How business model innovation can be goosed: increase the likelihood of serendipity

I’m following up on the theme of innovation arising from periodically or systematically rearranging the workplace seating layout (see Embrace randomness). Here’s a snippet from Rachel Feintzeig in a NY Times piece that touched on workplace intermingling at a New York ad agency:

Rachel Feintzeig, The New Science of Who Sits Where at Work

MODCo Media, a New York advertising agency, has tested three different seating arrangements over the past few years. For about six months, the company intermingled its accountants and media buyers, hoping they would begin to absorb each others’ skills through “osmosis” and “overhearing phone calls.”

The experiment ended up saving MODCo “a couple hundred thousand dollars a year,” says CEO Erik Dochtermann, but it turned out badly for the accountants. The media buyers began to understand the financial side of the business so well that MODCo no longer needed a full accounting department. Now, the media buyers “do the accountancy on the fly” and the company’s chief financial officer checks their work, says Mr. Dochtermann.

From my perspective this is a great example of spontaneous desiloing of the business instigated by the chance interactions of the MODCo buyers when placed in proximity to the accountants. The transition of the necessary foundational knowledge about accounting took place without a plan, simply because the buyers were observing experts, and then began to copy them.

But Feintzeig and the MODCo CEO are using the wrong metric to measure the true impact of this business model innovation, which shouldn’t be money, but time. There is no doubt that the new approach — where the buyers record the accounting of their activities — means that the financials are getting closer to real-time. In the older model there was a lag capturing and communicating the financial data, then the effort expended by the accountants and various delays there, and of course some checking by senior finance people.

The likelihood is that the CEO would have been willing to spend serious bank to shorten that cycle, to buy new software to optimize it, etc. But, instead, the business model innovation came serendipitously, by changing the mix of people’s desks. And specifically people that were formerly housed in separate buildings or floors whose work was actually closely linked.

I’ve written recently about the premise of organizing the company’s operations around hiring and retaining the high performers, which Reid Hoffman at Netflix calls increasing the talent density (see What top performers do, and how to do it). This is a parallel idea, which is cross pollinating ideas and knowledge by rotating or randomizing seating, which increases coincidensity: increasing the likelihood of serendipidy.

And the apparent downside — the reduction in accounting staff — is only a downside to the accountants, not to anyone else. The shifting social contract in today’s accelerating economy means that lifetime employment is an antique premise, at best an empty promise. And note as well that the accountants may be just as likely to be picking up the skills of the buyers as the buyers did theirs.

Playing roulette at work

I don’t mean gambling, exactly. But people at many companies are trying to take a chance on others, by setting up programs the increase coincidensity: fostering chance interactions by not leaving the just to chance.

For example, Sylvia Ann Hewlett recently wrote about the US arm of Boehringer Ingelheim, a pharma company:

Like many good ideas, this one was born of frustration — in this case, when David Thompson, scientist turned social media strategist, went looking for someone to have lunch with only to realize that his usual group of colleagues wasn’t available and he didn’t know anyone in the company cafeteria. “The sense of exclusion was palpable and galling,” he recalls. Driving home that evening, he came up with the idea of a web application that would randomly pair people throughout the organization for lunch. He emailed Christopher Tan, a marketer with an interest in mobile technologies and experience building applications, and within 36 hours, they had come up with a prototype. They then sent it out to a select group of colleagues and invited them to participate.

The process is simple. People sign up and say which cafeterias are convenient for them, a date that works, and then the tool comes up with suggested lunch partners, dates and times. As Hewlett points out, all work is personal, and creating new connections is a necessary precondition for serendipity.

In the UK, Nesta, , has tried to do the same thing around shared coffee breaks, and here’s some takeaways:

Institutionalising Serendipity via Productive Coffee Breaks (via Nesta)

After four months of RCTs [Randomized Coffee Trials] at Nesta, we are in the process of conducting an informal survey of the 60+ staff involved in the initiative.  The feedback has been incredibly positive and staff responses thus far have indicated that they like RCTs because:

  • Provides legitimacy to chat to people about things that aren’t directly work related. Although every time there have been direct beneficial impacts on various projects and programmes.
  • Totally random conversations, as well as some very useful work related conversations. Breaks silos at Nesta in a really effective way.
  • Offers the chance to make time to talk to people they should be talking to anyway, and to meet people who they won’t be directly working with but it’s nice to know who they are!
  • It’s a really good way of revealing links within the organisation and encouraging us to collaborate. It’s interesting that being part of the wider ‘RCT’ banners gives permission to spend and honour the time. Less likely to cancel a catch up if it’s an RCT coffee than a social catch up on a busy day.
  • They like the prompt to talk to someone new (or someone they already know), and the permission to take 30 minutes just to see what’s going on, without any particular agenda or goal.

At the most basic, programs like this legitimize the idea of seeking new connections as having a business value: not just for the individuals involved, but for the company. Secondly, the new behavior, once started, will seep into everything.

So, once people are exposed to lunch or coffee roulette, they will actively seek out opportunities to connect with others in the business, and find a rationale afterward. This is a critical shift to opportunity-seeking behavior and a relaxation of the hold of risk avoidance. Companies should do whatever is necessary to decrease the sense of risk associated with becoming more connected. Ultimately, becoming connected should be  riskless, and anything short of that is a failure of culture.

Jennifer Magnolfi on Marrisa Mayer’s ‘no remote work’ edict

I was talking with Jennifer Magnolfi, a leading proponent of the new thinking behind workplace design and its impact on innovation, creativity, and work culture. Since I had her on the line, I thought I’d get her take on Marissa Mayer’s motivations for the recent Yahoo ‘no remote work’ edict.

Stowe Boyd: I wanted to take a minute to get your thoughts about Marissa Meyers ‘no remote work’ edict.  it’s not in effect yet, it will be going into effect in June. There’s all sorts of controversy about it but I think the biggest question is does it represent a step backward to the panopticon notion that workers have to be watched in order to be productive?

Jennifer Magnolfi: Yes, of course I’m familiar with the case. There’s been a storm online of responses: critics and supporters alike have shared their opinions. From my perspective I wouldn’t attribute to this business decision to a broader statement of about the way we should work in the 21st century. I would imagine this to be a more specific business tactic, serving a near-term strategy to reinvent and bring the company forward to a degree of innovation that hasn’t been present there in a while.

Boyd: I think that’s the most generous interpretation I’ve seen. Various entrepreneurs are saying she has a problem, her house is on fire, and she has to put it out. The fact that she believes pouring water over the building is the best thing to do now doesn’t mean she wants it soaking wet for the rest of all time.

Magnolfi: I just got back from Las Vegas where I worked with another business leader of a tech company who is making a very specific, conscious investment in the importance of the physical environment of the culture. At Zappos, Tony Hsieh sees that as having strategic importance for the future of the business. It is widely known that this is what Tony has brought to his company. And to the world of business management — from a purely research-based perspective — it sounds really contrary to the mainstream view. And many people outside of Yahoo think companies benefit from the concept of worker mobility.

This is one of the biggest shifts in technology, and that has caused shifts in business culture, and in the social contract between employees and employers. From a purely research perspective there is no doubt that the potential for increasing knowledge creation, or the probability of increasing knowledge creation (which just means the creation of new ideas) is much higher when you are able to combine digital space interaction and physical space interaction. When you can combine the serendipity or the seemingly random knowledge streams you have online to offline, and to develop a ‘community of work’: it’s obviously a tremendous asset.

Boyd: I agree to the extent that you are looking at it micro-economically, relative to a single business for a short period of time.

Magnolfi:: I don’t think Yahoo’s internal strategy has been disclosed. I certainly haven’t come across it. It strikes me that it makes sense that one of the tactics that Mayer is deploying — at a specific moment in time — to reignite or accelerate a certain type of performance. I just can’t imagine the company or certainly Ms Meyer isn’t aware of the potential mobile technology has. Given her previous track record,  I’m a little less shocked by this. For a quite a bit of time now, I’ve been studying the potential and actual benefits of certain types of interactions being augmented in the physical environment.

Boyd: The term I use is concidensity: by increasing the density of people you are increasing the probability of coincidence, or serendipity.

Magnolfi: That’s a really good term, it’s a really fun term. I think if you are in that position, why wouldn’t you leverage that asset? I guess that’s the question I would ask, not knowing the internal context. I guess I’m not as harsh a critic of that, since it’s a tactical move. I don’t think it means more than that at this point.

Yes, I think coincidensity is a useful (and fun) term, one that I stole outright from Matt Biddulph, formerly of Dopplr. And I have to grant that Mayer is trying to make a cultural shift: specifically trying to get a culture that has been running in a fast-and-loose, networked way to a more tight-and-slow, collective mindset.

Mayer thinks that sort of culture is what is needed to turn the boat at Yahoo, and, grant you, she might be right. But it is running cross-grained against a number of newly instituted cultural work norms related to the  value of higher individual autonomy, results-oriented work, and application of social and mobile tools to support distributed, disconnected, and decentralized work.