Tuesday, February 24, 2015

Making innovation a valuable habit

You may be thinking to yourself that the title of this blog post is boring, or even redundant.  Of course we want to emphasize valuable habits.  And innovation can lead to valuable outcomes.  But what about the "habit" part?  Aristotle noted something about his fellow humans.  He said that "you are what you repeatedly do".  He recognized that the more we do certain things, the more we followed certain norms, the more they influenced who we are and how we look at the world.  This is interesting in itself, but troubling from an innovation standpoint.  Because if we are what we repeatedly do, we'll never innovate.  If we are what we repeatedly do, we're all efficiency managers, not innovators.  That could explain a lot about the barriers innovation faces in large corporations.

What are your habits?

Habits actually have a somewhat negative connotation any way, like biting your nails.  People often talk about "bad habits" but rarely talk about "good" habits.  Many of the activities and actions we take every day become ingrained habits.  Getting coffee, chatting about the corporate culture over the water cooler, grabbing lunch with the same people, arriving ten minutes late for scheduled meetings, and so on.  After a while these habits become so ingrained that they become the norms.  In fact, in many corporations it's the kiss of death to schedule a meeting after 3pm, for a couple of reasons, but the most important one of which is that so many people arrive for meetings late that each subsequent meeting gets pushed back.  We all sit around and shake our heads about how terrible it is that people can't show up on time, but no one takes the responsibility to change the habit, and soon it becomes the norm.  These "bad habits" become what the corporation expects, and soon become the norm that we teach newcomers.  Eventually what were once simply bad habits become the norm.

If we are what we repeatedly do, then we ought to be the world's best meeting managers, cost cutters, time managers, pre-planners and efficiency experts, since most people in corporations spend time in meetings, cutting costs or corners, planning the next meeting and trying to figure out how to do more with less.  These habits become ingrained, and eventually influence how people think.  If you don't believe this, try asking people to generate really creative ideas that will violate their cultural norms.  It's actually funny to watch people squirm.

Innovation as a valuable habit

If more innovation is vital to most corporations, but people are ingrained with efficiency, how do we make innovation a valuable habit?  Well, first we need to create the conditions where innovation is possible.  That means that executives have to communicate the need for innovation and build the environment, and establish the compensation and rewards.  Once the environment is right we need to task people to innovate, regularly and consistently, so that innovation tools and processes don't seem strange and new, but seem trusted and familiar.  If we repeatedly "do" innovation, we will become more innovative, and more capable innovators.  If we repeatedly "do" efficiency, we will remain capable cost cutters who recoil from the implications of innovation.

First we need to make innovation intentional.  That's where the executives come in.  They must link innovation to corporate strategy and make it valuable and purposeful.  Then they need to demonstrate commitment, because that's what will help most of the folks overcome inertia and become willing to adopt new thinking and processes.  Finally, we need to do innovation regularly, so that it becomes a habit.  Only then will innovation be as easy, and as acceptable as doing the everyday business as usual.

There's real work in making this transition. For decades we've developed managers who are efficiency experts, and many of them have progressed onwards into the management ranks.  We've given innovation skills and training short shrift, and efficiency is the habit, not innovation.  It's time to rebalance skills and reset the framework, expecting both innovation and efficiency.  You won't have to worry about the efficiency part of the equation - it's already an ingrained habit.  You will have to focus on innovation, to make it a habit, and the only way to make it a habit is to do innovation often, consistently and repeatedly, using the same approach.  There's a word that describes that consistent approach and repeated usage.  You need to understand that innovation is a "discipline" that must be practiced regularly.

Almost 40 years ago the Doobie Brothers, of all people, released an album titled "What were once vices are now habits".  If we follow that logic, then it should be apparent that what were once habits are now cultural norms.  And once something becomes embedded in the culture, only a radical effort to refocus, repurpose and rework is going to change.  We need to create innovation habits that lead to innovation norms, rather than allow our cultures, habits and norms resist innovation.
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posted by Jeffrey Phillips at 5:43 AM 0 comments

Monday, February 09, 2015

Innovators are pattern breakers

Over the last five years or so I've been asked many, many times about my opinion about corporate innovation.  Why is there so much demand for corporate innovation, yet so little practical result.  One could stipulate a number of reasons, including:
  • The lack of time or bandwidth
  • The focus on efficiency over experimentation
  • The lack of innovation skills or techniques
  • The inordinate rewards of short term thinking over long term success
  • Fear of the uncertain or unknown
And I'm sure we could continue this list ad infinitum.   These are all reasons why so many corporations can't successfully and continually innovate.  But over time I've come to realize a larger issue is at stake.  It's a problem of pattern recognition.  Most corporations believe that their customers' needs begin and end within the manner in which the corporations or the industry have defined their solutions.  As long as a new product or service can be delivered within those definitions agreed by the industry, then innovation is easier for the corporations to pursue.  But when a need or demand arises that falls outside of, or just adjacent to, the way an industry or corporation defines its solutions, everything falls apart.  Increasingly, innovation will be at the intersection of markets and industries, and corporations need to become far more flexible in how they define the market, the boundaries of their service offerings.

Top Down versus horizontal

Most companies develop a specific representation of a market, industry or segment.  For example, the haircare department at P&G wants to solve problems for people who want to wash or condition their hair.  But to an individual, that activity may be just a step in a complete journey from getting up to getting ready for work.  Should P&G decide to look at all the factors related to haircare in the customer's journey from waking up to leaving for work?  That could potentially broaden the opportunity and introduce new solutions, but they may have nothing to do with shampoo.

How the P&G hair care team looks at what a consumer needs or wants to accomplish in the morning, the "jobs to be done" if you will, starts and ends with their definition of the solution.  They might say "we are in the shampoo business" or "we are in the hair care" business.  But a consumer might say "I have a job to do to get up and get ready for work", one step of which is washing hair.  If an innovation opportunity or need emerges just before someone washes their hair, or just afterwards, does P&G pursue it, or assume that some other vendor who provides services or products that support he morning rituals will step in?  Does the P&G hair care team say "that's outside of our industry definition or sweet spot"?  Do they say "that's someone else's job to fill"?  Because if the gap is left in place long enough, someone else will fill it.

Customer Experience Journey

Here's where a customer experience journey map makes so much sense.  Trying to understand all of the things a customer is trying to do, both with your product or service, or just before or after it, instead of trying to optimize just a single step in the activity.  As long as we take a top down, very segmented view of the customer, we can solve only very small portions of their jobs, all the while missing or ignoring opportunities that are just adjacent to our capabilities or services.

You may say, well, if it's just adjacent to our services, we may not be in the best position or have the best capabilities to provide it.  And you might be right.  But what you are doing is opening the door for very similar competition to take up a very vital activity right next to your products and services.  And if they can solve the adjacent need that you've been ignoring, does it build credibility for them to get to solve the problems you've been focusing on all along - or worse, perhaps try to collapse the needs they are solving with the one you've been solving?  Isn't that what iTunes ultimately did?  Collapse several related solutions and needs into one more integrated solution?

Patterns, Corporate Capabilities and industry boundaries

We pride ourselves on our pattern recognition capabilities, but too often we become very comfortable in our our definitions and patterns.  Far too frequently we at OVO see opportunities that are just outside or just adjacent to solutions and frameworks that a corporation has defined.  They'll say that those needs are outside their competencies or focus areas, and they may be right.  But they leave the door open for other firms or new entrants to solve those problems and gain credibility, when with a little bit of work they could extend their capabilities and solve a greater portion of the customer's journey.

How much does your corporate capability limit your innovation potential?  Are you required to follow the industry in where you define where it begins and ends?  Do you understand the entire journey a customer is going through when they encounter your product or service?  Is there a more complete or integrated solution you can provide to ease the customer journey, even if it's not within your wheelhouse?  We need to define our opportunities within the confines of our capabilities, but always with an eye to understanding the total needs of a customer. When is the last time you developed a customer journey map for your customer's need?
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posted by Jeffrey Phillips at 7:35 AM 0 comments

Tuesday, February 03, 2015

What's your perspective on innovation?

Our clients are always interested in what will lead to the most innovation within their companies.  Is it the markets or industries they compete in?  Do they have a natural amount of innovation or resistance?  Do software firms innovate more than manufacturers?  Is it the culture of the organization?  If we have ping pong tables in the break room, will that make it more innovative?  How about the people?  Do we need hipsters, millennials, Boomers or some other segment?  Do we need creatives, designers, artists?  Sometimes it seems we could actually remake many corporations by merely suggesting that they need more designers or Millennials.  But while these factors contribute to innovation success, there are other factors that we care about.  One of them is passion.  Does an individual have passion for the problem and a desire to create a solution?  Will the individual move mountains to try to solve the problem?  Sounds like an entrepreneur, but given their head many corporate employees can identify challenges or problems where their passion lies.  And with passion comes commitment, engagement and many other factors that can drive a successful innovation activity.  But there's one other factor I always look for:  perspective.

Send me the shoes

There's an old story used to make a point, primarily to sales people, but it is entirely apropos here.  Two shoe salesmen are set to set up shop on an inhabited island that hasn't had a shoe franchise before.  When they get there they discover that the entire population is barefoot - no one has developed shoes or sold shoes to the population, and the population hasn't developed its own footwear. The first salesman sends a message back to HQ:  please come get me out of here.  None of the inhabitants wear shoes.  The second salesman sends a message back to HQ:  please quickly forward all the makes and models you can.  Nobody wears shoes here.  The market is huge.

In the world of sales, the idea that people who don't wear shoes also don't need shoes is nonsensical.  If the need isn't present, create the need and then fill it.  But look at the second salesman.  He recognizes a huge, untapped market because he believes he can fill needs customers aren't aware of.  Yes, it may take time to get the population to wear shoes, but once he convinces them of the need for shoes, he'll have the market to himself.  The two characters in this story represent two different and competing perspectives:  what is possible with a positive outlook, and how quickly people will surrender to a negative outlook.  What people do we want on an innovation project?  The people willing to take an expansive, inquisitive, positive take on any opportunity or challenge, regardless of their position, age, training, managerial level, zodiac sign or depth of innovation training.

A few days ago I wrote a post about the amount of opportunity available even in a highly competitive market.  Far too often corporations shy away from competing in what appears to be a "red ocean" - a highly competitive market with lots of competition and low margins.  Frankly, it makes sense to place investments where you can win more share and more margin.  But even in highly competitive markets there are opportunities.  We can look at Uber, NetFlix and AirBnB as just a few examples.  All three compete in what initially were highly competitive markets.  There are plenty of options for taxis or rental cars, movie rental options (at least while Blockbuster was around) and hotel rooms.  Each entered a competitive market and disrupted it by rejecting the status quo channels or business models and offering customers basically the same product but in a new way.  Do you think the first salesperson, dreaming up a new way to rent rooms to people, would have developed AirBnB?  No!  He'd say:  well, there are a lot of big companies competing in this space and a lot of the valuable real estate is locked up, and I don't have much pricing power or branding, so I'll go do something else.  The entrepreneurs behind AirBnB, Uber and NetFlix saw opportunity where others saw competition and struggle, and eventually forced the larger competitors to compete on their terms.

Why is corporate innovation so difficult

So, why is corporate innovation so difficult? For years we've told people what to think, how much risk to embrace, what mental models to use to think about their business.  We've preferred certainty to experiments, incremental change to creativity, short term thinking to long term thinking.  We've designed our teams to think like the first salesman.  Then every once in a while we gather a team and ask them to act and think like the second salesman, and frankly, they aren't prepared or capable to do that without some re-education and a whole lot of reassurance.

If you want more innovation, you need to train an army of people in your company who can execute flawlessly, improve efficiency AND who can easily and quickly think like and act like the second salesman.  It's not an either or proposition.  Efficiency and Innovation can, and must co-exist.  But we've been trained to believe that they are enemies, and that efficiency must prevail because it is predictable and safe.  On your innovation teams, how many people would rather be voted right off the island like the first salesman?  I suspect you'll find the answer is most, if not all of them.

You can hire designers, you can hire Millennials, you can hire creative types, and all of those factors may help you generate more ideas.  But until you impact the perspectives and expectations of the workforce within your company, you will rarely innovate successfully.
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posted by Jeffrey Phillips at 11:02 AM 0 comments

Monday, February 02, 2015

There's more innovation opportunity than you think

Just recently we were working with a client and our combined OVO/client team had created a number of really good ideas to develop as new products and services.  When we presented them to the senior executive sponsoring the activity, his response was mixed.  Some he liked, some he was uncertain about, and some targeted a market that is valuable but which also has a lot of embedded competitors.  His comment about innovation in that last space was basically to say there may not be a lot of room for innovation, perhaps the incumbents had the space locked up.  While I understood his concern, the comment was a bit deflating for the team.  Later, as the team debriefed the meeting, his concern came up.  My response was:  I'm sure many competitors and new entrants felt the same way about Blockbuster back in the days before NetFlix.  My point being that how we define an opportunity may lead us to ignore a valuable market opportunity, but changing how the market or segment is served may open what appears to be a closed or highly competitive market.

Because, after all, what did Redbox and NetFlix and eventually real time streaming of movies actually do?  In the end the consumer gets what they want, entertainment and content.  How they get it, the business model, channel and customer experience may have changed, but the ultimate service or product changed very little.  If we were to go back and think about disrupting Blockbuster when they had a shop on every corner, and a (relatively) deep selection of movies to choose from, we'd be crazy to enter and compete in the same way.  That wouldn't be innovation, but you see what I mean.  But by defining the market differently, by thinking about new channels, new experiences and solving problems that the customer had, even in the face of high competition from Blockbuster, NetFlix completely eliminated Blockbuster as a competitor, even thought Blockbuster had access to the same content and was trying to solve the same need.  The problem was that the customers ultimately cared less about obtaining the content from a corner store, and more about the breadth of offerings and convenience of returning movies through the mail.  Blockbuster built their franchise on a corner store model, and NetFlix innovated by pointing out that with a little foresight and planning you could see all the same content without ever going to the store, to choose movies or to return them.

Of course, you'll say to yourself, this is a classic reframing problem.  I should be in the "transportation" business, not the "wagon" business.  While this reframing exercise may seem a bit trite, it forces you to ask:  how should I compete to win those customers?  What does my competitor or the incumbent offer that the customer doesn't need?  What is in the currrent business model I could change or even remove?  The SIT and TRIZ folks will call this subtraction - what can I take away and have an equivalent or valuable product.  What can I change or add to the existing model that subverts it?  Removing the hassle of going to the store to acquire and worse return movies made it more convenient for consumers.

Everyone wants to find a "blue ocean" - a segment or space where there aren't any competitors.  What no one seems to realize is that even in the most competitive markets and segments there is plenty of innovation possibility, but to discover it we may need to reframe the problem or change the game.  Often the incumbents don't want to change - their models and channels are based on what they've built.  Innovators, entrepreneurs and newcomers aren't invested in the way things work, they are interested in introducing new perspectives or frameworks that subvert the dominant paradigm.  Sorry just had to work that in.  Too often managers and executives recoil from innovation in a highly competitive space, when perhaps it's exactly where they should spend their innovation efforts.  But because they compete for the same customers and deliver much of the same value proposition, they don't necessarily have to do so in the same business model, pricing, channels or customer experience models.  That's what we need them to see - we can innovate in these spaces, but only by reframing the problem, changing the business model or channels.  But when we win at doing that, we dissolve the incumbents competitive advantages at the same time. 
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posted by Jeffrey Phillips at 7:47 AM 0 comments