Tomorrow, is UK GovCamp, a bar-camp for Government. I’m going, and it’ll be at Goggle’s offices in Victoria from 10AM. Here’s the list of everyone whose going. Unfortunately, though, I think the tickets are all gone but there is a waiting list, if you’re interested. If you want to know more, there’s a vertical social network running.
I’ll post impressions next week, and of course will be on twitter during.
1.5 days. 100 people. 20 design sessions, and 200 ratified decisions.
It’s the reason I went dark last week online. We were running a crowd sourcing un-conference event to work out the details of IT strategy in as short a time as possible.
It was an event that showed me the reputation the public sector has for being bureaucratic and unable to do anything quickly is unfounded.
Lots of people doubted us when we said we wanted to crowd source strategy development. “Crowds won’t give you anything you can use”, someone said. “They don’t have all the background” someone else told us.
The thing is, they may not have all the data my strategy team had, but collectively, they had deep insight that we would never have gotten ourselves. All we had to do was provide this big group with a way of expressing it in a reasonable way.
Just like most organisations, whenever there is a decision to be made in the Department, lots of people like to have their point of view. The traditional approach is to call various meeting with various stakeholders until you reach what passes for consensus. This can sometimes take a long time. Everyone complains about it, but nothing seems to make things go more quickly. It was exactly the same at Lloyds Banking Group. Big organisations are challenged when you ask them for quick decisions.
But none of that happened at the strategy event last week. In each design session, the subjects were discussed in detail, but since we made it a rule that anyone making a proposition would automatically trigger the chair to call a vote, people naturally put their cards on the table quickly. It worked well.
Now, I don’t propose to go into the IT strategy we’ve come up with here, though I have to say it is a very powerful document, and vastly more detailed that you could expect to get when you task a small secret-squirrel team to do the work, who then do a big reveal once everything has been watered down appropriately.
But for those of you who are interested, I though I’d explain exactly how we ran the day. Several of you who’ve been reading my Tweets have been asking.
So we started out by doing PowerPoint to the whole group. We laid out the problem we were trying to solve, and provided some stimulating material that people might liked to consider across the event. This was the only time we did Powerpoint, actually.
Then we moved straight into propositions for the first design session, using the basic format pioneered by unconferences. We asked the question “What do we need to design”, in order to prompt proposals for sessions, and then voted as a group on what was needed. The top voted four sessions were immediately scheduled in breakout rooms.
At this point, I’ll pause to let you know that we decided to use electronic voting systems throughout. There were a couple of reasons: firstly, there 100 people in the room, so it was too hard to count hands every time we wanted to put something to the group. But secondly, we were hoping there’d be a bit of contention and provocation, and we wanted the anonymity of electronics. Plus, it gave us the ability to get actual metrics on how positive people were about each thing that came up.
Each design session used standard unconference principals. You got to move freely between sessions as the mood took you, and could interject at any time once the preliminary points were made. In each room, the discussion eventually got to real proposals – and we asked the group to vote if they “agreed to add it to the strategy”. With a majority vote, it was tentatively added. I’ll get back to that in a minute.
We ran screens in each room so that attendees would know what was going on in other sessions, updated live as the tentative decisions came up. The idea was that people should be able to bolt from one room to another if they felt things were going on they had to be a part of.
We realised pretty early that walking out of meetings for some people normally constrained by traditional formats didn’t come easily. We had to get specific in encouraging people to do it, actually. Perhaps they felt it was rude, or something.
Anyway, we ran 20 design sessions of an hour each over the 1 and a half days, and you’d not believe the breadth of topics. Or perhaps you would, if you’ve been to a BarCamp.
And the final step, after each design session, was we brought everyone back into the main room and had them ratify, electronically, every single tentative proposal that came out of the breakout sessions.
Just as a side note, I have to admit I was very, very nervous about how this format was going to be received. Firstly, we didn’t know if it would work in a corporate setting. As in, when the outputs have to be more than networking and learning. We wanted a real document, and who knew if people would engage enough to do that?
But there was another worry as well, and that was that we’d find people in such violent objection to each other that we’d never get any decisions at all.
What actually happened was that most of the propositions were carried by a landslide. There were some, the especially contentious ones, that didn’t of course. I rather liked that, actually, since it showed that people weren’t just pushing the Yes button every time.
But I think the big learning is this: if you put people in a room and give them a novel way to make decisions, you will get decisions. It has proved to me that struggling against the big corporate stakeholder machine (which is highly optimised not to make any decisions) need not be the only approach one takes when trying to introduce change. At least, it seems to work for us.
If any of you want more details, feel free to reach out.
Well, I’m back from Austria, and I can tell you, the skiing there was awesome. And I know those of you with families will probably be horrified to know this, but I have to say that taking oneself off during Christmas and not having to do more than calling a few people back home was just an amazing relief. You know how stressful all that Christmas stuff can be. We even skipped Christmas lunch, opting instead for a nice Goulash in a ski-in cafe on the slopes.
Anyway, now that I’m back, I’ve been thinking about 2009, and some of the highs and lows. Mostly, its been a great year.
At the start of the year, I was pretty sure interesting things would be happening. At Lloyds Banking Group, we were just gearing up for the big integration exercise, and no-one was certain what would be happening from one month to next.
The innovation team and I were still trying to work out how to adapt the innovation strategy given the number one priority for everyone was going to be incrementalism for the foreseeable future. Luckily, that was the strategy we’d already been pursuing, even during the boom times. For some institutions, and Lloyds is one of them, you simply can’t have a play-to-win innovation strategy and get away with it. So, as it turned out, there weren’t that many changes there for us. We just kept going on with Innovation Market and all the other things we’d started. I think we managed to achieve some valuable things for the bank.
Nonetheless, I knew that I’d be leaving the bank in 2009, but didn’t know where I’d be going yet. Sometimes, you just know that the time is right. Anyway, I’m firmly of the belief that when you’re an innovation guy, you really want to make sure that you turn your people over every couple of years or so. You want that fresh perspective, that new way of looking at things. Why should it be any different for the person in charge of the innovation programme?
By the end of January I was in a bit of a panic, because I was months late with the manuscript of Futureproofing and just didn’t see how I was going to get it done. So I started getting up at 3AM every morning to write, and now that’s a habit I just can’t shake. Lucky, actually, because my next book is now also months overdue, so the 3AM writing is back on again.
One of the highlights of the first part of the year for me was a trip to Australia, to attend Annalie’s AMPlify festival. I’ve written about it here before, and its a case study in my book. Now, the content of the event was interesting, of course, but it taught me a major lesson: you can’t overlook design in anything you do. Fit and finish is everything, and once you have that right, everything else flows naturally.
My current team are pretty sick of hearing me rant on about this, actually, and they also keep reminding me that just because Annalie had butterflies hatching out of chrysalides at the exact moment people were coming into her event on the last day, does not translate into appropriate expenditure in a non-corporate environment. Actually, I already knew that, but adjusting to the sometimes arcane rules of the public sector has been eye-opening.
When I joined the Department for Work and Pensions in August, it was a bit of a relief, actually. The bank had become increasingly difficult. Although most of us were confirmed in roles by that stage, there were constant announcements of reorganisations, teams being shut down, people being transferred, and of course, the “death by a thousand cuts” as we kept announcing round after round of layoffs due to integration. Everyone was on edge.
Leaving was neither a simple decision, nor was it done in haste. After all, what would I know about working in the public sector?
Many of my colleagues in banking were somewhat surprised that I joined the civil service (“What on earth would you do that for?”), but it has worked out to be a rather pleasant surprise.
The fact of the matter is that there are few bigger IT environments anywhere. Neither is the innovation upside larger than here. To that, add the challenge of designing innovation systems and processes where profit is not the driving motive, and I think you can get an idea of why this move was so attractive to me.
I’ve been in post now for about 4 months, and I’m really looking forward to talking about some of the things we’ve been up to in that time. There’s really a lot that’s very exciting going on.
The other big thing for me in 2009 was the release of my first book, Innovation and the Future Proof Bank. I have really been overwhelmed by the response to this. I recall at the time I was sending it out for the last time to the publisher, I did it with complete trepidation, knowing that there would be nothing i could do it bombed.
Apparently, that is the normal fear of writers before they send things out.
Anyway, sales of the title are good, and my publisher is pleased. And word is spreading, so month on month sales seem to be growing at a reasonable rate in every country that the book’s avaialble in. Since the book is so ultra-niche, it is much more than I expected.
Anyway, that leads me to the end of the year, and my current projects. One of them, The Little Innovation Book, is an online set of essays based on my writings here in the last four years. Publishers – particularly mine – don’t like to sell things that are already in the public domain, so they aren’t very interested in books based on blogs.
But Future Proof Bank is pretty text-booky, to be honest, and I wanted to have something much more approachable. The Little Innovation Book will hopefully fill that need. I’m hoping to have it done and online in a month or so.
The other, much bigger, project I have on, though, is my second real book. Its tentatively called One Big Thing, and its about single innovations. In particular, based on a set of observations from history and more recently, I’m making the argument that radical innovation isn’t where the money is.
Neither is it in incrementalism, by the way, to those of you who know I am fan of small, sharp innovations done at scale.
Anyway, I won’t say much more about that right now, but will certainly keep you apprised of progress throughout the year.
So, for me, 2009 has been an exciting, and very impactful year. I am very confident that 2010 will be equally exciting. There is just so much going on, and I love it when its busy.
I’ll be back tomorrow with my top 10 predictions for 2010. I am quite often wrong, mind you, but I can’t resist joining in with everyone who always makes their forecasts at this time.
Actually, my boss at the Department has this down to an art. At every Christmas-do he has, he asks everyone their predictions, notes them down, and reads them out the next year.
I forgot to make predictions on the blog last year, but the year before I was pretty much wrong, wrong, wrong. Its much more fun to read back and realise how wrong you were than be right anyway.
The best of the season to you.
Corporate innovation festival, I hear you ask? Well, yes indeed, and when I first heard about it, I was impressed, but couldn't for life of me see how anyone could possibly get a business case together to support such a thing.
Let me paint you a picture: get your Head of Innovation to go around the world and find the most interesting people she can. Doctors, political advisers, new media people, web psychologists, and, yes, even a banker. Then bring them all to Australia and let them talk about their work to the whole institution. See if it inspires new and creative thinking in your people.
But don't just stop at internal. Have an event in a pub where local ph.d students can pitch their research on a mic in two minutes of less, and give prizes to the best as voted by the crowd. And then have your CIO decide that everyone deserves a prize and give each struggling student $1000 to roaring applause.
And since you're not just doing internal, how about you broadcast the whole event, including all these expensive internal guest speakers, so that the world can share the inspiration. Do this even though traditional thinking would suggest that allowing just anyone, including competitors, to participate, would reduce any potential competitive advantage you might generate from the investment.
And just as icing on the cake, bring all your top customers and investor in to meet all these interesting people. Don't just stop at confronting traditional thinking in your staff, make sure your most valuable customers get their thinking challenged as well.
Finally, finish it all off with a staff expo where everyone gets to show how off their work in new and creative ways. Have, for example, a mock cave complete with cavemen to explain how your legacy systems have evolved to their present state.
You can understand, being somewhat a traditionalist myself, that when I looked at all this, I couldn't understand the business case. That's because the results aren't obvious when you just look at the numbers. I'm very busy running an innovation function that tries to get all these nice predictable returns from investments, so doing a festival hardly seems a great use of money.
But then I realised this: Amplify09 is the most magnificent ideation campaign I've ever seen. It makes the ones my team and I run internally at the bank look ridiculous in comparison, and we know how to turn our little attempts into money predictably.
Can you just imagine how much differentiation AMP will have as it actualises all that out-of-band thinking it generated from this event?
But the more important point is this one: quite obviously, AMP is an institution that's realised that the real competitive advantage it has is the people who choose to work there. Who cares about technology and products and processes, when you have the ability to invent uniqueness whenever you want?
Meanwhile, the rest of the industry is very busy with dark ages thinking about the nature of competitive advantage. They're all still doing trade secrets and patents, and trying to close down the ability of their staff to collaborate in, and outside, their institutions.
Want to bet which institution I think will really differentiate in the long term?
As you know, I spent last week at Amplfy09, an innovation festival hosted by AMP of Australia. At one of the events, I had the chance to sit with some financial planners and their clients. The question I posed was this:
Which do you think has more brain power: 25 twenty-three olds (i.e., brand new graduates) with a year's experience each, of one 65 year old with 25 years of experience?
The obvious answer, of course, is that the crowd of 23 year olds has more brainpower, but the real question is whether the value of experience outweighs the obvious advantage in mental watts of the group.
My thinking is it does not, and here is why.
Experience is a result of the formation of mental models about the way things work. Essentially, one observes that certain actions produce certain effects, and over time one learns to generalise so that even actions which are only marginally related to those previously observed can result in reasonable predictions of outcomes. Because the mind has limited abilities to accept information and process it, developing experience is something that takes a large number of years.
This is why you generally reserve very accountable positions in organisations for those who have lots of experience.
But try this experiment. Get a group of new graduates together, and confront them with a crisis. You will be amazed when you watch what happens: instead of some alpha-male/female attempting to take control of the situation, the group optimises itself, using rapid fire burst of communication, to solve the problem synergistically. It looks like chaos, and you wonder whether or not anything will ever come of it, but invariably very good outcomes do. And the order that emerges from all this chaos tends to be a highly optimised resolution of the problem at hand.
I know this, because I've had lots of time to study our new workforce at the bank, and they do things in quite different ways to those that my peers and I do things. We try to take control, to lead. They don't bother with any of that, and self organise into a non-structure that produces results, which are often unexpected.
Coming back to my original question, then, the value of experience as a differentiator in this case is very much reduced. Because you have 25 minds processing things in parallel, the amount of information that can be involved in a mental model is incomparably greater than that for a 65 year old with experience. 25 minds working together can accept all the evidence a 65 year old accumulates over their career in hours or days, and Instead of building models over time, they do it in real-time. The result will tend to approximate the best available outcome given a much broader analysis of data.
Here's another experiment you can try if you don't believe me: talk with a group of twenty-somethings about a project they've been working on, and ask them for detail of things they didn't work on personally. They'll have no clue at all what their peers are doing, and will refer you onwards. They don't care what their peers in the crowd are doing, because they have self-optimised their handoffs and interactions so they don't have to care.
That's quite different to the way that I, for example, would approach something. I need to know that the whole outcome is under control. I need to know the detail is in hand. And I must certainly feel able to explain the whole project to anyone who asks me. I am accountable; therefore, I must know what is going on.
In other words, I am unable to harness the power of multiple minds in any way which makes the whole greater than the parts.
Now, before I leave this topic, I want to make one last point, and it is this: the communications and collaborations technologies in the hands of our new workforce already let them collaborate at lightning speed. But these are not technologies that one expects in any way to slow down their advance. The power of crowds of young people to do things previously reserved for only older, more experienced people will continue to grow, probably in an exponential fashion.
Consequently, I predict the death of experience as the defining decision factor in who gets what job in our workforce within the next 10-15 years. That's the timeframe, by the way, that significant numbers of these collaborating crowds of young people will start to win their first senior jobs away from the old guard non-collaborators who presently rule the roost.
I'll close this post with another discussion I had at Amplify last week, and it was with a senior executive I'd made these points to. He wanted to know, if the end of experience was nigh, what would happen to all the older workers out there? Now, I don't have a convenient answer to that, because I don't know. But what I have observed so far is that collaborating groups in this age band tend to make collectively moral decisions which include the social best interests of most players.
The probable result? Our experienced workforce will get taken care of, whilst at the same time, they are pushed to the edges of major decision making. They will be reference encyclopaedias that can be called on for historical facts quickly and easily, but won't be core to the actual process of creating substantial change.
Last night, I was at a power networking event, and here was the question I was most asked: "Innovation – well we want it, but how do you pay for it?", Especially in a downturn, apparently. Broad consensus seemed to be that it was easy to afford innovation in the good times, but much, much harder at present.
Obviously, the bad old days where doing innovation is considered optional have not left us yet.
However, the question remains a valid one: sorting out the funding thing is indeed one of the biggest challenges a new innovation programme faces.
In my research for Innovation and the Future-proof Bank (out on August 29 – Hurrah!), I discovered there are as many funding models as there are stars in the sky. They range from elaborate internal corporate taxation schemes, to pure overhead supported by single business units. But successful innovation programmes – meaning ones which last more than 18 months - all have several common factors.
The first of these is obvious. Given scarce funding, an innovation programme must be the best available investment considering the opportunity costs of doing everything else. It is surprising how many people who do innovation fail to realise this, but why would innovation be any different to any other investment a rational business makes? It is when investments in innovation are irrational that programmes are seen to be speculative and risky. They naturally get cancelled the second the reality distortion zone generated by the sponsoring executive evaporates.
The second factor common to successful innovation programmes is they don't cost much, and it is consequently easy to justify they are the best available investment opportunity. Let's say that in a particular institution, the best available use of the money before innovation returns 49% in year 1. That's unrealistic, I know, but I use it to illustrate my point.
Let's say the innovation programme is spending a million in cash a year, and for this, they need to generate a real cash return of 1.5 million to be the best opportunity available. That's a 50% ROI, and to do it, let's imagine the innovators have made 10 100k investments. Further assuming that one fifth amount to anything, we have two investments that have to make about 750k each in the first year. Now clearly, that's not a very big ask, supposing you're screening properly. You can do that with a few changes to a volume business process in some cases.
Now let's imagine a much bigger programme now, say 10 million or so. To get to 15 million (assuming the same success rate as before), you'd need to make 100 100k investments, or a smaller number of much bigger ones. The bigger the individual investment, naturally, the more concentrated the risk. At least 80% of what an innovation programme will try is going to fail, so concentrating the risk in this way tends to be very expensive. But the fact of the matter is that very few innovation teams scale up their bandwidth at the same rate as they scale up the money.
Anyway, for argument's sake, lets imagine our innovation programme has quadrupled the number of investments it can make in a year to 40, and each is worth 250k. 20% will likely translate into value, so now we have to get 15 million out of this smaller pot of success: each must investment must return 1.87 million in year 1.
The difference between 750k and 1.87 million is very substantial: the former can likely be achieved in a single year, but unless you're lucky anything really new won't make the latter until year 2 or later. At least, not anything that starts out with a cost of 250k.
The final factor common to successful innovation programmes is they are very, very predictable in terms of making their numbers. Obviously, such programmes don't know which specific innovations are going to come out of their pipelines in advance, but they do know pretty accurately how much money they'll be making. This is a numbers game we're playing, after all, and is very little different to running a loan book. You know in advance how many loans are likely to go bad, so you can compute a return on the loan book. It is no different for an innovation portfolio, and having more investments rather than less is the best thing to spread the risk.
By making large numbers of small investments, an innovation portfolio can be as predictable as you like. You can also adjust the investments in such a way that you can hit a particular return number with a good level of precision.
Innovation programmes with all three of these success factors tend not to have to answer the funding question often. Since they're making money and at a better rate of return than other available opportunities, a rational firm will usually make a rational decision with respect to funding.
The most interesting thing that happened last night at my networking event, however, was the reaction I got when I explained all this. Apparently, lots of people still think in terms of single innovation investments. Is it any wonder that innovation is sometimes seen as optional in the bad times?
Last night I was at an innovation event where the thorny issue of definitions came up. That is, definitions of innovation.
Now, as you've probably seen in your own organisations, dare to utter the word "innovation" and no one will be able to agree on what it is, much less how to achieve it. So too it was last night at this dinner.
One bright spark suggested that it was pointless to try to define innovation since no agreement would ever be reached ever. Far better, he thought, to let people have their own opinion and just move on.
I, however, disagree, and the reason is this: multiple divergent opinions on what you're trying to achieve with an innovation programme generally lead you to achieving nothing at all.
Here is our definition at the bank: innovation is anything that we might do which would not have been achieved through ordinary business as usual processes. It is a convenient definition because it tightly defines our area of responsibility, and also our scope for what can reasonably be done.
We don't, for example, tweak interest rates, terms and conditions, or product marketing. All of those things have very good processes surrounding them already. There are quite a few Lean and Six Sigma groups running around which have the goal of improving those, anyway.
On the other hand, we do often make changes to specific business processes in unusual ways. The other day, for example, we spent a while considering how we could put a left-field administrative process on an ATM. This is not something that would ordinary have come up through the ATM team, but was a suggestion made internally by someone. We're dumping that, by the way. Too hard, too expensive, and would likely create the longest queues ever seen.
My point in all of this, however, is that our definition of innovation allows us to touch anything truly new whilst not interfering in places which are already well established, and have their own improvement processes in place. It is also convenient that it doesn't place any limits on how small or how large the innovations must be to count. We can go from incremental to radical without modifying anything at all.
I've often said that the foundation of an innovation programme is the means of collecting ideas and doing things with them, but last night's discussion has made me rethink that. The true foundation is getting a definition – doesn't really matter if not everyone likes it – and sticking with it. Then, at least, you have something to aim for, and won't kill yourself trying to please everyone.
Late last week, I gave a guest lecture at Nottingham University to a group of undergraduates studying marketing. They were 2nd years, and my hostess was quick to let me know that I shouldn't expect them to behave in the ways I'd been used to in large corporate meetings. I wasn't, for example, to expect rapt attention, punctuality, or any kind of animation from the audience.
Since I am used to this behaviour anyway from bankers at various industry events, I reassured her that this would be of no concern to me whatsoever. Anyway, as the 400 or so students filed in, it took me back to my own years sitting in lecture halls, wondering just how much longer I would have to put up with some boring person talking about stuff I didn't care about, instead of letting me go straight to the student bar where the real work was going on.
Surprisingly, these students were engaged and interested.
But let me tell you one thing that was very different about them: they never laughed at my jokes.
Now, I am pretty confident these were funny jokes. I know this because several members of the university faculty were there as well. And they were laughing.
But not the students. When I spoke about idiot-repelling force fields that surround new self service innovations, ensuring a complete lack of use at introduction, they didn't crack a smile. When I tried to explain the difference between incremental and breakthrough innovation, by pretending to be Boeing 737 on stage with wingtips, they barely looked up. And, finally, when I was talking about new customer experience, using Vatican Airways as an example (an airline that has a prayer on the headrest for every passenger) I asked offhandedly what the chances of such a plane crashing might be. All I got was a yawn.
What do I deduce from this?
Gen-Y – those born after 1980 – have quite a different reaction to stimuli than other segments. My experience – with old people laughing, and young ones ignoring – is illuminating. It means that if you want to reach this new generation, you can't just do what you did before, perhaps with some minor age-related tweaking.
It means you have to do something completely different. And finding that thing will likely require putting Gen-Y in positions of authority, with full ability to create their own products and define their own experiences. You don't give a caveman a computer and hope you get software. Neither is it reasonable to expect a non-Gen-Yer to create stuff of interest to Gen-Y.
Of course this leads to the penultimate question: how many institutions are going to hand over the authority define and create products and experiences to someone in their early twenties with practically no banking experience?
The answer, of course, is very, very few.