Corporate Convergence

I think this could be one of those times when the planets all align to create the infrastructure for new growth and innovation. Often when we look back on some major shift in the way we work or live, we can identify the convergence of trends or information or people that led to new opportunities. Many factors are converging to pave the way for a new focus and uptick in innovation.

Why do I say that? Well, there are several factors to consider:

1. Many firms have spent the last five to ten years getting their execution processes just right. They've been through Six Sigma and Lean Manufacturing. They've improved reporting processes because of Sarbanes-Oxley requirements. What's happened is that there's been a real focus on improving the executional processes in many businesses, so they can now perform at a higher level.

2. They've outsourced many of the functions that they don't do well or can't do cost effectively. This means that they've optimized their processes and have begun to focus on the things they believe they can do well, and shifted the processes or functions that they could not do as well to other shores or other businesses.

3. Globalization has increased the competitive pressure. In the last 10 years or so, the increase in global competition, with the rise of China and India and the freeing up of the Eastern Europeans has created more consumers and more producers. I remember less than 10 years ago people were worried about our US jobs going "south" to Mexico. How many times do you hear that fear today? As competition increases, our firms have to focus on what they do well to continue to differentiate

These factors and the recognition that our economy is a knowledge based economy, lead me to believe that many of the key requirements for success in innovation are out there. We have the ability to innovate, the national will and history as an entrepreneurial society of risk takers, and we have many businesses that have optimized their processes, which should mean they can bring new ideas and products to market more quickly. The growth in competition from overseas will increasingly lead our firms to focus on new product development as a differentiator.

Factors like Six Sigma, lean, outsourcing, right sizing and global competitive pressure may set the stage and converge to focus our attention even more closely on innovation, and lay the groundwork for even better outcomes.

The idea box

This post probably isn't about a magical box that we can open and find all sorts of good ideas, although that would be a great box to have. No, this post is about the box many of us insist on putting our new ideas into, and the problems that can cause.

Raise your hand if you've been in a brainstorming or idea generation session and someone puts an idea on the table, and someone else immediately "boxes" the idea. That is, the second person attempts to shape, narrow or constrict the idea, by immediately pointing out a limitation, a possible objection or some possible constraint. This type of thinking is helpful when EVALUATING ideas, but not when generating ideas.

Don't worry, we all carry around our idea boxes with us. We use these boxes, also called our experiences, our biases and our perceptions, to shape not just ideas but everything we come in contact with. Usually these perceptions and experiences help us make good, quick decisions, but in idea generation they can very quickly kill an idea before it's had a chance to get out of its shell.

What I propose, instead, is the idea stretcher. It would be great if the first few comments and suggestions about an idea were not about limiting factors, constraints or things we've tried before, but ideas and methods and opportunities to expand the idea, to provide even more opportunity about the idea. What we should try to do with ideas when they are first conceived is not narrow them, but expand them. Let them grow and breathe for a while before attacking and boxing them in.

I get the sense that too many ideas are killed far too quickly. Killing an idea is easy, but hardly something to get recognized for. Expanding and nurturing an idea can be tough, but I think it is well worth the effort. Next time your team is brainstorming, put away the idea box and let the ideas expand to their natural limits before trying to find ways to shape them or constrain them.

A Question Culture

Some ideas are so good that they can apply to many things. In this case, I am double dipping on an idea I got from Peggy Van Pelt who is the head of Disney’s Imagineering group. I had the opportunity to hear and meet Peggy at the American Creativity Conference in Austin last week.

One of the things that she said struck me as really insightful. It’s really a question of culture, and that is – do you have a Question Culture or an Answer Culture. She did not use these words – they are mine, but she did talk quite a lot about being willing to ask questions as one of the reasons that Disney does such a great job creating new ideas.

That got me thinking. In most businesses, you rarely want to ask a question, especially if you don’t know the answer. Most lawyers know you should never ask a question you don’t know the answer to. Asking questions can make it appear you are unaware of the issues, don’t have the knowledge or are just out of the loop. In most businesses, none of these conditions is good for your career.

But what happens if you don’t ask questions is that stuff gets taken for granted, or we accept the first proposal placed on the table. Without questions, no one probes the idea, turns it upside down and examines the margins.

Most businesses I am aware of don’t have a Question Culture – they have an Answer Culture. That’s because we are taught very early on that we should have the answer to the problems right at hand. Getting to an answer quickly is often rewarded in business, and having a plausible answer makes it appear we are “in the know”. The problem with the Answer Culture is that ideas get the “one and done” treatment. An idea gets proposed and someone already has the answer – We’ve done that before or It won’t work here or some other answer. Rather than ask questions and expand the discussion, we seek to quickly provide an answer and move on.

This is a vestige of the industrial economy, when management would receive a question from the hierarchy below and answer it. A quick, concise answer meant the shop worked well, on time and efficiently. However, the needs have changed. It’s not necessarily important to put ideas to bed as quickly as shop floor issues or transactional issues. Often we should ask questions about a challenge or a problem before putting forth an answer.

What’s the culture within your firm? If you reward an Answer Culture mentality, you’ll get a lot done very quickly, but miss the subtle opportunities that require more development. Try injecting a little more Question Culture thinking, especially when considering new ideas, products or services, to give new concepts room to grow.

Idea Advocate

At the American Creativity Conference today (March 22) in Austin, I found myself in a presentation talking about the challenges of innovation, especially innovation within a corporate environment. We had a discussion about the reasons why we can't innovate, and I realized that there's a simple, seemingly reasonable answer for every type of innovation.

For example, let's say our idea is about incremental innovation on an existing product. Sometimes these ideas will get killed because someone is worried about cannibalizing the existing product or product line. Or let's say our idea is about attacking another firm's bread and butter product. These ideas will get killed because we don't think we have the capability or technology. Or possibly the ideas will be about an interesting, radical new approach or process. That's when the Not Invented Here syndrome sets in.

So, for every reasonable category of ideas, it is easy, almost too easy, to create very rational reasons why we should not pursue the ideas. In fact, one could argue that the conventional wisdom should suggest that every idea should be eliminated very early in the crib. The only problem is a firm with no new initiatives, no new ideas will simply stagnate and die.

So, there's got to be a force or group that works to find the good in ideas. Instead of immediately eliminating ideas that might cannibalize a product, we might want to evaluate whether or not our competitors will attempt to attack that market, and by cannibalizing our products we can sustain or grow market share. It could be that the time is right for radical innovation, and if we don't do it, someone else will.

Most people prefer the devil's advocate position, so ideas face an uphill climb from the get-go. Who within your firm is responsible to argue for the defendent? Who's the advocate for the idea that starts life on death row?

Who is responsible for innovation?

In most firms, there's a clear leader for any important business function or process. The CFO is responsible for finances. The VP of Sales is responsible for the sales pipeline and managing the sales team. What remains unclear to me is - who is responsible for innovation in your firm?

Now, most people will quickly point to the head of R&D if the organization has one. That's probably not a bad first choice, except that it argues that all ideas will come from only one group or business function within your organization. Do you really want to stake everything on just one organization? What if your business partners or customers have suggestions or ideas? Will they naturally funnel to the R&D team?

Or, to look at it another way, suppose there's a great idea to improve a business process. That idea, surely, doesn't belong to the R&D team. No, it should belong to the person responsible for the function or business process that needs to be changed. So here's a good idea without a clear owner - or maybe ownership is passed around as the focus of the improvement changes.

Suppose the CEO decides to innovate a service delivery or the business model of the firm. Who owns that change? Who is responsible for ensuring that your organization is considering ideas to improve your products, your services, your business model and other ideas? Certainly all of these ideas are not relevant to the head of R&D.

This is another example of the dysfunction around innovation. Since ideas can come from anywhere, and can reflect anything, it's hard to categorize and assign responsibilities for good ideas. So in any business, there are good ideas for new products being evaluated by R&D and marketing and product management, and good ideas to improve processes being evaluated by the heads of several functional groups. How do you determine which ideas have the most merit and which to fund? Who is responsible for the succcess or failure of these ideas?

Short answer - a lot of different people, who have a lot of other things on their plate. Long answer - really, no one. Perhaps its time to identify the Chief Innovation Officer in your business. This person should be responsible for implementing the tools, processes and culture to help each function record and evaluate ideas and move the best ones forward. He or she could apply funds or resources to nurture great ideas and to provide some assistance to teams within the organization. He or she should report an innovation pipeline, consisting of ideas that relate to products, and processes, and services, to the senior management team.

Innovation should be pervasive across your organization, so yes, we probably are adding another layer of management. However, as the speed of innovation increases, only by surfacing the idea and gaining management buy-in and resources will you be able to consistently innovate.

Think outside the box

In the world of management lingo Bingo, this phrase should count as three or four squares on your bingo card. Many individuals I've talked to point to management consultants as the originators of this phrase, but it has easily become one of the most overused commands in management circles.

That's too bad, because like many hackneyed ideas or philosophies, there's some value in there, but the phrase has been so misused and abused that it's only used tongue in cheek today.

Let's break down the phrase "Think outside the box" and see how it could apply to becoming more innovative in your organization.

First, Think. At one time the word Think was an IBM mantra. Thinking has always seemed vaguely suspicious to people in management. Most of us are paid as white collar workers because of knowledge that we have, but we are expected to apply that knowledge. Mere thinking seems unproductive. Can you measure thinking in increased units per hour? Since there is a management bias against thinking, we should probably consider how important thinking is. Where do great ideas come from? Do they come from people constantly running around putting out fires, or from people who commit the time to think about the future, the new products, new services? I think, therefore I innovate. How much time do your teams get to think - think about problems, challenges and opportunities. Most teams I work with are so constantly busy that spending time sitting still thinking seems slightly dangerous.

Next, Outside. Most of us spend so much time within our business function, our department and our office that we rarely get a different perspective. Want to know why management consultants are paid the big bucks? Not because of words like transformational but because they can parachute into any situation and provide a different perspective. They don't bring the day to day expectations and biases of your organization with them. So they can bring an "outside" perspective. Can't your team get an "outside" perspective? Can you shed the skin of the organization for just a little while and look at your processes and your products in a different way?

Next, the Box. To me, the box is the metaphor for all the cultural and managerial overhead about your business. Incremental innovations often happen as the next "turn of the screw" so to speak, and can happen within that box. Disruptive innovations often destroy the box at the same time, so most people can't see or won't see the disruptive innovation. To be truly innovative, you've got to find ways to change the culture or at least make people feel they can rethink not only the products and the processes, but the culture as well.

Go do something transformational with your operatational processes and create a new paradigm. Or just Think. Outside. The Box.

Working from the instruction manual

This is great! There's an actual discussion online about innovation and what's necessary to support and nurture innovation in a firm. Well, it's a discussion between two people at least.

Greg Eisnach at Grassroots innovation posted a short response to my "Making it up as we go along" post. My post indicated my firm belief that innovation is the only business function which lacks a defined methodology and process. Purchasing and Inventory control folks have APICS. Financial teams have GAAP. Quality teams have Six Sigma. CRM and Sales have several sales methodologies. What's innovation got? I will still argue that innovation teams have very little defined methodology or process to help move an idea from its conception to its release as a product or service or business model.

But Greg rightly points out that I don't become Charlie Trotter by buying his cook book. I can become a better chef by using a cookbook from the best chefs in the world, but that by itself does not make my food taste significantly better. I also need:

- the best ingredients
- the right tools
- the desire and time to cook the food correctly

Greg points out that Six Sigma demonstrates a process for quality, but engineers and people on the shop floor of most manufacturers knew they could build products with higher quality, they just didn't believe it was what management wanted. To a great extent, I concur. The documentation of the process alone is not nearly enough. We've got to have the right ingredients, the right tools and the right motivations.

Let's look at innovation in that light. Do senior management teams express interest in innovation? Unfailingly, yes. Several studies by management consulting firms all agree that over 66% of CEOs interviewed identify innovation as a top priority. So, at least at the senior management level, we've got the focus and the interest.

Do we have the right ingredients? Most people I talk to within firms that are trying to become more innovative say they have too many ideas. I think that's true, but I also think they have a lot of poor ideas and few really good ones. There's definitely a problem when "no idea is a bad idea". What most firms need is not more ideas but better ones. Better ideas come from clear guidance about what's important and where the firm is heading - so encouragement and direction from senior management, coupled with creative minds and talents.

OK, if the management team is willing and we have some of the ingredients, do we have the tools and processes necessary to move beyond merely generating ideas? Can we actually implement these ideas and create new products or services in a sustainable fashion? The truth of the matter is, no. Most firms create new products and services through sheer force of will and heroic actions by individuals rather than through any well defined, well implemented process or tools.

To use the quality analogy - I agree that people on the shop floor knew some of the problems with the quality of the products they were making, but anecdotal evidence and suspicion never satisfies a manager. Six Sigma gave those folks the ability to set goals and measure results and prove out theories. To badly mangle a line from A Few Good Men "It doesn't matter what I believe. It only matters what I can prove." In the end, the folks on the line make actuators or washing machines. They make them with a 10% rejection rate or a 1% rejection rate, but they are still making the same things.

When we ask teams to become more innovative, we ask them to step into a function has has a much higher failure level than anything they've done before. Innovation is a new process and not well defined or documented, so anything we can provide to give insights and processes is going to be helpful.

No, a defined process by itself is not the only answer for innovation teams. It just seems that many of the other factors are present, while there remains very little defined process for innovation.

Making it up as we go along

There's been a fair amount of emphasis on innovation in the last few years in the analyst community and in the press. Dozens of studies and research papers have noted how important innovation is to CEOs and senior executives around the world. Yet while these senior managers identify innovation as a key driver for success, the facts on the ground suggest that the word is trickling down but there's no great momentum yet for innovation in the mid-management levels and in the trenches.

I think there are several explanations for that.

First, unlike virtually every other business function, innovation has no accepted dogma or methodology. If I visit my local bookstore, I can find several sales methodologies that have withstood the test of time. If I visit the purchasing and inventory teams within most businesses, many of them have been through APICS or other certification. We don't even have to define the GAAP and other requirements and methods that the finance team lives under, or the JIT/MRP processes of manufacturing or Six Sigma processes for quality. All of these business functions have well-defined and well-received business methodologies and documentation.

Innovation, on the other hand, really doesn't have a defined, codified methodology or set of business processes and practices that are published. In fact, most firms I've spoken with basically make up their process as they work on new innovations, and rarely use the same process twice in a row. This means innovation is more haphazard and subject to failure than other business processes. If you take for granted that innovation is likely to have more failures (and hopefully more big wins) than other business processes, then let's at least put some defining processes and metrics to manage the swings in the outcomes.

There's an old saying from my days as a consultant - No one ever got fired for hiring IBM. I guess now that's not quite true, but the meaning behind it was that a project could fail without significant punishment if IBM could not make it happen, but if a project failed and you picked a smaller, no-name consulting firm to work with, you were in trouble. In a situation where there's a lot of risk involved, people want some definitive guidelines. What are the established paths? What experts should we turn to? Who has been down this road before and where are their maps?

This aggregate learning should be converted into methodologies for innovation, and business processes to implement to support innovation. This would follow the normal process that we've seen before. Before Motorola and GE, there was no "Six Sigma" methodology. Someone had to invent it, define it and codify it so others could adopt and follow it. Likewise, right now there is no Holy Grail of innovation methodology. In a year or two we'll look back at some defined process and wonder why it did not exist back then.

So, it's up to us. Let's get together and define an innovation methodology and business process that we can share. This would mean that a number of consulting firms, software firms and innovation thought leaders would pool their ideas and we can define one "standard" innovation methodology and write the "Six Sigma" or Miller-Heiman for innovation. Once a methodology is codified, it will be much easier for firms to actually implement innovation initiatives.

Idea Logistics

When I heard this phrase, I knew I had to write about it. I was speaking with a gentleman who is heading up innovation initiatives in his organization, and his concern was that ideas not simply get "collected" but have some "flow" associated with them. He wanted idea logistics.

That is probably one of the best, most prescient comments about innovation I've heard in a while. Far too often we get caught up in the "Creative" piece of the process - generating ideas, but then the logistics or executional portion fails to create excitement or process flow around the idea.

Often I think we view "logistics" as a relatively mundane, back office capability, but in our global economy logistics is the chain that keeps our economics engine humming. In the product world, toys, computers and cars can be made anywhere in the world, but aren't worth much until they arrive at a place where the customer can acquire and use them. Our trade with China and the Far east is completely dependent on a strong logistics capability. If the Chinese vendors made a toy for Christmas 2006 but the logistics supply chain failed, we'd have no new toys for Christmas.

In the same manner, we should think of logistics for ideas. Creating an idea is important - but what happens next? How do you keep the idea current, keep it in process and tie it to an important goal or milestone? What logistics capabilities exist for your ideas?

It should be no surprise that most strong logistics firms (think Fedex for a moment) have very strong processes and computer systems to coordinate the flow of goods and services. Ideas, like products, need to move, need to be presented to the right customers to have real value. Fedex could not support its operations with a spreadsheet and an adhoc process. Don't your valuable ideas deserve a logistical process and system to add value and reduce the cycle times?