GUEST POST from Jeffrey Phillips

The US Government, along with many other governments around the world, is beginning to come to grips with its fiscal deficit, and, hopefully, its long term debt. A deficit is a current year short-fall that occurs when spending exceeds tax receipts. A debt, on the other hand, is the accumulated deficits. Both are pernicious, and both must be addressed, or, like Greece, we’ll all find ourselves in the uncomfortable situation of dramatic cuts in government services or paying extreme taxes to pay down our creditors.

Another factor you should watch closely is big business, at least in the US. Right now, many businesses are reporting exceptional profits in the face of a slow economy. I’ll argue they are doing this in many cases by driving two significant deficits, which are leading to debt. Neither of these deficits will show up as a negative on the balance sheet in the short term, but may cripple the firms in the long run.

The first deficit or debt is in information technology. Many firms are simply relying on existing software and existing systems to get them through these lean years, and are investing far too little in development and new systems. Many IT organizations are barely able to sustain their existing infrastructure, much less add new functionality. Many are also hoping to take advantage of a generational shift to the “cloud”, which they believe will dramatically reduce IT costs, but they aren’t taking into account the dramatic costs of shifting to the cloud. In the next few years the lack of investment in IT will be obvious and CEOs in the near future will have to invest in IT to continue to drive revenue and profits, demonstrating the deficit and debt around IT spending.

The other deficit or debt that is near and dear to my heart is the innovation deficit. In this economic environment most firms are satisfied with sustaining the status quo, and squeezing all the value that they can out of existing products or services. They use many arguments to demonstrate why innovation is currently too expensive, too difficult or too risky. Many executives know they need innovation in order to sustain growth and profits (see any recent CEO survey where 70% of CEOs demand more innovation), yet many CEOs also recognize that innovation isn’t getting done. For proof see the NSF survey where less than 25% of manufacturing firms and less than 10% of services firms report generating a new product. This deficit builds to an innovation “debt” or gap, which has several implications.

First, many firms that are leaders today aren’t innovating, and won’t have interesting and valuable new products and services to offer. To sustain themselves in the near future, they will have to acquire smaller firms with new offerings or risk the wrath of their customers. Second, new entrants and upstarts will cause radical disruptions because they bear less of the infrastructure cost and have less at risk when they innovate, so the table is set for disruption in any industry that isn’t very innovative now. Third, competitors in countries like India and China that are lending us money to drive our fiscal deficits are innovating, so we can expect more and more innovation from those firms and countries.

Right now many firms in the US are whistling past the graveyard, hoping to get through a tough economic climate and get back on solid footing. They are driving profits by squeezing more efficiency and returns from existing infrastructure and products, but at the same time creating an innovation deficit which they won’t be able to fill in the coming years. As nature abhors a vacuum, that innovation deficit or debt will be filled by someone, some firm or some country. Don’t kid yourself: short-term profits are coming at the risk of long term product and service innovation. Our businesses are creating an innovation debt to rival the debt rung up by our government, and sooner or later we will pay for the lack of investment.

Innovation, like tax collection, isn’t an on-again, off-again activity based on external conditions but a consistent requirement over time, which we may come to recognize at our peril.

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GUEST POST from Jeffrey Phillips

It’s rare that you’ll find a quote from General Motors in an innovation blog, but I read that Dan Akerson, Chairman and CEO of General Motors, gave the commencement address at Bryant University. Akerson gave a fine commencement address, full of self-deprecating humor and advice for the graduates. But one thing he said, tucked in at the end, was important. He said “Don’t be afraid of new ideas; be afraid of old ones”. Here, in the wrap-up of his speech, are the words GM, and every firm needs to hear.

Why are so many firms “afraid” or perhaps more realistically “resistant” to new ideas? Why do so many firms and individuals cling to ideas that are old and outdated? Why do individuals and firms consistently cling to concepts that are well past their shelf life, and in doing so fall behind the competition?

New ideas require a shift in perspective. New ideas require us, as individuals or as corporations, to reconsider our thinking. New ideas suggest a shift in demand, in the marketplace or in habits or behaviors, and those changes or shifts may indicate that our offerings will be less interesting or less valuable. But new ideas also come with a price tag. It is not clear if new ideas will “pan out”. After all, the success of many businesses is built on a solid, well-defined “old” idea that has proven its merit, while a new idea may not be as defensible, as scalable or as profitable as the old idea.

So, in light of these challenges, many firms rest comfortably in the knowledge that while new ideas may arise, their “old” idea provides substantial value. With luck, the old idea can be extended for many years and the firm can build defenses against the preponderance of new ideas. Over time comfort, inertia and a defensive mindset take hold. It is far easier to defend, after all, than to attack. Military strategy holds that an attacking army needs to far outweigh a well entrenched defensive position, and the same is true in business. Playing defense is far easier, requires less resources and is a more comfortable position.

Yet a defensive mindset assumes that the environment will change little, if at all, and customers’ needs will change very gradually, and that there are few if any shifts in demographic behavior or economic activity. When the global economy was fractured and trade was limited, these assumptions made sense. Now, however, with a fully integrated economy that can see supply lines ruptured (Japan Tsunami) and rapidly stitched back together (see also Japanese Tsunami), change is inevitable and global demand increasing. Consumers are ever more fickle, demanding new products, new services and new experiences at a rate never seen before. These factors, plus a significant shift Southward (to Southeast Asia, India and Africa) of population density and economic intensity over the North (North America, Europe, Japan) indicate significant shifts in consumer activity and demography. Firms relying on old principles, old ideas and old rules about product cycle longevity are at significant risk.

We can’t be merely afraid of old ideas. In older, established economies our businesses should be constantly re-evaluating existing business models, product offerings and experiences, running numerous experiments to discover what will work in an emerging future. It’s not merely old ideas that are dangerous, it is old expectations, old rules of thumb and old methods of managing. The pace is changing, and old theories and old expectations are just as dangerous as old ideas.

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GUEST POST from Jeffrey Phillips

Sitting in on a Twitter chat (#innochat) yesterday we were tweeting about innovation “failure”. One of the opportunities and challenges associated with tweeting is the difficulty of accurately defining what you mean by certain words or phrases. I’m sure innovation failure has as many definitions.

Giving it some thought, however, I felt it was appropriate perhaps not to define what innovation failure is, but to think about the root causes of innovation “failure”. If we understand the root causes or types of failure, we can enter projects with appropriate expectations and awareness. Herewith, my attempt to define at least five significant types or causes of innovation failure.

1. Things You Don’t Notice

In the first category of innovation failure are the opportunities or markets you simply don’t notice. In hindsight these opportunities or markets are fairly evident, but at the time perhaps the competitive nature of a market or business simply blinds many people to an opportunity. Take, for instance, Sony, one of the leaders in portable music equipment and in recording. Why didn’t Sony create an iTunes concept? It would seem they had all the pieces, but they failed to notice the opportunity. These failures often occur when firms or even industries assume that business will continue much the same as it has for years. A small oligarchy implicitly agrees on the rules for the market and new entrants eventually overthrow the existing order. This failure is based on a firm’s complacency, inertia and fear of change, and is based on the assumption that markets and customers will demand much the same products and services year on year.

2. Things You Notice But Reject or Choose to Ignore

It is a failure to notice a new market or opportunity and choose to ignore the opportunity, waiting for someone else to take the lead, or so locked into a specific business model that you can’t exploit an opportunity or market when it presents itself. The “we aren’t innovative” argument isn’t a strategic, it is the abdication of strategy and initiative, and in itself is a failure. Noticing a market or opportunity and ignoring it is perhaps a worse failure than not noticing at all. This failure is based on a lack of strategy and initiative. Noticing opportunities yet looking away, being reactive rather than proactive, is quite possibly the worst failure of all.

3. Talking But Not Doing

Currently, many firms are talking a good game about innovation but aren’t actually doing anything. This is a failure of dramatic proportions. Surveys typically show that CEOs rank innovation as one of their top three priorities, yet a recent NSF survey found that only 25% of manufacturing firms and 8% of services firms reported creating a new product or service in 2006-2008. There’s a significant gap between the talk about innovation and the actual output. Talking about innovation is not doing innovation. This merely creates a significant amount of cynicism inside the firm and outside the firm, and makes doing real innovation even more difficult. This is a failure of transparency and goal setting.

4. Trying to Create Something New But Failing in the Attempt

Many, many firms will engage an innovation project and generate new ideas. Often these ideas “die on the vine” or simply aren’t implemented effectively. This is an innovation project failure, often caused by poor planning or poor understanding of customer needs, or little commitment to actual change. Doing real innovation work is hard, requires discipline and a willing sponsor at the end of the line. Many barriers will prevent even a committed team from moving an idea from concept to product. This failure is a failure of commitment and process, typically resulting from a lack of resources, inadequate staffing, and a poor understanding of an innovation process.

5. Products or Services That Fail in the Marketplace

Every year thousands of new products are introduced and pulled from the shelves only a few months after they were released. Look at the Microsoft Kin phone as a really compelling example. These are new ideas that made the transition from concept to new product but were rejected in the marketplace. This kind of failure is damaging and expensive. After all, these ideas were developed, new products were created and launched, and the products were met with at best a collective yawn. Doesn’t say much for innovation when that happens. These failures are a failure of timing (right product, too early or too late) or a failure of understanding the needs and wants of the marketplace (poor customer insight). When most people talk about innovation failure, this is what they mean.

Conclusion

Perhaps the most important question, then, is which kind of innovation failure is most important or most dangerous. I think the knee jerk response will be “products or services that fail in the marketplace” since they are the most visible and most expensive from an investment perspective. I’d argue that the worst kinds of innovation failures are those that you don’t notice, or do notice and ignore, since those are the ones that will disrupt the industry. The challenge is in the cost structures. The failures of products in the marketplace show up on the books today, while failures to act on new opportunities or markets don’t show up as costs for years.

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GUEST POST from Jeffrey Phillips

“What’s the right answer?” is a question we hear all the time. In school we are expected to learn our material and spit out the “right” answer on demand. In business we are expected to look at historical precedents, what our competitors are doing and what we can afford, and provide the “right” answer.

Strangely, I often hear this when applied to innovation. What’s the right answer? When I hear this I know that the perspectives and intents are all wrong, and innovation will simply be another tool applied to find the right answer, instead of being applied to its true capabilities.

Far too often, the reasons that innovation “fails” are not tied up in the ideas that are generated, but in the questions that were posed and the rush to find the “right” answer. We in business are trained to find the one right answer very quickly, and have often failed to realize that innovation is often a voyage of discovery, to determine the correct opportunities and destinations rather than simply answer a question. Business cultures and attitudes have hammered into our heads the need to find the answer quickly, rather than explore for the best opportunity or outcome. We take for granted that the questions posed or the opportunities as framed are correct, and proceed to use innovation tools and techniques within an exceptionally limited framework, attempting to answer a question that is too limited and perhaps not even valid.

This isn’t our fault, really. We’ve been trained for years to accept the offered premise, which is that the question posed or the opportunity identified is the correct one. But far too frequently management’s ability to assert the right strategy or ask the right question seems less and less obvious, and innovation isn’t a technique or tool meant to answer one question as much as to explore a number of possibilities, and perhaps return with answer to a far different but more compelling question.

It’s not hard to tell whether or not an innovation effort will struggle. The roots of the failure lie in the original definition of the problem and the expectations inherent in the way the question is framed. In my experience many executives frame questions far too narrowly, missing many innovation opportunities, and place far too much pressure on obtaining the “right” answer to questions that were ineffectual to begin with.

Innovation should often be framed in two distinct phases: the discovery phase, where we take the given paradigm and extend it beyond where the thinking originated, and the action phase, where we start to generate and select ideas based on the opportunities or problems as framed in discovery. Far too often the discovery phase is taken as stated by an executive, with little or no investigation, with constraints and scope that are far too small to enable innovation to work.

Please remember that innovation is, first and foremost, an act of discovery, often of things you may not have intended to discover.

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GUEST POST from Jeffrey Phillips

In a number of industries, large firms have created the concept of a “blockbuster”. The blockbuster is the big “make or break” product or service that creates such a bow-wave of profits that it sustains all the other development projects. You are familiar with blockbusters if you take medications like Lipitor, which is one of the most profitable drugs ever created. Unfortunately for its manufacturer, Lipitor’s patent will run out shortly, and there don’t appear to be too many new blockbusters in the hopper. For years the pharmaceutical industry has focused on finding and protecting the next blockbuster, while placing less emphasis on drugs that solve problems but don’t drive as much revenue. This strategy, which drove up pharmaceutical stock prices in the 80s and 90s, is beginning to look a bit thin, as the costs and risks associated with developing a “blockbuster” and the increasing difficulty of identifying molecules or compounds that have the potential to be blockbusters is growing smaller day by day.

Hollywood does blockbusters as well. They bet the farm on big, action-packed movies that release in the summer, and near Christmas. A good gate from a big film means lots of revenue and profits. Miss on your big blockbuster and your year is sunk. Increasingly, it is becoming more and more difficult for “big” blockbuster movies to make money, as the costs rise and consumers turn to other forms of entertainment.

Hollywood and the pharmaceutical industry have become servants to a creature they created. At one time, new blockbuster drugs or big summer movies seemed easy, so rather than create a lot of moderately successful drugs or movies, many of the firms placed one or two big bets. This made sense if the blockbuster was relatively easy to define and achieve, but now the investment in a new movie or a new drug is so large, and the risks so great, that few firms will do anything outside a proven formula. However, those proven formulas are beginning to unravel. What will Hollywood do if small, independent film producers can go STY – Straight to Youtube? How will large pharmaceutical firms sustain themselves as it gets harder and harder to generate the big blockbuster drug?

Increasingly the old formulas don’t seem to be working anymore, and we may see the need for a big shift in the business model of these industries and others that have grown lazy, and have become more and more reliant on a few blockbusters to cover up a lot of mistakes. The “formulas” that they’ve followed have become ingrained as business models, and that’s perhaps the first thing that needs to change, otherwise we’re likely to have Rocky VIII or Star Wars prequels thrust upon us in years to come.

For films, the industry needs to realize that many people have in their homes projection systems and sound systems that rival what movie theaters can provide. Further, as the Blair Witch Project and other “small” movies have demonstrated, many good, profitable movies can be made for far less cost and far fewer special effects than most Hollywood productions. In fact, Hollywood is at risk of forgetting that movies are just a way of telling good stories. The studios risk losing the actors and the stories at the expense of computer animation. Perhaps it’s time to re-innovate the business model, and become an evaluator and distributor of excellent stories created by far more people, or return to finding stories and actors that matter. Hollywood needs to recognize as well that in today’s demanding attention culture, people have many other outlets for their attention. When I was a kid, we saw Star Wars (the first one) at least a dozen times in the theaters. Movies would remain in a theater for weeks. Now, most films are fortunate to remain in a first run theater for days. Again, Hollywood needs to adapt to that reality or change it. All of these impacts demand changes to the business model.

Pharmaceutical firms are in worst shape, if that is possible. For too long they’ve grown addicted to the blockbuster drug, the treatment not the cure, which is expensive, can be protected by a patent, and serves a large base of customers. As the wealthy first world countries become more healthy and many of the large scale illnesses are addressed with medication, it becomes more and more difficult to find a blockbuster. Yes, there are large scale illnesses to be treated, but often in countries where the patients can’t afford medication. And yes, there are still acute illnesses to treat in relatively healthy countries, but often the population suffering the illness is small. Pharmaceutical firms are increasingly faced with a choice – continue to chase ever more elusive blockbusters or rework their business models to attack niches (as PA describes in the link above) or work to find less expensive ways of creating and testing drugs that serve the needs of larger but poorer populations. Even if market realities don’t begin to force this, government regulations and costs will force pharmaceutical firms to find new and less expensive ways to produce drugs, due to the rapidly rising costs of health care and the burden it places on government budgets, in the US, Europe and Japan.

There’s nothing wrong with a focus on the “blockbuster” product or service from an innovation point of view, but when the pursuit of blockbusters defines and limits your business model and the kinds of products and services you can innovate, then it’s time to innovate the business model.

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GUEST POST from Jeffrey Phillips

From the outside, looking in at innovative firms, it seems that the innovators must be fantastically insightful, smart and rapid responders. After all, innovation requires that someone or some team spot a great new opportunity, create a product or service to fill the gap, and arrive in the market with the solution before anyone else, yet not too early. What is it that good innovators know that you don’t?

Perhaps it’s easier to answer this question by examining what they’ve learned.

First, they’ve learned that interesting, valuable innovation comes from cues and signals on the adjacency of their markets or businesses. Good innovators combine ideas from the edges of their markets and industries, introducing new ideas and new concepts.

Second, they’ve learned that a lot of ideas that seem very valuable are often misguided or just plain wrong. What they’ve learned from those experiences is that one “mistake” is never fatal, just a learning experience to be incorporated later.

Third, they’ve learned that innovation is not a “utility” like water from the tap or electricity at the switch. It cannot be simply “turned on” when required and “turned off” when the firm has enough innovation. It either runs, and runs consistently and well, or doesn’t run at all.

Fourth, they’ve learned that they need to learn about innovation. Innovation has a body of knowledge, a wide range of tools and embedded skills. Even good innovators know that they must constantly learn more about innovation in order to be successful.

Fifth, innovators have learned that the most important gap between ideas and new products and services is the transition between an “idea” and a prioritized product or service development project. Sponsorship of good ideas, the focus that enables a good idea to become a prioritized project in product or service development, matters perhaps more than any other factor.

Finally, good innovators have learned that complacency is a death sentence. The global economy is accelerating, customer demands are shifting and firms in any geography can compete anywhere. What we used to think of as paranoia is now a reality.

What do good innovators know that you don’t? They know that innovation is not a discrete, one-time, on and off effort, but something that everyone needs to work on all the time, accepting failures, learning more all the time. Those folks aren’t any smarter, or more insightful or gifted. Often, they’ve just stuck with it longer, persevered through the same kind of resistance you’ll find in less-innovative firms. And through it all they’ve developed a “muscle memory” for innovation you can’t get by trying once.

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GUEST POST from Jeffrey Phillips

After close to eight years doing innovation work, you’d think there would be few surprises left, but almost every week I get another perspective or another insight that simply floors me. Whether its the gap between what CEOs say about innovation (typically 70% list it as a top 3 priority) and the actual implementation of innovation (barely 25% of firms acknowledge creating an innovative product last year), or the completely mixed signals that many firms send about the importance of innovation without any change to evaluation or compensation schemes, innovation efforts constantly encounter an almost Kafka-esque reality.

None, however, more so than the mental and physical athleticism necessary to be a successful corporate innovator. I was thinking about this based on an article I read which dealt with “amping” up creative thinking.

In many organizations, the vast majority of people spend very little time thinking about or pursuing ideas, and even less time preparing to actually do anything innovative. Then, in one fell swoop, an executive demands a new innovative product in far less time and with far less resource allocation than is feasible. So, from a standing start, with no preparation, no “stretching” and no familiarity with the tools or processes, the innovators are in a sprint to the finish. Or, really, a decathlon.

I think of innovators as decathletes, if there is such a word, because of the many challenges, hurdles and obstacles they must overcome, and the many different capabilities they must display. Decathletes are people who are really good, but not world class, at a bunch of different athletic events – sprints, distance running, jumping, throwing, hurdling. Innovators have to be the same. They encounter plenty of obstacles that they must surmount. They hurdle issues that others in the business never encounter. Their projects often start at a sprint, but can turn into a distance event.

However, we haven’t been training decathletes in our organizations, and we haven’t introduced even so much as an occasional stretching period or a coach. Instead, we’ve trained our organizations to all be sprinters, sprinting from one quarter to the next, constantly running the same distance over the same courses. What we need now, when innovation is in high demand, are decathletes, or at least relay teams that contain the range of skills and athleticism we need.

What’s your firm doing to build or at least identify decathletes, or teams that can form a decathlete relay? Are they working together? Do they get the time to “warm up” and stretch before the starting gun? Do they practice their innovative skills before they are deployed in the Olympics of a critical new innovation project that’s meant to save the company?

The US would never dream of selecting a decathlon team built entirely of 100 meter sprinters and asking them not to practice any other event, and further, ask them to only focus on the 100 meter until the day of the decathlon, then wonder why the decathlon team fared so poorly. Sounds crazy, right? But that’s exactly what we do with innovation teams. Neglect their training, misunderstand the range and depth of skills necessary, and never allow them to practice those skills until the need is critical for high performance.

Over the last two decades we’ve spent millions of dollars developing one very special type of athlete, the sprinter who can achieve very specific goals over a very specific course. Our managers are gold medalists at this event. However, the future will demand that every business participate in the decathlon. Is your business, are your teams, ready?

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GUEST POST from Jeffrey Phillips

I’ve written previously that many organizations confuse innovation and strategy. Strategy consists of the vision your executives have for the business over the longer term. Strategy includes how the firm will acquire the necessary inputs and resources it will need to thrive, and encompasses the changes that the firm will make in its products, services and served markets in order to continue to grow and differentiate from competition.

Or, at least, that’s what they tell you in the MBA program. Innovation, on the other hand, is a tool or capability that helps identify new markets or opportunities and encompasses the tasks (idea generation, validation, prototyping and commercialization) to bring a new product or service to market, to serve existing or prospective customers. Note that innovation, at least in the definition I’ve provided, isn’t necessarily dependent on strategy. And clearly, anyone or any firm can innovate. Dreaming up new ideas, new products or services isn’t really all that hard. But what makes innovation so unusual is when a new product or service aligns with a customer need and those two things happen in a firm that can create the product and address the customer need. And that alignment happens because of vision and strategy. Far too often, innovation creates interesting products that don’t provide a necessary benefit to customers, or products or services that don’t align to corporate strengths. And that is a signal that innovation is out of step with strategy, or that there is no clear strategy.

Every firm starts out with a strategy. Entrepreneurs attack a need they believe is overlooked or unfulfilled. Over time, as businesses grow and the range of products and services increase, and the number of offerings to defend increases, it becomes more difficult for a firm to communicate with great clarity its strategy, since strategy says as much about what you “won’t” do as it does what you will do. Further, as the market becomes comfortable with a steady, consistent earnings model from your business, creating new products and services, or even introducing new strategies, takes a back seat to maintaining a consistent earnings engine. The longer this focus ensues, the more importance to maintaining status quo, so the strategy becomes more about maintaining status quo than about creating new visions or new products or attacking new markets.

What happens, then, when an executive decides he or she has no recourse but to innovate? Without a clear strategy, or with a clear strategy that is focused on maintaining a steady earnings engine, it is exceptionally difficult to know which markets, opportunities, products or technologies are valuable and interesting. Without clear strategy, many innovators simply spin their wheels. Is it any wonder that many of the firms we consider good innovators are also good strategists? Steve Jobs, when he returned to Apple, cut a huge swath of products that Apple had offered, narrowing the focus of the firm. He was responding to Fredrick the Second’s axiom of war that “he who defends everything defends nothing”. Apple stepped on the innovation gas when Jobs reduced the breadth of the product offering and created a clear strategy.

You don’t need a clear strategy to innovate, but if that’s your condition you’ll find many ideas that are interesting but ultimately aren’t valuable. Good strategy defines scope and targets for innovators to achieve. Good strategy, well-communicated accelerates innovation and helps innovators achieve better results.

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GUEST POST from Jeffrey Phillips

I read Kate Bennett’s recent post on the concept of an Innovation Superstar. I think many organizations wish they had an innovation superhero, but I think that the superhero is a thin uncertain foundation to build an innovation capability on.

I like a lot about what Kate writes about, and I’m not attempting to pick a fight with her. If your firm is lucky enough to have an individual who is capable of wearing the mantle of innovation superstar, more power to you. However, from our experience, it becomes evident fairly quickly to everyone that the role is a terrible slog.

Innovation superstars are necessary in some organizations because there is no agreed method or theme to generate and manage ideas, no process to find funding, no available resources to help convert good ideas into viable products and services. In effect, the superstar often generates the idea, manages the idea and through sheer force of personality manages to convince enough people that the idea should become a new product or service. Given that the average time from idea to product in many businesses is measured in years, not days or weeks, this is a tremendous effort swimming upstream the whole way, with little support and no cultural encouragement.

These superheros must have a compelling vision, must be completely sold out on their ideas, must be excellent communicators, able to present new ideas without ruffling feathers or asking people to put existing products or services at risk. They must be able to beg, borrow or steal resources and cadge enough funding to test the idea, and must have enough business savvy to find the right sponsors who will agree to convert an idea from an intangible concept to a commercial product or service. Given that strong innovators with defined processes and teams of people, supported by innovation software often struggle at doing this work, what strength of purpose and what perseverance must the superhero have in order to do this once? And, having done it once, could possibly stomach the idea of doing it again?

Now, if you’ll tell me that you have someone that matches this description in an organization that is fortunate enough to have cultural support for innovation, sympathetic managers willing to provide resources and a defined workflow, we’ll say what are you waiting for? But without the cultural support, infrastructure, resources and sponsorship, the superhero will be lucky to convert one good idea before finding another role out of sheer exhaustion.

Note that Kate says at the end of her blog “If a Superstar is completely unsupported or leaves an organisation, however, it will not be long before the innovation programme is floundering and the excuses begin.” And you might ask yourself, if an individual has that much capability and passion, why would they remain in a place where their skills and capabilities aren’t rewarded and valued? They’ll either leave, to find a firm that acknowledges and supports their capabilities, or take a much more comfortable but boring position in their existing firm. No one wants to fight corporate bureaucracy on a regular basis, and those that try often end up on the outside looking in.

Strong, committed personalities are important for innovation, whether those personalities are in the executive suite or in innovation roles in the organization. But those personalities, no matter how strong they are, aren’t a match for the inertia, fear of change and avoidance of risk that many organizations present. If you have a superstar, nurture them, and give them the support and infrastructure they need to thrive. But if you don’t, you can create an innovation process and culture that allows anyone to develop an idea successfully. Superstars are valuable, but supporting culture, processes and infrastructure are far more valuable. Often, the presence of Superstars indicates a lack of agreed methods, processes and workflow. Many within the organization will carefully examine the workload of the Superstar and decide they have better things to do than innovate.

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GUEST POST from Jeffrey Phillips

I struggled for a long time to understand what the real barriers are for innovation. Yesterday, in a conversation with the folks at Xiameter, a brand from Dow Corning, a light bulb went off in my head. Where innovation is concerned, we’ve met the enemy. In fact, we know the enemy of innovation quite well. He is us.

I had a great conversation with several of the folks at Xiameter, and learned a lot about their goal to radically change the business model within their industry. Traditionally, Dow Corning has provided silicone to a range of clients, but wrapped that product in a lot of information, service and support. It became evident to individuals within Dow Corning that a large segment of the potential customer base didn’t want or need anything except the silicone product itself, so Xiameter was launched to offer a radically different business model and distribution of the product to those customers who didn’t want, or need, the service or support associated with the sales and distribution by Dow Corning. Xiameter learned a couple of valuable lessons by implementing the new business model with a new value proposition.

First, there was far less cannibalization than executives had initially feared. Less than 10% of the existing client base switched from Dow Corning’s brand to Xiameter. Second, Xiameter “expanded the pond” by acquiring many prospective customers who wanted the product but needed a different interaction model which unbundled the service from the product. In fact this experience is true in many instances, where firms fear cannibalization they actually discover opportunities to enlarge their markets.

Xiameter successfully packaged a specialty product based on a B2B model and “sells” it as if it’s a commodity B2C product. What I found most interesting, and the reason for the Pogo reference at the top of the blog, was what the Xiameter folks said about making the change and creating the new business model. The hard work, they said, wasn’t in setting up the new distribution system or attracting customers. The hard part in changing the model wasn’t in the external efforts, but in the internal workings of Dow Corning.

If you think deeply about this activity – changing a business model – that may come as a surprise. Frequently I think we in industry assume that a business model is dictated to us by the market, and to participate in the market we must accept what the players in the market have decided about how the market works. Changing a business model means enticing the firms in the market to adapt to the new model you are introducing. It would seem far easier to change a model internally than to change a market or industry externally. But there are several factors at play here. First, Xiameter was introducing a business model to serve unserved or underserved customers who had chosen not to interact with the existing business model, so they were additive to the customer base. Second, Xiameter is more than willing to co-exist with a high-touch, high service business model that Dow Corning provides. In this case, and I suspect in many cases, business model innovation expands the pie and attracts new customers. It does not have to be a zero sum game.

So, what’s revealed by the great success at Xiameter, and in every innovation effort that I’ve been a part of, is that the existing “way” of doing business, the deep knowledge of how it gets done, the comfort with that approach and the inertia that builds up around the existing approach within a business is far more resistant to change and innovation than the market, prospects and customers that make up the likely customer base. The reason for this resistance is fairly simple. Innovation introduces change, change introduces risk and uncertainty, and few firms enjoy any of those experiences. Far safer, far more comfortable, to stay the course rather than introduce a lot of uncertain risk and change.

It turns out Newton was right. Objects at rest tend to stay at rest. In fact, they come to prefer to remain at rest and actively resist movement and change. It’s not our customers or our markets that will resist innovation. In fact they often want and need new products and services. No, the biggest enemy of innovation is us – the compendium of existing expectations, processes, knowledge and experience. We’ve met the enemy, we see the face in the mirror every day, corporately speaking.

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