Strategy. Innovation. Brand.

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An Evolutionary View of Innovation

consistencyMy sister has a Ph.D. in biology. For her dissertation, she randomly divided fruit flies into two groups and treated them exactly the same except for one variable. She introduced a specific chemical to one group but not the other. Then she followed the effects through multiple generations. I don’t remember what she discovered but her method allowed her to conclusively link cause to effect.

Why did she choose fruit flies? Because she wanted to look at the effects of the chemical over multiple generations and fruit flies create generations quickly. She wanted to know not just how the chemical affected fruit flies. She wanted to know how the chemical affected the evolution of fruit flies.

Could we use evolutionary thinking to solve business problems in innovative ways? Well, there’s a theory that we could develop software more quickly and at less expense through evolutionary techniques.

First we identify a problem that we want software to solve. Then we create, say 10,000 identical sets of code. We introduce random variations into each set, execute the code, and then determine which set comes closest to solving the problem. We take the winner, make 10,000 copies, introduce random variations into each one, then execute the code. We pick the winner and repeat the process. It’s like breeding dogs, only less messy.

With modern computing power, we can generate thousands of generations in very short order. We could almost certainly solve the problem. Additionally, we might generate some very novel solutions. The random variation might lead us down paths that we never would have imagined on our own.

While I suspect we’ll make evolutionary software before long, it does seem a bit exotic. Are there ways we could apply evolutionary thinking to solve more practical, day-to-day problems?

Sometimes I think it’s as simple as asking the question. Too often we make yes/no, either/or decisions – whether-or-not decisions as Chip Heath calls them. But we can always ask the question, is there an evolutionary way of looking at the problem? We might find that there are multiple sub-decisions we could make along the way to the big decision. We can decide smaller issues, test the results, and repeat the process. Each time we do, we create a new generation.

A “generation” in this sense might be a set of market trials, a series of studies, or surveys, or focus groups, or trial balloons. We can find many ways to identify and/or validate market needs. But first we have to ask the question. So the next time you participate in a big decision – especially a big risky decision – be sure to ask yourself, could an evolutionary approach help us here? The answer may be no, but don’t close the door too soon.

Snails and Innovation

Snail - Big AssWhat does a huge snail have to do with innovation? It’s all about the platform.

The jungle – much like a coral reef – is an incredible platform for innovation. It creates an environment with billions of niches where flora and fauna can grow and evolve. There’s no particular plan, just a grand variety of nutrients. Ultimately, we get a cornucopia of life that we never could have predicted, even including a snail as big as your hand. (That’s Elliot’s hand in the photo, by the way, in the jungle of eastern Peru).

What’s the lesson here? We need to create more jungle-like platforms if we want to spur innovation. Platforms don’t have to be hot and steamy but they have to be rich in “mental nutrients” – food for thought. One of my favorite platforms, for instance, is the land-grant college system in the United States. It started small but grew into a “jungle” engendering a welter of useful (and sometimes bizarre) ideas and innovations.

On the other hand, if we tried to create a huge snail, we would inevitably fail. The trick is to create the platform that allows the snail to evolve naturally. Let’s focus on building jungles, not snails.

Sustainability and Innovation

Nice axe!

Nice axe!

When I lived in Ecuador, I climbed many of the highest peaks in the Andes. I carried an ice axe with a carbon steel blade and a shaft made of laminated bamboo. Why bamboo? Because it was very light and very, very strong. Little did I know, I was also using one of the most sustainable products in the world.

Who uses bamboo today? Dell Computer now creates packaging out of bamboo fibers rather than cardboard. Why? Partially because it’s very light and very strong. But mainly because it’s one of the fastest growing, least resource intensive fibers in the world. As with my ice axe, it’s highly sustainable.

Dell’s packaging is a small example of a wave of innovation that’s sweeping the manufacturing world. Companies realize that sustainability is increasingly important to their own survivability. It can also be an important competitive advantage within significant customer segments. Innovating for sustainability can deliver three significant benefits. First, it can reduce costs. Second, it can lead a company into new market segments. Third, those market segments are often willing to pay a premium for sustainable goods, which can mean higher margins.

According to a joint MIT and Boston Consulting Group study, interest in sustainability is growing partially because profits are growing. MIT/BCG have published the study yearly since 2010, when they first identified Sustainability Embracers “who firmly believe that sustainability is necessary to be competitive.” In 2010, 23% of the Embracers were already reporting profits from their sustainability innovations. By 2012, that number had risen to 37%.

To reduce costs, companies are increasingly asking their suppliers to reduce waste and energy use and simplify packaging. Customers — especially in Europe — are demanding sustainability “credentials”. Employees are also pressuring their employers to innovate for sustainability. Ultimately, sustainability may become a differentiator in efforts to recruit top talent.

Companies are also selling sustainability. According to the study, SAP, the huge business-to-business software company now states that its purpose is sustainability. Peter Graf, SAP’s chief sustainability officer, says, “That is why we have started to … help clients optimize their energy requirements and natural resource use across their supply chains.” Helping customers implement Green Manufacturing has to be one of the biggest B2B software opportunities over the next decade.

Dell’s example is one of resource innovation — swapping a less sustainable component (cardboard) for a more sustainable one (bamboo). Many companies are also innovating their business models to achieve greater sustainability and greater benefits from sustainability. The innovations tend to come either in value chain improvements or in market segmentation. Companies that “pull these two levers” are more likely to see profits from their sustainability efforts.

There are still obstacles of course. Companies cite various hurdles: it’s difficult to quantify the benefits, sustainability conflicts with other priorities, it increases administrative costs, and, in some cases, it may increase overall production costs. Still, a growing segment of companies is investing in sustainability. Perhaps the best predictor of success is whether a company has written a formal business case for sustainability. Those that have tend to be the innovation leaders. They are also more likely to report that their sustainability investments are generating profits.

Interestingly, North American companies are not leading this innovation wave. Though Europe is ahead of America, the real leaders are companies in developing countries, especially in Africa. The MIT/BCG study suggest that this may well be “because these regions face significant resource scarcity and population growth challenges.” This may also be an example of “reverse innovation” where innovations in poorer countries are adapted by richer countries rather than vice-versa.


Innovation: Loosen Up, Tighten Up

Loosen up, dudes!

Loosen up, dudes!

I’ve written a lot about innovation but have yet to properly introduce Rosabeth Moss Kanter, one of our leading thinkers in innovation and change management. A professor at Harvard Business School, Kanter has written a string of books on innovation, incuding some of my favorites: Confidence: How Winning Streaks and Losing Streaks Begin and End and SuperCorp: How Vanguard Companies Create Innovation, Profit, Growth, and Social Good.

Today, I’d like to draw on concepts from one of Kanter’s articles in Harvard Business Review, “Innovation: The Classic Traps“. Kanter surveys a number of different traps but two, in particular, caught my attention, mainly because I’ve seen them myself.

The first is called controls too tight. All too often, companies use traditional metrics to judge the impact of non-traditional innovations. The problem is that traditional metrics — such as hurdle rates, ROI, or NPV — all require some type of track record to produce results that might be considered reliable.

The problem, of course, is that a truly innovative product has no track record. Kanter writes that companies often fall prey “… to the impulse to strangle innovation with tight controls — the same planning budgeting and reviews applied to existing businesses.”  Kanter writes that the solution is to loosen up and add flexibility to your planning and control processes. This may include innovation funds and judicious exemptions for corporate requirements and timetables. Going a bit farther afield, you might also incorporate new financial metrics like real options analysis.

The second trap might be called connections too loose. The idea is that companies often isolate innovative new products and processes in organizational units that are physically and/or culturally isolated from the mainstream. Kanter points out that GM’s Saturn brand was established as a separate unit to pioneer new ways to design, build, and market midsize cars. While Saturn itself was innovative, the innovations didn’t have much impact on the rest of GM.

The same trap can affect established units as well. Kanter points out that CBS was once the largest broadcaster in the world and also owned the largest record company in the world. But MTV, not CBS, invented the music video. Kanter also writes that “… Gillette had a toothbrush unit (Oral B), an appliance unit (Braun), and a battery unit (Duracell) but lagged in introducing a battery powered toothbrush.”

Again, I think we can go a bit farther afield and identify similar disconnects among departments within a company. Engineering designs a product and then turns it over to manufacturing. That’s often a loose connection. If manufacturing experts participated in the design process (as they do at Apple), you might get products that are not only well designed but also easy to manufacture.

What to do? Kanter writes that “… companies should tighten the human connections between those pursuing innovation efforts and others throughout the rest of the business.” This requires good leadership, good communication skills, and a willingness to “convene discussions to encourage mutual respect rather than tensions and antagonism.” It may also require good architecture as in the example of Steelcase, which built ” a design enter that would force people to bump into one another….” (This is one of the reasons I think Marissa Mayer at Yahoo! is right to require people to work at the office).

So how do you stimulate innovation? While it’s not easy, a good first step is to loosen up you processes while tightening up your people-to-people connections.




Marissa Mayer — You Go, Girl!

marissa-mayer-is-putting-the-kiboshnbspon-workplace-flexibilityMarissa Mayer, the new Mom who is also  the CEO of Yahoo!, recently announced that all Yahoos (that’s what they call employees) have to work at the office, not from home. Since then, the blogosphere has been all aflutter. A majority of the bloggers I’ve read suggest that Mayer is retrograde, dumb, and sexist. I have to disagree. I think it’s a very smart move and about time, too.

The arguments against Mayer’s decision have to do with productivity, convenience, women’s rights, and maybe even clean air. Stephen Dubner (one of the two Steves who created Freakonomics) wrote that an experiment at a Chinese travel agency shows that woking at home can increase your productivity and reduce health problems. Apparently long commutes raise your blood pressure. A recent article from Stanford (based on the same Chinese study) suggests that the productivity of those working at home is 13% greater than those working at the office. An article on (Work At Home Moms) argues that telecommuting shifts the employee’s emphasis away from politics and towards performance. Months ago, Slate wrote that Mayer doesn’t care about sexism. Grindstone calls Mayer’s decision a “morale killer” and a “giant leap backward for womankind.”  The Atlantic Monthly flatly declares that “Marissa Mayer Is Wrong”.

But is she wrong? It depends on what she’s trying to do. Raising productivity is generally a good idea. But if the price of productivity is reduced innovation, then the cost is too high. There’s a strong case to be made that working from home — while it provides many benefits — inhibits innovation. I’ve written about the mashup nature of innovation. Many of the best new ideas are mashups of existing ideas.

The same logic applies to people. Getting people together — and encouraging them to mix and mingle in more-or-less random ways — helps them mash up concepts and create new ideas. It’s why Building 20 — a ramshackle, “temporary” structure on the MIT campus — generated so many innovations. People bumped into each other and shared ideas and, in doing so, created everything from generative grammar to Bose acoustics. It’s why cities produce a disproportionate share of of inventions and patents (click here and here). It’s why reducing the number of bathrooms in a building will increase innovation –you’re more likely to bump into someone. It’s why I advise my clients to allow e-mail to flow freely between buildings but to banish it within a building. If you’re in the same building as the recipient, get together for a face-to-face meeting. You’ll get more out of it — maybe even an innovative new product.

So, what is Mayer trying to accomplish? In her memo to all Yahoos, she speaks of “communication and collaboration” and notes that “Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people, and impromptu team meetings.” She doesn’t use the word “innovation” but that’s exactly what she’s talking about. And, in my humble opinion, Yahoo! could use a healthy dose of innovation. So I think Mayer has got it right: PPPI — proximity and propinquity propel innovation. All I can say is: you go, girl!

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