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Does Creativity Pay?

“I view my role more as trying to set up an environment where the personalities, creativity and individuality of all the different employees come out and can shine.”  – Tony Hsieh

What will I create today?

Creativity is by nature unpredictable – I certainly can’t predict how this entry will end up although I have a few ideas which I plan to include along the way (and a very scrappy mind map on some paper in front of me).

Creativity is more about culture and attitude than formal process, although I hope an earlier article on Cracking Creativity helped provide a framework.  3M are often held up as an example of  a creative company, although according to Business Week they have been struggling to recreate their innovation track record recently.  The struggle is between creating efficient internal processes which minimises mistakes, and a more open culture which tolerates failure.  A change of management brought redundancies, six sigma processes and immediate rises in the stock value of the company.

And no new breakthrough ideas.

Error free and idea free

Although 3M is famous for the post-it note, they have a century or more track record of innovation also including masking tape and thinsulate, much written about including in the book Built to Last.  However, the last big innovation at 3M is now a long way back, and sales of “new” products account for less than one quarter of total sales, where previously they were more than a third.  However, Wall Street are happy for now as short term profits are up – it’s not clear how long that can be maintained though.

Application of quality management processes have great value in many areas, but innovation is not one of them.  Six sigma and other similar approaches are designed to measure and reduce error rates.  Improving processes leads to greater consistency and precision, while innovation demands variability, serendipity and above all failure.  Six sigma does not tolerate failure.  Quality management works well when you understand what needs to be controlled, but in innovation we sometimes don’t even know what problem we are address.

Art Fry, the inventor of post-its, admits that they would probably never have emerged in the current company culture.  The need to create 5,000-6,000 iterations before developing something successful (very much the history of post-its), would mean that the company would drop the idea and move on to something with greater chances of success.

Analysis of paint and photography companies by Wharton and Harvard professors shows that implementation of quality systems has a big impact on the nature of a company’s innovation, with a big shift away from blue-sky ideas and toward more incremental innovations of existing product lines. Although this has short-term advantages there can be a significant long term downside.

What does this mean for innovation?

This doesn’t mean that innovation should be free of metrics.  Peter Drucker’s Innovation and Entrepreneurship although 25 years old, has predictably solid advice.  He recommends that companies look at innovation in total, rather than at individual innovation projects.  He also recommends that metrics are based on long term company goals (for example, 3M’s target of 1/3 of sales from new product lines).  For example, that a company can tolerate 1,000s of individual failures as long as one high potential breakthrough idea is developed every 2, 3 or 5 years (whatever is needed).

A further recommendation is to split the innovation team away from the main business, with separate management and metrics, something that P&G have done in the past by setting up new innovations as separate businesses with much longer term business goals.

Should creativity be kept separate?

3M’s new boss George Buckley says, “perhaps one of the mistakes we made as a company – it’s one of the dangers of six sigma – is that when you value sameness more than you value creativity, I think you potentially undermine the heart and soul of a company like 3M.”

I can appreciate that sentiment, having today been on the end of frustrating interactions with operatives who followed procedures to the letter, but provided a customer experience which in its conformity to process was flat and uninspiring and one I don’t wish to repeat again.

From watching a video of Tony Hsieh, CEO of Zappos, talking about his new book, I think I would have had a much better experience if I had been buying shoes.  His focus on customer experience rather than business efficiency is an inspiring lesson in how to create a happy company with happy customers.

I think his approach has a bigger lesson though.  The over-riding message of Zappos company culture is to focus on goals rather than processes.  He says that Zappos is a “customer experience company who happen to sell shoes”, and the culture is something that has developed over the 10+ years of the company’s existence.  What is most inspiring is that employees are told to “make customers happy”, encouraged to be enterprising and entrepreneurial in their roles, and provided with no scripts as to how to do their job.  They have no maximum call time (the longest on record is apparently more than seven hours), and encourage customers to call rather than use email.  They even pay staff to leave after their initial training!  Few choose to do so.

Despite providing metrics and processes, and with a lack of visible long term business goals, Zappos has built la one billion dollar company.  True obliqueness in practice.  In fact, Zappos have created a great culture of innovation, with curious, patient and happy staff.  They are also a fantastic embodiment of Daniel Pink’s advice to focus on autonomy, mastery and purpose in order to drive a high performance culture.

Success in creativity and business is all about culture and not about systems.  I can’t remember who said, “culture eats strategy for lunch”, but they were right.  If you have the right culture, you won’t need to worry about strategy.

REFERENCES

http://www.businessweek.com/ At 3M, A Struggle Between Efficiency And Creativity by Brian Hindo

Built to Last by Jim Collins and Jerry Porras (2004)

Innovation and Entrepreneurship by Peter Drucker (1985)

Delivering Happiness by Tony Hsieh (2010)

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