Organizational Innovation. Why is it so Difficult?

Organizational Innovation is difficult. We think too much in terms of the past, projects and structures. And very often time is not on our side.
Organizational Innovation
There has been a lot of discussion about new ways of working. Very often the topic gets reduced to telework or arty-farty office design. But it should be about organizational innovation. Organisational Innovation is a form of organizational design with a focus on stretching organizations to not only superficially alter the  way they work. It’s mostly aimed at developing new capabilities that help organizations to thrive and survive in a VUCA-world. So its final purpose is to create a sustainable advantage.
But organizations have a hard time changing. And organizational innovation seems to be difficult to implement and even more difficult to maintain. And here is why.

Thinking about the Past is Easier

It’s simply difficult to imagine a future identity. It’s hard for people, and it’s even harder for a collective like an organization. The future is difficult to grasp because it does not exist. The past is documented, but can make us complacent or conservative. “We have always done it like this” or “There is no alternative” are expressions that show the difficulty we all have to imagine ourselves in a future state. Thinking about the future might even induce fear.
We can look at tendencies to try to make the future more tangible. In fact we should scan the environment for disruptions, because it helps to integrate a vision on the future in our current organizational decisions. Having a bright and fluid vision about the future helps to become agile and fearless. Here’s an example: R/GA has developed future vision to gather and share new ideas on the future. Go and take a look.

Instead of thinking about the past, we should think about the future. A bright and fluid vision about our future helps to become agile and fearless.

Thinking in Projects is Easier

Organizational Innovation can never stop, because the context changes continuously. That’s why organisational innovation should never be a project with a defined end. It’s a process of continuous adaptation. Organizations are like living entities that go through rapid evolution. It’s difficult to put a start date and certainly impossible to put an end date on it. So why bother?
But we live in a world where timings and deliverables are important. So I suggest to monitor organizational change by looking at incrementality. The idea behind this is that small steps create value. We can measure small steps and their impact. And we can also correct small steps. So organizational innovation is not about creating a big bang. It’s about taking two steps forward, and sometimes one step back.
The thing is that thinking in incrementals forces you to think about creating value instead of about being in time, budget, or scope. It also enables us not to fix targets that are too far away, not to fix directions we are not sure of and not to fixate a future vision that should change anyway.

Instead of thinking in projects, we need to think in incrementality. It helps to focus on value and to get rid of fixed ideas.

Thinking in Structures is Easier

When people think of organizations, they see boxes and lines. They think of structure. But Organisational Innovation is not (only) about structure. Structure is the last thing to consider in Organisational Innovation. Organisational Innovation is about creating context. Organizational Innovators think of organizations in terms of the external and internal context. The external context is that busy, bad world that threatens and invites at the same time. The internal context is the context an organisation can influence:

  1. its relationships with partners, employees, customers, governments and other stakeholders, … Ecosystems are not structures.
  2. its choices of technology, territory, talent, operation model, value chain, processes, … the tangible hardware of the organization.
  3. its culture, purpose, leadership, … the software of the organization.

But the structural thinking is strong. And in itself it’s not wrong to think in structures when thinking about organizations. But, we need to realise that a structure does not solve much. If anything, it gives people a sense of orientation within an organization. It might nudge people towards desired behaviour. But alas, very often the lines and the boxes are limiting the minds of people.
I have always wondered why people get so boxed in and say things like “it’s not in my job description“, or “I’m not responsible“, or “I am not allowed to work on that“. People adapt to structures and structures are as effective as the people working in them. So instead of working on structures it’s beter to think about capabilities like collaboration, leadership, time-to-market. Organizational Innovation is about building capabilities. And collaboration is probably one of the most important capabilities for the future. Structures are too often a matter of coerced collaboration.

Instead of thinking in terms of Structures, we need to think of fluid capabilities, collaboration being one of the most important ones.

Organizational Innovation needs a Mindset.

When organizations get praise for their innovative approach, we should be sceptic about the sustainability of the innovation. Like every change, innovation requires attention, energy. There is no such thing as a stable design. Organizational Innovation requires constant attention. So one of the reasons why it fails, apart from the difficulties to think about the futures, incremental value and capabilities, is that we fail to invest enough time. Every system that is not supported and provided with energy, falls apart, derails or yields undesired results.
Therefore organizational innovation should be a habit. Like dental Hygiene. And it’s a matter of more people than we can imagine. And when we drown in daily problems, the shit of yesterday and the operational concerns, we cannot find the time to innovate.

Organizational Innovation is a matter of mindset, it’s more a habit than a task.

 


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Here are some other blogs on organizational innovation and design.

Why we all should be Luddites.

Luddites

The Luddites

A friend of mine once said “I’m such a Luddite“. I had never heard of Luddites before. The Luddites were a group of textile workers who protested against the mechanization in the textile industry in the early 19th Century in England. The new machines had left them jobless. They had been replaced by lower-skilled and lower-paid workers that could run the machines. The name comes from James Ludd, who had destroyed two machines himself.
The Luddites did not win. There resistance was quite massive, and still they did not win. 200 years ago the army was used to break that resistance. The resistance was isolated, in one industry. And it could not stop the introduction of new technologies at that time.

A Shift

There are fears for our future. I don’t think we will have a jobless future, like Martin Ford suggests. However, we will need a different approach in the talent market (see my blog on the jobless future and on Humans and Robots). We are experiencing a shift, comparable to the shifts we had when the wheel was invented, print was introduced, the steam engine changed the industrial world.  Today digitalization disrupts many traditional industries.
There are robots that mow the lawn, automated vacuum cleaners, drones, … The technological progress means that robots can emulate a human’s sensory and cognitive capabilities. Companies are integrating artificial intelligence in more decision and service processes than ever. Almost every activity can to a certain extent be performed, supported or enhanced by some kind of robotics or artificial intelligence.

Are the Luddites back?

So if that’s the case, should we expect the Luddites to return? There is something like neo-luddism. It’s a word that stands for the resistance against technology and consumerism. You could say that it’s a movement of resistance against blind innovation.
But I do not see this happening. Any (technological) revolution will be met with some resistance. Two centuries ago, the Luddites were just one example of this. Usually it’s the people who have the most to lose, who will resist. But at the end, the (r)evolution takes place.
And compared to former changes, changes today take place faster than before. There is no time for resistance. Look at Uber. They have grown so fast. And there are massive protests by taxi-drivers in cities where Uber enters the market. And yes, Uber adapts. AirBnB complies to local regulations. But they are not stopped.
Could there be new Luddites standing against digital technologies? Where are they? The funny thing is that the resistance against technology uses technology to resist. We are being attacked by hackers, worms, bots, Trojan Horses, Viruses, … and they do one thing: they make technology better and more robust.
What if a worker would stand next to a humanoid robot and is compared to it? What if a worker is sacked and replaced by a robot who does his job better or cheaper? What if we would have jobless factories?
Well, there are factories that have very few people in them already. This did not happen overnight. Highly technological process plants have only few people in them. Labour has been replaced massively by technology. And if there is reindustrialization in the West, it’s of a highly automated nature.
New technologies will change society, will destroy jobs and will also create new jobs. It has always been like that. We can use new technology to our advantage, to create a healthier, safer, cleaner society. Stopping technological evolution would be like asking humanity to stop breathing.

Make it better

But the thing is, we need to reinforce ethics in that evolution. We are on the brink of enormous breakthroughs but we risk to forget humanity. We can make automated war drones, but they dehumanize war even more. War becomes a video-game. We can find medical ways to prolong life, but do they preserve human dignity? We can close down plants and delocalize, automate, … but is the alternative better? Why do we still have child labour? Why do we still have people working in unsafe and unhealthy conditions? Why does the ILO have to stress the importance of decent work? We know that inequality threatens social stability, and yet it’s growing.
Change is a challenge. Our society is shifting. But it’s not only through technology. There is a lot of tectonic friction emerging because we are evolving at different speeds. And maybe some people will be the violent Luddites of our age, but they will not stop evolution. Therefore, we should all become ethical Luddites. This only means we should remain critical towards those evolutions. It means we should act responsibly and try to assess the impact of the shifts that take place and build in measures to avoid negative societal or ecological consequences. The purpose is not to stop that evolution, but to simply make it better. The word “Luddite” could be a badge of honor, and I believe my friend has used the word in that way.
Luddites
 
 
 
 

5 reasons why Conformity kills Innovation.

In a previous post I wrote about how important open-mindedness really is. It fuels innovation. This leads to a higher growth, productivity, employment and prosperity. There are many ideas that could solve economic, societal and ecological problems. And yet it’s difficult to get them implemented. The general rule is that people are looking for conformity. But conformity kills innovation.
 
Conformity
Why is that? I see five reasons.

Reason 1: Questioning yourself is difficult.

We all have our stories. Those stories aim at feeling good about ourselves. And so once we get a balanced life, some satisfaction, it’s difficult to question that. We are looking for conformity to the norm we have set for ourselves. Why change something that is working for you? Questioning yourself is difficult. It requires courage.

Reason 2: Changing course costs Energy.

Courage means energy. It costs a lot of energy to switch. You have to give a lot of attention to the change. And we know that there is no change without pain. So conformity is the easier path.

Reason 3: The outcome is uncertain.

Moreover, you know what you have and you do not know how it’s going to be. Many changes start out with good hope, but end in disappointment or despair. The Arabic Spring started with good hopes. It ended in bloodshed without much progress. At least you know what you have when you conform to the norm.

Reason 4: Education aims at conformity

I compare open-mindedness with a muscle. You need to train it. If you don’t the muscle dies. Open-mindedness starts with education. How does one look at the world? Does the education system confirm a certain view on things or does it invite people to think for themselves, question, be critical? The answer is yes. We are educated to conform.

Reason 5: The context does not help

And finally there is a context. In certain environments there is just no support for open-mindedness and innovation. Do as you are told. Don’t think. Many cultures are drenched in conservatism, lack of safety for experimentation, fear of failure. Those who want to leave orbit and break with conformity are usually ousted.
The first 3 reasons are about people. The last 2 are about leadership. Through leadership conditions arise that help people to be open-minded, agile and innovative.
And don’t forget what Frank Zappa wrote.
Open-Mindedness Conformity
How about you and your organization?
 

Why Open-mindedness is important for Growth, Productivity, Employment and Prosperity.

Open-mindedness is the condition to be able to tackle the problems the world is facing. 

Growth matters

The ILO has published its world social and employment report

The global economy is showing new signs of weakness. This pushes unemployment to over 197 million in 2015. It makes existing jobs increasingly vulnerable.

The outlook is for unemployment to increase by a further 3.4 million over the next two years. Next to that there will be slower progress in reducing vulnerable employment, which could reach 1.5 billion by 2016. This leads in itself to  a pause in the expansion of the middle class and, sometimes, intensified risk of social unrest. Because of that efforts to further reduce working poverty stall. And it becomes more complicated to increase growth and to meet demographic challenges.

Policy focus on quantity and quality of jobs and tackling income inequality is paramount.

If you read the report there is reason to worry. The world is in a sorry state and is confronted with a dangerous mix of explosive ingredients: unemployment, social unrest, income inequality, poverty, climate change, terrorism, … . And a lot of it it seems to turn around growth, or the lack of it.
In a recent TedTalk, Dambisa Moyo talks about how to fix the growth problem in the world. Growth in the developed economies is falling behind on its three components: capital (debts and deficits), labour (qualitative and quantitative labour supply) and productivity .

In the emerging economies 90% of people live and 70% is younger than 25.
Moyo states that it is essential that the economy of emerging markets grows by 7% per year to fight poverty and double per capital income within one generation. She explicitly links growth to upward mobility, opportunity and improved living standards.
Today we see that GDP growth in the emerging countries is slowing down. Even China has dropped under the required level, reporting 6,9% of GDP growth in 2015. China is one of the few countries who has GDP Growth targets. Other countries ask their planning agency what growth could be and adapt policies to that. According to an article in the Economist China does that to keep control and avoid social unrest. The article warns that this could damage China’s economy, but China needs growth to secure employment. Unemployment leads to inequality and social unrest, as recent events in Northern Africa but also in Spain and Greece have shown.

The ending Story of Productivity Increases

Look at the figure below. The Western countries have a high level of productivity, but did not surprisingly have a low productivity growth since 2000. The West should not have high hopes for a renewed growth in productivity.
On the left hand of the graph you see the countries that still have a low productivity, but enjoy high productivity growth like Eastern and Southern Asia. Wages in those areas are still low and growth in GDP can still come from an increase in productivity. But as productivity is going up, so will the wages. And vice versa. This is illustrated by countries that introduce or increase the minimum wage. The latest example is the UK, where the minimum wage has been increased. Companies need to increase their productivity to match the increase in salary (and do so).
The West’s challenge is to keep up its labour force and keep up its prosperity with dwindling demographic supplies. On top of that, the low growth rates in Europe make it difficult to sustain the labour market. And so we are leaving the virtuous cycle of growth – employment – prosperity. The question is how we can restore growth and restart that virtuous cycle? We know that we should not set our hopes on pure productivity increases.
open-mindedness
Moyo pleads to be open-minded and to avoid ideology when tackling these problems. Growth is linked to capitalism. Both market-regulated capitalism (like the U.S.) and state-regulated capitalism (like China) have yielded success, she says. So it’s better to look at the result of policies than to blur our vision with ideological filters. Ideology is lethal for progress and the enemy of growth.
open-mindedness
I agree with her. Ideologically, someone can be against growth, but what is the alternative? And being open-minded means that we need to constantly look for new ways of making things work. This leads to more innovative approaches to how we organise our economies, our labour markets, our organisations, our processes, our societies.

Open-mindedness

The West will never increase its growth by just focussing on productivity. That’s a finished story. The West should focus on innovation. According to the world Economic Forum 85% of productivity gains comes from innovation.
If we would only focus on productivity, we will go into a social armageddon by automating as much as possible (and creating unemployment and a dual labour market) and we might push people collectively into psychological disorders like burn-out because of the relentless better to go higher, faster, stronger.
A focus on productivity will in itself not solve the problems that the ILO refers to.
Innovation is the only way to break that vicious cycle. We can find solutions for current and future problems by not repeating recipes from the past. And I am talking about innovation on all levels of society. The fuel of that innovation engine is open-mindedness. The expression of open-mindedness is experimentation.

  • Through experimentation nations can find new ways to deal with societal problems like unemployment, labour market inefficiencies, health care challenges, ecological threats, …
  • Cities can solve mobility, social and budgetary challenges through experimentation.
  • Through experimentation organisations can come up with new ways of doing business, new products, new business. Businesses can become more diverse, inclusive and mature through experimentation.
  • Through experimentation teams can look for ways of coping the challenge of doing more with less,
  • Through experimentation people can find ways to customize their work and life tasks. This enables them to be employable, happy, healthy.

We need open-mindedness to be able to experiment. Dogmas kill innovation. Ideology focusses on a status-quo. Progress is the enemy of ideology, especially progress through experimentation. Being open-minded means that you are willing to accept that ideas have led to both good and bad things. Open-mindedness leads to wonder, questions, debate.

Should we be optimistic?

Open-mindedness will lead to innovation, agility, growth, to employment and to productivity. Innovation-richness is the measure for future success of any entity. According to World Economic Forum Leader Klaus Schwab innovation-richness will determine the future of a country

WEF
 
 
There are many ideas that are available to improve the state of humanity around. But it takes too often a long time to test and carry them out. Or we go for the less ideal solution for whatever reason.
Let’s not forget, open-mindedness leads to progress. Dogmas lead to a standstill.

 

In a next blog I will reflect on the reasons why it’s difficult to be open-minded.