David Matheson - SmartOrg, Inc.

The Courage to Act - David Matheson

After a successful project with a customer, I went out to dinner with the CEO and another officer, who I will call Ann. These two remarkable women had created a productive, fun, and high-performance culture that delivers business results and get awards for "best place to work." After a fine dinner swapping personal stories, as Mary and I walk across the parking lot, I say "We should probably coordinate some business briefly, how do you want to handle some of the next steps from the meeting?"

Then the bombshell: "There is something you need to know about my personal situation: I'll be leaving the company in a few weeks. We will need to work out someone else for you to liaise with." I am a bit shocked, and the implications for the company and for our business relationship with it whirl through my head. She continues, "I have been working flat out since I was about 15. I promised myself long ago that I would change gears at 50.

My birthday is two weeks away, and I am going to do it. My father is in poor health and I want to spend time with him. I have a major trip planned with my (grown) children. After that I will probably work at the company about a day a week, and will probably still be involved with SmartOrg. I want to slow down while I can still play a little, rather than slowing down because I have to."

A bit relieved that there will be some continuity in our business relationships, I realize that the step Mary is taking takes a lot of courage. Courage we all wish we had. A kind of courage that helps build high-performance teams. A kind of courage about creating the future you want to live in. A kind of courage I had seen before.

Several years ago, I was leading a large program at AT&T as part of a consulting organization. We were having significant difficulties with the political situation and a dysfunctional culture. The venerable AT&T later pretty much went out of business and was bought by SBC who retained the brand. The company died in part because its culture was so toxic it prevented them from capturing the opportunities all around them. Anyone who wanted to do something a little new, a little innovative, was crushed--not through any specific action, but through a death by a thousand cuts imposed by the culture and status quo.

In my little corner of AT&T, we were working as consultants on a program to improve innovation. It called for business and R&D leadership working together to define the sorts of opportunities they wanted to pursue. The program was not going well. The situation was highly political, there was lots of conflict, and we were being slowly crushed by the culture.

The one unqualified success was a particular project: it was strongly supported, being executed well, and delivering real results. It was a complex project, with about twenty people working on a strategy in a situation of high conflict.

One the consultant who was leading the project, Bob, an extremely competent man in his 50's or 60's, comes to me and says "I am quitting, leaving in a few weeks." I am shocked. He continues, "I have always wanted to teach high school, and I have an opportunity to be a math teacher. My kids are grown, my mortgage is paid, and I am ready to give back to the community."

I was prepared for the worst. In this highly political environment, I was sure people at AT&T would jump on the moment of weakness and things would go from bad to worse. It was only an accident of fate that had resulting in Bob reporting to me, he was clearly more experienced than I and the single most important member of the team (myself included). I was not sure the project, or even program could survive without Bob.

Happily, I was completely wrong.

When Bob announced his intention to the project team, there was a moment of shock and surprise. Then Joe, the head guy on the AT&T side walked up to him and said "Congratulations. It is a rare moment when someone has such an opportunity and is willing to take it." You could see that he hoped to have the courage to do the same someday. Indeed, everyone's response at the meeting was admiration. Joe turned to me and said, "This is going to be a bit complicated for you and for the project, but we will work with you to support Bob's leaving and dealing with the staffing change." From the expressions around the table, you could see that he spoke for everyone, not because of his position of authority, but because they all agreed with him.

Everyone rallied around making it work, and the project continued on its success trajectory. In the middle of a high-conflict political environment and a in company where dysfunctional behavior was the norm, Bob had somehow created a pocket of effective culture and a high-performance team.

I have kept in touch with Bob, and he continues to inspire me and others through his actions and the courage of his convictions. He offered this advice which continues to stick with me: "Don't let what you cannot do get in the way of doing what you can." He consistently treated people with respect, considered options, figured out which was best, and acted. He was open and honest. He had conviction and courage.

In organizations, some choices are hard because of conflict. In organizations or personal situations some choices are hard becuase it is difficult to figure out what is the right thing. But the hardest choices are often fundamentally personal: having the courage to do what you know is right.

In having the courage to take these decisions you know are right, not only do you make good choices, but you effect the people around you, enabling them to make good choices as well. Modeling thoughtful and respectful deliberation, considering the options, selecting one for the right reasons and having the courage to act leaves a precious cultural legacy. Bob did it in the most difficult of environments. Mary contributed to it for her whole company.

I wish Ann well on her new adventures, confident that things will work out fine for her, for the company, and for our business relationship.

Open Innovation and the Hype Cycle - David Matheson

At a recent major convention on innovation, I got into a discussion with Henry Chesbrough, author of "Open Innovation" (http://www.amazon.com/Open-Innovation-Imperative-Profiting-Technology/dp/1578518377) and general innovation rock star (http://www.haas.berkeley.edu/faculty/chesbrough.html). We discussed management fads and recognizing how the idea of Open Innovation echoes an older fad on Benchmarking...both involve getting ideas from other companies. Open Innovation is hot now; Benchmarking is a mature technique with well understood strengths and limitations. While requests for Henry to speak are clearly rising rapidly now, where is Open Innovation as a management fad?

We borrowed Gartner's Hype Cycle model to make some comparisons (http://gsb.haifa.ac.il/~sheizaf/ecommerce/GartnerHypeCycle.html). This model is used to describe IT approaches, like business intelligence and customer relationship management. It says that each technology goes through several distinct phases, here in abbreviated form:

1. Early Adoption, who try out the technology and prove that it can really do something. These early adopters them become the poster children and get lots of publicity. This leads to...

2. Maximum Hype, in which the fad seems to be everywhere and can solve virtually all problems. Press coverage is intense, consultants pop out of nowhere, and everyone is talking about it. This leads to...

3. Unmet Expectations, in which people trying out the technology find it fails to meet all the claims during the period of maximum hype. Disillusionment and bad press crush the technology into the background. This leads to...

4. Maturation, in which people quietly find the strengths and limitations of the technology and use it to solve real business problems. It works its way into the way things are done.

Henry and I both agreed that Open Innovation was in the earlier phases. He leaned more towards early adoption, "Open Innovation is just at its beginning phase." I thought it was approaching the period of maximum hype, "It is hard to imagine more press coverage and accolades." P&G is definitely an early adopter, and has been on the speaking circuit for a while now. It seems to me that their success is going to limit the success of later consumer products companies that try the techique. P&G is already prospecting the world for great consumer products ideas using Open Innovation, and has undoubtedly found many of the good ideas. Perhaps the vein has been mined.

Henry was less sure. But he pointed out that P&G's version of Open Innovation is only one of three parts: they focus on getting ideas from other companies. Nobody has really mastered taking one's own ideas and putting them out to others, nor have true markets really emerged for the exchange of ideas. Both of these aspects of Open Innovation remain in the Early Adoption phase.

Uncluttering Metrics - David Matheson

I was talking to Ron Howard, a pioneer in Decision Analysis, about value.

How do you know what you want? Usually there are some high-level constraints, such as ethical and legal behavior, then many possibilities.

In many business contexts the answers are relatively straightforward: more money, sooner, and at less risk. But often discussions get muddied by many objectives: strategic fit, difficulty, market potential, budget, etc.

Dr. Howard offered a crucial distinction about value metrics: direct vs. indirect value. Direct values are those you trade off directly, indirect values are proxies for things you really care about.

Consider purchasing a car. You might have objectives around total cost of ownership and MPG. But MPG is simply part of total cost of ownership--based on fuel consumption and prices, this translates into dollars quickly. So MPG is an indirect value: you could compute whether or not it is desirable.

However, MPG today conveys bragging rights. This is distinct from the economics of MPG. So the MPG metric may be obscuring a direct value: green pride. You have to make a value judgement about how much you are willing to pay in total cost of ownership to achieve green pride. Nobody can tell you the right answer, as this is a value judgement.

Dr. Howard's advice is to always look for the direct values and focus your decision making on those. Get one or two clear direct value measures, and understand your tradeoffs among these. What are you willing to pay for green pride bragging rights?

This advice has always held me in good stead. I have seen very complex situations and choices literally littered with metrics and infested with confusion become crystal clear by identifying the real direct values and tradeoffs among them. From decisions on whether to run the Tennesee Valley Authority River system for Power Production or Recreation, to decisions about which house to buy, to portfolio prioritization in R&D, getting clear about the direct values is often a key to turning confusion into insight.

In business, it usually boils down to money. Even the three I mentioned at the begining: more money, sooner and at less risk can usually be reduced.

Money sooner versus later is usually an indirect value, based on discounting at the cost of capital. The direct value for money sooner versus later usually has to do with meeting street expectations, not money per se. Usually this is not really an issue.

Often "risk" is a stand in for "we have made assumptions nobody believes", and is not really a value at all, but rather a symptom of poor information.

Treating information as uncertain and modeling uncertainty in an economic case goes a long way into dealing with risk. When risk remains part of the decision, then it often remains as a direct value: greed versus fear.