Measuring innovation: Searching where the light is best

Stop me if you've heard this joke before, but I think it is exceptionally relevant to measuring innovation.

A guy walks out of a bar one evening and sees a drunk searching for something on the sidewalk.  He stops the drunk and asks him what he is doing.  "Looking for my keys" the drunk responds.  The guy decides to help the drunk and they explore the entire sidewalk under the streetlight. Finally, the guy turns to the drunk.  "Are you sure you lost your keys here?" he asks.  "No" the drunk replies "I lost them in the alley but there's no light back there."

In my way of thinking, measuring innovation, at the corporate level or at the national level is often like a drunk looking for his keys.  Both are important missions, undertaken in earnest, but in the wrong places.

Innovation is often reported on using factors that are favored because they are measurable. Often a company or a university is measured by the number of patents it generates.  Patents are easily measured and have some relationship to innovation, so reporting that a particular firm or region is "innovative" based on patent generation seems reasonable.  States and countries are measured by intellectual property generated, patents or startup firms, which are all reasonably easy to measure and are aligned to innovation.  While these measures seem valid and reasonable, this is really a case of looking for keys under the streetlight, because the real information about whether or not an entity is "innovative" is rarely quantifiable.  So we search under the streetlight called "quantifiable information" rather than search in the dark alley of qualitative factors like passion, culture, networks, engagement and so forth.  In fact, I'd argue that patents and start-up firms are simply evidence of an environment that sponsors innovation, rather than good measurements of the innovation capability or potential.  As an analogy, if I had a farm and great soil, which could be very productive, but planted crops that are ill-suited for the climate, I may appear to have an unproductive farm.  If I have a farm with poor soil, but husband my resources, use appropriate fertilizers and carefully tend the appropriate crops, I may have a good yield.  In the first case, a good infrastructure appears to be a poor producer, while in the second case poor infrastructure produces good results through hard work.  Any in both cases, a disinterested observer would be misled about the actual potential of the farm.

Why might patents be a poor choice for innovation metrics? A good number of the patents generated are for new ideas, some of which may be converted into new products or services.  Many patents, however, never leave the lab, so the ideas die on the vine or weren't useful enough to be converted into products and services.  Other ideas are protective or defensive patents, meant to defend an idea and make it more difficult for a competitor to enter a space.  Many patents don't add any new value to the market and actually make competition more difficult.  Further, patents can be easily extended - look no further than the pharmaceutical industry which has mastered the ability to extend patents with new diagnosis or new delivery methods.  This isn't to say that patents are bad - quite the contrary, but they are not the perfect analogy for innovation that many people claim.

Further, consider startups.  While a healthy entrepreneurial environment is critical for economic prosperity and growth, the number of startups in a country doesn't say that much about how innovative the country is.  If all the startups or entrepreneurial firms are grocers, dry cleaners and tailors, they are adding productivity and services but may not increase the standard of living or make the country or region more innovative.

Even other factors that we constantly use, like the distribution of education, can be misleading.  Many Middle Eastern countries have high rates of college attendance yet exceptionally stagnant economies. It's usually true that regions with higher education tend to be more innovative, but in many instances there are so many other factors at work that education by itself isn't a determining factor either.

If these factors don't necessarily indicate an innovative environment, why are they used so consistently?  Because they are easy to measure, quantifiable and comparable across regions and countries.  Other qualitative factors, like culture, employee engagement, passion, the ability to network, ability to fail and even go bankrupt without cultural penalties, rapid access to markets, tax policies etc are significant factors in whether or not a country or region is innovative, but they are much more difficult to measure, analyze and compare region to region.  Further, many of these factors are "soft" factors and difficult to control, which means they take time to propagate in the region or society.  So we, like the drunk, measure ourselves on indicators that give only a glimpse into the true reality, while the information we need lies in the dark corners where we refuse to tread.

Beyond the cube: why crossing boundaries matters to innovation

Last week I schlepped my family to Boston for spring break.  Interesting choice, you might say.  Most people head to the beach for spring break, or at least somewhere warm.  Or, if they choose to travel to northern climes they travel to ski resorts.  Well, we braved the New England weather so my daughters could visit college campuses (campusi?) scattered in the northeast, including such stalwarts as Harvard, MIT, Yale and Princeton.

A side trip to MIT's museum sparked an incredible insight for me about innovation.  If you are ever in Boston, take the few minutes to get over to Cambridge and visit MIT's museum, which is full of their current research, interesting art combined with technology, and many inventions and technologies that were spawned from the very bright people at MIT.  If possible, go with a curious, scientifically interested kid in tow.

It was at the MIT museum that I was introduced to Vannevar Bush.  The name may ring a bell for you, as he was an advisor to Franklin Roosevelt during the second world war.  He was also an MIT professor and dean and one of the developers of the differential analyzer, which allowed fast computation of differential equations.

The exhibit goes on to explain that Bush's research and development of the differential analyzer enabled the research of two other people who are featured in the exhibit.  One who benefited from his work was another MIT professor named Harold Edgarton, whose work with the stroboscope has created the iconic photography of the drop of milk and the subsequent splash.  While Edgarton's work may have progressed without the differential analyzer, Bush's work accelerated the work of Edgarton.  Bush's differential analyzer accelerated the work of other faculty members as well.

What's all this got to do with innovation?  Well, there are several key points to make:

1. Innovation drives other innovation.  Bush's inventions and ideas created entirely new possibilities for innovation for others, who used his ideas and inventions to create entirely new inventions in completely different fields
2. Innovators must draw from others outside their discipline.  Edgarton and Bush, while both in the engineering curriculum, were in very different fields. Yet the intersection of their work is far more valuable and innovative than their work on its own.  If neither man had bothered to look beyond their labs for new ideas, new technologies or capabilities, we'd have far fewer innovations.
3. Mixing ideas, even those from very different disciplines, can create entirely new concepts.  Far too often we innovators try to innovate within our cubes, or at least within our corporate confines or within our technology limitations.  Bush demonstrates why that is at best a very limited approach.

Now, many of you will argue that these two were in an academic setting, where it is easier for ideas to flow across boundaries.  Further, both were housed at MIT and therefore were in close proximity to each other, creating a greater likelihood of valuable sparks.  Both of these may be true, but these concepts and capabilities aren't by definition limited only to the academic world, which in any case is far less collegial and open for exchange that it was once.

If these conditions lead to more innovation, we corporate innovators should spend less time explaining why the academics have it so good, and find ways to mimic the conditions that we believe drove the success. Why should academics and university researchers have all the fun?  Certainly we are smart enough to identify methods that allow us to exchange ideas and technologies with individuals in other companies, regions, industries, in such a way that we both gain from the exchange and new ideas are created.

Creating a collaborative innovation framework

I'm back after some time out of the office, leading the PDMA Carolina Open Innovation conference and after a week of well-deserved vacation.

This week, Paul Hobcraft of Agility Innovation in Europe and I initiate what we hope is the start of an online discussion on innovation models.  Our ultimate goal is to remove some of the "mystery" that surrounds innovation and develop, or at least present, what we believe is an innovation model that others can adopt or adapt.

We believe that many firms are confused by conflicting claims and don't have an adequate understanding of what innovation entails.  To a great extent that's because there are no common standards where innovation is concerned.  There are many different approaches, strategies and methods.  This causes uncertainty and confusion when firms attempt to innovate.  Which is the "right" approach?  Open innovation?  Disruptive innovation?  Who or what should be involved?  A small team?  Everyone?  Clearly, every situation is different and each firm has unique needs, but a common starting point is required.

No industry can scale when there are too many competing "standards", and currently innovation is very much a cottage industry, with a number of competing methods and models.  We'd like to begin the dialog that will lead us - innovation consultants, practitioners, academics and clients - to a more transparent, common innovation reference framework.  Doing so will remove much of the uncertainty about innovation, and accelerate the adoption of innovation as a business capability or discipline.  Over the next few days we'll unveil the approach at InnovationManagement.se and at InnovationTools.com.  Our goal is to encourage everyone to comment on the model we've developed, and add to it.  We encourage you to join with us to develop a common reference framework that everyone can use or adapt to their needs when they start innovating.

To that end we've developed a wiki, entitled the Collaborative Innovation Reference Framework, which will allow anyone who is interested to participate in the development and extension of the innovation model we are proposing.  Please visit the site and let us know if you'd like to join us in developing or extending the model, or would simply like to be part of the community.

Ultimately our goal is to republish the model on a regular basis as we receive feedback, edits and comments, so there is a common, collaborative innovation reference framework available and reasonably accepted by a number of innovation practitioners.  We believe that framework can help reduce the mystery and develop a "standard" for innovation which enables more firms to innovate and accelerates adoption of innovation.  This is not to say that the model we are developing will be a "cure all" for every situation.  Any firm starting an innovation effort will need to adopt the model, then adapt it to its needs.  But by exposing the model and examining the different innovation "types" (business model innovation, open innovation, design-led innovation, service/experience innovation, etc) we can establish the validity of the approach and demonstrate that the model is a starting point for any kind of innovation effort.

Feel free to contact me if you have questions or would like to get involved.  Join us on the wiki site to comment, add to or extend the innovation model we've proposed.  Most importantly, help us create a transparent, collaborative reference framework that removes some of the mystique from innovation, so more firms can innovate more quickly and with greater confidence.

PDMA Carolinas Open Innovation Conference - April 15

Well, if you are reading this you probably aren't here in Charlotte, involved in the best open innovation conference in the Southeast.  We have an incredible lineup of speakers and a good crowd signed up and ready to learn and network.

You can check out the conference website and agenda here:  Innovate Carolina.

Further, you can follow my sporadic tweets tomorrow about the conference.  I tweet at @ovoinnovation and I think we'll be using a hash tag #innovatecarolina if you care to follow the action, such as it will be.

More upon my return.  Good innovating!

Innovation: "I have a dream" beats "I have a plan"

Over coffee this morning we were talking about the need for a "vision".  One of my compatriots quipped "suppose Martin Luther King had said 'I have a plan' rather than 'I have a dream'".  What struck me is how differently these two statements establish a framework for innovation.

After all, as we've discussed here and many other places, big change needs a big vision or dream.  When JFK talked about going to the moon, he did so at a time when humans could barely get into orbit, much less reach the moon and return.  Now, to my knowledge, JFK didn't say he had a "vision" about space travel or that it was his "dream" to go to the moon.  Further, in re-reading the speech he talked about the risks, both of trying and failing and not trying at all.  He and the nation were spurred to this by the accomplishments of the Soviet Union.  So in some regards he was playing catch-up, and pushing the goal posts a lot further out. 

When Martin Luther King gave his "I have a dream" speech the country was mired in civil strife and many Americans were relegated to second class citizenship.  MLK was thinking about the sweeping change that would occur when people were judged by the content of their character, rather than the color of their skin.  His, too, was a monumental vision or dream, brought about by conflicting realities.  He was spurred on by the belief that the US promised equality and justice to everyone.

Imagine, therefore, if either JFK or MLK had started their speeches with "I have a plan".  The problem with "I have a plan" is that the outcome is already constrained, the approach already dictated, the timeline already established.  A plan is usually well-defined, and there's little room for change.  You can accept the plan or reject the plan - it's a binary decision.  Plans demonstrate that a lot of thinking has already been accomplished, and often you don't understand the perspectives or imperatives of those who constructed the plan.  A dream, on the other hand, tends to be inclusive, unconstrained, expansive.  Dreams can be accomplished in a number of ways, and many people are invited to participate.  A plan suggests that a solution is already in sight, and we simply need to apply people and resources to achieve the outcome.  A dream suggests that we're still discovering the opportunity and making that vision available to anyone who wants to come on board.

While it's not businesslike to talk about "dreams" at work, we can reasonably substitute vision.  I'll argue that every good innovation effort beyond the merely incremental should start with by defining the "dream" or "vision", and proceed from there.  Clearly, at some point a "plan" will be developed to outline the resources and efforts necessary to accomplish the vision, but no one signs up to a "plan".  People are engaged in dangerous or difficult work due to an overriding dream or vision.  That vision usually has the ability to communicate not just the end state, but the benefits the individual will receive because of the end state.  King talked not only about measuring people by the content of their character - which was the end state, but in the same speech talked about the outcomes:

With this faith we will be able to transform the jangling discords of our nation into a beautiful symphony of brotherhood. With this faith we will be able to work together, to pray together, to struggle together, to go to jail together, to stand up for freedom together, knowing that we will be free one day.

Imagine if King had said "I have a plan".  Would his words have had the same resonance?  Would his goals have been as lofty?  Would that have inspired people to make the major sacrifices necessary to reach his desired goals?  I doubt it.  While we innovators don't fight for such lofty outcomes, we can learn from his oratory and the examples of others.  We need to learn to frame our goals as dreams and visions, rather than mundane plans and products.

As Daniel Burnham, one of the most celebrated architects in the late 19th and early 20th century said:

Make no little plans. They have no magic to stir men's blood and probably themselves will not be realized. Make big plans; aim high in hope and work, remembering that a noble, logical diagram once recorded will never die, but long after we are gone will be a living thing, asserting itself with ever-growing insistency. Remember that our sons and grandsons are going to do things that would stagger us. Let your watchword be order and your beacon beauty. Think big.

Yes but, or How dinosaurs die

It's pretty clear that disruption of major industries can happen, but I'll stipulate that it rarely happens "out of the blue".  In fact, many larger organizations have been disrupted out in the open, in plain sight.  GM and Ford watched Toyota and Honda enter the markets, and in some cases acceded the "low end" market to them.  Major steel manufacturers watched Nucor and other mini-mill firms enter at the low end of the steel market and happily left much of that market to Nucor, only to watch Nucor climb the capability ladder and eat their lunch.

These slow conversions of the market are based on what I call the "yes but" argument.  Large firms look a new product or service which carves off a small portion of their business and say to themselves "Yes, but they won't take our core customers" or "Yes, but they can't grow from there" or "Yes, but our brands are stronger".  It's as if they assume the disrupter plans only to carve off some small portion of their business and then remain static.  The larger firms are willing to give up some of their markets and anticipate that the disrupters will settle into a comfortable slow growth model just like the dinosaurs that rule the market.  The dinosaurs never seem to understand the amount and nature of change that is happening in their own markets.

I was thinking about this when considering Square, the new product offering from the founders of Twitter.  Square allows anyone to process a credit card on their cell phone, allowing individuals and very small businesses the ability to take cash, checks or credit cards at their businesses.  The banks and firms that provide merchant services sniffed and said "Yes, but they are just riding on our networks" or "Yes, but that's only for small businesses".  Instead of partnering with or simply buying Square, they acknowledged it and ignored it.  Now I see that Verizon has partnered with ChargeAnywhere, a similar offering to Square.  Verizon has clearly decided it wants a part of the transaction flow between small businesses and its customers.  Rather than simply process the transaction - that is, act like a "dumb pipe", Verizon through its partner will gain value from the transactions, and increasingly can replace card readers in small businesses.  Take another example.  Paypal is on track to exceed $2B in transactions in 2011.  Is Paypal "large" yet?  I'm sure a few years ago the banks were arguing "Yes, but it's just an interesting fad".

What in your business are your people saying "Yes but" about?  What small disrupters are taking your customers away "out in the open"?  I'm sure the dinosaurs ignored small mammals, and if we could go back and listen to their conversations we'd hear the dinosaurs telling themselves, "Yes, but they are so small" or "Yes, but they can barely defend themselves".  If your team is saying "Yes but" about a small competitor or even a firm that they'll argue "doesn't really compete with you", pay attention.

The Great Unwinding: The next real innovation opportunity

This week is clearly a "sports" oriented week, as yesterday I discussed what innovators could learn from baseball.  I focused primarily on strategy, coaching and practice.  Today's post was triggered by my family's enjoyment of tennis. 

For those of you who enjoy tennis you know the drill.  You need a good, fresh set of balls to really enjoy the game.  But that started me thinking - what do we do with all of these old balls we generate, which after a few games of tennis are really useless for playing tennis?  My family alone generates hundreds of dead tennis balls, and the thought of all of those balls ending up in a landfill sickens me.  But tennis balls are merely the tip of the trash spear.  Frankly, the next great innovation opportunity will focus on what I call the unwinding.

Over the past 200 years or so, mostly driven by the industrial revolution, we humans have learned to build things and construct things out of many different materials - metals, plastics, glass, compound components, etc.  These advances have given us a quality of life unimagined even a few hundred years ago.  If we traverse back to the days prior to the industrial revolution, most day to day items were made of readily available materials, and when discarded often decomposed.  Think about archeology - we dig and dig to find one small campfire or a few arrowheads.  Everything else that our ancestors used was left behind and decomposed.

After the industrial revolution, we became very good at building things, but neglected to build in planned obsolescence and useful obsolescence into our products.  We discarded these products - cars, refrigerators, mattresses, furniture, etc - in large landfills, because there was no planned obsolescence other than to fill landfills with these products that had reached a useful end of life.  And here we are back to tennis balls.  While we enjoy tennis, can we rest easy knowing that thousands or millions of tennis balls will be dumped into landfills to sit there for all eternity?

I titled this post the great "Unwinding" and increasingly I believe that "unwinding" will be the innovation focus of the future.  We must plan to unwind our products, so that at the end of their useful lives the components or materials can be recaptured and reused in new and useful ways, rather than simply dumped into the earth to hopefully rot.  Whether this unwinding takes the form of finding new uses for old, discarded items (many schools use tennis balls on the feet of their chairs, for instance) or planning to recapture and reuse the components of complex devices when they are designed, there can be no argument that the opportunity is vast, the waste stream is huge and the environmental impact is tremendous.  What we need now are good minds to ask the question that so far hasn't been asked - how can we use what is in the waste stream for new, practical uses, and how can we design and build products to take them apart and reuse those components at end of life.  This is what I call the great "unwinding" and this opportunity will be one of the next great innovation opportunities.

What baseball could teach us about innovation

I found myself watching a baseball game over the weekend, which is always a pleasure.  There's something about the start of baseball season that signals the beginning of spring.  No matter how many "opening" games I see there's always a sense of renewal.  Opening day brings with it the sense of new possibilities.  Even perennial losers are undefeated that first game.

So that's the first lesson that baseball can give us about innovation - approach each new opportunity as if it is the first opportunity.  Your history of success or failure, innovation competence or lack thereof, is less important than the opportunity "right now".  To start off with excuses like "we've never been innovative" is to plan to fail and plan the excuses first.  Even the Washington Nationals start off the season talking about the playoffs.  Your team should start off talking about the positive outcomes that are likely, rather than the problems from the last attempt or the challenges that will be presented along the way.

I watched the Yankees play, and by full admission I am not a Yankees fan, more because of Steinbrenner and the sense of buying up all the talent rather than an animosity towards the team or players.  I marvel at the ease with which Rodriquez scoops up a ground ball on the run and pegs the runner at first.  It simply seems effortless, and the announcers call it a "routine" ground ball. 

Well, it's routine because Alex has practiced, and practiced, and practiced some more.  It looks so easy and so graceful because he and his team mates have spent countless hours practicing the play.  His coaches have hit grounders to his left and to his right.  He's made countless throws to first from every possible position.  Fielding a ground ball and making the throw to first is now second nature to him.

That's the second lesson baseball or any sport has to teach us about innovation.  Many firms kick off innovation projects using tools and techniques that are new to the employees, most of whom have never "innovated" previously.  However, the employees start in an even deeper hole than most baseball players, who grew up playing the game.  Most corporate innovators start from the fact that their firms have been focused on cost-cutting and efficiency, so innovating is a 180 degree reversal from what they've been focusing on.  So innovation requires reframing the challenges and issues and introducing new tools and techniques.  Only then can the employees gain any practice time.

That last line was kind of tongue in cheek.  There are few firms that provide any "spring training" for innovators.  Typically it's "here are the tools, get started".  No major league team brings an untrained rookie into the majors and places him in an unfamiliar position.  That's bound to fail.  Yet that's what we do with innovators all the time.

I watches the coaches signal plays and direct the fielders.  I watched the pitching coach talk the Yankees' pitcher out of a pitching jam.  Here's another lesson from baseball - it helps to have people who have been there before, or who have a different perspective, who can offer advice and support.

Highly paid major league baseball players have coaches that give them support and advice to help them achieve their best.  What do most corporate innovators have?  A management team that scrimps on training, demands the best outcomes in unreasonable timeframes and has little experience in innovation, so can provide very little coaching. 

Baseball is an old game, and in many ways risks losing its attractiveness to kids brought up on fast paced games like basketball or soccer.  But baseball is also a thinking man's game, and has much to tell us about how innovation can and should work.

Look no further than the concept of "swinging for the fences" or playing "station to station" baseball.  The former concept loads the batting lineup with lots of sluggers who can hit home runs.  The downside to this approach is that many sluggers are also adept at strikeouts.  It's very much an either/or proposition.  The station to station guys play small ball - lots of singles, stolen bases and so forth to move the runners along.  We have the same analogy in industry - except there are far fewer sluggers.  Most firms are content to play small ball, building on simple incremental innovations.

I'm sure I could go on all day, but here's the gist of the story:  baseball, with its strategy, coaching and constant practice until difficult plays become "routine"is a great metaphor for your innovation effort.  Without strategy, coaching and practice, you may as well stay in Single A ball.