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tag:blogger.com,1999:blog-186076352015-06-30T07:14:03.644-07:00Innovate on PurposeOVO Innovation's blog site dedicated to ideas, conversations and approaches for sustainable, repeatable innovation.Jeffrey Phillipshttp://email@example.com:blogger.com,1999:blog-18607635.post-58939109855840280692015-06-30T07:14:00.001-07:002015-06-30T07:14:03.654-07:00Innovation: Exploiting and ExploringIn every aspect of life we create simple dichotomies to simplify decision making. Something is right or wrong, black or white. We do this to simplify our lives, shorten decision making time and become more efficient. Creating these false dichotomies means we often miss excellent opportunities for much deeper consideration.

Take innovation for example. No matter where you turn companies and experts are creating all sorts of innovation dichotomies. Products or services? Incremental or disruptive? Exploiting strengths or exploring new opportunities? Constantly creating an either/or dichotomy, when the real opportunities are far richer and deeper.

Exploit or Explore?
I can say without fear of rejection that most innovation at the corporate level is incremental, extending existing products and services by adding new capabilities or features. There's nothing wrong with incremental innovation. It creates solutions that keep existing customers engaged and creates short term revenue. It allows an organization to "exploit" its existing capabilities and portfolios.

On the other hand, very little innovation in corporate levels is focused on transformation or disruption. There are several reasons for this fact. First, transformative or disruptive innovation is unpredictable. It's hard to determine the benefits or outcomes of something completely new. Second, transformative or disruptive innovation can work against the existing business model, in effect leading to cannibalization of existing products and services. When the overwhelming priority is to sustain the business model and make money with existing capabilities and resources, it can be very difficult to contemplate disrupting the business model. Third, disruptive innovation can be expensive, and time-consuming. For these reasons and others, too little focus and energy is expended on transformative or disruptive innovation.

It's not really either/or
But you see we've introduced a false dichotomy: exploitive versus exploration, and are forcing leaders to make tradeoffs between these two alternatives, without fully understanding several important factors.

First, too often innovators ignore the breadth and depth of innovation possibilities. Doblin has described, and many of us use their description, of ten different types or outcomes of innovation: products, services, business models, channels, brands, value networks and so forth. Yet many corporations artificially narrow this to simply creating new products, when in effect we should be focusing on innovating business models, channels and experiences. Again, false narratives and thinking narrow options far too often and too early.

Simultaneous and broadly defined

Instead of narrow definitions, we need to open up innovation definitions to larger thinking. Corporations need a balanced blend of innovation to exploit existing capabilities (incremental, cost-cutting, efficiency focused innovation) AND exploring new markets and opportunities (transformational, disruptive innovation). Secondly, corporations need a much broader definition of desired innovation outputs or targets (products, services, business models, etc), rather than simply tinker with product innovation.

Implications

If you accept the idea that innovation must be more broadly defined and simultaneously working on both exploiting and exploring opportunities, then there are implications for your business. First, you'll need to reallocate resources. Far too many resources are focused on simply running the day to day business. Far too little resource is invested in innovation, of any type. Second, you'll want to rethink how you assign people. Your best people need to be working on your future, not your present or your past. Assign your best people to innovation.

Third, focus on a balance between exploiting and exploration, based on the amount of competition and change in your industry. The faster the change, the higher the competition, the more you should be focused on exploration, because significant change is going to happen. You can cause it or you can react to it after the fact.

Fourth, work on creating a much more fluid organization, able to adapt to changing circumstances - changes you create and changes thrust on you by external forces. Solid, rigid organizations create barriers to change and then crumble as new products and new business models emerge.

Fifth, focus on changing and adapting your business model. Too much emphasis is placed on product innovation, and too little on adapting and shifting business models. Ultimately it's not a product or service that drives success in the market, it's the business models, and increasingly we can see that business model longevity is shrinking in the same way that product cycle longevity is shrinking. No longer do we hail the impact iTunes had on the music industry, now we look in wonder at how quickly streaming options have overtaken iTunes, forcing even Apple to react.

To remain competitive corporations must become far more aggressive innovators, constantly innovating existing products and capabilities (exploitation) and constantly evolving and identifying new markets, segments, technologies and opportunities (exploration). As they do the latter, they must become far more nimble and agile, able to modify and shift business models. Increasingly, business model innovation must be the focus of innovation efforts, with products and services viewed as by-products of a business model innovation.

A new change model

All of this means corporations need a new model of change, moving away from the unfreeze/refreeze models of the past, because in the future there is no time to refreeeze, only to repurpose, shift and adjust. These concepts and demands call for greater fluidity in the organizational structure, nimbleness in the corporation culture and better strategy and implementation in the management ranks. Innovation, business model adaptability and change management are not nice to haves, they are the competitive advantage of the emerging marketplace. Paul Hobcraft and I proposed some ideas about a new change model and the concept of a "fluid" business structure in a series of articles published on Innovation Excellence.

Trying to accomplish both exploitation and exploration in a "frozen" organization won't work - all the constructs are focused on exploitation. This is why ambidextrous organizations are important and why we need new change models. You cannot afford to focus on exploitation alone, and few firms would even think of a solitary focus on exploration. You need to be doing both, simultaneously, which will demand new flexibility, new agility, the ability to change at speed, and execute established processes efficiently while conducting exploration capably. Innovators need to identify and adopt completely new models of change in order to thrive. Jeffrey Phillipshttp://email@example.com:blogger.com,1999:blog-18607635.post-52940554124624424442015-05-26T06:19:00.001-07:002015-05-26T06:19:56.440-07:00Innovate your processes before innovating your productsI was leading an innovation training session, talking about the reasons for conducting trend spotting and scenario planning prior to idea generation. There are many reasons why I like trend spotting and scenario planning, but it's the sense of understanding what might happen in the future that really resonates with me. I described why we advocate trend spotting and scenario planning as a component of innovation, especially as the expectations of an innovation activity are more disruptive. Given the pace of change and the number of factors that are changing in the environment, taking some time to understand what may happen and, more importantly, what may happen in response, is very important. No matter how good your ideas are today, most firms cannot hope to realize them as new products or services for months or years.

If you are confused by the opening paragraph and its juxtaposition with the title of the blog post, don't be. We teach trend spotting and scenario planning to our customers to help them understand the importance of recognizing emerging needs and emerging segments, because the great ideas they generate won't become products or services very quickly. They'll become products and services when the product or service development process in their organization provides resources for the new ideas, and spend time developing, validating, testing the new products and finally launching them. What will the world look like when we are ready to finally release a product based on an idea from the past? What new needs or new segments will emerge?

As we teach trend spotting and scenario planning inevitably one senior member of the attendees will raise his or her hand. With careful patience they will tell me that while other firms may take months or years to move from the recognition of an opportunity to a good idea, and then from a good idea to a finished product, and then from a finished product to a successful market launch, their firm is different. And then I ask them to tell me their firm's average product development process timeframe. Usually, blank stares result, for good reason. First, there is no such thing as an average product development timeframe. Product development differs depending on the amount of change, the available resources and the urgency of the product need. Second, very few firms keep track of their product development cycles, so they are unaware that for many of them, product development cycles are GROWING at a time when product lifecycles are SHRINKING. That can't be a good result.

What this bring me to is the original topic of this blog post - and the title of the post. Far too many organizations want to "innovate" products and services, only to be stymied by their inflexible or unresponsive product development process and capabilities. For the last 20-30 years most organizations have spent a tremendous amount of effort and training to hone their product development processes, eliminate waste, restructure priorities, implement Stage-Gate and then test other philosophies like Agile. The vast majority of product development teams are underresourced, overtaxed, and constantly bombarded by changes to existing product developments as well as revisions to priorities for projects already in the hopper. They typically have few tools to help re-prioritize projects and almost always have the wrong skills available for the next project in the hopper. Further, simply developing a new product or service doesn't mean it's ready for launch. Products and services must be validated through customer feedback, fully tested, integrated with other products or services to tie into a larger offering, and a marketing campaign must be prepared. As should be apparent, all of these actions can take months or years, and that's before we incorporate any product review by the regulatory agencies if the product has an impact on the health or safety of consumers.

In the final analysis, it becomes clear that in order to innovate successfully, a company must innovate and update its existing internal processes before trying to innovate products and services. Companies worry about the investment and time associated with developing a new product, concerned that customers won't accept or adopt a new product. This should be a secondary concern, because the vast majority of product or service requests that enter the product development and launch stages - what many of us in innovation call the "back end" of innovation - simply fail to ever get resourced or funded. There's simply not enough time, resource or management engagement to move new, risky ideas ahead of existing product development projects, and the backlog extends for years.

We worked with several clients on this issue, and almost always came to the same conclusions. Companies need to respond to this issue in one of three ways:

Rethink the internal product/service development process, to emphasize allocations to new products over existing projects. Accelerate decision making and shorten cycle times to get new products to the market faster.

Outsource the design and development of new products, leaving your existing product and service development team to focus on legacy products and services, to reduce conflict and confusion over resource priorities.

Create a hybrid that speeds up and reworks internal capabilities while tapping external partners for key innovation tasks.

Regardless of the outcome you select, you'll need to spend time rethinking the approach and focus of your product and service development capabilities.

Now, it may be easy to suggest to yourself that innovation is an occasional activity and doesn't merit making changes to a stable, reliable product development process. This thinking is wrong on both counts. Innovation will become a far more consistent exercise as the pace of technology change increases and as competition increases. Innovation will be required simply to remain in the game, not as an opportunity to leap ahead, which few take advantage of anyway. Second, most product development processes do a poor job allocating resources and establishing priorities, and are bogged down with poorly defined projects and inadequate staffing levels. It's exceptionally rare for products to exit the process on time and on budget.

If you hope to sustain innovation, start by focusing on your internal processes, both by developing a "front end" capability and reworking or rethinking the execution phases in the "back end". The absence of either process, or the existence of an inadequate process in either case, stymies innovation. Jeffrey Phillipshttp://firstname.lastname@example.com:blogger.com,1999:blog-18607635.post-71351061332264144712015-05-15T08:50:00.002-07:002015-05-15T08:50:30.228-07:00The problem with corporate innovationIf that sounds like a pretentious title, you are probably right, but it's time to start talking about the fact that so many companies simply cannot innovate effectively. Many long standing corporations in the US are simply withering on the vine, unable to respond to changing market conditions, new competitors or changing consumer demands. Past success does not guarantee future success, and by the time many of these firms recognize the need to innovate the opportunity has past them by.

Corporate innovation faces challenges that entrepreneurs can't fathom. Entrepreneurs often wish they had the people and resources that larger organizations do, without realizing that all those people and resources are already spoken for. Larger organizations lack the freedom and agility that smaller organizations have. Larger organizations are very slow to recognize and respond to major seismic shifts, so comfortable in their day to day operating models. Industry conventions become first defensive barriers and then comfortable blankets, reassuring large organizations that they understand what the customer needs and what the industry will do.

Corporate executives face a really difficult challenge: on one hand they must meet the quarterly numbers, or heads will roll. Yet meeting quarterly numbers means an all hands on deck focus on day to day operations and ever increasing efficiency and effectiveness. Yet on the other hand they are expected to grow revenues, differentiate and create valuable new products and services. The difference is that the payoff for new stuff is all in the future and relatively uncertain, while cost cutting and efficiency is easily understood and implemented, and adds value to the bottom line immediately.

So corporate executives are faced with a couple of important questions. First, how much innovation should we do, and of what type? Second, how do we allocate resources and funds to innovation, and how do we oversee it and manage it? Third, do we have internal capabilities and bandwidth to do innovation, or should we build the skills or outsource the work? Faced with all of these questions, executives are often satisfied with small pilots or distributed innovation activities that may accomplish some incremental innovation but don't build innovation capabilities or change the operating models or culture of the business. In other words, they are "innovating" but it doesn't seem to accelerate growth. That's because where there is little risk there is likely little reward. Further, even if the organization gets better at generating ideas, they haven't resolved how to commercialize good ideas quickly, due to long decision making and product development processes. It's not an either/or proposition. To get better at innovation you must design and develop a "front end" idea generation capability and link it to a product or service capability that is better at allocating resources to the best solutions.

Of course this demand for more innovation, and its incumbent investments and implementation timeframes, is happening at the same time as executive tenure shrinks. Executives need to hit the ground running, demonstrate real value in their positions or the corporation will move them on to other roles. Trying to "invest" in innovation capabilities and competencies isn't a winning proposition when the results may not happen for several years.

So executives are faced with a dilemma: either use expert external partners who specialize in innovation to create new products and services, or build internal capabilities. Both are ripe with opportunity and risk. Outsourcing innovation means that the corporation becomes even more focused on day to day operations and may become blindsided by a new entrant, while paying top dollar for new ideas. Where does the money come from to fund the external innovation consultants? Can the ideas or concepts they generate enter the product development process?

On the other hand, if you try to build an internal innovation capability, that will mean designating staff to focus on innovation, and build skills and methodologies. That sounds a lot like an internal investment that won't pay off in new ideas for quite some time, and even then may not generate valuable ideas.

So we are left with the classic tradeoff of money (outsourcing) or time (developing internally). Currently, money is cheap and time is valuable, so I believe we'll see a turn to more and more outsourcing of innovation, which is smart in the short run and terrible in the long run. The more corporations outsource innovation the more insular and protective of their operating models they become. Innovation shouldn't be thought of as an occasional activity to boost revenues but a consistent internal capability to constantly reinvent both the corporation and the industry itself.

Until executives decide what innovation is meant to do, its role and position within the strategic framework of the corporation, it will have only short term appeal in most organizations.Jeffrey Phillipshttp://email@example.com:blogger.com,1999:blog-18607635.post-87580016272513714302015-05-13T06:18:00.003-07:002015-05-13T06:18:46.114-07:00Where to focus your innovation effortOVO has done a fair amount of innovation work in the banking and financial sector. As such I would not call us "experts" in the banking or financial services space, but we've spent time there and we are always interested in new ideas that are percolating in the industry. It was with great interest that I read a synopsis of a presentation given at Forum 2015, by the wonderfully named Jeffry Pilcher, who is the CEO/President and Founder of The Financial Brand. His talk to the conference was on a key innovation target. Not customers, not needs, not products, but on saving people time by reducing complexity.

Many, many times clients have debated about the best innovation opportunities, from opening a new market segment to creating a disruptive product. But many of these factors miss a key point: the vast majority of customers, as Geoffrey Moore and others have demonstrated, are early or late majority, unlikely to change and unwilling to change unless there is a really powerful value proposition. In that case, while we as innovators need to think about compelling new products and services, we ought to first decide which of three or four key factors we want to solve that really matter in people's lives. Pilcher does an excellent job explaining why saving time is so valuable. His argument is that banking is complex and takes far too much time, when people are already overwhelmed and want more time for themselves.

Key factors to improve

So, if time is one key factor to improve, what are the others? I'll argue that it is a relatively short list:

Saving time (dramatic savings, not just shaving a few seconds here or there)

Reducing complexity, simplifying usage

Improving customer experience

Improving usability or design to create intuitive solutions

Integrating disparate but dependent activities

Pilcher has dealt nicely with saving time, and argues that the way to do so is to remove complexity. I'd have gone farther in the banking space to argue that improving customer experience, in all channels and in all interactions, is vital to improving experience and saving time.

Apple has proven that design and intuitive solutions are valuable innovations, since they simplify consumers lives and make adopting new products or services far more easy to accomplish. Apple (with iTunes) and others have demonstrated the power of integration - combining disparate activities that were important but difficult to accomplish in one hopefully simpler, more integrated solution.

In the end, most people are trying to solve fundamentally simple problems that are typically based around these issues. Many innovators often have a hard time differentiating between symptoms and the real underlying illness, if I can use a medical analogy here.

Innovation Outcomes

Beyond confusion of symptoms and illnesses, there are other unfortunate perspectives that corporations introduce. Many corporate innovators put the cart before the horse. They suggest that they need a new widget or product that will generate $X amount of revenue or profit, and argue that they can get this return because the idea will add more value or features for consumers. Instead, they should build their assertions starting with the most basic outcome for consumers. The new widget will save time, reduce complexity and improve customer experience, attracting new customers and winning over customers from other vendors, leading to new revenue and new profits. Where you start your thinking, what you base your outcomes on, matters in the end. Innovation to drive new revenue and profits is an internally focused activity that will be shaped by internal needs. Innovation to change lives or experiences is an externally focused activity that will be viewed and understood as such by consumers, and will be shaped as such through the innovation process.

What does this do for the consumer?

The first question we should be asking, then, is what does the consumer want to overcome or resolve? Yes, the consumer has a "job to be done" and can do it in many different ways. But ultimately innovation should reduce the workload, reduce the complexity, reduce the uncertainty. We at OVO always talk about innovating from the customer's perspective. The customers don't necessarily want new stuff, they want better lives, more time and interesting experiences. Use these as your starting point for defining your innovations, and let that lead you to new products or services.

Where in the customer's experience is the greatest amount of needless complexity? What factors or features consume time but don't provide equivalent value? What disparate capabilities or needs do people have that must be accomplished that could be easily combined? If you want to know where to focus your time as an innovator, there are worse places to start. Jeffrey Phillipshttp://email@example.com:blogger.com,1999:blog-18607635.post-82454114907116282182015-05-11T07:52:00.000-07:002015-05-11T07:52:02.023-07:00What Innovation shares with HumorI had the opportunity to listen to NPR a lot over the weekend. I was driving my daughter to and from her college as the semester has just ended. That meant a lot of time on the road, listening to music, books on CDs and the radio. I've found that NPR is a good source for a lot of my innovative posts, and this weekend was no exception. Matt Diffee, a cartoonist for the New Yorker magazine, was interviewed in a news segment. What struck me was how many similarities humor shares with innovation.

Here are just a few commonalities I thought were interesting:

Success rate
Take for example his "success" rate. Diffee says that it's a good week when one out of ten of his cartoons is purchased by the New Yorker magazine. What goes unsaid is that there are some weeks when none of his ideas are accepted. Diffee has to restart his project clock every week, and gets constant, unrelenting feedback on his ideas in the form of acceptance and a check, or outright rejection. We innovators need to appreciate what a cartoonist or a stand up comedian experiences before we get too frustrated with our own experiences. These guys get their heads handed to them on a weekly basis, and that's how they earn their living. Most innovators I know get frustrated when their ideas are rejected, but they fall back on their regular jobs.

The timing of an idea

Diffee described a cartoon he drew of an old man with a sign that said "face painting". The old man was holding interior paint and a roller, clearly not what most kids would expect. Diffee and his friends thought the cartoon was funny. It was rejected by the New Yorker the first time he submitted it, and the second time. His mom found the cartoon and encouraged him to submit it again. Undaunted, and without much to lose he submitted it again. The New Yorker accepted it the third time he submitted it. Ideas and cartoons are similar - there are times and places for them, and just because an idea is rejected at a specific time and place does not necessarily make the idea a bad one. It can be that the presentation of the idea was poor or the audience not quite ready or right for the idea.

Practice

In another story making the rounds Sara Silverman was angry with a comedy club in New York for paying her less than the male comic that went on just before she did. It later turned out that the club had asked her in to fill in at the last minute and offered her the standing rate for comedians trying out their new programs. The kerfluffle was over $10 or cab fare, which is what it turns out a lot of comedy clubs offer comedians who are just breaking in new material. I'm not here to weigh in on gender equity, but to point out how little these folks are paid in service to their new material. Even the lead spot was only paid $60 bucks.

Yep, you read it right. Even Seinfeld and other famous comedians must break in new material to see how it plays. They work with little fanfare to develop their acts, in small clubs with little compensation, to get their timing and stories just right. In other words, experienced, well-paid performers are perfecting new programs through trial and error, testing what works and what doesn't. In the innovation world we'd call this experimentation, testing new ideas and developing them, first in simple prototypes without a lot of fanfare, mostly to learn what needs to change and what can stay. A lot of this innovation work happens behind the scenes, trying new things, testing new concepts, long before the final product is brought out and released. There's a lot of work to develop new ideas, and constant practice helps.

Risk/Failure

Every humorist, comedian and cartoonist risks a lot every time they display their work. Their ideas about what is funny, what will entertain and make people laugh, may or may not work. They are on stage, paid to make people laugh, and if the material doesn't work they quickly get the ax. Every comic understands that's the nature of the opportunity. We innovators need to have the same expectation. We need to believe in our ideas and understand and embrace the risks that come with asking to change the status quo or introduce something completely new and different. Innovation is often born and developed in the background, as I noted above, but it must be launched in the open, where everyone can see, understand and respond. Innovators have to be comfortable developing their ideas with little resource and in the background, then announcing their ideas on a big stage where risks are high and failure is frequent.

The Unexpected

Finally, innovation and humor share the fact that the punch lines are often unexpected. The best jokes lead up to a story with an expected ending, only for the punch line to be something completely different, and the unexpected outcome branches into a different perspective that people find funny, shocking or just unexpected, and it is this different ending that makes the joke work.

Innovation works the same way. We innovators are often confronted with the same challenges and seek to solve problems or needs that customers have. We can do this through continuous improvement, which is the solution customers expect or through innovation, which tells the same story but comes up with very different and potentially unexpected solutions. When we "branch" to a new ending, we need to ensure the branch we take has meaning for customers, who often either don't know what a compelling solution would look like, or don't believe we'd have the courage to create it.

These are just a few of the factors that humor shares with innovation. I know that both can lead to significant delight of an audience, or a stony, cold silence of rejection.

Jeffrey Phillipshttp://firstname.lastname@example.com:blogger.com,1999:blog-18607635.post-60711890403747001282015-05-06T05:49:00.003-07:002015-05-06T05:49:59.900-07:00Innovating against conventional wisdomI love those funny insightful quote from people like Yogi Berra, who was either an unrecognized cosmic genius (When you get to a fork in the road, take it) or perhaps occasionally just full of malapropisms (Nobody goes there anymore, it's too crowded). Likewise, I think, we innovators should think about how and where we choose to innovate. Another (baseball) related quote sums this up perfectly. When Willie Keeler was asked how he was able to sustain such a high batting average, he responded it was simple: hit em where they ain't. Shouldn't that be our innovation mantra as well?

Here's what I mean. Far too often "everyone" agrees that a specific market or space is just "ripe" for innovation, while other segments, markets or industries are just too limited, and no one in their right mind should innovate there. Too often experts tell us things that they know are true and direct our attention to "facts" not quite in evidence, leading a lot of lemmings to innovate in a particular market, while other markets or segments, crying out for innovation, are ignored. Let's use a specific example. We recently completed a project for a large retail bank. The conventional wisdom is that all Millennials and Gen Y and Gen Z will never use or frequent a retail bank. They are too wired in, too mobile and too dependent on the internet to ever darken the door of a branch bank. Or so we were assured by experts. So this leads to a lot of "innovation" in mobile apps targeting younger customers and the constant breast beating of retail bankers stuck with old, unattractive retail branches. So no one is innovating in branches, except trying to figure out how to turn them into coffee shops or community centers. All the smart money in the retail and commercial banking sector is in payments and money movement, not in retail banking. After all, nobody goes there anymore.

But what if the prognosticators and experts are wrong? What if we should be innovating in the very place they suggest we ignore? After all, as an innovator you have a number of choices as to where to innovate, but very limited resources. Should you innovate in the same markets and segments that all the cognoscenti suggest you should, and simply follow the crowd, or should you carefully consider all the data and seek markets, segments and customers where your innovation will matter? Should you zig when others zag, even in an innovation setting? Is it better to be the fifth or sixth firm to "innovate" is a specific space where everyone is innovating, or to carve out unrecognized opportunities that you can own?

Well, the recent punchline to the issue of whether or not younger consumers will use branches is new research that demonstrates young customers use branches about the same amount as older customers. It's not that younger customers reject branches. Younger customers (and the rest of us) now have different interactions and expectations about interacting with banks, and many different channels. There are simply some interactions where all of us, regardless of age or experience, prefer the face to face interaction. And, since many banks are ignoring the branch experience as an innovation opportunity, perhaps some bank out there will realize that branch banking isn't going away, but is simply changing, and will realize that no one else is really innovating in this space, while all of the competitors are seeking to drive all banking to a hand-held device. While "everyone" is talking about the death of the retail bank, some firm is going to understand the overlooked opportunity and be the only one innovating in that space - literally hitting them where they ain't.

Sometimes what is counterintuitive is also true. I'm guilty of nodding along as experts told us the branch banking system would die on the vine, that no younger customer would be caught dead in one. Again we've neglected to think through the entire customer experience to realize that not everything can be automated, minimized, placed on a handheld device. The sooner the branch banking system realizes that (and overcomes some other issues like opening hours) the greater potential for relevancy.

So the question becomes, how much of the conventional wisdom should you accept when it comes to where you place your innovation bets? What happens if every player in an industry accepts the same models or wisdom (I'm looking at you now, Wall Street, and the whole CDO packaging fiasco). Can you afford to be the fifth or sixth company to innovate in the same space, or does it make sense to differentiate where and why you innovate? I'm often reminded of the Woody Allen movie Sleeper, in which Allen's character wakes up in the future after a long coma, to find everyone eating fatty foods and smoking cigars constantly. When he rejects the lifestyle, they tell him that people in his generation had it all wrong. Steaks and cigars were never life threatening. Will we wake up from our comfortable sleep to find out that all the conventional wisdom was wrong? I suspect it won't take us long to discover the error of conventional wisdom and innovation bets. Less time than Allen's character, but with greater complications.

If you've read this far, thanks for sticking with me. There are two interwoven points I wanted to make, and have probably done so relatively poorly. The first is that innovation goals should be driven by your specific insights, not on what the cognoscenti decides. Far too often the conventional wisdom is wrong, and leads us to investments that don't pay off or were simply wrong. It's often easier to follow the herd, when experts and analysts are telling you that younger generations won't go to branch banks, who is to say they are wrong?

The second point is that every innovator has only a limited number of bets to make in any given time period. Too many factors in running the day to day business will restrict the number of innovation activities that you can undertake. So, the question becomes, should you innovate in exactly the same place everyone else is innovating, or should you innovate in markets or segments that have needs that others are ignoring or overlooking? In the payments space, can you compete with Apple, Facebook, Google, Paypal and a host of others, or could you rather partner with these firms in these opportunities and innovate in the branch setting, which most banks are ignoring? Of course I've used a banking example, but the same phenomenon plays out in every industry. Jeffrey Phillipshttp://email@example.com:blogger.com,1999:blog-18607635.post-81807800574121155832015-04-29T06:10:00.000-07:002015-04-29T06:10:00.468-07:00Bolt-on or Built-in InnovationI'm led to post today by an article from Gary Hamel and Nancy Tennant in the Harvard Business Review. In it, Gary and Nancy provide a list of actions for innovation success. When I discovered this list, I rolled my eyes, because there is always another consultant providing another list of things to do in order to succeed at innovation. And those lists are always self-serving lists of tools that may support an innovation activity, but will not build an innovation competency. Anyone, anywhere, can do innovation once, and may even succeed at it. As we say in the south, even a stopped clock is right twice a day. What far far too many corporations have failed to understand is that they don't need innovation once. They need innovation constantly, continuously, because the pace of change and shifting competition and consumer expectations demands more frequent innovation.

That's why I initially rolled my eyes at another list of five requirements for innovation. But Hamel and Tennant do something you rarely find in these articles. They name check all of the tools and activities that many firms have completed. Idea database in place? Check. Ability to mine customers for insights? Check (although I find this one doubtful). Awards and recognition for successful innovators? Check. In other words it seems that many corporations have checked the boxes of all the innovation tools and methods that should lead to innovation success. Except they failed to realize that these need to be applied constantly, and in a holistic sense. Just as a carpenter has a range of tools in his toolbox and uses each according to the need presented, we innovators must have all of these tools available to us, and use them appropriately and consistently.

If you decide that the Harvard Article is too long, or you simply don't have the time to read it, here's the pull quote as far as I'm concerned. OVO has led innovation projects for over ten years, and we have constantly reinforced this idea. It's great to see it reinforced by thinkers like Hamel:

It takes a systematic approach to build a systemic capability—whether that is Amazon's logistics prowess or the near-flawless service you receive as a guest at a Four Seasons hotel. So it is with innovation. Skills, tools, metrics, processes, platforms, incentives, roles, and values all have to come together in one supercharged, all-wheel-drive, race-winning innovation machine.

In other words, innovation is a system, and must be deployed as a system, interlinked, fully capable, and constantly engaged. These tools and methods and processes (and people) must work together, and work on a continuous basis, in order to success. Earlier in the piece Hamel and Tennant use the analogy of a well-tuned engine disconnected from its transmission. Again this reinforces the idea of an interconnected system, operating at full capacity. So the key question becomes, what does it take to get there?

Hamel and Tennant provide 5 requirements, which I'll list below:

Well-trained people who think like innovators. They conflate a couple of ideas in this requirement. First is a cultural phenomenon that people must overcome the business as usual culture and think about innovation and change, rather than efficiency and stability. Also embedded in this idea is the concept that people must be trained on innovation tools and processes.

A definition of innovation. One of my favorites. What is innovation for your company? What does it entail? Is it a product, a service, a business model or something else, or all of the above? What is the desired scope? Incremental change or disruptive change? Without these shared definitions, people will define their own scope and outcomes, and will usually revert to conservative definitions.

Metrics. Here I disagree somewhat with Hamel and Tennant. They argue that many companies don't measure innovation. I think the real problem is they measure the wrong things. They use traditional measurements like ROI to decide whether or not the innovation will succeed, rather than understanding that innovation may require new or different measures and metrics. I've rarely found too little measurement, but often found too much of the wrong measurements.

Engaged leaders. I wish they had placed this one first. You will find that you cannot innovate in a large corporation without involved, engaged leaders. If the leaders aren't passionate about innovation and willing to take risks, then no one else will be. Leaders set the tone, allow for mistakes and experiments, provide direction and most importantly free up resources. To me this is the first requirement.

Innovation Friendly processes. Again the authors conflate several ideas here. They speak directly to issues of planning and budgeting. Most annual cycle planning is inadequate for innovation, and most budgeting processes rarely consider innovation, so these may need to change. The authors don't dwell quite as much on defining innovation processes, which I think is equally important. Until we can define a consistent, end to end process that people can follow, innovation is haphazard and won't be as successful as it can be.

The authors make another point that is vital - the difference between innovation as a "bolt-on" to existing business as usual, or "built-in" to the corporate culture and way of doing business. We at OVO have talked for years about the fallacy of a "bolt-on" innovation capability. This is a fallacy because the corporation seeks to sustain business as usual and bolt-on innovation around the edges. Since there is no slack in the system and no time or attention paid to the bolt-on process, it never gets done. Unless and until innovation is core to the way you work, what I called in my book innovation business as usual, you'll continue to find your innovation efforts less than satisfying.

Innovation must become a core part of your operations, not an experiment on the margins, but core to the way you do business. This means it must start from the top, influence how you think and the skills you acquire and be supported by (and not blocked by) corporate processes, timetables and resource allocations. Right now in many corporations some of the tools or methods exist, but they aren't bound together, they don't exist as a holistic process or capability and too many existing processes, allocations and structures create barriers rather than enablers for innovation. Time is ticking past - change is inevitable and ever accelerating. Hamel and Tennant have the right message. Are you listening and implementing?

Jeffrey Phillipshttp://email@example.com:blogger.com,1999:blog-18607635.post-82484396671556261832015-04-21T05:49:00.001-07:002015-04-21T05:49:55.264-07:00Universities get an "F" for innovationFor a long time I've pondered the dichotomy of the higher educational system in the US. On one hand the American university and collegiate system is perhaps one of the finest in the world, drawing students from many countries and cranking out many exceptional graduates. On the other hand, I'll assert, it is failing our students and our economy miserably, because the educational system is rote, designed for a production age when we are clearly in an informational and innovation age, does not encourage risk taking or experimentation, and is far too comfortable and complacent, far too unwilling to change.

Let me illustrate by an example. I am a terrible golfer, as anyone who has every experienced the hazards of playing golf with me will testify. I would never agree to provide golfing advice for even a child, worried that my advice would lead them astray. In contrast, our university systems pride themselves on "innovation" yet, in every way are strangers to the word, steadfastly clinging to centuries of history, discouraging the very factors that make innovation possible, content to produce the same sorts of outputs they created years ago, and unwilling or unable to recognize that they need to change, and that their customers and funders want them to change. How does a university system, which clings to old methods, old curriculum, produces graduates with the same experiences and same knowledge as in the past, and refuses to update its own structures, claim to be "innovative"? You wonder why it's hard to innovate? One reason is that few people are trained in innovation tools, but even more importantly, many are indoctrinated in their educational systems to conform rather than to create.

There are a host of reasons why universities are failing us, right when we need innovation most. And I realize I'm painting with a broad brush here, but far too many degree systems and universities aren't teaching the stuff that leads to creativity and innovation. Just because one department or one program has some innovation going on doesn't make up for the fact that the rest of the university is stuck in the 1950s thinking. We need a revolution in how people are taught, how they think about the world. We need graduates with better and more tangible skills, people who can create jobs and products rather than people who hope to be handed a job. We need more value from the collegiate experience than we are getting, and that we are paying for, and we need universities to start innovating, in every dimension. Here are just a few of the obstacles standing in the way of innovation at most universities:

Innovation isn't a recognized discipline
Visit your alma mater's website and look up the various degrees and colleges or courses of study. Find the business school, or the English department. You can find these with blinders on, most likely. Now, go and find the "innovation" department. Heck, find the innovation courses. You'll probably end up high and dry. That's because innovation in the real world is a highly collaborative activity which embraces a lot of different skills. Strangely, college and the educational system in general is meant to introduce you to lots of perspectives and a wide range of skills, but ultimately they de-emphasize broad knowledge and curiosity for depth and expertise.

Some universities will place innovation courses in the business school. In fact many now have executive education programs that proport to teach innovation on the weekends to managers who have full time jobs. So college professors, who can't agree on what innovation is, and often have little real world experience creating new products, will offer to teach innovation on the weekends to interested business professionals. Perhaps it ought to be the other way around.

The educational system is more interested in deep courses of study rather than broad surveys of knowledge and good synthesis, which, along with creativity and curiosity should form the basis for innovation. Our collegiate system of education has it all wrong, and perhaps that's why many true innovators (Gates, Jobs, Dell, Zuckerberg, etc) left college to start their own gigs.

Innovation doesn't "belong" in the business school or the engineering school. Innovation is a broad set of skills that draws on historical cues, experiences, insights, design and many other factors. Innovation is broadly multidisciplinary and incorporates a lot of experiences and perspectives. We need graduates who can think these ways. That means we need to restructure how they are taught.

Universities don't innovate
I've often joked that you could pluck a university don from 12th century Cambridge and drop him into a modern university setting, and the only things he'd find confusing are the fact that women outnumber men and the amount of technology in the lecture hall. Other than that, many of the characteristics and features of our educational system would seem entirely familiar, and that's a problem. When the predominant way of learning remains unchanged over 8 centuries, increasingly the educational system diverges from the innovation and entrepreneurial systems. If universities and colleges want to be relevant, they have to create people who are creative and innovative. To do that, they themselves have to become much more adept not just at teaching innovation, but doing innovation. How can you credibly teach innovation in a place that clearly isn't innovative? And please don't suggest that because one lab or one graduate engineering program is turning out innovative stuff that makes the entire university innovative!

If there's another organization that has the potential for more innovation, I'm not sure what it is, but politics, silos, compensation and other factors keep the English professors and the Psychology professors and the engineering professors apart when they need to be talking to each other and exploring possibilities. Until the curriculum and silos are innovative, the compensation and recognition systems are innovative, the university won't be innovative. And if the university systems can't become laboratories for innovation, they certainly can't expect to generate a significant number of innovative graduates.

Failure and Experimentation aren't encouraged
In most university settings, failure isn't encouraged. Students know which majors will require more effort, and which professors grade on a generous curve. It's a well-known truism that it's harder to get into Harvard than it is to stay at Harvard, where close to 90% of the grades offered are "As" and "Bs". Either the classwork isn't challenging enough, or professors don't want people to "fail". But what do we teach them if they don't fail? They aren't encouraged to risk anything! Beyond the lack of risk taking and failure, most students don't experiment with anything other than substances that are probably illegal, given their age and/or state of residence. While many are busy experimenting with substances and ideas off-campus, their course of study, their path into the business world are both preordained. Just as it's rare to find an English major in an engineering calculus class (and the opposite is also true), it's rare to find students experimenting with a broad range of classes, instead following the traditional course of study, becoming narrow experts in one specific field, able to spout historical knowledge and conform to a specific way of thinking, rather than experimenting with a lot of different ideas and gaining experience working in ambiguous settings without a "right" answer.

Teaching isn't rewarded
At a school where I speak regularly on innovation topics, the capstone class for fourth year engineering majors - a two semester class where they define a customer's needs and create working prototypes to address those needs - is taught by an adjunct professor. The "full" professors are too busy doing research or teaching graduate students to bother to teach the class which is most akin to the life students will lead immediately after graduating. The best teachers aren't full professors, and many of the most notable and recognized professors don't bother to teach much. We need to place value on what the students need the most - encouraging actual teaching, exploration of concepts and ideas - rather than on research.

The value produced is declining

As a father with two kids in excellent colleges and another who will be in college shortly, I can't help but recognize that the value of a college degree is flat if not declining. Certainly my kids need a degree to get a job, but far too many people are getting degrees that don't seem to be worth all that much, driving down the average value of a degree. I'll lay some of the blame on the sheer number of people getting degrees, and some of the blame on the watered down curriculum. But shouldn't the university system recognize it's shortcomings and, dare I say it, failure in this matter? Any business that saw the value of its outputs declining in this manner would retool its processes or product development, seeking to create better outcomes and outputs. Clearly universities don't work under the same expectations or pressures, but don't they owe something to the students, and to the people who partially fund the university's existence (taxpayers) consistently upgrade the output of their process? What is the accountability for the university system to create better graduates who are more prepared, not simply to take a job, but to create a job, to create new products, to innovate from day one after graduation?

Safe and Protected
To their detriment, universities and colleges are somewhat safe and protected from the rigor of competition, and by the fact that most employers require a college degree as a prerequisite to get a job. It's difficult to start a new college or university and difficult to keep accreditation, so few new colleges are started to compete with existing colleges, and many prestigious colleges trade on their names and historical laurels. As long as the college degree is the ticket to corporate America, colleges will have a willing pool of applicants who don't look too closely at the value they are getting. But soon two factors will converge. One will have to do with the actual capability of the new employee. When jobs are scarce and skills are valuable, the people with demonstrable skills will win. The skills most in demand will have to do with creativity, design, empathy, the ability to translate needs into requirements. These skills are the "front end" skills for innovation. The second will have to do with outsourcing and offshoring. Anything that can be done offshore will be done offshore, from manufacturing to accounting. Further, as Dan Pink pointed out, anything that can be automated will be automated. Employees will be required to demonstrate their value from day one, and not in rote repetitive jobs but in actual contact with customers to create new solutions. When graduates from prestigious universities cannot do these jobs effectively, they too will be living at home with their parents, driving for Uber. Then the university system will face the result of these trends: less demand for collegiate graduates, fewer people interested in a degree, and more people interested in the skills that are necessary to innovate or to create their own jobs, which may not require a college degree. At that point the whole facade collapses. I think they've got about 10-15 years to change before this all comes tumbling down.

Herbert Stein, an economist, and a professor at the University of Virginia, once wrote that anything that cannot go on forever will stop. By that he meant that trends with unsustainable growth or expectations will have to crash. There are several trends in the higher education system that all lead to the conclusion that things have to change. Far too many people are getting degrees they can't afford and cannot pay for, which don't lead them to good jobs. Far too many people are taking degrees that don't prepare them for work, and don't prepare them to create their own jobs. Far too many people who have degrees are working in jobs that don't require a college degree. These facts are often written off as a sign of the economy's slow recovery, but seven or eight years in the economy is growing but the facts aren't changing. What needs to change is the way people are educated, and the ability of universities to innovate.

Who can push for change?

The real problem is that while everyone recognizes that change is needed, few constituents are in a position to advocate forcefully for change in the educational system. Parents who send their kids to college remember fondly what college was like for them, not realizing that the demands on new graduates is changing. Plus, these parents don't have the access or means to band together to demand change and are only involved with the college or university for four or five years while their kids are there. Students are part of the system and don't have the power to create change because they too are transient and often unwilling to rock the boat about their own education. Large and small companies which hire the graduates don't have a lot of sway with the university unless they hire significant numbers of students, in which case they can tailor a specific program to their needs. State governments, which can create real change at least for public universities, often have conflicting needs and goals and don't always have the best intentions in mind.

Universities don't have a lot of accountability and few powerful organizations exist to force them to change. This leaves societal trends and economic forces which will creep up on the complacent universities as the only real source of competitive change. Emerging requirements, trends and economic forces will eventually whipsaw the university system and cause real, painful change for these entrenched systems. Hopefully, some universities are recognizing the forces at work in the business world and are beginning to respond to the need for graduates who can innovate, think creatively, create their own jobs and have experiences at their educational institution that make them more attractive and more employable for the jobs that exist, or able to create their own jobs, products or solutions, when innovation is required.

Jeffrey Phillipshttp://firstname.lastname@example.com:blogger.com,1999:blog-18607635.post-39986377405697281662015-04-15T06:05:00.002-07:002015-04-15T06:05:14.007-07:00Sprinkling innovation responsibility like pixie dustThere's a fundamental problem in many corporations that keeps innovation from constantly delivering valuable results. The challenge probably isn't what you imagine. While many of us in the innovation space will point at a lack of tools, a lack of innovation experience, low expectations and significant risk barriers as challenges for innovation, along with a lack of resources and inadequate planning and funding, those to some extent can be overcome. In fact these are all frequently overcome when an executive really needs, demands a new product and prioritizes innovation over the business as usual, day to day operations. But herein lies the rub: who is ultimately responsible for innovation? Who wakes up every day and goes to work knowing that their progression, their compensation and their success is measured on how innovation is accomplished on a day to day basis? The answer in many companies is: no one. And further, even in companies where there are people who are measured on these criteria, they often face the challenge of responsibility without authority, or are in the wrong place in the organization to affect constant innovation. Let's explore.

"Everyone can innovate"

Let's dispense with the trite but true concepts first. You'll hear that "everyone can innovate" which is exactly true and mostly meaningless. Everyone can, and should, have the opportunity to innovate. They can generate ideas and participate in an innovation activity. A corporate culture should reward and encourage this behavior, although most don't. But even if it's true that everyone can innovate, the majority of people in most corporations don't, for a variety of reasons. Perhaps they don't think their ideas are all that great, or don't understand how to develop their ideas, or don't have the bandwidth to manage ideas and their day to day jobs. Further, if the don't innovate, they don't really risk anything. Since they aren't measured or accountable for innovation, since it's not part of their responsibilities and they don't have the authority to do it on their own, they can't be held accountable. You can't sprinkle innovation responsibility across a broad swath of the company without also dictating some fairly specific measures and goals, and constantly evaluating achievement. When everyone's responsible then no one is responsible.

The CIO is responsible!

In some companies, an individual has been named as the chief innovation officer, and in many cases he or she is nominally responsible for innovation. While we at OVO believe that a "center of excellence" is important to maintain innovation tools and capabilities, too often a corporate function focused on innovation is either a) too corporate and too removed from actual day to day operations to affect innovation in a product group or line of business or b) becomes an innovation center that generates ideas and solutions that aren't important or relevant to the product groups or lines of business. We believe that innovation is a competency that must be sustained (hence the center of excellence) but at the same time innovation must be accomplished as close to the customer, or need, or opportunity as possible. Who understands the customer, the market and the opportunity better than the product managers, sales people and others in a line of business? Shouldn't these people be active in the innovation? If so, what role does the CIO play in a day to day basis for innovation? Can they cause innovation to occur in disparate product groups and lines of business? Note that I'm not suggesting that CIOs aren't important, just that they must be intimately connected with innovation at the grass roots level and not become an ivory tower. They must encourage innovation, and have budgets to help lines of business or product groups fund innovation activities. But who, ultimately, is accountable for innovation in this model? Either the CIO is, if his or her team is responsible for generating ideas, or product group leaders and business line leaders are, if we are to conduct innovation at the coal face. In the latter instance, the CIO is a funder, resource provider and cheerleader for innovation, but shouldn't be dictating which projects are conducted. This means many CIOs have a lot of responsibility without a lot of authority. However, having a common approach and methodology means there's a greater chance of consistent innovation approaches and corporate learning.

Push it down into the businesses

If you buy into the idea that innovation should be conducted by line of business leaders or product executives, then you could argue that innovation responsibility, authority and accountability should rest with them, and in many cases I think this is actually the right place. Yet today few are measured on innovation, and few believe their executive teams will provide the space and opportunity for innovation. Most of these executives don't have innovation experience, but they are at the right place with the right level of authority to decide which projects should be pursued and how much change needs to be introduced.

We believe that the more we can encourage these leaders to innovate, the more corporations can devolve responsibility and accountability for innovation to these individuals, and consistently measure their innovation activities and outcomes, the more likely innovation is to take root and to be conducted on a consistent basis. For this to happen, annual and corporate planning needs to change, to develop budgets for innovation at a product or business team level, and compensation and evaluation programs need to change, so these leaders can see how their promotion and progression are tied to innovation. At the same time, corporations need to ensure a relatively consistent approach to innovation, developing methods and processes that can be shared across these leaders. If every business unit leader or product team executive determines their own methods for innovation, you'll soon have a cacophony of methods and styles, with little consistency and no comparability. Plus, each team will invest in its own set of processes, tools and external agents, rather than sharing tools and costs.

Responsibility, Accountability, Authority

So we'll argue that the RESPONSIBILITY for innovation should sit where the AUTHORITY is greatest, where leaders who decide what customers to serve and what products to build are found. They need to be held ACCOUNTABLE for innovation by executive management which sets expectations and budgets linked to STRATEGY and growth targets, and regularly review progress against innovation goals. All the while a CENTER OF EXCELLENCE should support and sustain innovation through the development of common tools, methods, training and other activities to provide a common innovation approach for everyone in the company.

As long as there is uncertainty about who is responsible for innovation, and no one is actively measured on it, and no resources or funds are regularly budgeted for the activity, it will be difficult to perform innovation effectively. Pushing innovation down to line leaders or product executives without also developing budgets and evaluation criteria is meaningless. Naming a CIO who is removed from the day to day operations can create an innovation team that is disconnected from the every day work and creates interesting but ultimately ineffective innovation.

Far too many companies spread innovation responsibility like pixie dust, hoping that if they spread around responsibility, many people will innovate. The reality is that most people are far too busy getting their day to day work accomplished, and lack the accountability and authority to do much in the way of innovation, and can't find the funds, time, resources or tools to do innovation competently. The sooner large corporations stake out exactly who is accountable, who has the responsibility and authority to do innovation, and the expected impact and frequency of innovation, the sooner we'll see more interesting and more valuable innovation results.Jeffrey Phillipshttp://firstname.lastname@example.com:blogger.com,1999:blog-18607635.post-68496274069645313342015-04-14T06:10:00.002-07:002015-04-14T06:10:32.604-07:00Fast innovation often leads to furious outcomesToday, inspired by the Fast and Furious movies, I thought I'd write about the appropriate speed for innovation. One doesn't have to have the arms of the Rock, or the brains of Vin Diesel, to see that most innovation is attempted at the wrong speed. And, much like Goldilocks and the Three Bears, there are speeds that are too fast, too slow and "just right". One more literary allusion and I hit the trifecta!

Speed and its relationship to innovation

What does speed have to do with innovation anyway? As regular readers of this blog will not doubt remember, there is a market window for every opportunity. Get to the market too quickly and your great idea or technology will be rejected because no one is ready for it, or the infrastructure doesn't exist. Enter the market too late and other competitors will have populated the market, leaving only niches or dissatisfied customers for you to attract. But, get there at the right time, with the right speed, and you can dominate the market.

Another concept related to speed is the increasing pace of change. Again, regular readers will recognize this as a common, recurring theme in this blog. What people don't yet understand is how quickly the pace of technology, and change in general, is increasing. Product lifecycles are getting shorter, and by extension corporate lifecycles are shrinking. Expectations from the past lead corporations to believe they can scale up, build a brand and defend the brand, reaping profits for years. Increasingly, those products and brands experience very short life cycles. It's definitely time to pick up the pace and learn to operate at speed.

When the speed is too slow

There are a number of factors that limit innovation speed, most important among them a lack of experience or familiarity with tools, a need for perfection and elimination of risk, and long decision cycle times. Each of these hampers an innovation activity and causes it to move slowly. When a company management team and corporate culture combines all three of these factors, they simply makes the process sclerotic. When the team's ability to move quickly is hampered by a lack of skills or experience, outsiders or consultants can speed up the process. However, almost nothing can speed up decision making or eliminate enough of the risks to allow a project to move more quickly other than the buy-in of executives. What factors cause your innovation projects to move slowly, if they get started at all?

When the speed is too high

It's rare that you'll find a good team, fully engaged and experienced in innovation tools, with a clear objective and a fully supportive management team. That is nirvana, and while it is occasionally possible it is highly unlikely that all of these factors fall into place. If a team doesn't have these factors yet innovates quickly, it is guilty of making unnecessary and improbable assumptions, limiting the scope of its inquiry or simply skipping steps. All of these factors will result in a project that ends quickly and delivers an inadequate and unacceptable result. Yet it is a fast, speedy project that all executives seem to want, when they complain about the amount of time it takes to innovate, when they want to cut corners and increase cycle time but don't commit enough resources and don't free up the resources to do the work effectively. Moving too quickly is simply a box checking exercise, to exclaim we completed an innovation project, but end up with products or services that no customers want or need.

When the speed is just right

A good innovation project should move relatively quickly, but not for the reasons you are thinking. As Fred Brooks pointed out in The Mythical Man-Month, nine men can't make a baby in a month. Some activities have a reasonable gestation period, no matter how expert the process or the team working on the issue. What you can do to make a project go more quickly is to adequately define the opportunity or problem (Covey's Sharpen the Saw is relevant here) and provide the right amount of training and process definition, and ensure the people working on the project understand the breadth and depth of exploration that's acceptable and necessary to do the job right. After all, it's not necessarily the fastest innovation project that wins, but the one that delivers a product or service that meets or exceeds customer needs in a timely fashion.

Remember that many innovation projects are new activities within a corporate setting, so it takes time to build understanding and expertise. Additionally, a good innovation project requires learning and discovery, which cannot be predicted. It's rare that anyone, even those of us with deep experience running innovation projects, can fully and accurately predict the length or duration of an innovation project, but there are many reasons to create shortcuts or end an activity too early.

The Fast are Experienced

If I was creating a new movie about innovation, modeled on the Fast and Furious, it would be titled The Fast are Experienced, because it takes innovation experience to know how to work quickly, and when to be patient and let an idea incubate. Perhaps we'd need The Rock with his bulging muscles and commanding presence to persuade management to leave the team alone when it needs space, and the expertise of Vin Diesel and others to accelerate the team to escape velocity. But good experience and history tells me that it's not necessarily the first who will win this race, but the ones that cross the finish line with something that matters to customers, can generate profits for the company and is in time for the market to unfold.

Experience matters when it comes to innovation. Innovation projects need to be unlike the other projects your team does regularly, otherwise they'll create the same result. You cannot become an expert or gain innovation expertise unless you've completed a number of innovation projects and learned the subtle inflection points and how and when to apply specific tools or methods. There is no one size fits all, and often not even a one size fits many approach. Gaining experience and learning when to push, and when to wait, matters. You can't skip steps in the innovation process and expect a valuable outcome. If Fred Brooks was right about software development, we can assure you he was even more correct about innovation projects.

Want to move at the best possible innovation speed? Define a consistent innovation approach or method, train your best people and allow them to gain expertise by participating in a number of innovation activities, so they learn the traps, learn when to speed up and when to sit back and let ideas percolate and incubate. There's enough stress in an innovation project without having executives stand on top of the team demanding greater speed, or insisting on cutting corners or reducing staff, which is a common occurrence.

You can have fast innovation, which in many cases will lead to furious innovation teams, or you can let your teams gain experience, and then they'll tell you how fast they can innovate.Jeffrey Phillipshttp://email@example.com:blogger.com,1999:blog-18607635.post-74169343451541519082015-04-08T08:13:00.001-07:002015-04-08T08:13:46.746-07:00If you fail to forget, you'll fail to innovateI'm happy to report that I've forgotten a lot about innovation. In fact I make it a regular practice to try to forget what I know. After over a decade of focus in the innovation space, forgetting isn't always easy, although as a I grow older I think I'll have the opportunity to forget more frequently and perhaps without trying. If all of this forgetting seems counter-intuitive, please continue to read on. If this forgetting seems natural, then perhaps you've reached the zenith of innovation nirvana. And if you are just confused, or have already forgotten why I was writing about forgetting, please join us for a celebration of forgetfulness.

Why, and What, should you forget?

Innovators who seek new ideas should seek to recognize and value the present, but not cling to it, because true innovation will create change. For those who cling too tightly to the way things are, or cling to memories about the way things were, these memories become barriers to doing something that will create change. We innovators must recognize and honor the past and present, but we must be willing to forget what lies behind and press on to what lies ahead. (A little Pauline paraphrase there).

Forgetting means releasing what you know, intentionally or unintentionally. When we let go of our knowledge and expertise, when we free ourselves from the burdens of history and conformity and imposed conventions, we can look at problems and opportunities with fresh eyes and expectations. Forget your knowledge and expertise - they often just get in the way of good ideas. Forgetting the past and looking forward to the possibilities opens up new vistas and creates expectations of better ideas.

I don't know about you, but when I forget something it makes me somewhat anxious, and I often spend time trying to recover that knowledge or memory. This deep thinking often leads to new ideas and new energy, because I devote time to thinking and perhaps make new connections in my brain. I find that forgetting is often a route to new connections and ideas. Forgetting makes me even more willing to learn, to replace what I've forgotten and to learn something new.

Further, given the pace of change that we are encountering, you may as well forget what you know to be true. Science is constantly uncovering new truths about what we held as conventions. Further, entrepreneurs are continually subverting the technologies and tools that just recently we thought were state of the art. Forget the tools and techniques you have and trust because everything from Moore's law to the network effect tells us that new perspectives and capabilities are just around the corner. To innovate you'll need to be a perpetual, lifelong learner and forgetter.

Oh, and forget the barriers, conventions and regulations that are in place today. They may constrain your business and your thinking now, but they will be changed, subverted or obsolescent in the near future. You are probably better off as an innovator forgetting everything you know and hold dear, focusing only on the needs and demands of existing and potential future customers. Find a way to solve those needs, forgetting what exists and what may constrain you, and you'll find a way to solve those challenges.

Forget the naysayers, conformist and middle managers who say it can't be done, there isn't time or a budget, that it's been tried before. If you remember these voices or facts you won't be able to innovate.

Strange to say, but I think it's true: if you fail to forget, you'll fail to innovate.Jeffrey Phillipshttp://email@example.com:blogger.com,1999:blog-18607635.post-21429426833762159502015-04-06T08:00:00.002-07:002015-04-06T08:00:57.953-07:00Innovation is like societal changeIt occurred to me over the weekend that a lot of the sturm und drang around innovation is very similar to the resistance and issues that arise around social change. As people we are, for the most part, conservative, willing to accept the established norms rather than face the uncertainty of change. Is a major innovation in a technical setting all that different from a major societal change? I think perhaps Gandhi could be a model for how we think about innovation and most importantly, how we anticipate the changes innovation introduces and how we adapt to them.

First they ignore you

Gandhi's most famous quote about creating change has to do with the response of those who could be most affected by the change. He said, first they ignore you, then they laugh at you, then they fight you and then you win. Gandhi understood that the people who resist change would first ignore the need for change. They prefer stability and certainty. New ideas might upset the established order. They want to preserve and protect the established order. Next, recognizing the change is still likely, they will "laugh" at those proposing change. The established order wants to ridicule the proposed changes, causing those who propose change to lose heart, and those who might be open to the change to question their decisions. Finally, when ignoring the potential change and ridiculing the change is no longer practical or feasible, the established order organizes itself to fight the change. There's often enough at stake that the existing order will fight doggedly to sustain how things are currently done. That's not because the people behind the existing order are irrational, but because they are conservative and happy with the existing order, and afraid that change will upset the status and certainty they enjoy. Now Gandhi was talking about social or societal change, but all of these ideas apply directly to innovation in a technical or corporate sense as well.

It's the same in corporations

Think about all of the people who have good ideas in your organization. Most of them can't manage to package and present their ideas, because managers are too busy doing the things that keep the corporation running day to day. Changes that disrupt the existing efficient order are likely to be ignored, and for good reason: anything that upsets or distracts from the efficient execution of existing processes and products is frowned on. It can be very difficult to gain the attention of managers or executives and help them see the potential of a new idea. Even when you manage to gain the attention and discuss new ideas, the second reaction is inevitable. They will ridicule new ideas because if they are truly new they don't "fit" within conventional models. They don't align to existing business models. Truly new and interesting ideas are by definition different, and the way many people respond to truly new or uncomfortable ideas is to ridicule them, rather than take them seriously. So, it's inevitable that good ideas once they gain some awareness are likely to attract questions, objections and then ridicule. It's only after the innovators have run the gauntlets of silence and ridicule that they have to be prepared to actually defend their ideas, because when it becomes likely that a new idea will be adopted, the "vested" interests will fight back. Businesses view the world through a "zero sum" lens, meaning that an investment in a new idea by definition means that existing products or services must experience a cut. Thus it is normal and natural that ideas and innovators must fight for resources with established and proven products and services.

The unreasonable man

Who or what can fight their way through these barriers to create new ideas in a corporation or in the face of societal resistance? Gandhi made it, but just barely. Galileo, while scientifically correct, was forced to withdraw his conclusions. George Bernard Shaw noted that all change is due to the "unreasonable" man, because reasonable men adapt to circumstances. So successful innovators have to be people who can conceive, develop and defend unusual or unlikely ideas, and have enough passion and commitment to their ideas to become unreasonable in the eyes of the status quo. Does your organization have any unreasonable men or women? Anyone who can conceive new ideas, get past the fact that the corporation won't have time or energy for new ideas, and who can withstand the ridicule that's going to come, and who can organize facts and evidence to defend the idea when appropriate? Without these unreasonable men and women, corporations will become complacent, will work to sustain business as usual and resist change, and will slowly wither and die.

The reason so many innovations come from startups or entrepreneurs is that they don't have to overcome the current success and existing investments of large corporations. Their success doesn't threaten a sister division's product or potential budgets. Entrepreneurs seek to disrupt or overturn industries and segments, while incumbents seek to sustain them and protect them. But the old model is slowly getting turned on its head. In the past it took decades to distribute a product and gain wide acceptance. Even more recent technologies like the personal computer or cell phone took decades to achieve deep market penetration. In contrast increasing globalization, distribution and awareness based on the internet and shifting consumer demands mean that ideas and products can be adopted far more quickly, and frankly can die far more quickly as well. Once it took a long time and a large organization to scale up and get to profitability, at which point the firm protected and defended its market position and installed base. Now, ideas and money are cheap and distribution channels are multiplying. There are far more people who can be, and who by rights are, unreasonable men and women untethered to existing industry norms, willing to disrupt or overturn markets or industries that they don't have an investment in. Big corporations must ask themselves how much of their budget should be set aside to harden and defend the existing industry norms and models, and how much time and effort should be set aside to innovate. They'll find, to their surprise and chagrin, that far more time needs to be set aside for innovation, and that in many cases they aren't the leaders, but are lagging far in the rear. And that's when they'll need to identify their unreasonable men and women, and stop laughing and get out of the way.Jeffrey Phillipshttp://email@example.com:blogger.com,1999:blog-18607635.post-23022823075943212122015-03-31T06:53:00.002-07:002015-03-31T06:53:59.004-07:00Double Down, Explode, Bridge and Breakout: The innovation options

For quite a while now, the words and phrases we use when we talk about innovation have bothered me. To some extent that's because the language is too inexact, and in other cases the words have been appropriated or misused. In many companies any new product is labeled "innovation", regardless if it is actually innovative or not. Further, innovation is a word that encompasses so many activities and purposes that it becomes almost meaningless. It is an umbrella term for a lot of different techniques, deliverables and activities, and therefore has little meaning.

We can do something about this, however. We can create and demand better definitions and better communication about innovation. To some extent, there have been attempts to create better definitions, or more definitive descriptions of innovation. Take, for example, the concept of defining innovation as incremental or disruptive. These are truly either/or alternatives, but opposite ends of a spectrum of innovation possibilities. On the conservative end of the spectrum you find incremental innovation, which means small changes to an existing product or service, typically within expected confines of a solution or industry. On the other end of the spectrum you'll find radical or disruptive innovation, which means creating something so new and unexpected that it disrupts the existing models or paradigms. Which outcomes are innovation? Well, both are. What's important is understanding the differences in expected outcomes, and the work involved in delivering both.

The Ten Types

Far too often, it's assumed that innovation MUST be a new product. Doblin in their work identified ten different types of innovation, starting with products but extending to services, customer experiences, business models, value chains, brands and much more. I've included an image that reflects the ten types Doblin has described, in case you are unfamiliar with the model.

What Doblin was doing by creating this definition was creating more specific language and texture about innovation. In this regard, using Doblin's ten types, we could have an executive say that the innovation they wanted or needed should be an incremental change to a channel, or a disruptive change to a business model. By defining the types, Doblin has expanded our purpose and language, and hopefully created a better understanding and dialog about innovation, the expectations, investments and necessary outcomes. And this is an exceptionally valuable contribution.

Outcomes

But there is at least one more definitional issue that I've frequently stumbled on, and that is the outcome or the intent of an innovation activity. What many executives and managers don't understand is the amount of change that an innovation activity may cause to his or her own business, business model or industry. When these executives ask their teams for innovation, they want the maximum amount of new revenue that can be generated (which means a really interesting and new product, service or business model) but often with the least possible change or disruption to existing business operations (which means incremental change). From our work, we've seen a number of truly innovative ideas that were powerful and valuable simply be rejected because the outcomes were far different than an executive could image. Take for example work we did in the life insurance market. Life insurance is really difficult to innovate, because of the number of competitors and the constraints. Of course, if we can't innovate the product itself we can innovate the channels (online), the experience, the business models and so forth. One idea we had was to use the insights and data collected to add value to other industries - to see aggregated data from decades of experience to other industries that might find value in the data. This idea, which we vetted and found to have value, was so different and so unusual that the insurance firm we worked with stated that they weren't in the data business, even though they manage petabytes of data. The concept of breaking out from offering life insurance and offering valuable data based on years of experience was too confounding. It wasn't an outcome they planned for or expected.

From this work and others we've developed four categories of outcomes, to help inform and distinguish the type and amount of change that's desired. These four categories include:

Double Down: create incremental change or potential line extensions that work within the existing solutions, business models and frameworks. No idea will be radically different from what the company already does and expects, and none will cause significant change to operating models or expectations. In this case we are doubling down, both on the extent of change to the product or service (small) and to the risk of change of the operations, culture, industry expectations or business model (also small)

Explode: Explode the business model or industry expectations. This type of innovation is rarely done from within an industry by an incumbent, because they have too much at stake in the existing agreements and definitions of an industry or business model. Exploding an existing model (music distribution on physical media vs digital media) typically occurs from outside an industry rather than within an industry. This option includes huge risk, both in terms of the new product or service, which may be rejected by the customer, as well as the risk to the stability of an industry or convention. That's why this alternative is almost never used by an incumbent in an industry, almost always by an entrant.

Bridge: create innovations that attack or solve needs or opportunities in a nearby but adjacent market or segment. In this case the ideas are somewhat reasonably anchored in the existing operations but bridge to new opportunities or customers in adjacent spaces. This may cause some change to existing operations and business models, but the change is anticipated and acceptable. This option creates moderate risk both in terms of the new product or service, as well as to the operational capabilities and industry knowledge of the company doing the bridging.

Breakout: A breakout innovation is one that intentionally causes a team to leave the industry, constraints or business model of the existing corporation, to explore something new. Our example of an insurance company selling its data to other firms could be an example here. This may require a completely new entity or radically change business models and operations.

Large corporate incumbents dream about breaking out of their existing constraints and business models but few do. Apple, in its migration from PC manufacturer to music player to music distributor is a good example of a firm that has attacked different industries and to some extent managed to "breakout" into other models and forms. Most corporate innovation is focused on "doubling down" - either extending existing products or creating new products that still "fit" within the existing operational processes and business models. However, if they "fit", then they are subject to many of the constraints that older, less valuable products and services have created and sustained. Perhaps the most likely alternative for larger corporations is the "bridging" concept, innovating to solve problems or opportunities in an adjacent space, firmly anchored in the current and well-established industry but creating valuable entry to new customers with new and compelling products in a new, tangential space. This bridging respects the operations and existing investment but demands changes to operations, business models and capabilities.

The new, more definitive language

Using our four category addition, we can communicate far more clearly and concisely about what innovation should do, what should emerge, and what risks or opportunities we are willing to pursue or leave behind. An executive could now ask for a disruptive channel innovation that bridges to a new industry, or an incremental product that merely doubles down on existing investments and does not cause change. But more importantly they can indicate how much change the product or service must create in the marketplace, and how much change the business, its operations and models are willing and able to bear. Many, many corporations want the breakout or bridging type of innovation, but simply are not prepared to make the structural, cultural and business model changes necessary to achieve either. Then, as they become complacent and leave opportunities on the table, they become subject to the "exploding" option - other new entrants or entrepreneurs explode the existing models or bridge into what seemed like a safe and defendable market or segment.

Innovation encompasses all of these "definitions" and many more. When we are inarticulate with our definitions or language, or simply refuse to define what we need and what risks and changes we are willing to bear, we lose opportunities to do more. In the absence of good definition and clear communication, teams will always default to the most conservative understanding of meanings, protecting existing business models, corporate structures, cultures and operational capabilities, which severely limits the potential and range of innovation. Unless and until executives are clear about their goals - not just in terms of profits and revenue but in terms of the amount and type of change they are willing to inflict on their own company and the industry at large - then innovation will be incremental. And that's ok, as long as that was what was intended and what was delivered.

Jeffrey Phillipshttp://email@example.com:blogger.com,1999:blog-18607635.post-65505347850189520102015-03-20T06:44:00.003-07:002015-03-20T06:44:58.053-07:00Innovation needs Time, Talent and TempermentI'm about to leave for a well-deserved vacation, but I wanted to leave you, gentle readers, with a parting shot to contemplate before I go. The idea I'd like you to contemplate until my return is that we are all making innovation far too complicated, and we need to stop dressing up the activity with lots of talking points and stop working ourselves and our management into a tizzy about commitments and investments. Of course all of these are important. But what we should be asking, in much the same way the "lean startup" folks are asking about bare essentials and "minimum viable products", is: what is the minimum investment it takes to make my (team, product group, line of business, company) more innovative? I'm going to argue that it's simply three "T"s: time, talent and temperament.

Let's address all three of these quickly, so you can go have a good think while I am resting comfortably in an exotic location.

Time

Time is probably the most problematic of the three Ts. As efficiency has become a watchword, many organizations have people who are filling two jobs, in meetings constantly and trying to juggle far more day to day operational tasks than they can measure. These individuals aren't doing a good job getting their day to day responsibilities done. How then can we imagine that we can layer on another "important" task - an innovation project or activity - when these folks can barely keep their heads above water on the tasks they are reasonably good at? When you are overwhelmed trying to keep the day to day stuff (where your expertise lies), how can you possibly carve out time for an activity where you have little experience and few defined processes?

This is simply a management decision. Innovation requires time. Time to identify interesting problems and scope them. Time to consider emerging trends and technologies. Time to understand unmet customer needs. Time to do an effective job generating ideas and solutions. Time for prototyping and validating concepts. And of course time for the product development process.

Your management team needs to understand how much time it will take to innovate, and either free up your time by delegating responsibilities to others, or finding capable people who can do the work without putting day to day operations at risk. You simply will not succeed if you can't find the time to innovate, and will fail if you try to balance too many simultaneous tasks. Innovation will always draw the short straw.

Talent

Talent in this context is composed of two factors: attracting the people who want to be a part of an innovation exercise, who have passion for creating new things, and giving them the tools or methods that they need in order to do their work well. Most organizations strike out on both counts.

When staffing an innovation team, find the passionate people who believe change is possible, who are willing to take risks and explore new options. People who are unwilling to change or explore will simply recreate products and services that already exist. Far too often, the wrong people are in the job. Further, too many organizations neglect to provide or introduce meaningful tools, methods and templates. Even passionate people need to have guidance, and can work more effectively if they have a roadmap and a defined end goal. Invest in defining what a successful innovation roadmap looks like, and here's a hint. It does not start and end with idea generation.

Temperament

Temperament is a broad term meant to address three constituents in an innovation activity: the executives who asked for it, the people who are doing it and the culture that is observing it.

Executives want perfect answers now, fully documented and easily executed. They won't get that from innovation, unless the innovation is so simple that it reflects existing products and services. Innovation is going to be messy, uncertain and rife with opportunities and possibilities but no certainties. The sooner we set that expectation, and the more the executive team accepts that expectation, the better your activities and outcomes will be.

We also need to consider the temperament of the culture of the organization that's observing the innovation activity. Often an innovation activity is watched first with curiosity, then hope, then fear. The fear is that the innovation activity will take dollars or funding from someone else's projects. This is when the antibodies start circling, seeking to limit or kill innovation before it infects the organization and creates too much change. You've got to focus on the temperament of the organization or innovation will wither and die like a lab experiment in a petri dish.

Finally, consider the temperament of the team. If you've selected passionate, engaged people, all you really need to worry about is exasperation and cynicism. If the culture or executive team won't support innovation, doesn't provide resources or won't make critical decisions in the lack of full information, exasperation and cynicism increase. Don't let that happen, because once you lose your passionate people, you've really lost a lot of the potential to innovate.

Conclusion

A lot of people don't really "get" innovation. They think of it as an event or a project, when it is really an attitude or a mindset. It's not something you can switch on or switch off, depending on need. It's something that people and corporations need to do consistently and constantly, need to believe in and engage in. It takes time, talent and temperament to do this, and you'll notice all three aren't discrete factors that can be easily turned on or off, but are continuous capabilities that need to be engaged all the time.

Have a think on this and we'll reconvene shortly. Jeffrey Phillipshttp://firstname.lastname@example.com:blogger.com,1999:blog-18607635.post-10195372203442625862015-03-10T05:41:00.001-07:002015-03-10T05:41:15.816-07:00Successful innovators are "true believers"After my "don't rock the boat" post a few days ago, I was asked by a few folks a very interesting question. Which was: what does it take to be a good innovator in a corporation? Note that I placed some scope or constraints on the question. After all, it's fairly easy to be an innovator in a small company or as an entrepreneur. In fact you need to rock the boat in small companies or startups or you will struggle to differentiate and grow. But what about large companies? What does it take to be a successful innovator in a large corporation? Either a culture that welcomes and encourages innovation or a true believer mentality.

How do you do it?

We at OVO get to participate in a lot of idea generation sessions. It's interesting to lead these sessions and to sit in as a guest idea generator. Because most of us have few filters, we are willing and able to generate any idea. Ask me sometime about the credit card that zaps you with an electric shock if you use it too frequently. So when we have all of these crazy ideas, people often ask us: well, how do you do it? How do you constantly generate such crazy ideas? Why are you so much better than us when it comes to generating ideas? The reason is that we are true believers. We believe that there is ALWAYS a better way to do something. All it takes is a little insight, a little imagination and a willingness to free yourself from your day to day constraints.

Working inside an organization, especially for a long period of time, an individual becomes part of the fabric and culture of that organization and begins to think like others in the organization, accepting core principles and cultural norms. Over time what seemed changeable seems permanent and what seemed possible seems immutable. It's exceptionally difficult to work inside an organization for very long and not adopt the cultural biases, and typically those biases have to do with maintaining status quo, not creating new products and services.

The typical innovation project

On any typical innovation project we see three categories of participants. The first were asked to be on the team because they've been successful within the execution engine. They know how to make the day to day operations work effectively. They typically try to force an innovation activity to look and feel like a normal day to day process, limiting the scope and rushing to a decision. The second category of people who participate are subject matter experts, asked to participate because they either have deep knowledge or can add a fresh perspective. Most don't have a stake in the outcome unless it materially impacts their area of expertise, which is dangerous, because expertise and knowledge of existing models and methods overcomes their ability to consider meaningful change. The third category is usually composed of people who are "available" - that is, they are busy but have some time that can be spared for the innovation project.

What's often missing from this list are what I'll call true believers, people who are convinced that innovation is vital and important. Every company has a number of true believers, but they are often considered problematic because they are constantly asking why things are done the way they are. These true believers are always seeking to do things differently or suggesting improvements or changes to existing processes or products. They are often the last folks to be asked to participate in an innovation project because they are thought to be uncontrollable - they rock the boat a lot.

Why do true believers matter?

True believers are unique and important to innovation for a number of reasons. First, many of them are dissatisfied with the status quo. They know that it's possible to create better products and services. They WANT to see change, rather than seek to avoid it. True believers of any stripe, in any discipline, don't allow a little resistance or public sentiment to bother them. They are willing to seek out new information and insight even if it conflicts with existing beliefs. They don't allow barriers or roadblocks to discourage them. In fact they often redouble their efforts when they encounter difficult barriers, where many more complacent people will willingly give up.

True believers always believe there is a better answer, a better way. They are never satisfied with incremental change, although they'll accept it on the road to disruptive or radical innovation. They like Jobs want to put a dent in the universe. These true believers are found in every business, in every country, in every walk of life. They are difficult to deal with day to day, but impossible to live without if you want to innovate beyond incremental changes.

These true believers can be a bit insufferable, and that's why they are found so much more frequently in startups or as entrepreneurs. They believe in their ideas, their insights and aren't going to let a complacent culture, corporate inertia or simple fear of risk and uncertainty become a barrier to their ideas. And they are exactly what most corporations need right now.

We are living in an age of great technological and market upheaval, where the pace of change is almost unprecedented and the level of competition unmatched from almost any time since global markets unfolded over 300 years ago. Money flows to where it can find its best return, anywhere in the world and at the blink of an eye. Consumer demand and market conditions shift rapidly. New competitors emerge in places that were unthinkable as competitive hotspots only a few years ago. The people who can lead you out of your corporate inertia are the people you've most likely relegated to the sidelines. The people you know could be valuable but you haven't figured out how to harness them yet. You need to engage the true believers in your organization - the people who want to create real, interesting change - and you need to do it soon. With the changes that are underway, playing a passive defense is not a strategy, it's a recipe for oblivion.

Can you find your true believers and task them to create really interesting and valuable new ideas? Can you clear the barriers and remove the inertia and let them create valuable new products and services? Do you even know who the true believers are in your corporation, or have you tamped them down, and squeezed them out in the ever increasing goal of corporate efficiency and compliance?

What can you do?

First, find the people who are always creating interesting ideas, people who want to create change. It may be hard to distinguish them from chronic complainers, but with a little work you can sort them out. Instead of leaving them out of innovation projects, learn to work with and manage them successfully. Give them far more latitude to generate ideas, but in parallel give them clear targets to aim for.

Second, discover who in your organization has compelling innovation traits. We can help you identify people in your organization who have the traits and characteristics that other innovators share. Contact us about our InnoTraits Assessment to help find the people in your organization who have the skills to innovate, if not the passion.Jeffrey Phillipshttp://firstname.lastname@example.com:blogger.com,1999:blog-18607635.post-13186072562682839892015-03-09T07:38:00.000-07:002015-03-09T07:38:46.759-07:00Don't rock the boat innovationIt's strange how music, songs and lyrics stick with you and take on important meanings. In one of my presentations for my book Relentless Innovation I have a slide that speaks to the factors that shape our current business environment. The slide simply reads "What's going on" and every time I present it at a client site or for a speaking engagement I think Marvin Gaye should be singing in the background. Music and its lyrics have an interesting power, one we should learn to engage more.

Recently, in an idea generation session with a client, I found myself humming another song. This time it was "Don't rock the boat" by The Hues Corporation. Occasionally I turn to this song and its lyrics when I get frustrated by by clients who don't want to push the boundaries and discover disruptive innovation.

What is "Don't rock the boat" innovation?

Many innovation projects start out with such promise. We're going to create new ideas! Those ideas will lead to new profits or revenue! We'll swamp the competition and gain market share! Our CEO will get to go on stage in a turtleneck like Steve Jobs and everyone will listen! And other really motivating stuff like that often surrounds the beginning of an innovation activity. The question becomes: what is the real anticipated outcome of an innovation activity? Is it to create incremental solutions - extending what already exists, or to create powerful disruptive new products and services, which would lead to all the hubbub. Far too often, like children at the dessert bar, the eyes are bigger than the stomach. Creating too much disruption may require too much change or investment, or put an organization at risk if the ideas fail. While many CEOs would love a really interesting new idea that drives differentiation and new profits, the executives often don't understand what it takes to create valuable new ideas that lead to differentiated products.

This means that the definition of innovation is left to the middle managers, who are efficiency experts, meaning they are really good at creating small improvements to existing products and services. And, since they don't have a specific directive to go put a dent in the universe, a la Jobs, they revert to what they know best, what I call "don't rock the boat" innovation.

Don't rock the boat innovation follows all the best practices, engages people in research, conducts meaningful idea generation, and results in incremental products that are nice but not really all that differentiated or new. That's because the managers and executives involved are really comfortable with the status quo, even though they know it needs to change. But they don't have the permission, or directive, or funds, or resources, or time, to do something really different and new. So, they can conduct innovation according to plan, but never put the existing processes or existing commitments at risk. They are innovating, but they aren't going to "rock the boat".

What's the problem with "don't rock the boat"?

Is there really a problem with "don't rock the boat" innovation? I'll stipulate that there are several problems. First, don't rock the boat will NEVER lead to real benefits. At best the ideas that a project with a "don't rock the boat" mentality will result in incremental new products at best. Secondly, many innovation projects are begun with a lot of fanfare and promise, but are often cramped, dreary affairs that are limited in resources, scope and investments. This dissonance creates cynicism, which is perhaps the kryptonite of innovation. Further, a few projects or activities conducted within a "don't rock the boat" philosophy creates an inertia and an established way of doing things that make it difficult to ever break out of.

Think about this another way. What happens to the individual who "rocks the boat"? They are told to sit down, sit still, stop goofing around. They are ridiculed into submission and will never rock the boat again, or may not even be allowed on the boat anymore.

Let's Rock the Boat

Instead, most corporations definitely need to "rock the boat" and perhaps even tip the boat over, to continue the lyrics. Trying to innovate in a very limited and "safe" fashion sustains the status quo. Only questioning the business model, offerings, pricing models, channels and other critical factors will create real difference. To do this, innovation teams need a directive that must come from the top, and that must be constantly reinforced. They need the right people on the team, the right investments and resources in order to do what is necessary, and the right amount of time and risk tolerance. Without these factors in evidence, all innovation becomes a "don't rock the boat" exercise.Jeffrey Phillipshttp://email@example.com:blogger.com,1999:blog-18607635.post-90801781717793987402015-02-24T05:43:00.000-08:002015-02-24T05:43:59.508-08:00Making innovation a valuable habitYou may be thinking to yourself that the title of this blog post is boring, or even redundant. Of course we want to emphasize valuable habits. And innovation can lead to valuable outcomes. But what about the "habit" part? Aristotle noted something about his fellow humans. He said that "you are what you repeatedly do". He recognized that the more we do certain things, the more we followed certain norms, the more they influenced who we are and how we look at the world. This is interesting in itself, but troubling from an innovation standpoint. Because if we are what we repeatedly do, we'll never innovate. If we are what we repeatedly do, we're all efficiency managers, not innovators. That could explain a lot about the barriers innovation faces in large corporations.

What are your habits?

Habits actually have a somewhat negative connotation any way, like biting your nails. People often talk about "bad habits" but rarely talk about "good" habits. Many of the activities and actions we take every day become ingrained habits. Getting coffee, chatting about the corporate culture over the water cooler, grabbing lunch with the same people, arriving ten minutes late for scheduled meetings, and so on. After a while these habits become so ingrained that they become the norms. In fact, in many corporations it's the kiss of death to schedule a meeting after 3pm, for a couple of reasons, but the most important one of which is that so many people arrive for meetings late that each subsequent meeting gets pushed back. We all sit around and shake our heads about how terrible it is that people can't show up on time, but no one takes the responsibility to change the habit, and soon it becomes the norm. These "bad habits" become what the corporation expects, and soon become the norm that we teach newcomers. Eventually what were once simply bad habits become the norm.

If we are what we repeatedly do, then we ought to be the world's best meeting managers, cost cutters, time managers, pre-planners and efficiency experts, since most people in corporations spend time in meetings, cutting costs or corners, planning the next meeting and trying to figure out how to do more with less. These habits become ingrained, and eventually influence how people think. If you don't believe this, try asking people to generate really creative ideas that will violate their cultural norms. It's actually funny to watch people squirm.

Innovation as a valuable habit

If more innovation is vital to most corporations, but people are ingrained with efficiency, how do we make innovation a valuable habit? Well, first we need to create the conditions where innovation is possible. That means that executives have to communicate the need for innovation and build the environment, and establish the compensation and rewards. Once the environment is right we need to task people to innovate, regularly and consistently, so that innovation tools and processes don't seem strange and new, but seem trusted and familiar. If we repeatedly "do" innovation, we will become more innovative, and more capable innovators. If we repeatedly "do" efficiency, we will remain capable cost cutters who recoil from the implications of innovation.

First we need to make innovation intentional. That's where the executives come in. They must link innovation to corporate strategy and make it valuable and purposeful. Then they need to demonstrate commitment, because that's what will help most of the folks overcome inertia and become willing to adopt new thinking and processes. Finally, we need to do innovation regularly, so that it becomes a habit. Only then will innovation be as easy, and as acceptable as doing the everyday business as usual.

There's real work in making this transition. For decades we've developed managers who are efficiency experts, and many of them have progressed onwards into the management ranks. We've given innovation skills and training short shrift, and efficiency is the habit, not innovation. It's time to rebalance skills and reset the framework, expecting both innovation and efficiency. You won't have to worry about the efficiency part of the equation - it's already an ingrained habit. You will have to focus on innovation, to make it a habit, and the only way to make it a habit is to do innovation often, consistently and repeatedly, using the same approach. There's a word that describes that consistent approach and repeated usage. You need to understand that innovation is a "discipline" that must be practiced regularly.

Almost 40 years ago the Doobie Brothers, of all people, released an album titled "What were once vices are now habits". If we follow that logic, then it should be apparent that what were once habits are now cultural norms. And once something becomes embedded in the culture, only a radical effort to refocus, repurpose and rework is going to change. We need to create innovation habits that lead to innovation norms, rather than allow our cultures, habits and norms resist innovation.Jeffrey Phillipshttp://firstname.lastname@example.com:blogger.com,1999:blog-18607635.post-88091478318159766382015-02-09T07:35:00.005-08:002015-02-09T07:35:30.670-08:00Innovators are pattern breakersOver the last five years or so I've been asked many, many times about my opinion about corporate innovation. Why is there so much demand for corporate innovation, yet so little practical result. One could stipulate a number of reasons, including:

The lack of time or bandwidth

The focus on efficiency over experimentation

The lack of innovation skills or techniques

The inordinate rewards of short term thinking over long term success

Fear of the uncertain or unknown

And I'm sure we could continue this list ad infinitum. These are all reasons why so many corporations can't successfully and continually innovate. But over time I've come to realize a larger issue is at stake. It's a problem of pattern recognition. Most corporations believe that their customers' needs begin and end within the manner in which the corporations or the industry have defined their solutions. As long as a new product or service can be delivered within those definitions agreed by the industry, then innovation is easier for the corporations to pursue. But when a need or demand arises that falls outside of, or just adjacent to, the way an industry or corporation defines its solutions, everything falls apart. Increasingly, innovation will be at the intersection of markets and industries, and corporations need to become far more flexible in how they define the market, the boundaries of their service offerings.

Top Down versus horizontal

Most companies develop a specific representation of a market, industry or segment. For example, the haircare department at P&G wants to solve problems for people who want to wash or condition their hair. But to an individual, that activity may be just a step in a complete journey from getting up to getting ready for work. Should P&G decide to look at all the factors related to haircare in the customer's journey from waking up to leaving for work? That could potentially broaden the opportunity and introduce new solutions, but they may have nothing to do with shampoo.

How the P&G hair care team looks at what a consumer needs or wants to accomplish in the morning, the "jobs to be done" if you will, starts and ends with their definition of the solution. They might say "we are in the shampoo business" or "we are in the hair care" business. But a consumer might say "I have a job to do to get up and get ready for work", one step of which is washing hair. If an innovation opportunity or need emerges just before someone washes their hair, or just afterwards, does P&G pursue it, or assume that some other vendor who provides services or products that support he morning rituals will step in? Does the P&G hair care team say "that's outside of our industry definition or sweet spot"? Do they say "that's someone else's job to fill"? Because if the gap is left in place long enough, someone else will fill it.

Customer Experience Journey

Here's where a customer experience journey map makes so much sense. Trying to understand all of the things a customer is trying to do, both with your product or service, or just before or after it, instead of trying to optimize just a single step in the activity. As long as we take a top down, very segmented view of the customer, we can solve only very small portions of their jobs, all the while missing or ignoring opportunities that are just adjacent to our capabilities or services.

You may say, well, if it's just adjacent to our services, we may not be in the best position or have the best capabilities to provide it. And you might be right. But what you are doing is opening the door for very similar competition to take up a very vital activity right next to your products and services. And if they can solve the adjacent need that you've been ignoring, does it build credibility for them to get to solve the problems you've been focusing on all along - or worse, perhaps try to collapse the needs they are solving with the one you've been solving? Isn't that what iTunes ultimately did? Collapse several related solutions and needs into one more integrated solution?

Patterns, Corporate Capabilities and industry boundaries

We pride ourselves on our pattern recognition capabilities, but too often we become very comfortable in our our definitions and patterns. Far too frequently we at OVO see opportunities that are just outside or just adjacent to solutions and frameworks that a corporation has defined. They'll say that those needs are outside their competencies or focus areas, and they may be right. But they leave the door open for other firms or new entrants to solve those problems and gain credibility, when with a little bit of work they could extend their capabilities and solve a greater portion of the customer's journey.

How much does your corporate capability limit your innovation potential? Are you required to follow the industry in where you define where it begins and ends? Do you understand the entire journey a customer is going through when they encounter your product or service? Is there a more complete or integrated solution you can provide to ease the customer journey, even if it's not within your wheelhouse? We need to define our opportunities within the confines of our capabilities, but always with an eye to understanding the total needs of a customer. When is the last time you developed a customer journey map for your customer's need?Jeffrey Phillipshttp://email@example.com:blogger.com,1999:blog-18607635.post-32615271245696736872015-02-03T11:02:00.001-08:002015-02-03T11:02:32.004-08:00What's your perspective on innovation?Our clients are always interested in what will lead to the most innovation within their companies. Is it the markets or industries they compete in? Do they have a natural amount of innovation or resistance? Do software firms innovate more than manufacturers? Is it the culture of the organization? If we have ping pong tables in the break room, will that make it more innovative? How about the people? Do we need hipsters, millennials, Boomers or some other segment? Do we need creatives, designers, artists? Sometimes it seems we could actually remake many corporations by merely suggesting that they need more designers or Millennials. But while these factors contribute to innovation success, there are other factors that we care about. One of them is passion. Does an individual have passion for the problem and a desire to create a solution? Will the individual move mountains to try to solve the problem? Sounds like an entrepreneur, but given their head many corporate employees can identify challenges or problems where their passion lies. And with passion comes commitment, engagement and many other factors that can drive a successful innovation activity. But there's one other factor I always look for: perspective.

Send me the shoes

There's an old story used to make a point, primarily to sales people, but it is entirely apropos here. Two shoe salesmen are set to set up shop on an inhabited island that hasn't had a shoe franchise before. When they get there they discover that the entire population is barefoot - no one has developed shoes or sold shoes to the population, and the population hasn't developed its own footwear. The first salesman sends a message back to HQ: please come get me out of here. None of the inhabitants wear shoes. The second salesman sends a message back to HQ: please quickly forward all the makes and models you can. Nobody wears shoes here. The market is huge.

In the world of sales, the idea that people who don't wear shoes also don't need shoes is nonsensical. If the need isn't present, create the need and then fill it. But look at the second salesman. He recognizes a huge, untapped market because he believes he can fill needs customers aren't aware of. Yes, it may take time to get the population to wear shoes, but once he convinces them of the need for shoes, he'll have the market to himself. The two characters in this story represent two different and competing perspectives: what is possible with a positive outlook, and how quickly people will surrender to a negative outlook. What people do we want on an innovation project? The people willing to take an expansive, inquisitive, positive take on any opportunity or challenge, regardless of their position, age, training, managerial level, zodiac sign or depth of innovation training.

A few days ago I wrote a post about the amount of opportunity available even in a highly competitive market. Far too often corporations shy away from competing in what appears to be a "red ocean" - a highly competitive market with lots of competition and low margins. Frankly, it makes sense to place investments where you can win more share and more margin. But even in highly competitive markets there are opportunities. We can look at Uber, NetFlix and AirBnB as just a few examples. All three compete in what initially were highly competitive markets. There are plenty of options for taxis or rental cars, movie rental options (at least while Blockbuster was around) and hotel rooms. Each entered a competitive market and disrupted it by rejecting the status quo channels or business models and offering customers basically the same product but in a new way. Do you think the first salesperson, dreaming up a new way to rent rooms to people, would have developed AirBnB? No! He'd say: well, there are a lot of big companies competing in this space and a lot of the valuable real estate is locked up, and I don't have much pricing power or branding, so I'll go do something else. The entrepreneurs behind AirBnB, Uber and NetFlix saw opportunity where others saw competition and struggle, and eventually forced the larger competitors to compete on their terms.

Why is corporate innovation so difficult

So, why is corporate innovation so difficult? For years we've told people what to think, how much risk to embrace, what mental models to use to think about their business. We've preferred certainty to experiments, incremental change to creativity, short term thinking to long term thinking. We've designed our teams to think like the first salesman. Then every once in a while we gather a team and ask them to act and think like the second salesman, and frankly, they aren't prepared or capable to do that without some re-education and a whole lot of reassurance.

If you want more innovation, you need to train an army of people in your company who can execute flawlessly, improve efficiency AND who can easily and quickly think like and act like the second salesman. It's not an either or proposition. Efficiency and Innovation can, and must co-exist. But we've been trained to believe that they are enemies, and that efficiency must prevail because it is predictable and safe. On your innovation teams, how many people would rather be voted right off the island like the first salesman? I suspect you'll find the answer is most, if not all of them.

You can hire designers, you can hire Millennials, you can hire creative types, and all of those factors may help you generate more ideas. But until you impact the perspectives and expectations of the workforce within your company, you will rarely innovate successfully.Jeffrey Phillipshttp://email@example.com:blogger.com,1999:blog-18607635.post-64055227369991715292015-02-02T07:47:00.001-08:002015-02-02T07:47:33.318-08:00There's more innovation opportunity than you thinkJust recently we were working with a client and our combined OVO/client team had created a number of really good ideas to develop as new products and services. When we presented them to the senior executive sponsoring the activity, his response was mixed. Some he liked, some he was uncertain about, and some targeted a market that is valuable but which also has a lot of embedded competitors. His comment about innovation in that last space was basically to say there may not be a lot of room for innovation, perhaps the incumbents had the space locked up. While I understood his concern, the comment was a bit deflating for the team. Later, as the team debriefed the meeting, his concern came up. My response was: I'm sure many competitors and new entrants felt the same way about Blockbuster back in the days before NetFlix. My point being that how we define an opportunity may lead us to ignore a valuable market opportunity, but changing how the market or segment is served may open what appears to be a closed or highly competitive market.

Because, after all, what did Redbox and NetFlix and eventually real time streaming of movies actually do? In the end the consumer gets what they want, entertainment and content. How they get it, the business model, channel and customer experience may have changed, but the ultimate service or product changed very little. If we were to go back and think about disrupting Blockbuster when they had a shop on every corner, and a (relatively) deep selection of movies to choose from, we'd be crazy to enter and compete in the same way. That wouldn't be innovation, but you see what I mean. But by defining the market differently, by thinking about new channels, new experiences and solving problems that the customer had, even in the face of high competition from Blockbuster, NetFlix completely eliminated Blockbuster as a competitor, even thought Blockbuster had access to the same content and was trying to solve the same need. The problem was that the customers ultimately cared less about obtaining the content from a corner store, and more about the breadth of offerings and convenience of returning movies through the mail. Blockbuster built their franchise on a corner store model, and NetFlix innovated by pointing out that with a little foresight and planning you could see all the same content without ever going to the store, to choose movies or to return them.

Of course, you'll say to yourself, this is a classic reframing problem. I should be in the "transportation" business, not the "wagon" business. While this reframing exercise may seem a bit trite, it forces you to ask: how should I compete to win those customers? What does my competitor or the incumbent offer that the customer doesn't need? What is in the currrent business model I could change or even remove? The SIT and TRIZ folks will call this subtraction - what can I take away and have an equivalent or valuable product. What can I change or add to the existing model that subverts it? Removing the hassle of going to the store to acquire and worse return movies made it more convenient for consumers.

Everyone wants to find a "blue ocean" - a segment or space where there aren't any competitors. What no one seems to realize is that even in the most competitive markets and segments there is plenty of innovation possibility, but to discover it we may need to reframe the problem or change the game. Often the incumbents don't want to change - their models and channels are based on what they've built. Innovators, entrepreneurs and newcomers aren't invested in the way things work, they are interested in introducing new perspectives or frameworks that subvert the dominant paradigm. Sorry just had to work that in. Too often managers and executives recoil from innovation in a highly competitive space, when perhaps it's exactly where they should spend their innovation efforts. But because they compete for the same customers and deliver much of the same value proposition, they don't necessarily have to do so in the same business model, pricing, channels or customer experience models. That's what we need them to see - we can innovate in these spaces, but only by reframing the problem, changing the business model or channels. But when we win at doing that, we dissolve the incumbents competitive advantages at the same time. Jeffrey Phillipshttp://firstname.lastname@example.com:blogger.com,1999:blog-18607635.post-20262559211689563472015-01-20T05:31:00.001-08:002015-01-20T05:31:48.621-08:00Innovation doesn't take a vacationYesterday, January 19th, we celebrated Martin Luther King Day in the US. This is a Federal holiday meant to recognize and celebrate the work that MLK and others did to improve the lot of African Americans. Since it is a Federal holiday, many businesses also recognize it, so yesterday, many employees stayed home, or used the long holiday weekend to visit family or make a quick get away.

Vacations and holidays are awesome. We all benefit from an opportunity to step away from our work, to recharge our batteries and refresh our thinking. But one thing we all need to realize is that innovation, the inexorable march of change and emerging new ideas, never takes a vacation. Innovation doesn't recognize holidays, or weekends, or sick days. Innovation doesn't care about how busy you are just keeping up with day to day operations. Innovation is out there, working, emerging, constantly evolving all the time. When you take a day off, have a holiday or delay innovation activities or projects "until the time is right" then you are merely delaying the inevitable. Because, to paraphrase Neil Young, innovation never sleeps, never vacations, never rests. And the sooner you realize how quickly and how constantly innovation is occurring, the better you'll be able to either 1) decide to engage at the same level or 2) prepare to be eclipsed.

Now, this isn't a diatribe about holidays or vacations. As Americans, we tend to work too much, ignore or reject vacation time. Too much work leaves anyone tired, bored and uninspired. Innovators recognize that new interactions or experiences can lead to new ideas or insights. The challenge we face is that too often a vacation day or holiday simply compounds the amount of "business as usual" work we have to do the day we get back from holiday or vacation, because "business as usual" issues and work never sleep either. If you are going to be behind in your work, and make choices between being behind at your regular work or your innovation efforts, which should you shortchange? That depends.

It depends on how important you believe things like innovation, new product development, building the capability to change are to your business. If your team believes that keeping pace day to day with existing competitors and products is most important, you'll shortchange innovation. And you'll find yourself in good company, since most firms will emphasize day to day over the future. You'll also have a much greater opportunity to commiserate with your colleagues, because all of those who focus on the mundane, business as usual will be disrupted, and far sooner than they can imagine. Because innovation doesn't rest, doesn't sleep. Here's the truth: it only takes one innovator, one entrepreneur, one new entrant to disrupt a market. If only one firm in your industry or one new entrant does innovate and create a compelling new product or service, it doesn't matter what the rest of the industry did. If all of the other firms in your industry decide to shortchange innovation, and one new entrant creates a new product that customers demand, it's proof that innovation doesn't rest, doesn't take a vacation.

In fact it makes sense to say that new entrants, entrepreneurs and innovators should seek markets where the incumbents are taking a break, resting on past laurels, sure that existing channels, products and business models are secure. We were busy celebrating Blockbuster just months before NetFlix swooped in to devastate its business model. Nokia created and tested a touch screen phone years before Apple did, but safe and secure in cell phone handset leadership it did nothing.

If we were serious about innovation, here's what we should be using our vacations for - in fact what our employers should do: intentionally send employee teams on vacation with the demand that they come back with interesting new ideas. Send them someone new or different. Send them somewhere that challenges their thinking and introduces new insights. Perhaps every innovation project should begin with a vacation - a vacation from the mundane, day to day stuff that clogs our thinking.

But this really isn't a blog about vacations. This is a blog about persistence, about change, about the need to become far more vigilant. As the character in the Great Gatsby replies when he was asked how he became bankrupt (gradually, then suddenly), innovators, entrepreneurs and new entrants don't sleep, don't put things off, don't wait until the time is right. They are innovating now. It's their number one priority. Is it yours? Can you afford to have another priority?Jeffrey Phillipshttp://firstname.lastname@example.com:blogger.com,1999:blog-18607635.post-51448181734759073932015-01-19T08:51:00.001-08:002015-01-19T08:51:03.370-08:00Sequels or new ideasI was perusing Twitter, checking out the tweets of some of my favorite Tweeters, when a note from Saul Kaplan caught my eye. He was poking fun at the prevailing need in the US to create "franchises" of successful ideas - the inevitable "sequel". He wrote:

Sequel Nation. Windows 10, iPhone 6, Scary Movie 5.

From Saul Kaplan @skap5
Note that it is almost a given that any good product will spawn a sequel. Whether that product is a software product (Windows moving on to its 10th "version") or a sequel of a TV show (Breaking Bad is spinning off Better Call Saul) or a movie (how many Terminator movies do we actually need?). Just recently I saw that someone thought it would be a good idea to create the second "Hot Tub Time Machine", a movie that uses as it's central idea a bunch of morons who discover that a hot tub is actually a conduit to a worm hole that let's them travel through time. Never mind the whole hot tub as time machine, did we really need a second one? Further, I saw an advertisement that the Odd Couple will return as a new series on CBS, with a Matthew Perry of Friends fame playing the Oscar role made famous by Jack Klugman. So in this instance not only is the story a remake, but the actors are retreads from other sitcoms. Given the overwhelming prevalence for sequels, we should start to investigate why there are so many, and what that means for innovation.

The rationale behind sequels

What every firm wants to create is a money making franchise that will spin out huge profits over a long period of time. The idea of versioning or sequeling allows a company to take what was once a good idea and extend it, reaping more profits or benefits. For strong product or good ideas, the concept of a sequel is almost a "no brainer". You are simply building on a known success, which already has market viability and awareness. This minimizes marketing and advertising and creates links to what consumers already know. In the minds of many execs, a sequel of an even poorly executed idea is often more promising than a completely new product or service. Thus we are served Scary Movie 5, or a remake of Ghostbusters or Charlie's Angels, rather than completely new material.

This rush to sequels is supported by what I call the maximum loss hypothesis. If I build on an already existing idea or franchise, I build on existing awareness and link to audience or client expectations. While the audience may not expect much from Scary Movie 5, it knows WHAT to expect, and may already have decided that while the entertainment will be mediocre, it's worth what it costs. Thus the maximum loss is relatively low. If, on the other hand I invest in creating a completely new product, which the audience is unfamiliar with and doesn't link to other existing brands or products, the audience could ignore or reject it entirely, thus I lose both the investment in the new product and the opportunity cost of not investing in a sequel. This is why we keep getting the same recycled dreck in the entertainment world, why Breaking Bad seems so unusual in a world of recurring Matthew Perry and other Friends cast spin-offs. There's less to lose on the downside, which is accepted, along with the low ceiling that most sequels never do as well as their predecessors.

The rationale for new ideas

Genuinely new ideas are unusual and unfamiliar, and may not have the same social status or acceptance of older or reworked ideas. Since the ideas are new, untested and unfamiliar, a larger investment in creating validity and awareness is often required. Many corporations, in both the content world and the product world, shy away from an investment to create a brand for a new product. It's much easier to extend a brand (Coke, Coke Zero, Cherry Coke, etc) than to create a new brand or market a new idea. New ideas usually return only one of two outcomes: they either strike out miserably or win big over the long term. Note that neither of these outcomes is preferred. A big strikeout - an investment without any return is a huge negative, as is a big return in the long term. Most executives would rather settle for smaller, predictable returns in the short run rather than the opportunity for a larger but slower return overall. New ideas that are really interesting or valuable take time to sell and take time to drive profits and revenue.

Thus we'll never really move all that far from the sequel. Even firms like Apple, which seemed at first interested in "breaking the mold" are now more content to extend the brand. The iPhone definitely broke the mold at the start, but now is satisfied to simply extend some features and add new "versions", but we're well past the risky stage. What's the next iPhone that will disrupt the handheld market? Will Apple create it, or will they simply version us to death?

Truly new ideas move us from certainty to a completely new insight or understanding. They change the way channels work, the way we use products, even our expectations. To become too dependent on sequels is to reject change. We need new products and services, new innovation to refresh ourselves, our markets and our thinking.

We are our own worst enemy

Who is at fault for this avalanche of sequels? We, the buying public, are. As long as we pay money for Scary Movie 5, the firms that make decisions about which products to commercialize will create sequels. We have far more power in this equation than you may believe. This is a consumer driven economy, and if we consumers demand better and more interesting new products and services, the companies that create content, products and services will have no choice but to act. So, if you want innovation, vote with your attention, your feet and your wallet. Please do everything you can to avoid sequels and retreads. Demand better, more interesting, more valuable products and services. Otherwise, get ready for Scary Movie 6, coming to you in 2016.

Jeffrey Phillipshttp://firstname.lastname@example.com:blogger.com,1999:blog-18607635.post-4512429698111161062015-01-08T07:17:00.003-08:002015-01-08T07:17:54.830-08:00The difference between continuous improvement and innovationIt's a shame that no true standards body for innovation exists, because the lack of accepted definitions and standards allows anyone to claim anything is "innovation". One of the biggest issues I face constantly is trying to help people understand why their continuous improvement programs aren't necessarily all there is to innovation. After all, continuous improvement programs use brainstorming as a tool, seek to improve a situation or process or product and often result in a better solution. Isn't that innovation?

Perhaps I can best illustrate by using an analogy. Someone who uses a "paint by numbers" kit and a famous artist - let's use Picasso - can both be called "artists". After all, they both use the same tools - paint and brushes, and they both produce finished paintings. But, which would you pay more for? Which is an incremental improvement and which is a masterpiece?

The problem with Six Sigma, Lean and Continuous Improvement adherents is that they act as if innovation is somehow derivative or subordinate to these tools, rather than acknowledging that innovation is a much broader set of outcomes and capabilities, and that continuous improvement is a small portion of a much larger innovation umbrella. When innovation is defined in the context of Continuous improvement, it loses it's power to engage and to create, to generate completely new and unexpected products, services and business models. Instead it is held captive to those who would seek a predictable but incremental solution every time.

The difference between the "painter" who dabs paint into numbered sections on a prepared canvas, and Picasso is that the paint by numbers adherent is merely improving an existing product, while Picasso is creating something new and unexpected. In the paint by numbers example, there's little chance of failure, but the outcome is also fairly predictable - if not already presented on the box. With little skill and little risk comes little reward. If you want to call that innovation, that's fine, but your definition is far too limited.

A more comprehensive innovation definition will definitely include continuous improvement or "incremental" innovation, but expands to include radical or disruptive innovation which creates new and unexpected products, services, business models and other valuable outcomes. We need this definition because it's possible to conceive of great new products and services that aren't based on incremental improvements to existing products, but the continuous improvement definition treats these outcomes as if they were magic. They aren't, they are just the result of a more expansive definition and expectation for innovation.

Continuous improvement has its uses. If the expectation and goal is to modestly improve an existing product or service, then continuous improvement makes sense and should be applied. However, if the situation or need calls for a truly new product or service, continuous improvement can't countenance that need. It turns to existing products and services and seeks to make them better, rather than confronting the fact that consumers or markets may require a completely new, radical and undefined solution. This is innovation too, and it's not magic, just a different way of framing the definition. Some of the tools are the same in incremental and disruptive innovation, but the mindsets, the expectations and the leaps of faith are very different. If your innovation outcomes often result in products and services that look a lot like the products and services you already possess, your teams are too focused on continuous improvement.

Another difference between continuous improvement and disruptive innovation is that disruption (or creating entirely new products and services) requires creativity and the ability to recognize and respond to emerging or latent needs. No one ever asked Picasso for cubism, and no one else was doing it until he created it. Picasso was willing to step out of the impressionist school and create an entirely new way of looking at the world. Anyone following a paint by numbers method will struggle to develop something new or different, until they choose to ignore the recommendations that link a paint color to a specific section of the painting, and go their own way.

Stop defining innovation by the tools you use, and start defining the innovation you need and want to do by the outcomes you expect. The fact that I have a hammer in my garage does not make me a carpenter. The fact that you can follow a manufacturer's color scheme does not make you an artist. We need to remove these cramped and incorrect definitions of innovation, so our teams can fully explore and engage all that innovation has to offer.Jeffrey Phillipshttp://firstname.lastname@example.com:blogger.com,1999:blog-18607635.post-33941498995057843322015-01-06T05:38:00.002-08:002015-01-06T05:38:31.533-08:00Making sacrifices for innovationA blog post by Jeff DeGraff prompted me to write this post. His post was entitled "What are you willing to give up for Innovation", although on a closer read he's not really suggesting that you have to give up anything. However, modern business thinking is based on winning a shrinking share of a fixed pie. That is, most executives believe it's all a zero sum game. If I spend resources to "do" innovation, those resources have to come from somewhere. Therefore, I am sacrificing some other project, goal or capability in order to attempt innovation. And this zero sum thinking, this ratio of tradeoffs, will never tip the scale in the direction of innovation. Here's why.

If you keep doing what you are already doing and are reasonably adept at doing, you can anticipate approximately the same returns, unless a major disruption in your market happens. If you attempt innovation, and you aren't particularly adept at innovation, you may end up with a less than satisfactory result. Given the nature of innovation, even good innovators don't hit home runs every time. So the equation boils down to preferring consistent singles and doubles versus the possibility of a home run or nothing. When the game is cast in this light, the vast majority of managers will play small ball, seeking singles and doubles, over the riskier game of home runs or strikeouts, because predictability and marginal growth are rewarded over the short run, and disruption occurs only rarely in the marketplace.

Of course this model is developed with a number of assumptions. The two most important assumptions are that 1) it's difficult to become a better player in the game and 2) the conditions and rules about the game never change. That is, you can't improve the odds of a home run, and the playing field and the rules won't change, or will change very slowly, giving you time to react. What if neither of these assumptions are true?

We know the first isn't true. You can develop better innovators or hire the skills to innovate more effectively. Whether you choose to "insource" and develop innovation skills or "outsource" innovation to trusted partners, your company can become more adept at innovation, forcing managers to be more circumspect in their singles and doubles versus home run thinking. It turns out the second condition is also not true. We've built organizations, corporate structures and hierarchies based on business models from the 19th Century, but the pace of change and nature of markets, consumers and competitors is evolving rapidly. It wasn't that long ago that Border's was a Wall Street darling, but internet commerce made its business model and many other booksellers' models obsolete. The market you compete in, the expectations of your customers and the types of competitors you face are all changing very quickly. Playing for singles and doubles while the playing field changes may leave your team further and further behind.

The fact is that too many managers and too many business models are working on outdated premises. These premises suggest that you have to sacrifice too much for too little gain to do innovation. I'm here to tell you that you may need to make some small sacrifices for innovation, but it's no longer a question or when or how much, but how quickly. It would be beside the point to argue that innovation doesn't require some sacrifice. Any new initiative or change in corporate direction will require some sacrifice or rebalancing of resources. Cultural inertia in places where innovation isn't a frequent activity will require the investment of personal capital and enough energy to spark momentum. But once the skills are learned, the culture and people are aware of the importance, they will provide more energy and enthusiasm, because everyone wants to be part of something new. You see, we managers believe that people view their jobs as a zero sum game as well - only putting in the minimum to accomplish the tasks they are assigned.

What we fail to realize is that we can call on their sense of adventure, their desire to create something new. When people truly believe they'll have this opportunity, they'll commit more of themselves to the effort. Thus, we believe there is a much deeper reservoir of resources and energy just waiting to be tapped, that you aren't tapping today. You can enlarge the pie by asking for more innovation. Once people believe you are serious, and that they can actually create new products and services that matter to themselves and customers, more time and more resources will be available, if for no other reason than your employees will want to see the ideas succeed. Everyone wants to work for a company that is changing the world. If all you ask people to do is to maintain the status quo, that's all they'll do. Once you ask people to put a dent in the universe, and demonstrate that you mean it, they'll do more and do so happily.

Do you need to sacrifice something for innovation? Yes, the first time you attempt innovation you'll be forced into tradeoffs. But with the right communication and commitment levels, the right cultural preparation and the right executive commitment, you can turn zero sum thinking into a situation where you begin to ask: how much larger can we make this pie?Jeffrey Phillipshttp://email@example.com:blogger.com,1999:blog-18607635.post-12195685891868383142014-12-17T06:32:00.001-08:002014-12-17T06:32:27.496-08:00In the beginning of innovationI received an email from a colleague and prospective client recently, letting me know that a lot of his hard work on preparing the ground for innovation within his company seemed to be paying off. A lot of long, lonely toil to advocate for innovation was finally being accepted. Executives were starting to recognize the need for innovation and begin to pay attention to his presentations and advocacy. There's nothing like the feeling when a long period of being a lone voice crying out in the wilderness finally begins to pay off.

But, like the proverbial dog that catches the car, the next reaction is: now what? Now that people within your organization buy into the fact that innovation is important, what should they do next? What happens most frequently is that innovation moves from being important but not urgent, to being both urgent and important. And when something becomes "urgent" in an organization, there's a mass rush to do as much as possible, as quickly as possible, as if innovation is something that can be fixed with an "all hands on deck" mentality for a couple of weeks. This is, in fact, the worst way to go about introducing and inculcating an innovation capability in an organization. Just like the development and cultivation of the need over time was slow and careful, the implementation and rollout should be the same.

So, what's the plan of action? How can a firm with little innovation experience or internal capability define and rollout innovation? Perhaps the best first activity is for senior executives to simply define what they think innovation is, and what it is for. Often, in the "all hands on deck" mode, we simply skip past the definition and purpose. Each executive, business line or geography adopts a meaning or purpose for innovation for itself, and soon we have a mishmash of meanings, definitions, investments and tools, all purporting to be "innovative" and none in synch or alignment.

Innovation is a tool, nothing more. It should work in support of your company's goals, especially in terms of growth, differentiation, new product development and profitability. Additionally it can help you disrupt adjacent markets or enter completely new markets. What is innovation, and what is it for? How much change and disruption do we want to create?

The next consideration should be: what barriers currently exist to doing good innovation, and how do we overcome them? If you aren't innovating now, there are reasons why not. They may be monetary (no money for innovation) or skill based or risk based or culturally based issues. Until and unless you identify these and decide how to remove the barriers or overcome them, all the good innovation intentions are worthless because every innovation activity will end in something less than success. Executives need to be part of this discussion, because they created or sustained the barriers and only they can successfully change or remove them.

Once you have a good definition and have started removing the barriers, we'd recommend talking about and defining "how" you want to innovate. There are literally thousands of innovation processes, capabilities, tools and methods. Do you want to rely on external consultants or do you want to bring the capabilities "in house"? Do you want a "free for all" where every line of business or product group defines its own innovation methodology, or do you want a common central methodology? We advocate for the latter in both cases, but there's not an answer that necessarily wrong. You just need to understand how decisions impact your ability to innovate and your capability to deliver on the innovation and strategic goals.

Now that you've got a good foundation, it's time to set some expectations. Earlier we asked to eliminate the "all hands on deck" thinking and the quick rush to success. Innovation defines an activity from recognizing an opportunity or need through to successful uptake of new products or services by consumers. That timeframe may span years, even if your ability to generate ideas takes only a few days. Recognize and set expectations that innovation isn't necessarily fast, but can be very powerful. Without these expectation setting activities you'll start off with great confidence but may fail to deliver within unrealistic timeframes, and you don't get many second chances to start an innovation initiative.

Finally, work with some really committed senior executives who want to do innovation right. When the CEO accepts that innovation is important, every executive will want to complete a project, but some will treat it as window dressing, or won't provide the appropriate resources or allow enough time commitment. Some executives will be genuine in their commitment and understand the value and importance of innovation to their long term success. Choosing your first projects wisely will make a lot of difference.

There's plenty more to say about beginning an innovation competency, but I'll leave it here for now. The most important things to remember are:

Define what innovation is, and what it is "for"

Identify gaps or barriers that will resist innovation and work on removing them before or during your first innovation activities or projects

Define "how" you want to do innovation - tools, methods and partners. Build a set of skills and processes before rushing in

Take your time! Don't rush into innovation, but build competence and capability

Work with executives and senior managers who are committed and understand the investment, especially on early innovation projects.

Jeffrey Phillipshttp://firstname.lastname@example.com