Create Collaboration With The Right Incentives

I just read some fascinating research by Marshall W. Van Alstyne in Harvard Business Review. The figure below shows a network of high collaboration on the left, and a network of much lower collaboration on the right. The explanation turns out to be simple: it’s caused by two very different incentive systems. Alstyne found that “the people rewarded for individual performance shared information least; the people rewarded for team performance shared more; and the people rewarded for company performance shared most.” In the figure, each connecting line indicates email traffic between two people. Thicker lines correspond to a greater volume of email. As Alstyne explains it, the reasons are pretty simple: it reflects each person’s self interest, aligning with the different incentive systems. If your compensation is linked to the performance of everyone else, then you benefit from sharing and helping others. If your compensation is linked to your own performance, relative to others, then you’re likely to “hoard” information to maximize your own performance (and to undermine that of others).

This aligns with my own study of W. L. Gore, as I wrote about in my book Group Genius. At Gore, everyone at the company receives the same profit sharing percentage; no one gets profit sharing directly from their own projects and successes. When I asked CEO Terry Kelly why, she said it’s because it encourages a culture of collaboration. She said, “at Gore, you can pick up the phone and call anyone in the company to ask for help, and they will take that call.” And imagine the alternative: with individual rewards, why would you take a phone call from someone in a different division, who you’ve never met? It’s just going to slow you down in your progress on your own work.



The Science of Creativity Workshop

Yesterday I did a one-day workshop near Manhattan for a national group of innovation managers (3M, W. L. Gore, P&G…). I do such workshops a lot, but this was the most knowledgeable audience I’ve ever spoken to. These executives live and breathe creativity and innovation. My challenge was to say something they didn’t know already–to give them information, based in research, that doesn’t appear in the usual business books on innovation. I decided to build the morning session around the psychological research that’s in my upcoming book Zig Zag: The Surprising Path to Greater Creativity. This book (to be published this March) describes the eight basic steps of creativity, and it’s filled with exercises and techniques to help enhance your creative potential.

It turns out that these exercises are a blast to do in a group, and–because they’re derived from psychological research–they do a great job of communicating the essence of how the mind generates new ideas.

The organizer, Peter Koen of Stevens Institute of Technology, also invited neuroscientist Aaron Berkowitz (Harvard) to tell us how creativity is realized in the brain, and psychologist Angela Duckworth (Penn) to tell us about her studies of “grit”–the importance of perserverance and hard work to success. And in the afternoon, I presented my research on the key role of groups and collaboration in creativity (captured in my 2007 book Group Genius).

I wish I could say more, but the participants swore me to secrecy. So all I can say is that I was honored to meet these innovation experts, from companies that I admire. Sometimes when I talk to executives about what innovative organizations look like, they look at me and say “There’s no way my company could ever be that way.” Not these folks–they heard my message, nodded constantly, and said Amen. These companies are showing us all that it’s possible to be innovative in a large, profitable organization that isn’t necessarily a computer company based on the West Coast.

If you want to hear a similar message, you might consider attending the Front End of Innovation conference (in Boston, May 2013) where I’ll be giving a keynote, along with several other innovation thought leaders.

Tinkering Toward Innovation

In this weekend’s Wall Street Journal,* Alex Foege is critical of “tinkering time”. My ears perked up, because this is a common practice at some of the most innovative companies. It means you give each employee a small percentage of each week to dedicate to their own pet projects. W. L. Gore gives each worker 10 percent of each week; Google gives everyone 20 percent; 3M, where the practice started back in 1948, gives 15 percent. In recent years, Apple started its own program called Blue Sky, and LinkedIn announced its “Incubator” program.

I advocate such programs in my keynotes and workshops, and in my 2007 book Group Genius: The Creative Power of Collaboration. I recommend tinkering time as a solution to the innovation paradox: The main task of a company is to keep generating revenue from profitable business lines. You need to do this at as low a cost as possible, sell to the largest possible market, and charge the most the market will bear. The paradox is that this sort of focus is pretty much the exact opposite of how innovation happens. So why not devote a portion of the company’s energy to innovation, while continuing to focus the majority of the resources on proven money makers?

Back in the 1950s and 1960s, the traditional way a company invested in the future was to create a separate organizational unit called “research and development” or R&D. The R&D staff spent 100 percent of their time on innovation; everybody else spent 100 percent of their time taking care of existing business. But the well-documented problem with this model is the “hand-off” problem: taking an innovative new idea from R&D and handing it over to the rest of the organization. All too often, the organization can’t manage the transition and good ideas fail to be implemented. The most famous example is Xerox, which created a legendary R&D group in Palo Alto called the Palo Alto Research Center or PARC. In the 1970s, PARC developed most of the technologies that we associate with personal computing today: windows and mouse user interface, laser printer, networking, pull down menus, etc. (The Apple Macintosh was famously inspired by Xerox’s innovations.) And yet, Xerox failed the “hand off” and never made any money from its innovations.

Many innovation managers now believe that the “tinkering time” philosophy can avoid the hand off problem, by embedding innovation throughout the organization rather than way off in a separate campus.

So why is Alec Foege critical? He argues that it rarely works. (Even as he cites famous examples of new products that emerged from tinkering time, like gmail at Google.) He claims that employees find it “terrifying” and that truly innovative people are completely different from the kind of people companies like to hire. Real tinkerers are “dilettantes, free-form creative types motivated more by their own curiosity than by the bottom line”. He points out that if you are “ordered to tinker” then where’s the passion?

This isn’t what I’ve seen when I visit places like Gore and Google. I see people who are very passionate about their 10 percent project. They don’t seem terrified to me. That’s because failure is welcomed as a step toward later success. And it’s easy to come up with a long list of successful new products and services that emerged from tinkering time…so I’m puzzled that Foege would say “it rarely works.”

Here’s his proposed solution:  tinkerers should profit more from their innovations than the company does; companies should avoid aimlessness and instead demand creativity within clear goals. Well, we already know what will happen if companies do that. If tinkerers profit from their ideas, then people become possessive and selfish and collaboration dies. If companies provide clear goals, then you’ll never get a surprising, disruptive new idea.

I still plan to read Foege’s new book, The Tinkerers: The Amateurs, DIYers, and Inventors Who Make American Great. I’m just a bit more optimistic that it IS possible to foster tinkering within a company; you don’t have to be a loner in a garage to be innovative.

*Alec Foege, “The trouble with tinkering time.” Wall Street Journal, Jan 19-20, 2013, page C3.

Boss Free

Are you angry at your boss? Is incompetent leadership ruining your company? Does your boss squash creative initiative and enforce conformity?

I have always loved my bosses, but bad bosses must be pretty common because Bob Sutton’s new book Good Boss, Bad Boss is selling really well (hot off the successes of his hit The No Asshole Rule). But here’s a radical idea: Dispense with bosses altogether. Think it could never work?

Guess what, there are lots of companies who have chosen to go “boss free.” Valve Corp, a videogame maker in Washington State, has been boss free since 1996. It also has no managers and no official project assignments. How do the 300 employees coordinate their work? They “self manage”: they recruit each other for worthwhile projects, and they roll their desks around (all are on wheels) to reconfigure their work teams as they wish. Salaries and raises are set by committees of your peers. At Valve, with each project one person tends to emerge as the de facto leader, but they’re not assigned from on high.

In my book advocating for the collaborative organization, Group Genius, I wrote about W. L. Gore, another company with a famously flat organizational structure with around 10,000 employees. Management guru Gary Hamel likewise is an advocate, see his book The Future of Management.

These companies are radically different from what you’re used to. It takes almost a year for a new hire to adapt; some of them never do, and they move on to a more traditional company. Getting the culture right is absolutely crucial. Gore CEO Terry Kelly told me that she spends over 50% of her time managing the culture. And having the right staff is essential; you need highly motivated and collaborative employees. At most such companies, the interview process is grueling, because you’re hired by a huge team of ten or more people (because there’s no boss to make the final decision).

If you’re nervous about going completely boss free overnight, it’s possible to take small steps in this direction. For example, at Gore, they tell employees that ten percent of every week is their own “creativity” time, to manage as they wish. Any company could experiment with something similar: Ninety percent of each week you’ll work on your managed project, and the other ten percent, work boss free. But then: What if everyone prefers working boss free?

*See Silverman, Rachel Emma, 2012. “Who’s the boss? There isn’t one.” Wall Street Journal, June 20, 2012, pp. B1, B8.

CNBC “Collaboration Now”

I’ve been so busy traveling that I haven’t had time to post here about my appearance on CNBC’s prime-time series, “Collaboration Now.” I appeared on Episode 2, Sunday October 19, at 8pm: the topic was, how can C-suite executives lead more collaborative and more effective teams?  The host was Donny Deutsch, and I am big fans of all of the others who were on stage for this first segment: Terri Kelly, CEO of Gore (a company I wrote about extensively in my book Group Genius); Andy Stefanovich, who has a consulting firm called Play (I love that name!); and Sheila Johnson, CEO of Salamander Hospitality.

Tune in for episodes 3, 4, and 5 on October 26; November 2; and November 9th.

Inventing the Future of Management

How can we maximize human potential to make the world a better place? How can we make work more fulfilling–whether in a business, a school, or a government agency?

For the past two days, I’ve been attending a high-powered conference here in Half Moon Bay, California, hosted by Gary Hamel (Wall Street Journal’s “top business guru” and author of The Future of Management). Our goal: to use the latest management research to re-design organizations to release the full potential of their employees, and to generate maximum innovation, adaptability, and engagement. Our starting point is the observation that management today–whether businesses, government agencies, or educational systems–is deeply flawed (think of Dilbert’s cartoons and you’ll know what we’re trying to fix).

C. K. Prahalad, Peter Senge, Gary Hamel (standing), Eric AbrahamsonMost of the 40 or so in attendance were thought leaders, authors of best-selling business books and/or professors (The photo shows, from left to right, C. K. Prahalad of University of Michigan, Peter Senge from MIT, Gary Hamel (standing), and Eric Abrahamson of Columbia).

But the high point, for me, were the presentations by a few CEOs, representing innovative styles of management: Gore, Google, Whole Foods, and IDEO, all companies I describe at length in my book GROUP GENIUS.

Tim Brown, IDEO

Representing Gore was CEO Terri Kelly; Whole Foods, CEO John Mackey; and IDEO, CEO Tim Brown (in the photo). If you’ve read my book GROUP GENIUS you know that all of these companies represent a new sort of management technology, one that is designed to tap into the power of collaboration.

A high point of the event was when Eric Schmidt, CEO of Google, answered questions from the audience about Google’s unique organizational culture (sitting at the right of Gary Hamel in the photo). I haven’t written as much about Google, simply because that company has been so widely reported in the media already; but, like Gore, IDEO, and Whole Foods, Google is a company that maximizes the collaborative potential of its employees.

Gary Hamel and Eric Schmidt

“Inventing the Future of Management” was designed to be a beginning, so we didn’t come up with concrete advice so much as challenges, obstacles, and important issues. But I was delighted to see that the consensus emerging from this group is directly aligned with my message in GROUP GENIUS: that innovation can’t be forced in a command-and-control organizational design. Innovation always emerges from the bottom up, in teams that form spontaneously and interact improvisationally. In the future, we need organizations that enhance the power of collaboration, managers that facilitate the unpredictable creative work of everyone.

Attendees: Eric Abrahamson, Chris Argyris, Julian Birkinshaw, Tim Brown, Lowell Bryan, Bhaskar Chakravorti, Yves Does, Alex Ehrlich, Gary Hamel, Linda Hill, Jeffrey Hollander, Steve Jurvetson, Kevin Kelly, Terri Kelly, Ed Lawler, Andrew McAfee, John Mackey, Tom Malone, Marissa Mayer, Lenny Mendonca, Henry Mintzberg, Vineet Nayar, Jeff Pfeffer, C.K. Prahalad, J. Leighton Read, Keith Sawyer, Peter Senge, Rajendra Sisodia, Tom Stewart, Jim Surowiecki, Hal Varian, Steve Weber, David Wolfe, Shoshana Zuboff.