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Consultant-Led Innovation

Finally, remember Innovation won’t come from plans or people outside your company – it will be found in the people you already have inside who understand your company’s strengths and its vulnerabilities.

Steve Blank, Esade Business School Commencement Speech

I think Steve Blank – well-respected thinker on innovation and entrepreneurship – has hit a key point in his speech. A company’s employees are exactly the right people to enlist in innovation efforts. Here are the qualities that make employees uniquely qualified:

  • Deep knowledge about customers
  • Understanding why customers leave
  • Strong interest in the company’s future
  • Internal informal networks to move things forward
  • Vast reservoir of existing ideas and insight about future possibilities

Organizations are starting to take these amazing attributes seriously as they think about innovation. I’ve seen some forward-thinking organizations involving employees in the process of moving forward. But not all, certainly not a majority yet. For many senior executives, consultants are still the preferred means to think about and design the future.

Consulting’s impact on employees

In my history, I’ve seen how consulting has been used in organizations, as an employee, a consultant and an observer. I sort the types of consulting into three levels of a pyramid:

Consulting stack

 

The bottom level is consulting around specific functions.  Towers Watson, for instance, focuses on HR and financial issues. This consulting is helpful in bringing new information to the employees in these functions. Consultants here see a lot of what works, and what doesn’t. With both their expertise and experience, they make people smarter in the core supporting functions of organizations.

The middle level is more about enablement across different groups. This consulting brings new philosophies and frameworks to employees. It enhances people’s ability to think about addressing the key strategic factors that impact the business. My own work consulting on crowdsourced innovation is one such example. Consulting firm Deloitte offers Lean Six Sigma consulting. This level of the consulting pyramid works in concert with what motivates employees and helps them be better in their jobs.

The top level is best characterized as strategy consulting. These firms (e.g. McKinsey) look at a company, its assets and its markets, and design a future path for the organization. This can include new markets to go after, expanding in existing markets, new products to offer and new business models. This is what I call Consultant-Led Innovation. It is actually really valuable, but can also result in demoralizing employees.

Do outsiders really know better?

I’ll relate my own experience here, see if it resonates with you. When I was at Pay By Touch, the CEO decided to bring in a well-known consulting firm. Their mandate was to examine the payments market and determine how Pay By Touch should tackle it. After doing their research and executive interviews, they came up with a strategy for pricing, and new products for a biometric wallet. I remember attending their presentation to a packed room of employees. The room was packed because it felt like the CEO was going to go with their recommendations, and people wanted to know what the consultants were thinking.

After seeing the presentation, the collective employee reaction? Meh. It suffered from two issues. First, it wasn’t anything that hadn’t been part of the discussion internally. Second, it had some fundamental flaws that people who’d been working on the edge of the evolving payment industry would have known. Unsurprisingly, their recommendations went to the shelf without further action.

But that experience always left me with a bad taste. Why didn’t the CEO call on his own people to do this strategic thinking? He’d hired smart people who knew credit cards, ACH, point-of-sale systems, etc. People who joined the company to change the way we pay. But instead of leveraging that, he brought in the consultants.

Outside consultants aren’t going to know your business – customers, markets, competitors, products – better than your employees.

Diverse perspectives and who is motivated most

I’ve written previously about how valuable cognitive diversity is. And the strategy consultants do add to that cognitive diversity. They have smart people who bring strong analytic perspectives to your business. The problem arises when their perspectives, their voices are the dominant basis of thinking for the C-Suite.

It’s an in-your-face dismissal of your “most valuable asset”, your employees.

Dilbert - employees are our most important asset

Via Dilbert.com

As I’ve described previously, the key to successfully engaging employees and having them help lead the company’s innovation is for senior executives to set a course forward and ensure that innovation obstacles don’t stifle progress. Strategy consultants actually can be useful here, in that they can help an executive crystallize thinking about the future. After that, enlightened organizations know their employees have the smarts, knowledge and motivation to work out the future. And better than some strategy inserted from outside, when employees help determine the organization’s future, their enthusiasm and energy will be critical to achieving the outcomes expected.

Don’t rely on consultant-led innovation. Make sure you’re building through the amazing cognitive diversity and energy of your employees.

I’m @bhc3 on Twitter, and yes, I’m a Senior Consultant with HYPE Innovation.

 

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How to determine what rewards matter to employees

In the field of enterprise innovation, rewards programs are a relatively common component. This is a response to the fact that participating in innovation often comes on top of an employee’s existing duties. Organizations want the cognitive diversity, they want novel ways of addressing needs, but they also need to satisfy customers and keep the lights on. Rewards programs are put in place to provide additional value from participating in the innovation efforts (on top of the intrinsic motivation to help solve a challenge).

Rewards programs have a well-earned bad reputation for being de-motivators. Simplistic approaches – cash, gift cards, merchandise – can inadvertently wreck employees’ motivations to participate. When done poorly, they become what Daniel Pink described as de-motivators. Which then opens the question…how to do rewards “right”?

I think what matters is the type of work. Even Pink talks about how his research about motivation relates to what he terms “creative tasks”. I want to pick that up and propose the following matrix as a way to think about what rewards matter to what types of employees:

In this matrix, two attributes are keys to understanding what types of rewards would appeal to employees. Ambition level speaks to how much responsibility the person desires to have. And how much impact on the organization’s outcomes the want wants. Cognitive complexity includes what Pink calls “creative tasks”. Work that is more cognitively complex will have a high level of uncertainty, and require learning, trial-and-error and an iterative flow. To help make these characterizations of work more tangible, I’ve added some example occupations for each square in the matrix.

Together, cognitive complexity and level of ambition determine what rewards would hold appeal. If you like tasks that follow well-known rules, rewards that allow you to gain new knowledge are less interesting. If your objective is a paycheck and a great life outside of work, opportunities to meet with the CEO hold little appeal. If one’s interests run toward ways to increase career options and take on greater responsibilities, a $25 Amazon gift card offers little motivation.

I just wrote more about this in my post, Keys to success with an innovation reward program. There, I’ve described a spectrum of rewards that run from cash/merchandise through innovation program options. I map the matrix to those, and provide specific examples where rewards were done wrongly. Learn from those mistakes.

I’m @bhc3 on Twitter and I’m a Senior Consultant with HYPE Innovation.

My Ten Favorite Tweets – Week Ending 122509

From the home office in the North Pole, where I’m packing up a for a couple months relaxing in Hawaii…

#1: RT @nenshad No spoilers but I agree! rt @twailgum “The Business Application of the Decade: And the Winner Is…” http://bit.ly/53BdZ2 my blog on CIO.com

#2: The Benefits of Pissing People Off http://ow.ly/OHEA #innovation

#3: Radian6 Sentiment Analysis Review – Does Natural Language Processing Work? http://bit.ly/5ckKPa > Sentiment analysis still work in progress

#4: Accept Defeat: The Neuroscience of Screwing Up | Magazine #innovation (via @jorgebarba) http://post.ly/Ftqa

#5: The Consumerization of Enterprise VC http://ow.ly/Osck by VC Bill Burnham | what works in consumer web doesn’t inside orgs #vc #e20

#6: What motivates external innovators? (MIT Sloan) #innovation http://post.ly/FfKm

#7: RT @jhagel: Drafting an entire workforce into the company’s brain trust – lessons from Toyota http://tinyurl.com/yfnh87d

#8: RT @brucenussbaum Ingenius use of space.Train goes through Thai market! Unbelieveable! http://bit.ly/4TEva9 /via @brucemaudesign (via @Rishadt)

#9: RT @marylynn3 How NORAD keeps track of Santa- A behind the scenes peek from @CNET News http://bit.ly/6Py9BY

#10: Wrapping paper, Two Buck Chuck, It’s a Wonderful Life > Christmas Eve 2009