Tag Archives: not invented here

How ‘Not Invented Here’ Limits Innovation

Imagine the scene. A warm summer’s day. The tree-lined slopes of gentle hills stretch toward a darker valley below. There’s a river running through it, sparkling water, dappled light through the leaves. Now place a party of schoolboys there, shipped out from the nearby town – lucky kids from well-off families, enjoying the fun of summer camp. On the first day, they form into two teams. They’re given different huts to sleep in and different colored badges to wear. They’re encouraged to choose a name and an identity. During the coming days, they’ll compete in all sorts of games and projects.

Sounds idyllic, yet, by the end of the week, there is almost open warfare between the two teams.

What began with name calling and petty violence (each group burned the flag it had captured from the other team) moved on to raiding parties that attacked the opposition’s huts, overturned beds, ripped apart furnishing and stole key possessions. Before long, there was a real risk of violence. The teams armed themselves with baseball bats and socks filled with rocks and marched toward each other for a showdown when the camp counselors finally intervened!

This was the famous “Robbers Cave” experiment devised by Muzafer and Carolyn Sherif to explore how inter-group conflicts occur when there are limited resources and a strong element of competition. Being in one group – in this case, you could be either in “The Rattlers” or “The Eagles” – meant that you had a great deal of loyalty toward your fellow teammates and an equal antagonism toward the others.

In many ways, this mirrored work by Henri Tajfel and others around social identity theory – the idea that we define ourselves by the groups we identify with and which we try to belong to. Their famous studies gave us the idea of the “in group” (people like us) and the “out-group” (the others outside of our circle). Once again, research showed the propensity for conflict between the two groups and the lack of trust that could quickly build up – even if the basis of who’s in which group is as simple as being allocated a color or a group name.

See also: Improving Your Potential for Innovation  

Significantly, the same effect can be reproduced very easily with different groups and in different situations – essentially underlining an important aspect of the way we have evolved as social animals. We bond together tightly (which is good evolutionary practice when facing a common enemy). However, it has a downside, which is a tendency to distrust people belonging to groups outside our circle and the ease with which this can escalate into open hostility.

What has all of this got to do with innovation?

Quite a lot, actually. It helps us understand the famous “Not Invented Here” (NIH) effect. NIH is one of those surprising features of the innovation landscape – the situation where an organization rejects a new idea offered from outside.

For example, the young inventor Alexander Graham Bell was looking for a partner to help him commercialize his idea for a telephone – a device which could revolutionize the communications industry. He started with the U.S. market leader, Western Union, the guys who’d spent so much time and effort stringing telegraph wires alongside railways tracks to link up the continent.

It seems like a good fit from the outside. However, their reception was frosty. In a famous comment the President of Western Union, William Orton, who was known as one of the best-informed electrical experts in the country said: “There is nothing in this patent whatever, nor is there anything in the scheme itself, except as a toy. If the device has any value, the Western Union owns a prior patent … which makes the Bell device worthless.”

NIH is a surprisingly common feature of the innovation landscape, and there are many other famous examples. Not least Kodak’s rejection of both Edwin Land’s idea for the Polaroid process and Chester Carlson’s xerography underline how easy it is to put up defenses against ideas originating from outside. NIH is a theme which my colleague Oana-Maria Pop has written a great blog post about, but its persistence makes it worthwhile to take another look.

Elting E. Morison gives a wonderful example in his detailed study of “Gunfire at Sea,” which explores the tortuous journey the innovation of continuous-aim gunnery had in finding its way on to the decks of U.S. warships. Back in the late 19th century, naval gunnery was not very accurate. A U.S. Bureau of Ordnance study of one thousand shells fired during an exercise around the time of the Spanish-American war suggested that less than 3 percent were hitting the target. That’s a problem.

A long way away in the South China Sea, Admiral Percy Scott of the British Navy was working on the solution. His squadron was doing gunnery practice with similarly poor results – except for the crews on one ship (rather inaptly named HMS Terrible) who were recording surprisingly accurate performance. Looking more closely revealed the use of a prototype gun-sight and a novel method of tracking the target called “continuous-aim gunfire.” Scott supported the development, trained all the crews on all his ships, and eventually changed practices across the British Navy.

The fascinating part of the story concerns a young U.S. lieutenant, William Sims, on secondment with the squadron. He is aware of the Bureau of Ordnance study and the poor U.S. performance and sees in the new British system an opportunity to make his name and career by introducing this better system to his superiors in Washington.

What follows is a classic case of NIH – all sorts of arguments assembled to prove that the new system was no better. For example, a side-by-side test was arranged on dry land where the advantages of the new system in dealing with moving targets at sea were neutralized! It took President Roosevelt intervening himself to get the U.S. Navy to take the idea seriously and eventually adopt the new system.

It would be wrong to see this behavior as the result of blind stupidity or outdated attitudes. Significantly, in most NIH cases, there is a very plausible defense to be mounted – the lack of fit with the core business, the risk of having to cannibalize existing activities, the unproven nature of the new technology, etc. What’s really going on is subtler and owes a lot to the ideas introduced above around group identity and defenses.

We sometimes talk about a corporate immune system, and this is a good metaphor because it accurately captures what an immune system does for our bodies: protect them against dangerous things from outside. The narratives around resistance to outside ideas – not invented here – are very much those of a well-meaning immune system.

One way this hits our innovation world is when the new ideas emerge from across national borders. There is little doubt that “lean” thinking has changed the world – first through manufacturing and then across services both public and private. In its early days, lean was conflated with Japanese manufacturing techniques which had a frosty reception outside Japan – a common argument was that “it works over there, but it isn’t right for our kind of organization.” The same goes for many of the quality management principles which we now accept as second nature but once saw as something peculiar to Japanese corporate culture and not transferable.

Studies in psychology have shown the close links between the ideas raised by social psychologists like Sherif and Tajfel. For example, Alex Haslam and colleagues looked at perceptions of creative ideas arising from groups. Their findings confirmed on many occasions that when those ideas came from within the group, they were highly rated and valued where those coming from another group were lacking in innovativeness or value. And a recent article by Frank Piller and David Antons distills a variety of other psychological studies, which give us a clear sense that this is not an occasional effect – it is deep-rooted.

The big question for innovation management is, of course, what might we do about NIH?

How can we reduce the risk that we miss out on something important from outside because the way our “immune system” operates?

One useful place to start is with Sherif’s original experiments. In their later work on trying to understand inter-group conflict, they found that giving groups a superordinate goal made a difference. In other words, make the challenge big enough and everyone will co-operate, share, and work together towards the target. The “moon-shot” project is a powerful way of overcoming tribal rivalries, and it works just as well inside large organizations.

See also: Linking Innovation With Strategy  

Another approach is to mix people up. The more we can experience first-hand that people are like us, the harder it is to maintain inter-group boundaries and barriers. Cross-functional teams, secondment, and rotation are all helpful strategies, especially in innovation where ideas from across different functional or discipline boundaries are often powerful assets in solving the overall challenge.

Interestingly, we’ve known this for a long time. Back in the 1960s, a pioneering set of experiments were carried out by Paul Lawrence and Jay Lorsch looking at innovation in textiles, plastics, and food. They found that the extent to which differences between functions was an important influence on how long it took to get new products to the marketplace. By extension, those groups with multiple integration mechanisms fared better, sharing ideas, defusing tensions, and working together towards the common goal.

Our ‘FD&H’ Curse: Fat, Dumb and Happy

As an adviser on behalf of the CEO and the board, I recently found myself working with an insurance industry executive suffering from FD&H Syndrome—that’s short for “Fat, Dumb and Happy.” You know the type—the classic myopic naysayer who would rather ignore every outside message and shoot every messenger than to stay lean, smart and open to new insights, including the necessary medicine that may not go down so tastefully?

Let me be clear: This is not a personal attack on one individual, but rather a call to awareness of a broader industry leadership concern. As such, here are several symptoms of FD&H I’ve observed in interacting with this executive over the past six months:

  • Not Invented Here – If he personally, someone on his team or an industry insider didn’t think of something, it can’t possibly be viable. But isn’t it interesting how often Invented Elsewhere sparks real innovation?
  • Smartest Guy in the Room – In several situations, he exhibits a rather obvious need to convey his intellectual prowess. No question he’s an intelligent individual, but astute leaders tend to listen much more than they pontificate.
  • That Can’t Possibly Be True – Results of interviews with his staff highlighted key areas for improvement. For each, he had an excuse, a rebuttal or a personal attack against the perceived person who made the comment.
  • Entirely Too Input-Oriented – Calls, meetings, focus groups and even some research are all means to an end. But he was so consumed by the input (what and how something was done) that he often lost sight of the outcome (desired business results).
  • Paralysis by Analysis – “We need to further discuss that point at the next annual meeting,” “we’ll wait and see” and my favorite, “we need to have more people look into that point,” were all too common responses to uncomfortable findings. Great leaders are action-oriented!
  • Don’t Have the Budget – Another common excuse that surfaces often with this executive is budget objections. “Don’t have it”– the budget for this tool, that person, this event or that effort  –  seems to be the de facto response. Don’t misconstrue my point – I’m a strong believer in financial stewardship of limited resources. In my experience, however, budgets are often an issue of setting priorities and seldom strictly a financial issue. Think about it – we’ll prioritize and invest in concerns or opportunities we deem to be important.

It probably won’t surprise you that this COO doesn’t care for outside consultants or advisers. After all, it takes them way too long to get up to speed on the insurance industry nuances, they couldn’t possibly have any good ideas and they often do little more than reiterate what we already know anyway! The first time I expressed my candid view that his product was stale and offered some ideas to reinvent a portion of his business, I got the facial equivalent of the Blue Screen of Doom. “Great, not interested,” he said. When I pressed for deeper insight, he added, “That’ll never work!” Why? “Because we tried it 10 years ago!”

What this executive with FD&H doesn’t realize is that he’s quickly working himself out of a job. You see, the board has brought in a visionary CEO who deeply believes in thinking and leading differently. He is out spending time with brokers, attending and speaking at industry conferences. He’s visiting with end clients with the agents and is writing insightful pieces as executive summaries to distribute across the industry.

Meanwhile, back at the ranch, the COO is busy covering his behind, demonstrating to peers and subordinates alike his lack of confidence in his operational stewardship. He seems particularly threatened by entrepreneurial thinking by people around him. Whatever his reasons, unfortunately what he is neglecting to see is that he’s a danger to his company, the firm’s clients and the industry. An organization with too many FD&H sufferers will die of stagnation. Allowing “Fat, Dumb and Happy” attitudes to exist within an organization—or worse, spread—leads to increasing irrelevance to your broker community, end customers, agents, investors and other stakeholders. Markets evolve, and so must you.

The cure: independent perspective

To prevent FD&H syndrome, regularly inoculate your key leaders with independent perspective. They must attend gatherings of senior executives at industry conferences and executive education sessions at respected universities. On a regular basis, they must invite thought and practice leaders (from both within the industry and outside) to host roundtable discussions  or go off-site to work on the business and break the routine.

Unlike doctors, independent advisers make house calls. Consultants, thought and practice leaders alike can spark new ideas and unique perspectives and suggest a different lens through which to view the same challenges or opportunities. And if FD&H sufferers stand in the way, overtly or covertly sabotaging every attempt at forward motion, maybe it’s time to retire them to the irrelevant pasture they belong in. My favorite example from my COO interaction is his justification for inaction: “Look how much money I saved us!”

As professional interventionists, we come with no agenda. We’re not after anybody’s job. We often bring unique insights and, most importantly, independent perspectives. As outsiders, we can ask, say or do things others within the organization may not be able to for fear of political retribution. Mr. COO has been explicitly directed to evolve the organization, but his severe case of FD&H renders him powerless. I’m trying to give him the vaccine and guide him into alignment with his positional role to lead his organization’s evolution, but it appears my intervention is too late.

Invest in relationships that matter

Moral of the story? Time is an incredibly effective filtering mechanism. If this particular executive doesn’t change his irrational and protectionist behavior, he cannot continue to be employed by a forward-looking enterprise with a visionary CEO. (And, by the way, the CEO has recently replaced two other FD&H sufferers in the senior leadership team.) Those in the insurance industry who refuse to evolve, as their organizations must, are simply on borrowed time. Sooner or later, this myopic thinking or antagonistic posturing against outsiders will cause him to shoot himself in the foot. “Time wounds all heels,” the joke goes. In this case, the wound is to the entire organization, not just the heel.

The critical point for any of his direct reports, as well as several of us outsiders who are genuinely trying to help the organization move forward, is to continue to build productive relationships, up, down and across the organization. If I have the ear of the CEO and the mandate by the board to identify dysfunctions within the organization and recommend opportunities for innovative thinking, a more agile culture and growth strategies, I can appeal to the logical self-interest of this roadblock COO’s peers to think and lead differently.

Today’s global, always-on insurance industry is simply too competitive for sufferers of FD&H to last forever. When he’s gone, others will be there, ready to offer fresh and independent insights. For the organization, Fat will become Lean, Dumb will become Smart and Happy will be replaced with Results, as the organization leverages its greater efficiency and effectiveness.

Public health warning: If you recognize that someone in your organization is a sufferer of FD&H, don’t wait. Get help now.

Takeaways

1. Sufferers of FD&H Syndrome (Fat, Dumb, and Happy) are unacceptable baggage because the insurance industry is boarding maglev trains – and the FD&H folks are still searching for the horse & buggy!

2. The cure for FD&H Syndrome is frequently outsiders’ unique insights and independent perspectives.

3. Time will eventually remove FD&H sufferers, but not quickly enough to meet the demands of today’s agile insurance industry demands.