Managing Innovation teams in complex environments.

  1. To some greater or lesser degree, every team will come to have a responsibility to be innovative. But the idea of a special team leading the innovation responsibility for an organisation will nearly always be useful as a catalyst to change both culture and outcomes. Judging the point when it becomes counter-productive is both critical and difficult. One of the ways organisations try to kill innovation teams is to allow innovation to be “owned” as an excuse to continue with the relaxing pleasures of business as usual — ie to not collaborate.
  2. But another is to claim that the special group’s work is so important that it is now to be diffused throughout the organisation. This is almost always untrue even if original intentions were good. Driving an innovation mind-set through a large organisation is all but impossible and in many cases would anyway be counter-productive. Managers quite rightly want most of their teams to focus on doing really boring things repeatedly, as cheaply as possible. Most work is either tedious or pointless with the the scale between the two tending to correlate to pay. Rational decision makers therefore tend to try to move from low paid tedious work to more highly paid pointless work with graduates getting to start half way. Most of these people have neither the skills not the incentives to innovate anything although experience with low paid tedious work is at least valuable raw material.
  3. The best way out of this dilemma is for the group with catalytic responsibilities to carefully and deliberately build an explicit virtual team approach from early on, tapping the critically important diversity and front-line delivery skills and deep operational experiences of groups across and up and down the wider organisation, community or eco-system. A virtual team is a team where people doing most of the heavy lifting are doing it unpaid and secretly, outside the parameters of their actual responsibilities. This addresses three problems; a) the catalytic team is never given enough budget early on to recruit the skilled people needed because they can’t prove that this level of expenditure has any return until they actually start doing the work. b) it gets critical frontline and back office experience fed into the innovation process, without which it will almost certainly fail and c) it makes the lives of the poorly paid less tedious and allows them to address some of the frustrations caused by lamentable management, disastrous processes and arrogant customer mis-service.
  4. Early education for all members of the virtual team in the nature and strategies of innovation can be useful as most people have strange and misguided ideas and their senior managers are generally the worst. Very few people got to be senior managers by being innovative. Either way, you will need to try to break down the misunderstandings that pervade the subject.

5. Myths & misunderstandings about innovation:

a. Innovation is about making a thing or product rather than an approach, a service, a platform, a way of financing, etc, etc. The gentle art of stealing blog has a nice list of 15 categories here. There are many typology maps but this one of ten types by Doblin.com is good and clear. For a mind bending example of what it might look like to innovate with institutions, market processes and social platforms, take a look at the extraordinary work of my former colleague, Indy Johar.

b. Innovators are special individuals. The myth of the inventor. Virtually all interesting innovation is done by groups and ecosystems and diversity of outlook and experience is fundamental. See this great talk, Where Good Ideas come From, by Steven Johnson or read his brilliant books. Here you can see some nicely presented recent research by Rocio Lorenzo at BCG, Munich.

c. Disruptive innovation is radical innovation. They are two completely different things. The major disruptive innovations are both more than radical and less. Put differently, they change smaller things with greater effect. Definitions vary but for our very rough purposes we can agree that incremental innovation changes a product, radical innovation changes a business model and disruptive innovation changes an industry. Almost all actual innovation is type one or two while almost all innovation discussion is about three. Disruption usually starts with a very small, simple intervention that addresses needs that have been abandoned. For a full and clear explanation of disruptive innovation, its really worth going back to its defining authority, the brilliant Clayton Christiansen. Here is a great one hour talk by him at Oxford. And here are links to all his other stuff.

d. Innovation is an event or epiphany. Innovation is actually an approach and a philosophy and a set of networks and processes. Many have written and spoken on this but John Kao’s approach is particularly accessible and engaging, especially when he illustrates his point using jazz piano.

e. Innovation happens in special places with special designs and special people. Many of the most interesting and successful approaches both in business and elsewhere are the result of networks of users, advocates, etc. We find it very hard to escape the Hollywood paradigm of innovation as brilliant invention. Much more often is a like a movement or a coalition, aligning the frustrated, the annoyed, the ignored and the motivated Charles Leadbeater is compelling on this and you will find links to all his books and some inspirational talks here. The fabulous Robin Chase, co-founder of Zipcar and radical thinker about collaboration platforms has long combined theory and practice based on this insight. Its also worth taking a deep dive into the experiences of the Mondragon cluster of cooperatives forming the Mondragon Corporation. To understand the many implications of their achievements, which are echoed in several places in this article, particularly with regard to competitiveness and equality, take a look at Gorka Espiau’s thoughts. Dr Charlotte Heales, Dr Mary Hodgson & Hannah Rich at the Young Foundation have published a brilliant in depth study of the learnings from Mondragon which rightly highlight their distinctive and hugely successful combination of all out private sector competition with inclusive growth and egalitarian principles.

5. There are a number of great strategies for introducing and protecting innovation inside non-innovative organisations:

5.1 You will always need very senior stakeholder protection — preferably right from the top or as close to it as you can get. Without it you will be killed. There isn’t really a way around this. People who try usually end up leaving and becoming entrepreneurs — which is a completely different thing. Most senior executives and all strategy consultancies preach this by the way. But practice it not so much.

5.2 It is well worth keeping your intentions secret from many people until you have achieved critical velocity. Many innovations are not best served by being analysed while they are still young saplings and the failure rate has to be much higher than the rest of the organisation can tolerate or you aren’t innovating. This is one of the reasons it’s so hard to innovate inside public sector organisations. Its worth noting that a group or individual that repeatedly fails or fails for the wrong reasons should be fired. The overall ROI on an innovation programme should be very high. Its just that its managed in a way to allow intensive experimentation which looked at close up, mostly looks like repeated failure.

5.3 You will need to find people outside your group who are going to get most, if not all, of the credit for your breakthroughs. The senior stakeholder becomes critical in this manoeuvre because somebody very senior needs to know who really created the breakthrough or you will be defunded in subsequent rounds. Let me repeat this point because its really important. To survive in large organisations and complex environments, innovators absolutely must allow others to take the credit for their innovations. If the senior leadership doesn’t know where the innovation comes from, the catalytic group will lose its funding and the credit taking group will win it. And a combination of ego, short-sightedness and stupidity, fuelled by perverse financial incentives, will usually ensure that they seek it and sincerely believe they deserve it.

5.4 Innovation without implementation is hot air. And yet its very hard to remember to value implementers just as highly as ideators, iterators, innovators, creators, ‘design thinkers’ and policy strategists. This is partly because these characters are much better at self promotion and internal marketing than implementers are. But if you don’t treasure your implementers, you will just make cool pilots and local one offs that will make great marketing stories but achieve nothing. Much ‘social innovation’ is this. Because it is not built with a sustaining value model in mind (see next point.) . But there are many great exceptions to this such as the influential Martin Stewart-Weeks in Australia and Filippo Addarii and his team in UK, Belgium & Italy who are both ambitious to operate with impact at mass scale. An ambitious city-wide approach is unfolding in the Amplifier Montréal project which underpins its innovation programme with a focus on inclusion, equality, and social and economic resilience. Similarly ambitious aspirations inform La Caixa Foundation’s work with women in Mozambique, India & Peru.

5.5 Even more important than valuing and nurturing implementors is baking your cake with a sustaining value model in mind. This might be profitability at some future point. It doesn’t matter when that point is as long as you or your adoption curve can keep on persuading your corporate, public or venture investors that it exists. Or it might be social value through enhancing mutual respect, cohesion, social solidarity or justice. Or it may be some blend of the two where, for example, a negative externality is reduced or a positive externality sustained and enhanced.

5.5 It is sometimes helpful to remember the distinction between an innovator and an entrepreneur (or social or public entrepreneur) — the latter sometimes turns an innovation into something that actually changes the shape of the world. It need not be their innovation and entrepreneurs are rarely innovators because the skill-sets are different.

5.6 Your stakeholders and funders will need to be comfortable with knowing that you are unlikely to have a better than one-in-seven success rate. Constant success and reports with 18 green traffic lights and one amber light and one red light are either just internal marketing (systematic, well intentioned lying.) In the public sector this is problematic to the point of impossible except where there is unusually enlightened risk-tolerant leadership or where all else has failed and utter destruction looms or where your senior manager is approaching retirement and actually doesn’t give a flying fuck.

5.7 It is hard but essential to build a culture where there is pride and reward for working well on one of the six failed initiatives and early project-kill decisions are not obstructed by passionate attachment. This takes strong leadership and, by extension, a huge amount of mutual trust in the team.

6. Most organisations tend towards the recruitment of well-rounded, balanced individuals. As the builder of an innovation team you will want some very imbalanced people who are weirdly outstanding in some way or other. Some of these may even be unbalanced people. You won’t be able to innovate with a group of rule-following all-rounders. This is why you won’t see any innovation at all coming out of any of the big consultancy firms, to pick one example at random. But to be fair, most organisations are incredibly bad at employing people who aren’t mediocrities because they leave the selection up to senior management who recruit in their own image. The public sector is better at this because they let almost anyone in and tend to promote more on merit than companies do so they end up with some really strange people in senior positions.

7. A properly diverse team suffers from periods of mutual incomprehension bordering on all out warfare because they will come from different backgrounds and inevitably not just speak different professional and cultural languages but value different things, value the same things differently and use different ways of valuing, regardless. Your job is stop this warfare and get them to see things from each other’s point of view, which is incredibly hard.

8. You will need an almost insane conception of what is possible and therefore your team will need to radically expand their own belief in what they are capable of. To be able to do this, you will have to abandon almost everything people tell you about how to be a good leader, almost everything you have ever seen your own managers do and absolutely everything that supports the pervasively practiced “arsehole school of management” approach and follow these new rules below:

Leadership & Organisational culture

9. Our systems for choosing leaders in most polities and organisations are not just broken — they tend towards the success and promotion of people who are uniquely ill-equipped to be leaders by rewarding and promoting people who:

a. Live very unbalanced lives, undervaluing friends, family and community in the pursuit of ambition. They go the extra mile.

b. Are adept at taking credit for things they are not actually responsible for. They are in the right place at the right time.

c. Are adept at avoiding responsibility for mishaps they have not prevented. They are agile.

d. Are adept at taking responsibility for fixing things that they should have prevented going wrong in the first place. They are good at fire-fighting.

e. Are adept at taking credit for their team’s work and transferring blame for cock-ups. They are confident and good communicators.

f. Have excelled at doing the task required two or three levels below the leadership level and in the way it was best done when they were at that level. This is particularly problematic in the digital area. They are knowledgeable and experienced.

g. Substitute process for real leadership whenever possible. They are professional.

h. Are decisive when they should be adaptive. They have a strong, positive approach.

i. Are consultative when they should be decisive. They are risk-averse.

j. Focus on discoverable metrics rather than culture, belief systems and strategic outcomes. They say “You cannot manage what you can’t measure.”

k. Promote people in their own image. They build a strong culture.

l. Treat people as “resources” as in the phrase “human resources.” They get things done, are decisive, and execution focussed.

m. Have many transactional relationships. They are great networkers.

10. Most organisations’ strategies are based on a deep fear. The fear that other people know how to do this properly. There is a pyramid of fear. Roughly speaking, charities and other organisations in receipt of public money are forced to be so risk averse that they end up copying what their government sponsors were doing ten years ago. For various political reasons, Ministers have been convinced, explicitly or implicitly that public sector organisations are much less efficient and innovative than private sector organisations — so they end up copying what companies were doing ten years ago. Most companies are also terrified and the bulk of them end up copying what the most innovative and successful companies were doing ten years ago (if they cant buy them.) This means that the most critical organisations working right at the front line with communities are running about forty years behind what the most innovative organisations are doing. (There are some great but rare exceptions to this.)

11. The most interesting and innovative organisations around at the moment, regardless of sector, have tended to turn this pyramid of fear on its head. They are learning how community-rooted, values-based, movement-like organisations and networks can teach others how to innovate and make change. But we have to slowly change a number of deeply rooted assumptions to harvest these insights with confidence. The Basque experience is the best I’ve come across.

12. We need to escape the myth that the private sector innovates and the public sector doesn’t. Looking for example at the fabulous and increasingly influential work of Professor Mariana Mazzucato.

Also see Leadbeater on learning from the edges & frugal innovation

See also Radju & Prabhu on frugal innovation. And for some interesting developments in the corporate sector, various in HBR on reverse innovation.

13. Then we need to free ourselves from the mechanistic, simplistic, damaging habit of imposing project management “disciplines” and systems on things that are not projects. It’s very hard to do this, to escape “project thinking”, especially in government, but its vital. See for example the YF account of early methodological approaches used in the community-based innovation movement approach I introduced there with my colleague, the extraordinary peace movement builder and innovation thinker, Gorka Espiau, based on Michael Young’s approach, mixed with Basque peace and regeneration movement insights.

14. Interestingly, unnoticed by many working on the public and social side of the house, the software development world which many think of as an archetype of PM thinking has moved on from it to something much more like the approach described above. From extreme, to agile, to scrum and beyond.

15. Next we need to realise that the organisation is, itself a network and work out the strengths and weaknesses of networks. The principal weakness with networks is that rich nodes get richer and we have to make conscious never-ending efforts to stop that from happening. An example — women will end up being underpaid and under-promoted in an organisation that only devotes itself to gender equality through principles, policies and processes. The inequality bias is deep and self-reinforcing, even by those who suffer from its effects. So the new leader will actively study actual outcomes and proactively counter-act them at every stage. See this research from Feliz Garip at Harvard & David Easly & Jon Kleinberg at Cornell.

16. One of the fundamental keys to an innovative culture (and therefore to mission critical problem solving) is diversity. Diverse teams consistently outperform mono-cultural teams just as scientists from diverse faculties out perform those from specialised units when measured in Nobel prizes, for example, even though, ironically, the Nobel prize itself has a diversity problem. See this HBR article by Hewlett, Marshall & Sherbin.

17. For models of transformational groups that have impact far beyond their size and that perform many times better than the norm, we need to think well beyond the conventions of corporatised “high-performance team” management which is hierarchical, process based, static-roled, pervasively normed and naturally Gaussian — ie managed on the profound misconception that groups of people conform to means (averages) with standard deviations rather than power law distributions with dramatic and disruptive outliers. Think for example of families, extraordinary musical ensembles, movements & revolutionaries and tech start-ups. Each of these models can have disproportionate and transformational impact on individuals, communities and the world but here are some of the things you will almost never find in them:

a. Regular, systematic performance appraisals.

b. Anything like a performance appraisal system that tells some large proportion of the group that they have under-performed the best.

c. Rigid and slowly changing hierarchies.

d. Job descriptions.

e. Weekly team meetings.

f. Performance related pay and bonuses. (particularly ones that reinforce the message at (b) above that most of the team are under-performing. See for example, Giving everyone an A by the fabulous Benjamin Zander:

18. In fact it’s worth dwelling on this profound point that most outperforming small groups are distinguished by the fact that they treat their members as human beings, not resources. They treat each other as fundamentally equal, while diversely skilled and experienced. True equality never means similarity.

19. What underpins this approach, as with all moral systems, is a view of what it is to be human. There are many traditional ways to approach this question that command respect. For me the important theme is some degree of free will, the spark without which there are no values, no meaning and no speech. An explanation of that doesn’t belong here but happy to provide it separately. I think people are free to be determinists if they really want to but you would obviously never employ one. Agreeing divisions of work and commitments to deadlines with someone who, by definition, can’t accept responsibility would be too hazardous.

20. If free will is distinctively human and we commit firstly to not blocking people’s exercise of it to become more fully human and secondly to actively encourage self actualisation, we end up with some good principals to use in the conduct of our work and our leadership, where leadership is now understood to be the facilitation of a group of people to become transformationally great through unlocking and beginning to realise their full potential. Not accidentally, these are the converse of the leadership selection criteria criticised in paragraph one :

a. Ensure that colleagues are empowered and encouraged to live balanced lives, to be good members of their families and communities and to enrich themselves intellectually, socially and culturally both in work and beyond. See this early research by Aristotle.

b. Create a culture where respect for and celebration of people’s contributions are natural and pervasive. Great teams are always celebrating something.

c. Create a culture where people insist on and are obliged to take responsibility for their own shortcomings and failures because it is not just safe to do so but because they know they will receive loving support in dealing with them. Here is some serious HBR research on this on this but more interesting is the Fuck-up movement which really takes this idea seriously.

d. Create a shared understanding of and belief in the mission of the group that means that the final outcome is always desired and setbacks are identified and prevented. The diving catch is no longer cause for much celebration but becomes a signal of failure that the group addresses honestly together.

e. Lead in a way that tends towards you taking responsibility for things that go wrong and giving all the credit to others for things that go right. Understand and eliminate self serving attributional bias.

f. If we all knew what we all know, we would be amazing. The outperforming group values deeply the skills and insights of every member of the group and overcomes the barriers created by the different languages and metrics that flow from their necessary diversity.

g. A great leader and a great team never tries to solve a problem requiring good judgement or leaderly decisiveness or group creativity with a process. Processes are fundamentally important in the delivery of complex work but they are tools which come after human judgement and give effect to it. The good leader understands the difference between the power of using processes to support good decision making and the more or less complete abrogation of responsibility that comes with relying on processes to justify decisions they are afraid to own or create decisions they are afraid to make.

h. Many leaders make the mistake of thinking that decisiveness on the one hand and adaptiveness, openness and consultation on the other, are mutually exclusive leadership styles. Great leaders are very open. They change their minds.

i. And then when the time is right, very decisive. Great teams decide slowly and implement fast. Most public sector organisations decide quickly and implement slowly.

j. Data and metrics are much like processes — very useful in the service of good judgement. But an organisation that only manages what it is able to measure is on the fast train to Stupidville. Extraordinarily the quote “If you can’t measure it, you can’t manage it” comes from the truly great management thinker W Edwards Deming in ‘The New Economics’ and what he actually said was “ It is wrong to suppose that if you can’t measure it, you can’t manage it, a costly myth.” The Deming Institute continues to struggle to defeat this profound misunderstanding with little apparent success.

Deming long before others realised that performance appraisals were deeply damaging. The interesting thing is that he was a statistician by training and thus understood the power and limits of metrics. Strong tools in the hands of the amateur are a danger to all. Most BI tools and emerging AI are particularly dangerous in the hands of amateurs. Most users in the public sector are amateurs or close because the public sector can’t afford professionals in this area at present. (See separate paper on why the public sector and the tech sector misunderstand each other so comprehensively. )

k. Treat all people with respect.

l. Understand that great innovations are rooted in relationships and that all real relationships are non-transactional relationships.