HESSELBEIN & COMPANY
SOWING THE SEEDS OF INNOVATION
To be responsible for the health and growth of a company is a great challenge for even the most competent business leaders. We all know instinctively that innovation is key to meeting that challenge. And yet innovation remains elusive, the subject of endless prescriptions and formulas. But all that sound and fury generates more heat than light, more impassioned rhetoric than insight. Blindly responding to these siren songs of success all too often has led leaders onto a rocky shore.
My forty years in the computer industry, which brought me ultimately to be chairman and CEO of Control Data Corporation, provided me with great experience with and insight into innovation. Much of the empty rhetoric and futile search for innovation in companies has at its root a lack of understanding of what innovation actually means. In simplest terms innovation means problem solving, it means meeting a need with sometimes old, sometimes new know-how, but know-how configured and applied in a novel and more effective way.
In The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, Marc Levinson relates the fascinating story of Malcom McLean and one of the most revolutionary innovations of the 20th century. The shipping container is a far cry from a silicon computer chip or a bio-engineered gene. As Levinson says, the container is hardly awe-inspiring science: “A soulless aluminum or steel box held together with welds and rivets, with a wooden floor and two enormous doors at one end: the standard container has all the romance of a tin can.”
Nonetheless, the shipping container has reduced transportation costs to a negligible factor in world trade and thus revolutionized global manufacturing and trade itself. It is a result of two innovations by Malcom McLean. First was the idea of driving trucks onto ships and then transporting their trailers at far less cost up and down the East Coast of the United States. The second was simply to remove the steel beds, axles, and wheels from the trailers. This would reduce the space occupied by each trailer by one-third. Moreover, they could then be stacked.
Of course, it was not that simple. As in any revolutionary innovation, the entire system, in this case the shipping system, had to change. And that meant not only government regulations, physical port systems, trains, and trucking systems but labor practices and policies as well. These changes did not come easily.
Innovation, as in Malcom McLean’s situation, starts with pragmatic solutions that meet a need in a more effective way. But adaptation of innovation goes beyond that to the intense motivation that is necessary to overcome the myriad obstacles rooted in the phrase: “This is the way we have always met this need.” Those obstacles are firmly entrenched in business practice, public and employee attitudes, and government regulation.
The shipping container story vividly illustrates that it is not necessarily breakthrough science that must be applied to the solution of a problem, it is an encompassing awareness of the relevant know-how, whether old or new.
New businesses are innovative almost by definition: they come into existence as a result of an innovative idea—a new product, a new service, a new marketing concept. Why do innovation capabilities so often seem to fade and become lost? Do most businesses, like most people, simply lose their childlike curiosity, in-quisitiveness, and sense of experimentation as they grow and mature, becoming increasingly sedate and risk-averse? Are the endless prescriptions for innovation nothing more than a futile search for a chimerical fountain of youth?
Organizations are as organic in their nature as the individuals who constitute them. Business organizations can be regenerative if they have the ability to support ongoing innovation. The seeds of regeneration are sown in the earliest stages of the organization’s existence and have four key attributes:
- Acute awareness
- Excellent skills
- Inspired motivation
- Supportive infrastructure
If that characterization seems obvious, all the better. Still, it is that very obviousness that misleads people. Three attributes—inspired motivation, skills, and awareness—relate to qualities in people that can be nurtured, shaped, and honed through experience. A supportive infrastructure is a purely exogenous factor supplied by the corporation—it is enabling.
Much has been written on how leaders motivate their organizations. There are tangible motivators such as incentive compensation and benefits, and there are intangibles such as trust and commitment to mission. The latter are more difficult to introduce than, say, a new pay plan, and receive considerable attention in writings on motivation. Similarly there is no lack of management literature on hiring and developing people with excellent skills, and there is even more analysis and prescription for building a supportive infrastructure: organizational tools, human resource policies, values, and governance mechanisms.
Of the four characteristics of the innovative organization, however, awareness must be the essential underpinning, and it is by far the most difficult to engender. Sowing the seeds of awareness and cultivating them throughout the organization is a leader’s never-ending challenge.
Awareness
Building awareness is something much more profound than simply sending people to seminars and conferences on new technology. Awareness involves a correlative ability to understand how various tools and concepts can be best brought to bear on the problem at hand. We think of people with this correlative ability as being intuitive. When I think of that it calls to mind a man named Bob Perkins. Bob was a designer who had the responsibility for devising input-output equipment for Control Data Corporation’s early computers. One necessary input-output mechanism was the ability to read and produce punched cards—not a technologically sophisticated task, but at the time crucial to overall system performance. The solution? According to Bob, “I went down to Chicago, stuck my head into what was left of an old player piano company, and learned how to do a real cheap pneumatic read.” Ideas and innovations arise from people’s special connections with the world around them.
Without question the semiconductor ranks among those inventions with the most far-reaching consequences in human history. As an innovator, Seymour Cray was aware of the possibilities the semiconductor offered, so he was able to perceive geometric configurations of them that would result in the highest performance computers. Seymour is a powerful example of awareness. He was driven by a feeling for, and a deep-seated caring about, problems that needed to be solved and, in turn, was intensely attentive to technologies he might find useful. People such as Bob Perkins and Seymour Cray have an innate curiosity about problem solving that heightens their awareness of the possibilities for problem resolution.
It is a considerable leap, however, from a few innovative individuals to an organization that is similarly attuned. In nearly every organization one may find a creative individual. That does not make the company highly innovative. It is a corporate culture of awareness that is the basic building block of creative energy. This characteristic of awareness can also be thought of as “caring curiosity.” It can, like other traits or skills, be learned, and with practice it can be honed to rewarding sharpness. Most of us will never design a supercomputer or figure out how to navigate a space vehicle. But each of us can know the satisfaction of innovation, of devising a novel solution to the oft-felt frustration that makes us say, “There’s gotta be a better way.” Mostly we learn this skill through experience and practice. That’s not surprising. What is surprising is how few organizations know how to challenge employees and give them the opportunity to learn and practice that skill. Of all managerial inanities none is more regrettable than to deprive people of the opportunity to learn and exercise caring curiosity—the single most important skill for corporate health and renewal.
How do we bring about this characteristic on a company-wide basis? The answer lies in the “Four Ps”:
- Partnering, especially technological collaboration
- Possibilities for turning necessity into opportunity
- Perspective that provides opportunity for people to broaden their problem-solving experience
- Practicing innovation at all levels in the company
No one of these alone will suffice; they work together to inculcate alertness to possibilities so integral to a culture of innovation.
Partnering
Learning how others, including competitors, use any given technology to meet their product or service goals is inherently eye-opening. To empathize with another person, to see the world as that individual does, requires a much deeper understanding; it requires solving a different set of problems—with, more than likely, a different set of resources. In short, it stimulates innovation by creating an awareness that there are new and different ways to look at and solve problems.
A novel way to encourage employee engagement in collaboration is a social service leave policy that allows employees at any level to take time off with full pay and benefits to work on community, national, or international projects. One example illustrates the power of such a policy in bringing out the innovative and entrepreneurial talent that is latent in people.
Hilda Pridgeon: Building the Alzheimer’s Association
Hilda sensed something was wrong with her husband, Al. She went to work at Control Data, feeling that she needed a secure job. Soon after, Al abruptly quit his job after 25 years. He was only in his late 40s, but something was clearly wrong. Al was diagnosed with early-onset Alzheimer’s disease. Hilda was faced with a number of intractable problems—building security by having her own career, raising her children, providing care for Al, and learning to understand and cope with a disease she was told was rare. Hilda, with the encouragement of her manager, completed her college degree while working in Shareholder Relations.
Having an Alzheimer’s patient at home required more than financial security. She met other women dealing with the same issues. Five of them chipped in and ran a $25 advertisement in the Minneapolis newspaper, inviting families of Alzheimer’s patients to a support meeting. The group got materials from the National Institute on Aging, and Control Data provided a conference room. The response was a standing-room-only crowd.
“I knew then we needed to have a national organization,” Hilda says. She began working nights and weekends to organize a family support group—and wrote a proposal requesting a year off with pay and benefits to form the organization. On August 1, 1979, her year began. Hilda turned a room in her home into an office. The National Institute on Aging told people what she was doing, and letters began to come in from all over the country. By August 28, she had registered the first 501(c)(3) nonprofit organization for Alzheimer’s in the United States. Technically, the group was still a Minnesota organization.
The National Institute on Aging invited Hilda and others to Washington, where they agreed to form a national nonprofit group. The national Alzheimer’s Disease and Related Disorders Association, Inc., was registered in 1980, with Hilda Pridgeon on the board of directors. In June 2002 the Alzheimer’s Association published the report Alzheimer’s Disease: The Costs to U.S. Businesses in 2002, which declared, “The total cost to businesses of workers who are caregivers of people with Alzheimer’s disease is $36.512 billion. The cost to businesses of healthcare for people with Alzheimer’s disease is $24.634 billion.”
After her one-year leave, Hilda went back to work at Control Data. The experience she had gained, not to mention the many corporate and public policy contacts she had made, gave her both insight and perspective. That was invaluable to her in helping to shape the company’s communication and community relations functions. Needs awareness—whether it is a computer designer’s deeply felt understanding of the need for the best possible computing engines, or a caregiver’s firsthand experience with the needs of those dealing with Alzheimer’s in a loved one—is an attribute that can be created by enlightened management.
Possibilities for Turning Necessity into Opportunity
Leaders understand that the natural tendency of organizations is to deal with necessities imposed by regulation or societal circumstances in exactly the wrong way—to wish they didn’t exist. For example, rapidly escalating health care cost is an almost universal problem faced by businesses. This is not a new phenomenon. It was a problem facing my company, Control Data, 25 years ago. We developed a comprehensive education program to help employees understand that a healthier lifestyle could lead to both a more enjoyable life and a reduction in medical expenses for themselves and the company. The program, Staywell, was so successful that we began selling it to other companies and ultimately it was spun off as a stand-alone and very successful business.
The status of the computer industry when Control Data was founded forced an early recognition of the need to treat necessity as opportunity. The company’s first computer was the performance leader of the industry. But the performance of the total computer system required the highest-performance peripheral equipment such as magnetic tape transports, output printers, and other input—output devices. The best-quality peripheral equipment was available only from IBM. Because of its monopolistic position, IBM was able to enforce the sale of such equipment to other computer manufacturers at its retail list price. The question was whether to accept reduced profits or to build the necessary high-performance peripherals within the company, a commitment that would be hugely expensive when comparing the costs of development and manufacturing to the relatively low volumes required.
An escape from this dilemma lay in becoming a supplier of peripherals to other competitors in the industry. The original equipment manufacturer (OEM) peripherals business thus came into being. Selling to one’s competitors is not a business entered into lightly. It requires a fine-tuned understanding of just where one derives competitive advantage. With the OEM peripherals business, the company successfully turned necessity into opportunity.
Perspective
Technological collaboration and turning necessity into business opportunity are in and of themselves broadening for the participants, but there are numerous other ways to foster broadened perspective. Companies support participation in technical conferences and industry groups. These things certainly are useful, but active problem solving is even better. A relatively common sort of problem solving in industry generally involves establishing national or international standards. Some standards are established de facto by one supplier becoming dominant in the marketplace. Many standards, however, are established only through the arduous efforts of volunteers from companies across an industry. It is difficult to imagine a more frustrating problem-solving process: a committee of disparate members convening to agree on a single solution regarding emotionally charged issues. Nevertheless, the experience of dealing with standards issues is an excellent example of gaining perspective through a problem-solving process external to one’s company.
Another idea is to encourage rising managers to participate in boards of directors in both the for-profit and nonprofit arenas. Seeing management, employee, and technical problems in an environment outside the company is wonderfully enlightening. Companies that insulate themselves from the outside world eventually are overtaken by that world.
Practicing Innovation at All Levels of the Company
Awareness is cultivated in many small ways. In some few employees it will blossom into new products or breakthrough ideas for new business, but it is a fact of life that all of us are surrounded by problems that can benefit from attention and innovation.
Over the past two decades Total Quality Management (TQM) has found its way into management practice globally. TQM, however, is notably absent in the literature on innovation. This is unfortunate and reflects a mistakenly limited view of TQM, as well as the general mysticism that surrounds innovation. TQM tends to suffer from the incremental perspective that “continuous improvement” imposes. It suffers even more from the idea of minimizing variations from the norm, or from the product specification. The result is that TQM is associated with operational effectiveness only and has little to do with the creation of new things—new products, new services. Actually TQM can be a training ground for innovative thinking. At the same time, TQM can instruct on the risks of innovation and the judicious acceptance of those risks, as well as on ways to approach progressively complex tasks and collaborations within and between organizations. The basis for an enduring quality program is to reinforce the beliefs that “There’s gotta be a better way!” and “I can be a part of the solution.”
Caring curiosity—awareness—is latent in all of us. Leaders use many variations of the Four Ps to grow and enhance that attribute. Leaders understand that the innovative organization is one inspired by a caring curiosity to solve tough problems and the dedication to make economic reality of the solutions to those problems. Innovation is fun and inspiring. Give your people a chance to experience the thrill.
Robert M. Price is the former CEO of Control Data Corporation, one of the major computer companies in the world at the time of his tenure. Currently, he is an active corporate board member and is president of PSV, Inc., a consortium of consultants specializing in technology commercialization and corporate strategy. His recent book, “The Eye for Innovation: Recognizing Possibilities and Managing the Creative Enterprise,” was published by Yale University Press. For more information, see www.bobprice.net.