May 24, 2013
Issue 34 – May 24, 2013
View from the Cloud 1.
View from the Cloud .......................................................................................... Lou Killefer
2.
5 Trends That Will Drive the Future of Technology …….………..………….... Greg Satell
3.
modelH – Health Model Co-Creation Forum (part 3) ……..........………..…… Kevin Riley
4.
Big Data Collides with Market Research…………………...….………...…...... Brigid Kilcoin
5.
Improving Returns on your Innovation Investment .………………...……… Paul Hobcraft
6.
Innovate Your Process …………………..…………………..…….…………..…. Paul Sloane
7.
Are B2B Companies Slower Adaptors of Open Innovation? ……..…. Stefan Lindegaard
8.
Where J.C. Penney and Ron Johnson Went Wrong ………………..…...…….. Mike Myatt
9.
Product Thinking ……………………………….….…………………….…...….. Mike Shipulski
10.
Free, a radical story turning disruptive (1/3) ………………………...…..…..…. Nicolas Bry
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: Eric Peters Autos
View from the Cloud Posted on May 19, 2013 by Lou Killeffer
Editor’s note: Lou Killeffer caught up with Wayne Simmons and Keary Crawford, CEO and COO, of The Growth Strategy Company as they launched their new growth platform, GrowthCloud, in San Francisco. Lou Killeffer: The pursuit of business growth is on everyone’s minds and lips these days. But for all the time, energy and resource it rightly commands, there seems to be a pervasive lack of understanding about just how real growth is achieved, much less sustained. Why is growth so illusive? Wayne Simmons: We see a few contributing factors. First, many companies depend heavily or exclusively on marketing and sales performance as the primary sources of growth. The problem with this approach is that both marketing and sales are inherently tactical and only designed to generate short-term revenue. This short-term, tactical focus creates a gap between current revenue and future growth projections over the medium to long-term. Next, we see that a lot of companies are simply not growth-focused. What I mean by that is, in many cases companies have become hard-wired to deliver results by improving operational effectiveness. Companies that have this type of orientation can fall into the trap of delivering ever-higher levels of management control, efficiency and productivity, all unfortunately, at the expense of growth. Finally, the information required for real business growth is often difficult to find; unorganized; and in some cases nonexistent. These critical pieces of information — things like customer profiles, market analysis, and competitive analysis —
are often paper-based or locked in the heads of individual employees or even outside consultants. This creates an information gap that can make it difficult for companies to craft coherent or effective growth strategies. LK: In your new book, GrowthThinking: Building the New Growth Enterprise, you all set out to demystify and literally model the successful pursuit of growth. In fact, you show how growth can be broken down into its constituent parts and actually engineered through a sequence of processes. In effect, a method that can be applied again and again across any organization focused on the growth of sales, revenues, and profits. It’s sounds too good to be true. Is it? Keary Crawford: Lou, it is definitely not too good to be true. (Smiles) We believe strongly that business growth should be viewed as a formal business discipline and not simply the function of chance or random acts; however inspired or well intentioned! So, instead of creating some sort of “black art” associated with growth, we focused on researching, modeling and integrating what actually works in the real world. We’ve all accepted for years that “you can’t manage what you can’t measure”. With that in mind, our approach emphasizes measurement of the true underlying factors, like the level of market attractiveness and relative competitive positioning, that drive sustainable growth outcomes. In addition, we freely adopt ideas, like divergent and convergent thinking, that have been around in the design-thinking world for a while. We’ve taken these powerful concepts to the next level by embedding them into an actual workflow that can be executed, optimized and repeated. So, collectively the language, systems and structures embedded within GrowthThinking all work together to provide a pragmatic solution to sustainable business growth. LK: In the book, you cite a number of success factors and organizational competencies that must be present in a “growth enterprise”. I’d like to focus on what you’ve identified as the “Six Principles of the Mechanics of Growth”, a sort of best practices that transcend operational effectiveness to make sure entrepreneurship, growth strategy, and business innovation can take root and work. What are these six keys as you see them? KC: The “Six Principles of the Mechanics of Growth” are essential to establishing the new behaviors and habits within companies and they include: Outside-In Observation, “Projectizing” Growth, Balancing Experimentation and Exploitation, Organizing for Growth, Hard Wiring with Specialized Tools, and Making Someone Accountable for Growth. Successful growth enterprises adopt these growth-focused mechanisms and embed them into their day-to-day operations to help ensure that they’re “doing the right things” and “doing the right things right” to consistently generate growth opportunities and strategic growth outcomes. LK: Why is “outside-in observation” so important; what does that reveal? WS: Many companies view the world in which they operate from the “in-side out”. This leads to really reduced peripheral vision and makes them vulnerable to missing shifts in customer behavior, emerging trends in the marketplace, or the
unexpected moves of their competitors. In contrast, growth enterprises build their organizations to be “outside-in” and embrace observation, feedback, and interpretation of the external factors driving their existing customers and prospects in both existing and emerging markets. This outside-in orientation allows companies to view, interpret, and understand the marketplace differently; identifying articulated and unarticulated needs to position themselves better for future growth. LK: What does it mean to “projectize growth”? Is that where so many companies stumble? KC: You know, most large companies are really good at organizing, initiating and completing hundreds, if not thousands, of projects a year. However, where they stumble, even though growth is the number one challenge in most companies, their growth-focused initiatives just aren’t treated with the same rigor. Growth enterprises know that growth doesn’t happen by chance – they take deliberate steps to convert innovation and strategic intent into tangible sources of growth. This happens by organizing ideas and strategies into specific “projects” that can be properly resourced and monitored through to implementation.
LK: How does a company “balance experimentation and exploitation” as you refer to it in your book, and to what end? Is one of these more important than the other? WS: Certainly some companies focus too much on today’s value exploitation while not experimenting enough to find future growth opportunities. To address this issue, we advocate that companies manage the interplay between experimentation and exploitation by allocating strategic resources (time, capital, leadership attention, etc.) based on the company’s specific circumstances. Along those same lines, whether experimentation or exploitation is more important depends largely on the state of the company, its markets and industries. For example, when companies face hyper-competition, experimentation of new offerings, customers and business models becomes pretty important.
LK: What sort of new and “specialized processes and tools” do you all recommend as required? How do these correspond to a company’s more traditional tools and measurements? KC: The vast majority of management tools in use today are analytical in nature and focused on improving efficiencies, controlling production and minimizing variations. However, these legacy tools aren’t capable of helping companies reimagine their markets, rethink the ways they create value, or renew their value to customers, shareholders, and employees. To generate new growth opportunities, companies should use tools specifically designed for that purpose. These new tools, which include customer value maps, customer journey maps, strategy canvases and our “Growth Strategy Grid” are specifically designed to identify customer pains, unarticulated needs, competitive patterns, market dislocations, and gaps. LK: Are these old and new tools in conflict? KC: Not at all, these new tools add visualization, design and collaboration that augment and enhance traditional analytical tools. LK: How should a company approach “organizing for growth”?
WS: “Organizing for growth” contrasts somewhat dramatically with the more traditional command and control structures found in many if not most companies. Those companies that are structurally designed to foster engagement between executives, employees, partners and customers have certainly organized themselves for growth. These alternative structures can be implemented at the team, group, or enterprise levels, and are designed to be more flexible and collaborative and therefore more entrepreneurial. As a way to bypass legacy thinking and established systems in pursuit of growth, companies should consider adopting these new kinds of organizational structures as part of, or indeed as entirely separated from, the existing enterprise. LK: How do you go about making growth “everyone’s business”, so much so that you engage and equip the majority of employees to actively contribute to growth? KC: You know, we feel that growth is everyone’s business, that all levels of the company have a vested interest as valued partners in the pursuit of strategic growth. We believe that implementing and sustaining a series of growth-focused roles that are superimposed over the existing organization, analogous to Lean Six Sigma “belts”, black belt, green belt, etc., is a great way to encourage broad based engagement and knowledge diffusion across the company.
LK: But still and all you must make someone, some executive, or some group of executives, accountable for growth, right? When everyone’s responsible, no one is? So who’s typically in charge of delivering growth beyond the base business; who should be? WS: Our most recent research shows that the majority of companies, fully 52%, feel that the responsibility for business growth falls entirely on the CEO. However, chief executives and P&L owners have a wide array of other responsibilities that makes it impractical for them to be singularly accountable for sustainable business growth. We feel that companies should be more deliberate and pragmatic about identifying a senior leader that’s accountable for growth. However, we don’t advocate adding another “Clevel” executive to existing leadership teams. Especially when an existing Chief Strategy Officer (CSO), Head of Strategy, or VP of Strategy, already holds the proverbial “seat at the table” and explicit responsibility to shape the company’s future strategic direction. We believe that adding growth-focused responsibilities equips the CSO as the virtual “Chief Growth
Officer” who has the explicit goal of delivering growth beyond the existing business, creating the cultural conditions where growth can be sustained, and improving the company’s future growth prospects. LK: Wayne wonderful. I really appreciate your time today. Keary and Wayne, thank you both. WS: Your welcome, Lou. It was fun. KC: We enjoyed it. Thank you. image credit: growthstrategy.com The Growth Strategy Company has provided content and sponsorship to innovationexcellence.com
Lou Killeffer is a Principal with Five Mile River Marketing. A versatile marketing strategist, Lou’s passion for communications and innovation has made him a trusted advisor to some of the world’s most enduring businesses and brands, from AT&T to UPS, where he helps enterprises embrace change, look ahead, and focus on sustaining success.
5 Trends That Will Drive The Future of Technology Posted on May 19, 2013 by Greg Satell
Trends get a bad rap, mostly because they are often equated with fashions. Talk about trends and people immediately start imagining wafer thin models strutting down catwalks in outrageous outfits or a new shade of purple that will be long forgotten by next season. Yet trends can be important, especially those long in the making. If lots of smart people are willing to spend years of their lives and millions (if not billions) of capital on an idea, there’s probably something to it. Today, we’re on the brink of a new digital paradigm, where the capabilities of our technology are beginning to outstrip our own. Computers are deciding which products to stock on shelves, doing legal research and even winning game shows. They will soon be driving our cars and making medical diagnoses. Here are five trends that are driving it all.
1. No-Touch Interfaces We’ve gotten use to the idea that computers are machines that we operate with our hands. Just as we Gen Xers became comfortable with keyboards and mouses, Today’s millennial generation has learned to text at blazing speed. Each new iteration of technology has required new skills to use it proficiently. That’s why the new trend towards no-touch interfaces is so fundamentally different. From Microsoft’s Kinect to Apple’s Siri to Google’s Project Glass, we’re beginning to expect that computers adapt to us rather than the other way around. The basic pattern recognition technology has been decades in the making and, thanks to accelerating returns, we can expect computer interfaces to become almost indistinguishable from humans in little more than a decade.
2. Native Content While over the past several years technology has become more local, social and mobile, the new digital battlefield will be fought in the living room, with Netflix, Amazon, Microsoft, Google, Apple and the cable companies all vying to produce a dominant model for delivering consumer entertainment.
One emerging strategy is to develop original programming in order to attract and maintain a subscriber base. Netflix recently found success with their “House of Cards” series starring Kevin Spacey and Robin Wright. Amazon and Microsoft quickly announced their own forays into original content soon after. Interestingly, HBO, which pioneered the strategy, has been applying the trend in reverse. Their HBO GO app, which at the moment requires a cable subscription, could easily be untethered and become a direct competitor to Netflix.
3. Massively Online In the last decade, massively multiplayer online games such as World of Warcraft became all the rage. Rather than simply play against the computer, you could play with thousands of others in real-time. It can be incredibly engrossing (albeit a bit unsettling once you realize that the vicious barbarian you’ve been marauding around with is actually a 14 year-old girl). Now other facets of life are going massively online. Khan Academy offers thousands of modules for school age kids, Code Academy can teach a variety of programming languages to just about anybody and the latest iteration is Massively Online Open Courses (MOOC’s) that offer university level instruction. (For a good example, see here). The massively online trend has even invaded politics, with President Obama recently reaching out to ordinary voters through Ask Me Anything on Reddit and Google Hangouts.
4. The Web of Things Probably the most pervasive trend is the Web of Things, where just about everything we interact with becomes a computable entity. Our homes, our cars and even objects on the street will interact with our smartphones and with each other, seamlessly. What will drive the trend in the years to come are two complementary technologies:. Near Field Communication (NFC), which allows for two-way data communication with nearby devices and ultra-low power chips that can harvest energy in the environment, which will put those entities just about everywhere you can think of. While the Web of Things is already underway, it’s difficult to see where it will lead us. Some applications, such as mobile payments and IBM’s Smarter Planet initiative, will become widespread in just a few years. Marketing will also be transformed, as consumers will be able to seamless access digital products from advertisements in the physical world. Still, as computing ceases to be something we do seated at a desk and becomes a natural, normal way of interacting with our environment, there’s really no telling what the impact will be.
5. Consumer Driven Supercomputing Everybody knows the frustration of calling to a customer service line and having to deal with an automated interface. They work well enough, but it takes some effort. After repeating yourself a few times, you find yourself wishing that you can just punch your answers in or talk to someone at one of those offshore centers with heavy accents. Therein lies the next great challenge of computing. While we used to wait for our desktop computers to process our commands and then lingered for what seemed like an eternity for web pages to load, now we struggle with natural language interfaces that just can’t quite work like we’d like them to. Welcome to the next phase of computing. As I previously wrote in Forbes, companies ranging from IBM to Google to Microsoft are racing to combine natural language processing with huge Big Data systems in the cloud that we can access from anywhere. These systems will know us better than our best friends, but will also be connected to the entire Web of Things as well as the collective sum of all human knowledge. The first of these, IBM’s Watson, costs $3 million to build, but will only be about $30,000 in ten years, well within the reach of most organizations.
When Computers Disappear When computers first appeared, they took up whole rooms and required specialized training to operate them. Then they arrived in our homes and were simple enough for teenagers to become proficient in their use within a few days (although adults tended to be a little slower). Today, my three year-old daughter plays with her iPad as naturally as she plays with her dolls. Now, computers themselves are disappearing. They’re embedded invisibly into the Web of Things, into no-touch interfaces and into our daily lives. While we’ve long left behind loading disks into slots to get our computers to work and become used to software as a service – hardware as a service is right around the corner. That’s why technology companies are becoming increasingly consumer driven, investing in things like native content to get us onboard their platform, from which we will sign onto massively online platforms to entertain and educate ourselves. The future of technology is, ironically, all too human.
I mage credit: telecomcircle.com
Greg Satell is an internationally recognized authority on Digital Strategy and Innovation. He consults and speaks in the areas of digital innovation, innovation management, digital marketing and publishing, as well as offshore web and app development. His blog is Digital Tonto and you can follow him on Twitter.
modelH – Health Model Co-Creation Forum (part 3) Posted on May 20, 2013 by Kevin Riley
What is a business model canvas? Wikipedia defines it as “a strategic management template for developing new or documenting existing business models”. It is not a business plan, but rather a visual language designed to align business activities that produce value by illustrating potential trade-offs. The idea was initially proposed by Alexander Osterwalder.
A business model canvas for the American healthcare system
Phase 1 of the modelH CoCreation Forum aims to create a business model canvas specifically for healthcare. To do so we must first agree on what defines value within the American healthcare ecosystem. Our definition of value is based on Michael Porter’s work in What is Value in Health Care? – “the patient health outcome achieved per healthcare dollar spent”. Therefore a value-based healthcare business model must result in:
1. Increased access to necessary care through an engaged delivery system; 2. Reduced aggregate cost of care, with a market-driven, balanced incentive and reward model; and 3. Improved consumer experience yielding an informed decision maker aligned to their risk and reward.
Our healthcare business model canvas, which we are calling modelH, must also work in a market-driven system. Better ideas can then be generated and evaluated using that engine because they 1) create shared value and 2) can succeed in the marketplace. Likewise, current models and trends can be evaluated through this engine to see if they are effective. The basis for modelH is Alex Osterwalder’s work on business model generation, but modified to fit the uniqueness of the American healthcare domain. Our community will participate in modifying the Osterwalder model as needed to create the modelH Healthcare Business Model Canvas.
Source: The Business Model Canvas by Alexander Osterwalder Our work on Phase 1 of for modelH will take on two distinct conversation types. The 1st conversation type will be to look at the core Building Blocks of Osterwalder’s model and debate their nuances in regards to healthcare business models. Wikipedia defines these core elements as:
Customer Segments – the customer groupings a business model serves.
Value Propositions – the collection of products and services a business offers to its customers.
Channels – the way a company brings its value proposition (product) to its customer segments.
Customer Relationships – the type of connection a company wants to create with their customer.
Key Activities – the most important tasks in the execution of a company’s value proposition.
Key Resources – the internal assets required to create value propositions for customer segments.
Key Partners – the external relationships needed so a company can focus on their Key Activities.
Costs – the most important financial concerns of a company’s business model.
Revenue – the way a company makes income from each customer segment.
The 2nd conversation type will be to define the new Building Blocks needed for healthcare and how they should be incorporated into the canvas. The additions to be discussed are:
Externalities – the external forces (regulations) imposed on healthcare business models.
Jobs-to-be-Done – the customer’s JTBDs, which may not adhere to a company’s value proposition.
Intermediaries – the influencers/intermediaries between the healthcare customer and the product.
Experiences – due to multiple intermediaries, customer experience bears a greater look.
Cost Drivers – for healthcare to exists, the cost drivers must come under control.
Payments Sources – in healthcare, customers are separated from payment sources in many cases.
Platform – the healthcare ecosystem is interdependent, requiring an infrastructure to work.
We will do this in the order of importance to a business model – starting with the Customer and ending with the Platform. The result will look something like this:
Source: The Healthcare Business Model Canvas by Kevin Riley So, step up to the plate an get involved.
Click here to join (the big red button on the side!): http://bit.ly/modelHForum
Follow us online at: https://twitter.com/ModelHForum
And you can read more about this project in my linked posts:
modelH (part 1) | modelH (part 2) |
To your health! image credit: businessmodelgeneration.com
Kevin Riley is an entrepreneur, healthcare executive, and business model innovator who works with start-ups and legacy companies alike, across the healthcare industry. Kevin founded and was CEO of a national health care retail company, has played leadership roles for national retail health start-ups, and served as the first Chief Innovation Officer of a major insurance plan. In 2006 he started Kevin Riley & Associates Health Model Innovation to help companies with the convergence of health care and the consumer.
Big Data Collides with Market Research Posted on May 19, 2013 by Brigid Kilcoin
The Top 3 Reasons Market Research Agencies Can Thrive in the Era of Big Data Lately I have found it impossible to scan my numerous RSS feeds without the
term “Big Data” staring me in the face on nearly every page. And there’s good reason for that: Big Data is big business. And it’s growing all the time. To add some scale to big data’s explosion, consider these statistics from wikibon.org:
IDC estimates that by 2020, business transactions on the Internet—both business-to-business and business-toconsumer—will reach 450 billion per day. (Source)
In 2008, Google was processing 20,000 terabytes of data (20 petabytes) a day. (Source)
Facebook stores, accesses, and analyzes 30+ petabytes of user-generated data. (Source)
Walmart handles more than 1 million customer transactions every hour, which is imported into databases estimated to contain more than 2.5 petabytes of data. (Source)
ATT’s extensive calling records contain the largest volume of data in one unique database (312 terabytes) and the second largest number of rows in a unique database (1.9 trillion). (Source)
As you can see, big data is a big opportunity. Wikibon.org also cites an IDC study forecasting the big data market is expected to grow from $3.2 billion in 2010 to $16.9 billion globally in 2015. The multi-billion dollar question is this: with players such as IBM, Accenture, SAP, and Microsoft offering both platforms and professional services, can market research agencies ultimately compete in this explosive new space? The answer is, at least for some, is a clear yes. There’s three core MR competencies that can provide a differentiated offering to prospective clients. I’ll walk you though them below:
Focusing on the why: While traditional sources for decision analytics (like transactional data) can help identify what is going on, it is only in the context of why it is happening that an enterprise can drive meaningful change within its organization. At its core, MR is all about the why; the discipline encompasses a myriad of approaches
for solving business problems. Assuming they develop competence in working with non-proprietary data sets (no small feat in and of itself), their ability to guide the collection of primary research and deliver answers can be a true competitive edge.
Identifying insights: There’s an important human dimension to synthesizing complex data and analytics and translating that into a true “Eureka!” moment. In a phenomenal piece on the
Harvard Business Review
blog, Executive Strategist Jim Stikeleather writes on big data’s human component:
“We often forget about the human component in the excitement over data tools. Consider how we talk about big data. We forget that it is not about the data; it is about our customers having a deep, engaging, insightful, meaningful conversation with us — if we only learn how to listen. So while money will be invested in software tools and hardware, let me suggest the human investment is more important.”
Sound familiar? Isn’t this the drumbeat we’ve been hearing at MR industry conferences over the past few years? Stikeleather’s post strikes right at the heart of the MR big data opportunity: using our expertise in synthesizing data to turn it into insights that inspire conversation and meaningful change among clients. It’s something critical to our craft, and one that the top firms in our field have been honing for many years.
Storytelling that brings insights to life: Beyond identifying critical knowledge, leading MR firms have increasingly focused on how insights are communicated and socialized within client organizations. It has become critical that non-researchers truly grasp the deep meaning of research. The best way to do this is to tell the story of the research in a non-technical, visually compelling way. While this is an art form in and of itself, the
engagement it creates amongst the audience is well worth the effort: there’s nothing worse than seeing clients’ eyes glaze over as they’re barraged with chart after chart. A visually compelling story backed by a deep understanding of the data’s meaning is key. As data sets get larger and the analyses become more complex, this skillset will be increasingly important. Clearly an opportunity for MR agencies that have honed their skills in this realm.
Here’s a great example of the power of storytelling: The seeds of potential success are clearly there for insights agencies to capitalize. Those that successfully transition will have access to a fantastic catalyst for future growth. However, realizing these opportunities is going to require a quantum leap that I don’t believe most MR agencies will ultimately be able to make. If the statement “we have met the enemy and he is us” was ever true, it will wind up being true here. Stay tuned. I’ll blog about this particular topic soon… Until I do, however, what do you think? Can MR agencies thrive in the era of Big Data, or is it ultimately another force for creative destruction for the traditional MR industry?
image credit: mycustomer.com
Brigid Kilcoin is a Marketing and Public Relations Specialist at Gongos Research. Her prior work experience includes: Corporate Communications Specialist at Freudenberg-NOK, Social Media Specialist at Perforce Software and Investor Relations Assistant at TriMas Corporation, and TV/New Media Editor at the Michigan Daily.
Improving Returns on your Innovation Investment Posted on May 17, 2013 by Paul Hobcraft
I highly value the studies that are undertaken by the larger consulting firms. They have the C-level access and geographical reach to give us some critical insights into the progress of innovation. Recently Arthur D Little provided their latest innovation excellence study, its 8th Global Innovation Excellence Study, into what companies can do to achieve a better return on their investment in innovation management. The report can be downloaded or viewed here and outlines in their opinion what really works in terms of managing the innovation process. They offer some good pointers and understanding of what differentiates top innovators within and across industries. It also suggests that it provides new insights into what companies can do to achieve a better return on their investment in innovation management. I think it does fall a little short on a depth to support and validate these claims in my opinion, but it does still provides sound insight. They specifically attempt to focus on understanding what differentiates top innovators from other companies in different industries. Drawing on over 650 responses, the study sheds new light on the basic key question: what innovation management techniques are most important in achieving a better return on innovation investment? The results they suggest are important for any company that wishes to stay competitive. Overall the report highlights six key insights: 1. There is strong evidence that excellence in innovation management based on Arthur D. Little’s model leads to higher innovation performance. It is such a pity they lead off with this ‘claim’ adopting their best practices helps to achieve innovation success. I would strongly argue adopting any good, coherent framework will contribute to improving performance, providing you give this the dedicated focus, resources and top management commitment. I think they have put the “cart before the horse” by leading with this. 2. Top quartile innovation performers obtain on average 13% points more profit from new products and services than average performers, and 30% shorter time-to-break-even, although the gap is narrowing.
They argue the gap in best and worst performers has narrowed in recent years and past under-performers can and do catch up and maintaining a lead in innovation performance is getting harder. I’d have liked to have this observation explained or validated some more. 3. Innovation performance achieved has decreased on average since 2010, yet satisfaction with this level of performance has nearly doubled This is the really interesting point for me. Comparing 2010 and 2012 results, they found a significant overall decrease of up to 25% in innovation performance across a range of industries and suggest this may be driven by the tough market conditions of recent years which have forced companies to focus on short term performance, as well as issues specific to certain industries. In contrast, they found that overall satisfaction with innovation performance increased significantly from 25% to 42%, although the majority of respondents are still dissatisfied. They conclude on this point that this might also reflect recognition that innovation success is getting harder to achieve. 4. There is a clear correlation between capability in innovation measurement and innovation success, yet less than 20% of companies believe they have a good innovation measurement capability. What they found as more surprising is that less than 20% of companies believe they are better than average in innovation measurement capabilities and indicates the level of dissatisfaction with their efforts to measure innovation performance. They offer the view this underlines both the inherent difficulty of effective measurement of innovation, and the significant potential for companies to improve their capabilities in this area. 5. Certain innovation management practices have a particularly strong impact on innovation performance Top innovation performers invest relatively more in radical improvements to products, services and business models, as opposed to incremental improvements. They suggest there are four basic practices but the key, for me, is the one of mobilizing the whole organization to develop new ideas. I would argue mobilization across all that innovation covers is critical, not just new ideas but ideas to commercialization. 6. Top innovators do much better in adopting best practices in accelerating growth The study found that top innovators are better at identifying unmet needs, fostering an entrepreneurial culture and leveraging existing key competencies. Another really important point for me that is often understated.
They pick up on it is the organizations ability to overcome important internal challenges such as getting top-management support, enabling fast decision-making and establishing productive cross-functional relationships that gives them innovation leadership. The conclusion of the study The study concludes with the two important insights: there is a strong correlation between adoption of new business growth practices and achieving innovation success and top innovators are more effective at dealing with internal barriers. I think the study gives encouragement that having a focused, disciplined approach to innovation does make a difference. By tackling the internal barriers successfully will change innovation performance. It is not a ground breaking study but it does offer some helpful focal points to improve organizations performance. The real disappointments that for me this report does bring out? I still feel disappointed they started off with promoting their own model as blatantly as the reference point to success. I am not a lover of equally generalizing around “best practice”. I’m of the school arguing for “emerging practice or novel practice”. I also wonder if they have not fallen into this old trap of perhaps practice leader’s self-justification for this study, hard as it might seem as a comment. This tends to be for me the older consulting practice approach of self-promotion that I believe actually constrains your perceived value to clients. Today a more detached view seems to offer greater consulting judgement even in best practice observations. I quote from www.sourceforconsulting.com in a recent article: “Consulting firms need to re-think their approach to thought leadership from scratch. Less money should be frittered away by people writing whatever they want and more invested in centrally coordinated thought leadership. Some seriously innovative thinking needs to go into developing a game-changing approach to content or publication” I would apply this observation also to this Arthur D Little study. To quote again from the above www.sourceforconsulting.com article “Research is a good example: liberally distributing the results of an expensive survey in your publications used to be a differentiator but even the smallest firms do this now; primary research has to be either very clever or very big to stand out” The report certainly contributes into our innovation understanding I think the Arthur D Little innovation practice does make a really sound contribution to innovation practices without doubt. I think they can do a whole lot more actually. I really do think translating their observations from benchmarking and best
practice observations can be significantly lifted up in being real value differentiators by extending their existing toolkit at www.adl.com/InnovationExcellence into something more dynamic as a “must go to� source but will they? There is a real leading innovation practice space to fill and this goes way beyond existing approaches made by the bigger consultancy firms or the ones exclusively focusing on innovation. A large diverse innovation practice can fill this space but it needs so much more. Will anyone step up to the plate I wonder, it needs it. image credit: innovation-futures.org
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.
Innovate Your Process Posted on May 20, 2013 by Paul Sloane
If you want to innovate with a process or a service then try focusing on this word – rearrange. Describe your current process as a series of steps. Draw them out as a block diagram. Now try moving the blocks around and see where this leads. Ray Kroc delivered a major innovation with the concept of fast food at McDonald’s. The process steps for a conventional restaurant are something like this:
1. Customer selects choice from menu 2. Waiter takes order from customer to kitchen 3. Kitchen prepares food. 4. Waiter delivers food to customer 5. Customer consumes food 6. Waiter presents bill 7. Customer pays Kroc rearranged this process. The fast food model at McDonald’s is:
1. Kitchen prepares food in advance 2. Waiter takes order and presents bill 3. Customer pays 4. Waiter delivers food to customer 5. Customer consumes food
On-line check-in for flights is another example. Previously we went to the airport and stood in line to check in for our flight. Now the order is rearranged; we check in on-line at home and then go to the airport. By getting the customer to check himself in, time is saved and the process is improved.
Every process in your business should be examined and the question asked, ‘How could we rearrange this?’ Make a list of who does what tasks when. Then play around with possibilities. What if we did this stage earlier or later or not at all? What if we got the customer to do this part and a supplier to do that part? For hundreds of years shops had the same process. The customer told the assistant what he or she wanted. The assistant fetched the goods. The customer paid for the goods and took them. Then in the 1920s Michael Cullen decided to rearrange the process. He asked, ‘Why not let the customer fetch the goods instead of the assistant.’ He created the world’s first supermarket, the King Cullen store in New Jersey. The UK retail giant Tesco faced a challenge when it entered the Korean market. All the best retail locations were taken by the incumbent market leaders. Tesco took an innovative approach and rearranged the process. They rented space on subway walls and created virtual stores showing pictures of popular items with QR codes. Commuters waiting for their train home can select and order the goods they want using the camera on their mobile phones. When they arrive home the goods are delivered. There is scope for innovation in every process; even such a well-established process as shopping. Take a good look at your processes. Apply the verb rearrange in an imaginative fashion. It might lead you to create an innovation as dramatic as fast food or the supermarket.
Paul Sloane writes, speaks and leads workshops on creativity, innovation and leadership. He is the author of The Innovative Leader and editor of A Guide to Open Innovation and Crowdsourcing, both published by Kogan-Page.
Are B2B Companies Slower Adaptors of Open Innovation? Posted on May 18, 2013 by Stefan Lindegaard
As I am about to do an open innovation session for a B2B company, I got to think about this question once again and since it works well for a good discussion, let me start out with a couple of remarks: • B2B companies are actually just as good as consumer goods companies on open innovation, but the latter are just more visible when it comes to open innovation initiatives. A reason for this could be that the products and brands of consumer goods companies are better known and thus we hear more about these companies. • B2B companies have longer development cycles and thus it takes longer for them to adapt to open innovation. • B2B companies have more engineers working on innovation relative to fast moving consumer goods companies that have a more holistic approach, which to a higher degree include other functions such as sales, marketing and supplychain in their innovation efforts. This could lead to a stronger focus on traditional, internal focus for B2B companies. Personally, I lean towards the view that many B2B companies are slower (compared to B2C) adaptors and that they have an untapped potential on open innovation. The good thing is that many B2B companies have realized the value in this potential and thus there are lots of interesting initiatives going on. We just don’t hear too much about this. Not so long ago, I also wrote a blog post on the differences and similarities on open innovation between B2B and B2C companies. Here they are:
Differences: Crowdsourcing works better for B2C companies. This is pretty obvious, as B2B companies do not interact directly with consumers and end-users. This also leads many people to believe that crowdsourcing is all you need to consider when it comes to open innovation for B2C companies. This is dangerous. The key is to being able to bring more external input into an innovation process and integrate this with internal resources. This needs to go further than input from just consumers and end-users.
B2C companies have a more open mindset. You can argue that B2C companies have a different mindset. Having to work directly with consumers and end-users seems to foster a more experimenting and open mindset when it comes to bringing out new products and services. In theory, this should make B2C companies more open when it comes to innovating how they innovate, but in reality they can get as stuck in their traditional ways of doing things as B2B companies.
Similarities: The real work happens behind the scenes. So what if B2B companies are better at crowdsourcing. The real work starts behind the scenes and this goes for both types of companies. Even though you have good access to external input, you still have to integrate this into your organization in order to bring out better innovation. This is hard work. They share many of the same issues and challenges. Corporate innovation units in both types of companies share many of the issues and challenges including: • getting executives to buy into and commit to innovation • developing an innovation strategy • building a strong innovation culture • making business units engage in innovation • improving communication with regards to the corporate innovation capabilities • merging external and internal resources to bring out better innovation • moving beyond incremental innovation and bring out more disruptive innovation The approaches to these issues and challenges are quite similar regardless of the type of company. More and more innovation happens through communities. The future innovation winners will be those that manage to bring together current and potential innovation partners (companies rather than individuals) in eco-systems and communities. The big challenge is how to make such communities work and this goes for both types of companies. Challenge-driven innovation can help both types of companies. Service providers such as NineSigma, InnoCentive and IdeaConnection focus on challenge-driven innovation in which they help companies (seekers) connect with individuals as well as other companies (solvers) in order to get their problems
solved. Such an approach can be applied within many different kinds of business functions and thus it can bring value to both types of companies. In an earlier discussion on this, Kevin McFarthing also added that B2B companies have a much smaller number of customers, each of whom buys a lot. He stated that it’s true that B2C companies go via retailers who certainly have an influence, but large customers are very important in the definition of the innovation portfolio for B2B companies. This is a valid observation by McFarthing. What is your take on this topic of open innovation for B2B companies? image credit: onesocial
Stefan Lindegaard is an author, speaker and strategic advisor who focus on the topics of open innovation, social media and intrapreneurship.
Where J.C. Penney and Ron Johnson Went Wrong Posted on May 20, 2013 by Mike Myatt
It’s not hard to lead talented people with an aligned vision who fall under the umbrella of an iconic brand that has a cult-like consumer following. This describes Ron Johnson’s role as head of Apple’s retail operation prior to assuming the CEO role at J.C. Penney.
Johnson was fired recently by JCP as his efforts to rebrand and turnaround the struggling retailer failed to get traction. In June of 2012 I predicted Johnson’s failure as I warned of cookie cutter leadership practices in a Forbes column entitled Culture: Don’t Copy – Create. While the aforementioned Forbes column offers an insight into why the turnaround failed under Johnson’s leadership, it points to a much bigger issue – another example of a board of directors tapping the wrong CEO for the job. Penney’s opted for star power, when what they should have done was hire a CEO with proven turnaround experience. Penney’s didn’t need cool – they needed someone who understood the JCP culture, the JCP consumer, and the JCP business, all of which varied radically from Johnson’s Apple experience. Penney’s board opted for a silver bullet that didn’t exist. Rather than do the hard work and heavy lifting necessary to turnaround a brand that had been mismanaged for years, they wanted a quick fix – they bought smoke and mirrors rather than sound business practice. You can’t lead with cool – cool must be earned. The label of cool comes as a result of great business decisions and outstanding leadership. While JCP was broken long before Johnson took the helm, the retailer’s performance clearly declined under his leadership. The thing is, it didn’t have to happen, and oddly enough, I blame Penney’s board and their search firm just as much as Johnson. There were a dozen candidates who would have been a better selection, but they just had a demonstrable track of turning around businesses – they weren’t considered cool. Here’s the thing – had they made the right choice, for the right reasons, everyone would be looking cool right now. Succession matters – especially CEO successions. Let me give credit where credit is due – Johnson didn’t do everything wrong, in fact, he made some long overdue changes. That said, he misfired on the big ones of culture, business model and understanding the consumer. Most importantly, he failed to produce results. A lesson for all would-be turnaround CEOs. Thoughts?
Mike Myatt, is a Top CEO Coach, author of “Leadership Matters…The CEO Survival Manual“, and Managing Director of N2Growth.
Product Thinking Posted on May 18, 2013 by Mike Shipulski
Product costs, without product thinking, drop 2% per year. With product thinking, product costs fall by 50%, and while your competitors’ profit margins drift downward, yours are too high to track by conventional methods. And your company is known for unending increases in stock price and long term investment in all the things that secure the future. The supply chain, without product thinking, improves 3% per year. With product thinking, longest lead processes are eliminated, poorest yield processes are a thing of the past, problem suppliers are gone, and your distributers associate your brand with uninterrupted supply and on time delivery. Product robustness, without product thinking, is the same year-on-year. Re-injecting long forgotten product thinking to simplify the product, product robustness jumps to unattainable levels and warranty costs plummet. And your brand is known for products that simply don’t break. Rolled throughput yield is stalled at 90%. With product thinking, the product is simplified, opportunities for defects are reduced, and throughput skyrockets due to improved RTY. And your brand is known as a good value – providing good, repeatable functionality at a good price.
Lean, without product thinking has delivered wonderful results, but the low hanging fruit is gone and lean is moving into the back office. With product thinking, the design is changed and value-added work is eliminated along with its associated non-value added work (which is about 8 times bigger); manufacturing monuments with their long changeover times are ripped out and sold to your competitors; work from two factories is consolidated into one; new work is taken on to fill the emptied factories; and profit per square foot triples. And your brand is known for best-in-class quality, unbeatable on time delivery, world class performance, and pioneering the next generation of lean. The sales argument is low price and good payment terms. With product thinking, the argument starts with product performance and ends with product reliability. The sales team is energized, and your brand is linked with solid products that just plain work. The marketing approach is stickers and new packaging. With product thinking, it’s based on competitive advantage explained in terms of head-to-head performance data and a richer feature set. And your brand stands for winning technology and killer products. Product thinking isn’t for everyone. But for those that try – your brand will thank you.
Mike Shipulski brings together people, culture, and tools to change engineering behavior. He writes daily on Twitter as @MikeShipulski and weekly on his blog Shipulski On Design.
Free, a radical story turning disruptive (1/3) Posted on May 21, 2013 by Nicolas Bry
What is radical, what is disruptive?
Greg Satell points out the definition of disruptive innovation unfolded 10 years ago by Clayton Christensen in The Innovator’s Dilemma: ‘Great firms get disrupted and fail when they got blindsided by a completely new market’. Greg notes that disruption can ‘start with a product worse from a traditional standpoint, but performing better in areas such as price or convenience: a new market would then develop, the new upstarts will serve a different kind of customer that seemed tangential, niche and less profitable to incumbent firms’. When radical innovation is about technological leapfrogging, disruption brings a new market to the landscape, explains similarly Venkatesh Rao. In other words, the CD is a radical innovation (great technology, same players shoot again, with better margins) while the MP3 is a disruptive innovation (value shift, complete recomposition of the market, incumbent players get disrupted). I have in mind 2 additional perspectives:
disruption unveils features that meet deeply ‘social
imagineries’, thus funding a solid basis for a new
tradition: that’s what managed ‘Champagne’ wine, firstly a disconcerting invention by docteur Jules Guyot, patented in 1844, and then becoming tradition and common language;
disruptive products involve high sales volumes, reducing manufacturing costs per unit for the new entrant, and leading to fast rising profits: this is precisely the iPhone business case and the Apple exponential margins.
In “four quadrants of innovation”, Hugh Carpenter goes one step more in detail, distinguishing 4 innovation types by crossing market and technological axes as shown below.
Going radical Free is a French Internet Service Provider (ISP) set-up in 1999. For Free, the defining moment to take over the French market is 2002 with the launch of the ‘Freebox’. A few hints illustrate Free’s radical move:
Freebox is a creative ADSL modem home-designed by Free: it is first presented as a radical new technology giving access to broadband network, bringing the tremendous benefits of high-speed and ‘always-on’ Internet to the subscriber: a radical change compared to former slow PSTN access. Free bundled his powerful Freebox with an agressive pricing, a monthly fee of €29,9 undercutting price competition by half.
€29,9 established a new plateau for Internet access, and is still a reference in customer’s mind 10 years later. All competitors progressively aligned with this pricing.
Following Free initiatives led to unbundling from the incumbent operator, thus reducing anxillary access cost, and promoting Triple Play offering: Tiple Play is a combination of three services, Internet, Telephony (VoIP), and Television (IPTV) in one single subscription. Free would hit the nail by keeping the same monthly fee, while empowering its product: adding Telephony (free VoIP calls) in 2003, IPTV channels in 2004, Pay Video On Demand, Personal Video Recorder, and free TV On Demand (Catch-Up TV) over the successive years, Free delivered a continuous trend of innovations.
Free’s strategy sent a clear and strong message to its subscribers: ‘Free provides you continuously with the latest features, at a constant price’.
Shall Free then be considered as a disruptive innovator? ADSL and IPTV are stunning technologies which, combined with the infinite resources of the Internet, developed new markets at fast pace: 22 millions ADSL subscribers at the end of 2012, close to the number of French households of 25 millions, and 12 millions IPTV subscribers. Though Free did contribute largely to shape this market, Free did not disrupt the historical firm, incumbent operator France Telecom. It was indeed not the only player to surf the ADSL wave, and trigger IPTV usage. Multiple ISPs gave it a try: at peak time, 10 ISPs were commercializing Triple Play on the French market! Some players managed to follow quickly every innovative step accomplished by Free, and became nimble ‘Fast Followers’. Fierce competition ended in market consolidation: Free performed a brilliant market share, more recently with top position in acquisition in 2012, but France Telecom, now rebranded Orange, still holds a lead position. French ADSL market 2012/12/31 : Orange : 9 893 000 subscribers, 44.61% market share Free : 5 364 000 subscribers, 24.19% market share SFR : 5 075 000 subscribers, 22.88% market share Bouygues : 1 846 000 subscribers, 8.32% market share
During this period, Free built a strong brand image as innovator, always on edge of most recent technology, and gained to be considered as ‘the best provider for Geek communities’. The offset was unfortunately a perception of ‘Do It Yourself’ service, along with a long-lasting criticized customer care. The common word was: ‘If your Freebox installation works, it’s the best; but if it doesn’t, it can be a real nightmare’. It was all the more upsetting to deal with the customer service that hot-line used to be at premium rate at that time.
The missed rendez-vous of the ‘Smart TV’ ? Free kept on going on his innovative path, delivering the first Internet-enabled box in 2010, the ‘Freebox Revolution’, turning your TV into a ‘Smart TV’.
‘Freebox Revolution’ is a groundbreaking box providing an impressive range of services on your TV, complementing advanced IPTV services with Internet games and TV apps, a Blu-ray player, a Mediaplayer service connected to home devices, and an Internet Web Browser. It works both with ADSL and fiber networks, going one step further toward lighting speed connections. A noteworthy focus was made on aesthetic, resulting in a slick UI (User Interface), elegant form-factor, and a futuristic remote-control designed by Starck with gyroscop and accelerometer features, facilitating web browsing and gaming.
Yet, to my opinion, a Freebox is still more perceived as a technical commodity than a personal emotional device such as the iPhone or iPad are: those create a special connection with the user, and furthermore with the Apple brand. A slight twitch is missing to turn ‘Freebox Revolution’ into THE box.
Maybe it relies to some extent to the fact that Internet and broadcast TV are handled as 2 distinct worlds in the Freebox experience: there is no sign of blending TV viewing with related content coming the Internet, nor is there aggregation between TV programmes and Internet videos. As Daniel Danker, General Manager Programmes & On Demand at the BBC, puts it: ”Today TV and Internet are completely separate worlds in the Smart TV user experience, and I don’t think that is good enough. It would make more sense if Live TV and Internet TV were brought together’.
‘Freebox Revolution’ did not capture the primary social essence of TV. As a matter of fact, Social and enhanced TV experience through the Internet would emerge shortly after, through the phenomena of ‘ Social
TV and
Second Screen‘: these servives display social conversations, extra content, and offering various interactions synchronized with the TV show, through Smart Phones and Tablets.
Having said that, no one has still cracked the code to design a ‘Smart TV’ and make it an unforgettable experience!
No doubt either that it’s not easy to bring people to see an ADSL box as statutory as their Smart Phone or Tablet, or in the next future, their Internet-enabled Watches and Glasses: it lacks a consumer-facing interface. A broadband box is often shelved below the TV set, gets dusty and forgotten, and is not exactly something you show spontaneously to your friends, proudly saying: ‘Hey, have a look at my box!’. Will it be one day? Don’t miss our next episode on the Free story. Next: Free, Tackling Disruption image credits: www.niemanlab.org, innovation excellence, huffingtonpost.fr, www.mac4ever.com, www.trendsnow.net, www.universfreebox.com
Nicolas is a senior VP at Orange Innovation Group. Serial innovator, he set-up creative BU with an international challenge, and a focus on new TV experiences. Forward thinker, he completed a thesis on “Rapid Innovation”, implemented successfully at Orange, and further developed at nbry.wordpress.com. He tweets @nicobry
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