Leading Productivity & Innovation – 2 Sides of the Same Coin
© ICMCI and Doug Macnamara CMC
We are in the midst of a changing world order. Structural trends are reshaping economies, societies, and politics and the economic centre of gravity is shifting to Asia.
The demographics of aging are putting an incredible premium on skilled workers. This is a world where productivity and innovation are at the root of the new competitiveness.
- Kevin Lynch former Clerk of Privy Council Canada and Sec'ty to Cabinet, June 2012
After reducing staff and paring back expenses, after perhaps a re-focus on core business elements; coming out of the recession over the next few years will demand yet another net improvement in productivity levels. This means adjusting work processes and responsibilities first towards achieving the pre-cutback levels of personal productivity, then advancing it further towards a real gain over the past. We must seriously re-think our organizational designs and interfaces of people with technology to advance our innovation capacities overall and competence to create new products, programs and/or services of ever increasing value.
What is Meant By Productivity?
There are several definitions of Productivity floating around, but essentially the job for executives is to get more for each hour worked. Smarter thinking, better conversion of ideas into products/services, more leverage of technology.
Productivity - 1. The ratio between Output volume and Input volume; GDP per hr worked.
2. Multifactor Productivity (MFP) – The relative measure of the efficiency of a person, machine, factory, system, etc. in converting inputs into useful outputs. Computed by dividing the average output per period by the total costs incurred or resources (capital, energy, material, personnel) consumed in that period. (BusinessDictionary.com)
Over the years, growth in productivity is what allows us to improve our quality of living, and return enhanced profitability to shareholders. In the NFP and government sectors, improved productivity is what allows us to more effectively deliver on our mandate within a steady state of donations or moreso today - declining funding.
Sources: Conference Board of Canada; Global Innovation Report
Productivity Beyond the Numbers
These statistical elements are of course, very general; and they represent a collection of varied productivity from different sectors, and different types of primary vs. secondary industries for example.
In your organization here’s what the executive should be looking for:
People: are your people focussed, motivated and effective? What is your turn-over rate? (Regularly having to recruit and re-train individuals really takes a notch out of your productivity.) How is your level of internal collaboration, information-sharing and appropriate involvement in decision-making? Do you have the right talent for the challenges at hand? Do they understand and focus on “advancing the business” of the organization?
Do people truly understand what a highly productive 8hr day looks like, sounds like, feels like?!
Org. Design: Are your people deployed in the best manner to deliver the customer service, programmatic impact or product appreciation you are working to achieve? “Form” really should follow “function”, and as the organization shifts its resource complement, its service evolution, and/or its relationship with clients/distribution partners/end-consumers; then so too we need to be able to flex the organizational design and job descriptions. Today it is not uncommon to adjust the org design annually!
Compensation & Reward Design: do your reward mechanisms support the new expectations of performance? Are your performance management (annual performance plan + annual performance appraisal) mechanisms in place and adjusted to be in-synch with the new work design and expectations? Are compensation/reward elements reinforcing the same expectations amongst everyone?
Technology & Interface: Perhaps the most under-appreciated element and often the biggest barrier to advancement, is the integration of technology with our human creativity and capacities. First, the technology just has to work properly! Second, the software and people interface has to support the org. design and desired new human/team practices. Third, technology has to elevate performance and impact in the manner that actually has more value to the customer. Often technology can create more work for employees, and turn out marginal value to the client.
Executive Facilitation: Executives are an important part of productivity success. Employees often simply can’t ‘do more with less’ or figure out productivity improvement, when the senior leader simply demands it in staff meetings. Executives need to be on the front-line with staff to see and understand how the elements above are working together. Executives provide context and understanding to employees about why priorities and focus are the way they are. And often, executives must personally connect individuals, capture and champion good ideas, and/or bring clients, employees, and technology support people together to explore improvements. Indeed, executives themselves must have an ability to visualize what success might look like or include, and facilitate that exploration and solution building amongst employees and broader network players (suppliers, consultants, community, clients and partners).
Quality, LEAN, Six Sigma, BPR Processes: The use of these initiatives must be applied to the advancement of the organization towards their operational goals. Sometimes, projects in QI or BPR can take on a life of their own, and it’s not clear how they are actually advancing the organization – towards their goals! Executives must ensure that these initiatives are integrated within new org design and technology application and that they align with the new strategic/operational plans.
Today’s Innovation Challenge
There are several levers to Innovation. These include:
- Innovation of new products & services as “Divers” for organizational/economic growth
- Tenacity of executives to ensure their organization evolves, improves, stays relevant
- Connectivity – to marketplace/customers; use of technology
- Clear customer challenge(s) to solve
- Knowledge exchange & formalized “communities of practice”
- Empowered Employees
- Environmental Interdependence recognition
Of course, in today’s globalized world where almost any organization can compete anywhere, and many industries or business models are becoming “commoditized”; prices are dropping, quality and timeliness is improving, and competition is heating up. Innovation of new features, value, or completely different approaches to things is what allows an organization to keep ahead of the commoditization process, retain/grow market share and jobs. Here is how the general innovation of companies and governments within various countries lines-up. (2013 data.)
First comes CREATIVITY, then comes INNOVATION. It is impossible to get innovation without creativity; however many creative processes and creative ideas/outcomes never become innovations. Often in the pursuit of innovation, we don’t really stop to consider what creativity elements are important to bring to bear.
In essence, creativity is about making “connections”; about re-combining patterns into new patterns and cross-connecting from one perspective to another. “Two heads” really is better than one. Indeed 10 heads are even better! So the facilitation of collaboration, sharing of information and ideas and techniques, exploration into new concepts, and the unleashing of imagination of the team is particularly important. Creativity takes time and is enhanced with a dedicated space or place for people to come together and interchange. We might refer to this as creating “communities of practice” or facilitating exploration and exchange.
Innovation takes creative ideas and mobilizes them into tangible products or services that have concrete economic benefit and enhanced value. Having attended and been a part of various panels on innovation over many years, one true-ism gets constantly repeated… Having a compelling customer challenge, problem, issue or need is particularly valuable at focusing creative process into innovative conclusion. As an executive, this is a critical component that you can bring to the focus of your team. What client challenge are you seeking to address?
Another thing that has become very evident over the years is that when I talk about “innovation” to a group of, say, 10 executives, there are often 10 completely different pictures of innovation in the heads of those assembled. This leads us to another very important concept:
Innovation, is not innovation, is not innovation…
A really great representation of this was outlined by Geoffrey A. Moore in his 2004 HBR article “Darwin and the Demon – Innovating Within Established Enterprises.” Taking a classic product lifecycle curve, he showed 8 different types of Innovation that are possible for an organization. You might consider which type of innovation is the type that drives your organization, or department.
Each type of innovation, takes a different management and business application approach. Each type also benefits from different styles of creativity and different people talent. One would not try to lead/manage “Disruptive innovation” need with a “Process innovation” approach – or vice versa – for example.
Some Recipes for Success!
Improving productivity and innovation is the result of several efforts that executives must orchestrate together. And, it is crucial to understand that many of the mechanisms for improving productivity must be applied within an overall context for where the organization is headed, how it will measure success, and the main priorities within always a resource-constrained environment.
- Start with Clear and Compelling Vision
Coming out of the recession, many employees are weary, nervous and anxious. They are overwhelmed by personal realities and besieged by media messages of problems and concerns. Individually perhaps, you will likely need to check-in with each person that report to you and understand their challenges. Collectively you will need to find a way to inspire them and energize them for when they come to work! Reinforce the value of what they do and real impact of what the organization aspires to achieve.
People thirst for Vision and to be energized. Executives must pump it up in post recessionary times
- Enunciate and hold people Accountable towards Outcomes Measures of Success
How do you achieve something significant and yet a bit of a stretch? You break it down. You focus on the priorities. And, you must push out the distractions that can cause you to get way-laid. Some clear goals, accompanied by a few key measures of success are really important. So far we haven’t got to the nitty-gritty; but it is crucial not to action productivity or innovation without such larger context in place – as this is what leads to the 80% overall failure rate of QI or BPR initiatives, Mergers & Acquisitions, and more.
What is the business challenge your productivity initiatives are trying to address – and how does this fit into the Vision of your organization going forward?
What are the client needs or challenges that our creative thinking and Innovation initiatives must solve?
- Foster Individual Motivation and Commitment to Personal Productivity
This is where it all starts! Our people just have to understand: what does a productive 8hr day look like in action? As basic as it may seem, this is a topic worthy of team discussion and perhaps even some individual coaching. Downsizing of an organization creates both loss of friends, and then seemingly overloads the remaining employees with all the responsibilities left over. Executives have to be present and have to facilitate an exploration of how you are going to do the same with less, or do more with the same, or even do more with less.
With the evolution of social networking, multi-media glitz, email overload, reporting for this & that, involvement in various side initiatives; it is extremely easy to get so distracted by the easy and interesting ‘busy work’ such that the important and critical ‘productive work’ gets set aside.
Are information exchanges actually working within your team/network?
For example – do people actually read emails to understand the message or do they poorly scan headers and miss the important content?
Do team members actually “listen” to each other and either make the point of “connecting the dots” or hear the “so what” of the message?
I have to say, executives really need to work this at both their own personal and then also their team level. This is very important to address these days, as the fundamentals of effective communications don’t seem to be working all that well.
Do work teams fully understand what they are trying to achieve this week? What are they going to do this coming month to advance the yardsticks towards the Goals for the year/quarter? This is the value of weekly Monday morning meetings, or monthly team meetings. Don’t forget to get your staff to bring their Annual Performance Plan to such meetings so they can connect their progress to expectations.
Do team members help each other with their productivity and accountability to results? While it is clearly a manager’s role to address these and create the conditions for effective dialogue, it is also the mark of a great team, when all team members know each person’s role(s) and contributes towards motivation and accountability.
Is idea generation fostered, and innovative application of these ideas, encouraged, nurtured and made clear that it is a part of everyone’s job?
- Enhance the Flow of Information and Proactive Communication/Collaboration to Enhance Creativity
Clarity of “customer challenge” context, priorities and reinforcement of success is all enhanced by ensuring information is spread throughout the organization in a variety of forms that address different learning/communication styles. This includes: email, video, coffee chats, staff meetings, discussions, customer presentations.
But what is your culture of sharing information within the organization and proactive thinking about and initiating collaboration and communication?
If we want our employees to be “partners” in the organization’s success, then we need to teach them the business of the organization. Share monthly or quarterly financial and operational reports – then discuss what this means. Engage ideas and suggestions from amongst employees of all levels. Bring the front-line impact of our business into a ‘real’ perspective. Bring customers and their challenges/feedback to the employees – either by in-person sessions or by video, or take some out into the customer sites. Show employees what their total all-in cost to the organization is, and how this is funded through sales, grants, etc. Draw the connections. Then get explicit about the expectations for communication and collaboration. Set examples, reward those who take such initiative and build new heroes around this behaviour.
For those who are consistent barriers or ‘take’ far more than they ‘contribute’; then there has to be consequences. Interestingly this perception of equality of contribution & return, and the abuse of it by other team members is often the single biggest detractor from a collaborative culture taking root.
Collaboration, sharing, connection-making, establishing communities of practice for exchange of ideas and insight are crucial. Leading by example is really critical for executives in this aspect!
- Develop the Appropriate Organizational Design
One of the most ‘sluggish’ aspects in organizations undergoing change, is their ability to redesign workflow, to re-think and re-model which key resources will be responsible for what. Particularly in circumstances where there have been layoffs or where there are severe resources constraints but expectations for enhanced output/impact, then organizational design and development (OD) is a critical executive skill to apply. In fast changing and fast growth organizations, often the org. chart and job descriptions need adjustment annually – not because management doesn’t know what they are doing – but in order to be sensitive and adaptive to the changing circumstances and/or expectations of clients.
In unionized settings this can be difficult. Even in non-unionized environments, it is still difficult. Team members have to be a part of this process of visualizing a new operating approach – focussed of course on the customer-deliverables and productivity-deliverables. They also have to ‘suspend’ their personal fears and ‘turf protection’ in order to truly break-out of the existing design. Then as the new design emerges, the roles must be captured into job descriptions, compensation elements updated, and organizational charts adapted. Individual coaching and training/support may also be required.
For all involved, executives have to foster an understanding that we might not get it 100% right at any iteration. (Indeed it is impossible to know what is ‘right’ in these times.) What is most important is to develop the capacity and appreciation for adaptability and continuous improvement/tweaking of organization design.
- Drive-up Innovation - Appropriately
So what do we mean by innovation as it relates to improved productivity?
Productivity and Innovation are invariably seen as two sides of the same coin, and yet there are so many different kinds of innovation and interpretations of the connection. Remembering the different types of Innovation from above, think about what type of Innovation is most appropriate for your organization. Be sure you explain this to your team members so their approach to innovation can be appropriately focussed.
Canada’s Public Policy Forum has taken aim at the issue with a focus on Science, Technology & Innovation in their 2009 report Innovation Nation – Building a Culture and Practice of Innovation in Canada. Driving up Innovation is definitely an elusive ideal for government, business and NFPs. Indeed experience has shown only about 30% of innovation comes from the formal areas such as R & D Departments and/or Marketing. So innovation truly is everyone’s job. In Australia this has been a focus of several reports over the past few years. One of the more compelling is Professor Jonathan West’s Strategy to Accelerate Innovation in NSW. In this report, West identified a few key aspects that resonate with my personal experiences:
- Innovation is diffused across the economy
- Within industry, innovation is concentrated
- Innovation usually begins with a customer problem, not a technical ‘discovery’
- Returns from innovation are disproportionately captured by those who bear and manage its risk, often the
- Some essential components of an effective innovation system cannot be developed by private firms alone (this
includes collaboration, and sharing of knowledge)
Innovation is a way of life. It is not limited to companies either, as we have witnessed many NFPs and Government departments that have consistently delivered innovation into the communities they serve. Executives must work to understand innovation in its many forms, and facilitate appropriate exploration and application within their teams.
- Ensure Technology Integration & Business Processes Improvement support Goals
So often I see executives spend a great deal of time and effort developing Vision, Values, Goals & Measures, then off-load the technology and business process re-alignment to lower level managers or external resources. It seems as though there is little appreciation for just how critical these aspects are to the actual implementation of new practices and achievements of the goals.
Over the past year, in my ‘coffee chats’ with CEOs and Sr. Executives, I have been asking: “what are the 2 or 3 most significant organizational aspects holding them back from realizing their objectives?” While this initiative is not a scientific, statistically sound survey, it is representative of many different industry sectors across 4 or 5 continents. Overwhelmingly, the #1 issue they identify is technology and/or internal process problems. And the solutions are inevitably unclear, expensive and time consuming. Wow!
First on the technology aspect – Some fundamentals are getting in our way these days. Microsoft for example has at least 3 and possibly up to 5 different operating systems currently driving office computers. In addition we now have 3 different versions of MS Office, Word, Outlook, etc. This alone has made it difficult to transfer files and exchange information. Add in Mac O/S, UNIX and Google Apps, and we get a real mess. Actually, it is not impossible, but many employees have never been trained on how to save files or open files of a different version/format. Some organizations decide to take an organization-wide network standardization approach, eliminating anything from the outside and preventing utilization of some of the recent social networking opportunities. Others take a ‘cloud computing’ approach, with almost all corporate technologies in a web-based form. Of course, there are many other approaches in between. On top of this are a multiplicity of proprietary operation technologies such as robotics, CAD, financial modeling, CRM and many other program, product and service-specific support technologies that every organization relies upon.
So, what is your technology strategy in support of the achievement of your organizational goals? Or, is everyone chasing adaptations to deal with systems that cause you to do things in a manner inconsistent with your goals and priorities?
Seriously, things have to just work! And, our systems must support collaboration, knowledge exchange, networks of formal and non-formal work associates, partners and clients.
Second are our business and operational processes – the way we do our work, achieve approvals, ensure quality control, design, develop and produce product. Often these get spread across different departments and /or divisions in an organization. This requires executives to work effectively across “stovepipes” to adapt both the components and the interfaces of internal mechanisms as the organization changes.
Of course, as you change organizational direction and/or organizational design, then work processes must also change. All those affected by/involved in changing internal processes and procedures need to be engaged so they understand why the change, and what are the expectations. New pathways, and possibly even trustful relationship may need to be facilitated by executives to ensure success.
Are you personally involved in the update/adaptation of internal processes & procedures?
How long does it take for internal processes to effectively change in support of new directions, org. structures, and/or product and service delivery?
Have you effectively crossed outside your own team/division to build an understanding and appreciation for the contributions and ‘handoff’ points for all involved in internal processes?
After the economic melt-down, have internal processes, approvals, and authorities made things more difficult for staff to achieve results? If so, how do we get them adapted to better support productivity?
- Train employees, managers, leaders in application of new technology & processes
With so much of our work tied into technology – be it laptops or more powerful specialty applications – the training of our staff on the use and application of technology is a clear necessity. As a reminder, there is a BIG difference between training on ‘how to make the software work”, versus “how to advance the business through effective use of the software & technology”. Employees need both types of training.
In addition, our employees often need some training on how to effectively collaborate, the change process, high performance teams, leadership and more. Also, they need time and space to share their insights, ‘tricks and tips’, and explore together new approaches with the technology.
Are your people fully capable at applying their technology into the work they do?
Do your team members know how to get technology to ‘leverage’ their knowledge/past work in order to ensure efficiencies and continuously improve their productivity?
If you could capture a half day with your team on technology applications, what would you cover?
Improving Productivity & Innovation – Easy to Demand, Harder to Deliver
Advancement in the value of a Company, NFP or Government Department is directly related to continuously improving productivity and building a culture of innovation. There are many components to making this happen as outlined above, indeed there are several others in addition to those identified above.
While many seem to simplify the dialogue on Productivity and Innovation by focussing on Research, Science and/or Technology; the challenge goes far beyond this. We have a whole new generation (Gen X and front edge of Gen Y) entering the workforce with very different attitudes and understanding of personal productivity. Also their skill levels and experience for innovation are rudimentary. Some of our new senior executives have also come up from the technical streams and are now in charge of major strategic and operational decision-making. This puts them into new and unchartered territory. Thus, our people part of this equation actually requires significant hands-on facilitation and development by experienced leaders.
Finally, executives today have to do more than just talk about and demand improved productivity or innovation. They need to be hands-on in leading it, facilitating collaboration, and relentless in the encouragement of communication and sharing throughout the network.
Doug Macnamara and Banff Executive Leadership Inc. offer public and customized programming to improve Board Governance and Executive Leadership Practices. We also provide strategic, exec. coaching and consulting services to Boards and Executives to help enhance their leadership practices. For more articles on Governance and Leadership application, please go to: http://www.banffexeclead.com/Newsletter04/newsletter.html.