Why are people so concerned about, afraid of, or resistant to new things?
Innovation, by its very nature, is good. It is something new that creates value.
Naturally, the answer has nothing to do with innovation.
It has everything to do with how we experience it.
And innovation without humanity is a very bad experience.
Over the last several weeks, I’ve heard so many stories of inhuman innovation that I have said, “I hate innovation” more than once.
Of course, I don’t mean that (I would be at an extraordinary career crossroads if I did). What I mean is that I hate the choices we make about how to use innovation.
Just because AI can filter resumes doesn’t mean you should remove humans from the process.
Years ago, I oversaw recruiting for a small consulting firm of about 50 people. I was a full-time project manager, but given our size, everyone was expected to pitch in and take on extra responsibilities. Because of our founder, we received more resumes than most firms our size, so I usually spent 2 to 3 hours a week reviewing them and responding to applicants. It was usually boring, sometimes hilarious, and always essential because of our people-based business.
Would I have loved to have an AI system sort through the resumes for me? Absolutely!
Would we have missed out on incredible talent because they weren’t out “type?” Absolutely!
AI judges a resume based on keywords and other factors you program in. This probably means that it filters out people who worked in multiple industries, aren’t following a traditional career path, or don’t have the right degree.
This also means that you are not accessing people who bring a new perspective to your business, who can make the non-obvious connections that drive innovation and growth, and who bring unique skills and experiences to your team and its ideas.
If you permit AI to find all your talent, pretty soon, the only talent you’ll have is AI.
Just because you can ghost people doesn’t mean you should.
Rejection sucks. When you reject someone, and they take it well, you still feel a bit icky and sad. When they don’t take it well, as one of my colleagues said when viewing a response from a candidate who did not take the decision well, “I feel like I was just assaulted by a bag of feathers. I’m not hurt. I’m just shocked.”
So, I understand ghosting feels like the better option. It’s not. At best, it’s lazy, and at worst, it’s selfish. Especially if you’re a big company using AI to screen resumes.
It’s not hard to add a function that triggers a standard rejection email when the AI filters someone out. It’s not that hard to have a pre-programmed email that can quickly be clicked and sent when a human makes a decision.
The Golden Rule – do unto others as you would have done unto you – doesn’t apply to AI. It does apply to you.
Just because you can stack bots on bots doesn’t mean you should.
At this point, we all know that our first interaction with customer service will be with a bot. Whether it’s an online chatbot or an automated phone tree, the journey to a human is often long and frustrating. Fine. We don’t like it, but we don’t have a choice.
But when a bot transfers us to a bot masquerading as a person? Do you hate your customers that much?
Some companies do, as my husband and I discovered. I was on the phone with one company trying to resolve a problem, and he was in a completely different part of the house on the phone with another company trying to fix a separate issue. When I wandered to the room where my husband was to get information that the “person” I was talking to needed, I noticed he was on hold. Then he started staring at me funny (not as unusual as you might think). Then he asked me to put my call on speaker (that was unusual). After listening for a few minutes, he said, “I’m talking to the same woman.”
He was right. As we listened to each other’s calls, we heard the same “woman” with the same tenor of voice, unusual cadence of speech, and indecipherable accent. We were talking to a bot. It was not helpful. It took each of us several days and several more calls to finally reach humans. When that happened, our issues were resolved in minutes.
Just because innovation can doesn’t mean you should allow it to.
You are a human. You know more than the machine knows (for now).
You are interacting with other humans who, like you, have a right to be treated with respect.
If you forget these things – how important you and your choices are and how you want to be treated – you won’t have to worry about AI taking your job. You already gave it away.
Using only three words, how would you describe your company?
Better yet, what three words would your customers use to describe your company?
These three words capture your company’s identity. They answer, “who we are” and “what business we’re in.” They capture a shared understanding of where customers allow you to play and how you take action to win.
Everything consistent with this identity is normal, safe, and comfortable.
Everything inconsistent with this identity is weird, risky, and scary.
Your identity is killing innovation.
Innovation is something new that creates value.
Identity is carefully constructed, enduring, and fiercely protected and reinforced.
When innovation and identity conflict, innovation usually loses.
Whether the innovation is incremental, adjacent, or radical doesn’t matter. If it conflicts with the company’s identity, it will join the 99.9% of innovations that are canceled before they ever launch.
Your identity can supercharge innovation.
When innovation and identity guide and reinforce each other, it doesn’t matter if the innovation is incremental, adjacent, or radical. It can win.
Identity-based Innovation changes your perspective.
We typically think about innovation as falling into three types based on the scope of change to the business model:
Incremental innovations that make existing offerings better, faster, and cheaper for existing customers and use our existing business model
Adjacent innovations are new offerings in new categories, appeal to new customers, require new processes and activities to create or use new revenue models
Radical innovations that change everything – offerings, customers, processes and activities, and revenue models
These types make sense IF we’re perfectly logical and rational beings capable of dispassionately evaluating data and making decisions. SPOILER ALERT: We’re not. We decide with our hearts (emotions, values, fears, and desires) and justify those decisions with our heads (logic and data).
So, why not use an innovation-typing scheme that reflects our humanity and reality?
Identity-enhancing innovations reinforce and strengthen people’s comfort and certainty in who they are and what they do relative to the organization. “Organizational members all ‘know’ what actions are acceptable based on a shared understanding of what the organization represents, and this knowledge becomes codified u a set of heuristics about which innovative activities should be pursued and which should be dismissed.”
Identity-stretching innovations enable and stretch people’s understanding of who they are and what they do in an additive, not threatening, way to their current identities.
Identity-challenging innovations are threats and tend to occur in one of two contexts:
Extreme technological change that “results in the obsolescence of a product market or the convergence of multiple product markets.” (challenges “who we are”)
Competitors or new entrants that launch new offerings or change the basis of competition (challenges “what we do”)
By looking at your innovations through the lens of identity (and, therefore, people’s decision-making hearts), you can more easily identify the ones that will be supported and those that will be axed.
It also changes your results.
“Ok, nerd,” you’re probably thinking. “Thanks for dragging me into your innovation portfolio geek-out.”
Fair, but let me illustrate the power of this perspective using some examples from P&G.
Radical Moved P&G into services and uses a franchise model
Identity-stretching Dry cleaning service is consistent with P&G’s identity but stretches into providing services vs. just products
Do you see what happened on that third line? A Radical Innovation was identity-stretching (not challenging), and it’s in the 0.1% of corporate innovations that launched! It’s in 22 states!
The Bottom Line
If you look at innovation in the same way you always have, through the lens of changes to your business model, you’ll get the same innovation results you always have.
If you look at innovation differently, through the lens of how it affects personal and organizational identity, you’ll get different results. You may even get radical results.
If you’re like most people, you’ve faced disappointment. Maybe the love of your life didn’t return your affection, you didn’t get into your dream college, or you were passed over for promotion. It hurts. And sometimes, that hurt lingers for a long time.
Until one day, something happens, and you realize your disappointment was a gift. You meet the true love of your life while attending college at your fallback school, and years later, when you get passed over for promotion, the two of you quit your jobs, pursue your dreams, and live happily ever after. Or something like that.
We all experience disappointment. We also all get to choose whether we stay there, lamenting the loss of what coulda shoulda woulda been, or we can persevere, putting one foot in front of the other and playing The Rolling Stones on repeat:
“You can’t always get what you want
But if you try sometimes, well, you might just find
You get what you need”
That’s life.
That’s also innovation.
As innovators, especially leaders of innovators, we rarely get what we want. But we always get what we need (whether we like it or not)
We want to know.
We need to be comfortable not knowing.
Most of us want to know the answer because if we know the answer, there is no risk. There is no chance of being wrong, embarrassed, judged, or punished. But if there is no risk, there is no growth, expansion, or discovery.
Innovation is something new that creates value. If you know everything, you can’t innovate.
As innovators, we need to be comfortable not knowing. When we admit to ourselves that we don’t know something, we open our minds to new information, new perspectives, and new opportunities. When we say we don’t know, we give others permission to be curious, learn, and create.
We want the creative genius and billion-dollar idea.
We need the team and the steady stream of big ideas.
We want to believe that one person blessed with sufficient time, money, and genius can change the world. Some people like to believe they are that person, and most of us think we can hire that person, and when we do find that person and give them the resources they need, they will give us the billion-dollar idea that transforms our company, disrupts the industry, and change the world.
Innovation isn’t magic. Innovation is team work.
We need other people to help us see what we can’t and do what we struggle to do. The idea-person needs the optimizer to bring her idea to life, and the optimizer needs the idea-person so he has a starting point. We need lots of ideas because most won’t work, but we don’t know which ones those are, so we prototype, experiment, assess, and refine our way to the ones that will succeed.
We want to be special.
We need to be equal.
We want to work on the latest and most cutting-edge technology and discuss it using terms that no one outside of Innovation understands. We want our work to be on stage, oohed and aahed over on analyst calls, and talked about with envy and reverence in every meeting. We want to be the cool kids, strutting around our super hip offices in our hoodies and flip-flops or calling into the meeting from Burning Man.
Innovation isn’t about you. It’s about serving others.
As innovators, we create value by solving problems. But we can’t do it alone. We need experienced operators who can quickly spot design flaws and propose modifications. We need accountants and attorneys who instantly see risks and help you navigate around them. We need people to help us bring our ideas to life, but that won’t happen if we act like we’re different or better. Just as we work in service to our customers, we must also work in service to our colleagues by working with them, listening, compromising, and offering help.
You are a rolling stone, and that means you gather no moss! You read the September issue of HBR (and maybe last week’s article), tossed out your innovation portfolio, and wove yourself an innovation basket to “differentiate the concept from finance and avoid the mistake of treating projects like financial securities, where the goal is usually to maximize returns through diversification [and instead] remember that innovation projects are creative acts.”
Then you explained this to your CFO and received side-eye so devastating it would make Sophie Loren proud.
The reality is that the innovation projects you’re working on are investments, and because they’re risky, diversification is the best way to maximize the returns your company needs.
But it’s not the only way we should communicate, evaluate, and treat them.
Different innovation basket views for different customers
When compiling an innovation basket, the highest priority is having a single source of truth. If people in the organization disagree on what is in and out of the basket, how you measure and manage the portfolio doesn’t matter.
But a single source of truth doesn’t mean you can’t look at that truth from multiple angles.
Having multiple views showing the whole basket while being customized to address each of your internal customer’s Jobs to be Done will turbocharge your ability to get support and resources.
The CFO: What returns will we get and when?
The classic core/adjacent/transformational portfolio is your answer. By examining each project based on where to play (markets and customers) and how to win (offerings, profit models, key resources and activities), you can quickly assess each project’s relative riskiness, potential return, time to ROI, and resource requirements.
The CEO: How does this support and accelerate our strategic priorities?
This is where the new innovation basket is most helpful. By starting with the company’s strategic goals and asking, “What needs to change to achieve our strategy?” leadership teams immediately align innovation goals with corporate strategic priorities. When projects and investments are placed at the intersection of the goal they support, and the mechanism of value creation (e.g., product, process, brand), the CEO can quickly see how investments align with strategic priorities and actively engage in reallocation decisions.
You: Will any of these ever see the light of day?
As much as you hope the answer is “Yes!”, you know the answer is “Some. Maybe. Hopefully.” You also know that the “some” that survive might not be the biggest or the best of the basket. They’ll be the most palatable.
Ignoring that fact won’t make it untrue. Instead, acknowledge it and use it to expand stakeholders’ palates.
Start by articulating your organization’s identity, the answers to “who we are” and “what we do.”
Then place each innovation in one of three buckets based on its fit with the organization’s identity:
Identity-enhancing innovations that enhance or strengthen the identity
Identity-stretching innovations that “do not fit with the core of an organization’s identity, but are related enough that if the scope of organizational identity were expanded, the innovation would fit.”
Identity-challenging innovations that are “in direct conflict with the existing organizational identity.”
It probably won’t surprise you that identity-enhancing innovations are far more likely to receive internal support than identity-challenging innovations. But what may surprise you is that core, adjacent, and transformational innovations can all be identity-enhancing.
For example, Luxxotica and Bausch & Lomb are both in the vision correction industry (eyeglasses and contact lenses, respectively) but have very different identities. Luxxotica views itself as “an eyewear company,” while Bausch & Lomb sees itself as an “eye health company” (apologies for the puns).
When laser-vision correction surgery became widely available, Bausch & Lomb was an early investor because, while the technology would be considered a breakthrough innovation, it was also identity-enhancing. A decade later, Bausch & Lomb’s surgical solutions and ophthalmic pharmaceuticals businesses account for 38% of the company’s revenue and one-third of the growth.
One basket. Multiple Views. All the Answers.
Words are powerful, and using a new one, especially in writing, can change your behavior and brain. But calling a portfolio a basket won’t change the results of your innovation efforts. To do that, you need to understand why you have a basket and look at it in all the ways required to maximize creativity, measure results, and avoid stakeholder side-eye.
You are a savvy manager, so you know that you need an innovation portfolio because (1) a single innovation isn’t enough to generate the magnitude of growth your company needs, and (2) it is the best way to manage inherently risky endeavors and achieve desired returns.
Too bad you’re wrong.
According to an article in the latest issue of HBR, you shouldn’t have an innovation portfolio. You should have an innovation basket.
Once you finish rolling your eyes (goodness knows I did), hear me (and the article’s authors) out because there is a nuanced but important distinction.
Our journey begins with the obvious.
In their article “A New Approach to Strategic Innovation,” authors Haijian Si, Christoph Loch, and Stelios Kavadias argue that portfolio management approaches have become so standardized as to be practically useless, and they propose a new framework for ensuring your innovation activities achieve your strategic goals.
“Companies typically treat their innovation projects as a portfolio: a mix of projects that, collectively, aim to meet their various strategic objectives,” the article begins. “MOO,” I think (household shorthand for Master Of the Obvious).
“When we surveyed 75 companies in China, we discovered that when executives took the trouble to link their project selection to their business’s competitive goals, the contribution of their innovation activities performance increased dramatically,” the authors continue. “Wow, fill this under N for No Sh*t, Sherlock,” responded my internal monologue.
The authors go on to present and explain their new framework, which is interesting in its focus on asking and answering seemingly simple questions (what, who, why, and how) and identifying internal weaknesses and vulnerabilities through a series of iterative and inclusion conversations. The process is a good one but feels more like an augmentation of an existing approach rather than a radically new one.
Then we hit the “portfolio” vs. “basket” moment.
According to the authors, once the management team completes the first step by reaching a consensus on the changes needed to their strategy, they move on to the second step – creating the innovation basket.
The process of categorizing innovation projects is the next step, and it is where our process deviates from established frameworks. We use the word “basket” rather than “portfolio” to denote a company’s collection of innovation projects. In this way, we differentiate the concept from finance and avoid the mistake of treating projects like financial securities, where the goal is usually to maximize returns through diversification. It’s important to remember that innovation projects are creative acts, whereas investment in financial securities is simply the purchase of assets that have already been created.
“Avoid the mistake of treating projects like financial securities” and “remember that innovation projects are creative acts.” Whoa.
Why this is important in a practical sense (and isn’t just academic fun-with-words)
Think about all the advice you’ve read and heard (and that I’ve probably given you) about innovation portfolios – you need a mix of incremental, adjacent, and radical innovations, and, if you’re creating a portfolio from scratch, use the Golden Ratio.
Yes, and this assumes that everything in your innovation portfolio supports your overall strategy, and that the portfolio is reviewed regularly to ensure that the right projects receive the right investments at the right times.
These assumptions are rarely true.
Projects tend to enter the portfolio because a senior executive suggested them or emerged from an innovation event or customer research and feedback. Once in the portfolio, they progress through the funnel until they either launch or are killed because of poor test results or a slashed innovation budget.
They rarely enter the portfolio because they are required to deliver a higher-level strategy, and they rarely exit because they are no longer strategically relevant. Why? Because the innovation projects in your portfolio are “assets that have already been created.”
What this means for you (and why it’s scary)
Swapping “basket” in for “portfolio” isn’t just the choice of a new word to bolster the claim of creating a new approach. It’s a complete reframing of your role as an innovation executive.
You no longer monitor assets that reflect purchases or investments promising yet-to-be-determined payouts. You are actively starting, shifting, and shutting down opportunities based on business strategy and needs. Shifting from a “portfolio” to a basket” turns your role as an executive from someone who monitors performance to someone who actively manages opportunities.
And this should scare you.
Because this makes the challenge of balancing operations and innovation an unavoidable and regular endeavor. Gone are the days of “set it and forget it” innovation management, which often buys innovation teams time to produce results before their resources are noticed and reallocated to core operations.
If you aren’t careful about building and vigorously defending your innovation basket, it will be easy to pluck resources from it and allocate them to the more urgent and “safer” current business needs that also contribute to the strategic changes identified.
It’s that time of year. The summer sun is beating down harder than ever. The grass is fading from green to brown, and no amount of watering seems to be enough. School supply lists hit your Inbox as Back to School sales fill your mailbox.
Yep, it’s almost Strategic Planning & Budgeting season.
You’ve been through this before, so you know what a strategy is (a set of choices and actions to get you closer to your long-term goals). You know why you need one (set common goals, create shared understanding and responsibility, align key stakeholders, inform priorities and decisions, enable your team to be proactive).
But do you know how to create a strategy that gets used?
No, I’m not talking about a process (though that is important). I’m talking about the experience you create and the expectations you maintain for your team as you develop the strategy.
Earlier this week, a client and I talked about this. We were preparing for a strategic planning offsite, one that we vowed would be different from previous strategic planning efforts that were somewhat successful (a new idea was launched and has since become an essential part of the organization) but left the team with lingering frustration about the process and skepticism about this one.
As we shared our thoughts and I scribbled notes, themes emerged. The next day after the themes were presented to the nearly 50 people in attendance, the head of the group raised his hand. “You’ve just described the I Love Lucy approach to strategy.”
Now, I love a good pop culture reference, especially one that requires a bit of history. But I did not get this one. As I scrunched my face in confusion, he explained, “It’s Ay yi yi yi yi!”
And thus, the I Love Lucy approach to strategy was born.
If you want to create a successful strategy, one that gets you closer to your long-term goals despite an uncertain and changing environment, how you create it must be:
Inclusive: Use the IKEA effect to your advantage and give everyone in your organization a voice. Different voices bring different perspectives to the process and help you avoid groupthink. Research from BCG indicates that “organizations that engage a broad group of internal and external stakeholders in their strategy development efforts yield better results than organizations that leave strategy in the hands of a small, central team.”
Illuminating: In the same way, it’s easy to ignore the softball-sized dust bunny under the bed until your mom comes to visit, it’s easy to ignore the parts of the business that aren’t broke but aren’t in an ideal state until strategic planning season. Your process needs to shine a light on all the nooks and crannies of your business, revealing all the opportunities and flaws to be addressed.
Innovative: You would never write a strategic plan that makes your business worse, but are you writing one that makes it better? In most cases, and often for very sensible reasons tied to incentives and metrics, teams write strategic plans for steady and safe growth. But there’s no such thing in unsteady and uncertain times. If you’re not thinking about what’s possible, you’re not planning to achieve your long-term objectives.
Internalized: A common entertainment trope is a villain who monologues for so long that the hero can escape. So you know who else monologues? Managers talking about strategy. And yes, everyone is looking to escape. Don’t be the villain, be the hero and create a strategy everyone can remember and repeat.
Implemented: The most useful strategic plan I ever saw was in a binder being used to straighten a wobbly table. It was useful, but not in the way its creators intended. If no one acts on your strategy, you just made a great table leveler.
Bonus Recommendations
For best results, I also recommend chocolate during the process and Vitameatavegamin after (or during but outside of work hours)
What are your recommendations for a good strategy development experience, a successful strategy, or an I Love Lucy marathon? Let me know in the comments below.
