The 4 Laws of Enduring Innovation Success

7 04 2010

[tweetmeme]Always an avid reader of the Financial Times, (one of the few decent news sources in an otherwise barren information landscape here in the US)  I came across a great commentary/review by the FT’s always fabulous Lucy Kellaway on the “Money-Honey’s” (CNBC’s Maria Bartiromo) recent book “The Ten Laws of Enduring Success”.

Lucy does amusingly short work of debunking the 10 laws that Maria came up with, and proposes a few laws of her own instead.

Lucy’s Laws were so much better formulated (in my opinion) that it got me thinking about the “Laws” of successful Innovation programs – not least of which because I think the first couple would be the same as the ones Lucy came up with.

So, here are my 4 Laws of Enduring Innovation Success:

1) Be Lucky – no matter how many different ways you squeeze it, Innovation is about luck.With your typical long term program “failing” 75% of the time, there can be no doubt that it takes a certain amount of luck to be successful – especially over the longer term.

You are in essence, shooting into the dark with most innovation programs – trying products and processes that haven’t been tried before in your company, your industry, or sometimes even the world.

That’s not to say you can’t improve your chances of getting lucky though. Unlike with the Las Vegas casinos, no one will kick you out of the game for learning the innovation equivalent of card counting techniques. Indeed, in this game, cheating of any form is encouraged; and banding together in casino-busting style innovation teams with other individuals and companies is heavily rewarded.

By setting up and executing robust innovation strategies and processes you are in essence increasing the predictability of the Lucky Breaks you get – And in Innovation, Luckier is most definitely Better.

2)  Be Ambitious – There’s an old saying: “Fortune Favors the Brave” – and nowhere else is that truer than in the Innovation game. To score big, you have to aim big.  If you only look for incremental ideas, then that’s all you’ll get.

During my time at Imaginatik, we used to make the bold claim of being able to consistently achieve “a 10x ROI on your investment”.  How did we make sure that happened? By making sure that the problems being targeted by the client’s innovation strategy were big enough to achieve at least that. And you know what? It worked.

3)  Stay Focused – Running an Innovation program at a big company is kind of like a subscription to a “Shiny-New-Toy-Of-The-Month” Club.  It’s easy to get distracted by the current toy sent to you. It’s easy to forget to go to the mailbox for the following month’s toy because you’re having too much fun with this month’s toy still. And after a while, it’s easy to forget the reason you shelled out so much money to get the subscription in the first place.

To that end, maintaining a laser-like focus on what you’re trying to achieve is imperative for an innovation program.  Your Innovation strategy needs to be revisited constantly and attacked with the same brutality for embracing change as you’re demanding from the organization with the innovations that you are introducing.  Your strategy needs to be a fluid structure with one constant– “How can I best drive significant business results and organic growth for my organization?” – and you should make sure that your processes and actions are targeted at achieving that goal.

4)  Embrace Everyone – not in a “creepy guy who keeps looking at me funny” way – but rather in a “let’s talk to, and get input from, as many different people as possible” in your quest to solve your corporations problems.

Innovation, more so than any other business discipline is leading the way in the upcoming socialized business revolution. That revolution will herald a new era where a company’s potential knowledge-base of solutions is no longer limited to the company walls, nor even close collaborators, but will instead embrace a global audience of potential participants.

To do this, you’ll need to begin to develop new skill sets that will involve learning how to identify which communities of people provide you with specific types of input; learning to set up and drive Social Teams to turn subsets of those communities into useable and active groups that will help you achieve your goals; and learning how to make those groups self sustainable so as to make sure they’re constantly available to you as a resource.

That’s it – 4 simple laws for ensuring that you not only become successful, but also stay successful. Keep these 4 on a post-it on your desk, on a poster on your wall, or as the screensaver on your laptop – whatever works for you – just do them!

Do you have any other Laws to Enduring Innovation Success?[tweetmeme]






Going from Green to Gold – a model for Innovation and Sustainability

1 09 2009

Tree1

It wasn’t that many long ago that friends and clients who have known me for a while, would start giggling when asking me a question on the topic of green innovation.

In part I think this was because of my reputation for doggedly insisting that companies focus exclusively on value creating activities – something that has always set myself firmly apart from so many others in the innovation space – and partly because they like to hear my rant on the history of how Sustainability became a respectable corporate pursuit – a “highlight” of a conference presentation I gave a few years ago.

In that “history” I detailed an amusing, but logical, development path starting with the originators of the true green movement (tree-hugging hippies from the 60’s..) and charting the development of that movement alongside the development of what’s become the modern day green agenda. Interestingly I think you can match the way corporate environmental programs gained credibility with the career development of these 60’s kids:

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The argument went something like this:

60-70s

– Kids – taking too much acid, hugging trees, and getting nothing in return but tree burns and bad hangovers. Hate big companies.

– Corporates – green? What green dept? Are you smoking something??….

70-80s

– Kids – now split up into two groups – the activists who decide to sober up and provide a more organized resistance to the destruction of the environment ; and their colleagues who realized they finally needed to get a job (usually at one of those hated big companies) in order to pay for their college loans  who then start financing the activists (hence the flourishing of organizations like Greenpeace)

– Corporates – with the influx of a new generation of workers, comes a changing culture. The kids joining the workforce bring with them an acute awareness of the environmental effects that starts to pervade the company they join.  Some of these kids even land roles in fledgling corporate environmental departments; but they’re not really taken seriously, are generally underfunded and ignored by the older controlling generation and thus their activities are reduced to minor programs like introducing recycling programs next to photocopying machines in their organizations. Regardless of any benefit they bring in, these departments are still generally regarded as cost centers.

90-2000’s

Now reaching middle/senior management positions in the big corporates they joined, the kids are finally in a position to mandate some the environmental morality they’ve carried with them from their youth. However, you don’t get to senior management without having developed an acute sense of business profitability – so whilst departments are formalized and programs are funded – they are done so on the condition that they contribute to overall company profitability.  Programs focus on becoming better Global Citizens, finding Eco-efficiencies, Sustainable Ventures to ensure the next generation of products can be built,  and responding to the overall global increase in the consumer demand for green products and industry(corresponding to the rise in 60s kids with disposable income! In fact, even today, despite the cost pressures of the current economic market, “environmentally friendly” still ranks as the #3 consumer priority behind “Price” (#2) and “Ability to do the job” (#1)). Sustainability and innovation offices of corporations are no longer seen as a cost center, but a potential profit center.

Likewise for their activist counterparts who have now realized that they’re getting too old to be chasing Japanese whaling ships around the Pacific and vain attempts to stop developed countries from testing nuclear weapons (“that shit gets dangerous dude”) – and have now set about embracing the overwhelming entrepreneurial spirit of the times to start up and develop new companies either providing new green products and services.

2010’s –

– With most of the 60s kids now in senior mgmt positions and corporate sustainability offices well established; they embark on the next phase of development – using Green as a platform from which to innovate – either by using it as a competitive differentiator, using nature as inspiration for innovative directions, or developing new breakthrough business models that exploit ecological factors. At this point, the sustainability and innovation offices of corporations are no longer seen as cost centers nor profit centers, but rather as a source of competitive advantage.

tree-huggerWhilst there was more than a touch of cynicism, and a fair dose lot of tongue-in-cheek in that history – there was also, in my mind, a lot of truth in there too, and it served well to ridicule managers still stuck in yesteryear with regards to their attitudes to corporate green initiatives.

For whilst there are some wonderful ecological, philanthropically, and social reasons for advancing a corporate green agenda – what’s actually making these things possible and viable from a corporate perspective – is the changing attitude of today’s Sustainability Executives who understand that a solid “Green” Strategy relies on focusing on activities that make the company solid “Gold” so to speak.

Whilst we would like to think of companies as being capable of selfless activities to make a better world for our children, avoid climatic, social, and economic doomsday scenarios, and generally reduce the impact that they have on this big blue cosmic marble we all inhabit – the truth is that they do this most effectively, with the most conviction, and with the most impact, when those activities have an impact on the bottom/top line too.

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You can call it a cynical observation on a capitalist society if you wish, but I simply call it a realistic observation on what really motivates companies to act and react in the modern era.

The good news though is that Green IS an issue that can drive just this type of impact – in many different and valuable forms – and if you’re looking to drive a successful green program – it’s crucial that you focus on this in order to be allowed to operate freely.

By now I’m sure you’re saying – “ok, ok – enough rhetoric Boris!” – so here’s some meat for you.  I spent a year going to multiple conferences, spoken to the sustainability arms of several large companies, and even attended a World Economic Forum event on sustainability as an “innovation expert” – and found myself developing a model that offers a comprehensive strategic formula for directing an innovative green agenda.

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You start by considering the 4 key elements that a company consumes and produces:

–       Water

–       Energy

–       Waste

–       Toxics

Although your company may not use/produce every single one of these elements; they constitute the backbone of a comprehensive environmental agenda (ps, proper attribution for the four elements has to go to Nike, who first introduced me to this elemental concept).  The idea is to then take each in turn (or combinations of the 4) and think about all the possible things you can do to them (always with a view to adding/contributing to company profitability):

–       Reuse/Recycle the element

–       Replace the element from your production cycle

–       Reduce the amount of the element you use/produce

–       Look for ways to increase your Revenue/utilization rate of that element

For example:

–       nike_airNike defines waste as “anything that doesn’t end up in the consumer’s closet” – the annual value of the waste they throw away amounts to an incredible $844,000,000 per annum – so finding even a manner to reduce waste by 1% can lead to significant financial gains

–       Several of the major superstores of one retail giant in the Southwest of the US have invested in covering the roofs of their stores with solar panels with the result that they not only are they reducing the amount of energy they’re consuming from the national grid; some stores even found out they were able to generate a surplus of energy which could be sold back to the grid, providing them with a new form of revenue.

–       600px-no_left_turn_signsvgUPS made headlines a few years ago when they rerouted their delivery routes to eliminate left hand turns – significantly reducing the amount of time their trucks spent idling waiting for a red light (For international readers, in the US, drivers in many states are allowed to make right hand turns on a red light). UPS also introduced a system whereby in certain cities with tight parking or narrow streets (like New York City for example) the driver will park his truck once in a central location, and then delivers smaller packages to the local area by bicycle instead.  Whilst these seem like very green initiatives, they also increase efficiency, and reduce fuel expense – a double whammy for UPS!

Finally – once you’ve considered the various angles offered to you by the model for your own production and consumption – start looking at how you can apply the model to both your inputs and outputs. Are there ways you can reduce the waste in products you source other companies by asking them to reduce the amount of packaging they use (maybe you can negotiate a better price in exchange for the savings you’re creating for them); or can you sell your waste products to someone else to reuse (creating a new revenue stream, whist also reducing waste); or maybe there’s a more efficient way to deliver your products to your customers (Think about how Apple didn’t even include a DVD drive with their recent MacBook Air line – instead suggesting that clients download all the software they need instead – reducing packaging, material cost and improving customer service and margins all in one go – not to mention better target the “road warrior” clients for whom light weight and high style are super important buying factors).

6a00d83452507d69e2011570387192970b-500wiI’m excited to see where the next generation of environmental agents takes the corporations of the future – for the next stage of environmental innovation is upon us – and that HAS to be good thing! Go forth and be green everyone!

In the meantime – please feel free to add in your own green stories and examples in the comments section below – I’d love to hear from you all!





The Innovator’s Guide to a Galaxy in Recession

20 11 2008

 

Don't Panic ButtonRecessions are funny things – on the one side economic horror story on the other harbinger of an explosion of innovation opportunities – sort of a “is the glass half full or half empty” coin toss really. 

I always find it interesting to watch how companies react during bad times – their reactions, whilst perfectly understandable from a human emotion standpoint – can be dreadfully short sighted at times. In fact – it’s this over reaction towards short term thinking that triggers the economic horror stories out there as people get laid off, companies post ever lower profits, and economic doom and gloom dominates the newspaper headlines. 

For example – take this typical strategical cycle that typifies corporate recessionary behavior: 

In a non-recessionary environment, people are employed; stability reigns, and people feel comfortable enough to part with their hard earned cash on non-essential items. And when times are really good – people approach their purchases in a more “cavalier” attitude looking at a wide array of factors beyond whether or not it simply “does the job” – and happily paying for things like extra “coolness”, the right brand, or a color that matches those shoes you bought last week.  In this environment, companies can lazily throw low-level innovations at the market with impunity to capture a fickle market that carefully matches their purchases with their lifestyle and changes frequently because of the easy availability and reliability of cash to the consumer. For the last 7 years or so (and some might say longer as the 2001-2002 recession was a short one) we’ve been facing just such a market. 

In a recessionary environment, consumers get jittery about spending their money as stability is no longer guaranteed – consumer mentalities change and so do their buying preferences. Top of the list of consumer preferences are now two simple elements, 1) whether or not the product can do the core job needed, and 2) price.

The net effect of that, on most markets, is to essentially commoditize all the products within because the incremental differences between competing products are no longer valued individually.  As a result, the companies able to provide the least expensive goods that still do the job begin to take on market share.

Consumer paying with coins

In order to compete, companies likewise begin to compete on price, initially by reducing their operating costs (i.e. headcount), which allows them to be able to maintain margins and profits on lower demand.  Then eventually they begin to sacrifice margin for increased market share in a bid to make up the reduced margins with increased volume.  Whilst these moves result in short term gains, they only last as long as it takes for competitors to do the same, which usually isn’t long. 

Eventually companies reach a point at which they are operating at minimal margins that barely cover their costs – and go on to the next stage – a battle of bank balances as companies continue to reduce prices at the cost of the business until only one remains…. 

Sound familiar? It should, the car industry pretty much just followed this model of competition to its demise, and current bid to be bailed out by the US Government.  There are several other similar cycles as the failure on one group of companies resonates up and down their value chains to affect the entire economy.

Who Dares Wins DVD cover

Yet out of every major recession, several companies emerge as winners.   Companies that have somehow found a way to separate them-selves from competition, found new ways to do business, or capitalized on new markets that no one new existed before. Home Depot, the iPod, the PC, even MTV have all triumphed from past recessionary environments.  In a recessionary world it really is “He Who Dares,Wins” (read this McKinsey Quarterly article for a fantastic quantification of this).

It’s easy to overlook the big obvious solution to the whole problem and get caught up in all the doom and gloom that dominates our media headlines as so many other commentators have. 

Recessions result in one certainty – BIG CHANGE – and the longer and deeper the recession, the more change there is – in your consumer/client, in your market, in your industry, in global business as a whole.   

Big Change is scary – but Big Change is good. Big change means BIG OPPORTUNITIES. Opportunities to change the game, to take advantage of weaker competitors, to find new and novel ways in which to not only survive, but to thrive. 

Innovation is all about realizing and capitalizing on the opportunities available to your company, and it’s the way out of vicious cycles like the one described above. 

The great news is that companies intent on winning the game are now forced to look at innovation with a sense of urgency previously unseen.  They will look towards innovation to revisit past assumptions, norms, and directions in a bid to become different from the competition in the eyes of the consumer/client.  To no longer be able to be compared on a like for like basis, and to compete in a market of one instead of many. 

Winners emerging from this downturn in the economy will develop an innovation strategy that looks at innovation in a very unique way from most companies. They will see innovation as something that can impact all parts of the business, in short and medium, as well as long-term time frames. 

1) Short Term Innovation Strategies

In the short term, winning strategies look to help companies with their short-term goals of increased efficiencies.  They do this by developing new and novel ways for the company to achieve cost reductions, process improvements, and business model changes that can catapult them into a new league of efficiencies that are impossible with old-school models.  The more sophisticated the efficiency developed, the more defendable and long lasting that innovation will become.  This will give the company a short term cost edge on its competitors, which is more conducive to the long-term health of the business than simple cost cuttings and harder to emulate.  Dell’s development of their unique business model in the 90’s is a classic example of the type of base changes that can propel a company into a market of one. 

Embracing the creative potential of their employees, GE is currently using Imaginatik’s software to drive their DMP (Direct Material Productivity) Work Out process.  This looks at reducing overall costs through design changes whilst maintaining or improving quality and customer acceptance. The results will directly impact the short-term productivity of GE’s business units. 

Another client I worked with had the interesting idea of creating a marketplace to drive efficiencies in the way the company used external consultants. Rather than individual bids or blind RFP processes – they invited all the consultants into an online system (with company names suitably anonymised) where they could not only see everyone else’s proposals, but could also add on to other company’s proposals.  This allowed the client company to pick and choose the best combination of services to fit their need – and to negotiate pricing in a very transparent process! 

The key here is to focus on short-term strategic objectives, and on areas that will result in ideas developed and implemented. In many cases this means not looking to create new projects, but rather to enhance existing funded projects by providing them with new and novel solutions to the problem they are already addressing. 

For example, why not play into Six Sigma and Lean projects?  They’re all about increasing efficiency in company processes – however all of them rely on small teams of people studying a process at length and then brainstorming between themselves to come up with a more efficient process.  In today’s technology literate and collaborative environments, it seems awfully short sighted to not involve hundreds or thousands of people in the process to come up with better ideas. cardboard toilet rolls

 

 

Georgia-Pacific was a great example of this.  One of their cost reduction initiatives I worked on zeroed in on shaving the cost of the cardboard tubes inside rolls of paper towels. By embracing the collaborative innovation infrastructure at their disposal, mill workers from among the company’s 16,000 North American employees quickly responded with little changes that shaved about $1.2 million a year, or roughly 4%, off the cost of the tubes – not too shabby, eh?  

2) Medium Term 

When looking at the medium term you can start looking at how to take advantage of some of the more obvious changes in the changing marketplace. 

Starbucks Cup and WaffleI loved one story I read about how Starbucks are doing just that.  They’re currently testing out new pricing strategies to try and overcome the recessionary effects on their consumers that are much more price sensitive nowadays, and no longer want to be spending $4 on a daily “Grande pumpkin spice vanilla latte (hold the cream, it makes me fatter)”.   One idea they’re piloting at the moment offers consumers small bottomless cups of coffee (i.e. free refills, not that the cups don’t actually have a bottom, that would be just silly…) for $1.  The move ensures that Starbucks customers return to Starbucks for their daily fixes regardless of household budget changes.  It also provides Starbucks with opportunities to up sell them additional products like music and baked goods that will contribute to the overall margin per customers that they achieve while satisfying new needs for the customer. 

Several clients I’ve worked with have also had fantastic results in the medium term by looking for adjacent markets for existing products. One performance chemicals company I worked with found a multi-million dollar new market for their existing waterproofing wrap used in the construction industry.  This was found when one curious sales person found that his client was buying the product to rapidly waterproof boats they were manufacturing instead.  

Bayer Production FacilityBayer, another Imaginatik client did something similar, collecting 147 ideas from their employee base for alternative uses and markets for one of their existing products.  This resulted in Bayer being able to enter a brand new market area with a new application in less than a year. 

Finally, when looking at the medium term, don’t underestimate the benefits of working with your business partners.  One large tech company ran one event over a 30-day period on optimizing their supply chain with select partners. The resulting ideas picked for implementation realized over $2 Million in benefits and saved them over 3000 man-hours!  I think the correct terminology for those kind of benefits in my current US homeland is “There’s gold in them’ hills”! 

3) Long Term 

Long-term strategies are all about changing the game – finding new products, new markets and taking advantage of concepts such as Blue Ocean Spaces, Disruptive Innovations, or Lead Adopters (depending on whom you choose as your academic guru of choice).  There’s no shortage of proof of the potential that a good innovation program and process can deliver to your business.  Whether it’s the ability to take your business to new heights (i.e. Apple or Google for several over publicized examples of innovation programs of different sorts at work), or more importantly, its ability to provide longevity to your business, even if that means changing the nature of the business Nokia N-Series(i.e. Nokia– originally a forestry company, then rubber products (they still make tires bizarrely), and now a telecoms giant – what could be next?).  

However, success in the long term has to be driven by success in the short and medium term. Their ability to drive real value will give you the credibility and time to drive the big changes that will propel your company into the next generation. 

After all, winners emerge from recessions and innovation is what will make you one of those winners. 








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