Tuesday, March 02, 2021

Ready or not, the future is unfolding

 I'm back to talk about understanding the future, returning to a subject that I think needs much more examination.  By this I don't mean trying to find out when we'll all get our promised jet backpacks and fly to work rather than drive.  No, when I am talking about understanding the future, I'd like it to be a bit more practical - say a future two or three years from now, with just enough notice about the impending changes that my company can structure new solutions in order to meet shifting market demands.  We need to prepare for the future that we can reasonably address, and understand the future that will unfold just beyond our product cycles.

But no one, and I mean no one, cares about the future in most businesses.  Oh, of course they want a positive future, where margins are higher and costs are lower.  They all want a future where the stock price is higher than it is today - after all, many of us have compensation tied to appreciating stock prices.  But, beyond wanting a better future with a higher stock price, what are we willing to do to understand the future and prepare for it?  Really, not much.  It is no one's responsibility or job, and many people do not believe that it is worth the time to investigate what the future may hold.

Don't believe me?  Let me give you a few examples.

I was speaking recently to a group of executives interested in innovation, and one asked me - what are some of the activities that we can do to get a lot of return for little cost and risk?  And I told him what I've said for years:  the lowest hanging fruit in the innovation world is in understanding trends and understanding what those trends mean, so you can get to the market with what customers want and need as the need unfolds.  The general response from the group was a big "meh" - I think they were hoping for a magic wand.  Trying to understand the future is squishy work that belongs to no one in particular.

Most companies I've worked with have very competent product managers, who are skilled at managing existing products, but at best have one person in a "strategy" office somewhere who thinks about what's next, and no one to convert that thinking into new products and services.

In another example, I've been speaking to a few educators who are concerned about students returning to full time classes in colleges and universities in the fall.  If that happens, students will start arriving in August - just five months away - and everyone says they want students to come back.  But what plans are being made?  What contingencies addressed?  What forecasts about housing, food, faculty demands and so forth? Virtually none.  If students are going to return, universities need to be figuring out what that August will look like now (in all reality it's probably too late) but they could at least prepare.

There are a couple of reasons why there is so little focus and preparation on imminently obvious futures.  First, as described above, the work is distributed.  Everyone has a stake in the future outcomes but no one is responsible for preparing for it.  When "everyone" is responsible, no one is responsible.  Second, there are immense pressures to get things right, right now.  No one wants to hear about thinking about the future when we lack control over the present.  Third, people don't believe that good, practical tools exist for understanding the future, so it feels like a fool's errand.

What I fail to see is why this work is left undone.

The trends are out there and reported on regularly.  We know how fast the US is aging.  We have good data on immigration.  We know how fast the COVID virus is mutating and also the increasing supply of vaccines.  The future - or at least versions of the future - are somewhat knowable, and knowing what versions are likely, a company, university or government could begin to prepare.

Yet we are frozen, as if we are incapable of understanding the data around us and developing alternative futures and understanding their implications.  Or, more kindly, we are too busy with day to day activities to spend time to understand what our future challenges will look like, and, since we neglect the future now, we will continue to toil with too much work and too little insight when the future arrives.

In all things, look to Einstein.

As a lead up to my point, let me relate a story that is often told of Einstein.  He was asked - if you had one hour to solve a problem, how would you spend your time?

Now, gentle reader, when I tell people this story, I stop here and ask them - what do you think he said?  How would Einstein use his time?  Most of us would spend a few minutes panicking, and a few minutes arriving at what we think is the best possible answer, and spend the rest of the time building a solution.

Einstein responded - I'd spend about 55 minutes thinking about the problem, and about 5 minutes solving it.  Note that Einstein, perhaps one of the smartest men who ever lived, is doing problem definition and examining the ways the problem can be defined and gathering the information he has, only then to work on solving the problem.  We, on the other hand, rush to solving the problem.

The data is out there

This failure to prepare and anticipate the future becomes even more perplexing when we realize just how quickly the capacity is growing to gather data and analyze it.  We are in the midst of a data processing, Artificial Intelligence and machine learning revolution, yet we miss one of the biggest opportunities - asking these systems to gather data in a number of trends and make predictions about what the future might look like.  Even if you don't want to spare people to do this work, certainly you can spare some computing time.  These algorithms are good at Monte Carlo simulations and should be able to give you reasonable predictions about likely future scenarios if you will help with the design of the experiment.  We have the tools, we have the insight, we have the clues about what the future may hold.

Why do we fail to act on this?

Willful disregard

There is almost a sense of machismo around the failure to discuss, analyze and develop scenarios about the future.  We'd rather rush around, focused on today's problems and continue to be caught unaware by the unfolding future that in many cases is, and was, predictable to some degree.  Some people say we could not predict COVID, but we've had MERS, SARS and Ebola just within the last 20 years, and the mis-named Spanish Flu before that.  It's not as if the future is unknowable, we just choose to ignore the evidence.

I blame the scientific management revolution in the 1950s and 1960s.  Those managers distilled everything into numbers that can be understood and manipulated and downplayed any other way to think or manage.  When we start talking about future opportunities, trends and scenarios, the common refrain is - but is the data statistically significant?  Can we make predictions without risk?  Of course not, but making predictions and assessing the scenarios and the implications of those scenarios can teach you something about the future, and that's what's important.

I also blame the expectations of slow, predictable change.  For 40 years after WWII, the US stood predominant in global business, and change was slow and predictable, but since then change has been more rapid and more discordant, but we still act as though the future is relatively predictable and stable. 

I also blame science fiction writers and movies - because we have the idea that talking about the future involves jet backpacks and life on Mars and that seems unimportant and unrealistic to people who need to deliver the next quarter.  Understanding the future and acting on it does not require a rocket or a spacesuit.  The future is not necessarily Utopian or a dystopian nightmare. 

What should we be doing? 

Gathering trends and looking for evidence of emerging needs and opportunities, the potential for new competitors to enter the market and possible market shifts based on new technologies, policies or demographics.

We should constantly be examining several time blocks - most importantly, two to three years from the current date, since that's most likely the least amount of time it will take for you to bring a new product or service to market.  After that, a 4-6 year time horizon and a 7-10 year time horizon makes sense to investigate.


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posted by Jeffrey Phillips at 6:35 AM 0 comments

Tuesday, February 09, 2021

Book Review: A.L.I.E.N. Thinking

 As you may know, as a noted (ahem) blogger and voracious reader, I am sometimes asked to review books on strategy and innovation.  When I am approached about reading and reviewing a book, I always ask myself a couple of questions:

  • Does the book seem to advance interesting ideas or methods to improve innovation
  • Does it have anything new or novel to add to a plethora of books on innovation topics
  • Will I learn something from the book - is it worth my time or my reader's time

Based on this quick analysis, I turn down probably half of the books that are proposed to me.  Even after choosing some books to review, I often find myself asking - did the book actually meet my criteria?

All this in advance of a book I want to like, but struggle to review, entitled A.L.I.E.N. Thinking, with the subtitle "The Unconventional Approach to Breakthrough Ideas".

What this book is about

The book introduces a framework the authors have developed to improve innovation thinking to lead to better ideas.  The word ALIEN in their title is an acronym:

  • A - Attention
  • L - Leverage
  • I - Imagination
  • E - Experimentation
  • N - Navigation

Each letter represents the word following in the list above, and introduces a concept about how to think or act to create better innovation insights.  The authors suggest that individuals or teams that apply this mnemonic in their quest for breakthrough ideas and innovation will be more successful.  Each chapter opens with a story about an inventor or entrepreneur who succeeded in creating new products or a new company through the use of one of the factors in the ALIEN acronym.

What the authors have defined is a useful framework for digging into opportunities and needs and creating new ideas.  

Why I struggle to review this book

While this book presents a useful framework for idea generation and innovation, it's not clear "who" this book is for, or if the insights are really all that new.

In the case of the "who" question, it's not clear if this book is aimed at corporate innovation teams, individual innovators or entrepreneurs.  Many of the anecdotes are about individual innovators or entrepreneurs - for example, a story about an entrepreneur who created an edible spoon to reduce waste in India.  Are these skills and approaches more relevant to an individual, who should become adept at all of the tools in ALIEN thinking, or should corporate innovation teams assemble people who are adept at one or more of these skills, building a team that is complete in its approach?

The second challenge is that not much of this is "new".  While the book is heavily referenced and has a long section of footnotes, it ignores all together a book entitled The Innovator's DNA, by Clayton Christiansen and others who did good research into the characteristics of good innovators.  In fact, several of the findings in Christiansen's book (exploration, experimentation) are very similar if not exactly the same as those in A.L.I.E.N Thinking.   Good creativity thinkers like Keith Sawyer are referenced, but a lot of the references are from academic journals and research sources.  This book, like many others, picks and chooses its stories and references that fit the theme.  We aren't introduced to situations or stories that may differ from the idea or demonstrate its weaknesses or limitations.

What the authors have done is to link good approaches and ideas together in a somewhat linear fashion, and then at the end of the book suggest that good innovations and ideas can enter the A.L.I.E.N. framework at any letter, which indicates that ALIEN thinking is actually a network rather than a linear process.

The last reason I struggle with the book is that while it has good ideas, it does not describe effectively "how" to do this work.  Who are the people that have these thinking skills?  How do we leverage them and deploy them?  The authors do provide a very short questionnaire to help you decide if you have these skills, but at two or three questions per topic I don't think this is a real evaluation.

Going back to my evaluation criteria

So, returning to my evaluation criteria - if you are an innovator or entrepreneur who is unfamiliar with ideas like deeper attention (Beginner's Mind), experimentation, gaining a new perspective, then this book is a helpful addition to the books on innovation.  If you are a corporate innovator seeking to build a team to do some interesting innovation, it may provide some new ideas.

The book is in effect repackaging and re-purposing existing ideas into a new framework and giving that framework a name.  To some extent, the ALIEN framework reads a bit like a design thinking framework as well, so I'm not sure it is entirely new, but could be helpful to some who don't want to adhere to a design thinking approach.

Is the book worth your time?  If you are new to innovation, or need inspiration or a new way or working or thinking, or are just looking for a framework to follow, then possibly.  I do think the book falls a bit short in providing tools and frameworks to actually use this in a real activity or project, and should have been accompanied by a more rigorous assessment tool.  Perhaps that is coming in the future.

Reading the Innovator's DNA, or my own work on the traits that good innovators demonstrate (see the white paper on Unusual Suspects) or even reviewing good design thinking frameworks and principles will cover much of what ALIEN thinking introduces.  

If you are new to innovation, or the theories that suggest that some people, perspectives or mindsets may be more inclined to innovative behavior, then this is a good book for you as you begin your innovation journey.  The ideas are solid, if not particularly new, and the book lays them out well.


 

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posted by Jeffrey Phillips at 6:53 AM 0 comments

Tuesday, February 02, 2021

Innovating in the midst of chaos and disruption

 There's a great poem by Kipling that I'm sure is now out of favor, but it has a central message that we all need to hear. The poem is "If" - and if you are interested in reading the poem you can find the link here.  Go ahead and read it now.  After the Biden inaugural, poetry is on the upswing in popularity and Kipling is a good poet.  Plus, the poem has a message that we need to hear now.

It's the first couple of lines that always spark my interest - "If you can keep your head when all about you are losing theirs..."  The poem is an ode to confidence in yourself, especially in trying times.

But, as you are well aware, this is not a blog about poetry, but a blog about innovation.  And, from my perspective, it's about time to start implementing some of what Kipling is writing about in this poem.  We need more confidence, more ability to dream, and think, and meet with both triumph and disaster.  Kipling wasn't writing about new product development, business model change or innovation, but what he is writing is entirely applicable to our situation today - first quarter 2021.

Gamestop is up, and you are down

In a time when everything is experiencing change, when disorder and disruption seems constant and profound, when people are storming the Capitol after an election, and the threat of COVID hovers over all of us, hunkering down and waiting for the storm to pass would seem to be the sensible solution.  Many companies are waiting, waiting for the storm to pass, for the air to clear, for the future to be more understandable or more predictable.  I think that is a fool's game.

The folks who tell us about climate change tell us that what will actually occur is less predictable weather and weather patterns.  In the same way, I think our existing and near term business climate is much less predictable, and will remain that way for some time.  There are a number of reasons for this conclusion - more than it is worth going into here, but if the fact that Gamestop is one of the most valuable and highly traded stocks doesn't say something about change and disruption in the market, then little else does.

Markets are efficient but not predestined.  Markets are made up of people, their fears, passions and emotions.  And when we connect a lot of passionate people to the means to trade stocks, and direct them, strange things can happen.  When we create information bubbles and people are fed stories that favor one viewpoint or another, with little common ground, strange things can happen.  When we live with a virus that we refuse to acknowledge and fail to defeat, strange things can happen.  Perhaps the "normality" of the 70s, 80s, and 90s was unreasonable, and our lives are subject to more change and uncertainty than we'd like to admit.

I think we are likely to see more unexpected and difficult to interpret social, demographic, environmental and technological change that will have an impact on businesses and governments, and those changes will occur more frequently.

Doing something in the midst of chaos and change

Rather than hunkering down and waiting for the storm to pass, only to be surprised by a different storm or sudden change, perhaps our businesses, organizations and governments should expect more disruption and change and learn to operate within uncertainty and change.  Waiting for chaos or disruptions to end before adapting loses ground in two dimensions.  First, you don't learn during the chaos if you don't engage the chaos.  Second, the result after the chaos ends is a new market, shaped by new forces, and a new disruption will emerge to change things again.  Hunkering down means constantly falling behind and never learning or adapting.

Rather, what we need are far more dynamic, far more agile, far more forward-looking organizations that can adapt, operate and even accelerate in the chaos and disruption.  The time to build truly agile, dynamic and innovative organizations is in the teeth of change and disruption, to learn while doing, rather than waiting until the next calm between storms.

How can a company adapt to constant chaos, disruption or change

You've been warned by experts that the pace of change is accelerating.  A simple glance at technology adoption shows that we adopt new technologies and tire of them in ever shortening cycles.  We have a far more educated populace making far more demands for new products, services and experiences.  We are likely to have far more disruptions, market shifts, economic challenges than ever before.  How does a company learn, adapt and create new operating models?

There are a number of possibilities.  First, you might take time to do more scenario planning and trend spotting, to try to understand the future changes that will unfold.  Then you can learn from and put programs and systems in place before the trend emerges.

Second, you can train people to innovate in any circumstance.  History shows that many great innovations occur during a market convulsion or downturn. Typically, the winners have been those who acted during the downturn, rather than those who waited for the downturn or shift to end.  

Third, you can create far more nimble and agile organizations that can adapt to changing market conditions far more quickly.

Fourth, you must change your corporate culture to become a learning organization, one that is more aggressively embracing change, one that is capable of engaging risks and uncertainty.  Your organizational structure and culture will become either your biggest asset or your biggest barrier to survival.

Innovate Carolina Conference

At our 12th annual Innovate Carolina conference we will be talking about these issues - trying to understand how to innovate all the time, in the face of current and constant change, disruption and chaos.  Check our our conference site here and follow up if you are interested in speaking or attending.

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posted by Jeffrey Phillips at 6:51 AM 0 comments

Tuesday, January 26, 2021

What we talk about, when we talk about innovation

 After over 15 years of work in the innovation space, sometimes I get a bit weary talking about innovation.  After all, innovation is a frequently misused word, and it's often used with a lot of naive optimism on the part of some speakers (hope before experience) and cynicism on the part of other speakers.

Increasingly, in businesses large and small, we talk, and we write, and we debate about innovation.  I've tried to define what innovation is (people putting ideas into valuable action) and tried to provide the breadth (Doblin's Ten types of innovation) and depth (three horizons - incremental/transformative/disruptive). Yet people persist in creating their own definitions about innovation, often creating dissonance where none is necessary.  What you'll find is that you cannot talk meaningfully or logically about a topic where there are no shared definitions.

What we fail to talk about is the purpose of innovation.  In all this talk about innovation, I think we often get caught up in the "ways" of innovation but lose sight of the purposes and outcomes.  And I think that's why there is often a lot of talk about innovation that frequently fails to come to fruition.

That is to say, we know we want innovation, but we aren't sure exactly 1) how to go about it or 2) what the measurable outcome will be if we innovate successfully.  And all the while, many of us talking about innovation are whistling past the graveyard, failing to talk about two very important aspects of innovation - the ability to do what we are talking about doing, and the risks we will face if we innovate.

All that to say - most people talking about innovation are similar to people who have never climbed a mountain who get together over coffee in a Starbucks to talk about summiting Everest.  More than likely they don't have the ability, the knowledge or the skills, but they have a BHAG goal.  They more than likely don't know the risks and probably aren't willing to face them.  The outcomes and recognition seems great, but they aren't familiar with the work or the risks, and all the talk will amount to nothing.

So, when we talk about innovation, perhaps we should refocus what we talk about. 

We should:

  • Start by defining our terms
  • Start talking about specific, measurable outcomes and how to achieve them.
  • Start talking about the skills and capabilities we need in order to make those specific and measurable outcomes occur - and then implementing the programs to build the skills
  • Start talking about the risks we'll face and how we'll prepare for them and address them.
  • Stop talking about innovation as if it is something that anyone can do without preparation.
  • Stop talking about generalities and start talking about specifics.
  • Stop talking about BHAGs without talking about budgets and resources.


In fact, if possible we should stop using the word "innovation" because it has been so maligned and misused as to be almost meaningless.  As long as we recognize that our misuse of a word does not negate its power or its meaning.

So, I hope you keep talking about "that which cannot be named", but do so in entirely new ways, using my recommendations about to start talking in new, more specific ways and to stop misusing the word.

Most importantly, stop talking in the abstract and start talking in the specific, the definitive.  And further, put some of that talk into action, to build skills, to plan for and address risk, and to carry out new growth and differentiation activities (see what I did there?)

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posted by Jeffrey Phillips at 7:13 AM 0 comments

Tuesday, January 19, 2021

Two documents that tell you all you need to know about innovation

 If you believe everything you hear, or read, within your corporation about innovation, you may end up a bit disappointed.  As we've seen over the last two decades, talking about innovation is easy, but implementing it and realizing the benefits are a bit more difficult.  Plus, with all the swirling definitions of innovation, what is one woman's innovation is another woman's incremental change.

To cut through the confusion about the importance of innovation and to understand how important innovation is the your company, there are two documents that you can examine that will tell you exactly how much the organization you work for values innovation and the priority it places on innovation. 

These two documents I am referring to aren't necessarily about innovation, but what they say (or don't say) about innovation will tell you all you need to know.

One important document that doesn't matter

You may think that the "strategy" document or plan is important, but it really isn't.  Today, every strategy talks about innovation - it's a requirement, like ants at a picnic.  A strategy document or plan that does not talk about innovation will be tossed back, but writing about innovation in a strategy plan does not mean that innovation will be implemented.

The two documents that do matter are easy to access and easy to read, so anyone in a company can see where the business places its emphasis.  I'll unmask the two documents below and what they tell you.

Budgets

The first document is a budget.  In the political world, the saying is that the President proposes and Congress disposes.  That is, the president proposes actions and plans (similar to a strategy) and Congress decides and prioritizes and determines the funding.  

You can see how important innovation is by looking at your company's, divisions's, and team's budgets. Budgets are where company leaders decide to place important bets, and where they fund the important operations of the business.  If budgets don't all out specific funds for innovation, then it's very likely that no innovation will get done, and even if people manage to create new ideas, there won't be money to realize the idea or convert it to new products and services.

While a strategy that defines innovation is nice, a strategy is high level.  A budget defines what is going to be spent - where the company will place its resources. Budgets are much more definitive than strategy.  You can regularly hear concerns about going over or under budget, but rarely hear people get called out for going beyond strategy.

 While a strategy document is forward looking, and a budget is the realization of the forward looking plans, the second document(s) are somewhat backward looking.

Evaluations and Measurements

While these are two separate items, they are really tightly related, because both assess what happened and why it happened.  We evaluate people and processes based on earlier plans, and their accomplishment of the plans.  If your monthly, quarterly or yearly evaluation doesn't include explicit measurements and goals for innovation, then your company isn't really serious about innovation.

 Think about it - periodically you are evaluated, your team is evaluated, your division and its leadership is evaluated.  Are you evaluated on the amount, scope or nature of the innovation you do?

Here's where another old saying becomes meaningful:  what gets managed gets measured.  If you aren't measuring innovation activities and outcomes, then you aren't managing it, and it isn't important.

Not new news

This probably isn't news to most employees - they know that the budgets don't include money for innovation and further they know that working on innovation is more like sticking their neck out rather than something they'll be rewarded to do.

However, what these two documents say about executive teams and their focus speaks volumes.  If a company constantly talks to investors and outsiders about innovation, but internally does not budget for innovation and does not evaluate people or teams on innovation work, there is no longer any dissonance.  Employees recognize a cynical marketing messaging ploy, and are even less likely to try to innovate when innovation is important and necessary, and somewhat supported by executives.

If your company is serious about innovation, it will include innovation goals and outcomes in its strategies and plans, include funds for innovation in its budget cycles, and evaluate people and teams on their innovation work.  Anything else simply displays an unserious approach to innovation.

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posted by Jeffrey Phillips at 12:40 PM 0 comments

Thursday, January 14, 2021

Thinking about innovation and strategy

 I've been asked several times lately to write about, or perhaps more specifically, to opine about, innovation strategy.  If you are a somewhat regular reader of this blog or my work generally, you may know that I think talking about innovation strategy conflates two very important ideas that are related but not the same thing.  I find it useful to consider first the definition of these two concepts.

 Innovation Definition

Innovation, in its simplest form, is simply turning good ideas into some valuable action.  That action may be creating a new product, or developing a new channel or business model.  Of course, innovation can span a range of impacts and outcomes, from very incremental product innovation to industry changing business model innovation.

Strategy Definition

Strategy, on the other hand, is an entirely different beast.  Strategy is often difficult to define.

When I Google definition of strategy, this definition pops up.  It's just one of several, but I think I like it the best:  a plan of action or policy designed to achieve a major or overall aim.  

Several important things to note about this definition:

  1. It is a plan of action or a policy - that is, strategy is extenuated over a period of time.  Strategy is not a momentary action or a project.
  2. It is designed - which means that strategy is carefully considered with a significant end goal in mind
  3. It has a specific outcome - the successful execution of strategy should result in a meaningful outcome

Now, reviewing the two definitions, we can see why these words are often conflated.  Innovation hopes to achieve a specific outcome, but most often a much more tactical solution like creating a new product.  Innovation is an action, but it is not often a plan or policy.  Innovation should be designed, but is rarely so carefully considered.

How are these two concepts related

In my view, innovation is a means through which strategy can be realized.  That is, once you've identified a strategy, innovation is one of the important tools in the toolbox that may help you achieve your strategy.

One of my favorite frameworks for thinking about strategy is Treacy's 3 competitive positions, which are competitive positions that are simplified from Michael Porter's work.  The three competitive positions are:

 - Product Leadership

 - Customer Intimacy

 - Operational Excellence

Typically, you can look at a market or industry and see one clear leader in each of these competitive positions, and others simply trying to compete.  

When we consider these positions, one could argue that Product Leadership is most closely aligned with innovation, and to some extent that's true.  Note that product leadership isn't necessarily the newest or the most ornate product.  Product leadership is simply the best product, and a company can create and iterate good products without a lot of innovation.

Next, consider customer intimacy.  This means getting as close to the customer as possible and understanding their needs. In this case you can innovate the customer experience by understanding customer journeys, and create new relationships and touch points, but you can accomplish some of these results through other means.

Some people would argue that Operational Excellence is not associated with innovation, because it typically has to do with efficiency and cost reduction.  I am as comfortable innovating in this regard as any other focus, just the actions and outcomes are different.

Perhaps you'll see where I am going with this.

Innovation is a tool that may help you accomplish your strategy.

It's an interesting conundrum that the companies that have excellent strategy and use innovation as one means to accomplish their goals are very successful, but companies that lard up their language with innovation but lack good strategy aren't as successful.

There may be a few companies that have "innovation" as their strategy, but I'm not aware of them.  A singular focus on innovation as a "a plan of action or policy designed to achieve a major or overall aim" will leave a company exhausted and bankrupt.  Innovation is always important, since growth and differentiation are important, but strategy is more important than innovation, and "innovation" by itself is not a corporate strategy.  

Now, if you were to ask:  OK, where should I focus my innovation efforts?  Then I'd respond with, tell me what's most important in your strategic efforts and where innovation can make a difference.  If your strategy for example is customer intimacy, then I would ask:  how might we use innovation to create new channels, new customer journeys and new relationships to improve customer intimacy.  Note that innovation should be able to provide a major impact on customer intimacy, but it is not the only tool in the toolbox.  You can also improve customer intimacy by training your front line workers, changing how you communicate with customers, shifting corporate focus and rewards and compensation models to emphasize customer intimacy.  

That is to say:  Innovation is one tool to help you accomplish your goals, and once you have clarity about your strategic goals, you can then determine where and when to leverage innovation.

Takeaway

The purpose of this post is not to relegate innovation to a lesser role, but to place its priority and use in a context.  When executives say they need innovation, the response should be:  we need strategy.  Once the strategy is determined, (hopefully well developed and implemented successfully) then where and when to leverage innovation should become much more clear.

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posted by Jeffrey Phillips at 4:49 AM 0 comments

Monday, January 11, 2021

Conditions for innovation to succeed

 I was asked recently to write a short post about the conditions necessary for innovation to succeed.  It's actually not possible to write a short post about innovation, much less the conditions necessary for innovation to succeed, but I've tried to simplify this into nine critical factors for success.

They are:

  • Scope and opportunity framing
  • Executive commitment
  • Clear definition of the outcome (incremental/disruptive, product/service/business model)
  • Adequate resources and funding
  • Recruiting the right people
  • Understanding customer needs
  • Cultural realities - risk taking, openness to new ideas
  • Agile idea development and testing (MVP)
  • The ability to accelerate ideas into product or service development

The first question I often get when I create a list like this is - are all these criteria important?  Can we rank them and decide which ones need more development?

The answer is, yes, you can rank them - I think good scope, executive commitment and the right people are the most important criteria for success - but really good ideas can be killed by other factors.  For example, one of the biggest idea killers is the inability for many companies to take really good ideas and get them prioritized in the existing product development process.

 If I had to choose, I'd prioritize the right people with the right support and give them the right problem.  With those basics in mind, you can do a lot of good innovation.

If you are interested, here's a brief definition of each of the factors that contribute to success.

Brief explanations

I'd like to provide a brief explanation of these criteria and explain why I think they are important for innovation success.

Scope - too often executives ask for innovations, but can't describe or won't identify the scope of the work, what they hope the innovation activity will produce (see clear definition of the outcome) and what investment or risks they are willing to endure.  Without this clarity, or in absence of a defined scope, the teams adopt the business as usual thinking and infer a narrow, limited scope even if the executive team wanted more disruptive innovation.  This is why so many "innovation projects" result in incremental or "me too" ideas.

Executive commitment - It's hard enough to get the existing products or services to market, let alone try to create new solutions in an uncertain innovation process. Plus, some good ideas will require that businesses rethink their existing offerings or channels.  And, the work isn't free and requires air cover. Executive involvement and commitment in an innovation activity is critical for success. As the old saying goes, at breakfast the hen is involved and the pig is committed.  Innovation needs really deeply involved executive involvement and commitment.

Adequate resources and funding - I'll deal with the funding here and the resources in the next bullet.  Discovering needs, testing ideas, conducting research and getting new ideas through the development process and then launching a new product costs money. Starving the teams to get more creative solutions isn't necessarily wrong, but failing to invest small budgets when the potential payoffs are huge is simply misguided.

Right people - I've written extensively that the right people for innovation are typically NOT the "best" people in the current processes.  That's because they are wedded to the existing products and processes.  You need to find the creative thinkers, the outliers, the people plugged into customers and markets.  I think this is so important that I wrote an entire white paper and personality analysis called the Unusual Suspects.  Getting the best innovators involved, rather than the "best" people, will definitely accelerate your innovation work.

Needs - most innovations solve current but unfilled or unmet needs, or anticipate and create solutions for needs that customers don't yet know they have.  Your current market research is mostly focused on your existing customers and existing products.  Discovering new opportunities and needs requires a refocusing of your research and a new way to interact with customers and prospects.

Culture - The old saying is that culture eats strategy for breakfast.  Guess what's for lunch?  A highly optimized, cost conscious culture that is moderately risk adverse and focused on the short run will not conduct expansive innovation projects, and will not carefully consider risky, unproven ideas.  Want more innovation?  Make your culture more welcoming to innovation.

Idea Development and validation - you need a really good, agile and rapid MVP development process to bring an MVP to customers and prospects for testing.  This is NOT a complete product but provides a tremendous amount of insight into what the product or service should be and...

Solution Development - You've got to figure out how good ideas are going to get converted into new products or solutions.  Most companies have products and product development pipelines that are overtaxed and not prepared to accelerate new ideas.  So good ideas often languish in the decision making process just trying to enter product or service development

Other conditions

There are other conditions of course.  Two that should be relatively obvious but not covered here are:

  • The ability to launch a new idea - new ideas may reach new customers through new channels.  This can require rethinking marketing strategies and channels
  • Legal and regulatory issues - there are ideas that require the development of industry standards or regulatory programs.  If the standards aren't complete or regulatory frameworks don't exist, some new products, no matter how promising, can't be realized

Why would anyone try

In light of all of these criteria, why would any reasonable executive try to innovate?  The answer is that many don't.  Instead, they wait for smaller firms and entrepreneurs to create new ideas and simply acquire the company or technology.

In fairness, other companies have skunkworks or separate organizations that seek to become the innovation engine of the organization, so innovation is isolated from a lot of cultural and decision making overhead.

Some organizations, like 3M, Apple and Google, rely on a deeply embedded corporate culture which encourages innovation and risk taking.  I wrote about this approach in Relentless Innovation.

However, as we can see from examples like AirBnb or Uber, 3M or Apple, different organizations with different philosophies can successfully innovate and relentless innovation does drive a market premium over companies that do not innovate.

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posted by Jeffrey Phillips at 10:38 AM 0 comments