Last April, I received an email from Erik Joule, Senior Vice President of Merchandising and Design at Levi’s, asking to speak with my colleagues and me about our paper “Wellsprings of Creation“. Erik and Levi’s were setting out on a “massive cultural transformation project” to renew the organization’s capacity for innovation and creativity. After speaking with us about our research, Erik decided to use our theory of deliberate perturbation as his conceptual frame for the transformation project. Subsequently, Erik and I have met a few times to discuss the project, and he invited me to meet with some people at Levi’s to learn more about what they’ve been up to. On Thursday, I took him up on the offer and interviewed two people from the strategy group. Here’s their perspective on how Levi’s has been changing.
Our conversation began with a recently launched new product development initiative. The new product targets a market segment that has not been a priority for the company, and thus represents a significant, high level perturbation. As Brad, Mike and I explain in our paper, the hallmark of a perturbation is that it jolts an organization away from a stable, predictable equilibrium trajectory.
The initiative incorporated a variety of lower-level perturbations designed to throw the organization out of balance. For example, working together with a design firm, Levi’s conducted a series of three “salons”, off-site workshops lasting two or three days. Each of these salons brought together about twenty people from functions across the organization to develop ideas around the new product theme. One salon was conducted in Memphis, where the company rented a space and recruited local consumers to interact directly with the Levi’s team. Levi’s wanted quick feedback about their ideas, so they sewed clothes on the spot, had consumers try them out, and got immediate reactions. The salons were about “ripping you out of your day to day job” and getting into a different frame of mind–an image that captures the essence of perturbation.
The distribution of exploration within the company has also changed. Previously, the company separated exploitation (day-to-day business) and exploration (innovation), concentrating the latter in a dedicated innovation group. As with many other companies that have attempted this approach, the innovation group proved unable to drive exploration throughout the company. Within the organization, it was seen as a “group of people off on the side”, isolated from the market and customer needs, and not taken very seriously. Now the group is gone, and “innovation is something you do every day.”
Several concepts and phrases came up repeatedly during the interview: rapid prototyping, direct feedback from customers, the need to pursue “progress over perfection”. The changes have been disorienting for the organization. Putting rough prototypes in front of real consumers has been discomforting for an organization accustomed to perfecting their products before letting them see the light of day. Projects staffed with cross-functional teams have disrupted traditional boundaries, as when members of the strategy team (without any specialized training, just a fifteen-minute orientation) participated in a consumer shop-along project that would previously have been performed exclusively by staff from the consumer insight group. This disorientation is, of course, a sign that perturbations are occurring–that established processes are being knocked off balance.
From an organizational learning perspective, I’m intrigued by the emphasis on collecting people from across the organization and creating opportunities for them to experience their customers–shop-alongs, field trips, even a mock retail environment in a conference room at headquarters with real consumers invited in to “try it out”. According to Ikujiro Nonaka’s theory of knowledge creation, such shared experiences enable the development of tacit knowledge. Employees who participate in shop-alongs or see consumers walking around a mockup of a store acquire knowledge beyond what they can articulate in words. Shared tacit knowledge provides a common frame of reference and thus facilitates communication.
Our conversation raised at least two provocative questions.
First, although employees involved in these efforts have adopted the mantra “failure is an option, fear is not”, what will happen when a significant failure occurs? Indeed, a senior manager “jumped all over” this phrase when it was presented to him: we have to succeed! One of my interlocutors reflected, “I don’t think we tolerate failure well … if something fails, it will be the grumbling around the water cooler” that casts a pall over the initiative. So how should management handle failures?
Second, Erik’s openness to new ideas creates another challenge: which to pursue? Before, the default response to a new idea was no; Erik’s default response is yes. “Erik loves ideas”. One project came up with a list of one thousand ideas. The theory of deliberate perturbation posits that too few perturbations lead to stagnation, but if perturbations are too numerous or not complementary, they result in chaos and decreased performance. So how to manage the flow of ideas and ensure that perturbations are as productive as possible?