Continual innovation #1: collective brilliance

This article is designed for those responsible for innovation and change or those wanting more from existing programs and who are prepared to look for that potential in more subtle, complex and often hidden ways. The ideas in this article are based on 70 years of research and application plus a recent research project. It was written by Perspectiv’s Andy Wilkins and Master’s in Innovation, Creativity and Leadership Alumni, Anne Maria Aydin.

We use the term ‘continual innovation’ rather than ‘continuous improvement’ explicitly and deliberately to avoid unintended and unhelpful consequences for those looking to change performance. ‘Continuous’ implies that organisations are in a constant, uninterrupted state of improving, but research highlights that change approaches are always based on punctuated equilibrium. So ‘continual’ – repeated but with breaks in between – is a more accurate description.

Likewise, ‘improvement’ focuses only on half the change spectrum. As HR Magazine noted about innovation and change in December 2018: ‘At one end stands revolutionary explorations or inventions, and at the other end evolutionary developments and adaptions. All of it is creative and innovative and neither is better than the other’. If the aim is to change performance, surely we want to value and include the whole spectrum – what Jeffrey Hyman (founder of Pret a Manger and Director of Innovations at RHM) once referred to as ‘valuing a balanced diet’.

Releasing collective brilliance

Historically capital, raw materials and labour were considered more valuable than creating and applying knowledge, however, this has changed. The ‘knowledge revolution’ means that today very little work is still based on static routines alone. The world and the environments in which we work are constantly changing, and with this comes a pressure for everyone to be innovative and for leadership to be able to release the collective genius of the organisation and its ecosystem.

In too many organisations the work of innovation is delegated to a department, or a type of employee – what some label as the ‘creatives’ – or worst of all to senior management. Yet, in the relatively few organisations we have encountered who are ready, willing and able to keep pace with relentless change, innovative problem solving is deeply and widely distributed.

For example, Amazon is unleashing new products and services constantly. There’s Amazon Prime, Amazon Fresh, Amazon Web Services, Amazon Smile, Mayday, Amazon Prime Instant Video, Amazon TV, Amazon Business, and what do they have in mind for the patent of a ‘flying warehouse’ that has been filed? This is from Amazon’s Founder and Chief Executive Officer, Jeff Bezos’ April 2014 letter to shareholders:

‘We have the good fortune of a large, inventive team and a patient, pioneering, customer-obsessed culture – great innovations, large and small, are happening every day on behalf of customers, and at all levels throughout the company. This decentralized distribution of invention throughout the company – not limited to the company’s senior leaders – is the only way to get robust, high-throughput innovation. What we’re doing is challenging and fun – we get to work in the future.’

We have learned that you need to educate, promote and accept innovation as part of the social capital of the whole organisation – innovation can happen anywhere and needs to be enabled to happen everywhere.

Connecting knowledge and innovation

Innovation needs knowledge – often new knowledge – some call ‘knowledge data’, or information or insights. Whichever word you use, the knowledge can be tacit or explicit.

Tacit knowledge has been called personal knowledge and is embedded in what we do, believe or feel. It is strongly connected to opinions, intuition and perceptions as well as our experiences, our imagination and the environment we are in. Tacit knowledge is difficult to write down, visualise or transfer from one person to another. It is embodied in the person.

Some examples of tacit knowledge include:

1. Learning a language which requires immersion and using the language for long periods of time.

2. Complex social skills such as leadership, innovation and collaboration are difficult to learn – training cannot guarantee effectiveness in these domains because effectiveness develops from experience.

3. Snowboarding and other tasks that require physical coordination such as cycling and skiing are considered tacit knowledge.

The mathematician Dr. Ruth Noller who worked with Albert Einstein and with the International Center for Studies in Creativity (ICSC) came up with a helpful equation that connects creativity and knowledge. The equation suggests the relationship between knowledge (K), imagination (I), evaluation (E) and attitude (a).

C = fa (K, I, E)

This equation provides a useful framework for how to increase the level of creativity and therefore innovation because, as some scholars and the HR Magazine article noted: innovation, creativity, problem-solving and change management are the same thing, just different words. They are all ‘gap-closers’ between where we are now and where we want to go – to talk about one is to talk about them all.

So, innovation is linked to knowledge, but tacit knowledge is not programmable – not storable in a database – and not in Google. Put another way, it is hidden and has to be found, surfaced, discovered, unearthed, dug up in a particular moment in a particular context.

In the paper ‘The role of tacit and explicit knowledge in the workplace’ Elizabeth A. Smith suggests that as much as 90% of knowledge in any organisation is tacit – embedded and synthesised in peoples’ heads and therefore most tacit knowledge is an invisible line item in corporate budgets. Tacit knowledge is a highly underutilised asset when looking for marginal gains because knowledge lays the foundations for innovation.

Uncovering hidden knowledge and innovation potential

Knowledge leads to needs, leads to ideas, leads to solutions, leads to new value. But what does one do when as much as 90% of the knowledge in an organisation is hidden and it is this hidden knowledge that contains the new value, gems and insights required to fire up innovation? Indeed some ‘continuous improvement’ programs completely fail to acknowledge the waste of unused human talent and imagination. In Lean thinking terms, non-utilised talent or the waste of human ‘skills’ is called The 8th Waste.

Many organisations never release or utilise their full innovation potential and miss the turn off to the future. The ‘poster child’ for missing the turn off to the future because it was too focused on the present is Blockbuster, who turned down the offer to buy Netflix several times. Management of the present is very different to imagining the future.

Having never worked for Blockbuster we cannot say exactly why they missed the turn off, but we do know that research suggest that a key factor for innovation, amongst many, is the capability of a company to foster an environment where people are encouraged to talk about the ‘unknown future’. A handy calculator that we use with teams to help them think more about competing for the future and ensuring they don't miss the turn off is to ask:

1. What % of your time do you spend looking outward as opposed to looking inward?

2. When looking outward, what % of the time do you look at the future as opposed to today?

3. When looking outward and into the future, what % of the time do you spend developing a collective, shared team view as opposed to singular view of the future?

Total time devoted to building a corporate perspective on the future or ‘creating a shared vision of the future’ = Q1 x Q2 x Q3.

With your current score calculated, think and talk about what the figure might need to be for you, your team or your organisation to reach your full potential.

These three questions are based on Gary Hamel and C.K. Prahalad’s work on Competing for the future. A related article in Forbes, finishes with this great line: ‘And it could happen to you. Invert your strategic planning time. Spend 80% on trends and scenario planning, and 20% on historical analysis. It might save your business.’

Companies and/or teams who truly understand this dilemma to keep setting the foundations for the future also understand that they have to constantly work on sharing information. Some examples of this ongoing endeavour include parts of 7Eleven, Google, Halcrow, National Grid, Pixar, Platinum Guild and RHM.

By contrast for example, has John Lewis spent enough time thinking about the future or too much time protecting what John Lewis set up 150 years ago?

Creating favourable conditions for organised surprises

To reach a stage where an individual, team or organisation is ready to diffuse an innovation such as a new mindset, attitude, feeling, product, service, processes or idea – knowledge has to be shared with the intended audience. However, when releasing new knowledge, there are two key issues that need considering:

1. Much of what is really useful information that might come to the surface is what is sometimes referred to as ‘undiscussable’. Indeed, it is sometimes undiscussable to discuss the undiscussables and the undiscussability of the undiscussables! Another term often used today is the ‘the elephant in the room’. This hidden knowledge is both extremely valuable but also very difficult to surface and then use.

2. The truth is that it just takes time to authentically, deeply and truly understand some information. There is a great quote from Edward I. Koch that illustrates this: ‘I can explain it to you, but I can't comprehend (understand) it for you.’ Often, potentially useful but volatile information is lost due to the pressure for hasty action – moving too fast.

So, the highly fragile, ambiguous and anxiety-provoking nature of much tacit knowledge means that leadership needs to play a critical role in creating the right environment for knowledge sharing, discovering and surfacing. Indeed, many suggest the core challenge of leadership is to create an innovative organisational ‘climate’ that is open to different perspectives and enables people to express diverse opinions and ideas amongst each other and across all levels of experience – thus allowing people to externalise and share their valuable tacit knowledge.

However, valuing diversity (as distinct from just tolerating diversity) and truly acknowledging different perspectives that upset the status quo is not easy for most organisations – particularly if they are concerned with getting on with it, or being right, and managing the present. As a result many environments do not have favourable conditions for organised surprises.

‘Favourable conditions’ can be defined as a place, context or space where knowledge is shared, used or created. It can be physical, virtual or mental and is referred to by Ikujiro Nonaka and Hirotaki Takeuchi in their research, articles and book The Knowledge Creating Company as ‘favourable fields of interaction’ or using the Japanese concept of ‘ba’, which roughly translates to English as ‘place’.

Enabling continual innovation potential

In this article we introduced the link between knowledge, favourable conditions and innovation potential. If you believe releasing innovation potential is key to you or your organisation you need to ask yourself: is your organisation ready for organised surprises?

During our work as innovation consultants / change leaders, and supported by years of research, we have learned that knowledge sharing is best done through conversations – sometimes referred to as ‘dialogic’ conversations. Our research and experience, along with others such as Von Krogh in his book Enabling Knowledge Creation, shows that there are five key enablers which contribute to uncovering needs, creating ideas, developing solutions and diffusing innovations. These are:

1. Instilling a vision

2. Managing conversations

3. Mobilising activists

4. Create a favourable climate

5. Globalise local knowledge.

All five of these enablers are important to success over the whole innovation lifecycle but two – creating a favourable climate and managing conversations – are the most important to get things going.