Michael Schrage is a Research Fellow at the MIT Center for Digital Business and a Visiting Fellow at Imperial College’s Department of Innovation and Entrepreneurship. He examines the various roles of models, prototypes, and simulations as collaborative media for innovation risk management. He has served as an advisor on innovation issues and investments to major firms, including Mars, Procter & Gamble, Google, Intel, BT, Siemens, NASDAQ, IBM, and Alcoa. In addition, Michael has advised segments of the national security community on cyberconflict and cybersecurity issues. He has presented workshops on design experimentation and innovation risk for businesses, organizations, and executive education programs worldwide. Along with running summer workshops on future technologies for the Pentagon’s Office of Net Assessment, he has served on the technical advisory committee of MIT’s Lincoln Laboratory. In collaboration with the Center for Strategic and International Studies (CSIS), Schrage helped launch a series of workshops sponsored by the Department of Defense on federal complex systems procurement. In 2007, he served as a judge for the Industrial Designers Society of America’s global International Design Excellence Awards.
Michael authored the lead chapter on governance in complex systems acquisition in Organizing for a Complex World (CSIS 2009). He has been a contributor to such prestigious publications as the Harvard Business Review, Sloan Management Review, the Financial Times, The Wall Street Journal, strategy+business, IEEE Software, and the Design Management Journal. In his best-selling book, Serious Play: How the World’s Best Companies Simulate to Innovate, published by Harvard Business School Press (2000), Schrage explores the culture, economics, and future of prototyping. His next book, Getting Beyond Ideas was published by Wiley (2010). His latest book, The Innovator’s Hypothesis: How Cheap Experiments Are Worth More than Good Ideas, was published by MIT Press (2014).
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Morris: Before discussing The Innovator’s Hypothesis, a few general questions. First, who has had the greatest influence on your personal growth? How so?
Schrage: Certainly, my parents. But since adolescence and university, I would unhesitatingly say my friends and, of course, my wife. My friends and I take friendship seriously and we don’t indulge each other’s weaknesses even as we respect that no one is or should be without flaws. I like and admire my friends – and my wife – and they all give me superb perspective on what it means to try to be a good person. There’s a wonderful conversation to be had about “satisficing” and “optimizing” in this context but this isn’t the place.
Morris: The greatest impact on your professional development? How so?
Schrage: These are more awkward than difficult questions because – of course – that’s not the “unit of analysis” I would use. Certainly, my time as a Washington Post journalist/columnist had an enormous impact on me. I was in my early 20s and dealing with extraordinarily powerful, extraordinarily influential, extraordinarily smart and extraordinarily competitive people in a challenging environment. But the same could be said about my fellowship at MIT’s Media Lab back when Nicholas Negroponte was running it.
I’ve always – always! – made a serious effort to learn from my professional interactions. Best case, I learned from the very best about what made them “effective” and what make them tick. At worst, I gained greater insight into myself and my limitations. I became much more sensitive to the reality that great intelligence, great influence and great competence did not necessarily correlate with good character – and vice versa.
Morris: Years ago, was there a turning point (if not an epiphany) that set you on the career course you continue to follow? Please explain.
Schrage: Yes. I was collaborating with my best friend to design and build new software back in the 1980s. I slept on his couch and we worked together for a fortnight but nothing was coming out of us but frustration and bad arguments. Here we were – two really smart guys who liked and trusted each other and were committed to doing something great – but we were getting nowhere. This made no sense to us and we were both getting depressed.
Rob finally said, “Look, I know a guy – he’s a bit of a nut – but he’s come up with an interesting technology and approach to getting people to work together. We should see him.” I skeptically responded, “What is he? A therapist? We’re going into couples therapy now…?”
But Rob said it wasn’t like that and so we went off to Bernie’s. Long story short: Bernie had hooked up a Mac to a Limelight projector and simply facilitated a design discussion between Rob and myself. As we talked, our conversation was made visible on a large screen. We began talking to each other through the screen; that is, the focus of or attention and communication was the shared space of our screen-based conversation. We began to move the words and phrases and then pictures and graphs. To use Bernie’s phrase, “We could see ourselves being heard….” This meeting directly led to our design document and a real breakthrough in mutual understanding and awareness. I “got” it.
This simple computer-augmented conversation had a huge impact. It was, forgive me, transformative and led directly to my first book about collaboration. I am fascinated, struck, and compelled by how technology can amplify and augment who we are and what we can do not just for ourselves but with each other. This has been central to my academic research and advisory work. I had vaguely appreciated and understood that before the conversation with Bernie but that episode crystalized/galvanized and every other kind of ‘ized’ that into an epiphany.
Morris: To what extent has your formal education been invaluable to what you have accomplished in life thus far?
Schrage: Invaluable is a tricky word. Honestly, only three or four formal classes (and teachers) were truly ‘invaluable’ in my conceptual and/or intellectual development. My classes with Doanld Michie on AI; a couple of ‘history of economic thought’ seminars and workshops. A matrix algebra class.
There are only a handful of formal educational experiences I can or would point to as being integral to my professional development and effectiveness. That said, being in those environments – having opportunities for informal exchanges, projects, mentorship, apprenticeship, etc. – was imperative to success. Bluntly, most formal learning mechanisms didn’t fit with my personality, curiosity and aspirations. Fortunately – or unfortunately – I was clever enough to always do “well.” But doing “well” and learning lots aren’t the same thing. I was genuinely interested not just in learning but in understanding the fundamentals and most of the subjects, courses and teachers I had in formal environments simply were unwilling or unable to provide that.
Morris: What do you know now about the business world that you wish you knew when you went to work full-time for the first time? Why?
Schrage: I wish I was – or had grown up to be – more of a “people person.” I never really cared that much about being liked or disliked. Don’t get me wrong. I like and enjoy people but – except for my friends and certain colleagues – I pretty much never cared if someone liked me or not. People can tell if you don’t care and this can be off-putting to many, many people.
In fairness to me, I kinda “knew” this before entering the business world but thought my energy, drive, intelligence and ability to collaborate with anyone would render the need for ‘likability’ irrelevant. Lord, was I wrong.
Morris: Of all the films that you have seen, which – in your opinion – best dramatizes important business principles? Please explain.
Schrage: This is a funny question for several reasons. First, the films I truly enjoy literally have nothing to do with business and/or business principles or ‘learning.’ They’re simply great and wonderful films like Kind Hearts and Coronets and The Lady Eve.
But I was thinking as I was preparing some exec ed classes, what films I could draw on to make certain points clearer or more emotionally compelling. I confess the first one that immediately leapt to mind is that wonderful scene in Walk The Line when the record producer tells the Joaquin Phoenix/Johnny Cash character that the audition was perfectly adequate but absolutely nothing special. He asks him to sing something that really, really, really matters to him….the one thing that would define him. Then, of course, Cash and his combo step up to deliver it. I thought and still think that scene is wonderful because it beautifully captures the recognition that you need people to listen to you perform and then frame your creative challenges in actionable ways. You have to give people the chance to do the right thing. You have to be willing to listen to people try to be their best.
So to come back to your original question: I think there are many good films with several great moments. But what you ask is not how I experience the movies.
Morris: From which non-business book have you learned the most valuable lessons about business? Please explain.
Schrage: That question is brutally unfair: I read and have read a lot. Again, I don’t read books with the intention of applying them to business practice. But I would say that the non-fiction genre that has had the greatest impact on my business thinking and behavior has been in the history of economic thought and psychology. That is, how theories of the mind and creativity co-evolve with the history and perception of value.
In terms of fiction, as rich and compelling as I’ve found “the classics,” the honest truth is that science fiction – the willingness and ability to conjure up alternate planets, life forms, cosmos, physics, etc – has proven remarkably helpful to stimulating my own business/research imagination.
Morris: Here are several of my favorite quotations to which I ask you to respond. First, from Lao-tse’s Tao Te Ching:
“Learn from the people
Plan with the people
Begin with what they have
Build on what they know
Of the best leaders
When the task is accomplished
The people will remark
We have done it ourselves.”
Schrage: Yes. But what do we want empowerment to feel like? How do “the people” then “self-organize” to take the initiative in ways that traditional leaders can’t?
Morris: From Howard Aiken: “Don’t worry about people stealing your ideas. If your ideas are any good, you’ll have to ram them down people’s throats.”
Schrage: Not in my world. In my area, there’s an openness and willingness to play with and explore ideas. Then again, Aiken was Harvard; I’m at MIT.
Morris: From Richard Dawkins: “Yesterday’s dangerous idea is today’s orthodoxy and tomorrow’s cliché.”
Schrage: Yes – but only when people decline to revisit the fundamentals.
Morris: From Isaac Asimov: “The most exciting phrase to hear in science, the one that heralds the most discoveries, is not “Eureka!” (I found it!) but ‘That’s odd….’”
Schrage: I couldn’t agree more.
Morris: From Thomas Edison: “Vision without execution is hallucination.”
Schrage: Yes…and there’s a lot of C-suites debating hallucinatory quality instead of designing due diligence into operations.
Morris: Finally, from Peter Drucker: “There is surely nothing quite so useless as doing with great efficiency what should not be done at all.”
Schrage: The false gods of optimization remain pervasive and persuasive. What we do – and appear to do well – gets a presumption of ‘worthiness’ that is frequently not deserved.
Morris: In one of Tom Davenport’s recent books, Judgment Calls, he and co-author Brooke Manville offer “an antidote for the Great Man theory of decision making and organizational performance”: organizational judgment. That is, “the collective capacity to make good calls and wise moves when the need for them exceeds the scope of any single leader’s direct control.” What do you think?
Schrage: Well, I like “decision markets” and respect “wisdom of crowds’”models of interaction and assessment. That said, I’ll refer back to the Lao Tse quote you cited earlier: I’m genuinely more interested in how great leaders – and great leadership teams – design for empowerment and collective insight. I want both.
Morris: Here’s a brief excerpt from Paul Schoemaker’s latest book, Brilliant Mistakes: “The key question companies need to address is not ‘Should we make mistakes?’ but rather Which mistakes should we make in order to test our deeply held assumptions?'” Your response?
Schrage: Yes…but isn’t this what we call “learning from feedback”?
Morris: Feedback indeed. Schoemaker’s point suggests to me the importance of experimentation that serves strategic purposes. In your opinion, why do so many C-level executives seem to have such a difficult time delegating work to others?
Schrage: Because they are control freaks (in denial) who all too often believe they’re the smartest people in their organizations & the room.
Morris: The greatest leaders throughout history (with rare exception) were great storytellers. What do you make of that?
Schrage: There’s an implicit issue here that demands unpacking. Are their stories great? Or are they great storytellers? I think you need both…but if I had the choice, I would go with the “leader” who has the great story to tell as opposed to being a great storyteller. Yes, motivation is important. But I am – in the first and final analysis – a substance guy. What is the substance – not just the style – of that great story? Is it the kind of story that people can understand, share, build upon, develop, turn into a movie or another form of narrative expression? I get scared when charisma can be confused and conflated with content.
Morris: My own opinion is that charisma resembles a pleasing, expensive fragrance. It smells good but don’t drink it. Change agents, for example. Most change initiatives either fail or fall far short of original (perhaps unrealistic) expectations. More often than not, resistance is cultural in nature, the result of what James O’Toole so aptly characterizes as “the ideology of comfort and the tyranny of custom.”
Here’s my question: How best to avoid or overcome such resistance?
Schrage: Make discomfort a norm. That’s what the special forces do: No Easy Day. People have to learn to live with discomfort. To me, the question is – how much? We don’t want discomfort that pushes people or their productivity and creativity past the point of diminishing returns.
Morris: In recent years, there has been criticism, sometimes severe criticism of M.B.A. programs, even those offered by the most prestigious business schools. In your opinion, in which area is there the greatest need for immediate improvement? Any suggestions?
1. Insist that people work in the real world at least two years before applying for an MBA.
2. Require MBA students to do/perform original research, not just analyze case studies and algorithms.
3. Appoint the best qualified alumni to serve as adjuncts and advisors for MBA projects
4. Use Executive MBA courses and classes to inform and inspire MBA curricula
5. Insist that graduates take and pass a test or assessment or submit a portfolio five years later to ‘keep’ their MBA credential
Morris: Looking ahead (let’s say) 3-5 years, what do you think will be the greatest challenge that CEOs will face? Any advice?
Schrage: Yes…how best to balance investment in human capital development of clients, customers and personnel with investments in “machine learning” platforms, processes and systems?
My advice: Read my books!
Morris: Now please shift your attention to The Innovator’s Hypothesis. When and why did you decide to write it?
Schrage: I decided to write it for the most obvious and prosaic of reasons. This had been a very successful and effective methodology for over a decade and I felt the time was right to sit down and have the discipline to write down what my clients, students and I had learned over time. It was like being a really good chef in a really good restaurant with a really good staff and clientele deciding to produce – not just write! – a ‘cookbook’ and description of what a great dining experience should be like.
Morris: Were there any head-snapping revelations while writing it? Please explain.
Schrage: Yes. An agonizing one. I had to abandon the book because the more time I spent writing it, the more I realized I had focused more on “experimentation” as a means and had given enough serious time and thought to the ends. That is, was experiment and experimentation something meaningfully more than a faster, better cheaper means, medium, and mechanism to innovate?
This internal debate ultimately led to my Harvard ebook – Who Do You Want Your Customers To Become? That’s a story in itself. But the point is that we experiment – we innovate – as a way to discover how to improve and more creatively invest in the human capital, competences, capabilities and creativity of our customers and clients. I think this not just a big deal but a HUGE deal.
Morris: Over the years, when I observed my four children and then their ten children experimenting within their immediate environment (i.e. crib, blanket, carpet, sandbox, lawn) when they were in their pre-K years, they seemed to have no fear of failure. In fact, they seemed to have no sense of failure. They tried until they succeeded or lost interest. What causes children to become risk-averse adults?
Schrage: Gosh…the Piagets, Bettelhiems and Wertheimers of the world invested their careers in that question. My own view is unromantic: children literally don’t know any better. As Maria Montessori remarked, “Play is the work of children.” It’s what kids do. The twist I’d put on your question is that children are less inhibited about the fantasy of imagination and play than are adults. And now we’re back to science fiction.
Morris: Here’s a related question: When does “failure” become a major issue for those engaged in “play”?
Schrage: This question is very important: If you do it right, “failure” doesn’t enter the picture or the semantics. The essence of the 5X5 methodology I’ve overseen is that the cost, pain and/or ‘shame’ of “failure” is so low, so marginal, and so irrelevant relative to the benefits that people simply don’t care. You want to make the learning so compelling that any perceived ‘failure’ seems and feels incidental. That is a craft.
Morris: My own opinion is that, over the years, as children’s “play” becomes more structured and supervised, it is much less enjoyable for so many of those on school and league teams. Do you agree? If so, how do you explain that?
Schrage: I don’t agree. Improv comedy is structured. So is poetry. So are sports. I think well designed constraints are liberating and inspiring. But the key phrase is “well designed.” Most managements and businesses don’t design constraints – they arbitrarily impose them: cut 20% from the budget; do the same amount of work with three fewer people; deliver in 5 weeks instead of seven. These are constraints as Procrustean beds, not ingenious ways to get people to be ingenious and creative!
Morris: When is “play” most valuable within a workplace culture? What can an organization’s leaders do to encourage and support those initiatives?
Schrage: This will sound tautological but play is most valuable when people in organizations realize that they couldn’t have come up with the innovation or efficiency unless they had played with the possibilities. The line I used in my book, Serious Play, is that we now live in a business era where you aren’t being serious unless you play. That is, you have to not just allow for but encourage your diverse and creative communities of customers, channels, and employees to play with models, prototypes, and simulations of the problems you wish to solve or the opportunities you want to exploit.
Morris: Pablo Picasso repeatedly observed that he spent all of his adult years — he was 91 when he died — struggling to see the world again as he once did as a child. What’s your take on that observation?
Schrage: As much as I like Picasso, sometimes I am less interested in seeing the world through the eyes of a child than through the eyes of a llama or a falcon or an ant or a robot. I don’t give children a monopoly on either innocence or novelty.
Morris: Whenever drawing up a list of great (non-athletic) teams, I immediately think of the Disney animators (who produced classics such as Pinocchio), the Manhattan Project, Lockheed’s “Skunk Works,” Xerox PARC., and Apollo 13. In your opinion, what will be the defining characteristics of a great (non-athletic) team in years to come?
Schrage: That is such a great question. I don’t think it will change much because the teams you’ve identified have literally set the standards for creativity and innovation in their respective fields. But if I had to pick one huge difference between then and tomorrow, it would be that the Pixar animators and aviation designers of this century and next will increasingly rely upon intelligent and creative machines – not just their own collaborative wits and aesthetics – to create enduring breakthroughs.
Morris: Of all the great innovators throughout history, with which one would you most want to share an evening of conversation if it were possible? Why?
Schrage: Wow. This is an incredibly tricky question because – forgive me – I have had the opportunity to spend serious time with many “great” innovators – including Steve Jobs, Bill Gates, Mark Zuckerberg, Andy Grove, Bob Noyce, James Dyson, Larry Page, Bob Langer, Akio Morita, James Watson and Francis Crick, Craig Venter, Arnold Beckman, Carl Djerassi, to name a few. They are – of course – all brilliant but let’s just say I had better chemistry with some than with others.
I’m afraid that I am now old enough to know that we would likely get less from a dinner conversation than from actually designing a new product or service together. In other words, screw the dinner – let’s go to the lab or the workshop or the studio and start making something. Who would I like to make something with? I think it would be a hoot to try to come up with something with a Thomas Edison or Din Land or Reid Hoffman. Why? Because I think we’d get a start on something important as well as fun. I want both.
Morris: Let’s say that a CEO has read and then (hopefully) re-read The Innovator’s Hypothesis and is now determined to establish or strengthen a workplace culture within which personal growth and professional development are most likely to thrive. Where to begin?
Schrage: Begin by doing two provocative things:
1) Ban the phrase “good ideas” from the enterprise vocabulary and insist creative people talk in terms of “testable hypotheses.”
2) Personally hand out awards to small teams that come up with the fastest, simplest, most frugal ‘high impact’ business experiments every 90 days for the next two years.
Morris: For more than 25 years, it has been my great pleasure as well as privilege to work closely with the owner/CEOs of hundreds of small companies, those with $20-million or less in annual sales. In your opinion, of all the material you provide in The Innovator’s Hypothesis, which do you think will be of greatest value to leaders in small companies? Please explain.
Schrage: Besides thinking in terms of testable hypotheses and act in terms of simple/fast/frugal business experiments, the greatest value comes from facilitating a culture where “learning actions” speak louder than “planning words.” The value comes from empowering your people to explore and embrace value in faster, simpler, and cheaper ways.
Morris: Which question had you hoped to be asked during this interview – but weren’t – and what is your response to it?
Schrage: The question I had hoped to be ask is, “Where do you feel your work fails to have the impact you think it should and why?” My answer would be that my work fails to influence because of two dominant reasons. The first is that people think they’re already doing some form of experimentation or fast/cheap/simple experiments. But when you really look at what they’re actually doing – you see they’re actually trying to use experiments to “validate” plans and analyses they’re already committed to.
The second is that they simply feel or believe that they don’t have the time to do this. That, in fact, their analytics, their experience, their guts are good enough and experimentation is only incidental rather than central to learning and development. Therefore, it’s a bad investment.
How to overcome this? I think it’s going to happen much the same way “quality” came to America in the 80s and the Internet dominated the world after 1999. Competition and Expectations are essential: Competitive pressures and rising customer/client expectations around innovation will drive adoption and adaptation of these techniques. And, forgive me, make innovators and entrepreneurs ask themselves yet again, “Who do we want our customers and clients to become? How will our innovation investments get them there?”
My thanks, Bob.
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Michael cordially invites you to check out the resources at these websites:
MIT Faculty page link
The Innovator’s Hypothesis/MIT Press link
Amazon link to Who Do You Want Your Customers to Become?
YouTube videos link
Big Think videos link