November 9, 2012
Issue 6 – November 9, 2012
1.
Push or Pull Marketing for Innovations? ………………………....………….. Braden Kelley
2.
Innovation Regeneration …………...……………….……………...……….…. Rowan Gibson
3.
Open Services Innovation ……………………………………..…..……… Henry Chesbrough
4.
10 Good Reasons Not to Trust Your Brain …………….…..……………..…. Holly G Green
5.
6 Ps of Radical Innovation for Large Companies - Potential .………… Kevin McFarthing
6.
Yes, but what about leadership? ………………………………………………. Josie Gibson
7.
What is Your Why? …..…….….................................................................…. Jeffrey Phillips
8.
The Awesome Power of Knowledge Networks ………...…………...…….. Zulma Acevedo
9.
Why You Need to Be Vulnerable to Innovate ………………….…………..….. Tim Kastelle
10.
1st Innovation Principle Non-Innovators Must Embrace …………………..… Jorge Barba
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: beautiful fairy from Bigstock
Push or Pull Marketing for Innovations? Posted on November 6, 2012 by Braden Kelley
Innovation is all about value, and both internal communications and external marketing have a critical role to play in determining whether an invention has any chance of becoming an innovation. When it comes to both the Value Access and Value Translation components of innovation, in most organizations the marketing department holds the keys to success. But, unless the team does a good job of evangelizing the idea and resulting solution internally first, even the most promising innovation may never see the light of day.
Value Access is all about how easy you make it for customers and consumers to access the value you’ve created with a potential innovation, and could also be thought of as friction reduction. How well has the product or service been designed to allow people to access the value easily? How easy is it for the solution to be created? How easy is it for people to do business with you?
Value Translation is all about helping people understand the value you’ve created with a potential innovation and how it fits into their lives. Value Translation is also about understanding where on a continuum between the need for explanation and education that your solution falls. Incremental innovations can usually just be explained to people because they anchor to something they already understand, but radical or disruptive innovations inevitably require some level of education (often far in advance of the launch).
Design, operations, sales, and marketing all have roles to play in successful Value Access, while Value Translation usually falls primarily to sales and marketing, but with roles to play for all employees, suppliers, and partners to serve as innovation evangelists. To successfully educate or explain to the customer the potential value of your innovation, marketing has two main tools to help achieve their mission – “push” marketing and “pull” marketing.
Just what are “push” and “pull” marketing?
Describing push marketing is easy (or at least it should be). Push marketing is the traditional marketing and advertising seen everywhere. Push marketing starts with the product or service, identifies the features or benefits that potential customers will find most compelling, and then utilizes targeting and segmentation to “push” carefully crafted marketing messages out via a variety of advertising, sales, and social media channels to the most likely potential customers.
But, stray into the pull marketing universe and prepare to be inundated by a plethora of widely divergent definitions. Some people would define pull marketing as similar to push, but instead of marketing to potential customers, potential decision makers or consumers (or even influencers) are targeted so that hopefully they will pull customers to the business. Still other people talk about technology push versus market pull in the context of determining which products get developed and sold (or should be developed and sold). Making it even more confusing, some people call the direct advertising to consumers of prescription medications like Viagra a pull marketing strategy. So just what is a pull marketing strategy then anyways? Who’s right?
I would argue that none of them are correct. While the communications produced might to talk to different groups of people than traditional marketing or in a slightly different way, they all are still, at their core, push marketing strategies. Pull marketing is something else entirely (and should be in order to maximize your investment in marketing). While push marketing focuses on the most likely potential customers, pull marketing should be focused on a totally different group of people – non-customers who are not yet ready to become customers at this time.
An effective pull marketing strategy begins with extensive research into what makes a person evolve from someone who is disinterested and unaware of a solution area, to seeing how it might fit into their personal or professional lives and make it better. This usually involves the creation of content that will raise awareness, interest, inspiration, and understanding of the whole solution area, and the need for it, not just the features and benefits of one company’s particular product or service. Pull marketing strategies are very uncomfortable for most marketers, and as a result most companies have no pull to balance their push.
So which is better for an organization – push marketing or pull marketing?
Any organization that is interested in sustained revenue and profitability growth over time should invest in both, but most companies are seduced by the immediate payback of push marketing and pursue only push marketing strategies. Meanwhile, pull marketing helps grow new potential customers (or accelerates their purchase readiness timeline), so it is equally important in the long run. Smart companies, organizations that intend to succeed in the long run, need to invest in both push and pull marketing strategies in order to keep their sales pipeline full both for now AND for the future. And if your company is focused on innovation, then the more disruptive that you try to be, the more important that having a pull component to your marketing strategy will become. Push or pull? The answer lies in… the balance.
And what about for marketing an innovation – push or pull?
The more disruptive an innovation is likely to be, the more important it will be for you to craft and execute an effective pull marketing strategy. The main reason is that in every situation, despite the popular belief among inventors, a customer already has a solution. It may be the “do nothing” solution, but they have a solution.
Therefore, proposing a big departure from their existing solution will be seen as very uncomfortable by the recipients of your message, even the most likely customers. Also, the most likely customers in your mind may not end up being those customers that are most likely to be the first to adopt your innovation. The reason is that it may not be immediately obvious how your solution (or even your solution category) fits into their lives, or even that your solution is actually better than their existing solution. So, you may have to a fair amount of education (pull) to do first, before you even begin talking about the merits of your particular solution (push).
At a deeper level, it will also be crucial for you to build awareness, interest, and desire for several key technical (and potentially safety) aspects of the solution, and possibly for the entire solution category, not just helping people how your particular solution might fit into their lives. Pull marketing is incredibly important for innovations because of the fact that for great inventions destined to be great innovations there are often few ready customers early on to orient push marketing towards, so instead the focus should be on using effective pull marketing at the beginning to grow the numbers of future potential customers, and to learn as you go what some of the successful elements of your pull marketing are that you might want to reinforce or utilize in your push marketing later on.
So, are you ready to begin pulling customers to your potential innovation, or are you intent on trying to push it on those people you HOPE will become your customers?
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Braden Kelley is a popular innovation speaker, embeds innovation across the organization with innovation training, and builds B2B pull marketing strategies that drive increased revenue, visibility and inbound sales leads. He is currently advising an early-stage fashion startup making jewelry for your hair and is the author of Stoking Your Innovation Bonfire from John Wiley & Sons. He tweets from @innovate.
Innovation Regeneration Posted on November 3, 2012 by Rowan Gibson
In biology, there’s an old saying: “Growth is the only evidence of life”. A lot of investors on Wall Street seem to echo these words when they evaluate today’s corporations – and business leaders are getting the message. At GE, for example, CEO Jeff Immelt is on the hook to deliver an incredible 8% of organic growth each year. This represents around $15 billion of new revenue – equivalent to the combined annual revenue of America’s entire bookstore industry, or fitness industry, or music production and distribution industry! No wonder “Driving Growth” has become today’s dominant management mantra, not just at GE but at companies all over the world.
Yet if we go back to biology for a moment, we realize that there is more subtlety to organic growth than we may have previously imagined. In fact, we find out that life actually requires two very different kinds of growth.
The first kind of growth is about cell multiplication and organization – it’s about increasing the size and strength of the organism until it reaches physical maturity. In the case of human beings, it’s the process that starts with a single cell and finally produces the estimated tens of trillions of cells that make up our adult bodies.
The second kind of growth, however, is not about size; it’s about longevity. It’s the process of self-renewal by which our body cells are continually replaced or repaired, as the need may be. If this process – of growing new cells to replace those that deteriorating – could somehow be sustained, human beings could theoretically live forever.
The biology of business is not dissimilar; companies need both kinds of growth as they progress through their life cycle. In the early years, most companies are primarily concerned with scaling up their organizations as rapidly as possible, with a pressing need for systems or processes to help them manage their ever-expanding business. Eventually, though, this kind of growth tends to flatten out and the company reaches a level of maturity in terms of its size and strength, just like humans and other biological organisms do. As my colleague Gary Hamel likes to put it, “Trees don’t grow to the sky”.
Again, consider GE. In the last five years of Jack Welch’s tenure, which ended in the year 2000, GE’s market value grew from around $50 billion to somewhere between $350 and $400 billion. But to do that again over the next five years, GE’s market value would have had to go from $450 billion to $3 trillion! Extrapolating from the year 2000, this meant that by 2005 GE would have to represent 20% of the entire New York stock exchange! The chances of that happening were very remote. Here’s the point: it’s simply a lot easier to grow by 100% a year when you are a $10 million firm or even a
$100 million firm than when you a $50 billion firm. Because to achieve that kind of growth rate at that kind of size, you would practically have to recreate half of the economy every year.
Of course, expanding the business remains crucial even when a company’s growth-rate has naturally flattened out, but at some point increasing the scale of the organization is no longer the main issue (in fact, it may even need to get smaller to become more profitable). That’s when the emphasis shifts to a different kind of growth – the need to grow new sources of profit to replace those that may be losing their economic value. These might be new product ideas, new services, new strategies, new markets, new customers, new business opportunities, or new competencies – whatever it takes to offset the long-term irreversible decline in the economic efficiency of the company’s core business model.
This is the challenge that currently faces companies like McDonald’s or Coca-Cola or Microsoft or Dell. It’s the task that bedevils Hollywood as it watches box office figures shrink and DVD sales stalling in a world of digital downloads. It’s the hurdle for big pharmaceutical firms as they confront declining R&D yields, escalating price pressure, and the growing threat from generic drugs. It’s the big headache for traditional airlines as they compete with industry revolutionaries like Southwest, JetBlue, Ryanair, Easyjet or AirAsia. For all of these businesses, and many more, success now hinges not on size but on the capacity for strategic renewal.
Like human beings, organizations start to grow old and die when they lose the power to renew themselves. That’s why it’s crucial to build a deep capacity for self-renewal – the capacity to replace the old and decaying with the fresh and new on a perpetual basis. The goal is to be “forever young”. And the fountain of youth – the only real source of renewal on the longer term – is deep, strategic innovation. It’s not going to come from anywhere else.
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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.
Open Services Innovation Posted on November 4, 2012 by Henry Chesbrough
Innovation has always been a challenging and risky business. These days, it is getting harder and harder for many companies to compete, escaping the forces of commoditization, as manufacturing spreads around the world to lower-cost regions. With the increasing flow of knowledge and information, largely spurred by the proliferation of the Internet and enabled by technology, product life span is shortening.
As new products come to market with increasing frequency and take valuable market share, more and more companies are finding it increasingly challenging to keep up and compete. Product life span is further shortened by customers’ increasing demands for products and services customized or tailored to fulfill their needs better. The combination of these undeniable forces creates a commodity trap, an often perilous phenomenon that pulls at even the most innovative and successful companies.
Many companies and industries are beginning or trying to make a shift as our advanced economies increasingly are oriented around services. Products are becoming a smaller and smaller share of the economic pie, yet we know much less about how to innovate in services than how to develop new products and technologies.
Innovating in services is the escape route from the commodity trap and a solution for growth, giving firms a significant competitive advantage. As they innovate into the future, companies must think beyond their products and move outside their own four walls to innovate. Do not think that service businesses are not immune from stagnation. Like commodity businesses, they too have to raise their game, but they do so in different ways, often by working effectively with products to create platforms. This requires a different mind-set and a different stance toward business, customers, business models, and the ability and willingness to open up the innovation process.
Let’s take a look at how GE Aviation transformed their business model in a way that converted their business from one that makes products to one that delivers services.
Case Study: GE Aviation
GE is a world leader in manufacturing aircraft engines. Such engines are not cheap: each costs $20 or 30 million or more. However, the market for new engines is competitive (Rolls Royce and Pratt and Whitney are strong competitors), and aircraft manufacturers are highly concentrated (Boeing and Airbus are the dominant customers). So it is hard for GE to make much money selling its engines. Instead, it looks to maintenance, spare parts, and financing as ways to make money from its engines once they are sold. This heavy industry manufacturer therefore makes most of its money from services, not the product. The product increasingly is just its way of acquiring customers to receive these services. As aircraft engine sales have leveled or fallen off, services have become an increasingly important part of GE Aviation’s 2008 sales (25 percent of revenues) and profits (50 percent of profits).
GE has transformed its business model for its aircraft engines. In the past, each engine sale involved tens of millions of dollars, with a long sales cycle, lots of negotiations, and high-stakes bargaining. Yet most of the profit for GE from the engine comes not from its initial purchase, but rather from the services provided over the estimated thirty-year useful life of the engine.
This insight about the long tail of after-sale use prompted a shift in GE’s business model for its engines. GE’s new model is ‘‘Power by the Hour,’’ selling its engines much as a utility company might sell power to a residence or commercial enterprise. GE will sell its engines for some thousands of dollars per operating hour, and the customer pays only when the plane is flying. Again, a large fixed cost for the customer is transformed into a variable cost instead.
This new model has an important second effect: better-aligned incentives. Both GE and its customers want to minimize the amount of downtime for unscheduled maintenance. Customers make no money from planes that are grounded for repairs, and under this new business model, GE doesn’t make any money either. In fact, GE maintains a group of specialists who will fly anywhere in the world within twenty four hours to repair a GE engine while it is still mounted on the wing of the plane (versus taking the engine off for repairs, which requires a tricky and timeconsuming reinstallation process). They want to get that plane back in the air as quickly as possible, the same goal that GE’s customers have.
These aligned incentives also stimulate GE to learn more about how to reduce unscheduled maintenance of its engines. Lessons that GE learns from servicing one engine are quickly shared with other GE technicians and engineers in order to prevent grounding another aircraft with that same engine for unscheduled maintenance, or to reduce the time needed for such maintenance to a minimum if the issue cannot wait until the next scheduled engine servicing. Across its fleet of engines, GE can develop sophisticated algorithms for predicting likely sources of future engine failure and the optimal time to service the engine to prevent such failures. The more data and experience GE accumulates, the better these algorithms become, and the more effective GE will become in delivering these services. Only a company with lots of data to work with can hope to do this well. This is a less appreciated knowledge-based economy of scale for GE.
GE also benefits from a third effect, one that reduces competition in the aftermarket for its spare parts and repair services. Most of the profit in an aircraft engine is derived from its thirty-year service life, but GE does not have this market to itself. A cottage industry of other companies that remanufacture GE parts and provide repair services has arisen around GE’s engines. Many of the people who provide these services used to work as service technicians for GE, so they have been expertly trained on GE’s engines.
The Power by the Hour business model is an important answer to this challenge. Third-party service companies cannot take on the responsibility to keep the planes flying the way GE can. Changing the pricing model for GE engines to this utility business model drives the repair business for GE’s engines right back to GE itself. Of course, the customer could instead choose to buy the engine upfront for tens of millions of dollars and then find a third-party service organization that can maintain and repair the engine for less than GE would charge, but such an investment would pay back only in the very long term. And GE’s fleet of technicians available around the clock on demand, along with the rapid knowledge transfer that arises from servicing the fleet of GE engines in service around the world, provides important knowledge advantages that third parties cannot obtain. In the long run, GE is likely to be able to reduce unscheduled maintenance of its engines to levels far below what third party servicers could provide. Many GE customers therefore have opted for the variable-cost option of Power by the Hour instead.
As services have grown in importance to its business, GE has become more focused on organizing to exploit them. In 2005, GE created its OnPoint brand for all of its aviation services offerings. This allows the company to work with its customers across the range of services available and provide one-stop-shopping. GE thus realizes economies of scope through this process.
Conclusion
More and more companies are discovering that by focusing on service offerings, they can get a better sense of the utility customers want from a product. This is a key point for two reasons: First, it helps companies provide real value to customers – which may prevent them from switching to lower-cost competitors – and second, the knowledge gained about a customer’s challenges will provide insight that an organization’s competitors may not even know. It is time to transcend the limits of product-focused innovation and move to a way of thinking that can lead to increased margins for companies and add more jobs to our economy.
Notes:
1. ‘‘GE’s Focus on Services Faces Test,’’ Wall Street Journal, Mar, 3, 2009, p. B1 2. See C. Anderson, The Long Tail (New York: Hyperion, 2006). Anderson points out that the long tail phenomenon is not limited to the Internet; it can apply to other businesses where the Internet is at most a minor part of the value chain. 3. This business model is not unique to GE, just as Xerox’s managed print services model is not exclusive to Xerox. An interesting account of Rolls Royce’s experience with a similar model can be found in ‘‘Britain’s Lonely Flier,’’ Economist, Jan. 10, 2009, pp. 60–62. However, both GE and Xerox have executed this model well to date.
Dr. Henry Chesbrough is a professor and the Executive Director, Center for Open Innovation at the Haas School of Business. Adapted with the permission of the publisher from Open Services Innovation: Rethinking Your Business to Grow and Compete in a New Era, Introduction and Chapter Six, by Henry Chesbrough. Copyright (c) 2011 by Jossey-Bass, A Wiley Imprint. All rights reserved.
10 Good Reasons Not to Trust Your Brain Posted on November 5, 2012 by Holly G Green
The human brain is a marvelous tool. However, it was designed for a very different world than we currently live in. As a result, it retains many design flaws that do not serve us well, especially in today’s business world where new ways of thinking and ongoing innovation are essential for success.
Perhaps the most damaging flaw is the brain’s tendency to think it’s right. In fact, it often insists it is right even in the face of contradictory evidence. So the next time you’re absolutely, positively sure you’re right, consider these 10 reasons not to trust your brain:
1. It jumps to conclusions. The brain loves to solve problems. But as soon as a solution presents itself, the brain wants to accept it as the solution. Case closed – let’s move on to the next problem! No seeking alternative answers; no exploring possibilities. Not a good approach considering most business problems have more than one good solution and the act of exploring multiple right answers often opens doors to all sorts of success.
2. It sees what it wants to see. The brain acts as a filter, constantly screening in and screening out information. Unfortunately, it tends to screen out information that contradicts our prevailing view of the world and let in that which supports it. Ever been jilted by a romantic partner and wondered why you were the last to know? Ever been sure you had the right data and looked at the information again to find you were way off? The signs were usually there all along. Your brain just didn’t want to see them.
3. It distorts incoming information. The brain also twists and distorts incoming information so that it aligns with our attitudes, beliefs, and assumptions. If you don’t believe this, try watching Fox News or MSNBC. They make a living out of taking the same information and twisting it to suit their own agendas. Our brains do the same thing; they just don’t get to do it on national TV most days.
4. It ignores the obvious (and then tries to justify it). We know that drunk driving is dangerous, and texting behind the wheel is even worse. Yet we do them anyway. Why? Because our brain tells us we won’t get caught. Or, it assures us we won’t get in an accident. Or, we really are that important that we have to respond immediately and ignore the safety of ourselves and others. After all, it always happens to someone else, right?
5. It’s not designed for multitasking. In today’s time-deprived, hyper-paced world, our brain wants to convince us of the virtues of multitasking. Yet, research shows again and again that multitasking increases stress, inhibits creativity, and makes us less efficient. Pause and think about that the next time you try to do five things at once!
6. It constantly makes stuff up. In the absence of information, we make stuff up. We do it all the time, and then we believe it to be true! Our brain won’t live with a void so it fills in the blanks. Most of what we make up is negative, and usually worse than the truth. Just listen to your internal dialog the next time the boss calls you into her office and you don’t know what for.
7. It seeks to avoid threats rather than pursue opportunities. Coming up with new ideas and new ways of doing things requires going out on a limb. However, in most cases the brain will choose avoidance of pain over the pleasure of some future reward. Not a good way to support innovation, which includes a certain amount of pain (failure) in order to succeed.
8. It wants to stick with the known. When stressed, the brain seeks comfort in what it is familiar with – even when it becomes obvious that the old way is no longer working. That’s why people stay in bad jobs or bad relationships. That’s why leaders hang on to projects that are clearly losing money and sucking up resources that could be better applied elsewhere. Our brains like what is familiar, not necessarily what is the best for us.
9. It thinks everyone else sees the world the same way. Logically, we know this isn’t true. But when presenting a new idea or a solution to a problem, how often do we unconsciously assume that everyone in the room sees it the same way? Then we wonder why people look at us like we’re from another planet.
10. It has too much confidence in its own abilities. Research shows that experts are only slightly more accurate than non-experts when making predictions in their fields. Moreover, when confronted with their errors, the experts almost never blamed their thinking or changed their beliefs. Instead, most attributed their mistakes to outside factors beyond their control. The next time your brain insists you’re right because “we’ve always done it that way,” you might want to step back and look at the situation from a different perspective.
Albert Einstein once said, “Two things are infinite, the universe and human stupidity, and I’m not sure about the universe.” I don’t think we’re stupid. But I do believe we get hoodwinked by our own brains because we don’t check in with them to see what’s really going on.
Call to action: Pick one of these brain flaws and start to notice when it occurs. How does it impact your decision-making?
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Holly is the CEO of THE HUMAN FACTOR, Inc. (www.TheHumanFactor.biz) and is a highly sought after and acclaimed speaker, business consultant, and author. Her unique approach to creating strategic agility, helping others go slow to go fast, will change your thinking.
6Ps of Radical Innovation for Large Companies – #2 Potential Posted on November 5, 2012 by Kevin McFarthing
How do large companies pursue radical innovation? You know, the kind of new product that changes or creates a market. In my first blog I summarized the 6Ps, a template that I believe could help to increase the output of game-changing innovation. This was followed by the first “P”, PERSPECTIVE. The second “P” is POTENTIAL.
Large companies rarely need lessons in understanding markets; they know all about factors such as size, demographics, trends, behaviours and competition. They are also very good at future scenario planning. However this may not provide the appropriate context from which to estimate the potential of radical innovation. By definition, radical innovation significantly changes behaviour in a way that is difficult to predict from linear trend analysis.
These companies also have a very rational approach to the assessment of investment opportunities. Of course, they find that the expenditure line has a much higher level of confidence than either the timeline or the scale of revenue. For that reason large companies want to increase the level of confidence in the income stream. Various techniques are used; for example, many consumer goods companies will undertake a fairly standard sequential program of qualitative and quantitative market research. This will relate to a database of similar products launched in the past. So, as long as you do the market research correctly, you can reduce your uncertainty and proceed.
But, as I pointed out in a recent blog, if an opportunity can be valued in the way described above, you are probably dealing with tangible facts and an opportunity that is pretty close to what you already have. If there’s a comparative database of similar products, then you’re highly unlikely to be dealing with radical innovation.
Small entrepreneurial companies are much less able – or inclined – to do the forecasting work that large companies do so well. They make up for it with belief in the future presence of a viable market and speed getting there. The issue is not necessarily forecasting the rise or decline of markets. It’s more about taking the market information, then using judgment and as much iterative data as possible to make decisions – fast.
In assessing the future, nothing is absolutely objectively factual and devoid of subjective judgment. I would view this as a continuum, shown below.
Simplistically, large companies need to become more comfortable moving further to the left hand side of the spectrum. Radical innovation needs a higher proportion of judgment, and an iterative approach to development and further assessment of the opportunity. Often programs will start with a “fuzzy” view of the market potential. Iterations in prototypes and market tests, and a mix of novel and conventional consumer research, will build greater confidence as the project moves along. The objective should be gradually but as swiftly as possible, to progress towards the right hand side.
It’s essential to modify the approach to market research. The “cookie cutter” approach that works so well with incremental innovation is unlikely to be appropriate to the early stages of radical innovation. If the market research agency can’t adapt, then find one with a more flexible and creative mindset.
The difference with radical innovation is that you will need to press the “GO” button with fewer facts than when dealing with incremental innovation in existing product and behaviour areas. Innovation deals with parameters of specification (what you want to achieve), cost and time. If you’re too late, it doesn’t matter about the other two parameters, so increasingly speed is becoming the most important one. If you spend too much time trying to get more facts, you run the danger of diminishing potential simply because you become late.
Assessing the potential of radical innovation will of course be subject to the specific characteristics of the industry, market, product range and consumer behavior. Even though determining the potential of radical innovation in financial services or cleaning products will be different, I would argue that the principles are the same. They are;
- Rely much more on judgment to move projects ahead rapidly;
- Don’t apply the same criteria to incremental and radical innovation;
- Use a fast and iterative sequence of prototyping and market testing to learn and reduce uncertainty;
- Go to market as soon as you can, don’t wait for all the facts.
Assessing potential in this way can increase the chances of large companies delivering radical innovation. In the next blog I’ll discuss how prototypes can be used to iterate radical innovation and bring it to life.
image credit: shbc
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Kevin McFarthing runs the Innovation Fixer consultancy, helping companies to improve the output and efficiency of their innovation, and to implement Open Innovation. He spent 17 years with Reckitt Benckiser in innovation leadership positions, and also has experience in life sciences.
Yes, but what about leadership? Posted on November 7, 2012 by Josie Gibson
Booz & Co’s latest global innovation study, ‘Making Ideas Work’, makes interesting reading – as much for what it doesn’t say as what it does.
Once again Apple was named the world’s most innovative company, by a bigger majority of respondents than last year.
Once again technology, healthcare, and auto companies dominate the research and development funding ranks, with Booz re-emphasising the lack of a long-term correlation between how much a company spends on innovation and its overall financial performance. “What matters is how companies use that money and other resources, as well as the quality of their talent, processes and decision-making,” Booz says. “Those are the things that determine their ability to execute their innovation agendas.”
This year Booz researchers decided to dig down into process, unpicking how successful organisations have made innovation a part of everyday business. They looked at idea generation and idea conversion and found, unsurprisingly, that alignment and discipline count. “The most successful innovators in all industries have developed a variety of consistent, manageable ideation practices that are well aligned with their innovation strategies,” their report says. “And when moving ideas into the development stage, they tend to depend on an equally consistent set of principles and process.”
The problem is, Booz’s own research indicates a higher-order problem – that many companies still struggle to achieve a coherent innovation strategy. Its 2010-11 survey findings, ‘Why Culture is Key‘, revealed a lack of strategic thinking and poor alignment between many top companies’ innovation ambitions and business strategy, culture and processes. In this year’s report, the Booz researchers reiterated key questions highlighted in that earlier work. “Is (the innovation strategy) tightly aligned with their overall business strategy? Have they put in place the capabilities needed to support that strategy? Do they have the right corporate culture needed to make that strategy work?”
It follows that companies that align all aspects of the innovation process and execute well have a distinct advantage. How, though, to achieve such alignment?
Booz’s findings on process and decision-making are robust and highly relevant. Its three innovation models – Need Seekers, Market Readers and Technology Drivers – make sense.
Leadership, while perhaps implied, isn’t mentioned at all, yet it is widely acknowledged as crucial to innovation’s success.
Recent McKinsey research reaffirmed that while structures and processes matter, leadership and alignment are paramount. “While 86 percent (of respondents) say that the structure of their separate functions positively influences outcomes,” McKinsey says, “the results suggest that the most important factors for success are the extent to which innovation is integrated into corporate strategy and to which company leaders support and engage with innovation efforts.”
Leaders set up the cultures that cause innovation initiatives to flourish or fail. The researchers behind the eight-year Harvard Business School project that produced The Innovator’s DNA reaffirmed that basic message in July. The world’s most innovative companies, they say, are led by people who daily model the mindsets and behaviours they want to see in the rest of the organisation.
“What does the average company need to achieve in these areas to spark an innovation premium?” the researchers ask. “Fundamental change within senior managers (some mastery of the five discovery skills); changes in how their innovation project teams work (processes that support innovation); and changes in philosophies that foster the belief that innovation really is everyone’s job.”
According to Nike’s global CEO, Mark Parker, challenging the organisational status quo is a leadership role. “It’s natural for people to be comfortable the way things are,” he says. “My job, our job, is to not close the mind.”
Anointed ‘the world’s most creative CEO’ by Fast Company, Parker offers a refreshing view of a culture comfortable with a volatile operating environment. “Our management hasn’t come from studying and reading business books,” he says. “It’s more intuitive, from the culture of sports. We’re constantly looking for ways to improve. How do you adapt to your environment and really focus on your potential? To really go after that, you have to embrace the reality that it’s not going to slow down. And you have to look at that as half-full, not half-empty.”
image credit: cleanbizasia.com
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A former journalist and strategic communication specialist, Josie Gibson set up a CFO network, among other things, and now works with companies on creativity and innovation initiatives. www.pourquoi.com.au
What Is Your Why? Posted on November 3, 2012 by Jeffrey Phillips
We corporate drones are actually pretty lucky. Many of us get to work sitting down, in the shade, for eight to nine hours a day. Compared to the work I used to do on the farm, my life is gravy. And so it goes for many people in the developed world. In fact, our work is so far removed from “work” – that is, the expenditure of blood or sweat, that we are fortunate.
In a cruel twist of fate, however, it’s becoming clear that many people aren’t excited or engaged in their work. Many corporate drones go to work for living and then participate in all kinds of interesting, engaging activities where their passions lie outside of work. Isn’t it ironic that at the peak of the knowledge work shift, many people have little engagement or participation in their work?
There are several reasons for this, I think:
First is the issue of compensation. Truth be told, if I could earn a 1% salary teaching high school kids history, I think that’s what I would do. I love history, and minored in it, but never pursued it because I didn’t think it would support the lifestyle I wanted. Likewise I know many accountants who can’t stand accounting, but do it because the money is good. Many of us pursue jobs or careers that aren’t in line with our passions – so how can we be fully passionate or engaged at work?
The second is the issue of control. The more structured an organization becomes, the more predictable it seeks to be, the more defined and constrained the roles and the work have to become. Most major corporations can’t afford significant failures or risks, and the processes that sustain those firms frown on even small deviations or changes, so jobs and roles are narrowly defined. People have little freedom to experiment or try new things. They repeat the same work over and over, and rarely expect to dramatically change their job, their organization or the products or services they create. Control reduces engagement and enthusiasm.
The third issue is one of focus or vision. Ask 100 people in any corporation why their organization exists, and 95 will say to make money or earn profits. Perhaps a handful will say their organization’s strategy is to create the best widget, or solve a key challenge mankind faces. Simon Sinek, in his book Start with Why, focuses on this. It is hard to be fully engaged or passionate when you are unclear about corporate goals or strategies, or if you simply don’t care about the goals or strategies.
Maslow’s employment hierarchy:
Time was, simply finding enough food was all that mankind cared about. Then shelter, clothes, food and eventually self-actualization. Maslow defined that for us. But it turns out there is a work related Maslow’s hierarchy as well. Time was that simply earning a paycheck that kept your head above financial calamity was enough. Now though, as many of us make more than we need, and we are removed from “work” work, we
need more. We need to know our work matters. We want to make big change. We want to work on things that we are “passionate” about. We want workers who are “engaged”. Yet we define jobs narrowly, restrict failures and experiments, and display a marked inability to communicate strategic vision.
No wonder so many people are frustrated, and no wonder innovation can seem so difficult. We have a significant body of staff and middle managers who are not challenged and not engaged in their work, trapped in narrow cells of management structure who are yearning to break free and do things that add meaning and value. These people want to be deeply engaged, and find their engagement away from work rather than at work. It’s not just your best assets that leave every night – it’s also your best hopes, dreams and aspirations, which get spent on other things.
The “why” a business exists matters. It tells customers what we believe and stand for. It tells employees what we believe and why we matter. It aligns corporate culture and decision making. Without the “why”, things become about outcomes. Yes, commercial entities should drive profits, hopefully outsized, incredible profits. But if they do, those profits will be based to some great extent, on your “why” and what you believe, and what that says to your customers and prospects.
If this sounds hard, it is and it isn’t. Creating a why is easy. Being willing to stick with it is the hard part. And so far, the discussion has just been about a general “why”. Imagine the difficulty of innovating without a “why” – without a shared purpose or focus. Now you know another reason innovation seems so tentative, occasional and ad-hoc. If regular, everyday business seems difficult in the absence of a “why”, innovation is only moreso.
It’s ironic, really. The more removed from real work we become, the more the work matters. Most knowledge workers I know get great satisfaction from mowing their own lawns. Mostly because they control the beginning, middle and end of the work, and can see the results immediately. What we do is becoming less important – why we do it is becoming more important. Executives need to understand that the “why” isn’t the icing on the cake, it is the whole cake. And innovators, take note. Working in the absence of the “why” is tough in regular, every day business, and many of you know how difficult any change is, or introducing new concepts. Trying to do innovation in the absence of the why is even more difficult.
image credit: caught one image from bigstock
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Jeffrey Phillips is a senior leader at OVO Innovation. OVO works with large distributed organizations to build innovation teams, processes and capabilities. Jeffrey is the author of “Make us more Innovative”, and innovateonpurpose.blogspot.com.
The Awesome Power of Knowledge Networks Posted on November 7, 2012 by Zulma Acevedo
Aristotle imagined a “Tree of Knowledge”, Darwin saw a “Tree of Life”, and Warren Weaver – the great scientist and mathematician – gave us his vision of organized complexity. But none of these revered thinkers were ever able to witness the awesome power of today’s web-based knowledge networks that stretch around the globe, pulsing 24/7 with new thinking, and growing organically every day.
Like galaxies in a night sky, these networks resemble giant communities of stars and planets that are somehow organized yet independent, part of a system that shares the same center of gravity. And so it is with Innovation Excellence – a network that brings together people from over 175 countries who share a common interest in the world of innovation. A network that would have been a sheer impossibility before the advent of the Internet.
A little over a year since Innovation Excellence was launched, we sit and ponder: 14000, 3500, 4000. It looks like a mathematical formula, but applied mathematics in this case; these are the numbers of members we have exceeded on LinkedIn, Facebook and Twitter.
In our community, we have members from all kinds of backgrounds and industries: from innovation professionals who serve as process champions in multinational companies, to company owners who are seeking and finding answers on how to grow their businesses, to researchers, consultants, managers, supervisors, writers, and a multitude of others. Through our knowledge network on Innovation Excellence, people have not only enhanced their understanding of how innovation can be put to work for their organizations, leading to new revenuegrowing breakthroughs, but some have used this network to close agreements between companies that have been able to exchange views and over time have become real businesses.
Innovation Excellence was born from a tiny network of three thinkers whose vision was to create a web-based platform – and a global community – for sharing innovation knowledge. Today, it has truly grown into a “tree” or web of knowledge that each day opens up a shared space for research, discussion, study, writing, and new business opportunities. Thanks to everyone involved in building this wonderful network. With your support our community was born and has grown, and continues to grow from strength to strength. We are proud to be a part of this global knowledge network that believes in innovation excellence!
image credit: orbitalrpm.com
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Zulma Acevedo G. is the Latin America Editor, and provides Program Development and Innovation Consulting Services, for Innovation Excellence. Formerly with GBM Corporation and IBM de Colombia, she specializes in CRM, data analysis, competitive strategies & pricing, marketing and business partners management.
Why You Need to Be Vulnerable to Innovate Posted on November 5, 2012 by Tim Kastelle
The Biggest Innovation Obstacle: Fear of failing is one of the biggest innovation obstacles around.
Within organisations, mistaking ideas for innovation is the most common innovation mistake that I come across. In part, this is due to fear of failing. If your idea is never executed, then it can’t fail, right?
The problem is that if the idea is never executed, then it will never succeed either. As Wayne Gretzky said, “you miss 100% of the shots you never take.”
I’m currently reading Brené Brown’s superb book Daring Greatly, and it’s giving me some great insight into this.
Lessons From My Biggest Screwup:
Before that, though, let me tell you a story.
I was a pretty good student in high school, and I was pretty excited when I was accepted by Princeton. Up ’til then, I defined myself by how well I did in school.
So I felt a great deal of shame when I failed out halfway through.
There were plenty of reasons that I did (and everyone’s first guess, partying, was definitely not one of them!), but the main reason was that I was scared to try my hardest and fail. Instead, I didn’t try much at all – I sabotaged myself. It gave me the illusion of control, but it also made me deeply unhappy.
To my amazement, it wasn’t as disastrous as I thought it would be. I went back to live with my parents for a couple of years, and worked in a feedmill. I saved enough money to pay for finishing up college myself, and when I was readmitted to Princeton, I did pretty well, and graduated.
I learned a few important lessons from all of this. The first is that it is foolish to define ourselves by how we’re viewed by others. In the end, trying to be “the good student” wasn’t a very good strategy. Here is what Brown says about this in the book:
“What we all share in common—what I’ve spent the past several years talking to leaders, parents, and educators about—is the truth that forms the very core of this book: What we know matters, but who we are matters more. Being rather than knowing requires showing up and letting ourselves be seen. It requires us to dare greatly, to be vulnerable. The first step of that journey is understanding where we are, what we’re up against, and where we need to go.”
I wasn’t willing to be vulnerable – rather than try and maybe fail, I just didn’t try.
The second lesson is that you don’t learn the important things in the classroom – you learn them by doing. Instead of partying, the main thing that I did while avoiding my schoolwork was spend time at the campus radio station. I was a DJ, and ended up holding bunch of different management positions there.
DJing went most of the way towards getting me over the painful shyness that plagued me in high school. And I learned an unbelievable amount about managing (and about myself) while helping to run the station. Meanwhile, my time at the mill kicked most of the remaining arrogance out of me, and taught me a lot about resilience as well.
I’ve only learned the last lesson recently – and that is that everything that I have done and experienced has made me who I am – and I need to draw on all of it if I am going to achieve the things that I’m aiming for. Here is how Nilofer Merchant put it in her post Why I’m Glad I Got Fired – one of the inspirations for this post:
“But just as my success led to failure, my failure led to success. Thinking more and more about these questions, I started a consulting practice that ultimately blossomed into a multi-million dollar business, with the idea that having a great strategy wasn’t enough to win. If we didn’t also address the organization’s ability to change, to behave differently, to believe in the new direction itself, then any good idea would simply fail. Strategy without an adaptive context to absorb the idea into its fiber would fail. Winning once wasn’t enough — organizations had to build the ability to co-create solutions and thereby win repeatedly.
I had changed. I had changed from being an accomplished, smart, results-oriented person with the corner office to someone who was also a human being, wanting to belong and co-create something that endured. I accepted that part of me didn’t have all the answers, and that led me to ask more questions. Who I was after that firing was a fuller me.”
True in my case too.
Why You Need to be Vulnerable to Innovate:
Watch Brené Brown’s talk from TEDxHouston – it’s well worth your time:
http://www.ted.com/talks/brene_brown_on_vulnerability.html
Brown quotes Peter Sheahan in Daring Greatly, who says:
“If you want a culture of creativity and innovation, where sensible risks are embraced on both a market and individual level, start by developing the ability of managers to cultivate an openness to vulnerability in their teams. And this, paradoxically perhaps, requires first that they are vulnerable themselves. This notion that the leader needs to be “in charge” and to “know all the answers” is both dated and destructive. Its impact on others is the sense that they know less, and that they are less than. A recipe for risk aversion if ever I have heard it. Shame becomes fear. Fear leads to risk aversion. Risk aversion kills innovation.”
Vulnerability leads to innovation. How many great ideas have been pre-emptively killed because we’re afraid that they might fail? A lot. We can talk all we want about frameworks and tools, but if we don’t address this problem, none of these can help us.
Brown takes her title from this speech by Theodore Roosevelt:
“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better.
The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause;who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly . . .”
If you’re a manager, you need to do whatever you can to help put people into positions to dare greatly.
If you have a great idea yourself, you have to tackle that fear of failure and take a shot. That makes you vulnerable. But it also makes you alive. And who knows – it might work! It’s the only way to find out…
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Tim Kastelle is a Lecturer in Innovation Management in the University of Queensland Business School. He blogs about innovation at the Innovation Leadership Network.
The 1st Innovation Principle Non-Innovators Must Embrace Posted on November 2, 2012 by Jorge Barba
I’ve mentioned this before, but it is worth mentioning again: anything can be reimagined.
And I think this is a key innovation principle non-innovators must embrace. In practice, what does this mean? For an example, read the text below:
The ice cream scoop has gone through different iterations. Yet, it isn’t perfect. Why is that? What constitutes the “perfect scoop”? How can you improve something as common as an ice cream scoop? Why would you want to do that? And if you can improve it, what would that look like? How exactly would it be better than what currently exists?
These are not easy questions to answer. But the answer may lie in a different point of view. For example, why use a scoop? What is an ice cream scoop really for? Maybe what we need to create and experiment with is a different type of delivery method. Is there such a thing? Has anyone tried to this before?
Maybe the act of eating ice cream is such a strong and important ritual for people, that messing with it won’t make any difference. It is this line of questioning and thinking that is rarely a part of anyone’s daily routine. And this is exactly what one does when systematically setting out to reimagine any object, idea, concept, institution, organization that has stood the test of time.
You could ask similar questions about any object you use on a daily basis. For example, what other objects that you use on a daily basis haven’t changed much and why?
The point: Anything can be reimagined. This is the first principle non-innovators must embrace. Give yourself permission to start from scratch. Give yourself permission to reimagine what is. Everything you see is ripe for innovation.
image credit: forum
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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.
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