The document discusses managing change and innovation in organizations. It describes GE's L.I.G. program which aimed to embed growth into the company's DNA by having business teams constantly seek out growth opportunities. It also discusses balancing short-term goals with long-term innovation through the 5% Factor approach of dedicating 5% of time and resources to exploring new ideas. Key challenges for organizations include increasing complexity, preparing for rapid change, and balancing short and long-term priorities.

1. Tremendous challenges: economy, demographics, energy, etc. that are real, structural,
deep get ready!
But greatest challenge is preparing for increasing complexity and rate of change while
managing overwhelming pressures to deliver now
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2. GE’s L.I.G. program: The eternal management challenge of balancing the short term and
the long term— or simultaneously managing the present and creating the future—was
explicitly addressed.
Immelt: As he explained in the company’s 2007 annual report, the program’s aim was “to
embed growth into the DNA of our company.” By that he meant getting the teams leading
the businesses to think about organic growth day in and day out—to be constantly on the
look out for opportunities and to create inspirational strategic visions that would enlist their
troops in the cause. He wanted them to weave innovation and growth into every aspect of
their businesses.
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3. Two domains of change: external forces, and the force of human agency. Understanding
how both work is critical to making smarter, better choices, aligning current realities with
future potentials.
CHANGE: Take it! Take all of it! Make the most of it!
1ST: Understand the systems, how things work
2nd: Ask BIG questions (find intersection of trends with your interests/I.P./emerging
opportunities)
3rd: Choose and act, choose, and act, choose and act; a continual iterative process,
managed by 5% of time, talent, and resources.
CHOOSE! You can choose to be patient or impatient…Fearful or courageous…Resistant or
enthusiastic…
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4. Our future ‐‐ and the social, economic, and environmental crises of our time ‐‐ spring from
just four constant and predictable forces. Understand how they work together to drive
change, and you can stake out a territory that is yours to invent and own — for the long‐
term.
The 4 Forces of Change:
1. Resources
2. Technology
3. Demographics
4. Governance (rule of law, rule of markets as adaptive and reactive mechanisms
to change)
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5. Short‐term gains always have the upper hand because
• Humans tend to choose certainty (or the illusion of it) over ambiguity
• Rewards and incentives are structured for short‐term gains, especially in business and
government
• We trust what we can perceive, not abstractions
• So, we need to “make sense” of the future!
• Excursions and experiential learning helps our brains process information
concretely.
• Exploration of what’s new, what’s possible, is most effective when there’s a
sensory element. Getting a ‘picture’ of certain conditions, and interacting with
information outside your everyday world is required for new insights and ideas
to arise.
• Focused by a guiding question or challenge, these activities are the heart of the
5% Factor, and the means by which you (individual, team, organization)
integrate Newing Better into Knowing and Doing Better.
• Field trips to museums, parks, restaurants, neighborhoods, concerts…
• Movies, music, videos, art, performances…
• Experts from fields outside your business, i.e. philosophers, economists,
engineers, artists, kids, detectives, social entrepreneurs, linguists,
mediators…
• Games, humor, physical challenges, collages, found objects…
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6. Change Literacy: How the brain perceives and creates change
Problem‐solving, creativity, insight , “knowing” use the same neurological pathways, on
the right side of the brain.
Our imagination is constrained by two things:
1. Quantity and diversity of memories
2. Associative fluency
So, in order to create new visions of the future, to generate new insights and ideas, you
have to create new memories! How? By pouring in new information and stirring it up.
Pour & Stir
1. Pour in New experience, information, stimuli
2. Stir it up through playful activities (described on the previous page)
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7. Playing by the rules of the 5% Factor, you must design processes to support dominant
functions and modalities of the two hemispheres.
Left: Begin with analysis to determine the question that gets to the core of the
matter;
Right: follow with a structured exploration (right brain: New) to ‘make sense’ of
unknown/future conditions;
Left: conclude with a strong edit of collected ideas and insights, prioritize, choose
projects and create action plans.
Use the right tools and activities for the job!
Refrain from using meetings as your primary process tool!
• Meetings are best for reports and updates, but ill‐suited to problem‐solving
• Ideation = Left brain; solution‐driven
• Innovation = Right brain ; inquiry‐driven
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8. ALL progress is iterative!!
Continued refinement of questions and of exploration reveals better material over time.
Don’t get stopped waiting to ‘figure it out’ first. It’s an innovation‐killer.
Beware of “Best Practicide”!
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9. Change Literacy: The Four Forces
Market and cultural trends occur at the surface and reveal more about how we’re currently
adapting to change.
By the time you’re tracking them, the window of opportunity for innovation is nearly gone.
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10. The four forces = 4 pillars of human society:
1. Resources (naturally‐occurring assets)
2. Technology (tools for extracting value from assets, and inventing new forms)
3. Demographics (composition and size is a major determinant of group’s sustainability
4. Governance (rules of law and markets; social constructions for distributing and
managing assets within the group)
A cross‐section through any industry, sector, geography, or time in history reveals their
influence as both constant and connected.
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11. Critical thresholds in food, land, water, energy, environment, climate
Acute and potentially dramatic tipping points
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12. Extending our capabilities in every realm. Enormous challenges to our values and world
views. Merging capacities in G.R.I.N. technologies:
• Genetics
• Robotics
• Information Technology
• Nanotechnology
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13. One of the biggest challenges, dismayingly absent from most strategic discussions
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14. Rules of law are generally reactive; markets are better at leading. The two work together
to shape our future, and is how/where we can effect change.
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15. Pour & Stir!!!!
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16. Discovery = don’t know what you’re going to find.
Lead with “Like That!” exercises and play to see what emerges
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17. Problem Solving
KNOW:
Study structural and systemic factors
Define issue in those terms
Determine your Best Question
NEW:
Explore
Invent
DO:
Execute
5% Factor
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18. Once you’ve achieved your biggest, boldest, most inspired vision of a proprietary
opportunity – given proscribed conditions and potentials – it’s time to factor reality back
in.
You do so by reverse‐engineering the vision, and applying best guesstimates of
measurable resources needed, and outcomes expected. Critically, you must also inventory
the assumptions that support those measures.
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19. Short‐term = Duh!
Mid‐term = Love it!!
Long‐term = OMG!!!!
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20. Because each product category references the same vision, efficiencies are built‐in across
intellectual property, product development, markets, etc.
Get it tight into quarterly outcomes and deliverables.
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21. Jeffery Immelt, CEO, General Electric:
Our R&D budget is the one budget that isn't being cut in this downturn, and that's a
course of action I'd recommend to every company that wants to get through this
economic crisis even stronger than before.
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22.
5% New is the key to anticipating and leading change within your organization
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23. My 5% Factor approach to building a culture of innovation has worked for these
organizations, and public utilities, universities, NGOs, Silicon Valley start-ups too!
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24. The intelligent practice of strategy follows the same principles, and is why cultivating
Change Literacy within your organization is vital to your future.
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