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  Throughout this book, we will meet a wide variety of social sector innovators—hard at work both above- and belowground—who have inspired us. We hope they inspire you!

  CHAPTER TWO

  How Do We Get There from Here? A Tale of Two Managers

  It was the best of times, it was the worst of times.

  Charles Dickens, A Tale of Two Cities (1859)

  It is easy to talk in theory about the shift from an Innovation I world to Innovation II, but what does it feel like to live through it? In chapter 1, we talked what that transition looks like at an organizational level. Now we’ll consider what it means to the behavior of real people in real time. We’ll drop in on George and Geoffrey, two managers trying to actually accomplish innovation in their organizations. Both are intelligent and dedicated, but they see life—and work—from two entirely different perspectives. We’ll look at the obstacles they face as innovators and how design thinking can help. After that, we will consider the simple methodology that we talked about in chapter 1, focusing on the four questions we’ve found to be invaluable to would-be design thinkers all over the world, seeking to uncover the innovation magic inside all of us.

  We argue that all of us possess a latent ability to find and pursue innovation, and that organizations need to tap into this capability if we hope to solve the wicked problems that surround the social sector. But let’s be honest: some of us need more help than others. A world where everybody designs can be a mixed bag—the best of times for some, the worst of times for others. For some, the invitation to innovate is a glorious opportunity; for others, it is a source of anxiety and confusion. Particularly for those of us who have worked in the large, bureaucratic organizations often found in the social sector, innovation can be intimidating; we may need to “unlearn” thinking styles and behaviors before we can tap into our creative capabilities. To do this, we need enabling tools to structure and guide our efforts. That is a role design thinking can play: helping to democratize innovation by giving everyone in the organization the confidence and capabilities to act.

  To understand what this dynamic looks like in action, let’s contemplate the experiences of George and Geoffrey—both highly capable and committed, both working in large, bureaucratic social sector organizations. Developed through years of studying managers faced with innovation challenges, George and Geoffrey are archetypes, representing two markedly different behavior patterns we’ve observed in our research. One struggles, one succeeds at innovation. Why?

  Let’s first meet Geoffrey. When our research team encountered him, he had just joined a large health care organization. He arrived there from a well-known innovation strategy firm, bringing with him experience in different businesses and functions. Having started up two new marketing ventures and been involved in change management at a previous employer, Geoffrey arrived at his new employer with a mandate to lead innovation. He also brought with him some beliefs from past experiences: (1) that innovation should begin with a deep understanding of stakeholders’ everyday existences and an ambition to make those lives better, (2) that innovation is a discipline that can be learned, and (3) that success rarely comes on the first try.

  Our second manager, George, has a track record of success at his organization, a charitable foundation, yet finds himself struggling with new expectations around delivering innovation. His background is different from Geoffrey’s but equally impressive. An engineering major in college, George obtained an MBA and joined a well-run foundation known for its solid management and careful attention to process. George has done well and has not been interested in “jumping around” (as he describes it) to various functions or other employers. He has focused on developing a depth of experience and detailed knowledge about the foundation’s operations. George is respected as the go-to person for any technical question.

  As Geoffrey was taking on his new role at the health care firm, George got an offer to lead a large but struggling department within his foundation. George was more apprehensive than Geoffrey about accepting the new challenge—it was clear that meeting this department’s goals represented a stretch. Expectations for improvements in the department’s performance were beyond what George thought realistic, given the staff and their capabilities, and George hated to fail. The challenge of managing a contentious group of stakeholders, including funders, applicants for funds, employees, and special interest groups, seemed daunting. Regardless, when it became clear to George that continued advancement in his career required him to tackle this challenge, he accepted the job.

  George immediately asked his staff to pull together all the data the organization could find on its stakeholders and their perspectives. After weeks of detailed study, he was confident there was not much about the dealings between these groups and the foundation that he didn’t know.

  Geoffrey, meanwhile, not content with existing research, decided he required more hands-on exposure to what his new organization’s stakeholders really wanted and needed. He assembled a diverse team from across departments, including clinicians, administrators, and patient representatives, to engage patients and their families, with the aim of understanding how health care interactions impacted all aspects of their lives. The team interviewed and observed, searching for emergent patterns. Throughout, Geoffrey focused his team on one question: “What could we be doing for our patients that would really make their lives better?”

  Soon they recognized what he called “something so fundamental it makes you want to cry.” They observed that almost every service the organization offered had been designed with its own needs in mind, not the patient’s. Geoffrey and his team set a goal of imagining what one or two key services would look like if they started with the patients’ preferred journeys in mind. Team members tried a few experiments that didn’t produce hoped-for results, but finally, after several attempts, more detailed work with clinicians, and a few new insights, they scored their first “win” with a service redesign that simultaneously improved patient satisfaction and reduced the cost of delivery.

  On the basis of their early interviews with stakeholders and a successful pilot, Geoffrey and his team quickly explored improvement opportunities for other key services. As word of their successful approach got around, they started to get calls from interested colleagues with problems that they thought might benefit from the new approach. The team identified a set of outside groups (insurers and community leaders) as critical to the successful adoption of many promising opportunities, so they started sounding those possible partners on their needs and wants.

  Geoffrey suspected that respected outsiders would be critical for internal buy-in—achieving necessary support and alignment across his organization’s many departments was not going to be easy or quick. Geoffrey also believed that offering theoretical arguments, both internally and to insurers, for the viability of his team’s ideas would produce long, unproductive debates. Geoffrey especially believed in the need for speed:

  I think one of the things that most people don’t get—and this is the big challenge in the innovation journey—is this notion of speed. An entrepreneur doesn’t have the luxury of time or lots of resources. And that’s why I think a lot of entrepreneurs are better at innovation than those who work in large organizations.

  All in all, attempting a large rollout would likely be slow and painful, he concluded. So Geoffrey elected to affiliate quickly with a few selected insurers to prototype new concepts and conduct small-scale experiments, carefully monitoring results. A critical aspect was observing and interviewing patients and clinicians as they experienced any new service, and learning from these insights. Geoffrey’s team was especially interested in testing assumptions in areas such as how the flow of the new service would impact both patient satisfaction and speed of delivery.

  Meanwhile, George and his team were struggling to find the “big idea.” George shared Geoffrey’s commitment to making people’s lives better; he was just not sure how to do it. His team had been given ambi
tious strategic targets to hit but couldn’t find a substantive strategy for achieving them. Senior leadership had been clear that they expected a big impact, but uncovering that kind of opportunity wasn’t proving easy. Despite abundant data and significant analysis, and even after hiring some expensive consultants, the “big win” remained elusive. Nothing seemed big—or sure—enough. So George and his team kept looking.

  Finally, George’s team located an idea they thought could be the big win. It involved entering a field that the foundation had not previously supported. The need for the foundation’s work was certainly there, and it looked like a solid opportunity on paper, but it involved bringing on board expensive specialized talent and building visibility with a new group of partners. The team had no hard data on how the organizations that needed funding in this new segment would react to the foundation’s entry into the field, or whether the foundation would have the capability to make good decisions, especially in comparison with foundations already well versed in that area. Months of debate ensued.

  Eventually, George’s team got the go-ahead. As he moved forward, George was careful to protect the foundation’s reputation. He was wary of talking too much to outsiders about the new offering. Most of the data was internally generated or obtained from consultants’ reports. Planning to make a major pronouncement that would “take the field by storm,” George wanted to be sure there were no leaks in advance of the announcement.

  But George’s people were growing increasingly worried. The news coming in as the initiative began to roll out was not reassuring. Potential donors in the field didn’t seem to grasp the many additional benefits that George’s foundation brought to the table. Potential recipients of the funds also seemed uninterested, and George’s staff was getting discouraged. Everybody knew that George’s prospects were riding on the success of the big rollout—he was in no mood to hear bad news. “Failure is not an option,” he repeatedly reminded his staff. “Do whatever it takes” was his response when they raised concerns.

  Back in Geoffrey’s world, results looked promising. The success demonstrated in the early field experiments quickly persuaded other insurers to support the new designs. And in the face of such demonstrated demand, Geoffrey’s team was finally able to work through territorial challenges within his own organization. Working with insurers early in the development process not only had cemented their interest in the new approach but also had convinced Geoffrey’s senior leadership, who responded to insurers’ enthusiasm with increasing support.

  For George, however, things were not working out as well. After substantial investment but with little sign of interest from donors or recipients, his boss pulled the plug on George’s big idea. New employees dedicated to the initiative had to be let go, and George’s reputation and career took a hit. In retrospect, he wondered where he, a manager with a strong track record of success, could have gone so wrong. Was it just bad luck? Or was the answer in the unknowable “black box” of the innovation process itself?

  From our research, we know that neither bad luck nor the inherent uncertainty of the innovation process accounts for the different outcomes that George and Geoffrey experienced. Geoffrey’s behaviors are simply better suited to an Innovation II world. His life experiences have equipped him with both a mindset and a tool kit that help him succeed in the face of uncertainty and conflicting demands. For Geoffrey, life (and success) is all about learning, an orientation that has followed him throughout his life. Because learning is sparked by stepping away from the familiar, Geoffrey accepts the uncertainty that inevitably accompanies any new experience and, as a result, he has actively sought new opportunities and built a diverse set of career experiences.

  Contrast this with George’s outlook (probably acquired as a young child and reinforced by a lifetime of experiences in Innovation I organizations), which is that the world is a test in which the object is to not get answers wrong. George lives his life trying to avoid mistakes. Because moving into uncertainty leads logically to more mistakes, George avoids that, too, and therefore has tended to shun the new experiences that would have given him a broader perspective for identifying possible opportunities. By the time we meet Geoffrey, in midcareer, his broad repertoire of experiences that span functions and organizations has prepared him to see opportunity. At midcareer, George’s repertoire is significantly narrower than Geoffrey’s, not because he is any less intelligent, well educated, committed, or capable than Geoffrey but because he has had less exposure to other ways of doing things. George may have an expert’s repertoire, valuable during stable times, but it is narrow and specialized. It does not set him up for success in innovation.

  These early differences in mindset and repertoire set the stage for two very different self-sustaining cycles. For George, despite the fact that his attitude and skills have helped him achieve success in a stable environment, when the world becomes more uncertain as innovation becomes the goal, his behaviors often trap him in a pattern with a high likelihood of failure. He relies exclusively on quantitative data, places one big bet, spends a lot of time trying to “prove” his idea in advance, and then ignores disconfirming data as it emerges. For Geoffrey, the cycle more often leads to success in innovation. He invests in gaining new insights about his stakeholders’ needs before testing ideas, manages multiple options, and reduces risk by keeping his bets small and enlisting outside partners.

  The consequences of their differences continue to accumulate as each works through his specific innovation challenge. Geoffrey has a deep and personal interest in his stakeholders as people rather than as data. His focus is on offering services within the context of their lives, in ways that improve them. This deeper “knowing,” when combined with his broad repertoire of experiences, helps Geoffrey identify opportunities that others miss.

  George, on the other hand, is somewhat detached from his stakeholders—he “knows” them through data rather than through firsthand observation or experience. His interactions with them are staged. When this detached view of important stakeholders is combined with a narrow repertoire, it inevitably is harder for George to surface new opportunities for innovation, despite the fact that he, like Geoffrey, truly cares and wants his stakeholders and organization to succeed. But he has few clues as to how to do this, whereas Geoffrey’s deep knowledge of his stakeholders’ needs helps him focus on the larger jobs they are trying to accomplish, giving him a much clearer, qualitatively data-driven path for harnessing his organization’s skills toward helping them.

  Even having both seen an opportunity, each chooses a different response to move it forward. While seeing opportunity, Geoffrey expects to make mistakes, so he never puts all his eggs in one basket. He adopts an experimental approach, conducting multiple small trials to test the ideas in action. He reduces his risk whenever possible and increases his learning by partnering with outsiders, such as his insurers.

  George, on the other hand, pushed to find innovation despite his narrower repertoire and stakeholder understanding, continues to search for the one right answer and puts all his eggs in that basket when he thinks he has found it. His (and his organization’s) expectation is that all projects should succeed, that he should look only for big wins at the outset, and that he should be able to prove the value of his idea before moving forward. These beliefs are fatally flawed in the context of the uncertainty surrounding innovation.

  Geoffrey knows that there are no single right answers—there are only experiments—and does not attribute failed experiments to his personal failings. Instead, he recognizes that the inability to predict is a property of the uncertainty surrounding any new idea.

  George continues to rely on analysis in his search to “prove” that the opportunity is good and to calm his own anxiety in the face of uncertainty. Though it is logically impossible to use historical data to definitively demonstrate the value of a future project, this is what George has been taught to do and what intelligent individuals like him still try to do. The outcome is
often gridlock: the Georges of the world end up spending much time in meetings, debating and defending the value of their proposed ideas. Yet learning only occurs when they try something new. Tragically, George’s approach actually unnecessarily increases risk, rather than reducing it as he intends. When he limits his options to one “big idea” and avoids seeking input from outside stakeholders, he ends up placing bets that are bigger and less informed by the reality of actual stakeholder needs. Worse still, he places them slowly, because of his ongoing search for “proof” before action. He ignores disconfirming data, his anxiety making it hard for him to listen to bad news. Hence, his colleagues stop bringing it to his attention, and his chance to cut his losses early evaporates.

  Geoffrey pursues an alternative course. He conducts small, inexpensive experiments that give him positive results to promote—or, if the results are negative, allow him to table projects before upper management starts looking. In the end—to the surprise of no one—it is Geoffrey who generally succeeds. And even when he fails (as some of his experiments surely do), these failures often pass under the radar. Each manager is locked in a self-sustaining cycle, but in conditions of uncertainty, one cycle encourages success and the other, failure.

  George’s and Geoffrey’s self-sustaining cycles.

  George’s is a sad story: the same tools and approaches that he learned in an Innovation I world, which drove his past success, now thwart his attempts to innovate. Geoffrey, on the other hand, behaves as though he lives in an Innovation II world, even though his organization may still have an Innovation I mentality.