Innovation in the Rainforest?

I was recently invited to speak at a 3 day workshop on innovation entitled ‘Rainforest Architects,’ sponsored by Greg Horowitt and Victor Hwang, partners and co-founders of T2 Venture Capital, and co-authors of the book The Rainforest – the Secret to Building the Next Silicon Valley.  The conference sought to build on the themes of the book, which examines the metaphorical contrast between the well-manicured order of the plantation, and the chaos of the Rainforest.  The plantation represents our disciplined, ordered, and (relatively) well organized economy.  Break-through innovations have been the equivalents of weeds that have somehow been able to flourish– weeds that traditional businesses and organized economies normally reject. “While plants grow most efficiently on farms, weeds sprout best in Rainforests.”

The workshop was held in Silicon Valley, since Silicon Valley is the Rainforest they describe, having become a hot bed of innovation and creative ideas that in most cases, were rejected by the ‘plantation owners’ in the US economy of  15, 20, 25  years ago. Many of those plantation-like businesses are now defunct, but the best and strongest weeds, the Googles, the Facebooks, and others have transformed their industries, and arguably our world.  The plantation model still works for efficient implementation and ‘harvesting’ of proven ideas, but the chaos of the Rainforest is where the new ideas, the ‘weeds,’  grow and flourish, and where the best and strongest can prove themselves.

Given that the Rainforest is chaotic and disorganized, I was asked to bring in the perspective of another culture – the Navy SEALs – which has thrived and succeeded in the chaos of the battlefield.  Since SEALs often speak of themselves as ‘masters of chaos,’ and have thrived as a weed within the well-ordered plantation of the Navy,  Greg  wanted the business entrepreneurs  attending this workshop – his Rainforest Architects –to hear from a representative of this successful military ‘start-up’ which has gotten so much attention lately.  And through a couple of mutual friends, he was connected to me.

I was asked to speak on ‘comfort in chaos,’ and I did – generally noting that we should never be ‘comfortable’ in chaos – instead, we should seek to be as well prepared as possible, and when in chaos, stay very, very alert and tuned in, and look hard to find the patterns. SEALs and other SOF train hard to master the chaos of the battlefield by being better prepared and better trained than anyone else in the gunfight, and they mitigate risk by planning and preparing for things to go wrong. We talked about managing luck, good and bad, and becoming more resilient by purposely spending a lot of time outside of our comfort zone, but trying to stay within our safety zone.  After examining my experience and preparing the themes I wanted to address, I found many of the same ideas better expressed– but without the SEAL or military connection – in two books:  Great by Choice, by Jim Collins, and The Icarus Deception by Seth Godin.    I think I led a good discussion with the Rainforest Architects, but we didn’t get specifically to ‘innovation’ as I had hoped. The topic of positive innovation, and creative thought, individually, organizationally, and socially continues to fascinate me.

The reading I did on ‘innovation’ struck me a lot like the reading I have done on leadership: it is a very broad topic, a bit mushy (which I like), there are a number of different models that have succeeded, and innovation and leadership both must adapt to culture and context to succeed.   I found many formulae for enhancing one’s own innovative spirit and personal creativity, formulae for leaders and organizations to foster innovation within their companies/teams, and how innovative teams, often called ‘skunk works’ (check out the etymology)  can organize themselves to best nurture that great idea that will transform their organization, society, or the world.  I also found interesting material about when NOT to innovate, and when to hunker down with the tried and true.   But what I found most insightful were the ideas in Greg and Victor’s Rainforest book and workshop, emphasizing  the need for a supportive ‘economic ecosystem’ to ensure that  great and innovative ideas don’t die on the vine (as many do), but get traction, gain momentum, and have a positive and enduring impact.

The Rainforest Architect approach emphasizes the social and personal relationship piece of the innovation process, and less the scientist working alone in a lab who (for example,) may develop a cure for diabetes.  Greg and Victor make the point that money is not the primary driver for most successful innovators, nor for their supporters , a point also made by Simon Sinek in Start with Why, and Daniel Pink in Drive, among others.  Money and capital are certainly an important part of the process, but their point is that passion and zeal for the idea and the impact it can have, are the primary drivers in most great innovations – not the drive to get rich.  Start with a great, or even pretty good, idea, add passion and zeal on the part not only of the creative, but also the support team, throw in strong business skills, trust between the players, and an economic ecosystem that supports innovation, and the money will naturally follow.

In short, Greg and Victor’s Rainforest message is that ‘it takes a village’ to foster and sustain innovation, and that ‘village’ can be social, entrepreneurial, business, and scientific networks spanning the globe.  That village needs to promote collaboration and trust, and create a space for ideas to come together, and in the words of Matt Ridley, ‘have sex.’  It is a complicated process, and the roles of biology, human relationships and a support community have been undervalued in understanding the innovation process.  A few short quotes from The Rainforest – the Secret to Building the Next Silicon Valley give you a sense for the key messages I took from the book:

-          To understand Silicon Valley, we must think of its people as a living biological system, not the sum of its individual components. P271

-          Successful innovation requires the labors of a vast ecosystem of executives, engineers, salespeople, advisors, consultants, venture capitalists, angel investors, accountants, landlords, lawyers, marketers, bankers, supportive friends, and countless others. Page 82

-          The secret recipe of Rainforests…is about people and how they interact with one another. P64

-          Rainforests have replaced tribalism with a culture of informal rules that allow strangers to work together efficiently on temporary projects. P116

-          The informal rules that govern Rainforests cause people to restrain their short-term self-interest for long-term mutual gain. P121

-          Rainforests like Silicon Valley have developed ways to foster communication, trust, and collaboration among very different kinds of people.  P111

-          Leaders in the Rainforest must learn to engineer serendipity, not outcomes. P275

In preparing for my participation in the workshop, I got a feel for the extensive literature and breadth of thinking on innovation, not only individual creativity, but also how organizations and social and economic ecosystem can foster it.  Exploring the process that leads to breakthroughs that propel our individual, organizational and socio-economic lives forward is a fascinating new world for me.  Clearly, we need analytical, systematic, and plantation-owner thinking in most aspects of our lives, and most of us spend our lives living and working in the well-organized and comfortable world of our (metaphorical) plantations.  But the world of the entrepreneur, the venture capitalist, the start-up, and the innovator is different.   As Greg Horowitt and Victor Hwang write, there are great insights to be gained by purposely (and courageously) walking out into the Rainforest, and seeking to learn from the chaos and innovation in nature, and considering what those processes might teach us as we try to foster an economic ecosystem that gives new and innovative ideas a chance to prove themselves.

Note and Postscript:  The values that the book espouses are of particular interest to me as someone who (still) teaches business ethics.  They are generally consistent with a new movement by successful entrepreneurs and thought leaders like Bill Gates (‘Creative Capitalism,) Michael Porter (‘Shared-Value Capitalism,’) John Mackey (‘Conscious Capitalism,’) and others.   You can read, comment on, and/or endorse the Rainforest Social Contract at http://therainforestbook.com 

The Single Measure of Merit: Profits and Grades

Be careful of the ‘single measure of merit.’  We have a tendency to seek simple criteria to judge whether something or someone is successful or not.  In business, it might be profit; in politics power; in school, grades and the GPA; in work, pay or promotion; in the military, killing the enemy; in sports winning.  Not that these are unimportant – but ‘success’ is more complicated than that, and other things may be more important.   Frequently these single measures are useful tools, but they can be deceptive – they are often means to other ends, which are usually more important.   If not pursued with wisdom, these intermediate goals – the means – can undermine the ends which they are meant to serve.

Now let’s talk about profits and grades.

In business, profits are clearly important, but they are not an unqualified good, and many argue that they are not the primary goal of business.  There are other criteria that must be considered in evaluating business success. Though profits are necessary, they are not a sufficient condition for judging business success. 

While businesses often measure their success at the end of the quarter in profits, students similarly often measure their success at the end of a semester by the grades assigned by their professors.  We know that the quarterly profit and the student’s grade tell us something, but they don’t tell us everything.  They may not even tell us the most important things.

Is the purpose of a business primarily to make a profit, and ideally, to make a very good profit? Or is it something else?  Are profits a means to another end?  Milton Friedman made the provocative statement that the purpose of a business is to make a profit.   Advocates of Corporate Social Responsibility (CSR) respond that the purpose of a business is to create goods and services in a way that serves the needs of society, and to be well rewarded for doing so.  They claim that profits are a by- product of and reward for doing something else well.   

Is the purpose of taking a class to get a passing grade, and ideally to get a very good grade? Or is it something else?  For some students, some classes are merely a hurdle to get over to get something else -   a mere means to another end.  Most of us believe however that taking a class should serve a broader purpose – to better understand the subject matter, how the subject matter relates to the student’s broader life goals and other areas of interest.   In that case, taking the class and getting a passing grade are a means to a broader end. 

I think you may see where I’m going with this.  If the student focuses on learning, works hard, and becomes engaged with the subject matter, ideally s/he will get a good grade as a matter of course. But if the student comes to better understand the subject matter, learns how the subject is important in a broader context, but doesn’t get the grade s/he wanted, the student can still view the class as a success in meeting that broader goal.  That said, a poor or failing grade, which does not allow the student to progress, can become a serious liability to continuing one’s education and learning.  Students cannot ignore grades and still serve their broader goals.

Likewise in business, by providing a great service or product to one’s community and customers, most companies will indeed be profitable as a matter of course. But even if fantastic profits don’t ensue, the business that is meeting its broader goals can still be considered successful, as long as it meets its financial commitments.  But as with learning, if the business doesn’t take care of the ‘business of business,’ it can lose money and ultimately fail, no matter how good its product/services and support to stakeholders.

In both business and school, there are certain practical functions that have to competently managed in order to achieve desired profits or decent grades. In business, these include marketing, accounting, legal compliance requirements, and building and sustaining positive relationships with employees, customers, and the supply chain.  In academics, these practical functions include reading and research, writing, critical and disciplined thinking, time management, etc. In both fields, performing these practical skills poorly will lead to failure, no matter how much passion, integrity, service, and long term focus one has.

In business and in school, there are people with natural aptitude and talent – for getting good grades in school or making money in business.  It comes relatively easy for them. There are business people who can make money without passion or a quality product or service, or strong business processes. Some people just know how to play the business game well to make money.  And in school, there are students who are intelligent and efficient and have a natural gift for figuring out how to meet professors’ expectations without seriously engaging with the material or even learning much.

 And, there are others in business who work hard, with great passion, and provide great products and service, but just can’t seem to make a strong profit.   Likewise, there are students who are positively transformed by the class and the subject matter, but somehow struggle to put things together with all the fundamentals necessary to play the grade game well and come up with an A, no matter how hard they seem to work.  It isn’t fair.  Life isn’t fair.  There are some for whom things come easy, and there are others who always seem to struggle to keep their heads above water.

Just think of athletics.

But then think of character.

Under stress, the business person for whom profits are everything, will be sorely tempted to fudge the books, lie or tell half truths to customers, or otherwise violate ‘the rules’ of the game to achieve their primary objective – profits and the trappings of success.  Those who keep a broader primary goal in mind will see violating the rules to maximize profits a violation of trust with their customers, employees, supply chain and others.

Likewise under stress, the student for whom the grade is all important, will be sorely tempted to plagiarize or otherwise violate the rules of academic integrity to get that A, and maintain a high GPA.  Those focused on learning will take their lumps with lower grades if they are struggling or under stress, but they will stay focused on the learning itself.

The ideal in business is that the business with the best product and services, the best support to customers and supply chain, and respect for environmental impact will also be the most profitable. We know that is not always the case. Sometimes it’s because of inadequate attention to the business processes necessary to maximize efficiency and profitability.  Sometimes the market is not ready for their product/service; sometimes competitors may just have greater talent for business.  And sometimes the playing field is not level. And some people get away with lying and cheating. Life isn’t fair.

The ideal in school is that the student who is most engaged, puts in the most work and learns the most, gets the best grades. We know that is frequently not the case. Sometimes it’s because of inadequate attention to the mechanics of research, writing, engagement with the professor’s objectives, or a disconnect between what the student wants to focus on and the professor’s approach. Sometimes other students are simply more talented and intelligent.

But in business and in school, the Quality End we seek is not measured primarily in profits or grades.  Both profits and grades are necessary, but as means to other ends.  If the businessman and the student stay focused on the right goals, while still giving adequate attention to the means, in the long run, success will usually come their way, even if there are some short term failures.

Let’s return to the ‘single measure of merit.’  The message is: Be careful not to confuse means and ends.   You’ve heard the old saying: Be careful of what you want, you just might get it.  Knowing the right thing to want is very important.  Aristotle once said that the clever person knows how to get what he wants. The Wise person knows the right things to want.

Ideally, we want to be both wise and clever.  Given a choice, I’d rather be wise.

A Business Ethical Bridge Too Far?

I am struggling with how best to teach my Business ethics course in the Master of Science in Global Leadership program. I find ethics fascinating – the struggle over the nuances of principle, of choosing between conflicting principles, the weighing of potential good consequences against complying with principle, and applying critical thinking to complex decisions involving human values. I also find fascinating the interplay between culture and ethical values, and how people from very different cultures and backgrounds struggle to find common ground for ethical decision making. Yet I’m finding that many people DO NOT find these topics as fascinating as I do.

I’m finding that a majority of my students are of a very practical mindset. These are good, intelligent, hard working, and moral people, who want to make themselves better, who want to succeed in their lives AND serve their communities. Most students have chosen to study for a graduate degree in business in order to acquire skills and knowledge which they hope they can apply to problem solving relevant to their lives. In other words, they want a good, practical business education. They frequently struggle to see where philosophical ethics fits into that objective.

I sometimes think that we (I and my teaching partner) may be trying to do too much in the course we teach. We introduce our students to the foundations of Western ethical thinking (principle or duty based thinking, consequentialism, and virtue ethics), we introduce them to the fundamentals of the debate regarding the ethical responsibilities of business in society (free market capitalism and corporate social responsibility,) and we introduce them to the role of culture in shaping business values. We ask them to apply all of this in analyzing case studies in which multi-national corporations confront difficult dilemmas in doing business in countries with very different histories, cultures, and political-economic structures. Our students with the strongest undergraduate backgrounds, and who have the greatest aptitude for dealing with issues that have no clear answers, love it, thrive and do well. However many seem to finish the course at least somewhat overwhelmed and confused, with their most important take-away being: “Right and Wrong are not as simple as I thought. There are a number of factors that must be considered, and good people can disagree.” Sometimes I think this may be a sufficient take-away; other times I’m not so sure.

I recently met with some of my colleagues who also teach ethics and we discussed whether and to what degree philosophical ethical theory should be included in applied ethics courses. I was surprised to learn that several had come to the conclusion that theory should not be taught up front (as we do in our course) but should emerge after looking at practical cases. In other words, they argue that the fundamentals of theory should be distilled out of struggling with real cases. I have another friend who begins her ethics class with the WIIFM principle – What’s In It For Me? – knowing that this is an explicit or implicit question that practical students always ask. Not only what is it to be ethical, but why be ethical? Indeed this is the fundamental question that underpins Aristotle’s virtue ethics. She tells me that she believes her approach resonates well with her students, that it is effective in helping them to see the ethical issues and make good decisions, and she barely touches ethical theory.

One of my mentors outlined 5 sequential steps that he believed lead to the development of ethical thinking and action: First, ethical awareness, second ethical reasoning, third ethical decision making and action, fourth ethical responsibility, and fifth achieving ethical results (in other words, good consequences, which we all want.)

I wonder whether the minimum objective of an introductory business ethics course should simply be developing ethical awareness. If so, then our goal would be to AT LEAST enhance students’ critical thinking skills to the point that they recognize that there are ethical issues associated with many business decisions. My IDEAL would be that students also develop some of their ethical reasoning skills to where they are able to apply them to dilemmas in international business cases, are able to make better and informed decisions, and are better able to understand and take responsibility for their decisions. Is this a bridge too far?

Being a ‘good person’ and having good intentions usually aren’t enough to help one understand and deal with the complex confluence of cultural values with the demands, rights, and perceived entitlements of a large number of stakeholders in a business decision. Awareness of the ethical implications of many business decisions, and the critical thinking required to dissect ethical dilemmas into various components and perspectives, are indeed ‘skills’ that DO have utility in the business world. These ‘skills’ can help a business leader to navigate tricky waters to achieve better outcomes, avoid doing unnecessary harm, and perhaps, even stay out of jail.

I am beginning to believe that we spend too much time on ethical theory, or at least more than necessary to meet reasonable objectives in our short, introductory course. I’m thinking we should spend less time on theory, and more time on critical thinking, and seek primarily to develop and refine the practical analytical ability to identify the ethical issues associated with business decisions in the global market. Is it a ‘bridge too far’ in an introductory course in business ethics to ask students to rationally and effectively apply ethical theory to complex business issues, and then justify and assume responsibility for their decisions? I don’t know. That IS a lot.

And I still wonder to what extent ethical theory important is useful in an introductory course on ethics for global business. I continue to struggle with how best to teach this course to make it work well for most students, not just the few who already have an aptitude for critical thinking about values.