Archive for the ‘Uncertainty’ Category
Working with uncertainty
Try – when you’re not sure what to do.
Listen – when you want to learn.
Build – when you want to put flesh on the bones of your idea.
Think – when you want to make progress.
Show a customer – when you want to know what your idea is really worth.
Put it down – when you want your subconscious to solve a problem.
Define – when you want to solve.
Satisfy needs – when you want to sell products
Persevere – when the status quo kicks you in the shins.
Exercise – when you want set the conditions for great work.
Wait – when you want to run out of time and money.
Fear failure – when you want to block yourself from new work.
Fear success – when you want to stop innovation in its tracks.
Self-worth – when you want to overcome fear.
Sleep – when you want to be on your game.
Chance collision – when you want something interesting to work on.
Write – when you want to know what you really think.
Make a hand sketch – when you want to communicate your idea.
Ask for help – when you want to succeed.
Image credit – Daniel Dionne
The WHY and HOW of Innovation
Innovation is difficult because it demands new work. But, at a more basic level, it’s difficult because it requires an admission that the way you’ve done things is no longer viable. And, without public admission the old way won’t carry the day, innovation cannot move forward. After the admission there’s no innovation, but it’s one step closer.
After a public admission things must change, a cultural shift must happen for innovation to take hold. And for that, new governance processes are put in place, new processes are created to set new directions and new mechanisms are established to make sure the new work gets done. Those high-level processes are good, but at a more basic level, the objectives of those process areto choose new projects, manage new projects and allocate resources differently. That’s all that’s needed to start innovation work.
But how to choose projects to move the company toward innovation? What are the decision criteria? What is the system to collect the data needed for the decisions? All these questions must be answered and the answers are unique to each company. But for every company, everything starts with a top line growth objective, which narrows to an approach based on an industry, geography or product line, which then further necks down to a new set of projects. Still no innovation, but there are new projects to work on.
The objective of the new projects is to deliver new usefulness to the customer, which requires new technologies, new products and, possibly, new business models. And with all this newness comes increased uncertainty, and that’s the rub. The new uncertainty requires a different approach to project management, where the main focus moves from execution of standard tasks to fast learning loops. Still no innovation, but there’s recognition the projects must be run differently.
Resources must be allocated to new projects. To free up resources for the innovation work, traditional projects must be stopped so their resources can flow to the innovation work. (Innovation work cannot wait to hire a new set of innovation resources.) Stopping existing projects, especially pet projects, is a major organizational stumbling block, but can be overcome with a good process. And once resources are allocated to new projects, to make sure the resources remain allocated, a separate budget is created for the innovation work. (There’s no other way.) Still no innovation, but there are people to do the innovation work.
The only thing left to do is the hardest part – to start the innovation work itself. And to start, I recommend the IBE (Innovation Burst Event). The IBE starts with a customer need that is translated into a set of design challenges which are solved by a cross-functional team. In a two-day IBE, several novel concepts are created, each with a one page plan that defines next steps. At the report-out at the end of the second day, the leaders responsible for allocating the commercialization resources review the concepts and plans and decide on next steps. After the first IBE, innovation has started.
There’s a lot of work to help the organization understand why innovation must be done. And there’s a lot of work to get the organization ready to do innovation. Old habits must be changed and old recipes must be abandoned. And once the battle for hearts and minds is won, there’s an equal amount of work to teach the organization how to do the new innovation work.
It’s important for the organization to understand why innovation is needed, but no customer value is delivered and no increased sales are booked until the organization delivers a commercialized solution.
Some companies start innovation work without doing the work to help the organization understand why innovation work is needed. And some companies do a great job of communicating the need for innovation and putting in place the governance processes, but fail to train the organization on how to do the innovation work.
Truth is, you’ve got to do both. If you spend time to convince the organization why innovation is important, why not get some return from your investment and teach them how to do the work? And if you train the organization how to do innovation work, why not develop the up-front why so everyone rallies behind the work?
Why isn’t enough and how isn’t enough. Don’t do one without the other.
Image credit — Sam Ryan
Innovation is about good judgement.
It’s not the tools. Innovation is not hampered by a lack of tools (See The Innovator’s Toolkit for 50 great ones.), it’s hampered because people don’t know how to start. And it’s hampered because people don’t know how to choose the right tool for the job. How to start? It depends. If you have a technology and no market there are a set of tools to learn if there’s a market. Which tool is best? It depends on the context and learning objective. If you have a market and no technology there’s a different set of tools. Which tool is best? You guessed it. It depends on the work. And the antidote for ‘it depends’ is good judgement.
It’s not the process. There are at least several hundred documented innovation processes. Which one is best? There isn’t a best one – there can be no best practice (or process) for work that hasn’t been done before. So how to choose among the good practices? It depends on the culture, depends on the resources, depends on company strengths. Really, it depends on good judgment exercised by the project leader and the people that do the work. Seasoned project leaders know the process is different every time because the context and work are different every time. And they do the work differently every time, even as standard work is thrust on them. With new work, good judgement eats standardization for lunch.
It’s not the organizational structure. Innovation is not limited by a lack of novel organizational structures. (For some of the best thinking, see Ralph Ohr’s writing.) For any and all organizational structures, innovation effectiveness is limited by people’s ability to ride the waves and swim against the organizational cross currents. In that way, innovation effectiveness is governed by their organizational good judgement.
Truth is, things have changed. Gone are the rigid, static processes. Gone are the fixed set of tools. Gone are the black-and-white, do-this-then-do-that prescriptive recipes. Going forward, static must become dynamic and rigid must become fluid. One-size-fits-all must evolve into adaptable. But, fortunately, gone are the illusions that the dominant player is too big to fail. And gone are the blinders that blocked us from taking the upstarts seriously.
This blog post was inspired by a recent blog post by Paul Hobcraft, a friend and grounded innovation professional. For a deeper perspective on the ever-increasing complexity and dynamic nature of innovation, his post is worth the read.
After I read Paul’s post, we talked about the import role judgement plays in innovation. Though good judgement is not usually called out as an important factor that governs innovation effectiveness, we think it’s vitally important. And, as the pressure increases to deliver tangible innovation results, its importance will increase.
Some open questions on judgement: How to help people use their judgement more effectively? How to help them use it sooner? How to judge if someone has the right level of good judgement?
Image credit – Michael Coghlan
Improving What Is and Creating What Isn’t
There are two domains – what is and what isn’t. We’re most comfortable in what is and we don’t know much about what isn’t. Neither domain is best and you can’t have one without the other. Sometimes it’s best to swim in what is and other times it’s better to splash around in what isn’t. Though we want them, there are no hard and fast rules when to swim and when to splash.
Improvement lives in the domain of what is. If you’re running a Six Sigma project, a lean project or a continuous improvement program you’re knee deep in what is. Measure, analyze, improve, and control what is. Walk out to the production floor, count the machines, people and defects, measure the cycle time and eliminate the wasteful activities. Define the current state and continually (and incrementally) improve what is. Clear, unambiguous, measurable, analytical, rational.
The close cousins creativity and innovation live in the domain of what isn’t. They don’t see what is, they only see gaps, gulfs and gullies. They are drawn to the black hole of what’s missing. They define things in terms of difference. They care about the negative, not the image. They live in the Bizarro world where strength is weakness and far less is better than less. Unclear, ambiguous, intuitive, irrational.
What is – productivity, utilization, standard work. What isn’t – imagination, unstructured time, daydreaming. Predictable – what is. Unknowable – what isn’t.
In the world of what is, it’s best to hire for experience. What worked last time will work this time. The knowledge of the past is all powerful. In the world of what isn’t, it’s best to hire young people that know more than you do. They know the latest technology you’ve never heard of and they know its limitations.
Improving what is pays the bills while creating what isn’t fumbles to find the future. But when what is runs out of gas, what isn’t rides to the rescue and refuels. Neither domain is better, and neither can survive without the other.
The magic question – what’s the best way to allocate resources between the domains? The unsatisfying answer – it depends. And the sextant to navigate the dependencies – good judgement.
Image credit – JD Hancock
Transcending Our Financial Accounting Systems
In business and in life, one of the biggest choices is what to do next. Sounds simple, but it’s not.
The decision has many facets and drives many questions, for example: Does it fit with core competence? Does it fit with the brand? How many will we sell? What will the market look like after it’s launched? Do we have what it takes to pull it off?
These questions then explode into a series of complex financial analyses like – return on investment, return on capital, return on net assets (and all its flavors) and all sorts of yet-to-be created return on this’s and that’s. This return business is all about the golden ratio – how much will we make relative to how much it costs. All the calculations, regardless of their name, are variations on this theme. And all suffer the same fundamental flaw – they are based on an artificial system of financial accounting.
To me, especially when working in new territory, we must transcend the self-made biases and limitations of GAAP and ask the bedrock question – Is it worth it?
In the house of cards of our financial accounting, worth equals dollars. Nothing more, nothing less. And this simplistic, formulaic characterization has devastating consequence. Worth is broader than profit, it’s nuanced, it’s philosophical, it’s about people, it’s about planet. Yet we let our accounting systems lead us around by the nose as if people don’t matter, like the planet doesn’t matter, like what we stand for doesn’t matter. Simply put, worth is not dollars.
The single-most troubling artifact of our accounting systems is its unnatural bias toward immediacy. How much will we make next year? How about next quarter? What will we spend next month? If we push out the expense by a month how much will we save? What will it do to this quarter’s stock price? It’s like the work has no validity unless the return on investment isn’t measured in days, weeks or months. It seems the only work that makes it through the financial analysis gauntlet is work that costs nothing and returns almost nothing. Under the thumb of financial accounting, projects are small in scope, smaller in resource demands and predictable in time. This is a recipe for minimalist improvement and incrementalism.
What about the people doing the work? Why aren’t we concerned they can’t pay their mortgages? Why do we think it’s okay to demand they work weekends? Why don’t we hold their insurance co-pays at reasonable levels? Why do we think it’s okay to slash our investment in their development? What about their self-worth? Just because we can’t measure it in a financial sense, don’t we think it’s a liability to foster disenchantment and disengagement? If we considered our people an asset in a financial accounting sense, wouldn’t we invest in them to protect their output? Why do we preventive maintenance on our machines but not our people?
When doing innovative work, our financial accounting systems fail us. These systems were designed in an era when it was best to increase the maturity of immature systems. But now that our systems are mature, and our objective is to obsolete them, our ancient financial accounting systems hinder more than help. The domains of reinvention and disruption are dominated by judgement, not rigid accounting rules. Innovation is the domain of incomplete data and uncertain outcomes and not the domain of debits and credits.
Profit is important, but profit is a result. Financial accounting doesn’t create profit, people create profit. And the currency of people are thoughts, feelings and judgement.
With innovation, it’s better to create the conditions so people believe in the project and are fully engaged in their work. With creativity, it’s better to have empowered people who will move mountains to do what must be done. With work that’s new, it’s better to trust people and empower them to use their best judgement.
Image credit – Jeremy Tarling
With innovation, it depends.
By definition, when the work is new there is uncertainty. And uncertainty can be stressful. But, instead of getting yourself all bound up, accept it. More than that, relish in it. Wear it as a badge of honor. Not everyone gets the chance to work on something new – only the best do. And, because you’ve been asked to do work with a strong tenor of uncertainty, someone thinks you’re the best.
But uncertainty is an unknown quantity, and our systems have been designed to reject it, not swim in it. When companies want to get serious they drive toward a culture of accountability and the new work gets the back seat. Accountability is mis-mapped to predictability, successful results and on time delivery. Accountability, as we’ve mapped it, is the mortal enemy of new work. When you’re working on a project with a strong element of uncertainty, the only certainty is the task you have in front of you. There’s no certainty on how the task will turn out, rather, there’s only the simple certainty of the task.
With work with low uncertainty there are three year plans, launch timelines and predictable sales figures. Task one is well-defined and there’s a linear flow of standard work right behind it – task two through twenty-two are dialed in. But when working with uncertainty, the task at hand is all there is. You don’t know the next task. When someone asks what’s next the only thing you can say is “it depends.” And that’s difficult in a culture of traditional accountability.
An “it depends” Gannt chart is an oxymoron, but with uncertainty step two is defined by step one. If A, then B. But if the wheels fall off, I’m not sure what we’ll do next. The only thing worse than an “it depends” Gantt chart is an “I’m not sure” Gannt chart. But with uncertainty, you can be sure you won’t be sure. With uncertainty, traditional project planning goes out the window, and “it depends” project planning is the only way.
With uncertainty, traditional project planning is replaced by a clear distillation of the problem that must be solved. Instead of a set of well-defined tasks, ask for a block diagram that defines the problem that must be solved. And when there’s clarity and agreement on the problem that must be solved, the supporting tasks can be well-defined. Step one – make a prototype like this and test it like that. Step two – it depends on how step one turns out. If it goes like this then we’ll do that. If it does that, we’ll do the other. And if it does neither, we’re not sure what we’ll do. You don’t have to like it, but that’s the way it is.
With uncertainty, the project plan isn’t the most important thing. What’s most important is relentless effort to define the system as it is. Here’s what the system is doing, here’s how we’d like it to behave and, based on our mechanism-based theory, here’s the prototype we’re going to build and here’s how we’re going to test it. What are we going to do next? It depends.
What’s next? It depends. What resources do you need? It depends. When will you be done? It depends.
Innovation is, by definition, work that is new. And, innovation, by definition, is uncertain. And that’s why with innovation, it depends. And that’s why innovation is difficult.
And that’s why you’ve got to choose wisely when you choose the people that do your innovation work.
Image credit – Sara Biljana Gaon (off)
Sometimes things need to get worse before they can get better.
All the scary words are grounded in change. Innovation, by definition, is about change. When something is innovative it’s novel, useful and successful. Novel is another word for different and different means change. That’s why innovation is scary. And that’s why radical innovation is scarier.
Continuous improvement, where everything old is buffed and polished into something new, is about change. When people have followed the same process for fifteen years and then it’s improved, people get scared. In their minds improved isn’t improved, improved is different. And different means change. Continuous improvement is especially scary because it makes processes more productive and frees up people to do other things, unless, of course, there are no other things to do. And when that happens their jobs go away. Every continuous improvement expert knows when the first person loses their job due to process improvement the program is dead in the saddle, yet it happens. And that’s scary on a number of fronts.
And then there’s disruption. While there’s disagreement on what it actually is, there is vicious agreement that after a disruption the campus will be unrecognizable. And unrecognizable things are unrecognizable because they are different from previous experience. And different means change. With mortal innovation there are some limits, but with disruption everything is fair game. With disruption everything can change, including the venerable, yet decrepit, business model. With self-disruption, the very thing responsible for success is made to go away by the people that that built it. And that’s scary. And when a company is disrupted from the outside it can die. And, thankfully, that’s scary.
But change isn’t scary. Thinking about change is scary.
There’s one condition where change is guaranteed – when the pain of the current situation is stronger than the fear of changing it. One source of pain could be from a realization the ship will run aground if a new course isn’t taken. When pain of the immanent shipwreck (caused by fear) overpowers the fear of uncharted waters, the captain readily pulls hard to starboard. And when the crew realizes it’s sink or swim, they swim.
Change doesn’t happen before it’s time. And before things get bad enough, it’s not time.
When the cruise ship is chugging along in fair seas, change won’t happen. Right before the fuel runs out and the generators quit, it’s all you can eat and margaritas for everyone. And right after, when the air conditioning kicks out and the ice cream melts, it’s bedlam. But bedlam is not the best way to go. No sense waiting until the fuel’s gone to make change. Maybe someone should keep an eye the fuel gauge and let the captain know when there’s only a quarter tank. That way there’s some time to point the ship toward the closest port.
There’s no reason to wait for a mutiny to turn the ship, but sometimes an almost mutiny is just the thing.
As a captain, it’s difficult to let things get worse so they can get better. But if there’s insufficient emotional energy to power change, things must get worse. The best captains run close to the reef and scrape the hull. The buffet tables shimmy, the smoked salmon fouls the deck and the liquor bottles rattle. And when done well, there’s a deep groan from the bowels of the ship that makes it clear this is no drill. And if there’s a loud call for all hands on deck and a cry for bilge pumps at the ready, all the better.
To pull hard in a new direction, sometimes the crew needs help to see things as they are, not as they were.
Image credit – Francis Bijl
The Cycle of Success
There’s a huge amount of energy required to help an organization do new work.
At every turn the antibodies of the organization reject new ideas. And it’s no surprise. The organization was created to do more of what it did last time. Once there’s success the organization forms structures to make sure it happens again. Resources migrate to the successful work and walls form around them to prevent doing yet-to-be-successful work. This all makes sense while the top line is growing faster than the artificially set growth goal. More resources applied to the successful leads to a steeper growth rate. Plenty of work and plenty of profit. No need for new ideas. Everyone’s happy.
When growth rate of the successful company slows below arbitrary goal, the organization is slow to recognize it and slower to acknowledge it and even slower to assign true root cause. Instead, the organization doubles down on what it knows. More resources are applied, efficiency improvements are put in place, and clearer metrics are put in place to improve accountability. Everyone works harder and works more hours and the growth rate increases a bit. Success. Except the success was too costly. Though total success increased (growth), success per dollar actually decreased. Still no need for new ideas. Everyone’s happy, but more tired.
And then growth turns to contraction. With no more resources move to the successful work, accountability measures increase to unreasonable levels and people work beyond their level of effectiveness. But this time growth doesn’t come. And because people are too focused on doing more of what used to work, new ideas are rejected. When a new idea is proposed, it goes something like this “We don’t need new ideas, we need growth. Now, get out of my way. I’m too busy for your heretical ideas.” There’s no growth and no tolerance for new ideas. No one is happy.
And then a new idea that had been flying under the radar generates a little growth. Not a lot, but enough to get noticed. And when the old antibodies recognize the new ideas and try to reject it, they cannot. It’s too late. The new idea has developed a protective layer of growth and has become a resistant strain. One new idea has been tolerated. Most are unhappy because there’s only one small pocket of growth and a few are happy because there’s one small pocket of growth.
It’s difficult to get the first new idea to become successful, but it’s worth the effort. Successful new ideas help each other and multiply. The first one breaks trail for the second one and the second one bolsters the third. And as these new ideas become more successful something special happens. Where they were resistant to the antibodies they become stronger than the antibodies and eat them.
Growth starts to grow and success builds on success. And the cycle begins again.
Image credit – johnmccombs
Channel your inner sea captain.
When it’s time for new work, the best and smartest get in a small room to figure out what to do. The process is pretty simple: define a new destination, and, to know when they journey is over, define what it looks like to live there. Define the idealized future state and define the work to get there. Turn on the GPS, enter the destination and follow the instructions of the computerized voice.
But with new work, the GPS analogy is less than helpful. Because the work is new, there’s no telling exactly where the destination is, or whether it exists at all. No one has sold a product like the one described in the idealized future state. At this stage, the product definition is wrong. So, set your course heading for South America though the destination may turn out to be Europe. No matter, it’s time to make progress, so get in the car and stomp the accelerator.
But with new work there is no map. It’s never been done before. Though unskillful, the first approach is to use the old map for the new territory. That’s like using map data from 1928 in your GPS. The computer voice will tell you to take a right, but that cart path no longer exists. The GPS calls out instructions that don’t match the street signs and highway numbers you see through the windshield. When the GPS disagrees with what you see with your eyeballs, the map is wrong. It’s time to toss the GPS and believe the territory.
With new work, it’s not the destination that’s important, the current location is most important. The old sea captains knew this. Site the stars, mark the time, and set a course heading. Sail for all your worth until the starts return and as soon as possible re-locate the ship, set a new heading and repeat. The course heading depends more on location than destination. If the ship is east of the West Indies, it’s best to sail west, and if the ship is to the north, it’s best to sail south. Same destination, different course heading.
When the work is new, through away the old maps and the GPS and channel your inner sea caption. Position yourself with the stars, site the landmarks with your telescope, feel the wind in your face and use your best judgement to set the course heading. And as soon as you can, repeat.
Image credit – Timo Gufler.
Organized For Uncertainty
There are many different organizational structures, each with its unique set of strengths and weaknesses. The top-down organization has its strong alignment and limited flexibility while the bottom-up has its empowering consensus and sloth-like pace. Which one’s better? Well, it depends.
The function-based organization has strong subject matter expertise and weak cross-function coordination, while the business unit-based organization knows its product, market and customers but has difficulty working east-west across product families and customer segments. Is one better than the other? Same answer- it depends.
The matrix organization has the best of both worlds – business unit and functional – and isn’t particularly good at either. And there’s the ambidextrous organization that I don’t pretend to understand. If I had to choose one, which would I choose? It depends.
The best organizational structure depends on what you’re trying to do, depends on the environmental context, depends on the organization’s history and biases and the general state of organizational capability, capacity and profitability. But that’s not the whole picture because none of this is static. All of this changes over time and it changes in an unpredictable way. Because the best organizational structure depends on all these complicating factors and the factors change over time, there is never a “best” organizational structure.
Constant change has always been the dominant fundamental perturbing and disturbing our organizational structures. But, as competition turns up the wick and the pace of learning builds geometrically, change’s ability to influence our organizational structures has grown from disturbing to dismantling.
Change is the dominant fundamental, but its real power comes from the uncertainty it brings to the party. Our tired, old organizational structures were designed to survive in a long-dead era of glacial change and rationed uncertainty. And though our organizational structures were built in granite, the elevated sea levels of uncertainty are creating fissures in our inflexible organizational structures and profitability is leaking from all levels
If uncertainty is the disease, adaptability is the antidote. The organization must continually monitor its environment for changes. And when it senses an emerging shift, the organization it must move resources in a way that satisfies the new reality. The organization structure shifts to fit the work. The structure changes as the character of the projects change. The organizational structure never reaches equilibrium; it survives through continual evolutionary loop of sense-change-sense.
I don’t have a name for an organization like this, and I think it’s best not to name it. Instead, I think it’s best to describe how it behaves. It’s a living organization that behaves like a living organism. It wants to survive, so it changes itself based on changes in its environment. It’s an organization that self organizes.
Directionally, organizational structures should be less static and more dynamic, and they should evolve to fit the work. The difficult part is how to define the explicit rules on how it should change, when it should change and how it decides. But it’s more than difficult to describe explicit rules, it’s impossible. In domains of high levels of uncertainty there can be no predictability and without predictability a finite set of explicit rules will not work. The DNA of this living organization is implicit knowledge, evolutionary experimentation and personal judgement.
I’m not sure what to call this type of organizational structure, and I’m not exactly sure how to create one. But it sure sounds like a lot of fun.
Image credit — actor212
You don’t find the next new thing, it finds you.
Doing something new is harder than it looks.
The first step to doing new is to realize you have no interest in doing what was done last time. Profitable or not, the same old recipe just doesn’t do it for you. You don’t have to know why you don’t want to replay the tape, you just have to know you don’t want to. So don’t.
But it’s not enough to know what you don’t want to do, you’ve got to know what you do want to do. To figure that out, you’ve got to stop doing. The focused, churning mind isn’t your friend here because it thinks of ideas that are too closely related to what it knows. This is the job for the idle mind. The idle mind has nothing to focus on, so it doesn’t. It runs in the background imagining the impossible and considering the absurd. And since it runs without your knowledge, you can’t get in its way. So do nothing. Turn off your electronics and sit. Feel uncomfortable. Give your mind no place to go so it can go where it wants. Read a biography about an important historical figure. Travel to their century so while you’re visiting your subconscious can figure out what to do.
You don’t figure out what’s next. What’s next finds you while you’re not looking for it. And the best way to do that is to do nothing.
Doing nothing is a lot of work. And it’s difficult to do. My advice – start with 15 minutes of nothing. Anything more is too much. Take your mobile phone out of your pocket, put it on your desk (or throw it at the floor and stomp on it) and walk to a quiet place and sit. Close your eyes, sit and watch. You’ll see your monkey mind search for the next big thing and not find it. Then you’ll see it think about something that scares you and you’ll get scared. Then you’ll see it think about an old argument and you’ll jump back into it and relive it. Then, after a while, you’ll realize you’re not watching, you’re reliving. Then you’ll see your mind try again in vain to find the next thing to do. And after 15 minutes of this nonsense, you’re done with your first session of nothing.
Repeat this process over 5 days and a good idea will find you. You may be sleeping, showering, eating or reading, but no worries, it will find you. Something will click and you’ll put together two things that aren’t meant to be together but, once together, make a lot of sense – like a strange Ben and Jerry’s flavor you taste for the first time and eat the whole pint.
The new idea isn’t the new thing itself, it’s the first step toward finding the next thing to do. But, you’ve started wandering down a crazy new path that’s no longer crazy, and you’re on your way.
Resume your daily 15 minute sessions of nothing and, in between, mix in some small experiments to test, refine or invalidate your next new thing. Repeat, as needed.
And don’t stop until what you’re looking for finds you.
Image credit – Figure Focus.