4 Fears that block creativity

David Kelley, Founder of Stanford's Hasso Plattner Institute of Design and the design and innovation consultancy, IDEO.

What are those four fears?

1. Fear of the messy unknown (as against all that nice, safe and comfortable that comes to your desk automatically) and of getting out and going to places where people don't know you. Reality is always messier than the prepackaged data that comes to your desk.
2. Fear of being judged. As you get older you're worried everybody's is going to judge you and make fun if you don't say exactly the right thing. It drives people to just remain silent or not take risks.
3. Fear of the first step. For the writer, it's the blank page. For the teacher, it's like the first day of school. That is really the hardest because once you start, you have momentum. It is so much easier to hang back and not take that first step.
4. Fear of letting go. Fear of losing control where people think they have to control every aspect of something. 

We take people through a process of small successes, one success after another. You have a little success, it's hard to get going, so you have a small success, and that feels good.

And then we hold their hands and we do another step and that feels good. And pretty soon when you've done this for a while, you get down to the end and you surprise yourself.

oh my God, look how creative that solution was that I came up with.We call this creative confidence. The famous psychologist at Stanford, Albert Bandura, calls it self-efficacy. This sense that you know how the world's put together and that you can do what you set out to do. 

So our deal is you're just building these muscles. These are tools that we give people and you're building a muscle. So it's not as easy, you have to get past your habit of thinking of yourself as not creative and thinking that this is hard.

But once you start having some successes, then it makes it real easy for you to keep going. It's sort of like you started to play the piano and everybody was saying boy, you can really play the piano well. Then that spurs you on to keep going even though it's a lot of mileage.

But my favorite is this news aggregator called "Pulse." These two students started out, they were in computer science and kind of reluctant to this go out and talk to people kind of thing.
But through the class, they were convinced to hang out in a coffee shop every day for about five weeks. And each time they talked to people, they got a better idea. And they kept releasing their product, and they kept going, and they eventually made "Pulse" which was the best-selling iPad app there was out there at the time.

Well sure. For example, one of the things you can do is you can just go online. And most companies now have forums where the customers collect. Where they talk about the company so you're just listening to what they say.One thing we encourage people to do is just call in, pretend you're a customer. Call in to your customer service line, see what that experience actually is. Because you'd be surprised how many senior executives haven't really experienced their own service in the way that a first-time customer does.
Sure. Fear of letting go, it starts with just acknowledging that I'm not going to have all the inputs. No matter how smart I might be, if the problem is a significant one, I can't control the solution from start to finish and so you have an open mind about this. And so one really powerful tool is open innovation schemes where you really ask the world for a solution.
At IDEO we have a open innovation platform we call Open IDEO. And we put these social innovation questions out into the world and 30,000 people from 170 different countries have helped us work on really tough social issues. And so yes, we have 600 people who we think are pretty smart, but we went to the world to look for answers. And so we're letting go of our own feeling, we're like OK, we got to solve this all ourselves.

And so in the article, we tell a story about Bonnie Simi who was then director of airport planning for JetBlue Airways. She's now head of HR for the company. But she wanted to wrestle with this problem in which they'd had a big flight delay. There had been a big storm at JFK, and it disrupted their flight service for six days.

And if you had too much fear of letting go, you'd try to solve the whole problem yourself, you'd try to be the hero. But that's not what she did. She brought 120 front-line employees together for a day and they wrote every problem on a Post-it and they filled a room with Post-its. And then she worked with teams throughout the company along the way. And so she gained her creative confidence by letting others help.

I want to move on to fear of the first step. I know that entrepreneurs talk a lot about low-cost experiments. But how might one do that in a big bureaucratic organization which typically requires lots of analysis and approvals before getting a new project or new idea off the ground? David, can you address that?

So what we ask them to do is to do their job. You're not going to endear yourself to the people in your company if you say no, I don't want to do it the way the company does it. I'm going to go off and do this other thing.
Instead we say, do your job, but also take these new skills that you've learned and try some experiments on your own. And then after you have a little success, we find that people will pay attention. And pretty soon they notice oh, that group's more creative, look what they're doing. And so by doing these kind of little experiments on the side, you can get the ball rolling.

Doug Dietz was a design engineer at GE who had worked on MRI machines. He decided that on his own he was going to go to the hospital and see what was going out with the machine and use these user-centered approaches that we had. And he was doing his regular job as well. But he really noticed that the children were having trouble dealing with this big machine.

And so he started designing ideas for ways to make it enjoyable. Like it was a Pirate ship and the kids would be more playful. And in the end, his way of looking at things really resonated and the whole company turned on a dime. He built these little quick prototypes and the company saw them, and the kids reacted to them, and the hospital reacted to it. And pretty soon it was a mainstream idea now, it wasn't just this one guy going off.

And because our approach is so human-centered, we find that it's really easy for people to adopt that point of view. So you're normally doing it a certain way, and you're doing it in a more human-centered way and people will react to that. And the individuals react, and then the whole organization will react. So mainly what we're talking about is you build some very low-cost prototype of what your big idea is in addition to your normal job.

So we've had great success with working for a car company and we're doing some kind of new interface. Instead of spending a lot of time making a new car or going through the process of doing something completely digital, we just put a camera in the front seat and drive around. And then we have a bunch of film and then we can edit that and make it work.

Or when we're doing prototypes of things for children's television network, apps for kids. Instead of doing a lot of digital work and having to use a lot of computer time, we will do things like take a big cardboard thing and cut out a shape that's the size of a real human and then we just put the camera on but we dance behind it. And then you can show it to the other people in the company and get them excited and say what you think about this? What if Elmo does this?
And there's so low investment in our kind of quick and dirty prototypes that you can do those on the side and then start building excitement around it. It's much easier than trying to convince the company that they should do things a different way. You win them over through the kind of success of the quick prototype. And that builds confidence in everybody that you know that what you're going to do is going to work.

TOM KELLEY: Well, Dave and I have been working on innovation for something like 30 years at IDEO. And so people might think that we have a slight bias on this subject. So maybe if I turn to a more objective third party source. In one of the recent IBM global surveys, they go around the world, interview 1,500 global CEOs. They asked the CEOs what was keeping them up at night and they talked a lot about complexity. And then in the summary of the findings they said that creativity was the single most important competency for organizations trying to navigate through that complexity. So this is not designers, this is not real self-identified creatives. This is the CEOs of public and private sector enterprises.
And there's actually a more recent survey from Adobe where they went out 5,000 people in five different countries and they asked them questions about creativity. And 80% said that unlocking creativity was important for economic growth. And I loved that they phrased it in that way, "unlocking creativity," Because you don't have to teach people creativity. It's there inside them, you just have to unlock it.
And so we think that anybody can gain creative competency. You just need the right kind of nudge, the right kind of spark. And so historically, David and his work at Stanford has been teaching designers in the product design program. But with this new product at the d.school, he's teaching non-designers.
See, there are graduate students from all seven schools-- the law school, the business school, the medical school. And so these are not self-identified creatives, and yet we found a way to unlock their creativity. And so it's possible to do with anybody and we think it's really important for economic growth in an organization, in a community, even in a nation.
ALISON BEARD: Well, that's a very hopeful message. Tom, David, thanks so much for your time today.
TOM KELLEY: It was a pleasure, thanks.
DAVID KELLEY: Thanks, Alison.
ALISON BEARD: That was Tom and David Kelley of IDEO. To read their December article "Reclaim Your Creative Confidence," go to hbr.org.

who killed Michael Porter

What Killed Michael Porter's Monitor Group? The One Force That Really Matters

Why go through the hassle of actually designing and making better products and services, and offering steadily more value to customers and society, when the firm could simply position its business so that structural barriers ensured endless above-average profits?

What killed the Monitor Group, the consulting firm co-founded by the legendary business guru, Michael Porter? What went wrong ? The answers to this questions are strange and troubling. We can find some of them in the work of consulting insider, Matthew Stewart, and his enlightening, but misleadingly-titled, book, The Management Myth (Norton, 2009).

In his book, Stewart tells how in 1969, when Michael Porter graduated from Harvard Business School and went across the river to get a PhD in Harvard’s Department of Economics, he learned that excess profits were real and persistent in some companies and industries, because of barriers to competition. To the public-spirited economists, the excess profits of these comfortable low-competition situations were a problem to be solved.

Porter saw that what was a problem for the economists was, from a certain business perspective, a solution to be enthusiastically pursued. It was even a silver bullet. An El Dorado of unending above-average profits. Why go through the hassle of actually designing and making better products and services, and offering steadily more value to customers and society, when the firm could simply position its business so that structural barriers ensured endless above-average profits?

In 1983, Porter co-founded his consulting company, the Monitor Group, that over the years generated hundreds of millions of dollars in fees from corporate clients (as well as from clients in the nonprofit sector), and also providing rich livelihoods for other large consulting firms, like McKinsey, Bain and BCG.

No basis in fact or logic

There was just one snag. What was the intellectual basis of this now vast enterprise of locating sustainable competitive advantage? As Stewart notes, it was “lacking any foundation in fact or logic.” Except where generated by government regulation, sustainable competitive advantage simply doesn’t exist.

Porter might have pursued sustainable business models. Or he might have pursued ways to achieve above-average profits. But sustainable above-average profits that can be deduced from the structure of the sector?

y.

Although Porter’s conceptual framework could help explain excess profits in retrospect, it was almost useless in predicting them in prospect.

The goal of strategy is to avoid competition?

How did all this happen? Porter began his publishing career in his March-April 1979 Harvard Business Review article, “How Competitive Forces Shape Strategy”, with a very strange sentence: “The essence of strategy is coping with competition.” Ignoring Peter Drucker’s foundational insight of 1973 that the only valid purpose of a business is to create a customer, Porter focused strategy on how to protect businesses from other business rivals. The goal of strategy, business and business education was to find a safe haven for businesses from the destructive forces of competition.

By defining strategy as a matter of defeating the competition, Porter envisaged business as a zero-sum game. As he says in his 1979 HBR article, “The state of competition in an industry depends on five basic forces… The collective strength of these forces determines the ultimate profit potential of an industry.” For Porter, the ultimate profit potential of an industry is a finite fixed amount: the only question is who is going to get which share of it.

What’s gone wrong here was Porter’s initial thought. The purpose of strategy—or business or business education—is not about coping with competition–i.e. a contest in which a winner is selected from among rivals. The purpose of business is to add value for customers and ultimately society.

Making profits without deserving them

In the theoretical landscape that Porter invented, all strategy worthy of the name involves avoiding competition and seeking out above-average profits protected by structural barriers. Strategy is all about figuring out how to secure excess profits without having to make a better product or deliver a better service.

It is a way of making more money than the merits of the product or service would suggest, or what those plain folks uncharitable to the ways of 20^th Century business might see as something akin to cheating. However for several decades, many companies were ready to set aside ethical or social concerns and pay large consulting fees trying to find the safe and highly profitable havens that Porter’s theory promised.

No competitive advantage is sustainable

The disastrous consequences of thinking that the purpose of strategy, business and business education is to defeat one’s business rivals rather than add value to customers has of course been aggravated by the epic shift in the power of marketplace from the seller to the buyer. In the studies of the oligopolistic firms of the 1950s on which Porter founded his theory, it appeared that structural barriers to competition were widespread, impermeable and more or less permanent.

Over the following half century, the winds of globalization and the Internet blew away most of these barriers, leaving the customers in charge of the marketplace. Except for a few areas, like health and defense where government regulation offers some protection, there are no longer any safe havens for business. National barriers collapsed. Knowledge became a commodity. New technology fueled spectacular innovation. Entry into existing markets was alarmingly easy. New products and new entrants abruptly redefined industries.

The “profit potential of an industry” turned out to be, not a fixed quantity with the only question of determining who would get which share, but rather a highly elastic concept, expanding dramatically at one moment or collapsing abruptly at another, with competitors and innovations coming out of nowhere. As Clayton Christensen demonstrated in industry after industry, disruptive innovation destroyed company after company that believed in its own sustainable competitive advantage.

The only safe place

The business reality of today is that the only safe place against the raging innovation is to join it. Instead of seeing business—and strategy and business education—as a matter of figuring out how to defeat one’s known rivals and protect oneself against competition through structural barriers, if a business is to survive, it must aim to add value to customers through continuous innovation and finding new ways of delighting its customers. Experimentation and innovation become an integral part of everything the organization does.

Firms like Apple [AAPL], Amazon [AMZN], Salesforce [CRM], Costco [COST], Whole Foods [WFM] and Zara [BMAD:ITX] are examples of prominent firms pursuing this approach. They have shifted the concept of the bottom line and the very purpose of the firm so that the whole organization focuses on delivering steadily more value to customers through innovation. Thus experimentation and innovation become an integral part of everything the company does. Companies with this mental model have shown a consistent ability to innovate and to disrupt their own businesses with innovation.

Thus what is striking about continuous innovation is that the approach is not only more innovative: it tends to make more money. The latter point is important to keep in mind. For all the hype about innovation, unless it ends up making more money for the firm, ultimately it isn’t likely to flourish. Making money isn’t the goal, but the result has to be there for sustainability.

Is continuous innovation sustainable? Firms like those I mentioned have been at it for one or more decades with extraordinary results. What’s interesting is that they are consistently disrupting others, rather than being disrupted themselves. Will they survive for 50 or 100 years? Time will tell. What we do see is that they are doing a lot better than firms pursuing shareholder value or focusing merely on defeating rivals.

Monitor had no place in the emerging world

In this world, Monitor’s value proposition of a supposed sustainable competitive advantage achieved by studying the numbers and the existing structure of the industry became increasingly implausible and irrelevant. Its consultants were not people with deep experience in understanding what customers might want or what is involved in actually making things or delivering services in particular industries or how to innovate and create new value.

They were part-time academics who promised to find business solutions just from studying the numbers. They had no idea how to build cars or make mobile phones or generate great software. They were numbers men looking for financial solutions to problems that required real-world answers.

The important question is not: why did Monitor go bankrupt? Rather, it is: how were they able to keep going with such an illusory product for so long? The answer is that Porter’s claim of sustainable competitive advantage, based on industry structure and the numbers, had massive psychological attractions for top management.

Porter’s theory thus played to the image of the CEO as a kind of superior being. As Stewart notes, “For all the strategy pioneers, strategy achieves its most perfect embodiment in the person at the top of management: the CEO. Embedded in strategic planning are the assumptions, first, that strategy is a decision-making sport involving the selection of markets and products; second, that the decisions are responsible for all of the value creation of a firm (or at least the “excess profits,” in Porter’s model); and, third, that the decider is the CEO. Strategy, says Porter, speaking for all the strategists, is thus ‘the ultimate act of choice.’ ‘The chief strategist of an organization has to be the leader— the CEO.”

Strategy leads to “the division of the world of management into two classes: “top management” and “middle management.” Top management takes responsibility for deciding on the mix of businesses a corporation ought to pursue and for judging the performance of business unit managers. Middle management is merely responsible for the execution of activities within specific lines of business.

The concept of strategy as it emerges defines the function of top management and distinguishes it from that of its social inferiors. That which is done at the top of an organizational structure is strategic management. Everything else is the menial task of operational management.

Two classes of management

Practitioners of strategy insist on this distinction between strategic management and lower-order operational management. Strategic (i.e. top) management is a complex, reflective, and cerebral activity that involves interpreting multidimensional matrices. Operational management, by contrast, requires merely the mechanical replication of market practices in order to match market returns. It is a form of action, suitable for capable but perhaps less intelligent types.

This picture of CEO-superdeciders helps justify their huge compensation and the congratulatory press coverage, and yet again, it also has little foundation in fact or logic. The strategy business thus lasted so long in part because it supports and advances the pretensions of the C-suite.

Porter’s strategy theory is to CEOs what ancient religions were to tribal chieftains. The ceremonies are ultimately about the divine right of the rulers to rule—a kind of covert form of political theory. Stewart cites Brian Quinn that it is “like a ritual rain dance. It has no effect on the weather that follows, but those who engage in it think that it does.”

The future of strategy consulting

Does strategy consulting have a future? When rightly conceived as the art of thinking through how companies can add value to customers–and ultimately society–through continuous innovation, strategy consulting has a bright future. The market is vast because most large firms are still 20^th Century hierarchical bureaucracies that are focused on “the dumbest idea in the world”: shareholder value. They are very weak at innovation.

Consultancies that can guide large firms to move into the world of continuous innovation in the 21^st Century have a bright future. To succeed in this field, however, consultants need to know something both about innovation and about the sectors in which they operate and the customers who populate them. Merely rejiggering the financials or flattering the CEO as the master strategist is not going to get the job done. Managers and consultants are going to have to get their hands dirty understanding what happens on the front lines where work gets done and where customers experience the firm’s products and services. To prosper, everyone has to become both more creative and more down-to-earth.

What has no future is strategy conceived as defeating rivals by finding a sustainable comparative advantage simply through studying the structure of the industry and juggling the numbers.

Since Monitor had no other arrow in its strategy quiver, it was doomed from the outset. Its embarrassing debacle marked the beginning of the end of the era of business metaphysics and the exposure of the most over-valued idea on the planet: sustainable competitive advantage.

Monitor was killed by the dominant force: the customer

Eventually even attractive illusions come to an end: people see through them. Ceremonial rain dances come to be viewed for what they are. The financial crisis of 2008 was a wake-up call that reminded even entrenched firms how vulnerable they were. Today, large firms have little interest in paying large fees to strategists to find sustainable competitive advantage just from studying the numbers.

Monitor eventually learned the hardest lesson of all: strategy, business and business education are not about pursuing the chimera of sustainable competitive advantage.

Monitor wasn’t killed by any of the five forces of competitive rivalry. Ultimately what killed Monitor was the fact that its customers were no longer willing to buy what Monitor was selling. Monitor was crushed by the single dominant force in today’s marketplace: the customer.