This is a transcript of Episode 6 – innovation. You can also listen to episode 6.
My number one belief is the biggest impediment to innovation is actually time.
The marketplace that we have at the end of the two days to showcase all of the ideas, we’re getting four to five hundred people coming. It’s amazing.
“Right, we want you to innovate NOW” and then people are sort of expected to just come up with these ideas and that’s your innovation.
Welcome to Feel – a podcast about leadership. My name’s Andy Kelk. So far in this series we’ve covered everything from culture through to remote and distributed working. If you’ve missed out on earlier episodes, you can get them from iTunes, Stitcher, SoundCloud or FeelPodcast.org
In this episode, we’re looking at innovation – how are smart companies creating new ideas and getting everyone involved?
The management consultant and author Peter Drucker said that “If you want something new, you have to stop doing something old.” In an age where the world seems to be moving ever-faster, all organisations seem to be in search of the new, the different, the innovative. But how many of us are prepared to stop doing something old in order to get there?
An innovation is a new product, method or idea. But it’s more than just something new. I spoke to leaders in companies with strong innovation cultures to get their views on what innovation is and how to promote it. Kerri Rusnak, formerly of the REA Group started with her definition of innovation.
The analogy I have for innovation is like a joke or something that’s funny. The reason I say that is something is funny and makes you smile because there was one intended outcome and then something quirky and unexpected happened that pleased you in a delightful way. And I think innovation’s a bit like that. If you put something together, you expect to have one outcome and then somebody’s come up with something else it’s kind of the same but different. It’s unexpected and isn’t that cool? When people feel like “what a delightful surprise, it makes me smile and isn’t that cool?” That to me is an innovation.
So it has to be something, it’s an evolution usually of something. It’s not an innovation if it’s not useful and it’s generally not an innovation if it’s so new that nobody actually gets it. People can adapt their minds to an evolution of ideas, in terms of “I have a product which does this and now it also has this other cool thing and it lets me do two things” or it’s the extension of something and I think if we think about innovation as evolution – the delightful surprise that makes you smile – then you’re probably getting closer to it.
I think of the things that I think are really innovative and cool that I want to be attached to as a consumer or part of the in-crowd or whatever are the things I’m like “that’s cool, what a clever idea because it’s kind of like this but they’ve done something surprising and different”.
Almost all organisations want to be creating something clever, cool and different. Even if it’s just a new way of doing old business. But innovation doesn’t just happen when we want it to.
How can we create the right conditions for it to thrive? Em Campbell-Pretty, an enterprise lean and agile coach, thinks that most companies don’t give enough time to the process.
My number one belief is the biggest impediment to innovation is actually time. And everything I’ve done, everything I look at tells me that if you give people time they will innovate. It’s that whole intrinsic motivation piece; Dan Pink and Drive: autonomy, mastery and purpose. If you give people time and space they will innovate. I know so many techies who go home at night and code and play with stuff, the same stuff they do at work, they do it in their own time because they choose to. So there’s definitely something about time in there.
When she was working in the data-warehousing group of a large Australian telco, Em set aside specific time blocks for people to experiment and try new things.
We set up what we call the innovation challenge. And we said to the teams “you’ve got 10% of your capacity each iteration to invest in innovation” – like the Google 10% time idea – and “at the end of the iteration, we want you to share your innovations with all the other teams and we’re going to vote for the best innovation and you can’t vote for yourself.” So crowd-sourced what the other teams find most valuable and then we would give $100 cash to the team that came up with the best innovation.
And I think we just thought they’d go to the pub or something. The cool thing about this is they went to Coles and bought crisps and lollies and biscuits and what have you, came back to the office, sent an email to everybody on the floor saying “Snacks at our place. Come visit us. Come see what we did.” So that part? Brilliant. Absolutely brilliant. Loved it. And just never saw that coming.
A little way into it we also got a cup. What was really fascinating was, when we had the innovation cup, there was far more fighting over this cup than there ever was over the money. People got really really precious about who had the innovation cup. So that was kind of interesting as an experiment.
The REA Group also allocated a proportion of time to innovation each month, but found that there were limitations. At the time, I was working with Mike Breeze who is an iteration manager at the REA Group; we both wanted to find new ways to spark innovation.
I think what we quickly found was we weren’t really being very constructive or productive in that time. There wasn’t much being produced. There was very little being produced and there wasn’t much accountability to actually show what was being produced and then, obviously, that creates a friction with the rest of the business, they’re like “Well, what are those guys spending 20% of their time on if we never get to see it.”
So we had a few iterations on that and then introduced the Atlassian FedEx Day concept which, I’m kind of paraphrasing, you spend a certain amount of time but you must showcase what you’ve built at the end of the time, I think that was the key thing. And then, along with that, a higher focus on actually shipping something – which is why they called it FedEx days.
So we switched to that format and that was brilliant. I don’t know whether it was a day then or a day and a half, but if you wanted to join Hack Day as it was then, we didn’t have many people joining. It was maybe nine or ten devs, you said what you were going to work on, you worked on it for a day and a half and then you presented a showcase on what you’d built or managed to build or hadn’t managed to build but the important thing was you stand up in front of your peers and you show them what you’ve been working on. I remember that was really important at the time because we were still not far away from those geeky, introverted devs with our headphones on. So to actually stand up and present to your peers was a big thing for most people.
There’s a video somewhere of people doing just that in front of the CEO and the head of product and the CIO and they’re excruciating. I look at them now and think “[laughs]”; just crazy stuff. That was the first change. And it was very small then, it was nine or ten developers. I tell stories about it now and I talk about nine or ten knock-kneed, skinny, geeky developers standing up, terrified, in front of the CEO and the head of product and the CIO pitching these incredibly nerdy projects but it just slowly grew from there.
Mike goes on to tell me how the hack day concept has grown up.
We have a stand-up at the start of Hack Day on a Thursday morning and we have up to 20, 25, 30 teams coming up and pitching ideas to 300 people, talking about the ideas that they’re going to try and build over the course of the two days. And then the marketplace that we have at the end of the two days to showcase all of the ideas, we’re getting four to five hundred people coming and it’s amazing.
If we talk about the way the actual format’s evolved. When we first switched to the FedEx Day format, we organised a big showcase meeting where we’d try and convince people from the business to come and look at what we’d built. And each of the teams or devs would queue up one at a time and present their ideas. And really very quickly within two to three of those, it was excruciatingly boring. We couldn’t get people from the rest of the business to join because they would have to sit through all of the presentations to get to the one they were interested in.
Instead of presenting them in turn and making an audience sit there and absorb if for two or three hours, we would have what we call a marketplace. Which is a bit more like a conference setup where you have a big floor area and each of the teams sets up a stall and they pitch their project from that stall and people just wander around to the projects that they’re interested in and see the ones they want. So if someone from sales or product or anywhere else in the business has only got ten minutes, they can come up and quickly see which ones they’re going to be interested in, go and listen to the pitch, and then leave again. And that was immediately successful. It was incredible how much of a change that made.
And that’s the first that we suggest when we go and talk to other companies – just change that around and you’ve still got everyone pitching but they all do it together and you get a sense of energy from that. You can have food available. And really we bribe the rest of the business to come and join the marketplace by having free beer and drinks and food and whatnot. And that creates an instant buzz.
And then we developed that further. Instead of having the CEO and head of product and CIO voting on who they thought, we came up with the idea of giving everyone some fake money whether it’s three pebbles or three coins to spend; they go around and look at all the ideas and, almost like a venture capital setup, they decide which three teams they’d spend their money on to give them money to start up an idea as a company. That was an immediate hit as well and we still do that in some form. So the team with the most coins, notes, pebbles at the end of the day is the winning Hack Day team.
And we’ve had a trophy, a perpetual trophy which has got 14 or 15 winners over the three or four years we’ve been doing that and that’s become a much-loved prize for the winning team to take.
The REA hack days have been recognised by many other organisations as a great example of innovation at work. But the concept doesn’t work for everyone.
Other organisations prefer to try and create the right conditions for innovation to happen at any time. Neil Killick, agile portfolio manager at MYOB, explains what’s important to him when thinking about innovation.
We talk about clarity of direction and where we’re heading and those kind of things and it’s almost like the case with innovation that you actually don’t want to have a direction as such. Because if you’ve got an explicit direction of where you want to head you’re actually boxing your thinking to some extent. Where with innovation it’s truly about brand new ways of thinking and approaching problems in a different way and looking at the market in a different way.
So often you see this thing where companies talk about “Oh, we need to innovate so that we don’t get disrupted.” So you try and create this start-up culture in the company to be able to do that but then you realise “But we can’t do that across the whole company.” So you end up with an innovation team or an innovation project. And I guess hack days is an example of that. You’re boxing your innovation into this particular timeframe where “Right, we want you to innovate NOW.” And then people are expected to just come up with these ideas and that’s your innovation.
Could hack days lead people into thinking that, because they’re running them, they don’t need to innovate outside of those timeboxes? Steve Hardisty, a senior engineering manager at Etsy, warns that might be the case.
The issue I have with them is kind of like tech debt days where you’re going back through and doing all the shit you should have done for the rest of the year and you just didn’t. It feels like that, it feels a little contrived. And you employ 160, 200, however thousands of engineers, people who are very smart, a lot of them are very passionate about their jobs and then for a week a year or two days a quarter you give them the ability to flex their intellectual muscle. OK, what happens the rest of the year?
And it doesn’t mean you should have hack weeks all the time, there has to be some organisation around doing large, complex things. But where’s the idea generation happening the rest of the year? You’ve employed all these people with unusually high IQs, why not use that a little?
So I think they’re a good thing, but they do feel like a sticking plaster rather than actually making people feel empowered to have ideas and to execute on ideas the rest of the time.
If innovation is ongoing and not just a timeboxed event then it becomes commonplace and nothing out of the ordinary. That’s certainly how Alex Stokes, consultant and founder of agily.com.au, sees it.
My partner’s role is programme lead for the innovation team; there’s a Chief Disruptive Innovator that he reports to at his work. Yeah, real job titles. So, as a term I think it’s probably overused and there’s a bit of hype around it but I think it’s just stuff that we’ve probably been doing for a while and encouraging for a while.
So I hope what it means is that organisations will collaborate more between functional boundaries instead of having ideation happen in marketing, and having a team called product that design a product and then a team called delivery or IT or whatever that deliver a product. I hope it’s something that means that companies cross-pollinate a bit more.
And that would fit in with the moving of org structures; moving away from functional org structures and having more teams that are like little cells that form around a product or an offering for as long as that product or offering is relevant.
And then if you look at the true innovators, the start-ups that are three man bands or very very small companies, that’s essentially how they operate because that’s all there is. “There’s only the six of us, so we’re doing everything.”
By creating the right organisational structures and allowing people more latitude to explore, we can start to create the right environment for innovation. Steve Hardisty tells the story of Forward3D, a digital marketing firm who ended up in a very surprising line of business.
They’re a group of designers and engineers and various people interested in building products in London and a group of people there did some work to work out what was the best value Google AdWord. So, cheap but people are interested in it. So they bought all these AdWords, they built one-page websites with pictures of the things and a ‘Buy Now’ button.
And the best value was parrot cages. So they just built this website, just a picture and a ‘Buy Now’ button but it didn’t do anything but they tracked how many people hit buy and looked at the conversion rate. And then they went to the pet shop around the corner, offered to sell their parrot cages, did a good job of that; they went to the wholesaler of the parrot cage guy, built a website for the wholesaler, did very well from that; a guy in Holland went to jail or something, he was Europe’s biggest importer of parrot cages, they bought his stock and his warehouse. And now these four guys in the corner of an office in Camden are Europe’s biggest importers of parrot cages. And they got there through just this crazy process.
And that can only really happen when you allow people the latitude to do that work. And the other thing is knowing how to execute on an idea is important. One thing I think we’re fairly good at at Etsy and what Forward, the parrot cage people in London are very good at, is understanding what the minimum viable product is to understand the value of an idea. And that doesn’t mean building all of the infrastructure out, it means building the minimum thing; so long as it looks good enough, looks like it should be there and it appears to function then from there you can understand how good something is. And with websites that’s easy to do.
So what can you do to create the conditions where people are able to come up with new ideas? Neil Killick thinks a lot of it is about the expectations the leader has for their team.
It’s cultural. Which means it’s really complex. But it’s how we, as managers and leaders, establish a culture where people are completely unafraid and actually encouraged and rewarded for coming up with new ideas and throwing things out there and experimenting, trying new things. And acknowledging that 99% of them or maybe more are going to be a complete waste of time and failures. But that that’s OK.
As soon as you put a box round it and go “This is fourth experiment you’ve done and we’re not getting any results from it” then straight away you’re now thwarting innovation. Because you’re now putting pressure on people to come up with this winning idea and they’re going to put more investment and time into it than perhaps they should and they’re not going perhaps test their hypotheses with the right people or they’re going to start feeling more biased towards that particular thing. Because that fear is there that they’ve got to innovate more quickly or they’re going to be in trouble.
It certainly is possible to foster innovation and creativity in everyday work although it’s not easy. But then hack days and other timeboxed events are about more than just new ideas; they’re also great tools for bridging divides and creating a strong culture. Kerri Rusnak explains.
The experience here certainly has been, I think, the majority of what Hack Day stands for us is the culture. And it is a culture of innovation but it’s more importantly a culture of collaboration, of showcasing, of trying new things out and celebrating that ability to try something new out. It’s timeboxed which also reinforces this agile mentality of “you can achieve incredibly great, wonderous things within two days and that’s a mindset you should take into your day-to-day.”
I think, even in agile, even though we have iterations, it’s easy to let iterations tick away as numbers without the intention behind the iteration which is “I’m timeboxing this and I’m creating tension in the system to drive an outcome” and really force you into the mindset that a lot is possible in a short period of time; more than you could ever expect. So I think one of the things you see in hack days, certainly the culture, yeah that’s true, I think we talk about that a lot; but I think it’s also that mindset of cross-collaborative work forced into a short period of time develops a mindset that great things are possible without an endless amount of time.
And those benefits are not just restricted to the techies and the product teams. As Mike Breeze explains, at REA, Hack Days are a whole-company event.
Hack Day’s got to that point, that size where the whole company gets involved. On any given Hack Day team we have salespeople, we have product people, we have people from our helpdesk; our old CEO, he joined a team at one stage. So we have fully cross-functional teams working on these ideas and that means all of our people are meeting different people that they wouldn’t normally work with on a day-to-day basis. So it opens up all sorts of new relationships and whatnot through the building. And that really has a great effect.
And so now it’s recognised at board level; we played a Hack Day video at the AGM a couple of weeks ago and everyone loved it. It’s amazing to have gone from those nine knock-kneed, skinny, geeky developers, terrified and pitching to now the board sees it and our shareholders know about it and they recognise it as a valid means of building culture and technology in the company. It’s an amazing story.
An amazing story, it certainly is. Innovation will always be an elusive quality for many organisations and thinking of innovation just as the responsibility of one team or as a one-off project will only get you so far. Creating the right conditions for new ideas requires time, bravery and support. But if you get it right, there’s always an amazing story to tell.
Next time on Feel: diversity – why is it important and what can organisations do to increase it?
If you like what you hear in this series, please consider rating and reviewing the show on iTunes – it gives us valuable feedback and helps others find out about it too. And if you want to discuss things directly, get in touch on twitter – @feelpodcast, or contact me via the website – FeelPodcast.org
I’m Andy Kelk, this has been Feel. A big thank you to Alex Stokes, Em Campbell-Pretty, Mike Breeze, Neil Killick and Steve Hardisty. The show’s music is by audionautix.com and our website is FeelPodcast.org.