Board too risk-averse for innovation? Then bark up this tree…

The first job of a Board is to make sure the organisation continues to be viable.  And if you’ve been good in the ‘Added-Value Domain’ for a while (the work domain that’s about constructing the networks, systems and everything else required to deliver value to customers today and tomorrow)…it’s going to take a lot to start messing with that.

And so it should.  If the magazines Science or Nature allowed any old idea to get published…credibility of the whole science profession takes a nose-dive.  You’ve got to prove yourself before we start changing the laws of nature!

But as we also know, eventually what we produce in the Added-Value Domain is going to have to change as values change….and the connection comes from what we call the Innovation Domain of work.  The point of this work is for values and trends to be revealed in decisions to provide fundamentally new value to possibly new clients.

It’s different to the Added-Value Domain….but ends up in the Added-Value Domain.

(If you’d like to read more on these Domains, check out Luc Hoebeke’s wonderful work Making Work Systems Better)

Here’s the trick – the attributes of good work in the Added-Value Domain are fundamentally different to that in the Innovation Domain.  But if we don’t see this, and in particular, if we present information to Boards using the same criteria for both Domains….we are automatically set up for ‘no’.  

The attributes of the Added-Value Domain are the things that you find in every business case and operational measure.  Throughput.  Quality.  How Many.  Revenue.  Profit.  Customer Data.  Wastage.  Cost.  We can see them.  We can go and get them.  And they work because the Added-Value Domain is here!  We’re doing it now.  And if it’s improvement work…we can extrapolate out with some spreadsheet work….and be somewhat certain.

And these measures are the dominant business paradigm.  We measure countries on GDP.  We think ‘bottom-line’.  Remember just how seriously the ‘triple-bottom line’ was actually taken when it was big a while back.  Not so much right?

It takes a lot of bravery to not use these measures as the dominant decision-making information.  It’s a lot to ask of a Board that is charged with not wrecking the joint.

But…when it comes to the Innovation Domain, using only these attributes or criteria is going to lead to ‘no’.

Here’s a different way.  Imagine something like the below (based on Luc’s work)

We seek a small amount of funding to run some experiments on our idea so we can come back in six months with:

• Desirability – we’ll demonstrate with actual results whether the idea will actually create new value, not just for potential new customers, but for all stakeholders involved.  We’ll be honest, and you’ll have access to all views.
• Feasibility – we’ll learn about what is really involved in bringing this idea to the market and whether those that would be involved in doing so are supportive of the idea.  Again, we’ll give you all views, not just the rosy ones.
• Transferability – we’ll work out whether the idea can actually become integrated or replace our existing business-as-usual and what would be involved in doing so
• System-Wide Impact – we’ll also have a good look at what other aspects of our business and the wider community such an idea might impact, and we’ll give you our best view on what this would all mean about possible success.

What we’re asking for is the time and a small fund to find some information on the above four attributes by running some actual experiments, at which time we’ll come back to you with a recommendation on whether to proceed.  We’ll be able to find out some rough numbers to consider, which will form part of the desirability and feasibility sections.

The end result we are looking for from the above is a lively conversation….because in the end….all innovations are an act of faith.  Faith the idea will actually create value, that enough people do want it, and that we can actually do it without breaking things.

Imagine doing the above with 8-10 ideas.  Can you see how the conversations at the Board meeting in 6 months might change?  Less ‘show me the ROI‘, and a lot more ‘what are you learning, will it fly‘?

And with 8-10 ideas, we only require a 15% success rate (meaning now part of the Added-Value Domain) to fund the whole program.

What does the above approach give you?  Fundamentally, it changes the conversation, which achieves two things:

1. It stops the unfairness of asking the Board to make decisions on information that simply cannot be true (there is no way to predict the ROI of a genuine innovation)
2. It provides the Board with valuable information that both fuels a lively discussion while providing comfort that there is discipline and accountability.

A much better use of everyone’s time, and might just allow that innovation strategy to become real.

And truly supported.