Friday, October 26, 2012

Innovation in Korea: Rules of the Mind

The Power of Innovation
The Asian invasion!  How soon will we face our fate?  Will the west be buried by Innovations from the east?  Will we be left in the dust?  

I think the answer is that we’re ok in the near term if my experience in South Korea is any indicator.

The whole concept of Innovation fascinates me. 
·      How do humans dig into their natural creativity and come up with ideas that move the world in a positive direction? 
·      Once you have an idea, how do you turn it into something useful?

I’ve worked around the world and I sense that some places are better at idea generation and implementation than others.  Why is this?

Well I recently spent more than two years in Korea building Innovation capability within a large company.  This gave me a chance to do first hand observation and research.  I found three things:
1.     The vast majority of employees are not engaged in Innovation.  Hierarchy and deference leave them out.
2.     Innovation in product extensions and “adjacent possible” new products is disciplined, rigorous, and repeatable.  The reverse engineering mantra of “faster, better, cheaper” is deeply ingrained in the rhythm of the business.
3.     Korea is a long way away from seeing a Steve Jobs, Mark Zuckerberg, Eric Schmidt, or Jeff Bezoz.  White space, game changing, blue ocean Innovation is rare in Korea

While I was in Korea I took time to get to know my hosts.  I questioned them about their history, culture, and future.  I visited their museums, landmarks, and festivals.  I studied and listened.  Ultimately I consolidated my learnings into a five page article.  Here is the summary: 

Innovation in Korea is the captive of uniformity of thought and respect for institutions, build on centuries of homogeneity and the teachings of Confucius.  

The entrepreneurial spirit in Korea is swallowed by its large conglomerates.  Seoul is not a hot bed of private equity investors.  Investment capital is generally consumed in the bureaucracy of entitlement.  Capital in Korea belongs to deference.

I respect the achievements of my Korean friends.  It’s impossible to downplay the economic “Miracle on the Han” or the legendary products and services coming out of: Samsung, LG, and Hyundai/Kia.

But is “faster, better, cheaper” the sum total of the Innovation story in Korea.  Will Korean businesses be able to engage the entire workforce and will their Innovators bring new business models to the global stage?

You can look deeper into these questions by reading the whole article: Innovation in Korea: Rules of the Mind

Monday, October 15, 2012

The Decline of Innovation!

Is Innovation a Shooting Star
Never chase a bus or a management technique; there’ll be another one soon!

Is Innovation losing its urgency?  I fear so.  Take a look at the littered landscape of management science over the last half-century.  It’s a history of chasing silver bullets. 

I’m not sure where to draw the starting line but let’s say it’s somewhere in the 60’s: maybe with Douglas McGregor’s “theory X and Y.”  Before that I think we had specific techniques that gave us insights into specifics issues.  I’m thinking of Weber’s ideas on bureaucracy; Taylor’s scientific management; and Mayo with human behavior.

But in the 60’s the notion arose that management was a discipline that could be learned, not just experienced.  Emerging thinkers included: Warren Bennis, Aaron Wildafsky, Peter Drucker, Henry Mintzberg, and W. Edwards Deming.  These scholars saw a slice of success in complex organizations, studied that success, and codified it so others could learn and prosper.  These were great times for management thinking, experimentation, and aspiration.

Out of this nescient thinking came a flood of movements to help managers “get it right”:

  • Quality: six sigma, Kaizen circles, continuous improvement
  • People: performance management, leadership development, empowerment, commitment and engagement
  • Compensation: pay for performance, incentives, recognition
  • Planning: strategy, business plans, projects, budgets, accountabilities
  • Culture: vision, values, core competence, orthodoxies
  • Customers: service, unarticulated needs, satisfaction, loyalty
  • Metrics: the Balanced Scorecard, KPI’s and indices
  • Innovation: idea generation and implementation

It seems to me that these techniques follow a similar pattern:

  • We see a successful business and try to understand the genesis of the success
  • We describe the success factor then define it as a hypothesis for success
  • We test the hypothesis in successful and unsuccessful organizations
  • We form the data and declare victory for our success factor
  • We create a generic silver bullet system that will yield success to all true believers, then finally
  • We create a recipe: “10 steps to business success through xyz”; just follow the steps, rinse and repeat. 

We’ve seen this pattern dozens of times.  We accept the new system with enthusiasm; we generalize it to the whole organization; we “tic and tie” all the linkages in a complex web.  Then the system begins to implode and we study the reasons for failure – which are usually cited as lack of executive support and employee resistance. 

Well I think that Innovation has completed its ascent and is now passing the apex on its way to decline.  Innovation has overextended itself.  Its sharpness has become dull.  It is trying to answer too many questions for too many people.

Innovation doesn’t need to be at the center of organizational life in all organizations.  Sure, all organizations need ideas if they are to renew and stay alive; however, innovation at Apple doesn’t look like innovation at Bank of America.   At its core (no pun) Apple is an innovative culture that encourages ideas from everyone everywhere. 

This is not so for a volume based transaction organization like BoA where consistency and efficiency are paramount.  I suspect that BoA doesn’t want most of its employees to be highly empowered.  They likely want employees to think within tightly controlled guidelines.  Too many people thinking too far outside the box at BoA could put the organization in legal jeopardy with governments and regulators.  What organizations like BoA need is Innovation on the fringe where they can find new businesses in the discontinuities of the market and shifting needs of customers.  This is the lesson to be learned from Apple.

If Innovation is to shine we need to be much clearer about its value.  We need to ratchet back and see Innovation for what it is:

  • Unique:  Innovation has to be sized to meet the needs of the organization.  
  • Passionate: Innovation is an outlet for the creativity held within the human spirit.  
  • Anti-systemic: Yes, idea generation can be learned but game-changing innovation is serendipitous.  Innovation systems limit innovation.  Leave room for chaos that is driven by the emotions of people.
  • Focussed: Let’s stop generalizing and start focusing on the Innovation value proposition.  We’re not about continuous improvement or product extensions – that work is for others.  Innovation is about finding ideas that change the world.  This is difficult, specialized work.  It’s not for everyone but it needs to be supported by everyone.

All management techniques try to do the same thing.  They try to keep organizations alive.  They look for the levers and hot spots that renew an organization within a context at a point in time - management techniques are temporal. 

Innovation is a tool, not a toolbox.  We can either use it wisely or dilute it beyond recognition.

Monday, October 8, 2012

ERP Change Management - Advancing the Discussion

The Light Is Better Over Here!
The more things change the more they remain the same.

A decade ago I was a partner with Deloitte with major responsibility in the region for ERP Change Management.  When I left Deloitte I shifted my change focus to areas such as: employee engagement, customer loyalty, and innovation.

Because of my Deloitte experience I was recently called in to give my insights on an ERP implementation.  The question was: “what risks are on the horizon that we’re not prepared for?”  Wow, what a surprise! 

Basically I found that nothing has changed in the world of ERP Change Management.  We’ve polished the discussion but we haven’t advanced it.  Let me explain.

ERP Change Management is aimed at two functions: Communications and Training.  The underlying assumptions are logical and rational: “all we need to do is inform and prepare People for the new technology.”  This is exactly the way we saw the world 10 years ago.

The problem 10 years ago is that ERP implementations were generally perceived to fail.  The failure rate was often touted to be around 70% based on metrics such as: ROI, timeline, cost, and disruption to the business.

As I reviewed recent literature on ERP’s I found three things:
  1. The failure rate is still perceived to be high
  2. The systems integrators claim the failure rate to be much lower
  3. “People” are still cited as the main reason for ERP implementation failure. 

Ok, so other than the rationalization of failure by systems integrators, nothing has changed in 10 years.  What’s going on here?

Firstly, let’s be kind to systems integrators.  In a sense they are right.  You could argue that 100% of ERP implementations are successful.  Even when we accept the rule of 2X (ERP’s take twice as long and twice as much budget as planned) - ultimately we’re talking about the technological merging of software and business processes.  Ultimately there are sufficient time and resources allocated to “tic and tie” things together so that most software functions work well enough to claim benefits for the business.

So even though technology and process improvement overspend to gain limited business benefits, why is it that PEOPLE RESISTANCE takes the rap?  Why don’t those damn people just do what needs to be done?  Why doesn’t Change Management do its job?

Well there are some answers to these questions.  Basically I think that the systems integrators need to see Change Management as an ally in implementation rather than a convenient scapegoat.  They need to respect the dynamics of changing People in addition to the mechanics of informing them.

Systems integrators typically view Change Management as a subordinate task rather than a value added activity.  The typical implementation process puts the systems integrator under constant resource pressure to overcome the limitations of their software and ability of their consultants.  Relief is always found in the same place: Change Management – where resources are cut back and the work focuses on mechanical issues to explain to People:
  1. the new business process, and 
  2. how to do their job using the technology 

I’m not downplaying the need for this work.  I am saying that we’ve been looking under this lamppost for years; yet ERP failures are still blamed on People.  How long do we need to keep looking here while expecting a different result?  Isn’t it time to look under a different lamppost?

I went back into the literature to see if others have had new ideas over the past 10 years.  The answer is “kind of.”  Three to five years ago there was some incredibly insightful research done – generally in Canadian universities.  For reasons I don't understand the research ended so we really haven’t benefited from the work.  I like the research because it fits in with my global experience in engaging employees in organizational transformation.

Basically this research tells us what we intuitively understand:

ERP implementations dramatically alter “infopolitics” and “infoculture” in the organization.

In other words, information (data) has political power and cultural value.  This power and value has deep implications for People at work.

On the power side let’s be boldly clear: ERP’s are usually implemented as a power grab by management.  The huge expenditures on ERP’s are justified because of the huge benefits that will flow to the company by centralizing data.  The power of information is drawn from the catacombs of the organization into the hands of management.

The benefit to People in this grab for power is always explained as “it’ll make your job easier” - easier yes; but not necessarily more valuable to them.  In fact "easier" is often interpreted as “gone!” 

For People the ERP represents a lose of control.  Their As Is state changes in the To Be.  It goes from 3R’s to CAT:

Rites, Rituals, Relations -> Consistency, Accountability, Transparency

People use the power of information to built value into their jobs.  In the As Is state they use the dysfunction of data and information as a cultural bargaining chip.  Information lets them be heroic and lean forward to serve their customers.  The chaos around unclean, distributed data let’s People detach from the accountability sought by the business.  ERP’s take the value of drudgery out of the As Is work – they make work visible and efficient.  That's why People say:
  • the system doesn’t understand 
  • my clients aren’t being served 
  • the old world was better
  • I thought management knew what it was doing – apparently not.
ERP Change Management won’t be successful until it addresses the power and value of information in the transition from AS Is-to-To Be.  How do we do this?
  1. Recognize the issue: 
    • Study it, document it, map it, communicate it
  2. Equip managers to handle the issue: 
    • Show them how to discuss the issue with their teams
  3. Replace the issue: 
    • Identify and implement higher order work with higher order value
Systems integrators tend to see People like they see systems: logical, rational, literal, and sequential.  Unfortunately the human condition has not reached this level of perfection.  Humans are still driven by: emotions, impressions, beliefs, and desires. 

Treating People like systems doesn’t make them act like systems.  People have an indomitable spirit that makes them act like People.  Until Change Management treats employees like People their resistance will continue to be cited as the #1 source of ERP implementation failure.

Will we move the ERP Change Management needle in the next decade or just continue to look harder under the same lamppost?