Vancouver, British Columbia
May 15-17, 1996

Leading the Agile Organization

The Critical Features of Innovation

André Delbecq, Professor
Santa Clara University

Good afternoon. I’ve had an adventure that I want to share with you, my experience in Silicon Valley studying innovation. However, the story is not only about behavior unique to Silicon Valley. For example, my own involvement with innovation began when James Webb invited me to join colleagues to study innovation in aerospace. He was convinced that one of the spin-offs from NASA should be the lessons learned about managing projects, an equally important societal contribution with landing someone on the moon. Thus, the history of innovation and organization precedes Silicon Valley. But most would argue that its incorporation into organization life reached its apex in the Valley’s High Technology complex.

Imagine that you had the opportunity to be Margaret Mead and could put on your tennis shoes and sun helmet and just live with and observe the techies at Sun Microsystem, at Netscape, at Genetech, at Hewlett Packard (HP), at IBM Research Park, at Xerox Park, etc., and actually see how they spend their days. That’s exactly the opportunity I had when I moved to Silicon Valley from the University of Wisconsin, Madison. Upon arrival, if I stood on the roof of my office, I could look out over the low-rise buildings of Silicon Valley and with my naked eye I could see a business complex containing more economic worth than could be found in the entire Great Lakes industrial basin. And I thought, “What do they do out there that creates this dynamic industry? How do they live in a world where the average product development cycle is 36 months and the average product life cycle is 12 to 18 months? It takes them longer to create the product than the amount of time the product has economic value in the marketplace. How do they do it?”

The preeminent finding is that innovation within these organizations is bottom up. It’s the engineer or technician close to a need and to a problem, someone possessing “local knowledge,” who is the key. An individual who has been working with a problem for some time, thinking about it, engaging in trial-and-error efforts, etc., it’s those people in the heart of the organization who drive innovation. It is absolutely not a function of Scott McNealy being brilliant at Sun or Bill Packard being a genius at HP which is the key. These CEOs are exceptional people to be sure, but the key is they have created and enabled organizations where at all levels individuals are empowered to have the same sense of work as play that they possessed early in their own career. They have created organizations where people who are close to knowledge are the main innovators.

Let me illustrate by a story taken from innovation in health care told by Leland Kaiser, a wonderful teacher of health-care innovation. A consultant was invited by the president, vice president, and executive committee of a medical center to help them do a turn-around. He asked, “Who will I be working with?” and they said, “Us.” He replied, “You don’t have a chance.” The consultant went out and pasted signs all around the medical center that said, “At 11:00 Our Lady of Misery Hospital will meet to decide what innovations we must undertake to survive. Would you like to attend?” Two hundred people came to the auditorium. The consultant then said, “Now you have a chance.”

Adequate competitive innovation in a medical center requires innovation in registration, innovation in medical records, innovation in laboratory procedures, innovation in primary care, innovation in health education, innovation in core medical services, etc. It requires innovation at every level, for every function, every interstice. It’s not a few things in one or two medical departments that a contemporary medical center must focus on; rather, it’s the need for innovation in all the parts of the organization that must be enabled. And no hierarchical figure or executive is smart enough to know how to diagnose the need for and implement innovation in all the parts of the health care organization. He/she must rely on the people who are embedded in each particular part of the organization. Thus, the pivotal finding with respect to innovation is that the actions that are necessary must be enabled in the unit and by the workers who are close to a particular set of challenges.

So we are now faced with an interesting question. What do deans do? What does top management do? What do senior administrators do to contribute to the innovation story?

There are a few things you must do at the senior levels of the organization. First, you must help create a sense of directionality. How do you create strategic direction without being a tyrant or restrictive of the creativity of lower level participants? The answer is, you do so through sending the members of the organization themselves to do environmental scouting. Scouting is an important word to put in your vocabulary about innovation. Its main purpose is to discover the entire network of detailed information about marketplaces, about competitors, about changes in technology, and parallel practices in other industries.

From every level and function of your organization you send scouts to visit centers of technology, centers of science, and the various subgroups you will be serving. As you begin to aggregate this scouting information a sense of overall directional vision begins to emerge. Thus directional vision is no longer a numerical plan based on the extrapolation of prior performance carried forward to the future. It is rather the additive judgments of many organizational members who bring back to the dialogue within the organization information which calibrates emerging external trends.

Top management’s role, then, is to manage the dialogue with respective strategic planning groups analyzing and synthesizing the scouting information which contains many of the important clues regarding an unfolding future. Then this information must be related to the organization’s core competencies and its own directionality. Based on this stimulation of search behavior and the integration of this information, one begins to receive proposals for focusing on needed changes within many parts of the organization. There is a management process associated with managing the energy created by scouting and directional planning, and that process is largely associated with phased innovation. The classic phases are Feasibility Studies, Pilot Tests, and Implementation Designs.

In the Feasibility study phase the two most important efforts are: 1) getting information from users, and 2) getting information from wise and experienced experts, people who have already tried some partial solutions ahead of you. With respect to user/client information, sixty percent of the attributes of successful innovations which make the innovation user friendly and lead to adoption are suggested to you by the people you’re trying to serve. In all the great stories of innovation breakthroughs come from a new and more precise understanding of user/client needs (that other organizations are not addressing) and then solving these needs through technical solutions that provide distinguished benefits.

Better than 58% of the technical solution elements contained in successful innovation solutions come from discovering solution elements that already exist; thus innovation does not require total new invention, you often borrow solution elements and recombine them with your own contribution to better serve the client. An example of creative solution borrowing or discovery of transferable solution elements can be given from a medical example. I have a colleague who is a medical researcher developing a decision-tree process for women who have breast cancer. To help these women make decisions, he borrowed solution attributes for decision-making under stress by studying football quarterbacks and military officers in combat conditions. It’s such playful parallel thinking and discoveries coming from talking to all kinds of related experts who suggest transferable lessons that creates the development of elegant and creative innovations.

Herbert Simon at Stanford University, the Nobel Prize recipient, admonishes that search behavior is far more important that brilliance. It’s obtaining that diversity of information through scouting, exploring needs with the client/user, and discovering partial solution elements in dialog with outside organizational experts that makes the big difference in innovation success. Thus, Feasibility Studies are primarily search behavior directed at identifying the problem elements clients/users are struggling with, and then discovering solution elements that can be recombined into a useful innovative way to respond to the problem challenges.

When you think you have a solution design the foolish mistake is to attempt to implement the design all at once untested. The next intermediate stage is Pilot Testing. Within the Pilot there are alpha and beta phases of experimentation. At the alpha stage, you test the Feasibility Design with early innovator clients/users who want to experiment with your untested solution almost as much as you. Together you will debug and co-create a revised design. It is with these co-creators that you engage in timely trial and error learning. If you wait until you have a perfect theoretical design, it’s too late to have a competitive and timely solution. On the other hand, if you take an imperfect design to the general public you have egg on your face. These early innovators become your partners in design refinement.

Only then should you expose the emerging design to average users as your beta site adopters. With these average users you learn the kind of teaching, training, support, service and assistance that is necessary to support later adopters of your new innovation. You always discover more support is necessary than you anticipated when first exposing average people to your innovation. This is the value of beta sites. If you go from testing with people who are very adroit directly to diffusing the innovation without identifying service requirements, you get into enormous problems.

When it comes to final implementation, you face still another strategic choice. Studies by the Small Business Adminstration and studies at MIT show that small, incremental, hesitant implementation has modest economic return and very little impact on the market. This would suggest that when you have a winning innovation you need an aggressive implementation plan. On the other hand, if the innovation does not have potential for great market penetration, then a more conservative niche marking approach is more appropriate. (Decision rules for determining the appropriate strategies for broad scale implementation and technology transfer are something we will talk more about in the forthcoming workshop.)

So to summarize, the critical features of innovation discussed thus far are scouting, aggregation of scouting insights into directional vision, and phased innovation through Feasibility, Pilot, and Implementation stages. These are the foci of the forthcoming workshop.

In our remaining time I would like to return to the issue of decentralization and the question of who are the innovators in high-performing organizations. Are they right-brained, left-brained, of average intelligence, of superior intelligence, first born, second born, or later born? In fact, innovators are not distinguished so much by personality as by passion and energy. The answer to who are the innovators in high-performing organizations is they are volunteers.

This requires you to create organizational arrangements that depart from the hierarchical command tradition. An organizational setting where, if someone says, “I’m excited about innovating in this area!”, you make it very easy for each individual to be empowered to innovate and to bid for innovation resources. Our earlier discussion of innovation phases depends on the action of empowered individuals. Let’s start with approval processes. The perfect application form for innovation funds to support a Feasibility study is one sheet of paper that answers three questions: What do you want to do? Who’s going to work with you? And why does it excite you? There is a clear inverse relationship between the complexity of application processes in early phases of innovation and rates of innovation. The more you distribute easily accessed mini-grants in the organization, the greater the probability that volunteers will come forward when they see a connection between their search behavior, environmental change, etc., and the needs for innovation within the organization. In the organizations that I study, complicated processes to access modest funds for feasibility studies or the requirement for formal business plans as early phases of innovation stifle innovation.

If one receives approval to do a Feasibility Study, and then to go forward to conduct a Pilot Study, the next concern is the presence of slack time to match slack funds. Matrix Management failed, not only because of problems of duality of power, but predominantly because of the time overload which burdened those trying to do innovation while at the same time continuing to do their everyday work. We have learned that you have to give time resources to people at critical moments of innovation so they can really focus energy on the project. The label often used is “heavyweight teams,” implying teams with the mandate and time resources to struggle with the unexpected difficulties of innovation. We have to move away from seeing innovative work as something you do as an overload on top of all your present duties. In high-performing organizations, innovation represents a legitimate portion of the work role. Especially during pilot and implementation phases, innovation requires you to reallocate your efforts away from the press every day duties.

To summarize, ease of access to slack resources through uncomplicated proposal processes and actual slack time allocated in support of innovation are organizational level commitments that support innovation.

Of course it is not simply a resource question. Equally important is a culture that supports innovation as an organizational priority. The essence of the culture’s story line is the following: I’m going to hire bright people, I’m going to support through training and development evolution world class skills, I’m going to provide opportunities for outside scouting to uncover world-class information, I’m going to make it simple for people to apply for modest funds in support of early phases of innovation, and time during later phases, I’m going to let innovators work in teams which address critical innovative tasks, and I’m going to get out of their way. The message you would like employees to communicate to their friends is that “My organization is structured to enable me to continue to work at the frontiers of new challenges.” Contrary to such a culture is risk aversion, formalization, excessive review, and especially criticism directed toward those who encounter difficulties in the innovation journey. So in our workshop we will be addressing the nature of innovation pressures in our contemporary work place, the characteristics of the classic phases of innovation, the structures an organization can put in place to easily enable individuals to receive a mandate and support, and the cultural context of innovative settings.

Thank you very much.

Copyright © 1998 by André Delbecq