You don’t have to buy them: The Collaborative Investment

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I had a conversation today with a VP of Human Resources at one of the largest, and still fastest growing consultancies in India. He described a practice of accelerating innovation you can borrow today, which they have already shown to work in their business.

In the new frictionless economy, in which innovation in product and service can emerge from everyone, everywhere and for everything, not only do we need to bet on the creative innovative collaborations of the people within our own organizations, but we can also tap into the creative surge of small, nimble, companies without the deep formality and commitment of either acquisition or equity capital investment. Right now, there is a flood of new startups entering the world market. You don’t need to risk a stack of money to buy and leverage their expertise. Instead, build the “collaborative investment.”

Stay curious and open to those emerging small (even really small) businesses which show promise in delivering new market value, and cultivate those relationships, as both direct customers, and on a quid pro quo basis to stay ahead of the innovation curve. You might currently hold a leading market position, yet innovative ideas and solutions can come from all quarters of the market. And since the next killer app might notcome from inside your company, all the better reason to stay closely connected to emerging opportunities.

Here are a few ways you can collaborate with emerging businesses without formal monetary commitment:

Make visibility and marketing exchange commitments to the new partner
In this capacity, you have the power to recommend and refer existing customers to small companies showing promise, representing immense new opportunity for the small company, yet maintain a “watch and see” position to learn how the market responds. The startup gains the visibility the much larger company can offer while you remains a tacit partner in the promotional effort. This collaboration can then be formalized over time as the startup gains traction. For favored customer status, or even for an inside look under the hood of the killer app you are using, you can offer market visibility that would be otherwise unavailable because of their size.

Make internal referrals
Whatever cool, efficient, valuable product or service the startup is offering, you can bet another group or another division in the company can equally benefit from their service. If you are responsible for a particular product development initiative, you are certainly aware of similar efforts, funded from separate budgets in your own company that might benefit from the external partnership. Bonus: your internal referral will not increase your customer favorability, but also fuel the innovation of the service itself because the new division working with the startup is likely to push them in different ways.

Find small, promising companies and get close to them. Figure out what you can offer that would be of great value to your smaller collaborator to help their innovation grow.

Balancing Global Vision with Local Relevance

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At the moment, Andrew Deonarine is a third year medical resident at University of British Columbia (UBC)  He has developed a passion for improving literacy in developing economies.  A few years ago after a trip to India he was inspired by the One Laptop Per Child initiative to improve literacy around the world.  And he wondered if there wasn’t an even easier and more ubiquitous platform for delivering literacy learning.

He is also a programmer and technology tinkerer.  With a curious mind, he developed a big idea to use simple cellphones to be a platform for distributing literacy learning through PhoneCasting – a push technology in which anyone can author a brief engaging learning script and push-cast it out to deliver simple reading and math literacy to potentially millions of people.  He calls it EduCell.

Inventive yes.  But how does anyone know about it?  They didn’t.  Until, he learns about an InnoCentive challenge.  He applies and his EduCell proposal wins.  He is in talks with Nokia to develop and deliver EduCell universally.  Through the innovation crowd-sourcing visibility of Innocentive, Andrew is changing the world.  From Ontario.

This is a wonderful story, and indicative of how fast innovation can move in this frictionless economy.  How important is speed to market?  Last year Jim Barksdale, formerly of Netscape, spent 300 million to dig a gopher hole from the Chicago Mercantile exchange 825 miles to the New York Stock Exchange to lay direct-line fiber optic cable.  Why?  To gain 3 milliseconds in speed of trading information.

Competition is emerging from everyone, everywhere, and for everything – and one thing is clear:  Our most powerful competitive advantage is in the hearts and minds of all the people throughout our global organizations, and we must unlock these capacities.  Gone are the days when we could just buy diligence and expertise, and ask people to execute on the strategic bets of a very few in the corner offices.  Now, only by tapping into those discretionary qualities of initiative, creativity and passion – that cannot be bought at any price – can we build the competitive value of the future.

Bruce Churchill, president for DirectTV Latin America, said the key to the 300% market growth was to remove the corporate directives from NYC and Miami that decided how and when and where their services were deployed in Latin America, and instead give autonomy and discretionary decision-making authority to the local operators.  Who knows better than the people who live in Bogotá, Rio, and Caracas, the culturally relevant TV programming to provide, how to price it, the marketing that would make it stick in each locality.

Michael Byrne, president of Linfox, the biggest shipping and logistics operator in Australia said the key to their remarkable growth in India, Thailand, Vietnam, China and throughout southeast asia over the past ten years has been specifically because tap into the talents and give localized control over operations.  With over 2400 employees in India, and as of my conversation with him last year, Linfox had exactly one Aussie ex-pat working there – and he’s not the boss either.  By first providing a clear and singular vision of commitment to safety, excellence, product integrity and quality, Linfox provides the shared vision and values that provide the bedrock of the company, and then gives trust and operating control to the local markets for culturally nuanced execution.

Those organizations that learn to balance global unified vision with local relevance are those that will thrive in the new creative age.

Increase Accidental Intensity for Innovation

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What do these products have in common? Anesthesia, cellophane, cholesterol lowering drugs, cornflakes, dynamite, the ice cream soda, the slinky, Ivory soap, NutraSweet, nylon, penicillin, photography, rayon, PVC, smallpox vaccine, stainless steel, Teflon. They were all invented by accident. Of the more famous examples, microwave ovens were first invented by Percy Spencer, the 5th employee of Raytheon. Percy, a curious and skilled engineer, was responsible for scaling up the production of magnetrons for military use in radars. One day in 1946, while walking past one of the magnetrons, he noticed the candy bar in his pocket was melting. Curious, he started experimenting with popcorn and eggs, and immediately discovered the heat generating qualities of magnetrons. The first commercially available microwave oven, the 750 pound Radarange, became available in 1947.

The relationship between error and progress is undeniable. There is intentional innovation, and then there are accidental outcomes beyond intention. Often accidental innovation can be the most powerful and profound. So, we have to want accidents, and induce and examine them, to accelerate innovation. Fail faster, the saying goes.

Since this is true, we need to shift our mindset regarding acceptance and generation of accidents. We should:
1. Look for accidents, and harvest them for value
2. If valuable accidents aren’t frequent enough, generate some
3. Recognize the conditions under which the valuable accident occurred, and try variations on those conditions to magnify valuable accidents

To allow and recognize these happy accidents, we have to set up the right conditions and then be mindful of the changes there to be observed. Here’s one suggestion to magnify your accident intensity, hack your day. One of the most important things we can do is to build variation into our habits. This will increase accidental frequency. Robert Austin, Harvard Business School, interviewed a number of artists who constantly experiment with their method to create new work. One artist described finishing a clay piece and then, before it cured, hitting it with a bat to see what new shape occurred.

I’m suggesting to build both conditional variation and curiosity to recognize the emerging value in the change. But don’t overdo it. You will find a ceiling at which you are able to recognize and harvest value out of the variation you are creating. Don’t let the volume of noise exceed the measurable signal level.

Scott Wallace, in his book The Unconquered, describes trekking through the rich biodiversity in the remote Amazon basin and complained he wished he had the time and skill to slow down and harvest the incredible medicinal value all around him.

Don’t save Par, make Birdie

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“You don’t know how strong you are, until being strong is the only option you have.”

There’s an old adage that suffering yields ingenuity. The list is deep of artists, innovators, and inspiring leaders who found strength in the depths of adversity. It’s a beguiling truth since we tend toward safety and risk aversion in most aspects of our lives and business. So the question becomes, “If we aren’t currently in the depths of adversity, how do we find deep creativity and inspiration within contentment?” Or a better question might be, “How do we intentionally perturb ourselves in the search for creativity and inspiration?”

Statistically it’s true that golfers become better putters when faced with making par versus making birdie, from the same distance, with the same lie. We have surety and conviction when attacking the status quo, and make poorer choices when reaching beyond ourselves to excel, even when the goal remains the same. When we are on the edge of social risk, we retract, concede, and assimilate back to the norm – we make par.

Try this:
Choose between getting $900 for sure or a 90 percent chance of getting $1,000.
A. Getting $900
B. 90 percent chance of getting $1,000

Choose between losing $900 for sure or a 90 percent chance of losing $1,000.
A. Losing $900
B. 90 percent chance of losing $1,000

See below for the analysis, but the answer is clear. If you, like most people, chose A and then B, you could well be $100 down at the end of this exercise. What’s your social risk tolerance? What’s your measure of personal need for gain?

(Jamie Lalinde, Vanity Fair) The results of this simple problem set, for which most participants answer A and then B, were used to develop the thesis that would make Kahneman and Tversky famous: prospect theory.

In a 1979 paper, they documented a peculiar behavioral tendency: when people faced a gain, they became risk averse; when they faced a loss, they became risk seeking. As a result of their discovery, Kahneman and Tversky debunked Bernoulli’s utility theory, a cornerstone of economic thought since the 18th century. (Bernoulli first proponed that a person’s willingness to gamble a certain amount of money was a product of how that amount related to his overall wealth—that is, $1 million means more to a millionaire than it does to a billionaire.)

Along with playing a large role in Kahneman’s being awarded the Nobel Prize in 2002, the theory also spawned a new academic pursuit, the field of behavioral economics. Prospect theory, Michael Lewis writes, explains “why people are less likely to sell their houses and their stock portfolios in falling markets; why, most sensationally, professional golfers become better putters when they’re trying to save par (avoid losing a stroke) than when they’re trying to make a birdie (and gain a stroke).”

Why can’t a cell phone be like a cow?

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I’m grateful for an interview the other day with Iqal Quadir, Director of the Legatum Center for Development and Entrepreneurship at MIT. When Iqbal was quite young, growing up with his siblings in a village in Bangladesh, he was asked by his mother to walk about 10km to another village to fetch medicine. He spent all morning walking to the village to discover the doctor was out attending to patients in other villages and retrieving supplies. So Iqbal spent the afternoon walking home with his pockets empty.

Years later after moving to the U.S. and receiving degrees from Wharton, he became a Wall Street banker. He recalls having another unproductive day in the early 1990s transporting data across Manhatten on floppy disks (remember floppies?). Mobile phones were still in their infancy – expensive, heavy, and with scarce connectivity. But understanding Moore’s Law (processing speed, transistor density, pixal concentration, memory capacity, etc…all doubling every two years), Iqbal knew that in the coming years mobile phones would become cheap, powerful and ubiquitous. If this was to be true, he reasoned, then why not begin the journey now to provide mobile phones to villagers in his home country of Bangladesh.

In Bangladesh, a source of entrepreneurial capital might be a cow or goat to provide milk to sell or convert to cheese. If having a cow or a goat could be the seed of an entrepreneurial venture in a Bangladesh village, then why couldn’t a cell phone be one also? As Quadir put it, “Why can’t a cell phone be like a cow?”

Why couldn’t people in rural environments in Bangladesh use mobile telecommunications technology as an entrepreneurial technology, just as many use land, livestock, and other local resources to start small businesses? If land could yield crops to sell, or a goat to harvest milk and cheese to sell, Quadir rationalized that someone could take out a micro-loan to purchase a mobile phone that could be shared—rented—by members of the community. In this way, a mobile phone could be an asset to an entire village. As Quadir likes to say, “Connectivity is productivity.”

Quadir took this argument to Grameen Bank, a micro-credit lender that could realize the potential, as well as to Telenor telecommunications of Norway, which could help provide the infrastructure. As of this writing, Grameenphone has nearly 40 million subscribers and is still expanding.

This system of microlending has vastly increased the productivity and standard of living of the people of Bangladesh, spawned an untold number of entrepreneurial ventures employing cell phones, and of course brought some wealth to Grameen Bank and Telenor. But the impetus for such an innovative initiative started with Quadir’s recognition that connectivity equals productivity, and his strong sense of purpose and meaning in giving back to his native country.

Money is a by product of contributing value and meaning

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As the legend goes, Peter Drucker was once asked by a business owner to review his financial statements and see if he could find better, more innovative, ways to make money from studying, and tweaking, his financials. To which Drucker replied, “You don’t make money, you make shoes. Work on making shoes. The money is just a by-product.”

The lesson reminded me of an interview I had with Yvon Chounaird, founder of Patagonia, who said in the interview, “Over the past forty years I have yet to encounter a business problem that cannot be solved by focusing on product excellence and product integrity.” Despite, and because of, the magnificent growth Patagonia has enjoyed over the years, Yvon and Patagonia found sustainability by consistently refocusing their attention on quality and excellence. The journey was not without various hurtles and faltering moments while those around him were distracted by financial growth alone. For the full story see this interview.

But my point is this: Everyone I talk to is talking about building meaning in their work – building meaning into their everyday life and endeavors, As Teresa Amabile reminds us, progress in meaningful work is what motivates and engages us. We’re preparing for an upcoming event with Benjamin Zander, renowned conductor of the Boston Philharmonic, and I listened to him talk recently about the importance and value of contribution, as opposed to competition. They aren’t the same thing – competition is when you mentally compare, evaluate and attempt to trump. Contribution has no such relative marker. Contribution is when you try, when you show up and muster what you got – hopefully from a source of practice and competence – but nevertheless a real try.

Dispel your worries of competitive evaluation, and focus on your best, and give toward your best efforts with honest intention.

Why Change is Hard – Embrace the Unfamiliar

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Sometimes you make a leap. Perhaps you buy that new car you’ve been researching, or that slick new piece of software or technology you’ve been eyeing. And suddenly you see it everywhere and wonder if you weren’t on the cutting edge after all. Once you’ve gone through the diligence and effort, it’s become familiar and suddenly you see it everywhere. The same is true about out networks and connections – we know what we know and whille we think we adapt the new, and are open to new experiences, we readily default to the familiar, the known.

The same is true in organizations, and the change initiatives, new processes and designs that we start to adopt can get unhinged by our urge to retreat to the familiar. This psychological effect was documented years ago as the Mere Exposure effect. One of the more classic examples involved showing subjects, and their friends, pictures of the subject – both straight photographs, and a mirrored version, as the subject would see themselves in the mirror every day. Consistently, the subjects found the reversed image more appealing, and the acquaintances found the straight photograph more appealing. Of course because each image is exactly as it appears to themselves, and as it appears to their friends in the world. How we see the world is the most familiar and our most attractive and comfortable version of the world.

An important recognition here, confirmed in the studies, is that the more we expose ourselves to new ideas, the more familiar they become. To create change, in ourselves and within the ways we work, embrace the unfamiliar.

Engage. Connect. Deviate.

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Theoretical physicist Richard Feynman once said, “You can know the name of a bird in all the languages of the world, but when you’re finished, you’ll know absolutely nothing whatever about the bird.” His point is that, once we label and partition a thing or an idea, it curtails our sense of discovery and curiosity to learn more. We have to regularly nurture curiosity to allow creative value to emerge. But don’t confuse creativity with brainstorming, or divergent thinking. Divergent thinking is a critical component but not the end result. Divergent thinking—our ability to come up with a multitude of possibilities—does not necessarily equal creation of recognized and shared value.

What does this mean? www.JasonTheodor.com

For example, I showed a sign of a man throwing litter into a trashcan to my five-year-old daughter Annie and asked her what she thought it meant. She said, “It’s someone putting ice cubes in a hot tub.” Well, could it not be?

Similarly, our son Will watched my wife collect clothing and toys around the house to donate to Goodwill. After half an hour he had a puzzled look and said, “How can good Will wear all of these clothes? How old is good Will?” He doesn’t know what he doesn’t know, and it can be a good thing. Preserving a sense of remaining open new truths is a critical component of creativity, and that capacity to interpret the mundane as unexpected is innate in all of us.

To uncover the pleasantly unexpected in something we have known for a long time, or to have a novel interpretation of something we have never seen before, we must remain ever curious. This curiosity allows us to build a growing repertoire of ideas that, when gestated for long enough, can interconnect to create new mash-ups that, hopefully, are recognized by the world as possessing shared value.

When we are in flow—deeply engaged in activity—we can accelerate the duration it takes for those idea mash-ups to reach full potential by connecting ourselves with other people with whom we don’t interact regularly—or by making new relationships. These connections can quicken the process of borrowing brilliance to generate new ideas. Again, it’s those mash-ups of cross-pollinating, disparate ideas that leads to new value creation. Remember the most powerful new creative mash-ups often come when we reach out into our networks of people around us—particularly when we share, connect, and collaborate with those with whom we have weak (occasional) ties—that those new value iterations have a chance to form.

Finally, remember we find the best expression of ourselves when we don’t wait to be tapped by our leadership, our company – when we don’t wait to be asked. In our work, we all see opportunities to be filled, dilemmas to be solved, and possibilities to be executed on. And yet we hesitate. We’re waiting to be asked, ignoring the difficult, or pausing out of fear. That fear is often borne out of trying to anticipate what we think the company wants and expects of us – trying to intuit how the company or leadership thinks we should act.

The truth is, we will bring much greater energy, creativity and passion to our work when we take the lead, when we take the first step. Step boldly.

Invite a Penguin to Your Next Meeting

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Years ago, Matt May was consulting to a Detroit car company. After interviewing people in the organization, he discovered theirs was a culture that stifled ideas in a command-and-control hierarchical fashion. The leaders of the company rejected his suggestion, didn’t believe him, and insisted they had an open environment where all ideas were welcome to the table.

So when Matt was asked to conduct a half-day workshop session he created an exercise in which each team, composed of diverse employees from all strata of the organization, had to work in teams to solve a puzzle. The exercise was about selecting the right balance of fuel, food, people, and resources for a successful trip to the moon. In the exercise there is a correct configuration of resources to solve the problem.

Before the exercise started, Matt did this: he took aside the most junior member on each team and gave them the answer. And told them they were free to do anything they chose to make their voice heard and be convincing to make their team successfully win the game except tell the team that Matt gave them the answer key.

Not one team got it right. At the conclusion of the session Matt asked the secret member of each team, who held the answer key, to stand up. The leaders attending the meeting were both appalled and enlightened to discover that contrary to their belief, voices from all levels of the organization really weren’t appreciated and listened to thoughtfully. After all, for each group the answer was sitting right at the table, yet no team delivered the correct solution.

We spoke to Juan, a senior IT leader at a large financial services organization, who had a similar experience, but his voice was heard. Recently, he was puzzled to be invited to a meeting with two of his colleagues from different departments who were trying to solve a business dilemma. As Juan sat through the opening comments of the meeting, he kept wondering silently what in the world was he doing here? Juan was leading the IT group, and clearly what these players needed was a business decision structure that had nothing to do with his team. But despite his puzzlement at why he was invited, Juan stayed and listened intently and shared his best ideas and suggestions during the course of the meeting. Within just a couple days Juan was included in some followup notes and found his colleagues had agreed and implemented the ideas discussed at the meeting.

But he discovered later in water cooler and cafeteria conversations, that it was his presence and divergent opinions and perspectives that bridged the understanding gap between his colleagues who had been too close to the project to see and execute the solution needed.

Maybe next time invite someone from left field to the table. Something interesting and successful might happen.

Shared beats Borrowed Brilliance

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Have you ever worked with a group of carpenters? Then asked to borrow a tool? In my experience it depends on the person, and the tool you ask for, but many are hesitant. Because as your experience grows, so do the selection, quality and personal connection to each tool. They want to know how you intend to use it, how long it’s going to be gone and when they’re going to get it back. More often the response might be, “Well, what are you trying to do?” or “Let me take a look and give you a hand.” Both because they want to help, and because tools are a personal kind of thing.

But what if you work in the creative, conceptual economy? And sharing ideas doesn’t mean surrendering something that can’t be recovered? Once you understand that sharing powerful ideas means creating value, and that hoarding only serves to allow good ideas to die with you, it becomes at once easy and fulfilling to give freely of the ideas you have. Often those enriching opportunities to give remain remote because we’re just too wrapped up in what we’re doing, and because often people just don’t know what to ask for. But recognition of good ideas to adopt is significantly easier than knowing what to ask. We just ‘know it when we see it.’

The other day we learned a fabulous solution when talking to a senior IT leader at a Fortune 500 financial services company. His group of engineers had a steady +/- efficiency rate of about 46%, and the needle hadn’t moved substantially in a few years. Yet he knew that from a competitive standpoint he had some of the best and brightest coders in his group. Here’s what he did: He first went around to some of the more inventive programmers in his group and asked if he could gather up and group some of their unique and valuable hacks and macros they had created in their work. He then grouped them by application and posted them internally on a wiki where other coders could go in, browse and borrow interesting and useful hacks and shortcuts to solve coding problems.

Pretty soon people in the group were adding and swapping their signature solutions and hacks in a shared environment – both benefiting from the collective wisdom of the other programmers and creating a fun environment to brand their work publicly. Efficiencies shot up to over 65% – both through the sharing and iterating on signature solutions, as well as the camaraderie and co-petitive environment created.

In the conceptual economy ideas are still tools, but we are able to share these ideas and still maintain the integrity and personality of thought, and benefit from an idea tool that comes back sharpened by another. And even if it doesn’t come back, we still get the joy and knowledge of having shared and knowing your unique ideation will live on through the work and voice of others.