We Too Often Ignore The Tradeoff Between Innovation And Optimization

It’s not how effective individual units are, it’s how effective the system is overall. And maximising the parts doesn’t maximise the whole.

McChrystal realized that in order to defeat a network, his forces had to become a network. So he took a number of steps that actually decreased the efficiency of individual teams, like embedding top special forces operators in intelligence units and vice versa. Liaison officer positions — previously neglected — were now only given to top performers.

At first, these moves inspired resistance in the ranks — nobody wants their team impaired — but as the plan took shape, it became clear that it was working. The individual teams might have slowed down slightly, but the increased interoperability allowed the army as a whole to move much faster, attacking targets almost as soon as they were identified.

Source: We Too Often Ignore The Tradeoff Between Innovation And Optimization

Russel Ackoff said this years ago:

“There are many places where making the performance of the part worse will improve the performance of the whole”.

It’s counter-intuitive that performance decreases improve overall performance. It’s also frustrating to individual teams, who in the short-term feel the downside but rarely the upside. And this is why it doesn’t happen organically, and why good strategy is about seeing the system overall. It’s also why strategy needs to be exercise in top-down power as Richard Rumelt explains in his excellent Good Strategy/Bad Strategy:

Strategic coordination, or coherence, is not ad hoc mutual adjustment. It is coherence imposed on a system by policy and design. More specifically, design is the engineering of fit among parts, specifying how actions and resources will be combined.
Strategy is visible as coordinated action imposed on a system. When I say strategy is “imposed,” I mean just that. It is an exercise in centralized power, used to overcome the natural workings of a system [emphasis mine]. This coordination is unnatural in the sense that it would not occur without the hand of strategy. The idea of centralized direction may set off warning bells in a modern educated person. Why does it make sense to exercise centralized power when we know that many decisions are efficiently made on a decentralized basis?
Left alone, each node of the system will try to optimise its own performance – be that teams in the army, positions on a football field, or functions in an organisation. It takes a strong player to sacrifice their performance for the good of the whole, and it takes a strong leader to say no to those who don’t get this, especially when the system-level benefits are difficult to quantify and only emerge over time. (For another day, but this is why working to a logical theory is more important than prioritising only what can be quantified, as explored here, here, and here.)

Compress to impress — Remains of the Day


Ironically, Jeff employs the reverse of this for his own information inflows. It’s well known that he banned Powerpoint at Amazon because he was increasingly frustrated at the lossy nature that medium. As Edward Tufte has long railed against, Powerpoint encourage people to reduce their thinking to a series of bullet points. Whenever someone would stand up in front of Jeff to present, Jeff would have rifled through to the end of the presentation before they would’ve finished a handful of slides, and Jeff would just jump in and start asking questions about slide 35 when someone was still talking to slide 3.As a hyper intelligent person, Jeff didn’t want lossy compression or lazy thinking, he wanted the raw feed in a structured form, and so we all shifted to writing our arguments out as essays that he’d read silently in meetings. Written language is a lossy format, too, but it has the advantage of being less forgiving of broken logic flows than slide decks.

Source: Compress to impress — Remains of the Day

Competition in organizations: good or bad? | Niels Pflaeging | Pulse | LinkedIn

The fundamental reason why these tools and practices do not actually work is this: Individual performance, in organizations, does not even exist. The notion of individual performance is a crude over-simplification of organizational reality: Performance is not something that individuals within an organization can do, or create by themselves, individually. Instead, performance in organizations always happens in the space between people. It arises from interactions between individuals, or from “performing with-each-other-for each-other”

Source: Competition in organizations: good or bad? | Niels Pflaeging | Pulse | LinkedIn

How To Fix Christensen’s Spinoff Theory For Responding To Disruptive Innovation

From where I sit, the cult of maximizing shareholder value is a pretty strong root cause of a lot of the changes we’ve seen. We all know that this is not something that has been handed down by some higher power, nor is it required by law. It’s a set of decisions that people have made to orient a system around something that in my view is fatally flawed. It doesn’t lead to good for anybody, except for people who are making short-term gains as they get in and out of stocks. This helps explain a large part of the business challenges, that have more of a short-term focus, and more of a strip-mining mentality, than a real long-term orientation.

Source: How To Fix Christensen’s Spinoff Theory For Responding To Disruptive Innovation

Harnessing the Secret Structure of Innovation

The promise of an information-enabled innovation strategy extends to disruption. Disruption, as seen through the lens of our model, is an event that suddenly resets and resimplifies an innovation space by lowering product complexity. We observe such events when two previously unconnected innovation spaces merge, giving rise to myriad new product innovations with reduced complexity. This implies that disruptions don’t just happen — they are created by innovators at the edge of a space who build simpler products that leverage components from a different space. A classic example is the disruption of the music media industry by edge players in peer-to-peer file sharing (like Napster) and research organizations developing new music encoding standards (like the Munich, Germany-based research organization Fraunhofer-Gesellschaft, which was the main developer of MP3 technology). While we cannot claim that we can predict such disruptions (yet), our analytical approach allows innovators to spot such events and interpret them as early-warning signals.

A disruption always requires innovators to reset their innovation strategy and to return to an impatient approach. We modeled different responses to disruption in the technology space and found that companies that successfully reset their strategy have an innovation output that’s about 50% higher than companies that don’t. (See “Sensing and Navigating a Disruption.”) Switching back to impatient behavior is easier said than done, because it requires a switch in all aspects of the innovation approach.

Source: Harnessing the Secret Structure of Innovation

Harnessing the Secret Structure of Innovation

Innovation is an evolutionary search process.

The exhibit below, “Information-Enabled Innovation Strategies Outperform,” demonstrates three crucial insights. First, information-enabled strategies outperform strategies that do not use the information generated by the search process. Second, in an earlier phase of the game, an impatient strategy outperforms; in later stages, a patient strategy does.

Source: Harnessing the Secret Structure of Innovation

The Threat | Edge.org

I’ve always loved Michael Schrage’s question: “what do you want your customers to become” as a way of framing innovation, as opposed to the needs you serve. If we think in terms of the superpowers we give them, the human capital we build, it creates a far richer and more meaningful outcome.

Sometimes we forget just how powerful we’ve become:

My concern is that right now you have people whose abilities, consciousness, and whose perception is enormously enhanced by the use of tools.

I began to realize this in 1996 when I first played with AltaVista, the first proper search engine. I was in the process of helping some lobbying of the government on privacy. We wanted to investigate some companies who appeared to be misbehaving. At the end of an afternoon when I’d figured out, using AltaVista, how to find out everything about these companies, about their accounts, their directors, their directors’ hobbies and interests, I realized that with a search engine I had the same kind of power at my fingertips that last year only the Prime Minister had with the security and intelligence agencies to do his bidding.

Source: The Threat | Edge.org