of 60,000 people found that information does not need rely on hubs or bridges.

With that said, there are a number of ways to network your organization by optimizing organizational platforms for connection. For example, Facebook’s Engineering Bootcamp found that “bootcampers tend to form bonds with their classmates who joined near the same time and those bonds persist even after each has joined different teams.”

One of my favorite examples of how even small tweaks can improve connectivity is a project done at a bank’s call center. When it was found that a third of variation in productivity could be attributed to informal communication outside of meetings, the bank arranged for groups to go on coffee break together, increasing productivity by as much as 20% while improving employee satisfaction at the same time.

Myth #4: Networks Don’t Need Leadership

Perhaps the most damaging myth about networks is that they don’t need strong leadership. Many observers have postulated that because technology allows people to connect with greater efficiency, leaders are no longer critical to organizing work. The reality is that nothing can be further from the truth.

The fact is that it is small groups, loosely connected, but united by a shared purpose that drive change. While individuals can form loosely connected small groups, they can rarely form a shared purpose by themselves. So the function of leadership these days is less to plan and direct action than it is to empower and inspire belief.

So perhaps the biggest shift is not one of tactics, but of mindset. In traditional hierarchies, information flows up through the organization and orders flow down. That helps leaders maintain control, but it also makes the organization slow to adapt and vulnerable to disruption.

Leaders need to learn how to facilitate information flow through horizontal connections so people lower down in the organization can act on it without waiting for approval. That’s where shared purpose comes in. Without a common purpose and shared values, pushing decision making down will only result in chaos. It’s much easier to get people to do what you want if they already want what you want.

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

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How to Defeat Corporate Antibodies

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A Guide to Beating Resistance

How to Defeat Corporate Antibodies

GUEST POST from Stefan Lindegaard

Imagine yourself as the CEO of a mid-sized organization that’s struggling to grow and adapt to the ever-changing business landscape. You decide that it’s time for a significant transformation, which will involve new partnerships, revamped processes, and a shift in the company’s culture.

Despite the potential benefits, the proposed changes are met with strong resistance from within the organization. Corporate antibodies, individuals who fight against innovation and maintain the status quo, are now the biggest challenge to overcome.

In this guide, we’ll walk you through a story that illustrates the impact of corporate antibodies on organizational development and explores the role of organizational culture, leadership, and employee engagement in fostering a supportive environment for change.

A Tale of Two Teams

In our fictional organization, there are two departments that perfectly illustrate the impact of corporate antibodies on organizational development: the marketing team, led by an open-minded and forward-thinking manager named Susan, and the finance department, led by a risk-averse and conservative manager named Mark.

Susan’s marketing team is known for embracing new ideas and encouraging collaboration. She has created a culture where employees are motivated to share ideas, challenge assumptions, and learn from failures. On the other hand, Mark’s finance team resists any proposed changes and defends the status quo. Mark is wary of any initiatives that could disrupt the stability of his department and is often skeptical of suggestions coming from outside his team.

The Power of Culture

One day, during a company-wide meeting, the CEO announces a new partnership with a cutting-edge technology company to streamline processes, reduce costs, and drive innovation across the organization.

Susan’s marketing team quickly embraces the idea, eager to explore the opportunities this partnership could bring. They begin brainstorming ways to integrate the new technology into their work and share their ideas with other teams.

In contrast, Mark’s finance team reacts with apprehension and skepticism. They question the need for such a drastic change and raise concerns about potential disruptions to their well-established processes. Mark himself is hesitant to support the initiative, fearing that it might expose weaknesses within his department and lead to a loss of control.

Detecting Corporate Antibodies

The stark difference between the two teams becomes apparent during meetings and discussions about the upcoming transformation. The finance team, led by Mark, expresses their resistance through statements like:

  • “We already tried something similar, and it didn’t work.”
  • “Our current process has worked fine for years; there’s no need to change.”
  • “If that were a good idea, we’d already have thought of it.”

Some individuals in the finance team genuinely believe they’re looking out for the company’s best interests, while others prioritize their personal interests or fear the potential consequences of change.

The Battle Begins

As the transformation moves into the incubation phase, the tensions between the two teams escalate. Susan’s marketing team starts working closely with the new technology partner, sharing their progress and achievements with the rest of the organization. They demonstrate the positive impact of the change initiative and inspire other departments to get on board.

Meanwhile, Mark’s finance team continues to resist the change, erecting roadblocks and questioning every decision made by the marketing team and the technology partner. Their relentless negativity creates a tense atmosphere and slows down the progress of the transformation.

The Turning Point

As the organization enters the Acceleration stage, the CEO recognizes the need to address the corporate antibodies that are hindering the company’s growth. She decides to implement the following strategies to manage resistance and foster a more supportive environment for change:

  1. Engage potential blockers: The CEO invites Mark and key members of his finance team to participate in decision-making processes, ensuring they feel valued and included. By involving them in shaping the transformation, she gradually turns some of the blockers into backers.
  2. Encourage open communication: The CEO fosters a culture where employees can voice their concerns and suggestions without fear of backlash. This allows the organization to identify and address potential issues early on, reducing the likelihood of resistance emerging later in the process.
  3. Provide support and resources: The CEO allocates resources to offer training and support to employees who need help navigating the change process. This alleviates anxieties and creates a more positive attitude towards the change initiatives.
  4. Celebrate successes: The CEO acknowledges the achievements of Susan’s marketing team and other departments that have embraced the change. Recognizing progress and milestones helps maintain morale and motivation while demonstrating the benefits of the transformation.
  5. Foster collaboration across departments: The CEO organizes cross-functional workshops and team-building activities that encourage employees from different departments to work together. This helps break down silos and promotes a greater understanding of the benefits of the change initiative across the organization.
  6. Appoint change champions: The CEO identifies key influencers within the organization who can help advocate for the change and address concerns from their peers. These change champions play a critical role in maintaining momentum and enthusiasm for the transformation.
  7. Establish a feedback loop: The CEO implements a system for collecting regular feedback from employees about the progress of the transformation. This allows the leadership team to monitor the effectiveness of their strategies, make necessary adjustments, and address any emerging concerns promptly.

With these additional strategies in place, the organization begins to witness significant progress in its transformation journey. The impact of the corporate antibodies is gradually diminished, and a culture of innovation and adaptability starts to flourish.

Monitoring Progress and Ensuring Long-term Success

The CEO understands the importance of monitoring progress and adjusting strategies as needed to ensure the long-term success of the transformation. To do this, she establishes a set of key performance indicators (KPIs) that help track the progress of the change initiatives and their impact on the organization. These KPIs may include employee engagement, cross-functional collaboration, efficiency gains, and financial performance.

Additionally, the CEO remains vigilant for signs of lingering resistance or the re-emergence of corporate antibodies. By maintaining open lines of communication and actively soliciting feedback from employees, she can quickly identify and address any issues that might hinder the organization’s development.

The conclusion is that identifying and tackling corporate antibodies is essential for successful organizational growth and transformation. By understanding the reasons behind their emergence and applying effective strategies to manage them, organizations can build a positive environment for change and promote long-lasting progress.

Emphasizing a strong organizational culture, good leadership, and employee engagement can help ensure your organization’s development efforts succeed, leading to a more resilient and adaptable business in a constantly changing world.

Image Credit: Stefan Lindegaard

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Our People Metrics Are Broken

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Our People Metrics Are Broken

GUEST POST from Mike Shipulski

We get what we measure and, generally, we measure what’s easy to measure and not what will build a bridge to the right behavior.

Timeframe. If we measure people on a daily pitch, we get behavior that is maximized over eight hours. If a job will take nine hours, it won’t get done because the output metrics would suffer. It’s like a hundred-meter sprint race where the stopwatch measures output at one hundred meters. The sprinter spends all her energy sprinting one hundred meters and then collapses. There’s no credit for running further than one hundred meters, so they don’t. Have you ever seen a hundred-meter race where someone ran two hundred meters?

Do you want to sprint one hundred meters five days a week? If so, I hope you only need to run five hundred meters. Do you want to run twenty-five miles per week? If so, you should slow down and run five miles per day for five days. You can check in every day to see if the team needs help and measure their miles on Friday afternoon. And if you want the team to run six miles a day, well, you probably have to allocate some time during the week so they can get stronger, improve their running stride, and do preventative maintenance on their sneakers. For several weeks prior to running six miles a day, you’ve got to restrict their running to four miles a day so they have time to train. In that way, your measurement timeframe is months, not days.

Over what timeframe do you measure your people? And, how do you feel about that?

Control Volume. If you have a fish tank, that’s the control volume (CV) for the fish. If you have two fish tanks, you two control volumes – control volume 1 (CV1) and control volume 2 (CV2). With two control volumes, you can optimize each control volume independently. If tank 1 holds red fish and tank 2 holds blue fish, based on the number of fish in the tanks, you put the right amount of fish food in tank 1 for the red fish and the right amount in tank 2 for the blue fish. The red fish of CV1 live their lives and make baby fish using the food you put in CV1. And to measure their progress, you count the number of red fish in CV1 (tank 1). And it’s the same for the blue fish in CV2.

With the two CVs, you can dial in the recipe to grow the most red fish and dial in a different recipe to grow blue fish. But what if you don’t have enough food for both tanks? If you give more food to the blue fish and starve the red fish, the red fish will get angry and make fewer baby fish. And they will be envious of the blue fish. And, likely, the blue fish will gloat. When CV1 gets fewer resources than CV2, the fish notice.

But what if you want to make purple fish? That would require red fish to jump into the blue tank and even more food to shift from CV1 to CV2. Now the red fish in CV1 are really pissed. And though the red fish moved to tank 2 do their best to make purple guppies with the blue fish, neither color know how to make purple fish. They were never given the tools, time, and training to do this new work. And instead of making purple guppies, usually, they eat each other.

We measure our teams over short timeframes and then we’re dissatisfied when they can’t run marathons. It’s time to look inside and decide what you want. Do you want short-term performance or long-term performance? And, no, you can’t have both from the same team.

And we measure our teams on the output of their control volumes and yet ask them to cooperate and coordinate across teams. That doesn’t work because any effort spent to help another control volume comes at the expense of your own. And the fish know this. And we don’t give them the tools, time, and training to work across control volumes. And the fish know this, too.

Image credit: Unsplash

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Why You Don’t Need An Innovation Portfolio

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According to Harvard Business Review

Why You Don't Need An Innovation Portfolio

GUEST POST from Robyn Bolton

You are a savvy manager, so you know that you need an innovation portfolio because (1) a single innovation isn’t enough to generate the magnitude of growth your company needs, and (2) it is the best way to manage inherently risky endeavors and achieve desired returns.

Too bad you’re wrong.

According to an article in the latest issue of HBR, you shouldn’t have an innovation portfolio. You should have an innovation basket.

Once you finish rolling your eyes (goodness knows I did), hear me (and the article’s authors) out because there is a nuanced but important distinction.

Our journey begins with the obvious.

In their article “A New Approach to Strategic Innovation,” authors Haijian Si, Christoph Loch, and Stelios Kavadias argue that portfolio management approaches have become so standardized as to be practically useless, and they propose a new framework for ensuring your innovation activities achieve your strategic goals.

“Companies typically treat their innovation projects as a portfolio: a mix of projects that, collectively, aim to meet their various strategic objectives,” the article begins. “MOO,” I think (household shorthand for Master Of the Obvious).

“When we surveyed 75 companies in China, we discovered that when executives took the trouble to link their project selection to their business’s competitive goals, the contribution of their innovation activities performance increased dramatically,” the authors continue. “Wow, fill this under N for No Sh*t, Sherlock,” responded my internal monologue.

The authors go on to present and explain their new framework, which is interesting in its focus on asking and answering seemingly simple questions (what, who, why, and how) and identifying internal weaknesses and vulnerabilities through a series of iterative and inclusion conversations. The process is a good one but feels more like an augmentation of an existing approach rather than a radically new one.

Then we hit the “portfolio” vs. “basket” moment.

According to the authors, once the management team completes the first step by reaching a consensus on the changes needed to their strategy, they move on to the second step – creating the innovation basket.

The process of categorizing innovation projects is the next step, and it is where our process deviates from established frameworks. We use the word “basket” rather than “portfolio” to denote a company’s collection of innovation projects. In this way, we differentiate the concept from finance and avoid the mistake of treating projects like financial securities, where the goal is usually to maximize returns through diversification. It’s important to remember that innovation projects are creative acts, whereas investment in financial securities is simply the purchase of assets that have already been created.

“Avoid the mistake of treating projects like financial securities” and “remember that innovation projects are creative acts.” Whoa.

Why this is important in a practical sense (and isn’t just academic fun-with-words)

Think about all the advice you’ve read and heard (and that I’ve probably given you) about innovation portfolios – you need a mix of incremental, adjacent, and radical innovations, and, if you’re creating a portfolio from scratch, use the Golden Ratio.

Yes, and this assumes that everything in your innovation portfolio supports your overall strategy, and that the portfolio is reviewed regularly to ensure that the right projects receive the right investments at the right times.

These assumptions are rarely true.

Projects tend to enter the portfolio because a senior executive suggested them or emerged from an innovation event or customer research and feedback. Once in the portfolio, they progress through the funnel until they either launch or are killed because of poor test results or a slashed innovation budget.

They rarely enter the portfolio because they are required to deliver a higher-level strategy, and they rarely exit because they are no longer strategically relevant. Why? Because the innovation projects in your portfolio are “assets that have already been created.”

What this means for you (and why it’s scary)

Swapping “basket” in for “portfolio” isn’t just the choice of a new word to bolster the claim of creating a new approach. It’s a complete reframing of your role as an innovation executive.

You no longer monitor assets that reflect purchases or investments promising yet-to-be-determined payouts. You are actively starting, shifting, and shutting down opportunities based on business strategy and needs. Shifting from a “portfolio” to a basket” turns your role as an executive from someone who monitors performance to someone who actively manages opportunities.

And this should scare you.

Because this makes the challenge of balancing operations and innovation an unavoidable and regular endeavor. Gone are the days of “set it and forget it” innovation management, which often buys innovation teams time to produce results before their resources are noticed and reallocated to core operations.

If you aren’t careful about building and vigorously defending your innovation basket, it will be easy to pluck resources from it and allocate them to the more urgent and “safer” current business needs that also contribute to the strategic changes identified.

Leaving you with an innovation portfolio.

Image Credit: Pixabay

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Building a Psychologically Safe Team

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Building a Psychologically Safe Team

GUEST POST from David Burkus

One of the most consistent findings in organizational behavior over the last decade has been just how significantly team performance is affected by psychological safety. A psychologically safe team is one where team members feel comfortable being themselves, expressing their ideas and opinions, and taking risks without fear of being punished or ostracized. Teams with high psychological safety learn faster, communicate better, and hence collaborate more effectively.

At its core, psychological safety is marked by a sense of mutual trust and respect. And these are two different things. Trust is how much teammates feel they can share their authentic selves with others. Respect is how much teammates feel the team will accept that self. If I trust you, then I will share honestly with you. If you respect me, then you will value what I’ve shared.

In this article, we’ll cover four ways to create a more psychologically safe team—with the first two focusing on trust and the second two on respect.

Be Vulnerable First

The first way to build a psychologically safe team is to be vulnerable first. This is a powerful way to build trust because trust on a team grows reciprocally. When someone makes themselves vulnerable, they signal to the team that they’re trusting the team. And teammates feel trusted and respond in a trustworthy manner (most of the time). This cycle repeats itself over time and trust grows alongside it. As a leader, that means it falls upon you to demonstrate trust first by being vulnerable first. You don’t need to share embarrassing secrets or your deepest fears, but a simple “I don’t know” when discussing a problem or a simple sharing of a few weaknesses can be an important moment in the development of trust on your team. Don’t make people earn your trust. Trust them and let them respond with trustworthiness.

Accept (but learn from) Failures

The second way to build a psychologically safe team is to accept (but learn from) the team’s failures. Failures on a team can’t be avoided—and they can’t be ignored. You’ll have to deal with repeated failures or performance issues, but often unexpected failures get overlooked (or worse). Projects sometimes run over budget, clients change their mind, global pandemics threaten the supply chain and force everyone to work at home in their pajamas. When failures happen, the human reaction is to deflect or excuse away failures. So, when teams face failures, they often fight over who is to blame. But psychologically safe teams recognize failure is a learning opportunity and see honest conversations about what happened and what can be changed in the future to prevent failures. As a leader, take your team through an after-action review when failures happen and celebrate any moments of honesty or responsibility you see. Doing so sends the message that failure is feedback—not something to be deflected.

Model Active Listening

The third way to build a psychologically safe team is to model active listening. This helps teammates feel respected, the other side of psychological safety. Leaders don’t have to accept every idea their team shares to build respect, but they do have to ensue every teammate feels listened to. And modelling active listening not only ensures you’re listening to the team—it also teaches the team by example how to listen better to each other. Make sure you’re actively focused on the person speaking, not looking at a phone or laptop. Nod your head and utter small “hmms” and “ahhs” to show you’re responding and processing what you hear. Follow up with questions based on what you heard that signal listening and encourage them to expound on their ideas. And before you offer your thoughts, summarize what you heard them say to confirm that you understand. Doing so will ensure the other person feels listened to—because you were actually listening.

Treat Conflict As Collaboration

The fourth way to build a psychologically safe team is to treat conflict as collaboration. It’s difficult to model active listening when the person speaking is sharing an idea or action in conflict with something you’ve previously said. It’s hard to actively listen when in conflict because you’re wanting to jump in and defend your original idea. But for building respect, it’s crucial to remember that task-focused conflict is a form of collaboration. People who disagree with their teammates aren’t (usually) saying their teammates are dumb, they’re saying they see the situation differently and care enough to share. Resist the urge to shoot down the conflicting idea, and use the questioning time during active listening to ask questions about the assumptions made or information that leads this person to a different conclusion. Meet conflict with curiosity about how they concluded something different than you. You’ll not only maintain respect, you’ll often find out that their way is a better solution anyway.

Looking at these actions collectively, it’s easier to notice the interplay between trust and respect that leads to a psychologically safe team. Trusting moments need to be met with respect, otherwise they might trigger distrust. But when teams develop both simultaneously, they start to share diverse perspectives and generate better ideas—and they gradually become a team where everyone can do their best work ever.

Image credit: Pixabay

Originally published at https://davidburkus.com on February 25, 2023.

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Great Coaches Do These Things

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Great Coaches Do These Things

GUEST POST from Mike Shipulski

Good coaches listen to you. They don’t judge, they just listen.

Good coaches continually study the game. They do it in private, but they study.

Good coaches tell you that you can do better, and that, too, they do in private.

Good coaches pick you up off the floor. They know that getting knocked over is part of the game.

Good coaches never scream at you, but they will cry with you.

Good coaches never stop being your coach. Never.

Good coaches learn from you, and the best ones tell you when that happens.

Good coaches don’t compromise. Ever.

Good coaches have played the game and have made mistakes. That’s why they’re good coaches.

Good coaches do what’s in your best interest, not theirs.

Good coaches are sometimes wrong, and the best ones tell you when that happens.

Good coaches don’t care what other people think of them, but they care deeply about you.

Good coaches are prepared to be misunderstood, though it’s not their preference.

Good coaches let you bump your head or smash your knee, but, otherwise, they keep you safe.

Good coaches earn your trust.

Good coaches always believe you and perfectly comfortable disagreeing with you at the same time.

Good coaches know it’s always your choice, and they know that’s how deep learning happens.

Good coaches stick with you, unless you don’t do your part.

Good coaches don’t want credit. They want you to grow.

Good coaches don’t have a script. They create a custom training plan based on your needs.

Good coaches simplify things when it’s time, unless it’s time to make things complicated.

Good coaches aren’t always positive, but they are always truthful.

Good coaches are generous with their time.

Good coaches make a difference.

Image credit: Unsplash

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Why You Should Care About Service Design

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Why You Should Care About Service Design

GUEST POST from Robyn Bolton

What if a tool had the power to delight your customers, cut your costs, increase your bottom line, and maybe double your stock price? You’d use it, right?

That’s precisely the power and impact of Service Design and service blueprints. Yet very few people, especially in the US, know, understand, or use them. Including me.

Thankfully, Leala Abbott, a strategist and researcher at the intersection of experience, innovation, and digital transformation and a lecturer at Parsons School of Design, clued me in.

What is Service Design?

RB: Hi, Leala, thanks for taking the time to talk with me today.

LA: My pleasure! I’m excited about this topic. I’ve managed teams with service designers, and I’ve always been impressed by the magical way they brought together experience strategy, UX, and operations.

RB: I felt the same way after you explained it to me. Before we get too geeked up about the topic, let’s go back to the beginning and define “service.”

LA: Service is something that helps someone accomplish a goal. As a result, every business needs service design because every business is in the service industry.

RB: I’ll be honest, I got a little agitated when I read that because that’s how I define “solution.” But then I saw your illustration explaining that service design moves us from seeing and problem-solving isolated moments to seeing an integrated process. And that’s when it clicked.

LA:  That illustration is from Lou Downe’s talk Design in Government Impact for All . Service Design helps us identify what customers want and how to deliver those services effectively by bringing together all the pieces within the organization. It moves us away from fragmented experiences created by different departments and teams within the same company to an integrated process that enables customers to achieve their goals.

Why You Need It

RB: It seems so obvious when you say it. Yet so often, the innovation team spends all their time focused on the customer only to develop the perfect solution that, when they toss it over the wall for colleagues to make, they’re told it’s not possible, and everything stops. Why aren’t we always considering both sides?

LA: One reason, I think, is people don’t want to add one more person to the team. Over the past two decades, the number of individuals required to build something has grown exponentially. It used to be that one person could build your whole website, but now you need user experience designers, researchers, product managers, and more. I think it’s just overwhelming for people to add another individual to the mix. We believe we have all the tools to fix the problem, so we don’t want to add another voice, even if that voice explains the huge disconnect between everything built and their operational failures.

RB: Speaking of operational failures, one of the most surprising things about Service Design is that it almost always results in cost savings. That’s not something most people think about when they hear “design.”

LA: The significant impact on the bottom line is one of the most persuasive aspects of service design. It shifts the focus from pretty pictures to the actual cost implications. Bringing in the operational side of the business is crucial. Building a great customer journey and experience is important, but it’s also important to tie it back to lost revenue and increased cost to serve

Proof It Works 

LA: One of the most compelling cases I recently read was about Autodesk’s transition to SaaS, they brought in a service design company called Future Proof. Autodesk wanted to transition from a software licensing model to a software-as-a-service model. It’s a significant transition not just in terms of the business model and pricing but also in how it affects customers.

If you’re a customer of Autodesk, you used to pay a one-time fee for your software, but now you are paying based on users and services. Budgeting becomes messy. The costs are no longer simple and predictable. Plus, it raises lots of questions about the transition, cost predictability, control over access, managing subscriptions, and flexibility. Notice that these issues are about people managing their money and increasing costs. These are the areas where service design can truly help. 

Future Proof conducted customer interviews, analyzed each stage of the customer journey, looked at pricing models and renewal protocols, and performed usability studies. When they audited support ticket data for the top five common customer issues, they realized that if Autodesk didn’t change their model, the cost of running software for every customer would increase by 40%, and profit margins would decrease by 15% to 20%.

Autodesk made the change, revenue increased significantly, and their stock price doubled. Service design allows for this kind of analysis and consideration of operational costs.

How to Learn More

RB: Wow, not many things can deliver better service, happier customers, and doubling a stock price. Solid proof that companies, and innovation teams in particular, need to get smart on service design. We’ve talked a lot about the What and Why of Service Design. How can people learn more about the How?

LA: Lou Downe’s book is a great place to start Good Services: How to Design Services That Work. So is Woo, Wow, and Win: Service Design, Strategy, and the Art of Customer Delight by Thomas A Stewart and Patricia O’Connell.  I also recommend people check out The Service Design Network for tools and case studies and TheyDo, which helps companies visualize and manage their service design.

Image Credit: Pixabay

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