Tuesday, October 25, 2011

What's the 'Matter' with Innovation Management? —Towards An Atomic Theory of Innovation Management

What's the matter with innovation management? Why haven't we advanced further in our knowledge and practice of it?

Interest in innovation management approaches—especially those that infer (but may not deliver) the promise to reduce uncertainty, improve returns, and increase predictability, or at least improve the risk/reward ratio—remains high. Difficulties in managing and measuring innovation efforts remain chronic. And there is as much signal as there is noise in the innovation management literature. It is safe to say that serious students and veteran practitioners of innovation and its management are not completely satisfied we have found the answers.

Perhaps there is nothing 'wrong' with innovation per se.  Instead, perhaps the problem is our preconceived notions on what constitutes the 'matter' itself—the matter or essence of that which we are attempting to 'manage'. 

Might we taking a different perspective by looking at innovation and its management as both matter and energy (and information)? This point of view may enable us to realize that it is not only the matter (thing) that we need to manage. It is also the energy within and around it that needs our attention as well.

The following article is an attempt to step back and take a different point of view on this 'matter' and energy, in both a playful and practical manner. 

The "Matter"

Why is innovation such a chronically unpredictable art? 

Despite years of research, management theories and principles—managing innovation remains at best, art and practice; at worst, luck. Hardly science. Innovation as a process is difficult, if not impossible to manage (which is why “parenting” innovation may be a better term than “managing”) partly because every innovation, by definition, is new and therefore, has its own peculiarities with respect to both its essence and its context. In this respect innovation and its management may be like chemistry, which is part science and part art. 

Patent attorneys use the distinction “predictable” and “unpredictable” to classify the type of domain within which they must develop the proprietary claims of an invention. Chemistry is an unpredictable art, whereas electronics is a predictable one. The difference is that an unpredictable art requires more actual experimentation to demonstrate its utility and feasibility; whereas a predictable art requires less. In fact, you can do a thought experiment rather than an actual one when dealing with a predictable art. This is not so easy when in the context of an unpredictable art. [It gets even more interesting when an invention crosses two or more domains, where one is predictable and the other is unpredictable, but that's another subject.]

As an art or domain of human endeavor, innovation and its management is more like chemistry than electronics—it’s more of an unpredictable art, than a predictable one. However, as in chemistry, there are some things we know that increase the probability that our efforts are not wasted. No guarantees, but perhaps greater probability, if we understand the science and “what nature wants us to know.” In other words, while innovation may be an unpredictable art, it may not be alchemy either.

Taking the chemistry metaphor a half step further brings us into the world of physics where physicists look at matter not simply as a fixed physical substance but also active energy. What you and I would call physical objects, at least at the atomic level, physicists assume are both matter and energy, particles and waves. Might we find in the physicists' perspective a more useful point from which to view innovation "matters"?

In fact, might there be an "atomic structure" to innovations and the management of them? If we are able to describe such a structure, it should prove useful to innovation practitioners, including sponsors, intrapreneurs, mavericks, and innovation midwives, in both creating the best “chemistry,” including the timing and type of catalysts introduced into the process. It should also contribute to a deliberate and managed increase in the probability of success with less relearning and wasted effort. So then, what might such a fundamental atomic structure of innovation look like?

The following is intended to be an initial description of an atomic structure relevant to the basic elements involved in most any innovation effort. Credit goes to the 2008 Innovation Practitioners Network who met in Colorado in May for the original and playful discussion of this architecture. 

Perhaps we should call this a "unified" theory of innovation management; Einstein's failed quest for such a unified theory notwithstanding. Then again, perhaps an "integrated" theory might be a better term. Whatever we call it, the gist of the theory we attempt to explain in greater detail in this essay can be stated in a few simple propositions:

•        innovations are comprised of matter and energy (and information),
•        innovations develop,  and innovation management, therefore, is developmental (versus operational),
•        managing innovation requires attending not only to developing matter, but also to changing energy and new and/or emerging information.

That's what follows in a nutshell. If you believe it, perhaps you don't need to read further. If you would like to think further about this, then reading further might be useful.

 Innovations are matter, energy and information

One of the first things that needs to be said and understood about the "matter" of innovation is that innovation is both matter and energy—it is both the idea and the innovators that co-create it.  This understanding of matter as both particle and wave is often the first thing that is ignored, when it comes to innovation management. An over-emphasis on the innovation—the thing—to the neglect of the innovators—the people and especially the relationships between them--leads to so-called "hand-offs." Thinking that an innovation is a baton that can be handed off arises in part when innovators are mistakenly regarded as fungible, particularly with reference to a particular innovation itself. When this thinking prevails, learning is often crippled, handicapped or stymied entirely. 

The Innovation Practitioners Network has come to view "adoption" of an innovation as a better way to think about what is intended to happen in a "hand-off." Adoptions occur after the innovation has been "born." Adoption infers that during the gestation period, it's probably a mistake to change players. In fact, even during and after the adoption, it may be advisable for some players who carry the tacit knowledge of the earlier developmental phases to remain, if only to carry forward the essential memory of what was learned in the early stages of development.

In contrast, hand-offs during phase changes that can and do occur during the development process can prove crippling, even lethal to the innovation. This is especially true if a hand-off coincides with a 'critical point' (what physicists regard as the normal but unstable period just prior to phase changes), as they so often do. More on this later. Suffice it to say at this point that while new skills may need to be brought on, the implicit memory of what has been learned thus far in the development of an innovation is essential to remember in order to guide the future developmental iterations.

General George Dorio, one of the original venture capitalists, articulated an experience-born piece of wisdom that still guides venture capitalists today. Dorio is attributed with saying "Give me a Class A entrepreneur with a Class B idea over a Class B entrepreneur with a Class A idea."
Successful venture capitalists know that the initial business plan is likely to change—sometimes completely change—such that what they are funding is really a team of agile learners, quick to recognize where and when improvisations are called for, and adept at making those adaptations. Contrary to this sage piece of advice, many of our innovation management efforts emphasize the importance of the idea or plan, and under-estimate the importance of the intrapreneurial team and their adaptive capability.

Recognition of this intersection between an innovation (a compelling need matched with a solution that effectively, and even cost-effectively addresses the need) and the innovators (those who collaboratively discover the need, invent the solution and find a way to make it work for all concerned) may at first appear self-evident. However, those charged with managing innovation efforts can inadvertently harm the very efforts they steward by being too quick to change players.  When this happens, the impact on the energy and ultimately the matter of the innovation itself can be serious.

At least in the early stages of an innovation's development, the energy and information applied to its development comes from the innovators. They are the initial carriers of the information and energy that is infused (or enthused) into the matter or system being developed. As innovators' creative energy is applied, the innovation takes shape and comes to life. What is involved in this creative energy itself—heat and pressure, if you will—is a complex set of factors and dynamics beyond the scope of our purpose (and perhaps knowledge of thermo-dynamics!). Our point is simply that matters of innovation involve both physical content and human energy. Ignoring one due to over-concentration on the other ends in wasted effort.

 Innovation is developmental more than operational.

We manage operations, but we parent innovations. We execute strategy, but we nurture innovations. “How well are we performing or are we succeeding?” are the questions we constantly ask of the businesses we operate. “What are we learning (versus re-learning) that is new about creating value for others?” is the question we should ask of the innovation efforts in which we are engaged. Innovation is by nature developmental more than operational.

This developmental characteristic strongly suggests using an emergent, evolving, stochastic model for innovation management. A linear, deterministic and finite model is more appropriate for operational contexts. Companies with undeniably strong track records in managing innovation, from Clif Bar & Company to Toyota, use some form of the following emergent model to help them know where they are in the innovation process, where they have been and what they need to do next.

Figure 1:  Simple Emergent Model  


Act—do something, not just anything, but something targeted, purposeful and in an appropriate “field.” Attend carefully to the experience and outcomes. Then, based upon what is observed, adapt the plan of action for the next cycle so that you are learning something new (in regard to creating value for end-users) in the next iteration of the cycle. The worst outcome is for subsequent cycles to yield only a re-learning of something that you already know. Toyota considers re-learning wasteful, and perhaps the most serious form of waste.

Phase change is a part of the developmental process for innovations

This simple emergent cycle is essentially the same but goes through different phases or states in the overall developmental process. It is much like what happens with a physical element (e.g., H20).  With the change of energy and pressure, the physical element moves from the gaseous or vapor (steam) state, through a critical point to the liquid state (water), before then moving on to the solid state (ice) state. Just as the element H20 can, with adjustments in energy and pressure, change states, so too, innovations with adjustments in energy, change their states in the process of development. 

As a chemical substance changes from one phase to the next, signs of the change are not apparent until after what physicists call the "critical point" occurs.  Then the change seems to happen all at once. The conditions necessary for these "critical points" differ from element to element, but show a consistent pattern. Critical points happen when all the necessary conditions align or converge, through extreme instability, before “flopping over” into the next phase, with the appropriate application of changed energy or pressure.

Innovations seem to have a similar developmental pattern. Sometimes their development shows no change at all. How often have operating managers asked of their counterparts in R&D what progress is being made and R&D managers have to wave their arms because they really have nothing to show at the time the question is asked. Then, not by any calendared or chronological cadence, the innovation goes through a very scary, unstable point and transforms into the next phase of its development. This is the maddening and seemingly unpredictable nature of an innovation’s developmental progress. It is far from linear and much less subject to a timeline, except in retrospect.

Figure 2:  Development Direction (through phase changes) 

                  Front End                     Potential Value Proposition           Validated Value Proposition

            ‘Vapor’ State                                   ‘Liquid’ State                             ‘Solid’ State

                                    Critical Point #1                        Critical Point #2
                              (discovery/invention)            (reduction-to-practice and introduction)


The earliest “front end” state of innovation is like the vapor state. The act-attend-adapt cycle for the innovation practitioner at this stage is about sensing, exploring and discovering, and perhaps even inventing. Insights intermingle with ideas, and both are carried, often aided and abetted by the conversations between people. In this state experienced innovation practitioners are typically engaged in forming, reforming and refining hypotheses about the causal connections and structure of the context or system that has captured their attention. It is as much about learning and understanding as it is about discovery and invention. Relationships between the people, particularly a dyad or triad of people, who welcome interactions with others, but maintain some continuity with the two or three consistent participants, seems to be essential for advancing the learning and enabling the “chemical” bonding that can occur between the insights, ideas, and people, searching for some resonance with a need.

When something is discovered or an invention is conceived—often these two appear either together or in close proximity in this front end state—it is a sign that the innovation may be at the first critical point and ready to move on to the more “liquid” phase. In this liquid phase a potential value proposition has begun to emerge. Acting, attending and adapting is now cycling with a bit more singleness of purpose and focus, but still in a forming or reforming condition. Michael Kennedy has spoken of this in his book, Product Development for the Lean Enterprise, referencing Toyota’s experience as the “floating spec” period (our paraphrase). This is when, contrary to conventional wisdom of casting specifications early and holding everyone one to them, Toyota has learned that it is much more efficient to float a preliminary set of “specifications” out there so that diverse and disparate teams have a common direction. The chief engineer during this period of time acts as a go-between, cross pollinating the various and diverse efforts with what is being learned in one group, before finally arriving at a fixed spec, which ultimately is required before the die is cast and production is readied.

The third or more “solid” phase begins when the potential value proposition has become “validated.” This happens when it has garnered enough confidence on the part of the innovators to commit to a fixed set of specifications. Frequently this is the point at which “hand-offs” occur, which is where much break down occurs, partly because, we believe, that this is the second critical point in the development of the innovation—an unstable period by definition—when the last thing you would want to do is change players!  There is still development work to do in this solid state—the goal of which is to move from fixed specifications to, what serial innovator Dick Sperry refers to as a "stable product."  A stable product is one that can be made repeatedly and used in a sustainable and even scalable fashion. This is what an operational host can more readily adopt, largely because the development—at least in this initial version—is finished. To reach a stable product requires cycling through acting, attending and adapting as well. At this stage, the iterations of these cycles demand a “real” environment in which to learn and understand some of the fine-tuning required to get a fixed set of specifications into a stable form. User interaction is essential.  Some companies use "discovery channels" (as apposed to the more traditional "test markets"—limited regional portions of the larger total target market) to provide this real environment for learning.

What may not at first be apparent in the progress made from one phase to the next is the evolving interplay of energy, information and matter. In the early vapor state, energy and information comes from the innovators themselves, searching, exploring, recognizing and initiating connections. By the time we get to the latter part of the solid state, the energy is much more directed, focused and controlled and coming from users using the stable product as a “tool” to get the job they need doing done, as Clayton Christiansen puts it. In the earlier stages, information about the context may be as important as information about the specific causal chain of what leads to what and why, to the extent such can be differentiated. In the latter phase, information becomes more focused and even more precise than in the earlier vapor state.

With all these changes occurring—often in the form of big leaps through unstable, critical points that in hindsight show dramatic developments—the elements in their basic atomic structure remain the same. This consistency of the elements throughout the different phases of development may be the more interesting characteristic, and may provide a helpful navigational guide for the practitioner. To this consistency we now turn our attention.

Attending to the ("Atomic") energy

While the innovation-under-development may go through phase changes, our hypothesis is that in each phase or state, the human energy and information that infects and intersects the "matter" of the innovation, itself, should be stewarded as well. More often than not an innovation gradually reveals itself to the innovators tasked with sensing its faint signals, conceiving it, “midwifing” its birth, nurturing it and guiding the organizational “parents,” and enabling its eventual adoption. Just as the atom is the smallest particle that comprises a physical element (not counting the sub-atomic particles), so we believe there is an analogous basic or smallest part in the innovation process—a process that is essentially bringing matter, energy and information together in a new way that provides new value. Understanding what the structure of this smallest part is can go along way to helping innovation practitioners manage their way through the vagaries, uncertainties and inevitable ups and downs of innovation with greater confidence.

The atomic structure we are proposing should maintain itself from one state of the innovation-under-development to the next, especially through the phase changes and critical points, just as the atomic structure of H20 remains the same whether it is steam, water or ice. What innovators understand in both a cognitive and visceral sense is that the elemental or atomic structure in the early vapor state carries over into the latter liquid and solid states. This is one of the reasons why it is so threatening to the continuity and healthy development of the innovation to lose that memory by changing innovators in externally imposed “hand-offs.” Each innovation, like each of the basic elements in the periodic table of elements, may have a different atomic weight, due to differences in the number of protons, neutrons and electrons, and differences in the density of the nucleus, among other differences like valences, etc. However, each innovation may be viewed as having an atomic energy balance, which dynamically responds to the application of "temperature and pressure" and the presence of other related and neighboring elements. This structure of the human energy may prove to be the useful part of this metaphor. Our initial hypothesis is that the basic atomic structure of innovations is a structure that maintains itself through the critical points and state changes that occur as a part of the developmental process, which can be depicted in Figure 3.

Figure 3: Proposed Atomic Structure for Management of Innovations



The nucleus of the atomic structure of innovation management or parenting is most assuredly found in relationships. When you look closely at entrepreneurial histories, we see consistently a sustained relationship. For example, in the case of Disney, it wasn’t just Walt, it was Walt and Roy. In the case of Hewlett-Packard, it was both Dave and Bill, and many others. In the case of Apple Computer, it wasn’t just Steve Jobs, it was Jobs and Wozniak, and currently others. The myth of the solo entrepreneur makes for a good read, but the real stories reside in relationships of trust and the focused, creative collaborations that grew in and through those relationships. It has become fashionable to speak about social capital as a way of describing this nucleus. One of our favorite truisms is “nothing happens except out of relationships.” This is no less true for innovations than for any other creative or generative act.

While relationships may form the nucleus (not just relationships between people, but also between people and ideas, insights, experience and knowledge) the electron cloud that surrounds the nucleus requires the coming together and holding together of three vertices. One has to do with purpose. It requires the innovators’ ability to empathetically identify with the customer’s need. The vision, discovery and invention(s) are born out of this empathy. This provides the essential context from which the value being created (remember Al Ward’s definition of innovation as “learning applied to creating value”) can be generated, invented or discovered. The second has to do with understanding, specifically understanding the underlying causal relationships. Understanding, to a great extent cognitive, comes from direct observations of experienced reality, whether in the form of simple observations or deliberate controlled experiments. This is a part of the innovation normally associated with the technology side of the equation.

The third “particle” or vertex has to do with sensing and is another direct link into the value being created. While understanding causalities is more rational, this one is more emotional. This is not to say it is irrational, but it’s other-than-rational. Well-intentioned business minded people attempt to be dispassionate in their assessment of the innovation and its potential. However, many innovations are crippled or aborted because of this inadvertent effort to be objective. Who ever heard of a dispassionate parent when it comes to matters affecting their child? This element is where a type of motivation is located that arises from "wanting to innovate," more than "having to innovate" though more often than not our motivations for innovating are some mix of these two.

The “magnetic field” dimension of this atomic structure—the energy that is essential to holding the particles together—also describes an unseen but essential dynamic of most innovation efforts. Though density and valences may change from one state to the next, when it comes to an innovation-in-development, heads, hands and hearts are essential. Drop any one, and the effort is either doomed or unsustainable.

Given the sub-atomic realities that challenge strict differentiations between particles (Newtonian matter) and waves (energy), it could easily be that our vertices might better be labeled "head," "hands," and "heart," while that which connects them are imperatives to "empathize," "understand" and "sense." Whichever you preference, the main point is really two-fold: (1) that the essential "matter" and energy of innovation management of necessity requires all these elements.  If one is missing in any phase, the effort is doomed; and (2) that at the very center of any innovation effort is a sustained relationship—whether a diad, triad or "ensemble" as Gary Erickson likes to refer to it—which should be sustained and encouraged (not handed off or transferred) through the unstable critical points of the innovation's normal, difficult to predict, phase changes.

Atomic structures seldom stand alone in isolation, except perhaps in clinical contexts isolated under sub-atomic microscopes. The same is true for innovations-under-development. Like the atomic structure of an element, the innovation may respond to the particular energy field or state they are in, reflecting the effects of their surrounding state in the bound or excited state of the electrons and in its valence shell. In a like fashion, the newness characteristic of all innovations—that which comes from the bringing together of diversity, or the connection of previously unrelated things, ideas or insights (e.g., a known method applied in a new context)—may be governed by how these atomic structures interact and bond with the structures of other elements around them, and even points of intersection within the established host business system.

Certainly there is more to consider and some experiments to run to demonstrate whether this atomic theory of innovation and its management has sustained practical value for practitioners and can actually lead to improved results. For example, should we be designing ways to monitor if not measure both the energy level and flows, or valences and their fluctuations during the course of an innovation's development, not simply the milestone outcomes? How can we measure the energy and monitor the balance of head, heart and hands throughout the effort? 

For now, we will have to be content with the criticisms and connections of our readers, from whom we welcome a response.

Special thanks to our Innovation Practitioners Network collaborators on this thought piece including Greg Blythe, from Hewlett-Packard Company, Doug Gilmour, and of course, the participants in the Spring 2008 Innovation Practitioners Network.

This article was originally published in September 2008. Call (415) 387-1270 for more information.