Monday, July 30, 2012

Innovation faces Orwellian resistance

I'm a big fan of George Orwell.  Not just the well-known works like Animal Farm or 1984, but also many of his writings on the use of English in political discussions, and his memoirs on the Spanish Civil War.  Perhaps none of his creations are as powerful, however, as his concept of doublespeak and doublethink in the novel 1984.  There are three concepts that underline the government of Oceania, the location where the novel takes place:

  • War is Peace
  • Freedom is Slavery
  • Ignorance is Strength
These concepts were meant to reinforce the power of the state and the existing order.  They were also meant to warn the citizens away from desiring rights that also come with obligations (freedom is slavery).  Freedom is slavery only when viewed from the perspective that free people have to work and think for themselves, and that working and thinking places a heavy burden on an individual.  Allowing the state, or by extension, a corporation, to think for you and dictate what and how you think relieves you of responsibility and work.  Likewise, ignorance is strength reminds you that those who are solid in their conviction of a few things, regardless of how "right" or "correct" the things they believe are, have great strength in their convictions and can't be swayed.  Those "intellectuals" who introduce new perspectives and new points of view are to be viewed with great suspicion.

Compare Orwell's structure and plot to 1984 with current management philosophies.  How is the thinking from Oceania different than that of many corporations?  After all, the focus is on maintaining the status quo at all odds, rejecting disruptions and anything that will change the dominant management "paradigm".  Rather than reinforcing political dogma, many organizations reinforce a bureaucratic dogma that employees must accept, and perform heroic deeds to achieve.

The existing corporate mantra in many companies goes something like this:

  • Creativity is Distraction
  • Innovation is Risk
  • Differentiation is Danger
 Our businesses have created informal, unannounced "rules" that individuals ignore or violate at their own risk.  We have Orwellian truths to recognize in our corporate cultures - concepts and frameworks that many people simply accept, and some fight or ignore.  What's interesting is none of these are "true" in the sense that while creativity may be a distraction, it is also necessary for growth and change.  The most significant risk to a business is assuming the world is static, without change and that the world can be governed through dictates the firm intentionally or unintentionally sends to its employees.  To be fair, most organizations don't have speakers in the walls that repeat corporate mantras or management edicts, or the Two Minute Hate focused on a problem or individual.  In most corporations reinforcement of thought is more insidious, through corporate culture, attitudes, perspectives, compensation and other means.

What appears to be a safe, rational approach to the market is actually the approach most fraught with challenges, as each change or disruption thrust on the business is unforeseen and must be responded to quickly.  So a comfortable, static, slow moving organization at a minimum must become an organization that understands foresight and change and is more responsive and nimble, or it will cease to exist.  If a responsive and nimble capability is achieved, it is only a small step to innovation.

If we look further at the language of innovation (and Orwell was always interested in language) we can see that innovation is dangerous because it creates "disruption".  Innovation can create "radical" change.  Both of these terms are antagonistic to status quo organizations.  Many innovators are hailed as "revolutionaries" who discovered new concepts or ideas.  The language surrounding innovation is a challenge to everyday organizations focused on constantly efficient processes allowing no variation or error.  Everything about innovation is subversive to the status quo, unless innovation is part of the status quo.

Finally, we hold up only a handful of innovators - Apple, Google, 3M, etc - in a sea of competitors because innovation is so subversive.  It is difficult to innovate once, much less consistently, especially as the inertia of the status quo sets in and the expectations of flawless execution creep in.  These firms that we hold up as examples of innovation are either subversive to the status quo, or have embedded innovation into their organizational culture and structure.  Orwell would have smiled, and noted that some animals are more equal than other animals when it comes to innovation.
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posted by Jeffrey Phillips at 5:43 AM 1 comments

Wednesday, July 25, 2012

What is your why?

We corporate drones are actually pretty lucky.  Many of us get to work sitting down, in the shade, for eight to nine hours a day.  Compared to the work I used to do on the farm, my life is gravy.  And so it goes for many people in the developed world.  In fact, our work is so far removed from "work" - that is, the expenditure of blood or sweat, that we are fortunate.  In a cruel twist of fate, however, it's becoming clear that many people aren't excited or engaged in their work.  Many corporate drones go to work for living and then participate in all kinds of interesting, engaging activities where their passions lie outside of work.  Isn't it ironic that at the peak of the knowledge work shift, many people have little engagement or participation in their work?

There are several reasons for this, I think.

First is the issue of compensation.  Truth be told, if I could earn a 1% salary teaching high school kids history, I think that's what I would do.  I love history, and minored in it, but never pursued it because I didn't think it would support the lifestyle I wanted.  Likewise I know many accountants who can't stand accounting, but do it because the money is good.  Many of us pursue jobs or careers that aren't in line with our passions - so how can we be fully passionate or engaged at work?

The second is the issue of control.  The more structured an organization becomes, the more predictable it seeks to be, the more defined and constrained the roles and the work have to become.  Most major corporations can't afford significant failures or risks, and the processes that sustain those firms frown on even small deviations or changes, so jobs and roles are narrowly defined.  People have little freedom to experiment or try new things.  They repeat the same work over and over, and rarely expect to dramatically change their job, their organization or the products or services they create.  Control reduces engagement and enthusiasm.

The third issue is one of focus or vision.  Ask 100 people in any corporation why their organization exists, and 95 will say to make money or earn profits.  Perhaps a handful will say their organization's strategy is to create the best widget, or solve a key challenge mankind faces.  Simon Sinek, in his book Start with Why, focuses on this. It is hard to be fully engaged or passionate when you are unclear about corporate goals or strategies, or if you simply don't care about the goals or strategies.

Maslow's employment hierarchy

Time was, simply finding enough food was all that mankind cared about.  Then shelter, clothes, food and eventually self-actualization.  Maslow defined that for us.  But it turns out there is a work related Maslow's hierarchy as well.  Time was that simply earning a paycheck that kept your head above financial calamity was enough.  Now though, as many of us make more than we need, and we are removed from "work" work, we need more.  We need to know our work matters.  We want to make big change.  We want to work on things that we are "passionate" about.  We want workers who are "engaged".  Yet we define jobs narrowly, restrict failures and experiments, and display a marked inability to communicate strategic vision.

No wonder so many people are frustrated, and no wonder innovation can seem so difficult.  We have a significant body of staff and middle managers who are not challenged and not engaged in their work, trapped in narrow cells of management structure who are yearning to break free and do things that add meaning and value.  These people want to be deeply engaged, and find their engagement away from work rather than at work.  It's not just your best assets that leave every night - it's also your best hopes, dreams and aspirations, which get spent on other things. 

The "why" a business exists matters.  It tells customers what we believe and stand for.  It tells employees what we believe and why we matter.  It aligns corporate culture and decision making.  Without the "why", things become about outcomes.  Yes, commercial entities should drive profits, hopefully outsized, incredible profits.  But if they do, those profits will be based to some great extent, on your "why" and what you believe, and what that says to your customers and prospects.

If this sounds hard, it is and it isn't.  Creating a why is easy.  Being willing to stick with it is the hard part.  And so far, the discussion has just been about a general "why".  Imagine the difficulty of innovating without a "why" - without a shared purpose or focus.  Now you know another reason innovation seems so tentative, occasional and ad-hoc.  If regular, everyday business seems difficult in the absence of a "why", innovation is only moreso.

It's ironic, really.  The more removed from real work we become, the more the work matters.  Most knowledge workers I know get great satisfaction from mowing their own lawns.  Mostly because they control the beginning, middle and end of the work, and can see the results immediately.  What we do is becoming less important - why we do it is becoming more important.  Executives need to understand that the "why" isn't the icing on the cake, it is the whole cake.  And innovators, take note.  Working in the absence of the "why" is tough in regular, every day business, and many of you know how difficult any change is, or introducing new concepts.  Trying to do innovation in the absence of the why is even more difficult.
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posted by Jeffrey Phillips at 6:23 AM 0 comments

Monday, July 23, 2012

Why your team won't innovate

I read a post today from Paul Pluschkell at Spigit which read:  The bonus of empowering people to make real change is that you end up with a bias towards action.  This statement has the benefit of being true, but peeling back a deeper insight.  Too many businesses talk about empowering employees, but the fail to understand how to empower them.  Further, they fail to understand what the real outcomes will be if they empower them.  That's a shame, because one of the clear benefits of "empowering" your team is the potential for more innovation.

Empowered people are proactive, they take action to solve problems or address challenges that are evident before them.  They don't wait to be told what to do, and they are actively engaged in what they do - they are excited about their work.  Empowered, engaged people are a powerful force to reckon with, and also a force that needs careful use and guidance.  Empowered, engaged people can "run off the rails" if there isn't a clear set of objectives or guidelines in place that help them use that passion and energy effectively.

And here's where empowerment breaks down.  Too many executives want interesting change, want the growth potential that's possible from engaged employees, but would have to define a clear course and strategy that will allow their teams to harness their energy.  And this is where empowerment fails.  It's hard work to create a strategy and communicate it effectively.  Further, the more definitive the strategy, the more change it implies to an existing organization, and the longer it will take to achieve.  Finally, the more definitive the strategy, the more an executive risks if the strategy or goals aren't met.  There's safety in numbers and the bell curve demonstrates that reversion to the mean in any industry is where we'll find most competitors.

This is to say that innovation is a complex, integrated system of beliefs and actions.  I can empower people, but if they aren't engaged or don't have clear direction and goals, they will simply end up frustrated or working diligently on very incremental issues.  I can engage people, but if they aren't empowered to create, or if they don't have clear goals they will engage in meaningless tasks.  If I create clear goals but don't align the culture and the teams, or neglect their energy and passion, once again I've built half a bridge.

Few organizations seem to grasp just how pervasive innovation must be, and how interconnected to a range of strategic and cultural issues.  These words - empowerment, engagement, strategic - are all important and regularly used by executives to describe their work and the impact they are having on an organization.  But they aren't discrete activities - they are mutually reinforcing, and innovation thrives in organizations where all are thoughtfully applied and consistently reinforced.  Yes, this means that innovation must spring from strategic objectives and executive management.  That does not mean that the ideas come from those locations, but the corporate objectives, frameworks and cultural accelerators do. 

The common refrain is:  our people aren't innovative.  That's rubbish.  People are inherently, naturally innovative.  It's your culture and your lack of engagement, empowerment and inability to define a clear strategy that becomes a barrier to innovation.  Even the most creative, innovative people in the world would struggle to innovate with no clear challenge to solve, no passion for the problem and a lack of empowerment.  People talk about Jobs, or Edison, or other innovators.  Do you think they suffered from a lack of vision?  Do you think they were engaged in their work?  Do you think they were empowered, either by themselves or others?  If you constantly hold up Jobs, Edison or others as innovators, why not replicate their success by realizing how much of it was based on empowerment, engagement and clear strategic vision.
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posted by Jeffrey Phillips at 8:51 AM 0 comments

Friday, July 20, 2012

Culture - a powerful innovation barrier

I was talking with a client recently who understands the value of "innovation culture" but who so far hasn't been able to quantify the impact or outcome of working to shift the existing culture from status quo or "business as usual" to innovation.  I think this is probably one of the most important activities any firm can undertake.  After 30 years of quality management, lean, Six Sigma, right-sizing, outsourcing and other management philosophies, most organizations have efficient, rigid, inflexible operating models and cultures that are very good at cranking out the same products, and very poor at creating new products.

What's interesting is how nebulous and yet how powerful corporate culture can be.  If asked, we can produce an "org chart" that describes how the organization is structured, at least on paper, which also should suggest reporting hierarchies.  Yet you simply cannot draw, or chart out on paper your corporate culture.  It is clearly present, yet maddeningly transparent.  Corporate culture presents its strength only when you try to change it.  That's when you'll know how powerful, how stubborn and how pervasive your culture is.  And when you'll realize how limiting your culture has become to your attempts to change.

In my conversations with my client, I was asked what the value proposition of changing the culture would be - could we state the reasons why we should change the culture, and could we quantify the value of the change.  This is a bit like asking the value of exercise or dieting based on your health and longevity.  While regular exercise, eating well and other healthy habits may contribute to a longer and healthier life, it won't prevent you from an early death if you contract a communicable disease or step in front of a bus.  In other words, the investments have a real, and positive return, but can't be measured now, and are affected by externalities beyond our control.

But another question arises:  is your culture really responsive and valuable to what you do now, or have you simply adjusted your goals and your work to the culture as it exists?  If you can't define the culture, and if you can't shape the culture or worry about changing it, are you simply accepting your corporate culture and working around it?  Won't your culture become a potential barrier regardless if you decide to pursue innovation or not?  In other words, you'll have to face down, revise and bring the culture under your direction and control at some point in order to make any effective change.  Innovation just seems risky because it requires you to change your culture for an uncertain outcome.

Most likely, you can't quantify the value of your existing culture, or its contribution to your bottom line.  Why would you seek to understand what the value of a new culture can be if you have no baseline to compare to?  Does your organization even understand how powerful your culture is, and what a significant potential barrier it is to growth and change?  Do you understand why your culture will block innovation efforts, and why that is a problem?  Is your culture the elephant in the room, the attribute that everyone knows must change but that no one wants to face down?

It's important to have a strong, well-communicated and pervasive culture, as long as that culture supports and reinforces your strategic goals.  Inevitably culture and bureaucracy become more about self-preservation and inertia than they do about growth and change.  You can't define your culture, you can't chart it, you can't contain it but you know it governs how your organization works.  When you seek to become more innovative, one of the simplest, least defined attributes of your organization will become the biggest barrier.  But it's not just innovation that the culture will resist.  It will resist any change, any growth, any shift in momentum.  Getting a handle on your culture and bringing it under your control, in line with your goals and strategies, is the most important activity executives can do now, because more, and more rapid, change is about to unfold.  Firms that can innovate, grow, shift positions and markets will succeed.  Those that struggle with change, those that are inflexible or lack agility will suffer.  Mostly because their culture, a nebulous, invisible, pervasive but powerful force, resists change and sustains status quo.

It's not just innovators who need a responsive culture in line with corporate strategies, but it is innovators who need a responsive culture even more.
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posted by Jeffrey Phillips at 5:37 AM 0 comments

Thursday, July 19, 2012

Innovate in your own skin

In case you're wondering, I often apologize to my clients when I use references to Apple, Google, 3M or Proctor&Gamble.  I apologize because I think that these firms are overused as innovation references, and in that overuse we build up these firms as the arbiters of innovation success.  There are reasons why we talk about these firms and focus so much of our attention on these firms.  First, they are relatively successful innovators over a long period of time.  Second, they receive a lot of press and market coverage based on their success, much of which they themselves generate.

But for many nascent innovators there are dangers as we define an "innovation royalty".  Some may think that innovation is possible only for a small handful of visionary firms, or that Apple and 3M have the only innovation "secret sauce".  Others may believe that innovation is OK for some firms but not possible or necessary for others, depending on geography, industry or competition.  Still others may believe that to innovate, they need to emulate what these firms do.  And to me, the last danger may be the biggest problem of them all.

You can't innovate like Apple

Many firms we work with want to understand what makes Apple so special, and they want to know if there are "secrets" to Apple's success that they can copy or emulate.  I'll often tell them "not unless you've got a Steve Jobs lying around".  Apple's success is due in great part to a potentially unreplaceable visionary leader, who had incredible foresight combined with marketing genius.  But more to the point, you don't want to innovate like Apple.  Their methods, their style, their approach is probably different from how you work, your culture and what your customers need and want.  Note that Apple has a different innovation "style" than Google - in fact they are almost polar opposites, and 3M's methods differ from both Apple's and Google's.  Here's a place where "best practices" becomes dangerous - you can't emulate Apple's innovation style, but you do want to emulate Apple's innovation success.

Innovating in your own skin

Rather than don the style or "skin" of a different firm, what you need to do is discover what makes your firm interesting, unique and different, and capitalize on your strengths.  Then, you need to embed innovation activities, methods and cultural bias in the organization to support and sustain your strengths.  There are innovation "best practices" you can deploy, but most of them have to do with changes to routine issues like compensation, rewards, training, staff availability and so forth.  Ultimately, your innovation approach needs to be your own, based on your strategies and goals, aligned to your vision, and bounded by your existing and potential skills and capabilities.

Why would you want to mimic Apple?  Does it make sense for your team to pretend it is Apple for a day or so, only to be confronted with the realities of the business when they return to their regular jobs?  No!  You need to understand the existing strengths and capabilities, and define a path that takes you where your firm wants to go, and build innovation skills and methods into the fabric of the organization.  In this way, using the fabric analogy, you will weave an entirely new culture that embraces innovation, and shapes innovation in its own way.

Learn from, don't emulate or imitate

Should we learn from Apple, Google and so forth?  Absolutely, but what we need to do is distill the reasons, characteristics and factors that make these firms so successful at innovating and understand how those factors can be deployed in our organizations.  Apple's has been about a small team of visionary leaders who seek to disrupt the market with improve customer experience.  3M's vision is about constant investment in new R&D brought to market very quickly.  Google's is about bubbling up ideas from everyone.  What's constant across these approaches is commitment, an engaged culture and sponsorship.  Everything else is different!  Don't worry about imitating Apple, or Google, or some other firm.  Understand the basics and make innovation your own.  You will never be Apple, just as Apple (thankfully) could never be IBM or Compaq.  Start with the innovation basics, understand your strengths and differentiators, and carve your own path.  Imitation may be the sincerest form of flattery, but it doesn't differentiate you and it may not accelerate change at all.

As we used to say in Texas, the only things in the middle of the road are yellow lines and roadkill.  You can't copy the leaders, and you don't want to.  Understand innovation basics, methods, models and cultural phenomena, internalize them, and make them your own.  This is where most firms fall down - they can't make the tools and methods their own.  They always seem foreign, as if they are wearing someone else's clothes.  The tools and methods, the approach and goals need to be cut to fit the firm that you are.
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posted by Jeffrey Phillips at 7:05 AM 0 comments

Wednesday, July 18, 2012

The UK's lost innovation years

NESTA has published its third annual Innovation Index, which tracks the state of innovation in the United Kingdom.  The report is a sobering look at innovation in the United Kingdom.  One can't help but be concerned about the information NESTA reports, although there are a few nuggets of hope embedded in the research as well.

NESTA describes itself as:
Nesta is an independent charity with a mission to help people and organisations bring great ideas to life.  We do this by providing investments and grants and mobilising research, networks and skills.  Nesta doesn’t work alone. We rely on the strength of the partnerships we form with other innovators, community organisations, educators and investors too.
NESTA has undertaken research on innovation in the UK, and has published an Innovation Index. To say the results are disappointing would be an understatement.

NESTA reports that based on their analysis, innovation investments by UK businesses have fallen 14% between 2009 and 2001, on top of a 7% fall in the preceding years.  During the years of the recent economic slowdown, NESTA estimates that the investment in innovation by UK businesses has fallen 24 billion pounds.  NESTA goes on to point out that that amount is five times what the UK government spends on innovation.

There are a couple of concepts that are important here.

First, the transition from public innovation investments to private or commercial innovation investments is continuing and accelerating.  The UK is not alone.  In the US we pay the Russians $75 million dollars per astronaut to take us into space.  Private organizations will hopefully provide access to space in the coming years.  NASA is just one example of the lack of innovation spending by the government, in all sectors.  As populations age in the UK and in the US (and in other western countries) we place far more demands on the government for services, which leaves far less for primary innovation and R&D investments.  As the recession continues, businesses are finding it hard to invest in innovation, and the gap between expected innovation spend and actual innovation spend is increasing.

Second, while the NESTA report does not address the issue directly, we can say that innovation and entrepreneurship are tightly linked.  Unfortunately, entrepreneurs are finding it difficult to obtain the funding they need to start and grow businesses, also a result of the recession and global financial issues.  This means the innovation gap widens, because what corporate organizations can't do, entrepreneurs often can.  Large companies and the government aren't aggresively investing in innovation, and small businesses and entrepreneurs are finding access to seed money difficult to obtain.

We are approaching a "lost generation" where innovation is concerned, but innovation won't be the victim.  Innovation is a capability that will always be at hand.  What will be impacted by a continuing lack of innovation are things like improved heathcare, improved food sources, improved transportation.  In other words, our quality of life must and will stagnate until these innovation investments increase.

Now, for the potentially good news.  Two other numbers from the NESTA report matter.

First, the report finds that only 13% of innovation spending is aligned to R&D.  There are two sides to this statistic.  On one hand the percentage is small because spending on R&D has declined.  On the other, and hopefully more important hand, businesses are realizing that innovation and R&D are related but not the same thing.  Businesses are beginning to realize that innovation happens throughout a product life cycle, and across a range of outcomes, to include business model innovation, service innovation, channel innovation, customer experience innovation.  The definition of innovation and its potential outcomes are increasing, which is a good thing, because investment in R&D is expensive and time consuming, but investments in other forms of innovation can deliver value as well.

Second, the report suggests that there are two sources of economic growth:  increased inputs (raw materials, equipment, brain power, dollars) and innovation.  The report concludes that 63% of economic growth in the UK between 2000-2008 is due to innovation.  This realization matters.  We need politicians in the UK, and currently in the presidential contest in the US, to realize what a significant contribution to economic growth innovation can play.  Once we realize how much growth potential innovation can provide, we'll return to policies and programs that foster more innovation.  And not just R&D tax credits, but programs that encourage innovation in all its forms, and in every type of business, from entrepreneurial to multinational.

This report should serve as a wakeup call for innovators, for governments and for anyone who desires more economic growth.  Innovation is the key driver for sustained economic growth.  We need to unleash the entrepreneurs, small business people and innovators in large organizations.  Are you listening, House of Commons?  Are you listening House of Representatives?
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posted by Jeffrey Phillips at 5:58 AM 0 comments

Monday, July 16, 2012

Please, no innovation

I was thinking about innovation over the weekend when I asked myself "what's the one thing that no senior executive is likely to say about innovation?" Every executive is likely to talk about innovation, to describe what his or her firm is doing.  They are likely to talk about plans for innovation, as clients demand new products and services.  What I don't think you are likely to hear is executives telling their employees not to innovate, or executives talking to the press or shareholders about a lack of innovation.  Can you image a CEO who came out and said to his team "Please, no more innovation"?

Sometimes, to understand what's going on it takes an extreme or almost inverted perspective to shine a light into the darkness.  Certainly, few CEOs would last long if they downplayed the importance of innovation.  Innovation is seen as an important differentiator, and something every executive should support and embrace as a means to growth. Innovation is as American as apple pie and motherhood, and has become almost as overused and as saccharin.  So we aren't likely to hear denunciations of innovation, or executives verbally downplaying its importance.  Innovation, or at least the appearance of innovation, is exceptionally important.

But what we don't often hear about is the actual work of innovation, the investments made, the people trained, the mistakes made, the successes that create new segments.  Innovation, like dieting or getting into better physical shape, is something we all know we SHOULD do, but is also something that is easy to put off to another day.  If talking about physical fitness contributed to weight loss we'd all be exceptionally thin.  Unfortunately, staying in shape and physically fit requires more than talking - it requires a consistent commitment and focus on specific goals.  Likewise, innovation requires a constant commitment that is intended to deliver specific outcomes.  No one innovates for innovation's sake - they innovate to create a new product or service, to create new revenues and profits, to differentiate from another competitor, to stake out a completely different market sector.  Since we know that few if any CEOs will reject innovation, and innovation isn't widespread and fully competent in many organizations, what can we do to build and sustain innovation as a consistent competency?

Build a plan

Most innovation is undertaken as a reaction to some competitive threat or market shift.  This means most innovation is REACTIONARY rather than the result of an intentional plan. When we react we tend to invest just enough to get a product just good enough to compete in the market.  So many of our "innovations" are reactions to competitors with the goal of responding with a product that's just good enough to compete.  Rather, we should plan for innovation proactively.  This would force our internal teams to think about innovation more broadly, account for innovation in annual planning and most importantly funding exercises.  Further, a plan demonstrates vision and strategy.  One of the most common questions we hear when working with innovation teams is: how does innovation fit with our strategy?  That's not a question you should ask a consultant, but one your executives should be able to answer easily.

Establish goals
Without a goal any outcome can be declared a success.  Far too many firms are expected to innovate but without any clear goals or measurements. This is akin to a weight loss program with no clear outcomes or end state metrics. 

Many clients ask us about the "best" goals for innovation.  My response is that the 3M goal for innovation, which they define as 20% of revenues resulting from products less than 3 years old, is a good one.  Defining a revenue target for new, innovative products requires that a firm innovate and keep innovating.  In fact I'd like to see an initial target and then each year inch that target up a bit more.  Once 20% becomes a fairly "easy" target to hit, let's move it up to 25%.

Appoint a Sponsor
In many programs that help people lose weight or quit bad habits, the program insists on a "sponsor" who is an honest broker for the person trying to change habits.  The sponsor is meant to call the person to account - to ensure they are doing the things that will help them achieve their goals.  Likewise, innovation needs an honest broker or a sponsor. This could be a senior executive who constantly reviews innovation activities and compares to targets.  He or she can assess whether or not the firm is living up to its commitments, and encourage the firm to do more.  After all, we are talking about changing the habit of efficiency into the habit of innovation.

Find a coach; Get encouragement
Whether you are trying to lose weight or trying to quit a bad habit, you need resources to accomplish your mission.  Those resources may be friends and relatives who give you great advice, or a sponsor or a charitable organization to provide support or encouragement.  Changing attitudes and behaviors requires a constant reinforcement of goals and rewards for short term small successes.  Innovation needs a coach and plenty of encouragement.  If it were easy, every firm would be doing it proficiently.  Evidence suggests that few firms do innovation well, and most don't understand how to get started or how to maintain the momentum.

Stick with the program
In any change program you will encounter obstacles.  Some of these may be your own cravings.  For me, nothing beats mint chocolate chip ice cream as a dessert. But if I want to lose weight or at the least maintain the weight I have I have to stick with my exercise program and my diet.  Deviating from the program can and will have adverse affects.  Innovation faces the same dilemma.  You can't jump into and out of an innovation program.  There are simply too many factors reinforcing the status quo that will make it very difficult to swap into and out of an innovation program.  The risk factors, inertia and resistance to change will become barriers to innovation.  If you plan to become innovative, plan to stick to the program, come rain or shine.

Examine the Commitments
Few CEOs or senior executives are likely to describe innovation as unimportant or unnecessary.  But the real assessment of their focus and commitment should be an investigation into the points I've made here.  Are the commitments in line with the communication?  Does your organization understand the breadth and depth of the change necessary to incorporate innovation as a consistent discipline?

It is more dangerous to start innovation without resources and without a clear purpose than not to start at all.   Given the inertia and resistance, your team will get few chances to get innovation right before the organization becomes cynical and disillusioned about innovation.  Most corporate cultures are very good at sniffing out what initiatives will have deep executive commitment, funding and support, and which are talking points that won't be supported.  If you say you want innovation, be sure to provide the commitments necessary to sustain it.
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posted by Jeffrey Phillips at 5:33 AM 2 comments

Wednesday, July 11, 2012

Make innovation your day job

I don't know why it is but I revel in those short pithy statements on bumper stickers like "Imagine Whirled Peas". One of my favorite ones is "Imagine the world where schools had enough money and the military had to hold bake sales".  These bumper stickers are light hearted twists on conventional wisdom or unfortunate reality, depending on your point of view.  My recommended new bumper sticker is "Make innovation your day job".  That is a twist on current reality and just extreme enough to get a guffaw out of many people who have tried to innovate in a corporate environment.

 I've written about the challenge of making innovation part of the regular expectations in a business - in my book Relentless Innovation I talked about converting from "business as usual" to the concept of "innovation business as usual" - where innovation is embedded in what you do every day.  I also addressed this topic in the innovation novel I wrote called Pulp Innovation.  In chapter 67 an innovation project is at risk because some of the key contributors have a problem.  The innovation work they want to do is becoming a barrier to getting their day job done.  While Pulp Innovation is fictional, the conflict between innovation work and the "day job" is real, and is only going to get worse.

Modern businesses have spent the last few decades slimming down, reducing headcount and optimizing processes and resources.  This means that everyone has a full time "day job", if not more than one job.  The workload has increased and the pace of change has accelerated, while meetings and calendar items have only increased.  Simply finding time to get the work done that you are expected to do becomes difficult.  Meanwhile, simply sustaining the status quo isn't enough.  Market demands require new products and new services at an ever increasing rate.  So, innovation is bolted on to the existing frameworks, and you are appointed to an innovation team.  In fact, you may be excited about doing innovation work, and think that it is important and urgent for your firm to do.

But here's the rub.  There are only 128 hours in a week, and your family expects to see you occasionally.  You'll need some time for sleep and personal grooming.  There's the commute to the office, and requirements for nourishment.  When incorporating the need to get your "day job" done when your deliverables are due, this leaves very early in the morning or very late at night for innovation work.  Your day job will always supersede innovation work.  Here's why:

You are evaluated on your day job work and results, not on innovation.  Your compensation and advancement opportunities are closely tied to your evaluation.  As long as innovation is viewed as a side job, and a nice to have, while the "day job" is where your evaluation, compensation and promotion opportunities are linked, your decisions are agonizing but ultimately a "no brainer".  Innovation work will be delayed, put off, "placed on the back burner" anytime a critical need arises in your day job.  Can you remember the last time there wasn't a fire to fight or a crisis concerning your day job?  Neither can I.

So, your firm wants innovation but can't understand why people can't find the time or energy to commit to innovation?  That's because of the day job conflict.  Until and unless people are responsible for innovation, are evaluated and compensated based on innovation outcomes and have the ability to assign the appropriate people to innovation work with the freedom to commit themselves to the work, and the understanding that their work will be recognized and valued, innovation is at best an occasional, sporadic event brought on in a panic when a product manager or a business line leader recognizes that they have no other choice.  Then innovation will be your day job, but only until the problem is resolved.

Many of us have an innovation day job.  We both love, and hate, our jobs.  We who get to do innovation regularly and consistently love the impact our ideas and work have in the market.  We hate how conflicted many of our clients are about the choices they are forced to make by firms that don't understand that innovation requires more than an hour or so a week from distracted and unmotivated employees.  It really is a Hobson's choice that many firms place on people in innovation teams.

For innovation to succeed, innovation needs to be somebody's day job, and that individual or team needs to be able to bring aboard the best people who are completely focused on innovation success, not constantly pulled back into their day job.  And yes, your best people are necessary because your ideas need to be better than average, and the resistance the ideas will face will require people the business respects.  Hopefully soon you'll see "Make innovation your day job" on bumpers coast to coast, right next to all of the political sticker, or one of my other personal favorites, "Keep honking I'm reloading".
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posted by Jeffrey Phillips at 8:55 AM 0 comments

Monday, July 09, 2012

Why you aren't ready for open innovation

Yep, you read that right.  My provocative headline suggests that your team or firm isn't ready for open innovation, just as all the major publications tell you that open innovation is vital, or crucial, for your success.  Open innovation will be very important, and very soon.  In fact we believe that in the near future the winners will be the firms that are best at scouting, acquiring and commercializing the best ideas, regardless of their source.  That's a far cry from where things stand today.  Most firms have difficulty managing internal innovation, much less thinking about or shifting to an open innovation model.  Yet the consulting organizations and many publications are beating the drum for open innovation.  Here's why you aren't ready, and what you should be doing to get ready.

Paving the goat path

Yes, I've been in consulting long enough to have a lot of these sayings, and "paving the goat path" is one of my favorites.  It's long been the case that many firms simply want to speed up what they are already doing, rather than stepping back to reconsider how things are done.  This is true with many internal processes, and it is true with innovation.  The initial response is:  how can we repeat our few innovation successes more quickly, rather than what is the best approach to innovation and how do we tweak our capabilities to align to that approach.  Fast adaptation of existing models is preferred, even when those models are totally inadequate.

A bottleneck culture

Most organizations do a terrible job of managing the ideas their employees generate.  Ideas pool in various places, unable to move forward due to poor process definition, decision gates or a lack of market insight to decide which ideas are most relevant and valuable.  If your ability to manage ideas that your own team generates is not so good, why on earth would you think to magnify the problem with more ideas from external sources?


Many organizations have a difficult time defining internally what an "innovation" is.  We often start innovation projects by trying to understand strategic goals and competencies.  If internal teams have a hard time sorting this out, external partners will have an even more difficult time.  The external teams are more than willing to suggest ideas, but their definitions of innovations will most likely be different than your internal definitions, if they exist at all.  Getting everyone on the same page matters.

Not invented here culture

I used to work at a semiconductor firm headquartered in the Dallas area.  I'll let you fill in the blanks.  We used to joke that the phrase "not invented here" was invented at that firm.  The culture of the firm was so antagonistic to ideas from the outside that it was practically useless to suggest partnerships or ideas from the outside.  Many firms have great pride in their brands, their products and their intellectual property.  That's great, but that cannot be a barrier to the best ideas, regardless of their source.  Your culture must value ideas from external partners at least as much as it does internal ideas if you hope to succeed with open innovation.

No clear processes or metrics

Far too many firms talk about innovation as if it were black magic.  Innovation should be a business process or discipline - in other words, it is something that can be defined, taught and codified in the business.  This activity is hard enough when you think about internal teams working on internal ideas.  An occasional idea stumbling through a poorly define or ad hoc internal process is troubling but manageable.  It become onerous or unbearable when many more ideas must be pushed through an ill-defined process because...

Expectations are higher

If you ask a customer or partner for ideas, they expect that you'll recognize their investment and at least tell them what happened to their ideas.  The level of interaction and exchange when you ask for ideas externally goes up dramatically.  Expectations are higher, since customers and partners want to be helpful and want to know their ideas are recognized and appreciated.

Implications aren't understood

People talk about "open innovation" as if open innovation were one animal.  Open innovation is a zoo keeper's fantasy of animals.  Contests are open innovation, as are open suggestion boxes on the web.  Firms like Innocentive and Nine Sigma offer a different flavor of open innovation.  Partnerships offer another form of open innovation.  If open innovation were a dessert, it would be ice cream and you'd belly up to the 31 flavors.  What makes this even more of a challenge is that every open innovation approach has different implications.  Obtaining ideas from customers means responding to thousands of ideas - it becomes almost a social media opportunity.  Interacting with selected partners means much greater investment in business development, partnering and intellectual property definition. You must understand the different implications inherent in an open innovation approach.

Ready, Aim, Fire

The open innovation approach is one of the few cases where a ready, fire, aim approach makes sense in innovation.  Often we are trying to get our clients off the dime, to try something, take on a bit more risk, fail and repeat.  In an open innovation context many firms take on far more risk than they intend to, and since much of open innovation is much more public they don't realize until its too late how public their work has become.  This is the one area where we try to counsel our clients to take a careful, measured approach to innovation.  While the media may be proclaiming that open innovation is critical, be careful.  We wholly agree with the sentiment, but know that many firms simply aren't ready to embrace open innovation to its fullest.
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posted by Jeffrey Phillips at 8:10 AM 1 comments

Thursday, July 05, 2012

Three reasons why corporations can't innovate

I was reading an article today from Forbes that asserted that the reasons Microsoft has struggled to innovate have to do with "rank stacking" - that is, the evaluation of people from top to bottom, with only the top 20% or so getting good reviews.  Several employees who were quoted said that this evaluation system drove the creativity out of Microsoft.  Perhaps that is the case, but another point in the article drove home why I think large organizations struggle to innovate.  Here's the key quote:

Eichenwald also reveals that Microsoft had a touch-screen e-reader developed in 1998, but Bill Gates nixed it because he “‘didn’t like the user interface, because it didn’t look like Windows,’ a programmer involved in the project recalls.”

While rank stacking may have had something to do with Microsoft's inability to innovate, I suspect that in many large organizations there are three significant barriers to innovation that often permeate management thinking:  hubris about existing products and their importance, the shift from offense to defense and the difficulty switching back to offense, and the inertia that bureaucracies create.

What happens when firms grow large and have an established product portfolio is that they believe the world revolves around their technology.  Microsoft is guilty of believing that Windows is what people want and need, rather than understanding that expectations, wants and needs change.  Microsoft became a firm defending a brand and a product portfolio moreso than a firm understanding customer needs and building solutions that anticipate those needs, whether or not the product or the interface look like Windows.  What Microsoft fails to realize is that while Windows and many of its products are widely used, they are widely disliked.  Many users seek work arounds or reject Microsoft in any instance that they can.  This creates opportunities for innovators.  Meanwhile Microsoft continues to reinforce its branding, its customer experience and its product portfolio on its users rather than seek to understand what customer want.

Shift from Offense to Defense
As firms grow, they shift their focus from creation of new things to defense of what they've created.  That shift signals a shift from growth to profitability.  Historically, when product life cycles were longer and competition was less fierce, a management team could expect to refresh a product like Windows every few years, since innovation wasn't as important.  What many firms have failed to realize is how quickly the markets are changing.  Customer clock speeds are moving far more quickly, and whole platforms are shifting.  The web as presented on a laptop is far different than the web presented on a mobile device.  Systems such as Facebook, built for the stationary web, are now confronted with a significant shift to mobile, just as it was scaling up for profitability.  Further, what worked in the past may not work in the future, but executives and managers remember what worked previously and try to reinforce the past successes, not the future opportunities.

Don't mistake the concept of inertia for lack of energy or passion.  I don't consult to Microsoft but I am sure there are thousands of people with good ideas and plenty of passion about new products at Microsoft.  I also understand how any organization of that size, with that many products at stake, will create bureaucratic decision making processes which hamper innovation.  The amount of risk any firm is willing to bear in its product portfolio is almost always linked to how profitable the product portfolio is currently.  While Windows is riding high, the bureaucracy will do everything to insulate it and protect it.  The meetings, decisions, risk factors, objections and funding mechanisms that a large firm creates to defend its core products create a significant amount of inertia.  New ideas find obtaining "lift off" against that inertia or gravity exceptionally difficult. 

Can large firms innovate?
The question becomes then, can large firms innovate?  Can a large enterprise, with a significant number of products, and high expectations in the marketplace, remain innovative?  I think the answer is "yes", but it requires maintaining a lot of the energy and speed of an entrepreneurial firm, and remaining exceptionally open to customer needs and expectations.  A firm must have pride in its products, yes, but not so much that it fails to understand what customers need and how that may impact the product or create demand for new products.  Andy Grove at Intel once famously said that "only the paranoid survive" and perhaps that is the case.  There may be too much complacency and hubris in larger firms, and not enough paranoia, drive and aggressiveness to sustain innovation.

So, is "rank stacking" the villain at Microsoft?  Is that what impacted its ability to innovate? I'd suggest that rank stacking is a symptom of a larger problem - one I'll call bureaucratitis, which is the calcification of an organization and the beginnings of arrogance and an inability to listen, to change or to confront the commonly held beliefs about the organization.  Rank stacking would not be a problem if Microsoft were cranking out thousands of great new products.  If Microsoft were highly innovative, people would flock to work there regardless of its employee ranking system.  Now, what is being exposed are the issues people have with the organization, now that it is no longer innovative.
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posted by Jeffrey Phillips at 6:23 AM 0 comments

Tuesday, July 03, 2012

Innovation is a belief system

In today's post, I decided to tackle what is, to me, perhaps the most confusing characteristic of most organizations today - the failure to believe in innovation.  Most firms believe strongly in their culture, they say they believe in their people and their abilities.  Yet the biggest gap for innovation success is in what executives believe about the organization, and what the organization believes about its executives.

Executives want innovation to happen, in order to drive new revenues or create differentiated products, but are concerned about the distraction that innovation may produce.  That distraction may lead the team to take their eyes off the ball and miss quarterly projections.  Missing quarterly projections simply isn't done, and cannot be repeated, so far too much emphasis is on the short term numbers.  While executives want the benefits of innovation, they are concerned about the risks of emphasizing innovation.  Worse, many executives don't have faith that their teams are capable of innovation.

On the other hand, far too many people in the organization look at their executives and are certain they know what will happen if they suggest an interesting or compelling new idea.  Most managers and staff are convinced that if they present a new innovation, the executive team will shoot it down, and place a black mark on the permanent record of anyone who suggested a radical new idea.  Managers and staff don't believe that their executives are open to innovative ideas, even as executives ask for innovation.

This is a belief system failure, which leads to executives  thinking that their teams or staff aren't innovative, because they never suggest interesting, valuable ideas, and the staff thinking that executives don't believe they are capable or worse, will shoot down new ideas.  While both teams recognize the need to innovate, neither has a belief system which establishes communication, trust and commitment to allow to happen what both want to happen.  This is almost a prisoner's dilemma situation, where both win only if they can keep silent.

Why does the belief system break down?  Let's examine the executives first.  Executives often don't understand how innovation works.  Many executives achieved their positions by cost cutting or by financial management, not through innovation, so for many of them innovation is an unfamiliar, uncertain activity.  They know they need it but aren't sure how it works or how their teams can be effective.  They have repeatedly asked for innovation but have seen little from their teams.  They don't recognize that innovation is more than an activity - it is a capability or system that needs resources, funding and persistence.  Their unfunded requests seem cynical in the eyes of the managers and staff, who know that compensation is tied to delivering the quarter.  Eventually executives come to believe that innovation is a dangerous, risky exercise that requires great insight and experience, which isn't present in the organization.  Executives don't believe their organizations can be innovative.

In the reverse, a lot of managers and staff have good ideas, but are afraid to present them because the executive team hasn't been very open to listening to new or different ideas in the past.  Increasingly, I am told by our clients how difficult it is to obtain a meeting with executives and how unlikely new ideas are to receive a warm reception.  In many cases the managers have built an artificial wall, and I've found that with the right presentation and packaging executives are interested, but managers and staff don't believe that their executives will be open to new ideas.

This lack of a belief system is built on four challenges or assumptions:

  1. Innovation is something that requires a significant amount of insight and skill, which doesn't exist in our company.  The insights are often there, waiting for permission to be unleashed
  2. Our needs and strategies are well communicated, so innovators will step forward.  Executives often believe that their strategic goals and the needs for innovation are obvious, but that's rarely the case.  Company strategy is poorly or inadequately communicated and often analyzed and received differently than was intended.  Combine a poorly communicated strategy with the overwhelming pressure to achieve high objectives in short time frames and you can see why most organizations revert to business as usual
  3. When managers or staff suggested ideas to executives in the past they were rejected or ignored.  In fact in most organizations this is still the case - there are few mechanisms to allow good ideas to surface at the level where they can be considered and most importantly funded.
  4. Inaction and rejection breed a culture that accepts the difficulty of innovation and the inadequacy of the staff.  A vicious cycle erupts and becomes codified - executives don't think their teams are innovative and managers and staff think their ideas will be rejected.  Neither believe that the other is open or capable of innovation.
If you want more innovation, work for better and more consistent communication of that fact.  Establish communication lines and mechanisms for anyone to present good ideas.  Carefully define the strategic goals and frame innovation activities in line with these goals.  Set aside time to listen to your team and their ideas.  Demonstrate engagement with your team, and build a belief system that demonstrates you (as an executive) believe the team can develop good ideas.  Provide sponsorship to those who seek to innovate and offer encouragement, rewards and recognition to those that do.  You'll be surprised how much innovation is possible in an organization that has a strong belief in its capability to innovate, and how little innovation is possible when no one believes that innovation is possible.
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posted by Jeffrey Phillips at 5:58 AM 1 comments