00:00:10
so Christian Carl
00:00:13
um I guess the obvious question to kick
00:00:15
off with is what is an innovation
00:00:17
tournament
00:00:19
um and why do you use the word
00:00:20
tournament in the title of your book
00:00:23
so we think of innovation basically is
00:00:26
creating matters between Solutions and
00:00:28
needs and the tournament is a process
00:00:31
that basically does this consistently
00:00:33
for many ideas that are going through a
00:00:36
process and there are only two parts to
00:00:38
that Innovation process the first one is
00:00:40
creating or identifying the ideas the
00:00:43
opportunities but then the second one is
00:00:45
the selection piece so you have to pick
00:00:47
the best ones to move forward and that
00:00:49
is very much like the World of Sports
00:00:51
where people athletes are competing
00:00:53
against each other to see who's going to
00:00:55
win the race
00:00:58
it in full disclosure there's also a
00:01:01
topic in economics academic economics
00:01:04
called tournaments and it is it does
00:01:06
fall into that academic domain as well
00:01:09
okay so um we're going to get into the
00:01:13
kind of mechanics I guess of what an
00:01:15
innovation tournament consists of but
00:01:17
perhaps before we do that um could I ask
00:01:19
is is there a specific audience that you
00:01:22
have in mind for this book um or is an
00:01:24
innovation tournament something that any
00:01:26
organization could and and should do
00:01:31
well we definitely wrote the book for a
00:01:33
practitioner audience as opposed to an
00:01:35
academic audience and the book is really
00:01:37
very much a how-to manual if you I was
00:01:41
I'm really surprised by how broad the
00:01:43
audience is I was actually spending the
00:01:45
weekend with my 85 year old mother and
00:01:48
uh she said oh yeah you know that draft
00:01:51
you sent over uh we I've actually been
00:01:53
applying that Innovation tournament
00:01:55
method uh to an online course that I'm
00:01:58
developing she's a retired history
00:01:59
Professor I thought wow if it works for
00:02:02
history professors it probably works for
00:02:04
any organization
00:02:07
so this is really not meant to be a
00:02:09
management book where you have to have
00:02:11
do you have to be the vice president of
00:02:13
innovation to to be the redox support
00:02:15
this is both in terms of who we are
00:02:18
addressing it to as well as comfortable
00:02:20
audience we had in mind when we were
00:02:21
writing this is a book for everybody who
00:02:23
wants to be Innovative there could be a
00:02:25
high school teacher or it could be a
00:02:26
senior executive
00:02:28
okay
00:02:29
um perhaps we could outline um again
00:02:32
before we get into the meat of the book
00:02:34
um what are the kind of the clear
00:02:35
benefits maybe there are one or two
00:02:37
clear benefits um that a firm will get
00:02:39
from running their own Innovation
00:02:40
tournament
00:02:42
um what would you say you know to
00:02:44
someone who says well you know I could
00:02:45
just invest a bit more in r d or hire a
00:02:47
consultant
00:02:48
so the value proposition is that we
00:02:50
think of innovation as a process and
00:02:52
this process comes some promise of
00:02:54
consistency of repeating the successes
00:02:57
while each individual idea of these
00:03:00
opportunities flowing through the
00:03:01
process they're going to be somewhat
00:03:03
random and unpredictable again our
00:03:05
ambition or our strong Relief really
00:03:08
having done this many times is by
00:03:10
implementing the tournament the overall
00:03:12
outcome is going to give you consistent
00:03:14
uh success there's also a nice side
00:03:16
effect that we found running these
00:03:18
tournaments over the years and that is
00:03:20
as we Implement these tournaments the
00:03:22
organizations start to change cultures
00:03:24
start to loosen up people get excited
00:03:27
get more motivated and so it's really
00:03:29
also a lot of a lot of fun
00:03:32
I I would add that we're definitely not
00:03:35
opposed to either Consultants or to
00:03:38
spending more money those are two
00:03:40
additional levers that you could use to
00:03:42
improve Innovation performance but
00:03:43
Innovation tournaments is really a
00:03:46
process and a method that perhaps a
00:03:49
consultant could facilitate but that
00:03:51
would allow you to get more out of that
00:03:54
r d spending with the ultimate goal of
00:03:56
generating more value that is creating
00:03:58
more value as a result of innovation
00:04:00
that's ultimately the payoff
00:04:03
so you mentioned the word process
00:04:06
um the book itself is divided into a
00:04:09
succession of different sections or
00:04:12
chapters you've got things like defining
00:04:14
the challenge you have the pitch you've
00:04:17
got developing opportunities and so on
00:04:19
perhaps um you could walk us or you
00:04:22
could both walk us now through what
00:04:23
these different stages or processes are
00:04:25
within an innovation tournament
00:04:28
I mean broadly speaking there are two
00:04:32
components to an innovation tournament
00:04:34
there's the generation or identification
00:04:36
of the opportunities that's basically
00:04:38
getting great candidates to show up and
00:04:41
then there's a selection process by
00:04:43
which you try to discern which of those
00:04:44
candidates are exceptional and we have
00:04:47
several steps for both and so on the
00:04:50
generating side and and actually I was
00:04:52
even before we get to generating a
00:04:55
critical step is defining the challenge
00:04:57
figuring out what problem it is you're
00:04:59
trying to solve in fact probably the
00:05:02
most important step in in Innovation is
00:05:06
not the Innovation per se but is
00:05:08
figuring out what challenge you're
00:05:09
addressing with the Innovation so I
00:05:12
guess in some figure out what problem
00:05:15
you're trying to solve
00:05:16
generate great opportunities and then
00:05:19
put in place an effective selection
00:05:21
process that allows you to discern the
00:05:25
exceptional opportunities
00:05:27
there are only two ways which you can
00:05:30
read the book one is very much like a
00:05:33
cookbook going through these stages that
00:05:34
car just articulated uh really from the
00:05:37
problem definition to the idea
00:05:39
generation to the selection and are
00:05:41
include here the culture transformation
00:05:42
at the end uh so you read those as
00:05:45
you're cooking a meal is a how-to book
00:05:48
but you can also use it as a reference
00:05:49
book where if you're struggling with any
00:05:51
one of these steps in particular in your
00:05:53
work uh the chapters are written that
00:05:55
you can just jump into chapter five
00:05:57
without having read the previous
00:05:58
chapters
00:06:01
so you can use the book according to
00:06:02
your needs and dive in in different
00:06:04
points and so on according to to to what
00:06:07
you need the book reads very well it's a
00:06:10
very Lively very funny very engaging
00:06:12
narrative
00:06:14
um it's also full of examples of real
00:06:16
life Innovation tournaments um that
00:06:18
you've both been involved with perhaps
00:06:20
you could share um just a couple of or
00:06:22
one or two of the most memorable the
00:06:24
most amusing the least successful
00:06:26
Innovation tournaments that you've been
00:06:28
part of
00:06:29
so we've had the pleasure of doing this
00:06:32
in many many organizations as well as in
00:06:34
our classrooms and I think between Carl
00:06:36
and myself we have listened probably to
00:06:38
over 10 000 pitches by now but I will
00:06:41
never forget a pitch that I heard here
00:06:44
at 10 matters in the healthcare system
00:06:46
of the University of Pennsylvania we're
00:06:48
doing a big tournament with thousands of
00:06:49
employees involved about transforming
00:06:52
the patient experience and so there was
00:06:55
this young nurse from the oncology award
00:06:56
basically pitching
00:06:59
an idea about improving the patient
00:07:02
experience and to pitch when something
00:07:04
like I'm coming to work every day and
00:07:08
provide care to these uh most young
00:07:11
women well because of the chemotherapy
00:07:14
lost all their body here and they're
00:07:15
shivering there on this artificial
00:07:17
leather well I inject the cold chemo and
00:07:20
she just sold such a beautiful story
00:07:22
narrative and she finished her pitch
00:07:25
with could we buy these patients a warm
00:07:27
blanket and we can be made with a warm
00:07:29
blanket that's been the greatest
00:07:30
innovation in healthcare over the last
00:07:32
decade but you see so much passion so
00:07:36
much empathy so much enthusiasm that uh
00:07:40
really it's a joy to moderate these
00:07:42
tournaments and I I can promise all
00:07:44
readers you will have similar
00:07:45
experiences uh getting to know the
00:07:48
people that you work with as well as
00:07:50
your customers when you engage them in
00:07:51
the tournament
00:07:54
two tournaments that stand out for me uh
00:07:58
are one in which we had a very very
00:08:01
narrow challenge which was how can we
00:08:04
reduce the water consumption in the
00:08:07
production of Bounty paper towels so
00:08:09
super specific and we spent three days
00:08:13
with a large team of inside and outside
00:08:15
experts focused on that very narrow
00:08:18
Challenge and at The Other Extreme I had
00:08:21
a former student who was very successful
00:08:24
hedge fund manager come to me and say
00:08:26
hey Carl can we run a tournament to
00:08:29
figure out how to make more money and
00:08:31
initially I sort of laughed at that but
00:08:33
we actually did run a tournament for new
00:08:36
trading strategies for his hedge fund
00:08:38
which had the unfortunate benefit that
00:08:41
he couldn't tell me the answer he said
00:08:44
Carl you know once we're in this
00:08:45
tournament that's going to be a
00:08:46
proprietary secret I'm not going to be
00:08:48
able to tell you what the result was but
00:08:50
that gives you a sense of the extremes
00:08:52
super focused challenges how highly
00:08:55
directed to extremely broad challenges
00:08:57
like how do we improve performance how
00:08:59
do we make more money
00:09:00
so again this is an approach that can be
00:09:03
adopted for all sorts of different
00:09:04
contexts all kinds of different
00:09:06
objectives one of your chapters is
00:09:08
called
00:09:09
um creating a better pool of
00:09:11
opportunities what's what's this chapter
00:09:13
about what do you mean by a better pool
00:09:15
of opportunities
00:09:17
so if you ask yourself
00:09:19
what would you like to see in a pool in
00:09:21
a portfolio in a set of ideas we think
00:09:24
there are three things that really
00:09:25
matter a you want many ideas because the
00:09:29
chances are that if you have more ideas
00:09:30
you're going to have one Blockbuster in
00:09:32
it uh second we talk about ways of
00:09:35
improving the ideas improving the
00:09:37
average quality of the ideas things that
00:09:39
you can do to become better at ideation
00:09:41
but the thing that is always amazed us
00:09:43
the most is the third one which is
00:09:45
having a more diverse or higher variance
00:09:48
set of ideas and typically column I have
00:09:51
backgrounds income operations management
00:09:53
and in most of business and processes we
00:09:56
hate various we want things to be
00:09:58
consistent but in innovation in terms of
00:10:00
the variance is your friend and so we
00:10:03
talk about ways with which you can
00:10:04
increase the variance of the performance
00:10:06
of the ideas meaning you get some ideas
00:10:08
that's going to be worse but since you
00:10:10
don't only you're only going to execute
00:10:12
the ideas that are the most promising in
00:10:13
your portfolio the best ideas are going
00:10:15
to get better
00:10:18
one of the really interesting things
00:10:20
about tournaments is you don't care very
00:10:22
much about averages so for example if
00:10:26
you are
00:10:27
the National Institute of Health and
00:10:29
you're looking at at Health proposals
00:10:31
proposals for improving health care and
00:10:34
you get a hundred okay ideas compare
00:10:38
that to getting 99 bad ideas and one
00:10:41
cure for pancreatic cancer you would you
00:10:44
would much prefer that second uh pool of
00:10:47
ideas and so we as managers we have to
00:10:49
get over this idea that we're looking
00:10:51
for average quality we're not we're
00:10:54
looking for exceptional ideas for real
00:10:56
outliers and that requires some changes
00:10:59
in the way we think about the pool of
00:11:01
opportunities we want to embrace
00:11:03
variants including the good and the bad
00:11:05
in the hopes of really finding something
00:11:07
exceptional
00:11:10
chapter nine of the book
00:11:12
um is called uh the culture or a culture
00:11:15
of opportunities again this is a very
00:11:18
intriguing title what what do you mean
00:11:19
by culture of opportunities and are
00:11:22
there any real world examples that you
00:11:25
could share that illustrate this idea
00:11:28
well what is culture culture is the
00:11:32
norms and behaviors that apply when
00:11:36
there aren't rules when you don't have
00:11:38
strict processes and rules what are the
00:11:40
Norms that guide behavior in an
00:11:42
organization and culture is notoriously
00:11:45
difficult to move or to nudge in in an
00:11:48
organization but it's super important
00:11:51
because you can't have rules and
00:11:53
processes for everything and you want to
00:11:55
rely on people to know what to do when
00:11:57
there aren't rules and processes
00:12:00
so culture of innovation if you think
00:12:03
about how to create a culture of
00:12:05
innovation most organizations just use
00:12:08
words they give speeches they have
00:12:10
slogans they say we need to embrace
00:12:13
diversity we need to celebrate failure
00:12:16
and beyond that they often feel
00:12:20
frustrated as to how do we actually move
00:12:21
the culture and our belief is that the
00:12:24
best lever for moving culture is
00:12:26
actually process and structure and that
00:12:29
Innovation tournaments themselves are
00:12:32
both a visible sign of commitment on the
00:12:34
part of Senior Management which is
00:12:36
really important in moving culture but
00:12:38
also allow people to participate to know
00:12:41
what to do in order to be more
00:12:43
innovative
00:12:46
yeah Scholars of organizational culture
00:12:49
organizational Theory distinguish
00:12:51
between two types of cultures there's a
00:12:53
tight cultures and think about kind of
00:12:55
German people like me they like things
00:12:58
in order and they come on time and then
00:13:00
there's a kind of a crazy American type
00:13:02
of culture Israeli culture where people
00:13:06
are much more improvising uh rule
00:13:09
breaking type of people and many people
00:13:12
have argued that when it comes to
00:13:13
Innovation and going back to my earlier
00:13:15
point on the importance of variance it's
00:13:17
kind of easy to believe that it's the
00:13:20
loose culture that is the right culture
00:13:22
for Innovation but we argue that that is
00:13:25
a little bit short-sighted because many
00:13:27
great companies are innovating very
00:13:30
successfully based on processes right
00:13:33
and so I think in the book we find a
00:13:35
nice balance between tight and blues
00:13:37
process and improvisation and then
00:13:40
finding that balance is what in our view
00:13:42
is important to enable an innovation
00:13:44
culture
00:13:47
your book ends um you conclude by
00:13:50
pulling everything together with what
00:13:51
you call um four pillars for future
00:13:54
success
00:13:55
um what are these four pillars and how
00:13:58
do they work
00:13:59
so I I shared a tournament example early
00:14:03
on that went really well so let me share
00:14:04
a tournament that went really poorly and
00:14:07
that's the joy of writing the book we
00:14:08
were kind of we're living our memories
00:14:10
and I had a tournament about a decade
00:14:12
ago uh in the early 2000s in Moscow very
00:14:16
different kind of political conditions
00:14:18
compared to today big Energy company and
00:14:21
so we were looking for growth
00:14:22
opportunity in the energy market and uh
00:14:26
so this was translated by since I don't
00:14:30
speak Russian this was translated by a
00:14:31
very capable translator and I was
00:14:34
watching this page this 40 year old man
00:14:37
stands to a poster and on the poster was
00:14:39
an office building with a logo of the
00:14:42
Energy company was that oil company it
00:14:44
was a more wind well next week
00:14:46
and I thought great we are talking about
00:14:48
renewable energy and gonna talk about
00:14:50
disruption and green and then he
00:14:53
basically pitched the following idea he
00:14:55
said like my suggestions did we open the
00:14:58
doors out of our corporate headquarter
00:15:00
building and all the hot air that is
00:15:03
produced in that building that will flow
00:15:05
out and it were power when will have
00:15:08
enough energy to fuel the whole country
00:15:11
and that's the type of situation where
00:15:13
we can't prepare you for that even with
00:15:15
this book uh but back to your question
00:15:18
now uh what are the pillars so we
00:15:21
believe that a couple of things that
00:15:23
have to be in place for an innovation
00:15:25
tournament to succeed you need the
00:15:27
leadership there the commitment or the
00:15:30
tournament that I mentioned in Moscow
00:15:31
none of the management team that was
00:15:33
sponsoring the tournament showed up it
00:15:35
was just myself with 30 more or less
00:15:38
motivated uh participants uh resources
00:15:41
have to be in place uh there needs to be
00:15:44
an understanding and conviction of
00:15:46
everybody like why are we doing this
00:15:48
right why are we innovating what's
00:15:50
what's the burning platform if you wish
00:15:52
and there needs to be structures and
00:15:54
incentives in place and so when those
00:15:56
things come together we see the best
00:15:58
Innovation tournaments happen
00:16:04
I guess the final question for you both
00:16:06
would be
00:16:08
um we've talked a lot about your book
00:16:09
and you've talked about the processes
00:16:11
involved you've talked about the
00:16:12
benefits um and you've given you've
00:16:14
shared some really arresting and um and
00:16:16
very amusing uh examples of what
00:16:19
Innovation tournaments can look like
00:16:21
um what would you hope or what would
00:16:23
your hope be that your reader takes away
00:16:25
from Innovation tournaments from from
00:16:28
your book
00:16:30
our vision and our aspiration is that a
00:16:33
reader would would get the vision and
00:16:35
would say hey I want to realize that
00:16:37
outcome that's a great outcome I've read
00:16:39
all these examples I want my
00:16:41
organization to have that outcome and
00:16:43
then would be able to actually use the
00:16:46
book to do it and we have quipped that
00:16:49
we want to put ourselves out of business
00:16:50
as consultants we really want someone to
00:16:52
be able to read this book and say hey I
00:16:55
can now try this tomorrow and so that's
00:16:57
our hope and our aspiration
00:17:00
it's really about codifying that process
00:17:03
of innovation and I think a lot of
00:17:05
people are intimidated they are they're
00:17:08
shying away from running an innovation
00:17:10
tournament they reach out to Consultants
00:17:12
because they feel like wow it is so hard
00:17:14
and I think it is actually not hard and
00:17:17
I hope that by writing the book we can
00:17:19
make the tool accessible to more readers
00:17:22
more people doing this and as an outcome
00:17:25
get more people innovate and turn this
00:17:28
place into a better world
