Business & Economics

Why innovation dies

Steve Blank

Faced with disruptive innovation, you can be sure any possibility for innovation dies when a company forms a committee for an “overarching strategy.”

I was reminded how innovation dies when the email below arrived in my inbox. It was well written, thoughtful and had a clearly articulated sense of purpose. You may have seen one like it in your school or company.

Skim it and take a guess why I first thought it was a parody. It’s a classic mistake large organizations make in dealing with disruption.

The Strategy Committee

Faculty and Staff:

We believe online education will become increasingly important at all levels of the educational experience. If our school is to retain its current standards in terms of access and excellence we think it is of paramount importance that we develop an overarching campus strategy that enables and supports online innovation.

We believe our Departments play an essential leadership role in the design and implementation of online offerings. However, we also want to provide guidance and support and ensure that campus goals are met, specifically ensuring that our online education efforts align with our mission, values and operational requirements.

To this end, we are convening a Strategy Committee that is charged with overseeing our efforts and accelerating implementation. The responsibilities of the group will be to provide overall direction to campus, make decisions concerning strategic priorities and allocate additional resources to help realize these priorities. Because we anticipate that most of the innovation in this area will occur at the school/unit level we underscore that the purpose of the Strategy Committee is to provide campus-level guidance and coordination, and to enable innovation. The Strategy Committee will also be responsible for reaching out to and receiving input from the Presidents Staff and the Faculty Senate.

The Strategy Committee will be comprised of Mark Time, Nick Danger, Ralph Spoilsport, Ray Hamberger, Audrey Farber, Rocky Rococo, George Papoon, Fred Flamm, Susan Farber, and Clark Cable.

A Policy Team, which is charged with coordinating with the schools/unit to develop detailed implementation plans for specific projects, will report to the Strategy Committee. The role of the Policy Team will be to develop a detailed strategic framework for the campus, oversee the development of shared resources, disseminate best practices, create an administrative infrastructure that provides consistent financial and legal expertise, and consult with relevant campus groups: and the the Budget Office. The Policy Team will be led by two senior campus leaders, one from the academic side and one from the administration side.

We are extremely pleased that Dean Tirebiter has accepted the administrative lead role of the Policy Team. Dean Tirebiter brings to this position a deep knowledge of the online environment.  He will be helping to identify a member of our Faculty to serve as the academic lead of the Policy Team.

The Strategy Committee will be meeting for a half-day retreat at Morse Science Hall in the coming weeks to begin work. We will be sending out an update to faculty and following this retreat, so stay tuned for further updates.

Sincerely,

President Peter Bergman

We can figure it out in a meeting

The memo sounds thoughtful and helpful. It’s an attempt to get all the “right” stakeholders in the room and think through the problem.

One useful purpose a university committee could have had was figuring out what the goal of going online was.  It could have said “the world expects us to lead so lets get together and figure out how we deal with online education.”  Our goal(s) could be:

  • Looking good
  • Doing good for all [or at least citizens of California]
  • Doing well by our enrolled students
  • Fixing our business model to fix our budget crisis
  • Having a good football team — or at least filling the stadium
  • Attracting donations
  • Attracting faculty
  • Oh and yes – building an efficient, high quality education machine
But the minute the memo started talking about a Policy Team developing detailed implementation plans, it was all over.

The problem is that the path to implementing online education is not known. In fact, it’s not a solvable problem by committee, regardless of how many smart people in the room. It is a “NP complete” problem – it is so complex that figuring out the one possible path to a correct solution is computationally incalculable. (See the diagram below.)

If you can’t see the diagram above click here.

Innovation dies in conference rooms

The “lets put together a committee” strategy fails for four reasons:

  1. Online education is not an existing market. There just isn’t enough data to pick what is the correct “overarching strategy”.
  2. Making a single bet on a single strategy, plan or company in a new market is a sure way to fail. After 50-years even the smartest VC firms haven’t figured out how to pick one company as the winner.  That’s why they invest in a portfolio.
  3. Committees protect the status quo. Everyone who has a reason to say “No” is represented.
  4. Dealing with disruption is not solved by committee. New market problems call for visionary founders, not consensus committee members.
My bet is that there will be more people involved in this schools Strategy Committee then in the startups that find the solution.

In a perfect world, the right solution would be a one page memo encouraging maximum experimentation with the bare minimum of rules (protecting the schools brand and the applicable laws.)

 Lessons learned

  • Innovation in New Markets do not come from “overarching strategies”
  • It comes out of opportunity, chaos and rapid experimentation
  • Solutions are found by betting on a portfolio of low-cost experiments
    • With a minimum number of constraints
  • The road for innovation does not go through committee
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Comments to "Why innovation dies":
    • Fred M Beshears

      Steve,

      It may interest you to know that Berkeley once had a committee eerily similar to the one you describe.

      In 1994, Chancellor Tien established the Campus Computing and Communication Policy Board, which became know as the CCCPB or, in lighter moments, the Supreme Soviet.

      The CCCPB formed a number of committees including one that was to provide guidance on instructional technology policy. This committee had an even more impressive acronym: the CCCPB-IT committee. Now that I’ve retired, I can laugh and poke fun. But in 1994, I staffed the CCCPB-IT. It was co-chaired by mechanical-engineering Professor Alice Agogino and the head of Information Systems and Technology (IS&T) Jack McCredie.

      Although I had little policy experience at the time, I was selected to staff the CCCPB-IT because I happened to be the Assistant Director of the Instructional Technology Program (ITP). In those days, ITP was a very small faculty-directed program that was part of Information Systems & Technology. I started work with ITP in 1987, well before the advent of the web. And, in 1994 (still before the web came to Berkeley), ITP worked with early adopter Berkeley faculty, conducted multimedia training workshops, developed educational software (e.g. HyperCard stacks), and sponsored forums that brought in early adopter faculty from other schools. The latter was a deliberate attempt to get the more traditional faculty to take an interest in instructional technology and innovative ways of teaching.

      The CCCPB-IT committee did do a number of useful things. It developed Information Literacy Expectations for Effective Use of Instructional Technology (1997-98). In coordination with the Divisional Council of the U.C. Berkeley Academic Senate, it conducted a survey of faculty needs regarding instructional technology. It initiated CyberSemester, a theme semester built around computation and the Internet in 1996/97. And, it developed and implemented a plan for developing and managing course websites (1998-2000). Part of this plan was to establish an enterprise-wide Learning Management System for the Berkeley campus. Professor Agogino stepped down as co-chair of the CCCPB-IT committee in 2001. For a year or so after that, the CCCPB-IT was chaired by Statistics Professor Philip Stark.

      Starting in 1998, my work with ITP had been to establish the first campus-wide LMS service using the low-end (cheap) versions of Blackboard and WebCT. We started providing course websites to faculty during CyberSemester at the request of Jack McCredie. In 2000, ITP finally received substantial funding to establish the first enterprise wide system for the Berkeley campus. Before this, ITP had developed the campus-wide LMS service as an unfunded mandate with a very small staff: initially we only had two part time students and me. Just before 2001, we were able to get temporary funding to hire a full time person to staff the help desk.

      In those days, ITP was like your quintessential small entrepreneurial firm. However, in 2001, just as the central campus LMS service was transitioning from an unfunded to a funded mandate, ITP was moved out of IS&T and subsumed by a larger unit: the Office of Media Services. The merger of the two units is now called Educational Technology Services (ETS), and it is headed by the person ETS initially hired to take over my position as staff to the CCCPB-IT and to manage the central campus LMS service: Mara Hancock [Editor's note: Ben Hubbard current serves as Interim Associate CIO, Academic Engagement & Director of Educational Technology.]

      So, to return to your question: Why innovation dies? Based on my experience, it is possible for disruptive innovation to occur even after an institution forms a committee to recommend policy. However, I don’t know if the history of how the central LMS service came into being at Berkeley would provide much encouragement to would-be entrepreneurs there. Nevertheless, it does show that disruptive innovation can occur, even within the context of a highly successful, deeply entrenched, incumbent institution.

      Best,
      Fred

      [Report abuse]

    • steve blank

      A few thoughts:

      Problem
      The Education business model is one of a service industry:
      • There are no economies of scale
      • The service providers (professors) are highly compensated to keep them on campus vs. leaving for industry.
      • For the last 100 years there hasn’t been any substantial increases in productivity.

      Inflection Point
      For the first time in a century, education may finally be at an inflection point for changing it’s business model.
      • Tablets + bandwidth now allow video-on demand education to be portable
      • Education software “platforms” now allow course development to be a tool not a coding problem
      o Automated quizzes and tests
      o Asynchronous/on-demand
      o Crowd-learning in group forums
      o New pedagogies – flipped classroom, hybrid learning, etc,

      Situation
      The core competence of the U.C. system and Berkeley in general:
      1. We select for and have assembled a world-class faculty.
      2. We select for and attract high caliber students that match our faculty.
      3. We certify the degree programs of how students learn.

      The sum of all three equals the reputation of U.C. Berkeley.

      The problem is that as a public university we can’t match the 6:1 faculty ratio of a Stanford (we’re closer to 18:1). Our funding problems are well known. Stanford can afford to have an on-line strategy that limits its faculty to stay within a Stanford sanctioned box (via Coursera.) They have no interest in having 100,000 of thousands of students actually getting a degree online and potentially diluting their brand.

      Opportunity
      Our calculus is different than Stanford. While we have a brand as good as Stanford (and internationally perhaps better,) we are broke and in crisis.

      Crisis often forces us to confront the fact that the status quo no longer works. That solution by committee will only get us more of the same.

      Berkeley has the opportunity to use it’s brand to do exactly the opposite of Stanford.

      Instead of a walled garden of an elite that can only be accessed via campus, Berkeley should run a series of fast, quick and innovative experiments that uses its brand to reach as many students world-wide as it can.
      Berkeley should become the campus for the world.

      10 million students in 10 years.

      steve

      [Report abuse]

    • Gene Rochlin

      Thank you, Steve. It’s hard to believe that after all the examples of truly creative innovation that characterize the Bay Area anyone could think that innovation could be ‘promoted’ by creating a ‘strategic fromework’ for the campus. Indeed, the excess of committees doing strategic planning is one of the major problems of this increasingly bureaucratized institution. One can only hope that they retreat literally from this notion, which would, of course, be a full-fledged strategic retreat.

      [Report abuse]

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