Innovation meets Adolescence (Part 1)

30 09 2008

 

Following on from my previous post on the Death of the Chief Innovation Officer (and the forthcoming rise of the VP, Innovation!), I’ve had several people now ask me about the rest of the contents of that presentation I gave on the “State of Innovation” – where is Innovation today?  

I personally believe that Innovation is continuing to mature – if we looked at the track of the adoption curve for Innovation as a sustainable business process, my feeling is that it looks somewhat like this:

 

Back in 2001 when I first got involved with Innovation and Idea Management – we were most definitely selling to the Innovators out there. They behaved in typical Innovator fashion – looking for shiny objects, reading up research to get the latest and greatest in whatever business tools are out there, very little sensitivity to risk, and generally regarded as mavericks within their companies. 

What we’ve gone through in the last 7 years is the maturation of that market – and with that a change in not only who’s doing innovation, but also how they’re doing it, and what they’re looking for.  It’s also signaled large scale changes in the market and how innovation is perceived and marketed by vendors.  

Let’s look at the most obvious indicator – the market landscape: In 2001, there were really only a few very small vendors out there – they were highly fragmented and tended to focus on niche elements of the innovation arena. I remember speaking to an industry analyst from Forrester at the time who told me that despite the fact that they loved our product “if you don’t have competitors, you don’t have a market”.   We were missionary sellers to a market that didn’t know what we had or how to use it – and when they did use it, they tended to focus on using it to replace the old school system of paper based suggestion boxes and Excel spreadsheets.  It was hard to find someone who could understand the potential in what vendors were trying to sell them – and even harder to find someone willing to look at committing the time, energy and resources into making it sustainable. Only serial entrepreneurs and mad men would dare enter the market at this point (and yes, we were both ;p ) .

By 2004, several more vendors had shown up on the scene – the market became more identifiable, people began to string applications together to make more robust products that the client could understand, and I had that same analyst now tell me that “consolidation will happen in this marketplace – I know of a company who is going to buy you soon”.  At this point there started to be people who “got it” on a more regular basis – although they still tended to be predominately mavericks or “movers and shakers” in the company who were out to make an impact and saw an opportunity to do something no one else had.  Of course, this led to a boom and bust period for corporate innovation programs as these maverick leaders would make a big impact in the business world and then have to face the consequences  – namely they would either:

a) Get Promoted
b) Get given more areas of responsibility in order to kibosh their rebel rousing ways
c) Get hired by someone else in their industry who wanted the magic formula
d) Retire (because another frequent profile of sponsor were near-retirees looking to make a last ditch impact and had nothing to lose

The market today is very different yet again – with a multitude of small vendors starting to flood the markets but ultimately the main market sticking to the few bigger vendors who serve defined markets but have multiple unique selling points to differentiate themselves as they try to find what the mass market that’s coming ahead really wants and needs. Financing is becoming easier because institutions are beginning to actually understand what is meant by the various terms that are used in the marketplace, and what the business proposition is.  Enterprises as a whole are starting to understand – and nowadays, if they aren’t actively approaching the vendor market in some way, it doesn’t take them long to figure out how it can be useful to them.  The market is rich with options – both from the software world and from the consulting world – big and small – local and global – there’s a vendor who can satisfy the market’s needs.  Prices are high, but so are the rewards for sustainable innovators – and the current recession is only going to strengthen the innovation agenda (see my entry on this topic for more on recessions and innovation). 

My personal feeling is that we’re about to begin tapping into the Early Majority stage of the adoption curve now having crossed the Innovator’s Chasm (the make or break point for any concept or product where you have to bridge the gap between the Early Adopters and the beginning of the mass market that is represented by the two majority groups) at the beginning of 2007. 

Of course the most interesting changes are happening at the enterprise level – and there are several major trends that are also pointing to this upcoming maturation in the enterprise application of innovation tools and techniques.  But that’s a story for another posting… 🙂 


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Innovation Complexity Curve

26 09 2008

 

About a month ago I got asked by a colleague if I thought that there was some sort of maturity model for how are clients address and utilize innovation tools and it got me thinking on.  What I came up with is a model based on how I’ve observed our clients taking innovation as a new concept and tool and how that usage has grown over time:

When addressing a new concept, the first stage is to see if you can use it for Cost Reduction Purposes. It’s low risk, easy to do, can generate some marginal value that you wouldn’t have otherwise achieved and if you fail, no one will notice. 

Having achieved success at that, you then start looking at finding ways in which to improve your existing processes to become more efficient and to start adding some original value to the company. 

Success in that area leads you to look at how you can begin to use the concept/tool to gain some sort of competitive advantage with your product line – at first by looking at Incremental changes to your existing product line, and then by looking for alternative adjacent offerings you can develop to complement your existing product line.

Finally you start looking to the future – first by envisioning what your product line will look like in future generations and then ultimately by opening your mind to what sort of blue sky / breakthrough opportunities the company could capitalize on in the future. 

The further up the complexity curve you go, the more potential impact on your business a project will have. However, as the complexity is rising so does the risk of failure (naturally – if it was easy everyone would do it well!) and so your attitude towards failure needs to be likewise massaged and toughened if you desire to reach the top. 

I’ve seen many companies follow this curve – it offers a balanced way to try out the new concept/tool whilst all the time building credibility and tolerance to risk in exchange for reward. 

I’d be interested in any thoughts people have – so feel free to leave them!

Oh – and yes, I realise the “curve” isn’t actually a curve – but somehow “The Innovation Complexity Straight Line” didn’t have the same ring to me as I was writing this – and I vaguely remember an A-level maths professor say something to me about how even a straight line is a curve of sorts mathematically (although I could be wrong)… 


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Death of the Chief Innovation Officer?

17 09 2008

I recently did a presentation to a large nationwide insurance company around “the state of innovation” today. it was an interesting opportunity to reflect upon some of the major changes that I’ve been noticing going on over the last year. 

As this was a pretty senior audience, it was no surprise that one of the items that caught their attention was the state of innovation leadership and how innovation is staffed and led in the modern enterprise. 

One of the biggest changes I think is the death of the Chief Innovation Officer (CIO) role. As unusual as it sounds for someone like me to be proclaiming that – I have good reason for my assertion – other than the evidence of numerous high profile CIOs leaving their employment over the last year or so. 

In reality – it’s not that companies don’t have the need for the CIO role – but rather that I think innovation has become such a critical part to most company’s future that it has been rolled into a much more important role – that of the CEO.  Try finding one CEO statement on any financial report that doesn’t mention innovation nowadays – and I absolutely applaud that approach.  Innovation has the capacity to make big – no HUGE – changes to a company. Take Nokia – innovation has taken it from being a forestry company, to a rubber products company, to a telecoms behemoth – without complete executive support for the type of changes required to innovate, it simply wouldn’t have happened. Innovation has to be about helping the organization achieve a direction and goal that it WANTS to achieve – and ultimately there is only one person in the organization that has the ultimate responsibility for that – the CEO.  

That’s not to say that organizations can get away without some sort of senior leadership – far from it – that leadership is as important, if not more important, than ever before – but it now is coming from a position that is junior to whomever leads the major change directions within the organization – in some orgs that comes under a Chief Strategy Officer, in Consumer Products companies that is typically the Chief Marketing Officer, in  Pharmas and other research intensive companies it falls most likely under the R&D department – and in some cases it’s a position that reports directly to the CEO. 

This new role – most frequently then an SVP / VP of Innovation – is the guardian of innovation within the company – ensuring processes are devised, targeted and executed to enable the org’s strategic goals to be achieved. They are the ultimate problem solving expert in the company – helping to not only define the problems that must be overcome, but then also to define the methodology by which they can be solved and ensuring that the organization’s resources are made available to do so. They are the champions of change, the focusing lens of innovation, and ultimately the secret to a successful program. 

The CIO is dead! Long Live the VP, Innovation! 


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Parallel or Serial?

2 09 2008

So I’ve been working on this concept for some time as a result of an Open Innovation process that I put together for two of our clients – both major international food companies – who are taking the brave first steps towards collaboratively innovation. I say first steps, but they’ve actually already been at this for over a year – and it’s only just recently that the legal teams on both sides have put together and signed enough agreements with three letter acronyms (NDA, CDA, JDA, etc) to justify their retainers and satisfy every eventuality that this collaboration might produce – cue the ability for the business teams (and me) to start formulating a way to actually work with each other. During this two day working session I got to thinking that there are several ways in which to collaboratively work on a specific problem – mainly either in parallel or serial modes. 

The classic way of working is in Serial mode – that is – you first pose the question to one team, then pass the results to another team for further building and idea gathering, then to another team to develop further, etc – one after another until you have a finished product.  This is also the model you follow if you simply put everyone in the same room and let them at the problem.

The alternative Parallel mode gives the same question to both teams and has them both ideating in isolation – only to share the results with each other after the end of the ideation period. Whilst it would seem to be a duplication of effort and ideas (and you’re right to think so) there are actually times when that would make sense – and even be preferable. 

Of course people then also are able to mix the two approaches – first a Parallel process, followed by a Serial process to get the desired result and I thought I’d spend a little time this week to explore some of these concepts.  As these aren’t fully formed yet – bear with me if in future posts I then continue to add more – but I figure if I don’t get started somewhere, it’ll be ages before I get around to explaining what I think is a pretty interesting process question. More to come later 🙂 


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Questions to get you started

28 08 2008

I was asked today by a client to help them by identifying the questions they’d need to ask internally in order to start identifying the workflows and processes that they would need to use to achieve success – and I figured I’d share what I wrote here: 

For either internal or open innovation processes you need to ask yourself/your sponsor the following questions: 

1) What is it we’re trying to achieve? – why are we bothering to look for ideas? What impact is it going to have on the business? How big of an impact does that need to be? What kind of ideas are we looking for (incremental process improvements? tangential product ideas? blue sky concepts?) ?  – With all of these, make sure you’re identifying them in as measurable a terms as possible – ideally focusing on those that impact bottom line revenue – or the company’s ability to impact that revenue figure. The more you tie your program to direct value generation, the more the company will value your efforts, and ultimately deem your program successful and fund future efforts/program expansions. 

2) Where are these ideas coming from? – bearing in mind what we’re trying to achieve – what knowledge pool does it make sense for us to tap into? What are the implications of tapping into that knowledge source? Think of things like – can these people “play” well together in a collaborative environment? How will we incentivize them to take part? How much can we ask them to contribute? What kind of ideas will they be able to contribute? What security/legal/IP considerations are there to take into account for this group of people?  What do these ideas look like? And how do we want to receive and acknowledge them? 

3) What are we going to do with the ideas when we get them? – Do we need to further build/test them? If so – then to what level? Can collaborative input improve them – and if so, then who should be involved and in what way? Once the ideas are built, how are we going to bring them to fruition / realization? Is there a path to implementation identified? 

When working with all of these questions – you’ll find it easy to build a rather exhaustive list of things you could ask and end up with an idea form 20 pages long and a review process that would take a team of 20 people a year to complete – but remember KISS – Keep It Simple Stupid! The more complex you make a form, the more you put off people (especially externals!) from giving you their ideas (especially the more blue sky ones that have the largest potential for impact.  The more complex you make a review process, the more of a chore it becomes for the reviewers, and the less likely they are to do it. Simplicity is the key to Usability. 

Throughout the process consider whether you a) have all the information you MUST HAVE in order to consider an idea worthy of implementation and b) how much of this is just “nice to have” – A lot of the information you’ll be tempted to add in, you’ll want to primarily because it was already there beforehand and so you might as well add it again. One way around this temptation is to try and design your form without looking at the old one – start from scratch and see what you think NEEDS to be asked. Then use the existing form as a check up to make sure you haven’t missed anything vital – rather than a template from which to build on. 


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Innovation Metrics – Part 3

13 08 2008

Innovation Metrics - Part 3

 

Innovation Metrics - Part 3

 

Continuing the thoughts on metrics.. 

3) The Three F’s – When beginning to consider innovation metrics – there are three main “F”’s that you need to measure – Form, Flow, and Function. 

    a. Form – Form is your ability to perform each part of the innovation process.

    b. Flow – Flow is your efficiency at both passing stuff through the individual elements of the process as well as the overall process itself.

    c. Function – Function looks at the program as a whole and its ability to achieve organizational goals, and the organization’s innovation capacity as a whole.

Taking the innovation process you’ve developed in section 2 (see last week’s post) above, you then go through the process figuring out what metrics are most appropriate taking into account the 3 F’s.  For most companies, the metrics will be broadly split into two sections – the form and flow of the pipeline itself – and the function of the program as a whole:

 

Innovation Metrics Worksheet - Form and Flow

Innovation Metrics Worksheet - Form and Flow

Some good examples of Form and Flow metrics: 

1) Problem Identification and Definition stage: 

  • Number of Problems submitted for consideration (form)
  • Number of individual event sponsors recruited (form) 
  • Number of Event Charters defined (form)
  • Number of Events accepted and set up  (flow)
  • Number of Events in each of the key corporate strategic areas (flow) 

2) Idea Collection, Building and Management 

  • Number of ideas/builds collected (form)
  • Number of Event Visitors / Contributors (form) 
  • Number of Idea/Build  Authors (form)
  • Number of ideas reviewed and concluded (flow)
  • Number of Ideas passed through to concept development (flow)

3) Concept/Opportunity Development

  • Number of Prototypes developed (form) 
  • Number of ideas going into Project Management (flow)
  • Potential value of ideas going to Project Management (flow) 
  • Average time idea spends in Concept Development (flow)

4) Project Management

  • Average time to project completion (form) 
  • Number of projects completed versus target (function)
  • Number of projects currently in the pipeline versus target (function)
  • Effective capacity versus capability (function)

5) Initial Launch

  • Target sales/cost reduction/process improvement versus actual (form)
  • Customer satisfaction (form)
  • Customer uptake versus local competitor/alternative (form)
  • Number of Launches proceeding to Expanded Launch (function)
  • Number of Launches failed (function)

6) Revise, Expand, and Re-Launch

  •  Contribution to profit margin from innovations

And for Innovation Function: 

Innovation Metrics Worksheet - Function

Innovation Metrics Worksheet - Function


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Innovation Metrics – Part 2

8 08 2008

Continuing the thoughts on metrics from last week! : 

2.    Plan the Path – Now that you have a direction to point your innovation efforts at, it’s time to plan the path to get to that effort.  In the same way that strategy documents are formulated with multiple time points to set milestones for where the company wants to be at 1,3, and 5 years – so should your innovation plan and strategy as to how you’re going to help the company achieve those aims and the contribution the innovation program will make to the company’s strategic aims.

Your innovation pipeline will be led and directed by the strategic context of the program (see step 1 from last week) below, which follows the general form of: 

i) Find and Identify the problems or barriers to achieving the strategic objectives and define each tightly in terms of applicability, feasibility, and commitment to implementation of the solution. Then decide upon the order in which to tackle those problems.

ii) Collect ideas from internal/external sources on how to solve those problems/overcome the barriers, and begin the collaborative process to build those ideas into base concepts, selecting the most effective concepts/solutions for further development.

iii) Build out the selected concepts and begin testing for feasibility, cost constraints, market acceptance, etc – the various tests and building activities carried out in this stage(s) will vary depending on the company, industry, and target of the innovation process. 

iv) Decide upon and begin developing that project through effective project management

v) Launch the developed solution in a limited manner – to one geography, one factory, one business unit, etc – and tightly monitor and control to look for effects and improvements

vi) Redevelop based on insights from the limited launch and Re-launch to a wider audience, usually in stages. 

Underpinning the program are the dual disciplines of Portfolio Management (ensuring that the quality of the pipeline is sufficiently high and sufficiently robust in order to achieve the company goals) and Foundations (ensuring you have the culture, skill set, tools, processes, leadership,  etc to fully enable the innovation process) .  

The pipeline is meant to provide you with a guideline as to the general best practice of a robust innovation program – and you will find that most innovation programs will be able to be overlaid onto this model.  You’ll need to spend time understanding how to translate your overall program strategy, into a comprehensive program that fits your company’s capacity, culture, and aspirations.  Once you have your process set out, you’ll be ready to start sorting out what you’ll need to measure to ensure you’re achieving your aims. 

To be Continued (again 🙂  ) 


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Innovation Metrics – Part 1

1 08 2008

Metrics are one of the most important elements of an innovation program’s success – determining everything from a program’s future direction – to whether a program even gets funded the following year.  Yet metrics are probably the least understood, and most misused activity in a corporate program agenda.  Understanding what to measure, and how to benchmark your performance is paramount to achieving both recognition and validation at the senior executive level – so how do you get it done?  I thought I’d paste in a step by step guide over the next few weeks to let you know!

Understanding the Innovation function

1. Start with Strategy – Key to understanding the metrics used to measure your innovation program is understanding what the real goal of that program is.  Your whole program should be focused at trying to help the company achieve its strategic objectives (if it’s not – make sure it’s realigned to do so or you risk having a marginalized program that will be cut at the first opportunity!) – so it makes sense to start your journey into metrics by getting a better understanding of what it is exactly that the organization is trying to achieve – where does it want to go? What are the barriers stopping the company from achieving it? Where are the key competitive forces?  These and other questions will lead you into a better understanding of how best to target the activities of your innovation efforts to best benefit the organization as a whole. 

Don’t be fooled into believing that the answer will always be via the creation and development of the company’s product set either.  Sometimes it could be a need to dramatically improve process efficiency that will drive a company forward. For other companies it could be a need to develop innovative business models to drive profitability in the forthcoming years – and yet others might be driven by a need to get out of a commoditized marketplace and develop an entirely new value proposition and new client base altogether (see my earlier White paper on Innovation Dimensions for more on the different dimensions an innovation program can and should be attacking).  Even within the same industry – different players will typically be driven by different environmental and competitive factors that will lead the decision to pursue a particular business strategy.  This strategy should then lead both the direction of your program and the metrics you use to measure the program’s effectiveness. In the same way that companies do not typically simply copy another’s business strategy blindly, neither should you simply copy their innovation metrics and benchmarks – as what’s appropriate for one company in a certain situation could be disastrous when applied to another.  With metrics, the wrong metrics will give you misleading information on your ability to help meet the company goals

I’ll be adding more in weeks to come! 


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Non-Value Events and the Pursuit of Expansion

30 07 2008

I don’t think any client ever hears me say “focus on the value” enough times for the most part – but I will accept that there is a time and a place for running events that don’t directly add value creating ideas into the pipeline. 

One great example of such a time is in helping to broaden and expand a program by running an event that is broader in scope than your standard event in order to engage the most amount of people possible and give as many as possible a good experience of using the methodology.  

One recent client in the aerospace industry actually did this quite well – as part of their initial pilot period they ran both value enhancing events, but also ran one event for a senior marketing VP which was much ‘softer’ in nature – focusing more at understanding the characteristics of a new market they were thinking of attacking.  The value events drove some great results and perceived ROI despite being reasonably technical in nature and as a result had low participation rates. The non-value event got a fair amount of ideas on all sorts of subjects related to the new marketplace. Whilst it didn’t generate any actionable ideas, it did however generate a lot of interest in the tool from potential event sponsors and enquiries about how it could be used. The client then pointed to the ROI figures from the value-driven events to convince future event sponsors of what could be achieved with it. 

I think companies nowadays should drive a mix of events – and as with so many things in business, I suggest using the trusty 80:20 principle for figuring out the correct split of value to non-value: 80 % of your events should be focused on driving new and novel value for the company. 20% of your events should be focused on topics/methods designed to market the innovation program to a wider audience and thus expand the overall reach of innovation within your company.


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“I ain’t got nooooboooodddyy….”

2 07 2008

“We’d love to innovate, but we just don’t have the resources – everyone’s just too busy on more important projects”…. I can’t tell you the number of times I’ve recently heard this from both clients and prospects that I’ve been put in front of in the last few months. There’s a general impression that Innovation in itself is a separate project that you do in addition to your other workload – “PHOOEY!” I say (not sure on the spelling of that word btw – but am sure you get the point). 

What I don’t understand is how clients get to thinking like this. Innovation is not a goal in its own right – it’s a methodology, a discipline, and a strategic tool to achieve your corporate goals – not a goal in its own right. You’re most successful when you’re using it as a way to help the company to find new, novel, and better ways to achieve what it’s already motivated to do – not when you’re floundering along trying to swim against the flow that the company is trying to go in. 

Ah – but what about companies like Nokia, for example I hear you say. Companies that have  changed and morphed through time (in Nokia’s case from forestry, to rubber, to mobile communications so far) by being constantly innovative? What people fail to acknowledge is that Nokia was actively trying to change – it was part of its strategy to be open to and drive new business models away from their core business – business models that eventually proved more profitable than the previous ones and quite rightly became the main focus for Nokia.  Innovation you see, can change the entire company in many weird and wonderful ways – IF your company WANTS to change in those directions.  It’s no use trying to force change that the organization isn’t open to – you’ll just waste a lot of time and effort that will ultimately fail and will not be positively recognized by your leadership. 

Instead – take the company strategy and identify the direction the company wants to go in and the goals that it has set for itself. Identify the people working on projects aimed at progressing the company towards that goal and offer them a different and better way in which to achieve the work that they’re already trying to get done.  They’ll already have the desire, enthusiasm, commitment, and more crucially – resources – to get the innovative ideas and approaches your team is bringing to the table implemented.  And at the end of the day innovation is about getting things implemented and to do so in a way that adds value to your company – this approach does both.



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Can Grassroots Innovation Work?

27 06 2008

I just spent the day at a client today who’s trying to make a grassroots innovation program work.  Specifically, they’re trying to build up an innovation capacity ‘under the radar’ – choosing to drive their internal program without specific knowledge of, or support from, the very top of the company. However – best practice is commonly to start with the top and work down – it’s just easier to have that mandate and strategic direction with which to work with. However – not everyone has that luxury – and whilst much harder to drive an innovation program from the bottom up, it’s far from impossible – as long as you follow some guidelines: 

  1. Start with strategy – just because you don’t have top level support, doesn’t mean you don’t need to follow the company strategy. In order to become successful, and to build the stories and gather the credibility needed to grow your program – you need to be helping the organization (and the individual managers you’re enabling) to achieve its goals. Innovation can change a company completely – Innovation is about coming up with value-creating change – but an organization won’t want to change in a direction that is against the direction the company wants to go in. You could come up with a fantastic idea for a new beverage that would revolutionize the drinks world, but if your company is determined to attain and maintain a leadership position in the aerospace industry, you’re wasting your time developing that idea. It’s simply not productive to “swim against the current” – your goal as an innovation leader is always to help the company achieve its goals – not try to convince them of goals they do not have. 
  2. Start conservatively and focus on value creation. At this customer today, when talking about barriers to the innovation strategy we were formulating – one of the team members brought up that she’d been trying to get the company to realize the value of open innovation for years – they simply weren’t open to outside ideas.  There’s a common problem in many grassroots innovation programs – and it’s especially problematic when you have visioning conversations and strategic thoughts – of trying to implement an innovation system that is several generations ahead of what the organization will accept.  Cultural change is not an overnight process – at best it will take at least 18 months to make a positive behavioral change in a large organization – and that’s assuming you’re constantly re-enforcing the change behavior you’re looking to move to.  To take this example as an illustration – when looking at what the organization needs to do in order to achieve its long term goals, it’s easy to see an ideal system that incorporates outside ideas and insights from customers, suppliers, and others in addition to all sorts of complex systems. However – a grassroots system needs, more than any other, to be built off of credibility creating successes.  Focus on creating value utilizing a disciplined approach to idea capture and development and you’ll begin to build successes you can build on and expand off of. For example, with this client today, they need to start by driving key projects with divisional VPs utilizing internal ideation to create new product ideas that have the potential to create value. Once they’ve achieved that, and built up some credibility “credit” – they can then use that to try and expand the use of the system through less conventional techniques – not only because the business sponsors will be more open to letting you experiment, but also because the organization as a whole will be more used to the concept of ideas as a source of value – focusing more on the value concept than where the ideas come from. 

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