Wednesday, May 20, 2015

Unlocking the DNA of Innovation through Strength Analysis





Everyone talks about innovation, as if it something they can make happen, just by deciding it. Innovation is the product of very specific abilities and attitudes, and therefore is driven by people with specific talents, and requires an organisation-wide mindset shift, that results in an Innovation Culture.

The rationale behind developing an Innovation Culture is to ensure all that every employee within an organisation is being engaged in work that utilises their strengths, and provides the authority to manage, innovate, implement and engage in collaboration. This level of autonomy is crucial to the development of Rainmaker teams to drive innovation and maintain a leading edge within the sector.

In my experience Rainmaker Innovation Practices can be implemented in two stages:

    •     The Business Opportunity Analysis Team (BOAT) process
    •     The Business Implementation Team (BIT) Process.

A detailed level of personality and strengths profiling will reveal whether an organisation has the existing Starter human capital to create a BOAT, or whether they will need to recruit key personnel. Many organisations already have sufficient staff with the requisite finisher profiles to create a Business Implementation Team (BIT), but these will still require proper training in BIT processes and an adequate respect for the BOAT skill-set.

This mix has been shown to create an ideal return on investment on R&D and new enterprises as long as:

    1.    The finishers (BIT) are utilised in the enterprise-modelling phase.
    2.    Founders and C-Level management are consulted and their GLI (Gut Level Intuition) is utilised in the brainstorming phase; all enterprise proposals must be run through the BOAT before any commitments are made to potential enterprise partners, or product development.
    3.    It is essential that the strong Finishers lead the BIT process and ensure they do not bury an enterprise model created by the BOAT before implementation, and trust in the information and intelligence provided, once approved.  It is equally crucial that the BOAT fully briefs the BIT members to achieve real acceptance and ownership of the enterprise at the ‘coal-face.’
    4.    Once sign-off is achieved, enterprise plans should be implemented, tracked and re-assessed at pre-determined times. These enterprises should not be tinkered with outside of the BOAT / BIT process.
    5.    Regular (monthly) group meetings are essential in order to track feedback on new and existing enterprises, manage resources, and to identify any potential unforeseen opportunities, capacity constraints, weaknesses and threats.


Barriers to Innovation

Some powerful barriers, in particular risk and scrutiny, have a specific impact on innovation. Managers are judged on their success and, in seeking to avoid criticism or failure, they can become conservative or resistant to innovative approaches, because innovation is inherently risky. In the not-for-profit sector, failures tend to happen in the full glare of public scrutiny, with consequent risks for the reputations and careers of all those involved. It can therefore be much easier to avoid criticism by not taking risks.
A Strategic Masterplan should acknowledge and examine a diverse range of barriers to innovation. These include risk aversion; failure of leadership; resource constraints; lack of direction and measurement; value conflicts; hierarchical attitudes; silo mentality; legislative limitations; accountability concerns; and resistance to change. Some are a function of necessary requirements for accountability, profitability, impartiality and transparency and cannot be easily swept away. There is no panacea. Finding ways to overcome such barriers will take creativity and determination.

Innovation is also anti-hierarchical—a new idea can come from any level within an organisation or from an external source. Organisations that are open to a range of ideas and suggestions and that encourage development and experimentation thus tend to be innovative. A narrow range of inputs and rigid, multi-tiered approval processes discourage innovation. The BOAT and BIT processes aim to streamline New Business Development without stifling innovation or undermining the value of experience. Innovation requires a tolerance for experimentation and thereby, by definition, for failure. For each innovative success there will be multiple unsuccessful attempts. Such failures have a value in demonstrating what does not work and why; and can contribute to later successful innovations. A culture that punishes failure is not conducive to innovation. It is the nature of management to not focus on the 90 percent of things that go well, but rather on the 10 percent of things that have problems. This mindset is personality dependent, and arguably, this contributes to a culture in which failures or shortcomings are regarded as unacceptable.  Conversely identifying failure early and acting upon it is a crucial part of developing an innovation culture.

Finally, innovation can be transformational or it can be incremental. Both types of innovation are important. Incremental innovation (e.g. streamlining processes) drives continuous improvement and a steady growth in productivity. Transformational innovation (such as introducing a new technology into a workplace) is often highly disruptive, but can lead to large leaps in performance and productivity. It will be the purpose of the Masterplan to provide the context for both incremental and transformational innovation, set out the strategies for both, indicate timetables for their development and implementation and create the benchmarks for tracking results.

It is important to recognise that innovation is more than just coming up with a good idea. Translation of an idea into a successful outcome is what is required for innovation to take place, and it is failure at this point that often causes an innovation culture to stall .

It is this level of innovation that is required to transform any start-up into a sustainable entity and ensure it not only survives but also thrives.

Past, present and future enterprises should be profitable, autonomous, and linked within a collaborative culture of continuous improvement and innovation, once identified and developed. While processes are crucial, all research shows that it’s the business strategy and people, rather than the process alone, that matters. There is little evidence that success rates for research and development productivity can be increased much by just having a new product or process. In fact research suggests these have absolutely no impact on performance or profitability. It’s the people that drive these that determine success or failure.

More specifically, the strategy is to create a Business Opportunity Analysis Team (BOAT) to identify appropriate, innovative new enterprise development opportunities to enable financial sustainability. It is advisable that all new enterprise proposals, regardless of their origin, would be put through the BOAT process once developed.

Growth from innovation is a fundamental business strategy. To succeed, there must be a corresponding innovation mindset across the organisation as well as in Research and
Development (R&D).  However, abdication of growth to R&D without support and involvement from the BOAT (including marketing and production support) means the growth initiatives are likely to fail. A Business Opportunity Analysis Team with the authority to drive innovation through collaboration, and thus growth and profitability is an essential part of any start-up Masterplan strategy.

Myers Briggs (MBTI) and Dow have identified - through a 10 year study - the five steps that drive effective New Business Development (NBD):

Five Steps to More Effective NBD:


1. Determine if R&D leadership is innovative enough:


Dow identified two main personality types: Starters, later characterised via the MBTI instrument as NTPs and NFPs  - preference for intuition, thinking / feeling and perceiving, and Finishers characterised as STJs - people with sensory, thinking and judging preferences.

The Starter Personalities are creative, intuitive, visionary and curious. They continually challenge the status-quo, and tend to be difficult to manage as well as difficult to follow
when in leadership roles without training. They tend to dislike details, agendas, may be viewed as impractical, and can be procrastinators.

In contrast the Finisher personality types are far more pragmatic, better focused, more respectful of authority, and more task-oriented. They like details, agendas, and are far
steadier, consistent workers. They are the people who get the job done. They capture the cash as they exploit the developed opportunity, but can be rigid and negative when faced

with a change to the status-quo. They may resist innovation with the attitude ‘if it ain’t broke why fix it?’

While Starter personalities suit Business Opportunity Analysis, both Starters and Finishers are clearly needed in BOATS, but require initial induction and appropriate management.

Because individual personality is determined to a large extent by genetics, researchers believe it must follow that organisational cultures are also determined to a large extent by genetics, when organisational culture is defined as the collective mindset of the leadership in that organisation. For BOATs to flourish the culture most likely needs to shift its mindset, and thus its culture toward an autonomous / collaborative culture.

2. Match leadership personalities to job roles:


People tend to perform best and gain the greatest job satisfaction in roles that enable them to use their natural gifts. Therefore, understanding the genetic nature of personality means it is critical to match the personalities of the leaders with appropriate job roles, otherwise productivity suffers dramatically.

Starter personality types are best suited to job roles involving innovating and developing, requiring them to operate in an area of ambiguity. These job roles include determining what new types of enterprises or products are needed to meet customers; needs, and then creating them and the marketing and sales plans they need.

Finisher personality types are best suited to growing and enhancing job roles that usually rely on using well established procedures to solve problems. These jobs include commercialising existing products, keeping plants running well, and implementing procedures. Both continuous improvement and incremental advances are hallmarks of Finisher roles.

When Finishers are asked to innovate, they typically fail and are miserable as well. Likewise, when Starters are asked to implement established procedures, at best they typically perform at a lacklustre level.

It is important to emphasise that there are no right or wrong personality types. All are needed, but in the right roles in the right balance.

3. Train and coach Rainmaker BOATs


Rainmakers are a specific type of BOAT that includes a majority of Starters and minority of Finishers who have been selected for their ability to innovate, think outside the square, gather information quickly  and morph one idea quickly into another.

Rainmakers should be trained to assess opportunities in the following ways:

    •    Making sure the new product concepts fit within the business. BOAT leaders use a ‘Gut Level Screen’ ensuring that the opportunities presented to them by the BOATs would truly excite top management from a stand-point of potential size and profitability, timing, geography, technology and markets.

    •    Visiting customers and stakeholders at their locations and plants, testing the draft propositions, determining the customers’ true functional requirements (which they often cannot articulate themselves), and analyzing the results.

    •    Building system cost-performance models of the way customers use products or services (including labor, capital and raw materials), both today and tomorrow - so the next generation of products is already on the drawing board. These results then need to be compared with potential new offerings based on both performance and cost, to determine whether the new business concepts will beat the best-performing competitors, and by paying greater attention to developing a sustainable competitive advantage by establishing exclusive intellectual property rights, or through commercial agreements

    •    Morphing the concept until a winning concept for commercialisation is identified, then reporting to upper management, while typically staying with the zone of top management’s Gut Level Screen

Typically the Rainmakers are likely to discover why the starting point idea should be shelved or even killed. This is a major problem a linear business development process - turning them into killing machines. Successful BOATs need a creative mindset which enables them to morph a starting point idea (statistically doomed to fail) into a winner.

Dow’s study found that the top performing Rainmakers BOATs uncover the real customer’s unmet needs (often unspoken, and sometimes unknown) along with the value of meeting those needs. In short, they morph the starting-point idea. Statistically 95% of the morphed ideas made money after commercialisation vs. the normal 11% odds of success from the end of the early stages of an NBD process.

New businesses are typically begun by innovative Starters. For those that do survive, there is far more work requiring Finisher skills (production, selling, accounting, safety,
quality, shipping and logistics) than Starter skills (innovating in R&D, marketing, advertising). Therefore, the leadership of most firms typically shifts over a period of time toward becoming a culture of Finishers, operationally excellent but no longer able to innovate at world-class levels. The end result is usually a sudden turn-over catastrophe, from which only 1 in 3 businesses recovers. Most organisations literally have a biological lifetime based on their natural ageing process as they gradually shift from a genetic Starter culture to genetic Finisher culture.

Understanding the largely genetic nature of personality should allow  any organisation to have subgroups of creative leadership composed of more Starters, even within a larger organisation that needs to be more heavily staffed with Finishers - allowing the business to be both low cost and highly innovative at the same time. This would create a remarkable people-based sustainable competitive advantage, making the organisation nearly unstoppable.

In the research it strongly suggests that managers who refuse to take the right actions based on the BOAT’s findings (or do not refute those findings with better information) they
should be reassigned. This requires fast and strong action from top management. Far too much is at stake financially. Another way to say this is that NBD managers who make bad decisions usually go on to make many more bad decisions if allowed to do so. Nothing is more damaging to the future success of an organisation than poor decision making by NBD management.

4. Ensure enough Finishers among non-leadership professionals:


Someone has to grow the opportunity to make money. The evidence suggests this requires a higher percentage of Finisher personality types within the larger group of Implementers, than within the BOAT group.

From the research to date  it appears that whereas BOAT groups should be 60% Starters, and 40% Finishers, the implementation group should be only 20-30% Starters with 70 -  80% Finishers.


Research shows that the leadership mix needs to be continually rebalanced with each businesses portfolio and product life-cycle, while the non-leadership groups among both should be primarily Finishers.   For a new organisation this means that the initial phase should be driven by the the R&D team, but once the model is implemented, tested and refined, it should be handed over to a team pre-dominated by Finishers, while the R&D team investigates and develops revenue streams derived from spin-off opportunities.

5. Review Middle Management’s Implementation Plan:


The BOAT’s final step is capturing the information in a clear presentation to the business management, describing why it fits the founder’s Gut Level Screen and why it will win. But then what? Sometimes middle management does the right thing and takes action to commercialise the new business opportunity.  Sometimes they legitimately ask for more information.

However, far too often (Stevens and Swogger found approximately half to two-thirds of the time) middle management fails to take the right actions. After a BOAT presentation with a recommended course of action, a manager should either agree with the information and take appropriate action, or disagree with the information, refuting it with better information and take a different course.

Either way all decision making should be evidence based, even if the initial line of innovation was prompted by a founder’s Gut Level intuition.

The research shows that there are two major categories of management failure from a BOAT:

    •    Management fails to shut down the work which the BOAT proved cannot succeed. In all of the cases where BOATs clearly showed why the starting ideas were doomed, and management tried to commercialise them anyway, failures occurred, often ending in massive write-offs involving hundreds of millions of dollars.

    •    Management fails to commercialise the positive morphed ideas from the analyses. The opportunity costs of missing out on new commercial products and services can be substantial. In both cases the financial impact of improving management’s actions is high.

A better fit of leaders’ personalities with job roles - especially managers who are Finisher types - is needed to understand the importance of Starters involvement when innovation is needed. Achieving an excellent fit between personalities and job roles is critical for all the business functions and leaders, not just within R&D.

With the odds of success for BOAT initiated projects being between 84% and 95% it is clear that projects identified by a BOAT should be implemented. Review of implementation plans must be periodic in order to raise implementation rates, dramatically capturing the otherwise lost opportunity cost of stalled projects.

While the BOAT team need to be dominantly Starter, the model requires the implementation staff (BIT) to be comprised of teams that are 70 - 80% Finishers, ensuring completion.

Pre-implementation action-planning meetings for middle management, with top management and the BOAT present are recommended. It is simple to measure whether or not the pre-implementation planning review meetings are taking place. It is also possible for top management to take fast and appropriate action based on the results from these meetings.

It is worth noting that Starters form less than than 5% of top managers, as they are usually lost early in their career, and they occur less than 200 times out of every 10,000 people.  The starter trait is emergenic - meaning that while it is a genetic trait, it isn’t inherited from one generation to the other, but instead arises from a lucky combination of a series of unrelated genes, that when all present create a highly intuitive,  innovative individual with the ability to think logically.

The attributes of a Starter cannot be learned, so no amount of creativity workshopping will turn someone into a Starter. Within the workplace, these individuals generate 9,500 times the revenue of their non-starter peers when placed in a conducive environment. When an organisation attracts Starters it needs to do all it can to keep them, and it needs to listen to their advice. Simply being creative is not enough, it is the ability to think through the logical steps for modelling or assessing an innovation that is crucial, so not all intuitive types, and not all creative types are suitable.

Elisabetta is the author of The Energy Code (2014, Motivational Press), The Infidel (2015, True North) Veritas (2015, True North) and is a Performance Expert with 30 years experience working with individuals and organisations world-wide.

Click here to visit her website

References:

Stevens, Greg A, and Swogger, Kurt; ‘Creating a Winning R& D Culture, Vol I and II’  Industrial Research Institute Inc, Jan- Feb 2009, pp 22- 50.
Nardi, Dario, The Neuroscience of Personality, Radiance House, Los Angeles, 2011.
Kirton, Michael. Editor. 1989, Adaptors and Innovators; Styles of Creativty and Problem Solving. Routledge, London.
Stevens, Greg, James Burley and Kurt Swogger; 2003 Dow Chemical Achieves Major Transformation of PO&E R&D Group: Personality-Oriented Aproach Improves NPD REsults. PDMA Visions XXVII, No. 3, pp 6-10.

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