Innovate on Purpose

Midwestern Innovation at 3M

2009-11-13T05:52:00.000-08:00

Yesterday, November 12th, I had a unique opportunity to visit with senior executives and scientists at 3M's Customer Innovation Center in St. Paul. 3M invited six innovation "influencers" to attend a briefing and to learn more about what makes innovation so viable at 3M. Over the next several blog posts, and in my upcoming November newsletter, I plan to recap what we learned during the briefings, and what I think that means for firms that seek to replicate the success that 3M has had in innovation.

One attribute that resonated with me was the collegial and "we're all in this to succeed" cultural model demonstrated time and time again during the presentations. After all, these weren't just any scientists. Several people in the room, including Andy Ouderkirk, Olester Brown and Sumita Mitra are well known innovators and have won numerous awards inside 3M and outside 3M as well. In many organizations these individuals would be "rock stars", yet the CMO of 3M said several times that one of the defining cultural aspects of 3M is that there are no "rock stars". It's hard to validate that statement after one day of meetings, but I came away with the sense that everyone (at least on the technical side of the house) is actively encouraged to innovate, and that aspects of the 3M culture sustain that by lowering barriers and increasing the opportunity to work together.

I titled this post "Midwestern Innovation" because we joked at lunch about whether or not 3M's culture would have developed in the same way if the firm had been located in Manhattan or San Jose. 3M's model is distinctively upper midwestern - built on the concept of working together for the common good of the firm and the employees. The original founders embedded much of this philosophy, which was extended by William McKnight who encouraged his managers to allow employees to experiment, to define the best way to do a job, and to tolerate mistakes. I'm curious how much those early decisions about how to structure work and the collegial atmosphere of the environment has sustained 3M and made it easier for innovation to occur.

Some of the other factors that sustain an innovation culture are also aspects of the midwestern, rural roots. There's a focus on individual initiative, which encourages people to identify opportunities and create solutions, and a "barn raising" mentality which encourages people to help each other with on projects. There's also very little financial gain on the part of the individual for new ideas, but the opportunity for advancement and the opportunity to repeat the success. Finally, the evaluation criteria for most people encourage working together and solving problems across geographies and product lines. These collegial attitudes, low personal aggrandizement and attitudes to sharing insights and information rather than bottling up information in rigid silos creates an internal innovation community spread across geographies and over 40 different core competencies. With a powerful informal network, the conditions are ripe for innovation.

Over the next few posts I'll return to the 3M visit and highlight some of the other learnings, takeaways and challenges for 3M. But to me one of the most important aspects of the innovative culture was the demonstration of the culture that allows innovation to flourish.

You can read other blog posts by other attendees here:

Mike Lippitz: link

Nick Shulz: link

Paul Williams: link

Other attendees included:

Joe Sinfield, Innosight
Lisa Bodell, FutureThink
Mary Tripsas, Harvard Business School

Island of misfit ideas

2009-11-11T08:15:00.000-08:00

Do you remember the annual Christmas special about the island of misfit toys, where Rudolph ends up because he doesn't "fit in" with the other reindeer? The island is full of misfit toys that weren't acceptable for one reason or another.

A recent Accenture study on innovation found that there must be a mythical land of misfit ideas. Executives who were surveyed for the innovation study said that "opportunities to exploit underdeveloped areas/markets often die because they can never find a home to nurture them." Less than 15% of the executives surveyed disagreed with this statement. In other words, organizations can generate good ideas that are relevant to specific opportunities, but fail to find business lines or leaders who will adopt and nurture those ideas. So, those ideas must end up somewhere - our land of misfit ideas.

There are several reasons why good ideas aren't adopted and nurtured. In our experience I think I'd boil it down to three predominant reasons: prioritization, ownership and fear.

By prioritization I mean that a product or service development team within a line of business typically has more work than it can effectively complete. Even a very compelling idea that is generated and has merit must find its place in the priority stack. Often it is much easier to simply slip that "great new" idea at the bottom of the stack rather than reprioritize the work, so the opportunity slips by and little is done to advance the idea.

By ownership I mean that good ideas that are generated outside of a business line are often looked at with suspicion. Even if the idea is a good one and solves a significant problem, a business unit leader may think that since his or her team didn't generate the idea, they have little stake in the idea, or the idea may cannibalize the existing products and services. So a good idea is rejected or ignored.

By fear I mean that an idea may have great value but be so radical that implementing it will create significant change. In many organizations change is feared rather than embraced, and for some reason it is better to be forced to change through the actions of a competitor (reactive) than to create change and disrupt others (proactive). Since most firms reward consistency and reaction rather than change and proactive disruption, many new ideas will never see the light of day.

Perhaps what's needed is "local" innovation in a product or service line that is safe and relatively incremental, and "global" or corporate innovation that is relatively radical and disruptive. The challenge in this regard is moving the good idea from those who don't have the responsibility to develop the concept as a product or service to those that do, unless we simply spin off new product groups or businesses based on the radical ideas, rather than trying to force them into the existing businesses.

Otherwise many of the best ideas in your organization will end up on the island of misfit ideas, waiting for someone else to come along and discover them. Then, those ideas get released and implemented with a fury on those who ignored them initially.

Looking for the next disruption

2009-11-10T05:30:00.000-08:00

Many of us are aware of disruptions in markets, but like recessions we can only identify them by looking at evidence from the past. It's difficult to identify what new emerging technology or capability will create a market disruption. We typically can say a new product or service was disruptive months or years after the fact. But that shouldn't stop us from trying to decide where a new disruption might arise. In fact, we should be scanning the horizon constantly for emerging trends and evidence of leading indicators. Or perhaps challenges to be solved.

I was thinking about this recently when it hit me - there's a clear need for a disruption in personal electronics. We've had, by my count, at least three big breakthroughs. First came a rapid decline in the cost of memory. Remember when Bill Gates said 640K was all the memory anyone would ever need? I have thumb drives that have gigabytes of memory. Second came processing power. Remember when Intel would tell you how great their next Pentium or Septium or whatever processor was going to be? They made you care about the processor. Who makes the processor in your iPod or SmartPhone? Who knows? Who cares? Most of us have far more processing speed than we'll ever need. Next came broadband and wireless access. We have access to fast data transmission, wired and increasingly wireless, just about everywhere. So, currently our personal electronics are fast, efficient processors of information and are constantly connected. What more could you want?

Well, a couple of things. Since the early data input vehicles were typewriters, most of our electronics are dependent on manual data entry through a keyboard. Heck, even our smartphones are more keyboard dependent than voice dependent. But this is a limiting factor. Too many of us aren't great at thumb typing and want to have a more robust interaction with our Smartphones and portable machines. We are hampered by the input mechanism. What would these smart electronics look like if our main source of data input was voice? Could we eliminate the keyboard all together? I think this is one clear disruption waiting to happen. Voice driven electronics that can determine when I am speaking if I want to create a document and dictate the content of the document or record my voice for storage or make a call.

Also, another challenge of the form factor of most smart electronics is the size of the screen. Unlike teenagers, many of us are finding the size of the screen and the amount of information we seek to convey on those screens a challenge. What's clear is that as we become more reliant and dependent on mobile computing, we need more robust presentation capabilities, either as the 3-D holograms of Star Wars fame or perhaps something a bit more mundane, like a set of glasses that stand in for the screen. I could imagine a set of glasses that has a built in microphone that allowed the user a heads-up display of the information from his or her smart device.

Further, what's also happening is that all of the processing speed and memory are sublimated back into the cloud. We don't need tremendous processing power or memory on the device if we can stream a significant amount of information wirelessly and process it in the cloud. We need to improve the human interaction with the information and allow people to process and use information in a more natural context. We are still too tied to the concept of a computer terminal at a desk when our needs and interactions are increasingly less like that original concept.

The next major innovation or disruption in smart electronics should be in human form factors - allowing us to use ubiquitous information and process it in a much more effective way than we can today. If you are looking for a significant disruption that's likely to happen, I can't think of a more likely place to start looking.

Your innovation needs a story

2009-11-03T07:14:00.001-08:00

Imagine if you will, somewhere in the distant recesses of our existence, a group of cavemen huddled around a fire. The wiseman of the group gathers the tribe around the fire and regales them with stories of their ancestors - how they fought the neighboring tribes, how they found the food necessary to survive. The shaman passes on the wisdom of the tribe, and teaches in the process.

Stories are the best way to learn, and the best way to communicate. For some reason, we've lost the sense of story in business. Rather than use stories we opt for hard and fast "facts" that often miss the root causes or issues. There's no story telling class in an MBA program, yet most of the best leaders understand the importance of storytelling, and they lead others by telling and retelling stories. Some of those stories are myths, meant to reinforce the culture. Some of those stories are true, meant to teach and instruct.

I've just had the opportunity to read Michael Margolis' new book Believe Me, which he calls a "storytelling manifesto for change makers and innovators". It is a small, slim book with a lot of good ideas about why story matters and how to reclaim it.

What strikes me about stories in regard to innovation is how little emphasis we place on a story or a narrative. Too often an innovation project is created, but there's no linkage to past work or existing issues. The project seems to exist outside of the framework of the business, and doesn't have a strong linkage or narrative to drive it. Margolis identifies 15 storytelling axioms and notes that storytelling is especially important to innovators. There are a few axioms I'd like to point out:

1. If you want to learn about a culture, listen to its stories. If you want to change a culture, change the stories. I've found that culture is always a barrier to innovation, so changing a culture is important when innovating. Identifying the stories and changing the stories will make innovation more acceptable.

2. The power of a story grows exponentially as more people accept your story as the truth. This axiom played out for us on an innovation project, when we introduced qualitative research to a firm that had not used ethnography successfully before. Our story about our findings and the value of our findings spread through word of mouth and created an entirely new perspective on the use of ethnography.

3. Storytelling is like fortune-telling. The act of choosing a certain story determines the probability of future outcomes. If we choose a story line that we are a simple, safe, slow moving company then that informs the culture and defines who and what we are. If we choose a story line that defines our organization as a risk taking, insightful innovator, that's what we can become. Your story drives your results.

As an innovator, I'd like to start with the story, which will drive the culture to adapt to a new view of itself, and anchor the work within a narrative that we can spread through word of mouth to others. There's a need for a formal communication network, but powerful stories, repeated throughout the organization, do far more to get people on board.

Check out Michael's new book and think about what your story says about your organization, and how you can use story to your advantage.

Innovation in a bottle

2009-11-02T05:05:00.000-08:00

I guess I'll never fully understand the depth of concern that many management teams have around command and control, especially in an era of constant change. It seems that the more demands are placed on an organization to create new products and adapt to environmental change, the more resistance to that change is created and encouraged at mid and senior management levels. I understand that what's "known" is comfortable and what's unknown and new is uncomfortable, but at some point every firm has to create some new products or services or it will simply atrophy.

Recently I've witnessed what I'll call "innovation in a bottle". That is, a relatively successful innovation effort that the management team approved and blessed spawned interest in innovation across the organization. People in other business units and geographies wanted to know more, and learn more, about innovation and the successful work that was done. We on the project team viewed this as a good thing - a successful innovation effort being recognized as such. It was clear that many people wanted to understand the tools and process, and implement that kind of thinking in their lines of business.

Except that the management team viewed all of that energy and excitement with concern. Why was everyone so excited? Why was everyone so interested in innovation? Yes, the recently completed project had created very valuable insights and compelling new products and services, but the intent was for that group only. I think, in hindsight, that the management team intended not for a widespread innovation effort for the firm, but a more narrowly targeted new product discovery effort for one line of business. When that effort succeeded, and other lines of business wanted to learn more and duplicate the effort, the genie was at risk of leaving the bottle, and that caused concern for the management team. After all, if several lines of business started innovating, the amount of change in the business could be dramatic.

I don't think most firms can be successful keeping innovation in a bottle - limiting it to very specific product lines or geographies. If the innovation work is done well, it will produce great results and those results will be noticed. Leaders in other organizations will want to copy the work and develop new products and services for their customers. Successful innovation is contagious, and to think the management team can limit innovation is part and parcel with command and control thinking. Yes, an executive team can control innovation, by limiting resources and stopping projects, but once the value of the methods and tools are seen, it will be hard to keep that lightning in a bottle. And probably counterproductive to do it as well.

Here's the takeaway: If your firm seeks innovation and is willing to commit to do it well, expect that with any successful effort that more and more people within the firm will want to learn more and duplicate the work in their own departments. This should be a good thing, but can be viewed negatively by an executive team worried about control. What they don't recognize is how fast the world is changing and how great the demand is for new products and services. I don't think you can keep innovation in a bottle, and I doubt it's a good idea to try.

Innovation as a competitive advantage

2009-10-28T05:41:00.001-07:00

Over the last six or seven years, definitely since about 2003 or 2004, there has been an increased focus on innovation in many businesses. I think much of this was driven by several factors, including an increased rate of change in competition, especially the growing capabilities of India and China. I also think that information costs have fallen as the web has become more fully adopted, and consumers are demanding more. Finally, I think the focus on cost-cutting and outsourcing is reaching it's logical conclusion. Most of the things that could be cut, trimmed or outsourced have been. Many businesses in the US are relatively lean, and need to return to growth and differentiation.

All of these factors contribute to the need for innovation. However, there are a lot of trends that suggest innovation is important in the near future as well. The focus on global warming means new technologies are required to reduce emissions. In the US, health care reform will mean new demands on an antiquated health care system. The US Government is straining to provide services that the population expects and demands. The banking sector is ripe for change and disruption. All of these factors suggest a significant amount of change is in store for our government and for major businesses.

None of this is going unnoticed in the hallowed halls of major corporations. Booz and Company has just released its yearly Innovation survey, and more than ever, innovation is moving from an interesting sideshow in most organizations. Now, innovation is being recognized as offering a competitive advantage, perhaps one of the few sustainable advantages, and CEOs and executives are taking note. The survey points out that over 90% of the executives surveyed said innovation was critical to the success of their firms as they prepared for the market and economy to improve. One executive went so far as to say "the recession was a catalyst for increased innovation".

Booz listed three reasons why they felt companies have continued to invest in innovation during the economic downturn:

1. Innovation is becoming a core component of overall corporate strategy.
2. Recognition that product development cycles are longer than recessionary periods
3. Many see the recession as an opportunity to build advantages over their
competitors

One of the biggest impediments to innovation continues to be the "constraints of the product development lifecycle". The product development life cycle in many industries is simply too long and too cumbersome, and any opportunity to shorten the development life cycle could mean real rewards. Conversely, any slacking off could mean falling behind the competition.

My take: Innovation is gradually moving from an occasionally interesting sideshow that is not focused and not strategic, to becoming a key focus of senior executives as they realize that only innovation can help the firm continually grow and differentiate. Innovation is rapidly becoming a capability or enabler that strengthens and focuses the corporate strategies, and should over time become a key enabler to many corporate goals and strategies. Once more firms create a continuous capability for innovation and modify their cultures to embrace innovation, then we'll see the real transition occur. It is heartening to see that more and more firms are placing more emphasis on innovation at a strategic level.

Reversing the Hippocratic Oath

2009-10-26T13:56:00.000-07:00

When I visit the doctor, I like to repeat to myself the Hippocratic Oath - "First, do no harm". I like to remind myself that no matter how much the doctor may poke and prod, he or she has committed themselves to not harm the patient, no matter how sick. This means that most doctors proceed to investigate any illness with an abundance of caution, and carefully understand the symptoms before prescribing treatment or medication.

Sometimes I think that many managers feel the same way about their businesses. Their approach to every issue is first - do no harm. Don't do anything to damage the status quo. Don't challenge the existing orthodoxy. Don't do anything that will damage my reputation. Whatever happens, don't do anything to disrupt the existing products or processes. In fact, in fairness, this is how most businesses are structured, so to say that managers reinforce this thinking is like saying that Frenchmen like wine. It goes without saying. Few businesses would exist if all they focused on was destroying their own products and services.

An innovator has to take on a different motto however. I don't think it's "First, do lots of harm" but I do think that an innovator must first decide what kind of change to introduce, and the volume and magnitude of the change. Then, he or she must decide where to focus that change. The new idea or change could be a radical new product or service that forces significant change or cannibalization on existing products or services. The new idea could disrupt an adjacent market space. The new idea could literally birth a new market or new space. Any of these concepts are valid. Looking back now at the corporate manager who is stuck on "doing no harm" but needs to create something innovative, his or her most comfortable choice is to disrupt someone else's market or product, since the first law of equilibrium is to not disrupt or cannibalize your own firm's products or services. This leaves only a radical or disruptive innovation that significantly disrupts a market or product where the firm has little insight or knowledge.

Perhaps, instead, the innovator should begin by asking "What are our sacred cows, and who is seeking to gorge them?" Or, "What product or service should we cannibalize to enable greater growth and differentiation". Start by disrupting the markets or products you understand and influence, then work outward to disrupt the adjacent and secondary or tertiary markets. This logically leads us to the concept that a true innovator working within a large company should usually cannibalize first, then attack other adjacent markets second. This makes sense, because it's easier to disrupt something that exists than to create an entirely new product or market.

With that in mind, the innovator's oath should probably be something like "Attack ourselves before someone else does" or "No Sacred Cow left unmolested". Perhaps you can suggest a better one?

R&D for the rest of us

2009-10-23T07:37:00.000-07:00

Something happens when you put on a lab coat and safety glasses. You have the immediate ability to explore concepts and ideas that may, or may not, become new products. And your time horizon shifts dramatically. Many people in primary R&D are examining technologies or molecules that won't become products for many years.

The question we as innovators should ask ourselves, and our companies, is: why is this kind of thinking and investment committed solely in technology R&D? Why, in a pharmaceutical company, is there a team that is actively investigating new compounds and molecules that may become new drugs, but no one that is actively investigating new business strategies, new organizational hierarchies, new management philosophies? Why is innovation confined to the "R&D" wing of the business, and walled off from all the other things we do to add value to a business?

Certainly, R&D in a pharmaceutical firm is very important. It offers the chance for the discovery of a "blockbuster" new drug that could cure diseases or extend the life of seriously ill individuals. But I think we can all agree that a pharmaceutical firm (and by extension, any firm) adds tremendous value beyond primary product or service research. There are opportunities to dramatically innovate the business model (which health care reform may require), process or service delivery, customer experience and so many other factors or functions of the business. It's as if all critical, exploratory thinking is confined to R&D, while the rest of the business is restricted to cost-efficient, process-oriented, short term thinking.

Where are the guys and gals in lab coats who are researching the long term disruptions of their business model, or service delivery model? Who is responsible for thinking about and generating new ideas about the relationships a pharmaceutical firm has with physicians and hospitals? Don't you think these relationships and experiences are likely to change over time? Can we safely assume that these functions will remain the same over time, and all we have to do is find ways to cut costs? Just as Travelocity and Expedia decimated the travel agent industry, could other similar offerings radically change the interaction between a pharmaceutical company and its customers?

Gary Hamel points out in The Future of Management that most firms have some measure of product innovation underway at any point in time, and may have some inkling about service innovation or customer experience. Few, if any are innovating around business models or organizational structure, yet these are the places where competitive advantage is sustained over the long run. It's time to assign a few more people to lab coats and safety glasses, and have an R&D team investigate all the aspects of the business where we believe we can add value. Just like Festivus, innovation is R&D for the rest of us.

Empathy for the devil

2009-10-20T08:28:00.000-07:00

I couldn't pass this up, it was just too perfect. For those of you old enough, or forced to listen to enough "classic" rock, you are familiar with the Stones Sympathy for the Devil. If you aren't familiar with this particular piece of sonic candy, get yourself off to iTunes or your favorite MP-3 site and download it.

So, what's puzzling you is the nature of my post.

I've been reading a new book that describes some of the trials and tribulations of innovative types in non-innovative companies. One of the points the author makes is that innovative types have to work with the "tried and true" people who want six decimal place proof of everything. Clearly for most innovative concepts that's nearly impossible. Another point is made that ultimately, the only way to create something compelling and new is to radically understand the customer or user. This, naturally, lead me to the concept of empathy for the user, which led me, in some dark workings of my mind, to Empathy for the devil, since most of us consider customers or users as particularly distasteful people we have to deal with because they purchased our products or services, rather than the drivers and predictors of the next big things.

Since many firms often treat their customers as the devil, they don't have much empathy or understanding of their needs. If, on the other hand, we treat our customers and users as partners, or even friends and colleagues, it may become easier to have empathy and understanding for their needs. It's only when we truly seek to understand customer needs, wants, frustrations and challenges that we can discover and create new products and services. The book goes on to state that:

It's almost impossible to design something compelling for someone you don't respect or wish to understand.

So we need to decide to have some empathy for the devil (our prospects and customers) before we can truly understand his or her needs, and only when we respect our customers enough to engage them in real discussions and interactions can we create some interesting new products and services. Otherwise, we'll ignore our customers, give them what we think they want, and explain away the failures as a "lack of understanding" or "lack of knowledge" or "lack of vision" on the part of our customers. And eventually, those customers will leave us, since we don't respect them and don't create anything relevant and new.

Who is responsible for customer empathy at your firm? Shouldn't this be one of the most important roles - engaging customers and trying to understand their needs and challenges? Instead, most senior executives NEVER meet a customer. How can you empathize with someone you never meet? Perhaps we as customers need a spokesperson to reach out to the firms who offer us products and services, to act on our behalf and draw attention to our wants and needs. It's fairly clear that most firms don't know how to interact with consumers in any meaningful way. Perhaps it's time to turn the tables, and take the mountain to Mohammed.

Innovation relies on synthesis

2009-10-19T13:45:00.000-07:00

I've read several books about innovation, and am reading another which I'll review shortly here on the blog, which talk about the importance of combining disparate skills or capabilities when innovating, or holding two diametrically opposing ideas and finding the happy medium. What should be obvious is that one of the most important skills from an innovation perspective is the act and insight of synthesis.

This is a real challenge, because most people are taught to break down problems into smaller, finite pieces and solve the smaller problems. We also work as specialists, with deep understanding of our core capabilities and knowledge, but often with little insights or knowledge beyond our education or jobs. So most people don't use synthesis skills on a regular basis, and are probably prone to avoiding synthesis since synthesis requires introducing a number of new and possibly unknown factors which may simply make the problem larger and more difficult.

Well, to a certain extent that true. However, innovation often happens when we take a step back, look at the bigger picture and combine two concepts or technologies or ideas that are seemingly unrelated and create something completely new. And when you boil it all down, that is what synthesis is all about.

Synthesis happens in all phases of innovation, starting from the very beginning. We usually like to start a project by collecting trends and synthesizing or combining them to create new, alternative futures (or scenarios). Rather than simply focus on one trend, it is more interesting (and a bit more difficult) to combine three or four active trends and project them into a 7 to 10 year future. The synthesis, or combination of these trends helps create a view of the future which we can use to identify new opportunities or emerging threats.

Synthesis happens in customer research. We often will engage ethnography or voice of the customer work to discover customer needs and wants. Talking with a number of customers or observing behavior can lead to a range of insights. Synthesizing or combining these insights and seeking the common themes or threads is what is really valuable. Insights or needs from one customer is interesting, aggregating insights and understanding them from a range of customers is valuable.

It's not at all unusual to use synthesis as a method to generate ideas. We can ask ourselves what would happen if we combined several capabilities or technologies, and what that combination would create. Clearly synthesis is a powerful tool in almost any phase of the innovation effort.

The way we generally use synthesis is almost always the same, however. Using synthesis requires a team to slow down, step back and look at a bigger picture - to gather more data and more disparate information or insights than may seem necessary. In many ways this may cloud the picture, but if your team is willing to do the extra work synthesizing the materials, or insights, then the results will be even better. Good innovators are synthesizers, and use synthesis techniques in all phases and stages of innovation. This fact is also one reason that many firms struggle to identify innovators - there are simply too few people who are good at synthesis and who use the tool regularly. As with any capability, misuse or lack of use causes the skill to atrophy. Perhaps one of the most important things you can do as an innovation leader is to find people who are comfortable with the approach or skill, or introduce it as a technique and train your teams on the approach.

"Fools rush in where angels fear to tread"

2009-10-15T07:41:00.000-07:00

In my experience, one quote from Alexander Pope sums it up nicely. Where innovation is concerned, people often rush in to try to create new ideas without any investment in training or any notion of the desired outcomes. Typically the first question someone asks me when we kick off an innovation project is: "When do we start generating ideas?" That's the "rushing in" part.

While it seems obvious that in other projects we'd carefully consider strategic goals, and identify what we "know" in terms of market research and customer needs, and think through industry trends and possible scenarios, that work is rarely considered in an innovation effort. For some reason many teams believe they can simply skip over the prep work and go right to the idea generation step. Perhaps that's because the idea generation is a visible sign of action, whereas much of the prep work seems to be team building and development. Or perhaps idea generation just seems more "fun". At any rate, rushing in to idea generation will only lead to frustration, less than successful ideas and a project that is considered a failure in many cases.

Why? In any other effort or project that your teams undertake in your organization there are precedents. The work is reasonably familiar and the people who are involved understand the goals and the scope of the work. When the project is related to innovation, virtually none of these things are true, and when people are uncertain about their scope, they usually place limits on themselves that the executives didn't intend to be there. Additionally, if the scope is unclear the team will spend a lot of time spinning its wheels trying to define the scope of the project, the needs and wants of consumers and the ultimate goal for the project. All of this will happen simultaneously as part of the idea generation, creating even more frustration when everyone suddenly realizes that every team member has a different perspective about the goal of the project, the scope of the project and the intended outcomes.

If you want to be successful in an innovation project, recognize that the preparation work is at least as important as the idea generation work, perhaps more so. Rather than rushing in to generate ideas, take the time to set the stage effectively, plan the work, engage the team and set clear goals and expectations. Understand the opportunities and customer needs and wants. Then, do the ideation work. Yes, it will take longer to do it the way I am suggesting. But you'll be far more successful, and generate far more valuable and pertinent ideas.

Innovating in a recession

2009-10-12T05:23:00.000-07:00

I've written about this topic previously, but felt it was important to return to the idea of innovating in a downturn or a recession. Admittedly, it is somewhat counter intuitive to think about investing, especially in a risky proposition like innovation, when the economy sours and wages and incomes decline. On the other hand, time marches on and as the economy improves, and new jobs are created and incomes increase, consumers will expect new products and new services that meet unfolding needs or emerging opportunities. We can't simply offer them the same for less, when they want new, or different, products or have new or different needs.

In the October 3rd issue of The Economist, probably the only "dead tree" magazine you really ought to read, the Schumpeter column is entitled Thriving on adversity. In the article, the author points out several ways to thrive during a recession. One group of consistent winners is identified as those with a "record of innovation". The article goes on to quote Craig Barrett, the former CEO of Intel, as saying "You can't save your way out of a recession; you have to invest your way out." The article goes on to point out that P&G is opening a number of new factories and investing heavily in new ideas right now, and IBM is holding a number of innovation jams to squeeze ideas out of employees. Note that these leaders are actively involved in innovation during the recession.

Take special note of Craig Barrett's statement - "You can't save your way out of a recession; you have to invest.." Barrett is acknowledging what innovators already know. Even in a time of reduced spending and tightened budgets, consumers expect the market to change and present them with new ideas. Those ideas and products may meet immediate needs (lower costs with the same quality) or longer term needs (new products and services that meet unexpected needs). What the consumer does not expect is that product and service development will sit still. Those that fail to innovate and invest during the downturn will have last year's models that don't meet consumers needs and expectations.

The article goes on to make one other point - there ought to be a huge range of skills available in this market at very inexpensive prices. During the Great Depression, Dupont invested heavily in R&D and hired unemployed scientists. In just a few years over 40% of their sales were from products less than 10 years old. In this market, there are hundreds of people available with the skills you need to innovate and increase the pace of change in your company. Furthermore, if you aren't innovating during this period, you can bet that the folks who don't have jobs and don't see a future in a larger organization will create new, smaller companies to create new products and services aimed at some segment of your customers. So, you can choose to take on some of this talent and speed your own development, or watch as that talent forms new companies to compete with you.

When all bets are off, most individuals and firms will consider anything to succeed. In a downturn, where the future is relatively uncertain and consumers are hesitant and skills are plentiful, now is the time to act. There's no better time to innovate than right now, anticipating the eventual upturn in the economy and laying the intellectual foundation for new products and services.

Engineers, Marketers and Innovation

2009-10-09T08:38:00.000-07:00

Braden Kelley has posed another question for us, which is: what roles do engineers and marketers play in an innovation setting, and what conflicts can arise based on their perspectives and approaches?

First, let me say that I am ably suited to answer this question, since I am both an engineer (undergraduate) and a marketer (graduate degree). I've worked in the technical trenches and, frankly, left them as quickly as possible, and worked in a number of marketing roles since my MBA. I left the engineering world because it necessarily demands a level of specificity and exactness that I find boring and tedious, and demands attention to detail that I sometimes lack.

So, let's talk about engineers first. What traits are associated with engineers, and does their education, focus, attitudes and skills position them well for innovation? Most engineers I know are very interested in solving problems, which suggests they have a proclivity for innovation. However, the focus on getting to a solution quickly, and detailing a solution exactly, often hampers them from bigger picture or disruptive innovation. Engineers and accountants like things in black and white - no shades of gray. Innovation often happens and requires some ambiguity for success. Engineers like to build things, which again indicates a proclivity for innovation, especially prototyping. However, they are often more entranced by once concept or idea than they are the process, which narrows their thinking and focus too early. Good engineers can be excellent problem solvers, but don't often think of themselves as "creative" and too often don't have good understanding of market needs and trends.

The market needs, trends and opportunities should come from marketing, if the marketers are doing their job well. Unfortunately, as narrowly defined as many engineering jobs are, marketing suffers from the reverse - a too broad definition. Today marketing can mean public relations or PR, Marketing communications, trade show management, conferences and events, product management, social media and a host of other capabilities. Marketing has become too far flung, and to a certain extent has lost sight of the base purpose of marketing - to identify segments and customers who have needs, and understand how to fill those needs effectively. If marketers fill that function, then they are innovative in nature, because they want to know and understand customer needs. Too often marketers are more worried about the copy on a new ad, or who will be at a tradeshow, and they fail to understand customer needs and develop scenarios about the market of the future.

So, what often happens is that marketing is too distracted to do what should be it's primary job - understand customers and develop potential product and service ideas. Engineering and product development shows up and doesn't get much insight into actual customer needs, so the engineers go off to explore interesting new technologies that may, or may not, be important to customers. Neither, and both, are at fault.

Engineers should demand that marketers do a better job of defining near term customer needs and emerging customer requirements or markets. Without that insight, it is difficult to build interesting new products. Engineers on the other hand need to be more ready to engage the market with rough, fast prototypes, and work to an iterative model. If there is an issue in most firms, it's that we all have become too far removed from the customer, and fail to understand their wants and needs.

In my mind, that's marketing's job, to discover the needs and translate them into specific opportunities for engineers to build.

Wanted: Market and Product Explorers

2009-10-05T05:39:00.000-07:00

Ok, after a number of years and a range of clients, I've seen a lot of titles. Product Manager, Product Developer, Product Development Manager, etc. I've even seen titles like Innovation Manager and Ideator and some other more fanciful titles. These are all valid and important roles. But what is evident to me is that while we place great emphasis on maintaining the existing product and service lines, there's almost never a person whose job it is to devise entirely new products and services. It's as if we believe that all future growth will spring from existing products and services, and we won't have to address new markets or new competitive threats, leave alone the opportunity to create a new "blue ocean".

Run down the list of titles in your firm that have to do with product or service management or development. There will be a host of people who "manage" products or services. These individuals have a vital job to maintain the existing product or service line. They have detailed plans for several years out about product enhancements and new features. They keep the lights on and ensure the existing products and their incremental improvements are planned and released. Additionally there will be people with the title of Product Developer or Service Developer. Their job is to work with the product managers to ensure the product or service is built according to the identified needs and specifications. Again, a vital job focused on very near term opportunities.

Occasionally we'll find a "New Product Development" or New Product Manager title in an organization. That role is probably closer to what we are advocating, but is still rooted in the near term. A new product or service developer or manager is still working under the constraints of the product or service mantra within the firm.

What most firms need, and sorely lack, are people whose full time job it is to identify new opportunities or markets and start shaping those opportunities into new products, services or business models that the firm can deliver. Existing and near term opportunities are important. They keep the lights on and the beast fed. But only rarely are they going to produce new, dramatic growth or differentiation. Innovation will spring from people who have longer term vision and are less tied to the day to day product or service delivery, and who are more interested in emerging opportunities or threats. In my experience, most product managers rarely read or interact outside of their own area of expertise, so the firm is constantly surprised when new products enter the market from unexpected quarters.

According to most CEOs, there's little that's more important than innovation, yet there are few if any defined roles in the organization who "own" it. It would do my heart good to see a few people with permanent responsibility to explore new markets and new opportunities. Perhaps we could call these individuals market or opportunity explorers. Naming them explorers gives them the right to investigate, explore and identify really dramatic new things and introduce them to the organization, which can then convert new opportunities into products and services. Most organizations have programs like Stage-Gate that do that part well. What's missing is an intentional focus, and an assignment and role(s) that focus solely on the longer term innovation.

Yes, I know that Product Managers and Product Developers consider this work part of their job, but given the demands of the job and the relentless quarterly reporting, longer term, disruptive work gets pushed out constantly. Let's have one or two people whose job it is - full time - to uncover and explore new opportunities and markets. You can't manage a task without assigning someone to do it and measuring them and their results. You certainly can't be successful over the long term when no one is actively responsible for this important work.

How to identify the innovators in your firm

2009-10-01T05:19:00.000-07:00

Thanks to Twitter, much of my research is done for me. I found a story linked on Twitter about the key innovation characteristics of leaders in innovative firms. That article was published by HBR.

The five attributes the authors identified as relevant for innovation are: associating (making connections across unrelated ideas or problems), questioning (especially focused on "what if" or "why not"), observation (especially observing behavior), experimentation (new experiences or exploration) and networking (especially with people from different industries or perspectives). Let's assume these factors are correct - from my experience they appear to be. Then, let's compare to what happens in many firms today.

First, there's little association in most firms today. Most organizations aren't interested in making connections across disparate fields of study; they are focused on maximizing the best practices within their industry. Rarely do we see ideas introduced from outside an industry unless it is introduced by an outsider.

Second, while there's plenty of questioning, it is most often used to belittle or denigrate ideas, rather than build them up. The knee jerk reaction in most firms when a new idea is generated is to seek what's wrong with the idea, rather than to build the idea or support it.

Third, the concept of observing customers or clients has been completely outsourced. Too few people spend time watching and observing customer behavior and trying to understand it. We've insulated ourselves from interaction and rely on cold, quantitative surveys. We often don't understand our customers' behavior or what that behavior means.

Fourth, there's limited experimentation outside of an R&D lab. Gary Hamel pointed out in his book The Future of Management that most firms have some product or service experimentation, but never experiment with management practices. More to the point, the authors define experimentation as new experiences or exploration. For the vast majority of firms, management is content to stick to its knitting.

Fifth, the first line item cut in any downturn is travel and conferences, so we by definition limit the amount of networking that is possible. In fact, in many firms there is little interaction with competitors, and even less interaction with firms in adjacent industries or markets. Innovation often happens at the intersection of two seemingly disparate markets or businesses, yet we've managed to wall ourselves off from any interaction with others.

The point here is that most organizations actively work against many of the attributes that would define good innovators.

So, if you are seeking to build an innovation team, or hire people with a greater proclivity for innovation, perhaps you should ask the following questions:

1. Give us examples from your experience where you combined two concepts or capabilities from diverse situations or markets and created something completely new. Or, here's a (lego block, lincoln log) and a (band-aid, scarf). Can you create three interesting, useful new concepts from these raw materials?

2. What's your first reaction when someone offers up a new idea? If the response is to explore it further or build on it, ask for examples. Otherwise, next question.

3. How do you gain insight into what consumers want and need as new products and services? 1 point for reading in the industry, 3 points for reading outside the industry, 5 points for putting on the consumer hat and acting as a consumer, 7 points for actually watching and interviewing customers about their behavior

4. Give an example from your personal or professional life of something new you've taken on. Could be learning a new language, learning a musical instrument. Need evidence of the attempt, and persistence. Quitting after a week or so isn't good enough.

5. Tell me how frequently you meet with people who aren't in your industry or have very different experiences or perspectives than you do. Do you intentionally seek out these interactions?

How often do you think your HR team asks these questions? If you've built a successful innovation team, did you ask questions like these?

Innovation Fallacies

2009-09-25T13:04:00.000-07:00

The longer you hang around a subject, the more interesting the rumors and misperceptions. Innovation seems to spawn a number of fallacies, probably because it is very important, haphazardly performed and misunderstood by management. The combination of importance, carelessness and ignorance probably spawns a lot of fallacies. In fact, it sounds a lot like teen sex in a way.

One interesting new fallacy that seems to be making the rounds is that "open innovation" is easier and cheaper than innovation within the four walls of your organization. Open innovation can drive more ideas, and in many cases simply bypasses the bureaucracy and sloth of an organization to attract a number of people from outside the organization. In this manner open innovation can be faster, but it is not cheaper or less expensive, nor does it require fewer resources. Open innovation just shifts the costs from an innovation team, or R&D, to legal, IP and business development. If your legal, IP and business development teams have more bandwidth or lower cost than your innovation or R&D teams, perhaps this is a logical tradeoff. But don't expect open innovation to dramatically reduce the cost of innovation.

Another fallacy we see quite often is the assumption that a firm can start, and stop, innovation programs as needed or at will. While other projects may start and stop easily enough, there's enough barriers and roadblocks to make starting an innovation program difficult, and once halted almost impossible to start again. What's the biggest concern about innovation programs from those who are assigned to do the work? That is is another management "flavor of the month" program and the executives aren't serious. It is hard to start, and even harder to restart, an innovation project, and awfully easy to kill.

A third fallacy is that innovation can occur in a black box. While skunkworks can be successful, they compete for resources with other projects but can't communicate the goals and aims of the project or effort. Thus, managers have to balance how to resource a project, and what benefits or results they'll see from the innovation effort. Why would a manager provide resources to a black box project that potentially cannibalize his major product or service? We don't cut our own throats in real life, and we certainly don't do that at work. Skunkworks can work when fully resourced, all the way to product development, but innovation works best out in the open. The more visible an idea is, and the more scrutiny it receives within the comfortable confines of your organization, the more it will be shaped for the market.

The fourth fallacy is that really "good" people are important. Well, yes, people are important, but I'd rather have open-minded, collaborative volunteers than the smartest people who are assigned against their will. In fact, a good process and understanding of the tools and methods of innovation deployed by an "average" team will trump the best thinking of the best people who don't leverage the methods and processes. Clearly, as an innovation team, we'll take the best people we can get, but I'd prefer passion and the willingness to learn and use the innovation tools over people who think they already know the answer.

The fifth fallacy is that executives can demonstrate commitment by talking about innovation. Frankly, unless he or she is Walter Cronkite (a famous newsman for you younger set), executives don't communicate well, and often leave their direct reports and the people under them translating what was meant. If you want successful innovation, have your executives SHOW UP and participate in the work, and comment on the work and its outcomes, not simply state the importance of innovation. NO ONE IN YOUR ORGANIZATION KNOWS WHAT YOU MEAN BY INNOVATION ANYWAY! Demonstrate, then talk about it, rather than simply exhorting.

The last fallacy I'll talk about today is related to my recent post about new wine and old wineskins. You can't ask people to think differently and challenge the status quo, while working within the status quo and using all the existing tools and methods. New thinking requires new tools, and the ability and permission to use those new tools. Nothing is more frustrating for a team than to be told to innovate on the sly, on their own time, using old tools and methods to generate radically new ideas. Never the twain shall meet. If you want new ideas from your people, then give them the time and the tools to create the new ideas. No, demand that they take the time necessary to learn the tools and use them effectively. Otherwise, just buy ideas from consultants and save your team the headache.

Timeless innovation insight

2009-09-24T07:31:00.000-07:00

While I'm not one to rest on historical precedents, especially where innovation is concerned, it is interesting that we can find indications of the barriers to innovation in historical records, and the answers to some of those barriers as well.

I'm thinking today of the proverb that Jesus told his disciples, which was that "no one placed new wine in old wineskins". That was because the new wine would eventually puncture the old skins. New wine needed new wineskins. This is taken from Luke 5:37-39. Jesus' point was that new thinking required new containers. The old containers simply could not contain the new, more radical ways of thinking. Jesus was an innovator, by the way, interested in radically changing the existing order. He had a vision for the change he wanted and was unafraid to live up to the standards he expected from others who would adopt his approach. You're also probably aware of his fate, and what can happen to those who attempt radical change without the sponsorship of the executive.

Here's a timeless analogy very relevant to what we face in innovation today. Too often we are asking for "new wine" (new ideas), but we want to retain the old "wineskins" (old methods, old processes, old structures). This is a disconnect of the first order, as demonstrated by Jesus over 2000 years ago. Yet it is a trap that present day executives fall into all the time.

In our work on innovation, we find this new wine/old wineskin problem consistently. I'm currently working with a firm that desires to radically change a product in its industry, yet has not set aside time for its innovation team to meet regularly, doesn't reinforce the innovation tools we've provided and doesn't want to place too much emphasis on the innovation goals and efforts. What's likely to happen in this case is that the participants will simply revert to the ways they've worked in the past, and few if any new ideas will be generated. The likely result will be frustrated teams, disappointed management and few viable ideas.

It is an oxymoron and a waste of time to ask people to generate new ideas in an environment that will continue to reinforce the existing way of doing things, and that is unwilling to make any significant changes or acknowledgments to an innovation approach. What is even more astounding is that management teams must re-learn a lesson that has been experienced for thousands of years, and proven correct over and over again. You can't put new wine in old wineskins, and you can't create new ideas in an old, tired process that reinforces conventional thinking.

Free your mind

2009-09-22T08:17:00.000-07:00

There's a line in The Matrix, the movie that gave Keanu Reeves his acting chops, that I believe is critical for innovation. In the movie, Reeves plays a person recently detached from the "matrix" who is struggling with what is, and is not, reality. Laurence Fishburne plays Morpheus, his mentor, who has rescued him from the matrix and is eager to have Reeves join his team.

Everything that Morpheus suggests to Reeves is antithetical to what his experiences and senses tell him. Morpheus can fly, can dodge bullets and do other things than seem impossible, until Reeves is forced to reconsider his reality. To help him achieve the same perspective, Morpheus says - "Free your mind".

We, too, as innovators need to free our minds. As I work with teams that are engaged in innovation work, far too frequently I see people who are still tied down to existing restrictions, existing templates, existing work rules and culture. These folks are trying to innovate, but their expectations are the same as they were under their previous work, and their goals and aspirations are far too small.

Recently I worked with a firm to reconsider and innovate a piece of furniture. We talked about a wide range of possibilities and then conducted a short brainwriting exercise. Once we were done, I asked how many of the participants had considered doing away with the core components all together, rather than simply iterating the existing components or adding one or two new features. In a team of 15, only two had even considered taking a completely new perspective. When we queried the team to discover why they had not taken a broader view, most of them suggested it simply had not occurred to them. They were tied to a specific worldview and formula, and weren't quite able to give it up.

Probably the first thing we need to do as innovators is discover if our prospective team members have the capability and flexibility to release what they know to be true. A team with too many people locked into old methods or perspectives will simply get frustrated. Then, we need some sort of sudden shock to the system to force us to free our minds and consider the problem or opportunity from a number of perspectives that aren't tied to the existing methods. Only then will you get the insights and ideas that matter.

Free your mind. Open up to a completely different set of realities. Take on a completely different perspective. In an innovation setting, this is the only way to succeed. If you can't ask "What if" in this setting, and are constantly governed by the here and now, the rules that already exist, then your team will struggle to innovate. How do you "Free your mind?" Well, if you saw the movie you know it's a choice, a red pill or a blue pill. In your organization, it's also a choice.

The chief sponsor, grand poobah or CEO who is behind the effort has to set the stage for the team to free themselves from their yokes. This has to be an intentional effort. A half-hearted suggestion that people "think differently" won't be enough for most people. Demonstrating that something new requires something different, and that difference will be embraced, not just tolerated, is what's required.

Choosing the pace of innovation

2009-09-18T13:51:00.001-07:00

I've invented another theorem or "law" of innovation, which suggests that the speed of innovation is inversely proportional to the kinds of innovations you create. If your team creates incremental innovations, then the pace of innovation must be high, and the pipeline kept full. If your team creates disruptive innovations, then the pace can be much slower, with perhaps fewer ideas in the pipeline. This is predicated on a number of assumptions:

The first assumption is that if you are satisfied with incremental innovations, that you understand that those are easy to copy and will have a short "shelf life". Betting on incremental innovation means that once you climb on the treadmill, you'll need to remain on the treadmill. Once you stop the incremental innovation, other firms are bound to continue and you'll lag behind. The implication is that you need to keep a continuous flow of ideas that can be cranked out quickly, as the older innovations become market standards and then commodities.

The second assumption is that you'll need more ideas if the concepts are incremental rather than disruptive. This is because no matter how smart your team is, there are a number of other smart people in your industry, and in the adjacent industries, who are likely to notice the same near term opportunities. You can't be on being the only firm that notices an incremental opportunity, so you'll need to keep a number of them active in case someone beats you to the punch. It's less likely to see a number of firms working on the same disruptive ideas, since the complexity around forecasting the trends in the market and customer needs and wants can be much higher. Therefore, you may not need as many disruptive ideas since there's less chance of duplication. The flip side of that argument also means that there's a greater chance of guessing wrong. You may be innovating in a space where firms have decided there's no opportunity, and they are right and you are wrong.

The third and most important assumption is that disruptive innovations have a longer shelf life. If that is true, then the pace of release of new disruptions can be much lower than if the ideas are incremental. If you consider a firm that has disrupted the market, typically a real disruption can maintain market leadership for several years, while an incremental innovation may remain distinct for six or eight months at best. Since replacements cannot come online as fast to match or replace a disruptive idea, your pace of development of disruptive ideas can be more methodical, more measured. In fact, it is probably in a leader's interest to be more methodical, because a firm that is successfully innovating as a disrupter is often only competing with itself.

In reality, few firms can afford to choose one approach or the other - they need both incremental and disruptive innovation. What we can argue is that the pace of both programs can differ, while the tools and methods remain the same.

The perfect setting for innovation

2009-09-16T04:51:00.000-07:00

I've been thinking for a while about the perfect physical space for innovation. When we work with our clients we often are asked to help design a physical space for the team to work in. This should be a space that is open, colorful, inviting and really different from the regular work environment. The space needs to remind the people working there that when the teams are innovating, they need to be thinking differently than they do when in their day jobs. In a perfect world, there would not be such a separation of thinking, but until everyone is a perfect innovator, we'll have to settle for great thinking spaces.

The spaces we've worked on and in are usually spare space the firm can afford to reconfigure, and are usually the typical Class A space, with bare gray walls and industrial strength carpet. Sometimes the walls have been painted interesting colors or someone has put posters or other graphics up on the wall. Typically the space is fairly open, to allow a lot of movement, with smaller breakout areas for team work. Most of these physical spaces are a good first step, but don't really break out of the usual workspace - gray walls, cubicles, boring industrial feel.

After giving this some thought, I'm going to propose the best arrangement for an innovation space - a kitchen. Think about a kitchen and its properties. A kitchen is a place where you create delicious (hopefully) food from a wide range of ingredients following a methodology (recipes) and experimenting with new additives or flavors. Cooking is a good metaphor for innovation, because many of us follow a recipe to some extent, but we also experiment with different spices, flavorings or cooking styles. Experimentation is important, and having a number of different ingredients at hand is very valuable.

Also, at any party, where do people end up? In the kitchen, standing around, talking about the events of the day. A kitchen, because there's food and drink available, is inviting. People tend to remain there, talking about the issues of the day. From an innovation perspective, that's valuable. A wide range of people mixing together, exchanging ideas is a good building block for innovation. Additionally, kitchens are much less formal than a living room or sitting room, and invite people to interact. The fact that there are few comfy chairs in a kitchen encourages people to mill around. This ensures an exchange of ideas.

A kitchen also has all sorts of appliances, tools and utensils. These are the things that help prepare, mix and bake/broil/fry the food. Likewise, innovators need tools and techniques at hand in order to do their work effectively.

Another reason a kitchen, or some semblance of a kitchen would be an excellent jumping off point for an innovation space is because it would be so different, so unique from the rest of the working environment. A kitchen would be totally unexpected and offer people a very different environment in which to innovate, yet one that is potentially familiar and comfortable.

I can't wait to test this out - I think a kitchen, surrounded by some work areas or breakout areas and white boards, would offer a team a chance to "cook up" (sorry, couldn't resist) a whole range of new ideas. Clearly there needs to be some more traditional working space as well, but a kitchen, stocked not just with cooking utensils but tools for ideation, idea development and prototyping would form a unique site, ready for people to innovate. You could even staff the innovation site with personnel who are innovation coaches would could offer lessons on the methodologies, the tools and the practice of innovation, who could act as "executive chefs".

Who "owns" Innovation? Where does it "live" in an organization?

2009-09-15T05:02:00.000-07:00

Braden Kelly has asked a number of us to respond to the question "Who owns innovation and where does it live in an organization?" This is actually a question we are asked quite frequently by our clients. The answers are based on the strategic goals of the firm.

First, let's consider who "owns" innovation. Many firms will argue that the CEO "owns" innovation, and they are correct, to a point. Anyone with any amount of experience working on innovation will tell you that an engaged, involved executive team is vital to success when innovating. However, a CEO simply doesn't have the time or bandwidth to get involved in every decision and manage all the disparate teams and activities that are involved. A CEO needs to make clear strategies and declarations about innovation's purpose, and ensure the work is conducted effectively and measured. OK, if the CEO doesn't "own" innovation, who does? I've written before that larger firms may need a Chief Innovation Officer, but only if that role is accurately defined. Since innovation can happen anywhere in the organization at any time, we certainly don't want to place all the emphasis on one person or team.

Our preferred model is an innovation team that sponsors innovation, defines the processes, methods, tools and language for the organization and works on disruptive or "white space" ideas. Just as there is one common chart of accounts or one standard purchasing process, we need to create common innovation tools and methods, and be able to roll up the results. This central innovation team can report to a CIO, but the team and the CIO bear only a portion of the innovation effort.

Clearly, a lot of innovation happens in product groups, geographies and lines of business. Establishing a central innovation team doesn't relieve these groups of the requirement for innovation - quite the opposite. Defining a team that can offer methods, tools and services should accelerate innovation in each line of business or product group. These teams are closer to the customer and have a better understanding of customer needs. Unfortunately the business lines are also bound by a 90 day clock, which keeps their focus on quarterly results and not longer term growth. There's a real need for innovation at this level, coupled with innovation at a level that is not so bound by quarterly results.

So, who owns innovation? The CEO should SPONSOR and ENCOURAGE innovation and MEASURE it regularly. A Chief Innovation Officer should build capabilities, methodologies and tool sets to enable innovation in the organization, and the individuals who head up business lines, product groups or geographies should build the expectation for innovation into their annual plans, and product incremental and occasional disruptive innovation. No one person can own the responsibility and capability for innovation, but a management team working together to a common goal can clearly establish the expectations, build the tools and set the plans to unleash the creativity their employees, partners and customers have.

Additionally, innovation needs to reside at every level of the organization. We've seen it proven that innovation driven from the top doesn't work effectively, and innovation residing in just one product group or team creates an unbalanced organization. Every group, every team should be expected to innovate. It's not the responsibility of one team or one manager, but every individual in every group.

Ships and Castles, Ports and Plains

2009-09-14T08:57:00.000-07:00

I spent a few days last week and over the weekend in the company of a number of innovation and creativity practitioners. I come away from that amazed at the kinds of ideas and collaborations that are possible when we are exposed to other ways of thinking and other people.

I titled this post "Ships and Castles, Ports and Plains" because there is so much evidence that many firms take a "castle" approach to innovation. That is, they stake out their ground and protect it with a castle, occasionally leaving the castle to do battle in the nearby country. A castle is great for defense, but it suggests a reactive, defensive mindset, where the walls of the castle become an inhibitor to growth and new ideas. Ships, on the other hand, are primarily offensive in nature and are meant to explore new waters and new oceans. Ships "project" power and influence and explore or discover new things and new places. Clearly, a combination of ships and castles is probably the ultimate defensive/offensive strategy, and lends itself well to innovation thinking as well.

But what about "Ports and Plains"? While I can only point to strategic work that's been done around ships and castles, I want to claim Ports and Plains as my own. I think most research and evidence will suggest that most of the big shifts in society have come from "ports" - because that's where people from different countries, with different languages and different ideas mix and mingle. Meanwhile, out on the plains, there is less involvement with people who are "different" from the people on the plains and much less exchange of ideas and information. Ports are often seen as too permissive or too liberal, while the plains are often bastions of conservative thought.

Note that both ships and ports are concepts where people from different cultures, experiences and backgrounds interact. They are the best metaphors for mixing different ideas from different cultures. As an example of the failure of interacting with the "outside" world, consider China in the 1800s. China walled itself off from outside "corrupting" influences, to the extent that the British fought a "war" with China to get to dock in Shanghai. During the isolation from the western influences, China slipped intellectually and technologically behind the rest of the world. Contrast that with China's engagement and rapid technological increases today, as it engages the outside world.

There's a lesson in this for all of you in Fortune 500 firms who have suffered from having all of your education and travel frozen due to budget cuts. As you have less and less interaction with customers, prospects, business partners and others who may introduce new ideas and influence your thinking, you will have fewer ideas. Additionally, without the interaction of a number of different people and perspectives, your frame of reference will shrink and you'll concentrate more on safe, simple ideas. It is not impossible to innovate without interacting with others, but rich interaction at a conference, a tradeshow, an educational offering or other experience adds so much to your perspectives and your thinking.

Many firms are at risk of building a castle on a plain and never interacting or mingling with their customers and business partners, much less with other people who may disrupt or challenge their ideas. That's a recipe for extinction. Where are all the interesting places to visit? Ports and crossroads.

Chubb accelerates with Innovation and Imaginatik

2009-09-09T09:28:00.000-07:00

I know it sounds strange, but I spoke today with an insurance company that is interested in identifying new ideas and moving quickly. Yes, innovation has found its way to what appears to be a slow-moving, stodgy, conservative industry.

I interviewed Jon Bidwell, the Chief Innovation Officer at Chubb about their innovation experiences and goals, and their use of Imaginatik. Jon was very forthcoming about Chubb's opportunities and goals.

First, Jon told me a bit about Chubb's history and its current challenges. Chubb is an insurance and financial services company, so it faces many of the challenges we see in the market today. Additionally, Chubb is increasingly global and wants to tap its employees and partners for their ideas. Chubb realizes that speed is of the essence, and that good ideas exist inside, as well as outside the firm.

To give you a proper sense of the speed of the effort, Chubb's board approved the innovation program in June 2008 and requested that the innovation team start its first event by September 30th. That meant the innovation team had to come up to speed, identify some key areas of focus, build some processes and evaluate and select an idea management platform in that period. That's moving quickly in my experience, especially for a regulated firm not used to aggressive innovation.

Jon has developed a small permanent team of four people responsible for developing the methodologies, training and communication and managing the events and tools. Other people are drafted part-time as necessary based on the needs and the division or business lines involved in the innovation events. Note that most of the work they've done so far is "directed" - campaigns or events. Chubb has not yet provided an innovation "suggestion box" based on Imaginatik's tools, but that is in the works.

Jon's team also identified an innovation fund, to support the development of ideas that don't align to the annual plans or budgeting cycles. Most firms that we've worked with have found that a separate fund to speed ideas through development outside the typical budgeting process are far more successful, since they can react to market opportunities much more quickly.

One of the points of emphasis was the need for transparency throughout the process. Participants can submit ideas, comment on ideas and see their ideas in the innovation pipeline supported by Imaginatik. Another point of emphasis is speed. The Chubb team is conducting a number of events and has successfully implemented a number of ideas, with the goal of moving ideas from idea generation into the market as new products and services in six months or less.

Imaginatik's software has supported the development of the innovation community and campaigns and has proven easy to configure and deploy. While Chubb evaluated four competitors in a quick RFP, the team felt that Imaginatik's application provided the best solution combining idea generation with innovation processes. Chubb is using Imaginatik to capture ideas from agents and business partners, as well as internal employees.

Bidwell also discussed a number of activities his team undertook to overcome any cultural barriers, including a significant amount of communication about innovation from executives, and work to think through appropriate incentives, rewards and recognitions for the participants. Chubb is actively monitoring the statistics that show who generates ideas, who contributes to the development of an idea and so forth.

The Chubb story, one year on, is a fairly significant success. In short order the board approved the innovation team and investment, and three months later the team was actively engaged in generating and capturing ideas. Less than two quarters after that, new products and services were entering the market. While the majority of Chubb's ideas to date have been incremental or sustaining, Chubb is beginning to see more disruptive ideas. Bidwell's lessons learned: Be flexible, recognize that there's a lot of learn and be willing to learn and adjust as you go.

Our take is that Chubb has successfully integrated an innovation program and idea management tool by emphasizing the cultural aspects (recognition, rewards, communication, company history) and focusing on speed. Chubb's decision to set aside funds for the innovation program mean that ideas can be developed and funded outside of the annual planning process, which can speed products to market more quickly, rather than having to wait for the next budget cycle. Clearly the senior executives at Chubb have decided to accelerate product and service development using innovation and Imaginatik as drivers for success.

Innovation success or culture - which comes first?

2009-09-08T06:28:00.000-07:00

Many strategic challenges have a "chicken or egg" quandary. In the case of the chicke and the egg, which comes first? Clearly you can't have a chicken if the chicken didn't come from an egg. But you can't have an egg if it didn't come from a chicken. Quite a conundrum. Ranks up there with Schrodinger's cat and other notable thought experiments.

The chicken and egg question has parallels in innovation, especially when firms consider how to get started. The dilemma the firms face is: do we work on creating an innovation culture before attempting innovation, or do we start with smaller, more tactical innovation activities that will allow us to build up innovation knowledge and experience that can be transferred to the culture? Here's a couple of things to ponder while considering the tradeoffs.

First, anyone, anywhere can brainstorm or generate ideas. That does not make them "innovative" and one brainstorm is not necessarily repeatable or sustainable. However, that may be the best first step for many firms, only comfortable with small, trial steps. However, what many firms find once they've generated ideas is that there is no sustaining process or procedure for managing ideas, and the "day job" is more compelling. Cultural roadblocks often stymie further pursuit of ideas.

Second, building a culture is hard, but changing a culture is very difficult. In any existing firm, there are norms and expectations that have been built over time and reinforced in the way people work and how they are compensated. Changing a firm's culture does not happen overnight, and many executives recognize this. So, there's yet another rationale for trying a "quick and dirty" innovation project rather than trying to implement longer term change.

Third, building a culture of innovation requires a vision. You can't simply wave a wand and expect the culture to change - it can change, but it must change based on some shared concepts and vision. Executives have to define a very clear rationale for the change and present the end state. This requires commitment and good communication skills over a long period of time. Again, since we manage today with a stopwatch rather than a calendar, time is of the essence, and quick wins are preferred to methodical changes.

So, in many cases we are left with two alternatives, neither of which seem to have positive outcomes. On one hand a firm can innovate with small projects and programs and attempt to overcome cultural issues as they arise. Often they will find that the culture doesn't reward people who take risks and who propose programs that are different from the status quo. On the other hand, a firm can start working on the culture and begin changing the expectations before launching innovation programs, but this is time consuming and most executives don't have the patience for such efforts.

Probably the best approach is to run the changes in parallel. Start working on cultural change while enacting a series of small innovation programs. Build on the successes and use any failures as opportunities to reinforce the cultural change. Expect that any effort to change the culture will take several years. However, if you can successfully influence the culture, the innovation possibilities are incredible. Culture is the biggest roadblock to innovation, but once overcome, it can be the stimulus and propulsion for innovation.

In the case of innovation activities versus innovation culture, don't think of these as tradeoffs but as activities that should, probably must, be done simultaneously if you want to build a long term, successful innovation capability.

The government's role in innovation

2009-09-03T07:05:00.000-07:00

Recently a number of bloggers and Tweeters have linked to an interview with Greg Bialecki, who works for the governor of Massachusetts on economic development. The question posed to Bialecki was "what is the appropriate role for state government in accelerating innovation?". Bialecki does a good job of straddling the many sides of the question, noting that many businesses are against more government involvement, since they believe it will lead to regulation and taxes, or favortism.

But the question is a good one. At any level of government, from a city to state or province to a federal or national government, what is the appropriate role for the government in an innovation policy or strategy? It seems to me to break down into three likely outcomes.

The first is based on the Apollo program. In this instance the government identifies a significant need or opportunity and challenges itself and industry to achieve it (put a man on the moon before the end of the decade). Note that the statement doesn't dictate specific technologies or vendors. It is a challenge that created excitement and enthusiasm. Government agencies, private industry and other organizations then asked themselves - OK, if we are going to achieve this seemingly difficult mission, what is necessary for us to do? Then they went on to solve a number of engineering challenges and captured the attention of the nation. Thousands of kids (I'm one) wanted to become an astronaut because of the excitement and glamor. I think that this kind of effort - creating a challenge that engages all of the population - is one involvement in innovation that governments should have continuously. Right now, rather than creating a 1000 page health care plan, the government should set a specific goal and ask all of us to help achieve that. Perhaps the goal is universal coverage with no increase in healthcare outlays. We need big challenges to come together and overcome these hurdles.

This leads to the second possible government involvement - selecting preferred industries or technologies. Government involvement in selecting the "best" or preferred industries or technologies is fraught with hazard. Left to its own devices, the government that created ARPANET might still be monopolizing the ability to communicate and interact. Clearly any government with research facilities should be responsible for generating new research, but not selecting which technologies are approved or disapproved. Government involvement at that level and scale is bound to be tied up with political favoritism and will be showered on the largest and most powerful (see for example the GM bailout, or the bailout of larger banks).

The third kind of involvement is something rarely seen in the US outside of the Defense Department - a public/private partnership. The government could easily define specific issues or challenges it faces and create opportunities for innovation to address these specific issues. While this does occur on a limited basis today, the contracting rules and the size and influence of incumbents make it difficult for smaller firms or new entrants to compete. This means that many of the same old tired ideas and concepts are constantly recycled. If the Federal government could open itself up to more innovation around its biggest challenges, and invite a wide array of innovators and reduce the issues around contracting, it could create an entirely new innovation community which might significantly impact its ability to govern and its ability to deliver services. Secondarily to these outcomes would be the scaling of new ideas which could then flow back into the private sector. Thus, the government could be an incubator of ideas that eventually benefit the private sector. To a certain extent, this was true in the 40s, 50s and 60s, but as significant government research has dwindled, less innovation flows out of the government. We could easily turn the tables by asking the citizens and industries to respond to innovation challenges.

From my perspective, I don't want to see any government picking industries or technologies. I do want the government to identify key challenges and needs, and bring together the best minds to create innovative solutions. Currently, one of the biggest stumbling blocks to innovating with, or for, any government is the bureaucratic hurdles involved in contracting, and the over-reliance on existing "beltway bandits" who have long incumbancy but little innovation incentive. Let's open up the interactions, bring more people and firms into the innovation arena and have governments define the big challenges and turn the rest of us to work.