Tuesday, September 02, 2014

Train, apply, repeat

So the question of the day is:  can innovation be learned, or "taught"?  The underlying assumption is that innovation is inherent, a creative spark that one is either born with or cannot hope to possess.  The rationalist in all of us considers this unusual and unfair.  Certainly everyone can "learn" to innovate, no?

This begs the question of whether innovation is simply a skill reducible to practice, which can be taught through instruction, application and repetition, or whether innovation is mystical and poorly distributed capability that few possess and even fewer can learn. And, to paraphrase Henry Ford, whether you believe the former or the latter, you are probably right.  That is, if you believe that innovation is a capability that you simply don't possess, then no amount of education or training will change the fact that you'll struggle to innovate.  If you believe that you have even the smallest spark of innovation capability, training and instruction will only magnify the skills you have.

But the real question should be not whether we are innovative or not, but how we can become more innovative.  That is, let's accept that we all have some spark, some inherent creativity or innovation potential.  Once we accept that concept, how do we become better innovators?  Is education enough?  Can we find good training?  What does it take to build and reinforce the skills so we become better innovators?

I've hinted at the answer above:  instruction, application and repetition.  No one becomes good at any vital skill without all three components.  Sure, Mozart sat down at the piano and was a virtuoso from the start, but those types of savants are few and far between.  You will need initial instruction, to learn the tools and techniques, as well as the necessary perspectives and mindsets.  You'll need to apply what you've learned to reinforce the tools and try them out.  And then you'll need to consider your successes and mistakes and repeat the process until it becomes second nature.

This is where basic "innovation training" gets it all wrong.  Plenty of firms are popping up everywhere offering innovation training - over the web, in classrooms, instructor led or self-paced.  Absolutely nothing wrong with getting training on tools and techniques, unless that training isn't reinforced with application.  Imagine learning to hit a baseball by reading about it in a book, but never going to the batting cage.  That's what a lot of innovation training looks like.  Academic information with little practical application.  We at OVO believe in innovation training - we believe that everyone has the innovative spark - but we practice "JIT" training.  That stands for Just In Time.  This allows us to deliver innovation training in the classroom days or weeks before an innovation team will attempt to use the tools in a real innovation project.  Offering the tools and techniques without practical application means the concepts will be lost very quickly, as people turn their attention to their "day jobs".  Innovation training is a side show, and what little information is presented is quickly lost. 

There's one final component to real expertise in any subject or skill, and that's repetition.  Take our batting analogy.  A good batter hits hundreds of baseballs a day, every day, under a lot of different conditions, in order to improve his swing.  He watches film of his at-bats to identify weaknesses in strikeouts and good swings when he connects.  He learns from mistakes and constantly repeats the skill, growing in confidence and moving from needing to think about the technique until the technique becomes second nature.  How many of us can claim that innovation is "second nature" when we practice it so infrequently?

Instruction, application, repetition.  If you want to "learn" innovation and grow in proficiency, these are the steps.  As in many other facets of corporate business, we place far too much emphasis on the gathering of knowledge, and far too little on the application and repetition.  And then executives wonder if "anybody here can play this game".

So I come not to bury innovation training, but to praise it, if innovation training is followed rapidly by actual innovation work to put the tools just learned to use, and if the innovators themselves have the opportunity to try, to fail, and to repeat their innovation work.  Everyone can be innovative, but few have the staying power to make it through the entire process.
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posted by Jeffrey Phillips at 5:42 AM 0 comments

Tuesday, August 26, 2014

Innovation: faster horses or deeper needs?

In a bout of "physician heal thyself" we at OVO led an internal idea generation session yesterday for some of our internal compatriots who are developing new products and services.  It was a valuable and highly productive session, because our counterparts committed to doing the pre-work we asked.  Further, they invested their trust in us about the approach and methods to generate better ideas.  We all left thinking it was a valuable session, and they have some great new product ideas to pursue.

Now that I've patted myself (and Dean, and Dom) on the back, we can turn to a brief sideline discussion that I found insightful and interesting.  We were discussing what new features or outcomes the potential customer desired.  One senior executive argued that it's impossible to know, that like Steve Jobs we should tell the customer what they need, since they can't possibly imagine it.  He quoted the old Henry Ford saying about faster horses.  Another executive took the opposite view.  He argued that we should be meeting with customers to understand the challenges and faults with existing solutions and working to project future needs from current frustrations.  And in this divide we see one of the great innovation philosophical debates.  That is, is innovation derivative or emergent?

The "whole" cloth

On one hand you have the Jobsians, or perhaps the Fordians, who had the foresight (or simple luck) to create products that consumers may not have imagined that they needed.  These and other innovators argue that talking to customers about their wants and needs is fruitless because the only answers you'll receive are either very small tweaks to existing solutions (the notorious "faster horse") or impossibly large or vague requests that can't be fulfilled commercially (where's my jet backpack).  The argument posits that most consumers can't create new solutions from the thin air, can't imagine what they can't see, can't create features and attributes of new products from the whole cloth.  To a great extent, the people who hold these views are correct.  The vast majority of people are "anchored" in what they can see, what they experience, and for the most part find it difficult to imagine any product or service that doesn't conform to current expectations of a product or solution.

What the Fordians leave out is that with a few simple questions or a little bit of directional discussion, many consumers can provide better insight into their needs.  Let's use Ford as the example.  When asked what new transportation the average consumer might need, most would probably turn to the horse and buggy. They might seek a "faster" horse, or a larger, more comfortable buggy, or a horse that ate less but delivered the same transportation.  But anyone asking poorly defined questions like these shouldn't be in market research.  The vast majority of people had horses, and were very familiar with wagons and buggies.  Also, most were familiar with the idea of motors - electric and fuel based - which had been in existence since the 1870s.  Asking a leading question - could you imagine using a buggy that was powered by a motor rather than a horse - would have elicited a complete different and insightful set of answers.  Good innovation is often found at the intersection of several technologies or solutions that haven't been merged.  Could we take a wagon, remove the horse and add a new motive power?  Would that be valuable?  What are the benefits and/or downsides to doing so?

The average person asked a poorly conceived question about product aspiration will never provide good insight.  In this Ford and Jobs are correct. But can you actually argue that people weren't aware of the issues managing music and their players?  After all, music sharing and music management systems existed.  Jobs imagined a way to combine them, but in many ways he wasn't the first, just the one who considered it holistically and commercialized it successfully.

The researchers

On the other hand there are plenty of folks in the innovation community who have given up on being a Ford or a Jobs, and who insist on deep customer interaction, to learn about unmet needs and use that insight to drive innovative ideas.  If the former group can be defined as emergent, creating ideas that they then impose on the consumer, this latter group can be labeled as inquisitive, relying heavily on discovering needs to the detriment of creating leading products that consumers can't define.  The question becomes - how much should we trust our own (instincts, technologies, judgment) and how much should we discover or validate with prospects and consumers?

The problem with true market research is that far too many firms take too cramped an approach to discovering "customers" and "needs".  They inevitably rely on consumers who already use their products and are reasonably satisfied, because those consumers are easy to talk to and non-confrontational.  They are also the people who have the least interest in something radically new and different, because it will require them to change.  Talking to happy, well-adjusted consumers who are familiar with your products is OK, but don't expect them to introduce a lot of new concepts or features because they are already invested in your solution.  To discover interesting new needs, you must talk to the disaffected customers or to prospects who don't want or need your existing products or solutions.  And this target audience is not comfortable for many market research enthusiasts. They are hard to recruit and often say things that conflict with what is known internally or believed to be true.  In fact the people you may need to talk to most may be the people you strive to talk to the least.

The middle ground

There's nothing wrong with trusting in your gut, leading with your ideas as long as you validate the needs and expectations.  There's nothing wrong with deep investigation and interviews with customers, as long as you ask the right questions of the right people.  The choices you make should be based on the capability and vision of the people within your organization, and the breadth and depth of the people you can interact with outside your organization, and your ability to sift and analyze the feedback and insights of both interactions.  Trusting market research alone may leave you with a very cramped response based on existing products.  Trusting in your own vision may leave you with a compelling product no one wants or needs.  As with many issues where there is a spectrum of responses, the reality is that a middle ground approach is best for creating new products.  As Reagan was fond of saying, trust but verify.  Create a solution that you believe in, but verify the need and the potential uptake. It's typically the case that internally driven solutions look different than solutions created with exclusively external content.  It's probably in the mix of this insight and feedback that good innovation, that can be developed and will be accepted by the consumer, is discovered.

Let's face it, few of us have the insight or the intestinal fortitude to bet a company on internal gut feel or insight alone.  Pay homage to Jobs but don't mimic him.  Likewise, understand that there are people within your company who have good insights and ideas that can be validated.  Research is important, but only if you are talking to the right people and asking the right questions.  Good innovators will discover the best answers between their gut feelings and insights and the needs they discover from customers.
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posted by Jeffrey Phillips at 10:30 AM 0 comments

Wednesday, August 20, 2014

Innovation in developing economies

Recently I was asked by a Twitter user to talk about innovation in developing countries, especially in Asia.  While I have some experience with innovation, and have been to some countries in Asia, and have even led programs on innovation in two (China and Malaysia), I'm not a economic development expert.  But I did offer to give my opinions on the evolution of innovation in developing countries, so here goes.  Just remember, this advice is priceless, and if you have any concerns, there's a money back guarantee.

The first question I was asked was about the state of innovation in Asian economies.  I'll address that by extending it to encompass developing economies generally.  First, there's plenty of "innovation" in every country.  A lot of the discussion needs to start with definitions.  If we take the simplest definition of innovation, there is innovation in every corner of the globe.  I'll define innovation as "people converting ideas into valuable action" meaning that innovation isn't simply ideas, but the ability to realize an idea commercially.  When early man sharpened the first stick, and then hardened the point with fire, he was innovating.  There's plenty of innovation going on in every economy, but what make it less noticable is another categorization.  A lot of innovation in developing economies is "new to that location".  There are three categorizations we'll often use for innovation:
  • New to us (locally, segment, geography, industry)
  • New to the market (exists elsewhere but not here)
  • New to the world (completely new and different globally)
In the West we get hung up on "new to the world" innovation.  You'll hear people speak of disruptive or breakthrough innovation, because continuous improvement and incremental innovation is almost commonplace.  In the West, where we have more technology and more complexity in our economy, to innovate means to create something radically new or different.  In developing countries it may be sufficient to solve a problem with technology or solutions that the rest of the world doesn't find new or interesting.  Or with a solution that is innovative but has less novelty or technology than the West might find interesting.  The concept of reverse innovation plays well here, where the developing world may innovate more simply or more inexpensively.  The analogy is when the Russians and the US were in a space race.  The Americans created a fancy writing instrument that allowed their astronauts to write with a pen even in zero gravity.  The Russians used a pencil.  Both got the job done.

How do we leapfrog

One of the questions the individual on Twitter asked was - can we leapfrog our way to more innovation?  The challenge in a developing country is to solve important and basic needs.  In the west we have clean water, a relatively robust transportation system, clear title and ownership of intellectual property.  These infrastructure and legal mechanisms provide protection and encouragement for people and companies that want to invest in creating new ideas.  The infrastructure ensures scalability and to some degree profitability, while the markets and legal systems ensure that if the idea is successful there are ways to protect the revenue streams.  If developing countries want more innovation they need to provide these two factors, or their innovators will seek to develop ideas and market them abroad.

Secondly, you need an economy and people who are convinced that they have good ideas and can have the education and understanding to move the ideas from a nascent concept to a reality.  That means a strong educational system to help people prioritize needs, identify solutions and build and deliver new products or services.  It's been demonstrated that good innovation follows good education, and that's not merely technical education but also deep education in markets, channels, commerce and other factors that stand between an idea and a commercial success.

What would I recommend

I'm not a economic development expert, but if a developing country approached me to ask about how to drive more innovation, I'd work on deeper market education, understanding how to identify customer needs and develop new ideas and technologies.  I'd work on developing networks of people who are passionate about developing new ideas, because good innovation seems to require cross-functional networks of people who create exchanges of goods and services as well as ideas.  I'd focus on creating products and solutions that create local value and that can offer value globally.  Most local markets are too small or lack fluidity to create a larger market opportunity.

I'd pay a lot of attention to what some of the Korean firms did, because they've become innovation leaders in the last twenty years from a very basic starting point.  Many developing countries start out by copying existing technology and scaling a learning curve, which is what many of the Korean firms did, but very quickly.  It's this base of education and knowledge that then allows them to innovate new products.  It's difficult to build an innovative economy and culture with little infrastructure, whether that's a legal infrastructure, knowledge infrastructure or market infrastructure.

That's not to say that innovation won't happen in any developing economy. It will happen and it is happening.  Much of this is in the definition of innovation, and the size and scale of innovation your local market can adopt.  To enter a regional or global innovation market, you'll need investments in education, legal systems and market development, as well as the ability to identify challenges or problems that many people around the globe face, want to solve and are willing to pay for.
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posted by Jeffrey Phillips at 5:43 AM 0 comments

Tuesday, August 19, 2014

Innovation Magnetism

Did you ever play with magnets when you were a kid?  Wasn't it interesting to discover how powerful small magnets were when you connected the negative pole of one magnet to the positive pole of another magnet?  Or perhaps you had one of those toys that allowed you to manipulate iron shavings over the outline of a face, to create "beards" or a mustache using a magnetic wand to drag the shavings into place.  These and other toys that rely on magnets work because of the force that magnets exert on other magnetic objects.  Without the magnetic force, the shavings stay in place, held by inertia or gravity.

I can help returning to a constant theme I've developed over the years - the idea that inertia and complacence are two of the biggest impediments to innovation.  Any sentient being wants to avoid change, uncertainty, and new or additional work.  Face it, the vast majority of us like doing the same things, building the same things, meeting the same people.  We all live in a fairly regular, routine rut that we call life.  There's nothing wrong with that, except that nothing ever changes in those routines. Most of us don't seek out change within our routines either.  When we seek novelty we seek it in other places, doing other things.  Our home and job are for routine, our vacations and travels are for novelty and experimentation.

Yet we can see that innovation requires a force to act on an individual or population in order to lift them from the everyday rut and retain their focus on the new opportunity or new need.  This is true at the start of an innovation activity, when we need to create enough energy and enthusiasm that we spark the small flame of novelty and creativity that all of us nurture deep inside.  Yes, admit it, you do have natural curiosity and the desire to do something new and different.  It's just been held deep in abeyance at work because trying to do something new and radical may be a career-limiting move.  So you wait, and do your work in the "business as usual" environment as the flame of creativity and newness slowly flickers and dies.  What will it take to increase the flame or re-ignite it after years of neglect?

Further, if an innovation opportunity or project can re-ignite the flame and draw your attention away from "business as usual", what will retain that passion and attention over the life of an innovation project or the creation of a new product or service?  Simply capturing your attention for a brief moment is one thing - retaining and sustaining your attention over the life of an innovation project is quite another.  So many other factors will arise to impede your work.  So many demands from your everyday job.  So many barriers or hurdles to overcome to do new work.  In fact it's relatively amazing that innovation gets done at all, considering all the barriers, hurdles and "reasonable" work that must get done in any company.

You need a magnet

In the past I've written about a "burning platform" to attract attention and cause action.  In an innovation setting a burning platform is an opportunity too big to ignore, or a threat too imminent that you can't afford not to respond to.  A burning platform provides energy or passion to engage in an innovation project.  It causes executives to agree to support and fund innovation, and creates enough light and heat to convince people to engage.  But anything burning can also easily burn out.  Far too often we find that burning platforms are quickly replaced by another burning platform, which draws attention and firefighters to another problem long before the first one was extinguished.  We need something more than a burning platform.  We need innovation magnets.

The difference between the analogies for burning and magnets is that something on fire will eventually be extinguished, it will burn out or it will be judged not important to address.  A magnet creates a powerful attractive or repellant force and it sustains that same force over the lifetime of the magnet.  As long as the magnet retains its magnetism, it exerts the same force.  That's what we need for innovation to succeed in any organization - an initially powerful force to attract the right people to the right ideas, and an equally powerful force that remains powerful and attractive over time to keep people focused, even when other forces come into play.

Who or what are your magnets

Now, in the physical world magnets are pieces of metal that have been charged with a current to create a magnetic field.  In the workday world of your company, you need to find the "magnets" that will attract and retain your team's attention and passion.  Magnets in this sense are first important needs, opportunities or challenges that your firm MUST address.  This provides the first attractive force.  But you must do more than an initial attraction, because other forces will inevitably work on the teams that were initially attracted to the challenge.  Your magnets must have staying power.

Your potential magnets are people with deep passion, executives with deep commitment, leaders and managers who "get it" and understand the longer term trade-offs between "business as usual" and innovation.  Identifying, empowering and sustaining your magnets is probably the most important thing you can do to sustain innovation, and do what everyone talks about - building a "culture" of innovation.  Until you have people who are magnets, attracting other people, other ideas and a level of commitment that sustains over time, you don't have a culture of innovation, you have a burst of innovation that simply can't sustain, and is more likely to crash and burn than to create anything of value.

Do you have magnets?  Do you have people who are fully energized by innovation, who have enough hierarchical authority or simple moral imperative to create the reasons to innovation and attract the right people and ideas?  Can they sustain that attraction, not just in the eager initial phases of an innovation project but during the long slog to a new product or service when the siren calls of their regular job start exerting new forces to draw them away?  How strong is your attractive force for innovation, versus the attractive force of the everyday job?  If you want innovation, you need some magnets - people, causes, cultures that draw the right people and keep their attention.  It's not a sprint, it's a marathon, and you need to attract the right people, and retain them with attractive force that's more powerful than the hurdles or barriers they'll face along the way. 
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posted by Jeffrey Phillips at 6:04 AM 0 comments

Monday, August 11, 2014

Innovation Choices

Most of us live in a consumer driven economy.  That is, we have a number of alternatives or choices for any need.  At the grocery store, for example, we can choose among a number of brands of ketchup, cheese, cereal and other staples.  We can choose across different brands of gasoline, airlines, automobiles and many other offerings.  We are familiar with, and comfortable with, alternatives and making choices.  Except, it seems, when we are called on to innovate.

Innovation, in all of its facets and complexities, is really about making choices.  What we do so casually each day of our lives becomes significantly more difficult in the context of innovation.  What is innovation if not an intertwined series of choices?  For example:
  • Executives choose to identify a market need that demands innovation
  • They choose an individual or team to pursue innovative solutions
  • That innovation team chooses to use innovation tools or techniques to discover new ideas
  • The team chooses how to rank or evaluate its ideas
  • The team selects (or chooses) its favorite ideas
  • The team recommends ideas to an executive, who chooses the ideas that seem best
  • The corporation chooses to prioritize (or not) the ideas in the product development process
Everything about innovation is a choice and that's what makes it so interesting.

Every Day Work

For many people, when they arrive at work they don't have a lot of choice. They may get to decide when to do certain activities, or how much attention to pay to certain issues, but they must take up their work every day.  Whether that is processing invoices, winning new customers or building products, the every day work must get done, and done reasonably well.  That's not a choice - it's a requirement.  As the demands increase and resources fall, the every day work becomes paramount, and it becomes difficult to choose to do anything else.  And, as we've said, innovation is a choice.

When time is tight and resources are slim, making the choice for innovation is a risky proposition.  There's a strong probability that choosing to spend time on innovation activities will detract from the every day work, which has very short term demands and rewards.  Unless people are given the freedom to choose to work on innovation, removing some of the obstacles and ensuring longer term rewards, very few people will consciously make the choice.  Every day work is too familiar, too ingrained and too easily linked to rewards and compensation.

Freedom to Choose

If we want innovation, we need to recognize that it is a choice, and one that many people aren't willing to make within the confines of existing culture, process and reward systems.  Until people are truly free to choose to work on innovation, all the training, all the tools and all the communication doesn't change the basic fact:  if people don't feel they have the right to choose innovation, or are concerned about the negative outcomes if they do choose innovation, they won't choose it.

The range of choices

What's interesting about innovation is how many intentional, proactive choices have to be made in order for it to succeed.  For every day work to get accomplished, few choices are required.  For innovation, everything becomes an uncertain choice.  Who gets assigned?  How much research or investigation should they conduct before creating ideas?  What's the correct scope?  How many people are necessary?  How much must we invest?  All of these questions force choices and decisions, and in most cases the natural implication is to say "as little as possible" to all of them.  Inclinations, brought on by years of cost cutting will reduce scope and reduce investment, which inevitably leads to cramped, incremental ideas.  What innovators need is a clear range of choices.  If all the choices are limited, there is no choice and little hope for interesting ideas.

The knowledge economy

Conceptually, we live in a new era framed by the knowledge economy.  This should mean that our workers are more educated, and more familiar working with and creating information and knowledge.  They should be less constricted to familiar patterns and processes, since there's less rote process and task following.  But so far in this innovation "bonanza" we are living through there's very little blossoming of innovation broadly across industries or geographies.  We continue to hold up a handful of companies as the models for innovation, while the vast majority of companies struggle along in a choice constrained, innovation constrained muddle.  If we believe in our employees, believe in our strategies and believe we are truly in a knowledge and information economy, we need to provide far more choice and permission to release the bonds that hold our people back, and allow them to make intelligent choices to create more innovation.

The choice is yours

Yes, it's a tired and hackneyed phrase but it also has the benefit of being true.  Innovation is a series of choices, starting from the top to engage innovation in a company and culture, and making that choice "safe" for people to pursue.  It's about allowing people the opportunity to make choices, trusting that they understand the goals and strategy of the organization, and can bring that knowledge to bear to create interesting new products.  It's about providing permission for people to make choices, experiment and discover, even to make the occasional mistake.  Until executives make those choices, little true innovation will happen.  You can lead a horse to water but you can't make him drink.  You can teach a person to innovate but you can't force her to think. You've got to make choices that provide clarity about your goals and provide permission and opportunity for people to make choices to drive innovation.
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posted by Jeffrey Phillips at 5:49 AM 0 comments

Friday, August 08, 2014

The cognitive dissonance of innovation

Thanks to psychology, we have a term that defines what most corporate innovators face on a daily basis:  cognitive dissonance.  As our good friends at Wikipedia define it, cognitive dissonance is " the mental stress or discomfort experienced by an individual who holds two or more contradictory beliefs, ideas, or values at the same time"  Why are innovators subject the cognitive dissonance, and why do they appear so disjointed and harried all the time?  Well, let's turn to the definition.

Mental Stress

Innovators are people who are constantly frustrated by the inadequate solutions they are offered or force to offer to customers.  Good innovators see a thousand ways to improve offerings or solutions, and have a strong desire to improve the status quo or offer better or improved products or services.  However, they are constantly faced with the constraints of their business, fear of risk, inertia and a thousand other reasons why they should simply shut up and keep offering the same mediocre solutions to their customers.  This unsolvable dilemma creates mental anxiety and stress, because it's difficult to be true to your energy and passions when you are forced to serve up products and services you know aren't what you want to offer, and what don't adequately solve customer needs.

Contradictory beliefs

It's not impossible to hold two contradictory ideas simultaneously.  Most innovators will tell you that good ideas and inventions often spring from the ability to try to resolve what appears to be unresolvable.  In fact contemplating the insolvable is what many innovators want to do.  But they don't simply want to contemplate - they desire the ability to act on their insights and ideas.  This is where the truly contradictory beliefs exist in large corporations.  Executives want ideas, but don't want the risk or uncertainty that are part of an innovation program.  Asking people for great new ideas without removing the anxiety or uncertainty of risk creates contradictory beliefs.

In the old Soviet Union, the people had a saying:  you pretend to pay us and we'll pretend to work.  This is a signal of complete cynicism matched with utter resignation.  The problem that real innovators have is that they simply can't lapse into utter resignation.  They can imagine good ideas and are frequently stymied by corporate culture and decision making processes.  It's this cognitive dissonance that makes it so hard to sustain life for long periods of time as a corporate innovator.

Tradeoffs

No executive is going to state for the record that they don't want innovation.  Quite the contrary, they all want the BENEFITS of innovation, but are frequently concerned about the potential downsides or risks.  In our current financial climate, it's much safer to repeat existing processes and achieve mediocre results without taking big risks rather than making some interesting but speculative investments on the hope of much larger returns.  I was interviewed recently for an article in a leading journal, and the author asked me about the paucity of innovation.  His assertion was that innovation lacks funding.  No, I told him, money is cheap.  It's people that are expensive.  Innovators need more support, more bandwidth and more aircover to take interesting risks.  It's not about the money, it's about the potential for "failure".  Large corporations have lost their risk:reward tradeoffs and are slowly sinking into a defensive crouch, rather than taking more proactive steps to create new products and services.  It's deemed safer to be in the defensive crouch, which again points out the cognitive dissonance innovators face.  Innovators often only know one direction - forward - and can't stand to come in second place with an inferior product when they KNEW the needs and could have responded earlier.

The innovator's lament

Countless times you'll hear internal innovators say "we had that idea years ago" or complain that they presented concepts to their management teams years ago that are now gathering accolades from the market that their competitors have launched.  Executives, listen to your innovators.  Get engaged in the innovation discussions.  Create some room for experimentation.  Challenge your innovators.  Provide funding for them to test hypothesis and discover new ideas.  Get out of the defensive crouch before all your innovators need psychological counseling.
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posted by Jeffrey Phillips at 6:52 AM 1 comments

Wednesday, July 30, 2014

The innovation bandwidth constraint

After discussions with a number of current customers and potential prospective clients, I've come to the conclusion that many businesses are at a critical inflection point in regards to the innovation they can conduct.  What's interesting is how closely the constraints align to larger economic issues.  I'm talking here about the necessary level of staffing in order to get things done.  What's I've referred to in the title as "bandwidth".

Today, after years of outsourcing, right sizing, continuous improvement and an unfortunate focus on efficiency most businesses run right on the bitter edge of staff availability and competency.  It's as if many businesses decided to identify the least possible amount of staff to accomplish the everyday work that must be done, and then reduce headcount by 10%, all the while whistling past the graveyard, knowing full well that there is no staff availability to do anything above and beyond the everyday work.  When my clients talk about a lack of time or a lack of available resources to do innovation work, I don't doubt them.  Many businesses seem to lack the people to get their regular work completed.

While OVO interacts with only a handful of companies at a time, I get the feeling that my observations are in line with what other colleagues are seeing - that the productivity curve has reached or perhaps exceeded it's optimal levels.  Businesses are asking fewer and fewer people to do more and more work, and increasingly it comes at the expense of doing anything new or different.  There simply isn't enough time or enough bandwidth in many corporations to take on new, innovative or different projects.  We ought to stop and consider the paradox presented by overworked, overwhelmed corporate executives in the face of unemployment and underemployment in the US.  Right now we have a dearth of innovation in many companies because the employed staff are far too busy on everyday work, while tens of thousands of people are unemployed or underemployed in this country at the same time profits are reaching new peaks.  It may be time to hire a few more people to conduct the "Everyday" work so that your best people can focus on innovation.

The lack of innovation from many corporations today is not because there are few opportunities in the marketplace or that companies or employees lack ideas.  Most organizations are awash in good ideas.  No, the barriers to more innovation come from several sources, almost all of them having their root cause in staffing and resource availability.  At a time when money is insanely cheap, people are viewed as expensive and hiring is difficult.  Ask any group of executives and they'll blame innovation strictures on available resources, conflicts and concerns about tradeoffs for existing projects.  They'll rarely point to poor ideas or a lack of opportunities.  It's a concern about hiring more people, having the flexibility to expand and/or contract headcount as opportunities present themselves, and having people with the right attitudes, experiences and perspectives who can create new value quickly.

The answer to this dilemma breaks down into one of two internal solutions:  either hire new people who are highly creative and can innovate rapidly, leaving your existing employees to continue to operate at high efficiency, or bring on new employees to take on the everyday work, freeing up your best employees to gain skills and create new products and services.  Of course you can pursue another path, outsourcing innovation to consultants who fill the gaps that your teams can't or won't fill, but you'll never convert your internal organization or its focus by leveraging too heavily an external partner.  Innovation isn't something you can start and stop at will, but must eventually become an internal capability.  Relying on outsourced models is more expensive, and in a period when money is cheap and people are expensive is a relatively intelligent solution, but the time will come when money is expensive, and your competitors will have modified their models to incorporate more innovation skill internally. Then where will your business be?

Note that I'm not even addressing the issue of whether or not the people outside your organization are naturally creative or innovative - in many organizations they simply need more people to get the work done that they are doing everyday.  Simply freeing up a few good people to think about the next new product or service would be a great start.  Giving them innovation skills or people with innovation experience would just be the icing on the cake. 

Wall Street and us investors have become too enamored with short term success and constantly rising stock prices, which are creating disincentives for real innovation and differentiation.  The pressure on costs inside many organizations means that they shed opportunities for future differentiation and growth, focusing only on the most predictable and least risky products and services.  This leaves only the truly entrepreneurial firms to innovate, which makes innovation seem even more uneven and risky.  The breaking point for corporate innovation today isn't ideas, it isn't funding, it isn't opportunities - it's personnel bandwidth.  That seems like something that should be easy to address, especially in a time when more and more people attend college, and thousands of experienced people are looking for work.  This isn't an issue of skills match, this is an issue of too much focus on the cost of hiring and maintaining headcount, and the impact that headcount has to short term results.
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posted by Jeffrey Phillips at 7:21 AM 0 comments