Money and the infinite pursuit of innovation

Having a couple of million dollars in your bank account takes the urgency out of your drive to innovate… Just last Tuesday I ran into this piece of Stanford research. It shows that an initial public offering (IPO) on the stock market has a negative impact on the level of innovation in a company. I get that. Being rich might even make a lot of bloggers lazy 😉

But.
I wonder where true inventors go after they leave such a company. Do they spend the rest of their lives hanging out by the pool side? Somehow I don’t think so. So why do they leave? An IPO – or the presence of money – seems to cause a shift in a company’s priorities away from creativity. In this post I will explore the issue (without suggesting I did any kind of thorough research myself).

Money Creativity Matrix

IPOs seem to cause a shift to urgency (left) at the expense of R&D activities

Why do innovators leave after an IPO?

At one point in my career I was working at a, well not a start-up because it was a couple of years old, but still a company in the early pioneering stage. Characteristics:

  • Most people around are actively trying to improve the product, or they’re helping out on the stuff that needs to get done.
  • No one gets excited over quarterly reports, but they do get wowed by anything that will make the product easier or more fun to use because everyone wants people to know it and love it and, yes, buy it too.
  • The bottom line is that there is no budget but you’re allowed to tinker. If you have an idea, you check with your boss (the owner/entrepreneur) and he may well give you permission to invest your time, energy, and intelligence. So long as the dull must-do tasks are taken care of too.

Creativity scare #1: investors’ risk adversity

The moment IPO and suchlike is around the corner this all changes. Inventors become the engineering department. That may sound like an important part of the company, but more and more people within the company get interested in things like marketing and quality control and business process management. Which basically means more rules. It means that if you are really excited about something you thought up, you need to make sure you’re talking to the right person by the coffee machine or risk:

  • watching their eyes glaze over as they say “Oh – yeah. That’s great, really great”.
  • having them say stuff like “I’m not sure that’s allowed/safe actually”.

That’s exactly the kind of situation that might, apart from no longer having to worry about money, cause this:

“I find that the quality of innovation produced by inventors who remained at the firm declines following the IPO and key inventors are more likely to leave.” (Shai Bernstein)

Key inventors – that doesn’t sound like people who were in it just for the money. These are the born tinkerers.

Innovations that do pass the risk-and-legal test may have been compromised at an early stage – any part deemed risky is replaced by add-ons to bits that were invented at an earlier stage. It seems that investors want you to do what you’ve proved yourself to be good at, only more of it, and without risky adventures now that their money is involved. Think sequels 🙂

Creativity scare #2: a sense of urgency

Marketing talk on its own is unlikely to scare innovators away – start-ups all try to come up with a viable product. What else is there? An innovator is motivated by curiosity – wanting to find out how things work, how problems can be solved, products might be improved…

A shift in your company’s mindset from opportunities to threats (to the investors’ money, for example) will lead to decisions based on a sense of urgency. Especially if you have the money to act immediately – you find yourself buying a company that has the necessary tech rather than wasting time trying to figure it out yourself. Added effect is that such an action knocks out a potential competitor, or allows you to effectively monopolize a couple of relevant patents.
Invest wisely – don’t gamble.

How to pull off the combination of money AND the pursuit of creativity

There are at least two things you can do to safeguard creative processes in your company:

  1. I found this sentence: “Firms with more entrenched managers, whose greater job security makes them less likely to be sensitive to market pressures, experience a smaller decline in innovation novelty, and interestingly, their inventors are less likely to leave the firm.” I could translate this as “Firms that don’t get completely taken over by shareholders don’t scare their inventors away as much.” Make sure your company has solid management before even considering going to the stock exchange.
  2. Don’t interfere with creative processes by throwing risk and legal stuff in at an early stage. Let innovators tinker and give them credit for being good at it. This is what companies like Google understand. Inventors, while liking the idea of having enough money to live a comfortable life, need to know they are allowed to tinker (part of their time). There’s nothing quite like someone asking themselves “I wonder if it’s possible to… How about if I try…” and taking off. This is ‘flow’ for inventors. Mess with that and you should not be surprised if your inventors pack up and leave.

If you don’t like the sound of ‘letting them tinker’, you need to accept that your top innovators will turn elsewhere to do what they do best.

Source: Research paper No. 2126 “Does Going Public Affect Innovation?” Shai Bernstein, Graduate School of Business, Stanford University, December 2012.

P.S.: I just found myself wondering how this relates to blogging vs. corporate blogging. What do you think?

I hope you found this post of interest! Please add your thoughts about innovation, creativity, and tinkering in general in a comment – what else could you do to keep inventors on board?

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Social business people: a grass-roots movement

In the past few years social media have become so commonplace you could say they’re boring if we didn’t find something of value in them: our networks. Our access to heaps of information and more friends, acquaintances and complete strangers on another continent than we ever had contact with before has had, and will continue to have, a profound effect on the way we view our lives and our jobs.*

A grassroots movement

This new perception is trickling into the fabric of every organization – through us – through all the individuals who show up for work every day. We’re oozing global networks from every pore. One side-effect may be that employees who’re not allowed to be on social media check their Facebook updates when they visit the bathroom, and get notably upset if they drop their smartphone into the toilet.

You don’t want that sort of thing. It’s bad for productivity, and it doesn’t smell pleasant either. By now, most businesses have a social media policy. The level of strictness varies widely.

How do people turn into social business people?

Social Business People
Social (Business) People [OCAL image]

Our present-day collective experiences don’t translate directly into employees being ambassadors for their own company. Not even the ones who are actually proud of working for or with you.

It didn’t work that way offline, and it doesn’t do so online.

So how can you help people adjust to a social business role that comes more or less naturally to them?

How to make social media ‘work’ for you

This may either sound completely silly, or so obvious you can’t believe I’m bothering to say it. I’ll risk it anyway. Have you considered:

  • taking inventory to see what types of people work for your organization;
  • thinking up ways to ‘market’ the uses of social media for business to each group? How would you approach someone from accounting, or in HR?

I’m talking classical market research and segmentation here. My next paragraph is for you if you lack time, resources, knowledge, or interest to get involved in ‘real’ market research.

Your people in the picture: cutting a few corners

Sit down with a few colleagues. List all your teams or departments. Then jot down every conceivable prejudice you could have about each team. I’ll help you get started with two unresearched examples 🙂

Accounting:

  1. maniacs for details. Never challenge them on details, unless you value emails longer than this post 😉
  2. cautious types: will always come up with rules we might be breaking. Share half a profile on social media – if they’re there.
  3. allergic to marketing talk which seems all promise and no accountability, unless they actually know responsible-sounding marketing people (what are the odds?)

Human Resources:

  1. will talk all day just for the sake of communicating.
  2. tech dummies. If a printer breaks down in HR the mechanic will find half a dozen people discussing how they have no idea what to do about it.
  3. allergic to technical explanations.

Don’t forget your own team, if only for the fun of it – or to avoid being unfair to others. Establish a rule of no rules and you should have an amusing and productive session 😉

Next up would be to find out what’s true of all the stuff you’ve collected, or you skip that step and work out an approach for every group. What characteristics and natural affinities in each group can you use? What issues do you need to address?**

Use your people’s strengths

Anyone who wants to turn a company into a social business by influencing the employees should assess people’s strengths and ambitions and build on those:

  • Support people who want to help others by making room for peer2peer support;
  • Train people who want to represent your company to guide online conversations.
  • Help people with a passion for reading and writing find subjects to write about, and train their writing skills.***

I’d like to conclude with a few tips for conversations in an advisory role:

  1. Make sure you know what you want from the conversation: are you checking your assumptions (or prejudices), or finding out what skills and ambitions people have that you could use in a future ‘social business’?
  2. Clarify what you want to achieve by asking questions, and why. Especially if you’re in a company that has prohibited social media use in the past, you had better come up with a good and honest reason.
  3. Practice serious listening.
  4. Don’t offer to fix anything – this tip is aimed at tool-selling specimens 🙂

Good luck, and let me know what else you’d like me to talk about!

Further reading:

* In case you missed the introduction to my ‘social business’ writing project, here’s my post from last Friday.

** There is any number of books about personality types and communication styles. One I’m familiar with is Management Drives (scroll down for the English text). Knowing a little about the subject may help you in conversations.

***Lou Hoffman wrote about writing skills, Experimentation in Content Marketing Offers Promise of Competitive Advantage, November 4, Business2community.

Please share this post if you found it interesting, or leave your thoughts about social business people and must-read articles in a comment below – I will reply to any (non-spammy) comment!

Social business organization: elements of change

Since I started to write about social business and agile business, I’ve had some feedback (thank you Twitter) that said something on the line of “useful stuff – like to read more”. Lucky me – I’ve discovered I have a lot more to say. So much in fact that it’s never going to fit in one post.

In this post I’ll go into a bit of organization history and the present-day trends and I’ll tell you how I propose to deal with the topic of social business.

Business organization in theory

History is a wonderful thing so long as you don’t have to live it. If you don’t believe me, imagine life without toothpaste. But here’s the thing: we do live history. At least many of us do – we work in organizations that are too big for us. How’d that happen?

Social Business Organization - Elements of Change

What’s your view of change?

In any group of people it will soon be obvious that some people have different affinities and skills than others.

In larger-scale businesses (let’s say in the Industrial Age) it made perfect sense for successful, growing organizations to form teams and departments that could function relatively independently from each other.

In management literature the term ‘span of control’ is used for the number of people any manager (or whatever he/she is called) can manage effectively. Managers were given a group of people they could actually oversee, and the ‘managees’ didn’t have to deal with 200 colleagues every hour of the day – just people in their team, and their manager. In terms of organization theory that must have seemed very efficient.*

Unfortunately, these silos have some major drawbacks, like a lack of communication between teams and valuable information falling into a crack somewhere. We’ve learned over time to deal with the status quo by using work-arounds of every description and ignoring the bits we can’t solve.

But in our current, information-overloaded society these negative side-effects of the nature of our organizations are no longer something we can safely ignore. And we don’t have to.

Technology-driven changes and your business organization

Technology has reached a point where it can actually help overcome the age-old problem of working in an organization its ‘inhabitants’ and its customers can’t oversee. But these new ‘social’ solutions need a different mindset from all those involved. And at some point some CXO is going to have to decide to ditch some of the old structures, procedures and software to make way for the new social working method.

Most businesses stop short of that, settling instead for add-ons and plug-ins. The thing about plug-ins – as any self-hosted blogger will tell you – is that some of them make your blog run a whole lot slower…

My credentials as a social business or change management pro

Here goes:

  • Affinity with the subject: check
  • Any kind of topic-related study: started with an introduction on organization theory, been interested ever since.
  • Strategic role within a company: nope
  • Strategic change management experience: nope
  • IT implementation: yes, on the user side of the equation (functional requirements).

I basically know what doesn’t work, and I have some ideas about why something will or will not take off the way you’d like it to. Standard procedures for supporting or facilitating online collaboration on any level, of any description don’t lead to adoption by employees of its own accord. A lot of tech stuff has got so many handy options, giving it to your average employee is like handing a Swiss army knife to your granny and telling her to open the door with it. It won’t work in a hurry – unless your granny had an unusual career that is.

Elements of change: proposed subjects

There are many ways to start changing your business, and I’m sure every single one of them has its challenges. To increase my chances of writing sensible information about each aspect, and hopefully add some useful articles for further reading, I will deal with one view in each post:

  1. Bottom up – employees are changing. I’ve written a post that addresses some issues. How do you enhance and direct changes in your workforce?
  2. Top down – strategy talk. I’ll get into it when the time comes.
  3. Manager level – this is actually a part of larger organizations that should not be overlooked. It’s more interesting than it looks from the outside!
  4. Tying your teams together. Buzz has it that you should be tearing down the silos inside your organization. You’ve just read a paragraph or two in which I stated that those silos used to have a function. Like it or not, they’re hard to get rid of. The fact that most articles about social business are focused on marketing led to my writing my “Back to Front” post.

* Literature I’m loosely referring to in this post:

  • The organization classic: Mintzberg on Management
  • Steven van Belleghem: The Conversation Company (which I mentioned in an earlier post before reading it)
  • And there are any number of great titles out there that focus on the role of conversations within the confines of your organization, like Crucial Conversations and Conversations for Change.

The central issue I’d like to ponder is what it takes from all those involved to adapt to the changes which look set to turn your organization into a social business.

Do you have thoughts or must-read literature you’d like to share? How do you view your own organization – and your role in it – in light of the whole social business buzz?

Business dynamics: big data and social media are changing us

A few days ago I found an article titled: “Being Agile Is the New Paradigm for Marketing”. It could have been a quote from Dilbert’s manager, but (alas) no.

I’d run into the term ‘agile marketing’ before. Since it sounded like a possible trend I decided to dig just a little bit. In this post you’ll find the results of my amateur archaeology.

Dig into the subject of agile business

Trend: BYOS

A few points from the ‘agile marketing’ article:

  • “Agile” is a method from software development which basically means you’re more flexible than in traditional project management. (I’d say that shouldn’t be too hard, especially in IT projects.)
  • Recent changes in social media make it necessary for us to develop an agile business model. I mentioned a few of those changes in an earlier post.
  • We should become more flexible since rapid changes in technology can impact business to the extent that it, too needs to change – if it’s to survive.
  • This calls for changes to the business model. Everything seems to hinge on technology here.

Marketers are supposed to be able to spot trends and write about them, so it’s no surprise to find oodles of articles about marketing trends.

Is it just marketing going all hoity-toity about discovering what will turn out to be the next management fad? Just a silly question maybe 🙂 but let’s see if there’s a glimmering of an answer out there.

A glance at Twitter shows talk about the #hrtecheurope event (October 25th): Josh Bersin gives his audience a tour of, yes, #agilebusiness – and what it means for HR.

A few disruptive changes seen in technology and society are:

  1. Social media
  2. Big data
  3. My personal favorite: people have changed (as a result of access to social media and huge amounts of information)

Organizations need to adapt by becoming highly flexible, which means quick decisions supported by technology to deal with ‘big data’.

What it also means is yet another force pushing the organization towards more transparency and employees acting more independently.

Why is it important to involve HR when you follow up on this trend?

Consider these aspects:

  • Recruiters notice people coming in with different mindsets and assumptions.
  • The technological changes affect employers’ careers.
  • You need HR for talent development.
  • HR is reportedly at the bottom of present-day contributors to ‘agile business’.

There are plenty of reasons to take a good look at different parts of the organization to get an idea of what it would mean (and take) to turn them around.

I recently wrote a post on the case for turning a company into a social business starting at the ‘back’ rather than in the marketing department. If you want things to change it’s worth noting the people who are not immediately eager to get in on every new trend, but who are experts in their own line of activity and who will understand what you’re talking about because they see it happening every day.

In the case of ‘social’ that may be the people who answer the phone for your company. Regarding ‘agile’… introducing an extreme measure of flexibility influences (organization) psychology as well as the actual structure of the organization.

It’s worth noting at this point that Beverly Macy has recently written an article about [social enterprise] trends for 2013 saying:

The true social enterprise is so far beyond marketing, it isn’t even funny.

If marketing is the only department buying into the changes affecting your business, you’re going to be in big *pause* trouble (head down ;)) sooner than you think.

How can you find out if ‘agile’ is a viable option for (parts of) your company?

  1. Read up using the reading list at the bottom of this post. I’ve included two blogs about Josh’ presentation.
  2. Look around you and talk to a few people, and I can’t stress this enough, in different parts of your organization. Leave the tool and tech talk out. Instead, ask about changes in behavior. What have people noticed about others, about themselves, about customers? Have preferences shifted lately? How do they respond to what they see is happening? What major issues are lurking beneath the surface of ‘business as usual’?
  3. While you do all this, focus on being a good advisor. Ask, shut up, listen, watch, think, ask again. I’m serious about the shutting up bit 😉

I hope I’ve given you food for thought. Please leave your thoughts in the comments. If you know of more ‘must-reads’ please add those too!

+If you found this post of interest, please share it.

Reading list

HR tech’s blog about Josh Bersin’s presentatio: Building an agile workforce;

Lumesse’s blog about Josh’ presentation;

And Janice Diner’s blog: Being Agile Is the New Paradigm for Marketing

Also worth thinking about: Beverly Macy, The Top Four Trends Shaping Social Enterprise in 2013 on Huffington Post.

Background: the classic by Jeremy Rifkin, The Age Of Access.