Seven Techniques For Getting Creatively Unstuck

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Article first published as Seven Techniques For Getting Creatively Unstuck on Forbes.

If you solve problems for a living, you’ve probably had it happen. Just when you least expect it — and just when you need to be brilliant — you’re suddenly blocked. You pour on the coffee and tell yourself you’ll power it out. But all you produce is the jitters. You try burning the midnight oil, and all you do is exhaust yourself. Face it: your “idea factory” has decided to shut down. You’re stuck.

The condition can be so jarring that authors have a name for it: writers block. For them, it’s the inability to produce satisfactory new work. In some cases, it can last for years, as it did for such luminaries as Stephen King, Harper Lee, and Truman Capote. For the rest of us, it’s usually a temporary condition, but no less frustrating if you’re coming up on an important deadline and your well is suddenly, inexplicably dry.

Getting stuck doesn’t have to become a personal crisis. Not if you have a few tools in your toolkit for just such times. Here are seven surefire ways to avoid the time- wasting, agonizing period of non-productivity known as being stuck — and get quickly back on track:

1. Recognize that you’re stuck. But don’t panic.

“Getting stuck is all part of the process,” the senior engineer at a defense contractor remarked recently. “It doesn’t scare me like it did when I was younger.” Don’t let it scare you either, but learn to recognize the symptoms. If you find yourself aimlessly surfing the Internet and avoiding the project you’re on, this could be a sign. If you draw a mind-map but can only come up with several options, this could be a heads up that you’re stuck. If you call a meeting to discuss solutions to a problem and silence fills the air –your team is stuck.

Try this: Interview yourself: why do you feel you are stuck? What’s happening in your work or your personal life that may have precipitated this state? What has worked for you in the past to get back on track? The simple solution might be to get a good night’s sleep. Focusing on something else for a day or two can also work. But if the condition persists, your strategy needs to be to shift and keep shifting until you get your groove back.

2. Consciously shift your environment.

Start shifting your environment, your perspective, and your approach to the problem you’re working on till you get back into a flow state. How? Start by changing where you’re working on the problem. Change your physical environment. Go work in the conference room, or at the coffee shop down the street. Work from home.

In a recent session I led for an engineering firm, one participant said this: “If stuck, I’ll put [the project] aside, take a walk, visit a museum, or sleep on it. I often awake with complete solutions. I keep paper and pencil next to my bed and in my car at all times.”

Other ideas: Visit a toy store with your kids and let them lead you around. Go to a museum. Go for a walk in the woods or take a spin on your bike. Nature is God’s environment to help get us unstuck. Use it.

3. Consciously shift your approach.

Tried and true problem-solving steps can sometimes be ignored as we try to cut corners and produce brilliant work on the fly. If you’re feeling stuck, revisit these steps: identifying the problem, setting goals, brainstorming possibilities, and assessing alternatives. Solutions to the bigger problems and projects often come, not when we command them to appear, but because we’ve incubated ideas for a period of time. They are the result of gathering inputs from others, mulling over alternatives, and seeking inspiration to carry us to a higher level.
Here are comments I’ve heard:

• If stuck, I’ll talk with a creative colleague in another field.”

• “If stuck, I work at my white-board or sketch pad. If I’m still stuck, I’ll switch to another task and allow the first one to go in the background for a while.”

• “When I get stuck, I walk out and clear my head and then query somebody on the idea. This isn’t easy at my company because I have to find someone with enough technical knowledge to understand what I’m talking about. And they’ve got to have a mind open enough to hear something that is not completely thought out.”

4. Shift your perspective.

“If stuck, I try to bounce the problem off others, thinking out loud,” observed one manager. “This always worked for me when I used to do software development.” Assumption assaulting is necessary because the human brain is designed for efficiency. It takes what neuroscientists call “perceptual shortcuts” to save energy. Only by forcing our minds to move beyond habitual thinking patterns can we imagine truly new solutions.

Years of experience in an industry, profession or job can give us invaluable experience. But they can also be a block. “It’s always been done that way” or “we already tried that” are often a sign that you and your team need to shift perspective to move beyond habitual thinking blocks in order to imagine alternate possibilities. To get unstuck and spawn fresh thinking, ask such questions as “I wonder if we…” or “what would an entirely different way of handling this situation look like?”

Try this: Bombard the brain with alternatives and possibilities. Actively challenge assumptions. Invite new thinking.

5. Avoid using the pressure of deadlines to ignite creativity.

Harvard professor Teresa Amibole studies creativity in the workplace. At the end of each day, she asks participants in her studies to report on their creative experience, by writing about it in their journals. After reviewing over 12,000 days of diary entries, Amibole made a surprising discovery. She found that people universally believed they were most creative when they were working under severe deadline pressure. But their diaries showed otherwise. They were actually least creative when fighting the clock. “Time pressure stifles creativity because people can’t deeply engage with the problem,” Amibole told one interviewer. “People need time to soak in a problem and let the ideas bubble up.”

Key message: We’ve all used a tight deadline to motivate us to get creative. But suppose you wait till the last minute and develop a case of stuck? Research indicates this is a bad habit worth breaking.

6. Develop creative muscle.

For much of my professional life, I’ve been involved in an ongoing study of the creative habits of highly successful innovators and the organizations they lead. In personal observation and countless interviews, I find they develop what I call creative muscle almost every waking hour. That is to say, they have or develop a conscious internal process to stimulate the input, throughput and output of ideas on a constant basis. They use a series of routines, habits, and techniques to keep their idea factories operating at peak levels day in and day out.

To take one example, Silicon Valley marketing guru Regis McKenna told me about his personal process for generating ideas. Whether attending board meetings, relaxing with his family, or conversing with colleagues, he takes along a moleskin idea notebook and jots down ideas as they occur. “You’re sitting there in that meeting, and something is said that relates to something else you’re working on, and boom – you get an idea. I’m always in this mode of looking for better ways of doing things.”

Action step: Become “idea-oriented” as you go through your day. Ideas are everywhere. Avail yourself to them by observing and being curious.

7. Know when to multitask and when to unitask.

It’s important to recognize the difference between being stuck, and simply being distracted. We may think we are more productive when we work on multiple projects at once, but research shows otherwise. Comparing multitaskers with non-multitaskers, Stanford professor Clifford Nass concluded that multitaskers performed poorly on a variety of tasks, were easily distracted, and had difficulty focusing.

It’s a challenge to cut out multitasking when creative concentration would serve us better. We all get a sense of being productive from being able to keep several balls in the air at once. But sustained periods of multitasking can lead to burnout, and increase the risk of getting stuck. So if you’re doing routine work, multitask to your heart’s content. But when you’re doing important non-routine work, make it a point to eliminate distractions and work on one project at a time. During these periods, put your phone on silent mode; close all web browsers and shut your door. Even when your thoughts wander, or you get sidetracked, remind yourself of the importance of focusing singularly rather than scattering your mental force across multiple issues.

Conclusion: There are lots of different ways to get unstuck. Use the ones that work for you.

Six Innovation Leadership Skills Everybody Needs To Master

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Article first published as Six Innovation Leadership Skills Everybody Needs To Master on Forbes.

You don’t need a crystal ball to see that the world of work is changing. According to an important new study from McKinsey Global Institute, almost half the jobs people currently perform have the potential to be automated by currently existing technology. It sort of makes you wonder: what kind of work will be left for humans to do?

The answer: innovation. Clearly, to thrive in this new world of work will require different skill-sets, mindsets, and tool-sets. Chief among them: the need to bring people together as a team. The need to demonstrate deeper empathy. The ability to get new things done.

Innovation in the next economy is about much more than inventing. It’s about figuring out how and where you can add unique value. It’s about how fast you can unlearn, relearn and master new skills. It’s about how you engage others at a deeper, more humanistic and passionate level.

Here are six critical leadership skills that will help you turbocharge your career in the coming days:

1. You Continuously Embrace The Opportunity Mode Of Thinking

Innovation in the new workplace is not what you do after you get your work done; it’s how you approach your work. In its simplest form, innovation is coming up with ideas and bringing them to life. To solve problems. Create opportunities. Instead of innovation being a department (new product development, research and development, IT, etc.), it is quickly becoming everybody’s business.

In Opportunity Mode you are passionately alert to possibility, to unmet needs, to the power of imagination, and to the thrill of turning vision into reality. Where others see problems, you sense potential. When others stress over details, you see the big picture, the progress being made, the vision of how things can be but are not yet. You realize that your perspective and attitude determines everything. And you know progress will happen, if only you keep the mood right and press ahead.

Action step: Exercise your imagination muscle. To shift perspective at any time during your day, invite yourself to come up with additional solutions to a challenge you currently face. Ask yourself (and your team members): what are five alternate ways to address this problem? What 10 things are working well in my life, team, job or organization right now? Learn to be aware of what mode of thinking – Defeatist, Dreamer, Sustainer or Innovator – you are in at present, and invite yourself to shift.

2. You Are Adept At Assaulting Assumptions

Assumptions are like barnacles on the side of a boat; they slow us down. In my work with hundreds of teams, ranging from C-suite executives to graduate students to mid-level managers and front line employees, I’ve developed some simple but powerful techniques to help people blast away at assumptions. This proactive bombardment of new stimuli is essential because the brain, left to its own devices, routinely takes what brain researchers call “perceptual shortcuts” to save time and energy.

Years of experience in an industry, profession or job can also be a deterrent. “It’s always been done that way” or “we already tried that” are often a sign that you and your team could use a technique to move beyond habitual thinking blocks in order to imagine alternate possibilities. Innovation begins where assumptions end. In today’s hypercompetitive world, we can either assault our assumptions, or somebody else will do it for us and reap the benefits.

Action steps: Consciously challenge personal, professional and industry assumptions. Do this to spawn fresh thinking. Asking such questions as “I wonder if we…” or “what would an entirely different way of handling this situation look like?”

When the thought that “there’s got to be a better way” pops into your mind just remember, there probably is. Nudge yourself to envision that better way. Experiment with alternatives and possibilities. In such moments, you are challenging the assumption that the status quo is the best or the only way – and you invited new thinking.

3. You Develop Empathy For The End Customer

Jennifer Rock worked in the marketing department at Best Buys’ Minneapolis headquarters when she was tapped to oversee the company’s intranet. The intranet was used to push policy changes out to the company’s 1500 stores, but Jennifer and her team transformed the intranet into a two-way communications vehicle. They began hosting weekly online surveys with store employees and managers. They created online discussion sessions for employees in disparate locations. And they hosted agenda-less town hall meetings where employees can interact with senior leaders.

When I asked Jennifer about why she took these steps, she spoke of her passion for the end customer – in this case, the company’s employees. “We wanted to do something about the disconnect between management and the field,” she explained to me in an interview. At the beginning of Jennifer’s journey to make the intranet a two-way communication vehicle, Best Buy’s employee turnover rate was over 80%. Today, it’s less than 50%.

Action steps: Strive to understand the business you’re in on a deeper level. Develop empathy for your end user, whether that customer is internal or external. Try to walk in their shoes. Seek to understand their pain points. Listen deeply to what that customer wants to accomplish, what problems they face, and how you and your organization might take on their problem. Step outside the bubble of your culture. Interact with more people. Wrap your brain gently around what they are trying to express.

4. You Proactively Think Ahead Of The Curve

Ever try walking around in the dark without a flashlight? It’s an unsettling feeling and can often lead to injury if you walk straight into something you couldn’t see. In today’s hyper-changing world, you need your own version of a flashlight. Things happen fast when we aren’t paying attention. Responding to issues on the home-front and in your personal life, and myriad other distractions and deadlines in the workplace can blind us to important societal, technological and other external changes. We can miss important trends, disruptions, and technologies. With your “flashlight” in hand, however, you will find things do not happen quite so suddenly.

Action steps: Your flashlight, as I tell my audiences, is your ability to illuminate the trends that surround you. Every innovator I’ve ever met has a voracious information diet: books, articles, alerts, reports. Developing the ability to track emerging trends is a skill. You get better at it with practice. It involves projecting out where these trends will go. Connecting the dots. It involves looking at what you must do or can do proactively to prepare for the future. By assessing and interpreting changes as they relate to your world, you position yourself to transform them into new opportunities.

5.You Continuously Fortify Your Idea Factory

Everybody has ideas. But only some people know how to keep their “idea factories” fortified to churn out a wealth of them on a consistent basis, when and where needed. Only a rare few know how to fuel their work with a constant flow of ideas from “ah ha” to “done.” This ability to “ideate” and invite ideas on purpose using tools like mind-mapping and simple brainstorming is an essential skill of the dawning world of work.

Action steps: Always consciously manage your mental environment so that you’re able to recognize the ideas that flutter into your life. Enhance your creative environment at home and at work. Turn your office into a creative place. Or, make efforts to seek inspiration outside the office. Practice encouraging creativity in the people around you. Compliment them for their “brilliant” suggestions and watch more of them appear. Remember: creativity is not a gift from the gods, but the result of preparation, routine, discipline.

6. You Are Adept At Building The Buy-In

In a world where everything seems to “go viral” instantly, we sometimes forget that persuading other people – colleagues, the boss, customers, our spouse – is an essential and developable skill. In studying breakthrough products and business models, I often find a whole lot of selling going on behind the scenes that helped the idea succeed.

For example, the 3M team responsible for launching Post-It Notes was growing desperate when senior management threatened to kill the product as a loser. Nobody was buying it. Retail stores were indifferent as nobody was requesting the funny little pads. So the team took action. They handed out Post-It Notes and showed people how to use them. They sent them to the administrative assistants of top CEOs, who began using them on documents. That was the turning point. Eventually, people started sticking them everywhere and began asking for them at retail stores. The new product took off.

Action steps: Strive to get better at communicating the merits of taking a certain course of action. Selling new ideas is about surmounting obstacles, overcoming objections and gaining commitment for (your) new way of doing things. Always focus on the benefits of adopting the new way, and avoid getting caught up in the features and technical details. Solicit feedback from friends, mentors and others you trust to sharpen your message. Watch the television program Shark Tank to understand how not to sell ideas. Always think about the individual or individual you’re presenting your ideas to. For instance, if your idea buyer is numbers oriented, use plenty of charts and graphs. If more aspirational, don’t bog down with details, and show how this enhances the brand. And be persistent: building the buy-in for a change often takes time and patience.

The Future of Banking | Community Banking Innovations During a Time of Incredible Change

The Future of Banking

 

This article is a transcript from the YouTube video on “The Future of Banking.”

Has there ever been a time when you and your bank face such incredible changes? FinTech. Mobile banking. Bitcoin. Regulation. Mergers. Millennials. You name it. And the result: Over the past decade, the number of small banks in America has gone down by twenty-seven percent to fourteen percent since Dodd-Frank alone. More changes are ahead, so what’s the solution?

The solution, of course, is innovation. But not in the way you might expect. You and your bank probably have some online and mobile projects underway — but you may be wondering is this enough? My background is in helping businesses in a wide variety of industries profit from change. I’ve written seven books on innovation and work with banks and financial firms all over the world, including Bank of America, Citibank, Mastercard and many others. Today my focus is on community banks, the lifeblood of our economy, and helping them navigate these turbulent times and find new pathways to growth.

During the past 12 months, my team and I at The Innovation Resource in California have gone in search of innovative Main Street banks and what we are finding is truly inspiring.

We’re discovering community banks that are creating whole new revenue streams, dramatically reducing costs, and finding the right FinTech partners to help them grow. We’re discovering community banks that are going after adjacent markets that were hidden in plain sight.

One community bank in Mississippi — they’re going after the unbanked. They took a fresh look at the 46 billion dollar payday loan industry and said “we can do better.” They started a program that offers low interest loans of up to a thousand dollars to unbanked consumers. To participate they must agree to open an account at the bank and enroll in three hour financial literacy course. But here’s what they found: Many of these people turned out to be police officers and teachers and healthcare workers. Gainfully employed people who have since become loyal customers.

Other banks, they aren’t just talking about Millennials and Gen Xers — they’re taking action. They’re innovating. They’re introducing programs that target young consumers. They’re using low-cost crowdsourcing methods to gather market intelligence on Millennials to better understand their changing needs and as a result they’re building strong relationships that could last a lifetime.

So what we’re really talking about here is innovating how you innovate. As one executive said to me “we looked around at some point and we realize we had a process for everything else around here. why not for innovation?” Because of the relentless pace of change in banking today, you need an ongoing, systematic, all-the-time process. A process for innovation. But it doesn’t have to be overwhelming. One bank we know of formed an innovative team. They’re going to search for new opportunities. They do customer-of-the-month sessions every month, where they go out and talk to different customer groups and hear about their problems. They have a magnet team to vet ideas and allocate resources and manage risk. They have an innovation leader to coordinate the entire process

In today’s world it’s easy to get left behind and sometimes it’s hard to know where to start. But if you’re ready to stop talking about innovation and start practicing it today — in your job, your work, your bank and in your life — you’re ready for my keynote Leading Ahead of the Banking Curve.

Six Winning Ways to Add Customer Value

ways to add customer value

 

Are your customers demanding more, yet looking to pay less? Are you facing new and disruptive competitors from every direction? Are you being challenged as never before to differentiate your offerings and stand out from the crowd? If so, you’re not alone.

It may be time to think about the vital but often overlooked issue of customer value. If you’re not a commodity provider, and don’t want to compete solely on price, it may benefit you to revisit (and possibly rethink) your customer value proposition in light of market changes. As an innovation coach and speaker, I often find it’s the last thing that comes up in strategic planning sessions. To avoid disruption, it should be the first. Key reason: “customer value” is perception and is not permanent, but is relative and fluid. What satisfied customers yesterday may not satisfy today. Your customer has new solutions and business models to chose from. Winning firms make adding value a priority. “We invent by starting with the customer and working backwards,” notes Jeff Bezos in a recent Fortune interview. “That becomes the touchstone for how we operate.”

You can nudge internal discussions in the direction of customer value by asking yourself (and your management team) some important questions. What’s really producing value for our customers now? What new, tangible value have we added of late? And when was the last time we examined our overall value proposition with an eye to increasing our uniqueness and exceptionalness?

Use the six strategies below to strengthen your firm’s value-adding efforts – and start winning the value revolution today.

1. Take on the customer’s problem. Powerful things begin to happen when you go beyond merely trying to sell products and services. Instead, strive to understand the customer’s unmet and unarticulated needs. Are you the customer’s trusted advisor, advocate, problem-solver, coach and partner that you say you are? Value-leading firms start by walking in the customer’s shoes. They think deeply about the job customers are struggling to get done. They look for unmet needs and underserved customer groups, and they take action.

Example: BankPlus, in Jackson, Mississippi, took a fresh look at unbanked consumers in their region, those caught up in the payday loans lending cycle (typical interest rate: 400 percent per annum). Research revealed that a surprisingly large number of these people were police officers, teachers, health care workers and others who simply managed money poorly. They responded to this problem by creating CreditPlus, an innovative program offering low-interest loans to unbanked consumers, provided they enroll in a three-hour financial literacy seminar. Today, BankPlus is recognized in community banking circles for having taken on their customers’ problem. And for signing up a growing cohort of new and appreciative customers in the process!

2. Make the customer’s life easier. Every business (and every product offering) has a “convenience quotient.” The customer calculates it by dividing his or her desire for fulfillment by the hassle and annoyance (and time) that must be endured to complete the transaction. Ask your team: Are you easier or harder to do business with today than a year ago? Are your hours of operation reflective of today’s busy lifestyles? What about customer-irritating policies, procedures and complicated voicemail systems that block rather than enhance communication? Take action: Survey customers to discover the most frustrating aspects of doing business with your company. Consider offering extra measures of convenience and simplicity and you will add incredible value to today’s harried consumer.

Example: Car accidents are stressful. So Boston-based Plymouth Rock Assurance, pioneered Crashbusters, a program designed to lessen the hassle of the claims adjustment process. Their mobile claim representative will meet you at a time and place that’s convenient for you to assess the damage to your vehicle.  The policyholder receives a check on the spot, so repairs can get underway. And if you want to outsource the entire process, Plymouth’s Door-to-Door Valet Claim Service provides one-stop fender bending repair.

3. Provide access rather than ownership. Access rather than purchase is the mantra of the Sharing Economy, and new entrants such as Spotify, ZipCar and Uber are transforming industry after industry. Incumbent firms can profit from this trend as well. Ask yourself: what do we currently sell that could also be made into a service? Look for more and more product categories to continue to increase in the years ahead, including automobiles.

Example: TechShop, based in San Carlos, California describes itself as a “health club for geeks.” Customers pay a monthly fee for access to its R&D labs, but don’t have to purchase or maintain expensive equipment such as 3D printers, laser cutters and oscilloscopes. With nine locations so far, the concept is attracting small businesspersons, students, and hobbyists of all skill levels, who gain access to expensive industrial tools and equipment without incurring the cost of ownership.

4. Empower the customer with knowledge. While the Internet brings access to unlimited amounts of information, it is unfiltered, unreliable, and does not empower. To take advantage of this strategy, consider ways to shift your firm’s focus from selling products and services to providing “know how” – news they can use. Data can easily drown, but knowledge (“awareness or familiarity gained by experience of a fact or situation”) is power. Your customer contact and sales professional’s knowledge can reduce the customer’s complexity and need to study, thereby speeding up decision making, Absolute integrity is required. Ask yourself and your colleagues: in what ways can educating customers empower them to do more and be more successful? And then: how can it be turned into our to strategic advantage?

5. Raise your firm’s empathy factor. Amazon’s Alexa robot is so human-like that some owners say “good morning” and “good night” and consider it a companion. IBM’s Watson is now able to co-produce movie trailers. Software is designing software. No less than 33 companies are busy developing driverless cars. As robots take over more and more jobs, and as social media isolates us into tribes, isolation and alienation are on the increase. What’s missing in all this? The human touch. Look for the pendulum to swing toward businesses that focus on enhancing their empathy factor. Ultimately only humans can build relationships of trust, demonstrate character, bond us together as humans and give meaning to experience.

Example: The Painted Cabernet in Santa Barbara, California promises to help you unleash “your inner artist – sip by sip.” Professionals and tech workers who’ve poured over computer screens all day, birthday celebrants looking for a memorable experience, and girls on a night out on the town all gather for paint-while-drinking classes under the direction of an encouraging, funny and empathetic artist-teacher. No wonder one of the fastest growing U.S. franchises is Paint Nite, which is taking the paint-while-sipping-wine concept nationwide.

6. Provide greater responsiveness. Winning businesses eliminate customer waiting by challenging time-based assumptions. They measure the time lapse between the customer saying, “I want to purchase” and when the customer says “thanks. Mission accomplished.” One way to put teeth behind your intentions is to offer time guarantees.

Example: Dr. Neil Baum, a New Orleans urologist, guarantees that if a patient is still waiting after 20 minutes of their scheduled appointment, he waives the charge for the visit.

Conclusion: Remember: there’s no such thing as a true commodity, there’s only a tired imagination.

Braden Kelley on Leading Successful Initiatives

Editor’s Note: Innovation expert Braden Kelley set out to understand why the failure rate of corporate initiatives is so high, and to design a tool to help working managers improve their odds of success. A Seattle-based consultant and speaker, Kelley is best known as the editor and publisher of Innovation Excellence, considered the voice of the Innovation Movement. I recently sat down with Braden to explore the secrets to executing a successful initiative – innovation or otherwise. Excerpts:

Charting Change Braden Kelley

Robert Tucker: Braden, welcome. You say in your new book, Charting Change: A Visual Toolkit for Making Change Stick, that 70 percent of all initiatives fail. What is your source on that and what’s the reason for this high failure rate?

Braden Kelley: Begin with the fact that every project changes something, and you end with 70 percent of change initiatives failing. A 2007 email survey by Dr. Dobbs Journal had 586 respondents and “70 percent of respondents had been involved in a project they knew would fail right from the start.”

Change efforts fall rather messily into either the capital C change bucket (programs focused on innovation, merger integration, restructuring, business transformation, or major system implementations) or the lowercase C change bucket (projects focused primarily on delivering process or system improvements).

Capital C changes, as you can see, are typically programs (a collection of projects), and lowercase C changes usually are discrete projects with shorter timelines. This difference in size is usually accompanied by a difference in scope and duration, and this influences the necessary investments in change planning, change leadership, change management, change maintenance, and change portfolio management activities.

Because lowercase C change is typically smaller, organizations usually do not invest in anything more than basic project management, and this means that change management activities crucial to successful adoption are either addressed only marginally or ignored completely. In some organizations, surprisingly, this happens even with some capital C change efforts.

This underinvestment in proactive change planning, cross-functional change leadership, change planning, change maintenance, and change portfolio management ultimately is what leads to the high failure rates associated with project and change program execution.

Robert Tucker: In a world of disruption and digitization, will we ever see improvement in how initiatives are conceived and managed?

Braden Kelley: They’ll have to in order to survive. All organizations will need to be able to more quickly conceive and manage their innovation and change initiatives. It will be critical that organizations invest in becoming more flexible (able to redeploying existing resources to different purposes as customer requirements change) and more agile (able to change directions quickly). Organizational Agility, which is incredibly difficult, is achieved by establishing the right balance between flexibility and fixedness, as introduced in my Organizational Agility Framework:

Organizational Agility Framework

People can click here to download the 11” x 17” scalable FREE PDF download

Robert Tucker: What organizations are setting the course for others in the way they approach initiatives?

Braden Kelley: Over the years I’ve liked elements of what I’ve seen at places like Whirlpool, P&G, USAA, Intuit, Cisco, Adobe, and other great organizations. More companies should make external perspectives an integrated part of their innovation programs. One forward thinking Catholic healthcare organization in Illinois is doing just that with me right now. The common thread in the organizations that are setting the benchmark for innovation programs is that innovation is not something that the innovation group does, but that something the innovation group helps enable and reinforce across the entire organization.

Robert Tucker: In a nutshell, what’s your solution to the initiative failure crisis?

Braden Kelley: My solution is to take initiative communications and planning to the next level of transparency and alignment, enabling a focus on continuous forward momentum instead of the dangerous quick wins mentality, through the constant use within organizations of the Change Planning Toolkit™.

The toolkit is introduced in my latest book, Charting Change, and is designed to make the planning of organizational change initiatives (even down to the project level) more visual, more collaborative, and will help you get everyone LITERALLY all on the same page for change. It’s also designed to be easy-to-use and very affordable.

As with innovation, most projects and change initiatives fail because the hard upfront work is often skipped so that people can begin getting the “real” work done. The process that project teams go through during the change planning phase using the Change Planning Toolkit™ will help surface the land mines that could throw a project off track down the line.

Robert Tucker: Is it your opinion that management needs to kill off failed initiatives, rather than let them linger?

Braden Kelley: Yes! I think management needs to be careful of three things in this area: Number one, every innovation team needs to be careful not to let themselves be influenced by senior managers infatuation with some bright shiny object they saw at some conference or on television. Work the process. Own the process. Letting senior managers throw shiny objects into the pipeline is one source of lingering initiatives, because many people don’t have the courage to kill their boss’s idea.

Robert Tucker: What else?

Braden Kelley: Well, every innovation team must be on guard against the siren song of launching things. When people start padding their resume with an accumulated collection of things they’ve launched instead of letting the process work, you’ll end up with another source of lingering initiatives. Innovation managers must not look at initiatives as a case of success versus failure, but instead innovation teams must plan a journey for each initiative with a series of pre-determined hurdles, that if successfully cleared, will greatly increase the chances of success. Each of these hurdles can be linked to funding for the next phase, and when an initiative fails to clear the barrier it doesn’t move forward, period. Instead management must determine whether the timing isn’t right, external help is needed, the need no longer exists, or the market potential isn’t as large as expected. Failure to implement hurdles or stage gates leads to more lingering initiatives that people haven’t had the courage to kill.

Robert Tucker: With your Innovation Excellence newsletter and your popular website, you’ve been a thought leader in the Innovation Movement for over a decade. How has the field of innovation evolved over that time period? Should innovation itself be promoted as an initiative?

Braden Kelley: Over the last decade, innovation has evolved to become a professional discipline, complete with multiple certification bodies, publications and sub-specialties (open innovation, product innovation, innovation program management, etc.) and a more accepted part of the organizational architecture. In my new book I introduce a framework titled “Architecting the Organization for Change” that has strategy at the top of the pyramid with prominent roles for both innovation and change:

Architecting the Organization for Change

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We have seen in the last ten years more organizations creating innovation programs and naming Chief Innovation Officers (CINO’s) in an attempt to make innovation more repeatable. But we have also seen several companies lay off their innovation teams and scale back their innovation investments. The reality is that many companies have simply renamed new product development (NPD) to innovation and expected different results. This will never work. You can’t try to build a new building on top of the old one using the old foundation. For innovation to succeed leaders must first define what innovation means and then cross-functionally create and communicate an innovation vision, strategy and goals that integrate with the organization’s vision, strategy and goals. Unless innovation is an integrated part of the whole, it will always be one of the first initiatives to go when budgets get tight.

Robert Tucker: One of the big debates in the innovation community is whether you should centralize or decentralize the innovation push. What’s your take on that?

Braden Kelley: The role of any centralized innovation team should never be to “do innovation” but instead to facilitate collaboration, communication, inspiration, funding, connection and dissemination of idea fragments so that they have their best chance to spread across the across the organization and grow into strong, inventive ideas with the potential to become innovations. My definition of innovation has always been: “Innovation transforms the useful seeds of invention into widely adopted solutions valued above every existing alternative.” And so for idea fragments to grow into an invention and eventually become an innovation, you must create the value, help people access that value, and translate that value into a story that resonates with the very people who must adopt it for it to complete the transformation into an innovation. No easy task!

Robert Tucker: Thanks, Braden! How can people get in touch with you?

Braden Kelley: People can reach me at bradenkelley@live.com or (206) 349-8931 or http://bradenkelley.com or connect with me on twitter (http://twitter.com/innovate) or Linkedin (http://linkedin.com/in/bradenkelley).

Why You Need a Personal Innovation Strategy

personal innovation strategy

 

2017 is only a few weeks away, so it’s not too early to polish up your personal strategic plan. Yesterday I delivered the keynote address to 500 credit union executives here in Maui and that was my message. To Lead Ahead of the Curve” you’ve got to plan ahead of the curve — or face getting hammered by rapid, unrelenting change.

In a time of Moore’s Law Exponential Change, it’s more important than ever to plan — even when so much is uncertain. What seldom gets discussed (by all the gee whiz futurists out there), is how convulsive change — technological, political, social, demographic, environmental — can hammer people’s lives. Eliminate their jobs. Isolate us from one another.

As a futurist and innovation coach, what I see happening is that individuals are being disrupted because their organizations are being disrupted. Hewlett Packard is laying off another 30,000 workers, as it copes with product commoditization and cloud computing. Publishing giant Pearson is cutting 4000 editorial staffers as it attempts to tackle a “storm” in the markets it serves. Such statistics are mere abstractions unless you witness your good friend Joe in Boston coping with sudden dislocation after being shown the door in the latest round of layoffs. Then it becomes real.

The challenge is to avoid personal obsolescence, and to thrive amidst the churn. And that’s why I believe in developing a Personal Innovation Strategy — a written out game plan to keep you on course and adding value no matter what’s going on in your life right now.

Here are four key components to building one:

1. Invest in your future every day. A Personal Innovation Strategy is a well thought out set of goals, habits, and daily actions that insure your relevance over time. Set both short and longer-term goals. Make it a point to learn something new every day. Ask questions, and take notes. Every day take at least fifteen minutes to “think ahead of the curve” and to strategize and invest time in contemplating your future. Ready yourself to assume new responsibilities, either in your present position or within an entirely new context. Build skills: communication skills, social skills, writing skills, functional skills. Volunteer. Say yes when asked to be on a new project team. Be willing to experiment and try new things. Always be thinking about finding your next opportunity. Develop your Innovation Skills (see below) because this set of skills puts you on the path to becoming more and more difficult to replace. Invest in your future every day.

2. Identify where you are and where you want to go. If you’re serious about taking control of your life, start by visualizing and fantasizing into the future as you most want it to be. Let your imagination go. How do you want life to work for you? What’s the view over the breakfast table? Sketch out a portrait of your life on a day in the future five and ten years out. Ask yourself: how is what you are doing in your job and in your life today helping you create the future as you most want it to be?

3. Dig deeper. Do a deep dive into the business side of your organization. Study up on your customers. Figure out how your company’s business model is holding up in today’s world of disruption and change. What are the analysts saying about your company, and possible threats on the horizon. Talk to people. Take an interest in what they do and how they feel about the future. Size up your company’s culture. Is it attracting go-getters or is it tolerating incompetence and infighting and bureaucracy? Are people encouraged to take risks, or is risk taking punished? Don’t allow yourself to be disrupted because your company gets disrupted and you didn’t see it coming. The signs were there all along.

4. Develop new skills. Over and above your functional and technical skills. The most valuable skills you can add to your repertoire are ones I call I-Skills – short for Innovation Skills. If you’ve heard me speak live, you’ve heard me say this: Whatever your position or industry, your ability to innovate – to find new and better ways to get the job done, to discover opportunity where others see only problems, to get new things done, to be entrepreneurial, to energize and motivate people around you, to build the buy in and gain consensus to move forward – these skills, which I write about in the book, Innovation is Everybody’s business – these skills give you a personal competitive advantage that can never be outsourced. And they will serve you well in the years ahead. I wish you great success.

Trend Tracking: Six Essential Steps for Spotting Your Next Opportunity

trend tracking

 

I once asked Fred Smith, the founder of FedEx, what led him to start the company back in 1971. He explained that, at the time, he was running a company at the Little Rock, Arkansas, airport, refurbishing executive aircraft. It was there he began to notice that with increasing frequency, business people were showing up at his company to see if they could charter one of his planes to get some “time sensitive” shipment someplace in a hurry. “The existing freight forwarders hadn’t noticed this unmet need,” he told me. “To us it seemed like an huge opportunity.”

Smith found a need and filled it. And he acted. The Opportunity Mindset he embodies is becoming a touchstone of success in the Digital Age. When you look for it, you see it everywhere. “It was our reading of trends that led us to make this move,” Filippo Passarini, the chief information officer at Procter & Gamble told me when I interviewed him for the book Innovation is Everybody’s Business. “One of our pillars is thinking out in the future, anticipating what’s coming, and then making our move.” By thinking ahead of the curve, Passarini was able to reorganize Procter’s back office operations, and eliminate over a billion dollars in costs.

Here is a 6-step trend tracking process we use with clients to spot opportunities in change, and avoid being blindsided by disruption:

1. Observe trends in your daily life. Innovators are noticers above all. They are interested in everything. They take in more information. They read voraciously. They ask questions. They question assumptions. So step one is to start noticing more wherever you are, wherever you go. Track consumer trends, technology trends, social trends, global trends, economic trends and political trends.

2. Project out ahead. Ask yourself: where will this trend will be three, five and ten years out? For example, take the artificial intelligence industry. Today, A.I. is said to be at the same stage of development as the Internet in the mid-1990’s. Yet, more and more products and services have A.I. capability built into them all the time. The industry is expected to balloon from $8 billion in revenue today to $47 billion in 2020. Huge  opportunities will accrue to those who are willing to project out ahead, then make their move.

3. Consider the larger impacts of the trend, technology or disruption. In other words, who’s going to be affected? Who will benefit from this development and who might lose out? Take driverless cars: five years ago where were they? Now early versions are available for purchase at your local dealership. Now consider the impacts yet to come. For example, if you’ve got young children; will they even need a driver license? Will the younger generation choose not to own a car? Perhaps they’ll simply order a ride with their phone when they need one. And how about auto insurance companies? With fewer and fewer car owners, and fewer accidents, what happens to them? And what will our roads and transportation systems need to do differently? By considering the societal impacts of a trend or technology, it gives you a big picture perspective.

4. Do a SWOT Analysis. Now think about the trend from the perspective of your career, your family and your organization. Big question: how fast will disruption happen to those who don’t handle this trend right? Take, for example, the 3D Printing trend. If you’re a manufacturer, you may be sensing this new capability is a potential game changer for your firm. So you’ll want to perform an initial SWOT analysis with an emphasis on the speed of change. Examine your company’s Strengths, Weaknesses, Opportunities, and Threats that 3D Printing might pose. Look at how this new way of making things might or could impact your business and your industry. How fast will all this happen? For a given business, here’s how fast it can happen: The U.S. hearing aid industry converted to 100 percent additive manufacturing in less than 500 days, according to the Harvard Business Review, and not one company that stuck to traditional manufacturing methods survived. Concludes HBR: “Managers will need to determine whether it’s wise to wait for this fast-evolving technology to mature before making certain investments or whether the risk of waiting is too great.”

5. Research early responses to the trend. As part of your SWOT analysis, do a Google search. In today’s connected world, by the time you identify a trend or development as noteworthy, somebody somewhere is probably already acting on it.– They may be around the world, or right in your community. But your response to the trend can benefit from their experience.

6. Embrace the Opportunity Mindset. Come back to the “O” in the SWOT acronym. After you review your firm’s strengths and weaknesses, and after you’ve sized up the threats inherent in the technology or the trend, lay your findings on the table, and then let your creative juices flow. Challenge yourself and your colleagues with a series of questions. How might we capitalize on this trend? How can we add value to the customer vis. a vis. this trend? If it’s a disruption bearing down on you, the question might be: how can we take these lemons and make lemonade?

In today world, it’s all too easy to miss the trends. Just ask Blockbuster, Blackberry, Nokia, Kodak, Circuit City and a host of others. By incorporating this 6-step process into your routine, you can leapfrog your competition and avoid getting blindsided by change.

Why Innovation Leaders are Running Into Brick Walls of Opposition

Every now and then, a study crosses my desk that causes me to assault my assumptions on almost everything I thought I knew. And a just-released report by Boston-based membership organization Innovation Leader did exactly that. The upshot: Today’s innovation leaders are running in to some hefty roadblocks, and the sense of optimism has diminished. Let me explain.

“Innovation Benchmarking Report” gives us an unusually frank window into the state of innovation practice in 198 companies. I contacted Scott Kirsner, co-founder of Innovation Leader and lead author of the report, to get his take. Excerpts from our conversation:

Scott, what were the key findings from your research regarding the state of innovation practice today?

We found some companies making strides, yet many innovation leaders are still running into the brick wall of business unit opposition. They are tasked with doing incremental and transformational innovation at the same time, and it isn’t sustainable. We heard comments like, ‘we run seventeen programs in our company and we’re also a skunkworks and we’re also supposed to be scouting interesting startups and we run hack-a-thons.’ They are being run ragged.

For those of us who’ve been in the innovation field awhile, hearing this age-old tension is as strong as ever is like déjà vu all over again. What companies are making strides despite all the obstacles?

Lowe’s, the home improvement retailer in North Carolina, is off and running with its innovation lab, they’ve got a well-defined mission. That seems to be key, having a well-defined mission and not trying to do everything. Kyle Nel has a mandate that says ‘look, we’re not about redesigning the checkout process in our stores, or making forklifts more efficient. We’re about next generation stuff that’s going to shape the way retail changes’. So they’re experimenting with mobile robots in the stores and augmented reality as a way to visualize the end result of your home improvement project.

But aren’t innovation centers vulnerable because they are disconnected from the business units? If you’re disconnected from the business units, sooner or later they are going to say, ‘but what revenue have you generated for the company’?

At public companies like Lowe’s, things can always change. They are constantly in danger of being pulled to [get something done in] the next quarter.

I think we’d both agree that what often derails innovation teams is not being connected with what the CEO cares about, and what the business unit leaders care about. Were there any in your study that are avoiding this by the way they are structured?

A good example would be Transamerica Insurance. They started off more as a skunk-works but now they would describe themselves as more of a partner to the business units. They go to them regularly and ask: what don’t you have the resources to do? What white spaces do you see? How can we help you?

So partnering closely with the business units is essential. But trying to be all things and do all things is often a trap, right? Innovation teams need to clearly define their missions if they hope to endure and deliver value.

The vast majority of these programs, 79.9 percent, report to a chief innovation officer, or other C-level executive. The chief innovation officer (now often called CINOs) position was supposed to help organizations structure so that they avoided the inevitable conflicts over resources. Are CINOs delivering on that promise?

I’d say it’s an endangered role for almost everybody who takes it. Just in the last several months, the chief innovation officer at a top staffing firm was let go. Newmont, the mining company in Colorado, disbanded their whole innovation team, and the emerging technology team at Turner Broadcasting was shut down. It’s great to do all kinds of great cultural stuff, build an awesome brainstorming space with whiteboard walls, put ideas in the pipeline, set up an open innovation program. But in two or three years people are going to say, ‘okay but what revenue have you added?’ That’s going to be the end of the line for some chief innovation officers.

There’s always going to be the political issue of business units feeling like they should be responsible for their businesses. It’s a really difficult role. Clayton Christensen said when we interviewed him for our new magazine, also called Innovation Leader, that if he was offered the position of Chief Innovation Officer, he’d turn it down. His sense is you just don’t have your hands on the levers of power the way the business units do. If you’re seeing opportunities or markets that you should go after that conflict with what they’re doing, or they feel territorial about their market, there’s real potential for conflict and turf battles there.

But certainly there are people who have figured out how to make it work. Any programs that you came across which stand out?

Companies like GE where they have an office of open innovation, and General Mills which has been focused on innovation for 10 years now, or Fidelity Investments, where they’ve built prototype investing tools for virtual reality goggles and smart watches, and helped create a new accelerator program for financial services startups called the FinTech Sandbox. In Fidelity’s case, the owning family – they’re a private company – is really committed to keeping the level of resources devoted to how investing is changing, and what are the technologies that are going to be different five years from now.

The report suggests that more companies are taking a hybrid approach.  What do you mean by that?

Scott: Half the respondents told us their company has innovation activity taking place in a central group as well as throughout the business units. About a third are like Marriott, in that they have a purely centralized innovation team, and 17 percent are pursuing a distributed approach. What we found was that centralized teams are more likely to have the proper staff and perspective to explore longer-term, disruptive innovation, whereas distributed networks of innovators are good at delivering process improvements, line extensions, cost cutting approaches.

Despite pockets of progress, few innovation groups believe they have the necessary autonomy, distance, resources, or CEO support to develop breakthrough ideas and bring them to market. The report seems to conclude that the only way to accomplish breakthrough innovation is to invest in startups, build partnerships with entrepreneurial companies and universities, lower your expectations, and be content to do the incremental projects.

Scott: Well, I definitely wouldn’t say lower your expectations. In a way, you want to create the conditions that will let you blow away expectations and accomplish something really big. Some of that, as you point out, will be more likely to happen if you get outside your own walls and work with startups and universities and partners. They can help amplify your ideas and get them to market more quickly than you might’ve been able to alone.

I was surprised to see that corporate innovators find they are fielding too many ideas from inside and outside the organization, rather than too few. I’d always assumed a dearth of ideas. Why the shift?

They are bogged down in what I call the idea avalanche. Some of that is because they promote idea challenges, or deploy idea management software to collect ideas where maybe before they had a simple suggestion box. But they lack resources to develop a few high potential ones. One leader told us that they used to have idea funnels so employees could submit ideas, but that it was fraught with peril because most of the ideas weren’t strategically important from a business perspective. The longer they are in the job, the more they see the wisdom of focused and controlled input from colleagues and business partners.

Ninety five percent of the companies you surveyed rate themselves innovation immaturity – “not yet optimized.” In fact, one of the companies participating in the study, Kimberly Clark, had a chief innovation officer as far back as the early 2000’s. Yet you quote the current innovation leader at KC admitting ‘we’re in the early stages of program maturity’. What gives? There is a lot of turnover in the innovation world. A lot of these programs, to be honest, get reconstituted. One person leaves and the program may kind of vanish for a little while or go dormant. After a while, there’s another team formed. We definitely have seen a lot of companies and this may be the case with Kimberly Clark where it’s like, “Oh, yeah. There was the old innovation team. We’re the new team.” They kind of look at the clock as having restarted in a way.

Any patterns on the companies that do reach maturity? Companies that consider themselves more mature, we found, tended to be in consumer products. They also tend to be companies where they’ve had a really sophisticated product development or R & D organization for a long time — like a pharmaceutical company or an aerospace company. For them, innovation and R & D are intertwined. They have all kinds of stage gates and budgeting processes and review meetings and scoring systems for figuring out which ideas should move forward and which ideas should get resourced. So, they would call themselves more mature. Then, you know, the companies with the new Chief Innovation Officer that just did their first innovation day and the CEO gave a speech and was thrilled. They would call themselves less mature.

Are you bullish or bearish on innovation inside big companies?

I’m bullish on corporate innovation programs that have patience. Patience is really the key here, and that can be hard when you have stock market pressures, or turnover in the CEO’s office. But patience is what you need to change a company’s culture, and to help it lay the foundation for substantial innovation.

Editor’s note: While the report is not publicly available to non-members, Innovation Leader has compiled an executive summary at:

http://www.slideshare.net/skirsner/2015-benchmarkingsummar

 

 

 

Eight Powerful Ways to Generate Great Ideas

generate great ideasFor most of my professional life, I’ve studied the creative habits of highly successful innovators and the organizations they lead. Turns out there’s wide variance in how these individuals achieve greatness. A common trait emerges in how they approach idea generation. Virtually every one of them at some point devised a conscious process to stimulate the input, throughput and output of ideas on a constant basis. They use a series of routines, habits, and techniques to keep their “idea factories” operating at peak performance levels day in and day out.

Check out their methods below to generate a breakthrough process of your own:

1. Identify what gets your creative juices flowing.  As an innovation speaker and coach, I’m in front of clients and audiences on a weekly basis. I use these occasions to do quick surveys, and whenever possible in-depth interviews to supplement the more quantitative research we also do. For example: my recent research indicates that the typical manager today needs three to four times as many ideas as did their counterpart a decade ago. Another finding: fifteen to twenty percent of us hatch our best ideas in the middle of the night. For others, taking a shower or driving is another frequent idea-stimulant. Suggestion: If there’s a time of day when you do your best thinking, plan for it. Make it part of your routine. If there’s a particular spot in your home or office that gets your creative juices flowing —be it the kitchen table or the bathtub or an obscure conference room– set aside time to sit quietly in that space, alone and free of noise and distraction.

2. Inspect your idea factory frequently. What does your “things to do” list reveal about the types of ideas you’re working on just now? Are most of them tactical– pick up the dry cleaning, process the payroll, do the budget, etc. — or are there also some big picture ideas on your radar as well? If your big ideas list is nonexistent, it may be time to identify larger goals and projects. How about your “bucket list” – places you want to see before you “kick the bucket.” And goals for where you want to be one year, three years, and ten years out. Suggestion: start paying closer attention to all your ideas, regardless of category. And regularly inspect, prioritize, sort, eliminate and retool your idea productivity.

3. Download ideas the moment they occur. Silicon Valley marketing guru Regis McKenna told me about his personal process for generating ideas. Whether attending board meetings, relaxing with his family, or conversing with colleagues, he takes along a moleskin idea notebook and jots down ideas as they occur. “You’re sitting there in that meeting, and something is said that relates to something else you’re working on, and boom – you get an idea. I’m always in this mode of looking for better ways of doing things.” Innovators like McKenna are always alert – always ready to capture ideas. They pounce. They’re like vacuum cleaners. Suggestion: If you ever find yourself muttering: “I don’t need to write down that idea, I’ll remember it” take stock. It could indicate you’re not serious about taking action. Innovators know that ideation (coming up with ideas) without implementation is mere hallucination. The human mind is a great mechanism for hatching ideas. But it’s a lousy place for storing them. Download immediately.

4. Study the personal best practices of the innovators around you.  Eleanor Roosevelt once commented that “small minds talk about people, and average minds talk about events. Great minds discuss ideas.” If you’re lucky to have even one person in your life that loves to discuss ideas, you are blessed. Because the greats know that the people in our lives can often be the catalysts to think bigger. There’s got to be humility mixed with courage and persistence. Wayne Silby, founder of Thee Calvert Group, and originator of the financial services industry’s first social investment fund, once told me: “I spend a lot of my time making sure people recognize that I come up with ideas, that some of them are good. And most of them are bad. What we have to do together as a management team is to sort out the good ones from the bad ones.”

5. Manage your mental environment. Harvard professor Teresa Amabile is famous for her studies of creativity in the workplace. Her research shows that people are most likely to have new ideas on days when they feel happy, and that emotional upset is a creativity killer. “Of all the events that engage people at work,” reports Amabile, “the single most important driver by far is not bonuses or rewards, but simply feelings that ‘I’m making progress’ in the projects I’m working on.” When we’re around negative people, or dealing with situations fraught with negative emotion, creativity is blocked. So take charge of your creative environment. Avoid negative people as much as possible, or meet with them later in the day. Regroup from such encounters and make an effort to be with people in your life that stimulate your Opportunity Mindset.

6. Pay attention to the happy accidents in your life. One way to hatch brilliant ideas is simply to pay more attention to serendipitous events in your life. When researcher Jeannette Garcia made a mixing error in her IBM lab in San Jose, California, she returned to find a hard white plastic that has incredible new properties. Garcia had inadvertently discovered a new family of advanced materials. These polymers are light and strong and can be easily reformed to make products recyclable, so they have great commercial promise. A surprisingly large number of inventions are the result of “happy accidents” including: Velcro, Nutrasweet, Viagra, Scotchgaard, FedEx, Silly Putty, and many others. What about the happy accidents in your life? For example: You chat with an Uber driver about a project you’re working on, and voila, the conversation shifts your perspective. You happen upon data that shows surprisingly strong sales of a particular product your company sells: that too is a happy accident. But if we’re not paying attention and open to new possibilities, we can get so busy working our “things to do today” lists that we overlook the serendipitous opportunities.

7. Look for ideas by wandering around, asking questions. In the mid-1980s, I interviewed the legendary Bill Gore, founder of W.L. Gore and Associates, and consistently one of the most innovative companies in the world. Bill told me about his favorite method of generating ideas. “I walk through the plant and I see a piece of equipment that’s being built in the shop,” Gore explained. “I inquire about how it’s designed. And I scratch my head and say, ‘You know, it would be so much easier, so much better if it could be done this way instead of that way. Why don’t we do it that way?’” Gore’s habit of “managing by walking around” and asking questions might seem heavy-handed. But his team loved him for it. He took an interest in their work and wasn’t afraid to challenge their approach.

8. Take a Doug Day. Doug Greene was the founder of New Hope Natural Media, a pioneer in the natural and organic foods industry and one of the fastest growing companies in America. Here’s how Doug described his favorite method of generating ideas to me in an interview: “Once a month I schedule what I refer to as a Doug Day. I create a block of time where I have absolutely nothing to do: no appointments. I’ll go to a different environment. I’ll sit and draw or whatever my first instincts are to do. I think about my team. I think about my level of passion and what’s going on with my energy level. I think about opportunities. And I have to say that if I hadn’t taken those Doug Days since I started the company, I wouldn’t have had nearly the success that we’ve enjoyed, and I wouldn’t have had the quality of life.” Imagine how refreshed and rejuvenated you would feel, and how many ideas you might come up with, if you allowed yourself to take a Doug Day.

Seven Fundamentals of a Winning Innovation Team

innovation teamSooner or later, you’re going to be asked to lead an innovation team. This will be your time to shine, if you’re up to the challenge. The distinguishing aspect of leading a special purpose team is that you’re not in control, you can only influence behavior. You’re tasked with figuring out how to do something new, so you and your mates are going on a learning journey. So what you do in the formative stages will greatly impact the team’s chances of success. Follow these seven suggestions to guide your success:

1. Keep team size small, even for big projects. In Silicon Valley, the “pizza rule” has taken hold. If you can’t feed a team with two pizzas, your team is too big. Lots of research supports this notion. Once a group gets beyond five to seven people, productivity and effectiveness begin to decline. Communication becomes cumbersome. Managing becomes a pain. Players begin to disengage, and introverts withdraw. When it comes to team size, less is more.

2. Pay attention to group chemistry and emotions. Researchers at Carnegie Mellon point to three factors that make a team highly functioning. 1) Members contributed equally to the team’s discussions, rather than letting one or two people dominate; 2) Members were better at reading complex emotional states; and 3) Teams with more women outperform teams with more men. The emotional component – how we feel when we are engaged with a team – truly matters but is all too often never discussed. Pay attention to how the people you’re inviting onto your team relate to others. Assess human factors like trust, empathy, ability to resolve conflict, and seek and offer forgiveness. Acknowledge people’s selfless behavior and achievements. Always give credit to your team rather than take credit yourself, and practice empathy at all times.

3. Calculate people’s Teamwork Factor. Will Wright, developer of The Sims, Spore and other best-selling computer games, analyzes what he calls a person’s teamwork factor. “There is a matter of, how good is this person times their teamwork factor,” Wright told interviewer Adam Bryant. “You can have a great person who doesn’t really work well on the team, and they’re a net loss. You can have somebody who is not that great but they are really very good glue, and [they] could be a net gain.” Team members Wright considers “glue,” share information effectively, motivate and improve morale, and help out when somebody gets stuck. Be aware of not only the needed skill sets, but who works well together and who does not.

4. Don’t go overboard with diversity. Can too much diversity be a detriment to team chemistry? Researchers at Wharton think so. Too much diversity of “mental models” can be a drag on forward progress, say professors Klein and Lim. If members of a team have a “shared, organized understanding and mental representation of knowledge” about the nature of the challenge, it can enhance coordination and effectiveness when the task at hand is complex, unpredictable, urgent and novel. The researchers concluded that team member who share common models can save time because they share a common body of knowledge.

5. Establish a group process. Nancy Tennant, who led an amazingly successful innovation initiative at Whirlpool some years ago, once told me about joining an ad hoc governmental team tasked with solving a very big problem. “They brought a group of people together from all over the world to help them brainstorm. They spent a lot of money, put us in a room and said ‘think hard.’ But we didn’t know each other. We didn’t have a group process. And we just couldn’t do it.” A group without a process is like a ship without a rudder. It will have a harder time innovating. Establish team rules at the outset. Address how you’ll treat each other, how you’ll respect each other, and articulate how much of time each member is committing to the team. Effective teams establish clear goals and rules at the outset, and hold each other accountable.

6. Pay attention to what is going on outside the team. Since your dedicated team is charged with getting something new accomplished, it is natural to think of it as the “innovation team.” But doing so leads those not part of the team wondering how the project will effect them, and whether they support or oppose the team’s challenge. You must be careful to begin building buy-in for your efforts from the very beginning. Day to day managers see innovation teams as a threat or a special case that should be ignored. Teams appointed by the CEO can be seen as the ‘CEO’s pet project’ leaving a chance for them to be condemned or subtly derailed. Team leaders and members must spend as much time working in the external environment as working in their team. Be sure to build trust and open communication with the rest of the organization.

7. Pay attention to the 3Rs of innovation: Result, Reputation, and Residuals. What motivates people over the long haul is not money, but intrinsic rewards.  Harvard’s Teresa Amabile’s research shows that feelings of accomplishment, that we are making progress, doing important work are the biggest motivators.  As the team leader, keep the three Rs in mind: 1) Result. If you hit your target, you’ll have another accomplishment on your track record; 2) Reputation: your status in the organization rises. Senior management will be delighted. Colleagues will talk you up, praise your contribution, and invite you to join future projects. 3) Residuals: the lasting payout of participating in a successful collaborative team is that you get to see your “product” being used by customers, both internal and external. You know you’ve made a difference, solved a problem, or created an opportunity for the organization, your team, and most of all yourself.

Five Windows on Where China is Headed Next

 

Alibaba Headquarters

On a lecture tour in China last month, I spotted plenty of Bentleys, Audi’s, BMWs and Maseratis –- even a Tesla or two. But I never saw a single person laugh out loud for joy. On the busy streets of Beijing, Guangzhou, Shenzhen and Hong Kong, I saw no homeless people, no graffiti or potholes, but few smiles. In conversations with managers, academics, and grad students at two of China’s leading universities, I began to sense that this heads down, industrious, smartphone-obsessed nation of 1.4 billion people is in a state of rapid transition.

As readers of this newsletter know, I research and speak on the best practices of the world’s most innovative companies. China, it turns out, has a growing number of them. And thanks to my hosts, professor Jin Chen of Tsinghua University in Beijing, and Dr. Baohua Song (who was kind enough to guide me around throughout the trip), I was able to visit some of these companies, and interview their people. Here are five windows on where China may be headed next:

1. Despite recent setbacks, China is not on the brink of collapse. Much publicized has been the slowdown in China’s GDP growth (from 10 percent to around six percent). So has the ballooning debt burden of some Chinese companies, especially ones in commodities industries and real estate, which are suffering from overcapacity and falling profits. Add to this the reports of polluted ground water and toxic air (which the World Health Organization estimates that 97 percent of Chinese breathe). Combine this with a still-growing government crackdown on journalists and publications and a disappeared Hong Kong bookseller, tack on the pullout of Google and the banning of Facebook, and the censorship of a growing list of foreign publications, and you have a less open, more controlled environment that stifles information flow, cultural exchange, and may be responsible for the lack of smiles I witnessed. Mix in a less-welcoming business environment for foreign firms doing business in China. And don’t forget those video images of China’s “ghost cities,” row upon row of vacant buildings, the result of government over-investment and corruption. Then, last year, when China’s stock market plunged 30 percent, what I’ve come to call the “brink of collapse” narrative really took off. China’s wealthy were seen buying up “safe haven” properties in New York and San Francisco.  Surveys showed high intention of wealthy Chinese to leave the country. Morgan Stanley’s chief global strategist may have put a coda to the “collapse” narrative when he warned: “China is a threat to the United States not because it is strong, but because it is fragile.” The only problem with this narrative: none of these destabilizing forces appear to have slowed up China’s relentless march forward. My takeaway is that China is in transition from one phase of its ascent to the next, and it is not without tumult.

2. China’s is shifting from one economy to the next. In the 10 days I was in country, the government announced an array of measures designed to fuel China’s future. One of them was a trillion-dollar infrastructure project called Belt and Rail. This project, when complete, will link China by high-speed rail to trading partners and travelers in Eastern Europe and Asia, and beyond. Belt and Rail received press attention, but it was one of dozens of innovation infrastructure initiatives that filled the pages of China’s English language newspapers. Among them: incentives for China’s state run enterprises (about a third of the economy) to embrace innovation; an announcement that China has built the world’s most powerful supercomputer; a report on the coming boom in “service robots” to help serve China’s aging population; a huge innovation conference in Western China; China’s own Davos conference and this year’s theme of “the fourth industrial revolution.” The launch of yet another Chinese rocket called The Long March. A report on governmental investment in biotechnology, 3D printing, drones, solar. After a while, you start to wonder: if they keep announcing all these initiatives, where will China be in ten years? Clearly, the country is moving away from cheap manufacturing to higher end, highly automated manufacturing; from being an export led economy to a service economy; and from a rural and developing country to a developed and urban country – all at dizzying speed.

3. China’s price advantage is disappearing, roiling manufacturing. In 2002, China’s labor costs were just 60 cents an hour, according to the Conference Board. Since then, they’ve increased to $14.60 an hour on China’s coast, compared with $22.68 an hour in the US, according to Boston Consulting Group. Adding energy costs, China is now a more expensive place to manufacture than Indonesia, Thailand, Mexico, or India, and low-end manufacturing is transitioning out of China at a fast clip. Amazingly, BCG projects that U.S. manufacturing costs will be below China’s by 2018. Other trends working against China’s competitiveness, is the movement toward mass customization of products, on demand 3D printing, and the desire of sellers in the West to respond more nimbly to rapidly changing consumer tastes. Churning out vast stockpiles of apparel and other uniform goods to be shipped in giant containers will no doubt continue, and Apple has no plans to start making I-Phones stateside. China’s leaders appear to realize that low cost manufacturing is not the future. As a result, Chinese companies are on a spending spree, buying up whole companies in the West, and dominating whole industries like solar. Governments in Europe are said to be worried that too much technology is falling into foreign hands. Some of China’s manufacturers are even starting to build plants in the United States. Haier, the giant Chinese appliance maker not only built a plant in South Carolina, but just purchased GE’s Appliance Division, making it the world’s largest.

4. China’s startups are moving beyond copying to create unique business models. The common perception in the West about China’s companies is that all they do is copy. That they are incapable of true innovation. To be sure, there are plenty of examples to support this notion. Baidu is a replica of Google. Tencent is a knockoff of Yahoo. JD a version of Amazon. Didi Chuxing is a copy of Uber. And while Chinese companies are in fact great copiers (and expropriators of other’s technology and ideas), a new generation of startups in China is going beyond mere mimicry. These Little Dragons, as they are called, don’t just copy – they adapt, localize, improvise and combine until there is uniqueness. One example of this is Xiaomi, the mobile phone and internet company which professor Chin and I visited in the suburbs of Beijing. Founded in 2010 by serial entrepreneur Lei Jun, Xiaomi sells its sleek handsets (which look suspiciously like iPhones) at cost, thereby expanding the market to consumers who’ve never had a smartphone, never been connected to the internet. It farms out manufacturing to Foxconn, again, copying the Apple playbook. But Xiaomi’s business model is what’s not a copy. Rather it is an amalgamation of ideas that ultimately seem original, and customer centered. Xiaomi makes money by selling accessories like headphones, IoT enabled rice cookers, air purifiers, step tracking wristbands and a growing number of other products to its subscribers, who can also shop at its brick and mortar retail stores, which are direct copies of Apple. Another way the provider differentiates is by constantly interacting with its loyal minions through weekly software upgrades, and crowdsourcing constantly with customers online. Xiaomi becomes a part of the lives of its customers, as it builds loyalty to its unique “ecosystem.”   After growing like a rocket, Xiaomi’s sales have recently hit a down patch. And while there may be more reversals ahead, Xiaomi might just represent China’s homegrown innovation future: a startup that figured out how to differentiate itself and survive in a highly competitive market. “There is only one Steve Jobs,” Licheng Cui, Xiaomi’s Secretary General told me, “but if we gather up good ideas from our customers and our employees, collectively we might just be able to create another Steve Jobs.”

5. China’s rising middle class is demanding service and services. On the streets of China’s biggest cities, I saw delivery vehicles zipping about, possibly filled with packages for China’s growing middle class. Already the country has 721 million internet users (about half the population), and companies like Xaiomi and others are expanding this population with low cost connectivity, greater choice, and competitive pricing. Chinese consumers are demanding convenience, better value, greater transparency in their transactions, and above all speed. At the ferry station in Hong Kong, I watched a long line move swiftly thru checkout at a 7-11 as payment took seconds, rather than the minutes it takes in the States to pay by the cumbersome new chip-enabled credit cards.  Visionaries like Jack Ma, founder of e-commerce giant Alibaba, saw this consumer tidal wave building, and abetted its rise. Today one of the world’s most innovative companies, I was surprised to discover just how huge Alibaba’s headquarters campus is, and how fast the company has grown over the past decade. Row after row of buildings are being erected to house newly hired employees. Stately granite and glass buildings, well-manicured grounds and a quiet lagoon offered thinking space to hard-charging tech workers. One young data scientist we spoke with told us of he is constantly being recruited to work for other startups. But he turns down all offers, on account of his loyalty to Jack Ma and the Alibaba culture.

Final thoughts: Fantastic trip overall, I learned a great deal about China and its time of transition. I came away convinced that China will set the innovation agenda for the foreseeable future.

 

 

 

 

 

Five Ways to Disrupt the Disruptors

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disruptorsAt FIS’s banking conference in Orlando last month, the talk was of digital disruption. As if Dodd-Frank financial regulations and blockchain technology weren’t enough to contend with, here comes the “two guys from Ireland” to eat their lunch. Brothers Patrick and John Collison grew up in a remote part of Ireland and didn’t have internet access until they were teens. But they created Stripe, which is being heralded as “a far simpler method of processing payments” that could wipe out banks’ credit card processing business. Stripe was recently valued at $5 billion, and the brothers have relocated to Silicon Valley.

The Collisons are part of a new breed of digital disruptors sending shudders through the banking sector. With names like Stripe, Square, AimLoans, Zopa, Mint, and Wonga, they are targeting every revenue category that banks rely upon for profits: home loans, consumer credit, asset management, deposits, and credit cards. Accenture expects disruptive business models to gobble up 32 percent of banks’ revenue stream by 2020. And banks are hardly alone. Here are five ways to disrupt the disruptors in your market:

  1. Understand the nature of disruption in your market. To understand the nature and pace of disruption, look at the exponential rate of technological advancement. When the term “disruption” first entered the business lexicon in the late 90s, the phenomenon was confined to the disk drive industry and a few others. Today, it’s an ever-growing threat to virtually every industry. Banks and bookstores and brick and mortar retailers of all stripes are endangered. Already in 2016, the shift to online shopping has decimated big box retailer Sports Authority and regional chains across America. The college textbook industry has essentially stopped acquiring new titles, and laid off thousands of editorial employees. Moore’s Law predicted a doubling in storage and processing capacity every two years, and that’s what’s occurred. Combine Moore’s Law with the enabling power of The Cloud, and the entrepreneurial zeal of Collison brothers around the world looking to make their mark, and you get a glimpse of what is to come over the next three to five years. And what you must do to prepare.
  2. Understand what’s really going on with your value proposition. In my work across industries, I regularly see numerous forces and factors triggering dislocation, not just technological. Among them: lifestyle changes, demographic shifts, and new regulations, to name only a few. Scientific breakthroughs can be triggers. Dentists are having a hard time because better preventive measures (fluoride, for example) means people are getting fewer cavities so there’s less drilling and filling to do. Consumers are drinking 36 percent less fluid milk, as an array of alternative beverages such as almond and soy milk, become available. More and more Americans are opting for cremation, disrupting the traditional funeral industry in the process. People are writing fewer and fewer letters, and the envelope industry is idled. Who will need auto insurance when driverless cars arrive? The age of disruption demands that we develop a closer understanding of what’s producing value for our customers, and how today’s value proposition might be obsoleted by new offerings that give customers greater choices.
  3. In the age of disruption, being in denial is not an option. Kodak had 16 years to fend off digital disruption before declaring bankruptcy in 2012. After the iPhone was introduced in 2007, Blackberry saw its market share plummet from 53 percent to three percent in only five years. Clearly the time to respond is diminishing, and delay can be costly. With disruptive forces afoot, the natural tendency is to downplay their significance, or to make incremental moves to regain position. As a leader, it’s vitally important to not get caught focusing on the wrong things. Gather data, talk to outsiders and pick their brains for insights and advice. Study history, and develop a point of view about where things will be three to five years from now under various scenarios. Regardless of your industry or your title, you can make yourself indispensable to your organization by chasing the storm, rather than hiding in your bunker. Having studied the downfall of once-powerful companies like Kodak, Blockbuster, Radio Shack, Blackberry and others, my conclusion is that we have less time than we think to take action.
  1. Assault industry assumptions. Every industry makes assumptions about things like “how we operate” and “what customers want.” These assumptions are unchallenged, and become canonical. A disruptor comes along and sees the buyer-seller relationship afresh, and doesn’t harbor the same assumptions. And while these attackers toss conventional wisdom aside, industry incumbents can fight back if they wake up in time, and do some unfettered thinking. Questions like these can be good for getting started: If we were going to go after our business model, where would we start? If we unbundled our value proposition, what would that look like? What business are we really in? What aggravates our customers such that, if we could eliminate it, would create a stronger bond with our customers? What are some core assumptions about how our industry creates value that may no longer be valid?
  1. Experiment constantly. Test and try out new business models, new products and services and marketing methods and see what appeals to post-disruption consumers. Consider various scenarios and allow nothing to be sacred and untouchable. Look to other industries for business models to borrow and adapt to yours. A global hotel-booking company used speeded up feedback cycles on multiple offers to gauge consumer reaction. Software maker Adobe recalled the old saying “if you can’t fight them, join them” and no longer licenses versions of its software in one-off transactions; today it provides software as a service. The ski industry’s star innovators, such as Killington Resort in Vermont, realized that aging, affluent Boomers weren’t going to engage in the sport nearly as much as before so they beefed up their conference business instead. Whistler Resort in British Columbia rethought the idle summer months of no snow and created a series of summer festivals and competitions that fill beds at its resort. Instead of trying to play catch-up to disruptive competitors, ask what you might do to add value and truly delight customers by adding new, unique or exceptional value. People glommed on to Uber because the typical cab experience (provided you could find one) was less than desirable. They shifted to digital photography because the old way was so expensive and cumbersome. The age of disruption demands that we develop a better understanding of what’s producing value for our customers, and what’s not. Yet the established players in any industry are not sitting ducks. They can disrupt the disruptors with enough moxie, creativity and willpower.

 

 

 

 

 

Is Crowdsourcing the Future of Innovation?

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crowdsourcing

The process of inviting ideas from groups – usually online — to solve a common problem is called crowdsourcing. The tool is quickly gaining popularity, (Forester reports a 32 percent growth in innovation management solutions) just as other innovation methods, such as corporate venture funds, are proving ineffective. Powered by state-of-the-art software from purveyors like Bright Idea, Imaginatik, IdeaScale, Spigit and others, crowdsourcing is giving new momentum to efforts to broaden innovation and make it “everybody’s business.”

As an innovation speaker and consultant, I’m picking up on a new sense of urgency out there. The goal is to involve the troops as companies address existential issues: How do we avoid becoming the Kodak of the (fill in the blank) industry? And how do we move the growth needle, now that cost-cutting and headcount reductions have been pushed to the extreme?

I’ve long argued that the most effective way to speed up an organization’s metabolism is through what I call “all enterprise innovation.” In today’s environment, you never know where your next breakthrough idea will come from – supply chain, HR, IT, manufacturing — almost anywhere except the department of line extensions and incremental improvements. The growing realization is that you can’t just have a few pockets of innovative activity. It really needs to be systematic and coordinated. You need a process. Scattershot approaches will not be enough to meet the challenge of hyper-competition, and two guys working out of some internet café in Ireland (ask any banker). At the same time, various innovation tools that initially showed promise are fading fast (Open Innovation, for one) or corporate venture funds, (85 percent of these programs are failures, according to our sources in Silicon Valley), while organized, online initiatives continues to rise.

The big idea behind crowdsourcing is that none of us is as smart as all of us, especially when it comes to solving big problems 

“Imagine the potential when you can leverage the brainpower of tens of thousands of people in your company,” is the mantra of the Crowdsourcing Movement. Fifteen years ago, as suggestion boxes first began to morph into intranet-based suggestion programs, companies thought they could automate the process, sit back, and the ideas would pour in. Didn’t happen. Many of these programs experienced huge drops in participation after the initial enthusiasm dissipated. And when some programs failed to implement submissions, the result was often employee cynicism. “I put in an idea and they never did anything with it,”  was the frequent complaint. Some firms abandoned their programs entirely.

Meanwhile an adjacent social movement – crowdsourcing – was exploding with potential based on the book, The Wisdom of Crowds by James Surowiecki.  The notion here is that none of us is as smart as all of us, especially when it comes to solving critical problems and conceptualizing exciting new opportunities.

Surprise Finding: Ninety-three percent of crowdsourcing programs are aimed at creating a culture of innovation and increasing engagement. Only half were aimed at finding breakthroughs. 

In 2006, crowdsourcing got a huge boost when IBM hosted a series of widely publicized global “Innovation Jams.” Instead of a few people crowded around a whiteboard, they opened the process up to IBM’s 377,00 employees, their families and the company’s global supplier base to participate in global electronic online brainstorming sessions. Each Jam was built around a specific challenge – how could we reduce global energy use by 30 percent? Or: how can we make cities smarter? – And game-changing ideas poured in, and IBM quickly went to market with the best of the best. Crowdsourcing took off from there.

 

At Spigit’s annual Engage conference last month in San Francisco, 150 or so innovation leaders from a wide variety of industries shared their crowdsourcing experiences. A survey by Spigit found that the top objectives of most crowdsourcing programs is not breakthrough products but rather “creating a culture of innovation” (93%) and “increasing employee engagement” (86%) across the enterprise.

One insurance company told of using its crowdsourcing program to revive sagging morale, overcome the stigma of its role in the Global Financial Crisis, and energize the culture. Using Spigit’s platform, they began hosting reinvention challenges: “How do we drastically improve customer experience?” And: “How do we dramatically boost retention?” A thousand employees participated in the first challenge. They formed a 40-person “boot camp” team to oversee the effort. They assigned five person teams to do “proof of concept” of ideas which got vetted and implemented. Early experiments mushroomed into a whole new way of doing business within the division.

Now energized, the unit has begun setting its sights on even bigger opportunities. Why not capitalize on the knowledge we’ve gained in paying millions in workers comp claims over the years? Why not be the first to insure against things like terrorism, or cyber attacks? Why not be at the forefront of leveraging data they have collected on their customers to help them prevent accidents, reduce costs, and train differently? And why not gather data in new ways, for example, by having construction workers use wearable technology that will give better data analysis on how employees get injured, in the first place? How about using virtual reality to simulate hazardous conditions? Why not rely on our 65,000 employees to “recognize the change signals”?

“We see changes in the insurance industry happening at an exponential rate,” observed the commercial division president. “The question is, can we reinvent fast enough? We know that if we don’t disrupt ourselves, we simply won’t be relevant in the years ahead.”

 

 

 

 

 

 

 

 

 

Four Ways to Fail Forward Faster

100825_erformance-teamsIf you’re a “high potential” manager in a good-sized company these days, expect to get The Call. It’ll be your chief knocking on your door with an important assignment. He or she will be calling upon you to lead an initiative to jumpstart growth. That’s suddenly the driving necessity right now. It’s as if, all at once, Wall Street institutional investors have become impatient, and companies are realizing that cost-cutting alone is not going to cut it.

But before you say yes to an initiative that will cost you nights and weekends with your family over the next twelve months, hold on for just a minute. My strong suggestion is to ask yourself some important questions regarding the issue of “failure” in your firm. These questions could give you an insight into what you’re up against in terms of the innovation challenge, and whether you say yes, or wiggle out of it.

Your biggest obstacle to success is not a lack of growth opportunities. It’s liable to be from your company’s prevailing culture as it relates to risk-taking, and that forbidden word “failure.” So, here are five questions to ponder before saying yes to your CEO:

1. Does your organization realize that failure is in the innovation arena is different than in the execution realm?

Operationally excellent companies are good at one thing above all else – execution. Inevitably, they are determined to eliminate failure. A production line that goes down is failure. A product batch that has a slight color blur in the packaging is a failure and somebody’s fault. Tolerating or “celebrating” failure in this context is an invitation to chaos. But in the innovation realm, failure is another matter. It is to be expected. It is a way of thinking about unsuccessful experimentation. Think of Edison trying mightily to find the perfect filament for his electric light bulb. Three thousand “failures” and then success. But the innovation immature organization doesn’t get this. It wants to punish failure of all types, and unless there’s enlightenment, it will bring down the attempts to innovate.

2. What happens to people associated with failure in your organization?

Are they marched off to Siberia, or are they promoted? Are they celebrated for their bravery or sanctioned for their mistakes? I was once called in to a major tech company to ferret out a rumor that people in one of the divisions had been punished for failure. When I started asking around, nobody had any real evidence of an actual instance, an “urban legend.” Apparently just the whiff of punishment was causing an onslaught of risk adverse behavior. Senior management wanted to get to the bottom of it and did, by holding an Innovation Day and emphasizing the need for innovation (and discussing failure).

3. How advanced is your senior management team’s knowledge of driving growth through innovation?

Experienced entrepreneurs and “intrapreneurs” know that constant experimentation, fast prototyping and fast learning are the only way to innovate. They instinctively relate to Soichiro Honda, founder of Honda Motor Company, who once said: “To me, success can only be achieved through repeated failure and introspection. In fact, success represents the one percent of your work which results from the ninety nine percent that is called ‘failure’.” But those who have never been involved in innovation projects, those who have not studied innovation in school or read up on the topic, are painfully ignorant of this fact. In many companies that I am privy to being on the inside, the chief is as ignorant of the elements of innovation as anyone else. If you accept The Call in a company with an uninformed leader, know that a big part of your challenge will be educating your senior team to these realities.

4. Does your organization hide failures or worse, assign blame?

Think back to projects and initiatives that didn’t work out. What happened? Innovation-adept organizations get “failures” out in the open. Their leaders get involved when projects are going off the rails. They coach and pitch in and give support. They analyze what went wrong, and why. They don’t point fingers and punish people. If an organization covers up, others can’t learn. And worst of all, it sends a signal to the entire culture: avoid risk-taking at all costs. Lesson: True failure occurs when the organization doesn’t learn from other people’s failure.

If you have trouble thinking of people in your company who would be considered “risk-takers” what does that tell you? Rule of thumb: an organization must reward failures, not just successes, by praising and honoring people who take risks. If treated as outliers, this gives you an insight into the behaviors your company has asked for previously. As we all know, behavior that gets rewarded gets repeated, and your taking on the innovation challenge means you’re inevitably going to need to reform the culture too. In order to form a successful innovation initiative that moves the growth needle, you’re first going to have to deal with cultural inertia and even dysfunction.

Okay, so having now cautioned you about some of the pitfalls to leading an innovation initiative, I hope you’ll say yes to your chief even if conditions aren’t perfect (they never are), even if you sense that your “risk-adverse culture” is worse than ever, and that your chief really doesn’t understand innovation. Over the years, innovation leaders have told me that this experience was one of the highlights of their career, even if it was tough going at times, filled with setbacks and fending off the “corporate antibodies.” In the final analysis, if you haven’t failed at something lately, you must not be trying hard enough.

Robert B. Tucker is an innovation speaker based in Santa Barbara, California.

5 Habits of Highly Effective Ideators

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imgresSeveral years ago at an Economist Ideas conference in Berkeley, I asked Elon Musk whether he ever worried about spreading himself too thin. After all, Musk is not only CEO of Tesla, but also of SpaceX, and SolarCity, among other stints. His answer surprised me. “Not in the least,” he deadpanned. Sixty to 100 hour weeks energize him, he explained, because the work he does is so engrossing.

For two decades, I’ve studied the success traits of standout innovators like Musk. I’ve spent time with FedEx founder Fred Smith, who was doing startups before startups were cool. I’ve learned at the feet of Jonas Salk. I’ve ridden helicopters piloted by Dean Kamen, inventor of the Segway, along with many others.

Through the years, I’ve observed a growing recognition that innovators are made, not born. I’ve observed that individual creativity, rather than being an innate gift, is more the result of our habits, rituals, and routines. And these collectively, over time, greatly influence our success. Below are five habits that anyone can adopt. Apply them to your life and be prepared to turn the challenges you face into solutions, opportunities and possibilities.

Habit: Identify when and where you do your best thinking.  Each morning at five, award-winning choreographer Twyla Tharp works out for two hours at a Manhattan gym to fire her creative imagination. It’s been her pattern for 30 years. Tharp has created over 130 Broadway shows, and run a dance company too. But Tharp believes creativity isn’t just for artists: “It’s for business people looking for a new way to close a sale; it’s for engineers trying to solve a problem; for parents who want their children to excel, and who know that their creativity will be what differentiates.” If there’s a time of day when you do your best thinking, take advantage of it. If there’s a particular spot in your home or office that gets your creative juices flowing —be it the kitchen table or the bathtub or an obscure conference room on the fifth floor – go there. Set aside time to sit quietly in that space, alone and free of noise and distraction.

Habit: Inspect your ideas list frequently. Take a look at your “Things to Do” list: that’s one collection of your ideas right there. What does your list reveal about the types of ideas you’re working on today? Are most of them tactical: attend the next meeting, pick up the dry cleaning, pay the bills, etc.? Or are there some bigger ideas on your list as well, like “change jobs” or reinvent the innovation process in your current company, or go on safari in Botswana? If your “big ideas” list is dormant right now, it may be time to renew it. Tune in to your larger goals, your “bucket list,” to where you want to be one year, three years out, and to those that could become breakthroughs.

Habit: Capture your ideas the moment they occur. Whether attending board meetings, conversing with colleagues, or relaxing in a hotel room, Silicon Valley marketing guru Regis McKenna takes along a moleskin idea notebook and jots down ideas as they occur. “You’re sitting there in that meeting, and something is said that relates to something else you’re thinking in some other area, and then your mind starts thinking about that. I’m always in this mode of looking for a new idea; or a better way of doing things.” Innovators pounce on ideas. They’re like vacuum cleaners sucking up ideas no matter where they are in. The mind is a great place for hatching ideas. It’s a lousy place for trying to remember them. So grab them, get them out of your head, record them on your smartphone, on paper, or in a running “idea notebook.”

Habit: Manage your mental environment. Harvard professor Teresa Amabile studies creativity in the workplace. Her research demonstrates that people are most likely to have new ideas on days when they feel happy, and least likely when they are emotionally upset. “Of all the events that engage people at work,” reports Amabile, “the single most important driver by far is not bonuses or rewards. It’s simply feeling that ‘I’m making progress’ in the projects I’m working on.” When we’re around negative people, or dealing with situations fraught with negative emotion, creativity plummets. So take charge of your mental environment. Avoid negative people as much as possible, and try to confine the toxicity. Regroup from such encounters by making an effort to attract people into your life that stimulate your thinking and build your self-esteem.

Habit: Make Time to Think. Doug Greene is one of the pioneers of the natural foods movement. Here’s how he described an important ritual for generating ideas to me in an interview: “Once a month I schedule what I refer to as a Doug Day. I create a block of time where I have absolutely nothing to do: no appointments. I’ll go to a different environment. I’ll sit and draw or whatever my first instincts are to do. I think about my team. I think about my level of passion and what’s going on with my energy level. I think about opportunities. And I have to say that if I hadn’t taken those Doug Days since I started the company, I wouldn’t have had nearly the success that we’ve enjoyed, and I wouldn’t have had the quality of life.” Imagine how refreshed and rejuvenated you would feel, and how many ideas you might come up with, if you allowed yourself to take a Doug Day.

Everybody has ideas. But only a few know how to keep their idea factories fortified to churn out a wealth of them on a consistent basis, when and where needed, even when the heat is on.

 

How is Your Organization Training Innovators?

imgresTop executives in major companies regularly claim that innovation is a “top three priority,” yet 70 percent of them rate their company’s innovation capabilities as only average. Given this discrepancy, PhD candidate and friend of Innovation Resource Consulting Group Tim Michaelis (Center for Innovation Management, North Carolina State University) decided to find out what the biggest companies are doing to train their innovators. He interviewed 40 R&D directors and senior vice presidents. Here’s what he’s learned so far:

  1. Innovation training does not happen in most companies. Embedding specific innovation knowledge, skills, and abilities (KSA’s) into employees is what innovation training is all about. But what I discovered was it simply isn’t being done in the majority of brand-name companies. For example, one director told me, “We just don’t have the time to do innovation the way it looks in the books. If we spend too much time training people they wouldn’t get any real work done.” Instead of effective training, most firms expect their employees to “figure innovation out” in a trial-by-fire manner.

2. Boomer-age R&D innovators are retiring, taking their experience and knowledge with them. Large companies have apparently used informal means to train new hires in the art of innovation. “We hire smart people and expect them to figure it out,” one manager told me. “We do on-the-job training and trial by fire,” commented another. But will such methods be enough as experienced innovators retire en masse? The Baby Boomer generation is retiring at approximately 10,000 a day. This phenomenon will continue through 2030.

3. Large companies use portfolio management much less than they profess. “We don’t have standardized metrics to measure innovation,” one R&D manager told me, “so how could we do portfolio management? It is impossible to compare any of our projects.” Yet without standardized innovation metrics, portfolio analysis cannot be done. Thus, companies without defined innovation metrics will remain stuck in ad-hoc incremental level projects.

4. Lack of processes is not the problem. Companies are not teaching and using their processes. “We have so many processes and so many best practices [but] we just don’t have time to do innovation how it looks in the books.” When it comes to tools, again no lack here. “We have too many innovation tools, we are tooled out.” My preliminary findings suggest that the R&D units of the biggest companies are overwhelmed with innovation processes and tools, but lack the time to learn them. Companies seem to be adopting portions of best practices on an ad-hoc basis to solve current problems in their innovation pipeline.

5. Companies are confusing project management with innovation management. At the grass roots level, companies appear to be confusing Stage Gate Process with an entire innovation management system. Typical comments: “[We are] focusing too much on getting through gates and it keeps us from thinking.” “We have 157 gates before commercialization.” Others train spottily: “We train in project management but not in voice of the customer,” one veteran R&D manager commented. The result: Companies are not building a systematic innovation process to do Breakthrough or Transformative innovation. Instead, their mingled-together NPD best practices are randomly used and yet rarely discarded. Often, they linger in the culture for years, creating confusion and slowing throughput.

Implications for Management

I would hate for this article to be the bearer of bad news, but innovation in large companies today appears stuck in a purgatory of indecisiveness. In fact, as I was completing this article, I read of a study by CEB which has “collected a wealth of data that indicates a clear and troubling reality: Most business activity is slowing down, not accelerating.” CEB chairman and CEO Tom Monahan reported a “common” complaint from top managers at the world’s largest companies: ”It’s just so hard to get stuff done.”

It is clear that innovation training does not occur in the majority of companies I interviewed. However, the real problem seems to be that large company innovation processes have deviated or mutated from a once strategy driven approach to an ad-hoc, Frankenstein-esque, hodgepodge of complexity. As companies grow, they seem to be good at adding new tools to their innovation process, but bad at deleting old ones.

My recommendation: Big companies should look to simplify their innovation process relative to their strategic goals; e.g., incremental innovations or disruptive innovations. Without a strategy-driven innovation process, the question for future research becomes, how long can a company last with an overly complex and ad-hoc approach to innovation? If there is any parallel to Mary Shelly’s Frankenstein, it would suggest that the monster— ad-hoc, non-strategic, innovation process— will eventually kill its creator; namely, the company.

Tim Michaelis is a PhD candidate and research associate at the Center for Innovation Management Studies, N.C. State University. Contact Tim: tlmichae@ncsu.edu

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Six Smart Ways to Gather Customer Feedback

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customer feedbackJust checked in to a resort here in beautiful Cancun, Mexico and my first impression is “wow.” Amazing lobby. Stunning views of the ocean. A world-class fitness center. And best of all, a staff that truly seems to care about its guests. What a contrast to the airline I arrived on. “United’s Quest to Be Less Awful” is the cover story in BusinessWeek, detailing maddening flight delays, disgruntled employees, technical meltdowns, and abysmal customer service.

As an innovation coach, I can’t help speculate on what accounts for the difference between these two businesses. Leadership, for sure. But another factor may be less obvious: willingness to listen to customers and respond to their needs. A participant in one of my workshops expressed this formula succinctly when she said this: “Whether we admit it or not, virtually all innovation comes from the end user, either through a question that sparks an idea, or a direct request for something new.” If you want a good laugh, try suggesting an improvement idea to an employee of United Air Lines just to see the look on their face.

All too often we assume that innovations get dreamt up in isolation, by brainiacs in the back office, far from the madding customer crowd. But that’s not the case with innovation-adept companies. They value listening. They welcome suggestions. They pounce on new ideas no matter where they come from.

More and more companies assume that they can automate all of this listening stuff. They look at the success of Facebook, Google, Amazon, and other tech titans that are data-driven, cloud-based, and don’t have to get their hands dirty talking to customers face to face. All too often they conclude that getting out there in the marketplace and mixing it up with actual customers is so 20th Century. Why waste time? It’s all in the data, right? But something vital is being lost: a deeper understanding of the customer, and early warnings that your value proposition is not delivering as it did only yesterday.

“We are training an entire generation of assistant marketing managers that, if they have five good bullet points on a slide, they think they understand the customer,” says Dev Patnaik, author of Wired to Care: How Companies Prosper When They Create Widespread Empathy. “They don’t realize their business is out in the world– in the stores, where people are buying their products and services. And in the homes where they live their lives.”

There’s no question that the Digital Age is giving us powerful new listening tools. But data mining alone cannot help us intuit the customer, develop intimacy with the customer, or discover their latent needs, wants and desires. The most Big Data can give us are lagging indicators: of service levels, of repurchase rates, etc. What Big Data does a poor job of is signposting leading indicators. Without face to face listening, data fails to give us the unique insights that can lead to breakthroughs.

Below are six ways leading firms listen to their customers:

  1. Smart firms know that good listening starts at the top. All the great CEOs are or were customer-focused listeners first and foremost. Sam Walton, who flew his own plane to attend store openings and frequently showed up at stores unannounced. A.G. Lafley’s “consumer is boss” motto was at the heart of Procter & Gamble’s wildly successful innovation initiative. Cisco’s John Chambers made frequent sales calls and reportedly got a “heads up” on startups that Cisco needed to buy. And Elon Musk constantly interacts with Tesla owners, and answers their questions. Even the late Steve Jobs, who never believed in marketing research and focus groups, focused intensely on creating “insanely great products” that people just couldn’t do without.

 

2. Smart firms listen to anticipate emerging needs. GE CEO Jeff Immelt spends four days a month in the field, interacting with buyers. He hosts town hall meetings with several hundred customers at a time to listen to their thoughts on what the company can do better to meet their present needs. He also introduced a new way of forecasting their unmet and future needs. As I explore in Driving Growth Through Innovation, GE also convenes “Dreaming Sessions” with key customers in the company’s various business units, from healthcare to turbines to jet engines. As Immelt explained: These sessions are where “we are trying to think about where our business and their business will be in five or ten years.” Favorite question: “If you had $400 million to spend on research and development at GE, how would you prioritize it?”

3. Smart firms involve customers early and often. To maintain its market positioning as the “ultimate driving machine,” BMW must constantly integrate new technologies and design features that are a step ahead of the competition. To accomplish this, BMW created what it calls a Virtual Innovation Agency (VIA) to listen to customers directly. Car buffs worldwide can access the VIA Web site and join online discussions to share their ideas with other enthusiasts around the world, and with the BMW Group listeners. The VIA submission process allows anyone with Internet access to submit ideas, and if the idea has potential, it’s quickly routed to the appropriate working group at BMW for follow-up. Within the first week after VIA was launched, 4,000 ideas had been received.

4. Smart firms identify and listen to maverick customers. One such customer type has been called the “lead user” by MIT professor Eric von Hippel. This unique breed of purchasers are the ones who have needs still unrecognized by the overall market. They may stand to profit if they partner with you to solve a problem their customer has. Or they don’t accept the limitations of the way you do business presently, your terms, your products features or lack thereof, and they see a way you could serve their needs better and don’t mind telling you about your limitations. Listening – even better brainstorming with — this creatively outspoken type customer can help you identify unarticulated needs which most customers don’t even entertain because they accept the limitations of your present way of doing business. Sometimes, these individuals take it upon themselves to modify your product to better suit their needs, and can help you anticipate what the market might welcome were it to be standard. Cup-holders in cars are an example. Aftermarket entrepreneurs invented them, auto parts retailers began selling installable cup-holders first, and the big automakers later designed them in to new models after seeing how much customers valued the convenience.

5. Smart firms experiment constantly with new listening methods. Perhaps the hottest new method is crowdsourcing, the practice of obtaining ideas from large groups of people and especially from the online community rather than your usual sources. Denmark-based Lego Toys is using this technique to inspire ideas from fans that its own 180 designers might not have ever thought of. Submissions that receive 10,000 votes from site visitors are then vetted by Lego reviewers. And fans whose models are chosen for production receive one percent of their toy’s revenue. Other organizations are hosting crowdsourcing contests for solutions to vexing technical problems or to discover winning algorithms Netflix did recently with a method of showing customers similar movies to the ones they have watched. Snack giant Frito Lay asks the crowd to suggest new chip flavors or even whole snack categories via its website.

6. Smart firms seek ideas from new customer groups. The medical products division of Dutch-based Philips Electronics assumed its customers were doctors in hospitals, since they were the ones who traditionally made decisions about medical tools. But Philips managers looked and listened to a wider array of customer groups, and noticed that more services were being provided in nontraditional environments: outpatient clinics, homes, and even on the street (for homeless people). By asking themselves what these non-traditional customers might need, Philips came up with a stethoscope with improved acoustics. The new scope helps filter out voices, traffic, and other background noise, making it easier for caregivers to hear heart murmurs or breathing problems they might have missed otherwise.

Do you want to build an innovation capability in your firm? Start by looking at how you listen to customers and what you do with these insights. Use the six strategies outlined above to shake up and wake up your listening.

 

 

 

 

 

Five Strategies for Spotting Trends: Learn How to Lead Ahead of the Curve

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spotting trendsEconomists, the late Paul Samuelson once quipped, predicted nine out of the last five recessions. Yet they failed to warn about the big one: the Crash of 2008. Unbowed, they keep at it. Last year, they predicted interest rates would go up. They went down instead. They predicted oil prices would rebound: they sunk to below $35 a barrel instead.

And what about those media prognosticators, how well did they do? U Penn researchers checked up on the predictions of pundits like CNBC’s Jim Cramer, New York Times’ columnist Thomas Friedman, Wall Street Journal columnist Peggy Noonan and many others and concluded they had the accuracy of “dart throwing chimpanzees.” And don’t get me started on futurists who boast about trends they accurately predicted but fail to mention the many they missed.

Although prediction algorithms might be about to change the forecasting game (see below), for now at least, prediction is still more art than science. For leaders, the need to make prediction-based decisions has never been greater. Missing market shifts and misreading important trends can be career-limiting. Blackberry’s co-CEOs misread the iPhone, dismissing it as a niche product. Kodak invented the digital camera but stood by as it unraveled the company’s business model. Radio Shack ignored consumer trends that rendered it irrelevant. Some cable companies dismiss the “cord-cutting” trend that is beginning to roil their industry.

As a futurist and innovation coach, I don’t try to predict trends so much as to alert my clients to changes that could spell opportunity, if action is taken. I’m convinced we all need to become better trend-watchers to avoid being blindsided. Communications technologies make it easy than ever to connect to the wider world, yet tempting to drown in information overload. It’s easy to misread the signals of change because there are simply so many of them.

Here’s the good news: with a bit of focused attention, you can build skills in this area such that they become a strength rather than a vulnerability. Not only will it lead to better responsive moves, but at times, your improved capability at spotting trends will enable and empower you to pounce on emerging opportunities. Here are five strategies to guide you in this important arena:

  1. Audit your information diet. Start by doing a simple assessment of the various information sources – periodicals, books, reports, newspapers, email newsletters, etc. that you’re accessing. Think of this as your “information diet.” Just as when we diet, we carefully monitor our caloric intake, become more aware of your “information intake.” For the next week, monitor how much time are you spending on trivial items like Donald Trump’s latest outburst, versus how much you’re taking in that’s substantive, deeply researched and well written. Ask other leaders in your network what they’re reading, and share articles of interest. Suggestion: Make it a point to subscribe to publications rather than only grazing the web. Let them build up– the important analysis and survey results that keep you abreast.
  2. Develop new antenna. It’s been said that “leaders are readers” and I’m continually amazed at how well informed the innovative leaders I meet each year are on a broad range of topics. I first noticed this trait when interviewing 50 leading innovators back in the mid-80s. I’d go out to interview them and they’d start interviewing me! They are, as I noted in Winning the Innovation Game, like vacuum cleaners sucking in the latest trends. They avail themselves to opposing points of view and alternate perspectives. They ingest a wide-ranging number of surveys and reports. But they also get out there to see for themselves, to experience, to press the flesh. They travel extensively and actively question customers, suppliers, industry luminaries, and experts. They are alert to change at all times and notice small details that might easily be overlooked. Suggestion: Do more aggressive “front line observational” research, and ask questions wherever you go.
  3. Use social media as an early warning system. The field of prediction is ripe for reinvention, and that’s exactly what’s going on these days behind the scenes. According to the Wall Street Journal, predicting the future is about to become “embarrassingly easy,” as prediction algorithms– the fruits of the big data revolution– become so widespread that conventional forecasting methods come off as oh so 20th century. Dataminr is a six year old startup that applies advanced analytics to the entire Twitter “fire hose” to detect events likely to move the market. Already, 75 financial clients, including big investment banks and hedge funds, are subscribers. More and more companies are paying attention to Twitter, and to potential wisdom of the crowd forecasting techniques that are possible from this data set. “It’s pretty hard to come up with industries that would be happy knowing later, less and not everything,” said Ted Bailey, Dataminr’s CEO. According to Fortune, Dataminr revealed preliminary reports of Volkswagen’s emissions scandal three days before its stock price plummeted 30 percent. The Twitterverse erupted 45 minutes before the Associated Press tweeted about the Paris attacks. Question: how can you and your organization tap social media as an adjunct to your early warning system?
  4. Recalibrate your forecasting skills. University of Pennsylvania professor Philip Tetlock wants to know what makes some people better than others at seeing into the future. With funding from DARPA, Tetlock and his team have been hosting forecasting tournaments in order to identify what separates good forecasters from the rest. In these competitions, thousands of everyman prognosticators volunteer to answer roughly 500 questions on various national security topics, from the probably movement of Syrian refugees to the near term stability or instability of the Eurozone. In his book Superforecasting: The Art and Science of Prediction, co-authored by Peter Scoblic, Tetlock reports that the tournaments identified a small group of people who generated forecasts that, when averaged, beat the crowd by well over 50 percent in each of the tournament’s four years. How did they do it and whence are their powers? Turns out these adept forecasters buried among us are: philosophically cautious and humble, comfortable with numbers but not always math whizzes; pragmatic and capable of considering diverse points of view, and open minded. They are intellectually curious and enjoy puzzles and mental challenges. Key takeaways: if people feel they will be held accountable for their views they tend to avoid cognitive pitfalls such as overconfidence and a common failure to update beliefs in response to new evidence. Lesson: with effort, we can all improve our forecasting abilities. Tetlock’s research suggests basing forecasts on facts and logic, and being alert to personal bias and guessing. His research stresses the need to think in terms of probabilities and recognize that everything is uncertain except history.
  5. Take action on trends. Although Blackberry’s co-CEOs watched Apple announce the iPhone in 2007, they dismissed it as a niche product. They didn’t consider it again for another six months, losing valuable time. Even a cursory look at disrupted companies shows that their leaders were vaguely aware of the threat to their business model. They waited too long, then  mounted halfhearted responses to the threat. It’s natural human tendency to want to delay action till others have gone ahead and paved the way. But the advantage that comes to those that spot trends early is that we take early action. We alter our processes, we change our business model. We diversify. We enter new markets, whether adjacent or in new territories.

If you’re an executive or manager, it’s easy to want to delegate trend-watching. It’s easy to think we have more time than we do to mount a response. In response to an ever-increasing degree of technological, social and economic change, I invite you to redouble your trend-watching capabilities and prepare for the VUCA world (volatility, uncertainty, complexity and ambiguity). In 2016, it’s going to be vital to pay attention to how we pay attention.

 

Winning on Shark Tank: Nine Strategies for Selling Your Bright Ideas

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Later this week at a resort hotel in Huntington Beach, California, a group of managers from selling strategiesa $2 billion program and construction management company will host a Shark Tank contest to conclude their two day conference. The winning team will receive funding to move forward with their concept, plaques, and heaps of praise from peers and the company’s CEO.

Such “idea bake-offs are part of a growing trend. In my travels of late, a surprising number of client companies are using Shark Tanks to elicit ideas from the troops, make real-time “go” or “no-go” decisions, and have some laughs in the process. (For my readers outside the United States, Shark Tank is a popular reality television series where contestants pitch their startup ideas to a panel of “shark” investors, often with lots of drama adding up to high ratings).

But whether you’re about to appear on Shark Tank, or just want to improve your effectiveness in this arena, here are my favorite tips to greater selling success:

  1. Realize that selling ideas is an essential skill. The days of top down, command-and-control leadership are over. These days, gentle persuasion or “leading from behind” is the new imperative, and “building the buy-in” (gaining alignment and support for a decision, idea or direction) is a vital part of the innovator’s toolkit. CEOs must sell their ideas to the board. Managers must sell their ideas to their teams and to senior managers and sponsors. Parents must sell their ideas to their offspring. And spouses should know how to sell their ideas to each other (“honey, don’t you think it would be fun to vacation in St. Croix this spring? There’s an incredible offer that just came in the mail.”)
  2. Do your homework. Before you try to sell an idea to others, sell yourself first. Gather the facts. At Gore-Tex maker WL Gore and Associates, they ask three questions of any potential opportunity: is it real? Can we win (if we take this to market)? Is it worth it? Think your idea through from these perspectives and size it up objectively. Do the necessary research as if your reputation depends on it, because it does. Be able to concisely summarize your concept from the standpoint of the user problem it solves and the opportunity it creates.
  3. Consider timing. You’re excited about the idea because, well, it’s your new baby. It’s natural to fall in love with your ideas, but is now the time to try and gain support to build and launch it? Would waiting till the end of budget season make more sense? Do you need to plant more seeds and talk up the idea informally before proposing it before the board? Decide on the best time to pitch the idea, and keep in mind that timing is everything, especially when selling ideas.
  4. Focus on what’s in it for them. “We invent by starting with the customer and working backwards,” Amazon CEO Jeff Bezos told an interviewer. “The other guys (competitors) start by asking ‘what are we going to get out of this if we launch this idea?’” It’s never too early to ponder issues having to do with end-user value; what’s in it for them if they adopt and use your idea? Does your concept make their lives better, give them greater choice, simplify or increase speed? Does it help the company cut costs or improve engagement? The best idea evangelists focus on elucidating an idea’s benefits, the worst fixate on features and get lost in the weeds.
  5. Keep it simple. Don’t overwhelm your idea-buyer with too many details, don’t slip into jargon that is familiar to you but Greek to your customer, and above all, avoid needless complexity. Concentrate on making the complex simple and understandable to the layperson, realizing that even the insiders will appreciate your gift at communication. If you can’t explain the essence of your idea in a few simple sentences, you haven’t thought it through sufficiently. If it’s a complex idea, come up with a metaphor.
  6. Help others visualize your idea. A picture is worth a thousand words, and a prototype can be worth a thousand pictures. A story illustrating some aspect of your idea, or a testimonial of how the idea is already in use elsewhere, can be of benefit in emotionalizing your audience. The more others truly understand your idea, the deeper their support. People don’t buy what they don’t understand, and social science research demonstrates that people are reluctant to admit that they are confused, and will go along silently without understanding. Make it a point to KISS: keep it simple stupid! Build a rapid prototype, create a stellar pitch deck (PowerPoint slides), or just sketch your idea out on a whiteboard, if that’s all you’ve got. They help people “see” your idea, and you help people come around to your way of thinking.
  7. Customize your communication style. How you sell an idea will depend to a great extent on the person or persons you’re selling it to. If you’re pitching to a numbers-obsessed idea selection team, that’s different audience than to a CEO whose goal is higher growth.
  8. Welcome feedback. If the idea checks out after you’ve done your homework, try out your pitch on trusted colleagues first to get the bugs out. Then, invite tough critics to poke at it and see if they can rattle you. If they can, you’ve got further homework to do to win. You can’t allow yourself to get defensive when they criticize your idea. You may not like what they have to say but realize their job is to discover flaws now rather than after you’re further along in the development stage. Think of these panelists as being on your side. Their feedback not only keeps you from overlooking weaknesses or better alternatives, but your openness and positive, humble attitude builds trust.
  9. Be open to input. One of the best ways to build support for your idea is to share it with others and ask for their suggestions on how it could be made even better. If you’ve thought it through and done your initial homework, you’ve earned the right to ask for their support and guidance. People love to give suggestions for improving an idea, and feel a sense of pride (and greater ownership) if they’ve helped shape your idea.

 

Three Ways to Face Down Disruption

Screen Shot 2015-10-13 at 2.50.28 PMHave you heard the joke about the disrupted barber? He was happily running a one-chair barbershop for years when a discount haircutter opened across the street. Customers deserted him. Business plummeted. The man grew desperate. Till one day he fought back: he created a sign and put it out front: “We fix $9 haircuts.” Business returned.

As I travel this fall listening to the challenges business leaders face, disruption tops the list. While disruption has always been an issue – recall the buggy whip makers who failed to adapt to the horseless carriage — what is strikingly different today are the mushrooming sources of industry turmoil, and the ever-shorter window leaders have to mount a response.

Kodak had 16 years to fend off digital disruption, and failed. Blackberry had only four. “The first thing [Blackberry co-founder] Mike Lazaridis said when he saw the iPhone was that this will never work, the network can’t sustain it, it has rapid battery drain and a lousy keyboard,” notes the book Losing the Signal: the Untold Story Behind the Extraordinary Rise and Spectacular Fall of Blackberry. While they were impressed with what Apple had created, Blackberry’s leaders didn’t give any additional thought to the iPhone for months, delaying their response.

As disruptive forces press down upon almost every business and industry sector, we’ve all got to objectively assess the new playing field, and use creativity to go on offense.

New Yorker writer Jill Lapore’s well-publicized takedown of Clayton Christensen’s Theory of Disruption misses the point. Fifteen years ago, the Harvard professor pointed out how low-cost upstarts like steel producer Nucor, Southwest Airlines and others disrupted existing industry players with stripped down, “good enough” products and services, to upend markets. Lapore challenged the theory by questioning whether certain incumbents that Christensen wrote about were really overtaken after all. Both miss the larger point. Today, disruption is a broadly-inflicted phenomenon whose origins range from regulatory, technological, social, geopolitical and demographic. Whatever causes the malady, its only commonality is that it is often fatal to businesses that don’t respond boldly. To wit:

  • The iPhone disrupted Nokia and Blackberry, not with a stripped down, lower-cost product, but from the high end with exciting style and functionality. Uber and Lyft disrupted the taxi industry, not by offering a lower price, but by introducing “surge pricing.”
  • A regulatory disruption has hobbled hundreds of small banks in the USA, as they struggle to cope with a complex new financial restrictions (Dodd Frank) passed by Congress.
  • The cemetery and funeral industries are undergoing a lifestyle disruption. As cremation gains favor fewer people buy burial plots, and fewer people opt for expensive caskets, and expensive funerals. The golf industry has been disrupted as millions of golfers have given up the game, citing “lack of time” as their key reason. And so it goes.

Fending Off Disruption

Here are several ways to respond to disruptions that may be looming in your industry:

  1. Realize denial is the enemy. Faced with the need to change our business model or prove that adverse conditions are temporary, most of us get busy on the proof. As someone who studies industry disruption, I can tell you denial is the most common reaction. “Let’s ignore this bit of reversal, and maybe it will go away. But it’s the worst thing you can do. Place the disruption at the top of your strategic priorities list and dig in to its causes and cures.
  2. Walk in the customer’s shoes. If you’re experiencing a disruption it could mean that it’s time to do a reset of your understanding of what’s producing value for your customer now. Several years ago, I first realized how serious a threat Uber was to the taxi industry when I began asking cabbies about it. Cabbies in Orlando, Florida, a convention city I often visit, employed by Mears Transportation, told me that their employer responded to Uber by raising their fees and lowering their earnings. Uber drivers told me they were happy to be free to work as much or as little as they wished, and they were satisfied with their earnings as well. Not hard to figure out which business model had momentum in that case. If your industry is experiencing disruption, realize that what customers are doing is reassessing your value proposition versus new ways of solving their problem. By empathizing with customers, you’ll be able to understand the trajectory of the threat. And intense customer listening may help you spot innovative ways to respond.
  3. Work on engaging the opportunity mindset. In periods of uncertainty, the natural tendency is to get caught up in the internal affairs of your company. Getting out in the world, and in your market, is essential. Make time to attend association meetings and other conferences, network with people and pick their brains, study the lessons of history, and seek to develop a point of view about where things will be three to five years from now. Ask yourself at the end of each day: did I manage the past today, or did I manage the future? As the great German writer Johann Goethe once said, “Be bold and mighty forces will come to your aid.”

Meet the New Winners at Corporate Innovation

benchcover[5]Every now and then, a study crosses my desk that causes me to assault my assumptions on almost everything I thought I knew. And a just-released report by Boston-based membership organization Innovation Leader did exactly that. The upshot: I assumed that the practice of innovation was further along than it now appears to be. Let me explain.

“Innovation Benchmarking Report 2015” gives us an unusually frank window into the state of innovation practice in 198 companies. So I contacted Scott Kirsner, co-founder of Innovation Leader and one of the authors of the report, to get his take. Excerpts from our conversation:

So Scott, what were the key findings from your research regarding the state of innovation practice today? We found some companies making strides, yet many innovation leaders are still running into the brick wall of business unit opposition. They are tasked with doing incremental and transformational innovation at the same time, and it isn’t sustainable. We heard comments like, ‘we run seventeen programs in our company and we’re also a skunkworks and we’re also supposed to be scouting interesting startups and we run hack-a-thons.’ They are being run ragged.

For those of us who’ve been in the innovation field awhile, hearing this age-old tension is as strong as ever is like déjà vu all over again. What companies are making strides despite all the obstacles? Lowe’s, the home improvement retailer in North Carolina, is off and running with its innovation lab, they’ve got a well-defined mission. That seems to be key, having a well-defined mission and not trying to do everything. Kyle Nel has a mandate that says ‘look, we’re not about redesigning the checkout process in our stores, or making forklifts more efficient. We’re about next generation stuff that’s going to shape the way retail changes’. So they’re experimenting with mobile robots in the stores and augmented reality as a way to visualize the end result of your home improvement project.

But aren’t innovation centers vulnerable because they are disconnected from the business units? If you’re disconnected from the business units, sooner or later they are going to say, ‘but what revenue have you generated for the company’? At public companies like Lowes, things can always change. They are constantly in danger of being pulled to [get something done in] the next quarter.

I think we’d both agree that what often derails innovation teams is not being connected with what the CEO cares about, and what the business unit leaders care about. Were there any in your study that are avoiding this by the way they are structured? A good example would be Transamerica Insurance. They started off more as a skunk-works but now they would describe themselves as more of a partner to the business units. They go to them regularly and ask: what don’t you have the resources to do? What white spaces do you see? How can we help you?

So partnering closely with the business units is essential. But trying to be all things and do all things is often a trap, right? Innovation teams need to clearly define their missions if they hope to endure and deliver value.

The vast majority of these programs, 79.9 percent, report to a chief innovation officer, or other C-level executive. The chief innovation officer (now often called CINOs) position was supposed to help organizations structure so that they avoided the inevitable conflicts over resources. Are CINOs delivering on that promise? I’d say it’s an endangered role for almost everybody who takes it. Just in the last several months, the chief innovation officer at a top staffing firm was let go. Newmont, the mining company in Colorado, disbanded their whole innovation team, and the emerging technology team at Turner Broadcasting was shut down. It’s great to do all kinds of great cultural stuff, build an awesome brainstorming space with whiteboard walls, put ideas in the pipeline, set up an open innovation program. But in two or three years people are going to say, ‘okay but what revenue have you added?’ That’s going to be the end of the line for some chief innovation officers.There’s always going to be the political issue of business units feeling like they should be responsible for their businesses. It’s a really difficult role. Clayton Christensen said when we interviewed him for our new magazine, also called Innovation Leader, that if he was offered the position of Chief Innovation Officer, he’d turn it down. His sense is you just don’t have your hands on the levers of power the way the business units do. If you’re seeing opportunities or markets that you should go after that conflict with what they’re doing, or they feel territorial about their market, there’s real potential for conflict and turf battles there.

But certainly there are people who have figured out how to make it work. Any programs that you came across which stand out? Companies like GE where they have an office of open innovation, and General Mills which has been focused on innovation for 10 years now, or Fidelity Investments, where they’ve built prototype investing tools for virtual reality goggles and smart watches, and helped create a new accelerator program for financial services startups called the FinTech Sandbox. In Fidelity’s case, the owning family – they’re a private company – is really committed to keeping the level of resources devoted to how investing is changing, and what are the technologies that are going to be different five years from now.

The report suggests that more companies are taking a hybrid approach.  What do you mean by that? Half the respondents told us their company has innovation activity taking place in a central group as well as throughout the business units. About a third are like Marriott, in that they have a purely centralized innovation team, and 17 percent are pursuing a distributed approach. What we found was that centralized teams are more likely to have the proper staff and perspective to explore longer-term, disruptive innovation, whereas distributed networks of innovators are good at delivering process improvements, line extensions, cost cutting approaches.

Despite pockets of progress, few innovation groups believe they have the necessary autonomy, distance, resources, or CEO support to develop breakthrough ideas and bring them to market. The report seems to conclude that the only way to accomplish breakthrough innovation is to invest in startups, build partnerships with entrepreneurial companies and universities, and lower your expectations, and be content to do the incremental projects. Well, I definitely wouldn’t say lower your expectations. In a way, you want to create the conditions that will let you blow away expectations and accomplish something really big. Some of that, as you point out, will be more likely to happen if you get outside your own walls and work with startups and universities and partners. They can help amplify your ideas and get them to market more quickly than you might’ve been able to alone.

I was surprised to see that corporate innovators find they are fielding too many ideas from inside and outside the organization, rather than too few. I’d always assumed a dearth of ideas. Why the shift? They are bogged down in what I call the idea avalanche. Some of that is because they promote idea challenges, or deploy idea management software to collect ideas where maybe before they had a simple suggestion box. But they lack resources to developing a few high potential ones. One leader told us that they used to have idea funnels so employees could submit ideas, but that it was fraught with peril because most of the ideas weren’t strategically important from a business perspective. The longer they are in the job, the more they see the wisdom of focused and controlled input from colleagues and business partners.

Ninety five percent of the companies you surveyed rate themselves innovation immaturity – “not yet optimized.” In fact, one of the companies participating in the study, Kimberly Clark, had a chief innovation officer as far back as the early 2000’s. Yet you quote the current innovation leader at KC admitting ‘we’re in the early stages of program maturity’. What gives? There is a lot of turnover in the innovation world. A lot of these programs, to be honest, get reconstituted. One person leaves and the program may kind of vanish for a little while or go dormant. After a while, there’s another team formed. We definitely have seen a lot of companies and this may be the case with Kimberly Clark where it’s like, “Oh, yeah. There was the old innovation team. We’re the new team.” They kind of look at the clock as having restarted in a way.

Any patterns on the companies that do reach maturity? Companies that consider themselves more mature, we found, tended to be in consumer products. They also tend to be companies where they’ve had a really sophisticated product development or R & D organization for a long time — like a pharmaceutical company or an aerospace company. For them, innovation and R & D are intertwined. They have all kinds of stage gates and budgeting processes and review meetings and scoring systems for figuring out which ideas should move forward and which ideas should get resourced. So, they would call themselves more mature. Then, you know, the companies with the new Chief Innovation Officer that just did their first innovation day and the CEO gave a speech and was thrilled. They would call themselves less mature.

Are you bullish or bearish on innovation inside big companies? I’m bullish on corporate innovation programs that have patience. Patience is really the key here, and that can be hard when you have stock market pressures, or turnover in the CEO’s office. But patience is what you need to change a company’s culture, and to help it lay the foundation for substantial innovation.

 

Editor’s note: While the report is not publicly available to non-members, Innovation Leader has compiled an executive summary at:

 

http://www.slideshare.net/skirsner/2015-benchmarkingsummary

 

End of interview

 

 

 

Six Ways to Elevate Your Innovation Games

improve innovation strategiesJust got back from speaking at a large conference of retail professionals in Scottsdale, Arizona. Bricks and mortar retailers these days are quickly becoming the proverbial “canary in the coal mine,” as economic and consumer trends hit them first. The death of Radio Shack, Borders, Comp USA, Blockbuster, A&P and others has energized this sector, and given rise to the notion that innovation is everybody’s business, not just the C-Suite.

For retailers, and for a growing number of industries, disruption is no longer a theoretical construct. It’s the reality that confronts each of us with a choice every single day: do I busy myself fighting fires and trying to be efficient? Or do I try to add value, and come up with ideas and innovation strategies that help my organization fight back and win in the marketplace?

The retailers in Scottsdale chose to elevate their game. Here are six ways to elevate yours:

  1. Embrace the Opportunity Mindset. I once asked interior designer Pamela Armstrong about her innovation process. “First of all,” she explained, “it’s not separate from my life. I don’t set aside an hour to be innovative. [innovation] is at the core of who I am, and wonder is ever present in my mind. I am interested in everything, especially people: who they are, what fascinates them, why they choose their professions, how they view the world, what colors stimulate their thoughts and creativity.”                                                                                           When I asked how she brings out the creative best in the teams she works with she responded: “On my projects, I want every contributor to be looking at how what [they] do affects what the next person will do, and the overall look/feel/functionality of the project. I don’t want to work with a tile setter who just comes in and sets tile in a pattern I drew. I want the tile setter who sees the pattern and point out that if we center on the grout line rather than the middle of the tile we will have fewer cuts and a more balanced design.”                                                                  You and I may not work in an officially “creative” profession like design, but we can still invite creativity into everything we do. To add value, differentiate our solutions, and drive growth. What’s your innovation process? How do you shift out of burnout and distraction mode and into Opportunity Mode, where ideas start flying like popcorn on a red hot skillet.
  1. Inspect your idea factory regularly. Your “to do” list is a snapshot of the ideas you’re working on right now. What does your list reveal? Are the ideas mostly related to your basic functional duties, or are there also ideas related to strategic goals and opportunities and projects? How many truly strategic ideas are on that list, versus tactical? Everybody must execute routine details. But if you go for days and days running like the hamster on the wheel, your idea factory is greatly in need of retooling. It’s not that you aren’t generating ideas– you almost certainly are. The problem is that you aren’t capturing them, honoring them when they occur, and sifting and selecting the ones you want to act on and implementing them in systematic fashion.
  1. Eliminate Distraction. Research shows that we now check our devices 78 times a day, and we are interrupted – or interrupt ourselves — every three minutes. All this at the same time when my own informal surveys of audiences indicate we need three to four times as many ideas to meet the challenge of industry disruption, technological upheaval, and global competition. The Information Overload Research Group, a nonprofit consortium of business professionals, estimates that knowledge workers waste 25 percent of their time dealing with huge and growing data streams coming at them.                                                                     Most managers have absolutely no strategy for managing the deluge. They are over-scheduled, over-stimulated, over-connected and overwhelmed. They become reactors, grazers, skimmers, multi-taskers. Yet, we know from research that breakthroughs come from diving deep, questioning assumptions, parsing problems, probing possibilities … and sticking with it. The first assumption that must be assaulted is the one that says we cannot carve out quality time to think. Eliminating distraction during certain periods is essential for success in the digital age.
  1. Download your Ideas. Try this for a week: Wherever you go, wherever you are, use your smart phone, or a simple notepad to jot down ideas as they occur. The mind is a fantastic instrument for coming up with ideas. But it’s a poor storage device! Remember: if you’re not writing your ideas down, you’re not serious.
  1. Host All Things Considered Meetings. Filippo Passerini leads the IT function at Proctor & Gamble, and he and his team figured out a way to save the company a billion dollars a year thru an initiative called Shared Services. I asked Filippo how he came up with the idea. He told me that he and three key colleagues would often get together after working hours and just “chew the fat.” Talk about ideas. Talk about what trends they were seeing. Talk about how to translate the company’s innovation focus into the IT realm. Who do you get stimulated by when you’re just kicking around ideas, without an agenda, or deadlines or pressure?
  1. Identify when and where you do your best thinking. Ask yourself: Where are you when you generate your best ideas? When, where, and at what time of day do you most often do your best thinking? What do you do to get yourself unstuck when facing a vexing problem? How did you inject creativity to handle a task in the last 24 hours? How often do you come up with solutions that others compliment you on as being “creative”? Jot down your responses so that you fully explore these issues. If you take time to think about these questions and their answers, you’ll gain further insight into your own ways of fortifying your idea factory. The next step is to go to that space when you want to do some serious cogitating. If there’s a time of day when you feel you do your most creative thinking, try to reserve it for yourself and use it to its fullest. If there’s a particular spot that says “idea space” to you—your study or the bathtub or an unused conference room—set aside time to use that space, alone and free of noise and distraction. Check out places outside your home, too: a park, a library, the neighborhood Starbucks.

The retailers in Scottsdale are fired up. How about you? If it’s been awhile since you felt the joy of being in Opportunity Mode, take action today. And use this list to spark new approaches. We all need to fortify our Idea Factory now and then.

The Five Hottest Innovation Trends

Risk-Taking-and-Happiness-325x217The start up craze. 3-D printing. Uber, AirBNB and the unstoppable On Demand Economy. We first reported on these and other driving forces of change in the inaugural issue of InnovationTrends (May, 2014). In this month’s issue, we revisit these trends and reflect on how rapidly they are developing. Only a year ago, we were just hearing about the “sharing economy” (since renamed the On Demand Economy), today the mainstream media reports on these trends constantly. Check out these top five I-Trends:

1. The Start Up Trend Goes Global.

On recent swings thru the Middle East and Africa, I heard less about turmoil in the region, and often about the increasing number of startups sprouting. Today’s breed of entrepreneurs are discovering that funding is available, customers are receptive, technology is cheap and scalable, and many a market’s incumbent players are vulnerable to new business models that offer fresh solutions. The secret is to have a good idea, and the old adage “find a need and fill it” still applies. Winning entrepreneurs seek to solve problems people have that they aren’t solving particularly well, and are open to change.  Serial entrepreneur Richard Barton, whose startups include Zillow, Expedia, Glassdoor and others, says he gets ideas by repeatedly asking a simple question: “what piece of marketplace information do people crave and don’t have?” In sum: the startup boom, and lower fuel costs, is providing much needed oxygen to the still-strained global economy and will likely spread (Iran’s startup culture may lead the growth). The impact on the corporate world is clear: better disrupt yourself or someone else will.

  1. Additive Manufacturing is Nearing a Tipping Point.

According to Gartner, a technology becomes mainstream when adoption levels reach 20 percent, which is approximately where this nascent industry is today. As predicted in InnovationTrends May 2014, practical uses of 3-D printing are exploding, as more and more creative people use the new devices to solve problems and create opportunities. NASA uses 3-DP to rapidly prototype at lower cost. Stage set designers on Broadway are using 3-DP to churn out sample sets overnight. Ships at sea are using 3-DP printers to make replacement parts, doing away with costly backup inventory. Charities worldwide are creating 3D-printed prosthetics for those who could never afford them otherwise. UPS is building on its existing third party logistics business to add 3-D printing mini-factories for just in time deliveries. But the real tipping point comes when failure to adapt to the Additive Trend starts becoming a necessity to survival. According to Dartmouth’s Richard D’Aveni, (Harvard Business Review, May, 2015), “The U.S. hearing aid industry converted to 100 percent additive manufacturing in less than 500 days, and not one company that stuck to traditional manufacturing methods survived.”

While 3-DP does not provide economies of scale achieved thru massive production runs, its differentiating factors are increased flexibility and the ability to customize. Because each unit is built independently, it can easily be modified to suit unique needs or, more broadly, to accommodate improvements or changing customer requirements. The larger impact on the entire manufacturing sector is also becoming clear. With wages in China rising and the cost of energy diminishing, Boston Consulting Group calculates the average cost of manufacturing in the U.S. is now only five percent higher than in China. By 2018, BCG sees U.S. manufacturing costs dropping below China’s.

  1. The On-Demand Economy is Unstoppable.

As I write this, the headline on this morning’s New York Times is “Uber Valued at $50 billion.” Meanwhile, Uber’s twin brother, AirBNB has overtaken Hilton and InterContinental Hotels to become the world’s largest lodging chain, without owning a single room. Since our inaugural issue, where we alerted readers to the “sharing economy” (since renamed the On-Demand Economy), the rise of app-based startups has become a huge global force of disruption and possibility, depending on where you sit. On the one hand, On-Demand businesses enable regular people to make money on their own terms, often with assets they already own. “Is the On Demand Economy taking workers for a ride,” as Time’s Katy Steinmetz asks, as hundreds of thousands of new drivers sign on every month. The ability of these new business models to disrupt incumbent businesses at the local level, has produced violent protests and new regulation from Portland to Paris. Thinking ahead, it’s easy to see how more and more traditional businesses will be upended by competitors from outside their industry, and outside their geographic area. TaskRabbit is a threat to the temporary staffing industry. RelayRides or Sidecar, which allow consumers to rent a car from a private citizen, pose a threat to Hertz and Avis. While regulators will need to establish new protections, the trend seems almost inexorable. Its cumulative effect will have a major impact on cities, product manufacturers and service providers.

  1. The Algorithmic Economy Approaches.

Ninety percent of the world’s data was created in just the last two years alone but here’s the rub: most of that data is still unstructured, meaning it’s not fully digitized and therefore not accessible. But this is changing – and fast! Big Data is the technology that allows organizations to analyze more information from more sources in more ways than ever before. Combine this access to mega-data with the ever-growing advancement of mathematical algorithms (and related software) and you get incredible new capabilities: Increased power to predict patterns in consumer behavior; the power to predict the maintenance requirements and operating lifetimes of industrial machinery; the ability of machines that notify you in advance that they need attention. Companies that embrace Big Data will be able to make sense of the information at their fingertips, and derive new strategic benefits. New ways to cut costs, increase sales, personalize product offerings, and enter new markets. Since 2005, IBM has invested $24 billion in their data analytics business, including $17 billion in 30 acquisitions. And they are hardly alone. Key question: what are you doing to exploit the Algorithmic Economy in your organization?

 

  1. The Crowd is the Future.

Crowdsourcing will continue to gain clout in large organizations. Denmark-based Lego Toys uses crowdsourcing to inspire ideas from fans that its own 180 designers might not have ever thought of. Submissions that receive 10,000 votes from site visitors are then vetted by Lego reviewers. And fans whose models are chosen for production receive one percent of their toy’s revenue. Thanks to the internet and social media, crowdsourcing is one of the hottest new methods of tapping customers (and the wider public’s) knowledge, creativity and insight to further your company’s goals. Other organizations are crowd-sourcing for solutions to vexing technical problems or to discover winning algorithms (Netflix), while snack giant Lay’s, a division of Frito Lay, asks the crowd to suggest new chip flavors or even whole snack categories via its crowdsourcing website. To see the front lines of this revolutionary trend visit Clorox Connects and you’ll see dozens of ideas submitted by Clorox consumers. Fact is, we’ve been crowdsourcing since the time of the Romans. What’s different today is the scale and scope of this new method of interacting with the wider world, and this dynamic will only grow in the years ahead.

Clearly, you can look at these five trends and conclude: they don’t apply to me. But that’s dangerous. The driving necessity is to continue to upgrade and refine the way you practice innovation, and this means looking for ways to ride the energy of emerging trends into a more prosperous future. Hopefully this recap of these five innovation trends will spur you to take action, and I wish you much success.

 

 

 

 

 

Four Ways to Make Yourself Indispensable

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ahead-of-the-curve2Honk if this sounds like you: You’re rushing from meeting to meeting putting out fires. You’re multi-tasking, texting, and counting the days till vacation. Lately you’re noticing a trend: job automation. Airport ticket counters staffed by fewer and fewer agents. Parking garage attendants replaced by self-pay machines. Once hot jobs like data center manager disappearing into The Cloud. Could your job be next? Read on for my four ways to make yourself indispensable

Call it the Great Restructuring — a megatrend that’s gaining momentum by the day. From accountants to X-ray technicians to lawyers, jobs are vaporizing, replaced by software, algorithms and robots. By 2025, predicts McKinsey Research, 140 million knowledge worker jobs could be replaced by office automation, and 75 million jobs by robots. What can you do, not just to ensure your employment, but your employability in the years ahead?

As a futurist and innovation expert, I approach the automation challenge much the same way that I approach industry disruption. If you are willing to embrace its imperatives, this brave new world of work can become your opportunity. If you’re willing to study up on the issue, and take action daily to adapt, you’ll ride this wave into the future. Here are four ways to ensure your viability going forward:

1. Do an assessment. If your job can be “routinized,” it’s probably going to disappear. Begin by asking yourself some questions: How can this trend be approached with an Opportunity Mindset rather than a Defeatist Mindset? What are other forward-thinkers doing to make this trend their friend? And what will the workplace look like in 10 years and what might you do starting now to prepare?

According to much-cited MIT research, if a job involves learning a set of logical rules or a statistical model that you apply to task after task, day after day, that job is ripe for replacement. What jobs will be left, in high demand even? In my work with “high potential” managers in companies like American Express, Johnson & Johnson, IBM, Cisco and others, I observe the qualities that are much needed, but that most companies are desperate for.

After interviewing 43 standout managers and contributors from a variety of organizations for the book Innovation is Everybody’s Business, I have identified what it takes to be successful in the emerging non-routine world. These contributors don’t just master the functional and technical skills that got them hired in the first place. They go beyond. They develop subtle aptitudes and abilities that enable them to get new things done. I call them Innovation Skills, or I-Skills for short. For example, can you lead a cross-functional team tasked with doing something the organization has never done before? Can you sell your ideas to superiors, to colleagues, to your reports? Can you challenge assumptions that hold back fresh unfettered thinking? Do you see the big picture? Can you empathize with the end user? To assess your I-Skills, I’ve developed a simple survey that will give you a quick idea of where you stand.

2. No matter what lies ahead, your I-Skills will differentiate you.

While constantly looking for ways to reduce headcount, organizations are in need of people who know how to add value no matter where they’re placed. Paulette, a facilities manager in a large Canadian tech company, described her I-Skills this way:

“A lot of people in this profession think what we do is provide space for people to work in. They leave it there. But it’s really much more: it’s looking at the life cycle management of buildings, looking for greater cost savings and green buildings; it’s finding new and better ways of doing things.”

Whether you’re in facilities management, human resources, manufacturing, or brand management, things are changing so fast that you’re confronted daily with situations you’ve never faced before. So it’s how you deal with them that matters.

3. Developing and deploying your I-Skills daily is the path to not just surviving the next round of layoffs, but to becoming indispensable.

At the moment, if you’re a data scientist, you can write your own ticket. But hot jobs come and go like so many teenage pop stars. What doesn’t come and go is your reputation for having spotted and seized an opportunity that benefited the organization, for critical thinking, for being comfortable with ambiguity, and for completing important projects. Here’s the new reality: employers care less and less about where you worked and even how long you were there, and more about the types of projects you were involved in, and the results you achieved. What did you do to differentiate yourself in that position? What did you do that showed your Opportunity Mindset at work? As one manager expressed it in our interviews: “I’ve got a lot of autonomy in my job and I get to work on some really neat projects. I also get to work with some really smart people who keep me on my toes. It’s something new every day. I never thought I would enjoy work the way I do now.”

4. Lifelong learning is essential to future employability.

What’s your “information diet,” and how is it giving you an early warning system on the future? What articles or books did you read recently that gave you new insights into some important topic? Jobholders a decade hence will encounter and will be asked to solve problems with nothing to guide them, and which have management at least temporarily stymied. We’ll constantly need to do research and master new technology and adapt to ever more rapid changes. Those most likely to succeed will be those who are, by nature or self-discipline, eager and constant lifelong learners, autodidactic, and voracious readers. They will need to teach themselves more than they will be taught. With information at the touch of a smartphone, the valuable and rewarded skill will be to make sense of it all, to connect the dots, to form a point of view, and to be able to communicate clearly, concisely and persuasively.

The Upshot: You have a choice to make everyday. You can continue to do the job you were hired to do and leave it there. You can hope these hurricane-force winds somehow leave you unaffected. Or you can choose to participate in the world of work in a fresh way. I wish you all the best in your journey ahead.

 

Six Essentials to Cultivating an Innovation Culture

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A decade ago, I was invited to coach a group of Nokia’s fast-rising superstars. Thirty-five “high potential” managers flew in to Palo Alto, assessment-3California to network, sample local wines, and focus on innovation. At the time, Nokia seemed unstoppable. Growth was in the double digits. “The company sells five phones every second,” gushed Fast Company in a profile. “Their global market share, 38 percent, is greater than that of their nearest three rivals combined, and boasts a 50 percent share in Western Europe.” What could possibly go wrong? Cultivating an innovation culture is essential to success.

You can imagine my surprise when I surveyed the group beforehand, and discovered a much different culture than the one portrayed by the press. Risk-adverse, top down, capable only of incremental innovation, were frequent comments. “Large corporation syndrome” has set in, one manager reported. Failure is punished here, claimed another.

The biggest surprise came when I asked the class a question. If someone on your team has an idea, what do you want them to do with it? One participant couldn’t hold back. “I’d just tell them to forget about it,” he blurted out with evident frustration. “You’re only going to beat your head against the wall.”

At the time, I brushed off these comments as overly critical. Like everybody else, I assumed Nokia would continue to dominate the mobile market. But two years later, Apple released the iPhone. And Nokia began its spectacular crash. These days, I often use my list of Nokia Innovation Barriers (see below) as a cautionary tale. The company’s growth and strong brand had covered many sins, but did not protect it in the end. Nokia’s engineer-dominant, left-brain, execution-driven culture was no match for a right brain, esthetic and emotion-based attack from a new market entrant (Apple).

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A decade ago, cultivating a culture of innovation was a “nice to do” activity. Today it is becoming a “must do” discipline for organizations that want to be around tomorrow. Here are six essential steps to cultivating an innovation culture:

1. Understand what an innovation culture is, and why it’s essential to work on improving it. Culture refers to the values, unspoken rules and subtle cues that guide people’s behavior and suggests how they should act within your environment to be effective. Culture is heavily influenced by an organization’s leadership. If risk-adverse, just-make-your-numbers behavior is rewarded by leadership, this message cascades to the far reaches of the company. But when a disruption starts to occur, the culture will ignore it or deny its existence until it becomes a full-blown crisis. By then it may be too late. Unless you’re working constantly to improve your culture, it will inevitably veer toward the kinds of behavior that Nokia’s high potentials revealed.

Before you start trying to improve your culture, you must first figure out what behaviors your organization genuinely rewards and sanctions. Then ask: is this the type of behavior that will help us meet the goals we’ve set and the market challenges we face? My strong suggestion is that leadership must spell out the behaviors you want more of, and catch people exhibiting them, and reward them in every way. Reward the mid-manager who emails the chief a disturbing story from the front lines where your product was no longer competitive. Compliment the millennial generation employee who speaks up in the meeting and asks an assumption-assaulting question. Laud the salesperson that rents the truck and drives through the night to personally deliver the customer’s order after a snafu. Reward the receptionist who contributes the most ideas to your Innovation Portal. Share stories that illustrate the desired behaviors, and make these people heroes. Behavior that gets rewarded gets repeated.

2. Put somebody in charge of cultivating the culture. Studies by Booz & Company show that companies with “highly aligned innovation strategies and highly aligned cultures generate 30 percent higher enterprise value growth and 17 percent profit growth.” All well and good, but in most companies, nobody is in charge of creating and maintaining an innovation culture, much less in aligning it with an the organization’s strategy. It is a colossal mistake to assume that the human resources department, just because it is in charge of people, should perform this role. My experience is that they are ill-suited for this role. Instead, I have long advocated a systematic approach to innovation whereby innovation strategy and culture alignment become the responsibility of the firm’s chief innovation officer.

3. Periodically assess the climate for innovation. There are a lot of things a company can do for itself, but understanding your culture’s strengths and weaknesses is not one of them. “There’s a rumor around here that we punished someone for failure,” said the division chief of a major chipmaker. “But we don’t have a clue what they’re talking about.” Surveying employee engagement has become commonplace in recent years, but a workforce can be engaged and still be anti-innovation and risk-adverse. Climate surveys enable you to objectively assess such cultural essentials as: the level of trust people feel towards each other and towards management; amount of collaboration across functions and silos; receptivity to new ideas; availability of resources among other attributes. Pay attention to gaps that exist between where people rate your company on an attribute, and how important they judge that trait to be. And make sure to contrast your company’s results with how a sample of other innovation Best Practice companies perform on these attributes before you seriously start thinking of launching a company-wide innovation initiative. The value of periodic assessment is that it gives you an objective pulse of how your people are feeling about the climate for innovation today, and enables you to gauge progress in your journey to cultivate a more open climate.

4. Make innovation a part of everybody’s job. Until recently, innovation was considered the responsibility of the R&D department, new product development, or the marketing team. Few companies included mention of creative initiative when assessing individual performance. Today more and more firms expect employees to operate from the principle that innovation is not what you do after you get your work done, it’s how you approach your work day-to-day. There’s growing recognition that a firm’s next breakthrough might arise from the supply chain arena, from a new manufacturing method, from entering a new market or championing a new business model. Progressive companies are training their high potential contributors not only to meet their numbers and be operationally excellent, but in the mindset, skillset and toolset of innovation. Some are even creating early warning systems to apprise them of asymmetrical threats such as Nokia faced. In our two day master classes for standout managers, topics include: How to spot opportunities in changing customer requirements; disrupt or be disrupted; how to lead change initiatives: how to sell new ideas up, down and sideways; and how to set expectations in the case of high-risk ventures or business models. Experience in this realm is becoming the biggest resume-builder, rather than avoiding high profile but “risky” projects.

5. Incentivize and reward broad-based innovative thinking. Why would anybody in their right mind volunteer to work extra hard to bring an idea to life if the result might be getting fired if things don’t work out as planned? The risks must always be born by the organization, and not the individuals involved. My experience is that in the vast majority of organizations there are abundant disincentives, but few incentives strong enough to encourage people to take risks. Recognition via salary increases and promotions are not usually enough to change behavior day to day. To change behavior, change the rewards, dinner for two to a nice restaurant, a bit of time off after completion of a major task, a handwritten note from the chief.

6. Improve the work environment. Innovate solutions to things in the office that waste people’s time. Eliminate policies and procedures that annoy people. Pay attention to enhancing the physical environment. Install white boards in all conference rooms. Hold meetings to exchange information, and brainstorming sessions to surface new possibilities. Set the example. Seek constructive feedback on your performance from the people who report to you. Ask continuously: how can I improve? Do you feel I am listening to you? Focus on improving communication skills. Change meetings by encouraging people to ask different questions. Invite people to think big. Say something like, “Guys, I think we’re getting in the weeds here. Reframe the question. During one brainstorming session with a client, the question “how can we increase productivity” got few responses. But when the question was changed to: “how can we make your job easier” ideas poured forth. If one of your top barriers is “lack of time to think” plan a “No Meetings Friday” and invite people to use the day to think up new ideas. Give out an award for the best ideas received.

 

 

 

Are You Ready for the Millennial Majority?

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If you’re wondering why so much talk lately has been about Millennials, it may be because they’ve just become the majority of the American workforce. It’s true. The offspring of the “forever young” Boomers are taking over. The torch has been passed. There’s no going back. And over the next 10 years, they’ll completely transform the economy by dent of their purchasing power. The question is: will you and your organization be ready to profit from this tectonic demographic shift? What are you doing now to anticipate their unique wants and needs as both employees and customers?

Readers of this newsletter know that our focus is on tracking the trends. Frankly, they don’t get any bigger than this one. Our goal is to get you “thinking ahead of the curve” so that you are positioned to seize the opportunities in change. What we discovered when turning our sights on this fast-rising age wave (ages 19 to 35) was that our perceptions were riddled with clichés rather than fresh, actionable insights. So we poured over numerous surveys, read a dozen articles, and soon became … overwhelmed. Recovering, we set out to sketch a composite portrait of this 92 million-member cohort that’s sometimes called Generation Y. Use the six observations below to anticipate where this demographic megatrend may be headed, and what you can do to prepare:

1. Millennials’ early life experiences have left them singed but surprisingly optimistic. For the demographic cohort born between 1980 and 1996, the Global Financial Crisis was a generation shaping event. Nobody saw it coming, least of all the young. But it fomented a somber transition into adulthood. To afford college, Millennials piled up unprecedented levels of debt ($28,400), only to find “not hiring” signs aplenty upon graduation. Many were forced to move back home with their parents and take minimum wage jobs. Only now is this beginning to change as the economy improves (four million new jobs were created in 2014), hiring continues, and confidence returns. What has been the psychic toll on Millennials? Pollsters are discovering surprising resilience and optimism. Pew Research’s study found almost half of Millennials think America’s best days are ahead of it. They are surprisingly confident about their own economic futures. Nine in 10 believe that “I’m going to eventually have enough money.” Collectively, the studies appear to indicate that, despite the economic blindside, Millennials still want to achieve the American Dream. The economic dislocation of this decade has not put limitations on their future visions. Yes, there will likely be an even greater divide between the hard-charging, risk-taking, tech-savvy members of this generation, and the entitled, immobilized minority that have returned home perhaps permanently to live with parents. But for most, there’s a quiet recognition that “if it’s going to be, it’s up to me” and a dogged determination to make it in what is being called the New Normal.

2. The most rewarded members of the Millennial Generation will be those who embrace lifelong learning. In 2012, for the first time ever, one third of the nation’s 25 to 29 year olds had completed at least a bachelor’s degree. Four in ten had at least some college. Yet Millennials realize that they haven’t gotten much bang for their educational buck. That a college education today has a short shelf life. Outside of science and math, the typical education has woefully underprepared graduates for the world that Millennials discovered post-college. Every day in the workplace, Millennials encounter and are asked to solve problems with no precedent, and which have management stymied. They constantly need to do research and master new technology. Millennials most likely to succeed will be those who are, by nature or self-discipline, eager and constant lifelong learners, autodidactic, voracious readers. They will need to teach themselves more than they will be taught. With information at the touch of a smartphone, the biggest skill will be to make sense of it all, to connect the dots, to form a point of view, and to be able to communicate clearly, concisely and persuasively.

3. Millennials are not becoming entrepreneurs in record numbers. But they expect to in the future. Contrary to popular impression, the share of people under age 30 who own private businesses has reached a 24 year low, according to data compiled by the Wall Street Journal from recently released Federal Reserve data. Only 3.6 percent of households headed by adults under 30 owned stakes in private companies, compared to 10.6 percent in 1989, when the Fed began collecting such data. Researchers aren’t sure what’s going on. One explanation is a total surprise: that Millennials have a low tolerance for risk. But think about it: with $28,400 in debt hanging over them, no wonder fewer Millennials are starting companies. Looking ahead, however, Millennials can be expected to do startups, and this trend may be only temporary.

4. Millennial purchasing power will transform the economy in big and little ways. In ten years, visualize Millennials zipping around in driverless cars, while they text, chat with friends and colleagues in distant places, and complete projects at work. Far fetched? Hardly. With millions of the oldest members of Generation Y now in their 30s, we no longer have to speculate on what they will want in terms of products and services. Take housing, for instance. Here the common assumption was that Millennials would opt to remain downtown dwellers, and renters. A just released study from the National Association of Home Builders finds just the opposite to be true. Seventy five percent of Millennials say they eventually want to live in single-family homes, and 66 percent of them prefer to live in the suburbs. Only 10 percent say they want to stay in the central city. Among homebuilders venturing back into a devastated market, Millennials’ preferences are already being felt: according to the study, homes being built for Millennials are slightly smaller, laundry rooms have become essential, and built in home technology and energy saving devices are becoming de rigueur. Millennials are eschewing such features as high-end outdoor kitchens, two-story foyers and family rooms. Hint: Look to Millennials to surprise every industry with new and unexpected preferences and requirements, including yours.

5. Millennials will transform the world of work by joining the growing Freelance Economy. Whether out of necessity or by choice, many Millennials will not ever hold regular employment. They’ll drive for Uber, deliver for Reddit, share space on airbnb, or work as temps or contract labor on an as needed basis for corporations. By 2020, according to a study by Sprint, these “guns for hire” will comprise 40 percent of the US workforce or about 60 million people, up from 42.6 million in 2006. And what are the implications? “A disturbing truth about the new economy is that it’s all on you,” observes economist Rana Foroohar in Time Magazine. “People who are smart, well-educated and entrepreneurial may well do better in this paradigm.” What about those who aren’t? Can a solid work ethic be developed in individuals who came from tumultuous or entitled upbringings? Again, this generation’s past is not its potential but the jury is still out. For employers, the immediate impact is cost savings from tighter and more flexible staffing. But clearly companies will have to work harder at engaging these temporary and contract workers, in a world where brainpower, creativity and customer empathy are key differentiators.

6. Millennials can be catalysts for innovation, but only if they are engaged. Until 2015, Millennials have been intimidated by the dearth of jobs and have kept a low profile, with the exception being a highly publicized minority employed in the tech sector. These young workers have been pampered with game rooms, free food, and other benefits. But as competition heats up for the most talented and skilled and emotionally intelligent members of Generation Y, the next three to five years will be dramatically different from the post Great Recession era (2009 thru 2014). Employers will need to understand what Millennials want from work, and what they need to be engaged. Here, Deloitte’s annual surveys of Millennials are instructive. Seventy eight percent of Generation Y were influenced by how innovative a company was when deciding if they wanted to work there, but most say their current employer does not encourage them to think creatively. They want constant and immediate feedback, and coaching to improve performance. They want to work independently thru digital means in the future. They want the company they work to have a positive impact on society. They are used to being ranked and measured in endless tests and competitions, so they want metrics: they are accustomed to being evaluated numerically and objectively. 

Concluding Thoughts: The arrival of the Millennial Majority can be looked at as business as usual, but this is dangerous. The Boomer dominant society has been slow to notice the potential of this game-changing generation. But now that the economy is improving, and millions of Millennials enter their peak earning years, vast changes are afoot. What is clear is that innovative thinking must take place at every level of the organization to adapt to and anticipate the needs and desires of these new citizens, consumer, colleagues and co-workers. My strong suggestion is that you make it a priority to study up on this rising generation. If your company lags in hiring Millennials, take a look at why. Rethink how you hire and recruit more Millennials. The innovators attitude is to welcome change instead of trying to resist it, to use it as a stepping stone, instead of a stumbling block. And by riding the wave of change, by helping to shape it. I hope that you are ready for the Millennial Majority, and I wish you all the best.

Reflections From an Innovation Road Warrior

TrainI am reporting to you this month from Marrakech, Morocco, where I just had the honor of keynoting a huge phosphates conference that attracted delegates from 47 countries. Turns out that Morocco controls 80 percent of the world’s phosphate (who knew?), and state-owned OCP, the event’s sponsor, wants to encourage innovation in the sustainable use of phosphates. If used improperly in fertilizers, phosphates can turn rivers green with algae, and wreak all kinds of environmental damage.

The value of conferences like this one is in how they can speed up the pace of innovation. Thirteen hundred researchers, producers, journalists, and industry partners gathered to exchange ideas in a vital area – sustainable agriculture — that has seen surprisingly little of it to date. The efforts of these collaborators will be to help farmers in developing countries better understand their soil, cut wasteful fertilizer and pesticide use, and increase crop yields. They need to hurry up. Phosphates are essential in the growing of food, and the world needs to produce 70 percent more food by 2050, according to the U.N.

One promising area is Big Data. “[Big] data is a tool for driving the next wave of productivity gains in agriculture,” Andy Wheeler, general partner at Google Ventures, which is investing in the sector, told the Wall Street Journal. But the question is: can the rate of innovation be increased in time?

Over the past eight weeks, I’ve shared my strategies for accelerating the pace of innovation at over a dozen conferences and private company meetings, from Kuwait to Little Rock, Vancouver to Los Angeles, Jeddah to Washington D.C., Muscat to Monterey. The challenges each group faces vary greatly. But dig deeper into the issues, and you see that everyone is facing multiple Industrial Revolution-sized challenges at once. For some, disruption is upon them. For others, things seem to be at a tipping point. What becomes evident the more groups you study up on is that the way we go about innovation is inadequate to the growing need to produce it. The way we approach our problems is the problem.

We thought leaders and practitioners of innovation often congratulate ourselves on the power of our tools and techniques. We are sure that “innovation” is not a fad like Business Process Reengineering or Six Sigma, but a permanent change in the way modern organizations operate. Out here on the speaking circuit, you can’t help notice that discussion of innovation process and innovation culture is falling on fresh ears. Indeed, my impression about the way innovation is practiced — both individually and collectively – by most organizations has barely progressed since I wrote Driving Growth Through Innovation in 2003, calling for companies to embrace “systematic innovation, from anywhere and everywhere in the organization.”

One way I come to this impression is because we do confidential client surveys, whether industry trade group or corporation, that give us candid insights on actual practices. A frequent question I receive from audiences is, “how do you define innovation?” This tells me that that person is grappling with an unfamiliar subject.

Most business people (not to mention the general public) still equate innovation with basic scientific research or corporate R&D. Most think of it as coming from afar – Silicon Valley, say, but certainly not from inside ourselves first, and from multi-functional teams and organizations that constantly tweak the way the manage ideas. People love it when I tell them, “Innovation is not what you do after you get your work done, it is how you do your work.”

The biggest challenge facing the Innovation Movement is not better tools. It’s getting people to use the tools that have been created: whether lateral thinking, design thinking, or building a more robust back end of innovation. We are living in a time when technology diffuses very rapidly, but better ways of managing, leading and speeding up the pace of innovation diffuse much too slowly. At a time when working managers and CEOs are contending with vast changes in customer requirements, technology and market conditions, the Innovation Movement needs to assess where we really are and what we have achieved. I am singularly unimpressed with the way most business schools approach the teaching of innovation.

William McCullough, the great biographer, has just produced a new masterpiece called simply The Wright Brothers. He appeared on Fareed Zakaria’s program GPS the other day, and was asked what lessons he took away from studying these Dayton, Ohio brothers who gave the world flight.

McCullough’s response got me thinking: “That problems can be solved by people who are determined to use their brains to the utmost, “ said McCullough, “and not let failure or disappointment take the heart out of their efforts. These were men of character. They never said anything negative about their rivals. They had no money, no inside track. They worked hard and they had faith that they could accomplish flight.”

Perhaps, when all is said and done, innovation comes down to force of will, more than anything else.

Success Secrets of Leading Internal Startups

Screen Shot 2015-03-09 at 2.26.29 PMLately, I’m hearing about more and more organizations establishing internal startups — separate units to build new business models, pursue new markets, create whole new divisions. 3M has one. General Mills does too. Because you’re a reader of InnovationTrends, chances are good that you could be asked to lead one. Are you ready? Earlier this week I explored the finer points of leading a startup with Pam Moret, the driving force behind brightpeak financial, a startup that provides affordable financial services to young Christian families in the United States. (I’m looking forward to interviewing Pam on stage at an industry conference next month in Washington, D.C.) When the call came, Pam was ready.

In 2011, Moret was senior vice president for strategic development at Thrivent Financial, a Minneapolis, MN based Fortune 500 affinity organization and one of the largest insurance companies in the United States. In 2011, CEO Brad Hewett asked Moret to set up a new division to pursue the Generation X and Millennial financial services market, which was grossly underserved by the existing industry. In addition, the Global Financial Crisis had made some young people very wary of the entire financial services industry.

Pam felt ready to take on the challenge. During her 30 year corporate career she’d acquired advanced innovation skills through her many and varied roles. Individuals with I-Skills are in demand today as never before, as more and more industries face sudden changes in customer behavior and there is a need to rethink no longer viable business models. Here’s a look at some essential qualifications that you’ll need, to insure success in the new venture assignment.

 

  1. Broad-based experience and willingness to take risks. A self-described “maverick personality,” Moret had always been eager to take on new challenges. She’d built a reputation as a player who delivered what she promised to deliver, and was willing to take on new challenges. A licensed attorney, she had risen to become CEO of IDS Life Insurance, and SVP for the retail financial product lines at American Express Financial Advisors, a large subsidiary of American Express. Moret also held a variety of positions at American Express in products, marketing, public affairs and legal. The varied background and solid track record of execution gave her a unique perspective, but something more: the fortitude to persevere through setbacks.“This is by far the most intense assignment I’ve ever taken on,” Moret told me in a phone interview. Her reputation for “getting new things done” preceded her. “People find me direct, and even demanding. This is a fast-paced, mission-oriented environment and not the slow-paced, risk-averse environment in many larger organizations. Colleagues apparently respect Pam for the risks she is willing to take on behalf of the organization and its future.

 

  1. Proven ability to envision and implement an innovative strategy. Profit margins are thin when you are selling small, simple products to a younger market. While Thrivent Financial continues to be very successful selling to pre-retired and retired Christian families, the business model is too expensive and person to person selling was not being embraced by younger generation couples. Other for-profit carriers, such as Metlife and State Farm, had set up special units to target the millennial market and shut down their operations. “We couldn’t employ a copycat strategy,” says Moret. “We had to start from scratch and test and learn as we went.” brightpeak embarked on an omni-channel strategy, with a heavy digital emphasis, something few life insurers have done.

 

  1. The clout to negotiate structure and budget first before taking on the role. Before she accepted the new assignment, Moret obtained assurances from CEO Hewett that he would have her back in what promised to be an arduous journey. She gained commitment for a substantial start-up budget and three years to aggressively test and learn, hoping to find a new model. She insisted on setting up operations in a building several miles from Thrivent, rather than imbed her fledgling team within headquarters. Why? “Because the core organization can kill you with ‘kindness and help’,” Moret explained. “We even insisted on having separate IT,” which was the first of several battles she and her staffers had to fight in order to establish an entrepreneurial culture in the brightpeak unit. Next she insisted on recruiting her own team, with most staffers coming from outside Thrivent, and in some cases from outside the insurance industry entirely.   “We needed ambidextrous people with a strong commitment to our mission and a willingness to try and fail. Many new employees had previously worked in start-ups or small companies.” For the first year the team was small– fewer than 10 people.

 

  1. Willingness to build ties to the main organization. The unwavering support of her CEO, as well as Pam’s well-honed innovation skills, were critical to launching the new unit. And while she insisted on building a new culture away from headquarters, she also knew she needed to maintain ties and relationships with the core business. Pam created a new governance structure with CEO Hewett and several of her senior management colleagues on an internal board. Regularly scheduled meetings, which were open and transparent about successes and failures, helped build support. Startup champions realize they must build select partnerships with the main organization. Moret calls these “tethers.” This means selective support from key partners of the organization: HR, Finance, Facilities and the like. Yet the new culture within brightpeak also had to be non-hierarchical, risk tolerant, candid, lively — in short all the things that the main company culture is not.

 

  1. Willingness to study and examine other start-up examples, no matter how much you think you know. For several months, Moret and her founding team researched and talked with other big company startup practitioners to hear their key lessons learned. Among them: hire with great care, because the kinds of people who tend to be successful in big corporate environments are often not like those of a start-up. Three years on, the team has grown to 65, and is still “ever so careful about every person we bring on.” Ongoing study of other start-ups ensures you keep an outside perspective and it’s worthwhile to study successes and failures. Communicating with other innovation champions is motivating, in and of itself, and it reminds you of the necessity of not compromising on critical structural issues.

 

  1. An understanding that the corporate anti-bodies will sooner or later attack your unit. It’s nothing personal, you understand, but it is almost a certainty that “corporate antibodies” will arise and attack your unit. They may question your lack of results, funding, strategy, business model, and most hurtful of all, your leadership. Because she was both experienced and alert, Moret began anticipating this day would come from the very beginning. Pam worked closely with Hewett, who had led a start-up himself in a former position. His active coaching was critical and he ran interference when needed. Setting up the unit away from corporate headquarters was “the best money we ever spent,” says Pam. Units inside headquarters are co-opted from the beginning with “this is how we do the business here” thinking. As every veteran of big company startups will attest, there are fundamental incompatibilities between the core business and the new business and there always will be. Reason: organizations are not designed for innovation. Quite the contrary, they are designed to stamp out variance and execute operationally. Humans being humans will err on the side of safety and conservatism, and will undermine – even with the best of intentions – anything new and risky.

 

  1. Willingness to stay the course after repeated “failure.” In the Innovation field we often romanticize about how exciting it is to be working on a project where we get to be part of something new. And indeed it is. But what we often don’t talk enough about are the dark days, the setbacks, the emotional and physical toll. Instead, we fast forward to the beer bust celebrations of victory. “When you’re experimenting and something you think will work doesn’t, you feel crushed,” Moret explained. Innovation leadership, similar perhaps to any battlefield, requires self control and what Moret terms “actively managing your own emotional competence.”

 

  1. Readiness to enjoy the rewards of success? “We’re now at the hockey stick stage where we’re starting to increase the number of customers,” Moret told me. “Heavens knows we have a long ways to go, but we have begun a path to future rapid growth while not neglecting future innovation.” The first phase success now gives the unit a new leadership and business challenge, how to run what is essentially a small business while ensuring they have the budget and resources to innovate. Moret calls it “a tough new balancing act” but one the team can handle. “The core business has begun to accept us as something worthwhile,” Pam says. “We are no longer seen as simply ‘wacky’.” When I ask Pam if she’d do it all over again or take a pass, she pondered the question silently for a moment before answering. “My dad gave me a book called The Disputed Passage, and in it I came across a quotation from Walt Whitman that has stuck with me,” she said.  “Have you learned lessons only of those who admired you, and were tender with you, and stood aside for you? Have you not learned great lessons from those who braced themselves against you, and disputed the passage with you?”

In Washington next month with Pam on my Intelligent Talk Show, I’m going to ask her that question again.

Four Key Perspectives That Will Transform the Way You Innovate

UntitledBy Rowan Gibson

How do great innovators like Steve Jobs, Jeff Bezos, or Richard Branson come up with their big, breakthrough ideas? How do they manage to spot the opportunities for industry revolution that everyone else seems to miss? What is it that enables them to imagine radically new or different ways of doing things that will fundamentally change customer expectations and behaviors, or break long-established industry paradigms, or shift the entire basis for competitive advantage? Where do they get the brilliant flashes of inspiration that lead them to their game-changing discoveries?

This is the essential question at the heart of my new book “The Four Lenses of Innovation: A Power Tool For Creative Thinking.” And the answer might surprise you. The conventional view has long been that these remarkable people are simply creative geniuses and business visionaries – they are just “wired” differently from the rest of us. For them, innovation and wealth creation seem to come naturally, almost “reflexively.” It’s as if they were somehow born with magical skills that allow them to think and act in ways that mere mortals, or ordinary companies, cannot possibly hope to match.

But what if that’s not true? What if we’re all capable of seeing the world like top innovators do? What if every single one of us has the innate mental capacity for idea generation and imaginative problem-solving, and all we have to do is learn how to unlock our own inner genius?

Let’s be clear about one thing: some individuals, either thanks to nature or nurture (or the fortunate interaction of both), have been able to develop their creative and entrepreneurial skills to a much higher degree than others. But that doesn’t mean that these skills are forbidden to the rest of us. Just as you can learn to cook or to play the piano, you can learn to enhance your ability to come up with innovative ideas.

The first step is to understand how innovators actually think. One of the things that always surprises me when I read about after-the-fact cases of successful innovation in books or articles, is that the authors never seem to go back and try to unpack the thinking processes that actually led the innovators to their breakthroughs. They don’t ask “What was this person thinking? How did he or she manage to discover some critical insight that seemed invisible to others? What was different about the innovator’s angle of view?”

In my new book, I examine lots of inspiring examples of business innovation in an attempt to open up that mysterious “black box” we call the human mind and take a good look at how the creative process works. Because if we can truly understand the perspectives or thinking patterns that are common to all of these cases, then perhaps there’s a chance we can reverse-engineer the mind of the innovator. Maybe we can take these thinking processes and turn them into a systematic methodology for generating radically innovative ideas and opportunities.

That’s the basic premise of the book, and here’s what I discovered: innovators don’t come to their breakthrough ideas simply by using some inherent, individual brilliance. They do it by looking at the world from a completely fresh perspective. In fact, I have been able to identify four specific perspectives or thinking patterns that are characteristic of radical innovators:

 

  1. Challenging Orthodoxies Innovators question and overturn deeply entrenched beliefs and common assumptions, exploring new and highly unconventional answers. They never accept that there is only one “right” way of doing things inside a company or across an industry. Outstanding examples would be Steve Jobs, Nicolas Hayek, Elon Musk, Michael Dell, Herb Kelleher, Ingvar Kamprad, Charles Schwab, Reed Hastings, James Dyson, and Jeff Rubin.

 

  1. Harnessing Trends Innovators understand change. The pay close attention to nascent trends and discontinuities that have the potential to profoundly impact the future of an industry, or that could be harnessed to substantially alter the rules of the game. Examples include Bill Gates, John Mackey, Jeff Bezos, Steve Jobs, Howard Schultz, Reed Hastings, and Phil Knight.

 

  1. Leveraging Resources Innovators look at a company not as a set of business units but as a collection of core competencies and strategic assets that can potentially be repurposed, redeployed, and recombined to create new growth opportunities. Consider Walt Disney, Richard Branson, Larry Page and Sergey Brin, Steve Jobs, Jeff Bezos, Carlos Moro, Duncan McFie, Percy Spencer, Joe McVicker, and Arthur Fry.

 

  1. Understanding Needs Innovators learn to live inside the customer’s skin. They put themselves in the customer’s shoes and are able to feel their “pain points”, identifying unmet or unvoiced needs others have overlooked or ignored. Then they design solutions from the customer backward. Think about individuals like Gary and Diane Heavin, Mark Zuckerberg, A.G. Lafley, Fred Smith, Malcolm McLean, Steve Jobs, Reed Hastings, Travis Kalanick, Tony Fadell and Matt Rogers.

 

What this reveals is that innovators don’t just come to their ideas by staring out of the window waiting for a Eureka moment. Whether they are conscious of it or not, they discover big, game-changing opportunities by looking at the world through a different set of perceptual “lenses”. And the great news is that we can do the same! We can learn to use these same four lenses to consider common situations or problems from the innovator’s perspectives, and thereby dramatically improve our ability to look through the familiar and spot the unseen.

 

If you’re hunting for your next big idea, try deliberately using these four proven ways to generate the kinds of insights that will inspire exciting new products, services, strategies and business models. You will be amazed at how the lenses will unlock your innovation power.

Rowan Gibson is recognized as one of the world’s foremost thought leaders on innovation. His new book, The Four lenses of Innovation (Wiley), examines the thinking patterns or perspectives that have been catalysts for breakthrough innovation throughout human history, and shows you how to use these perspectives to infuse creativity into your own organization.

 

 

Thunder Down Under: One-on-One with Australia’s Innovation Thought Leader

Hargraves Conference 2011 - Powerhouse MuseumAllan Ryan is credited with bringing the Innovation Movement to Australia. Nine years ago he got the idea to form a consortium of leading organizations to help companies rethink their basic approach to driving growth through innovation.

The Hargraves Institute, named after Australia’s most famous inventor and explorer, Lawrence Hargrave, was born from Ryan’s passion to help companies become more innovative, and the insight that companies of the future would need to collaborate with each other to accelerate progress. In addition to being the founder and Executive Director of Hargraves Institute, Allan is also Executive Director of Managed Innovation International, and Adjunct Professor of innovation, UTS Business School. Edited excerpts from our conversation:

Tucker: Two years ago, you stopped using the word innovation entirely. Australians were sick of it. With the downturn, what’s the state of innovation now?

Ryan: Innovation has come roaring back. When times get tough, smart leaders look to both cost-cutting and jumpstarting revenue growth. So innovation is very much on the agenda again.

How has your vision changed over the years since you founded Hargraves?

Ryan: Five hundred innovation eventslater, [our] companies know as much about innovation as the consultants [laughs]. Australia is a bit isolated, so Aussies tend to put their heads down and just do the work, rather than yapping about it endlessly. We’ve got member companies that know the models. They have mastered the tools – and they use them to deliver results. Last year one of our member companies (in the consumer products market) collected over 8000 ideas. They then implemented a thousand projects, and recorded the savings and sales growth in a dashboard seen by the entire organization. The contribution was in thetens of millions of dollars.

Australia is home to some world-class innovators like Cochlear, ResMed, and Atlassian, among others. But you’ve also got a lot of companies that are based elsewhere. Don’t the multinationals tend to want to do the important projects in their headquarters markets?

Ryan: That’s an outdated notion. A lot of the multinationals are using Australia as a great place to market test new products and services. Think about it: we’re a first world economy. We’ve got world-class managers, and the fact it’s isolated means market feedback can be achieved faster and cheaper than in the U.S. or Europe.

What innovations have come from companies’ Australian units?

Kimberley Clark’s team here came up with the latest Huggies Nappies diaper. That one was developed completely from Down Under and now is distributed internationally. I don’t know if you’ve had the chance to try this product, Robert? [laughs] Google Maps came from a Sydney-based company, Where 2 Technologies. Coca Cola’s ‘Share a Coke can’ promotional customization came from Australia. It’s a long list.

So how does innovation happen in Australian companies?

Ryan: I divide innovation into two types. Firstly there are the folks whose job is to innovate – the professional innovators so to speak. These guys live and die on their ideas. The second type are those who have jobs where innovating is voluntary. They can choose to do “everyday innovation,” very much to thepoint of your book, “Innovation is Everybody’s Business,” or they can stick to their day jobs.

Any examples of voluntary innovators coming up with unexpected breakthroughs?

Ryan: Sure: just recently, a volunteer innovator at Coca Cola Australia came up with the idea of personalizing Coke cans with people’s names on the can. She works in accounting, not marketing. It was a simple suggestion, and there were over 100 senior managers, in Australia and globally, that had to approve the idea, and it finally got approval. It has become the most successful promotion ever, and Pepsi couldn’t touch it.

What in and what’s out tool wise in Australia? For example: where’s open innovation?

Ryan: It was a fad. I can’t think of any company or any product that has come from open innovation in Australia. It’s a buzzword. What is important is collaboration. Innovation takes time and commitment of resources, especially by leaders. Open innovation assumes someone has a ready-made idea or solution to your problem and ‘hey presto’ they enter it into your website. Collaboration is people-to-people interaction, discussion, conversation and development of mutually beneficial innovation where both parties win. Collaboration is a lot of hard work and brings the greatest results.

Design thinking?

Ryan: Design thinking [has become] a commodity. The big names in design thinking came to Australia to work with companies, but they didn’t get invited back. Every business school is teaching it, it’s built into every one of our programs at Hargraves. It’s become a correspondence course.

What about idea management software?

Ryan: if it’s used right it has staying power. But the scariest thing for most people is sharing their idea. Sharing is about putting yourself out in the open, putting yourself at risk. It’s about putting your heart and soul out there. Brene Brown did a fabulous TED talk where she talked about the power of vulnerability. But if you’re worried about being vulnerable, why would you input your idea into a system where everyone and anyone can see it and criticize it and criticize you! So after ten years trying to get people to submit ideas to a portal, we came up with what we call the Idea’s Best Friend Program. It’s designed to help people, especially introverts, to engage with idea management systems a little easier. The proof of our ‘Catalyst’ approach is best evaluated by looking at the longevity of innovation leaders and their programs. We have many examples of programs that have grown and grown for over 5 and 10 years. Time is the best test. Do you know of innovation managers and programs that start with lots of hype and then disappear in less than two years?

And finally, what tools seem to have staying power?

Ryan: The secret of tools is to have a toolbox. There is no one tool. There are many that work well. The problem with people who are experts in one tool is that if you have a hammer, then everything looks like a nail. So it’s not the innovation tools that matter. It’s the results that the tools bring about.

10 Questions for Mindjet CEO Scott Raskin

 

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In 2013, CEO Scott Raskin turned heads when his company, Mindjet, acquired Spigit, instantly becoming the largest software purveyor in the innovation industry. Scott’s vision took Mindjet from being the number one mind mapping and brainstorming software company to become the leading provider of enterprise cloud software for innovation practitioners. Because he and his 350-person team go behind-the-scenes inside numerous global corporations each year, we wanted to get Scott’s candid assessment of how innovation is being practiced, and what’s changing in the innovation space. Edited excerpts:

 

  1. Scott, your software is used by 83 percent of the Fortune 500. But for readers who may be unfamiliar, briefly explain what idea management (IM) software does.

Sure. IM software provides a systematic process for generating, capturing, and evaluating ideas and turning the best ones into practical, real-world innovations. With a cloud-based IM platform, businesses are able to tap into the thinking and ideas from a much wider array of people –employees certainly, but also customers, partners, suppliers, you name it. And with our system, the customer gets functionality that includes advanced data science, algorithms and crowd analytics to power what users see and engage with on the surface. They get a space to discuss ideas, a way to conveniently vote on them, provide suggestions and feedback, and collaborate to turn great ideas into new products, marketing programs or business processes.

 

  1. What’s changing in the innovation space? What new customer needs are you seeing emerge?

In the past few years, the focus on implementing an innovation management program or creating a center of excellence for innovation at the enterprise level increased dramatically. Yesterday’s need was more ideas. Today the need is finding the best idea. In a survey two years ago by The Corporate Executive Board, 77% of executives said they were concerned with not having enough ideas. This problem was solved and is what most innovation or ideation software vendors provide today. The good news is they provided a lot of ideas; the bad news is they provided a lot of ideas! So what customers want now is a way to more effectively get to the best ideas with high value predictability – what it’s worth, how much it will cost, how much revenue it will generate. This has been our focus and what has helped our customers achieve such demonstrable results.

 

  1. One of the big complaints with IM software is that people are so busy they stop submitting ideas into a company’s portal. How have your clients overcome the challenge of falling participation rates?

Keeping your crowd of employees and partners engaged is just about the most crucial piece of the innovation management process. There is no innovation without ideation, and if your pool of participants is restricted, so are your opportunities. Companies that manage innovation successfully do three absolutely critical things: first, they make the idea selection process transparent and simple, so participants are never in doubt about the value of their contributions or confused about the process. Second, they motivate through recognition, continually demonstrating why participation matters and how it influences leaders’ decisions. Finally, they make it fun by using a platform that has game mechanics built right in.

 

  1. What percentage of firms set up idea portals to invite employee ideas, but do nothing to change their cultures, or to accomplish innovation differently? 

It’s absolutely not enough to just tell your employees that innovation is important. It’s not even enough to buy a tool and tell them to use it. Innovation has to be a part of every single person’s daily work. It has to be a central piece of an organization’s DNA, and most importantly, it absolutely must be communicated through and supported by the company’s culture. It’s tough to provide an accurate percentage regarding where the invitation to innovate doesn’t effectively extend beyond just the first step. But I can tell you that the companies that choose that path aren’t the ones you’re going to be hearing about in the future.

 

  1. Your software is now used by 83 percent of Fortune 500 companies. It’s used by almost all of our Ten Most Innovative Companies in the World (see: Tucker’s Top 10 List). So why do you believe there’s a huge market opportunity still out there to be tapped?

In a global economy, companies have to continuously innovate at a rapid pace to build markets and value for shareholders. Innovation isn’t just the purview of technology companies – in addition to the leaders you would expect in the tech sector, we have customers in agriculture, construction, government, financial services, and health care, as well as many other unexpected industries. Every company needs innovation, so that leaves us with a constantly growing market to tap into.

 

  1. In the innovation field, there’s lots of talk about crowdsourcing. Companies like Lego invite customers to contribute ideas for future products, and reward them if their idea goes into production. Mindjet is in a position to know how widespread this trend is – especially in house. Are firms really crowdsourcing internally or just blowing smoke about this trendy tool? What is really going on behind the scenes? And is it helping improve success rates and drive revenue growth?

Companies are absolutely using crowdsourcing to generate new ideas, but it’s more than that – crowdsourcing is about increasing collaboration. It’s about using every resource available to raise your chances of striking innovation gold. As old-school business approaches die out and hierarchies flatten, we’re seeing attitudes change drastically. The direction that leadership is taking today is far more concerned with building mutually beneficial networks. It’s more about encouraging ownership than it is with funneling directives through some narrow, disconnected pecking order.

 

  1. While I occasionally hear innovation practitioners extoll how wonderful their innovation portal is for driving participation, I’ve never heard an example of where a submitted idea became a breakthrough and really moved the growth needle.

We see these kinds of returns on innovation constantly. UnitedHealth Group used our software and ended up with 40,000 program participants and millions in cost savings. Novant Health shortened their product development cycle by over 40 weeks. Citibank used SpigitEngage to coax over 46,000 participants to submit over 2000 potentially viable ideas. DPR Construction was able to increase productivity by 20 per cent, reducing the average time per project by over 10 weeks. There’s just no denying the value of crowdsourced innovation management.

 

  1. You all wrote about an NGO that uses your software as well. Tell us about that.

But when it comes to something globally impactful, my favorite customer story comes from the team at UNHCR, which we featured in the third issue of our industry publication, INQ Magazine. They face huge challenges that have significant and lasting global implications for the 45 million refugees they work with. Backed by our software, they developed a dedicated innovation program to promote collaborative ideation and surface suggestions for improving the lives of refugees. From tackling access to educational materials, to rethinking how to meet the housing and energy needs of displaced communities, theirs is an incredible program. It even gathers ideas from the very people they’re trying to help. And because the process is systematic and repeatable, investors can see up front where their funds are going and what they’re being used for. Similarly, as innovations evolve, the ability to provide lasting help to those in need continues to grow and advance. That’s what I call a real return on innovation.

 

  1. Mindjet is pioneering IM software by employing data scientists and other highly trained specialists to add value to your products and services. How is Mindjet capitalizing on the Big Data trend?

The thing about Big Data is that, like innovation, its status as a trend doesn’t diminish the value of what it can teach you or how it can impact a business. The incredible research done by our data science team has made it possible for us to become the market leader in innovation management software, because they’re always analyzing the data produced by customer program results as well as the constantly changing behaviors of participants inside of the platform, which gives them a crucial understanding of what’s working and how. Our Predictions Module has essentially taken the luck out of innovation, and replaced it with logic. It enables organizations to use the collective knowledge of the crowd to forecast time to market, implementation costs, and resulting revenue of ideas. We also recently released Insights, a new visual reporting and analytics tool in SpigitEngage that helps stakeholders understand all that data and use it to drive greater, faster returns.

 

  1. Amazing evolution, Scott. What’s next? Where do you see Mindjet impacting the innovation space in the near future? What’s next for the SpigitEngage platform?

We expect to extend our lead even further in working with global companies to execute on the great ideas their employees and customers bring to the table. It turns out that the crowd is not just good at coming up with ideas – it’s also very good at deciding which ideas to pursue, and how to pursue them.

Tucker’s Top 10 Worlds Most Innovative Companies

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In 2001, Fortune Magazine named Enron one of the “most innovative companies” in the world. Shortly thereafter, the firm erupted in a financial scandal, its leaders were marched off to prison, and the company collapsed. All to say that readers of this newsletter are cautioned to review our inaugural list with a grain of salt. We were motivated to compile this list because we believe the criteria of existing lists too narrow, and therefore incomplete. Some focus solely on patents (Thompson Reuters), 3 year financial performance (BCG), “innovation premium” (Forbes) and in one case a popularity poll amongst the magazine’s editorial staff (Fast Company). Fair enough on the subjectivity, but we believe additional criteria are also important: visionary leadership, innovation culture, customer delight, corporate reputation (sorry Amazon, but you dropped quite badly here in 2014), unique business model, and sustainable process for innovation. Click on each company to read more about these winners, and please let us know how we did.

Contributing to this article were: researchers Patrick Sonsteng, Tim Michaelis, and Caley Thomas. Reviewing our handiwork: Bart Tucker, Sam Dolan and Dr. Gary Byrne.

  1. Alibaba: Pulling Off Biggest IPO in History Was Only the Beginning

Talk about visionary leadership. Alibaba founder Jack Ma was told repeatedly “e-commerce will never work in China, people here simply do not trust the internet.” But Ma pressed ahead anyway, and today this Hangzhou, China-based company sells twice as much merchandise as Amazon, and eight percent of everything sold in China. More than just another e-commerce site, Alibaba is often described as E-Bay, Google, and Amazon combined. To build trust with Chinese consumers, Ma created Alipay (similar to PayPal), and adopted a liberal returns policy to fulfill its mission “to make it easy to do business anywhere.” The priorities of the company that Jack built are: customers come first, employees second, and shareholders third. Coming off the successful IPO, Alibaba is on a tear, announcing plans to launch a Chinese version of Netflix and new ventures in consumer finance, insurance and mobile aps. Alibaba can de-prioritize investors, but over the long term it will be under pressure to deliver ever-greater profits, become more transparent to Westerners while staying in the good graces of China’s authoritarian government – not the easiest of tasks!

  1. Nike: Running Like a Hungry Startup

Although this Beaverton, Oregon athletic maker already owns 92 percent of the basketball shoe market, and over 50 percent of the running shoe market, it still acts like a hungry startup. CEO Mark Palmer’s “category offense” strategy calls for growth not just from selling more shoes or apparel, but by dominating entire sports: football, soccer, golf or tennis. Nike’s culture has been about innovation ever since cofounder Bill Bowerman used a waffle iron to make the first modern running shoe, and Phil Knight sold them out of the trunk of his car. These days, through its Nike-ID website, customers can design their own shoes in extreme detail, right down to the color of the eyelets. While innovation is everybody’s responsibility at Nike, the company’s Innovation Kitchen is where a legion of “swoosh scientists” cook up game-changing concepts. Example: Flyknit Racers are feather-light shoes that feel “like a sock atop a sole.” They rely upon a proprietary Nike technology that uses a single spool of thread to produce the entire shoe. Result: growth was up 10% for the year, and Nike is expected to continue sprinting toward future growth.

  1. Tesla: Taking Innovation to the Streets

How’s this for counter-intuitive? Instead of pursuing competitors who might try to encroach on its many patents, Tesla Motors actually encourages other auto manufacturers to adopt them in order to build electric vehicles faster into a mass market. While other car companies sell through dealers, Tesla sells through its own showrooms in shopping malls and other high traffic areas to build a direct relationship with customers. All software used in its vehicles is developed in-house, a model closer to Apple than to conventional automakers. Such bold moves exemplify how this Silicon Valley-based company is rethinking the car business from top to bottom. The fastest way to lose an argument at Tesla is to say “such and such [auto] company does it this way,” according to insiders. Not failing often or fast enough gets noticed in this hard-charging culture. “If things are not failing, you are not innovating enough,” says CEO Elon Musk, Tesla’s South Africa born founder. Tesla may be a pioneering company, but it coddles customers with old fashioned roadside assistance, and Musk often responds directly to customers when issues arise. 2014 was a good year for Tesla, which opened its 300th supercharger station in North America, and announced its intention to build a huge battery manufacturing plant near Reno, Nevada. Stay tuned as Tesla continues taking innovation on the road.

  1. Uber: Disrupting Public Transportation Without Owning a Single Vehicle

Let’s first pause to acknowledge what this San Francisco-based startup has been able to accomplish since its 2009 founding. They delighted millions of customers worldwide with a new and superior means of getting around. They completely upended the taxi-transportation business in 270 cities worldwide. And they’ve fended off regulators and “me too” competitors using software, lawyers and guts, instead of fleets and hoards of dispatchers required by the traditional industry. Yet every day is a new battle (the main conference room at headquarters is called The War Room), and Uber CEO Travis Kalanick hired President Obama’s campaign manager, David Plouffe, to help handle regulatory battles. Meanwhile, the Uber team, under siege brought closer, is treated well, with software engineers making a reported $115,000 per year, according to website Glassdoor.com. Short term war is a great way to inspire innovation. Longer term it tends to produce paranoia, burnout, and regimentation. Thus, the jury is still out on the longer-term forecast for a company born in acrimony (Uber has been banned in India). Customers love being able to summon a car with the touch of a smartphone app, and get around on rainy days in New York City, when cabs all seem to disappear. But they are conflicted about Uber’s surge pricing, which ratchets up in periods of high demand. Overall, though, customers are raving about Uber, and the company’s ascent has become as much a social phenomenon as an economic one. Investors are ecstatic: the company’s value now exceeds $40 billion.

  1. Google: Changing the World One Click at a Time

A Google engineer planning a trip to Spain found he could not get a close up view of the hotel he was to stay in since the road was too narrow for the StreetView car to photograph. Rather than shrug that it was “not my job,” the engineer used Google’s famous 20 percent free time policy to create the Google Tricycle to film narrow lanes. Such action at the grass roots level no doubt pleases Google CEO Larry Page, who wants innovation in every realm. “I feel like it’s my job to always be pushing people ahead,” Page said recently. Since taking the reins from Eric Schmidt in 2011, Google has been investing its projects in world-changing ventures. With over 96 percent of its revenue coming from AdWords, Google commands a staggering 67 percent of the U.S. search market, growing 20 percent annually for the past three years, with revenue topping $62 billion (Google has become so dominant that the European Union forced it to alter certain business practices). Innovations emerging from GoogleX, the search giant’s secretive skunkworks lab, include the now famous driverless cars, Google Glass, and a plethora of less well known projects. Examples: blood glucose monitoring contact lenses and ingestible “painted” nanoparticles that conceivably will bind to cancer cells and other biomarkers in the body and allow scientists to “read” what they find. “We’d like to have a bigger impact on the world by doing more things,” Page told the Wall Street Journal in typical understatement.

  1. GE: From Old Line Behemoth to Future-Focused Tiger

Under Jack Welch, GE grew through acquisitions, used Six Sigma and cost cutting to jettison tens of thousands of employees, and cut R&D spending to the bone. Profits soared. Since 2001, Jeffrey Immelt has taken GE in a new direction. He expects “imagination breakthroughs”—game-changing ideas that create whole new markets and disrupt sleepy rivals. Welch followed a “promote from within” philosophy, but Immelt welcomes outsiders with new skillsets. He promotes women to top positions and has made innovation a more systematic, embedded discipline. GE’s latest iteration is called FastWorks. Bringing the Lean Startup movement in-house, its purpose is to decrease time to market, lower the cost of building new products, and involve the customer early and often. Each business unit has a “growth board,” which meets to allocate resources in house or deadfile potential projects. Thus far, 40,000 employees have been trained and some 300 projects have been approved.

  1. IBM: Growing New Green at Big Blue

Some readers will recall IBM’s Innovation Jams back in the mid-2000’s. The company invited thousands of employees, clients, consultants and even employees’ family members to brainstorm new uses for company’s technologies. At the time it seemed like a PR move, but little more. Yet out of these sessions came IBM’s game-changing Smarter Planet initiative, as well as Watson, the artificially intelligent computer system capable of answering questions posed in natural language. Good thing it jammed as revenue and profit growth have been flat in recent years despite great effort. IBM’s challenge is clear: with the rise of cloud computing, corporate clients can largely do away with expensive data centers, and rent server capacity and processing power for far less than IBM charges to hire its consultants to run everything inhouse. CEO Ginny Rometty is pushing the troops to create new demand in Big Data, analytics and Watson. The company is starting to make headway: IBM’s overall cloud client base doubled in the past year, and Watson is starting to gain traction. If IBM can “cross the chasm” by exiting low-end hardware and monetize a new services-based business model, there is hope for other organizations struggling to grow new green in the age of nimble startups.

  1. Apple: Breakthrough Year for the Tech Titan

2014 was a spectacular year for Apple. The iPhone 6 model’s revenue now accounts for more than half of the company’s gross revenue and the bulk of its profit. Most important of all, CEO Tim Cook proved in 2014 that Apple without Steve Jobs can carry on with innovation, and keep the culture he spawned intact. “Steve established a set of values and he established preoccupations and tones that are completely enduring,” chief product designer Jonathan Ive told the New York Times. “Chief among them is a reliance on small creative teams whose membership remains intact to this day.” Unlike Google and Facebook, Apple sells hardware and software, and has disrupted at least eight industries. With its new Apple Pay service, and the soon to be released Apple Watch, the future looks bright. Apple watch features a fitness tracker, wireless payment functionality, text messaging, and inductive charging beneath a touchscreen display. To keep the momentum going, Apple’s circular “spaceship” campus, when completed, will accommodate 12,000 employees, who conceivably will keep pioneering insanely great products.

  1. Procter & Gamble: Going Back to Basics to Restore Growth

In 1999, this Cincinnati, Ohio (USA) based company mired in bureaucracy, growth had stalled, morale was low, and lower priced store brands were eating away at margins. But under A.G. Lafley’s leadership, P&G reinvented its innovation process and tripled its innovation success rate. The company pioneered Open Innovation, and connected with outside sources for new ideas. It set innovation stretch goals for every division and department and Lafley made innovation everybody’s business. Result: the company rebounded, growth soared, the stock price increased, and Lafley became a hero of the Innovation Movement. His successor wasn’t able to keep up the momentum and a year ago, Lafley was brought back to rework his magic. But instead of focusing on innovation, Lafley has placed an emphasis on “restoring focus”, selling off scores of under-performing P&G brands, from Duracell batteries to Folgers coffee. Meanwhile, the consumer goods market is being roiled by seismic changes. The company’s heft once enabled P&G to out-research, out-market, and out-spend rivals. But today it no longer guarantees market share. New advertising media allows smaller players to reach customers and seize market share in P&G’s categories. Even P&G’s massive research and development apparatus, and its efficient manufacturing plants, can hinder flexibility and rapid response to moves by regional brands. Nevertheless, as with IBM, we are confident that P&G, with Lafley’s vision, can get its mojo back. The way forward is for P&G to reread its own playbook for breakthrough innovation success.

  1. 3M: Proving that Systematic Innovation Can Be Sustainable

If you’ve ever wondered where a lot of the ideas on innovation management and innovation culture came from, one source is 3M. In contrast to Amazon, which seems to be trying to innovate everywhere (but can’t seem to make money anywhere), or even Tesla, which has yet to break even, this quiet St. Paul, Minnesota (USA) company just keeps churning out new products – and steady growth and profits. Example: the 15 Percent Rule, now used at Google, where it became the 20 Percent Rule. 3M employees were given 15 percent discretionary time to create whatever they want. If an employee believes they have a worthy creation, they inject it into the firm’s “champion” new product development system, and the idea receives a fair hearing and resources. The famous Post-it Note came out of this process. Ditto the innovation metric that 3M pioneered decades ago called the Thirty Percent Rule (30 percent of each division’s revenues must come from products introduced in the last four years). Or the way 3M screens job applicants for signs of innovation potential (which I write about in Driving Growth Through Innovation). Metrics like the 30 Percent Rule can prove invaluable over time, as when 3M came under the influence of a Six Sigma CEO (Jim McNerny, now at Boeing). McNerny slashed capital spending, laid off workers, jolted the stock back to life, and revenue and profits grew 22 percent. But the 30 Percent metric began dropping and demoralized the firm’s culture. “McNerny didn’t kill it [the Idea Culture] because he wasn’t here long enough,” Art Fry, Post-it inventor, told an interviewer. “We all came to the conclusion that under Six Sigma, the Post-it would never have seen the light of day.”

Asia Brand Foundation Honors Top Innovation Speaker

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The Asia Brand Foundation honors top innovation speaker Robert B. Tucker for his outstanding contributions to the field of innovation. Past recipients include Steve Jobs, John Maxwell, Mark Zuckerberg and others. BrandLaureate is the world’s premier branding foundation dedicated to the promotion and improvement of branding standards in the Asia Pacific region and across the globe.

Asia Brand Foundation confers the annual award upon individuals who have made outstanding contributions to their field or industry. These individuals have contributed greatly to the growth of a business, brand, or an industry in their own rights and terms. The award is to honor successful individuals whose contributions have enhanced the well-being of society and enabled others to live up to their potential. Being conferred the BrandLaureate award is a defining moment as it is a testimony of the brand’s success, acknowledgement of the brand’s value, strength, character, and the endorsement of being the best. The BrandLaureate Award is the only Brands and Branding Award endorsed by His Royal Highness, the 13th King of Malaysia.

View all of 2015 Brand Personality Award Winners

History of Asia Pacific Brand Foundation:

Founded in 2005, the Asia Pacific Brand Foundation (APBF) is a non-profit organization dedicated to developing brands in a myriad of business backdrops. Led by its Patron, H.E. Tun Dr. Mahathir Mohamad, Malaysia’s fourth Prime Minister together with a Board of Governors who are experienced captains of industries and brand icons.

Brands are catalysts of growth and organizations musts realize the significance of brands and branding if they want to be successful and achieve market leadership position. Consumers must also be educated and informed of the qualities of good brands and best branding practices. This is where the APBF steps in to make a difference and assist brands to achieve their maximum potential.

Visit their website

Is Innovation Really, Finally, Going Mainstream?

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Despite all the talk about innovation from CEOs on down, the subject still daunts most people in business and industry, Robert B. Tucker told the CIMS 2013 fall conference. Tucker is president of The Innovation Resource, a global consulting and executive development firm focused on strategic innovation (www.innovationresource.com). Formerly an adjunct professor at the University of California, Los Angeles, Tucker has been studying innovation for 26 years in 40 countries as a researcher, consultant, speaker, and author. For his fifth and latest book, Innovation Is Everybody’s Business, he interviewed 43 innovation-adept individuals from multiple industries and all levels of organizations, in order to identify and teach the personal skills necessary to become a successful innovator. Following the CIMS meeting, Innovation Management Report’s Editor Michael F. Wolff sat down with Tucker to discuss trends in the innovation field. Edited excerpts:

CIMS: Given the difficulties companies have with innovation, why are you of the opinion that innovation is finally going mainstream?

Tucker: Because there’s no way to avoid it. You either innovate or you evaporate. Just ask Blockbuster, or Kodak, or Blackberry or Nokia. Operational excellence is not enough. Firms that have been lagging their peers on growth are being pressured by their boards to rev up growth. So we’re seeing many new companies, including obscure mid-sized and service companies and even franchise operations reaching out.

CIMS: You cited BCG surveys showing innovation to be a top three priority for 76 percent of CEOs, and the top priority for 40 percent of them. But translating this priority into revenue growth has often been a stumbling block, has it not?

Tucker: No question, and I think innovation is getting harder to do by the day. If you’re the CEO of a publicly-traded firm, innovation is always going to be a two-handed affair. On the one hand, you know you’ve got to invest in the future, you’ve got to take some risks, and build a more change-ready creative culture. On the other hand, you are mindful of the pressures to make this quarter’s numbers, to think ever more short term, and to limit risk, lest it adversely affect your stock price and your compensation.

CIMS: So what’s different now that’s making CEOs want to get serious about innovation?

Tucker: The likelihood that you’ll get disrupted. Fifteen years ago, when [Harvard Professor Clayton] Christensen first published his research on disruption, the phenomenon was confined to a few industries, like disk drives. Today it’s a looming threat to virtually every industry, not just technology. You don’t want to wake up one day and discover you’re the Blackberry of your industry and it’s already too late.

CIMS: What’s causing the disruptions?

Tucker: Because I work across so many industries and continents, what I’ve come to see is disruptions don’t just come from technology. It could spring from lifestyle changes, or demographic changes. Or new government regulations. Or from the impact of climate change.

CIMS: What are examples of industries that are being disrupted?

Tucker: Aside from the obvious ones, like the recording industry, how about magazines and newspapers; community banks, because of Dodd-Frank [legislation], and small retailers and even big box retailers like Best Buy, being disrupted by Amazon’s value proposition. Cable television is in the throes of a coming disruption. Dentists are being disrupted; it seems people are having fewer cavities. The printing industry. Desktop computer makers. People are drinking less milk. It’s a long list!

CIMS: So if you’re being disrupted, you’ve got to innovate. What’s an example of an industry that’s doing a good job of this?

CIMS: Take the ski resorts industry. These folks are facing the aging of the Baby Boomer generation, who let’s face it, are not as spry as they once were, and they’re opting for less strenuous sports. Meanwhile, the cost of skiing continues to rise while wages have stagnated, especially for younger folks who might like to take up the sport. The smart resorts, such as Whistler Blackcomb in British Columbia and Jay Peak Resort in Vermont, and Vail Resorts in Colorado are not sitting still. They are looking constantly for new ways to grow revenue, turning their resorts into year-round playgrounds. Whistler Blackcomb just became the world’s leading mountain bike park with big crowds in summer. Not confining themselves to snow sports at all. Peter Drucker used to exhort managers to know “what business are we in?” Today it’s also important to ask, “what business might we be in next?”

CIMS: You’ve long been an advocate of what you call systematic innovation. What is systematic innovation?

Tucker: It’s approaching innovation as a disciplined, holistic, sustainable process for driving growth and differentiation. Organizations have always innovated, but it’s been mostly piecemeal, episodic, fragmented. Then, starting in the late ‘90s, a small but passionate group of companies – BMW, Borg-Warner, Whirlpool, GE, Citibank, among others –began rethinking how they accomplished innovation from stem to stern. I wouldn’t say I invented systematic innovation. What I did was study what these people were doing differently, and that led to my writing up these case studies in the book, Driving Growth Through Innovation.

CIMS: What are these firms doing differently?

Tucker: They are breaking up internal monopolies and ways of thinking about getting new things done. Before, the R&D departments had a monopoly on R&D. Strategy departments had a monopoly on the company strategy. But these pioneers, people like Nancy Snyder at Whirlpool, and Simon Spencer at Borg-Warner and many others, said to heck with that. They saw that you’ve got to cross functions and invite new voices into the hunt for tomorrow. You’ve got to speak openly about the corporate anti-bodies that surround and kill such initiatives. And they were looking at not just new products, but new services, new business models, new markets. And they had an amazing amount of support from their chiefs, which turns out to be critical.

CIMS: In your speech you spoke about effective innovation being about the input, throughput and output of fresh ideas thru an organization’s “idea factory.” What are the elements you’ve found necessary to generate and maintain this flow?

Tucker: When you ask enough people to identify where their organization struggles with innovation, you find a lot of diversity. Some say, “we’ve got too many ideas, we’re drowning in them.” What that tells you is they’ve got a poor idea selection mechanism. Or they’ll say, “we’re poor at implementation and execution,” and that tells you something else. Or they’re poor at commercialization; they’ve had a string of duds and they are shell-shocked. Or they’ll tell you the culture is risk-averse, or that the real problem is with certain members of the top team who are dragging their feet. So what you really have is an alignment issue. You have to take a step back and look where the flow is blocked. And that means you’ve got to put somebody in charge of the overall process.

CIMS: Are you optimistic that chief innovation officers, apparently in 40 percent of larger companies today, can drive growth more effectively than other ways of managing innovation?

Tucker: What I found in interviewing a dozen innovation czars was that not all of them really have a mandate for reengineering the overall process, nor the buy-in from the business units. Quite a few are essentially chief technology officers or new product people with a new title. But the effective ones appear to be those who have the full backing of the chief, and are tasked with enabling the process rather than delivering innovations. And let’s face it: there’s always going to be conflict for resources between today’s business and tomorrow’s business. Innovation leaders are vulnerable to short term thinking caused by Wall Street’s impatience. It’s just that today, since organizations really have to get better and better at innovation just to keep from being devastated by disruption, these folks are being listened to like never before.

Robert B. Tucker is one of the world’s most in-demand innovation speakers, consultants and authors. President of The Innovation Resource Consulting Group, with clients in 46 countries, Tucker is the author most recently of Innovation is Everybody’s Business. For more information: www.innovationresource.com or info@innovationresource.com

Five Key Ideas from New Innovation Research

five key ideasWhen 500 innovation leaders were asked what they’ve learned in the past 10 years, their answers were decidedly upbeat. Forty-four percent of respondents said their companies are better innovators today than they were a decade ago, while another 32 percent said they are much better. Only six percent said they are doing worse.

But when asked about the next ten years, their optimism evaporated. Only 27 percent feel they have mastered the elements they will need for innovation success over the next ten years. “Innovating isn’t getting any easier,” concludes a just-released survey from Boston Consulting Group (BCG).

Here are five insights having to do with the “elements of innovation” that were confirmed by The Global Innovation 1000” report, along with Boston Consulting Group’s “The Most Innovative Companies 2014” report.

1. Before trying to do breakthrough innovation, master the basics first.

“Too many companies want to shoot for the moon when their innovation programs are barely airborne,” concludes BCG. Senior level commitment, a well-crafted innovation strategy, and cultural alignment are critical factors that do not happen overnight. Standout firms do three things better and differently: they cast a wider net for ideas; they practice business model innovation in addition to new product, process and service innovation; and they continuously cultivate risk-taking cultures.

2. The global war for innovation talent is heating up.

Reckitt Benckiser is a little known company with well-known brands (Woolite, Dr. Scholl’s, Lysol, etc.). Yet Reckitt must compete with Procter & Gamble, Unilever and other consumer products giants in attracting and retaining creatives. “Talented people don’t want to work in bureaucracies,” says Reckitt-Benckiser CEO Rakesh Kapoor. “They want to work in companies where they can get things done. This is why we focus so much on culture. You have to act like a small company. Size can give you scale, but for innovation, speed is more critical.”

3. You need a chief innovation officer to truly systematize innovation.

The senior leader should not be responsible for delivering innovation but for enabling and coordinating it. Two thirds of all exemplary innovation firms report that innovation and product development are driven by a centralized organization, the BCG survey found.

4. Collaborate with customers and improve your new product hit rate.

Both surveys find that companies are making greater efforts to listen to their customers, and even to get out in front of them. In three years of research on this issue, BCG confirms that companies that directly capture customer insights had three times the growth in operating income and twice the return on assets of industry peers that captured customer insights indirectly, as well as 65 percent higher total shareholder returns. Exciting new tools, including big data, crowdsourcing, customer case research, and video voice of the customer show tremendous promise in revealing the unstated needs of consumers.

5. Align your innovation strategy with your business strategy.

Two thirds of respondents report that their company’s innovation strategy has become better aligned with their business strategy. Companies with tightly-aligned business and innovation strategies had 40 percent higher operating income growth over a three- year period, and 100 percent higher total shareholder returns, than industry peers with lower strategy alignment. Many companies have streamlined their R&D portfolios and reduced the number of things they were working on, especially those that had little chance of success.

Kudos to the researchers and authors of both these reports, they both are outstanding contributions to our field.

Traversing the Valley of Death: A practical guide for corporate innovation leaders

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CLICK HERE for a copy of “Traversing the Valley of Death”

TVoD_Book-Cover[1]For those who have struggled to cross that nebulous decision space known as the Valley of Death, the journey can be all too traumatic.  The Valley is what separates the activities for developing ideas from the activities needed to commercialize those ideas; it separates the people engaged in research and discovery from those tasked with commercializing new products and services.

Traversing the Valley of Death can be perilous—depending on how you define idea and commercialization; the survival rate can range from 1 idea in 11 to 1 in 100. Why so low? Because, as authors Stephen Markham and Paul Mugge assert in this new book Innovation Leaders — and their teams — are often ill-equipped for the journey.

Innovation Leaders set the research agenda; they are the ones who allocate the resources for the organization’s innovation management system (in this book organizations refer to the large B2B companies burdened with hierarchies and bureaucracies that separate them from their customers and so often inhibit invention and innovation). Teams include three players who play major roles in crossing the Valley of Death: Champions, Sponsors and Gatekeepers.

For these people and their organizations, Markham and Mugge prescribe a complete system that includes the process, tools, governance system, and metrics necessary for managing what they call Big Innovation. Unlike incremental innovation – the small design and feature changes companies make to their current product and service platforms – Big Innovation requires a system. Big Innovations create large-scale disruptions that affect the entire organization. Besides, isolated innovation projects rarely command attention in mature organizations, particularly those driven by operational efficiency (which seems to be the preferred business strategy of corporations since the market crash of 2008).

Importantly, this book contains a series of worksheets collectively called the System for industrial Innovation. Through a series of over 30 exercises and worksheets, the System helps organizations quickly develop ideas into legitimate, profitable business opportunities and capture these opportunities in a compelling business case (the stuff senior managers of these organizations want to see) in order to secure necessary resources. The worksheets are the jewels of the System, but they are not meant to be filled-in routinely in a “check-the-boxes exercise”. Rather they are meant to engender thinking, and discussion, around the critical factors facing the project. Although each worksheet builds on the worksheet before it, a project team that is confident about what it has accomplished –and confident about what it should do next–can go directly to whichever worksheet is most relevant.

The System doesn’t end with developing a business case.  As essential as a compelling business case is, it is just the start of the process of adopting and implementing the new business opportunity. The business case is a core requirement for selling decision-makers on the opportunity’s value to the company. Unfortunately, too many project teams see completing the business case as the end of the process when it is simply the tool for climbing out of the Valley of Death.

Implementing the project across the whole organization is actually a much bigger task, particularly when the organization likely views it as “risky”, maybe even “threatening.”

Too often, the act of getting a project adopted is left to chance, with little to no planning or effort exerted to encourage people to embrace a new idea or opportunity. Without a coordinated adoption plan, all innovation efforts are likely to go unrewarded. Fortunately adoption, like all innovation activities, is a manageable process and the System contains a host of adoption planning tools for this purpose.

In a very real sense, the System for Industrial Innovation helps “de-risk” breakthrough innovation. Applied in the manner the workbook prescribes, it can help organizations make the Big Bets that lead to Big Innovation.

The System for Industrial Innovation is not a theoretical construct or some academic exercise. It has already been put into practice at more than a dozen companies, Moreover, the book has been informed by 20 years of research and practice in managing technology development and innovation at N.C. State University as well as the authors combined 60-plus years in industry.

If this is your organization’s first attempt at crossing the Valley of Death, it will seem more like a high wire act. But if you follow the guidance put forward – with repeated application – it will begin to feel more like a four-lane highway bridge! More important, it can increase the rate at which you turn good ideas into profitable products and services. We know this because that’s been the experience of several companies that have already adopted the methodology of this book.

Four Strategies For Thinking Ahead of the Curve

ahead-of-the-curve2About the time you read this, I’ll be stepping onto the stage here in Monterrey, Mexico, to kick off the Universidad de Monterrey’s annual Innovation Summit. Arrived here yesterday, and did what I always do. Had our driver pull over and my hosts and I breezed through the aisles of a local hyper-mart, taking it all in. Who has shelf space in the diaper aisle? What new products are being introduced? How full is the parking lot? What’s the vibe?

These drive-by tours are one way I trend-watch on the fly. I learned to do this by studying and hanging out with the greats of innovation. Trend-tracking is an essential activity if you want to get better at thinking ahead of the curve.

Seeing Around Corners: I once asked Filippo Passerini, one of the most innovative chief information officers of our era, where he got the idea to transform Procter & Gamble’s back office operations. It was a bold move that took out billions in costs, while helping the company introduce new products more rapidly.

“It was our reading of trends,” he explained. In bull sessions, Filippo and his team saw that the world was moving from “big is good” to “big is bad.” In the fast-paced consumer products realm, being a slow-moving giant amidst nimble regional players such as those here in Latin America is a prescription for disaster.

When I asked Filippo how he keeps his mind focused on seeing around corners, he revealed his lifelong passion for competitive chess. “It forces you to think two and three moves ahead.” All the great innovators do this. They take in more data, more inputs from the environment, from the meeting, from wherever. They live in what I call the future moment.

This skillset, which I write extensively about in Winning the Innovation Game, is a safeguard to being blindsided by change. It’s fundamental to discover incredible opportunity. Below are four strategies for stepping up your game in this essential area.

1. Set Up a Future Scan System

Audit your information diet of developing technological, social, economic, and global trends. Is your intake sufficient, given the pace of change today? If you’re not reading at least two to three newspapers a day, five or more periodicals a month, plus various reports and white papers and blogs, chances are your diet is inadequate. Make it a point to notice trends wherever you are, wherever you go. As you surf the net, as you glance at spam, as you monitor your various mailboxes and inboxes and outboxes, pay attention. Try to “suss out” subtle patterns of change, and think about the implications of these changes going forward. Attend conferences, watch TED Talks, read biographies and history, and seek out different points of view. Above all, allow your assumptions to be assaulted.

2. Develop Front Line Observational Skills

Do this when you’re walking through airports, or retail shops, or your own organization: pay attention, keep your antennae up, and carry along what the novelist Tom Wolfe once called his “portable ignorance.” It’s also important to connect with people, especially those who stimulate your imagination when you are around them. Such people in your life — and they are always rare –have a tremendous influence on your psyche, on your possibility zone, on your ability and motivation to seize the day.

Interacting with people when you are attending a conference, rather than pecking away on your smartphone, could lead to new connections. Ask questions everywhere you go, especially of taxi and limo drivers. Cross-check perspectives and be sure to rub your chin. Think of yourself as a journalist; get informed, don’t just allow yourself to be informed passively.  The results of doing this daily are cumulative.

3. Master the Art of the Deep Dive

Let’s say you are asked a question for which you don’t have the answer. Pay attention to such moments! Make a note to get off your jet ski , and don your mask and fins and do a deep dive.

The greatest opportunity spotters do not have a different genetic composition. They simply are more alert to such moments, when the future is calling, and then dig in and explore the depths. “What passes for vision is just a lot of grinding-it-out information gathering,” FedEx founder Fred Smith once told me.

Game changers like Smith listen to their intuition. They respond to that little voice inside that says: “Wait a minute, this is important.” Or “this doesn’t feel right,” or “other people must be having this problem, maybe there’s a better way of going about this.” Smith told me that the idea to do FedEx came from noticing how business people were showing up at his little company at the Little Rock, Arkansas,” airport that refurbished executive aircraft. They were practically frantic to get a package to its destination urgently, and begged him to charter a plane to ship it, even though that wasn’t his business. The existing freight forwarders were oblivious to the growing demand.

Take it upon yourself to do deep dives on emerging issues, new technologies, unusual but intriguing customer requests. Gather more information. Become the expert on the subject. Think through the implications and examine the possibilities and develop a POV – point of view. Leverage people’s thinking for them and they will value you highly. Pretty soon you’ll develop a reputation as the “go to” person for information and insight in this area.

4. Look For Ways to Exploit Trends

Serial entrepreneur Richard Barton, whose startups include Zillow, Expedia, Glassdoor and others, hatches billion-dollar ideas by repeatedly asking a simple question: “What piece of marketplace information do people crave and don’t have?” Wow! Is that a powerful question or what?

The classic credo of the entrepreneur is: find a need and fill it. It’s not enough simply to be well-informed. Innovation-adept leaders like Filippo Passerini don’t just gather better intelligence. They do deep dives, crunch this data, argue about it, debate its implications, brainstorm responses, and try to connect the dots in some meaningful fashion. They seek to arrive at a point of view, both individually and collectively, about how to turn today’s rapid changes into tomorrow’s growth opportunities. And then, they take action to exploit what is often called “first mover advantage.”

“One of our pillars is thinking out in the future, anticipating what is coming, and then making your move,” Passerini explained. “It’s so much better than reacting.” Not bad advice for all of us, in a world where the best is yet to be.

The Five Hottest Innovation Tools

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In 25 years in the innovation field, I’ve seen a lot of innovation tools come and go. Let’s face it, tools are trendy. They get introduced with great fanfare at conferences or in the Harvard Business Review. A high profile company or two starts touting the tool. A case study gets written up. And then, often as not, the tool gently fades away.

What seems to gives a tool staying power is its usefulness. Brainstorming is a tool with staying power. It was invented by an ad man in the early ’40s and is still popular today, why? Because it works. If you and your group need to shake up your thinking, if you need to consider more alternatives, brainstorming works. If you follow the “rules” that is (appoint a facilitator, don’t analyze during the session, go for quantity not quality, etc).

Not long ago I gave myself the assignment to report to you on the top innovation tools trending now. My team and I looked at ideation tools, commercialization tools, idea management tools, selection tools. There’s no lack of tools out there let me tell you.

The ones that bubbled to the top of the list are below. But I cannot vouch for their staying power. Only time will tell. Only practitioners like you will determine that by which tools you continue to use over time to do your work.

So after you’ve digested this list, I’d truly like to hear what tool(s) are working for you.  Which ones have you tried and found wanting? What’s your all-time favorite? Please complete this 50 second Innovation Tools Survey click here). Here are the five:

1. Lean Startup Movement: Taking Silicon Valley by Storm

General Electric’s recent adoption of this tool is reported to be the biggest new movement in the company since Jack Welch embraced 6 Sigma in 1995. This hot tool originated in Silicon Valley, as a process mapping system for tech startups. Today it is increasingly being adopted by larger multinationals to decrease time to market and bloated budgets. Similar to the business model canvas tool, it addresses the most pressing question innovation practitioners face: How do you get new things done faster and cheaper in today’s world of strangulating bureaucracy, rising costs, and 6 Sigma controls? The answer, according to Lean Startup evangelists, is: instead of heaping money on ideas, be stingy. Encourage everybody to think like a startup. Dole out very limited budgets, form cross-functional teams, and streamline development of new products and services that have the potential to disrupt markets because of differentiated value propositions.

GE’s program, called FastWorks, has given the movement a tremendous boost. Already, 40,000 employees have been trained after CEO Jeffrey Immelt green-lighted the biggest internal movement since Jack Welch adopted 6 Sigma  in 1995. Each business unit has a “growth board,” which meets to give thumbs up or down to potential projects. Thus far, some 300 projects have been approved. Before, a development team might have spent four years building a new product based on marketing surveys. FastWorks promises to cut development time in half. What’s the right value proposition? The Lean Startup method suggests constantly taking your prototypes before customers throughout the development process to get real world feedback, and course correction in half the time and at half the cost.

2. Ethnography: Use This Tool to Discover Your Customers Emotional Hot Button

While focus groups ask, ethnographers observe. Trained ethnographic researchers (think Margaret Mead in New Guinea) at Google, Intel and IBM observe consumers where they live, work and play, searching for insights into their subconscious and unarticulated needs. By gathering qualitative data, ethnographers help businesses uncover hidden opportunities, and spot problems consumers have that they are not solving particularly well, and later brainstorm superior solutions. Kaiser Permanente used observational research to better understand the unmet needs of hospital visitors, who often help make critical decisions for patients. Citibank observed subway patrons paying for their rides, then used insights to design a key chain tag that could be easily swiped in crowded stations. Expedia used ethnographers to revamp their marketing approach to cruise customers.  The only drawback: observational researchers need training in how to observe, and how to interview consumers, to bring out the whys in the observed behavior.

3. Open Innovation: A Tool for Expanding Capabilities by Partnering with Outsiders

With global R&D budgets declining in real dollars over the past decade, partnering externally with suppliers, universities, and other entities has become the tool of choice for a growing number of organizations. Open innovation (the term was coined by U.C. Berkeley professor Henry Chesbrough) came to prominence when Procter & Gamble adopted the methods with their pioneering Connect and Develop program. Today, over half of the firm’s new product ideas originate from outside the company.

4. Design Thinking: A New Tool for Creating “Insanely Great” Products

What’s the difference between a MacBook Air and a HP desktop PC? Insanely great design! And that’s the goal of this increasingly popular tool: to help developers create products and services that are aesthetically attractive and user-friendly, and make competitive products seem dowdy by comparison. AirBnB used design thinking to finally connect emotionally with its customers and begin a meteoric assault on the lodging industry. Philips Electronics uses its design thinking unit to give cache to a once-fading brand. Some critics in the design world have declared this tool dead, but in an empathy-challenged world, the need to teach the elements of good design to software developers, engineers and executives is sorely needed.

5. Business Model Ideation: Use This Tool to Start Thinking Like Steve Jobs 

Nestle’s Nespresso machine-and- coffee pod breakthrough is a business model innovation on par with King Gillette’s invention of the razor and replaceable blades model of 1904. Ditto Apple’s iPod/iTunes business model, which revolutionized the music business. Netflix put Blockbuster out of business by introducing videos as a subscription service. As new products can be copied faster than ever, business model innovation (the systems, revenue model and value added services surrounding your offerings) has risen in importance. If you want to discover a new model for your industry, this family of tools can help. Structured ideation sessions focused on UC Davis professor Andrew Hargadon’s Eight Ways to Make Money can open new models for consideration. Alexander Osterwalder’s Business Model Canvas can expose faulty assumptions in the revenue model. Innosight’s Scott Anthony outlines the DEFT process (Document, Evaluate, Focus, and Test) in his new book, the First Mile. No wonder Business Model Ideation is being taught in leading business schools and “lean startup” workshops: it helps mere mortals to think like Elon Musk, Steve Jobs and King Gillette.

Okay, now you’ve perused my short list of top tools. But you, reader, are the co-creator here. Please give me some quick feedback on the tools you regularly use, and your comments on tools that you’ve tried to use, that just didn’t work so well. In a future issue of InnovationTrends, I’ll summarize all comments received. Click here to fill out the survey.

Eight Ways to Rethink Your Business Model

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Many businesses today are stuck in a commodity mindset. You hear them say things like, “All customers want is the lowest price.” Or, “This is a mature market.” Or, “You have to move manufacturing to China to survive.”
Whether you’re a small operation, a startup, or a large multinational, it’s easy to adopt the prevailing assumptions. Often they’re industry assumptions. Sometimes they are company assumptions (“we don’t have the capability to pull that off”). And sometimes, they are personal assumptions (“I’m not creative” or “An individual like myself can’t impact an organization as big as ours”).

Regardless of type, my company’s research with industry groups shows consistently that winning firms are those that don’t buy in to conventional wisdom. Their leaders make it job one to challenge assumptions. They take time regularly to rethink. Use this list below to start a rethinking revolution in your firm:

1. Rethink what everybody in your industry knows to be true (but may not be)

A decade ago, if you were a furniture manufacturer in the United States, the assumption was: “You have to move manufacturing to China or face the inevitable.” The industry was hard hit, but not everyone caved. Bassett Furniture, based in Virginia, got busy rethinking its options. They cut costs, partnered with their workers, and invested in cutting edge equipment. Then they rethought what their dealer network needed most for it to survive. Today, Bassett ships custom orders in 24 hours, retailers carry less inventory, and favorable financial terms. Meanwhile, the China Price differential is disappearing as wages, raw materials and shipping costs continue to rise. “Many companies that offshored manufacturing didn’t really do the math,” says Harry Moser, founder of the Reshoring Movement.  “As many as 60 percent of the decisions were based on miscalculations.”

2. Rethink how you sell

Before J.D Power came along, the market research industry’s standard practice was to call upon customers to obtain research contracts. These research projects were then conducted on a proprietary basis. But Power went in a new direction; he rethought the business. Bearing all the costs upfront himself, he investigated the auto manufacturers’ customer experience. Then he sold his findings to the car companies for a hefty price. Customer satisfaction standouts were given the right – for an added fee – to advertise the proud results. Only if they paid did they have the right to claim that they were “number one in customer satisfaction.”

3. Rethink the markets you serve

Like a lot of hard hit “commodity” paper companies, Mohawk Fine Papers, of Cohoes, New York, was hit hard by the digital revolution and the “paperless office” trend. Mohawk’s customers were cutting back and cutting out printing. What to do? Mohawk was advised by consultants to cease operations, but they exited the low end of the market, and activated the opportunity mindset. First, they boldly launched an online operation to create personalized stationary. They joint ventured with online websites for customers who create their own coffee table books. And they began selling pricey “superfine” paper to customers who wanted to design personalized holiday cards. Result: 2013 revenues increased 17 percent to $410 million.

4. Rethink what you guarantee

In December, 2008, during the depths of the global economic downturn, car buyers stayed away from dealer showrooms in droves. The major automakers were down 30 to 50 percent. Rebates weren’t working. But Hyundai North America got busy rethinking industry assumptions. Instead of playing the rebate game, they asked a different question: “Why aren’t customers buying cars?” The question unlocked new creative space. Result: Hyundai began offering customers a “one year no cost return guarantee.” If you lost your job in the 12 months after purchasing a Hyundai, you could return the car for free. Result: sales were up at Hyundai 14 percent.

5. Rethink your customer’s solution

Often, business models get built on a partial solution for the customer. Nobody challenges them for decades. But then someone rethinks what “total solution” would look like in the eyes of customers. That’s what happened when Apple introduced the iPod-iTunes solution. The iPod alone would not have had much impact. But combined with iTunes and the ability to purchase songs for a dollar, the consumer got a complete music solution for the first time.

6. Rethink how you price

In the jet engine business, the over-riding assumption was: “Use engine sales as a loss leader to secure the lucrative business of selling replacement parts.” But GE Aviation did a rethink. As a result, they upended the industry model by offering customers a bold new choice. Airlines could now buy “power by the hour.” Instead of purchasing jet engines, they could opt to be charged on the basis of uptime, or per hours of use. They could purchase a package that included engines, parts and maintenance, repair and overhaul services.

7. Rethink your customer’s needs

Clayton Christensen is best known for his theory of disruption. But another of his ideas, in this writer’s estimation, is by far his more useful: jobs to be done. Christensen posits that consumers “hire” products to get certain jobs done. The commuter facing a 90-minute drive home in heavy traffic “hires” a milkshake to relieve the tension and tedium of the commute. We “hire” a dishwasher to clean our dishes. Over time, businesses tend to make all kinds of assumptions about what jobs their customers need to get done. Meanwhile, customers’ needs change. By consciously identifying “jobs to be done,” you will often find new and emerging opportunities ripe for exploitation.

8. Rethink your revenue model

For years, Blockbuster dominated the movie rental business. In 2004, they had over 9000 stores. But then came Netflix with a new revenue model: from per transaction, to monthly subscription fee. Movies by mail just as fast as you could watch them and return them. Consumers loved it. And Blockbuster began its painful decline. For years, auto insurance companies sold policies based on a person’s driving record and age. Progressive Insurance rethought its revenue model and gave policy-holders a new choice: pay by the mile, and time of day you drive.

Are You Indispensable at Work?

 

Spotlight-on-talent-cropThis summer, my wife Carolyn and I flew to Johannesburg to begin what was billed as the “Ultimate African Adventure.” By light aircraft, and then jeep, we and seven friends spent 17 days exploring the wilds of Botswana, Zambia, and Zimbabwe.

Each day we rose before dawn, dressed warmly (it’s winter there), and set out in Land Rovers on what are called “game drives.” We’d rumble along slowly for a time seeing nothing, then suddenly there’d be a dazzles of zebras grazing quietly. Or around the next bend, a rank of impalas or a parade of elephants. We even came upon a rare pack of wild dogs feasting on fresh kudu, and all such sightings set off press conference cacophonies of camera clicks (one friend took over 5000 photos!).

In the evenings, we enjoyed tasty meals and South African wines. We gathered around campfires for African dancing and singing by our talented camp hosts. It took awhile to adjust to going “cold turkey” and not being able to log on to the Internet. But after the first week, work began to recede from thought, and Africa lifted me up, which is exactly what vacations are supposed to do.

I came out of the bush with a new lease on life. I’m fired up. Ready to go. I love what I do, which is to coach people and organizations to realize their innovative potential. Back home in California, I received an email from a reader of InnovationTrends who works for SAP in Germany. “I love the new focus on innovation and technology trends,” she wrote. “But what I am missing is the human aspect. Personal innovation. How to support your own creativity and innovation flow.” The phone rings and it’s a major healthcare organization calling. We need you to help us “make innovation everybody’s business” at our September meeting of all 8000 employees.

Five years ago, amidst the gloom of the global financial crisis, I began to focus on the “everybody’s business” aspect of innovation. I came to see that innovation is not something you do after you get your work done, it’s how you do your work. I looked at the massive layoffs and growing disengagement, and noticed that even people with good technical and functional skills were being downsized and dislocated.

Innovation is not something you do after you get your work done, it’s how you do your work.

So I began to interview managers and individual contributors in organizations whose colleagues considered indispensable. What were their secret skills? what did they have in common that made them so valuable? What were the attributes that enabled them to get important new projects done. From this research, I came to see that whatever your position or industry or specialty, your ability to innovate – to problem solve, think critically and digitally, to experiment, add value, to be able to figure out new ways to differentiate and delight customers and to think ahead of the curve – would become more and more valuable in the world that is evolving. Developing what I started calling “I-Skills” (innovation skills) may be the best career move you’ll ever make.

Organizations don’t innovate. People innovate. Engaged and passionate and collaborative people innovate, because innovation is a team sport. The innovators I’ve met pour their heart and soul into their work, into the projects they are involved with. And they are rewarded in deeper and more satisfying relationships with colleagues.Constant learning. Greater autonomy (“They leave me alone and let me think,” said one interviewee.) In endless variety, and incredible challenge. As one of the many managers we studied expressed it: “I’ve never been so happy in my work as I am now. I get to work with a really great team of people and I’m having the time of my life.”

People who’ve embraced the innovator’s mindset all seem keenly aware of what I call their “unique contribution.” It might be their uncommon ability to spot opportunities that only seem like hassles to everyone else. It might be their ability to “connect the dots” or to link up people who don’t realize they have potential synergies. It might be bridging the communication gap between the technical folks and the marketing folks to form a more compelling offering.

When an organization finds itself disrupted, individuals with take charge reputations rise quickly to prominence. Where are the people we can rely on to lead this change initiative? To get us out of this pickle? And if you’ve quietly gone about building your I-Skills, you don’t have to market yourself. They’ll beat a path to your door.

So my advice is this: stop waiting for your organization to be perfect. You can differentiate yourself in a flawed and dysfunctional organization by becoming a pocket of excellence. A beacon of sanity and positivity and standout reputation.

If you’re curious as to the present state of your I-Skills, I challenge you to take this simple test. It’s an assessment of your strengths and areas for improvement as you become indispensable at work.

 

 

Five Tech-Trends That Are Changing the Game

images-1In 10 years, over 40 percent of the Fortune 500 will no longer be around. By 2020, more than three fourths of the S&P 500 will be organizations that we have not heard of yet. Predictions like these are common. What if they turn out to be correct?

That’s the question I’ve been pondering since speaking at IBM’s Big Data Conference in Toronto last week. IBM is making a big push into analytics, and the field is taking off. Since their near-death experience in the ‘90s, when the market shifted away from mainframes and the company was caught flat-footed, IBM has done an exemplary job of embracing marketplace shifts. They’ve also gotten better at shedding. They sold off parts of their business (such as their PC division, and most recently their server division) to focus on higher value work such as Big Data. Clearly, this shedding and embracing skill is one that all firms will need to master in order to survive in the Age of Disruption.

How to do this is the question. Start by tracking the trends, especially technological, which are the fastest moving. Below are five that my team and I have been monitoring of late. Whether you’re with a small or mid-sized business, or a huge multinational, as you read thru these five tech megatrends, ask yourself: what might we need to shed (or stop doing) to take advantage of this development? And what do we need to embrace (or start doing) to capitalize off this trend?

1. Big Data Will Transform Healthcare, Government and a Host of Industries.

Big Data is the technology that allows more people to analyze more information from more sources in more ways than ever before. Everybody knows that data is expanding exponentially, but here’s how much: Ninety percent of the world’s data was created in just the last two years alone. The only downside is that 80 percent of that data is still “unstructured” – meaning it’s not fully digitized and therefore inaccessible. But companies that embrace Big Data will be able to make sense of the information at their fingertips, and derive new strategic benefits. New ways to cut costs, increase sales, personalize product offerings, and enter new markets. Since 2005, IBM has invested $24 billion in their data analytics business, including $17 billion in 30 acquisitions. And they are hardly alone. Key question: what are you doing to exploit Big Data in your company?

2. A Supercomputer in Every Pocket.

In just the past two years alone, the smartphone has become an essential mass-market device used by two billion people around the world. Qualcomm predicts that by 2017, seven billion smartphones will be sold. Soon, you won’t even be able to purchase a basic cellular phone. “We’re just now starting to live in the world where everybody has a supercomputer in their pocket and everybody’s connected,” Netscape inventor and tech investor Marc Andreessen told the Wall Street Journal. “For a lot of people, their smartphone will be the first computer they ever have, the first phone to connect to the internet, first way to learn online and organize politically and get accurate information and access to global markets.”

The way Andreessen is thinking about mobile technology is the way all of us should be thinking. The fact is, we’re just starting to glimpse the implications of five billion people having a supercomputer in their purse or pocket every hour of every day. Try this exercise: ask your kids (or grandkids) to think out into the future 10 years and speculate on what new capabilities the smartphone will be able to do? Have pen and paper handy, and take notes!

3. The Internet of Everything Will Usher in a Major Productivity Boom.

There are already more things connected to the Internet (and soon to your smartphone) than there are people in the world, according to Cisco research. This is the Internet of Things (IOE) megatrend and it too is gaining ground quickly. General Electric CEO Jeffrey Immelt calls IOE “tying together the physical and analytical worlds,” and he’s got his 315,000 employees busy doing just that. Since GE makes everything from power plants to locomotives to hospital equipment, IOE is a definite game changing opportunity to differentiate offerings and add unique value to customers seeking greater productivity.

Already, GE’s sensor-empowered machines kick out data about how they’re operating, where they’re in need of attention, and how they can be run more productively. GE’s analytics team crunches the data (See Trend #1, Big Data), and helps customers adjust machinery to be more efficient. By the company’s estimates, data of this sort could boost productivity in the USA alone by 1.5 percent, which over a 20 year period could save enough cash to raise average national income by as much as 30 percent! Internet of Things innovators are busy connecting not just machines, but buildings, factories, even cities.

The Spanish city of Barcelona is already using IOE to operate more efficiently and offer its citizens new services. Through connected water management, the city already saves $US58 million a year. Connected street lighting saves $37 million. And an estimated 47,000 new jobs have been created over the past seven years. Some observers, such as Cisco CEO John Chambers, predict IOT will have a much bigger impact on the world than the first 20 years of the Internet. Now that’s a game changer if ever there was one!

4. 3D Printing Will Change the Game in Manufacturing.

While much of 3D printing’s early days were confined to making small plastic items for giddy hobbyists, these are no longer early days. This fall, 3DP innovator Jay Rogers, CEO of Local Motors, will print an entire car! Meanwhile, practical uses are exploding. NASA uses 3DP to rapidly prototype at lower cost. Stage set designers on Broadway are using 3DP to churn out sample sets overnight. Ships at sea are using 3DP printers to make replacement parts, doing away with costly backup inventory. Just this month, a group of volunteers from around the globe have teamed up to form a charity that creates 3D-printed prosthetics for those who could never afford them otherwise.

3DP evangelists like Bre Pettis, CEO of MakerBot Industries (and a speaker at the recent Front End of Innovation conference in Boston last month), believe 3DP will ultimately transform manufacturing. Bre cites wages in China doubling every two years, and global supply chains interrupted in recent years by natural disasters, to argue that manufacturers will soon turn to the new make-on-demand technology en masse. “No more making and shipping and storing” is the new mantra. Not when you can customize and deliver instantly. Sales of 3D printers, materials and associated services was only $2.5 billion worldwide last year, according to market research firm Canalys. But that figure is expected to grow to $3.8 billion this year and soar to $16.2 billion by 2018.

5. Cloud Computing Will Disrupt and Enable Businesses.

Lanspeed, a 15 employee IT services firm in Santa Barbara, California, recently shed its last remaining on-premises server. The firm has fully embraced The Cloud, which CEO Chris Chirgwin reports is paying off in improved performance, greater reliability, at lowered costs. Lanspeed is hardly alone in taking advantage of this tech-megatrend — to serve customers differently, and to serve different customers. But the cloud is both a disruptor and an enabling force of change. For startups needing massive amounts of computing and storage power, The Cloud has been an extraordinary enabler of innovation. For others, it’s a potential disruptor. At IBM, The Cloud had the potential to displace big parts of the company’s business of selling hardware, software, and services to data centers. But the company is now embracing “Cloud DNA” big time with the goal of having 40 cloud-dedicated centers in 15 countries operational by the end of 2014. CEO Virginia Rometty’s message to IBM’s 400,000 employees: “Embrace the future, and quickly, rather than resist it.”

Not bad advice for all of us!

Guidelines on How to Set Up a Successful Rethink Session

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1. Invite and recruit participants to the session (remember: no deadwood allowed) and make it an honor to be asked.

2. Mention that this is just an exercise, a “think tank.” Imply that nobody will have to do any actual work afterwards, unless they want to).

3. Send out the key rethinking questions a week in advance. Make it look fun, and slightly rebellious.

4. Big question: what about our business model is most ripe for reinvention?

5. Big question #2: what industry assumptions are there today that will go by-by in the next 3 to 5 years?

6. Focus on how you might deliver tangible value surrounding your offerings. Then ponder: how might we rethink distribution? What value added services might we add to differentiate us from the competition?

7. Follow the normal rules of brainstorming: no bad ideas, write ‘em down, go for quantity, not quality, appoint a facilitator, etc.

8. Ask how noted innovators might encourage rethinking in your industry: Jeff Bezos, Steve Jobs, Elon Musk, etc.

9. Start with rethinking the things about your business model that touch your customer. What aggravates them such that, if we could eliminate it, would be a win-win? And: If we did this, what’s in it for the customer? How will the customer benefit?

10. Decide in advance what you’ll do with the ideas after the session. Write them up and report them to the CEO? Store them in a file and return to your piles of work? Tell people that you were only kidding when you said this was just an exercise. Invite people to join you in taking action to change the world.

The 6 Hottest Innovation Trends

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Future ImageNext week, thousands of people from around the world will gather in Boston to hear the latest developments in the fast-changing field of innovation. For me, the Front End of Innovation conference is a kind of homecoming, a place where I swap ideas with practitioners and fellow consultants that I don’t often get to see, and spot emerging trends. In preparation for next week’s event, here’s my take on the most significant trends shaping the innovation field in 2014. I’ll let you know in future editions of this newsletter which ones I left out.

 1.    The start up boom is energizing the global economy.

Only a few years ago, pundits were worried sick that all the best minds of the younger generation were headed to Wall Street. How 30 minutes ago! Today millennials with even an ounce of entrepreneurial spirit are heading instead to the tech hubs: Silicon Valley, or Silicon Beach (Venice, California), or Soho (New York) or Tel Aviv, Dublin or Lima, with a passion that makes Wall Street seem downright dull in comparison. They’re fired up to create the next Facebook, or WhatsApp, or start a robotics company that changes the world. They are discovering that funding is available, fans and followers and paying customers are receptive, and incumbent multinationals ready to buy their ideas. Google has purchased eight companies in the past five months, including Nest, maker of smart thermostats and smoke detectors, and is apparently branching out to serve “the connected home.” Who’s next?  Serial entrepreneur Richard Barton, whose startups include Zillow, Expedia, Glassdoor and others says he benefits from being away from the frenetic pace of Silicon Valley. He gets ideas by repeatedly asking a simple question: “what piece of marketplace information do people crave and don’t have?”

In sum: Whether it starts in Silicon Valley or elsewhere, the startup boom is providing much needed oxygen to the global economy. The trend is likely to continue to grow in importance. Already it is having a profound impact on the corporate world; here the message is clear: cultivate a culture of innovation or your best and brightest will bolt. No industry’s incumbents are safe from the startups, who are busy trying to disrupt the business models in the unlikeliest of industries, like thermostats.

 2. Open Innovation is Going Mainstream.  

With global R&D budgets declining in real dollars over the past decade, collaborating externally with partners (suppliers, customers, universities, etc.) by sharing technologies, risk and financial rewards has become a growing method to make up the shortfall.

The term was first coined by UC Berkeley professor Henry Chesbrough in his 2003 book Open Innovation, and received notice when Procter & Gamble adopted his methods with their pioneering Connect and Develop program, whereby 50 percent of product ideas come from outside the company. Today, legal concerns around IP (Intellectual Property) have been somewhat mitigated, and the boundaries between a firm and its suppliers and stakeholders have become more permeable. Within this new “open” framework, ideas (and technology) can easily transfer inward and outward to the mutual benefit of all parties.

At the conclusion of the recent Open Innovation Summit in Baltimore, blogger Sara Caldicott  reported on case studies from companies as diverse as Clorox, Amazon, Intel and Pfizer, and concluded that “open innovation success offers firms newfound abilities to pivot rapidly into diverse business models, distant geographies, as well as gain access to new target audience groups and technology platforms.” Look for Open Innovation to go mainstream as an essential best practice in a resource-constrained era.

3. Innovation is Becoming Everybody’s Business.

Until only recently, innovation was the province of the R&D department, new product development, and the marketing team. No longer. Today a firm’s next breakthrough might arise from its logistics department, from a new manufacturing technique, or from its creating a new market or business model. With this in mind, more and more progressive companies are training their high potential managers and individual contributors in the skills of innovation. Topics include: How to pounce on opportunities; how to recognize the unarticulated needs of consumers; how to collaborate cross functionally to remove barriers to successful innovation; how to sell new ideas up, down and laterally; and how to set expectations in the case of a high-risk new ventures or business models. While the present generation of CEOs is dominated by Boomers –who didn’t study innovation as a field in school — the rising generations are finding it valuable, if not essential, to champion a revenue–building project, product or service. In sum: mastering the mindset, skillset and toolset of innovation is sure to become a requirement for advancement to the top.

 4. The “Sharing Economy” is Unstoppable.

The hotelier that will soon overtake Hilton and InterContinental to become the world’s largest lodging chain doesn’t own a single room. AirBnb, based in San Francisco, is a website which enables homeowners in 192 countries to rent out their spare rooms or vacant homes or apartments to travelers. Airbnb is one of a growing number of innovative startups that are part of the burgeoning “sharing economy” movement, which allows regular people to make money on assets they already own. Result: more and more traditional industries are being upended by competitors from outside their industry. The taxi industry is being disrupted by Uber, a ride sharing app that’s already spread to 70 cities. Airbnb is busy disrupting the hotel industry. TaskRabbit is a threat to the temporary staffing industry. Want to share your car and pick up some extra income? Register it on RelayRides or Sidecar.

According to Forbes, the trend is already generating $3.5 billion a year, with growth exceeding 25%. While regulators are currently clipping the wings of certain of these upstarts, their cumulative effect is said to have a major impact on cities, product manufacturers and service providers. Using Ebay’s rating system, and smartphones that let sharers transact anywhere, anytime, micro-entrepreneurs are empowered to further monetize this space for years to come. Just as YouTube did with TV, and blogs did to traditional media, the peer-to-peer sharing trend is becoming a major disruptive force that will, in the years ahead, create winners and losers in its wake.

 5. The Rise of the CINO.

In 2006, a new breed of senior managers began to emerge at forward-thinking companies like GE, BBC, Whirlpool, Humana, and Shell. The title they took was often chief innovation officer; their goal was to align innovation strategy and culture. By putting somebody in this role, these organizations helped drive growth and transformation in a more systematic way.

Then came the Global Financial Crisis. For a while, not much was heard from these “innovation czars” as some have termed them. But now the trend is again on the upswing, helped along by a string of CINO conferences that bring these souls together to commiserate and collaborate. According to a Cap Gemini global survey of 260 innovation executives, 43% said their companies have a formally accountable innovation executive, up from 33% the previous year.

My own preliminary research reveals that roles and responsibilities vary widely, as does their clout and effectiveness.  However, there does seem to be one key to success: having the ear and the support of the chief. Another major success factor is whether incentives and are aligned such that business units are compensated at least in part on inventing the future, rather than profitability alone.

Not all CINOs succeed; for some it’s a lonely and career-risking post. But those who do, such as Lee Clark Sellars at building materials giant Ply Gen Corporation, move the growth needle and get promoted, or recruited to run major companies (Marissa Mayer, now CEO of Yahoo). “Companies with highly aligned innovation strategies and cultures generate 30% higher enterprise value growth and 17% higher profit growth than industry peers,” reports a Booz & Company study. There’s growing recognition that CINOs are the missing link in gaining this kind of alignment. Look for the position to grow in the years ahead.

 6. Crowdsourcing will continue to gain clout in large organizations.

Denmark-based Lego Toys uses crowdsourcing to inspire ideas from fans that its own 180 designers might not have ever thought of. Submissions that receive 10,000 votes from site visitors are then vetted by Lego reviewers. And fans whose models are chosen for production receive one percent of their toy’s revenue. Thanks to the internet and social media, crowdsourcing is one of the hottest new methods of tapping customers (and the wider public’s) knowledge, creativity and insight to further your company’s goals. Other organizations are crowd-sourcing for solutions to vexing technical problems or to discover winning algorithms (Netflix), while snack giant Lay’s, a division of Frito Lay, asks the crowd to suggest new chip flavors or even whole snack categories via its crowdsourcing website. To see the front lines of this revolutionary trend visit Clorox Connects and you’ll see dozens of ideas submitted by Clorox consumers. Fact is, we’ve been crowdsourcing since the time of the Romans. What’s different today is the scale and scope of this new method of interacting with the wider world, and this dynamic will only grow in the years ahead.

Clearly, you can look at your company’s innovation efforts and say “business as usual.” But that’s dangerous. The driving necessity is to continue to upgrade and refine the way you practice innovation, and this is a function of leadership. Hopefully these six trends will spur you to take action, and I wish you all the best.

 

 

Creating a Risk-Taking Culture

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Twelve years ago, appliance makers Maytag and Whirlpool both faced a recessionary environment, intense global competition, and products that consumers could not tell apart. Maytag elected to hunker down and cut costs. Whirlpool took a different tack.

Under then-CEO Dave Whitwam, the company launched an all-out, enterprise-wide initiative to develop a core competency in innovation. Not having a cookbook to follow, they experimented with how best to reward risk-takers and foster a culture where ideas were welcomed, supported, and funded. Maytag, a once-great American company, cost cut its way to near-oblivion, and was purchased by Whirlpool in 2005. Meanwhile a reenergized Whirlpool grew to become a global appliance powerhouse and a leading proponent of Systematic, All-Enterprise Innovation.

Twelve years on, Whirlpool has not just survived the Global Financial Crisis, but delivered record financial performance in 2013. And now it faces formidable competition from a new source: “smart appliance” disruptors Samsung, LG, and others — an area where Whirlpool could have been blindsided were it not for the company’s innovation focus.

As more and more companies face a similarly changing competitive landscape, they’re opting for a Maytag response. “We’ve been so operationally-minded for so long,” they tell me, ”that we are having trouble finding entrepreneurially-minded people to lead the charge.”

Behavior That Gets Rewarded, Gets Repeated

To compete in the hyper-competitive global economy, new behaviors will be required of you, and everybody on your team. Often, in consulting projects we start with a comprehensive Innovation Climate Survey. This gives you an objective, confidential evaluation of how people perceive the true cultural norms and values. If you’ve rewarded risk-avoidance, punished failure, and ingrained incrementalism, that’s what people repeat over and over until something comes along that changes that.

For years, companies have rewarded managers for making their numbers, flying under the radar, and “doing more with less.” The fact is, this strategy worked. Until it didn’t any longer. Maverick thinkers who somehow made it through the Orwellian hiring process that help HR departments identify “people who think and act just like us” were not seen as valuable team players but as difficult-to-manage nuisances. Often their reward was to be first-fired during layoffs.

So if you’re now looking for different behavior, you have to get clear on exactly what actions, decisions, cultural norms and values you want people to change.  And you have to look for high visibility ways to incent different behaviors going forward. It won’t be enough for the CEO to make innovation one of the company’s nine top priorities,as a petroleum exploration and marketing company attempted to do. You’ll need to do lots of things to get the word out that expectations are changing, and that not innovating is the greater risk to one’s career.

If you have trouble identifying people in your organization whom everyone recognizes as risk-takers and entrepreneurs, that should tell you something. My advice: steer clear of monetary rewards as a way to get attention. Beyond small monetary rewards given to teams not individuals, cash for ideas can backfire, and besides, the literature shows that recognition is the most reliable reward of all. Properly motivated and recognized, enough people will step forward, and seemingly ordinary people that you may have assumed “didn’t have it in them” will do amazing things.

Publicizing examples of innovativeness from your own people is another way to gain buy-in and reinforce the new behaviors you’re hoping to spawn. Not only do you shine a spotlight on people who dearly need recognition, but you provide evidence that innovation isn’t something that only the Apples and the Google’s can do; it’s something your people are doing too – and need to do more of. Give recognition to teams and individuals who stick their necks out to launch new products, even if they aren’t successful right off and even if they fail.

And finally, the rarest, and therefore the most valuable contributors in your company are those who are obsessed about customer needs, and not about the latest company politics. Seek out people who dream up new solutions to customers’ problems, who aren’t content just to incrementally improve your products and services, but who want to change the world. 

Thriving in the Age of Disruption

At a destination travel conference in Barcelona not long ago, a marketing exec confided to me that although his company has enjoyed double-digit growth during the past four years, there’s a sense of unease. I asked him why. He explained that if a new competitor like Apple or Google or Amazon decided to enter the company’s market, they could be upended overnight. This company is hardly alone.

In 1997, when Harvard professor Clay Christensen first articulated his theory of disruption, the phenomenon was confined to the disk drive industry and a few others. Today, disruption is an ever-present threat to a growing number of industries.

Kodak tried to fend off digital disruption for 16 years before declaring bankruptcy in 2012. Blackberry is the new Kodak. Four years ago, the company’s market share stood at 53 percent. It has since crashed to three percent with no turnaround in sight.

While technology is clearly the driver, it’s not the only type of disruption. As I work across industries helping business leaders think ahead of the curve, I am amazed at the many forces and factors that can trigger mayhem. For example, it can spring from lifestyle changes, or demographic changes, or new government regulations.

At a banking conference in St. Louis, a congressman predicted that 25 percent of independent banks in the United States would be out of business within a year. The culprit: Dodd-Frank banking regulatory reform, which mandates a raft of new laws that the small lenders are hard-pressed to comply with. Or, at an insurance trade association convention in Laguna Niguel, California, I learned that many of the member companies are reeling from the disruption brought on by the Affordable Care Act.

To be sure, disruption is nothing new. The buggy whip makers who failed to adapt to the coming of the automobile simply didn’t survive. Today, it is bricks and mortar bookstores and other retailers who are in the crosshairs of change. Dentists are being disrupted: it seems people aren’t having as many cavities these days and there’s a glut of dentists with less drilling to do. People are drinking less milk, taking fewer vitamins. Consumers are opting for cremation and disrupting the funeral industry in the process. The global auto industry has been hit by young people’s indifference to cars and alternative means of transportation, such as Zipcar. Who’s next?

If you talk to young people, they will tell you that the cable television industry, with its nosebleed monthly charges, is ripe for disruption. But when you bring this up to people in the industry, they refuse to acknowledge it as a remote possibility. And maybe that’s the point. Denial is the most common reaction to disruption; ignore it and maybe it will go away. But it doesn’t.

As someone who studies industry disruption, I can tell you denial is not the best policy. Last year I keynoted the ski resorts industry annual convention in Palm Springs; their disruption is demographic and economic. Aging Boomers are opting for less strenuous sports, and going to the mountain less. Meanwhile, the cost of skiing continues to rise while wages have stagnated for new generations who might want to take up the sport but can’t afford to. What to do?

The smart resorts, such as Whistler Blackcomb in British Columbia, Jay Peak Resort in Vermont, and Vail Resorts in Colorado, are not sitting still. They are looking for new ways to grow revenue – by reinventing their ski schools, for example. They are developing loyalty programs that keep customers coming back and discovering ways to enhance their experience, such as appointing trip advisors to cater to their every need. Most importantly, they are redefining what business they are in and not confining themselves to snow sports.

Whistler Blackcomb has become the world’s leading mountain bike park, attracting big crowds in summer. Jay Peak has built a year-round watersports arena that has caught on with people who’ve never skied. “The future of this industry is in your hands,” I told the assembly. “Or rather, it’s in your mind.”

To thrive in the age of disruption, what’s most important is our mindset; our willingness to get busy managing the future, rather than lamenting the past. Denial is the enemy because it can lead to paralysis by analysis.

Often disruption means that it’s time to develop a closer understanding of what’s producing value for your customer now. Experimenting with new biz models, new products and services, and new marketing methods can get us in action mode.

In such periods of uncertainty, the natural tendency is to be distracted by the internal affairs of your company. But getting out more is essential. It’s also important to coax yourself to “think ahead of the curve” and not get caught focusing on the short term.

Take time to gather data, talk to people and pick their brains, study history, and try to develop a point of view about where things will be three to five years from now. Regardless of the industry you’re in or what your title on your business card says, you can make yourself indispensable by wading into the storm, rather than leaving it to others to find the future.

Greetings from the World’s Most Innovative City

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Which of the following cities was just designated the World’s Most Innovative City by the Urban Land Institute/Wall Street Journal? Tokyo, Tel Aviv, Shanghai, Medellin or New York?

If you picked Medellin, give your brain a kiss!

Last week during a speaking engagement in Colombia, I had the opportunity to view firsthand the amazing transformation Medellin has undergone. By tapping the power of innovation, Colombia’s second largest city has shifted from being a violent, drug-ravished, and stratified city of three million people, to become a “can do” community that constantly seeks ways to improve the lives of its citizens.

I went there half wondering if it was a PR ploy; I came away inspired.

Twenty-two years after cocaine kingpin Pablo Escobar was killed in a shootout with Colombian police, homicides are down 80 percent. Poverty is reduced, and civic pride is up. Our guide, an engineering student named Carlos, toured us through museums (nine of the city’s largest firms funded a science museum), and one of ten new schools built and donated by Empresas Públicas de Medellín, the civic-minded local utility. Medellin, we learned, is one of the largest cities to successfully implement participatory budgeting, which allows citizens to define priorities and allocate a portion of the municipal budget.

Perhaps the biggest symbol of what Colombians call “social innovation” is Medellin’s cable car network and escalators. Cable cars now ferry people down from the hillside slums, and link them with public transportation. As a result, people don’t have to spend hours each day traversing the steep hills to get back and forth to work.

This might seem like no big deal to an outsider. But it was life-changing for the weary manual laborer we shared a gondola car with on our ride to the top. From an innovation standpoint, this was identifying and solving an unarticulated need. City officials might easily have continued to ignore this worker problem as “just the way things are” and something that was unsolvable. Instead they borrowed an idea from the ski industry, and ignited economic growth and productivity.

Just last week, another city blasted across the headlines with the opposite sort of news: Detroit declared bankruptcy, in effect waving the white flag on its ability to creatively solve its problems. Brookings scholars Bruce Katz and Jennifer Bradley, in a just released book, call Detroit “a perfect storm of municipal mismanagement.” I’d call it a wake up call to what can happen when people stop collaborating, stop believing and stop taking charge of their destiny.

In my speech before a group of Colombian financial executives, I described innovation as a tool for progress. Corporations and entrepreneurs can use this tool to create new products and services that offer superior and unique value to customers.

Municipalities like Medellin, Durban, South Africa, and Gaborone, Botswana, where I traveled last month, are beginning to master this tool to remove barriers, promote literacy and job growth, attract industry, and raise living standards.  Just as cities are rated and ranked on innovativeness, countries are as well. Today, in a hyper-connected world, everybody wants to be citizens of innovation nation.

“We managed to transform a brand that was associated with drug trafficking into a brand of innovation, which means that we know how to solve problems, we dare to change,” former mayor Sergio Fajardo, credited as the initiator of Medellin’s transformation, told NPR.

I just wish the innovators of Detroit could travel to Medellin and see what I saw about the power of innovation and collaboration to transform circumstances and turn around even the bleakest situation.  Our guide, Carlos, would surely be glad to show them around.

“When we were considered the murder capital of the world we hated that,” he told us. “The biggest innovation here is in our hearts.”

Robert B. Tucker is one of the world’s most in-demand innovation speakers, consultants and authors. President of The Innovation Resource Consulting Group, with clients in 46 countries, Tucker is the author most recently of Innovation is Everybody’s Business. For more information: www.innovationresource.com or info@innovationresource.com

The Five Best Practices of the Global Innovation Elite

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At The Economist magazine’s Ideas Conference this year, they invited me to examine the various lists of “the world’s most innovative companies,” and to give a brief presentation comparing and contrasting their approaches and the firms they ranked in the top ten.

It turned out to be an illuminating project. For one thing, there are a lot of companies out there, and lest one limit oneself to only ranking companies in a certain geography (the United States, say), you’ve got a lot of work on your plate. But the real challenge, it turns out, is deciding the criteria and the methodology by which you’ll rank the innovators, and we found some interesting criteria:

  • The Boston Consulting Group has been ranking innovative companies since 2004, as a pure popularity poll of 1500 top executives. In 2008 they changed their methodology slightly to include 20% three-year financial performance, but still, it’s mostly a beauty contest.
  • Thomson Reuters’ Top 100 Global Innovators list is heavily weighted towards patents. Even they admit that this is not the full picture, especially today, when even respectable companies buy up patent portfolios solely to prevent others from actually trying to build innovative, new products.
  •  Forbes builds their World’s Most Innovative Companies list using what they call the “innovation premium” methodology. This is a measure of how much investors have bid up the stock price of a company above the value of its existing business based on expectations of future innovative results.
  • Fast Company’s methodology can be described in one word – popularity. They survey their editorial staff, and voilà, out pops their The World’s 50 Most Innovative Companies list. Just like that. Apparently if you’re Fast Company you don’t need criteria or methodology, you just need to make your list quickly, and get it out there on the newsstands!

When you compare and contrast these four approaches – BCG’s market performance, Thomson Reuters’ patents, Forbes’ innovation premium, and Fast Company’s popularity – what jumps out at you is that their methodologies and criteria are so fundamentally different. Small wonder that their “most innovative” companies rankings are vastly different as well. Some finalists are downright weird, like Sony at number seven on BCG’s list. They’ve lost money for the last four years and just recorded their biggest loss in their 67- year history. Three companies are the exception – Apple, Google, and IBM that show up on two of the four rankings. Amazon takes the prize for showing up on three of the four lists.

My purpose here is not to label these rankings manure, as Vijay Vaitheeswaran, China business and finance editor, The Economist did, but to consider afresh what fundamental factors make a company innovative, and not just a flash in the pan. It’s just that neither recent marketplace performance, number of patents, nor trendy popularity or even stock market “premium” tell the complete story. And combining these four metrics would not necessarily be the solution either.

Over the years, I have derived my own set of criteria. If there were a way to measure a company’s accomplishments in these five areas, I believe that would take ranking the most innovative companies into more objective territory. Here they are:

Innovation Vanguard Companies drive from the top. In the nine years that A.G. Lafley was CEO of Procter & Gamble (the first time), the company tripled its innovation success rate and the stock price skyrocketed. Under a succession of CEOs who had tried to jumpstart innovation, Lafley stand out. Indeed his successor, Bob McDonald tried and failed to carry on what Lafley started and resigned under pressure earlier this year, handing the reins back to Lafley, who was chairman.

Innovation might be the buzzword of our time, but succeeding at leading it is anything but easy. If you work in an organization whose leader doesn’t understand how to effect the levers of innovation, doesn’t bother to develop an innovation strategy, or become personally involved, you’re going to face an uphill battle at every step. If you are the CEO and you try to make innovation one of seven or eight key priorities, you’re not going to move the growth needle.

Innovation Vanguard companies fortify their idea factories. Simon Spencer took on the job of innovation catalyst at Borg Warner corporation back in the late ‘90s, before innovation became the corporate rage. Asked about why BW had decided to shake up its entire approach, Simon told me “We have a process for everything else around here, why not for innovation?” But today, only about 40 percent of companies have an effective process for innovation.

A lot of people think that innovation is about the dough, the financial payoff. A lot of people think that it’s about the “grow.” And, don’t get me wrong, it certainly is. But it’s fundamentally about the flow – the input, throughput and output of fresh, new powerful ideas through your company that sustains innovation. IBM gets it. Everybody in the company can submit an idea through their Think Place program. And they host periodic “jams” to dream up game-changing ideas.

Innovation Vanguard Companies collaborate deeply with their customers. They seek to anticipate not just what their customers’ present needs are, not even what their unmet needs are, but also what their unarticulated needs are going to be in the future. Amazon does this incredibly well. At every company meeting, they have an empty chair around the table. Why? It’s purely symbolic. They want to make sure to keep the focus on the customer at all times. CEO Jeff Bezos talked about this when he said, “We innovate by starting with the customer and working backwards. That becomes the touchstone for how we invent. The other guys start with themselves and say, ‘what are we going to get out of this?’” There’s a reason Amazon shows up on three of the four lists. And maybe this is it.

Innovation Vanguard Companies cultivate a culture of risk-taking. Risk aversion is a high art in most companies, but in companies like Apple, Google, Hyundai and many others, calculated risk-taking is seen as the mother of future growth.

During the depths of the Global Economic Crisis of 2008, consumer confidence plummeted and automakers’ sales were down 30-50%. But Korea-based Hyundai was up 14%. Why? What did they do? The other automakers were asking, “How do we sell more cars?” But Hyundai asked a different question: They asked, “why aren’t people buying cars?” Out of this brainstorm came a totally unconventional offering – a one-year, no cost, return guarantee. If you lost your job, you could return the car. Risky move? You bet. But moves like that have paid off for the fast-rising firm.

Innovation Vanguard Companies make innovation everybody’s business. One of the most innovative things A.G Lafley did was he made innovation everybody’s business. “Previously, we relied on 5000 R&D people for innovation,” Lafley told BusinessWeek. “Now we make sure that everybody knows the role they play in innovation.”

Not just the folks in R&D. Not just the innovation team. Not just the new product development department. But everyone and everywhere: IT, logistics, payroll, you name it. Because in today’s world, you really don’t know where your next breakthrough idea is going to come from.

Robert B. Tucker is one of the world’s most in-demand innovation speakers, consultants and authors. President of The Innovation Resource Consulting Group, with clients in 46 countries, Tucker is the author most recently of Innovation is Everybody’s Business. For more information:www.innovationresource.com or info@innovationresource.com

Amazon Vs. Apple: Who really is the world’s leading innovator?

The business media is constantly coming out with new rankings of “the world’s most innovative companies.” Forbes does it. Fast Company does it. BCG does it as well as Thompson Reuters. But what do innovation rankings really measure and do they help business leaders understand the new rules of innovation?

Click above to watch Tucker at last month’s Economist Idea’s Conference in Berkeley, where he takes a skeptical look at the methodologies behind these rankings, and introduces his own benchmarks for innovation excellence.

Are Chief Innovation Officers Delivering Results?

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Back in the mid-2000s, a new class of senior managers emerged at forward-thinking companies. Sometimes called chief innovation officers, or innovation catalysts, their job was to help their organization drive growth and transformation in a more systematic way. Companies including Humana, Whirlpool, GE, Coke, BBC, Shell and many others embraced the new position. And many others followed suit.

Before, most companies tapped director-level scientists to run disparate R&D outposts, and myriad marketing mavens managed new product development. The arrival of innovation czars represented a new approach to driving organic growth. The idea was to “put somebody in charge” who would lead innovation efforts. “A chief innovation officer needs to be a blend of marketer, technologist, strategist and businessperson,” observed BusinessWeek in a 2007 article.

Fast-forward almost a decade and you can’t help but wonder: how’s it going? Are these new-breed CIOs delivering the goods? To find out, I’ve been speaking with CIOs in the US, Europe, South America and Asia-Pacific. I’ve also been pouring over various innovation surveys, trying to gain an objective pulse on what’s going on.

The good news: after the global financial crisis threw almost all firms into cost-cutting mode during the past five years, innovation is definitely back on the front burner in organizations outside Europe. Boston Consulting Group’s annual survey of 1500 executives finds that “76% of respondents ranked innovation as a ‘top three priority,’ while 40% ranked it as the top priority — the highest level since the survey began in 2004. And other research suggests that the CIO trend is again on the uptick. According to Cap Gemini’s 2012 global survey of 260 innovation executives, 43% say their companies have a formally accountable innovation executive, up from 33% the year before.

Are these idea czars proving effective in sustaining the new, more comprehensive approaches to innovation management?

In the giddy days of 2007, an Accenture study boldly concluded that “companies that have a single point of accountability for innovation report higher innovation performance and capabilities as compared with their peers at a ratio of 2:1.” And a 2012 Booz & Company study indicated that companies with “highly aligned innovation strategies and highly aligned cultures generate 30% higher enterprise value growth and 17% higher profit growth” than industry peers. Which begs the question: how do you obtain that vaunted state of strategy/culture alignment? And what are the traits and job descriptions of CIOs who succeed in achieving that synergy?

Cap Gemini’s survey suggests that today’s CIOs are facing stiff headwinds. “Only 24 percent of CIOs believe they have an ‘effective organizational alignment of innovation efforts’,” notes the survey. “The absence of a well-articulated innovation strategy is by far the most important constraint for companies to reach their innovation targets,” concludes Paddy Miller, professor of innovation at EISE Business School in Barcelona, and lead author of the report.

This is roughly the same level of satisfaction level as a Coopers & Lybrand study indicated 12 years ago.

In my own preliminary research, I am finding that today’s innovation leaders are often newly appointed to the role, and lack in-depth knowledge of the field of innovation. They are often chief technology officers and see the world thru the technology lens, at the expense of creating cultural alignment. Quite often the word “innovation” gets added to the SVP’s portfolio along with strategy, finance and perhaps other functions. Many are poorly trained, and lack adequate funding and authority. Quite commonly, they have no network of other practitioners in other organizations to call upon when dealing with intractable challenges. Often, they are tasked with leading a multi-faceted, complex and evolving mission, for CEOs who are distant and uninvolved. Yet some are thriving and moving the growth needle, and are transforming staid organizations.

When they speak candidly, they will tell you how they get pushback both subtle and overt, and indifference from line managers and division heads. They are often tasked with delivering on a portfolio of projects, while also thinking ahead of the curve. Yet still, some are succeeding despite the odds.

The best ones bring new thinking to the table. They gain the ear of the CEO. They create strategic alliances and collaborate with customers. They embrace open innovation. They gain respect because they bring home the bacon.

Robert B. Tucker is one of the world’s most in-demand innovation speakers, consultants and authors. President of The Innovation Resource Consulting Group, with clients in 46 countries, Tucker is the author most recently of Innovation is Everybody’s Business. For more information: www.innovationresource.com or info@innovationresource.com

Philippines Telecomm Forum Focuses on IT Innovation

Enterprise Innovation Forum
MANILA, Philippines – Built on the strength of its passion and momentum for instilling innovation in the industry, Globe Business gathered leading business stalwarts here and abroad for the third installment of its Enterprise Innovation Forum (EIF) at the Makati Shangri-La.

Touted as the “most awaited and exclusive business event of the year,” the EIF drew top business executives where they learned ideas and strategies to maximize innovation within their organization to stay ahead of competition and become role models in their respective industries.

With the theme “Revolutionizing Businesses Today,” the event empowered the delegates with more insights on the current and evolving needs of their own clientele, with Globe being at the forefront of the industry.

The day kicked off with a CEO Breakfast Forum with Globe Telecom president and CEO Ernest Cu setting the tone through his welcome remarks.

Cu said, “The company is one which thrives through innovation as evident with its initiatives on transforming itself with massive investments on its network, IT infrastructure, customer support systems, and its people.”

In his special message, Globe chairman Jaime Augusto Zobel de Ayala said, “Globe Business has consistently been in the forefront of innovation by introducing game-changing solutions to the market as it continues to reshape itself to best position its clients, partners and affiliates to drive their future.”
True to its theme of introducing innovation, Globe Business head of enterprise segments Grace Castillo opened the forum proper via a hologram and walked the participants through a synopsis of the first two EIF’s highlights, then provided a snapshot of the event’s morning plenary and afternoon sessions.

She capped off her presentation by encouraging the company representatives present that for their businesses to survive, they need innovation “to embrace change to turn challenges into profitable opportunities and become role models in (their) respective industries.”

For this year’s forum, Globe Business flew in world-renowned corporate innovation consultant and speaker Robert Tucker, president and founder of The Innovation Resource, to deliver the event’s keynote address.

In his speech, Tucker said, “In today’s hypercompetitive world, innovation will be much more than new technology as well as research and development, but should rather become ‘everybody’s business.’”

“Innovators are made, not born, and I’m convinced that we can all learn to innovate better, and the EIF is one such venue to unleash innovation from each and every one here,” he said.

A panel discussion with some of the country’s top executives such as Bank of the Philippine Islands president and CEO Aurelio Montinola III, Citibank country officer Sanjiv Vohra and Zuellig Pharma Corp. chief executive Raymond Azurin along with Cu and Tucker followed suit, discussing the topic, “How Innovation Drives the Business Landscape.”

Globe head of corporate strategy and business development Gil Genio also provided a run-through of the current status of the ongoing network transformation, saying the “brand new Globe network is almost 60 percent done and will augur well for companies and enterprises being served by Globe Business.”

After providing an overview of the afternoon sessions, Globe Business head Jesus Romero reiterated Castillo’s earlier statements, going further by saying that while businesses today face huge challenges, they need to be able to do more efficiently, in less time.

“We all have to act now. We all have to be fast or be last. Having products and solutions that address end-to-end ICT solutions, Globe Business will be there to make innovation work best for you,” he said.

Breakout sessions featured topics on mobility, enterprise networking and connectivity, collaboration, technology, software solutions involving health care and business intelligence, showcased by a powerhouse cast of presenters and speakers — experts of their respective industries spanning the spectrum from electronics, telecommunications to health and all other industries in between.

New ICT services and solutions were also put on the spotlight, displaying the current arsenal of Globe Business to enhance corporate as well as small-and-medium enterprise operations.

Living up to its billing in propagating innovation, the 2012 EIF was also simulcast live to business leaders in Cebu and Davao.

The annual event powered by Globe Business was also ably backed up by its corporate partners SingTel, MIS Net, F5, Samsung Electronics Philippines, Research in Motion, Trends and Technologies, Avaya, ECI, Tellabs, and Hewlett Packard.

The evolution, current challenges and future of innovation

Innovation Management
Author Robert B. Tucker shares some thought-provoking insights into the state of innovation, including its surprising growth to date, what’s challenging organizations today and its future outlook.

Robert B. Tucker is president of The Innovation Resource, and an internationally recognized leader in the field of innovation. He is the author of several books, including Winning the Innovation Game, Managing the Future: 10 Driving Forces of Change for the New Century, and Driving Growth Through Innovation, which was just released in an expanded and updated second edition. In this Thought Leader interview, Robert talks about how the practice of innovation has evolved, current challenges given today’s uncertain economy and other disruptive factors, and what the future of innovation looks like.

Frey: What surprises you the most about how innovation has evolved – or hasn’t evolved – during the 5 years since the first edition of Driving Growth Through Innovation appeared?

Tucker: I don’t think any of us who’ve been around this field for awhile could have predicted how big it’s gotten. Survey after survey finds innovation one of the top priorities of CEOs and innovative companies like Apple and Google are inheriting the future. And of course right now the credit crisis and economic downturn are causing a wave of uncertainty and distraction like we haven’t seen in years. So a lot of these fledgling innovation programs that companies started up in the past five years are suddenly facing their first real test of sustainability.

Frey: Will they survive? What’s your perspective on that?

Tucker: The innovation managers I’m in touch with are getting push back – no question. A lot of them are having to make the case for innovation all over again. Innovation budgets are being scrutinized. But it’s different this time. There’s greater recognition that when times are tough it’s essential to put resources into innovation so that you take advantage when things turn around.

Frey: Isn’t cost-cutting and hunkering down inevitable? Who impresses you in the current environment as doing what you’re suggesting?

Tucker: No question, you have to cut costs. But you have to get creative too. Look at Howard Schultz [CEO] over at Starbucks. He realized Starbucks had gotten complacent. He realized that they’d taken their eyes off finding new ways to delight the customer. And suddenly paying $3 for a latte didn’t make as much sense to hard-pressed consumers. So they’ve started introducing new products; they closed 7100 stores in the US for an afternoon teach-in tutorial for baristas on improving espresso quality. They just launched MyStarbucksIdea.com to solicit customer suggestions. And it’s not just Starbucks. This is what progressive leaders are doing across the board.

Frey: You sound pretty optimistic. Isn’t it a whole lot more difficult to make the case for innovation when you’re losing money and your stock is in the tank?

Tucker: No question, but the global economy is simply too dynamic to go back to the old way. I see a new breed of innovation managers who are quietly, effectively making the case, and they’ve got so much better data with which to make it than they did five years ago. We just worked with a major bank in Europe that has been heavily impacted by the credit situation. Yet, they are continuing to move forward with a well-conceived innovation game plan that will deliver much-needed growth. I spoke before managers of the top student loan organization in the US. They’ve gone from a steady-state industry to suddenly facing a burning platform because of the credit crunch — they too are going ahead with innovation.

The growth of innovation

Frey: You said in a recent CNBC interview that the field of innovation has seen more change in the last 5 years than in the previous 20 or 25 years. How so?

Tucker: What I meant was how the tools and the skills of innovation have advanced. Companies today can benefit from the experiences of others who have tried various approaches – they don’t have to reinvent the wheel. Sometimes clients will come to me and say, ‘we’re going to do this; this is where it’s at, we’re thrilled.’ And I’ll say ‘okay, but are you aware of what the research shows if you try to do it that way?’ and you just didn’t have the data five years ago to help people avoid driving off into the ditch.

In the late ‘90’s, early 2000’s, when we were researching the book, we actually had difficulty coming up with enough companies to benchmark and write about because there weren’t very many of them. Today you’d be hard pressed to find a large company that hasn’t taken steps to revamp innovation, and we’re finding the mid-sized companies getting aboard the innovation train.

Frey: Innovation isn’t really new, though, is it? How was innovation practiced before?

Tucker: True – it wasn’t that companies didn’t innovate before. Every company innovates to some extent or it doesn’t survive – just ask DEC and Wang Laboratories or Polaroid or Smith-Corona. It was more that organizations innovated in fits and starts, with piecemeal efforts. Incrementalism ruled the day – endless line extensions and me too products. I remember the CEO of a major beverage company reminding me, just as I was going to address his 200 top managers, that I needed to define innovation for his people because they thought of it solely as new products or new technology.

Frey: A lot of people still define innovation that way, don’t they? How do you define it?

Tucker: As an all-enterprise imperative. As a systematic process of discovering, selecting and implementing ideas that add value, differentiate and ignite growth. Your company’s next breakthrough might not be a new product at all. It might come from entering a new market, or otherwise changing your business model. It could come from the logistics department or the payroll department or – gasp – human resources. Again, the speed of change is such today that you cannot redo one aspect of your innovation process in isolation, and expect that you’ll be effective.

Frey: In the new edition of Driving Growth Through Innovation, I noticed that you excised out discussion of several companies – EDS and Citibank being two of them that supposedly had ingrained innovation in their DNA. What happened?

Tucker: What happened was that these two firms both had changes in top leadership that led to a dismantling of their innovation programs. Version one of Driving Growth Through Innovation made a strong case for designing and implementing a systematic innovation process. And Citibank did just that. What Citibank accomplished in a short time was phenomenal. I had the privilege of working with a very talented team of Citibankers based literally all over the globe as we established “innovation catalysts” to drive the process at the grass roots level. We set up such things as Customer of the Month sessions to engender new product suggestions, and “magnet teams” to coach and select top ideas for implementation. The results were amazing – Citibank Trinidad, among others, reported a 40 percent growth rate as a direct result of the Initiative. But then the program was abruptly cancelled.

Frey: What happened?

Tucker: What happened at Citibank is what happens all too frequently in other organizations. The executive in charge of Citibank International was replaced for reasons having nothing to do with the innovation program and we lost our sponsor. I find it ironic that Citibank has been suffering ever since as they’ve tried to get their house in order in every which way except to get serious about driving growth through innovation. What it shows is that when there are changes at the top, look out. Your innovation program may not be as imbedded as you thought.

The challenges of innovation

Frey: Organizations are still talking about innovation today, but it seems that relatively few are succeeding at it. What are the primary reasons for this disconnect between intent and accomplishment?

Tucker: I’m not sure I agree that few are succeeding. I think that most are succeeding, but by different degrees. Look at vanguard companies like IBM, Proctor & Gamble, BMW, Whirlpool, Borg Warner – fantastic growth. And they all would be the first to tell you – it’s because they’ve gotten serious about innovation. Maybe company A launched an innovation initiative and they only increase growth by x percent instead of y, which they were hoping for. Was that a failure? What about if you compare what they did achieve against the alternative that they had done nothing to improve their practice of innovation? No question, companies are not succeeding that thought they could take a flavor-of-the-month approach and that would magically imbed innovation in their cultures. But firms that embrace innovation and drive it from the top are succeeding where it matters most.

Frey: And where is that?

Tucker: Let me give you one example of how you can measure the positive impact of innovation. Boston Consulting Group, in conjunction with Business Week, now compiles an annual list of the World’s 25 Most Innovative Companies. When you compare these firms against the Standard & Poor’s 1200 Global Stock Index, the Most Innovative Companies (MICs) had a mean margin growth of 3.4 percent annually, compared to a 0.4 percent increase among the total index. MIC stock returns averaged 14.3 percent, compared to 11.1 percent for the mean index. That’s just one metric of success I could cite, but an important one. My experience is that your innovation process will bear fruit in exact proportion to the amount of effort and focus you put into it.

The rise of the Chief Innovation Officer

Frey: You spend some time in the new edition of Driving Growth Through Innovation talking about the rise of the Chief Innovation Officer (CIO). How important is this development?

Tucker: It’s a fundamental tenant of systematic innovation that somebody other than the CEO be in charge of keeping the innovation factory humming. I participated in the first ever Chief Innovation Officer conference last year. It surprised us how many firms already have a CIO: Humana, Cargill, Diageo, AMD and many others. The title you give that person is not important; it’s the role that’s important.

Frey: What role is that?

Tucker: Herding cats [laughs]. No seriously, the role of the chief innovation officer is to work across divisions and silos to push the organization to change, to embrace change and new ways of organizing innovation. At Whirlpool, today a $19 billion organization, a four person team is all it takes to keep turning out hit products and services. They have trained over a thousand innovation mentors who push the tools and skills to the rest of the organization.

Frey: What’s the biggest mistake a CIO can make?

Tucker: I think it’s a mistake for the CIO to have a portfolio of deliverable projects, in addition to trying to coordinate the larger effort. Because then you’re right back into a centralized innovation approach rather than an all-enterprise approach. Study after study shows that this doesn’t work. When you confine innovation to a department, you send the message to everyone outside that department that delivering innovation isn’t your job.

Frey: Let’s pretend for a moment that I’m the CEO of a midsized firm. What’s the elevator pitch – why should I hire a CIO to help drive innovation in my company?

Tucker: You probably shouldn’t hire a CIO from outside. You’re better off identifying the right person inside your company to step up into this role. The reason I say that is that an outsider, no matter how talented, won’t know the culture and the market as well as they need to. I would advise that you look for someone in your organization who has broad respect, is a person eager to study up on innovation best practices, and who is passionately results-oriented. And if you find you just don’t have someone with those qualifications in your firm, only then should you recruit a CIO from outside.

The outlook for innovation

Frey: What does the future of innovation look like in the next five years?

Tucker: The importance of developing your innovation skills will continue to grow. Today, you can still find good, hard-working administrators in senior positions to whom innovation is a scary subject. But I don’t think that will be enough [to get you to the top] in the coming years. I see a rising crop of young people around the world who came of age living and breathing innovation, who just blow me away with their creativity and their passion. I recently conducted a public workshop in Mumbai for CNBC’s India affiliate and we had 500 mid-managers brainstorming – the room was electric! These 20-something year olds, whether you’re talking India, China or Nicaragua are truly global thinkers capable of amazing things. For them, innovating is a way of life not a ‘gotta-do’.

Also, the tools we’ll use will evolve, improve. Crowdsourcing is an example of a promising new tool. Used properly, it can generate new ideas, shorten R&D, cut development costs, create deeper loyalty. On balance, though, I don’t think coming out with a breakthrough product or business model will be any easier, though. The customer will be met with a plethora of new offerings and suppliers, all trying to differentiate.

Frey: Innovation has always been important. Is it more important today, and if so, why?

Tucker: It’s definitely more. In the global economy unless you innovate, a new competitor can show up out of nowhere and disrupt your business model overnight. Products and services become obsolete faster and faster. And we human beings, no matter our field or functional expertise, become obsolete faster than ever unless we figure out ways to create new value, which is what innovation is all about. Research out of MIT shows that if a job can be reduced to a set of replicable instructions, if it can be what they call “routinized” then it will likely go to a lower wage country. So my message is really that innovation isn’t just coming up with the next iPhone, it’s an essential survival skill for the 21st century.

The skillset of tomorrow’s innovator

Frey: What sorts of skills will we need to remain competitive in this new world?

Tucker: I think we all have to get serious about not only staying abreast of our specialist fields, but developing skills and competencies that aren’t taught in school. How good are you in convening a meeting for possibilities, for effective brainstorming? How good are you at tracking the trends and thinking through the implications to find hidden opportunities? Can you tap people’s creative imaginations? Can you unleash your own? Are you comfortable making decisions where you can’t possibly have all the data, all the facts and you must exercise intuitive judgment? Can you talk to customers and get them to really open up about what’s on their minds? Can you lead a team of people to deliver a result when you have no position power over them? These are the kinds of leadership qualities I coach executives in developing.

Finding new opportunities for innovation

Frey: It seems that innovation is easy to apply to products. But what about areas like sales, service, accounting and other less obvious areas?

Tucker: Actually, that’s the big trend we’re seeing in companies in the innovation vanguard. Companies like BMW, Whirlpool, IBM, and others realize that their next truly game-changing idea might come from their supply chain people or a sharp salesperson as it is to come from the new product team. I remind people that Starbucks’ Frappuccino was invented not at headquarters but by baristas at one of their stores in California. It was a retail clerk at Home Depot who came up with an inventory control system innovation that is today used throughout the chain. Two mechanics at American Airlines maintenance operation in Tulsa, Oklahoma came up with a way to reuse broken drill bits, saving the company $380,000. In progressive companies, we’re seeing a lot of emphasis on innovation becoming everyone’s responsibility.

Frey: Can individual contributors really have ideas in most companies?

Tucker: Absolutely. It’s just that in the past — and in most organizations to this day — we’ve confined responsibility for innovation to a few departments, like marketing or R&D and we’ve in effect told everyone else they were not to bother to take their ideas seriously. We’ve not listened to people in our organizations who didn’t have the right title. But now you need everyone to bring their brain to work. And you need every department and functional area to have some skin in the game, not just the folks in R&D.

Frey: So how do you motivate fresh thinking from traditional departments?

Tucker: You have to create a culture where individuals and teams in every area of the firm are responsible for delivering fresh approaches. It’s a matter of what you’re rewarding, what you’re incenting. One way you motivate fresh thinking from traditional departments is you break up their monopoly. You outsource some of what that department delivers, whether it’s training, HR, finance, whatever. And then you show the traditional department that they have to find ways to add value over and above their “competition”.

Frey: What is happening globally today relative to innovation and what warnings or lessons are there for us as leaders?

Tucker: Chuck, as you know, I work with companies outside the US almost as much as I do inside. And what my travels have demonstrated more than anything is that most companies based in the US have yet to truly embrace the global economy. Many who could find tremendous growth by entering new markets, are not doing so. Our domestic markets have been robust enough to where they didn’t have to. But now that we’re in a downturn, and now that foreign competitors are coming into their markets, this is changing very rapidly.

Another concern I have is the prevailing myth that we [in the U.S.] have some sort of lock on high value work. I just spent a week in India and I work with Indian firms. Indian and Chinese companies are not content to be simply low wage outsourcers of services or product manufacturers. They are hauling up the value chain at a much faster rate than anyone expected. Some of the most innovative firms on the planet are Indian IT outsourcing firms: Tata, Wipro, Infosys, Satyam, HCL Technologies.

Nurturing your “personal innovation”

Frey: Let’s look at a topic I know you’re increasingly interested in: personal innovation. What is it, exactly?

Tucker: Personal innovation is mastering a set of non-obvious and seldom discussed skills that enable us to be more effective at coming up with ideas and bringing them to life. We could use Jeff Immelt or Oprah or Steve Jobs or Tiger Woods as examples and think about just how many ideas these leaders come up with each day. I say to people, the reason you’re successful, is that you power out more ideas day to day than others in your field, you create value with ideas. I’ve had the privilege of observing the success habits of some highly successful people at close hand, and they are totally in touch with the artist within. Picasso once said that “all children are artists, the challenge is to remain an artist when they grow up.” Yet this is what it’s really about in this age of Innovation: finding what works for you as an individual and freeing yourself of mental boundaries. To identify what gets your creative juices flowing, to take time to think and dream, to set stretch goals – and yes, to implement too.

Frey: So what prevents it?

Tucker: Fear of failure would have to be at the top of the list. Have you ever failed with one of your ideas? Of course! Show me an innovator and I’ll show you someone who is very familiar with failure. I love what Soichiro Honda, the founder of Honda Motor said about this. He said, ‘to me, success can only be achieved through repeated failure and introspection. In fact success represents the one percent of your work that results from the 99 percent that is called failure.’ I always say, if you haven’t failed at something lately, you must be doing something wrong.’

Frey: What are the “daily disciplines” for personal innovation?

Tucker: I recommend carving out creative space to do your best thinking daily. Many people tell me they get most of their ideas in the shower, some while driving to work. I find a surprising number of people report getting their best ideas in the middle of the night. For me it’s getting up at five, going for a run and spending an hour reading and reflecting and planning my day – but for you it’s different. The secret is to be true to your own rhythms, and move away from distractions to claim your space. Another daily discipline is capturing your ideas when they occur – little ideas like ‘pick up the dry cleaning’ all the way to big ideas you get that you say ‘wow’ to immediately. I also suggest taking a problem or situation you’re facing and forcing yourself to come up with 10 different possible solutions. And there’s more to be sure. What we’re really talking about is paying more attention to what gaets your creative juices flowing.

Frey: How do we transfer these skills from work to our homes, communities and elsewhere?

Tucker: Innovative thinking is not just a tool for growing companies; it’s a tool we need to use in every realm of our lives – most especially in helping be good crew-members on what the great inventor Buckminster Fuller called Spaceship Earth. I had the pleasure of dining with Tharman Shanmugaratnam, the education minister of Singapore recently and his whole thing is how do we teach these skills and how does Singapore develop its young people to find the better way, the uncommon path. We very much need to help transfer these skills to our families and communities and to helping the planet deal with huge issues. I see business as being in the forefront of this movement to think up novel solutions and restore hope.

Pam Atherton interview with Robert Tucker on “Innovation is Everybody’s Business”

Pam AthertonIn this lively, unscripted radio interview, Pam Atherton, the top rated talk show host speaks with Robert Tucker about his latest book, “Innovation is Everybody’s Business.” The conversation focuses on how companies and organizations all over the world are shedding jobs in record numbers. BUT… they are desperately in need of people with the abilities and skills to think ahead of the curve, delight customers, motivate colleagues, slash costs and achieve unconventional results.

Click on the player below to listen to the conversation with Robert

Lionel Richie, Master of Reinvention!

 

Photograph by Ethan Miller/Getty Images

Any Lionel Richie fans out there? The other day, while tooling around town, I did something very retro: I listened to the radio! Yep, and when Richie’s hit All Night Long (All Night) came on, I cranked up the volume and sang along like a teenager.

Then I thought, whatever happened to that guy?

Well, it turns out the popular R&B crooner did not go gently into oblivion after all. Instead, he’s switched genres to country music, and he’s at the height of his game. Why country?  Might be because country fans still buy most of their music the old fashioned way, on CDs. Richie’s new album, Tuskegee, a collection of duets with country stars, is currently topping Billboard’s chart, and breathing life into a severely disrupted industry.

What Richie is doing – changing genres, reinventing his career, and climbing back – is what all of us need to do to avoid the downside of disruption.

When Harvard’s Clayton Christensen introduced the term “industry disruption” in the 90s, it was a relatively infrequent occurrence. Today, a trickle has become a flood.  From the music industry to FM radio to brick and mortar retailers to dentists, everyone and every industry is facing at least the potential for getting kicked in the groin.

It isn’t just technological, either, although what’s happened to Blackberry and Nokia often makes it seem so. More and more industries face not just technological disruption but demographic, economic, political, regulatory and even lifestyle. Today’s dentists face disruption as consumers get fewer cavities (fluoridated toothpaste), and new dental chains spring up offering discounted oral care to the masses.

When you start looking for it, disruption is everywhere. It creates winners and losers in its wake. Take magazines. The Audit Bureau of Circulation reports that magazine circulation in the first half of the year was down another 10 percent from last year’s decline. The New Yorker declined by 17.4 percent. Time is down 31 percent. Even Cat Fancy is down 23 percent. As I always say, when cat lovers stop buying your product, it’s time to paw your way back by getting serious about innovation.

Normally I might define innovation as “the process by which you grow your business.” For firms facing disruption, it’s the way you go about rethinking and reinventing your company and your unique value-add to that company to help lead the future.

This was my message last month as the closing speaker at a conference for professionals in the pool and spa industry, which has seen a 60 percent drop in business due to economic disruption. Turns out that even the affluent population, the only income group that can still afford in-ground pools costing a minimum of $60,000, cut back on such non-essential luxuries just like the rest of America. One speaker at the Chicago conference was from the recreational boating industry – where sales are down 55 percent.

When facing disruption, the place to start is with a reality check: take stock of where you are today, and be brutally honest about assaulting your assumptions. That’s what Ford chairman William Ford did in 2008, when sales went into freefall for all auto-makers. “The business model that sustained us for decades is no longer sufficient to sustain profitability,” Ford declared.  And then he focused laser-like on ramping up innovation in new vehicles and cutting costs. Result: Ford never required a dollar of government bailout money to survive and sales are up 13 percent.

It’s vitally important to get in touch with your customer. What has changed with them? What do they value now, and how can you provide it. In periods of disruption, value becomes a moving target. The value we provided yesterday may not be sufficient. Needs may have evolved.

To help them better understand the affluent buyer, the pool and spa industry hired a leading consumer researcher of the affluent. Their focus groups revealed a pervasive attitude of turbulence, yet a reservoir of resilience and optimism.

“Today’s consumers have managed to create a sense of stability around themselves and their families in a very uncertain world,” researcher Doug Harrison noted. “They have come to accept that this is the way the world works now. And they seem to have realized they need to move forward with making the most of their lives.”

For pool and spa professionals willing to change with their customers, the affluent buyer is now willing to spend on luxuries that are truly meaningful, such as the experience of being at home with close friends and family. But only if you reduce the hassle of purchase and installation and maintenance, and can the dishonest hype and salesmanship and empower the customer with knowledge.

Last year I attended a dinner in Rochester and happened to be seated beside the CTO of Kodak. He and I and the others around the table were all speakers at a regional economic development forum the following day. Nice guy. Studied at Cal Tech. But I couldn’t help but think: why is he here? And why does he seem so calm when his house is on fire?

Kodak declared bankruptcy shortly after that event, the latest example of digital disruption finally doing them in. Various commentaries appeared after Kodak’s surrender, and all rightly acknowledged Kodak’s many attempts to get its mojo back. Having followed Kodak for a number of years, and knowing former employees of the company, it would be unfair not to acknowledge their attempts to innovate. But ultimately, what it comes down to is too little, too late. Don’t let it happen to you. If you’re facing even the gentle breeze of a future disruption, it’s time to take action before it’s too late.

Robert B. Tucker is president of The Innovation Resource Consulting Group and a frequent speaker at industry and corporate meetings. You can reach him at www.innovationresource.com or by calling (805) 682-1012.

Driving Innovation in Silicon Valley

I was in Silicon Valley the other day showing my daughter around. She’s graduating from college next month and is thinking of moving there to seek her fame and fortune, or at least an entry level job in a startup.

What struck me was the optimism of the place. Facebook just bought Instagram for $1 billion, and the restaurants were full of casually dressed young people discussing which of the many startups might be on track for a similar breakthrough.

We had lunch in Palo Alto with a friend of the family who graduated from Stanford three years ago. She started out responding to user questions. But soon the tiny social game startup was sold to Disney for $763 million. She’s quickly working her way up the ladder as the company keeps hiring. We called on the CEO of a software company in Pleasanton whose social media tools boost workplace collaboration through crowdsourcing ideas. If these obscure niches sound insignificant, think again: Forrester estimates such applications will grow 61% per year to become a $6.4 billion market by 2016.

Next, we toured around Apple’s headquarters in Cupertino and noticed the building boom at the world’s most valuable company. They can’t find space for all the new hires, and the new headquarters won’t be completed till 2014.

Millennials like my daughter, born between 1977 and 1997, will make up half the global workforce by 2014. In talking with some of them here in the USA, what I gather is that they have had it with all the negativity and nostalgia and small thinking spawned by the Great Recession. They are not buying into America’s inevitable decline. They want to make their mark; they want to follow their Mark, as in Zuckerberg, and create products and services that people want to use.

The national election that belches negative attacks and counter-attacks creates yawns in this generation. They aren’t waiting on Washington to solve their problems or to find them work. Instead, some of them are deciding that if it’s going to be it’s up to me. And they are embracing the entrepreneurial mindset and looking for opportunities.

Whether I’m buzzing around Silicon Valley or walking the trade show floor of a giant exposition called FabTech at McCormick Place in Chicago (where I was the keynote speaker), I’m hearing similar bullishness.  When I ask “how’s business?” what I hear is “it’s great — we can’t find trained welders or (at a fleet executive conference in Florida) qualified drivers to fill open positions.

While the media constantly reminds us of dangers of unforeseen circumstances, America’s innovators are out busily creating favorable circumstances. American companies are lean and profitable. The stock market is up 12 percent this year. In contrast to Europe’s double dip recession due to too much austerity, America’s stimulus spending may not have been such a waste after all.

As growth stalls in Brazil and China, the competitive position of the U.S. grows suddenly stronger.

America is the largest, richest and most secure market in the world, foreigners are investing here. And despite our many problems, people still want to move here.

A Gallup poll last month showed that 640 million adults in the world would like to leave their home countries permanently. The country the most people hope to migrate to? The United States of America.

What Is Your Company’s Return On Innovation?

Today it is no longer good enough for organizations to simply be “innovative” occasionally.  Successful companies will need to innovate quickly, constantly, effectively, and comprehensively; developing new products, processes and strategies. The ever-increasing level of competition simply demands it.

Think about the person in your position 20 years ago. How many more ideas per day/week/month do you need now to be effective than that person did, simply because it was a slower pace of change then?  Twice as many? Three times? Ten times as many to get the job done?

With that frame of reference, I want to talk about some specific strategies you can use to turn the vague notion of innovation into a more concrete concept you can use every single day to differentiate your organization, succeed and prosper in the market.

Here are a few best practices I find common among innovation leaders:
Embrace an opportunity mindset. This means believing that there is no such thing as a truly mature market, or a truly bad economy; there are only tired imaginations.  In challenging times, a key competitive asset is the imagination capability of your organization.  Consider this example; Michelle works as a receptionist at a manufacturing company in Ohio.  As part of her job, she is frequently on the phone with customers, and sometimes they are unhappy with something the company has done, or failed to do.  Rather than getting upset, she pulls out her writing pad and records their complaints. Then she asks a simple question: ”What do you think we should do so this never happens again?”  Those suggestions end up in the company new ideas program.  For her efforts, Michelle won her company’s Innovator of the Year Award. I love that story because Michelle could have rightfully said – Innovation, make it my business?  You have got to be kidding.  But instead she realized her time spent on the phone with customers was valuable and she had a system to share those ideas with management. This is what I mean about having an  opportunity mindset.

Involve everyone in the organization. No matter how good you are at generating new ideas, you can’t achieve the necessary level of new idea output alone.  You’ll need to involve everyone in your enterprise. To accomplish this, successful companies create a culture of innovation, with specific metrics, responsibilities and incentives so that people are recognized, rewarded and encouraged to be part of inventing the future.

Procter & Gamble is an example of a company that truly champions innovation, but that wasn’t always the case. Just a few years ago they hit an inflection point; growth was stalled, their stock was languid, and they were getting beat up by lower priced store brands. They hadn’t had a breakthrough idea since Head & Shoulders Shampoo in 1963. Then a new CEO shook things up by acknowledging and rewarding employees who had new ideas.  He conducted annual innovation reviews with stretch goals so that every business unit knew what their innovation deliverable was, not just their profit and loss target.  And, in one of the most controversial ideas for that time, he pioneered “open innovation” at P&G, which acknowledges that not all the good ideas must be found inside the company.  A goal was set that, in 5 years, 50% of new ideas would come from outside the company. They achieved that goal and created a slew of successful new products including Crest CD White Strips, Swiffer, and Spinbrush battery operated toothbrush.

Be systematic in your approach.  Today’s best companies realize they have a process for everything else, why not innovation?  As more and more companies see the pace of change accelerating, they are questioning why they are still practicing innovation the way they did 20 or 30 years ago. Consistently innovative companies use idea management systems to systematically record, nurture and  implement new ideas. IBM has a very effective program called ThinkPlace. If an IBM employee anywhere on the planet happens to wake up with a good idea, he or she has a place to submit it.  These idea management systems are not the complete solution, but once implemented, your organizations’ new ideas are more likely to succeed because there is a process to leverage them.

Ask a different question. This is one of the key roles of leadership when it comes to innovation.  During the depths of the great recession, when it seemed the global economy was going off a cliff and auto sales were flatlining for most of the industry, Hyundai sales were actually up 14%.  How did that happen?  They were asking a different question. Everyone else was asking – how do we move our cars?  Do we rebate further, or discount more?  But Hyundai was asking -– why aren’t people buying cars?  Well, one reason was because they were afraid they might lose their job.  How to address that?  Hyundai came up with a one year, no cost, return guarantee. If you lose your job in the next 12 months, you bring the car back. An unconventional solution for unconventionally challenging times. They had never done anything like that before, but sales went up 14%.

Controlled risk taking is essential. Many organizations today are too risk adverse. You cannot innovate in that environment. Experiments are necessary and they will fail more often than they succeed.  I’m not talking about mistakes or incompetency, but failure.  If you think about Edison, he experimented with literally thousands of different filaments before achieving success. Innovative organizations need to fail forward faster if they hope to invent the future and drive growth through innovation in these turbulent times.

And you have to get failures out in the open. If not, a very dysfunctional thing happens in many organizations.  Human nature being what it is, people will start jockeying for position and try to gain advantage over those associated with the failure.  In these situations, it is critical that executive leaders clearly communicate the rules of the road, setting a culture and climate that allows those with new ideas to test them in a safe environment. The risk associated with failure must be borne by the organization, not individuals in the organization.

Whatever your position in your organization, your ability to innovate, to problem solve, experiment, create ideas, drive growth, collaborate and add value, gives you a personal competitive advantage that can never be outsourced.

Innovation Excellence Interview: Where is the Innovation Movement Headed?

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Robert B. Tucker is a popular innovation speaker and consultant. Since 1986, with the publication of Winning the Innovation Game, he has coached and advised managers, executives, and entire teams at organizations ranging from IBM to the U.S. Air Force Research Laboratory to SAP. Post-it Note inventor Art Fry said that after a 40 year career developing new products for 3M, “I found myself agreeing with everything Tucker says about taking an idea from concept to successful innovation” in his ground-breaking book Driving Growth Through Innovation.

President of The Innovation Resource Consulting Group, with clients in 40 countries, Tucker’s primary work is assisting firms in developing sustainable innovation programs. His latest book, Innovation is Everybody’s Business, delves into how individual contributors and mid-level managers can ride the innovation trend. He recently sat down with me to discuss the new book and the state of the Innovation Movement.

1. Robert, you’ve been involved in the field of innovation since 1986. Where is the Innovation Movement headed?

In contrast to what we saw two years ago, The Innovation Movement is booming, even in the face of pretty dismal economic results. What we’re finding today is that many organizations are continuing to transition away from the conservative reaction of hunkering down, reducing headcount and cost-cutting and are actively searching for new ways to grow revenue, engage and develop their high potential employees, enter new markets and disrupt the competition. I’d say the future has never been brighter for innovation practitioners inside organizations who can deliver growth, and for innovation consultants who can help them achieve these objectives. We’ve never seen anything like it.

2. Why are organizations focusing on getting better at innovation?

Because the old ways of doing business just don’t cut it in a time of hyper-competition. Customer needs are changing faster and faster. New competitors crop up out of nowhere. Disruption used to be confined to a few industries but it’s now a fact of life in most industries – and it will crush you if you don’t push back. Products become commodities in the blink of an eye – just ask mobile phone handset manufacturers like Nokia who’ve been hit with the I-Phone and droid [operating system]. The problem is organizations don’t innovate – people innovate. So leaders have begun to realize they need their people to be bold, think big, assault assumptions, go beyond tactical execution and dream up opportunities. IBM asked 1500 CEOs at big global companies: what’s the one attribute you seek above all others in your people today? The answer: creativity. There’s just not enough of it today in organizations.

3. Your new book, Innovation is Everybody’s Business, was something of a departure for you in the sense that it is directed to the individual contributor and manager, rather than being another tract on “here’s how to innovate in your company.” Why did you change your focus?

Our overall focus hasn’t changed; we still assist organizations in establishing systematic processes to drive profitable growth. But this book is a manifesto for everybody else out there who is not the CEO. It basically says ‘heads up, friend. While you’re busy answering 100 emails a day and attending back to back meetings, the world is changing in some pretty dramatic ways. The reality is, you’re either on a path to becoming indispensable or you’re becoming expendable, because – simply put –the system wants to eliminate your job. But it goes on to say, if you’ll just spend a little time each day developing your innovation skills, I-Skills for short, you’re going to be in the catbird seat because you have the unique, and valuable skills that make you indispensable.’

4. Don’t employees just frustrate themselves if where they work doesn’t value their ideas? Don’t you need a creative culture in order to propose new ideas?

That’s a common perception, and it’s a stumbling block that I hear all the time. In researching the book, my team of graduate and undergraduate students from UCSB and I identified 43 innovation-adept managers and contributors inside organizations. The people we interviewed had developed reputations as being innovators, people who get new things done for the organization. And what we found were folks who didn’t wait for their organizations to be perfect. They stepped up to the plate and showed initiative. They did what needed to be done. But it wasn’t like they were arrogant or outliers. Instead we found humble, team-oriented people who were reluctant to take personal credit for the success they’d achieved.

5. What’s your advice when somebody says they’ve got ideas, they’d like to innovate but their organization is dysfunctional?

If you wait for your organization to be like Google or Apple, you may have to wait a very long time. But look at the big picture: your CEO absolutely, positively needs you to innovate at the grass roots level. Chiefs view their talent needs differently today. They finally understand that innovation is much more than what goes on in their research labs. They are starting to see it as a critical element in the way their people think, solve problems, discover new revenue streams, and add value day to day. Suddenly innovation is being linked to talent management, employee engagement, and developing tomorrow’s leaders. So a lot of my recent work has been with multi-national firms who have asked me to teach their high potential employees these I-Skills.

6. Why is that a lot of people don’t feel like they’re very creative or innovative?

The reason I felt compelled to write the book is that far too many people think that creativity and innovation are something you are either born with or you’re out of luck. Or they assume innovation is somebody else’s responsibility. My message is, whether you write software, design employee handbooks, process payroll, or even if you’re the receptionist — you can still be creative in how you add value, how you do your everyday work. It’s about doing ordinary things in extraordinary ways. It’s taking initiative and reaching out for help. Innovation is not something you do after you get your work done… it’s how you approach your work.

7. I want to hear about these Seven I-Skills. But first, who did you interview?

Tucker: We interviewed people like Brent Gow, payroll chief at Starbucks, whose department discovered ways to reduce the cost of paying employees by 50 percent. We interviewed Tom Dolan, and unconventional manager at Xerox Global Services who stared down a major disruption threatening the very life of his company, and he didn’t flinch. He saw how Xerox had gotten out of step with customer needs, and he accepted the will of the market. We interviewed Jennifer Rock at Best Buy, who with her team took on the problem of employee turnover and helped reduce it from over 80 percent to under 40 percent by using social media and the company intranet to foster dialogue between employees in the various stores. The result was that they transformed employee engagement levels. When we asked these leaders how they become so innovative, they all said without fail: I didn’t start out knowing how to innovate, I developed these skills.

8. Tell us about these I-Skills. How do I know if I’ve got the right stuff or not?

Sure. And let me start by posing a question to our readers out there: How good are you at brainstorming and working on your ideas? That’s an I-Skill we call Fortifying Your Idea Factory. How good are you at tracking the trends, connecting the dots and discovering opportunities? That’s an I-Skill we call “thinking ahead of the curve”. Can you create a level of trust necessary for truly breakthrough collaboration? That’s an I-Skill. Do you have passion for your customer – whether that’s an internal customer or an actual end user? – that’s another I-Skill. And can you build support for your ideas and convince others to go along? That’s an I-Skill we call Building the Buy-in. We actually have an assessment where you can see how you stack up. Give it a shot!

9. The big trend today is an increasing emphasis on employee engagement. Yet research shows that employees feel worse about their jobs than ever before. What gives?

It’s ironic, isn’t it? You’d think that people would be happy to have a job when there are so many millions of people out there who can’t find one. But we’ve pushed lean and mean and headcount reduction so far in the past decade that the pendulum had to swing the other way. Granted, it’s hard to measure individual productivity in white collar work, and that the solution du jour has been, “firings will continue until people collapse from exhaustion” and that’s where many firms are today. Disengagement is rife at the precise time we need people to bring their full selves to work and innovate minute by minute. Gallup estimates the cost of America’s disengagement crisis at $300 billion in lost productivity annually. But I think for those of us in the Innovation Movement, this is our opportunity to come forward with solutions.

10. Why is that?

Because when you unleash the spirit of innovation, and involve employees in idea management, people get engaged. And when you engage your people, innovation happens, and when you fail to engage them, the opposite happens. The research proves this phenomenon. For example, last year Jim Harter and his colleagues at Harvard found that lower job satisfaction foreshadowed poorer bottom-line performance. When people are indifferent about their work and especially if they are mentally checked out, they simply don’t perform.

11. Who are the early adopters of what you call ‘personal innovation’?

It’s been fascinating to discover who’s responding at the grass roots level. LG Electronics MobileComm USA teaches these I-Skills to everyone in the company, from the receptionist to Jeff Hwang, their president. The American College of Healthcare Executives, has been using Innovation is Everybody’s Business as a playbook. Alabama State University’s entire administrative staff has been educated in putting the Seven I-Skills to work as they strive for excellence. We’ve heard from various professors that they use the book as a guide to prepare students graduating into a difficult job market. The sales force at Bristol Myers Squibb uses their I-Skills training to drive market share.

12. Any final comments, Robert?

In my conversations with CEOs the world over, I can’t tell you how many times they’ve said to me, Robert, we’ve got really good people working here. They’ve got good functional skills. They’re great at execution. But they wait to be told what to do. And the world is changing so fast, I need people who can help us stay ahead of the curve. So, my final piece of advice would be, whatever your position or industry, your ability to innovate – to solve problems, experiment, create ideas, drive growth, collaborate with others, and add value – is going to give you a personal competitive advantage that can never be outsourced. The people we interviewed pour their best selves into their work. And they are rewarded with richer and deeper relationships, constant learning, endless variety, and incredible challenge. As one of the managers we interviewed told me, ‘I’ve never been so happy in my work as I am now. I get to interact with a really great team of people and I’m having the time of my life’. To me that says it all.

13. How can people get in touch with you?

Since I’m on the road so much, the best way to be in touch would be to contact our vice president of business development, Graham H. Scott, who will be happy to respond to your emails and calls. Also, for a bit of fun, we’ve decided to run a quick contest, whereby the first THREE people that contact Graham and reference Innovation Excellence will receive a FREE COPY OF THE BOOK! He can be reached by email gscott@innovationresource.com and you can visit us on our Website and on YouTube.

Innovation topic of Santa Barbara Executive Roundtable

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Steve Sinovic, News-Press Staff Writer

Innovation may not be at the top of the priority lists for many South Coast business owners as they stay busy putting out their latest fires.

But staying stuck in a firefighting mode is not the route to prosperity as America emerges from a brutal recession. Indeed, business owners not taking on the task of leading change — and originating revenue-producing ideas to grow in challenging economic times — may be the ticket to oblivion, asserts a local resident and innovation expert.

Robert Tucker

“There are five strategies to get your arms around with this thing called ‘innovation,'” explained author and innovation guru Robert Tucker at a recent talk before members of the Santa Barbara Executive Roundtable (SABER) at the University Club. Applying these strategies to a business of any size is one way of ensuring a healthy bottom line, he added.

Mr. Tucker, who is the author of five books on the subject and consultant to businesses around the globe, said these strategies are embracing the opportunity mindset; assaulting your assumptions; passion for the customer; thinking ahead of the curve; and fortifying your idea factory.

With a small flashlight in hand (illustrative of business owners lighting the way), Mr. Tucker’s comments, suggestions and tips for the SABER audience — which is comprised of sole proprietors and owners of small companies — were a quick overview of the big bucks presentations he gives in one- and two-day programs.

He defined innovation as “the act of creating new, unique, exceptional value for customers and your business.” To Mr. Tucker, the commercial viability of an innovation is clearly his particular forte, although innovation of another sort is called upon when times get tough.

“It’s about using different sides of the brain,” explained the former UCLA lecturer and now president of The Innovation Resource Consulting Group, talking about the left-brain mindset involved in cost-cutting, economizing and downsizing a company.

But as a business rightsizes, everybody needs to bring their brains to work, added Mr. Tucker, whose clients include 200 of the Fortune 500 as well as leading companies in Europe, Asia and Latin America.

Robert Tucker

Companies don’t just need ideas, but ideas that can make customers see value, said Mr. Tucker, who profiled 43 “innovation adept” leaders in his recent book, “Innovation is Everybody’s Business.” The people included everyone from receptionists to top execs at Google and Starbucks. Mr. Tucker was also recently interviewed by CNBC’s Maria Bartiromo for a program called “The Business of Innovation.”

He defined innovation in a business setting as essentially three types: product, process and strategy.

“There’s no such thing as a tired commodity, but rather a tired mindset,” said Mr. Tucker. “Will you drive the innovation or wait for something to fall into your lap?” he challenged the business owners. “What’s your next breakthrough idea? Everybody should have something in the pipeline, although that may not be a good word to use right now.

“And ask yourself, ‘Do I have the right people on the bus?'” he said of key staff members and vendors.
Companies in the innovation vanguard have come to realize that their next game- changing idea will just as likely come from their supply chain personnel or a salesperson as it is to come from the new product development team, said Mr. Tucker.

He reminds executives that Starbucks’ Frappucino was invented not at headquarters but by baristas at one of its stores in California. “Creativity is coming up with ideas. Innovation is bringing them to life,” said Mr. Tucker of the synergy between the two.

Interestingly, Mr. Tucker gets few requests to address franchise groups. “They want to stay with tried-and-true formulas,” he said with a shrug.

What the innovation coach was clearly looking for with the SABER group was to fire up new attitudes and help avoid complacency.

He illustrated this with the example of seeing the owner of a popular local restaurant going to a tennis club during lunch hour. Mr. Tucker recalled visiting the eatery several times, and was put off by the lackadaisical service and “the food not tasting as good” as it used to.

“I thought, ‘He (the restaurant owner) is at the tennis club when it’s showtime,'” said Mr. Tucker. “Ladies and gentleman, that’s a metaphor for some businesses in town and that’s unfortunate.”

His last strategy about fortifying the idea factory brought an interesting suggestion.

“Too many business owners are overconnected, overscheduled and overwhelmed,” declared Mr. Tucker, talking about being held hostage to technology such as e-mails and text messaging. “Be more circumspect about your use of technology and appointment scheduling,” said Mr. Tucker. “Don’t let them steamroll you.”

Instead, he suggests a day without e-mails or phone calls and going for a walk, getting into nature.
“Time away helps identify what really gets your creative juices flowing,” said Mr. Tucker.

Are You Indispensable at Work?

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How to make innovative thinking your ticket to success
By Robert B. Tucker

In a time of economic disruption, unprecedented downsizings, budgetary cutbacks and the constant pressure to outsource more and more routine functions (and the employees who perform them), advice on professional survival always seems to convey the same tired message: Be visible. Don’t make enemies. Suck up to the boss. And work even harder.

In reality, you are already working hard. Simply working harder will not be enough, and may lead to burnout. Relying solely on your functional skills and expertise will not be enough to make you difficult to replace. And your years of experience on the job may not have the cachet they once did either.

The good news is there is something you can do to take charge of your career if you’re willing to consider it. Based on research and interviews with 43 standout employees whom peers, bosses and colleagues identified as indispensable, I believe the only way to become more valuable to your organization – and have incredible job satisfaction in the process – is to focus on mastering a new set of strategic skills.

Help Wanted: I–Skills Required

To help you, the meeting planner, succeed, you need to build and unleash a new set of skills in your work and in your life: Innovation Skills, or I-Skills for short. While organizations around the world are shedding jobs, they are suddenly, desperately in need of professionals with the abilities and skills to deliver unconventional results: to slash costs without sacrificing service, to add unique value that keeps current customers loyal and helps close new business.

Innovation is about more than inventing new products and services. Today, it’s about figuring out how and where to add value where you are and where you work. Innovation is the act of coming up with ideas and successfully bringing them to life to solve problems and create opportunities. It’s also about bringing your total self to the work you do – and thriving amidst the chaos of changing times. As one manager we interviewed in our research expressed it, “I’ve never felt such satisfaction doing my work as I do now. I get to work with a really great team of people and I’m having the time of my life.”

Based on 20 years experience as an innovation consultant and coach, and on 43 interviews for an upcoming book, here are the seven fundamental I-Skills you need to master to make yourself indispensable in today’s hyper-competitive world.

1. You Embrace the Opportunity Mindset.

Where others see problems, you see potential. When others bog down in endless details, you climb up to the roof to see the big picture. In other words, you realize that perspective determines everything.

My friend Mark Sanborn, motivational speaker and author of The Fred Factor, found he had a growing aversion when the phone rang. So he wrote the words “obligation or opportunity?” on a Post-It note beside his phone. Every time he picks up the phone, he does so with an attitude of service, gratitude and positive expectancy.

To shift perspective, challenge yourself to come up with solutions, see the big picture, and unleash creativity. Ask yourself: what are 10 ways to address this problem? Or: what are 10 things that are working well in my department right now?

2. You are Adept at Assaulting Assumptions.

Ever heard yourself mutter the words “there’s got to be a better way”? If so, you challenged the assumption that the way we do something is the best or the only way – and you invited new thinking. Innovators challenge personal, professional and industry assumptions in order to breed new unfettered thinking.

Years of experience in your industry can be a detriment to assumption assaulting efforts. “It’s always been done that way” or “we tried that (new approach) and it didn’t work” are often blocks to freely asking such questions as “I wonder if we …” or “what would an entirely different way of handling this situation look like?”

Experience can infect us with biases that blind us to new possibilities. Press your reset button, both on a mental and emotional level, and start the questions flowing. And remember: innovation begins where assumptions end.

3. You Have a Passion for the End Customer.

Steve Jobs designs products that rock people’s world. How? By getting vast teams of specialists to collaborate and understand that second-best efforts will be unacceptable. He’s not going to settle for anything less than awesome.

You and I also create “products” for a living. That event you’re planning for Orlando is a product. The new cost-reduction initiative you’re contributing to is a product. Even that email memo you sent out five minutes ago is a product. Everything you create is your product – and every product has a customer.

Like the iPod, the iPhone and the iPad, the best products are those that anticipate the customer’s need and offer a superior solution.

To turn your products into icons of your indispensability, strive to acquire empathy for the end customer and force yourself to listen deeply to what that customer wants to accomplish. Step outside the bubble of your culture, interact with enough people, and be fascinated with what they say. This will give you a sense of what the outside world thinks, feels, and perceives about your organization, as opposed to what people inside assume.

4. You Think Ahead of the Curve.

Ever try walking around in the dark without a flashlight? It’s an unsettling feeling and can often lead to bumps and bruises if you walk straight into something you couldn’t see. In today’s hypercompetitive world, you need your own version of a flashlight. Things happen fast when you aren’t paying attention. With your flashlight in hand, however, you will find things do not happen quite so suddenly. By developing the ability to track emerging trends, and to assess and interpret the changes as they relate to your world, you are positioned to transform them into new opportunities and strategize advantage for yourself, your organization and your career.

5. You Continuously Fortify Your “Idea Factory.”

Everybody has ideas, but only a few know how to keep their “idea factories” fortified to churn out a wealth of them on a consistent basis, when and where needed. Here are some suggestions. Enhance your creative environment. Turn your office into a creative place to brainstorm ideas. Or, find your inspiration outside the office.

Know when to unitask. People think they’re more productive when they are working on multiple tasks at once, but research shows otherwise. Michelangelo didn’t multitask when he was in full creative mode. Neither should you.

Practice at creativity. It’s not a gift from the gods, but the result of preparation, routine, discipline.

Get in the habit of downloading your ideas. If you don’t capture it the minute it strikes, you’re unlikely to act on it later. The mind is terrific for coming up with ideas but an equally terrible storage device.

6. You are Considered a Standout Collaborator.

If you’re a genius in your area of expertise, but your collaboration skills are lacking, you’ll never achieve your potential, and you’ll never become indispensable. To collaborate is “to work together, especially in a joint intellectual effort.” Collaborative teams are how big projects actually get done.

7. You are Adept at Building the Buy-in.

Selling new ideas has always been about surmounting obstacles, overcoming objections and gaining commitment for change. How do you accomplish this? Isolate the benefits and solicit feedback from friends, mentors and others you trust. Then, think about the innovation style of the person or persons you’ll be presenting your ideas to. For instance, if your audience is more “big picture” oriented, don’t bog them down with details. Use their hot button words. Innovators use familiar language.

Be persistent. The 3M team responsible for launching Post-It Notes was growing desperate. Senior management was threatening to kill the product as a loser. Nobody was buying it. Then, individuals took suitcases of the little sticky pads and handed them out to passersby in the city of Richmond, Virginia. That was a turning point. People started sticking them everywhere and began asking for them at retail stores. The new product took off like a rocket.

Summary

Innovation is everybody’s business who wants to thrive and prosper in a time when the meetings industry is in such flux. Start thinking about these skills as they relate to your job, the projects you are completing right now, and the initiatives you want to suggest should be next on the agenda. Master the mindset, skillset and the toolset of the innovator, and soon your reputation for results will precede you wherever you go.

Robert B. Tucker is president of The Innovation Resource Consulting Group and author of Innovation Is Everybody’s Business, to be published by John Wiley this fall. He can be reached at (805) 682-1012 or via email at rtucker@innovationresource.com.

Innovation is Everybody’s Business

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Westlake Village seminar focuses on contributions of all employees
By Mike Harris

Everyone in business — from CEOs to the lowest-level employees — can help grow his or her company by being innovative, author Robert Tucker said at a seminar Tuesday in Westlake Village.

To illustrate his point, Tucker, whose latest book is titled Innovation is Everybody’s Business, told of a receptionist honored by her company as its innovator of the year.

“And people said, ‘How could you possibly win that award? Aren’t you on the telephone all day?’” Tucker told about 50 business owners and executives at the seminar at the Four Seasons Hotel Westlake Village. “And she said, ‘Yes, but what I do is when customers call in and they’re not real happy with something we did, I just look at that as an opportunity.’

“‘I hear them out and then I ask them my favorite question, which is, what do they think we should do so that never happens again? And they tell me, and I submit it to our new ideas program and that’s how I got the award,’” Tucker recalled.

“So it really is everybody’s job to be innovative,” Tucker said at the seminar hosted by the Thousand Oaks-based 101 Leaders Institute, which was founded by motivational expert Jim Cathcart to help develop more effective leaders. “The idea here is that we used to have innovation, but it would be like your research and development department or your marketing people. Everyone else was like, ‘Hey, that’s not important to me.’

“And the big trend today is that innovation really has got to involve everybody,” he said, outlining a number of steps to develop one’s innovation skills.

They include aggressively questioning one’s assumptions, thinking ahead of the curve, learning how to come up with new ideas on a consistent basis and becoming a standout collaborator.

A number of seminar attendees said they felt inspired by Tucker, who is president of Santa Barbara-based The Innovation Resource, a corporate consulting firm.

“The thing that excites me the most is his commitment to involve everybody in the process,” said Terry Paulson of Agoura Hills, a speaker and author who writes a conservative political column for The Star.

Don Gilman, a speaker and consultant who drove from Santa Barbara to hear Tucker speak, said he thinks “innovation is one of the key competitive advantages of America on a global scale.”

But, he said, he believes the United States has lost its innovative edge. “We have to regain that,” Gilman said. “And this is the way to do it.”

Tucker Leads Global Dialogue on Innovation at 13th Annual St. Petersburg International Economic Forum

At this nationally-televised “Power of Innovation” session, Tucker led a panel about the crucial role that innovation now plays in the global market. The “Power of Innovation: When Will Tomorrow Begin?” forum included Craig Barrett, chairman of Intel, Jean-Philippe Courtois, president of Microsoft International, Joerg Reinhardt, COO, Novartis, Jan Kubis, executive secretary, UN Economic Commission for Europe, and Anatoly Chubais, CEO of Rosnano.

International Economic Forum
“The model of economic growth has hit a wall,” said Tucker in his introductory remarks, “The world looks to the power of innovation to turn breakdown into breakthrough, recession into recovery, and stagnation into success. Throughout history, new discoveries, new technologies, and the creative ideas of entrepreneurs have powered new waves of growth. But does innovation have that capacity this time? What’s in that collective innovation pipeline?”

International Economic Forum
Relaxing after moderating “Strengthening the Role of International Cooperation and Opposing Protectionism” were Edventure Holdings CEO Esther Dyson and panel moderator and New York Times foreign affairs columnist Thomas J. Friedman.

International Economic Forum
Maria Bartiromo, Anchor of CNBC’s “Closing Bell,” moderated a panel on “The Global Economic Crisis: First Lessons and the Way Forward” with Junichiro Koizumi, former prime minister of Japan, Gerhard Schroeder, former chancellor of Germany, and Nobel Prize economist Dr. Robert Mundell of Columbia University.

International Economic Forum
Intel chairman Craig Barrett and wife Barbara, hamming it up with Tucker at the opening reception at the Hermitage Museum, founded in 1762 by Catherine the Great.

Businesses get strategies for innovation

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Open mindset, process for new ideas, collaboration are necessary.
By OH BOON PING

A CORPORATE guru yesterday set out in a speech the five broad strategies that should guide businesses seeking innovation.

The strategies include an open mindset towards opportunities, a process for managing new ideas and collaboration with customers and stakeholders, said Robert Tucker. The others were developing an innovative culture and a measurement and reward systems for innovation.

Mr Tucker was speaking at the Captains of Industry conference, the Global Entrepolis @ Singapore.

Formerly an adjunct professor at the University of California, Los Angeles, Mr Tucker has been studying innovators and innovative companies since l981. He is now president of consulting group The Innovation Resource.

Yesterday, he stressed that innovation is a mindset, adding that ‘innovative organisations are busy embracing changes’, unlike companies with slower growth.

Broadly speaking, innovation can take the form of new products, strategy or processes, and it is important that firms implement systems to manage ideas in those areas, he said.

These systems not only include a transparent selection process for those ideas, but also an execution plan and commercialisation of the output.

Pointing to leading firms like 3M, Shell and Procter & Gamble, Mr Tucker said that they are now ahead of the others ‘in the sense that they have become more systematic in the way they accomplish innovation’.

The third strategy, he says, is collaboration with customers and stakeholders that can help businesses identify opportunities much more easily.

Also, a culture of innovation helps as it promotes new ideas and makes innovation a common responsibility ‘from sales to IT, to operations and marketing, and also procurement’, he said. ‘If you are not cultivating a more open culture . . . your culture will turn risk-averse and inevitably bureaucratic and change-resistant.’

Companies have to be willing to reward ‘intelligent failure’, which Mr Tucker defined as ‘honest attempts to get the formula right’.

‘Unless you honestly reward failures, you have play-it-safe behaviour and you will not have innovation,’ he said.

Also speaking at the conference yesterday was Sukhinder Singh Cassidy, Google’s vice-president of Asia Pacific & Latin America operations, who touched on innovation as the industrial engine of the 21st century.

Specifically, she pointed out a need for firms to continuously innovate, as ‘sustainable competitive advantage does not exist’.

Citing research by Arthur D Little – a global management consulting firm – Ms Cassidy said that successful innovative firms achieve ‘an Ebit (earnings before interest and tax) margin that is six times that of the underperformers’.

Some of the drivers of innovation include resources such as education, infrastructure like roads and regulatory environment, as well as a supportive culture.

‘An innovation calendar is a must for every company’

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By Nandan Singh

As a president of The Innovation Resource, a research and innovation consulting firm based in Santa Barbara, California, US, Robert B Tucker has worked with companies including IBM India, Satyam, Nokia, American Express and Citibank to deliver growth and innovation. His numerous books include the international bestseller Managing the Future: 10 Driving Forces of Change for the New Century. Tucker spoke on growth through innovation at an event organised by CNBC TV18 in Mumbai on Tuesday.

Can innovation ever be systematic?
A Yes, we can never systemise the grand innovative idea. But, an innovation calendar is must for the company, where people meet and ideate about disruptive models.

Remember, we are not talking about solving current problems but finding future disruptive models, where we introduce new or improved products, processes, and strategies that create new value for our customers and for our firm. For example, if you give children matches to play, chances are that they might strike a light.

How does one harness talent of younger staff?
The curiosity of the younger lot is a great asset to the organisation. Also, you need to have lot of ideas to have a grand idea. We need to harness this curiosity by encouraging them to think.

Google has an intranet where every employee can post the ideas. Toyota gets a million ideas a year from its rank and its files. A manager has to manage them from his heart. They don’t care how much you know, but they care for about how much you care about them.

Should innovationbe an original idea?
Innovation may not be an original idea after all. See, a product innovation, as Sam Palmisano of IBM said rightly, could be copied by your competition. But a business model innovation can be a lot tougher to react to. It could be the opportunity to provide greater convenience such as Virgin Atlantic providing on air message.

It could be opportunities in entering new markets; to rethink how and what you customise for customers; to change how your products and services are distributed to customers such as eBay; to capture uncontested market or to take on a customer problem.

What should product innovation lead to?
They should provide a superior solution, enable benefit, resolve contradiction and create a unique value proposition, but above all, it should create new needs.

Tell me, can we live without a cell phone today? Whether it is product or business model, today it’s become very important to identify the unarticulated needs of the customer.

For that, we need to get out of office and meet with customers regularly; read voraciously-it is one of the top sources to stimulate your creative juices; set up a system that helps you gain an early warning on trend, technologies; experiment with new customer-observer methods; identify and cultivate visionary customers.

Innovators are like Vacuum cleaners. They seek more information from surrounding, read a lot, and have a voracious appetite for innovative ideas. Procter & Gamble have 50% of the ideas coming from the customers

How does one rebound from failures?
Innovation is not just about praising and rewarding success; you have to reward the failure too. You have to lavishly praise people who ideate and encourage them to think differently. Promote people who have had intelligent failures.

Their idea may not be commercially viable or may have cost the company a considerable sum, but, remember they are the ones to who have the potential to come out with that one grand idea, which could prove to be a disruptive model for the business.

Robert B. Tucker predicts innovation trends

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By Chuck Frey

Robert Tucker is the author of several books on innovation, including the classic Driving Growth Through Innovation. In February, he will release Inside the Innovation Elite: Practices of the World’s Most Innovative Companies as an “online, on-demand briefing” to update executives with what’s going on in the field. As president of The Innovation Resource Consulting Group in Santa Barbara, California, USA, Tucker works with a wide range of companies including IBM, Nokia, American Express and Citibank each year to deliver growth through innovation. He recently sat down with InnovationTools’ Chuck Frey, to discuss the global innovation movement, key trends for 2007, and the latest methods companies are developing to drive results.

Frey: What were the most significant developments in 2006 for the field of innovation?

Tucker: For me, the most significant event was the declaration that China made that 2006 was the year of innovation. The Chinese government kicked off a drive to transform its companies into not just the world’s 800-pound gorilla of low cost manufacturing, but also an innovation powerhouse. They committed to spending $115 billion a year on research and development, and on transforming their culture to be the originator of breakthrough ideas and technologies. We’re already seeing the result of this shift: A Chinese company, Lenovo, bought IBM’s PC division. Chinese companies are also making cars, major appliances, consumer products, and we haven’t seen anything yet.

Frey: Do you think the field of innovation is in danger of becoming overheated and over-hyped?

Tucker: There are certainly some faddish elements, but remember, this is the business mega-trend of the 21st century. I find American managers especially tend to discount the impact of this trend and think of it as just a flavor of the month or a theme. Every year, I lecture at 50 or so conferences and conventions around the world, and I see how conference planners think: Let’s see, we did the leadership theme last year and innovation this year, so what theme should we pick for 2007? But innovation is more than a theme and you can’t possibly cover it in a single conference. I’m still learning all the time. I often feel like a grad student on finals – things are moving so fast.

Frey: When you talk to corporate leaders, what’s your message to them?

Tucker: My message to CEOs is this: You’re in an innovation arms race. It’s the strength of your business process versus those of your competitors. A cost reduction strategy alone will not cut it. I disagree with RosaBeth Moss Kanter when she said (in a Harvard Business Review article) that interest in innovation comes and goes in seven-year cycles. It may have in the past, but not today.

Frey: And why is that?

Tucker: Simply because it’s tough to pull it off. CEOs of publicly traded companies, in the U.S. at least, have attention deficit disorder when it comes to innovation. And who can blame them? Their average tenure is a short three years. Either they drive growth and meet their quarterly numbers and get the stock price up, or they’re out. Thirty-five percent of departing CEOs left involuntarily in 2005, according to the Wall Street Journal! So I think a lot of them look at innovation as planting trees that will bear fruit – for the next guy or gal, not for them, so they’re of two minds.

You ask them, how important is innovation? In one survey, 72 percent of them said that it’s one of their top three priorities. But then the knowing-doing gap kicks in. They “know” they’ve got to get better at it. But what they “do” is often piecemeal, ad hoc, seat of the pants. If innovation were a company, and you and I were assessing growth prospects, I’d say there’s still a lot of growth to be had because most companies are still at the beginning of their journey. I wrote a piece in my e-newsletter called, “Is There a Ford in Your Future?” about Ford Motor Company – which lost over $7 billion in 2006 – and how it’s suffering a classic disruption of its business model, just like Wang Labs, Blockbuster, Kodak, Montgomery Ward, and dozens of other companies. The response to that article was typical. We heard from managers who wrote, “I fear if we don’t do something in my company, we’re quickly going the way of Wang.” They want to know what to do.

Frey: You talk about how tough innovation is to pull off. Are companies getting better at successfully implementing it?

Tucker: Studies I’ve seen that have been published indicate that there is greater achievement of return on innovation. In my book, we cited a Arthur D. Little survey of 669 global executives conducted in the late 1990s that “fewer than one in four believe they have fully mastered the art of deriving business value from Innovation.” And Boston Consulting Group’s survey of 1,070 senior executives last year in 63 countries found that almost half were satisfied with the returns on innovation. While that’s hardly where you’d like it to be, it does show improvement. When compared against the S&P 1200 Global Stock Index, the 25 most innovative companies that BCG identified (MICs) had a mean margin growth of 3.4 percent annually, compared to a 0.4 percent increase among the total index. And MIC stock returns averaged 14.3 percent, compared to 11.1 percent for the mean index. So I think we’re seeing improvement in what innovation initiatives deliver to companies.

Frey: What trends do you see emerging in the field of innovation for 2007?

Tucker: The big movement I see is a broadening of the definition of innovation. Yes, it’s those process improvements that you need to cut costs. Yes, it’s new products. But it’s also what I’ve long called strategy innovation and which some people call business model innovation.

Strategy innovation concerns everything you do that touches your customer that’s not your product, and doesn’t have to do with your back-office processes that the customer never sees. This area is extremely hot for the simple reason that your new breakthrough product can and will be copied, knocked off faster today than ever before. Patents are increasingly less effective in preventing this, and technological innovation gives your competitor a multitude of ways to workaround and duplicate your invention without outright violating them. But if you can come up with a unique way of adding value, especially if it’s coupled with a breakthrough product – think iPod and iTunes – you’re much more likely to be on to something sustainable. So companies are coming to us wanting to brainstorm not just new product concepts, but new ways of going to market, new ways of entering new or adjacent channels, new value-adding services, and new ways of anticipating unarticulated customer demands.

Frey: What companies are doing interesting new things in the area of innovation?

Tucker: I’m impressed with what Bank of America is doing with its Innovation & Product Excellence Group. In 2006, they innovated their way past Citigroup to become the world’s largest bank by stock market value. They have come up with a new twist called Voice of the Associate, where they gain valuable feedback from their own employees, before they even pilot a new idea. I think BMW is on to something with its Listening Posts satellite trend observation teams in places like Palo Alto and Tokyo and Shanghai. I think what IBM did last year with its second Innovation Jam was outstanding.

In fact, there are a lot of interesting new methods being developed, plus new ideation techniques, new mind-mapping and idea management software. Our toolkit is evolving rapidly today, as practitioners and consultants alike continue to experiment with what works, and what doesn’t. Innovation is still such a new field that only now is it becoming clear that there are five or six key areas where you need to focus in order to build an innovative capability. For example, how will we harvest enough big ideas at the front end, how will we manage ideas, how do we select the most promising ones and allocate resources, etc.

Identifying these buckets isn’t difficult; addressing them equally well is. The only thing worst than doing nothing about improving innovation in your company is doing the wrong things – the things that sound good, but that evidence shows don’t work. And unfortunately, a lot of people just want to “get creative” and try to reinvent the wheel, rather than doing the research into what other companies have learned through experience. That was what led me to develop Inside the Innovation Elite: Practices of the World’s Most Innovative Companies. It’s about adopting what works and not going down blind alleys.

Frey: You noted IBM’s Global Innovation Jam. Wasn’t that mostly a publicity effort?

Tucker: Well it did generate a lot of free publicity for IBM, no question. But what IBM did was unprecedented in scope and scale. In the interest of full disclosure, IBM is a big client of mine, so far be it for me to bite the hand that feeds me.

But look at what they did. In July 2006, they issued an online brainstorming invitation to their 330,000 people in 173 countries around the world, but also to IBM clients, business partners, and even family members. They said, “We want your ideas.” They exposed their advanced projects to these people in separate web sites to give participants information about emerging technologies from supercomputing to avatars. IBM managers then used automation to winnow the 37,000 ideas they received down to 300 well-defined ideas. Finally, more than 50 employees spent a week at IBM’s Watson Research Center in New York further combining and trimming these top ideas to down to 30. And now they’re spending $100 million to develop ideas that came from the Global Innovation Jam. I was in Asia Pacific working with IBM’s country officers and it was the talk of the town.

Frey: What’s your impression of the open innovation movement? Is it here to stay, or just a fad?

Tucker: It’s here to stay. I just wish I’d named it instead of (UC Berkeley business school professor) Henry Chesbrough, who’s been such a great advocate of it in his books and lectures. Open innovation is a powerful tool to force collaboration both within and outside your company – and it works. IBM’s biannual survey of over 700 global CEOs showed clearly that companies with higher revenue growth report using external sources significantly more than the slower growth firms.

What open innovation does is give management a tool to break up the monopoly of where ideas come from. Before, they came almost exclusively from R&D and marketing and new product development. Open innovation practitioners like Procter & Gamble CEO Allen Lafley are saying to their people, “You no longer have that monopoly.” Lafley wants 50 percent of ideas coming from outside the organization. This creates healthy competition for breakthrough ideas in the company! What leader-directed collaboration is about is not letting grass grow underneath your patents – either use them or lose them. If you haven’t used them before a certain date, you have to sell them off to somebody who can.

Frey: What are the benefits of getting customers involved, either directly or indirectly, in the innovation process?

Tucker: The benefits are enormous. The innovation vanguard companies I monitor and in some cases advise are figuring out how to gain customer insights in amazing ways. I’m impressed with what John Deere developers in their turf division did to listen for their customers’ unarticulated needs. They used our friends at Product Genesis consultin] out of Boston to help them do extensive Video Voice of the Customer. They went out and interviewed golf course groundskeepers and superintendents and asked them what they wanted in a mower. They also watched them cut grass, lots and lots of grass. They were looking for unique insights, not just “you could add a cup-holder” kinds of suggestions.

They noticed how the guys doing the mowing had to work around the golfers during the day, and how they couldn’t mow at night if it was near houses because of all the noise. They came up with the idea of the silent mower, and their breakthrough hybrid mower was the result.

See, what’s lacking in innovation today are folks in these giant companies who have a well-honed intuitive feel for their customers, the way a Bill Clinton knows how to read voters’ minds, or the way a Sam Walton knew how to tell if something would fly with customers or store managers. Managers are so busy these days answering e-mail and going to meetings that they have no feel for the customer. They don’t get out there and develop these chops. So all these methods – ethnography, customer case research, voice of the customer – are essential for creating a way to clue in to what your customers’ needs and wants and aspirations are.

Frey: When you first got into the field, you’ve observed that mavericks and outliers didn’t get much respect. Is it any different today?

Tucker: Some of those mavericks are running their own companies today, and laughing all the way to the bank. But seriously, while there’s greater respect for highly creative people in many organizations, there will probably always be a tension between those who want to change the system and those who want merely to improve the system, whatever system you are talking about. It’s just that today companies are figuring out ways to unleash bottled up creativity while also being good at execution.

The Power of Creative Imagination

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Editor’s Note: Solutions World sought out several thought leaders outside of Chevron and the energy industry for this article to gain their perspectives on the importance of ingenuity and innovation in the business world.

If you think you’ve been reading or hearing a lot about ingenuity or innovation in the news recently, you’re right.

Both words are commonly interchanged in the business world, each referencing the notion of creativity and invention.

But why are the media reporting about it so much now? Hasn’t the need for ingenuity in business always existed?

“It’s definitely been a hot topic the past few years,” says Yahoo!’s Innova- tion programs manager, Oliver Raskin. “Part of it is perception. The media are always looking for hot buttons that help define the latest trend for consumers, but there are some real systemic things that are driving the story in today’s news.”

Chief among these systemic drivers, explains Raskin, is the emergence of the Internet, the democratization of the means for production, and the demands of the public market to deliver unsustainable growth rates quarter after quarter.

“From Chevron’s perspective, ingenuity is vital because our customers expect us to come up with new products and services for them,” says Ray Buschmann, manager, Marketing Solutions, Global Lubricants. “Ingenuity is necessary to help distinguish our products as being more consumer-worthy than the compe- tition’s, and to help us come up with new ideas to help fill the gaps for sensational introductions that might be needed years down the road.”

Essentially, ingenuity drives Chevron to seek new opportunities and out-of-the- ordinary solutions. We use our creativity to find unexpected and practical ways to solve problems. Our experience, tech- nology and perseverance enable us to overcome challenges and deliver value. Regardless of its precise definition, this particular skill or power is a precious value venerated by every industry on the planet.

Today’s Key to Tomorrow’s Success

Never before has the energy industry needed ingenuity more than today, with news headlines trumpeting stories about global warming, the record-high price of crude oil, refinery production limitations, geopolitical concerns, and the uncertainty of being able to sustain the world’s future energy needs with petroleum.

“The issue of ingenuity is most ap- propriate at this moment in time for a company like Chevron, where it is clear that the next 50 years of the oil business will be nothing like the last fifty,” says Paul Saffo, a Stanford associate professor and an Emeritus director at the Institute for the Future. “Energy companies that sit astride the lifeblood of the modern economy in the form of hydrocarbon energy have to figure out how to create an energy ecology that’s no longer a monoculture. We are going to need a va- riety of technologies and energy sources in the future, and the companies that can use their resources to innovate and figure that out will be the ones that survive.”

“By interpreting ingenuity in our own way, we’re introducing new, transforma- tional ideas and processes aligned with our long-term business strategies,” says Buschmann. “There is great strength in the processes that have been developed at Chevron. In fact, some of our pro- cesses, like CPDEP [Chevron Project Development and Execution Process, the core Chevron process for project management], have been licensed for use by other companies. The combination of benchmark processes teamed up with ingenuity makes for an unbeatable combination.”

The Ingenuity Race

One of the most potent fuels for growing or stimulating a company’s ingenuity capital is a diverse workforce that has been empowered to question the norm.

Robert B. Tucker, a best-selling author and president of The Innovation Resource, says that about 50 percent of his work as an innovation coach is with companies outside the United States.

“What I see is that Americans don’t have a lock on ingenuity or innovation, and we ain’t seen nothing yet in terms of what the rest of the world can come up with in terms of science, medicine, technology, you name it,” Tucker says. “But to me this is exciting. You and I are competing globally to create new value for people, and when we do that, we get rewarded for it whether we live in Mumbai, Melbourne or Memphis.”

According to Michael Schrage, a reporter for the Financial Times, India and China are becoming technical education superpowers, producing 1 million engineering graduates a year, compared with 170,000 per year in the United States and Europe (“The Asian Giants and the Brains Bazaar,” Financial Times, May 2006).

“The world is in a cutthroat competi- tion to find the greatest minds and most creative intellects,” according to Kiril Sokoloff of 13D Research. “The best investments of the future may well be employing the best and the brightest, but if one believes that creative success comes from ‘outside-the-box thinking,’ what methodology will create such thinkers?”

“Innovative companies chase ‘cheap smarts’ as relentlessly as today’s costconscious multinationals pursue cheaper manufacturing and call-center capacity. Try commanding a premium wage as a post-doctorate in that marketplace,” Schrage writes. “Of course, a wealth of scientists and engineers is not the wealth of nations. University dropouts such as Microsoft’s Bill Gates and Apple’s Steve Jobs persuasively demonstrate that global technology leadership does not require top degrees.”

The point being that ingenuity does not require a degree, although it’s a safe bet that university-trained students will yield more innovative brain power than their less educated peers. And by the numbers alone, more engineering and scientific brain power is being produced in China and India than in the rest of the world combined. That is a major shift from the past, when the ingenuity or creative capitals for business were centered in Western Europe and the United States, while China and India were used primarily for manufacturing products and back-ending technology and service companies.

A New Way of Creating Value

“Whether ingenuity or ‘intellectual capital’ is developed organically within an organization or acquired on the open market, it’s not just about creat- ing new products, but new business models that enable companies to survive dramatic shifts in the marketplace,” says Saffo. “EBay is a new business model for retail sales, wherein they have more sales agents than Wal-Mart has employees. Google is a new business model creating value for their company every time you or I use their search engine. Just around the corner, there is a huge need for ingenuity in companies in every industry in order to survive and profit from the rapidly advancing disruptive technology, Nanotechnology. Nanotech will change every industry and company in terms of how their products are produced and how they are used at the consumer level.”

An example Saffo likes to cite is how the railroad industry knew its business was changing in fundamental ways in the 1950s. The Interstate Highway Act was going to cut into their freight business, and civil aviation was going to take their best passengers. Yet when the industry leaders sat down to discuss their future, “Intellectually, they got it right, but in their hearts, they still loved trains so much they couldn’t let go of them, even though they could see what was coming,” says Saffo. “They ended up missing out on becoming a major player in the transportation revolution because of nostalgia.”

For companies like Chevron that are facing a dramatic turnover in human capital as a result of retirement, two factors are critical in addressing the need for ingenuity in the future: tapping into the vast reservoir of knowledge from veteran employees and promoting an acceptable risk/reward scenario for newcomers.

“Really try to absorb the collective wisdom and wealth of experience of the veterans who are retiring,” says Tucker. “Pick their brains, show interest, ask questions. When they’re gone, it’s too late. Ingenuity is built on the back of knowledge of what works while chal- lenging assumptions about how things could be different.”

“Knowledge transfer is key to compa- nies like Chevron, but at the same time, new employees need to keep a handle on the ideas and perspectives they had before joining the organization,” adds Raskin. “Newcomers need to see how old-timers have benefited from the corporate culture, but they also need to see that there is an acceptable risk/reward structure that em- braces innovative thought. It’s important to promote and lavish praise on employees who stand up and take risks. Companies that don’t take risks die off.”