One of the long-standing debates in the world of management theory and practice is whether success can be engineered and predicted, or it can only be explained, post-hoc. The hind-sight wisdom is 20/20, we know that, but can prognosis be at least as close, if not perfect? There are some companies that seem to deliver like clockwork, regardless of the external changes, competitive uncertainties, and internal turbulence. Much like successful people, successful companies do a few unusual things consistently well, and as Aristotle noted “(then) excellence becomes a habit”.  

Here we are discussing such counterintuitive practices of leading innovative companies which look against the grain, but are highly effective, with a hope that success can indeed be engineered, painstakingly though. These are mostly people-management habits that make them amicable across a wider gamut of organizational contexts, pan industries, geographies, and tenure.

Innovative companies know that output can come from anywhere, and in causally ambiguous ways where it's difficult to pin down the series of actions that led to a great outcome

Sub-optimal talent utilization

One of the standout insights from one of the first widely-read management books, “In Search of Excellence”, was that Japanese companies are not slaves of productivity when it comes to product development or innovation. In companies such as Toyota, Honda, Sony, Toshiba, and even at the South Korean majors, such as Hyundai and Samsung, there seems to be a sub-optimal resource utilization, by design, beyond production. Unfortunately, that rare gem of an insight got lost as the book came to stand as a protocol for McKinsey’s 7-S Framework.

Employee utilization or productivity roughly translates into how much is achieved for how little. This unitary focus on output by input reduces humans to machines, taking out even an outside chance of discovery, or serendipity. Most ordinary organizations measure employee productivity on an almost daily basis, as much as they would measure a machine uptime, or throughput. It was fine for as long as the work was mechanical or repetitive, but in the knowledge economy, where output is delinked from input in surprising ways, productivity can’t be the right measure. In fact, measuring productivity is counterproductive. Because managers have paid much attention to this issue and with a lack of a general sense of imagination, they have stuck for far too long to the tried and tested time-sheets, and other rudimentary means of measuring performance (read busyness). 

The innovative companies know that output can come from anywhere, and in causally ambiguous ways where it’s difficult to pin down the series of actions that led to a great outcome. So, they allow for sub-optimal utilization of employees. By design, there is a free time left with employees to take up hobby projects, go beyond the immediate deliverables, engage outside their milieu of work and get back with richer insights. The famed 15 percent time-off at 3M, or the 20 percent at Google, are classic cases of a sub-optimal utilization of employees, by design. On the upside of the 20 percent time practice at Google, Eric Schmidt shares “The most valuable result of 20 percent time isn’t the products and features that get created, it’s the things that people learn when they try something new.” We are increasingly slipping into the world of non-countable, the nebulous; and the management practices should match the calling.  

The more innovative companies couple the top-down goals with those generated by individuals, including their personal goals

Internal competition and duplication

The corollary of sub-optimal talent utilization is the not-so-perfect division of labor, where, at times, multiple teams may be working on the same objective, almost competing with each other. Samsung, one of the world’s most innovative companies, and constantly ranked high-up on the R&D spending and patents, is a big proponent of internal competition. For the same product component, multiple teams across the continents of North American, Europe and Asia would be working and the parent organization would, like a Venture Capitalist, back the one with the highest promise. To a proponent of Greater Taylorism, this might look like an antithesis of Management 101; but when it comes to innovation, it works wonders. It shrinks time to market, avoids complacency, and results in some surprising upsides not factored at the planning stage. That’s what Bill Gates meant when he prophesied: “as we look ahead into the next century, leaders will be those who empower others”. 

The high level of redundancy and almost competition-like spirit amid teams help bring the rigor of a capitalistic marketplace to the organization. Now, the senior management is ‘hunting’ talent, ideas and capital inside (and outside) the firm’s boundaries, and this keeps everyone excited. When AG Lafley, the former chief of consumer goods major P&G, declared that as much as 50 percent of new product ideas must come from outside the company, the R&D scientists and engineers were feeling the heat, for now they were not the favorites. The competition was truly and wisely open.  

A marketplace model of an organization has multiple benefits, much like what Tata Group has enjoyed over the years with its 100+ group companies and generations of employees finding a home there. Talent can be scouted for the best opportunity from across the marketplace, ideas flow freely, and an inventor has no one boss to please. Someone’s failed solution can be a panacea to other’s problems and such a discovery happens only if the organization is not micromanaging who does what, all the time. The deliberate loosening of the work mapping, rather ruthless division of labor, and micro-monitoring saves scores of employees from the tyranny of Taylorism. Of course, this calls for an ability to manage chaos, without losing sight of the big picture, or going nowhere in particular.  

Teams are notorious for setting up groupthink and a regression towards mean, which discount an individual's idiosyncrasies and, hence, the teams are good for 'doing stuff', but not 'thinking stuff'

Loose coupling between top-down and bottom-up goals

Goals stem from the mission which addresses a well identified vision; however, most employees remain disconnected to the mission, let alone the goals that they are supposed to work on. If the goals are thrusted from above, which is the case with most organizations, the employees in the trenches have a rather binary choice- follow or you’re out! Such a mechanism pays no heed to the unique knowledge or the ability this employee, deep down the corporate totem-pole has, which is largely missed by the seniors.

The more innovative companies couple the top-down goals with those generated by individuals, including their personal goals. The proponent of OKRs (Objectives and Key Results), John Doerr, notes – “innovation tends to dwell less at the center of an organization than at its edges”. It’s imperative then that the folks at the margins are empowered to reflect and set their own goals which best suit their approach to solving a problem, or an opportunity that (so far) only they can see. An overt push for alignment of an individual’s goals to the organizational may be a hard-fought battle with little upside. It not only frustrates people who think differently, but also amplifies leadership blind spots.  

A good goal setting should have no more than 70 percent goals cascading from the top and the rest emerging from the trenches, where the employee spends most of her time. These goals offer the much-needed variation to the organization, in terms of seeding new ways of thinking, better work ethics, and who knows, may result into a new type of an organization. A case in point is Marc Benioff, one of the youngest Vice Presidents at Oracle who couldn’t pursue Oracle’s Larry Ellison to adopt Cloud and eventually led to the formation of Oracle’s biggest rival Salesforce.com. If only dear Larry would have paid attention to Marc’s nudge. If only. 

Ditto for Bill Gates who recently admitted that his biggest mistake ‘ever’ was on losing out on the opportunity of Android, a company Google gobbled up in 2007 to turn it into a multi-billion-dollar mobile phenomenon. Don’t you think someone down the layers would have thought about the possibility of an opensource operating system for mobiles? Most likely, yes. But, alas, it didn’t match with Microsoft’s goals and priorities, or even ethos of not giving away things for free. That’s the importance of listening to the trenches. 

Not everyone must work in teams

Now, this is a tricky one. Haven’t we heard of the importance of teamwork? Yes. But does every problem call for a team effort? Are teams always superior to an individual, or just a pair? Perhaps not. The World Economic Forum identifies the top ten workplace skills for future, with the top three being complex problem solving, critical thinking, and creativity, followed by people management and coordination with others¹. Surprisingly, emotional intelligence comes sixth in number. A team is not exactly the best setting when it comes to complex problem solving, or creativity, least of all, critical thinking. Teams are notorious for setting up groupthink and a regression towards mean, which discount an individual’s idiosyncrasies and, hence, the teams are good for ‘doing stuff’, but not ‘thinking stuff’.

On the question of creativity and complex problem solving, research suggests that solitude is a powerful driver of original thinking, for it allows for synthesis of ideas and enabling new connections of the hitherto unconnected². The zen like habits of Steve Jobs were instrumental in him delivering  some of the most ground-breaking innovations in the modern times, on relatively matured industries, such as music, retail, and entertainment. One of the most prolific psychologists, Mihaly Csikszentmihalyi, propounded that the most creative people are introverts. However, our workplaces discount the introverts heavily - they don’t open up easily, they don’t seem to get along with all, and are difficult with team, and hence are side-lined. They are the precise harbingers of innovative thinking.

Susan Cain, the author of ‘Quiet: The Power of Introverts’ observes, - “I don’t believe anything really revolutionary has been invented by a committee. If you’re that rare engineer who’s an inventor and also an artist, I’m going to give you some advice that might be hard to take. That advice is: Work alone.”  And this statement comes from some sold investigation on the power of introverts. 

The innovative companies pay attention to their workplace design, offering enough time for meditative work, desirable isolation and alone time, away from the oozing energies of the typical modern workplace. A case in point is IBM Fellows, a position created in 1963 by Thomas Watson Jr., for promoting the most exceptional of the scientific and engineering talent from across the company. Guess what? They chose their own projects, their own teams (if any), and work on their own accord. Not all good has to come from teams, and not all thrive in team settings. Leadership must allow people to contribute in whichever ways they can, as long as they are all aligned to the True North.  

Weak short-term memory

Mark Twain appropriately observed, “to succeed in life, you need two things: ignorance and confidence”. The same applies to innovative organizations. They make mistakes (we all do), but they don’t regret for too long, or that such mistakes don’t dent their risk appetite. There’s only learning, not guilt, or sorrow. 

Jeff Bezos, one of the most prolific entrepreneurs of the modern times, says, “As the company grows, the size of the mistakes has to grow as well, and if it doesn't, you're not going to be inventing at a scale that can actually move the needle”. And Jack Ma, Bezos’ counterpart in Asia, wraps it well by stating, “instead of learning from other people’s success, learn from their mistakes. Most of the people who fail share common reasons (to fail) whereas success can be attributed to various different kinds of reasons.” Failure is indeed a great teacher. 

While failure is common, learning from failure and an ability to forego and forgive is uncommon. Innovative companies learn to move on in the face of almost life-threatening failures. This selective amnesia allows the leaders and employees to avoid the dysfunctional impact of mistakes and failures for another day. Such a culture calls for building ‘psychological safety’, where employees aren’t afraid of presenting their point of view or making mistakes or being vulnerable by choice. Promoting this very element of psychological safety, David Packard awarded Chuck House HP’s only Medal of Defiance, for “extraordinary contempt and defiance beyond the normal call of engineering duty”. Events like these set the culture in motion of taking risk, acknowledging failure, and going on to win the day.   

Innovative companies learn to move on in the face of almost life-threatening failures. This selective amnesia allows the leaders and employees to avoid the dysfunctional impact of mistakes and failures for another day

Employees need to learn to move on, both from failures and mistakes. In his best-seller ‘Hit Refresh’, Microsoft CEO, Satya Nadella, talks about what he said at the Grace Hopper Celebration of Women in Computing conference on the issue of equality of women pay.  Satya Nadella said that women should trust "karma" instead of asking for pay raises, a statement that he apologized for in an open letter and promised to take affirmative actions to bring about equity in pay³. He lives on as one of the most respected leaders in the world, notwithstanding a public goof up. That’s okay. Imagine the signal it sends to the trenches that it’s okay to make mistakes; own up and move on.   

So, you see, the innovative companies do different things and also do things differently. As they say, many of these are simple but not easy. Choice is yours, always.

References:

1. The Future of Jobs Report 2018: World Economic Forum

2. People who seek solitude are more creative, study finds: Washington Post

3. Microsoft CEO Satya Nadella Apologizes For Comments On Women's Pay