Friday, October 24, 2014

Opening the innovation aperture



Today a brief tip of the hat to Larry Keeley and his team at Doblin Group, for their concepts of "Ten Types" of innovation.  Keeley and his team created a very nice graphic that captures many of the different types of potential outcomes of an innovation activity.  That is, innovation can result in a new product, a new service, a new business model, a new process, and so forth.


This concept is important, because when most of us think of "innovation" we think of new, tangible products.  In fact much innovation work is simply the "front end" to new product development.  Using innovation just to create new products is like using a computer to only surf the web - it's power and capabilities are limited unnecessarily.  What's more, product innovation in many cases is obvious and somewhat boring, unless the goal is "disruptive" and the team fulfills that goal.

Further, many people will argue that they have plenty of products.  What they need are new services, new channels, new customer experiences and new business models.  In fact many of the "big" innovations in the last few years are more likely to be business models (Software as a Service as an example) or customer experience innovations (anything Apple has made).  There's a pent-up demand for things that are new, valuable and unusual, not just tangible products but solutions that provide value.  Getting a company to think beyond the product is important, and Keeley and his team have presented us with a nice framework for thinking beyond product innovation.

I've surreptitiously introduced another dimension as we think about opening up the innovation aperture.  The concept of a spectrum of innovation from small tweaks to existing products (incremental innovation) to completely new products and solutions that create significant change (disruptive or breakthrough innovation).  This is another way to think about opening the innovation aperture.  Not every product or service needs incremental innovation.  In a baseball analogy, we should be good at hitting singles and doubles (incremental) but we also need to take purposeful swings at the fence (disruptive).  As we open the aperture, we give people more clarity about the desired solution - the "what" of innovation.  A disruptive new customer experience can be just as valuable as a new product, and often more difficult to copy.  But being able to describe the anticipated goal, and get the team to understand and work to that goal is what's really important.  Because our ability to communicate limits the dilation of the aperture.

I've yet to meet an executive who only wants incremental product innovation.  They all want a range of innovation outcomes, both in terms of incremental-disruptive and in terms of Keeley's range of outcomes.  But they often don't know how to state what they want, or don't do a good job defining the desired outcomes.  When communication is poor or lacking, people hear the demand for innovation but don't understand the depth or breadth, so they choose a safe set of parameters and settle for incremental product innovation.  It's no wonder that so often new "innovations" look a lot like existing products.  Without better instructions, that's what the culture will lead people to create.

We can go further with this idea of the aperture, to think about the "how" of innovation. It's often not clear how much investigation or discovery of needs should take place, or how much research is necessary.  Teams often don't understand whether they should trust in their own ideas and technologies or open up to external firms, using so called "open" innovation.  The more we set out in our "what" and "how" conversations about innovation, the better the resulting outcomes can be.  Conversely, the less said about what and how, the lower our expectations should be.

Who ultimately controls the dilation of the aperture?  It's not just executives, not just managers but it's the entire organization in thrall to a culture of risk avoidance, consistency and efficiency.  All it takes is one strong voice to demand more clarity about the potential outcomes and activities to cause the entire organization to rethink how innovation is conducted.  Until that voice - or hopefully voices - rises up, innovation is conducted through a very narrow aperture, leading to very incremental solutions.
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posted by Jeffrey Phillips at 6:28 AM 0 comments

Tuesday, October 21, 2014

Open to adjacency

We work with a lot of firms to build innovation processes and culture, hopefully leading to the development of what we call an innovation competency.  Trying to get a larger, complacent firm to embrace the risk and uncertainty of innovation is not easy.  There are often many preconceived notions about what the firm and its people should do, where they should spend their time, what's "important" and what isn't.

But the truth is with the right coaching and a good set of tools and methods you can overcome a lot of learned avoidance, and actually create some good ideas.  Good ideas, that is, up until the point where someone asks the question:  Is this what a firm in (fill in the blank) industry should do?  What we have here is a predicate question - asking whether or not the firm should solve the problem, often before or instead of understanding if the customer has a need, and whether or not that need should be filled.  Whether or not a firm in a specific industry or market  segment "should" solve the problem is beside the point.  Either it will or it won't.  If it decides that the solution or offering is outside it's capabilities, well and good.  If the need is pressing and customers are willing to solve it, someone or some other firm will solve the problem.

Where this thinking matters is when an innovation team starts every discussion with:  is this what our firm or industry should do?  Too often there are preconceived, and very powerful notions, about what an organization should, or shouldn't do.  These notions argue that once a business model or industry focus or customer segment strategy is developed and perfected, all future opportunities should be viewed from this lens.  Nothing, my friend, can be further from the truth.

Imagine, since Apple is always used as an example, if Steve Jobs had said, "well, we are in the PC business, so no matter how terrible those little MP3 players are, and no matter how terrible managing music becomes, we can't solve that.  We are a PC company, after all!"  I didn't have the privilege to meet Jobs, but I'd like to think that he was able to see problems and needs in markets adjacent to his own, which he had the vision or technology to solve.  He believed that these needs were important and that customers wanted solutions.  He then asked:  even if we aren't in that business, do we have the underlying technologies, capabilities and relationships to be credible in that space?  He found that the answer was yes.  He didn't allow the fact that Apple was a PC company to keep it from identifying and solving vital and interesting customer needs.

Now, there's a fine line here between identifying and solving "adjacent" needs or extending capabilities or business models to new customers, and entering completely new lines of business.  Richard Branson is probably the only person I've heard of who succcessfully enters completely new lines of business.  He is innovating marketing and customer experience, rather than products and business models, so his model may be a bit easier to replicate.  But back to Jobs.  There are two other things that make this story compelling.  First is the fact that one of his first acts upon returning to Apple was to cut about 80% of the product line.  He simplified the product suite to focus more attention on fewer products.  So in some regard he compressed and consolidated the space he thought Apple should be in.  But then he looked for opportunities to use Apple's design capabilities, its customer experience, its ability to integrate and bring disparate items together to solve a number of problems, from the iPod to the iPhone and the iPad.  Apple wasn't initially a phone company, or a MP3 player company and many of its initial attempts to enter consumer electronics had not been successful (see the Newton).  But he didn't allow the organization to simply reject good ideas that solved customer needs that were outside of its cultural purview.  The other thing that Jobs didn't do is focus Apple on things it clearly couldn't and shouldn't do, however.  He understood the proximity of consumer electronics, cellular phones and tablets, and the distance between Apple and other factors like toaster ovens.  But one last thing you'll notice is that every innovation opened the door to another adjacent space.  For example dominance in handsets now means that Apple is relevant in payments and has released perhaps the most secure payments mechanism for individuals.  Would Apple be relevant in payments as a PC company?  Probably not, but it is relevant as a payments provider with a dominant marketshare in the handheld space.

On the other hand, almost every corporate innovation team I work with rejects a lot of innovation opportunities out of hand.  It's not in our business model, they'll say, or a "blank" company doesn't do that, or wouldn't be accepted if it did "X".  So they leave behind the most urgent needs customers define to pursue ideas that both they and their customers have less investment in. 

Can your leopard change its spots?  Can your teams identify and continue to contemplate opportunities outside your defined business model or sweet spot without complete cognitive dissonance?
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posted by Jeffrey Phillips at 8:01 AM 0 comments

Wednesday, October 15, 2014

Innovation is not a strategy

I've written about this concept before, but I believe it bears repeating:  innovation is not a strategy.  Strategies, according to Webster, are:
careful plan or method for achieving a particular goal usually over a long period of time
Your corporate strategy may be to become the leading provider of a specific product in your chosen market, or to be the most profitable company in your segment.  These are strategies, which then require definition of the direction, and some ability to measure and recognize when you've achieved your goal.

Now, imagine that we use innovation as a strategy.  In fact we don't have to imagine, it happens quite frequently.  Executives will say:  we need to be more innovative, as if that is a strategy.  What does this statement miss?
  • More innovative in what capacity?
  • What does "innovative" mean to you?
  • How will we know if we've been innovative?
  • What are the outcomes or results you seek?
  •  
 You can learn a lot by the answers you get when you ask these questions.  If the answers are:  we aren't sure, or, just get busy and we'll figure that out later, then innovation is window dressing.  In many cases I don't expect executives to be able to state exactly how much innovation should contribute to growth, or exactly how many new products it should generate, but at least provide a ballpark! 

One of the big problems with innovation today isn't in our ability to execute innovation, it's in our ability to direct innovation against interesting challenges that align to strategic needs and goals.  There are plenty of people who, if given the training and time, can develop interesting new ideas.  The real question for innovation is:  what problems are really important, and what new ideas are acceptable?

The challenge that many executives face, and the reason that strategy and innovation are so often lumped together, is that there is true symbiosis between strategy and innovation.  The more clear cut the strategic goals are, the easier it is for innovation to find ways to support and achieve the strategic goals.  Conversely, the murkier the strategy, the more difficult it is to define innovation programs or projects that matter.  This isn't to say that all strategies demand innovation.  They don't.  But many strategies have goals that require us to stretch our thinking or introduce new thinking to drive new results.  This is where corporate insanity comes into play.

Einstein said that insanity is doing the same things over and over again and expecting different results.  If we have the same strategies, and implement the same tools and methods to achieve those goals, expecting different or better outcomes, we may be falling into his trap.  However, it's exceptionally hard to change tools, methods and thinking in a company, and even more so when so much is on the line.  It's no wonder that executives revert to tried and trusted tools, hoping to squeeze out new ideas from exhausted but familiar processes.  It's even more difficult to do this when there's confusion between what is "strategy" and what is "innovation" and how they interrelate.

Strategy consists of goals that the company sets in order to grow or differentiate, and should have measurable outcomes.  Grow profitability 15% over three years.  Enter a new market and win 10% market share in three years.  These are strategies.  Innovation is a tool that helps you achieve your strategies when the every day tools can't or won't succeed.  In a specific strategy, say entering a new market and growing share, my existing methods and tools may help me achieve some of that growth.  But gaps may still exist between what I can achieve with my existing knowledge, products and solutions, and what I hope to achieve.  These gaps are perhaps some of the best use of innovation - striving to achieve a well-defined and accepted strategic goal by introducing new tools and new thinking.

If you paid attention to the definition of strategy above, you'll note one other factor that I've ignored till now.  "...over a long period of time".  Here's where innovation and strategy are similar.  Strategies aren't short term things.  You can't enter a new market and take significant share in few weeks.  Strategies are supposed to take work and evolve over time.  They are worth the investment.  Innovation is the same.  Innovation is not a tool that can be grasped in times of emergency or on an occasional whim.  Good innovation takes time to develop, time to change the culture, time to recognize the outcomes.  But while they share similar traits, it's easy to see that strategy is far more important than innovation.  Strategy provides the goal, provides the clarity and should provide the support and resources.  Innovation is the tool that bridges the gap between what's achievable with every day methods and what's expected.  Without clear strategy, innovation is just an interesting set of tools that most people find interesting but something of a distraction from real work.

There can definitely be strategy without innovation.  Plenty of business strategies don't require innovation, they require good execution using existing tools and methods.  Some strategies can only be successful using innovation.  But the reverse is also true in larger organizations.  It's very difficult to innovate if strategy is missing or unclear.
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posted by Jeffrey Phillips at 6:57 AM 0 comments

Tuesday, October 07, 2014

Innovation Prevention

If you've followed this blog lo this many years, you'll know that I specialize in two things:  trying to convince individuals, teams and organizations to do more innovation, often with a very tongue in cheek approach.  This post is no exception.  I want to talk to you today about the importance of preventing innovation.

Like Mordac, the character in the Dilbert cartoon series who prevents people from getting things done with technology, many times I have been Mordac, the preventer of innovation projects.  Mordac's job at Dilbert's company is to develop and sustain IT systems.  Inevitably, instead of making Dilbert's job easier through technology he makes Dilbert's job more difficult or impossible.  This is playing off the idea that many IT departments are roadblocks to new solutions rather than enablers.  In their defense, some of the IT projects they block are ill-conceived.  Others may seem simple to implement but would be difficult to support.  Still others require more or different resources than the IT team possesses.  So, sometimes, Mordac the Preventer is right.  Of course sometimes the projects he blocks are wrong.  Mordac (and your IT organization) occasionally block projects that should be implemented and that would add value.  Can we find a parallel between IT projects and innovation projects?

As an innovation consultant, it's my job to help my clients decide which projects make sense for them to pursue.  Unfortunately, it's also been my occupation to block innovation projects or to try to prevent them from happening.  This is usually because the client has poorly defined goals, inadequate resources or doesn't understand the market or solution they'd need to create.  To my great pride, I've helped block, prevent or delay a handful of projects, which I believe saved my clients time and money.

But more important than saving time or money is saving credibility.  If a client is just beginning its innovation journey, and lacks innovation experience, doing the project right matters.  Kicking off a poorly planned, poorly conceived project that has a high likelihood to end in failure, when the company doesn't have a lot of patience and is very risk adverse will end any future opportunities.  Where innovation is concerned, most organizations only get a few chances before the management loses interest and teams lose commitment, or start to believe they simply can't innovate.  In these instances it is better to suffer the small failure of stopping an innovation activity prematurely, to recast and replan the activity, than to conduct the activity and have it end poorly.

Client Example

Here's a recent example, redacted to protect the client.  Many of our clients have an "Innovation Week" in which they bring disparate people together to plan new products and design new projects.  One client asked us to help plan their Innovation Week event.  Since we've conducted other workshops like this, we were glad to oblige.  However, as we started to discuss the goals and anticipated outcomes it became clear that the client didn't have clear strategies, couldn't communicate what they wanted to happen in the event and couldn't define the outcomes.  We worked diligently with several key sponsors but could not get them on the same page.  A few weeks after we started planning everyone realized that the event wouldn't lead to a good outcome and might even frustrate attendees, and turn them away from innovation.  So we cancelled the event, and hope to schedule it in 2015, when we have better planning  and visibility.  While cancelling the event caused a bit of heartburn, it was far better to postpone and create a meaningful event that all the sponsors could back, rather than continue with a half-hearted innovation workshop.

Innovation Creator and Preventor

If you are an internal innovator, it's your job to find the most interesting problems and challenges and try to get your management team to sponsor innovation activities around these.  But it's also your job to prevent ill-timed, poorly planned or poorly resourced innovation activities from getting started.  I know it's tough to finally get someone excited about innovation, only to become the "wet blanket" that seeks to redirect or slow progress on an potential innovation activity, but treat each one like the only chance you'll get.  Eventually you'll want to get the point where killing an innovation activity is easy, a no brainer, and no problem because you have so many going on.  But when you only have one, and it's in the spotlight, you need to ensure it's done right.

When to prevent an innovation activity

There are a number of factors that can alert you to the need to slow or even cancel an innovation activity.  Those factors include:
  • Poorly defined innovation goals.  Simply saying that "we need a new product" or "bring me an interesting new idea" is not enough.
  • Vague or inadequate commitment of time or resources.  "Let's see how this goes before we commit resources" or "Why can't you have some good ideas in just a few days" are two statements that should cause you concern
  • Different definitions or opinions about definitions or outcomes.
  • Imposing a scope that avoids risk or discovery, which is virtually guaranteed to return a product or service that looks like the existing products or services
  • Lack of preparation, training and innovation skill development
  • Fear of failure, lack of experimentation
 If one of these risks exist, you have an innovation project that needs to be carefully managed.  If several of these exist, you may want to prevent, delay or postpone an activity until you or your management team can address these issues.  It's simple to run an innovation project, it's just difficult to run a successful one.




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posted by Jeffrey Phillips at 5:43 AM 0 comments

Monday, September 29, 2014

Innovation should change your perspective

I've been thinking a lot about innovation lately.  Well, I guess I've been thinking about innovation for over a decade, but for some reason the thinking has migrated from operational to philosophical.  I've long wondered why innovation is considered a transactional activity rather than a engaging philosophy or "way of life".  Too many people view innovation as something to do only in emergencies, when a competitor steals a march and wins new customers or introduces a new product.  Otherwise it's steady on, life as usual, and ignoring or avoiding innovation.  I think some of focus on the everyday is brought about by rewards and recognition, some based on the emphasis we place on productivity and efficiency, and some of the perspective is caused by the way we look at innovation, as a transactional, occasional opportunity rather than a way of thinking or living.

Is innovation an interrupter or a way of life?

I was thinking about this recently because I had one of those "shower" moments.  It happens I wasn't actually in the shower - I think I was mowing my grass.  But I had one of those minor epiphanies.  It went something like this.  Why aren't we more concerned about the role our companies, our solutions and our products play in consumer's lives, rather than the jobs we can do or the needs we fill?  It's almost another Maslow's hierarchy, I thought:  needs and jobs versus roles.  The best analogy I can come up with is the difference between a hammer and a carpenter.  A hammer helps me do one or a handful of "jobs".  That hammer can be replaced with others tools as situations warrant, and if the hammer is superseded by another device, the hammer is just an outdated tool. However, a carpenter has a vital role, offering broader solutions and doing more than filling in for just one job.  A carpenter has a role to fill with me, creating better solutions, and if I build a relationship with that carpenter, he or she may create a role that sticks with me for a very long time.

We innovators talk about customer "needs" to fill, or using Christensen's philosophy, "jobs to be done".  But I think we should be thinking about how we become indispensable in the ROLES that we fill in our customers' lives.

But this requires a new philosophy

Is innovation meant to create new products or services, to fill unmet needs, or to help spot and suggestion solutions that drive to larger value propositions?  The answer is yes to all three questions.  The real question is:  what is our philosophy about working with customers, and how we leverage innovation to drive more value.  The vast majority of firms doing "innovation" today are trying to discover new products that solve a customer need.  As soon as the customer has solved that need, another need will emerge that we and others will seek to satisfy.  You get a little credit for solving a need, but like a tool in the toolbox you'll need to prove your value proposition all over again when the next need arises.  However, if you have a vital ROLE in the customers' lives, you don't have to compete with the occasional tools.  But to take a vital role in a customer's life, you've got to do more than satisfy one need, and you've got to migrate with the customer, or create solutions on a consistent basis even before the customer is aware of the need.  This suggests continuous innovation - innovation as a way of life, rather than an occasional interruption from the everyday.

Innovation as a "way of life"

What would it look like if innovation was a "way of life" in your organization, rather than something strange and unusual that is thrust upon the organization periodically?  Rather than resist innovation, it's unusual tools and methods, your teams would gladly embrace innovation activities.  They'd be comfortable using the tools and methods, and understand the rationale and scope of effort.  They wouldn't see innovation as a disrupter of regular processes, but a "way of life" and "how we do things around here".  This would mean, for many companies, a rethinking of the culture and perspectives that people have about their work, and their skills.

Clearly we'd need to understand how quickly innovation is occurring in our target segments and markets, and we'd need to match or even innovation at a slightly faster pace, constantly evolving but also anticipating the sudden forks in the road or disruptions that require an entirely new product or service.  We'd also have to recognize that innovation is more broadly based than we like to admit, and we'd create new channels, new customer experiences, new business models and other solutions as readily as we create new products. 

3 Philosophies on Innovation
What's your team's philosophy on innovation?  There are really only a couple of answers.  First and worst, that innovation is risky and someone else should do it.  We're "fast followers".  Abandon hope, all ye with this philosophy.

Second, and somewhere in the middle, is the recognition that innovation is important, but encounters resistance because it interrupts a really nice operating rhythm.  We know we need to innovate, but gosh darn it we can't find the time, and only innovate in emergencies. 

Third, and frankly few firms are here yet, is a philosophical leap.  We view innovation as a "way of life" and our teams have adopted this perspective.  They believe that innovation is important, and is at least as important as good operating rhythm.  We want to innovate consistently and take on an important role in our customers' lives, not just settle for solving occasional needs or jobs.

If you buy into this philosophical change, your next question should be:  OK, how does a leopard change its spots?  How do we change the way our folks think about innovation?  How do we adopt this idea of innovation as a way of life? 

The simplest answer is:  it's complicated.  Not because it's necessarily difficult, but because it takes a long time.  The message need to come from the top and be constantly reinforced.  People need to see resources and dollars flowing to projects and activities based on this philosophy, and they need to see that over time, and in every corner of the business.  You can't expect to change the dominant philosophy with one project, in one small corner of the business, while everyone else ignores the activity or pretends it isn't happening. 

I've said it before but it bears repeating.  Either innovation changes you, or you change innovation.  The latter outcome dominates and causes so much of the grief that innovators feel.
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posted by Jeffrey Phillips at 12:08 PM 0 comments

Wednesday, September 24, 2014

Going with the flow

If you've ever been working on a task or a project when time passed by in an instant, or so engrossed in a hobby or game that you forgot to eat or sacrificed sleep to continue, there's a good chance you were experiencing "flow".  Flow, that is, as defined by psychologist Mihaly Csikszentmihalyi in his book Flow:  The Psychology of Optimum Experience.  For those of you who have experienced "flow", or who have been in the groove, or have been so engaged in an activity that time slipped by almost unnoticed, you know what it feels like.  You are doing something that you enjoy and find intellectually challenging.  Your worldview narrows.  Few things can distract you.  And you are operating at near peak performance.

Flow occurs when you are engrossed in an activity that you find challenging and stimulating, and at the same time an activity where your skill level is very high.  If the activity is challenging but your skill level is low, the result is that you feel anxious, because you are aware that you aren't doing a good job.  If, on the other hand, you have a high skill level but don't find the work challenging, you experience boredom.   Flow occurs when an individual is engaged in an activity that is meaningful to that person, challenges them to do their best and calls on their experience and skills.  This is why "flow" happens so often when we are pursuing hobbies or activities we greatly enjoy.  It also explains why flow happens so rarely in most people's professional lives.  They are either afraid to be challenged - seeking only to perform in tasks where they have great skill, or their managers and executives don't challenge them, leading to boredom.

I reach flow when I am deeply engaged at innovation, but I know that isn't the case for a majority of people.  There are two major issues that block people from doing innovation well, much less achieving flow.  The first is skill level.  After over a decade of working on innovation tasks and projects, many of the innovation tools are second nature to me and my teammates at OVO.  We are constantly learning new tools and expanding our knowledge.  We are working with clients to discover what works best and what doesn't work so well.  Our skill level is relatively high, and hopefully getting better all the time.  Contrast that with the average middle or senior level manager, who is called on to manage people, processes and dollars.  A manager or executive who is constantly pulled from one topic to another, never developing expertise in any specific industry or function, and who rarely or almost never gets to contemplate new ideas or the methods and tools that support innovation.  These managers and executives are expected to innovate, but don't have the time or availability to develop the skills.

The second barrier is challenge and engagement.  While many innovation experts love the challenge of creating new ideas, most managers and executives don't enjoy it.  Creating ideas is fraught with risk and peril, requiring a lot of experimenting, mistakes, recursive work and learning.  It can be messy and uncertain, and most people don't find it engaging or challenging.  They find it frustrating and confusing, and want to return to clear cut processes and predictable workstreams.

In simpler terms, the vast majority of people trying to do innovation will never achieve flow, primarily because the challenges are too off-putting, leading to anxiousness or fear, and secondarily because their skill levels and focus are limited.  They recognize that they don't know what they don't know, and don't believe they have time to learn the tools and skills appropriately in order to do a good job.  There's a reason so much innovation activity in large corporations results in ideas that are similar to existing products.  The lack of engagement and lack of skills leads to anxiety and apathy, and since no one enjoys living in those conditions the innovation teams resort to creating quick and simple ideas so that they can return to something that's closer to flow for them - the sameness and predictability of their day to day work.

If you want your teams and your company to be good at innovation, if innovation and its resulting benefits are important and valuable to your company, you need to help people reach this concept of "flow".  That means giving them interesting, challenging and engaging challenges or problems to focus on, and ensuring they have enough time and enough skill to do the work well.  When these factors exist, innovation can flourish.  When any of these factors are missing, innovation will be conducted as a brief foray into enemy territory.  The team will be anxious and uncomfortable until they are relieved from duty or return with relatively simple ideas.  Their goals aren't to create anything truly new and different, but to return to familiar and comfortable work and routines.

Executives are always asking questions, seeking to understand how their people and teams can become more innovative.  Tell them it's all about flow.  Creating interesting challenges and developing people with deep skills and the time to deploy those skills on the interesting problems.  That's what will create innovative people and creative cultures.
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posted by Jeffrey Phillips at 6:57 AM 0 comments

Monday, September 22, 2014

Why leadership development is critical for innovation

It's been a summer of reconnecting with old friends and colleagues.  A few weeks ago I drove to Richmond, Virginia to reconnect with a good friend I hadn't seen in a few years.  Last weekend I drove to Greenville, SC to see my daughter in college, and to visit my college roommate, Brett, who I hadn't seen in a few years.

Brett is in the leadership development and coaching business, working with senior executives and CEO to help them grow as people and leaders.  As we discussed his business and mine, I realized that we shared many commonalities.  When he works to help executives improve their leadership capability, he is changing their perspectives and helping them model new behaviors.  When we work with our clients to build new innovation competencies and capabilities, we are introducing new perspectives and tools, and asking people to model new behaviors.

At one point in the conversation, it really crystallized for me:  any good business is built on strong processes, culture and people.  It doesn't matter how good your ideas are, or how interesting your technology is.  If you don't have these core concepts well-defined and well-implemented, no technology or interesting new idea will carry you very far.  Conversely, if you have strong culture and processes and people, you can direct your focus in any direction and count on good success.  That's what Richard Branson and others like him do:  build a vision, align people to the vision and then work to sustain the capabilities and culture.

What many entrepreneurs try to do is to build neat technology and "scale up" a business quickly, ignoring or avoiding the work to develop strong internal capabilities and processes, or to develop a cohesive culture.  While some of these businesses may grow quickly they can't scale and often topple, because the core belief systems don't work or they don't have strong supporting infrastructure.  You can't tack on beliefs and culture and processes after the fact.  Whether you like it or not you are building and sustaining corporate culture from day one, and everything you do adds to that culture or reinforces it.

Many executives speak about innovation as if it were an external phenomenon that they can adopt or bolt-on to their existing businesses, never realizing just how different and foreign innovation is to the daily operating methods and models.  Innovation can't be imported and internalized, it needs to start from the inside, as a communicated belief system, which infects the culture, and is replicated in the tools, training and workflow that people receive and regularly use.  Innovation must spring from the people in the organization, rather than being forced on them.  Innovation can't be directed from above or dictated to people and cultures that aren't comfortable with the risk or aren't familiar with the tools or methods.

At the core of any well-run company are these three interlinking and interwoven factors:  strong, committed people who are living and enacting a corporate culture that directs the way they think and act at work, supported by well-developed processes, methods and tools.  Once you understand that these three factors are the linchpins to corporate success, you'll then understand why we talk about innovation capability or competency.  You can run a successful innovation project occasionally without changing the culture or introducing too many new tools, but it has little impact on the culture in the long run.  To engage a culture and change the thinking, the focus and the tools of the people within the company, you've got to engage all three of these factors.  A quick survey of any of the really successful innovators will demonstrate that they have cultures that are engaged and focused on innovation, strong people who understand their roles and processes and tools that support innovation.

So, what does this all mean?  Innovation is a cultural phenomenon, driven by engaged leaders who are willing to show people why they need to innovate, and who are willing to invest in the tools and training necessary to help their people succeed.  Without strong leadership and deep commitment from leaders, innovation simply won't thrive.  With this in mind, much of the innovation challenge in corporate America is a leadership development issue.  GE has recently published its "barometer" of corporate executives that delves into the purpose and understanding of innovation.  As is almost always the case, the overwhelming majority highlight the importance of innovation, and note that the top needs in their companies are to:
  1. Understand customer needs and anticipate market evolutions
  2. Attract and retain the best talent
  3. Adapt and implement emerging technologies
These are issues of process and culture (understanding needs, market evolutions and technologies) and people (finding and retaining the best talent).  How are they doing at these stated goals?
The survey goes on to point out that 29% of executives believe their firm is doing a good job identifying customer needs, and 27% believe they are doing a good job retaining talent.

There's a huge gap between what executives want, and what the business is willing and capable to do.  Of course changing a company and culture takes time, but clearly the leadership of these organizations needs to do a much better job modeling the behavior they want to see from their staffs.  Less than a third of corporations think they are doing a good job on two of the most important components of innovation success.  Is this because they are unaware of the focus areas and their importance, or because these areas aren't constantly highlighted and improved?  My guess is the latter.

Another factor that demonstrates that executives may be signalling the wrong message is another finding from the barometer.  According to the research, 74% of American executives believe it is best to protect the core business profitability as much as possible when innovating.  This is likely to lead to more emphasis on existing products for existing customers, leading to less growth and less differentiation and far fewer new products.  When executives ask for "safe" innovation that extends existing products, they are signalling their intentions and goals to their staff and reinforcing corporate expectations and culture.  

Innovation has many meanings.  It could be an activity, a capability, an outcome, a description of a new product or service.  But ultimately it needs to be thought of as a leadership development goal.  We need leaders and executives who understand the purpose of innovation, who can communicate the purpose and set appropriate investments, who will model the behaviors they expect to see from their teams.  We need a new generation of leaders who have been trained and have experience with innovation, not just those who have experience with efficiency.  Innovation is critical to leadership development, and leadership development is critical to innovation.
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posted by Jeffrey Phillips at 7:35 AM 0 comments