Thursday, April 24, 2014

Who blocks innovation?

As an innovation consultant whose company works with a lot of large corporations, the psychic dissonance associated with innovation can be quite challenging.  By that I mean there's a lot of demand for innovation, but not a lot of passion.  A recognition that a lot of innovation is needed, but few resources and many time constraints.  A real desire to create new things, and do things differently, but little cultural permission.  We've overcome the awareness issue associated with innovation.  Everyone believes that we need to do more.  We are now staring at the commitment and inertia barriers, where it's finally time to "do" something.  And the problem is, at every level in the organization, someone wants to innovate, but an individual one level up doesn't seem bought in.

Let's take this from the bottom, shall we?

Average Employee

Your average employee is hard at work at a milling machine or processing requests for accounts payable or communicating the value of your products to customers.  Every day they see opportunities for new products, services and business models.  They recognize the opportunity for small, incremental innovation to existing products and have the capacity to imagine completely new and disruptive innovations.  Yet they go about their merry way, doing what they are "supposed" to do, because that's how they are evaluated and measured, and that's what their managers expect them to do and hold them accountable to do.  While there are lots of ideas in these teams, the individuals themselves feel obligated to keep doing what I call "business as usual" because if they don't, we won't achieve the quarter. 

These employees feel that their ideas and insights are valuable, but can't or won't ask for permission to pursue them.  They believe that their management will reject new ideas and ask them to recommit to the business as usual processes and existing products.  If you ask these people why there isn't more innovation, the answer they'll give is:  no time and no management interest.  My "manager" won't let me innovate. 

Average Middle Manager

Your average middle manager has a thankless job, stuck between the executives who make promises to Wall Street and then expect the managers and employees to make the numbers happen.  Middle managers are experts at making more from less, and they are the driving force behind "business as usual".  For more on this read my highly acclaimed book Relentless Innovation

Middle managers know they are on a treadmill, and the treadmill is running out of tread.  Products are getting old in the tooth, and fewer and fewer products are replacing those tired products.  Increasingly, they achieve their numbers by cost cutting or pulling in sales from future quarters. 

When asked why there isn't more innovation, these managers will answer:  no room for risk, no deviance from the quarter, no available headcount.  They believe they are risk and resource constrained, and that while executives expound innovation, it's all flavor of the day stuff, here today, gone tomorrow for the benefit of the market.  My executive won't allow me to innovate.

Average Executive

Your average executive, circa 2014, came to his or her role through efficiency and cost cutting.  They cut their teeth on outsourcing and right sizing, and while they never really understood Lean and Six Sigma, those solutions freed up cash flow, so the executives embraced them.  These executives aren't stupid, however.  They see and hear a lot about what other leading innovators are doing, and see the premiums that "innovators" command in the marketplace.  They want new products that drive differentiation and growth.  They want this desperately, but they also don't want to disrupt the organization or miss a quarter. So they ask for innovation, hoping someone below will rise to the challenge, while counting on making the quarter in a tightly resource constrained organization.

If you ask these executives why there isn't more innovation, they'll respond:  lack of skills and resources.  They believe the opportunities exist, and that properly led they have the people who can generate ideas and create products and services. They don't believe their teams have the skills necessary, and also recognize resource constraints and the risk involved.  They believe that their shareholders won't allow them to innovate, because it puts short-term profitability at risk.

Average Shareholder

I put shareholders at the top, because, after all, we shareholders have great sway in what businesses do.  Shareholders want to invest in firms that generate profits, and have long term growth potential, which should cause stock prices to rise.  We don't want to bet on dinosaurs or firms that can't grow and can't command increasing margins.  We are also consumers and want top notch products and new, compelling offerings.  And, we are fickle.  We can invest in any market, and buy products from any supplier who meets our needs.

Do we demand profits or innovation?  We demand both.  As consumers we want the best new products.  As investors we want profitability and growth.  Interestingly, doing the former well will often drive the latter. 

Who stands in the way of innovation?

Ultimately, there's really no one standing in the way of innovation.  Consumers and shareholders want it, and are often willing to give firms the benefit of the doubt if they are really investing in innovation.  Executives want innovation but must be convinced that their organizations can deliver, build skills and create a successful innovation capacity.  Middle managers want to innovate because they are fed up with the drudgery and being stuck between intemperate demands for innovation from on high that arrive with no resources, and requests to innovate from employees but no availability to introduce more risk or uncertainty.  Employees at the ground floor want to innovate because they witness customer needs that go unfulfilled. 

When we really look closely at "who" blocks innovation, we catch a glimpse of an imagined figure at the corner of our eye, but when we really confront who blocks innovation we see that the figure we imagined is actually made up of all of us, who don't have quite the passion or commitment to take the risk.  Everyone is responsible for blocking innovation, and no one is responsible, and there lies the problem.  Can you image anyone saying that they "don't want" innovation?  That doesn't make much sense. 

Of course this recalls the old story:

There was an important job to be done and Everybody was sure Somebody would do it. 
Anybody could have done it but Nobody did it.
Somebody got angry with that because it was Everybody’s job.
Everybody thought Anybody could do it but Nobody realized that Everybody wouldn’t do it. 
It ended that Everybody blamed Somebody when Nobody did what Anybody could have done.
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posted by Jeffrey Phillips at 6:08 AM 0 comments

Tuesday, April 22, 2014

Conditions where innovation thrives

There's an old joke that I've used before to make a point.  It draws on the stereotypes we have of people from different countries in Europe.  Basically it goes something like this:
Heaven is where the French are the cooks, the Italians are the lovers, the Germans run the trains and the English are the police.  Hell, on the other hand, is where the English are the cooks, the Germans are the lovers, the Italians run the trains and the French are the cops.  The idea is to play on various stereotypes that we have about what's "best" and "worst" about each country's citizens.

I was thinking about this joke and an analogy recently when talking with a colleague at lunch.  We were talking about what would make the perfect conditions for innovation.  Which factors should be present or absent, which barriers could be lowered or removed.  For example, there's an economic analysis that examines why the airline industry is a poor investment.  The product (seats) are transient, the workforce is heavily unionized, the industry is heavily regulated, there's high competition and little control over the price of key inputs.  Never mind the fact that the airlines are so susceptible to bad weather, which they don't control.  When you consider these factors, it's little wonder that the industry has lost money over a span of several decades.

But, what if we could design the optimal innovation environment or industry?  What would that look like?   My assertion has always been that Google is an archetype of a firm or industry that has the best opportunity for innovation.  Here's why:

  • Low cost, low risk product development.  Google's product development costs and risk structures are fairly low.  Any SaaS software team is fairly small compared to enterprise software development teams, so the cost to develop a new application is fairly low, due to
  • Short development times.  Google can quickly create a stub of code and try out a new feature or product in a very short period of time.  Typically this is because of
  • Little regulation or compliance issues.  Unlike many other industries (pharmaceuticals, financial services) Google isn't heavily regulated. Unlike these industries, Google has few compliance and regulatory hoops to jump through. It's products won't cause bodily harm, and they don't hold a store of value for their clients, who are open to
  • Experimentation and trials.  Google can place an incomplete product in the market, label it as beta and people can try it out and give feedback.  Google can also close an underperforming product very quickly, because it doesn't have to "recall" it from its users.  Google can simply shut down a product on the web.  People are accustomed to some quirky behavior from Google products, and the fact that some may exist for only a short period of time.
  • Large customer base.  Google has a large customer base that reflects a significant portion of the total population.  If it works after launch, it is probably a winner, whereas many firms will see products succeed in small trials but lack large scale adoption.  Google can also capture a lot of feedback on its products very quickly.
  • Low barriers to entry and exit.  As I stated before, for Google products on the web, it's easy to enter the market as part of Google's platform and easy to leave as well.
  • Strong employee base, constantly refreshed.  Google attracts many top end college graduates, and is typically considered a very desirable place to work, until you build enough insight or equity to start your own firm.  Therefore, Google is constantly refreshing its employee base with some top talent, making it a compelling idea factory.
  • Culture.  While Google's vaunted "20%" time seems to be fading into oblivion, there is a compelling corporate culture and anthology of stories about Google Search, Gmail and other products that were created by innovative employees.  Google must continue to innovate and has a culture based on innovation.
So, is there a lesson here for firms that want to innovate more successfully?  It's often not possible for heavily regulated firms to completely reverse some of these factors.  For example, the regulations and compliance components aren't likely to change, but it might be possible to work more closely with the regulators to understand what's allowable and what isn't.  Culture is difficult to change but not impossible - just requires a dedicated focus over a significant period of time.

But what this may point out is that innovation in more heavily regulated firms will move more slowly in the areas where products and services are regulated, but there may be opportunities in any industry that reflect what Google is doing.  Increasingly more data is digital and available on the web.  Can any industry create value on the web, where the regulations are lower, the development times are shorter and the willingness to experiment far greater?  I think the answer in many cases is "yes", but it may take a mindset change in order to identify these areas of innovation possibility.

This doesn't mean that we should abandon innovation in the core business, just that innovation can move at different speeds depending on the barriers (or enablers) we choose to emphasize.
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posted by Jeffrey Phillips at 5:58 AM 0 comments

Monday, April 21, 2014

Diminishing marginal return and missed opportunities

My good friend and colleague Paul Hobcraft sent me a note over the weekend.  The story he attached discussed the new razor from Gillette, which is the "latest" in shaving technology.  The ProGlide Flex Ball razor has multiple blades, a pivoting head on a flexible ball track and the option of battery power.  Any product that needs four or five adjectives to describe is worrisome.  The ProGlide Flexball razor may be what we all knew we'd finally see, the pinnacle of innovation reached as the marginal returns approach zero.

Diminishing Returns
While admittedly not a perfect example of diminishing returns, what the razor presents is a race to the top, to "win" the shaving technology race through ever increasing sophistication and complication of what is a relatively simple process, that many people accomplish every day with a cheap disposable razor that has one blade and no pivot points.  Does all this new technology actually result in a "better" shave?  I suppose that depends on what your definition of "better" is.  Does a razor that costs $12 for the handle, before the blades are factored in, provide enough of a better shave than a package of disposable razors that cost $6 for 10 razors?  This is rapidly becoming a vanity project.  Who can cram the most technology into a razor to "wow" young men who are fascinated by technology but perhaps don't weigh costs and benefits. Who will finally create a razor that links to an app on your iPhone while simultaneously mapping your GPS coordinates and providing the "best" possible shaving route across your face?  Where does the pursuit end?

While I've begun this article discussion a seemingly absurd pursuit of innovation which results in negligible marginal benefits over other razors, we should also look at the other side of the coin.  Every investment means another investment was not made.  What are the opportunity costs, or in this case the "missed opportunities" of spending millions on a razor that has little actual benefit?

Missed opportunities
First, we should ask, what are the critical needs or jobs to be done that aren't getting done well, or at all, when a man shaves his face?  A "close" shave is already getting done, perhaps not perfectly, but reasonably well.  Are there other needs or jobs to be done that aren't being addressed or solved that Gillette could have addressed?  Certainly.  There are needs to reduce the amount of time it takes to shave, or perhaps the frequency of shaving.  There are needs to reduce nicks and cuts that occur when men shave, or to reduce skin irritation.  There are needs to closely shave within the nooks and crannies, skin folds and delicate locations near the mouth and nose.  A device as large as the ProGlide FlexBall doesn't simplify many of these needs.  While I haven't conducted the qualitative research, I will assert that by listening to customers there are probably many other needs that are going unfilled, especially needs external to the razor technology that would benefit consumers.

Here's where the opportunity costs really begin to sink in, when we consider the innovation opportunities not taken in areas like channels, business models, services, customer experiences and many other factors, other than the core shaving technology.  Gillette is being attacked in many of these areas by Shave Club, which is a classic disrupter in the Christensen sense.  Shave Club is also attacking the business model and customer experience of shaving.  Gillette has clearly decided to double down on the technology of shaving, but without truly significant benefits over what exists. Every technology reaches a point of zero marginal returns, and it's often at that point that a radically new technology or solution emerges that completely disrupts the older technology.

What's "wrong" with innovation
What this all means is not that innovation is "wrong" but that far too often firms are willing to bet on more features and more technology rather than considering the entirety of the innovation landscape.  Far too much innovation is focused on technologies that can't be distinguished by customers or easily consumed, while lots of innovation potential is missed because the innovations are needed in other realms, from business models to customer experience and beyond.  There's nothing wrong with innovation, but sometimes we need to do a better job at aiming the weapons before choosing the targets.  The Gillette ProGlide FlexBall is a case where the methods of innovation are probably OK, but the targets and outcomes could have been defined much differently.  You'll know innovation is completely exhausted when Gillette brings out the inevitable ProGlide FlexBall 2, offering even more flexibility or blades.  Watch for it at your local supermarket, then buy the products that actually meet your needs.

My personal favorite whipping boy in this case has historically been Microsoft, who were happy to continue to layer on feature after feature in Word and Excel, making it ever more difficult for dedicated users to find the handful of core features that they used regularly.  This is called "bloatware" by some in the software space.  Adding more features when few or none are needed isn't innovation, in fact it becomes the opposite of innovation.  Now, I see the new CEO of Microsoft is making the Office suite available for the iPad.  Maybe someone in Redmond gets channel and service and business model innovation after all.
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posted by Jeffrey Phillips at 6:15 AM 0 comments

Wednesday, April 16, 2014

The state of Innovation, 2014

As a person who lives and breathes innovation constantly, daily in fact, it seems to me the right time to step back and look at the state of innovation broadly.  I'm doing this about a decade after OVO started its innovation focus, trying to assess what's working, and what's merely conversation, in the innovation sphere.


Ten years ago we formed OVO to transition some innovation processes and tools that we'd been using in the R&D and Federal space to start assisting clients in the private sector.  Dean Hering and I started OVO because we were convinced that the future of the US market would be based on better ideas that led to better products and services and business models.  At that time, it seemed the US was outsourcing everything, but we were convinced that the US could continue in a leadership role by doubling down on idea creation and intellectual property development.  While the manufacturing may be shipped overseas, we continue to lead the world on many aspects that contribute to great entrepreneurship and idea creation.

In 2004 many firms were struggling to create new organic growth and to create interesting differentiated products.  That's not so different from today, over 10 years later, because the predominant corporate thinking, decision making and cultures are so focused on efficiency and short term deliverables that it's nearly impossible to find the resources, the bandwidth and the time to simply think about new solutions, and even when you manage to achieve some new thinking, radical new ideas simply don't fit in the old containers of efficiency and 90 day increments.  I'm happy to report that some of this mentality is changing.  Many corporations are realizing that their internal, efficient, "business as usual" cultures are simply roadblocks to creating interesting new products and services.  But so much more needs to be done.

In 2004 we documented an innovation workflow or methodology we called Innovate on Purpose which was meant to describe a consistent workflow for innovation, starting with good opportunity or problem definition and moving through a defined series of activities to arrive at excellent ideas.  We still advocate that thinking today, that innovation is a process that can be taught, a set of intelligent steps to follow, based on powerful tools to drive insight and create ideas.  What many firms in 2004 were looking for wasn't so much a process as an activity - idea generation.  We were faced with talking about what came before idea generation - discovering customer needs, and what came after - actually evaluating, prototyping and developing the ideas that came out of the idea generation.  Today, a decade later, there's still far too much emphasis on idea generation, internal or "open innovation" seeking to find ideas or technologies in the external market, and not enough time given over to defining the right problem or opportunity, and understanding the breadth and depth of customer needs.  In many corporations the dominant methodologies are convergent, and instruct us to rush into solving a problem, rather than exploring the breadth and depth of the opportunity before rushing in. 

In 2004 we understood to some degree how important people were to the innovation equation, and over time we've come to appreciate even more just how important good, passionate people are to generating differentiated and valuable ideas.  You can select any random team in a business and get an incremental answer, but carefully build a team of passionate, empathetic people who are comfortable working in ambiguous settings and they will create ideas that are far better than the average team will.  Innovation is one of the last activities in a business that is truly dependent on the best people, yet time and again most businesses don't seek to build skills or place their best and most creative people on innovation activities.  To this end we are developing and will release in late spring an innovator assessment, which identifies a number of traits and characteristics your best innovators share, to help build the best teams.  But these individuals present only the raw talent for innovation, and need more training and skill development before they can work at peak performance.

In 2004 we defined a process but neglected one critical component, which we've added in the subsequent years.  That component is governance.  And while it may seem unlikely to add "overhead" and rules or governance to an innovation activity, proper governance reasonably applied will accelerate innovation, remove roadblocks and improve the opportunities for new products and services.  You see, gathering ideas from anyone with no sense of how those ideas relate to strategic problems is an exercise in futility.  You may gather a lot of ideas, but they aren't meaningful or valuable to anyone.  Understanding the burning platforms, addressing new market opportunities that matter to executives who have the funding, resources and power to make the ideas a reality matters.  Good governance, from choosing the right opportunities to gaining buy-in for the right funding and resources and having a champion who can remove roadblocks or raise the priority of your projects is paramount. 

So, where do things stand in 2014, looking back on over a decade of innovation consulting and services?  I think we can say a couple of things have improved over time.
  • First, there's far more awareness in executive ranks that the old efficiency model is running on empty and can't create new growth or differentiation.  But that model has proven so effective that many executives can't imagine another way to work.
  • Second, more people throughout the hierarchies of most corporations are far more open to change, risk and new tools and methods.  People are really ready for a new method to drive new growth, many are champing at the bit.  They are looking for signals from top management and permission to commit time and effort to new tools.
  • There are far more capable service providers and consultants to assist these corporations.  I've reluctantly come to the conclusion that consultants and service providers will remain the dominant force in innovation for another decade, not because the tools are difficult to learn and use but because the staffing levels and demands on internal managers and staff are so high.
There are also a couple of significant, consistent barriers that are holdovers from a decade ago.
  • First and most important, corporate culture.  No matter what anyone tells you, corporate culture is the biggest barrier to innovation, if for no other reason than inertia and fear of change.  No one person or one threat will change culture, and it will take time to change, but it must change and become far more comfortable with managing both efficiency and innovation.  In 2011 I wrote Relentless Innovation to focus on the fact that "business as usual" is THE barrier to innovation, and it remains that way today.
  • Clarity around the role that executives play for innovation.  While many existing executives didn't achieve their roles by innovating, they now need innovation to grow their businesses.  Executives need to understand the role they play as sponsors, to start projects, and resource providers and roadblock removers.  They need to build a framework under which innovation can thrive.
  • The markets.  Yes, we are all investors now, and yes we all want to see constant, consistent returns every quarter.  But we also must demand as investors that the firms we invest in show that they can be viable in the long run by creating interesting new products and services.  We as investors must tell the market that we value innovation, and that information must begin to change the incentives for executive management.
  • The cottage industry nature of innovation.  While some of us have attempted to present concepts and models to bring more consistency to innovation, and perhaps provide some common data models and standards, there's been significant resistance from many quarters.  Innovation tools and methods still have too much secrecy and mystery to them, which dampens adoption and slows innovation.  Other industries and functions have managed to thrive with standard, transparent tools and models.  We innovators are still quite far from that, and it retards the growth and adoption of innovation and the creation of more new products and services.  In 2013 I wrote the e-book 20 Mistakes Innovators Make because so many nascent innovators make the same mistakes.  This is due to the lack of consistent information and transparent processes and tools.
Looking back and looking forward

Over the last decade it's been quite a wild ride.  Corporate innovation was the mantra of Christensen and a handful of others in the early 2000s, and Christensen inspired us and others to offer services in this space.  Over the last decade we've seen a real blossoming of services, solutions and software for innovation, but much of this is still in its infancy, because of the issues I raised above.  As competition increases, consumer demands change and our economy adjusts to a "new normal" I expect innovation will become even more important in the future.  Will the demands on executive management make it clear that innovators are valued far more highly than laggards?  Will we begin to see the formation of consistent innovation tools and models that are more transparent?  Will we begin to identify people who have more innovation capacity and skill and promote them to positions of leadership?  Time will tell.  I hope to give you an update a decade from now on all that's gone right.
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posted by Jeffrey Phillips at 6:43 AM 1 comments

Monday, April 14, 2014

Innovation, team sports and vital components for both

In a slightly strange but very insightful Tweet Friday, Bill O'Connor (@Oconnorautodesk) noted that innovation today is often like a chess tournament where "no one has a chess set and no one knows the rules" .  I think he's on to something, but I'd use another sport to describe the opportunity and challenge of corporate innovation.

My preferred sport wouldn't be chess, which is primarily a solo practitioner game where one person faces off against another.  My preferred analogy would be baseball, where a number of important factors come into play. In team sports, the field or arena matters.  Chess can be played anywhere two people can meet, but team sports typically require a field or arena which is demarcated for that sport.  These boundaries are important, because in the real world of innovation companies have "boundaries" - competitive, regulatory, cultural and business model boundaries that to some extent dictate how they can, and where they can "play".  The arena or field creates limits to the types of things a team can do, much in the same way that corporate culture, competition and regulation limit what a firm can do.  On the other hand, the field or arena also augments play, because it was designed for the purpose.  You can't easily play baseball on a football field or a basketball court.  The space and its architecture and boundaries matter, to team sports and to innovation.

Next, a team sport is a good analogy for innovation because you can't launch a new product or service unless a wide range of people with deep skills in a number of different capabilities or functions provide assistance.  Good ideas are developed and commercialized through the support of product developers, legal teams, regulatory teams, finance and marketing.  In baseball, for example, players at different positions have different skills and strengths.  Shortstop and second basemen are good fielders, nimble and able to make acrobatic plays, but aren't often counted on to provide significant offense or batting prowess.  First base is where you park your big hitter, who may be a fielding liability.  Each position requires different skills, and together the team as a whole plays the game, each contributing their offensive and defensive skills.  In the same way a corporation that hopes to succeed at innovation needs a range of people representing a wide variety of important skills and talents.  Chess, as I mentioned, is a solo sport, and therefore perhaps not the best analogy for innovation.  Innovation requires a cross functional team.

And all of those people, whether they are innovators or sportsmen, need to be trained in their roles.  Athletes don't take the field without hours and hours of batting practice and fielding practice, but we often ask innovators to take on large projects with little or no training or prior experience.  Imagine running a professional sports team the way we run innovation projects.  Individual athletes would show up a few minutes before gametime, would lack complementary skills and in some cases even awareness of each other's strengths and weaknesses, and would play unfamiliar positions, uncertain of the strategy or expected outcomes.

Finally, there's got to be some strategy involved, and that's where the chess analogy or any sports analogy really rings true. Chess involves a lot of strategy, and while it may not appear so, baseball does as well.  Will we be a team that plays "small ball", using the hit and run and advancing runners, or will we count on the "long ball"?  The Oakland As introduced the concept of deep statistical research to find inexpensive but productive players, and that was an "innovation" in a sport over 100 years old.  Likewise, strategy matters for innovation.  What is the corporate strategy and key goals and objectives for innovation?  How do those strategies and goals frame what the team does?  Do they understand those strategies and how their work fits in?

So, using these analogies we are left with a number of interesting vignettes:

  1. You could have trained athletes who understand their roles but don't have an appropriate "arena" or strategy to pursue.  This scenario aligns to a company that focuses on "training" its employees on innovation techniques but doesn't have a consistent innovation process, and can't decide how or where to deploy the innovation capabilities.
  2. You could have a beautiful park in which to play, but no players or the wrong distribution of players and skills.  This scenario aligns to corporations that focus on building elaborate innovation centers with bright colors  and playful architecture, but neglect to fill the space with trained people who understand the goals and mission of innovation.
  3. You could have a beautiful park and the right number of players, but the wrong assortment.  This scenario aligns most readily to companies that think all innovation "belongs" in one function or department.  Often the idea is that innovation belongs in "R&D" for example, and the R&D staff receive a lot of investment and focus, and the rest of the company receives none.
  4. You could have the park, the players and the strategy but no audience.  This last scenario represents the fact that you can get everything right - the right people and in the right mix, following the right processes and with the right strategy, but neglect to notice that innovation should be driven by customer needs, not internal assumptions.
It's not until you have the right setting (or park), the right team members with the right skills and the appropriate distribution of the players and skills, and they all have the right training and practice, and they are in tune with the strategy that you'll be able to accomplish valuable innovation on a sustainable basis.   If you have all of these capabilities in hand, you'll then need the humility and patience to understand what customers need, and the willingness to respond.

Of course competitive sports fail as a perfect analogy for innovation because innovators aren't competing against one other team or opponent as they do in a sporting event.  Innovators are competing against a host of direct and indirect competition, and the rules are constantly changing.  Innovators have to be far more flexible and adaptive to market and competitive situations, technology shifts and customer demands, which many athletes don't have to consider.

Ultimately, athletic teams or innovators share some common challenges.  They need cohesion, the right mix of capabilities, attitudes and skills, an arena to perform and clear strategy to direct their efforts.  If any one of these is missing, performing at a peak level is virtually impossible.
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posted by Jeffrey Phillips at 5:48 AM 0 comments

Wednesday, April 09, 2014

Is crowdsourcing the answer for NBC?

When companies that rarely innovate attempt "open innovation"  I often wonder:  is this a sign that they finally understand the number and range of excellent ideas in the broader world, or is this a desperate sign that they've recognized the idea well is dry internally, and are left with nothing but an external search for ideas?

This question presented itself to me today when I read that NBC is crowdsourcing ideas for new TV shows.  Is NBC leading the way to greater democratization of television, breaking down barriers to find new talent and better stories, or have they simply exhausted their regular sources?  It will be an interesting experiment to watch.

While I don't have the data at hand as I write this, I've seen statistics that suggest that ABC looks at over 800 ideas for new shows in a season, and will actually script about 20 and create about 10 pilots.  Of these, typically two or three new series will enter a lineup, and typically one or two of those will fail.  This math isn't a surprise to many of us in the innovation space - it often takes a lot of ideas to uncover some really good ones, and with selection bias and other factors at work even ideas that seem great internally may falter when they encounter the audience.

What NBC is doing is a high wire exercise, and I wonder if they are prepared for the results.  While they are asking for ideas from their audience, I doubt that they've done much to change how they evaluate ideas or the internal culture of the network.  If you read the article you'll see that the judge panel they are using to evaluate ideas and pilots consists of a range of comedic talent that they've featured in other shows, some successful and some that failed.  If NBC really wanted to understand what people want, they'd go further, allowing crowdsourced ideas to be evaluated and ranked by the crowd.  One wonders if they know who their audience is and what they want.

The audience is increasingly separating.  People over 50 are not finding much on TV worth watching on the "big four" especially comedies, because they don't reflect what the audience does.  People under 50 are increasing consuming content on the web that can be spun up quickly, with little cost or risk, or are playing video games or consuming other content.  Few people in the audience are willing to allow a set schedule to force them to watch what's presented, or when it's presented.

ABC's Modern Family is probably the pre-eminent show for a number of reasons, including the fact that a wide range of demographics are represented (old, young, gay, straight, even some people of color) and manages to be both poignant and funny.  The rest of the sitcoms and comedies on TV rehash old plots and present caricatures that aren't funny.  Large studios face increasing competition from anyone with a web cam and the ability to upload content on YouTube, which is where my 15 year old spends as much time as anywhere else consuming content.

So, NBC's experiment should be fascinating.  The questions we should ask:


  • If NBC is presented with some really good comedic talent and content, will they recognize it?
  • If they accept new shows, will they have the courage to leave the ideas and talent alone, or will they force it into the boxes that they understand?
  • If they can successfully bring new shows to market, will anyone be left watching regular broadcast TV anyway?
  • Can NBC innovate not the content of the show but the entire broadcast model, competing more with webcast, YouTube and other online content providers to reach new consumers where they are, rather than compete with ABC in "primetime"?
Innovators, here's your chance.  If we are all as smart and funny as we all think we are, we should be able to create interesting, funny shows that can't be ignored by the studio.  I'm hoping to see some of your ideas at NBC in the near future.
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posted by Jeffrey Phillips at 4:36 AM 0 comments

Monday, April 07, 2014

The innovation worm turns at GM

There's been a lot of coverage in the US about GM and it's latest quality fiasco, the faulty ignition switch.  As is the case in many corporate investigations, the people now taking the heat were probably uninvolved or unaware of the dangers, and the executives who made the decisions are comfortably retired.  Hopefully, through this investigation, the people who were injured will receive some compensation, and GM and other companies will learn how to value human safety over profits.

But in the story I read, what may be a "throw away" line from GM's new CEO Mary Barra was all but missed.  However, that line, "..moved from cost culture after the bankruptcy to a customer culture" may be the most important factor in GM's survival, and something that every large firm needs to understand.  Focus on cost and efficiency has been paramount for 30 years, as trade barriers fell, competition increased and customers had more choices and became better consumers.  Large corporations have focused on driving out costs, eliminating inefficiencies and reducing risk and uncertainty.  Decisions and timelines have shortened.  Many corporate managers simply cannot will themselves to think beyond the next 90 days.  But in one short sentence, Barra has signaled that she gets it - efficiency is vital, but customer intimacy and the engagement and innovation that will emerge from understanding and focusing on customers is what will sustain corporations in the near future.

Sure, GM has some special advantages.  Bankruptcy allowed it to shed underperforming assets and many debts, to emerge as a more healthy and hopefully a more vital company.  But through that process did it shed its culture and thinking models?  That remains to be seen.  Barra's statement, just one in a short news article and probably one of many she had made, could be the signal that the worm will turn.  That finally larger organizations will begin to understand that customers and their needs matter, and that by gathering and understanding those needs, they can build better products and services.

Now, the skeptics among you will note that Barra is using this as a liferaft, claiming to value the customer because customer appreciation to a company in GM's predicament is paramount, in the same way that patriotism is the last refuge of a scoundrel.  Time will tell.  I think - I hope, that is, that Barra and others like her will recognize that the operating models, timeframes and decision making capabilities of their organizations need to change.  That cost conscious companies inevitably make barely acceptable products that no customers love, and that competitors easily copy or replace.  To win customers and retain them, new insights driven by true customer research and deep understanding are vital.  These insights should lead to new ideas, and onward to new products or new features on existing products.  And to me, that sounds a lot like innovation.

Has the worm turned?  Or will Barra identify the importance of a "customer culture" only to return to efficiency and cost controls?  Does Barra think that signaling remorse to customers creates a "customer culture" or will she work to put the customer at the center of GM's focus, in place of the bottom line which has clearly been the central driving factor.  I think Barra and others may find that placing the customer at the center, and using the insights that come from doing that effectively through innovation may enhance, not reduce the bottom line.  Is GM trying to make cheap cars, or cars that meet customer needs but are inexpensive?  There is a difference.
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posted by Jeffrey Phillips at 5:52 AM 0 comments