January 11, 2013
Issue 15 – January 11, 2013
1.
The Eight Dimensions of a Brainstorm Session............................................ Mitch Ditkoff
2.
Are you Capturing the Value of Your Innovation? ……..…………..…...…. Stephan Liozu
3.
McKinsey Innovation Report – what stands out ………………...…..……… Paul Hobcraft
4.
7 Ways to Make it Safe for Others to Innovate ..........................................…. Jorge Barba
5.
In 2013, Innovating Customer Experience Strategy .…….…………… Geovanny Romero
6.
Innovation Mentoring Strategy – McKinsey, EMC ……………………………. Steve Todd
7.
Matching Innovation Possibilities with Needs …………….………….….... Rowan Gibson
8.
It’s Not High School Anymore! ……………………….……..…...….. Deborah Mills-Scofield
9.
The Disconnected Leader …………………………………………….....…..….….. Mike Myatt
10.
Innovating for the Post-Crisis Rebound ….……………………...….….…..… Yann Cramer
Your hosts, Braden Kelley, Julie Anixter and Rowan Gibson, are innovation writers, speakers and strategic advisors to many of the world’s leading companies.
“Our mission is to help you achieve innovation excellence inside your own organization by making innovation resources, answers, and best practices accessible for the greater good.”
Cover Image credit: Vintage Metal Sign
The Eight Dimensions of a Brainstorm Session Posted on January 5, 2013 by Mitch Ditkoff
Most people think brainstorming sessions are all about ideas – much in the same way Wall Street bankers think life is all about money.
While ideas are certainly a big part of brainstorming, they are only a part.
People who rush into a brainstorming session starving for new ideas will miss the boat (and the train, car, and unicycle) completely unless they tune into the some other important dynamics that are also at play:
1. INVESTIGATION: If you want your brainstorming sessions to be effective, you’ll need to do some investigating before hand. Get curious. Ask questions. Dig deeper. The more you find out what the real issues are, the greater your chances of framing powerful questions to brainstorm and choosing the best techniques to use.
2. IMMERSION: While good ideas can surface at any time, their chances radically increase the more that brainstorm participants are immersed. Translation? No coming and going during a session. No distractions. No interruptions. And don’t forget to put a “do not disturb” sign on the door.
3. INTERACTION: Ideas come to people at all times of day and under all kinds of circumstances. But in a brainstorming session, it’s the quality of interaction that makes the difference — how people connect with each other, how they listen, and build on ideas. Your job, as facilitator, is to increase the quality of interaction.
4. INSPIRATION: Creative output is often a function of mindset. Bored, disengaged people rarely originate good ideas. Inspired people do. This is one of your main tasks, as a brainstorm facilitator — to do everything in your power to keep participants inspired. The more you do, the less techniques you will need.
5. IDEATION: Look around. Everything you see began as an idea in someone’s mind. Simply put, ideas are the seeds of innovation — the first shape a new possibility takes. As a facilitator of the creative process, your job is to foster the conditions that amplify the odds of new ideas being conceived, developed, and articulated.
6. ILLUMINATION: Ideas are great. Ideas are cool. But they are also a dime a dozen unless they lead to an insight or aha. Until then, ideas are only two dimensional. But when the light goes on inside the minds of the people in your session, the ideas are activated and the odds radically increase of them manifesting.
7. INTEGRATION: Well-run brainstorming sessions have a way of intoxicating people. Doors open. Energy soars. Possibilities emerge. But unless participants have a chance to make sense of what they’ve conceived, the ideas are less likely to manifest. Opening the doors of the imagination is a good thing, but so is closure.
8. IMPLEMENTATION: Perhaps the biggest reason why most brainstorming sessions fail is what happens after — or, shall I say, what doesn’t happen after. Implementation is the name of the game. Before you let people go, clarify next steps, who’s doing what (and by when), and what outside support is needed.
image credit: meeting image from bigstock
Mitch Ditkoff is the Co-Founder and President of Idea Champions and the author of “Awake at the Wheel”, as well as the very popular Heart of Innovation blog.
Are you Capturing the Value of Your Innovation? Posted on January 6, 2013 by Stephan Liozu
Innovation, value and pricing are inseparable. They are part of a dynamic system to create long term sustainable value for firms. As such, they have to be treated with equal attention, with the required sweat equity from top executives and with the necessary levels of investments. That might not be the case yet. Firms invest billions in R&D and innovation processes. They deploy very elaborated new product development and product life-cycle processes in the hope of achieving greater innovation rate.
Most firms, however, fall short of defining crisp value propositions, of measuring the differential economic value of their innovation versus their competitors and, of capturing the true value through pricing. There are many root causes for this fact and I have studied them in my Ph.D. studies over the past four years. One of these causes relates to the lack of conceptualization of what value means.
So, what does value management mean? My conceptualization of value management takes a holistic approach to business strategy and include a strong link between the three critical dimensions of value management: value creation, value assessment and value capture. I
conjecture that these three dimensions form a dynamic unbreakable chain that can generate greater profit levels for organizations. Many firms I talked to struggle in the area of value creation and therefore have a pricing problem to capture something that does not exist. I challenge them to look at the level of differentiation created through their innovation process. So the transformation process towards sustainable value excellence starts with significant investments in innovation to generate differentiation and create value. Once value is created, it is critical to measure it and then capture it through value-based pricing. To make the wheel turn in a sustainable fashion, it is then imperative to have strong re-investments in R&D and innovation.
That is what the best-in-class innovative companies do. A fixed portion of net profit are re-invested in the firm’s innovation process to maximize long term value. It takes money to make money!
Be bold. Join the value revolution!
image credit: stephanliozu.com
Stephan Liozu is the Founder of Value Innoruption Advisors and specializes in disruptive approaches in innovation and value management. He is also a PhD candidate in Management at Case Western Reserve University and can be reached at sliozu@case.edu
McKinsey Innovation Report – what stands out Posted on January 5, 2013 by Paul Hobcraft
Recently I have outlined the existing gaps at the leadership level on innovation engagement and that innovations continues to lack being integrated into an organizations strategy. Time and time again there are new reports, surveys and different comments made on this serious disconnect still going on that needs clear resolution. Yet it still continues, why?
It is always pleasing to ‘dovetail’ onto the same track as the Big Consultants. When you are already working on and moving beyond the trends they are spotting and highlighting. Being ahead in offering some clear tangible solutions, to help resolve these issues they talk about. One of these was a recent McKinsey Quarterly survey conducted an on-line of just under 3,000 executives on issues surrounding innovation. The report is entitled “Making innovation structures work”- see the link below.
They confirm much that I have seen or gained through my research and point very specifically to the key difficulties organizations are presently having around innovation.
This report feeds directly into the solution work I’m undertaking
The results feed directly into the work I have been undertaking on the leadership gap and the suggested framework of the integrated executive innovation work mat that has been discussed in considerable details in the past few weeks. These have been on this blog site of mine, as well as ovo innovation’s my collaborating partners, and also on innovation excellence’s web site, where we had a whole week of featured articles, discussing the work mat component parts, or as we entitled it, the essential seven domains of innovation that make up this work mat.
So what stands out in the McKinsey report?
The innovation structure is evolving; organizations rely on exploring various organizational models to ‘house’ and execute innovation. They work with multiple structural models to drive innovation efforts and often have separate innovation functions, located in multiple locations. It seems there has been an insurgence of structures in the last three years that are currently being worked through.
Presently there is no uniformed view on innovation organizational design
According to the report, the innovation’s function has shifted in the functions location, in its financing and ownership and increasingly reporting into a C-Level, or even directly into the CEO.
The designs involved include innovation centres, a dedicated new-business development function, emerging business opportunities and technologies groups (often separate) and having advanced technologies institutes as part of the mix.
It still seems where it ‘sits’ partly depends on the time the innovation function was set up. The older structures, set up more than ten years ago 46% of those surveyed report that innovation “sits” at corporate headquarters compared with 65% at the organizations with younger functions. Younger functions also focus more on profit but presently have fewer market successes as they have had less time.
What is the innovation they are working upon?
These are with functional focus on identifying new business opportunities, such as blue-sky innovation and developing potentially disruptive technologies and those report directly into the CEO at around 44% of the functions at present. That maybe the wrong side of the 50% mark I’d like but we seem to be making progress of linking innovation directly to the leadership of our organizations, or are we? Read on.
The factors of success
This is the area of most interest to me. Although it is prefaced by a matter of maturity (whatever that means) there is a ongoing debate on how separate or aligned with corporate strategy an organizations approach to innovation should be. To quote from the report “What is affirmed that strategy (particularly one that is focused, clearly articulated and integrated) is key to successful outcomes. At companies where innovation is fully integrated into strategy, executives are SIX times as likely as those without an integrated strategy to say their separate functions meet their financial objectives effectively, actually very effectively or extremely effectively”
Equally where there is a successful integration there is a sharing of the organizational elements across the portfolio. This includes sharing strategic priorities and focus, knowledge and insights, research insights and analysis, leadership teams and approach to governance with lastly a good talent flow and exchange.
The challenge for innovation is still around strategy though
Only one-third of the executives report innovation is fully integrated in corporate-level strategies, and nearly half say integrating the separate function’s strategic objectives with those of their core businesses is one of their functions most significant challenges.
Those that achieve effective outcomes have clear leadership support
Fifty-six per cent of all the executives surveyed identify C-level and leadership support as a driver of success (second only to strategic focus). There is a more than interesting effective outcome split within the report (exhibit 4) that the level of interact frequency with the C-level team makes a real difference.
Surprisingly but fitting with my own observations and research, is the frequency of interactions between the separate innovation functions and C-level leadership. From this report those deemed as “very frequent” is only at 40%. Can you image the wealth creation, new growth potential that innovation provides yet C-level engagement is only at 40% for very or extremely frequent in discussions? So is innovation that important to the C-level really? Something is wrong here, badly wrong. “Somewhat frequently” comes in at 17% and “rarely or not at all” is 22%. This is the leadership gap we have suggested needs addressing, urgently. Clearly innovation “sounds good, a good sound bite” but is not top of mind for C-level as they would like us to believe, it seems.
Then McKinsey outlines the involvement with separate innovation functions at the C-level as actively involved in the innovation process, from idea generation to commercialization, is only 38%. Those involved in the evaluation and feedback on major innovation decisions, about strategic decisions and priorities of investment makes up another 35%, yet only 26% serve on an innovation council or committee and 14% report that their leadership is not involved with innovation functions at all.
So we are still badly lacking that deep C-level engagement, although the line into them is improving. The need is to get the C-level strategically engaged at least and convince them to provide the innovation framework for others we are proposing, so they do become fully involved and those responsible to work within innovation can conduct their work through the framework we are suggesting to strengthen the C-level engagement and cohesiveness of strategy with innovation activity.
Divergence and philosophical tension in innovation
So the McKinsey report is more than helpful (and timely) on providing a snapshot of practices, successes and challenges but they do suggest there is a divergence and reflection on the struggle and philosophical tensions surrounding innovation. For instance, equal shares of those
surveyed, state their function exist to turn a profit, or have no financial targets at all. Equally there are large splits on measuring individual performance with only 30% having the same performance metrics as the rest of the organization, while 32% have innovation-specific metrics and some (23%) seem to straddle the middle of the two. The lack of leaning to one form of measurement or the other needs resolution or is it evenly split due to the nature of the innovation activity the function is working upon?
The one aspect within the report I find really shocks and disappoints me
The concern lies in the number of dedicated employees on innovation, 35% of executives (out of 2,927) have ten or fewer full-time equivalents working within their function and 30% saying at least 51 full-time equivalents dedicated and working on innovation.
That is staggering low in my opinion for the area that is reportedly consistently within the top three priorities of the CEO. No wonder we have the slow innovation cycles, the poor success rates and the lack-lustre performances from innovation if these are the dedicated numbers working on innovation. This is appalling. I just wonder how many efficiency and effectiveness people are employed across some sizeable organizations yet innovation seems grossly undeserved by these results. Putting your future into too few hands, to work on breakthroughs, those new disruptive areas means you must be forced to end up with incremental innovation for maintaining performance, and we all are seeing that clearly emerging time and time again, from most organizations not balancing their innovation activity in a well- structured and thoughtful way.
Risk, poor incentive, under-resourcing innovation and fear still dominate. When will stakeholders start asking more direct innovation questions to the boards of organizations?
The last part of the report deals with the difficulties aligning innovation.
The significant challenges in meeting strategic objectives are hampered by a range of difficulties, the highest as a % of respondents was 53% on the competition coming with short-term priorities from other parts of the business, 42% for difficulties in integrating functions strategic objective with those of the core business, 29% in difficulties in defining the functions business case or value proposition to company leaders, with 19% seeing the challenge of being separated from the rest of the company.
The conclusions drawn from the report.
The report concludes many of these issues are cross-cutting and perennial challenges not just for innovation but for the organizations as a whole.
It reaffirms the absolute need for strategy to precede structure when organizations decide to create new innovation functions and the enabling effect an engaged C-level support brings in driving innovation success. Also it suggests that a real care to tailor the function to existing organization objectives and culture are important.
The report recommends the following:
1) Organizations should not rely on a single innovation function, it must integrate with the entire organization
2) There must be first a well-established and clear strategic focus
3) A clear garnering-in from top management
4) That C-level support is a key factor for innovation success
5) The measures should focus more on the performance and success on the functions role in the innovation value chain, not necessarily financial targets as these can be an unreliable measure or guarantee of success.
This report is timely
After the last few weeks in laying out the business case for having an integrated framework for innovation through our executive innovation work mat, this McKinsey report reinforces that we are on the right track.
I feel even more confident that this framework we offer to bridge the innovation leadership gap can make a solid, maybe significant, contribution to reducing some of the issues and challenges that have been raised within this McKinsey report.
The McKinsey report can be found through this link.
image credit: photographicdictionary.com
Paul Hobcraft runs Agility Innovation, an advisory business that stimulates sound innovation practice, researches topics that relate to innovation for the future, as well as aligning innovation to organizations core capabilities.
7 Ways to Make it Safe for Others to Innovate Posted on January 9, 2013 by Jorge Barba
Great leaders make it safe for others to innovate. What stops innovation? Fear.
Fear of the unknown. Fear of public shame. Fear of failing. Fear of getting started. All these fears, in one way or another, get in our way. How do we make it safe for others to innovate? You let them try stuff and see what happens.
Here are 7 ways to make it safe for others to innovate:
1. Champion ideas by getting involved. Sometimes all people need to see is if you sponsor ideas. But more effective, and which sends a huge signal, is if you as a leader are hands on. No one will argue or question your dedication if you are involved. In other words: Practice what you preach.
2. Speak up not down. Get some healthy debate going. If everyone agrees with each other, that is a bad sign. Dissent is good when it leads to constructive criticism.
3. Ask. This goes with the last point. Identify the “yes men” and encourage them to disagree with you.
4. Yes and. To put it simple, become a yes man. But more powerful is the “and”, as in adding to other people’s ideas.
5. Prototype it. Pictures speak louder than words. Prototypes, stuff you can use are even more powerful. Pictures, diagrams, story boards, stuff made out of cardboard, all are useful for communicating ideas.
6. Give them time. Google is known for their 20% time formula for stimulating innovation within the company. Gmail and Adwords were born as a result of 20% time. But want to take this a step further? How about implementing a FedEx Day activity where your whole company takes one day to build and deliver innovation overnight? What is a FedEx Day? Very simply, FedEx Day is a 24-hour innovation immersion event that enables employees to brainstorm, prototype, and pitch their emerging innovations. Why is it called “FedEx Day”? Because the goal of the 24hour blitz is for participants to originate, develop, and deliver new products, new services, or business process improvements overnight.
7. Don’t forget the customer/client. This one is very important. It seems to me that organization want to innovate “just because” it could result in growth or because of competitive reaction. Not good. Innovation is about value. And the one who receives this value is the customer. If your efforts are focused on doing just that, people should not be afraid of wanting to satisfy customers.
Have anything to add? I know you do. Fire away in the comments!
image credit: protection image from bigstock
Jorge Barba is an Innovation Insurgent and is the Creative Strategist at Blu Maya, a San Diego based Digital Marketing Firm that helps organizations build their online business with strategy development for new products and services. He’s also the author of the innovation blog Game Changer. And lastly, you can follow him on Twitter @jorgebarba.
In 2013, Innovating Customer Experience Strategy Posted on January 7, 2013 by Geovanny Romero
Customer Experience and Customer Experience Management (CEM) has been on the corporate agenda for several years now, and interest in the topic seems to be gaining momentum. So, in this way, Strativity Group, and its CEO, Lior Arussy, present a complete guide from Innovation to Execution in the book Customer Experience Strategy.
This focus of this blog isn’t only a book review, but rather a reminder for 2013 that “Customer Experience is not just about passion, it is about profitable results.” How can we innovate this?
First let’s review that Customer Experience is the total value proposition provided to a customer, including the actual product, and all interactions with the customer: pre-sale, at point of sale, and post-sale. This value includes experience attributes such as on-time delivery and the quality of products, as well as the experience attitudes, such as the emotional engagement created during interaction with the customers.
And, Customer Experience Management (CEM) is a business strategy leveraging customer-centric innovation and problem-solving that absolutely provokes smiles, certainly, but the biggest smiles come when companies examine bottom-line profits. Simply stating the goal: Customer Experience is profitable.
Companies are seeking guidance with customer experience motivated by numerous differing issues: market share, wallet share, customer satisfaction, customer attrition, and so on. But the need for customer experience is ultimately driven by one factor: Commoditization. For innovating the Customer Experience it is necessary to build a roadmap to beat commoditization, modernizing the customer relationships and achieving greater profitability.
Organizations cannot accomplish innovation of customer experience without deep employee involvement and without creating experiences for other stakeholders, including employees and B2B suppliers. Customer experience is a business practice definable in financial terms that stakeholders from the CEO, and the CFO on down will understand. Customer Experience is everywhere!
Throughout the following process (taking from the Customer Experience Strategy book) we will examine ways to assure that the customer experience strategy is supported, enabled and executed throughouts the entire organization.
Innovating customer experience involves building a disciplined structure to asses the brand, the customer’s needs and expectations, and the specific execution of experience and delight. To innovate, the firms should design a new customer experience in four key areas: Promise, Delivery, Communication and Growth.
The four stages of experience value evolution are:
1. The Promise of Experience Value: Involve yourself early in establishing the expectations you are delivering against and in establishing the expectations you seek to surpass with delightful experiences. If the promises are beyond the company’s capabilities, you can’t even meet expectations. Under-promising and over-delivering is the more effective method of creating close and committed relationships.
2. The Delivery of Experience Value: This stage concerns every aspect of delivering the promise service, products, information, etc. All the details are involved in delivering experience value, from the operation to the website to delivery of invoices.
3. The Communication of Experience Value: This is a stage that most companies are not aware of, yet they must be. This is the stage where the problems start. Most companies fail to incorporate mechanisms that demonstrate and display the value they provide through products and services. Create a proactive value-visualization model to assure that customer see, understand and appreciate the value that company provide.
4. The Growth of Experience Value: This is a stage of the progression, bringing customer retention, repeat business, and increased profit per transaction. Retaining and growing business from exiting customers is far more cost-effective than acquiring new customers. If companies deliver experience and delight on each of the previous steps, they will see Experience Value growth from highly satisfied customers.
The terms customer loyalty and customer relationship are real life emotional terms, and the great news is that 95% of customer decisions are emotional. The firms are building experiences and relationships every day. The relationships begins with people. Delightful experiences over time, and every interaction, build a relationship, and a strong relationship builds loyalty.
In 2013, start Innovating the Customer Experience! Experiences are not static, they are dynamic.
image credit: ereachconsulting.com
Geovanny Romero, is certified NPDP Plant Manager at Renovallanta-ContiLifeCycle, and Managing Director at NPD Strategy in Andean Region. A Member of PDMA International, his main interests are focused in Productivity, New Product Development and Lean Innovation Management. You can connect with him on Twitter @geovanny_romero
Innovation Mentoring Strategy – McKinsey, EMC Posted on January 4, 2013 by Steve Todd
This year I’ve come across several thought-provoking posts regarding managing remote innovation. I’ve also written several blog posts about a new role I assumed in 2012: managing EMC Labs China.
There are two articles in particular that have been helpful:
A CEO’s guide to innovation in China (McKinsey)
Six Traits You Need to Manage Remote Teams Successfully (Mark Murphy)
I like these two articles because one offers corporate advice (McKinsey) and one offers individual advice (Murphy). In order to accelerate EMC Labs China innovation I am trying to draw the best out of these articles and push for change on both fronts.
Individually
The Murphy article taught me, first and foremost, to take care of my energy level. The twelve hour time difference leaves you tired. My coworkers in China need to see me as energetic. Murphy calls this indefatigable.
In addition, the Murphy article validated two behaviors that I was already practicing: (a) company evangelist, and (b) enthusiastic.
In regards to being a company evangelist, the team in China is well aware that I blog frequently on the capabilities of the EMC product line. The public evangelism evident on my blog naturally translates to internal evangelism to the team.
When it comes to generating enthusiasm, the team is also aware that I consider myself lucky. When I was developing products as part of an EMC business unit, I always had two or three innovation projects on the back burner. Usually they were pretty cool. With the EMC Labs China team I’ve got a dozen projects on the front burner. We work on next generation product possibilities that span nearly all of our business units. It’s a playground for innovation. Being enthusiastic in this environment, for me, is easy.
Murphy’s article stresses that when these characteristics (along with several others) are evident in a remote manager, success often follows.
Corporately
The McKinsey article highlights some very real threats to multinational innovation in China that I cannot solve as an individual. I can work, however, with EMC’s Executive team on making changes to management frameworks and philosophies. Here are some of the key points raised by McKinsey:
Multinationals often have a hard time building an innovation team in China due to attrition. The following quote advises multinationals to follow the lead of local Chinese companies: “Chinese companies, for example, excel at creating a community-like environment to build loyalty to the institution. That helps keep some employees in place when competing offers arise, but it may not always be enough“.
Career paths and company brand matter. The brand of a successful multinational can be an important retention strategy: “Talented Chinese employees increasingly recognize the benefits of being associated with a well-known foreign brand and like the mentorship and training that foreign companies can provide. So multinationals that commit themselves to developing meaningful career paths for Chinese employees should have a chance in the growing fight with their Chinese competitors for R&D talent“.
Multinationals with successful innovation collaboration frameworks have an advantage: “One area where multinationals currently have an edge is promoting collaboration and the internal collision of ideas, which can yield surprising new insights and business opportunities. In many Chinese companies, traditional organizational and cultural barriers inhibit such exchanges.”
This last point is an area where EMC is having a high degree of success. My co-workers at EMC Labs China are the most active global contributors to our yearly idea contest (EMC’s Innovation Showcase). Out of just under thirty winning ideas selected during this year’s Showcase, the EMC Labs China team was selected as the winner of more than twenty percent of them! This means that out of 2200 ideas, global judges chose five EMC Labs China ideas as the best in the world, with several members contributing to a cross-cultural idea voted as “Best in Show”. It is incumbent on me to continue to strengthen this program. Indeed, our 7th Innovation Conference will be held in China next year (the sixth was held in Israel).
My biggest action item, however, is a combination of individual and corporate.
I’m flying over to China next week, and one of my tasks is to begin a mentoring relationship with a key senior contributor in China that has been a strong innovator for at least five years. Given the importance of career paths in China, interaction with EMC Fellows (such as myself) and Distinguished Engineers is highly prized. I also have an action item to work with Human Resources on the establishment of a global corporate Fellow and Distinguished Engineer mentoring program. This community (over 80 people) can help scale the experience for not only China but other nations as well.
If you are interested in this topic, I recommend that you give both articles a thorough read. I’d also appreciate additional comments from readers who can recommend alternative approaches.
image credit: mckinseyquarterly.com, imagine china/corbis
Steve Todd is an EMC Fellow, the Director of EMC’s Innovation Network, and a high-tech inventor and book author Innovate With Global Influence. An EMC Intrapreneur with over 200 patent applications and billions in product revenue, he writes about innovation on his personal blog, the Information Playground. Twitter: @SteveTodd
Matching Innovation Possibilities with Needs Posted on January 5, 2013 by Rowan Gibson
“What roles do engineers and marketers play in an innovation setting, and what conflicts can arise based on their perspectives and approaches?” Corporate innovation has traditionally been driven from the technology side; from departments like R&D and engineering. It’s an approach that can be very successful. Indeed, it has often led to great breakthroughs. But if a company wants to win in today’s value-based economy, this is no longer the best way of doing things.
Instead, organizations must learn how to drive innovation from both the technology side and the customer side. Sure, innovation can spring from a technological discovery that is then leveraged to meet a customer need. But, conversely, it can be driven by an unmet customer need that inspires a new technical solution. So the challenge for companies is how to get better at bringing those two sides together.
A Boston Consulting Group survey found that roughly half of all the senior managers they interviewed were unsatisfied with the financial return on their innovation investments. This doesn’t surprise me at all. Even when an organization invests substantial amounts in R&D from year to year, it can find that few of these innovation dollars actually translate into significant commercial opportunities.
Take GM. The firm has pumped more money into R&D than any other company on earth over the last twenty five years and it’s currently struggling just to stay alive! Where GM has clearly failed is in linking its technological research to the articulated and unarticulated needs of its customers. So all of that engineering effort has produced very little in terms of customer value.
How can a company avoid this expensive innovation trap? Consumer products giant Procter & Gamble provides a powerful lesson in how to break out of the technology-centric mindset. Back in the 1990s, a group of P&G’s senior managers woke up and realized the company had missed a series of big commercial opportunities by encouraging innovation solely from the R&D department; by historically being too technology-driven.
For example, P&G’s Oral Care division had looked into the idea of adding baking soda to toothpaste as a way of reducing plaque-related periodontal diseases. The R&D people tested it and concluded that, from a technology perspective, there was no merit in the idea. There was absolutely no way they could clinically demonstrate any benefits. So they said, “OK. It’s just smoke and mirrors. We’re not interested in it.” But then some of P&G’s competitors added baking soda to their toothpaste – along with a premium price tag – and made a huge business success out of it. How was that possible? It was because, even though the idea didn’t work as a piece of technology, it worked in the consumer’s mind. It leveraged the fact that generations of dentists had told people that, under certain circumstances, they should use baking soda for oral-care-
related problems. So rather than being a technology-based innovation, this opportunity was based on a deep consumer need that looked, at least psychologically, as if it was being met.
This, and a few similar experiences, began to hammer the message home to Procter & Gamble that innovation is not just an R&D game. Of course, technology is a very important part of the equation, and P&G probably still outspends most of its competitors on technical research, but what senior management finally understood back then was that it’s only half of the loaf. That was what prompted them to develop an internal strategy aimed at bringing both the technology and the consumer side together. It was called “Matching what is Possible with what is Needed.”
This was when P&G’s marketing people made the fundamental switch from managing brands to managing consumers’ needs. For example, the company discovered when they talked to consumers that they assumed soap was not good for their skin (P&G had been making and selling soap since 1837!). So they went back to R&D and combined the cleansing action of a soap bar with the moisturizing effect of a lotion to create Olay Body Wash, which was a big commercial success. In fact, it was voted ‘Product of the Year’ in the Body Care category by the largest consumer-voted program in North America to recognize innovation among consumer packaged goods.
When P&G listened to consumers talk about hair care, they found that people thought shampoo would make their hair shiny but that it wouldn’t actually make it very healthy. So they asked the scientists in R&D to add some vitamin technology to the shampoo, which was the birth of Pantene Pro-V (pro-vitamin) products. Today, they are the top-selling hair products in the world. The range includes products designed exclusively to meet specific consumer needs: from the hair textures of different ethnic groups, to color-treated hair, to hair that needs protection from urban pollutants. And when consumers said they would like a hairspray to provide hold but without the gluey stiffness makes hair impossible to comb, P&G responded with Pantene Pro-V Flexible Hold Hair Spray, which was an instant hit.
This is not to say that innovation at P&G can no longer originate on the technology side. Far from it. But the company has managed to strike the right balance between technical R&D and customer-centric marketing so that the two sides work symbiotically to create new value. That means the correlation between P&G’s innovation investments and commercial outcomes is now much stronger than ever before.
Sadly, in many other companies we still find a great divide between these two sides of the business when it comes to innovation. We find engineers and scientists locked away in isolated research labs, assuming that marketing’s job is simply to advertise and sell their finished inventions. We find R&D people protecting their turf rather than embrace new concepts like crowdsourcing and open innovation – where
customers and other external parties become co-inventors and co-designers. On the other hand, we find marketing and sales managers who are far more focused on the features and benefits of their offerings than on the unmet needs of their customers. And when R&D comes up with a truly disruptive innovation, we often find the marketing department arguing vehemently against it on the basis that it would cannibalize their existing business.
So how is the situation inside your own organization? Have you achieved a high level of synchronicity between engineering and marketing? Are your marketing people generating a constant stream of quality customer insights to guide your engineers on where to innovate? And are your engineers producing a slew of new technical possibilities for your marketing people so they can leverage these to address unmet customer needs?
In short, is your company already adept at matching what is possible with what is needed, and vice versa? Or does it need to get a whole lot better?
Rowan Gibson is widely recognized as one of the world’s leading experts on enterprise innovation. He is co-author of the bestseller Innovation to the Core and a much in-demand public speaker around the globe. On Twitter he is @RowanGibson.
It’s Not High School Anymore! Posted on January 4, 2013 by Deborah Mills-Scofield
It seems I’m spending more and more time in high school these days. No, not my kids’ school, the business world. Perhaps the economy has increased insecurity, doubt and lack of trust in business; perhaps adolescence’s creeping into the 30’s is why its taking longer to grow up and be professional; or perhaps we’re so politically correct, or conflict avoiding, that we are sacrificing accountability and productivity for fear of offending.
There are times I feel so “old-school” with my kids’ friends and in the corporate world. I see behavior that wasn’t tolerated in ‘my day’ and I’d never tolerate…from my kids let alone colleagues, including the C-suite. The Harvard Business Review even ran an article “Rudeness at Work: What’s Your Story?” What the heck is going on? Are permissiveness and indulgence endemic everywhere?
Increasingly, the virtue I see that is most needed, aside from Courage, is Temperance. I love that word. It comes from Greek sophrosyne (moderation), which Cicero translated into the Latin temperantia. By the mid-14th C, it evolved from the Anglo-French temperaunce to mean “self-restraint, self-control, moderation.”[*] I think we need a heavy heavy dose of Temperance today – in any business, be it for/not-for profit, ‘social’, entrepreneurial, etc. We need to balance protecting wealth with creating wealth, efficiency with effectiveness, and yes, compassion with responsibility.
Many workplaces are enclaves of aiding and abetting immature, disrespectful, even harmful behavior. People end up spending more time working around or with these people instead of doing the jobs at hand. Physical and emotional energy is sapped; time is spent in the weeds providing unnecessary levels of detail and hand-holding because people want to be told exactly what to do instead of taking the initiative; and employees are not asked to step up their game, limiting their professional growth and burdening the entire organization culturally and productively. Trust declines, morale declines, and the company’s ability to attract and retain talent erodes.
What is the outcome? Increasing risk in delighting the customer. Plain and simple. At the end of the day, that’s what matters, because otherwise there is no business. While it may be ‘easier’ in the short term to aid and abet, it will destroy your organization in the long term. At some point, it’s very difficult to prevent this behavior from affecting your customers in some shape or form. And let’s face it, we’re not helping anyone by avoiding the issue…we’re kicking the can down the road.
So, please think about how you can apply Temperance in 2013. Apply to yourself first, your team, and your organization. As the leader, you set the tone. This may not be easy, but it is so important to create and sustain a culture that continually delights it customers…because of it’s people, it’s culture.
image credit: thepoliticalcarnival.net
A special Thank You to my friend, Jess Esch, for letting me use her fabulous sketches in my posts!
Deb, founder of Mills-Scofield LLC, is an innovator, entrepreneur and non-traditional strategist with 20 years experience in industries ranging from the Internet to Manufacturing with multinationals to start ups. She is also a partner at Glengary LLC, a Venture Capital Firm.
The Disconnected Leader Posted on January 7, 2013 by Mike Myatt
Even though few would dispute the value of being an engaged leader, many still do not practice what they preach. The harsh reality is great numbers of leaders continue to operate in a vacuum by sequestering themselves away in the corner office and attempting to lead from afar.
Trust me when I tell you that being out of touch is never a good position to find yourself in as the CEO. I rarely come across leaders who couldn’t benefit from being more meaningfully engaged on both a broader and deeper basis, and hope that today’s post will encourage you to do just that…ENGAGE.
I have consistently espoused the value of walking the floor (hat tip to Tom Peters –MBWA), dropping in for meetings on an impromptu basis, proactively engaging key stakeholders, and any number of other items that focus on raising your awareness. Don’t think span of control – think span of awareness.
My advice to CEOs, regardless of whether you’re running a start-up or a Fortune 500 company, is to go see things for yourself. I think you’ll find your view of the world will change dramatically when you validate impressions based upon your own observations, as opposed to sole reliance on what you read in a management report, or what you hear third or fourth hand in a meeting. Think about it… when you’re sitting in front of the board, on an analyst call, providing testimony, talking to the media, or speaking at the annual shareholder meeting, wouldn’t it be great to actually know what your talking about as opposed to interpreting what someone else has told you?
So the real question is this – how does a CEO get to the point of being so disconnected from operations that he or she just doesn’t have a clue? The reality is that there are any number of reasons why this can happen, a few of which I’ve noted below:
The Optimistic CEO: I have met a number of CEOs that simply choose to view the world through rose colored glasses. They will believe what they want to believe regardless of what they hear or what they observe. Even in the worst of times they believe nothing to be insurmountable. While optimism is generally a great quality for a CEO to possess, there is a point at which unbridled optimism can disconnect a person from reality.
The Arrogant CEO: These CEOs believe they can will their view into reality in spite of circumstances, situations, or events. The arrogant CEO doesn’t value the input of line and staff management. These CEOs see management opinions as inconsequential, unless of course, they happen to be in alignment with their own beliefs and opinions.
The Unaware CEO: These CEO’s will take any report or piece of information at face value. These CEOs are overly trusting, and often politically naive. They fail to seek clarification, validation, or proof supporting the information they have been fed. This is a very unhealthy state of mind for a CEO hoping to survive over the long haul.
The Fearful CEO: These chief executives hide in fear of making a mistake, revealing shortcomings or inadequacies, or in an attempt at managing perceptions. CEOs guided by fear often suffer from indecision and analysis paralysis. The worst thing about a fearful CEO, is that executives who refuse to make decisions and take risks will transfer that thinking to others within the organization. Leadership is a contagion – good or bad. Oddly enough, the biggest sign of a fearful leader is when a leader fails to engage. Leaders who avoid personal interaction, or shy away from social media for all the wrong reasons are likely fearful leaders.
The Disconnected CEO: Unlike CEOs who understand how to leverage time and resources via delegation while remaining connected to management and staff, the disconnected CEO does just the opposite. They have reclusive tendencies which cause them to often completely abdicate responsibility and remain disconnected from management. Sticking one’s head in the sand will not make the circumstances of a particular situation go away, rather that type of thinking will likely on exacerbate the issue.
If you’re a CEO with clouded vision and desire to change the view from the top, it is critical that you maintain open lines of communication through a variety of channels and feedback loops. All good leaders maintain a connection and rapport with both line and staff. Furthermore, savvy CEOs are always working to refine their intuitive senses. A good CEO demands accountability and transparency. They challenge everything of consequence. They understand that acceptance of general statements and ambiguity, or blindness to hidden agendas will only contribute to limiting their vision.
If you’re a CEO and you haven’t personally spoken with your top customers, suppliers, vendors and partners, you’re doing yourself and your company a great injustice. If your CFO handles all communications with your banking relationships, and your Chief Investment Officer handles all of your investor relations, you’re flat out missing the boat. If your CMO is making all of your brand decisions there will be h*ll to pay down the road. Moreover, in today’s litigious and compliance oriented world where the CEO is no longer out of reach, it’s just plain smart to take a more hands on approach. Remember that there is a major difference between delegating and abdicating responsibility. I think President Reagan said it best: “trust but verify.”
Let me be very clear; I’m not suggesting that you become a micro manager or that you stop delegating, I’m simply suggesting you do the job the way it is supposed to be done. Great leaders champion from the front – they are not disengaged invisible executives. As the CEO you are the visionary, influencer, champion, defender, evangelist, and you must have a bias to action. You can be none of these things as a recluse.
Engaged leaders are very visible and very active leaders - they question, listen, assess and react. I can promise you one thing – leaders who don’t have a clear read on the pulse of the organization, won’t have a healthy pulse for very long.
Thoughts?
Mike Myatt, is a Top CEO Coach, author of “Leadership Matters…The CEO Survival Manual“, and Managing Director of N2Growth.
Innovating for the Post-Crisis Rebound Posted on January 4, 2013 by Yann Cramer
Schumpeter defines innovation as a process of creative destruction. The point is not merely that innovation can still happen in times of crisis; it is that crisis are the best time for era-defining innovations to emerge.
In a recent session of the Mardis de l’Innovation cycle (in French), Marc Giget highlighted a few powerful examples of companies, which emerged or reemerged stronger out of the Great Depression of the 30s with winning products, such as GE and its refrigerators and washing machines, Converse and its emblematic (and ugly) shoes, or the entire machine-tool sector. As it turned out, the Great Depression became one of the most innovative periods in American history.
Today, some post-crisis winners are already emerging, though others may still be in the making. Examples include:
Boeing, which just started a third assembly line to increase production of its Dreamliner from 4 to 12 per month;
O3b with its low-cost satellite telecom network for the Other 3bn people who do not have access to a legacy, land-based, telecom infrastructure;
India’s Aravind eyecare system, which has already treated 12m patients with a state-of-the-art cataract operation at an ultra-low cost of $7, and has become the #1 training centre for eye surgeons from around the world;
Decathlon with its low cost, high performance, standardized sportswear and sport equipment business model.
In the last four years, the automotive sector has been badly hit by the economic crisis. Yet, 20% of Europeans say they intend to buy a new car in the next 2 years, a proportion that is not indicative of a particularly depressed demand. But 75% say that cost will be their #1 criteria, both from a cost of purchase and from a cost of operating perspectives.
Three ways are emerging to meet that typical crisis-time need:
1. Development of frugal products such as the Logan or the Duster from Renault’s Dacia. The Duster, a small low-cost SUV, has been so successful that some second-hand cars have become more expensive than new ones due to the delays to meet a higher-than-expected demand.
2. Investment in high-throughput maxi-volume industrialisation. The most emblematic example is VW which has sold 30m Golf cars since 1974, is now launching its 7th generation, and is investing a staggering $50bn in the largest and most modern plants that the auto industry has ever seen, all operating on a standardized but modular MQB platform that will support 40 to 60 different models. The development costs are reduced by 20% and the production costs by 25%, positioning VW as a clear winner in, and post, crisis.
3. Collaborative Consumption alternatives to car ownership, such as CityZenCar, BlaBlaCar, and many others, ranging from fleet sharing to peer-to-peer rental, which enable individual mobility with a radically different cost structure.
Let’s note in passing that electric cars are unlikely to be the growth engine of the post-crisis rebound, as they are not the cost-conscious, backto-essentials response that the crisis-hit consumer needs. Auto manufacturers who bet the farm on electric may not live long enough to be able to see their bet pay off.
Looking at past and present examples, some common key principles of innovation for the post-crisis rebound appear to be:
Smart functional product definition focused on customer essentials, not by de-featuring existing products but by restarting from scratch;
High-quality design focused on purchase cost-effectiveness and in-use cost-efficiency;
Synthesis of the best state-of-the-art technologies (as opposed to making new discoveries);
Design that allows for fast and easy extension of the product range when post-crisis growth returns;
High-quality high-throughput industrialisation, where simplicity, economies of scale, and modularity lead to a step change in manufacturing costs;
High unit margins as the new lower-cost product is shielded by the higher cost of the previous generation products still in the market.
Organisations that harness these key principles of innovation for the post-crisis rebound often flourish to become the new leaders in their respective sectors, when a new world inevitably rises from the ashes of the old one.
image credit: gettingsorted
Yann Cramer is an innovation learner, practitioner, sharer, teacher. He’s lived in France, Belgium and the UK, he’s travelled six continents to create development opportunities with customers or suppliers, and run workshops on R&D and Marketing. He writes on www.innovToday.com and on twitter @innovToday.
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