You’re Not Innovating if You’re Not Doing These Three Things

 

In a recent interview with Harvard Business Review, IBM CEO Virginia “Ginny” Rometty discussed her concerted efforts to ensure the company stays relevant. It’s not difficult to see one clear theme emerge, seemingly a six-word lynchpin of her strategy in this transformation: “Don’t try to protect the past.” Rometty’s tack is a unique lesson in innovative thinking, efforts that otherwise could easily have gone awry.

When Rometty was appointed CEO in 2012, she had already been with IBM for over three decades, starting her career there in the early-80s. It’s hard to even compare the IBM of then with the company that we see today. At that time, IBM’s focus in hardware and computing technology was a much more direct representation of its moniker: International Business Machines (my own introduction to IBM was with a second-hand electric typewriter my father bought at a company salvage sale).

The company, today, has only continued to divest these legacy businesses ($8B-$9B in revenue sources under Rometty alone), in favor of making big bets in its artificial intelligence platform, Watson, and new businesses of data, cloud, and security. Whereas most executives could hardly be faulted for folding to mounting investor pressure, Rometty has held course despite 20 consecutive quarters of revenue decline.

Rometty’s determination in continuing IBM’s tradition of being the only technology company that has moved from one era to the next is a case study in building innovation for durability and sustainability. In our experience, true innovation, that which is woven into the fabric of an organization’s ethos and sustains despite multiple pivots, requires three critical ingredients:

  1. Ardently committed management

  2. Sufficiently invested horizon

  3. Safety-laden risk tolerance

ARDENTLY COMMITTED MANAGEMENT

There seems to be a widespread romanticism with the idea of innovation. Watch the latest product launches from Apple or Google and it’s not hard to understand why. Innovation seems to be equated with sexy new technology products encased in aircraft grade aluminum, featuring the fastest and latest Silicon Valley magic.

The reality is that real innovation is a street fight.

Every innovative breakthrough is built on the carcasses of hundreds (if not thousands) of experiments, each providing the next pixel of progress. This is a highly iterative, time-consuming, arduous process that often feels like it’s steeped in repeated failure. And, if there is one factor that we have seen most responsible for derailing innovation efforts and initiatives, it is wavering management support. This is especially true when the waters get rough, which they almost always do.

Take the example of a life sciences company, LifeX. The organization was facing the imminent likelihood of disruptive production demand. Specifically, its production process would soon be incapable of meeting forecasted demand on a new product. And, because of the specialty nature of this product, there weren’t enough specialists who could be hired to scale their current process. The organization needed to innovate their process for scalability using their current staff and facilities.

The project was heavily invested: countless hours of steering committee meetings, program design optimizations to best engage the necessary team members, passionate communications from the sponsoring business unit manager, and a trans-Atlantic kickoff that further communicated commitment.

In the months that followed, however, interest and commitment steadily waned. The business unit manager would often be absent from key team meetings (attending to other legitimate priorities), and eventually was visibly frustrated by the pace the process was taking. Slowly, steering committee members and other stakeholders became unavailable for program tasks. Ultimately, the entire program was halted, never meeting its objective to develop a new process to meet production demand.

This may be an extreme example, but it serves as an all-too-common cautionary tale. Management support is extended and signaled in a variety of ways, most powerfully through consistent prioritization and resolve. Team members are constantly looking to their leaders for these signals on what is most highly regarded, what will be rewarded, and what is being paid lip-service. Compound that with the messy, non-linear, and uncomfortable road that innovation commonly takes and it’s inevitable that most of us will be looking for the first exit ramp we can find.

For all these reasons, managers need to be resolute about their dedication to innovation efforts and consistently reinforce this message, both in language and action.

SUFFICIENTLY INVESTED HORIZON

Innovation is a process that relies on one input more critically than any other: time. The simple fact is that time is required to engage in the experimentation and iteration that is necessary for innovation. Further, it takes time for the most important aspect of innovation: interpretation. Interpretation is the secret sauce that drives progress; interpretation of trends, interpretation of experiment results, interpretation of data. It is for this reason that we reject the Fail Fast paradigm that has been heralded by Silicon Valley in recent years.

Fail Fast attempts to turn failure from something that most of us avoid into something to be celebrated so that we can learn and iterate. The problem with Fail Fast is not so much in the fail, but the fast. The preoccupation with speed taps into our innate desire not to linger in something which is uncomfortable or stressful too long (in this case, failure) and places the process at odds with what it is trying to achieve, which is learning from the failure. In our experience, Fail Fast becomes a proxy for shotgun approaches with insufficient deliberation for interpretation.

Rather than Fail Fast, we recommend Fail First. We honor that failure is necessary and is the seedling for what’s next. But, rather than fast-forwarding to the next failure, we do a deeper exploration and interpretation to fully make meaning (sometimes several meanings) so we can be intentional about the next effort. Put succinctly, we commit to the goal for people to learn. And, for people to learn takes time.

In the example of LifeX, there simply wasn’t a sufficient horizon (or patience) for innovation to emerge. It is unclear whether a clear expectation of timeline had been set at the onset, but it is apparent that early hurdles triggered an impatience that is, unfortunately, a leading cause of the demise of most similar innovation initiatives.

We often get inquiries asking us to assist in providing the foundation for teams or organizations to adopt a more innovative approach. It soon becomes apparent that these inquiries expect results after mere weeks or single fiscal quarter. In our experience, developing the baseline capacity for sustained innovation takes a minimum 9 – 12 months. Even this can be an aggressive timeline for teams that have anti-innovative barriers.

SAFETY-LADEN RISK TOLERANCE

Several years ago, the executive team for a financial services organization was not seeing the uptick it had anticipated. Its management had prioritized a multi-year strategic objective to invest in product innovation efforts with the goal of raising its reputation of being dull, stodgy and outdated. After 18 months of investment with little return, we were asked to come investigate.

After speaking to staff at various levels in a number of business units, two opposing factors became clear. On the one hand, recent recruitment efforts to attract a new generation of employees had been largely successful. Many early-career employees were excited at the prospect of being the voice at the heart of a rejuvenation. Managers also spoke enthusiastically about the prospect of bringing their institution out of the dark ages.

Management behavior (at a variety of levels), however, painted a different picture. It was discovered that two discrete practices were stymying efforts. First, many were second-guessing management’s authenticity due to a widely circulated story about one product innovation that, when presented to managers, was deemed too aggressive. Instead of praise at the out-of-the-box thinking, this team was rewarded with a dressing down and reputational consequences. Future ideas from those involved were undervalued and sarcastic jabs never let the moment die. The message for the rest was clear: don’t innovate the “right” way and it will cost you.

Second, even if there were product innovation ideas that would garner strong institutional support, financial incentives were tied to existing products. Supporting innovation in new products, while prioritized by the executive team in mindshare and message was not being prioritized in other motivating avenues, specifically reward and bonus systems. There was a critical misalignment.

At the center of innovation lies a four-letter word: risk. Whether or not this is regarded as a dirty word is largely dependent on its counter-veiling force: safety. How safe an organization makes it for risks to be taken will, more than any other factor, dictate the willingness and ability for its people to unlock creativity and innovation.

Luckily, most of us don’t have life-safety concerns when being asked to innovate at our workplaces (the exception being when we’ve worked with military or police & fire services). But, safety comes in many forms: financial, reputational, job security, and career trajectory, just to name a few. Put any of these things in danger and there will be an overwhelming force to snap to what’s established and proven.

It would be convenient if the reward for innovation could simply be equal or greater to the risk undertaken. Unfortunately, behavioral science research tells us that the positive reinforcement must actually be much greater for the simple fact that unknown positives are discounted and unknown negatives are inflated. It is no wonder that innovation was stalled in the examples above. Even when incentives were re-aligned, it took several fiscal quarters for teams to begin to take the reputational risk gamble.

CONCLUSION

Whether Rometty’s transformation at IBM will ultimately be successful is still yet to be seen. What is apparent, however, is that both rhetoric and actions are aligned in management commitment, a long-term innovation horizon has been invested, and an appetite for risk has been nurtured allowing staff to move away from that which is time-honored and well-known.

When thinking about your own organization, is it really committed to innovation, or merely painting a thin veneer over the status quo?