Making innovation pay

It seems every CEO these days wants their company to be “innovative”.

I think it’s key to distinguish innovation from invention, because they’re often confused. According to Peter Denning

An innovation is a transformation of practice in a community. It is not the same as the invention of a new idea or object. The real work of innovation is in the transformation of practice.

In the USA, it’s not our skill at invention that’s the bottleneck, it’s our skill at innovation. It amazes me how reluctant our culture is, at every level, to seek out and copy best practices.

The active seeking out is critical, because we all tend to decide what’s possible for us by looking at our neighbors, and it’s hard to imagine there’s already another better way to do a thing, maybe on the other side of the planet. According to Wikipedia

Not invented here (NIH) is a term used to describe persistent social, corporate, or institutional culture that avoids using or buying already existing products, research, standards, or knowledge because of their external origins. It is normally used in a pejorative sense, and may be considered an anti-pattern. The reasons for not wanting to use the work of others are varied but can include fear through lack of understanding, an unwillingness to value the work of others, or forming part of a wider “turf war”. The opposite culture is sometimes denoted proudly found elsewhere (PFE) or invented here.

As a social phenomenon (sociology), “Not Invented Here” syndrome is manifested as an unwillingness to adopt an idea or product because it originates from another culture, a form of nationalism.

I’m reluctant to quote T.S.Eliot, because he was a bigot, yet he was also a talented poet and critic. According to Eliot

One of the surest tests [of the superiority or inferiority of a poet] is the way in which a poet borrows. Immature poets imitate; mature poets steal; bad poets deface what they take, and good poets make it into something better, or at least something different. The good poet welds his theft into a whole of feeling which is unique, utterly different than that from which it is torn; the bad poet throws it into something which has no cohesion. A good poet will usually borrow from authors remote in time, or alien in language, or diverse in interest.

See also the presentation “Steal like an artist”.

How to counteract the not-invented-here syndrome? Companies could start by putting their money where their mouths are and building serious incentives for innovation. According to Aaron Shapiro

Performance evaluations for managers should include assessment of the volume and quality of new ideas they brought to the table.

And they don’t need to be ideas that are new to the whole world, just new to or unused in their organization. For example, if you hear from somebody in another group about a great tool they’re using, then making your group aware of that tool should count as a valuable new idea.

But the bigger incentive problem is that in the typical company it’s pretty foolish for them to let you know about that great tool in the first place. The only thing that might save them is the not-invented-here syndrome. But let’s suppose the tool is so obviously great (or so easy) that innovation is possible.

Consider a team who is creative and does things in a rational way compared to others, highly effective, developing tools with their opposable thumbs. If they successfully share their most important tools and techniques, they immediately lose their relative advantage, because they’ve lost the secret sauce that’s getting them better results than other teams.

Why is there no significant reward for teaching the wider organization new and better ways?

A possible explanation – it’s not measurable. Within a company the happy new users of the tool or idea won’t need to even check out a license, let alone pay a fee to the inventors.

If CEOs really want their companies to be innovative, they need to find a way to translate the spreading of great ideas into significant cold hard cash. If the only way to profit from your idea or insight is to keep it your personal trade secret, then that’s what you’ll do.

I think you probably know at least one person or team that you’d love to clone, because the organization would be hugely more effective. So why not approach the most effective people, who are getting the most measurable results, and instead of giving them a thank-you and a token of our esteem at a communications meeting, offer them a 100% bonus for the year if they teach their methods to everybody? That would be like paying for one additional person-year to get a return of many person-years.

Would you hire one person for a year if they could greatly increase the effectiveness of the organization? Well, why not just hire the stars you’ve already got instead? How much money does your company already spend on highly-paid consultants and on useless training? But you could be spending that money making innovation pay.

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