Imagine a world without the lightbulb. Or the telephone. Or even, yes, the internet or cellular network you are using to read this right now. None of these or countless other innovations would have happened if someone had stepped in and stopped innovators and entrepreneurs from trying and failing, testing and tweaking, and ultimately succeeding and improving the lives of billions around the world.
What is permissionless innovation and why is it important?
At Koch, permissionless innovation is at the heart of every business and capability. When experiments fail, employees learn as much as they can to improve for the next attempt. And when they succeed, they further virtuous cycles of mutual benefit as the company pushes to create better products and services that people value while using fewer resources, finding new and better ways to increase efficiency and improve processes.
What follow are some lessons learned from the past that can help each of us put permissionless innovation in high gear:
Innovation is everyone’s job.
At every level, in every capability and business, and in every location, it is each employee’s responsibility to find new ways to improve and transform their roles and themselves consistent with the vision for their business. The way we look at it: we can either be the ones to disrupt or be the ones who get disrupted. We’d much rather be the former.
Permissionless innovation isn’t a free-for-all. We want employees to experiment in a way that makes sense for their individual roles and, if they fail, allows them to fail quickly, learn, and iterate another solution. Permissionless innovation is setting priorities, working on important things, and conducting experiments consistent with Koch’s risk philosophy. It is not chasing bright shiny technologies and products with little or no attention to risk or priorities. That's an important distinction.
Innovative ideas can come from everyday tasks... if you're thinking about it the right way.
For example, one of our goals at Georgia-Pacific is to use less paper to deliver the same or better value for customers and consumers. Whether it is our touchless paper towel dispensers, lighter weight packaging, or improving our tissue, we're decreasing the resources required to “do the job” better for our customers and consumers. In those businesses, every employee understands this is a priority and strives to find new and better ways to do so.
Some of the best innovations have come from employees who wanted to make their jobs more satisfying. An employee in Corpus Christi handles crude oil purchasing and scheduling. To do so, she reconciled dozens of spreadsheets consuming many hours each week, usually during evenings and weekends at home. She finally reached out and said, “I want to automate this so I can free up time to improve our purchasing effectiveness by $1 million or more per year.” Even though the returns were high and the risks modest, it took a while to find resources to work on the problem. But with the help of an innovative new process automation team at FHR, eight weeks of work and testing were invested to automate the activity.
We underestimated how valuable it would be. Because of the new system, we were in a position to buy an extra several thousand barrels per day that we could bring into the Corpus area. Those additional barrels should be worth many more millions more per year.
Helping employees and teams find the time to work on these “small” improvements is one of the important ways supervisors across Koch foster permissionless innovation.
There’s always room to improve, if you make the time.
I encourage people to do marginal analysis of how they are spending their time. If we free up time by deferring, automating, outsourcing or not doing lower value activities, we can apply that time to figure out how to get our jobs done more productively. And the more that we do that, the more time that we free up for higher-value transformation. This creates a virtuous cycle between employees, their supervisors and the company.
We are focused on efficiency and eliminating slack in the system. We also know that the opportunity cost of big mistakes can be very large. This can translate into a “no slack” model for our teams and a “no mistakes” risk philosophy. This may be the right approach as it relates to specific roles and activities in our business, but there are many other roles and activities where this approach fundamentally undercuts permissionless innovation. If we don’t guide our teams to pursue the appropriate roles, responsibilities and expectations, time management, and optimize risk to experiment and learn, we will not transform ourselves. Uniformly applying a “no slack” and “no mistakes” approach may result in better short-term results, but it makes permissionless innovation far less likely, and may well lead to the demise of our businesses over time.
It's never too early to start.
Invest your time reading and being curious about new ideas and technologies and how they might affect us. Ask yourself, “how could I do what I do in a much better way?” or “how could our business do something completely different and far better?” Look at other companies in your industry, across Koch, and at other industries far ahead of ours.
We only have so much time we can direct to improving and transforming. I believe the most important thing we can do in our job and in our life is to apply marginal analysis to our time. Think about the least valuable things we do and ask yourself why we do it and how else it could be done, because that's how we find time to create better ways and virtuous cycles. As Peter Drucker noted, our “to do” list is important, but our “not to do” list is far more important.
When I ask employees how they think about working on something new, they instinctively compare it to the most valuable thing they're working on. They should be comparing it to the least valuable thing they're working on. I've probably made this point more than 50 times around the company, and heads are always nodding in agreement. But agreement isn’t enough, if we all want to realize Maslow’s goal that “what we can be, we must be...” we need to figure out how we as supervisors and employees practically manage risk, priorities and our time.
Read more from John Pittenger.