Tuesday, May 29, 2012

Innovation is a system; Brainstorming an activity

I'm interrupting my planned cycle of blogs about innovation and velocity to write briefly about the reasons brainstorming and idea generation can seem so difficult and so pointless, and the continuing conundrum about the effectiveness of innovation.  Note that I draw a distinction between these two concepts - idea generation and innovation - because one (idea generation) is just an activity or phase within the larger context or system (innovation).  When idea generation, brainstorming or whatever label you choose to use to describe generating ideas happens outside of a greater context of innovation, the results are often less than satisfactory, for four key reasons:
  1. Ideas often aren't aligned to strategic goals or needs
  2. Ideas don't satisfy key customer needs or anticipate future trends or shifts in the market
  3. The organization has little ability to speed good ideas into the market
  4. There are no enabling or sustaining capabilities or processes to further innovation activities
Let's imagine that, like many firms, your team has spotted a problem or challenge and has been told to "innovate" a new solution.   Like many firms you'll rush to "generate ideas" using brainstorming, and many times you'll be unhappy or disappointed with the results.  Often the ideas are simply incremental or don't introduce new concepts or features.  The ideas you capture seem familiar and rehashed.  In the end a concept no one particularly likes is supported by an individual with power or stature, everyone falls in line, and little gets done.

This is, of course, a description of a poorly run and managed brainstorming or idea generation session, but it is not a description of innovation.  In fact it leaves out or ignores much about innovation as a "system".  Paul Hobcraft and I documented that there are at least four significant components to an innovation system:
  1. Strategy and tight linkage to corporate goals and strategy
  2. People, skills and roles
  3. A defined workflow or process
  4. Cultural engagement and support
If all of these factors are carefully considered and implemented, your organization may have the ability to innovate, and to innovate consistently.  Starting with idea generation, while ignoring the other factors present in an innovation system, is similar to wondering why the car won't start when the battery is dead and there's no gas in the tank.  There are many mutually reinforcing components, decisions and activities that work together to make innovation work.  Idea generation is simply a step in a defined workflow or process, and frankly not even the most important step.

What happens if you ignore the components of the innovation system?

Strategic Alignment
Ignoring or doing a poor job linking strategy and innovation means the team creates ideas that are very incremental, thus in line with corporate goals but don't "move the needle, or they create ideas that the executive teams can't understand or don't believe support the mission and business of the organization.  Often the strategic goal of idea generation is merely to respond to an immediate threat, rather than a carefully defined strategy with longer term consequences.

People, Skills, Roles
Ignoring the work around people, skills and roles means that you have people with little expertise generating and managing ideas, who have much more familiarity and comfort with efficiency and effectiveness.  Further, these people haven't been trained for their innovation roles and don't have the knowledge or skills necessary to do the job well.  Finally, they often aren't compensated or rewarded for risky innovation work, which makes them less likely to work deeply and invest the time necessary to do the job well.

Innovation Process or Workflow
If you ignore the fact that innovation is a workflow or a process, you'll find your team generating ideas that simply stack up in a queue waiting for approval, funding and product development bandwidth.  Even if all of these factors fall into place you'll soon discover that an expensive launch of "me too" ideas isn't helpful or valuable, and that the "downstream" activities you need to build and launch a new product don't appreciate your occasional surprises.  Turns out that while your idea may be urgent, product development, legal, regulatory and IT are fully loaded for the next few years.  Changing priorities and work assignments may be difficult in order to bring a product to market quickly.

Finally, if you ignore your corporate culture or, more to the point, hope to run roughshod over the way your culture normally works, you're in for a shock.  Existing corporate culture, attitudes, belief systems and compensation strategies are far more powerful than a good idea.  Cultural barriers will arise at every turn to slow a good idea, chip away at it and eventually stymie its progress.  You can innovate outside your corporate culture (in a skunkworks) or you can change your corporate culture, but you can't innovate well within a corporate culture attuned to efficiency, consistency, short timeframes and reduction of risk.

Brainstorming, Idea Generation or any other activity meant to generate ideas are simply that - activities.  These activities need context (what does the client actually want?  What is likely to happen?  What are our competitors doing?) and alignment (What problem are we solving?  Do our ideas align to strategic goals?) before ideas are generated.  For rapid implementation and commercialization, ideas need defined processes (How do good ideas get prioritization in product development?  Who is responsible for launching the concept?) and cultural emollients (Why does the culture accept this idea?  Who lowers the barriers?  How are compensation programs and reward systems changed?)

If you want to witness this for yourself, do the following experiment.  Tell an innovation team that they must create a viable, interesting new product or service and release it to the market within a year.  Ask them to do the work on a part-time basis, and offer them no new training, methods or skills.  Simultaneously, ensure that their "day jobs" become more demanding with tight deadlines and important activities.  Don't provide any additional funding, resources or rewards for innovation work.  In less time than you can imagine possible, the teams will exhibit a dissonance, uncertain how to proceed, because while innovation is important, it isn't as urgent as the "day job" and the methods and processes aren't defined.  Does this sound like cruel and unusual punishment?  It's what many innovation teams face every day.

Brainstorming or idea generation are simply activities.  To succeed, they need to be placed within the appropriate context of an innovation system.  This concept of an innovation system means that there is work involved to build up the capabilities to innovate successfully, much like every other viable, functioning process in your business.  Ad hoc, occasional attempts at innovation often fail, for the reasons I've listed above.
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posted by Jeffrey Phillips at 5:36 AM 1 comments

Friday, May 25, 2012

Innovation: Speed as an enabler, feature, benefit

Over the last few days I've been writing about the relationship between speed, velocity and innovation.  So far we've decided that velocity matters (velocity is speed in a specific direction) because the pace of the market is increasing, and as it increases product lifecycles become shorter, meaning new products and services must be introduced more rapidly and more frequently simply to maintain competitive position.  Yesterday I made some suggestions about how "fast" you should innovate.  The idea being that an intentional plan for innovation across a range of outcomes (incremental to disruptive) and product, service, experience and business model types is important.  Without an intentional plan, without clear goals, innovation doesn't happen, and when it doesn't happen your organization is likely to find itself further and further behind the competition.

The problem with the concept of working "at speed" is that most organizations have a pace or rate at which they like to work and are comfortable working.  In fact, as bureaucracy and organizational inertia sets in, speed and velocity take a back seat to meetings, discussions, committees and approval cycles.  Most organizations aren't currently designed or built for speed or velocity.  They are highly optimized to deliver a narrow set of products and services they understand very well, but have little ability to pivot and accelerate in new or different directions, and little capability to manage new ideas at speed.  My book, Relentless Innovation, describes what I'll call the tyranny of "business as usual".  Most organizations have reached the pinnacle of efficiency and effectiveness just as innovation, velocity and inventiveness become paramount.

The interesting opportunity that presents itself to any organization willing to increase its velocity through innovation is that speed is an enabler to business objectives, a feature to your clients and customers and provides benefits to your firm as well.  While many organizations fear working at a higher speed or velocity, speed can actually improve your results and help your organization sustain its position in the market, if not radically improve it.  I should note that I've made a distinction between speed and velocity, as velocity is speed in a specific direction, but for the purpose of this post I'll just stick with speed.

Speed as an enabler
Larger organizations recognize their "need for speed" but fear the transition and consequences.  A large organization has a culture and bureaucracy with a mind (and a pace) of its own.  Trying to tweak the process for a bit more speed here or there is a significant challenge. Any bureaucracy, firmly established, resists changes.  Further, from a distance working at speed looks dangerous.  There's not enough foresight, so firms worry about driving further than their "headlights" can illuminate.  Working at speed is risky because we'll ask the organization to do things at a pace it is unfamiliar with, and that may have impacts on output and quality.  On the whole, most organizations will revert to the existing pace.  However, adopting a new pace can be an enabler to further opportunities and growth.

Maintaining your existing pace will mean working to a rate that existed as the business matured and as the bureaucracy dictates.  However, your internal pace isn't valuable or interesting to the market, which is constantly speeding up.  The market and competition dictate the pace, and firms must struggle to keep up.  But speed is an enabler if your organization makes a commitment to speed, through improving internal capabilities, shortening product development cycles and building innovation capabilities to bring new products to market at an increased pace.  Speeding up your internal pace doesn't have to lower quality or create more mistakes - but it will require more research, more insight and more planning.  Working at increased speeds means your firm must become far more proactive in the market, rather than reactive to the market, and good innovators are constantly trying to understand and assess needs in the market to predict opportunities, rather than attempt to simply respond to them.

Speed as a feature
As you accelerate your internal capabilities and innovation processes, speed is no longer a risky venture but becomes a feature of your products and services.  Your clients and customers grow accustomed to a new level of productivity and a pleasantly surprised by meaningful products and services delivered at an increased rate.  You can then market your capability as a firm that delivers at a much higher velocity, which has meaning for your customers, who also understand the pace of change is accelerating.

Speed as a benefit
But we all know that you sell the sizzle, not the steak, and speed isn't just a feature, but a benefit.  As your innovation capabilities and internal product development skills improve, you arrive first to the market, in the right markets, with the right products, at the right time.  This means greater market share, more market awareness and more attention paid to what your firm does.  Wouldn't your firm benefit from the free marketing that Apple or Google benefit from?  Innovators define markets, and disrupt markets, and benefit from more than their fair share of market coverage and awareness. As your firm gets faster, it becomes a better competitor, with better margins not from excellent efficiencies (although that can't hurt) but from being able to command higher margins.  And, once you can work at higher velocities you force your competitors to change and adapt. 

Can innovation really drive these benefits?  Yes.  Look no further than P&G or 3M if you care not to look at Apple or Google.  Innovation creates more market awareness, more visibility to relevant, important ideas that matter, and an improved ability to bring products to market more quickly and effectively.  If you want speed, and frankly, who doesn't, implement a real innovation capability - innovate your product development process and create a viable "front end" innovation capability.  The increased innovation capability will deliver greater speed, which will have enormous benefits.

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posted by Jeffrey Phillips at 5:45 AM 0 comments

Thursday, May 24, 2012

How fast should you innovate?

In my last two posts I've identified the need for speed, or velocity, as an outcome of innovation.  What many firms fail to realize is that the game has changed.  The rate of change in the environment has increased, and to remain "in the same place" as your firm is today - merely to hold serve - you must accelerate your product and service development capabilities.  That means improving your ability to develop and launch good ideas, which will require tweaks to your product development process, and improving your ability to find, develop and rationalize good ideas, which will mean creating a consistent, persistent innovation capability if one doesn't exist, or improving an innovation workflow if it does exist.

If, as I suggested in my post about Velocity, the adoption rate of new products and services is increasing, then the obsolescence rate of products and services is also likely increasing.  We as consumers become bored quickly, and demand new features.  Not long ago the presence of a camera in a cell phone was an amazing thing.  Then, nothing less than a 4 megapixel camera would do.  Now, in many cell phones we have cameras that challenge many stand alone digital cameras for capability and performance.  It's possible the small stand alone digital camera will become obsolete in just a few years, replaced by the cell phone.  This increase in expectation and performance is jaw-dropping in its speed, and in its impact. 

How fast/often should we innovate?
What it means to your organization is that innovation must accelerate to keep pace with the environment and with customer demands.  When we work with customers we are often asked, "How often/How fast should we innovate"?  My response is always based on the competitive landscape, the rate of change in the market, the position of the firm asking the question (leaders or laggards?).  But inevitably the answer is:  faster than you are doing so today.  And in many cases, along a much broader front than you do so today.

I want to offer a suggestion about the rate of innovation that many firms should consider.  Of course no one recommendation fits all, so take what follows as a baseline, from which you may apply your specific needs and market challenges.  What's valuable is not that you follow the recommendations exactly, but that you have a strategy or intent for innovation activities and pace.  Defining a strategy, and putting the capabilities in place to accomplish that accelerated innovation demand, will in and of itself create more awareness and more excitement for innovation.

Based on the range of outcomes
Think about the range of innovation outcomes, and your organization's goals and intent:

  • Incremental innovation - this should be happening almost constantly
  • Disruptive innovation - each business unit or product group should conduct at least one activity a year to determine the "next big thing"
A good yardstick for the range of innovation activities between incremental and disruptive is to consider the "Three Horizon" model, and plan innovation activities in each of three horizons - incremental, breakthrough, disruptive.


 These three horizons are based on the knowledge of needs and products, certainty of the need and the impact of the product or service when it hits the market.  Most firms focus only on Horizon 1, neglecting Horizon 2 and Horizon 3.  Given the pace of change, Horizon 3 expectations rapidly find their way into Horizon 1 timeframes.

Based on the strategic goal
But the measures above are simply measures of degree.  Other strategies or goals can be defined:

  • Product innovation - Innovation focused on improving or completely replacing existing products. Incremental innovation should be underway all the time.  Your team should conduct disruptive innovation on a planned cycle, preferably at least once a year
  • Service/Experience innovation.  This is innovation focused on improving customer service or customer experience, from the customer's perspective.  Again, your teams should be incrementally innovating the service/experience models regularly, and considering disruptive innovation activities for service and experience at least once a year. 
  • Business model innovation.  Innovation focused on changing how the firm makes money or competes in its industry.  Clearly a disruptive innovation, but should be considered at least once every three to five years, given the pace of change in the market space.
There's no one size fits all, but your organization should be pursuing both incremental and disruptive innovation, using the Three Horizon framework as a guide.  This is a question of speed and intent.  Additionally, your teams should be pursuing constant product innovation, and intermittent product, service and business model innovation.  These activities are no longer occasional initiatives but must become carefully planned and executed strategies.  Customer expectations, new competitors and falling barriers mean that the rate of change in the economy is increasing.  Yes, here in 2012 we are in a bit of a recession, but as the economy improves the rate of change will only increase.  Sitting still, treading water is not an option.  Neither is occasional, random innovation activities initiated by reacting to competitors.  Innovation is a persistent threat, which must be answered by persistent, high velocity capabilities.
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posted by Jeffrey Phillips at 5:33 AM 0 comments

Tuesday, May 22, 2012

Velocity is the only innovation outcome that matters

Yesterday I wrote an introductory blog post about the importance of VELOCITY as an innovation outcome.  Today I want to drill a little deeper, to examine why velocity is so important to many businesses, and why innovation should be the technique that many turn to to accelerate velocity.

Few people would quibble with the argument that the pace of change is accelerating, and continues to accelerate.  If, for example, you could teleport yourself to the Roman empire and examine the living conditions of the average family, you'd find that conditions weren't overly improved for hundreds of years.  New technologies were infrequent and scientific discovery was slow.  Fast forward to the early Middle ages, as learning and communication improved, and we see an increasing pace of change.  Comparing, say, the 1200s to the 1400s would demonstrate significant gains for the upper class in terms of products, services and technologies.  But the pace of change for significant portions of the population was still slow.  Consider even the 1950s and 1960s.  Much of the world lacked basic infrastructure, communication systems, adequate food, while the "developed" world had all of these factors and more.  Today, it's not unusual to find people in depressed circumstances with access to cell phones, the internet, bank accounts and many of the trappings of a fully modern society.  The pace of change has delivered more goods, services and technologies, and distributed them more quickly in the last few decades, than many believed possible. 

Factors Driving Pace of Change
What factors drive the increasing pace of change?  I'm sure better minds than mine have pondered this question, but a few factors seem relatively obvious.  First, better information systems and communication systems.  When communication is difficult, it is hard to transfer knowledge and information.  As communications systems have advanced, the ability to spread information more broadly has improved the pace of change in many areas.  Second, the distribution of education.  Today, many of the world's best universities are resident in the US, the UK, Germany and other "western" countries, but increasingly excellent universities are identified in India, China and other countries.  Further, access to education, over the web, over the improved communication channels means that far more people can gain education and build skills.  Third, the increasing demand for better living conditions, better lives for our children, more access to more things.  Fatalism and the acceptance of a terrible life is a thing of the past.  Everyone, everywhere demands a better standard of living, more access to more and better goods and services.  These demands create the opportunity for a market, these demands are filled with new and better supply.

These are factors that I think are driving the increasing pace of change.  But you don't have to accept my assertions, you can see the increasing pace of change for yourself in adoption curves of technology.  The "S" curves of technology adoption over the last 100 years demonstrate that it took years for a radio or television to penetrate many households, while newer products like VCRs, cell phone and PCs penetrated very quickly.  One reason this is true is that the infrastructure (electricity, communication standards, interactivity) was built, deployed and stabilized.  As the infrastructure got better, it became easier and easier to deploy and to use new technologies.  See the increasing acceleration of adoption in the "S" curve image below.

Diffusion of Technologies in Households

Implications of Accelerating Change
The implications of this acceleration should be obvious - the pace of change and rate of acceleration is ever increasing.  Individuals who were once satisfied with only one model of product are now more likely to be clamoring for more variety, more choice.  This is something that even Henry Ford missed.  Simply solving a basic transportation need led to ever increasing demands to satisfy comfort, status and ego needs.  For many products and services, life expectancy is decreasing at the same rate as the accelerating pace of change.  Few firms can count on long product cycle times.

Why this matters to Innovation
If these assumptions are true, then VELOCITY, as defined as speed in a specific direction, becomes very important for a firm's ability to grow and compete.  Relying on long product life cycles is not an option.  Customers will demand new products, new features at an ever increasing rate.  Firms can't simply "dump" older technologies and products into "developing" markets because those market too understand the product/feature acceleration and reject older products.  This acceleration means that firms must address the most significant barriers to velocity within their businesses.  There are three barriers they must address:
  1. The ability to bring products to market very quickly.  Most organizations have well-defined, stage-gate models that use waterfall approaches with many signoffs to reduce risk.  These existing processes are long, drawn out affairs designed to prevent mistakes and perfect products rather than systems attuned to customer needs and expectations.  One of the first activities many firms should undertake is to innovate their product development cycles.
  2. Few firms have invested in true innovation capabilities.  Yes they have some "innovation" teams and perhaps even some systems or processes meant to sustain innovation, but they don't consider innovation core to their business.  Innovation - purposefully creating new, meaningful products and services that clients will want - will increase the organization's speed, and potentially its velocity.  It can increase velocity if...
  3. Executives create clear strategies based on the understanding of the importance of velocity.  Innovation can result in more speed, based on improvements in the product development cycle time and in generating new ideas more effectively.  But the difference between velocity and speed is intent.  Velocity is speed in a specific direction.  Executives must provide the demand for speed, combined with the insights that detail specific directions.  Innovation needs far more attention from executives, in terms of greater importance and more clarity and focus.

So, hopefully you can see that perhaps the most important outcome innovation can deliver is velocity, that is, corporate speed with purpose.  I've identified at least two areas where more internal speed is important, if a firm hopes to keep pace with its competitors and its market demands.  Executives play an important role here as well.  Our corporations become comfortable with our operating models and the internal pace of business.  While our internal pace may be valuable, comfortable and well understood, our internal pace is irrelevant if the external pace of change is different.  Far too many firms have too many structures that impede speed and velocity, and are too comfortable with a slow pace of change.  Why they may believe they need innovation to create new products and services, these firms fail to realize how important it is to accelerate their operations and keep pace, at a minimum, with the market.  And, not only is speed important, but velocity.  Meaning that while we increase internal speed we do so in important, strategic directions.

In subsequent posts I'll address the concept of innovation as a catalyst for corporate velocity.
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posted by Jeffrey Phillips at 5:57 AM 0 comments

Monday, May 21, 2012

Velocity, speed and innovation

I'm just returned from a long trip to the UK and South Africa, leading workshops in London and in Johannesburg on innovation topics.  Flying for 12 hours at a stretch can give you a lot of time to think, in between in-flight meals, movies and other on-board entertainment.

The more I thought about the current state of innovation, the more I realized that many of us have it all wrong.  We at OVO often talk about innovation as an enabler to strategy, not a strategy itself.  But I think there's something much deeper going on than that.  First, we know that many executives WANT more innovation.  But they don't want innovation for its own sake.  They want innovation that drives more revenue growth, more differentiation and more creation of compelling products and services than what would otherwise happen.  This means that innovation must create solutions with more return than existing methods, with only incrementally greater risk.

Executives want to be Innovative, they don't want Innovation
In the final analysis, CEOs and senior executives don't want INNOVATION, they want the benefits and outcomes of well-pursued innovation activities, namely, growth, differentiation, market penetration, disruption of adjacent markets and so forth.  If there are easier ways to achieve these outcomes, CEOs and organizations will gladly pursue the alternatives, and forgo the risks that surround innovation. What risks?  Because of the investments in management tools, techniques and training to improve efficiency and effectiveness, many businesses have very efficient but very brittle and fragile operating models.  Innovation introduces risk, uncertainty and change into organizations and business models honed to avoid these issue.  Further, most work teams have been right-sized and down-sized to the point where incremental work is almost impossible to engage.  No, what executives want is not innovation per se, but they would like to be viewed as INNOVATIVE and enjoy the benefits of meaningful, valuable new products and services.

Why Velocity is more important than Speed
Perhaps what I've come to realize is that what most organizations need more than anything is VELOCITY.  Let me explain what I mean by Velocity.  My daughter's physics class was working on the definition of motion and speed.  Speed measures how fast an object is moving, so many feet or miles divided by the amount of time it takes to complete the distance.  Physics and calculus distinguish SPEED from VELOCITY, by taking the stance that VELOCITY is Speed in a specific direction.  Physicists and scientists would say that VELOCITY is a Scalar concept.

When we think about most businesses, VELOCITY is exactly what they need.  They need speed to compete with a host of changes occurring in their markets, from increased competition to lowered trade barriers to a rapid increase in the abilities of individuals and firms in developing countries and markets.  However, speed isn't all that valuable if it's in the wrong direction.  VELOCITY is speed in a specific direction, and that's what many organizations need.  They need to be faster, more effective, more innovative, and end up in a place that was intentional. 

VELOCITY connotes the idea that the firm is going somewhere that matters.  How a firm knows where to go is dependent to some extent on corporate strategy and how well that strategy is communicated.  Further, how it knows where to go is dependent on the firm's ability to assess market trends, develop scenarios and understand customer needs.  These final factors are innovation tools, which help describe a range of possible futures and help decipher which ones are relevant and important.

Speed kills, Velocity Wins
Over the next few days I will write about speed, velocity and their relationship to innovation.  Because increasingly innovation is just a method to help a firm increase its speed in a particular direction.  Speed will become the new competitive weapon in a highly competitive market, but speed in and of itself is useless without intentional direction and guidance.  We'll look at why speed is ever more important, and how good innovation contributes to speed and velocity.

Another way to think of this is that innovation is a feature, and speed or velocity are the potential benefits.  I'm increasingly convinced that velocity in a business sense - getting to the right markets and opportunities faster than others, and doing so intentionally - is the capability that will distinguish winners from losers in the coming years. 
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posted by Jeffrey Phillips at 11:15 AM 2 comments

Tuesday, May 15, 2012

Innovators: stand on the shoulders of giants

I had a nice meeting today in Johannesburg with an individual I met through Twitter.  We talked about our shared interest in innovation.  When I queried him about how he became interested in innovation, he told me that he started out in his company's process improvement team, and innovation just seemed like the next logical step.  Innovation, in his eyes, built from incremental changes to ever increasing radical or disruptive ideas.  This discussion led me to think about the advantages of starting innovation late.

Innovation, like any other science or capability, is evolving.  In the example above, many organizations start innovation based on incremental changes, which spawn new ideas about bigger and riskier change.  Further, many organizations start innovation activities by querying their employee base and asking for ideas.  As the innovation activity matures, these firms realize that open suggestion systems often don't provide the insight and value desired, so they shift to what we call "directed" innovation - asking for ideas about a specific problem or need.  So you can see evolution and learning at work in real time.  The evolution involved in the shift from incremental ideas to radical or disruptive ideas, and the shift in focus from suggestion systems to directed innovation.

What's interesting is that many firms follow these paths, starting with incremental suggestion systems and slowing discovering that more formal directed systems are more practical.  What I don't understand is why so many firms fail to understand the best practices and learning that exist. Why recreate the wheel when the evidence is available in the marketplace?  Most firms starting innovation activities today should build from years of experience available in the marketplace, and should "leapfrog" generations of innovation activity, skipping over the less valuable suggestion systems about incremental ideas to a more formal innovation activity addressing specific company strategic needs.  In the same way that we see many countries using advanced wireless telephony to overcome missing or outdated landline service, we should see new innovation entrants capitalizing on existing innovation knowledge and best practice.  These firms should be leveraging the benefits of prior experience and scaling the learning curve much more quickly than the firms that preceded them.  Yet in many cases this doesn't happen.  Why this is the case is a head scratcher for me.

Plenty of best practice is documented for innovation.  Hundreds if not thousands of innovation experts, consultants and practitioners exist.  Thousands of books are written about innovation.  Innovation conferences and training programs abound (cough, cough).  It's not as though the best practice doesn't exist - its as if people willfully ignore it or don't seek it out.  There are only a couple of plausible explanations for this behavior:
  1. People don't believe there is such a thing as innovation "best practice"
  2. People believe they must take every step in the evolutionary journey in order to be innovative
  3. People don't want to take the time to learn the best practices and dive in at the shallow end of the pool
  4. People don't believe innovation will have a long life in their organization, so understanding the best practices isn't worth the time
  5. Innovation isn't expected to have a big impact - it is for "show" rather than having an impact, so any activity is valid
To paraphrase Dean Wormer in Animal House, cynical, uninformed and unmotivated is no way to go through innovation.  Anyone in any firm can learn what works and what is valuable in innovation, and leapfrog the early inefficient activities to move onward to more effective innovation.  The reasons I've listed above reflect a lack of investigation, a lack of emphasis and time, a cynical attempt to quickly deliver some "innovation" regardless of outcome.  What other reasons could exist for a failure to fully understand what's successful, and what isn't, in innovation.

Here's an analogy to prove my point.  I recently led a workshop on open innovation with several dozen people who claim to be active in innovation, who have a stated interest in open innovation.  When we examined some of the different styles of open innovation, I recommended that they look at IdeaStorm, Dell's open innovation portal.  When asked, only 2 of over 30 people were even aware of Dell's IdeaStorm, perhaps the most public open innovation activity, in a room full of people who want to do more open innovation.  Why would a room full of self-selected innovators, many of whom use Dell products, be unaware of what is perhaps the most widely touted open innovation platform?  Is it a lack of interest?  Clearly not.  Is it a lack of research?  Perhaps.  Is it a failure to understand that they can learn from what firms that are further ahead have done?  I really don't know.  Our thinking about open innovation is freely available on this Slideshare presentation.

But I do know that firms that understand that innovation is an evolutionary activity can learn from those that have gone before, and leapfrog to a more robust innovation platform.  As Newton said, if I have seen further it is because I stood on the shoulders of giants.  There are innovation giants on whose shoulders you can stand, if you care to find them.
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posted by Jeffrey Phillips at 1:03 AM 2 comments

Friday, May 11, 2012

Five Factors that drive the need for more innovation

Every agrees, on the whole, that we need more innovation.  The real questions are "Why" and "How much" innovation we need.  Like other patently good things - love, chocolate chip cookies and exercise - we could all stand a bit more innovation.  It's just never clear how much we need or what the real benefits are, at least to many organizations.

I'm going to focus today on five drivers that will require you to do more innovation.  You can look at the list and decide how much each one of the drivers individually, or in combination, will affect your business.  Then, based on the influence of these five drivers, you may be able to decide not only how much innovation you need, but how soon you need to get started with a more concerted effort.  We believe the answer to that question is:  yesterday.

There are many forces at work that will drive the need for more innovation.  The five I want to describe today are:
  1. Falling Trade Barriers.  Even in a tough worldwide economy, trade barriers are falling, not rising.  In the last few months the US has signed new free trade agreements with countries in South America and Asia.  As trade barriers fall, new products and services from many more competitors enter the market, to compete with existing products and services.  Increased competition, especially from countries where costs are lower or technology emphasis is higher, will either drive down prices or increase customer demand for more features.  Both will increase your need for innovation.
  2. The increasing rate of change.  The lives of people in the late 1800s and the early 20th century changed, but changed slowly.  Many people never traveled more than 100 miles from their homes.  Many never heard a radio, never saw a TV show, and few experienced the luxury of an automobile.  In the mid-20th century, many people had access to basic necessities and some luxuries, but their standard of living and access to information pales in comparison to what we expect on a daily basis.  The pace of change is ever increasing, and with it expectations of new products, new services and new features.  We expect more as customers, demand more, and product lifecycles are ever shorter.
  3. Customer Expectations Increase.  We may not always know exactly what we want, but as consumers we are aware of more competitors, more channels, more offerings than ever before.  Some of this is clearly stoked by rising living standards, some by improved marketing.  But our expectations about our quality of life, and the products and services we need to "keep up with the Joneses" is ever increasing.
  4. Increasing access to information.  Everyone, everywhere, now has the same ubiquitous access to information everywhere.  Look no further than the recent news that Stanford and MIT will place their best classes online.  Hundreds of thousands of people are signing up.  There's no monopoly on information, or what can be done or discovered with information.  That means smart people, everywhere, are going to leverage their access to information to create new products, services and insights.  Thus, new and interesting concepts will be available from more sources, at an ever increasing rate.  Education is also much more widely distributed, so more people will receive more education and have more access to information, which will mean more and better products and services.
  5. Decreasing cost of entry.  Thanks to the internet, I can purchase goods and services from people on any continent.  What would have once been difficult to find or transact is now much simpler, and eventually will be transparent.  Any individual or small company can access almost any market, as the internet reduces marketing barriers and global financial programs reduce financial risk and barriers.  Anyone can enter and sell in any market.
When you consider these drivers in the aggregate, it should be clear that any firm that thinks it can sit idly by, resting on its laurels, is sadly mistaken.  Your pace of innovation is insufficient now, and if you can't at least match the increasing pace of innovation that is created by these five drivers, your company will rapidly find itself and its offerings obsolete.  You don't have to like these forces or approve of them, but you need to understand and respond to them.  Historically the pace of change and its impact weren't as rapid and immediate.  But they are both now.
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posted by Jeffrey Phillips at 3:56 AM 0 comments

Wednesday, May 09, 2012

"Never" restricts innovation

There are a couple of really famous sayings that incorporate the word "never".  For instance, Satchel Paige is supposed to have said "Never look back - something may be gaining on you".  Or, "never judge someone until you've walked a mile in his shoes".  Or, finally, Einstein: "I never think of the future - it comes soon enough".  What risks we place on our thinking when we use a definitive word like "never" and how frequently we are wrong.  Let's examine what's wrong when executives, managers or innovators start with "never".

For instance, we worked with an insurance firm in the states and created a number of interesting new ideas.  We were told that they were "impossible" to implement because regulations created by Congress change so infrequently.  Well, the ongoing debate and new regulations and legislation about healthcare has made many things that were once unthinkable, thinkable.  What things do you take for granted?  What things does your business model assume will "never" change?  Those blind spots will allow competitors to sneak up on you.

Or, consider "never look back" or Einstein's "never think of the future".  Most corporations are firmly rooted in the moment.  The clocks are set to ring every 90 days, and then reset for the next 90 day interval.  Few firms look back at their beginnings, except in colorful coffee table books in the lobby, or look further ahead than the fiscal year.  Most organizations could learn a lot about themselves by looking back at the creation of the business, to understand the drivers that led to the creation of the business and the risks that those early innovators took.  Everything is not the same as it has always been.  Further, executives and managers need to look ahead, much further ahead.  The accelerating pace of change means that what seems a distant future is much, much closer than expected.  Like the saying on the rear view mirror, objects in the future are much closer than they may appear.  If you don't look back you'll miss a lot of what made your company great, and innovative, early.  If you don't look forward you'll miss the opportunities to thrive, and cede them to your competition.

Or, never look "down".  Many firms, once they reach a certain size, forget that they too once were small, scrappy competitors seeking to unseat the big boys.  Once a firm gains some requisite size, it becomes a "big boy" and ignores all competitors and entrants that are small.  But as Christensen has ably pointed out, disruptive innovation usually comes from underneath, and from outside, not from equally competitive firms and rarely from within the industry.  GM and Ford ignored Honda and Toyota.  Big Steel ignored Nucor.  Who are you ignoring? 

Next, never judge until you understand the situation or context.  Most product managers have never met a customer in the customer's context. Oh, they read reports from market researchers and sit in on a focus group or two, but never "walk a mile" in their customers' shoes.  How can we judge what people want, and what they need, without getting in their situations and contexts?  I'm convinced that many new products fail in the marketplace because they seem right in the product development team conference room, but don't match to customer needs or expectations.  If you never meet with a customer, you cannot be an innovator.

Finally, while there isn't a great quote about it, many innovators and product managers never network, meet or interact with people outside their industry, geography or job description.  Isolation isn't a means of innovation.  Good ideas happen at the confluence of people, ideas and interactions.  If you never mingle with people outside your sphere of influence, never go to conferences or tradeshows, never discuss issues with individuals in adjacent markets, you are missing many innovation opportunities.  Good innovation rarely wells up from within an industry or firm - it is adopted from other uses or situations.  Knowing who to interact with and what matters is half the battle.  If you never meet people outside your network, or fail to extend your network, you will fail to innovation.

Perhaps no other word should be anathema to innovators as the word "never".  Never is such a restrictive, convergent word.  It is often used to shut off debate or discussion, or to insist that something won't possibly change or occur.  In many cases whatever we argue will never occur often immediately does.  What "nevers" in your business are blocking innovation?  The assumption that the industry will "never" change?  The assumption that current conditions or market fixtures will never fall?  The assurance that smaller competitors and new entrants will never provide a product or service as good as yours?  The thinking that your firm will never embrace that much risk or uncertainty?
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posted by Jeffrey Phillips at 8:10 AM 1 comments

Tuesday, May 08, 2012

Clarity accelerates and sustains innovation

Unfortunately, when many executives and politicians say "let me be clear" they mean to emphasize what they want to communicate.  It's not necessarily clarity they seek, but emphasis of a certain point of view.  Clarity in innovation, like sunshine in politics, is the best disinfectant. 

Why, given the amount of education, communication channels, and "intentional" discussion and dialog are we left with so little clarity about innovation?  We are constantly told it is important.  Survey after survey reinforces what CEOs think about the importance of innovation.  Vast numbers of executives, managers and staff talk about innovation and the impact innovation could have to their businesses.  We have more communication channels - written word, spoken word, voice mail, email, social media, etc - than ever before.  Yet nothing about innovation seems clear.

In many innovations there are a number of places where clarity breaks down:
  1. The linkage between corporate strategy and the role of innovation to support that strategy
  2. How much risk and change an organization is willing to bear when innovations are deployed
  3. What timeframes and horizons innovation teams should explore
  4. What the criteria are for evaluating ideas once they are generated
  5. Whether or not to explore ideas that may cannibalize existing products and services
  6. How much time and money to spend on innovation efforts
  7. What tools, techniques and methods are acceptable to use to spot needs, generate ideas and manage them effectively
  8. Whether or not to work with clients and business partners to generate ideas
In a world where nearly everything is certain, planned and the unexpected is viewed with distaste, clarity of purpose, clarity of action, clarity of decision is paramount.  We live in pre-planned, pre-destined workforces where little is unexpected or allowed to change.  We have well-defined processes and policies that govern how we work and what we work on.  Yet innovation constantly protrudes into this well-defined, neatly ordered world, and it seems dangerous.  Because nothing about innovation is clear.

So you have an option.  You can keep innovation, like mushrooms, in the dark, covered in manure, hoping something positive will spring up.  Or you can create more clarity about innovation.  This will require work.  Work on the part of executives to support and sponsor change, and the disruption that innovation will have on the business initially.  Work on the part of managers to define new workflows, new teams, new tools and new reward structures.  Work on the part of the rest of the staff to think about new ideas, new opportunities.  But none of that work will happen without clarity.

Innovation, left to its own devices, is uncertain, risky, unfamiliar.  Much of the reason innovation is risky and unfamiliar is because there's no clarity about it's importance, tools and validity.  Further, if innovation is attempted occasionally with little preparation, it is not likely to succeed.  Thus we sweep the small failures under the rug.  This eliminates any chance of learning or improving.

Innovation clarity looks like this:  executives who state what they want, what they can endure in terms of change, and what they are willing to invest.  Managers who define which tools and techniques are valid, the timeframes and commitments necessary to succeed.  Teams that welcome "wild" ideas and actively seek customer insight and input.  Clarity requires a communicated scope, a defined innovation budget, rewards and recognition for the participants.

Lack of clarity looks like this:  no one is sure what the executive wants other than a "new" product.  No one is certain of the investments, budgets or staffing.  People are distracted by their existing work because no one has made it clear that innovation is more valuable.  No one owns the idea, no one is certain how it will be commercialized, and everyone is afraid that it will damage something that already exists.  No one is certain if the concept will meet existing or new client needs.  Everyone can't wait for innovation to be over, so they can get back to their "regular" work.
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posted by Jeffrey Phillips at 7:13 AM 0 comments

Monday, May 07, 2012

Innovators: Humble Servants and Bold Warriors

Thanks to Jorge Barba I'm free of my writer's block that had stymied my writing about innovation.  Jorge noted a post in the HBR blogs by Harry West of Continuum entitled Innovating in the Scary zone.  Harry starts his post talking about the need for humble servants who can understand customer needs, and why the usual picture of innovators is one of hipsters who have excellent insights, cool attitudes and hip eyewear.

I think Harry is on to something.  We tend to immortalize people who create really interesting ideas, but in all truth many skills and attitudes are necessary for innovation to be successful.  In fact you could say that innovators need to be:

  • As insightful as Aesop
  • As humble as a servant
  • As creative as Mozart
  • As tough as nails
  • As bold as Patton
Of course, the people you choose to emulate may be different than mine.

The idea of innovators as humble servants is an interesting one.  But if we stand in our ivory towers and project our knowledge of customer needs without going out to meet customers, our arrogance will defeat us.  We have to be good listeners and willing to hear what customers need, and able to anticipate what they will need that they can't even imagine.

But beyond humility we need creativity.  Simply having good insights and understanding of customer needs isn't enough.  Innovators need to associate disparate concepts and ideas to create interesting new products and services.  There's rarely a straight line from a need or insight to a product or service.

Corporate innovators also have to be tough and bold, to see ideas through to completion.  Humility in gathering insights is one thing, but humility is often not so useful when asking for resources or budgets for an uncertain idea, especially when times are tough.  There are many obstacles and many doubters.  Innovators have to answer or deflect the doubters, and have the courage of their convictions to press on even when others in their own organization doubt them.

The need for all of these characteristics signals why innovation teams are so important.  It is difficult to find one person who emulates all of these characteristics, but a team of people who believe in ideas often will possess a range of skills and perspectives that will encompass all of the characteristics I've defined.  Just as one person on the team tires or discovers a gap in their skills, another team member can step up to offer his or her skills and support.  Perhaps not everyone is humble or a good listener, just as not everyone is good at generating ideas.  Innovation is clearly a team sport - know the skills that are necessary and understand where and when you can offer your skills to help a team succeed.

There was only one Steve Jobs and while we are told to emulate him, we'd probably do better understanding the breadth and depth of roles innovators must hold and understand the conditions and perspectives necessary in every part of the journey.  Rather than attempt to fill all of these roles, find the ones you do best and discover team members who can fill the skill or interest gaps you leave open.

Insight, humility, creativity, development, persistence and boldness.  These are the skills that move an idea to a new product or service.  In the right measure, and at the right moment.
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posted by Jeffrey Phillips at 4:35 AM 1 comments