Monday, November 30, 2009

Book Review: Innovation and The Future Proof Bank

Some subjects are simply too large and encompassing for a slim volume. Some subjects are simply too broad and have too many facets for any author to capture fully. Innovation, by its very nature, has spawned a host of new books which provide the "secrets" of innovation success, or a helpful twelve step method, or insights into "disruptive" versus "incremental" innovation.

In his book Innovation and the Future Proof Bank, James Gardner attempts to set the record straight. While ostensibly writing to the financial services industry about innovation, he's created a book that is relevant to any innovation team, and which addresses a number of the intricate components and definitions of innovation, as well as defining an innovation process.

Gardner advocates a methodology he calls "Future Proofing", which is really a consistent innovation program scanning for new opportunities and introducing a defined innovation process that operates continually and consistently over time, creating new ideas and unveiling new products and services over time. To accomplish this "Future Proofing" status, he breaks down the elements of innovation chapter by chapter.

He first considers innovation theories and models, providing the "backstory" and the rationale for many of the approaches and tool sets innovators use successfully, starting with the Diffusion of Innovation and S-curves, and indicating the attributes of successful innovations in the past. Given that this chapter is intended to establish the models and intellectual history and rigor of innovation, he reviews Christensen's models from the Innovator's Dilemma as well.

Once he establishes the intellectual rigor and methods behind innovation, he then turns his attention to innovation in financial services firms. He examines the opportunities for innovation across five factors: products, markets, experiences, channels and business models, and finds significant opportunities for innovation across many of these features. Based on those opportunities, he also creates a maturity model for a firm that is growing in its innovation capabilities. The phases of growth include inventing, championing, managing, futurecasting and venturing. This maturity model ties nicely to one we've built and others we've seen previously.

In the next few chapters he investigates the phases of an innovation program, including "futurecasting" or what we'd call trend spotting and scenario planning, idea generation and scoring, and "execution" or the process of piloting, prototyping and launching a new innovation. In these chapters he does a good job of identifying the tools and techniques to conduct these activities and in each case provides a case study from a financial services organization.

The last sections of the book deal less with the innovation process and more with the leadership of innovation and innovation teams and the skills and capabilities required on an innovation team. These chapters are useful for individuals who need to understand how to lead an innovation team or need to attract and recruit people to an innovation team.

The Future Proof Bank, while written ostensibly to a financial services audience, can be read, understood and implemented by innovators in any industry. It is a good handbook - written much like a textbook with many footnotes and examples - for innovators of any stripe. It is a fairly exhaustive book and references many of the tomes that define innovation and establish its intellectual bona fides.

While I like the book and know that James is an excellent innovator, there are two items that seem to receive less focus than I would have expected. They are qualitative insight tools such as ethnography and voice of the customer, to acquire more insight into unmet or unarticulated and the issue of corporate culture. In our experience we've found that many firms rely far too heavily on existing quantitative research and fail to understand customer wants and needs, since qualitative research like ethnography seems a bit uncertain and difficult to quantify. My second quibble, about the cultural enablers and inhibitors to innovation, is both more obvious and more problematic. Every organizational culture has some barriers to innovation, and if they aren't adequately addressed, will hinder or block innovation. Gardner addresses some of these factors but I would have liked to see more examples of actions taken to change or impact a corporate culture. I know we get asked that question quite a bit.

If you are in the financial services world and are contemplating an innovation effort, run, don't walk, to the store and buy this and read it carefully. Even if you aren't in the financial services sector this is an exceptionally thorough and complete book about structuring an innovation program. I highly recommend it.
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posted by Jeffrey Phillips at 5:47 AM 3 comments

Tuesday, November 24, 2009

Head to Head: Innovation in China and the US

There's an interesting new survey out from Newsweek about innovation. The survey compares the attitudes and expectations about the US and China in regard to innovation. In the survey there are some relatively unexpected differences and some safe assumptions and conclusions drawn.


On the safe side, it's not surprising that a majority of people in the US and China believe innovation will be even more important in the next few decades than now. Most people understand the increasing rate of change and the need for new products and services to meet both growing consumer demands and the increasing constraints placed on our consumption. We need both new products and services and new solutions to growing demands for more energy and a cleaner planet. The survey also shows that we in the US have less respect for our innovation capabilities than the Chinese population does. In the survey we consistently underestimate our capabilities, or the Chinese are overestimating us.

But what was really interesting to me was presented in the middle and toward the end of the survey. The first item that caught my attention was this question: What are the factors that you believe are causing the US to fall behind China from an innovation perspective?

The answers were: Schools lagging in math and science education (42%), American government not doing enough to support innovation (17%), American business not investing enough in innovation (16%), Don't know (14%) and American workers lacking skills to be technologically innovative (11%). According to this survey, then, we in the US are slipping behind because our (1) education system is failing to create innovative, creative workers or (2) our government isn't doing enough to support innovation or (3) businesses aren't investing in their workers or innovation.

What incentives did the government create or offer to Google to become the dominant and most innovative search engine? College dropouts created Napster, which was used as a model to disrupt the entire music distribution business. My concerns are that too often we sit passively by waiting for some permission or some program which will allow us to innovate, rather than simply taking the initiative. Waiting for the government to select the "best" technologies or waiting for the educational system to do a better job educating is not an answer. Yes, we need better education systems but we need them to turn out creative, insightful people, not just engineers and scientists. Innovation has so many possibilities and facets that turning out more scientists and engineers isn't necessarily going to make the US more innovative.

Let's reinforce this point using the next slide in the presentation. The title of the slide is American and Chinese parents disagree about which skills their children will need to drive innovation. The first two categories sum it up.

American families favor more science and technology education for their kids (American families chose this option 52% of the time, Chinese parents 9%) while Chinese parents chose creative approaches to problem solving (American families chose this option 18% of the time while Chinese parents chose this option 45% of the time). We in the US are far too fixated on science and technology as a driver for new product creation, when in fact too often the engineers and scientists in an organization can act as a block or barrier to innovation, since they are too focused on what's feasible, functional and practical. We, in the US and in China, need to educate our children and our workers on creative problem solving skills, to have them reach beyond the obvious to attain new ideas for new products, services and capabilities. One thing I think we can safely assume is that there will be an enormous number of scientists and engineers worldwide. No country or firm will corner the market on those skills. However, the number of people who are truly gifted at thinking creatively and solving difficult problems and challenges is far smaller. Let's corner the market on those skills and then find the people necessary to build and deliver the physical products and services.

We run the risk of expecting innovation to be driven by a government bureaucracy or waiting for specific dictates from government or businesses as to the "chosen" technologies or industries. What we need is more initiative from every sector. We need to improve education and educational opportunities for our children and demand more depth and breadth in their education, not just focusing on more math and science but also more creative and dynamic thinking to help them solve new and thornier problems. We need to increase the training for our existing workforce to shift their skills to new types of work and opportunities. But we can't wait for permission and we can't expect a behemoth of a federal government to make the right selections. What we can hope for is that it creates an environment where innovation and creativity can flourish.
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posted by Jeffrey Phillips at 5:53 AM 4 comments

Monday, November 23, 2009

Passionate People Drive Innovation Success

I love those truisms that people use to describe a situation. Strangely they are usually based on obvious failures, but perhaps it's simply easier to teach people based on failure than success. Some relatively well-known truisms include:

You can lead a horse to water but you can't make him drink
You can't push a string uphill
Time waits for no man


I'd like to add one about innovation. While we like to say that everyone can innovate, its probably also safe to say that

You can't force a disinterested person to innovate

Now, to me, a person who loves change and new ideas, I can't imagine why anyone wouldn't leap at the chance to participate in innovation. Sign me up! But I've discovered that while "everyone" can be innovative, many people usually aren't, and there are several good reasons for that. Understanding the reasons, and identifying the people who can or will overcome the barriers, will make your innovation effort more successful.

The first reason some people can't or won't innovate is that they don't understand what innovation has to do with them. They simply can't imagine doing their work any differently, and if they did innovate, they might have to learn a new way of doing things. They either can't, or won't imagine the possibility of doing things in a new or different way. These folks aren't resistant to innovation per se, they are resistant to CHANGE.

The second reason some people can't or won't innovate is that they don't believe they'll have the opportunity, or permission, or time. They are willing to project a new future and to try to change, but believe that nothing will change, or that if they have good ideas they'll just be shot down. These folks have good imaginations and are willing to exercise them. They aren't resistant to innovation, they are RESIGNED to the current state or believe it can't be changed.

The third reason some people can't or won't innovate is that they don't want the extra work involved. They are perfectly comfortable punching a clock for eight hours and going home on time. They can see the opportunities for change and innovation, but don't want to have to do anything extra. They aren't resistant to innovation, they simply expect to PUNCH THE CLOCK and don't want any extra work.

The fourth reason some people can't or won't innovate is that they have been infected with a negative perspective or bias. They can recognize the possibilities for innovation but believe that their firm "won't listen" or shoot down their own ideas or the ideas of others too quickly. Just like a the barrel of crabs pulls down any crab that tries to escape, these folks use their negative mojo to shut down any innovation effort. They aren't necessarily resistant to innovation, they are simply NEGATIVE about anything new or different.

OK, so if you weed out these individuals from your organization, then hopefully what's left are the open-minded, the engaged, the change agents and the naive, and that's the perfect blend for innovation. Innovation is going to require change, since it will introduce new products, services or business models. It will require open minded people who can and will think differently. It will require the naive who don't yet know what "can't" be done. And it will require the people who are most engaged who will be willing to make the changes and do the extra work required to make innovation succeed.

This is why we try to staff all innovation efforts with volunteers. People who will volunteer for a difficult project that requires change see the opportunities and want to accomplish them, regardless of the obstacles and barriers, and are willing to do the extra work. Conversely, people who have been conscripted to innovation work are likely to doubt it can happen and abandon the effort at the first sign of resistance, or simply wait for permission.

Perhaps the easiest way to kill an innovation project is to staff it with people who don't believe it will be successful, aren't willing to effect change and who are content to wait passively for permission to proceed.
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posted by Jeffrey Phillips at 10:28 AM 11 comments

Wednesday, November 18, 2009

3M's Innovation Challenges

Over the last few posts I've documented a number of capabilities that enable 3M to innovate successfully. These factors include the culture, the intentional scenario planning or "forward mapping" within the research teams and the identification of seven core enablers or components of innovation. Through these attributes and a dedication to innovation throughout the organization, 3M has clearly established itself as an innovation leader.

Now, we want to turn in this last post to the remaining issues or challenges. While 3M is an excellent innovator, there is always room to grow and improve. In this spirit, there are a couple of areas where I believe 3M could do more to improve its innovation capabilities. The areas of possible improvement are:

Complacency: Paul Williams pointed out that any firm that has success in any endeavor risks becoming complacent. As Andy Grove of Intel pointed out "Only the paranoid survive". 3M needs to build on a successful foundation and remain hungry for new innovations. Also, 3M should speed up its product development and delivery time frames.

Insular: While 3M is very good at internal discovery and does invite key customers into its innovation efforts, it risks becoming too insular. 3M has yet to fully embrace “open” innovation in all of its incarnations. Clearly other R&D driven organizations like P&G have embraced a combined internal and external model successfully. 3M could start by partnering with Innocentive and grow its trusted networks, then move more gradually to an "Ideastorm" model for consumer products.

Product/Technology focused: The majority of the innovations we discussed were technical discoveries based on research that led to new products. This is very commendable, but leaves out a number of other kinds of innovations, from service innovations to business model innovations. I'd like to see more and hear more about 3M's innovations outside the product sphere, and encourage them to do more innovation outside the technology/product sphere.

Engaging the whole organization: In fairness we only met with the research teams, so we didn't have a chance to meet individuals outside of the research teams who are innovating. I didn't get the sense that the expectation, or the sets of tools and techniques, are nearly as evolved outside the technology organization. It would be interesting to see 3M place as much emphasis on innovation beyond the product as it does on the technology and product.

Customer Driven: 3M is clearly a technology driven innovator, using new discoveries to create new products and services and align those with customer needs. While this approach requires some interaction with customers and consumers, there was less discussion of the discovery of unarticulated needs using ethnography or voice of the customer. Given the capabilities of the research teams, adding more customer insight tools to the mix would make 3M an innovation machine.

3M is clearly a leading innovator and has done a significant amount of work to innovate consistently. While some of the points I raise above may seem a bit narrow, I believe that innovation needs to be extended beyond the product and beyond the bounds of the organization. Business model innovation and customer experience are two of the most sustainable innovations and differentiators, and there's really very little attention paid to these concepts in any organization. With the headstart that 3M has in terms of its existing capabilities, building these other strengths shouldn't be difficult and will erect a differentiation that will be exceptionally challenging to overcome for any of its competitors.
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posted by Jeffrey Phillips at 6:13 AM 6 comments

Tuesday, November 17, 2009

3M's Seven Innovation Components

This post is the third about my trip to 3M. In the first post I examined 3M's culture, informed by its midwestern roots. In the second post I reviewed the concept of forward mapping and some of the opportunities and challenges of 3M's innovation exchanges. Today I'll recap and review the components that 3M believes make up its innovation success.

The seven factors or components of successful innovation, according to 3M, are:

• The relationship of innovation to corporate vision and business model
• 3M’s culture, which I’ve addressed previously
• Access to multiple platforms or technologies
• Networking
• Individual expectation
• Measured Accountability
• Connection to customer need

Let's investigate each of these components and discern their value for innovation.

Relationship to corporate vision and business model
3M is the first company I’ve seen with a documented definition for innovation. That definition is:
The use or application of creativity to generate a new or novel output having value for customers

Often when we at OVO work with clients one of the first things we try to do is create a definition, so that everyone is working from the same perspective. Demonstrating a standard definition means that everyone within 3M understands what innovation is. Further, Larry Wendling, one of our hosts, said that “Innovation is 3M’s business model”. I think by this he meant that innovation is viewed as a core strength and a competitive advantage for 3M. At 3M innovation is tightly aligned to corporate strategy.

Culture
3M's culture, which I've written about previously, encourages innovation and establishes expectations that everyone should be creating new ideas. The atmosphere is collaborative and collegial, and individual initiative is expected.

Access to multiple technologies
3M has six major business lines that span the gamut from consumer to industrial, healthcare to imaging. The fact that 3M has basic research and products in so many different businesses and technologies mean that innovators have a tremendous number of potential interactions and “mash-ups” within 3M. In a sense they’ve created their own proprietary, trusted networks. While we were in the innovation center we were introduced to 40 core technology platforms. This means that any innovator can explore opportunities in his or her area of focus, and also call on scientists and researchers across a tremendous array of technologies and capabilities. But beyond merely managing a portfolio of technologies, 3M sponsors and encourages cross-pollination.

Networking
3M encourages a range of informal networking, as we’ve detailed in our discussion on the culture. But perhaps more importantly 3M encourages “birds of a feather” to organize themselves into special interest groups. This informal, horizontal structure around specific topics or technologies is called the Tech Forum. On any given day you can expect that at least one interest group is meeting on a specific technology or capability in every 3M facility. The networking and exchange of information is truly astounding. These interest groups have formal leadership and small budgets to encourage communication, but are driven from the “grass roots”. These teams reinforce the 3M culture and are called “3M’s competitive advantage”.

Individual Expectation
Every 3M employee is expected to innovate. One of the most important early leaders of 3M, William McKnight, developed a set of expectations for employees and their managers. These included ideas like individual initiative, allowing the individual to decide how the job got done, and tolerance for mistakes. This encouraged individual effort and initiative. Further, the rewards and recognition structure reinforces networking and the innovation culture. There are few individual financial incentives to innovate, but several important recognition programs, including the “Circle of Technical Excellence and Innovation” and most prestigious, the Carlton Society. Only 170 individuals have been named to the Carlton society.

Measured Accountability
3M spends a significant amount of its revenue on R&D and other innovation activities. As such, innovation must produce value for 3M and the activities and outcomes are closely managed. 3M uses a balanced scorecard model to track its success with innovation, including such measures as:

• Incremental Revenue from recent innovations
• R&D spend
• Speed to market from idea to product
• Patents issued

Measuring the results indicates that 3M expects to innovate, and expects ideas to flow through a pipeline and become new products. That which gets measured gets managed. Innovation needs to be measured and managed like any other process.

Link to customer need
Innovation and basic research is not valuable unless the discoveries can be converted into value for the organization or its customers. 3M carefully connects its innovation work to customer needs (particularly B2B customers) through meetings and exchanges with customers in Customer Innovation Centers located throughout the world. Typically each facility has several meetings every day with corporate customers. These meetings identify significant challenges the customers face and help 3M identify the right technologies or opportunities for new innovation.


These are the seven key facets or components of innovation from 3M's perspective. Tomorrow I'll complete my posts about the 3M visit with the identification of some key challenges and areas of growth for 3M to explore.
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posted by Jeffrey Phillips at 6:01 AM 19 comments

Monday, November 16, 2009

More on the 3M visit

This is the second of a series of posts about a visit to 3M's customer innovation center in St. Paul Minnesota. There we were treated to a day of interaction with some of the leading innovators at 3M. Additionally, we learned about 3M's methodologies and culture which sustains innovation. My previous post about 3M's unique collegial, no "rock star" culture is here. In this post we'll explore the use of "Forward Mapping" that the technology researchers and scientists use to project the development of new insights.

In our meetings with 3M we were fortunate to have Andy Ouderkirk present to us the “forward mapping” process 3M uses to project technologies and their future uses. This concept is similar to “roadmapping” except the perspective is from a technology point of view rather than from a product point of view. The concept also incorporates some scenario planning aspects and these "forward maps" look at the development and refinement of technologies well into the future, and the possible products to be created or problems that can be solved. Using this forward mapping process and some other 3M methodologies, Ouderkirk believes that breakthrough ideas and innovations can become much more predictable and frequent. He believes that breakthrough innovations are different from evolutionary or incremental innovation in two specific regards. Evolutionary ideas are execution driven and mitigate risk through diversification (many different ideas). Breakthrough ideas are architecture driven and mitigate risk through leverage. In other words, breakthrough ideas create “platforms” that launch many new products and iterations of products. The platform concept is important to 3M, since each new technology may integrate with other technologies or platforms to create a wide range of solutions in many different businesses. This forward mapping capability led to the development of the first “pico” projector, an LCD projector about the same size as a mobile phone. The capability to develop that product was “forward mapped” from highly reflective thin films that Ouderkirk and his team developed several years previously.

Moreso than other R&D work I’ve seen in other innovative companies, the research scientists and corporate innovation teams at 3M are constantly aware of the need to deliver value – in fact they “sell” their research and development findings to the various business lines and meet in organized “tech forums” with product and innovation leaders in the business lines on a regular basis. The formal and informal exchange of information is truly amazing. On any given day in any 3M facility you can find at least one "tech forum" underway. This engages "horizontal" communication and attracts individuals who have a common need or challenge to solve and exposes the wealth of corporate research to everyone in the forum. The combination of "Forward Mapping" - extending a new technology far beyond the first technical iteration to consider integration with other capabilities to solve a wide range of problems over several iterations, demonstrates a desire to solve problems and address opportunities, not merely just discover new things. This forward thinking philosophy helps 3M identify new opportunities and consistently innovate.

We did discuss a few concerns with the methods we saw in use. The “influencer” panel asked questions about younger researchers and younger product managers and wondered if the informal, person to person transmission of information would work in an age when many new graduates are very comfortable networking, but use very different tools. Within the research labs there is little use of social media tools like blogs, Twitter and Facebook, but a growing realization that these tools are the modus operadi for the younger generation entering 3M’s product groups and labs. To further that point, while 3M has a very robust internal innovation program, and does interact fairly regularly with its B2B customers in the customer innovation centers, 3M retains a “bring the customers to us” mentality and has little experience with truly “open” innovation. In the few instances it gave as examples of "open innovation", all the examples were acquisitions of other firms. There needs to be a greater understanding of open innovation models, from an “IdeaStorm” application for consumer facing products to proprietary networks of engineers, scientists and companies for more technical B2B challenges. Finally, much of what 3M calls innovation seems more like technology discovery and technology push rather than customer pull. In fact one of the speakers called this "technology driven business development". That's fine, and important, but too much emphasis on internal knowledge and insights uncoupled from customer and consumer needs can result in interesting but ultimately disappointing innovation.
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posted by Jeffrey Phillips at 5:31 AM 40 comments

Friday, November 13, 2009

Midwestern Innovation at 3M

Yesterday, November 12th, I had a unique opportunity to visit with senior executives and scientists at 3M's Customer Innovation Center in St. Paul. 3M invited six innovation "influencers" to attend a briefing and to learn more about what makes innovation so viable at 3M. Over the next several blog posts, and in my upcoming November newsletter, I plan to recap what we learned during the briefings, and what I think that means for firms that seek to replicate the success that 3M has had in innovation.

One attribute that resonated with me was the collegial and "we're all in this to succeed" cultural model demonstrated time and time again during the presentations. After all, these weren't just any scientists. Several people in the room, including Andy Ouderkirk, Olester Brown and Sumita Mitra are well known innovators and have won numerous awards inside 3M and outside 3M as well. In many organizations these individuals would be "rock stars", yet the CMO of 3M said several times that one of the defining cultural aspects of 3M is that there are no "rock stars". It's hard to validate that statement after one day of meetings, but I came away with the sense that everyone (at least on the technical side of the house) is actively encouraged to innovate, and that aspects of the 3M culture sustain that by lowering barriers and increasing the opportunity to work together.

I titled this post "Midwestern Innovation" because we joked at lunch about whether or not 3M's culture would have developed in the same way if the firm had been located in Manhattan or San Jose. 3M's model is distinctively upper midwestern - built on the concept of working together for the common good of the firm and the employees. The original founders embedded much of this philosophy, which was extended by William McKnight who encouraged his managers to allow employees to experiment, to define the best way to do a job, and to tolerate mistakes. I'm curious how much those early decisions about how to structure work and the collegial atmosphere of the environment has sustained 3M and made it easier for innovation to occur.

Some of the other factors that sustain an innovation culture are also aspects of the midwestern, rural roots. There's a focus on individual initiative, which encourages people to identify opportunities and create solutions, and a "barn raising" mentality which encourages people to help each other with on projects. There's also very little financial gain on the part of the individual for new ideas, but the opportunity for advancement and the opportunity to repeat the success. Finally, the evaluation criteria for most people encourage working together and solving problems across geographies and product lines. These collegial attitudes, low personal aggrandizement and attitudes to sharing insights and information rather than bottling up information in rigid silos creates an internal innovation community spread across geographies and over 40 different core competencies. With a powerful informal network, the conditions are ripe for innovation.

Over the next few posts I'll return to the 3M visit and highlight some of the other learnings, takeaways and challenges for 3M. But to me one of the most important aspects of the innovative culture was the demonstration of the culture that allows innovation to flourish.

You can read other blog posts by other attendees here:

Mike Lippitz: link

Nick Shulz: link

Paul Williams: link

Other attendees included:

Joe Sinfield, Innosight
Lisa Bodell, FutureThink
Mary Tripsas, Harvard Business School
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posted by Jeffrey Phillips at 5:52 AM 7 comments

Wednesday, November 11, 2009

Island of misfit ideas


Do you remember the annual Christmas special about the island of misfit toys, where Rudolph ends up because he doesn't "fit in" with the other reindeer? The island is full of misfit toys that weren't acceptable for one reason or another.

A recent Accenture study on innovation found that there must be a mythical land of misfit ideas. Executives who were surveyed for the innovation study said that "opportunities to exploit underdeveloped areas/markets often die because they can never find a home to nurture them." Less than 15% of the executives surveyed disagreed with this statement. In other words, organizations can generate good ideas that are relevant to specific opportunities, but fail to find business lines or leaders who will adopt and nurture those ideas. So, those ideas must end up somewhere - our land of misfit ideas.

There are several reasons why good ideas aren't adopted and nurtured. In our experience I think I'd boil it down to three predominant reasons: prioritization, ownership and fear.

By prioritization I mean that a product or service development team within a line of business typically has more work than it can effectively complete. Even a very compelling idea that is generated and has merit must find its place in the priority stack. Often it is much easier to simply slip that "great new" idea at the bottom of the stack rather than reprioritize the work, so the opportunity slips by and little is done to advance the idea.

By ownership I mean that good ideas that are generated outside of a business line are often looked at with suspicion. Even if the idea is a good one and solves a significant problem, a business unit leader may think that since his or her team didn't generate the idea, they have little stake in the idea, or the idea may cannibalize the existing products and services. So a good idea is rejected or ignored.

By fear I mean that an idea may have great value but be so radical that implementing it will create significant change. In many organizations change is feared rather than embraced, and for some reason it is better to be forced to change through the actions of a competitor (reactive) than to create change and disrupt others (proactive). Since most firms reward consistency and reaction rather than change and proactive disruption, many new ideas will never see the light of day.

Perhaps what's needed is "local" innovation in a product or service line that is safe and relatively incremental, and "global" or corporate innovation that is relatively radical and disruptive. The challenge in this regard is moving the good idea from those who don't have the responsibility to develop the concept as a product or service to those that do, unless we simply spin off new product groups or businesses based on the radical ideas, rather than trying to force them into the existing businesses.

Otherwise many of the best ideas in your organization will end up on the island of misfit ideas, waiting for someone else to come along and discover them. Then, those ideas get released and implemented with a fury on those who ignored them initially.
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posted by Jeffrey Phillips at 8:15 AM 2 comments

Tuesday, November 10, 2009

Looking for the next disruption

Many of us are aware of disruptions in markets, but like recessions we can only identify them by looking at evidence from the past. It's difficult to identify what new emerging technology or capability will create a market disruption. We typically can say a new product or service was disruptive months or years after the fact. But that shouldn't stop us from trying to decide where a new disruption might arise. In fact, we should be scanning the horizon constantly for emerging trends and evidence of leading indicators. Or perhaps challenges to be solved.

I was thinking about this recently when it hit me - there's a clear need for a disruption in personal electronics. We've had, by my count, at least three big breakthroughs. First came a rapid decline in the cost of memory. Remember when Bill Gates said 640K was all the memory anyone would ever need? I have thumb drives that have gigabytes of memory. Second came processing power. Remember when Intel would tell you how great their next Pentium or Septium or whatever processor was going to be? They made you care about the processor. Who makes the processor in your iPod or SmartPhone? Who knows? Who cares? Most of us have far more processing speed than we'll ever need. Next came broadband and wireless access. We have access to fast data transmission, wired and increasingly wireless, just about everywhere. So, currently our personal electronics are fast, efficient processors of information and are constantly connected. What more could you want?

Well, a couple of things. Since the early data input vehicles were typewriters, most of our electronics are dependent on manual data entry through a keyboard. Heck, even our smartphones are more keyboard dependent than voice dependent. But this is a limiting factor. Too many of us aren't great at thumb typing and want to have a more robust interaction with our Smartphones and portable machines. We are hampered by the input mechanism. What would these smart electronics look like if our main source of data input was voice? Could we eliminate the keyboard all together? I think this is one clear disruption waiting to happen. Voice driven electronics that can determine when I am speaking if I want to create a document and dictate the content of the document or record my voice for storage or make a call.

Also, another challenge of the form factor of most smart electronics is the size of the screen. Unlike teenagers, many of us are finding the size of the screen and the amount of information we seek to convey on those screens a challenge. What's clear is that as we become more reliant and dependent on mobile computing, we need more robust presentation capabilities, either as the 3-D holograms of Star Wars fame or perhaps something a bit more mundane, like a set of glasses that stand in for the screen. I could imagine a set of glasses that has a built in microphone that allowed the user a heads-up display of the information from his or her smart device.

Further, what's also happening is that all of the processing speed and memory are sublimated back into the cloud. We don't need tremendous processing power or memory on the device if we can stream a significant amount of information wirelessly and process it in the cloud. We need to improve the human interaction with the information and allow people to process and use information in a more natural context. We are still too tied to the concept of a computer terminal at a desk when our needs and interactions are increasingly less like that original concept.

The next major innovation or disruption in smart electronics should be in human form factors - allowing us to use ubiquitous information and process it in a much more effective way than we can today. If you are looking for a significant disruption that's likely to happen, I can't think of a more likely place to start looking.
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posted by Jeffrey Phillips at 5:30 AM 5 comments

Tuesday, November 03, 2009

Your innovation needs a story

Imagine if you will, somewhere in the distant recesses of our existence, a group of cavemen huddled around a fire. The wiseman of the group gathers the tribe around the fire and regales them with stories of their ancestors - how they fought the neighboring tribes, how they found the food necessary to survive. The shaman passes on the wisdom of the tribe, and teaches in the process.

Stories are the best way to learn, and the best way to communicate. For some reason, we've lost the sense of story in business. Rather than use stories we opt for hard and fast "facts" that often miss the root causes or issues. There's no story telling class in an MBA program, yet most of the best leaders understand the importance of storytelling, and they lead others by telling and retelling stories. Some of those stories are myths, meant to reinforce the culture. Some of those stories are true, meant to teach and instruct.

I've just had the opportunity to read Michael Margolis' new book Believe Me, which he calls a "storytelling manifesto for change makers and innovators". It is a small, slim book with a lot of good ideas about why story matters and how to reclaim it.

What strikes me about stories in regard to innovation is how little emphasis we place on a story or a narrative. Too often an innovation project is created, but there's no linkage to past work or existing issues. The project seems to exist outside of the framework of the business, and doesn't have a strong linkage or narrative to drive it. Margolis identifies 15 storytelling axioms and notes that storytelling is especially important to innovators. There are a few axioms I'd like to point out:

1. If you want to learn about a culture, listen to its stories. If you want to change a culture, change the stories. I've found that culture is always a barrier to innovation, so changing a culture is important when innovating. Identifying the stories and changing the stories will make innovation more acceptable.

2. The power of a story grows exponentially as more people accept your story as the truth. This axiom played out for us on an innovation project, when we introduced qualitative research to a firm that had not used ethnography successfully before. Our story about our findings and the value of our findings spread through word of mouth and created an entirely new perspective on the use of ethnography.

3. Storytelling is like fortune-telling. The act of choosing a certain story determines the probability of future outcomes. If we choose a story line that we are a simple, safe, slow moving company then that informs the culture and defines who and what we are. If we choose a story line that defines our organization as a risk taking, insightful innovator, that's what we can become. Your story drives your results.

As an innovator, I'd like to start with the story, which will drive the culture to adapt to a new view of itself, and anchor the work within a narrative that we can spread through word of mouth to others. There's a need for a formal communication network, but powerful stories, repeated throughout the organization, do far more to get people on board.

Check out Michael's new book and think about what your story says about your organization, and how you can use story to your advantage.
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posted by Jeffrey Phillips at 7:14 AM 8 comments

Monday, November 02, 2009

Innovation in a bottle

I guess I'll never fully understand the depth of concern that many management teams have around command and control, especially in an era of constant change. It seems that the more demands are placed on an organization to create new products and adapt to environmental change, the more resistance to that change is created and encouraged at mid and senior management levels. I understand that what's "known" is comfortable and what's unknown and new is uncomfortable, but at some point every firm has to create some new products or services or it will simply atrophy.

Recently I've witnessed what I'll call "innovation in a bottle". That is, a relatively successful innovation effort that the management team approved and blessed spawned interest in innovation across the organization. People in other business units and geographies wanted to know more, and learn more, about innovation and the successful work that was done. We on the project team viewed this as a good thing - a successful innovation effort being recognized as such. It was clear that many people wanted to understand the tools and process, and implement that kind of thinking in their lines of business.

Except that the management team viewed all of that energy and excitement with concern. Why was everyone so excited? Why was everyone so interested in innovation? Yes, the recently completed project had created very valuable insights and compelling new products and services, but the intent was for that group only. I think, in hindsight, that the management team intended not for a widespread innovation effort for the firm, but a more narrowly targeted new product discovery effort for one line of business. When that effort succeeded, and other lines of business wanted to learn more and duplicate the effort, the genie was at risk of leaving the bottle, and that caused concern for the management team. After all, if several lines of business started innovating, the amount of change in the business could be dramatic.

I don't think most firms can be successful keeping innovation in a bottle - limiting it to very specific product lines or geographies. If the innovation work is done well, it will produce great results and those results will be noticed. Leaders in other organizations will want to copy the work and develop new products and services for their customers. Successful innovation is contagious, and to think the management team can limit innovation is part and parcel with command and control thinking. Yes, an executive team can control innovation, by limiting resources and stopping projects, but once the value of the methods and tools are seen, it will be hard to keep that lightning in a bottle. And probably counterproductive to do it as well.

Here's the takeaway: If your firm seeks innovation and is willing to commit to do it well, expect that with any successful effort that more and more people within the firm will want to learn more and duplicate the work in their own departments. This should be a good thing, but can be viewed negatively by an executive team worried about control. What they don't recognize is how fast the world is changing and how great the demand is for new products and services. I don't think you can keep innovation in a bottle, and I doubt it's a good idea to try.
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posted by Jeffrey Phillips at 5:05 AM 5 comments