Monday, June 26, 2006

Mind the Gap

There something interesting about visiting another country, especially one where the language is nominally the same as ours. Well, the English will claim they invented it, but I'm sure we've augmented and improved it.

Mind the gap is a great English expression, which is really a warning to watch your step as you move from the platform into the cars of the Underground. There is a gap between the platform and the car, and I guess if you miss it you'll plummet several feet to the rails below. There's another gap that worth minding in an innovation setting - the gap between generating ideas and evaluating them and creating prototypes.

Let's face it - generating ideas is fun. How often are you told to think creatively and open your mind to new possibilities at work? Isn't that what brainstorming is supposed to be about - at least at some level? Brainstorming is about reaching a little out of your comfort zone to think beyond the near horizon and generate ideas for the next product or process. It's a little free-form, wheeling and dealing with little judgement until its time to actually evaluate the ideas. However, how many times have you participated in a brainstorming session with the sinking feeling that you are in Groundhog Day, the movie? You know these same ideas have been generated before, and you know that, even worse, it's likely none of the ideas will be acted on.

That's because there's a yawning void in most organizations between idea generation and actual implementation. Geoffrey Moore, in his classic "Crossing the Chasm" defined this as a, well, chasm that needed to be crossed. In my thinking, it's a gap that needs to be spanned by processes, expectations and systems.

When you enter a brainstorm session, your first question to the facilitator or person who called the brainstorm should be - what's going to happen to these ideas once we're finished? Who's documenting them, where will they be published, who is responsible for evaluation and moving these ideas along? If there aren't any clear answers to these questions, you may be in for another round of Groundhog Day.

A well-defined process will take the ideas that are generated, place them in a database for further elaboration and review by the team, and move those ideas into some type of database for further definition, context and evaluation. In an ideal world, this would happen fairly quickly and seamlessly. In reality, what happens too often is that the ideas, written on a big sheet of paper, are rolled up and placed in the corner of someone's office. It's almost as if the brainstorming session itself was the hoped for outcome, rather than the ideas.

One goal I think every firm should have is a metric which measure the time from idea generation to first prototype or simulation. People can't react to ideas that are not modeled or simulated for them - it's simply too hard to get everyone to "think" the same way. Place a prototype or simulation in front of them, however, and the reactions are worth their weight in gold. The speed to prototype is important because it helps highlight the "gap" between idea generation and the resulting next steps. A long gap indicates that your firm does not have the processes and systems necessary to bridge the gap, and will probably be beaten to the market fairly frequently. A short gap can actually increase cycle times but improve the product, as a rapid prototype receives a lot more commentary and feedback into the system.

Where innovation is concerned, the gap you should mind starts the minute you leave the brainstorm. Do all those ideas have a process to follow, or do they go right down the drain?
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posted by Jeffrey Phillips at 2:19 PM 10 comments

Thursday, June 22, 2006

Inverting the Pyramid

If you take a hard look at the way our businesses are changing, due to global competition and outsourcing, you can see a number of factors working against the old command and control organizational structure. One factor that is working against it is the need for speed. Since we want to be faster in everything we do, the old game of each successive layer of management informing the next level down is rapidly falling away. What we need are flatter organizations. This is also true since more and more people are doing thinking work rather than manual work. Smarter workers need fewer managers and fewer levels between themselves and the "boss".

What's also true is that over time the entire pyramid will be inverted. What I mean by that was originally a few workers at the "top" did most of the "creative" stuff and the majority of the workers actually built the products or delivered the services that the few creative types dreamed up. I think over time many businesses in the US will become innovation and product design engines and will have an inverted pyramid, where most of the people at the top are very creative, and there's very few people underneath them that make the products, since most of the manufacturing will be provided by outsourced firms, either here or overseas.

This phenomenon can already be viewed here in the Research Triangle Park, NC in the biotech and pharmaceutical industries. There are a significant number of firms here that are what I call "one hit wonders" investigational companies working on medicines or molecules to attack a specific condition or disease. Most of these firms have no intention of manufacturing anything - they are interested in discovery. Their goal is to identify potential drug candidates and have them manufactured by another firm, or possibly sell the candidates to other, larger firms who wouldn't take the discovery risk. Most of these firms represent an inverted pyramid, with a significant amount of R&D and innovation and no service or manufacturing capability whatsoever.

As more and more manufacturing comes online in China and India and Viet Nam and ... well, you get the point. There will always be a lower cost manufacturing location than the US for many products. I think we'll see firms begin to recognize that the competitive differentiations we have in this country are:

- Access to the world's largest and most vibrant market. We are it, we live in it, we should be able to assess that market and understand its needs better than anyone

- Access to some of the most original thinkers with a sense of entrepreneurialism. The US far exceeds other countries in new company creation due to its liberal incorporation laws.

- A strong history of innovation. The US traditionally has fostered innovation, from the federal government, universities, the private sector and organizations that bring these three groups together.

- Capital markets. Traditionally, we've had the most fluid and transparent capital markets, with a large amount of private equity and intermediaries who help identify and place the money.

All of these facets lead me to believe we have the core capabilities to remain an innovation engine, and the underlying factors of outsourcing and low cost manufacturing indicate that more and more, our businesses will be ones that seek to understand and predict new products and services, design them and market them, while outsourcing manufacturing, service and support. The confluence of our capabilities and global business realities will lead to an inverting of the traditional management pyramid in many cases.

Innovation does not cause that, but will be an influencer for many firms to add creative, innovative people in order to grow and survive.
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posted by Jeffrey Phillips at 5:23 AM 7 comments

Tuesday, June 20, 2006

Fear and/or Greed

What is "Why do firms innovate"?

At the risk of sounding like Gordon Gecco from the movie "Wall Street", most firms focus on innovation for two clear reasons: either they are at serious risk of being left behind by the market (see the Motorola and RAZR story) or they identify a niche or opportunity that if exploited will present them with a tidy windfall. Both of these are valid reasons for innovating, but represent the far ends of the spectrum in terms of proactivity. Of course for the sake of this argument I'm leaving out the incremental innovations that firms in the Consumer Packaged Goods industry do so well. You know, Tide, Tide with bleach, Tide with the fresh pine scent...

Entrepreneurial firms are all about the greed motivator. They want to exploit an opportunity with the latest and greatest idea to soak up a lot of market share and grow a company from a few people in a garage to a large, publicly traded organization. Or at least that's the myth. In reality, a lot of people in a lot of firms of varying sizes see new market niches and attempt to attack them, all for the same reason. In most cases, they believe they've identified a market with a large potential revenue stream they can dominate, generating profits for the firm. There's a fair amount of proactive innovation in most firms today, but not nearly enough, and most of it is still focused on cost cutting rather than gaining market share, new profits or exploiting new opportunities.

The fear factor is all about shrinking margins and the loss of market share. Larger firms often "innovate" and take big risks when they can't see any other method of sustaining and retaining market share and profits. Often it's the falling revenue and profit lines that engage the fear factor which releases teams to become much more aggressive with their innovation initiatives. We may look back at the iPod or the RAZR as examples of excellent innovation and new product development, but those products were built at a time of increasing desperation at Motorola and Apple.

What does this say about innovation in most firms? Innovation is problematic in many larger firms, requiring a significant market event or downturn to loose the innovation teams and release constraints. In fact, it appears that much innovation is very reactive to the future outlook of the firm and its place in the market. These are rarely market leading innovations but the results of some desperate acts that finally released creative people. That's not to say that the greed factor is always the correct approach. The greed factor all to often overlooks roadblocks and transition costs for new products or services that are introduced into the market.

On the whole though, I'd feel a lot better if I saw a little more fear in the eyes of the senior management teams of larger firms in the US. Complacency and a lack of risk taking will lead many of these firms to a point where they'll have no option but to free the innovation capability within them. The question is: at that point, will there be people left who are willing and able to innovate, or will they all have left to form startups?
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posted by Jeffrey Phillips at 2:53 PM 6 comments

Monday, June 19, 2006

Roll Your Own

At the Front End of Innovation conference in May, Dr. Michael Treacy gave a presentation about academic research that he is conducting into the various forms and methods of innovation in business around the world. One of the items that had been trickling around in the back of my mind has finally taken shape, and that is the concern over a particular “model” of innovation.

Treacy has defined a model with three significant axes – the degree of complexity of the business, the amount of coordination and alignment within the business and the adaptability of the business. His idea is that using these levers, a firm can determine its innovation quotient and begin to improve its ability to innovate. I’m going to argue that firms need to evaluate what others are doing, but craft their own, unique innovation strategy. Dr. Treacy certainly did not advocate adopting innovation models from other firms from the whole cloth, and I felt his presentation was valuable and a good jumping off point for this blog post.

There are three concerns I have with too much adoption of existing innovation models: 1) the historical nature of research, 2) how applicable the learning is to your business, and 3) how differentiated your business is and wants to remain.

First, almost all research is looking in a rear-view mirror, at conditions that existed at some time in the past. Clearly GM was successful in the 50s and 60s, but I would not argue that their business approach and model from that time are necessarily correct for today. Most research also looks at only successful companies and filters out the unsuccessful products or companies that did succeed. Research about innovation, especially firms that have been successful innovating, is important, but the information must be used carefully. All too often, a firm exploited a niche or met a market condition that simply does not exist now, so attempting to duplicate one firm’s approach is dangerous. My concern is true whether we are talking about academic research or what's in books about innovation. Often, looking in hindsight we can piece together facts that make a firm's success look planned rather than happenstance.

Second, there’s an applicability issue. If a lot of research is based on firms that produced new physical products, there’s not as much to learn if your firm is services-based. Even if your firm produces products, there are wide differences between the value chains of consumer packaged goods and electronics for example, and some innovation approaches will simply not translate to another firm or industry. Also, “innovation” has many layers and subtexts. Some firms succeed at incremental innovation, while others are seeking to disrupt a market. Some firms focus on internally driven ideas and R&D, while others are creating an open innovation platform, incorporating customers, vendors and business partners. These different approaches make adopting one firm’s model highly suspect, even if they are in the same industry.

Third, and related somewhat to applicability, is the issue of uniqueness. Are our businesses so similar that we should all follow the same innovation model? It seems to me that senior management needs to set a specific corporate direction and allow the teams in the organization to define the methods and approaches necessary to become more innovative. What’s happening right now in innovation is that CEOs are telling their people “We need to be more innovative” without providing a good definition of what that should mean or how the request ties to strategic goals and directions. CEOs cast about, looking for firms that have been successful with innovation and declare “let’s be more like Apple/P&G/3M” when those business models and approaches don’t readily apply. Meanwhile, the folks in the trenches are trying to decide how to get started, and are upset that the senior management teams can’t provide clear guidance and get out of the way. In some instances – purchasing for example, my purchasing process and yours may match exactly, and that’s OK, I don’t get great value or differentiation around my purchasing process. My innovation process, on the other hand, may be a significant driver of value for me, and I need for it to be tightly aligned to my strategy and differentiated from what others are doing.

I suggest you roll your own innovation strategy. Sure, look at what others have done. Leverage the best practices inventories that are available. Talk to the folks at Peer Insight if you are a services firm. Read the best selling authors. Steal a little bit of insight from a number of sources. Then synthesize all of that knowledge and use it to your advantage.

Start with the senior management team. What’s important to them is next quarter AND next year AND five years from now. Define some incremental innovation goals and tie them to short term measurements. Define some more disruptive innovation goals and measure them on a qualitative basis. Establish a longer time frame for the disruptive goals. Assess the culture of the firm and determine its ability to attempt “open innovation”. By defining the model and approach, you can tie your innovation methods and processes to corporate goals, and get more buy-in from the senior management team, and build processes that tightly align to your business’ specific requirements and needs.
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posted by Jeffrey Phillips at 8:25 AM 7 comments

Wednesday, June 14, 2006

Masters of Innovation

Business Week has a feature on innovation online called "In". You'll find there a number of interesting articles and some good overviews of what firms are doing around innovation. One of the most interesting presentations is the list of "masters of innovation".

Once I overcame my disappointment that I was not included in the list, I was interested to see who BusinessWeek picked as leaders in innovation. I don't know what rationale the writers used to pick the group, but the group is interesting nonetheless. Click here to see the group (Scroll towards the bottom and look for the IN 25 link).

What struck me most about the group is that it is dominated by women, in a list of firms that is almost to a fault dominated at senior levels by men. Why is that? Are women more naturally inclined to innovation? Of the 25 people BusinessWeek selected, only 8 were men - 17 were women. Again, I don't know the methodology or selection criteria, but odds are that in most senior ranks of large businesses, this breakdown is not the norm. I'd expect in most senior ranks that the relationship today is probably 2:1 ratio male to female. So there's something afoot here.

Of the industries represented, there is significant weighting towards consumer goods and technology, with almost every firm represented from the Fortune 500. While it is hard to discover what smaller firms are doing, I'd like to see BusinessWeek identify innovation in smaller firms and in firms outside technology and consumer products. Also, most if not all of these individuals were US based, which is probably a little short-sighted, in that there is a significant amount of innovation work being done in Northern Europe, especially the Scandinavian countries, and increasingly in India and China. However, both the US-centric focus and the focus on technology firms and consumer goods firms didn't surprise me.

I've seen a number of these new "Masters" speak and seen their work. I've had a chance to meet with Jeneanne Rae of Peer Insight, who has also been identified as a leader in innovation. Clearly there are a significant number of women who have staked out a differentiated space around innovation. Is that because innovation was considered too "new" or "risky" by established executives and women saw a chance to grow a new opportunity quickly? Is that because women have more creativity and empathy for customers and prospects and their antenna are more alert to opportunities in the market? There's no doubt that these folks are adding great value - but what can we learn from it? It surprises me that there's not some discussion about this and what these people have in common that other businesses can learn from.
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posted by Jeffrey Phillips at 2:51 PM 6 comments

Monday, June 12, 2006

Plenty of ideas

I was reading a recent Fast Company and in it was a good article about building an "army" of people who agree with and support your idea as you move it forward in your organization. The premise of the article - that ideas will move forward more quickly as there are more supporters - is one I can buy into. What bothered me a bit about the article was the supposition that in any company there are "plenty of ideas" just waiting to be worked.

I think this argument is uniformly accepted and generally meaningless. Of course there are plenty of ideas in any organization. Any place a bunch of humans congregate on a regular basis will have ideas. My seven year old son has some great ideas about space travel and fighting Darth Maul. The fact that he has some ideas does not mean they are valuable or useful. In most businesses I am sure there are plenty of ideas available. The problem is not a quantity problem, the problems facing innovation are deciding which ideas deserve funding and which will be viable by the time they are realized as new product or services or business models.

I've spoken with a lot of firms about their ideas and their innovation approaches recently. All of them tell me they have plenty of ideas. In fact there are often so many ideas mentioned or discussed that it becomes difficult to sort them out, and an analysis paralysis sets in on the team. With no clear definitions or sorting algorithms, who's to say an idea should or should not be investigated? With few clear innovation processes or methods, what's the right approach to foster one or more ideas? The challenge faced by most firms is not a quantity issue - it's an issue of ascertaining the quality of the ideas and investing in those that have merit.

This is especially difficult since ideas have varying degrees of difficulty and potential return. Should your firm focus primarily on incremental innovations, those ideas that bring out the "next" version of the product? Should your team investigate ideas that could change the way your organization works, or radically disrupt the marketplace you do business in? What's the expected return horizon for your ideas? Should your idea generation focus on improving existing products or creating new products? Without a tight alignment between corporate strategy and idea generation and selection, it will probably be very difficult for an organization to successfully implement an innovation process, since it will be easy to generate ideas, but hard to select and implement the appropriate ones.

I suspect in many businesses if you were to ask these questions, the answers you'd get are "Yes" to incremental, "Yes" to disruptive, "As soon as possible" for returns and "Both" for existing or new. Clearly most firms don't have the resources to chase this many, so some mechanism must be established to help select ideas. The real problem here is that our firms have become so quarterly focused that it is often hard to invest in concepts that may not pay off for some time, or to invest in ideas that have a high probability of failure, even thought the learning from the process may introduce a new product or service.

So, my answer to the "we've got plenty of ideas" statement is: so what? Who doesn't? The real differentiator will be "and we've got a methodology to select the ones to work".
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posted by Jeffrey Phillips at 4:55 AM 9 comments

Friday, June 09, 2006

Lean on me

OK - I'll admit it. I am having a hard time making up my mind about the importation of "lean" principles to innovation. Obviously, Six Sigma and Lean concepts are having a powerful impact in many businesses, improving processes and cutting costs and wastes. The adoption of powerful tools from one business function to another has traditionally been very acceptable. Do the concepts behind lean add value or detract from improving innovation and idea management? I think there's a mixed result so far.

What's great about Six Sigma, Lean and some of the other concepts currently being imported from manufacturing and process improvement in other business functions is that they seek to reduce cycle time and reduce waste. Those are great goals for innovative teams. Since product life cycles are getting shorter, a firm has less time to recoup costs of development and bring a new product to market. Bringing great new ideas to market faster is clearly a benefit. Reducing waste, primarily through reducing redundant projects and rework, will mean a greater focus on the ideas that "work" and pouring more resources into fewer, better ideas.

However, most of the business functions where Lean and Six Sigma concepts have worked have had a long-standing, well-defined business process already in place, and the implementation of Lean or Six Sigma or both have brought about tweaks or improvements to those existing processes. Is Lean or Six Sigma right for a business function or haphazard process that represents the state of the art for innovation in many businesses today? It seems to me that there are few documented processes that are followed repeatedly in innovation teams, and little consensus about how to innovate even within the same organization. Don't these issues need to be addressed first?

Also, Lean and Six Sigma have goals for reducing costs, reducing waste and reducing inefficiency. At some level, as much as we'd like to have a clear view of the products and opportunities available to us, there has to be some level of trial and error in innovation, especially in more disruptive innovation. If you can perfectly define the market for a product - the size of the market, the adoption rate of the product, then you are working on an incremental innovation at best. Most really interesting and disruptive products have completely outstripped any plans for the product, and Lean and Six Sigma really don't work well in situation that you can't quantify. Look at the RAZR for example. In my previous post I argued that the RAZR design team did a terrible job predicting the size and adoption of the product. Initially, they were going to make 2 million. They upped that to 20 million and ended up selling more RAZRs faster than even the Startac phone. Can lean and Six Sigma concepts work in an area that almost demands that we work on items that can't really be quantified. Does the culture of cost reduction, waste reduction and time reduction begin to force teams to discount ideas and opportunities that might take longer or have a higher risk profile?

So, I'm torn. What I like about Lean and Six Sigma:

- Proven to work and to be adopted by the organization
- Emphasis on a repeatable process
- Focus on cost reduction, waste reduction, cycle time reduction

What I don't like about Lean and Six Sigma:

- Will force the team to focus on short-term innovation only
- May place constraints on the team's thinking and risk taking
- Is not really about building processes, but about improving existing processes

I'd be interested in your thoughts. Feel free to leave me a comment and let me know what you think, especially if you've implemented Lean concepts or Six Sigma concepts as part of an innovation team.
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posted by Jeffrey Phillips at 5:14 AM 25 comments

Tuesday, June 06, 2006

Breaking the mold

Albert Einstein is recognized as the person who defined insanity as doing the same thing over and over again and expecting different results. By that definition, most innovation teams and firms that seek improvements in their innovation are insane.

Take a look at an article features on the Business Innovation Insider (link here). If you aren't reading the Innovation Insider, you should be. Dominic puts together an incredible range of information on innovation. At any rate, the Innovation Insider focuses on an article from Fortune about the success of the RAZR phone.

The article in Fortune and Dominic's summary draw some interesting conclusions:

- The phone was originally targeted as a high end, very expensive phone, costing over $500
- The team ended up well behind schedule delivering the phone
- The team kept its work, its design, even the materials it was using secret
- The team did little external requirements gathering or focus groups

Think about this - the team failed from a timeline perspective, a marketing perspective, a pricing perspective and didn't align to existing product development methodologies, materials or project norms.

In other words, the team failed to follow any of the organization's guidelines and expectations and cultural norms and created a huge hit. As the article points out, the team that designed the RAZR "broke the mold".

By this I think the author means that the team operated in a manner inconsistent or almost at odds with the existing corporate culture and expectation. Since the article points out that in 2002 and 2003 Motorola was in poor shape financially and with its product portfolio, what other option existed? The design team could have accepted the "status quo" of the Motorola design and development culture, or they could have chosen their own path. It only seems logical in hindsight to question everything about the then-current Motorola process and to seek ways to change it.

But while the team has been successful, the important question one must ask at this junction is - is it sustainable? Is there a culture, a program, an organizational fabric which improves product innovation at Motorola, or did a bunch of random opportunities coalesce to create a great, one-time suite of products that can't or won't be repeated? Will Motorola break the mold and create a new way of thinking and a new approach across its design team, or will the majority of the organization simply look at the RAZR design team as renegades and return to the old ways of doing things?

I happened to meet several Motorola design engineers and product developers recently. In our discussions, what was clearly their biggest challenge to new product innovation was - corporate culture and change. So while the RAZR team has created an exceptional product, will Motorola be able to sustain that innovative capability over the long term, or was this a one shot wonder? The challenge that Motorola faces is to demonstrate that innovation is the norm, and that the RAZR team demonstrates a consistent capability rather than an "individual act of heroism".
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posted by Jeffrey Phillips at 5:27 AM 7 comments

Friday, June 02, 2006

Kissing Frogs and Picking Horses

There are several schools of thought around the best "methods" to build a culture for innovation in your business. By this I am not talking about processes or tools, just the simple cultural expectations about how innovation should "work". For example, some would advocate a fail fast, fail frequently approach. This is what I call Kissing Frogs, from the "you've got to kiss a lot of frogs to find a prince." Another approach is to hand select a few ideas or concepts and place much larger bets. This approach is like betting on horses at a racetrack.

What's realistic in most businesses? Since most firms aren't greenfields, there are established norms, expectations, procedures and teams. Innovation must work within those constraints if it is to be sustainable. Otherwise it will be considered a strange off-shoot with its own goals and metrics. These constraints exist and must be factored in to the way your team approaches innovation.

In many organizations, the kissing frogs approach is hampered by the rules and expectations around starting many projects. While Dean Kamen and Thomas Edision can explore, and fail at, many different ideas and concepts and quickly move to another, this approach can be very difficult in a larger, established business that requires project justification, cost centers, senior management signoff and so forth. Even in businesses where failure is tolerated, it is hard to rapidly move from a failure to an entirely new concept or project.

That leads us to the "picking horses" approach. Since the culture of larger organizations is all about risk reduction, many ideas get thrown out before they are considered, and only certain ideas even get into the race. Then, based on the previous performance of ideas in a category or from a specific sponsor, big bets are made on just a few ideas. In this instance, in for a dollar, in for a dime. The fixed costs associated with starting a project mean that you should shoot for a larger return.

The problem with the "picking horses" approach is that only ideas that have some track record or champions that have some track record will be selected. We are accepting all of the constraints the business presents and eliminating many possible options. This approach is probably OK for incremental innovation, but by definition will knock out any disruptive innovations, since there's no track record. The picking horses approach also significantly limits the funnel of new ideas and the people who can work on those ideas.

Now, if we can get our cultures to move towards the kissing frogs approach, we'll have more ideas that progress down the innovation process. Of course, we'll also have more failures. For a long time the Japanese electronics manufacturers followed this approach in Japan. To visit Japan was to see hundreds of electronics devices that were experiments or small batches that for one reason or another the manufacturers decided not to place into large scale production. The purpose of these was to get a new feature or application into customers' hands and to learn from the experience.

I think there should be a happy medium. Few businesses can sustain a true "kissing frogs" approach once they reach a certain size and critical mass. There's just too much overhead, expectation and infrastructure to manage to create lots of small projects, each with little probability of success. However, limiting the pool of ideas and people who can work on them simply because the organization's culture can't adapt certainly doesn't make sense either.

I recognize this is a somewhat simple dicotomy I've used as a strawman. What other approaches are you aware of to encourage innovation in a culture?
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posted by Jeffrey Phillips at 9:54 AM 5 comments

Kissing Frogs and Picking Horses

There are several schools of thought around the best "methods" to build a culture for innovation in your business. By this I am not talking about processes or tools, just the simple cultural expectations about how innovation should "work". For example, some would advocate a fail fast, fail frequently approach. This is what I call Kissing Frogs, from the "you've got to kiss a lot of frogs to find a prince." Another approach is to hand select a few ideas or concepts and place much larger bets. This approach is like betting on horses at a racetrack.

What's realistic in most businesses? Since most firms aren't greenfields, there are established norms, expectations, procedures and teams. Innovation must work within those constraints if it is to be sustainable. Otherwise it will be considered a strange off-shoot with its own goals and metrics. These constraints exist and must be factored in to the way your team approaches innovation.

In many organizations, the kissing frogs approach is hampered by the rules and expectations around starting many projects. While Dean Kamen and Thomas Edision can explore, and fail at, many different ideas and concepts and quickly move to another, this approach can be very difficult in a larger, established business that requires project justification, cost centers, senior management signoff and so forth. Even in businesses where failure is tolerated, it is hard to rapidly move from a failure to an entirely new concept or project.

That leads us to the "picking horses" approach. Since the culture of larger organizations is all about risk reduction, many ideas get thrown out before they are considered, and only certain ideas even get into the race. Then, based on the previous performance of ideas in a category or from a specific sponsor, big bets are made on just a few ideas. In this instance, in for a dollar, in for a dime. The fixed costs associated with starting a project mean that you should shoot for a larger return.

The problem with the "picking horses" approach is that only ideas that have some track record or champions that have some track record will be selected. We are accepting all of the constraints the business presents and eliminating many possible options. This approach is probably OK for incremental innovation, but by definition will knock out any disruptive innovations, since there's no track record. The picking horses approach also significantly limits the funnel of new ideas and the people who can work on those ideas.

Now, if we can get our cultures to move towards the kissing frogs approach, we'll have more ideas that progress down the innovation process. Of course, we'll also have more failures. For a long time the Japanese electronics manufacturers followed this approach in Japan. To visit Japan was to see hundreds of electronics devices that were experiments or small batches that for one reason or another the manufacturers decided not to place into large scale production. The purpose of these was to get a new feature or application into customers' hands and to learn from the experience.

I think there should be a happy medium. Few businesses can sustain a true "kissing frogs" approach once they reach a certain size and critical mass. There's just too much overhead, expectation and infrastructure to manage to create lots of small projects, each with little probability of success. However, limiting the pool of ideas and people who can work on them simply because the organization's culture can't adapt certainly doesn't make sense either.

I recognize this is a somewhat simple dicotomy I've used as a strawman. What other approaches are you aware of to encourage innovation in a culture?
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posted by Jeffrey Phillips at 9:54 AM 5 comments

Kissing Frogs and Picking Horses

There are several schools of thought around the best "methods" to build a culture for innovation in your business. By this I am not talking about processes or tools, just the simple cultural expectations about how innovation should "work". For example, some would advocate a fail fast, fail frequently approach. This is what I call Kissing Frogs, from the "you've got to kiss a lot of frogs to find a prince." Another approach is to hand select a few ideas or concepts and place much larger bets. This approach is like betting on horses at a racetrack.

What's realistic in most businesses? Since most firms aren't greenfields, there are established norms, expectations, procedures and teams. Innovation must work within those constraints if it is to be sustainable. Otherwise it will be considered a strange off-shoot with its own goals and metrics. These constraints exist and must be factored in to the way your team approaches innovation.

In many organizations, the kissing frogs approach is hampered by the rules and expectations around starting many projects. While Dean Kamen and Thomas Edision can explore, and fail at, many different ideas and concepts and quickly move to another, this approach can be very difficult in a larger, established business that requires project justification, cost centers, senior management signoff and so forth. Even in businesses where failure is tolerated, it is hard to rapidly move from a failure to an entirely new concept or project.

That leads us to the "picking horses" approach. Since the culture of larger organizations is all about risk reduction, many ideas get thrown out before they are considered, and only certain ideas even get into the race. Then, based on the previous performance of ideas in a category or from a specific sponsor, big bets are made on just a few ideas. In this instance, in for a dollar, in for a dime. The fixed costs associated with starting a project mean that you should shoot for a larger return.

The problem with the "picking horses" approach is that only ideas that have some track record or champions that have some track record will be selected. We are accepting all of the constraints the business presents and eliminating many possible options. This approach is probably OK for incremental innovation, but by definition will knock out any disruptive innovations, since there's no track record. The picking horses approach also significantly limits the funnel of new ideas and the people who can work on those ideas.

Now, if we can get our cultures to move towards the kissing frogs approach, we'll have more ideas that progress down the innovation process. Of course, we'll also have more failures. For a long time the Japanese electronics manufacturers followed this approach in Japan. To visit Japan was to see hundreds of electronics devices that were experiments or small batches that for one reason or another the manufacturers decided not to place into large scale production. The purpose of these was to get a new feature or application into customers' hands and to learn from the experience.

I think there should be a happy medium. Few businesses can sustain a true "kissing frogs" approach once they reach a certain size and critical mass. There's just too much overhead, expectation and infrastructure to manage to create lots of small projects, each with little probability of success. However, limiting the pool of ideas and people who can work on them simply because the organization's culture can't adapt certainly doesn't make sense either.

I recognize this is a somewhat simple dicotomy I've used as a strawman. What other approaches are you aware of to encourage innovation in a culture?
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posted by Jeffrey Phillips at 9:54 AM 3 comments