David Koren

Why Can't Organizations Innovate?

I've been thinking for a while about the problem of innovation in organizations. Billions of dollars have been spent by leading organizations of all kinds (corporate, not-for-profit, governmental) to try to help them solve problems better, innovate faster, come up with new ideas, etc. And, after all those dollars have been spent, and millions of executives have attended innovation and "design thinking" classes, I think it's patently obvious that organizations, are no more innovative, on the whole, than they were fifty years ago. 

So, why is that? What is it about organizations that makes them unable (or at least makes it very difficult) to come up with new ideas and be innovative?

Of course, before I answer that, you'll want to think about those few organizations that actually are, or have been, innovative. You'll mention advertising agencies, architecture firms, and Apple, of course. Well, first of all, it's easy (ok, easier) for companies to innovate when they're focused on something outside of themselves... when they're focused on solving another company's problems (see management consulting) or on creating some jazzy new idea to market another company's product (see advertising) or when it's about creating some zoomy new form or idea for somebody else (as in architecture). But it's really hard for companies to focus their creative energies internally. 

The exceptions, where they happen, are incredibly rare. Apple comes to mind as the primary example. But Apple, at its most innovative, was driven by Steve Jobs, who had a relentless sense of purpose--to achieve a level of design perfection to create an "insanely great" product--and would annihilate anyone who got in his way. I think the only way that a conventional organization can possible actually be "innovative" is to follow this autocratic model, and be driven by a singular leader on a mission who will let nothing stand in his/her way.

Normal organizations, run by committees, boards, bureaucrats, uninspiring leaders, and otherwise nice people, have a hell of a time creating much of anything. For the most part, they move things around, buy and sell stuff, and try not to rock the boat. Why is that? 

Innovation is such a challenge in most organizations because of the innate human need to establish a consensus reality. That is, we work to collaborate with those around us to build clear rules for how things work. These rules might include power structures, etiquette, cultural norms (what do we talk about, how polite/rude are we, etc.). These things are incredibly pervasive, and the longer we spend together, the more complex and developed they become. 

Innovation is dangerous. Innovation is rebellion. When you innovate, you are challenging the established reality, the accepted way of seeing the world, and some of the "rules" that your organization has created, by consensus, for behaving in the world. This is a dangerous thing to do socially. It's risky. It can cost you friends. It can cost you social status. It can make people angry. Now, if we're talking about the place where you work, where you earn your livelihood, the place that enables you to exist in the manner to which you've grown accustomed, the risk of offending someone could be quite significant. And it's probably better, for your own survival and long-term career prospects, to keep your mouth shut.

So, as an organization, how do you get people to innovate? Well, you either relentlessly drive them to innovate by being a complete asshole, like Steve Jobs, or you lead them to focus their innovative energies outside the organization, like advertising agencies, architecture firms, etc. But getting people to innovate, inside the organization, is going to be difficult. You'd be much better off hiring an outside consultant to do the hard work of innovating if it relates to things inside the organization. Because the only people who want to take big risks like that inside the organization are either crazy, or completely secure in their position (like Steve Jobs).

Let's talk about the iphone for a second. Only Steve Jobs, only the CEO of the organization, could ever conceivably propose to cannibalize one phenomenally successful product (the ipod) to take a risk on a new product (the iphone). Nobody else would ever have the balls to do this. In almost any organization, proposing something like this would be pointless, because it would never be approved, and you'd lose status over proposing something unpopular. By proposing to cannibalize something successful, for something unproven, you are risking the livelihood of everyone you work with, for an uncertain future. And very few leaders have to guts to take that kind of risk.

I think organizations of all kinds would be better off to recognize that innovation inside the organization isn't worth the trouble. You're likely never going to overcome the institutional inertia and drive for comfort that makes organizations safe and boring unless you drive people to it with all your effort (Steve Jobs again). Innovation should be directed outside of the organization. Let people be comfortable. Don't try to force them to go against the power structure at work every day. And, if you need innovation inside the organization, get it from outside. Buy small innovative companies. Hire a hot little ad agency. Work with a ballsy management consultant. But don't expect the employees that you hired because they were the right "cultural fit" to rock the boat.

 

The Big Issue: the Influence of Wealth on Government Decision-Making

When I woke up this morning and heard that police had cleared Zuccotti Park late last night under the orders of Mayor Mike Bloomberg, I was immediately struck by the irony of the fact that the sole decision to evict people who are protesting economic inequality in NYC rests with the 30th wealthiest person in the world, who paid $102 Million to be elected to a third term in 2009 (a cost of $183 a vote!) after fighting to have the term limits law changed so he could run again. Now, I actually like Mike Bloomberg. I've voted for him. I think he's something of a benevolent dictator for New York City, and I believe he authentically cares about this city, and about doing the right thing for the people of New York.

But the fact that he's in office at all highlights the very issue which it seems to me is at the heart of the Occupation movement. And it isn't easy to get to the heart of it all, because there are so many issues heaped on top of it. We've got economic inequality, social issues, the failure of capitalism, the deregulation of the financial system, the recent economic collapse, the bailout of the banks, and everything else. But all these issues are, I think, united very simply in one core problem: 

Money buys political power, and our country is now effectively run by the wealthy, who exert tremendous influence over our government to make sure that policies that benefit their wealth are enacted, and that policies that do not benefit their wealth are blocked. 

The ways that money buys political power and influences government decision-making are many, some direct and some indirect, some legal and some illegal. Of course there's graft and corruption, but there's also the spin of the media, political donations (it takes a lot of money to get elected), paid lobbyists, the power of political appointments, the promise of future rewards after serving in office, and a host of other subtle and overt ways that money influences decision-making.

This problem is not just a problem for the left or the right. It's a problem that threatens our entire system. We have become a plutocracy in which those with the most money have the most influence. Without wealth, we have very little voice... all that we can do to influence government decision-making is to vote, or to protest, or to write a letter. But those with money can hire lobbyists, make large political donations, influence coverage in our media, hire a "consultant" (say, a former influential elected official) to make a few phone calls, promise someone a reward in the future, or make an out-and-out bribe. 

This is not about "capitalism" or "socialism." The ideological divide between these two idealized economic models frames a lot of the neverending debate between the left and the right about specific policies. But we don't have a capitalist society or a socialist one. We have a combination, and we choose when to adopt socialist principles or capitalist principles in our government. Capitalism works well for some things (incentivizing growth), and socialism works well for other things (military, major infrastructure, etc.). Some things work well when the government does them, and some things do not. Some things work well when businesses do them, and other things do not. We can debate when government or business is better equipped to handle one thing or another, but any dogmatic position that says "business is always good (or bad)" or "government is always good (or bad)" denies history and reality. 

If the wealthy are effectively controlling the decisions that our government makes on our behalf, they will make decisions about when to apply socialist principles and when to apply capitalist principles so as to maintain and increase their wealth. So we have socialized military, police, roads, and socialized risk for "too big to fail" financial institutions. But we continue to apply capitalist principles to health care (health insurance and hospitals) for most Americans, even as our costs continue to skyrocket, and the quality of our service continues to decline. And we apply capitalist principles to job creation, even though the "trickle down" from the wealthy "job creators" doesn't seem to result in very many new jobs, because the wealthy are generally hanging on to their money, rather than hiring new workers.

So we have a country in which our representative democracy, under the influence of pressure from moneyed interests, effectively makes decisions for the benefit of the few at the expense of the many. That is, actually, the definition of tyranny. Even though we still get to vote. Even though I can write to my senator if I want. My opinion is worth a lot less than that of Rupert Murdoch or George Soros.

If we approached decision-making at the governmental level from the perspective of "how can we make a decision that benefits the most citizens possible" we would have a very different approach to health care, financial regulation, job creation, defense, taxation, campaign finance and many other issues. But this isn't how most lawmakers approach the problems that face us. The one-person/one-vote system has far less power than the individual ambition and desire for personal benefit that wealth can bestow on our elected representatives and political appointees.

Let's look at three examples from the last few years, one from each branch of our Federal government, in which decisions very obviously placed the interests of the wealthy few over the interests of average Americans:

• The Emergency Economic Stabilization Act of 2008 was drafted by Bush Treasury Secretary Henry Paulson (himself a former Chairman and CEO of Goldman Sachs) to provide $700 billion in bailouts to financial institutions through the Troubled Asset Relief Program (TARP). Whether or not there is any actual conflict-of-interest in Paulson bailing out his former firm and many others, I don't think there can be any doubt that Paulson's perspective on the importance of the bailouts was influenced by his time on the inside at the most successful financial institution on Wall Street.
• The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 extended the Bush-era tax cuts after a bitter national debate over whether to let them lapse or not. As some conservatives chose to view the expiration of a temporary tax cut as a "tax increase," and given the pledge that many legislators have signed to not raise taxes under any circumstances, it was impossible to not extend the tax cut, even for the wealthiest Americans, and even in the midst of a national debate about the deficit. Unfortunately, the ongoing debate about fair taxation (highlighted most dramatically by Warren Buffett) has caused many to begin to think of the Republican party as the "Party of the Rich" since many Republican legislators vociferously defend against higher taxes on the wealthiest Americans, whether by closing tax loopholes or increasing taxes on capital gains or income taxes.
• The Citizens United v. Federal Election Commission decision of the Supreme Court essentially gives corporations the right to fund campaign advertisements without making that funding public. This decision gave additional credence to the view that corporations are people, with all the same rights as citizens, and that money is a form of free speech. John Paul Stevens, in his dissenting opinon, wrote that this decision "threatens to undermine the integrity of elected institutions across the Nation. The path it has taken to reach its outcome will, I fear, do damage to this institution."

If we actually are a society in which everyone is equal... If we actually have a country that is (as Lincoln said at Gettysburg) "of the people, by the people, and for the people," then everyone's interests should be weighed equally in making decisions that affect us all. For many of us, I think that's the basis of our social compact, of what we agree to when we place our allegiance in America. And it is the very sense that this social compact has been violated through the pervasive influence of wealth in politics that has brought us the continuing Occupation movement. And this isn't going away until the social compact is restored, until we figure out a way to make decisions that affect us all in a way that serves the needs of the many, not just the needs of the wealthy few.

 

 

 

A Case for Participatory Government

The Occupation of Wall Street is two weeks old today. Like many people I know, I’ve been watching the protest emerge and evolve through Facebook updates and Tweets and from an occasional forwarded article in the Gothamist. As I write, there are not only people encamped downtown, but similar actions cropping around around the country, and in fact, around the world.

One of the areas of confusion and criticism around the protest is that it’s not clear what the protest is about specifically... There’s not a specific call for action that we’re supposed to take. As an audience, many people would like more definition in order to better understand the protest, and to put it in a specific envelope, “Oh, they’re protesting for more taxes on the rich” or “Oh, they’re protesting for mortgage debt forgiveness” or “Oh, they’re protesting for the government to focus on creating jobs.” I’ve also read that various members of the audience would like to see a clear spokesman for this movement, some one person to step forward and become the avatar through which we can experience what is going on downtown and in other cities.

But I think it’s important to resist this desire, from the general public, to have this thing wrapped up with a bow. There is tremendous value in bringing people together simply to object to the way that things have been run, to unify not around a specific change that must be made, but in order to make a general statement that something fundamental needs to change in America, that America’s government has not been serving the needs of its people, at least not as its primary objective, for some time now. And whether people join the occupation because they are members of the long-term unemployed or because they have been significantly hurt by the recent financial crisis and recession or because of some other reason, there is still significant value in having them come together and make a statement about the injustice they feel.

This reminds me, to some extent of Howard Beale in the 1976 film Network:

"Things have got to change. But first, you've gotta get mad!... You've got to say, 'I'm as mad as hell, and I'm not going to take this anymore!' Then we'll figure out what to do about the depression and the inflation and the oil crisis. But first get up out of your chairs, open the window, stick your head out, and yell, and say it: "I'M AS MAD AS HELL, AND I'M NOT GOING TO TAKE THIS ANYMORE!"

Yes, there’s change that has to be made, that many of us have been hoping for and talking about for some time. But, clearly, this change is not going to happen if we all sit at home simply writing blogs and tweeting and updating our facebook status as our primary means of dissent. Or even if we become active in the conventional political process and campaign for the lesser of two evils, or write letters to our elected representatives encouraging them to do the right thing.

First, we actually have to get mad. And then, we have to take our actual physical bodies and go out and make a stand, in the street. We have to leave cyberspace and go out into meatspace. And if it’s not specific about exactly why people are taking to the streets, if it’s just from a general shared disillusionment with the capitalist status quo, a reaction against economic inequality, a riot against the growing sense that our best days are behind us, well, that’s ok. That’s what it needed right now, before we start to move toward any specific change, we need to get people on their feet.

It’s amazing what this movement has accomplished so far, in only two weeks, and how many things have been done just right. There is no specific leader who has emerged who can be ripped to shreds by the media and cynical spectators (remember Julian Assange?). The inclusive “General Assembly” model, instead of some more formal leadership structure, means that anyone who needs to be heard, can be heard, that anyone who has something to say can say it, that anyone can be a part of what is happening. And it’s all happening, ostensibly, without any big-money interests behind it or powerful existing organizations (political parties, unions) calling the shots. So far.

And at the center of this movement are kids, young people, Millennials... the generation that grew up with computers all around them, and that we didn’t think knew how to do anything that wasn’t tied to a computer or handheld device. This is the generation that is getting people up and out in general protest at the way things have been run.

To me, the promise of this movement isn’t some minor revision to the existing legal framework (reinstating the Glass-Steagal Act, or changing the tax code) but in creating a more participatory model for government, a government that actually serves the people, and is actually accountable to the people. Some people are looking at Occupy Wall Street and advocating for a technologically fueled direct democracy. I’m not sure that would work all that well... There are two kinds of tyranny: tyranny of the few over the many (dictatorship, oligarchy, plutocracy) and tyranny of the many over the few (mob rule, total democracy, communism). Our government is designed in some ways to slow down the heat of popular sentiment, to make sure that we don’t start burning people at the stake when their positions become unpopular, to protect the individual from the state. We need to maintain those protections.

One of the reasons that we need to have a government infrastructure is also so that we can all spend our time doing things other than governing ourselves. As Oscar Wilde may or may not have said, “The trouble with Socialism is that it takes up too many evenings.” So we elect officials that take on the job of running the state so that we can work for living and have some time for leisure. Because somebody has to run things around here.

But when we elect officials, we have to believe and trust that they are going to serve our interests, that they are going to work for us. That’s the basis of the social compact between the government and the governed. And our existing government in the United States has broken the trust of many of us. There is a widespread and growing sense that those in positions of authority are far more concerned with their own individual self-interest (whether it’s re-election, lining their pockets, protecting their friends) than they are in doing what is right for the longterm health and prosperity for the majority of the people of the United States. So we’ve seen a trend, for the past 30 years or more, of a society that increasingly favors those who already have the lion’s share of the wealth, as the wealthy, quite obviously and dramatically, get richer, while those at the bottom have less and less. This is not the appropriate result of a representative democracy in which one person has one vote to elect representatives to serve their interests.

One way to look at the history of humanity on this planet is as an ongoing struggle between those who would limit participation, and those who would seek to maximize it. We are now at a moment in history in which our communications technology enables more and more of us to participate, and we need to take advantage of that to insist that our representatives take action that is in our interest.

So I think what is happening here is that more and more people are standing up and saying, “You guys are doing a really lousy job representing me. In fact, you’re letting 1% of the country walk all over the other 99%. And you know what? We want to be more involved. We don’t just want to elect you every two or four or six year and let you start running for re-election the second you get into office. We actually want a government that works for us. And, damn it, if we have to give up some evenings to get that, well, so be it.”

Inevitably, however, this movement will need to begin to advocate for specific popular policy changes. As Occupy Together grows to locations all around the country, and gathers an increasing groundswell of popular support (if that can be sustained) I’d love to see the movement try to maintain both it’s inclination for direct democracy and a desire to respect the existing framework of the Constitution and the government of the United States... by drafting and working to pass a number of amendments to the Constitution to further protect us from our government and provide for better economic equality... whether these are the “fair tax amendment,” the “campaign finance amendment,” or the “full employment amendment,” I don’t know... but it would be great to find a way to change the system directly, without necessarily becoming just another pet issue to propel another party or slate of candidates into office, and begin the cycle of inaction and disaffection all over again.