Tuesday, July 26, 2011

Anticipating future needs - buying up the beachfront

We went, along with a significant number of other North Carolinians, to the beach last week.  We swam and we built sand castles and we got slightly burned, just like a host of other folks at the beach.  My son, who is 12 and thinks like a young entrepreneur, wanted to know why houses are so expensive at the beach.  He could see that there was plenty of demand.

He wanted to know why people in the "early days" of the country didn't buy up all of the beachfront property, and if they had, wouldn't they have been rich?  If my great, great, great, great, great grandfather had purchased the Outer Banks, for example, would we be wealthy now?  I'll give him credit for thinking like an entrepreneur, but his history is a little off.

In the 18th century and well into the 19th century most people avoided the beach.  There were few roads, few facilities and the food and water at any beach was relatively lacking.  Not to mention that bathing or swimming weren't in vogue, and most people worked 6 days a week.  A vacation was something only the wealthy enjoyed, and they took long trips to Europe primarily.  I'm sure if my long lost ancestor had turned up to purchase a significant chunk of the Outer Banks, the few residents would have been happy to sell, but it would have taken several generations before the vision paid off.

Few people bought beach front property because no one at the time thought beaches were particularly healthy, few people had time for vacations and if they did they wouldn't spend it at a beach.  Anyone buying beach front property with the anticipation of extremely high demand for that property in the 18th or 19th century would have been a visionary at best, and probably considered a crackpot.

Which brings us to modern times.  Instead of creating a time machine and going back to purchase the beach front property, I asked my son to consider what people will "demand" in 25 to 50 years in the future.  If we can think through what will be in demand in a generation or two, and start cornering the market now, he will retire rich.  When we discussed this he nodded solemnly and said - "in the future, they'll all vacation like the guy in the Matrix" - meaning we'd simply plug into our computers and experience virtual vacations in any setting we chose.

The story I've told above is true, and gets to a much larger point.  Innovation is as much about discovering what new opportunities or needs may exist as it is about creating the product, service or business model that satisfies that new need.  In fact, I'll argue that understanding the emerging opportunity or need is more important, because once the need becomes evident everyone will try to fill it with a product or service, but few of those firms have done the research to understand the real underlying opportunity or need.  These fast followers often miss a deeper reality or set of expectations, and offer only a surface solution, rather than addressing the deeper need.

Today, few firms spend any time investigating the future.  Most will argue that given the rate of change and the number of "crises" that are occurring simultaneously, they have no time for that.  Plus, the market demand attention on a quarterly basis, and is a strict taskmaster.  Yet, we don't live in the past, and live only momentarily in the present.  All the rest of our lives are in the future, the time we understand the least.  While we may not be able to understand the potential futures perfectly, having any understanding about the future has the potential to place a firm in a much better competitive situation than its competitors.

Why is there so little focus on understanding the future, and identifying emerging threats, opportunities and markets?  Is it because the work seems too ephemeral or untrustworthy, or because it is too uncertain?  Too often firms examine the future hoping to identify a new product or service, which is tangible, when they should be examining the future to understand the setting and scenarios which may occur.  Once the scenario is understood, there may be dozens of solutions, products and services that fill the needs.  Far too often we assert a product in a specific future setting rather than assert the setting and seek new products and services that are implied by that scenario.

True innovators are working now to discover the "beachfront" property of the future, staking out ownership of valuable real estate that will rise as customers understand the features and benefits.  This new real estate may require a change in mores (as it did in swimming) or a change in culture or attitudes (paid vacation) but good innovators understand that everything changes, and often not in the way we anticipate.  Less than 50 years after bathing became popular, French designers created the bikini, an article of clothing that if worn in public less than a century before would have caused mass disruption and social condemnation.  Henry Ford's development of a standard workweek led to the idea of a regular job with regular hours and eventually to paid vacations, which led to middle class folks seeking entertainment on the beach.  Several social, demographic and economic trends combined to make the beach an attractive vacation alternative in less than two generations, and today the beach is in demand even in a recession.

Will that be true in two or three generations?  What will happen if the seas rise due to global warming, or the temperatures rise?  What if the atmosphere thins and more people become more susceptible to skin cancer?  What if the weather at the beach becomes more violent and unpredictable?  Many societal, technological and governmental trends could curtail interest in the beach in just a generation or two, just as trends and scenarios may identify new vacation concepts or new products and services.

Trend spotting and scenario planning are the most powerful innovation tools available to a firm, and are often simply ignored or overlooked.  The arguments against these tools include:
  • A lack of vision to pursue opportunities in the future
  • A lack of commitment to big ideas in the future
  • Not enough time
  • Too much uncertainty about the predictions
  • The possibility of new concepts disrupting or cannibalizing existing products
  • A new idea or scenario may require a new business model
  • A lack of skills or capabilities to conduct the work
These arguments are the same ones presented about any innovation effort, and are rationales I discount.  If your firm is going to innovate, this is where it should start - understanding the opportunities, threats and emerging markets that exist in the near future.  You can "innovate" without doing so, but don't be surprised if the future markets look different when you arrive than they did when you started.  Only by anticipating the future can we arrive well informed.  There are literally thousands of small reasons to avoid trend spotting and scenario planning, and none of them are really valid.  There a few really compelling reasons to do scenario planning and trend spotting, and they all have the same outcome - a firm that consistently succeeds and thrives in relation to its rivals.

Yes, buying up all of the beachfront property in 19th century North Carolina would have take a lot of guts, vision and commitment, but imagine the wealth you'd have today.  Since we don't have a time machine, we can't go back and second guess the people living at that time.  But we can wonder - what will our grandchildren wish we had anticipated?  What is blindingly obvious in their day that with a bit of luck, foresight and commitment we can acquire now? 
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posted by Jeffrey Phillips at 6:08 AM 2 comments

Monday, July 25, 2011

When will the innovation fad end?

I suspect that many people who've been around the block a few times are good at spotting fads.  Fads come in all shapes and sizes, and touch our lives in a number of ways.  One of my favorite fads was the "Pet Rock" - literally a rock with eyes glued on it.  But during the Pet Rock craze there were thousands of people lining up to buy pet rocks.  People were caught up in the humor and whimsy of a "pet rock" and wanted to be part of the joke.

Fads exist in consumer markets, yes, but also in management circles.  For example, I think job performance reviews have been subject to a number of fads, from the self-evaluation to the 360 evaluation.  In each of these attempts to change or augment the standard job appraisal, there is some core kernel of value, but the additional fluff that often arrives with a new concept detracts from the value.  Executives and businesses are subject to fads, just like consumers.  That knowledge, and the experience of acknowledging and riding out fads, has meant that many people are cynical about innovation.

You see, many executives want to align to what's current, or what appears important, in the press.  If other firms seem to acquire benefits from being "innovative", then more and more executives and firms will claim to be "innovative".  Yet in many heart of hearts, most are simply waiting for the innovation fad to end.  They are convinced that like 360 degree job reviews, Malcolm Baldrige awards and Cabbage Patch dolls that innovation will run its course.  In a few years good thinking, logical people will all look at our collection of innovation work and chuckle, just as we do with our Pet Rocks.  What were we thinking, they'll ask themselves.  Many of our current executives are certain that innovation is just a passing fad, and while some attention must be paid, the less the better.

Here's the issue:  innovation has the appearance of a fad, since many individuals and organizations are rushing to join the bandwagon.  But unlike Cabbage Patch dolls, Pet Rocks or bell bottoms, innovation does something that many fads don't:  add value.  At the end of the Pet Rock fad, the person who acquired a Pet Rock had a river pebble with eyes glued on, and was out $10.  The underlying needs for innovation aren't driven by fashion, but by increasing consumer demand and expectation, and increasing competition.  If a firm invests in innovation capabilities, they'll be able to innovate consistently and repeatedly.  That's an investment of great value.

Meanwhile, the individuals who believe innovation is a fad will pay some lip service to innovation, attempt a project or two to demonstrate their bona fides, and wait patiently for the fad to end.  Don't get me wrong - many of the hucksters who thrive on a fast buck will fall away as their inability to deliver value will be exposed.  But that doesn't mean that innovation is unnecessary or a fad.  No, because the underlying drivers that increase the need for innovation aren't short-term and aren't based on passing fashion or whim.  The drivers for innovation are factors that are simply accelerating: growing consumer demand, an expectation of new products and services, rising global trade and the increasing knowledge of consumers.  These factors reduce expected product life and increase competition.  Innovation is merely the means to address the increased demand and to stay relevant with consumers.

Innovation still suffers from an attitude that describes innovation as "important but not urgent".  That's because many executives prefer to solve short term issues through cost cutting, waiting for the innovation fad to die out, to see what's next.  Actually, innovation is both important and urgent, because of the pace of change and the persistence of change.  Until executives and managers grasp the underlying currents that propel innovation and realize that it is the tool to sustain the new normal, rather than a passing fad, innovation will often be considered a side-show to the real work of the organization.

There will come a time, in the not too distant future, when executives realize that innovation isn't a fad, but a set of tools and techniques to help increase growth and differentiation in a market that is rapidly changing.  And in the immortal words of Warren Buffet, that's when we'll know who has been swimming without any trunks.  Because the executives who consider innovation a fad will be exposed.
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posted by Jeffrey Phillips at 8:15 AM 6 comments

Tuesday, July 19, 2011

Is innovation enabled by a process?

So, once again, dear readers, we plunge into the deep waters that refuse to be sated.  Many an innovation consultant, author and commentator examine the question of innovation and process.  It is a conundrum, certainly.  Can something that relies on creativity, on passion, on insight be improved by something that defines a methodology or framework?

The latest missive in this ongoing saga is by Helen Walters, a deep thinker and innovator at Doblin.  In her lastest post - Can innovation be reduced to a process - Helen seems to argue that no, innovation can't be reduced to a process, and uses design thinking as a framework to shape her discussion.  In all sincerity, I'll argue that her heart is in the right place, trying to advance the thinking around innovation, but her argument is framed incorrectly.  Innovation isn't "reduced" to anything.  It can't be boiled down, reduced to base parts and reconstructed more efficiently.  But that isn't what many of us who argue that innovation is ENABLED by processes are trying to accomplish.  Rather than atomize and try to incrementally improve all the steps within an innovation effort, thus reducing innovation to Taylorism, we are trying to argue that innovation can and should be enabled by methods and processes that people can understand, and learn.  Innovation shouldn't be reduced to a process, it should be enabled BY an underlying method or process.

This is a subtle but important distinction.  I don't think many people claim to have the definitive innovation "process".  In other words, I have yet to see any consultant state that given a few ideas and a bit of time, his or her process will definitively produce the end results a client expects.  Everyone understands that there are tools, and methods, and techniques that are appropriate for situations.  Tools like TRIZ, approaches like Open innovation, methods like "jobs to be done", all of which are situational and sustain only a small fraction of the total innovation effort.  Just as there are horses for courses, there are tools for situations.

But what inevitably gets in the way of innovation is nothing more than unfamiliarity, uncertainty, lack of definition and inertia.  People will argue that ideas are fragile.  That's simply not true.  Ideas aren't fragile, it's the people and processes that don't understand how to advance ideas that are fragile.  Without some defined methods and workflows that people can readily understand and follow, ideas stagnate and are eventually left to wither and die.  In large organizations, the only work that gets done effectively is the work that is well defined, and that people understand how to accomplish.  Most of the time, you'll discover underneath that work is a well understood formal or informal process that everyone has agreed on and follows religiously.  Yet we seem to need to argue that innovation is somehow different.  It doesn't need a process to work effectively - no, actually, process inhibits innovation!  This is simply not true.  Innovation isn't a process, but it is accelerated by agreed methods, workflows and roles.

Walters states in her post:
A codified, repeatable, reusable practice contradicts the nature of innovation, which requires difficult, uncomfortable work to challenge the status quo of an industry or, at the very least, an organization. Executives are understandably looking for tidy ways to guarantee their innovation efforts -- but they'd be better off coming to terms with the fact that there aren’t any.
In fairness to Walters, she's intertwined the ideas of an innovation process with a focus on design thinking, and perhaps that is informing her perspectives.  Of course executives want methods that will speed ideas to market with less risk and less cost.  There's no denying that innovation is the new shiny object that all firms want at as little risk and cost as possible, and perhaps we consultants have been guilty of arguing that processes will bring them closer to that goal.  But let's deconstruct the first sentence of her statement.

"A codified, repeatable, reusable practice contradicts the nature of innovation, which requires difficult, uncomfortable work"  Does this mean that Dobin invents new methods and procedures for every project, or that it uses its perspectives to bring fresh eyes to new challenges, and then relies on a familiar set of tools and techniques to present concepts to its customers?  I suspect it's the latter.  I think it is difficult to "systematize" creativity and idea generation, but once ideas are generated, a process simply accelerates and enables the best ideas to rise to the top.  And even in the so-called "front end" where opportunity identification and trend spotting and idea generation happen, there are tasks and steps that can be identified, and tools and methods applied.

I particularly agreed with this statement that Walters makes: 
"Design doesn’t -- shouldn’t -- live in a bubble and designers need to bridge the divide between their world and business, not just lob ideas over the fence and hope for the best."  The same is true for innovators.  Too often businesses try to append innovation on top of, or adjacent to, existing practices and methods.  Ideas do appear to be simply lobbed over the fence.  Hope is not a strategy, or a well-defined process.  Whether we are talking about design, or a larger innovation perspective, clearly we need processes that accelerate both and INTEGRATE both, rather that simply tacking them on.

At the end of her article, Walters is talking about the misuse of design:
"For now, the real issue with design thinking is that executives run with it as they see fit, design practitioners continue to shrug their shoulders at the discussion, and corporate continues to trump creative."  However, she could just as easily be talking about innovation.  The real issue with innovation is that executives believe it is a utility, which can be switched on when demand or need is high, and switched off when demand is low.  Innovators accept this belief and try to work within these constraints, rather than demanding a consistent, continuous innovation discipline, supported by enabling processes.  Short term focus trumps long term innovation discipline, and the result is ineffective and inefficient.

Can innovation be reduced to a process?  No, but I think that's the wrong question.  The real question is:  Can innovation be improved or enabled by a process, and I think the answer to that is a resounding YES!
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posted by Jeffrey Phillips at 7:46 AM 4 comments

Tuesday, July 12, 2011

Transition from pattern matchers to innovators

Reading James Gardner's excellent post today on the discoveries he made while listening to a new string composition, I felt that he had identified a very important issue that was worth expanding on.  James identifies the concept of familiarity and patterns, which are central to our lives.  When those patterns are interrupted or changed, we tolerate the change and wait for the patterns to revert to our expected norms.  What's going to happen, then, if we can't adjust to new patterns of behavior, or outcomes?

As humans, we excel at pattern recognition.  We find patterns in nature, learn from those patterns and apply them to our benefit.  The same is true in education.  We train students to learn according to patterns, then we reinforce the patterns.  All of this focus on patterns culminates in business.  Most businesses are about identifying a few important patterns, determining that the patterns are viable and sustainable, and reducing the patterns to an algorithm which can be improved and made more efficient.

If you consider most large businesses today, they work to specific patterns.  Within an industry, the vast majority of competitors in an industry have the same business models and make money in the same ways.  The patterns are repeated - the same customer needs are met by a range of competitors using many of the same channels, offerings and features.  Over time the patterns and algorithms become more important than the market, which build walls and silos which dictate how businesses provide services to customers.  These patterns and algorithms create blind spots.  Businesses forget that patterns aren't permanent, and build monolithic structures to provide ever more efficient pattern matching solutions.

This is all well and good as long as patterns have long lives, and businesses are able to spot the shift in patterns and behaviors before they cause significant shifts in customer demand.  I believe that the era of long-lived patterns of behavior is ending, and with it much of what we hold dear about education and the way we do work.

Today, we place emphasis on validating patterns and developing algorithms which allow us to serve those patterns successfully.  Those algorithms take on more and more importance and become harder and harder to change.  We train people to spot patterns and align to the patterns.  All of this training and development may become moot, and perhaps even a hindrance, if patterns change more frequently, or if there are fewer and fewer consistent patterns of behavior.  If that's the case, we can't afford to train people to spot patterns and create algorithms, we need to train them to think about what's next.  Businesses can't scale up algorithms in monolithic solutions, they must remain flexible and nimble to address rapid shifts in patterns.  In short, if the life of patterns of behavior changes, everything about the way we educate people and the way most business processes work will need to change.

And that's when innovation, and the skills and capabilities inherent in innovation, will become even more valuable.  I'm arguing that we are living in the transition between long patterns and short patterns, driven by global shifts in demand, the rise of China and India, the decreasing importance of Western Europe, increased global trade, and many other factors.  What has been true for decades if not centuries is not likely to be true even in the next ten years.  How will your business react?  How will your educational systems react?
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posted by Jeffrey Phillips at 7:26 AM 4 comments

Monday, July 11, 2011

The Shuttle program demonstrates innovation lessons

Friday, July 8, 2011, is a bittersweet day for every American, because Friday marked the last shuttle launch and practically the end of our space exploration for some time to come.  For those like me who came of age in the space race, the fact that we're reduced to hitching rides to space with the space agencies from other countries is astonishing.  Heck, we don't even have the means to rescue the shuttle, so the crew has been reduced to four astronauts.  But melancholy isn't the purpose of this post.  No, what I want to talk about instead is how a rocket launch is similar, and dissimilar to innovation.

First let's consider a rocket launch.  Years of planning and careful consideration go into every aspect of a launch.  Several exceptionally well-trained astronauts enter the cockpit and prepare to launch.  Tremendous energy is required to overcome the gravitational forces that would keep the rocket tethered to the earth.  The rocket launches, slowly at first, overcoming gravity and inertia, and increasingly accelerates until it is in space.  The actual work in space is almost an afterthought compared to the planning, the preparation and the launch.  Finally, after the mission is complete the astronauts must return safely to Earth.

Compare, and contrast, that description with much of what masquerades as innovation.  Instead of careful planning, most innovation is spur of the moment, based on a pressing need or a shift in a market.  Innovation, unlike a rocket launch, is often reactive rather than planned and proactive.  Astronauts proceed through significant training - many are military pilots, engineers or have highly specialized skills, and prepare for the mission for months or years.  In contrast, most innovation teams have exceptionally little preparation, are unfamiliar with important innovation tools and methods and have little time to come up to speed before they are expected to create a powerful and interesting new idea.  Training and preparation are at best an afterthought, and often simply skipped.

The rocket, much like an innovation project, is tethered to the here and now.  Both the innovation project and the rocket must escape the bounds of gravity, inertia and conventional thinking.  The rocket overcomes gravity and inertia slowly but bit by bit climbs into space.  Many innovation projects fail to reach escape velocity, captured by the gravity well of inertia, poor planning or poor alignment.  While both a rocket and an innovation project's trajectory can be carefully planned, both can encounter unexpected problems and turbulence.  NASA demonstrated during Apollo 13 the ability to innovate on the fly when problems occurred on the spaceship, because lives were at stake and people were demanding action.  When turbulence hits an innovation project, many times the project withers and dies, since few people are aware and the stakes aren't quite as high.

Both the shuttle program and innovation struggle with another common problem:  clear definition of the mission.  The shuttle program, along with the entire space program, has no clear mission.  Should it explore near space?  The moon?  The possibility of a station on Mars?  What can space exploration provide?  What benefits can it contribute?  What new research or learning is possible, or even desirable?  No one has clearly stated this since JFK.  Likewise, while many firms want "innovation", it often isn't clear what the appropriate outcomes or results should be.  Does innovation mean a new product, or a new service, or an entirely new business model?  What are the benefits of innovation to the firm?  How should innovation align to corporate strategy?  Both the space program, and many corporations, lack clear goals and strategy.  This makes it more difficult for the government, and for executives, to invest in the space program and innovation, respectively.

Both a rocket launch and an innovation program share one other significant attribute.  Both must come back to earth safely and with a specific benefit or outcome.  Fortunately, most of the space shots we've launched have gone into space and returned safely to Earth, having carried out an important mission.  Many innovation programs, after successful launch, flounder and don't return any valuable outcomes.  Part of this is simply mission definition.  Where people in space are concerned, returning safely to Earth is the only reasonable option.  Failure isn't an option.  Where innovation is concerned, the only failure is to fail to innovate and fail to incorporate the learning.  Every successful innovator has had spectacular failures.  What distinguishes them is their ability to incorporate what they learned into their next attempt.  Many innovation attempts fail at the start because executives can't stomach the possibility of failure, even when the stakes are much lower.

At the end, we've become far too comfortable with the shuttle and it's "delivery van" missions to near space.  That is a problem corporations confront as well.  After a brief surge of innovation, corporations become comfortable with the status quo and what was interesting and new becomes routine.  It's then that new innovations should take place, but in this case they haven't.  We've allowed the majesty of space flight to be reduced to the equivalent of a UPS truck.

Both a rocket launch and an innovation project are high stakes events that unfortunately occur far too frequently.  Yet innovation teams have a lot to learn from the space program, about defining mission, training and preparation, and overcoming gravity and inertia.  Will innovation efforts end the same way as the space program, with a quiet success full of melancholy or will we develop the strategies and goals to sustain even more and better innovation efforts?
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posted by Jeffrey Phillips at 4:42 AM 5 comments

Thursday, July 07, 2011

Why innovation can't be benchmarked

I must confess that in a previous life I was fascinated by the concept of "benchmarking".  This was during my wild and uncertain years, when issues like Total Quality Management seemed the order of the day.  Every firm in the late 80s and early 90s was determined to improve quality, and the nascent Baldrige award and ISO certification programs encouraged firms from different industries to benchmark their best practices against the "best in class".  Many firms opened their doors to demonstrate their efficient processes to others.  In hindsight it's clear that benchmarking was simply an exercise in defining and then achieving some industry standard "best practice" as personified at one firm.  We never stopped to ask ourselves if the process was necessarily important, relevant or if it could be eliminated entirely.  At that point we were only interested in whether or not it was efficient and error-free.

Many business processes could be benchmarked across industries because much of the focus was on "back office" processes that didn't need to differ much from one industry to another.  For example, it didn't really matter how an electronics firm and a pharmaceutical firm processed purchase orders - there didn't need to be many radical differences and there really wasn't a competitive advantage to be gained.  So, teams of employees focused on improving internal processes trooped around to examine other firm's processes in the hopes of discovering the secret sauce that made one firm more efficient than another in a given process.

But now I hear of firms talking about benchmarking the innovation methods and processes of other firms.  For example, it's not unusual to hear a firm just starting an innovation initiative ask to review the innovation processes or methods of an industry "leader".  Many books have been written that intend to depict how Apple innovates, or how Google innovates, or P&G, since these are some of the recognized leaders.  You can gain some insights from these books or from reviewing another firm's innovation process, but more often than not you'll discover the differences are more important than the similarities.  Benchmarking innovation isn't just misguided, it's misdirected.

The reasons why benchmarking innovation is difficult, if not impossible, are many, but here are a few:
  • Innovation is closely tied to strategy and vision.  Unless you share a common strategy and vision with another firm, you can't mimic or benchmark their processes
  • Innovation is time sensitive and time bound.  Some firms consider opportunities in time periods of decades.  Some consider anything longer than 90 days far too distant.  Your time planning horizon and ability to scan the future must align in order to benchmark methods and approaches
  • Innovation is dictated by wants/needs/jobs to be done or technology vision.  Some firms assert the future and the market and reject customer insights.  Well, not completely, but Apple does claim to ignore customer needs and build what it thinks people want.  Some firms, like P&G, do an enormous amount of customer research.  Your approach - inside/out or outside/in - must match in order to compare your approach to that of other firms.
  • Innovation is expansive or contractive.  Some firms encourage interaction with customers and partners through open innovation.  Some place far more emphasis on internal innovation.  Some use a mixture.  Again, your approach must align to the approach of a firm you plan to "benchmark".
  • Innovation can be insourced or outsourced.  Many firms rely on trusted partners to help generate ideas, develop alternatives and in some cases even develop products.  Others do the majority of this work in house.  Your methods and insourcing/outsourcing strategy must match to those of firms you plan to benchmark
Finally, there a real cultural difference between firms that "get" innovation and those that don't, that simply can't be benchmarked.  In firms that innovate consistently, the expectations, culture and attitudes are attuned to innovation in a way that simply can't be copied, benchmarked or replicated quickly in another firm.  Those changes come with time, and with proof of the commitment of the firm to innovation over the long term.

And thats, perhaps, the biggest reason you can't simply benchmark another firm's innovation success.  While you may eventually adopt the tools and replicate the methods, if you can't also adopt the cultural shifts, the urgency and the commitment, then your firm simply won't be successful. 

This isn't to say that innovation doesn't have good, consistent methods and approaches, or that the tools are necessarily unique to each deployment.  Only that each firm innovates in its own way, to its own needs and visions, and in its own timeframes. 
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posted by Jeffrey Phillips at 11:20 AM 4 comments

Wednesday, July 06, 2011

Art imitating life - an Innovator's dream

I was running last week (a great way to get ideas) and listening to NPR while I was running.  During All Things Considered, there was a story about how the music industry works.  The story is called How much does it cost to make a hit song?  What was fascinating about the story was how packaged and cynical the pop music world is, but also what a great demonstration of an innovation engine the process is.  We innovators can learn a lot from the production of pop songs, especially considering how relatively inexpensive it is to write and produce an "album".  Do they make those any more?

The story related that a star's manager will determine it's time for a new record, and will host a writing camp for two weeks. There, some of the best song writers come to write songs and are paired with music producers who have a music tracks but no words.  Here's what the transcript says:
Here's who shows up at a writing camp: songwriters with no music, and producers toting music tracks with no words.

For two weeks the song writers and music producers develop songs, and at the end the "artist" - in this case Rihanna - comes in and selects the tracks she likes best, and then records those songs.

The cost?  According to the transcript:
The writing camp for Rihanna's album "had to cost at least 200 grand," Daniels says. "It was at least forty guys out there. I was shocked at how much money they were spending! But, guess what? They got the whole album out of that one camp."
A writing camp is like a reality show, where top chefs who have never met are forced to cook together. At the end, Rihanna shows up like the celebrity judge and picks her favorites.
Her new album has 11 songs on it. So figure that the writing camp cost about $18,000 per song.

Yes, $200,000 for two weeks, but they create an entire album's worth of material.  $200K sounds like a reasonable sum of money in any business, until you realize that figure represents, on average, less than two full time equivalent people fully loaded.  In other words, it's not a very large expense and the value generated in that very short amount of time is incredible.  If your firm could spend $200K once every six months or so and come away with, say, 11 really valuable ideas that those executives could implement, wouldn't that be the best investment you could make?

We innovators need to learn from this - we need to encourage our teams or clients to bring together the best people, in very short projects, to generate and develop powerful and valuable ideas quickly.  This concept shouldn't be a once in a while approach, but a regularly scheduled effort.  There's clearly an important need to be solved (the public expects a new record from Rihanna) and a lot of urgency (excellent people and recording studio time aren't cheap), but bringing these resources together under these conditions created a tremendous amount of value.

Yes, I can hear you now, wondering about how to free up some of your best people for a few days, much less two weeks.  If your best people can spend one week a quarter preparing to present the results of the quarter that is just finished, then certainly you can find two weeks every six months or so for them to develop the game changing ideas for the future.  Too many executives spend far too much time evaluating and reporting on the past, which can't be changed, only dressed up, and spend far too little time investigating the future and generating ideas that will impact the future.  We need to change this dynamic.

When change is slow, contemplation of the past is reasonable.  When change is fast, contemplation of the future is vital.  Where are your best people spending their time?  Assessing and reporting on the past, or evaluating and understanding the future?
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posted by Jeffrey Phillips at 7:36 AM 4 comments

Tuesday, July 05, 2011

The appropriate distribution of innovation work

We read, quite consistently, that innovation should be "everyone's" job.  That's a simple encomium that is at least partially true.  However, we also know that innovation is difficult, exacting work that requires new insights and new skills.  How can "everyone" do innovation when barely anyone gets any training?

So, what is the appropriate distribution of the work involved in innovating?  Should "everyone" participate, and by that do we mean literally everyone - customers, partners and employees, or are we only talking about internal employees when we say "everyone"?  Or, if innovation is as important as we suggest that it is, shouldn't we have experts doing innovation work?  Shouldn't our best people focus on innovation?

I think in many firms innovation is the triumph of hope over experience.  Innovation is fraught with risk, so few people are willing to dig deeply into what makes innovation work.  Further, because everyone is so busy, it can be hard to find time to innovate, so while many are called, few actually choose to participate.  In my experience, and in the experience of other innovation consultants, it's not rare to discover that of those invited to submit ideas, only 10% of those invited submit ideas, and of the ideas submitted, about 2 or 3% of the participants are responsible for most of the ideas.  A relatively small population of any "crowd" submits the lion's share of the ideas, and that's the involvement in the simplest activity.

When it comes to managing, evaluating and selecting ideas, that work can be difficult if not impossible without a defined set of processes, a transparent evaluation template and a reasonable amount of training.  Otherwise evaluation is simply opinion.  There's real work to be done to manage and select ideas.  The hangers-on who submitted ideas now often fall away, leaving only the truly committed to see ideas through to the end.

Or perhaps when we say "Everyone" should be involved in innovation we mean that different people can play different roles, even if they don't participate in the entire innovation process.  For example, some people may be good at spotting trends, and that's their contribution.  Others are good at generating ideas, and that's what they do.  Others are willing to take on a larger role with more responsibility, so they work on the evaluation and selection of ideas.  This role based approach can work if you can find the people who have strengths in the different requirements each phase of innovation presents.  This approach requires less from each individual and allows each to play to their strength, but suffers from a lack of continuity and consistency.

An innovation team formed to solve a problem moves through each of these phases, but the skills and capabilities of the team aren't uniform.  While some may enjoy trend spotting, many may feel the time is wasted and want to proceed immediately to generating ideas.  Others may feel idea generation is not valuable and want to simply flesh out a couple of ideas in great depth.  While the team approach offers consistency and continuity, there are often conflicts as to the importance of the work in each phase.

Further clouding the issue, innovation work is often thrust upon people who are overworked.  Innovation becomes more more requirement that they must complete.  Many of these people aren't "bought in" to an innovation vision and are frustrated that their regular work is diminished by the new innovation requirement.  Both innovation and their regular work suffer.  The question arises - should the people who work on innovation initiatives be part-time or full-time?  The easy answer is full-time, with requisite compensation and rewards.  That way regular work doesn't send a siren call to return to the day to day grind, and the team has a singular focus to create a new product or service.  However, asking people to step outside their regular jobs for a significant period of time may take them off the "fast track" for advancement in their functional role.  A strong marketer may find advancement and promotion simpler by sticking to that core work, rather than taking on a long, risky and uncertain innovation initiative.

The final answer is that there is no definitively correct distribution of innovation work, except with these caveats:

  • Wherever and whenever possible, assign people to the team who are passionate about change and about innovation.  In fact, seek volunteers.
  • Wherever possible, assign people to a team and free them up from their regular job, and describe how they'll return to the job or a better one at the end of the innovation effort.
  • Understand the broad set of skills necessary and when they are necessary.  Trend spotters are needed early, ideators in the middle, idea managers and evaluators late
  • The individual who leads the innovation initiative must be a strong motivator, well connected and open to radical change.  He or she will "make or break" the rest of the team, so choose your leader carefully
Let's face it:  everyone may want the "ability" to participate in an innovation initiative, but many won't, and that's OK.  It's better to have a few truly committed and passionate about the idea, while leaving the opportunity open for "everyone".  What's just as important is freeing the right people up to do the work without distractions, and giving them the tools and training they need to be successful.

Finally, decide whether you want an innovation project, or an innovation capability.  A project is a one-time, discrete event.  Your people or your innovation team can gear up, work the opportunity and disband.  Training is less important and your methods are less important, since the work won't be repeated.  It will be even more important in a discrete project to place your best people and best leadership on that project, since the team will invent most of its methods.  If, on the other hand, you want a more consistent flow of idea and see innovation as a long term capability, training and process development should take precedence.
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posted by Jeffrey Phillips at 5:26 AM 2 comments

Friday, July 01, 2011

Are you Experienced?

There are several movements or phenomena underway right now that strike me as "important". Two of those that are near and dear to me are innovation and social media.  Both are especially interesting and vibrant, and both are full of promise and yet are potentially hollow.

Innovation is gaining traction for several reasons.  Businesses want more innovation because they've picked all the low hanging fruit, wrung all the efficiency from their existing businesses and face consumers who want new, shiny things.  Businesses that rest comfortably on their existing products and services will be left puttering in the right lane of the historical superhighway, with a safe view of the crazy innovators flying by in the passing lanes.  Some of those crazy innovators will inevitably crash and burn, but some will create a new product or service so compelling that it radically changes the market, and endangers the safe, plodding firms and industries. 

Governments, increasingly want more innovation.  No longer can we justify a $400 hammer, or spend money as if we print it (well, you get the point).  As the boomers age and people place higher and higher demands on government programs, governments across the globe must become more innovative in the way they obtain funding and deliver services.  Constituents understand the power of innovation in the private sector and expect to see the same advances in the public sector.

Consider as well social media.  From the first instances of blogs, to Facebook and now on to Twitter and a host of other applications which encourage and foster virtual communities, the explosive growth of social media is unparalleled.  Recently it was announced that if Facebook became its own country, it would be the third most populous country in the world.  Not too shabby for a website that was developed less than a decade ago.

But both of these nascent phenomena demonstrate, at least to date, the triumph of hope over experience.  Granted, the skills and techniques for innovation aren't new, and people have been dreaming up new ideas since the dawn of time, but real, involved innovation as a core focus is new in business and in government.  There's simply not a lot of experience doing good innovation work, and much of what you'll see and hear about are the few successes, rather than the catastrophic failures.  The same fact is true in the social media world.  Simply put, this is an entirely new capability, and the rules are being written as new capabilities and technologies unfold.  A deeply experienced social media expert is someone who built a blog site a few years ago and tweets regularly.  They don't, and we don't, have any real understanding of how all of social media fits into life and into business.

What's missing from both innovation and social media is deep experience, and one can argue that there are benefits and drawbacks from that lack of experience.  The benefit is that we don't rely on "old" thinking when we innovate, and we certainly can't rely on old methods for social media.  I chuckle when I listen to people comparing social media to broadcasting, or other known entities.  We are casting about for models to begin to understand how to manage and model social media.  It may be that we have to define the models as we build the businesses.

The drawback is that there aren't many "gray heads" deeply involved or engaged in either phenomena.  I think especially of social media here.  Ask a question on Facebook or Twitter or LinkedIn, and you are likely to get an answer, but that answer comes with a caveat - most of the people answering are self-described experts who are technically savvy, but not necessarily life-savvy.  Many of our most experienced citizens aren't as active, or active at all, in social media or innovation, and we risk missing a tremendous amount of knowledge and insight since they aren't as engaged.  The number or breadth of answers to a question on social media or the number of ideas generated in an innovation effort aren't as important as getting the best answer, or finding the right idea, and at least some of that success is based on life lessons, experience and deep knowledge.  Too often what passes for knowledge on social media or good ideas in innovation are concepts that thrive only in the shallow end of the pond, unaware of the dangers that lurk in the deeper end.  Only people who have been to the deep end know what lurks there, and how to deal with what lurks there.  Shallow end thinking is thinking, but it may not be the best thinking.

So, who is experienced, and does that experience come with a price?  Is social media and innovation less valuable than they could be because of the absence of people with experience, or should we simply expect to build experience as we exercise the tools?  At a minimum, everyone using social media and participating in innovation should understand that they are new tools, not completely understood, and often lack participation and involvement by the people most experienced in life.  Those lessons are hard-won, and we don't need to re-learn them.
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posted by Jeffrey Phillips at 6:22 AM 2 comments