Scaling:)Innovation s!missing&middle!

Transcription

1 Scaling:)Innovation smissing&middle Dan McClure Innovation Design Practice Leader, ThoughtWorks Ian Gray Director, Gray Dot Catalyst Presentation at the Humanitarian Innovation Conference, Oxford England, July 19th 2014 Table&of&Contents& OVERVIEW& 2 THE&PROBLEM& &FAILING&TO&SCALE&GOOD&IDEAS& 3 POSITIVE&AND&GROWING&FOCUS&ON&INNOVATION& 3 REPORTS&OF&REAL&WORLD&CONCERNS&WITH&SCALING& 3 EXPLORING&THE& HOW &OF&SCALING& 5 UNPACKING&THE&INNOVATION&LIFE&CYCLE& 6 A&FAILED&STRATEGY& &MAKING&PILOTS&BIGGER& 6 STAGE&1:&INVENT& &EXPLORING&IDEAS& 6 STAGE&4:&OPTIMIZE& &CONTINUOUS&IMPROVEMENT& 8 THE&MISSING&MIDDLE& 9 STAGE&2:&SCALE&UP&O&CLIMBING&THE&MOUNTAIN& 12 COMPLETENESS& 12 COMPROMISE& 13 CONNECTION& 14 STAGE&3:&SCALE&OUT& &DESCENDING&THE&MOUNTAIN& 15 WHY&REPLICATION&IS&HARD& 15 MAKING&TRADEOFFS& 16 SYSTEMS&FOR&DISTILLING&COMPLEXITY& 17 MANAGING&SCALE&UP&AND&SCALE&OUT& 19 KEY&PROGRAM&MANAGEMENT&DIFFERENCES&IN&THE&MISSING&MIDDLE&(TABLE)& 20 COMPARING&INNOVATION&MODELS& 21 RECOMMENDATIONS& &FOSTERING&SCALING& 24 INNOVATION:((THE(MISSING(MIDDLE( 1

2 Overview( Despiteenthusiasmforsmall1scaleinvestmentinpilotingnewinnovations,there appearstobeabroadfailureinthehumanitariansector sabilitytoscaleupand scaleoutsuccessfulideas. Thiscreatesaneedtounderstandandaddresstheneglectedelementsofthe innovationlifecyclethatliebetweenconclusionofapilotprogramandtheultimate widescaleoperationandoptimizationofanestablishedprogram. Thisisinnovation smissingmiddle.itisacomplexspacethatneedsmuchmore attentionifanevergrowingnumberofpilotprograminvestmentsareto growup anddelivermeaningfulvalueintheworld. Bothauthorsarehandsonpractitionersofinnovationwithinanenterprisecontext. Danhasspentseveraldecadesdrivinginnovationswithglobalcommercial enterprisesandgovernmentagencies.ianhas15yearsexperienceinthe DevelopmentandHumanitariansectorsandhasbeendirectlyengagedinleading innovationintheareasoftheirdevelopment,humanitarianandpolicywork. Leveragingthishands1onperspectiveandinterviewswithkeyfiguresengagedin developing,managingandfundinginnovationinthehumanitariansector,thispaper seekstoprovideaframeworkforthinkingaboutwhatblocksscalingandhowto technicallyprogressfromprovenideatobroadbasedoperation.wehopethiswill helporganisationsastheyattempttofund,manage,andexecutethescalingjourney. 2( INNOVATION:((THE(MISSING(MIDDLE

3 The(Problem( (Failing(to(Scale(Good(Ideas( I"would"not"give"a"fig"for"the"simplicity"this"side"of"complexity,"but"I"would"give"my"life" for"the"simplicity"on"the"other"side"of"complexity."(oliver Wendell Holmes, Jr.)""" Positive(and(Growing(Focus(on(Innovation( Thereisanunprecedentedlevelofcommitmentandinvestmentininnovation.A recentstudybypricewaterhousecoopersfoundthat61%ofceossaidthat innovationwasapriorityorprimaryfocusoftheirbusiness. i Thisfocusongrowth andfuturerelevancethroughnewideasandtransformationhasdominatedbusiness thinkinginboththecommercialandnotforprofitspaceformuchofthiscentury andhasreachedacrescendooverthelastfewyears. IntheHumanitarianindustry,thereisgoodreasonforoptimismonthisaccount. Therehavebeenhighprofilewinstransformingourapproachtoreliefand development,suchastheusecashtransferstoreplacephysicalaiddeliveries. Anothertrendthathighlightsthedesiretoinnovatewithintheindustryisthe numberofpositionsandteamsfocusedoninnovationthatorganisationshave developedoverthepastfewyears.thisshowsthatorganisationsareputting resourcesbehindtheirinnovationrhetoric. Inadeparturefromthetraditionallogframebasedapproachtofundingthat dominatedtheindustryoverthepreviousdecades,thedonorcommunityhas attemptedtoprovidenewfundingmodelstostimulateinnovation.fundssuchas thehifareevidenceofafocusthatisdrivingthedevelopmentofnumerouspilot productsandprograms. Theindustryappearstobebuildingonit sstrengthsofsolutionfindinganddriving, oftenfieldled,innovationatasmallscale. Reports(of(Real(World(Concerns(with(Scaling( However,thereisgrowingsensethatasystemicproblemexistswithourabilityto scalethesesuccessfulinventions.evenasthenumberofpilotprogramscontinues tomultiply,andskillatmanagingaportfolioofnewideasmatures,therearefew examplesofgreatideasthathavebeendeployedatscale,impactinglarge populationsandservingneedsinvaryingenvironments. Whencarryingouttheresearchforthispaper,leadersintheHumanitarian Innovationspacestruggledtoidentifymorethan2or3innovationsthattheyfelt hadtrulygonetoscale.insemi1structuredinterviewstheinnovationleaders repeatedlycitedthesamesmallsetofsuccessstories.communitymanagedacute INNOVATION:((THE(MISSING(MIDDLE( 3

4 MalnutritionandCashTransferswereconsistentlycitedasexamplesofinnovation thathasbeentakentoscale.therewereoneortwoindividualrespondentswho citedotherexamples,butaconsistentthemeemerged;pilotprogramswere proliferating,buttherewaslittleevidenceofthemgoingtoscale. Itisasifthehumanitariancommunity,havingbecomeadeptassmallscaleidea testing,hasbecomeaddictedtoakindof pilot1titess.thiswordcameupagainand againinourinterviews.smallprogramsseemtobebreeding,producingmyriadsof babybunnies,multiplyingwithoutaneffectivewaytogrowupanddeliverbroad basedvalue. Therewerevariedperspectivesonthemainreasonsforthis,rangingfroma systemic brokennessofthehumanitariansystemandmanyhumanitarian organisations, toit just beinganissueofwheretheindustryisintheinnovation cycle.lookingacrosstheinterviews,thefollowingissuesemergedasunderlying challengestothescalingnewideas. 1. Preference&for&New&Over&Scale:Aseemingobsessionwith new, shiny andbespokesolutions.whengoodsolutionsthatneededlonger1term investmentinordertoscalewerealreadyinexistence,thebackingofnew pilotsasadominantinnovationstrategywasseenaswastingmoney. 2. Legacies&Supported&by&Misaligned&Incentives:Thiswasakeyconcern fromanumberofinterviewees.itwasfeltthatoutdatedlegacyorganisations, departments,andsystemsweresustainedduetomisalignedincentivesinthe industry.despiteprogressbeingmadebysomeagenciesinmeasuring effectiveness,thelackofconsumer(disasteraffectedpopulations)power overproductsandservicesmeantthatentrenchedlegaciescontinuedto exist,blockingtheadoptionandscalingofnewwaysofdoingthings. 3. Investment&Size&and&Time:Alackofunderstandingbyfundersand decisionmakersregardingtherealcostsoftakinganinnovationtoscaleand ensuringthatitismaintainedandupdated.anumberofinterviewees pointedtothefactthatachievingscaletakessignificantamountstimeand money,bothintheprivateandnot1for1profitsector.insomewaysthishas confirmationinthefactthatthetwoprimeexamplesofinnovationsatscale wereactuallypilotprogrammesfromoveradecadeago. 4. Risk&Aversion:Embracingsmallpilotprogramshasbeenanimportantstep forahumanitariansectorthatcanbedeeplyriskaverse.therisksofpilot programsarenowwidelyseenasacceptablesincethearecheapandlimited inscope.however,takinganideatoscaleisfarmoreexpensiveanddrawn outovertime.atthislevelofinvestment,theriskofpickingthewrongpilot toscalecanbeparalyzingtodecisionmaking. 4( INNOVATION:((THE(MISSING(MIDDLE

5 5. Measures&of&Success:Thepriorelementofriskaversionismadeworse whenthereisalackofunderstandingastowhatconstitutessuccess.there weredisucssionsastowhatscalinginnovationactuallymeans.itwasfelt thattherewasareluctancetobackscalinginvestmentsbecausethere weren tclearmeasurestosaywhethertheyweresuccessful.forexample,do 40150,000deploymentsofUshahidiacross159countries,orFrontlineSMS beingdownloaded200,000timesacross130countriesconstitutescale?does thewidespreadadoptionofaninnovationwithinlargeingoswhocanafford itlikeoxfamandsavethechildrenamounttoscaling? 6. Building/Finding&New&Skills:Manytraditionalhumanitarianorganisations areinnovatingoutsideoftheircorecompetencies.thisrequiresdeveloping newcompetenciestoenterthecomplexworldofscalingandoftenlooking outsidetobuildpartnershipswithorganizaitonsthathavediversenewskills. Exploring(the( How (of(scaling( Whatwasmostinterestingtotheauthorsisthattherewasverylittlediscussionof theactualprocessofscaling,abouthowcapablehumanitarianorganisationswereat doingthis,whetherornottheyhadthetechnicalcapacityandtoolsrequired.it seemedclearthatthisisanareathatwouldbenefitfromdeeperunderstanding. INNOVATION:((THE(MISSING(MIDDLE( 5

6 Unpacking(the(Innovation(Life(Cycle( Whydon tsuccessfulpilotsconsistentlygotoscale?webelievetheproblemis rootedinafailuretorecognizethedeepdifferencesthatexistbetweenthestagesof theinnovationlifecycle. A(Failed(Strategy( (Making(Pilots(Bigger( ThereisnaturaltendencytoseescalingassimplythelaststageofasuccessfulPilot program.inthismodel,thepilotprogram babybunnies scaleupintobigbunnies simplybymakingthemlargerorbydeployingtheminmorelocations. FigureA TwoTroubledStrategiesforScaling Successful Pilots TheintuitionhereisthatwithasuccessfulPilot,aninnovator skeyresponsibilities havebeencheckedoff.ideashavebeentestedandvalidatedonasmallscale,soitis nowappropriatetoapplyproventechniquesoflarge1scaleoutcomebasedprogram management. Theapparentfailureofthisstrategyneedsasystemicexplanationthataccountsfor persistentchallengesacrossmanyfieldsandprograms.webelievetheheartofthis problemisafailuretorecognizefoursubstantiallydistinctstagesoftheinnovation lifecycle.evenmoretroublingisafailuretoaccountforhowdifferenteachofthe stagesare. Stage(1:(INVENT( (Exploring(Ideas( Invent isthefirststageoftheinnovationlifecycle.thisiswherepilotprograms arewidelyused.thegreatchallengehereisthatproblemsareoftenpoorly understood,andtherearepotentiallymanyideasforaddressingthem.theproblem spaceisdominatedbyuncertaintyandquestions.whichideasarevalidandhow shouldtheybeconstructedtoproducethegreatestvalue? 6( INNOVATION:((THE(MISSING(MIDDLE

7 INNOVATION:((THE(MISSING(MIDDLE( 7 EricRies LeanStartup ii popularizedthebuild1test1learnideatestingmodel,where smallinvestmentsvalidatenewideasbyactuallydoingworkinthefield.whilethe phrase failfast isoftenassociatedwiththeapproach, learnquickly isamore appropriatedescriptionoftheprocess.asnewinformationarisesduringthepilot, thebestresponseistoremainflexible,pivotingthedirectionofthepilotquicklyand often. Thisisalightweightsystemthattestsideascheaplybothintermsofkeyhuman resourcesandfinancialinvestment.topromotespeed,retainflexibility,andenable asmanydifferentresponsesaspossible,rulesanddependenciesaresuspended. Smallteamsofpoly1 skilledspecialistsfill manyroles,workingto limitthescopeofthe programtoelements essentialforlearning. Theyareencouragedto operateoutsidethe constraints,regulations, andintegration requirementsthat weighdowntraditional programoperations. Theirtoolsetsareoften improvisationalandad hoc,acreativeofuseof ducttape.nothing needstobesustainable orrobust. Thisisadifficultand unpredictablejourney. Topdowncontrolis seldomeffective,so dailycollaborative problemsolving replacesformal reporting.because passion,personalenergyandindividualcommitmentdrivetheeffort,membersof theteamcannotbeviewedasinterchangeablecogs Thesepracticesnowformawidelyadoptedsystemforexploringuncertainty. Simplicityandflexibilityareembracedintheserviceoflearning. FigureB STAGE1INVENT SimplicityintheServiceofLearning

8 8( INNOVATION:((THE(MISSING(MIDDLE Stage(4:(OPTIMIZE( (Continuous(Improvement( Attheotherendoftheinnovationlifecycle,ideasarematureandalreadywidely adopted.averydifferentsystemisatwork.ironicallyitalsoembracessimplicityas anorganizingprincipal,butforentirelydifferentpurposesandwithamuch differentexecutionstrategy. InthemidTwentiethCentury,themanufacturingindustryenteredaperiodofcrisis. Afteryearsofrapidgrowthdrivenbyfactorybuilding,therewassuddenlymore thanenoughcapacitytomeetdemand.nowcustomers,withmanychoicesavailable tothem,werenolonger satisfiedwithsimplyhaving moreproducts.theywanted betterproducts.aracebegan tomastertheartofquality. W.EdwardsDemmingentered thisfray,definingoneofthe earliestsetsofcodified innovationpractices.he aspiredtocreateafactory operationthatalways deliveredconsistentquality andyetwasopentocontinuous improvement. Theinnovationsystemhe pioneeredwasaprocessfor makingcomplexthingsbetter. Itcapturedintricatefactory operationsindetailed processesandstandards.with thisdone,itbecamepossibleto routinelymeasure performanceagainstexpected standards.iso9000,tqm, CMMandahostofother methodologiesweredeveloped toimplementthisapproach. Afrontlinepractitionercanengageaverylargesystemwithoutafullappreciation orconcernfortheunderlyingcomplexity.therearestillmanymovingparts,buta Workeronthefactorylinedoesn tneedtoworryaboutthismessinesswhen proposinganinnovativeadjustment. FigureC STAGE4OPTIMIZELRepeatableOperations

9 Thissurfacesimplicityfostersacultureofincrementalimprovement,butcomes withatradeoff.whereassimplicitywasusedintheinventstagetopromote flexibility,intheoptimizationstage sencapsulatedcomplexityactsasananchorto deeperchangeandradicalinnovation. The(Missing(Middle(( Itshouldbenosurprisethattwosystemswithsuchradicallyapproachesshould havedifficultytransitioningfromonetotheother.theyarefundamentallydifferent systemsforcreatingvalue,withlittlealignmentintheirapproachesorgoals. AdeepsystemtransformationmustoccurbetweentheinitialInventstageandthe ultimateoptimizestageoftheinnovationlifecycle.this MissingMiddle has receivedmuchlessattentionandlackstheestablishedpracticesandframingmodels thathavebenefitedinnovatorsworkingtoinventandoptimize. FigureD TheillLdefinedMissingMiddle Manyideashaveemergedtodealwiththeperceivedscalingchallenges.Compared totheseemingorderlinessofthewellcodifiedinventandoptimizepractices,many oftheemergingapproachesseemwidelydivergent,sometimesseemingtosolve entirelydifferentproblems. Webelievemuchofthismessinesscanbeattributedtoageneralfailureto appropriatelyunpackthechallengesandjourneysthatoccurinthemissingmiddle. Dividingthescalingprocessintotwodistinctstageshelpsunpackthesedifferences. INNOVATION:((THE(MISSING(MIDDLE( 9

10 FigureE Unpackingtheinnovationlifecycle ThegoalofStep2intheInnovationlifecycleistoScaleUp,servingmanypeoplein theexistingcontextwithasolutionthatissustainableovertime.thisbeginswitha successfulpilot,anideathathasbeenvalidated,butishardlyreadyforprimetime. DuringtheInventstagemanycompromiseswillhavebeenmadeinthePilot.In almosteverycase,theprojectwillbetoosimpletoexpandandservealargenumber ofbeneficiariesintheircurrentcontext.supplychains,legalcompliance,ongoing staffing,andbusinessmodelsarejustafewoftheareaslikelytohavebeengiven littleconsiderationastheinventteamexploredanewidea.asustainablesolution cannotbebaseduponducttapeandheroiceffortstokeepitworking.itmust delivervalueovertimetomanypeoplewithinasinglecontext,usingsustainably availableresources. Stage3lookstoScaleOuttheinnovationbydeployingitinadditionallocations.Itis seldomaninvestor sgoaltodevelopinnovationsthatworksonlyinoneinstance,so tojustifytheheavyinitialinvestmentinanewidea,thesolutionmustbemadeto deliversatisfactoryperformanceinmultiplesituations.further,thesevaried deploymentsandoperationsmustbedoneatpricethatcanbesustainedatscale. Here,theneedistoremoveorhidecomplexitythatpermeatestheearlier SustainableSolution.Thisiscannotbedonebysimplydiscardingdifficulties,the waythatfastmovinginsurgentsdoduringinapilotprogram.rather,inthescale Outstage,theinnovatormustmakehardchoicesbetweenoutcomes,cost,and flexibility. 10( INNOVATION:((THE(MISSING(MIDDLE

11 ThejourneythroughtheMissingMiddleconnectsInventandOptimizealongapath thatisratherlikeclimbingamountainofcomplexity.complexityisaddedintothe PilotprogramtocreateaSustainableSolution,andthenisselectivelydistilledout againtoproduceasystemthatcanbeduplicatedatscaleandultimatelyoptimized inmanycontexts. INNOVATION:((THE(MISSING(MIDDLE( 11

12 Stage(2:(SCALE(UP(\(Climbing(the(Mountain( TheinitialInventstageofinnovationisdesignedtorapidlyexploreandlearn.As describedearlier,anynumberofshortcuts,compromisesandhalfimplemented tacticsareacceptable,evendesirable,becauseofthespeedandflexibilitythey foster.however,onceanideahasbeenvalidateditisnecessarytoshiftthe innovator sstrategyanddevelopasystemforvaluecreationthatworksinthereal worldwithoutthepilot sspecialattentionandallowances. Theshortcomingsofthe Inventmodelthatneedto betransformedwill obviouslyvarybasedon thespecificsofthepilot andthetargetgoalsfor thescaledupmodel. Inventstagebest practicesencouragesfour pragmatictypesof simplificationthatneedto beaddressedtoachievea sustainablesolution. Completeness Compromise Capacity Connection Completeness(( Anobviouswayto simplifyacomplex problemistosimplyleave thingsout.bestpractices FigureE AddingcomplexitytocreateaSustainableSystem inleanproduct Innovationspecifically encouragethecreationofaminimumviableproduct(mvp),andintuitivelythisis whatpeoplenaturallydowithcomplexproblems.theypickkeybitstoignoreor grosslysimplify. Forexample,inthehumanitariansector,mostinnovationfundshavebeenreleased intheformofagrantorwithinaprogrambudget.questionsaboutsustainable businessmodelsneednotbeaddressedindetail. 12( INNOVATION:((THE(MISSING(MIDDLE

13 Anothercommonsimplificationbyomissionoccurswithlongtermmaintenance andsupportservices.ifthepilotisshortenough,there snoneedtoworryabout whowillrepairtheequipmentayearortwodowntheroad,thecostsoflargescale deployment,ortheprovisionofongoingmaintenance.thecomplexitiesoftraining, administrativeprocesses,qualitycontrol,andsecurityarealltemptingcandidates forsimplificationwhentheydon tcontributethefastpacedlearningoftheinvent stage. Proudinsurgentchangeagentsoftenpointtotheirabilitytocutthroughredtape, claimingthatakeypartoftheinnovationisthisparingawayofdeadwood.itistrue thatinsomecasestraditionalcomplexitycanbejettisoned,butafarmorecommon situationisthatomittedelementsmustbeaddedbackintothepilottocompleteit. ThefoundersofvirtualcurrenciessuchasBitCoinaspiretocreateaparallel economicsystemwithoutthemindnumbingcomplexityofexistingmonetary systems,andatfirstthelightweightfreedomofthesimplifiedenvironment empowersrapidexplorationandinvention.however,whencurrencyisstolenit becomesclearthatsomeadditionalsafeguardsareneeded.thesespawntheneed fordisputeresolutionprocesses,whichinturnhighlighttheneedsforothermissing elementsofagenuinelycomplexsystem. Compromise( Asecondformofsimplificationdoesn tgoasfarasomittingakeyfunction,butstill cutscornersbymakingcompromisesintheapproach.excessexpertiseisoften leveragedbypilotprogramstohelpspeedprogramsforward,learnfrom experiments,andrespondtounexpectedproblems.havingasmartandresourceful persononthespotmakesthisalleasier. Reallysmartpeopledon tscalewell.sothiscompromiseneedstobereplacedwith amorecomplexandadmittedlymoredifficultapproachthatdrawsonthepoolof actuallyavailableresources. Passionisofteningreatsupplyduringapilotprogram,withhighlymotivatedand drivenindividualsintenselyfocusedonmakingthingswork.therecanbemore thanabitofsurprisewhentheydiscoverthattheirsuccessorsaremore conventionallymotivated.arealmodelofrewardsalignedwithindividualsgoals andneedseventuallymustreplacetheevangelicalenergyoftheinventor. Fixingacompromisecanbefrustratingbecause,unlikewiththechallengeof completeness,thereissomethingthatworksalready.theaspectofthesolution simplycan tbetakentoscale. INNOVATION:((THE(MISSING(MIDDLE( 13

14 Connection( Thefinalgapthatneedstobefilledwithaddedcomplexityisconnection.Most pilotsaredevelopedinsomethingofabubble.incontrasttothis,awebofsystems makesupthereallifecontextofanymeaningfulinnovation. Theremaybeintegratedtechnologysystemsforaccounting,multiplepartysupply chains,orprocessesflowsthatknittogetherdifferentpeople sactionsintoawhole. Ifwewanttohavetheinnovationfunctionwithintheotherpartsofacomplex world,weneedtodeterminehowtoplugin. Whilethisisessentialforanymeaningfulimpactincomplexenvironments,thereis seldomaseriousefforttodomuchofthisintegrationduringtheearlystagesof invention.therearetworeasonsforthis.first,connectionsmakeitmoredifficult forthepilottopursueitslearninggoals.eachpointofintegrationestablishesaset ofconstraintsonthesolution,takestimetosetup,andlimitstheabilitytopivot.it canbequitelikeastickyandbindingspidersweb. Justasimportantly,theownersofthesurroundingsystemsarerightfullyskeptical aboutdemandsontheirtimefromatinyinitiativethatcan tevenmakeupitsmind aboutwhatitsultimatelydoing.thereistypicallyfiercecompetitionforattention andresourcesforexistingoperatingsystems.gettingoncalendarsandgettingwork doneisslow,difficult,andcanproduceconflictalongwithdelay.so,integrationis oftenjustlydeferredduringthepilot,butthesolutioncannotremaininabubble onceitmovestoscaleup. 14( INNOVATION:((THE(MISSING(MIDDLE

15 Stage(3:(SCALE(OUT( (Descending(the(Mountain( WhentheStage2SustainableSolutioniscomplete,thereisacomplexsystemthatis wellintegratedintotheimmediatecontext.itcanscaleupanddelivervaluetoa largeaudiencewhofallswithinthisuniquesetofcircumstances.thisisa meritoriousone1offsuccess,butitdoesnotdirectlyenablethekindreplicable improvementthatsomanyinvestorsininnovationhopetocreate.itscalesup,but itdoesnotscaleout. EngineeringtheSustainableSolutionaddedmissingcomplexityintothePilotuntilit hadalltheelementsnecessarytoproducevalueforaparticularimplementationof thisidea.tomaketheideareplicable,muchofthiscomplexitymustnowbehidden. Ineffect,anothertransformationisneeded,goingdownthemountainofcomplexity. Why(Replication(is(Hard( Fromthestandpointofreplication,theidealresultwouldprovideasinglepackaged solutionthatcouldbesuccessfullyappliedinanycircumstancewithminimaleffort andtrainingbyawiderangeofpractitioners.suchamodelwouldallowtheteam drivinganinnovationtowardmaturitytoclaimthattheirjobisdone,andforthe thoseresponsibleforreplicationtofocusonfactorystyleoptimizationofexecution. It sanidealthathardlyeverhappens.let sexplorewhy. AttheheartoftheproblemisContext.Situationswhichsuperficiallyresembleeach otherareseldomactuallythesameinalltheirimportantattributes.these differencesmanifestthemselvesinmultipleways,butallcancontributetothe failureofa proven solution. Keyassumptionsthathavebeen bakedin toaprogram sdesignmaynotbetruein adifferentsituation.oftenperfectlyvaliddesigncriteriaintheoriginalcontextare alteredorevenfalseinthenewcontext.forexampletheoriginalprogrammay havebeendevelopedwithacommunityleaderwhovalueschangeandopportunity. Strategieswillneedtochangeifsubsequentimplementationsmustdealwith leaderswhosefundamentalvaluesareconservativeandweddedtothestatusquo. NotethatthisisadifferentproblemthantheInnovatorfacedduringearlierstages ofinnovations,whenfundamentalideaswerebeingvalidated.atthispoint,an answercanberightinonecontextandwronginanother,andnoamountofgood workintheoriginaldesignwillseamlesslyaccountforpotentialvariationsin context. INNOVATION:((THE(MISSING(MIDDLE( 15

16 Contextchangeswithtimetoo.Assumptionthatoperatedperfectlywellatone pointintimebecomeuselessasconditionsonthegroundchange.newinnovations andchangingneedsoftenservetoraisethebaronexpectations.initially,when deprivedofoptions,peoplemaybequitewillingtoacceptlessthanoptimalresults, butaschoicesexpandtheybecomeincreasinglyintolerantofcompromise. Ateverypointofintegrationwiththelocalenvironmenttherearepotential difficulties.theclassicproblemoftryingtopluganelectricalapplianceintothewall isametaphorforabroadclassofproblemsaroundestablishingstandardsand drivingconformancewiththem. Evenifthereisagreementonstandards,thesestandardscomewiththeirown contextdependencies.everyonemayagreetouseaparticularstandardfora particularpurpose,butthatdoesn tmeanthatthestandardsupportstheneedsof othersfurtheroutintheecology.everyonemayagreethatsomethingshouldbe shippedinpackagesofagivensize,onlytodiscoverthattheboxesdon tfitonthe smallvehiclesusedfordeliveryinagivenarea. Making(Tradeoffs(( Thebadnewsisthatthereisseldomasingleelegantsolutiontothischallengeof replicationindiverseandchangingenvironments.therearemultipledimensions tobeconsidered.howmuchcanbeinvestedineachdeployment?howconsistent musttheresultsbe?whatlevelofresourcesaregoingtoberequired?the Innovatormustchoosewhichofthesefactorsisthemostimportantandwhichone s canbecompromised. Ofcourse,itwouldbeidealtoavoidcompromisesbetweenthesefactors.Itis possibletoimagineanapproachwherebrilliantpractitionerswithyearsof experiencedrawoninfinitebudgets,tailoringdeploymentstotheuniqueelements ofeachnewcontext. Thisideal,butluxurious,systemofvaluecreationisseldomarealoptionfor replicatingaworkinginnovation.replicablesystemshavetotakesomeportionof thecomplexityfromthesustainablesolutionandpackageitinawaythatitcanbe adoptedbydifferentstakeholdersinaworldthatrefusestoremainstatic. ThepracticalrealityisthattheInnovatormustmaketradeoffsamongthemultiple dimensionsareatplay: 1. Complexity Howmanymovingpartsandexposedelementscanweaccept? Whatisthedifficultlyofunderstandingandworkingwiththesolution? 2. Customization& Howmuchtailoringofthesolutionarewewillingtodoto meetuniquelocalconditionsandneeds? 16( INNOVATION:((THE(MISSING(MIDDLE

17 3. Change Howmuchchangeovertimedoweexpecttosupport? 4. Conformance Howmuchagreementwithourapproachandstandardsdo weexpectfromothers? 5. Capacity Whatkindofresourcesdoweexpecttobeavailable?Whatskills? Whatfunding?Howmany? 6. Consistency Whatlevelofperformancemustweachieve?Howuniformdo resultsneedtobe? Ideallythesetradeoffsaremadeintentionally.Forexample,tradingoffanabilityto customizesolutionsagainsttherealityoflimitedresourcecapacitymaybeentirely justifiedinsomesituations,butafoolishchoiceinothers. Systems(for(Distilling(Complexity( Acloserlookatcommonlyuseddeploymentstrategiesrevealsthattheydifferin whichprioritiestheyimplement.inoneformoranother,theyallhidecomplexity fromtheinitialsustainablesolution,buttheymanagethedistillationofcomplexity differently.eachmakestradeoffsinadifferentway.aninnovatorworkingtoscale Outtheirsolutioncanchoosetheapproachthatmakesthebestcompromisesfor theirgoal. Custom&Deployment:Asmentionedearlier,itispossibletomoveintoanew contextbydoingthesamethingthescaleupteamdidintheoriginal environment,tailoringfunctionalityandconnectionstothelocalconditions. Thisapproachkeepsallthecomplexityfromtheoriginalsolution,astrategy thatrequiresuniquehighvaluepeople,substantialtime,andlargebudgetsto replicateineachnewenvironment.ironicallytheprocessofcustomcreation canencounterunexpectedpitfalls,sodespitetheinvestmenttheconsistency oftheoutcomeisuncertain. Packaged&Solution:Attheotherendofthespectrum,wecoulddistillthe basicsofthesolutionintoasetofroteinstructionsandreplicatethe approachinproductionlinefashion.heretheinnovatorhidescomplexity andlimitscustomization.thiscanbeaffordableandeasytoadoptin environmentswithlimitedresourcecapacity.itistheclassicmodelfor engineeringreplicablesolutionswherevariationsincontextarelimited,such asafranchisedrestaurantenvironment.however,inmessyenvironments wherefullcontrolofconditionsdoesn texist,theforcedconsistencyoften failswhenconfrontedwithlocaldifferencesthatreallydomatter. Platform:Aplatformapproachtakesapositionmidwaybetweenthese extremes.withaplatform,asuiteofelementsispackagedtogetherwith INNOVATION:((THE(MISSING(MIDDLE( 17

18 verytightlydefinedinterfacesandstandards.withintheplatformitself, complexityishiddenandconformanceisenforcedwiththeoutsideworld. However,theplatformisnotthewholesolution.Itisdesignedasthe foundationforindependentinnovation,withcreativeadditionsbeingbuilton topofthecore blackbox.odkbasedsurveytoolsormicrocashtransfers usingmobilephonesareexamplesofusingplatformsforinnovation.the innovatordoesnotneedtore1inventamobilephonenetwork,sotheycan quicklyaddtheirowncustominnovationsontopoftheestablished standards. Tool&Kit:ToolkitsaresimilartoaPlatforminthesensethattheyhave componentsthataretestedandincludewell1definedinterfacestoconnect withothertools.inthiscase,theelementsarerelativelyautonomousandcan beassembledindifferentwaystomeetlocalconditions.ifaplatformactsas afoundationforinnovation,thenatoolkitismorelikealegoset.diverse innovationsarebuiltfromasetofstandardizedparts. Standards:Anotherformofreplicationistocreatestandardsand constraintsthatbindalltheplayersinaspace.ineffectthisalignsother innovatorstoavalidatedapproachandenablesmultiplesolutionstowork together.standardsarequitepowerfulinthattheycanimpactabroad rangeofinvestment,buttheyarenotoriouslydifficulttocreate,adoptand enforce.theyarealsoparticularlyvulnerabletochange,becomingmoreand morebrittleovertime. 18( INNOVATION:((THE(MISSING(MIDDLE

19 Managing(Scale(Up(and(Scale(Out( Innovationmanagementmodelsmustalignwiththeunderlyingvaluecreation modelusedineachstage.asaresult,thereisnoonerightwaytomanagean innovationacrosstheentirelifecycle. Overthelastfewyearstherehasbeenaperiodofculturaladjustmentwithinthe Humanitariancommunity. Failfriendly innovationmanagementmodelshave beenincreasingacceptedasapracticeinsupportoftheinventstageofinnovation. Thechangewasanecessaryshiftbecausethetraditionaltightlycontrolledand measuredmodelsforoptimizingwellestablishedcapabilitiesweresimply inappropriatefornewideaexploration. Asimilarshiftinmanagementstrategiesneedstooccurasinnovationsmovesfrom InventtoScaleUp.Thesearetwoverydifferentkindsofactivity.TheInventstage isdrivenbyaneedtoexperiment,designandvalidateideas.managementpractices encouragequickandeffectivelearninginanuncertainenvironment. Incontrast,innovationsScalingUpmustfocusoncomplexprogramarchitectureand engineering.demandsoutsidetheoriginaltalentsoftheinventteamsarepiled ontotheinitiative.atechnologyinnovationcaneasilygrowtorequireskillsin changemanagement,supplychaindesign,businessmodeldevelopment,andhuman resourceplanninginordertobecomeasustainablesolution. Thenatureofriskshiftstoo.AschallengesmovefromInventtoScaleUpthe leadershipprioritiesshiftfrommanaginguncertaintyandriskofunexpectedfailure todealingwithorganizationalengineeringproblemthatarecomplexandhard. TherearemanyWickedProblems,issueswithoutclearlydefinedanswersthatoften comewithmessycomplexsocialdynamics.thesetypeofproblemcannotbe plannedoutinadvance,soaswithotherstagesofinnovation,iterativelearning playsakeyrole.however,asprogramsscaleup,thelearningisnotsimplyabout ideavalidation.thegoalistoprogressivelyreachacompleteendstatesolution. Anumberofmanagementchangescomeoutofthisshift: Measuring&Progress&to&End&State:TheScaleUpprocessmaywellreduce theactualefficacyoftheprogramasrealworldrealitiesareintegratedinto thesolution.outcomebasedmeasures,whichtrackprogrameffectiveness, needtobereplacedwithothermeasuresthatreflecttheprogressthe programhasmadetobecomingasustainablesolution. INNOVATION:((THE(MISSING(MIDDLE( 19

20 Passionate&Owners:Thepathtoengineeringacomplexsystemrequiresa bigpicture visionoftheendstate.thisholisticviewisusedtoknit togetherthevariouselementsandtomakesurethatkeygapsdon texist. ProgramOwnersareresponsiblefordevelopingandmaintainingthisvision. Inourexperiencethiscannotbedelegatedtoacommitteeorcapturedina pre1plannedreport.anactiveandpassionatearchitect,whohasaholistic viewoftheinitiative,isneededtoguidethecreationofthesustainable Solutionandeventuallydistillcomplexityforareplicablesolution. Time&and&Investment:ThiscreationofcomplexSustainableSystemsisa longjourneythatcaneasilyrequiremoretimeandmoneythantheoriginal pilot.investmenttosimplytoachieveacompletesustainablesolutionthatis distilledanddeployedcanbesubstantial.timeframesmaywellextend beyondtheshort1termattentionspanofmostgrantfundedefforts. AswiththeearlierefforttocreateaInventcapabilitywithintheHumanitarian sector,thesechangeswillrunintoestablishedpoliciesandpractices.significant changesacrossfundingagencies,ngo sandcollaboratingorganizaitonswillbe needed.manyofthesearecalledoutinthetableattheconclusionofthereport. Tosomeextentthisishappening,particularlyaroundfinancing.Overthepasttwo yearsforinstancedfidhasidentifiedtwovalleysof financial deathfornew innovations.thefirstinitialideafundingvalley,andthesecondscalingvalley.in somesensesthepilotusaiddivhumanitarianfundingmechanismoflastyearwas aimedatthissecondvalleyofdeath.however,adecisionmakingprocessthattook thebestpartof10monthsfromconcepttofinaldecision,coupledwithaseeminly poorsuccessrateofapplications,showsthatevenwhenthereisfundingavailable, therearedeeperproblemsinthescalingstageforinnovationintheindustry. Key(Program(Management(Differences(in(the(Missing(Middle((Table)( Thefollowingtablehighlightsthedifferencesthatexistundereachoftheinnovation models. 20( INNOVATION:((THE(MISSING(MIDDLE

21 Comparing(Innovation(Models( Stage&1& Missing&Middle& Stage&4.0& Invention& Taking&to&Scale& Optimize& Stage&2 Stage&3& Climbing&the&Mountain&of& Complexity& &Sustainability& Descending&the&Mountain&of& Complexity&F&Replication& Key&Purpose& && & & Exploreuncertainty. Discoverwhatworks. Createoriginalvalue Createacompletesolutionthat worksinthe realworld Simplifythedeploymentofthe solutiontoenablereplication Createvaluebyenhancing existingsolutionsthrough incrementalimprovements. Principal&Leader& & & & Entrepreneur Architect ProductOwner OperationalManager Dominant&Business& Mindset& & & & Nimblenessandabilityto pivot Architectural/systemsthinking Simplification/marketing/product thinking Economiesofscaleandefficiency Investment&Criteria& & & & Potentialforopportunity Successfulpilot(goodidea) Provenmarketfit? ROI Clearstagegatesfordelivery Cleardeployment/replication Clarityofknowncostsand

22 Stage&1& Invention& Passionateentrepreneur Missing&Middle& Taking&to&Scale& andfinancing strategy Viablepathtoscaling Marketingplan ProductScalingcapability Abilitytosustainthejourney counterfactuals 1 Stage&4.0& Optimize& Detailedbusinessandproject planning. Complexity&vs.&Simplicity& & & & Simplifiedenvironment thatremovescomplexity toenableflexibility Embracecomplexityto engineerwholeintegrated systemsofvalue Simplifythesolutionforusabilityby endusersindifferentcontexts Codifiedsystemsenabling targetedimprovementssimplified environmentthathides complexitytoenablereplication andincrementalchange Conformity? Biggest&Risk&& & & & Unknowns/Riskof failure(you rewrong) Complexity/Difficultyof solution(itshard)(getting stuckincomplexity?) Notbeingabletosimplifythesolution intheformatuserswant(wrong marketfit?) Management/Riskofpoor execution(you renotcompetent) Risk&Management& & & & Shortiterativelearning. Failfast.Learnquickly Bigpicturevision.Progressive creationofcomplexecology. Endstateusability,marketfitand demandforendproduct/service Planningandtrackingcompliance withplan. 1 i.e.wehavethecounterfactualofthecurrentcostofdoing/producingthisalready,sowehaveacomparatortorunanroi againstforthenewsolution. 22( INNOVATION:((THE(MISSING(MIDDLE

23 Stage&1& Missing&Middle& Invention& Taking&to&Scale& Measures&of&Success& & & & Stage&4.0& Optimize& ValueDelivered(market fitanddemandproved?) Progresstowardbigpicture vision(morecomplete) Continueddeliveryofvalue (e.g.itstillworks) Replicablesolutiondeployedatscale ValueDelivered ProjectProgress NewValue(e.g.synergies) Timeframe&/&Investment& & & & Short/SmallProjects (pilots),smallscale, limitedexposure Longsustainedinvestment overuncertaintimeframe Clearertimeframesduetoneedtoget theproduct/servicetomarket. Clarityofcostsandrevenuesachieved toguideinvestmentlevels. MarketstagegatesUestablishdemand Singlego/nogodecisionmadeon settingupproject/programme andfinancingit. Clearlydefinedscopeand duration Legacy&Impact& & & & Changeisisolated Potentialfordeepstructural andbusinessmodelchanges. Unprovenchangemodels. Clearerunderstandingoftheimpact. Distillationofcomplexitypathclearly outlinestheimpactonlegacy environment. Replicate:Knownchangeswith knownchangemanagement Optimize:Changewithinexisting framework Development&approach& & & & Agile Metaagile?Honeycomb? Modularization Waterfall/Blueprint INNOVATION:((THE(MISSING(MIDDLE( 23

24 Recommendations# #Fostering#Scaling# SowhatdoesthismeanforHumanitarianorganisations?Thereismuchgoodwork beingdonetoinventnewideasthatcanaddresspressinghumanitarianneeds. Butinventingandvalidatingpilotinnovationsisnotenough.Thelargelyunmet missionremains,scalingthemtodeliverbroadbasedvalueforaffectedpopulations. Therearebothinternalandexternalchallengestobeundertaken: Portfolios)Of)Innovation) AscomfortgrowswiththeInventstageof innovation,thereisadangerthatfundingwillincreasinglyfocusonnewidea generation.yetsubstantialinvestmentsinlessglamorouslongtermprojects forscalingwillbeneededtobringthesenewideastoabroadbasedof beneficiaries. Contracting:))Longer)Time)Frames)/)Changing)Measures:Climbingand descendingthemountainofcomplexitywillengageteamsforlongperiodsof timeonmanydifferentprocesses.logframethinkingwon tbeapplicable. Longertimeframesmustbeanticipatedandcontractedfor,although iterativestepsalongthewaywillcontinuetobeuseful.themeasuresof successmustbealsoadjusted,soastoreflectprogresstowardatargetend stateofthesystem. ) Sustained)Funding:FundingmodelsintheHumanitariansectorare plaguedbytwoproblemsthatmakescalingdifficult.thefirstisthe preferenceforshorttermprojetswithclearlymeasuredsuccessfactors.the secondisanexcessivedependencyonmoneyinfluxesthatoccurduringthe bigemergencyresponses.scalingrequiressustainedfundingandcontinuity ofeffort,andfundingmodelsmustbeabletosupportthis. People,)Mentoring)and)Guidance) ScalingdoesnothavewellKestablished bestpracticesoradeeppoolofexperiencedresources.expertiseandinsight intothecomplexissuesthatdrivesuccessmaybethethinginshortest supplyasinnovatorsseektotaketheirideatoscale.thepositivedeviants andinnovatorsonthemarginsmaynotbethebestpositionedagentstoscale theirinvention.identifying,engagingandmentoringarchitecturallyfocused bigpictureleaders,andguidingtheirnewpractices,willbecomeakey requirementofsuccess.thiscouldbeanareawherefundersandother programsponsorscouldstepinandprovidedeeperlevelsofsupportto promisinginnovations.) ) Expanded)Collaboration:Asmentionedearlier,scalingisacomplexand messychallengethatdemandsmanydifferentskills.humanitarian 24# INNOVATION:##THE#MISSING#MIDDLE

25 organisationswillincreasinglyneedtogobeyondtheircapabilitiestodrive complexinnovationscaling.newpartnerships,includingwiththeprivate sector,offerawaytomeetthisneed.thesepartnershipsarenoteasy,and oftenrequireskilledfacilitation,brokerswhocanunderstandthediverse languageandworldviewsofthedifferentpartners. AnAccenturestudyfoundthatonly38%ofbusinesseshaveawellKdefined innovationstrategyandsystem. iii Thisisnotbealuxuryleadinginnovatorsinthe Humanitariansectorcanaccept.Scalingupandscalingoutinnovations,climbing themountainofcomplexitywillrequireintentionalleadershipinnewinnovation managementtechniquesandpolicies. Thusfar,thetrackrecordforscalinghasbeenspottyatbest.Puttingthisina postitivelight,thismeansthereisagreatdealofuntappedpotentialtocreatevalue. Giventhenumberofpromising babybunny pilotsthatarebeingdevelopedeach year,becominggoodatscalingoffersauniquelyrichopportunitytoincreasethe impactofthesector sinnovationinvestments. i PWCinnovationsurveyhttp:// 30 th June2014 ii Reiss,Eric(2011)The$Lean$Start$Up,$RandomHouse,USA iii Accenture(2013)Whylowriskinnovationiscostly, RiskKInnovationKCostly.pdfaccessed31stJuly2014 INNOVATION:##THE#MISSING#MIDDLE# 25