Copyrighted material – 978–1–137–47014–0
© Tim Baker 2015 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6–10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2015 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndsmills, Basingstoke, Hampshire, RG21 6XS. Palgrave Macmillan in the US is a division of St Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN 978–1–137–47014–0 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress. Typeset by MPS Limited, Chennai, India.
Copyrighted material – 978–1–137–47014–0
v
Contents
List of Figures, Tables and Boxes
ix
Acknowledgments
xii
Introduction
xiii
1 Entrepreneurial Barriers to Innovation The gap between the need and the capacity to innovate Problem one: what innovation really means Problem two: fuzzy responsibility assignment Problem three: confusing innovation with creativity Problem four: lack of a framework Problem five: lack of control Problem six: lack of coordination Problem seven: lack of customer focus
1 1 3 4 6 7 8 9 10
PART ONE
11
2 Overall Picture of the A-to-F Model
13
Why do organizations need processes? The innovation process as a solution Continuous innovation as a sum of projects The innovation process: roles versus stages Dynamics 3 Activators What an activator is, and why there’s a need for this role Prerequisites for activators Innovation framework Which is preferable: a broad or specific innovation framework? Innovation guidelines Innovation checklist Types of activators Types of resultant activation Which type of activation is best?
13 14 15 15 17 20 20 20 21 25 27 28 28 29 33
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4 Browsers What a browser is, and why there’s a need for this role B to C: innovation diagnostic From B to D: technological and design solutions From B to E: marketing formulas Techniques and methods for gathering information 5 Creators What is a creator? Who the creators are Profile of creative people How creativity works Methods for generating ideas Which information browsing methods are most useful to the creative technique? Assessment of creative techniques and information browsing methods From idea to concept Subjective assessment 6 Developers What is a developer? Developers’ contribution to concept definition Conserving the concept How to advance step by step in development Solutions to the trade-off between key features 7 Executors Who are the executors? Execution: a critical factor in success Selecting executors Key inputs and features of an ideal execution The marketing plan Pre-implementation Actual execution: the action plan Post-execution: iterate and improve 8 Facilitators What do facilitators do? Who they are Types of facilitation Systems for assessing and selecting alternative ideas or concepts Systems and tools to jumpstart a stalled innovation process
35 35 37 49 50 52 60 60 60 62 64 69 85 86 87 93 96 96 98 100 101 103 108 108 108 109 114 116 118 121 122 132 132 132 135 135 139
P c o n t e n t s
Systems and tools for approving and allocating financial resources and investments Combination of criteria and levels of approval or rejection The tools for setting the objectives of the launch Type of innovation versus facilitators’ tools 9 The Advantages of Designing Innovation Processes with the A-to-F Model Advantages of the A-to-F model Designing innovation processes with the A-to-F model Coordination of the process From processes to schemes Conclusion Annex I Examples of process design using the A-to-F model Annex II Detail of collaboration tasks and examples Annex III Testing techniques – from concept to finished product
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143 151 152 153 156 156 161 167 168 169 169 169 183 183 192 192
PART TWO
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10 Planning Innovation
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The elements of innovation planning Corporate business diagnostic Fit with company mission, goals and overall strategy Innovation goals Defining the innovation strategy Implementing the innovation strategy 11 Metrics What are innovation metrics? How to use them How many companies use innovation metrics? Types of metrics Combination of metrics Sophisticated combination of metrics The metrics and objectives 12 How to Foster a Creative Culture What is “creative culture”? Culture builders Organizational inhibitors of ideas, creativity and innovation Organizational motivators of ideas, creativity and innovation
197 198 198 200 202 206 213 213 213 214 215 221 223 224 227 227 228 231 236
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The misunderstood popularization of creativity The role of communication Multiculturalism and cross-functions Other no less important considerations Steps to creating an innovative culture 13 Incentive and Rewards What are innovation incentives? Should we incentivize innovation? Types of incentives Criteria for rewards And the winner is … In sum, to conclude …
237 238 239 241 242 244 244 244 247 250 251 251
Notes
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Index
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1 Entrepreneurial Barriers to Innovation
The gap between the need and the capacity to innovate In the business world today, innovation, as a discipline, has not reached the stage of development where it can satisfy the pressing need to innovate. We find that, where innovation is concerned, in many companies need exceeds capacity. A revealing statistic: although 96 percent of executives see creativity as integral to their businesses, surprisingly, only 23 percent have succeeded in making it an integral part of their businesses.1 And without creativity, there is no innovation. And that’s not the only statistic. A number of surveys on how companies innovate show that there is a broad consensus on the need to innovate, but also widespread dissatisfaction with how innovation is carried out. Executives are well aware of this gap: Innovation is a messy process – hard to measure and hard to manage. Most people recognize it only when it generates a surge in growth. When revenues and earnings decline during a recession, executives often conclude that their innovation efforts just aren’t worth it. Maybe innovation isn’t so important after all, they think.2 Executives say innovation is very important, but their companies’ approach to it is often informal, and leaders lack confidence in their innovation decisions.3
Something similar happened a few decades ago with marketing. When the superiority of marketing as a management tool was first demonstrated, there were few marketing professionals with sufficient experience, since business schools were just starting to add marketing to their curriculums and it would be some time before the fresh crop of graduates would join the labor market. Likewise, there were few specialized agencies or consultancies, aside from the fact that companies did not feel entirely comfortable with outsourcing such an important function. Moreover, marketing departments were created out of what were then called sales departments, which also implied internal restructuring, with all the conflicts that such change entails. Similarly, innovation has been synonymous with technological innovation, thus it was mainly the R&D department, and primarily engineers, who were responsible for innovation.
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Today we know that this is a too limited a view of the sources of innovation. Figure 1.1 shows a diverse set of sources of innovative ideas.4 People power
Most significant sources of innovative ideas % of respondents selecting up to three choices
41
Employees
38
Business partners
37
Customers 21
Consultants
20
Competitors Associations, trade shows, conference boards
18
Internal sales and service units
17
Internal R&D Academia
16 13
Figure 1.1 Sources of innovative ideas Source: IBM, The Global CEO Study 2006 (based on interviews with 765 CEOs and business leaders)
Moreover, as we shall see in dimension A of the A-to-F model presented here, there are many other types of innovation (business model innovation, process innovation, market innovation, target customer innovation, and so on). In many cases, these types of innovation require no new technology, but rather new ways to exploit existing technologies. A clear user of this philosophy is 3M, where, based on just 38 core technologies, the company managed to place 50,000 products and 2,000 brands on the market.5 ExxonMobil, to take another example, developed its successful Speedpass system, which lets drivers pay automatically at the pump, based on observing customers and using technologies that were already being applied to other products and services. Another clear example of this philosophy is the fact that in ranking the world’s most innovative companies, the Boston Consulting Group (BCG) gives the highest ratings to business ingenuity in terms of products, customer experience, business models and processes. Whether or not technology forms part of innovation is irrelevant.6 When a company limits its approach to the technological aspect or to its R&D department, it misses out on the creative potential of professionals working in other departments. Don’t get us wrong: we are not saying that R&D shouldn’t innovate or be involved in the innovation process. What we are saying is that, in addition to R&D and technology, there are lots of other departments and ways to generate innovation in the company. Part of the gap between the need to innovate and the limited capacity to do so has to do with narrow-minded policies that restrict innovation policy and strategy exclusively to technical departments.
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The consequence of such a limited vision is that managements in many companies don’t have much to show for their investments in innovation. Some succeed, but many others lose money and even put their business in jeopardy. Technological innovation, if not coupled with value creation and capture, will not meet customers’ wants and thus will fail. Increasingly, companies have been claiming that they have been making their innovation process more market-focused and customer driven. Yet failure rates for new products remain unacceptably high, with estimates ranging from 50% to 90%.7
The underdevelopment of innovation, as a branch of business management, is not the only problem. There are other barriers and constraints that one must recognize.
Problem one: what innovation really means When a company launches a breakthrough or radical innovation, like Apple with its iPhone or Google’s phenomenal success on the Internet, it makes headlines and is held up as an example in the press and at business meetings. “That’s real innovation,” experts and journalists exclaim in awe. Over time these sorts of headlines and product launches have the effect of creating a distorted picture in our minds of what innovation really means. We have come to believe that innovation is a new product, service or application that dazzles the world and completely redefines the rules of the market. It is true that radical innovations outshine everything else, but that’s not what all innovation is about. Indeed, it could even be dangerous or counterproductive for a company to be continuously launching radical innovations: they entail a lot of investment, they take time to turn a profit and, moreover, inevitably they are a big gamble.8 This myth of radical innovation as the only, or at least the most visible or recognized way to go, causes a lot of problems for business management professionals. When a senior executive demands more creativity or innovation, employees automatically assume, erroneously, that they are being asked to come up with some dazzling new product or service. The consequences are disastrous, because the pressure on employees utterly paralyzes them. Proposing a radical innovation means sticking your neck way out and, rather than jeopardize their careers, people often prefer to keep their ideas to themselves. In fact, innovation doesn’t always entail giant leaps forward. Gradual, step-by-step innovation is innovation too – and it is just as or more necessary than the radical version. This is what really makes a business sustainable. Innovation should also be understood as developing an innovative culture within the company, which is what will enable it to produce and bring out onto the market a steady stream of smaller, incremental innovations.
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That’s when, as paradoxical as it might seem, radical innovation eventually appears. It is very hard, if not impossible, for a business to make a successful launch of a groundbreaking innovation without first launching a good number of smaller innovations. In the absence of this initial process, it is unlikely that a company can develop its culture of innovation to the point where it can pull off such a groundbreaking feat. A company that hasn’t developed the innovative habit can hardly expect to perform well when it comes to extraordinary innovations. The fact that gradual or continuous incremental innovation over time eventually leads to radical innovation is easy to demonstrate. Take for example the automotive industry. Over the past decades, the aim of engineers was not to come up with a completely new car. Almost all the innovation has been gradual, targeting specific components and aspects of performance: better brakes, lower fuel consumption, more horsepower, quicker acceleration, and so on. As a result, based on small modifications, if we compare a car of today with one made 50 years ago, the difference is huge. And we arrived at this difference step by step, not in one fell swoop. The solution therefore is not to think of creating a radical innovation today but rather to think of innovation as occurring in a set of small innovative steps over time, hopefully culminating eventually in a major innovation.
Problem two: fuzzy responsibility assignment Who in the company is in charge of innovation? In the late 20th century, innovation was the responsibility of the R&D department, since everybody pretty much assumed innovation meant technological advances. Whenever a company needed some sort of non-technological innovation, the immediate reaction was to hand the responsibility to the marketing department. But the marketing departments were too busy with their day-to-day business. They had to demonstrate their efficiency in product and brand management, but that did not necessarily mean they were ready to innovate. Moreover, innovation marketing is radically different from continuity marketing, which is where marketing departments’ real potential lies. But we saw a conflict between the R&D and marketing departments, where the former felt that marketers didn’t know how to capture value and the latter felt that engineers weren’t creative enough. We contend that Product Development (i.e. R&D) and Marketing must become intimate partners if a company hopes to optimize its innovation performance. Unfortunately, too often the Development and Marketing relationship is ill defined and challenging.9
In certain companies, innovation, was split between R&D and marketing but left without any strategic management. There was a short circuit between
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those who were supposed to be coming up with innovations and the top management needed to bring them to fruition. In consequence, as the McKinsey Quarterly has pointed out,10 many executives opt to get ideas and innovation from external, informal sources, rather than from their own business units and the in-house teams that they themselves have directed to work on innovation. Usually, when a company outsources all its innovation, it later run into real problems when it comes to implementing the innovations proposed by external consultants. As in the case of the company that never innovates and, suddenly, launches a radical innovation, when you force professionals to implement changes that they themselves have neither devised nor approved, you are bound to run into breakdowns and counterproductive side effects. But, given that it is so integral to the survival of a business, why this persistent absence of responsibility in the realm of innovation? One aspect that differentiates innovation from other forms of management is that while the different departments of a company are assigned clearly defined functions, innovation, as we understand it today, happens on different levels without belonging to any one department in particular. Of course, the marketing department needs to innovate. But so do human resources and finance. And these departments must innovate not only within their own domain, but also with an eye on the market and capturing value. As shown in the book Marketing Moves,11 marketing today means holistic marketing, and it needs to be spread throughout the organization. The same is true with innovation. Someone in the finance department might discover an investment tool, for example, that translates into lower costs that translate into price innovation and – why not? – perhaps eventually a new product line for the company. Innovation is not a matter for a chosen few. It is the responsibility of the entire organization. But we know that when everyone is responsible for something, no one takes responsibility, and responsibility gets watered down. The result is that innovation, beyond technological innovation, becomes the company waif, lost and wandering blindly from one department to another without quite knowing where to turn. According to the McKinsey Global Survey,12 only 24 percent of business leaders fix innovation budgets and only 50 percent decide who will work on innovation projects. In companies with low levels of innovation, the levels of responsibility are unclear. On the other hand, companies that perform better in terms of innovation do not have this problem; the role of innovation is well defined and there is someone in charge who, moreover, does not depend on the marketing or the R&D department. Innovation is actively managed from the top down, eventually including various parts of the company. For example, at Starbucks, Howard Schultz, the company founder and president, is the person at the helm in strategic innovation management and business expansion. Another option – one that is also very effective, as we shall see – is to name someone head of innovation and give them a 360-degree view of all
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the innovation going on throughout the company; according to a previously approved plan, of course. In truly innovative companies, innovation is not located any one place in particular, rather it happens at the same time at various levels of the organization. It’s not a question of which department, but of who; particular people who might be located anywhere, even outside the organization. We will further clarify this point later on, when we talk about the Open Innovation model. The fact that innovation is spread around the organization does not mean there is confusion or chaos. At Google, everyone innovates and the processes are perfectly ordered and defined. When a company innovates at all levels, there are also responsibilities at all levels and in each stage of the innovation process. Some companies even go a step further, bringing in outside monitors. We have gone from closed innovation (limited to the laboratory or R&D department) to collaborative innovation (where all members of the organization are encouraged to come up with ideas), to open innovation (with people from outside the organization involved in the innovation processes).13
Problem three: confusing innovation with creativity The third element hindering the development of business innovation is the widespread confusion regarding applied innovation and creativity. There are times when an idea with potential spends years bouncing around the organization and never quite materializes because there’s no one to take responsibility for managing it. The contrary is also possible: great ideas, left to their own devices, can be harmful to a business. Theodore Levitt, in an article in the Harvard Business Review,14 explains how creativity that is not coupled with proper innovation management can spell death for a business or enterprise. The message is clear: creativity, ideas and new technologies alone won’t get the job done. The innovation process must have people to manage it; new skills, more related to business management, are needed to guarantee success in bringing the idea to market. Many managers complain that their companies lack creative talent. The problem with these organizations is not so much a shortage of people with enough creativity, but rather a shortage of functional idea management. They don’t have enough innovation or innovation management because they confuse creativity with innovation. There is no shortage of creative people; what business needs more of are innovation managers. Which is something that 3M is completely aware of and, to avoid this problem, it has a system it calls “dual ladder,” which lets employees choose freely between a technical track and a career in management within the company. Whichever path a person chooses, promotion and level of responsibility within the company are the same. 3M does not try to turn research scientists into managers,
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rather each plays his own role, since both are essential to making innovation work. At IBM, for example, some of the company’s top talent, at the height of their careers, are not assigned to safeguarding mature businesses, but to turning new ideas into profits, that is, into new lines of business. A clear demonstration of the widespread confusion between creativity and innovation is how companies invest heavily in creativity at the expense of innovation: lots more resources go to training in creative techniques than to developing innovative functions. Companies assume that if people act or work in a more creative way, if they promote creativity, sooner or later, it will translate into greater innovation. And this is not necessarily so. It is true that creativity – that most human of gifts – when applied to business, leads to innovation. But an organization filled with creative people is not necessarily an innovative organization. As Theodore Levitt points out in the above-mentioned article, this may even be counterproductive. In fact, companies that look exclusively to the creativity of their personnel for innovation are shirking their responsibilities. They prefer to have the organization propose the ideas and then have management decide whether to accept or reject them. But success is a not question of luck. Innovation requires creative people, but it also means setting clear goals for innovation, defining strategies, establishing what your resources and risks are, allocating responsibilities and, most importantly, clearly delimiting and defining your innovation processes, with someone in charge in each respective area. Companies that confuse creativity with innovation, and many do, eventually find that the habit is not only a brake on productivity but can even be counterproductive. People propose ideas and, due to the lack of any clear rules about what to do with them, the ideas wither away before they can go anyplace. As a result, people get demotivated and stop proposing new ideas. Encouraging them to do so again will be much harder the second time around.
Problem four: lack of a framework There are a number of aspects to innovation that make it completely different from any other area of business management. Companies must function efficiently on a daily basis in order to stay profitable and generate cash flow. Meanwhile, in anticipation of an uncertain future, they must innovate in order to keep ahead of change and preserve their lead in their sector. These needs can be somewhat contradictory. Change is at odds with efficiency. It is very difficult to think about how to do things differently while you are actually doing them. As John Lennon once said: “Life is what happens to you while you’re busy making other plans.” It is not easy to change the way you work while you are working. Indeed, it is almost impossible. We need to stop, think about what we’ve done and then change it. In management, effectiveness and efficiency rule. In business, your job is not to change what you do, but to do it right.
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Second, innovation often means changing something that, for the time being at least, works. If a company launches an innovation to replace an existing product or service that is still performing well, it sacrifices the chance to continue exploiting the investment it originally made in that product or service. On the other hand, if, for the sake of maximizing profit on its current portfolio, the company doesn’t innovate, the competition may slip ahead and then it might be too late. The people who should be making changes in what works are busy keeping the business running as usual and nobody knows when the time is right to change rules that, for now, are getting good returns. When it comes to innovation, companies cannot look to any generally accepted management or operating framework. This is not the case with other disciplines, which are divided into clearly defined departments and personnel with their own special well-developed methodologies and tools. Thus, all managers know that in marketing you need market segmentation, you have to define your brand positioning and market your products according to the famous 4 P’s. In finance, any manager knows the main tools of the financial department: operating account, balance sheet, cash flow analysis. But what about innovation? According to Marketing Week,15 44 percent of business leaders admit they don’t know what essential tools they need to make creativity and innovation happen in their organizations. A lot of research and publishing is being done on innovation, but, despite some progress in this direction, we do not yet have a comprehensive, unified and universally accepted theory on the subject. There are books with helpful ideas on creative techniques, on innovation processes, on how this or that company does it, on how to develop an innovation culture and so forth. And all this literature is filled with interesting facts, worth taking into account. But for the manager in search of a single, clear work scheme, no one book or article can provide all the answers. Innovation is in its infancy as a field of management and, although we are learning more and more about it, there is still no broad consensus on what processes and tools to use, or on a general framework to build on. In the first part of this book we present the A-to-F model for innovation. It is a complete model that can be applied to any past or future developments in business and market innovation. We don’t know whether it will be the model used by managers in the future, but we have tried to make it comprehensive, just as the 4 P’s of marketing were in their day.
Problem five: lack of control Logically, this problem is a direct result of what we were talking about in the previous section. If the function of innovation is not well defined, if you don’t have consensus on your management framework and if responsibility for innovation is not ingrained and properly allocated, you are bound to lose control of your innovation processes.
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In the above-mentioned McKinseystudy,16 most companies lacked consistent, centralized management to ensure the monitoring of innovation in their business units. For example, only 34 percent of top managers – and only 22 percent of other managers – say that innovation is part of their work agenda. This situation won’t change until innovation is considered an area of business management. As soon as that happens, the control problem will disappear. Once responsibilities for innovation are assigned, control becomes possible. People think of innovation as a creative and nonlinear concept. But that does not mean that it is not manageable. In an interview, A.G. Laffley, CEO of Procter & Gamble 2000–2008, said that the company can manage innovation because “we have a clear definition of innovation.”17 In our chapter on the metrics of innovation, we offer a range of useful ideas on how to measure and monitor your company’s innovation efforts. Similarly, our A-to-F model is about how to gain complete control of a business’s innovation processes, from idea generation to execution to feedback and to control.
Problem six: lack of coordination Lack of coordination between departments is considered one of the main barriers to innovation.18 But collaboration means more than tearing down partitions and walls between insular departments. It means creating information flows and physical spaces for collaboration. Innovative companies create cultures of innovation. There are two types of problems: horizontal and vertical.
Lack of horizontal coordination By horizontal coordination we mean coordination between departments, between equals on a similar level in the chain of command. We do not mean just the classic lack of coordination or conflict of interests between R&D and marketing that we talked about above, but between all the departments in a company in general. According to Professor Robert Shaw, author of the report “Return on Ideas”,19 creativity is overly limited to the marketing department, and thus he calls for enhanced interdepartmental cooperation: “If everybody has a stake in how marketing ideas are used financially and operationally, creative thoughts become larger than ideas; they become strategies,” he says. The problem may well not be a lack of coordination but rather a failure to involve from the outset in the ideation processes the departments that will be involved in them later. There is a clear tendency to isolate certain departments from innovation projects, even where companies are aware of the negative impacts of this practice.
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Lack of vertical coordination On the other hand, no less important is vertical coordination, that is, coordination between top management, general management and the rest of the organization. This malfunction usually occurs between general business policies and innovation policies. Companies’ strategic objectives or acceptable target risk often are out of step with the innovations coming out of both the R&D and marketing departments. We frequently find that someone proposes launching a new product that management is unwilling to finance or that involves more risk than it is willing to assume. In other cases, management accepts an innovation but only to give it a try. But since management commitment is low, the innovation does not get enough support and the execution turns out to be a disaster. An imbalance between company goals and the goals of innovation is an endless source of problems in the implementation of innovations.
Problem seven: lack of customer focus What’s the difference between an idea and an innovation? Answer: an innovation offers increased value for the customer. This is a key point. Today it is impossible to innovate if you don’t keep one eye on the end customer. Real innovation, sooner or later, must be accepted by an end customer, who has to make the effort to switch from one service or product to a new one. This switch entails an effort that the customer will only make if he gets a clear and superior benefit from it. Many recent innovations have come as a result of observing the customer. And we don’t mean traditional market research, but modern methods, where, based on interaction with customers or observing behavior, companies have been inspired by ideas that customers themselves would never have been able to put into words. This is what we call an ethnographic study, the aim of which is to get a perspective or consumer insight. 3M got the idea for its Post-it Picture Paper by observing how digital Post-its’ users were switching their laptops, cell phones or BlackBerrys for sending digital photos.20 Brainstorming as a technique for generating ideas is giving way to ethnographic techniques, which are much more inspiring and closer to market realities. Innovation that starts with an understanding of the current behavior of end customers is far more likely to be successful. Note that we’re not talking about that marketing mantra “meeting customers’ needs.” It’s deeper than that. It’s a matter of enhancing customers’ circumstances by observing their present behaviors and imagining ways to enrich their lives. We will deal with generating new ideas, that is, creativity, in a later section of this book.
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Index
Page numbers followed by f and t indicate figures and tables, respectively. activation, types of 29–33 activators 20–33, 156t to browsers (input from) 184–5 browsers to (input from) 183 to creators (input from) 187 creators to (input from) 184 defined 20 to developers (input from) 188–9 developers to (input from) 184 to executors (input from) 190 executors to (input from) 184 innovation checklist 28, 28t innovation framework 21–6 innovation guidelines 27, 27t need for 20 overview 16 prerequisites for 20–8 and strategic planning, coordination between 21f types of 28–9 actual execution (action plan) 121–2 see also execution Adobe India 247 Alerts 53 Allen, James 110 All Marketers Are Liars 116 alternative ideas/concepts, assessment and selection of 135–9
company-wide rating 136 concept screening 136–8 Delphi method 138–9 subjective assessment 93–4, 93f, 135–6 see also concept; idea(s) Amabile, Teresa 232, 234, 235, 236, 241 Amazon 23 AMV BBDO 64 Apple 3, 13, 23, 33, 50, 61, 94, 128 area testing 118–19, 120f, 131t, 193 A-to-F model activators see activators advantages of 156–93 browsers see browsers creators see creators cross-cutting inputs 159, 159f, 160f designing innovation processes with 161–7 developers see developers dynamics 17–19 executors see executors facilitators see facilitators main person/s in charge of each role 161, 162t overview 13–19 resources allocated to each role 164–7, 164t–167t roles and interactions 18f sequence of 156, 156t six I’s of innovation 18f
P I N D E X
strategies, implemention of 206–11 technique(s) employed by each role 162, 163t Total Innovation System and 19f total time and time allocated to each role 163–4, 163t ATR see Awareness, Trial and Repeat (ATR) attributes listing 78–9 audio recording and logs 56 Avatar 149 Avena Kinesia 39 Awareness, Trial and Repeat (ATR) 124 Barnes and Noble 23 Baxter 248 BBA see Bush Boake Allen (BBA) BCG see Boston Consulting Group (BCG) Beals, Vaughn 55 Bharti Tele-Ventures Ltd 111 BlackBerrys 10 Blue Ocean strategy 71–3, 72f BMW 13, 30 Boston Consulting Group (BCG) 2, 222 bottom-up activation 31–2 brand decision 94 brand review 37 browsers 35–58, 156t to activators (input from) 183 activators to (input from) 184–5 to creators (innovation diagnostic) 37–49 to creators (input from) 187 creators to (input from) 185 defined 35 to developers (input from) 189 to developers (technological and design solutions) 49–50
261
developers to (input from) 185–6 ethnographic studies 54–7 to executors (input from) 190–1 to executors (marketing formulas) 50–2 executors to (input from) 186 geolocation 57–8 information gathering, techniques and methods for 52–8 need for 35–7 network monitoring 52–4 overview 16 “Bubble Assignments” 30 Bush Boake Allen (BBA) 83 business diagnostic 198 business model innovation 23, 25t, 204 for insurance market 179–82, 181t–182t buying process 47–8, 48f Cameron, James 149 cannibalization 90 Carolina Herrera 184 CEO see chief executive officer (CEO) “Champions” 30 chief executive officer (CEO) creative culture, establishing 228–30, 229f see also culture builders chief innovation officer (CIO) 94, 113 creative culture, establishing 230 see also culture builders innovation goals and 201 choice of focus 64–6 Christensen, Clayton 110 Chu Woosik 222 CIO see chief innovation officer (CIO)
262
Cirque du Soleil 71, 73 Clay Street Project 236 Clinton, Bill 116 Club Méditerranée 23 CNN 51 Coca-Cola 111 co-creation 82–4 Collins, Jim 110 communication, in creative culture 238–9 informing staff about innovation heroes 238 of rejected ideas 239 of results gained by innovating 239 of strategy and innovation projects 238 company shares, as financial incentives 247–8 see also financial incentives, for innovation company-wide rating 136 concept basic benefit 90 case study 88f, 92b conserving by developers 100–1 developers contribution to 98–100 end benefit 91 images that illustrate 88–9, 88f insight 90 name 88 overview 87 rationale 91 social trend in 92–3 source of volume 89–90 subjective assessment 93–4, 93f, 135–6 concept screening 136–8 concept tests 192 conjoint analysis 103–6, 104f, 105f connection (in creativity) 67–8 consumer diaries 56–7
index
control, lack of 8–9 Cooper, Bob 86 Cooper, Robert G. 214, 229, 240 coordination, lack of 9–10 Corning 13, 30, 215–16 corporate mission 198, 199 corporate strategies/goals 198–9 cost–benefit analysis 144–5 creative culture 227–42 communication in see communication, in creative culture culture builders see culture builders customer proximity 239–40 environments for 241–2 innovative, steps for 242 multiculturalism and crossfunctions 239–41, 240f organizational inhibitors in see inhibitors, organizational organizational motivators in see motivators, organizational overview 227–8 see also creativity creativity 25, 62 atmosphere for 241–2 choice of focus 64–6 common spaces for 241 connection 67–8 displacement 66–7 idea generation, techniques of 69–85 from idea to concept 87–93 information browsing methods for 85–6, 85t and innovation 6–7 misunderstood popularization of 237–8 organizational inhibitors on see inhibitors, organizational
263
P I N D E X
organizational motivators on see motivators, organizational reasons 68 release time for 242 stages 64–8 subjective assessment 93–4 techniques, assessment of 86–7, 86f creators 60–94, 156t to activators (input from) 184 activators to (input from) 187 to browsers (input from) 185 browsers to (innovation diagnostic) 37–49 browsers to (input from) 187 common resources 63 defined 60 to developers (input from) 189 developers to (input from) 187 to executors (input from) 191 executors to (input from) 187–8 feeling 63 finding 60–2 manifestation 64 overview 17 profile of 62–4 qualities 63 tools and techniques used by 64–8 traits 62–3 see also creativity crisis and downsizing, as inhibitors 235 see also inhibitors, organizational cross-cutting input 159, 159f, 160f, 183t, 185t–186t, 188t, 190t culture builders 228–31 CEO 228–30, 229f
CIO 230 innovation processes leaders 230–1 culture, in innovation metrics 219–20 number of departments that innovate on ongoing basis 220 percentage of employees that assess ideas 219 percentage of employees that produce ideas 219 percentage of time spent on innovation 220 propensity for risk-taking 220 rate of ideas per employee per year 219–20 see also metrics, innovation customer focus, lack of 10 customer value equation 115, 115f Dannon 94 Davidson, Willie 55 Davila, T. 101 DDB 45 deadlines and pressure, as inhibitors 234 see also inhibitors, organizational de Bono, Edward 141 dedicated teams 112–13 vs. shared team 113 deductive thinking 25 Dell 23 Delphi method 138–9 demand estimation 145–7 depreciation 147 developers 96–106, 156t to activators (input from) 184 activators to (input from) 188–9 to browsers (input from) 185–6
264
browsers to (input from) 189 browsers to (technological and design solutions) 49–50 concept conservation 100–1 conjoint analysis 103–6, 104f, 105f contribution to concept definition 98–100 to creators (input from) 187 creators to (input from) 189 defined 96 to executors (input from) 191 executors to (input from) 189 financial limitations 100 key aspects 96 marketing limitations 99–100 new products testing 106 overview 17 production limitations 99 quality checks/controls 105 roles 96–7 step by step advancement 101–2 technological limitations 99 virtue (patience) 105–6 vs. marketers 97 direct/face-to-face observation 55 displacement 66–7, 75–6 disruptive innovation 203, 203f Doritos 83 downsizing and crisis, as inhibitors 235 see also inhibitors, organizational “dual ladder” 6 earnings before interest, taxes, depreciation and amortization (EBITDA) 216 EBOs see emerging business opportunities (EBOs) economic metrics 215–16
index
company sales from innovations other than in new products 216 company sales from new product launches 215–16 cost savings from innovation 216 profits from innovations other than in new products 216 profits from launch of new products 216 total ROI in innovation 216 see also metrics, innovation Edgett, Scott 86 effectiveness, in innovation metrics 218–19 average expenditure on rejected ideas and projects 219 average impact of investment per successful project 219 average investment per project 218 number of years as industry leader 219 success rate in new products 218 time to market 218 see also metrics, innovation emerging business opportunities (EBOs) 31, 121, 171–3, 172t–173t Employee Involvement Association 246 Epstein, M. J. 101 Ericsson 13 ethnography 54–7 advantages 57 aims 55 audio recording and logs 56 consumer diaries 56–7 defined 55 direct/face-to-face observation 55 techniques 55–7
P I N D E X
video recording and logs 55–6 Euro Disney 149 execution 108–9 actual (action plan) 121–2 decision making in 109, 109f dedicated team vs. shared team 112–13 inside/outside company 109–12 key inputs 114–15 marketing plan 116–18 outsourcing 110 post-execution 122–30 pre-implementation 118–21 traits of 116 unified option 113 value equation 115, 115f executors 108–31, 156t to activators (input from) 184 activators to (input from) 190 to browsers (input from) 186 browsers to (input from) 190–1 browsers to (marketing formulas) 50–2 to creators (input from) 187–8 creators to (input from) 191 defined 108 to developers (input from) 189 developers to (input from) 191 overview 17 profile of 113–14 selecting 109–14 exploratory innovation 26, 198 extrinsic motivation 237 see also motivators, organizational ExxonMobil 2, 13, 37, 49, 118, 128 Facebook 54 facilitation approval and allocation of financial resources and investments 143–51
265
assessment and selection of alternative ideas/concepts 135–9 jumpstarting the innovation process in the event of a breakdown 139–43 subjective assessment 135– 6 types of 135 facilitators 132–54, 156t defining 132–3, 134f functions 132 overview 17 tools vs. innovation type 153–4, 153f, 154f fads 44, 45t fashions 44, 45t fast second companies 128 fear in general, as inhibitors 231–2 see also inhibitors, organizational fear of error, as inhibitors 232–3 see also inhibitors, organizational fear of retaliation, as inhibitors 233–4 see also inhibitors, organizational Fedex 23 Ferrari 30 financial incentives, for innovation 245, 247–8 company shares 247–8 money 247 payment in kind 248 portion of sales 248 financial resources and investments, approval and allocation of 143–51 cost–benefit analysis 144–5 demand estimation 145–7 market tests 150–1 profit and loss account 147–8
266
return on investment (ROI) 148–9 scenario analysis and intervals 150 focus, choice of 64–6 Foster, Richard 111 Foursquare 57–8 framework, lack of 7–8 Frito-Lay 13, 77 GameChanger panel 29–30, 169–71, 170t–171t Gass, Michelle 82 General Electric 13, 30, 83, 98, 111, 143, 187, 220, 233, 240 General Packet Radio Service (GPRS) technology 56 geolocation 57–8 Giddens, Anthony 55 Godin, Seth 116 Golant, Farah Ramzan 64 Google 3, 6, 13, 32, 118, 129, 133, 136, 189, 190, 237, 241, 242, 248 Google Alerts 53 Google Earth 57 Google Labs 118 Google Trends 53 Gordon, William J. 69 Govindarajan, Vijay 108, 112 GPRS technology see General Packet Radio Service (GPRS) technology Hamel, Gary 14 Harley Davidson 55, 83 Harvard Business Review 6 Hewlett Packard 217 home usage tests 193 horizontal coordination, lack of 9 House of Quality 98 http://twittersentiment. appspot.com/ 54 Huston, Larry 230
index
IBM 7, 13, 31, 150, 171–3, 172t–173t, 228, 239 EBOs 31, 121, 171–3, 172t– 173t idea generation, techniques of 69–85 attributes listing 78–9 Blue Ocean strategy 71–3, 72f co-creation 82–4 lateral marketing 75–8 morphological analysis 73–5, 74f redefining customer value 84–5 scenario analysis 79–81, 80f Synectics 69–70 visits and trips 81–2 idea(s) and innovation 10 methods for generating 69–85 organizational inhibitors of see inhibitors, organizational organizational motivators of see motivators, organizational sources of 2f see also concept IDEO 61 IKEA 13, 23, 84, 187, 248 incentives, innovation 244–51 on creativity and innovation 246–7 defined 244 desirability of 246 economic 246 financial see financial incentives, for innovation intangibles see intangibles, incentives for marketing professionals 245 monetary 244, 245, 246 need for 244, 246–7
P I N D E X
non-financial 245 for salespeople 245–6 types 247–50 incremental innovation 4, 203, 203f inductive thinking 25 information browsers see browsers information browsing methods assessment of 86–7, 86f for creative technique 85–6, 85t see also browsers information gathering techniques 52–8 ethnographic studies 54–7 geolocation 57–8 network monitoring 52–4 Infosys Technologies Ltd (INFY) 229, 249 inhibitors, organizational deadlines and pressure 234 downsizing and crisis 235 fear in general 231–2 fear of error 232–3 fear of retaliation 233–4 of ideas, creativity and innovation 231–6 lack of methods and processes 236 overdoing internal competition 234–5 innovation approval/rejection, criteria and levels of 151–2 exploratory 198 goals 200–2 and idea, difference between 10 incentives see incentives, innovation incremental 203, 203f metrics see metrics, innovation organizational inhibitors see inhibitors, organizational
267
organizational motivators see motivators, organizational predictable 198 process 23, 25t, 204 product and service 24, 25t, 205 project portfolio 207–8b, 207–9 radical 203, 203f resolutions and 200 roadmap 209, 209b semi-radical 203, 203f six I’s of 18f strategies 202–12 tools to set objectives for 152 vs. facilitators tools 153–4, 153f, 154f innovation, barriers to fuzzy responsibility assignment 4–6 lack of control 8–9 lack of coordination 9–10 lack of customer focus 10 lack of framework 7–8 myth of radical innovation 3–4 need of, and limited capacity 1–3 vs. creativity 6–7 innovation checklist 28, 28t innovation diagnostics 37–49 adjacent categories analysis 40 buying process 47–8, 48f innovation review 37–40, 38f innovation routes 38–9, 38f, 40f, 48–9 internal consulting 41–2 market trends 47, 47t social classes 46 social trends 42–6 innovation framework 21–6 broad vs. specific 25–6 focus of innovation, defining 24–5
268
levels 23–4 limiting scope of innovation 22–3 innovation guidelines 27, 27t innovation planning 197–212 business diagnostic 198 corporate goals and strategies 198–9 corporate mission 198, 199 elements of 197 innovation process A-to-F model in designing 161–7 collaboration in 158–9, 159f, 160f, 183–91, 183t, 185t– 186t, 188t, 190t as continuous activity 15 coordination of 167–8 dimensions 161–7 dynamics 17–19 for insurance market, design of 179–82, 181t–182t investment and risk evolution 101, 102f key roles 16–17 main person/s in charge of each role 161, 162t for medium-sized company, design of 173–7, 174t– 177t multidisciplinary approach 161 need for 13–14 resources allocated to each role 164–7, 164t–167t for retailer, design of 177–9, 178t–179t roles vs. stages 15–17, 157 to schemes 168, 168t as solution 14 steps 15f, 156 technique(s) employed by each role 162, 163t total time and time allocated to each role 163–4, 163t see also A-to-F model
index
innovation review 37–40, 38f innovation routes 38–9, 38f, 40f, 48–9 in-out activation 30–1 insights, list of 42 insurance market, innovation process design for 179–82, 181t–182t intangibles, incentives access to restricted circles 249 public recognition 248–9 research resources 250 time 250 intensity, in innovation metrics 217–18 investment in R&D 218 number of brands 217 number of ideas generated per year 217 number of innovation projects in pipeline 217 number of innovations in products, services, customer experiences, processes or business models 217 number of ongoing innovation projects 217 number of patents 217 see also metrics, innovation internal competition, overdoing as inhibitors 234–5 see also inhibitors, organizational internal consulting 41–2 internal rate of return (IRR) 149 Internet increasing use of 52–3 netnographic tools 53–4 operational tools 54 intrinsic motivation 236–7 see also motivators, organizational iPhone 3, 23, 24, 33, 94, 128
P I N D E X
IRR see internal rate of return (IRR) iTunes 23 Janna, Julia 231 Japan Human Relations Association 246 Johansson, Frans 239–40 Kaplan, Sarah 111 Katzenbach, Jon R. 229 Katzenbach Partners LLC 229 KPIs evolution 127, 127t Kraft Foods 237, 242 lack of control 8–9 lack of coordination 9–10 lack of customer focus 10 lack of framework 7–8 Lafley, Alan G. 9, 229, 241 lateral marketing 75–8 at the market level (I) (displacement) 75–6, 75f at the market level (II) (analogies) 77–8 the market level (III) (comparisons) 78 Lateral Marketing 39, 65, 128 Laube, Sheldon 245 launch extension 127–9 Lead User Analysis 83 Lego 83 Lennon, John 7 Levitt, Theodore 6, 7, 108 LinkedIn 54 long-term goal 202 3M 2, 6, 10, 13, 32, 83, 124, 218, 237, 241, 249, 250 Macrotrends 43, 44t management/top management, as activators 28 marginal innovation 203, 203f marketers vs. developers 97 marketing formulas (from B to E) 50–2
269
learning from errors 51–2 marketing strategies 51 marketing tactics 51 Marketing Moves 5 marketing plan 116–18 elements of 117 see also execution marketing process elements of 117 stages of 65–6 marketing vs. R&D 97–8 Marketing Week 8 market innovation 23–4, 25t, 204–5 in three dimensions 24f market research 41–2 market sizing 42 market testing 121, 131t, 150–1, 193 market trends, in innovation diagnostics 47, 47t Mauborgne, Renée 71, 73 McKinsey & Company 214, 220, 221f, 245, 247 McKinsey Global Survey 5 McKinsey Quarterly 5 The Medici Effect: Breakthrough Insights at the Intersection of Ideas, Concepts, and Cultures 239–40 medium-sized company design of innovation process for 173–7, 174t–177t Metalquimia 249 metrics, innovation 201, 213–25 choice of 223 combination of 221–3 in companies 214–15, 215f culture in see culture, in innovation metrics defined 213 economic see economic metrics effectiveness in see effectiveness, in innovation metrics
270
intensity in see intensity, in innovation metrics objectives and 224–5 ranking of 220, 221f sophisticated combination of 223–4 types 215–21 use 213–14 Microsoft 13, 128 Mittal, Sunil B. 111 money, as financial incentives 247 see also financial incentives, for innovation morphing 129–30, 130t, 191 morphological analysis 73–5, 74f motivators, organizational on creativity and innovation 236–7 extrinsic 237 intrinsic 236–7 Motorola 143, 189, 247 NASA 30, 70 Nesquik Night 76 Nestlé 76, 77, 83, 94, 111, 187, 215 Netflix 13 net present value (NPV) 149 network monitoring 52–4 NGT see nominal group technique (NGT) Nike 55 NineSigma 62 Nokia 13, 70, 249 nominal group technique (NGT) 139–41 Novartis 78 NPV see net present value (NPV) Nutrexpa food company 141 Olympus 75 open innovation 33 Osborn, Alex 66
index
out-in activation 32–3 outsourcing 61–2, 99 participant observation see direct/face-to-face observation payment in kind, as financial incentives 248 see also financial incentives, for innovation PepsiCo 184 P&G see Procter & Gamble (P&G) Phillips, J. Donald 142, 218 Phillips 66 technique 142 Picasso 105 portion of sales, as financial incentives 248 see also financial incentives, for innovation post-execution 122–30 KPIs evolution 127, 127t launch extension 127–9 morphing 129–30, 130t purchase funnel 122–4, 124f satisfaction surveys 125b–126b see also execution pre-implementation tools 118–21 area testing 118–19, 120f, 131t experimentation and product testing 118 market testing 121, 131t see also execution PricewaterhouseCoopers 245 Prince, George M. 69 proactive companies 204 Procter & Gamble (P&G) 9, 13, 31, 32, 62, 218, 228, 229, 230, 236, 240, 241, 249 innovation planning and 197 product tests 118, 192–3 profit and loss accounting tool 147–8
P I N D E X
project portfolio 207–9, 207b– 208b provocation/disruption see displacement public recognition, as incentives 248–9 see also intangibles, incentives Puig Beauty & Fashion 39, 184 purchase funnel 122–4, 124f quality checks/controls 105 radical innovation 203, 203f myth of 3–4 see also innovation R&D vs. marketing 97–8 reactive companies 203, 204 redefining customer value 84–5 resource allocation 202, 205–6, 210, 210b resource scheduling 205–6 retailer, innovation process design for 177–9, 178t–179t “Return on Ideas” 9 return on investment (ROI) 148–9 rewards, innovation 244–51 criteria for 250–1 incentives see incentives, innovation monetary 244, 245, 246 need for 244, 246–7 Ries, Al 94 roadmap 209, 209b ROI see return on investment (ROI) Royal Dutch Shell 13, 241 10 Rules for Strategic Innovators 112 Sacha London 185 Samsung Electronics Co. 61, 218, 222 scenario analysis 79–81, 80f, 150 Schultz, Howard 5, 30, 42
271
scientific community and researchers, as activators 29 Scotchlite 191 Scotch Tape 191 Scout Labs 53–4 screening, concept 136–8 SECRET acronym 66–7 semi-radical innovation 203, 203f shared team 113 vs. dedicated teams 112–13 Shaw, Robert 9 Shell Corporation 29–30, 169–71, 170t–171t, 206 GameChanger panel 29–30, 169–71, 170t–171t Shelton, R. 101 short-term goal 202 SignBank service 45–6 six I’s of innovation 18f Six Sigma methodology 142–3 Six Thinking Hats technique 141–2 social classes, in innovation diagnostics 46 Social Mention 53 social trends innovation diagnostics 42–6 timeframes for 43–5 Southwest Airlines 10, 13, 73, 116 Special GameChanger Panel 170 Speedpass system 2, 49–50, 118, 128 stakeholders, as activators 29 Starbucks Corp. 5, 13, 30, 42, 82, 84, 189, 230, 238 StepRep 53 Strategos 14 StubHub 52–3 subjective assessment 93–4, 93f, 135–6 dimensions 135 Surowiecki, James 138 Synectics 69–70
272
technological solutions/design (from B to D) 49–50 Technorati 53 Tesco 13, 30, 42, 133, 183, 191, 200, 232 testing techniques 192–3 area test 193 concept tests 192 home usage tests 193 market tests 193 product tests 192–3 Texas Instruments 247 Titanic 149 Total Innovation System 197 and A-to-F model 19f Toyota 13, 30, 60, 219 trends 43–4, 44t–45t Trimble, Chris 108, 112 Trout, Jack 94 Twitter 54 unique innovation value (UVI) 115 unique selling proposition (USP) 115 up-bottom activation 29–30 USP see unique selling proposition (USP) UVI see unique innovation value (UVI) value equation 115, 115f vertical coordination, lack of 10
index
video recording and logs 55–6 visits and trips, for creative ideas 81–2 von Hippel, Eric 83 Waisburd, Gilda 62 Walmart 13, 33, 111 Walmart Innovation Network (WIN) 33, 111 W. Chan Kim 71, 73 Whirlpool 55, 61 Wii 73 Wikipedia 237 WIN see Walmart Innovation Network (WIN) The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations 138 W.L. Gore & Associates 242 workers, as activators 28 www.wefeelfine.org 54 www.wordle.net 54 Yamaha 94 yet2.com Inc. 62 YourEncore Inc. 62 YouTube 237 Zook, Chris 110 Zwicky, Fritz 73