Fast Iteration: lessons from genetic programming

Okay, I am not going to get too geeky here, but there are important lessons that I have learned from hanging around with some serious geeks. One lesson was about the power of value networks (learned from the open source community). The other is the power of fast iteration. This one I learned from practitioners of genetic programming.

The origins of genetic programming dates back to 50’s but it really only began to come into its own after the turn of the century (doesn’t that sound quaint?) with cheap access to serious computing horsepower. The idea was that you could develop programs that could evolve themselves to solve complex problems.

Okay guys, let’s get one thing out of the way. Yes, there is evolution. Not all programs are created in unblemished perfection.

Key concept here: “evolve themselves”.

Basically, what you can do is to take a set of generic programs and point them at a complex question that needs to be solved. Turn them on, and walk way. Lo and behold, the problem is eventually solved.

In essence, in the darkened room of discovery, the programs begin to try to address the problem. They try, and fail, and learn from that failure, then morph, and try again. Over and over again until the answer is found.  This process often takes hours, but it has been successfully demonstrated multiple times.

But if you think about it, this process is the same for any innovation. It needs to be focused. It needs to iterate a potential new solution multiple times, and it needs to learn. At its core, the innovation process needs be obsessive, agile and unrelenting. In time, it will work. Always. Though probably not in the way you expected.

Why lean is not enough

Over the past two decades, companies have been focusing on squeezing more value out of their manufacturing operations. Cleaving the fat, making things lean. This process has, for the most part, been helpful in restoring competitiveness. At least for the short term. Because cutting costs is not enough.

Years ago I remember learning about the difference between competitive and comparative advantage.  Comparative advantage, I came to understand, was based on production costs and places like Asia, with its low labor costs, was a great environment for reducing that element of manufacturing costs. But comparative advantage is difficult, if not impossible, to sustain. Someone will always find cheaper labor costs.

I learned that competitive advantage is based on value. Create more value than anyone else and you can build long-term customers. The problem, however, is that value is not static, but is constantly evolving as customer needs and aspirations change.

What I now understand is that competitive advantage is not based on value itself, but on the speed in which it evolves, that is, the rate of innovation.  Innovating value faster than your competition is the only way to survive and thrive.

Which leads us back to lean. Improved efficiency is indeed important, but it is only one component. For a company to be successful it must also find ways to increase its agility and creativity.  Combined, efficiency, agility and creativity are the three core elements needed for increasing an organization’s rate of innovation.

The question, then, is this. When was the last time you measured your organization on these three dimensions? You should ask your employees. You may be surprised what you learn.

Innovation, Coffee and German Philosophers

I’ve been thinking about coffee lately. And innovation. And, of course Nietzsche. Who doesn’t, after all?

Coffee has two roles in innovation. The obvious one is in keeping people awake so they can think of new ideas. The mathematician Alfréd Rényi called a mathematician a “device for turning coffee into theorems.”

But it also has a historical role. By the late 17th Century coffee had taken hold of Europe, and with it came the coffee house: a place where people of different backgrounds get together and talk, argue, exchange ideas, and pass the sugar. When Hobbes, Voltaire, Madison, Paley broke the intellectual ice with their startling new ideas, coffee houses were the perfect place to spread and refine them. The British called coffee houses “penny universities,” since you could rub shoulders with prominent people for the price of a nonfat caramel macchiato.

I’m not sure what Nietzsche’s drink was, but he proposed that truth was relative – what is true depends on a person’s perspective. Different people bring different perspectives. What the coffee house did was bring those perspectives together.

The power of open source is that it brings people with different perspectives together. Sure, Eric Raymond said that with enough eyeballs, all bugs are shallow. But it’s not the numbers, it’s the perspective – a million identical eyeballs won’t make a dent in a problem – they need to contribute from their own context.

The moral – when you’re innovating, bring in not just more people but ones with different perspectives. And don’t forget the coffee.

The dawn of the digital renaissance

I am beginning to see the future. Working with high school students helps you do that. Our business and political leaders are not the future, it’s the newly minted young adults that are. And they live in a world that is very differently from ours.

I have heard the complaints about this younger generation – that they are unmotivated and lazy. Or that they are not willing to pay the price of admission to success that we paid, but, instead, are impatient and want it all now.

The more that I spend time with this generation the more that I realize the disconnect between their world and ours. They are the first true digital generation whose fluency with electronic devices makes our heads spin. But we continue to teach them the same way that we did fifty years ago, in a slow, plodding and often painful journey with unclear goals. No wonder we have a crisis of relevancy and our graduation rates are suffering.

That is not how they are wired. As never before in the history of mankind, they have access to tool sets that allow them to quickly acquire knowledge they need on the fly or, with a click, connect themselves to someone with expertise they need.  But what they are missing is often a purpose to focus their potential. Put that piece in place, I believe, and we will be able to help them unleash an amazing creative genius which will underpin a new age, birthing a digital renaissance.

So I did an experiment. We took five students who did not know how to write a single line of software code, matched them up with a developer who had never taught kids, threw them at a problem that was really important for them, and watched what happened.

This was a classic information problem. In high schools, kids don’t know what is going on. There are so many announcements, both general ones and for clubs, sports, etc, that the information flow is overwhelming. On top of that, the primary means by which announcements are communicated are incredibly ineffective for reaching kids. Announcements are emailed to them (but no one reads email in this generation) or they are read over telephone speakers in the front of the classroom (where they are almost impossible to hear).

Really?

The kids said, look, we need to have our announcements on our mobile phones with easily customizable filters so that we are able to focus on those that are relevant to us.

In two short meetings, they mapped out the solution for a new mobile app and an underlying management system for the announcements and then started coding using agile methodologies and putting together a solution using readily available technologies and platforms. Six months later they are ready to release their beta version in what may be the most sophisticated dynamic messaging solution for any high school in the country.

Really?

Never underestimate these kids. They are going to transform the world.

Innovation and the Struggle for Control

You’ve probably known for a while that Firefox is moving to a faster development cycle, and a lot of corporations are peeved.

The complaint of the big IT departments: “We can’t keep up your release cycles. Slow down your innovation, if you please.”

What’s going on here? It’s a fundamental struggle – don’t we love fundamental struggles? – between Control and Innovation. Firefox is doing the innovating – making their tool faster, more adaptable, and more secure with every release (at least, we hope they are). Corporate IT departments want to keep control of the tools they use. They’ve established what Firefox calls “effort-intensive certification policies.” You can’t control something when it changes every week, and you’re not notified till it’s a fait accompli.

The IT guys can’t keep up with Firefox, which is doing its job trying to keep up with the market. I’m with Firefox here. If a corporation’s culture can’t adapt to others’ innovation, how’s it going to keep up with the increasing demands for rapid innovation from its customers? These companies are hobbling their employees with old tools.

It’s time for them to adopt a new model, including a new take on certification. And its time that we expeted our IT departments to get ahead of the innovation curve instead of dragging it down.

The Uses of Discomfort

In my last post I talked about how success at a certain business model tends to create an organization that’s invested in that business model. When it’s time to more forward, the organization rebels and sucks you under. Think of GM producing cars for a vast local market that was shrinking as imports went from an exotic choice to a commonsense one. GM was such an attractive edifice, no one was willing to tear it up to make it work in a new market. So the market tore it up instead.

Which raises the question: how and when do you innovate in order to prevent being swallowed in the mire?

It’s probably too late to do disruptive innovation when your business model becomes threatened – the time to do it is before your business model becomes too stable.

Google is a great example – from search to ads, to cloud to mobile, it keeps disrupting itself, and stays footloose.

Another example is Netflix. When they started, they could have been MailFlix – after all, they delivered all their goods by mail. But they knew that they were entering a Net-based world, and tying their fate to the postal system was not the way to go. They chose the unsettled, ever-changing idea of the Net.

Sure it’s uncomfortable working without a firm underpinning of stability. That’s why we need to be comfortable with being uncomfortable.

That’s not as unnatural as it seems. Yes, we all desire comfort and security, but we also have the need to be creative. Discomfort can be very energizing for the creative process. Look at Intel, a huge company that can only survive by innovating at a ruthless pace. Intel is constantly working to make their own technology irrelevant. Their former CEO, Andy Grove, called it constructive paranoia.

And paranoia means never having to say you’re comfortable.

The Ichiro Strategy

When you read an article about innovation these days, chances are the subject will be the well-known disruptive innovation that significantly changes or creates markets. Incremental innovation isn’t nearly as sexy a topic. To make a baseball analogy, most of the thought leaders out there are emphasizing the home runs – Apple, Netflix, and Amazon, for instance.

But if you go to the plate swinging for the fences every time, be prepared to strike out. A lot

Ichiro knows this. I remember watching the Mariners in batting practice once. Ichiro Suzuki hit ball after ball over the fence. But when the game started, he hit singles. Why? His job wasn’t to hit home runs – it was to help the team win by getting more men on base to score runs. It’s called small ball, and many World Series have been won that way.

In business, games have been won by making incremental improvements to design, quality, marketing and support. Sabrix made valuable improvements to business tax software. The companies Warren Buffet adopts are known for just this kind of approach.

We all love the grand slams – Google and Groupon – but the number of failures is huge. Consider the incremental strategy that took Ichiro to the top. Home runs are great, but there’s a lot to be said for a plain old hitting streak.

How High-Growth Companies Innovate

Tired of talk about innovation? Want to see some hard figures?

Recently we did a study of the innovation strategies of 143 companies, and how those strategies correlated with their success. The study was for NWFPA’s Innovation and Productivity Center. What we found was very instructive.

To get a clear picture of the companies, we surveyed executives about how they approached the 3 dimensions of innovation:

• Product innovation – dreaming up new widgets
• Process innovation – making widgets faster and more efficiently
• Promise innovation – creating business models that bring customers new value

Then we segmented the companies into no-growth, growth and high-growth categories.

Now, 98% of companies we surveyed said that innovation was important. But talk is cheap. How did their actual behavior correlate with their bottom line?

• No-growth companies stressed process innovation. They were always trying to do the same stuff faster and cheaper
• Growth companies focused on process and product innovation. Also, they co-innovated upstream with their suppliers as a team to make improvements.
• High-growth companies emphasized process, product and promise innovation, and used all three dimensions of innovation upstream with suppliers, and downstream with customers. So they were co-innovating with suppliers and customers to not only do things better and faster, but bring new value to both groups.

Once again, the data shows that promise innovation is the key to real growth.

The Number 1 Reason We Innovate

Ask any business executive about innovation, and they’ll say it loud and clear: innovation is essential to their strategy. And why not? Studies show that companies that innovate enjoy not only higher growth, but higher profit margins.

Ask them why they’re planning to innovate, and things get fuzzy.

The reason we innovate is to differentiate our companies. Differentiate them how? You have three ways to do it: innovation by cost, product features, or promise.

The first two are the easy ones to understand. Find a new way to do it cheaper, and you’ll stick out. Same for product features.

Because cost and features are easy to understand, companies concentrate on these two types of innovation. And that’s why they run into problems. Innovation has to be translated into value for the customer, and the value of cost or feature innovation is usually transitory. Companies are good at competing on costs, and features leapfrog each other all the time.

The real differentiation comes with promise innovation – creating a new promise of value for the customer. Netflix didn’t just offer customers cheaper video rentals – they offered a way to do it without stepping outside. Facebook doesn’t just offer a way to show photos and chat with friends. It offers a way to bring your whole life and personality online.

I said that innovative companies have higher margins and growth. Here’s the real news: companies that differentiate by promise have higher margins and growth than those that differentiate by cost and features. A recent study we did of 135 companies’ innovation strategies bears this out. I’ll elaborate a bit in my next post.

So yes, innovation is vital to your company. But if you’re looking to thrive, it’s critical to focus on promise innovation.

Dilbert on Innovaton

We’re not the only people who have innovation on our minds.