Heads-Up! on Organizational Innovation

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?