Why "Value Thinking" is important for being innovative?

I work in a IT service firm and there is a continual expectation from our customers on “innovation”. The target audience are customers who outsource or offshore IT, business arena of work to save costs, leverage value and focus on their “core” area. We all know this very well and this is the story of outsourcing in general- Let’s not get there as that will fill another 20 pages! :-)). In this blog and in this context, I am only picking a subsection which is “innovation” and that seems to be the expectation from everyone. Fair one, is’nt! When they are outsourcing millions of dollars, the expectation from them on firms to innovate is obvious, right? Even when I am paying continual $$’s for my vegetables-fruits-on-demand-service provider, I am expecting him to be innovative. Don’t ask me how but I am expecting as I am paying some $$’s. :-))

Here is the small disconnect and the premise of my blog- All Indian and US IT firms can definitely innovate on process and technology but to innovate on customers business requires “value thinking”. IT firms have “operations/delivery” folks and “relationship/engagement” folks – These folks seamlessly integrate the fabric of delivering services to the customer expectations. The disconnect on innovation comes specifically on “value thinking” as you move upwards to innovate on customer’s business, “changed mindset” from the service providers/customers and “courage” [required leadership trait]. All these three are interconnected and it’s important to join these three so that we get the holistic picture!

Let me expand on “innovation”- I agree with everyone on customers valuing business result or outcome of applied innovation but the issue here again is related to courage. IT service firms core business is system integration, technology integration, consulting on aligning business and technology- IT Service firm’s core business is not necessarily always improving the “customer business” [atleast from a balance sheet perspective]. Firm X (IT Service Firm) may win a large outsourcing contract with a healthcare giant- Firm X cannot set up new hospitals or create a revolutionary way of handling physicians or create cutting edge surgeries or attract patients/payers for that healthcare giant under innovation [that is the core business model for healthcare giant]- Here is what Firm X can do under “innovation”:

• Can definitely innovate on “process” and “technology” as they are experts in that area and they are contracted for that!·
• Can definitely brain storm with the healthcare giant on their areas of business innovation- 5 W’s[Who, What, When, Why, Where] and 1 H [How] should be triggered for Firm X’s involvement in business innovation? Most of the business innovation will have some IT component to it and Firm X can facilitate that IT part for that business innovation and be a part of the healthcare giant’s innovation eco system. This definitely requires “time” and “energy” from the healthcare giant and its not a one-way street. Companies like Walmart, TESCO, P&G have spent enough time with suppliers to enable them in their innovation eco-system so that they can reap benefits.
• Firm X also need to baseline the current state of process and technology innovation [which is a “hygiene factor”] and sign off on the customer expectations and prepare a road map of future expectations with the healthcare giant on innovation. This has to talk about time and energy required from both parties etc. Now without all these, just talking about innovation either with the customer or internally does not make sense and it will join the league of over-abused jargons in management or leadership! We definitely don’t want Scott Adams have “innovation” in the buzzword bingo contest where “Wally” records these from the pointy haired boss!!

I believe the traits required for “value thinking” for a customer is as follows:

1. Keep on reading on the area that you are working- It can be analyst reports, It can be google alerts on your area, It can be books etc. Because at the end of the day, all are inter-connected and the ability of the leader to connect the dots become super critical in an age where there is no information asymmetry. Reading and Connecting the dots is an important trait- For example, hypothetically speaking, this healthcare giant would have created a revolutionary mechanism on pricing with payers on outcomes or would have created a unique way of doing surgery. How do we leverage Firm X internal knowledge or expertise to enable healthcare giant’s business innovation? Can we explore that? It can be a sensitive area but internally we should be able to connect the dots. Can we do an innovation introduction as outlined by “Michael Schrage”: http://blogs.hbr.org/schrage/2010/11/when-your-best-customers-reall.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+harvardbusiness+%28HBR.org%29
2. Have the courage to face failure- Firm X engagement/relationship/delivery folks should go to a customer and propose something new. It can be a failure but the attempt to “challenge the status quo” has to be there in action. It should not be there to give advice to the team- it has to be there in practical demonstration. This is not a enlightenment session where the team should know how to challenge the status quo but it has to be a practical demonstration on how it is done to the team. Most of the times, we tend to have self-doubts about our approach or idea and the whole thing dies before it is presented. I define “courage” as the ability to face criticism from customer or internally and still have the confidence in your idea or approach. At the end of the day, if you present 10 approaches to customer and if 3 are treated as failure, you still emerge at 70% success rate on new things. That requires enormous homework, connecting the dots and courage. As you can see, all are inter-connected.
3. To expand further on courage, we should think of us as tiger in the mirror and not as sheeps- if we think we are sheeps infront of the customer, we will behave like one. This is a direct analogy but it is applicable- What will happen finally? Will the customer eat us? No- we have to create an impression where we are genuinely trying to do the thinking part along with the customer. And whenever you do thinking, you always have the possibility of going wrong- Its okay. Check out a tiger- Even if it makes mistakes, it does not sulk. :-) don’t know whether it is a right analogy but I somehow like the posture of a tiger.
4. Stay Hungry, Stay Foolish- there was an amazing publication called The Whole Earth Catalog. It was created by Stewart Brand in the late 1960's, before personal computers and desktop publishing, so it was all made with typewriters, scissors, and polaroid cameras. It was sort of like Google in paperback form, 35 years before Google came along: it was idealistic, and overflowing with neat tools and great notions. Stewart and his team put out several issues of The Whole Earth Catalog, and then when it had run its course, they put out a final issue. It was the mid-1970s- On the back cover of their final issue was a photograph of an early morning country road, the kind you might find yourself hitchhiking on if you were so adventurous. Beneath it were the words: "Stay Hungry. Stay Foolish." It was their farewell message as they signed off. Stay Hungry. Stay Foolish.

To summarize, the key traits for “value thinking” which is essential for innovation are:

• Read and connect the dots
• Stay Hungry and Stay Foolish
• Have the courage to face failure and challenge the status quo
• Make mistakes as it indicates that we are trying rather than just order-taking
• Always baseline quantitatively and involve the customer genuinely- This helps in showing improvement or progress

Democracy Vs Progress

I was recently attending an AGM [Annual General Body Meeting] of my housing society- My society comprises of 1000 apartments and each apartment has got a building representative. Each building is labelled from A-Z; so its kind off a centralized-decentralized structure when it comes to maintenance et al.

The purpose of this blog is not to enumerate about my building society but to talk about “consensus building decision making” and “how to take responsibility without authority” and whether “democracy is really good”.

I have been to all these meetings and the key take-away is as follows:
• Everyone wants to make a point
• Everyone has an opinion about everything that they know partially, fully or none!
• Everyone wants to point a problem [seldom do people point a solution]
• Everyone feels the housing society core committee are their employees [I wonder where from this notion is coming as these are honorary jobs where core committee does not take any salary or bill by the hour]
• Everyone wants ROI
• Everyone feels that they need to push hard and feel that there are areas of improvement all the time- I am okay with this but at least the good work has to be recognized some time!

Coming to core committee- They have a challenge to please all the owners of 1000 apartments without prejudice or conflict of interest! They have to get consensus for each and every thing; otherwise it will be labelled as dictatorial and people in India don’t like Hitler in general.

Secondly the core committee are constantly taking responsibility without any amount of authority. This is slightly tricky because in any responsible role, you have to take a decision and if this goes wrong, you will be penalized by 1000 apartment owners and if it goes right, nobody will even acknowledge. That’s the beauty of this job. I feel this is slightly similar to the vertical-horizontal split in a typical Indian IT services firm. Indian IT services in an effort to sustain the scale; created industry based verticals and capability based horizontals. These capability based horizontals will operate on a shared service mode and someone who is in a vertical has to take responsibility without authority as s/he has to constantly collaborate with the horizontals keeping the end customer expectations in mind. Getting things done when you are NOT a boss is relatively easy in a professional set-up but in this type of honorary or public service set-up, I think it’s a nightmare!

Finally coming to my pet peeve which is “democracy”- Is this really good for us? I feel that in the name of democracy, some of the progress is getting stunted across board. I see this in a silo-ed version for this board meeting. During my final pass out year at BITS, pilani we had T.N. Seshan [ ex- Chief Election Commissioner for India] as a speaker and he was articulating about “benign dictatorship” instead of democracy. Mr.T.N.Seshan was passionately advocating benign dictatorship for India as he wanted progress in many areas. I distinctly remember folks talking about the utopian nature of this idea and also some folks who did not understand what he was even talking about [ I was in the latter part as I never comprehended why we are talking about dictatorship when we are supposed to celebrate democracy]. There were some folks who were talking about why democracy is important for India blah, blah. After this AGM meeting, I am completely convinced of Mr.Seshan’s line of thought- I pity Mr.Manmohan Singh sometimes as he has to balance between consensus building, keeping the job, make hard decisions, tell politicians NOT to be corrupt [that is a big ask given the 2G spectrum allocation or the Mumbai Adarsh housing scandal], ensure security etc. This list is endless and progress in a democracy is a real challenge- It is definitely NOT impossible but a real hard nut to crack!

On a tangential note, we are all fairly democratic with our better half to progress in life! Looking at this optimistically, there is progress at least in personal life if one follows true democratic principles! :-))