Wednesday, August 13, 2008

Committed to Innovation

If you think about any of the individuals or firms that seem really successful at innovation, one thing should shine through clearly. They are all fully committed to innovation. Edison is famous for saying that genius is one percent inspiration and ninety-nine percent perspiration. He knew over 1000 ways not to make a lightbulb, because he kept trying. All of the firms we hold up as innovative are the same way - they commit to innovation and expect everyone to be innovative.

Since I'm writing at the time of the Olympics, let's use an athletic analogy. Do you suppose that Michael Phelps is "somewhat" committed to swimming, or "dabbles" or experiments with swimming? I think the evidence suggests that he is fully committed. On the flip side, we also know that you can't be a little bit pregnant or slightly dishonest. You either are pregnant or dishonest, or you aren't.

So, what's all that got to do with innovation? Basically, everything.

Most firms we work with are interested in starting very small, containing the risk and the cost. They want to experiment to demonstrate some results before committing to innovation. On the surface, that sounds about right. No one should plunge in, sight unseen, to a new strategy. However, given the magnitude of the change necessary to become more innovative, and the pressures just to get the regular day jobs done, what can happen is that a few people dabble in innovation, they experiment with innovation but aren't really committed to innovation. This usually then results in the examination of safe ideas and concepts that don't really require a lot of work or confronting existing norms and expectations. So, the ideas are incremental at best and don't really stretch the organization, and the results are ho-hum. Then everyone scratches their heads and wonders why innovation doesn't seem to create dramatic change.

Few people who have been assigned part-time and temporarily to an innovation program that the firm has yet to show any long term commitment to are going to stick their necks out and risk much. If you want those ideas and that commitment from them, then you'll need to demonstrate your commitment and ask for those ideas, demonstrate your firm is working for innovation in the long run and change they way those folks are compensated and evaluated.

Frankly, most good innovators aren't just committed, they probably should be committed. After all, who knowingly, constantly questions the status quo and creates products and services that create risk and can't be quickly and adequately costed? Who'd come up with products and services that cannibalize existing offerings? Who'd suggest disrupting another significant market?
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posted by Jeffrey Phillips at 1:36 PM 2 comments

Thursday, August 07, 2008

What's your BHAG?

Let's face it - everybody wants to innovate, but most people can't find the time, the urgency, the resources or the bandwidth. When they finally get all the people, dollars, resources and time, they then play it safe, choosing to innovate around small issues. Eventually everyone decides that innovation is just a new word for new product development.

Let me suggest instead the BHAG - Big Hairy Audacious Goal. When you set out to innovate, set up an outrageously audacious, aggressive, time consuming goal that needs to be met quickly. Then, figure out how to make it work. Why would you take this approach?

First, it focuses the minds of the people who are involved. Incremental innovation can be accomplished in a lot of ways, and people get tied up in the existing politics and procedures. A BHAG will force people to think differently and work differently.

Second, a BHAG, if supported by the executive team, will create a sense of excitement and urgency. A real BHAG will ripple through the organization - everyone will want to participate and see what happens. Who wants to be the roadblock for a BHAG?

Third, a BHAG demonstrates to the organization that change is important and will happen. If the BHAG is truly big and audacious, the individuals tasked to make it happen have to think differently, act differently, fund and staff the issue differently. They have no choice but to become innovative in how they think and react, staff the challenge and create results.

Fourth, a BHAG seems "worth it". Too often our innovation goals don't seem really all that valuable, because we are too safe and comfortable. Then, many people will shrug their shoulders and ask, is it really all that different or new? With a BHAG, it will be and the effort to get there will be worth it.

What would happen in your firm if the CEO demanded three big ideas to radically change the business, or three new product expanding or market opening ideas that had to be deployed in 3 months or less? During the second world war, when cargo ships were at a premium, Liberty ships required almost 250 days to build. As the demand increased, the builders were asked to create ships much faster. Eventually they innovated the design and building of the ship and got the average to 40 days, about 20% of the time it took when they started. This wasn't because of learning gains, it was because the US had a BHAG to build ships much faster. Setting the BHAG demanded that the shipbuilders think differently, organize differently and work differently. It also created a sense of urgency to know that their work was driving the war effort. If it can be done in shipbuilding (as in only one example) it can be done anywhere.

If your company is innovating, what's your BHAG? If you don't have one, do you believe that a clear definition of an urgent BHAG will make it easier to think differently and rally people to the idea or innovation?
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posted by Jeffrey Phillips at 8:12 AM 2 comments

Monday, August 04, 2008

How does innovation fit into your plan?

We all know that CEOs want innovation. Every press release, every annual statement talks about the importance of innovation to just about every firm. Yet there is a disconnect that exists between the executive level demands and expectations for innovation and what happens six to nine months later. You see, most people within a business would love to be more innovative, but they've got the pressure to deliver on quarterly and annual goals and promises to Wall Street, investors and shareholders. So, while the advocacy of innovation from the senior suite is interesting, what gets done is what gets measured. And our current yardstick is stock price, profits and revenue growth.

To move beyond merely advocating innovation, the executive team needs to set a solid expectation about the delivery of innovation. The best way to do that is to require each line of business, each product group, each business function, to incorporate innovation into their annual plans and be able to demonstrate what achievements were accomplished. This might look like a 3M sort of goal, where you want to drive X% of your revenue from products created in the last few years, or the creation of Y new markets that did not exist for the firm a year before.

Requiring the product groups and business functions to incorporate innovation in their annual plans, and then reviewing the results and assessing how well the goals were achieved is a simple first step, and one that is not often taken. The next approach to incorporating and achieving innovation is to establish a pool of funds specifically for innovation, and have the lines of business or product groups request money from that pool, which is dedicated to innovation. Jeff Immelt at GE has taken this step - to challenge each line of business to create imagination breakthroughs with funding available from the office of the CEO. When the CEO asks for innovation and offers to fund it, and reviews the significant ideas, don't you think that conveys how important innovation is to GE?

What would happen in your organization if the CEO asked for an annual plan from a line of business, and also asked for a plan that included 30% of revenue generated from products that did not exist, or asked the line of business to create a plan that spent $5M in innovation funds to create new products and services? Would that change the way your firm thought about innovation and the urgency and importance it assigns to innovation? You bet it would.

CEOs who truly want innovation in their organizations need to invest not just their words, but their time and their funding to demonstrate how important innovation is to the business.
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posted by Jeffrey Phillips at 7:31 AM 1 comments

Friday, August 01, 2008

Why innovation is like (and unlike) electricity

I was sitting in an innovation discussion with a client recently when it struck me - in some ways innovation is very much like electricity, and often we want it to behave exactly like electricity, even when it won't.

Innovation is unlike electricity in that you can't simply "flip a switch" and expect an immediate outcome. I can flip a switch to turn on the lights in my room, but I can't simply say "be innovative" and expect an immediate result. Nor can I flip the innovation switch off and on repeatedly, since the "flow" of ideas takes time to build.

However, that last concept - a "flow" of ideas explains why I think innovation can be compared to electricity. If you flip the switch on, and leave it on, electrons flow until you flip the switch. Likewise, in a well run innovation program, ideas literally flow constantly, because that's the only way to succeed. Starting and stopping when you have "enough" ideas is ineffective and inefficient. Want more? We can continue the analogy to a circuit board.

Just like in electrical circuits, innovation has its resistors and capacitors. Now, resistence is used for important effect in most electronic circuits, but it almost always creates waste, especially heat. In the same manner, innovation has it's resistors - they are the people who want to demonstrate why it can't be done, or are the doubting Thomases who say "we've never done anything like that before". Alternatively, most innovative teams have power sources where the ideas flow from, and capacitors, which store and manage the flow of ideas, just like an electrical circuit. When the ideas are flowing, they originate from one or multiple sources and are managed through a process with an effective governance.

We've become so accustomed to turning on the lights and getting results that many managers believe that programs like innovation should work in the same way. Inertia, change, risk, fear of the unknown block an innovation program and keep the ideas from flowing. Only through establishing a consistent, continuous circuit can an organization succeed at innovation. You can't just flip an innovation switch.

Note: My apologies to all the electrical and circuit folks among you who are probably cringing as you read this. My one and only class in electrical engineering proved to me that I belonged in marketing. Feel free to add your own analogies (even if they are a stretch) in the comments or tell me where I went wrong!
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posted by Jeffrey Phillips at 3:50 AM 2 comments