Friday, November 28, 2008

Lessons from innovation's front lines:

An interview with IDEO's CEO Tim Brown, whose company specializes in innovation, distills the lessons of his career.
NOVEMBER 2008 • Lenny T. Mendonca and Hayagreeva Rao

IDEO is a fascinating company that we feature in our classes. The following is an excerpt from an interview from the McKinsey Quarterly. Go to the original site for the full text. They talk about some real pertinent issues. Remember, we use the term innovation a lot but we are really talking about growth.
I would like to wish our American audience a very Happy Thanksgiving; our Indian members a rapid return to peace; and a wish to all a return to “normalcy” whatever that is!

Many companies claim to be innovative, but few can claim innovation as their raison d’ĂȘtre. One such innovation machine is IDEO—a designer of products, services, and experiences ranging from Apple’s first mass-market computer mouse to aspects of Prada’s store in New York City to the patient-care delivery model at SSM DePaul Health Center, in St. Louis, Missouri.
IDEO’s single-minded focus makes it an intriguing port of call for executives seeking insights on innovation. The company’s deep experience collaborating with other businesses and with nonprofits and government agencies gives it valuable perspectives on what distinguishes winning from losing innovation efforts. Yet as CEO Tim Brown is quick to point out, what works at IDEO won’t work everywhere.

Brown has worked at IDEO since its formation, in 1991, when three established design firms came together. He became CEO in 2000, after stints heading IDEO Europe and the company’s San Francisco office. Over the years, Brown has stood for the development of ideas through action—observing customers, prototyping, testing, refining—rather than abstract thought.1
In this interview with McKinsey’s Lenny Mendonca and Stanford professor Hayagreeva Rao at IDEO’s offices in Palo Alto, California, Brown provides his perspective on innovation at IDEO and at other organizations. He focuses not on a philosophy of design but on the role of leadership in stimulating creativity, the barriers that sometimes inhibit it, and the incentives that really help to generate new ideas. He also discusses opportunities to innovate in public services and the promise of user-generated online content.

The Quarterly: You’ve written and spoken extensively about IDEO’s design philosophy and its potential relevance for other companies. What lessons does IDEO, as an organization, hold for others?

Tim Brown: …………..
So we talk a lot about managing tensions. On one end of the spectrum is running a business well. On the other end is having the most creative culture you can. You’ve got to have both. And you can’t just pick a spot on the spectrum. You’ve got to move around. It doesn’t worry me to do that. But it drives some people completely crazy.(You need to be ambidextrous!!)

The Quarterly: Presumably, those tensions also exist in other organizations trying to innovate. What approaches can help resolve them?

Tim Brown: Even though companies want everyone to be thinking about innovation all the time, the reality is that everybody’s got other roles to play. So innovation is not a continuous activity; it’s a project-based activity. If you don’t have a process for choosing projects, starting projects, doing projects, and ending projects, you will never get very good at innovation. Projects need some form—you call them something; you run them in a certain way; you fund them in a certain way. That sounds simple, but, actually, a good process for getting projects going and done is often not obvious to companies.

The Quarterly: What’s the role of leadership in stimulating creativity and innovation?

Tim Brown: You really notice a difference in organizations where the senior leadership immerses itself in innovation. I don’t mean that it runs projects. I don’t mean that it does the innovation itself. But it immerses itself by, for example, playing an active role in reviewing the innovation that’s going on at various levels in the organization in order to give people permission to take risks. Or by playing a really active role in deciding who gets to do innovation, making sure project leaders pick people who are naturally comfortable taking risks.
(Systemic innovation/growth cannot happen without the active involvement of leadership, period!!)

In some cases, leading innovation means standing up for ideas when they get to the point where they need to be sold throughout the organization. Most of the extinctions that happen in the innovation ecosystem happen inside the organization—long before the ideas get to market—not in the marketplace. The antibodies that organizations naturally have to fight new ideas win out. It’s often the role of senior leadership to defend new ideas until they’re actually out in the marketplace and able to stand up for themselves.

The Quarterly: What gets in the way of innovation?

Tim Brown: The biggest barrier is needing to know the answer before you get started. This often manifests itself as a desire to have proof that your idea is worthwhile before you actually start the project: “show me the business proof that this is going to be a good idea.” You can understand this, of course, because it’s an attempt to mitigate risk. But wanting to know whether you’ve got the right idea—or the assumption that you’ve got to have a business case—before beginning to explore something kills a lot of innovation.

Now, if you want to do some incremental innovation in a market, with products you understand well, then there’s a reasonable argument that you should have a pretty good business case. But not if your ambition is “to create the next iPod.” Steve Jobs didn’t know what the business case was going to be for the iPod before he started. (This huge. In our discussions we often talk of needing to be an ambitexrious company. You need to match the approach and appropriate tools aginst the goals of any particular project. Projects that extend or defend an existing business should have a pretty sound business case. But, if you are reinventing or making a significant change to you business design, you cannot possibly have a solid business case at the outset. This is when we deploy tools such as Options Management and Discovery Driven Planning that are designed to manage the uncertainty/assumptions until a firm business plan can be developed.)

The innovation process is a series of divergent and then convergent activities—a very simple concept, but one that a lot of leaders used to managing efficient processes in their businesses struggle with. By “divergence,” I mean a willingness to explore things that seem far away from where you think your business is today. The discomfort that a lot of business leaders have with innovation is with divergence. They think that it’s divergent forever and that they’ll never be able to focus on something that makes business sense. I think that’s where some business leaders, historically, have had a bit of a problem with their internal innovation units: the leaders have a sense that these units are endlessly divergent. If you understand that convergence follows divergence, and that it’s really hard to converge without first diverging, maybe that’s a bit comforting.

The Quarterly: What role do you see for user-generated online content—which often seems pretty divergent—in stimulating innovation?

Tim Brown: It’s better to have a bigger ecosystem for innovation than a smaller one. You’re going to get more ideas and increase the likelihood of better ideas. The more people, all other things being equal, the better for innovation. So there’s definitely a role for user-generated content.
But it’s really early. ………

The Quarterly: Thus far, we haven’t talked much about incentives. What’s their role in creating a culture where innovation flourishes?

Tim Brown: I think organizations have a hugely unfair advantage when it comes to innovation and incentives: people want to put things out in the world to leave their mark; they want to be creative. I think it’s a basic trait of human nature—if you give people the chance to do things that have an impact in the world, that is inherently motivating to them. Time and time again, I hear people say that putting something out in the world that didn’t exist before was a life-changing experience.

This means that if you want to be an effective innovation organization, to motivate your people as innovators, you’ve got to be prepared to measure yourself by the impact you have on the world—not just your sales or your margins, which are important, of course………….

The Quarterly: If translating innovation into impact is critical to motivate people, how, in practical terms, do you do that—both organizationally and for individuals—in ways that matter to them?

Tim Brown: At IDEO, we try to do this on three levels. Everybody has a portfolio of all the things they do. We’re now rolling out a software platform for knowledge sharing. Everybody has a page on that, which is basically their personal portfolio. One of the things in it is the impact of the work they’ve done—on their colleagues, on their teams, or on the outside world.
Then we’ve always encouraged project teams, at the end of a project, to share the impact they’ve had.. ………..

The Quarterly: Why are you doing that?

Tim Brown: People want to work on things they believe in. I don’t mean that every project we do is in the social-impact space, of course. But we get more pushback now than we ever did about whether a project is something that people want to work on……….

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