Sunday, February 6th, 2011

The Problem of Innovation

And his disciples asked him, saying, Why then say the scribes that Elias must first come? And Jesus answered and said unto them, Elias truly shall first come, and restore all things. But I say unto you, that Elias is come already, and they knew him not…Then the disciples understood that he spake unto them of John the Baptist. – Matthew 17:10-13

Behold, there went out a sower to sow: And it came to pass that, as he sowed, some fell by the way side, and the fowls of the air came and devoured it up. And some fell on stony ground, where it had not much earth; and immediately it sprang up, because it had no depth of earth: But when the sun was up, it was scorched; and because it had no root, it withered way. And some fell among the thorns, and the thorns grew up, and choked it, and it yielded no fruit. And other fell on good ground, and did yield fruit that sprang up and increased; and brought forth, some thirty, some sixty, and some an hundred. – Mark 4:3-8

I was privileged to give the keynote address at Friday’s urban innovation symposium put on by the graduate student association at the UIC Department of Urban Planning and Policy. I’ll be posting an audio at some point, but I wanted to reprise for the blog the first part of it, which is about the real problem of innovation.

A lot of innovation events, contests, initiatives and such seem to be about how to get more innovative ideas or stimulate more outside the box thinking. But I’d argue that finding innovative ideas is easy. It’s implementing them that’s the hard part.

As many of you know, a couple years ago I won a global innovation competition to generate ideas for boosting public transit ridership in Chicago. My entry was a comprehensive program of over 50 ideas. After winning, I was actually able to present my program in person to the CTA’s senior leadership.

How many of those ideas do you think were implemented? That’s right. As near as I can tell, none. Now, that’s not to say they were all practical ideas, as I was trying to be innovative. And I think most of you know that I’m a big fan of Rich Rodriguez and the team at the CTA. In fact, I think they really have done a lot with innovation, from train tracker to the new fare system that’s on the way to adding remote sensor technology to old viaducts. The point is that ideas by themselves have little value, no matter how innovative they are.

The sad reality is that most cities and organizations have enormous structural and cultural barriers to innovation, and it is in overcoming these that true innovation results. I’ll share a couple below.

The Tyranny of the Org Chart

I spent 15 years working for a major international consulting firm. I spent most of that time out doing work for clients, but the last three I spent in an internal staff position. When I was out at clients, I always thought people hired consultants because we were really smart guys. We had the best practices, the innovative thinking our clients said they wanted, etc. We’d put together fancy Power Points and show them to the VPs and such and they loved it. I’m proud to say we accomplished a lot of great things for our clients.

When I took my internal role, I was excited to get to apply the same tools and thinking to my own company. I thought it was going to be great. Instead, I’m sad to report that in three years, I totally failed in my ambitions. It wasn’t that I did a bad job, but I was able to deliver little of the innovation I’d hoped, and few of my ideas were adopted.

It was then that I realized why people really hire consultants.

When you occupy a box on an org chart – in a company, a government, etc – or a known position inside a social structure, everything you say or do is seen through the lens of that box. If you are a middle manager say, what are the odds that you can even get access to the CEO, much less have the CEO act on your ideas? It doesn’t seem likely.

Consultants, by contrast, exist outside the org chart. To steal a phrase, they stand behind a “veil of ignorance” about their status in the hierarchy. Consultants take great pains to maintain this, which is one reason why consultants have such nebulous, generic titles. It’s to disguise the fact that the “partner” consultant is actually middle management in his own firm. This enables even top level executives in large corporations to engage with the consultants in a totally different type of way.

In fact, I hate to say this, but a lot of times all consultants do is talk to middle managers at the client and document up what they’re told for higher level consumption. That’s one reason middle management particularly despises consultants.

I call this principle the “tyranny of the org chart” and consider it one of the biggest barriers to making innovation happen. As virtually all innovative ideas occur below the top levels of the pyramid, they become imprisoned in lower levels of the organization. This is as true of cities as it is of companies. I’ll be the first to plead guilty to the offense myself, as I’ve little doubt that I’ve behaved any better than anyone else in my career on this point.

I think this also accounts for why so many innovators have to leave town to find success. I have noticed for myself that while I’m most closely associated with Indianapolis and Chicago, virtually none of my major breakthroughs or milestones in building my urbanist career came from those cities apart from the transit innovation contest, which was a blind competition. In your home town people might not know who you are, but they know you who aren’t – and that’s one of the boys. Whereas people in other cities don’t know or care about anything but the value you bring. Perhaps that’s why, as they say, “an expert is somebody from out of town.”

Interestingly, CEOs and other top level leaders and thinkers are actually very receptive to new ideas and new people. It’s the lower layers, possibly because they are less secure and feel more threatened from below, that tend to try to squelch things. It’s an organizational axiom that’s rarely failed me that the higher up you go in the pecking order, the more open minded and flexible people become – and certainly much more open minded and flexible than those who work for them would lead you to believe.

The Play It Safe Mentality

This is another classic barrier and is aptly summed up by the old tech adage, “Nobody ever got fired for buying IBM.” People have a nearly overwhelming desire to go with a known quantity versus an unknown, and the tried and true versus an unproven idea.

I’ll give another personal example here. I started my blog over four years ago. I wasn’t a senior fellow at the Brookings Institution nor a hot shot academic from Harvard or something. But I thought I had something to say and wanted to put it out there. Sure enough, I quickly started building an audience.

Among my readers were journalists. They would start contacting me for help with stories they were working on, which I was delighted to supply. But they almost never quoted me. In fact, I even had one journalist tell me directly, “You aren’t authoritative for us to quote in this article.” For about the first two and half years of the blog, I had extremely limited notice, despite my readership.

Then when I won the transit contest I got my picture on the cover of the Chicago Tribune. That was thanks to the Chicagoland Chamber of Commerce, and certainly not to me, so I’m very grateful to them. You’d better believe I featured that prominently on the blog. Then shortly a journalist from Detroit talked to me and wrote a column about my ideas on talent in her paper, which I also blogged. Then the Christian Science Monitor did a piece. All of these I put up on my blog. As a result, people now see that I’ve been used as a source by others, and so feel safe using me themselves.

I’d like to think I’ve gotten better with age, but I don’t think I’m that’s much better than when I was starting out in the blog business. The difference is less in me, than in how people perceive me. Now imagine if this were something with serious stakes at risk and see how much less likely it is people will take a chance on the new.

People wonder all the time about things like, “How did we lose Mark Andreseen and Netscape to Silicon Valley?” Well, the answer is easy. He wasn’t Mark Andreesen then, he was just a punk college kid. Or rather, he was Mark Andreesen, but they knew him not. How many times have we seen this movie again? That’s why I say that it’s highly likely nothing has changed, and the next Mark Andreesen who comes along will get the exact same treatment. Too many cities and companies just sit there waiting for Elijah to come, not realizing he’s already passed them by half a dozen times already (assuming they didn’t behead him the way Illinois tried to do Andreesen).

If you are a city trying to build a cultural of entrepreneurial innovation or some such, a big challenge is how to find and support the potential tomorrow’s big success stories before they have their first major startup exit, not just celebrate the people who’ve already made it, which is only innovation via the rear view mirror. Any fool can tell you which horse you should have backed after they’ve already won the big race.

So You Want to Be an Innovator?

It’s sexy to be an innovative, outside the box thinker. Not so much to be the effective organization man who figures out how to make things happen. Our heroes are people like Thomas Edison inventing the light bulb or Alexander Graham Bell the phone.

But if you really want to make your ideas actually happen, if you want to really change your city for the better, to do something new and innovative that will take it in a better direction, then you should spend less time thinking about ideas and more time studying organizational theory, politics, sales, relationships, and the art of getting things done. Because the people who’ve mastered those skills and who can take their idea through to reality are the ones who’ll make a real difference.

For top leaders themselves it’s the same challenge. How can they create the conditions in which structural barriers like the tyranny of the org chart or the play it safe mentality don’t sabotage innovation?

If we consider the parable of the sower, we tend to think that the problem of innovation is not enough seeds. But the true big problem is not enough good ground. Every city and organization I know has tons of seeds raining down on them every day. I’m constantly amazed at the incredible innovative thinking and ideas that I come across in practically every city I visit. The problem is that most of those seeds are landing on the rocks or in the weeds.

That’s the challenge to any mayor, CEO, or civic leader who wants to create a culture of innovation in their organization or city, not to create a place with more new innovative ideas, but a place where more of the innovative people and ideas they do have can land on good ground.

10 Comments
Topics: Economic Development, Urban Culture

10 Responses to “The Problem of Innovation”

  1. Danny says:

    I was an analyst for a venture capital company with a fairly well proven track record of good returns. This is the type of company you could expect to give innovators their fair chance at success, right? Wrong.

    Even in venture capital, even of the successful variety, venture capital very rarely identifies innovation. In fact, as an analyst, I was prized more for my ability to turn down ideas than I was for my ability to identify good ideas. And sure, it is obviously important to filter out bad ideas…but in order for them to take me seriously, I had to have a proven track record of filtering out ideas.

    As it turns out, one of the very first business plans I had reviewed was an incredible business opportunity…a truly 100x return possibility. I tried telling them what I thought of the business, but to absolutely no avail. And guess what happened…that company went with a small angel investor instead and that investor made >100x returns on his small $100k investment. A huge missed opportunity for the sole reason that I hadn’t yet made a name for myself as a sufficiently cynical analyst.

    After I had left the company, I thought I would take a chance at pitching an idea of my own. Not innovative enough. That is, it wasn’t innovative enough until they heard that one of their affiliates was interested in funding my business. Then, of course, they were willing to listen.

    Yes, even the innovation experts, the absolute masters of the trade, absolutely suck at identifying innovation. The best that they can do is to identify heuristics which, at best, can identify an innovative opportunity with a slightly higher success rate. We can ALWAYS get better at it.

    This was an excellent article and it is refreshing to see the right attitude toward innovation in the civic sphere. I think you understand the concepts behind identifying innovation better than most of the venture capitalists I know.

    As a side note, if you want to learn a bit more about the hows and whys of sabotaged innovation, and how to combat them, Cass Sunstein wrote an excellent book that summarizes boat-loads of academic research on the topic. It is called “Infotopia: How Many Minds Produce Knowledge”. You would like it.

  2. Mauricio L says:

    A great article. I’ve been thinking about innovation lately and, among other things, how local governments can choose “innovation winners” to create employment clusters that can bring jobs and income to cities via public policies and incentives, as many are trying to do. Your article and Danny’s comments lead me to be VERY skeptical of government acting as venture capitalists altogether and innovators outside their main core functions. And on top of it all you have all the politics to deal with…

  3. EngineerScotty says:

    Since you mentioned IBM… http://c2.com/cgi/wiki?IbmManagementGame

  4. carlos9900 says:

    Aaron, very nice article

  5. EngineerScotty says:

    Following up on the IBM story linked to above (which may be apocryphal), it’s amazing how much social status can factor into decision-making, even among conscientious decision-makers who Ought To Know Better. As you point out, the value of consultants is that they permit good ideas to come from people not perceived as peons–and many decision-makers tend to perceive their underlings (who they hire and pay money to provide them with advice) as not to be entirely trusted.

    Here in Portland, our local NBA franchise is owned by one Paul Allen, a Microsoft gazillionaire and boyhood friend of Bill Gates, who has a reputation as a notirously bad businessman who lucked into his fortune. (An unflattering biography of him is called “The Accidental Billionaire”). Much of the local scuttlebutt concerning Allen’s management style is that he pays top dollar for talent to run his team (head coach Nate McMillan is highly regarded, as was prior GM Kevin Pritchard, who was unexplicably axed last summer), but also employs a small army of trusted advisors (including a few college buddies) who keep a watchful eye on these professionals–the implication being that Allen doesn’t entirely trust the basketball experts whose expertise he pays dearly for.

  6. Ed Sanderson says:

    Chicago was built on a base of strong back (or big shoulders, take your pick) which required little book-learning but managed to employ millions over the years before the de-industrialization of the city, state and nation.

    Innovation industries in the 21st century require brain-power not brawn-power and regardless of how many innovating ideas are implemented, the smart and educated thousands will quickly fill them.

    We have millions of jobs that need to be created and whatever wonderful innovations you dream up will provide jobs for only thousands of the best-educated. The rest will be left to “service.”

  7. George Mattei says:

    Aaron:

    Interesting post. I agree that I often see good ideas either rejected or at least not fostered. I do see some irony in this quote though:

    “But if you really want to make your ideas actually happen, if you want to really change your city for the better, to do something new and innovative that will take it in a better direction, then you should spend less time thinking about ideas and more time studying organizational theory, politics, sales, relationships, and the art of getting things done. Because the people who’ve mastered those skills and who can take their idea through to reality are the ones who’ll make a real difference.”

    I think this is called “becoming an insider”. The irony is that once people get to “insider” status, they often begin to dismiss those newbies that have great ideas. After all, if you spend years learning the ropes and building your clout, you don’t want to end up suddenly giving that away to the next guy that comes along with a good idea.

    That’s why I think it’s so hard for cities or organizations to embrace truly innovative people and ideas. That’s also why I think those that do have a distinct competitive edge. I have often thought that cities need a “George Washington”, or someone that amasses power and then turns around and spins it right back out to the people for their own benefit. Let the seeds grow and see what happens.

  8. Matt Malinowski says:

    Here is a story that beautifully sums up part of the problem you cite (from Balzac by way of The Black Swan):

    An aspiring poet named Lucien arrives in Paris to begin his literary career, but has trouble getting his manuscripts published. At first, “Lucien’s manuscript is rejected by a publisher who has never read it; later on, when Lucien’s reputation has developed, the very same manuscript is accepted by another publisher who did not read it either! The work itself was a secondary consideration.”

  9. It’s far easier to evaluate someone’s reputation than their work product.

    There is a good reason that scientific peer reviews are conducted on a blind basis (with the author’s name removed from the review copies); so the jury actually has to read the damn paper. There’s a good reason that musical auditions for symphony orchestras are typically done with the musician behind a screen.

    Perhaps other endeavors, such as VCs deciding such business plans are worthy of funding, ought to be handled in a similar fashion?

  10. Danny says:

    Actually, one of the most successful VCs around, Y Combinator, has done exactly that. They make most of their preliminary decisions like seed funding without ever meeting the entrepreneurs in person or asking for academic/business experience or credentials.

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