Your business needs it, you ask employees for it, you incent them to deliver it, but in the end, do you really get it? I’m talking about innovation. When the Conference Board queried CEOs in 2018, it found that one of their most important concerns was “creating new business models to adapt to disruptive technologies.”
Unfortunately, many companies, even those with innovative histories, struggle to keep up with the torrid pace of change in their industries. This past fall, for instance, Starbucks, an organization widely regarded as nimble and forward-looking, announced a restructuring, with CEO Kevin Johnson emphasizing the need to “increase the velocity of innovation.” Established businesses have trouble innovating for many reasons, including siloed structures, fuzzy strategies, inadequate talent, and not enough funding. “Softer” factors also come into play, for example, a team or corporate culture that fails to give employees the time and space they need to think creatively.
How do effective leaders overcome these hurdles? I’ve spent the past decade studying creative bosses, such as filmmaker George Lucas, hedge fund guru Julian Robertson, and fashion magnate Ralph Lauren, who not only innovate but also create work environments in which everyone else does too. When I advise leaders on how to bring some of the same behavior into their organizations, I emphasize that it’s OK to start small. And one of the first tools I recommend is a group exercise I call the “change notebook.”
Here’s how it works: At your next team meeting, pull out a pad of paper, turn to an empty page, and divide it into three columns. Each one corresponds to a question relevant for innovation:
- “What is the existing practice/the recipe for success/the way we’ve always done it at our organization?” Jot your thoughts down in the left-hand column, including the key beliefs or assumptions underlying the practice. Then look critically at each of them and ask yourself if any are on the verge of becoming anachronistic or obsolete.
- “What market shifts, external forces, or technologies might threaten the elements of our operational status quo?” List these in the middle column.
- “What can we do about these impending disruptions you’ve uncovered?” For each one, use the right-hand column to note some preemptive action you could take. Sometimes you’ll want to tweak an existing practice to render it “disruption-proof.” Other times you’ll need to toss it out and start from scratch.
When a team at one of my client companies, a midsize insurer specializing in the automobile market, ran through this exercise, employees identified a number of operational “sacred cows” — practices like designing policy parameters based on past experience, selling to customers through independent agents, subcontracting with insurance adjusters to work with customers after an incident, and putting premiums into secure investment options. Threats to the business noted by the team included self-driving cars, the growth of Uber-type services, the rise of larger insurance companies offering “one-stop shopping,” the digital customization of policies for customers, a volatile investing climate, and the company’s increased vulnerability to bad publicity on social media.
Brainstorming actions to take, executives came up with a range of options, including studying self-driving cars and their implications more closely, creating new products and services for gig-economy workers, seeking out ways to tighten relationships with existing customers, scouring their network of independent brokerages for digital innovations they might exploit, and reevaluating the company’s investment portfolio for its resilience in the face of volatility. Whether or not all of these ongoing initiatives succeed, the exercise spurred team members to break out of entrenched mindsets, leading to far more innovative results than if they had remained passive.
As you experiment with the change notebook, you’ll find that your team members become progressively more comfortable exploring new ideas, including those that conflict with the status quo, and taking action to deal with looming change before it catches them unawares. Don’t just do the exercise once and forget it; make it a regular part of your team’s workflow. Devote 15 minutes to it at a weekly team meeting, filling in a new page of the notebook each week. Remind yourselves of potential disruptions you’ve identified in the past, and then work on spotting new ones.
Over time your team will gain more facility in the exercise. Due to the structured nature of these conversations, change will come to seem less chaotic and scary, and team members will become accustomed to talking through disagreements and tough issues. If my experience consulting with teams is any indication, you’ll also get group members in the habit of pulling themselves away from daily concerns to focus on the big picture. You’ll help them internalize the notion that change, not stasis or stability, is a fundamental quality of business; eventually, this sensibility will color everything they do.
It’s easy for teams and organizations to fall into a pattern of reacting to change. But why can’t you be the aggressive, proactive ones? You can. Follow the example of the world’s greatest bosses, and take an important step toward instilling a culture of creativity, growth, openness, and innovation that your team or organization so desperately needs.
By Sidney Filkenstein