Organizational Psychology and Innovation

A conversation with Cheryl Reed, Chief Innovation Officer at Dover Corporation This article originally appeared on voltagecontrol.co

This is part of my series on thought leaders in the innovation space.

Cheryl Reed is an organizational psychologist turned innovation catalyst with a passion for people and human behavior. She started her organizational psychology career working in the US Air Force research labs. “As an organization whose strategy was to create game-changing innovation, it was my job to help individuals and teams grow to the next level of innovation.”

Cheryl’s journey with the Air Force gave her a background in leadership development, the dynamics of teamwork, and finding agile responses to challenges with numerous constraints. “Working in the Air Force for 21 years also teaches you how to learn about new organizations very quickly, because you move every two or three years.”

As an organizational development lead for the Air Force research labs, Cheryl focused on developing the organizational structures, people, and processes that enabled brilliant researchers to execute on innovation and outpace competitors. “That was the organizational strategy, so I had to figure out what that meant, what it looked like, and how to develop the people and the processes inside the organization to do it. We started by doing innovation assessments to figure out the innovation readiness for the organization, identify our barriers to innovation and how to get around them.”

Applying her organizational psychology lens in the field of innovation, Cheryl sees the practice as a human behavior puzzle to solve. “The things that keep us from seeing new opportunities are the cognitive biases that we’ve developed based on the muscles we’ve exercised.” Cheryl believes that these cognitive biases are what prevent some of the best companies and teams from seeing innovative opportunities when they present themselves.

“The things that keep us from seeing new opportunities are the cognitive biases that we’ve developed based on the muscles we’ve exercised.”

In innovation, the things that made an organization successful in the past are rarely what makes that organization successful in the future. Those past experiences form a mindset that creates a barrier to becoming something new. “Human beings have biases that open up possibilities or shut them down. Helping us to recognize what our own biases are and reminding each other of what these biases are, turns us into seekers of new opportunity.”

Cheryl sees the work of detecting bias and busting assumptions as a necessity for innovative solutions. She characterizes a cognitive bias simply as a particular way of thinking shaped by habits and enduring belief. Those beliefs can be developed by data, and the more powerful the data, the harder the biases are to change. The key is in testing those biases.

“Say you’re a tennis player who’s won championships ten years in a row. If I tell you I’ve got this great new approach to tennis that’s going to help you become better, one of the thoughts that’s likely to go through your mind is that there’s no one in the world that knows tennis better than you do. You’re probably going to wonder how I can teach you anything.”

Evidence Mapping

To illustrate cognitive biases for teams, Cheryl relies on evidence mapping and activities that bring an individual’s attention to their cognitive biases. One activity Cheryl uses presents participants with three scenarios, each representing a different cognitive bias and asks them to answer questions based on what they see. “We use the tool as an attention-getter. When you’re working with really smart hard-working people, it’s hard to convince them that they don’t have the answers. If you can’t convince them that there are things out there they’re not seeing, it’s hard to get them out of pure execution mode.”

Overapplication of the term innovation creates unintended barriers to change, according to Cheryl. Attempting to equate innovation that creates new value and fulfills an unserved need with an adapted product that was updated to meet new compliance regulations, can halt an organization’s progress in innovation. “The fact that it means so many different things to so many different people makes it easy for people to say they are innovating and keeps them from getting outside of box one and into box three.”

Vijay Govindarajan’s three-box model

By box one, Cheryl is referring to a focus on execution. The verbiage comes from Vijay Govindarajan’s three-box model of innovation. For companies to succeed at innovation, Govindarajan believes they need to look at it from the three boxes:

1. Manage the present
2. Selectively forget the past
3. Create the future

The first box is the execution challenge. The execution engine is a critical anchor to providing the resources, and the ever-changing need to stay alive, vibrant, and healthy. “You’ve got to execute well. Inside that bin, you can be very innovative about productivity, inventory, and supply chain — what’s inside the execution engine delivering to your shareholders. The problem we run into is most companies put 99% of their efforts into box one.”

“The problem we run into is most companies put 99% of their efforts into box one.”

Box two is about forgetting the past. All the things that make an organization successful today get in the way of adopting new things that will keep them relevant tomorrow because they’re consuming so many resources. “If you can’t figure out and get rid of those things you’re doing today, or those beliefs you hold today that are getting in your way, then you’re not going to have the time, resources, and people to pursue and create in the future.”

Box three is non-linear thinking about creating a new future. “Balancing those three boxes is challenging when you’re a publicly-traded company that has to report out to your shareholders every quarter. The urgency becomes delivering on execution. The danger lies in not taking time to figure out what part of your past you need to forget about so that you can free up resources to create a future and then protecting the resources you’re putting into creating that future.

“The danger lies in not taking time to figure out what part of your past you need to forget about so that you can free up resources to create a future…”

Protecting innovation programs and resources is something that often relies on measurement. Cheryl believes the ultimate measurement for innovation is the quality of the relationships created with customers. “If my innovation is new value that customers care about, then it shows them that you care about their success.” How to go about measuring that quality is a work in progress that Cheryl continues to think through.

Measurement is something that evolves as the practice matures. In the early days, Cheryl focuses on activity metrics which she acknowledges are never very convincing. “Then, I think the outcome metrics have to focus on how much you’re learning, rather than how much revenue you’re generating today. One of the things that we need to know is a good inventory of what we’ve learned. If we could focus on understanding what we’ve learned, measuring what we’ve learned, and keeping those learnings readily available, then we become better positioned to take advantage of new opportunities.”

To demonstrate this idea, Cheryl offers the example of a Dover concept called the I-door, a refrigerator door with an embedded media player that could play advertisement videos. “Several customers absolutely loved it, but they couldn’t quite figure out how to use it and how they would pay for it.” The team that created the concept— having realized it could be done from an execution standpoint—patented it and shut down the project due to the lack of demand. Last year, a startup looking to create an advertisement marketplace approached Dover to partner on the product after learning of the patent. “We knew what we knew. We knew where that knowledge was. We knew how to use it. And we were able to then join this company in a new endeavor.” The product went live at the National Retail Federation supported by an advertising marketplace to place and pay for ads that will be displayed on cooler doors in supermarkets or convenience stores using sensors to measure real-time conversion rates for different types of advertising.

Metaprocess

Throughout her career, Cheryl has learned that successful innovation programs depend on identifying the problem the program is trying to solve. “Creating that problem definition must involve key leaders who communicate with each other with an attitude of curiosity and a willingness to learn. Sometimes this is contrary to the decisive, action-oriented style senior executives have had to learn to be successful in their jobs.”

With the problem defined, a hypothesis is created for solving it, and experiments are run to test those hypotheses. “It isn’t a linear process but, rather, a commitment to use your innovation processes on your problem. You use the results you get on each iteration to pivot and try again.”

For Cheryl, well-executed innovation is an inverted pyramid with an organization’s culture at the top, followed by strategy, infrastructure, processes, and tools. She believes getting all of these elements lined up and identifying a target through strategy enables organizations to make some great progress.

“If you’re a traditional company with a strategy to start becoming digital, your rollout roadmap might be to first work on digital internal operations, then digital customer front end, and then digital products for the next three years. If you can keep everyone focused on that, you can make some great progress as long as you know the kind of infrastructure and tools that are going to be most effective in that scenario.”

On the other hand, if the innovation program’s goal is to change how people think that gets “pretty darn squishy.” In this case, it’s even more important to get clear on what problem you’re trying to solve. “It’s challenging getting leaders to commit to a focus area, or to commit to a problem they want to solve. Because every time they get focused on a problem, they want to solve, something comes up that causes some rethinking and re-vectoring. It’s easy to lose focus.”

At Dover, Cheryl deconstructs the problem that an innovation program solves. “I ask myself if we are fixing the difficulties of adapting to the rapid pace of change? Are we fixing the challenges we are having keeping our customers engaged? Are we fixing the possibility that our product could become commoditized in an environment where people want experiences?”

Once the problem is identified and cleaned up into its more basic form, organizations can determine how innovation brings value. “You can’t just use these processes to solve the problems that your customers are bringing to you. You’ve got to use them on yourself.”

In innovation, there is no clear path from start to finish. In place of a silver bullet solution, Cheryl sees skills, attitudes, and practices that need to become part of innovation work. “Tools can help along the way by getting people engaged and establishing a common language, but if you let the tools define your program, you will fail in creating culture.”

“Tools can help along the way by getting people engaged and establishing a common language, but if you let the tools define your program, you will fail in creating culture.”

Open innovation

Cheryl’s favorite innovation success story began with the Department of Defense’s need to reclaim millions of dollars in fuel contaminated by flame-retardant foam following a fire. Civil engineers who looked at the problem decided it couldn’t be done, so the project was deprioritized and put out onto an open innovation platform with a tiny $10,000 budget.

“Within six months the ideation team had a prototype out in the field that was able to reclaim the fuel to a purity level that it could be used in jets. The total payout was $60,000.00 to the ideators. If we had hired a company to develop a solution, it would likely have taken years, because the whole process for putting out an RFP and developing the solution would have cost millions of dollars. Interestingly, the people who proposed the solution were not civil engineers; they were not Defense Department-type people; they were not American. We debunked a lot of different beliefs. People who participated in that became huge believers in open innovation.”

On the flip side of success, stories of failure often teach us the most. Most of the failure Cheryl has experienced has been around losing focus when there is an abundance of distractions or a lack of clarity on what outcomes to pursue. “I continually ask myself what leadership looks like under the current circumstances. How have others successfully navigated circumstances like those I am facing?”

One of the biggest challenges she’s explored is combining front-end processes with a team under pressure to execute. “Consistently, in our first year of operating, we had senior leaders present important efforts on which to execute and instruct us to do some due diligence thinking through it, deconstructing the problem, looking at options. And then they’d say we need to deliver this new capability to customers in six months. Those two pieces cannot peacefully coexist on the same team.”

Cheryl finds one of the biggest mistakes is trying to combine box one and box three activity into a single effort. “You don’t want teams to be experimenting when the house is on fire. You want to be experimenting when there’s some safety and where you can experiment without alienating customers, without interfering with your execution engine.”

Maturing innovation practices

Cheryl is excited when she hears or sees more consistent use and understanding of different processes, tools, and language around innovation. These are clues that lead her to conclude that the practice of innovation is maturing. “I think consistent use of language is what differentiates a nascent discipline from a maturing discipline. Some agreement about what works and what doesn’t. We’ve got to first anchor in a certain language so that when I say innovation vitality index and you say innovation vitality index, we’re talking about the same thing. I’m seeing more agreement than I have in the past.”

She sees this consistency in the literature that she reads in Harvard Business Review, LinkedIn blogs, and in conversation with other innovation leaders. One area she’d like to see this maturation expand is through the presence of more academic-style conversations on innovation at conferences built around the topic.

These academic conversations are better equipped to spread the learnings of organizations who seem to be getting innovation right. From the 50,000 foot view, Cheryl finds those to be the organizations who take the time to clearly define what they are trying to achieve, to align their organizations around a shared definition and approach, and stick with it through the ambiguity and uncertainty are the ones who produce valuable (though sometimes difficult to measure) results.

If you want to read my other articles about innovation experts and practitioners, please check them all out here.

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