One theory of why there is more innovation in a downturn comes from Professor Dominic Houlder of London Business School. It goes like this:

There are two main sources of innovation – invention and discovery.

Discovery as it relates to innovation is analyzing where customers are being over-served and where they are being under-served. Discovery is teasing out what needs customers have surpressed during the boom times for a myriad of reasons, and identifying ways to better serve customers. The firms that get this right during the downturn are the firms that are likely to emerge strongest out of the downturn.

For more detail check out the video:

So, now that you are less busy filling customer orders. Are you using that time to innovate through discovery or only through invention?

Where will your next innovation come from?

@innovate

For decades, innovation in the mobile industry was obstructed by the mobile carriers. Walled gardens seeking to maximize airtime revenue ruled the day and delivering value to customers a distant concern. Carriers had ultimate power to determine what innovations customers would have access to and their contract terms and limitations discouraged application development. Then along came a man with a sledgehammer….

The man was Steve Jobs of Apple, and the sledgehammer was of course the iPhone. The iPhone was a revolutionary handset at the time, and for several of its best features to work, a carrier would need to cede some of its control. Apple took the iPhone first to American mobile service market leader Verizon and was shown the door. Control was retained and the walls of the garden did not come down!

So, Steve Jobs did what any good entrepreneur would do, he didn’t take no for an answer and went on to the next carrier on Apple’s list. AT&T didn’t say no, after all this was their golden opportunity to try and catch Verizon, but they were no pushover in negotiations with Apple either. In order for AT&T to do a deal with Apple and cede some of their control, AT&T got Apple to sign a five year exclusive contract, but Apple did manage to start taking a sledgehammer to the walled garden. As a result RIM, Nokia, and others have managed to widen the crack further.

Now instead of the mobile carriers obstructing innovation by controlling which applications make it onto their network and taking nearly all of the revenue from their sale, handset makers are now controlling which applications make it onto their phones. Where mobile carriers were incented to limit the available applications, handset makers are incented to make as many applications available as possible. There is even a Skype client for the iPhone. This is something I never thought I would live to see.

Now, Nokia is looking to leverage their strategic acquisitions to push mobile innovation into whole new directions.

So now that many of the obstructions to innovation in the mobile industry have been torn down, what other industries currently are obstructing innovation?

Some say that commercialization of innovations in electric, hybrid, and water-powered vehicles has been obstructed by the automobile manufacturers, petroleum companies and the government (at the bidding of the first two). Whether that is a conspiracy theory or reality, I will leave for your comments to decide.

Conspiracy theorists will be disappointed as we’re not going to talk about water-powered cars, because water is an even more precious resource than oil, making a water-powered vehicle fleet unsustainable.

This leaves electric and hybrid vehicles. Is innovation being obstructed here?

In the United States, the evidence would indicate that the answer has been at least partially yes….

Despite the Toyota Prius being on sale since 1997 in Japan and since 2000 in the United States and Europe, there is still not a plug-in version available from Toyota (although one is slated for late 2009). But, through third-party providers like Advanced Vehicle Research Center and CalCars you can covert a standard Toyota Prius into a plug-in hybrid capable of getting 100mpg.

But at the same time you have researchers inside the United States at MIT recently discovering a way to potentially create lithium ion batteries that can be re-charged must faster. This could have implications for the portable device market for sure, but potentially also for the electric and hybrid electric vehicle market.

Outside the United States, innovation introductions to the marketplace are proceeding at a faster rate.

In December 2008, BYD, a Chinese company began selling a plug-in hybrid in China for about $22,000 (about half of the likely Chevy Volt price tag). The specs are compelling – 100mph top speed and 62-mile range on the battery (making it nearly fuel-free). If it passes U.S. safety tests, BYD’s vehicle may hit the market before the Chevy Volt or Toyota’s official plug-in Prius. Warren Buffett and Berkshire Hathaway are investors in BYD.

When you look around the hybrid electric innovation-sphere, what you see is a collection of independent foundational technology projects with little coordination or systems thinking. As we look to shift to fully or partially electric cars, we need designers to look at the power system as a true “system” and look to optimize the efficiency of every component of the system – including positive use of non-core and waste assets. We will need to come up with an objective measure of system efficiency similar to mpg and emissions measurements for internal combustion driven vehicles.

One non-core asset example people are already discussing is integrating solar panels into a car’s exo-skeleton. Here are a few links if you would like to find out more about on-board solar power:

• http://features.csmonitor.com/innovation/2008/07/14/solar-panels-for-your-car/
• http://auto.howstuffworks.com/solar-cars.htm
• http://www.technologyreview.com/Energy/21073/?nlid=1205

One waste asset example would be using the turbulence and airflow over the car’s exo-skeleton to power mini-turbines and/or embedding a wind turbine that could re-charge the battery when the vehicle was at rest. Here are a few links if you would like to explore this further:

• http://www.whynot.net/ideas/720
• http://knol.google.com/k/gaby-de-wilde/the-wind-powered-car-project/1yrf1mzjtxzk5/8#

Internal combustion systems are well-understood and composed of nearly universal components, with innovations and competitive differentiations occurring primarily at the system component level. Because of this, maybe hybrid electric vehicle system design should become an open-source project to drive standardization of system component types and supply chain efficiencies.

This would allow component suppliers to focus primarily on creating component innovations, while still being able to contribute potential system improvement ideas to the open source research project. Automobile manufacturers could also focus on optimizing for efficiencies in the design and production of entire vehicle fleets, but still retain the ability to contribute system improvement ideas.

Could we collectively do more to spark an innovation revolution here?

What do you think?

@innovate

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Trickle-Up Innovation is a topic you will hear more and more about.

Innovations currently tend to be commercialized in the developed countries and then distributed in the developing world. Trickle-Up Innovation turns that model on its head by commercializing products or services in developing countries and then adapting them for the developed world.

Trickle-Up Innovation does not displace the traditional dissemination patern, but instead provides another option for innovators to consider when looking at commercializing their ideas.

One reason that Trickle-Up Innovation will find increasing adoption is the fact that innovative products and services tend to initially be adopted by those with the greatest pain.

Another reason that companies will expand their innovation strategies to include Trickle-Up Innovation is the fact that often the breakthroughs that drive innovation come from working with extreme users.

Extreme users and those with the greatest need for an innovation are equally likely to be found in the developing world as in the developed world – opening the door for Trickle-Up Innovation.

Where will you find innovation?

@innovate

For more information, see Fast Company’s article or BusinessWeek’s article on Trickle-Up Innovation.

Introduction

I had the opportunity to attend the Brightidea Innovation Leaders “Birds of a Feather” Conference. The event was a peer-to-peer discussion on innovation management among innovation executives and managers at top global corporations. The conference provided a forum to exchange ideas and best practices on implementing innovation in large organizations, and there were presentations by WMS and Mentor Graphics. This is the first of a series of two articles highlighting the key takeaways from the two presentations, based on the notes I took at the event.

The WMS presentation was given by Shridhar Joshi, VP, Global Product Strategy, and Al Thomas, Executive Director, Advanced Game R&D.

WMS has sprung forth from the loins of Williams Bally Midway combination and its heritage of pinball machines to become the dominant player in the video slot machine business.

WMS leadership set innovation as a core principal in an attempt to establish a culture of innovation. They set out with two key questions:

• How do we make every employee feel that innovation is part of their job?
• How do we maximize our innovation potential?

To achieve their innovation culture goals, WMS had to establish certain focus areas, had to establish certain structures that allowed somewhat for spontaneous formation of cross-fuctional teams, and had to form an advisory panel of experts to lead, guide, and evaluate innovations. In addition to creating on-boarding training on innovation for all employees, WMS also had to put training in place to replace panel experts over time.

Other foundational pieces include:

• A process for what to do with ideas that people submit (internal and external ideas)
• Training on the idea submission system along with training on how to innovate
• A reward and recognition program
• Quarterly innovation awards luncheon
• An annual innovation awards dinner
• Marketing team publishes a quarterly innovation newsletter

Seven keys to success:

1. Building a program formally before launching it
2. Launching it with the full support of top management and a communications plan to support the launch
3. Participation – People want to participate (75% so far) – we’re tapping the brain of the entire company
4. Consistency – We have been able to maintain involvement over time
5. Fearless Leaders at the top
6. Light-hearted approach makes innovation accessible
7. Having a tool at the backbone has been key (shows that we have a process to manage the ideas that come in)

As a result of the foundational pieces and keys to success coming together, WMS has been able to create a “Culture of Systemic Innovation” because of the following:

• They didn’t create artificial financial metrics
• Employees are free to do (submit) what they feel is important
• Panel of experts are responsible for evaluating the financials
• We find the organic innovators in the company and make them the spokespeople

WMS has built an innovation portal, of which Bright Idea’s idea management system is but just one part:

• “I have an idea” (submission)
• “I’m in need of a solution” (search and innovation challenge creation)
• “I’m new to this site” (tool training)
• “Be a better innovator” (innovation training)

And a few final takeaways:

• The promise of financial rewards are not key, in fact they might hamper participation
• It is important to also provide the ability to start a specific innovation challenge for problems people are seeking a solution to
• The BrightIdea solution does not replace any existing departmental solution (i.e. new game idea submission from game designers)
• The BrightIdea system helps to make the IP group more efficient in some ways by helping to shape ideas before they get to the IP group (curtails hallway conversations, etc.)
• A lot of the ideas are about things like improving manufacturing, hr benefits, etc.
• Rather than setting aside a certain amount of time every day for innovation, it is more important for managers to be flexible and help promising projects succeed
• It is important to allow ideas to gather strength on their merits, to allow people to comment and vote on ideas, and to provide mentors to help shape promising ideas
• Breaking the surface tension is one of the keys to sparking innovation
• Getting participation is a function of how committed you are to giving people proof points that you are listening (moving the cafeteria soda machine example) vs. The suggestion box is a paper shredder
• Inviting the third person to the idea session often creates a third idea that the first two would have never imagined

Conclusion

All of this comes together to reinforce the difference between innovation theory and practice. Innovation and working with clients are, of course, my passions. After listening to WMS I came away with the feeling that they “get it” and that they are making a lot of the right moves to set themselves up for success, but I also noted that there are numerous other parallel “innovation” tools and processes that may be an area of great opportunity for increasing their chances of achieving continuous innovation.

I would entreat all of you out there in formal or informal innovation management roles, to not only give yourself a broad base of knowledge in innovation theory, but to also seek out other companies ahead of you on the path and learn from their successes and mistakes. Innovation is a dirty business, an emerging discipline, and the reality is actually far more interesting than the theory. For another inside peek into practical attempts to create innovation, I encourage you to check out a book with an unusual (or possibly innovative) organization scheme I am currently reviewing – “Inside Project Red Stripe: Incubating Innovation and Teamwork at the Economist”.

So, if the people at WMS keep it up, chances are that every time you go to a casino and play the video slot machines, you (or the casino) will have a better experience than the time before.

What do you think?

@innovate

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I came across an interesting article today on stackable cars that is a good followup to my article about vehicle ownership and whether the combined Zipcar and Flexcar represent an innovation in the automotive industry.

The stackable electric cars are being developed by MIT with a grant from General Motors, along with an electric scooter. Unlike Zipcar’s round-trip rental policy, MIT is advocating a one-way rental system both for the electric scooters, but also the stackable electric cars. This is similar to the way that free bicycle systems work in several cities around the globe. The main downside will be whether or not a one-way system can maintain even coverage across the city to serve customers.

There is no reason that Zipcar couldn’t benefit from this invention. Assuming that these cars could be purchased by Zipcar, they could make more cars available in a smaller amount of space. This could be quite handy for Zipcar. Do the benefits of a vehicle like this stack up?

What do you think?

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