“We need a fresh perspective,” the C-level executive ruminates. “I need to bring in some outsiders.”
This powerful myth — that outside people can see a situation anew and deliver crucial insights — has a strong basis when it comes to outside experts. Advisors and consultants with deep knowledge can provide new insights. But the myth that non-experts can make appropriate and powerful changes to an organization can lead to hiring people who take a long time to train so they have the requisite expertise to operate effectively. The worst case is that an outsider can take an organization down the rat hole.
This myth recently came under scrutiny in a blog post by Erin Griffith on PandoDaily. She recounts the stories of a few tech innovators who humbly credit their insights and success to their naïveté. The myth is that, unencumbered by history and tradition, their insights could flow, unhindered by a bag full of history and hammers around their proverbial windpipes.
As Griffith writes:
The problem is there’s a lot of backstory to these tales of disruption that doesn’t get told. . . . [for one VC firm,] the decision to back a company is just as much about the founder as it is about his or her background and how it led up to that moment.
That is, having an idea is fine, but unless you have a legitimate and deep background that makes your insights plausible, workable, and sustainable, you’re just someone with an idea. Acquisitions are a smart way to bring in expertise and innovation — iTunes was created when Apple acquired SoundJam MP and brought the experts who had created it aboard when they relabeled it iTunes. To succeed as an innovator, you have to have the right kind of experience.
Peter Thiel’s famous question about innovation — “Do you have a secret?” — has a bearing on the issue of innovation. It means, as Griffith writes:
. . . do you know something about this industry, or market, or product, that no one else does?
When Apple bought SoundJam MP, they were buying SoundJam MP’s secret.
Let’s contemplate this for a moment, because it’s pivotal. For you to know something about an industry that nobody else does requires more than just dumb luck, as the recent attempt to inject the former developer of the Apple retail stores into the JCPenney brand revealed. On the surface, a store is a store, retail is retail. But selling high-end, high-demand, and high-design electronics is very different from selling household goods and basic clothing necessities at reasonable prices and in convenient locations. JCPenney shoppers are looking for low prices and complete inventory, as one shopper noted after the failure of the new CEO culminated in his resignation recently:
. . . the J.C. Penney brand, to me, meant that I could find my basic things — t-shirts, jeans, kitchenware and more — in the right size/color, virtually all the time. I don’t want Martha Stewart-looking stuff.
Whatever you need to do, you have to keep the current business going while you are experimenting with your new one. He didn’t do that. What he did was put a bullet hole in his current business and went about trying to create a new one.
The results of bringing in someone from outside the industry for JCPenney were disastrous — $985 million in losses, 25% sales declines, 57% lower stock values, and dissatisfied core customers. They ultimately apologized for the fiasco and brought back their former CEO.
Outsiders can’t know an industry immediately, and bringing in a naïve outsider can usher in the wrong beliefs and skills — in JCPenney’s case, the person they brought in was strong in design and aesthetics, but those were not things that were going to save the retailer. JCPenney rises or falls based on discounting and reliable inventories, not style. They needed someone who understood discounting and distribution well enough to innovate in it.
I’ve experienced this myself in a mild way. Having spent 15 years doing editorial and publishing work in the medical specialties, I moved to a surgical specialty a little over three years ago. There are many obvious and subtle differences between surgery and medicine, including how important research is, how industry and physicians relate, levels of autonomy, how trials are designed, and so forth. My first exercise was to understand the market, so that within six months, I had a strong sense of our customers and their needs. Even with that, it’s been sobering how long it takes to really understand a field.
Another side-effect of the executive belief that “life is elsewhere” is that staff members aren’t utilized in transformational efforts. In the pigeonholing that can take place between HR and executive leaders, staff can be overlooked. After all, these people have job descriptions, roles, responsibilities, and performance evaluations — how could they possibly be relevant to an exciting new initiative or even develop an interesting new idea?
Too often, staff are taken for granted, even though they may have skills, abilities, knowledge, and perspectives that would lead to innovations. I remember searching for a solution for months using outside consultants and endless meetings. Then, one day, talking about the problem with a low-key long-term employee at his cubicle, he made a suggestion that not only solved the problem conceptually but gave me the actual person with the answer. I’ve seen people who I thought only did one thing reveal entire swaths of their careers I never knew about when a new initiative took hold. Some people are doing things as a hobby or personal passion that might matter. It’s hard to know. But looking inside is as likely to work as looking outside. The trick is to avoid the naïf.
Staff have earned their secrets about the industry. They may know something you need to know, or have a point of view that might save your organization thousands of dollars or hours. Don’t forget about them. Don’t let the myth of the naïve innovator seduce you — how could they know any secrets at all? Instead, look to the people closest to you on a daily basis. Build a baseline of shared customer knowledge, then ask them for their insights from there. They know some secrets about the future.