Tuesday, May 30, 2006

"Get out of your culture" free card

After a week of traveling and talking with a wide range of potential innovators, I’ve decided to give away a very valuable gift to many people who want to innovate. I’m calling it the get out of my culture card. As you'll recall from the game Monopoly, there's a "get out of jail free" card, which allows the owner to skip going to jail. I think many innovators need a "get out of my corporate culture" free card.

While at the Front End conference last week, it was clear that very many innovators are excited about the potential of sustainable innovation, implementing processes, tools and methodologies to improve innovation. However, it also became clear that the biggest impediment to innovation isn’t tools, isn’t process, isn’t people, but it is the corporate culture.

Probably a third of the people I spoke to felt stymied by their culture - to the point where they've given up trying to implement anything and are simply observers of innovation. There are several powerful corporate cultural roadblocks to innovation. They generally fall into one of three categories:

- What’s our motivation? One class of response had to do with why people in the organization would be motivated to use new processes or tools. Well, I can think of a number of ways to motivate people to participate. We ran into this issue many years ago implementing CRM systems. What solved the problem of getting sales leads and opportunities into CRM systems was that a sales person would receive 100% of her commission if the sale was registered in the CRM system when a deal closed, and 50% of herr commission if the opportunity wasn’t registered when the deal closed. In other words, you can change motivation by compensation. We tied the use of the tool and the process directly to compensation, and the use of CRM went up dramatically. Of course that’s not the only way to impact motivation. Having senior management reinforce the need for new systems or processes, creating a sense of urgency around a new initiative can help tremendously. It's fairly simple for senior management to indicate how important innovation is to the business, but what's more important is for that same senior management team to make innovation and the measurements and metrics one of their top priorities. What gets measured gets done.

- How do we turn the battleship? Another class of response has to do with the size and complexity of the organizations in question. Even if we want to implement such a system, it’s too big, too complex for us to manage and effectively implement. To this argument I say – start small. Identify one working group and demonstrate success. Don’t worry about the entire organization – prove out the process on a small scale and people will find you. The larger the group you try to change, the longer the change will take to ripple through. Rather than forcing change on a large and unwieldy group, identify smaller working teams that have a strong desire for change. Demonstrate how easy the change can be, and the results these changes can have. Then, instead of facing resistance, you'll find teams lined up for more. This is the approach the Six Sigma teams have used to great success.

- How do we justify the expense? Another area of concern is justifying the expense of implementing new processes or systems to improve innovation. This one is understandable yet very short-sighted in my opinion. In many businesses a new idea converted into a product can mean significant growth in revenues. Contrast a multi-million dollar revenue stream against a cost of $100,000 or so for new processes and systems. The potential return and ROI for these systems and processes is significant. Yet so much focus today remains on approaches to cut costs that I’m afraid we’ll have to justify innovation initiatives as methods to cut costs, rather than as alternatives to grow revenue and margin.

I'd love to hand many of these folks I meet with a "Get out of my culture" free card. However, I can't do that. That power lies in their hands and in their management teams' hands. Rather than ask for permission, however, it may make sense to make an innovation jail break.
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posted by Jeffrey Phillips at 10:17 AM 41 comments

Thursday, May 25, 2006

Can I see your license?

One of the things I took away from the Front End of Innovation conference is how many ideas there are floating around in the heads of most of the participants. Indeed, I suspect that in many firms that ideas are generated by a wide host of employees. What often happens, however, is that mere possession of an idea is relatively worthless.

What we need to do is give people a license to innovate. I got to thinking about this based on listening to Dr. Treacy (why do we think people are any good at innovating?) and talking with Joyce Wycoff (we ought to train people and provide them with tools to be more innovative). It also reminded me of a talk with my wife. She'd like to see a requirement to have a license to have a child, just like a license to drive or get married. At least that way we could ensure people had some preparation for parenthood.

Well, we don't really prepare people very well for innovation. Unlike say, Six Sigma or accounting or other business practices and functions, there isn't a lot of documented information on innovation as a sustainable business model. Oh, I know there are books by Christensen and Von Hippl and Kelly and others about innovation, but those are broad, sweeping tomes. What does a person do day to day to become more educated about innovation, its approaches and processes? How do we train people to become more innovative?

Seems to me that training should be in at least three dimensions: how does what you do align with corporate strategy, what processes do you follow for sustainable innovation and how do you work within the existing culture to change the culture and become more innovative. Once an individual has been through that kind of training, building small teams to deliver on innovation should be a no brainer.

There are Six Sigma Black Belts and MBAs and PhDs in our organizations with a lot of education and experience to define and lead specific functions. Where the MI (Master of Innovation) or the Black Belt of the Innovation Master?
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posted by Jeffrey Phillips at 5:42 PM 12 comments

Wednesday, May 24, 2006

Front End Day Two May 24 2:30

We've just completed the second day of the Front End of Innovation event. Over lunch we had Michael Treacy speak on innovation discipline. One of the things he said that I found particularly compelling was the idea of the cost of failure.

In the US, the cost of failure tends to be fairly high, psychologically and in monetary terms. It can cost a fair amount of money to shepherd a new idea through an organization and have it fail in the marketplace. However, in China and India, the cost of failure is relatively low. The cost to design and develop an idea in these countries is significantly lower, so we can expect to see much more brute force innovation from these countries.

If the cost of failure is high, then the processes for innovation in more developed countries needs to be much better. Since it's expensive to fail, at least in mid-size and larger organizations, these firms need better innovation process and discipline.

Another point he made I'd like to expand on another time is who is capable of innovation. We don't let marketing create and publish our financials, so why should "anyone" be part of an innovation initiative? Shouldn't we require these people to get educated or trained? I have a number of thoughts about that topic that will be the point of another post.

Finally, like a lot of us, Treacy wonders about the many different definitions of innovation. Do the people within your organization hold the same definition for innovation? He suggested a definition:

Significant improvement along the main parameters of customer value

Some of Treacy's concepts from my perspective were too engineering and "MBA" focused. There needs to be some room for ideation and insight. His presentation really focused on a very rigorous approach using tools that financial analysts could love, but I found it very product centric.

More later
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posted by Jeffrey Phillips at 12:21 PM 4 comments

Front End of Innovation Day Two May 24 9am

Just back from a talk given by Burt Rutan, who was responsible for the first private space flight. Burt gave one of the most interesting talks I've heard, about how to create breakthroughs. Burt suggests that most breakthroughs happen very quickly and almost accidently. Breakthroughs are created by people somewhat outside the mainstream, less influenced and governed by the politics and rules of an organization. Breakthroughs are often developed inexpensively.

Burt used the Wright Brothers as an example. The Wright Brothers spent relatively little money and were not considered aviators since they were bicycle mechanics. Yet from the time of their first flight in 1903 to 1913, hundreds of airplane manufacturers were created and thousands of people had flown an airplane.

Burt went on to note that many scientists and inventors were inspired by some exceptionally interesting invention or occurance in their lives when they were young. Many scientists and inventors in the 30s, 40s and 50s were inspired by airplane flight and the Wright Brothers. Many of the scientists and inventors today were inspired by Apollo and the moon landing.

This poses some interesting questions: what does your organization do to inspire people to create new products and services? In many firms, a new product or service must be carefully planned, designed, signed-off, etc. Yet most breakthroughs never passed through these long and arduous processes. In many cases we are organized to kill the potential for breakthroughs.

Fear is also a great innovator. Burt noted that Sputnik and the early "space race" that the Russians appeared to be winning forced NASA to create new ideas and concepts at an incredible speed. He noted that the first moon shot, Apollo 8, was also the first manned flight on the Saturn Rocket. So, the first time we used a Saturn Rocket for manned flight was also the first time we tried to send a man to the moon. Clearly the desire to be first overrode all the testing and sign-off usually necessary to develop a new technology and make it available for users.

So, how does your firm motivate its innovators? Does it inspire them with examples of what others have done? Or does it point out the challenges from competitors and encourage you to win?
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posted by Jeffrey Phillips at 6:06 AM 5 comments

Tuesday, May 23, 2006

Live from the Front End conference Update 2 May 23 8:30pm

Well, the first full day of the conference is done. I feel like I've advocated for innovation to half the conference at this point. Hopefully the other half will swing by tomorrow.

There's a sense of anticipation in many of the attendees. I get the feeling that many of them are very interested in innovation, yet in many cases something is holding them back. Sometimes it's a lack of authority or feeling that they alone can't implement innovation. Some are in a learning process, discovering what "innovation" is all about. Some are battling a culture that is not open to new concepts and new ideas. I get the sense that some change in the market, or technology, or economy will occur and innovation in many firms will literally gush forth.

I spoke with many different firms in many different industries about innovation and the "front end". Most of them recognize a severe shortcoming in generating ideas and moving them through some defined process to a new product or service development phase. Consistently, firms and individuals will tell me they know "how" to build things, they just aren't certain "what" to build.

There's also a real lack of clarity around innovation - the definitions and meanings. When some firms talk about innovation, what they are really talking about is incremental changes to existing products. Some firms are using innovation to mean developing new products in new industries. Some consultants talk about innovation but really mean creativity and idea generation. Those things are important but aren't innovation. The author of Blue Ocean Strategy talked about Blue Oceans and Red Oceans - in other words, defining new markets that your competitors haven't defined. All of these viewpoints are valid, yet don't provide real clarity to individuals who are trying to introduce new concepts to firms more attuned to cost cutting and right sizing than idea generation and innovation.

Another interesting factor is the number of people and firms from the Scandanavian countries. I get the sense that they've seen the future of "Old Europe" and have decided that the best way to remain vibrant is to hitch their country's wagon to innovation. There are a significant number of Finns, Danes and other Scandanavians in attendance, and my experience has been that the Swedes, Danes and Finns especially are really focused on differentiation around innovation.

I'll provide another update tomorrow.
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posted by Jeffrey Phillips at 5:30 PM 5 comments

Front End of Innovation Update 1 May 23 9:30

This is the first of a series of short posts about the Front End of Innovation conference ongoing right now in Boston. Almost 700 innovators and practioners are here to interact and learn new approaches and processes for innovation.

Our speakers this morning included Rene Mauborgne, one of the authors of Blue Ocean Strategy, who gave a great overview of the findings from her research which lead to the writing of the book, and used examples from Southwest Airlines and Yellow Tail wines to identify firms that had found new "blue oceans". She mentioned at the end of her discussion something that resonated with me, which was that most firms that had created new products or services for a blue ocean had not yet demonstrated that they could innovation repeatedly and sustainably, creating successive Blue Oceans. This resonates because we advocate innovation as a sustainable business process. Even firms that have found "blue oceans" have not yet built the systems and processes and tools to do so sustainably.

The next speaker was Claudia Kotchka from P&G who gave a great overview on the influence and impact of design on innovation. As a consumer packaged goods firm, we don't typically think of P&G as a leader in "design" but it's clear they are considering design more and more as part of the innovation process.

Later today we'll have a chance to hear from Clayton Christensen and then a series of breakouts by the practioners themselves and their experiences. I'll have another update later today.
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posted by Jeffrey Phillips at 6:26 AM 5 comments

Monday, May 22, 2006

Live from the Front End Conference

I'll be blogging on a periodic basis from the Front End of Innovation show May 22-24th, as a participant and an exhibitor here in Boston.

The show has a great lineup of speakers, including the usual suspects - Von Hippl, Christensen, and many others. There are a host of corporate speakers and consultants as well.

I'll try to provide an update once or twice a day during the show and perhaps a synopsis or wrapup afterwards.

Back at you later today.
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posted by Jeffrey Phillips at 7:09 AM 5 comments

Thursday, May 18, 2006

Strategic Planning and Innovation

In recent discussions, we've talked to several large firms about their strategic planning initiatives, looking out over several years. The strategic planning process to me seems at some level almost archaic, as if one could predict the future and lay out a course of action to pursue for several years. Given the rapid change in markets, in technologies and in consumer tastes and demands, any planning beyond 12 months or so seems awfully speculative right now.

I notice that more and more, individuals who have been associated with strategic planning within many firms are shifting their focus from "planning" to trend watching and innovation. I think this is a very logical approach.

Strategic planning springs from thinking from the late 50s through the 80s, where teams define the future and examine things like Porter's "five forces" and value chains and so forth. In an era where there was less cross-border competition and more stability in markets and economies, and less change, strategic planning made sense. Obviously, some things have changed in the environment. Product life cycles are shorter, there are more choices and consumers have become much more demanding. Markets have opened up and we compete with the vendor next door as well as the vendor in China or on the web. In short, attempting to define the business over a 3 or 5 year horizon is probably foolhardy at best.

However, what is very important to do is define strategic milestones or goals and determine how the firm arrives at those goals. For example, an electrical utility may determine it makes sense to offer content over its infrastructure, and needs to do so within 3 years. Now the strategic planning is really about how we can make that happen, which is really about the trends in the market (do people want this stuff? will the technology work?) and about creating ideas, products and services to move the firm to that goal. So, a strategic vision is necessary, but I'd argue that once that vision is in place, what's important is understanding and managing the trends that will enable or foil that vision, and defining the ideas that will become the products or services to realize that vision.

These are probably more "tactical" activities than pure strategic planning, but they give the firm more flexibility to react to changes in the market. Additionally, this approach incorporates more of the firm's personnel and skills, as strategic planning moves from a small, senior group into a set of actions to create new products and services.

I doubt we'll ever see the end of "strategic planning" but what I think we'll see over time is the realization that innovation and trend management is the actionable part of the strategic planning process.
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posted by Jeffrey Phillips at 10:29 AM 8 comments

Tuesday, May 16, 2006

Right concepts, wrong goals

Thanks to the Corante Innovation Hub, I have found more innovation information and sources, and a new set of colleagues. One of those colleagues, Brent Edwards, wrote yesterday about a new innovation survey from IBM Global Services. Thanks, Brent, for pointing out the survey.

As a person who is very interested in innovation and active from a consulting and writing point of view, I am always interested to see new surveys about innovation, since a survey can take the pulse of a large number of executives in many industries and, combined with other surveys and information can indicate trends in a topic or market. In this case, the survey of over 700 senior executives worldwide reinforces some existing knowledge and highlights some of the same trends as we've seen recently in innovation.

Some of the concepts the survey reinforces are:

- The importance of senior executive involvement and sponsorship of innovation
- How collaboration is becoming more and more important as an enabler of innovation
- How important employees are in idea generation (consistently the number 1 source of ideas)

IBM chose to break innovation up into three "types" - product/service innovation, operational innovation and business model innovation. While I am not certain they meant to, it seems that IBM favors the business model innovation approach and places a lot of emphasis on changing business models. Operational innovation is seen as an approach only relevant for those firms that haven't already improved their systems and processes through Six Sigma or other approaches. Product/Service innovation is considered a key component of innovation, but not the area for emphasis that business model innovation can be. These three types of innovation help stratify the different areas of focus, and of course most firms will eventually pursue two or even all three of them, sometimes simultaneously.

What surprised me about the survey, however, is what the senior executives expect the results of innovation will provide in terms of benefits to the company. I generally think that innovation will help a firm capture a larger share of its market, driving higher margins and profits. This viewpoint would suggest that innovators are market leaders and gain significant marketing benefits as well, which should lead to greater market power and the ability to pick and choose collaboration partners. I guess I'm thinking Intel as a model here.

However, almost uniformly the CEOs indicated that cost reduction was the number one benefit they expected to receive from innovation. The firms that the CEOs represented were divided into product/service innovators, business model innovators and operational innovators. As you'd expect, the operational innovators ranked the top five benefits as:

- Reduced cost
- Higher customer satisfaction
- Speed and flexibility
- Access to markets
- Increased revenue

What was striking about the responses from product/service innovators and from business model innovators was that the lists looked very similar. Cost reduction was also the first benefit selected by business model innovators, while high customer satisfaction was selected first by product/service innovators.

Increased revenue was third on product/service innovation, fifth on operational innovation and sixth on business model innovation, and it does not appear that any questions were asked about improved margins or increased market share.

OK, so what's the point? Over 700 senior executives across the world were asked about their innovation focus and priorities. Many of them recognize how important innovation is, yet consistently report that they need to lead but have "difficulty in getting employees to act". The CEOs need to play an important role in establishing an innovation culture but "are not always certain how to go about it". The results of the survey (page 30) show that the two biggest obstacles to innovation remain 1) unsupportive culture and climate and 2) limited funding, both of which are under the control of the senior executive team.

The survey ranks the best source of innovative ideas:

- Employees (#1)
- Business partners (#2)
- Customers (#3)
- Consultants (#4)
- Competitors (#5)

Where's internal R&D? 8th, or next to last in the list.

So, what is also reinforced in the survey is that CEOs recognize the importance of innovation, but are not changing the corporate culture and opportunities for innovation. Sponsoring ideas from employees is clearly important, as is improved collaboration with business partners and customers, yet the majority of funding for new technologies and ideas is directed to the organization the CEOs seem to rank very low in idea output. Little investment is being directed toward the disciplines and capabilities necessary for collaboration and partnering.

Additionally, CEOs are still biased towards cost savings and operational efficiency as outcomes, rather than improving margins or increasing revenue. I recognize that this is what the financial markets value, but innovation should be more than simply the next opportunity for cost reduction and right sizing. Innovation should produce benefits that are measured in terms of increased revenue, increased market share and increased profits. Until CEOs think in those terms, innovation will not receive the cultural change or investment that it needs. Until CEOs think in those terms, collaboration and partnering will not have the focus or discipline it needs to produce real change.
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posted by Jeffrey Phillips at 4:49 AM 9 comments

Thursday, May 11, 2006

Turning interest into action

Over the last eight months or so there's been a tremendous bow wave of interest generated around innovation. I know I've talked with more people about innovation, ideation and idea management over that span than probably over my entire working life. There is clearly a significant amount of excitement and interest around innovation.

Attending conferences and talking with customers and prospects, I see individuals with titles like "Innovation Process Manager" and "Director of Innovation" in a number of firms. I know in several firms we are working with, managers have specific metrics and are being measured and compensated for their innovation results. This indicates that there is some real movement behind the excitement around innovation.

However, I think there's still a disconnect between the talk and discussion around innovation and the engagement in the day to day realities within many firms. I suspect that many people agree that innovation is important, but are uncertain how to get started and how to determine and quantify the benefits.

There are several reasons for this:

1. Uncertainty around how to get started
2. Too much change and risk involved
3. People think innovation is a passing fad

To address the first one, use the Chinese proverb "The journey of a thousand miles begins with a single step". Start right where you are by capturing and developing a set of ideas, even if they are just your own ideas. Grow the innovation team by incorporating your work team or people within your business process. Don't wait for the blessings to get started to come down from on high. Build a process and demonstrate its value. People within the organization will find you.

From a change and risk perspective, much of this is perceived and not actual risk. Many firms are trying to accomplish innovation tasks and idea generation. It's just that they do it poorly and haphazardly. The risk isn't in improving the process and managing it more effectively, it's that you'll continue with your existing non-process. Sure, over time you want to find ways to get more buy-in and possibly compensation for what you do, but don't let that stop you.

If you are not moving forward with innovation because you think it's a passing fad, then you are sadly mistaken. Our economy is shifting, and two predominant themes are emerging. One is that the US is rapidly becoming a services based economy, and the other is that only truly value added actions and people will be rewarded. This means you need to be adding value through cutting costs, delivering better services or bringing new ideas to market as new products and services.

What's holding up your organization from becoming more innovative? Cultural issues? Fear of failure? Uncertain where to start? Here's a tip: start doing something, especially around defining a process for sustainable innovation. Start small and demonstrate some success, and the other stuff will work itself out. Don't stand on the sidelines waiting for the fad to pass, or for someone to give you the OK to proceed. This is one train you don't want to miss.
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posted by Jeffrey Phillips at 12:59 PM 4 comments

Tuesday, May 09, 2006

Trends Identification and Management

After working in the area of innovation and idea management for a while, one consistent theme I hear from the individuals and teams I work with is that they lack the skills and tools to consistently evaluate the trends in their environment and make sense of those trends.

These trends could be social, economic, demographic, technical or other trends, or combinations of these types of trends. Trends can indicate where a market or technology is heading, and anticipating trends and getting ahead of them can be very beneficial for innovation and product development.

To that end, my firm (OVO) is building a trend management application and is seeking teams that would be willing to try out a web-based trend capture and management software application. Rather than explain exactly how the pilot would work and how the software works here, if you'll contact (me), I'll send you a short synopsis and let you decide if the pilot is right for you.

We seek firms that are interested in improving the capture, management and evaluation of trends in their market. The primary users are probably product managers, directors of product development or strategy, and senior managers interested in understanding what trends will effect their industry. The application we've built is a simple, but powerful concept to help capture trends, data, ideas and other information and synthesize it to make sense of the information.

There's no cost to you to work with the pilot application, but we do ask that you provide us with your feedback as you work with the application. Does an application like this meet your needs? What can we do to make it even more powerful? Is it easy to use, with a very short learning curve? Recognize that as a pilot application, it will be incomplete and rough around the edges.

This is your chance to influence a great new software application and try out some software concepts before they are finalized. Feel free to contact
if you have questions or would just like more information about the pilot.
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posted by Jeffrey Phillips at 6:07 AM 10 comments

Monday, May 08, 2006

New Enough

Like Goldilocks, I think we need to find the right combination of newness and sameness in our innovations to make them attractive to our potential customers. Some innovations are too new - that is, so new to the world that they are off-putting. Some innovations are too "old" - that is, too similar to products or services that already exist. The key to me for successful innovation involves delivering products and services that are "new enough".

Often I think we divide innovations into two "camps". The first camp is "safe" innovation, which is incremental (think adding pine fresh scent to your favorite laundry soap). This innovation is just a "turn of the screw" and not a risky innovation, which will act more as a product extension. The second camp is "radical" innovation, which introduces an entirely new product to the market.

This is a somewhat simplistic analogy, but it provides the strawman necessary to discuss what I think should be the goal in most innovation - avoid the truly radical innovations unless your time horizons are very long, and focus on the innovations that move beyond merely incremental.

Take for example the Segue. Dean Kamen, who invented the Segway, is a certifiable genius. I can remember the hubbub surrounding the release of the Segway. It is clearly an incredible new product and may over time change the way some people travel. However, this potentially radical innovation overlooked one item - infrastructure that is already in place. The Segway can't go on the highways, and most cities and towns quickly banned it from the sidewalks. So the average person can't use a Segway to commute. Usually you'll see them being used by airport security or by people at amusement parks who have to traverse long distances. The Segway was simply too "new" and violated too many existing infrastructures. The totally electric car failed in a similar way. In 1993, California passed a law stating that by 2001 at least 3% of all vehicles sold in California must be zero emission vehicles. The problem was that no one was willing to build the charging stations. While the concept and the idea were great, the changes required to the infrastructure were too large for people to take the risk.

Truly radical innovations often take a long time to filter into the mainstream, while simple incremental innovations often are just product lifecycle extenders. It seems the truly valuable innovations belong somewhere in the middle of the spectrum.

My favorite example of a "mid-point" innovation is the Swiffer. The Swiffer has the convenience of a broom, in that you can store it anywhere, with the cleaning power of a mop, with little of the muss and fuss. The Swiffer replaced two products - a broom and a mop, with less headache and less overhead for the purchaser. No stooping to rinse out a mop head, no storing a wet, filthy mop. All that with greater cleaning power than a broom. The Swiffer takes a solution that people were familiar with, and made it significantly better, but not radically better. The radical solution would be to have a wet vac that sprayed water and then absorbed it, and flushed itself into the waste water drains.

The Swiffer also presents a classic Geoffrey Moore solution in that it is a "whole" product solution. Mops definitely clean the floor, but there's a lot of rinsing and wringing involved, and an issue of storage. The Swiffer provides the same cleaning benefits, with better storage and usage benefits. It is a classic Geoffrey Moore solution as well in that it targets the early majority set of purchasers. A Mom or Dad who buys the Swiffer isn't investing in new technology and can quickly use the Swiffer. There's no risk of early adoption.

So, for a successful "mid-point" innovation to succeed, I'm stipulating it must achieve at least these three criteria:

- Be "new enough" to be different without being "radical"
- Be a "whole product" solution - that is, provide a complete solution where the existing offering is only a partial solution
- Target the early majority. Rather than require the purchaser to take risks, bring the product to market in a way that reduces risks to acquire and use

The "mid-point" innovation provides enough new capabilities with a low enough risk threshold to attract a broad market and great returns, while avoiding the risks and timeframes associated with the truly "radical" innovations, and provides more reveue and profit than a traditional product extension product or service innovation. In this case, I'm going to argue that the best place to be is right in the middle.
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posted by Jeffrey Phillips at 4:49 AM 16 comments

Wednesday, May 03, 2006

Creativity versus innovation

I hear these topics talked about in a way that somehow equates them. I think they are both important, but I strongly believe that creativity is a subset of innovation, and firms that focus only on creativity will suffer over the long run.

In our thinking model of innovation, the first few steps have to do with creating new ideas. Creativity is a significant part of those steps. Without a good creative culture, most ideas get shot down or never even generated. Too many firms actively discourage creativity, thinking that it hampers "real" work. Those firms settle for incremental innovation if any innovation at all.

However, no matter how creative a firm may be, if the ideas are generated but never evaluated or converted to new products or services, they are merely interesting artifacts. Value is generated by taking a creative new idea and moving it through a series of gates or stages to produce a new product or service or business model and launch that new "thing" into the market. How many people have said they "invented" the latest new gadget or fad, only they never found the time to actually develop the product. They had the idea, but never took the idea to fruition. That's the difference between creativity and innovation.

Creativity is important - don't get me wrong, but innovation, as defined as bringing new ideas to market in the form of new product and services - is what generates the ultimate value. Innovation could be thought of as harnessing the creative energy and moving those great new ideas through a defined set of processes to an ultimately valuable conclusion.

So, when you are considering the training and capabilities necessary to help your firm generate new products and services, consider both the creativity capability and the innovation process. Just don't think they are the same thing.
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posted by Jeffrey Phillips at 2:35 PM 33 comments

Monday, May 01, 2006

Idea Data Model

Ideas, like most things, have a definite life cycle. They are created, they grow, they morph into something new (a product or service or business model) which then has a product lifecycle. Eventually those products or services die. Birth, growth, life, extension, death.

What's interesting about an idea is the metamorphosis it goes through during these transitions - and the abrupt and suddenly very different requirements at each step in the process. Look at each phase in turn:

Birth:

An idea is born when someone recognizes an opportunity, or shouts out an idea in a brainstorming session, or tastes a compound meant for kidney disease and recognizes the potential as a sweetner. An idea is often nothing more than a statement - "let's attack the XYZ market with our latest nanotechnology capabilities". If you've ever been in a brainstorming exercise you know that an idea starts out as nothing more than a short statement. That statement may have tremendous meaning in context, but very little of that meaning is captured or fleshed out.

Growth:

An idea grows dramatically as a person or team begins to work on it. Suddenly the idea needs greater "Depth". The idea must be scoped, defined, bounded, measured, costed, incubated and evaluated. As more and more people become involved, the idea grows and changes. The idea starts out an "inch wide and an inch deep" and ends up much more robust. It has definition, context, supporting materials, costed analysis and so forth. The "data model" for a particular idea at the end of the growth phase is much richer and much more complete than when it entered this phase.

NPD:

However, when an idea moves from an "idea" stage to new product or new service development, an abrupt change happens. Now the idea needs to be placed into context of the manufacturing or service delivery mechanisms. It needs a bill of material, a recipe, a shop order. It needs to move from the realm of possibilities to the realm of actuality. The idea moves quickly from ephemeral to structured. The data requirements are significantly different and drastically larger. The idea must become more exact, rigid, fixed in time and space. The data model becomes more about measurements - heights, weights, widths, costs, and so forth. So in this phase the data model changes dramatically from what was passed along as an evaluated idea.

Product and Extension:

Once the product or service is released, it is prepared for sales and marketing. It is priced, packaged, shipped to channels or customers and made available for purchase. Another iteration or layer of the data model is added, and another layer added as new product extensions are released.

Think about the dramatic change in the scope and data model of just one idea. Initially, an idea may have been to carry music around in a portable format. Now think about the definition of an MP3 player or iPod and the specifications that must exist to build, sell and ship that product. The changes inherent in moving the concept from early idea to final product are tremendous, yet few firms manage this process from idea to final product, much less considering the dramatic and sudden changes in product definition, scope and detail around an idea.

What's the data model of an idea? How do you define the data required to capture an idea, and the data required to convert an idea to a new product? What systems capture and manage this data for you?
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posted by Jeffrey Phillips at 3:07 PM 9 comments

Is this really the best we can do?

I spoke with a friend who is working in a large, well-known telecommunications firm. The firm has had some significant financial difficulties but is working its way back. Of course, given the focus on improving financial metrics, they, like many other firms I am working with are looking at Six Sigma as a way to improve business processes and financial operations.

That's great, but it wasn't poor financial processes that got them into financial trouble. What happens when financial people run a product business is that everything becomes about the financial metrics, which means risk goes out the window and everything becomes about squeezing the last dollar out of existing products and services. This is the second iteration at improving processes and right sizing the organization, at a time of immense change in the telecommunications industry.

So, with all the focus on process improvement and the recognition for the need for new products and services, what's being done about new product development, innovation and idea management? Right now, the leading edge practice is to "get in a room and toss ideas out and see what sticks". At least there is some collaboration and brainstorming going on, but little work being done on trends and what's happening in the market, or implementing a process to capture and manage ideas to the new product development process. Many firms, like this one, have a reasonably developed new product development process. They lack tools, processes and methodologies for getting an idea from first generation to the point where the idea is ready to be worked by the NPD process.

What strikes me is that this firm is going to spend probably hundreds of thousands of dollars to improve existing processes to squeeze out small gains, and ignore what should be the most important process of all in a very competitive market - how to bring new products and services to market more quickly, that meet what customers need. Is an ad hoc process really the best these guys can do? Why does innovation take a back seat to other processes?
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posted by Jeffrey Phillips at 2:57 PM 4 comments