Innovating in a Change-Averse Culture

Optimizers and innovators speak two different languages.  Optimizers speak the language of reliability, and use terms that emphasize the importance of consistency with past practices, whereas innovators speak the language of validity, and use terms that emphasize the potential of future practices.   As a result, they fail to understand one another  and this misunderstanding leads to disagreements when, in reality, they may actually agree.

Learning to speak another person’s language means changing your behavior to accommodate them, or at the very least listening with an open mind and attempting to understand rather than rectify their perspective.  Optimizers are inherently opposed to changing their behavior, are entrenched in their beliefs, and cannot be expected to learn the language of the innovator.   And so, an innovator must learn to speak the language of the optimizer, and should be more open to doing so because he is characterized by a willingness to change and accommodate.

The key to communicating with optimizers is in understanding that their motivation is based on fear:  they immediately fear anything that is unfamiliar and will not put much effort into attempting to understand it.  As a result the typical conversational pattern of the optimizer is nay-saying: they point out the problems with a proposal and have no suggestion of how to solve them.  

And so, the proposal of any change must begin in the context that is familiar, before considering improvements or deviations from current practices. One excellent tool is analogy: to describe an unknown concept in terms of something that is already known.   The innovator will acknowledge that he understands what is presently being done and why things are thus before suggesting a change, and then emphasizing the way in which the new method will still do the things that the old one does.   This helps the optimizer to overcome his resistance to the changes.

It is a serious mistake to attempt to enlighten them – nothing new can be proposed except in context of what is already known.   One must pay homage to the old ways, consider that the optimizer views any change to the status quo to be a threat to his comfortable routine.  He cannot be sold on dramatic changes, but may be titrated to minor changes if they are presented as improvements or enhancements on the current ways.

In this way, radical changes can be introduced slowly, and it will take many years to get done what might have been accomplished in a few months – but so long as the optimizer is in a position to prevent change, it would be impossible to accomplish the goal in any amount of time.   So it is a slower and less efficient approach to innovation, but it may be the only route to evolution when working within a change-averse culture.

When is Innovation Harmful?

Businesses and the people who work at them tend to go to extremes.  Rationally, an objective should be pursued only when it makes sense to pursue it – but emotionally, an objective becomes and end-all-be-all.  In particular, I’ve been thinking about the topic of innovation and the way in which firms seek to “always innovate” rather than focusing their time and resources for innovation in areas where it makes sense to be innovative.  Nothing – including innovation - is a categorical proposition.  It does not always make sense, and it is not always productive.   There are a number of instances in which innovation is pointless or counterproductive.  Here are a few examples:

Innovation Yields No Market Advantage

The main reason to innovate is to gain a competitive advantage in the market – so investing excessive effort in an innovation program that has no impact to market performance is wasteful and can be counterproductive.   A good litmus test is to ask whether the customer can witness and appreciate the results of innovation.  If the answer is “no” then your R&D dollars are likely better spent elsewhere.

A common misuse of innovation is on transforming internal services such as logistics and accounting.   These operations rarely have an impact on the customer and innovations seldom yield any noticeable improvement.   Efficient operations can improve financial performance and should definitely be considered, but unless logistics or accounting is a core service of the firm, innovation in these areas will likely be negligible in terms of market advantage.  The firm would be better off wither seeking to optimize (rather than innovate) or outsourcing these operations to a more efficient provider than attempting to improve its own internal services.

Market Demand Supports a Basic Good and/or Service

There are instances in which there is sufficient demand for a product that does one thing well and customers see no benefit in enhanced or ancillary services.  This can be tested through market research that asks the customer what they value in a product – where it is unrealistically believed that the customer would learn to want something if only they could get their hands on it, then test marketing will uncover a bad decision.

There are shopworn examples of the Swiss Army Knife, a tool that does many things poorly and nothing particularly well, or the Internet-enabled toaster that offers functionality that no-one wants enough to pay for.  There is plenty of demand for a toaster that just makes toast well.  It doesn’t need additional capabilities or new uses – it just needs to do one thing well.   Here, innovation is unnecessary and fruitless, and development resources are better directed to making the product better, cheaper, and easier for its existing purpose.

Time and Money are Needed to Innovate

Quick-and-dirty innovation is seldom fruitful, and while the innovation cheerleaders are constantly using fear of obsolescence to push half-baked ideas to market prematurely, it takes time to innovate well: to explore a problem, evaluate solutions, and set up operations to provide them requires a firm to move at a more deliberate pace, and a bread-and-butter product that is not innovative may still generate sufficient revenue for the firm to stay afloat. 

When this occurs, the current (and soon-to-be-obsolete) product is needed to provide the life-blood of the firm while it seeks to make significant changes in its core operations.  The basic product and its performance can be marginally improved by optimization and efficiency improvement rather than innovation.  Particularly when this product is scheduled to be phased out when its successor is sufficiently mature, investing in innovation on that line is not merely beating a dead horse, but trying to feed one.

We Don’t Know Why Our Competitors are Winning

In some instances, insiders at a firm have no idea why its competitors are winning – they may seek to imitate the practices of other firms (aka “industry standard best practices”) without knowing why other firms are doing these things.   This is a very bad practice because the company will eventually be doomed – but it is a very common one and a situation in which innovation is impossible because the firm does not understand the market.  Hence, any attempt at innovation would be a shot in the dark, more likely likely to waste scarce resources than save the firm.

This situation is entirely similar to the firm that needs time and money to innovate, but is different in that a firm in this position doesn’t know how to innovate at all – and if it can admit that, then it is a rational decision to stop innovation efforts and retrench until a strategic approach can be discovered and implemented.   Happy accidents occasionally occur when an ignorant person stumbles on a viable solution – but this is the exception rather than the rule.

The Firm is Stable and Profitable 

Perhaps the best reason not to innovate is that innovation is unnecessary: the firm has a commanding position in its target markets and is entirely capable of sustaining itself on its revenue and there is no plausible evidence to suggest that the competitive landscape will change.  Or more importantly, when there is no sign that customers are dissatisfied with the product, and change would decrease satisfaction and loyalty rather than increase it.  The best example of a firm that shot itself in the foot by innovating where it was utterly unwanted by the market can be summed up in two words:  New Coke.

This brings us back to the original consideration: that the extremists who feel that innovation is always necessary lack and understanding or appreciation of stability and success by current methods.   There are many firms whose operations are successful and who can maximize performance by maintaining their present operations.   There is always room for improvement, or so it is said, but in this situation efficiency improvements that do not jeopardize the firm’s position in the market and the financial sustainability of existing operations are better than innovating with wild abandon.

Reinforce, Optimize, Innovate, Destroy, or Let it Be?

This is the inherent difficulty when attempting to resolve a problem in an existing process: is it necessary to completely replace an existing solution with something new, or merely to make a few minor adjustments to an otherwise perfect existing solution?  The way to settle the dispute between innovators and optimizers exists, though it is very much neglected: as-is analysis.

The as-is analysis considers the present solution, acknowledging that it was put in place to solve a problem, and conceding that the present system was designed by people who were intelligent and insightful – but that even the most intelligent and insightful people make mistakes that lead to failure or partial success and it is possible for the people presently involved, equally intelligent and insightful, to find a way to improve.    Said another way, as-is analyst answers some basic questions:

• What was the existing solution instituted to accomplish?
• Are those goals (still) valid and worthwhile?
• Is the existing solution being implemented as designed?
• Is the existing solution effective in accomplishing its goal?
• Is the existing solution efficient in accomplishing its goal?

The answers to these questions help define the scope of the present effort: to reinforce existing solutions, optimize them, replace them with something innovative, or leave it alone?   It’s an important decision to make to put sufficient but not superfluous effort into the effort.

If the goals are no longer valid or worthwhile, then the solution should be to desist and destroy the processes – they are merely rituals that likely render no benefit and entail expense or inefficiency.

If the existing solution is not being implemented as designed, then reinforcement is necessary, as the evidence does not warrant changing or replacing it.  If it can be done properly, it may work.

If the existing solution is not effective in accomplishing its goal, the innovation is needed to replace it with an entirely new solution that will be more effective.

And if the existing solution is effective but inefficient, optimization is necessary because the solution is valid, but adjustments are necessary to improve upon it (get greater results with less effort/expense).

My sense is that a though as-is analysis is seldom done, particularly when there is a proposed replacement for an existing solution that has generated great enthusiasm, or a significant amount of resentment or dislike for the existing solution.   These are more psychological or political factors that have nothing to do with functional improvements.

Innovating from a Clean Slate

A common approach to improving a product – whether a physical good, a service process, or some combination of the two – is to begin with the product as it currently is, identify problems that create customer dissatisfaction, and solve those problems.   It is an entirely sensible practice, and one that is capable of making many small, incremental improvements to a product – but it utterly annihilates any possibility of making significant and revolutionary improvements that will create innovative improvements that amaze customers and leave competitors far behind.

The reasons for this are straightforward:

• The as-is/to-be practice makes the assumption that the “as is” state is generally acceptable and needs only minor adjustments, so nothing revolutionary is ever considered
• The same process tends to identify many small problems that are easy to address, so people spring to action to make “quick wins” while the bigger and stickier problems are ignored or unaddressed.
• Where physical products and service procedures are already similar across firms in a given product category, all firms that use the as-is/to-be comparisons see the same problems and derive the same solutions, ensuring that products remain commoditized

Revolutionary improvements require revolutionary thinking, which is a different process to examining and making minor adjustments to what is known.  Innovation on this level requires clean-slate thinking, going back to the very basic assumptions about the problems that customers are facing and the ways in which products provide solutions.

As an example, consider the process of learning a foreign language.   The traditional approach to teaching language is incrementally building vocabulary and syntax: the student learns a number of words and follows models for how they can be arranged into sentences.   This model has been used in both academic courses and professional training, and is highly ineffective: it’s hard to learn a foreign language because it is not taught very well.

For many years, there was not much improvement in teaching methods, because education providers focused on improving the parts of their pedagogy without reconsidering the entire system of teaching.   That is, those who sought to improve instruction came up with different sets of vocabulary words, tailoring courses to business discussions or the common problems of international travellers – but learning vocabulary was still a matter of rote memorization of the names of things and actions out of context.  Likewise, it was recognized that classroom education (having to be in a certain place in a certain time) was inconvenient, so lessons were recorded into books, tapes, and videos that could be portable and consumed at the learner’s convenience – but the method of teaching was still the same.

These incremental improvements addressed specific inconveniences of the learning process, but kept the process the same – and the process, itself, remained broken.  As such, learning a foreign language remained a difficult and time-consuming process, and one which most people who had a desire to learn another language chose to avoid entirely, giving up on achieving their goals.

Solving this problem, and revolutionizing the language-learning problem, required stepping back from existing practices to ask the question, “how do people best learn to speak a language?” and to consider, simply enough, the manner in which a person who moves to a foreign country learn the language without classroom instruction.

Considered in that manner, it becomes obvious that people do not memorize lists of words in isolation, but learn words that they hear in the context of everyday life.  This goes both for vocabulary (how a given thing is called) as well as syntax (how an action is described in a way that identifies who is performing it and when).   The core problem, which the system ignored, was the manner of learning, not the content of the lessons.

If I’m not mistaken, the first company to solve this was Rosetta Stone, whose courses did not consist of memorizing vocabulary words and conjugations, but instead provided users with the context of a situation in which words were used and modeled the process of remembering language in context, comparing different situations, and assimilating language as part of the communication process.  And it was wildly successful because it solved the real problem.

And again, the real problem had nothing to do with the performance of parts of the as-is process of teaching, but with the nature of the process itself.   So long as education designers focused on improving the parts while ignoring they systemic problem, no significant progress was made.  They had to start over from a blank slate.  And because their competitors remained mired in incrementally improving a broken process, Rosetta Stone constituted an amazing leap forward.

The same is likely true of a great many products, to the extent that “new and improved” has become something of a joke.  Whenever a product bears that label, customers are dubious that the improvement is significant – they often have to search for what is new and different, and are often disappointed by what it is.  A “new and improved” detergent may have a different scent, and “Version 11.1” of a software product adds features that they have no use for anyway.  

Customers have become so jaded to this practice that in order to get their attention, a product has to launch under an entirely different brand to convince them that it is really different – and even then, there is the tendency for this fact to become known and for customers to spread the word that “new brand” is exactly the same as “old brand” (even if there are some minor differences).  Novelty cannot be faked.

Starting over from a clean slate is an exceedingly difficult process because the certainty of current practices and the fear that something different will not work out inexorably bring people back to considering incremental improvements to the as-is process.   “Let’s consider a new way to X” is followed very quickly by “We’ll start by looking at what we do today and considering ways to improve it.”  Because that’s easy, and because that’s safe.

To go a bit further, I will posit that this is the reason nothing good is ever created by a committee.  When people get together in groups, the fear of the unknown becomes a constant refrain in the “innovation” process – anyone with a bold, new vision is corralled back into the herd – and herds are characterized by a desire for safety and skittishness in the face of the unknown.  

But this is a transition to a much different line of thinking.