Disruptive Innovators Network

Strategic Foresight and Escaping the Tyranny of the Present

Most of us struggle to imagine the future – even our future selves are complete strangers to us. Studies have shown that when we think about our own future we imagine ourselves as a wholly different person.

This week I attended an event run by the Disruptive Innovators Network featuring the futurist Tracey Follows. She questioned how many organizations routinely scanned the horizon for future trends. Based on the attendance (a third of the number who attended a talk on digital transformation earlier in the week) I’m guessing ‘not many’. Which is ironic, as one of the reasons that many transformation programmes fail is the lack of any strategic foresight. The vision set at the outset is one of an imaginary future organization, not based in any kind of reality.

Strategic foresight is a structured way of using ideas about the future to anticipate and better prepare for change. It is about exploring different plausible futures that could arise, and the opportunities and challenges they could present.

We can all get better at thinking about the future by attempting to seek out what Vijay Govindarajan calls ‘weak signals’. These consist of emergent changes to technology, culture, the economy, and consumer tastes and behaviour. Weak signals are hard to evaluate because they are incomplete, unsettled and unclear – they exist at the edge of our vision, if at all.

Tracey outlined that you’ll almost never pick up a weak signal from the mainstream media. The clue is in the name, once it’s featured in the mainstream – it’s no longer weak. Importantly she reminded us that if we are thinking about what the future looks like we should also look to the past. If you’re imagining what the next 10 years look like, you need to be looking at the trends of the past 20.

How much of our organizational time , if any, is spent looking for clues to the future? Smart organisations know that these weak signals exist but also take active steps to detect them. Is the ping of the signals getting weaker, or becoming ever more incessant?

One of the themes that I think is getting stronger is that of a decentralisation of power, of a desire amongst citizens for more control over their lives. This will likely only accelerate in the post-pandemic years as people seek to rebalance what has been an , arguably necessary, extension of state power into the running of our lives.

Already we are seeing this in the employment market – where people’s newly found commute-free working has led to a reconsideration around the role of work in their lives. Work isn’t quite as important. Employers have lost a degree of power over the individual.

My interest is less in this and more in how this trend affects communities. How will a desire for more control and influence shape our future social sector?

Power doesn’t flow downstream naturally. Whereas the internet promised us decentralization and empowerment, what we actually ended up with was the collective of FAANG – the power pooling with a small collection of titans: Facebook, Apple, Amazon, Netflix and Google.

The Web 3.0 movement , the next generation of internet that heavily relies on the use of distributed ledgers, machine learning and artificial intelligence, has the potential to build a more sovereign and open internet.

So how does this affect us? Well let’s just look at the social housing sector for example.

There were more than 1,600 social housing providers registered in the United Kingdom in 2021 the largest share of which are non-profit (1,356), followed by local authorities at 215 and for-profit companies at 53.

That’s 1,600 HR departments and CEOs. 1,600 different ways of forming policies and vying for homes and delivering services in a sector that exists to solve the same shared problems. This puts an enormous amount of power in the hands of organisations rather than citizens.

What decentralisation might bring is an realization that organisations should scale back, doing only what they do best, partnering with others and delegating to the consumer through decentralized applications and blockchain infrastructure.

In the future we may no longer be stuck with the choice between the public sector and the private sector. The citizen sector should be recognised as a viable, industrial force. We saw this in the original vaccine rollout where the NHS partnered with private suppliers and community groups to deliver a haphazard , but brilliantly effective supply chain.

As J. Peter Scoblic has said, strategic foresight doesn’t help us figure out what to think about the future. It helps us figure out how to think about it.

Things take longer to happen than you think they will, but happen much faster than you expect. Those weak signals are getting stronger and louder all the time.

Does Regulation Really Stifle Innovation?

Last week I did a presentation to a group of managers when the issue of governance and regulation ‘getting in the way’ of innovation came up.

People often think regulations stifle innovation, new business and services. They assume that regulators are there to control and curtail what they want to do.

“We are so heavily regulated, we can’t change what we do” is a familiar cry from those in the public sector.

Is it true that regulators are blockers of innovation, or is it false perception?

Even worse – is this simply a convenient excuse used to resist change?

It’s true that if you looked at the websites and reports of most regulators you’d likely get a view that they are a pretty conservative bunch. There’s plenty of talk of consistency, best practice and benchmarking. And we all know that best practice and benchmarking are often just a race to be first at being average.

In reality though, when you meet face to face, I’ve never met a regulator who doesn’t want to see more innovation in their industry.

Last year I did two pieces of work, one for Ofwat, the economic regulator of the water sector in England and Wales, and the other for the Regulator of Social Housing. Both organisations were looking for ways to innovate within their own organisations and to spur on a greater drive for experimentation within their wider sectors.

It’s not in the interests of a regulator to be anti-innovation. A report last year found that respondents were looking to regulators to support innovation, and to an extent most organisations are seeing this take place. 1 in 4 though see regulators as innovation blockers.

Part of the problem here is the definition of innovation, a disruptive pioneer (Uber for example) to one person is the unregulated aggressive exploiter of people to another.

Unregulated disruption is sometimes necessary. Had ride-sharing firms been prevented from entering the traditional taxi cab market, we would not be enjoying a better customer experience today. Arguably, the incumbents would never have improved their services left to their own devices.

In today’s world of speed and digital innovation though, regulators need adaptive regulations -and a more responsive, iterative approach.

That said – innovation gone bad requires regulation. Arguably “financial innovations” such as easy credit, subprime lending, mortgage-backed securities caused the financial crisis. It was a perfect storm to have uncontrolled innovation at the same time as encouraging light touch regulation.

Innovation as risk management

The fear of innovation within any organisation is far more likely to come from heavy handed approaches to governance and risk than it comes from external regulation.

At the event earlier this week, Ian Wright, Managing Director of the Disruptive Innovators Network asked a very good question: what is your risk patience?

Most of our organisations and institutions lean toward control and order and away from chaos and risk.

How does your organisation actively seek out risk? Only 20% of strategy officers describe their organisation as risk seeking. We need to transform risk management from being about “stopping doing things” to being about “starting doing different things” within a well managed framework.

Traditionally we have not being good at focussing risk management on the right areas. Significant amounts of time are spent auditing areas that are highly unlikely to ever cause major reputational damage. This can be a huge inhibitor of potential innovation.

Whenever you innovate you’re taking a risk. What I’m anxious to get across to the public sector is that you DO need to take those risks – the Auditor General for Wales.

The work of the Wales Audit Office and in particular their Good Practice Exchange is a great example of an audit and assurance approach that encourages well managed risks

Innovation done badly IS a risk, but innovation done well is good risk management.

Having a framework that protects the host organisation from early stage experiments until they have proven value is actually good governance.

The best approaches to innovation always have a way of framing and strategising, allocating and diversifying risk – whilst buffering the rest of the organisation from it. Organisations equipped with this will be less risk averse and conduct more risk-taking behaviour.

Ultimately, your organisation has plenty of excuses not to take risks, to stick to the tried and tested, to follow the same path as everyone else.

But fear of the regulator isn’t one of them.

How To Kill Ideas

We were asked a really good question last week with the visit to Bromford of the Disruptive Innovators Network.

How long should you spend on an idea?

In the early days of Bromford Lab we had a 12 WEEKS MAX rule. If we couldn’t get an idea up and running within that time – it should be killed.

We soon realised the error of our ways. Some ideas need to be timed exactly right. Now we don’t so much kill ideas as leave them languishing in the pits of our Exploration Pipeline – waiting for the stars to align.

The Premature Death of Ideas

Many organisations , without realising it , act as inhibitors of innovation.

Our colleagues generate ideas every single day about how their job could be done more efficiently or how customers could be better served. These ideas – hundreds of thousands over the course of a year – mostly disappear , never to be harvested.

Organisations have developed numerous tools to kill off ideas.

1: Have A Meeting About It

The best way to assassinate an idea.

Meetings can crush ideas. People want to look like they are adding something in meetings and being hypercritical is highly valued. Putting your freshly hatched idea in that scenario is asking for trouble.

It’s only a matter of time before someone says “That sounds good in theory, but what’s the business benefit?” or even…“We’ve already tried that.”

Meetings are the best place to shoot down an unsuspecting victim who is trying to generate new ideas.

2: Take It To Your Manager

The middle layers of organisations are trapped between management (keeping wheels turning and not rocking the boat) and leadership (inspiring and taking risk).

People here are often scared to take risks because they’re responsible for so much. The bright spark on the team is often seeing as someone who is trying to mess with success.

There is evidence too that managers can undermine employee creativity through interference – changing goals and getting over involved when they should just steer clear.

3: Suggest The Idea Is “Escalated”

Most hierarchical structures are uniquely designed to ensure that any decent idea never goes near the top table.

Any idea that emerges closest to the customer has to work its way up through a series of managers, any one of whom is likely to veto it. As David Burkus points out, research suggests that there is often a cognitive bias against new, innovative ideas – a “hierarchy of no”.

The higher an idea moves up the chain of command, the more likely it is to be rejected, as the people furthest from the idea’s source will have a lesser understanding of its potential value.

4: Ask For A Report On It

Once you’ve written a report about an idea – it’s no longer an idea. It’s a project.

That will attract all sorts of project management attention, far too early. As soon as the Gaant chart appears it’s time to pack up and go home.

5: Ask To See The Data On It

“Data fixation” is an innovation killer. The trend towards having an evidence base for absolutely everything removes the gut instinct from your idea. Measuring things too early means you constrain experimentation. And experimentation includes the possibility, the high probability even, of failure.

It’s not necessary, or even possible, to completely remove these idea killers. But knowing your enemy , and developing strategies to avoid these pitfalls, will boost your capability for innovation.

The Four Stages of Ideation

Often we think of ideas as being single events when instead they should happen in stages:

Idea Generation

Having the idea is the easy part. What separates successful innovation approaches over ‘innovation theatre’ is the latter promotes generation over action. The successful ones know know that an idea without execution remains simply that—an idea, a paper exercise, no more impactful than a passing thought.

Idea Selection

Most of our organisations don’t suffer from a lack of ideas, they suffer from a lack of process that identifies the ideas worth having. It’s not an idea problem; it’s a recognition problem.

Perversely, the answer to unlocking creativity isn’t to go looking for ideas – but to go looking for really good problems. That’s the way to select the ideas that matter.

Idea Deployment

We need to move from reporting about things we are going to do and shift it to things we have done.

Spend less time talking about ‘What would happen?’ and start demonstrating ‘What happened’. That means we need to make available resources for prototyping and space where we can turn ideas into reality.

Idea Extermination

Your ideas might be wrong, even when your instincts are right. Knowing when to let go is vital.

Innovation is all about discipline in the creation and implementation of new ideas that create value. If ideas are allowed to live too long they can become zombie projects.

To support innovation , we need to create a climate that protects early stage ideas and become comfortable existing with ambiguity.

Rather than just being highly efficient killers our organisations need to become better at idea generation, selection, deployment AND extermination.

And if you’re really struggling to get traction for your idea why don’t you follow this advice from Helen Reynolds? Don’t tell anyone about and just do it anyway.

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Photo by Jason Abdilla on Unsplash

What We Can Learn From The Oldest Companies in The World

Shigemitsu Kongo, a Japanese Buddhist temple builder, formed his construction company Kongo Gumi in in 578 AD. His company built relationships with their customers that lasted for 1,400 years, surviving through many wars and natural disasters, just like their temples.

It wasn’t technology that nearly killed the company, but cashflow. The oldest company in the world became a subsidiary of Takamatsu Construction in 2006.

There’s a very good chance you will outlive the company you work for. Whilst our life expectancy is increasing, the lifespan of organisations appears to be in decline.

The average age of a company listed on the S&P 500 has fallen from almost 60 years in the 1950s to less than 20 years today. Only 30 of the original companies still exist in 2019, the 35th anniversary of the FTSE 100.

Disruptive technology is killing off older established companies at a much faster rate than ever before.

This is why when you go to conferences you’ll see presentations selling the virtues of Uber, Amazon, Netflix and Google.

Be like them the wisdom goes. Be agile. Only by doing as they do may you survive.

This is only half the story though.

Rarely , if ever, do we look at the companies that are bucking this trend. The companies who have been around forever and are still doing business.

A look at the oldest companies operating today is fascinating.

Worldwide there are over 5,500 companies that are over 200 years old. However the distribution of these is heavily weighted to just a few. Japan dominates the list (3,146), followed by Germany (837), then the Netherlands (222), and France (196).

I started this week staying in Düsseldorf, Germany, in a district known as “Little Tokyo on the Rhine” — one of Europe’s largest Japanese communities. I was there to talk to European students about the opportunities of smart cities , but I concentrated more on the possibilities of building upon the wisdom of communities that have existed for generations.

It’s deeply unfashionable to talk about , let alone revere, older things today. It’s almost like innovation started with the iPhone and disruptive companies began with Uber.

My week ended with a visit by the Disruptive Innovators Network to Bromford, who at 56 years old is barely out its pre-school stage in Japanese or German terms. It was interesting to hear in the talks by Helena Moore and John Wade how there was almost an apology for referring to things we had learned more than five years ago, as if we were becoming embarrassed by the weight of our own history.

We shouldn’t be though. The right culture for innovation is one where there is:

Just enough friction – with teams having regular, intense debates
The practice of high standards, with a steady supply of high performing people who are committed
Permission to be different – a culture where it’s allowable, even encouraged, to push back.
The ability to think and act experimentally with a tolerance for failure through practical experiments

However it’s also a culture that creates a feeling of belonging and a feeling of purpose.

Why have so many Japanese and German businesses lasted so long?

A study by the Bank of Korea found that such companies thrived over the years because they created new demand while sticking to a corporate culture that promoted tradition, attention to detail, and frugal innovation.

Instead of going after short-term results, they pursued longstanding trust with customers and partners. They also pursued growth within their means, rarely borrowing to expand.

In his book The Living Company, Arie De Geus attributed the success of older businesses to four factors:

1. Long-lived companies were sensitive to their environment and remained in harmony with the world around them.

2. Long-lived companies were cohesive, with a strong sense of identity. No matter how widely diversified they were, their employees felt they were all part of one entity.

3. Long-lived companies were tolerant and generally avoided exercising any centralised control over attempts to diversify the company.

4. Long-lived companies were conservative in financing. Frugal even.

However his strongest point is contained in one sentence “Companies die because their managers focus on the economic activity of producing goods and services, and they forget that their organizations’ true nature is that of a community of humans.”

It’s time to stop worshipping the new and the shiny. We need to strike a delicate balance between continuation and innovation, being reliable and disruptive at the same time.

Creating a culture where these two competing sets of values can coexist is difficult – and not always a comfortable place to be.

Clearly though , the innovation potential of us older lumbering giants is vastly under appreciated – and the disruptive power of the younger and hungrier is often overstated.

Lessons Learned From Five Years of Failure

Sometimes the execution of the idea doesn’t need to be the best to succeed.

In 1989 a video game designer called Gunpei Yokoi changed the world with the launch of the original Nintendo Game Boy. It took gaming out of the hands of geeks and paved the way for the industry to become the most profitable and popular form of entertainment.

However the Game Boy was far from best in class. Its black and white display was made up from old technologies well past their sell by date. Gunpei called his philosophy Lateral Thinking with Withered Technology.

Withered: mature technology which is cheap and well understood.

Lateral thinking: combining these ideas and technologies in creative new ways

Innovation doesn’t actually need to be cutting edge. Rather it needs to be simple, useful and to make someone’s day that little bit easier.

This week I was invited by Ian Wright of the Disruptive Innovators’ Network to outline the lessons learned from five years of Bromford Lab about making innovation simple and accessible for colleagues.

I was speaking to L&Q Futures which has been put together by Tom Way to provide people with the digital mindset and skills of modern businesses while also looking for creative ways to solve the housing crisis. The 25 people selected via a competitive process are spending 1 day per month away from their day job to learn and apply the tools and techniques being taught.

The key things I wanted to put across were:

Think big. Start small.

Most of our organisations avoid doing things because we let them get too complicated. It’s easy to talk yourself out of doing anything. If you wait for perfection before you put an idea to work, it will stall before it gets off the ground. The key for us is to assemble small teams with limited resources who are prepared to get their hands dirty.

The idea is the driver

Most corporate structures are uniquely designed to ensure that any decent idea never goes near the top table. Structures that support hierarchical decision making limit opportunities for people to have influence and innovate.

We often don’t have a choice in the path our ideas take. They don’t fit within our structure charts or management meetings. You’ve got to develop a space and process that works around them and allows them to flourish. Let the idea go where it needs to go, and when.

Don’t get distracted by Intergalactic Space Cats

Not all ideas are good ones. Some are very bad indeed. But even bad ones can prove worthwhile to look at, if only by helping to shape better alternatives.

Innovation is all about getting better at being wrong. However it must be founded in a deep understanding of the problem we are seeking to solve.

Everyone thinks that their idea is the one worthy of most attention.

Try and get the organisation to fall in love with problems rather than solutions.

Everything is connected

People are working on the same things as us all over the world. We won’t solve things on our own. We are desperately inward looking. There will always be more talented people outside your organisation than within it – so lets seek them out. Collaboration is a central theme to innovation because of speed , connections, energy and the ability to fast track implementation.

The talent in our organisations is siloed. Our first task is to connect and leverage that talent and combine it with the creativity in our communities.

Learning from failure is the measure to obsess about

Nielsen research suggests that “about two out of every three products are destined to fail.” However this is rarely acknowledged and hardly ever promoted.

In the public sector , where projects take years rather than weeks, and pilots become mainstream services without any evaluation – things are worse.

Nothing fails. Everything is a success.

Failure is only bad if we are doomed to repeat it. Breaking our organisations out of cyclical failure is a huge challenge.

At Bromford as part of our Lab Planning we meet to talk about failure every single week. We tweak our processes to learn from it and limit it. The real learning is in our stalled concepts, not the one’s that have been successful.

Ultimately the message I tried to give was not to overthink things, keep a wide field of vision and try to think laterally.

In many ways I think an effective innovation approach is to encourage organisations to be more childlike. As kids we learned through exploration and experimentation, not through people talking at us from a PowerPoint presentation at a team meeting.

Our organisations need to relearn how to learn, rapidly and efficiently.

Learning and innovation go hand in hand, but learning always comes first.

This is a brief extract of the original talk – the full presentation can be seen here