Innovation, Standards, and Mature Organizations Ted Habermann NOAA National Data Centers

1. Innovation, Standards, and Mature OrganizationsTed HabermannNOAA National Data Centers “There are special management challenges, and I think that that's an area that we in agencies such as NOAA, need to spend an extra amount of time on. We have very talented workers and very talented employees, many of whom have advanced degrees, and they have been successful because of certain behaviors in their field. As you progress through the system in any organization, you need to develop other skills;…” Vice Adm. Lautenbacher Mature Organizations

2. The Technology S-Curve We all know that new technologies emerge slowly, grow quickly (if they catch on) and then fade away. This common knowledge has been described as the technology S-curve. Why does it exist? Luddites Pragmatists Visionaries TIME

3. The Chasm Moore has described the “chasm” in the adoption life cycle. He proposes that many new technologies do not make it across the chasm between visionaries and pragmatists. They fall into the chasm. The technology S-curve with the chasm might look like: TIME

4. Technology Cycle Technology Cycle Technological Disruption Selection Era of Ferment Dominant Design Disruption #2 (destroys existing competence) Standards Network Effects Value = f(N2) (non-compliance cost increases with time) TIME O’Reilly, C.A. and Tushman, M.L., The Ambidextrous Organizations, Harvard Bus. Rev, April 2004.

5. Types of Innovation - 1 Sustaining / Incremental Innovation: generally small innovations in products and processes aimed at existing customers. Disruptive / Discontinuous Innovation: significant innovations generally aimed at unknown or non-existent customers.

6. Unidata Objectives (1998): Sustaining Innovation “These objectives either respond to users' current needs or advance Unidata toward meeting future needs effectively. Most of the "responsive" items are continuations of current Unidata objectives, and their importance is well established. But only by looking beyond present needs to anticipate future ones, and by pursuing the most promising technical advances, can Unidata remain effective. This is true even though some of these advances involve uncertainties, and the demand for them may not be apparent as yet”.Unidata, 2003 Proposal. Disruptive Innovation Clayton Christensen, The Innovator’s Dilemma

7. Java Sustaining Innovation Customer Metric Disruptive Innovation C TIME Unidata (netCDF) Evolution Disruptive Innovation: Always includes a decrease in metrics for current customers so it is difficult for mature organizations. In the Unidata case we are now seeing the disruptive switch to Java play out. The capabilities of the Java version of the netCDF libraries have now surpassed the original C version.

8. Types of Innovation - 2 Component Innovation: Making existing components better. Architectural Innovation: putting existing components together in new ways. Mature organizations: Architectural Innovation usually involves organizational change

9. Innovation & Technology Cycle Disruptive Innovation Component, Architectural, Sustaining and Process Innovation Product Innovation Design Competition Community-driven technology change What do we make? How do we make it (better)? TIME

10. How Standards Change The Game • Expanded Network Externalities (Network effect turns on) • Reduced Uncertainty and Risk in Technology Decisions • Reduced Consumer Lock-In to Particular Components • Competition in the Market vs. Competition for the Market • Competition on Value vs. Features • Competition to Offer Proprietary Extensions • Component vs. Systems Competition Standards shift the locus of competition from systems development to component development. Specialists tend to thrive in the mix-and-match environment created by interface standards. Generalists and system (stovepipe) developers tend to thrive in the absence of standards. In the absence of standards: 1) there is no architectural innovation (no mix-and-match) and 2) the organization can not benefit from component innovation. Once a standard has been agreed on (selection), the organization benefits from component innovation and architectural innovation.

11. Why No Standards? The longer the market takes to determine a standard, the more expensive it will be for firms operating within that market. The more expensive this competition becomes, the greater the tendency for firms to cooperate at the beginning. The difficulty with this reasoning is that it is difficult for individual firms to determine how expensive or how long it will take the market to determine the dominant standard. Nor are companies willing to cede control of such an important aspect of their market early in a competition. Booz Allen Hamilton, 2005. The science community generally values sharing results more than they value sharing data.

12. Innovation, Standards & NOAA There is a considerable innovation literature that can help NOAA learn the new skills required to innovate strategically and effectively. Technology is evolving from a computing tool to a communication tool. It is becoming an infrastructure technology. Standards are critical to building value of infrastructure technologies. Standards are critical to organizationally effective component and architectural innovation. NOAA must develop and use processes for selecting and applying standards. The requirements and approaches to planning are very different in the different phases of the technology cycle. Understanding and explicitly recognizing the differences in phases of the technology cycle and the differences in balance between management and leadership skills might help NOAA.

13. NASA Standards

14. NASA Standards

15. Organizational Capabilities • = Sum of individual capabilities • Resources • Money and people, easy to change • Processes • Hard to change: • Organizational boundaries facilitate current processes • Current processes have worked in the past • Values • Hardest to change

16. Good people, wrong process / values The reason why innovation often seems to be so difficult for established firms is that they employ highly capable people and then set them to work within processes and values that weren't designed to facilitate success with the task at hand. Ensuring that capable people are ensconced in capable organizations is a major management responsibility in an age such as ours, when the ability to cope with accelerating change has become so critical. Clayton Cristensen, Coping With Your Organization’s Innovation Capabilities, in Leading For Innovation and Organizing for Results

17. TIME Values Statements From a paper on standards: As an agency, NASA has particular needs, and so the SPG process is tailored for the particular pragmatic demands of the agency. As an agency, NASA has a technology adoption curve just as any population does even if, as a research agency, NASA may skew toward innovation and early adoption. NASA’s great advantage is that it sponsors a large pool of innovators NASA is here and life is good!

18. Position of Responsible Structure Autonomous Mainstream Heavyweight teams New Structure of Development Team Lightweight teams Fit With Organization’s Processes Functional organization Customary Poor (disruptive) Strong (sustaining) Fit With Organization’s Values What Approach? Where are NASA Standards Efforts? Clark and Wheelwright, Organizing and Leading “Heavyweight” DevelopmentTeams, 1992.

19. NWS NESDIS NMFS NOS OAR Functional Team FM FM FM FM FM Working Level Markets

20. L L L L L PM Lightweight Team FM FM FM FM FM NWS NESDIS NMFS NOS OAR Working Level Project Manager and area of influence Liason Markets

21. L L L L L PM Heavyweight Team Functional Manager FM FM FM FM FM Project Manager and area of influence NWS NESDIS NMFS NOS OAR Working Level Liason Markets

22. Broad concensus Extent to which people agree on what they want No concensus No concensus Broad concensus Extent to which people agree on cause and effect (how to get there) Microsoft in 1995 Apple Computer Balkan Peninsula Companies Employing Independent Contractors Christensen, C., M. Marx, and H. H. Stevenson, The Tools of Cooperation and Change, Harvard Business Review, Oct. 2006

23. No concensus Broad concensus Culture Tools Leadership Tools Broad concensus • Fokelore • Religion • Charisma • Vision • Rituals • Salesmanship • Democracy • Tradition • Role Modeling Management Tools • Apprenticeship Power Tools Extent to which people agree on what they want • Strategic Planning • Negotiation • Financial • Incentives • Transfer Pricing • Measurement • Systems • Role Definition • Hiring and • Promotion • Fiat • Control Systems • Threats • Standard • Operating Proceedures • Coercion • Training No concensus Extent to which people agree on cause and effect (how to get there)

24. Broad concensus Extent to which people agree on what they want No concensus No concensus Broad concensus Extent to which people agree on cause and effect (how to get there) Different NASA Standards Groups? Scientists? Scientists? Contractors? Christensen, C., M. Marx, and H. H. Stevenson, The Tools of Cooperation and Change, Harvard Business Review, Oct. 2006

25. Organizational Challenge A new business with high growth potential (let’s call it NewCo) rarely coexists gracefully with the most closely related established business unit within the company (let’s call it CoreCo). The unnatural combination creates three specific challenges for NewCo: forgetting, borrowing, and learning. NewCo must forget some of what made CoreCo successful, because NewCo and CoreCo have elemental differences. NewCo must borrow some of CoreCo’s assets—the greatest advantage it has over independent start-ups. And NewCo must be prepared to learn some things from scratch. 10 Rules for Strategic Innovators: From Idea to Execution, Vijay Govindarajan and Chris Trimble, Harvard Business School Press, Boston, MA. 2005

26. Leadership Model: Positive Deviance Positive deviance says that if you want to create change, you must scale it down to the lowest level of granularity and look for people within the social system who are already manifesting the desired future state. Take only the arrows that are already pointing toward the way you want to go, and ignore the others. Identify and differentiate those people who are headed in the right direction. Give them visibility and resources. Bring them together. Aggregate them.Barbara Waugh

27. Ted.Habermann@noaa.gov

28. References Booz Allen Hamilton,Geospatial Interoperability Return on Investment Study, 2005, http://gio.gsfc.nasa.gov/docs/ROI%20Study.pdf. Christensen, C., The Innovator’s Dilemma, Harvard Business School Press, 1997, 225p. Christensen, C., M. Marx, and H. H. Stevenson, The Tools of Cooperation and Change, Harvard Business Review, Oct. 2006. Clark and Wheelwright, Revolutionizing Product Development, The Free Press, New York, 1992, 364p. Govindarajan, V. and C. Trimble, Building Breakthrough Businesses Within Established Organizations, Harvard Business Review, May 2005, p. 58-68. Lautenbacher, C., Business of Government Radio Interview, http://www.businessofgovernment.org/main/interviews/bios/conrad_lautenbacher_frt.asp, 2005. Moore, G., Crossing the Chasm, Marketing and Selling High-Tech Products to Mainstream Customers, Harper Business, 1991, 211p. O’Reilly, C.A. and Tushman, M.L., The Ambidextrous Organizations, Harvard Business Review, April 2004. The Positive Deviance Initiative, http://positivedeviance.org/ Pascale, R.T. and J. Sternin, Your Company’s Secret Change Agents, Harvard Business Review, May 2005, p. 72-81. Tushman, M.L., Anderson, P., and O’Reilly, C.A., Technology Cycles, Innovation Streams, and Ambidextrous Organizations: Organizational Renewal Through Innovation Streams and Strategic Change, in Managing Strategic Innovation and Change, Tushman and Anderson, eds., Oxford University Press, New York, 1997, 657p.

29. Background

30. Team Structures

31. How to Forget • Don’t be insular. • Don’t assign status based on size. • Rearrange the moving parts. • Build a new dashboard. • Dare to make complex judgments. • Promote new thinking about success.

32. How to Borrow • Balance the yin of forgetting with the yang of • borrowing. • Find common ground. • Be careful what you ask for. • Co-opt CoreCo.  • Be alert to tremors. • Force authority uphill.

33. How to Learn • Don’t try to mix oil and water.  • Protect predictions. • Avoid being defensive. • Do less, faster. • Analyze through a new lens. • Measure what you don’t know.