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When it comes to innovation, you probably *shouldn't* leave it to the professionals
Technology has brought so many changes to business - enabling new business models, compressing the lifespan of others, but ironically one of the biggest changes it brings may be in how we think about people and where their greatest strength lies for businesses. This piece from Toby is a great view of the full range of innovation and strategy - from the ten thousand foot view of the macro changes that businesses are grappling with, down to the two inches reality of how people, not professionals can be the difference between spotting and capitalising on opportunities in change vs the pitfalls of focusing on business as usual in unusual times, enjoy! - Tom
Business developed a professional class to ensure the quality of management and the deep expertise to run businesses efficiently. Yet somewhere along the way we got lost. An approach designed to improve the quality of how a business was run became overrun by the pseudo science of “rational models” and the dispassionate treatment of businesses as mechanical things with replaceable parts and resources rather than organic and whole entities full of human beings. This matters less in a steady state world, but when technologies move from nascent to mature, businesses from angel funding to unicorn status, product life cycles from decades to years and the business is crying out for some originality, some spark of an as yet unimagined future, businesses are too busy designing out perhaps the one thing that brings forth possibility, creativity and engagement, our people.
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The shift from artisanal craft to industrial process was triggered by Adam Smith’s reflections on the division of labour and the fabled pin factory. This understanding of productivity spread through the pre industrial world to create methodologies and technologies that enhanced productivity. Manufacturing was THE driver of economic growth for multiple centuries. Naturally this simple model of division of labour was lifted and dropped from the factory floor into management.
This came in the theories of scientific management developed by Taylor and the later application across notably the car industry via Henry Ford and Alfred Sloane, that led to the industrialised wealth creation we saw during the twentieth century. The various tools and approaches that continued to support this notion of wealth through efficiency became ubiquitous. The use of Time and Motion studies, the reengineering boom of the 1990s and the remote productivity checkers (keyboard clicks) that became popular during the lockdowns .
Business efficiency was a huge breakthrough and its division of labour basis made a lot of sense in the broader context of the age. Business operated in a world of predictability, stability and passive consumers. The market was a virtuous circle of lower costs, higher productivity leading to more wealth and growth across the economy and a growing demand from consumers. Added to this high barriers to entry driven by capital cost and economies of scale meant businesses could get on with getting better.
The making of the professional
This led to the strong growth of the professional class. The managers designed businesses to seek out and improve these corporations. THey spread their expertise across the increased division of labour through functional specialisations, so we got departments, from concrete and anchored such as finance and legal, to more exploratory and creative such as marketing and strategy. All of these brought considerable value and considerable intellectual horsepower to bear.
These professionals have expertise in a functional domain and work within a given structure and set of processes that run with that expertise. This drives shared models, centralisation and agreement around a core set of skills and behaviours that together make this work. They are expected and expect to broadly follow approved approaches to a challenge, often locked into Standard Operating Procedures and bolted down into some software. This is all designed to ratchet in the impacts of efficiencies in processes that have been optimised and, added up, aims at driving out cost and variability in the delivery of activities. Scale existed not just in the production lines, but in this highly tuned expert layer embedded in the professional class.
But buried inside was a hidden metaphor of the mechanical age, of cogs and precision parts, of zero deviance, of highly repeatable and systematic approaches in a controlled environment, of resources that could be tuned to higher and higher tolerances.
And the world shifted
We don’t live in the mechanical age anymore, we live in the digital age and it is characterised by very different market conditions to the ones that gave rise to the professional class. The digital age is everything but stable. Insert any metaphor you have for speed of change, I am still a fan of Justin Trudeau’s “The pace of change has never been this fast, yet it will never be this slow again” as every day you say it is true. This change is driven by the same celebration of technology that kicked off the twentieth century, the difference digital is constantly changing the rules, whereas industrial, with its high capital cost, worked by sticking to the rules. Technology looked incremental back then, but we can now see it is exponential and this has consequences. This isn’t a landscape of high predictability, this is a landscape of growth and decline, of stock surges and collapses, of new new things and big challenges. Technology feeds technology, ideas have sex , stuff happens, society changes.
Businesses as a consequence have changed, and how people think about businesses have changed. We have theories of Agile, of Lean Start up, of disruption that help navigate through the changes and help businesses find ways of adapting to this much more turbulent environment. The nature of business looks different, Andressen talked of software eating the world, back in 2011. He has reframed and suggests that nowadays there is no such thing as a software company, every business is software. The building blocks, the way we think about markets, the very fabric of a business has shifted. Yet somehow we still have this model of the professional, this version of what leaders and managers do, of how we build silos of expertise and drive efficiency in each, with a vague belief somehow that fixing the parts adds up to a better whole.
Today’s professional context
We have refreshed nearly everything about how we think about business, but somehow this legacy model of professionals and how we turn up at work remains. The benefits we have reaped and can continue to reap from this celebration of expertise and knowledge are too easily obscured by a mix of things. Firstly this jarring oxymoronic juxtapositioning of embracing change at a business level at the same time as inside businesses we hold tenaciously onto a set of management practices that suited a different age. Secondly professionalism has led to a stasis around working practices, of process alignment, of standard operating procedure models that lock down processes into a software to make it unchangeable. The lessons of zero deviation have landed up in the digital age. Finally professionals have created strong silos of expertise, a ghettoisation of language and strong moats of their own to define and justify their role.
This alignment around process and metrics has embraced some of the digital tools to continue to play out this version of reality. In the previous version of Looking Up Looking down #2 Tom commented on Thi Nguyen’s discussion on “ A philosophy of gaming that is really a philosophy of life”. In that interesting discussion he reflects on the use of data and data aggregation. He comments that businesses aggregate data that is scalable and what is scalable is homogenous data , so make all datapoints the same. The data sought with the new capabilities is the data of efficiency and process This allows rapid and global reading of a business against those metrics, which is hugely useful but what is lost is the non scalable richness and nuance of individuals. So here we are again, back to efficiency and alignment.
The other risk of professionals is they exult their role and expertise and define the world through that lens. This creates extreme difficulty in seeing another configuration of the world, because it often involves shifting or even eliminating expertise. A good example is in the phone industry. Nokia was totally focused on optimum cost and having a huge supply of components to create multiple models. Apple changed the whole story by looking at the whole thing and creating one answer. Nokia’s battery engineers couldn’t get their heads around a day long battery not a two week battery, the production engineers couldn’t get their heads around not managing for component costs, which to Apple didn’t matter if you were selling for $600, marketing couldn’t get their heads around a phone even costing $600. Each of these changes challenged what the professionals “knew to be true” about their area of expertise and meant Nokia went from bring 45% of the handset market to less than 2%. Professionalism, its silos and expert lens on the world stops them seeing disruptive change, because it throws in the air everything they have built their career and expertise on.
Building an innovation muscle
So in a business context that pretty much everyone agrees is one of constant change and adaptation, the one thing we aren’t changing is how we actually run the day to day. This doesn’t really add up, because what we know of constant change for businesses is that it needs innovation. In the mechanical age innovation was about line extension, again makes sense in the overriding context - same production line, similar market. We have since moved from line extension to product and service innovation to business model innovation and ecosystem innovation. If the technology age is the digital age, then from a business perspective we now live in the innovation economy.
This is where startupland got its spurs, in the bountiful blend of imagination meets possibility. Start ups are designed to sniff out new possibilities, and treat industry truths as the assumptions they really are. Their success sits somewhere in the combination of an understanding of technology possibilities with some read of a need that existing businesses have forgotten about in the pursuit of efficiency. Innovation is not spurred by the fuel of stability but rather by “obvious in retrospect” beautifully simple insights that change how we look at a problem, the “obvious in retrospect” being almost the leitmotif of a truly great innovation.
The fuel for this is a mix of imagination and intent. Enough studies on the nature of innovation point to the need for diversity of thinking, more private knowledge in the room being accessible to the people trying to see things differently. It is this combination of a multitude of collective insights and the ability to see patterns, to extract a narrative that feels new and insightful that creates things worth looking at. Beyond that the story continues into exploration, challenge, trying things out, reframing, engaging and letting go. These do not look like skills you typically see in the legacy businesses we see around us.
People not professionals - hiding in plain sight
This shift to an innovation economy needs a way of joining up the dots and it turns out that dispassionate scientific style observation is the worst way to go about this. . Innovation asks for people with stories and patterns and experiences that are contributive, people that bring private knowledge not accessible to the group, people happy to explore, happy to be wrong, fueled by curiosity. This isn’t a job for professionals, its a job for real people.
Pirsig in that source of constant insight “Zen and the art of motorcycle maintenance” kinda comments on this and the failure of scientific method to actually solve for a changing future.
“ What you’re up against is the great unknown, the void of all Western thought. You need some ideas, some hypotheses. Traditional scientific method, unfortunately. has never quite gotten around to saying exactly where to pick up more of these hypotheses. Traditional scientific method has always been at the very best, 20-20 hindsight. It’s good for seeing where you’ve been. It’s good for testing the truth of what you think you know, but it can’t tell you where you ought to go, unless where you ought to go is a continuation of where you were going in the past. Creativity, originality, inventiveness, intuition, imagination - “stuckness,” in other words - are completely outside its domain.”
He sort of suggests what ultimately we all know outside in the real world, beyond the office doors, that this is what people do. And weirdly in the business these people are your professionals, just hiding in plain sight, behind the rules and processes the business laid over them and rewarded them for following. These people behind the professionals have a thousand fold more stories. THe conversations they have had, the friends they have, the films they watched and the books they read, the hobbies they practise, the life they have lived.
Their richness is exponentially greater than their professional self: “5 years Financial Controller EMEA”, for example, and has so many more patterns and models to draw on. And they are also people who live, breathe, love and live in the whole wide world, not just in the rarified universe where the company product line is the centre of the known world.
Start ups themselves have bumped into this, and talk a lot about culture and creativity. Reed Hastings at Netflix explicitly talks about this in his book (co authored with Erin Meyer) “No Rules Rules”. He talks about the business prior to Netflix, Pure Software, where every time he ran into a problem he redesigned to solve for it, seeking a zero defect business. But realised that the only people left were the ones who knew how to manage the process, not the ones who bucked the system. This is the lesson he took to Netflix. And then articulated many of the lessons so well (reality checked by Erin Meyer) of what he took from there. But it still feels like a second order reflection, not a natural design principle, discovered by the start up reflex to explore, test, pivot rather than a grounding framing of how a business could be run. It should really be a place to start not a place to end up in.
When innovation is about seeing through not looking at, about being the most curious person in the room, not the smartest, it is as good a guarantee as you are going to get that finding the people in the business will absolutely deliver better innovation. They will see broader, connect further, find richer and when you play to their mix of skills with that intent the professional side comes boldly in with expertise.
I remember some work with a global spirits brand, where a friend was trying to get support for the innovative stream of projects she was overseeing. Instead of asking for allocations of resources from finance and the like she held an informal cocktails session after work ( one of the fringe benefits of being in a global spirits company) and sold them the story of the ideas. She got volunteers, people excited by the idea. On one project I remember the legal volunteer, instead of looking to cover the project with legal caveats and blockers, found a really helpful way through the legal morass and got us to a definitively better solution. This is absolutely better, the creativity and excitement partnering up with the deep expertise.
Unlocking the people
As my son would say “ I’m not gonna lie” (nice to know some parental learning seeped through). I don’t have a “grown up walking around” thesis for the answer to this. I do know people can do this because I have seen them do it. So I am putting out some things that I believe nudge us in the right direction and hope it starts off some more sharing and conversation about how to do this. Who knows maybe there is some amazing perspective out there I just haven’t got my hands on yet, so if you have it let us know!
But three things spring to mind in how this can happen:
The first is something I learnt at WhatIf. I think they intuitively got this but not sure they ever articulated it nor made it into a way of thinking about businesses. They selected the right people, created the right frameworks and tools and off they went. What What If knew at the time really well was how to make people creative. This turned up in everything they did, from how they turned up at a pitch (weird and wonderful) to how they orchestrated conditions that made people naturally more creative.
The secret sauce in all this was a mix of a destabilising tendency to turn up as themselves, and then playfulness. Turning up as yourself means everything from how you dress to what you are comfortable doing and talking about with a client. If you turn up looking like the client they subliminally think you play by their rules, when you turn up differently they have lost a slight confidence in the way the rules will be played. And the one thing you knew about What If in the old days was they weren’t going to play by your rules.
This destabilisation then continued into how sessions were set up, in strange locations - we took an oil major, used to swanky hotels in the rolling English countryside to a slightly dodgy photographic studio in East London. It turned up in things called “energisers” to reframe, and get people engaging, laughing. I remember with a very good friend getting a bunch of German engineers to play rock paper scissors as Star War characters. I think his hidden knowledge was the overlap between German engineers and geeking out on Star Wars was huge. They loved it. It turned up with unusual invitees to give different perspectives - working with windfarm maintenance crew we got them to talk to a police despatch officer about emergency call outs - turned out to be all about making decisions in real time with imperfect information about the future. It turned up with out-of-step homework. Again with an oil major where we were exploring the future of intelligent mobility instead of reading some dense literature we had them get their children to draw the car of the future. At the session when asked to present, instead of Head of Marketing South East Asia presenting her son’s flying car we got the proud mother and everything that came with that, the whole person.
These approaches do three critical things. Firstly they are playful and playfulness encourages people to turn up, it breaks down the professional barrier. It is literally the opposite of classic consulting, where the model is “ maintenance of the consulting guard”. When people turn up they lose inhibitions and are willing to explore, be wrong, have fun.
Secondly it destabilises their reality and their rules. This has two consequences, firstly they can’t figure out what the rules are so they lose their professional authority, which opens them up to different roles. Secondly in destabilising, it loosens their views of the truths that inhabit their world and opens them up to new possibilities.
Finally it accesses the wealth of patterns inside the person but hidden from the professional. These patterns are all the things I talked about earlier and their volume and diversity is orders of magnitude greater than their professional patterns.
The second is so well demonstrated by how Reed Hastings talks about Netflix, and these lessons can be well applied to at least the innovative elements of a business, if not the whole business. This is what I would call “Adults in the Room”, to gleefully steal from the title Yanis Varoufakis’ take down of the EU.. In businesses this turns up as assuming you are working with adults not children. And this turns up as a significant reduction in the “future proofing” processes that plague businesses. These are things like expense policies, days off, process respect and the like. I love how at Netflix people are just asked to be reasonable with these sorts of things.
When you believe people are adults weirdly they turn up like adults. They don’t go crazy on expenses, they respect money as if it were their own, and they make their own choices. Adults in the real world are not transactional and don’t need metrics or simplistic tools to decide what to do or interpret the world. They interact with the real world and use models to understand, they aren’t behoven to models to interpret the world. As a consequence they are totally capable of complex trade offs, of understanding and mapping stories, of making choices not diven off simple metrics.
Finally there is something about creating and recognising curiosity and bravery and how you organisationally set up for this. I remember a great story (can’t remember who) where this individual recounts how he was at J & J and wanted to try a new product and approach. He got budget, launched it and it was a disaster. A few months later he was called in by the CEO. Trepidacious and expecting a slap down he was truly surprised when as he went in the CEO stood up and came round his desk to shake his hand, saying if people weren’t trying and failing then how would the business ever learn?
I have seen this when working with an incubator set up within an (that same) oil major. The team were so well supported by the CEO at the time, the framing of the challenge was “ what beyond oil?” and the budget discussions were something along the lines of” $1bn is too much, $1m is too little, let's go somewhere in the middle”, no business case proof, no ROI specifics, just a recognition of the need to explore and the need for a lack of operational business overlay.
What I thought particularly helpful in all this was a mix of how the CEO and the leadership team set up for this, recognising they themselves would bring operational baggage, and then how the team responded to this and explored, challenged, destabilised. They created different metrics, a different sort of rhythm (less frequent check ins but more in depth), a willingness to go beyond their comfort zone and an expectation that the team would challenge how they thought, how they worked and how they turned up. A credit to the team for doing all of these things. One other top tip from managing this most excellent team, by the by, was to make sure your innovation team reminds you of a sitcom cast, all different, all personalities, diversity is as much in characters as it is in demographics.
Future of professionals
You need professionals in your business to bring the quality of their thinking and the specific expertise they have. You need the focus on efficiency and quality of intervention, just not all the time. The compression of business model life cycles means you still need a phase of making hay while the sun shines, where doubling down on the business model you have gives you the extra margins, where you build the moat and fill it up. The challenge is that these don’t last so long, so whilst the professionals are busy making this happen with one eye, with the other those same people need to be thinking about what next. The challenge isn’t finding people, It is how to get the professional and the person, and ensure that the person gets the last say. The person knows all the things the professional knows and the rest, and doubts themselves, the professional only knows what they know and acts with supremely misplaced confidence. The person should guide, the professional execute.
The reflections are a mix of things I have experienced, things I know, things I think I know (called assumptions) and conjecture mixed with belief and hope. I believe and want to believe that people make businesses hum, that the people in the business mistakenly only characterised as roles and professionals, are all capable of doing that in the right context, and out of that more established businesses will find their second and third and fourth wind. Add your comments and reflections, I am sure we will be revisiting this question at a later date….
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