Chapter 7. The Do Loop – The Eight Skills of Adaptive Foresight

Skill 3. Innovation (Divergent thinking)

Twelve Pillars of Innovation, Solis, 2014 (See also What’s the Future of Business, Solis, 2013)

Twelve Pillars of Innovation, Solis, 2014
(See also What’s the Future of Business, Solis, 2013)

Most of the time our best survival strategy, as imperfect beings, is to take a creative, experimental, trial and error approach to the world. Only rarely (evo devo studies in biology allow us to argue roughly 5% of the time) can foresight professionals and their clients see one “right future” ahead. Usually many divergent options and outcomes can be visualized, and many roads are attractive. In such circumstances, we do well to follow the advice of Abraham Lincoln when he said “The best way to predict your future is to create it.” Or Alan Kay, who said “The best way to predict the future is to invent it.” This is the position of Schlesinger et al.’s Just Start, 2012, on organizational and personal creativity as a survival strategy whenever you are faced with VUCA (volatility, uncertainty, complexity, ambiguity). We further propose that creativity needs to be accompanied by the other seven skills to be long-term adaptive.

As you may recall in our discussion of the 95/5 Rule in Chapter 1, I would argue that perhaps 95% of the time, innovation, a process of unpredictable experimentation seeking market success, is the most useful of the two most basic foresight strategies, innovation (evolution) and anticipation (development). Nevertheless, both approaches seem equally important to living sytems and to organizations. If evo devo theory is correct, and we can only predict correctly one out of twenty times (5% of the time), having that predictive capacity can still make all the difference in many competitive environments.

Innovators are driven to generate difference, create something new, and make a bet on their chosen future. This trail-and-error approach to foresight is often the best solution, especially when the right strategy isn’t obvious. As always, the interaction of the innovator’s creativity and the social and physical environment will decide if, where, and for how long each innovation will be adaptive. When the organization is in a resource-plentiful environment, when it is early in a decision process, or where a dominant strategy isn’t clear, it is often best to run many small learning efforts, anticipation activities and innovation experiments in parallel, and to carefully compare them before any narrowing down strategic options.

Running experiments in parallel is what an executive does when she assigns the same task to number of individuals for diversity of input and comparative evaluation. Often criticized as wasteful, it can be a key strategy to solve tough problems. Giving parallel, short-deadline assignments of the same task to independent teams, to maximize insights and options both at the beginning of projects and again at critical decision points, is commonly used in leading management consultancies, like Boston Consulting Group and Bain & Company. This strategy was also famously used by President John F. Kennedy with his advisors, and has been employed by several of our more innovative Presidents since. It is also at the heart of our new crowd innovation platforms, like 99 Designs for graphic design, and Open Ideo for crowdsourced designs for global development and social good.

Recalling Boyd, the fastest and most resource efficient form of innovation is Idea Generation. Any foresight professional who tries to imagine one or a range of possible futures, in a way that will achieve any degree of market success, for example, getting accepted by clients as plausible, is using this function. But the value of creative ideation can be poor if it is not based on good learning (Skill 1), subject to careful convergent selection (Skill 3) and critical feedback and review (Skill 8).

Foresight professionals collect and imagine a wide range of possible futures. Our profession calls these “alternative futures”, and we use methods like brainstorming, cross impact analysis, scenario analysis, and wild card imagination to better anticipate uncertainty, explore the possibility space, and test possible visions, goals and strategies against many potential outcomes (Skill 4). Idea generation is predominantly divergent, “What-if”-style thinking. There is also a genre of foresight literature called counterfactual history that seeks to imagine possible alternatives to past historical events. But while alternatives ideation may be the easiest and for many, the most enjoyable type of foresight work, its quality and impact varies widely. As we know, the value of any good idea can only be monetized by successful execution (Skill 5).

Innovators also invent by Design and design thinking, with its user-centered mental and hands-on problem solving activities, providing another set of helpful tools for us to create the future we envision, and then see if it survives in the environment. Closely related to design is the Innovation Management function, a new field of study that seeks to lead and maximize the value of organizational R&D, design, and innovation processes. Like both strategic foresight and intelligence studies, the field of innovation studies and management is young and poorly validated, but it offers helpful methods for maximizing the creative capacity and future-orientation of an organization. Clay Christensen’s The Innovator’s DNA (2011) offers a well-considered recipe for business processes to maximize innovation, in firms of any size. Jan Verloop’s Insight in Innovation (2004) explores innovation as a business process, using historical Shell examples. Tony Wagner’s Creating Innovators (2012) has good insights on K-12 innovation education.

image170Some of the most exciting new entrants in the innovation space are the commercial Ideation and Innovation Management (IIM) platforms now offered by BrightIdea, Datastation, CogniStreamer, Hype, IdeaScale, Imaginatik, SpigitEngage, and others, and technical problem solver communities such as InnoCentive, which now has over 300,000 “solvers” in its community. Recently, IIM platforms have crossed the chasm of early adopter use and become real businesses. The IIM category now has tens of millions in annual sales. With leadership buy-in, adequate user training, and real rewards for innovators, IIM platforms can unleash new creative capacity from your employees and customers, and draw forth a steady stream of next-step innovation proposals for management to evaluate.

As Carrie Zapka reminds us, there are at least two schools of thought for facilitating and using employee ideas. The newer enterprise innovation school is more open and thus necessarily more platform oriented, where attracting more diverse participants, including customers, stakeholders and the public, is considered the best way to find the best ideas, including important ideas that may not fit with current culture. Books like Chesbrough’s Open Innovation (2005), Lindegaard’s Making Open Innovation Work (2011) and Sloane’s A Guide to Open Innovation and Crowdsourcing (2011) advocate this open approach.

The older enterprise innovation school is Kaizen (continuous improvement), Lean enterprise or Six Sigma oriented, focused on finding and implementing many small ideas, primarily from the firm’s employees. The latter school has historically not needed fancy online platforms and openness, but culture and policies that holds managers accountable to innovation, and empowers employees to share small ideas and notice problems. Robinson and Schroder’s Ideas Are Free (2006) and Robinson’s The Idea-Driven Organization: Unlocking the Power in Bottom-Up Ideas (2014) are helpful here. These authors don’t think you need big budgets, fancy software, or crowds for world-class innovation, just good culture and process. Each school seems useful for different facets of innovation, but successful implementation of the Kaizen approach is probably much more efficient and useful, in most firms, before open innovation is considered.

Entrepreneurship is another business function that is oriented to the future through the lens of innovation, in this case via new business ventures that may also include new processes, products, and projects. In a world where creative destruction and technological unemployment are constantly eliminating jobs, entrepreneurship seems a particularly rewarding function for foresight. Foresight professionals that make their client firms more innovative, entrepreneurial or intrapreneurial (able to generate new business ventures from within established firms) provide them with a lasting ability to survive in conditions of ongoing uncertainty—a foundational foresight skill.

As long as a firm can stay either as or more creative than its competitors, it can have several strategies in play that are gaining traction in the marketplace at any time. Its creative drive can continually keep it alive, even if it stumbles or moves backward for a time. Owens and Fernandez’s The Lean Enterprise (2014) shows how even large, mature organizations can aggressively innovate if they are willing to pay the political cost. Ries’s The Lean Startup (2011) explains why startups are so much better at innovation than anyone else. All those that lead the future cultivate a perennial startup culture and mindset.

Hardy (2015)

Hardy (2015)

Darren Hardy’s The Entrepreneur Roller Coaster, 2015, offers a motivating tour of the emotional factors blocking or aiding entrepreneurship, risk, and innovation, and how to manage them. Recall our discussion of emotional intelligence and the ECA cycle in Chapter 3. Risktakers and innovators need to think “automatic responses” and “emotions first,” (Kahneman’s System 1) in ourselves and others, as they are the top determinant of daily success. To retrain our subconscious emotional-cognitive systems to be more comfortable with risk and innovation, Hardy proposes it is better to read one good book on such topics several times, until its lessons are no longer scary and are internalized, than to read several good books one time each. For leading teams to do scary things, he notes its far better to “pull” them, challenging them to emulate your own example (picture a rope tied to your waist) than to push them (tell them), which offers much less emotional support, and is “do as I say, not as I do”. Great innovators take personal responsibility for leading by example.

Successful innovation is still such a scarce skill that a past track record of entrepreneurial innovation has significant momentum attached to it. John Kao’s Innovation Nation (2007) argues this is one of the reasons our international investment community retains such faith in US innovation capacities, even when our national economy experiences recession. Apple Computer’s survival in its nadir from the mid 1980s to mid 1990s might also be explained, in part, by how deep consumer loyalties to highly innovative companies can run.

In the Evo Devo Foresight model, a good practice guideline for the skill of Innovation, also called evolution in this guide, is to love the journey (of exploration and creation). In biological life, the process of evolution displays a fundamental love, a pleasure-seeking drive, to explore an incredible variety of ways of living, and to create a breathtaking variety of forms. Recall that innovation in the organization is concerned with imagining the possible and with creating what does not exist, in the hope of making something that will be adopted by others (social replication and “success”).  Innovation uses rationality and logic to create this variety, but as any creative knows, the creative process is driven largely by positive emotions (courage, optimism, excitement, and love of creation). It thrives best in a physically safe environment (though there may be deadlines, competition, or other urgencies or constraints), and benefits from self confidence and personal willingness to risk. We can oversimplify a bit and say that due to the central role of emotion and positive visions in creativity, innovation is managed primarily “from the heart.” The award-winning 1968 short film, Why Man Creates, is a loving, big picture overview of this critical foresight skill.

Great idea generators, innovators, and entrepreneurs are explorers who love the creative, risk-taking act. They may love it primarily in themselves, and simply demand it from others, even humiliating them when their colleagues fall short of expectations, as Steve Jobs often did (see Walter Isaacson’s Steve Jobs, 2011). Or they may love and encourage it in all of their employees and stakeholders, as we’ve seen with Larry Page and Sergey Brin’s tenure at Google, where a culture of team innovation and a safe culture for innovation failure has (so far) scaled to a 50,000 person company (a rarity at this size). The most sustainable innovation leaders maintain a climate of positive, empathetic emotion on their team. As a leader, you must be one of the more reserved displayers of positive emotion. But accepting your team for who they are, encouraging their efforts at useful creativity, tolerating and learning from failure, and giving them regular honest feedback are all keys to peak creativity.

Those working in strategy and innovation in big companies, and consultants, would do well to remember that most useful innovation comes first from the small to mid-sized players in a market, with the biggest players usually being counterinnovative (seeking to slow and patent and sit on innovation as long as possible). We can call this classic economic dynamic the Innovation 80/20 Rule. Fortunately, once a really useful new innovation emerges from one of the smaller players in the long tail, and that firm starts gaining market share because of it, the big players in the fat head have to respond by rolling out the innovation their own engineers and innovators have long wanted to do but have been prevented from doing by executive priorities.

We should remember that this executive behavior isn’t intended to hurt society, top execs in big companies are just doing what is smart for their firm. Their natural incentives, once they are big, is to more frequently act in counterinnovative ways themselves, and be on the lookout for small firms they can acquire once they prove they can grow market share. As long as economic concentration exists (a fat head or oligopoly at the top), big company incentives will typically be aligned to try to control and slow down innovation, maximizing current shareholder return. Apple, Google, and others show us there are big company exceptions to this rule (company culture can easily be more powerful than this market pattern), and society needs big companies to do big R&D and create scale, but those who care about innovation should always fund and patronize a good fraction of small firms and their early stage R&D and innovation, as a few of them will one day become large as a result, and that small-firm support, when they do good things, keeps the large firms accountable to the customer. A great book that explains how this works in the defense industry, where small contractors have a long track record of being more innovative, is James Hasik’s prescient Arms and Innovation: Entrepreneurship and Alliances in the Twenty-First Century Defense Industry (2008).

Innovators also love divergence and freedom. The best way to incentivize innovation in any group of students, or of employees, is to give individuals greater freedom the better they perform. See Bob Compton’s Finland Phenomenon (2011) for the power of incentivizing students with freedom when they are doing well in their educational performance. People need freedom to create. Rewarding employees who are “meeting expectations” or above with Free Fridays or Google’s 20% Time, or whatever other freedoms you can give, signals that you are serious about supporting innovation.

Covey (2008)

Covey (2008)

Several things can block our love of the creative journey. The most common blocks, and often the least discussed, are distrust and fear. After the lack of freedom, these are the greatest innovation-killers. Managing these negative emotions requires greater understanding (learning), seeing the value of greater freedom (innovation), and getting good at empathy and learning to trust (relating). Good books that will help you and your clients overcome distrust and fear are Stephen Covey’s The Speed of Trust (2008), Ryan and Oestreich’s Driving Fear Out of the Workplace (1998), and Tom Rieger’s, Breaking the Fear Barrier (2011). These writers all remind us of the great importance not only of trust but of faith (belief in certain things, without proof) in organizational environments. Whether we place our faith in science, religion, or humanity, we and our clients must find a way to believe in the capacity for goodness and progress both in our colleagues and in ourselves. Having faith in your team and loving their creative journey will motivate them to surprise you with beautiful new creations. As with the learning skill, managers must set limits on creative time and effort. Innovation must be balanced with the other skills. But if we don’t provide ourselves space and freedom to create, and if we don’t have faith and trust in our creative capacity, and master our negative emotions, we will be out-innovated by those who really do love the journey.

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