The “Jobs to Be Done” Theory of Innovation

strategy+business, August 31, 2016

by Theodore Kinni

Since 2005, Strategy& has been conducting an annual study of the 1,000 biggest corporate R&D spenders. One conclusion has held true through all 11 installments: There is no statistically significant relationship between the financial performance of the so-called Global Innovation 1000 companies and their R&D spending.

The fact that, in 2015, these companies collectively spent US$680 billion buying R&D lottery tickets bothers Harvard disruption guru Clayton Christensen. “Innovation processes in many companies are structured and disciplined and the talent applying them is highly skilled.… From the outside, it looks like companies have mastered an awfully precise, scientific process,” he and coauthors Taddy Hall, Karen Dillon, and David S. Duncan write in Competing Against Luck: The Story of Innovation and Customer Choice (HarperBusiness, 2016). “But the results show that, for most companies, innovation is still hit or miss.”

Christensen and his coauthors think they have an explanation for this conundrum: Companies know a lot about the characteristics and attributes of their customers, but they don’t know why customers buy their products and services. In other words, companies know the correlations between types of customers and their products and services, but they don’t understand what causes customers to buy their offerings. And without grasping causation, they can’t be sure whether their R&D spending will yield a winning ticket.

Competing Against Luck proposes that companies get to causation by asking customers, “What job did you hire that product to do?” This is a question that surely would have warmed the heart of Theodore Levitt, the Harvard Business School professor who immortalized an otherwise forgotten guy named Leo McGivena for saying “Last year one million quarter-inch drill bits were sold — not because people wanted quarter-inch drill bits but because they wanted quarter-inch holes.” But Christensen et al. take McGivena’s insight far beyond Levitt’s interest in customer needs and desires by cobbling together an approach to innovation that they plainly, if a bit clunkily, call the Theory of Jobs to be Done (aka Jobs Theory). Read the rest here

TechSavvy: Delta’s Digital Black Swan

MIT Sloan Management Review, August 22, 2016

by Theodore Kinni

Condolences if you were flying — or more accurately, not flying — on Delta last week. As the tally of cancelled and delayed flights climbed into the thousands, Nick Taleb came to mind — you know, the Black Swan guy. Taleb wrote that black-swan events have three characteristics: “rarity, extreme impact, and retrospective (but not prospective) predictability.”

I don’t know if the power failure at Delta — and the chain of unexpected events that followed it — qualifies as a black swan by Taleb’s standards, but it must have felt that way to CEO Ed Bastian. The day after the failure, he apologized for the second time and ruefully explained that over the past three years, Delta has invested “hundreds of millions of dollars in technology infrastructure upgrades and systems, including back-up systems, to prevent what happened yesterday from occurring.”

Delta isn’t the only airline whose systems have crashed recently, and with more and more companies integrating their systems, it seems like a good bet that digital black swans may become more and more common. In an article for CIO Dive, associate editor Naomi Eide offers some lessons from Delta for companies hoping to avoid similar events. First, she says, beware centralized control points, because when they go down, everything goes down. Regionally dispersed control centers are more expensive, but more robust. Second, ensure redundancy measures are in place and test them regularly. Third, practice recovery plans and responses to worst-case scenarios.

All of this still may not be enough to save your company from a true black-swan event; Taleb made a pretty strong case that they will be with us always. But it may be enough to avoid the growing numbers of gray ones. Read the rest here.

Use Social Influences to Be a Better Manager

Insights by Stanford Business, August 18, 2016

by Theodore Kinni

When Jonah Berger was a PhD student at Stanford Graduate School of Business, he biked through Palo Alto, slipping surveys under the windshield wipers of BMWs. He wanted to compare why owners bought their Beamers to why they thought others bought theirs. Berger discovered that BMW owners assumed other owners were strongly influenced by the social cachet associated with the luxury brand, while they themselves believed they were influenced by more rational and practical reasons.

Berger, who is now an associate professor of marketing at the University of Pennsylvania’s Wharton School, dives into this theme in his new book, Invisible Influence: The Hidden Forces That Shape Behavior. “It’s hard to find a decision or behavior that isn’t affected by other people,” he says. “In fact, looking across all domains of our lives, there is only one place we don’t seem to see social influence — ourselves.”

In Invisible Influence, Berger helps us understand how we are affected personally by the sometimes contradictory forces of social influence, and how managers can use these influences to more effectively lead others. Read the rest here

John Kotter’s Required Reading

strategy+business, August 17, 2016

by Theodore Kinni

John Kotter has been the go-to guy on the subject of change leadership longer than most of us have been working. For the past 35 years or so, he has been making the compelling argument that the essential role of leaders lies in their ability to achieve change — to shepherd their organizations to new and better places. The fast-paced and fundamental disruptions caused by advances in digital technologies make his work more relevant than ever.

Kotter codified his findings in an eight-step change leadership process in the mid-1990s, while at Harvard Business School. He taught there full time from 1972 (when he earned his doctorate) to 2001, when he retired as the Konosuke Matsushita Professor of Leadership. In 2008, he cofounded Kotter International, a consultancy that helps sitting leaders at large companies apply his ideas. Among many other honors, he is a recipient of the Lifetime Achievement Award from American Society for Training and Development.

A prolific writer, Kotter has authored 19 books. Leading Change (Harvard Business School Press, 1996), which Time selected as one of the 25 most influential business management books ever written, The Heart of Change (with Dan S. Cohen; Harvard Business School Press, 2002), and A Sense of Urgency (Harvard Business Press, 2008) detail and explore his change leadership process. To spread the word still further, Kotter teamed up with Holger Rathgeber and wrote a business parable featuring penguins, Our Iceberg Is Melting (St. Martin’s Press, 2005), which also landed on the New York Times’ bestseller list.

Kotter’s latest book, That’s Not How We Do It Here! (Penguin, 2016), is another parable written with Rathgeber. This time, the main characters are African meerkats, whose struggle to cope with a drought illuminates the obstacles organizations face in disruptive conditions.

I asked Kotter about the books that had most influenced him in his work. He offered up the following titles, calling them “the big three that helped lead me where I am today.” Read the rest here.

TechSavvy: Four Lessons from IoT Early Adopters

MIT Sloan Management Review, August 12, 2017

by Theodore Kinni

To paraphrase the late Roy Scheider in one of the greatest of all summer movies, you’re gonna need a bigger router. In 2025, Machina Research predicts, the Internet of Things is going to be a $3 trillion market of 27 billion devices generating more than 2 zettabytes of data. Two zettabytes of data is something like twice the total global IP traffic we’ll generate this year, according to Cisco.

The IoT data deluge is, by the way, the first of four lessons drawn from early IoT adopters by contributing writer Howard Baldwin for his article in Computerworld. IoT initiatives at ARI Fleet Management, for instance, generate the same amount of data every two weeks as the company previously collected in two decades. “Understand where data is coming from, and determine how you’re going to analyze it,” writes Baldwin.

The second lesson is that IoT will require cross-functional collaboration. Because IoT is deployed and used in factories and fleets and products, the IT department is going to need to partner with other functions and business units. “Determine how and when to combine operations and information technologies for maximum data insight,” writes Baldwin.

Baldwin’s third lesson for early adopters is that IoT is likely to require working with and coordinating across multiple vendors. The new Kansas City streetcar line, for instance, required collaboration with Sprint, Cisco and other vendors. “In orchestrating the many moving pieces of an IoT rollout, make sure you know who plays what part,” writes Baldwin.

Fourth and finally, as applies to forays into any young, fast-emerging technology, watch out that you don’t get caught out too far on the IoT growth curve. “Some early IoT adopters have reported reliability issues with either sensors or vendors or both, and others have struggled to reconcile competing protocols,” writes Baldwin. “Be prepared for setbacks in an immature market, and try to select a protocol that has long-term industry support and a sound security footprint.” Read the rest here

Techsavvy: A Call to Arms Against the Hacker Hordes

MIT Sloan Management Review, August 4, 2016

by Theodore Kinni

Imagine being enthroned at the end of the long table in the C-suite. You’ve got riches beyond imagination at your disposal; tens of thousands of vassals are toiling day and night for you. Your knights surround you, awaiting your command. And, at this very moment, some evil-minded jester with a computer and an Internet connection is breaching the castle walls.

But wait, is that a war horn you hear in the distance? Yes, it’s the lawyers from Steptoe & Johnson riding to your rescue. Enough, says partner Stewart Baker and trusty clerk Victoria Muth in an article for Brink. “It’s pretty clear that building higher walls around our networks is a dead end. So is tighter scrutiny and control over what happens on the network,” they write. “Government is failing us…, too.” The solution? Fight back.

Attribution and retribution are the weapons in this counterattack. “It might mean building ‘beacons’ into documents so that when they are opened by attackers, they phone home to alert defenders that their information was compromised,” suggest Baker and Muth. “It might mean using information provided by beacons to compromise the attackers’ network and gather evidence as to the attackers’ identities. It might mean stopping a DDOS attack by taking over the botnet, or by patching the vulnerability by which the botnet conscripted third-party machines.”

And, of course, you’ll need more lawyers. “We need to bring private resources to bear on retribution as well as attribution — not by endorsing network attacks, but by encouraging retribution within the law,” the authors continue. “Luckily, once an attack has been attributed, legal remedies begin to look quite realistic.”

“In short, you don’t have to sit and take it anymore,” conclude Baker and Muth. “There are plenty of risks in trying to go beyond passive network defenses, but there may be more risk in doubling down on an approach to network defense that has been failing ever more spectacularly for 30 years.”

Oh yeah, we’re going all “Game of Thrones” on hackers. Read the rest here.

How to Become an Ambidextrous Leader

strategy+business, August 3, 2016

by Theodore Kinni

A few pages into Lead and Disrupt: How to Solve the Innovator’s Dilemma (Stanford University Press, 2016), business professors Charles A. O’Reilly III and Michael L. Tushman present two lists of companies. At first glance, there doesn’t seem to be too much difference between them. Each features 27 companies, most with familiar names and long histories, such as GM, Siemens, and Lego.

The second list includes some dead companies — such as Circuit City and Bethlehem Steel — and some companies that are shadows of their former selves, such as RadioShack. But the histories of the companies on the first list reveal that many of them have experienced their fair share of hard times, too. For example, the French media conglomerate Vivendi endured a period of turmoil after a series of aggressive acquisitions in the late 1990s.

Nevertheless, O’Reilly, the Frank E. Buck Professor of Management at Stanford’s Graduate School of Business, and Tushman, the Paul R. Lawrence MBA Class of 1942 Professor of Business Administration at Harvard Business School, see a clear difference in the success of the companies on the two lists. And they peg leadership as its source.

The companies on the first list, they contend, “had ambidextrous leaders who were able and willing to exploit existing assets and capabilities in mature businesses and, when needed, reconfigure these to develop new strengths.” The companies on the second list were not so lucky. Their leaders, say the authors, “were rigid in one way or another — unable or unwilling to sense new opportunities and to reconfigure the firm’s assets in ways that permitted the company to continue to survive and prosper.” Read the rest here.