Innovation in Large Organizations

Peter Temes, Founder and President of the Institute for Innovation in Large Organizations, will be sharing insights into how large organizations innovate. In 2005, Peter founded the Institute for Innovation in Large Organizations (ILO), a membership organization providing research, community, and knowledge-sharing for upper-level executives leading innovation inside multi-billion-dollar corporations. This podcast explores the innovation practices that have emerged as a result of COVID. There is also a presentation of innovation practices that still matter. Peter discusses the importance of business-model innovation, secular innovation, promoting unexpected leaders.

Transcript

JOE CAHILL: Hi everybody. It is my pleasure to be here today with Peter Temes. Peter is the Founder and President of the Institute for Innovation in Large Organizations, ILO. It was founded in 2005 and ILO is a membership organization providing research, community, knowledge sharing for upper level executives that are leading innovation in multi-billion dollar companies. 

Member organizations have included IBM, Pepsi-Co, Marriott, Save the Children, Microsoft, FedEx, NASA, Toyota, and the New York MTA, plus 150 others. So participating executives hold titles including CIO, CTO, CMO, Head of Strategy, Head of Product or Service Development and Head of R&D. So, welcome to Center Stage, Peter.

PETER TEMES: Thank you, Joe. Delighted to be here. It is a privilege.

CAHILL: The privilege is all mine. Let’s get started. Given that we are squarely in a challenging environment six months into the Covid pandemic, why don’t we start on talking about challenges. So in the context of innovation, which is your sweet spot, what are the greatest challenges that organizations, leaders and people will face in the coming years and how should we all prepare for this new future?

TEMES: Right, two really big, big questions and the answers are only being figured out now. But I can tell you in the conversations that we’re having and some of the research we’re doing with our members, you’ve really got a confluence of two things.

You’ve got very urgent short-term issues, which for some firms really net down to how can we stay in business, how can we have the continuity to keep serving our customers and doing the good things we are built to do in the world, and this longer, kind of slow wave of change that many of these firms have been investing in for years and decades. And the question of how we can use these short-term demands for change to build better and stronger foundations or carry forward further and better some of these longer-term strategic change goals.

So, for example, the companies that already had strong work-from-home policies that had not only good digital infrastructure but had the habits in the people to get them working in new and different ways are two steps ahead. And we have been talking to any number of companies, some of which will say... 

For example, Google says everyone now really needs to be working from home until next year. So we are going to be almost all... And that’s Google. So on the one hand, they are a very young company, they are super tech infused, they have always had lots of people working from home, they can just tilt and get more and more of their folks over to this infrastructure-rich environment that they have in their homes. And they are built for that.

Then you look at a company like Boeing. Boeing is a fascinating organization, totally tech infused, but partly because they are a manufacturing company where people swarm around these enormous vehicles that they are building, tens of thousands of people under one roof at times, building dozens or hundreds of jetliners. Their whole culture is a come-to-work culture. 

So they probably have really strong personally owned and corporately owned hardware and infrastructure in folks’ houses, they have big centers in Wichita and Seattle and Chicago. These are places you can get really good connectivity, places where folks have a lot of tech support all around them. But they don’t have the habits of having large numbers of key people working from home, collaborating, turning these things on, turning these things off. So partly because they weren’t as forward looking as they might have been in terms of work culture, not just technology investment, they start off a few steps behind. 

But then the question is, would a company like that say yikes, we have to solve the short-term program, let’s surge some resources down, without saying this is also a long-term culture issue? I don’t know. I can’t tell you if Boeing is doing that right or wrong. Boeing shows a lot of signs of doing it right from an outside perspective but in terms of having the right kind of conversation it’s a big, big challenge.

CAHILL: Do you think that the convergence of what you’re talking about with the actual new tool sets that are there, that it’s... the adoption is much different than it would have been 10 or 20 years ago?

TEMES: Yes.

CAHILL: That really does make it move faster. 

TEMES: Absolutely. We have heard a bunch of people say... we’ve talked for years about whether digital transformation needs to be ultimately led by the CEO, the CIO, the CTO and then they say it’s really being led by C-O-V-I-D, right? So this is really accelerating now, it’s making this change happen quickly. 

But I would rather lead an organization where the tech is okay but not great but the culture is a culture of collaboration and improvisation and “get the work done from wherever you are” than the culture where we’ve got everything right on the tech side but folks are still a little bit afraid to work differently because that’s not the people who great rewarded the most. 

CAHILL: And that’s where all your productivity comes in, right? If you get that right, if you get the culture right where people are accountable to one another, you really do see the returns on that.

TEMES: Yes, I think that’s absolutely right. You really should probably look at this with a third dimension, which is about clarity about mission. The companies that have spent a lot of money on tech are a step ahead, the companies that have the culture piece really wired into who they are in terms of how people work. 

But it’s probably most important of all that folks at every level in the organization know what the company is really for, know what the company really believes and know what it’s okay to lose money on or lose productivity on because that thing is essential to who we are. This is about decision making going further down in the org chart so that when because we are not working in the office I can’t go and find the VP and get approval and get a signature and I have to make a decision from my lake house for the team, we’re going to spend some money, and if I don’t make any decision we’re going to lose something significant.

CAHILL: So let me ask you and connect into the innovation in large organizations with the next couple of questions. Your work is really focused on innovation for large organizations. Innovation can be very abstract and intangible for some and I would like you to define for the audience what is innovation, particularly in the context of a large organization.

TEMES: Right and specifically in the context of a large organization innovation is really about taking invention, whether it happens inside your walls or outside, and more and more it’s likely to be outside, and scaling. So it is positive change, it’s new ways of working, new ways of solving problems and applying it at large scale. And that is why large organizations have a very different role as innovators than small organizations.

So in 2005, when we launched the Institute, a lot of corporate leaders would say we need to learn how to be more like a startup. And that was really the wrong question. Today after a lot of battle wounds those same folks or their equivalents are saying smartly we need to find the right way to work with the little startups because they do things we can’t do. We do things they can’t do. They shouldn’t try to pretend to be us and we shouldn’t try to pretend to be them. But the question of how we collaborate and organize is really, really important.

CAHILL: And how do they succeed building those ecosystems, right?

TEMES: Yeah.

CAHILL: They are two different speeds and certainly different skills and different backgrounds.

TEMES: Yeah. So there are two different ways to answer that. One is just in terms of where technically and programmatically where the plugins are. Running a corporate accelerator is a really good way to infuse new ideas, new people, new technologies at a relatively low cost, which means every so often having that class of startups who come and live inside, typically 90 days, your envelope and get certain kinds of support while telling their stories and bringing their perspectives to your people, potentially giving the parent company, the host company, a chance to invest. 

But that turns out to be the least important thing. The most important thing is seeing how people in the same space with no inherited prejudices and none of your big machinery and none of your big customers, how they rethink doing the kinds of things you do. 

So you look at HSBC’s Future of Banking Accelerator, wow, what an exciting thing. Here is a giant global bank, they can’t tell their customers we are rethinking how we do banking because their pillar is trust and reliability. So if I’m trusting them with half a trillion dollars, I don’t want to know that they are thinking about how to do it all completely differently. 

But when I’ve got a dozen little Future of Banking startups inside their company and I get exposure to them, I may say wow, of these dozen I’m really glad you’re not doing one through 10 because that scares the bananas out of me, but numbers 11 and 12 are interesting, I hope you guys do more of that. That’s a way you can have the creativity and the energy and the craziness of the smaller companies that can take lots of risk because they have relatively little to lose. Get close to it, look at ways both on an individual basis, person to person, should we bring these people in, should we invest in them? But more importantly, should we help explore this direction that they are pioneering? We can come in behind them, moving more slowly with a lot more resources. And most importantly, much, much more ability to scale that. 

It’s interesting, you can see right now as we are developing vaccines for coronavirus, you see this playing out rapidly where you say, wow here’s some crazy little startup in Silicon Valley, or San Diego, and they have single-digit number millions of dollars they’ve been putting into developing new molecules and testing new kinds of messenger RNA. And now that they really got through the first couple steps and, son of a gun, this thing seems to work, now we’re going to roll in the traditional $100 billion large corporate pharma because we have to manufacture a billion doses.

CAHILL: There’s a front end of that, by nature there is a front end, the innovation end. How do large companies take that front end, the ideation and the development and the piloting and testing, how do they ultimately get to the outcomes that they need? 

TEMES: Yes.

CAHILL: It’s got to move through a big machine. And how do they make that happens?

TEMES: Yes, for sure.

CAHILL: And then also, are there unique characteristics of large organizations and doing and achieving these outcomes.

TEMES: So number one is there is one big enduring best practice for innovation in large organizations that hasn’t changed since we began this work 15 years ago, and probably hasn’t changed from decades prior to that. And it’s this idea of lowering the cost of failure. So if you pick the firm that you think is the most innovative and publication X says it’s Apple, publication Y says it’s Amazon, it could also be a slow-moving industrial company that just seems to consistently make the right bets.

When you peel back the onion what you tend to see is they are no less likely to succeed with every new venture or experiment than their peer group. But what they are really good at is making those experiments faster, cheaper, in ways that intelligently insulating their reputation and customer relationship risk and with managed low-risk politically to folks inside the organization who participate in projects that don’t succeed. 

So we summarize that as saying lower the cost of failure on four dimensions - time, money, reputation and brand risk, and the politics inside your firm. I think a lot of folks know - a lot of senior folks especially - know that in some companies if I say man, I just figured out a new way to do this thing and even without a budget I want to start working on this to get a proof of concept, will you join me, in some companies people say wow that looks like the future, yes, I’ll throw in a little time and energy, I’ll come in on a Saturday and I’ll share my ideas. 

And in other companies people say oh man, chances are that’s not going to go and I just know what happens if you start being identified with projects that don’t work so I think I’d rather not. So you as a leader can make some moves to really change that.

CAHILL: Yes, it’s a risk management move essentially. 

TEMES: Yes, it’s all risk management, yeah. That really is a great lens through which to look at what innovation really is. And that’s why the big guys and the little guys are so different because the big guys have a lot to protect. There are good reasons to be conservative and make a lot of money. And the little guys - 

CAHILL: They go off brand and so forth when they’re doing their testing.

TEMES: Yes. For every one of these there is a toolkit, right? Faster and cheaper is a whole separate set of moves that a lot of people by now are probably familiar with. But one of the things that you’ll do… 

The New York Times used to be a great example of it. So here’s New York Times in its heyday, the best known and two decades ago a hugely profitable newspaper, they had a portfolio of smaller newspapers. They were also family run. And what would happen would be if your family owned the newspaper and you come out of Yale or journalism school at Columbia and it’s time for you to step into the family business, first they’d send you down to the Tampa Times and if you don’t kill the Tampa Times, then they might bring you up to the Boston Globe. And if you’re okay at being a journalist at the Boston Globe, a couple years later they’re going to bring you into New York because they are trying to have a process where they can lower the cost of risk for doing something that they feel compelled to do.

CAHILL: Right.

TEMES: Interestingly, a company like the Times, as opposed to their competitor, the Washington Post, if you were in the ownership family and you came out with an accounting degree, they’d bring you right to New York to help run the business. And that was a clue that they really, really cared about the journalism... in the business they were minding the store but not with the same outstanding brilliance I’d say.

So you have that, you have a lot of organizations that have second and tertiary brands. A great example is the old story of New Coke. When New Coke was launched, and this was what, 30 years ago now? When New Coke was launched the Coca-Cola Company had four branded carbonated beverages. Now they have about 200. And they would never try a new can size or a new flavor or a new go-to-market strategy with Coke. They would start by saying let’s try this on Mr. Pibb, and if it doesn’t kill Mr. Pibb then we might roll it up to Diet Sprite. And they’re going to pyramid it that way to protect those relationships. 

And you can see that playing out in service industries where they say okay we’re going to bring something to this sector of the business where these accounts are either more secure or less strategically important and we’re going to make some mistakes and we are not going to punish our folks who make the mistakes, we’re going to reward our folks who learn from the mistakes and bracket the risk impact.

CAHILL: And that is a big, big cultural change for most companies, that part. 

TEMES: It sure is. It’s a different kind of management, right?

CAHILL: Sure.

TEMES: One of the things that we’ve seen is that organizations... so large organizations tend to either be more oriented toward managing for efficiency or managing for discovery and most manage more toward efficiency. And individual functions within organizations tend to be much more focused on efficiency or discovery. 

We have worked with plenty of brave, very senior leaders who have said okay we have to have a change function, an innovation function. We are going to put some money on the table, we’re going to bring in some brave people, we are going to elevate and retain some brave people, and we are going to have these new functions or we’re going to have a new way of running this business. But they bring in folks for a discovery agenda and then they manage it as though they are managing people working on efficiency.

So the CEO, the CFO, the business unit leader, says we want you to be a little crazy and break things and it’s going to be scary but we want you to do it. They get in the seat and then they start getting calls from the CFO’s deputy for your division looking for triple back-up of five nickels every Thursday and you realize it’s not the right management mode. That is what you do for efficiency.

CAHILL: So I wanted to say to you that I had the pleasure of listening to your keynote address at the PMI Global Executive Council Meeting a month or two back. At the time, you discussed the post-Covid-19 workplace - I think that was the topic - and you identified a couple central themes of innovation, things that have changed since the crisis and then things that still hold true. Can you walk us through that?

TEMES: Absolutely. The new stuff is maybe the more interesting. And of course it’s not new-new, it’s new in our moment because we are stressed in ways we haven’t been stressed maybe in a decade or two. One of the issues, and they tend to all connect, one of the issues is looking for emerging leaders. This is something that we heard from a bunch of organizations including in healthcare but also including in logistics, including manufacturing, where they say we are in the middle of or have just gone through the worst period of disruption in my career or in the career of most people in the organization so far.

Interestingly, some people have stood up and exercised leadership in ways we wouldn’t expect, in ways that reflect a maturity and a capacity that should be three or four levels above where they are in the org chart. We recognize that. We give them a party, we applaud them, they get a nice note from the CEO. What do you do with those folks? Can you elevate them more quickly? And the answer is you really ought to.

So you need to have a constant audit of who is stepping up, who is actually making an outsized contribution, recognize that, reward it and capture the value of those people going forward. It is really a shame to have someone, whether it’s… Someone who I’ve gotten to know personally, a young woman who rolls into a hospital, working out of a central administrative group, and because of work she had done in war zones, wearing another hat in another part of her life, she saw that the morgue was overflowing. And she just stepped sideways and said all right, gang, hey morgue workers, here is how we have to organize what’s going on and preserve the dignity for these folks and their families. And she started doing the work and she became the de facto leader. 

Now if you sent her back to the central administration building doing what she did the month before, you have missed an extraordinary opportunity to take someone who really knows how leadership can and should work under those circumstances and you have lost the ability for that person to be a leader.

Now this may be someone who is ten years younger than the peer group she is performing in but that is a plus, not a minus. And taking a person like that first on a temporary assignment two or three levels up the org chart with a bias toward trying to make it work is probably a really, really good idea. 

CAHILL: I like that.

TEMES: Yeah. And this connects to that notion of how clarity of values is so important. You can look at a coffee shop, part of a big national chain, you can go online and say wow, here’s another video of someone being thrown out of a coffee shop because they are not wearing a mask and this person is being treated with respect or not. But you have a store manager who might be making $15 an hour standing up, taking leadership, finding their voice, which is hard to do for a young person, and representing the values of the firm.

I have seen these videos where you have these folks who look like every other worker there, most of whom are standing there in that moment of fight or flight panic, and someone clears their throat and says, ma’am we love your business, we want you to be healthy but the rules here are you cannot be here without a mask. I have to tell you that and I have to ask you to leave and you have to leave now. 

Now in many of these cases these folks may have gotten the memo about the mask policy without the onboarding training because when they onboarded there was nothing like that. And I don’t think we want to ever say, gosh, you failed to do this hard, unexpected thing but what we do want to say is you succeeded at something because you understood that the values of our organization are we have to keep everybody safe before we do anything else. That person probably needs to become someone you celebrate in the region and across the firm and you have to have a question mark that says should this be our next regional training manager.

CAHILL: Yes, their connection or their living of the values is demonstrated in their behavior. So that’s the best example.

TEMES: And that connects very strongly to a couple other pillars of a kind of new approach to innovation that’s really emerging from this moment. One is a very specific role that we have encouraged people to establish. We began talking about it as a crisis data officer role. So we want it to be someone at a very, very high level in a firm whose job it is to run a new little organization that monitors how everybody across the firm is dealing with these unprecedented circumstances that we are dealing with and captures everyday who did what best. 

So if we say, son of a gun, we are now dealing with how to treat patients in the hallway or we are now dealing with production goals that are triple what they were last week and we have only brought in 10 percent more staff, who among your team did that task better today than most other folks? And what did they do? It needs to be someone’s job - and in a big organization it needs to be a team that you stand up - to do that across every operating group when you’re in crisis and then feed it back really fast and create the expectation that every day we are going to share these new best practices so that you ratchet up. So that your average performance ratchets up every day based on best performance from the day before.

Really though, when you think about that, that is exactly about discovering what those folks at the edge of the organization, like the coffee shop manager, are doing. And it is about discovering rather than predicting or inventing in the lab the best new way to do things. And that is another one of those really enduring principles of innovation in large organizations.

CAHILL: And that connects very nicely into a startup mindset as well.

TEMES: Absolutely.

CAHILL: I mean it rings true to me that a startup mindset is evident in what you’re saying.

TEMES: Yeah no I think that’s right. And it is very much about who is pivoting how and when and not losing the fact that someone is doing something different. I mean we have seen this a thousand times - in big organizations a lot of people who are brilliant at improvising and discovering new ways of doing things want to hide it - A, because they don’t want to get in trouble, but B, if they find a better way to do something they don’t want that to become the new normal because they are arbitraging how smart they are against how the ordinary system wants them to do things a little slower.

But there’s this long-standing principle exactly parallel to lowering the cost of failure which is to value discovery over prediction. And that is a general principle but this is a really great application of it to say we want to look at processes and practices in a state of crisis who are under great strain as a way to discover what our people at the tip of the spear are doing and not say we need the smarty pants, we need the central group to invent it and then we’ll tell them what to do. When they’re doing it already, we have to find who is doing it best.

CAHILL: That is a big challenge for most companies, right, the balance between individuals being order takers versus designing and in this case innovating for a better outcome.

TEMES: Right. Yes. And a lot of goes again right back to whether you have really clear values. The stronger your values the more you can trust. If I say, look, we are here to make hamburgers. The way I’m going to trust you is I’m going to trust you by seeing how well you comply with my instructions to make hamburgers. But if I say, look, we are here to provide food to people in our community who we care about, that is just a different mindset.

CAHILL: Completely.

TEMES: Hamburgers are very important but understanding what happens when someone really needs a bagel instead of a hamburger, I’m going to be able to establish better long-term relationships and I’m going to empower those folks who know, who can’t follow an unlimited set of rules because in a crisis you don’t have the rules, but everyone can understand and apply the principles. You have those few principles, what you care about and what you are for, that’s the core, that’s what we build on. 

CAHILL: Yeah. And those principles are based on an empathetic approach to working with customers and stakeholders. 

TEMES: You hope, you know? Although, frankly, there are some cases in which you say look, we are company X and we’re a bankruptcy restructuring firm, you can always count on us to do the thing that will make the most money for the shareholders and that’s who we are and that’s what we do. And even in a situation like that, when you have a crisis, when you have a corporate restructuring that suddenly goes bad because the Fed funds reg collapses or triples or whatever it is, you’ve got someone architecting one small part of the deal that has to be done by midnight and sent directly to the regulators. 

I mean it sounds crazy to think that there is that direct an analogue but I think there really is. That person will understand the principle. And if the principle is, we have to get costs down, that person will take the risk and own the risk and follow the principle of the firm. And I don’t think there is anything wrong with that provided that you know what the principles are of the organization that you’re choosing to work with.

CAHILL: As long as it’s simple and easily understood, right? That’s the other aspect of it.

TEMES: Right.

CAHILL: It can’t be an epistle, it’s got to be something that is digestible and learned.

TEMES: Yeah, right. 

CAHILL: So Peter, your work and your ideas are very relevant to and part of what we call thought leadership. How can a leader become better at thought leadership and how do they discover trends and hot ideas? Give us some tips on that.

TEMES: I really like this notion of thought leadership partly because it helps people realize part of their job is to think and part of their job is to learn and share. The pillar of thought leadership to me is to listen, to observe and to be very, very curious. 

One of the folks we’ve done a lot of work with over the years, a fellow named Alph Bingham, he used to be one of the principles running R&D for the drug firm Eli Lilly. And then he started Lilly Ventures and he stood up this wonderful open innovation technical platform called Innocentive. 

One of the things that Alph often talks about is this idea of optimal distance. He says, look, here’s what happens when a company posts a technical challenge on this global open innovation platform so people anywhere in the world can say, I think I can solve this, and you’ll get a big reward. He says, first you get a wave of submissions from everybody and their uncle and the distribution of real value is almost random. 

And as it starts to net down, he says, it’s almost never people who have direct experience in that issue. It’s never the PhD material scientists who are solving the material science challenge ‘cause people have already tried that, that’s why that company filled with folks like that decided to do this more radical thing. He said, but you know, it’s often someone who has a master’s degree in a somewhat similar discipline but they are used to doing something different. They are used to solving different kinds of problems with different kinds of language but they are close enough that they really understand at a technical level what the fundamental challenge is, and that is optimal distance. 

When NASA started their open innovation program one of the first things they put out there was a new space glove. Here is the new space suit, you could ordinarily pay a big defense contractor $50-$100 million to engineer the glove from the ground up but here are the specs, anybody who wants to try to invent this, go do it. And the guy who won... And it is a beautiful glove, they took it around, and there’s this big glass dome, they put the glove… they toured it when they were talking about their Open Innovation program, the fingers turned just like in the Sistine Chapel, and it’s a beautiful metaphor for human potential.

The guy who won it was a master’s degree holder in material science. He was a third-generation glove maker, his father and his father’s father made hunting gloves. And it was a beautiful example of optimal distance. He is not a space scientist, he doesn’t have a PhD in polymers. But man, he could make a glove and he understood from the glove maker’s perspective rather than from the perspective of the polymer scientist exactly what the moving parts were and how they would work.

So that optimal distance issue I think is actually a big part of thought leadership. 

CAHILL: That is fantastic. Yeah.

TEMES: The person who is passionate about their church, who is passionate about art, who is passionate about footwear and goes to work in a bank and rises up and starts asking questions about how money moves and how the way that lending in a certain community relates to the way that people cluster together on their track teams, in their religious organizations, based on their interests in literature. 

You see all that other expertise giving perspectives and enrich the way they see a given problem. They won’t necessarily go as deep with the skill of the specialist, but they’ll always be able to go broad and make connections that other people might not be able to make. And thought leadership has a lot to do with that. It’s so much less about what you think and say as a thought leader and so much more about what you can hear and learn about and connect.

CAHILL: It’s really interesting, this whole concept of optimal distance. It really comes down to the individual has a passion and a deep understanding of the application of the science or the technology.

TEMES: Right.

CAHILL: And that’s often missed, right? I mean I think that’s the point. 

TEMES: Right, that’s right. 

CAHILL: When you really have that mindset and you can find people that can apply in a different way, you get to the best answer. The next question is very much connected. I see your very impressive educational background steeped in writing and literature. How does that core part of you influence your work? Is there some optimal distance in there?

TEMES: Ha! There are a few different ways to tell that story. There’s a lot of distance, sometimes optimal, sometimes too much. Yeah the first thing I would say is even though I was always a kid who loved learning and graduated from the public schools in New York City, I was not a stellar student. I barely squeaked out of high school, started at the local public open-admissions college and the transferred up and did a whole bunch of different things. But by the technical definition, I think I dropped out of college twice.

And then I got my act together once I managed to finish college on a slow schedule but really found my rhythm... had a couple of kids and got serious because I was suddenly a responsible adult. And I really loved graduate school. I went to graduate school at Columbia University initially to study writing, which helped a lot because understanding how words work and how people hear things and just the structure of language, has helped me in everything I’ve done from working with NASA to building houses. So I think that is a fundamental pillar for everybody. 

I studied what I thought was the most important stuff in the world, which in the late eighties and early nineties meant studying how our country had changed because of the civil rights movement. And here we are again, as the cycle keeps coming back because we have this profound, unfinished business in all our organizations. 

And what I really was looking at was the leadership of Martin Luther King in his branch of the movement and how it was different with respect to the Black Power movement, different styles of language, different arguments and, more importantly, a different sense of how people hear demand for change. So King emphasized that America was an unfulfilled promise. He basically said - and the beginning of the “I Have A Dream” speech is all about this - America is a great promise but you, white America, have not fulfilled that promise. But you can. I refuse to believe that you can’t do it.

And that led to three extraordinary works of legislature, it led to the Civil Rights Act, the Voting Rights Act, the Fair Housing Act. In 1966, the Black Power movement splits off with a different approach, not saying that America is an unfulfilled promise but basically saying America is a lie. It never was what it pretended to be so we have to start over. And then I would argue that led to a lot of accomplishment, but nothing like that huge leap that those three big pieces of legislation accomplished. 

So that was my conclusion as a scholar working in this one area. Years later, a lot of other adventures, I wake up and I’m running this institute thinking I’m doing something very different but it’s extremely rewarding. And I realize actually it’s very, very similar. It’s all about change on a very large scale. 

And I actually spend more time now, when we sit around a table with folks at the Institute, talking about things like the difference between transformational and transactional change, which has a lot to do with technology change in organizations today, but which is really a model that emerges from studying the civil rights movement, and it helps me have a different frame. So those things are deeply, deeply connected in my mind.

CAHILL: It’s interesting how language, words, the approaches that you take do make a big difference because what one set of words means to you is something different than someone else. 

TEMES: Right.

CAHILL: So it gets tricky. And at the level of racial inequality particularly and all the way down to less important things like change management in the company, but they have the same features and the challenges.

TEMES: Yes. And it’s funny, I think change management in the company is in some ways the same story as that we have social justice, right? Because organizations where we go to work everyday and get our paycheck from and feed our family with, this isn’t separate from the big ideas in life. This, for most of us this is the greatest expression of those big ideas, which is why we have to support our colleagues to never allow themselves to say, I know I’m doing the wrong thing but hey, it’s my job. And to always empower them to say, here is a concern I have and I need to help be an agent for positive change. I need to see part of my job as doing the right thing and help make things better without necessarily being confrontational and without saying no, no, no, no, no.

What I always want to know in the frame of social activism is not so much what you’re against but what are you for. 

CAHILL: I love the whole insight there and the connection to your core education. Again, it connects back to this optimal distance concept, which I really love. I’d like to shift gears a little bit and talk a little bit about our project professionals. I’ll just ask you with regard to your research, do you have research that can predict or anticipate the type of skills or capabilities that project professionals will need in the future?

TEMES: Yes, what a terrific question. And you and I talked about this briefly the other day. One of the shifts we’re seeing now in terms of how people work, especially if like me you spend a lot of time looking at the screen for these remote video conferences, and I’m old enough that I always think of it in terms of the Brady Bunch and how that TV show had a grid like that. [laughter]

So there are shifts and I think in some ways it’s terrific to see folks being able to say look, over the course of my 24-hour day, in addition to being the world’s greatest project manager, I’m going to help out my kids, I’m going to help out my spouse, I’m going to do something in the community and I’m still going to do really good job and I’m going to be there when you need me to be there. And that’s different from putting on the good suit or the good skirt, being around the table, spending more time socializing with the rising star and trying not to align with the person who seems to be a little marginalized.

There is something good - now there’s plenty bad too - but there is something good about what happens when we have all this remote work tied together with these occasional conferences. One of the things that happens is the folks who just look good and have good meeting performance strategy tend not to have the advantages that they have in a traditional office environment. 

And another is central management tends to need to focus more on measuring real productivity and contribution and that is going to help a lot of folks who might not be as articulate but are really great at doing the work. And folks who look a little different or just have different social instincts in terms of conversation but now that I say, I can’t walk down the hall and see who is working hard, I’m going to have to look at the measures of productivity to see who’s working hard, there is something leveling and good about that.

And you know what, leveling is the wrong word because it’s not level. It’s about a meritocracy, which I think is inevitably good for the long run. 

CAHILL: And it’s an acceleration of what I would think management, the challenges that management has had even in the face-to-face environment of measuring productivity in the service world or the digital world.

TEMES: Well I think that’s right. Yeah. I think that is absolutely right. And I think PMI deserves some credit for this. If it’s not uncomfortable to say something nice about PMI here…

CAHILL: No, feel free.

TEMES: So the way in which we have evolved practices and tools in 100 different places has been very important in terms of project management as a discipline. But having a society, having an organization to socialize that, to localize that, to have community around those practices is exactly that large-organization leverage which makes it really innovative, rather than 100 small organizations figuring things out and having a generationally slow penetration of those new practices across the world.

CAHILL: So one of the big features of a project manager, their success, is collaboration, right? So face-to-face collaboration, digital collaboration, it really doesn’t matter, how do you see... what do you think a project manager needs to do differently in this more digital world with all the challenges at home and kids? They’re not distanced from you, they’re right in the next room. How do they achieve collaboration?

TEMES: It’s really interesting to me because I think the sharing of information is so key. And this is the evolution that I think we have seen before Covid and it’s exactly that kind of prior commitment and investment that gives an advantage to folks who have been getting that right for the last ten years. 

If you have any one of a dozen tools for knowledge sharing at the project level, a good project management coordination tool, suddenly that tool is much more important. I mean, if I say where are we with the project, let me go ask Bob, instead of saying where are we in the project, let me pull my phone out of my pocket and I can see visually exactly where we are, there is a democratizing effect which increases productivity. Because I don’t know where Bob is A, in every moment and B, I don’t know if Bob heard the last news from the job site, right?

So being able to really do that is vitally important. You can see the different tools. You can see if you look at a relationship management tool like Salesforce, which was really hard to use in its early days - and you could argue that it is only part way through its evolution - but you look at the way that interfaces move from being very technical, being bigger, fatter, easier to use... 

It’s very interesting for me in terms of just being a guy who runs a small business and a household where I notice all the banking sites that I go onto - my business account, my personal account - they have changed in the last three months. The key information is bigger, it’s visually less complex but it is more prioritized for the information that’s more relevant. And I think they did that in this crisis because suddenly the load for information pull doubled, tripled or quadrupled. That is the kind of evolution that I think we are living through. 

And in terms of a personal practice and personal development, more openness, more transparency, understanding that project management is actually much less about managing other people’s expertise and much more about helping everyone see the way this complex field is moving and growing and evolving at the same time really sparks things. And there is lots of economic theory behind this, which I’m actually very interested in, that, you know, the more transparency, you have the more people tend to work harder to improve their own lives, which improves the public space and then accelerates peoples individual growth.

CAHILL: How does that transparency, relative to managing projects or working a project team, how does that manifest itself with innovation? How do you have further innovation with that?

TEMES: I think it goes right back to efficiency versus discovery. And what you see is project management is oriented often toward being more efficient but I think because it is all about information flow, it actually helps you discover lots of really cool, new things. 

One of my favorite projects.. several years ago, working with Cummins Engines. They had just… and I guess this would have been 2013-2014. They had just put RFID chips into all of their hand tools. So they might sell an engine for an enormous ship or they might sell a boring tool for a coal mine in South America or a diamond mine in South America. 

These things might be 200-300 feet tall, they might weigh 1000-5000 tons. And they would come into the place where they’re being assembled through some combination of slices of them going down a high way on a truck, going down a river on a barge. And then they might send 100 people down there with hand tools to put the darn things together. So each of these builds has an outcome and sometimes the outcome is better than others. Some are A, some are B, some are C.

Once they had those chips on those tools the question was okay, what did we learn? The chips are about efficiency. Suddenly we can measure how each tool moves over the course of let’s say a three-week build on a site in Venezuela. What they really had to do at first was to create these animations. They said okay, here are five A builds and here are five Bs and five Cs. What is different? Because the data was new. So it wasn’t a question of who has the higher score, it was a question of what story is the data telling me.

And two of the outcomes that I love were number one, one quality a lot of the better builds had was that fewer tools were moving around. So you can imagine you can take an animation of the tools moving around, each leaving a red trace, like a tracer bullet, and I can play all three week’s worth over let’s say five minutes. I can watch a whole bunch at the same time. And I can say boy, this looks different, this one feels different, this one feels less dense, this one it turns out has fewer tools. 

So what is happening is the technicians in some cases are picking up a tool and they are unofficially making it a dual-use tool. They are not climbing off the darn thing and getting another tool in some cases. And that is a really good best practice if you do it right. 

And in other occasions you’d say wow, these are really good builds. And every so often everybody stops moving, all the tools stop moving, what’s going on? And what’s going is the site supervisor, every few hours, stops everybody for two minutes and says okay, what have we learned? Let’s apply that lesson and get back to work. So that is a brilliant best practice.

It’s coming out of the data, which like a lot of project management disciplines, seems to be about being more efficient. But actually because the data is telling a story, when we step back and say let me not just measure the data, let me listen to it, let me see it at a macro level, we are going to be able to see where certain inefficiencies are, we’re going to see where certain weak links are, and we are also going to see where perhaps value was created, that there were acceleration and inflection points we haven’t noticed.

So if you’re in a project management classroom you are going to have lots of time saying here’s how you do this and here’s how you do this well and here’s the case studies. And every once in a while you’re gonna hope you’re gonna have someone say all right, now, based on this project data, what surprised us? What else is here that we’re not looking for? And you make that a habit.

CAHILL: And that delivers innovation, it accelerates what we used to process reengineering, right?

TEMES: Right, yeah.

CAHILL: Those kind of solutions would take weeks in a conference room with lots of white boards and markers and so on and so forth. It’s fantastic. I mean that’s a great insight. Thank you for that. We could probably go on forever talking about project management but I want to keep it in a more diverse topic area. 

I gotta tell you, Ed Hoffman, our friend in common, told me that you’re a brilliant connector. I would like to ask you if you can share with the audience what does it take to be a brilliant connector? Are you born with it, do you wake up one day and you’re all of a sudden a brilliant connector or are there certain skills and disciplines needed to be so?

TEMES: It’s a great question. Ed is probably too kind in saying that about me but both of us know Ed partly through his work at NASA where he was a very important leader for a lot of years. And Ed is one of those connections I have that I really cherish. 

So a couple of different things. Number one is there’s a kind of humility that some people like to put into this idea of don’t try to be interesting, try to be interested. And I really like that. But I think there’s something else to it. I think if you find that there is something you love, that’s great. Going deep in any area gives you a sense of what depth looks like in other areas. So I think one of the important things is to try to balance what it is that gives you an almost selfish kind of pleasure and allow yourself to go deep with that. And then look for the characteristics of someone or something that has that depth to it and you’ll always find that deeply interesting. 

What I do in my core life, when we’re allowed to travel, and I hope we get back to that sometime in the near future.. I’m going around, hosting 40 of these small events around a conference table every year in a bunch of different cities, and we get people from every industry, we certainly get people from every background but there is a commonality that emerges around the table - it’s people who say, yeah, I’m willing to invest my time to have a conversation that is not explicitly about solving a problem but it’s about thinking about a range of problems that I may well have in common with folks from different industries.

And I always think back to one of Jack Welch’s exercises when he was the CEO of GE. And this is not intended to say anything about anybody being a A or a B or a C but it’s intended to be about people who are passionate about what they do and being able to recognize that passion in others, which is what that connecting I think is about. 

So he said hey, let’s look at this vast army of advantages we have here. I want to rate everybody. Because he was cutting heads and also trying to learn about the organization in new ways. I want to rate everybody based on how well they’re doing their job, an A or a B or a C. And kind of like the leadership at Cummins, once they had that data, it wasn’t just, okay cut loose the lower 10 percent, it was also what is this data telling us? What questions is it answering that we are not asking?

And one of them was about hiring patterns. And what they found that I always was deeply impressed by was As tend to hire As but Bs tend to hire Cs. And that makes intuitive sense to me because I’m passionate about a handful of things. I’m passionate about the history of the civil rights movement, I’m passionate about poetry, I’m passionate... my son is now super into these old hand tools, 19th Century hand tools, I see that passion in him. 

If you have that seriousness about anything you will recognize someone else who has it. So when you’re hiring and maybe you’re hiring for a project manager, if you’re an A you can tell it, you can tell if this other person really cares and is really good at it. If you’re a B, you are probably doing a pretty solid job but you don’t care about that passion. You’re not feeling as though you’re a little bit of an oddball but there are other oddballs out there like you and you have a special connection to that. You are more a normal person who is just saying let me get someone who can do the job and go home and that’s what leads you to the Cs.

One of the ways that I think we have to apply that is actually to slow down growth at times and to look at human talent as a natural balancing point on growth. Because I have been in plenty of environments where people say I haven’t found the right candidate but if I don’t get someone in this job we’re not going to be able to take on this new problem. That’s when you start getting the Bs and Cs. 

And so then you say okay, we’re a bunch of As, we got a B, that’s fine. But then when it’s the B’s turn to hire you’re gonna maybe get a C. And that’s how everything deviates toward the mean. That’s how when you work in an organization you say, man, this place is special, you hope ten years from now it will still be special but everything deviates toward the mean and it takes hard work to keep that special place special.

CAHILL: That’s pretty damn good insight and it rings true I think for myself for sure and I’m sure for the audience. Thank you so much, Peter. I learned quite a bit about you and about innovation in large organizations. I’m very thankful that you came here today to share your story and to share story of the institute. So I want to thank you on behalf of the audience and on behalf of myself and PMI. I look forward to continuing the conversation in the future.

TEMES: Joe, an absolute pleasure. I really enjoyed this and it really is a privilege to be with you and all the folks connected with PMI. Thank you.