Tag: Innovation

Can a large organisation be responsive?

Posted on by simongterry in Uncategorized

Steve Blank, a lean start-up expert has elegantly described the differences between start-ups and traditional large organisations.  

“the 21st century definition of a startup: A startup is a temporary organization designed to search for a repeatable and scalable business model…
The corollary for a large company is: A company is a permanent organization designed to execute a repeatable and scalable business model.”

These definitions are useful and highly accurate. Most large organisations have chosen to focus on efficiency in execution of a business model as the rationale behind their efforts.

However, it is important to note that a corollary may follow but does not always preclude other logical alternatives. Breaking apart Blank’s structure there are a number of different elements in play:

  • the duration of the organisation: temporary vs permanent
  • the process of the organisation: search vs execution of a repeatable and scalable business model
  • an implicit difference between effectiveness of a search and efficiency of execution

Importantly there are other options that could be chosen for these spots in Blank’s definition:

  • Rather than looking at duration we could look at the ability of the organisation to change – adaptability with a scale from the highly adaptable startup to the fixed processes and systems of efficiency oriented large scale organisations.
  • Rather than focusing on process efficiency we could focus on effectiveness of process at achieving purpose – no scalable business models is permanently enduring; they must be subject to eternal change to be more effective and to better achieve the outcomes for which people came together.

From this we can see that there is at least one more logical model to chose. Let’s define a responsive organisation thus:

“a responsive organisation: is an adaptive organisation designed to search for more effective ways to execute a repeatable and scalable business model.” 

Blank is right that you can’t behave like a start-up if you are trying to be efficient in execution and startups should not be judged by efficiency of execution. However there are more than two models for an organisation to choose. Large organisations can be responsive but they need to choose to adapt and be more effective.

Metrics Change

Posted on by simongterry in Uncategorized

“You can’t bank a percentage” – entrepreneurial wisdom

Disruptive businesses change the metrics that measure success by focusing on more effective outcomes.  How are you rethinking the measures in your business?

Your Metrics Weren’t Always Thus

Metrics are one area where we can easily form views that they ‘have to be this way’.  Metrics are often driven by prior year plans, industry standard comparisons or by the expectations of analysts and investors. It is taken as gospel for businesses and industries to have standard growth rate, cost to income and other metrics. 

If you want to get a sense for the changing dynamic of metrics read back in the history of business to completely different eras. Here we can see innovation in metrics changes the fundamental understanding of business activity.

If you read the biographies of early industrialists and railroad barons in the US you will find a very different perception of shareholder value and company performance.  Shares in the late 19th century in the United States traded like subordinated bonds. The questions of valuation were how large was the dividend the company might pay and how close the shares traded to par. Innovations like consistent approaches to value accounting practices and models of cashflow valuation were introduced to sustain the modern approaches to valuations.

Metrics Illuminate and Create Blindspots

Metrics are how businesses see. As they say, if you want something done, measure it. However, the light that measures cast also creates shadows and blindspots. What doesn’t get measured, doesn’t get done.

A fixed view of metrics makes them a fertile ground for entrepreneur change.  The traditional competitors will struggle to see and understand the performance of new businesses because they will be trapped judging the new threat by old metrics. 

There are many examples of innovations that change the metrics.  Here’s a small sample:

  • Craig McCaw built up and sold huge businesses in both cable television and mobile telephony by having a more effective view of valuation to that prevalent in each industry when he started
  • Online display advertising was sold by effectiveness (cost per click) rather than (cost per thousand). New measures that made it hard for traditional media to see a way to respond to the changes
  • Many industries are dealing with competition that does not value the unit of content or service, but instead values the community of users that is created by giving away the content or service.
  • The taxi industries around the world are faced with moving from the value of a licence and a cost per km to the utilisation of and returns to a driver as a measure of effectiveness
  • Changing the unit of measurement of delivery effectiveness to time enabled courier services to change the game in parcel delivery

Traditional businesses with their measures of success will often miss these changes initially or see them as unsustainable. If you are assuming the irrationality of your competitors, look again at their metrics. Ultimately, new valuation models and new investor expectations develop around the new metrics provided that they prove more effective.

The worst outcome for the future of your business is that you are happily delivering your plan as the value erodes away.

Don’t accept as gospel the returns, growth rates and margins that you have inherited in your business. You can’t bank a percentage. Focus instead on exploring with new metrics to measure the effectiveness of your business in creating sustainable value.

No Island. Connected.

Posted on by simongterry in Uncategorized

No man is an island,
Entire of itself,
Every man is a piece of the continent,
A part of the main.
If a clod be washed away by the sea,
Europe is the less.
As well as if a promontory were.
As well as if a manor of thy friend’s
Or of thine own were:
Any man’s death diminishes me,
Because I am involved in mankind,
And therefore never send to know for whom the bell tolls; 
It tolls for thee. 

John Donne
Recently, discussing corporate culture and disruption, I was asked how is it that organisations cling to old views in the face of disruptive change.  How do people whose businesses are threatened still deny the need for fundamental change.  Many of these organisations cling to the past even when their performance has already begun to change for the worse.
As we talked familiar patterns of conversations in these organisations came to mind:
  • fad spotters who declare the inconvenient trend will is temporary or suits only marginal customers or competitors
  • past successes who can’t move beyond what worked before
  • boiled frogs that never don’t jump out until too late
  • safety first who fear loss and demand certainty, less risk, better proof or ROI
  • ostriches who see only what is convenient and celebrate variation as reversals of the trend
  • the wiser who know better than their colleagues, customers and competitors
  • premium providers who forget premium means more valuable and more relevant
  • technicians who see the great unravelling of the trend ahead because of a better technical solution or a flaw in the new technology
  • underlying performers who adjust away the difficulties to show sunshine underneath
  • tried & failed who know that their organisation’s failures define the limits of all future success…

I could go on this way.

One thing is common in all of these patterns: the individuals in the organisation have ceased to take inputs from their external environment. The organisation has become an echo chamber for business as usual views and any inconsistent information is discounted. 

The problem is easily rectified: engage people in the accountabilities of the real world –

  • start listening to customers and the community
  • start engaging with people beyond your own industry
  • start reading things you have not read before and 
  • start talking with people you don’t usually meet

No organisation can survive as an island.  An organisation that opens up to even the smallest amount of genuine engagement with its community discovers new insights.  This immersion and engagement will also drive to embrace new accountabilities for change.

Nobody can be an island.  We all need to be engaged in our communities.  Listening and engaging in the world outside the organisation is the surest first step to avoid the toll of disruption’s bell. 

Getting credit

Posted on by simongterry in Change, Collaboration

It is amazing what you can accomplish when you don’t care who gets the credit – Harry S Truman

Yesterday I discussed the vexed issue of ownership of collaboration. Credit for the successes of collaboration is one other reason people are so keen to own it and also why ownership belongs with the users.

Credit is also a vexed issue for innovation. As Harry Truman notes, giving credit away is often the only way to get something done. Far too many change agents are frustrated that their good ideas are quickly taken for implementation, often without credit or further involvement. Sadly, the great ideas don’t get implemented easily.

Three other challenges come for organisations that run on the concept of credit:

  • Credit debates are rarely factual. Credit is usually a part of a performance management process that is not connected to facts. Debates about credit suggests people are much more concerned with appearances of performance.
  • Credit gets in the way of collaboration. Credit tends to assume there is one creator of every outcome. Collaborative outcomes, like design thinking processes, don’t fit the system
  • Credit is distinct from accountability which is much more important. I would rather know who is taking accountability for delivering something than who would like to plans to claim it.

How can an innovator or change agents deal with issues of credit?

  1. Don’t Play the Game:  There is nothing to gain and a lot to lose playing along, keeping ideas secret and trying to hog or claim credit.
  2. Work Aloud: working aloud enables others to understand what you have been involved in and reduces the risk others misjudge your involvement later.  Working aloud engages stakeholders progressively. Working aloud reinforces accountabilities, because it enables others to know who to follow up.
  3. Move on & Work with Collaborators: The advantage of being oriented to innovation is you know you have more ideas and opportunities ahead of you. Many of those clamouring to gain credit know that they don’t have the luxury. Often they will learn their lesson when they need help on the next round.
  4. Give Credit Where it is Due: Innovation processes can be convoluted with lots of participants inputs, reuse of ideas and evolution to a successful implementation. Recognition at the end is hard.  Make sure you recognise others along the way. You will discover building a fact based culture of recognition will flow back in appropriate recognition of your role.
  5. Take Accountability for the Innovation System: Individual ideas matter less in an organisation. What matters more is to have a functioning system of innovation, a consistent process that delivers a cadence of innovations into the market. Innovators and change agents should be build a system that lets everyone in on innovation

Manage an ecosystem or it will manage you

Posted on by simongterry in Uncategorized

Traditional management focuses on an atomised view of the relationships in a business. Relationships with employees, customers, suppliers, competitors, partners and the community are treated as mutually exclusive, individual & discrete transactions. We put all our relationships into a simple hierarchical structure.  

This convenient fiction is a classic example of organisational stupidity. Linear hierarchical choices are easier for us to use through than complex networks of relationships. Networks get messy quickly. We chose these simplistic view to make organisations easier to manage.  

In this simple model, relationships beyond the bounds of the organisation and its interactions are rarely considered, except under the categories of risks. In our disruptive networked world, every organisation exists in an ecosystem of complex networked relationships. We all need to adjust to making decisions in that ecosystem. If we keep managing to fictions, the ecosystem will take our influence and decision rights away.

So where’s the networked ecosystem?

No organisation is an island.  If you have one employee and one customer you have already begun to build a complex network in their relationships.  

We are increasingly experiencing the dynamic of a networked ecosystem as a result of following principles:

  • All the agents are connected: customers, suppliers, employees and the community are all much more able to connect, share information and collaborate. Importantly, they will connect share and collaborate whether your organisation exists or not.
  • Any agent can play multiple roles: An employee can easily be a customer, a supplier, an influential member of the community and even potentially a competitor simultaneously. The same could be said for any other agent in your ecosystem. Traditional linear thinking struggles to manage this. Just look how many organisations attempt to stifle their employees’ ability to connect with each other or play a role as customer or community advocates.
  • The pace of innovation brings down barriers: Traditional barriers like control of information, power or resources that kept agents isolated are coming down with the accelerating pace of innovation. It is far easier to shift between roles than ever before or to get access to information or connections that you need. If your organisation depends on barriers for its success, there is a great chance someone is working now to circumvent them.  
  • The tools of disruption help us see the system:  increases in networking technologies, data analytical tools and communication technologies increasingly help all participants see and manage the system

A social and natural ecosystem too

When we start to look beyond our traditional linear categories of relationships we can see a wider ecosystem around our organisations. This broader view of relationships helps us see the ecosystem in a fuller light:

  • We can see that our connections and our organisations contribute to social goals
  • We start to see the positive and negative environmental & social impacts of our organisation and its relationships
  • We see new ways to contribute
  • We can look to the relationships that occur beyond our traditional thinking and wonder what contribution our organisation can make or how we might leverage these relationships to add new value

Start Leveraging the ecosystem

With a new more complex view of the ecosystem around your business start asking new questions:

  • How does the wider view refine your organisation’s purpose?
  • What should you do more, better or differently?
  • How do you go faster if you leverage others?
  • What changes in the wider system benefit or harm you? What can you do with other players to have more of the good or less of the harm?
  • How do customers, suppliers, employees and others help you grow your business?
  • Where are the sources of value, the conversations, connections and opportunities in the system that you have been missing?

If you don’t ask these questions, somebody in the ecosystem else will.  There’s a good chance you won’t like their answers.

Ask new questions

Posted on by simongterry in Uncategorized

Asking the old questions will give us the old answers. New thinking comes from considering new questions. Disruptive times ask us to challenge ourselves with new questions. If we don’t, the changes ahead will ask even more of us.

At a recent Startup Australia organised by Powerhouse HQ, Kate Bennett Eriksson of PWC made the powerful point that organisations trying to create a more innovative culture need to learn to ask new questions in their decision making. Referencing Victor Frankl, Kate noted that between stimulus and response is time for thought. Changing decisions with new questions that alter our thought process generates a different outcome.

New questions are a powerful technique of change. When I want to learn a new way of thinking or consider new issues I develop a mental checklist of new questions to help me think differently in decisions. The provocation of a new set of questions changes the process and outcomes of thinking.

New questions to consider

I believe we need to lead change in the way we work and organise ourselves to survive digital disruption. This belief led me to the panel session on Startup and Corporate collaboration at which Kate spoke. It also has driven my engagement with organisations like The Responsive Organisation Manifesto, Disrupt.Sydney and Change Agents Worldwide in search of new ways of thinking and techniques for responding to the challenges of disruption. I have come away from those conversations with many new questions to ask.

Here are some of the new questions that I have learned to ask:

All confronting questions and only a beginning of the new thinking ahead.

Questions for you:

What new questions do you need to add from your decisions? What old questions are getting in the way? How can new questions drive new thinking and new results in your world?

What are you waiting for?

Assembly Line of Knowledge Revisited: More Human & More Social

Posted on by simongterry in Uncategorized

The future is here.

We are at a time of innovation in the future of work. We have choices as to the criteria by which we judge success. Let’s make the future of work more human and more social.

Some time ago, I suggested that we were approaching innovation in the way we work with knowledge (‘knowledge work’) that was of equivalent significance to the introduction of the innovation of the assembly line for industrial work. Roger Martin in HBR recently described changes at Proctor and Gamble that begin to treat knowledge work as a ‘decision factory’: focusing on project management of knowledge workers and leveraging algorithms to guide decisions.  To paraphrase William Gibson, the future of knowledge work is here, it is just not widely distributed yet.

Many knowledge workers recoil when you suggest the future of their work may resemble that of industrial work, even by analogy. Often they dispute that the work can be the subject of these kinds of innovation. However, we know dedicated entrepreneurs will find a way and that this disruptive innovation has begun already.  

At the heart of many of these objections is a concern that a focus on innovation will shift the focus of knowledge work from effectiveness into a focus on efficiency. In that change, people perceive real risks to the financial and social rewards of knowledge work, to the skills that will be demanded in future and the potential for change to wider society.  Many knowledge workers have benefited from traditional characteristics of human motivation, like autonomy, mastery and purpose. Losing those roles solely for efficiency may well be a great loss.

Assembly lines – more human and more social

Curiously enough, when Henry Ford introduced the assembly line innovations to his plants the changes were not solely about manufacturing process. Henry Ford realised that for the assembly line process to succeed he needed wider social change.  At the same time as Ford introduced the assembly line, he introduced a suite of social changes that were an attempt to build more complex social system around his organisation. There are arguments today as to what Ford’s purpose was in these changes, whether they were truly implemented or effective and the extent to which they may have just been clever marketing. Still, Ford introduced to its workers:

  • a $5 day a day wage that was a huge lift in income potential for workers and shared a small part of the profits of the new processes
  • a sociological department that explicitly sought to assess employee fitness across a range of social characteristics including family, thrift & home life and address social ills, like gambling and drinking.
  • a newspaper, education & language classes, medical treatment, parks and playgrounds and even a band
  • new workspaces that were models of light and open space at the time
  • a vision of buying the product that they made as Ford disrupted the luxury car market by making cheaper cars at scale

Today, we struggle to understand the Victorian values of these social changes. We would not want Ford’s near feudal power over his team. Also, we can lack context and understanding of the diverse nature of industrial workplaces before the birth of the modern factory system. However, Ford was seeking to make social changes an explicit part of the system of changes in his production system. Those changes were as radical then as many of the working models proposed by start-ups and other innovative companies are today. Ford’s wider social innovations, whether successful or not, suggested that he understood and saw the need to engage with the wider social role of work.  

Work plays a larger social role than a source of income and a source of profit.  Work sustains communities and families. Work provides personal satisfaction, gives rewards for our time and underpins our complex webs of relationships.  Lack of satisfying work correlates with all kinds of social ills. Each of these effects flows back to the workplace and influences outcomes.

The future of knowledge work – more human and more social

Knowledge work is going to get more efficient. Even today there is still too much drudgery that can be innovated, automated or analysed away. Some organisations will focus solely on the efficiency opportunity of innovation in knowledge work. They will reduce their knowledge worker populations and streamline processes to realise profit.  

These same organisations will likely find that they will struggle to recruit and retain talented people. Designing and maintaining their new systems will require even more expensive knowledge workers.  The lack of engagement and innovation in their businesses will require expensive external consultants. More importantly, the broader society outside of the organisation will continue to question the relentless focus on efficiency and profit, query the negative externalities on society and demand a social dividend. Solving this issue transactionally will mean even more expensive marketing and corporate social responsibility activity.

We get to choose the success criteria for our innovations in the future of knowledge work. Profit does not have to be the sole motive.  

We have the opportunity to ask of our innovators in work that they design for social changes and consider the broader social aspects of work. We can ask that work is more social.  We can ask that it take account of criteria like sustainability, natural value, social value and ability to deliver benefits for a wider community of stakeholders. We can ask that work is more human and that better delivers autonomy, mastery and purpose for all workers. My experience is that innovations improve when we take this broader systemic frame and when we are more demanding in our measures of success.  Great innovations involve constraints and stretch.  We will only deliver significant social benefits from this innovation if we leverage design thinking and adaptive innovation to deliver changes in work.

An assembly line or decision factory for knowledge work does not have to be a race to the bottom. Employees in workplaces across the globe will get to shape and debate the changes being made inside and outside their organisations. As community members, they are a part of a public debate on the standards that organisations should meet.  We all can leave organisations that do not respond well and entrepreneurs will start organisations to leverage the best innovations and new opportunities to realise value.  

Potentially, it could be the birth of a new golden age of human and social growth.  

We get to choose.  

PS: Obviously, innovation and consideration of a broader social frame is something that will benefit industrial work too.  However, because industrial organisations are much more competitive and more directly impacted by social pressures around environment, many leading industrial employers have already begun to look into new models that leverage wider social value and engage and empowering their employees to add new value.  Toyota’s work on waste and the Toyota Management System are examples.

Notes:  my limited understanding of Henry Ford comes largely from Steven Watt’s ‘The People’s Tycoon’, wikipedia and The Henry Ford Museum.

Assembly Line of Knowledge Revisited: More Human & More Social

Posted on by simongterry in Uncategorized

The future is here.

We are at a time of innovation in the future of work. We have choices as to the criteria by which we judge success. Let’s make the future of work more human and more social.

Some time ago, I suggested that we were approaching innovation in the way we work with knowledge (‘knowledge work’) that was of equivalent significance to the introduction of the innovation of the assembly line for industrial work. Roger Martin in HBR recently described changes at Proctor and Gamble that begin to treat knowledge work as a ‘decision factory’: focusing on project management of knowledge workers and leveraging algorithms to guide decisions.  To paraphrase William Gibson, the future of knowledge work is here, it is just not widely distributed yet.

Many knowledge workers recoil when you suggest the future of their work may resemble that of industrial work, even by analogy. Often they dispute that the work can be the subject of these kinds of innovation. However, we know dedicated entrepreneurs will find a way and that this disruptive innovation has begun already.  

At the heart of many of these objections is a concern that a focus on innovation will shift the focus of knowledge work from effectiveness into a focus on efficiency. In that change, people perceive real risks to the financial and social rewards of knowledge work, to the skills that will be demanded in future and the potential for change to wider society.  Many knowledge workers have benefited from traditional characteristics of human motivation, like autonomy, mastery and purpose. Losing those roles solely for efficiency may well be a great loss.

Assembly lines – more human and more social

Curiously enough, when Henry Ford introduced the assembly line innovations to his plants the changes were not solely about manufacturing process. Henry Ford realised that for the assembly line process to succeed he needed wider social change.  At the same time as Ford introduced the assembly line, he introduced a suite of social changes that were an attempt to build more complex social system around his organisation. There are arguments today as to what Ford’s purpose was in these changes, whether they were truly implemented or effective and the extent to which they may have just been clever marketing. Still, Ford introduced to its workers:

  • a $5 day a day wage that was a huge lift in income potential for workers and shared a small part of the profits of the new processes
  • a sociological department that explicitly sought to assess employee fitness across a range of social characteristics including family, thrift & home life and address social ills, like gambling and drinking.
  • a newspaper, education & language classes, medical treatment, parks and playgrounds and even a band
  • new workspaces that were models of light and open space at the time
  • a vision of buying the product that they made as Ford disrupted the luxury car market by making cheaper cars at scale

Today, we struggle to understand the Victorian values of these social changes. We would not want Ford’s near feudal power over his team. Also, we can lack context and understanding of the diverse nature of industrial workplaces before the birth of the modern factory system. However, Ford was seeking to make social changes an explicit part of the system of changes in his production system. Those changes were as radical then as many of the working models proposed by start-ups and other innovative companies are today. Ford’s wider social innovations, whether successful or not, suggested that he understood and saw the need to engage with the wider social role of work.  

Work plays a larger social role than a source of income and a source of profit.  Work sustains communities and families. Work provides personal satisfaction, gives rewards for our time and underpins our complex webs of relationships.  Lack of satisfying work correlates with all kinds of social ills. Each of these effects flows back to the workplace and influences outcomes.

The future of knowledge work – more human and more social

Knowledge work is going to get more efficient. Even today there is still too much drudgery that can be innovated, automated or analysed away. Some organisations will focus solely on the efficiency opportunity of innovation in knowledge work. They will reduce their knowledge worker populations and streamline processes to realise profit.  

These same organisations will likely find that they will struggle to recruit and retain talented people. Designing and maintaining their new systems will require even more expensive knowledge workers.  The lack of engagement and innovation in their businesses will require expensive external consultants. More importantly, the broader society outside of the organisation will continue to question the relentless focus on efficiency and profit, query the negative externalities on society and demand a social dividend. Solving this issue transactionally will mean even more expensive marketing and corporate social responsibility activity.

We get to choose the success criteria for our innovations in the future of knowledge work. Profit does not have to be the sole motive.  

We have the opportunity to ask of our innovators in work that they design for social changes and consider the broader social aspects of work. We can ask that work is more social.  We can ask that it take account of criteria like sustainability, natural value, social value and ability to deliver benefits for a wider community of stakeholders. We can ask that work is more human and that better delivers autonomy, mastery and purpose for all workers. My experience is that innovations improve when we take this broader systemic frame and when we are more demanding in our measures of success.  Great innovations involve constraints and stretch.  We will only deliver significant social benefits from this innovation if we leverage design thinking and adaptive innovation to deliver changes in work.

An assembly line or decision factory for knowledge work does not have to be a race to the bottom. Employees in workplaces across the globe will get to shape and debate the changes being made inside and outside their organisations. As community members, they are a part of a public debate on the standards that organisations should meet.  We all can leave organisations that do not respond well and entrepreneurs will start organisations to leverage the best innovations and new opportunities to realise value.  

Potentially, it could be the birth of a new golden age of human and social growth.  

We get to choose.  

PS: Obviously, innovation and consideration of a broader social frame is something that will benefit industrial work too.  However, because industrial organisations are much more competitive and more directly impacted by social pressures around environment, many leading industrial employers have already begun to look into new models that leverage wider social value and engage and empowering their employees to add new value.  Toyota’s work on waste and the Toyota Management System are examples.

Notes:  my limited understanding of Henry Ford comes largely from Steven Watt’s ‘The People’s Tycoon’, wikipedia and The Henry Ford Museum.