The application of scientific process to business practice has been one of the critical drivers in the success of modern enterprise. Observe, hypothesize, measure, analyze, apply, repeat. It drives efficiency and progress. Unfortunately things get dicey at the edges. There is an art to being a breakthrough business, in being able to observe the unobservable.

Sometimes our ability to envision surpasses our ability to measure. Sometimes you just have to leap.

“Leave space for things to come to you,” says Janice Cartier in her discussion of artistic process.

In a way, creativity’s feeling of random discovery is a scientific process we have not yet come to terms with. Robin Dickenson commented that for him the creative and scientific processes were modes of thinking that can be switched between. Kay Plantes commented that both the scientific and artistic states-of-mind need to recognize the value each brings to the toolbox of business thought. And then she brought Jeopardy Champ Watson into the discussion.

Ah, Watson. The knowledge workers’ nightmare…

Part of Watson’s strength is the programmers’ ability to dissect and understand the thought-processes of human Jeopardy champs of the past. Ken Jennings describes Watson’s intuition:

“I expected Watson’s bag of cognitive tricks to be fairly shallow, but I felt an uneasy sense of familiarity as its programmers briefed us before the big match: The computer’s techniques for unraveling Jeopardy! clues sounded just like mine. That machine zeroes in on key words in a clue, then combs its memory (in Watson’s case, a 15-terabyte data bank of human knowledge) for clusters of associations with those words. It rigorously checks the top hits against all the contextual information it can muster: the category name; the kind of answer being sought; the time, place, and gender hinted at in the clue; and so on. And when it feels “sure” enough, it decides to buzz. This is all an instant, intuitive process for a human Jeopardy! player, but I felt convinced that under the hood my brain was doing more or less the same thing.” Ken Jennings, Slate 2/16/2011

Is Watson imitating human intuition or have programers learned how the old synapses fire. Don’t know. Makes me feel vulnerable though.

Understanding and nurturing creative process is a critical competitive advantage, one that the US thought it had pretty much locked up. ‘Sure take our manufacturing jobs, we’ll all be imagineers.’ Now the alarm bells ring for U.S. creativity with a key measure (the Torrance score), falling each year since 1990.

“Instead of solving problems, our current mentality is to postpone dealing with them, either by ignoring them or trying to spend our way out of them,” Brad Shorr observed when commenting on the decline.

That particular methodology could be seen as a symptom of creative decline in and of itself. Creativity is all about solving, adding, discovering.

Maybe a part of the problem is that our ability to measure has suddenly surpassed our ability to absorb. The amount of data flying at the average manager is much higher than ever in history, does it free managers to move or lock them in a narrow pathway?

“What if I had been taught that the science of writing is also an expression of art?” Deb Brown asked.

ART - Photo by Joanna Paterson at ConfidentWriting.com

We all need to be reminded that some aspect of what we do is art — is creative. No matter how hard we try to bury it. Diane’s question reminded me of this Postcard Project image from Joanna Paterson’s Confident Writing site where she was reminded that “Your Words Are Art.” I like that. More wisdom form Janice, by the way. Learn from the artist. They are closest to the paint.

Could we also say, “Your Actions Are Creative.”

This post has the distinct feeling of a random walk, but sometimes my ideas do come from strange places, so walk with me a moment longer please.

If someone beats a drum and says, “Don’t disrupt the production line. You are not creative. You should not be creative. It is not your job to be creative.” Most of us would laugh, and consider the drummer to be silly.

As a matter of fact, I’ve never met anyone who would knowingly drum such a beat.

But the drummer exists. Self-doubt. Social mores. Wave avoidance. ‘Go with the flow.’ Odd reward structures.

Recognize the beat. It’s background noise which we all hum without realizing.

A devastating drumbeat.

Makes you want to cover your ears and run screaming for the woods. Thoreau did. He was on to something.

“Imagination is at the heart of great strategy — we need to reconnect with the 9 year old kid living in the back of our head,” commented Bill Welter.

I’d say it’s at the heart of a great life as well.

I’ve had the pleasure to speak with a number of individuals over the past few months who have brought a deep sense of imagination to solving problems others shy from. Dean Cycon changing the world through coffee, Raphel O Tyson through microfinance in Ghana or Jon Rycek through play. (I owe posts on the later two. Jon just left for Peru to train individuals who plan to build playgrounds for schools in the country as part of Playground Ideas.) They understand the traditional bottom-line, but believe there is something more that a company needs to be measured by.

Know anyone who is making a difference bringing social entrepreneurship to life? My students and I would be interested in knowing about them. Let me know in comments or by email. Thanks!

Carmen Benavente, author of Embroiderers of Ninhue: Stitching Chilean Rural Life, spoke at Indiana University today about her experiences in Chile. In 1971 at a time of turmoil in Chile she found herself back in her home region.  Surprised and frightened at the fear and mistrust she encountered upon arrival, she spent the night thinking over an idea – to invite the women of town to meet and share and learn embroidery.

I found her story compelling, in part because of how quickly a creative impulse could catch fire.

“Stitches afford a vocabulary for the designs,” said Carmen Benavente.

The women were hesitant at first, saying they couldn’t even draw a straight line. But by the second day many in the community were out in support. More of the community came out the second day and quickly she saw them give the “approval of the whole community and family and invest it in the work of the embroiderers”.

Within 8 weeks pieces created by the embroiderers of Ninhue were selected for a show at a gallery. She described the embroiderers’ looks and comments as they gathered their work for the show.

“I can imagine this to be their first encounter with their creativity,” said Benavente.

Many of the embroiderers’ were able to make good livings from selling tapestries, but they also felt great satisfaction at what they were creating.

The ability to ‘feel creative’ is a great gift.

Tough act to follow.

Today embroidery goes on, although the area is still recovering from the Chilean earthquake of 2010.

Instead, I’m just going to say you need to read it for yourselves.

Get past the scary call to action about creativity declining in the United States. (Scary for those of us who live here at least) This is one article where the really interesting and useful stuff is in the second half.

As you read keep in mind:

• Creativity is about the creation of something original and useful – don’t limit your thinking to fine art categories.
• Creativity can be learned and encouraged in every part of the educational process, possibly improving overall effectiveness more than when limiting to traditional categories.
• The need to be creative is a deep, neurological need.

Kudos to Po Bronson and Ashley Merry at Newsweek for a great synopsis.  Creativity is messy, which means there’s plenty to argue about in the article. But given how central creativity is to our humanity, putting the discussion front and center seems like a good idea.

The article is: The Creativity Crisis, Newsweek, July 10, 2010 by Bronson and Merry.

Most of the inscriptions are in verse. My mother tells me that her father and mother often traded poetic notes with each other and it looks like the practice was widespread, at least in this neck of the woods. While I’m sure many of the verses were used multiple times among many friends, each page provides a touch of personality — a small window into the lives of people I never knew. It felt very personal.

“My friends in my album I ask you to write,
but to tear out the leaves I deem impolite.    A. Maiers”

Annie had a sense of humor. As did Jeannie:

“To Anne,
Around went the album
To me it came,
For my contribution,
So here goes my name. ”
Jeannie Haickey

There are other inscriptions more personal and heartfelt, but unfortunately they are not in the mood to scan for now. They have faded and are difficult to read. But they are there. The afternoon was spent talking about memories with the autograph book and a few photos to inspire the conversation. I learned things I never knew about my grandmother.

Which got me to thinking about Facebook. Today’s version of the autograph album, a complete electronic rolodex of our network of acquaintances and friends.

• Spelling – optional.
• Punctuation and capitalization – optional.
• Thoughtfulness - optional.
• Even words – optional.

Now I’m a latecomer to Facebook.  I actually joined to help my kid’s high school booster group manage publicity. But quickly I discovered some old, lost friends. Facebook is my living autograph book. A place where connections are made. But how long lasting are the memories here. Will great, great, grandchildren ever dig old Facebook files out of a trunk and feel connected to someone they hardly new?

It doesn’t feel that way.

And now there is a kerfuffle as Facebook works to generate revenue using the very contacts it helped me connect with. I don’t begrudge them the cash. They brought value by connecting me easily with old friends. But I’m a little irritated with their desire to track my steps through every website and web tool I visit. It’s as if they somehow believe that friends share every detail of their lives with no edits or consideration.

That’s not poetry. That’s personal spam.

The glimpse of life I gained through my grandmother’s high school autograph book reminds me of how at one time individuals were maybe a tad more thoughtful about how they wished to be remembered. Maybe even a bit more thoughtful about how they presented themselves. Could our ability to communicate easily be weakening the value we put on communication?

The ability to connect human beings together in memorable, long lasting ways is probably one of the most powerful selling points any business can hope to have. Facebook caught lightning in a bottle, but now seems ready to tip the balance from valued tool to overly greedy spy. MySpace went this route. Some are not amused. Taylor Davidson provides an interesting look at why we should care about the business model behind the services we use. Just because they are free doesn’t mean they are without cost.

Communication continues to evolve. From private letters on stationery to sentiment presented on greeting cards. From phone calls to email to texting.

As everything goes digital it would be a neat trick to find a way to return the private, personal, long-lasting feel of a letter (or autograph book) while maintaining the convenience of Web 2.0 interaction. Things are being lost in our digital age. A key aspect of looking for opportunity is to mine the past for value, not to recreate history, but discover ideas primed for updating.

Of course I doubt my grandmother ever gave a thought to the idea that her descendants would be leafing through her old autograph book.  It was kept as a personal keepsake, her own memories. Which make it even more precious to us.

Solutions to the digital keepsake dilemma anyone? Let the competition begin.

So, if Wilber and Orville had decided to open a different kind of shop to pay the bills, let’s say a bakery for example, would they have flown today in 1903? (That would be December 17th, 1903)

“While most engineers assumed that a successful aircraft would need to be inherently stable, as bicycle builders the Wrights made their living building vehicles that were inherently unstable.” NOVA Wright Brother’s Flying Machine (Currently on Hulu.com)

The bike shop turned out to the the perfect training ground for the first successful aeronautic engineers.

The leap concerning stability -

…led to a focus on control -

…onto a critical insight about wing warping which came when Wilber reached for a cardboard box containing an inexpensive tire tube.

From giving a box a helical twist to steering a biplane.

Serendipity.

But as with all serendipitous moments (and most instances of luck for that matter) the inventors had to put themselves in the right frame for inspiration to strike.

Which brings me back to the power of Need, Structure and Serendipity when it comes to personal creativity.

The Wright Brothers were pursuing flight. They knew the research of the day, figured out where others were going wrong through a progressive series of experiments, and ingeniously transfered skills learned from the bicycle trade.

Their bike shop paved the way for their flight shop.

So with the new year approaching I think it could be fun to think about ways to enhance our chances for big serendipitous moments – Personally, professionally and businesslly. (I know, I know, businesslly is not a word. But if you know what I mean maybe it is now. We’ll see.)

Any pointers you’d like to add to the discussion?

Photo: First flight December 17, 1903 from Wikimedia Commons

It was a safe place to launch.

Funny how lessons from childhood get learned so well you forget there was a time before you knew them.

My dad did the building back in 1966 based on a simple plan found in the always inspiring Better Homes and Gardens. A kid size A-Frame with porch, ‘bay’ window, screens and furniture.

Even as a youngster I was encouraged to help. I was a great help hammering. (Oh how I hammered. Dad would hand me the hammer and a bit of wood and say “Fred, I need you to hammer.” And I would hammer, hammer, hammer. Quite a bit of work would get done while I hammered – elsewhere, of course.)

Comfortable for 4, room for all (phone booth style). Its purpose shifted on a whim. When ideas were short it stood as the starting point without forcing direction.

Play house? Of course.

Neighborhood club, general store, doctor’s office? No problem, why stop there.

It was a guard post marking the boundary between the wilds of the alley and safety of the backyard. A must stop engagement during hide and seek. (Not a good place to hide, but some never learn.) A warming hut during ice-skating.

And around Halloween Witch Hazel made the occasional visit with crystal ball and caldron. (A fact made a tad bit more frightening given the pet birds, gerbils, and rabbits that were buried around back in fine Buster Brown cardboard caskets. Stephen King’s Pet Cemetery really resonated in high school.)

This is going to make me sound stupid, but I just got the Witch Hazel pun. My dad is still cracking me up.

Learning Personal Creativity

I’ve learned to rely on three basic sources of creativity over the years. Needed, Structured, and Serendipitous. When all three are in balance ideas seem to flow more easily, each source reinforcing the other. Looking back on my childhood I think I started to learn the balance around The Little House.

• Needed: The source for much creativity. The need to get something done, to be entertained, to simplify. It gets you out of bed in the morning. It’s the reason the creative muse comes looking.
• Structured: Patterns can make creativity easier. Routines create space for ideas. Deadlines fight procrastination. Structured simply makes sure the creative muse knows where to find you.
• Serendipitous: The magic that most people focus on. The idea out of the blue. The random connection that changes your world. The muse hits you along side the head.

The first two sources are the work that prepares you for the serendipitous event. Having safe-spaces can help create the balance. Can be a launching pad.

The Little House was one of my launching pads as a kid. When the conversation in the middle of summer would turn to:

“What do you want to do?”

“No, what do you want to do?”

“I asked first….”

The little house was one of the places we could wander to and build a fun afternoon from.

It was like a permanent cardboard box waiting to be opened.

Today my safe spaces and launching pads are a bit different. They’ve evolved beyond place to include people, routines, and even a touch of enforced randomness. But they serve the same purpose. Places to start from. Places where the creative muse knows to find me.

Writing has become one of those structures that drives creative connections. It enforces the balance between need, structure and serendipity. Over the years I’ve been surprised at how regularly forcing my sometimes random thoughts onto a page can prompt ideas to evolve in very useful ways. For example this post developed from the serendipitous connection between the “How Do You Write To Learn” subject at Joyful Jubilant Learning and a recent re-connect with a few of the old neighborhood friends (Hi Barb, Patty and Steve).

Add a quick walk through my Mom’s amazingly organized photo albums and I suddenly remember that my parents taught me the fundamentals of creativity on Grand Opening day at The Little House.

(To which I arrived via The Little Red Car, but that is a story for another day.)

But as with many ideas that make life better, affordable implementation depends on general ‘good behavior’.

Expected behavior has a large impact on how you develop an idea. Dr. Leonard Kleinrock, who was a major force in the development of the internet (Happy Birthday Arpanet), explains in a recent Science Friday interview what he feels was a mistake we are still paying for:

“Yes. In fact, in those early days, the culture of the Internet was one of trust, openness, shared ideas. You know, I knew everybody on the Internet in those days and I trusted them all. And everybody behaved well, so we had a very easy, open access. We did not introduce any limitations nor did we introduce what we should have, which was the ability to do strong user authentication and strong file authentication. So I know that if you are communicating with me, it’s you, Ira Flatow, and not someone else. And if you send me a file, I receive the file you intended me to receive.

“We should’ve installed that in the architecture in the early days. And the first thing we should’ve done with it is turn it off, because we needed this open, trusted, available, shared environment, which was the culture, the ethics of the early Internet. And then when we approach the late ‘80s and the early ‘90s and spam, and viruses, and pornography and eventually the identity theft and the fraud, and the botnets and the denial of service we see today, as that began to emerge, we should then slowly have turned on that authentication process[...]. But it’s very hard now that it’s not built deep into the architecture of the Internet.” (Dr. Leonard Kleinrock interviewed by Ira Flatow on NPR’s Science Friday)

I kind of thought bike riders would be nice like that. Even so, in the Paris rental bike business they tried to adjust for human behavior. The bikes are $500 tanks (The NYT’s says $3,500 but other sources indicate that is a misprint) that lock securely into pay stations. Unfortunately, daredevils use the bikes as stand-ins for bone jarring jaunts down stairs, bikes are stolen, and some are intentionally vandalized. I’m not sure where the critical failure points are or if the attempts at security created its own problems. Heck, it could be angry taxi drivers for all I know. The point is the system is in danger of collapse due to the unexpectedly high rate of loss.

Real world testing messes with even the most robust products, whether due to a lack of comprehension or vandalism. (There are reasons why instructions include seemingly incomprehensible steps like “Do not use as a cup-holder”, “Take the product out of the box” or my favorite kindling for the yearly Darwin Award candidates – “Don’t try this at home”) A general lack of respect for property – whether caused by societal stress, criminal advantage or simply the movie JackAss – is increasing the transaction rates for publicly beneficial entities like the Parisian bike rentals, the same as spam and phishing creates costs and headaches for internet users.

Is there any defense against bad behavior?

Unfortunately, changes in societal norms from place-to-place and time-to-time mean that products will be subject to sources of predictable and unpredictable use and abuse.

To proactively defend your service or product from bad behavior there are three basic paths to follow in parallel:

1. Build to the big desire. Meet the core user need in a straight forward, easy to understand way. Limit barriers to proper use of any kind.
2. Identify the big failure points. Build against ‘Toaster in the Bathtub’ and ‘Gaining by Destroying’ moments. Keep in mind that rapid deployment and iterative development advantages could outweigh short term flaws.
3. Share the big rewards of positive behavior. By utilizing social engineering tools you can build in rewards and opportunities to legitimately share in a products success. Create barriers to negative behavior. Leave open paths to use your product as platform for other businesses. Watch for uses that drive the “I never thought of that” gold mine.

Could the bike program have benefited by creating social media plays for users to comment on their experience, on the condition of the bike, to report naughty use? While the bike program appears to have been a failure on the cost side, from a usage standpoint it is a crazy success with between 50,000 and 150,000 rentals a day and 63 million rentals since starting in 2007. That success means there is a driving customer demand reason to find a solution by all parties involved in the business. If time had been spent building a bullet-proof security system the business might never have been launched in the first place.

The truth is, if the internet pioneers had focused on security from day one it is possible that the internet would not be the engine for innovation that it has become. The ease of use, the openness and even the anonymity of the early system allowed thinkers to focus on utility not fear security. Focusing on the negative might have stopped the whole thing right in its tracks, without providing overwhelming benefit.

Balancing the cost of bad behavior with the need for innovation will continue to be a work-in-process.

I was surprised one year when my kids decided the perfect bag for stashing their loot was a king size pillow case. Heavy, but holds up to rain, sleet and snow. Cardboard Creativity in action.

Halloween seems to refresh the creative spirit, whether its a cool costume, uncool prank or simply a discussion of how electronic chip implants may replace candy someday soon.

Fear is a small part of it. Freedom to experiment is a big part.

Which reminds me, did you see Maurice Sendak’s response to the question whether he thought the new “Where the Wild Things Are” movie would be too scary for kids?

“Let them wet their pants.”

I’ve mentioned that creativity can be messy.

I may have forgotten to mention that sometimes creatives can be cranky.

Are you scared by cranky creatives? It’s not something to really complain about or correct. Cranky protects the soft spot on a creative spirit’s soul. Let em be.

—

Rather than take up your Halloween with scary stories about innovation, a short story recommendation.

“mr. penumbra’s twenty-four-hour book store”

It’s mildly sci-fi, inspired by a tweet, includes a touch of scary and a hint of Google:

IT’S 2:02 A.M. ON A COLD SUMMER NIGHT.

I’m sitting in a book store next to a strip club.

Not that kind of book store. The inventory here is incredibly old and impossibly rare. And it has a secret—a secret that I might have just discovered.

I am alone in the store. And then, tap-tap, suddenly I’m not.

And now I’m pretty sure I’m about to snap my laptop shut, run screaming out the front door, and never return.

For the complete story in written form head to Robin Sloan’s website, or if you would rather be read to head to Escape Pod for a podcast version.

As many things in this brave new world of digital media the story is Free. (A terrifying word if ever I heard one.) Escape Pod is at the forefront of discovering ways to preserve the short story format as magazines decline. This is the first story they’ve bought that was first published on a blog. Their business model is changing even while it changes the publishing industry.

So grab the story and a fist full of candy (yes the stuff you plan to give away, you know that’s why you bought it early) and let your thoughts wander.

Who knows what spooktacular new ideas you may dig up.

So, as Steve Eley would say, “It’s Story Time.”

So it was with some interest I noticed Business Horizons’ recent issue on entrepreneurship included a paper that strongly argues scenario planning not only prepares a corporation for external disruptive events, but it can improve an organization’s overall entrepreneurial capacity.

Scenario planning has long been used to prepare for emergency events. Since the 9/11 terror attacks corporate use of scenario and contingency planning increased from 38% to over 70% of executives surveyed, again primarily as a means of preparing for external disruptive (exogenous) shocks. In the article, Beyond risk mitigation: Enhancing corporate innovation with scenario planning, William J. Worthington, Jamie D. Collins and Michael A. Hitt, show that “advanced use of scenario planning can help firms go beyond innovative responses to more complex repositioning of their strategy.”

In one example they explain how Goodyear Tire & Rubber Company uncovered synergies and competitive advantages that could be built into their supply chain while developing emergency responses to potential regional conflicts. They improved their everyday business by being prepared for a crises.

“The process used to create the scenarios aids firms in exploring the environment while exploiting their resources and capabilities (March, 1991). This may require companies to shift their perspective of scenario planning from risk mitigation to opportunity recognition. Recognizing that uncertainty in the firm’s environment is an indicator of potential opportunities is an essential insight for executives (McMullen & Shepherd, 2006). In particular, we believe that firms can use scenario planning for exogenous shocks to identify unique opportunities.” Worthington, Collins & Hitt, Beyond risk mitigation: Enhancing corporate innovation with scenario planning.

The authors call this “an opportunity to innovate.”

On occasion I’ve run into the question of whether entrepreneurs and innovators ‘discover’ or ‘create’ opportunities. In the paper Discovery and Creation: alternative theories of entrepreneurial action, Sharan A. Alvarez and Jay B. Barney argue that different strategies are necessary depending on whether opportunities are ‘discovered’ or ‘created’. For example, leadership might be based more on expertise than charisma when opportunity is discovered. Decision making may be more iterative and incremental when opportunities are created versus a risk assessment philosophy for discovered.  In their view, management strategies to leverage ‘discovery’ vs ‘creation’ appear to differ, possibly to the point of contradiction.

To a certain extent this is language play, but from a practical standpoint for a firm trying to jump-start innovative processes it indicates a need to travel multiple strategic pathways. Come to the rescue scenario planning.

It leverages existing organizational learning.

It stretches the collective imagination in ways that spreads knowledge and learning.

It creates an environment where decision making and opportunity observation can be spread throughout an organization.

What kind of scenarios are you thinking about?

Scenario Planning is a great tool for working through the Uncertainty Paradox. Identify possible scenarios. Work through solutions. Discover commonalities. Pre-position for the future.

This is a different way of stroking innovative fires within a company from more individualized efforts like Google’s 80/20 rule. It encourages teamwork, a philosophy of opportunity detection, a working structure for dealing with both opportunities and disruptions, and quite possibly a better management attitude towards learning from failure.

In today’s environment it’s easy to focus on financial disruptions, working on plans to simply get through the current crises. Scenario planning can go much further than that. Technological and pricing attacks from competitors. Changes in consumer tastes. Political disruptions. Employee defections.

All pieces in your own personal company war game.

Desire to dig under, work around, leap over and push through is strong motivation to think anew.

However, there are limits, that — hmm, — limit.

Did you know that a major difference between moribund Detroit and high flyin’ Silicon Valley is the difference in how non-compete agreements are enforced? (Michigan enforces them, California limits them.)

In the recent Carnegie Mellon University publication: “Renewing Globalization and Economic Growth in a Post-Crises World – The Future of the G-20 Agenda” Serguey Braguinsky and Steven Klepper write about various ways worker mobility can limit innovation on a regional scale. In addition to visa restrictions, social pressure and lifetime employment guarantees, they use the non-compete as a primary example of the damaging effects of limiting mobility in the United States.

I’ve been on both sides of non-compete covenants. I’ve never particularly liked them, but never really questioned the idea either.

The comparison of Michigan to California is the poster child for how non-competes appear to damage innovation and economic development, in part due to a rather sudden change made by Michigan in the 80s. Matt Marx, Deborah Strumsky and Lee Fleming mention the similarities between Detroit around 1900 and Silicon Valley around 2000. In their youth, both were hotbeds of innovation and both rejected non-compete agreements. Thanks to a change in 1986 however, Michigan moved to a restrictive view of non-competes. Mobility of inventors appears to have fallen about 25%. Is that why Tesla Motors started out west?

Why Care If Inventors Can Jump Ship?

“In addition to infusing the hiring firm with knowledge, employee mobility has been shown to be associated with changes in strategic direction (Boeker 1997), organizational structure (Klette, Moen et al. 2000), the compensation of R&D staff (Moen 2005), innovation and patenting (Kim and Marschke, 2005; Singh 2006b), though not necessarily with performance (Groysberg, Lee, and Nanda, forthcoming). The growth of industries (Franco and Filson 2000; Klepper 2002; Klepper and Sleeper 2002) and even regions (Rosengrant and Lampe 1992; Saxenian 1994) has been attributed in part to the movement of technical personnel between firms. (Mobility, Skills, and the Michigan Non-compete Experiment. Marx, Strumsky and Fleming 2008)

So there appears to be a strong regional reason to promote worker mobility. There is an obvious personal, individual reason to promote mobility. But is that at the expense of innovation within a corporation that now has more difficulty holding onto key employees? I think not for a number of reasons.

Reasons why I think all companies can benefit from a mobile workforce:

1. Good ideas go out the door, but better ideas come in. The grass is greener argument. Employees who are unhappy with the recognition and impact of their current job go somewhere they feel things will improve. Since companies will raid each other’s employees with some care for consequences (you take mine, I’ll take yours) things tend to balance out. You get a guru, he gets a guru, she gets a guru….
2. Systemic Problems Alert. Loss of great employees (or mavericks) is a huge warning signal that something is not right with your firm. A warning signal that you can act on.
3. Empowered Employees are more willing to stand up for good ideas. Employees terrified of not only losing their job, but being driven from an industry may be less willing to stand up for risky (but great) ideas or for what’s right.
4. Employees willing to leave to follow their dream and passion make good investments. As inventors leave to follow their dream, buy in at the start. They are more dedicated and motivated and you still get a part of the upside.
5. Keep managers on their toes. A cranky inventor with what seems to be a half-baked idea is easy to dismiss when you think they can’t escape.
6. Take upstart threats more seriously. Sometimes a company will try to maximize short-term cash-flow by putting off innovations that could change their business models. Control of talent makes them more likely to feel safe pursuing this path.

Now there are plenty of reasons why a company would want to contain their employees with non-competes, the two most potent being protecting IP and managing customer relationships. I’m curious how the benefits outweigh the costs. While I’ve found some research that looks at this I would certainly appreciate anything you may be able to add via comments or email. I’ll be following up.

What does limited employee mobility have to do with Health Care?

I think health care insurance, as currently regulated, is becoming a larger threat to employee movement than non-compete agreements. At least a judge can determine a non-compete is unreasonable, there are few backstops to being denied insurance.  If access to insurance can be refused in ways that are out of the control of the insured then decisions to move and take employment risks are damaged. Start a company? Work for a small firm? Take a risky stand?  Risking health insurance coverage has been and is a growing factor in decisions about how to behave at work. Unfortunately solving this becomes a regulation problem where government may need to take a stand for the individual over the large organization.

As a side note, current regulations are even delaying genetic research because of concerns that research subjects could be denied insurance based on information uncovered as part of the research. Even with the benefit of recent legislation there is serious concern: (Disclosure: A client is in the biotech/genetics field and must grapple with these issues.)

[These genetic studies]  …”will not (and indeed should not) materialize until insurance companies cannot deny coverage for pre-existing conditions and cannot drop or limit coverage for the seriously ill. After all, genetic testing performed during treatment for one disease could turn up susceptibility to a whole host of other diseases; susceptibility to diseases that may induce insurance companies to look back through your forms for clerical errors. “ Genomics Law Report

I started thinking about limits thanks to Robert Hruzek’s “What Did I Learn From Limits” project over at MiddleZoneMusings.com and as you can see it took me in rather an unexpected direction.