Today’s conference at Washington University, called the Innovation Exchange, brought together top scholars and business leaders to think collaboratively about fostering innovation.  It was hosted by our new Institute for Innovation and Growth.  Keynote speakers included:

Bill Peck (former Dean of Washington U. Medical School and founder of Innovate St. Louis)

Carliss Baldwin (Professor at Harvard Business School and an expert in the relations between design and the economy)

Christoph Loch (Professor of Corporate Innovation at INSEAD, possibly the best business school in Europe)

Jeff DeGraff (Dean of Innovation at the Competing Values Company and a professor at University of Michigan)

Key insights that emerged included:

* The need to transform business school education to teach for innovation

* The desire for managers and innovation champions to have a forum where they can exchange problems, issues, and solutions

* The need for managers and staff to be educated about how innovative companies work, and how they can make their own organizations more innovative

Watch this blog in the coming year, as this new Institute for Innovation begins to take shape.

Innovation is the flavor of the month; has been for more than a few months now.  Organizational learning is another management trend–it refers to the ability of an organization to learn–to become more effective over time, to develop new knowledge and retain it to respond to future situations.  What both innovation and learning have in common is adaptability and improvisationality.

In an article in the Fall 2007 issue of Sloan Management Review, Joaquín Alegre and Ricardo Chiva studied organizations high in organizational learning capability (OLC) and identified five core features of high OLC companies: experimentation, risk taking, interaction with the external environment, dialogue and participative decision making.  This is fascinating because in my research, I’ve found that these five characteristics also hold true of organizations that use the power of collaboration to generate innovation.

(1) Experimentation, as defined by these authors, produces a flow of new ideas that challenge the established order.  (2) Risk taking is just what it sounds like: the tolerance for ambiguity and errors.  And as I’ve found, innovative organizations foster idea generation and tolerate failure.

(3) Interaction with the external environment is what I call “collaborating with customers” and is associated with innovative networks that I call collaborative webs in my book Group Genius.  Deborah Ancona, in her 2007 book X-Teams, has likewise discovered that successful teams have an outward focus, and strong social network ties with people outside of their team.

(4) Dialogue and (5) participative decision making are what I call improvisation–a style of communication and an organizational culture that is egalitarian, open to flows across status levels.  Improvisational organizations excel at a type of dialogue that opens up possibilities, a style of conversation in which new and unexpected ideas emerge.

I firmly believe that organizations high in learning ability are more likely to be innovative organizations, and I’m delighted to read of this fascinating study confirming the link.

Imagine you’re the CEO and your goal is to make your organization more innovative.  Where would you start?  No doubt, you would start with your people.  And the part of the organization responsible for your staff’s professional growth and development is human resources.  “Human resources” gets a bad rap; in the Dilbert comic strip, the evil Catbert symbolizes the senseless bureaucracy too often associated with the human resources department.  But thriving, innovative companies are learning organizations.  Learning organizations provide constant opportunities for everyone to reach their fullest creative potential.

I touched down in the human resources world last week, when I gave the keynote address at the annual meeting of the eLearning Guild.  (Listen to a pre-conference audio interview.)  The members of the Guild are the people that design web-based learning applications for corporate training, certification, licensing, legal guidelines…we’ve all worked through at least one such on-line application.  Most of them are far from innovative–you’re presented with a bunch of information, then afterwards you’re tested with multiple choice, true-false items.  This is simple information delivery, and all the research shows that this sort of learning does not result in creative employees.

So, in my talk, I drew from the latest research in both the innovation process and in the learning sciences.  This research gives us a pretty good idea of how to design learning environments that foster creative learning, rather than simple memorization of facts.  The problem is that this research is just now starting to emerge from university research labs, and most people “down in the trenches” haven’t encountered it yet.

But instructional designers in HR departments can’t make the transformation to innovative learning all by themselves.  The transformation has to be initiated by senior management, and they have to push hard to create a culture of organizational learning, and of innovation.  Only with top management support can an HR department shift to designing innovative learning applications that do more than simply deliver information.

I was extremely impressed by the knowledge and talent of the professionals in attendance at this event.  They’re exploring some truly exciting and innovative technologies: immersive learning simulations, multi-player online games, even using cell phones to deliver on-demand instruction.  Keep your eye on this sector; you’re going to see dramatic changes in the next three to five years.

I’ve just read an interesting academic paper by Pamela J. Hinds at Stanford.  It’s an experimental study that seems to show that if your company asks you to protect proprietary information, you might end up being less creative.

She took 69 undergraduates and asked them to imagine they worked for a company and that their goal was to “generate novel and marketable ideas for consumer-oriented information appliances” (like a toaster with a computer screen on it).  Theiy were told they’d then share their ideas with a task force containing people from many companies.  The best ideas would get a $25 bonus payment.  Before starting the task, she gave each of them a packet with eleven pieces of information about information appliances.

Then, she split them into two groups.  Half of the students were told that of the eleven pieces of information, four of them were proprietary and could not be used in the final suggestion–because, after all, that would be shared with the task force and other companies would have people on the task force.  The other half of the students were told all the information was public and they were allowed to use all eleven pieces of information.

Of the proprietary students, the average number of ideas they generated was 10.18, and of the
public students, the average was 7.54.  That seems to suggest that working with proprietary information makes you have fewer ideas.

Prof. Hinds then had all of the ideas rated for novelty and marketability by a product design engineer, on a scale of 1 to 5.  The average creativity rating of the proprietary students’ ideas was 3.54, and for the public ideas, 3.47–not a significant difference.  Finally, she compared the single highest rated idea for each student; and it turned out that the public students’ single best idea was more creative than the proprietary students.

The results are not dramatic but they are suggestive.  Prof. Hinds concludes by discussing the reasons why this might be the case.  It could be that suppressing the proprietary information is mentally demanding, and so interferes with idea generation.  Or, it could be that students in the proprietary condition perceive the task to be more constraining, feel that they have less autonomy, and thus their motivation to create declines.  Prof. Hinds is inclined to the first explanation, but further research is needed.

Hinds, P. J.  2000. The hidden cost of keeping secrets: How protecting proprietary information can inhibit creativity.  Proceedings of the 33rd Hawaii Int’l Conference on Systems Science.

Apple’s corporate image is one of the creative iconoclast; their motto, “Think Different.” Their products look great. Artsy people like graphic designers, photographers, and film directors choose Apples.

Does the ad campaign work? Does the average person-in-the-street think of Apple computers as being more creative? A recent study done at Duke University’s Fuqua school of business provides some evidence that it does. This research has been all over the newspapers and even on NPR, so you may have already heard the take-home message: research subjects were shown an image of either Apple’s corporate logo or IBM’s corporate logo, and immediately afterwards they were given a creativity test. The subjects who’d seen the Apple logo scored higher on the creativity test. Ready-made message for news reporters: Apple really does make people “think different”. I’m sure Apple’s PR department was high-fiving over this free publicity!

But the details of the study haven’t been reported at all, and when you look at the details, the message is more complex. First of all, the test used to measure “creativity” has some problems; it’s from a research article published back in 1958, and all it asks is “think of as many unusual uses as possible for a brick.” (It’s called the “unusual uses test”.) This is a measure of what creativity researchers call “divergent thinking” and it isn’t really what most of us mean when we talk about creativity. And in fact, no studies have been able to prove that a higher score on divergent thinking tests translates into real-world creative output. Second, the difference between seeing Apple or IBM was very small. The 219 subjects who saw an Apple logo, on average, wrote down 7.68 uses; the 122 who saw IBM wrote down 6.10. When independent judges rated the creativity of the answers, Apple answers got a rating of 8.44, IBM answers a rating of 7.98. These differences were statistically significant, but it’s not hard for small differences to reach statistical significance when you have so many subjects; it’s well-known in psychological research that a greater number of subjects raises the significance of the finding. And furthermore, when the researchers added a third experimental condition–no brand logo shown at all–the Apple subjects did not score significantly higher than these “no brand” subjects (they still scored higher than IBM subjects, though).

The researchers later did another experiment where they first measured how much each subject valued creativity–how much they wanted to be creative. Those who scored low on this measure, who didn’t really want to be creative, showed no differences on the unusual uses test with either Apple or IBM logos. But those who scored highly showed a difference, coming up with about 8 unusual uses for the brick in the Apple condition, but just barely over 5 in the IBM condition, and just barely over 5 in the no-brand condition. (And, the independent judges rated the Apple uses as being the most creative of all three conditions.)

One final interesting fact about this study: in the first experiment, the Apple and IBM logos were flashed on the screen for only about 13 milliseconds, so briefly that no one was consciously aware they had seen the logo. This was a subliminal effect. In the second experiment, the one that asked about your motivation to be creative, the subjects actually saw (and manipulated) images of generic-looking computers, with either an Apple or IBM logo prominently displayed on the computer’s monitor (or no computers at all, in the no brand condition).

You know how your car always seems to run better after you take it to the car wash? Of course, it runs exactly the same as before you washed it. In the same way, when you use a product that you associate with creativity, you should feel more creative (even though you’re probably not). However, discovering that exposure to corporate logos changed their score on a test is intriguing. I wouldn’t call the “unusual uses test” a measure of creativity; but the experiment makes you wonder, nonetheless. Should Apple feel proud about the results of this research? The headline would be very different if it read “Staring at Apple computers helps you think of strange ways to use a brick.”

I was sad to read of the death of Gary Gygax, co-creator (with Dave Arneson) of the legendary role-playing game Dungeons & Dragons.  I was first introduced to the game when I started college at MIT in 1978.  There, I learned that many of my classmates were already seasoned players from their years in high school.  (I guess they were early adopters, considering that D&D had only been published in 1974!)  Although I was never a player myself, in college I was surrounded by the rule books with “Gary Gygax” imprinted on the cover, so I immediately recognized his name atop the obituaries this past week.  If you haven’t heard of the game, you should know that in addition to sales that topped $1 billion, and 20 million players, D&D had a cultural influence far beyond the numbers.

The major national newspapers covered this passing (see articles in WSJ, NYT) .  I’m noting it here because, after a bit of research, I’ve learned that D&D emerged from the same innovation process that I’ve seen everywhere in today’s economy.  Although Gygax certainly deserves to be recognized for his important role, he was not the sole creator of D&D; it emerged from a long series of collaborations, from an almost invisible community of like-minded wargamers.  Innovation always works this way: Even though one person often gets credit for an invention, all innovations emerge from groups.  In Gygax’s case, the group included dedicated wargamers who lived around Lake Geneva in Wisconsin.  Many different Lake Geneva groups came together to play wargames, with names like the Lake Geneva Tactical Studies Association and the Midwest Miltary Simulation Association.  There were so many groups that in 1966, they formed an umbrella organization called the International Federation of Wargamers (IFW), with separate chapters for different periods of military history—the “Castle and Crusade Society” for medieval wargaming, for example, and the “Armored Operations Society” for World War II wargaming.  IFW became nationally known by sponsoring an annual convention of gamers called GenCon, and publishing a magazine of wargaming called The Spartan.

These communities of hobbyists had been experimenting with medieval wargames using miniature figures, just like D&D, for years.  The first published set of rules appeared in 1967—for a game called Siege of Bodenburg, created by Henry Bodenstedt and published in Strategy & Tactics magazine, a wargaming fanzine created in 1966 by Chris Wagner.  (Wagner created his fanzine to compete with the magazine The General, published by the wargame-publishing company called Avalon Hill starting in 1964.)  The wargamers around Lake Geneva read these rules, and a couple of them began experimenting with their own variations.  In 1971, two of them—Jeff Perren and Gary Gygax—published their own set of medieval wargaming rules; they called it Chainmail and sold it through a company called Guidon.  Tolkien’s trilogy, The Lord of the Rings, was gaining a cult following at the time, and sales of Chainmail were surprisingly strong.  A third Lake Geneva wargamer, Dave Arneson, began experimenting with his own variation that he called Blackmoor.  When Arneson and Gygax began collaborating on the next generation of medieval wargame, they took most of Blackmoor’s features intact.  They intentionally named the main characters after those in Tolkien’s trilogy—orcs, ents, hobbits, wizards—to tap into its popularity.  (A lawsuit from Tolkien’s estate later forced the game’s publisher to rename some of these characters.)

I love stories like this one, because they show so clearly how innovation emerges from a collaborative process.  In my book Group Genius, I tell many similar stories—for example, how Monopoly emerged over a 30-year period from a national community of Quakers, frat boys, and economics professors.  Dungeons & Dragons was a collective creation, emerging from an unsung, almost invisible collaborative web.  With the help of Gary Gygax, this emergent phenomenon was disseminated far beyond the Lake Geneva community to become an international phenomenon.  When the International Federation of Wargamers faded from history in 1974, its passing was not noted—there’s no such thing as an obituary page for groups.  So we use the obituary pages to remind ourselves of the true nature of creation by recognizing those individuals who played key roles within genius groups—like Mr. Gygax, who died March 4 at age 69 at his home in Lake Geneva.  It’s all about collaboration; as Gygax himself said in a 2006 interview, “The essence of a role-playing game is that it is a group, cooperative experience.”  Rest in peace.

A long-awaited report on how to measure innovation in the U.S. economy has just been released by the U.S. Commerce Department. The report is called “Innovation Measurement: Tracking the State of Innovation in the 21^st Century Economy”. I first learned about this high-profile initiative last October; a press release revealed that a panel of CEOs and academics had met in Washington DC to discuss how to measure innovation in the U.S. economy. When I say “high profile” I mean folks like Microsoft CEO Steve Ballmer, Medtronic Chairman and CEO Art Collins, IBM CEO Samual Palmisano, and Harvard economist Dale Jorgenson.  The original press release said that the panel’s recommendations would be published in November; perhaps only an innovation junkie like me would be checking every week since then!

To measure the impact of innovation on the economy, analysts often use a measure called Total Factor Productivity (TFP). Any growth in TFP is assumed to result from innovation. Of course, the problem is that productivity could grow for other, non-innovation, reasons (for example, if existing innovations are diffused more broadly, TFP would grow even without new innovations). Other common measures of a country’s innovation have their own problems. You could count up the number of patents; but, patents alone don’t translate into successful innovation. You could count up the number of professionals working in R&D and university research labs; but as with patents, that’s a crude measure that doesn’t directly track successful innovation.

In the end, the panel’s report doesn’t tell us exactly what to do.  Panel member Ashis Arora, Professor of Economics and Public Policy at Carnegie Mellon, said that “The current advisory panel did not opt to recommend an index, because there is no serious evidence on how different measures of innovation should be combined, either at the organizational level or at the aggregate national level.”  However, Commerce Secretary Gutierrez outlined a plan for moving forward: a better measure of the impact of high-tech goods and services (to be developed by the Bureau of Economic Analysis and the Bureau of Labor Statistics); a better way to measure productivity increases that result from innovation investment (to be developed by the BEA); and new data collection efforts to measure the role of basic research (spearheaded by the National Science Foundation).

A longstanding problem has been getting different government agencies to share data with each other.  The stumbling block has always been confidentiality concerns.  Secretary Gutierrez announced his intention to work aggressively with the relevant agencies to try to find a way to share the relevant data while addressing confidentiality concerns.  That’s going to require working with a wide range of agencies including the Office of Management and Budget, the Council of Economic Advisors, the Census Bureau, and the Securities and Exchange Commission.  That’s a pretty tall order, but if that could happen it would result in a much better picture of national innovation.

Quote of the week:

“I don’t think people appreciate how much money, time and good technical research goes into what we do. Sometimes, people think the idea is the thing. I think the idea can be the easy part.” Dr. Darryle Schoepp, of Eli Lilly, in an interview about new drug development quoted in the New York Times (Sunday, February 24, 2008, Business section p. 10).

I spent a few days last week in Oklahoma City, as a keynote speaker for an event sponsored by the Creative Oklahoma initiative. Believe it or not, but Oklahoma is working hard to become known as the “state of creativity” (and they’ve gotten a good start by securing the domain name www.stateofcreativity.com). Like many of my readers, I was at first skeptical; Oklahoma doesn’t typically come to mind in connection with the creative economy. But Oklahoma’s creativity initiative has the backing of top political and business leaders, a rare combination. I met the Governor as well as a substantial number of local business leaders. And both Democrats and Republicans were united behind the initiative.

For about five years now, Oklahoma’s initiative has been guided by Sir Ken Robinson, a leader in the field of creativity and education who has spent most of his life in the U.K. (thus accounting for his knighthood by the Queen) and, seven years ago, attracted to the U.S. by a top position at the Getty Foundation in Los Angeles. No doubt as a result of this expert advise, Oklahoma is doing everything right–the campaign is proceeding on multiple fronts, including education, culture, and business.

I was invited to talk about innovation in the schools of the future. Oklahoma schools have adopted the A+ schools model that originated in North Carolina. If we want a creative economy, then we absolutely have to start with our schools, because the creative economy depends on creative workers. I haven’t written much on this blog about my research on schools and creativity, but let me just say that most schools today do a very poor job of fostering creativity in students. When I see Oklahoma investing in its schools in this way, I begin to believe that it truly could become known as the “state of creativity.”

They’ll have to be in it for the long haul; regional transformations like this historically have taken between ten and twenty years. Another invited speaker was Pascal Cools, of the Flanders District of Creativity project. Flanders is the Flemish region of Belgium, and until a few years ago was thought of as an agrarian backwater. Now it’s a center of the global innovation economy. In the small Belgium town of Leuven, Pascal coordinates a global network of “districts of creativity” that include Qindao, China, Karnatka, India, Catalonia (”in” Spain although the Catalonians would deny that), and yes, Oklahoma–the only state in the U.S. to be a member in this international effort.

I wish Oklahoma great success in this transformative effort.

On Wednesday, the leaders of the world gathered in Davos, Switzerland for their annual schmoozefest known as the World Economic Forum (January 23-27). At no other annual event can you find country presidents and prime ministers mingling with CEOs of the largest multinational corporations, listening to talks by thought leaders from around the globe. The theme of this year’s event is “The Power of Collaborative Innovation”. Collaboration is, more and more, the driver of corporate success; but by choosing collaboration for this year’s WEF theme, Davos is acknowledging that collaboration is also the key to solving the most pressing global issues. In previous years, the Davos meeting received more attention for the anti-globalization protesters outside the gates, but this year’s theme doesn’t seem to have offended anyone.

Presentations include Matt Parker, of Nike, describing their Nike Plus gadget–a device that you put on your shoe and hook into your iPod, and also connect you to the Internet. The system allows runners to communicate, to come together and organize races for example. Reuters’ Tom Glocer described their company’s internal innovation program, where employees are encouraged to submit ideas in a quick one-page document.

In a typical Davos event, CNBC reporter Maria Bartiromo interviewed Bono, Bill Gates, and Michael Dell. They announced their support for the (RED) initiative (if you purchase a product that is “red,” the selling company makes a donation to fight AIDS in Africa). Soon after that, British Prime Minister Gordon Brown joined a powerhouse panel that included the CEOs of Cisco and Pepsi, to discuss why it makes business sense for corporations to establish social responsibility as a priority alongside profits.

A press release dated today was titled “Collaboration Key To Success As New Initiatives Are Launched In The Field Of Humanitarian Relief At Davos.” Members companies and the United Nations announced two initiatives to bring together the private sector and the humanitarian community, to harness their collective power collaboratively.

The theme of collaboration has five sub-themes. I was particularly intrigued by the first: “Competing while collaborating.” This is a central topic of Chapters 9 and 10 of my new book Group Genius. It sounds counterintuitive; but, over and over, the most innovative companies are the ones that figure out how to build collaborative webs with partners, customers, and even with their competitors. And because my book’s subtitle is “The Creative Power of Collaboration,” you know I’m excited to see the importance of collaboration recognized by such a high-profile event.

What happened in Iowa and New Hampshire?  Yes, we know it’s called “voting,” it’s the democratic process in action, blah blah blah.  But is this the best way to choose a president?

I should say right up front that my answer is “yes.”  I believe in the power of the people—that’s why I wrote my book Group Genius.  But is my belief in people power supported by scientific studies of groups?  For much of history, leading political scholars believed that “the people” generally made bad decisions.  Historically, most people were uneducated and illiterate, and they could easily be swayed by appeals to the basest emotions, grandstanding, and poor logic.  When scholars first began to study group dynamics, they focused on mobs, riots, and panics, making it obvious that these scholars weren’t big fans of groups.  In fact, even the founding fathers of the United States shared these concerns; that’s why they created a “representative” democracy, where the people didn’t actually make the decisions; they elected representatives, who presumably would be properly educated and cool-headed, and could be trusted to make good decisions. 

But in the last few years, research by my colleagues and I has begun to show that groups are often smarter and more innovative than the individual members of the group.  Think of a jazz ensemble—where none of the players is in charge, where no single musician knows exactly where its going.  That’s what I mean by “group genius,” and every one of us has been in a creative conversation, a successful energizing meeting, or a sports team where everything gelled together.

Is primary voting, for example in Iowa and New Hampshire, more like a jazz group—super creative—or more like a crazy mob?

As I’ve found in my research, for a group’s genius to be fully realized, several things have to happen.  First, the members of the group have to share a common body of knowledge—and on top of that, they each have to know some uniquely different information.  Second, they have to trust in each other.  But trust doesn’t mean everyone always agrees; it allows them to challenge other’s ideas, and to propose crazy ideas of their own.  Third, they need to interact with each other, in a special kind of open, improvisational conversation—where something unexpected can emerge.  The best genius groups are like improvisational jazz ensembles.  The outcome is unpredictable, and it depends on a complex sequence of small actions and interactions.  A lynch mob isn’t like any of these—in a mob, everyone is the same, everyone agrees, and the outcome is pretty much predictable ahead of time.

This research gives us some hints about why democracy is sometimes hard to export to other countries.  In a country where the citizens don’t share a culture of democratic values, where tribal and historical rivalries make it near impossible to trust each other, it’s hard to get the conversation going.  And without a truly creative conversation, the group—“the people”—can’t do its creative work.

In Iowa and New Hampshire, thankfully the process has been more like group genius than like a mob.  We’ve seen frequent conversations and debates, with voters and candidates alike.  In such small states, even the media often plays a constructive role, spreading communications among voters.  That’s why it’s a good idea to have the first primaries in smaller states, like Iowa and New Hampshire—because there’s a very real possibility that actual conversations between voters could influence the outcome.  And these interactions have, of course, resulted in unpredictable, emergent outcomes—even four days after Iowa, it was hard to say exactly what would happen in New Hampshire.  And still, we don’t know who the nominees will be.

Both parties have been tinkering with the primary calendar.  But true democracy should be a bottom-up process, one where the choices start in conversations among the people, and then gradually bubble up.  We don’t want a process that allows the party elite to choose their candidate and then ask the people to rubber stamp that choice.  The power of democracy is the power of group genius; and that’s what we’ve seen in these primaries.  If only we could think of a way to get every state involved early on, so that all voters across the nation could participate equally, and yet still allow this emergent creative process to unfold, unpredictably and from the bottom up.