Innovative cultures seem to be all about creating something new but that is only half the story.
The untold story — and probably less sexy — is exactly the opposite of new idea creation.
#MakingRoom innovation
The principle of #MakingRoom innovation is to remove activity in the organization in order to “make room” for new activity that must be added to execute its strategy. Think of it as an organizational cleanse; a purge of plans, programs and activity that must be stopped so that new more important things can be started.
#MakingRoom innovation is every bit as important as innovating to add new capabilities in an organization — products and services, technology, strategic partners and applications.
Its importance lies in the economic realities every organization faces. There are limits to the added costs a firm is able to take on while preserving healthy growth in revenues and margins. By continuing to add investments, profitability is squeezed and the ability to add new activity is threatened — the old world continues to dominate the strategic agenda, and the new world can’t get a foot hold to begin.
The solution to this very common circumstance is to achieve a balance between what you take on and what you take off. What you add and what you take away. What you pile on and what you mine out.
CRAP is a priority
Organizations that have effective innovation strategies have a strong emphasis on cutting the CRAP in their organization — making it matter to eliminate the CRAP of yesterday so they can get on with the business of tomorrow. They spend as much time removing products no longer serving their strategy as they do adding new ones.
And they recruit to build a culture around the premise that shedding stuff is a mandatory competency required for the organization to not just be competitive but to stand out and be the market leader in their space. Being the only one among their competitors with a disciplined process to regularly purge itself is their competitive advantage.
Pundits also recognize that non-strategic activity that continues to consume resources is the enemy of progress and if it isn’t expunged from your organization the old will continue to consume time, energy and cost leaving new opportunities starved and unable to get off the ground.
“Business schools, the always helpful whipping boys in my rants, focus on the “cool” FMS troika. (Finance-Marketing-Strategy.) And yet it is the internal organizational “stuff,” mostly MIA or very secondary in B.Schools (not sexy enough), that trip company up. Not “bad strategy,” but … “rigidities” … that impede the ability to … “execute” or innovate in a timely fashion … are the culprits behind shoddy performance in 9 out of 9.01 cases.” — Tom Peters
“If you want something new you have to stop doing something old.” — Peter Drucker
“The essence of strategy is choosing what not to do.” — Michael Porter
But notwithstanding the advocation by the experts, #MakingRoom is not treated as a priority in most organizations; few take it serious and give it the attention it deserves.
Conscientiously removing stuff consistently and building a culture around it is difficult to achieve.
People are generally reticent to giving up what there used to. They like the feel of what they’re doing and don’t want the risk of taking on something new. Getting people turned on to mining out the no longer relevant stuff that every organization has is a challenge. It’s much easier to get turned on to new product rather than removing one from a product portfolio particularly if you’re the product manager.
#MakingRoom guide
Here is an 8-point guide to help you take a real step towards #MakingRoom:
1. Assign a champion to be responsible for inventorying ALL projects and programs going on in your organization. This is a dedicated role, not a part-time assignment. Try and define those that consume material resources — some organizations use annual expenses as the metric to isolate the activity to be examined; if it’s “below the line” it gets a reprieve.
2. From this inventory, create a KEEP category of the inventoried activity that is tightly aligned with strategy, and therefore should remain. Make the KEEP list it short. Resist the temptation to justify all existing activity as relevant; be brutal on current projects to make sure each one of them is absolutely critical to the new direction. Make it difficult for any activity to stay on the list.
The guide I used was to have 20% of the inventory activity assigned to KEEP.
3. Create a CUT category and make the list long — it should contain 80% of the inventoried activity. As this list will be the eventual source of the additional resources that will fund new activity, it is critical to capture as much activity here as you can.
4. For each CUT project, note the person who is currently working on it — the project prime. At the end of the day, people will have to be re-assigned to new projects.
5. Organize a meeting to critically assess each project on both lists. Involve the senior team responsible for the execution of your new strategy. Trot each CUT project prime into the room and have them explain in detail how their project relates 100% to the new strategy. Side benefit: you will see how well they really understand your new strategy.
6. Decide which CUT projects to stop and determine the annual net savings that will result. Take the expense savings out of the current budget and hold it for reallocation to the new agenda. If the budget isn’t held in a separate #MakingRoom account, it will very likely be spent by the current owner and won’t be available to fund new initiatives.
7. Develop a resource re-assignment plan. Be prepared to exit people who either don’t have the skills to take on a KEEP project or who don’t want to support the new direction.
And beware of those people who are currently working on CUT projects; many will try and hold on to them and resist change. If left alone, they have the potential to “infect” their colleagues and hold back new activity.
Identify these folks and manage them: either reassign them or, if they are unwilling to move to the future, exit them with dignity from your organization.
8. Communicate the results of your work — KEEP projects and CUT projects and the reasons for activity being assigned one way or the other. This is a great opportunity for leaders to talk about the organization’s strategy.
And recognize #MakingRoom innovators; those people who show a willingness to give up what they’re doing; who show the confidence to “give and get”. Make these individuals examples of the culture you are trying to create.
#MakingRoom is today, unfortunately, a second cousin to #CreatingNew. But it can attain a more prominent position.
The secret ingredient to #MakingRoom innovation is a culture where people don’t like to hold on to the past; who lean into the opportunity to shed irrelevance and adopt new exciting opportunities.
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