The Crucible of Innovation

My quick survey of popular business publications seems to indicate that “innovation” may be the modern business equivalent of “abracadabra.” The short version is that with unfettered (even uninformed) imagination, absolute freedom from process, and of course a large enough supply of sticky notes, you too can hatch sufficient break-through ideas to fix nearly any business issue – especially if you can trek through the woods or scale a mountain (but make sure to bring extra sticky notes).

Forgive my facetiousness; it’s just this that kind of stuff drives me crazy! To be clear, there is no doubt that innovation is incredibly important. But there is a far more organic, seamless and effective way to cultivate creativity and collaboration in your organization. And it is likely a practice that you are already doing. It is also one that will help to create an ongoing development cadence and act as a powerful cultural transformation lever. I am talking about design reviews.

Design reviews are an oft-overlooked, even maligned opportunity for real-time innovation. But I’m not talking about what passes for design reviews in many companies. You know, the type that act as a poor cousin to a status review; “wirebrushing” people who identify issues and grilling engineers for design release-dates and tool starts. Or the pre-milestone “dog and pony show” type that serves primarily to give senior management a much desired, but usually false, sense of security. The ones where an engineer’s primary objective is to “get offstage” with minimal negative exposure and never violate the tacit agreement that if you don’t pick on mine, I won’t pick on yours.

Design reviews can be the heartbeat of your development project and a critical part of your overall development operating system.

Design reviews can be the heartbeat of your development project and a critical part of your overall development operating system. They provide a common link for distributed teams and are a primary mechanism for learning and doing, at program speed. Generally, I think in terms of two broad categories of design reviews. The first is a cadenced review used to surface and resolve technical issues in a timely manner. It provides a consistent, recurring forum with required cross-functional participants to work on inevitable technical challenges, thus preventing the waste of engineers chasing down much-needed help. The second type is system focused and scheduled in support of key integration events. These typically involve representatives from the entire development team, who focus on interfaces and interdependencies, and are scheduled such that sufficient time is allowed for post-review work without disrupting the program.

In either case, they should be challenging, rigorous and above all, alive and energizing. They should raise performance expectations for both the product and the team with the aim of making both ever better. This is not a “check-the-box” event; far from it. It is a demanding crucible of ideas – testing, challenging and improving. An event that generates both heat and light. It’s not a PowerPoint show. Participants should bring only those materials they are already using in development such as early prototypes, test data, simulation results, or CAD with perhaps a one-page problem statement. The events themselves should be held at the gemba whenever possible – this creates powerful dynamic. And importantly, problems are not an anomaly and real time learning is why you are there.

Design reviews are a tremendous opportunity for people development and cultural change. It is an opportunity for leadership to evaluate both design solutions and the thinking behind them by asking probing questions and actively coaching in real time. More importantly it is an opportunity for leadership to demonstrate those behaviors they expect from their teams such as collaboration, experimentation, rigor, detail and ultimate ownership. The environment is not punitive, in fact there should be far more pressure on leadership. It is about stretching the team, self-pressurizing to achieve more together than they ever could separately.

This is not a place for individual performance reviews or finger pointing. It is about working as a team to continually improve in order to deliver ever-greater value to your customer.

Although initially uncomfortable, your team will begin to thrive on these events, relishing the opportunity to engage and grow as engineers and leaders as long as leaders remember to ask tough questions and challenge ideas, but always support their people. This is not a place for individual performance reviews or finger pointing. It is about working as a team to continually improve in order to deliver ever-greater value to your customer.

Here are a few points you may wish to consider as you think about your next design review:

1)   Actively manage the agenda and scheduling. Make sure all the right people are there for the right discussions – and not present when they don’t need to be (wasteful). Also be sure to allow sufficient time for in-depth dialogue on topics. Event-driven reviews should be scheduled such that they allow time for work – but also create a cadenced (perhaps weekly) review to surface and work through breaking issues.

2)   Participants, especially leaders, should be prepared. Send out critical info in advance whenever possible. Presenters should have a clear problem statement, show work to date and alternative solutions (A3s can be useful for this). This is not a place to just dump a problem.

3)   Hold the review at the gemba whenever possible. Make sure actual product, critical data or CAD is available.

4)   Leaders should ask probing, meaningful questions. Not play “stump the chump” to show how smart they are or just provide answers. If you choose the former, people will shut down, if the latter you will soon find yourself owning a lot of problems.

5)   Encourage robust and candid dialogue – ask the tough questions. Creative tension is an important part of creating great products. But never, ever allow attacks on people. Think about interfaces and interdependencies, and where the program is in the development process.

6)   Remember to “do the experiment.” It’s not a debate club. Ask how can you effectively test a hypothesis.

7)   Capture and apply knowledge. These are your learning cycles, your opportunity to enforce, update and create standards through learning. Be sure to fully leverage existing knowledge and capture new information.

8)   Design reviews should be a foundational part of your overall development operating system. In larger organizations an integrated network of design reviews may be appropriate. And participation is not optional.

9)   Set high expectations for both the product and the participants. But set even higher ones for yourself.

There is no potion, no incantation, not even a magic e-letter that will transform your organization into an innovation machine. It requires hard work, focus and perseverance – but that’s the point, isn’t it? Creating innovative solutions and delivering new value need to be part of who you are and built into how you do your work every day.

Are your design reviews contributing to that goal?

Put the ‘i’ Before the Apple

Apple, the company that once helped its customers soar past their common ways of thinking and imagine that which had yet to be created, is now trailing behind its customers. There has been previous debate about the leanness of Steve Jobs, but it’s quite clear to me that Apple has taken another step back.

“Get closer than ever to your customers. So close that you tell them what they need well before they realize it themselves.” (Steve Jobs)

Cooperation between Apple CEO Tim Cook and U2 soloist Bono led them to decide to provide everyone who purchased the new flagship product, the iPhone 6, with a copy of the band’s newest album. Apple’s customers, the two believed, would see it as yet another example of the value that the company provides them. After all, the supporters’ identification with the Apple brand – the attractive design, the fast and dependent operating system, and the friendly user experiences – is the justification for the price, which has remained high, and the increasing difference between the iPhone and the other smart phones, which have turned into commodities.

But people who purchased an iPhone expected to get a platform that would allow them to choose their content individually and personally, and they were not willing to allow the company to define their musical taste for them. Even if all of the series 6 iPhones are identical in shape and color, each phone is personal and holds its owner’s particular, unique content. After all, that’s the whole idea of an iPhone.

The community of Apple supporters viewed the move as an affront to their loyalty and a digression from the basic assumptions that are at the very foundation of the trust between the company and its customers. Pushing the U2 album (even for free) was seen as an unwelcome intrusion into the customers’ personal space, and they viewed it as a form of virus. As a result of public pressure, Apple had to make it possible to clean out and wipe off the “infected” album, and Bono personally apologized.[1]

Steve Jobs, the founder and re-inventor of Apple, defined the purpose of the company to create a great product so that:

Our job is to figure out what they [the customers] are going to want before they do… People don’t know what they want until you show it to them… Our task is to read things that are not yet on the page.” [2]

The secret of Apple’s strength, and the source of its innovation, were to be found in the interaction with their customers – that’s where the key to success can be found, not in technological leadership. This last marketing move by Apple may reveal that it has diverted its focus from empathy for the customers’ needs to a focus on promotion of a product and an attempt to convince customers to make the buy.

Does the launch of the iPhone 6 point to the end of the era of Steve Jobs, pulling Apple back into the traditional mental models [3] that they disrupted at the beginning of the 21st century? Abdication of the first part of Jobs’ sentence (“get closer than ever to your customers”), leaving only the second part (“tell them what they need well before they realize it themselves”) could pull the company backwards.

According to the alternative thinking (as a disruptive business paradigm) that Steve Jobs developed in his second tenure, the purpose of the existence of a good company is to reliably express the customer’s identity and desires. Innovation, according to this view, stems from the manufacturer’s ability to design the customer’s story and the role that he wants to play in that story, by understanding his strengths, dreams, weaknesses and fears. Apple’s success rests on its ability to build a value-proposition for the customers that can serve as a platform for change in the customers’ way of life and make them into winners in their own ideas within their own communities.

The traditional, conservative mental model – push marketing – is composed of three stages:

1. Creation of awareness

2. Generation of attention

3. Customer’s action.

The business model that is at the foundation of pull marketing – as developed by Toyota, adopted by the lean community, and articulated by Peter Drucker[4] – redefines the purpose of marketing, based on updated mental models:

The aim of marketing is to know and understand the customers so well the product or service fits him and sells itself.” – Peter Drucker

Thus, the principles of pull marketing transform business policy from selling products and services to creating a relationship between supplier and customers. This process proceeds through three milestones:

  1. Creation of attraction
  2. Affinity
  3. Customer’s Action

The commercial success of market leaders such as Google, Facebook, Toyota, Starbucks, Amazon, Waze, Airbnb, and Uber (and this is only a very partial list) stemmed from the founders’ ability to free themselves from mental models, make their business model more flexible, and divert it from a focus on the product-platform in terms of service and technology to a focus on the customer.

Whoever is able to make his mental models more flexible and attend to his customers will view technology as valuable leverage and as a tool for organizational learning.  Leaders in retail manufacturing, banks, hosting, tourism, and logistics who are focused on their customers use digital technology as a means to listen, to come closer, to observe and to learn about existing and changing behavioral patterns in their target market. For them, collection of information about the lifestyles of their customers takes precedence over and is more important than pushing marketing messages, and no less important than the management of sales.

The distance between a business mistake and the response of the market can be measured by the pace of the byte. Cook and Bono took upon themselves the authority to define what is appropriate and proper for the customer, and so they strayed from Apple’s path. It didn’t take long before they had to pay the price.

In the 21st century, commercial companies that prefer to look at themselves rather than their customers and think empathically about how a product or a service will improve their lives will not fulfill their purpose and will not reach their goals.

In your own business spaces – have you been able to change the mental models and basic thinking that form the basis for your “value proposition” and your business model?

[1] Bono apologizes for U2 album in Apple iTunes libraries after iPhone 6 launch | Daily Mail Online

[2] Walter IsaacsonSteve Jobs.  Simon and Schuster, 2011.

[3] Mental Model:  Fixed basic assumptions and patterns that affect an individual’s decision making.  These models: 1. Exist in thought; 2. Are resistant to change; 3. Affect actions and behavior, and form the basis for decision-making.

[4] Peter Drucker, Management Challenges for 21st Century (New York: Harper Business, 1999)

Boaz Tamir

Boaz Tamir is Founder and President of Israel Lean Enterprise Institute. He has extensive experience in entrepreneurship, turn around processes, company management, and academic research, and has contributed his knowledge to the business development and marketing of some of the largest and most successful organizations in Israel. Tamir is a founding and managing partner of Montefiore Partners Venture Capital Fund and has also served as founder and director of Romold Group, a multinational company specializing in environmental technologies and the development and production of infrastructure products for water and waste-water management and telecommunication. Tamir holds a Ph.D. in Political Science and Management from MIT.