Did Innovation Kill Wow!

Mont Saint Michel

When was the last time you said “wow?”  Had to think about it didn’t you.

I often ask this question to audiences – and a strange thing is happening.  Fewer and fewer people have a good answer.  In fact, there is a demarcation by age.  Experienced people enjoy the question and have fun with it; the younger crowd looks around quizzically or takes a brief time out to peak at their phone.

What’s going on here?  Well I’m not sure but I have an idea.  I think we have become so inundated with amazing innovations that we have lost the ability to be wowed.  Let me explain.

Not too long ago I was in the Customer Loyalty business.  As consultants our aiming point was to get customers to say: “wow!”  We believed this correlated to loyalty.  Not anymore.  Wow is simply the expected norm in our culture of constant stimulation and immediate gratification.

I think this has been caused by our quest for Innovation facilitated by the Internet.  We are all working from the same database of winners as selected by the Internet.  The Internet has narrowed our base for Innovation, not widened it.  In addition, the Internet alerts us of Ideas and Innovations in the pipeline.  Who is surprised that Google is working on driverless cars?

Is this a tragedy?  Should we stop Innovating?  Of course not!  I still like the wow I get from my new car because I never have to take the key out of my pocket.  But a car key in your pocket will never wow my grand daughter.  She doesn’t even relate to phones; here preferred style is video chat.

I think that’s the sadness of our hyper-innovation society.  We’re losing our ability to be excited.  But wait, maybe there’s an answer.  Maybe we need to start spending time with the younger people in the audience to show them how to access ideas at the source rather than through RSS feeds.  Maybe it’s time to spend time in nature and museums to see what is truly remarkable.  And maybe it’s time to stand in awe of some of the great achievement of humans – I just visited Le Mont Saint Michel where no one was looking at their smartphone.

Maybe there is an answer in “retro.”  Maybe returning to diversity in experience and thought will bring us some new ideas.  Ones that will make us go WOW!

The Timeliness of Organization Renewal

Renewal Isn't a Fad

I’m a big believer that organizations must constantly renew themselves if they are to remain healthy and relevant.  I never shy away from the “fad of the month” allegation.  People may complain but it is these perceived fads, when used properly as levers, that keep energy, inspiration, and thinking in organizations. 

Organizations need ideas from everyone, everywhere if they are to remain sharp.  The toolbox to do this has become an expansive cornucopia.  But what are the origins and limits to this cornucopia?  Has it become a Hydra?

I got thinking about this a few weeks ago when a good friend of mine retired.  He’d been a senior finance executive and through his career he went to many “executive development” programs.  He was kind enough to sort through his papers and give me a file of some of the premier courses he’d attended.  Wow!  What an eye opener.

The documents in the file went back to the late 1970’s.  The contents spanned all the usual suspects: change, employee involvement, customer focus, and systems thinking.  My favorite is the HBR article of 1985 titled: Managing Innovation: controlled chaos. 

In reviewing the file I was shocked at how the basic concepts haven’t changed.  You could present the content of these courses to executives today if you genuflect to Apple rather than Kodak and Christensen rather than McGregor.

I was intrigued so I dug deeper into my own files.  Among other things I found a 1970’s Manual for Planning, Programming, and Budgeting .  This was a field guide for one of my first jobs.  It sprung from Robert McNamara’s time at the US-DOT.   As I reviewed the manual I realized that it contained most of what I know about planning and financial systems in large complex organization.

So, what’s my point in our new world where we’ve transitioned from paper to digital files; and where face to face sharing has given way to Webinars, Facebook, LinkedIn, and Tweeted hash tags?  Well, I’m concerned that we learn less because we have more.  Let me explain.

We have access to an incredible richness of thinking and practice in management science; however, we tend to select and refine our knowledge within functional silos.  As we drift further from the seminal source of an insight we get multiple interpretations of it cloaked in a myriad of case studies to support a single purpose.  There comes a point of unintelligible background noise that numbs the senses. 

For example, the concept of “jobs to be done” is attributed to Clay Christiansen, as a way to deeply understand the unarticulated needs of customers.  Recently the Human Resource community has taken this engaging concept and interpreted it into improved job descriptions.  Not to be outdone, Simplification professionals now use it to explain organizational roles.  We now have one concept living in three silos that can’t talk with one another.

It seems to me that “confusing the client” can’t be the purpose of all of this rich information and thinking.  We can do better.  Here’s a modest proposal: maybe organizations should have a designated center of “renewal” to regularize the organization’s point of view on the discipline of management science.  What are the organization’s consistent set of principles, definitions, practices, and methods that make sense out of the “fad of the month?”

I have consulted in several organizations that do this.  For example, I lead a Customer Loyalty project at Whirlpool when it was also engaged in a global initiative to build Innovation capability.  My team was “required” to learn and use Whirlpool’s accredited innovation toolbox for ideation, opportunity elaboration, and rapid experimentation as we worked with client teams to improve Whirlpool’s customer experience.

I know the flaw in this proposal: how do you control information flow in a world of free flowing information?  Well maybe technology doesn’t have to be a bane to management science; maybe it can solve this challenge.  I’d certainly prefer effort in this direction as opposed to what I see today where the “fad of the month” is stalled and resisted under the slogan: “if we stand still long enough we’ll be in the lead.”

Innovation – Is It Just Another “Shiny Thing?”

There'll be Another Soon

Innovation has a head of steam.  It’s in all the business publications and on every CEO’s lips.  It’s today’s silver bullet.  It’s the key to growth, sustainability, and employee engagement.  But is Innovation here to stay or is it just another “shinny thing?”

I can make the case on either side of the question; however, recently I’ve had my faith restored in Innovation becoming deeply embedded in the science and practice of management.  My encouragement comes from the Management Innovation Exchange web site where it lists finalists in this year’s Innovation contest.  Two of the entries come from clients and friends.

Whirlpool Corporation

The first comes from Moises Norena the Global Director of Innovation at Whirlpool Corporations.  He writes about: Whirlpool’s Innovation Journey: An On-Going Quest for a Rock-Solid and Inescapable Innovation Capability.  The full story is at: Whirlpool's Innovation Journey.

For me the significant part of Moises’ story is that it starts in 1999.  As he says, the Innovation journey can be long but it has big rewards.  I was involved in the early chapters when Gary Hamel started Whirlpool down the Innovation path.  He and his team at Strategos used their tools to begin building the Innovation capability within the corporation.

My role in the early 2000’s was to lead the team that focused on Customer Loyalty.  We used our global customer research as the primary input into understanding Customer Insights and Discontinuities in the appliance market.  We then used the Innovation tools to frame and implement innovations that would capture the articulated and unarticulated needs of Whirlpool’s customers.

From these green-shoots Moises weaves an interesting tale of the constant adjustment Whirlpool makes to the expectations and theories about embedding Innovation.  I’m not sure if Moises agrees, but my major take away from his work is that: Innovation can’t be embedded; it can only be a capability that evolves to meet the business needs of the day.

Korea Telecom

The second article is from Misook Lim the Director of the Innovation Management Center at Korea Telecom.  Her story is about Transforming Culture Through Pervasive Innovation.  It can be found at: Korea Telecom - Innovation Changes Culture.

I worked with Misook and her team for about 26 months.  Again the connection was through Gary Hamel and this allowed us to draw on the Whirlpool experience through the generous support of people like Moises and his boss Nancy Tennant who has been named by Business Week as one of the world’s 25 Innovation Champions.

Misook does a wonderful job of relating the multiple fronts that had to be pursued to have Innovation recognized as a needed tool to position Korea Telecom for the aggressive changes taking place in its market.  She walks us through a series of initiative such as: building capability in a core team; leading Innovation challenges within business units; setting the governance structure; and developing the companies executive team and vice presidents.

For me the Korea Telecom experience re-proved something we all know: culture is a major issue when implementing change.  I learned that you have to understand culture and respect it as a starting point for change.  The culture at Korea Telecom was hierarchical and deferential; sometimes our western beliefs about equality and participation had to wait.

Often in the Innovation consulting business we’re asked for proof, best practices, and where this has been done before.  Moises and Misook answer the question.

Employee Engagement->Innovation->Customer Loyalty: Case Study

Leverage Innovation

Organization transformation is a business full of: principles, tools, models, approaches, frameworks and perspectives.  It’s a mind-boggling and mind-numbing stew of overlapping and contradictory ideologies.  Just defining a word like “innovation” will call forth passionate debate.

When I get tossed in these storms of righteousness I struggle back to a few “truisms” that I’ve learned along the way, like:

… nothing happens in organization transformation unless the executive team is “open and trusting.”  If you can’t fix this problem then you can’t fix the organization!

I discovered another truism when I spent 26 months in Korea working the transformation of a 30,000-employee public company.  A decade ago I came to the understanding that organizational change had to be driven from the outside-in.  Successful change is customer driven change.

As I worked with this idea of “customer driven change” I found collateral benefits.  I found that when employees leverage customers, the employees become engaged in their organizations.  A short line of sight between employees and their customers not only generates effective change, but it does it by solving the biggest malaise in organization’s today – the disengagement of employees.

So it became clear to me that organizational transformation should be based in engaging employees to solve customer issues.  Trite, but true!

My practical problem was that HR programs aimed at solving employee engagement didn’t always solve customer issues; and marketing programs aimed at customer loyalty didn’t always engage employees.  A link was missing.

Then in mid-2010 we got a request from the CEO of Korea Telecom to help him engage his people to change the organization.  KT’s market was shifting, yet the employees tended to abide by traditional hierarchical and deferential rules.  How could we connect employees to their changing customer base?  The answer was “innovation.”

Innovation has some glorious characteristics that go beyond the customary Employee Engagement and Customer Loyalty programs.

1. Innovation needs to be framed within the context of a “customer value proposition,”
2. Innovation draws on the energy and passion derived from creativity which is innate in all humans, irrespective of culture, and
3. Innovation has a discipline that leads to commercialization.

Thus another truism: organization transformation is based on the virtuous value chain of:

Employee Engagement->Innovation->Customer Loyalty

This understanding was fundamental to our success in Korea – and that success has been documented in the public domain.  Here are two references.

The first reference is a case study at the London Business School.  The study was prepared about a year and a half into our 26-month engagement.  The connection to LBS was through Gary Hamel who led our project.  The case study has a strategic focus on the large issues of transformation.

 KT-Transforming to an Agile Organization

The second reference is written by my client and best friend in Korea, Misook Lim who now heads the Innovative Management Center at Korea Telecom.  Misook has just published this article.  It comes about a year after the first reference.  This article focuses on the practical working level and implementation of the strategic context provided in the first reference.

Pervasive Innovation at KT

I’m not a fan of the common wisdom that: “70% of change efforts fail.”  The virtuous value chain and the dedication of my Korean colleagues have proven it wrong.

Employee Engagement – For Change Managers

Employee Engagement continues to plummet.  It has hit an all time low at about 30%.  HR has been working hard at reversing this trend for almost a decade, but nothing seems to work.  Maybe it’s time that HR calls on Change Managers to design and implement a new paradigm for employee engagement?  

Let’s start at the beginning.  HR and managers have worked for years to destroy employee engagement.  This was not intentional or malicious; it was done in the name of eliminating “employee entitlement.”  Several decades ago the belief emerged that employers had provided such a strong economic safety net that employees were not hungry; they had lost their incentive to perform.  

Employees, it was believed, had become complacent because they could rely on: annual merit pay increases; employer paid benefits, particularly for health; and a defined benefit pension plan if they could just put in enough time to “meet the numbers.”  Comfort equaled sloth and that accumulated into a lack of business performance.

The simple answer to this initiating belief became the next belief.  According to the emerging paradigm: business needed to create a “performance culture” where those who performed to defined standards would be afforded commensurate rewards.  The employer was to give up vestiges of paternalism; it was time for employees to grow up and take responsibility for their careers.    

To implement these beliefs HR changed its role.  It took a lot of economic hygiene off the table and replaced it with: pay for performance topped up with metric driven bonuses; defined contribution pension plans where employees managed their investments for retirement; and paid-time-off plans along with cost sharing for health benefits.  The underlying philosophy, at the hygiene level, was clear: “we’re in this together, but you're on your own.”  This belief system was imbued into the depths of HR – as it transformed itself into a “strategic partner” with a seat at the executive table.

Unfortunately, what was perceived as “entitlement” had one major benefit.  It relieved employees of economic worry and let them focus on their work.  To the extent possible, “entitlement” let people bring themselves into their jobs.  It gave them the autonomy to find purpose in their work.  It let employees feel engaged.

Those days are gone.  Most businesses are not going to build the economic safety net back into their cost structures.  Employee disengagement is here to stay; we created it, now we have to manage it; and managing it means that HR will need to change its beliefs and build a new paradigm.

Here’s where Change Managers can help.

Reduce the Economic Worry:

Compensation is a big issue for HR to unlearn.  An industry has been built up around the performance pay experiment that hasn’t worked.  There are lessons in the past pointing to the value of solid base pay that is marked to the market and then topped up by sharing company profits. 

Performance appraisal is another sacred cow in HR’s performance belief system.  This monster was created by linking pay to performance.  Unfortunately we don’t have the social engineering skills to make it work.  Now the system is dreaded by all and serves no one.  Empirical evidence tells us that it’s time to unlink pay from performance – if we can get HR to go along.

We need to work with HR to create an abundance mindset that encourages employees to constantly look for and interview for new job opportunities.  One of two things will happen: employees will either learn how good they’ve got it, or the company will learn it’s under-valuing them.  Either way the employee moves to a new economic reality.

Finally, severance is a reality that many employees will face; they shouldn’t have to fear it.  We need to help HR enunciate and communicate severance policies that respects the employees’ contribution based on their job level, age, and time in the job.  Employees deserve that peace of mind.

Stratify Employee Engagement:

The 30% figure is an aggregate; we need to help HR focus where it matters.  

Veterans in the workforce are invested; whereas new entrants aren’t; however, recruits from the “social media generation” are going to be difficult to engage.  Most aren’t looking for a career; they’re looking for an experience.  Is low engagement a form of resistance to be conquered or is it a temporal condition that requires patience?  Change Managers know the difference and have the appropriate tools for either situation.  

Where Change Managers need to apply some new thinking and find new tools for HR is for that sliver of talent that understands the company’s DNA and wants to carry the gene forward.  We need to work with HR to learn what it takes to engage those who are interested in the company’s future.

Communicate Tough Love:

Employees offer their unique gifts when they have purpose at work; however, purpose comes from principles.  Get HR to write down the principles of the business?  How are employees expected to act?  How should employees treat each other and their customers?

HR needs to let employees know the rules of the game and know they will be held accountable.  Change Managers can help through their knowledge of two way communication and expertise in setting up accountability regimes.

Let Customers Drive Engagement:

Companies have eroded their commitment to employees, and employees know it.  HR needs to work with management to give employees a purpose that transcends the company.  Employees want to be valued and customers provide this.  

Linking employees to customers is a sweet spot for Change Managers.  We know how to create a short line of sight between employees and customers – and we also know how to show HR and managers how to get out of the way.

It's Just A Beginning
So, the above are thought starters on how Change Management can help HR build a new paradigm for employee engagement.  This is important work if we are to avoid a backlash.  For years HR have worked with their companies to become “kinder and gentler” in an attempt to increase employee engagement.  It hasn’t worked.  I dread that, out of exasperation, management will return to harsh models of command and control.  

We must avoid this.  We must help HR find a new paradigm for employee engagement as supported to by advocates such as Daniel Pink; however, our first task will be to help HR look beyond itself and its constraining orthodoxies.