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Posted by on Oct 30, 2015

Everyday Innovation at the Federal Reserve’s Innovation Summit

Everyday Innovation at the Federal Reserve’s Innovation Summit

 

Recently, Terry M. Farmer, Ph.D., Evan Ishida and I were asked to present and serve as panel experts at the Federal Reserve System’s Innovation Summit. It was a great honor as we were the only participants external to the Federal Reserve. There were over one-hundred participants at the host site in Cleveland, Ohio and over 400 additional participants that joined via Skype from the other 11 Federal Reserve Bank locations across the United States. Numerous polling questions and question and answer sessions led to a very interactive and engaging experience.

Like most organizations, innovation is a hot topic at the Fed. And some very common themes related to innovation were discussed, including fear of failure as a leading barrier to innovation and the critical role that leadership and culture play in innovation. 

We shared our “external” perspective based on our research combined with our experiences with the many organizations we have both work for as employees and well as worked “with” as consultants. We shared about seven of the most common “themes” or “opportunities” that we’ve encountered related to innovation, and discussed some of the ways we’ve addressed these opportunities.

The Federal Reserve System (also known as the Federal Reserve, and informally as the Fed) is the central banking system of the United States. The U.S. Congress established three key objectives for monetary policy in the Federal Reserve Act: Maximum employment, stable prices, and moderate long-term interest rates. The first two objectives are sometimes referred to as the Federal Reserve's dual mandate. Its duties have expanded over the years, and as of 2009 also include supervising and regulating banks, maintaining the stability of the financial system and providing financial services to depository institutions, the U.S. government, and foreign official institutions. The Fed conducts research into the economy and releases numerous publications, such as the Beige Book.

The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors or Federal Reserve Board (FRB), partially presidentially appointed Federal Open Market Committee (FOMC), twelve regional Federal Reserve Banks located in major cities throughout the nation, numerous privately owned U.S. member banks, and various advisory councils.

- Courtesy of Wikepedia and Business Insider

Opportunity Area #1: Difficulty Defining or Operationalizing Innovation.

One of the key reasons we began EiQ was in response to some of the things we observed and experienced in the organizations we were part of in the past (in addition to a passion and view that the world needs innovation). We observed and experienced a lot of confusion around what innovation was and what is wasn’t.

We come across example after example of people telling us that their leaders will say, “Go forth and innovate,” but no one knows exactly what the heck they are supposed to do. So they just go back to work and conduct business as usual.Innovation is often viewed as an amorphous, fuzzy concept in many organizations. Most don’t define it—at least not consistently.  

So our focus at EiQ, the first year and a half, was to research and build a methodology, called BASIS, to operationalize building an innovation mindset and culture. Our focus was to bring meaning and purpose to innovation, and to translate innovation into actionable terms.

Advice: View innovation as a deliberate, purposeful process and gain a common definition and language of innovation. Ideally, this should be done collaboratively with involvement beyond merely top leadership. Also, this common definition should be unique to your organization, its purpose, traditions and goals.

Opportunity #2: Defining Innovation Too Narrowly.

Another observation we’ve made is that, in those cases where an organization actually defines innovation, many organizations define innovation too narrowly. The focus is often only on the product development and launch cycle - taking ideas and managing them through the process of getting those ideas turned into products that can go to market.

Although we see this obviously an important part of the innovation process, EiQ defines innovation much more broadly - as a mindset, a culture - an interconnected and interdependent ecosystem if you will. Innovation defined as a way of working, making decisions, leading, setting priorities, allocating budgets and resources.

Advice: View Innovation as a Culture-an Ecosystem.  

Opportunity #3: Addressing only Half of the Innovation Equation.

Related to the idea that organizations define innovation too narrowly, is that they also only address half of the innovation “equation.” 

That is, they emphasize building the capabilities of people to become more innovative, but ignore organizational capabilities. For example, they might focus on delivering “creativity” or “design thinking” training to help their employees be more innovative.

However, the organizational side of capability-building is often downplayed or ignored altogether. In other words, the organizational infrastructure, processes, talent processes, and leadership must align to and reinforce intended innovation behaviors. Thus, EiQ takes a holistic approach that emphasizes building the capabilities of both people and the organization to drive innovation—the Yin and Yang of Innovation

We were very fortunate to work extensively with Geary Rummler, the “Father” of Human-Performance Technology (HPT), and he would emphatically repeat a statement to the effect of:

“You can hire the highest performing, most innovative person in the world, but if you put that person into broken or misaligned organizational system, the organization will win every time!”

Advice: Focus on innovation holistically—building both people and organizational innovation capabilities.

Opportunity #4: Reserving Innovation for a Select Few People or Departments.

It’s still often the case that innovation is viewed as an activity to be performed by a select few employees and departments, such as the R&D department. But organizations can’t depend on only a few select employees or departments for innovation anymore. Great ideas, large and small, can & have come from anywhere and anyone…so organizations need to have everyone engaged in the innovation process. 

“You can hire the highest performing, most innovative person in the world, but if you put that person into broken or misaligned organizational system, the organization will win every time!”

There should be an emphasis on building the innovation capabilities of performers across all functions, jobs, and areas of expertise. And you want the collaboration of diverse perspectives and disciplines to fuel idea generation and innovation because diversity brings better ideas (there is plenty of research to back this up). 

This also ties into one of the many myths associated with innovation, the notion that innovation is reserved only for an elite group of gifted geniuses like Einstein, Edison or Steve Jobs . This can distort our perception of our own ability to innovate and make people believe that innovation is something beyond their own abilities.

Innovation is almost always the result of an intentional process, of deliberately scanning for new opportunities, skillfully generating new ideas, and purposefully learning how to bring those new ideas to life. And these are capabilities that everyone can learn and improve upon with practice and experience!

Advice: Engage everyone in the innovation process.

Opportunity #5: Viewing Innovation as an “Extra” or Add-On Activity          

Organizations often see innovation as something that needs to be scheduled or added to current work responsibilities. We’ll hear, “we’d like to innovate, we just don’t have the time.”

Then you have some organizations that say they “carve out time” for people to innovate. But innovation can’t be scheduled.  The best ideas can come at any time, anywhere. EiQ’s approach, processes and tools reinforce that every moment is an opportunity to innovate. 

Advice: People should be continuously viewing the world, their work, problems & goals, as innovators do – through an opportunity-seeking innovator’s lens. Innovation is not extra or something you “carve out” time to do.  It should be designed into the job as part of the job. It should be expected, coached, measured, rewarded, & compensated continuously. View every moment as an opportunity to innovate.

Opportunity #6: Focusing Only on the Big, Game-Changing or Disruptive Products.          

Some organizations focus primarily on developing big, disruptive, game-changing products. But we’ve found that organizations focusing mostly on attaining big, disruptive products as their primary goal of innovation might start strong but don’t sustain. 

We’ve found that the most successful innovation organizations value innovations of all types—from small to transformational and everything in-between. They consider all to be important and valuable toward the innovation process. 

In general, the same principles apply to “small” innovations as disruptive ones. Ideas that first appear to seem small can become “game-changing” when leveraged to the rest of the organization. (we call this the “Ripple Effect”).

And when we talk about valuing every “type” of innovation, “Type” also means not limiting innovation to new “products.”  Innovation can take the form of new services, processes, tools and techniques as well.

Advice: Value every type of innovation.

Opportunity #7: Address Problems in the Context of Creating.

Are you familiar with the game called “Whack-a-Mole?” This is the “game” that many us play every day.  We whack problems and get good at whacking problems. The “problem” with problem solving “Whack-a-Mole” is that at the end of the game, you haven’t really created anything new.  You haven’t advanced or moved forward in any way.

This is relevant because above all else, innovators seek to create. Innovators make that their center of focus—not problems.  Problems are addressed by innovators only in the context of creating a desired outcome.  There is a big difference between problems solving and creating.

“There is a profound difference between problem solving and creating. Problem solving is taking action to have something go away—the problems.” 

“Creating is taking action to have something come into being—the creation.”

– Robert Fritz, “The Path of Least Resistance”

EiQ’s ARC Model is a model of creating.

Acknowledge – This is understanding and assessing the current state: Trends, patterns, strengths, happy surprises -- we’ve found many organizations are already pretty good at this. However, most organizations stay here and act on what they find.  Innovators, however, move to the next element.

Reframe - Many organizations still center their innovation activities on solving problems in the current state.  Rather than making problems their center of focus, innovators make desired outcomes their center of focus. Therefore they must Reframe the current state into desired outcomes.

Connect - Innovators continuously seek connections for generating new ideas and innovation to bring their desired outcomes to life.  They seek connections that lead to a wide diversity of input, opinions, and perspectives because, again, “diversity brings great value and power.” When connecting, we tend to return to the same sources for ideas (same people, dept. discipline), but we want to get in the practice of connecting to sources outside of habit and beyond the obvious!  It greatly expands the potential of your outcomes!

EiQ focuses on the power of “Everyday Connections.”  This is the “C” in the ARC Model. EiQ has developed a proprietary tool that lays out the various types and the diversity of connections that innovators make. The Everyday Connections Quadrant is a powerful tool that can be applied in many powerfully productive ways.

Advice: Do as innovators do. View the world and your work through an “Innovator’s lens.” Acknowledge the circumstances, Reframe those circumstances within the context of a desired outcome, and Connect to people, data, experiences, and analogies to generate new ideas to bring that desired outcome to life.

The BASIS Method

BASIS is a systematic and strategic process for “operationalizing” innovation. BASIS provides a “roadmap” for driving innovation into an organization and culture. BASIS is comprised of 5 phases, Brand, Assess, Spark, Implement, and Sustain. It’s designed to be flexible and meet an organization “where you are.”  Not a cookbook, but a roadmap that provides guidance on the innovation process.

Everyday Innovation

There are three dimensions of “Every,” everyone, every moment, every type, and they serve as the foundation for the definition of Everyday Innovation: 

“Everyday Innovation occurs when everyone in an organization is actively supported, encouraged and involved in the continuous generation of new ideas and innovation of all types, from small to transformational, to improve our organizations and world.” 

This definition provides a good description of an Innovative Mindset and Culture. And with today’s pace and scope of change, with the hyper-competitive global markets, this is the Mindset, the Culture, the Way of Being needed to advance our organizations, our communities and our world.

We want to express our sincere thanks to the Federal Reserve System for inviting us to this outstanding experience. It was genuinely an honor and pleasure to share the day with an organization and group of people that share a passion for innovation and making a positive difference.

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