If you are looking for ASI go to the offical website http://www.americanstrategic.com/
Innovation Essays and Leadership Articles Leadership and Innovation: Relating to Circumstances and Change Innovation is one of those words that we all use, agree is a positive thing and for the most part want more of. However, the term “innovation” like “leadership” seems to defy a commonly accepted definition. There is no shared interpretation of what we mean or what we are observing when we use the terms. Moreover, we lack practices for deliberately and consistently producing “leadership” and “innovation”. This is evident in the fact that in spite of thousands of books on these subjects, reading and understanding the books doesn’t enable us to be leaders or innovators. Innovation and leadership are closely related. Leadership always has some focus on bringing about a better future. In this sense, leaders are necessarily innovators. We would not normally consider a spectator of the status quo to be a leader. The term innovation also suggests some break with the ‘norm’ or the status quo. I will show in this text that an ‘innovator’ and a ‘leader’ are cut from the same cloth, that these terms are distinguishing different but intersecting dimensions of the same phenomenon. This paper is the first of a series of essays that are intended to open possibilities for developing leadership. It provides pathways for action for those who are dissatisfied with the status quo and are attempting to either improve on existing processes or perhaps accomplish breakthrough results. To begin, I will make a number of distinctions. There are obvious distinctions between the innovator (who), an innovation (what) and the process of innovating (how). This paper’s intent is to illuminate and inquire into the phenomenon of innovation (and leadership) before history judges an accomplishment as innovative or declares a person to be a leader. The focus will be on the innovator and the context or ‘way of being’ of the innovator. My thesis is that a competency for innovation is a natural by-product of certain ways of relating to the world; the context in which we relate to circumstances and change. I will also distinguish between innovation and art, two terms often used interchangeably. Finally, I distinguish simple change that is a variation of what already exists from profound change that alters the scope of what is possible. Distinguishing Innovation To many, innovation is equated with change. But, this view tells only one part of the story. Change is happening all the time whether we’re aware of it or not. A random event, insight or an accident may be novel but I do not consider it to be an innovation. What one can observe and do in the context of a novel occurrence or insight might very well lead to innovation. For example, all of us have had ‘big ideas’ from time to time and done nothing about them only to learn later that someone has succeeded in bringing about 1 Page 2 exactly what we had imagined. This is what might distinguish a leader/innovator from a dreamer. A more powerful way to think of innovation is that it means: intentionally ‘bringing into existence’ something new that can be sustained and repeated and which has some value or utility. That is, innovation is always related to some practical ‘in-the-world’ value. It is about making new tools, products or processes, bringing forth something ‘new’ which allows human beings to accomplish something they were not able to accomplish previously. Art is creative and may have value to its consumers, but requires no utility to be art. Art might be seen as the artist’s self-expression or experience of their world. Innovation on the other hand must allow for something else, some possibility or accomplishment or value beyond the innovation itself. If someone comes up with a new hammer that does what our existing hammers do, then that is a design change and design is an ‘art’. When someone creates a new kind of hammer, however, such as a ‘nail gun’ or a new method for hammering, then we can distinguish that as innovation. In this sense, we can also see that we can innovate within an art form, such as painting with acrylic at one point allowed artists to create effects that were not possible with traditional oils. When we create a new tool we are innovating. When we are not innovating we are the tool or the ‘tool’ is an extension of us. For example, the typewriter was an innovation in writing. At some moment, the typewriter becomes transparent (to both the typist and those concerned with what is being typed) and we simply have a typist typing. The tool appears again only when there is a breakdown or it no longer serves its purpose. I am claiming that our relationship to the circumstances, especially when there are breakdowns, is the primary factor in determining whether we respond as leaders and innovate, or simply resist or cope with what is happening. Whether we are speaking about leadership or innovation, our concern is about accomplishing some sustainable change whether large or small, continuous or breakthrough. While leaders and innovators participate in both kinds of change, I distinguish leadership as always occurring in a context of some intention to create the latter: Breakthrough, to break with the status quo. Both leaders and innovators change the context, paradigm or frame of reference of the innovator/leader and those who have a stake in the innovation. However, another distinction between leaders and innovators comes from the observation that leaders’ actions exist within a context of ongoing relationships with other human beings. If change is happening all the time and innovation and leadership both imply deliberate acting, then are there (deliberate) ways of being in the world that define our relationships with change? And, is there an “order” underlying such possible ways of being? 2 Page 3 Relationship to Circumstance and Change I distinguish six different ways we can relate to our circumstance and the changes occurring all the time. I claim that the way we relate to our circumstances becomes the foundation for our being leaders and opens or closes possibilities and opportunities for innovating. If we consider that change is a constant and always occurring whether we know it or not, then we might also say that these six ways of relating to the circumstances are also ways we relate to the world and become the contexts within which we deal with everyday life. These should not be considered as progressive steps in a process. Rather, these are different “states of being” or contexts available to every human being, at every moment, to differing degrees depending upon our commitments, concerns and competence in various domains of action. RESISTANCE – Opposition to circumstance Probably the most common way we relate to change is to resist it. To resist means to stand apart from whatever one is resisting and judge it as ‘not being as it should be’. We resist in many ways: we can resist by simply disagreeing with a new policy, for instance, by analyzing something over and over again, or by playing devil’s advocate with no ownership of the issue. Resistance can be overt or covert, sometimes we can resist by agreeing with someone and then gossiping when the person isn’t around. We can procrastinate, argue, rationalize or even sabotage a change initiative simply by ignoring it and waiting for the next change to come along. Whatever strategies or patterns for resistance we have, whether overt or covert, conscious or unconscious, active or passive, they have three things in common: First, all forms of resistance are “counter-innovative” and thwart human intentionality to create/own change. Any effort spent in opposing what is occurring moment to moment will blind us to possibility. Further, resistance gives power to the status quo or cultural inertia that, by its nature, will persist. This is reflected in the often quoted maxim, ‘the more things change the more they stay the same’. Secondly, all resistance is rooted in the past and is grounded in a negative mood/attitude and assessment of ‘the way it is’, a judgment that things ‘should be’ different than they are. Our commitments and actions are organized by what we see as feasible and that we know how to do. At best, this will lead to finding effective ways to cope and at worst will lead to a state of chronic suffering and eventually to resignation. Thirdly, to resist implies that there is some thing “there” to resist which essentially objectifies our world including ourselves and other people, turning us into objects in an objective world. This reduces us to either being victims of whatever it is we are resisting and/or encourages a ‘spectator’ relationship with the circumstances. This means we no longer participate in creating the future, and become trapped in a worldview that destroys possibility and power. In this state, innovation is a rarity and an ideal. When innovation 3 Page 4 does happen it is usually attributed to some ‘special-ness’ of the innovator or more often explained as an anomaly that leaves us unaffected, untouched and not responsible for the change. “Leadership” in this context is exercised through ‘opposition’ to the circumstance. For the most part, this will prove ineffective to the point of becoming part of the problem. For example, in most organizational or cultural change initiatives, the prevailing rational is that the status quo is “broken” and needs to be fixed. The leadership is resisting the ‘way it is’ and in a well-meaning way is attempting to ‘fix it’. The problem is that these initiatives are rarely effective because everything being done to change something is pushing against (resisting) what is already going on. This is how many issues persist even when there is widespread agreement that something should change. Essentially the proponents and opponents to a leadership initiative are operating in the same context. COPING – Positive reaction to circumstances Coping is also rooted in a view that circumstances are objective and we must somehow adjust our commitments and actions to match what the circumstances allow. Coping might be viewed as a positive alternative to resistance as the coping person works within the circumstances effectively. Energy expended in resisting is now redirected to problem-solving and designing ways to overcome barriers to accomplishing one’s intention. Like resistance, coping is also ‘counter-innovative’ as a relationship to change, but with one big difference: There are many innovations that are conceived as tools or strategies for more effective coping. In other words, in a circumstantially determined view of reality, coping can drive innovation, but only as a RE-ACTION to the circumstances, not as an intentional force in creating new circumstances. For example, “organized labor” was invented as a re-action to perceived misuse and abuse of power by owners and managers in the early part of the 20 th century and has become an integral aspect of how work is accomplished. In other words, the political- economic ‘institution’ of organized labor was a way for workers to cope with their circumstances. While we can observe that this ‘innovation’ has produced a lot of value and benefit for workers over the years, it can also be argued that it has done little to build or address the underlying issues of trust and allocation of perceived power in organizational hierarchies. In effect, the mechanism for coping reinforced and even institutionalized the problem. Further, we can argue that successful coping solutions will often thwart and even undermine attempts at further innovations. In the above example, labor organizations have generally attempted to block various proposed innovations in management such as cross-functional training, incentive compensation packages, self- managing teams and commitment-based management. Leadership in this context is often facilitative and oriented toward reasonable expectations and interpretations of what is possible and not possible. In a coping context, leaders will typically be arguing for and justifying whatever limitation seem to exist and encouraging ‘work around’ or ‘in spite of’ strategies for getting things done. While this 4 Page 5 can be positive and produce results, the leader in this case become a well meaning and unwitting ‘co-conspirator’ for individual and organizational limitations. RESPONDING – Owning the circumstances To respond means to freely choose action, given the circumstances. To respond requires a different relationship to the circumstance in which one considers that the circumstances are subordinate to the actions of the individual. In other words, to respond requires that one view him/herself as responsible, as owning, as being senior to whatever circumstance is occurring. The word, responsibility can actually be seen as ‘the ability to respond’…. “response-ability”. In responding, we see a human being as having insights and making choices in relationship to objective circumstances but not limited or defined by them. When we are responding we are beginning to innovate to the extent we: a) have some intention or commitment, b) are owning and not ‘re-acting’ to circumstances, and c) are bringing something new into existence which has value/utility and can be sustained/replicated in the future. For example, one of the most basic organizational issues is the common ‘us versus them’ conversation. In this structure, we complain is that “they” are a problem. The “they” might be upper management, or the quality control group, or the salespeople or the government. The underlying structure of the conversation is that someone ‘outside’ is causing a problem for me/us. To respond requires that we acknowledge that whoever “they” are is occurring within our interpretation of the world. Our choices and actions are never limited or determined by ‘them’ or the circumstances unless we believe that we have no power or choice in the matter. What limits us is part of our interpretation. We are never in fact, victims of our circumstances, although in many instances it can seem so and our suffering, when this is the case, can be very ‘real’. Secondly, to respond we must grant ‘them’ the freedom to choose as individuals, the legitimacy of their view even if we disagree. Otherwise we will be reacting to what we perceive they are doing and therefore have limited action and become part of a larger pattern of resistance that reinforces “their” behavior. In a posture of resistance, at best we may ‘win’ in a dispute by dominating rather than innovating. At worst we become resigned and simply ‘put up with’ the status quo. To determine whether we are responding or reacting we can ask, “for the sake of what are we responding”? If there is no intention or commitment behind our actions, then our actions are essentially automatic and thoughtless. If we are responsible for our circumstances and intentional in our responses, innovating comes naturally. Leaders who are responsive rather than reactive are not blind to problems or to people’s concerns, but are organizing their actions based on other considerations. They are not 5 Page 6 attempting to ‘fix’ people or simply solve problems but keep their eye on the intended outcomes or purposes for which they are working. For example, in the movie Apollo 13, there is a moment when a technical crisis threatens the lives of the astronauts. All technical options have been exhausted and there is no possibility they will survive. The ‘leader’ in the film throws down a pile of all the ‘stuff’ in the space capsule and makes an unreasonable demand for the engineers to ‘create’ a solution where none exists. This response could not have happened if the leader had believed that the circumstances were fixed. The focus in this way of relating to change is on what is possible, what might bring us closer to what we want, rather than on what is impossible, broken or deficient. CHOOSING - Accepting the circumstances To choose is a step beyond owning and responding freely to circumstances. The idea of choice is synonymous with that of acceptance where we acknowledge not only that things are the way they are, but that they should be the way they are, even when the circumstances are not what we would wish and are assessed as negative. This is a very different state of relating than either succumbing or rationalizing that one can’t help the way things are. This state is to embrace the change and the circumstances. This notion is very basic to many spiritual disciplines in both the East and the West where we can experience enormous freedom when we acknowledge that ‘reality’ is happening regardless of our point of view or understanding. In fact, one can even at some point notice that by the time our brains can ‘think’ about what is happening in the moment, the moment is already past. This experience is familiar to almost anyone who has participated in sports and been in “the zone”, or to people in the performing arts who have transcended thinking about or controlling a performance and simply expressed himself or herself fully. In this state of choosing or ‘being present’ one becomes a different observer. A person can observe all sorts of possibilities and choices that otherwise would remain buried in the circumstances. This is a state in which innovation is natural and effortless, even obvious. It is important to note however, that this is also a state in which the circumstances are still ‘out there’ and the observer is still relating to the world as something separate and distinct from the observer. This is the state where leadership begins to become an increasingly creative process. This is also where we can observe a paradox between fully accepting the way things are without any resistance whatsoever and simultaneously creating a commitment to a larger possibility. In this context it is obvious that possibilities are by definition created and leadership is about creating vision and possibility in relationship with other human beings. BRINGING FORTH – Creating the circumstances This way of relating to the world and to circumstances is the state that we normally associate with truly ‘creative’ people. What I wish to distinguish here is that the ability 6 Page 7 to create something is not a ‘gift’ that a few especially endowed people have inherited. While it is true that some people come by this capacity ‘naturally’, it is a learnable way of relating to the world and the creative expressions that it makes available begin to approach what we earlier distinguished as breakthroughs. To ‘bring forth’ means to not only to choose a circumstance that is already occurring, but begin to relate to the world ‘as if’ we are creating the circumstances themselves. In an organizational context for example, most of us have experienced or witnessed moments of sudden and often profound insight into the nature of a situation or circumstance and have formulated what seem to be (and often are) genuinely original ideas or solutions. In retrospect these innovations or inventions can be seen as: a) unpredictable, b) require challenging or changing some underlying belief or assumption about what is and is not possible, and c) generally appear obvious after the fact. A classic example is the story from the 3M Corporation about the invention of the POST IT that was created when a project looking for stronger glue failed. The inventor ‘brought forth’ a new interpretation of what was wanted and needed (removable notes) and which “bad glue” could provide. The point is that this insight required a different order of creative thinking outside conventional and reasonable frames of reference, what is usually meant by ‘outside the box’ thinking. The question here is can anyone learn to be creative simply by beginning to change how he or she relates to the circumstances? I believe that this is possible. To do so, however, requires that we let go of our notion that we are objects in an objective world and adopt a worldview in which we are individually and collectively creating the circumstances that we are observing. Leaders who ‘bring forth’ are those we normally consider to be ‘visionary’ and charismatic and who are often seen as gifted in their capacity to keep moving forward and creating openings for action regardless of the circumstances. In Shakespeare’s Henry V, the King gives an impassioned speech to his soldiers in the face of insurmountable odds. In doing so, he not only creates a possibility where none exists, but inspires his army to victory. For the leader who relates to the world in this way, a vision is not a big goal or picture of the future, but a powerful ground of being from which to create reality. MASTERY – Creating the Context for Change To create here means to distinguish the rare ability that a few people have demonstrated to invent entirely new fields of inquiry. These people are creating new domains, new openings, and new possibilities for others to explore and innovate. This is a very distinct way of relating to circumstances in which the ‘creator’ is the author of the context in which the creator is relating. To create a context means to be responsible not only for what is being perceived, not only for one’s responses, not only for a generative relationship to the circumstances, but to be responsible for creating the background or space within which the circumstances appear. 7 Page 8 “Mastery” of anything from art to penmanship is ultimately mastery of oneself and ‘who one is being’ in a situation and in relationship to the world. Hence, to become a master of innovation, a person must own both what is happening as well as what isn’t happening, to be present to both “what is” as well as to the cognitive and transparent boundaries that define our perceivable reality. In 1980 a man named Fernando Flores wrote a Ph.D. thesis titled “Management and Communication in the Office of the Future”. (Flores, 1980). In his thesis he asked the simple question, “What is action for a manager”. His thesis opened an entirely new view of management as a phenomenon that happens in conversations and that action occurs as ‘speaking and listening’. His work has transformed much contemporary thinking about how coordination occurs in organizations and has impacted thinking and practices in the fields of information technology, artificial intelligence, health care, international relations and development of leaders among others. Where this will go remains to be seen, but his work illustrates creating a new “meta-paradigm” for observing, not simply making different observations in the same paradigm. When one is the creator of the paradigm or context, then we can begin to consider that we are in fact creating and mastering our circumstances. Finally, leadership in a context of Mastery is often very modest and may seem effortless or so natural as to seem inconsequential at the time. Mahatma Gandhi, for example, was a gentle man who used no force, and yet showed us how not resisting could be a powerful force for change. His Mastery did not even seem to be leadership for most of his career and yet from the beginning he was pursing the creation of a new reality. In addition, leaders who live and work in this context are constantly inventing or creating their experience, in this sense they are always beginners, learning and creating in each moment. Summary Innovation takes place at different levels from modest improvements on an existing product or process to dramatic and even historically significant breakthroughs in how we relate to the world. In all cases, the capacity to innovate will be a function of our commitments, what we want to accomplish and our relationship with the circumstances we perceive we are in. If we are resisting or coping, we see no innovation and whatever change we generate will be as a reaction to the circumstances and part of the process by which those circumstances persist. When we are responding or choosing we are in a position to innovate and will do so naturally and consistently as a function of what we observe to be possible or what we observe is missing in our perspective of the world. Change based on this view is likely to be an improvement on what already exists. When we are bringing forth or creating we are not only in a position to innovate but are predisposed to do so. Further, in these ways of relating to circumstances, we have few if any limitations on what we can imagine and generate. We are likely to be generating breakthroughs or even creating entirely new spheres of possibility. The Great Innovation Lie Like any good managing director, I regularly watch what the competition and others in our field are up to. One thing I have noticed over recent months is a tendency to turn corporate innovation into a highly complex system involving numerous processes, approaches and models. Such systems are being promoted by consultants who, not surprisingly, charge by the hour for implementing and teaching their complex systems - which require many, many hours to implement. Worse, consultants scare their clients into believing not implementing the consultants' system will lead to failure. Indeed, when the system does fail, the consultant can easily blame the client for not implementing the complex system properly.But, the consultants are wrong! Corporate innovation need not be horrendously complex. Indeed, highly complex systems can actually stifle creativity. And since innovation is the result of successfully implemented creative ideas, it is clear that systems that stifle creativity are not going to maximise innovation. Quite the opposite.As I have written before, medium to large organisations already contain many internal creative thinkers: the employees; and many external creative thinkers: the customers. All that is needed is...Trust: to make people comfortable about sharing their ideas with the organisation. They need to feel they can make mistakes without suffering undue consequences. Management buy-in: management must demonstrate their commitment to innovation through internal and external communications media. Management must also demonstrate being creative themselves; as well as a willingness to try out creative, yet risky ideas.Budget: is necessary to implement highly creative or disruptive ideas, which by nature are more risky than less creative ideas. Money must also be found for investing for tools (see below) that facilitate idea sharing and development and training in the use of those tools.Tools: such as an idea management tool for soliciting, capturing and evaluating ideas from the employees. Used well, an idea management tool is the best on-going tool for idea capture. Also useful are creative project teams, brainstorming sessions, mind-mapping tools and other items which facilitate creative thinking and collaboration.Evaluation methods: are necessary for evaluating ideas generated by the tools. Many tools, such as idea management systems, include evaluation components. Note: one must be careful not to over-evaluate an idea. Too much concern about risk can lead evaluators to discourage creativity in order to minimise risk (see article “Too many evaluators spoil the idea” in the 20 September 2005 issue of Report 103 (http://www.jpb.com/report103/archive.php?issue_no=20050920).Facilities: including meeting rooms, other spaces where people can meet and share ideas, white boards, post-its, pens and other things which facilitate creative meetings and brainstorming.Rewards: whether recognition, small gifts or granting special privileges, some kind of fair reward scheme motivates people to share their creative ideas with the organisation. Time: employees need time to be creative (see second article below). How all of these components come together will vary from firm to firm. What is important is that these components exist, that there is flexibility and that ideas are implemented – nothing spoils a great idea management system than not implementing ideas that are generated by the system.Of course the above components of corporate innovation are highly simplified. Nevertheless, they provide the backbone of a corporate innovation plan and can quickly be elaborated to provide a more detailed structure. For more details on a simple, but effective organisational innovation strategy, see the Corporate Innovation Strategy Plan.So, don't let the expensive consultants fool you. An innovation strategy is relatively easy provided you have the commitment, the desire and the budget. Moreover, the strategy should be designed to fit your firm with minimal disruption. Dr. Stephen M Sweid / Principles of the creative process Page 1 of 10 Review of the Main Principles of the Creative Process. Introduction There are tens of known creativity stimulating techniques, but it is worthwhile reviewing the main principles behind the creative process, for the purpose of developing real artificial creativity using computer software, similar to artificial intelligence. Creative ideas could be discoveries, modifications, new combinations, integration or adaptation in response to an analogy, need, opportunity, or problem etc. Creative ideas are usually original, because there are usually an infinite number of possibilities for combinations and associations, and hence it is unlikely that the same combination is repeated by random. Definitions A concept (idea, object, etc) is defined by its aspects (attributes, features). Example: The concept Bike has features such as: "Two wheels", "Mobility", "Exercise", "pedaling", "Balance", "light weight", etc. Apple as concept has aspects such as "sweet", "fruit", "round", "healthy", etc. Note: There are different ways to visualize concepts and aspects, as shown below in the graphs, or one can present aspects as oval shapes containing the concept. In the latter case we find the concept in the overlap area of the different aspects. Analogies: Similar Concepts refer to concepts that share one or more aspects(s) (features, attributes) called common aspect(s) Dr. Stephen M Sweid / Principles of the creative process Page 2 of 10 Similar Concepts Means Sharing One, or More Features Concept A Concept B Common Aspect Aspect Aspect Aspect Aspect Aspect Aspect Aspect Aspect Aspect Aspect Compatibility: Compatible concepts or aspects are those that can fit together. For instance, a "break" is compatible with "bicycle", a "rearview mirror" is compatible with "car", "shock absorber" is compatible with "bicycle" etc Characteristic aspects are the fundamental (Most relevant) features that define a given concept or aspect, away from the irrelevant details. Example: A characteristic aspect of Bicycle is "Mobility", of email "Communication", of Apple "fruit" Activation of a Concept in The Mind Once a concept is activated in the mind, all the directly relating aspects are easily activated, and the mind automatically conducts a specific level of analogies. Creativity stimulating techniques can systematize this process. Dr. Stephen M Sweid / Principles of the creative process Page 3 of 10 Activation of a Concept In The Mind Activates Aspects CONCEPT Aspect Z Trigger Aspect X Aspect Y The Different Principles behind Discoveries ? When two concepts are quite similar (Analogy) , i.e. they have more than one common aspect, they are LIKELY similar in other aspects, i.e. they have other common aspects (These are considered discoveries if these aspects were unknown before). Clarification: Concept (A) and Concept (B) have a Common Aspect (1). Concept (B) has the aspect (2). When looking closer, we discover that Concept (A) has also the Aspect (2). Example: Bicycle and car have the common aspect "Mobility on wheels". Car has another aspect called "Air resistance dynamics", which also applies to the bicycle. (Note: This principle could apply to concepts having one common feature only. With some effort, one might discover other common features.) Dr. Stephen M Sweid / Principles of the creative process Page 4 of 10 Discoveries: Similar Concepts are Likely to have other Common Aspects Concept A Concept A Concept B Concept B Common Aspect Aspect Aspect Aspect Aspect Aspect Aspect Aspect Aspect Aspect Other Common Aspect ? Other Common ? Aspect ? ? ? A Characteristic aspect of a characteristic aspect is usually a characteristic aspect of the concept: When a concept is characterized by some aspect (1), and this aspect (1) is characterized by an aspect (2), then the original concept is characterized by the aspect (2) (Deduction). This stimulates new ideas and new connections. Example: Water is a liquid. Liquids can evaporate. Hence water can evaporate. ? Finding the causes and purpose of things, i.e. asking the WHY question (This can be related to above two rules), including sequential WHY questions to get to the real origins, and to deal with different levels of causes or purpose. Example of sequential WHY questions: Why is the room dusty? Because we have to keep window open. Why do we have to keep window open? Because we need fresh air. Why do we need fresh air? Because we are exercising and sweating. Why are we sweating? Because we are not using deodorant. etc Role of Common Aspects Common aspects act as channels (bridges) to move from one idea (Concept) to another. Therefore, one can perform multiple trip analogies: From one concept (1) to a similar concept (2), then move to an aspect at concept (2), and find a concept (3) similar to concept (2) and so on. Dr. Stephen M Sweid / Principles of the creative process Page 5 of 10 Second Approach: Finding Similar Concepts and Extracting Useful Features Concept A Similar Concept CommonKey Feature Common aspects act also as bonding pieces for combination of similar concepts. Basic Rule • Common aspects act as the bonding pieces for combination: Compatibility. • Similar concepts are likely to have compatible aspects, i.e. they can be borrowed and integrated easily. C1 Common Aspect C2 Dr. Stephen M Sweid / Principles of the creative process Page 6 of 10 Issues of Compatibility Aspects of similar concepts (similar means they have one or more common aspect(s)) are usually compatible, i.e. are likely to fit (be integrated) to the other concept. Example: One Aspect of bike is "mobility on wheels" What is similar, i.e. with same aspect? >>> Reply : car, train, motorcycle etc. What is another feature of car? >>>> Reply: Gear, stop light, turning signal, shock absorber etc >>> Result: New combinations: Bike with gear, Bike with stop light, Bike with turning signal, bike with shock absorber etc. Common aspects act as the bonding pieces for combination of similar concepts This is why similar concepts are likely to have compatible aspects i.e. that can be borrowed and integrated easily with each other. As long as starting point and final destination of analogies are connected, including multiple trips, they are most likely compatible. In brief When two concepts are quite similar, i.e. they have a number of common features, then it is likely that: • Other unknown common features can be found (Discovery) • Many features are compatible for Integration (New Products) The WHY Questions The why question makes a transition to the levels of causes or purpose: "Why is it like this?" (Cause), or "Why do we do it?" (Purpose). The why question, and indeed successive type "Why" questions, lead to broader perspectives. More options for combinations or solutions are available in this broader scope. Example: Why do we have to be more competitive? >>> Because we need to sell more Why do we need to sell more? >>> Because we want to keep growing Why do we want to keep growing? >>> Because we want to make more money Why do we want to make more money? >>> etc Dr. Stephen M Sweid / Principles of the creative process Page 7 of 10 Analysis Analysis or attribute listing (aspects, features) is considered as one of the most powerful creativity technique, and acts as the feedstock for creativity. With an organized structure of ideas, the brain can perform associations and find new ideas more easily, but also modify aspects: Analysis goes as follows: ? One identifies and lists the aspects of the concept, i.e. key features, attributes, characteristics. Concept could be anything, an idea, product, process etc. One should at least identify some 6 aspects. First Approach: Identifying the Features of a Specific Concept: Feedstock for creativity Concept Aspect 1 Aspect 2 Aspect 3 Aspect x Aspect 6 Aspect 5 Aspect 4 Key Feature Key Feature ? Then one figures out ways to modify, or improve each feature. ? And / Or one strikes analogies in respect to each feature and learn or borrow from the similar concepts. With aspects defined and written, it is easier to make analogies related to respective aspects. All types of questions should be asked to define the aspects, such as why, what, how, who, where, when etc. Furthermore, in order to get useful (and practical) new ideas or combinations later, one should cover in the aspects the elements of needs, problems, difficulties, goals, markets, customers, users, applications etc. Dr. Stephen M Sweid / Principles of the creative process Page 8 of 10 Synthesis This very significant creativity process involves combinations, integration, added value, added functions etc. A large share of creative ideas is created through the synthesis process. Types of combinations: ? Combinations of Similar concepts ? Combination (integration) of a concept with features of similar concepts (Learning, Borrowing). ? Combination (association) of a concept with a random concept. ? Combination of different aspects to create a new concept (Quiz type). Synthesis: Generation of a New Concept (Idea) from combination of different Aspects: Quiz type. NEW CONCEPT? Aspect X, e.g. User Aspect Y, e.g. Market Aspect Z, Application ? Combination for adaptation (Adjustment to a specific market or application etc) Generation of a New Concept (Idea) from combination of different Aspects: (Quiz type, i.e. overlap of different aspects). This is the opposite to analysis of a concept. Analysis is similar to finding the meaning of a word in the Dictionary, while synthesis is the opposite process, deriving the word from the required meaning. If concept is not known, the more aspects are provided, the easier it is to pinpoint the concept (as with a quiz): A realistic top number of aspects to combine (overlap) is 6, otherwise the average mind will be too strained. Dr. Stephen M Sweid / Principles of the creative process Page 9 of 10 Characteristic Aspects Characteristic aspects are the fundamental (Most relevant) features that define a given concept or aspect, away from the irrelevant details. They also serve as logical deduction, since a characteristic aspect of a characteristic aspect is also characteristic of the related concept: e.g. Apple (concept) is a fruit (characteristic aspect), and fruit is a plant (characteristic aspect) hence apple is a plant. Characteristic Aspect: Wide ScopeCharacteristic Aspect Characteristic aspect can be identified when performing analysis, i.e. when listing aspects of the concept. Characteristic aspects are important in creative thinking because they deal with the main features, away from the secondary aspects: They have a broader scope (Containing many concepts to link to). Characteristic aspects act as expander of scope, i.e. where more possibilities are available. They are very effective when overlapped with other aspects and concepts. They are very stimulating to creativity. Example: One of the characteristic aspects of bicycle is "Mobility". We can find unlimited number of concepts having this feature, e.g. car, horses, trains, boat, insects etc, hence we have a wide pool of concepts to borrow from. If we say "Mobility on two wheels" we narrow the scope appreciably. Application Example for Characteristic Aspects: We are seeking new applications for an existing product in a given market. To proceed, one defines the characteristic aspects of the present application, and seeks to match such with the given market. Dr. Stephen M Sweid / Principles of the creative process Page 10 of 10 Specifically: we are producing an electronic weighing scale for laboratories & seeking applications in travel markets! Characteristic of product is "weighing" (and not for laboratories). We ask: Where is "weighing" needed in travel? >>> Maybe one can develop a small portable scale for weighing luggage, which can be even incorporated into the luggage, or maybe develop a small portable scale for fitness weight watch during holiday etc. Had we defined aspect narrowly as "weighing device for laboratories" it would have been unlikely to find the new product idea. Another example in solving problems: we define characteristic aspects of problem and ask where else do we find such aspects, i.e. we seek analogies, to learn from. Ideas in Search of Problems Are ideas a dime a dozen as the expression says? Probably not. That’s too easy and somewhat of a cop out. It is relatively easy to get ideas, but probably more difficult to get “good” ideas—those with the greatest probability of solving problems. However, the very best ideas to the most poorly-defined problem might as well not even exist. Anyone can have an exciting brainstorming session with hundreds of ideas. Frequently neglected, however, is devoting as much time and attention to clearly defining a challenge as is given to idea generation. As famed photographer Ansel Adams, said, “There is nothing worse than a sharp image of a fuzzy concept.” Most of us tend to be more solution-minded than problem-minded. Although lip service may be given about the need to “define the problem,” relatively few people do it well. This paper will address how to focus on framing challenges, especially as they might apply to strategic innovation. Horse and Cart Innovation The description above represents a “horse before the cart” approach to idea generation. Some organizations also may use such an approach to innovation initiatives. For instance, corporate managers often frame challenges based mostly on strategic outcome objectives (e.g., profitability, market share) along with some secondary goals such as generating new products and enhancing marketing and branding. Of course, many other objectives also need to be considered from a strategic perspective. The route to achieving any of these objectives is NOT just generating ideas. Instead, tactical maps first must be constructed to lay out the strategic terrain for all objectives. The old saying still holds true: “If you don’t know where you want to go, any road will take you there.” It also is true that even if you think you know where you want to go (an often costly, untested assumption), you must create a map of goals to achieve along the way. 2 These maps are based on the premise that the objectives are stated clearly, known, and understood—three, often erroneous assumptions. As Douglas Adams aptly put it, “The hardest assumption to challenge is the one you don’t even know you’re making." Most organizations do a good job of collecting research on how and where to innovate. However, Doblin, Inc. estimates that only about 4.5% of innovation initiatives succeed! (Business Week, August 1, 2005, p. 72). One reason might be due to poorly framed innovation challenges. Unfortunately, there still are few resources on how to frame challenges for ideation. Framing Challenges Even if you are not concerned with strategic innovation, the need still exists to frame challenges for productive idea generation. Innovation challenges at any organizational level should be relatively open-ended and target an explicit objective such as increasing product sales. A common way to state challenges is to start with the phrase, “How might we…?” This provides a prompt for open-ended idea generation. For instance, consider an objective of generating ideas for new floor-care products. It first is necessary to “de-construct” the challenge into its parts, simply by asking basic questions: • “What is involved in cleaning floors?” • “What do people dislike about it?” • “How often should floors be cleaned?” • “In what ways are current floor-care products ineffective?” The answers to these and similar questions then can be used as triggers for specific challenge statements. For instance, answers to the above questions might lead to challenges such as: “How might we: • make it easier to dispense floor cleaning products?” • reduce the amount of effort involved in scrubbing a floor?” • make floor cleaning more convenient?” • reduce the frequency with which floors need to be cleaned?” • Increase the sanitizing effect of floor cleaning?” 3 Strategic Framing When doing strategic framing, the same basic principles described in the previous section still apply. Organizations are guided by strategic visions and planning processes. When they decide to innovate, they create strategic innovation frames to guide the innovation process. A primary obstacle is how to state innovation challenges and link together objectives so they will produce strategic results. Many innovation initiatives may fail because all of the secondary objectives were not detailed and linked together appropriately. To illustrate the potential relationships among such objectives, consider aerospace giant Boeing Co.’s challenges described in Business Week (July 18, 2005, p. 44): • Restoring the company’s tarnished image • Increasing revenue • Squeezing more profit out of existing businesses • Improving a toxic corporate culture • Reducing bureaucracy • Encouraging innovation • Increasing financial growth Each of these could function as corporate objectives. The question is, however: “How should these objectives be framed and linked together in the most productive way?” Consider the conceptual map in Figure 1 below. The relationships in the figure are hypothetical, but conceivably could apply to the Boeing case. Working from the top down, profitability is the primary objective. Increased revenue and financial growth are secondary (i.e., subordinate) financial objectives. Thus, the direct route to profitability is increased revenue and financial growth. At the third level, re-branding the corporate image might be secondary to the previous objectives, but superior to reducing bureaucracy, encouraging innovation, and improving the culture. For instance, encouraging innovation would help support rebranding. These relationships illustrate that strategies are complex, interrelated decisions (Quinn, 1980). Most objectives are nested within hierarchies of other, related objectives. And, multiple goals typically must be achieved to accomplish one primary goal (Richards, 1986). As shown in Figure 1, there may be clusters of objectives linked together by commonalities. These clusters can exist at the same or different levels. And, they might be linked with other clusters within a hierarchical level or between levels. Moreover, not all objectives in a cluster may be linked across levels. For instance, Figure 1 shows encouraging innovation at the fourth level linked with financial growth rate at the second level. How these 4 objectives are linked may depend on a variety of factors, especially the competitive environment within different industries (Day, DeSarbo, and Oliva, 1987). Figure 1 Hypothetical Framework of Boeing Strategic Objectives 5 Strategy Maps Visual diagrams of strategic goals and objectives have been around for a while, especially from the perspective of cognitive mapping. For instance, most cognitive strategy maps draw on Kelly’s (1955) personal construct theory. It postulates that we understand our environments by organizing concepts that are relevant to a specific environment. Eden, Jones, and Sims (1979) used this theory as the starting point for generating causation decision maps. In their seminal research, Hodgkinson and Johnson (1987) interviewed senior managers in the grocery story industry and observed that they tended to create hierarchies of their competitive environments based on degrees of abstraction. (For an excellent, comprehensive review of strategy mapping, see Huff, 1990.) To some extent, Figure 1 parallels the more encompassing and elaborated strategy mapping process used with the balanced scorecard (BSC) approach of Kaplan and Norton (2001, 2004). They maintain that traditional strategic planning is based too much on historical financial data and not enough on the intangibles present in corporations. To increase performance, organizations first should create a strategy map consisting of four, valuecreating processes or perspectives: (1) Financial, (2) Customer, (3) Internal Processes, and (4) Learning/Growth. These maps then are used to translate an organization’s vision and mission statements into effective performance. Basic strategy maps can involve 30 or more components, all of which must be aligned with each other and monitored over time. The hypothetical Boeing objectives shown in Figure 1 correspond roughly with the top three BSC perspectives. Thus, “Profitability,” “Increase Revenue,” and “Financial Growth” represent financial perspectives involving long-term shareholder value. (These also might be labeled as “high-level, super-ordinate,” objectives.) Next is the Customer perspective of rebranding the corporate image. This would be subordinate to the financial perspective because it could help increase the financial growth rate. Finally, “Reduce Bureaucracy,” “Encourage Innovation,” and “Improve Culture” all reside at the Internal Process perspective. Although these three objectives obviously are quite ambitious, they still are attainable (or, at the least, worthy of attention). Learning and Growth, the lowest level BSC perspective, is not represented in this conceptualization because it is hypothetical and limited just to the topics in the article. Other objectives also are not represented that should be in a comprehensive strategy, although that is not the goal of this paper. This paper is not intended to represent all facets of strategic planning. Instead, its focus is more on clusters of challenges that organizations 6 perceive as salient at a specific point in time. Most of the focus here is on the Internal Processes perspective. That is, framing that is need-driven at a particular time and not necessarily framed in the context of more encompassing variables. Moreover, this paper is oriented toward how to state (or frame) individual challenges and then link them together as frameworks to guide portions of a strategic innovation initiative. As appealing as the BSC approach may be, there might be situations in which it is not as useful. For instance, it may be deemed too expensive for some organizations, too complicated, or just plain overwhelming (Ashkenas, 2004). It also may conflict with idiosyncratic organizational barriers such as turf protection, competition for scarce resources, and resistance to broadscale change. Weaknesses, in addition to the above, include assumptions about rationality (shared by most such behavioral/cognitive approaches) and the lack of “integration opportunities” within the internal processes perspective—e.g., links between product development and operations management and customer management (Wood, 2005). Along these lines, Marr, Schiuma and Neely (2005) argue convincingly for adoption of “value creation maps” that incorporate interdependencies between both tangible and intangible assets. In spite of any shortcomings, BSC and strategy maps remain useful tools for strategic planning, system-wide change, and performance management enhancement. Evaluating Innovation Challenges All of the challenge statements used so far are based on the assumption that they are well-framed. In “real life,” however, that often is not the case. Wellframed challenges must satisfy various criteria before even considering how to link them together or determine their priority. Evaluation criteria typically can be classified as general or specific. General criteria apply to most decisions and typically involve resources such as time, people, and money. Specific criteria pertain directly to the nature of the alternatives available. Based on research and experience (especially with the Global Innovation Challenge—http://www.innovationchallenge.com), I believe the seven most important criteria required to evaluate and select innovation challenges are: 1. Begins with the phrase, “How might we…?” 2. Singularity of objectives? 3. Absence of evaluative criteria? 4. Absence of solutions? 5. Appropriate level of abstraction? 6. Appropriate use of positioning elements? 7 7. Clear and unambiguous? 1. Begin with the phrase, “How might we…?” Posing challenges as openended questions helps insure they can be used to generate specific ideas for specific challenges. Otherwise, the challenge might be better directed in another direction. 2. Singularity of objectives. This means that there should be a focus on only one objective in each challenge. Consider this example from a major produce distributor: “How might we differentiate ourselves from our competition and radically increase consumption of our produce?” Better wording might be: • “How might we differentiate ourselves from our competition?” • “How might we increase consumption of our produce?” The priority then might be on differentiation since that might help increase consumption. 3. Absence of evaluative criteria. Perhaps the most common mistake in framing innovation challenges is including evaluation criteria. The human mind has trouble generating ideas while simultaneously trying to determine if they would satisfy all possible criteria. A focus on judgment during ideation also can limit creativity. Even ideas viewed initially as “bad ideas” might be real winners when modified, combined, or used simply to trigger new ideas. Use criteria later, after you have generated all possible ideas. 4. An absence of solutions. It may appear paradoxical, but there can be a fine line between challenges and solutions. One reason is that challenge objectives and solutions often are confused by including them in a single challenge statement. For example, consider this from a restaurant chain: “How might we increase the number of diners in our restaurants by creating a more healthy menu?” The primary objective seems to be to increase the number of diners. “Creating a healthier menu” is one potential solution for achieving that objective. The challenge might be reframed as, “How might we make our menu healthier?” So, the solution becomes a challenge based on the assumption that a healthier menu will increase the number of customers. 5. Appropriate level of abstraction. This can be a difficult criterion to apply. In general, the broader and more abstract a challenge, the better. Broad challenges encompass a greater number and diversity of potential secondary challenges. For instance, in the example used regarding an absence of solutions (Criterion #4), a healthy menu could be used as a secondary challenge to increase the number of customers. 8 6. Appropriate use of positioning elements. Positioning elements are criteria that help frame the scope of the primary challenge. They should not be emphasized as the primary focus, be overly specific, or be included as part of the challenge statement. Instead, positioning criteria should be more general and listed below the challenge. For instance, in the restaurant example, it could be stated (after the challenge) that ideas for increasing restaurant customers should, in some way, emphasize health. Or, positioning criteria can be used to indicate what ideas are not wanted. 7. Clear and unambiguous. If the previous six criteria have been addressed adequately, the challenge should be relatively clear and unambiguous. This criterion serves as a final check prior to ideation. Review the challenge to be sure that all of the previous criteria have been considered and that there is a clean, simple, and straight-forward challenge capable of generating ideas. Relatively Simple Challenge Framing To illustrate how to apply these criteria, here is an actual, relatively simple, presented challenge from a consumer products company: “How can the Big Bucks Company develop brand awareness for its new XYZ brand of products with little marketing or PR funds?” A quick scan of the seven criteria discussed above suggests that this challenge contains two criteria (“little marketing or PR funds”) that should be removed and used as positioning elements or reserved for later use as evaluation criteria. After presenting this option to the client, they decided to frame the challenge as: “How might Big Bucks Company improve the brand awareness of its XYZ line of consumer products? Solutions ideally would not involve significant marketing or PR funds.” Moderately Complex Challenge Framing Consider this moderately complex challenge from an international hotel and resort chain, with the pseudonym, “BedsRUs:” “With a diverse and creative workforce, what strategies can BedsRUs implement to deliver a new level of service to guests? We want to provide ideas that can be implemented that would also make the Beds R Us brand more distinctive and thus create a closer and more emotional connection with travelers.” 9 Rather than using this presented challenge as is, let’s see how we might deconstruct it for more effective ideation. The first task is to create a single objective using the “How might we…?” format. In this case, “a new level” is ambiguous, so the challenge might be reframed as: “How might we improve customer service?” “Ability to implement,” mentioned in the presented challenge, might be reserved as a criterion. Brand distinctiveness could be used either as a criterion or as another challenge objective. And “a closer and more emotional connection with travelers” might be posed as the following challenge: “How might BedsRUs create a more emotional connection with travelers?” (This was the challenge the client selected.) One potential concept map for BedsRUs is shown below in Figure 2. Figure 2 Concept Map of Strategic Objectives for “BedsRUs” This diagram incorporates all of the elements of the presented challenge. As displayed, the goal of improving customer service directly affects creating a 10 more emotional connection with travelers. The emotional connection is critical to making the brand more distinctive which, in turn, directly impacts the occupancy rate. Customer service also affects the occupancy rate directly as do an emotional connection and making the brand more distinctive. Complex Challenge Framing Some presented challenges are quite complex, reflecting in-depth research and input from a variety of stakeholders. For instance, consider this presented challenge from an international mailing service organization (“MailIsUs”): “The objective for this challenge is to develop a new product/service/ process or an enhancement to an existing product/service process that will result in increased revenue for MailIsUs. This can be accomplished by: • developing a new product/service/process for current customers • enhancing an existing product/service/process for current customers • developing a new product/service/process for new customers • enhancing an existing product/service/process for new customers • and/or developing new marketing/partnership opportunities.” Whew! That’s a lot to take in and especially way too much for any productive ideation in one bite. This challenge definitely needs to be de-constructed and sorted out. The primary objective seems to be increasing revenue (the core challenge, although a case might be better made for profitability). The remaining information only serves to increase complexity by suggesting a focus on all the possible combinations present (e.g., develop a new product for new customers, enhance an existing product for new customers, or develop a new service for existing customers, ad naseum). Evaluating these possibilities against the decision criteria suggests that the only criteria satisfied within these challenges are an absence of evaluation criteria and solutions. There also are too many variables to process while simultaneously generating ideas. More importantly, specific objectives other than increasing revenue or profitability need to be identified. To identify these objectives, I reviewed multiple documents from the client involving strategic issues such as the competition, markets, strengths and weaknesses, and trends. Based on this research, I then “harvested” 21 potential challenges that key stakeholders narrowed down to nine. (The 11 process for doing this is known as a “Challenge Bank” or “C-Bank” and is described later in Figure 6.) The task then was to decide which challenges would be secondary to others. That is, which should be accomplished first to achieve the primary objective of increasing revenue? It also was important to decide how the different objectives might be interdependent—i.e., linked in ways so that achieving one will help achieve another. Potential relationships for this client’s challenges are depicted in the concept map shown in Figure 3. For instance, Figure 3 indicates that two primary challenges secondary to increasing revenue are increasing access and awareness of their products and services. These challenges, in turn, are likely to be impacted by the challenges indicated in the figure. For example, increasing awareness should increase delivery volume that, in turn, should increase revenue directly. And, facilitating online commerce should increase access so that revenue increases. In the end, the client chose to focus on both increasing access and awareness. Of course, this does not mean that the other challenges would be abandoned. All of them could be used to facilitate these dual objectives that, in turn, should increase revenue (with the implicit assumption that profitability also would result). Figure 3 Conceptual Map for “MailIsUs” 12 Strategic Question Banks Willy Sutton, a notorious bank robber in the 1930s, supposedly was asked once why he robs banks. His answer was simple and to the point: “Because that’s where the money is!” Strategic question banks (“Q-Banks”) are used because asking questions is where the answers are! Simple as that. Question banks are a logical choice to use during strategic framing because lists of questions and responses contain the answers needed to focus on overcoming organizational challenges. Innovative ideas then can be taken from the responses. At the outset of strategic planning, organizations are in different perceptual “locations.” That is, organizational stakeholders may differ in their perceptions regarding the organization’s strategic positioning. A Q-Bank is a broad process that can help an organization take a hard look at itself and increase understanding about what it does and does not do, as well as what it should do. The outcome will be a sense of potential strategic directions to pursue. Q-Banks are useful if an organization is trying to find its direction, wants to affirm its current strategic plan, lacks consensus about strategy among key stakeholders, or wants to chart a new course. A Q-Bank is not, however, a substitute for conventional strategic planning. Many organizations already have collected the information needed, but still could benefit by involving key stakeholders or in just updating old information. Planning is a process, not an end result. A typical Q-bank is implemented by sending out a list of generic questions to key stakeholders—usually around 10 – 30 people. This can be done via email and involve one or two rounds. An abbreviated list of sample questions follows (VanGundy, 2000): Our Company What does our company do? What do we want to do in the future? Where are we positioned in the minds of our customers? Our Brand What values are associated with our brands? How consistently do we transmit these values? What is our brand awareness? 13 Our Customers Who are our customers? Who would we like to have as customers? Our Markets What markets are we in? What markets would we like to penetrate? Our Products What products do we have that are successful? Do we know why? What products do we have that are not successful? Do we know why? Our Competitive Set What do we like about our competition? What are they doing right? What are they doing that’s not working? Q-Bank responses eventually are used as the basis for generating potential innovation challenge questions. The basic Q-Bank process is shown in Figure 4 below. As shown in the figure, a preliminary list of questions is generated and sent to stakeholders for their feedback and any new questions they might want to add. The data are analyzed and summarized by organizing the responses into affinity groups involving such topics as: customer service, marketing, branding, or sales. These data are sent to the stakeholders again or are used to generate a list of final challenge questions for client approval. The final list typically is narrowed down to one or more challenges to use for ideation. To practice using a Q-Bank, you can conduct your own, even if it involves a relatively small number of people. It also doesn’t have to be system-wide; instead you could practice with six or seven people from one department. You also could use the questions listed previously and add some of your own. Here are some sample responses from a large financial services organization to Q-Bank questions such as those described above (the responses have been modified and presented below in italics): 1. Where are we positioned in the minds of our customers? Not really at all. Many of our customers do not deal directly with us. 2. What is our brand awareness? We have no brand awareness. 14 3. When don’t our customers like us? Industry-traditional complaints such as high fees. 4. What is the competition doing that’s not working? Conducting price wars. 5. What values are associated with our brands? Customer service is excellent and our customers believe they receive good value from our products. 6. How do our customers benefit from our products or services? A primary benefit is 24-hour access to our resources and services. Figure 4 The Basic Q-Bank Process 15 The answers to all of the questions can be reviewed and then converted into challenge statements. A Challenge Bank (“C-Bank”) next could be conducted using these challenges as the initial input. For instance, the responses above might suggest such questions as: How might we: • increase our brand awareness? (#1 & #2) • increase the transparency of our fee structure? (#3) • reduce our fees? (#3) • avoid entering price wars with our competition? (#4) • improve our customer service? (#5) • increase access to our services? (#6) If more clarity is needed, a concept map—such as the one in Figure 5 below—also could be developed depicting how these objectives might be interrelated. Otherwise, such maps could be created after finishing a C-Bank. Figure 5 Conceptual Map for Financial Services Company 16 STRATEGIC CHALLENGE BANKS (“C-BANKS”) In contrast to Q-Banks, Challenge Banks (“C-Banks”) assume that an organization already has the information gleaned from Q-Banks (or their equivalent) and can proceed directly to generating a list of potential strategic challenges. A typical C-Bank process flow chart is shown below in Figure 6. As shown, the process for C-Banks is essentially the same as for QBanks. The difference is that Q-Banks may end with a short list of challenges (Q-Banks also could end with just with a list of responses to the general questions.) C-Banks, in contrast are designed to end with a comprehensive list of innovation challenges. Figure 6 The Basic C-Bank Process 17 C-Banks can begin in one of two ways. First, a positioning statement is presented to a group of stakeholders who are asked to use it to generate challenge statements and return them to a coordinator (Round #1). For instance, a manager might request challenges based on the following script: “As you know, we currently face competitive threats from emerging markets such as Brazil, Russia, India, and China. As we transition from a technology product to a service-based business model, what challenges should we address? For your responses, please put them in the form of, ‘How might we…?’ For example, ‘How might we improve human resources functions in emergent countries?’ Please email your responses to me no later than the end of the week. I then will collate everything and send you the results to stimulate additional challenges. Thanks for your help with this vital project.” Figure 6 shows this version of a C-Bank. Once the stakeholders have a chance to generate additional challenges after inspecting the previous ones (Round #2), you might return the responses for a third round. The option also exists, of course, to conduct only one round without returning the results. Or, you could do only two rounds, organize those results into affinity groups, and send them to the client for approval and eventual ideation. The second way to do a C-Bank is to use the results from a Q-Bank and generate a preliminary list of innovation challenges. You then could do one or more rounds, each time organizing the results into affinity groups. Once the client approves the final challenge(s) ideation can begin. 1. Findings About the survey 50 surveys were sent electronically with a covering note, with an initial return of 14 within 3 days of receiving them. A follow up phone call elicited another 18 with another 9 being done face to face. In total 41 surveys were returned. Question 1 asked each respondent give their definition of organisational creativity. Although innovation is a concept that most were familiar with the term organisational creativity was not as clearly understood nor easily defined. I have selected a sample of the responses received. Responses included: “This is a broad and indefinite term. I associate it more with ‘capability’. It takes a mixture of energies and disciplines to be creative. Any organisation’s people can become capable whether it is for innovative matters or simple process education matters or so on. The creativity links to core competence matters. If a firm has disciplines in place which test its core competencies, then it has the capability of being ‘creative’.” Education and Training ? Organisational creativity for us means; ? to have the smarts to foresee potential issues ? to shape the organisation to avoid problems that may be encountered ? to create innovative solutions to problems that do arise ? to devise products that fill identified market needs for the best return to the company ? to devise strategies to maximise the growth potential of every dollar of cash-flow. Printing and Publishing “The ability of an organisation to intuitively undertake continuous improvement in achieving corporate objectives.” Oil and Gas Exploration A Survey of Organisational Creativity 3 “Having an inherent organisational capacity to be at the forefront of progress in the use of people, capital, and ideas.” Oil and Gas Exploration “Development and implementation of good ideas.” Accountancy “The ability to think beyond what is defined as “current practices”, thus adding value to the organisation by making it safer / more effective and/or more competitive.” Oil and Gas Exploration “Creativity comes from the people in the organisation and their ideas or perspective on things. Organisational creativity is where having ideas are promoted, listened to and acted upon. All people have experiences and ideas from outside the work environment, and a way to capture these ideas is essential in allowing this creativity to grow. When boundaries are imposed, such as up-front budget constraints, this will limit the creative flow of ideas and you will lose the ability to harnessing the energy of staff to make break-through advances in the business.” Oil and Gas Exploration Question 2 asked whether organisational creativity was important to their organisation and if so why? All but one of the respondents (see quote below) affirmed that organisational creativity was important to their organisation with a variety of reasons being given with almost all focussing on the need to get the ‘competitive edge.’ Even the respondents from local authorities focussed on the need for a competitive edge within their organisations. (see quote below). “Not essential, but desirable to remain competitive, both in terms of value to stakeholders, and attracting/retaining staff” Oil and Gas Exploration “Even though we are not in a competitive environment it is important that we remain competitive because our ratepayers expect us to be as effective, efficient and as innovative as one would expect in the private sector.” Local Authority A Survey of Organisational Creativity 4 “Yes, as it gives us a point of difference over our competitors. Being first to market can give our customers opportunities to grow the category and their own businesses.” Manufacturing “It is important in the sense that the problems we are facing today cannot be solved with the solutions and tools which have contributed to create them in the first place Therefore, a new approach or new ideas are required to help us solve these problems or give us a competitive edge.” Oil and Gas Exploration “Yes, as we are competing for resources with other divisions (funding and staff) to undertake developmental and growth activities to make this business stronger and prosper into the future. Creativity is imbedded in the project process by casting the net as wide as possible on all options to then distil them down to the preferred choices based on clear technical and commercial screening. There is also a string focus on hiring the right skilled people and training them is the accepted and tested global practices.” Oil and Gas Exploration “Yes. To maintain an edge over competitors and to continue to manage unit costs as production declines.” Oil and Gas Exploration The table that follows attempts to summarise the reasons given regarding the importance of organisational creativity. Reasons for importance of organisational creativity Number of responses Competitive edge 38 Find niches in markets 5 Reduce internal costs 14 Promote efficiency and effectiveness 4 Motivates people 11 Attracting/ retaining staff 5 Problem solving 3 Improves morale 5 Fig. 1: Reasons given regarding the importance of organisational creativity. A Survey of Organisational Creativity 5 Question 3 asked the respondents to identify the factors that enhance and/or facilitate organisational creativity. I have categorised and summarised the responses. 14 respondents also said that the factors that facilitate or enhance are the opposite of the factors that are barriers. Factors that facilitate or enhance organisational creativity. Number of responses Creative / charismatic leadership 14 Creativity recognised 6 Skilled delegation 3 Allowance for mistakes 8 Removing uncreative people 2 Time 31 Competence and motivation of staff 15 Balance between risk and opportunity 7 Clear organisational goals understood by all 14 Individual empowerment 8 Appropriate reward 12 Open communication and full information sharing 22 Appropriate tools and technology 9 Necessity the mother of invention 3 Diversity 8 Some ‘fat’ in the system 3 Organisational ‘life force’ 1 Fig 2: Factors that facilitate or enhance organisational creativity The following quotes from respondents give a ‘feel’ for the overall nature of the responses. “Organisational culture that supports and encourages new ways of thinking; looking at problems and creative solutions.” Manufacturing “Organisations need to be nimble so they can respond quickly and offer new/improved products on fast turn-around.” Manufacturing “The leadership has to be creative, and lead the organisation creatively.” Printing and Publishing A Survey of Organisational Creativity 6 “Uncreative people in the organisation need to be gently placed out of the way of the creatives.” Printing and Publishing “The environment has to be safe enough to make mistakes in – not repeatedly – but it is difficult to learn without making some mistakes.” Dairy “Just having uninterrupted time would do it for me. It’s so rare that I make space and time in my day just to think and be creative. I know that when I do it works really well for me and I enjoy my work. It remains a challenge for me.” Local Authority “Dead and boring leaders create dead and boring organisations.” Business Consultant Question 4 asked respondents to identify the barriers to organisational creativity. As mentioned previously a number simply said the opposites of the factors from question 3. From those that did respond with actual answers the table that follows identifies the main barriers. Factors that are barriers to organisational creativity. Number of responses Unnecessary compliance 8 Work force skills 23 Lack of access to information 12 Micro-management 5 Time 34 Resistance to change 15 System constraints 8 No organisation desire to learn from previous mistakes 7 No personal authority to initiate change 14 Restrictive bureaucracy 20 No space/resources to pursue ideas 28 Risk aversion 9 Reluctance to invest (time/$) 18 Fig. 3: Factors that are barriers to organisational creativity. A Survey of Organisational Creativity 7 Question 5 gave each respondent the opportunity to say what their organisation is doing to encourage / enhance organisational creativity. Of the 41 respondents 8 commented that their organisation was doing the opposite and in fact were doing more to put barriers up than they were to encourage organisational creativity. “Seems to be more focus on not rocking the boat, not doing anything ‘out there’ than on innovation.” Of those who responded positively a number were general responses such as: • “Encourage people to challenge the status quo” • “Recruit the right people” • “Create a challenging environment and never be at ease with the status quo. The only way to survive is to improve.” • “Some freedom to act – within some relatively tight and known constraints.” • “Remuneration that rewards creativity.” • “Culture that accepts the odd mistake – prepared to take calculated risks.” Others did offer some specific organisational initiatives that encouraged organisational creativity although creativity focussed initiatives were few and far between. • “Regular workshops for the extended leadership team, team building and bonding sessions.” • “Give access to wealth of knowledge via the Shell group.” • “Creating a creative friendly environment e.g. music, artwork on walls, design magazines etc, ‘decorate your department’ and other creative competitions.” • “Very carefully and clearly defining what it is we wish to do and want to do and what our particular goals and how we wish to be within that channel, then encouraging creativity within those bounds to run free.” • “We set clear outcomes and leave people to decide how to meet them. I have found that people are often more creative within a known box. It forces them to be so.” A Survey of Organisational Creativity 8 Question 6 focussed on the role of leadership in creating an environment that enhanced organisational creativity. All respondents replied positively citing leadership as highly important factor in enhancing organisational creativity. The following quotes give a ‘flavour’ of the responses. • “Provides the environment and encouragement that facilitates and rewards creativity.” • “Provides adequate resourcing to allow the time for creative thought.” • “Empowerment – encourage ownership and distribution of responsibility.” • “By not putting staff ‘on the spot, rather taking learnings and/or enquiring into what staff are thinking.” • “Having leaders who lack a sense of humour, have limited emotional maturity, or discourage challenge and questioning work against a creative environment.” • “By supporting new ideas and creativity from the idea stage, feasibility study and implementation.” • “As leaders we can coach our people to think outside the square and encourage different ways of doing things.” • “Leaders can also allow teams to take time to brainstorm and come up with new ways of doing things or solutions to problems.” Respondents were then asked to give examples of creativity that was successfully applied in their organisations. The responses here were disappointing as less that a third of the respondents were able to give specific examples although those with whom I met face to face or talked with over the phone were able to give examples after some prompting. Most were focussed on the “big innovations” rather than the everyday creative acts that people do in their workplaces. Examples included: “When we started publishing and ran out of cash trying to print each new book, we hit on the idea of printing them with photocopiers, years before digital POD became the industry buzz-word.” “We set up a full IT backbone based on Bill gates’ book Business at the Speed of Thought that tracks and traces product from receipt to market, minimising repeat data entry and capturing key information in an easily accessible central brain.” “Our Manufacturing Excellence programmes have made a real difference. People are focussing on creative ways of reducing waste, improving production – some of the projects have saved us hundreds of thousands of dollars.” “The projects that each person has to for their First Line Management training programme have made some huge differences in the workplace. Not all have worked but its better to identify the ‘no-goers’ early on through feasibility studies that invest lots of money and fail further down the track.” A Survey of Organisational Creativity 9 “New ways of working to continue to achieve objectives with fewer resources.” “Establishing alliances with other organisations to achieve an outcome that is mutually beneficial to both.” “To encourage our departments to talk to each other so they can draw on a greatly increased knowledge base.” “Social events continue to be a high [point in the organisational calendar, with a mixture of new interesting ideas and the old tried and true. Unfortunately not everyone participates.” “In-house development of fit for purpose tools for production planning, optimisation and reporting although the IT department wouldn’t agree that this was a good thing.” “Can’t think of any ‘breakthrough’ creativity but would argue use of things like process improvement, value assurance reviews, peer reviews do in fact work the creative process.” “Sharing of findings across a wider audience has helped understanding and allows others to challenge assumptions.” Respondents were then given the opportunity to make further comments / or detail insights on any aspect of organisational creativity. Less that third took this opportunity. The quotes that follow indicate the views. “An organisation needs the correct mix of visionaries and doers in order to achieve creative success. Too many dreamers and it will get a lot of ideas that are not fulfilled (frustration), too many doers and there will be a tendency to continue to replicate how a task was done last time.” “I personally feel “congested”, to the point where dreaming up something new and innovative is totally unappealing, because it will just add to an already overloaded schedule.” “I do recall feeling differently and have demonstrated an ability to innovate and make a silk purse out of a sours ear in the past. But I seem to have passed over the creative climax and am trying not to slip too far down the other side! I suspect this sentiment is not uncommon throughout (organisation name).” “You cannot force creativity, only create a climate. It has to grow and develop within the individuals.” A Survey of Organisational Creativity 10 “We seem to make so much work for ourselves that not only do we not have space to take a step back and consider alternative, but we a less efficient doing the routine stuff. We all feel that it’s someone else’s problem to solve (viz “Management”, whoever they are?!), rather than recognising that we all have a responsibility as individuals. I now understand how it feels to be a rat in a race!” “Creativity is limited by personal motivation. Offering incentives to staff can enhance motivation. This is an imbedded process but not necessarily used to the fullest benefit by managers to reward staff. You need to acknowledge and reward staff at appropriate times, but there is a fine balance between not enough and too much. Also, praise must be perceived as being sincere and not just lip service.” “Wayne, when you find the holy grail lets ‘talk turkey’(!)” Summary This chapter has detailed the main results obtained from the data collection described in Chapter 3. In the chapter that follows these results will be interpreted and analysed in terms of the purpose and objectives for the project as a basis for drawing conclusions. A Survey of Organisational Creativity 11 2: Discussion and Conclusion This chapter examines the outcomes of the research project as they relate to the purpose and objectives detailed in Chapter 1. The purpose of this research project was to identify those factors that enhance organisational creativity – those behaviours, systems, processes – that lead to a workplace that is creative. The literature suggested a number of factors that were regarded as important in achieving this. I will take the factors as identified in my research and attempt to match them with those from the literature. It was interesting to note that in a substantial number of the responses the respondents seemed more easily able to identify barriers to organisational creativity than they were to identify those factors that facilitated it. The pervading belief among respondents was that there exists in every organisation the potential for much greater levels of creativity and if certain barriers were removed then creativity would flourish. The table that follows shows the priority order in which the respondents from the survey identified the factors that enhance organisational survey. Factors that facilitate or enhance organisational creativity Time Competence of staff Space/resources to pursue ideas Open communication and full information sharing Supportive organisational structure Personal authority to initiate change / Individual empowerment Creative leadership Motivation of staff Clear organisational goals Appropriate reward Appropriate investment ($, time, resources etc) Appropriate tools and technology Allowance for mistakes Diversity Organisational desire to learn from previous mistakes Creativity recognised / taken seriously Balance between risk and opportunity Skilled delegation Some ‘fat’ in the system Removing uncreative people Organisational ‘life force’ Fig. 4: Factors that enhance organisational creativity in priority order (descending) A Survey of Organisational Creativity 12 I propose to take the top ten factors and discuss them in more detail relating them, where possible, back to the literature and supporting them with comments from the surveys. 1. Time More respondents raised the issue of time as the most important factor with regard to enhancing organisational creativity than any other with comments such as “Just having uninterrupted time would do it for me. It’s so rare that I make space and time in my day just to think and be creative. I know that when I do it works really well for me and I enjoy my work. It remains a challenge for me.” Time pressure was also identified as a real barrier to creativity. This is supported by a study completed by Teresa Amabile in 1996 the results of which are recorded in Amabile’s words in the December 2004 issue of Fast Company in which she says: “In our diary study, people often thought they were most creative when they were working under severe deadline pressure. But the 12,000 aggregate days that we studied showed just the opposite: People were the least creative when they were fighting the clock. In fact, we found a kind of timepressure hangover -- when people were working under great pressure, their creativity went down not only on that day but the next two days as well. Time pressure stifles creativity because people can't deeply engage with the problem. Creativity requires an incubation period; people need time to soak in a problem and let the ideas bubble up. In fact, it's not so much the deadline that's the problem; it's the distractions that rob people of the time to make that creative breakthrough. People can certainly be creative when they're under the gun, but only when they're able to focus on the work. They must be protected from distractions, and they must know that the work is important and that everyone is committed to it. In too many organizations, people don't understand the reason for the urgency, other than the fact that somebody somewhere needs it done today.” Guilford (1967) also makes the point that distractions and time pressures can inhibit the creative process. In addition, creative problem solving takes time. A person or group may stop short of achieving a creative solution if there are strong external time pressures; under these circumstances, the first solution that appears to be good enough is likely to be selected Organisational creativity requires time! 2. Competence of Staff Competence of staff was highlighted as the second most important factor in enhancing organisational creativity. When questioned further about this respondents talked about a range of issues. Some mentioned having the ‘creativity tools’ at their disposal and the traing required to use them well e.g brainstorming, deBono’s Six hats etc but the majority took a much more general perspective of competence perhaps best summarised by the comment: “If I know that I can rely on my staff, that they are technically competent, then I am able to rely on them to push the boundaries of there technical competence into the areas of the unknown or the new – to come up with creative and innovative ideas.” Manufacturing A Survey of Organisational Creativity 13 Although a second view was offered by some. “Just because someone is technically competent doesn’t mean that are are capable of producing new and creative ideas. Some people are simply not competent of confident to do so. It is beyond their capability.” Education and Training Several of the researchers quoted in the litertaure review identify characteristices of creative people but these are more attitudinal and cannot really be defined as competencies. Amabile in Fast Company again: “The fact is, almost all of the research in this field shows that anyone with normal intelligence is capable of doing some degree of creative work. Creativity depends on a number of things: experience, including knowledge and technical skills; talent; an ability to think in new ways; and the capacity to push through uncreative dry spells. Intrinsic motivation -- people who are turned on by their work often work creatively -- is especially critical. Over the past five years, organizations have paid more attention to creativity and innovation than at any other time in my career. But I believe most people aren't anywhere near to realizing their creative potential, in part because they're laboring in environments that impede intrinsic motivation. The anecdotal evidence suggests many companies still have a long way to go to remove the barriers to creativity.” Amabile (1988) identified the factors that promoted problem solving or personal creativity by studying a group of 120 innovators working in research and development. One of the qualities that she identified as inhibiting creativity unskilled (24%) (p.128) She also indicates that individual creativity was enhanced by domain relevant skills, creativity-relevant skills and intrinsic task motivation. From the survey responses and from the literature there seems to be differences in the opinions of people as to the competencies required to enhance organisational creativity. It seems a better defintion of competence is needed to discuss the relavance of this aspect of enhancing organsisational creativity. Perhaps this is an area for further research 3. Space/resources to pursue ideas This priority was closely linked to time but also included the physical space required to ‘trial’ new ideas and the finance required to fund such a pursuit. A number of respondents from the manufacturing sector talked of Lockheed’s ‘Skunkworks’, 3M’s commitment to giving flexible time to staff to try new ideas and the concept of the innovation incubator. One of the respondents had visited the business incubator in Christchurch, New Zealand, and talked about applying the concept within a business. Another aspect raised here was the organisation of internal space within a business – open plan versus separate offices. Responses were mixed with people giving views as to the positives and negatives of both open and closed space. There was, however, agreement that access to both types of space was necessary to enhance creativity. “I am at my creative best when I can balance the need for access to people and resources with time for me. I do my best thinking when I am jogging in the morning but then I need people to test my ideas against – and sometimes that is hard.” Local Authority A Survey of Organisational Creativity 14 The need for space and resources is well supported by the literature. Mumford et al (1997) found that resources are important not only for functional support, but also because having an adequate level of resources for the task/project influences workers’ perceptions that the project is valuable and worthy of organisational support. Resources include financial support as well as time and physical space. “We have got several hundred thousands dollars of good ideas rusting away because the person involved with them didn’t have the time to plan properly nor the resource to trial before implementation. They failed. He got fired and it wasn’t all his fault. This is not an uncommon situation in my experience.” - Manufacturing The physical environment or setting can influence the degree to which divergent thought processes are used. Divergent thinking has a broad, relaxed focus of attention that requires a sense of psychological safety and peacefulness (Isaksen 1983). “Allowed space and funding to explore options, in an environment where making mistakes (within reason) is seen as a learning event, not a crime.” - Oil and Gas An environment that was conducive to creativity was also mentioned by some respondents with one commenting, “that having appropriate music, art work and ‘creative stuff’ around gets my creative juices going but I don’t think that my tastes would appeal to all. I’m not sure how you get agreement on that sort of thing.” - Education and Training Appropriate space and resources enhances organisational creativity. 4. Open communication and full information sharing More than half of the respondents mentioned a lack of open communication and information as a major blocker to organisational creativity. “For me one of the major barriers is an environment where people undermine each other, information is not shared and there is no credit given to creativity.” Hospitality Almost all respondents talked of the need for open communication and full information sharing. Some spoke of information on a ‘need to know’ basis but the general consensus was that people will select what they need to know and it is best to let them make that decision rather than keep information from them. “It is essential to have access to information – creativity is often spurred by hitch-hiking on new ideas that flow past the alert mind – often converting them to a new situation or means of application.” Information Technology A Survey of Organisational Creativity 15 Trust was regarded by many as the cornerstone of effective communication and information sharing. “When I know that I am being trusted with all the information I need it makes me feel like I am valued and I can make decisions based on the whole picture not just on bits of it.” - Dairy Industry Open communication and information sharing is certainly supported by the literature. Amabile, Kanter, Ford, McMaster and others all comment on this as being necessary to facilitate organisational creativity. Several respondents commented on how communication is delivered and information is shared as being important. “If the boss takes the time to speak to staff in person it makes them feel more important. It’s often not what they say but the fact that they have made the effort especially if I am able to respond and know I am going to be heard. I know that if I am feeling good about my boss and the information I am getting then I am likely to want to contribute more and the business certainly gets more from me.” IT Industry One respondent took the view that “In the past, lack of information was a bottleneck in business. But today with electronic mail, electronic newsfeeds and intranets we have 'information overload'. Information is no longer a bottleneck it can be a liability and it can get in the way. We tend to think that to do anything we need to track down and analyse all the information and knowledge available. But the real bottleneck today is 'creative thought'. Dairy Open communication of organisational changes, decisions, and policies and opportunity to voice concerns, understandings and ideas and ‘being heard’ enhances organisational creativity. 5. Supportive organisational structure This factor and its priority in the list of enhancers came from combining a number of factors from the list of enhancers and barriers. This factor was described by one respondent as, “a supportive environment where problems are fixed without blaming or scape-goating.” Most responses related barriers. The term ‘restrictive bureaucracy’ was used by several people. There was agreement that is supported by the literature that organisational structure can inhibit or foster creativity and innovation. The problem with organizational structure though, is that it is the result of many factors, including history, organic growth, strategy, operational design, product diversity, logistics, marketing, client base, supplier base and so forth. Therefore, I suggest that what managers need, are not recipes for complete structural change, but insights into the properties of fostering structures that can be adapted into the existing structure. To start, it would be useful to analyse the preferred structures against the not so preferred. Given that there are many definitions of types of organisational structure, I have selected a model that a number of the respondents could relate to – the mechanistic versus the organic organisation. Mechanistic structures have centralised control and authority, clearly defined tasks, vertical communication links, obedience to supervisors, rigidity and inflexibility. Respondents agreed that this type of organisation would be unlikely to enhance organisational creativity. Organic structures – those which have decentralisation of authority, tasks loosely defined, horizontal communications, greater individual authority, flexibility and adaptability – were seen to be more likely to enhance organisational creativity. King and Anderson (1990) assert that one of the conditions for organisational creativity was group structure that was organic rather than mechanistic. However, all bar four of the respondents interviewed said that their organisation fell into the A Survey of Organisational Creativity 16 mechanistic category. My professional experience shows that the above can be misleading. For example flat organisations are generally preferred and hierarchical ones not, however, even flat organisations are in reality hierarchical. Importantly, if we have a mechanistic structure, what factors might allow us to move in the right direction without wholesale change? Some answers given by various respondents include having a structure that allows and encourages direct communication links to decision makers, communication and information flow between departments, tangible progression of ideas from problem to solution to product development to commercialisation, and creative teams working outside but linked into the organisation, whose culture, processes etc permeate through the existing structure. A supportive organisational structure will enhance organisational creativity. 6. Personal authority to initiate change / individual empowerment Respondents talked about the need to know that had the personal authority to initiate change. When asked how they knew whether they had it the responses fell into two categories – those who empowered themselves and gave themselves the authority required and those who waited for others to give them the authority or empower them. People in both categories talked about the anxiety and stress that at times accompanies empowerment. An interesting perspective arose in conversation with two of the respondents. It was suggested that rather than use the term empowerment it is helpful to look at perceived individual employee discretion -- how much freedom the individual feels he or she has. For instance, a member of a so-called compliant organisation may in fact have high levels of personal responsibility or a role involving the management of significant risk. The more complex the task, the more discretion - freedom to choose how things are done - will be given to employees. This contrasts with the adaptive organisation where individuals may have significant creative discretion - freedom to choose what is done. Basadur (1997) and Amabile (1998) both talk of the importance of adaptability in enhancing organisational creativity. Ideally, then, empowerment of employees results in increased initiative, involvement, enthusiasm, innovation and speed, all in support of the organisation's mission. Personal authority and employee discretion enhance organisational creativity. 7. Creative leadership Although coming in at 7 on the respondents priority list all respondents acknowledged that leadership is a critical factor in enhancing organisational creativity. In fact, without supportive leadership very few of the other creativity success factors could be sustained. Teresa Amabile in Fast Company: “Taken together, these operating principles for fostering creativity in the workplace might lead you to think that I'm advocating a soft management style. Not true. I'm pushing for a smart management style. My 30 years of research and these 12,000 journal entries suggest that when people are doing work that they love and they're allowed to deeply engage in it -- and when the work itself is valued and recognized -- then creativity will flourish. Even in tough times.” A Survey of Organisational Creativity 17 This is supported by the respondents. “Leaders have a big part to play in enhancing organisational creativity. While individuals should take responsibility for their own areas, a leader has a big impact on the organisatioon dynamics and environbment that individuals operate in and it can become increasingly frustrating for someone to be inspired and creative when their leader isn’t supportive.” - Education and Training “While the truly inspired abnd creative may break through barriers to success, an environment that enhances organisational creativity may reap the benefits from many surprising sources – the quiet, the timid, the plodders – not just the Einstiens. The leader’s role is to remove the barriers.” - Education and Training “Our belief is that today, New Zealand’s prime opportunity going forward, is to be an international ideas mine and our business is increasingly gearing towards that role. We have a very clever, well educated populace (in general) with a diversity, creativity and quite unique cultural mix that generates new views on things, and a distance from the rest of the world that gives us a view of the forest, not a single tree and that throws up unique access problems which, in demanding solutions, create opportunities for new international products and services. It is the critical role of our leaders to understand and embrace this notion, share that which is necessary and then lead their department in the pursuit of opportunities within that.” - Printing and Publishing “As MD, leadership is the key to success in regards to creativity in the workplace. The MD sets the vision, goals and culture that all must live and breathe. Creation of a culture that allows and enhances innovation is the key to re-invention.” - Education and Training When asked if a leader needs to be creative themselves the responses were mixed. “The leadership has to be creative, and lead the organisation creatively.” summarises one point of view. The other point of view took the stance that the leader did not have to be creative but needed to recognise and reward creativity and remove the barriers to it happening. “Provides the environment and encouragement that facilitates and rewards creativity.” “Allows mistakes in a safe environment.” “Provides adequate resourcing to allow the time for creative thought.” “Don’t let issues fester, or you get a cold environment where people are demotivated, even blatantly hostile sometimes. Not a good space for free speech, imagination, sharing and “comfortable” risk taking.” A Survey of Organisational Creativity 18 Researchers such as Meyers (1982), Nonoka (1991), Roberts (1977) and Amabile (1996) make comment on the importance of leadership in enhancing organisational creativity. “. . . usually determines the organisational characteristics, sets the tone for the corporate climate, and determines whether or not the organisation is interested in innovation. It also controls whether there are competent project management, evaluation, sufficient resources, and an emphasis on the status quo, constraint and competition. (Amabile, 1996) Leadership, though not necessarily creative leadership, enhances organisational creativity. 8. Motivation of staff Amabile in Fast Company: “There's this widespread notion that fear and sadness somehow spur creativity. There's even some psychological literature suggesting that the incidence of depression is higher in creative writers and artists -- the de-pressed geniuses who are incredibly original in their thinking. But we don't see it in the population that we studied. We coded all 12,000 journal entries for the degree of fear, anxiety, sadness, anger, joy, and love that people were experiencing on a given day. And we found that creativity is positively associated with joy and love and negatively associated with anger, fear, and anxiety. The entries show that people are happiest when they come up with a creative idea, but they're more likely to have a breakthrough if they were happy the day before. There's a kind of virtuous cycle. When people are excited about their work, there's a better chance that they'll make a cognitive association that incubates overnight and shows up as a creative idea the next day. One day's happiness often predicts the next day's creativity.” Motivated staff are essential to having a creative organsaition. Although rated highly very respondents made comments about motivation. Most took it as given – no motivation – no creativity. One dsescribed it as a cycle. “If I am motivated I will be more creative but the reverse is also true. I have seen people get into upward and downward spirals and it can be catching.” Positive motiavation enhances organisational creativity. 9. Clear organisational goals It needs to be noted that while respondents talked about testing out new ideas, occasionally failing and having fun this needs to be considered against the background of having to meet organisational goals. A creative environment for them is not a soft one but it can be a frustrating one. Several raised the issue around lack of clarity regarding goals and outcomes and the waste of creative energy that goes into simply defining the goals let alone working to achieve them. Where goals are clearly defined most respondents were more than able, in fact, expected to be left alone to achieve them. In fact, comments were made that creative people are more likely to take the initiative when goals were clearly defined. The importance of aligning organisational goals with personal goals was also raised. Several authors have claimed intention (Nonaka), alignment (Robinson & Stern, 1998), or shared vision (Senge, 1990) to be of vital importance for organisational creativity. If the intention (organisational goal) is not conceptualised and collectively communicated to the employees as a vision, the authors claim the individuals would not be able to evaluate or justify the result of a creative act. A Survey of Organisational Creativity 19 However, what Senge (1990) suggests is that in order to be creative a person needs to have a vision. However, if a vision at all is needed, it does not have to be a company provided vision. It is suggested and supported by some respondents, that what people become “excited” about is the opportunity to work with things in which they are interested no matter what the organisational goal is. “My department has done all the visioning stuff – and we have goals for everything – but the reality is that if I get excited about something I will do the work I have to do as quick as I can so I can get onto the exciting stuff. I still try to meet my goals but if I wasn’t able to do some of this other stuff it would probably drive me nuts. Isn’t most work boring?” - Manufacturing It seems that being able to act rapidly, to seize new business opportunities as they emerge, and to create new knowledge for a previously unanticipated need are now far more important than to stay focused and march in the same direction. Having clear organisational goals may not be an enabling factor for enhancing organisational creativity. 10. Appropriate reward When asked to define ‘appropriate reward’ anly a small number of respondents raised the issue of monet citing the fact that “it’s money that brings me to work but it certainly isn’t money that gets the beat work from me”. Amabile in Fast Company: “The experimental research that has been done on creativity suggests that money isn't everything. In the diary study, we asked people, "To what extent were you motivated by rewards today?" Quite often they'd say that the question isn't relevant -- that they don't think about pay on a day-to-day basis. And the handful of people who were spending a lot of time wondering about their bonuses were doing very little creative thinking. Bonuses and pay-for-performance plans can even be problematic when people believe that every move they make is going to affect their compensation. In those situations, people tend to get risk averse. Of course, people need to feel that they're being compensated fairly. But our research shows that people put far more value on a work environment where creativity is supported, valued, and recognized. People want the opportunity to deeply engage in their work and make real progress. So it's critical for leaders to match people to projects not only on the basis of their experience but also in terms of where their interests lie. People are most creative when they care about their work and they're stretching their skills. If the challenge is far beyond their skill level, they tend to get frustrated; if it's far below their skill level, they tend to get bored. Leaders need to strike the right balance” And so agreed the majority of the respondents. Rewards do matter to enhancing organisational creativity but they must be appropriate and each person will decide what appropriate is for us – if given the opportunity. A Survey of Organisational Creativity 20 Conclusion The fundamental purpose of my research project was to identify those factors that enhance organisational creativity. The project began with an assumption that organisational creativity is important to the future sustained success of organisations. Creativity and inovation are two responses to a market that are likely to give organisations a competitive edge. This was agreed by the majority of the respondents. Based on the literature reviewed in this paper, and the responses from across a range of industry sectors one would conclude that it is possible to enhance creativity and innovation by implementing a range of behavioural, structural and cultural initiatives. Although these may vary from organisation to organisation there seems consensus between the literature and my research that certain factors must be in place if organisational creativity is to be enhanced. In this study those factors, identified in priority order, as indicated by survey respondents, as being: Time Competence of staff Space/resources to pursue ideas Open communication and full information sharing Supportive organisational structure Personal authority to initiate change / Individual empowerment Creative leadership Motivation of staff Clear organisational goals Appropriate reward Appropriate investment ($, time, resources etc) Appropriate tools and technology Allowance for mistakes Diversity Organisational desire to learn from previous mistakes Creativity recognised / taken seriously Balance between risk and opportunity Skilled delegation Some ‘fat’ in the system Removing uncreative people Organisational ‘life force’ Although all respondents identified the importance of the need to enhance organisational creativity as a prerequisite for future success very few agreed that their organisation exhibited them. In fact, when talking with respondents about organisational creativity the conversations were largely around the barriers – both people and process barriers - that prevent organisations from reaping the benefits of a creative working environment. The limitations of this study were identified - the major one being the limited number of responses from a small cross section of industry sectors thus putting into question the applicability of my findings across other types of organisations. This study has raised for me more questions than it has answered, the major one being: If there is so much agreement that organisational creativity is so important what is preventing it from happening? A question for future research! Don't multitask Multithink instead I expect you are familiar with multitasking: the ability to perform more than one task simultaneously. Managers who like to overwork their employees love multitasking. They assume that if their employees are performing three tasks simultaneously, they'll work three times as fast. The logic in that assumption is so thoroughly flawed, it is hard to believe that intelligent managers accept it without question. Perhaps they are too desperate to improve employee productivity.Logic suggests two points:1. No one can actually perform several tasks simultaneously. Rather they quickly switch from one task to the other. Hence, all things being equal, multitasking should be no faster than monotasking (that's my own word, incidentally).2. Bearing in mind point 1, it would seem that a person would require a certain amount of time to switch from one task to the other. Even if that time is tiny, it would add up after numerous switches from task to task. This would suggest that multitasking is actually slower than monotasking.As it turns out an even more reputable source than me confirms the above two points. In a paper published by the American Psychological Association: “Executive Control of Cognitive Processes in Task Switching”, authors Joshua S. Rubinstein, David E. Meyer and Jeffrey E. Evans confirm what logic tells us. You can download the paper as a PDF at http://www.apa.org/journals/releases/xhp274763.pdf or read the press release at www.apa.org/releases/multitasking.html.Although multitasking turns out to be counter-productive, multithinking (another word of mine!) is a different matter all together. Multithinking is thinking about completely different issues or tasks at the same time. Whether you multitask or not, you almost certainly have numerous tasks awaiting your attention at any given time. And it is inevitable that your mind occasionally turns to one task while you are working on another. A multitasker would be inclined to switch tasks at this point. I recommend you stick to the task at hand, but keep a notebook – or at least some paper – nearby when performing any tasks. (Indeed, if you've been reading Report 103 for any length of time, you will know that I recommend having a notebook with you all the time). When the mind turns from the task at hand to another task, simply note down your thoughts in the notebook. Then return to the task at hand. This simple action does several things at once. Firstly, It allows you to maintain your focus on the task at hand. By making a note of your thought, you are clearing your mind of the distracting idea. This can only improve your focus on the task at hand.Secondly, when the action of performing task A inspires an idea relevant to task B, it is very often the case that the idea is a creative one that would not have come to mind had we been focusing on task B. In other words, multithinking often inspires creative ideas.Thirdly, if performing task A provides inspirations for task B, you may come across synergies between the two tasks; synergies which reduce your overall workload – and actually improve your productivity. Such synergies are best discovered through multithinking. Indeed, when ideas come to mind. Do not simply write them down. Try to draw links between your ideas for task B and task A.Frankly, one of the best places to multithink is during long, crowded meetings. During many such meetings, I have filled pages of my notebook on ideas relevant to other tasks – and have still followed the flow of the meeting. On the other hand, even as I write this, I have one notebook on my desk and another electronic one open on my computer – and I am slowly filling them both up.So remember. If you want to be more creatively productive. Don't multitask. Multithink! From time to time, when demonstrating our idea management virtual software to prospective clients we are asked about how many ideas the client can expect. We answer: “a highly effective idea management solution can be expected to generate an average of one idea per user per month or 10-12 ideas per user per year.” This sometimes shocks prospects: “But we have 7,000 employees! How will I ever handle so many ideas!?!”Implementing an innovation culture together with an idea management solution requires a significant investment – and the software costs are but a small part of the investment. The greatest cost is staff time. In a worst case scenario, a company will need to undergo a complete culture change from a hierarchically managed company where all decisions come from the top and must be obeyed (or else!) to an innovation culture in which the active sharing of ideas and knowledge is the norm. This is an expensive transition. But, truth be told, such companies rarely make such a big jump. Companies getting serious about idea management generally have a culture which encourages the sharing of knowledge. They usually have some kind of suggestion box system in operation and have discovered the value good ideas offer their firms. Hence, the initial investment is in promoting a new innovation programme based on a comprehensive idea management solution. The cost of an internal promotional campaign such as this will be around €10 per employee per year.The cost of an idea management solution varies greatly. If you purchase a software package, you will also be faced with the costs of servers; licenses (for databases, web server software, etc); IT staff for maintenance of the server; and on-going support. These costs can add up quickly.We offer Jenni idea management, a “virtual software” solution in that we install and maintain the software on our own secure servers and charge clients a per user subscription fee. So there is no issue of additional hardware or IT management costs. Jenni starts at €30 per user per year inclusive of software access (via a web browser), maintenance, regular upgrades, technical support and innovative support.Every idea submitted to an idea management system requires time on the part of the submitter – anywhere from 10-30 minutes, not including time spent thinking about the idea. Let us assume an average of 20 minutes.IdeaMasters (the term we use for people who oversee idea management systems and perform initial screening of ideas, rejecting poor ideas and sending interesting ideas to experts for evaluation) spend anywhere from one to 20 minutes on screening ideas. Clearly undoable ideas can be rejected in a minute or two. Interesting ideas take more time and must be routed to evaluators for expert opinion. Expert evaluators will normally need about 15-20 minutes to perform an evaluation using a tool like our 5x5 criteria based evaluation tool. Of course highly complex ideas can take longer to evaluate – but we are looking at averages here.So, let us consider a company with 5000 employees, generating an average of 10 ideas per employee per year. We'll assume an hourly cost of Euro 30 for employees and Euro 60 for IdeaMasters and experts. Promoting idea management: €50,000 Cost of generating ideas: €500,000 Cost of IdeaMastering: €250,000 Cost of evaluating 25% of ideas with three evaluators for each evaluation: €750,000 Cost of idea management solution: €150,000 Total annual cost per year: €1.7 million Yikes!!! I hear you say. That's a lot of money.What can you look forward to in exchange for such an investment? There are number of calculations for determining the RoI (return on ideas) of an idea management solution. For this article, we'll consider the value per idea.DaimlerChrysler likes to brag that in 2001, their idea management solution netted 69,000 ideas which generated a savings of €62 million. This works out to about €899/idea – and this fits in with our own observation that a well implemented innovation programme centred around an idea management solution nets an average of €500 to €1,000 per idea (in new income or cost savings).So, in our example 50,000 ideas would mean a revenue increase of between €2.5 and €5 million – certainly a handsome return on your innovation investment. Indeed, Giga Research (a subsidiary of Forrester Research) also found that a “positive total economic impact within one year is reasonable” for the implementation of an idea management solution. As the saying goes: It takes money to make money. And while there is clearly a significant risk involved, a well implemented innovation programme centred around an idea management solution can bring an excellent return on investment. Want to know more about what an innovation programme can do you for you? The classic definitions of innovation include:the act of introducing something new: something newly introduced (The American Heritage Dictionary). the introduction of something new. (Merriam-Webster Online) a new idea, method or device. (Merriam-Webster Online) the successful exploitation of new ideas (Department of Trade and Industry, UK). change that creates a new dimension of performance Peter Drucker (Hesselbein, 2002) the process of making improvements by introducing something new[citation needed] In economics, business and government policy,- something new - must be substantially different, not an insignificant change. In economics the change must increase value, customer value, or producer value. Innovations are intended to make someone better off, and the succession of many innovations grows the whole economy.The term innovation may refer to both radical and incremental changes to products, processes or services. The often unspoken goal of innovation is to solve a problem. Innovation is an important topic in the study of economics, business, technology, sociology, and engineering. Since innovation is also considered a major driver of the economy, the factors that lead to innovation are also considered to be critical to policy makers.Contents [hide] 1 Introduction 2 Conceptualizing innovation 2.1 Distinguishing from Invention and other concepts 2.2 Innovation in organizations 2.3 Economic conceptions of innovation 2.4 Transaction cost and network theory perspectives 3 Types of innovation 4 Innovation and market outcome 5 Sources of innovation 6 Value of experimentation in innovation 7 Diffusion of innovations 8 Goals of innovation 9 Failure of innovation 10 Measures of innovation 11 Public awareness 12 See also 13 References 14 Innovation Links 15 External links [edit] Introduction In the organisational context, innovation may be linked to performance and growth through improvements in efficiency, productivity, quality, competitive positioning, market share, etc. All organisations can innovate, including for example hospitals, universities, and local governments.While innovation typically adds value, innovation may also have a negative or destructive effect as new developments clear away or change old organisational forms and practices. Organisations that do not innovate effectively may be destroyed by those that do. Hence innovation typically involves risk. A key challenge in innovation is maintaining a balance between process and product innovations where process innovations tend to involve a business model which may develop shareholder satisfaction through improved efficiencies while product innovations develop customer support however at the risk of costly R&D that can erode shareholder returns. [edit] Conceptualizing innovation Innovation has been studied in a variety of contexts, including in relation to technology, commerce, social systems, economic development, and policy construction. There are, therefore, naturally a wide range of approaches to conceptualising innovation in the scholarly literature. See, e.g., Fagerberg et al. (2004).Fortunately, however, a consistent theme may be identified: innovation is typically understood as the successful introduction of something new and useful, for example introducing new methods, techniques, or practices or new or altered products and services. [edit] Distinguishing from Invention and other concepts "An important distinction is normally made between invention and innovation. Invention is the first occurrence of an idea for a new product or process, while innovation is the first attempt to carry it out into practice" (Fagerberg, 2004: 4)It is useful, when conceptualizing innovation, to consider whether other words suffice. Recent authors point out that invention - the creation of new tools or the novel compilation of existing tools - is often confused with innovation. Many product and service enhancements may fall more rigorously under the term improvement. Change and creativity are also words that may often be substituted for innovation. What, then, is innovation that makes it necessary to have a different word from these others, or is it a catch-all word, a loose synonym? Much of the current business literature blurs the concept of innovation with value creation, value extraction and operational execution. In this view, an innovation is not an innovation until someone successfully implements and makes money on an idea. Extracting the essential concept of innovation from these other closely linked notions is no easy thing.One emerging approach is to use these other notions as the constituent elements of innovation as an action: Innovation occurs when someone uses an invention - or uses existing tools in a new way - to change how the world works, how people organize themselves, and how they conduct their lives.Note in this view inventions may be concepts, physical devices or any other set of things that facilitate an action. An innovation in this light occurs whether or not the act of innovating succeeds in generating value for its champions. Innovation is distinct from improvement in that it causes society to reorganize. It is distinct from problem solving and is perhaps more rigorously seen as new problem creation. And in this view, innovation applies whether the act generates positive or negative results. [edit] Innovation in organizations A convenient definition of innovation from an organizational perspective is given by Luecke and Katz (2003), who wrote:"Innovation . . . is generally understood as the successful introduction of a new thing or method . . . Innovation is the embodiment, combination, or synthesis of knowledge in original, relevant, valued new products, processes, or services. (p. 2)" Don Sheelen also placed innovation at the pinnacle of modern business stating that:"Innovation is the lifeblood of any organization." Sheelan emphasizes that "without it, not only is their no growth, but, inevitably, a slow death." Innovation typically involves creativity, but is not identical to it: innovation involves acting on the creative ideas to make some specific and tangible difference in the domain in which the innovation occurs. For example, Amabile et al (1996) propose:"All innovation begins with creative ideas . . . We define innovation as the successful implementation of creative ideas within an organization. In this view, creativity by individuals and teams is a starting point for innovation; the first is necessary but not sufficient condition for the second". (p. 1154-1155). For innovation to occur, something more than the generation of a creative idea or insight is required: the insight must be put into action to make a genuine difference, resulting for example in new or altered business processes within the organisation, or changes in the products and services provided.A further characterization of innovation is as an organizational or management process. For example, Davila et al (2006), write:"Innovation, like many business functions, is a management process that requires specific tools, rules, and discipline." (p. xvii) From this point of view the emphasis is moved from the introduction of specific novel and useful ideas to the general organizational processes and procedures for generating, considering, and acting on such insights leading to significant organizational improvements in terms of improved or new business products, services, or internal processes.Through these varieties of viewpoints, creativity is typically seen as the basis for innovation, and innovation as the successful implementation of creative ideas within an organization (c.f. Amabile et al 1996 p.1155). From this point of view, creativity may be displayed by individuals, but innovation occurs in the organizational context only.It should be noted, however, that the term 'innovation' is used by many authors rather interchangeably with the term 'creativity' when discussing individual and organizational creative activity. As Davila et al (2006) comment,"Often, in common parlance, the words creativity and innovation are used interchangeably. They shouldn't be, because while creativity implies coming up with ideas, it's the "bringing ideas to life" . . . that makes innovation the distinct undertaking it is." The distinctions between creativity and innovation discussed above are by no means fixed or universal in the innovation literature. They are however observed by a considerable number of scholars in innovation studies.. [edit] Economic conceptions of innovation Joseph Schumpeter defined economic innovation in 1934:[citation needed]The introduction of a new good —that is one with which consumers are not yet familiar—or of a new quality of a good. The introduction of a new method of production, which need by no means be founded upon a discovery scientifically new, and can also exist in a new way of handling a commodity commercially. The opening of a new market, that is a market into which the particular branch of manufacture of the country in question has not previously entered, whether or not this market has existed before. The conquest of a new source of supply of raw materials or half-manufactured goods, again irrespective of whether this source already exists or whether it has first to be created. The carrying out of the new organization of any industry, like the creation of a monopoly position (for example through trustification) or the breaking up of a monopoly position Schumpeter's focus on innovation is reflected in Neo-Schumpeterian economics.Innovation is also studied by economists in a variety of contexts, for example in theories of entrepreneurship or in Paul Romer's New Growth Theory. [edit] Transaction cost and network theory perspectives According to Regis Cabral (1998, 2003):"Innovation is a new element introduced in the network which changes, even if momentarily, the costs of transactions between at least two actors, elements or nodes, in the network." [edit] Types of innovation Scholars have identified at a variety of classifications for types innovations. Here is an unordered ad-hoc list of examples:Business model innovation involves changing the way business is done in terms of capturing value . Marketing innovation is the development of new marketing methods with improvement in product design or packaging, product promotion or pricing. Organizational innovation involves the creation or alteration of business structures, practices, and models, and may therefore include process, marketing and business model innovation. Process innovation involves the implementation of a new or significantly improved production or delivery method. Product innovation involves the introduction of a new good or service that is new or substantially improved. This might include improvements in functional characteristics, technical abilities, ease of use, or any other dimension. Service innovation refers to service product innovation which might be, compared to goods product innovation or process innovation, relatively less involving technological advance but more interactive and information-intensive . Supply chain innovation where innovations occur in the sourcing of input products from suppliers and the delivery of output products to customers Substantial innovation introduces a different product or service within the same line, such as the movement of a candle company into marketing the electric lightbulb. Financial innovation through which new financial services and products are developed, by combining basic financial attributes (ownership, risk-sharing, liquidity, credit) in progressive innovative ways, as well as reactive exploration of borders and strength of tax law. Through a cycle of development, directive compliance is being sharpened on opportunities, so new financial services and products are continuously shaped and progressed to be adopted. The dynamic spectrum of financial innovation, where business processes, services and products are adapted and improved so new valuable chains emerge, therefore may be seen to involve most of the above mentioned types of innovation. Incremental innovations is a step forward along a technology trajectory, or from the known to the unknown, with little uncertainty about outcomes and success and is generally minor improvements made by those working day to day with existing methods and technology (both process and product), responding to short term goals. Most innovations are incremental innovations. A value-added business process, this involves making minor changes over time to sustain the growth of a company without making sweeping changes to product lines, services, or markets in which competition currently exists. Breakthrough, disruptive or radical innovation involves launching an entirely novel product or service rather than providing improved products & services along the same lines as currently. The uncertainty of breakthrough innovations means that seldom do companies achieve their breakthrough goals this way, but those times that breakthrough innovation does work, the rewards can be tremendous. Involves larger leaps of understanding, perhaps demanding a new way of seeing the whole problem, probably taking a much larger risk than many people involved are happy about. There is often considerable uncertainty about future outcomes. There may be considerable opposition to the proposal and questions about the ethics, practicality or cost of the proposal may be raised. People may question if this is, or is not, an advancement of a technology or process. Radical innovation involves considerable change in basic technologies and methods, created by those working outside mainstream industry and outside existing paradigms. Sometimes it is very hard to draw a line between both. New technological systems (systemic innovations) that may give rise to new industrial sectors, and induce major change across several branches of the economy. Social innovation a number of different definitions, but predominantly refers to either innovations that aim to meet a societal need or the social processes used to develop an innovation [edit] Innovation and market outcome Market outcome from innovation can be studied from different lenses. The industrial organizational approach of market characterization according to the degree of competitive pressure and the consequent modelling of firm behaviour often using sophisticated game theoretic tools, while permitting mathematical modelling, has shifted the ground away from an intuitive understanding of markets. The earlier visual framework in economics, of market demand and supply along price and quantity dimensions, has given way to powerful mathematical models which though intellectually satisfying has led policy makers and managers groping for more intuitive and less theoretical analyses to which they can relate to at a practical level. Non quantifiable variables find little place in these models, and when they do, mathematical gymnastics (such as the use of different demand elasticities for differentiated products) embrace many of these qualitative variables, but in an intuitively unsatisfactory way.In the management (strategy) literature on the other hand, there is a vast array of relatively simple and intuitive models for both managers and consultants to choose from. Most of these models provide insights to the manager which help in crafting a strategic plan consistent with the desired aims. Indeed most strategy models are generally simple, wherein lie their virtue. In the process however, these models often fail to offer insights into situations beyond that for which they are designed, often due to the adoption of frameworks seldom analytical, seldom rigorous. The situational analyses of these models often tend to be descriptive and seldom robust and rarely present behavioural relationship between variables under study.From an academic point of view, there is often a divorce between industrial organisation theory and strategic management models. While many economists view management models as being too simplistic, strategic management consultants perceive academic economists as being too theoretical, and the analytical tools that they devise as too complex for managers to understand.Innovation literature while rich in typologies and descriptions of innovation dynamics is mostly technology focused. Most research on innovation has been devoted to the process (technological) of innovation, or has otherwise taken a how to (innovate) approach. The integrated innovation model of Soumodip Sarkar goes some way to providing the academic, the manager and the consultant an intuitive understanding of the innovation – market linkages in a simple yet rigorous framework in his book , Innovation, Market Archetypes and Outcome- An Integrated Framework.[1]The integrated model presents a new framework for understanding firm and market dynamics, as it relates to innovation. The model is enriched by the different strands of literature - industrial organization, management and innovation. The integrated approach that allows the academic, the management consultant and the manager alike to understand where a product (or a single product firm) is located in an integrated innovation space, why it is so located and which then provides valuable clues as to what to do while designing strategy. The integration of the important determinant variables in one visual framework with a robust and an internally consistent theoretical basis is an important step towards devising comprehensive firm strategy. The integrated framework provides vital clues towards framing a what to guide for managers and consultants. Furthermore, the model permits metrics and consequently diagnostics of both the firm and the sector and this set of assessment tools provide a valuable guide for devising strategy. [edit] Sources of innovation There are several sources of innovation. In the linear model the traditionally recognized source is manufacturer innovation. This is where an agent (person or business) innovates in order to sell the innovation. Another source of innovation, only now becoming widely recognized, is end-user innovation. This is where an agent (person or company) develops an innovation for their own (personal or in-house) use because existing products do not meet their needs. Eric von Hippel has identified end-user innovation as, by far, the most important and critical in his classic book on the subject, Sources of Innovation.[2]Innovation by businesses is achieved in many ways, with much attention now given to formal research and development for "breakthrough innovations." But innovations may be developed by less formal on-the-job modifications of practice, through exchange and combination of professional experience and by many other routes. The more radical and revolutionary innovations tend to emerge from R&D, while more incremental innovations may emerge from practice - but there are many exceptions to each of these trends.Regarding user innovation, rarely user innovators may become entrepreneurs, selling their product, or more often they may choose to trade their innovation in exchange for other innovations. Nowadays, they may also choose to freely reveal their innovations, using methods like open source. In such networks of innovation the creativity of the users or communities of users can further develop technologies and their use.Whether innovation is mainly supply-pushed (based on new technological possibilities) or demand-led (based on social needs and market requirements) has been a hotly debated topic. Similarly, what exactly drives innovation in organizations and economies remains an open question.More recent theoretical work moves beyond this simple dualistic problem, and through empirical work shows that innovation does not just happen within the industrial supply-side, or as a result of the articulation of user demand, but though a complex processes that links many different players together - not only developers and users, but a wide variety of intermediary organistions such as consultancies, standards bodies etc. Work on social networks suggests that much of the most successful innovation occures at the boundaries of organisations and industries where the problems and needs of users, and the potential of technologies can be linked together in a creative process that challenges both. [edit] Value of experimentation in innovation When an innovative idea requires a new business model, or radically redesigns the delivery of value to focus on the customer, a real world experimentation approach increases the chances of market success. New business models and customer experiences can’t be tested through traditional market research methods. Pilot programs for new innovations set the path in stone too early thus increasing the costs of failure.Stefan Thomke of Harvard Business School has written a definitive book on the importance of experimentation. Experimentation Matters argues that every company’s ability to innovate depends on a series of experiments [successful or not], that help create new products and services or improve old ones. That period between the earliest point in the design cycle and the final release should be filled with experimentation, failure, analysis, and yet another round of experimentation. “Lather, rinse, repeat,” Thomke says. Unfortunately, uncertainty often causes the most able innovators to bypass the experimental stage.In his book, Thomke outlines six principles companies can follow to unlock their innovative potential.Anticipate and Exploit Early Information Through ‘Front-Loaded’ Innovation Processes Experiment Frequently but Do Not Overload Your Organization. Integrate New and Traditional Technologies to Unlock Performance. Organize for Rapid Experimentation. Fail Early and Often but Avoid ‘Mistakes’. Manage Projects as Experiments.[3] Thomke further explores what would happen if the principles outlined above were used beyond the confines of the individual organization. For instance, in the state of Rhode Island, innovators are collaboratively leveraging the state's compact geography, economic and demographic diversity and close-knit networks to quickly and cost-effectively test new business models through a real-world experimentation lab.[citation needed] [edit] Diffusion of innovations Main article: diffusion of innovations Once innovation occurs, innovations may be spread from the innovator to other individuals and groups. This process has been studied extensively in the scholarly literature from a variety of viewpoints, most notably in Everett Rogers' classic book, The Diffusion of Innovations. However, this 'linear model' of innovation has been substantinally challenged by scholars in the last 20 years, and much research has shown that the simple invention-innovation-diffusion model does not do justice to the multilevel, non-linear processes that firms, entrepreneurs and users participate in to create successful and sustainable innovations.Rogers proposed that the life cycle of innovations can be described using the ‘s-curve’ or diffusion curve. The s-curve maps growth of revenue or productivity against time. In the early stage of a particular innovation, growth is relatively slow as the new product establishes itself. At some point customers begin to demand and the product growth increases more rapidly. New incremental innovations or changes to the product allow growth to continue. Towards the end of its life cycle growth slows and may even begin to decline. In the later stages, no amount of new investment in that product will yield a normal rate of return.The s-curve is derived from half of a normal distribution curve. There is an assumption that new products are likely to have "product Life". i.e. a start-up phase, a rapid increase in revenue and eventual decline. In fact the great majority of innovations never get off the bottom of the curve, and never produce normal returns.Innovative companies will typically be working on new innovations that will eventually replace older ones. Successive s-curves will come along to replace older ones and continue to drive growth upwards. In the figure above the first curve shows a current technology. The second shows an emerging technology that current yields lower growth but will eventually overtake current technology and lead to even greater levels of growth. The length of life will depend on many factors. [edit] Goals of innovation Programs of organizational innovation are typically tightly linked to organizational goals and objectives, to the business plan, and to market competitive positioning.For example, one driver for innovation programs in corporations is to achieve growth objectives. As Davila et al (2006) note,"Companies cannot grow through cost reduction and reengineering alone . . . Innovation is the key element in providing aggressive top-line growth, and for increasing bottom-line results" (p.6) In general, business organisations spend a significant amount of their turnover on innovation i.e. making changes to their established products, processes and services. The amount of investment can vary from as low as a half a percent of turnover for organisations with a low rate of change to anything over twenty percent of turnover for organisations with a high rate of change.The average investment across all types of organizations is four percent. For an organisation with a turnover of say one billion currency units, this represents an investment of forty million units. This budget will typically be spread across various functions including marketing, product design, information systems, manufacturing systems and quality assurance.The investment may vary by industry and by market positioning.One survey across a large number of manufacturing and services organisations found, ranked in decreasing order of popularity, that systematic programs of organizational innovation are most frequently driven by:Improved quality Creation of new markets Extension of the product range Reduced labour costs Improved production processes Reduced materials Reduced environmental damage Replacement of products/services Reduced energy consumption Conformance to regulations These goals vary between improvements to products, processes and services and dispel a popular myth that innovation deals mainly with new product development. Most of the goals could apply to any organisation be it a manufacturing facility, marketing firm, hospital or local government. [edit] Failure of innovation Attaining goals must be the ultimate objective of the innovation process. Unfortunately, most innovation fails to meet organisational goals.Figures vary considerably depending on the research. Some research quotes failure rates of fifty percent while other research quotes as high as ninety percent of innovation has no impact on organisational goals. One survey regarding product innovation quotes that out of three thousand ideas for new products, only one becomes a success in the marketplace.[citation needed] Failure is an inevitable part of the innovation process, and most successful organisations factor in an appropriate level of risk. Perhaps it is because all organisations experience failure that many choose not to monitor the level of failure very closely. The impact of failure goes beyond the simple loss of investment. Failure can also lead to loss of morale among employees, an increase in cynicism and even higher resistance to change in the future.Innovations that fail are often potentially ‘good’ ideas but have been rejected or ‘shelved’ due to budgetary constraints, lack of skills or poor fit with current goals. Failures should be identified and screened out as early in the process as possible. Early screening avoids unsuitable ideas devouring scarce resources that are needed to progress more beneficial ones. Organizations can learn how to avoid failure when it is openly discussed and debated. The lessons learned from failure often reside longer in the organisational consciousness than lessons learned from success. While learning is important, high failure rates throughout the innovation process are wasteful and a threat to the organisation's future.The causes of failure have been widely researched and can vary considerably. Some causes will be external to the organisation and outside its influence of control. Others will be internal and ultimately within the control of the organisation. Internal causes of failure can be divided into causes associated with the cultural infrastructure and causes associated with the innovation process itself. Failure in the cultural infrastructure varies between organisations but the following are common across all organisations at some stage in their life cycle (O'Sullivan, 2002):Poor Leadership Poor Organisation Poor Communication Poor Empowerment Poor Knowledge Management Common causes of failure within the innovation process in most organisations can be distilled into five types:Poor goal definition Poor alignment of actions to goals Poor participation in teams Poor monitoring of results Poor communication and access to information Effective goal definition requires that organisations state explicitly what their goals are in terms understandable to everyone involved in the innovation process. This often involves stating goals in a number of ways. Effective alignment of actions to goals should link explicit actions such as ideas and projects to specific goals. It also implies effective management of action portfolios. Participation in teams refers to the behaviour of individuals in and of teams, and each individual should have an explicitly allocated responsibility regarding their role in goals and actions and the payment and rewards systems that link them to goal attainment. Finally, effective monitoring of results requires the monitoring of all goals, actions and teams involved in the innovation process.Innovation can fail if seen as an organisational process whose success stems from a mechanistic approach i.e. 'pull lever obtain result'. While 'driving' change has an emphasis on control, enforcement and structure it is only a partial truth in achieving innovation. Organisational gatekeepers frame the organisational environment that "Enables" innovation; however innovation is "Enacted" - recognised, developed, applied and adopted - through individuals.Individuals are the 'atom' of the organisation close to the minutiae of daily activities. Within individuals gritty appreciation of the small detail combines with a sense of desired organisational objectives to deliver (and innovate for) a product/service offer.From this perspective innovation succeeds from strategic structures that engage the individual to the organisation's benefit. Innovation pivots on intrinsically motivated individuals, within a supportive culture, informed by a broad sense of the future.Innovation, implies change, and can be counter to an organisation's orthodoxy. Space for fair hearing of innovative ideas is required to balance the potential autoimmune exclusion that quells an infant innovative culture. [edit] Measures of innovation Individual and team-level assessment can be conducted by surveys and workshops. Business measures related to finances, processes, employees and customers in balanced scorecards can be viewed from the innovation perspective (e.g. new product revenue, time to market, customer and employee perception & satisfaction). Organizational capabilities can be evaluated through various evaluation frameworks e.g. efqm (European foundation for quality management) -model.The OECD Oslo Manual from 1995 suggests standard guidelines on measuring technological product and process innovation. Some people consider the Oslo Manual complementary to the Frascati Manual from 1963. The new Oslo manual from 2005 takes a wider perspective to innovation, and includes marketing and organizational innovation. Other ways of measuring innovation have traditionally been expenditure, for example, investment in R&D (Research and Development) as percentage of GNP (Gross National Product). Whether this is a good measurement of Innovation has been widely discussed and the Oslo Manual has incorporated some of the critique against earlier methods of measuring. This being said, the traditional methods of measuring still inform many policy decisions. The EU Lisbon Strategy has set as a goal that their average expenditure on R&D should be 3 % of GNP.The Oslo Manual is focused on North America, Europe, and other rich economies. In 2001 for Latin America and the Caribbean countries it was created the Bogota ManualMany scholars claim that there is a great bias towards the "science and technology mode" (S&T-mode or STI-mode), while the "learning by doing, using and interacting mode" (DUI-mode) is widely ignored. For an example, that means you can have the better high tech or software, but there are also crucial learning tasks important for innovation. But these measurements and research are rarely done. [edit] Public awareness Public awareness of innovation is an important part of the innovation process. This is further discussed in the emerging fields of innovation journalism and innovation communication.What Business Execs Don’t Know—but Should—About Nonprofits Business leaders play vital roles in the nonprofit sector – as board members, donors, partners, and even executives. Yet all too often they underestimate the unique challenges of managing nonprofit organizations. In this article, 11 executives who have played leadership roles in both for-profits and nonprofits reveal the critical differences between the two, and suggest ways that business and nonprofit leaders can use this information to create a more effective social sector. Email Entry Download PDF Order Reprints Printer Version Other articles on: Management BoardsLeadershipManagementNonprofit By Les Silverman & Lynn Taliento Summer 2006 9 comments | Comment on this article Ask William Novelli, the CEO of AARP, if business executives underestimate the complexities of running a nonprofit organization, and his head starts nodding. The former Unilever marketer built Porter Novelli into a public relations powerhouse before embarking on his current career. Twelve years deep into the nonprofit sector, Novelli can attest that navigating Washington, D.C.’s land mines while running his sprawling $800 million operation is hardly the laid-back retirement farm that many businesspeople imagine.Too many business CEOs just don’t get it, says Novelli. “It goes beyond underappreciated. CEOs are often disdainful of not-for-profit management. They think it’s undisciplined, non-quantified.” But in fact, “it’s harder to succeed in the nonprofit world.” For starters, nonprofits’ goals are both more complex and more intangible. “It may be hard to compete in the field of consumer packaged goods or electronics or high finance,” he says, “but it’s harder to achieve goals in the nonprofit world because these goals tend to be behavioral. If you set out to do something about breast cancer in this country, or about Social Security solvency, it’s a hell of a lot harder to pull that off.” And “it’s also harder to measure,” he adds.It’s not always easy to persuade business leaders of what Novelli knows in his bones to be true. Yet our experience at McKinsey & Company advising hundreds of nonprofits in recent years suggests that it must be done. Business executives need to understand the leadership challenges faced by their nonprofit counterparts if they are to cross the border between the two worlds gracefully. And nonprofit leaders, for their part, need to have a firm grasp of these issues so that they can help the business leaders they work with be more effective.The gap in understanding between the two worlds has wide repercussions. Too many business leaders take their nonprofit board membership less seriously than they do their corporate board membership. Too many donors only half heartedly use their financial clout. Too many cross-sector partnerships fail because business leaders can’t accommodate the nonprofit sector’s different culture and demands. And too many well-meaning businesspeople who move into nonprofit leadership roles end up frustrated and ineffective because they don’t fully appreciate how uniquely hard their jobs will be. These underestimations of what it takes to lead nonprofits not only erode individual organizations’ effectiveness, but also hurt the nonprofit sector’s overall performance.For these reasons and more, leaders who have served in both sectors agree that top business executives need to better understand what makes the nonprofit world tick. Says Robert Higgins, who ran the Robert Sterling Clark, John A. Hartford, and Florence V. Burden foundations before co-founding the venture capital firm Highland Capital Partners, “The nonprofit sector is such a big part of the economy that you almost cannot let someone run a company who doesn’t appreciate [it].”To find out what exactly business executives don’t understand about nonprofit leadership, we conducted a virtual conversation among 11 nonprofit executives who have also held senior positions in the for-profit world – that is, crossover leaders. Although some of our interviewees noted that the gap in understanding between nonprofit and for-profit leaders is narrowing, on the whole they agreed that most business leaders sorely underestimate how tough nonprofit leadership can be.Our interviewees identified five challenges that most business leaders fail to appreciate. First, nonprofit CEOs wield less authority and control than their for-profit counterparts. At the same time, they must answer to a wider range of stakeholders. Nonprofits also lack straightforward performance measures – there are no analogs to profit in social change – and yet they are under greater scrutiny from politicians and the press. Finally, compared to the corporate world, the nonprofit sector is underfunded, understaffed, under-resourced, and undertrained. Below we discuss each of the five commonly underappreciated challenges of nonprofit leadership, as well as how our crossover leaders deal with them.Little Control or RespectFor business executives who are used to being the boss, the nonprofit setting harbors a rude awakening. “In the world of nonprofits, deference to the CEO is rare,” says Reynold Levy, president of Lincoln Center for the Performing Arts and a former AT&T executive. “You really need to earn that respect. It doesn’t come by virtue of your title.”Philip Lader, chairman of the communications services firm WPP Group and former White House deputy chief of staff, says the lack of respect can be exasperating to those who don’t understand the sector. “When I was a college president,” Lader says, “I sought to initiate curriculum reform, establish certain cultural requirements, and apply for admission to the NCAA, all of which required faculty consent. Contrary to a corporate setting, I would stand before the faculty senate and plead for their support. Yet the board and media would ascribe to me the credit or blame for the institution’s progress.“It reminds me of what someone said life as an ambassador is like,” adds Lader, who also served as U.S. ambassador to the United Kingdom from 1997 to 2001. “There you are at the helm of the great ship, with everyone scurrying about. Only after about four months of steering the wheel do you realize that it is not connected to the rudder. Everyone is saluting you and saying ‘aye aye,’ [and then] they go below to steer the ship themselves. In many nonprofits, that genuinely is the case.”“I’ve seen some people try to move over to the nonprofit sector from the private sector,” says Richard Schlosberg, who was CEO and publisher of the Los Angeles Times before serving five years as president of the David and Lucile Packard Foundation. “Their time frame, their command-and-control orientation, and their view of the employee/employer relationship just don’t translate as easily. It’s like they don’t quite get it.”So Many Stakeholders! So Much Consensus Building!Nonprofit leaders generally have less authority than their for-profit counterparts partly because they have to honor the disparate concerns of many more groups, each with a legitimate stake in the organization’s mission and activities. This diversity starts with the board of directors.“In most for-profit organizations,” explains Higgins, “people arrive with common goals. The board of directors may have different viewpoints, but shareholder value as a fundamental goal is something shared by the board, by the CEO, and by senior management. You start off differently in the not-for-profit world, with each board member arriving with a different set of goals and often different agendas. To manage that as a CEO is much more complex.”“You have to have a much more consultative, inclusive decision-making style,” adds Peter Goldmark, who was president of the Rockefeller Foundation for nine years in between publishing stints at the Times Mirror Company and the International Herald Tribune. He now directs the Climate and Air program at Environmental Defense. Asked to comment on the implications of having to work with so many different stakeholders, Novelli rattles off a few: “Eternal consensus building, slow decision making, slow to act.” When he first took the helm of AARP, Novelli brought in a business school professor to help him think about the organization’s processes. “Around here it’s ready, aim, aim, aim,” the consultant told him.“There’s nothing wrong with consensus building,” Novelli is quick to add. “It’s just that it shouldn’t be 100 percent consensus. It’s not like the mailroom guy has to weigh in. There has to be an end to it.”Schlosberg has seen this dynamic at work. “In the for-profit sector you often had to make decisions with incomplete information. In the foundation world, the time it took to make decisions was uncomfortably long at first.”“You have to lead by consensus and by influence as opposed to by pure management,” explains David Chernow of JA Worldwide (Junior Achievement). Chernow, who ran numerous for-profit cancer treatment centers and practices before leading JA Worldwide, says this lesson was seared into him when Junior Achievement merged its international and U.S. operations. “You can’t just come in here and wield a stick and make things happen.”Harold Williams, who was chairman and CEO of business conglomerate Norton Simon before becoming dean of UCLA Anderson School of Management, chairman of the Securities and Exchange Commission, and founding CEO of J. Paul Getty Trust, counsels crossover executives to be clear-eyed about how their authority will change. “You will have little opportunity to lead by making decisions,” Williams says. “You’ll have the power of the budget to some extent, but if you have a vision or you want to make any changes, you’re going to do it by leadership and by inspiration and not by direction. You’ve got to be a Pied Piper.”The Elusive Art of Nonprofit MeasurementMeasuring performance in nonprofits is notoriously difficult. “You don’t have a simple financial metric that is really central,” says Goldmark. “You are dealing with more squishy and intangible issues of social change or public attitudes and behavior.” In spite of the challenge, our crossover leaders agreed that it is important to develop meaningful metrics, however imperfect.“The lack of having a bottom line is truly underappreciated,” explains Schlosberg, “as is its importance in enabling an organization to have focus and come together. It becomes much more of a challenge to evaluate not only the organization, but individuals and their performance as well.”“How do you do this in artistic organizations?” asks Levy. “My director of festivals will say, ‘I want every festival I do to be the best, better than the year before.’ ‘Well,’ I say, ‘what do you mean by that?’ Translating a better festival into results that are measurable and that you can gauge over time is a major effort in an artistic organization and in most nonprofits.”Most crossover leaders agree that the drive to measure performance often goes against the nonprofit grain. “Bringing that tough-minded, analytical decision-making process is difficult given the cultural differences,” says Judy Vredenburgh, a former fashion executive who spent six years as senior vice president of the March of Dimes, and another five and a half years as CEO of Big Brothers Big Sisters. In her for-profit life, Vredenburgh was almost obsessively focused on speed and results, but she found the nonprofit world was decidedly not. “I remember not achieving a number that I said I would achieve early on,” she recalls, “and I thought, ‘Oh my goodness!’ But no one even noticed.”Catherine Meloy, who was a senior executive at Clear Channel Communications before taking over the Washington, D.C., region of Goodwill Industries, found that even bringing what she felt were basic budget practices to Goodwill involved true culture shock. “I said, ‘Let’s benchmark.’ It became a joke. People said: ‘Does she have to question everything? Doesn’t she trust what we’re doing?’”Communications in a FishbowlCommunication is central to effective leadership in any setting, but our crossover leaders say it is much more so in nonprofit organizations. “It’s extraordinarily more important in nonprofits as a means of influencing and motivating,” says Vredenburgh. “In the end, the CEO of a nonprofit has to be the external communicator and external relationship builder, and that means he or she has to be the chief fundraiser. In a for-profit, you have investor relations – but it’s on the side. It’s not a core function.”A related challenge – one that trips up even seasoned for-profit leaders – is the public and the press’s unblinking scrutiny of nonprofits. A few regulated for-profit industries, such as healthcare, may understand what it feels like in the fishbowl. But in general, “people in the for-profit world don’t really think of themselves as operating in the public view,” says Richard Leone, who ran the New York Mercantile Exchange and the investment bank Dillon, Read & Company before taking the helm at the Century Foundation. “People in the nonprofit world tend to deal with that much more than people in the for-profit world because they tend to have broader constituencies. They have to fundraise, they have a community they’re trying to serve, and they have the kind of goals that get spelled out in public ways.”Novelli agrees. “Many for-profit CEOs and high-level executives don’t understand politics. Politics is almost always present in not-for-profit worlds. You’re essentially using advocacy as one of your tools.”Doing More With LessOur crossover leaders all agreed that the nonprofit sector’s funding shortages and lack of training make building strong organizations especially hard. “For-profit executives don’t understand how difficult our jobs are,” says Vredenburgh. “Every time we in nonprofits satisfy customers, we drain resources, and every time for-profits satisfy a customer, they get resources back. That sounds very simple, but it has huge implications, and I don’t think the for-profit people really get that.”“They’re [nonprofits] difficult to run,” adds Williams, “in part because they are more hand-to-mouth, and because the quality and amount of staff is thinner than it is in a typical corporate environment. In many respects the typical nonprofit leader is much more entrepreneurial than the typical chief executive in the corporate world. You have fewer resources, fewer staff, and less certainty.“Many of the managers of nonprofits have come up what I call ‘the substantive side,’ without management training,” says Williams. “It really limits the ability of people in the nonprofit sector to scale up. It also contributes to the tendency of the for-profit people on boards to say, ‘This guy doesn’t know what he’s doing.’”“I had to become more of a teacher than I had been before,” says Schlosberg of his foundation stint. “I spent a lot of time blocking and tackling. I put a management committee together, upgraded human resources, got a planner in here, named a chief financial officer.”Schlosberg, who also observed many smaller nonprofits from his perch at the Packard Foundation, came away convinced that “in the nonprofit sector there’s much more reliance on the leader, and less developed teams and talent underneath. I see undercapacity all over the nonprofit sector.” Many good managers in the nonprofit sector would agree on the need for capacity building, but simply can’t get donors to support it. “In the for-profit business,” says Chernow, “you spend an enormous amount of money on that training. Here, if we went out to corporations and foundations to give us money to develop capacity in our organization and to build leadership, it’s not as readily accepted. It’s hard to get that kind of investment.”Beyond training a management team, even hiring the right people is harder in nonprofits. Salaries in the nonprofit sector are typically not competitive with those in the commercial sector, yet the need for management talent is just as great. “I come from a Wall Street environment where if you really wanted somebody you just threw a huge amount of money on the table,” says Leone. “The nonprofit world is obviously different.” Intense donor pressure to keep administrative overhead low further hobbles many organizations’ ability to hire good management.Despite all their drawbacks, nonprofits have one clear advantage when it comes to attracting and retaining staff: their inspiring missions. “The missions are so powerful that you can attract really good people,” says Novelli. “There was a guy from Levi Strauss who said, ‘I don’t want it to say on my tombstone that I shipped a million pair of jeans.’ That’s powerful.”How to Be a Better Crossover LeaderWhether serving as nonprofit board members, donors, partners, or executives, business leaders can play their nonprofit roles better by understanding the differences between nonprofit and for-profit organizations. Below, we suggest how both business and nonprofit leaders can help one another excel.Board members. Too often, business executives who sit on nonprofit boards don’t take their role as seriously as they do their corporate board role. Many consider it a hobby or a “do-good” contribution, rather than a real responsibility, and so they don’t invest enough time or energy into understanding the organization. “When it comes to a nonprofit board,” says Vredenburgh, echoing the sentiment of many in our group, “the sophisticated, smart, for-profit people sometimes leave their heads at the door.”On the performance side, many for-profit executives on nonprofit boards come to understand that measuring social change is challenging and costly. But rather than developing performance measures that are both meaningful and doable, they often throw in the towel on measurement, deeming it nearly impossible. Or they simply focus on keeping administrative costs low without a careful consideration of what is needed to ensure program quality and impact. As a result, they too often wind up starving nonprofits of much-needed managers, even though they would never consider running their own businesses without, say, a COO just to keep overhead low.Instead of abandoning performance measurement, Levy suggests that board members spend more time applying for-profit pragmatism and creativity to the problem of nonprofit performance measurement. For their part, nonprofit leaders must help business leaders recognize that nonprofits also need to invest in management and capacity, instead of minimizing administrative costs.Board members from the business sector are often impatient with the pace of change at nonprofits because they underestimate how long it takes to build consensus among the many stakeholders. To counter this, nonprofit CEOs should be clear – and unapologetic – about the need to consult with board members, staff (and not just the senior team), important donors, and sometimes partners and policymakers before making major changes in how the organization operates. Instead of being bogged down by frustration, for-profit board members should offer to participate in discussions with other board members, donors, and staff. By helping with some of the political heavy lifting, business leaders can accelerate the pace of change.Donors. Many donors fail to use their considerable influence to push for better performance at the nonprofits that they fund. Or when they do demand results, they focus on the wrong metrics, such as low administrative overhead, which only hinders the building of a strong organization. To counteract this, nonprofit leaders can teach donors about useful, even if imperfect, measures of impact. As for overhead, nonprofits must inform donors that an organization’s programs are only as good as its management, and that they should be willing to fund administrative overhead.Some donors advocate for their pet programs, or insist that the organization take on activities peripheral to the current focus, leaving nonprofits unable to direct their resources to the highest impact activities. Donors should make sure that they are not distracting the organization from its primary mission. Meanwhile, nonprofit leaders should push back on their donors – difficult as that might be – rather than venturing off-mission.Donors often demand a tremendous amount of attention from the executive director, in some cases seeing it as a return for their generous gift. Donors should understand that the executive director is juggling many stakeholders, and so should minimize their demands on the executive director’s time.Partners. Corporate partners often don’t realize that nonprofits lack management, marketing, and communications expertise and personnel. Because funding is often restricted to programs and services, nonprofits simply lack the resources to develop these capacities. Unfortunately, these are precisely the areas often needed for corporate partnerships. Or when nonprofits do have the personnel, they are usually stretched thin from running day-to-day operations. These people can’t free themselves up quickly to work on a corporate partnership without leaving the organization dangerously undermanaged.As a result, corporate partners often grow impatient with nonprofits’ inability to meet their commitments, and walk away from the partnership. Instead of giving up, or complaining about the nonprofit’s lack of capacity or sophistication, business partners should invest their time and resources into helping the nonprofit build capacity. Although not all corporate partners will be persuaded to do this, our experience suggests that if nonprofits are clear about their management limitations, some business leaders will be responsive.Executives. All too frequently, for-profit executives who venture into nonprofit leadership expect to implement big changes as quickly as they did in the for-profit world. They often fail to consult with key stakeholders before making important decisions. They don’t give the organization time to get to know and trust them. And they don’t take the time to get to know the organization’s culture, informal power structures, and ways of working. As a result, their big plans are often rejected by the staff and board, and the executives end up quitting in exasperation.The remedy to this problem may be obvious, but that doesn’t mean it is easy to implement. Nonprofit neophytes need to get to know the organization before proposing any changes. They need to take the time to talk with all stakeholders about any new ideas before suggesting them. And they should avoid unilateral decisions, and instead should involve their board, staff, and stakeholders as appropriate. (For more thoughts from our crossover leaders on transitions, see “Crossing Over” on p. 40.) Their new nonprofit colleagues should alert the new boss to these needs and help him or her make the necessary time and contacts.Building BridgesTwo messages linger from our conversations with crossover leaders. They agree that nonprofit work has been the most challenging and rewarding of their careers. And they emphasize that everyone has a stake in creating a high-performing nonprofit sector, because the solution of so many of society’s problems depends on it.“These misunderstandings matter,” says Leone. “The business side’s failure to understand the complexity, nuance, and criteria for judging success on the nonprofit side has tremendous effects, both on fundraising [and on people’s] understanding of how we’re going to address certain problems effectively.” That is why it is important for business and nonprofit leaders alike to engage in frank discussions about the differences between the two sectors and how executives can overcome them.“The true measure of making all this work,” concludes Novelli, “is to get the talent flowing in both directions. Make not-for-profit managers better so that they can be accepted on the other side of the bridge. And make for-profit people more understanding so they see the value of people from the not-for-profit sector. Not just value them because they know they can run a piece of business, but value them because they understand missions, they understand social change, and they understand social values.” --------------------------------------------------------------------------------LES SILVERMAN and LYNN TALIENTO were co-founders of McKinsey & Company’s Global Nonprofit Practice in 2000. Silverman led the practice until his retirement from McKinsey in 2004. He is now an adjunct lecturer at Georgetown University’s McDonough School of Business and also serves several nonprofit and for-profit organizations as a board member and strategic adviser. Taliento is a partner in McKinsey’s Washington, D.C., office, where she co-leads the Global Nonprofit Practice.Add Rating/Review You must login to post ratings. cancel Comments Comment excellent article! »» Posted by: anon at June 20, 2006 10:24 AM Comment This is the first article I have read that deals with this subject in such a forth right, up front manner. It is excellent! It is a good first step in a subject that needs further exploration. Just as in the “for profit” field organizations run from the small ‘mom and pop’ operations to the large conglomerate so to do such exist in the non-profit field. I am constantly amazed at the multi-demential scoup of management talent which exists in the non-profit field. It is more unrecognized then unappreciated. »» Posted by: Roger Davis at June 21, 2006 07:50 AM Comment I have recently founded a not-for-profit in my country (Malaysia) called the Genesis Initiative. The problems faced by non-profits in your country are magnified in this part of the world, where there is hardly any money for the work that nonprofits want to do, because the image of nonprofits here are charity-based - run by retirees, people who can’t get another job, and run on a hand-to-mouth existence. To a large extent that is true, but there are people like myself and several others who come from corporate, well-educated backgrounds who are bringing our expertise to nonprofits. The crossover examples you mentioned, I can certainly relate to. The title of CEO or founder of a nonprofit just doesn’t garner the same respect or attention of a similar position in corporate life. Besides the organisation itself, another mission I have is to get non-profits in my country and the region to see why they need to change the way the operate and communicate not just with potential donors, but with the public and media if they are going to be taken seriously and credibly. Unlike the US where there are a lot of resources and support to do such work, in my country - it is still in its infancy. Social change is what drives nonprofits around the world, ndn those of us who do it, do it because we have a passion. Getting corporates to see us as more than just fundraising machineries with low-paid, low-quality people is a huge challenge we in this part of the world face. Therefore, reading an article like yours provides encouragement, advice and ideas that are certainly useful. Thank you. »» Posted by: faridah at June 22, 2006 11:19 PM Comment Great article even though it does focus on the managers going from profit to nonprofit. I like how it explains the differences. As a nonprofit manager who did not transfer, but has “grown up” in the nonprofit world, it helps me to be able to explain the differences. I will be saving the article to send to my board and others. There are more and more places for training specific to nonprofit management. I finished a graduate certificate nonprofit management program at my local university (Univ. of Arkansas at Little Rock) 2 years ago. The need for training like this is getting more attention. If you know of a program, spread the word! »» Posted by: Judi at July 5, 2006 08:39 AM Comment This report summarizes my 25 years of experience in healthcare in the noprofit sector . Often we blame ourselves or staff resistance for the slow process of influenciing , consensus building , and the difficulty in finding outcome measures that approximate the impact of our work . Withhin my orrganization , the dental services are easily quantified and have a clear , predictable course with an endpoint. The behavioral and prevention / health promotion services defy easy measures and defined end points at which they can be assessed.This becomes challenging if we can’t present the story of our work usiing several different types of reporting methods - quantitative and qualitative . This article crystalizes what has been just swirling around iin our deliberations. »» Posted by: L.Reynolds MD at July 27, 2006 06:32 AM Comment Excellent summary, and very helpful. Based on my experience, another point might be worth considering. A fair percentage of nonprofits begin each and every year seeking “startup” funding. Lacking sunstantial endowment revenue, fees from services, government contracts, foundation grants, and/or guaranteed donations, these nonprofits are in perpetual “entrepreneurial” motion. Many nonprofits that fall into this category are issue-, advocacy-, or membership-driven. It could be argued that an ongoing struggle for funding or not “scaling up” to achieve a degree of stability could be seen as a signal of ineffectiveness or having outlived their usefulness. On the other hand, it could be argued that having to win over donors and members each and every year could motivate those groups to pay incredibly close attention to stakeholders and constituencies. Regardless, the reality (as I have seen it) is that many forprofit leaders are shocked by how much energy and entrepreneurship is required just to keep the organization solvent...and continually innovating and proving itself. »» Posted by: whiteke at September 14, 2006 02:16 PM Comment This is a fantastic article that I have used frequently, especially when I hear nonprofit boards start talking about hiring CEOs from the business sector. I feel insulted when I hear some business people say that nonprofits need to be more business-like when I could argue that many businesses need to be more like a nonprofit. I see the cultural differences between the two worlds as a big challenge for CEOs from the business sector. I think they can be successful but they need to go in with the knowledge that they are entering a different world that functions differently and like an anthropologist, their first task is to learn this new culture. I think when people say that nonprofits need to run more like a business, I think they are saying that we do need to do a better job sometimes of articulating how we work and what makes our work successful but the challenges we face are huge. I see too many people think that hiring a CEO from the business world is a fix-all. »» Posted by: kwandrei at August 31, 2007 11:38 AM Comment Having been in both the non-profit and for-profit worlds (I have both an MBA and a one year Development Certificate from USF), I see both sides and value both perspectives. The most important part of this article was the “Building Bridges” section. “The true measure of making all this work,” concludes Novelli, “is to get the talent flowing in both directions. Make not-for-profit managers better so that they can be accepted on the other side of the bridge. And make for-profit people more understanding so they see the value of people from the not-for-profit sector. Not just value them because they know they can run a piece of business, but value them because they understand missions, they understand social change, and they understand social values.” I hear a lot of comments above about not being understood ... it is sounding like a one way street. Non-profits also must make the step of understanding and appreciating the for-profit sector ... developing a mutual respect and understanding. From the fundraising portion of non-profit, I am struck by the lack of innovation at the lower levels ... something that would spell doom in for-profit. How many solicitation letters do you receive every year ... could they be interchangeable? This is all that most for-profit people see. It is almost funny when speaking to a fundraising person and you equate fundraising to sales ... sorry but it IS sales ... sales of a social good. The exact same techniques are used at various levels of intensity. There are more similarities than differences between for-profit and non-profit ... and for-profit is not a dirty word ... after all they pay the bills. Your thoughts »» Posted by: Marianne Quarre Dean at November 17, 2007 06:05 AM Comment ... another thought .. I wish a few for-profit folks were reading this as well so that I could get the other side opinion ... but any way .... I think some of the misunderstandings stems from simply the pace. Due to the nature of the beast and the need to bring everyone along, non-profits seem to move and innovate more slowly than for-profits. Moving slowly in for-profit spells the end. The faster pace in for-profit forces quicker decision making putting people on a steeper learning curve .. with successes and failures. With a faster pace and the threat of failure always lurking, you tend to spot trends more quickly ... out of sheer survival. A small thing but illustrates a bigger issue. I recently interviewed with two non-profits that had mid-management major gifts positions open. Both positions had been open for over 6 months and neither seemed to acknowledge there was a fundamental problem. Time just white washed the problems they had not addressed. They both said they were taking their time to find the right person. In for-profit there would be a tangible downside to such a delay ... lower sales and owners to explain things to. In the two non-profits, the management could not see a tangible downside of not paying attention to their donors ... the donation not pursued or cultivated ... time wasted = donations lost or at the very least donation levels dropped. They did see the savings in salary though. Where is the mission?? If I was a major donor and heard a NP had not filled a position for 6 months, I would be furious that the NP was being run inefficiently and my money wasted on either short term thinking or not addressing a management problem. Non-profits are a business as well. I think if non-profit management received more business management training, it would help in “Building the Bridge” to understanding each others world. The people I talk to have widely differing opinions about creativity and innovation. Many think that creativity is the original starting point. Some think that creativity is what you do after you innovate. Others think they are the same thing and use the words interchangeably. The more thoughtful say they are different in important ways. I would like to offer my own opinion as to these differences and why I believe we need both creativity and innovation.If you look up innovate in Webster’s Dictionary, you will discover that its root is innovâre — to renew. Today’s definition reads: to introduce something new, make changes. I think of innovation as adding something new to an existing product or process. The key words here are adding and existing. The product or process has already been created from scratch and has worked reasonably well. When we change it so that it works better or fulfills a different need, we are innovating on what already exists.Create, on the other hand, is defined as — to cause something to come into being, as something unique. It is the process that created the product in the first place. The product or process didn’t exist before it was created. It is original, unique and usually novel. So, I believe that creativity is a process that produces an original outcome or product, while innovation is the change, modification or improvement of an existing product.For example, the original 747 aircraft was largely the result of creativity in its design and manufacture. While there had been many airplanes over the years, this huge plane was a daring, novel, risky, and original design. It was much larger than any existing commercial airplane. The numerous models introduced since the original 747 are the result of innovating around the original design such as the addition of the upper deck, the stretch version, and the all cargo version. This also includes the model that was modified to piggyback the space shuttle from one launch site to another — over 20 years of continuing innovations on the original creative 747.It is important to distinguish between creativity and innovation because the processes are different, the risks are different, the starting points are different, and the climates needed for achievement are different, and there are consequences of these differences. Why is it that American business is very much more comfortable with innovation than with creativity? It’s because innovation is a lot safer, it is incremental, it is building on an already established product or process, and it is far easier to achieve success than starting from scratch. Conceiving and making the first post-it-notes was the result of a creative process. Making them of different sizes, shapes, and colors was an innovation based on that original creative idea.I strongly believe that creativity requires a different executive mindset than innovation, particularly in business applications. For some, even the word creativity rubs the culture the wrong way. It is considered too soft and "flaky." Creativity, after all, requires a tolerance of mistakes. Creativity requires an acceptance of risk. Creativity requires a commitment of time and resources. Creativity requires the acceptance of possible failure. Creativity must be thought of as an investment. You don’t start it and stop it. The organization must have a long term commitment to being creative. Taken together, these requirements affect the management culture of the organization that aspires to be creative.Innovation, on the other hand, requires a much lower level of risk and since success is incremental, it can be terminated at any desired level. Since the risks are lower, the levels of approval are lower. There is less of a need for long term commitment of resources and money and a less sophisticated management culture. In some organizations, innovative ideas are approved by the Suggestion Plan Committee.Whereas innovation is often a random event, creativity is much more of a formal, ongoing and complex process. Since the starting point of innovation is the modification of an existing product or process, it is much easier to make meaningful progress towards improvement compared with starting from zero and not knowing the outcome. Think of the automobile industry, it thrives on continuous innovation. Completely new models are rare — and expensive to create. For example, the Ford Model T, Chrysler Air Flow, Edsel, Mustang, Corvette, VW "Bug", DeLorean, and, etc., including the latest version of an all electric car from General Motors. So most of what we buy are innovated improvements on last year’s model — if they have survived in the first place, and many don’t. Creativity is a risky process.However, because creativity is a process, it can be taught and learned. There are numerous seminars, workshops and degree granting university courses in creativity and creative problem solving. I know of only one in the field of innovation.Because creativity can be taught and learned, it is possible for companies to train individuals, teams, and whole organizations to become more creatively effective in their work.In contrast, innovation is much more informal. There is no specific body of knowledge that could serve as a basis of teaching and learning. Many, if not most, innovative techniques are derived primarily from what we know about creativity.So what? Is this just another academic exercise or are these differences important to understand? I believe that understanding the differences between creativity and innovation can lead to the optimizing of both — and we need both. To grow and prosper, most organizations and businesses need to constantly improve their existing products and services through continuously innovating needed change; and, for survival of the enterprise, most also need to create new products and services to meet yet unfulfilled needs.Consequences? I think so. Organizations that rely exclusively on innovation will prosper until their products and services "run out of gas" and become obsolete and non-competitive. On the other hand, organizations that are totally creative will have their new products and services ready to launch, but often too few current products sufficiently up-to-date and competitive to generate the cash needed to fund their creativity. Every industry has its own examples of the costly consequences of this lack of differentiation between the two. Ones that come to mind for me are: automotive, aerospace, electronic, computer, pharmaceutical, photographic, apparel, and there are, no doubt, many others.Chances are that the very successful leaders of the future will be more likely to make creativity and innovation a strategic priority in their organizations if they better understand the reality of what they really are rather than an unsubstantiated myth. How they are different. Why they are both needed, and how to make them both happen in the right way at the right time in the business cycle.Ned Herrmann was founder and chair of Herrmann International (www.hbdi.com) with headquarters in Lake Lure, North Carolina. H e was a pioneer of creative thinking in the corporation and the founder of Whole Brain Technology. Ned was a former president of ACA and received ACA's Lifetime Achievement Award posthumously. Ned's work continues to be carried on by Herrmann International