Thursday, July 29, 2010

Innovation is interrelated and interdependent

One of the most illuminating comments I heard recently in a training program we offered was one participant's realization that innovation, especially bringing a new idea to fruition, might require more than just product innovation.  It may involve innovating the way the firm thinks, the way it works, how it manages and how it performs.  In other words, when you are just starting out in an innovation effort, you may have to innovate and invent new methods, new processes and new ways of thinking to bring a new product to life.

There's a good reason for this thinking - it's very difficult to create something entirely new to an organization that doesn't fit to existing thinking and processes.  You either adjust the new idea to existing thinking and processes, or you create new thinking and processes to enable the new ideas.  And if you follow that thinking, you can see immediately why firms with highly entrenched methods and processes can find it very difficult to innovate, while firms with flexible thinking and nimble processes and systems can more easily innovate.

So, there really isn't such a concept as "product" innovation as an isolated effort.  Creating a new product or service will force you to rethink how you collect and synthesize market insights, how you conceive new products and how you bring them to market.  Thinking deeply about a new product or service may in fact lead you to consider new business models or new sources of revenue or new channels as well.  This means that what may initially seem like a simple act of creating a new product will in fact force your firm to reconsider how it works.  That's another reason why a half-hearted, let's give it a shot innovation programs almost always fail.  There are simply too many things that must change to do innovation easily.  Yes, you can ramp through a new product or service without changing some of these other features and attributes of your business, but you'll run roughshod over the existing thinking and processes.  Not to say they don't need to be roughed up a little, but they'll give as good as they get.

Innovation at any level is interrelated to so many other factors of your business.  A new product or service may require a new method to service customers or a new channel, or new business model.  New ideas can't live in isolation and may not play nicely with existing ideas - and that's the point.  A radically new or different idea needs different organizational structures, channels and models to survive.  Innovation is also interdependent with other processes and strategies.  Try creating a new innovation effort in your business without communicating what you are doing, or changing how the participants are evaluated or compensated.  You'll soon find that while innovation may seem isolated from the "regular" business processes, it relies on and demands services from those processes that may seem unreasonable. 

Yes, you can create a skunkworks and hold innovation at arms length.  That can create really interesting and radical ideas but will need to duplicate a lot of the capabilities and processes you have already in existence, and the new insights and learnings won't filter back into your existing business.  The skunkworks model is effectively like exercising only one arm and hoping the rest of the body benefits.  If you plan to innovate, you need to know that you can't simply create a new product.  A really interesting new product or service will almost by definition force a rethinking of your existing management styles, business models and org structures.
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posted by Jeffrey Phillips at 1:49 PM 1 comments

Friday, July 23, 2010

Four ways ideas are selected for implementation

Most people in the innovation space will tell you that generating ideas is the "easy" part of innovation.  For the most part, they are correct.  They'll also tell you that the difficult part of innovation is evaluating, selecting and implementing ideas.  That, too, is mostly correct.  But I'd argue that this statement masks a fairly important decision.  It's actually not that hard to evaluate and select ideas, but no idea makes the transition from interesting concept to product on the shelf without a senior leader who backs the idea, funds it and makes it part of her plan.

Ultimately this is like shopping for furniture with my wife.  We can see many chairs or sofas that might work and be perfectly acceptable, but if she isn't willing to put the item in our living room, it's not going home with us.  Innovation programs can generate hundreds of great ideas, and we can train people to evaluate them and spot the "best" ones, but until a person who has the power to move an idea from a concept to a product or service is involved or engaged, it can be very difficult to bring the good idea to fruition.

With this in mind let me suggest the four ways ideas are most likely to make the transition from concept to product or service:  Assignment, Sponsorship, Adoption, Spinout.  When you think about your innovation process you need to consider how your organization prefers to convert ideas and how executives prefer to get involved.  Let's examine each briefly.

One method sure to produce results is "assignment".  This means that a senior executive has already decided on the idea that needs to get implemented, and he or she assigns the development and deployment of an idea to a team.  In this case the team doesn't have a lot of options other than to deploy the idea as developed by the executive or someone else.  While the idea is likely to come to fruition, it can be met with several challenges.  First, since the team deploying the idea didn't invent the idea, they have no great stake in the idea and may not challenge it or stretch it appropriately.  Second, the idea may be unworkable but the team may not feel it's in their power to question it.  Third, as several firms have already learned, top down innovation by senior executives is rarely effective if your CEO isn't named Steve Jobs.

The method we like best and think is most effective is "sponsorship".  In this case an executive recognizes a problem or solution and uses innovative teams and techniques to create ideas.  Since the ideas that are generated solve his or her problem, the executive sponsors the idea and agrees to fund it and back it through the development and deployment process.  In this case, an idea is linked directly to a problem the executive has or an opportunity that's been identified and the executive has an investment in the idea's success.

Some idea generation systems exist outside of specific needs or directed challenges.  Many "open" innovation programs allow individuals to submit ideas of their own choosing.  In these processes it can be the case that a good idea "bubbles up" and is identified by an executive, who decides to "adopt" the idea and deploy it in his or her business.  The executive didn't request the idea.  The idea merely popped up on his or her radar screen and it was so compelling that the executive chooses to "adopt" the idea as his or her own.

Finally, there are ideas that are simply orphans.  While they are good ideas, no one sponsored them, requested them or adopted them.  In some firms these ideas make great candidates for spin-outs or new business units.  Just because an idea wasn't sponsored or adopted doesn't mean it doesn't have value.  It may be that the idea is so different or so radical that the existing business lines couldn't decide how to implement it and the idea should be developed stand-alone or perhaps as a new venture.

What's important here is to understand innovation in the context of your organization.  Which model is most likely to result in ideas that actually get implemented?  Clearly we believe the sponsored model is the best approach, since there is active executive engagement throughout.  However it may be the case in your innovation program that several of these outcomes happen based on the ideas that are generated.  These different outcomes - sponsorship, adoption and spinout - require different implementation programs, funding mechanisms and capabilities, so understanding which one(s) are likely to happen is important when you design your innovation process and train your teams.

Finally, it's important to understand that while you can generate hundreds of ideas, the only ideas that really matter in the end are those that get implemented as new products, services and business models.  So, as you design your innovation process and team, remember to carefully consider which method or method is most likely to work within your organization.
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posted by Jeffrey Phillips at 5:53 AM 1 comments

Thursday, July 22, 2010

What Innovators can learn from the Obama presidential campaign

Whether you like the Obama administration or not, one thing you have to give them credit for:  during their campaign they sought out and identified people who were ready, willing and eager to help.  In fact, many of the people who drove the success of Obama's presidential race weren't the establishment figures - they lined up behind the Clintons until the primaries were over.  No, many of the people who drove the Obama campaign were just regular folks who were energized for perhaps the first time.  This passionate, engaged volunteerism can't be faked, it can't be manipulated and it can't be replaced, as evidenced by recent polling numbers.

This isn't a political post - it's a post that seeks to compare what went right with Obama's presidential campaign and what we as innovators can learn about building a successful innovation effort in a business.  Obama ran as something of an outsider - with new ideas, a fresh approach and as a radical change from the figures of the recent past (Bush, Clinton, Bush, etc).  He based his campaign on grassroots volunteers, many of whom were not establishment figures but who had a lot of passion and energy to donate to the campaign.  These folks, as well as Obama's team, leveraged new social media tools and new methods to meet and interact to sustain their energy and passion and to reach and invite new people.  We innovators would be smart to consider what was done well in that campaign and emulate it.

In most businesses today, if an executive decides that innovation is necessary or important, he or she assigns a (usually) poorly defined task to another subordinate executive to create some innovative product or service.  That individual assigns the task to several people who:  1) weren't involved in the decision 2) already have other responsibilities and 3) aren't passionate about change or innovation.  So, we get a team of the uninterested led by the unwilling focused on the abstract.  There's no passion, no energy, little enthusiasm.  Additionally, there's often little time allotted and no introduction of new tools or techniques.  So we ask people who aren't involved and aren't passionate to create something interesting and new, using existing tools and processes.

This is exactly the opposite of what happened in the Obama presidential campaign.  Obama created a clear change vision and attracted passionate, engaged people to that vision.  Then, he and his team introduced a range of new tools to get people who might not normally have been involved actively involved in the campaign - reaching out and including others and building a grass roots program.  Passion and energy are contagious, and having a vision to focus that passion and energy simply adds fuel to the fire.  Imagine, however, if the campaign team had recruited all of these new people to support the race, but had forced them to use older, more traditional tools and techniques rather than social media and meetups.  They'd have lost their enthusiasm and energy.  Now, think about what we do when we build innovation teams in most businesses.

Do we:
  • Create a clear, compelling vision?
  • Invite anyone who is energized by that vision?
  • Build on their passion and engagement?
  • Give them the new tools necessary to succeed?
Umm, no.  In most cases we:

  • Have a poorly defined goal with weak commitments
  • Assign people who are available and already overworked
  • Ignore people who might have passion about the topic because they aren't the "right" people or are from a different group or aren't senior/junior enough
  • Passion?  Engagement?  Really?  Not during office hours!
  • Ask them to use existing tools and techniques to create something new
Everyone tells me that they can't afford to invest in their people and their innovation teams.  Yet the Obama campaign is an example of a group of people who volunteered their time, crafted tools with little investment, using what was available to them, because they were passionate and engaged.  I think that given the right goals, clarity and opportunity, innovation doesn't have to be difficult or expensive.  People will rush to the right vision and opportunity, and will work far beyond an "8-5" given the chance to do something powerful and meaningful - for a political campaign, or for their employer.

Too many firms have forgotten that their people are motivated by more than the job and the paycheck.  People want to create new things and seek to express their passion.  Too often we ask them to leave that at home, or exercise it outside of the office.  Political campaigns are just one beneficiary of the fact that large firms often can't excite and motivate employees to bigger, greater things.
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posted by Jeffrey Phillips at 8:57 AM 1 comments

Monday, July 19, 2010

Creativity takes Courage

I took the day off on Friday.  A spur of the moment decision, really.  My daughter was finishing a summer camp near Asheville, NC and I decided to go up with the family and spend the weekend there.  If you haven't visited Asheville, I'd highly recommend it.  Asheville sits in the Blue Ridge mountains in Western North Carolina and is in a beautiful setting.  Moreover, Asheville is an interesting city because of the barons of the Gilded Age who built a good portion of the downtown, and Vanderbilt, who built the Biltmore.  However, in the last twenty years or so Asheville has become a real draw for artists, including pottery and ceramics, glass blowers and painters.

We went on a short walk through the River Arts district, watching a number of artists ply their trades - potters and ceramics makers, glass blowers, furniture makers and a few painters.  One that struck me in particular was Jonas Gerard.  I'd not heard of Gerard before Saturday, and I'm not sure his work is to my "taste", but we had an opportunity to watch him paint, and it was fascinating.

Watching an artist create something is amazing for someone like me with little skills in the graphic arts.  When I draw something I try to imagine what it "should" look like and then re-create it on paper.  Jonas spoke after he had finished his piece and said that the painting "wanted to be flowers".  It was his job to bring those flowers out of the painting.  Jonas worked rapidly, almost without contemplation.  He rushed up, dabbed paint on the canvas, then turned away for another color or another brush, and did it again.  His work seemed a jumble until it was finished. 

His art was distributed throughout the gallery, and so were a number of quotes.  One that struck me as being exceptionally true was the statement by Matisse that "creativity takes courage".  It takes courage to be an artist - to create a piece of art that will inevitably be judged by others.  It takes courage to suggest that a painting can be an impression of a scene, rather than a perfect reproduction of the scene.  It takes courage to create entirely new forms of painting as Pollock and Johns and others did.  These artists have the courage of their vision to create their art.  We in business need to learn from their example.  We need to have the courage of creativity.  Many people think that courage is the ability to face some terrible threat, such as a solider in wartime.  Simple courage is much more basic than that - the ability to create an idea that differs from the status quo, or to follow a passion, even in the face of possible skepticism from your friends and colleagues.

Creativity requires courage in business because any suggestion other than the most efficient or most reasonable is usually met with a snort of derision or scorn.  Varying even slightly from the accepted orthodoxy is tantamount to mental deviance in many firms.  Look at so many large financial services firms today.  Rather than find new ways to interact with their customers after the financial meltdown, the only consistent response is to offer more of the same, only with higher fees.  Not one financial services firm has explored a truly different or creative approach to addressing the financial needs of customers.  That's because they are limited by the expectations of Wall Street.  Their creativity is constrained and thus every bank and every bank product looks exactly like every other bank and bank product.

A firm either encourages and embraces the creativity of its people or it conforms and rejects those creative impulses.   These actions also create virtuous circles (when reinforcing creativity) or vicious circles (when rejecting creativity).  Business firms that reject creativity from their employees will eventually work themselves into a dead end where they recognize the need for creativity but can't "find" it in their teams.  That's because they've reinforced the notion that creativity is for creative firms, not for real businesses.  Until the day its really needed and everyone exclaims that "we aren't creative".  Firms that encourage and reinforce creativity in their staff create a virtuous circle.  They become firms that attract talent and grow talent more effectively.  They are more interesting places to work, where people can express their interests and passions.  They'll never run out of ideas.  Yet to create such a place requires courage - the courage of the executives to embrace innovation, and the courage of the staff to sustain innovation everyday.

Creativity takes courage, whether you are an artist, a teacher, a business person or a government official.  If you are worried about what other people will think, or how your boss will assess you, then you've put the brakes on your own creativity, and eventually on your own growth.  Take courage, and introduce some creativity in your work today.  You'll be the spark that ignites the rest of the business.
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posted by Jeffrey Phillips at 5:57 AM 5 comments

Thursday, July 15, 2010

Why compensation models work against innovation

I've asked myself, and many other people in the innovation space, why innovation seems to be so beneficial on its face and yet so difficult to accomplish.  I can't think many CEOs who aren't actively talking about innovation and the need for more innovation in their organization.  I can't think of many people who don't want to see their firms improve, and most of them are simply chock full of ideas.  It feels as if "everyone" wants innovation, yet there must be a strong, subtle restraining force that slows and distracts the innovation focus.  Certainly there are the "big" challenges - enough time, enough funding, finding enough resources - but generally those can be overcome, at least on a project by project basis.  No, I think something more subtle and more persistent is the barrier.  I think that when we strip away all of the other innovation constraints and blockades, we're going to find a very small but very powerful disincentive to innovate, buried in how we compensate our teams.

At our core, we people are fairly simple animals.  We are driven by the things that interest us, amuse us or entertain us.  Most of us work to afford to do the other things in life we enjoy.  We exchange our labor, our thoughts and insights and our management skills for a paycheck.  And, since most of us have pretty good lives based on those paychecks, we begin to forget what it was that inspired us and begin to do what ensures and protects the regular receipt of the paycheck.  I've said it before that many people (self included) can become creatures of their corporate culture.  That means that instead of doing what we know to be "right" in terms of creating something new, introducing new ideas and new products, we first evaluate what is expected in terms of our evaluation and compensation.  What will keep us in good feeling and mutual admiration with our co-workers and employers.  Gradually over time we become the people we used to sneer at when we had gumption and were ready to overthrow the status quo.  Now, we are the keepers of the status quo.

And this fact alone is why more innovation gets done in small, entrepreneurial companies than in large companies. All the other excuses that large firms throw around about innovation really pale in significance to the question of compensation.  Most people in most large organizations have a very specific compensation plan, and it is usually tied to predictable profits.  If that weren't enough, most people in large organizations have a good chunk of their savings in the firm's stock, so it is in their interest to create ever predictable revenue streams to reassure Wall Street on a quarterly basis that the firm is headed in a safe, predictable, profitable direction.  If everything that supports and sustains your standard of living and your paycheck is based on sustaining predictability and growing profits slightly year over year, you don't win many friends by suggesting a radical new innovation effort to distract the organization.  Even when you can convince people that innovation is necessary the effort is carefully walled off from the rest of the organization so as not to disturb or disrupt the operations necessary to achieve the annual plan and the whispered earnings.

If we truly want to see more innovation in larger firms, then the first thing these executives will do is change how people are evaluated and compensated.   If people are evaluated and compensated based on their innovation contributions as part of their regular compensation program, then we'll see far more ideas developed and implemented.  Jack Welch was famous for saying "Show me a sales person's timecard and I'll tell you how she is compensated".  I can say with little concern that the reverse is also true:  "Show me a person's compensation plan and I'll tell you how interested they are in innovation".

The reason that compensation is such an insidious barrier to innovation is that we all share it and it's not polite to talk about.  No one wants to focus on compensation since it can be such a headache to revise and restructure, but there's little doubt it is a serious impediment to innovation.  Unlike some of the other barriers that can be overcome - few resources, few dollars, few insights - compensation affects everyone and it is a personal barrier as well as a corporate barrier.  It's hard to rally people round the innovation flag when they are looking over their shoulder wondering about how the innovation work will affect their compensation.  Even if we get the other things right - establish a good atmosphere for innovation and identify a charismatic leader, people still carry around the millstone of compensation.  The fact we pull people out of their roles or teams for a while on an innovation project doesn't really solve this problem, because they eventually have to go back to their old home or role, where their innovation work may have simply caused more work for the folks who remained behind, and who weren't compensated for it.

I honestly believe that if a firm seeks to become more "innovative" over time as a sustainable capability, it will have to address its compensation and evaluation programs to bring them into alignment with the responsibilities and work required for innovation to take root and grow.  Any firm can innovate once without changing its compensation programs, but it's rarely sustainable.  It's also interesting that the people most involved with compensation planning are the people least involved in innovation efforts.  A good sign of a sustainable innovation program should be the presence of a senior Talent Manager or HR individual who is working in tandem with executives to build new evaluation and compensation models.
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posted by Jeffrey Phillips at 6:13 AM 7 comments

Tuesday, July 13, 2010

Managing for innovation

You'll note the title of the blog post - managing for innovation.  Not "managing innovation" which is akin to "herding cats".  No, managing for innovation.  In other words, setting out the environment, atmosphere and behaviors to inculcate innovation in the environment of the organization, rather than using a microscope and a magnifying glass on every activity to ensure that innovation is happening.

We "preach" managing for innovation to our clients.  Yes, we do innovation projects, but a discrete innovation project is hopefully just the first step on a much larger journey - the journey that takes an organization from occasional innovation projects to committed innovation entity.  What distinguishes a "once and done" innovation effort in an organization from an organization that is fully engaged and innovating all the time is the environment, the atmosphere, and the culture.  And all of those factors are predicated on the management of the organization.

This is a long winded way of introducing our topic for today, which is the valuable arrival of the latest Nielsen study on innovation.  You can read the synopsis here on the Nielsen site.  Frankly, I am late to comment on this.  Others already have - see here and Paul Slone's blog for example.  What the Nielsen report indicates is that distance from the executive team fosters greater innovation capability.  I'll take issue with whether that "distance" has to be geographic distance, or if the distance can merely be that the executive team offers space for the team to work and freedom to investigate ideas.  But what's evident in the research is that a light touch managing an innovation effort is critical.  In my thinking this means establishing the goals and developing the environment where innovation can flourish, and then allowing the work to progress relatively unimpeded, rather than constantly demanding updates and reports, and frequently shifting the emphasis of the effort.

In what is one of those "everything I needed to know I learned in kindergarden" moments, the synopsis states:
“One of the keys to successful new product innovation is to manage new ideas lightly,” said Agan. “While we don’t dispute senior management’s strengths and good intentions, they are often too quick to get involved in the creative process, especially when things are not going well, and their mere presence can stifle free-thinking and boundaryless ideas – which can doom the new product development process to failure.”

Well, here's a Captain Obvious moment.  We need innovation programs that have the freedom to follow the logical paths where the ideas will lead, rather than constantly evaluating, compromising and conditioning the ideas to our current realities.  And since most managers need new products and services yesterday and want to deliver them in the next quarter, they can be excused (but not forgiven) for trying to shoehorn new ideas into solutions they can deliver tomorrow, rather than allowing the ideas to play out.

Next, the study suggests that rather than managing ideas, executives should pay more attention to the process.  Yes! Finally, we are beginning to understand that the PROCESS is far more important than any idea within the process.  The PROCESS can be sustainable, while any idea moving through the process has only a small chance of success.  What's odd about this disparity is that in most instances executives are comfortable managing the processes and don't get too involved with the projects and initiatives within the process, as long as the process is within some tolerance level.  In innovation programs, there's little investment given or attention paid to the process, and all focus on the ideas.  We get innovation exactly backward, contrary to the way we run the rest of our businesses.

There's a good reason for this - innovation involves doing something new, different and risky, so we believe that every idea is sacred, every idea is immensely valuable and should be nurtured and coddled.  No, ideas are COMMODITIES - it's the process that matters, not the ideas.  And, what's also nice, is that an innovation process can be incubated and tailored to an organization's focus or culture.  Apple's innovation process is really different from Google's, which is really different from P&G's, but they all have defined processes and those firms reinforce the processes effectively and build cultures, atmospheres and behaviors that encourage idea generation.

For those of us who "do" innovation frequently, the Nielsen study isn't an "ah ha" report.  It is a statement of the obvious.  For those of you who hope to do innovation well, please consider it not an outlier, but the gospel truth - manage the processes distinctly and create the atmosphere or cultural tolerance for ideas and innovation.  As the report says - manage ideas lightly and the process precisely.
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posted by Jeffrey Phillips at 7:51 AM 1 comments

Thursday, July 08, 2010

Innovation: The Art of the Improbable or Impossible

You've perhaps heard the saying that politics is the art of the possible.  Otto von Bismarck said that over a hundred and thirty years ago.  He was the chancellor of the German nation.  You'd think that a guy with that much power would have been able to push almost anything through, no matter how harebrained.  But he realized and accepted the limitation foisted on him by the political system.

Otto was interested in what could be accomplished within the framework of his political situation, which was bounded by the bureaucracy of the government, the expectation of the people, what his treasury could fund, and a number of other constraints and barriers.  What he wanted was the best possible outcome based on these constraints.  Unfortunately, a lot of people who want to be innovators think this way as well.

Whether you are in government, in a not-for-profit, in academia or in a commercial enterprise, there are constraints that will be applied to any new project or initiative.  Resource constraints, funding constraints, resistance to change, the expectations of customers, shareholders or constituents.  These are realities we all face.  However, if we allow these constraints to frame the way we think about innovation, and constrain our thinking to achieve only what we believe is "possible" within those constraints or boundaries, we've lost the innovation war from the start.  Rather that take as a starting point our existing situation and all of the constraints as givens, as innovators we need to think about innovation as the art, not of the possible, but of the improbable or even the impossible.

I'll use an example to illustrate my case, once again from my home state of North Carolina.  In the 1950s a number of leading executives and government officials decided to create a research park in what were farming communities between Raleigh and Durham. They had a long term vision of North Carolina as a center for serious scientific research.  At that time their ideas must have seemed impossible.  North Carolina was primarily known for agriculture - tobacco especially.  There were few high tech firms here, and building a research park that required the cooperation of several universities, in a state that had few high tech firms, must have seemed daunting.  If the executives and politicians in that day had begun from the "art of the possible" they would have never made these investments.  There were many reasons and many constraints that would have stopped the creation of Research Triangle Park.  The park was a huge bet on the future, on technology and research, in a state that had traditionally focused on furniture, agriculture and textiles.  But those folks had a vision, and decided to think about the "art of the improbable" to make a significant investment that still pays dividends today.

My point here is that if those leaders had allowed the constraints and barriers to get in the way, the teams would have whittled down the concept of Research Triangle Park to a small office in an existing facility with little resources and no funding, and North Carolina would be far less evolved in technical research.  If they had worked completely within the "art of the possible" then IBM and the pharmaceutical firms that use the park would never have moved here.  Instead, they chose to see the possibilities and shrugged off the constraints and barriers to reach for the art of the improbable.

Far too often I hear people who are the "innovation" leaders within their firms talk about innovation and then temper their goals and aspirations based on what's possible.  If you start your effort with what everyone agrees is "possible" then you'll only achieve incremental improvements at best, and everyone will be disappointed and frustrated by innovation.  If you're going to innovate, please stretch your thinking.  Consider what would be improbable or even impossible and use that as a starting point or goal.  In any initiative the scope gets watered down and reduced, so starting with an impossible goal will eventually be watered down to an improbable goal, which is far better than starting out constrained by what's possible.

Here's a simple test for your would be innovators.  State your innovation goals loudly and often within your firm.  If people don't stop and gasp, and tell you that your goal is impossible, you are settling for the art of the possible, which won't be innovative.  And rest assured there are people eyeing your market or customers who are willing to attempt the art of the improbable, to disrupt your offerings and services and take your customers.  Don't start on an innovation project that is hemmed in, constrained and bounded by the "art of the possible".  It will only end in dissatisfaction and recrimination as the results simply aren't interesting or unique.  Start with the "art of the impossible" and force people to confront the barriers, challenges and issues, and create a vision that helps them understand why reaching further will create so much more value.
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posted by Jeffrey Phillips at 8:19 AM 2 comments

Wednesday, July 07, 2010

Four Innovation Perspectives you need to understand

I'm going out on a limb here, limiting myself to four innovation perspectives.  I'm sure there are many readers who've already decided that there have to be far more than four.  Perhaps there are, but stick with me to understand my thinking.

I'm writing today about how innovation consultants and service providers think about the innovation space - how they divide up the innovation decision makers and how they attempt to influence the decision makers and their thinking.  I've divided these up as:  strategy, design, marketing and PR, and process.

The big strategic firms - McKinsey, BCG - and the smaller niche innovation strategy firms like Innosight approach innovation as if it were a strategic problem.  And it is.  Innovation should always support a business strategy, strategic goals and strategic intent.  However, innovation isn't just a strategic problem.  Innovation is also an operational problem, a tactical problem and a cultural problem.  Addressing the strategic aspects of innovation is OK, but as we all know grand strategies aren't enough.  Real difference comes from the implementation of the strategy as new products and services that deliver value.  Remember also that innovation isn't a strategy - it can be an enabler to existing strategies but by itself it isn't a strategy.  So if your firm doesn't have a clear strategy or clear goals, innovation probably won't be much of a help.

The design firms - IDEO and Doblin as examples - want to position innovation as a design problem.  And to some extent they are correct.  Many problems can be solved through the use of integrated design.  Imagine if we intentionally designed our products or our client interactions rather than simply allowed them to evolve.  Innovation means incorporating different approaches and perspectives, and that's where the design concepts are helpful.  But, much like the focus on strategy, design thinking isn't enough without implementation, and isn't sustainable without defined processes, skill transfer and cultural change.

The marketing, PR and advertising firms that are involved in innovation want to position innovation as a marketing and launch problem.  They can be a marketing hammer looking for nails.  Marketing, PR and advertising skills are important if applied correctly in the understanding of customer needs and in the launch of the product, but that doesn't mean that these firms offer all the skills and capabilities necessary throughout the innovation process.  Additionally, like the design and strategy firms, they have arcane methods that don't provide for knowledge transfer.

Finally, there are firms (we at OVO are one) that think of innovation as a consistent business process.  In other words, we believe innovation can be a process that anyone can follow within your business, much like a purchasing process or other established process.  This doesn't separate innovation from strategy, since we've already agreed that innovation should be tightly linked to strategy, but creates a more consistent, sustainable way to undertake innovation over time.  If innovation can become an internal business process, then it is far easier for anyone to innovate within your firm over time, and for innovation to become something that your firm does on a regular basis.

Note as well that all four of these perspectives are valuable and all four rely to some extent on the insights and capabilities of the others.  A process oriented approach with no linkage to strategy can create a powerful but incremental innovation program, for example.

Another perspective when thinking about innovation and service providers is the concept of insourcing or outsourcing innovation.  Many service providers offer to "outsource" innovation for your firm - understanding your issues or needs and returning several months later with a handful of ideas.  While these ideas may be valuable, they don't convey any real insight or knowledge to your team or staff.  If your firm isn't careful, you'll outsource all the strategic and critical thinking to a third party, emphasizing implementation over insight.  We at OVO advocate insourcing innovation, using many of the same tools and techniques but working hand in glove with our clients to transfer knowledge and build skills.  Many firms talk about becoming more innovative yet rely almost exclusively on outsourced innovation models.  Without an established team and proven innovation process, most firms won't innovate successfully without outside help.

When you think about acquiring innovation help, make sure you understand the perspective your prospective partner takes on innovation - do they start from a strategic viewpoint, a design viewpoint, a marketing viewpoint or a process viewpoint?  What are your goals?  Do you want to acquire the skills to innovate internally, or are you, in the words of one of my clients, willing to "buy ideas from consultants"?  There's not a wrong answer, but there are implications to your selections.
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posted by Jeffrey Phillips at 7:22 AM 1 comments

Tuesday, July 06, 2010

A lack of standards makes innovation confusing

I've read about the five phases of a project: 
  1. Euphoria
  2. Disenchantment
  3. Search for the Guilty
  4. Punishment for the innocent
  5. Rewards for the uninvolved.
I've also read about the five stages of grief:

  1. Denial
  2. Anger
  3. Bargaining
  4. Depression 
  5. Acceptance
What we need in innovation is a five step method to describe the confusing explosive growth.  Perhaps something like this:

  1. Euphoria
  2. Extensive, unbounded definitions
  3. Impossible expectations
  4. Wild claims
  5. Occasional success
I believe that one of the biggest barriers to innovation is the lack of objective, documented methods, tools and standards.  When virtually anyone can assert a statement as innovation "fact", who knows what to believe?

I was shocked to discover that, based on which innovation "expert" you believe, Raleigh NC (my current hometown) is either the 4th most innovative city in the US (based on a survey recently published by Forbes Magazine) or is the 24th most innovative city, (two slots below Detroit!), based on a report by 2thinknow.  I haven't seen the details behind either report, and I'm sure good, well-meaning people can disagree about certain criteria or metrics.  But isn't this just a bit discongruous?

The fact is that both publications picked innovation metrics that they believed reflect innovation capabilities and results.  Without drilling down into the analysis, it's hard to know which, if either, are correct.  But with such a wide disparity, clearly at least one of them is wrong, if not both.  I argued in an earlier post that Forbes' work relied too heavily on patent generation, which propelled Raleigh up the charts due to the presence of IBM and three major research universities.  However, I don't believe that Raleigh is less innovative than Houston or Detroit, which the 2thinknow report suggests.  A city that doubles in population over ten years with vibrant high tech, biomedical and other growth industries is certainly more innovative than a city that loses half its population in ten years.

These two innovation rankings simply point out a larger issue with innovation.  As long as there are no standards, no agreed metrics, no accepted models, anyone can state with some authority that his or her report, or model, or process, is the "right" one.  Like any fast growth industry, there are a lot of people jumping on the bandwagon selling the latest snakeoil to profit from a lot of confusion.  We in the innovation industry need to begin to recognize that only through the definition of standard measures, processes and models will innovation be recognized as more science than art.  Until we develop standards that can be published and people can review, every offering in innovation is part black magic, and the purveyors profit from that ambiguity and confusion.  It's incumbent on us, innovation practitioners, to begin to agree on standard innovation methods, models and processes, which will identify the best innovation measures and metrics.  All other areas of management specialty have followed the path from folk wisdom to wild claims to organized documented fact.  We no longer guess at whether or not we make a profit - we use Generally Accepted Accounting Principles (GAAP).  Well, you do if you're not a hedge fund or financial services firm.  But you get my drift.  All the good thinking can be codified so we can provide more clarity to the work.

Is Raleigh the 4th best city for innovation, or the 24th best city for innovation?  Who knows?  There's no agreed way to measure, so both answers could be right, which means the level of uncertainty is far too high.
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posted by Jeffrey Phillips at 7:13 AM 3 comments

Friday, July 02, 2010

Secrets of innovation revealed

At innovation consultant's school, along with the long cape and decoder ring, most of us were issued with the ten secrets of innovation that we are sworn to protect.  This knowledge, handed down from the ancients, enables us to have great powers and sway over our customers.  Here, in this post, in a solo act of great bravery, I will expose the ten secrets of innovation for your use and inspection.  Like Prometheus, the giver of fire, I'll probably find myself tortured in perpetuity for this brazen act.  Unlike Prometheus, I'll be punished by repeated paper cuts and the occasional "out of paper" error message from my PC printer.  The horrors.

Herewith, the highly classified secrets of successful innovation:

  1. There are no secrets
  2. Always emphasize that there are secrets
  3. If questioned, defend the fact that there are secrets
  4. Otherwise average humans will be able to innovate
  5. When in doubt, refer to the first
  6. And so on
Let's be reasonable.  When anyone talks about "innovation secrets" they are usually doing so tongue in cheek, or trying to point out what should be readily obvious: there really aren't any secrets.  There are myths, of course, and you can read Scott Berkun's excellent Myths of Innovation book to see him debunk those myths.  When someone like Jeneanne Rae at Peer Insight writes about the dirty little secrets of innovation, she is merely pointing out what Orwell said "To see what is in front of one's nose needs a constant struggle".

Now, everyone wants for there to be secrets.  If there are "secrets" then the average person can be excused for not innovating, since there is knowledge or insight that they lack and can't acquire.  That knowledge is intentionally kept from them.  To believe this assertion stretches all bounds of thinking.  Simply check out all of the books written about innovation - there are hundreds, from Christensen to von Hippl to Tucker to Chesbrough to Phillips!  And more on the way all the time.  There is a wealth of information available about innovation.  If there were any secrets, certainly a publisher would have paid top dollar to publish that book.

But if by secrets we mean "shortcuts", then we get to the real heart of the question.  Typically when people seek innovation "secrets" they've been confronted by the actual work involved in innovating, and are certain there must be an easier way.  They seek the secrets that will smooth the rough roads and provide a straighter, simpler path.  The work associated with innovation, especially for a team that is not full time, is simply new, different and daunting.  Certainly there must be another path.  So the secrets we search for are those that will cut corners, simplify the work and ensure success.  There are no shortcuts.

Innovation is the combination of insight and creativity at the front end, combined with evaluation, selection, testing and market launch at the "back" end.  Some firms excel at the first, more creative capabilities.  Some firms excel at the latter, more executional capabilities.  The really innovative firms excel at both.  If there is a secret to innovation, it is that the two capabilities must both be optimized and working in synch.  These two capabilities are often diametrically opposed, as "creative" types aren't good at execution and process-oriented folks aren't good at creativity and insight.  Simply because your firm is operationally strong doesn't by definition mean it must be weak from a creativity standpoint.  These are learnable, acquirable skills!  And the same is true in reverse. 

Sorry to say that there are no innovation secrets.  All of the information you need was developed by Edison, and Osborn, and a host of other thinkers early in the 20th century.  Later work by Christensen et al has simply extended their work.  Everything you need to know is on display at your library.  There is no list of innovation secrets on the back of the Declaration of Independence, or a Rosetta stone waiting to be deciphered.  The information, as they say, is "out there".  There are no hidden secrets to dramatically reduce the effort associated with an innovation project.  If there were, don't you think we'd all place less emphasis on innovation?
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posted by Jeffrey Phillips at 11:18 AM 1 comments

Thursday, July 01, 2010

How I learned to stop worrying and love idea collection

If like me you are a film buff, you may be familiar with the Peter Sellers movie Dr. Strangelove.  The subtitle has always been my favorite:  How I learned to stop worrying and love the bomb.  In case you haven't seen it, I'd highly recommend it.  Sellers plays a number of characters in this movie, which is an "over the top" look at strategic planning in the military and the potential use of nuclear weapons.  At it's heart is a paradox.  Both we and our enemies (in this case the Russians) need nuclear arms but don't want to be the first to use them.  However, if our enemies use them, we want to be sure to retaliate and wipe them off the planet.  So we spend more and more to build weapons we hope to God we'll never use.  Anyway, rent it if you haven't seen it.

What Dr. Strangelove has to do with innovation, at least for me, has been the paradox of what I like to call "idea collection".  About 90% of the time we field calls from prospects, they are seeking to generate and retain a bunch of ideas.  Most of these folks don't have a specific problem to solve or need to address, and aren't sure what they'll do with the ideas once they've been captured.  But what they are sure they need is a method to generate and to store lots of ideas.  From our perspective this is nice, but completely misguided and insufficient.  But over time like many of the characters in the movie I've come to learn that I need to quit worrying and learn to love the collection of ideas.  Here's why collection of ideas is insufficient for innovation, if not downright dangerous.

First, when you collect ideas from a broad range of people, they expect them to be acted on.  Usually people have an ax to grind or a pet project they haven't been able to fund, so their "ideas" become things they've been anxious to change for quite a while, and haven't found the money or resources.  Since people are entering ideas they have some passion about, they will want to see some action on those ideas.

Second, these ideas usually don't pertain to anything the executive team considers strategic or important.  If so, they would have been funded in the past.  Too often an innovation effort becomes a way to resurface old projects and concepts that were near and dear to a few people but aren't strategic or valuable. Ideas that aren't valuable or strategic will simply sit in the idea collection (box, system, software) clogging up the pipeline.  This indicates to some folks that the executive team isn't really interested in innovation, since there are a lot of ideas that simply don't move.

Third, you need to have some specific problem to solve or opportunity to address, and resources or funding, to move an idea out of the system.  Collect all the ideas you like, but until one solves a critical problem or addresses a new revenue stream or business model, the ideas won't attract attention, except for the fact that they seem a bit stagnant and stale.

Fourth, you need to have people to read and interact with the ideas, who can register their thoughts and reactions, and consistent evaluation criteria to rank and prioritize the ideas.  If the ideas don't seem appealing to the participants, they won't move ahead, and if there aren't consistent evaluation criteria the ideas can't be adequately ranked.  Again, ideas will enter the system and stagnate.

All of these things are true, and all of them beside the point for individuals and firms who ardently believe that "innovation" is about capturing ideas in a box or system or software.  So, like the characters in Dr. Strangelove I have learned to stop worrying about idea collection and start embracing it.  Please, by all means, collect all the ideas you care to.  We'll still be here when you realize there's much more to innovation than establishing a database of ideas.

I realize now why the collection of ideas seems so urgent and so important to our prospects.  It seems like real progress.  Finally everyone can express their ideas and the firm can capture them in a system or software solution.  Clearly that solves one problem, but simply opens up a whole host of other problems.

  • Are they the "right" ideas from the right people?
  • Do they solve an important problem or address a new opportunity?
  • Are the ideas in line with strategic goals?
  • Is anyone willing to get behind the idea, sponsor it and provide resources?
  • Do you have a way to select the best ideas out of the hundreds or thousands you may receive?
Collecting ideas is like collecting coins.  Everyone has coins in their pocket or purse, so there are thousands of coins available.  However, a true collector needs specific coins to add to his or her collection, so while he or she may have a handful of change, none of those coins matter.  Finding the right coin, in the right condition, at the right time and with the right cost is where they true genius lies.  The same is true with innovation.

So, by all means collect all the ideas you want.  Just make sure that you have the ability to spot the few really outstanding ones out of the mass of ideas you'll receive, and that you can ascribe importance and value to those few ideas effectively.  That's where the real innovation magic happens.
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posted by Jeffrey Phillips at 8:17 AM 2 comments