Monday, April 12, 2010

(empo-tuulwey) We're so worried about the informal processes; what about the formal ones?

Michael Schrage's post The Delicate Art of Unauthorized Innovation begins with the following quote:

Better to seek forgiveness than to ask permission.

Now whenever I see that quote I think of Devo's battle with the estate of Jimi Hendrix, but that is a topic best addressed in my music blog. (As I already have, back in 2008.)

But let's get back to business here. This is what Michael Schrage says:

The ability of individuals and small groups to steal time and "bootleg" a project has become notably more difficult. Not unlike Mad Men's three martini lunches, under-the-radar gray market innovation has become a virtual anachronism. Some corporate counsels might even argue that it's effectively illegal: organizations should only invest corporate monies on explicitly authorized efforts. Anything else is cheating and theft.

But what of the Googles and 3Ms and Hewlett Packards of the world who have institutionalized creativity? Well, for one, the list of companies that have done that is rather short. Second, there has change.

...auditors and controllers have little tolerance for slush funds and discretionary spends....Intrapreneurs who surreptitiously yet successfully cross the boss now typically end up as external entrepreneurs instead of internal legends. Shrinking gray market and bootlegged projects appear to be unintended but understandable consequence of difficult times, and demand regulation and digital visibility. Since these give firms more opportunity to see what their employees are doing, it's harder to conceal unauthorized projects. Further, it becomes more difficult for line managers with gifted subordinates to get away with squirreling a few extra dollars for let's-give-it-a-shot new product development. The out-of-sight, off-in-a-corner alpha test is not just a dying breed — it's being euthanized.

Think about it from the investor's perspective. Let's say that you have $100 million that you want to throw at Twitter. Before you invest your money, you would want some level of disclosure regarding Twitter's plans. ALL OF their plans. Investors are results-oriented, goal-oriented, and possibly even process-oriented, and they might not react well if Ev of Biz told them that Employee X "spends Mondays and Tuesdays on the beach and dreams about stuff."

Take it further. Let's say that you are throwing money at both Twitter and Foursquare, and you subsequently find out exactly WHAT Twitter Employee X is dreaming about. If she's working out a way to provide rewards to Twitter users based upon the location from which they tweet...well, isn't that something that an investor such as you ought to know about?

More critical, however, is when an investor finds out that he or she is funding really really stupid stuff. Like the Apple investor who may have discovered that Apple was working on a computer that was named after a girl and that wasn't compatible with the Apple II at all. When that little experiment tanked, the investor may have wanted to insist that Apple never do anything like that again.

And to be fair, most hare-brained ideas usually do fail. For every Macintosh and Post-It Note success, there are probably hundreds or thousands of failures, and the investing odds usually dictate that doing stupid stuff does not provide a good average rate of return.

But back to Schrage:

Simply because something isn't unreasonable, however, doesn't make it a wise choice or a good investment. Informal innovation, bootlegging, and gray market intrapreneurship are essential to a healthily diversified innovation portfolio. Persistent pincering of informal innovation and gray market initiatives has provoked quiet revolts deep down in several organizations I know. People are rebelling against the strictures and constraints of formal innovation budgets and reviews. They want to be nimbler and more agile than the organization allows.

The way I read it - if you're cutting off your informal processes because they yield stupid results, shouldn't you also be cutting off your formal processes because they also yield stupid results?

Back in my Motorola days, I worked on a green belt project, literally spending a couple of years on it. (Not continuously.) Finally we got to a point where we had gone through the processes, come up with alternatives, decided upon solutions, and then calculated the potential cost savings. In the end, the potential cost savings didn't justify the project.

Now I'll grant that Motorola, which has been known to be process-heavy for years, is probably as much of an anomaly as Google. But just because idea A has been through a much more rigorous process than idea B does not in and of itself guarantee that idea A will yield a more positive result.
blog comments powered by Disqus