Welcome to the exciting conclusion of “Everything You Ever Wanted to Know About Psychological Safety but Were Afraid to Ask.”
Our generous expert, Alla Weinberg, CEO and Culture designer at Spoke & Wheel, has been patiently leading us beyond and through the buzzy frothiness that we (I) usually associate with Psychological Safety and into the deeply powerful and absolutely essential core elements.
In Part 1, we learned that psychological safety is more neuroscience than psychology (and required to be your smartest self).
In Part 2, we learned the first step to creating safety (and why corporate mandates are antithetical to the goal).
Today, we’re going where we need but don’t want to go – how to create a psychologically safe environment so everyone can thrive.
If Step 1 in creating Psychological Safety is verbalizing your emotions and understanding others’ emotions, I’m hoping Step 2 is easier.
Step two is relational intelligence.
There are three intelligences: emotional, relational, and systems
Relational intelligence is about understanding how to connect with different people, being aware when disconnection happens, and then acknowledging and repairing it. That last part is the most important because, without repair, there’s no safety.
Are you saying that saying, “I’m sorry” is essential to building psychological safety? Because I would much rather ignore the issues and move on. Or, better yet, pretend it never happened.
Nice try. But you know as well as I do that people are messy, and when we come together, there’s tension and conflict, and someone will get hurt or make mistakes. It’s normal. It’s okay as long as you know how to recover, repair, and heal.
The issue isn’t the conflict but how we handle it and whether we can repair it. I have a diagram of a relationship, which is a circle of connection, disconnection, and repair. We go around this circle just like breathing is inhaling and exhaling. Relating, connecting, disconnecting, and repairing is what a relationship is.
OK, step 2 is relational intelligence which requires repairing relationships, so how do I do that? Bonus points if I don’t have to admit to being wrong.
Not only do you have to admit that, but you also need to take responsibility for your impact, not just your intentions. Intentions are great, but without action, they don’t mean much.
When apologizing, we tend to try to explain ourselves. For example, we say, “I didn’t say anything in that meeting, and I’m sorry, but that wasn’t my intention, and I wanted to, but I had my own issue.” Instead, we should say, “I didn’t say anything in that meeting, and I’m sorry.”
When you apologize, don’t say “but.” To repair a relationship, you must take responsibility for your actions and their impact. Saying “but” negates all of that.
(head now on the desk because this is a lot to take in): I’m afraid to ask what Step 3 is, but I will practice verbalizing my feelings and ask anyway. What’s Step 3?
You’re doing great. This is a lot, and it’s ok that you feel overwhelmed.
Step 3 is systems intelligence, which focuses on the relationships within an organization that gives rise to its culture. Systems thinking is about understanding how structures, policies, processes, and relationships interact to create a greater whole,
Systems thinking! We’re getting back to left-brained stuff now. I’m feeling better.
Yes, and since connection is core to psychological safety, systems thinking tells us that we must fundamentally rethink how people work together by centering connection.
How do we do that?
We must reinvent, innovate, and rethink how we work together.
Lack of safety leads to power struggles, walls, and departmental rivalries, creating divisions and “othering.”
Hierarchy doesn’t align with connection, but shared leadership does. Hierarchy erodes trust because you need manager approvals, beg for budgets, or are told to prove your worth to get a seat at the table.
Silos are another problem because they lead to turf wars and people making decisions to protect themselves or their team rather than do what’s best for the greater good.
Look, I love challenging the status quo, but you’re suggesting that we burn it all to the ground and start over.
(Laughing) I don’t lead with that. When I work with organizations, I start with meetings.
Most meetings focus on work topics like status, decisions, and updates. But where are the meetings where we discuss emotions, share personal stories, and express hurt feelings? Everything shifts when we center connection.
Isn’t that called therapy?
Organizations value information, right? Emotions are information.
Emotions reside in our bodies, but in many organizations, the focus is on the intellect. It’s as if the head is the only important part, and the body is merely a vessel to transport the head from meeting to meeting.
And that brings us full circle to why psychological safety is mostly neuroscience. Our body houses our nervous system, where we feel safety or the lack thereof. So, when people talk about bringing their whole selves to work, I mean our entire body, not just the intellect. Our bodies contain wisdom and information that we often overlook and undervalue, yet this is where the crucial information resides to create psychological safety.
We don’t think of emotions as information. We think of them as signs of weakness, and you can’t be weak and successful.
It’s a lot of fear because how we’ve worked for the last 50 years gave us an illusion of certainty. Acknowledging that there is no certainty and that we’re in entirely uncharted territory is scary, and there’s a fear that everything will fall apart. We think the business won’t survive if we do it the other way.
I respect that fear. It’s okay to be afraid. But if we acknowledge that all of this comes from fear, we will be open to new ideas or thoughts. For organizations that want to innovate, they must change how they work. You can’t keep doing the same thing and expect different results. You need to innovate your approach to work.
Thank you so much for all of this. You’ve shared so much. Some of it was hard to hear, but I think that’s also a sign that it’s important to hear. Any last words of advice?
Give yourself and others permission to be human beings again. Not robots or cogs, not human resources, but to be human beings. That includes our bodies, our emotions, our messiness, and our relationships with each other.
If you would like to learn more about Alla and her work, please visit her firm’s website, www.spokeandwheel.co, and definitely download a FREE digital copy of her book, A Culture of Safety: Building a Work Environment Where People Can Think, Collaborate, and Innovate
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On April 3rd, 1921, a handful of journalists went to interview a relatively unknown scientist named Albert Einstein. When they arrived to meet his ship they found a crowd of thousands waiting for him, screaming with adulation. Surprised at his popularity, and charmed by his genial personality, the story of Einstein’s arrival made the front page in major newspapers.
It was all a bit of a mistake. The people in the crowd weren’t there to see Einstein, but Chaim Weizmann, the popular Zionist leader that Einstein was traveling with. Nevertheless, that’s how Einstein gained his iconic status. In a way, Einstein didn’t get famous because of relativity, relativity got famous because of Einstein.
This, of course, in no way lessens Einstein’s accomplishments, which were considerable. Yet as Albert-László Barabási, another highly accomplished scientist, explains in The Formula, there is a big difference between success and accomplishment. The truth is that success isn’t what you think it is but, with talent, persistence and some luck, anyone can achieve it.
There Is Virtually No Limit To Success, But There Is To Accomplishment
Einstein was, without a doubt, one of the great scientific minds in history. Yet the first half of the 20th century was a golden age for physics, with many great minds. Niels Bohr, Einstein’s sparring partner at the famous Bohr–Einstein debates (which Bohr is widely considered to have won) was at least as prominent. Yet Einstein towers over all of them.
It’s not just physicists, either. Why is it that Einstein has become a household name and not, say, Watson and Crick, who discovered the structure of DNA, an accomplishment at least as important as relativity? Even less known is Paul Erdős, the most prolific mathematician since Euler in the 18th century, who had an outrageous personality to boot?
For that matter, consider Richard Feynman, who is probably the second most famous physicist of the 20th century. He was, by all accounts, a man of great accomplishment and charisma. However, his fame is probably more due to his performance on TV following the Space Shuttle Challenger disaster than for his theory of quantum electrodynamics.
There are many great golfers, but only one Tiger Woods, just as there are many great basketball players, but only one Lebron James. The truth is that individual human accomplishment is bounded, but success isn’t. Tiger Woods can’t possibly hit every shot perfectly any more than Lebron James can score every point. But chances are, both will outshine all others in the public consciousness, which will drive their fame and fortune.
What’s probably most interesting about Einstein’s fame is that it grew substantially even as he ceased to be a productive scientist, long after he had become, as Robert Oppenheimer put it, “a landmark, not a beacon.”
Success Relies On Networks
Let’s try and deconstruct what happened after Einstein’s arrival in the United States. The day after thousands came to greet Weizmann and the reporters mistakenly assumed that they were there for Einstein, he appeared on the front pages of major newspapers like The New York Times and the Washington Post. For many readers, it may have been the first time they had heard of any physicist.
As I noted above, this period was something of a heyday for physics, with the basic principles of quantum mechanics first becoming established, so it was a topic that was increasingly discussed. Few could understand the details, but many remembered the genius with the crazy white hair they saw in the newspaper. When the subject of physics came up, people would discuss Einstein, which spread his name further.
Barabási himself established this principle of preferential attachment in networks, also known as the “rich get richer” phenomenon or the Matthew effect. When a particular node gains more connections than its rivals, it tends to gain future connections at a faster rate. Even a slight change in early performance leads to a major advantage going forward.
In his book, Barabási details how this principle applies to things as diverse as petitions on Change.org, projects on Kickstarter and books on Amazon. It also applies to websites on the Internet, computers in a network and proteins in our bodies. Look at any connected system and you’ll see preferential attachment at work.
Small Groups, Loosely Connected
The civil rights movement will always be associated with Martin Luther King Jr., but he was far from a solitary figure. In fact, he was just one of the Big Six of civil rights. Yet few today speak of the others. The only one besides King still relatively famous today is John Lewis and that’s largely because of his present role as a US congressman.
Each of these men were not solitary figures either, but leaders of their own organizations, such as the NAACP, The National Urban League and CORE and these, in turn, had hundreds of local chapters. It was King’s connection to all of these that made him the historic icon we know today, because it was all of those small groups, loosely connected, that made up the movement.
In my book, Cascades, I explain how many movements fail to bring change about by trying to emulate events like the March on Washington without first building small groups, loosely connected, but united by a shared purpose. It is those, far more than any charismatic personality or inspirational speech, that makes a movement powerful.
It also helps explain something about Einstein’s iconic status. He was on the ship with Weizman not as a physicist, but as a Zionist activist and that dual status connected him to two separate networks of loosely connected small groups, which enhanced his prestige. So it is quite possible, if not probable, that we equate Einstein with genius today and not, say, Bohr, because of his political activity as much as for his scientific talent.
Randomness Rewards Persistence
None of this should be taken to mean that Einstein could have become a legendary icon if he hadn’t made truly landmark discoveries. It was the combination of his prominence in the scientific community with the happy accident of Weizmann’s adoring crowds being mistaken for his own, that made him a historic figure.
Still, we can imagine an alternate universe in which Einstein becomes just as famous. He was, for example, enormously quotable and very politically active. (He was, at one time, offered the presidency in Israel). So it is completely possible that some other event, combined with his very real accomplishments, would have catapulted him to fame. There is always an element of luck and randomness in every success.
Yet Einstein’s story tells us some very important things about what makes a great success. It is not, as many tell us, simply a matter of working hard to achieve something because human performance is, as noted above, bounded. You can be better than others, but not that much better. At the same time, it takes more than just luck. It is a combination of both and we can do much to increase our chances of benefiting from them.
Einstein was incredibly persistent, working for ten years on special relativity and another ten for general relativity. He was also a great connector, always working to collaborate with other scientists as well as political figures like Weizmann and even little girls needing help with their math homework. That’s what allowed him to benefit from loosely connected small groups.
Perhaps most importantly, these principles of persistence and connection are ones that any of us can apply. We might not all be Einsteins, but with a little luck, we just might make it someday.
In his acclaimed book the The Diffusion of Innovations—the most-cited work in all the social sciences—Everett Rogers explained how innovations frequently meet resistance. Resistance that isn’t always rational. How all-too-often we’re willing to accept the status quo despite its flaws and reject new options despite their benefits.
We’re seeing exactly this phenomenon with electric vehicles. Demand from what Rogers identified as the early adopters—wealthy buyers who can pay a premium for the newest technology—has largely been met. The challenge now is to reach a broader market of buyers with more practical concerns about cost, range, reliability, and safety. News articles and commentary are popping up noting those concerns and expressing doubts about just how useful electric cars really are. The lack of charging stations, the environmental impact of mining lithium, the danger of battery fires, and potential strains to the electrical grid. There are some legitimate concerns, but how much of that skepticism is grounded in the reality of electrification and how much is good old-fashioned resistance to change?
To answer that question, let’s turn the tables. What if electric cars came first, and we’re trying to introduce internal combustion engines? Here are some predictable—and quite similar—objections.
How can we possibly build all the gas stations we’re going to need, and should we? (If electrification is the entrenched technology, we’d have plenty of charging stations everywhere.)
Do you really want trucks carrying 10,000 gallons of highly explosive gasoline driving down the highway next to you? Accidents happen! Do you want 20 gallons of it parked in your garage, waiting for just one spark to set it off—taking your house with it?
You can charge your electric car at home while you sleep, or at a charging station while at work. You can’t do that with a gasoline engine. You must go somewhere to buy gas, take time to get there, and then stand next to a hose pumping one of the most flammable liquids we know of.
We’re going to need a lot of that gasoline. Where will we find it, and at what environmental cost? Are we going to start drilling everywhere? Even in the ocean, the arctic, and in fragile ecosystems? Are we going to have massive tankers crisscrossing the oceans? What if there’s a leak or a spill?
How are we going to build all the refining capacity we’ll need to process and transport all that gas? That’s a massive investment. Who’s going to pay for it?
What if we need to get that gas from countries that don’t like us? Will they refuse to sell to us or charge exorbitant prices? Will we make our enemies rich?
Gasoline is more expensive per mile driven than electricity, and because it’s a commodity, its price fluctuates—sometimes a lot. You never know what you may have to pay.
Gasoline engines are a lot more expensive than electric motors. They’re much more complex and since we’re building them in smaller numbers at first, carmakers don’t have the same economies of scale.
Internal combustion engines are more complex to repair. How often will your car need to be fixed? Will your mechanic know how?
What about air pollution? Just one internal combustion car emits 4.6 metric tons of carbon dioxide each year. Multiply that by all the cars on the road!
Would you like a car that’s slower? The most powerful—and most expensive—internal combustion cars on the road have less torque than a typical electric vehicle. That means less acceleration when you need to pass someone.
Some of these concerns are a bit overblown — just like some of the concerns about electric cars. But others are entirely valid. Yet too often we shrug them off because we’ve already accepted those costs, inconveniences, and dangers.
What we’re seeing with electric cars is the same progression we saw with early automobiles, airplanes, hybrid crops, personal computers, and many other now widely popular innovations. We’ll get there, but not without some pushback.
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At the beginning of each month, we will profile the ten articles from the previous month that generated the most traffic to Human-Centered Change & Innovation. Did your favorite make the cut?
But enough delay, here are January’s ten most popular innovation posts:
If you’re not familiar with Human-Centered Change & Innovation, we publish 4-7 new articles every week built around innovation and transformation insights from our roster of contributing authors and ad hoc submissions from community members. Get the articles right in your Facebook, Twitter or Linkedin feeds too!
Have something to contribute?
Human-Centered Change & Innovation is open to contributions from any and all innovation and transformation professionals out there (practitioners, professors, researchers, consultants, authors, etc.) who have valuable human-centered change and innovation insights to share with everyone for the greater good. If you’d like to contribute, please contact me.
P.S. Here are our Top 40 Innovation Bloggers lists from the last four years:
When you go to the cinema or the playhouse you go you see a show. The show may be funny, it may be sad, it may be thought-provoking, it may be beautiful, and it may take your mind off your problems for a couple of hours; but it’s not real. Sure, the story-line is good, but it came from someone’s imagination. And because it’s a story, it doesn’t have to bound by reality. Sure, the choreography is catchy, but it’s designed for effect. Yes, the cinematography paints a good picture, but it’s contrived. And, yes, the actors are good, but they’re actors. What you see isn’t real. What you see is theater.
If you are asked to focus on the innovation process, that’s theater. Innovation doesn’t care about process; it cares about delivering novel customer value. The process isn’t most important, the output is. When there’s an extreme focus on the process that usually means an extreme focus on the output of the process would be embarrassing.
If you are tasked to calculate the net present value of the project hopper, that’s theater. With innovation, there’s no partial credit for projects you’re not working on. None. The value of the projects in the hopper is zero. The song about the value of the project hopper is nothing more than a catchy melody performed to make sure the audience doesn’t ask about the feeble collection of projects you are working on. And, assigning a value to the stagnant project hopper is a creative story-line crafted to hide the fact you have too many projects you’re not working on.
If you are asked to create high-level metrics and fancy pie charts, that’s innovation theater. Process metrics and pie charts don’t pay the bills. Here’s innovation’s script for paying the bills: complete amazing projects, launch amazing products, and sell a boatload. Full stop. If your innovation script is different than that, ball it up and throw it away along with its producer.
If the lame projects aren’t stopped so better ones can start, if people aren’t moved off stale projects onto amazing ones, if the same old teams are charged with the innovation mandate, if new leaders aren’t added, if the teams are measured just like last year, that’s innovation theater. How many mundane projects have you stopped? How many amazing projects have you started? How many new leaders have you added? How many new teams have you formed? How will you measure your teams differently? How do you feel about all that?
If a return on investment (ROI) calculation is the gating criterion before starting an amazing project, that’s innovation theater. Projects that could create a new product family with a fundamentally different value proposition for a whole new customer segment cannot be assigned an ROI because no one has experience in this new domain. Any ROI will be a guess and that’s why innovation is governed by judgment and not ROI. Innovation is unpredictable which makes an ROI is impossible to predict. And if your innovation process squeezes judgment out of the story-line, that’s a tell-tale sign of innovation theater.
If the specifications are fixed, the resources are fixed, and the completion date is fixed, that’s innovation theater. Since it can be innovation only when there’s novelty, and since novelty comes with uncertainty, without flexibility in specs, resources, or time, it’s innovation theater.
If the work doesn’t require trust, it’s innovation theater. If trust is not required it’s because the work has been done before, and if that’s the case, it’s not innovation.
If you know it will work, it’s innovation theater. Innovation and certainty cannot coexist.
If a steering team is involved, it’s innovation theater. Consensus cannot spawn innovation.
If more than one person in charge, it’s innovation theater. With innovation, there’s no place for compromise.
And what to do when you realize you’re playing a part in your company’s innovation theater? Well, I’ll save that for another time.
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Abraham Maslow was an American psychologist who created a model for understanding human behavior. Specifically, he was interested in what motivated people, and he devised five levels in the shape of a pyramid representing each of those needs. For those who need a refresher in psychology, those levels, starting with the basic needs at the bottom and working their way toward the top, are physiological needs (such as food, water and sleep), safety, love and belonging, self-esteem and self-actualization.
I’ve been thinking about a similar model for customers. I’m not a psychologist, and I’ve not done formal research on this idea, but I’ve been studying customer and employee experience in some form for more than 40 years. I’ve identified five areas (at least) that are important to customers when they buy from you and put them into logical order. So, here is ‘The Customer Hierarchy Of Needs’:
1. Products that Work – We’re starting at the bottom of the pyramid and working our way up. This is the base, and it’s simple: whatever you sell must do what you promise it will do. It doesn’t matter how great your customer service and experience (CX) are, if the product or service doesn’t work, customers will find an alternative.
2. Alignment in Beliefs – Your mission and vision statements are your beliefs. Your customers shouldn’t have to read those statements to know what they are. They should experience them when they do business with you. They will quickly learn how you treat them. If they like the experience, they align with you and what you stand for. While that can be enough, they may also enjoy doing business with you because of something that may or may not be in your mission and vision statements. That is a cause, charity or community activity your company or brand is involved with or contributes to. It adds to the emotional connection you’re trying to achieve with your customers.
3. Trust and Safety – If the company or brand has a bad reputation, getting and keeping customers will be tough. Even customers willing to take a chance may eventually experience what others have warned them about. Trust and safety belong together, but let’s first discuss trust. A sense of trust comes from different areas that can include (but are not limited to) a good reputation, positive reviews and ratings, customer-friendly policies (like easy returns), simple and friction-less processes, fast response times and friendly, helpful employees. Safety comes from assurances, including data privacy, secure websites, safe physical environments and more. Even if you have products that work—the basic need—without trust and safety, you might not be able to keep your customers past the first sale, assuming you have any at all.
4. Feeling Appreciated – Every customer willing to pay you for your goods and services deserves to feel appreciated. If you don’t acknowledge the customer with a simple thank you, they may not notice the first time. But there will be a point at which they feel underappreciated, and when they do, you put yourself at risk of losing them. Never miss an opportunity to express appreciation to your customers.
5. Emotional Connection – This is where you move customers from being satisfied to becoming loyal. Satisfied customers come back until something better comes along. Loyal customers come back because they like doing business with you and have made an emotional connection with you. They know your product works, they trust you, you make them feel confident (and safe) when engaging with you, they believe you have a good company and there may even be a cause or charity you mutually support, and every time they interact with you, they feel appreciated. At that point, your customers are feeling emotionally connected to you. Trust and appreciation are emotions. When all the boxes are ticked, you have the emotional connection that drives customer loyalty, advocacy and evangelism.
I could have written an entire article—or even a chapter in a book—on each of these five customer needs. Consider this article as a conversation starter. Perhaps you can add to this list of customer needs. Just because Maslow had five in his model doesn’t mean we are limited to that number.
Next week I’ll cover a similar concept, but instead of customers, I’ll focus on ‘The Employee Hierarchy Of Needs’. Stay tuned!
When you start out your career, you’re most often an individual contributor. And in that role your knowledge and skills are most important. But if you do that role well, you’ll likely be asked to consider becoming a leader. And in leadership, the methods you relied on to be a great employee don’t often help you become a great leader. Those skills will rarely help encourage and coach others to be great employees. Being a great leader requires a new toolkit.
As Marshall Goldsmith often says “What got you here, won’t get you there.”
In this article, we’ll discuss what will actually get you there. We’ll outline five ways to become a great leader —
whether it’s your first leadership role or your fiftieth.
1. Give Clear Expectations
The first way to become a great leader is to give clear expectations. In order to perform adequately (or higher), people need clarity. Teams need to know what’s expected of them, by when, and how they’re supposed to deliver it. And they need to know the priorities behind various tasks—what is most important, least important, and what’s in the middle. The challenge is that many leaders think that saying what they expect once is sufficient. And that might work in a static environment. But in a rapidly changing one, expectations and priorities can change quickly. So, leaders need to be clear about expectations and clear about when changes have happened and so expectations have also changed. And the same is true for priorities. It’s not enough for leaders to set expectations once, great leaders check-in constantly and revise their expectations accordingly.
2. Ask For Input
The second way to become a great leader is to ask for input. Often leaders can assume their primary job is solving problems and providing answers. They were promoted into a leadership role because of their outstanding knowledge and performance, and their team often comes to them with problems. So, their job must be to supply answers. Right? But great leaders don’t assume they have all the answers. Instead, they ask the team for input on nearly every decision of consequence. Great leaders know that doing so increases how much information will get captured and how many solutions will be generated. They also know that coming out of those requests for input will be team members who feel heard, and hence valued. And great leaders know that any suggestions they make can quickly be interpreted as orders—so they’re careful not to offer those suggestions until everyone has had a chance to be heard.
3. Share Your Reasoning
The third way to become a great leader is to share your reasoning. While great leaders seek out input from as many sources as possible, the final decision often rests on them. When that happens, great leaders know to share the reasoning behind their decision—not just the decision itself. Sharing the reasoning behind decisions is a way to reinforce the input that was considered before making the decision—which is especially helpful for those who may have desired a different decision. But sharing the reasoning also helps train the team on how their leader thinks—which is especially helpful when teams or team members bring their problems to the leader. Overtime, teaching team members to reason like their leader makes it more likely they’ll be able to solve the problem on their own next time. The more often leaders share their reasoning, the less often they’ll have to make a decision—because the team gets trained to reason the same way.
4. Stay Purpose Focused
The fourth way to become a great leader is to stay purpose focused. Great leaders keep the team focused on the mission, vision, and values of the organization but more importantly, how that specific team’s work helps serve that mission. It’s not enough for an organization to have a fancy vision or a compelling mission. Whether that mission actually motivates is determined at the team-level. That’s why great leaders know how to translate that larger mission into the day-to-day tasks of the team and bring meaning to the metrics the team is being assessed on. One of the most powerful ways leaders do this is by helping the team answer the question “Who is served by the work that we do?” and then build reminders to keep that answer top of mind. People want to do work that matters, and work for leaders who tell them they matter.
5. Care
The fifth way to become a great leader is to care. That’s the secret behind how great leaders tell their people they matter—those great leaders believe it. They genuinely care about the team they’re leading. They care enough to know about team members career desires and life goals, and they care enough to help each member fulfil those desires and goals in their work. Moreover, great leaders remind their people on a regular basis how much they care. The things leaders do to remind the team about its purpose are good, but the things they do to remind them they matter are great. And they can’t be faked. Great leaders genuinely care.
And even though it’s the fifth way, caring might be the most important one. You have to care for the people in your charge in order to put them first and serve them as a truly great leader. All the other ways will become easier if you start with caring. You’ll find you give clear expectation, ask for input, share your reasoning, and stay purpose focused. And over time you’ll find that caring, and employing all these methods, will help everyone on your team do their best work ever.
Raise the curtain on Innovation Theater yet again!
GUEST POST from Rita McGrath
We know that to create meaningful innovations that can move the needle for the companies that sponsor them, attention, resources and commitment needs to be sustained. But in too many organizations, innovation gets started, gets some traction and – just at the brink of discovering something useful – gets cut. Welcome to the world of innovation theater.
Layoffs are in the air
Predictably, firms that spent like drunken sailors during the low-interest-rate free-for-all that we’ve just been through are now reconsidering their spending as the economy looks a little soft, inflation has become a thing and investors are asking for — egads — a route to profitability!
We have seen this movie before, and it is one of the most devastating patterns that afflicts internal corporate venturing, or ICV. It’s worth bringing back some original research by Stanford’s Robert Burgelman and his colleagues to understand it.
The mystery of corporate innovation cycles
Years, ago, Robert Burgelman and co-author Liisa Vilikangas came to a perplexing conclusion. Despite all the talk about innovation, all the energy and money thrown at it and all the noise about accelerators, studios and labs, companies find it extraordinarily difficult to stick to an innovation program.
Indeed, as they observe in this article, “many major corporations experience a strange cyclicality in their ICV (Internal Corporate Venturing) activity. Periods of intense ICV activity are followed by periods when such programs are shut down, only to be followed by new ICV initiatives a few years later. Like seasons, internal corporate venturing programs begin and end in a seemingly endless cycle.”
They identify two influences on how an innovation process can come to grief. The first predictor is how healthy the existing core business is in terms of growth prospects. The second is how much a company has in terms of uncommitted resources – whether that’s cash or people. What you get when you juxtapose the two is a lovely 2×2:
Corporate venturing orphans: With plentiful resources, people get resources to start new ventures, only to find that the core business is quite happy to ignore them. So, things get going, develop for a while, then wither on the vine as the core business essentially refuses to welcome them into the corporate fold.
The entrepreneurs behind such ventures either give up in frustration, leave to find a firm with a more welcoming environment or even leave to found a startup that might well compete with the original firm. The interesting story of how Zoom became Zoom is a case in point.
All-out venturing drives: In this situation, there is money to invest, company leadership knows it has a problem, and venturing becomes the holy grail. This can be useful, as it tends to raise the profile of the venturing activity and it finally attracts attention, talent and a seat at the table.
The dilemma is that senior leadership teams in a hurry are apt to put too much time pressure and expectations for rapid growth on a still-uncertain activity. This can cause them to lose faith in its prospects and terminate it before it even has a chance. IBM and Maersk’s effort to create a blockchain platform, TradeLens, feels like that to me. That venture also ignored Bent Flyvbjerg’s excellent advice to avoid complexity to the extent possible.
Venturing seems irrelevant: Here, money and talent is already committed to other things, and the core businesses’ chances are looking pretty good. So why bother with an uncertain, unproven, hard to predict new business activity when you can just ride the existing gravy train, probably for as long as is relevant for the career of a given senior leader?
What happens in this situation is that investments in new capabilities are ignored, and eventually competition catches up or makes your existing operations irrelevant. For instance, Carlson Travel was riding pretty high for a while, and evidently under-invested in technology. Carlson Travel implicitly acknowledged as it struggled through a bankruptcy that it had under-invested in its core digital technologies and customer experiences and promised to spent $100 million on getting up to speed.
Desperately Seeking Corporate Venturing! Ok, so we’ve left investing in the future too late, money is now tight, and we need to deliver something to our customers and investors PRONTO! These situations rarely end well. A desperate senior executive team might well enter into ill-considered acquisitions or now, belatedly, fund the one or two ideas that have survived being neglected.
These are often terrible ideas. See: checkered history of mainline telecom or cable companies entering the content business. AT&T’s misadventures with its forays into the media business are a case in point. Verizon’s as well. Desperation seldom leads to cool-headed deal-making or venturing. A rare exception took place at Xerox Parc, where the invention of the laser printer saved the company after the government forced it to essentially give away its patents to other firms.
It doesn’t have to be this way!
In the next Thought Spark, I’ll describe what we think about all this at Valize, my sister company whose mission is to create predictable and reliable innovation and growth capabilities. In the meantime, please stop pouring money into innovation theater!
Or if you are really itching to start an innovation or transformation program, mail us at growth@valize to set up a time. We can get you off on the right foot. After all, there are no standing ovations for innovation theater.
When Mohandas Gandhi was a young lawyer he was so shy that he couldn’t even bring himself to speak in an open courtroom. He was also impulsive and had a nasty temper. Nelson Mandela started out as an angry nationalist, who argued vigorously about joining forces with other racial groups in a coalition to fight against Apartheid.
Yet as I explain in my book Cascades, both men learned to conquer themselves and evolved into inspirational leaders that achieved transformational change. Movements, as the name implies, must be kinetic to be successful. They need to start in one place and end up somewhere else, evolving and changing along the way.
The same is true for an organization. To create a real impact on the world, you first must drive change internally. That’s not easy and it doesn’t happen all at once, which is why most transformations fail. However, successful leaders understand that to bring true change about it is not enough to simply plan and direct action, you have to inspire and empower belief.
Building A Genome of Values
When Lou Gerstner took over as CEO of IBM in 1993, the company was near bankruptcy. Many thought it was a dinosaur and should be broken up. Yet Gerstner saw that its customers needed it to help them run their mission-critical systems and the death of IBM was the last thing they wanted. He knew that to save the company, he would have transform it and he started with its values.
“At IBM we had lost sight of our values,” Irving Wladawsky-Berger, one of Gerstner’s chief lieutenants, told me. “IBM had always valued competitiveness, but we had started to compete with each other internally rather than working together to beat the competition. Lou put a stop to that and even let go some senior executives who were known for infighting.”
Pushing top executives out the door is never easy. Most are hard working, ambitious and smart, which is how they got to be top executives in the first place. Yet sometimes you have to fire nasty people, even if they outwardly seem like good performers. That’s how you change the culture and build a collaborative workplace.
In doing so, Gerstner led one of the greatest turnarounds in corporate history. By the late 1990s, his company was thriving again and continues to be profitable to this day. That would have never been true if he saw the problem as one of merely strategy and tactics. IBM had to change from the inside first.
Forging Shared Purpose And Shared Consciousness
When General Stanley McChrystal first took over Special Forces in Iraq, he knew he had a magnificently engineered military machine. No force in the world could match their efficiency, expertise and effectiveness. Yet, although they were winning every battle, they were losing the war.
The problem, as he explained in his book, Team of Teams, wasn’t one of capability, but interoperability. His forces would kill or capture Al Qaeda operatives and collect valuable intelligence. Yet it often took weeks for the prisoners to be questioned and the data to be analyzed. By that time, the information was often no longer relevant or actionable.
What McChrystal realized was that if his forces were going to defeat a network, they had to become a network and he set out to build connections within his organization to improve trust and interoperability. He upgraded liaison officer positions to only include the best operators and embedded commandos into intelligence teams and vice versa.
While formal structure and traditional lines of authority stayed very much in place, operating principles changed markedly. The transformation wasn’t immediate, but soon personal relationships and shared purpose replaced archaic customs, procedures and internal rivalries. Even those resistant to change found themselves outnumbered and began to alter their views and behavior.
That allowed McChrystal to also change the way he led. While in traditional organizations information is passed up through the chain of command and decisions are made at the top, McChrystal saw that model could be flipped. Now, he helped information get to the right place and decisions could be made lower down. As a result, operating efficiency increased by a factor of seventeen and soon the terrorists were on the run.
Forging Cultural Awareness
As one of the largest credit bureaus in the world, Experian’s customers depend on it to help determine which customers are good risks and which aren’t. If its standards are too lax, lending organizations lose money from making bad loans. However, the opposite is also true. There are also consequences if it fails to identify good credit risks.
“One of the things that made the US so successful throughout its history is the principle that everybody can participate in the American dream,” Alexander Lintner, Group President at Experian told me. “Yet today, if you don’t have access to credit, it is very hard to live that dream. You can’t buy a house or a new car or do many other things most people want to do.”
“If we rely solely on traditional credit scores about 26 million working age adults are left out of the credit system,” he continued. “That means our clients are missing out on as many as 26 million potential customers. So at Experian, we’ve been working on extended scores based on alternative data, such as rent and utility bills, to help establish a credit history.”
As a fairly recent immigrant to the country, Lintner knows the problems that having a lack of a formal credit history can cause. He credits his company’s efforts to promote cultural awareness programs internally through Employee Resource Groups for driving a passion to solve problems for customers and the public at large, especially related to financial inclusion.
Transformation Starts At Home
Clearly, Experian didn’t start its Employee Resource Groups as a product development strategy, but to improve the lives of its employees. “We strive to make a very diverse group of people feel that Experian is their home,” Lintner says. Nevertheless, Its internal commitment helped create empathy for those who are excluded from the financial system and helped lead to a solution.
Chances are, that won’t end with using alternative data to improve credit scores, but will affect many other facets of its business. To drive a true desire to solve problems, it must be genuine. Much like Gandhi and Mandela, you have to first drive change internally if you hope to create a real impact on the world.
Wladawsky-Berger talks about IBM’s earlier transformation in similar terms. “Because the transformation was about values first and technology second, we were able to continue to embrace those values as the technology and marketplace continued to evolve,” he told me and credits that transformation in values with the company’s continued profitability. While IBM has had its challenges over the years, nobody talks about breaking it up anymore.
What most organizations fail to understand and internalize is that transformation is always a journey, never a destination. There is no immediate return on investment from cultural change. Investors won’t cheer you on for firing top employees who are disruptive or creating Employee Resource Groups. Yet great companies understand that transformation always starts at home.
— Article courtesy of the Digital Tonto blog and previously appeared on Inc.com
— Image credit: Pexels
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Why planning your innovation expedition helps avoid a lot of trouble on the journey…
Image: Dall-E via Bing
GUEST POST from John Bessant
When I was a child a big feature of the social landscape was the annual visit to my uncle’s house on Christmas Eve. My dad came from a big family and they’d gather at his brother’s place to celebrate; my kid brother would already be asleep but I would sit in the small room next to the place they were all gathered, drinking, talking, occasionally singing. It was warm there; a small electric fire in the grate and a blanket to wrap myself in if I felt the cold.
Which was just as well since I invariably spent the evening with my nose in a book. Not just any book; as soon as we arrived I’d make a beeline for the bookshelf and haul out John Hunt’s account of the ascent of Everest. And I’d spend the evening while the ice crawled up the windows outside the room I’d imagine hearing the wind howling against the flimsy side of my tent as we shivered over a primus stove, trying to warm ourselves and get some rest before tomorrow’s big day. The last painful yards towards the summit…..
I was fascinated by the scale of the thing; a huge expedition, involving over 400 people (362 of them porters helping carry the 5000-plus kilograms of equipment) and relying on the intimate knowledge of the mother mountain held by the 20 Sherpas in the team. Those Nepalese guides had grown up in the shadow of the peak and knew to fear and respect it. The months of planning in smoky rooms in London clubs, the assembly and trek towards the base camp and the allocation of roles to help lay the foundations for what would certainly not be a simple walk in the park.
The extended discussions around which paths to take, the weighing up of different challenges along the prospective routes. Obstacles reckoned into the equation and balanced with the specialist skills and equipment needed to tackle them. A whole new language of cols and crevasses, of pitons and crampons to be learned, a crash-course in high altitude physiology and technology to be mastered.
And that was all before they even took their first tentative steps up the slopes.
It was engrossing, exciting and scary; for an 8-year-old kid whose experience of mountaineering extended to scrambling over the South Downs during our annual trip to see Grandma this was heady stuff. And as the evening wore on and we approached the summit, so it became a race against time. For the climbers, whittled down to Hilary and Tenzing, struggling up the last stage, their oxygen and energy running low and storms looming.
And for me hearing the chatter from next door rise to the climax which portended the taking of farewells, the wrapping of my kid brother in a blanket to continue his pre-Santa sleep in the car and me being bundled into a coat. Would I get to the summit in time — or have to wait until next year to continue the journey, abandoning mine at the eleventh hour?
I took a couple of lessons from that book, the first being that I’m not cut out for mountain climbing. There have to be easier and still thrilling ways to get your kicks and ‘because it is there’ isn’t a good enough reason for me to devote my energies to that particular kind of madness.
But the other is a healthy respect for people who scale mountains successfully. It takes a lot of planning, great team work and an approach to uncertainty which is all about agility and pivoting, adapting and improvising your way upwards.
Pretty much the key ingredients for successful innovation — and certainly relevant to another kind of scaling journey, enabling great innovations to have impact.
Because taking an innovation from a small-sized success story to something which delivers value at scale is not an easy one. The Holy Grail of impact has a lot in common with that elusive quest pursued by King Arthur’s knights, taking them along strange paths, meeting with dragons and disasters and lasting a long time. Similar odds of success too.
Having spent a long time focused on the challenges facing start-ups the innovation spotlight is now moving to the question of scaling — and there’s a helpfully growing body of knowledge and codified experience around this theme. Including the important decision about which route to take for the journey to scale.
One thing about mountain climbing which I remember thinking about when reading my Everest book was how they chose which route to take. Faced with 29,000 feet of sheer white walls with the occasional dangerous looking black rock poking its jagged edge through the snow like a knife through a curtain, how do you decide which path to take? It’s not as if there are well-worn tracks and clear signposts which you can follow — all you have is a lot of very unfriendly and treacherous ground on which to try to make your way.
It’s the same with scaling your innovation. Choosing your preferred pathway to scale is a key first stage on the journey; fortunately — like today’s Everest climbers — there’s a wealth of experience available from previous attempts and some important lessons on which we can build.
In particular we need to see the choices available as lying on a spectrum where we trade off additional external involvement with giving up a degree of control.
It’s a strategic decision, trying to balance the resource commitments you’ll need to make with the amount of control you want to retain. And with deciding what parts of your innovation knowledge are core, what parts are modular and can be adapted and customized with others in mind and what parts are you prepared to let others engage with, ‘hacking’ their own version of your ideas. Scale stories give us valuable clues about possible options, which include not doing it!
Some innovations aren’t really about a scaling journey. They work for a particular problem in a particular context; what’s needed for impact over the long-term is sustainability, being able to continue to deliver over an extended period of time and becoming something which is used and relied upon.
But if you are going to aim for scale then your choices include:
· Parachute — develop the venture, then try to get acquired, a classic start-up exit strategy. Let someone with the experience and the resources buy your solution, let it go. Easy on paper but you give up all your control and can only watch from the side-lines as your venture develops, and hope it’s in safe hands…
· Go it alone — keep on adding staff and spreading your solution across different geographies, gradually paint the world (or your chosen part of it) in your colors. There are plenty of advantages to doing this — mostly you keep control and you can directly manage quality, message, brand, etc. But the downside is you’ll need a lot of people and resources and you’ll pretty soon reach the point where you need to rethink your structure. The old tight-knit start-up team has to give way to a structured organization, complete with policies, procedures and a slowing down of the decision-making process. Plus you’ll need to adapt your solution to different local conditions — compatibility. And cost management will be important, finding ways to grow without bloating.
In reality this organic growth kind of approach can’t be a solo act — there will be things you need to outsource like legal services, manufacturing, distribution or maintenance. And it can also take time to build your own networks.
· Replicate — maybe your solution idea is one you think will work simply by replicating, placing the same offer in different geographies with only minor tweaks to help it fit. If your solution is something which can be ‘packaged’ and exported — a plug’n’play option — then this can work. It can either be a ‘grow your own’ approach, repeating the pattern by putting down your footprints on an increasingly broad geography. That’s the kind of route followed by IKEA and many other retailers, embodying their innovation solution in something which can be replicated.
Or you can franchise, allow others to take on the task and replicate on your behalf, sharing the revenues and building on your original innovative efforts. That’s the route which McDonalds has followed, exporting its original innovative fast-food format to over 39,000 locations around the world. But as Ray Croc, their scale architect realized, there’s a critical need to make sure the rules are clearly codified and then control via the franchise agreement so your proxies don’t damage the brand, compromise quality or change the core product. It’s a kind of remote control based on a clear constitution….
· ‘Relay replication’ — another version which involves another organization adopting and using your solution. Like franchising it requires protocols, training, standardization of core elements and processes but it also allows the adopting unit to continue to adapt and innovate within agreed parameters. A classic model here might be the diffusion of chemical plants like oil refineries; the core technology is transferred and the user learns to operate. It needs more than simple delivery, not plug n play — it involves a shared extended handover process until the user can make ‘product in a bottle’ with its own staff operating the equipment.
The advantages here are that you learn every time as you coach different organizations in the use of your innovation, plus there’s the chance that their downstream learning feeds back to you and allows you to improve your innovation. But it takes time and resources to ensure a successful handover, with key knowledge being shared through training, manuals and protocols and a long-term commitment to support.
· Licensing is another variation on the replication theme where other players can take on and (depending on the terms of the license) do things ranging from simply selling the core package through to adapting and extending it to suit local conditions. The big advantage is that other players are putting their shoulder to the wheel, helping spread the innovation, plus there’s a direct financial return to the original innovator. But once again it does involve letting go of control.
· Open source/open licensing — much commercial innovation is about finding ways to appropriate the benefits. So there’s pressure to keep a tight rein on what’s shared and how. But if you want to spread something, especially a novel approach, you might want to open up more to accelerate diffusion and seek your returns from being a first mover, growing with the market. There’s plenty of examples — Philips wanted to change the way we consumed recorded music in 1993 when they launched the Compact Cassette and so licensed it for free to others like Sony and Matsushita. It makes sense — if you are trying to establish a new ‘dominant design’ and move the world away from the current incumbent then recruiting others via open licensing is a good road to take.
And in the world of social innovation this has particular relevance; innovators who want to change the world for the better face the same challenge and recruiting others to the cause offers one way of doing so.
There are several advantages to such an open approach, not least it recruits many innovators who may help improve on your ideas. Communities of practice and using the crowd have become powerful innovation engines through this approach of free sharing; Linux is a good example.
Image: Dall-E via BIng
Lego’s approach to the hackers who started to modify the original ‘Mindstorms’ product is interesting here; they were presented with a different option to the traditional lawsuit which they might have been expecting. They were invited to Denmark to add their innovative ideas to those of the core design team!
But the downside, of course, in such open approaches is the loss of control and the risk that the innovation may be hijacked or developed in directions which do not match those of the original authors or reflect their social values.
· Multi-player consortia may be needed when the range of complementary assets needed goes beyond a single partner. Sears and Roebuck pioneered the remote retailing model with their mail order catalogue approach but they needed to bring together many other players into the model to make it work — finance houses, logistics and distribution and a wide range of different suppliers. Boeing and Airbus do the same today, orchestrating extensive networks of players and partners to deliver their aerospace solutions at scale.
· Value network and ecosystems — today’s innovation language extends this multi-player game, recognizing that there is a need for multiple players to work together to create value at scale. The challenge is that not all of these players have the same goals or aspirations so balancing their needs with the overall ‘mission’ becomes a tricky balancing act. It’s also important to recognize that such ecosystems don’t just have shared value creators in the mix like our strategic partnerships; they may also involve other players who affect the journey to scale by shaping the ways in which the value creation game is played. Examples of such shapers include government regulators, trade unions and standards organizations.
Once again this has particular relevance for scaling social innovation where system change which delivers real impact may depend on finding ways to bring many diverse players, like government agencies or regional authorities onside. As an influential IDB report puts it, such collaborations require ‘…different actors to coalesce around a shared set of priorities and best practices’.
· Platforms — we’re also now seeing the rise of platform businesses which enable scaling through linking innovators and markets more effectively. The Taobao market approach pioneered in China mimics in many ways the ecosystems around Apple’s developer platform or much of the Amazon operation. For small start-up innovators such platforms become a powerful alternative route to scale, but at the cost not only of accessing the platform but also in letting go some degree of control.
For any innovator climbing Mount Scale remains a key challenge. Meandering around the foothills may be a pleasant way to pass the time but if you want your innovation to have real impact then that peak has got to be climbed. Which means putting together and planning your expedition with the kind of care and attention John Hunt brought to his Everest team. And my guess is that his reflections probably have relevance in the world of innovation. Working out the most appropriate route up those slopes is something best done in the comfort of base camp rather than halfway up the mountain with the wind howling and the snow lashing at your face as you realise that the other path might have been a better one to take….
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Drum roll please…
