Tag

innovation Archives - SUE Behavioural Design

Real Artist ship - quote

How to design an innovation habit?

By | Organisational Design

The organizational habits that
produce innovation and growth

Real Artist ship - quote

Why are some companies more innovative than others? I want to argue that they have habits in place that produce more ideas and habits to get those ideas shipped. As Steve Jobs once famously said (paraphrasing William Gibson) : “Real artists ship”.

In this blogpost I want to explore this innovation habit, based on our 8 year experience with collaborating with teams.

The habits that kill innovation.

Dozens of books havebeen written about this subject, but from our own experiences on running behavioural design sprint, these were the most common habits that kill innovation:

  1. No research culture / a crisis of curiosity. The bigger a company get, the more out of touch it becomes with how real users think, feel and behave. Managers rely on abstract data, like market shares, sales volumes, etc. The more detached they become from the real customer, the less probable they will be able to spot exciting opportunities.
  2. No ideation culture / a crisis of imagination. Once an organisation outgrew its startup phase and entered its scale-up phase, the whole mindset of the organisation is focused on growing the business. Most businesses organise their process around building the existing product offering. Moreover, to achieve this growth mindset, a specialisation of roles is required. Everyone, from the product manager to marketing manager, digital manager, UX-er, and communication manager, is expected to perform on their specific domain. This results in a decreased capability of the organisation to think out-of-the-box and to think outside-in. Nearly always, the exciting opportunity for innovation transcends the boundaries of the specific discipline.
  3. No prototyping culture / a crisis of experimentation. The more an organisation specialises, the more we expect those specialists to know what they are doing. This expert fallacy is a well know organisational problem: Because we are expected to be experts, we are more inclined to act like experts. The more we think we know, the less alienated we become from discovering the truth. Not knowing is perceived as weakness in these companies while every successful startup knows that aggressive experimentation is the nr one secret ingredient to growth.
  4. Conflicting incentives / a crisis of management. The problem with innovation in most organisations is that everyone, including management, is hired to execute the strategy. Not only are they hired, but they’re also reviewed based on the execution of the strategy. When your promotion depends on hitting the targets, everything related to new ideas will be perceived as a distraction.
The net effect of these habits is total inertia. Even in the context of declining market share, missing targets and aggressive competition, all the forces in the organisation seem to pull people towards repeating the same strategies over and over again. The habit of keeping doing what we always do is just too strong.

Behavioural Design is the missing layer

Join our Behavioural Design Academy and learn how to positively influence minds and shape behaviour

The habits that boost innovation

Innovation is not a goal as such. Innovation is always a function of growth. Some organisations are far better than others to spot opportunities, come up with ideas, test them and succeed in actually shipping them. Whether they improve the product, marketing, process or campaign, the value of new ideas is that they succeed in contributing to growth.

That’s why we need to study the innovative power of an organisation as a habit problem. Innovative companies have habits in place that trigger more curiosity, ideation, and experimentation. Continuous improvement is their default mode. We have facilitated sprints with many teams. Most of them don’t call themselves “innovation teams”. They’re product teams, or growth teams, or customer experience teams. The biggest challenge they all face is to improve their output to generate growth for the business. There are four team habits we came across that strongly correlated with the creative and innovative power of a team:

 

  1. A deep love-relationship with customer problems: Innovative teams are in love with the problem of the customer. They relentlessly talk to customers or observe them in the real world and try to spot opportunities for helping customer to overcome pains, break bad habits, take away barriers and achieve goals. They are always asking themselves the question: How might we help our customers to be more successful
  2. A fast process for generating ideas: Innovative teams have proper ideation sessions. They follow the core principles for group creativity (like brainwriting and dotmocracy) and treat every idea as an interesting hypothesis. In a well designed creative process, the individuals come up with as many ideas as possible and the group decides upon which ideas are worth experimenting.
  3. A process and tools in place to prototype and ship: Great teams have a maker-mentality. They always try to figure out ways to prototype their ideas and test them in the real world. This allows them to increase their learning curve and their success rate rapidly. An essential condition for allowing this to happen is to have an infrastructure that allows experimentation.
  4. A cultural shift that promotes, rewards and celebrates braveness. This is by far the most important habit. Very often, the problem is cultural. If the organisation is number-driven, then you’ll always end up with all kinds of triggers that incline people to believe that following the rules and reaching targets is what the organisation expects of them. However, if you want to create a culture of experimentation, then you’ll have to embrace failure, promote and rewards braveness. People need to experience that experimentation is being expected of them.

Incremental versus radical innovation

In the literature on innovation, quite often the distinction is made between radical and incremental innovation. Incremental innovation is the optimisation of the existing products and services, whereas disruptive innovation is the more radical ideas to transform the business.

To be honest: I think this distinction is a bit artificial. If you think about the innovation habits we described above, then they are about being radically customer-centred, about having a maker-mentality, and a culture of experimentation. Out of this habit, both incremental, as well as radical ideas can emerge. The only thing an organisation needs to have in place is a fund to invest in the rapid prototyping and testing of some of the more radical ideas.

 

What this means for innovation leadership

When approaching the problem of innovation in organisations from this perspective, I thinkthe role of an innovation leader in a company is to help to build the innovation habit. I don’t believe an innovation department – as the place where innovation is happening -isthe solution.

An innovation leader / or innovation tribe should be a group of people that facilitate and train teams to install the innovation habit. If new radical ideas come out of this process, they should be able to invest money in them to be able to hire a team to design, build, prototype and test the idea in the real world. If this experiment turned out to be successful, then it’s their job to convince the board to invest in the concept with ambition.

sue behavioural design

Learn how to make the science of influence work for you

Join our Behavioural Design Academy and master the skills to shape minds and influence behaviour. We trained people over 30+ countries and have a 9,2 satisfaction rate. Check out our free brochure. Don’t miss out on making your growth a success.

sue behavioural design
Pitcture depicting the Kock Brothers

The behavioural design of the economy. On incentives and rewards

By | Citizen Behaviour, Government & Politics, Organisational Design

To get the rich and powerful to change their behaviour,
is the most wicked design problem of our time

Pitcture depicting the Kock Brothers

I have been thinking a lot lately about society’s inability to tackle the biggest challenges of our time. I don’t know about you but climate crisis, income inequality and radicalisation is scaring the hell out of me. We can’t seem to change the behaviour of those who are running the show. This is the most wicked problem of our time. I want to argue that the solution to change the course of history can be found in applying some Behavioural Design Thinking to this wicked problem.

The economy is a behavioural design

The best way to think about behavioural design is to think of it as the design of choices. The way you design a choice will largely determine the behaviour that follows from that choice. This simple and powerful first principle of Behavioral Designworks on all levels of human decision making, from small consumer decisions to big societal decisions. Let me illustrate this with a couple of examples:

  • If you want to sell an item, it matters a great deal if you give two or three options. You can change the value perception of a cake + coffee of € 5,- in comparison to a € 2,5 coffee instantly if you would introduce a decoy option of a € 4 cake in the middle. The introduction of the € 4 cake makes the € 5 coffee + cake suddenly look like a bargain.
  • You can change the value perpection of something if you don’t call it “cheap” but “great value for money”.
  • If you want to get a sales team to run like hamsters in a treadmill, introduce sales targets and continuously give them feedback on how they’re performing in comparison to their colleagues. With these simple interventions, you will have designed a choice system that triggers hyper-competitive game behaviour.

These applications of the lens of behavioural economics to human decision making is nothing new. What fascinates me is the idea that could also look at the economy through this lens. The economy is a behavioural design system that rewards particular behaviour with power and profits and punishes other behaviours with taxes and fines. If you want to transform the economy, you have to tweak the behavioural design in such a way that it rewards and incentives different behaviours.

(BTW: In this post we explore the concept of Behavioural Design in dept)

Behavioural Design is the missing layer

Join our Behavioural Design Academy and learn how to positively influence minds and shape behaviour

It’s all about the incentives.

The problem with the current behavioural design of the economy is that it consistently rewards destructive behaviours, both with money, power and social status.

Society glorifies being rich and being powerful. To the extent that it rewards sociopaths like Donald Trump, Mark Zuckerberg, Jeff Bezos, Peter Thiel and Charles and David Koch (see picture above. BTW: David died this week) with power, prestige, admiration, etc.… The summit of social status in western capitalist society is “being rich”.

Society also rewards them with unlimited power to do whatever they want. Think about how Bezos played out communities against each other to fight for hosting the next HQ of Amazon. Amazon was offered 2.2 billions in tax cuts by the city of New York.

The third reward is financial. If you’re rich, you have access to all the tools to get even richer. The (capitalist) behavioural design of the economy offers unlimited financial rewards to people with capital. Every valuable thing in the marketplace is being sucked dry by the owners of capital. There’s so much cheap capital in the hands of investors that they can buy everything to help them to grow their wealth even further: They buy up houses in cities, they buy kindergartens, elderly homes, entertainment franchises, etc. They own more than 90% of all fortune 500 companies through the stock market, and instead of using profits to reinvest them in the companies, they use it to pay themselves high dividends.

This process is called the financialisation of the economy and explains why everything of value is rapidly becoming more expensive.

 

The solution: Change the incentives


If you want to understand the economy, understand incentives. If we’re going to change the economy, we’ll have to change the incentives. It’s as simple as that. If we want to fight inequality and climate catastrophe, we will need to change the social, financial and power rewards.

Governments and economist only tend to focus on tax incentives today, but I think we could have a far more significant impact if we work on the psychological rewards of social status and power.

We will need to challenge the social status of those who are destructing the planet and extracting wealth out of the economy. We will need to reward those with bold and brave ideas about the future with power.

A great example of this behavioural design change is the work that the Sunrise Movement in the US is currently doing. They are the movement that came up with the New Green Deal. They did a fantastic job of reframing the climate crisis story. Instead of talking about “saving the planet” and scaring the hell out of people, they turned climate action into a narrative about investing in wealth creation, job creation and the investment in thriving communities where kids have access to good education, clean water clean air and health care. That’s a story for which they’re getting bi-partisan support.

As a consequence, this broad support incentives politicians to embrace the New Green Deal, because it increases their chances of being elected. Meanwhile, they do a great job in glorifying business and community leaders who step up and take action and vilify those who are bringing the world on the verge of climate catastrophe.

Even the very rich are suckers for social status and recognition


In the end, no matter how rich we are, we all crave for recognition and social status. If we as a society succeed in taking those away from the current “heroes” of financial fame and instead reward the new heroes that bring society further through investing in a sustainable economy and a sustainable planet, we might succeed much faster in turning things around.  Saving the world is all about redesigning the incentives.

It’s as simple as that.

sue behavioural design

Learn how to make the science of influence work for you

Join our Behavioural Design Academy and master the skills to shape minds and influence behaviour. We trained people over 30+ countries and have a 9,2 satisfaction rate. Check out our free brochure. Don’t miss out on making your growth a success.

sue behavioural design
Nassim Taleb's great thinking on hedging against group-think

The psychological price of being rational is being unlikeable

By | Organisational Design

Rational decision makers have to dare to
fight common sense and social norms.

Nassim Taleb's great thinking on hedging against group-think

This blogpost is about how being rational in organizations is actually pretty difficult. It comes at a high social cost. Because rational people need to defy groupthink, defy authority-based decision making and defy social pressure. That’s one of the reasons why innovation is so difficult to pursue.

When do you pull the Goalie?

Imagine you’re a coach of a hockey team. Your team is one goal behind and we’re approaching the end of the game. You know you need to take a gamble and change the goalie for a field player. Butthe question is when. When do you pull the goalie?

If you approach it rationally, the answer would be 5-10 minutes before the end of the game. That’s how you maximize the chance of making a difference. But no coach would dear to do this. Because if it goes wrong, everyone will blame the coach for the mad and unexpected move.

The example was told by Malcolm Gladwell in an episode of his podcast Revisionist History. It reminded me of another story, told by Nassim Taleb in the Black Swan. Before Taleb (see picture) turned philosopher, he used to work as a trader on Wall Street. His strategy was to bet against improbable events. He would take the money of his clients and he would put it all in insurance that would pay out in the case something unexpected happened, like a crisis. He knew the money would eventually pay out big time, he just never knew when the improbable “black swan” event would happen. But he just waited and did absolutely nothing.

It drove his managers and his clients mad. They expected him to work actively to make money for them. The idea that he would sit on his ass to wait for a crisis event to happen – which would pay out enormously – was just unbearable to them. It was a perfectly rational strategy, but Taleb had to develop a very thick skin in order to be able to stick to it.

Behavioural Design is the missing layer

Join our Behavioural Design Academy and learn how to positively influence minds and shape behaviour

To be rational is to be unlikeable

The problem with acting rational is that it very often clashes with social norms. You will get much less problems for failing by following a strategy everyone else would follow, then you would if you followed an unexpected path, even though it makes sense from a rational point of view.

My partner Astrid decided to stop working at the office a couple of months ago. She realized that being at the office prevented her from doing the things she should be doing to create value for SUE. The constant distractions were killing for her productivity and her mood. So she started working at home. It took her three months to stop feeling guilty about it.

Warren Buffett and Charlie Munger, the smartest investors in the world, spend most of their time in the office on reading. They figured that investing most of their valuable time in understanding more about the world, would eventually pay off in smarter decisions. Berkshire Hattaway made 242 Billion Dollars of profit in 2017.  Unlike most investors, they buy companies with the intention to hold on to them forever. They are in the business for the long run.

Corporate culture doesn’t like the crazy ones

The problem with acting hyper-rational is that you need to be able to deal with social pressure. Very often, people will not like you for breaking the social norm. And when your choice leads to failure, they will find it very easy to blame you for your stubbornness. I think that’s one of the reasons why it’s so difficult for corporations to innovate. Innovation needs stubborn people who don’t mind the social pressure to conform to corporate norms. “Think Different”, probably the best commercial ever made, actually pays tribute to those people with the following legendary quote:

“Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.”

sue behavioural design

Learn how to make the science of influence work for you

Join our Behavioural Design Academy and master the skills to shape minds and influence behaviour. We trained people over 30+ countries and have a 9,2 satisfaction rate. Check out our free brochure. Don’t miss out on making your growth a success.

sue behavioural design