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In the team sport of innovation, the quality of interaction between teammates regulates the speed of discovery. If a team is healthy, the pattern of exchange will be free-flowing, candid, and energized. If it’s unhealthy, the team will retreat into silence, superficial niceness, or some combination of the two.

Much of the know-how required for innovation comes from the bottom of the organization — in other words, from local knowledge. Yet many non-management employees consider innovation outside the scope of their jobs. Even when they want to participate, they don’t because the organization’s tacit norms discourage it. The pressure to execute and remove variance overwhelms the motivation to innovate and introduce variance.

For example, an employee at a large health care organization said to me, “If you’re new in this organization, you have to listen for a year before the organization will listen to you.” That’s a cultural barrier to entry that silences a team and chokes innovation. If that norm is perpetuated, the entire organization will be hobbled in its creative output.

In my research with hundreds of teams during the past decade, I’ve identified a cultural barrier that — perhaps more than any other — stifles innovation in its earliest stage: authority bias. Authority bias is the tendency to overvalue opinions from the top of the hierarchy and undervalue opinions from the bottom, and it eventually turns into exaggerated deference to the chain of command. Organizations tend to give the most credibility to ideas, suggestions, or points of view based on source rather than substance. In fact, source becomes a proxy for substance because we reasonably expect more competency as we move up the hierarchy. But this creates natural disincentives for those at the bottom to raise their voices. The greater the power distance, the higher the perceived risk of speaking up. Thus, the grander the perch, the rarer the feedback.

Unleashing bottom-up innovation is largely a matter of neutralizing this side effect of hierarchy. But how can organizations create a true idea-meritocracy in which they become more agnostic to title, position, and authority and truly debate issues on their merits? How do they achieve cultural flatness: a condition in which power distance or structure does not restrict collaboration or the flow of information?

Here are three practical steps leaders can take to neutralize authority bias, embrace cultural flatness, and unleash bottom-up innovation.

Grant irrevocable participation rights.

First, understand the distinction between participation rights and decision rights. Participation rights refer to a person’s opportunity to participate in discussion, analysis, and advocacy concerning ideas, issues, and questions. Decision rights, on the other hand, refer to the authority of a group or individual to make a decision about an idea, issue, or question. Make it clear to both new and existing team members that participation rights are embedded in every role.

Here’s how: First, clarify the difference between participation rights and decision rights. Second, acknowledge that in the past, participation rights were often granted based on criteria such as seniority, time-in-grade, title, experience, and formal status. Explain that your team doesn’t subscribe to this norm and that all employees are granted irrevocable participation rights — provided they demonstrate respect, basic contextual understanding, and good faith. Third, provide opportunities for team members to exercise their participation rights based on relevant issues, questions, or potential courses of action, and then explicitly invite all team members to weigh in.

This of course is easier said than done. Many organizations are dripping with implicit bias, which curtails the participation rights of new and/or underrepresented and marginalized employees. In practical terms, this means that employees in these groups may require reassurance and additional efforts to create psychological safety in the process. They may be slow to respond, but when they see that equal access to participate in the process is fair and consistent, they will gradually opt in.

Finally, cultivate the expectation that innovation is embedded in every job description. Reinforce that innovation is primarily a social process that relies on collaboration.

Practice exploratory inquiry.

The status quo becomes ingrained over time as our thoughts about it harden into dogma and we become attached to it. But the homogenization of thought is the enemy of innovation.

Innovation by its very nature is disruptive of the status quo, so challenging it is a highly vulnerable behavior. Because it carries a high degree of personal risk, most employees conduct careful threat detection before engaging in exploratory inquiry and potentially deviating from the status quo. Also, keep in mind that, for most people, evaluating performance based on data feels more secure than exploring possibilities based on assumptions and predictions. So how do you get over the discomfort associated with exploration?

Practice the disruptive question sequence. This three-step process is a quick and effective way to get the ball rolling and accelerate bottom-up innovation:

  • First, ask, “Why?” Why do we do it this way?
  • Second, ask, “What if?” What if we tried this instead?
  • Third, ask, “How?” How might we do it differently?

Ensure that the process is non-judgmental. Generate and ideate without editing, critiquing, limiting, or censoring.

Finally, once you teach the disruptive question sequence, don’t expect the process to run itself. Your team needs practice. The best way to develop the skill is to run a series of disruptive question sequence sessions with your team with assigned topics. For example, I worked with a marketing team recently that held a session to address its lead-generating process. The leader was careful to model the three-step process and remove every incentive that might motivate her team members to be silent or superficially nice. The dialogue was hard-hitting, yet honest and respectful.

Normalize constructive dissent.

Finally, for employees to develop skills across the companion disciplines of execution and innovation and seamlessly toggle back and forth between them, normalize constructive dissent. Team members must be given explicit permission, and even the obligation, to disagree.

The thinking that causes employees to stay away from innovation goes something like this: “Innovation requires exploration, exploration leads to failure, failure leads to punishment. I’ll keep quiet.” Remember, silence is expensive for organizations. It drives out excellence and ushers in mediocrity. When it’s not safe, people play it safe. So how do you normalize dissent?

Criticize your own ideas and decisions in public.

Think out loud with your team and publicly poke holes in your own thinking and behavior. Invite others to join you. For example, one leader said to her team, “As you know, my fingerprints are all over this decision. I own that, but here we are six months later and it looks like I made the wrong decision. I need your help to think this through.”

Celebrate dissent and invite more.

The most significant moments of truth in culture formation happen when a team member takes an interpersonal risk “on stage.” In one team I observed, a team member voiced the unpopular opinion that a proposed decision was a bad idea. Creating a wave of cultural flatness, the team leader responded, “That’s fantastic. I’m excited to learn why you feel that way.” Then he listened carefully and solicited more dissenting views.

Inject empathy.

Never a purely intellectual process, dissent is frequently charged with emotion. At its root, dissent is most often an intellectual clash. On the other end of an opinion, though, is a human being coming to the table with some mixture of confidence and fear. People draw different conclusions from the same data sets all the time, and that’s why it’s hard. You can tell people to hold their opinions lightly, but it rarely works until they come to understand alternative viewpoints with empathy. Empathy is compassionate curiosity about another person’s journey from data to conclusions. What data do they have? What assumptions did they make? What do they care about and why? Finally, how did they reach their conclusions? Injecting empathy into the discussion can turn confrontation into fruitful collaboration.

. . .

Remember, bottom-up innovation relies on the circulation of local knowledge, and the circulation of local knowledge relies on cultural flatness. Too much deference to the chain of command will bottleneck that circulation. To create cultural flatness and unleash bottom-up innovation, grant irrevocable participation rights, practice exploratory inquiry, and normalize constructive dissent.

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3 Ways to Innovate in a Downturn https://smallbiz.com/3-ways-to-innovate-in-a-downturn/ Thu, 28 Jul 2022 12:15:10 +0000 https://smallbiz.com/?p=71371

Recessions offer major opportunities for innovators. They can be a good time to introduce game-changing offerings or simple, affordable solutions or make bold, strategic moves. The resource scarcity that typically accompanies recessions forces innovators to do things they should have been doing already: prune prudently, re-feature to cut costs, master smart strategic experiments, and manage the risks of innovating by sharing them with others.

The sense that a recession is coming is growing. If it does, will it cause innovation to slow? Not necessarily. History shows that recessions create three specific opportunities for innovators.

1. Game-Changing Offerings

Startups with radical products or services that “reverb” off of the big event driving the recession can take off. For example, Airbnb, an online marketplace for “places to stay and things to do,” was founded during the height of the recession in 2008. Its service appealed to thrifty millennials looking for a cheap way to travel, as did Uber’s car-sharing model.

Lingering distrust in traditional finance providers after the global financial crisis helped to spur novel payments providers. For example, Jack Dorsey founded Square (later named Block), the financial services startup known for its square-shaped white credit card reader, in 2009. “There is no better time to start a new company or a new idea than a depression or recession,” Dorsey, who also helped to found Twitter, reflected. “There [are] a lot of people who need to get really creative to create something new.” Wind back the clock further. Walt Disney founded his eponymous company in 1923, a time where the world desperately needed hope. It’s reasonable to expect the need for alternative energy sources to combat climate change and reduce dependence on autocracies, greater food safety, and more dependable supply chains to attract today’s entrepreneurial energy.

2. Simple, Affordable Solutions

Downturns can be great times to introduce offerings that connect with consumers who have tighter purse strings or are naturally frugal given continued uncertainty.

There was a recession on the heels of World War II, in 1948–1949, before the post-war boom. In 1948, the McDonald brothers fired all their carhops, closed their flagship store, installed new equipment, and reopened three months later with a novel approach for preparing food. Instead of having a single skilled cook who would custom-make orders, McDonald’s simplified the menu so that less-skilled people could prepare the same thing over and over again. All McDonald’s menu items could be eaten one-handed while consumers were driving.

It was Henry Ford’s assembly-line approach applied to food service. The brothers called the model the “Speedee Service System.” It made it much easier to hire and fire cooks and allowed McDonald’s to lower prices and prepare food faster. The new business model began to take off. In 1953, the company started franchising its stores to other entrepreneurs. Franchise owner Ray Kroc bought out the brothers in 1954 and scaled McDonald’s into today’s global powerhouse.

3. Bold Strategic Moves

Downturns can be great times for established companies to make dramatic changes. Shantanu Narayan took over as the CEO of Adobe in late 2007. The 25-year-old company seemed stuck, with products such as Photoshop and PageMaker stagnating. Nimble software-as-a-service (SaaS) competitors were emerging. And the onslaught of the global financial crises would challenge even the strongest incumbent companies.

In the face of these challenges, Narayen and his team undertook a bold transformation strategy. In 2008, they tested a software-delivered model of Photoshop. A few years later Adobe “burned the boats,” stopped producing packaged software and went to a fully SaaS model. In 2009, Adobe purchased Omniture for approximately $1.8 billion, a price 40% lower than its pre-crisis peak (but 2.5 times above its mid-crisis trough!). That acquisition served as the cornerstone of Adobe’s efforts to build a new growth business related to advertising services and analytics. From 2009 to 2019 Adobe’s revenues tripled, and its stock price rose 29% a year, making it one of the decade’s top transformers.

These three avenues for growth emerged from research recounted in my 2009 book The Silver Lining. The book’s title didn’t just refer to these kinds of opportunities; it referred to the fact that the resource scarcity that typically accompanies recessions forces innovators to do things they should have been doing already:

Prune Prudently

Take a hard look at what is in your innovation portfolio. Cut at least 50% of it. Your resources need to be focused on places where they can have the greatest impact. Many of the projects that you cut are likely to be “zombies” that shuffle along, sucking the innovation life out of your organization. Kill the zombies. It is an absolute no-regret thing to do — you should have done it already, you need to do it now.

Re-feature to Cut Costs

Customer-centricity should be a core component of cost-cutting efforts. After all, you can’t do more with less until you can define what more means. That means figuring out the job to be done of the customer (employee, stakeholder, channel partner).

Master Smart Strategic Experiments

It never has been easier to experiment, which makes it even more important to do it with the proper discipline. Like a good scientist, start with a hypothesis. Design an experiment with clear objectives. Make a prediction about what you think will happen. Test in a way in which you can measure and assess your prediction. You never know for sure, so remember the acronym HOPE (hypothesis, objective, prediction, execution plan).

Share the Innovation Load

People think successful entrepreneurs seek out risk. That’s not right. Successful entrepreneurs smartly manage risk by sharing it as widely as they can. Now more than ever, companies should embrace open innovation and find smart ways to collaborate.

In the onslaught of never-ending change, it’s easy for leaders to freeze and focus on survival. Don’t freeze. Seize the silver lining and find unique opportunity to turn today’s ambiguity into tomorrow’s opportunity.

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