I replied, “You’re doing it right now, I think.”

Of course, I knew what he was really asking -  what investments and commitments should his company make, in the very least, to get an innovation effort off the ground. As follows are what I recommend to this client – and other companies of any size and industry – as the basic checklist of innovation (yes, the very bare minimum):

The 5 Minimum Requirements of Innovative Companies

1. 2% of Time. Commit that 2% of your employee’s time each month can be spent pursuing new approaches and ideas. This might be applied to their current role or focus, but could also be for other areas of your business. Encourage teamwork onm this front to get more bang for the buck. Whether it be in product development, process improvement, cost cutting or client interaction – requiring your employees to commit 2% of their time (that equates to 2-3 hours each month for most full time employees) toward innovative thinking and brainstorming can reap huge rewards. By the way, Google gives employees 10% of their workweek to go towards innovation and creative projects.
2. Innovation Management System. You need a process for sharing and vetting ideas that goes beyond an “idea box” sitting outside the bosses office. All ideas need logged and you need to have an innovation leader to vet each submission and oversee a process for review, improvement and decision. This system should include a function to let others contribute to an idea, because sometimes a bad/mediocre idea could be the spark during broader discussion for a great idea worth pursuing. In the very minimum of minimums, a spreadsheet can track the items and the status. I recommend a monthly innovation lunch (with an open-door policy to the whole company) where ideas can be discussed and further explored by a wide range of employees.
3. Compensation & Rewards Program. Innovative companies must provide rewards for creative thinking and contributions of ideas. Provide incentives for both the submission of ideas but also discussion and evolution of a good idea into a great one. Sure, you can give items from the company store (blah!), but be innovative in your rewards too! A few ideas:  An extra vacation day, a VIP Parking spot, lunch with the CEO or other perks that are more about recognizing fresh thought than prizes and tchotckes. Certainly cash is king, but I’d reserve that for successful implementation of an idea that has a bottom line result, rather than just for the ideation process.
4. Idea Capital: 1/2 of 1%. Major innovation companies easily invest 5% or more of gross revenue towards R&D and innovation efforts. At a minimum you should be able to commit one half of 1% of your gross revenue (whip out the calculator) to investing in your innovation efforts. Those funds will act as an internal venture capital seed fund,  providing tools and cash to allow your employees to experiment and pursue ideas. This might include the cost for special “lab” space and technology – or to build prototypes and test a concept.
5. Executive Communication. If your CEO doesn’t openly express what’s happening and give it attention, no matter how passionate your innovation effort leader is, the employees will know that it’s just another gimmick effort to get more out of the employees. When your senior management (include other c-level executives) have drank the Kool-aid and are fired up about ideation and communicating that regularly, you’ll see your other investment pay even greater dividends. So, create an internal blog from the CEO (ghost written most likely) that documents what’s working, what you’re learning from and how that’s impacting the company.

What else do you think should be added to this list of our bare minimum innovation list?

A manifesto for innovation

The waiting game is over. We saw 2008 hit us hard in the bottom line. 2009 left us wondering if we would ever recover while 2010 flowed into 2011 and yet still business is stagnant. Will 2012 be any different? We cannot let it be. We need to take control of our destiny and stop waiting.

Over the past three years we’ve trimmed fat, leaned our operations and pushed our people to do more with less. We’ve done everything we can to survive. But survival is for the weak. We don’t want to survive, we want to thrive – and we will do so by tapping into our most valuable asset: our people.

Our people have seen success and tasted the bitterness of failure. We have learned from mistakes, made some smart decisions and gotten lucky too. We won clients away from the competition and lost them because we failed to serve them accordingly. All of those experiences give us the collective intellect to aggressively begin to think about the future of our company – and our industry.

We have failed to give our employees an incentive to think about the future. We have missed creating a culture where problem solving and idea development is rewarded and appreciated – no longer! Moving forward, we will not tolerate a culture where ideas are random and infrequent. They must instead be the lynchpin to our approach and a common occurrence through all levels of the organization.

We will not allow use “innovation” as a buzzword, but a mantra. Ideas will be the fuel that charges our engine and inspires us to try something new. We will measure results and continually evolve what we do.

We are perfectly capable of outwitting our competition because we’ve hired smart people who want to succeed. We will encourage a community of open communication and dialogue that breaks down barriers between our senior managemnet and the workers in the field.

We will stop penalizing failure, and instead penalize complacency. A failure to act is a far greater sin than an act of failure.

When we fail, we will communicate among our staff and learn from our mistakes. When we succeed, we will shout it from the rooftops and say “do it again!”

We will be agile as a state of mind. If things are taking too long to get complete, we will hold accountable our people for making projects too complicated. Nimble, innovative companies move quickly on everything they do and so we will learn how to break down work into manageable, quicker timelines that allow us to assess priorities and investments (of time and money) more frequently.

We can outmaneuver others in our industry by challenging our people to constantly think about how to be more efficient, identify new opportunities and provide a better product than our competition. We will disrupt ourselves, instead of being disrupted unexpectedly.

We will seek out and eliminate the sacred cows of our business that are holding us back from progress. We will hold these sacred cows up and publicly remove them from our business, even if it costs us in the short-term to do so.

We will stop admiring start-ups and other small businesses who are hacking away at our feet trying to steal market share and start acting like them. We will eliminate complicated decision processes and bureaucracy from our operation so that we can identify, assess and decide on business issues in hours and days, not weeks and months.

We will stop trying to please Wall Street – and instead please our customers. We will start by committing to talk to our customers about what they want from us in the future and learning how we can be more relevant to their needs as they innovate and evolve too.

2012 can be our year to break out and do something big. While our competitors wait, we will plunder their marketshare and create blue oceans of opportunity. We will do so at a pace of a marathon runner, trained for speed, but built for endurance.

And when we are out of ideas and have thought of everything, we will start all over again. Innovation is never finished, because the market will always be changing. And moving forward from now, so will we.

Random Object Problem Solving

1. Divide participants into small teams of 3 or 4 persons (2 if the main group is less than 12, individuals if the group is less than 6). Give each team a note card.
2. Each team selects one person to find a random nearby object (ie. stapler, mop from janitor’s closet, credit card, dollar bill, etc.).

   Example: Team selects a potted plant from the entry area

3. Teams have 5 minutes to identify a problem associated with the object (real or imaginary). Once defined, they should write what their object is and below that define the problem they’ve devised in a simple, easy to understand way. This should be one or two sentences.

   Example: The potted plant either gets under-watered or over-watered, causing it to die. How do we make sure the plant gets the right amount of water and grows?

4. Collect the cards and shuffle them. A member of each team will draw a card and pick up the object mentioned on their card. Teams cannot draw their own card.
5. Notify each group that they have 10 minutes to solve the problem – either by improving the existing object or communicating a process in which to remove the problem.  Start your timer or stopwatch. Shout out as 5 minutes, 2 minutes, 1 minute, 30 seconds, and 10 seconds remain. At the “stop” all conversations must cease.
6. One member of each team presents their object, the problem and the solution to the group in 3 minutes or less.

   Example: Team shows the plan, reads what the problem is on their card, then presents a new process for watering the plant involving a checklist, a rotating list of those responsible and a method to confirm the plan received water when it was supposed to. Alternatively, the team presents their idea for a new device that automatically gives the plant a predetermined amount of water on a schedule using a time and then sets off an alarm when it is low and needs refilled.

7. Group votes for who had the most well thought-out plan by a round of applause.

Lesson & Outcome: This brainstorming exercise is designed to be able to quickly identify problems of objects we come into contact with frequently. Successful businesses are always looking at making their products or services better and seeking to find solutions or improvements, no matter how insignificant.

I had coffee the other day with entrepreneur and technology executive Brian Wolff. Brian is a seasoned business executive who is co-founder of BlueLock a leading IaaS (infrastructure-as-a-service) provider for virtual cloud computing. Throughout our conversation appeared this concept of “idea guys” and “execution guys” and the value of each in contributing to a successful venture.

Being in the idea and innovation business, I am always seeking ways to emphasize to our clients that great ideas need execution or they are worthless. This  is particularly important when companies go through a strategic planning effort, launch an innovation team or attempt to go from concept to implementation of a new venture or product.

Idea Guys Are Key to Developing the Concept

When it comes to your innovation team or strategic planning group, the “idea guys” (gals included!) are critical to the critical thinking and disruption mindset that is needed to go from the current approach to a new initiative.

The creative folks who are willing to propose and conceptualize new, often risky thoughts are what define innovative companies. Steve Jobs was undoubtedly an idea guy who was obsessed the idea to “think differently” and build solutions that forced competitors to change course. He hired creative talent who had a track record of pushing the envelope and quickly fired individuals who failed to create products whose design and model weren’t groundbreaking.

Execution Guys Are Key To Making Ideas Successful

Apple’s success didn’t just come from Jobs’ focus on creating dramatically different products, it was also in the execution of bringing those ideas to market.  There’s a reason that Jobs’ appointed his COO, Tim Cook, as the new CEO of the firm, Jobs understood it was leadership of the execution that resulted in the success of Jobs creative vision for products and services. Cook is often credited and praised for cleaning up Apple’s supply chain that has enabled it to grow the business in a scalable, profitable way.

As your company considers how to build your innovation or strategic team, keep in mind that those who are best as ideation, may not also be the best at execution. You must marry together both skills by building a team who can leverage both skills at a high level.

4 Minute Business

1. Give each participant in your group two post-it notes and a marker.
2. Each participant should write one word (nouns, verbs adverbs only) on each post-it note. The more random the better, so encourage creativity.
3. Each participant sticks their post-it notes to a wall surface so that when all individuals have completed the task the surface has a random mix of nouns and verbs.
4. Divide participants into small teams of 3 or 4 persons (2 if the main group is less than 12, individuals if the group is less than 6).
5. Each team selects one person to go to the front of the room to select two different words (not necessarily the two words from the same participant).
6. Instruct the teams they now have four minutes to devise a 60-second business pitch for a company who’s name is a combination of the two words (Ex. “Database Earth” or “Earth Database”). In their pitch, the group should be able to communicate the problem they are solving, how their solution works and why the market will buy their solution. They can define the market as much or little as they want in 60 seconds. Advise them the winner will be selected by their peers for the best communicated concept.
7. Start your timer or stopwatch. Should out as 3 minutes, 2 minutes, 1 minute, 30 seconds, and 10 seconds remain. At the “stop” all conversations must cease.
8. One member of each team presents their business to the group.
9. Group votes for who had the most well thought-out plan by a round of applause.

Lesson & Outcome: This brainstorming exercise is designed to force participants to make decisions quickly and focus their message. Participants should understand that getting to a concise and simple business objective is critical in launching a new business. Too many extraneous details will result in a poor pitch, just as trying to accomplish too much with a new business venture will slow down progress or dilute the objective being accomplished.

In my career, I have been a part of several new business ventures at large corporate entities that have fizzled out over time. Looking back on the various reasons why those ventures aren’t thriving businesses today, a few consistent themes rise above all other reasons for failure: bureaucracy,

1. “Department” mentality
2. Traditional employee compensation plans
3. Wrong financial model

In no initiative I’ve been a part of was the roadblock to success a result of the people on the team, nor was poor planning or market conditions. So how do the three aforementioned issues affect corporations launching a new venture?

The Department Mentality

Operationally, companies typically try to put an existing operational model into play when it comes to launching a new venture. From existing hiring practices to distribution and marketing models the venture is more often treated like a department rather than a business.

Starting a business is not the same as operating a new department in a company. Once a leadership team is selected (typically from internal staff), they must be under the same types of pressure as a self-made entrepreneur who has to make fast, smart decisions. From hiring the right talent to bringing the product to market, the leadership team needn’t be concerned with tedious paperwork, reporting processes or marketing efforts that bog down most corporate processes.

Not including legal and SEC-related matters, the venture needs to have the nimbleness to change directions on a dime. How the corporate can help is in providing infrastructure and operational services that can often distract or slow a new start-up. Examples include:

• Provide IT support
• Provide office space and related services (cleaning, security, etc.)
• Provide accounts payable and receivables and general ledger services
• Legal services from in-house counsel
• Allow internal resources to act as advisors and networking points of contact

Traditional Compensation Models

Employees who join a new venture need to have a stake in the outcome of their work. Start-ups require long hours and emotional effort unlike a standard career role. Traditional compensation models such as salary our hourly rates alone are not enough to retain the best talent.

Senior executives or up and coming talent from within the organization need to bear some of the risk, but also deserve rewards for positive outcomes that are well defined up front. A more appropriate compensation model might include:

• Lower standard salary with bonus plan for achieved financial outcomes
• Continue a company benefit package if the venture is wholly a part of the parent company
• Create an equity plan (stock option or awarded stock) in subsidiary business based on milestones
• Provide all senior leadership stock compensation from the beginning

Inaccurate Financial Models

Many companies think of new ventures the same way they look at new products or services. There is a minimum expected profit margin before taxes. If new ventures don’t hit those marks, the inferred corporate costs that are spread across all products make the venture less appealing. However, many ventures don’t need all those associated costs – including compensation, benefits, etc.

From the beginning new corporate ventures should have their own P&L – including costs for real estate, technology, utilities, accounting services, legal services, etc. Success should not be judged as a matter of net income before taxes, but rather as its own

Likewise, funding for the business should be seen as a capital outlay for new business, and not a budget allocation. When the company makes a commitment to outlay capital investment for the business, the money can be spent more effectively than when budgetary changes can quickly strangle new ventures who must battle quarter by quarter to retain allocations that support their initiatives.

Launching a new venture takes risk along with a grand vision. When companies can commit to a spin-off and make the proper decisions to set it up like a new business, the outcomes can far exceed those when red tape restricts the business from acting like the start-up it really is.

Need help moving an idea from the drawing table to a spin-off venture for your business? Project Brilliant can help. Contact us to get started.

Yes. But maybe not.

Building a successful innovation team takes more than just having your best and brightest staff. How so? Consider:

• Innovation is about culture building. You need members who can be ambassadors within the organization and influence others to get on board.
• Innovation is about disruption. Often your top leaders have too much to lose if the current business model is disrupted or forced to change. If these stakeholders aren’t mentally prepared for change – they may act as roadblocks to true innovative thinking because it could impact their career or pocket book.
• Innovation requires risk taking. Individuals who aren’t know to take risks are less likely to think differently about solving problems, because…
• Innovative people are willing to fail. Failure is an opportunity to learn and find success. If your team isn’t willing to fail, they won’t push the envelope.  As an aside, productivity and process consultant Robby Slaughter has an excellent book on failure and writes a blog on the opportunities that come was a result of failure that cite several examples worth exploring.

5 Roles For Every Innovation Team

When we consult to a company about selecting staff within the organization who will be charged to participate in an innovation movement, consider the following roles being fulfilled:

1. Organizer. Who will keep the group focused on the tasks at hand? The organizer acts as the point person and manages the process of the team – but does not determine what is a good idea or not. The organizer must be an excellent communicator who can ensure that outcomes are documented and complete and that everyone is contributing to their highest skill level. 
2. Questioners. A critical component in the team are people who know how to ask good questions that can spark real conversation and debate. It’s not just important to have good ideas, but to have discourse that challenges the thinking the whole way through.
3. Creatives. Being able to think differently and not conform to existing models or limitations is the power-set of the creatives. Not necessarily dreamers, creatives ask questions of everything that is being presumed as fact and are willing to challenge the status quo.
4. Technicians. Being able to implement and fully review the ability of your company to execute an idea is critical. Technicians have strong work experience and will be charged with building the solutions. They’ll bring a since of practicality to the dreams of the creatives.
5. Sellers. As much as it often pains a team to have the “sales” guy on the team, the sales aspect must always be part of the group. Sellers must understand the marketplace and have experience being in the field talking to customers. Great ideas aren’t worth much without a paying customer.

Of course, every team will have additional roles depending on the type of business your in and the goals you have set. In some cases, one person may be able to fulfill more than one of these five critical roles that have been defined.

As you compile your team, remember that these individuals must be able to take criticism and also give it to their peers. In an innovation team, communication and challenging others is a central component to excellent work-product.

Need help organizing and launching an innovation team? Project Brilliant can help you organize, recruit and launch a team within your company who will be charged with thinking about the solutions that will drive the future of your business. Contact us to get started.