Tuesday, August 25, 2015

Should you welcome or fear disruption

I was scanning through my Twitter feed when I came upon a tweet where someone was excitedly welcoming disruption in the financial sector.  Strangely, it was from an individual employed in the traditional banking sector.  This made me think of the old Simpson's show where Kent Brockman, the news broadcaster, is announcing that there are new alien beings taking over the earth, and that he, for one, welcomed the new overlords. Much like the traditional banker who welcomes financial disruption in his industry, this welcoming of your own destruction seems a bit unlikely. My response is that disruption is something you want to create or anticipate, rather than welcome and react to.

Just ask Tower Records if they "welcomed" a disruption in the distribution of modern music.  Tower and other retailers owned music distribution until Apple decided to disrupt the market by changing the media (physical to digital) and the channel (retail stores to web downloads).  As interested bystanders, some of us were winners, and frankly some were losers.  If you don't like listening to iPods or MP3s, if you are an audiophile, then in some regards you may consider yourself a loser, as higher quality music is now harder to find. In any "disruption" there are winners and losers, but few people are completely isolated from impact. The truth is that we don't fully understand disruption, and it's far better to be the disrupter and able to anticipate where the bull you are riding is likely to go, than the disruptee or in many cases even the innocent bystander, who gets gored without ever trying to actually interact with the bull.

Schumpeter explored this idea when he wrote about creative destruction.  Innovation creates entirely new ways of solving customer needs and new value propositions, but almost always destroys existing means of creating value.  Look no further than Blockbuster if you want to understand disruption, by both Redbox (positional disruption) and NetFlix (technical disruption).  Every act of creation by one party is an act of destruction to someone else.  That's not to suggest we should fear innovation, but in fact we should respect its power, and harness it to our benefit, rather than simply expecting it to work on our behalf.  Innovation doesn't work that way; you are either the innovator, the intended beneficiary of the innovation, or you are what the military often politely calls collateral damage.  In this case collateral damage specifically refers to the business model or value proposition the innovation was meant to undermine, but it extends to the network of solutions or adjacent products and services that are no longer as valuable once the innovation is realized.  For example, it wasn't just Tower Records that was disrupted, but a whole value chain of suppliers, merchandisers, packagers and so forth, with ripple effects even to the music producers.

Rather than cavalierly "welcoming" disruption, you should fully understand its power:

 - Welcome its potential
 - Respect its power
 - Understand the blast zone associated with disruption
 - Be the disrupter or at least allied with the disrupter
 - Disruption is a blunt instrument with no sympathy for its victims - it does what it does, regardless of the impact or circumstances.  Therefore it's much better to be on board with the disruption rather than sitting by and welcoming it.
 - Become more proactive rather than reactive 

Welcoming disruption to your industry is naive and foolish.  Bringing disruption to your own industry is risky but can have benefits.  Disrupting an adjacent industry, doing what Apple did to Tower or Netflix did to Blockbuster, is the ultimate disruption position.
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posted by Jeffrey Phillips at 5:56 AM 0 comments

Tuesday, August 18, 2015

Barely scratching the surface

It's funny to me to read about the impending death of innovation, or how innovation doesn't add any value, or how often you can read about new innovation methods or techniques when most people haven't ingested the basic tenets yet.  For all the talk about innovation, for all the "I'm so over" innovation eye-rolling, it would be nice to admit a really simple fact that is as plain as the nose on your face:  80% of the people in most organizations simply don't know that much about innovation.

I have to remind myself of this constantly, because I'm not going to be surprised anymore by "innovators" in organizations who don't know who Alex Osborne is, or was.  Or can't tell me what Doblin's Ten types of innovation are.  Or cannot adequately define the difference between incremental innovation and disruptive innovation.  Recently at a professional association meeting we were talking about helping our colleagues understand "best practices" in innovation.  As lofty and potentially arrogant as that sounds, my advice was to start more simply:  how about if we just ensure they know the basic practices before we worry about "best practices"?

To me it seems the best analogy for the state of innovation today is something like this:  We are like the 49ers, the Americans in the middle of the 19th century rushing to California, because it's been reported that there's gold in the streams.  A handful of people are getting rich finding gold nuggets in the streams, simply there for the finding, never realizing that seams of gold lie just below the surface, waiting for someone with vision and passion to dig a bit deeper.

Where innovation is concerned most organizations have a similar experience to many of those who rushed to California.  They make finding the gold sound simple, they send people with no mining experience into the field to find the "nuggets" lying around, and everyone gets frustrated when the exercise doesn't pay off.  Eventually, most of the 49ers end up in other roles, settling down in a new territory rather than continuing to look for gold.  We are all guilty of flirting with prosperity, toying at the edges of innovation possibility, never fully committing to discover all the value locked up just below the surface.

There are good reasons for this willful ignorance.  When confronted with a virtual "sure thing" that maintains a moderately successful status quo or risks something for a potential windfall, managers and executives will almost always bet on the "sure thing".  Sustaining day to day operations, making the numbers each quarter, not rocking the boat pays off.  Meanwhile we are expected to do some "innovation", so we send out the unprepared to search for ideas in the wilderness, never surprised when they fail to find value, even when it was right there in front of them.  Later we are shocked when competitors or new entrants mine the same fields and find seams of gold.  But by then the executives and managers who provided only lip service to the exploration are long gone, safely ensconced in new roles where they'll reinforce the status quo in the face of unrelenting change.

Where do we place the blame? And, more importantly, how do we encourage people to explore innovation beyond the surface?  There are a couple of places we can explore to create change.

First, the business schools.  Many executives and managers have business school experience, either undergraduate or graduate.  In those programs they receive training in accounting, finance, marketing, operations management, sales, human resource development and information technology.  They learn to be managers, not explorers.  We need to radically rethink the education programs for our future business leaders, who will need to combine management skills with exploration and experimentation skills.

Second, the risk-reward spectrum.  From 1945 until today, western businesses have lived in a bubble of their own design.  The US and to a great extent western Europe dominated international business and set the stage for how things got done.  With the rise of China and other countries, and the slow decline of Western Europe, the competitive landscape is changing.  The pace of change is accelerating.  While older management tools still hold true, they only hold true as long as markets and competitors respect them.  We need to innovate management philosophy just as fast as we learn to innovate new products and services.

Third, and related, is business culture.  Culture and bureaucracy create their own realities.  Like it or not these are living, breathing entities that have their own opinions about change and can enforce those opinions over a longer cycle than the average tenure of a CEO.  This means that visionary CEOs and leaders need to partner with customers and investors to shift the culture of organizations over time, with buy-in from everyone, so that the culture is forced to change, rather than ignore the signals and slowly wither.

This should be a golden age of innovation, yet in many regards we are barely scratching the surface, content to pick up the small nuggets we stumble across while just below our feet there are seams of gold ready to be dug up, if only we'd truly commit to the work necessary to innovate regularly and consistently.  Whether we look at the Federal Government, where agencies like NASA used to regularly turn out new science and discoveries, or universities, where new science and creativity is increasingly stymied, or corporations, which have the bandwidth and the power to do far more innovation yet shy away at the investment, every constituent could easily do more, and with only a little investment and commitment unlock so much more value.  Are we content with this level of innovation?  Are we as consumers, as taxpayers, as participants in the educational systems, OK with this half-hearted commitment, resulting in mere trickles of innovation when there's an entire aquifer of ideas and innovation under our feet?
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posted by Jeffrey Phillips at 6:02 AM 0 comments

Thursday, August 13, 2015

Innovation decreases with knowledge

Did the headline of the post grab your attention?  Did you think I was going to assert that dumb people are better innovators?  Nothing of the sort.  However, I think I can positively assert that bringing all of your knowledge to bear on a problem that needs innovation is often exactly the opposite of what you should do.  Here's why.

If you can solve a problem with all of the knowledge you possess, drawing on everything you know and expect to be true, you are narrowing your range of solutions and calling on past experience.  Most likely you are solving a problem the likes of which you've seen before, and replicating past solutions.  Nothing wrong with that, but the solution is unlikely to be new and different.  You see, drawing on all of your knowledge and experience is what the vast majority of us are paid to do each day, becoming "experts" in our specific domains.  And the more knowledge and expertise you have, the less likely you are to draw on new information or question your frameworks or perspectives.

To create something completely new and different, to "innovate" in my terminology, means to rethink how a problem is addressed, or even framed.  To look at a problem from a completely fresh perspective, not bringing all of the experience and knowledge to bear.  In other words, to look at a problem with a "beginner's mind" perspective.  You know who does this especially well?  Children, because they don't have experience or a pre-conceived frame of reference.  They want to know "why" a problem has been solved in a particular way in the past, rather than accepting that they way it was solved in the past is the right way.  Sometimes they even ask why something is considered a problem at all.

When we at OVO researched the traits that innovators share, we found time and time again that the best innovators are people who have the capability and willingness to explore problems and opportunities with a "beginner's mind" perception, who were willing to set aside all the conventions and knowledge and expectations and look at a problem as if for the first time.  The sainted and frequently referenced Steve Jobs was good at this, and other heralded innovators are as well.  But this approach works against the grain of everything we've been taught, and how we are managed and rewarded.  Very few people are willing to strip away all they know, and appear as naive children when looking at a corporate challenge or opportunity, yet that kind of exploration and discovery is often what's needed most, not another round of application of decades of experience which simply reinforce the status quo.

The more you apply what you know, your frame of reference, your perceptions and your conventions to a problem, the more likely you are to create "ideas" that resemble the solutions you already have.  Yet that is what most corporations constantly reinforce.  Instead, the same corporations seeking interesting or radical new ideas should ask 1) if what they think are problems are really problems 2) how they might address the problem from a naive, almost childlike point of view or 3) if they were encountering the challenge for the first time, with no past experience or worries about existing investments.  Or, perhaps, you could use your "bring your child to work" day to do real discovery and innovation, because children don't carry around all of the expectations and conventions, and aren't all that worried about what other grownups think about their ideas.

Can your organization, its culture and its leadership allow enough child-like exploration and discovery to flourish to allow really new ideas to grow, or will the culture constantly reinforce expertise, knowledge and convention, continually generating very similar versions of the same ideas?
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posted by Jeffrey Phillips at 6:47 AM 0 comments

Tuesday, August 04, 2015

Day to Day Innovation Survey Results to date

Many of you know that we are conducting a survey of innovation practitioners.  If you haven't responded, please take ten minutes to provide us your insights.  To encourage you and to provide a mid-survey report, I thought I'd reflect on a few findings to date.

Remember that we are interested in what the people who are actually "doing" innovation think.  There are plenty of surveys that report what CEOs or senior executives think, but not enough is heard from the people who are responsible for day to day innovation projects and activities.  Thus we want to hear from you, and will report on what we've heard to date.  Here are a few of the findings so far.

Expectations versus Outcomes

So far, our results indicate that executives think innovation should focus on increasing differentiation, growing revenue and increasing profits, but in actuality a good deal of the innovation you do is focused first on cutting costs, then on entering new markets and growing revenue.  As we expected, so far there's a gap between what executives think innovation should do and what you are actually doing with innovation day to day. 

Aligning innovation to day to day priorities

We asked you to tell us how closely aligned executives' expectations for innovation are versus the day to day priorities and commitments.  Over 60% indicated there was little or no alignment.  This means that many executives are saying the right things but their goals aren't filtering down, or that existing culture or reward systems are reinforcing status quo.

Incremental to Disruptive

While executives talk about "disruptive" innovation, our survey results so far demonstrate that the vast majority of respondents report that their innovation work is very incremental.  Two-thirds of respondents to date place their innovation focus at very incremental or incremental.  This shouldn't be surprising, since incremental innovation is more predictable and less costly.

Still poorly defined

We also asked you about the definition of the "front end" of innovation.  Over 50% of the respondents said there is no defined innovation process or very little definition of the front end, while only 20% indicated they believed the front end of innovation is well defined.  There is still a lot of opportunity to define and improve front end skills and methods.

What happens if an innovation "fails"?

We asked you to report on what happens when innovations "fail".  50% of you reported that those innovations are "swept under the rug" as if they never happened, and a quarter of you reported that a failure can cause executives to lose confidence in an individual.  Corporations are still struggling with a zero defects mentality in a time when experimentation and innovation WILL create failures.

Keeping up with the Joneses

Over two-thirds of those who responded felt that their company was failing to innovate at the same pace as competitors and new entrants, and almost 75% of respondents felt that they'd accomplished less with innovation than was possible within their organization.

The results so far suggest that while innovation is a key strategic focus, it's still taking time to filter down to a day to day activity, frequently losing out to other priorities.  The front end in many companies is poorly defined and much of the innovation work is incremental.  Many of you worry about your internal innovation pace and losing out to competitors and new entrants.  Innovation failures are frowned upon and few people have a chance to develop new innovation skills.

What about you and your firm?  Do these statistics ring true or do you have a different take?  The survey will remain open for another two weeks.  Please take a few minutes to let us know what your day to day innovation activities are like.  Feel free to email me your feedback or comments at info@ovoinnovation.com.


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posted by Jeffrey Phillips at 10:43 AM 0 comments

Monday, July 27, 2015

Innovation: We'll know it when we see it

I'm back on my definitional soapbox again, so if you've had enough of my diatribes on the importance of defining innovation, I'm sure there's an interesting international market melting down or a distracting political movement somewhere.  There.  Now that all the folks who aren't interested in defining innovation have skipped away to other destinations, we can get down to serious business.  Because trying to "do" innovation without defining it isn't just painful, it's insanity.

Those of you who can remember old U.S. Supreme Court rulings will recognize the title.  A Supreme Court justice, on ruling about pornography and when and where it could be published, recognized that in order to rule on its commercial availability, the court would have to define what pornography was.  The justice was rumored to have said that he couldn't define it, but he knew it when he saw it.  Unfortunately many corporations use the same approach to innovation.  They expect great results, but don't know how to define what they want.  In the absence of a destination, any road you take will get you where you are going.

The real truth about innovation and its definitions and outcomes is that we recognize innovation when the market shifts and provides outsized rewards to companies that address important, unmet customer needs.  Until that time good ideas often seem unusual or risky, not worth pursuing. Then, when a competitor capitalizes and creates a great new product, we slap our foreheads and wonder why we didn't recognize the need and fill it.  Most good innovators have a very well defined problem to solve and understand the underlying customer needs and expectations.  Further they have in mind potential solutions, but they allow those solutions to be shaped by customer needs.  They have a good, but flexible, definition of the size and scope of the innovation, as well as the potential outcome.

What we should be doing instead is creating a definitive scope for innovation using shared definitions and language.  And, we should be innovating across a portfolio that includes incremental (small changes to existing products) and disruptive (completely new to the world products), as well as thinking about new ideas as products, channels, services, business models and other potential outcomes.  All this does is establish the width and breadth of the "playing field", and then each innovation activity must determine for itself what the appropriate risk, investment and potential outcome should be. 

If, on the other hand, you continue to use a "we'll know it when we see it" mentality, you'll find that all of your innovations look very similar to your existing products, because people "know" what they do and produce each day, and will revert to those definitions and constructs in the absence of any new expanded scope.  If you ever wonder why so many innovations "fail" or simply mimic existing products and services, this is the reason.  In the absence of new scope and clear definitions, it's much easier to simply repeat what's tried and true, rather than create something interesting and new.

Recently I was contacted by a new client who wanted us to teach their teams how to innovate more effectively.  We responded with a proposal but asked about their innovation definitions, mostly to understand existing expectations.  What, we asked, where the company's definitions or expectations about innovation?  Their answer:  we hope you'll tell us.  Think about that for a minute.  Would you ask an external company to deliver a fully developed strategy for your business?  Would you delegate decision making about entering a new geography or product line to an external firm?  If not, why would you ask an external agency, even an expert, to dictate what your innovation scope and definitions should be?  Because you are working on the "we'll know it when we see it" model, and should be working on the premise:  we'll see it when we know it instead.
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posted by Jeffrey Phillips at 7:14 AM 0 comments

Friday, July 24, 2015

Three principles to help you generate better ideas

It's interesting to me how little we appreciate the depth of knowledge and discipline that has been developed over the years where innovation is concerned.  Recently a client asked me where we (OVO) based our methodologies.  I told her that like most innovation consulting firms our foundations are based on work done in the 1930s and thereabouts by Alex Osborn.  A lot of innovation and creativity is based on Osborn's work, supplemented by Parnes and others.  When current firms talk about their methodologies, I think they should acknowledge where those come from.  Many originate in the work Osborn, Parnes and others did in the past.

Recently I've stumbled upon another historical artifact that illuminates idea generation.  This is a really nice short booklet or pamphlet written by James Webb Young over 60 years ago.  The booklet is entitled A Technique for Producing Ideas, and it offers great philosophical insight into how to improve your skill at generating ideas.

There are two principles that Young introduces that I think are especially interesting.

First, he suggests that every new idea is simply a combination of existing elements.  This means that good innovators are able to create interesting combinations of existing technologies, solutions or capabilities.  Young probably wasn't the first to notice this concept, but was perhaps the first to detail the concept so definitively.

Second he suggests that the ability to make good combinations is based on the ability to see relationships and understand how concepts and ideas are interlinked. He was thinking about complex relationships back then in ways that we almost take for granted now.

These two principles should tell us a lot about our individual capability and capacity for generating ideas, and how to become better at generating ideas.

Combining

In the first case, if Young is correct and every new idea is an interesting and new combination of existing elements, then the ability to generate ideas scales with your ability to imagine combinations of many different types of elements.  The more elements, technologies or solutions you are familiar with, the more potential combinations.  This means that people who have more diverse experiences and familiarize themselves with more "elements", should be able to create more combinations, or in this parlance, ideas.  Conversely, people who are experts in a specific field and who do not "browse" widely in other fields may not have awareness or familiarity with a large number of different elements.  This may limit the number of possible combinations and worse, the individual may have already attempted many of the possible combinations previously based on his or her limited inventory.  A person with a limited inventory of elements and deep experience has attempted to combine those elements before and has discovered that those specific combinations don't work.  This is why expertise can be dangerous when generating ideas.

This first principle also suggests that introducing random information, objects or experiences as an individual or team starts to generate ideas may offer more potential combinations.

Relationships

The second principle Young introduces is the ability to see relationships within potential combinations.  His quote about advertising is especially apropos. "In advertising an idea results from a new combination of specific knowledge about products and people with general knowledge about life and events."  Young believed that idea generators needed specific information about a key topic and broad general information in order to innovate, and understanding the relationships that were possible within discrete combinations were what would produce a valuable idea.  From an innovation point of view, the specific information is based on the unmet need or "job to be done".  The more we understand that, the better.  The general information is the inventory of potential elements or solutions.  This is why generating ideas without conducting needs investigation or research often fails.  We typically lack both the specific knowledge and use very limited general knowledge, which restricts the ability to generate more and better ideas.

Note that Young's advertising concept - combining specific knowledge with broad general knowledge - is what we now describe as "T-Shaped".  Ideo and others have acknowledged that good innovators are often very deep in a specific skill set or knowledge base, but very networked with a broad range of people or experiences.

Do we have the patience and ability to find the important relationships?  Too often the relationships aren't obvious on the surface.  Young addressed this as well when he wrote "If we go deeply enough, or far enough, we nearly always find that between every product and some consumer there is an individuality of relationship".  That is, at the surface there may not appear to be an interesting or unique relationship, but if we look carefully and deeply we can find interesting and valuable relationships.  This is the essence of fully understanding customer wants and needs.  Taken at the surface level, all wants and needs are evident.  If we take the time to drill into a challenge or problem more deeply, we'll find unexplored and unexplained needs to solve.

Letting go and letting your unconscious take over

Young offers one other point about good idea generation.  Often the best ideas emerge once you've given up working on them with your conscious mind, and allowed your unconscious mind to take over.  That's why good ideas happen in strange places, like in the shower or while you are driving to work, when your mind isn't intently focused on forcing connections.

If this assertion is true, then many brainstorming and idea generation functions are poorly structured.  Trying to generate a lot of ideas in 30 minutes is fine, but unless you allow for time for the unconscious mind to work, you'll miss good ideas.  Our preferred idea generation method is to allow time to prepare, before the idea generation session, and then break up idea generation into two short sessions, ideally a session in the morning of the first day, followed by other activities and then gathering again the morning of the second day, to harvest ideas people had while driving home or watching their kids play sports, when the mind isn't preoccupied with finding an immediate answer.

Even if this is a "best practice", it's hard to convince busy business executives that their teams need time to explore other connections, or for their unconscious brain to take over.  It's like that ad that IBM ran about innovation, where an executive finds a bunch of people on the floor on mats in the dark.  That may not be a bad way to allow the unconscious to work, but few executives are going to understand it and allow it.

Many people have asked me over the years how to become a better idea generator.  They'd like to generate more and better ideas on their own, and in a group setting.  Young's short booklet is one of the best outlines I've seen to help you consider the inputs that are necessary, and the mental models that support good idea generation.  Check it out, and follow his advice to become a better idea generator.
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posted by Jeffrey Phillips at 8:39 AM 0 comments

Monday, July 13, 2015

What's really happening with innovation day to day?

I've seen a number of surveys from many of the leading suspects, all of which tell us a lot about what executives think about innovation.  Mostly, they are for it, and think there is much more work to be done.  My experience with most large organizations is that executives are so busy with so many different priorities that they often think that more is happening, on all of their priorities, than is actually happening.  I suspect this is no different when it comes to innovation.

So to you, dear readers, I ask for your help.  We are interested in what's actually happening in innovation, day to day, across corporations large and small.  What are you getting done?  What's blocking or enabling innovation?  Do you have a definition of innovation?  What are your main objectives or goals where innovation is concerned?  If you'll take about 10 minutes to respond to this survey, we'll compile the data and feed it back to you. 

What we are seeking is the actual state of innovation, both the positives and the not so positives.  What are you doing with innovation?  What do you hope to do?  Does it differ by size of company or by industry?  Please respond to this survey, which is only 25 questions, and we'll publish the results by mid-August.

Why would you want to respond?  Well, first to see how similar your experience is to others who are attempting to innovate.  Second, to understand the alignment between what executives say and what actually gets done.  Third, to understand how demands for innovation may increase in the near future and what that means for you.

Here's one more link to the survey.  I hope you will respond, and we promise to provide the results back to you.
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posted by Jeffrey Phillips at 6:45 AM 0 comments