These slides are from a talk I recently gave at the Product Management Institute (PMI). PMI owns the PMP certification. The topic covered the "Innovator's Dilemma" with suggestions and insights into driving innovation in different company environments -- and the "fractal" behaviors that enable success.

1. A Fractal Approach To Innovation
Steve Gladstone
steve.gladstone@spg-solutions.com
March 18, 2014

2. Agenda
• Today, let’s discuss seemingly disparate concepts, drawing them together
to better understand and navigate the puzzle of innovation:
– Surprising links between motivation and innovation
– Understand the “Innovator’s Dilemma”
– Project, product, and solution companies
– The “fractal” mindset and behaviors
– The consigliere innovator model
– Culture and situational awareness fractals
– Bringing it all together through “joined-up” thinking
– Please feel free to interact as we go…let’s explore!

3. So, You Want to Have an Impact?
So, You Want To Have An Impact…
• Explore deeply and personally what “impact” means to you!
• Dan Pink: Surprises in motivation…
– Money? Yes…and no
– For creative tasks, higher rewards lead to lower
performance…
– It’s really about: Autonomy! Mastery! Purpose!

4. If Companies Want Innovation, Why Is It Difficult?

5. We Create Hierarchies To Manage It…

6. We Create Processes To Contain It…

7. And, There Are Usually Many Naysayers…

8. Companies Want Change, But Fear and Resist It…

9. Interesting Incremental Innovations
(Some innovations feel like these, don’t they?)

10. …So, we often end up being reactive. Why?

12. The Innovator’s Dilemma Visualized
$ (Cost, Price, etc.)
Features,Value,etc.
Incumbent
New
Entrant
10% Growth = $1M
10% Growth = $100M
• “Listens” to the customer
• Incremental innovation
• Organization tuned for
sustaining high price point
• Inferior product…at first
• Mostly ignored by market and
incumbent
• Pursue low-end features
• But, add more over time…
CEO: Which way to go?

13. • Perceived by some as “good enough”
• Converts some mid-market customers
from incumbent
• Others notice and may follow
• Eventually, begins to threaten
incumbency
The Innovator’s Dilemma Visualized
$ (Cost, Price, etc.)
Features,Value,etc.
Incumbent
New Entrant
• Inertia, slow to change
• Fear cannibalization
• Lower customer satisfaction
• Loss of market share
• Struggle to recover

14. Organizational Maturity Model: Projects, Products, or Solutions?
(The fractal that is usually much bigger than you!)
• Recognize that everyone says they want a solution
• Projects
– Customer says “Jump!”, and company says “How high?”
– Company brand centered in capability to execute
• Products
– Company willing to gently say “no” to customers
– Typically “market” driven
• Solutions
– Company says, “We are all things to all people.”
– Bring together People, Process, Technology
– Professional services consumes/customizes company products
– Typically viewed as “end-to-end” by customer
• Question: Which type is your personal sweet-spot? Is it aligned with the company’s?
Note: Projects and products do not typically play well together
if they share execution resources.

15. Project, Product, Solution Visualized
Typical Incumbent Strategy:
- Sustain Market Share
- Sustain Customer Satisfaction
ID Impact:
- Lose Market Share
- Decrease Customer Satisfaction
- Struggle to Recover
“Project”
“Product”
“Solution”
• Build whatever customer specifies
• “Recreate the wheel” several times
• Eventually, claim a “product”
• Suffer code fragmentation
• How do we contend with NRE-based business scaling issues?
• Build what the “market” wants
• OK. We need a “platform” and API gate-keeper
• Truly, have a “product”
• Still, can we service mass customization?
• Core engineering builds product
• Professional services handles customization
• Business scales in products and services
Leadership Changes
Typically Required
Organizational Scale (and typically, Time)

16. Fractals and Artificial Life: Describing Companies and Cultures?
 What’s a Fractal (for our purposes)?
 A simple concept or structure, iteratively applied
 Amazing, beautiful, “self-similar”, complexity emerges
 What’s Artificial Life (for our purposes)?
 Simulation of complex living structures and functions
 Based upon atomic, simple rules, iteratively applied
 Complex behaviors “emerge”
Question: Can we use these as paradigms for navigating
the innovation and project management “puzzle”?

17. Fractals: Emergent Complexity from Recursive Simplicity
The Koch Snowflake & Coastlines
“Self-similarity”

18. Fractal Examples In Nature

19. Fractal Examples In Practice
Social Networks
Cell Phone Antenna
Agile Project
Management
Methodologies
Digital Image
Compression

20. Fractals, Fractals Everywhere?
“Fractal geometry will make you see everything differently. There is a danger in reading
further. You risk the loss of your childhood vision of clouds, forests, flowers, galaxies,
leaves, feathers, rocks, mountains, torrents of water, carpet, bricks, and much else
besides. Never again will your interpretation of these things be quite the same.”
— Michael F. Barnsley
Fractals Everywhere (2000)

21. Fractal Behaviors of an Organization Drive
Emergent Results and Culture
Elementary
Behaviors
Organizational
Structure
Emergent
Outcomes
 Observe small factors that integrated to final results
 Observe self-similar behaviors at differing scales
 Emergent project results
 Emergent company “culture”
 Executive Sponsorship vs. “Sleepership”
 Information/Knowledge Silos
 Roles and Responsibilities
 Responsibilities and Authority
 Commitment and Accountability

22. Innovation, Income, Crime Scale with Population Size
DOUBLING THE SIZE OF A CITY
SYSTEMATICALLY INCREASES NUMBER
OF PER CAPITA PATENTS BY
APPROXIMATELY 15% REGARDLESS OF
CITY
Source: Geoffrey West

23. tc
N(t)
t
N(t)
N(t)
N1(0) .
N(0)
N2(0) .
N3(0) .
t
N(t)
Unbounded Growth Requires Accelerating Cycles
of Innovation to Avoid Collapse
Source: Geoffrey West

24. Ultimately, All Companies Die…
Source: Geoffrey West

25. Do Fractal Behaviors vs. Organizations Make More Sense
To Cope With The Struggle To Innovate?
(Birds, Bees, and Ants Do This)
Replace With? To Get

26. Geeky Musings: Can We “Diagnose” Companies?
• The same way we can reduce a digital image to it’s fractal equivalent, can we do the
same to an organization?
• If so, the possible outcomes are:
– The elementary fractal organizational “drivers” and pathologic behaviors would be apparent
– The life of the organization and evolution could be visualized (in a monte carlo sense)
– Possible IT/HR tools to diagnose, measure, and materially cope with the fractal drivers?
– Similar implications in social networks, family dynamics, and many other fields
– Sounds like Isaac Asimov’s Foundation series (science fiction)?!?
Fractally Represent Images
Fractally Represent Organization
Emergent Outcomes
&
Root Causes

27. Key Fractals: Execution and Communication in Context
• Understand
– Industry trends and causal relationships
– Competitive, revenue, profitability, and growth impacts
– Don’t use technology just for its own sake
– Product cannibalization fears!
• Get into stakeholder’s heads
– The CEO’s
– The customer’s
– Others (internal and external)
• Navigate any dual/mixed C-level roles
– CIO reports to CFO
– Dual CTO/CEO role
– PMO vs. silo PMs
• Who really drives change/innovation?
– Engineering vs. product management
– CEOs want minimal features, power users want everything
• Be forward thinking, but balance tactics and strategy
– If you only listen to customers, then you will only be as smart as them
– For disruptive innovation, paradigm shifts must be “on the table”
– Is failure really allowed? Because…

29. Key Fractals: Release Early and Often
It won’t be complete or perfect the first time…
End-users will be a better compass to shape the product anyway.
Prototypes, Beta Releases, and User Groups get you closer, faster.

30. Key Fractals: Know Thy Personal and Company Culture
• Alignment is essential in any organization
– Clear definitions of roles and responsibilities
• Project administrators vs. project managers
• Useful process vs. worship of process
• “Centers of excellence” processes, delivery, and metrics
– Commensurate responsibilities and authority
• Misalignment can lead to overly political environments
– Matched commitment and accountability
• The union builds on what we know about motivation
• Is it a Project, Product, or Solution based company?
– Core to understanding what/how change and innovation will/won’t occur

31. Key Fractals: Create a Shared Sense of Urgency
• Facilitate joined up organizational thinking/execution
• Partner with Marketing for communications
– Internal communications
• Be crisp and clear about why it is urgent (“an offer they can’t refuse…”)
• Does everyone share the vision, or just versions of it?
• Authorized internal communications can serve as a lock-in
• Care and feed the messaging, don’t abandon it
– External communications
• Media and trade shows must reflect the change/innovation
• Align or revise branding strategy, as required

32. Key Fractals: Bring It Together With “Joined Up” Thinking
• Understand existing company projects, products, and solutions
• Leverage knowledge of present “organizational maturity”
– In company cultural context, is the change/innovation realistic?
– Is it worth the professional risk?
• Truly “partner” with people/teams/organizations to bring it about
– Think like a developer, project manager, marketer, CEO, etc.
• Politics of change: Create buy-in
– No buy-in = No change
– Assert with passion and create excitement
– Be proactive, not reactive
– Take reasonable risks, but mitigate
– Change is hard: Empathize, but don’t fully sympathize
– Appeal to the “arrogance” of opponents (by making it their idea!)
– Ultimately, “Developers own the code”
Projects
ProductsSolutions
Fractals suggest behavior trumps process, particularly at SMB scale!

33. The Godfather’s “Consigliere” Model:
The Trusted Advisor Fractal

34. Summary: Agent of Change Key Fractal Behaviors
• Regularly evidence deep understanding to Execs/C-levels
• Know what it takes to execute an idea in a company/industry context
• Know thy personal and company culture
• Create a shared sense of urgency through communications
• Maintain awareness of existing “fractal” behaviors and weigh desired
outcomes
• Of course, execute: generate iterative results
• Consider the consigliere as an innovator model
• Remember, “joined up thinking” makes it happen!
• If you do the above, then:
– Projects, products, and solutions can execute with highest success probability
– Company and deliverables are crisply branded
– Gain executive sponsorship vs. “sleepership”
– Build resilient trust with Execs/C-levels

35. Finally, Claim Your Seat at the Table
• Significant change/innovation rollouts typically have material impact on company
• The stakes can be high!
• While execution of an idea is almost everything, its not the only thing
– Don’t burn too many bridges, as you will need them to come along next time!
– And, contrary to “The Godfather”, a carefully placed horse head won’t quite do it…

36. Now, We Understand Lao Tzu in a New Context…
Thank You for Participating Today!
Steve Gladstone
steve.gladstone@spg-solutions.com
Your comments, experiences, and
suggestions are welcomed!

37. Appendix

38. Further Exploration
Dan Pink on the Surprising Truth About What Motivates Us:
http://www.youtube.com/watch?v=u6XAPnuFjJc
Guy Kawasaki on the Art of Innovation:
http://www.youtube.com/watch?v=Mtjatz9r-Vc
PBS on Fractals:
http://www.youtube.com/watch?v=HvXbQb57lsE
Generating the Mandelbrot Set (Math):
http://www.youtube.com/watch?v=8ma6cV6fw24
Conway’s Life Simulation:
http://www.youtube.com/watch?v=C2vgICfQawE
Predators and Prey Simulation (Emergent Behaviors):
http://www.youtube.com/watch?v=qSmlKAly1UE
Geoffrey West on the Surprising Math of Cities and Corporations:
http://www.youtube.com/watch?v=XyCY6mjWOPc

39. The Game of Artificial Life:
Emergent Complexity From Simple, Iterative Rules
 Life is played on a grid of square cells--like a chess board but extending infinitely in every
direction. A cell can be live or dead. A live cell is shown by putting a marker on its square. A dead
cell is shown by leaving the square empty. Each cell in the grid has a neighborhood consisting of
the eight cells in every direction including diagonals.
 To apply one step of the rules, we count the number of live neighbors for each cell. What
happens next depends on this number.
 A dead cell with exactly three live neighbors becomes a live cell (birth).
 A live cell with two or three live neighbors stays alive (survival).
 In all other cases, a cell dies or remains dead (overcrowding or loneliness).