Heads-Up! on Organizational Innovation

Tom Peter's 5 P's of Innovation

Valarie Willis, principal with the Tom Peters Company tells us that Tom has come up with five P's of Innovation Success. She states, "As I read them, I thought about how I have believed for quite awhile
that innovation comes as a result of Pain, Passion or Need.  Usually one of the three will move us to do something new, different and creative.  Of course, Tom always has a different take on things so
here are his 5 P's:"

Pissed-offedness - Something that makes you so mad, that you decide enough is enough, let's fix this!  Dick Nettel of Bank of America tells the story of how people had to press a buzzer to get in and out of the mail room at the bank. The buzzer was 'important' for security reasons.  They figured out a way around that buzzer,Dick said, 'it was like a light bulb went off,fix the problem."

Passion - Passion drives most non-profit companies, so why not organizations?  Dyson who invented the first vacuum that wouldn't lose suction was passionate about his invention, even though it scared the other vacuum companies. The other vacuum companies couldn't imagine a bagless vacuum, after all, bags were worth millions in sales.  Dyson almost went broke bringing his vacuum to market. Passion prevailed.

Pals - Never go it alone. If you want to go out on the limb, be sure to have someone holding on to you so that you don't fall.  LeJeune from Fabcon manufacturing came up with an idea to make concrete panels for building lighter.  He had two other Fabcon employees in on the idea, who served as sounding boards. The company eventually created a new product called VersaCore, which according to Gallup helped the company to stay in business.

Politics - What is it that no one likes, it exists everywhere, and everyone is guilty of it but me? Politics would be the right answer.  Think of politics like gaining sponsorship, and as a way to get your idea 'sold' in the corporate marketplace. We all need influential people who can help market and sell a good idea.  Every project needs a project sponsor or champion

Persistence - Most ideas will get shot down before a person finish speaking, but those who prevail will not give up on an idea.  There were two sisters who invented a product called Ghostline, this is a poster board with faint lines so that you can write straight on the paper, but it looks as if no lines exist.  They invented this product after helping their young relative with a science project where they had to start over several times to get it right.  They stayed with their idea until they found a paper company that would produce it for them. Their persistence paid off, they now get royalty checks in the mail, from not only the company that is producing the paper, but from a competitor that tried to copy their idea!

If you want Tom's PowerPoint slides on innovation, you can download them from his site:
http://www.tompeters.com/slides/uploaded/TRY_It_072407.ppt

It's Never "Either/Or"

From Joyce Wycoff:

One of my favorite innovation quotes is that innovation is never "either/or;" it’s always "both/and" so it’s always interesting to see opposite ideas come into play.  This happened today as I read Amy Rowell’s thoughtful piece in Innovate Forum Daily (http://www.innovateforum.com/innovate/)  about the negative effects of process-focus at 3M and then participated in the first Ignite Innovation! web seminar featuring Carol Pletcher, former chief innovation officer at Cargill.  Amy discussed the effects of the Six Sigma program instituted by former 3M CEO James McNerney and a former 3Mer’s comment that the Post-It note would never have survived the new system.  The point of the article is that process can stifle creativity and innovation.  All too true.

However, Carol Pletcher in her presentation on innovation "bottle necks" states that companies have to look at where the bottlenecks are before developing a strategy for improving the flow of innovation.  Using an example where revenue is going up but margins are going down, she explained that the bottleneck might be efficiency and cost controls.  In that situation, the best innovation might be the implementation of a Six Sigma or lean manufacturing program.

So, the question isn’t process OR lack of process ... it’s about knowing what tools (or processes) to use when.  As Maslow said, "A man with a hammer in his hand sees every problem as a nail."  Unfortunately, it seems that McNerney tended to hit every issue with a Six Sigma-like approach rather than identifying the bottleneck that was impeding the flow of innovation and then developing an innovation approach that fits the specific situation.

The next Ignite Innovation! web seminar will be held July 17th at 1:00 pm Eastern.  "Developing an Innovative View" with JoAnn and Jim Carland, professors and experts on entrepreneurship, and Susie deVille Schiffli, founder of InnovationCompass.   Register at http://www.iirusa.com/convergence ... click on web seminars.  (Registration for this web seminar will open in a few days.)

Learning from Schools

From Joyce Wycoff:

Recently I've had the opportunity to work with a group of people who are planning a new high school in my area.  Their commitment is to create an "innovative and creative" learning environment so I've had a great time researching what's going on in the area of high school education ... and there is a lot.  If you're at all interested in this area, I've gathered a lot of information, articles and videos
into a New High Schools blog.

All of this has reminded me of the commonality of certain principles of innovation in all arenas.  One example comes from the School of the Future, a new Philadelphia school developed with assistance from Microsoft.  Mary Cullinane was the head of the project for Microsoft and she maintained a blog throughout the process.  The following is her post just before the opening of the school where she lists six lessons learned, lessons that are applicable to any innovation project:

Chronicle 10 - The Calm Before the Storm -- 

And when people are inspired, amazing things can happen.

Well, it has been a while since I have written. However, in 5 days, this school is going to open and I couldn’t allow that to happen without some reflection. So, what have we learned?

1.  People first -- everything else later. As a result of this project, I’ve been interviewed by a fair share of reporters. I’ve given a few speeches, and have spoken with educators from around the world. And there is nothing that I am more certain about than this… -- The School of the Future will open on September 7th because we had the right PEOPLE on the project. They were passionate, focused on kids, willing to try new things and worked harder than ever. Finding the right people ... Getting them on board... and then helping them cross the finish line is how great things happen. And it is certainly what allowed this school to open.

2.  Politics and coalition building are necessary levers.  The past three years has brought many challenges. Some more significant than others. And most had to do with politics and bureaucracy. During those critical points, our ability to not only identify the person who could remove the obstacle, but also have a pre-existing relationship with them, was critical. I can’t imagine what I would have done without the support and responsiveness of district leaders.

3.  This is hard. It shouldn’t have been this hard. It shouldn’t take a miracle to build a great school in an urban community. It shouldn't be an exhausting experience, leaving participants tired and frustrated. It needs to be easier. We need more agile learning organizations. We need to figure out a better balance between control and creativity. We need to create an environment that is inspirational, not just functional. We need governance structures and public policy that set high standards, but also provide resource to achieve them.

4.  Hope matters. This school was willed into completion. As the months progressed, more and more individuals jumped on board. More were motivated by the thought of creating something that hadn’t been created before. People were inspired. And when people are inspired, amazing things can happen. We need more inspiration in our schools. We need to fill district offices, hallways, community centers, neighborhoods with a sense of hope, We need to communicate a message that we understand the challenges, but that we are ready to take them on.

5.  You have to ask the question. If you want to bring reform ... ask. If you want to try something new ... ask. If you want to change the status quo ... ask. This project would never have come to fruition if Paul Vallas hadn’t ask the question, "What if...?."  9 out of 10 times, the answer will probably be no. But if that one time the response returned is yes ... all the years of being turned down just became worth while.

6.  It’s the journey ... September 7th will be amazing. But it will pale in comparison to the moments experienced over the past three years. I’m pretty sure I will never have the opportunity to be part of something like this again. (I don’t think I’ll be up to it ...) However, the past three years have been the chance of a lifetime. I hope I have served it well.

More info about Mary Cullinane:  http://marycullinane.com

Organizing for Open Innovation

From Cheryl Perkins, former Chief Innovation Officer for Kimberly Clark:

Cheryl Perkins is a thought leader in innovation and a creative catalyst in brand-building initiatives that contribute to rewarding consumer experiences and improved business performance.  She was named one of Business Week's top 25 leaders in innovation.  She and Soren Kaplan will be presenting a web seminar sharing their experiences and insights on February 22nd.  More info here.

Do you have the in-house capabilities to deliver a pipeline of innovations that deliver new to your company and new to the world solutions?  Are you structured to leverage the capabilities and expertise of others outside your company to deliver innovations?  Many C-suite executives are answering “No” to these questions.  They are struggling with creating value for their shareholders while maximizing their speed to market with their existing traditional R&D and marketing organizational structures.

I think many of us will agree that it is becoming harder and harder to meet corporate growth objectives.  Organizational design is one lever you have that can enable you to deliver a pipeline of innovations for existing businesses and in new white spaces. The innovation processes, systems, and tools maybe in place but many lack critical competencies,  expertise in new and emerging products, technologies, solution designs, brands and channel access and have insufficient time to deliver the required top line growth.  There is often an inability to reallocate resources and dollars to build these competencies internally.  The answer is to develop the infrastructure to access these solutions externally. Dedicate a few talented resources to focusing on looking outside the boundaries of the company for ideas, intellectual property and solutions.

The cross functional team of collaborative resources can be chartered to think broadly about “what” a potential solution is, which is much more important than “where “ the solution came from.  The organizational structure should be designed to leverage the diverse expertise and deliver capabilities in the areas of in-licensing, out-licensing, joint developments, partnering/alliances, venture capital and brokering.  The team should be charged with identifying external sources of innovation and helping with the demise of “not invented here” that may exist within the company.   You will be amazed by the many successful win-win collaborations that will be created by an open innovation model.  The solutions delivered by the team will be truly differentiated and meaningful innovations with short cycle times.  Organizational design coupled with the open innovation model will fill internal capability gaps and increase business output.

The Peril of Ignoring Stakeholders

From: Jonathan Vehar

On January 4, 2007 theWall Street Journal reported that Robert Nardelli resigned as chairman and chief executive officer of Home Depot.  While he is credited with more than doubling sales during his six years in charge, he was criticized for not providing a return to shareholders and for receiving an expensive compensation package.  In an interview, he noted that he had gotten "too focused on the idea that you do your job, you take care of your numbers and the rest will take care of itself."

The WSJ analysis was that he hadn’t paid attention to all of the stakeholders that are now important for CEOs to respond to.  Stakeholders such as "shareholder advocates, hedgefunds, probate-equity deal makers, legislators, regulators, attorneys general, non-governmental organizations and countless others..."  Mr. Nardelli says that this is an attack on the capitalist system, that "the things that got us to where we are are under attack."  This may be true, yet these are the stakeholders to which CEOs at P&G, GE and Wal-Mart pay close attention, and for which they receive praise.

Nardelli’s departure points out the reality of an increasingly linked, smaller/flatter world, in which it’s easier to find out what is happening anywhere, and where more people have a bully pulpit and a voice that cannot be stifled.

My point is not whether or not this is a good thing, but rather that the importance of listening to stakeholders is critical for success and -- here’s the key --  innovation. (The "Think 360" InnovationIgniter module is all about how identify stakeholders and bring them into the innovation process.)  Whether or not you’re the CEO, a junior analyst, the Ops Director, an assistant brand manager, or a fry cook, ignoring the people with influence is perilous.  Not only do you ignore the weaknesses in and threats to your position, projects and company, but you also miss out on fresh perspectives on leverageable strengths and opportunities.   And that is where innovation lives.

More information about Jonathan Vehar and New & Improved at
http://newandimproved.com/about/vehar.php

More information about InnovationIgniter at
http://innovationigniter.com

Google Notion of Innovation

From Joyce Wycoff:

Everyone wants innovation; few want to allow the thinking time required to make it happen.  Google is an exception ... no wonder it's earnings are in the stratosphere.  Try this notion on for size:  Employees get a "free" day a week. Sound radical?  Google states that half of all new launches come from this "20% time."  This is one notion of the 9 developed by Marissa Mayer.  See the rest here.

BusinessWeek Online states: Marissa Mayer helps run one of the world's most innovative companies by being an amazing talent finder. As Google's vice-president for search products and user experience, she is the last stop before founders Larry Page and Sergey Brin on the way to final approval of any new feature that appears on the Web's most valuable real estate.

Four Directions of Innovation

From Soren Kaplan:

Despite the 122,000,000 hits you’ll get from a Google search on the term “innovation”, the field is relatively fresh – No one has “the answer” and, one could argue, no company has really gotten it “right” – if they did, we’d all just emulate the model and that would be that.

As the world changes, so does the field of innovation. It used to be that products and processes consumed the vast majority of the innovation air-time within most companies. Today, we’re seeing four directions that are starting to yield strategic fruit for the early innovation adopters. To the extent that these directions provide new avenues of insight, exploration and opportunity, they represent emerging innovations within the field of innovation:

Open Innovation – Whereas the old model of R&D-focused innovation assumed that new ideas, technologies, products and services needed to be developed in-house, open innovation turns this assumption on its head. With open innovation, creating approaches to scan for, uncover, source, and leverage outside ideas is the key to sustained growth. Henry Chesbrough, a professor at UC Berkeley, and author of Open Innovation coined the term, and has recently extended the concept to include open business models. In today’s networked global economy, firms that embrace the principles of open innovation will clearly have a leg up on those that believe all the smart people work inside their corporate campus.

Design Innovation – You know that industrial design has found its place when Fortune 500 companies like Samsung, Ford, HP, P&G and others instill Chief Creative Officers and Chief Design Officers to lead their innovation efforts. Business schools like Stanford have created design programs. And this year’s Davos gathering featured a special workshop series on the topic. Whereas “design” used to be equivalent with “industrial design”, its scope has expanded to include “experience design” which can include anything from designing user interfaces to defining service and support offerings to orchestrating value-added experiences that surprise and delight customers (http://www.businessweek.com/bwdaily/dnflash/jan2005/nf2005013_8303.htm).

You Innovation – When Time Magazine named “You” as the person of the year, we all achieved our 15 minutes of fame, together.  And that’s what it’s all about – collective innovation.  From Flickr to YouTube, we’ve seen the role of social networking and user-generated content in value creation.  Companies that find ways to harness word-of-mouth marketing, social networks, and “You” will create new forms of value in our networked economy (OK, maybe THEY’RE not creating it, but at least they’re benefiting from it).

Socially Responsible Innovation - With global warming, the looming healthcare crisis, rampant childhood obesity, and other social ills, we’ve finally seen the light (or at least the glimmer of a candle) – business should be able to make money while at the same time providing a broader benefit to people, the community and the environment.  Wal-Mart’s pushing it.  Business schools are teaching it (www.worldinquiry.org). Business ventures and social responsibility are not paradoxical and don’t have to be at odds.  In fact, finding ways to creatively integrate the two can create compelling strategic differentiation in the market – just ask Ben & Jerry’s, Patagonia, the Body Shop, and especially Interface http://www.fastcompany.com/online/14/sustaing.html).  Given that scientists just discovered a substantial breakaway crack in the perennial sea ice of the North Pole, we’re sure to see more socially responsible innovation in the future.

Just like the world, innovation is complex.  While new products, services and technologies are always important, the field of innovation is about much more.  Sustained value creation relies on innovating how we innovate.  That’s what real innovation is all about.

Repackaged Value

Even on our remote island off the coast of Belize, we saw innovation at work.  One shelf of the dining room had a small offering of common drug store remedies.  My ear was clogged after diving so I went looking for relief and found the two items shown.  The contents are exactly the same but the packaging is different ... and the price differential is radically different.  Admittedly, Swim Ear is a little easier to get into your ear, but is it worth paying 10-20 times the price?  Something to think about.

Perfection and Innovation

From Joyce Wycoff:  I've just returned from a trip that prompted a lot of thought about perfection.  For several years, Richard and I talked about kayaking in Belize but never quite got around to it so I wanted to complete that loop.  The thought of warm water, beautiful fish and long, slow days seemed to be perfect.  Fortunately, my long-time friend, Lynne Snead (co-author of "To Do ... Doing ... Done!") is a kayaker and open to new adventures so we quickly signed up for 9 days on Long Caye island in Glover's Reef atoll off the southern coast of Belize.

Long Caye is in the midst of a marine preserve so the resort is very "low-impact" conscious.  Perfect ... but it also means that electricity is limited,  showers are delivered by rainwater in large barrels, the two composting toilets are a trek away and ice cubes are not an option.  The thatched roof cabins sit right at the water's edge, perfectly positioned for glorious sunrises ... but also drafty and noisy as the squalls blew through almost every night.    The perfect, remote location two and a half hours off the coast of Belize meant that we practically had our paradise world to ourselves ... it also meant we couldn't get off the island to do something else when the weather dictated something other than kayaking, snorkeling or diving.

So, while we both agreed that this was a perfect vacation, we also thought a lot about what "perfect" really means and how the definition of perfect changes.  It often means a rather precarious balancing point on a spectrum between two opposites.   Long Caye is a perfect, unspoiled retreat from civilization and offers an escape from television, phones, email, news and the information tsunami that washes over us every day.  And, yet, after awhile perfection begins to look like warm beds, hot showers, indoor plumbing and even the mindless advent of the new season of Americon Idol.

Perhaps we're just fickle -- today I want remote, rustic and pristine; tomorrow I want bright lights, bustling street corners and the grit of too many people living too close together.  It's something to keep in mind as we thread our way through the innovation maze.  Sometimes we want a cell phone that's also a camera, a television, an internet access, a music box and a status symbol.  Sometimes we just want a cell phone where we can see the numbers to dial.

It's all about PEOPLE

From: Jonathan Vehar

I was just at the Chicago PDMA’s excellent conference on innovation.  I enjoyed a presentation by Guy Merritt from Tellabs, who is their Broadband Products Division Director of Engineering.  Here’s a man who clearly loves their fiber-optic telecom product, revels in the engineering process, and can talk about the intricacies of VOIP, SIP VDSL, VDSL2, MoCA, and many other things I don’t pretend to understand. 

What I loved about his presentation, and which was wholeheartedly echoed by Roger Jellicoe the "father" of the brilliant Motorola RAZR wireless phone, was that after 18 years or managing engineering projects in the high-tech arena, he realized the most important thing in developing new products was the people, not the process.  In other words, people are the most important tool available to bring forth innovation.  "All the product development books are bunk," said Jellicoe.  My provocative reflection: the books and processes tend to focus on the lowest common denominator of people and try to manage them.  Instead I say, let the individual greatness of people shine through to bring forth innovation.

I realized at the Innovation Immersion this year that there are too many people focusing on Innovation as the end, not a means to an end.  After all, innovation is an enabler for business growth, and should be regarded that way.  We’ve been working deliberately with our clients to figure out what innovation means to them and why they want to spend resources to make it happen.  With a medical device company that we’re working with, we’re sitting down with a team leader to deliberately plan the following: 1) what’s the desired outcome? 2) how will you know when you’ve achieved it?  3) what are the measurements along the way, and 4) how will you share this with everybody? 

Cutting edge?  No, but it’s missing in the innovation efforts of too many companies with which we come into contact.  It seems that there is a fear of drawing a line in the sand to which people will be held accountable.  Is it risky?  Yes.  But remember: what gets measured gets done.  Your people deserve nothing less.

5 Keys to Improving Innovation Success

The Innovation Practice team attended the 12th Annual Innovation Immersion Conference in La Jolla, California, and synthesized 5 keys to success.  We've given you a brief view of the 5 keys below. 

1.  Tell Stories -- a good story delivers facts with feelings and context; good stories engage us, define us, and motivate us to action.  A good story affects change by challenging our thinking and providing new perspectives.

2.  Embrace Differences -- Your workforce is made up of different kinds of people with different skills and styles.  Some are inherently drawn to improving or perfecting the system, adaptive innovators -- while others want to make fundamental changes, radical innovators.

3.  Look at Your Values -- Climate and values count!  What does your organization value?  What are the stories around the values and culture?  What ones are still serving you and which ones should be replaced?  Are they consistent with what you see for the company's future?

4.  Create a new future by experimenting with new approaches.  Innovation leadership starts at the top with Management embracing innovation and the change that follows.  As Marshall McCluhan told us, "It is experience, not understanding, that guides behavior."  Begin by creating some new experiences for employees as well as customers.

5.  Celebrate!  Celebrate the successes and the learning from the failures.  Edison had 1600 failures before he reached success ... how do we know?  He counted.

For a full copy of this report, click here: Download immersion-news1.pdf
and for more about The Innovation Practice, go to http://www.theinnovationpractice.com

Criteria ... or Not?

One of the theories fundamental to innovation is that idea generation should be separated from idea evaluation.  But is it true?

In practice I’ve found that clearly identifying the evaluation criteria at the beginning of an innovation process is critical and results in far better ideas.  Of course, getting leaders to articulate their criteria up-front is like pulling wisdom teeth.  They say they want "out-of-the-box ' ideas at least until it comes judgment time and then they pull out a raft of hidden criteria ... "Oh, we couldn’t possibly accept an idea that doesn’t fit one of the current business units."  "Well, we couldn’t possibly invest more than $X in an untested concept."  I think it’s a set-up to tell people not to worry about criteria and have them do a ton of work that doesn’t have a chance of being accepted.

What I’ve started doing is working very hard to identify the criteria up-front and present it as part of the challenge statement.  Then we talk about not being constrained by the criteria and knowing that we may change, add or delete them along the way.  We also make sure we distinguish critical criteria from the merely important or nice to have.  At the end of a session, we can put up the criteria and begin to look at ideas in relationship to them and no one feels misled or abused.  By then, we’ve talked and referred back to the criteria so much that people do a pretty good job of self-evaluation rather than just tossing an idea into the ring and not having a clue how it might be received.

Knowing and working with the critical constraints seems to help people think far more strategically and creatively as they thread their way through the maze that leads to concepts that create new value for customers and for the organization.  Life and the market impose criteria on us, why should we act as if anything goes? 

The trick is to hold the constraints in one hand and freedom in the other and let something new develop in the middle.

That’s my view ... what’s yours? 

Connecting the Unconnected

Putting things together that do not normally associate with each other is a fundamental principle of creativity ... for instance motors and toothbrushes, music and jewelry (iPod), cameras and phones, earthworms and breakdance ...... earthworms and breakdance?! 

Yup, it's the concept for a new Visa ad series by animator Patrick Smith.  Click on the image to the right for a brief preview and then view the full ad with music by clicking here.  Here's a Q&A response that gives you a glimpse into his creative process:

Q: Can you discuss the creative process and how the final idea for the commercial came about? With the new “Life Takes Visa” campaign a break dancing worm seems a bit unusual. What inspired you to take this creative direction? How long did it take to create your animation from beginning to end?

PS: Not having the need for a checkbook, why not make a flip book out of it?! It's something I would do. And a breakdancing worm is exactly the type of "doodle" I would draw. We had several ideas, all sort of random and goofy, but the idea of having an earthworm breakdancing stood out as something everyone wanted to see.
The animation was done in two weeks. Most of that time was spent trying to translate breakdance moves to a character with no arms or legs. "How would a worm do the windmill? The moon walk? Yes... the robot!!" Fun stuff. We pretty much figured out every move, despite not having any limbs to work with.

Learning Moments

One of the hardest things to do in our over-busy work environments is to get people to slow down for a moment and think about what they've learned.  Thanks go to Jonathan Vehar, Senior Partner with New and Improved for sharing a story about how one CEO stimulated that type of contemplation.

In a Wall Street Journal article by Gwendolyn Bounds, Garry Ridge, CEO of WD-40, who has doubled that venerable campany's sales since taking over in 1997, talks about one method he used to get people to reflect on their learnings.  He says:  "A learning moment is a positive or negative outcome of any situation.  But what it really is, is a culture where people are applauded and rewarded for sharing what works and what doesn't work.  It's a freedom culture.  It is one that takes away fear.  I ran a 12-month program where every month I had people email me and share their learning moments.  They would all get prizes and in the end we sent one of our employees on a fully paid trip around the world.  The first month there were a few emails.  Then as they saw they weren't being punished for this.more came.  I have a sign on my door that says, 'Intellectual Collision Zone.'  I have another sign on my door that says, 'Blame-Free Zone."

Ridge also talks about one of his approaches to innovation.  After deciding that they wanted to focus on products related to "squeaks, smells and dirt" he states, "We then formed a team called Team Tomorrow, which focused only on revenues of the future. Team Tomorrow has a goal of being able to generate $100 million worth of annual revenue from products developed and launched in the previous three-year period. We are doing $35 million now from zero dollars in 2002."

Underutilized Assets

One principle of innovation is to find new ways to use underutilized assets.  We saw a tiny, but interesting, application of this principle at the Front End of Innovation conference.

Dean Hering, Chief Innovator at Ovo Innovation, printed "Met Dean at Front End of Innovation
Conference."  Now that we're all back from the conference with a pocketfull of business cards, little messages such as this could help prompt a memory in case the cards get mixed in with others
picked up along the way.

Dean has a wry sense of humor so he also made the back side of the card a helpful little reminder ... and a subtle marketing message. At the bottom of the card is printed:

Get:
Eggs
Milk
OVO tools
Butter

Who should be part of the innovation process?

Recently Innovate Forum asked me to contribute 500 words about whatever "bee was in my bonnet."  I didn't really know there was so much buzzing around till I started to put it down on paper. Here's what I shared with them and I'd love to hear your thoughts.

Finally, it appears that the corporate world has “gotten” innovation.  Survey after survey states that CEOs want more of it and the word itself is now plastered all over taglines, mission statements, ads, and annual reports.  Companies publicly herald their innovativeness while privately calling for more of it.  The majority of companies act as if talking about innovation and demanding more of it is enough.  Admittedly, the number of organizations that are building innovation into their systems and culture is increasing but, few are inviting everyone into the process.

The first question is why?  Is it because not everyone needs to be part of innovation?  Is it because, with our multi-location, multi-timezone workforces, we don’t know how to engage everyone?  Or, is it because it would cost too much from a time and budget perspective?

The next question is who should be part of innovation?  It’s easy to understand the importance of participation for people who are directly involved with developing the organization’s products or services.  Business managers and supervisors should be involved, of course.  But what about the janitors or accounts payable clerks or programmers or customer service reps or the shop machinists or sales reps in a department store?  Do these folks really need to be part of the innovation process?  Shouldn’t they just follow established procedures?

Recently Radio Shack announced that it would close about 10% of its stores and said it would “replace old, slower-moving merchandise with new, faster-moving merchandise within higher growth categories.”  I don’t know for sure but my guess is that the folks working in the 7,000 or so Radio Shack stores do not consider themselves the front line of innovation.  Think about it for a minute:  if there are, on average, 5 people working in each store, that would be 35,000 people talking to at least 100,000 customers every day.  If those employees understood that innovation was basically about creating new customer value and knew that it was part of their job … and if they had been given training in the fundamentals of value creation, could things be different today?  Might not those “old slower-moving” items already have been replaced by the things customers really wanted?

Of course, it’s impossible to know what might have happened if all of Radio Shack’s employees had been engaged in the innovation process.  It is possible to recognize how difficult it would have been to engage those 35,000 people in 7,000 locations spanning several time zones.   But, just because it’s difficult doesn’t mean we shouldn’t find a way to do it.  And, if we were confident that it was critically important, that it might mean the difference between growth or shutting 10% of our stores, we would.

Which seems to get us to the bottom line:  we’re just not convinced that inviting everyone into the innovation process is worth the time, money and effort involved to do it.  In the meantime, we pour an enormous amount of money into market researchers, ethnographers and special project teams sending them out to find out what customers really want and what’s new in the world.  While professional researchers are highly valuable, given my druthers, I’d rather see 35,000 passionate, trained and capable people exploring for new ways to create value 365 days a year. 

Most of us say ideas can come from anyone anywhere but too many managers act as if only a select few hold the keys to the kingdom of innovation.  Seems to me like it's time for a change.

The Cost of *Not* Innovating

by Ruth Ann Hattori, partner, ThinkSmart, LLC.

Lots of people talk about the cost of innovation and ask questions about what innovation metrics to use.  The questions we hear most often are:  How can I measure the ROI of innovation?  What's the payback period?  How does it fit our Balanced Scorecard?

These are important, logical questions.  How do you really show that improved or increased efforts around new product or service development are actually yielding better results than if you had just gone on doing the "same old thing?"  Most innovation is relatively incremental in nature which makes it even harder to quantify the ROI.

Gazelles and Dinosaurs

Any company can innovate - few can sustain innovation.   

Over the past twenty years, management literature has featured a constantly changing kaleidoscope of "hot" companies, including Enron which was voted most innovative company for seven years before imploding under a dog-eat-dog competitive system that fostered the worst possible behaviors ... as well as some of the best.

It's relatively easy to develop the next new thing - once.  It takes a completely different approach to develop a long-term innovation engine.  It starts with a mindset that seems to be outside the norm in today's business climate where SBC would rather buy AT&T and risk billions than develop the internal competency needed to create the future of the company.  US companies now have over a trillion dollars in cash, so, once again, they are trying to buy growth rather than develop an innovation competency.  Thus, Procter & Gamble buys Gillette for $57 Billion, SBC offers $35 Billion for AT&T,  and Kmart acquires Sears for $11 Billion.

All of this money spent in spite of the fact that more than half of all corporate mergers fail to create substantial returns for shareholders according to a study by A. T. Kearney, Inc.  And, innovation guru, Gary Hamel, calls this the mating of dinosaurs and finds no correlation between size and profitability.  "You don't get a gazelle by breeding dinosaurs," he concludes.

An article in "Strategy & Leadership" (Feb 2005) by Woodside Institute authors concludes that a strategy of developing a competency of innovation is more effective than acquisitions and mergers over the long-term.  They state, "Though sometimes effective in the short term, this strategy of innovation through acquisition usually fails because the acquiring corporation overestimates the value of synergies and underestimates the post-merger integration difficulties.  In any case, innovation by acquisition is always at enormous cost, either in cash or stock, to the shareholders of the acquiring corporations.  Shareholders see far higher returns when companies successfully innovate organically."

So, CEOs everywhere, how about taking a little of that acquisition money and put it into developing a competency of innovation.  Here are three ways you could spend that money and *guarantee* a return on your investment:

-- hold an Innovation Fair where teams share the new projects they are working on.  Create encouragement for people to incorporate the ideas they see into their own situations.
-- give everyone in the company an investment seed fund ($100 - 250) that they can use to develop their own ideas ... or pool them for ideas that have promise.  This would help break the management aproval bottleneck that stifles innovation in most organizations.
-- put the implementation of a new idea that creates revenue or saves money into the performance evaluation process of every person in the organization.

Rather than spending billions for a dinosaur, why not try micro-funding a bunch of gazelles?

More information:

"Metrics for innovation: guidelines for developing a customized suite of innovation metrics," Strategy & Leadership, Vol 33, p 37, by Amy Muller, Liisa Valikangas and Paul Merlyn, Woodside Institute. Download account_for_innovation.pdf

Challenge-challenged

Today, a mini-thunderbolt reminded me about a critical principle of innovation. To put this aha into the proper context, I need to share a piece of research, a story and a personal memory.

* First the research:  In putting together a presentation on “Why Innovation?” (Free to IN members¹), I came across a piece of research² that said basically:  CEOs think innovation is critical to their futures but they aren’t happy with their current ability to innovate.  Additionally, they believe they already have a lot of good ideas in house that are not being commercialized. 

While I don’t hold with economic theory’s “rational man” dogma, I do believe that business attempts to be rational and if corporations had ideas that they believed were truly “good,” they would work to implement them.  So, either they don’t really believe the ideas are “good” or they are truly inefficient at maximizing resources or they are so risk-averse that they won’t put resources into anything that isn’t guaranteed.  (This last option is hard to believe in light of some of the mega acquisition blunders of the past few years.  One example among many:  Mattel buys The Learning Company for $3.5 Billion and sells it a year later for nothing but the hope of future revenue. Net result:  $430 million after-tax loss, 350 lost jobs -- including the CEOs, amazingly enough.)

Supporting the Drivers of Innovation

Renee Hopkins Callahan started an interesting conversation on her blog, IdeaFlow. by asking the question: What drives innovation? There are many interesting responses that are worth reading. I posted one response and then began to think about the word "drive" and realized there is only one *driver* -- PEOPLE. Period.

Most of you are probably thinking, "Well, of course!" but some of what we see in this field today seems to indicate that tools or software or processes might be more important. I don't think people really think that a new software program or innovation process is the answer ... it's just that they are so much easier than dealing with the messy, unpredictability of *people*.

But, deal with us we must so perhaps a follow-on to Renee's question might be what supports people so that they are willing and able to drive innovation? Read Renee's opening remarks and the comments to that question ... and then share your thoughts about supporting people in the comments section below.

What Drives Innovation?

Your Choice: A "hit" rate of 4% ... or 70%!

"Innovation can be the submarine that you sneak into the safe harbor of an unwary competitor, or it can be the clever entreaty you use to begin a fantastic lifelong relationship with your customer." -- Larry Keeley, Co-Founder, Doblin, Inc.

Convergence 2004 speaker, Larry Keeley, is an innovation strategist who often wonders why people bother to listen to innovation "experts" at all. After all, since innovation fails about 96% of the time, it seems self-evident that the field has advanced to about the same state as medicine when leeches, liniments and mystery potions were the sophisticated treatments of the day. On occasions when Larry can get someone to listen, he is inclined to reveal pieces of the emerging science of innovation that is at the heart of Doblin's practice. By being obsessive about identifying the root causes of innovation failure and injecting better methods, it is now possible to systematically boost innovation 'hit rates' to between 35% and 70%. That still isn't perfect but it is an improvement of 10-15 times over the pathetic results people try to convince themselves is "normal."

How does Larry help people achieve higher rates of success in this field which will always be part science and part art? By doing extensive, in-depth research and synthesizing those findings into process models that can be used to guide innovation in any organization. Larry will be presenting his latest research and insights at Convergence 2004. He also has a new book being released by HBS Press early next year. Title: "Taming the New: The Emerging Discipline of Innovation." You can say you heard it first at Convergence 2004!

You can get an overview of some of his thinking by looking at the Ten Types of Innovation model .

On top of all of that, you can play music if you go to Doblin's website For all you musicians, send us the score for any tunes you can pick out and we'll all play along with Doblin.

We'd love to have you join us at Convergence This is the 10th annual conference of innovation practitioners and it's an incredible opportunity to exchange ideas with folks from organizations around the world.

Problems or Miracles?

"What if instead of seeing organizations as problems to be solved, we saw them as miracles to be appreciated?" -- David Cooperrider, Professor of Organizational Behavior, Weatherhead School of Management, Case Western Reserve University

What if you could spend time with someone who is actively involved with the process of helping the world's top religious leaders better understand each other ... as well as helping top organizations make giant leaps in effectiveness and profitability? That describes only a small part of the spectrum of activities that Convergence 2004 keynote speaker, David Cooperrider, is involved in.

He is also the founder of a radical new movement in management -- Appreciative Inquiry. The term Appreciative Inquiry (often abbreviated to AI) was created in 1986 by David in his doctoral thesis: 'Appreciative Inquiry: Toward a Methodology for Utilising and Enhancing Organizational Innovation.' He developed the methodology with a team of colleagues including Suresh Srivastva and Diana Whitney.

Appreciative Inquiry is the cooperative search for the best in people, their organizations, and the world around them. It involves systematic discovery of what gives a system "life" when it is most effective and capable in economic, ecological, and human terms. AI involves the art and practice of asking questions that strengthen a system's capacity to heighten positive potential. It mobilizes inquiry through crafting an "unconditional positive question" often involving hundreds and sometimes thousands of people. In AI,
intervention gives way to imagination and innovation; instead of negativity, criticism, and spiraling diagnosis there is discovery, dream, and design. AI assumes that every living system has untapped, rich, and inspiring accounts of the positive. Link this "positive change core" directly to any change agenda, and changes never thought possible are suddenly and democratically mobilized.

We'd love to have you join us at Convergence This is the 10th annual conference of innovation practitioners and it's an incredible opportunity to exchange ideas with folks from organizations around the world.

Innovating Innovation

"What we need is a new logic of innovation. The era of developing innovative technology solely for your company's internal use is over." -- Henry Chesbrough, Exec. Director, Center for Technology Management, UC Berkeley, author of "Open Innovation: The New Imperative for Creating and Profiting from Technology"

Occasionally someone innovates the very discipline of innovation. Convergence 2004 keynote speaker, Henry Chesbrough, is one of those innovators of innovation and it's a gift to have him join us at Convergence.

The following is an excerpt from an interview with Optimize Magazine.

Q: What is open innovation, and how does it differ from closed innovation, which is what you say most companies do?

A: The basic idea is that in closed innovation, the model is one of discovering things yourself, then transferring them into development, production, distribution, service, and support within the four walls of your company. The logic is: If you want something done right, you've got to do it yourself.

But the idea behind open innovation is that there are too many good ideas held by people who don't work for you to ignore. Even the best companies with the most extensive internal capabilities have to take external knowledge and ideas into account when they think about innovation. So good ideas can come from outside as well as inside. And they can go to market not only inside your company, but also
outside, through others.

The Language of Innovation

"Prototyping is the language of innovation." -- Tom Kelley,Managing Director, IDEO

Tom Kelley wowed us at Convergence 2000 and we're delighted to have him back to speak at Convergence 2004 to share his latest insights (before they wind up in his upcoming book!). In the four years since we last heard from Tom, IDEO has continued to develop as theh premier design firm in the world. They were splashed across the cover of the May 17, 2004 issue of BusinessWeek with the statement: "This tiny firm called IDEO redefined design by creating experiences, not just products. Now it's changing the way companies innovate."

Here are some of the highlights Tom shared with us in 2000 and in his book "The Art of Innovation."

Innovation begins with an eye -- Identifying innovation opportunities by watching real people in real-life settings and understanding their latent human needs

Prototyping is the language of innovation -- Sustaining a culture of continuous innovation—not by aiming for perfection the first time but by creating lots of rapid prototypes—and building on many small failures to ultimately reach a market success

Verbs not nouns -- Building brand loyalty and creating market "buzz" by designing great customer experiences

Being a visionary by living the future -- Informing short-term decision-making by having a long-term point-of-view on technology and market developments

Space is the final frontier -- Using the physical office environment as a tool to shape the attitude and behavior and performance of your creative team.

We'd love to have you join us at Convergence This is the 10th annual conference of innovation practitioners and it's an incredible opportunity to exchange ideas with folks from organizations around the world.

Managing Invention: Conversations

"Most really useful information comes from informal conversations."
-- William Pape, Verifone Co-Founder

John Seely Brown, who calls himself Chief of Confusion, in an interview with Innovation@Work talks about managing innovation. His definition of innovation is the activities that follow invention, what he calls the "path to the sea from invention." We don’t agree with his definition but it’s always wise to learn from this thought leader. So, he states that you cannot "manage" invention, but you can nurture it. You can, however, manage the implementation of the invention.

How does he suggest nurturing invention?

Mystery of the Collective Intelligence

"What’s clear about this collective consciousness is, when it puts its mind to something, it’s a force to be reckoned with."
-- Craig Hamiliton,

Early in my career, I experienced an activity that dramatically shifted my belief system about groups and wisdom. I was an independent, upwardly mobile young person who thought committees and meetings were a waste of time and energy. It was at a management development program led by Mason Haire that those beliefs changed forever.

We played the "Desert Survival" game where the challenge was to decide how to best survive an airplane crash in the desert. Each person had to rank 10 items in order of their importance to survival and decide whether to stay with the plane or try to walk for help. After each person made his or her decisions, we were put into small groups to make the same decisions as a group.

What amazed me was the outcome ... ALL of the groups scored higher than the highest scoring individual. My boss was an ex-military guy who was quite confident about his survival skills. Even he did not do as well as the groups.

Since that day, I've fervently believed in the power of groups and have consistently seen amazing things emerge from groups. We are now entering a new era of research and understanding about collective wisdom and I want to recommend an article in the current issue of "What Is Enlightenment" magazine and a set of audio interviews about this fascinating subject.

The Power of Choice

In a Larry King special honoring Don Hewitt, the 60 Minutes crew was asked what made the show such a long-term success. While there were many answers referring to the leadership of Hewitt, one answer that surfaced again and again was that the reporters chose their own stories and never had stories assigned to them. Because they could follow their own passions, the stories were deeper and finer.

It’s a principle worth remembering and applying whenever possible.

Appreciative Inquiry

"What if instead of seeing organizations as problems to be solved, we saw them as miracles to be appreciated?" -- David Cooperrider

One of the keynoters at Convergence 2004* (September 26-29, Minneapolis, MN) is David Cooperrider, originator of Appreciative Inquiry (AI) which is a new approach to looking at organizations and change. AI asks us to pay special attention to "the best of the past and present" -- in order to "ignite the collective imagination of what might be."

Cooperrider, Professor of Organizational Behavior, Weatherhead School of Management, Case Western Reserve University, invites us to see "that which others may not see." He states that AI is "about heightening our awareness of the value, strength and potential of ourselves and others -- and overcoming the limits that we impose, often unconsciously, on our own capacities."

Appreciative Inquiry shifts our perspective away from problem solving which focuses on what's wrong to building on what we do well. David will share some of his thoughts and experiences with AI at Convergence, including his work with one of the US's largest trucking companies.

More words from David Cooperrider:

"I have found that it does not help, in the long run, to begin my inquiries from the standpoint of the world as a problem to be solved. I am more effective, quite simply, as long as I can retain the spirit of inquiry of the everlasting beginner."

"The problem-solving approach directs attention to the "worst of what is," constantly examining what is wrong with the organization. The assumption is that if the problems are fixed, then the desired future will automatically unfold."

"We believe the seeds of change are implicit in the very first questions we ask. The questions we ask set the stage for what we find."

"AI involves the art and practice of asking questions that strengthen a system's capacity to heighten positive potential. It mobilizes inquiry through crafting an "unconditional positive question" often involving hundreds or sometimes thousands of people."

"AI assumes that every living system has untapped, rich, and inspiring accounts of the positive. Link this "positive change core" directly to any change agenda, and changes never thought possible are suddenly and democratically mobilized."

For more information:

Innovation Convergence 2004 -- *20% discount for IN Members!

"The Change Handbook" edited by Peggy Holman and Tom Devane

"The Appreciative Inquiry Summit" by Jim Ludema, Diana Whitney, Bernard Mohr, and Thomas Griffin

"Birth of Global Community: Appreciative Inquiry in Action" by
Charles Gibbs and Sally Mahe

Appreciative Inquiry Commons

Fundamentals of Innovation

Innovation2004: Innovation Fundamentals – You’re Invited to Participate.

Innovation is at interesting stage … people like Tim Ogilvie and Jeneanne Rae at Peer Insight are exploring the cutting edge in their Service Innovation Consortium and at the same time the field is still trying to solidify and articulate the basics. If you are interested in the entire spectrum of innovation, we’d like to invite you to participate in a collaborative project to capture the fundamental essence of innovation.

WHY: There are a lot of great innovation practices beginning to be documented and discussed. But what are the “fundamentals of innovation?” What things, if not done at all or not done well, could actually cause the failure of your innovation efforts?

WHAT: That’s the question for the new, cross-discipline, international collaborative project to articulate and report a consensus on the foundational elements of innovation, focusing on five major areas:

Defining Innovation
Common Terms
Innovation Process Phases
Leading Indicators of Innovation
Innovation Fundamental Practices

We would like to invite you to participate in this unique, online collaboration which will use very simple tools such as collaborative blogs, wikis, and email to collect our thoughts and create a report which can be shared broadly. The online work will be supplemented by three teleconferences.

Click here to see the very beginning of the collaborative blog.

WHO: Innovation practitioners from corporations, non-profits and governmental units as well as consultants and academics will be taking part in this collaborative effort. This deliberately diverse gathering represents countries from all over the world as well as many different organizational disciplines such as quality, the learning organization, and others.

WHEN: This project will start mid-June and extend through mid-September. This flexible, online format will allow you to learn and contribute on your own time schedule. The report will be distributed by all the sponsoring organizations in early October.

HOW MUCH: There is a $495 fee for registration which includes access to all the collaborative activities, listing as a co-author on the resulting report and a free one-year membership in the InnovationNetwork. Sign up here.

How to Use TRIZ

by Jack Hipple, Innovation-TRIZ

TRIZ is simply a way of using the existing patterns of invention and problem solving from the rest of the world into the room with you. Most people think they are working on a unique problem--one that’s not been solved before. That’s very seldom the case as Genrich Altshuller, a talented patent examiner for the Russian navy, showed a long time ago. He codified and collected inventive principles in a retrievable way and created what is known today as the Contradiction Table--the first usable tool in what was to become a much larger TRIZ tool kit.

FFE: Fast Company

Fast Company's flyer in the FFE conference book states: Innovation is more than just great ideas. It's the smarts, resourcefulness, and courage to turn great ideas into real marketable products. It also states the following:

Getting Innovation Right -- Effective innovation is about more than building beautiful cool things. A few thoughts for innovative well in your own shop:

1. Not All Innovation Is Equal. Technical innovation will earn you lots of adoring fans (think Apple). Business-model innovatoin will earn you lots of money (think Dell).
2. Innovate for Cash, Not Cache -- If your cool new thing doesn't generate enough money to cover costs and make a profit, it isn't innovation. It's art.
3. Don't Hoard Your Goodies -- Getting to market on time and at the right price is vital. If that means licensing your idea to an outside manufacturer or marketer, do it.
4. Innovation Doesn't Generate Growth. Management Does. -- If you covet awards for creativity, go to Hollywood. Managers get rewarded for results, which come from customers.
5. Attention Deficit Has No Place Here -- Every innovation worth doing deserves your commitment. Don't leap from one new thing to another. If your creation doesn't appear important to you, it won't be important to anyone else.

FFE: Leadership Panel

Participants:
-- Andrew Kaldor, Manager of Lead Generation and Downstream Breakthrough Research
ExxonMobil
--Jay Mathur, CEO, ValueIdeas
-- Wayne Puglia, Platform Leader, Corporate Innovation, Kraft
-- John Seely Brown, Former Chief Scientist of Xerox and Director, Emeritus, Xerox Palo Alto Research Center
-- Bill Wittenberg, Co-Founder and CTO, Maven Networks

Andrew Kaldor – “Innovation techniques exist but are still much more of an art than a science.” “Leadership and people are the key. You have to develop people and skills in order to sustain innovation.”
Wayne Publia – “Good systems in the hands of good people can do great things. Good systems in the hands of bad leadership, do nothing.” “Think about the business as if you owned it. Owners know they have to innovate or they won’t succeed.”
John Seely Brown – Be prepared for something terrible to go wrong, especially in radical innovation. Must be able to live through that, which is one reason venture capitalists hire teams more than projects – they know a good team can work their way through the things that go wrong. “Be willing to delegate to people way down in the organization the ability to make major mistakes. Give them a chance to make major mistakes early in their careers.”
Bill Wittenberg – “Innovate in everything.” “Hierarchies are counter to innovation.” “Lunch is the most important meeting of the day.” “Combine different knowledge across and outside the organization. It’s all about communication among people.” For an interesting example of Maven Networks’ product see the “Masters and Commanders” trailer.
Jay Mathur -- “Innovation is neither fuzzy nor mystical. Mange the portfolio. Innovatoin is everybody’s business. If you don’t disrupt yourself, someone else will.”

FFE: John Seely Brown

John Seely Brown – “Rethinking the innovator’s dilemma with modern tools.”

Here’s what JSB says about himself on his website: In my past life as the Chief Scientist of Xerox Corporation and the Director of its Palo Alto Research Center (PARC). I was deeply involved in the management of radical innovation and in the formation of corporate strategy and strategic positioning of Xerox as The Document Company. Today, I'm Chief of Confusion, helping people ask the right questions, trying to make a difference through my work- speaking, writing, teaching.

I fell in awe of him some time ago but really connected with him when I read the first sentence of his foreword to Henry Chesbrough’s Open Innovation book: “As a student of innovation for more than twenty years, I still find it amazing just how difficult innovation continues to be.” If JSB finds it difficult, I think it’s ok for the rest of us to be stumped by it from time to time.

JSB titled his slide presentation “Idea Sparkers” and that’s what he seemed to be doing – nudging us a bit to think about things in a new way. Here are some highlights from his talk -- read further for some interesting thought stimulators. Plus his website has a wealth of ideas to stimulate further thinking.

The decline of companies and the relationship to innovation.
Keys to survival in a rapidly changing world.
Games - a trend to be aware of.
Organizations: machines or fabric?
Identity.