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Why organisations are not innovative, even when they want to be

These days, innovation is like the holy grail which all organisations aspire to. Or at least what they claim to aspire to.

Yet innovation has mostly proven elusive.

Why? I think there are 2 major problems.

The first, I suspect, is that contrary to what they claim, most organisations do not really want to be innovative. They just want the occasional innovative solution. We only need to examine how most organisations will respond if their staff magically came up with a sudden glut of successfully tested innovative solutions. What happens? Well, organisation leaders would be pretty uncomfortable, wouldn’t they? There’s now a lot of pressure - should all the new innovative solutions be implemented? Isn’t that a lot of change? If not, which to shelve, and what impact would shelving workable innovative solutions have on future innovation? A lot of very difficult decisions, ironically, almost feels worse than the status quo.

Instead, what is far more preferable is the occasional innovative solution which makes easy implementation. A small number of innovations is very comfortable. No hard decisions required. Yet enough to be used as shiny references in all company presentations, which would surely convince everyone how innovative the company is.

Innovative organisation? Please, no. Occasional innovation? That’s the perceived sweet spot.

The second is, to me, much more interesting. It’s the inability to understand, accept, and shape human behaviour, especially in an organisational setting.

Consider organisations who subscribe to the popular “strategy” of making it safe for people to “start small and fail fast”. Suppose an employee were to follow this strategy, just as the organisation encourages them to.

What happens when they actually fail?

He/she is almost certainly worse off. Even if there is no explicit blame for failure, the best case scenario is a small sharing of lessons learnt. Or more probably, people are eager to bury the failure and quickly move on to the next project. When it comes to appraisals, assessment is based on successful work done. No individual is going to be rewarded for being brave and not succeeding. So why take the risk?

In this environment, how can there possibly be innovation? The organisation gives the initial mandate, but reveals itself to be nothing more than lip service because it is completely unprepared to deal with the inevitable failures. When organisations think about innovation, they haven’t really thought about what they want. They haven’t really thought about what innovation would look like and what it would cost them. Most of all, It places all the risks and costs on the individual. And then the organisation wonders why there is a gap between what they think innovative employees should do, and what employees will actually do. (Cue more leadership speeches, training, consultants, and innovation weeks, none of which will work.)

An understanding of human inclination is crucial. In almost every organisation, there is consistency in how people behave:

  • People are constantly worried about being judged and compared to others. They are also quick to figure out what gets rewarded and what doesn’t. A lot of what gets rewarded isn’t outcomes per se (except perhaps in sales), but perception.

  • This is because there are so many people and so many decision points in an organisation. It’s impossible to understand everything.

  • So the form of the proposal is critical. If the idea is defensible based on some widely accepted heuristics like “precedence”, “benchmarks”, “what are other people doing”, “do you have some graphs somewhere because that makes it a lot more convincing”, it’s a good proposal and far more likely to pass through (which also means rewards).

  • If the idea is completely new, it has to overcome much more resistance, it’s much easier to challenge and bring down (which means no rewards and probable judgement).

  • The defensibility of the idea is almost more important than the outcome. If a traditional idea fails, well it’s defensible. We went through due process, it didn’t work, sometimes things don't work. An innovative idea? Not only is it much less likely to pass through, if it fails, the natural thought is, “well, it was never going to work was it?”

Consequently, what emerges are paths of least resistance. These are paths which are widely accepted to tick one or more boxes of acceptable heuristics. Choosing these paths makes it less likely that one would face opposition or criticism. In times of failure, it is much easier to defend. It is likely to carry a good perception, which promises a reward.

Naturally, employees lean towards paths of least resistance. But these paths are also the ones that hinder innovation.

One organisation that had really thought through what innovation entails, and how to achieve it, is Google X. Astro Teller, the director of Google X, shares terrific insight in the appended video:

While Google X's objectives are likely different from most other organisations, the clarity and consistency of their thinking on innovation is worth examining.

What did they do?

1) They created tremendous clarity around how and what to think about innovation:

Google X lengthened the time horizon. Instead of innovating just for today, they saw innovation as learning what problems would occur in the future and how their business can solve these problems so they remain relevant and competitive. Without this longer term view, innovation is not likely because it is not very useful; innovation necessarily requires time with testing and failure, which is not attractive for the shorter term.

Since innovation is about the longer-term, the value it brings comes through learning.

Hence, the process of innovation centers around learning:

a) They want as many innovative ideas as possible to float up. This is standard across all organisations, but they developed a way to encourage this. Stay tuned.

b) They want to learn, as quickly as they can, why these ideas won’t work. If the idea can be confirmed not to work, they learn why, and can then move resources to the next potential project. If there is no way to prove the idea doesn’t work, then great, you might have something.

In other words, Google X acknowledges and fully prepares for the cost of innovation. When properly done, A is what ensures a supply of innovative ideas. B, on the other hand, is the sharpness in thought behind how innovation should be processed. Google X wants to be innovative. Innovation is about learning. And a large part of this learning is finding out what doesn't work. This question is a lot sharper than it first appears. When (ok, really “if”) you read through the rest of this piece, challenge yourself to think of a better question to ask that enables learning without killing the motivation to innovate. This segues nicely to our next point:

2) How do they get people to actively provide innovative ideas?

  • Every team has to present an audacious goal in front of the office. Since it is audacious, the chance of success is expectedly small. Most teams would fail, but the failing process needs to be centered around learning. Again, stay tuned.

  • Teams decide if and when they should end their pursuit of this audacious goal. If they end the pursuit, they then explain why they had to give up and what they had learnt.

  • Once they end their project, they get rewarded. Again, central dogma: innovation is about learning. When you end your project, you have advanced learning for the company. So you are rewarded. Initially in Google X, this meant a trophy, cash bonuses, and the chance to take some time off if they wished before getting onto the next project. Later, they found out that the reward need not be monetary; in fact, the best reward for employees is recognition that they get from others in the organisation that they have indeed pursued innovation, and they are attractive members when people form future teams. This recognition is the most valuable currency.

This might already make you uncomfortable. Isn’t it weird that you reward people for ending their work with no success, rather than those who are still working on their ideas?

But think about what these measures are really all about. It makes the pursuit of innovation a norm. In innovation, it is normal to fail. And you have to accept this cost, because it provides the company with learning.

In other words, Google X made innovation the path of least resistance. If this was not the case, employees would consistently simply not choose to provide and pursue innovative ideas.

3) They created a scaffolding around this path of least resistance.

Google X is very serious about the idea that innovation is about learning. This is why the question is farmed - how do we quickly figure out if this is a bad idea?

So instead of waiting for outcomes, they implemented their own customised version of pre-mortems. They try to pick out possible learning moments before failure even happens. How does this work?

Teller provides an explanation:

“For any project, if you asked employees to provide a list of the top 10 things the team needs to do, it would invariably be catered to what the team thinks will be most well-received by the boss. For example, profits, matches company priorities, etc.

Now ask for a reordering. Ask the team to make a top 10 list, what would enable them to learn the most at number 1 and all the way down. Almost always, the second list is completely different from the first. And as the boss, I ask the team to just do the first 2 things on this learning list.

Again, think about it from the employee standpoint. With the first list, they can go to the boss and update that we knew A and B and C were important, and we did it. It’s your typical milestones. But if they came up with the second list, what would happen in a normal status quo, where they report to the boss, we learnt from point 2 that this project is not going to work, we need to move on to the next one. The perception is that they would be judged terribly, which is why they won't do it.”

Unless, of course, that’s what the boss asks for. As Teller explains, It’s about being deliberate in tackling the path of least resistance, making the second list what is most important to the boss.

This top 10 learning list isn’t just about perception. By challenging the team to tackle what are the most important things to learn about the project, it forces the team to tackle the most difficult problems behind innovation. You don’t want the team to spend months addressing smaller issues around a project, only to find out that it fundamentally doesn’t work. You don’t want teams to think about how great customer experience will be with a new system only to find out that the new system they are trying to create is simply not possible or way too inefficient to create.

This ties back to the question: how do you learn in the quickest time if this project should be ended?

If the team doesn't learn the most important things first, it doesn't fulfil this objective.

In summary, Google X is able to constantly generate innovation not because they found the most creative and innovative people. Instead, they were very clear about what innovation should be about, and the necessary costs involved with innovation. It was not just about wishing for innovation while placing the costs and risk of innovating solely on the employees.

They understood human nature and created an environment where innovation became the path of least resistance. Finally, to ensure that this path of least resistance has robustness, they built scaffolding around it to ensure that it was able to produce what they set out for.

If innovation is what a company desires, then what is required is clarity of thought, details, and putting resources where their mouth is. Otherwise, it’s just slogans.

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