New Collection
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Innovation: business sustainability
Hello! Here at LAB we keep up with the key trends discussed in the world, and based on our surveys we select topics likely to help organizations – such as yours – to face today’s and tomorrow’s challenges. And innovation is one of them. More than a subject in vogue, we believe so much in innovation that it is a part of our value proposal. We therefore wish to share several studies in this first edition of the new Pocket Learning collection. In this Pocket, now in pocket-book form, we show models that help in understanding how innovation takes place, its application to business and the profile of professionals who do something different every day.
Enjoy the book!
Context
In today’s world new ideas have become resources that are essential to change, perfect, and develop an organization’s value chain. In search of productivity, differentiation, and growth, it is in innovation that companies visualize possibilities and competitive advantages. As changes are very swift, the early bird is one step ahead. This search is ongoing in today’s world. In this regard, organizations need to be flexible to a degree, as rigid long-term strategies may become out of date in the face of competition.
Innovation was for a long time associated only with the development of new products and technologies. But this is only the tip of the iceberg. This process is currently exploited in the renewal of services and even in business models. Similarly, innovative professionals are not restricted to engineers, scientists, and designers. This notion is out of date. Organizations now expect that their staff members should be responsible for innovation, each of them contributing with what they do in their professional activities.
How innovation
happens Innovation is not something random; it is a disciplined experimentation process that seeks specific results. Its planning will focus on assumptions as well as on data. In its initial stage, thinking differently is required in order to create new ideas. Creativity is essential at this stage. Next, aligned thinking is activated to test assumptions, validate concepts,
and implement them as a solution for the original problem. That is why scholars such as Teresa Amabile, one of the most renowned specialists on the topic, defend creativity as a starting point for innovation, yet not its only condition. New ideas are not sufficient, innovation actually occurs when there is practical application and change.
“Creativity means the production of new and useful ideas in any area of activity (…). Innovation is the successful implementation of an idea within an organization. Hence, individual and group creativity are starting points for innovation; they are necessary but not sufficient conditions. Successful innovation also depends on other factors and may originate in creative ideas from outside the organization (such as for example technology).” Source: “Creativity and Innovation in Organizations” – Teresa Amabile, 1996.
A practical case:
The Medici effect, termites and architecture
The explosion of innovative ideas brought about by association has been named the Medici effect by Frans Johansson, a reference to the great creativity in 15th-century Italy. To him, the ability to create an intersection among varied cultures, domains, and disciplines gives way to the creation of new concepts.
Individuals, teams, or companies achieve intersection by associating in an uncommon manner completely different areas of knowledge that we do not believe are related. Architect Mick Pearce for example, projected a ventilation system for the Eastgate Center business compound in Zimbabwe, inspired by
the cooling system in a termite nest, which preserves its humidity and heat precisely regulated as termites constantly build new air outlets and close off old ones. The air enters into Pierce’s building and is channeled to the office facilities, as occurs in the termite nest’s chambers and passages, by means of a natural system that renews the temperature according to the outside environment. This project contributed to savings of 3.5 million dollars in the undertaking and brought in a new area for architectural design: which finds inspiration in natural processes. Source “The Medici Effect” – Frans Johansson, 2004.
Innovation: Open or closed? Choosing between innovating within the company or accepting outside participation to create? This discussion has been taken into consideration by organizations in order to select more advantageous models and to solve stalemates such as being part of a cooperative society or remaining in the competitive market. In this regard, the principles of closed or open innovation may assist in the more adequate choice for each company, which should weigh its strategy and business model on the scales.
Principles of Innovation
Open
The best professionals work for us.
Not all the best professionals work for us. We should share knowledge and experience.
In research and development, we ourselves should invest, discover, develop, and apply.
Outside research may create significant value. In-house research claims a part of this value.
If we make a discovery, we will be the first ones to place it in the market.
Research does not necessarily need to be ours for us to take advantage of it.
If we are the first ones to market an innovation, we will be market leaders.
Building a better business model is more advantageous than entering the market first.
If we create better ideas in the industry, we will be leaders.
If we take advantage of the best in outside and in-house ideas, we will be leaders.
We should control our intellectual property so that competitors do not profit at our expense.
We should take advantage of how they use our research and purchase surveys from others when our business model progresses.
Source: “The Era of Open Innovation�. MIT, 2003.
Closed
12 The
dimensions of innovation in business
No matter how many organizations believe that they are innovative, customers are the thermometer that show if something makes sense, is relevant, or is interesting to them. A company should innovate according to its reality and target public. Innovation in business is present in a service’s, good’s, or technology’s value added. Hence, efficiency should be assured throughout the value chain. It is not sufficient to provide an excellent product if distribution is faulty, for example. Therefore, the company should bear in mind all the existing business dimensions. They should be looked on as opportunities to innovate.
brand
platform
networking
solutions
presence
consumer
logistics and supplies
Source: “The 12 different ways for companies to innovate� - MIT, 2006.
offering
customer experience
organization
capturing value
process
Offering
Platform
Solutions
Definition
That which the company provides as a product and/ or service
Methods and technologies for offerings derived from the same component.
Integrated and customized offerings to solve customer problems
Innovating
Developing more and better customer solutions
Exploiting versions or variations of an offering for different publics
Expanding the variety and integration of products and services
A practical case
iPod player and its iTunes service by Apple
Models of different Nissan sedans with the same engine
GPS and software by Deere & Co. for satellite agricultural management of planting and harvesting
Customer experience
Capturing value
Individuals or companies looking out for solutions for their needs
Everything he sees, feels, hears, or that provides some kind of sensation while interacting with the company’s product or service
Means of payment or cash flows
Exploiting new publics and segments
Constantly assessing and rethinking interfaces with customer
Developing new systems to interact with customers and stakeholders
Virgin mobile phones with entertainment options for customers below 30 years
Personalized Starbucks beverage glasses with customer’s name, welcoming environment as place between home and work
Results of paid Google survey
Customers
Logistics and supplies
Processes
Organization
Definition
Configuring the business’s internal operation
Form of company’s structuring and acting, its staff members, stakeholders, etc.
Sequence of activities for distribution and delivery of offerings
Innovating
Redesigning processes to obtain greater efficiency, speed, and quality
Rethinking scope of company’s activities, roles, and responsibilities Considering different business units
Expediting information flow and changing structure to improve cooperation by parties involved
A practical case
Implementing Design for Six-Sigma (DFSS) at GE
Nestlé’s Nespresso luxury business unit focused on coffee aficionados
Online Dell computer sales with telephone and chat support
Presence
Networking
Brand
Market distribution points and locations where offerings may be purchased or tried by consumers
Channels, means, and networks through which company, its goods and services are connected to consumers
Symbols, words, and meanings disclosed by company as values and promise to its public
Creating new presence points, exploiting creativity
Creating and improving networks with integrated offerings
Associating brand to creative solutions and new domains
Natura stores are experimenting environments for consultants and customers
Otis Elevators remote monitoring service
Yahoo! brand as a lifestyle
the company Managing innovation in
It is normal in the innovation process that the first ideas do not show the desired outcome, and are discarded.
organizational culture, it is easier to focus work efforts.
The most important is to assimilate the lessons learned, for subsequent attempts. Therefore, several conditions are basic for an innovation’s sustainability.
systems, and resources should be in tune in order to sustain innovation in the company. One sole contradiction may destabilize the experimentation environment.
These are:
Preparation: staff members need
Culture: it should be clear to all staff members what the company is doing and where it wishes to go. When creating a transparent and consistent
Alignment: values, processes,
training, theory, and technique in order to perform their functions with a focus on innovation. Outdated or obsolete resources will not allow you to take steps forward.
10
y Diversity: innovation requires a number of different heads thinking together. Different viewpoints lead to new ideas. It is worthwhile to mix staff members from different units, functions, or even locations.
Interaction: forums, platforms, and events create opportunities for exchange, assisting professionals in building their knowledge networks.
Leisure: free time is required between tasks in order to experiment and develop new ideas.
1 2 3 4 5 6 7 8 9 10
innovative companies in
Brazil
Azul, for popularizing air transportation Ambev, for innovating in management, becoming the world’s largest brewery Petrobras, for investing in oil exploration in the pre-salt region Osklen, for combining sustainability and elegance in the apparel brand Embrapa, for being dedicated to genetic engineering in agricultural and livestock research Gerdau, for modernizing and production in the steel market Natura, for investing in sustainable cosmetics with Brazilian flora Embraer, for adopting a model of outsourced aviation Metalfrio, for research in refrigerating equipment for commercial applications Solar Ear, for democratizing solar energy battery-powered hearing aids
Source: “Brazil’s 10 Most Innovative Companies” - Fast Company, 2011.
A practical case:
NestlĂŠ and Starbucks
Companies have innovated in particular in business models, i.e. the logic of creating, delivering, and adding value. Innovating a business model results in a kind of totally different kind of company, which competes not only by means of a differentiated price proposal for its offerings, but also in resources and processes. The Nestlé and Starbucks practical case reflects innovation in terms of product and customer service. Relying on comfort, exclusiveness, and personalizing, both business models exploit customer experience. The case serves as an example for the conduct of brands and market competitiveness. The business model of the US Starbucks coffee-shop is based on the coffeedrinking experience. Originally opened up in 1971, the company intended to convey the tradition of Italian coffee-
shops to the US and the rest of the world. The mission adopted by the company to this day is to inspire and encourage the human spirit, with the commitment of providing high-quality goods, excellent music, and a welcoming and relaxing environment. A refuge between work and home. In order to remain in the coffee competition, Nestlé created the Nespresso division with luxury machines to use at home or in the office, in addition to boutique-like stores to sell capsules of compacted ground coffee. Nestlé’s proposal to compete with Starbuck’s experience is to provide “coffee solutions for unconditional lovers in an environment dedicated to the art of espresso, paying attention to the smallest details.”
Innovative professionals in the business environment
The most innovative professionals in organizations are those who learn the most through trial and error. They really assimilate the lessons learned, in whichever company area they are found. Nonetheless, several personalities are more inclined to innovation. They have work features that create advantages in the process. The ideal is to form cross-functional teams with these different types, so that they act in a supplementary manner.
““The anthropologist”” “The experimenter” “The pollinator” “The jumper” “The cooperator” “The director” “The architect” “The scenographer” “The caretaker” “The storyteller”
“The caretaker”
“The experimenter”
Makes people feel at ease with his considerate treatment
Makes sketches and tests new models
“The scenographer” Focuses on physical space, making it functional and pleasant
“The cooperator” Creates connections for the group, encouraging collective exchanges
“The architect”
“The pollinator” Matches ideas, issues, problems, creating new thinking
Introduces ideas and experiences, making use of the senses
“The anthropologist”
“The jumper”
Researches and watches cultures different from his/hers to gather references
Overcomes obstacles and barriers, looking on them as opportunities
Plans and organizes with a long-term vision, taking the head and inspiring leadership
Learning These are watchful professionals, “hands-on”, and explorers
Organization “The storyteller” Relates facts that have an emotional connection with people, creating meaning (non-diversion)
These are professionals who guide and connect persons, overcoming difficulties
Construction These are professionals who build physical, psychological, emotional, and linguistic structures
Source: “The ten faces of innovation” – Tom Kelley e Jonathan Littman, 2005.
“The director”
Keep away
from myths Waiting u nti should su l a brilliant idea d denly aris The “Eure e. ka” mo
ment may but on its occur, own it is n ot enough today’s w in orld. This explains w number o hy a f companie s which on brainstorm ly h ing sessio ns are una old advance fu ble to rther. It is more prod to retain ta uctive len put in place ted professionals a nd to an environ ment that experimen favors tation, tha t creates an ongoin g learning culture.
e communities Depending on onlin tion. to promote innova possibilities
panded our The Internet has ex on. Nonetheless, ati orm inf of sharing unities are only mm co forums or online rning, which takes support tools for lea rk They may even wo le. op place among pe an on d se ba as w ide well in creating ne ld ledge, but you shou exchange of know in ich wh l, too the nd yo be able to think be is It s. ge an ch of creating itself is incapable t. people who do tha
Source: "The 5 Myths of Innovation". MIT, 2011.
Offering la innovati rger rewards fo ve ideas r Inn .
ovation is associa motivati ted with on, intrinsic satisfacti i.e. the impulse for on found within in Pleasure dividuals an . the proje d rewards are pe ct. Depe r se in nding on perform rewarde ance is a d tra This is a reward-p p for organizatio n roviding century logic of 2 s. pra 0th well for ro ctical thinking, w hich work utine tas s ks that d add valu o not e or arou s e of staff m the intere embers. st
e best g that th om below. in v e li e B s come fr that initiative ple who believe
peo lose There are gement is not c a n eas, a id m r w e senio lement n p im laced to p enough ibility is respons t, e c c n fa e h In and lines. wer pipe nd on e p e d s on the lo e l initiativ nd on successfu bottom to top a top m m o o fr fr s t effort lvemen and invo rt o p p u s . to bottom
The race for
innovation For an organization to become more and more innovative, two things are required, basically: an ongoing learning culture and consistent and inspiring creative leadership. Only seasoned leaders are able to sustain an organizational culture focused on innovation. And through a strengthened learning culture, the new idea-creating process takes place more naturally.
Therefore: •
Keep the organization stable and open to change
•
Encourage people to think freely based on clear directives
•
Balance creativity with feasibility of projects
•
Learn to dole out trust, independence, and control
•
List what has been already done in terms of innovation and the desired direction
•
Practice knowledge management
•
Put in place success indicators and rewards in order to gauge and manage innovation in a learning culture
•
Prepare leadership in order to manage talents focused on innovation
•
Consider the likelihood of moving professionals with specific profiles to projects in other areas, temporarily or definitely
•
Remember that what is good is not compatible with what is best
“
Great ideas attract the spotlights, but you should not disdain the force of daily innovation, which is based on ongoing improvement. The true power of innovation is sustained on the abundance of small ideas, more direct and applicable.
”
Matthew E. May, author of “The Elegant Solution: Toyota’s Formula for Mastering Innovation”
Bibliography BIRKINSHAW, J.; BOUQUET, C.; BARSOUX, J. The 5 myths of Innovation. MIT, 2011. CHESBROUGH, H. The Era of Open Innovation. MIT, 2003. CHRISTENSEN, C. The innovator’s dilemma. Harper Paperbacks, 2003. MARKIDES, C.C. & OYON, D. What to do against disruptive business models. MIT, 2010. DAVILA, T.; EPSTEIN, M.; SHELTON, R. Making innovation work. Wharton School Publishing, 2005. GOVINDARAJAN, V. & TRIMBLE, C. The other side of innovation. Harvard Business School Press, 2010. KELLEY, T.; LITTMAN, J.; PETERS, T. The art of innovation. Crown Business, 2001. MURPHY, W.; ZHENG, K.; NELLER, M. Managing talent for innovation and the HR function of the future. Heidrick & Struggles, 2009. SCHLOCHAUER, C. Criatividade e seu impacto em instituições bancárias. PUC-SP, 2003.
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