Innovation doesn’t need a pitch deck. Organizations have been talking about the need to be innovative since the end of WWII, where technological innovation was seen as the catalyst for economic growth.
Every executive has been told to be “more innovative” or to foster an “innovative environment.” We understand why, but do we know if our organization is being truly innovative?
Supreme Court Justice Potter Stewart is famous for uttering, “I know it when I see it,” when asked how he would know if something was pornographic. But executives cannot wait until they see innovation. They need tangible signs that innovation is actually happening under their roofs.
The best place to look for innovation is in the quality of decisions being made. Everything an organization does can be broken down into decisions, which are the building blocks of innovation, like Legos.
Innovative decisions take into account factors besides growth, profit and costs. They reflect an organization that is willing to invest in a future that is unclear, planting seeds in a garden you will never see, as sung in the "Hamilton" musical.
Here are three areas within your organization where you can look for innovative decisions.
Where Are Your Ideas Coming From?
Some organizations haven’t been able to shake off their military-style leadership, where all decisions are made at the top and then trickle to the frontline workers. As you can imagine, the top-down approach doesn’t leave much room for innovation unless your CEO is Jack Welch or Steve Jobs. Even then, you would be leaving many good ideas on the table.
An innovative organization has a decision-making process that encourages ideas from anyone. Google is known for allowing employees to spend 20% of their time on side projects. Most don’t go anywhere, but a few become homeruns like Gmail.
The 3M Sticky Notes were a failure. The team was looking for strong adhesives and stumbled on an adhesive that somewhat worked. Someone recognized the value of it and made it into a product.
TV shows like "Undercover Boss" remind us that frontline workers may have some of the best ideas. After all, they are the ones who spend the majority of their time with customers. A doorman at a hotel has a better sense of what is working than an executive who might not even live nearby.
Encouraging ideas from anywhere in the organization doesn’t mean that they have to be implemented. All ideas should be vetted through an objective framework. There are plenty of options, but I personally like the 3 O's, which stands for Outcomes, Options and Obstacles.
An innovative organization (or even a team) can survey the company for ideas, which are then evaluated based on criteria such as strategic alignment, potential, risk and any other factors relevant to the specific decision.
If all your ideas are coming from the same people, your decisions will always have the same outcomes.
See also: A Look Ahead for Insurtechs in 2023
The Magic of Decision Speed
The speed at which decisions are made matters greatly. Markets are moving more rapidly today than in the past. We could debate the reasons—social media, connectivity and so forth—but what matters is that decisions need be made quicker.
Perfect decisions were never possible, but today, especially, we need "good enough" decisions. When the pandemic hit, travel restrictions hurt Disney Parks. Yet, in 2021, they had raised profit by 20% with 17% fewer visitors than in pre-pandemic years. Disney accomplished this feat by introducing an app (Genie+), by changing their ideal customer and by removing free perks -- working through all the decisions at an amazing pace..
Starbucks is another example. The “third place” concept imported by Howard Schultz from Milan is dead. Starbucks recognized the future of drive-throughs—and walk-throughs—and is retooling stores.
Innovation often stems from a good idea implemented rapidly. Starbucks could have waited until all the research was done but likely would have lost market share to competitors.
That’s why innovative organizations need a new metric, Decision Speed, to capture how long it takes to make critical decisions. When an organization starts tracking this metric, they are often surprised by how slow they are. Innovation cannot thrive if decisions are made slowly. By the time you decide, the market has moved on.
Forget About the HPO
The third area to look for innovative decisions is by focusing on the weight of the HPO. I’m not talking about the British brown sauce. HPO stands for Highest-Paid Opinion.
I noticed a quirk in decision-making. The highest-paid person in a room commands attention. If they provide an opinion, it is often treated as fact. Decisions are then biased toward the HPO. HPOs often don’t realize their power, but the outcome is the same.
Innovation requires a certain meritocracy to avoid group think. Half of my work with organizations is simply providing fresh air to members' ideas. I then help them challenge their own thinking. Here are my three favorite techniques:
Technique 1: Blind Decision-Making
As you collect ideas, arguments and comments, do it blindly. You can set up an anonymous form where individuals can enter their ideas or find ways to strip their names from them. A team can then look at all the information without being biased by individuals' status within the organization.
This technique often adds a layer of administration, so I only recommend it for the most important decisions.
Technique 2: Devil’s Advocate
The Catholic Church establishes a devil’s advocate when exploring the possible canonization of someone. The person argues against that person and can be quite effective at uncovering holes in reasoning.
You can assign individuals to take different positions in a decision to see if they can poke holes in it. Randomizing this role ensures that everyone gets a chance to voice their concerns. We are not talking about heated debates here. We simply want to hear any potential issues before making a decision.
Technique 3: Thinking Partners
The best executives have informally found thinking partners to bounce ideas off. Making this a more formal process helps them have someone who can challenge them while understanding the biases they might fall into.
A good thinking partner is someone who knows your preferences and is able to challenge you respectfully. They are typically at the same level within the organization though usually in a different function.
Regardless of what technique you use, an innovative organization is debating decisions and working together to find the best solution. If none of this is happening, there’s a high chance you’re simply making the same decision over and over again.
One of my favorite quotes is from William Gibson: “The future is already here, it's just unevenly distributed.”
Innovation is often about trying to find the existing future. Your organization is full of innovative ideas, any of which could help the business grow. Your goal is to uncover those ideas and allow them to influence important decisions.
The future will arrive, one decision at a time. Are you making the right ones?