The document discusses measuring and promoting innovation in organizations. It provides three key points: 1. Measuring innovation through outputs like new products and patents does not guide performance improvement, which requires changes in how people work and make decisions. 2. Barriers to innovation include budgets, risk aversion, and defined roles that discourage experimentation. Innovation thrives on collaboration, speed, and accepting failure. 3. Developing trust is important for innovation as it facilitates knowledge sharing and risk-taking with new partners. Trust evolves over time through consistent behaviors across individuals and organizations.

1. BEING INNOVATIVE
Andrew Maxwell Ph.D.
Feb 11th, 2015

2. • Reputation for innovation1
• % new products in last 5 years2
• Number of patents3
How Do You Measure Innovation?

3. Output measures don’t guide
performance improvement
Improvements in performance require changes in the
way people behave and make decisions, including:
• Changing current procedures
• Developing new organizational structures
• Abandoning existing customers and suppliers, and
working with new ones
• Modifying incentives, compensation and
recruitment
• Changing the company culture (and attitude to risk)

4. What is the barrier to innovation?

5. Innovation killers
1. The accepted wisdom of annual budgets –
opportunities don’t arrive according to a plan
2. The need to clearly specify anticipated outcomes –
innovation is really about incomplete contracts
3. Quality improvement process applied to everything –
innovation is about doing different things
4. Lean systems with no slack –
innovation require experimentation (and failure)
5. Clearly defined roles and responsibilities –
innovation happens with cross functional teams
This is not what you learn in Business School
5

6. Maxwell’s laws of innovation inertia
1. There is a natural tendency for organizations to
keep doing what they’re doing and resist changes.
In the absence of a force, they will continue to do
what they’ve always done.
2. Larger organizations require more force to change
what they are doing than smaller organizations.
3. For every force there is a reaction force that is
equal in size, but opposite in direction. When
someone exerts a force on an organization, he or
she gets pushed back in the opposite direction
equally hard.
6

7.  Senior management molded by their environment and
experience: where speed/risk taking viewed as negatives
 Corporate approach to risk management: formal processes,
established relationships and contractual controls
 Unintentionally increases risk of being disrupted: by slowing
down decision making, discouraging risk taking, inhibiting
new partnerships and stifling innovative opportunities
 Companies previous success inhibits their likelihood of
adopting innovative ideas
 Performance systems are designed for incremental short
term not disruptive long term performance
Changing organizational design to
innovate is challenging when

8. Innovation requires:
• Collaboration across functions
• Working with new partners
• Two way, open, knowledge exchange
• Speed of decision making
• Willingness to accept failure
Innovation is like pornography …
I know it when I see it …. Justice Potter Stewart

9. “..willingness to be vulnerable to actions of another party,
without direct means of controlling theirbehaviors”
 reduces concerns about misappropriation or misuse
arising from knowledge exchange
 Accelerates knowledge sharing, enabling rapid
identification of relevant opportunities
 reduces transaction and verification costs associated with
knowledge exchange
 Speeds relationships by facilitating incomplete contracts
with multiple partners
 facilitate higher rates of knowledge absorption, increasing
likelihood of use / resource deployment
The relationship lubricant – Trust:

10.  Is a context dependent staged process over time
 Trustevolvesduetoindividualbehaviorsinfluencedby:
 Individual personality; previous relationship experience
 Corporate culture, processes and organizational design
 Initialrelationshiptrustbasedonproxy(i.e.background)
 Manifestations of dyadic trust behaviors influence trust level:
 One party displays trust behavior, reciprocated by other
 Each behavioral manifestation audited by other party
 Specific trust behaviors build, damage or violate trust
 Achievement of specific trust levels allow relationship to be
entered, extended and developed over time…
 Certain controls enable trust development: while others make
it more difficult for trust to develop
Becoming an intuitive trust auditor:

11. Behavioral manifestations that build trust
Dimensions
Trustworthy
Consistency Displays of behavior that confirm previous promises
Benevolence Exhibits concern about well-being of others
Alignment Actions confirms shared values and/or objectives
Dimensions
Trustworthy
Consistency Displays of behavior that confirm previous promises
Benevolence Exhibits concern about well-being of others
Alignment Actions confirms shared values and/or objectives
Capability
Competence Displays relevant technical and/or business ability
Experience Demonstrates relevant work/training experience
Judgment Confirms ability to make accurate and objective decisions
Dimensions
Trustworthy
Consistency Displays of behavior that confirm previous promises
Benevolence Exhibits concern about well-being of others
Alignment Actions confirms shared values and/or objectives
Capability
Competence Displays relevant technical and/or business ability
Experience Demonstrates relevant work/training experience
Judgment Confirms ability to make accurate and objective decisions
Trusting
Disclosure Shows vulnerability by sharing confidential information
Reliance Willingness to be vulnerable through task delegation
Receptiveness Demonstrates ‘coachability’ and willingness to change
Dimensions
Trustworthy
Consistency Displays of behavior that confirm previous promises
Benevolence Exhibits concern about well-being of others
Alignment Actions confirms shared values and/or objectives
Capability
Competence Displays relevant technical and/or business ability
Experience Demonstrates relevant work/training experience
Judgment Confirms ability to make accurate and objective decisions
Trusting
Disclosure Shows vulnerability by sharing confidential information
Reliance Willingness to be vulnerable through task delegation
Receptiveness Demonstrates ‘coachability’ and willingness to change
Communication
Accuracy Provides truthful and timely information
Explanation Explains details & consequence of information provided
Openness Open to new ideas or new ways of doing things

12. Manifestations
Build Trust Damage Trust Violate TrustTrustworthy
Consistency
Displays of behavior that
confirm previous promises
Shows inconsistencies between
words and actions
Fails to keep promises and
agreements
Benevolence
Exhibit concern about well-
being of others
Shows self-interest ahead of
others’ well being
Takes advantage of others when
they are vulnerable
Alignment
Actions confirms shared values
and/or objectives
Exhibits behaviors sometimes
inconsistent with declared values
Demonstrates lack of shared values
and willingness to compromise
Capability
Competence Displays relevant technical
and/or business ability
Shows lack of context specific
ability
Misrepresents ability by claiming to
have non-existent competence
Experience
Evidence of relevant work
and/or training experience
Relies on inappropriate
experience to make decision Misrepresents experience
Judgment
Confirms ability to make
accurate and informed
decisions
Relies inappropriately on third
parties or erroneous information
Judges others without giving them
the opportunity to explain
Trusting
Disclosure
Shows vulnerability by sharing
confidential information
Shares confidential information
without thinking of
consequences
Shares confidential information
likely to cause damage
Reliance
Shows willingness to be
vulnerable through delegation
Reluctant to delegate, or
introduces controls on
subordinates’ performances
Is unwilling to rely on
representation by others, or
dismisses participation
Receptiveness
Demonstrates ‘coachability’
and willingness to change
Postpones implementation of
new ideas or deflecting
Refutes feedback or blames others
ommunication
Accuracy
Provides truthful and timely
information
Unintentionally misrepresents or
delays information transmission
Deliberately misrepresents or
conceals critical information
Explanation
Explains details and
consequence of information
provided
Ignores request for explanations Dismisses request for explanations
Openness
Open to new ideas or new
ways of doing things
Does not listen or ignores new
ideas
Shuts down or undermines new
ideas
Behavioral Trust Dimensions

13. Shakespeare
To trust or not to trust that is the question
Whether it is nobler in the mind to innovate
and develop relationships that bring fortune
Or rather to introduce contracts and controls
that by opposing limit them

14. Becoming
Innovative
One Behavior
at a time

15. Why is innovation like porn
• Porn stimulates innovation: it brought us
streaming video, credit-card verification, Web
referral rings and Flash technology
• The internet is 95 percent porn and spam”
― Margaret Atwood
• Its fun and involves

16. Quotes
• M. A. Rosanoff: "Mr. Edison, please tell me what laboratory
rules you want me to observe."
Edison: "There ain't no rules around here. We're trying to
accomplish something!” — Thomas Edison
• "It's easy to come up with new ideas; the hard part is letting go
of what worked for you two years ago, but will soon be out of
date.” — Roger von Oech
• "Creativity is not the finding of a thing, but the making
something out of it after it is found.” — James Russell Lowell
• "There is no use trying,” said Alice. “One can’t believe
impossible things.” “I daresay you haven’t had much practice,”
said the Queen. “When I was your age, I always did it for half
an hour a day. Why, sometimes I’ve believed as many as six
impossible things before breakfast.” — Lewis Carroll