‘Those who do not learn history are doomed to repeat it.’

The most recent turmoil across sectors – mass layoffs, companies folding, lives disrupted – feels a lot like the turbulence of the bubble burst in 2001 and the struggles of 2008.?Everyone is familiar with the Edmond Burke quote, “Those who don’t know history are doomed to repeat it,” but it is hard to imagine that leaders are not aware of such recent history. What lessons did we fail to learn? Are there leaders who think this is just bad luck????

What must we do differently and how? I do not mean to sound critical or presumptive when offering what I believe to be a better way. My lifelong friend, Mitchel Cloward once told me, “Leaders don’t duck.” I feel like I need to share a perspective that can set our industries and companies on a better, more resilient path forward. We must learn from mistakes of the past and actively create a different future. In many companies today, there is a wide gulf between where transformation systems are and where they could be.??

We all want to do better, and we can! There are three things I believe companies need to stop doing and three things they can start doing instead.???

1. Stop treating assumptions like facts.?

Steve Jobs once said, "People don't know what they want until you show it to them. That is why I never rely on market research. Our task is to read things that are not yet on the page.” Market research is rooted in spreadsheets and "big data": often big data with little to no insight. The problem with much of market research is that it is just data that is correlated to an outcome, but it does not explain causality! It often does not help companies perform better over time.?But we use this data to drive product, service, and even business model design. We seem to convert assumptions into facts in our heads as leaders. We then make decisions to spend time and money on those assumptions, we document ROI’s and business plans, which so many then lead to disappointment. No wonder we have so many failures and why so many CEOs struggle to see the value of their “innovation” efforts while at the same time realizing it is a critical capability.???

2. Stop thinking that innovation is magic or luck.??

Unfortunately, many organizational innovation efforts have the branding or illusion of progress but are not making much of an impact.??Yogi Berra’s quote comes to mind "We are lost, but we are making good time".?A big reason for this is that innovation has not been treated as a critical leadership capability, knowledge set, and behavior. I suggest that it is because, for too long, we have made innovation seem like an activity reserved for people wearing sandals, black turtlenecks, and the creatives.?I refuse to accept that mystical perception.?We can make it more mechanical without losing its passion and purpose.???

3. Stop using bad metrics and methods to track progress.?

W. Edward Deming's said, “If you can't describe what you are doing as a process, you don't know what you're doing.” Many examples of innovation “processes” are based on outdated management practices.?Few of them are rooted in discovery-driven processes like those my colleague Rita McGrath so eloquently articulates.?They do not determine causality in the circumstance of the consumer and very few of them are driven by a common set of tools, language, and methods that recognize the assumptions in all we do and then drives experiments to drive evidence-based innovation vs idea driven innovation. We can do better.??

?We must unlearn some of these organizational habits and replace them with better processes and mindsets. Here are three important steps companies can take:???

1. Make business model renovation and creation an “always on” system.??

Finance, Supply Chain, HR, Clinical, have processes that are ALWAYS ON.?They can measure and test over time so why not innovation? Organizations need to deploy an innovation system and processes that are appropriately designed to learn fast and learn cheap. Business Model Innovation and Efficiency Innovation should be ALWAYS ON processes.??

An example of an industry issue that I believe is indicative of how we often experience innovation, yes even efficiency innovation, is Google’s simplicity sprint.??CEO Sundar Pachai, when asking for ideas from employees, aimed for “better results in less time.”?This appears to be an episodic rush to simplicity.?If we are to perform better, we must have an ALWAYS ON effort.?Efficiency innovation and business model innovation efforts should not be episodic reactions to a struggling time but must be constantly running.???

My team and I at Advocate Health have designed a business model renovation and creation system called Design for Impact. To teach the system and its language, tools, and methods we partnered with our amazing HR team to create our Impact Academy. DFI and the Impact Academy form an innovation system rooted in designing to the consumer's desired progress and the experiences they want while also thinking about how to deliver value to the company's business model. We have a learning objective that asks, "What do we need to learn before we invest more time and money?" and the natural follow up question must be, "What is our learning plan: Who, Where, When, How?"?Through this process, we have revamped multiple business models, delivered millions and millions of savings, better clinical, and consumer experiences.?I have a fundamental belief and evidence that if corporations had better innovation systems that we would better insulate ourselves against cyclical markets and improve overall viability and adaptability.?Design for Impact is designed to that end.??

2. Aim for clarity to de-fluff your transformation strategy.??

As Richard Rumelt writes, “Fluff is superficial restatement of the obvious combined with a generous sprinkling of buzzwords. Fluff often masquerades as expertise, thought, and analysis. It is also a form of gibberish masquerading as strategic concepts or arguments. It uses ‘Sunday’ words (words that are inflated and unnecessarily abstruse) and apparently esoteric concepts to create the illusion of high-level thinking!”??

How many of us have written or read strategy documents like this? This is not about high-level thinking. This is about clarity.?This means implementing a transformation architecture and system.?What do we believe the world will look like and be in five to seven years? What do we want our organization to look like? We do not need certainty, but we need clarity to help drive strategy. Clarity allows us to document, test and monitor those assumptions.??

3. Manage your business model portfolio.??

Once you have clarity in strategy, a key step in focusing a strategy is to do business model portfolio management.?Many organizations have solid project management portfolio processes and platforms but miss a rigorous approach to assessing business models. Alex Osterwalder, Innosight and others have done a solid job of discussing this. One you have that portfolio prioritized in how to stay relevant and win the future, the tough work of business model renovation and creation starts.???

We all want to do better, and I am extremely optimistic that we will! What lessons can we learn to help us prevent repeating the past? What steps can your organization take to create the future we envision?