Editor | On 16, Feb 2018

Kobus Cilliers

This article is an expanded version of an interview conducted for Tata Review in December 2016. The official version can be found at the online Tata Review website:
http://bitcast-a.v1.o1.bom1.bitgravity.com/tatas/ebook/tata-review-jan-2017/mobile/index.html#p=96)

Darrell Mann speaks at a speedy clip and the pace fits right in with the message he is keen to spread on the fast-changing nature of innovation. ‘Systematic innovation’ is Mr Mann’s sacred mantra and the United Kingdom-based company he heads is — appropriately enough, it seems — called Systematic Innovation.

Being chief executive of a company with operations across the world, including in the United States, South Korea, Japan, Australia and India, is one part of what Mr Mann does. He is a visiting professor at universities in the United Kingdom and Malaysia and a prolific writer, penning in excess of 600 innovation-related papers and the bestselling ‘Hands-On Systematic Innovation’ series of books.

An engineer by education, Mr Mann spent 15 years with Rolls-Royce in various research positions leaving the company in 1996 to set out on his own. He has over nearly two decades helped a clutch of the world’s top companies craft stronger innovation programmes and has participated in the creation of more than 500 inventions.

Mr Mann speaks here with Philip Chacko about innovation and its discontents, and the tools and mindset required for creativity to blossom in business. Excerpts:

You are an engineer by training. When and how did innovation become your chosen field?

The interest in innovation has been there since I was a small child. Looking back, it seems strange because I was reading Edward de Bono books at 10. I had some work experience at 16 in an engineering company, where I got to meet different people and question why things were done in a certain way. This questioning nature quite naturally prompted my migration to the research and development and innovation side of business. I always wanted things to be better than they were.

 

Could you tell us a bit about your background and your career?

My becoming an engineer was cause for complete puzzlement in my family. There is no trace in my parents to explain why I chose the profession I did. Both of them left school at 16. They had no further education but they definitely bettered themselves through their lives. They did it the hard way and they encouraged me to go for further education. I was the first person in my family to get a degree and, in fact, the first person in the family to leave the region (I grew up in the northern part of the United Kingdom).

 

What exactly is systematic innovation and how does it ensure that innovation programmes deliver tangible results?

Early in my Rolls-Royce career, we came across this Russian methodology called TRIZ [a problem-solving tool derived from the study of patterns of invention in global patents, developed by the Soviet inventor and science-fiction writer Genrich Altshuller and his colleagues] . The way Rolls-Royce educates its employees, you have to challenge everything. As soon as we saw TRIZ, we said this cannot possibly be true, and we spent three years trying to prove it couldn’t be true. We failed, and that’s when we recognised there was definite value in the method.

The scepticism was due to the nature of creative people and creative industries. The way they perceive it, creativity comes naturally; there cannot be a method that can produce creativity. There was that attitude at Rolls-Royce, but once we came through our three-year journey we realised that no matter how creative we thought we were, we were following the same patterns. We took TRIZ and made it more robust and resilient, and ready to be taken to different industries.

The Russian research on TRIZ, which began in 1946, helped decipher a lot of issues concerning innovation. The research was a good start for us, but we needed to take the methodology to a whole new level. We got a lot of funding and we put together a team to analyse patents. The team was based in Bengaluru [in India] and we gathered together the knowhow required for the analyses. Coming to Bengaluru was an easy decision for us; the timing and the costs were right and, importantly, the necessary patent-analysis skills existed here in India.

 

You were quoted in 2013 as saying that 98 percent of all innovation projects fail. Does that number hold good today?

It does; it’s very consistent. We’ve got a research team analysing innovation attempts — business as much as technical — from wherever we find them. The causes of the failure shift from industry to industry but the 98-percent failure rate is consistent. When we named our company Systematic Innovation, we said our job in life is to decode the difference between the 98 percent and the 2 percent. We figure out what this 2 percent did right and we get, as much as is possible, our clients to follow that formula.

With systematic innovation you are in a new world and it makes a lot of people uncomfortable. For example, the management community has had 40 years of living a life dominated by operational excellence. For most managers, their entire careers have been about operational excellence. But operational excellence and innovation are very different; you are taking in different languages. With innovation you have to make sure you are working on the right problem. An enormously large proportion of innovation projects fail on day one because the people involved are working on the wrong problem.

 

Is there a pattern in these failures?

I think there is. There are three core types of failures. The first is tackling the wrong problem. The second is chasing after the wrong solution; a quarter of projects find the right problem but then they deliver the wrong solution. This happens because people tend to go with what they know rather than what is best for the customer. The third kind of failure, and this afflicts some 40 percent of all projects, is about the inability of the organisation to execute the solution. Here they have found the right problem and delivered the right solution, but this solution and the insights gained have not, at the end of the story, pulled in the money. In such instances it is the slavish devotion to operational excellence that, I think, causes the problem.

 

You also cite poor communications and organisational hierarchies as reasons for innovation failures. How do you get on top of these issues?

We see plenty of silo walls inside companies and a whole lot of innovation programmes require you to work on both sides of the silo. Ever so often we are involved in teams where we need to involve multiple parts of the organisation or — in the Tata case — multiple parts of the conglomerate. Unless you climb over the silo wall and get the two parties to recognise it’s in their common interest to work together, the innovation attempt is almost always going to break down.

 

With innovation, is it that the bigger you are, the more difficult it is to succeed?

I believe so. When you’re a small company, you don’t have much to lose, and so it’s easy to take chances and try different things. When you’ve become a big company, on the other hand, suddenly you have a lot to lose. And margins to maintain. The DNA of the organisation shifts. If you consider the industries that are learning how to innovate well, they either outsource the innovation activities or they foster smaller enterprises to go about the task. The pharmaceutical industry, for instance, does that really well. In the aerospace industry, where I started my career, everything you do has to be safe. But you also have to innovate, which means trying new things, failing and learning from the failures. Resolving that conflict requires physical separation of the two functions within the organisation.

 

You speak about instinct in innovation and about the efficiency required to pull it off. How do you find the balance?

It’s good to use the word instinct. The instincts of most people are poorly attuned to innovation. This is partly due of the operational excellence culture and partly because, historically, the rate of change on the planet has been slow enough to make all change look linear. The way our brain looks at change, it’s going to happen linearly but, of course, innovation is very non-linear.

We spend lots of time in our research team calculating the pulse rate of industries and how often disruptions take place. Overwhelmingly, we see these disruptions happening faster and faster. What this means is that the linear assumption people make is less and less valid. We help companies understand that the assumptions we make are increasingly dangerous.

One of the challenges in the automotive sector right now, for example, is that it has a relatively slow pulse rate as an industry. So you have a customer saying, “I don’t care so much about the car as the communications systems in the car.” Now, the pulse rate of the communication systems is several times faster than that of the automotive sector itself, and that explains the frustration of customers. Many car companies are struggling with this because the pulse rate of the customer communication need is significantly faster of the pulse rate of the industry.

Coming to the balance between efficiency and instinct, there is no doubt that operational excellence dominates the world because that’s what makes money for the business. I sympathise with organisations that struggle find the balance between operational excellence and innovation. A lot of managers come from an operational excellence background; that’s what has made them successful. When they venture into the innovation world they see a bunch of aliens, guys who have no idea how to make money.

 

Does it make sense, then, to hand managerial responsibilities to the research person?

That sometimes opens up a whole new set of dangers. Inventors and the innovation community are great at starting stuff — and usually hopeless at finishing them. They get bored with all the detailing necessary to turn an idea into money, and tend to be much more interested in the next problem to go work on. I think it’s possible to train starters to also be finishers, but by our reckoning, about 1% of people end up being comfortable in both roles. That problem often becomes the bottleneck inside organisations trying to innovate more.

 

You mention South Korea as a country that has pushed the innovation envelope. What can India and Indian companies learn from South Korea about the pursuit of innovation?

Samsung is the best example in this context. The systematic innovation tools have been taught to 20,000 people across their organisation. They’re currently generating over 200 patents a week. This intellectual property engine and the innovation engine that comes after it are well established inside the business. Samsung has moved from playing catch up to becoming a pioneer.

The South Korean perception is that they are not particularly creative. This makes them much more open to a systematic way of doing things. The reality is there is no difference in the creativity; that’s just perception. What the South Koreans have proved over the last decade is that if you take a group of smart people and you give them the right tools, they will change the world.

The big advantage that India has, and more than anywhere on the planet, is this thirst for knowledge. If the country can combine this thirst with a systematic approach to innovation, there’s an incredible amount of potential that can be realised. India does really well in the quality of intellectual property developed — I would place it in the world’s top ten on this count and ahead of China — but this has to be matched with quantity. That’s where it has to perform now.

 

Are certain people, companies and countries culturally more in step with innovation than others? Or can anyone get good at innovation with the proper tools and training?

It’s definitely trainable and I confess I’m biased on this because we are in the business of teaching an innovation method. Having said that, I find it easier to teach the method in Asia than in Europe. The problem in Europe is that a lot of people — especially in the United Kingdom, which is probably an extreme example — think they are extremely creative. There’s little actual evidence of that but the fact that people arrive with such a mindset means that they are already half closed. In Asia, on the other hand, there’s extraordinary openness to, maybe not believe you, but at least listen to what you have to say

The United States right now has gone so far down the operational excellence road that people are just unprepared to take the time to really think about the problem. At problem-solving sessions with Americans, everyone urges me to go faster, faster, faster and I say, “We haven’t even found the right problem yet.” So they will sprint to the solution and, maybe six months later, the realisation dawns that they have spent all that time solving the wrong problem.

 

Why is America then still No 1 in business innovation?

I don’t think it is No 1. Innovation in my definition means ‘successful step-change’. By that definition, a lot of high profile American figures are great idea generators, but not so great at turning their ideas into money. When it comes to quality of solutions and their execution, according to our research findings, Denmark, Switzerland and Sweden, in particular, are ahead of the United States. The American pioneering spirit has disappeared, I think, but it’s worth saying at the same time that Silicon Valley and places like San Antonio in Texas have pockets of exceptional innovation capability. When it comes to fertile ground for innovation, it’s more about regions and ecosystems now that nation states.

 

Education systems in many countries tend to emphasise rote learning and this dampens the creative spirit in children. How can attitudes be changed here?

There is an imbalance in nearly every education system in the world, with the focus on left brain rote learning. I’ve seen attempts by governments to redress this and they invariably fail. That’s because the teaching community believes the way they teach is the right and proper way. It’s threatening to the education community when it is told that what is being taught is increasingly irrelevant. A good question is worth a thousand answers but the education system is still in the 1,000-answers business. This is a huge ship to turn around.

 

India produces a multitude of engineers every year, but that has not quite benefitted the country as much as it should have. This is unlike what has happened in China.

India always comes across to me as very humble when it comes to its achievements, and some of what has been happening in the country, to me as the outside observer, has been incredible. The difference between China and India is the difference between a top-down society and a democracy. When China sets its mind on something happening, it will happen. In India they’ll debate it for 10 years and then make a decision.

I think the Chinese top-down command-and-control system works in a short term. The faster and more interdependent the world becomes, however, the more dangerous command-and-control becomes. For me the safe long-term bet is India, first for the knowledge that exists in the country and for making the consensus approach fundamental to the way things are done.

As far as the quality of engineers emerging from the Indian education system goes, I think this is continuing journey. The society we live in now, it is the learner that wins, and it matters who can learn the fastest. In that context, India is significantly ahead of other parts of the world.

 

You are a votary of design thinking in innovation. Where does this fit in the innovation matrix and how important is design to the fruitful expression of creativity in business?

Design thinking is a mindset and it’s the polar opposite of operational excellence. Design thinking forces managers and leaders to look beyond operational excellence to rethinking their business. Operational thinking is about working out the problem and getting to the solution as quickly as possible. Design thinking says, “Consider your options.” It forces managers think divergently. Operational excellence thinking perceives that divergence as waste. Design Thinking is experiencing a wave of popularity right now because there hasn’t been enough divergent thinking inside businesses. Whether the wave continues in the long term will depend on how well the Design Thinking mindset approach is combined with other complementary tools, because the big drawback right now with the Design Thinking providers is that the tools, as they exist, are very weak.

It’s relatively easy for a small company to be agile and innovative and to embrace concepts such as design thinking. As soon as you become a big company, operational excellence thinking takes over. An example is Facebook, which, I think, is very vulnerable. They have innovated once or twice in their early days and now they have swung massively too far in the direction of operational excellence.

As for Apple, it too has a perfect storm heading its way. They have got a lot to lose because they’re a big company. When Steve Jobs was around he loved being the rebel, the pirate.  The Apple of today is so huge it cannot be a pirate; it has so much to lose. Now he’s gone and many of the designers who admired him have also gone. What you are left with is a company increasingly dominated by managers rather than leaders. People that are in the answers business rather than the questions business.