The Strategy-Innovation-Knowledge Forum

Implementing Innovation: When Metrics Don't Equal Accountability

A senior executive from a technology company was frustrated. Prior to expressing his frustration he was describing the design engineers and how well they were working with the sales engineers. To win contracts in their exacting industry, the teams collaborated for 18-24 months to win design approval from a client. This approval was a signature on a document, a promise to produce the designed component for inclusion in a larger product scheduled for future production. The dollars involved were substantial and all participants were professional and passionate about their business.
The Frustration
The frustration he expressed concerned the CFO, who was asking for a way to make this lengthy, expensive, and critically important interaction accountable. Apparently unwilling to wait for up to 3 years for something to count (it took at least that amount of time for an approved design to be incorporated into the final product and for that product to begin production, start shipping and generate sales), he demanded daily and weekly numbers to ensure these teams of valuable employees were working and being effective.
The Real Frustration
The trouble was that even with sales-engineering teams working diligently and responding well to clients' design requests there was virtually nothing to record on a spreadsheet, except expenses, and those mounted quickly as projects progressed. The CFO wanted numbers to represent movement, to provide accountability to this extended design-build sequence.
To make him happy the teams created numbers. The trouble was that they had little relationship to the vitality or potential of the design projects. The teams were disappointed to realize that the CFO didn't understand their business - he only understood numbers. "He thinks we're a production floor," was the comment.
Interaction is Hard to Measure
He wanted to provide objective (from his perspective) proof to the senior management team that these projects were progressing. It didn't work. The numbers offered represented a distortion of the complex design environment. Rather than make the design area more productive, it became more resentful. Bringing ideas into reality always means those involved actively trade off competing priorities to produce an optimum solution from a number of perspectives. As a result, selecting a metric with a bearing on only one aspect of a complex, knowledge-based environment may not be realistic or helpful.
A New Tool is Needed
The CFO mentioned and those overseeing innovation efforts should understand development is comprised mostly of observable interactions between talented people and very few numerically measurable activities. We call this knowledge work, since the work appears as a stream of activity which eventually results in a benefit or outcome but doesn't produce spreadsheet-style transactions while work progresses.
We shouldn't be quick to judge the CFO - bringing accountability to a business is their responsibility. The tool was the problem. The CFO requires the ability to align and drive the knowledge work interactions between employees and groups of employees. We understand this requirement as it is our area of expertise.
In North America, we must move quickly to bring accountability to crucial innovation activities, but not with previous generation, manufacturing-style methods. Innovation is the art of describing the context required to produce outstanding outcomes and using new accountability tools to ensure this positive context continues.

Implementing Innovation: an Organization-Wide, Cultural Intervention

Early in the innovation journey, leaders discover that moving an organization toward innovation is a more comprehensive endeavor than the mainstream projects and programs may have handled easily during their career. Innovation requires a number of complimentary elements.
Structural Support
Rosabeth Moss Kanter overviews the typical innovation pyramid structure made up of many teams with differing levels of involvement and support. The base of the pyramid represents the many small teams, with part-time involvement, doing initial reviews and preliminary investigations on many new ideas. The top of the pyramid represents the one or two dedicated teams toiling for a year or more to commercialize the organization’s most promising ideas. Configuring these teams to effectively cooperate is a substantial achievement.
Idea Generation
Leaders look for ways to quickly fill their pyramids with ideas as a way to assure the future of the enterprise. Melanie Haiken highlighted one trend called ‘crowd-casting’, where sizeable organizations create mechanisms to engage large numbers of individuals to deliver promising new ideas to their innovation teams.
Cultural Impact
But here the fundamental difference between innovation and other programs begins to be seen. While looking outside their existing workforce for ideas carries the promise of fresh, “outside the box” insights to help lift an organization to new sustained growth, it can also communicate unintended information to the existing workforce.
Think about how you would feel if your organization decided to go outside the organization to generate new ideas for products and services – to either business schools, expertise communities, or to the public. How would you feel? You might say, "Does our management team think that we're incapable of delivering new ideas and new thoughts? Are they saying that we don't have what it takes to compete in the future? Then why am I required to do the work to implement someone else's idea? I thought people were our organization’s most important asset?" A few might be a little ticked off.
And let's take this thinking a little farther. Do you think an employee who felt this way would do whatever is necessary to bring into reality an idea whose genesis was outside the organization? I don't think so. I think they would do what is required, what is acceptable.
Cultural Interaction
Creating an innovation engine within an existing organization is such a dramatic shift from typical programs and projects because it involves a cultural element; it involves how employees interact around ideas, concepts and each other.
When an employee generates a new idea and tells her boss about the new idea, the boss's reaction is crucial to the future potential of that idea for the organization. If the boss acts dismissively toward the employee, if they discount the potential of the idea, or if they disrespect the person offering the idea, then it will extremely challenging to generate the positive climate necessary to nurture new ideas.
Petri-Style Nourishment
Organizations need to see themselves as Petri dishes, supportive entities where new ideas should easily grow into something visible. The growth medium equivalent within our organizations is the observable interaction between individuals and between departments – the positive culture Kanter sees as essential. We need to change the pH level of our organizations’ cultures. Many organizations are so risk averse and so toxic to new ideas that they never grow to a size where their potential is visible.
Interaction Management
Organizations need to be able to bring direct accountability to the observable reactions of managers to ideas. They need to drive observable co-operation between business units.
Much of our organization’s research in the last number of years has been in the area of knowledge work. Knowledge work is fundamentally different than transaction and process activities because it is a pattern of activity that eventually produces an outcome. A software engineer designing a new application may work for one or two years before producing an outcome. The effort is a stream of activity with rare, if any, representative transactions to list on a spreadsheet.
Observable Interaction Management
SMG has found tremendous interconnection between knowledge work, this observable pattern of activity that eventually produces an outcome, and the interactions required between employees to enable innovation. The reaction of a boss to a new idea is an observable reaction and never creates a transaction to record on a spreadsheet. Our efforts to bring accountability and alignment to this level of interaction are within the context of executing strategy by bring accountability to daily observable activities. Our experience has shown us that innovation requires an organization to reach down to this level of interaction – either through direct or indirect means.
Top-Level Leadership Required
As a result, innovation will continue to demand outstanding leadership since it requires a very-broad, almost cultural re-alignment not called for when implementing typical projects and programs.

Guiding the knowledge-oriented enterprise: blog dedication

This blog is dedicated to those doing the real work of changing knowledge-based organizations. Those leading established organizations, who are trying to introduce new skills and teach their organizations to do new things – to “dance” in the words of Rosabeth Moss Kanter. Their organizations depend on their success.

There are too few RIM's, 3M’s, and Proctor & Gamble’s in the world. Enterprises so engaged in innovating and leading their industries that employees focus their collective attention on delivering value for customers rather than surviving the next round of cuts.

Let's explore new approaches and new tools to help organizations adopt, tip toward innovation, toward supporting a brand, toward supporting employment. The economy of the future will belong to countries where enough organizations lead the market and create successive generations of new and compelling products and services. No one country, no one area, no one enterprise can retain its lead in this flat world without aligning work in a new way.

Innovation leaders know their enterprise must be as skilled in aligning the interaction between employees as manufacturing companies were skilled in aligning machined components decades ago. The new enterprise, the knowledge-based enterprise requires overt, but gentle, direction on how employees work together, how they interact around new ideas, and how they support new groups as they seek to innovate and build the future.

This is a forum to discuss, debate, and dissect new ideas and new management techniques for knowledge-oriented enterprises. Above all – a home for practical thoughts. For many can present a strategic plan with compelling graphics and promising projections, here, we few will dialogue on the genuine challenges of guiding the creation and executing the strategy of the future enterprise.