Wednesday, December 18, 2019

Innovation FOMO and FOMAD

Today, memes enter and leave the lexicon so quickly that I almost hesitate to use newly coined words or phrases, in fear that they may have already become passe.  So you can imagine my trepidation in using FOMO - the "fear of missing out" - when writing about innovation.  However, rather than simply expand on innovation FOMO, I'd like to introduce another, even more important issue - FOMAD.  This is one of my own creation, and one I'm certain will be rippling through Twitter and the other social media platforms shortly.


What is FOMAD?  In the innovation context, FOMAD is the "fear of making a decision".  There is a tremendous amount of FOMAD in many innovation activities, and I think FOMAD is perhaps one of the most significant roadblocks to innovation success.  Here's why.

FOMAD is a symptom

FOMAD is a symptom of a consistently recurring problem in innovation.  Innovation teams have too little information or context about corporate direction, strategy, funding mechanisms or risk tolerance to decide whether or not the ideas they've created are useful or meaningful.  After days, weeks or months of innovation activity, they are left with a handful of what appear to be good ideas.  However, lacking good strategic context or clearly defined problems or evident financial support, the fear of making a decision about one of the ideas rises.  When all options seem equally viable and the path to a decision is unclear, all options seem equally attractive.  Innovation teams struggle with the fear of making a decision.

This symptom can be easily addressed and clarified by better scope definition, executive support and expectation setting earlier in an innovation activity.

FOMAD is about tradeoffs

FOMAD is also a problem due to scare allocation of resources - people, time and money - to innovation activities.  While scarcity and constraints are good fuel for innovation, they often create FOMAD when it's time to decide which ideas to champion, or even which problems or opportunities should be addressed by innovation.  The problem is that lack of resources and uncertain processes make innovation more of a gambling activity than an insightful, practiced activity.  So teams are left with the question - which big bet should we make?  Making one selection often means that you cannot invest in other good ideas, so decision making is delayed because the tradeoffs are uncomfortable or unfortunate.

FOMAD indicates career concerns

Fear of making a decision is also generated when careers are made or lost on a big project.  Too many times corporations build up an innovation activity and place too much emphasis on any one project.  Then, when the pressure mounts, it can be difficult for teams to get behind a good idea, recognizing that all new and transformative ideas have risk.  Even the best ideas can fail for all sorts of reasons.  Who wants to be the team that ardently supported an idea that eventually failed?  Failure of this type in many companies is a career-limiting move, what we used to call in my Accenture days a CLM.  Ever notice how wishy-washy many innovation teams are when called on to make a definitive statement about the potential success of an idea?  They know they cannot guarantee that the idea will receive the investment it requires, that it will be developed and launched successfully.  Thus it can be hard to make a definitive decision and back that decision when they don't control the downstream activities, and while many companies talk about failure as a learning exercise, it is more often a question of losing credibility.

FOMAD in your business indicates some key issues

Every business doing innovation has some FOMAD, but I've defined at least three reasons FOMAD might exist, and in doing so indicated some ways to reduce or eliminate FOMAD.

First, create clarity, funding and good scope for your innovation activities.  FOMAD is often a symptom of poor project definition or lack of executive support.

Second, while scarcity is a reality, innovation often receives far too little funding and can feel more like gambling that a careful investment.  Ensure the teams have enough funding to make good choices and that not every idea feels like the throw of the dice.

Third, mean what you say about failure.  Who wants to back a good idea when they can't guarantee the outcome but may be held accountable for the "failure"?  Failures are learning exercises - often expensive ones to be sure - but should be treated as such.  If failure is a career limiting move, then you can expect that your teams will be unwilling to ardently back good ideas.

These three instances of FOMAD are addressable. The first instance is a question of executive involvement, choosing important and urgent challenges and defining scope effectively.  The second instance is a question of resources and funding, having reasonable expectations for what it costs to do innovation and the potential return of ideas.  The third is about the expectations and culture of the organization, how people are rewarded and recognized (or punished) for failure, when failure was likely.

If your innovation activities aren't delivering what you expect, check your FOMAD.  And contact me, because I can help reduce and eliminate FOMAD in your business.

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posted by Jeffrey Phillips at 7:17 AM 0 comments

Wednesday, December 11, 2019

Why being ambidextrous is not enough - looking ahead to 2020

It's about that time of year where we begin to look back, to think about what we've accomplished and what lies ahead.  Knowing that the end of the year is in sight, and the holidays are almost upon us, we anticipate work slowing down, and perhaps for just a few days we can actually think - really think - about what's going to happen in 2020.

I've had the good fortune over the last six weeks to reach out and talk to a significant number of my colleagues, friends and some new acquaintances in the innovation space. What I've been trying to find out is 1) what is happening in the innovation space currently and 2) what do people think the future opportunities for innovation are?  I have a number of ideas and thoughts that I'd like to share - by calling on these conversations and my own opinion and research.

The key question I keep coming back to is:  can you juggle three really different needs and initiatives simultaneously?  Because I think increasingly an efficient core, an innovative edge and a digital transformation will all be important.

The beginning of the end, or the end of the beginning?

For more years than I can count, people have been calling for the "end" of innovation.  As Churchill said in the dark years of World War II, this could be the beginning of the end, or the end of the beginning.  Of the people I've talked to over the last six weeks, a blend of innovation consultants, analysts and corporate practitioners, most feel that innovation as a concept is reaching maturity.  That is, many companies believe that the capability to innovate is becoming a commodity inside businesses.  I think most management teams believe they can accomplish incremental innovation in house, and they are happy with that result.  So the question becomes - will there be a sustained push for more innovation, and will there be a need for more external assistance?  I think there will remain a focus on innovation, but with different agendas and motives.  Incremental innovation will become a consistent focus, while transformative and disruptive innovation will be sporadic at best. 

A good friend, Drew Boyd, who is no slouch at innovation himself, suggested that innovation moves in cycles.  For some firms we may be in a cycle where management teams are seeking to harvest ideas from previous investments in innovation.  It could be that many companies are waiting to see the fruits of the investments in innovation over the past few years, hesitant to invest more before seeing some outcomes.  Innovation - in this definition meaning creating valuable new products and services to drive organic growth, revenue and new profits - will always be in demand, yet my sense and the sense of others is that innovation for many reasons hasn't lived up to expectations in many corporations.  This failure to meet expectations (we can argue if these expectations were reasonable or the activities fully resourced) plus the emergence of digital transformation lead to the sense that interest in core innovation may wane slightly in the new year.

Shiny Objects ahead

There are, however, a few shiny objects on the horizon and closing fast.  The lure of digital transformation, and the excitement over the Internet of Things, machine learning and so forth is tangible.  Most companies know that this digital wave is about to crash, and most if they are honest with themselves know they aren't prepared.  This new management phenomenon will pull attention and funding away from innovation and in many cases this may be the right investment.  As more and more data is generated, companies stand to lose revenue, share and brand image if they don't respond with better digital capabilities.

However, management bandwidth is limited, so increased focus on digital transformation can only mean lesser focus on innovation, or pushing innovation into the fabric of the operating model.  Since few companies have fully adopted innovation as an operating capability, this means that its likely fewer innovation projects will be started, and when they are started it will help innovation activities receive funding if they focus on smart and connected outcomes.

This points out the opportunity to merge innovation, the creation of new products and services, which seems a bit long in the tooth, with digital transformation, which is emerging but not yet solidified.  If we can find ways to create new, smart and connected products and services that leverage innovation skills and digital skills, I think this is a win-win for everyone. I'm a bit concerned that much of the digital transformation focus in placed on specific tools (machine learning as an example) and not enough focus is on solving actual problems (what should machine learning do and what benefit does that create?).

The split between incremental and disruptive innovation

As noted above, most companies believe that they can do incremental innovation - that is, successfully add a new feature to an existing product, and they are probably right.  However, this capability basically keeps the lights on - incremental innovation does not create new revenue streams or enhance profit margins.  To "move the needle" companies need an occasional transformative or disruptive innovation.  And in this recognition lie both opportunities and problems.

There are opportunities to generate transformative ideas within large companies.  The staff are familiar with customer needs and emerging opportunities, so generating transformative or disruptive ideas is not difficult.  But converting disruptive ideas into new products or services within an existing business is difficult, because existing processes and business models, as well as executives whose businesses would be impacted by a transformative idea will resist creating such a disruptive idea internally.  Developing and launching new, transformative ideas that may cannibalize existing products or radically change operating models threaten existing revenue and profits, which make converting disruptive ideas into new products or services difficult.

Increasingly this means that most companies are likely to hone their incremental innovation skills, which in reality are an extension of familiar activities combining lean, agile and Six Sigma, and I believe will partner with startups and external firms to create interesting or disruptive new ideas.  I expect to see even more accelerators, incubators, corporate venturing programs and other mostly external laboratories for transformative and disruptive work.

One to create, another to scale

The idea that external or near external accelerators and incubators will create and validate new, transformative ideas isn't necessarily new.  Some companies are working in this manner already.  I just think increasingly we'll see more risk shifted to external organizations to create and validate ideas, and at the right time larger corporations will then acquire the solution and scale.  After all, isn't that what larger corporations do best, launch ideas into a viable marketplace and scale the good ideas?

I remain hopeful and skeptical.  Hopeful because the underlying story seems to make sense, but skeptical that larger companies can successfully identify good ideas in the ecosystem, acquire them in a relatively timely fashion and then scale ideas that weren't developed in house and may conflict with existing operations or brands.  Technology-driven companies do this kind of work finding emerging technologies in the open market, and it can take months or years to validate and acquire a technology that is just a component to a larger product or solution.  Imagine trying to determine the value of a partially tested solution and acquiring it and scaling it.

The story works but the successes so far leave room for growth.

Transformation, of everything

Jim Carroll, one of the leading speakers on the future, has determined that his new focus should be on transformation.  Note that I am dropping the leading "digital" from that description, because of course we are going to be transforming businesses and operations with digital technologies.  Digital transformation almost goes without saying.  We've been doing that since the first ERP implementations 30 years ago.

What we should be talking about is simply transforming our businesses, from large, static, slow-moving, monolithic and unresponsive to agile, insightful, creative and responsive organizations.  This transformation is enabled by digital technology, but also requires rethinking how people are deployed and managed, where the focus of the business lies and how the business interacts with and relates to customers.  More decision making needs to be pushed further down the org chart, and the org chart itself needs to evolve.  We need faster decisions, made closer to the customer, and far more agility, speed and innovation to compete.  Larger, older companies built on older models have further to go than newer, more digital and agile companies, but even newer companies must transform.

And I wonder if transform is the right word, because it implies a one time change, from this to that.  However, given the pace of change and the number of new entrants and the increasing power of digital and the internet, how businesses work will continue to change.  So transformation may not be a one time activity but a constant evolution.

You'll need three hands

Many people talk about ambidextrous companies - those that can maintain an efficient, effective core while simultaneously innovating to create new products and services.  The real test will be whether or not these ambidextrous companies can do both well while simultaneously transforming to meet new market conditions and customer expectations.

Wrapping Up

What we are ultimately talking about is not just product innovation, and where it occurs (incremental innovation inside, disruptive innovation outside) but also service and business model innovation, with the focus turned inward.  How might we innovate and transform our businesses to make them more agile, more nimble, to operate more quickly and decisively?  Can we maintain existing operations AND constantly evolve?  If so, how?  This question invites innovation back into the company, but with a different flavor and focus.  Now, speed, agility and business model innovation become paramount, and innovation capabilities and tools will be turned not only to the creation of new products for consumers, but to create new operating models, new organizational structures and new revenue models.  If you outsource all of your best innovation thinking, can you then turn the innovation skills to evolve your business when it needs to transform?

Digital transformation is a component of transformation, in the same way that ERP, CRM and the internet made today's businesses more efficient and profitable.  New expectations will leave slow, monolithic companies in the dust, however, and merely tinkering with digital transformation without changing services, customer expectations and business models will create a company that is ever more efficient at doing things that fewer and fewer customers want.

The expectations just went up.  Customers expect high quality products and services delivered at low prices, which means efficiency.  However, they also want interesting new products and services that address formerly unmet or unserved needs.  This means innovation.  But just as important is the ability to connect these devices and services to other data streams to create more meaning, more experience and more information.  This is the power of digital.

These concepts are tightly linked, and your company increasingly must be good at doing all three, simultaneously if you are to compete effectively in the future.

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posted by Jeffrey Phillips at 6:57 AM 0 comments

Tuesday, December 03, 2019

Innovation - fast and slow, for the right reasons

For quite some time we've been hearing about how important it is to do things quickly, with many new adjectives placed in front of the word "innovation". These words include adjectives such as "lean", "agile" and "rapid", to make the point that innovation should be stripped to its bare components, move as fast as possible and create minimum viable solutions.  What has worked in more traditional settings - manufacturing, process improvement, etc - is now being applied to innovation.  And to some extent that's good - innovation can't afford to get bogged down in lots of red tape.  But we ought to ask ourselves when it is important and necessary to move quickly, and equally what factors cause work to move slowly.

When to move slowly

You'll be a bit surprised, I know, to find out that my first point is a bit contrarian.  That is, not everything in innovation should move quickly.  In fact I've often said and written that to move quickly you first need to move slowly, or at least move with good information.  Far too many innovation activities start with ideas and move quickly to create minimum viable products, but these activities lack good understanding of the emerging future and lack customer insights and needs.  Moving quickly without important context is just failing faster, and failing without appropriate learning.

There are not nearly enough people or resources dedicated to understanding the emerging future, or tapped to understand unmet or unarticulated needs.  If the previous sentence is true for your company, then moving quickly through these activities, skipping them because you already "know" what's going to happen or just ignoring them in order to move faster isn't helpful.  You can move quickly to do innovation work if you are constantly updating the context in which new ideas should be generated.  You should not move quickly if moving quickly simply means ignoring customer needs and emerging trends.

Why innovation efforts often move slowly (part 1)

Innovation work often moves slowly for a number of reasons, that in reality are easily addressed.  These include:

  • Uncertain scope
  • Assigning people who are unfamiliar with innovation methods and tools
  • Assigning people on a part-time basis, or on top of their existing jobs
  • Working on ideas that cross internal silos where processes or communications are lacking
  • Lack of funding for innovation programs
These bullets are always true, and always slow down innovation work.  Innovation itself is not necessarily a slow activity, it is often slowed by factors beyond the control of the innovation team.  Address the factors around the innovation activity and innovation can move very quickly.

Why innovation efforts often move slowly (part 2)

But what really causes innovation to move slowly are factors like disruption and risk avoidance.  If your organization has a well-defined and reasonably profitable business model, how anxious will the leadership team be to see you generate a wholly new business model or a product that cannibalizes existing products or services?  Executives can't be faulted for asking for more validation, more data, more customer tests when existing, profitable products or business models are at stake.  Risk avoidance and current revenue are often more important than potential profitable products and services.  No amount of lean tools or agile methodology will change that.  Only management commitment and cultural change will address those issues.

When can you move fast?

You can move fast in innovation work when you:
  • Have capable teams, trained in innovation work
  • Have a clear project scope and anticipated deliverables
  • Have the people and funding you need, and no more
  • Have management flying air cover for your work and your ideas
  • Have a good understanding of emerging trends and customer needs
These factors will accelerate your "front end" work - that is, getting from opportunity to requirements.  You'll also want to address a large gating factor - how to get new product and service ideas into a packed product development process.  Innovation may move quickly, but the clog in the system is often in a transition from really good, validated ideas moving to new product development projects.

A minimum viable product is just that, minimum and barely viable.  Finishing and scaling an MVP is what drives real revenue, which means a good idea needs to go through the front end relatively quickly, and go through product development and market launch in a timely fashion as well.  Understanding the entire process, from opportunity identification to market launch is what will ultimately make innovation faster.

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posted by Jeffrey Phillips at 5:48 AM 0 comments