Monday, June 11, 2012

Innovation: Clockspeed, commitment and calendars

In my continuing series of posts about innovation and velocity, I am writing today about the poor understanding and alignment between time and innovation.  Your internal timeclocks are both too fast and too slow for innovation.  Those timeclocks are the corporate drumbeat, the "clockspeed" of your organization, which have worked well for decades.  The problem is that while 33 1/3 RPMs worked well in the past, your markets are moving at 45 RPMs, soon to progress to 78 RPMs.    Your internal clockspeeds don't matter to the market, until they cause your firm to respond far too slowly and cautiously to important change.

There are three issues with internal business time that I want to address today.  The first is clockspeed - how quickly the organization works when it is working to the optimized internal operating model.  The second is the time allotted to innovation projects, which we'll argue is often far too little, causing much innovation work to become incremental at best, and often incomplete.  The third issue with internal business time is the stubborn adherence to an annual planning cycle, which we adopted when man first planted and harvested grain in the Fertile Crescent in 5000 BC, and for some reason remains the predominant timing and planning cycle almost 7000 years later.

Clockspeed

After 30 years of business process re-engineering, quality, lean, Six Sigma, rightsizing, outsourcing and who knows what other three and four letter acronyms, you have an efficient, effective operating model that sustains your business.  It is honed for efficiency and works to an internal drumbeat based on the steps and phases of your methodologies and is timed to 90 day increments, which is an artifact of the external market.  The problem is that while you've been honing your business model for every greater efficiencies, the external clockspeed has increased.  Customer demand has increased, imports have increased, the barriers to entry have decreased.  More products and services are available from more competitors, and the internet and its new channels have simply accelerated external clockspeed.  This has a negative impact on your organization in several ways.  First, even if you have good ideas, you'll have a difficult time getting them to market to match the evolving needs and market windows.  Second, if you fail to get products to market on time, the market doesn't stand still, it keeps accelerating.  You need to innovate your internal processes to make them more nimble, more agile and more adept at keeping pace with the external rate of change.

Commitment

"Pulling the plug" too quickly is a fairly common occurrence in innovation timing.  This is the error of timidity and incremental thinking which constantly constrains innovation.  Far too many innovation initiatives are started, and once underway the scope of the effort is reduced, the team relieved of its duties and a modest incremental concept is adopted.  We provide far too little time for innovation - time in several components.  Far too little time for in depth research and analysis of problems, far too little time to understand the challenge and generate interesting ideas, far too little time to prototype and test ideas.  This failure to provide enough time and bandwidth is based on poor understanding of what it takes to innovate consistently and well.  As Fred Brooks noted in the Mythical Man Month, nine men can't make a baby in a month, and a constrained team operating in very short timeframes can rarely develop good ideas, unless they are working to a very well defined innovation methodology.  Since most innovation work is ad-hoc, almost all innovation work results in unsatisfactory incremental innovation.

Calendar

We are people of the solar calendar, tracking all time based on the earth's revolution around the sun.  This timing made sense when we were primarily an agricultural people, tending crops, but annual planning cycles make little sense in a globally connected world where competitors have different planning cycles, and customers don't care about your planning cycle at all.  An annual planning cycle is too infrequent to matter given the pace of change, and doesn't look far enough into the future for discovery.  By its definition it is meant to predict 12 months into the future in relatively straight line planning.  Perhaps the worst impact is that the annual plan locks in spending for the next 12 months, allowing little deviation from investment plans.  Innovation doesn't work this way, and as external clockspeeds and competition increase, linking innovation to an annual planning cycle where funds are provided only once a year, and plans are set in concrete months ago simply hamstrings the product development teams and innovators.  Most of us don't work in agricultural pursuits, and many larger corporations have "follow the sun" work schedules to take advantage of the fact that distributed teams can work continuously on issues or designs.  While some components of your business may work well in an annual planning cycle, innovation requires thinking further, planning further, but also more nimbleness in funding the occasional idea that happens out of the annual sequence.

To succeed in the future, innovation must become a core competency, not a bolt on to existing processes.  You must increase your corporate clockspeed to at least match what's happening in your competitive markets and need to find more commitment to longer innovation investments.  Perhaps the biggest challenge of all will be to decouple innovation activities from annual planning cycles, which are both too short to spot emerging trends and too rigid when good ideas bubble up. 
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posted by Jeffrey Phillips at 5:36 AM

2 Comments:

Blogger John Wes Green said...

Jeffrey,

Excellent post. There is no doubt that organizations need to evolve to better address the changing world we live in. It will be interesting to watch organizations figure out how to leverage analytics in a unified way to address "needle moving" real time business opportunities. This shift I believe will contribute the emergence of an innovation-centric business methodology.

John Wes Green
www.pharma-evangelist.com

5:54 AM  
Blogger Jeane said...

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