Never too busy for innovation

Here, on the last day of 2012, is both a blog post and a tip of the hat to some people who have been good friends and influencers over the last year.  First, the post.

Never too busy for innovation

Stephen Covey, the noted management thinker, suggested a number of principles for good leadership.  "Sharpen the Saw" - prepare before you work.  "Keep the main thing the main thing" - focus on what is important.  But to my mind the most important concept he introduced is the idea of important versus urgent.  Executives are paid to do the important things, but are far too often pulled back into the urgent things.  To succeed at innovation, we need to find far more time and resources for the important things, like growth, differentiation and market disruption, rather than the urgent things like achieving the next quarter.  When executives and managers allow themselves to be drawn in to urgent issues, rather than delegating the decisions and actions and using their brainpower on more important, long term and innovative issues, they are "too busy" for innovation.  An appropriate reordering of executive time, focus and attention is important to sustain innovation.

Setting priorities
The priorities of most organizations are backward.  They spend an inordinate amount of time improving the business models and operational efficiencies of products and services that are becoming outdated, and not nearly enough time understanding and preparing for the world as it will be in the immediate future.  When change was slow and predictable, the focus on honing the existing business model made sense.  Now, however, as the pace of change accelerates, business models rise and fall and global markets move simultaneously we don't have time to focus on internal processes and perfect long-existing methods.  We need to be constantly focusing on what's next. Setting the right balance between existing efficiencies and evolving new markets and capabilities is vital.

Why people are important
Innovation is the last process that is truly people-centric.  Over the years, through many management philosophies, we've automated the manufacturing processes, improved customer facing processes, eliminated variances in those processes and supported or enabled processes through enterprise resource management (ERP) software.  For the most part, the job that many people hold is to ensure the automated processes work the way they are intended to work.  In other words, many people hold jobs that are about managing exceptions to finely tuned automated processes.  Innovation refuses to be automated.  Machines and processes cannot offer insights or creativity.  Machines and computers cannot generate meaningful ideas or spot important emerging trends or have deep empathetic conversations with potential customers.  Gathering insights, evaluating trends, generating ideas remain the responsibility of people.  And, if innovation is vital for growth and differentiation, then the people who are working on innovation ought to be the absolute best people in the organization.

Why assign the best people to manage potential exceptions to well-oiled existing business processes, when the growth, differentiation and ultimately the survival of your business is based on your ability to innovate?  What are the best people in your organization doing?  Do they have enough time for innovation, or is it even on their list of things to do?

The reality

The reality is, it is difficult if not impossible to make a sudden switch and to place all of the best people in what is still a relatively unformed activity with limited definition and often conflicting priorities.  That said, how can your team, with limited time and resources, achieve the best possible outcomes for innovation?  Once it has demonstrated the ability to innovate, how does it build on that success and continue to grow skills and competence?

Starting from the beginning, you need clear priorities, strong, dedicated and committed people who understand their efforts are not a "one-time" event but a true shift in the intent and focus of the business, and you need to deliver tools and methods to help direct the work.  Recognize that they will fail sometimes and succeed sometimes, and that's the price of learning.  Reward and celebrate the wins and recognize and learn from the failures, but most importantly keep re-investing in the effort.

You'll eventually find your business is never too busy for innovation, when the priorities are balanced between retaining an existing efficient set of business processes while constantly striving for more innovation.  You'll find there is always time for innovation when the best people clamor to work on innovation activities, and that they are backed by defined tools, methods and processes.  You'll discover that there is no shortage of willing people when the rewards for innovation are as valuable as the rewards for maintaining the status quo. 

And until these factors are true you'll find that your teams are always too busy for innovation.


A tip of the hat at the end of the year

The end of another year affords us time to look back across the year just ended and recognize a lot of great people who have provided insights or helped us along the way.  I'd be remiss if I didn't recognize a few people who have encouraged me and continue to push me to become a better innovator.  They are, in no particular order:

Paul Hobcraft - who is constantly thinking about innovation, especially the cultural and management aspects of innovation.

Renee Hopkins and Drew Marshall - for their support of Innochat, the best discussion about innovation on Twitter.  I encourage you to get involved if you aren't.

Chris Marin - who works for Spigit.  Chris has been a great support to our local PDMA chapter and has a lot of passion for improving healthcare in North Carolina.

Sue Burek, Nheeda Enriquez, Chuck Mays, Steve Josey and the other board members at our Carolinas PDMA Chapter.  A great bunch of people who do a lot to further the concepts of product development and innovation.

Braden and the team at InnovationExcellence and Karin and Chuck and their teams at InnovationManagement.se for keeping us all in the public eye and up to date with the latest opinions on innovation.

Last but certainly not least, OVO clients.  We learn as much from you as hopefully you learn from us.  Thanks for a great 2012 and we look forward to serving you in 2013.

Innovators are unreasonable networkers

It is hardly possible to overstate the value, in the present low state of human improvement, of placing human beings in contact with persons dissimilar to themselves, and with modes of thought and action dissimilar to themselves, and with modes of thought and action unlike those with which they are familiar ... Such communication has always been, and is particularly in the present age, one of the primary sources of progress," – John Stuart Mill, The Principles of Political Economy

John Stuart Mill lived at a time and in a place where the interaction of the various classes was limited, and when it occurred the conversation or interaction was one of disdain for the lower classes.  Mill lived at a time of little change and great social unrest, but his goal was to create more progress.  Today we live in a place where anyone can talk with anyone.  Twitter, Facebook and other social media provide ever greater opportunities to exchange information and ideas with a wide range of people.

But even with lowered class barriers and increased communication channels, our interactions and discussions are often narrow and limited.  Increased specialization in business and less social exchange between classes in casual settings (social clubs, religious institutions, political parties) leads to confirmation bias and less new insight.  When you read that many people who voted in the US presidential elections don't know anyone who voted for the other candidate, you know that increasingly we are gathering into tribes that don't provide for communication across the tribes.

Why this matters to innovation

As Mill noted, more progress results when people with different interests, different experiences interact and exchange ideas and insights.  Further, extensive research by Dyer, Gregersen and Christensen demonstrate that the best innovators have well-developed and active networks with people outside their industry or geography.

Good ideas exist at the intersection, or collision, of industries, technologies or needs.  If your teams constantly interact with their internal compatriots, or at best with industry competitors, then they are constantly reinforcing a small body of knowledge rather than expanding their knowledge and introducing new insights.  If you wonder why your ideas seem cramped, teams seem stymied when generating ideas or the ideas you hear about are simply uninteresting, that's because your people and their interactions are very limited.

The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man. George Bernard Shaw

George Bernard Shaw understood that people either adapt to existing conditions or resist conditions.  Today we have the concept of the Kirton Adaption-Innovation index, which is a personality assessment that indicates preferences for innovation (resistance to existing conditions) or adaption (adapting to conditions rather than seeking to change them).  

Why this matters to innovation

Going along to get along is a well-respected (and expected) approach to business.  Don't ruffle feathers, get in line, do what you are told.  As Shaw noted, no progress comes from this type of response, but it results in acceptance.  Most innovators are told to simply adapt to the way things are, but they refuse.  This makes innovators seem like cultural misfits; they reject the way things are.  Innovators are the people with unreasonable expectations, unreasonable goals who want to find new and better ways to create new and better products and services.

Conclusion

If these two concepts are true, then most innovators are more likely to be viewed as having unreasonable personalities. They don't accept the status quo and disrupt comfortable acceptance of the status quo.  They may seem a bit brash.  Steve Jobs comes to mind.  Further, they are people who constantly seek to expand their knowledge and networks, because they realize that innovation happens at the intersections of people, technologies, industries and information.  An innovator will never wall themselves off from other people or technologies or industries, but will seek to immerse themselves in these networks and experiences.  And, for that reason, may people within a comfortable organization will be happy to see the brash, unreasonable innovator take trips to conferences, trade shows and partner firms.

But prevailing culture is to go along to get along, and to put the nose to the grindstone.  There's no time for challenging the existing orthodoxy or finding new insights or technologies.  Time is the enemy, distraction and deviation are its allies.  Get in line, hurry up, focus, focus, focus.  Which is a recipe for more of the same.  Yet that's what current cultures and corporate pressures reinforce.

Why your business needs more innovation

I was working with a client recently where there's a real, palpable disconnect between the product managers and the executive team.  The product managers believe more innovation is necessary - not simply more new products, but more expansive innovation.  They want to pursue new categories, offer dramatically new features and create new to the world products.  In addition, they are interested in expanding the definition of innovation to encompass services, experiences and business models.

The executive team, on the other hand, is concerned about profitability, efficiency and effectiveness.  They want innovation, but they want to know why more innovation is in order.  And if more innovation is in order, why does that new innovation have to include new to the world products and/or new services or business models.  Why do we need more innovation than we did previously, and what forces are requiring us to expand our definition of innovation?  This is a perfectly acceptable question, and one we innovators need to have good answers for.

Porter's Five Forces

As a newly minted MBA in the early 90s, I was entranced by Porter's Five Forces model.  Basically, it's a model that examines forces on an industry.  The model should help executives in any industry parse the changes and threats and determine responses. The model is as good a place as any to start thinking about the need for more, and different, innovation.







Three of these forces that we think drive the need for more innovation, and more broadly defined innovation:

New Entrants
Every market has new entrants, and newer entrants and competitors are less invested in the way things used to work within the industry or market, and more interested in disrupting how things work in an industry.  Barriers to entry are falling in many industries, leading to new entrants from other industries or geographies and new entrepreneurs.  These new entrants offer new products, services and business models that weren't considered before.  

Buyer Power

Thanks to the internet and a wealth of information on the web, buyers have far more power, and far more options, than they had previously, and this will only increase over time.  As buyer power grows, firms must counter by offering products and services tailored to the buyers' needs, and providing experience and information that matters. 

Alternatives and Substitutes
Increasing, thanks to advances in technology and more efficient trade, there are often many more alternatives or substitutes for products or services than there were previously, and this fact too will continue to increase.  Find French red wine too expensive?  Look no further than Australian Shiraz or Argentine Malbecs.  Customer have choices and alternatives, so our products and services must be more differentiated or more compelling.  Old, tired offerings are no longer good enough.

Pace of Change
One factor that Porter leaves out is the pace of change.  The pace of change is accelerating at an ever-increasing rate, and leading to discontinuities in the market.  In the past, we designed products and services in the expectation of long product life cycles, hoping for a return over years or even decades.  The increasing demands and the pace of change are dramatically shortening product life cycles, to the extent that manufacturing is returning to the US, in order to be far more responsive to changes in consumer tastes and the ability to fulfill orders quickly.

It's a race

In auto racing, the pack starts out together and the leaders are just slightly ahead of the laggards.  Over time, however, the leaders pull away and begin to lap the laggards, moving further ahead in the race based on speed and agility.  This metaphor describes what's happening in your markets.  Often we hear clients say that they believe they are innovating at the same speed as their traditional competitors.  That's only one important measurement.  There are at least two others:

Speed of change in the market
Are you introducing new products and services at the speed and expectation of the market?  Merely matching your traditional competitors may mean that you are drafting on one of the laggards, not a leader.  What is the pace of change that consumers expect?

Shifts in expectations
Are you introducing the range of products and services that align to customer needs and expectations, and are you aware of the products and services offered by new entrants or substitutes to your existing products?  Subtle shifts quickly become landslides. As products become commoditized, consumers expect innovation as new products, but also as enhanced experiences, services, channels and business models.  If you don't believe that, put down the $5 bottle of Fiji water and drink tap water for a while.

Speed of change based on new entrants and substitutes
The real accelerator of any market isn't the entrenched players but the new entrants and the products or services that offer substitutes.  What is the pace of change of new players in your market?  What new concepts or solutions do they offer, and what changes do those offerings inflict in the market?

Why does your business need more innovation?  Because the older model of long product cycles, limited competition and complacent consumers with little information is dying, and a newer, faster competitive model that relies on more information, more readily available, with lower costs of entry and more competitors and substitutes is growing.

For better innovation, fill the gap

Paul Hobcraft wrote a nice blog about the genesis of an idea in his article entitled Making Innovation Practice Spread.  In his article he talks about two schools of thought.  The first is that ideas originate from generating ideas - brainstorming and so forth.  The other school suggests that ideas originate from adopting new practices.  I think both are true, yet there's perhaps too much reliance on generating ideas, because the activity seems demonstrable.

I think there's a deeper, more interesting concept within this discussion, and that is:  what causes ideas?  Why do we have ideas?  Leave aside for a second whether idea generation or adopting new practices is a better approach.  Ideas are abundant, and obviously easily generated.  But what is it that causes humans to generate ideas?

The Gap

Underlying any idea is an unmet need or an unfilled gap. An idea only becomes compelling when it meets a need or a gap that is felt by a significant number of people and is important enough and urgent enough to fill.  The gap can be in a process, in the absence of a product or service, in the way a customer or individual experiences a specific event or process, in the business model or channel, but the origin of all ideas is a gap.

The gap can be identified through customers who experience poor service or inadequate solutions from existing products, or by imagining what "could be" if a new product or service offered far more feature or benefit than existing products or services.  That is, the gap can be real, experienced every day, or projected, not currently a gap but one that can be recognized when realistic solutions are presented.  Once a gap is identified, the next goal is to understand if it is important, pervasive and if the investment to bridge the gap is worth the cost of the attempt.

Gap Spotters and Idea Generators

Actually, I believe most people are very attuned to gap spotting.  There's probably not a day that goes by that many people don't comment on gaps in their lives.  Gaps formed by inadequate or incomplete products, poor experiences, incomplete solutions or business models.  In fact we are surrounded by gaps, but fail to innovate to close those gaps.  That's because many of us adapt to our surroundings rather than seek innovative solutions to close gaps.  The Kirton Adaption-Innovation Index suggests that many of us simply adapt to inadequate processes, products, services and business models rather than seek to change them.  Or we just shrug our shoulders and accept that inadequate or incomplete solutions are a part of life. 

To some extent that's why I think idea generators are so interesting.  Many of us encounter gaps every day, yet we fail to notice the gap, or become accustomed to the gap and fail to stop and consider why the gap exists and how to fill it.  Idea generators aren't necessarily smarter, or more observant or more sensitive to gaps, they often simply have less acceptance or tolerance for the gap, and are more willing to spend time filling the gap with ideas than moving on and accepting the inadequate current solution. 

Relevant, Important and Pervasive

The difference between good idea generators (and valuable ideas) is the difference between Michael Keaton's role as Blaze in Night Shift and Steve Jobs as CEO of Apple.  Keaton plays a role in Night Shift where he is constantly generating ideas, feeding them into a small pocket recorder ("Note to self:  Feed the tuna fish mayonnaise") but his solutions, while addressing a gap, don't address important, relevant and pervasive problems, or don't present valuable, realistic solutions. 

Too often, many business managers and executives view customers as unusual suspects, who simply don't understand the company's products and services.  Customers use the products and services and experience gaps, while executives think customers simply don't understand the capability or value of the product.  Internal teams struggle to "generate" ideas when they fail to understand the customers' gaps or needs.  And most firms have little insight into which needs or gaps are truly relevant, important and pervasive.

Don't need drills, need holes

Philip Kotler reigns as a pre-eminent marketing genius by noting that customers don't need drills, they need holes.  A drill is the tool that helps you achieve what you really want - a hole to place a bracket or mount a picture frame.  The drill is simply a tool.  Likewise, we can debate for days about the various innovation tools and approaches - TRIZ, Idea Generation, Mind Mapping, analogies, etc, but these miss a key point.  The tools are interesting buy ultimately less important than the identification of the gap.  Too much emphasis in innovation is placed on the tools and techniques, and not enough on discovery, empathy and insights about customers and gaps.  If the need is correctly identified, the tools are interesting but less important.

Apple, and perhaps Jobs himself, is a good example of this insight.  From the outside we may not completely understand how Apple innovates - which tools or techniques it applies for example.  But we do know that Apple through Jobs at least has placed its finger on the pulse of a long standing and misunderstood need - the need for more design, more user experience and more simplicity in computing and consumer electronics.  The gap was there from the beginning, and it has been important and pervasive.  In fact it remains so today.  The tools we use to generate ideas are secondary to the gaps we define.

Mind the Gap

It's the gap that matters.  Far too often we ask people who ignore the gaps, or think the customer doesn't understand the product or service to generate ideas about existing products and services.  They are not attuned to spotting the gaps, and even when they do spot gaps the gaps they identify are often artificial or unimportant.  Innovation starts with empathy and understanding the customer and the unmet or undermet needs that exist.  If those are accurately identified, the rest is far simpler.  Yet many people who work in innovation, as consultants or on innovation teams, have little experience talking with customers, acting as a customer or thinking deeply and carefully about the gaps in products, services, channels or experiences.  If you want true innovation, go find a gap.

Want more innovation? Establish investments and priorities

After a long day of innovation workshops, I ask the fateful question - does anyone have any questions about what we've done today?  Inevitably one hand goes up.  The question:  can you tell our executives that we need more time to do innovation?

The strange concept to me is that many executives want more innovation, but they don't understand the investments, or perhaps recoil from the costs.  Many mid and senior level managers want to do more innovation, for growth in their own careers, more differentiation of products and services, and simply to expand their horizons.  But they don't have any indications that if they do more innovation that the innovations will be favorably received.  So two groups, that talk frequently to each other, have deep desires for more innovation, and both are waiting for the others to make the first move.

When everyone wants something and yet no one feels free to act, it makes sense to unpack the barriers and explore them.

First Barrier - Immediate results

While executives want innovation, to help differentiate the company or grow new revenues and profits, they also don't want to risk distraction from existing revenues and quarterly promises.  Potential revenue or differentiation is just never as interesting as near term results.  To counteract this issue, we need to establish priorities and rebalance investments and commitments, or reduce the stated demand for innovation.  Innovation takes time, requires commitment from strong people and will require investments.  It may, or may not, deliver results.  If you want innovation, don't expect it for free.  Even God himself only offered manna from heaven once. 

Second Barrier - Clear goals

Yes, we know executives want more innovation, but how much?  And of what type?  In in what markets or segments?  Requests for innovation are appeals to God and motherhood, moving but often unconvincing.  What we need are clear, measurable goals with rewards attached to them.  3M's stated goal of driving 30% of revenues from products released in the last 3 years is a good example.  It's clearly stated, measurable and stakes out an important need for a continual stream of new products.  Yes, it can be jockeyed, by claiming that an existing product is a "new product" because it has new features.  But which argument would you rather have?  The debate about how "new" a substantial portion of your portfolio is, or why you are losing market share?

Third barrier - Time and Resource

After years of lean, Six Sigma, right sizing, downsizing and outsourcing, most people are working more than ever, and don't have much slack time to take on innovation projects, especially when those projects may require new tools or new ways of thinking.  If we can't turn a project quickly with minimal risk and minimal investment, we probably won't do it at all.  Yet many managers feel the need to do more innovation, and want to do innovation to extend their skill sets and their product offerings.  Perhaps no complaint is more poignant than managers and staff who want to do more innovation, but feel hemmed in by compensation programs, quarterly goals and limited resources.

Fourth barrier - internal focus

Even if all of these barriers are true, any firm that wants to innovate still has options.  While we'd argue that much innovation can and should take place with internal teams and internal capabilities, you can outsource innovation - trusting third parties to spot needs, develop ideas into products and services and even help launch new products and services.  If your firm can't afford the internal resources and people necessary to innovate and sustain quarterly results, you can find incremental services for innovation from third parties, whether this is "open" innovation or something you choose to outsource.  I'd argue that you should outsource the management and extension of existing products and services and insource innovation of new products and services, because that's where the growth lies, but that's for another discussion.

Want more innovation?  Create clear goals, refocus priorities and remove barriers.  The alternative is to create frustrated teams who want to innovate, but don't have the power, the permission, the time or the resources to innovate.  Ultimately the really motivated people in those teams will find new jobs where they can exercise more innovation, leaving behind the people who are willing to simply sustain existing products and services.  Then it will be even more difficult to innovate when your executive team finally commits.

Managers are for efficiency, leaders are for innovation

Time was, back when the railroads were built, that the military was basically the only management structure that was large, distributed and relatively effective.  So the railroads and other rapidly expanding businesses adopted the military's top down, command and control management philosophies.  This was actually a driver for industrial growth, since many corporations were forming and needed a structure to allow them to grow, to expand and to control operations.  The top down command and control organization wasn't especially fast at making decisions, but was good at implementing the desires of the senior executives and good at repetitive work.  This structure was especially valuable when few people had much education, but could be taught relatively simple operations on a production line.

Fast forward to today, and the top down, command and control organization is rapidly becoming a thing of the past.  First, it takes too long for commands to filter down through the organization, so the responsiveness of a top down command and control organization is limited, when the environment is changing rapidly.  Second, the executives and leaders rotate through jobs and positions like a roulette wheel, in one slot and then on to another slot every two to three years.  This lack of longevity in any role doesn't create much stability or desire for long term change.  Third, most workers in large organizations have far more training and education than their forebears, and are able to make informed decisions, if they are informed of the goals of the organization.

The Cross Roads

Our businesses are at a cross-roads, in terms of existing structures and purpose, and future demands.  Most command and control businesses were designed and built based on a competitive model and framework that is dissolving.  As trade barriers fall, competition increases and low cost options shift from country to country, building an ever more effective command and control environment is like akin to "fighting the last war".  Organizational structures need to change.  But you know this already.  Gary Hamel told you this in The Future of Management.  The real question is:  do you understand the impact of this treatise when it comes to innovation?

Leaders, managers and visions, oh my!

Back in the day when command and control was the accepted and the practical alternative, executives created strategies but didn't bother to share them with their employees.  They simply asked for specific tasks to be accomplished, and the employees acted accordingly.  The employees didn't question, and didn't bother to share ideas.  Requests came top down, and results flowed bottom up.

But today, things should be different.  With a far more educated and capable workforce, executive can expect far more than simply acquiescence to commands.  But do the communication channels exist to allow good ideas to flow both ways?  Often, modern corporations seem to represent the epitome of evolved learning, with empowered teams, active communication and deep training.  But underneath all of this evolved learning and management still resides, as an almost vestigial organ, a command and control mentality.  Oh, we've received the training, heard the message and nodded our heads at the sage wisdom, thank you, but we'll still wait for the directions.

What we need is a clear vision for the company, and the right and responsibility to achieve it with our best capabilities and ideas, regardless of their source.  What we need is executives and leaders who harness our knowledge and channel capabilities and passions.  While executives have gotten much better at expressing "what" they want, the "how" part is often still missing, and in the absence of clear directions, staff will revert to what they think is safe and reasonable.  

The new paradigm

Greg Satelle has written about this better than I can, so let's link to his blog, The Leaderless Organization.   What you need to be consistently innovative is to create very clear, compelling strategies and goals for your business, and provide the tools and techniques for your teams to deliver.  And be open enough to their ideas to encourage more innovation.  This doesn't suggest that organizations don't need executives, just that they need leaders even more than they need managers.  Leaders are good for innovation, managers are good for efficiency.  Both are required in a modern organization.