Tuesday, May 31, 2016

Innovation is a feature

As a marketer who was first an engineer, I am often guilty of larding up my marketing content with facts about features.  As we used to say at Texas Instruments, I can quote "feeds and speeds" all day long.  We can talk about faster processors or larger memories, more sophisticated storage devices and the ability to stream video at close to the speed of light.  And so on.  Marketers should get pilloried for this nonsense, because we are selling the steak and not the sizzle.  Marketers who talk about product features forget that people buy products to solve problems or to achieve some stature.  They buy the benefits, in other words.  I've often said that in the end few people care HOW something gets done as long as it gets done effectively.

This marketing problem has now fully transitioned into an innovation problem.  The reason this is an analogous problem is because executives are moving through their organizations and talking to their boards about innovation, as if innovation is a deliverable, an outcome or a benefit.  It is, in fact, none of those things.  Innovation at its best is a continuous process, at worst an occasional activity, but in either sense it is the HOW of something, not the WHAT.  Innovation is a feature, what it creates should deliver benefits to someone.  Yet how quickly we forget.

To many organizations, the idea of innovation is enticing.  They look at other companies that are "innovative" and gaze admiringly on all the new products and services that drive more revenue and profit.   It seems that all one must do is claim to be innovative and more profits and revenue will accrue.  When that fails, the nascent innovator then decides to actually become more innovative, trying to generate new ideas and move them into product or service development.  This is when they discover that innovation is not a deliverable, and during the implementation of an innovation capability or culture it certainly isn't a benefit, because attempting to "bolt on" an innovation process to a competent efficient culture is like dropping a modern 8 cylinder engine into a Model T.  In theory it should work, but the results often aren't all that appealing.  And in case you were wondering about the analogy, the modern 8 cylinder refers to the existing corporate processes and practices, which operate on "all cylinders" efficiently.  The Model T is the structure you try to build to use the existing processes in a new way, to innovate, and it typically ends badly.

Innovation is a feature of an organization or a culture.  It is not a benefit to customers.  In fact to many customers new innovative products aren't benefits, because these new capabilities require existing customers to change.  Some will change gladly, some will change if forced and some will never change.  So innovation may require that you piss off a portion of your existing customers and acquire a bunch of customers who have been ignored or overlooked, or who never considered your solutions before.  You get these customers because the innovations you create have benefits that they want or need.  And, it's also necessarily true that more innovation does not lead to more benefits.  Incremental innovation extends existing benefits to some degree, so lots of incremental innovation does not guarantee a lot of new benefits.  This is why so many corporations consider innovation a failure - there's a lot of activity but not much motion, because all of the effort is constrained to such a small space. 

Like any compelling phenomenon innovation has reached and passed its apex of awareness and promise and to some extent collapsed into the trough of disillusionment.  Now, new carnival barkers are promising better rewards through hyphenated innovation:  agile innovation, rapid innovation, design thinking innovation and so on.  Clearly, simple, general innovation is a significant disappointment, so we are working to re-categorize it rather than look at the misplaced expectations and lack of commitment.  Instead, simply strip it back to its base elements.  Ask:  what is innovation for?  What are we trying to deliver to customers?  What do they want or need?  Can we create that within our business, or must we rethink or re-imagine what our business is?  How disruptive must our thinking become?  What benefits does the customer need?  What problem must they solve?  What unmet needs could be addressed?  If you'll revert back to a simple question driven methodology, always keeping in mind that innovation is an activity or a feature, and not a deliverable or benefit, then innovation will take the place it rightfully occupies.
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posted by Jeffrey Phillips at 11:42 AM 0 comments

Friday, May 20, 2016

Can you teach people to innovate?

One of my recent pet peeves is the proliferation of education options for innovation.  One of my alma maters offers a "certificate" for innovation management.  While I cannot comment on the course, it is taught by two professors with little private sector experience who haven't created a product. One of them is a psychology major, which I guess makes sense because innovation is often the product of new or unusual insights or perspectives. 

You'll forgive me for a startling lack of enthusiasm about many of these "educational" offerings.  There are several reasons for my skepticism:
  1. Innovation is strange, unusual work, very different from what most people do day to day
  2. It doesn't require great insight or difficult tools, but does require working against considerable resistance in existing cultures and customer expectations
  3. You don't educate someone in "innovation", you educate them in a set of tools, expectations, perceptions and beliefs.  The combination of these factors enables innovation to occur.
  4. No matter how much you train people, they can only implement the tools and techniques if they are allowed to
  5. There is no commonly agreed innovation standard.  Perhaps the closest anyone has come is in Creative Problem Solving, which I would think is probably the best answer to innovation training.
We are what we do repeatedly

It is in our nature as corporate employees and those that serve them to follow well-trodden pathways.  One of these well-trodden and expected pathways is to "train" people on new tools and methods when introducing a new project or capability.  Most people in organizations are paid handsomely for their deep experience, and that's what they deliver every day.  When forced to confront new thinking and new tools, most will demand training to assist them to provide more expertise.  However, since most innovation is "one and done", the vast majority of people don't regularly exercise their innovation skills and experiences.  Thus, training is often ineffective because the tools that are learned aren't regularly engaged in consistent, repeated innovation activities.

The complete lack of standards

Imagine a world where every automobile had a different type of engine.  Your one goal in life is to become the best auto mechanic, yet every car that drives into your shop has a different engine. Some are four cylinder gasoline engines.  Some are eight cylinder diesel engines.  Some are hybrids, some are electric, some are powered by natural gas.  In this world you'd respond by becoming a virtuoso in one type of engine, say compressed natural gas engines, or you'd hire a plethora of people who could reasonably address a wide array of engine options.  Such is the nature of innovation activity today.

Without an agreed standard, and considering the wide array of potential outcomes for innovation (incremental to disruptive, products, services, business models, experiences and channels to name only a few), there is no one way to do innovation, and so many variations as to make training impossible, except in very narrow capabilities or tools.  I suspect it's probably possible to become an expert in Voice of the Customer techniques, but this is simply one of several ways to get customer insight, which is just one of several phases of a complete innovation activity.

A completely new way of thinking

Innovators argue about the metaphor of "inside the box" thinking.  Some believe that using the concept of "inside the box" is helpful because innovation is always bounded by constraints.  Others believe that the concept of a "box" is difficult, getting outside the box helps expand possibilities and introduce adjacencies.  Innovation is enabled by specific tools (trend identification and analysis, scenario planning, customer insight generation, open innovation, idea generation, prototyping, etc) but give me a person with an open, curious and inquisitive mind and I can move the innovation world, even without any of the other tools.  A careful, cautious plodder who is deeply immersed in all of the innovation tools, who has every "certificate" known to man but cannot release the thinking bonds that constrain them is worthless on a true innovation exercise.  They are people who know everything and can apply nothing because their horizons are too small.  Good innovation requires the courage to conduct new thinking, explore new opportunities, question the status quo.  In fact that's what innovation really is, questioning why we do things the way we do, and seeking opportunities to radically reshape how and what we do, to the benefit of customers and ourselves.  If you can't think differently, all the training in the world is useless.

Born, or Made?

Now, if you are still with me, you might be thinking that I am going to make the argument that innovators are born, not made.  You'd be wrong on that point.  There is no innate innovation gene, although clearly some people have more interest in exploration and discovery.  Some people are more creative than others.  Some people are really good at dreaming up new stuff.  That's all true as far as it goes, but neglects the fact that creativity and exploration must be linked to rationalization and implementation of the good ideas in order to solve a problem for a customer and to make money.  Innovators aren't born but they are shaped, more by experience than by training.  Of course we can provide some training in any tool or technique, and try to enlarge the way people think when they encounter an innovation exercise.  But the best way to make an innovator is to give them an intractable problem and remove the constraining barriers.  Encourage them to think differently and come up with novel ideas.  And, once they've done that, do it again.  We can make innovators, but not just by training, but also through engagement.  Innovators are workers who get their hands dirty.  Does your certificate come with some washing up powder and examples of the innovations you created?  If not, you are an observer of other people's innovation, and need to do some work of your own.

Can you teach people to innovate?

The answer to this question is:  no.  You cannot teach people to innovate.  You can teach them tools and techniques like TRIZ or trend spotting.  You can teach them process methodologies that lead them from customer needs to ideas to prototypes to customer validation tests.  You can teach them to think about innovation outcomes that are more disruptive or radical than incremental change.  You can show them Doblin's Ten Types model to help them think through the potential outcomes of an innovation activity.  But until they understand that innovation is a holistic implementation of all of these factors, and requires them to release their fear, uncertainty and doubt, you are hammering jello to a wall.  It will not stick.  The wall must be removed as the knowledge is applied.

People can innovate.  What we can do is accelerate, simplify and make their innovation activities more productive and efficient through tools and techniques.  But what we cannot do is remove fear, uncertainty, corporate constraints and a lack of executive commitment.  We cannot force organizations to sustain innovation activities so the work is repeated until it becomes familiar and eventually second nature.  So the real question is: can we teach organizations and corporate cultures to innovate?  We know the answer to this is yes, but few companies have the time and patience to make the change that's necessary.
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posted by Jeffrey Phillips at 8:58 AM 0 comments

Monday, May 16, 2016

Innovation without change

I've been puzzling this over the last few weeks, trying to wrap my head around the importance of innovation generally and the lack of real innovation delivery specifically.  What I mean is that everyone knows that innovation is vital to growth and future success, but very few new innovations are created. The vast majority of innovation effort and outcome is expended on me-too, so what incremental innovations that don't really change the user or the market.

I think the main problem with innovation - real innovation, that is, the kind that creates disruptive new products or introduces new channels or business models - is that it requires change.  And there's little that corporate structures, cultures and executives fear more than change.  They don't like change that's thrust upon them, and they certainly don't like change that is created internally without an exceptionally good reason.  In fact one could argue that in many ways midsized and larger companies are completely conservative - using the definition that conservatives seek to conserve frameworks and ideas that currently exist and those from the past.  Depending on the type, scale and proposed innovation outcome, innovation can create a small amount of change or a significant amount of change, and we know how difficult change is, even in organizations that are ready to change.

Change introduces another dimension to this discussion:  the concept of reactive or proactive change.  Most organizations change in a reactive fashion, because they are forced to change because of external factors or competitive threats.  The best kind of change is proactive change, which can be carefully planned and implemented through a change management process.  This description should ring true for innovators as well.  In a nice bit of parallelism, innovation can be reactive or proactive.  When innovation is reactive, a company is playing "catch up" and has no choice but to innovate, working against its own cultural fears of change.  When innovation is proactive, the change that will spill over out of the innovation activities can be planned for and managed accordingly.

Note then that any innovation activity, no matter how small or large, has secondary and tertiary effects beyond simply creating a new product, service or business model.  Innovation creates change, which ripples throughout the organization, far beyond the intended customer targets.  The more the ripple effect, the more people are impacted, the greater the resistance, especially if the team is not prepared for the change.

Knowing all this innately if not expressly, most managers and executives wish for the impossible: innovation without change.  Most executives are expressly conservative (using the definition above), good at conserving the status quo and tinkering mostly at the edges.  Most innovation, however, is innately radical or disruptive, changing not simply the end product or service, but often having a much larger impact, causing teams to question the targeted segments, product portfolios and even business models.  No wonder most innovation comes from outside the conventional players in an industry.  Entrants have little regard for existing conventions or norms, and are interested in disrupting those norms for their own benefit, while incumbents seek to protect the industry and at best want to manage change slowly.

Here's the final analysis:  if your organization fears change, resist change or is slow to embrace change, anything other than incremental innovation will be difficult if not impossible.  This truism should cause most executives to lose a lot of sleep, because the future of business is far more dynamic and unpredictable than the recent past, and the pace of change is only accelerating.  The companies that will innovate the best are those that are open and willing to change.  Those that are focused on preserving the past had better have a very defensible position, or be in niche markets, because change is inevitable, and innovation will often be its ignition.

You may have some change without innovation.  You will have very little innovation without change.  Those that can change can innovate, but will still need skills, creativity, time and patience.  Those that cannot or will not change should not bother to innovate.
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posted by Jeffrey Phillips at 6:48 AM 0 comments

Monday, April 18, 2016

Putting Brainstorming in its place

I find that I've become increasingly irritated with all of the narrow interpretations and self-serving definitions of what is, or isn't, innovation.  I'm happy to climb up on a soapbox again to talk about one of the most common scapegoats for innovation, the act of brainstorming.  No other activity is more miscast, more often blamed for failure, or more often denigrated.  Strange that the activity that should be the easiest, most natural activity in an innovation process is singled out as the most complex, difficult and dangerous.  But fact alone highlights how poorly understood the entire innovation process is.  So I rise today to neither praise nor bury brainstorming, but to place it in its proper context.

The Purpose of Brainstorming

Brainstorming is a technique that allows individuals or small groups to generate ideas.  Brainstorming resides in an activity or phase that we call Idea Generation, which in turn sits in the larger context of innovation.  In an appropriately defined and designed innovation journey, idea generation is preceded by activities like trend spotting and scenario planning, to understand the unfolding future and emerging opportunities, and by customer insight generation, to gain new understanding about what customers want, need and are willing to pay for.  Conducting idea generation without these leading activities is like assembling an IKEA desk without the instructions or those crazy little Allen wrenches.  You can do it, it just won't be done well.

Brainstorming is a group technique to generate, socialize and evaluate ideas. It is not the only idea generation technique.  Any interested person can find other approaches to generate ideas.  Further, brainstorming is not absolutely required for an innovation activity.  You can easily and safely complete an innovation activity without ever conducting brainstorming.  In those cases you may find other means to generate ideas, or you may be using "open innovation" to undercover ideas, products or technologies that already exist.

So, why beat up so much on one tiny step in an innovation activity, that as you can see is not necessarily required, and where substitutes or alternatives exist?  Why so much hate for brainstorming?

Love it or Hate it

Brainstorming is universally mocked because most organizations don't plan for it effectively, don't conduct it honestly, and most attendees don't treat it as important.  Once everyone has agreed to avoid any investment in brainstorming, what else can it be than a failure?  Brainstorming, or any group idea generation technique, is only as viable and useful as the planning and commitment that go into it.  If we committed the same time and energy to designing a building that we do to planning a brainstorm, you'd never safely set foot in another building.

A brainstorming activity is simply a meeting with a specific purpose - to generate ideas. Everyone knows this.  But what they don't often know is:  what kinds of ideas will be acceptable?  How disruptive or incremental should the ideas be?  What research or background has been developed?  Are we repeating old ideas or trying to discover new ones?  Can we generate ideas that are really divergent, or represent other outcomes like business models?  Without preparation, everyone assumes that the least common denominator rules apply, and all ideas are incremental and boring.

Plus, many brainstorms aren't meant to generate ideas, they are meant to give cover to a direction or solution that was already decided.  The brainstorming activity is simply a thin veneer to provide some validation on a course of action that was previously decided.

Without preparation, without defining the potentially viable outcomes, without providing the research or background, and without demonstrating that there is no ulterior motive, how could any meeting succeed?

Individuals are better than groups

Now, someone reading this diatribe is going to say "what about all the research that shows that people are better individually than in groups at idea generation".  And yes, there is research to show that people are sometimes better at generating ideas individually than in groups.  All that says is 1) brainstorming can be an individual tool rather than a group tool and 2) in some instances groups are less functional than individuals.  Have you seen the 2016 presidential race?  Groups are often poor decision makers where information is less than perfect.

But here's the rub:  in large organizations it's almost impossible for one person with a good idea to get anything done.  Large organizations require the ability to create and disseminate ideas, and get people to back the idea.  Thus, all innovation is a group dynamic in a large organization, and group brainstorms serve other purposes besides generating ideas.  They also serve to socialize ideas, validate and vet ideas and even evaluate ideas in a group setting, where more people mean more perspectives - assuming of course that you've got a heterogeneous team, where different perspectives are valued.  This is of course another problem with innovation generally, and brainstorming or group activities specifically:  most teams are far too homogeneous in their formation, thinking and perspectives. 

Fit for purpose

Ideally, the best situation you can find yourself in is when the tools you use are fit for the purpose you have.  For example, a pocket knife can help you chop down a small tree, but how much better is an axe, or even a chain saw to do the same job?  Likewise, if we think carefully about what our actual goals are, brainstorming and other idea generation techniques are actually very well fit for larger purposes.

If your purpose is simply to generate a lot of ideas, use a random number generator.  If your goal is to socialize needs, generate solutions, socialize and build on those solution, validate and evaluate those solutions and leave a meeting with more buy-in than was possible beforehand, brainstorming might be the best fit for purpose. 

What many corporate types want out of a brainstorm is simply words on paper, to be interpreted in whatever way they eventually want to interpret the "ideas".  Participation is welcome but not necessarily encouraged, especially ideas or submissions that deviate from the expected path.   These meetings don't emphasize socialization or buy-in, because the sponsors aren't looking for your support.  They have an idea and intend to pursue it, regardless of the outcomes.  And most savvy corporate types can recognize when the fix is in and play along, hoping one day that the same people will show up to their idea generation activities and play the same roles. 

What outcomes do you expect

A brainstorm, like any other tool, can be effectively used or used in a disastrous way.  Those who would blame the tool neglect the old aphorism that states that only a poor craftsman blames his or her tools for a poor outcome.  If you aren't getting the results you hoped for, check your assumptions.  Either you've defined the activity too narrowly (or not at all), you've failed to provide the research that will lead to understanding of the problem or challenge, your teams are too homogeneous or you are using brainstorming to validate an outcome you've already decided on, rather than discovering something new. 

Done well, with good preparation, good advanced reading and scoping, the right people with the right commitments and attitudes and effective leadership, good brainstorming is dynamic and creates ideas that take the team to new places.  If you read the buildup of that sentence you'll realize that all the predicates (good prep, good pre-reads, the right people with the right commitment) are prerequisites for any new activity.  In other words there's an investment required to do brainstorming, and it should be placed in its proper context - just after all the discovery necessary to find emerging needs and validate that customers have those needs, and just before building out prototypes and testing them in the market.  Again, brainstorming is a connected activity, with predicates and follow on activities closely linked, not a discrete, one-time, stand alone activity.

So, the next time your "brainstorming" fails to deliver, or you are dissatisfied with the outcomes, instead of searching for validating reasons that describe why brainstorming is so inept, first consider the role brainstorming plays in your innovation activity, and whether or not it is fit for your purpose.
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posted by Jeffrey Phillips at 6:42 AM 0 comments

Wednesday, April 13, 2016

Here comes the hypenated innovation offering

It's almost inevitable that innovation will grow to become an amorphous blob of ideas, techniques, processes, "experts", software and a host of other things.  It's the natural order of economics that when an opportunity is available, everything rushes in to fill the vacuum, and as the market becomes crowded various offerings must differentiate themselves from the others to demonstrate value.

It's like this with cheese, wine, beer (remember when there was only Budweiser and Miller?  Now you can have chocolate beer, artisanal beer, birch beer, pumpkin beer, beer from the mountains, from the coast, etc) and a host of other products and services.  Unfortunately, we are reaching peak innovation offering, which means we'll soon see the dreaded hypenated innovation offering.  We'll know we've reached peak innovation insanity when someone writes the "Chicken Soup" for innovators souls book.  Coming soon to a bookstore near you.

This slight rant of mine was started when I saw a new software application talk about its ability to help its clients in agile lean innovation.  Agile is a word adopted from software development, which is really just about stripping away a slow, steady development process replacing it with short "sprints" to complete a few features at a time.  Lean is about stripping away unnecessary assets to focus on doing the most with the least.  In case you haven't been around innovation very long, few innovation activities have too much funding and staff.  Most are already lean, but not intentionally.  And most are already sprints, because the people involved have other jobs they need to get back to. So the software purports to assist innovators in what they already do.

But we can expect to see much more of this - the unintentional obfuscation of innovation. As we pile on more modifiers and adjectives to define and differentiate innovation, we ought to take a moment to remind ourselves that the basic idea - developing interesting new products and services that fill a need that people have, and that those consumers want to buy - is not yet fully understood and incorporated as a strategic endevour in many companies.  Sure, executives talk about the importance of innovation, but they don't really know what it means.  Like the Supreme Court judge said of pornography, he may not be able to define it but he knows it when he sees it.  If the basic concept we are trying to modify isn't well defined or understood, what's the point of adding more adjectives and modifiers?  We simply risk creating even more confusion.

The Basics

Innovation, at least in the corporate world, should be defined in this way:

using creativity to create new ideas that address unmet needs that customers have and using those ideas to create new products and services that customers want to purchase, and which create differentiation for the company.

That's a good, basic definition of innovation, and believe it or not most companies don't have a common, shared definition.  Once one exists, it's easier to get people to align behind it.  Only then should we modify the definition by noting that innovation can be incremental, meaning small changes to existing products or services, or disruptive, completely new concepts that radically change the existing market structure or change industry dynamics.

Further, innovation can result in a number of outcomes.  We definitely use innovation to create new products, but also we can innovate new services, new customer experiences, new channels, new value networks and new business models (attribution here of course to Larry Keeley).

Layering On

Once we define what the act of innovation is, and what some of the potential outcomes can be, then we can define the methods of going about innovation - the "how" if you like.  This is where terms like "agile" or "lean" can come into play.  We at OVO often talk about "rapid" innovation, trying to start, conduct and end innovation before the culture becomes aware of the activity.  You can talk about "open" innovation, which is simply working with external third parties to exchange ideas, technologies, intellectual property or other tangible or intangible goods to make or improve ideas.

As your definitions improve and your team grows competency, then you can add complexity to the innovation definition and process, leading to...

Full Obfuscation

Then, of course we can begin to combine adjectives, types and modifiers, so we can expect to see something like Agile Open Radical Customer Service Innovation.  This is of course a combination of process, type, outcome and degree.  The ultimate obfuscation will arrive when experts debate the merits and rankings of various types of highly modified innovation, much the same way as ancient theologians argued about the number of angels that could dance on the head of a pin.

All of this obfuscation is dangerous and does nothing to assist the average innovator or the executive who must make innovation choices and fund innovation projects.  There is no better or worse innovation activity, process or outcome:  each activity should be driven by corporate needs, competitive realities and strategy.  All innovation types and outcomes are viable and necessary depending on the circumstances.  Unfortunately, given all the hubbub and lack of clarity, most decision makers settle for the simplest and easiest innovation type:  incremental product innovation, because it's easily understood and has little apparent risk.  But what you are doing is making decisions and setting policy based on the least common denominator.

When thinking about the language, definitions and modifiers that clog up innovation conversations, marketing and decision making, remember four important things:

  1. What outcome do we want to achieve:  a little more revenue, or make a significant "dent in the universe"
  2. What is the best method or process for us to achieve that goal:  working internally, working with partners, etc
  3. What type of outcome helps us achieve our goal: new product, new service, new business model, etc
  4. What do we as the leadership team need to do to see that the effort succeeds
If you can answer these questions, you will discover that each innovation activity deserves its own modifiers and adjectives, and the cycle should renew itself each time.

The more attention a market attracts, the more charlatans enter and the more obfuscation will be created.  Innovation, at its heart, is simple, but requires a lot of commitment and courage.  Like scaling sheer cliff walls, those who do it best use only a minimum of trusted tools.  Experts need very little accoutrements when they do their work.  Naive beginners lard up the process with every tool, trick, technique and process.  Go back to square one for greater success.  Beware of the constantly hypenated innovation solutions. 
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posted by Jeffrey Phillips at 5:53 AM 0 comments

Tuesday, April 12, 2016

The seven stages of innovation grief

I'm writing this a bit tongue in cheek, but the point of this blog is very serious.  There are a number of phases that innovators go through, accepting what they can about innovation based on what the executives and corporate culture allow.  Growing as an innovators is something like experiencing the seven stages of grief, only it's often in reverse.  

When we experience grief, as when we lose a loved one, psychologists note that many people progress through a number of stages. Those are:  disbelief, denial, bargaining, guilt, anger, depression and finally acceptance or even hope.  That is, at first we deny the issue, then we try to come to grips with it, then we express anger, then we finally come out of the darkness and end up with some hope.  If you've never seen it, one of the best examples of the seven stages was acted out by Tony Shaloub, who played the character Monk on television. He goes through the stages in about 2 minutes (accelerated because of his psychological makeup) Here's the clip:  https://vimeo.com/5419363

In the clip Shaloub first denies that his psychiatrist is retiring, then bargains for his return, then goes through anger and depression, all in just a couple of minutes.

We innovators, especially corporate innovators are like this, but often in reverse.  We have these big expectations about what we can do, only to watch them get watered down, constrained, managed, defunded and so on.  Yet we are supposed to push on with the same enthusiasm. It's true that we often start out with hope, and end with denial and disbelief.  Let's examine why this happens, and more importantly look to Napoleon for methods to circumvent it.

The five stages of innovation planning

As good innovators, we should be planning to disrupt an existing market or industry, or create a new market or industry.  This type of innovation has an impact far beyond the existing corporate framework, creating new products or even new industries.  These plans will often be stymined because executives will find them too risky, because the firm doesn't have experience outside its own comfort zone.

So the next option is to migrate or compete in an adjacent industry - one where we can partner with other experts to extend a capability or do some open innovation that marries our products and services with anothers to enter an industry or segment where we don't compete today.  This places a significant bet on a partner that we don't control and may have other plans or motivations.  Trying to mitigate one type of risk, we simply transfer the risk elsewhere.

Once that has been considered and rejected, we seek to do whatever we can to innovate within our own footprint, discussing "disruptive" innovation in our own markets or industries.  But we are quickly reminded that disrupting the cash cow isn't smart - either tone down the innovation in the existing footprint or go innovate outside the footprint (which, of course, has already been rejected since we know so little about markets or industries outside the footprint).

Then, innovators will consider adapting or adopting existing capabilities for new uses within the industry or footprint.  This seems like a real possibility, until we discover that we really know very little about innovation beyond the product itself.  Channel, business model and customer experience innovation, building on an existing product and extending innovation beyond the product, seems interesting but we know nothing about how to do it.

So, eventually, we end up with incremental innovation based on existing products, or, in other words, product extensions.  This is a completely viable innovation outcome.  It just shouldn't be the only one, but inevitably becomes the only viable outcome.

Innovation Places and types

In a perfect world, we'd consider places to innovate and types of outcomes, and create an interesting mix.  We'd innovate in adjacent and completely new spaces, because it's a rare company that wants to disrupt its own industry or business model.  In other words, we'd attack other companies' models or industries, to keep them off-guard, which opens new markets for us and protects our nest eggs from attack.  We'd also keep up a constant drumbeat of innovation in channels, business models, customer experiences, services and so on - to retain the value proposition of our products by extending innovation in other means and types. 

Innovators all know this, and live with consistent hope.  We go through innovation denial, giving up first disruptive innovation, then adjacent innovation, then other types of innovation to settle into incremental innovation.  It's no wonder that so much innovation is simply incremental.  It almost doesn't matter where your starting point is, or what your original targets and expectations were, most paths lead to the same place.  Paul Hobcraft covered this in his Snakes and Ladders posts a few weeks ago.  The Snakes are everywhere, causing you to fall back to the lowest common denominator.

Environment shapes Attitude

This reality is the reason so many innovators are so often also fatalists.  They've seen the mountain, and even think they know how to get there, but the obstacles placed in their way, by their own sponsors, executives, corporate culture and others simply wear down their hope and initial enthusiasm.  Ask almost any experienced innovator and they'll be able to describe the proposed journey and the almost inevitable outcomes.  New innovators are full of possibility and energy.  Experienced innovators constantly seek ways to get a lot more done under the radar, or before the barriers are raised.  Experienced innovators skip quickly past disbelief and denial.  Anger they've got plenty of.  They become masters of bargaining, and still retain a lot of hope.

When you stop to consider how important attitude, belief and commitment are to a successful innovation effort, it won't surprise you that fatalism and inertia are deadly.  The best innovators never give up hope, never stop believing, always overcome obstacles.  But it can be difficult to remain optimistic when your own organization is the culprit that builds the obstacles.

What Napoleon can teach us

Napoleon would make a great modern innovator. Of course he was a pretty good innovator in his own time, in warfare and in governance.  He had a couple of sayings that I think would apply nicely to modern innovation activities.  The first was Audacity, always audacity.  He meant that the winning side was often the one that plunged in and took big risks.  He was known for dividing his army in the face of the enemy, doing crazy, audacious things that no other commander would do.  He grew from a lowly second lieutenant to commander of most of western Europe by doing things others did not expect.  I think the same is true with most successful innovators. They have hopeful plans and are audacious, doing things that others can't imagine.
Another important Napoleonic aphorism was "if you go to take Vienna, take Vienna". In other words, no half-hearted attempts.  Make big plans and execute on those plans, ideally before the decision makers and corporate culture becomes aware of just how audacious your plans really are.  If you want to bypass or overcome the steps of innovation denial, move with audacity, make big plans and achieve them quickly.  Otherwise, the slowly moving corporate forces will introduce fear, uncertainty and doubt which will cripple your efforts.

In the world of corporate innovation, there are many possibilities but a few certainties.  One certainty is that the faster you move, the less time the culture has a chance to develop antibodies against your plans. The second certainty is that no matter how audacious your plans are, they will encounter resistance and will be watered down. Therefore, go for the biggest opportunity you can imagine.

The third certainty is that innovation grief works in the opposite direction to psychological grief.  Innovators often start with hope, move to bargaining and end with denial and disbelief.  Move so quickly, with such force and determination that you don't have to go through the steps.


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posted by Jeffrey Phillips at 6:00 AM 0 comments

Wednesday, April 06, 2016

Destructive and Constructive Innovation

Today I read a long post that claimed that up to 30% of the banking jobs in the US would be "destroyed" by innovation.  No longer will we need bank tellers. Any job that can be automated or done by machines will be.  This is a classic case of creative destruction, described by Schumpeter as a component of innovation.  Innovation will always create disruption in existing conventions, economies and industries.  This means that it will also destroy EXISTING jobs.  It does not mean, however, that innovation is constantly destroying the net number of jobs.  This is what the media tells you, and it is wrong.  What does happen is that the type of job changes.

For example, at the turn of the 20th century something like 60% of the population lived on farms, and we could barely create enough food to feed ourselves.  Today, something like 2% of the population lives on farms, and we create enough food in the US to feed ourselves and to spark a world-wide obesity epidemic.  I'm sure that people in the 1920s, 30s, 40s, 50s and onward decried the loss of jobs in farming, but innovation - better equipment, better methods, better seeds, better fertilizer - meant that fewer people could be enormously more productive.  This meant that the marginal labor or unnecessary labor was sloughed off.  It wasn't always easy, but we can expect the same thing to occur in every industry, all the time.

Yet, if we take a close look at employment and overall job creation from the turn of the century to today, we see a steady increase in the number and range of jobs, and, until recently a rising income level.  If all those people had remained on the farm, if we resisted innovation and kept producing at the same levels as in the 1900s, we'd still have millions of people on farms, using mules as their tractors, barely subsisting.  Instead, many of those people left the farms and went to college or worked in industry, creating the largest manufacturing boom in the 40s, 50s and 60s the world has ever seen. And, yes, I'm ignoring the Great Depression, because it was a once in a lifetime confluence of a recession made worst by international trade practices and poor administration of the currency.

Innovation will always destroy existing jobs.  That's just a fact, and rather than get exercised about it we should understand it and expect it.  This doesn't mean that people should simply accept that their jobs are "going away" or, as we've seen with Carrier and Ford, going to Mexico, it simply means that older jobs and older skills will migrate to lower cost, lower technology areas.  This means that we all bear responsibility for constantly updating our skills, and understanding how rapidly the world around us is changing.

However, innovation also creates jobs.  For every teller job a robot takes away, the robot creates jobs in robot design, robot programming and testing, robot maintenance.  Every innovation destroys old jobs and creates new ones.  We need policies that help people whose jobs are destroyed, yes, but we also need to build capabilities to predict what new jobs are being created and help people prepare for those jobs.  And, just like the move from the farm to the factory, this will require more knowledge and skills.

Having grown up on a farm, I can tell you that tractors replaced mules (yes, I'm old enough to remember when my grandfather used mules) but they do the same things.  Farmers are definitely smarter than they were in my grandfather's time, but technology has simplified what they do, not replaced it.  Consider manufacturing and the amount of change.  The original mass production lines were divided into very discrete (and often manually intensive) activities. But as throughput increased, complexity increased and demands for quality increased, shop floor knowledge increased. Today you'd have a hard time finding a job in many factories without an associate's degree, because of factors like computerization, automation, statistical quality control and a host of other factors.  The demands for greater knowledge and capability only increase, they don't decrease.

We are in a significant transition, similar to the one from farm to factory, where we move from manufacturing work to knowledge work.  This will only accelerate innovation and exacerbate a problem our education system is slow to recognize - faster innovation requires faster knowledge development and better education.  The new jobs are out there, but our willingness to obtain the education necessary, and the education system itself is lagging behind.

Innovation isn't at fault - it is agnostic and systemic.  Innovation will continue and cannot be held back, as we've learned from the Luddites.  The question is:  are we creating awareness of the speed and depth of change in our culture?  Are we building the right basic, secondary and post-graduate education systems to meet the rapidly changing needs?  Because this creation of new jobs and destruction of the old is only increasing.  Bernie Sanders may rail about "good jobs" but many of those jobs are likely to disappear, replaced by jobs that demand more knowledge, more skill.  Rather than cling to the old jobs and become a stagnant economy, let's recognize that innovation is inexorable and build the culture, training and systems to meet or exceed its pace.
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posted by Jeffrey Phillips at 7:43 AM 0 comments