FIVE
Leading the Self-Transforming Organization
Although Steve Jobs was famous for showing up on stage, casually dressed in a black turtleneck and jeans, to announce a radical new technology, his act wasn’t entirely original. Edwin Land, most famous for inventing the instant camera a generation before Jobs, also showed up at annual events casually dressed (for the era), next to a midcentury Saarinen table, to announce revolutionary technology.1 Jobs told interviewers that Land was “one of the great inventors of our time” and “a national treasure” and sought to imitate him, even down to the Saarinen-style table.2 But despite Land’s many inventions and his company’s success in attracting some of the world’s best scientists—Massachusetts Institute of Technology (MIT) and Harvard graduates who transformed the science of photography—the company still failed to leap into the digital future.
Although Polaroid, and its competitor Kodak, are often used as cautionary tales about the dangers of technology disruption, it wasn’t the technology that killed these companies. Kodak actually invented the first digital camera in 1975 and, in 1989, invented a digital single-lens reflex (SLR) camera similar to models available on the market today. But both times, executives shut the projects down, arguing in 1975 that “no one would ever want to look at their pictures on a television set” and, later, that the digital SLR would cannibalize their film sales.3 Similarly, just at the start of the digital-imaging revolution, Polaroid created some of the world’s leading digital-imaging capabilities. Had Polaroid commercialized the camera they created, it would have been best in class. But instead, the company decided to focus on the film business because it was so profitable, and so Polaroid put those capabilities on the shelf until it was too late.4
As highlighted by these iconic failures, technology was not the reason these organizations failed to transform. Instead, the real challenge was people—helping people believe enough to commit to a future different from the familiar and then persisting through the disillusionment that precedes any change. Although we all recognize these challenges intuitively, we need better tools to address the true limitations. In this book, we have shared a process and some tools designed to address these behavioral limitations—the incrementalism, habit, and fear—that hold us all back.
But we have also emphasized that sometimes, the most successful transformations begin small and end big: small-t transformations that could add up to a big-T transformation. In this approach, each small project represents a moment of transformation. Each successful project helps the organization self-correct from the dead-end tendency in all organizations—to become a calcified machine executing a routine—to what they need to become to survive in the future: a malleable team capable of capturing new opportunities. Thus, one of the key challenges will be to find the small-t opportunities that can add up to a big-T transformation. Sometimes, however, circumstances demand starting with a big-T transformation—a global transformation immediately. We would argue that the process still applies—creating a strategic narrative, breaking bottlenecks, and then designing the KPIs to create the future. Even then, you would be wise to take a data-first approach rather than announcing a grand transformation that will make it hard to pivot and change.
Regardless of your path on your transformation journey, we highlight some critical capabilities to help you on your way. Specifically we describe the roles of negative capability, inverted power, chaos pilots, accelerator skill sets, uncommon partners, results first, the three noes, and yea-sayers.
Negative Capability
Today we know Richard Feynman as one of the legends of physics, one of the fathers of quantum mechanics, and winner of the Nobel prize, in part for his work on the wobble of electrons in orbit. But when a much younger Feynman joined the faculty of Cornell after the end of World War II, he didn’t feel like the kind of scientist who would have such a significant impact on the direction of physics. Instead, he arrived physically and emotionally burnt out from the effort at Los Alamos to develop nuclear technologies, from the death of his wife, and from the task of creating new physics courses that had never been taught.
At the time he didn’t recognize his own exhaustion and instead criticized himself incessantly for his inability to do what many see as the most important job of a professor—research. In his biography, Feynman describes feeling terrible for his lack of productivity for what felt like years.5 Because he was in a new and emerging field, despite the lack of productivity, Feynman began to receive job offers from prestigious universities, as well as the Institute for Advanced Studies, the premier research institution for theoretical physics populated with legends like Einstein and von Neumann. But the offers only further compounded Feynman’s self-doubt since he knew how unproductive he was in research.
Finally, one day, after months of self-torture, Feynman decided that he would give up trying to do important research and just let himself follow his own curiosity. In the past he had always let himself explore how the world worked, even if it was already known. For example, he was curious about the flow of water out of a faucet and let himself calculate the underlying physics of how water narrows as it flows out of a faucet. Feynman decided he would forget about research and just let himself explore.
A few days later, Feynman was sitting in the dining hall at Cornell when someone took one of the dining hall plates and tossed it in the air. He recalls noticing that the plate wobbled in the air as it spun but that the Cornell medallion in the center of the plate spun faster than the wobble. Feynman decided to see if he could calculate the difference between the speeds and describe it with an equation and then, getting more curious, if he could calculate the underlying physics (mass, acceleration, etc.) behind it. Soon Feynman had it solved and ran to his department chair (and legendary physicist), Hans Bethe, and described his formula. Bethe congratulated him but said, “Feynman, that’s pretty interesting, but what’s the importance of it?”
Feynman defiantly replied, “Hah! … There’s no importance whatsoever. I’m just doing it for the fun of it.” Looking back on that moment, Feynman recalls: “His reaction didn’t discourage me; I had made up my mind I was going to enjoy physics and do whatever I liked.” Feynman continued to work on the wobbles, which he described as play, and effortless, but totally unimportant, except that one insight led to another; those connections led to how electrons move in orbit and to key ideas in thermodynamics and quantum dynamics and eventually straight into the ideas for which he won the Nobel Prize. As Feynman later stated, “The diagrams and the whole business that I got the Nobel Prize for came from that piddling around with the wobbling plate.”
Feynman’s willingness to suspend judgement about the end result and instead entertain an idea to see where it leads illustrates an important capability for innovation and transformation: negative capability. The term negative capability was coined by the romantic poet John Keats, when he was describing writers like Shakespeare or other people “capable of being in uncertainties, mysteries, doubts, without any irritable reaching after fact & reason.”6 He was describing the capability to accept not having the answer immediately, but to explore how something may evolve.
In the modern context, negative capability could be thought of as the ability to be comfortable with uncertainty, even to entertain it, rather than to become so anxious by its presence that you have to prematurely race to a potentially more certain, but more likely suboptimal, conclusion. To be a visionary—to take giant leaps—you need to develop this negative capability. Whereas many people cannot stand the fuzziness of uncertainty, leaders of innovation and transformation frequently demonstrate negative capabilities. The negative capabilities facilitate the exploration of new terrain and the discovery of the adjacent possible.7
Inverted Power
Most of the time when we teach transformation or innovation inside established companies, people dismiss the idea as impossible unless it comes from the CEO. (Even in profitable, successful companies like IBM, Amazon, Apple, 3M, Intuit, ING, and Mastercard, people dismiss innovative transformation as impossible.) When Kyle started the innovation transformation at Lowe’s, he was about as low power as you can imagine: a junior manager in the international research group. In other words, he started at the bottom of the pecking order.
Despite his lowly status, Kyle chose to see if he could ignite a transformation from within. Truthfully, he was helped at different points by leaders inside Lowe’s—people able to envision possibilities and with the negative capability to endure the uncertainty while it emerged. But it wasn’t an easy path at all. Kyle was challenged by skeptics inside and outside the company. During these periods, Kyle felt about one inch tall. Yet there were times when other leaders supported him and said things like, “This is exactly the kind of thing we need to be doing to transform this company.”
Don’t assume you have to be high power to start a transformation in your company. Many of the other transformations we have worked on have started at the lower ranks. Of course, if you start from the bottom, a transformation will take time. You will still need to seek support as high up in the organization as possible—we aren’t saying you can do it alone. But inverted power—the power of leading from the bottom up—does work. Moreover, whether you are leading from the bottom or the top, it will still be difficult. A transformation challenges many of the behavioral tendencies that hold us back, and there is almost always resistance. This resistance will likely be greater the first time you start to effect a change. Like an old piece of machinery being roused from the field, where it has rusted for decades, the organization has to start reusing muscles it has not exercised for decades. But it becomes easier. At Lowe’s, the AR and VR project was orders of magnitude harder to get started than were the later projects, like the exosuits.
Finally, don’t assume that you need to have a massive budget. When Kyle started at Lowe’s, he had a very small budget. You could begin with relatively little funding—it costs less than you think for stories, comics, applied neuroscience or other research techniques, and even technology to start building. Depending on what you already have on hand or what you can beg, borrow, or steal, you can start working right away. Be scrappy. The lower the cost, the lower the expectations for returns and the greater the glory for the results you do show.
Chaos Pilots
In 1991, Uffe Elbæk took out a $100,000 personal loan and opened a most unusual business school. To most lenders, the school would seem a very risky investment. Elbæk’s previous experience had been the creation of the Frontrunners program, a Danish social experiment to counsel problem children. As part of his counseling work, Elbæk convinced the children to become street performers, and in the process, he created a transformative experience: instead of being looked down on as dropouts, the children were applauded for their performances and had their self-confidence restored. Eventually, Elbæk’s program expanded to reach 250 troubled youth and then transformed into Aarhus Festival, Scandinavia’s largest annual cultural program. While creating the program, Elbæk learned the skills to creatively navigate thorny, uncertain problems, a skill set he believed was urgently needed by the larger business world facing an increasingly turbulent environment. With the vision to teach the business world the skills to navigate uncertain problems, he founded Kaospilot, a hybrid of design school, business school, and personal development program. Although today Elbæk has moved on into politics, Kaospilot continues, led by Christer Windeløv-Lidzélius. The school has been so popular that it has spread across Scandinavia and the rest of Europe.8
In a recent TEDx talk, Windeløv-Lidzélius and David Storkholm describe their vision of Kaospilot students as embodying three characteristics: (1) the willingness to meet ideas, questions, and people openly and creatively; (2) the capability to work in teams with persistence, productivity, and passion; and (3) the capability to deliver results that have a positive impact on the team, the target group, and the greater community. To illustrate, Storkholm tells the story of a group of five female students who went to Sarajevo, Bosnia, and Herzegovina, shortly after the devastating civil war, to study urban development. When the students arrived, they discovered a depressed city from which talent had fled and where the remaining people felt they had little voice.
The Kaospilot team came up with a project—they invited six hundred young people to fill a 5,000-square-foot canvas with their dreams for Sarajevo. The team then wrapped the canvas around the historic youth center, creating a visual image of the hopes of the youth for their city. Later, the students took the artwork to Oslo, Norway, where designers transformed it into products—T-shirts, handbags, posters, etc.—which were then sold and the proceeds taken back to renovate the very same historic youth center. Storkholm emphasizes that the project produced results for the students (they found a creative way to study urban development), the target group (the youth felt that their voices had been heard), and the community (it gained renewed hope and funds to renovate).9
Although the Kaospilot school doesn’t focus exclusively on transformation, the term chaos pilot is a perfect label for the kinds of people we are looking for when building a team. Chaos pilots are people who can creatively lead a project through uncertainty. They have negative capability, as we discussed, but they have other critical skills as well, such as how to structure chaos and take action regardless. But how do you find chaos pilots to join you? Besides the three characteristics Windeløv-Lidzélius and Storkholm described (openness to change, persistent teamwork, broad results), chaos pilots also care more about behavior change than about climbing the ladder or getting a star on their charts. They are more willing to be the nail that stands out or to ask a challenging question. Although it can sound romantic to be such a person, and many people believe they want to be so, being a chaos pilot is hard—you are working on projects that are ambiguous, and you are frequently getting beat up in the process. People who aren’t capable of being chaos pilots quickly melt down.
Finding chaos pilots to join you can be challenging and is probably best done through observation and experimentation. Frankly, few people are born chaos pilots—most of us grow into the role. So the challenge is to find the people who can grow into the role and then to coach them. But there are a few fertile places to look for good candidates. For example, look for people getting mixed performance reviews but who are still highly prized by the organization. Often, these people are getting mixed reviews because they make those around them uncomfortable (because the potential candidates often challenge the status quo), but they don’t get fired, because they perform so well. Typical reviews will read something like “doesn’t know how to navigate the organization” or “not a team player,” because these people are constantly challenging their bosses. But they are also so productive that they get comments like “super smart” or “gets an amazing amount done” and are consequently kept close to the heart of the organization.
As another character indicator, you might look for people who can handle criticism and disappointment. As a potential hypothesis, and at risk of over-generalizing cultural differences, perhaps one reason Kaospilot was founded in Denmark is that the Danes are great at complaining (or brokke sig, as it’s called in Danish). You are less likely to find this same tendency in Sweden or Norway, which are otherwise culturally very similar. But in Denmark, brokke sig is acceptable and expected. Arguably, complaining creates an environment in which people are allowed to point out the flaws of something and even share their disappointment. Not surprisingly, many Danes are good at responding to criticism. So, just as the United States has embraced the Scandinavian term hygge in seeking inspiration for “coziness,” perhaps we should be looking for the capacity to give, receive, and live with brokke sig when looking for chaos pilots.
Finally, you can also look for people who were placed into a project that changed dramatically along the way, but who navigated the change well or, even better, who rescued the project. You might also look for those who are willing to chase opportunities, regardless of prevailing wisdom about playing it safe. For example, people who ignored advice about risks to their careers and joined or led a particularly risky project may be good chaos pilot candidates. Finally, in assembling your team, you may also want to look for chaos survivors: they may not be the ones to lead through uncertainty like chaos pilots, but they bring the valuable skill of getting things done in a turbulent environment without having to be the one leading it.
Accelerator Skill Sets
During the early days of additive manufacturing, when everyone was racing to build desktop 3-D printers, we discovered something most people had overlooked—the real holdup to additive manufacturing was not the printers (which had been improving since the 1980s) but rather the 3-D imaging capabilities to bridge the divide between existing physical objects and 3-D printable objects. In response, during the early days of the project, Kyle struggled to find anyone who could create 3-D images that could then be printed. Eventually, he found a team of computer vision experts who agreed to form a startup to meet this challenge, but it was going to be a slow process and at great expense. Instead, Kyle recruited Mason Sheffield, a real-life MacGyver (a television hero who can build anything out of duct tape and a paper clip) who had previously been running development for Call of Duty.
When Mason found out about the quote, he laughed and then set to work. He didn’t even have a proper office yet. Instead, working out of the offices above a Lowe’s store in Seattle, he built a fully capable, 3-D scanning hardware and software device in four weeks for a fraction of the original cost estimate. Today, Lowe’s has patented the system Mason built, and the company uses it to create incredibly detailed 3-D images. To get a sense of how detailed, consider the Transformers movie. Its Optimus Prime robot superhero was visualized with 1.8 billion polygons, whereas a Lowe’s 3-D scan of a vase is 8 billion polygons (a polygon is a geometric object containing information about location, color, shading, and texture).
These 3-D images have proved incredibly powerful for online selling, increasing conversion for some items as much as 50 percent.10 The multidimensional objects are also less expensive to create than traditional photos. To be fair, Mason had been focused on the 3-D facial-scanning feature for the Call of Duty game before he joined Kyle’s group. But even with that background, Mason performed the impossible, soldering the hardware himself and coding the solution single-handedly. Later, he helped recruit the team to build the final answer to the 3-D content scanning challenge. Mason can only be described as having an accelerator skill set.
People with accelerator skill sets can catalyze your project, and they share the same vision that you have: to transform the organization. Sometimes, these skill sets are hardware or software related, but just as often, they just get things done or accelerate communication. For example, Amanda Manna, who joined Kyle early on at Lowe’s, proved pivotal in managing the creation of narratives and in communicating externally. Manna’s accelerator skills made the entire innovation lab at Lowe’s much more successful. For example, Manna helped both to create the broader narrative capabilities inside Lowe’s and to align the organization around those narratives (while also communicating those narratives externally). She also accelerated the scaling of these capabilities at Lowe’s.
In assessing which accelerator skill sets you need, the key is to ask yourself what you are good at, what you are missing, and how you can assemble a team that has diverse backgrounds, thought, skill sets, and actions—but shared purpose and vision—so you can move quickly. Although accelerator skill sets are a specific recommendation, they are part of a larger transformational issue in organizations. When we talk about accelerator skill sets, we aren’t just talking about cross-functional teams.
While ideas like cross-functional or complementarity are important first steps to breaking down silos, or inflexible, inefficient hierarchies in organizations, the terms mask a deeper problem at the heart of big organizations: the product/function organization structure. Most big companies are organized around products and functions, and although this structure works fine in a stable environment, this same structure creates problems when you want to start capturing opportunities that require the reorganization of capabilities.
By contrast, consider how startups organize themselves to do work. For example, there is a rule of thumb that if you want to create a software startup, you need a hustler, a hacker, and a hipster. Beneath the cute alliteration, the rule suggests that you will face three problems for which you need three matching capabilities: discovering the customer need (the hustler talks to customers), coding a solution (the hacker codes it), and the go-to-market strategy (the hipster optimizes the user interface to maximize customer acquisition).
Notice that the rule of thumb does not talk about creating cross-functional teams with sales, marketing, finance, and operations people led by a CEO. Instead, the general approach talks about the core problems the startup will face and the matching capabilities needed to solve those problems. Part of the reason startups often have an advantage over big companies (which already have money, people, industry knowledge, and distribution) is that the startups are faster at redeploying capabilities to match the evolving problems they face. And they are faster precisely because they employ a problem/capability structure instead of a product/function structure. Thus, acquiring accelerator skill sets doesn’t mean getting someone really great from finance, strategy, and marketing. Instead, it means developing a team that allows you to quickly match problems to capabilities.
Uncommon Partners
In a dingy conference room at NASA, five prototypical nerds, smelling of Thai food, laid out the path to printing satellites in space and buildings on distant planets. At the end of their four-day marathon, they emerged with an artifact trail that began with early prototypes for the first 3-D printer on the International Space Station and ended in the additive-manufacturing future—a future much bigger than 3-D printing. In the additive-manufacturing future, we will view everything as transient, or capable of being repurposed into new things. Rather than throwing away a soda bottle or a bent nail, we will simply reprocess these things into a new hinge for the fence we are building or a light switch plate for the tool shed. Indeed, we might not even go buy bricks for the tool shed, but instead might print them from impurities pulled from the air and the dirt beneath our feet. Such a process would both capture carbon in the air to make the bricks and avoid all the carbon involved in making and then transporting traditional bricks to your house.
If it all sounds a little too science fiction, think again. Lowe’s has already been honored as a Champion of Change by the US government for its prototype system to recycle plastic (e.g., plastic bags and bottles).11 The future may be closer than you have imagined. But to get there, Lowe’s didn’t work alone. It had to work with uncommon partners to create the future.
Uncommon partners are the types of organizations you might not normally work with, but which can greatly help you create radical new futures. Increasingly, as new technologies emerge and old industries converge, companies are finding that working independently to create all the necessary capabilities to enter new industries or create new technologies is costly, risky, and even counterproductive. Instead, organizations are finding that they need to collaborate with uncommon partners as an ecosystem to cocreate the future together. Nathan and his colleague at INSEAD, Andrew Shipilov, call this arrangement an adaptive ecosystem strategy and described how companies such as Lowe’s, Samsung, Mastercard, and others are learning to work differently with partners and to work with different kinds of partners to more effectively discover new opportunities.12 For Lowe’s, an adaptive ecosystem strategy working with uncommon partners forms the foundation of capturing new opportunities and transforming the company. Despite its increased agility, Lowe’s can’t be (and shouldn’t become) an independent additive-manufacturing, robotics-using, exosuit-building, AR-promoting, fill-in-the-blank-what’s-next-ing company in addition to being a home improvement company. Instead, Lowe’s applies an adaptive ecosystem strategy to find the uncommon partners with which it can collaborate in new territory.13
To apply the adaptive ecosystem strategy with uncommon partners, start by identifying the technical or operational components required for a particular focus area (e.g., exosuits) and then sort these components into three groups. First, there are the components that are emerging organically without any assistance from the orchestrator—the leader who tries to bring together the adaptive ecosystem. Second, there are the elements that might emerge, with encouragement and support. Third are the elements that won’t happen unless you do something about it. In an adaptive ecosystem strategy, you can create regular partnerships for the first two elements—those already emerging or that might emerge—if needed. But you have to create the elements in the final category (those that won’t emerge) either with an uncommon partner or by yourself.
For example, when Lowe’s wanted to explore the additive-manufacturing space, it began a search for an uncommon partner to provide the missing but needed capabilities. Unfortunately, initial discussions with major 3-D printing companies proved disappointing. The major manufacturers kept trying to sell Lowe’s 3-D printers. But the vision our group had created with science fiction was not for vendors to sell Lowe’s a printer, but for partners to help the company build a system—something that would allow customers to scan, manipulate, print, and eventually recycle additive-manufacturing objects. Every time we discussed 3-D printing systems with these major companies, they responded that they could do it and then tried to sell printers. When Carin Watson, one of the leading lights at Singularity University, introduced us to Made In Space (a company being incubated in Singularity University’s futuristic accelerator), we discovered an uncommon partner that understood what it meant to cocreate a system.
Initially, Made In Space had been focused on simply getting 3-D printing to work in space, where you can’t rely on gravity, you can’t send up a technician if the machine breaks, and you can’t release noxious fumes into cramped spacecraft quarters.14 But after the four days in the conference room going over the comic for additive manufacturing, Made In Space and Lowe’s emerged with a bigger vision. The company helped lay out an artifact trail that included not only the first printer on the International Space Station but also printing system services in Lowe’s stores.
Of course, the vision for an additive-manufacturing future didn’t end there. It also reshaped Made In Space’s trajectory, encouraging the startup, during those four days in a NASA conference room, to design a bolder future. Today, some of its bold projects include the Archinaut, a system that enables satellites to build themselves while in space, a direction that emerged partly from the science fiction narrative we created around additive manufacturing.
In summary, uncommon partners help you succeed by providing you with the capabilities you shouldn’t be building yourself, as well as with fresh insights. You also help uncommon partners succeed by creating new opportunities from which they can prosper (see the sidebar “Helping Uncommon Partners Prosper”).
Narratives Pivot, Principles Don’t
In the background of the first Lowe’s robots comic, workers moved about the store wearing exosuits—external robotic skeletons. Although the exosuits were originally just a background detail, many people commented that the exosuits seemed really interesting. Although exosuits hadn’t been the focus of the story, we thought it might be worth exploring. So we pivoted on the original narrative by creating a second narrative that described how workers in the future would use exosuits to help them work and keep them safe. At the time, exosuits had started to enter the fringes of the scientific frontier, but most of these were hard robotics—large, heavy, motorized mech-inspired machines that were complex and maybe even a bit scary to wear.
Moreover, our interactions with engineers helped us understand how long it would take to develop reliable components for hard exosuits. Similarly, discussions with risk departments at different organizations helped us understand the incredible savings thresholds we would have to hit to make up for the massive insurance premium increases due to the risk of putting people inside hard robotics. We began to realize we would need a different approach.
Helping Uncommon Partners Prosper
Working most effectively with uncommon partners can require a shift from more familiar outsourcing or partnership relationships. When working with uncommon partners, you are trying to cocreate the future, which entails a great deal more uncertainty. Because you can’t specify outcomes precisely, agreements are typically less formal than in other types of relationships, and they operate under the provisions of shared vision and trust more than binding agreement clauses. Moreover, your goal isn’t to extract all the value from the relationship. Rather, you need to find a way to share the value.
Ideally, your uncommon partners should be transformed for the better by the work you do. For example, Lowe’s uncommon partner developing the robotics narrative was a small startup called Fellow Robots. Through their work with Lowe’s, Fellow Robots transformed from a small team focused on a narrow application of robotics (which was arguably the wrong problem) to a growing company developing a very different and valuable set of capabilities: putting cutting-edge technology on top of the old legacy systems embedded at the core of most companies. Working with Lowe’s allowed Fellow Robots to discover new opportunities, and today Fellow Robots works with retailers around the world, including BevMo! and Yamada. Ultimately, working with uncommon partners should be transformative for both of you, so focus more on creating a bigger pie than on how you are going to slice up a smaller pie.
Fortunately, about this time we stumbled on an uncommon partner at Virginia Tech. In a quiet corner of the green campus, some of the world’s leading engineers are building DARPA-level robotics, but also something much friendlier—the core components for mechanical exosuits that use bendable forms to capture and return a worker’s potential energy.
As a result, we had to change the artifact trail to account for this big shift, and we even tweaked the narrative a bit to describe how soft-robotics lift-assistance exosuits that used carbon fiber rods to capture mechanical energy could give workers superpowers in the future by helping do their jobs and stay safe (figure 5-1). But building on the revised artifact trail, we used the technology they already had on hand to quickly prototype a workable exosuit. We could then begin neuroprototyping with workers to understand how they felt as well as testing ergonomics to ensure that the exosuits could work.15
What’s important is that although we went through several rounds of iteration on the narrative and the artifact trail, we stuck to our experimental design principles. These principles included identifying the key assumptions and then rapid, reliable tests of the key assumptions to start learning as quickly as possible. Even though the form of the robotics had changed, first from a robot in stores, then to exosuits built from hard robotics, then to exosuits built using flexible rods that capture and return potential energy, the process to test and learn did not. And by the way, workers love wearing exosuits at work. Who doesn’t want to have superpowers? But again, maybe we didn’t really need neuroscience to know that dressing up like a robot feels awesome.
Results First
Telenor is one of the world’s largest telecom operators with a top position in multiple countries across Europe and Asia. It has developed a reputation as one of the best operators in the world, but like all telecoms, in the face of digital transformation and new challengers like WhatsApp, Telenor is embracing innovation as a way to create new value. In the early days of its transformation, Andrew Kvålseth, a senior leader in the Telenor Group, had a compelling idea. What if the company could create accelerators in each of the countries where it operates to incubate promising startups, learn from them, and, in the spirit of working with uncommon partners, cocreate new opportunities with the best of them? He spent months building support across the group for the promising initiative and eventually presented it to the group executive management committee to launch the program across thirteen operating units. Unfortunately, although the initiative had immense promise, it was turned down.
Panels from early version of exosuit comic
Discouraged but not deterred, Kvålseth took a new role in Telenor as chief strategy and innovation officer at one of its largest operations, DTAC, in Thailand. At the local level, off the radar of the larger organization, and with a tiny budget, he decided to try out the accelerator concept anyway. Although he started small, in just a few years, the DTAC accelerator was already accumulating compelling results—new ideas, opportunities, and, most importantly, talent that could be recruited to speed DTAC’s own transformation. News slowly began to spread inside Telenor about the DTAC accelerator, and soon other companies within the Telenor Group reached out to Kvålseth to learn how to create an accelerator of their own. In the end, and in an ironic twist, he was eventually invited to present at the annual January meeting of top executives and explain how Telenor could adopt the program across the group, as part of its larger transformation into an innovative technology company. Although in the end Kvålseth basically achieved his original objective, he ultimately learned a critical lesson about how to achieve those objectives: results first, not vision first.
Intuitively people inside corporations often want to start by selling a grand vision, raising a huge budget, and then executing on their vision. Sometimes this can work, but it can also be a very dangerous path. It often raises expectations for returns so high that only a perfect storm can yield such returns. It also puts the project under the microscope, to make sure it succeeds, leaving little room for change. Therefore, instead of a vision-first approach, we believe in a results-first approach. Start small, keep it quiet, and accumulate small wins first.
This approach is such a basic principle of transformation that we gave it its own section. Results first is also a fundamental principle of innovation. In this vein, Nathan titled his first book Nail It Then Scale It—to emphasize that although it may feel slow to take the time to get things right (nailing it) compared with starting big (scaling it), changing something after you have scaled it is much slower and will most likely end in failure. Your chances of a successful transformation will be orders of magnitude higher if you can first show results and then convince people to get on board because of those results, not just because of a vision. This is why we have emphasized using experimental design to generate believable fKPIs early on. It is also why we encourage you to think of the small-t transformations that can lead to a big-T transformation.
The Three Noes
As you accumulate results, you can start to share them more broadly with the organization as part of the transformation journey. But as soon as you do share results, and probably even before you do, you will have to wrestle with the three noes: no to mature metrics, no to money, and no to mature systems.
No to Mature Metrics
There is both ample empirical evidence and intuitive rationale that trying to measure an immature project the way you measure a mature project works poorly. Doing so is like trying to judge the value of a new apple seedling using the same metrics you would use for a mature tree, for example, by counting the number of apples a young seedling produces in the current season. These metrics simply don’t make sense. Using such metrics, like return on investment or sales, almost inevitably sets a project up for disappointment and failure. This does not mean that new projects lack rigor or metrics. Rather, they simply have different metrics (see “Digital Toolbox: Metrics for New Projects”). Appropriate metrics can include the depth of the customer problem and the solution’s capability to deal with it, or cohort metrics like Google’s HEART (happiness, engagement, adoption, retention, and task success) framework or Cisco’s “value at risk.”16 For specific projects, because we use applied neuroscience, we prefer to measure the results of quantifiable hypotheses using KPIs tied to neural indicators (see the sidebar “What Is Applied Neuroscience Exactly?” in chapter 4).
No to More Money
As soon as you start to show results, inevitably the corporate obsession with scaling will kick in and you may suddenly find people saying things like “Should we pour some gas on this?” or “Should we scale this up?” There will come a time to scale, but early on, refuse the money and the offers to scale. Your projects need time to be tested and to mature. In explaining this tempered approach to senior executives, we have sometimes even referred to John Steinbeck’s novella Of Mice and Men. We explain that our projects are the fragile rabbits in the story and that the corporation is Lenny—the big, strong, well-intentioned individual who is going to inadvertently kill the rabbits with his strength. There does come a time when you will scale up (after you have truly validated the key assumptions), but until then, don’t allow the excitement to supersede the rigorous testing and maturation process. No one will care when it fails. Say no to the money until the time is right.
No to Mature Systems
Big companies have developed various systems—such as vendor management systems, procurement processes, and promissory services agreements—to manage major projects. Using these systems will slow you down and possibly kill your efforts. You need to find a way around these, particularly anything that is transactional, slow, or combative (involving lots of lawyers or negotiation). For example, most companies have a lengthy master promissory services agreement that will kill off any smaller uncommon partners. Just the legal fees to go through that contract can be more than the annual income of some of the startups. If not the legal fees, then the insurance requirements will bankrupt the smaller uncommon partners you want to work with. Instead of applying mature systems designed for mature projects to immature projects, work with your legal department to find an approach suited for transformation projects. For example, when Cisco’s innovation teams wanted to start working with uncommon partners, the legal team put together a short, flexible agreement, in plain English, and these simplified agreements sped up the process significantly.17 Likewise, Intuit put together a legal framework for internal entrepreneurs, paving the way for experimentation without having to seek permission from the legal office.18
To scale your innovation, you will eventually need to plug back into your legacy systems. Nevertheless, at the beginning, don’t waste precious energy figuring out how to do that before you have demonstrated success. At the same time, don’t make choices that preclude returning to your mature systems in the future.
DIGITAL TOOLBOX
Metrics for New Projects
The topic of how to measure new projects, particularly innovation projects, is starting to receive some much-overdue attention. But finding the latest insights on how to account for innovation and transformation can be time-consuming. On leadingtransformationbook.com we share some materials on the latest thinking on metrics for new projects.
Yea-Sayers
It might seem counterintuitive to talk about yea-saying after a discussion of the three noes, but although we have introduced new tools for transformation, actually leading transformation will be hard. There will be obstacles, resisters, and detractors. The well-established advice about how to spread new things across an organization typically suggests focusing first on the enthusiastic early adopters—people who will be quick to adopt—and high-energy advocates. The next step, convincing the rest of the organization, requires greater effort. The bulk of the organization will fall in line slowly. But for the detractors and late adopters, invest just enough energy so that they don’t derail the transformation; otherwise, expect them to get on board late or not at all.19
Besides this well-established advice, if you believe in your cause, persist, but do it as a yea-sayer. Generations of thinkers point out that fulfillment comes from doing hard things and that great things are rarely separated from the discouragement and obstacles that almost always accompany them. In reflecting on such challenges, Friedrich Nietzsche, one of the most influential modern philosophers, writes, “Examine the lives of the best and most fruitful people and peoples and ask yourselves whether a tree that is supposed to grow to a proud height can dispense with bad weather and storms; whether misfortune and external resistance, some kinds of hatred, jealousy, stubbornness, mistrust, hardness, avarice, and violence do not belong among the favorable conditions without which any great growth even of virtue is scarcely possible.”20 Alain de Botton, a contemporary philosopher, explains Nietzsche’s argument: “Nietzsche was striving to correct the belief that fulfillment must come easily or not at all, a belief ruinous in its effects, for it leads us to withdraw prematurely from challenges that might have been overcome if only we had been prepared for the savagery legitimately demanded by almost everything valuable.”21
But how should we meet these obstacles? Nietzsche offers advice on how to do just such a thing. In one of his essays, he makes a resolution to be a “yea-sayer,” someone who welcomes obstacles rather than resists them: “I want more and more to perceive the necessary characters in things as the beautiful:—I shall thus be one of those who beautify things. Amor fati: let that henceforth be my love! I do not want to wage war with the ugly. I do not want to accuse, I do not want even to accuse the accusers. Looking aside, let that be my sole negation! And all in all, to sum up: I wish to be at any time hereafter only a yea-sayer!”22
As you meet resistance, in a counterintuitive approach (or at least counter to what comes naturally) perhaps try first to say yes, rather than no or fighting back. Agreeing can disarm your opponents and may lead to an important insight about how to do things differently. For example, Kyle and Amanda Manna were recently working with an organization (whose identity has been disguised as a part of a nondisclosure agreement) to create a new strategic narrative. They had conducted a number of in-depth interviews to uncover the organizational nomenclature (as described in chapter 3) and found that the organization saw itself as a creator of art. After going through the science fiction and strategic narrative process, which produced a compelling future vision, Kyle and Manna were in the middle of working with external graphic artists to design the comic when they got a call from a senior executive at the client who demanded that their team would need to be involved in any artistic endeavor for it to be adopted.
This is where the instinct to be a perennial yea-sayer kicks in. Of course, in an organization that is differentiated by its artistic style, they should have anticipated skepticism about outside parties creating art for the organization. This was actually one of the best things that could have happened. If the strategic narrative came from within, there was a much greater chance of successfully changing behaviors and attitudes in the organization. So they responded by saying, “Yes, of course, we would love for you to help create the graphic novel.” Kyle and Amanda’s yea-sayer attitude saved the project. Of course, being a yea-sayer can’t solve everything, and we aren’t suggesting that you should be obsequious and thereby lead a transformation so burdened by internal demands that it becomes unwieldy (which is why we encouraged you earlier to keep things quiet until you have more progress). But we are proposing that you approach any resistance, negativity, and discouragement with a yes. Be a yea-sayer.
Transformation from Ossified to Agile
In this book, we have talked about a process to dream bigger and transform organizations. We used the transformation at Lowe’s as a red thread throughout the book to illustrate how a prototypical organization—mature, profitable, and focused on operational excellence—can transform. We described some incredible innovation leaps made along the way. But the innovations themselves were just a Trojan horse for the larger goal of transforming the organization. For this reason, we told stories of other companies with which we have worked (those that we can reveal), like Svensk Film and IKEA, and how they transformed themselves when it was less about technology and more about strategy, business models, or culture. Ultimately, whether or not a transformation involves technology, and whether or not you start with little-t transformations as we recommended, creating a strategic narrative, thoughtfully breaking bottlenecks, and creating fKPIs to guide your future will help you overcome the people problems that impede every transformation.
Lowe’s succeeded in building its way through the valley of deceptive disappointment to create differentiating technologies and solutions. But more impressive has been the start of a transformation inside Lowe’s. Today, narrative has become a focal point of almost every activity. Leaders inside the company also see their roles in a new, more empowered, more proactive light. By applying the transformation process described in this book, the company has started to shift from the prototypical big company to a very different organization, one that sees what could be.
In the future, users could engage with Lowe’s products from anywhere in the world, independently of physical locations. Or Lowe’s could become much more than just a mere pipeline for others’ products and instead could become a materials company or an IP company, or whatever fulfills the purpose of helping people love where they live. Of course, the company still has bureaucracy, politics, and everything else—all organizations are still populated by human beings with all our associated weaknesses. But Lowe’s has a different feeling than it once had.
The beginning of the transformation journey at Lowe’s gives hope that other organizations can do so as well. Whether Lowe’s continues on its transformation journey depends on applying the process described in this book to keep reengineering its future. Fortunately, we have seen other rigid organizations and even their most rigid organizational functions become the most agile. Risk and legal groups became our advocates. Executives who had previously viewed innovation with skepticism became capable practitioners of it. It is possible to become a nimble competitor ready for a new world. What must change is the belief that the organization can do it. In leading transformation, you need to believe that people want to do big things. Believe that they will adapt. And then take charge of your future. There is no objective future; there is only the future that you create.