The state of innovation at the end of 2018

Since everyone is compelled to write at least one backward looking story at the end of the year, I've chosen as my topic a review of innovation at the end of 2018.  This review isn't meant to be an attempt to grade innovation activities or suggest better or worse approaches, but to think about innovation holistically and consider the implications and ramifications of where we are, and where we who would like to think of ourselves as innovators will be moving in the future.

Let's look way back to establish a baseline.  All the way back to 1997.

1997 - a dividing line

I often speak at corporate events, universities and conferences, and one of my favorite parlor tricks is to ask people why 1997 is so significant in the annual of innovation.  To me, 1997 is so important we could create a BCE and ACE nomenclature around that year.  We could think of the days prior to 1997 as "before modern corporate innovation" and afterwards as during or after modern corporate innovation.  Why 1997?

Two significant occurrences happened in 1997:  Jobs returned to Apple and set it on a course that made it the company all innovators want to emulate, and Clayton Christensen published The Innovator's Dilemma.  A lot that we do today is built on the recognition and the shifts that occurred based on these two facts.

Jobs took a once interesting company that was nearly bankrupt and made it the model of innovation, especially business model innovation with a lot of design influence.Christensen, from his perch at Harvard basically introduced innovation as a management philosophy.   Change didn't happen overnight, but it did catch fire relatively quickly after 1997.

Prior to 1997

Before everyone gets up in arms about my selection of a crucial date in innovation history, I'll acknowledge there were other important innovation dates, start from Eurypides and his discovery of displacement (the infamous bath incident) and continuing on through a range of inventors (Edison springs to mind) and people who attempted to structure innovation (Osbourne and Parnes) as well as other inventors of innovation methods (Altshuller as an example).  But while all of these have influence on what we do as innovators today, none have the current impact on management thinking in the way that Jobs' Apple products (and margins) do.  It's pretty common to hear that someone wants their next product to be the "iPhone" of their industry.  When your product becomes the avatar for success in several industries, you've had an impact.

Christensen and Jobs also reinforced the idea that large companies can and should innovate.  Many earlier writers, inventors or consultants were individuals or very small teams, either by necessity or government dictate or other reason.  Christensen's work seems to make innovation safe for large corporations and to create a pseudo-scientific approach that provides some comfort to executives who were formed in the days of operational efficiency.

2018

The state of innovation in any year is less influenced by the calendar, post 1997, and more influenced by the state of the market, the profitability and competitive factors a company faces, its culture and its management team. Taking these in reverse order:

• Management teams - in 2018 in a large corporation most executive management is in their early 60s.  They've been successful and achieved a very senior role, starting their careers in the late 1970s or early 1980s.  Most have an MBA from an established graduate program, and because of the date of their matriculation into the work world, and their experience in graduate school, have little education about innovation and few if any have led innovation projects.  These folks for the most part were steeped in management traditions of efficiency, meeting quarterly objectives, gradually increasing sales volumes, reducing errors and inefficiency.  As senior leaders looking to retire in a few years, their primary goals are to stay the course, build a legacy and to avoid any costly mistakes.  All of this means that innovation will be a low priority for these individuals until or unless the company has a dramatic challenge - rapidly declining sales, a powerful or compelling new entrant, an exceptionally fast changing technology base or exceptionally fickle and rapidly evolving customers.  Of course many of these executives are facing these issues but were schooled in times prior to the Internet and NAFTA when change was slower and more predictable.  
• Profitability - most companies that have good access to the financial markets have been living large over the past few years due to exceptionally low interest rates used to prime the economic pump.  Cheap money and a strangely stagnant wage base have meant that companies are relatively profitable even in the face of growing competition.  The Trump administration's work on tariffs will create government sponsored winners and losers, accelerating profits for some industries and placing a pall over others.  As long as profits are relatively high, the demand for innovation is typically low.  We can see change on the horizon, however, if trade wars increase and the Fed and other financial markets signal the end of cheap money.  As Buffet likes to say, we'll see who has been swimming naked when the tide goes out.  In this context that means we'll see who has invested those profits from the good years in innovations that should be reaching market now, as competition rises and cheap money ends.
• The market - the market, both the stock market, which signals consumer expectations about the future, and the economy in general, feel exceptionally strange.  It seems we are coming off a sugar high in the US, fueled by low taxes and cheap money, yet many of the signals of the financial crisis are emerging again - high student debt, increasing personal debt, borrowing at every level in the economy, including at the federal level.  This is money that will need to be paid back, and when the money comes due consumers will be forced to cut back.  As consumer spending is 70% of our economy, the economy will likely slow down, and demand for new products and services is likely to slow.  Then, when funds are scarce, only really interesting or differentiated products will command a premium.  As consumers pull back to pay down debt, the federal government will only be able to do so much in a divided Congress.  Thus, companies that have been innovating in 2016-2018 will benefit, and those that haven't likely won't have the funds to do so, and will miss a market window.  History has demonstrated that a significant amount of innovation happens during a market tightening and as the market starts to rebound.  Since the average recession in the US is approximately 11 months, we could see companies that have innovative products start to recognize these benefits in about a year or so. The companies that have been practicing innovation theater, talking about innovation without doing anything, won't be able to release anything meaningful in this timeframe.

You'll notice that I haven't written anything yet about innovation tools, methods, approaches or best practices.  That's because of the wide distribution of capabilities and experiences across companies and industries.  Some of the companies that know innovation best seem to have neglected innovation recently (looking at you Apple), while there are hundreds of larger corporations that haven't really implemented the basics of innovation in their organizations at all.  Since the level of sophistication is so low, many companies are still at the nascent stages of operationalizing an innovation function.  Yes many companies have an innovation success story but it is from one division or team, not a corporate capability.  This means that while there are proven innovation tools and methods, few companies even 20 years after Jobs returned to Apple and Christensen wrote The Innovator's Dilemma are really deeply invested and broadly capable of sustained corporate innovation.

Not a bleak assessment

This isn't a bleak assessment.  It takes time for these kinds of changes to occur.  US corporations didn't get serious about quality until the Japanese car manufacturers starting winning based on quality, but that data was out there for close to 20 years before GM, Ford and Chrysler changed and before the Malcolm Baldridge award was created.  It took close to 40 years (1960 - 2000) for the hyper-efficient, low risk, short term economic model that the vast majority of companies follow to become fully ingrained. It will take 20-30 years for it to be unwound to an extent and for these organizations to relearn and for younger leaders more schooled in innovation, agility and change to take the reins.

When these factors happen we'll see more innovation, because the other factors that influence innovation - the accessibility of information, the ability to create products and services, access to venture capital or financial backing, access about customers and their needs - are only increasing and rapidly available on a global scale.  When AirBnB can scale from a few guys in an apartment in Brooklyn to the same valuation as several hotel chains in about a decade, anyone can quickly scale a company if they have the right idea.

Alert to the press: prototypes aren't finished products

I rise today to do something I find strange.  I'm actually going to defend Elon Musk.  Musk is receiving a significant amount of negative press after his unveiling of the Boring Company's (if you need to throw stones, do so at that name) pilot tunnel.

To the shock and dismay of many people, the prototype is only a mile long and uses Tesla cars rather than the futuristic car depicted in mockups.  People who were invited to take part in the drive felt the ride was a bit rough and the cars didn't travel as fast as promised.  These are the same people who will complain about wrinkled table cloths at a five star restaurant - completely missing the artistry in the food.

For heaven's sake, Musk just unveiled a prototype tunnel under Los Angeles, built in the last year or so at his own expense.  Could we stop for a moment and recognize the work involved to get planning approval and simply to build a mile long tunnel in a crowded metropolitan area like Los Angeles? 

Further, could we acknowledge for a second that it is a prototype, a very rough proof of concept - not meant to be a complete and final solution?  The problem with many consumers of new innovations is that they take a solution at face value and don't appreciate the potential for further refinements.  Who today using an Apple iPhone X would go back to the initial iPhone?  Over time Apple has improved and added features and benefits as it learned.  So to will Musk if he decides to move ahead with his plans.

But perhaps the biggest wow factor that the pundits miss is the cost.  Musk is interested in taking cost out of the digging of the tunnel and claims to have built the mile long tunnel for about $10M.  In contrast, the last time Los Angeles expanded its subway system it paid about $1B per mile for its tunnel.  Clearly we aren't comparing apples to apples - the subway tunnel was larger and more complex, but we can see that Musk may be able to take the cost of digging a tunnel down significantly.  Why isn't this - the most difficult and complex part of the whole project - the focus of the article, rather than how smooth the ride is?

I can't say I'm surprised. Almost any prototype and many 1.0 versions of products are very simple and basic, and consumers fail to understand how rapidly they can be improved as companies come up the learning curve.  We consumers often look at something like this prototype tunnel or a first version of a project and think that the solution in front of us is as good as it will get, while visionaries recognize how fast they will be able to improve the solution. 

In this context, the best response I can come up with to support Musk is:  pearls before swine.  Musk is showing the immense potential of a technology, and the pundits miss the incredible outcomes delivered to date to complain about how smooth the ride is, in a tunnel 30 feet under the surface of Los Angeles.  Probably the only privately funded tunnelbuilt in California outside of drug smugglers.  And yet we are still talking about how smooth the ride is in a prototype tunnel?

Prototypes aren't finished products and shouldn't be evaluated that way.  This isn't just a punditry failure; businesses do the same things to some of their best ideas.  They judge them too quickly and too harshly on metrics that only a completed product should be expected to meet.  I guess I expected a bit more wonder and amazement about the technology and the progress Musk has made.

Let's wait to judge the solution when it is a completed solution, and not apply rigid evaluation criteria suitable for a final product on a rough prototype.  Businesses can learn from this example.

The Six Million Dollar innovation fallacy

A few days ago I wrote a blog post about the relevance of the Six Million Dollar man to innovation, noting that the show was based around rebuilding Steve Austin, making him better, stronger and faster.  Many corporate innovation organizations need the Six Million Dollar man treatment.  Every firm needs to be innovating more effectively, faster, with better outcomes and increasingly with more partners.

Today I'd like to talk about the other side of the Six Million Dollar man innovation.  As a kid I was entranced by the fact that a regular guy could have his arm replaced with a bionic arm that allowed him to lift exceptionally heavy objects, until an older friend of mine pointed out that the arm might be able to lift heavy objects, but it was attached to a flesh and blood human, who was still subject to the weaknesses and frailties of being human.  This has a lot to say about corporations becoming more innovative - you can't simply bolt on an innovative process to a conservative "body" and expect the two to work together seamlessly.

Setting the context

If the first two paragraphs have you wondering, let's recap.  The Six Million Dollar man was a TV show in the 1970s about an astronaut who suffers a horrific accident, and parts of his body - an arm, two legs and an eye - are made "bionic".  The replacement limbs he receives are more powerful and more capable than the flesh and blood variety.  Steve Austin, the character in the show, goes on to do important work for the US government because he is an augmented human and capable of doing important work that a normal human might not be able to do.

There are some big gaps in the physics of the show, however.  A human simply cannot lift an exceptionally heavy weight just because their arm is bionic.  For many of the feats Austin undertakes, in reality the arm would separate from the body.  They never really dealt with these issues on the show, but in real life we have this challenge - can you bolt on a really powerful limb to a less powerful organism and expect them to work effectively?

How this relates to innovation

The big question then, from an innovation point of view, is can you bolt on a really interesting, powerful innovation capability to an organization that remains complacent and conservative, focused on efficiency and meeting the next quarter's numbers?  Does this powerful innovation capability, like Steve Austin's arm, attempt to do things that the corporate body simply isn't capable of doing or even understanding?  And when the innovation capability takes on more interesting and risky propositions than the rest of the company can bear, what happens?

Depending on the linkages between the innovation capacity and the rest of the organization, a couple of outcomes are possible:

• If the innovation capacity is loosely linked to the rest of the organization, the risky ideas are likely to be considered as wildly outside the scope of reality, and ignored or rejected.  No fatal dismemberment takes place but the innovation capacity faces a slow atrophy as its ideas are ignored.
• If the innovation capacity is tightly integrated to the rest of the organization, and the organization isn't attuned or aligned to new innovation activities and outcomes, chaos or disruption will ensue.  As the innovation team creates really disruptive ideas that the conservative operational team is called on to implement, the operational processes and people will either seek to simplify the idea, to fit into their traditional ways of thinking or working, or will try to force radically different ideas into a process not meant for them.

What this ultimately means

What this analysis suggests is that unlike Steve Austin, who is part human and part bionic, organizations need to be fully innovative or fully conservative.  Trying to be a "bit" innovative as a business is a lot like Steve's arm:  as long as the bionic arm is acting like a regular flesh and blood arm, doing the things that a normal arm would do, there's no problem.  Once the bionic arm tries to do things it is capable of, but the body isn't capable of, dramatic failures will increase.

Thus, it is risky to attempt to bolt on a powerful innovation process to an unwilling, conservative and efficiency-oriented business.  You'll need to encourage the business to become more innovative - more "bionic" if you'd like to think that way, or train the innovation capacity to work at the level, rate and risk tolerance of the rest of the organization - and what's the point in that?

This analysis leads to another insight:  you can either accelerate and improve your internal innovation capabilities across the organization, in all groups, functions or geographies, or you might want to consider simply acquiring horizon 2 and 3 innovations. Increasing innovation in large corporations may become less about building or bolting on powerful competencies and more about incubating great ideas in small companies and acquiring exciting new ideas as tested products and services.

Can you acquire innovation?

There are opportunities and risks involved even in new idea acquisition, however.  Compelling new ideas and products may have different business models or reach customers through different channels than your existing products do, forcing your team to broaden its reach substantially or make choices between new, exciting but disruptive products or the tried and true products that align to existing capabilities. 

In the end you are left with the conclusion that whether you plan to create your own disruptive ideas through a bionic capability or you plan to acquire new products and services, you must rethink your internal organization, operating models and culture.  Just as Steve Austin and his bionic capabilities required people to think differently about augmented humans, real innovators, whether they build or buy compelling new ideas, must rethink their strategies, operations and capabilities.

Six million dollar innovation

Since I write about innovation regularly, I often receive questions about "the future" of innovation.  Who really knows anything about the future of innovation, when many of us don't fully comprehend all of the tools and activities for innovation that are available to us now.

My standard response is in the title of the post.  In the future, we'll do innovation work much more quickly than we do today, we'll be smarter about our approach and increasingly we'll never do it alone.  But it's especially appropriate given the return of the Six Million Dollar man that we can talk about making things:

• Better
• Faster
• Stronger

The return of the Six Million Dollar Man

For those of you who came of age in the 1970s, few television shows had more impact on your imagination than the Six Million Dollar man.  After all, that was a time when astronauts still had glamour, when the concept of a half-human, half-cyborg was fantasy and the Terminator was well off in the future.  For those not raised on the Six Million Dollar man, he has returned as an action figure in Christmas oriented Honda commercials.  Which says something about Honda and its marketing targets, but I digress.

Steve Austin, the Six Million Dollar man, was in a horrific test flight accident, and government scientists rebuilt him with bionic legs and a bionic arm and eye, which made him far more powerful than other normal humans.  Even the amount - Six Million Dollars - seemed astronomical at the time.  However, in Steve's story - rebuilding a broken human, making him better, faster and stronger - is a story that is powerful for today's business executives and their challenge to improve innovation.

Today, we need to make our innovation efforts, our entire businesses, more effective at innovation (better), more facile and speedier at innovation (faster) and more daring in their attempts.  We will also have to teach these organizations that they can't go it alone.

Faster

We'll do innovation faster than we do today because 1) we'll know more about innovation and how it works 2) we'll have more information about needs and emerging technologies and capabilities but 3) most importantly customer demands and emerging competitors will be coming for your customers and markets faster than ever.  I don't think any company will have a choice.  As markets, technologies and competitors accelerate, as customers increase their demands, you'll be faced with either speed up the innovation process and generate more new products and services at greater speed or you will be the dinosaur.  This isn't hyperbole.  This is a fact.  Slow and steady may have won the old races but that model won't win in the future.

Better/Smarter

As Artificial Intelligence, machine learning, big data, predictive analytics, IoT and a host of other technologies emerge, we'll capitalize on the data that is generated and managed by increasing our insights and beginning to spot trends as they emerge.  Even if our innovation processes don't improve - which one hopes they will - the preponderance of the data will help make decisions less risky, and thus make the innovation process more intelligent.

In addition, a newer cohort of employees who are less wedded to old corporate models and decision making and more attuned to technology adoption and social media, and the concept of an MVP, will be more likely to engage innovation at a more strategic level.

With partners

Every company, every innovation process is currently surrounded by an ecosystem of partners, customers, channels, competitors, funders and other institutions that are potential partners who can provide ideas, technologies, market access or insight, funding and other important ingredients to the success of a new product or service.  The days of going it alone are ending rapidly as organizations of all shapes and sizes are discovering that the ecosystem can help them get to market faster, with less risk.  Today, when you do innovation on your own you are a hero.  In the future, trying to do innovation on your own, ignoring the potential partners in your ecosystem will seem unthinkable.

Even Six Million Dollars rings a bell

So, we need to be better, faster, smarter and work with partners if we are to succeed in the future.  Steve Austin and the Six Million Dollar man were more prescient than people could know.  Even the figure, a huge figure by 1970s standards, now seems rather small to most corporations.  But I'm willing to bet that most firms don't spend even six million dollars a year on innovation  (taking the R&D budget out of the equation).  What would it look like if we rebuilt our innovation capacity and funded innovation at even a modest $6 million dollars?  Would we, too, have a bionic innovation capability?  Or like Austin Powers, raised after decades of sleep, would we demand $1 million dollars not realizing just how small a demand that is?

The "whole product" is more relevant than ever

You simply must tip your hat to Geoffrey Moore and others who created the concept of the "whole product".  I've written about this concept several times, and I raise it again because the underlying ideas are about to become really important in innovation circles.  If you haven't read Crossing the Chasm or aren't quite familiar with what a "whole product" is, then it may make sense to go and read up.  When you are done, come back and let's continue the conversation about why whole products are about to become a lot more interesting.

Whole product (1.0)

When Moore and others conceived of the original "whole product", they were making a point about the differences between technology (which many inventors, entrepreneurs and early adopters find interesting) and "whole products" - adding features, capabilities, instruction manuals, user hot-lines and other features and services around a core technology to make the eventual solution more useful and valuable for people who aren't early adopters.  It turns out that most of the market prefers well-conceived and fully developed solutions rather than core technologies.  If that sounds surprising to you, you are probably a tech enthusiast or an entrepreneur in an emerging technology, and about to get a rude awakening when your technology doesn't sell as you expect it to.

Moore's point was that the vast majority of customers wanted more than the technology, they wanted additional capabilities that expand beyond the core generic product to an "expected" product and onward to a "whole product".  When the technology is finally wrapped in the additional features, services, offerings and data that make up a "whole product" then the vast majority of the market is willing to acquire.

Moore went on to say that features that were in the expected, whole or ideal product always migrate into the core product.  For example, seat belts.  Years ago seat belts were a feature, then become standard equipment, then became almost an afterthought as more and more safety devices were added.  Today, cars are designed with a vast array of safety devices that were almost unimaginable to manufacturers even 20-30 years ago.  Safety has become a component of the core product.

Whole Product (2.0)

The reason that whole product is becoming even more interesting is that the notion of product is expanding and many companies will soon be shifting to innovation "beyond the product".  The very nature of product offerings is changing rapidly, as Uber and other asset-less companies demonstrate.  As Software as a Service and other "as a service" models demonstrate, increasingly there isn't a "product" per se, but a number of services wrapped up as a product offering.  Thus, service innovation, business model innovation, channel innovation are becoming more important, and the definition of a "whole product" - what the vast majority of customers want to acquire - is rapidly expanding.  In fact the whole nomenclature may be wrong - it may be that we should be calling this the "whole solution" to move away from "product" nomenclature.  Somewhere in the offering there may be tangible products, but increasingly the services, business models, data, platforms and even ecosystems will be what draw customers to a solution.

Impacts on Innovation

This is, and will, have a huge impact on innovation.  First, product innovation is almost passe.  That's not to say we won't continue to innovate products - we will - but increasingly many innovations will happen "beyond the product" or to augment the tangible product. In fact I suspect much of the value of the innovation in the future will be in the augmented services, channels and business models.

Second, while many corporations and consultants are relatively good at incremental product innovation, there's far less experience around innovation outside of tangible products.  If you thought disruptive innovation around a tangible product was challenging, wait until you try to imagine the services, experiences and business models that must be provided to attract customers in the future. 

Third, the expansion of innovation beyond the product means that innovation change will be more dramatic, more sweeping.  Companies will need greater cross-functional participation in innovation because so many different components of their capabilities will be required, from channels to distribution to marketing to product management, and even finance.  This doesn't necessarily make innovation more difficult, just demands more strategic direction and more collaboration.

Fourth, this means that future innovation activity will need to be much more customer-centered, less technology centered and much more integrative.  As innovators we need to think about the second and third level needs and expectations of customers, well beyond the core product.  This will lead to thinking about how and where the product is acquired, used, supported, connected to the Internet or other data exchange systems, how the acquisition or use is funded and many other concepts that are either ignored or outsourced to third parties today.

What's your new "whole product" definition?  What do your customers need in order to acquire the newer intangible services you'll offer?  Do you have the skills to conceive, design and implement around the innovation beyond the product requirements?

Getting the right question is half the battle

I return once again to one of my favorite sayings, by Stephen Covey, who said (I'm paraphrasing): sharpen the saw before you start cutting the wood.  It's a really simple thought - do the right things to prepare before you start a big task, but we lose sight of what adequate preparation looks like in so many activities.  There are several reasons for this.

First, many corporate activities are second nature.  We know how to do them by heart, so preparation feels like wasted time.  Second, we are used to last minute requests for information that don't seem to allow time to think or prepare.  This way of working has become second nature.  Third, in a very time bound and time restricted world, preparation doesn't always feel like value added time.  It can easily feel like time that was lost.  Fourth, time spent in preparation calls into question the knowledge and capabilities of the individual or team.  Shouldn't they already know this stuff?  Thus it is that so many non-standard corporate activities and projects end up with poor preparation, later lamenting the fact that if only they'd taken more time to prepare, they would have done a much better job.

Everything I've written to this point is true about just about any corporate task that isn't a regular, regularly repeated task, but it is especially true about innovation.  And while we could spend the next few minutes exploring the concept of learning about innovation tools and methods, or spending time doing deep exploratory research or discovery, I'm going to spend my time today on one of the most important preparatory activities - getting to the right question.

The Right Question

The reality is that once a framework or goal is established, everything you do is restricted or enabled by that question or framework.  I was participating in a strategic planning session recently when I witnessed first hand how much a poorly thought out question can derail a good working session.

Something as simple as how a question was worded left the team perplexed and confused.  Was the purpose to explore how to generate more revenue, or more profit?  Was the purpose to create really differentiated products, or should the team explore alternative solutions - business models, experiences and channels?  Since the question was not thought out in advance and did not align to the work that was being done, it caused more confusion than it created clarity.

The concept of a really well defined question is so important that Warren Berger wrote a book about it.  He calls this book A More Beautiful Question.  Getting the correct context, purpose and intent in a question or framing provides direction for any team, but especially for an innovation team.  If you need more proof about the importance of getting the framing right, go back to Einstein.

Einstein was asked:  if you had an hour to solve a difficult problem, how would you spend that hour?  Einstein replied:  I'd spend the first 55 minutes thinking about the problem and the last five minutes generating a solution (again paraphrasing). 

Generally Applicable Everywhere

Unlike a lot of other tools and methods, stopping to get the question right is an approach that is useful and applicable to almost any business activity that is new or unusual, whether the topic is growth, innovation, a significant course correction or something else.  Yet this is another capability that we simply do not teach, do not practice and do not appreciate.

For innovators, getting the question right helps shape the activity, the anticipated impact and the potential range of outcomes.  For example, if I phrase my need or question as:  How might we create new types of food that require less water, I'm likely to generate ideas about plants that need less water to grow.  If I phrase my question as:  How might we reduce water usage throughout the food value chain, I may receive ideas about more drought tolerant plants, but also methods to reduce water usage in food cleaning and in food production.

A simple primer

You've probably noticed a few things about these questions.  First, I started them with a "How might we".  How might we is an aspirational opening, seeking to find viable alternatives.  Use this instead of "Can we", which suggest we might not be able to find such alternatives.  How might we is also inclusive, seeking ideas from everyone (the "we") in the phrase.

Further, these questions follow a pattern.  The "how might we" is almost always followed by a directional verb (increase, decrease, etc) and in many cases with a measurement.  So I could have asked How might we decrease water usage by 20%...  That measurement signals how disruptive the ideas must be.  5% reduction may be easily achieved (incremental) but 20% may be a major shift and require radically new and different ideas.

Another portion of the question may describe a location, place or process.  This further refines the question to make it more specific.  In my first question I did not address where in the food cycle to remove water usage, so the most likely outcome is to remove water that irrigates crops.  In the second question I was more specific - in the food value chain - I open up ideas from any place water is used, whether that is in irrigation, washing the crops, processing, shipping, freezing or preserving and so on.

A pause that inspires and accelerates

There was an old marketing slogan about soft drinks when I was growing up - Coca-Cola marketed its soft drinks as a "pause that refreshes".  In the same way I'd like to introduce the idea that creating a valuable, meaningful question is a pause - it does take a little bit of time - that can inspire and accelerate you and your team to the best possible ideas.

There are some really basic skills that you can teach people in your organization, that will help them in their strategic and innovation tasks immensely.  Creating a good question that adequately frames what they hope to accomplish and communicate that effectively to others may take a few moments, but it will empower the team to move more effectively, create better outcomes and save time down the road.

The End of the Beginning, for innovation

It's a sign of maturity and experience to be able to determine just where you are in a journey, and I think the time has come to put some stakes in the ground about just exactly where we all are in regards to our innovation journeys.  While some companies have made tremendous strides, becoming much more innovative than their peers, the real truth is that most corporations are still at the very beginning of their innovation work, and as I've written in other places the emerging new management fads around digital transformation combined with the fact that innovation often hasn't lived up to its promises means that our innovation journeys may end before they really got started.

Because while it seems many companies have been on an innovation journey for quite some time, the honest reality is that they haven't moved very far.  There's been a significant amount of sound and fury, signifying not so much, to paraphrase a much more ancient bard.  The reality is that right now, after almost 20 years of innovation as a corporate phenomenon, most companies are closer to the end of the beginning of innovation, rather than the beginning of the end.

We're going to innovate like its 1997

You may wonder why I date the beginning of innovation as a management phenomenon to 1997.  Two significant things happened that year that in my mind gave credence to innovation as a management philosophy in corporate settings.  First, Steve Jobs returned to Apple after years in the wilderness, and second, Clayton Christensen published the Innovator's Dilemma.  Two notable thought leaders emphasizing innovation in two very different but influential spaces - Silicon Valley and the Harvard Business School.  For geological purposes I date the beginning of the corporate innovation phenomenon to 1997.

Since then Apple has moved from near bankruptcy to insane profits, and has shifted from a real innovator in experience, channels and business models to an innovation laggard currently.  Clayton Christensen went on to found Innosight, which was recently acquired by Huron, an IT and consulting firm focused on healthcare.  Both of these avatars seem to have flared up and cooled down, much like innovation over the last 20 years.

They are to some extent representative of the phenomenon that is corporate innovation. Time was that innovation was the key mantra for executive.  The word innovation showed up in public pronouncements and annual reports.  Innovation became a buzzword for basically anything new and different.  Over time we've managed to codify some basic syntax and taxonomy for innovation, but it still remains a highly fragmented, diverse industry with solutions ranging from design innovation to "open" innovation to crowdsourcing and the latest twist:  digital innovation, I suppose combining digital transformation and innovation.

Like Sisyphus we persist

But like Sisyphus no matter how much energy goes into innovation we still seem to end up far too often at the same place, with the same result.  For innovation the rock represents the work we do and the hill represents real innovation outcomes.  Too many innovators push the innovation rock through uncompromising cultures, with too little resource and too little buy-in, obstructed by the importance of day to day operations and near term profitability.  

Thus there's a lot of energy and motion involved in corporate innovation, but not nearly enough outcomes, and other concepts or ideas will start attracting more management attention as innovation doesn't provide enough return.  The emergence of digital transformation will simply make innovation more difficult in the next few years, and many "hangers on" in the innovation space will jump to digital transformation solutions, which will be easier to implement, but in the end these solutions won't recognize significant returns because they'll be used to improve efficiency.

The end of the beginning

Many corporations need to make a choice - to decide to fully commit time, resources and energy to innovation and stop asking their innovators to become Sisyphus, or to decide to focus elsewhere and acquire innovation as it emerges.  There is no real alternative to these solutions.  Customers and investors are beginning to see through what has been politely called "innovation theater". 

When Churchill declared the end of the beginning the Battle of Britain was just ending.  He wasn't promising an easy road - in fact he and others knew that many years of warfare remained.  He was taking an honest look at the state of affairs and what would happen next, and sharing that with the English population, to ready them for what was coming next.  In the same way we should take an honest look at corporate innovation and ask ourselves, after all this time, where are we?  What are the appropriate milestones and standards?  What comes next?

Now, at the end of the beginning, we innovators have choices.  There is now enough education and experienced innovators that we can create real change.  There are enough codified tools and processes to do innovation well.  What we need are executives and companies willing to fully commit to innovation - to discover needs and emerging opportunities, to reach for transformative and disruptive ideas, to invest in new capabilities that may shift customer demand and even cannibalize existing products.  We've got the critical mass, finally, after almost two decades.  It would be a shame to shift management focus to digital transformation or other management concepts just at the point where we've finally reached the end of the beginning, but that's what I fear could happen.

Breaking the patterns for innovation

As far as one-hit wonders go, there are few bands that I listened to more than a band called the Godfathers back in the 80s and early 90s.  They had a song that was meant to encapsulate our lived experience.  The title?  Birth, school, work, death.  This is the pattern that we all live.  More importantly, each of us has a fairly regular pattern for our work lives:  get up, go to work, go to meetings, work on some deliverables, drive home, eat dinner.  Rinse and repeat.  These patterns are comfortable and familiar.  More importantly, these patterns - how we work, what we do, decisions we make, risks we take - become ingrained and begin to govern how we think, how we work and even the types of ideas that we contemplate.

The more comfortable we become with our patterns of life - breakfast, commute, work, lunch, work, commute, dinner, TV, bed - the more we cling to familiarity and stability.  I think that these patterns and familiarity also create real issues for creativity and innovation.  When we consider how important it is to create viable new products and services, and how quickly markets are shifting and customer demands are growing, we either need new patterns or we need to break the patterns we have.

Are patterns wrong?

First, let me say that patterns by themselves aren't "wrong".  Many very creative people are very proscribed by their patterns.  Many famous artists were very particular about where and when they would paint.  Many writers have a practice of getting up very early and spending hours at a typewriter or a word processor before lunch, day after day.  In many cases these patterns are about constant focus and productivity more than creativity however.  Patterns of work aren't necessarily wrong, until they influence patterns of thinking and creativity, and create resistance to new information, shifts in the market or the unwillingness to observe and predict new technological trends.

Patterns create familiarity and repeatability which in turn creates greater efficiency.  Again, nothing wrong with repeatability and efficiency until it's time to create something new and different, which may introduce variability, risk and inefficiency.  It's at this point that patterns may stymie good thinking or narrow the scope of inquiry.

Breaking the pattern

Leaving a trusted pattern or process can be difficult, but to innovate you almost always will need to break a pattern.  As long as you attempt to innovate and preserve an existing pattern - either a physical pattern or a decision making pattern - you are very likely to shape your ideas to fit your trusted pattern rather than change your pattern to fit your new ideas.

It is with this in mind that good innovators will need to insist on at least leaving the existing pattern in order to innovate.  I've witnesses countless numbers of teams trying to create more interesting and innovative ideas who were frustrated by the subtle pressures their existing physical and psychological patterns forced on them.

To break these patterns we often ask people to meet in a different location - away from their office, in a place that doesn't feel like work.  We may set the stage for them by removing anticipated constraints - telling them that during the activity they have the funding and resources they need - or can access these - to achieve their ideas.  We try to immerse people in new thinking and patterns by exploring future scenarios, showing them that other patterns or possibilities exist and asking them to live in that very uncomfortable place between a new pattern and an old one.

Creating a new pattern

 Good innovators and especially entrepreneurs are really good at recognizing existing patterns and spotting the weaknesses in the existing pattern and creating a vision of the new pattern.  They realize that people crave patterns, so innovations that don't port people from an old pattern to a new pattern will likely be short-lived.  In some instances they build new solutions that look a lot like the old pattern (Tesla and Airbnb come to mind).  These innovations are primarily based on the old models and patterns but with a new, compelling value proposition. 

Even what we might consider really radical innovations either build or adopt concepts from the previous pattern or they are well-conceived and relatively complete and holistic new patterns.  Geoffrey Moore explored this idea in his book Crossing the Chasm, where he referred to "whole products" in the way I am referring to patterns.  The difference between these is most innovation when he was writing 20-30 years ago resulted in mostly physical products, whereas most innovation today will eventually end up as services, channels, business models and data.

These intangible outcomes make forming new patterns more difficult, but not impossible for emerging generations who are more comfortable with digital solutions rather than physical solutions.  But don't kid yourself - while the nature of the solution may shift from more tangible to more intangible, the expectation of patterns will still exist.

What does this mean for innovators?

There are several takeaways if this assessment is true.  First, good innovators must both understand and respect existing patterns but understand their flaws and limitations.

Second, innovators must understand how to create solutions that safely port people from their existing expectations and patterns to new solutions that either build on some of the existing patterns or have a fully realized new pattern that is easy to adopt.

Third, to do this, innovators must be willing to step out of their own patterns - to become uncomfortable and examine patterns and needs from a objective perspective.  They cannot objectively rework or remodel patterns from within the existing process or pattern.

This last point means that - as we've known for quite a while - that good innovators will likely be either boundary-spanners, people who can easily move from following existing patterns to environments where few patterns existing, or they will be people who are constantly dissatisfied with the existing patterns, always seeking a new pattern.  These latter people are often branded as 'complainers' in many organizations.  The true boundary spanners are relatively rare.

Fourth, you may need patterns or processes to help you break your existing patterns.  This may seem a bit unusual but just as we cannot leave customers in an uncertain place without patterns, innovators may simply need new methods and tools once they step out of their existing patterns.  Trying to work in a new space with no patterns, tools or processes will lead to frustration.  This is why I've spent much of my career working on front end tools and methods.  Existing patterns and tools will not create interesting new ideas, but the reverse - trying to work without patterns or tools in an uncomfortable, unfamiliar environment - is simply a recipe for failure.

So, who are your pattern breakers?  Who among your team can exist outside of the existing patterns, and who among you can introduce new ways of thinking and new tools and methods to help solve problems in the "in between" spaces between your old patterns and the new patterns you are dreaming up?  Which member of your team has the vision to create a new pattern that can provide comfort to customers as they move from an old pattern to the new pattern?  Who ensures the new pattern is complete?  If you can answer these questions, you have a team for future investigation and discovery, no matter how unlikely they may seem on the surface.

How much innovation energy does your bureaucracy have left?

One factor I've been considering for some time has to do with the power of a corporate bureaucracy to create or block change.  On one hand, bureaucracies are good, in that they codify practices, principles and processes and allow people to get more done quickly as a unit than they might get done alone.  Bureaucracies were created to allow people to scale concepts, inventions, products and ideas.

However, any bureaucracy comes with a certain amount of baggage.  That baggage is the inverse of the promise of the bureaucracy.  These issues are exhibited in cultures that are resistant to change, processes that become too rigid when agility is required, limits on decision making and risk taking.

In fact I think one could easily say that there are real strengths and real barriers to any bureaucracy, whether that bureaucracy is housed in a government agency - think the driver's license bureau - or a corporation.

Where this exploration of the strengths and challenges of bureaucracy becomes interesting is in the exploration of innovation.  Bureaucracy could, in some forms and fashions, improve and accelerate innovation if the bureaucracy was structured and organized to do innovation.  However, as most of us know, most bureaucracies are established to deliver the status quo in the most effective and efficient manner possible.  This means that most bureaucracies can perform some incremental innovation well, because incremental innovation is a small change to an existing product or process, which is already accepted within the bureaucracy and doesn't cause inordinate risk or change.

On the other hand, disruptive innovation by its very nature and name threatens a bureaucracy.  Disruptive innovation may break apart long-lasting processes, structures, business models and channels that the bureaucracy has spent decades building and perfecting.  This is when you will see a bureaucracy defend itself, something most do very well.

In fact I think we could establish an innovation capacity index based solely on one factor - how much effort a bureaucracy expends in merely defending the status quo.  One could consider that a bureaucracy, like any entity, must consume a certain amount of energy just to exist.  Even humans burn calories when we sleep, so a bureaucracy, a living, breathing organism, must expend some energy simply to sustain itself.

The real question is:  how much energy, of the total amount of energy available to the bureaucracy, does it spend mainly to defend its operations and existence?  The energy that is left over is the energy available to innovate or introduce change.

Think about the dichotomy of an entrepreneurial startup and a large corporation.  The startup has little structure, governance, culture to sustain - in fact it may be trying to build some.  This lack of structure can make common work more difficult, but for the most part it enables more exploration and more innovation.  On the other hand, corporations have a lot of process, structure, governance and culture, which by their nature focus and limit innovation.  The more effort given to sustaining structure and culture and the existing business model, the less energy left over for innovation, the less scope for exploration.

In short, we don't need innovation maturity models or other mechanisms to understand how much innovation capacity exists in a specific company.  All we really need to do is look at the existing bureaucracy and how much effort it expends to sustain itself, and how much energy is left over.  The more investment in the existing structure and culture, the more pride and arrogance in the culture, the more it is defended and protected, the less likely it is that innovation can occur.

Innovating what we innovate

It finally came to me last week.  For over a decade I've been working with corporations, trying to help them accelerate their ability to generate new, interesting ideas to market as viable products and services.  In some instances we've been successful, and in other instances there were interesting failures.  I've recognized for a while that some major challenges exist.  I wrote Relentless Innovation as a way to frame some of the things I'd learned about the way culture resists change, and how a "business as usual" approach can stymie innovation.  But even with these obstacles it would seem we should have more innovation than we do.

What came to me finally is that we are trying to do new chemistry in old equipment, equipment that is tailored for a more conservative, slow paced way of working where there is less change and more certainty.  Our businesses are "built to last" and meant to gain scale quickly and then lock in customers and channels to drive more revenue and profits.  In a day and age (say 20-30 years ago) when markets were more stable and there was less innovation, building a company with this intent made sense.  Those days are over.

In fact we can look back 20 to 30 years ago at some key events and agreements that at the time seemed relatively benign, but in fact have accelerated competition and innovation.

The unintended consequences of free trade

Just under 30 years ago, President Bill Clinton signed the NAFTA agreement, which allowed for mostly free trade between Mexico, Canada and the US.  This was the start of many more free trade agreements, as other countries began to reduce trade barriers and increase global competition.  It should come as no surprise that the European Union is also almost 30 years old.  These agreements and others like them were good for consumers, because they lowered prices, but often bad for established businesses that were used to competing behind tariffs.  These agreements also increased the migration of lower skilled work to places where costs were lower.  This migration isn't new - any task with a high labor component has always migrated to lower labor cost areas.  The difference was that instead of moving from North to South, it moved from the US to Mexico, as an example.

Globalization and free trade increased competition dramatically and introduced a shift in valuable skills.  In the US, manual labor and low skills jobs began to disappear while IT and finance skills gained credibility.  This is also the beginning of the new imbalance we see today, why there is an increase in disparity in incomes between people who offer the market manual labor or few skills versus those who can move financial markets or program software.

The internet boom

The internet also begins to appear about 30 years ago, moving from an interesting collegiate experiment to a system that connects people across the globe.  Yahoo, and then Google began to organize the data on the web.  Google is 20 years old this year (2018), meaning it is leaving its awkward teenaged years and becoming an adult.

The advent and rapid advancement of the internet as a communication tool, then a content tool and now thanks to Amazon a sales and fulfillment tool has shifted how we consume content, how we acquire goods and services and has significantly changed entire industries.  Just ask Sears, the Amazon of the previous century.

The evolution of the internet now means that I can do business with just about anyone, anywhere in real time.  Existing companies now have far more competitors and the consumer has far more options.  Thousands of new companies can compete to provide goods and services, increasing the opportunity for innovation dramatically.

Apple and Amazon

The third leg of this stool, beyond globalization and the internet is the emergence of new and somewhat rapacious companies.  Amazon and Apple are the avatars.

Amazon was founded in 1994 as a book seller and has gained scale quickly by increasing its dominance over physical retail, while innovating its business models and entering entirely new markets (web services as an example).  Amazon demonstrated that people were willing to wait for the company to grow before becoming profitable, and cheered Bezos on to greater heights rather than demanding immediate profits.  Jobs returned to Apple in 1997 and created a company based on a few simple ideas - simplicity and integration.  Both of these companies explored new value propositions and new ways of working with customers.  Both are closing in on market dominance not seen since the guilded age.  Both give hints about new operating models and structures.

Stuck in the railroad age

Yet most corporations are stuck with a command and control organizational structure that dates to the age of railroads, which were the first large corporations.  It won't be a surprise to learn that the railroads adopted their operating models and organizational structures from the military, the other large and bureaucratic organization of its day.  These organizational structures worked well when change was slow and many organizations had monopoly or near monopoly power, and when few people were educated.  Today, most of these stipulations aren't true.  Change is constant and accelerating.  Few firms, other than Amazon and Google have anything close to monopoly control, and workers are far more educated and interesting in the meaning and mission of their work.

Corporations operate like glaciers, moving slowly and inexorably toward an almost predetermined goal, difficult to steer and with deep sources of internal, informal power that seem oblivious to the environmental changes all around.  Our business structures and models are for the most part still based on top down command and control, very regimented (a word straight from the military) and hierarchical, when we need to be more open to investigation, more flexible, more adaptable, more nimble.

Innovating org structures and business models

What we innovators should focus on are new organizational structures and new business models rather that products and services.  We can see evidence of some org structure and business model innovation in the "asset-light" companies like Airbnb and Uber, who have reworked their models to demonstrate that they don't need to own the assets to deliver a valuable product or service. 

But these are just the beginning.  As both Uber and Airbnb have demonstrated, once an organization reaches a certain size they take on trappings of bureaucracy and perhaps arrogance and lose sight of customers and their needs.  They become increasingly rule-bound and inflexible, losing some of their advantage and creativity.  If we can innovate new products and services with such alacrity, certainly we can innovate new organizational structures and business models that allow businesses to scale and remain nimble, become relatively large but still able to respond to emerging trends and needs.  This is the new "holy grail" of innovation - creating organizational structures and business models that are able to shift as customers shift, completely flexible and nimble while still scalable.

The quiet desperation of corporate innovators

Over the last year I've been conducting a one person listening tour, talking to a lot of my peers in consulting, as well as prospects, customers and friends who work in government and industry.  Of course many of these conversations revolve around innovation and new product or service development (or the lack thereof), and how people are engaged in their work and their roles.

One recurring development that has really troubled me over this period is the uniformity of feedback about innovation, about growth and about large companies' willingness to embrace the evolving future.  I've had the good fortune to talk to hundreds of people, in different industries, in different roles and across different geographies and countries.  One resounding consistent message I'm hearing is that the majority of the people I've spoken with are frustrated by the lack of innovation focus and effort within their organizations and the lack of engagement or emphasis placed on new growth and revitalization in large organizations.  While there is a lot of noise about innovation from all quarters, it appears from my discussions that there is little activity.  And this dissonance between noise and activity is beginning to impact senior people in significant ways.

In fact I'd go so far as to suggest that many people involved in innovation, new product development and who want to focus on growth in major corporations would gladly leave their current companies if they could find companies that would place more emphasis on innovation and growth.  It's strange to see so much frustration at a time when we hear that business is doing so well.

Enter the concept of Flow

Those who follow my blog know that I write fairly frequently about the concept of "flow", because it relates so perfectly with innovation.  Flow was first recognized and documented by a psychologist named Csikszentmihalyi.  He documented the idea that in some activities, people can lose themselves in their work. Time passes without notice.  People are deeply engaged and get great enjoyment from their work.  He defined flow as the confluence of the experience doing a task and the challenge of doing a task.  Too much experience with too little challenge?  Boredom.  Too much challenge with too little experience?  Fear.  The right match of challenge and experience?  The result is flow.

Note that the subtitle of the book is:  creating meaning, enhancing creativity.  These are factors that many people are searching for in their work.  People want to work with passion, on items that create or have meaning for them and others, leveraging their knowledge and creativity.  Talking to many people over the last year it's clear many of them want work that challenges them, creates meaning for them and is interesting and creative, yet they feel constrained by costs and efficient processes, trapped by cultures that are risk adverse, bound by short term thinking.  While corporations claim that people are their most important assets, few companies create structures or cultures or strategies that allow these workers to obtain the most value from their work.

Life in the silo

While many companies have shifted their work environments to more team-oriented work and more open plan offices, the majority of people still work in a very siloed model, constrained by their job title or description.  These job descriptions or titles define what the employee is supposed to do, day to day, but often don't reflect 1) what the company really needs from the employee and 2) what skills and capabilities the employee has that he or she could offer.  In other words, there are operational, psychological and structural mismatches between the actual needs of a company, the structures within which it asks people to operate, and the desires and goals of the employees. 

I'll argue that most large organizations waste 30-40% of their employees' knowledge, time and capabilities by defining roles and responsibilities too narrowly, and further distract or frustrate their employees by failing to create meaningful strategies and fully engaging their staff on a visionary goal.

Corporations are still too hierarchical, too top down, too siloed, too rigid in their definition of work and roles at a time when people are more capable, more educated and want to be more engaged than ever before.  Why are so many potential innovators in large corporations so frustrated?  Why are so many feeling unleveraged and underappreciated?  Because they are given so little leeway, so little support and the expectations and goals for their teams are so limited.

This is especially disappointing because more people have more education and more capabilities than ever before, and access to far more information about their customers, products and markets.  Many people don't need information interpreted for them in order to spot emerging opportunities - they can see the opportunities that their company is ignoring.  What's more, these same people have ideas about how to address those underserved markets, but can't get their ideas heard, supported or funded.

Good to Great

Jim Collins created at least one great idea in his book Good to Great:  the idea that we need to get the right people in the right seats on the bus.  In many cases in business we have the right people, but they are in the wrong seat or the seat doesn't define everything they can do.  Collins also suggested that some people might need to change seats or get off the bus entirely.  Increasingly however I think we might need to look at the drivers, because no matter how good the people on the bus are, if they aren't given effective direction and the freedom and challenges to live up to their skills, then the driver is at fault.

What does it say when an entire generation of people who are tasked with a very important and conceptually interesting task like innovation are frustrated and somewhat defeated by their roles and their work?  What does it say when this attitude is consistent across industries and geographies?  When people speak with passion about doing more, getting more engaged, doing more innovation but feeling constantly thwarted and frustrated by their own management?  

We are at an inflection point in business, where automation and artificial intelligence will cause some rather dramatic changes in how we organize and staff companies.  Now is the time to rethink how we engage people, and fully leverage their passion and energy.  We need to be thinking about how to get the right people in the right seats, and give them the right direction.  It's possible that with new thinking we could have a much more engaged workforce creating far more innovative products and services.  It's possible that we could actually create the conditions for "flow" in our organizations and that they would benefit from those conditions.

The alternative is underutilized people and assets, underachieving and feeling underappreciated, who float from job to job and eventually leave to go start something new where their energy and passion can be fully brought to bear.  Thoreau said many people live lives of quiet desperation.  I'm concerned that this is especially true among a very important subset of corporate employees - those who have the will and the passion for innovation.

What to do?

What can we do?  First, recognize that people ARE the most important assets, especially where growth, creativity and innovation are concerned.  These should be the places where we unleash our people and provide the time and funding necessary for them to create amazing new products and services.  Second, rethink how organizations are structured, the risk adverse cultures that have grown like kudzu, spreading slowly through the organization to stifle new growth and sustain the status quo.  Third, put the right opportunities and metrics in place and tell the innovators to "put up or shut up".  If you believe these folks can innovate, then get out of their way and reap the benefits.  If you think they can't, give them a fair opportunity and measure the outcomes.  Corporations that do this will benefit either way.

I can assure you that any company that demonstrates that it welcomes and encourages innovators will find itself overrun with high quality talent, and if it can put that talent to good use will create compelling new products and services that separate it from its competitors.

What U2 and Madonna can tell corporations about innovation

Let's get this right out there early:  I am a huge U2 fan.  From their earliest albums like October and Boy to their latest efforts, I'm a big supporter (well Zooropa not so much, but every great artist has at least one significant flub).  On the other hand, I've never much cared for Madonna.  Too packaged, too commercial, too much a formula it seems to me.  But both U2 and Madonna have something to tell major corporations about how to stay relevant for decades:  reinvent yourself.

Let's do a brief history lesson of U2 and see exactly what this means.

U2 - the early years

U2 started out as a punk band in Ireland, but with a twist - their lyrics were informed by their Christian beliefs and ethics.  They came on the scene just at the end of the punk era, where no one sound or formula dominated.  I think they became popular with their War album because of their commitment to social justice, their rock sensibilities and the way they came across as a fresh new voice. War was a breakout album and placed them on a path to success, but it did not define their sound in later albums.

And now for something completely different

U2's next album was the Unforgettable Fire, a major departure in sound and theme from the previous albums.  The Unforgettable Fire was a significant departure from War, and was somewhat controversial among fans.  It focused on the life of Dr. Martin Luther King, so the band was staying true to its social conscience but the music was different.  U2 quickly followed up with The Joshua Tree, where they pursued, like many European bands before them, the roots of the blues in the US.  The sound was different from their earlier albums, a bit more harder edged, more bluesy, but still with a social conscience.   Fans of Boy and October were disconcerted by War.  Fans that came of age with War were uncertain and sometimes estranged by The Unforgettable Fire.  Joshua Tree and the live album Rattle and Hum seemed to embark on an entirely different focus and sound. But it was the same band and underneath it all were the same sensibilities, just repackaged and repurposed, trying out different methods, constantly reinventing themselves.

The Electronica Period

U2 then entered my least favorite era - an era full of exploration, mostly of different forms of music that was more electronic, more synthesizer based, a major departure from their rock and roll, stadium-oriented sound.  But who can blame them?  You can only make the same record with the same sound so many times.  Albums like Actung Baby and Zooropa were less appealing to me as an original fan of U2, but followed the course and sensibilities of new types of music that emerged.

Return to the roots

Many of us who were early fans were really pleased by All that you can't leave behind, which combined some new sounds and ideas with a return to more guitar based rock, a more straight ahead sensibility. 

Exploration

After All that you can't leave behind U2 has been in an experimental phase, with several albums that explored different sounds and genres.  These albums seem to be searching for the right sound and focus, the right audience, and to me don't quite sound or feel like the U2 of old.  But perhaps that's because the U2 of old is now old.  After living in the limelight for 40 years, it's probably difficult to create new music.  Paul Simon had to go to South Africa to revive his sound and career after decades in the music industry.

Thanks for the history lesson

So, you may be thinking to yourself, thanks for the history lesson but what's the point about innovation?  Simply this.  If Madonna can shift from "Like a virgin" to Vogue to Material Girl to whatever the persona is this week, and if U2 can shift from Christian anthems to bluesy guitar based rock to synthesizers while remaining exceptionally popular, there's evidence that you can be in the same business but constantly reinvent yourself, your product and your persona.

Most businesses fail to appreciate this - reinvention isn't just important for musicians or actors or celebrities, it's vital for everyone.  Becoming too boring, too staid, too stuck in one way of thinking or one business model means you become less interesting and attractive.  There are a number of reasons the length of time corporations spend in the S&P 500 has been cut in half in recent years, and the lack of reinvention is an important one.

How do we reinvent?

If reinvention is important, how does a corporation reinvent itself?  You'll understand that since this is a blog about innovation, innovation will rear its head here.  To reinvent or remake a band, an actor or a company, we need to focus on keeping what is important and 'core' to the original and examine what is changing and what new customers want and need, as well as respecting the needs of employees who want both links to the historical past and new and refreshing ways of working.

U2 reinvents its sound, the way its packages itself (Joshua Tree and Rattle and Hum is all bluesy influenced, down to the way they dress while during Zooropa Bono takes on an entirely new persona) but underneath their songs and their sensibilities about righting wrongs and social justice remain fairly similar.  U2 went further with a controversial album release directly to consumers' iTunes accounts - innovating in a channel and in a business model.

Likewise, corporations need to reinvent themselves - constantly improving their offerings, products and services while thinking about how to interact and reach customers, how to revise and revamp customer service, how to leverage emerging channels and how to explore new business models.  Recognizing that it's a bit easier for a four man rock group to reinvent itself than a large corporation doesn't excuse the lack of reinvention that most corporations exhibit.

Corporations need to think more broadly about what they are good at, what their strategic intent is, why they exist and why they are important to customers.  Further, they need to shift with the times, and not just with a new logo or new branding but with renewed purpose and focus.  They need to do far more innovation outside of the core product, to reinvent themselves in new relationships with customers and prospects, in new channels, new service offerings and new business models.  Failing to do so leaves far too many options on the table, waiting to be exploited by new entrants.  My favorite examples are concepts like iTunes and the iPod, which probably should have been created by Sony, or the concept that became Airbnb, which could have been implemented by any major hotel chain.

Sticking to your guns or reinvent yourself

There's a sort of false equivalence here, the thinking that a company needs to either "stick to its guns" and stay true to itself or become a chameleon and constantly change with the times.  This is one of those times when we should choose the and rather than the or.  A company can be true to its capabilities and roots while reinventing itself to remain interesting and relevant to its customers.  An insurance firm can still do an awesome job selling and servicing life, auto and home insurance while completely reinventing itself in how it communicates with, serves, bills and attracts customers.  It can create new business models and experiences while continuing to provide similar services and products.  The sooner large corporations understand the need for reinvention, and the false equivalence of sticking to history or cosmetic reinvention, the better off we will all be.

Army Futures Command - fighting the last war?

In what may seem a bit of sour grapes, since my own hometown lost in a close race to Austin for the site of the Army Futures Command, I'd like to think through what's right, and more importantly, what's potentially wrong, with the Army Futures Command.  And I'd like to suggest that many of the factors that will cause the Army Futures Command to struggle are also issues that every large company also faces. The question Defense News asks is:  Can Austin make the Army weird?  That's an interesting but slightly incorrect question.  What matters is if Austin can make the Army innovative.

The Army Futures Command has from its very start attempted to be different.  It is meant to be more nimble and agile than "big Army", meant to cut through red tape and create new combat systems, weapons, and platforms at a faster pace.  I suspect it is meant to open the Army up to new ideas and help it embrace open innovation as well.  If the Army Futures Command does these things, then we all benefit.  We will have a faster, leaner, more well-prepared Army able to compete in future conflicts.  My sense is that the prevailing military industrial complex, risk aversion, bureaucracy and budgeting and funding cycles and processes will hold more sway than setting up in a civilian building in Austin.

First the Kudos

I'm glad the Army is recognizing the importance of emerging technology and placing its newest command in a high tech environment like Austin.  The future of warfare is technological, but also communication and data driven.  We are already at (virtual) war with several foreign entities in cyberspace, and those attacks will only continue to grow.  It's also good that the Army is seeking to distance itself from Washington DC and the governmental thinking that dominates there. It's a good sign that the Army believes it needs to be more agile and develop new ideas and systems more quickly. Finally, it's a good sign that the Army recognizes the overhead and bureaucracy associated with designing, building and deploying new systems.

The question marks

I believe (with no evidence whatsoever) that proximity to Fort Hood in Texas was a key factor in the decision.  Fort Hood is the place where the Army goes to drive large vehicles and tanks.  While we in Raleigh had Fort Bragg close by, Bragg is a special forces base, and special forces don't use large systems.  Fort Hood is based on the idea of large systems - tanks especially.  This line of thinking would mean that the Futures Command will focus on large platforms (tanks, rocket launchers, artillery, people movers, etc).  Which is fine to an extent, but I doubt that's the future of warfare.  The future of warfare has to do with command and control, taking out an enemy's ability to communicate and to manage data and information.  One small EMP device in a large city will cause more havoc than a tank battalion.  So it feels like we are simply repackaging a way to make big platforms and tanks in perhaps a new way.  If this is "futures" then we aren't looking far enough into the future, or we are at risk of preparing for and fighting the last war.

Second question is:  can you change the design, budgeting and procurement processes?  One of the most important vehicles in the Iraq war was the M-RAP, which saved thousands of lives and casualties.  The M-RAP was rejected several times by the Department of Defense and the defense contracting industry, not for reasons having to do with troop safety but for reasons having to do with budgeting cycles and platform prioritization.  Read Robert Gate's book to learn more about the resistance to new platforms, especially those conceived out of cycle or sequence.  Congress, the Department of Defense and military contractors have very entrenched notions about what systems matter and how they are procured and funded, and will fight to defend these.  The military may come up with great ideas about new vehicles but be unable to find means to fund them or place them into production.  Moving to Austin isn't going to change these issues.

How do these issues relate to corporate innovation?

So, what the Army Futures command wants to mimic to some degree is the famous Lockheed "skunkworks".  The typical skunkworks is usually set up to isolate an innovation unit attempting to build disruptive new products and services from the bureaucracy and culture of the existing infrastructure.  Jobs did this when he built the first Macintosh.  The problem is that locating in Austin doesn't isolate the Army from many of its cultural, budgeting and commercialization challenges.

The similarities arise when we think about what the "charter" of the group is. Army "Futures" should be, well, about the future.  But if they will focus on large fighting vehicles but neglect command and control, digital and cyber warfare, etc, it doesn't feel like the future.  It feels like horizon one or at best horizon two work.  Second, by focusing on large vehicles and platforms, are we once again building systems to win the last war, when we should be building solutions to fight the next war. Corporations fall victim to the same line of thinking when they double down on their best current products, while not realizing that the market and consumers are rapidly changing.

Another challenge that the Futures Command shares with corporate innovation is that it is always easy to create an organization in the 'front end' to create ideas but often exceptionally hard to create the programs to convert ideas into reality.  The development pipeline for any defense platform is long, complicated, political to an extreme and subject to funding whims of a Congress and President whose mandate changes often.  If you improve the front end process without addressing the execution issues you'll simply frustrate far more people more quickly.  If you'd like to know more about that from a military perspective, read the book about the best designer of fighter planes, John Boyd.  Similarly large corporations struggle with executing on good ideas.  It's often easier to generate ideas than it is to develop them as new products and services.

Corporate innovation and the Army Futures Command both struggle with:

• clear strategic direction
• looking far enough into a future that is rapidly changing
• innovation structures and governance
• access to the right resources
• the ability to execute ideas, not just imagine them
• political pressure and favoritism especially for pet projects and existing systems
• funding and budgeting, especially for large scale projects that span multiple years

Perhaps the Army has overcome these and other issues within or around the Army Futures Command.  I genuinely hope so.  However, having worked within the defense industry and in the innovation industry, I can see many challenges that may hold back the Army Futures Command from achieving their goals.  Most of these issues are the same ones that corporations face, but the issues the Army faces are often exacerbated by politics, funding cycles, an entire industry reliant on existing platforms and weapons, a tendency to learn too much from the last war and not consider the factors of the next war, and the cyclical nature of politics.  I doubt the Army Futures Command can be isolated from all of these pressures, which suggests to me that they will do a great job at Horizon One innovation, and falter at Horizon Two and Three.  Time will tell.

Digital Transformation: the Elephant in the Python

Lately I've been thinking a lot about the latest fad in business thinking - digital transformation.  As technologies become more pervasive, and our ability to gather and process a lot of information increases, it makes sense to think about how digital solutions may change the way we work, either by replacing monotonous tasks, automating entire business processes, anticipating future trends and hundreds of other ways.

As more companies place more sensors in their products, the products will start reporting on their mean time to failure and maintenance needs.  Companies will gather data from those sensors and provide feedback on optimal usage, maintenance and repair or replacement needs.  The Internet of Things (IoT) will mean that many, many devices are connected to the internet and providing a constant stream of data that can be analyzed, so that we can learn more about any factor of our supply chain, distribution chain and consumer consumption of products and services.  When you add in the promise of blockchain, it's possible that all of those transactions will be conducted in a fully automated and transparent ledger.  What's not to like?

Taking the curmudgeonly approach

This digital future sounds incredible, because it is.  We can now automate far more than ever before.  We have more data at our fingertips than ever before.  With that data we should be able to schedule people and machines more effectively, anticipate future shifts and reduce costs and cycle times.  We should know more about our entire value chain than ever before.  The real question is:  can all of this technology and data provide the insights it promises?  Is there a weak link in all of this promise?  I think there is.

Digital transformation is already happening.  It's not something that will arrive all at once, but piecemeal throughout your business.  You've already installed some IoT devices, and probably have a relatively robust ERP system to govern your internal processes.  To some extent you are already on your way to becoming a 'digital' business.  But there is more you can do, with additional sensors that capture data about customers, or blockchain applications that track the provenance of products and services.  You can and will install AI or machine learning algorithms to help you improve the efficiency of your operations.  As I said, this stuff is already happening, and it is a double edged sword.

The promising edge of that sword is integration and the availability of data and, with the right processing, new information and insights.  The difficult edge of that sword is integration of all the data producing equipment and the ability to normalize the data so that it is all integrated and useful.  And this is no small challenge.  Once every IoT device, smart device and distributed system comes on line, they will generate terabytes of information, and often in different data configurations.  Since there is no standard, someone must normalize all of this data and decide which data is truly valuable, and how it will influence or impact AI and ML algorithms.  You could literally be awash in data from thousands of different devices, all of which are producing data that has potential value, but in different data standards and configurations. 

Who does the integration?

Think about your current integration challenges.  Today many corporations have manual consolidations across different IT systems because it's easier for humans to review and consolidate financials or other data sets, rather than create rules about how the data should be aggregated.  If you have challenges with your existing operational data, collecting it, aggregating it and normalizing it, what do you think will happen when hundreds of new data sources - both internal and external - come on line, and new systems like AI or ML try to start making sense of this data?

Worse, an already overworked and overwhelmed team - the IT team - which in most cases is simply trying to keep the older operational systems afloat - will be called on to normalize and integrate all of this data, and ensure that the AI and ML systems get good, clean data to make assessments and projections.  Oh, and they'll need to install all the hardware and software, determine data flows and continue to run the regular IT systems that keep the company running.  Why is no one talking about the big challenge of data integration that is required for digital transformation? 

The elephant in the python

Data integration isn't just the elephant in the room that no one is talking about, it is the elephant in the python.  Digital transformation assumes that the data that is produced at any place in the business is instantly available to everyone, creates maximum efficiency and helps people and machines make better decisions.  For that to happen data needs to flow accurately and freely, and be free of conflicts or errors.  All systems need immediate access to the data and AI and ML need to be able to process the data and make decisions in real time.  What I just described is a fantasy for most large corporations today, and it will be a fantasy for quite some time.  Data simply doesn't flow that way, and today we are talking about a mere trickle of data as compared to rivers, oceans of data that will spring forth as the IoT devices begin to pop up everywhere. 

Most firms don't have the ability to manage the volumes of data we are talking about, don't have the ability to normalize the data and certainly don't want to introduce all of these diverse streams of data into any decision making process or algorithm without a lot of oversight.

Consultant Job Creation

When people tell you digital transformation will make your company more efficient, be wary.  It strikes me that it will create massive data traffic jams internally, leading to the need for far more consulting labor to straighten out the data flows.  It will require far more people to sit in judgement of the data, to ensure the data is valuable and useful, to keep algorithms from using incorrect or flawed data sets to make decisions.  Digital transformation is the pot of gold at the end of the rainbow for many hardware and software producers, who are overstating the benefits (of which there are many legitimate benefits) and vastly understating the challenges having to do with integration of data, the normalization of the data and the sheer volume of the data.

Does IoT, blockchain, AI, ML, sensors and other technologies have a place in your business?  The answer is unreservedly yes.  Should you be concerned about the use of these technologies and the impact on your business?  Again, yes.  Where is the biggest challenge?  I'll stipulate that most companies simply don't have the ability to manage the amount of data that will be created, and can't make that data (and the more important information and insight that should be gleaned from the data) available to the right people to make the right decisions quickly.  What's the value of digital transformation if it does not make the business more productive?

The future belongs to whoever creates it

You know something has become passe when you see it used as a meme on Twitter frequently.  That's actually what prompted this diatribe.  I doubt there's any meme I dislike more than "The future belongs to...".  In recent years we've been told that the future belongs to the swift, the smart, the agile, and more recently to the digitally transformed.

Not that long ago we were told that the future belonged to Nokia, because before 2000 it was the king of the hill in handsets.  Then along came Apple.  Then we were told the future belonged to the Newton, except the Palm and then the smartphone generally won the day.  The fact is that the future doesn't belong to anyone.  Given the rapid pace of change and the emergence of new technologies and solutions, you can't say with much certainty who will win the future.  In fact, as William Gibson likes to say, "the future is already here, it's just not very evenly distributed".

Who "owns" the future?

The best we can hope for is to understand the future and prepare for it, or attempt to create the future we want.  The other options - waiting to see what happens and then responding, or worse, hoping that nothing changes at all - are not viable alternatives.  These options are choices that lead to the fast road to obsolescence.  Santayana said that those who cannot remember the past are doomed to repeat it.  I think the corollary to that statement is:  those who ignore the future are doomed to extinction.

If we can't ignore the future, and it's clear few firms or organizations "own" the future, this means the future should be malleable to some extent, and we have the capacity to discover it.  Therefore it's incumbent on us to try, rather than end up as an afterthought, or an overused metaphor like the buggy whip manufacturers who didn't change as automobile ignitions changed.

Nobody "owns" the future but if we try just a bit we can understand what's likely to happen and in some instances perhaps even influence it.  However understanding the future requires doing work to identify emerging trends in the environment and understanding how they might unfold.  Understanding the future requires you to ascertain what 'could' happen, not simply depend on what  you want to occur.  Understanding the future requires understanding that the future is not determinant, but that there are multiple possible futures.  Once you understand these things, you can begin to see how you might influence the future.

Future chaos

If a weak definition of chaos theory is "a butterfly flaps its wings in Tokyo and it rains in New York" then the idea of small changes now influencing the future isn't so far fetched.  Microsoft influenced an entire industry at a time when Microsoft was very small, convincing IBM to license its operation system.  That one decision had ripple effects that we still experience today.

We are too often far too passive and too convinced that the future will happen to us, rather than becoming more proactive and at least more prepared to act as the future emerges or, better yet, trying to shape the future.  But what is good innovation other than an attempt to shape the future?  Innovation is a current bet on future outcomes - so any innovation is an attempt to change the future.  Why not invest in understanding the future and even influencing the future as part of any innovation activity?

Trend spotting, scenario planning, roadmappping, future forecasting - these are all tools that can help determine what may occur in the future.  Doing this work isn't enough however, because the knowledge will simply prepare you for what may happen.  Taking action on the insights, investing in innovative ideas meant to fulfill unmet customer needs or targeting emerging segments will shape the future, and perhaps allow you to create it and own it.