For several years Peter Denning, co-author of The Innovator’s Way, has been puzzling over why it seems that our innovation adoption rates are low even though our idea production rates are high. The overall success rate of innovation initiatives in business is around 4%. Yet many businesses report that they have too many ideas and waste precious time and resources struggling to select the ones most likely to succeed and then work them through to adoption. We are idea rich, selection baffled, and adoption poor.
From a Forbes article by Steve Denning we learn that a magisterial study by Deloitte’s Center for the Edge shows the rates of return on assets and on invested capital for 20,000 US firms from 1965 to 2011. It shows that “managerialism” has been steadily failing for the last half century.
The graphic shows that something has gone so terribly wrong with the US private sector—the supposed engine of economic growth and the supposed creators of jobs. When the best firms have rates of return on assets or on invested capital of, on average, just over one percent, we have a management catastrophe on our hands. An ROA of just over one percent means that firms are dying faster and faster: the life expectancy of firms in the Fortune 500 is now less than fifteen years and declining rapidly.
Fifty years ago, big firms were in charge of the marketplace. Then globalization, the internet and finally social media changed everything. Customers have choices, reliable information and an ability to connect with each other. The result for hierarchical bureaucracies is devastating: game over. Now the power in the marketplace had shifted from seller to buyer. And in this new ecosystem, big lumbering hierarchical bureaucracies of the 20th Century just aren’t agile enough to compete.
Traditional company business models aren’t built to empower customers and pass on value to them. They are built to extract profitability from them. And information asymmetry gives them the perfect cover. But, with an increasingly connected world paving the way for more and more information transparency to the customer, all of this is about to change. No longer are “Insiders” able to control the flow of information. If a product is great, soon customers will tell other customers on the Web and rave reviews spread like wild fire. Similarly, if a product is bad or customers realize they are being ripped-off, relationships will provide little recourse to contain that information from being widely disseminated.
What Happened to the Future? is the title of the manifesto of the Founders Fund. The subtitle is “We Wanted Flying Cars, Instead We Got 140 Characters.” Jason Pontin in the MIT Technology Review wrote an article entitled “Why We Can’t Solve Big Problems:”
[B]ig problems that people had imagined technology would solve, such as hunger, poverty, malaria, climate change, cancer, and the diseases of old age, have come to seem intractably hard….
Max Levchin, [a] cofounder of PayPal, says, “I feel like we should be aiming higher. The founders of a number of startups I encounter have no real intent of getting anywhere huge … There’s an awful lot of effort being expended that is just never going to result in meaningful, disruptive innovation.”
Solving big problems as Roman Krznaric suggests requires empathy:
I believe that empathy – the imaginative act of stepping into another person’s shoes and viewing the world from their perspective – is a radical tool for social change and should be a guiding light for the art of living. Over the past decade, I have become convinced that it has the power not only to transform individual lives, but to help tackle some of the great problems of our age, from wealth inequality to violent conflicts and climate change.
It is important to understand what empathy is and is not. If you see a homeless person living under a bridge you may feel sorry for him and give him some money as you pass by. That is pity or sympathy, not empathy. If, on the other hand, you make an effort to look at the world through his eyes, to consider what life is really like for him, and perhaps have a conversation that transforms him from a faceless stranger into a unique individual, then you are empathising.
Dev Patnaik, author of Wired to Care:
At Jump Associates, my colleagues and I have had the chance to collaborate with some of the world’s most amazing companies. And if there’s one thing that we’ve learned in all that time, it’s that companies prosper when they’re able to create widespread empathy for the world around them. That’s why I ended up writing Wired to Care, which shows how great companies around the world, from Nike to IBM, benefit from building a culture of widespread empathy for the people they serve.
The evidence is overwhelming on the need of empathy to drive innovation, yet as the documentary The Corporation argues, most corporations have the characteristics of a psychopath. And as Russell Mokhiber in an article in The Corporate Crime Reporter tells us:
Corporate crime inflicts far more damage on society than all street crime combined.
Whether in bodies or injuries or dollars lost, corporate crime and violence wins by a landslide.
“In everything, therefore, treat people the same way you want them to treat you, for this is the Law and the Prophets.” ~ Matthew 7:12
Myths are about becoming more godlike and achieving our best. Propaganda, on the other hand, celebrates those in power and urges us to willing comply with their desires…. We’ve built a world where the only option is hubris, where the future belongs to anyone willing to act like the gods of our myths…. The Japanese call it kamiwaza.
In The Case for God, Karen Armstrong explains that until the modern period, the major Western monotheisms all concerned themselves primarily with practice, the doing of religion, rather than doctrine. A good Muslim was one who stood alongside and supported the Pillars; a good Jew observed Sabbath and remained committed to the Law and the ritual year; and a good Christian embodied the Sermon on the Mount by caring for the marginalized, promoting compassion and peace, and sharing God’s love. This is what it meant to be religious, Armstrong explains:
Religion as defined by the great sages of India, China, and the Middle East was not a notional activity but a practical one; it did not require belief in a set of doctrines but rather hard, disciplined work, without which any religious teaching remained opaque and incredible.
For most of Western history, religion has been primarily a matter of orthopraxy, not orthodoxy. In fact, no doctrine made any sense without participation in the community of faith and in its rituals. No doubt, there were certain thoughts or “beliefs” that mattered and were of extreme importance; however, unlike today, these convictions were never understood as either the core or the purpose of the religious life.
In fact, for most of Western history “belief” has meant nothing like what it means today. Today, when someone asks me if I believe in God, for example, they are asking if I assent to the proposed verity or the factual existence of God—and usually it is in reference to a very specific understanding of that God. Similarly, if I’m asked if I have “faith in Christ”, the question is whether I agree with the proposition that Jesus of Nazareth was divine, died on a cross, and was raised from the dead, or some form of that story. In both cases, questions of “belief” and questions of “faith” require answers of thought.
Yet, as surprising as it may seem, these understandings are relatively recent. “Faith” has its etymological roots in the Greek pistis, “trust; commitment; loyalty; engagement.” Jerome translated pistis into the Latin fides (“loyalty”) and credo (which was from cor do, “I give my heart”). The translators of the first King James Bible translated credo into the English “belief,” which came from the Middle English bileven (“to prize; to value; to hold dear”). Faith in God, therefore, was a trust in and loyal commitment to God. Belief in Christ was an engaged commitment to the call and ministry of Jesus; it was a commitment to do the gospel, to be a follower of Christ. In neither case were “belief” or “faith” a matter of intellectual assent.
Is there a business parallel suggested by a paper by Peter Denning where innovation is not ideas [doctrines] generated, but practices adopted? What if entrepreneurs, rather than inventors, are the real innovators? Should we worry less about stimulating creativity and imagination, and more about developing our skills at getting our communities to adopt new practices. We would approach design not as an expression of ideas but as the framework for new practices?