Building Adaptive Innovation

Recognize that people are creative given the right conditions. Trust them to sense opportunity and pursue it. An authentic culture of innovation is one where we can’t tell the difference between operations and invention. Accept that innovation is uncertain. A healthy amount of variation and divergence is necessary if you want a vibrant ecology of self-renewal. Have the discipline to make bets in good times and bad. They build things, and they run things. Developers want to change. Testers wish to risk reduction. And operators want stability. The solution was to bring these functions together into one continuous process. It can be hard to say where “innovation” happens when teams are empowered, customer-focused, and integrated. What is our philosophy on innovation? Where, when, and how does innovation happen? Who participates in creation? Who has the right to innovate? How do we approach incremental and disruptive innovation? What is the role of failure and learning in innovation? How do we check new ideas, approaches, and products? How do we balance the short-term and the long-term? How do we manage our portfolio of concepts, prototypes, and products?

The default assumption is that you can do anything unless a specific policy or agreement prohibits it. We’re starting from a position of trust. More freedom leads to more learning, and more understanding leads to better performance. By focusing on execution, we limit the system’s growth potential. By making ourselves indispensable, we make our teams and organizations less resilient.

Once a decision has been made, it should be shared along with the rationale and perspectives that shaped it so that others can learn too. Consensus is impossible at scale and needs to reflect how adaptive systems work. Recognize that freedom and autonomy feed motivation. Create an environment where it is safe to try and fail, and teams will learn and grow in extraordinary ways.

Accept that we operate in a changing world where centralized control is too slow and disconnected from reality. Push authority to the edge of the organization — where the information is — so teams can adapt and steer.

Structural mediocrity has an inertia all its own. The team is self-managed. They are also multidisciplinary, containing all (or most) the skills they need to achieve their mission. If “our money” were our money, who knows how well we could deploy it to serve our collective purpose? The tragedy of the commons is that we can’t share. Recognize that people are not resources. They are people — capable of directing their time and attention to where they can add value. They’re also capable of delivering performance without fixed targets or individual incentives.

Accept that you cannot predict the future. Choosing how and where to spend your money a year in advance is folly. Cut long-term commitments where appropriate to maximize discretionary funds. Ignore annual rhythms and divide resources based on real-time information. Let relative targets and a share of the wealth created by the business guide behavior. They build things, and they run things; innovation is everywhere.

It can be hard to say where “innovation” happens when teams are empowered, customer-focused, and integrated. Developers want to change. Testers wish to risk reduction. And operators want stability. The solution was to bring these functions together into one continuous process.

Recognize that people are creative given the right conditions. Trust them to sense opportunity and pursue it. An authentic culture of innovation is one where we can’t tell the difference between operations and invention. Accept that innovation is uncertain. A healthy amount of variation and divergence is necessary if you want a vibrant ecology of self-renewal.

Recognize that people are capable of self-organizing if the conditions are correct. Create simple rules or agreements about how teams are formed and changed, then let people go where their skills and energy take them.

Organize for adaptivity. Ensure that the periphery drives your structure — the teams that touch the market — rather than those at the center. Allow teams to reorganize rather than in grand gestures every few years. Once people set their OKRs, they will do everything they can to hit them, including things that aren’t good for the business. The second is that many firms try to use OKRs as a form of top-down control, ensuring that each subordinate’s OKRs fit with the OKRs of their superior.

While this feels like alignment, it eliminates any chance of divergence or serendipity. A healthy system will not cascade in a perfect hierarchy of intent. Every ninety days or so, gather your team and try to generate a few strategy statements of your own (or review and update the ones you have). Think about what you need to focus on to succeed. What necessary trade-offs don’t come? What is our philosophy on innovation? Where, when, and how does innovation happen? Who participates in creation? Who has the right to innovate? How do we approach incremental and disruptive innovation? What is the role of failure and learning in innovation? How do we check new ideas, approaches, and products? How do we balance the short-term and the long-term? How do we manage our portfolio of ideas, prototypes, and products?

[¹]: Brave New Work: Are You Ready to Reinvent Your Organization?