Wednesday, May 06, 2015

Innovating against conventional wisdom

I love those funny insightful quote from people like Yogi Berra, who was either an unrecognized cosmic genius (When you get to a fork in the road, take it) or perhaps occasionally just full of malapropisms (Nobody goes there anymore, it's too crowded).  Likewise, I think, we innovators should think about how and where we choose to innovate.  Another (baseball) related quote sums this up perfectly.  When Willie Keeler was asked how he was able to sustain such a high batting average, he responded it was simple:  hit em where they ain't.  Shouldn't that be our innovation mantra as well?

Here's what I mean.  Far too often "everyone" agrees that a specific market or space is just "ripe" for innovation, while other segments, markets or industries are just too limited, and no one in their right mind should innovate there.  Too often experts tell us things that they know are true and direct our attention to "facts" not quite in evidence, leading a lot of lemmings to innovate in a particular market, while other markets or segments, crying out for innovation, are ignored.  Let's use a specific example.  We recently completed a project for a large retail bank.  The conventional wisdom is that all Millennials and Gen Y and Gen Z will never use or frequent a retail bank.  They are too wired in, too mobile and too dependent on the internet to ever darken the door of a branch bank.  Or so we were assured by experts.  So this leads to a lot of "innovation" in mobile apps targeting younger customers and the constant breast beating of retail bankers stuck with old, unattractive retail branches.  So no one is innovating in branches, except trying to figure out how to turn them into coffee shops or community centers.  All the smart money in the retail and commercial banking sector is in payments and money movement, not in retail banking.  After all, nobody goes there anymore.

But what if the prognosticators and experts are wrong?  What if we should be innovating in the very place they suggest we ignore?  After all, as an innovator you have a number of choices as to where to innovate, but very limited resources.  Should you innovate in the same markets and segments that all the cognoscenti suggest you should, and simply follow the crowd, or should you carefully consider all the data and seek markets, segments and customers where your innovation will matter?  Should you zig when others zag, even in an innovation setting?  Is it better to be the fifth or sixth firm to "innovate" is a specific space where everyone is innovating, or to carve out unrecognized opportunities that you can own?

Well, the recent punchline to the issue of whether or not younger consumers will use branches is new research that demonstrates young customers use branches about the same amount as older customers.  It's not that younger customers reject branches.  Younger customers (and the rest of us) now have different interactions and expectations about interacting with banks, and many different channels.  There are simply some interactions where all of us, regardless of age or experience, prefer the face to face interaction.  And, since many banks are ignoring the branch experience as an innovation opportunity, perhaps some bank out there will realize that branch banking isn't going away, but is simply changing, and will realize that no one else is really innovating in this space, while all of the competitors are seeking to drive all banking to a hand-held device.  While "everyone" is talking about the death of the retail bank, some firm is going to understand the overlooked opportunity and be the only one innovating in that space - literally hitting them where they ain't.

Sometimes what is counterintuitive is also true.  I'm guilty of nodding along as experts told us the branch banking system would die on the vine, that no younger customer would be caught dead in one.  Again we've neglected to think through the entire customer experience to realize that not everything can be automated, minimized, placed on a handheld device.  The sooner the branch banking system realizes that (and overcomes some other issues like opening hours) the greater potential for relevancy.

So the question becomes, how much of the conventional wisdom should you accept when it comes to where you place your innovation bets?  What happens if every player in an industry accepts the same models or wisdom (I'm looking at you now, Wall Street, and the whole CDO packaging fiasco).  Can you afford to be the fifth or sixth company to innovate in the same space, or does it make sense to differentiate where and why you innovate?    I'm often reminded of the Woody Allen movie Sleeper, in which Allen's character wakes up in the future after a long coma, to find everyone eating fatty foods and smoking cigars constantly.  When he rejects the lifestyle, they tell him that people in his generation had it all wrong.  Steaks and cigars were never life threatening.  Will we wake up from our comfortable sleep to find out that all the conventional wisdom was wrong?  I suspect it won't take us long to discover the error of conventional wisdom and innovation bets.  Less time than Allen's character, but with greater complications.

If you've read this far, thanks for sticking with me.  There are two interwoven points I wanted to make, and have probably done so relatively poorly.  The first is that innovation goals should be driven by your specific insights, not on what the cognoscenti decides.  Far too often the conventional wisdom is wrong, and leads us to investments that don't pay off or were simply wrong.  It's often easier to follow the herd, when experts and analysts are telling you that younger generations won't go to branch banks, who is to say they are wrong?

The second point is that every innovator has only a limited number of bets to make in any given time period.  Too many factors in running the day to day business will restrict the number of innovation activities that you can undertake.  So, the question becomes, should you innovate in exactly the same place everyone else is innovating, or should you innovate in markets or segments that have needs that others are ignoring or overlooking?  In the payments space, can you compete with Apple, Facebook, Google, Paypal and a host of others, or could you rather partner with these firms in these opportunities and innovate in the branch setting, which most banks are ignoring?  Of course I've used a banking example, but the same phenomenon plays out in every industry.
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posted by Jeffrey Phillips at 5:49 AM 0 comments

Wednesday, April 29, 2015

Bolt-on or Built-in Innovation

I'm led to post today by an article from Gary Hamel and Nancy Tennant in the Harvard Business Review.  In it, Gary and Nancy provide a list of actions for innovation success.  When I discovered this list, I rolled my eyes, because there is always another consultant providing another list of things to do in order to succeed at innovation.  And those lists are always self-serving lists of tools that may support an innovation activity, but will not build an innovation competency.  Anyone, anywhere, can do innovation once, and may even succeed at it.  As we say in the south, even a stopped clock is right twice a day.  What far far too many corporations have failed to understand is that they don't need innovation once.  They need innovation constantly, continuously, because the pace of change and shifting competition and consumer expectations demands more frequent innovation.

That's why I initially rolled my eyes at another list of five requirements for innovation.  But Hamel and Tennant do something you rarely find in these articles. They name check all of the tools and activities that many firms have completed.  Idea database in place?  Check.  Ability to mine customers for insights?  Check (although I find this one doubtful). Awards and recognition for successful innovators? Check.  In other words it seems that many corporations have checked the boxes of all the innovation tools and methods that should lead to innovation success.  Except they failed to realize that these need to be applied constantly, and in a holistic sense.  Just as a carpenter has a range of tools in his toolbox and uses each according to the need presented, we innovators must have all of these tools available to us, and use them appropriately and consistently. 

If you decide that the Harvard Article is too long, or you simply don't have the time to read it, here's the pull quote as far as I'm concerned.  OVO has led innovation projects for over ten years, and we have constantly reinforced this idea.  It's great to see it reinforced by thinkers like Hamel:

It takes a systematic approach to build a systemic capability—whether that is Amazon’s logistics prowess or the near-flawless service you receive as a guest at a Four Seasons hotel. So it is with innovation. Skills, tools, met­rics, processes, platforms, incentives, roles, and values all have to come together in one supercharged, all-wheel-drive, race-winning innovation machine.

In other words, innovation is a system, and must be deployed as a system, interlinked, fully capable, and constantly engaged.  These tools and methods and processes (and people) must work together, and work on a continuous basis, in order to success.  Earlier in the piece Hamel and Tennant use the analogy of a well-tuned engine disconnected from its transmission.  Again this reinforces the idea of an interconnected system, operating at full capacity.  So the key question becomes, what does it take to get there?

Hamel and Tennant provide 5 requirements, which I'll list below:

  1. Well-trained people who think like innovators. They conflate a couple of ideas in this requirement.  First is a cultural phenomenon that people must overcome the business as usual culture and think about innovation and change, rather than efficiency and stability.  Also embedded in this idea is the concept that people must be trained on innovation tools and processes.
  2. A definition of innovation.  One of my favorites.  What is innovation for your company?  What does it entail?  Is it a product, a service, a business model or something else, or all of the above?  What is the desired scope?  Incremental change or disruptive change?  Without these shared definitions, people will define their own scope and outcomes, and will usually revert to conservative definitions.
  3. Metrics.  Here I disagree somewhat with Hamel and Tennant.  They argue that many companies don't measure innovation.  I think the real problem is they measure the wrong things.  They use traditional measurements like ROI to decide whether or not the innovation will succeed, rather than understanding that innovation may require new or different measures and metrics.  I've rarely found too little measurement, but often found too much of the wrong measurements.
  4. Engaged leaders.  I wish they had placed this one first.  You will find that you cannot innovate in a large corporation without involved, engaged leaders.  If the leaders aren't passionate about innovation and willing to take risks, then no one else will be.  Leaders set the tone, allow for mistakes and experiments, provide direction and most importantly free up resources.  To me this is the first requirement.
  5. Innovation Friendly processes.  Again the authors conflate several ideas here.  They speak directly to issues of planning and budgeting.  Most annual cycle planning is inadequate for innovation, and most budgeting processes rarely consider innovation, so these may need to change.  The authors don't dwell quite as much on defining innovation processes, which I think is equally important.  Until we can define a consistent, end to end process that people can follow, innovation is haphazard and won't be as successful as it can be.
The authors make another point that is vital - the difference between innovation as a "bolt-on" to existing business as usual, or "built-in" to the corporate culture and way of doing business.  We at OVO have talked for years about the fallacy of a "bolt-on" innovation capability.  This is a fallacy because the corporation seeks to sustain business as usual and bolt-on innovation around the edges.  Since there is no slack in the system and no time or attention paid to the bolt-on process, it never gets done.  Unless and until innovation is core to the way you work, what I called in my book innovation business as usual, you'll continue to find your innovation efforts less than satisfying.

Innovation must become a core part of your operations, not an experiment on the margins, but core to the way you do business.  This means it must start from the top, influence how you think and the skills you acquire and be supported by (and not blocked by) corporate processes, timetables and resource allocations.  Right now in many corporations some of the tools or methods exist, but they aren't bound together, they don't exist as a holistic process or capability and too many existing processes, allocations and structures create barriers rather than enablers for innovation.  Time is ticking past - change is inevitable and ever accelerating.  Hamel and Tennant have the right message.  Are you listening and implementing?

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posted by Jeffrey Phillips at 6:10 AM 0 comments

Tuesday, April 21, 2015

Universities get an "F" for innovation

For a long time I've pondered the dichotomy of the higher educational system in the US.  On one hand the American university and collegiate system is perhaps one of the finest in the world, drawing students from many countries and cranking out many exceptional graduates.  On the other hand, I'll assert, it is failing our students and our economy miserably, because the educational system is rote, designed for a production age when we are clearly in an informational and innovation age, does not encourage risk taking or experimentation, and is far too comfortable and complacent, far too unwilling to change.

Let me illustrate by an example.  I am a terrible golfer, as anyone who has every experienced the hazards of playing golf with me will testify.  I would never agree to provide golfing advice for even a child, worried that my advice would lead them astray. In contrast, our university systems pride themselves on "innovation" yet, in every way are strangers to the word, steadfastly clinging to centuries of history, discouraging the very factors that make innovation possible, content to produce the same sorts of outputs they created years ago, and unwilling or unable to recognize that they need to change, and that their customers and funders want them to change.  How does a university system, which clings to old methods, old curriculum, produces graduates with the same experiences and same knowledge as in the past, and refuses to update its own structures, claim to be "innovative"?  You wonder why it's hard to innovate?  One reason is that few people are trained in innovation tools, but even more importantly, many are indoctrinated in their educational systems to conform rather than to create.

There are a host of reasons why universities are failing us, right when we need innovation most.  And I realize I'm painting with a broad brush here, but far too many degree systems and universities aren't teaching the stuff that leads to creativity and innovation.  Just because one department or one program has some innovation going on doesn't make up for the fact that the rest of the university is stuck in the 1950s thinking.  We need a revolution in how people are taught, how they think about the world.  We need graduates with better and more tangible skills, people who can create jobs and products rather than people who hope to be handed a job.  We need more value from the collegiate experience than we are getting, and that we are paying for, and we need universities to start innovating, in every dimension.  Here are just a few of the obstacles standing in the way of innovation at most universities:

Innovation isn't a recognized discipline
Visit your alma mater's website and look up the various degrees and colleges or courses of study.  Find the business school, or the English department.  You can find these with blinders on, most likely.  Now, go and find the "innovation" department.  Heck, find the innovation courses.  You'll probably end up high and dry.  That's because innovation in the real world is a highly collaborative activity which embraces a lot of different skills.  Strangely, college and the educational system in general is meant to introduce you to lots of perspectives and a wide range of skills, but ultimately they de-emphasize broad knowledge and curiosity for depth and expertise. 

Some universities will place innovation courses in the business school.  In fact many now have executive education programs that proport to teach innovation on the weekends to managers who have full time jobs.  So college professors, who can't agree on what innovation is, and often have little real world experience creating new products, will offer to teach innovation on the weekends to interested business professionals.  Perhaps it ought to be the other way around.

The educational system is more interested in deep courses of study rather than broad surveys of knowledge and good synthesis, which, along with creativity and curiosity should form the basis for innovation.  Our collegiate system of education has it all wrong, and perhaps that's why many true innovators (Gates, Jobs, Dell, Zuckerberg, etc) left college to start their own gigs. 

Innovation doesn't "belong" in the business school or the engineering school.  Innovation is a broad set of skills that draws on historical cues, experiences, insights, design and many other factors.  Innovation is broadly multidisciplinary and incorporates a lot of experiences and perspectives.  We need graduates who can think these ways.  That means we need to restructure how they are taught.

Universities don't innovate
I've often joked that you could pluck a university don from 12th century Cambridge and drop him into a modern university setting, and the only things he'd find confusing are the fact that women outnumber men and the amount of technology in the lecture hall.  Other than that, many of the characteristics and features of our educational system would seem entirely familiar, and that's a problem.  When the predominant way of learning remains unchanged over 8 centuries, increasingly the educational system diverges from the innovation and entrepreneurial systems.  If universities and colleges want to be relevant, they have to create people who are creative and innovative.  To do that, they themselves have to become much more adept not just at teaching innovation, but doing innovation.  How can you credibly teach innovation in a place that clearly isn't innovative?  And please don't suggest that because one lab or one graduate engineering program is turning out innovative stuff that makes the entire university innovative!

If there's another organization that has the potential for more innovation, I'm not sure what it is, but politics, silos, compensation and other factors keep the English professors and the Psychology professors and the engineering professors apart when they need to be talking to each other and exploring possibilities.  Until the curriculum and silos are innovative, the compensation and recognition systems are innovative, the university won't be innovative. And if the university systems can't become laboratories for innovation, they certainly can't expect to generate a significant number of innovative graduates.

Failure and Experimentation aren't encouraged
In most university settings, failure isn't encouraged.  Students know which majors will require more effort, and which professors grade on a generous curve.  It's a well-known truism that it's harder to get into Harvard than it is to stay at Harvard, where close to 90% of the grades offered are "As" and "Bs".  Either the classwork isn't challenging enough, or professors don't want people to "fail".  But what do we teach them if they don't fail?  They aren't encouraged to risk anything!  Beyond the lack of risk taking and failure, most students don't experiment with anything other than substances that are probably illegal, given their age and/or state of residence.  While many are busy experimenting with substances and ideas off-campus, their course of study, their path into the business world are both preordained.   Just as it's rare to find an English major in an engineering calculus class (and the opposite is also true), it's rare to find students experimenting with a broad range of classes, instead following the traditional course of study, becoming narrow experts in one specific field, able to spout historical knowledge and conform to a specific way of thinking, rather than experimenting with a lot of different ideas and gaining experience working in ambiguous settings without a "right" answer.

Teaching isn't rewarded
At a school where I speak regularly on innovation topics, the capstone class for fourth year engineering majors - a two semester class where they define a customer's needs and create working prototypes to address those needs - is taught by an adjunct professor.  The "full" professors are too busy doing research or teaching graduate students to bother to teach the class which is most akin to the life students will lead immediately after graduating.  The best teachers aren't full professors, and many of the most notable and recognized professors don't bother to teach much.  We need to place value on what the students need the most - encouraging actual teaching, exploration of concepts and ideas - rather than on research.

The value produced is declining

As a father with two kids in excellent colleges and another who will be in college shortly, I can't help but recognize that the value of a college degree is flat if not declining.  Certainly my kids need a degree to get a job, but far too many people are getting degrees that don't seem to be worth all that much, driving down the average value of a degree.  I'll lay some of the blame on the sheer number of people getting degrees, and some of the blame on the watered down curriculum.  But shouldn't the university system recognize it's shortcomings and, dare I say it, failure in this matter?  Any business that saw the value of its outputs declining in this manner would retool its processes or product development, seeking to create better outcomes and outputs.  Clearly universities don't work under the same expectations or pressures, but don't they owe something to the students, and to the people who partially fund the university's existence (taxpayers) consistently upgrade the output of their process?  What is the accountability for the university system to create better graduates who are more prepared, not simply to take a job, but to create a job, to create new products, to innovate from day one after graduation?

Safe and Protected
To their detriment, universities and colleges are somewhat safe and protected from the rigor of competition, and by the fact that most employers require a college degree as a prerequisite to get a job.  It's difficult to start a new college or university and difficult to keep accreditation, so few new colleges are started to compete with existing colleges, and many prestigious colleges trade on their names and historical laurels.  As long as the college degree is the ticket to corporate America, colleges will have a willing pool of applicants who don't look too closely at the value they are getting.  But soon two factors will converge. One will have to do with the actual capability of the new employee.  When jobs are scarce and skills are valuable, the people with demonstrable skills will win.  The skills most in demand will have to do with creativity, design, empathy, the ability to translate needs into requirements.  These skills are the "front end" skills for innovation.  The second will have to do with outsourcing and offshoring.  Anything that can be done offshore will be done offshore, from manufacturing to accounting.  Further, as Dan Pink pointed out, anything that can be automated will be automated.  Employees will be required to demonstrate their value from day one, and not in rote repetitive jobs but in actual contact with customers to create new solutions.  When graduates from prestigious universities cannot do these jobs effectively, they too will be living at home with their parents, driving for Uber.  Then the university system will face the result of these trends:  less demand for collegiate graduates, fewer people interested in a degree, and more people interested in the skills that are necessary to innovate or to create their own jobs, which may not require a college degree.  At that point the whole facade collapses.  I think they've got about 10-15 years to change before this all comes tumbling down.

Herbert Stein, an economist, and a professor at the University of Virginia, once wrote that anything that cannot go on forever will stop.  By that he meant that trends with unsustainable growth or expectations will have to crash.  There are several trends in the higher education system that all lead to the conclusion that things have to change.  Far too many people are getting degrees they can't afford and cannot pay for, which don't lead them to good jobs.  Far too many people are taking degrees that don't prepare them for work, and don't prepare them to create their own jobs.  Far too many people who have degrees are working in jobs that don't require a college degree.  These facts are often written off as a sign of the economy's slow recovery, but seven or eight years in the economy is growing but the facts aren't changing.  What needs to change is the way people are educated, and the ability of universities to innovate.

Who can push for change?

The real problem is that while everyone recognizes that change is needed, few constituents are in a position to advocate forcefully for change in the educational system.  Parents who send their kids to college remember fondly what college was like for them, not realizing that the demands on new graduates is changing.  Plus, these parents don't have the access or means to band together to demand change and are only involved with the college or university for four or five years while their kids are there.  Students are part of the system and don't have the power to create change because they too are transient and often unwilling to rock the boat about their own education.  Large and small companies which hire the graduates don't have a lot of sway with the university unless they hire significant numbers of students, in which case they can tailor a specific program to their needs.  State governments, which can create real change at least for public universities, often have conflicting needs and goals and don't always have the best intentions in mind.

Universities don't have a lot of accountability and few powerful organizations exist to force them to change.  This leaves societal trends and economic forces which will creep up on the complacent universities as the only real source of competitive change.  Emerging requirements, trends and economic forces will eventually whipsaw the university system and cause real, painful change for these entrenched systems.  Hopefully, some universities are recognizing the forces at work in the business world and are beginning to respond to the need for graduates who can innovate, think creatively, create their own jobs and have experiences at their educational institution that make them more attractive and more employable for the jobs that exist, or able to create their own jobs, products or solutions, when innovation is required.

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posted by Jeffrey Phillips at 5:49 AM 0 comments

Wednesday, April 15, 2015

Sprinkling innovation responsibility like pixie dust

There's a fundamental problem in many corporations that keeps innovation from constantly delivering valuable results.  The challenge probably isn't what you imagine.  While many of us in the innovation space will point at a lack of tools, a lack of innovation experience, low expectations and significant risk barriers as challenges for innovation, along with a lack of resources and inadequate planning and funding, those to some extent can be overcome. In fact these are all frequently overcome when an executive really needs, demands a new product and prioritizes innovation over the business as usual, day to day operations.  But herein lies the rub:  who is ultimately responsible for innovation?  Who wakes up every day and goes to work knowing that their progression, their compensation and their success is measured on how innovation is accomplished on a day to day basis?  The answer in many companies is:  no one.  And further, even in companies where there are people who are measured on these criteria, they often face the challenge of responsibility without authority, or are in the wrong place in the organization to affect constant innovation.  Let's explore.

"Everyone can innovate"

Let's dispense with the trite but true concepts first.  You'll hear that "everyone can innovate" which is exactly true and mostly meaningless.  Everyone can, and should, have the opportunity to innovate.  They can generate ideas and participate in an innovation activity.  A corporate culture should reward and encourage this behavior, although most don't.  But even if it's true that everyone can innovate, the majority of people in most corporations don't, for a variety of reasons.  Perhaps they don't think their ideas are all that great, or don't understand how to develop their ideas, or don't have the bandwidth to manage ideas and their day to day jobs.  Further, if the don't innovate, they don't really risk anything.  Since they aren't measured or accountable for innovation, since it's not part of their responsibilities and they don't have the authority to do it on their own, they can't be held accountable.  You can't sprinkle innovation responsibility across a broad swath of the company without also dictating some fairly specific measures and goals, and constantly evaluating achievement.  When everyone's responsible then no one is responsible.

The CIO is responsible!

In some companies, an individual has been named as the chief innovation officer, and in many cases he or she is nominally responsible for innovation.  While we at OVO believe that a "center of excellence" is important to maintain innovation tools and capabilities, too often a corporate function focused on innovation is either a) too corporate and too removed from actual day to day operations to affect innovation in a product group or line of business or b) becomes an innovation center that generates ideas and solutions that aren't important or relevant to the product groups or lines of business.  We believe that innovation is a competency that must be sustained (hence the center of excellence) but at the same time innovation must be accomplished as close to the customer, or need, or opportunity as possible.  Who understands the customer, the market and the opportunity better than the product managers, sales people and others in a line of business?  Shouldn't these people be active in the innovation?  If so, what role does the CIO play in a day to day basis for innovation?  Can they cause innovation to occur in disparate product groups and lines of business?  Note that I'm not suggesting that CIOs aren't important, just that they must be intimately connected with innovation at the grass roots level and not become an ivory tower.  They must encourage innovation, and have budgets to help lines of business or product groups fund innovation activities.  But who, ultimately, is accountable for innovation in this model?  Either the CIO is, if his or her team is responsible for generating ideas, or product group leaders and business line leaders are, if we are to conduct innovation at the coal face.  In the latter instance, the CIO is a funder, resource provider and cheerleader for innovation, but shouldn't be dictating which projects are conducted.  This means many CIOs have a lot of responsibility without a lot of authority.  However, having a common approach and methodology means there's a greater chance of consistent innovation approaches and corporate learning.

Push it down into the businesses

If you buy into the idea that innovation should be conducted by line of business leaders or product executives, then you could argue that innovation responsibility, authority and accountability should rest with them, and in many cases I think this is actually the right place.  Yet today few are measured on innovation, and few believe their executive teams will provide the space and opportunity for innovation.  Most of these executives don't have innovation experience, but they are at the right place with the right level of authority to decide which projects should be pursued and how much change needs to be introduced.

We believe that the more we can encourage these leaders to innovate, the more corporations can devolve responsibility and accountability for innovation to these individuals, and consistently measure their innovation activities and outcomes, the more likely innovation is to take root and to be conducted on a consistent basis.  For this to happen, annual and corporate planning needs to change, to develop budgets for innovation at a product or business team level, and compensation and evaluation programs need to change, so these leaders can see how their promotion and progression are tied to innovation.  At the same time, corporations need to ensure a relatively consistent approach to innovation, developing methods and processes that can be shared across these leaders.  If every business unit leader or product team executive determines their own methods for innovation, you'll soon have a cacophony of methods and styles, with little consistency and no comparability.  Plus, each team will invest in its own set of processes, tools and external agents, rather than sharing tools and costs.

Responsibility, Accountability, Authority

So we'll argue that the RESPONSIBILITY for innovation should sit where the AUTHORITY is greatest, where leaders who decide what customers to serve and what products to build are found.  They need to be held ACCOUNTABLE for innovation by executive management which sets expectations and budgets linked to STRATEGY and growth targets, and regularly review progress against innovation goals.  All the while a CENTER OF EXCELLENCE should support and sustain innovation through the development of common tools, methods, training and other activities to provide a common innovation approach for everyone in the company.

As long as there is uncertainty about who is responsible for innovation, and no one is actively measured on it, and no resources or funds are regularly budgeted for the activity, it will be difficult to perform innovation effectively.  Pushing innovation down to line leaders or product executives without also developing budgets and evaluation criteria is meaningless.  Naming a CIO who is removed from the day to day operations can create an innovation team that is disconnected from the every day work and creates interesting but ultimately ineffective innovation. 

Far too many companies spread innovation responsibility like pixie dust, hoping that if they spread around responsibility, many people will innovate.  The reality is that most people are far too busy getting their day to day work accomplished, and lack the accountability and authority to do much in the way of innovation, and can't find the funds, time, resources or tools to do innovation competently.  The sooner large corporations stake out exactly who is accountable, who has the responsibility and authority to do innovation, and the expected impact and frequency of innovation, the sooner we'll see more interesting and more valuable innovation results.
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posted by Jeffrey Phillips at 6:05 AM 0 comments

Tuesday, April 14, 2015

Fast innovation often leads to furious outcomes

Today, inspired by the Fast and Furious movies, I thought I'd write about the appropriate speed for innovation.  One doesn't have to have the arms of the Rock, or the brains of Vin Diesel, to see that most innovation is attempted at the wrong speed.  And, much like Goldilocks and the Three Bears, there are speeds that are too fast, too slow and "just right".  One more literary allusion and I hit the trifecta!

Speed and its relationship to innovation

What does speed have to do with innovation anyway?  As regular readers of this blog will not doubt remember, there is a market window for every opportunity.  Get to the market too quickly and your great idea or technology will be rejected because no one is ready for it, or the infrastructure doesn't exist.  Enter the market too late and other competitors will have populated the market, leaving only niches or dissatisfied customers for you to attract.  But, get there at the right time, with the right speed, and you can dominate the market. 

Another concept related to speed is the increasing pace of change.  Again, regular readers will recognize this as a common, recurring theme in this blog.  What people don't yet understand is how quickly the pace of technology, and change in general, is increasing.  Product lifecycles are getting shorter, and by extension corporate lifecycles are shrinking.  Expectations from the past lead corporations to believe they can scale up, build a brand and defend the brand, reaping profits for years.  Increasingly, those products and brands experience very short life cycles.  It's definitely time to pick up the pace and learn to operate at speed.

When the speed is too slow

There are a number of factors that limit innovation speed, most important among them a lack of experience or familiarity with tools, a need for perfection and elimination of risk, and long decision cycle times.  Each of these hampers an innovation activity and causes it to move slowly.  When a company management team and corporate culture combines all three of these factors, they simply makes the process sclerotic.  When the team's ability to move quickly is hampered by a lack of skills or experience, outsiders or consultants can speed up the process.  However, almost nothing can speed up decision making or eliminate enough of the risks to allow a project to move more quickly other than the buy-in of executives.  What factors cause your innovation projects to move slowly, if they get started at all?

When the speed is too high

It's rare that you'll find a good team, fully engaged and experienced in innovation tools, with a clear objective and a fully supportive management team.  That is nirvana, and while it is occasionally possible it is highly unlikely that all of these factors fall into place.  If a team doesn't have these factors yet innovates quickly, it is guilty of making unnecessary and improbable assumptions, limiting the scope of its inquiry or simply skipping steps.  All of these factors will result in a project that ends quickly and delivers an inadequate and unacceptable result. Yet it is a fast, speedy project that all executives seem to want, when they complain about the amount of time it takes to innovate, when they want to cut corners and increase cycle time but don't commit enough resources and don't free up the resources to do the work effectively.  Moving too quickly is simply a box checking exercise, to exclaim we completed an innovation project, but end up with products or services that no customers want or need.

When the speed is just right

A good innovation project should move relatively quickly, but not for the reasons you are thinking.  As Fred Brooks pointed out in The Mythical Man-Month, nine men can't make a baby in a month.  Some activities have a reasonable gestation period, no matter how expert the process or the team working on the issue.  What you can do to make a project go more quickly is to adequately define the opportunity or problem (Covey's Sharpen the Saw is relevant here) and provide the right amount of training and process definition, and ensure the people working on the project understand the breadth and depth of exploration that's acceptable and necessary to do the job right.  After all, it's not necessarily the fastest innovation project that wins, but the one that delivers a product or service that meets or exceeds customer needs in a timely fashion.

Remember that many innovation projects are new activities within a corporate setting, so it takes time to build understanding and expertise.  Additionally, a good innovation project requires learning and discovery, which cannot be predicted.  It's rare that anyone, even those of us with deep experience running innovation projects, can fully and accurately predict the length or duration of an innovation project, but there are many reasons to create shortcuts or end an activity too early.

The Fast are Experienced

If I was creating a new movie about innovation, modeled on the Fast and Furious, it would be titled The Fast are Experienced, because it takes innovation experience to know how to work quickly, and when to be patient and let an idea incubate.  Perhaps we'd need The Rock with his bulging muscles and commanding presence to persuade management to leave the team alone when it needs space, and the expertise of Vin Diesel and others to accelerate the team to escape velocity.  But good experience and history tells me that it's not necessarily the first who will win this race, but the ones that cross the finish line with something that matters to customers, can generate profits for the company and is in time for the market to unfold.

Experience matters when it comes to innovation.  Innovation projects need to be unlike the other projects your team does regularly, otherwise they'll create the same result.  You cannot become an expert or gain innovation expertise unless you've completed a number of innovation projects and learned the subtle inflection points and how and when to apply specific tools or methods.  There is no one size fits all, and often not even a one size fits many approach.  Gaining experience and learning when to push, and when to wait, matters.  You can't skip steps in the innovation process and expect a valuable outcome.  If Fred Brooks was right about software development, we can assure you he was even more correct about innovation projects.

Want to move at the best possible innovation speed?  Define a consistent innovation approach or method, train your best people and allow them to gain expertise by participating in a number of innovation activities, so they learn the traps, learn when to speed up and when to sit back and let ideas percolate and incubate.  There's enough stress in an innovation project without having executives stand on top of the team demanding greater speed, or insisting on cutting corners or reducing staff, which is a common occurrence.

You can have fast innovation, which in many cases will lead to furious innovation teams, or you can let your teams gain experience, and then they'll tell you how fast they can innovate.
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posted by Jeffrey Phillips at 6:10 AM 0 comments

Wednesday, April 08, 2015

If you fail to forget, you'll fail to innovate

I'm happy to report that I've forgotten a lot about innovation.  In fact I make it a regular practice to try to forget what I know.  After over a decade of focus in the innovation space, forgetting isn't always easy, although as a I grow older I think I'll have the opportunity to forget more frequently and perhaps without trying.  If all of this forgetting seems counter-intuitive, please continue to read on.  If this forgetting seems natural, then perhaps you've reached the zenith of innovation nirvana.  And if you are just confused, or have already forgotten why I was writing about forgetting, please join us for a celebration of forgetfulness.

Why, and What, should you forget?

Innovators who seek new ideas should seek to recognize and value the present, but not cling to it, because true innovation will create change.  For those who cling too tightly to the way things are, or cling to memories about the way things were, these memories become barriers to doing something that will create change.  We innovators must recognize and honor the past and present, but we must be willing to forget what lies behind and press on to what lies ahead.  (A little Pauline paraphrase there).

Forgetting means releasing what you know, intentionally or unintentionally.  When we let go of our knowledge and expertise, when we free ourselves from the burdens of history and conformity and imposed conventions, we can look at problems and opportunities with fresh eyes and expectations. Forget your knowledge and expertise - they often just get in the way of good ideas.  Forgetting the past and looking forward to the possibilities opens up new vistas and creates expectations of better ideas. 

I don't know about you, but when I forget something it makes me somewhat anxious, and I often spend time trying to recover that knowledge or memory.  This deep thinking often leads to new ideas and new energy, because I devote time to thinking and perhaps make new connections in my brain.  I find that forgetting is often a route to new connections and ideas.  Forgetting makes me even more willing to learn, to replace what I've forgotten and to learn something new.

Further, given the pace of change that we are encountering, you may as well forget what you know to be true.  Science is constantly uncovering new truths about what we held as conventions.  Further, entrepreneurs are continually subverting the technologies and tools that just recently we thought were state of the art.  Forget the tools and techniques you have and trust because everything from Moore's law to the network effect tells us that new perspectives and capabilities are just around the corner. To innovate you'll need to be a perpetual, lifelong learner and forgetter.

Oh, and forget the barriers, conventions and regulations that are in place today.  They may constrain your business and your thinking now, but they will be changed, subverted or obsolescent in the near future.  You are probably better off as an innovator forgetting everything you know and hold dear, focusing only on the needs and demands of existing and potential future customers.  Find a way to solve those needs, forgetting what exists and what may constrain you, and you'll find a way to solve those challenges.

Forget the naysayers, conformist and middle managers who say it can't be done, there isn't time or a budget, that it's been tried before.  If you remember these voices or facts you won't be able to innovate.

Strange to say, but I think it's true:  if you fail to forget, you'll fail to innovate.
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posted by Jeffrey Phillips at 8:13 AM 0 comments

Monday, April 06, 2015

Innovation is like societal change

It occurred to me over the weekend that a lot of the sturm und drang around innovation is very similar to the resistance and issues that arise around social change.  As people we are, for the most part, conservative, willing to accept the established norms rather than face the uncertainty of change.  Is a major innovation in a technical setting all that different from a major societal change?  I think perhaps Gandhi could be a model for how we think about innovation and most importantly, how we anticipate the changes innovation introduces and how we adapt to them.

First they ignore you

Gandhi's most famous quote about creating change has to do with the response of those who could be most affected by the change.  He said, first they ignore you, then they laugh at you, then they fight you and then you win.  Gandhi understood that the people who resist change would first ignore the need for change.  They prefer stability and certainty. New ideas might upset the established order.  They want to preserve and protect the established order.  Next, recognizing the change is still likely, they will "laugh" at those proposing change.  The established order wants to ridicule the proposed changes, causing those who propose change to lose heart, and those who might be open to the change to question their decisions.  Finally, when ignoring the potential change and ridiculing the change is no longer practical or feasible, the established order organizes itself to fight the change.  There's often enough at stake that the existing order will fight doggedly to sustain how things are currently done.  That's not because the people behind the existing order are irrational, but because they are conservative and happy with the existing order, and afraid that change will upset the status and certainty they enjoy.  Now Gandhi was talking about social or societal change, but all of these ideas apply directly to innovation in a technical or corporate sense as well.

It's the same in corporations

Think about all of the people who have good ideas in your organization.  Most of them can't manage to package and present their ideas, because managers are too busy doing the things that keep the corporation running day to day.  Changes that disrupt the existing efficient order are likely to be ignored, and for good reason:  anything that upsets or distracts from the efficient execution of existing processes and products is frowned on. It can be very difficult to gain the attention of managers or executives and help them see the potential of a new idea.  Even when you manage to gain the attention and discuss new ideas, the second reaction is inevitable.  They will ridicule new ideas because if they are truly new they don't "fit" within conventional models.  They don't align to existing business models.  Truly new and interesting ideas are by definition different, and the way many people respond to truly new or uncomfortable ideas is to ridicule them, rather than take them seriously.  So, it's inevitable that good ideas once they gain some awareness are likely to attract questions, objections and then ridicule.  It's only after the innovators have run the gauntlets of silence and ridicule that they have to be prepared to actually defend their ideas, because when it becomes likely that a new idea will be adopted, the "vested" interests will fight back.  Businesses view the world through a "zero sum" lens, meaning that an investment in a new idea by definition means that existing products or services must experience a cut.  Thus it is normal and natural that ideas and innovators must fight for resources with established and proven products and services. 

The unreasonable man

Who or what can fight their way through these barriers to create new ideas in a corporation or in the face of societal resistance?  Gandhi made it, but just barely.  Galileo, while scientifically correct, was forced to withdraw his conclusions.  George Bernard Shaw noted that all change is due to the "unreasonable" man, because reasonable men adapt to circumstances.  So successful innovators have to be people who can conceive, develop and defend unusual or unlikely ideas, and have enough passion and commitment to their ideas to become unreasonable in the eyes of the status quo.  Does your organization have any unreasonable men or women?  Anyone who can conceive new ideas, get past the fact that the corporation won't have time or energy for new ideas, and who can withstand the ridicule that's going to come, and who can organize facts and evidence to defend the idea when appropriate?  Without these unreasonable men and women, corporations will become complacent, will work to sustain business as usual and resist change, and will slowly wither and die.

The reason so many innovations come from startups or entrepreneurs is that they don't have to overcome the current success and existing investments of large corporations.  Their success doesn't threaten a sister division's product or potential budgets.  Entrepreneurs seek to disrupt or overturn industries and segments, while incumbents seek to sustain them and protect them.  But the old model is slowly getting turned on its head.  In the past it took decades to distribute a product and gain wide acceptance.  Even more recent technologies like the personal computer or cell phone took decades to achieve deep market penetration.  In contrast increasing globalization, distribution and awareness based on the internet and shifting consumer demands mean that ideas and products can be adopted far more quickly, and frankly can die far more quickly as well.  Once it took a long time and a large organization to scale up and get to profitability, at which point the firm protected and defended its market position and installed base.  Now, ideas and money are cheap and distribution channels are multiplying.  There are far more people who can be, and who by rights are, unreasonable men and women untethered to existing industry norms, willing to disrupt or overturn markets or industries that they don't have an investment in.  Big corporations must ask themselves how much of their budget should be set aside to harden and defend the existing industry norms and models, and how much time and effort should be set aside to innovate.  They'll find, to their surprise and chagrin, that far more time needs to be set aside for innovation, and that in many cases they aren't the leaders, but are lagging far in the rear.  And that's when they'll need to identify their unreasonable men and women, and stop laughing and get out of the way.
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posted by Jeffrey Phillips at 8:00 AM 0 comments