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Told You So!

"Told you so" is really stupid, a sign of senility and petulance; so I retract. But I will nonetheless quote from page 307 of my 1997 book, The Circle of Innovation. I was riffing on the problems associated with ISO 9000 certification, and unearthed the perfect quote to match my sentiments, courtesy Richard Buetow, then director of corporate quality for business systems at Motorola:

"With ISO 9000 you can still have terrible processes and products. You can certify a manufacturer that makes life jackets from concrete, as long as those jackets are made according to the documented procedures and the company provides next of kin with instructions on how to complain about defects. That's absurd."

What's particularly interesting about that, in addition to the amusing-but-deadly-serious content, is that the speaker is a Motorolan. Long before Welch at GE, Motorola was the poster child for wholesale adoption of Six Sigma quality processes. And, though the process worked wonders on quality in the short term, it apparently starved innovation, an under-tended priority for historically innovative Motorola—until the RAZR signified a return to corporate roots.

Searching Circle of Innovation for that vaguely remembered quote was in response to the June 11 BusinessWeek cover story, "3M's Innovation Crisis: How Six Sigma Almost Smothered Its Idea Culture." When Jim McNerney lost out to Jeff Immelt in the race to replace the retiring Welch, he immediately landed the CEO job at 3M. (He's subsequently moved on to Boeing.) As GE-ers tend to do almost mechanically, he instantly implanted GE's powerful systems—powerful in GE's odd culture, a point never to be forgotten. Six Sigma led the way, was of enormous value—and in the process more or less closed the lid on entrepreneurial behavior. Six Sigma = Tight Controls and rigid copying of "benchmark" entities within the firm.

The story is not unique—Motorola is a case in point, as mentioned. So was Florida Power & Light, which became, about 20 years ago, the first American company to win Japan's tip-top quality award, ironically the Deming Award. (After W. Edwards Deming, the Yank who brought quality fanaticism to Japan, having been dismissed as a nutter at home.) Upshot: FP&L de-installed most of its vaunted quality systems just a couple of years later because, apparently, they were choking the firm to death.

That was then, and the Welch Era is more or less now. Repeat: McNerney's fellow "loser," my pal Bob Nardelli, took the helm at Home Depot, discovered Gordian knots galore—and immediately (!!!) installed GE systems with the zeal that is his trademark, though not with Six Sigma in the pole position. You couldn't go two minutes at HD without hearing the word "metric." Again, the discipline was necessary and brought needed order to the monster firm. Nardelli is gone now, struggling to make do with his roughly $210 million "get out of town now" pay packet. And the reason in part was those damn systems, which strangled the previously energetic firm and whacked morale and retail customer service along the way.

Then there's Immelt's GE itself. Jeff inherited a 20 year operational excellence obsession from Welch, with Six Sigma at or near its heart. But what about the firm's vaunted Edisonian spirit of innovation? More or less M.I.A. (I was on Welch's shit list for a while, along with Michael Porter, for a quote in the Wall Street Journal asking, "What happened to Edison?" ) Immelt, like 3M's post-McNerny team, is trying to preserve the best of Six Sigma, etc., but clearly betting his legacy, and even his short-term hold on his job, on Big Bet Organic Innovation.

So from FP&L to Motorola to GE, 3M, and Home Depot we see the value of "system madness"—but also the devastation of an innovation "culture," à la 3M, that seems to accompany it. I, for one, have staked my own legacy on decentralization and innovation—and railed against ISO 9000, Six Sigma, Benchmarking, and Best Practices for 20 plus years. (Of course "learning" is essential—but rigid application of Best Practices in the spirit of "my way or the highway" is disastrous. So, too, benchmarking taken too far—as it usually is.)

"Balance" is as always the answer—and the real theme of the BW cover story. But an injunction to "do both" doesn't cut it for me—it's a first class cop-out as I see it. So, I am no fan of balance. And, in short, as I look at the pitiful (understatement!) performance of Giant Companies (think, of late, of our giant pharmaceutical firms), I say "Vote for—with purposeful imbalance—innovation and an ingrained entrepreneurial spirit."

Tom Peters posted this on 06/06/07.

Comments

I used to think that balance was the answer and I could go on about how the new ISO 9002 tries to move away from concrete lifejackets to a system that tries to be more business relevant. But as I grow ever more curmudgeonly I realise that it's about taking whatever seems to be the best idea at the time - irresepctive of source or current fads - and having the judgement, courage and persistence to make it work.

Posted by Mark JF at June 6, 2007 10:37 AM

i remember creating work instructions and procedures and thinking about how rotten the process - but if that what it takes to land the business so be it. perfect imbalance - we are all tasked with doing more with less, creating capacity with limited resources. looking around the environment how much systematic work exists that could be replaced with innovative, value adding activity? the tools are fine (where once i was blind, now i see) but clinical and mechanical and over time shape thinking and actions. we all started as idealists shaped over time by doing things right rather than doing the right things - huge difference and stifling to innovation.

Posted by tom wilson at June 6, 2007 1:43 PM

There are two issues embedded in the 3M situation that bear examining. First, what is a true measure of corporate performance? If 3M's board sees that as the increase in stock price, the hiring McNerny was a success. The stock was at 56 when he arrived and 75 when he left. But if the measure is long term profitability and competitive advantage, then it seems like the track record of 3M, based on William McKnight's original principles is better.

The other issue is the issue of where strict controls and discipline are appropriate and where they are not. There seems to be good research out there that companies with rigorous quality programs tend to innovate in areas around process improvement, rather than in areas of breakthrough products or processes.

I'm about Tom's age and I've seen the cycle of "let's make innovation more rational" come and go and come again. I've convinced that great innovation comes when an individual sees something unexpected and mutters that source of all inspiration, "Wow. That's interesting." I believe that great innovative cultures allow that individual and his ilk to pursue matters further without having to report back hourly.

Posted by Wally Bock at June 6, 2007 1:46 PM

I'm sorry, but before joining the conversation, I'll have to look up the procedures in the SOPs...

Posted by Steve Woodruff at June 6, 2007 4:30 PM

I'm actually going to weigh in on the side of balance. Process and measurement are necessary. They allow companies to function. They are necessary to move products and services from the idea stage to market effectively and efficiently and to improve them.

Companies like Google have process. They have measurements. Certainly they don't have the rigor of a company wide Six Sigma program, but they have it. They need it to operate successfully, especially as they grow.

I'm hesitant to compare companies and make generalizations about their cultures. Google will not be on top for ever. Apple will stumble with a product offering. When it happens, will it be because they have too many freaks or not enough. Who knows? When the time comes I'm sure there will be those that argue vehemently on both sides.

I suppose with ISO 9000 companies could produce concrete life jackets. I would imagine without it, they could produce perfectly good life jackets one day and some that looked good but burst at the seems the next.

The trick is seems is to produce a quality product or service but not stifle innovation. How is that done? I don't think there is any silver bullet. In his book, The Innovators Dilemma, Clayton Christenson suggests that sometimes to maintain innovation, to identify disruptive technologies, a company needs to create incubators, or pockets of innovation that are not subject to the same rules as the rest of the company. Of course it's the main company that supports the incubator.

If a company is to be successful long term, every employee can't be a freak. There needs to be a balance. There needs to be a balance with process as well. Some areas will require and benefit from more, some from less. Managers need to recognize this. They need to support and encourage the balance and be rewarded for doing so.

Posted by Nick McCormick at June 6, 2007 10:03 PM

Nick - I thought about taking a pro-balance line but on reflection, it would have been wrong. I hear your comments about process and measurement and about the need to manage freaks vs. straights, all of which is true. But I disagree about being in favour of balance because too often it leads to routine and complacency. Maybe (to balance the discussion!) we're talking about degrees of balance and we go back to the need for simultaneous loose / tight controls. From where I sit, however, the presumption should be that loose controls are best and there needs to be a really strong case for tight controls. (And not, "Someone once took a writing pad home and used it for personal purposes so we're going to make everyone fill in a form and get 3 signatures and cross-charge the relevant cost centre before they can take anything from the stationery room.")

Posted by Mark JF at June 7, 2007 2:41 AM

I don't know what Tom or Mark mean when they say they're against "Balance," but I know what I mean. I'm against pursuing balance as a goal. My experience tells me that leads to, as Mark said, mediocrity. Somewhere back there in the mist of my working life I started to used the term "appropriate" to describe what I think Nick is getting at. Many years ago I wrote an OpEd piece in the SF Chronicle called "When not to listen to Tom Peters" that pointed out that ISOE was dead on for large companies that had ground to a halt with paper stuck in the gears, but that many small to mid-sized businesses needed some of the proces and discipline their larger brethren had overdone. I think companies start out spontaneous because they can, then they get to a point where Ready-Fire-Aim winds up shooting the wrong things and you develop some controls and process. That takes over after a while and you need three signatures and the permission of the hall monitor to try anything. So you have to go back to Ready-Fire-Aim. People must have freedom to try things. There needs to be process. The issue is where and when and how for each. Figuring that out is still more art than science.

Posted by Wally Bock at June 7, 2007 8:19 AM

I think Wally nails it when he says that it is more of an art than a science. Unfortunately, art has given way to hyper analyzed, metric driven, process stifled "innovation" that has essentially killed creativity in many organizations. If you look through some of the sites that specialize in trend spotting, design reviews and "cool hunting" you will almost never see something referenced that comes from a large company - Apple being the exception.

Processes are absolutely necessary to insure that quality products are developed, produced and delivered effectively. In order for people to remain creative, however, they need a great deal of latitude to experiment, fail and investigate without having to fill out massive amounts of paperwork, go through interminable peer reviews and justify even the most insignificant changes.

It often seems like the companies that are the most creative, and successful, are those that do not rely heavily on focus groups, market research and process metrics, but rather develop products that they "would want to own or use." As someone with both industrial design and business backgrounds, I can say from experience that our most successful products have been the ones that we personally "liked" the most before we brought them to the market. Sure we're small, but that simple metric of personal connection is a pretty compelling one that is almost impossible to calculate in a process driven innovation model.

Posted by Andrew Hayden at June 7, 2007 10:54 AM

Andrew - do you have any stats about this? What was the process and methodology employed in your research? Is this conclusive proof and how do we implement your conclusion? Nice post :-)

Posted by Mark JF at June 7, 2007 1:28 PM

Today I bought Richard Branson's book 'Screw it Let's Do It' - I'm only 40 pages in and already hooked. In the first few pages Sir Richard says this - â€˜Most red tape is a tangled mess of utterly useless nonsensical jargon â€¦â€¦.. I wonâ€™t let silly rules stop me â€¦â€¦..I will find a legal way around rules.' Although I know this post is not about â€˜rulesâ€™ I think Sir Richardâ€™s words apply to processes that frankly leave me cold, confused and frustrated. Even the words used in these processes are indecipherable and make no sense whatsoever to 98% (thatâ€™s probably under-estimate) of normal people. Process is important â€“ but let's get the proportions right - my own definition of how things get done most effectively is â€˜passion with a side salad of process.â€™

Posted by Trevor Gay at June 7, 2007 4:53 PM

I think that the Sarbanes-Oxley legislation, with it's focus on procedures, will be this decade's "ISO 9000" innovation kiler.

Posted by DavidH at June 7, 2007 10:41 PM

Lots of good comments. Yes, Wally, my point is one of process appropriateness. There is a time and a place for it. Companies need more of it in certain areas and less of it in others. I also agree that it is more of an art form, and it's certainly not easy.

I've been in the IT field for about 17 years and my experience has been that most companies still have little to no process in their IT departments. Sure many claim to have process. The CIO will tell you they do. They have the stacks of methodology binders to prove it. Truth is, it's in name only (I suspect the same is true with Six Sigma and other quality programs - yes even in departments at GE). Are incredible amounts of creativity and innovation spewing from these IT organizations? No. In fact, they are completely mired in the day-to-day as they scramble to patch up their 20 to 30 year old hodgepodge of temperamental systems.

I have indeed seen the flip side. Some IT organizations do have too much process. These cases have been the exception. Far too many IT organizations err on the side of not enough "good" process. The developers may put extra sugar on their pop tarts and drive to work backwards, but again, there's not much innovation in the workplace.

The areas where I've seen innovation have typically had a dose of "good" process (there is a place for process in IT), where people have actually had some time to think. They've had movement of people within the group (i.e. new blood) and as mentioned in prior posts, they've had a culture where creativity is encouraged, failure tolerated, etc.

Posted by Nick McCormick at June 8, 2007 12:41 AM

Or should we call it Alignment in lieu of Balance...my car drives better and is more fuel efficient when the wheels are in alignment so may business and entrepreneurialship. Okay, not a word I know. M

Posted by Mike Brewer at June 8, 2007 7:52 AM

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Tom, I humbly disagree with you on this issue. I love ISO 9000. But it's a tool, and if misused will kill or maim your company (as you so eloquently pointed out). I view process and procedure as building a very large lever on which innovation is applied to move the world. But it takes a special kind of manager to build an organization of levers and forces. And never the twain shall meet.

It all boils down to focusing on what you do best. And building innovation expertise is critical. But there are many moving parts in any company, and I've been in way too many where fire fighting "lever" issues becomes the norm and alas, the company fails.

Posted by Bruce Fryer at June 11, 2007 11:14 PM viagra real quality

Bruce - I fully agree with you that effective process and procedure often underpin innovation. The problem in my experience is that some organisations allow process and procedure to become more important than the people and that in my view ALWAYS stifles innovation.

Posted by Trevor Gay at June 12, 2007 4:33 PM

To build on Bruce's comment, the great artists are those who have mastered the techniques of their craft and have gone beyond. The great basketball players have mastered the basics that allow them to innovate moves. Tiger Woods is a golfing legend because of both his discipline and creativity. Who could argue that Apple's ability to be creative was facilitated by their enviable financial position that came from discipline? Six Sigma is a way of mastering the basics. It isn't sufficient, but it is necessary. I think to argue one or the other, or some balance of the two misses an important point.

Posted by Greg at June 12, 2007 11:33 PM

most of these "silver bullet systems" forget the most important thing--- this years customer and next years customer

always short tem wonders -- kind of like the government when it sends help

Posted by ray Arno at July 15, 2007 8:30 PM