Driving Eureka!. Doug Hall

why I set up these special teams working outside the system.”

      When leaders are ready to confront the reality that: 1) they need to innovate to compete in today’s marketplace and 2) their current system for innovation management doesn’t work, they frequently seek out one or more of what the Innovation Engineering Pioneers call “False Cures.” These are simplistic management fixes that sound promising but, in the long term, often cause more damage than good.

      FALSE CURE 1: MORE INSPECTION, METRICS, AND BIGGER REWARD. The hypothesis is: If management reviews the development of innovations more frequently and diligently, then innovation success will be realized. The truth is that inspection of quality doesn’t work. Just as in the factory, innovation quality must be built into the organization’s work systems and tools.

      A related hypothesis is that if we manage by metrics and reward people for hitting the numbers, then innovation success will be realized. The truth is that metrics without a method simply creates stress that ignites the “gaming” of the system to hit the numbers.

      Metrics are invaluable when used as a tool for improving the system. They are destructive when used as a means for motivating. Metrics are the outcome of the system. Sustained improvement in metrics only occurs with improvement in the methods and tools that make up the work system.

      Success with innovation requires intrinsic passion and dedication. The promise of extrinsic rewards will not sustain innovators through the inevitable ups and downs that occur when trying to discover and develop a Meaningfully Unique innovation. As Dr. Deming and others have taught, extrinsic “beating of workers” and “bribery of workers” only serves to increase fear and decrease intrinsic motivation.

      With Innovation Engineering, we have two measures that we use to quantify progress.

      Our INNOVATION SYSTEM measure is the weighted value of the innovation pipeline. This is a measure of the value of all organizational projects for savings and growth that are in development. Each project is aligned to a strategic priority, called a Blue Card, in the language of Innovation Engineering. The value of each project is weighted based on where it is in the development process versus historical norms of what value will be realized when the project is made real and/or ships into the marketplace. No metric is more important to your future bottom line than the weighted value of all the ideas that are in your innovation pipeline.

      Our INNOVATION CULTURE measure is what percent of the time employees are engaged in proactive versus reactive work. When employees are 100% reactive, their days are spent “fighting fires” and in wasteful “rework.” When employees spend a high percentage of their time being proactive, their days are focused on anticipating the future. When a culture is proactive instead of reactive, employee engagement, productivity, and effectiveness are much higher. This is because employees feel a sense of control over their future instead of feeling they are simply victims of external circumstances.

      These two measures—Innovation Pipeline Weighted Value and Proactive Culture—are the foundations of Innovation Engineering. There are other metrics, independent variables, that are predictive of these two measures, such as: average cycle time for learning, time to development decisions, collaboration levels, data-based decision-making, training levels, and patent filings.

      FALSE CURE 2: THE BIG IDEA HUNT. The hypothesis is: If the organization just had more big ideas going into the organization’s innovation pipeline, then all would be great. In truth, more stuff going into the front end of a broken system doesn’t result in bigger ideas becoming reality. Most development systems reduce all ideas, no matter how big they start, into the same old stuff. As one company leader who is part of the movement said, “Every ‘big idea’ that we put into our system comes out looking like a minor variation of something we currently offer. We need to fix our system.”

      The foolishness of the “big idea hunt” was made clear in a famous study of technology transfer by the Massachusetts Institute of Technology (MIT) over 16 years. It found that when a large company licensed a “big idea” technology from MIT and put it into their existing development system, 80% of the time they ended up failing. Most MIT innovations died in development and never made it to market.

      FALSE CURE 3: SKUNK WORKS TEAMS. The hypothesis is: The only way to make sure that real innovations survive is to manage them outside of the existing culture. The truth is that, in most cases, the innovations will eventually need to use the infrastructure—and when they do, the culture strikes back, resulting in disruption, chaos, and the eventual failure of the Skunk Works. Skunk Works is the name for Lockheed Martin’s Advanced Development Program. It was responsible for a number of famous aircraft designs. The name “Skunk Works” is thought to have come from the moonshine factory in the comic strip Li’l Abner. Lockheed Martin’s team was successful because they operated 100% outside of the organization from idea through production to sales and delivery to customers. They were a complete, freestanding business operation. This was easier for them to do as they sold to one customer—the military.

      For much of my career, I was a vigorous advocate for Skunk Works teams. I’ve led or helped coach hundreds of these teams around the world. However, after 40-plus years of experience, I’ve come to the conclusion that my mindset was wrong. I now believe that working with and upgrading the existing culture—by enabling the leadership and employees with system-driven innovation—is the only sustainable and reliable path that a company can use to create a never-ending stream of innovations.

      Initially, the Skunk Works teams generate the perception of success. This is because they spend the majority of their time on the innovation as opposed to “the system.” However, eventually the success vaporizes, as an open or passive-aggressive civil war occurs when the new innovation needs to access resources within the existing organization. At around 18 months, the team ends up spending more time trying to convince those in “the system” to support their breakthrough innovation than they spend on the idea itself. As momentum stalls, those within the system point out the waste of time and energy, and slowly but surely the leadership gives up on the venture and/or the team members give up and quit the company.

      The failure of Skunk Works projects is regrettable. However, my bigger reason for no longer supporting this approach has to do with basic human rights. It’s not fair to allow some within the organization the freedom to think and create cool stuff outside the system, using advanced tools and methods, while at the same time shackling others with working within a bureaucratic prison.

      When the CEO stands up and celebrates a team that innovates outside the system, what message do you think it sends to the others? Those in the existing system have ideas too. They can make the ideas happen too. They could do amazing things as well . . . if they had the same training and tools as the innovators.

      FALSE CURE 4: BUY AN INNOVATION CULTURE. The hypothesis is: If we just acquire a small entrepreneurial company, a miracle will occur to transform our culture. This is a more expensive variation of the Skunk Works approach. And like many of these approaches, it gives a message to the culture that they are “stupid” and the new company team is “smart.” This creates discontent and disengagement within the existing culture. The result is often conscious or subconscious resistance to the new ideas. This is one of a number of reasons why independent research and a Harvard Business Review article finds that 70% to 90% of mergers and acquisitions fail financially. In addition, there is no real opportunity for learning when you buy a successful company. The biggest learning has already happened—it was the startup years of trying, pivoting, learning, and pivoting.

      FALSE CURE 5: BE A FAST FOLLOWER. The hypothesis is: If we give up being first to market, we can reduce our risk. The problem with this approach is that, if the pioneer is really good, then, as a provider of copycat products, our only choice is to sell our offerings at a lower price. Multiple research studies documented in my book Meaningful Marketing finds that, on average, fast followers generate half the profits of the pioneer. And it’s not very motivating to be an employee of a company that dedicates itself to being a follower. Great people want to do great things. They want to be part of an organization