New market analysis compiled by Bloomberg has shown that, going by his pay-grade of US$65.2m last year, Apple CEO Tim Cook has the best pay-for-performance rating of any US CEO.
Dublin: 19.04.2015 10.26AM
Former Rolls-Royce chief engineer Darrell Mann has spent much of his working life trying to understand why 98pc of R&D projects end in failure and has come up with an approach called systematic innovation. He has also created a system for ranking innovation in organisations and explains why Apple is better at it than Samsung, why Google is a paradox and Facebook is quite vulnerable.
Mann spent over 15 years at Rolls-Royce in various R&D roles before becoming chief engineer responsible for the company’s long-term military engine strategy.
A model of systemic innovation that he deployed at Rolls-Royce generated over a dozen patents and patent applications.
Featured in Who’s Who in the World, Mann is now recognised as one of the world’s most prolific inventors. His consulting clients include Infosys, Intel, Hewlett Packard, Procter & Gamble, General Motors, Nestle, & Mahindra, MindTree, Telekom Malaysia, Hong Kong government and, through EU-supported research and dissemination programmes, a wide roster of SME organisations.
Mann will be speaking at Engineers Ireland's 'Design Thinking' event on Wednesday 27 February during Engineers Week 2013.
“At Rolls-Royce lots of attempts to innovate had ended in failure and being a very scientifically-minded company we sat down and tried to figure out what were the differences between the things we were successful at and the things that failed. Currently about 98pc of innovation attempts in companies around the world end in failure.
“So it really boils down to the differences between the 2pc that succeeded and the 98pc that failed. If you studied the 2pc you will realise that they followed a certain path and rules and if you understand those rules you have a far higher liklihood of success.”
Mann’s systemic innovation journey began in 1992 when he assembled a team to codify the rules and take the company to the next level.
“We kept statistics on what were the sources of failure. We found that 25pc of failures were due to people trying to solve the wrong problems.”
Mann says the key problem is often companies focus so much on being efficient that they often alienate or crush aptitude for instinct that leads to success.
“It does tend to be individual with an instinct for knowing what the customer wants. Steve Jobs was the classic example of someone who decides they’re not going to ask the customer because they know better.
“I never met him but I worked with quite a few of his designers and he actually had a fine-tuned instinct and it almost does boil down to a formula of clear directions that define what success is going to look like.
“If there was any kind of formula, Jobs realised that we are all trying to get jobs done and innovation is only an innovation if it helps us to do those jobs better. Just think about who your intended customer is and realise they are just trying to get things done.”
I point out that the US and UK have a tradition of allowing inventors to flourish. “I think what companies like Dyson and Rolls-Royce do in the UK is give people the ability to be innovators and a belief that if they work hard and persevere they will accomplish their mission. Dyson is a particularly good example of perseverance. In the US it’s the American Dream, if I work hard I can one day be the President of the United States. But belief is one thing, it is necessary but not sufficient.
“I think you need to have a direction in which to apply that belief. South Korea has a very clear national mission statement which in their case is above all beat Japan. But in terms of uniting people to do things they can believe in they have done a beautiful job in getting everyone in Korea to know exactly where they are going.
“The next thing you need to do is give people the skills to accomplish things. Again Korea has done a wonderful job in this regard. One of the skills you need to innovate is to think creatively and differently.”
Samsung has deployed Mann’s systemic innovation model among 15,000 workers. “Where they didn’t have the skills they went out and got them,” he said.
But there is a conundrum most businesses face. In order to stay alive they need to be efficient at every level. However, this Mann says is 180-degrees opposite to what it takes to be an innovation-led company.
“Innovation is all about learning about failure and in an efficiency engine you’re not allowed to fail very often. So many companies focus on lean and six-sigma models and all these other methodoligies that allow them to be more efficient, but all the time they’re making it more difficult to do the innovation job.”
I ask him is this because of the increased bureaucracy that comes with some of these methodologies.
“Yeah. If a new person joins an organisation they are handed a rule book and instructions and once they’ve learned all that they are told don’t try to be creative, just follow the rules.
“An awful lot of people are employed in organisations to make sure everybody else just follows the rule. But if you’re an innovator it’s literally your job to break the rules.
“Steve Jobs is a great example. In Walter Isaacson’s book he comes across as an asshole, but very often the entrepreneur or the innovator has to be the asshole, the person who doesn’t care what other people think of them and is determined to just plough on with the course they think is the right course.”
The company Mann works with now, Blackswan, has come up with an innovation capability model that has five distinct levels of capability that rank companies.
“A level one organisation is not good at innovation, but a level five organisation of which there aren’t that many on the planet, have made innovation part of their DNA and can do the innovation stuff and efficiency stuff very well.
“Apple is a level four company. They don’t define what I would call real innovation capability but they are pretty darn good at it.
“Samsung is a level three organisation which we would define as ‘managed’. If you ask Samsung to build a better phone or refrigerator they will do it.”
But he says innovation in technology needs to be matched by innovation in terms of business model.
“Apple and the iPod are a great example of this. Samsung made MP3 players but Apple have most of the market because they understood it is not just about the technical stuff, it is the business innovation. At the heart of Apple’s success is iTunes and building the technology was the easier bit.
“That’s something that Samsung would find difficult these days; they are learning fast but in the stage of making the products better than the competition. Its TV products are a great example of this; they decided to become the best in the world and made the step changes that have put them in the lead.”
I ask Mann how he rates other innovative companies, and in particular two of the hottest internet properties on the planet Facebook and Google.
“The irony is both of them are at the start of their journey. Google is quite paradoxical because if you look at their workforce – they’ve employed some of the smartest people on the planet, but I think they are struggling from an innovation perspective.
“Google Maps, for example, was brought in from outside (Google bought Where 2 Technologies in 2004) and Google acquired Android Inc in 2005. I have to say this is a perfectly legitimate strategy – buying the mavericks in all the little companies that are good at learning stuff, ‘the ones that look like they’re turning into a success we’ll buy them.’
“Facebook are quite vulnerable. The big advantage they have is they have over 1bn people but there’s a great amount of inertia. And that’s where they are really vulnerable. They only need to make one mistake: if people’s privacy is breached in a way that offends a critical mass of people it could be game-over.”
Mann says today’s web audience is fickle and points to the move The Truman Show. As soon as the film’s character has escaped the show, the TV audience switches to the next channel. “And Facebook is very vulnerable in this way.”
Mann describes Amazon as one of the more innovative companies among the web giants, earning a level four ranking. “They’ve understood that you need to break down the silo walls, recognise the customer is trying to get a job doen and help them achieve those outcomes in the best possible way.
“Amazon Web Services is a fantastic example of going outside your own domain and innovating in another domain. Who would have thought ten years ago that Amazon would be a leader in cloud computing?”
A few years ago Google’s Ireland manager John Herlihy described Google’s innovation process as akin to the Roman Legions’ methods of reconnaissance – send the cavalry off in different directions and whatever direction they failed to return from, just don’t go in that direction.
I ask Mann what he thinks organisations should do with the 98pc of failed research, surely it’s worth something?
“Multinationals are getting good at selling patents. I have a client at the moment who has 5,000 patents in their portfolio and are probably actively using only 200 of them. They have set up a business unit and try to find solutions to other people’s problems through their patents and license them out.”
But he says, a lot of failure and wasted effort is due to communication and power bases within companies.
“Companies are discovering that finding the ideas is easier than the execution. Thomas Edison said ‘genius is 1pc inspiration and 99pc persperation.’
“Whenever I’m in Ireland I meet people who are absolutely bursting with ideas but very quickly this gets beaten out of them.
“This is particularly in companies where there’s an American headquarters and the execution capability is such that they can’t keep up with all the ideas coming from elsewhere. People end up being disheartened and so they stop submitting the ideas.”
He points to one Australian company that has found a solution by seconding innovative workers to other companies that are struggling. “It’s a great way of motivating people who generate ideas.”
I express my belief that innovation should begin earlier in the education cycle but that by rote learning and classically-based education systems don’t encourage innovation particularly well.
He agrees. “We see this problem all the time and particularly in the UK where the young people leave school at 16 or 18 and the left side of their brain has been crammed full of facts and the right side of the brain – the creative side – is a vacuum. Education systems don’t teach people how to think,” he warns.
He cites a new programme in Mexico where 40 hours of classes on entrepreneurship have been introduced to the curriculum, controversially he adds because teachers there reckon the curriculum is already chock-a-block.
“I think this is the core of it. You need to be teaching and allowing people to think their way out of a problem.
“Once you’ve got a problem solving approach to life, it makes all the difference,” he concludes.
∑ Mann will be a keynote speaker at Engineers Ireland’s ‘Design Thinking’ seminar on Wednesday 27 February at 9:00am