Archive for leadership
The Quest for Profit: The Mother of Invention, or Its Kidnapper?
Posted by: | CommentsAs we discuss in Conquering Innovation Fatigue, the profit motive can be important for inventors but is often not the real incentive behind the quest to invent. Steps that eliminate the opportunity to profit from invention, though, can be serious barriers to a nation’s innovation potential. The profit motive can be important for prospective innovators. However, a focus on profits can be utterly destructive to innovation within a corporation, where the incentives to those who lead other would-be innovators can create new barriers that kill the innovation future of the company. Ironically, what can be a helpful incentive for innovation to an individual can easily become a disincentive once distorted by the internal workings of a corporation. This is illustrated in recent analysis from Clayton Christensen. See an overview in the article “Clayton Christensen: How Pursuit of Profits Kills Innovation and the U.S. Economy” at Forbes.com. Christensen argues that ratio-based metrics for profitability distort corporate thinking and reward behavior that ultimately destroys the future of the corporation by creating short-term benefits in apparent profitability. We illustrate a related problem in the book with the Apple Tree Analogy, in which metrics for short-term profitability for an apple harvester get a dramatic boost when the apple trees are toppled, making it much faster to harvest the fruit. The future, though, becomes barren.
Corporations need to carefully consider the metrics they use for profitability, as Christensen teaches, and unlearn some of the sacred concepts they were given in business schools. They should also go one step further an consider the impact of their metrics on not just the long-term growth of the company as a whole, but also the individual innovator and the innovation culture within the company. Listening to the voice of the innovator inside the corporation should be an important exercise for its top leaders.
Griffon Aerospace: Lessons from the Pilot Behind a Fleet of Low-Cost Unmanned Aircraft
Posted by: | Comments
I recently had the privilege of meeting Larry French, CEO of Griffon Aerospace (also see Wikipedia’s article on Griffon). He is an inventor, an entrepreneur, a pilot, and the brains behind several major product innovations, including the Lionheart 6-passenger airplane and a host of unmanned aircraft that are disrupting the aviation world with their high performance at very low cost.
The Outlaw
The Lionheart
Larry’s journey as an entrepreneur and innovator has required that he face and overcome many of the innovation fatigue factors we describe in Conquering Innovation Fatigue. The ever-changing burdens of government regulation can be discouraging and expensive, for example. But he has found ways to cope, painful as it can be. The early years were truly difficult and required a lot of faith to keep the business alive. Now it is highly successful with over 50 employees and a bright future with valuable products that are changing the way we approach war, with far less risk to human pilots and crews. They can thank the pilot behind Griffon, the visionary innovator, Larry French.
Larry had this to say about launching his businesses:
For me I’m a “build it and they well come” business guy. I initiated and sustained the Lionheart development and marketing on 90% passion and 10% personal/investor funding. Without that 90% passion I would not have attracted believers willing to give me some of their money. Same with our current next generation of UAVs. The UAV market is in its infancy which means there are so many diverging opportunities that trying to select which of all the potential doors a winner is behind is nearly impossible. So, after reasonable absorption of the market trends, I follow my passion for the next aircraft. Fortunately now, unlike 10 years ago, I have the resources (passion, people, facilities, and finances) to convert idea to product.
Innovation never stops at Griffon. One of the next challenges on the aviation horizon is the heavy fuel engine, an engine that can burn heavy fuels such as diesel fuel or biodiesel instead of the lighter aviation fuel that can be so expensive in foreign theaters. (One energy expert told me that the delivered cost of aviation fuel in Afghanistan is $600/gallon. Wow. With diesel, local fuels could support the aircraft engine and greatly reduce costs. As heavy fuel engines emerge, I expect to see them used successfully by Griffon Aerospace, with their own added inventions.
Local Motors: Successful Crowdsourcing as a Design Tool for Innovation
Posted by: | CommentsDuring the CoDev 2011 conference in Scottsdale, Arizona, I was impressed with a speech given by a local CEO, John (“Jay”) Rogers of Local Motors in Chandler, Arizona. This small company designs exciting new vehicles using design contests that are open to the public. Their rapidly growing community (12,000 participants so far) contributes designs and feedback to help in the selection of potentially successful concepts that Local Motors will then build locally in a microfactory, with final customization of the appearance being achieved with an environmentally friendly and durable vinyl wrap that eliminates the need for paint and gives the owner freedom to have a unique look. The final assembly is done with hands-on help from the new owner, who becomes intimately familiar with the vehicle and with its maintenance.
I was impressed enough with what I heard that I changed my evening plans to drive down to Chandler and attend an open house at Local Motors hosted by Jay himself. He allowed photography, so below you can see some views of Jay speaking and some shots of his vehicles in various stages of construction. The Rally Fighter that I am standing by sells for $59,000. It’s an incredible rugged, safe, and fun car that is legal on the road but a load of fun off road as well. It’s able to do very nice jumps.
These cars weigh much less than other cars their size, offering a huge bonus in mileage. Great engineering and innovation at many levels makes this possible.
The microfactory concept involves assembly of a small number of vehicles at a time in sustainable, efficient processes.
Jay Rogers demonstrates a $300 crimping tool
Jay shows the wire harness for the Local Motors Rally Fighter
Jeff Lindsay in front of an early Rally Fighter from Local Motors
Inside a Rally Fighter
Initial frame, before welding
A portion of the body, before the custom vinyl wrap is added.
The frame. Remarkably strong, protective, and light.
A portion of the frame.
This baby can jump.
Coming together....
A sweet car: the Rally Fighter by Local Motors. This was one of the first vehicles produced.
“Quorum sensing” refers to the abilities of some organisms, especially bacteria, to sense the presence of others and begin collective action such as forming a biofilm. It’s a critical area of research in immunology. There are also lessons from quorum sensing that need to be applied to business and innovation. Quorum sensing, in a sense, results in “intelligent” collective decisions that are not made by a central brain but through the sharing of signals or other information between individuals, none of whom sees the big picture or understands the meaning of all the available data. The free market’s mechanisms for optimizing supply and demand through the collective information transmitted by price is one analogy in the business world. But let’s look at lessons specifically from the quorum sensing of one ant species that lives its life in a hostile, frequently shifting, rocky environment–sound familiar?–where constant change is required. This comes from Wikipedia’s article on Quorum Sensing:
Colonies of the ant Temnothorax albipennis nest in small crevices between rocks. When the rocks shift and the nest is broken open, these ants must quickly choose a new nest to move into. During the first phase of the decision-making process, a small portion of the workers leave the destroyed nest and search for new crevices. When one of these scout ants finds a potential nest, she assesses the quality of the crevice based on a variety of factors including the size of the interior, the number of openings (based on light level), and the presence or absence of dead ants. The worker then returns to the destroyed nest, where it will wait for a short period before recruiting other workers to follow her to the nest she found using a process called tandem running. The waiting period is inversely related to the quality of the site; for instance, a worker that has found a poor site will wait longer than a worker that encountered a good site. As the new recruits visit the potential nest site and make their own assessment of its quality, the number of ants visiting the crevice increases. During this stage ants may be visiting many different potential nests. However, because of the differences in the waiting period the number of ants in the best nest will tend to increase at the greatest rate. Eventually, the ants in this nest will sense that the rate at which they encounter other ants has exceeded a particular threshold, indicating that the quorum number has been reached. Once the ants sense a quorum, they return to the destroyed nest and begin rapidly carrying the brood, queen, and fellow workers to the new nest. Scouts that are still tandem-running to other potential sites are also recruited to the new nest and the entire colony moves. Thus although no single worker may have visited and compared all of the available options, quorum sensing enables the colony as a whole to quickly make good decisions about where to move.
The standard Corporate model of centralized new product development and decision making has its advantages, but also many limitations. When rapid growth or adaptation is necessary, innovation often works best when many minds can contribute their talents, insights, networks, and scouting activities to the search for fruitful new places to colonize. If decisions are fully centralized, they take forever and many good spots will be ignored. More rapid and efficient pursuit of innovation requires distributed authority and the involvement of many and systems that can tap and respond to the efforts of many without the endless waiting for one all-knowing top dog to sift through the data and make a decision. How flexible is your organization, really? How distributed and dilute is the power to act on innovation opportunities? What systems do you have to tap the knowledge, skills, and networks of all employees?
Horn of Innovation Schematic
The Horn of Innovation vs. the Funnel
The Tsunami of External Fatigue
Posted by: | Comments
Innovators and business leaders doing their best to achieve commercial success need to understand the set of innovation fatigue factors that they face. These include personal factors due to the bad behavior of individuals; corporate or organizational fatigue factors reflecting inadequate systems, culture, or flawed judgment; and external fatigue factors due to the burdens of legislation, taxation, and challenges in the patent system, for example. The first two categories are factors where innovators and corporate leaders are in charge. The external category is the most difficult one because the challenges come from outside our sphere of influence, where the best efforts on our part can still face seemingly insurmountable challenges beyond our control.
One of the effects of uncertainty regarding the regulatory climate that business faces is a dangerous reduction in venture capital that is often needed for start-ups to succeed. Consider this ominous news story from Yahoo! about the drop in venture capital funding recently:
Venture capitalists poured less money into U.S. startups in the third quarter and split this among more companies, signaling that investors are trying to be more economical with their funds.
According to a study set to be released Friday, startup investments declined 7 percent to $4.8 billion in the July-September period, compared with $5.2 billion invested during the same three-month period in 2009. A total of 780 startups received funding during the quarter — 9 percent more than the 716 companies that took slices of the investment pie last year.
The study, which was conducted by PriceWaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters, said that much of the decline stemmed from a drop in large investments in clean technology. Funding in clean-tech startups, which include alternative energy, recycling, conservation and power supply companies, has been mercurial lately. It fell every quarter last year compared with the previous year, but has been climbing this year — until the third quarter.
This is a genuine red flag, consistent with many red flags that we are seeing. The co-founder of Home Depot, for example, recently criticized the federal government in an open letter to President Obama in the Wall Street Journal (Oct. 15, 2010), explaining that Home Depot, founded during a past recession and now providing over 300,000 jobs to Americans, could never have been successfully founded in today’s climate where government, in his opinion, seems set on vilifying and punishing business rather than helping it to succeed.
We opened the front door in 1979, also a time of severe economic slowdown. Yet today, Home Depot is staffed by more than 325,000 dedicated, well-trained, and highly motivated people offering outstanding service and knowledge to millions of consumers.
If we tried to start Home Depot today, under the kind of onerous regulatory controls that you have advocated, it’s a stone cold certainty that our business would never get off the ground, much less thrive. Rules against providing stock options would have prevented us from incentivizing worthy employees in the start-up phase—never mind the incredibly high cost of regulatory compliance overall and mandatory health insurance. Still worse are the ever-rapacious trial lawyers.
Meantime, you seem obsessed with repealing tax cuts for “millionaires and billionaires.” . . . The wealth that was created by my investments wasn’t put into a giant swimming pool as so many elected demagogues seem to imagine. Instead it benefitted our employees, their families and our community at large.
Business leaders and innovators face many new burdens and uncertainties that can crush delicate start-ups and even thriving businesses. Increasing the burdens right now, whether through more regulations, higher taxes, or other measures with unintended anti-business consequences, seems likely to only increase innovation fatigue at this critical time in our nation’s history. I urge our leaders to carefully consider how small companies and start-ups are being affected, and how venture capital will be affected, by the changes that are being proposed and by the actions they’ve already taken.
It’s time for government to listen to the voice of the innovator.
Fighting Past Fatigue, Venture Capitalist Style
Posted by: | CommentsI was reviewing some information from one Venture Capital firm that described their annual efforts. Far from the laid-back lifestyle that some people imagine, this successful VC firm spent much of their year traveling to meet with over 6,000 companies. A few hundred would be selected and screened more carefully, and then a dozen or so might be selected for funding. Whew, what an exhausting funnel. But they are looking for gems in the rubble of entrepreneurial activity, most of which is bound for failure.
The experience of skilled venture capitalists points to a few key issues that all of us can apply to increase the odds of success in our entrepreneurial efforts and help us be more selective and less fatigued in filling the limited funnels of our own innovation efforts. Mike Alder, one of my favorite gurus of start-up success, now head of the Technology Transfer Office at Brigham Young University, once told me that the most important thing in his experience was the management team. Great technology with a dysfunctional or incompetent team will go nowhere. It takes a good team and especially a good leader to have a serious chance of success. That’s been our experience also at Innovationedge, where we have worked with a number of start-ups to assist them in commercialization (though most of our focus is on helping larger companies with their new product and innovation efforts).
Inc. Magazine has a valuable little piece, “6 Thoughts Inside the Mind of a Venture Capitalist” by John Warrillow. Read the whole article, but here are the six key questions that many VC people consider when they hear a pitch. Even if you never deal with the VC community, you should be using most of these questions as you evaluate your own entrepreneurial activities and plans.
1. “Why you?” (Are you uniquely qualified to play in this space? Do you have the expertise it takes to have credibility and a chance to succeed?)
2. “Should your concept really be its own product?” (Or is it just a new feature for an existing product? If it’s the latter, you should be licensing your product to the existing players in the market, not launching a new one.)
3. “How much will it cost to get someone to buy your product?” (I’m often amazed at how many start-ups haven’t carefully considered this. Details of distributing the product, for example, are often neglected. Demand for the product is almost always wildly exaggerated.)
4. “Can I protect your idea?” (If you want to sell your company or license your invention and lack means to prevent direct copying, you’ve got an uphill battle. One VC leader told me that they are simply much more interested in technology with a patent, even if the patent isn’t rock solid. Of course, sometimes know-how from proprietary research can give you a hard-to-imitate-lead without a patent. Sometimes.)
5. “How much money do I need to invest before your company will be worth more than it is today?”
6. “Can I fill the holes on your management team?” (A related question: Are you located in a place that high-powered business leaders would never move to? Can I relocate you to a more interesting area?)
The questions begin and end with consideration of the qualifications of the team and its leader. If you sink in that area, the business isn’t going to float.
Screen your projects with the VC lens, and you’ll be less likely to plunge into futile innovation fatigue.
The Summer 2010 issue of American Educator (a publication of the American Federation of Teachers) ably illustrates one of the lessons we teach in Conquering Innovation Fatigue: metrics to drive performance can have unintended consequences that may actually hurt rather than help. Indeed, unintended consequences are a major theme of our book, as we explore the problems arising from metrics, corporate and government policies, corporate innovation initiatives, laws, taxation policies, and other factors, all of which can contribute to innovation fatigue.
In terms of education and the danger of improper metrics, Linda Perlstein’s article, “Unintended Consequences; High Stakes Can Result in Low Standards,” examines a highly celebrated school in Annapolis, Maryland that received media attention and praise for seemingly miraculous success in education. The new principal arrived in 2000 to find Tyler Heights Elementary School in a dismal state with only 17% of its students getting satisfactory scores on the state test. She began redirecting efforts in the school to address this problem. Eventually her laser-focus efforts paid off, delivering the stunning success of 90% of third-graders performing well on the Maryland State Assessment, when only 35% of third-graders did so two years before. Several newspapers recognized the amazing turn-around and people at the school celebrated the success. But was it real success?
To achieve good performance on the Maryland State Assessment, education for the children was largely focused on how to do well on the test. Students learned how to write BCR’s (“Brief Constructed Response”) to deal with expected questions about poems and plays, and practiced writing these short answers for many hours, without actually studying poems or plays. “What gets tested is what gets taught,” the principal told the teachers, even if that meant leaving behind the material that was supposed to be taught according to state standards. Bins of equipment for studying science were largely unused.
Tyler Heights’ third-graders got only the most cursory introduction to economics and Native Americans, and much of the curriculum was skipped altogether. The students were geographically ignorant. . . . The third-graders had heard Africa mentioned a lot but were not sure if it was a city, country, or state. (They never suggested “continent.”) At the end of the year, the children in Johnson’s class were asked to name all the states they could. Cyrus knew the most: three. He couldn’t name any countries, though, and when asked about cities, he thrust his finger in the air triumphantly. “Howard County!”
The state standards required a broad curriculum, but the metrics for assessing that were based on one particular test and all the incentives were for helping students pass that test. In spite of the praise for the miracle at Tyler Heights, had the children really been helped?
Campbell’s Law
The problem with unintended consequences from metrics such as tests is hardly unique to Tyler Heights. Daniel Koretz, also writing in the same issue of American Educator (see page 3 of the PDF file on unintended consequences), explains that in education and other fields, score inflation is a common and well known but widely overlooked problem. In the social sciences, a phenomenon that leads to score inflation is known as Campbell’s Law. While widely applied to education, it was developed while looking at business. Donald Campbell, a prominent social scientist, examined the role of corporate incentives on the performance of employees. His research led to this general formulation: “The more any quantitative social indicator is used for social decision making, the more subject it will be to corruption pressures and the more apt it will be to distort and corrupt the social processes it is intended to monitor.” (Donald T. Campbell, “Assessing the Impact of Planned Social Change,” in Social Research and Public Policies: The Dartmouth/OECD Conference, ed. Gene M. Lyons, Hanover, NH: Public Affairs Center, Dartmouth College, 1975, p. 35. See also Can New York Clean Up the Testing Mess? by Sol Stern.)
Campbell’s Law is at work when schools game tests to get better scores, at the expense of education. It is at work when cardiologists choose not to operate on patients who might need surgery rather than risk hurting their own published statistics on mortality rates among their patients (Koretz refers to a 2005 story from the New York Times reporting the shocking results of a survey of cardiologists). It is at work when a company tries to boost innovation with metrics or incentives that result in game playing, while leaving the real problems from culture, systems, and vision unaddressed.
In our experience, metrics and incentives can play a valuable role in driving innovation, but only when the corporation has a culture that genuinely encourages innovation, when there is a shared vision of innovation and success, and when sound systems are in place to advance innovation. Without those, you can not only waste a lot of resources in attempting to drive innovation with metrics and incentives, you can actually make a weak culture become pathological and lethal, sometimes exacerbating fatigue factors like the Not Invented Here syndrome, theft of credit for innovation, and breaking the will to share. Adding incentives linked to metrics without the right culture and systems can be sort of like throwing raw meat into a school of sharks or piranhas. You can generate a lot of activity, a lot of exciting thrashing and splashing, but in the end there will just be a lot of blood in the water and fewer thinkers and producers in your school.
As always, innovation success requires that you carefully monitor for harmful unintended consequences from the policies, programs, and incentives you have in place. Innovation metrics, incentives of all kinds, and employee performance evaluation systems and other tools associated with metrics can backfire. Unless you are tuned to the voice of the innovator and understand the impact of unintended consequences, you can be like the company we treat in Chapter 8 of our book that felt like it was a rock star of innovation while they were actually squelching it. Don’t let the unintended consequences of well-intended policies and metrics crush your innovation success.
In late 2009, I was invited to speak at Singapore’s Innovation and Enterprise Week 2009, an event held at Biopolis and sponsored by A*STAR, the world-class research organization of the Singaporean government, in collaboration with Exploit Technologies, the tech transfer arm of A*STAR. While I enjoyed the opportunity to discuss our book, the important thing to me was the opportunity to learn more about that amazing country and their bold approach to promoting innovation and technology. In my presentation for the large crowd at Innovation and Enterprise Week, I discussed the fascinating parallels between the Singapore experiment and the evolving experiment in innovation in my state of Wisconsin, where the Wisconsin Institutes for Discovery represent a brilliant approach to combining the best of public and private innovation.
Below are three video segments from my presentation. A couple of friends in Singapore took the video. There are a few gaps in sound and so forth, but I hope you can understand it. Don’t miss my lame magic trick in segment 3. They seemed to like it–proof again of the great courtesy that one finds in Singapore. In all seriousness, I think there are important lessons about innovation that can be gleaned by inspecting both the Singaporean system and the Wisconsin Institutes for Discovery, which include the Morgridge Institute for private sector research and the public Wisconsin Institute for Discovery. Madison and Singapore are on opposite sides of the world, but on the same side of the innovation spectrum, at the leading edge.
Update: On April 24, I posted a newly recorded and shortened Pixetell presentation covering the basic information I shared in Singapore, without the magic or other excursions.
I am deeply grateful to the many people who kindly shared their time to help me prepare for the presentation, including Sangtae Kim, John Wiley, Charles Hoslett, Carl Gulbrandsen and Janet Kelly from the Wisconsin side (Wisconsin Institutes for Discovery and WARF), plus Boon Swan Foo, Seito Wei Peng, and Sze Tiam Lin at Exploit Technologies in Singapore.
Part 1:
Part 2:
Part 3:
Get Multivated!™ The Need for Multidisciplinary Innovation
Posted by: | CommentsA survey of patents and innovation trends generally shows that collaboration is increasingly important in innovation. There are still lone experts with deep expertise that can be drilled repeatedly for valuable discoveries and innovations, but the future of innovation is increasingly in areas that transcend single disciplines and involve expertise across multiple domains. The future of innovation, in my opinion, will increasingly be found in multidisciplinary collaboration, often catalyzed by lead inventors or visionaries with “good enough” expertise in multiple areas who can bridge gaps, make connections, and recognize opportunities. This is part of the message of Conquering Innovation Fatigue, especially in the sections on multidisciplinary innovators and “Da Vinci in the Boardroom.”
I am intrigued by innovators who develop skills in multiple seemingly disconnected areas and then draw upon their multifaceted expertise to find new levels of innovation success. These “multivators™” may be a big part of the yeast the raises the dough of our future economy. They can be difficult to manage, however, and may seem like sufferers of ADHD to many observers. Understanding their potential, their employment needs, and their ability to drive innovation if properly motivated–or properly “multivated™”–may be essential for successful corporate and university innovation in the future, and is a topic am I currently exploring in depth.
If you are such an individual or know someone’s story that we should consider in future writings, please let me know!
Idea Cancer: The Danger of Good Ideas (Growing Out of Control)
Posted by: | CommentsNussbaum on Design (BusinessWeek) has a though-provoking column that mentions several innovation principles from designer Diego Rodriquez. One of these is “Killing good ideas is a good idea.” That’s the kind of counter-intuitive blasphemy that merits reflection. Of course, developing good ideas is essential, but without the killing phase, good ideas can lead to “idea cancer.” Ideas from late-stage idea cancer strangle many organizations and many minds–when ideas grow without control, unregulated and unchecked by proper objectives and reality. Ideas can metastasize and choke the arteries of business, cloud the mind, and weaken all life support systems in the end, unless they are regulated and killed at the appropriate time. So many great failures begin with good ideas, and lots of them.
Innovation is often more about execution and planning than idea generation. A weak idea, implemented ITERATIVELY with the right talent, can be adjusted based on feedback from the system (e.g., the market) and become successful. Even mediocre ideas can beat good ideas if there are great skills, good leaders, and good execution. But add an occasional great idea to the mix and the success can be remarkable, if the dream isn’t cluttered with lots of distracting good ideas along the way.
Innovation requires discipline. One has to focus and learn iteratively in the process, and not let unrestrained good ideas shut down your innovation engines with “idea cancer.”