Outsourcing Institutional Innovation

Stephen DeAngelis

January 18, 2011

In a previous post about innovation, I discussed a number of innovation myths identified by Scott Berkun and presented in a slideshow entitled “Un-Managing” that was prepared by Tara Hunt. The fifth myth identified by Berkun was the belief that most people can’t be creative. Many creativity gurus believe that creativity is a matter of technique. Once people are taught techniques that permit them to view challenges from different perspectives, they are surprised how creative they can be. There are a number of “idea factories” and creativity freelancers who make a lot of money convincing companies that using the right techniques can generate a lot of good ideas [“In Pursuit of the Perfect Brainstorm,” by David Segal, New York Times, 16 December 2010]. One of those companies is called Jump Associates and it is the focus of Segal’s article. He writes:

“[In November 2010], in a small room on the fifth floor of a high-rise building in San Mateo, Calif., three men sat around a table, thinking. The place was wallpapered with Post-it notes, in a riot of colors, plus column after column of index cards pinned to foam boards. Some of the cards had phrases like ‘space maximizers’ or ‘stuff trackers’ written on them. Many had little three-dimensional ink drawings and titles, like ‘color-coded Tupperware horizontal stacker.’ It looked as if these guys had been locked in and told they couldn’t leave until they dreamed up 1,000 of the wackiest home-storage items they could imagine. Which was pretty much what happened. ‘We’re in our third month,’ said one of the men, Clynton Taylor, ‘so we’re at about the halfway point.’ This was a project room at Jump Associates, a company with 50 employees that comes up with ideas to solve what it calls ‘highly ambiguous problems.'”

Segal reports that all that thinking doesn’t come cheap. “You can hire Jump to think on your behalf, for somewhere between $200,000 to $500,000 a month, depending on the complexity and ambiguity of the question you need answered.” Based on an average cost of around $350,000/month, ideas Jumpsters are working on better be worth the over the $2 million the client is paying to get them. “Exactly what problem was being solved in the room, and which client asked Jump to solve it, the company wouldn’t say.” Segal reports that Jumpsters, as employees are called, are not quite so tight-lipped about past projects. He writes:

“Procter & Gamble asked Jump to study the future of water and what it portends for a company that makes water-dependent products like soap and laundry detergent. Mars, the candy maker, asked Jump to define the current meaning of ‘indulgence,’ on the theory that it now conjures pampering rather than stuffing your face. General Electric has retained Jump for at least 10 different projects. Jump’s work has elements of management consulting and a bit of design-firm draftsmanship, but its specialty is conceiving new businesses, and what it sells is really the art of innovation.”

Segal writes that Jump “is built on the premise that creative thinking is a kind of expertise.” You can either hire its in-house expertise to tackle problems or you can hire the company to teach your personnel to become experts (that costs bit a money as well — “$200,000 for a one-day session for 25 employees”). Segal claims that Jump’s business model was “pretty exotic” back in 1998, the year the company was founded, “but it isn’t today.” He explains:

“In the last decade, a quirky legion of idea peddlers has quietly invented what might be a new discipline and is certainly an expanding niche. How and why this happened is, naturally, a subject that everyone in the field theorizes about. What’s clear is that in recent years, much of corporate America has gone meta — it has started thinking about thinking. And all that thinking has led many executives to the same conclusion: We need help thinking. A few idea entrepreneurs, like Jump, Ideo and Kotter International, are companies with offices and payrolls. But many are solo practitioners, brains for hire who lecture at corporations or consult with them regularly. Each has a catechism and a theory about why good ideas can be so hard to come by and what can be done to remedy the situation.”

In a post entitled Better Hospital Management — Better Health Care, I noted that Kaiser Permanente had hired IDEO to help it think about how it could improve health care. In that post, I included a video clip (repeated below) of an ABC Nightline episode showing IDEO’s “deep dive” technique for thinking through a problem.

 

 

The big question raised by Segal’s article is: Why do companies filled with smart and talented employees need help thinking? He tries to explain:

“Eric Haseltine, who has worked for both Disney and the National Security Agency, draws on the findings of evolutionary psychologists to explain to corporations why they are often unable to see opportunities that are right in front of them. ‘Although we like to believe we know what is going on in our brains, we know almost nothing about what is going on inside them,’ he says. ‘We’re not only blind to certain things, but we’re blind to the fact that we’re blind to them.'”

That sounds remarkably similar to Donald Rumsfeld’s now famous remark, “There are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns — the ones we don’t know we don’t know.” My take on why companies can use help from outsiders is because outsiders bring with them new perspectives and new knowledge. The more varied the backgrounds of those brought in the better because it increases multi-discipline collaboration. Frans Johansson pointed out a number of years ago that Italy’s famous Medici family sparked the renaissance by gathering Europe’s greatest thinkers and artists together to exchange ideas. He called the result “The Medici Effect.” The Medici Effect is the ultimate payoff of interdisciplinary collaboration. Apparently Jump Associates believes in interdisciplinary collaboration as well. Segal explains:

“When I visited Jump Associates in San Mateo in early November, it was conducting a one-day boot camp, attended by a couple of dozen executives from the region. The morning session … was led by a handful of Jumpsters, most of whom were in their 30s. … Some of them were M.B.A.’s and former management consultants, but nearly everyone’s résumé had a polymathic twist. One Jumpster was a former U.S. forest ranger and Korean foreign-ministry staff member. Another had an undergraduate degree in civil engineering and a master’s in visual criticism.”

According to Segal, Jump Associates provides its workshop participants with a good background “about how ideas are born and nurtured, and why some great ideas die after just a few gulps of oxygen.” He continues:

“Like many of its competitors’, Jump’s core offering is an assortment of refinements to old-fashioned brainstorming. The analogy to weather built into that term is apt, it turns out, because Jump and others contend that without the right atmospheric mix, no brainstorming session will produce the cognitive version of lightning. Dev Patnaik, a sunny, kinetic co-founder and the chief executive of Jump, notes that even under ideal circumstances, traditional brainstorming can devolve into a kind of competitive idea tennis. You think of a new use for pencil. Then me. Then you. Then me. Somehow, the unstated goal is winning, however ill defined victory might seem, instead of ginning up virtuoso concepts. At Jump, they prefer to brainstorm with a variation of a technique pioneered in improv theater. A comic offers the first sentence of a story, which lurches into a (hopefully funny) tale, when someone else says, ‘Yes, and?’ then adds another sentence, which leads to another ‘Yes, and?’— and back and forth it goes. In the context of brainstorming, what was once a contest is transformed into a group exercise in storytelling. It has turned into a collaboration.”

That technique is fine if you want to expand on and refine views concerning a single concept or idea, but if you want to generate a large variety of ideas, other refined brainstorming techniques probably work better. I say “refined” brainstorming techniques because studies have shown that people brainstorming in isolation then coming together to discuss those ideas produce more and better ideas than teams trying to brainstorm together from the start. There are several reasons for this. First, of course, is fear. People fear that others will think their ideas are stupid so they don’t bring them up. A second impediment to brainstorming, however, is even more significant. People have difficulty holding on to more than one thought (which, in traditional brainstorming settings, they must wait to bring up when others are talking). This retards their ability to move on to other ideas. Individual brainstorming doesn’t suffer from this problem. People are simply able to move from idea to idea without having to wait. To learn more about brainstorming and techniques that can be used to overcome its shortcomings, read my post entitled Is America Undergoing a Creativity Crisis? Part 2.

 

As I have written before, another good way to generate good answers is to ask good questions. Segal agrees. He writes: “You often hear this from idea entrepreneurs: Don’t ask us for the answers. Let us help you frame the questions, so you can answer them yourself.” Segal goes on to explore the questions — “Why now? Why did innovation-mania take hold in the last decade or so?” He writes:

“One school of thought holds that corporations both rise and die faster than ever today, placing a premium on the speedy generation of ideas. The dot-com boom accelerated the process, [Vijay Govindarajan, a professor at Dartmouth’s Tuck School of Business], says. ‘In the late ’90s, people started to say strategy isn’t about stability, it’s about change,’ he says. Other ideas entrepreneurs offer a ‘great man’ theory, pointing to the enormous influence of Clayton M. Christensen, a Harvard Business School professor and an author of books including ‘The Innovator’s Dilemma’ and ‘Innovation and the General Manager.’ Christensen coined the term ‘disruptive innovation’ in 1992 to describe the kind of technological and marketing ideas that blindside established and seemingly well managed businesses. Think of Netflix, which reinvented the way videos are rented and crushed Blockbuster. Or Sears, a titan of retail for decades, which was poleaxed by discounters like Wal-Mart. Christensen has plenty of suggestions for avoiding the fate of the disruptees; for instance, he urges corporations to wall off a division that is built to think creatively and is small enough to be excited by small profits. But all of his prescriptions can be boiled down to three words: Innovate or die.”

The most interesting answer provided for the question — Why did innovation-mania take hold in the last decade or so? — was provided to Segal by Dev Patnaik, the co-founder and the chief executive of Jump. He claims it has to do with the changing role of management. Good managers used to be executives with access to data and a penchant for presenting it in a meaningful way. He now claims that software provides that function. Segal continues:

“The days when a manager at, say, the Gap could earn a bow just for knowing how many sweaters to ship to Seattle [are] over. ‘When that happens, what is the role of the manager?’ Patnaik asks. ‘Suddenly it’s about something else. Suddenly it’s about leadership, creativity, vision. Those are the differentiating things, right?’ Patnaik draws an analogy to painting, which for centuries was all about rendering reality as accurately as possible, until a new technology — photography — showed up, throwing all those brush-wielding artists into crisis. ‘Then painters said: “Well, wait, you can tell what is but you can’t tell me my impression of what is. Here’s how it looks to me.” … Or the Cubists who said, “You can’t capture what is going on from multiple angles.”‘ Technology forced painters to re-evaluate, which transformed their work. Something similar has happened in corporate America. As Patnaik puts it, ‘We’re in the abstract-expressionist era of management.'”

Segal notes that the best innovation factories are relatively small firms. Their success, however, has a number of larger consultancy firms eyeing them for acquisition. Segal writes, “Precisely how Jump’s business model could work in a management firm with a vastly larger payroll is unclear.” He goes on to describe a workshop he sat in on at Jump Associates concluded that it involved an “animated” and “slightly chaotic” form of brainstorming. He continues:

“The term [“brainstorming” was] popularized by Alex F. Osborn. In 1948, Osborn, the man who put the O in BBDO, the legendary advertising firm, wrote ‘Your Creative Power,’ a jaunty, history-filled book that argued that creativity was essentially a muscle that, with enough exercise, anyone could develop. Especially if that exercise happened in groups, like the ones he started organizing at BBDO in 1939. The key to these sessions, he stated, was creating an atmosphere in which judgment about the quality of any idea is suspended. If participants worry about criticism, they edit themselves, which undermines the process. ‘The crazier the idea, the better; it’s easier to tone down than to think up.'”

Segal claims that most “idea entrepreneurs” offer one form or another of “Osborn deluxe.” He explains:

“Govindarajan, the Dartmouth professor, presents companies with what he calls the three-box framework. In Box 1, he puts everything a company now does to manage and improve performance. Box 2 is labeled ‘selectively forgetting the past,’ his way of urging clients to avoid fighting competitors and following trends that are no longer relevant. Box 3 is strategic thinking about the future. ‘Companies spend all of their time in Box 1, and think they are doing strategy,’ he says. ‘But strategy is really about Box 2 and 3 — the challenge to create the future that will exist in 2020.’ He recommends to clients what he calls the 30-30 rule: 30 percent of the people who make strategic decisions should be 30 years old or younger. ‘The executives who’ve been there a long time, they grew up in Box 1,’ he says. ‘You need voices in the room that aren’t vested in the past.'”

Of course you can obtain “voices in the room that aren’t vested in past” by bringing in outsiders as well as by having younger people involved in the conversation. Part of the attraction of bringing in outsiders is entertainment. Although they might not see themselves as entertainers, creativity gurus wouldn’t stay in business if they were boring. Segal continues:

“Eric Haseltine, the entrepreneur who has married management consulting and evolutionary psychology, says he walks his clients through a series of exercises intended to demonstrate how little they know about their brains. One of his favorites is the ‘cocktail-party phenomenon,’ in which he asks participants to eavesdrop on a single conversation in a crowded room. It’s possible only if you manage to ignore every other sound. ‘Tuning in requires tuning out,’ he says, ‘but few people realize how much they are tuning out at any given moment so they can focus on whatever they are focusing on.’ Tuning out is adaptive, he says — it helped our hunter ancestors to focus on their prey and avoid starvation. But his job is to point out to clients how that adaptation can also limit their perspectives without them realizing it, and to offer them practical strategies to deal with these unconscious limitations.”

What Haseltine sees as an obstacle to innovation (i.e., tuning in and tuning out), Po Bronson and Ashley Merryman view as a vital trait. One of the things that characterizes truly creative people, they claim, is their ability to concentrate. Tests have shown that creative musicians have a way of turning off part of the brain that “reads incoming stimuli, sorting the stream for relevance.” Turning that portion of the brain off permits musicians to block out all distraction.” According to Bronson and Merryman, “They hit an extra gear of concentration, allowing them to work with the notes and create music spontaneously.” This ability to concentrate and formulate creative activity appears also to be true for dancers and athletes as well as musicians. [“The Creativity Crisis,” by Po Bronson and Ashley Merryman, Newsweek,10 July 2010] The point is: There is no single technique that can be taught that provides individuals with a specific, desired level of creativity. Bronson and Merryman agree that creativity is learnable; but they also note that certain people will always have advantages over others (just like tall basketball players have certain advantages over shorter ones). Idea factories and idea entrepreneurs do have a role to play. They awaken people to new possibilities and that is always an invigorating exercise.