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Q&A on Innovation in the Enterprise

| by Ben Linders Follow 29 Followers on Dec 04, 2015. Estimated reading time: 7 minutes |

Markus Andrezak talked about innovation in the enterprise at the the GOTO Berlin 2015 conference. InfoQ interviewed him on misunderstandings in innovation and asked him about solutions that enterprises can use to develop innovative products.

InfoQ: In your GOTO Berlin talk you presented a model with pioneers, settlers and town planners. Can you briefly describe it?

Andrezak: The pioneers, settlers and town planners (PST) model is originally invented by Simon Wardley, a well known British strategist, also famous for the invention of Wardley maps, a strategy tool. With PST he describes how systems develop in an evolutionary way. By adopting it to companies, he explains what types of work and types of people are continuously required to have sustainable success.

Pioneers are driven by the urge to find new ideas, finding the unknown. They are happy with high uncertainty and bored with certainty.

Settlers start where Pioneers leave off. They steal ideas from the Pioneers and are driven by the wish to realize those ideas. They are happy with ambiguity.

Town planners are driven by the desire to not only drive the products that settlers have built to perfection, but by going further in industrializing them.

What is important to understand is that each of those have great talent in very different areas and they complement each other perfectly. All of them are needed. It is not wise, though, to let town planners and pioneers meet head to head. While pioneers love vagueness and uncertainty, town planners hate these conditions. So they don’t get along very well. They also have very different tasks. The settlers, though, are great people to translate between pioneers and town planners. They love the pioneers for their ideas and the town planners, because they are required to scale and milk their products. Thus, a company is best managed through the settlers.

InfoQ: Do you have some examples showing how this model has helped to understand problems that organizations are facing when trying to innovate?

Andrezak: Most companies only know one mode of working. Waterfall, or agile or Six Sigma or any other method they cling on to by chance. The PST model explains that we need at least three different kinds of people for very different tasks in the evolution of companies, product and services and very different operating systems as well.

In the world of software development, the Pioneers are often working without building software at all in the beginning. Their aim is to work in a way that creates rough data points very quickly and cheap. Think about looking for a treasure without a treasure map. "Do I need to go left or right?" So speed is their aim. This is best serviced by inhouse fast iteration with agile software techniques. On the other extreme, town planners are not keen on building their own products and software. To scale, they buy standardized software off the shelf and try to standardize their processes through techniques like Six Sigma. Here, the aim is radical industrialization. Think about water or electricity, highly commoditized products, Not learning, but perfection and operational excellence is key.

When companies are not aware of the different operating models required for sustainable growth, they cannot innovate successfully. If the pioneers are missing, they will end up in the innovator’s dilemma, being stuck in the one same business model for all time as no new ideas are coming in. With no settlers, a company may have great ideas, but no one builds the first product from them. Without the town planners, the products will lead a life in the shadows, as no one knows how to really scale them.

Also, the model explains the conflicts that are happening in companies between pioneers and town planners. When they are managed head to head, they will fight and not accept the other side’s perspective. It needs to be understood that good pioneers and town planners need to have conflicts. Pioneers will always find the new, which mirrors to town planners what they can not yet do.

InfoQ: Why is it so important not to judge when you are using such a model?

Andrezak: As innovation and new ideas sounds so hip, when companies realize they need to invest in innovation, in new ideas, they start new initiatives. That has the social effect of "there’s a great party that I’m not invited to" effect. The PST model explains that not everyone should a) be required to be a part of such programs and b) that this makes no sense.

The PST model explains that pioneers, settlers and town planners all have very different talents and are driven by very different forces. All of them are great people and all of them are required. This is so important. All of them are required and all of them are accepted in how they are. The art is to provide environments where all of them can coexist in their talents and create conditions where they can thrive so that we have a perfect evolutionary chain of ideas and products from pioneers over settler to town planners, from first hunch to scaled products.

It is the task of the management to create and manage those environments, the flow of knowledge between the three types and to make the value of all three types clear, without forcing pioneers and town planners to work head to head.

InfoQ: Your talk also mentions the three horizons model described in your InfoQ article Visual Portfolio Management: Collaboratively Aligning Your Company. Can you give some examples how organizations can use it to increase their agility and become more innovative?

Andrezak: The three horizons model explains roughly the same basic idea, but from a different perspective. It was invented by Baghai, Coley and White from McKinsey quite a while ago. What it says is that companies need to invest in work in three very different horizons to have continuous growth.

Basically, the 3 Horizons model is that you need to think of three different areas of work in a sustainable company: making money of what (products and services) you have right now (Horizon 1), thinking about how you will make money tomorrow (Horizon 2) and preparing how you make money tomorrow (Horizon 3). One major point is that the type of work between H1 and H2/H3 is fundamentally different. From a people and process perspective that is important, as different people are naturally drawn to these different types of work. We should respect this.

The other point, and that also makes the three Horizons model vital for innovation and growth is that it explains that we need to work in all these areas all the time. This is really hard, as in traditionally managed companies, topics of high uncertainty in H2 and H3 will lose against the deadlines and safe topics from H1. The problem is that with only H1 topics and projects, the company will die off quite soon, as only safe bets and linear growth topics are placed in the portfolio. We can easily be outcompeted by anyone looking into the future of our market.

InfoQ: Can you share your thoughts on the concept of "dual mode organization"?

Andrezak: Dual mode organization is a concept popularized by Gartner. It carries a natural, but sadly naive idea: If we have a traditional organization that is overwhelmed by the idea of uncertainty, new ideas and agility, we could possibly place some agile champions to the side to do tasks of a new, agile, uncertain nature. The problem of this model is that it is prone to war and bloodshed. As PST explains, the pioneers and town planners will be managed to have their head to head collisions all of the time. It is a myth to me how this can be recommended. The only possible answer is that Gartner has not really seen or evaluated the consequences of the model.

InfoQ: Do you have some examples of how dual mode organizations are able to innovate?

Andrezak: The point is that dual mode is a naive idea that does not work: Leave out the pioneers and you have no new ideas. Leave out the settlers and the initial products won’t be built, but even worse: pioneers and town planners, very opposing personalities are forced to clash head to head. Leave out the town planners and the products won’t scale.

The PST model gives you a natural, evolutionary model of the company to continuously evolve in your offerings. Pioneers find great ideas. Settlers pick up the most promising and are destined to build the first version of a product. The town planners are naturally driven to scale the best of the products and clean up the mess that the ones before necessarily had to leave. This is a very natural model of doing things that helps companies in understanding how to manage that cycle in their company.

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