Zane Safrit

Radio Guest: William Seidman, CEO of @Cerebyte

Dr. Seidman is a recognized expert on how to develop and sustain high performing organizations. In particular, Dr. Seidman is renowned for understanding the processes required to discover and use expert wisdom to create extraordinary organizational performance.

Dr. Seidman’s received his doctorate from Stanford where he spent eight years studying management decision-making. As part of his doctoral dissertation, he developed a groundbreaking technique for analyzing management decision-making. The technique is the core of Strategy to Action methodology and has been recognized by KMWorld, The Innovation Center, IDC and others.

Dr. Seidman is CEO & co-founder of Cerebyte, which gives organizations the ability and the confidence to dramatically improve their performance. Their pioneering technology, based on the latest science of how we think and learn, enables them to quickly capture top performers' "secret sauce" and raise the performance of everyone else to that same high level. Their solution has been adopted by companies such as Intel, Jack in the Box, American Family Insurance, Nike to name a few.

Aligning with the latest research in positive deviance, fair process, neuroscience and mass customization, their solution makes it possible to quickly capture your top performers' expert knowledge, approach and values, and then systematically help everyone else apply them in theit work.

 And he is the co-author of Strategy to Action in 10 Days: Creating High Performance Organizations.

From his website:

Strategy to Action provides a groundbreaking approach that quickly infuses any organization with the skills, attitudes, behaviors and culture vital to extraordinary performance. This practical, step-by-step approach guides readers to create a highly predicable, scalable and engaging environment that will have everyone in the organization performing like a superstar.

After reading it, understanding his principles and his methodology and as important the science behind it...I would have to agree:

This practical, step-by-step approach guides readers to create a highly predicable, scalable and engaging environment that will have everyone in the organization performing like a superstar.

Dr. Seidman reached out directly to me on Twitter which is a positive deviance from the norm of CEOs and founders who remain reluctant to embrace Twitter. He’s open, clear, passionate and brings a scientific solution to transforming everyone into organizational stars.

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Later

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[NOTE: Sometimes I am sent author's draft copies, pre-release copies of books yet to be published or published books authors and their publishers and publicists. If I like them, I invite them to be a guest on this show. Sometimes, they agree; sometimes they don't. 

If they do, I transcribe our conversation and publish them as posts, either in their entirety and/or as excerpts: See Radio Show Highlights,  What Are You Reading and Solutions for President Obama. Sometimes, I write a review of their book. My payments are the book and the conversation. ]

The Interconnected World of Tech Companies

via satyamurthy.com

Huh. Very interesting to see the relationships among the powerhouses of tech and their offspring they spawned.

President Obama: 3 Tips to Give Our Students the Skills to Pitch Ideas

Sam Harrison is the author of a fabulous book titled: IdeaSelling: Successfully pitch your creative ideas to bosses, clients and other decision makers.

He joined the show recently. You can listen here. You can read notes from our conversation here.

It made sense them for me to ask him what we, as a country, could do to develop those presentation skills in upcoming leaders. And who better to ask, right, than our President.

I asked him:

Let’s say President Obama brought you to the WH. And he realized our ability to grow as a nation is dependent on the ability to communicate and collaborate, share ideas and find new ways to implement them.

And, he’s walking you through the Rose Garden, got his arm around your shoulder and turns to you and says:

Sam, what are the skills we’re not providing our students in order to pitch creative ideas and what are three thing we can do today to give them the skills to successfully pitch ideas.

What would you say?

And he answered, well, right to the point.

First of all I’d have to ask what happened to your presentation skills?

He was so powerful as a candidate. He made the best talks. Unfortunately he put that aside. I would have loved to have seen him show the leadership and make those talks he made as a candidate.

We’re doing a good job teaching students what to think, but not how to think.
Second I think...we need to do a better job of interpersonal skills. Awareness, perception, ethos. A lot of team projects with guide or mentor would help.
Help students improve their public speaking skills. Just simple training on how to speak, how to present and give them opportunities to present in the classroom.

Want More from Sam Harrison?

• Visit his website.

• Follow him on Twitter

• Buy his book: IdeaSelling: Successfully pitch your creative ideas to bosses, clients and other decision makers.

**********

Some may say this is inappropriate.

This is politics! And you never discuss politics at Thanksgiving Dinners, backyard barbecues and on a business radio show.

I disagree. As long as only politicians can discuss solutions for our country then those solutions and their interested audiences will remain off-limits, political, for those who make this brand, our country, run. And only politicians, these days that's only career politicians, can discuss those ideas and spoon-feed solutions to the public.

I see our times as an all hands-on-deck opportunity and not a crisis.  That opportunity is for each of us to lend our hands, our conversations, our ideas to find and share solutions. In our absence those challenges are left to ideologues, vested interests and politicians of all stripes and partisan persuasion.

We...are the only ones with vested interests. And now we have, with social media and the urgency of today, the opportunity to reclaim our place at this table and discuss our ideas to solve our challenges. At the very least, we can listen to a discussion until we are ready to speak up.

 

Six Disciplines of Excellence: A Review

Are you small business leader looking for a quick fix? You think that maybe what revenues lack is a cute ad or a viral cartoon? Maybe a nifty new slogan for your brand or more Facebook friends? Or, wait, you want to jump on the latest craze and sign up for those discount coupon programs....

Well, if you are, then carry on. There is nothing to read here.

However, if you are a small business leader who looks for the means and tools to create a sustainable means to success, if you want to create a culture of learners that constantly help each other learn the new skills you will need to remain leaders in your business and industry, and who wants to confront the challenge of executing strategy consistently...I may have a book you should read. And keep it close at hand. And read again and agin.

Six Disciplines for Excellence: Building Small Businesses That Learn, Lead and Last is a book many times over the years. I first read it in 2006-ish. And then again in 2008. I interviewed its author, Gary Harpst. You can listen to our conversation here. I included it in my list of well-worn business books to keep close at hand.

You're asking So what?

Fair enough.

Gary outlines 6 disciplines for ...They are:

• Decide What’s Important

• Set Goals That Lead

• Align Systems

• Work The Plan

• Innovate Purposefully

• Step Back

See any shortcuts? See any cutesy social media tricks or tips. No.

Notice also that top 10 tips and current business bingo buzzwords are absent, too.

Business excellence, dare I say, transcends au currant business theories and experts. Business excellence is built with the same principles regardless if your business operates today or last century. Those principles are these six principles which Gary has listed, described and discussed in detail.

And he describes and discusses them in a single chapter in such detail that at the end you have a plan to bring that principle to your business business today. And tomorrow. And bring others into your plan to learn that principle today and tomorrow. That is the foundation for your excellent business: A culture of learners who collectively create a culture of leaders.

Business now changes so fast, so often, as we face a global marketplace. The companies who can create a continuous, sustainable, culture of learners are the companies who will create cultures of leaders. That makes their business a leader. Today AND tomorrow.

Now you have a book with routines and practices that bring universal principles into your business today. Each of them are doable today. There are no great big investments required. The risks are small. The steps are doable, each and every day.

Now, there's no excuse. That's so what.

Notes from Tom Rieger - Author of Breaking the Fear Barrier: Part 3

Tom Rieger, author of Breaking the Fear Barrier: How Destroys Companies from the Inside Out and What to Do About It, joined the show recently.

Tom's book is imminently readable and includes imminently doable tips and steps you can take within your own organization to reverse this rising tide of fear that only serves to threaten your organization's sustainability. He's pulled the company's global research across a dozen countries spanning six continents to identify the "fear barrier" and to show how and why fear destroys companies. The book explains how to transform a fear-plagued organization into one that is courageous and unstoppable.

Mr. Rieger is a Senior Practice Expert for Gallup, has pioneered the study and science of organizational barriers. Rieger is an expert in applying behavioral economic principles to uncover how complex systems self-destruct -- and how to correct those problems. Through this work, he has become a recognized leader in developing methods and frameworks to identify and remove barriers to organizational and societal success.

• You can listen to our conversation here.

• You can read Part One of our interview here.

• You can read Part Two of our interview here.

We can see signs in the news every hour that fear and its manifestations are in abundance these days. Fear and then perceived threats and then anger and then fighting....

I'm an art major. I'm not a brain scientist. But some earlier guests on this show have talked about the role of the amygdala or the reptile brain in handling fear, perceiving threats and reacting to them. The whole fight or flight response syndrome.

Sure.

Your solution addresses fear from the outside. Behavior changes. Are there steps we can take to not feed our reptilian brain, the amygdala, basically deny it food and water?

Well, there’s two thoughts here. First, we have to recognize that not all fear is bad. You need some in your organization to help people feel the pressure to conform and meet their goals. That’s healthy so long as it’s the right level and balance with rewards.

Mark Twain had a great quote. It goes:

Courage isn’t absence of fear. It’s mastery of fear.

Secondly, we need to recognize that people are essentially emotional decision-makers. That’s just who we are. There’s some great work by Joseph Ladeau from New York University, I believe, and others that looked at visceral effects and their influence in decision-making and Ladeau actually mapped people’s brains in how they made seemingly logical decisions.

All that being said...you know if you make things objective and you recognize that you are not going to be able to just make people no longer feel fear; that’s just impossible. But you make people see things objectively, you take the subjectivity out, then you will by definition start driving things more based on metrics and more based on the truth instead of subjective fears.

So those subjective metrics and policies, those have to be driven more by emotion. It’s unavoidable. But, objective metrics, especially if they are the right thing will be driven by performance.

One thing you gotta be aware of is a subjective metric that’s masquerading as an objective number. if you just put a number to something that’s inherently subjective, it’s still subjective. You really have to look at what is each group really producing and for whom and how is that benefiting the overall mission?

Great answer again. Thank you.

Sure.

I want to pursue this a moment. Early in your book you write about parochialism and the tendency for companies to focus, as they grow, more on process and less on outcomes. And I think this ties in with your point about using the right metrics and that are aligned with your core strategic goals. Some of this is driven by department managers who are unable to connect the dots. For me that reads these managers have not developed the skill to think, conceptualize, plan in a wholistic way. Would that be correct?

I think so; I think so.

You know, the probably Zane is those skills are just blatantly ignored. Managers are often made not necessarily based on management talent but as a reward. Being a manager is doing a different job. At the end of the day you have to realize that leadership positions shouldn’t be given out as trophies. They should be given out strategically. They should be given out based on who is based going to be able to serve that role and achieve your overall goal and mission.

Now, that said, there are certain concepts I talk about in the book about managing people’s reference points and expectations, where they line up or don’t, managing fear, balancing the different types of courage...personally I think should be required training for all managers.

Fantastic.

Social media and fear or social media and courage. What's social media's role in either building or breaking the fear barrier? Have you seen an example of either?

That’s a really interesting dynamic and a fascinating to watch develop. You could really go either way.

Social media, when you think about it, is a series of one-way communications. You really can’t talk back to an email or a tweet or a blog post. You could respond to it in another one-way.

But if you take a step out of the corporate world, let’s look at Arab Spring or even the 2008 election you can see how it can be used to bring people together around an idea, to break barriers that one person alone may feel powerless to do anything about. There is that upside.

But, on the other hand it could be used the other way. You use it to intimidate, you use it to bully, you do a broadcast nasty email to the world and you could do a lot of damage to a person’s reputation. And unfortunately that happens a lot. There’s not just bullying in schools but it’s happening in companies with those broadcast torpedo emails that go out.

I look at it as a tool that could be used for good or a tool that could harm.

I like that you used the example of Arab Spring. I became fascinated as did many people. It seemed in a lot of respects, parallel to a certain degree, with some discussions going on in companies where as you describe one category of employees who are treated as prisoners with no resources or tools or time and random accountability measures. I thought the conversations, not to the same extreme, going on in some companies are about how to free up those employees to participate in creating a viable corporate economy.

Sure.

Yeah, these are all things you have to think about when you’re trying to deal with these problems.

We've reached the imagination moment in our show. It's not that big a leap. Fear is an emotional response to a perceived, often imaginary, threat. Let's imagine President Obama is on line two in your office. He’s on vacation, but he’s listening in. He leaves you a message.

Tom, he says. This is President Obama. I think our national conversation is dominated by fear and its manifestations. What are three things we as a nation can do to break the fear barrier? Can you come up to the White House or over to Martha’s Vineyard and share your thoughts?

What do you say to him?

Well, first of all I’d say:

“Yeah I would love that opportunity to come. I’m essentially a patriot at heart so anything I can do to help my country I’d love to do."

But to answer that question...

First I’d say we need a mission to rally around. We need a place to plant a flag in the ground and stand behind. You look back at the ’60’s and the space race. Look at what happened in this country. You had industry of all different types and people all around all working together trying to achieve something important.

The side benefits of that were huge. If you look at the innovations and the manufacturing, especially in the world of micro-processing and computers. But, the sleeping giant needs to be awoken; it needs to be focused on accomplishing something. This country can accomplish absolutely incredible things when it’s aligned with and around something and we’re all on the same page.

That’s number one.

Secondly, I think we need to shift the paradigm. We need to start thinking about:

“Well, how can we remove the barriers that exist to job creation."

Every job you create creates more and more people paying into the system rather than draining it. When that happens you have a lower deficit, you have a more prosperous nation, without having to just focus on who’s giving up what to whom. And that, I think, is what leads us to the 3rd thing.

There’s way too much focus on that. We gotta stop acting like a couple of dogs fighting over a bone trying to think about well who’s going to have to give up something. If you look at the whole concept of fear of loss, there’s some great work by a Nobel Prize winner named Daniel Kahneman that showed there’s twice as much pain with loss than trying to gain. What that means is people will fight twice as hard to avoid a loss even if that means forgoing a gain because there’s so much pain in that perception. If all we focus on is what we’re giving up and nothing else, then that fear of loss, I guarantee you will lead to barriers and those barriers will bring any hope of progress right down to a screeching halt.

So, if we can align around the mission, focus on removing barriers to job creation, both for private companies and public sector, and then stop focusing so much on who has to give up and what and instead on what we can achieve together, then I think we can actually make some progress here.

Excellent. Those are great examples and a great answer. I love that point you made about people will fight to avoid loss and they’ll cooperate, perhaps, around the idea of a shared gain.

But, the idea of a potential loss? They’ll fight like dogs over a shared bone.

Leaders are readers. Jim Rohn said that. I'm just smart enough to quote him. You're a leader. What are you reading?

If someone is interested in the concepts of the book then there’s a few things I’d certainly suggest to them from my list.

There’s a book out there called Advances in Behavioral Economics. If you are interested in what really drives people’s decision-making then I strongly encourage you to pick it up. It’s a collection of academic papers so it might not be for everybody. But I find it fascinating and I read it over and over again.

There’s a book called And the Wolf Finally Came: The Decline and Fall of the American Steel Industry by John Hoerr ....which I think is an absolute great example of everything I talk about in the book as it related to the steel industry and Pittsburgh in the ’80’s.

You know, I was at Carnegie-Mellon, basically while all this was happening. The book is written very objectively and you can see how these entitlements and this fear of loss on both sides of the aisle; it’s not just a labor issue, it’s not just an industry or management issue, it was all three of those things. And how this all began, everyone trying to do the right thing. And this whole thing came crashing down and it’s a good example of just how much damage this kind of thing can do.

Now that the book is finally done and I can start reading again...there’re a few books on my reading list. I’ve heard there’s good book called Tribal Leadership by ....One person who reviewed the book said it’s a book I absolutely have to read.

Fantastic. I love the list of books and it helps me expand my reading list.

You’ve written a great book. And I encourage everyone to go ahead and leave the show. Go buy it, read it, embrace it. Do some of the things listed in the book. Avoid some of the things described in the book that build barriers. We can start to chip away at this whole thing.

Can you leave us with one thought on Breaking the Fear Barrier?

Sure. The one thought I’d like to leave people with is this:

You may be sitting in your office looking out your window trying to think about how you can succeed, frustrated by all these seemingly impossible and impenetrable barriers that you are surrounded by. But you have to take a step back and remember that nowhere does it say:

On the 8th day God created barriers.

These are things that companies did to themselves. They did internally. They are things you did yourself.

But if they are things you did internally, guess what? They can be unpacked and dismantled internally. It won’t be easy. But it can be done.

It has to be very deliberate. People have to be willing to look in the mirror, as I said, and put things ln the table. But, these things aren’t impossible.

Certainly there are things you’re not going to able to fix. But I guarantee there are a whole lot of things that are.

Don’t let your fear crush your hopes and dreams. If you’re really deliberate about attacking these barriers you can achieve them.

That’s so great. I so appreciate you taking the time to come on the show. Congrats on being number one in those categories on the first day. I know it’s going to only stay there.

Next Guest

William Seidman, co-founder of Cerebyte which gives organizations the ability and, more importantly, the confidence to dramatically improve their performance. Their pioneering technology, based on the latest science of how people think and learn, enables them to quickly capture top performers' "secret sauce" and raise the performance of everyone else to that same high level. Their solution has been adopted by companies such as Intel, Tektronix, Hewlett-Packard, 3Com, and Collagen Aesthetics, Inc. as their corporate standard for developing and deploying best practices and other forms of organizational cultural change.

The scientific foundation underlying their solution enables Cerebyte to optimize organizational performance faster and more completely than was previously thought possible. Aligning with the latest research in positive deviance, fair process, neuroscience and mass customization, their solution makes it possible to quickly capture your top performers' expert knowledge, approach and values, and then systematically coach everyone else to apply those to their own work.

I’m looking to talk with Bill for several reasons. One you can see the nice tie-in with some of our last questions about brain functions, amygdala, and the abilities of organizational members to plan and organize in an wholistic manner.

But I liked the fact that Bill reached out to me on twitter. Not many founders use Twitter and even fewer use it to reach out directly and engage with others.

And, then I’ve found he’s a very clear thinker. Makes sense. That’s his business. But still it’s refreshing and I think his conversation will be refreshing for you also. Next Wednesday, August 31 at a special time: 1:00 PM Central.

(Jeez. August 31. Where did summer go?)

Notes from Tom Rieger - Author of Breaking the Fear Barrier: Part 2

Tom Rieger, author of Breaking the Fear Barrier: How Destroys Companies from the Inside Out and What to Do About It, joined the show recently.

Tom's book is imminently readable and includes imminently doable tips and steps you can take within your own organization to reverse this rising tide of fear that only serves to threaten your organization's sustainability. He's pulled the company's global research across a dozen countries spanning six continents to identify the "fear barrier" and to show how and why fear destroys companies. The book explains how to transform a fear-plagued organization into one that is courageous and unstoppable.

Mr. Rieger is a Senior Practice Expert for Gallup, has pioneered the study and science of organizational barriers. Rieger is an expert in applying behavioral economic principles to uncover how complex systems self-destruct -- and how to correct those problems. Through this work, he has become a recognized leader in developing methods and frameworks to identify and remove barriers to organizational and societal success.

• You can listen to our conversation here.

• You can read Part One of our interview here.

Now, once an organization has grown and become big, a global presence, a global corporation, it still faces fear. And I was preparing for this show I came across a post by John Moore over at Brand Autopsy and CrackerJack Marketer titled Why Does Big Mean Bad and Can It Be Avoided? And I thought in light of your book I would ask:

Why does big mean fearful and can it be avoided?

Well, larger organizations will have more departments and more groups clamoring for more information and resources. Budget time in big companies is basically open warfare.

You know, take Shared Services Group. They could never meet all the needs and all these needs could be legitimate. And you may have enough for 3 IT initiatives and you have requests for 50. So, some people are going to win and some people are going to lose. And that makes inter-departmental conflict unavoidable.

Information sharing also gets more difficult with size. You have that many more links to try and fill with information.

So, fairness starts to suffer and certainly resources start to get tighter and tighter. And that’s when fear comes in and people are sitting there saying:

“Wait a minute. How am I going to meet my goals?

And I may have to get very territorial with the resources I have, maybe even empire-build.

Or, if nothing else I’ve got to set some controls on how people deal with my department. "

And again, it’s all with the best of intentions. But when that happens it makes it that much more difficult for the organization to succeed.

Now. This does not mean that only large organizations can have these types of barriers. It can happen anywhere. But I do agree with you that it is more common to see this is as business gets more complex.

I live in a small town in rural Iowa. We see parochialism in all its glory on a regular basis. I am afraid at times I may have glorified it, too. But small towns do not have the exclusive on this. It happens in organizations of all sizes. In fact, you write that parochialism is the foundation of the pyramid of bureaucracy. Could we say parochialism is the foundation in our response to fear in an organizational setting?

You first have to see where the problem lies.

• Is it parochialism?
  
• Is it territorialism?
  
• Is it empire-building or something else?
  

But, you are right that you have got to start with parochialism to some degree. Because, quite frankly that’s where the cancer starts. That’s where it all begins.

Territorialism, which is the next level of what I call the Pyramid of Bureaucracy, is often a response to the parochialism of others.

" Ok, if you’re not going to make the exception for what I need so I better make sure my groups don’t make exception for anybody else.

And if that’s not enough if I start to feel that no matter how much control I have other the resources at my disposal I may not succeed then I may need to build an empire...and take over other departments or perform duplicate functions."

So, it does start with parochialism. And you do need to overcome the bricks-and-mortars of parochialism which is usually rules and policies that benefit the few while harming the many.

I always see the foundation as the most important, biggest, strongest element. What makes parochialism then the biggest, baddest, response to fear of loss?

Well, as I said, that’s where it all starts. You start to have these walls built with absolute rules; things I call gospels. We talked about customer service earlier...you ever called a call center with an issue. And it went horribly wrong? And at the end of it, after just arguing and arguing and getting nowhere, they say:

" Is there anything else I can help with you today?"

And you just want to strangle them! They have to say that even though it makes things worse.

So, parochialism is the absolute rules.

And there are other types of rules we’ll talk about as the show proceeds. But once you have that foundation then that does lead to some of these other types of barriers that we see such as Territorialism and Empire-Building, and so on.

You bring up such great examples that I am always flashing back to call center experiences and that classic one where after not helping you with any issue they ask:

Is there anything else I can help with you today?

There’s nothing to say.

I actually heard a call-center representative use that phrase to tell a customer to shut-up. They said:

Ma’am is there anything else I can help you with today...?

And he’s got a ticker and he’s made one more step forward to handling as many calls as he can.

How does an organization begin to overcome parochialism? What's one good step a listener can take today to chip away at this foundation?

What we see today is that parochialism is usually based on rules and policies. Why not audit the rules and policies?

There are things that you can look at to see do these rules make sense? What we want to do is ask:

What is the rule trying to do?

Is there a legitimate need?

Is it a need that is focused on overall success or is it just some small narrow version of process checking-off?

And if you answer that question then you ought to look at:

What’s the ratio of what’s the rule trying to protect against versus what is the rule preventing?

So, if the rule is protecting something legitimate more than it’s preventing something you want, then it’s probably ok; maybe you need to adjust it. If it’s preventing more than it’s protecting it’s probably a bad rule.

So, one thing we want to use with parochialism is a rules audit. You want to go in and see if these rules make sense. There are gospels that are absolute. Maybe they should be guidelines, more conditional.

If you really trust your employees, maybe you empower them to make decisions and actually use their brain. I know that’s a novel concept. But give them a guideline and hold them accountable. You know there’s the great quote from Spider-Man:

With great power comes great responsibility.

You can’t let people be loose cannons. You have to hold them accountable.

But the most harmful rules we find aren’t even rules. They’re what we call “ghosts”. They are things that people think are rules, but they’re not. Very often organizations are haunted by hundreds of ghosts.

You know what? There’s nothing wrong with doing an old-fashioned ghost-busting party and rooting out and dispelling the myths.

That’s such a great example you gave of having a ghostbusting party. Just to go through all the assumptions and all the well that’s the way we’ve always done it....and have a little fun with it and create some engagement with it and create some new ways of doing it. Get some ownership in what they’re doing.

That’s what happens on the frontlines. That wasn’t my idea. We were doing somework in an organization and some frontline employee raised their hand and said

Why don’t we do ghostbusting?

And I thought: That’s a great idea!

Again, it always comes to back to so many opportunities to create engagement. And it seems it’s always the will that is lacking, the courage and the creativity.

Level two of this pyramid is territorialism. What or who does territorialism protect us from?

Managers become territorial when they fear their resources are going to be sucked up by another part of the organization. It could be information. It could be money. More commonly it would be what people in that department are allowed to do for others.

It becomes institutional when people get confused about their strategy and performance goals. People start to say:

" I’m not going to help you."

We had one manufacturing company where there was a quality-control group that was there to really help with issues and make sure the product they were going to ship was up to spec. You could have a crisis situation with someone on the floor had test a batch and you could test it in an hour.

But the manager of that department had a rule about the certain way that memo had to be and they didn’t want any exceptions and they didn’t want their people stepping out of their comfort zone and the could delay the results being release by up to a day. Meanwhile, the plant’s shutdown.

But the person running that department wanted to make sure that they kept absolute control of how they ran that department. Again, it helped that manager reach their goals but it hurt the company’s overall performance.

We hear lots of talk of openness and transparency in organizations. And that seems like an excellent antidote to territorialism. Is it? Do you see openness and transparency as an antidote to territorialism?

Sometimes. But I’ve seen people be very open and transparent about the fact that they are being territorial.

What I will say is that if the territorialism is about control of the information then absolutely. However, if you have a manager in an office worrying that if they lose one more penny of their budget, have to take one more exception, then they won’t hit their goals...then I don’t care how open the organization is; territorialism is a big risk.

You know I’ve been working in organizational development since 1986 and I’ve never seen so much fear in the workplace. Fear is what leads to the types of behaviors we write about in the book.

So, no, if anything the openness is getting worse. But especially if that’s terriorialism about information then that’s something you have to address.

So, let’s go back to that point you just made. You DON’T see a trend towards more openness and transparency in companies.

I do and I don’t.

I see a lot more technology being available. At least in the companies I’ve worked in or brought into, there’s a lot more territorialism about information. The tools are there. But not everyone can use them.

We had one hospital chain that brought in a great new information system with email and get better control of communications around an issue. But they gave only 1/3 of employees access to it.

We got with a national consumer electronics sales and marketing organization that had invested all sorts in a new customer information system and didn’t give the sales force access to it.

So, sure there are tools in place and when used properly that can help. Unfortunately information is power and power is hoarded. So, in some cases yes, information is more available.

But there’s a flip-side to that information barrier that we see. And that’s not necessarily information transmission but information assimilation. When you have too much information that’s just as bad. One client we worked with this got so bad they actually called it process tsunami. If you added up the notes from every meeting and every form they had to fill out and every memo they received and the time required to do that it was 26 hours a day. That manager would never step out of their office, never deal with another customer.

But, more information isn’t always the answer. More importantly, do people have the access to what information they need, when they need.

That kind of openness? Absolutely critical. But just throwing more information out there isn’t going to work.

And these, parochialism and territorialism all lead toward Empire-Building, the 3rd and final building block, in this pyramid of bureaucracy; maybe the all seeing eye of bureaucracy. You list a few examples that I swear, again, resounded in my ears creating almost flashbacks. You profiled Doug Conant, CEO of Campbell Soup. How did he tears down those walls in Campbell Soup? What was the result?

Based on his interview with magazine, Gallup Journal, he did a few things.

He started by ripping up the org chart and getting rid of quite a few silos. Then rebuilding organization based on a common mission, focusing on employee engagement, and having a unified focus.

The result was pretty remarkable in terms of a turn-around for the company. And I would never sit here and say this was all due to those efforts. But, if youlook at earnings per share for Campbell’s Soup in 2008 it was $1.85 and by 2010 it was $2.45. During tough times, if you’re aggressive and do these things then you can have a pretty big difference.

That raises some pretty big point. The leadership has to behind this. I ask a CEO two questions before we start this work and the answer to both have to be “yes” otherwise we’re wasting our time.

• Are you willing to look in the mirror?

• Is everything on the table? Or tell us what isn’t.

Because those two things aren’t really crystal clear then you can’t see those types of institutional change.

Love those two questions! Would you give them to me again?

Sure.

• Are you willing to look in the mirror as a leader of an organization and look at your own practices and strategies?

• I’m going to assume everything is on the table unless you tell me otherwise.

Fear arises from the lack of vision, understanding. It is the opposite of courage. How do we, individually and collectively in our organizations, begin to empower courage for ourselves? What’s one step you’ve seen an organization take to move in this direction?

You know, I talk in the book about courage-enablers and courage-killers. There’s a few critical things you have to do.

First, you gotta have a laser-like focus on an overall strategic mission; not individual or group missions but an overall strategic mission. That should be the glue and your guidepost for everything in your organization.

You need to lead with strengths, make sure you set up people for success.

But most of all you have to moral courage with vital courage. There are all sorts of different kind of courage. Vital courage is all about the survival instinct. It’s instinctive. It’s what I do to survive, to better myself, to better my family. It may just come naturally.

Moral courage is doing something for the greater good. In this case, it’s doing something for the company.

So, the challenge that organizations need to always be thinking about is are you aligning those two things up. They both have to be there to defeat fear.

Let me give you an example. We once worked with one collections group for one financial services company. They had a huge spike in employee turnover. There were multiple reasons behind it. But one of the reasons was the new management system they put in. The team leaders were set up to be paid by the average dollars per hour that was collected by their team. On the surface it that makes perfect sense; that’s what you’d want to do.

However, the way they promoted someone was the manager would nominate someone from their group to go into a management training pool where they would eventually learn new skills to lead another team.

So, I’m a manager and it’s time to promote someone and I have a choice. I could take my best performer who may have also the best management talent and move them out of my group and this pool. And guess what happens when I do that? I just got a huge pay-cut because my numbers will drop. And since my numbers dropped, I’ll have a horrible performance review at the end of the year.

But, it’s doing the right thing for the company by putting the best person in the talent pool even though I’m suffering for it.

On the other hand, you could take your problem-person who could barely manage to tie their shoes much less do anything else and move them out of the group.

And guess what? You just gave yourself a raise! Not only did you give yourself a raise but you guaranteed yourself a great performance review at the end of the year.

So, in one case someone was displaying moral at the expense of vital. And in the other case someone was showing vital courage, what’s best for them, at the expense of moral courage or what’s best for the company.

Now, another client of mine had the exact same system as this client but they did something different. They provided a bonus if the person they placed in the management training program succeeded in their first year That gave them time to build the numbers back up in their group, recognize the contribution they were making in the company and not have this problem.

There are ways to overcome it. But you have to be very deliberate about it.

Excellent! That’s so great.

**********

Part Three of this conversation will be published Sunday, August 28.

 

Notes from Tom Rieger - Author of Breaking the Fear Barrier: Part 1

Tom Rieger, author of Breaking the Fear Barrier: How Destroys Companies from the Inside Out and What to Do About It, joined the show recently. You can listen to our conversation here

Mr. Rieger is a Senior Practice Expert for Gallup, has pioneered the study and science of organizational barriers. Rieger is an expert in applying behavioral economic principles to uncover how complex systems self-destruct -- and how to correct those problems. Through this work, he has become a recognized leader in developing methods and frameworks to identify and remove barriers to organizational and societal success.

Rieger joined Gallup in 1994. In addition to his work as the leader and chief architect of Gallup's consulting on organizational barriers, he is an expert in international research and polling methods and developing and applying statistical models to complex organizational issues.

Tom's book is imminently readable and includes imminently doable tips and steps you can take within your own organization to reverse this rising tide of fear that only serves to threaten your organization's sustainability. He's pulled the company's global research across a dozen countries spanning six continents to identify the "fear barrier" and to show how and why fear destroys companies. The book explains how to transform a fear-plagued organization into one that is courageous and unstoppable.

Tom. Thank you so much for being on the show!

Thank you, Zane. Pleasure to be here.

Thanks for writing a great book.

Is this your first book?

Yes, it is. First one.

Congratulations!

Were you ever afraid that readers wouldn't embrace it, the data and examples would be seen as less than compelling, it would be greeted with a great big yawn?

Oh, sure. I think most first-time authors have that fear. You know, I have to say in doing that work that led to the book this is really a story that needs to be told. I’ve seen anywhere from the frontlines to Vice-President’s of Sales being reduced to tears trying to deal with these insurmountable barriers or at least these seemingly insurmountable barriers. We remind them they were created internally themselves. And if they were created internally themselves then they can be destroyed internally.

I just think we need to give people some hope that their hopes and dreams can be achieved if we do this.

But, sure, it’s the first book. So, you always worry about that a little bit.

I love that point that these rules were created internally and they can be destroyed internally.

Now. Your book was released yesterday. How are the results so far?

Uh, so far, the results are very good. I looked on Amazon yesterday. And at one point it was:

• the number one workplace book
• the number one organizational behavior book
  
• I think it was the number 10 business book overall.

I haven’t checked how it’s done today. But, it was a little better than I had expected for right out of the box.

Who is your intended reader? As you labored early in the morning or late at night, who were you writing for? Describe this person for us.

You know, Zane, it’s really written for anybody who feels their success is limited by fear. Their fear or the fear of others. Anyone who is trying to do the right thing but feels handcuffed by what may seem like ridiculous rules and policies. Or anyone who’s the victim of someone else’s fear. Or even who create barriers out of their own fears. Things that happen within an organization that build one little silo at the expense of broader success. That’s who I’m really writing this for.

Mostly these are managers and supervisors, but employees as well, can do things, as well, to help the situation.

In her book Being Strategic, Erika Andersen coined the phrase reasonable aspiration or hoped-for future. And she asks:

What is your reasonable aspiration or hoped-for future?

What was your reasonable aspiration or hoped-for future with writing this book?

My main aspiration was to create a new dialogue. These things all exist in all organizations and everybody knows it. But they are all unmentionables. They are things that aren’t talked about.

So, I wanted to create a conversation about good rules and bad rules, a renewed focus on mission and achieving alignment around that; having people understand that when they make a decision, there’s a down-stream impact on others. And that has to be taken into account.

And, local success doesn’t always mean broader success. Sometimes you have to make adjustments. Whether it’s a factory worker in New Jersey or a manager in Chicago or a C-level executive in San Francisco...all these people are worried that their hlpes and dreams won’t be obliterated by the fears of others.

So, my aspiration is to give these people hope and some tools to overcome those fears.

Excellent!

How will you measure your progress from writing, publishing, promoting this book? What signs will mark your progress?

That’s a great question, Zane. You know, when we’re brought in to do this kind of work there are 8 - 10 types of issues that we are trying to impact like lower turnover or improve employee engagement or customer metrics. So, there’s usually a hard-level metric you want to take a look at.

That’s not really what I look for. When I walk into these organizations after they’ve made some changes I want it to feel different. Where companies have done this right and tackled this full-on, it just feels like a different place. There’s energy; there’s life.

There’s one organization I dealt with, it was a bank. We first went into that operations center, it was a god-awful place. The only thing that was missing was someone sitting out in front in the room banging a drum and yelling:

Ramming speed!

But by the time we were done, there was energy, there were balloons, there was excitement and most important of all there was real progress on goals. There was a real jump in customer satisfaction. They had doubled their first-call resolution in the call-center.

You can do great things when you really unleash that human capital. And it’s that sort of thing I really am looking for.

You know, I am distracted. And it’s not your fault that I am distracted. I have this vision of a company that I worked at in the past. They had a call-center supervisor whose desk was up on a raised platform, 1 or 2 or 3 feet high. You know where I’m going with this. They didn’t have the ramming speed, or Ben-Hur’s slave ship scenario, but they had a statistic on the board that showed them how many calls were in the queue and how long they had waited. That, in effect, served as the drum beat of ramming speed, move faster.

That’s an interesting one. Often, what I find with that exact metric is that it’s used as a proxy for how happy the customer is. And, sure you can’t let a customer wait forever. But what’s more important is:

" Did you solve the problem and did you make them feel like a valued customer? "

And I don’t know about you, but I would rather wait another 30 seconds and have a great experience than be rushed off the phone to not drag down that metric. So, that’s a great example of where those barriers can come in.

If you are just focused on measuring that queue, then you’re going to try to get rid of that customer as fast as you can.

Absolutely, and if all your performance appraisals are based on how quickly your call center reps got that call done and how many calls they handled, not how many customers were lost or how many repeat calls were need....

I have a great example of that. There was a public utility we worked for that had an incentive with the state that they were operating to beat that metric. It was called Service Level, a percent of calls answered within a certain number of seconds.

That became everything. It didn’t matter what kind of service they provided. They just had to drive that metric down because if they got below a certain threshold then they got a big check from the state. So, you can imagine what was happening. Every call they got was answered with:

"Sorry. I can’t help you. Have to send a tech." Click.

It got so bad they ended up having to post somebody from the field service department who could hack onto their software to schedule more appointments. And, you know the good news is they beat their service level targets and got a check from the state which they had to endorse right back because the field service department didn’t meet their goals because they got hit with so much over time.

I’m laughing. It’s such a perverse way of running business with such twisted metrics and metrics in isolation.

Let’s measure the cost of fear to our companies and economy. How much does fear cost?

You know, fear costs companies a fortune in very subtle and different was. It’s very difficult to measure across all the different types of companies we have worked with, exactly how that manifests.

One thing we can do is measure the engagement of the employees. We know from other research that Gallup has done that employee engagement is tied very closely to turnover to market share to all sorts of metrics of financial success.

We went out and did a study of 2600 US working adults and where they stood within these fear barriers. And what we found was shocking.

If we look at those we call ‘prisoners’ and ‘prisoners’ are somebody who is basically trapped. They have very little empowerment, very little freedom and very little time. They don’t have a lot of opportunities and their accountability is all subject to the whim of a manager. Startlingly, half, 1 out of 2, Americans fall into that category. And when that happens employee engagement just drops through the cellar.

That group only averages in the 8th percentile. That means for every one that is better there are 9 that are worse.

On the other hand, when those barriers are removed employee engagement jumps up into the 87th percentile which makes it among the most engaged employees we have studied.

So, this I would say is a necessary condition, if you don’t aggressively address these types of barriers you are done before you start.

Gallup has been doing tremendous work in the area of employee engagement. And, coming up through the frontlines as I did, employee engagement was such an obvious competitive advantage. I’ve always worked in telecom which is basically a commoditized service industry. And the only way we competed was with our employees and their engagement.

Now, there are just tremendous amounts of statistics that show the impact of employee engagement on the bottomline. I’ve had guest on here from Gallup who talk about its impact on revenue per share, revenue growth, cash-flows, etc. Why is it today there’s still so many companies that refuse to embrace the reality that engaged employees deliver better financial results?

You know, that’s a really good question.

To me, it’s really pretty obvious. A company is nothing more than a collection of people. Right? All focused on a particular mission, all focused on a particular goal. And you can drive employees who are unhappy in their jobs to do things.

I don’t know, but I as a customer don’t want to deal with someone who hates their job. It’s pretty obvious when that happens. And what’s even worse is sometimes the disengaged employee will do what I call ‘going native on you’. They’ll just sit there and rant for 10 minutes about what a terrible company it is they work for. Quite frankly, I don’t want to hear it. I take my business elsewhere.

And it’s just plain common sense that if someone is engaged and excited about their job they’re just going to do that much more than someone who is just retired on active duty.

I don’t know, Zane. It’s something that seems obvious.

You start your book profiling an imaginary but still very real character named Joe. Joe's in customer service. I need to ask an awkward question. Have you been stalking me? What you described for Joe is so similar to experiences I've had...it was almost painful to read. And yet, from what you write the imaginary but very real Joe and I aren't alone. You've interviewed thousands of employees in all levels of organizations in all functional areas. They all shared a common theme. Fear of loss. But behind that fear is something endemic. What is it that endemic driver for fear?

You know Zane it’s funny. But it’s actually true. Everyone who reads the story or at least most of the people I know who have, have said:

“ Boy that feels like something I have been through.”

That just shows how pervasive these problems can be.

But, getting to your question: What’s endemic? When we were doing this research, when I was brought in to see why these companies were stuck, we weren’t looking for fear; it was just something I saw. It was like I was looking at the same movie, again and again and again.

The endemic piece of it is this: With the best of intentions these barriers are born. No one comes in trying to destroy their company. But to protect someone somewhere, to avoid that perceived interference from other departments, walls are built. And those walls may protect one part of the process. But some times those walls can get so big then those inside begin to define their world in terms of the piece and not the puzzle.

That puts overall success at risk. It just gets lost.

I'm summarizing your discussion about parochialism but I believe you write that growth is a major catalyst for this fear of loss. This sounds a bit contradictory. Growth is more. Growth is opportunity. On the other hand, growth is a source for fear of loss. Can you bridge that contradiction for us?

Sure. Absolutely. Thank you for asking that question.

The problem isn’t growth itself. The problem is how growth is managed. When growth is poorly managed then that’s where you can start to see parochialism spring up.

And here’s how it happens. Through growth comes a need to divide up responsibilities. The business gets more complex. Suddenly you need to split up your human resource department into a training group and a recruiting group. Maybe you need to divide up sales and marketing, and you need to first limit strategies and tactics and promotions. You start dividing and dividing and you promote people into being in charge of specific little functions.

But great care has to be taken when you do that to make sure your overall focus doesn’t get narrowed as well. So, that the big picture doesn’t get lost in the haze and everyone begins checking off their one little box.

So, growth, of course you want and you need. But, you have to be very strategic and deliberate about how you handle that growth so you don’t see this type of parochialism begin to spring up.

**********

Part Two of this conversation will be published on Saturday, August 27.

Part Three of this conversation will be published on Sunday, August 28.

Would you live with your customers?

What can’t be easily outsourced is knowledge of the customer. The intimate understanding of what the customer wants and needs depends upon on-the-ground familiarity with the world of the customer. (For instance, when Toyota was designing the Lexus, it had to bring its engineers to the USA to live with the customers for extended periods so that they would have some understanding of what the customers might need or want in a car.)

via www.forbes.com

Well, would you? That wasn't the only thing Toyota did while they built Lexus into a luxury brand.

On the other hand, sending members of your organization to live with customers is the habit of another thriving brand: P&G. As Dr. Hal Gregersen, co-author of The Innovator's DNA explained during a recent interview about P&G's observational skills and processes:

Let me give you a quick example from Proctor and Gamble. You know they are systematic about sending people out to observe. Just as Colgate Palmolive does. P&G, the average marketer spends 12.5 hours per month just observing consumers buy product or use product. That’s a day and half just watching people. And they better well come back and see some surprising things.

But even a day and a half doesn’t get you some surprises. And, so, they actually have live-ins and go live with family for 2-3-4 days and figure out what’s it like to really do what they do. Many of their employees are from middle and upper income levels. And they’ve always had the luxury of walking into a kitchen or walking into a bathroom and turning the tap and have water run in. When you’ve gotta carry water from the well to where you are living and you have this thing called Tide detergent and it has 7 rinse cycles, then water gets really heavy carrying it back and forth to get soap out of the clothes.

So. Here are two world-class global brands who spend time with their customers. They live, literally, with their customers.

Would you go live with your customers in order to better understand how they would use your product or service if your product or service better fit the needs of their lives?

No? What would you do? Would you even call them?

Even NFL players are living with their customers. Chad Ochocinco, now of the New England Patriots, recently announced:

"I'm going to do something different, I'm actually going to stay with a fan for the first two, three weeks of the season," he said Tuesday. "That should be fun, until I get myself acclimated and learn my way around."

So, again, would you go live with your customers in order to better understand how they would use your product or service if your product or service better fit the needs of their lives? 

4 Cash-Flow Principles

Cash is king. So they say. And with nearly $2 trillion in cash, publicly traded companies here in the US are the recently annointed kings.

So, how does your company become a king?And as important, how does one sustain the positive cash-flows to help you retain your crown?

With that in mind, here are some principles that can serve to either keep you king or help you be a king in your business, king of cash flow.

Become a Learner.

Learners are leaders. That's a one-step iteration of the phrase, Leaders are readers. The quote is from Jim Rohn.

You must learn constantly what contributes or doesn't to your positive cash-flows. Why constantly? In today's global competition everything changes. Everything that changes in your business changes your cash-flows.

I know of no other way to understand your cash-flows than to make it a regular habit, at least once a month, to review your cash-flow statements. Any accountant or bookkeeper worth paying should be able to generate those reports. Even off-the-shelf accounting packages like QuickBooks Pro generate monthly cash-flow statements.

Generate them.

Then compare them. Compare them to the previous period, to year-to-date, to the same period from the previous year. What has changed? What amounts or categories or TOTALS? Why?

This sounds so very obvious. But it always and even now, continues to astonish me how so few executives and business analysts overlook cash flows. Cash is king. Full stop. But Cash flow, positive cash-flow, keeps you king. Kings own their business; creditors need not apply. Kings choose their journeys and who can join them. It’s good to be king for a moment. It is even better when you stretch those moments into consecutive quarters and consecutive years.

Communicate

Nothing forces a thorough understanding like being required to explain to another audience what you just learned. ( Clearly a standardized test and the skills to pass one would be insufficient here.)

Each month I would review these statements, even when they were not yet reconciled between accrued and actual. And each quarter I would review in detail those results and write a detailed discussion explaining the changes and projecting what changes we could look to in the future.

Sure. It is time-consuming. But making sure our company remained cash-flow positive was a key priority. It was a key metric. All results eventually reflected in our cash-flow. That statement told a story. And it was a story I needed to understand at every step. And it was a story I needed to understand in order to translate it and its impact to those in the company.

Connect.

Connect what? Connect the report, its results and categories, to the lives of those in your organization. Connect it to the specific actions or initiatives or projects in your company. Connect it to the people who drive them, too. Connect it to their incentives, extrinsic and intrinsic.

You told them the story, right? Do not assume they connect the elements of that story for the whole company to the meaningful elements of their day: their work, their recognition, their growth, their achievements and their income.

One of the smartest things I ever did was first to show our sales agents how much we spent on marketing and advertising. This was done in response to their complaints about the decline in prospect calls. Naturally, they asked for more. Makes sense. Spend more, get more. Then I turned the budget approval to them. Here is how much we can spend. You can spend it all on one day or spread the investment in marketing over the whole month.

That is when they saw...not only what we faced in the market for getting our message heard, but how much it cost and how those channels no longer delivered.

And that's when they understood why we needed to explore more innovative avenues like blogging (then) and flowers to new customers and proactive calls after every new product purchase....

Recognition.

Recognition. Who feels a surge in adrenaline and ideas and engagement when they are recognized for their successes?

Feelings are great, you say. But you though this was a post about cash-flows, the quantification of a company's success. You're right. But first, a little background.

Look at the the 12 questions in Gallup's Q12, employee engagement benchmark.

What is Gallup's Q12?

Gallup's employee engagement work is based on more than 30 years of in-depth behavioral economic research involving more than 17 million employees. This research has appeared in prestigious business and scientific publications, including the Journal of Applied Psychology and the Harvard Business Review, and in our bestselling books First, Break All the Rules and 12: The Elements of Great Managing. Through rigorous research, we have identified 12 core elements -- the Q12 -- that link powerfully to key business outcomes. These 12 statements emerged as those that best predict employee and workgroup performance.

What is the relationship then between recognition, employee engagement and cash-flows? Let's go back to Gallup:

Beyond the significant differences engaged workgroups show in productivity, profitability, safety incidents, and absenteeism versus disengaged workgroups, we have proven that engaged organizations have 3.9 times the earnings per share (EPS) growth rate compared to organizations with lower engagement in their same industry.

Productivity, profitability, safety incidents and absenteeism...are all key contributors towards a company's ability to survive, to thrive, to innovate and to generate positive cash-flow results.

Employee recognition and rewards are about tapping into intrinsic rewards, says Carol Myers of Globoforce in her blog post Employee Rewards: Busting Common Myths

Every question delivers answers that result from that employee's sense, experience, of recognition by and among their peers, managers and leaders as well as their ability to generate the recognition they deserve.

Reminder

There is a reason why they call it 'cash-flow' and not 'cash-snapshot'.

Cash is king. Cash flows, positive and rich, keep you king.

Radio Guest: Tom Rieger- Author of Breaking the Fear Barrier

Tom Rieger, author of Breaking the Fear Barrier: How Destroys Companies from the Inside Out and What to Do About It, is our guest tomorrow at 9:30 AM, Central. Listening options are listed below.

Mr. Rieger is a Senior Practice Expert for Gallup, has pioneered the study and science of organizational barriers. Rieger is an expert in applying behavioral economic principles to uncover how complex systems self-destruct -- and how to correct those problems. Through this work, he has become a recognized leader in developing methods and frameworks to identify and remove barriers to organizational and societal success.

Rieger joined Gallup in 1994. In addition to his work as the leader and chief architect of Gallup's consulting on organizational barriers, he is an expert in international research and polling methods and developing and applying statistical models to complex organizational issues.

Prior to joining Gallup, Rieger designed and ran a global customer measurement program for a Fortune 100 company. He also worked with predictive models for new brands and strategies.

Rieger received a master's degree in industrial administration from Carnegie Mellon University's Tepper School of Business in 1986. He currently resides in Southern California.

Some say the recession is... over (really?) and we can expect the unemployment numbers to begin to decrease. (A double really) But these illusionary successes have come at the expense of those who remain employed. Gallup has found that half of American workers feel like they are prisoners in their own company. Numerous studies on levels of employee engagement report stagnant or declining levels of employee engagement despite the well-reported impact on a company's financial results of rising percentages of their employees engaged and motivated. Regardless of industry, company size, job level, or function, a vast number of employees feel caught in a tide and powerless to do anything about it. The resulting cost to organizations -- in productivity, profits, and customer engagement -- is exorbitant. It's estimated that US companies alone lose up to $300 billion as a result.

Tom's book is imminently readable and includes imminently doable tips and steps you can take within your own organization to reverse this rising tide of fear that only serves to threaten your organization's sustainability. He's pulled the company's global research across a dozen countries spanning six continents to identify the "fear barrier" and to show how and why fear destroys companies. The book explains how to transform a fear-plagued organization into one that is courageous and unstoppable.

Be there for the show, buy the book or be afraid.

LISTENING OPTIONS

Live

• Listen in streaming mode here

• Call 646-915-9212 during the show's live portion: 9:30 AM, Central to 10:30 AM, Central.

Later

• Listen in streaming mode here

President Obama: 3 Steps to Create a Culture of Extraordinary Leaders

Rajeev Peshawaria was a guest on my radio show recently. You can listen here.

Rajeev Peshawaria is currently CEO of the ICLIF Leadership & Governance Centre based in Kuala Lumpur, Malaysia, which provides executive education and advisory services to organizations in Asia, Middle East and Africa. 

Prior to joining ICLIF in April 2010, Rajeev worked at AMEX, HSBC, Goldman Sachs and Coca-Cola where he headed headed Coca-Cola University and at Morgan Stanley, where he founded Morgan Stanley University.

We wanted to talk about his new book: Too Many Bosses, Too Few Leaders: The Three Essential Principles You Need to Become an Extraordinary Leader.

An exceptional leader is, he writes:

one who not only runs the company but creates a cadre of supporters who understand the company’s goals and missions and work to embody them every day.

Leadership, can neither be learned in a classroom, nor automatically acquired by accepting a big title or position of authority. Leadership needs to be discovered, and there is no shortcut to the discovery process.

I think President Obama faces all of those two paragraphs every day since he chose to run for President...back in that day. It made sense to ask Mr. Peshawaria for his ideas on how President Obama could create a culture of extraordinary leaders...

a cadre of supporters who understand [ our country's] goals and missions and work to embody them every day.

I asked him:

We've reached the imagination moment in our show. Let's imagine that our President Obama is calling you after this call.

Rajeev, he says, could you come to the WH or at least join a secure conference call with myself and Vice-President Joe Biden. We seem to be drowning here in DC from too many bosses and too few leaders. What are three things our country can do to create a culture of extraordinary leaders?

What would you tell him?

I thought his answer was beautiful in its clarity and how he picked up themes from other guests who have answered this same question:

Well, I think when he ran for President a couple of years ago he painted the picture of a better future. And that’s what won him the presidency.

Most of us related to his purpose and his values and voted for him. So, to continue to use the terminology from the book:

“We like the brain of his campaign and the promises he made.”

However, I think we’ve fallen just a little bit in the Bones and Nerve section. To take just one example, and this is just my view, many people liked his opposition to the Iraq War and that’s why he appealed to a lot of people. Now a lot of the same people are questioning his support for the struggle in Libya.

So, my humble advice would be to lead by example and stick to your values. It is impossible to say what are the three things the country can do to create a culture of leadership. In many ways America already has a culture of leadership. So, if Obama and Biden can re-articulate a vision and lead with values and keep the courage to do the right thing I think they will inspire a whole generation to do the same thing.

Let history judge their actions. For now, they should lead with values rather than their position of power.

Those would be my two cents.

Want more from Rajeev Peshawaria?

• Read his blog

• Follow him on Twitter

• Buy his book: Too Many Bosses, Too Few Leaders: The Three Essential Principles You Need to Become an Extraordinary Leader.

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Some may say this is inappropriate.

This is politics! And you never discuss politics at Thanksgiving Dinners, backyard barbecues and on a business radio show.

I disagree. As long as only politicians can discuss solutions for our country then those solutions and their interested audiences will remain off-limits, political, for those who make this brand, our country, run. And only politicians, these days that's only career politicians, can discuss those ideas and spoon-feed solutions to the public.

I see our times as an all hands-on-deck opportunity and not a crisis. That opportunity is for each of us to lend our hands, our conversations, our ideas to find and share solutions. In our absence those challenges are left to ideologues, vested interests and politicians of all stripes and partisan persuasion.

We...are the only ones with vested interests. And now we have, with social media and the urgency of today, the opportunity to reclaim our place at this table and discuss our ideas to solve our challenges. At the very least, we can listen to a discussion until we are ready to speak up.

 

Dr. Hal Gregersen, What Are You Reading?

Dr. Hal Gregersen, co-author of The Innovator's DNA - Mastering the 5 Skills of Disruptive Innovators, was a guest on my radio show recently. You can listen here.

I published notes from our conversation in three parts:

• Part One here

• Part Two here

• Part Three here

The Innovator's DNA - Mastering the 5 Skills of Disruptive Innovators was the result of an 8-year study to uncover the origins of innovative—and often disruptive— business ideas. They interviewed nearly a hundred inventors of revolutionary products and services, as well as founders and CEOs of game-changing companies built on innovative business ideas. In the process they identified five discovery skills that distinguish innovative entrepreneurs and executives from ordinary managers:

• Associating
• Questioning
• Observing
• Networking
• Experimenting

Dr. Gregersen is obviously a leader. And he leads companies and individuals around the world. It made sense to ask him:

Readers are leaders. Jim Rohn says that. I’m just smart enough to quote him. You’re a leader. What are you reading these days?

And, as expected, his answer was great:

I mentioned one book earlier that I am half-way through. It’s called Your Creative Brain: 7 Steps to Maximize Creativity, Productivity and Innovation in Your Life.

It’s written by Shelley Carson of Harvard Medical School. She is a medical scientist who has basically looked at every part of the brain and gives these incredibly clear explanations as to how they contribute to somebody getting a great new idea.

I find it fascinating and that’s the research I mentioned earlier about how most people find associational thinking exhausting and how can you make it fun and easy. It’s a great book. Very provocative.

Another book is from someone I mentioned earlier. It’s from John Hunt. And it’s called the Art of the Idea. In that, John basically says:

“Look. Ideas will prod and push the world forward.”

And he has some incredible one-liners and phrases in the book that really caused me to turn my head and think differently.

Want More from Dr. Gregersen?

 

• Visit the book's website 

 

• Follow him on Twitter

 

• Buy the book: The Innovator's DNA - Mastering the 5 Skills of Disruptive Innovators

Create Marketplace Disruption: A Review

Adam Hartung’s Create Marketplace Disruption: How to Stay Ahead of The Competition is a clarion call-to-arms for a select group of businesses: those who want to survive, first, and then thrive for the long-term. If you are not one of those companies then stop here.

He calls business leaders to first wake up and then look. Look up and look around. Look at your business. And keep looking. Look around you at what survives, who thrives and what dies. And ask why.

Create Marketplace Disruption will help you interpret what you see and do it faster. And afterwards you will want solutions. Adam offers those, too.

Old-school business orthodoxy is marked by rigidity, routines and rules of the that how who we’ve always done it kind. This is the ideology of dying brands, industries and markets. Adam shares a few obituaries of these companies, many of them brands we once knew, with a case study of their shared journey down the path of the safe, the familiar, the status quo protectors. Like all obituaries it is one we write ourselves with the publishing left to others.

Oh, that safe path marked by rigidity, routines and rules. Over the past few years it has grown from a path to into a freeway, a high-speed rail line of inevitability. Its sound is the sound of the inevitable we see today: job cuts, jobs outsourced, fewer jobs created, growth markets elsewhere, a growing number of companies who choose to compete with discounts and more discounts. That means lower margins and lower margins, cost-cutting and more cost-cutting. And that leaves companies without the resources to create, innovate and disrupt.

(And that business model appears near its own zenith. And why?

"...there are way too many deals companies competing for the same merchants.

" ...a lot of these merchants are also getting dealed out because they realize that the margins on these things aren't what they thought." )

Cash is not the missing resource.

• Corporations have compiled record amounts of cash. One report showed public companies with nearly 2 trillion in cash on their balance sheets.
• Business credit terms are easing. Credit is available for companies without that cash on their balance sheet, unless your company is considered small.
• Interest rates continue to remain low.

Some may say certainty is missing. But opportunities abound in uncertainty.

The resource missing is the human resource: intellectual capital, creative capital, leadership capital. Maybe all that is there; it is just kept locked in a box.

Whatever. That resource delivers the means to create marketplace disruption. That starts with disrupting your marketplace and the marketplace of others.

Not sure about that? Most companies and their leaders are not. Right now. If your company is not a leader then the tendency is to want to hold on, cut costs, and survive. Be safe, in other words. Your tombstone now will read:  

Here lies a company who chose the seemingly safe path of rote repetition while citing the mantra of this is how we’ve always done only to find that the safey was an illusion and instead they raced down the highway to their demise.

If your company is a leader ...well, who wants to disrupt that? Life is good, right? For now.

Adam shares data-driven paradigm shifts that serve as gentle slaps to our forehead. Wake up! This is not your father’s Oldsmobile, he says. At one time, Oldsmobiles were the mark of distinction. Markets are changing. If markets change, so will your position of imminence.

You need to change and here’s how. Here is what you can do to make sure your company is disrupting markets before markets disrupt you. Or you can write your own obituary. Just cut and paste from your competition's tombstone.

The global marketplace creates enormous pressures on businesses of all sizes now to change, to create, to innovate...to disrupt our business models and those of the marketplace in order to....survive.

And Adam shows the examples and the steps of companies who have found the successful ways to disrupt what you have done always done and instead relentlessly pursue what you can do better, what you can do that no one else can, where you can compete where no one else can follow. And keep doing that again and again.

Adam gives a blueprint, not a map. His blueprint offers an inspiring, teaching, annoying, and even frightening vision. That's like the experience in business in today's global marketplace. But Adam's is a blueprint that shows the reader how both to build and, well, to tear down what works. How to create, sustain and disrupt. Again and again.

You bring the resources. And the passion. And the willingness to learn. Adam's book gives you the blueprint.

But only if you are willing to listen. And read. And disrupt.

Sure. it is hard. It is scary. Knees will be scabbed.

But to those willing, the rewards can be a company that not only survives but thrives. A community that grows in quality of life as jobs are added, jobs with meaning and purpose. An economy that rebounds and allows us to resume being the leader among nations for innovations and solutions.

Adam Hartung write the excellent Phoenix Principle blog. He brings a track record of results from 20 years of practical experience in developing and implementing strategies to take advantage of emerging technologies and new business models. Today, he is a Forbes blogger, CIO Magazine columnist and contributing editor for International Journal of Innovation Science and consults and speaks worldwide.

Follow him on Twitter.

Adam was a guest on my radio show.

• You can listen here.

• You can read notes from our conversation here.

 

Pizza Inspectors...What If?

I opened a box of DiGiorno's pizza this past weekend. ( No, it wasn't delivered; it was frozen. )

I turned on the oven. And while it heated up I slit the plastic wrapper around the pizza: Chicken Supreme, Supremo, something.

Anyway, as I picked out the onions (I see onions as flavorings, spices and not an entrelevel vegetable) I wondered about the quality-control. Then I thought about the decline in the numbers and authority of government inspectors and the success (NOT) of self-regulation, self-inspection in the food industry.

Then I began to imagine DiGiorno's hired their own inspectors, invested in real food-safety as the basis of food quality. (Crazy, I know.)

Then I thought....

What if DiGiorno's hired enough food inspectors to make a difference. I don't know the number. I bet they do.

Those food inspectors could be former government food inspectors.

And they gave their own food inspectors the mandate to make their kitchens, their food, their preparation....everything the cleanest of clean in the business.

And these inspectors reported directly to the CEO, CFO, COO. And their reports were made part of their regular review sessions.

And those reports, those results, were published throughout the empire of DiGiorno's. Every plant, every cafeteria, meeting room, conference room...hallways.

You know those factories that report 234 DAYS SINCE OUR LAST ACCIDENT? Well, what if they did the same for food quality, safety?

234 DAYS SINCE THE LAST RAT DROPPING...

Ok, that's unfair to DiGiorno's. And I'm just being illustrative. They don't have any as far as inspectors report and they self-report. (But, who knows? Right?)  

And then, they gave a face to these inspectors.

A site was created for these inspectors to talk about their day, their procedures, their results.

Create a video or two.

Show the stats...publicly.

Create one of those QR codes and clicks to it would take you to this site showing these stats as well as the calories and vitamins of Chicken Supreme, Supremo...whatever. Anyway.

What if those C-Suite guys/ladies would mandate their inspectors to be leaders and speak out on the need for food safety and share their state of the art procedures and, and, the ROI from this investment. Lower COGS, higher cash-flows, lower rates of return, spoilage, more testimonials from customers....

And what if when the CFO asked how will they pay for this, then the CMO says:

Take it out of our budget. Ads just aren't productive. And those silly viral videos we created are just that: silly. What would really help us grow our customer base, generate repeat sales and referral business would be to create a level of such trust with our customers...and make it easy for them to share why they trust us...and make it easy for others to talk about our investment in trust with our customers and employees...that we are seen not as leaders in the food industry but in the areas of innovative marketing, brand loyalty, word-of-mouth, employee engagement, transparent leadership....our customers would love to tell our story and their role in it.

Pizza Inspectors...Yeah, What if ?

Top 5 Uses for Twitter...Here They Are

1.

2.

3.

4.

5.

I left them blank to illustrate a point.

How many times have we seen a post titled:  TOP 5 USES for TWITTER...or some such list. And we scramble to quickly self-assess and add a to-do item to start doing...number 5 on that list. Ok. I have. Twitter's powerful and how doesn't want the results described along with that list of quick and easy steps...

That's the point.

The top 5 ways to use Twitter don't come from me. My list of ways I use Twitter is precious and wonderful for me, sure. But ultimately irrelevant in this conversation.

The top 5 ways to use Twitter don't come from another post published by another social media expert, maven or guru, agency or firm.

They never have.

The top 5 ways come from...you.

What are your top 5 ways that you use twitter...*?

That is the power of a resource like Twitter or blogs or posterous or tumblr or flickr...You can discover and develop YOUR top 5 ways of using...Twitter. We can do this together. That has been the power of social media from the beginning.

You remember 3-4 years ago when there were no social media experts or agencies? 3-4 years ago before everyone and their mother and their mother's mother heard that list posts were a great way to generate traffic. Not ideas. Not conversations. Not discoveries.  

Be like everyone else and follow these 10 steps on social media and presto!

Presto, you're just like everyone else. True confession: I bought into it. It seemed an effective way to learn and help others. Then one day the lists seemed rote, redundant, repititive...and pretty soon everybody was doing it. Like AutoDms on Twitter to new followers. (Ok, I never did that.)

The power of social media has always arisen from this:

We, anyone, can use them, explore them, master them, make a mistake or two with them, at our pace. As we decide. That individuality, that freedom to explore and learn and fail and succeed as decide has always been the viral power of social media.

What was missing...back in the day...were experts or institutions assigning one way and enforced with bored and tired rules, which they administered. There were no standardized tests. No rules. No policies. Like kids we joined this playground and learned and fell down and got back up by ourselves or with others who helped.

See what's missing? No experts.

Like kids in a playground we all played together. Sure, our skills are ours alone. We mastered them: running or climbing or organizing a game or talking quietly off to the side or watching a butterfly or running out in the field by ourselves or competing or cooperating. We learned together. Together we all watched and learned and experimented and became masters ...together.

The power of social media is the power to run around on a playground on our legs as fast as we want in the direction we want. As often as we want. As fast as we want. And...with whom we want.

To say this in marketing vernacular we have the freedom to speak in our own voices. To share and showcase our own voices. As a marketing media there is no message more powerful than that of unique. Sure, you can browbeat people, you can bury them with an onslought of paid media. And as soon as that onslaught stops so does your message stop being shared.

That makes us all leaders. As Rajeev Peshawaria said during his interview with me:

We call someone a leader when they create something that does not yet exist. Or when she significantly improves something that already exists. And this comes from original thinking, not copying.

By copying behavior you can become an expert at something. But you cannot become a leader.

Back to the title. Fill in those blanks. What are YOUR top 5 ways of using Twitter? Or Posterous or your blog or Tumblr or YouTube or Google Reader or Google +. Find those. Use them. Speak in your own voice. You'll be heard. You'll hear others. Like on a playground. You will lead others on your, collective you, playground. And likewise you can be a co-leader on someone else's.

And what a playground it became with no one volunteering to be adults and no one claiming....they are an expert. Then we are all leaders and together we are co-leaders.

 

President Obama: Three Things We Can Do to Create Healthy Compromise

Elizabeth Doty joined the show recently. I hope you listen as we talk about her work with WorkLore and her inspiring and useable book: The Compromise Trap: How to Thrive at Work Without Selling Your Soul.

Elizabeth co-founded WorkLore which works with corporate clients in helping their leaders and teams make their missions real, increasing the engagement, integrity and alignment that make their work bigger than a game.

Compromise and how to do-it, what it entails, what happens in a democracy when you...do not understand its role has been a lively topic this summer and continues now.

It made sense to ask Elizabeth about what could we as a nation do to embrace healthy compromise. I asked her:

We’ve reached the imagination moment in our show. Let’s imagine for a moment, that your assistant waves frantically at you right now. You wave her off...can’t you see I’m on the phone style. But she persists. And she mouthes...It’s President Obama!

Sure enough President Obama has called. And when you speak to him he says:

Elizabeth, you’re spot on. Our nation is engulfed in an unhealthy compromise. We’ve struck too many faustian bargains. What can we do? What are three things we can do right now to transform our choices into healthy compromise?

What do you tell him?

She answered as you would expect anyone to answer who is as clear in her understanding of the answer as Elizabeth is. She answered:

The first one, that may surprise you, is an important stance for us and that’s to ask:

“How are you holding up? How you doing in the midst of all this?”

It’s such a comfort to know that there are leaders bearing up these responsibilities and dilemmas and we get to point out when they’re not doing it.

But that’s the problem. We need to share in the responsibility. And I appreciate the way Obama reframes the conversation to:

“We all have a shared interest in this. We need a budget together. "

That would be the first one, to offer support for him and all the other leaders who are bearing up under these things and stop projecting onto politicians the worst in human nature.

The 2nd is to encourage him and the rest of us to keep redefining the conversation to what do we want to create as a country. What is our worth-enough win as a country.

I’m hearing on both sides, the left and the right, a lot of similar values: personal responsibility, liberty and freedom. There are differences in how we get there.

But what is it we stand for, that is joint, that is that worthy enough win to create together.

And in particular, I would encourage him and the press to experiment in ways of reporting that talks in terms of that worthy-enough win and talks in terms of contributions from each side as opposed to vetting out which side should win. Cause that forces all the dialogue into a polarizing frame.

The last thing I would do is invite citizens to participate and weigh these tradeoffs instead of having to project them on to leaders. So that we have to face these very hard choices. We can point out to other people the very unhealthy compromises but when we deeper into the costs and the realities we’ll be much more aligned when we have to wrestle with these issues ourselves.

I’m very excited by the participative democracy movement that has us doing that, not just voting. Really chewing on budgets and priorities for city councils. We need more of that.

We need keep re-anchoring this conversation to these priorities. And then we can use data to get to the best ‘how’s’.

Good advice for us all as we face these tough choices and find the need to listen, to collaborate and to compromise in a healthy manner.

Want More from Elizabeth Doty?

Read her blog

Follow her on Twitter

Buy her book: The Compromise Trap: How to Thrive at Work Without Selling Your Soul.

**********

Some may say this is inappropriate.

This is politics! And you never discuss politics at Thanksgiving Dinners, backyard barbecues and on a business radio show.

I disagree. As long as only politicians can discuss solutions for our country then those solutions and their interested audiences will remain off-limits, political, for those who make this brand, our country, run. And only politicians, these days that's only career politicians, can discuss those ideas and spoon-feed solutions to the public.

I see our times as an all hands-on-deck opportunity and not a crisis. That opportunity is for each of us to lend our hands, our conversations, our ideas to find and share solutions. In our absence those challenges are left to ideologues, vested interests and politicians of all stripes and partisan persuasion. We...are the only ones with vested interests. And now we have, with social media and the urgency of today, the opportunity to reclaim our place at this table and discuss our ideas to solve our challenges. At the very least, we can listen to a discussion until we are ready to speak up.

Oren Klaff, What Are You Reading?

Oren Klaff shared an hour of his day with me recently as a guest on my radio show. You can listen to our conversation at this link.

Oren pitches deals for a living. And judging from his success, he pitches them very well. As Director of Capital Markets for investment bank Intersection Capital, he is responsible for managing their capital raising platform with both direct capital raising and deal syndication.  During the previous five years, Oren supervised and assisted in the placement of over $400 million of investor capital.

He also has written one of the better books on pitching, selling, presenting I have read. Pitch Anything: An Innovative Method for Pitching, Presenting and Winning the Deal is the work of one who loves his work, has achieved outstanding results with his work, and desires to share how he works, how he achieves his success, with others.

Look at our economy. We need to be able Pitch Anything or at least something.

Given all this, it made sense for me to ask him:

You're a leader. Jim Rohn says Leaders are readers. What are you reading with all free time?

And he gave a great answer:

It may be cliche’ but I have 2 books that kinda never leave my desk. One is my own book...I’m just kidding.

Jeffrey Moore’s Crossing the Chasm. I read and I re-read.

Michael Porter’s book on Competitive Advantage. I read and re-read.

And in some ways that question is

“Hey. What’s all the new stuff coming out.”

The new stuff to me...you know there hasn’t been any investment since 2008 - 2010 by the publishers in really good writing. I know the publishers. They’re going with known names who have existing platforms. It’s kinda like saying X-man 2-3-4-5. There hasn’t been an investment in great new writer. So, you’re not seeing a ton of great new stuff coming out.

There’s one third book I would add to that. And it’s not new either. Joseph M. Williams wrote a book called Style: Towards Clarity and Grace. If you write or need to communicate, that’s just a great book.

Those are the things I’m reading now.

Fantastic. I thought you might say you weren’t one of those people who read a lot. But I can tell you’re a discerning reader.

Want more from Oren Klaff?

• Read his blog

• Follow him on Twitter

• Buy his book: Pitch Anything: An Innovative Method for Pitching, Presenting and Winning the Deal

Pt. 3: Interview with @OVOInnovation, Co-Author of A Guide to Open Innovation and Crowd-Sourcing

Jeffrey Phillips, aka, OVOInnovation on Twitter, joined the show Wednesday.

• You can listen to our conversation here.
• You can read Part 1 of this interview here.
• You can read Part 2 of this interview here.

Jeffrey is VP of Marketing and a lead consultant with OVO Innovation. Jeffrey’s led innovation projects for Fortune 5000 firms, academic institutions and non-profits all based on OVO Innovation’s trademarked Innovate on Purpose method.

He was one of the 34 innovation experts who contributed a chapter for the excellent book A Guide to Open Innovation and Crowd-Sourcing: Advice from Leading Experts. Jeffrey’s chapter is Open Innovation Typology.

Your company is OVO Innovation. You’re one of the founders. How does OVO Innovation and your trademarked Innovate on Purpose methodology help your clients overcome some of these obstacles, particularly in the cultural arena?

Well, the tagline we chose was kinda tongue-in-cheek at one point. And we think over time it has become more and more prevalent which was Innovate on Purpose. We think that in a lot of organizations innovations are serendipitous or happy accidents.

And that’s great but that’s nothing to stake your future on. If you’ll take the assumption we work from which is:

“Innovation isn’t a nice to have thing any more but it’s becoming a core competence, then I need to innovate purposely and repeatably and sustainably.”

So, what we try to focus on with our customers, whether you’re doing open innovation or closed innovation, whether you’re doing innovation with specific tools or whether you’re doing it with everyone in the organization or just a small group of people, is that you do it in a disciplined way with a purposeful approach that you have defined processes that can help you sustain it and do it effectively. And all of that’s driven by your attitude and your processes and your culture.

Frankly, we like to say that:

Culture eats all the rest of that for breakfast.

If I can engage a culture and get people thinking about the possibilities for innovation and overcome the issues of Not-Invented-Here and the issues of efficiency over innovation. Because today most companies are focused on efficiencies and right-sizing and cost-cutting far more than they are on innovation.

We really have two challenges.

1. One is to move away from while still embracing efficiency, we need to add the concept of innovation back into our cultures.
   
2. And the 2nd is to become much more open to what is happening on the outside. And that is a cultural barrier as well. Traditionally, we’ve said we know what’s best and we’re going to do what’s best for us.

Interestingly, I have a friend who talks about being best at what you do best and outsourcing the rest. And when he talks about that he doesn’t mean just outsourcing manufacturing. Maybe it’s outsourcing legal or outsourcing finance. But the idea here is where are the best ideas I can leverage and the best ideas I can bring into my organization. And is the organization prepared to capitalize on those ideas and move very quickly to then get value out of those ideas.

And that’s really a cultural issue in many cases that has to be addressed first. And we address it through specific methodologies and specific training and cultural shifts in terms of how you compensate and how you reward, and what the management team emphasizes as part of its vision and strategy.

Now before the show we talked about what you did with OVO Innovation and some of the tools you used. You mentioned you used 2nd life at some point in some of your relationships with your clients.

Can you tell us a little bit about that? I thought it was fascinating.

Well, sure.

2nd Life is an immersive experience. Basically, you can log on and enter a virtual world and you have an avatar. An avatar is just a little character that represents you in that virtual world. You can walk around that world and interact with other people and so forth.

And one of those things we had been exploring is the fact that this kind of concept this kind of virtual world is a perfect metaphor for innovation. Because you can craft an environment in 2nd Life that aligns to the needs you want to have. So, you can create that new product and show it to people in a virtual world. You can create a new house and show people the new house and the new features and the new benefits. And they can walk through that house and give you feedback.

So, from an idea-generation perspective, from a role-playing perspective, from a scenario-building perspective, you can bring people into that environment that can interact with your ideas in that environment. They can give you feedback on your ideas and you can manipulate your ideas in real-time to say:

“ Oh. I heard that you said you needed this. Does this product or service or environment, does this meet your needs? “

So, it’s a very interesting rapid-prototyping environment. It’s a great place for idea-generation. And it’s virtual.

So, instead of having to fly team members from around the country to one location to meet in a stuffy conference room...we can meet in a really interesting place, we can interact with almost the same level of interactivity and we can test ideas in an environment that is specific to the opportunity or need we’re trying to generate.

So, we found that 2nd Life has been a really powerful platform for innovation, for idea-generation, for scenario-planning, for rapid-prototyping, and we plan to continue to use it as part of our arsenals with the community and partners who are really excited about the possibilities of using 2nd Life.

I have a question here in on my list about 2nd Life and how you used it with a specific client to generate these results. Is that possible to talk about?

I can talk about it generally because we’re under a NDA for the company name and specific functions. But we have written a white-paper about it and you can find that white paper on innovationmanagement.se.

The project we were working on was for a retail establishment. One of the questions was as the web grows and people buy more and more from the internet and do more of their transaction on the internet...what is the need, what is the opportunity, what is the benefit of a retail establishment and what should the retail establishment look like? What sort of products and services and features and experiences should it offer such that it remains a compelling alternative to remaining online.

What we did was we built a number of different alternative kinds of retail establishments or retail footprints and we walked people through those asking them if these features were here how would you interact with them and would you find them beneficial.

And what it allowed us to do was to break the concept down into 3 or 4 different areas. First, there’s a lot of factors around experience in retail. Although, you may buy some of your clothing online, sometimes just the mere experience of going into a store and touching and feeling interacting with the clothing really matters. So, retail experience needs to change. It needs to be more compelling. It needs to be more of an event or more of a destination, if you will.

Another thing we talked about are destination spaces. Sometimes there’s too much empty spaces, so you don’t know where to go. Or it’s too jam-packed. And so we need to give people better cues when they come to our retail location. Here are the spaces within the locations and the different things you can accomplish in those spaces.

And the 3rd thing we talked about were people. And the ability to solve problems on the spot and to be technically savvy enough so that if a customer walks in and says:

“Hey. I’ve got this issue and here’s my laptop or my tablet and can you help me.”

And the people in that retail establishment can interact with the technology in such a way that it blends the virtual world, the technology world and the retail world into one big solution for the customer.

So, using 2nd Life and walking through some of these retail establishments we were able to investigate a lot of these issues and make recommendations about what we felt were going to be really compelling physical structures; but not just the structures but the people, the spaces and the interactions that would happen inside those structures.

That’s fantastic. That’s excellent!

We've reached the imagination moment in our show. Let's imagine President Obama had a few moments this week. He finds your book, reads your chapter. And calls you.

Jeffrey, he says because he's the President. At this point in our declining ratings as a nation of innovators any type of open innovation will work. The challenge for us is to find one and move forward.

What if you came up to the White House and met with myself and Vice- President Biden. We want to hear your thoughts, maybe 3 things that we as a nation can do to identify the type of open innovation that can return us to being number one, generate some new businesses with new jobs.

What do you tell him?

Let say the first thing, I didn’t know you were going to ask me this question specifically.

I write a blog called Innovate on Purpose. Yesterday, I wrote a blog post called Failing to Innovate While Surrounded by Ideas and I riffed off the poem of The Rime of The Ancient Mariner. You know:

Water, water, everywhere and not a drop to drink.

We live in a society and a time when we are literally awash in a time of ideas. And the interesting thing is our government is really dead-locked. And it seems stagnant. At a time when there are so many good ideas out there it seems it’s really more about having the political will to change perspectives and adopt or at least ask people for their ideas as opposed to trying the same tired solutions over and over again.

I’ll direct your listeners to my blog.

But I think there would be three things.

First, the government can’t just be willing to listen to these ideas. They have to be willing to adopt those ideas and to demonstrate that:

“We listened and here’s the results from that action.”

So, the first one I would suggest are philanthropic contests. Can we create a contest much like BP had with the oil spill. What’s one thing you would change in the Department of Commerce. And if you recommended it how would, what would it change and how would it change people’s every day lives in creating jobs. And I use the Department of Commerce as an example. It could be any of the departments.

But, what we should be able to do is suggest very specific ideas that might drive jobs or help the government spend more money effectively or ways to cut costs or abuse and those kinds of things. And be very specific about ways with each agency of allowing people to make ideas.

The government has already started this with Challenge.Gov. But it needs to go a lot further. And it needs to demonstrate it through lots of small experiments. So, as we get these ideas we start kicking off very small experiments.

2nd idea you asked about was if President Obama asked me...was clearly here in the US we’re pretty smart. But we don’t have a lock on the best ideas. Are there places in other countries, other companies, other non-profits, where a problem we’re facing is solved better some place else. This would allow other people, other organizations, other countries, other companies, to submit ideas to the government:

“We see you have this problem. We think we have a better solution than you have.”

That would mean we would have to open up our minds and our political processes to be willing to listen and look at other ideas and accept those ideas.

The 3rd thing I would tell from an open-innovation perspective would be to merely opening up to new voices. I think that our government may be just a bit locked into 535 members of Congress and maybe I don’t know 15 or 20,000 lobbyists on Capitol Hill. That means those are the voices that get heard. There’s 300 million of the rest of us whose voices aren’t getting heard. Are their ways we can begin to compound our voices and get behind specific initiatives and ideas that can then be communicated to our government agencies.

What we’re really talking about is true democracy is true open innovation. If you think about it, it’s people with great ideas trying to press their will on the majority that eventually hopefully many in the majority will accept and it becomes a law.

I think we’ve lost a little bit of our democratic process in allowing ideas to bubble up. And it would be interesting to see if there were different ways to allow open innovation platforms or purely democratic platforms, democratic with a small d, to allow us to bubble ideas back up, bubble legislation, as well into the federal government.

So, those are 3 things. All those are pie-in-the-sky. We’re in the imagination phase as you said. I can be a bit imaginative and hope for the best.

Let’s talk about Social media and Crowd-Sourcing types. I see Twitter as more Suggested/invitational and Google + as more Directed/Invitational with its Circles. I don't see Facebook as an innovation resource. What am I missing?

Well, I think you’re right about social media if you’re meaning to categorize these products.

I think you left one out which I like which is LinkedIn which is probably the closest to Directed and Invitational. You can decide who you want to partner with and you can ask very specific questions.

Twitter allows anyone to submit any idea about any topic or really talk to anyone about any topic.

I can’t say that I’m a huge Facebook user either. But, I suspect Facebook is probably a pretty good innovation resource for groups that need to form wholistically or not-for-profits. You don’t see many businesses actively using Facebook, so it’s probably less of a business resource. Although I think Facebook could be good for innovation use for organizations who are trying to organize around a cause. But probably not so much for a business resource.

Leaders are readers. Jim Rohn says that. I openly incorporate that quote into my shows. You're a leader. What are you reading?

I’ve just finished reading a book called The Innovator’s DNA and I’m going to be writing a book review shortly. The Innovator’s DNA describes 5 attributes or 5 skills that good innovators have. It’s a good quick read.

I’ve also been reading a book called Little Bets: How Breakthrough Ideas Emerge from Small Discoveries. Little bets is a concept we talked about the government should be doing which is kicking off lots of small experiments. Too often we talk about innovation and we kick off 1 or 2 large projects when perhaps we should kick off 5 or 10 small experiments. I think that’s important.

Another book that’s on my desk that I’m reading for Harvard Business Review is a book called The Progress Principle: Using Small Wins to Ignite Joy. The idea behind it is really about employee engagement. If you think about innovation, whether it’s internal or external, how engaged your employees are in the processes, the concepts and the strategies and the ideas is really important. Ultimately, your innovation is inhibited or enabled by your corporate culture. If you have an engaged culture, you’re much more likely to have innovation as an outcome.

So, those are three books I’m actively reading now.

This has been a great show. I thoroughly appreciate it.

Can you leave us with a quote on the Typology of Open Innovation.

One quote on the typology of innovation....

I would say that regardless of the size of business you are in, regardless of the kinds of business you are in, regardless if you are public or private, for-profit or not-for-profit, there is a type of open innovation that will work for you.

But understand that open innovation is a generic term. And underneath that umbrella are many different types or approaches to open innovation.

What you need to do first is establish what your goals, your strategies and your desired outcomes are. Then use those filters to find the open innovation approach or type that is most applicable to your business. So, you could use a P & G model if that small directed innovation approach is right for you. Or you could use method that is more similar to what Dell is using if a very open, very engaging, open innovation model is right for you.

But understand the implications for their use are fairly profound.

Thank you Jeffrey!

Interview with @OVOInnovation, Co-Author of A Guide to Open Innovation and Crowd-Sourcing - Pt. 2

Jeffrey Phillips, aka, OVOInnovation on Twitter, joined the show Wednesday. You can listen to our conversation here. You can read Part 1 of this interview here.

Jeffrey is VP of Marketing and a lead consultant with OVO Innovation. Jeffrey’s led innovation projects for Fortune 5000 firms, academic institutions and non-profits all based on OVO Innovation’s trademarked Innovate on Purpose method.

He was one of the 34 innovation experts who contributed a chapter for the excellent book A Guide to Open Innovation and Crowd-Sourcing: Advice from Leading Experts. Jeffrey’s chapter is Open Innovation Typology.

You talked about the two, the x and y axis for open innovation. That’s the who and why, then the what instructions. And you broke it down into 4 types of open innovation. What are those 4 possible types?

If you think about that first axis, we tend to to label that axis as “Who’s invited”. And so, we would say you could have a model that is participative, in other words anyone can participate or it’s invitational that I only invite certain people or certain organizations or certain groups.

On the other hand, you could have suggestive and then anyone can participate and suggest any idea regardless if it’s relevant to you or not. And on the other end of that spectrum you could have directed. That means the company says to its open innovation participants:

“We want to direct your thinking to this problem, this technology or this market.”

We talked about P & G’s Connect and Develop program as invitational, not everyone is invited, and it’s directional: these are the challenges that we want to address.

If I was to look at something that was 180 degrees different model then I would look at Dell’s IdeaStorm. Dell’s IdeaStorm is for the most part is publicly-facing and is suggested. Because Dell basically says:

“Any idea you have is welcome.”

And it’s a very participative model because they don’t say who can participate and who can’t. If you have web browser, you can go to Dell’s IdeaStorm site and you can suggest ideas to Dell about, basically, anything you want to suggest.

Now, they do ask you to help them categorize it. But they don’t dictate that it has to be just about Linux or just about laptops. It’s a very open model; it allows you to suggest any ideas that come to you.

As opposed to the Connect and Develop program that was invitational and directed, Dell’s model is very much suggested. Anyone can participate. And anyone who does participate can suggest any kind of idea. Dell doesn’t begin to try to tell you what kind of idea or what kind of technology or what kind of opportunity to frame your idea around.

Now. Thinking on the fly here and that’s always kinda dangerous in my non-sequitur type of thinking. Dell seemed to have a directed-invitational model when they allow their customers to design their own computers. They invited only prospects and customers and directed them in certain ways to tell them what kind of computer they wanted.

I want a laptop with a big screen and fast processor and x number of USB ports, etc, like that.

Would that be within the realm of reasonable?

Yeah, that’s heading in the direction. The one difference I had in that case is they are inviting certain people and they are giving them certain direction. But, what they’re doing is having them choose from a list.

But if they said “Choose from a list and also give us 3 new things that don’t exist” then I would say that would be excellent. So, if I could design my own computer and also add 2 features that Dell had never thought of then I would say that is the perfect example of directed and invitational.

Now, they jumped into this IdeaStorm which is basically open the doors and embrace the world. And I’m thinking a company like Dell had to be pushed into that IdeaStorm. Maybe, motivated is a more positive term.

What do you think motivated them to take a public, open, high-risk, open innovation crowd-sourcing project?

I honestly think that Dell got into it in a proactive way as opposed to being pushed into it. I think that proactively they recognized they needed better interactivity with their customers. Dell really did a great job of innovation around the business model and really radically changed the PC model.

But, I think they got a little stagnant and I think they saw this idea of open innovation as an idea to re-ignite innovation in a big way and to really become much closer to customers and integrate with customers. They were also an early pioneer with the use of social media. So, I suspect these kinds of things were hand-in-glove for them: both the social media aspects of it and the getting closer to customers to it.

Just in case you haven’t done any research on it, the feedback has been tremendous. I don’t have the specific numbers in front of me. But I think over a 4 or 5 year time horizon they have received something on the order of 15,000 ideas. And I think they have implemented 4-500 of them. They have been engaged. They’ve had a large customer body present ideas to them. And it’s really helped them engage customers in a very different way than other PC manufacturers.

I haven’t. I’m peripherally aware of Dell. I’m a MAC guy. So, I need to go and look closer at it. What you describe sounds fascinating.

Do you have any idea what metrics they have used to measure their success?

The interesting thing is I think Dell did this for two reasons. One is the sort of overt reason of:

“Can we gather more ideas from our customers and if so can we implement them more effectively?”

I think they’ve proven they are pretty adept at it.

The other reason is Dell’s Open to Listening Post for its customers. Based on this open innovation model, the IdeaStorm model, they are able to listen to customers, spot trends and identify lead users. So, they get a lot of innovation insight that is qualitative in nature, a little harder to measure. But it’s equally as valid as the more quantitative measures around:

how many people would participate and how many ideas would they receive and how many ideas would they implement.

Excellent.

Now maybe the other end of the spectrum from Dell’s IdeaStorm would be the Directed Invitational type of open innovation. The difference seems intuitively obvious in just their names: directed vs suggested, invitational vs participative.

Functionally, we talked about the differences particularly in how you profiled P&G’s Connect & Develop program.

But, both of these examples are from big companies. Dell and P & G. Do you have an example from a smaller company?

Well, we can talk about several different kinds of companies. Traditionally, not just companies but the federal government and not-for-profits as well. There are a number of not-for-profits that are running what we would consider to be a Directed-Participative model which is I direct people to solve a particular problem. But I’m not so defined as to the type of solution you create.

And when you and I talked before one of the ideas we threw around was this idea of an innovation contest. And this contest was a great example with I know the Rockefeller Foundation uses this kind of model. The recent oil spill, the BP oil spill, used this kind of thing. The federal government uses this kind of model. I think the website is Challenge.gov.

What it is is an innovation challenge. So it’s Directed. The non-profit or the government agency or the small business may say:

This is the problem we’re trying to solve.

But they don’t necessarily limit who can respond. The BP oil spill site is a great example of that. After the oil spill in the gulf last summer, the federal government and BP put up a website that allowed anyone to suggest ideas but around a specific topic: how do we get oil out of the sea water.

I know the Rockefeller Foundation has used systems around this. I’ve seen other not-for-profits use something like this. And some smaller companies, and the distinction here is that when you talk about smaller companies the infrastructural issues become more magnified. If I ask others for their ideas then it becomes even more important for me to manage those ideas effectively.

What you’ll find in an open innovation model, especially for smaller companies, is that they are very interested in becoming part of those networks like the P&G Developer Network; they’d like to be a trusted partner. There are some smaller companies using the traditional open model like the IdeaStorm. But I have to admit I don’t have any off the top of my head. But what I will do is do some research and include that with your transcripts.

You’re talking about smaller companies and the greater challenge in the infrastructural area. I think that smaller companies might assume that the Suggestive-Participative type of open innovation might be very enticing. With all these different resources that are often free, you can with very little upfront costs, you can begin a very open, participative model. The management costs would be very low.

You write that they would be very wrong with that assumption. What happens when companies assume that and don’t manage these conversations?

Well, what happens with open innovation whether it’s a large or small company is that you tremendously magnify the number of ideas that you have coming in. And behind every one of those ideas is an individual or team or business that is really fascinated by the idea and want to see it progress.

So, instead of you as an organization working with 5 or 10 ideas and everyone that sponsors that idea is within the organization and it is very easy for you to talk to them and you can put your arms around.

When you start opening up to ideas from other places, you have the responsibility to accept the idea, vet the idea to make sure it’s valuable for you and also to vet the idea for the intellectual property associated with it. That means you have to research does this idea have any provenance in any other places:

• Does it belong to anyone else?

• Does the intellectual property belong to someone else?

Not only that but you have the responsibility to give feedback back to the idea. And as we know from a social media market, if you’re not actively responding to the people who are trying to talk to you, if you become a one-way street, if you only accept information without sending information back out, then you create a level of cynicism very quickly within the people who are submitting ideas. Then that faucet will get turned off very quickly. What will happen is people will see their ideas going into a black box and never getting any feedback back on

• Hey, this idea is being promoted.

• This idea isn’t useful for these reasons.

So, while many organizations think it’s cheaper and easier to obtain the idea...on the surface they are probably correct. But what they are missing is the ongoing maintenance and care and feeding of that community. And that investment around vetting that idea, making sure there are no intellectual property issues around the idea. And then further, very few organizations have an excellent innovation process.

In other words, there might be very good at generating ideas internally or finding ideas externally, but that’s really just the first step in ultimately commercializing the idea. Because you have to manage the idea, you have to evaluate it, you have to make selections as to which idea to invest in. And then, I have to convert that idea into some sort of physical concept as a product or service or new business model.

So, if you don’t have a good innovation process underway for the ideas you spawn internally that problem will become magnified as you have more ideas from the external sources that have to get pushed through an already inadequate process. So, while on the surface open innovation may look a little less expensive on the idea generation point of view it actually will end up magnifying the issues within the organization from an innovation point of view from a commercialization and intellectual property and just the ability to manage the ideas effectively from the community at large.

The last thing you want to do is open up innovation to an external community and fail to interact with them effectively. You’ll run into that old issue of:

“If I please one person they may tell another. But if I anger another person they’ll tell 7.”

So, if you do open up innovation to the community ineffectively then that will spread like wildfire.

There’s a good example with Campbell Soup. Campbell Soup asked the people for new ideas for recipes. But on the website told people they wouldn’t respond to them for 60 to 90 days. And this has created quite a hubub within the community because many members feel they have been let down. They don’t know how their ideas are being implemented or if their ideas are being implemented at all.

I just laugh. What a mixed message.

Please share with us your ideas; we’re excited to hear them. But we’re not really that interested in communicating with you. We’ll get back to you in 60 to 90 days.

It’s weird. You and I have talked about this previously in this call. The further you go in open innovation, the further you’re penetrating traditional social media. And social media demands a two-way interaction and not a one-way interaction.

I’ve written less articulately than you just spoke that the communication you have with your customers is a reflection of the communication you have within your company. If it’s engaged, open, passionate and trusting then that will the communication you’ll have with the public.

Bringing in an open innovation model and trying to impose it on an very protected, hierarchical, infrastructure is just going to expose these problems and let everyone see what a difficult company this is to work with.

Yeah. You’re addressing a lot of issues we think are important from an infrastructural and cultural angle. I used to work with a company years ago. And our joke that the phrase “Not Invented Here” was invented there. Any idea from the outside was quickly rejected.

And that’s another thing you have to think about when you are doing open innovation is how will ideas from the outside be perceived. And how much engagement will there be for ideas from third parties.

Now, you’re talking about the economy and the global markets and I hate to paint the world in a black or white perspective. But it seems companies face two choices. They can innovate now; they can pay it for now as the ad says. Or, they can pay for it later.

If you think about it, we as consumers, or we as just individual, want to have relationship with brands or products that matter to us. And the more engagement I have the more involvement I think I have with the product or brand, the more likely I am to return and repurchase that brand or product or company. And the reverse, less so. If I have less involvement and they seem less willing to listen to my ideas, I may be less involved and less engaged.

Apple may be the one company that can keep me engaged because their products are so good and yet I don’t think they listen to ideas from the outside. They are the exception to the rule.

And I think what’s going to happen is that as companies, as certain companies, become better at open innovation they are creating not just communities but tribes of people that really affiliated with their brand and their product. They feel like they co-created that product, that they had stake in the development of that product or brand. And then companies that are laggards try to get into open innovation, I think that their relationships or the strength of that bond between the company that’s been practicing that open innovation is going to be harder to break.

So, companies that lag behind or drag their feet about open innovation may not just miss ideas but may also miss strengths of relationships between themselves and their customers. Its not just ideas they are missing. I think it’s also they are missing the opportunity to build a tighter relationship.

**********

Part three of this interview will be published on Saturday, August 13.

Interview with Jeffrey Phillips, Co-Author of A Guide to Open Innovation and Crowd-Sourcing - Pt. 1

Jeffrey Phillips joined the show yesterday. You can listen to our conversation here.

Jeffrey is VP of Marketing and a lead consultant with OVO Innovation. Jeffrey’s led innovation projects for Fortune 5000 firms, academic institutions and non-profits all based on OVO Innovation’s trademarked Innovate on Purpose method.

He was one of the 34 innovation experts who contributed a chapter for the excellent book A Guide to Open Innovation and Crowd-Sourcing: Advice from Leading Experts. Jeffrey’s chapter is Open Innovation Typology.

And after reading Jeffrey's chapter it's clear there is a type of innovation that can fit any organization, for-profit or not, global giant or mom-and-pop brick-and-mortar and as importantly a type that fits anyone's budget.

Jeffrey, finally we meet. Thanks for being on the show.

Hi Zane. I’m looking forward to it.

Thanks for contributing a great chapter in this great book.

Can you share with us a little bit about how all 34 of you, including Paul Sloane the editor, came to write a chapter for this book?

Yes. What happened is that we discovered that there is sort of a loose confederation of innovators and we all interact with each other. And we all felt that there was a lot of interest around open innovation and Henry Chesbrough wrote the first book, Open Innovation: The New Imperative for Creating and Profiting from Technology, about open innovation almost a decade ago.

And while there’s a lot of interest and enthusiasm around it, it hasn’t been defined. And Paul, as the editor, asked us to write about specific areas of interest and topics so that we could begin to better clarify what open innovation is and how to do it effectively, things to think about when you’re doing, the kinds of results you can expect and so forth. So, Paul suggested topics to some people; some people suggested topics back to Paul. And he did a really good job, dare I use the word “curating”, he curated I think an excellent book with a lot of great insights about how to deploy and how to use open innovation effectively.

That term curated... is that going to be a more popular term as companies begin to embrace crowd-sourcing and open innovation?

I think curating is going to be a hot word because nowadays there are so many channels of information and channels of insights that increasingly what you are going to need are people to help you channel that information. Whether you are doing it from a trend-spotting perspective or an idea-generating perspective I think you are going to need people who are curators who are going to collect and make sense of that information.

I do expect that’s a role you’ll see in open innovation as well.

Great.

Who was the intended reader? Was there one reader you all collectively had in mind or did you each write for a slightly different audience?

The book’s a fairly practical book. So, it’s written with the person in mind who has been tasked to go out and install open innovation in an organization or to do the research necessary to recommend an open innovation approach.

So, typically most of the chapters are written for the people in an organization who would go out and lead the open innovation effort or be responsible for putting open innovation in an organization.

My friend, Erika Andersen, coined the phrase reasonable aspiration or hoped-for future in her book Being Strategic. She asks:

What is your reasonable aspiration or hoped-for future?

This might be a two-pronged question. What was your hoped-for future with writing your chapter. What is it for the entire book?

Yeah, I guess there are two distinct goals there.

For the book, what we are trying to do is strip away some of the mythology around open innovation and help people understand what it is and how it works and when it’s useful and when it’s applicable to an organization and when it’s not applicable to an organization. And more importantly some of the infrastructural and foundational issues that need to be in place in order to be successful with open innovation.

And the 34 chapters in the book begin to address a lot of those issues.

With my chapter, I guess my "hoped-for future" was I wanted people who had decided that open innovation might be right for them to understand that open innovation is just a very generic term for a number of different tools and techniques. And in my chapter what was trying to do is simplify the lens, if you will, to help people look at open innovation as a collection of tools that have different purposes and different uses and different outcomes so that if they decide to do open innovation they can choose the tools and techniques that are most appropriate for their needs.

So, my "hoped-for future" is for that person is who deciding that open innovation makes sense for their business they pick it up and read my chapter and it helps them very quickly come to the realization that there is a specific open innovation method or type that is appropriate for their particular business and their particular needs.

Perfect.

How will you measure your progress towards them? What metrics do you have in mind?

Well, what we really hope to see, I’ll speak for the other authors as well, is that we hope to see open innovation is more consistently applied. There are a lot of open innovation experiments underway in a number of different organizations. Some have been successful, some haven’t. I think where you see it being unsuccessful is open innovation is being applied too generally without enough forethought and strategic input.

And so our goal is that as you see more and more open innovation efforts undertaken that you are going to see far more success. And that what you are really going to do is then begin to move towards a network effect. Because the concept of a network effect is that the more people that are involved in a network the more valuable the network.

I believe the same is true for an open innovation network. The more people actively engage in open innovation, the more people who are engaged in a community sharing ideas, the more valuable and useful those ideas are going to be.

I think we are going to see a lot more success in the near future implementing open innovation across a wide variety of companies from, as you said, from large to small, from private and hopefully even in the public sector as well.

Your chapter is titled Open Innovation Typology. In the spirit of openness and transparency. I looked up the definition of typology. I’m an art major, after all. In retrospect it seems obvious. Typology is the study of types. Ology is study. Typology is the study of types. Open Innovation Typology then is the different types of open innovation.

You started your chapter with a quote that was so clear and whose truth was so obvious it makes me wonder why so few companies understand it. The quote is:

Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology.

Assumptions it is said can make an ass out of you and me. But this assumption seems remarkably reasonable. Yet, it is also remarkable that so many companies operate as if they are virulently against open innovation. Let's put it on the positive. What's in it for companies, why should they believe and why should they care about open innovation and its different types?

I think among the examples that many of us have used to talk about open innovation are the best from P&G, Proctor and Gamble. Historically, P&G had thousands of scientists from around the world doing deep research into new products and new compounds that they could then deliver into new products.

About a decade ago, Arthur Laffley who’s just stepped down as CEO, decided that there were more people and more ideas in more industries and more sectors around the world that had good ideas than could possibly be discovered by P&G’s internal staff. So, he had a choice and all businesses have a choice. The choice is this:

Is your team big enough, deep enough, connected enough and strong enough to understand every need and every opportunity that exists in the global market?

Because, as the markets become larger and larger and as we begin to integrate the economies of many different countries together the new opportunities that spring up are so diverse that it’s almost impossible for any organization, no matter how strong they are nor how smart they are, to be able to discover and create all these ideas internally. There are so many well-educated, so many smart people, around the world who are constantly spotting new ideas, who are creating new compounds and creating new ideas that if organizations don’t tap into that knowledge they very quickly risk being left at the side of the road or missing some very large opportunity.

So, the concept behind open innovation and what’s in it for companies is that there is so much, so much in new ideas and so much in new technology and new business models and new services being created by organizations and individuals and not-for-profits that if all they do is try to create new ideas within their own 4 walls they are missing a huge number of opportunities and a huge number of ideas and technologies that may be very viable for them.

The benefit for them and for small companies is to being to rapidly identify best-in-class ideas, outside their organization as well as inside their organization and adopt those technologies very quickly. It may be a great technology or a great product already exists. Or it may be that a new market is unfolding that you may not be aware of but other people are aware of and they’re already beginning to address those problems.

So there are a few key benefits. One of them is rapidly increase speed-to-market for new technologies that already exist. Another is much better sense of what the market needs and be able to respond very quickly. The 3rd is a much broader footprint of ideas than if you only relies on innovators and researchers within your organization.

I think the potential upside is really very positive for most organizations and there’s really very little downside once certain infrastructural and cultural issues are overcome.

I like that emphasis you put on once those infrastructural and cultural issues are addressed.

What are the two defining attributes of open innovation?

Well, there are two that we talk about a lot in my organization that are part of the typology that I tried to create. 

We felt that two really important things to talk about in open innovation because as you said the assumption that we have made is about inviting people in to share their ideas. And if you think of it in that context then there are two key driving factors around that.

One is Who Do I Invite?

• Do I invite everyone, literally the global population.

• Do I invite only specific people from an industry sector or geography.

• Do I invite only people who are in my industry or specific experts?

The first factor we like to think about is who do we invite and why do we invite them to share their ideas with us.

The 2nd factor that we talk about is What Do I Tell Them About What I Need?

• If I’m doing open innovation then I am either trying to discover something that exists in the marketplace or I am trying to solve a need that I already think I have or that I have spotted in the marketplace.

• And therefor the instructions that I give people about the ideas or about the technologies I want may be very viable.

So, on one hand I may be an open suggestion box. I may allow anyone external to my organization to submit any ideas that they care to. On the other hand of the spectrum I may have very targeted needs or targeted opportunities that I may be trying to solve. And I may only want to invite and integrate those kinds of ideas.

So these are the two areas that we think are interesting. And as we break down our typology we tend to think about it along these two spectrums. The first spectrum is "Who do I invite?" and that spectrum is literally everyone to very specific individuals and teams. The other one is "What kind of instructions or directions do I give them." One end of that spectrum is I give no instructions and I welcome any kind of idea. The other end of that spectrum is I am very specific about the problem and the opportunity I am trying to address.

Can you give us an example of a company whose practices can illustrate these defining attributes? I think we already did that with Proctor & Gamble. But do you have any examples of their practices which illustrate these defining attributes.

Yes and as we go through this conversation we can talk about the 4 different typologies that we have created.

If you think about the two different things that I have just talked about as a sort of x-y axis, on the x axis is the question of who I invite. And on one end is everyone and on one end are very specific groups of people. And on the y-end are the types of instructions I give.

You can think about a 4 factor matrix if you will.

The area that P&G is most famous for is their Connect and Develop program. And the Connect and Develop program is interesting because it’s a really good type of inviting very few people. P&G vets the other companies and individuals which they work with very carefully. And they also define specific areas that they are trying to address. In those two spectrums, they don’t invite everyone and they don’t invite everyone’s ideas. They ask for a specific group of people to give them very specific ideas around a very set of problems or technologies or market opportunities.

So, it is open innovation. But it’s not necessarily open to the world and it’s not open to every kind of idea and problem. They are being very selective about who they work with and very selective about the problems they try to address.

You know as I do in every show when people start giving me great answers then two things happen. One is that more ideas and questions start to percolate. And it also inspires me to write notes even though I’ll come back and transcribe notes. That’s what I’m doing furiously over here. So, thank you for your great answers.

You wrote:

'Open Innovation' is just a label - your firm won't implement OI; it will implement a version or versions of OI informed by the invitees and the kinds of problems or challenges you seek to solve.

I like it; it’s very clear. But with so many companies built around a top-down, command-and-control, hierarchy I could see this might present a problem. How do you help them over this paradigm hurdle?

You will recall earlier you asked me about the benefits of open innovation. And I said that for most organizations there is a tremendous upside for open innovation if they can overcome the infrastructure and cultural hurdles.

And one of the things you’ve raised here is a culture hurdle. That is top-down, command -and-control mentality. We also call it the Not-Invented-Here mentality. That an idea is not valid unless it is invented here. And open innovation really brings that thinking into question.

The hurdles of open innovation are typically this command-and-control culural mindset that says we have to create ideas internally for them to be valid. And the ability to scale up. Because, generally when you open up your organization to ideas from outside whereas you might have been working with 5 or 10 or 15 ideas a month that were generated internally you might quadruple or even take those numbers into exponential figures when you begin to bring those ideas from the outside as you allow so many ideas.

So, one of the infrastructural hurdles organizations face when they begin to implement open innovation is:

• How many ideas can I manage today if I only work on ideas from within my organization.

• And, if I open up the flood gates, how many more ideas will I be able to implement if I want to have good interaction with the people who are submitting ideas to me.

• And culturally speaking how welcoming is my organization to ideas from the outside?

• And will we set up an edifice that basically says we’re welcoming ideas but then internally reject them because they weren’t invented inside the organization?

So, it’s a real cultural shift.

But it’s also an infrastructural shift because you have to be able to manage a much larger number of ideas once you open to the outside than you did when you managed ideas internally.

One other thing to think about, too, is the more you move towards an open innovation model then more you are moving to and beginning to merge with social media. Because as you ask people for ideas you are talking to a community, you are interacting with a community. That interaction has to be two-way. You can’t simply accept ideas and not respond back to the people how submitted them. In many ways, open innovation begins to become a form of social media where you are interacting with your customers and your prospect base in a very different way than you have before.

You can’t accept ideas and then not respond in real-time and give them a sense of how their ideas are being managed.

So, it’s a cultural shift, it’s an infrastructural shift and it’s also a shift in the way you communicate and interact with these outside entities.

Excellent! I love that point about social media and open innovation. I think we’ll drill down into that later in the show.

Part two of this interview will be published on Friday, August 12.

Part three of this interview will be published on Saturday, August 13.