Don’t Do The Wrong Things When Things Go Wrong

No company is perfect.  Something will eventually go wrong, even if you have the greatest Six Sigma or quality program on the planet.

And it is how you handle these problems that can determine your relationship with your customers.

For example, I needed a taxi from my hotel in Paris to the airport.  According to the front desk, it was supposed to take only 7 minutes.  After 10 minutes, the woman apologized and walked outside to see what was going on.  The police had blocked the road and no cars could get down the street.  She walked with me to the corner to see if my taxi was waiting there.  It was not.  She had me wait at the corner while she ran back to the hotel to call for another taxi.  Given the road problems, they would not send another car.  Instead of giving up, she walked me several streets away to a taxi stand where she made sure I was off safely.

That is customer service!  That goes beyond what I suspect any manual told her to do.  And it left me with only positive thoughts of my experience with that hotel.

To me, this is the true essence of innovation.  It is about improvising in the moment to do what makes sense right then and there.

Or, after checking into my hotel in the suburbs of Chicago, I went up to my room to discover that the key did not work.  I went all the way back down to the front desk.  The gentleman there apologized, fixed the keys, and without hesitation handed me some chocolate chip cookies.  No, I wasn’t staying in a Doubletree where all guests get cookies.  I was in a Hampton Inn.  I doubt this was standard protocol.

That one small gesture removed any annoyance and made me happy…sort of.  Since I am trying to lose a few pounds, I did silently curse the front desk clerk as a devoured the delicious cookies.

But sometimes companies do the wrong things when things go wrong…

I have had service with a mobile phone company for a long time, spending $2,000 a year on service.  A year ago I decided to get their VoIP home phone service which was one third the cost of a traditional copper wire line.

From the beginning, I had problems with the VoIP phone with poor call quality and dropped calls.  I called the phone company’s technical support repeatedly to see if they could fix the problem, but they could not.  Finally, I called customer service to tell them about my problems and that I wanted to cancel my account.  The man I spoke with informed me that I was under contract and that I would be charged $200 for canceling.  I explained that I have had issues from the beginning and have spent nearly $10,000 dollars with them over the years.  Did he really want to risk losing my $2,000 a year mobile service by forcing to adhere to a contract for a substandard home product? After 20 minutes of pleading my case, he did not waver.

I hung up and decided to call customer service again.  I explained the situation to the new person on the line.  Within 2 minutes, he canceled my home contract without penalty.  Clearly it was not that difficult to do.  Why didn’t they do that in the first place?

You can  make or break a relationship with a customer through a single interaction.  And what is most telling is how you respond to a customer when something goes wrong.

I know someone who worked for Bose.  She once told me: “When a customer buys Bose speakers, they become a fan of the product.  But when they buy Bose speakers and something goes wrong, they become a fan of the company for life.“  Their customer service is second to none.

What do you do when things go wrong?  Do you follow the “instruction” manual?  Or do you color outside of the lines and do what is right?  One interaction can change your relationship with your customers.

Whatever you do, don’t do the wrong things when things go wrong.

Cathedral or Chaos?

The other day I gave a speech on open innovation at a conference primarily focused on open source software.

One of the presenters at the event suggested that instead of trying to create a cathedral by controlling software development, we should instead be comfortable with a mess.  The point of open source is to let creativity emerge from the mess.

I thought that was an interesting point and was curious if this is how open source really works.

Just then an audience member made a comment (paraphrased here) – “Nearly every major, successful open source software effort has been backed by (and loosely controlled) by a large group. For example,  Mozilla’s support of Firefox and Oracle’s support of Open Office.”  He listed a few others and concluded that the only one that was not organized this way was Apache.  He implied that maybe the “mess” is not best.

I’m not an open source software expert, but I don’t find that surprising.

When there is no structure, chaos ensues.  Structure, even simple structure, can help bring together people so that they can work together more efficiently AND creatively (we know that even creativity requires some structure; innovation more-so)

As the morning progressed, I realized that the conference itself was an example of what can happen when there are no controls. It quickly became apparent that there was no formal emcee, no one in charge of the running of the conference, and no well-defined agenda.

The morning plenary was scheduled to go from 9AM until 10:30AM followed by a 30 minute break.  After the break were concurrent breakouts, including the one where I was presenting.  Immediately after my speech, I would hop off the stage, hop into a taxi for the airport, and head to my next speech in Italy.

At 10:30, when the break was supposed to start, another speaker took the stage.  I assumed we were running a little late, but it was hard to tell how late since they did not list who was supposed to speak.  And then a parade of speakers continued.  It seemed like it would never end.  I think there were four or five speeches that went on after the scheduled end time.  And quite a few of the speeches were nothing more than long-winded commercials from sponsoring companies.  It was 11:30 – a 60 minute overrun on a 90 minute session – before the speeches were done.  And then, no one was given instructions.  Should they take a break?  Should they go to their breakout?  People were confused.  They did not know what to do.  I didn’t know what to do.  And I wasn’t 100% sure I would make my flight given the delay.

Although it would be an exaggeration to call this event “chaotic,” it certainly was not orderly or efficient. And it demonstrated what can happen when things are left on their own without any kind of process.

I realize that innovation requires a bit of flexibility and comfort with ambiguity.  Nothing is totally predictable in the world of innovation and you can’t schedule everything as neatly as you do in the world of operations or manufacturing.  I also agree that new ideas can emerge from chaos that might not otherwise come to the surface (reminds me of the infinite monkey theorem).  And when you have millions of people donating their time to the open source movement, the resulting inefficiency associated with the mess can be tolerated.

But can your business afford this level of inefficiency?  Probably not.  I have written frequently about the “signal-to-noise” ratio of your innovation efforts.  If you modeled your business after the “uncontrolled, mess model,” you will almost certainly end up with an extremely low signal-to-noise ratio.

The real objective of your innovation “process” is to put in just enough structure to help make it efficient, while not putting in so much that it stifles creativity.

I’ll close this post with something I wrote back in 2001 in my first book, and reused in a blog entry a year ago:

(As innovators,) we are architects of companies and industries.  An architect is not a ‘reengineer.’ To illustrate this point, I often ask clients what is the difference between an optimist, a pessimist, a reengineering consultant, and an architect. The optimist looks at a half filled glass of water and sees it as half-full. The pessimist looks at the same glass and sees it as half-empty.  The reengineering consultant sees too much glass. Cut off the top. Downsize. An architect looks at the same glass and asks questions such as “Who’s thirsty?” “Why water?” Or “Is there another way to satisfy the thirst?”

We need to architect our innovation efforts.  And in order to do that, we need to ask better questions.

In fact, one of the most critical skills for accelerating innovation is to – ask the right questions, the right way, of the right people.

With this approach, you get both the efficiency of the controlled cathedral building process and the emergent creativity associated with the messier forms of open source software.

P.S. It has been pointed out that some of my open source examples are not accurate.  I only wrote what I thought I heard, which clearly I didn’t get perfect. Even if I had the specific applications/companies wrong, the paraphrased concept came from an open source practitioner. Regardless, my focus in the article was not open source software specifically, but rather the implications for innovation in organizations. I still stand by my points of view. Even if the “mess” model works in open source, I don’t believe it can work inside of a company that wants to make money. Companies do not have unlimited access to unpaid resources.

P.P.S. The picture is one I took of St. Marks Basilica while in Venice, Italy.  Although your business might not want to create a cathedral, this one was pretty impressive!

Are You Smarter than a PhD?

“Are You Smarter Than A 5th Grader?” is an entertaining show.

In the world of innovation, the biggest question is, “Are you smarter than a PhD?”

Here’s what I mean…

In Personality Poker we address four primary innovation styles.  The spades are the ones who are, as we would say in Boston, “wicked smaht.”

We find that spades are analytical, fact-driven, and often quite intelligent.

One of the challenges with driving innovation into organizations is that smart people are often more interested in being right than doing right.  That is, experts want to believe that they can solve every problem under the sun.  Although this isn’t true, this pervasive belief can circumvent your innovation efforts.

Here’s a simple example…

A few years back, an InnoCentive client identified a very complex challenge they wanted solved.  They posted this challenge to the InnoCentive.com website.  Anyone who could solve this problem would get a cash prize.  Dozens of solutions were submitted.

One of the solutions was submitted by an employee of the client.  Let’s call her Sally.

Sally went to the individual who sponsored the challenge and said, “Why did you go outside to find a solution?  I already had the answer.”  She was clearly upset that her company went externally to find a solution.

Interestingly, Sally’s actions were the catalyst which helped this client build the case for open innovation.

When the evaluation team evaluated all of the solutions submitted, Sally’s was not viewed as innovative.  It was the same type of solution the company had been considering for years.  The breakthrough idea came from someone outside of their company and even outside of their industry.

The company now had proof positive of the value of open innovation.

To be clear, the objective of open innovation is not to replace the smarts you already have in your organization.  It is to augment this brilliance.  Most companies don’t have enough time to solve all of the challenges they are working on.  Unfortunately, R&D people often get spread thin working on a lot of different types of challenges, some of which could be better solved by others outside the company.

Here’s a simple model I use to help companies determine which challenges should be solved externally, versus those that can be solved internally. Challenge fall into roughly three broad categories:

Simple: These are challenges that someone else has probably solved.  Although you could solve them internally, this is not the best use of your resources.  The odds are that someone else already has a solution that you could buy or license for less money in less time.  Why waste your highly specialized experts on these types of challenges?

Unsolved: There are some challenges that are exceptionally complex that may have remained unsolved within your organization for years.  Or maybe it is something that is viewed as outside your area of expertise.  A well-worn, but useful example of this is the oil spill recovery in Alaska after the Exxon Valdez accident. For 20 years, oil/gas experts futilely tried to find a way to pump out the almost solidified oil at the bottom of Prince William Sound.  Eventually, through a challenge posted on InnoCentive, they found a solution from the cement industry, not the oil/gas industry.  John Davis, a chemist with expertise in cement, figured that if vibrating cement can keep it from hardening, then a similar concept can be adapted to keep the oil in the tanks from freezing.  It worked and solved a two decade old problem. These challenge are also best solved externally because you can increase the level of diversity in your solver base.

Differentiator: These challenges fall into the sweet-spot of your organization.  These are the challenges that your experts are best equipped to solve.  By “outsourcing” the simple and unsolved challenges, you can allow your team to focus on what they do best.  This will increase your ability to solve the problems that differentiate you from your competition.  For these types of challenges, it is often useful to post challenges internally, using a tool like InnoCentive’s @Work solution.  This allows you to tap into the collective intelligence of every employee, regardless of where they reside organizationally or geographically.

Smart people want to be (and should be) appreciated for their brilliance.  They have dedicated their lives to the pursuit of knowledge. But as the late, great Will Rogers said, “There is nothing so stupid as an educated man, if you get off the thing that he was educated in.”

Everyone can not be educated in everything.  Therefore, figure out what you (and your organization) do best, and find others to help with everything else.

Measures: Will You Get What You Want?

I recently spoke with a new client who shared with me their innovation measures.  When I looked at their measurement system, I immediately saw flaws.

But before addressing these imperfections, let me first provide you my perspective on innovation measures.

In general, there are three types of measures associated with “challenge-based” innovation (be sure to read this article if you are unfamiliar with the concept of challenge-based innovation):

1. Process Measures - These measure the activity associated with your challenges (e.g., 500 registered solvers, 40 submissions per challenge, 80 votes per challenge, etc)
2. Solve-Rate Measures - These subjectively measure how well you solved your challenges (e.g., 82% of challenges were partially solved, 61% of challenges were completely solved, etc)
3. Value Measures – These measure the actual value accrued (e.g., increased revenues by $25M, reduced costs by $35M, etc)

The last measure (value) is where the rubber meets the road.  This is your ultimate goal.  But sometimes, value realization can take years (or in the case of pharmaceutical companies, decades).  Therefore, the second measure (solve-rate) is a good way to monitor progress with your program.  But what about process measures?

Process measures are leading indicators that can be useful in measuring trends over time for things like community engagement, effectiveness of internal communications, and quality of challenges.

Let’s look at one common process measure: the number of ideas/solutions submitted for a given challenge.  This was one of the measures that my new client used.

Imagine that you are using crowdsourcing to find a solution to a challenge.  You post the challenge on your website or intranet.  A month later you check to see how many responses you get.  In this scenario…

Which is better:

• getting 100 ideas/solutions?
  or
  
• getting only 2 ideas/solutions?

Most people intuitively think that 100 solutions is better than 2.  In fact, most organizations believe that more ideas equates to greater success.  The reality is, however, that 100 is not necessarily better than 2.

Let me re-frame the question…

Which is better:

• getting 100 ideas where only 2 of them were exactly what you needed and the other 98 were duds?
  or
• getting 2 ideas where both were exactly what you needed?

Now the correct answer is a bit more obvious.  In this situation, the latter is probably better.  The amount of work needed to sift through the solutions is a lot less when you have only 2 submissions.  Imagine if you received 10,000 ideas of which only 2 were good.  You can see now that the effort to find the best solutions/ideas might be overwhelming.

Although activity is good, too many submissions can indicate that you have a poorly defined challenge.  Therefore the ratio of good ideas to duds might be a more interesting measure.

The key is, make sure you understand the unintended consequences of your measurement system, especially when it comes to process measures. If done properly, process measures can help you drive higher solve rates (measure #2). And often, higher solve rates lead to greater value (measure #3) in the long run.  But not always.

High solve rates with low value can also indicate problems with your innovation program:

• Poor implementation – You are unable to convert solutions into finished products/services
• Poor commercialization – Your solutions do not meet the needs of the market/customers and therefore do not generate revenue
• Poor relevance – Your challenges, although solved, are not important enough to “move the needle” of the organization’s innovation efforts

Measures are important for helping tracking your innovation efforts.  And they can help diagnose potential issues.  But it is important to measure the right things.

There is an old expression: “You will get what you measure.”

But the bigger question is, “Will you get what you want?”

NESTA Open Innovation Conference Videos

Last week I spoke at an event hosted by NESTA – the UK’s National Endowment for Science, Technology, and the Arts.

The day focused on Open Innovation and had some spectacular speakers including Cheryl Perkins (the former Chief Innovation Officer for Kimberly-Clark), Karim Lakhani (an open innovation guru from Harvard Business School), Stefan Lindegaard (a well-known expert on open innovation), and Helmut Traitler (from Nestle).

You can watch my opening remarks here. (8 minutes)

On the NESTA website, you can watch all of the other videos including my panel discussion, some Q&A, the morning panel, and more.

NOTES: A few quick comments on my opening remarks video: 1) For those in the US…Pop Idol is the UK version of American Idol. 2) I was a little over eager with InnoCentive “Solver” count. We have over 200K, but not quite a quarter of a million…yet. 3) There are many versions of the Edison quote…the one I prefer is, “I have not failed 700 times. I have not failed once. I have succeeded in proving that those 700 ways will not work. When I have eliminated the ways that will not work, I will find the way that will work.” Admittedly, I’m not sure what he actually said since I wasn’t there.

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