If these words come to your mind when you think about brainstorming and innovation, you’ll want to pay close attention.
Because it’s about not getting along, about disruption, about disagreement, and about contrasting perspectives. That’s what makes innovation happen.
In The Innovation Code: The Creative Power of Constructive Conflict, Jeff DeGraff and Staney DeGraff introduce a framework to explain how different kinds of leaders can create constructive conflict in an organization. Staney DeGraff is the CEO of Innovatrium Institute for Innovation. And Jeff DeGraff is known as the Dean of Innovation, a professor at the Ross School of Business at the University of Michigan and a friend of mine for many years. I recently spoke to Jeff about his latest book.
“Disharmony is crucial to innovation.” –Jeff DeGraff
Many people think that conflict and in-fighting must be solved before you can innovate, but you teach that it’s a healthy part of the process. Why is discord a good thing?
Innovation is simply a form of useful novelty. It’s the opposite of standardization. Positive tension is required to generate the energy required to create unique ideas. Apathy is the death of innovation, not conflict. So, to make innovation happen, you need to have divergent worldviews – points of departure. This creates new connections and forces ideas to morph into ever more potent forms. Take a good look at the most creative civilizations throughout history, and you will find they sit at the crossroads where a variety of people, and their ideas, meet both geographically and culturally: Athens, Hangzhou, Vienna, or New York. The same is true for teams and partners: Anthony and Stanton, Lennon and McCartney, or Shaq and Kobe. Every strength brings a weakness, and we need the “other” to push us forward and to overcome our own shortcomings. The key is to keep these conflicts constructive and focused on ideas, not personalities.
“Innovation is about constructive conflict-positive tension.” –Jeff DeGraff
Design thinking is one way to reframe problems, ideate solutions, and iterate toward better answers. It helps solve wicked problems. Those are the type that are especially insidious and difficult.
In a new book by Jeanne Liedtka, Daisy Azer, and Randy Salzman, Design Thinking for the Greater Good: Innovation in the Social Sector, the authors take on the challenge of applying design thinking to the social sector. The principles apply to all organizations and may help you reach a breakthrough in your organization. I recently spoke with Randy Salzman about their research. Randy is a journalist and former communications professor. His work has been published in over one hundred magazines, journals, and newspapers, from the Wall Street Journal and the New York Times to Mother Jones, Bicycling, and Style.
Design thinking is a modern version of what was once common, a method of addressing and solving problems outside of normal professional siloes. After about 500 years of ever-greater specialization, society is recognizing that wicked problems lie between the professions, between those siloes, and that most “answers” require a grasp of human behavior and a willingness to deeply understand the entire problem, not just “my” professional aspect of it. Design thinking, often called human-centered design, asks us to explore deeply, empathize continually, ideate rapidly, prototype simply and iterate constantly in order to address the problems that bedevil us. Unlike, for example, LEAN and most analytical methods of addressing problems, design thinking seeks to hold problem-solvers in the question space, rather than rapidly jumping to an answer as most Type A personalities – who corporate leaders tend to be — do. Reframing the question, exploring it deeply—and especially building solid empathy with users and other stakeholders—allows design thinkers to find unarticulated needs and desires and build solutions—tapping into unintentionally hidden aspects of human behavior. In today’s “quantitative” planning world, design thinking seeks to return to “qualitative” understanding of both bigger, and littler, picture issues.
It is being used today all over the world in a variety of very different organizations. Would you give us a few examples?
While many know of the success of Intuit, 3M, Proctor and Gamble and other major corporations in producing new products and services via design thinking approaches, less is known about the problem-solving methodology’s work outside of product development, and in social sector and government organizations. Today, many U.S. government bureaucracies – from Health and Human Services, the VA, even the armed forces – are today seeking to understand the people they serve at a much deeper level than treating people as numbers using a quantitative statistical approach. Non-profits, hospitals, and educational institutions are also adapting their thinking towards design-thinking’s “possibility first, constraints later” approach to problem solving. For instance, The Kingwood Trust in the United Kingdom is using design thinking to sense and adapt to the needs of autistic adults who cannot use written or oral language to even express their likes or dislikes, and involving them in the design of their living spaces. The Community Transportation Association of America is using it to build local capacity to solve the work-transport needs of lower income employees. Monash University Hospital in Australia has completed a dozen design thinking projects and are presently engaged in solving the truly “wicked” problem of how medical providers can deliver and be compensated for wellness instead of for providing interventions. All these stories are in our book, Design Thinking for the Greater Good: Innovation in the Social Sector. But the stories are too many to fit into any book. We only touched on the New Zealand government’s culture-wide tipping to design thinking. Most governmental ministries in that Pacific nation have a design-thinking shop aimed at exploring deeply and empathizing continually with the stakeholders they serve.
We like to talk in terms of a shift from “Innovation I” to “Innovation II” and liken to this shift to the one that occurred in quality, post WWWII. In the same way that quality was originally the realm of specialists and then gradually (facilitated by TQM) spread to the point where, today, quality is everyone’s job up and down the organization, innovation is increasingly seen as belonging to those outside of research & development and senior executives. For organizations to adapt and thrive in today’s climate of political and economic uncertainty and challenge, we submit that all staffers, all employees, need the training and authority to innovate. It must become a core organizational capability. In this environment of broadened responsibility for finding new ways to create value for stakeholders, design thinking can do for innovation what TQM did for quality – help us to teach, scale and democratize it.
Certainly, possibilities for innovation are accelerating for a variety of technological reasons, from big data to computing capacities. There has been less attention to the human dimension, to the awareness that flawed human beings do not behave like the so-called “rational consumers” the quantitative planning world was based on. As the authors of Nudge put it, man is not “homo economous” but “homo sapiens,” and until thinkers began to understand that most of us act without thinking – rationally or otherwise – very little qualitative understanding of human behavior was considered by “garage” and other technological innovators. Now—in what some are calling the “Smart Machine Age”—there is an awareness that every idea and every concept needs accompaniment from a social technology which aids in its spread. We think of design thinking as a social technology for change. As more and more business, governments, organizations recognize that a qualitative understanding of their stakeholders is needed, design thinking opens up a new kind of conversation that creates space for innovation to birth and blossom.
The bookstores have volumes and the media is full of examples of people who believe the way to success is to crush the competition—out-strategizing people and pressing your advantage till they are crushed by the wayside. Young leaders are told to step on faces to get ahead or aim for short term goals of size and profit.
But there is another way. There is a clear path to have stunning success and still be able to sleep at night and be proud to tell your grandchildren how the world is a better place because you were in it.
Values-based, not ego-based, leadership focuses on serving the greater good and accomplishing a higher purpose. It is not complicated. It is just difficult.
“Values-based, not ego-based, leadership focuses on serving the greater good and accomplishing a higher purpose.” -Jeff Thompson
Let’s take for example the last broad economic downturn.
How are the priorities in your department or company organized to deal with this problem? Who were the first to be affected? The most vulnerable? The last people who were brought in the organization (your future)? The people with the least power and the least influence? Who took the biggest beating? What won the day? The long-term good of the organization or the short-term financial performance report for the board? Shareholders may clamor for short-term wins, but there is no law that says you have to sacrifice the long-term health of the organization or its people to satisfying this immediate clamor. Decision making guided by values takes courage, discipline and durability.
“Decision making guided by values takes courage, discipline and durability.” -Jeff Thompson
Imagine a world where your customers want your organization to succeed. Where your employees are personally committed to your company’s success. Where your organization is not focused only on its own results, but on a collaborative effort that spans a community and beyond.
Co-creation. Share with our audience what it is and why it’s important.
It means collaborating with your most valuable business relationships to transform your business or revenue model. It can drive how you iterate, innovate or disrupt your market and in the process, evolve far beyond anything you could do alone.
“Introspection leads to right action.” -David Nour
You start the book by saying that, “Introspection leads to right action.” What’s the best way to do this?
Real introspection takes three critical elements:
Think Time – Unfortunately, given the hectic pace most of us work these days, we don’t get enough quality think time to set the minutia of the day aside and really consider our relevant strengths and strategic relationships, as well as personal or professional growth opportunities.
An Inner Circle – We need to surround ourselves with fewer, but more authentic and impactful, business relationships. Most of us could dramatically benefit from fewer partnerships and alliances and more thought partners who will tell us what we need to hear.
Leading Drivers – We can’t raise the bar on our intellect, performance, execution and results… if we don’t measure leading drivers of our progress—not lagging indicators of where we’ve been, but predictive insights toward where we’re headed. You can’t win a race looking in the rear view mirror. Focus your energies on the road ahead.
That bold statement was at the top of a letter I received, and it got my attention. I started to read about the reasons many organizations are struggling to innovate. It led me to the research by Anne Marie Knott, PhD. She’s a Professor of Strategy at the Olin Business School of Washington University. She was previously an Assistant Professor at the Wharton School. Her research is focused on innovation ranging from entrepreneurship to large-scale R&D. Her new book is How Innovation Really Works: Using the Trillion-Dollar R&D Fix to Drive Growth.
I followed up with her to talk about innovation, R&D, and what can be done about the current problem.
Companies Have Become Worse at Innovation
You say that companies have become worse at innovation despite the fact that it’s more important than ever. Why is this?
While companies have become worse at innovation, I don’t actually argue that innovation is more important than ever. It has always been the chief source of companies’ as well as the economy’s growth. I think the reason if feels innovation is more important is that companies’ R&D is only 1/3 as productive as it was in the past. Therefore, they need to do three times as much to generate the growth they used to enjoy–actually more than three times because each additional R&D dollar is less productive.
Research: Companies’ R&D is only 1/3 as productive as it was in the past.
The catchy answer is that RQTM (short for research quotient) is the company equivalent of individual IQ—it’s how smart companies are. The precise answer is that RQ is the percentage increase in revenues a company gets from a 1% increase in R&D investment. So companies that have high RQs derive more revenue, profits and market value per dollar of R&D than low RQ companies.
How was it developed?
I didn’t set out to develop RQ (though I knew I needed such a measure from my time in industry). I actually stumbled upon it while trying to solve an academic puzzle, in much the same way that Percy Spencer stumbled on microwave cooking while working on combat radar systems for Raytheon.
Once I discovered RQ, however, I went through a similar process companies go through with their R&D. I worked out the theory to characterize how it related to growth; I tested alternative versions; then I validated that the current version matches theoretical predictions using 47 years of data across the full spectrum of US companies conducting R&D.
What are its implications?
RQ has a number of implications. First, by tracking their RQ over time, companies can determine whether their R&D capability is improving or deteriorating. If companies could have done this 30 years ago, it’s likely R&D capability wouldn’t have deteriorated so much. Second, because RQ is derived from economic theory, companies can use RQ to determine how much an additional dollar of R&D should increase revenues, profits and market value—this helps them set their R&D budgets. Third, RQ provides investors a way to value R&D, so now even Warren Buffet can invest in technology firms. More importantly, when investors know how to value R&D, they won’t pressure companies to cut R&D in pursuit of current profits
Why Most Companies Fail at R&D
Why do most companies fail at R&D? “Failing” probably applies more to projects than to entire R&D systems (which is where RQ applies), but if you’re asking why companies have gotten worse at R&D, I have a few thoughts. I’m going outside the range of my evidence with this answer, but I believe the demise began with the “financial management” trend in the 1980s. This was the idea that any company could be managed by anyone simply by controlling “the numbers” (think T. Boone Pickens and Carl Icahn). “The numbers” meant cost reduction in the case of operations and rank ordering investments by ROI (return on investment) in the case of new investment. R&D can’t be managed that way. A good R&D system has many longshots. On average Industrial Research Institute (IRI) member companies report that it takes 125 funded projects to achieve a single commercial success. The problem is that no “number” can identify the single success up front. Companies have to carry portfolios of projects with the hope that that the “1 in 125” is in there. If you throw out all the projects whose ROI can’t be quantified with confidence, you throw out all the lasers, geosynchronous satellites, and other exciting things we developed at Hughes.
“The most widely held misconception is that R&D should be more relevant.” -Anne Marie Knott
The most widely held misconception (80% of consultants and 90% of investment analysts/managers) is that R&D should be more relevant. This seems completely plausible. After all, who wants to be “irrelevant.” The problem with that logic is best captured by the Steve Jobs quote, “A lot of times, peopledon’t know what they want until you show it to them.” He’s entirely correct, as the iPod, iPad and most especially iPhone attest. Work done by researchers at Duke supports his intuition. Ashish Arora, Wes Cohen and John Walsh found that while customers are the most prevalent source of external ideas, those ideas have the lowest ability to increase sales.
“People don’t know what they want until you show it to them.” -Steve Jobs