Dr. Schütt, companies like Sony often used to get more economic benefit from an invention than the actual inventor by using innovations from others to their own advantage. How important is it to develop your own innovations?
Schütt: Globally speaking, the pace at which innovations are being developed has quickened to such an extent that it’s increasingly unlikely that individual companies can bring about a financially beneficial innovation by themselves. To keep pace with this trend, the companies of today are joining forces: both with each other and with external partners, and in some cases are buying up innovative start-ups.
Does it make economic sense to publicly invite bids for projects on a large scale – even if it doesn’t result in financial success?
Schütt: Absolutely. If Goldcorp had been prospecting itself, without success, it would have been much more expensive. So they issued a public call for bids for the gold search and the associated prospecting methods, involving experts around the world in the process. The result was that its own research and development costs were kept to the minimum.
At Goldcorp it was a charismatic leadership figure who paved the way to success – isn’t that undemocratic?
Schütt: Not necessarily. It depends how you do it. At Goldcorp, CEO Rob McEwen had to overrule middle managers who were unwilling to embrace change to try out the new approach. He wanted to introduce a kind of open, democratic research. Fortunately for him he hit upon success very quickly, otherwise he wouldn’t have found it so easy to pursue this route to its end.
Sam Palmisano, CEO of IBM, has another method for implementing fundamental changes. He organizes virtual ‘jams’ where everyone can table their ideas on certain issues, and where he regularly wins the campaign for change. To me that’s very democratic. This type of involvement is also very motivating for employees – an aspect that shouldn’t be underestimated.
How would you define lateral thinkers with potential? Do you have any experience of certain typical characteristics?
Schütt: You have to distinguish between lateral thinkers and plain old grumblers. Unlike grumblers, lateral thinkers are charismatic, constructive and forward-looking – grumblers take a negative, destructive view of everything. Lateral thinkers don’t mix with the crowd, they go it alone and don’t like conforming to the majority view. They’re often difficult to manage, which is why they’re not welcome in many organizations. But at the end of the day this is bad for businesses because they lose out on a huge amount of potential.
Is it easier for HR managers to recognize the potential of lateral-thinking employees through intuition or by using sophisticated profiling techniques?
Schütt: Sniffing out lateral thinkers isn’t so much something you do at a job interview, it’s a question of corporate culture. All managers with HR responsibilities have a duty to recognize this kind of potential and encourage it instead of giving these people the cold shoulder. It is possible to recruit lateral thinkers from the outside, but it’s difficult – other than at very senior level, perhaps. ‘External’ lateral thinkers might well find it impossible to make their voices heard. They usually suffer from rapid burnout – and the anti-change faction wins out.
How do you turn your ideas into reality at IBM?
Schütt: I have the good fortune to work for an organization where constant change is part of our culture. Maybe it’s due to the American mentality in the company that we can say, OK, let’s give it a try.
The same is true in software development. IBM supports efforts to standardize software and is in favor of integrating open source solutions into its products: for example Linux solutions for servers and clients and the open Eclipse framework, on which almost all of IBM’s current rich client solutions are based.
At IBM, open social networking is encouraged and practiced by managers. Blogs, wikis and bookmark sharing are a part of everyday life, as is document tagging, where you can index and depict centrally managed keywords using tag clouds. We also use feed readers for efficient information procurement. To interact with our customers and directly involve them in the development process, we make use of external blogging.
But sometimes customers just want tried and tested solutions. Should providers continually be offering innovations nevertheless?
Schütt: The market evolves and customers and their needs evolve too – sometimes very rapidly and sometimes so slowly it almost goes unnoticed. Businesses need to keep up with the pace of change, and ideally spearhead that change. That’s one reason why a successful competitive strategy needs to involve the constant re-assessment of internal processes. For example, this means not only surveying customer expectations via the sales route but integrating existing and potential customers into the process of further developing your products. In an era where customers increasingly interact on a private or personal level, the kind of phenomenon summed up by the term Web 2.0, this has become absolutely essential.
The Cynefin analysis was designed to help businesses make use of ‘chaotic’ and ‘complex’ knowledge. Can you explain what is meant by this?
Schütt: The Cynefin model was developed at the beginning of this decade by former IBM employee Dave Snowden. The idea is that a well-functioning organization must make equal use of all types of knowledge. Snowden distinguishes between ‘known’, ‘knowable’, ‘chaotic’ and ‘complex’ knowledge. No type of knowledge is considered to be superior to any other. A good example of ‘known’ knowledge is news on the Intranet. ‘Knowable’ knowledge can be acquired through training and sharing experiences with others. ‘Chaotic’ knowledge does not conform to standard procedures and first needs to be unlocked or ‘invented’ by creative minds. Snowden describes ‘complex’ knowledge as subversive knowledge from networks and informal relationships.
Analyses have shown that companies make hardly any use of complex or chaotic knowledge when at the peak of their success. Put simply, this has to do with the fact that bureaucracy has acquired too strong a grip. By contrast, companies that have major problems to solve jump at this type of knowledge. They become more venturesome and open to change because there are no other options left to them. It’s at times like these that they suddenly turn to lateral thinkers with their ‘chaotic’ knowledge – chaotic in comparison to the formality of everyday business life. In the early nineties, for example, when IBM was on the brink of bankruptcy, the company appointed its first CEO from outside the company: Lou Gerstner, who successfully turned the organization around.
How does using lateral thinking unlock ‘chaotic’ knowledge?
Schütt: Lateral thinkers question processes. They constantly analyze the value of these processes in the context of the current framework. All too often, people forget that the framework changes constantly, sometimes with very little warning. Instead, organizations rely too much on so-called experts with their learnable, experience-based knowledge, and become inflexible. The ability to look at the complex challenges of business with the eyes of an expert and the charisma of a lateral thinker – one person can have both attributes – is the ideal basis on which to achieve a new competitive edge.