Udaiyan Jatar talks at TEDxBGI about how big things start small – and how you can start creating transformational change.

Blue Earth’s Mission

The pace at which organizations are adapting to the changing needs of consumers, the environment and society, is too slow. Incremental innovation just won’t cut it any more.

To help organizations drive true transformational change, like Unilever’s CEO, Paul Polman is doing according to Hunter Lovins, Blue Earth has brought together a multi-disciplinary team with an integrated set of solutions under the “Holistic Transformation” model.

The poverty issue, on the other hand, is far more insidious. The minimum wage is less than 60-70%, at best, of a living wage. Add to this the widespread practice in some sections of the restaurant industry of not hiring workers for 40 hours or more to avoid paying benefits, forces the poor to take multiple jobs, stay away longer from home, and still not have any health coverage etc. This leaves no time for self-improvement via education, or indeed, not even a decent family life creating other long term social issues.

On the other end of the spectrum are restaurants like the ones listed  on NP Enterprises Forum’s website – a link to social enterprises that provide great food while being socially and/or environmentally responsible.

By Udaiyan Jatar

“The real voyage of discovery consists not in seeking new landscapes, but in having new eyes.”—Marcel Proust

Mental Paradigms and the Dangers of Experience

If you had an intractable problem to solve, who would you turn to—an expert or an inexperienced outsider? In The 7 Habits of Highly Effective People, Stephen Covey described an experiment where two groups of people were shown a trick picture. One group was convinced the lady in the picture was a pretty young girl. The other group angrily argued it was an ugly old woman! The conclusions they drew were distorted by two different pictures the two groups had experienced before they were shown the trick picture. Unfortunately, our prior experience (often touted as expertise) constrains us every day, making us unable to see with new eyes. The key to innovation starts with identifying and eliminating barriers created by our expert judgment, so that we can spot transformational opportunities hidden in plain sight.

David vs. Goliath and Transformational Discoveries

Inventors involved in some of the world’s greatest discoveries, such as penicillin, have admitted to their accidental and unexpected nature. Remarkably, most world-changing discoveries were made by outsiders. For example, Einstein was a mathematician, but his discoveries changed physics. Most of the world’s greatest businesses were created not by large companies, but by small entrepreneurs who had new eyes by virtue of being outsiders to the industries they transformed. Nike was created by an accountant, Coca-Cola by a pharmacist, Starbucks by a salesman, and Harley-Davidson by hobbyists. This phenomenon applies to nonprofits as well. Icons like Goodwill Industries, YMCA, United Way, and Susan G. Komen for the Cure had humble beginnings outside the nonprofit sector.

Can an insider systematically harness this outside-in phenomenon and master it to discover opportunities for transformational change? Yes, if you are committed to creating transformational change. However, you have to truly think out of the box. But what is this box? Even if you can get out, where do you start?

Thinking Out of the Box

The Blue Earth Network Discovery framework (BEND) is part of a systematic and repeatable process to discover, invent, and execute transformational solutions. Most of us, whether we know it or not, are stuck in a box in the bottom-left hand corner of the BEND framework (A), the Organization-Product box. Our minds are constrained by our current assets and competencies. “This is the way things are done” or “this is our core competency.” This is the worst place to start an innovation project, because it creates immense invisible barriers to the discovery and resolution of the root causes of seemingly intractable problems. If what you do today will lead to transformational change, great. If not, remember the definition of insanity is repeating the same actions and expecting different outcomes.

Here is an example of how the framework is applied. Mr. Smith (hypothetical), a vitamin deficiency expert, is brought in to help children in Vietnam. His doctoral thesis was on the impact of Vitamin C deficiencies on children. Clearly, if he remains stuck in point A in the BEND framework (below), he won’t be able to help children whose deficiencies don’t include Vitamin C. If he climbs to Step B, he is able to recognize broader malnourishment issues, and benchmark himself against others in his sector. Therefore, he adds other nutrients to his portfolio and helps more children. Unfortunately, his core competency keeps him anchored by what’s being done currently by him and his current sector. His improvements are incremental and don’t create transformational change. Mr. Smith continues to import nutritional supplements at a high cost into Vietnam and distribute them to as many children as his grant money allows.

In contrast, let’s look at someone who wasn’t constrained by a product/service-based competency, and thus, was able see the issue of malnourished children with new eyes. Jerry Sternin (a Positive Deviance pioneer) did not solve the malnourishment problem by studying vitamin deficiencies (A) or children with malnutrition issues (B). Instead, Sternin studied the children’s lives holistically (C), including their environment and the children’s friends to discover the root cause of the problem. We call this the Human-Planet perspective (C). By doing this, he discovered that some of their friends were healthy and well-nourished, despite coming from equally poor families. Turns out, these families were eating nutrients abundantly available in their environment (like shrimp growing in the rice paddies and green potato leaves). Sternin discovered that the root cause of malnourishment was ignorance of the nutritional value of local flora and fauna. This discovery ultimately helped tens of thousands of kids get better nutrition without import or distribution costs. Read more examples here.

Organizations and experts can replicate this process by looking with new eyes or by bringing in “outside-in” thinkers who can help executives to think outside the box.

Obviously, discovering a root cause is not enough. Developing transformational solutions can be costly, time-consuming, and ultimately, quite risky.

Can we learn from the inexperienced outsiders who created the world’s greatest businesses with minimal expertise and resources by virtue of being small entrepreneurs? In the next edition of this series, “Invention,” I will discuss how to leverage a transformational discovery and convert it into a high-impact service or product with minimal cost, risk, and time.

Community Wealth Vanguard

Transformative Innovation

We’ve all heard that we will need more Earths if we cannot curb population growth, reduce per capita consumption, or get more from less. We will need to do all three, but “getting more from less” is what this series of articles is about.

The story is the same at the micro level. Our organizations have fewer resources than are needed to meet the growing needs of our stakeholders (communities, donors, shareholders, employees, and so on). We cannot achieve our expanding goals with declining budgets by doing what we have always done. To transform our outcomes, we must transform what we do and how we do it. As
the saying goes, doing the same thing over again and expecting a different outcome is the definition of insanity!

I think we can agree that transformative innovation (TI) is necessary.

An example of incremental innovation is moving from rotary dial to touch-tone phones. This innovation improved productivity incrementally.  However, cellular phones are transformational. You don’t have to walk miles to an emergency phone if you are stranded on a highway. If you are a farmer in a remote village, you can access a world of information from a cell phone. This innovation, along with the Internet, has dramatically improved human productivity, and cut costs and reduced materials used at the same time.

The problem is that TI is rare and unpredictable. Why? Most of us focus on barriers like lack of vision, funding, risk-taking, or even talent. But to unleash innovation, the boards and senior executives of large organizations need to remove the invisible barriers.

Barriers to Transformative Innovation

Human Nature. Let’s start with the obvious: a majority of us don’t like major change, until we have absolutely no choice. So we avoid it by taking “practical” incremental steps, until sometimes it is too late. This gets amplified in our organizational behaviors.

Poorly Defined Core Competencies. Emanating from our basic nature is our most sacred of management principles: “Stick to your core competencies,” or “Avoid mission creep.” The unintended consequence of this otherwise sound idea is that it frequently forces us to abandon ideas that are necessary to achieve an outcome, but are too different from our existing activities.

By definition, we can’t be experts in something that doesn’t exist yet. Therefore, we can’t stick to activity-based core competencies and still create a transformative innovation. This conflict explains why small entrepreneurs—not large organizations—conceived and incubated most of the world’s greatest innovations, organizations, and brands: United Way, Susan G. Komen for the Cure, Goodwill, Coca-Cola, Nike, Apple etc.

We shouldn’t define our core competencies or our missions by what we do, but by our desired outcomes. This might mean developing new competencies. This removes artificial constraints to transformative innovation. Apple is a great example of this—fear of the unknown didn’t prevent them from taking on the music industry or the cell phone industry with the transformative iPod and iPhone. If transformative innovation doesn’t become a part of our core competency, it will be difficult to survive, let alone thrive.

Illogical Time Horizons. We measure performance in annual cycles—an agrarian operating paradigm that simply makes no sense more than 200 years into the industrial age. The annual agrarian cycle forces us to create annual plans and incentives. Therefore, our projects face invisible and irrational pressure by trying to show meaningful progress for an annual review. Wall Street takes this irrelevant timetable to another level of idiocy by tracking companies’ quarterly results. Transformative ideas need time to evolve, especially in the social sector. Forcing annual results squelches innovation. If we invest big money in an innovation, we have to monitor results as frequently as possible. But why do we have to invest big money?

Unreasonable Scale. Coupled with illogical time horizons is the “big organization” mentality of trying to achieve scale quickly. This makes our TI experiments too big and our failures bigger, leaving transformative ideas dead on the vine. These failures, then, discourage future innovation. The trick is to start really small. If you start small, your risks are lower and the need for annual monitoring is felt less acutely. This gives the innovators breathing room to fail, learn, and improve—just like all those entrepreneurs who created iconic brands.

Impossible Success Criterion. The greatest entrepreneurs failed and learned often from small steps and experiments, gaining rich insights before they achieved their breakthroughs. But large organizations put tight controls on the scope of every step of the process, and expect black and white answers, leaving no space for accidental discoveries.

We won’t get transformative innovation right on preconceived metrics or on rigid timelines. Instead, one needs to promote several quick innovations—which may be failures—in an organic process, while allowing serendipity to emerge. The good news is that flexible milestones can actually speed up the TI process if managed wisely.

Overcoming Wall Street’s Negative Influence on Innovation

The barriers listed above are systemic and are difficult to reconcile with conventional management wisdom, but they can be overcome—even by large organizations. Wall Street’s fixation with quarterly reports (ostensibly to create management accountability) is driven by greed for quick returns. This is a root cause for why even large corporations with huge budgets and resources can rarely transform markets. Hence, actions of great CEO’s like P&G’s A.G. Lafley to courageously tell Wall Street that they would no longer provide quarterly guidance are to be imitated.