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(Since Culture Eats Strategy for Breakfast anyway) — Let Them Eat Cake!

Originally written May 2011. Revised January 2018.

I am a passionate evangelist for "management innovation." This term was popularized by American management expert Dr. Gary Hamel in his great Harvard Business Review article, "The Why, What, and How of Management Innovation." It refers to an approach to leadership that allows ingenuity efforts to succeed. Once leaders have re-envisioned their own roles (as the "stand-out" leaders in the IBM CEO study did), the journey of "innovation management" can begin. But without this as the starting place, that of management "innovating itself," efforts to foster inventiveness elsewhere in these organizations will likely fail. This is key ingredient #1.

Key ingredient #2 is that leaders need to be clear that creating an innovative organization is a journey one commits to; this is the heart of "kaizen," or continuous improvement. ("What Does 'Innovation' Mean") Isolated incidents of new initiatives (whether this is a process improvement, or a novel product or service) does not an “innovative organization” make. The genius of certain organizations, those that can rightly be called innovative, is that the conditions and processes to do this repeatedly have been standardized. (Langdon Morris, Permanent Innovation and Agile Innovation).

Numerous guidelines are readily available on how to make organizations more innovative. However, having an overarching mental model for the key components and how they relate to one another can be helpful. –The one I came up with happens to very much resemble the form of a two-layer cake!

The Bottom Layer: A Solid Foundation:

There are the basic, fundamental structures and processes that are necessary to the stability of any organization. Think of it as the bottom layer of the cake. Vision and missions should be well understood and aligned; legal and fiduciary structures must be in place; clear accountability and communications systems are needed, and so on.

Once in place, this basic foundation requires regular assessment and maintenance in order to ensure ongoing organizational and fiscal health.

This layer must be solidly in place before adding the next, which contains the structures and practices that foster ingenuity. However, even if one's organization is on shaky ground, just as the successes of kaizen clearly demonstrate, integrating some continuous improvement programs among staff may help guide the organization to more solid ground. Regardless of whether an organization is ready to go fully to the next level, smart leaders engage their employees by soliciting their problem-solving and improvement suggestions.

Top Layer: Innovation Processes:

It is here that the structures and procedures specific to innovation are added and integrated into the organization, such as:

The continuous collection of and reward for ideas solicited from employees, customers and stakeholders
Formal vetting processes to determine which ideas to explore and which to shelve
Rapid-prototyping to test new ideas to ascertain quickly which ones should be developed
Pipelines for short, medium, and long-term projects, so that the organization has a mixed "portfolio" of experimental initiatives in order to diversify its investment and risk
Creating “Intra-preneur” programs that reward employees to spend a modest percentage of their time developing viable ideas that may benefit the organization
The implementation of systems such as Lean and Agile to improve efficiency, effectiveness, speed, collaboration, and learning cycles
Skunk works (independent "branches") and “Organizations within Organizations,” when the organizational structure or culture is not yet conducive to integrating innovative processes
Practices that encourage both formal and informal cross-functional collaboration

"Management innovation" practices (see opening paragraph):

Systems and metrics that reward managers for experimentation and taking some risk, and not just ROI
Open communications systems that increase transparency, facilitate cross-functional collaboration, and that can push some decision-making downward
Implementation of formal roles such as "innovation champions" and MBWA (Management by Walking Around) practices

And now, for the final element…

The Icing: Daily Operations Re-thought!!

The icing or frosting covers and runs through the center of the two-layer cake, just as culture covers and permeates an entire organization. Yes, some people prefer their cake plain, with no icing. But in this model, frosting is not an option!

The icing, or culture, is the “special sauce” or "glue" of an organization that will make, or break, any initiative. In this case, innovation efforts.

As the saying goes, "Culture eats [even the best] strategy for breakfast."

What many leaders don't understand is that creative thinking is not just a switch that can be turned on upon request, and then off for the remainder. The creative lens is a more fluid way of looking at the world. It is the one that we were all born with — before we began suppressing it around adolescence because our peers thought it too "weird" to think and speak imaginatively. Conformity became the path to fitting in and finding acceptance. To compound this, convergent, inside-the-lines/box thinking is generally reinforced by our public-school systems, religious institutions, and workplaces.

So, it doesn't work to ask employees to "turn on" their best creative thinking at a brainstorming session, but to then spend most of their working hours staying within the lines of the accepted cultural norms and adhering to "how things are done," lest they be reprimanded in some way. This simply produces " cognitive dissonance" — not a safe environment that is conducive to original thinking.

It is no coincidence that the most innovative companies have cultures that are anything but staid. They are designed to encourage playful, divergent thinking. (Southwest, Google, Virgin Air, IDEO, etc.) Creative thinking is a core value and encouraged as a norm. Their approach is both clear to see, and effective.

In organizations committed to increasing innovation, teams should be rewarded for coming up with creative approaches to how everything is done, from:

Recruiting
On-boarding
How meetings are run
The design and delivery of training
Communications
How staff is rewarded for pushing through tough deadlines
Celebrations
And so on….

Creative, experimental approaches should be encouraged for all daily, "mundane" operations by those who have the inspiration and imagination to re-envision them. Think of it as creativity applied to designing the organizational culture.

(There are some great ideas for this in John Putzier's wonderful book, Get Weird: 101 Innovative Ways to Make Your Company a Great Place to Work.)

In closing…

When it comes down to it, most leaders are not prepared to do what is necessary to create innovative organizations. Their comfort zones are generally the top-down approaches to management which, then reinforced by the culture, allows them to retain full control and, they may think, "risk less." However, this system is antithetical to fostering cultures where divergent thinking can thrive. Such organizations may be "doing fine" at present time, but they will not be innovative or as successful as they might have been, and they certainly will be more vulnerable to waning competitiveness going forward.

However, for those who are committed to doing whatever it takes to lead and thrive into the future, the good news is that some great road maps have been created by those who have been part of the many success stories. Creative thinking is contagious. Once the systems that foster innovation are put in place, and the culture is designed to stimulate creativity, permanent innovation becomes possible — with benefits that keep on giving.

Build it, Bake it – And they will come!

"The first step in winning the future is encouraging American innovation. None of us can predict with certainty what the next big industry will be or where the new jobs will come from. Thirty years ago, we couldn’t know that something called the Internet would lead to an economic revolution. What we can do — what America does better than anyone else — is spark the creativity and imagination of our people." –President Barack Obama, January 25, 2011

There are two very practical reasons that I am so passionate about cultivating environments that support creative problem-solving and innovation. One of these is that, as an American, I care deeply about the resurgence of a healthy U.S. economy with full employment. The second is that, as Albert Einstein pointed out, we cannot use the same kind of thinking that created our problems to solve them, problems which now include great social-political and global environmental threats.

I was already concerned about the direction business and management-as-usual were taking us, when two different influences inspired me to launch Kowabunga! at the end of January 2011.

One was the 2010 IBM global CEO study I had read that previous fall, and which has been frequently cited in this blog. It reports that top managers from around the world said that creative thinking is the #1 most important leadership ability needed to tackle the rapid changes in global markets, technology, social-political issues, and environmental challenges. Disturbingly, 51% of them admitted their organizations were not prepared to meet the challenges.

The second was President Obama’s State of the Union address before Congress on January 25th, in which he referred to “innovation” 17 times. Following this speech, the Obama Administration released its ambitious Strategy for American Innovation in February 2011. The introduction reiterates that, "[In order to] create the jobs and industries of the future… the U.S. must out-innovate, out-educate, and out-build the rest of the world." Executive Summary or Full report.

Most would agree the Republican-led House of Representatives, further pressured by minimalist government Tea Party forces, has made it extremely difficult for many of the president’s initiatives to pass.

So, what progress has been made on his plans to foster more innovation on a wider scale in the U.S.? In a Forbes Magazine article, Todd Park, the U.S. government's first Chief Technology Officer offers his perspective in answer to this question.

Frankly, I was somewhat surprised to read all that has been accomplished, given the numerous challenges that Congress has placed before the Obama Administration. Of course, you will be your own judge regarding the extent of the achievements cited below. I noted with particular interest important improvements at the U.S. Patent Office that haven't received much airtime. These include considerable shoring-up of staffing, streamlining, and prioritization in order to expedite the vital patent application process.

Kowabunga's next post will summarize a recently released report conducted by Information Technology and Innovation Foundation (ITIF) that compares the two presidential candidates' recommended approaches to fueling increased innovation in the U.S..

What Efforts Has President Obama Made While In Office To Encourage Entrepreneurship And Innovation?

Todd Park, United States Chief Technology Officer

President Obama’s efforts to fuel innovation and entrepreneurship are wide-ranging and unprecedented. As Chief Technology Officer of the United States (a position created for the first time by President Obama), I see these efforts first-hand throughout the Administration— and as an entrepreneur who cofounded a company at age 24 and took it public ten years later, I have a special appreciation for how startups and innovation create jobs and prosperity across the country.

Let’s focus on three areas where the President’s leadership is making a huge impact: promoting high-growth entrepreneurship, helping accelerate technology breakthroughs, and investing in the “building blocks” of innovation. This is by no means a comprehensive list of every Administration effort to foster innovation across the United States, but every example below is specific, impactful, and well underway.

PROMOTING HIGH-GROWTH ENTREPRENEURSHIP:

Unlocking capital: This spring President Obama signed the Jumpstart Our Business Startups (JOBS) Act (http://wh.gov/QBy), a bipartisan bill that allows startups to raise capital from investors more efficiently, among other initiatives, by allowing small-dollar crowdfunding investments (http://wh.gov/3Buf), expanding mini-public offerings, and creating an “IPO on-ramp” consistent with investor protections. This is on top of an Administration commitment of $2 billion to match private investment in high-growth companies over the next five years through vehicles such as Impact Investment Funds (http://1.usa.gov/rfYCI8) and Early Stage Innovation Funds (http://1.usa.gov/JFf36a). The Small Business Investment Company program just had a record year in 2011 of helping over 1,000 businesses get $2.6 billion in capital.

Nurturing entrepreneurial talent: President Obama has taken executive action to make it much easier for graduates to manage student loan debt (http://wh.gov/uc1) and pursue an entrepreneurial path (http://wh.gov/TX5). The Administration has launched new mentorship and training opportunities for thousands of entrepreneurs starting new high-growth companies—including military veterans (http://1.usa.gov/NHNTE8), undergraduate engineers (http://1.usa.gov/qJOiWK), and clean energy entrepreneurs (http://1.usa.gov/fm47Pr) and students (http://1.usa.gov/o0kdfS) — and is engaged in sustained efforts to attract and retain immigrant entrepreneurs who create jobs here in the US (http://1.usa.gov/NglcgG).

Speeding up “lab to market” research: The President has directed all federal research agencies to help accelerate innovation (http://wh.gov/Tuh) by speeding up grants to startups. The National Science Foundation launched an Innovation Corps (http://1.usa.gov/pQSt45) to get teams of scientists out of the lab and starting new companies. Over twenty federal agencies have cooperated to fund regional entrepreneurial ecosystems (http://1.usa.gov/qV9X0e), and are dramatically streamlining patent licenses for entrepreneurs in clean energy (http://techportal.eere.energy.go…) and biotech (http://www.ott.nih.gov/startup).

Liberating data to fuel innovation: The Administration has launched a series of Open Data Initiatives — in health (http://wh.gov/5bg), public safety (http://wh.gov/v9W), education (http://wh.gov/uDZ), and energy (http://wh.gov/OGKY) — to stimulate entrepreneurial innovation using newly unleashed data from government and other sources. As a model, decades ago, the National Oceanic and Atmospheric Administration (http://noaa.gov) began making weather data available for free electronic download by anyone. Entrepreneurs utilized these data (http://data.gov) to create weather newscasts, websites, mobile applications, insurance, and much more. Today, entrepreneurs are using freely available government data and building apps and services that help Americans in an expanding number of ways – e.g., apps and services that help people find the right health care provider for their family, identify the college that provides the best value for their money, save money on electricity bills through smarter shopping (http://wh.gov/REo), keep their families safe by knowing which products have been recalled, and much, much more.

The Startup America Partnership: In response to the President’s call to action to support American entrepreneurs, the nonprofit Startup America Partnership (http://s.co) has mobilized well over $1 billion in private-sector commitments to help support startups and has launched entrepreneur-led coalitions in Startup Regions (http://www.s.co/regions/map) across the country.

HELPING ACCELERATE TECHNOLOGY BREAKTHROUGHS:

Biotechnology: The National Institutes of Health (NIH) has launched a new National Center for Advancing Translational Sciences (NCATS) (http://www.ncats.nih.gov/) to speed up the development of new diagnostics, treatments, and cures by building new bridges between the lab and clinic.

Nanotechnology: The National Nanotechnology Initiative (NNI) (http://nano.gov) is investing in areas such as nano-electronics, to foster a revolution in computing comparable to the transition from the vacuum tube to the transistor.

Advanced manufacturing: President Obama launched the Advanced Manufacturing Partnership (AMP) (http://1.usa.gov/Q8uopK), a national effort that brings together industry, universities, and the federal government to invest in the emerging technologies that create high-quality manufacturing jobs and enhance our global competitiveness (read the AMP Steering Committee report: http://wh.gov/xTFw). As a first step in building a National Network for Manufacturing Innovation (http://1.usa.gov/N0izNg), the Administration is funding a pilot institute for additive manufacturing (3-D printing) (http://1.usa.gov/HhHgBC). The President has also launched a National Robotics Initiative (http://wh.gov/rEt) and a Materials Genome Initiative (http://wh.gov/yF4) to help accelerate manufacturing innovation.

Space exploration: Guided by the President’s National Space Policy (http://wh.gov/3HB), NASA, the Department of Defense, and other agencies are advancing U.S. capabilities and expanding American industry’s role in developing next-generation applications — including the historic docking of the SpaceX Dragon spacecraft (http://1.usa.gov/Nk2qQD) with the International Space Station.

Health care technology: Building on the Recovery Act (http://wh.gov/recovery) and the Affordable Care Act (http://wh.gov/healthreform), the Administration is continuously engaged in major efforts to promote health information technology adoption, reform payment incentives to reward value instead of volume, and liberate health information for the benefit of patients while protecting privacy.

Educational technologies: To advance technologies that will transform teaching and learning, the President launched the Digital Promise partnership (http://1.usa.gov/Ole1n1) and championed a new Advanced Research Projects Agency for Education (ARPA-ED) (http://1.usa.gov/h9kob4).

Clean energy: The Administration is working to accelerate game-changing energy breakthroughs by funding the Advanced Research Projects Agency – Energy (ARPA-E) (http://arpa-e.energy.gov/) and Energy Innovation Hubs (http://1.usa.gov/NHPOII), while pursuing 21st century grand challenges like SunShot (http://1.usa.gov/jignu6) (making solar energy cost-competitive with fossil fuels) and EV Everywhere (http://wh.gov/XFe) (making electric vehicles as affordable and convenient to own and drive as today’s gasoline-powered vehicles).

INVESTING IN “BUILDING BLOCKS” OF INNOVATION:

Research and development: The market innovations that drive economic progress so often depend on breakthroughs in fundamental science. President Obama has implemented the largest increase in federally funded research and development (R&D) in history (http://1.usa.gov/h1cg9G), and is making continuous investments to fuel “Big Data” (http://1.usa.gov/OlfERF) research and double funding for key basic research agencies.

Education: The President has led the charge to provide every K-12 student in America with a world-class education, including the historic Race to the Top (http://1.usa.gov/2rYyB0) investments to drive comprehensive reform at the state and district levels. The Investing in Innovation (I3) fund (http://1.usa.gov/Nk4R5x) supports school districts and nonprofit partners to develop, validate, and implement innovative evidence-based practices that accelerate student learning and achievement. And the President has doubled down on education in science, technology, engineering, and mathematics (STEM) by launching a STEM Master Teacher Corps (http://1.usa.gov/Olgpdu) along with public/private investments to scale up high-quality STEM programs (http://changetheequation.org), prepare 100,000 STEM teachers over the next decade (http://wh.gov/tZl), and graduate 10,000 more engineers every year (http://1.usa.gov/ppgPfX).

Internet: The President signed legislation to invest $7 billion in broadband infrastructure, computers, and training (http://www.broadbandusa.gov/) for consumers and businesses nationwide, and has moved to dramatically expand high-speed wireless service for consumers and first responders through both direct executive action (http://1.usa.gov/Olh0M9) and legislation (http://wh.gov/l17z). Through the US Ignite partnership (http://1.usa.gov/OlhmCt), the Administration has also laid the groundwork for next-generation ultra-fast broadband networks. And during the national debate over the Stop Online Piracy Act (SOPA) and related legislation, the Administration made clear that the important task of protecting intellectual property online must not threaten an open and innovative internet (http://1.usa.gov/Nk5P1S).

Smart grid: To build a 21st century electric system, the President led the charge to make over $4.5 billion in smart grid (http://smartgrid.gov) investments for electricity delivery and energy reliability modernization, along with new smart grid initiatives to empower consumers (http://wh.gov/DpJ), improve the reliability of the electric grid, and spur innovation.

Patent system: President Obama signed the bipartisan America Invents Act (http://wh.gov/gOT) after nearly a decade of efforts to reform the nation’s outdated patent laws. The new law is helping entrepreneurs and inventors avoid costly delays and unnecessary litigation so they can focus instead on innovation and growth.

Again, this list is not comprehensive — for more details, check out the White House Startup America Initiative (http://1.usa.gov/xmHjcs) and the President’s Strategy for American Innovation (http://1.usa.gov/9bT9XU). And I have barely touched on all the ways that President Obama has fostered massive innovation within government, from unprecedented use of prizes and challenges (http://wh.gov/ho3) to the new Presidential Innovation Fellows program (http://wh.gov/innovationfellows) that pairs top innovators from outside and inside government to implement cutting-edge solutions for the American people.

To stay up to date on President Obama’s innovation agenda, you can follow me on Twitter @todd_park and @whitehouseostp.

I’m actually taking great liberties with the classic quote, “Life is a banquet, but most poor suckers are starving to death!" from Patrick Dennis’s book and Broadway hit, “Auntie Mame.”

My point being that although there are countless ways to engage our creative problem-solving brains to innovate day in and out, I am not optimistic that the majority of Americans in the business, non-profit, or governmental sectors will access this cornucopia before a lot more damage is done to our economy, environment, quality of life, and future potential.

For many, the word “innovation” is just a buzzword. They fail to understand that innovation is a state of mind and an approach, not a commodity that one can just order up, like a pizza, or flip on with a switch. Thinking that one can just make a few minor adjustments within one’s organization to become innovative is like having an argument on the cell phone while driving 90 miles an hour to get to a retreat center, and expecting serenity or enlightenment to be waiting at the door upon one’s arrival – It just doesn't happen that way.

And this is why it is projected that by the year 2020, only one out of five S&P 500 companies will still exist (findings of a comprehensive study published in Creative Destruction by R. Foster and S. Kaplan). The majority of companies simply will not have adapted to the changing world, and will therefore make themselves vulnerable to being taken over, sold off, broken up, or bankrupted.

I’m currently listening to the audiobook, That Used to Be Us: How America Fell Behind in the World It Invented and How We Can Come Back, co-authored by international journalist Thomas Friedman (author of the blockbuster The World is Flat) and American foreign policy professor Michael Mandelbaum. Like the authors, I consider myself to be a “realistic optimist.” By which we mean that it is only by clearly taking in the “bad news” — the looming threats facing our companies, institutions, and economy — that we have any chance to do what is necessary to adapt our mindsets and correct our course.

Like Friedman and Mandelbaum, I too, still believe in “Yankee Ingenuity” and that we have the collective capacity to rise to the occasion and deal with great challenges, just as Americans did in The Great Depression, World War II, and the race to the moon. But we can’t even begin until we pull our heads out of the sand.

When it comes to business, I am enough of a capitalist to believe in the survival of the fittest. On one hand, I believe that companies led by short-sighted, arrogant leaders and managers should fail. It’s best for them to get out of the way to make room for other ventures led by those who are wiser, more humble, and better attuned to both the world around them and to the intelligence and talents within their ranks.

The tragedy won't be the auctioning off of the brick and mortar and mastheads of these companies themselves over the next decade. Rather, it will be the human costs resulting from the bad choices made by those leaders: the millions of talented people who will lose their jobs and livelihoods, as well as the loss of tax revenues that will further cripple our society.

And then “four out of five” of these US companies will fail?! – Even if it were half that (e.g. 51% of CEO's in the 2010 IBM CEO study expressed concerns regarding their companies' futures for lack of creative thinking abilities) — what part of economic catastrophe do we still not understand?! Neither manufacturing jobs or increasingly outsourced pink and white collar services will be returning from our lower-cost overseas competitors in any significant numbers. That leaves American creativity and inventiveness to carry our economy forward. Yet we allow Brazil, India, and China to far outspend us in innovation (Boston Consulting Group Report, 2010) as the previously unchallenged lead we held in patent application filings now steadily shrinks. http://economix.blogs.nytimes.com/2010/10/06/china-poised-to-lead-world-in-patent-filings/ & http://www.wipo.int/pressroom/en/articles/2012/article_0001.html

Even among those in management who are talking about innovation, many don’t seem to grasp the irrefutable causal relationship between management style and innovative culture. I don’t believe that most American managers or the consulting professionals upon whom many of them rely, understand this fundamental reality: sustained innovation cannot exist in hierarchical, siloed, watch-your-back organizations.

“Management innovations” are necessary in order for other forms of innovation to see the light of day. It has been stated in numerous ways throughout these blog-posts that an organizational culture that fosters an innovative mindset and which produces winning results requires authentic mutual trust and respect throughout the organization. As the stand-out CEOs in the IBM 2010 Global CEO survey (“Capitalizing on Complexity”) indicated, trust and innovation are the means and ends and involve:

Cross-departmental and external stakeholder collaboration
Efficient and open communication in which mistakes are valued as educational opportunities rather than something to be covered up or blamed on someone else
Comfort with ambiguity, experimentation, and trial by error
Encouragement to question the status quo for the sake of continuous improvement
Processes and reward systems for fully engaging employees in contributing ideas for continuous improvements and increasing problem-solving autonomy throughout the ranks.

All of these necessitate a collaborative, versus a command-and-control style of management. Evidence abounds that the most successful U.S. companies (like Southwest Airlines, Google, and Apple) flatten their organizations and, far more than average companies, value and foster both the creativity and critical analysis of “whole brain” thinking at all levels.

Yet evidence and logic do not persuade many in leadership whose perceptions continue to be clouded by barriers of their own making. I am not optimistic that most organizational leaders in the U.S. are willing to trust and develop their employees’ abilities enough to relinquish control, because, as is said in Twelve-Step programs, their pain isn’t deep enough yet. –If only their poor choices wouldn’t inflict so much pain on the rest of us.

However… despite my concerns expressed above, as a dedicated realistic optimist, I will continue to focus my attention not on those who stubbornly fail to grasp the paradigm shifts that are necessary, but rather on the great innovators in all walks of life working with their creative muses and collaborating all over the world. I will feed my spirit and mind by exploring and learning along with those equally excited by the possibilities and the array at the banquet table!

Bon appetite!

Mangia!

The next post will further explore management innovation with a review of Gary Hammel’s great Harvard Business School article, “The Why, What, and How of Management Innovation.”

Check out Kowabunga! Riding the Wave of Organizational Creativity & Innovation!

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