Building New Strategies with Lessons of the Past

At last month’s Cannes Lions festival, I had the privilege of participating in a session with advertising legend Chuck Porter on “building new strategies for creative excellence.”  The session was organized by the Berlin School of Creative Leadership around the contrast between strategic insights drawn from the successful creative work of his agency, Crispin Porter + Bogusky, and more orthodox strategic approaches associated with Harvard Business School Professor Michael E. Porter (no relation).  In preparation, my Berlin School colleague, Professor Paul Verdin, and I had drafted a White Paper on the topic.

The session and paper yielded several conclusions about new priorities for building strategy for creative excellence.  For example, while acknowledging the greater need for flexibility and speed in decision-making today, we identified the persisting importance of making adaptive commitments to brand values and strategic priorities.  Likewise, we identified other crucial principles: serving communities of participation, building trust through storytelling, and finally recognizing accumulative value creation rather than pursuing competitive advantage for strategic success.  Overall, we proposed a fundamental shift from the traditional, largely adversarial orientation focused on competitors to an emphasis on value creation through the engagement of customers.

In doing so, the White Paper picked up on several currents of thought about the evolution of strategy.  Customer-centricity, involving better understanding and engagement of customers as well as enhancing capabilities for serving customers, is one such stream.  Another is the transformation of traditional value chain and scale economies by digital technologies and an information economy whose creation, distribution, and transaction costs have an entirely different structure.  Perhaps best-known, to use the title of Rita Gunther McGrath’s 2013 book, is “the end of competitive advantage.”  Rather than achieving a long-term, stable and sustainable market position in a well-defined industry, following Michael Porter, the new world of strategy is marked by developing a portfolio of transient advantages able to capture shifting “connections between customers and solutions.”

At same time as the Cannes festival, another debate around innovation and disruption began roiling.  Jill Lepore, a professor of history at Harvard (in the Faculty of Arts and Science, not Business School), published a withering piece on the contemporary “gospel of innovation” in The New Yorker.  “The Disruption Machine” took on the prevailing model of disruptive innovation associated with Clayton Christensen, another Harvard Business School faculty member.  His theory contends that while an incumbent firm seeks to maintain its market advantage through sustaining, or incremental, technological innovations, it is often overtaken by new entrants whose disruptive innovations, typically offered at lower-cost and with lower-performing technologies, end up remaking the market and leading to the failure of the incumbent firm.  Lepore alleged the theory, which she extracted primarily from Christensen’s groundbreaking 1997 The Innovator’s Dilemma, mistakenly explained the emergence of new technologies and the dynamics of firms.  In doing so, she also personalized the critique by questioning the integrity of his research and his claims about the theory’s ability to predict market failures.  In a Bloomberg BusinessWeek interview, Christensen responded briefly and quizzically both about the personal nature of the attack and the lack of actual difference in their questioning of innovation.

Much commentary and side-taking has ensued.   Many pieces noted how “disruption,” in particular, had become an overused shorthand for innovation-driven (some would say, -fixated) entrepreneurs and businesses.  On Vox.com, for instance, Timothy B. Lee’s post was tellingly titled, “Disruption is a dumb buzzword.  It’s also an important concept.”  Kevin Roose similarly wrote on nymag.com that, “for actual disruption to work best,‘disruption’ has got to go.”   Some comments took on the larger state of innovation in both business and management studies.  In the Financial Times, Andrew Hill thus made the case for a more measured use of the theory of disruption, citing its relevance to analyzing corporate failures like Kodak and Blackberry. 

While Christensen has understandably been at the heart of many of these discussions, Michael Porter’s place has also been important.  On Forbes.com, Stephen Denning wrote that Lepore had been “the assistant to the assistant of Porter” and he then cast her attack in terms of the conflicting views of Porter and Christensen.  Specifically, this meant distinguishing the strategic goals of maximizing shareholder value and creating and maintaining customers.  The recent imbroglio around disruption is a “symptom,” in Denning’s word, of a more far-reaching debate around core assumptions of contemporary management and business.

In fact, among the most important lessons of the Lepore-Christensen exchange seem precisely the value of reflecting on and wrestling with one’s own guiding principles and assumptions in business leadership.  That lesson was also a basis of the Porter vs. Porter White Paper and Cannes session.  Such questioning can include:

1. Language

Too often, as with “disruption,” we use or overuse language without fuller explanation or understanding.  Sometimes context is lacking.  For those in creative and marketing communications, for instance, Jean-Marie Dru, now the Chairman of the TBWA Worldwide advertising agency, developed the distinct concept and specific creative methodology of “disruption” at the same time as Christensen in the mid-1990s.  More generally, as I wrote in a recent post, we don’t take adequate care in our everyday usage of key words like innovation and creativity to ensure clear and effective communication of their meaning in given situations.

2.  Assumptions and Contexts

If the language around disruption or innovation would benefit from greater care and precision of usage, the assumptions underpinning that language can likewise have greater impact when more fully understood.  This is not to suggest, of course, that any discussion of innovation should revert to exploring the finer points of Christensen’s (or Porter’s) research.  It is, however, to posit the value of stepping back and assessing the larger ideas behind, or wider implications of, specific potential decisions, actions or strategies.  Some of the best commentaries on Lepore and Christensen, like John Hagel’s, are illuminating exactly because they analyze seemingly familiar ideas more acutely and pose bigger questions.

3. Beyond Prediction

One of Lepore’s major critiques in “The Disruption Machine” is how poorly Christensen’s model predicts business success or failure due to disruptive innovation.  Similarly, in the Cannes session, Chuck Porter observed how our White Paper about his agency’s creative work amounted to “backfilling” explanations for earlier strategic and creative work that may not be practically useful going forward.  Any prediction or forecasting for an increasingly uncertain future is obviously challenging.  Yet predicting the future is not the only standard or purpose for analyzing and modeling the past.  Even more, as Lepore herself allows (in quoting a recent New York Times report on innovation), “disruption is a predictable pattern across many industries” – patterns being a matter of deeper understanding and far different from concrete predictions about future performance at specific firms.

4. Models and Theories – and Learning

The distinction is essential.  As an educator who uses historical cases and models, my priority is often to connect particular examples to wider patterns.  However, the purpose in doing so is not the connections themselves but to help build individuals’ capacities for effective analysis and action.  Those capacities are enabled by learning multiple examples and experiences, models and patterns, and developing the discernment and agility to use them, as appropriate, to make sense of different situations and contexts.  Models and theories, like that of disruptive innovation, are always only potential means for conducting analyses.  Rather than ends in themselves, we should look to them to help us improve our thinking, sharpen frames of reference, and ultimately serve as aids to better understanding, decisions, and problem-solving. 

Saying 'Innovation' or 'Creativity' Is Not Enough

“What’s the opposite of innovation?,” the joke begins.  A tart punchline quickly follows: “Innovation consultants.”   

Since I teach, coach and sometimes consult on innovation and creative leadership, that cynical joke gives me pause.  Consultants of all kinds are easy marks, of course, whether they are from well-known global firms or one-person shops.  But it is innovation, as an idea and, increasingly, the basis of a cottage industry for consulting, advising, coaching and even counseling, that is the real target here.

Isn’t innovation good, though?, we ask.  Doesn’t thinking, designing, building and leading for innovation enable firms of all kinds to create and capture value?  Doesn’t imaginative collaboration, teaming, and organizing lead to breakthroughs that can transform businesses, industries and even markets?  Doesn’t innovation ultimately benefit individuals by encouraging and nurturing self-awareness, empathy, courage, and growth – human values that help contribute to personal fulfillment?

All true.  Yet that very sweep and sprawl of meanings is part of the problem.  Innovation is everywhere, from social and political agendas and corporate mission and vision statements to strategic positioning and brand marketing priorities to team charters and individual performance goals.  Likewise, creativity, often in adjectival form, has become a necessary qualifier for nearly all aspects of management and operations: leadership, strategy, talent management, organizational design, customer or client relationships, collaboration, and teamwork.  Even creative accounting has become a worthy aspiration (just not “too” creative…).

The expanded usage, to be sure, reflects some far-reaching and very real economic and historical shifts that have recently foregrounded aspects of creativity and innovation for individuals, firms and larger economies.  I myself often assert that “creativity is the new normal” to underscore the unprecedented opportunities, even necessities, facing businesses in a world where technology is transforming old and new industries alike.  My question here is whether the words themselves, asked to say so much in their varied and continual usage, increasingly end up saying little or nothing at all. 

There is no shortage of models, frameworks and typologies attempting to break out and define more precise and different meanings.  Classic distinctions of “innovation,” many well-drawn by some of our most astute observers and analysts of business and management, tend to delve deeply into specific areas.  We might think here of Clayton Christensen on disruptive innovation, Gary Hamel on management innovation, and Vijay Govindarajan on reverse innovation.  And so many other qualifiers of the word have become commonplace: incremental, radical, architectural, modular, technological, knowledge, product, process and so on.  Much more typically, though, both “innovation” and “creativity” are used generically by firms themselves, consultancies, the popular and business press, the blogosphere, and even some academic research to burnish a diverse but finally vague range of insights, tools and management practices.

Having an excess of overlapping and alternative tools and models is fine, of course, for leaders on the ground who use them to gain greater insights about, or to address directly, specific situations.  That assumes, however, a thorough familiarity with these different innovative approaches and how (or, more fundamentally, if) to apply them usefully to those specific situations.  Here we might return to the question of innovation consultants.  What is the precise form of expertise they offer?  Launching start-ups based on original ideas, developing new products or services for established firms, redesigning work processes, nurturing creative people or cultures, re-drawing business models?  Maybe all of those.  Or maybe none.  The challenge is finding the right fit of specific capabilities and experience from the growing constellation of offerings made using the same terms.

How did our usage of “innovation” and “creativity” spiral out of control?  From recent history, we might start looking in the 1980s-1990s.  The redefinition of creative work, industries and economies, began then in the UK and was furthered elsewhere by analysts like Richard Florida, who repositioned creativity as a driving force in the (re-)development of cities, societies and economies.  More generally at the same time, though hearkening back to the early 20^th century writings of Joseph Schumpeter, a doctrine of “innovation economics” emerged in the work of a diverse group of theorists and analysts to argue that knowledge, innovation and entrepreneurship are not outliers but essential to economic growth and productivity. 

Yet probably nothing has had as great an impact as the profound developments that have occurred in Silicon Valley (and the larger technology economy to which it has been central).  Combining a mythology of individual ingenuity, a culture of business entrepreneurship, and a demonstrated potential for world-changing invention, Silicon Valley has become a vital source for popular and corporate imaginings of creativity and innovation.  Even as the technologies produced there have transformed lives, societies and economies around the world, the thinking and language of openness, risk-taking, start-ups, and innovation has spread as far.

Amidst the concern that tech firms are in the midst of another financial bubble, with unjustifiably high market valuations potentially ready to burst, I see another Silicon Valley bubble in play.  It involves the inflation of certain ways of thinking and talking about innovation that originated in and around tech firms.  This language bubble, or what we might otherwise see as an internally-referencing echo chamber, grows through a continuing series of blogposts, websites, magazine articles, and books that largely re-package the same practices, policies and behaviors as being conducive to innovation and creativity.

What would Google do?, we ask.  A loose grouping of ideas and beliefs and leading practices have come increasingly to represent current thinking about how all organizations, regardless of industry or market, can best cultivate innovative and creative work.  Much of this is enormously positive, both fulfilling for people and productive for organizations.  In the process, the larger popular and practical discourse around Silicon Valley-style innovation has grown and grown.  One consequence is what Bill O’Connor, of Autodesk, calls “innovation pornography,” in which too many people become voyeurs, rapturously watching others innovate without doing so themselves.  Another is the myth that creativity and original thinking can solve any problem or develop an idea the world will eventually embrace. 

While I do believe fully in that problem-solving and even society-transforming potential, my point is that the generic superpower of creativity or innovation will not be the force to do so.  Rather, it is by understanding how creativity and innovation, even with all their inherent messiness, disorder, and indirectness, need specific situations and contexts in order to flourish and effect meaningful change.  Innovation and creativity, writ large and generic, are not strategic silver bullets.

A challenge I regularly pose to executives is to ask themselves “the follow-up question” about key words they use to characterize themselves or their firms.  So once they’ve identified their core values, for example, they need to probe more deeply what those values mean to them and the situations in which they’re working.  Trust, growth, inspiration, and purpose are all admirable values.  Yet they can mean very different things to different people and in different leadership situations.  What do those words mean to you, I ask, and why are they so important?  Innovation and creativity, I contend, warrant the same depth of reflection and elaboration.

To begin, you might ask yourself such questions as:

·      What are your benchmarks or examples when you speak of innovation? How relevant are they to your existing situation – and your people, culture, industry, market(s), and customers?  Even the most inspiring general cases of innovation – think of Edison’s light bulb, the Manhattan Project, or the pirates at Apple who developed the Macintosh – may have no relevance to the innovation that’s right for you, now.  Choose your examples, the stars that guide you, wisely and appropriately.

·      Going further, which examples of successful innovation and creative work outside of Silicon Valley (especially the usual suspects like Apple, Google, and Facebook) do you reference and seek to emulate?  While there’s much to admire, learn and adopt from the tech firms that have over the last two decades been so successful, their policies and practices may not be directly helpful to firms of various sizes across industries and at different stages of growth.  Instructive examples are everywhere.  To wit, I recently worked with the leader of a tech start-up whose breakthrough thinking emerged, counter-intuitively, from the practices of a century-old manufacturing firm.

·      And if you’re in an established firm, how many of your benchmarks come from start-ups?  Yes, you can and should likewise learn and draw from the approaches and actions of entrepreneurial start-ups, and elements of models like Eric Ries’ Lean Start-Up, but only if they’re applicable to and align with your own specific goals.

·      Is your entire organization, from people and performance metrics to strategic goals and resource allocation, guided by the same fuller understanding of innovation – that is, what you’re pursuing together, how, and why?  Managing the language of innovation requires both thoughtful consideration and development across organizations and ongoing effective communication.  The only leadership work harder than creating a collective vision for organizational innovation is sustaining the shared understanding and motivation that will enable its successful execution. 

·      Once you’ve developed your own fuller understanding of what you mean when you say innovation, ask if this is the innovation you and your team unit or firm really need.  All leaders need to forge the future and all organizations need to change.  The question is how best to do so.  Aligning specific kinds of innovation with individual organizational needs, capabilities and situations requires careful effort but is crucial.

This isn’t just an academic exercise.  Thoughtful leaders have long recognized the value of auditing their current innovation or creativity activities, needs and capabilities.  As time has passed and both words have been used more and more, it also seems increasingly useful to conduct an innovation and creativity language audit.  What do you mean when you say that innovation is a core value or a strategic priority?  What does specifying creative talent development mean for the shape and orientation of a HR processes or organizational learning?  More generally, how does innovation or creativity practically differentiate decisions, behaviors and results?

More than five decades ago, Theodore Levitt wrote “Creativity Is Not Enough,” one of the most famous articles in the history of marketing management.  Today, the words of his title arguably resonate in distinct ways.  The ubiquity of “innovation” and “creativity” in the language of business and management is threatening to empty them of meaning.  Increasingly, neither is sufficient to convey the vision, inspiration, newness, value, and strategy that drive a given leader, unit or firm.  

How do we change that?  One use at a time.  By doing the hard work of understanding and clarifying the newness, utility, value and change that we really envision and seek in specific situations.  Each of us needs to help take back the power of the words.  Next time you say or write “innovation” or “creativity,” pause.  How would you qualify those key words?  Or how else, beyond using placeholders, would you make your point?   Most simply, what do you really mean when you say and act on “innovation” or creativity” – and are you making that important meaning clear to others?