2016-09-21 – An Innovative Conference

Public servants are expected to be innovative while working in a risk averse environment. This inherent conundrum is compounded during times of fiscal restraint when ideas are solicited but resources to execute few.

Fostering Innovation in the Public Service When Money is Tight

This was the underlying theme of the September 21, 2016 Financial Management Institute’s conference on innovation.  A baker’s dozen (e.g. thirteen) questions were asked grouped into one of three themes: Defining Innovation, Getting Innovation and Innovation’s Dark Side:

  • Defining Innovation:
    • 1. What is innovation, how do you know if you have it and how do you know if you are losing it?
    • 2. Is an innovative public service an oxymoron?
    • 3. What is the relationship between innovation, invention, creativity, R&D and process improvement?
  • Getting and Sustaining Innovation:
    • 4. Can innovation be learned and made part of an organization’s DNA?  What are the hallmarks of an innovative organization?
    • 5. Who can help you become more innovative (or at least less hostile to new ideas)?
    • 6. How can you propose, implement and sustain an innovation in an environment that is risk averse?
    • 7. Thoughts and strategies of making the case for innovation during times of fiscal restraint?
    • 8. How can a change in environment and perspective aid in approaching innovation?
    • 9. What is the relationship between innovation and organizational change management?
  • The Dark Side of Innovation:
    • 10. When should you avoid innovation or at least control its appearances; is innovation ever a bad thing?
    • 11. Why is innovation so hard?  How can you, an organization or an economy make it easier?
    • 12. What role does senior management, management, staff, clients and the public play in successful innovation?
    • 13. What is stopping/helping you being known as an innovator?

A morning conference cannot answer questions as vexing as how do you innovate and be risk averse at the same time.  Nevertheless, some key thoughts, facts and take-aways provided* by the speakers** are presented below.

* The following is a combination of:

  • Presentations by the speakers (see the Consolidated Presentation Deck).  Thank you once again to:
    • Dr. Markus Sharaput, Dalhousie University: the theory of innovation and its practical challenges.
    • Chris Dambrowitz, NAIT: Can Innovation Become Part of Your DNA?
    • Karen Parker, City of Edmonton: the History, Success and Challenges of Creating an Open City.
    • Christian Felske, Ph.D., P.Eng., City of Edmonton: Turning Your Trash Into Treasure.
    • Moderator/Presenter; Jean McClellan, Partner-PWC: the Catalyst-Café, Systematic Innovation from PWC.
  • My notes from the above presentations.
  • Special thanks to Carmela K. who also shared her high-level bullets.
  • Review, edits and contributions from the presenters and FMI Board.
  • My own edits, research and contributions of Innovation.

**  To read more on the speakers including their biographies, download the pre-conference notes.

Defining Innovation

  • Innovation is an over-used term often applied to barely warmed over ideas and programs.
    • Example: Apple iPhone 7 which seems to be as much about re-selling the iPhone 6 as about the negligible new features it offers.
  • The Conference Board of Canada rates Canada 13th out of 15 peer countries on innovation and defines innovation as
    • a process through which economic or social value is extracted from knowledge—through the creating, diffusing, and transforming of ideas—to produce new or improved products, services, processes, strategies or capabilities.
  • Innovation needs context provided by a goal or purpose.
    • Pure research and experimentation is a critical indicator of how innovative a society/nation is.
    • See the further reading section on the importance of this.
    • However, although research may lead to subsequent innovation, in the short run it is not in of itself innovation.
    • Necessity and invention’s mother: People are often forced to innovate but it’s hard to force innovation on people.
  • Innovation is mostly incremental rather than transformative.
  • Sample methods to achieve innovation in organizations, including governments:
    • Internal Research & Development:refers to the investigative activities a business conducts to improve existing products and procedures or to lead to the development of new products and procedures. (source: Investopedia).
    • 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. Open Innovation combines internal and external ideas into architectures and systems whose requirements are defined by a business model. (source: Open Innovation.net)
      • Possible government context: benchmarking, environmental scans, request for information/comments.
    • Co-Development: producers (and governments) try to gain the benefits of direct user design advice while still retaining full intellectual property rights and control over new product and service development. Producers carry out co-development by inviting a few users to come to their development laboratories to participate in design activities along with their in-house team of professional developers. (source: Financial Times Lexicon)
      • Possible government context: town hall meetings, stakeholder consultation or even civil protests.
    • Co-Creation: A business strategy focusing on customer experience and interactive relationships. Co-creation allows and encourages a more active involvement from the customer to create a value rich experience. (source: Business Dictionary.com)
      • Possible government context: ibid to co-development.
    • Crowdsourcing: is the process of obtaining needed services, ideas, or content by soliciting contributions from a large group of people, especially an online community, rather than from employees or suppliers. (source: Wikipedia: Crowdsourcing)
      • Possible government context: is this not an election?
    • Ideation: is the creative process of generating, developing, and communicating new ideas, where an idea is understood as a basic element of thought that can be either visual, concrete, or abstract. Ideation comprises all stages of a thought cycle, from innovation, to development, to actualization.  As such, it is an essential part of the design process, both in education and practice. (source: Wikipedia: Ideation)
      • Possible government context: the policy development process of governments.
  • The PwC’s Three A’s of Innovative Execution:
    • 1. ALIGN:
      • Clarify the role of innovation in your business strategy and align the organization on where and why to innovate.
      • Determine the right mix of incremental and radical ideas.
    • 2. ACTUALIZE:
      • Develop a concrete operating model to implement innovation.
      • Use benchmarks and best practice to create innovation that work.
    • 3. ACHIEVE:
      • Drive change in organization, processes, and infrastructure to build an engine for repeatable innovation.
      • Establish the infrastructure to support Innovation (including the 10 elements noted below in the infographic).
PwC's Achieve Innovation Process.

PwC’s Achieve Innovation Process.

  • What is Being Innovated is an important question. PwC presented a two factor model comparing the influences of both technology and business conditions (see the following graphic).
PwC's 2x2 Matrix of Technology vs Market Change

PwC’s 2×2 Matrix of Technology vs Market Change

  • The Conference Board of Canada uses a similar model to the above although with slightly different axis:
    • Process versus Products and Services
    • Pace of change: Incremental versus Rapid
    • Not explicit in the above model is the traditional third P of People.
Conference Board of Canada - 2x2 Innovation Model

Conference Board of Canada – 2×2 Innovation Model

  • 1. Radical Change to Products and Services: usually originates from R&D or other forms of formal creative activity and can be in response to unarticulated, unmet, customer needs. Often, but not exclusively, stems from research discoveries or other sources and then evolves through a development process to eventual commercialization.  These new products and services can drastically alter what companies sell, and generate major gains in revenue and profit.
    • Buggy whip manufacturers, Kodak and Block Buster are victims of this quadrant.
  • 2. Radical Change to Processes is based on new ways to plan, manage, design, produce, distribute, and market products and services. These changes are rare, but when they occur they can radically alter how companies operate, and yield major gains in productivity and profit.
    • The German Blitzkrieg was fundamentally about how projects (in this case invading peaceful nations) were carried out through improved communication, coordination and control.  Better technology helped as well.
  • 3. Incremental Improvement to Products and Services add or sustain value by improving existing products and services. These changes can be in response to customer needs or new ideas. Most product and service innovation is incremental in nature.
    • Facebook capitalized on the bottom right (applying a bit of technology disproportionately to an untapped market).
  • 4. Incremental Improvement to Processes that enhance the efficiency and effectiveness of existing processes and practices. They are based on improving current business and management processes Most process improvements are incremental in nature.
    • Most of the work on innovation happens here.. which is often the precursor and infrastructure for the other three quadrants.

Getting and Sustaining Innovation

  • Government has a pretty good track record of some types of innovation.  This is because a government is about connecting different aspects of society.
  • The Northern Alberta Institute of Technology discussed how post secondary institutions can help governments and society innovative through two means:
    • Creating transformative careers for learners, and
    • Creating economic and social benefit for Alberta’s key industry sectors.
  • Clayton Christensen, The Innovators DNA – Five “Discovery Skills
    • Associating
      • Steve Jobs: “Creativity is connecting things”
      • Synthesize and making sense of novel inputs.
      • Discover new directions by making connections across seemingly unrelated questions, problems, or ideas.
      • Innovation happens at the intersection of diverse disciplines and fields.
    • Questioning
      • Show a passion for inquiry and challenge the status quo.
      • Questions are valued higher than answers.
      • Ratan Tata: “Question the unquestionable”
    • Observing
      • Akio Toyoda: genchi genbutsu (“going to the spot and seeing for yourself”)
      • Intense observers carefully watching the world around them.
    • Experimenting
      • Edison: “I haven’t failed. I’ve simply found 10,000 ways that do not work.”
      • Trying out new experiences and piloting new ideas.
      • Unceasingly explore the world intellectually and experientially, holding convictions at bay and testing hypotheses along the way.
    • Networking
      • Kent Bowen: “aggressively & proudly incorporate advances not invented here”
      • Spend time and energy finding and testing ideas through a diverse network of individuals different backgrounds and perspectives.
  • Two Views on Why Innovation is so hard:
    • Peter Andrews’ Enemies of Innovation:
      • Bureaucrat: seeks to ensure consistency, set limits and reduce risk – killing the innovation with imaginary downsides
      • Gatekeeper: blocks access to reources, power and decision-makers – frittering away all early-mover advantage by stalling
      • Deadbeat Sponsor: ”…a champion of innovators must have an attention span greater than that of a gnat” – hollowing out the project or culture, then replacing the staff
      • Wimp: team members who are negative, inept or unreliable – disrupting or maligning the team.
      • Owner. Power is more important than success to the Owner who is often a pop-up enemy, appearing out of nowhere to claim jurisdiction over a whole realm of human activity (as in, “I own security.”).
      • Rival. Internal and external competitors If they co-opt your ideas, at least the innovation moves forward. If they slander you or your work, that’s a different matter.
      • The Innovator: Innovators have vision, creativity and imagination. But innovation need to be persistent, build alliances and find alternatives. People who are inflexible, credit-hogging, unfocused, sloppy loners do not make good innovators. The best innovators often have a generosity of spirit, an openness to the ideas of others and a sense of purpose.
    • Lee McCormack (adapted from CCAF-FCVI Inc.”INNOVATION,RISK AND CONTROL”).
      • 1. Three Big Barriers:
        • a. The Grind: Delivery Pressures and adminsitrative burdens.
        • b. The Void: Lack of resources.
        • c. No upside: Low tolerance for risk with little upside to taking risks.
      • 2. Incentives can counteract these barriers.
        • a. An Innovative Culture.
        • b. A tolerance for failure.
        • c. An empowered middle management.
      • 3. Red tape puts the focus on process, not results.
        • The delicate are of applying a ‘loose-tight’ model of control.
        • Red tape is when rules are out of proportion to the risks they aim to mitigate.
      • 4. Trust
        • Listening, finding innovative thinkers, respect for ideas, and intelligent risk tolerance…
        • Executives who do the above reinforce the idea that innovation is normal.
        • Trust and innovation occur when an explicit bargain is struck:
          • Executives buy into innovation, are aware of the projects and risks.
          • Project managers demonstrate sound values and competence.
          • All practice enlightened accountability.
  • Foster  a culture of continuous improvement and a commitment to new ideas.
  • Seek incremental changes to improve efficiency and effectiveness in your day to day tasks.
  • Respect institutional memory – we need to understand why things are done the way they are (i.e. status quo) before disrupting them.
  • Technology can be an enabler for innovation, for example:
    • The City of Edmonton reduced false alarms in a city facility by analyzing and then determining their source (it turned out to be new employees not familiar with the doors).
    • The City of Edmonton has a vision of 90% waste re-direction from land fills.  It is about half way there as compared to the mid-1990’s.

The Dark Side of Innovation

  • Fear is a major inhibitor of innovation and creativity.
  • Innovation often involves destruction and a reaction to that loss.  Creative destruction is an essential fact about capitalism (Joseph Schumpter) and sometimes an unwelcome and unintended consequence of innovation.
    • Example: Daniel Smith crossing the floor to join the Alberta Progressive Conservatives was highly innovative… and ultimately destructive.
  • Citizens and taxpayers generally don’t like disruptive governments
  • Governments are not like Apple or Instagram, which experienced transformational growth.
    • War, natural disaster and other such factors aside, generally government is about offering stable and consistent products and services that are bettered through continuous improvement.
  • The innovator’s dilemma: organizations with strength in a mature industry (e.g. government) tend to be the least successful at mastering new strengths (p. 44, Execution: the Discipline of Getting Things Done; Bossidy and Charan)

Key Ideas and Thoughts to Take Away

  • See my blog on the same subject [pending]
  • Innovation is hard work and mostly incremental.
  • Innovation is about the long term.
  • Innovation can create its own weather system, but it is fragile.
  • When governments try to innovate, they should focus on what they do best: deliver efficient/effective services, regulate, connect society and protect the vulnerable.

Suggested further reading and links: