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by Doblin Inc. on Jul 11, 2012

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Speaking at the DMI "Balancing Extremes" conference in Portland, Doblin's Erik Kiaer takes a closer at the fascinating history of navigation. All to make the larger case for bringing discipline to ...

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Before going further, it may be fitting to put me in a bigger context, as well. My name is Erik Kiaer. I’m an engineer and product designer originally from Norway, embedded in a number of larger contexts – within Doblin, which is arguably the first design-driven innovation consultancy in the world founded in 1979, and Monitor Group, a strategy firm that literally through it’s co-founder Michael Porter wrote the book on strategy. Together, we focus our work on helping companies grow. Design and innovation is a core element of this.
I want start today by telling you a story about the power of context and the power of discipline centered around the sailing ships of the mid-1800s. Sailing and the act of discovery are closely linked and as a student of innovation, I have found many valuable lessons in the history of traveling the oceans. Here’s a ship about to leave the harbor on a journey across the sea.Now imagine you are the captain of this vessel and you need to sail across the Atlantic. You might have done it before, and you may know others who have, but primarily you need to rely on your own personal experience and a few key tools to make sure you get the ship, the crew and cargo to the destination safely, while operating without a safety net. Not unlike running an innovation project…
On your voyage, the first tool you will refer to is likely a compass. If you want to leave the shoreline behind, it is the most basic tool to help you know which way to go when you want to get back from beyond the horizon from a world that is unknown and unmapped and with no known landmarks. Not unlike Hansel and Gretel leaving crumbs behind, sea captains would record their compass heading, their speed and the time they had held that course, in a process called dead reckoning. To get back home, you simply reversed course. If the wind and the current were cooperating.The magnetic compass was developed about 2000 years ago in China, and became a navigational tool 1000 years ago. Proven technology, and with the stars as a backup, a good basic tool.----------------------------------The compass is an important tool for anyone trying to make their way beyond the coast. The magnetic compass was invented during the Chinese Han Dynasty between the 2nd century BC and 1st century AD,[1] and was used for navigation by the 11th century.[2] The compass was introduced to medieval Europe 150 years later,[2] where the dry compass was invented around 1300.[3] This was supplanted in the early 20th century by the liquid-filled magnetic compass.[4]In navigation, dead reckoning (also ded (for deduced) reckoning or DR) is the process of calculating one's current position by using a previously determined position, or fix, and advancing that position based upon known or estimated speeds over elapsed time, and course.Dead reckoning, using best estimates of speed and direction, is subject to cumulative errors.
If you are lucky enough to be the skipper of a naval vessel or a on a boat owned by a wealthy ship owner, you will likely have a sextant and a chronometer to help you find your way. The chronometer is a critical tool for knowing your longitude. It is a highly accurate, large version of a watch that is able to keep accurate time onboard a boat. Prior to the chronometer, there was no reliable way to keep time at sea as all the clocks at that time used a pendulum to stay accurate, and a pendulum doesn’t work well on a moving ship. To solve the problem of practically calculating longitude at sea, the British Government set up the Longitude prize in 1714. Initially, the cost of these chronometers was quite high (roughly 30% of a ship's cost). However, over time, the costs dropped making them more widely available. This is the Chronometer known as the K1, a replica of John Harrisons winning design for the Longitude Prize in 1761 (made by Larcum Kendall). Captain Cook used this on his second and third voyages in the Pacific and raved about it’s usefulness. It kept on ticking on a British naval vessel for over 17 years. On a transatlantic journey the chronometer was accurate to perhaps 30 seconds, or less than 10 miles of east or west (longitude), a huge improvement over the old method of dead reckoning, where errors multiplied.So this is great – you now know where you are. But are you where you should be? When I’m stuck in traffic, I know where I am, but I’m not where I want to be. In the days of the sailing ship, this is akin to being stuck in the Doldrums, drifting aimlessly for weeks. Is there a way to prescriptively figure out where you should be?----------------Captain James Cook used K1, a copy of H4, on his second and third voyages, having used the lunar distance method on his first voyage.[16] K1 was made by Larcum Kendall, who had been apprenticed to John Jefferys. Cook's log is full of praise for the watch and the charts of the southern Pacific Ocean he made with its use were remarkably accurate. K2 was on HMS Bounty, was recovered from Pitcairn Island, and then passed through several hands before reaching the National Maritime Museum in London.The invention of the modern chronometer by John Harrison in 1761 vastly simplified longitudinal calculation. It was the result of a GBP 20,000 open innovation prize, the Longitude Prize, set up by the British Government in 1714. With the chronometer (this is the one called K1 was a replica of Harrisons design) it became quite easy to calculate longitude by noting the time difference between when the sun reached it’s zenith at your location versus at your point of departure. Given the earth’s spins around 360 degrees in 24 hours, a one hour difference therefore translates into a 15 degree distance. Knowing where you are is of course very helpful. But as I’m sure you have all experienced, your GPS can often tell you that you are stuck in traffic, but is only sometimes helpful in telling you where you should be to avoid the traffic. Knowing where you are is only half the story. Most sailors relied on personal experience to know where they should be, but given the vastness of the oceans, personal experience was an incomplete record.-------------------------Latitude was measured in the past either at noon (the "noon sight") or from Polaris, the north star (assuming it is sufficiently visible above the horizon, which it may not be in the Southern Hemisphere). Polaris always stays within 1 degree of the celestial north pole. If a navigator measures the angle to Polaris and finds it to be 10 degrees from the horizon, then he is about 10 degrees north of the equator. Angles are measured from the horizon because locating the point directly overhead, the zenith, is difficult. When haze obscures the horizon, navigators use artificial horizons, which are bubble levels reflected into a sextant.Latitude can also be determined by the direction in which the stars travel over time. If the stars rise out of the east and travel straight up you are at the equator, but if they drift south you are to the north of the equator. The same is true of the day-to-day drift of the stars due to the movement of the Earth in orbit around the Sun; each day a star will drift approximately one degree. In either case if the drift can be measured accurately, simple trigonometry will reveal the latitude.LongitudeLongitude can be measured in the same way. If one can accurately measure the angle to Polaris, a similar measurement to a star near the eastern or western horizons will provide the longitude. The problem is that the Earth turns 15 degrees per hour, making such measurements dependent on time. A measure a few minutes before or after the same measure the day before creates serious navigation errors. Before good chronometers were available, longitude measurements were based on the transit of the moon, or the positions of the moons of Jupiter. For the most part, these were too difficult to be used by anyone except professional astronomers. The invention of the modern chronometer by John Harrison in 1761 vastly simplified longitudinal calculation.The longitude problem took centuries to solve and was dependent on the construction of a non-pendulum clock (as pendulum clocks cannot function accurately in a tilting ship or a moving vehicle, of any kind). Two useful methods evolved during the 18th century and are still practised today: lunar distance, which does not involve the use of a chronometer, and use of an accurate timepiece or chronometer.Presently, lay person calculations of longitude can be made by noting the exact local time (leaving out any reference for Daylight Savings Time) when the sun is at its highest point in the sky. The calculation of noon can be made more easily and accurately with a small, exactly vertical rod driven into level ground--take the time reading when the shadow is pointing due north (in the northern hemisphere). Then take your local time reading and subtract it from GMT (Greenwich Mean Time, also known as Zulu Time) or the time in east London. For example, a noon reading (1200 hours) near Central Canada or the U.S.A. would occur at approximately 6 pm (1800 hours) in London. The six hour differential is 1/4 of a 24 hour day, or 90 degrees of a 360 degree circle (the Earth). The calculation can also be made by taking the number of hours (use decimals for fractions of an hour multiplied by 15, the number of degrees in one hour). Either way, you can demonstrate that much of central USA or Canada is at or near 90 degrees West Longitude. Eastern longitudes can be determined by adding the local time to GMT, with similar calculations.The Longitude Prize was a reward offered by the British government for a simple and practical method for the precise determination of a ship's longitude. The prize, established through an Act of Parliament (the Longitude Act) in 1714, was administered by the Board of Longitude. John Harrison £14,315 Received in several payments. £4,315 was awarded during his work on his chronometers from 1737 to 1764 with the remaining £10,000 provided in 1765.A particular problem with the H4/K1 solution however was the great complexity and consequent cost of the instrument. K1 cost the Board £500; just 50 such instruments would be the equivalent of the cost of a whole 2nd rate ship of the line for the Royal Navy. So Kendall was commissioned to design and build a simplified version, now known as ‘K2’. This watch, made in 1771, was issued on a number of voyages of exploration, the most famous being in 1787, when it joined Lt. William Bligh on the Bounty, the ship that was the subject of the famous mutiny on that voyage. The watch was taken by the mutineers to Pitcairn Island and was only returned to England in 1840, after a series of adventures in South America. A further timekeeper, even simpler in design, was made by Kendall in 1774 and issued to Captain Cook on his third voyage of discovery to the south seas. It is known today as ‘K3’.
Well, this guy had some ideas - Matthew Fontaine Maury. Maury joined the Navy in 1825 at the age of 19 as a midshipman and almost immediately he began to study the seas, notice patterns of wind, weather and currents and think about how to improve the task of navigation. He was fascinated by what he experienced and frustrated by the complexity of navigational methods and tools, specifically the need for complicated math and navigational tables. It was hard to be a user of navigational tools.Sure, tools and calculations could all become more accurate, but what about becoming more practical and useful for sailors who didn’t always possess the mathematical skills or patience to do the calculations necessary? There had to be a better way to not only know where you were at any given moment, but also where you should be in order to reach your destination safely and more quickly. In between commissions, Maury was desperate to return to sea and research wind and currents in order to find a more practical way to navigate.
Well, fate intervened.Traveling from his home in Tennessee to his commission in New York, his stagecoach tipped over and in the crash, Maury seriously injured his knee. Being unfit for sea duty, Maury had to change his plans for research. Since Maury couldn’t go to sea, but was a talented junior officer, he was appointed to be the head of the Depot of Charts and Instruments in Washington DC, and subsequently promoted to become the Superintendent of the U.S. Naval Observatory.At the depot, Maury discovered a treasure that had been overlooked by all his predecessors, namely thousands upon thousands of ships' logs and charts, a treasure trove of data on wind, currents, weather and water conditions from around the globe during every season. Maury started a very early big data analytics and crowd sourcing effort to discover what he believed would be paths in the sea.-----------------------------
By collecting all the information from as many logbooks he and his staff could find, Maury was able to identify where it was most advantageous to sail for a vessel wanting to go from A to B at any given time of the year. On the left you can see his plots of ships journeys, their speeds and prevailing winds and currents. While his data was incomplete, he focused his efforts on the busiest routes first and gave sailing directions, what you see on the right to merchant vessels for free in exchange for the captain filling in new log books for Maury to use after the journey, giving him up to date information and the means by which he could solidify his data. He published the Wind and Current Chart of the North Atlantic, which showed sailors how to use the ocean's currents and winds to their advantage and drastically reduced the length of ocean voyages. Maury's uniform system of recording oceanographic data was adopted by navies and merchant marines around the world and was used to develop charts for all the major trade routes.
Based on information from millions of global data points, Maury and his staff was able to develop highly accurate maps that contained information about the position, direction and strength of currents, the migration of whales and the prevailing directions of winds and weather conditions, globally. (This is a chart Maury prepared showing the currents of the North Atlantic, 1855).Prior to Maury, the best routes to travel were in the heads of experienced sea captains. By using the location and condition descriptions that existed in ships logbooks over time, Maury was able to create a highly accurate map that made individual’s experience available to the many, and done in a way that was easily approachable by sailors with variable schooling. By looking at the next larger contexts beyond a given ship, and it’s route, he was able to understand the system and how they interconnected.
And the results of Maury’s sailing directions were significant. Ships returned from Rio in less than half the time it had taken prior to his charts, leaving merchants and families baffled at their speed. No serious ship owner could ignore this advance, as they could now repay the cost of the ship and crew in a fraction of the time. The sailing directions were so accurate that the great tea clippers would leave Canton china and arrive in within hours of each other. Modern airlines have a hard time with that kind of on time performance.
So, you may be asking yourself how a mid-19th century naval lieutenant applies to our innovation challenges today.Well, managing innovation is a big and diffuse challenge.
Over the years I have toiled in the fields of design and innovation, many new and different approaches to how to effectively manage and advance innovation have been developed, and they all promise to finally reveal the solution to the innovation challenge.Too often, however, I feel we gravitate to the next great promise without recognizing they all provide incomplete views of the challenge. We’re operating at too small a context, using incomplete approaches focused too much on individual projects. How do we really drive change in a way that is sustainable? How can we ensure the project we are working so hard on will affect the transformation we aspire to?
Because let’s face it, most executives don’t truly understand how innovation works. What executives need is predictability, and design and innovation management is still not well enough developed to provide the consistent results necessary. And just like a sea voyage used to depend on the experience of the captain, too much of innovation and design work is still based on the experience of individual project managers. So, no wonder companies perceive the use of design thinking and innovation as being a bit of a lottery depending too much on the quality of the teams. Are we getting the A-team?And to exacerbate the situation, we measure our success too much on the financial outcomes of individual projects, making it a binary proposition, at best – we either succeed or fail, there’s no in-between. If, instead success could be based on the larger innovation context, history and goals of the company, then we can through our actions help move the needle on a larger scale and helping companies learn and adapt, in addition to selling more.
So what is this larger context how do we describe it?The first step is to define what we mean by innovation in a company. Are we improving the known, expanding the footprint to new applications or inventing the new? And do we have a perspective on what is required?Two of my colleagues, Geoff Tuff and BansiNagji recently wrote an article in HBR on managing your innovation portfolio, to help inform exactly this – how do we balance our innovation activities and manage them as a system?
In a study of companies in the industrial, technology, and consumer goods sectors, we looked at whether any particular allocation of resources across core, adjacent, and transformational initiatives correlated with significantlybetter performance as reflected in share price. Indeed, the data revealed a pattern: Companies that allocated about 70% of their innovation activity to core initiatives, 20% to adjacent ones, and 10% to transformational ones outperformed their peers, typically realizing a P/E premium of 10% to 20%.Google knows this well: Cofounder Larry Page told Fortune magazine that the company strives for a 70-20-10balance, and he credited the 10% of resources that are dedicated to transformational efforts with all thecompany’s truly new offerings. Our subsequent conversations with buy-side analysts revealed that thisallocation is attractive to capital markets because of what it implies about the balance between short term,predictable growth and longer-term bets.
A second research finding adds more food for thought. In an ongoing study, we’re focusing on more-direct returns on innovation. Of the bottom line gains companies enjoy as a result of their innovation efforts, what proportions are generated by core, adjacent, and transformational initiatives? We’re finding consistently that the return ratio is roughly the inverse of that ideal allocation described earlier: Core innovation efforts typically contribute 10% of the long-term, cumulative return on innovation investment; adjacent initiatives contribute 20%; and transformational efforts contribute 70%AG Lafley has talked about the need for a multi-year journey to transform P&G as he expanded the context from product performance innovation within the different brands to broader innovation across the entire business system. Now imagine if we brought the same discipline to managing across innovation projects as Maury brought to managing sailing routes instead of individual voyages? Could we cut the cost of transformation by 30%? Could we reduce the time of the transformation by 50%? I believe this is the frontier of our field.
So the question before us is what should our distribution of design and innovation be and how do we manage it effectively? Because there are meaningful differences between managing the known and discovering the new, even though the core skills, tools and processes may be described using the same words and promising the same outcomes.
I introduced the term transformational capital in the title of my talk today, and what I mean by this term is that companies that are able to integrate predictable approaches used to improve the core with discovery-based approaches necessary to invent the new build the transformational capital required to adapt and transform ahead of the market. These two approaches require distinct processes, decision making structures, skills and incentives that must be managed separately but optimized together around the overall growth of the company.
Those keys are That we constantly think about and act at the right context. It may be bigger, it may be smaller.That we understand how the contexts are changing – where is innovation really happening – is it at the feature level or on the experience level or the infrastructure level?Do we think about our innovation activities as a portfolio that together?And do we measure success not just on financial impact, but also on metrics around insights and capabilities.
As you might have noticed, I like learning from the past, and forinnovation it is no different. This old guy said way back in the early 1500s that there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. It is of course Machiavelli, not necessarily one we aspire to learn from as we try to make the world a better place through our innovations. Yet he also tried to create change, and he was perhaps unfairly judged for embracing reality over idealism. I think his level of insight into the realities of human behavior are worth taking a note of, and is something we should heed.
Because Machiavelli goes on to say that change, reform or innovation fails to happen because people do not truly believe in anything new until they have had actual experience of it. We are the folks who can make the new come alive. Let’s make sure it matters – to ourselves and society.

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Powers of Ten Presentation Transcript

ASIA AMERICA EMEA
Reframing: enlarging the basis for innovation“Always design a thing by considering it in itsnext larger context—a chair in a room, a roomin a house, a house in an environment, anenvironment in a city plan.”Eliel Saarinen Chair Room House Environment City plan 2
This is me and my context Erik Kiær INNOVATION STRATEGIST INNOVATION EFFECTIVENESS GROWTH-FOCUSED STRATEGY Associate Partner Innovation strategy Strategy & Managing B. Eng. Mechanical Concept development Uncertainty Engineering, McGill Innovation capabilities Marketing & Sales M. Des. Human Centered Innovation Product Design IIT Organization & Leadership 3
Lt. Matthew Fontaine Maury USN(January 14, 1806 – February 1, 1873)
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Reduction in mean sailing time based on Maury’s charts England -50% From 126 to 63 days New York San Francisco-28%From 188 to 135 days Rio de Janeiro -58% -22% From 124 to 97 days Australia From 55 to 23 days 11
Enlarging the context: from description to prescription B ASea captain Ship Route Trade Global consistency networks commerce 12
14 User-centered designEthnography Design thinking Lean startupOpenInnovation Business model innovation ©2012 Monitor Company Group LP — Confidential
In spite of new approaches, we’re still too random… 15
Innovation can be classified into three levels of ambition, orthree different contexts… TRANSFORMATIONAL Developing breakthroughs NEW and inventing things for Markets/ markets that don’t exist yet Audiences WHERE TO PLAY ADJACENT ADJACENT Expanding from Markets/ existing business into Audiences “new to the company” business CORE Optimizing existing products SERVED for existing customers Markets/ Audiences CORE PRODUCTS EXTENSIONS NEW BUSINESSES and Existing Assets and Enhancements and Structures HOW TO WIN 16
Different levels of innovation ambition requirean uneven allocation of available resources… TRANSFORMATIONAL 10% ADJACENT 20% CORE 70% 17
…and should deliver inverse returns 70% TRANSFORMATIONAL ADJACENT 20% CORE 10% 18
But how do we manage design and innovation across thesedifferent contexts? TRANSFORMATIONAL ADJACENT ? CORE 19
More interconnected: Innovations require asystemic view of how different components interact.Separate elements may not direct influence each other but interact as a system:attempting to cleanly isolate and categorize individual parts can be counter-productive
More complicated: Innovation is messy andrequires us to embrace complexity andchallenge conventionDeeply understand context; go beyond current solutions; challenge orthodoxies
More ambiguous: Smarter solutions require us tointegrate rather than eliminate seeminglycompeting models.Don’t blindly accept either-or decisions, but have the patience to resolve tradeoffs in new,creative ways
More experiential: Communicating somethingnew requires an understanding of the experienceof the new, not just the description.Emphasize a visual orientation that engages viscerally when communicating the subtletyof an insight or the power of a concept
Transformational capital is built when companies canintegrate the two approaches and adapt to new contexts TRANSFORMATIONAL ADJACENT 2Linear AdaptivePredictable IterativeProof-based CORE 1 Discovery-based 24
So why have you never heard of Maury? B ASea captain Ship Route Trade Global consistency networks commerce 25
Our challenge1. Think about the next larger (and smaller) context in our work2. Understand where change is happening and what we can control3. Think about and manage innovation as a portfolio4. Measure project success on multiple levels: • measure what we are learning • measure the skills we are developing • measure the growth we are achieving. 26
There is nothing more difficult to take in hand,more perilous to conduct, or more uncertain in itssuccess, than to take the lead in the introductionof a new order of things. ©2012 Monitor Company Group LP — Confidential 27
[innovation fails tohappen because people]do not truly believe inanything new until theyhave had actualexperience of it. ©2012 Monitor Company Group LP — Confidential 28
Erik_Kiaer@Doblin.com@Askeladden