Tag: innovation

Parallel Thinking and De Bono’s Six Hats

This is how a group of people can solve a problem without arguments.

Think about all the times you’ve been in a team meeting, dealing with some issue. Everyone goes in with the best intentions, but the team members quickly form their own ideas of what needs to be done, argue about why everyone else is wrong, then eventually go with whoever won over the most (or shouted the loudest).

The six thinking hats are a more efficient way of solving problems than arguing. In an argument, each side picks a conclusion, finds evidence to support it, and ignores or discredits any evidence to the contrary. Emotions take hold as each side aims for the glory of being right and the thrill of defeating an adversary. It sounds like a terrible way to solve problems constructively. Yet our entire political and legal systems are based on it.

The alternative to arguments is ‘parallel thinking’. Instead of each individual taking different sides, all individuals take the same side and look in the same direction, in any one moment.

That’s where the imaginary hats come in. Each hat is a way of looking at an issue. They come in pairs, but you can only wear one at a time. And in a group discussion, everyone wears the same hat at the same time.

White Hat and Red Hat

The white hat is where the team establishes what information is known and what information is needed. This is about facts – not interpretations, judgements or opinions.

“Market research shows demand for coffee flavour biscuits is growing.”

The red hat is where intuition, feeling, opinions and emotion come in. They can be based on experience or just a hunch.

“I feel our current range of biscuits is boring and old-fashioned.”

Black Hat and Yellow Hat

The black hat is about caution and critical thinking. Everyone should be looking for danger signs, something that could go wrong.

“If we introduce a coffee flavour biscuit, our rival might copy us.”

The yellow hat is about sunny optimism. Finding possibilities for putting a plan into practice, and searching for the benefits.

“If our rival copies us, that could help grow the whole market so we’ll still benefit.”

Green Hat and Blue Hat

The green hat is about being creative. Coming up with new ideas, options and ways of looking at things.

“How about adding chocolate chips to the biscuits?”

The blue hat is about control and discipline. It ensures the meeting remains structured rather than free-flowing (which will probably deteriorate into an argument), and as a result the leader of the meeting wears the blue hat at all times. The discussion may start and end with everyone wearing the blue hat, first to define the problem and lastly to make a decision.

“We’ve agreed the next step is to develop a coffee flavour chocolate chip biscuit.”

Watch out for

While some tests and teamwork models assign people to different categories based on their strengths, De Bono says this restricts them rather than getting the best out of them. The advantage of the six hats is everyone tries a bit of everything, and comes up with ideas no-one else would’ve thought of.

“There is a huge temptation to use the hats to describe and categorize people, such as ‘she is black hat’ or ‘he is a green-hat person’. That temptation must be resisted.”

Edward de Bono, Six Thinking Hats, p. 6

Did you know? De Bono coined the phrase “lateral thinking.”

With thanks to Ivan Edwards who wrote most of this post. Thanks Ivan!

Resources

De Bono, Edward (1985), Six Thinking Hats, 2016 edition, Penguin Life

Clark Gilbert’s two types of business inertia

This model explains why some large, established firms respond well to largescale disruption, while others struggle.

Imagine you run a chain of clothes shops. You sell the coolest, most popular clothes and you’re the king of the High Street, with a knighthood to boot. But a new generation of online retailers appears. You start your own website to combat the threat, but slowly your customers slip away, your shops close down and the challengers pick away at the carcass of your dying empire. Why couldn’t you, as the incumbent and dominant player in the industry, adapt to the change in the market?

And why do incumbent businesses fail in the face of major external challenges, even as their managers try everything to stay on top? That’s what Clark Gilbert attempted to solve with his model on inertia.

To understand the problem, he defined inertia as coming in two different forms — an unwillingness to invest (resource rigidity) and an unwillingness to change the way the business operates (routine rigidity). The first form is easy to overcome. Tell a manager that a new threat will put them out of business, and they’re usually happy to throw money at the problem.

The trouble is this causes an increase in the second form of inertia. Now they’ve committed extra resources, the manager wants to use tried-and-tested methods, to control how every penny is spent — and they certainly don’t want to take any risks.

Here are Gilbert’s three steps to overcome routine rigidity.

  1. Bring in outside influence
    If you’re a clothes shop setting up a website, put the digital marketers and social media experts in charge of what it should look like. If you put the old guard in charge, inevitably it won’t be a new product — it will be an extension of the old business, facing the same problems.
  2. Separate the new venture
    The new venture should operate independently, with its own management, its own processes and business model. Maybe it will even have a different name and a separate office.
  3. See opportunities, not threats
    Now that the new venture is separated from the parent business, its managers won’t see the rise of online shopping as an existential threat — they’ll see opportunities to reach new audiences, sell niche products and cut overheads.

The disruption is best framed as a threat within the resource allocation process in order to garner adequate resources. But once the investment commitment has been made, those engaged in venture building must see only upside opportunity to create new growth. Otherwise, they will find themselves with a dangerous lack of flexibility or commitment.

Christensen & Raynor, pp.114-115, The Innovator’s Solution (2013)

Watch out for

Why is it harder to overcome routine rigidity? The answer may lie in another model, prospect theory . This holds that the pain of a loss is greater than the pleasure of a win. Inertia over the use of resources is motivated by the fear of losing what you have — if you don’t devote resources to this threat, you’ll go out of business. But changing a business model to perceive opportunities rather than threats requires risk-taking and motivation by the prospect of gains.

With thanks to Ivan Edwards who wrote most of this post. Thanks Ivan!

Resources

Christensen. C. & Raynor, M. (2013). Innovator’s Solution, Revised and Expanded: Creating and Sustaining Successful Growth. Harvard Business Review Press
Gilbert, Clark G. (Oct. 2005), Unbundling the Structure of Inertia: Resource Versus Routine Rigidity, Academy of Management Journal
Gilbert, Clark G. (2002), Can competing frames coexist? The paradox of threatened response, Working paper 02-056, Harvard Business School

Innovator’s DNA: Do what Bezos, Cook and Musk do

This model explains what it takes to be a successful innovator.

We’re talking DNA. Not the long chains of nucleotides that are the blueprint of organisms, but what Jeff Dyer, Hal Gregersen and Clayton Christensen consider the foundational building blocks of great innovators.

After an eight-year study, meticulously collecting data from 500 innovators and 5,000 executives, the authors came up with a list of five behaviours that make up the “Innovator’s DNA.”

The 5 behaviours of great innovators

  1. Associating: making connections between ideas and concepts from unrelated fields
  2. Questioning: posing queries that challenge common wisdom
  3. Observing: (in highfalutin circles, also called ethnography) examining the behaviour of customers, suppliers, and competitors to identify new ways of doing things
  4. Networking: meeting people with different ideas and perspectives
  5. Experimenting: constructing interactive experiences and provoking unorthodox responses to see what insights emerge

The authors also find that the world’s most innovative companies are populated, perhaps unsurprisingly, with innovative people, processes and a culture that gives employees courage to try out new ideas and take smart risks.

If the people running Amazon don’t make some significant mistakes, then we won’t be doing a good job for our shareholders because we won’t be swinging for the fences.

Jeff Bezos, The Innovator’s DNA, p.27

Watch out for

The authors find that innovators asked more questions than answers in a normal conversation.

Innovators tend to spend a lot of time testing ideas using different networks of people with different backgrounds.

Leaders at the most innovative companies, lead from the front and spend 50% of their time trying to come up with new ideas.

The authors rather humbly assert that they’ve “cracked the code for generating business ideas, and it’s one that anyone can follow. Creativity is not just a genetic predisposition – it’s an active endeavor.”

So, you have no excuses. Go innovate!

Innovator’s DNA is the third in the trilogy of Clayton Christensen’s books on innovation. Here’s more on his concept of how large companies often leave themselves open to disruptive innovation from the low end of the market.

Resources

Dyer, J. H., Gregersen, H. B., & Christensen, C. M. (2019). The Innovator’s DNA: Mastering the Five Skills of Disruptive Innovators (Updated). Cambridge, MA: Harvard Business Review Press

Disruptive innovation: why large companies are prone to disruption

Use this model if you want to understand why large, successful companies are prone to disruption.

A central theme running through Clayton Christensen’s innovation research is how companies can guard against being disrupted. How can successful innovators avoid having their lunch eaten by smaller, nimbler upstarts?  

As a company grows, its once simple products and services become ever more complex as it seeks to cater to more sophisticated customers where the company can command wider profit margins.

But…

As companies tend to innovate faster than their customers’ needs evolve, most organizations eventually end up producing products or services that are actually too sophisticated, too expensive, and too complicated for many customers in their market.

Clayton Christensen, https://claytonchristensen.com/key-concepts/  

This leaves space for smaller competitors to move in at the bottom of the market. At first these disrupting businesses tend to have some combination of lower gross margins, smaller addressable markets and simpler products and services.

Watch out for

Christensen’s thesis might be summed up with the old saying “success breeds complacency.” But his work is riven with deeper, seemingly counterintuitive takeaways and action points. One is that the competencies a firm builds up in terms of resources, processes and values (RPV) – competencies that may have made it wildly successful – can become encumbrances, blocking the path to innovation and business model renewal (think Kodak and the growth of digital cameras).

Also see the inverted SWOT analysis, which sees strengths as threats (and competitor strengths as opportuntites).

Resources

Christensen. C. (2016). The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Harvard Business Review Press
Christensen. C. & Raynor, M. (2013). Innovator’s Solution, Revised and Expanded: Creating and Sustaining Successful Growth. Harvard Business Review Press

Crossing the chasm: the adoption of new tech

This model illustrates what’s required to take new, disruptive technology into the mainstream.

Geoffrey Moore built on Everett Rogers’ diffusion of innovations theory to set out the marketing challenge a company faces when attempting to launch a new high tech product into the mainstream.

The essence of the theory is that innovations are absorbed in stages by different groups split into the early market and the mainstream market. According to Moore, the marketer should focus on one group at a time. The chasm is this separation between the early market and the mainstream.

In the early market, first are the Tech enthusiasts who want to get their hands an the latest, hottest new thing, even if they have to put up with faults. Next come the Visionaries who are interested in major technological advances to secure themselves a competitive advantage.

Next comes the far larger mainstream market, starting with the Pragmatists who make up about one third of the entire market will start to adopt a new product once the technology has proven itself. This cohort is looking for only incremental improvements and are key to obtaining market dominance. The Conservatives are next. This group is as large as the Pragmatists. They take time to win around and want easy-to-use products. Lastly, the Skeptics are a small group, often overlooked, highly resistant to new tech.

Key to success with the mainstream is to deliver a whole product – a product that is not only without flaws but also supported by complimentary services such as well-designed customer service channels, good returns policies and guarantees etc that make the core product a compelling proposition. If a successful firm can traverse the chasm, it can create enough momentum to establish the product as the accepted standard in its market (eg the iPhone in the premium smartphone martket).

Watch out for

Moore’s theories only apply to disruptive innovations. Arguably the best model to explain incremental innovations is the standard bell curve (without the chasm) of Rogers’ original technology adoption lifecycle model.

Not all products and services are intended to cross into the mainstream. This is particularly true of digital services and new media channles that consciously target very niche markets, the so-called long tail. The internet has reduced the costs of distribution to almost zero, which means the minimum viable audience is now much smaller for companies and entrepreneurs to achieve an acceptable return.

Resources

Levitt, T., (1986).The Marketing Imagination. The Free Press
Moore, G., (2014). Crossing the Chasm, 3rd Edition: Marketing and Selling Disruptive Products to Mainstream Customers. Collins Business Essentials
Rogers, E. M. (2003). Diffusion of innovations (5th ed.). The Free Press