Heads-Up! on Organizational Innovation

Lead Users: Eric von Hippel

One of the most powerful processes for developing truly customer-focused innovation comes from Eric von Hippel's work on Lead Users.  Here's a part of an interview just released by CIO magazine.

CIO: Eric, your work challenges prevailing wisdom regarding innovation. That model assumes that the product manufacturer almost always drives innovation. Your research asserts that functionally novel products and services tend to be developed by "lead users." Would you explain what you mean?
von Hippel: First let me describe what I mean by the term "users." Users may or may not be direct customers of the manufacturer. They may be in different industries or segments of

"APACHE and other open-source PROGRAMS are examples of user-to-user INNOVATION systems." —ERIC VON HIPPEL

the marketplace, but they are out in the field trying to do something, grappling with real-world needs and concerns. Lead users are an innovative subset of the user community displaying two characteristics with respect to a product, process or service. They face general needs in a marketplace but face them months or years before the rest of the marketplace encounters them. Since existing companies can't customize solutions good enough for them, lead users go out there, patch things together and develop their own solutions. They expect to benefit significantly by obtaining solutions to their needs. When those needs are evolving rapidly, as is the case in many high-technology product categories, only users at the front of the trend will have experience today with tomorrow's needs and solutions.

Companies interested in developing functionally novel breakthroughs—as opposed to improvements along known dimensions of merit such as speed and capacity—will want to find out how to track lead users down and learn from what they have developed. We have developed systematic ways to do this via lead-user research. Studies of project outcomes to date at 3M, which has been a pioneer in applying lead-user methods, show more than $100 million in new, projected sales per project.

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?

FFE: Teresa Amabile

Teresa Amabile, professor at Harvard Business School is well known for her work in creativity, including books “Creativity in Context” and “Growing Up Creative.” She presented her new work on Time Pressure and Creative Thinking in Organizations.

The study was a large, longitudinal study of 177 people on 22 teams working on mostly product development projects in 7 companies in 3 industries. People responded to Daily Questionnaires that measured current time pressure and daily events.

Results: More info: Interview and Article

The Experience of Time Pressure

-- Events that involved tight deadlines or workload increases were associated with feelings of greater time pressure that day and the next day.
-- The number of hours people worked increased as a function of daily time pressure, and increased at an even faster rate at high levels of time pressure.
-- Generally, people in these organizations experienced high time pressure (an average of about 5 on the 7-point scale).
-- People reported feeling more creative on time-pressured days

Time Pressure and Creative Thinking

-- The higher the time pressure on a given day, the lower the likelihood of creative thinking that day. Creative thinking is 45% less likely at the highest level of time pressure.
-- The higher the time pressure on a given day, the lower the likelihood of creative thinking the next day and the day after that. A time pressure increase of 1 standard deviation is associated with a 19% drop in the probability of creative thinking the next day.
-- The higher the time pressure at the beginning of each half of the project, the lower the average level of creative thinking during the following half.

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.

FFE: Dean Kamen

Dean Kamen (click for larger image)

Dean Kamen, President Deka Research and Development and developer of the Segway™ Human Transporter and founder of FIRST

Kamen professed to know little about innovation but finally defined it as “The art of concealing your sources,” which he said he borrowed from Pablo Picasso who said, “Good artists borrow. Great artists steal.” This led into an after-dinner romp through a memorable metaphor, 6 Rude Realities and 2 Slightly Serious Suggestions.

Memorable metaphor – Kamen showed a picture of a “south-pointing chariot” invented a thousand years ago by the Chinese. The intricate technology is a very early example of a computing machine and was used to keep people from getting lost while crossing the Gobi desert. In Kamen’s mind this does not qualify as an innovation, however, because it was never commercialized … primarily because there was a much simpler invention – a compass – that did the job much better and cheaper. Now, during design sessions at Kamen’s company, someone will always ask: “Is it a south-pointing chariot,” as a reminder to think about other, simpler ways to accomplish the same task.

Read more about:
Rude Realities
Slightly Serious Suggestions
Kamen Sound Bites
The Why, When, How and Who of Innovation
FIRST (For Inspiration and Recognition of Science and Technology)

FFE: Stephanie Burns, Ph.D.

Creating an Innovation-Rich Culture

Dow Corning went into Chapter 11 in 1995 and by 2000 had had 5 years of flat sales and earnings. Formed as a joint venture between Dow Chemical and Corning Glass 61 years ago, the company was in a dark place. It formed 7 non-executive teams chartered with reinventing the company.

Dr. Burns shared the story of how those set in motion a stream of innovations that have successfully turned the company around. “If you can unleash the creative energy of people, you can create an innovation-rich culture,” she states. Although she states that Dow Corning is “only 10% there,” she shared the following insights.

Challenge statements for the reinvention teams:

Assume the company doesn’t exist, how would you build a company around the core competencies?

If you had the current people but no capital, what would you do to create growth?

If you couldn’t sell your current products, what could you sell based on the core competencies?

Read more about:
Core Components
Values
Lessons Learned
Innovation Index

FFE: Clay Christensen

Clay Christensen is as close to an innovation "guru" as we have in the field today. His books "The Innovator's Dilemma" and "The Innovator's Solution" are must reads. If you haven't read either, skip the Dilemma and read Solution. Even Christensen says Dilemma is pretty depressing and not very enlightening about what to do if you're trying to stimulate innovation.

Christensen seems to be a genuinely nice guy and generously donated his time to share his thoughts with the folks at this conference. However, he's caught in the same dilemma that many widely read authors find themselves: do you assume everyone has read your books and talk about new stuff or assume they haven't read it and cover the same material. Christensen seemed to assume the latter so almost all of his material was straight out of the book. So, if you have read his books, you didn't miss much. If you haven't, put it on the top of your To Read stack.

FFE: Peter Koen

Peter Koen (left) with David Bonner
(click for larger view)

“Do anything but talk!”

Peter Koen, Associate Professor, Stevens Institute of Technology, emphasizes the importance of getting to tacit knowledge – that information that comes through stories, metaphors, pictures, images, physical representations and almost never comes through language only.

Three key innovation capabilities.

Koen’s experience states that innovative organizations have 3 major capabilities:

Leadership, Culture and Business Strategy – senior executives must provide financial and executive power in order for innovation to become a real capability.

Opportunity identification – the ability to ask “What sandbox should we be playing in?”

Technology/Competitive Stage Gate – a disciplined way of managing uncertainty.

New Concept Development Model includes the following:

Engine -- Leadership, Culture and Business Stragegy
Opportunity Identification
Opportunity Analysis
Idea Generation and Enrichment
Idea Selection
Concept Definition
Concept Selection and Technology Stage Gate

No resources, no innovation.

FFE: Eric von Hippel

Eric von Hippel, Professor and Head of the Management of Innovation and Entrepreneurship Group at the MIT Sloan School of Management.

Innovation definition: anything new that is actually used (“enters the marketplace”) – whether major or minor.

“Firms with the highest innovation-related profit expectations are most likely to innovate.”

Where does innovation come from?

It is important to know where ideas for innovation come from so that you can focus on developing new ones.

Users -- depending on industry, up to 90%
Organization itself – depending on industry, approximately 20%
Suppliers – some industries, about 30%
Others – up to 15%

Lead Users