GUEST POST from Jeffrey Phillips

I’ve been working in the “innovation field” for over seven years as a consultant, and I did regular “innovation” work for a number of years previously, so it is with a bit of chagrin that I come clean on the fact that it finally occurred to me why innovation makes many executives uncomfortable. I think if you are constantly reinforcing a belief system (innovation is good!) that it can be very hard to get a different perspective, and even understand why that other perspective exists. So for years I have labored under the assumption that others saw innovation as a valuable capability and commodity, just as I did.

Over the last few months I’ve been disabused of that notion, by working with executives and others who helped me understand why innovation makes them uncomfortable. And let me say my conclusions about why innovation makes executives uncomfortable surprised me a bit as well.

I’ve struggled with this, because I’d like to create a nice, neat taxonomy about the barriers for innovation. So far I have three categories or typologies, but as you read this, feel free to contribute your own in the comments section. I’d be interested to hear what you think. Recognizing there are several different kinds of reasons that innovation makes executives uncomfortable may help you become better at answering their questions and resolving the constraints on innovation in your business.

The first typology is based on the belief that innovation requires skills that the business doesn’t have or reinforce. On the surface, this may seem obvious. Innovation seems to be about incredible breakthroughs in research, or insightful observations about customer needs and wants in the future. But when you really break it down, innovation requires a different set of skills from those we inculcated in our organizations. Here’s a simple dicotomy:

• Innovation requires ART not SCIENCE
• Innovation requires QUALITATIVE insights not QUANTITATIVE statistics
• Innovation requires HUNCHES not FACTS
• Innovation requires RISKS not CERTAINTIES

In other words, we already have all the skills we need in order to innovate, we just don’t emphasize or rewards those skills. Innovation is still much more of a craft than a science, more artisan than automaton.

However, many of our executives were bred in the scientific management school of thought, which requires breaking down actions and phases of work into minute detail and describing and optimizing the action. As Brownian motion fans can attest, you can be certain of the location, or speed, of a particle, but not both. The same is true of these innovation skills – they are important, but can’t be scientifically managed.

The analogy would be a kindergarten taught by quant jocks. The kids wouldn’t have any fun, being forced into doing very specific and rigid tasks, and the quant jocks wouldn’t like the freeform play and idea creation of the kids.

The second typology is based on the fact that innovation is fairly unpredictable. This is increasingly true as the amount of disruption possibility increases. Again, we have executives who have been taught to believe, and their compensation reinforces, that businesses are organizations which produce regular, steady outcomes in the face of any environmental uncertainty or economic chaos. Innovation doesn’t work to our clocks or schedules, ideas and needs arise as customers preferences and situations change. Few executives are interested in the change inherent in really disruptive ideas, even if they have a substantial increase to the top or bottom line, because of the amount of change those ideas may introduce, and the ancillary effects of those changes. Most executives would happily trade regular, consistent growth in the low single digits to wild swings in growth based on occasional disruptive ideas.

The analogy in this instance is to a baseball player. Most managers would prefer a hitter with a .300 batting average who hits singles and doubles, over a .275 hitter who hits homers or strikes out.

The third typology is based on the fact that innovation ultimately places someone else in control. Many senior executives kid themselves that they are responsible for the success of their businesses. We are guilty of admiring people who make the cover of Fortune or Forbes, only in hindsight to wonder what we were thinking. Anyone remember Chainsaw Al for example? It is their insight, strategies and leadership that makes all the difference. In a fast paced, ever changing world, executives who create a vision and then engage the best in their people will be successful, but they must abdicate some of the decisions to those people. Innovation is rarely the provenance of one individual. Apple is probably the exception that proves the rule that most organizations have tens, if not hundreds of individuals actively involved in innovation. Yet the more innovation that happens in an organization, the less control the CEO has about products, and strategy, and direction. Unless, again like Apple, everyone understands with great clarity the strategy and goals and direction, and innovation is completely governed by that vision. Since most organizations lack that central clarity, innovation becomes rapidly dispersed throughout the organization, and the senior executives have little control. Therefore innovation is tightly controlled if allowed at all, since too much innovation may mean the loss of control.

So, to recap, I’ve found that innovation makes executives uncomfortable for at least three reasons:

1. A different set of skills are required than are supported or reinforced
2. Executives prefer humdrum predictability to wild swings in revenue and profits
3. The more innovation, the more likely the executive team is to lose control of the business

Now, note that I didn’t incorporate some of the “easy” reasons why innovation makes executives uncomfortable, like:

1. Innovation costs money
2. Innovation takes resources

Those two arguments are specious at best. Every new product, new acquisition, new initiative requires money and resources, so at the heart of the matter, these aren’t arguments against innovation. There’s something more relevant under the surface when these arguments are used.

Additionally, I didn’t use one I know to be true: in this environment, there’s much more to be gained in cost cutting and right sizing than in innovation, since cost cutting has an almost immediate return to the bottom line, whereas innovation has at best a possible return down the road.

The reason I didn’t include that alternative is that while it is true, it can only be true for so long. A firm that cuts 5% of its cost base every year will shrink to nothing in less than 15 years. Eventually, every firm needs new product, services and offerings to grow. So this is only a temporary reason not to innovate.

So, that’s my typology. I’d be interested in your thoughts. Also note that once you can get past the “we don’t have enough time” or “we don’t have enough money” arguments, understanding which of the other reasons actually block innovation will give you an opportunity to create evidence to reduce the concerns for each of the three typologies, which you’ll have to produce in order to innovate.

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GUEST POST from Jeffrey Phillips

In my continuing list of roles that any innovator must play, we come to the role that may be the most important role of all. Certainly we’ve seen how innovators must play a number of roles, including the Matador, the Futurist and the Jester. These roles have much to do with defining the opportunities and achieving initial traction. We’ve also examined the Tinkerer role, which has to do with developing and testing ideas once they are generated. Today I want to talk about the role that links all of these and many others, the role I call the Bulldozer.

I suppose the label “Bulldozer” is somewhat politically incorrect, but nonetheless the label is often correct. Innovation is the most difficult initiative to start, and one of the easiest to stop. This truism means that an innovation leader must be able to create a great amount of momentum and inevitability about their project at the outset, and retain a great amount of buy-in and credibility throughout the project as well. In fact I struggled over the label, considering and rejecting the label “Diplomat”. The challenge with Diplomats in an innovation setting is that constant negotiation without creating anything new is failure. When a firm needs innovation to remain competitive, internal negotiations and diplomatic maneuvers are as helpful as debating the size and shape of the table at peace talks, for example, in the Korean War.

In any innovation project there will be hundreds of reasons to slow the project, to redirect the effort, to redeploy the people assigned. The innovation leader must have a single, overriding focus – to accomplish the initial goals and completely as possible, and stiff-arm as many attempts as possible to detract the team from its mission. These distractions will take the form of very reasonable requests, such as:

• Reducing the size of the innovation team since the people are desperately needed to maintain existing products
• Waiting until next (quarter, year, etc) to start the project
• Reducing the scope of the innovation effort to become far more incremental
• Shortening the timeframe of the innovation project to produce innovations “faster”
• Attempting to redirect the team to new goals part-way through the effort

If you are an innovation leader, all of these sirens will call as your ship passes by. You’ll need the single minded focus of the bulldozer to deflect these “reasonable” requests to achieve interesting, valuable innovative results. Everything about existing corporate culture will work to impede your progress, attaching themselves to your ship like barnacles and anchors. As much as is humanly and culturally possible, you must reject these requests, always pointing back to your original goals, and you must keep up the momentum of your effort. An innovation project delayed or deflected is an innovation project denied.

The best recommendation I can make for innovation leaders is to be a positive force for change, constantly referring back to an original “charter” or agreement about the scope and goals of the innovation project, and rejecting as much as possible the slings and arrows of the existing culture that will attempt to delay, distract and reduce your outcomes and goals. These barriers are inevitable – the real question to ask is: how prepared are you to deal with them, and do you understand the value of momentum in an innovation project?

If you missed the other roles, here are links to them for your convenience:

• The Matador
• The Futurist
• The Tinkerer
• The Jester

Editor’s Note: For a look at some team-based innovation roles, check out The Nine Innovation Roles

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GUEST POST from Jeffrey Phillips

Over the last few days I’ve been writing about the different roles, or “hats”, that innovators must play. I’ve talked about the role of the Matador, anticipating the bulls who protect sacred cows. I’ve written about the need for the Futurist, to encourage people to think longer term. I wrote yesterday about the Tinkerer, who must convert virtual ideas into tangible artifacts for prospects and consumer to understand. Today I want to talk about another role, and I’ve struggled with the title. Basically it came down to either “the jester” or “the therapist” and I went with “the jester” because I thought it sounded more interesting.

Today’s role is probably the most important and the most difficult to perform well. Innovation, as you know by now, is in high demand from the executive suite. Innovation, conversely, is very difficult to implement in the bowels of most organizations, regardless of the demands of the executive suite, because there’s a gap in understanding, commitment and resources between what’s asked for and what’s funded. Asking for innovation without providing funding and resources is worse than useless – it’s cynical.

So here’s where the role of the Jester comes in. As an innovator, you must often help executives and managers understand the implications of what they request. Jesters in ancient courts were the people who could question the kings pronunciations without the risk that other courtiers faced. They could tell the king that he wore no clothes. Often, in many firms considering innovation efforts, the innovation lead must tell the executive team that their pronouncements wear no clothes – merely asking for innovation without changing the compensation and evaluation schemes, or asking for innovation without resourcing the effort, or asking for innovation without increasing a tolerance for risk, these reflect either a lack of understanding about the undertaking or a cynical, short term ploy to play to what the street wants to hear. Let’s assume that most of the communication in genuine – executives actually want innovation. Then, it’s the role of the innovation lead to demonstrate the implications of that expectation. In other words, the innovator needs to “speak truth to power” and demonstrate the commitments, investments and risk tolerances necessary for innovation to succeed.

Now, with just a little bit of thought much of this should be obvious, which is why this role is really an amalgam between a jester and a therapist. One could argue that the executives know that more resources, more investment and more commitment are vital for the success of innovation, but they are in “denial”. They want the benefits but don’t want to commit the necessary resources. What happens then is that a Potemkin village is erected. As you know, the old saying from the Communist era still applies – you pretend to pay us and we’ll pretend to work. The modern equivalent is: you pretend to fund innovation, and we’ll pretend to innovate. There are a significant number of firms talking about innovation today, which are really Potemkin villages of innovation – there for the compliant media to applaud, but not creating anything of value.

As an innovator in most firms, it will inevitably be the case that you will have to confront high expectations with limited resources. You can take the “jester” approach and demonstrate the actual requirements for innovation to succeed, or you can take the “therapist” approach and help the executives through their denial, but either way you’ll have to achieve more commitment, resources and investment than the executives establish initially. You can choose to create a Potemkin village, recognizing that little of value will be created through your innovation efforts and more people will become frustrated with the limited efforts or you can choose to demand the resources, funding and commitment necessary to achieve what the executives expect. Understand the real underlying goals and work accordingly.

If you missed the other roles, here are links to them for your convenience:

• The Matador
• The Futurist
• The Tinkerer

Next time: The Bulldozer

Editor’s Note: For a look at some team-based innovation roles, check out The Nine Innovation Roles

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GUEST POST from Jeffrey Phillips

If you are joining us mid-stream, I’m writing a series of articles describing the many “hats” that innovators must wear. In recent posts I’ve written that an innovator must sometimes be a Matador, anticipating the reaction of the old bulls when you attack the sacred cows. I’ve also written that innovators at times must be futurists, decoding trends and understanding how the future will unfold. Today we’ll look at another role that innovators must be able to fill: the Tinkerer.

What’s interesting about this role is that it is often downplayed or misunderstood, much to the detriment of good ideas. Creating a rough prototype and constantly improving that prototype based on internal and external feedback is the essence of innovation, yet very few firms do this work effectively, if at all.

Think about Thomas Edison for just a minute. While we have these ideas of Edison as a lonely inventor with flashes of brilliance, that’s not exactly how it played out. Edison was in fact a Tinkerer, and structured his work and his teams to prototype constantly. His labs at Menlo Park incorporated the latest technologies from several different industries – mining, telegraph, electricity, railroads and others – to ensure cross-fertilization of ideas and concepts. He encouraged his team to actively prototype ideas to test hypotheses and to learn from successes and failures.

Edison is considered one of the most prolific innovators, and he relied heavily on the concept of rapid prototyping to test ideas. From those prototypes he learned what would work, and more importantly, what was relevant and valuable to consumers.

As businesses grew, specialization took over and many firms lost the experimentation and prototyping instincts due to a reduction in variances. Mass production required increasingly efficient lines to create very similar products in large quantities, so much of the prototyping and experimentation moved to the R&D labs, and eventually out the door entirely. Few firms today have the willingness to create rough prototypes, expose them to consumers for feedback and incorporate those learnings quickly in the final product. That means that innovators must take on that task themselves.

Good innovators must be tinkerers, building rough and inexpensive prototypes of their ideas to share first internally, then externally to validate the idea and determine the relevance and value to customers. Innovators that engage customers in this iterative process will learn more, innovate faster and risk far less than other firms that ignore the need for prototyping and tinkering. Unfortunately prototyping and tinkering are not skills that are widely distributed or well-established in most organizations, so innovators will need to take on these tasks themselves.

Testing ideas by creating rough prototypes will add immense value at fairly low cost, yet this activity has a “craft” or ad hoc feel that doesn’t seem to align to modern businesses, much like other important innovation activities like ethnography. These activities are art, not science, so they don’t fit well in corporate America, but are vital to the innovation process.

If you missed the other roles, here are links to them for your convenience:

• The Matador
• The Futurist

Next time: The Jester

Editor’s Note: For a look at some team-based innovation roles, check out The Nine Innovation Roles

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GUEST POST from Jeffrey Phillips

Yesterday I began a short series of posts about the different roles that innovators play. There are several different and competing roles that any good innovator must assume, and understanding when and where to assume the roles is vitally important for success. Yesterday we argued that occasionally an innovator must become a Matador, able to work with the dangerous bulls that protect sacred cows. Matadors have to be quick on their feet and anticipate the bulls’ moves in advance.

Today we’ll look at another role an innovator must play: the futurist. Innovation, like it or not, is all about the future. Any good manager can look a day, a week or a month into the future and be reasonably certain of an accurate forecast. That’s because they’ll assume little change in the environment or operations. However, real innovation doesn’t get implemented and have impact over such a short time frame. Innovation is about quarters at a minimum, and typically is focused on years. Most people blanch at trying to make any predictions beyond a few quarters, and very few have any comfort trying to anticipate the future over several years. Yet that’s what innovation is all about. The future.

There are several reasons for this, but the two most important reasons are 1) your commercialization cycle and 2) the shifting demands and expectations of customers. In the first case, it takes a reasonable amount of time to generate an idea and commercialize it – anywhere from several quarters to several years, depending on the industry. That means if you identify a problem to solve today and have a really interesting new idea to present to the market, it may be years before the idea is commercially available. That means you need to solve problems in context of the timeframes when you can deliver the new product or service. In the second case, customer requirements, expectations and demands are constantly shifting. Usually they shift slowly over time, then rapidly as a new technology, experience or offering becomes commonplace. Then they shift slowly until a critical mass builds up, then shift quickly again.

Both of these phenomenon mean that as an innovator, you need to become an expert on the future of your industry, your firm and your clients’ needs. Only then can you successfully innovate and reap the rewards of your work. This is lonely, uncertain work, since the vast majority of the people in your organization will want to stick to no more than a quarter at a time. That’s relatively certain and measurable.

As a futurist, however, you need to open the book of the future and explain the stories that are there to be read and understood. You may need to write those stories that outline how the future may unfold and your firm’s role in that future. You may be laughed at, ridiculed or ignored, so it’s helpful to investigate deeply and make some reasonably correct predictions. Your firm can’t create interesting, valuable, relevant innovations without understanding the future, and more than likely there’s no one else actively trying to understand what the potential futures look like.

Like the Matador, you’ll be out there on your own. Unlike the Matador, you probably won’t be threatening any sacred cows. Everyone admires the Matador for the risks they take. Few firms admire futurists because they often have little stake in the outcomes. So as a futurist, you are likely to be lonely, and not deeply respected. That is, until you demonstrate your predictions were reasonably correct, and the ideas you’ve promoted and opportunities you’ve predicted, were accurate.

Lincoln and Alan Kay and Peter Drucker have all said, at various times “The best way to predict the future is to create it”. If you can’t create the future of your industry or offering, at least have the temerity to try to understand what’s next.

If you missed the other roles, here are links to them for your convenience:

• The Matador

Next time: the Jester.

Editor’s Note: For a look at some team-based innovation roles, check out The Nine Innovation Roles

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GUEST POST from Jeffrey Phillips

It struck me recently that far too often we in the innovation space expect our prospects and readers to understand, and comprehend, lingo and language that we toss about relatively carelessly. I often find myself, when working with clients, having to “define” radical innovation or breakthrough innovation, or introducing topics that I would think are standard in most organizations, like scenario planning.

I decided to try to place innovation and the work that people must do to succeed in metaphors I felt they could understand. With a hat tip to de Bono’s Six Thinking Hats, I want to offer you the X innovation roles. X because I’m not yet sure how “many” roles there are, and how many each individual will have to play.

Today’s innovation role is the Matador.

For those of you familiar with ingrained corporate cultures, we often speak of “sacred cows” that can’t be impacted by new ideas. While that thinking may be coherent from the inside looking out, it completely ignores the fact that outsiders are trying to dislodge your existing products from their niches, or worse, simply create new markets or new needs that make your products uninteresting or obsolete. You MUST examine innovations that threaten the existing order, product lines and business model, if for no other reason than to know how to defend against the attackers when they decide to attack or maneuver around your products and offerings.

When taking on the sacred cows, you must move carefully, decisively and watch out for the horns. In other words, you must be a Matador. Matadors understand how to control a bull, by using the bull’s energy and momentum. Bulls are usually easily enraged and charge heads down, never looking side to side. A bull’s only goal is to remove the threat posed by the new idea. Bulls are dangerous. If you as the matador don’t understand what the bull’s likely response will be, anticipate it and react in time with it, you will be gored.

As an innovator, knowing that you’ll have to generate and test ideas that may cannibalize existing products or services means that you need to plan for the likely outcomes. If you can justify why you need to examine ideas that threaten the status quo, and keep the “bulls” (ie the executives who are threatened by your investigation) aware of what you are doing, you can anticipate their reactions and even guide their thinking – to help them become more aware of potential threats in the marketplace or to create new products and services. However, you must anticipate the reaction before it happens, and have a plan before the bull is bearing down on you.

If you are doing your job well, you’ll have to consider ideas that threaten the status quo. Otherwise your scope of innovation is too narrow and your firm will be blindsided by new products or services that disrupt the status quo. Educating the executive team about the rationale for innovating in established areas is much more valuable than either other outcome – waiting for an external disruption or keeping a disruptive idea that threatens the existing products and services under wraps.

Matadors seem graceful in the ring because of the appearance of danger due to the onrushing bull. Matadors work safely for the most part due to practice, but also due to anticipation and understanding of the actions and behaviors of the bulls. Innovators must understand the dangers posed by external innovations and internal culture, and decide the best paths to follow before they are confronted by the angry bull.

Next time: the futurist.

Editor’s Note: For a look at some team-based innovation roles, check out The Nine Innovation Roles

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GUEST POST from Jeffrey Phillips

As we begin 2011, the concept of time seems to be paramount in my thinking about innovation. At the beginning of November I wrote a post about the “right” time for innovation. Over the last week I’ve decided that the biggest impediment to innovation isn’t funding, or resources, or time, but commitment. I’m sure somewhere over the 500+ blog posts I’ve written that contradicts something I’ve written before, but as they say, a foolish consistency is the hobgoblin of smaller minds…

With that catharsis, I thought it would be interesting to peel back the excuses that we hear about the lack of innovation and what is the “right” timeframe for innovation. The timeframes we’ll consider are: next quarter, next year, in three years, in the distant future.

Next Quarter

Far too often on this blog and in most business writing we decry the drum beat of the quarterly report. The quarter was invented by business people long ago because yearly reports didn’t provide enough granularity to what was occurring in the business. People wanted more insight and information about a business, so quarterly reporting was created. This is yet another example of unintended consequences. With quarterly reporting came quarterly achievement – the need to achieve growth quarter on quarter, and to achieve quarterly goals. What’s difficult to accomplish on a yearly basis is exceptionally difficult to accomplish on a quarterly basis. Businesses have hoist themselves on their own petard, and created a vicious cycle that’s difficult to break, because we are now measured on an almost irrelevant time period. Quarters are forever in a real-time, Bloomberg data driven environment, and quarters are like stopwatches when it comes to measure time to make significant change in an organization. I was speaking recently with senior members of a large organization which replaced it’s CEO. The listening tour to understand what wasn’t working was 90 days – it took that long just to decide what was wrong, and another year to implement the changes.

While we’d like to work on innovation in this quarter, it simply isn’t possible given the need to achieve short term goals. It would be awesome to get to work on innovation in the next quarter, but doubtful, so innovation is rarely a short term objective, unless it is a very small change that can be implemented quickly. In the case of the quarter, we are held hostage to a measuring device that is archaic and directs too much management thinking without real results.

Next Year

This is the most common refrain – we didn’t budget for an innovation effort in this year’s budget, and all the funds are accounted for, so we’ll need to plan for innovation in the annual plan and allocate funds, which will allow for innovation next year. I love this argument. It assumes that all other competitors and potential disrupters are willing to work to your timeframes. Since we didn’t bother to set aside resources or funds for innovation in 2011, we’ll simply have to wait until 2012. Do you honestly believe that other firms will restrict their innovations based on your funding cycles? The annual planning cycle is another fiction thrust upon us by financial reporting and the agrarian calendar. Why don’t most businesses create plans with more continuity over a longer period of time? What’s worse, the timeframe from idea to commercialization for many firms is far longer than one year, so commercializing a new idea may have to span several budgeting cycles, each of which is an opportunity to re-prioritize the funding and resources. All you can really do is start innovating next year, and hope that the benefits will accrue several years down the road.

In Three Years

Having an innovation objective three years from now is actually a far more reasonable goal than it might appear. If a firm starts out with little innovation capability internally and has a typical product development cycle of 18 months to 24 months, then a three year goal for innovation is very realistic. But when you talk about a three year investment window in this market, that sounds like forever. To create a consistent investment over that time and wait for any potential returns over that period seems almost impossible. Realistically, any really interesting and valuable innovation will require this amount of time – for the idea to be generated and evaluated, converted to a new product or service and launch effectively. A three year window for most firms is almost a concrete requirement, but few firms want to commit to that timeframe or investment. They would prefer to conduct a few brainstorms to generate some ideas and then see what happens, or use “open” innovation to extract ideas from customers. What they often fail to realize is that people and funds are required to convert those ideas into new products, which means adding staff or taking people away from other important tasks. Additionally, it takes time to vet the ideas, convert them into viable products and prepare the market for the new products. For many firms, three years is actually the best timeframe when thinking about an innovation commitment, but almost impossible to consider given the other constraints.

In the Distant Future

A major Chinese figure was once asked in the 1960s about his assessment of the French Revolution in the late 18th century. His response: too soon to tell. Our sense of time is out of proportion to what we can understand and accomplish in the given timeframes. The fact that many firms dismiss the future more than a handful of years out is an indication that we abdicate thinking about and proactively planning for the future, when all the really interesting innovations will occur.

Just two years ago, in 2008, if I had suggested that the US Government would soon own a significant portion of General Motors, many people would have laughed me out of the room. Now, it’s an article of faith that the government saved GM. Change happens, and actions that we think impossible to conceive will occur in that “distant” future. Too many firms are so caught up with the short term that they neglect the long term, and fail to invest for innovation or even attempt to understand what will happen. So they are constantly surprised by market conditions, new product introductions and disruptions that were somewhat predictable. In a corporate culture where many people hold their roles for 18 to 24 months then move on to another role, it’s paramount to accomplish something while in the role, which means that little gets done that can’t be accomplished in a year or less. For many reasons stated here, big innovation can’t be accomplished in a year, from idea to product, so innovation is often pushed off to that hazy distant future.

The real answer is that innovation should happen in all of these timeframes. Incremental innovation should happen continuously, through factors like Six Sigma, lean and suggestion programs. Firms should build into their plans the goals to implement four to six incremental ideas each quarter, to establish a demand for ideas and demonstrate capability to implement them.

Innovation should be a key component of an annual plan. If the annual plan is the blueprint for the coming year, and innovation isn’t defined, budgeted and resourced, then it won’t happen without an emergency. Adding innovation to the annual plan demonstrates organizational commitment and intention.

Innovation should be planned for outside of the annual plan, to recognize the timeframes that span multiple budgeting years. The plans should be at least as long as the idea to commercialization cycle, and in most businesses that would suggest at 3 year innovation planning horizon at a minimum.

Finally, any business that expects to compete and grow in the future needs an active program to understand what will happen in the “distant” future – those dimly viewed years more than three years from today. Trend spotting and scenario planning can help shape your view of that time, and help the organization understand how to act on a proactive basis to attack emerging opportunities.

The Right Timeframe for Innovation

The right timeframe for innovation is: next quarter, next year, in three years, and in the “out” years, and I’ve attempted here to define what your firm can, and should, be doing in each of those timeframes. Don’t let the excuses pile up – start executing innovation work in each timeframe, and doing the work that aligns to each timeframe.

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GUEST POST from Jeffrey Phillips

For those of you who receive our newsletter, these predictions are the same ones we made in our December 2010 edition. For those who don’t know about the newsletter or our yearly predictions about innovation, please read ahead.

Keeping with the publishing traditions that demand that most articles in December relate to a “top ten” list from the year just past or predictions about the near future, each year we boldly stake out several predictions about the future of innovation. Each year we also recap the predictions we got right, and wrong, from the previous year. For 2011, we’re making the following predictions about innovation:

1. Ideas come from everywhere – “open” innovation is ubiquitous
2. Experience is more important than product – the outcomes change from new products to new experiences
3. Timeframes shorten – while organizations are getting better at generating ideas, the timeframe from idea to commercialization hasn’t changed.
4. Creativity re-enters the workforce.

Let’s look at each of these in turn and describe why we think they’ll occur and why they matter.

Ideas from Everywhere

In case you haven’t been following along, this trend is already underway and will reach its zenith in 2011. Open innovation – receiving ideas and developing ideas with partners and customers – is already a powerful force in the innovation space, and will become even more so. Whether “open” innovation means receiving ideas from customers, co-creating, crowdsourcing, technology transfer or any of the many definitions or labels we apply, firms are interested in gaining more ideas from more people. There are benefits and risks associated with this. The benefits are that the firm has a much broader portfolio of ideas and sources. No longer is the firm limited to ideas that can be generated internally. The risks are that the firm fails to deliver new products based on these new ideas. There is an inherent contract with your customers and partners – ask us for ideas, fine, but be sure to deliver something new.

One reason that Open Innovation will reach its zenith this year is that many firms will recognize that Open Innovation, for the most part, is about generating ideas. If the evaluation, selection and product development capabilities aren’t improved, receiving more ideas that you can’t convert into new products and services isn’t important. In 2011, we’ll see even more emphasis on open innovation, and we’ll also see a growing recognition that while open innovation is important, it doesn’t solve many internal barriers to innovation (see “Tick-Tock” below)

Experience over Product

Traditionally, innovation has been focused on new products. We typically measure innovation by the investment in R&D or patents generated. The examples we use are things like the iPod – physical, tangible products. But innovation can result in a broad range of outcomes – products, services, channels, business models and experiences. Our prediction is that in 2011, experiences become more important than products. Here’s why: first, people will continue to purchase cautiously. They need to know their money is spent wisely. Therefore, fewer products will be purchased and they’ll have more meaning. The experience around the product purchased will matter more than it did previously. Second, experience is more difficult to copy or duplicate than product. There are thousands of MP-3 players, but only one iPod. That’s not because of the technology, but because the experience is truly different. Third, people will shift from a consumption economy to one where they demand more “meaning” from the products they buy and the firms they buy from. Look no further than Subaru’s campaign to contribute to causes. In 2011 and beyond, firms that understand that experience is important and start innovating around experiences will be more successful.

Tick-Tock

Many firms have done a good job of improving their ability to generate and manage ideas. However, they remain stuck with the existing product development processes, which actively hinder commercialization of ideas. The time from idea to commercial launch is actually increasing in many firms, and there are fewer resources to do the work and many competing priorities. As competition increases and product life cycles shorten, firms have to do a better job of getting their best ideas to market quickly.

In 2011, many firms will seek ideas to shorten the product or service development lifecycle, to get their best ideas to market faster. This will mean improving internal processes and capabilities, or partnering with third parties to bring the new products to market, while internal teams manage legacy products. There is an analogy for this in IT – typically new software is designed and implemented by third party consultants, while the IT team manages legacy applications. We’d prefer to see both capabilities housed internally, but the coming years may be very good for consulting firms that can speed the commercialization process.

Creativity Revived

As firms and organizations realize they must compete not simply on cutting costs but also on their new ideas, creativity will find a new, welcome role in larger organizations. I’ve just heard about new training proposed in a state government to teach government managers and executives to think more creatively. Can’t wait to see that training curriculum, but it’s a symptom of a much larger need. Over the past decade, most businesses have cut and downsized to the point of optimum efficiency and focused “like a laser” on become effective. Now the need to generate new ideas is paramount, but those people and skills are gone.

Firms in 2011 will need help creating new ideas, and will do that by training their staff and hiring consultants to help them add more creativity and new ideas.

That’s what we believe will happen in 2011. Please contact us to let us know what you think we got right – and what we missed.

Here’s to an innovative 2011.

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GUEST POST from Jeffrey Phillips

Like many of you I participate in the social media world. That world has opened up new relationships and new sources of information for me that were completely unexpected. I’ve learned a lot from individuals on Twitter and Facebook and Linkedin, and I’ve become a real believer in the use of social media to support innovation.

I was following a Tweet chat recently led by Boris Pluskowski in his new role at Spigit. Boris was interviewing the head of Allstate’s innovation program, who was talking about how the folks at Allstate deployed their innovation capabilities. Boris did a great job, and along with a number of folks on Twitter, commented on the factors that helped Allstate succeed at innovation. What was remarkable about the commentary was how unremarkable it is. This is not to say that Boris or the other folks who were Tweeting weren’t creating insights. No, the information they were providing is rock solid and valuable. What’s remarkable and distressing to someone who wants innovation to succeed broadly is that most of the factors really aren’t that interesting or remarkable. What is remarkable about most innovation successes isn’t that they have good practices, which if you follow the Twitter stream will seem fairly obvious, but that it takes passion, and vision, and intestinal fortitude to get these rather unremarkable things done in a business. And that’s why innovation seems one the one hand so obvious, and on the other hand so difficult.

Let’s go, as they say, to the Twitter stream for some examples. You can find much of this by searching on the hashtag #spigitwebinar.

Here were some of the success factors: (The bullets are direct quotes from the Twitter stream)

• They wanted to engage people in the org in the Innovation process – and their playful room was a starting point
• On-you-own-time experimentation – project to encourage and enable people to work on innovative ideas on their own time
• Allstate set up a lab for employee innovation. Originally post-it notes on a wall. Then wiki. Now a collaborative idea site.
• Allstate gets most of its value from targeted blitzes
• Everything is transparent… We want employees to have a voice in the innovation process
• Not all great ideas come from the exec office. Wanted to tap into the power and passion [from employees all over the world
• We need to fail affordably, we need to fail quickly, we don’t need to fail spectacularly
• Key aspect of Allstate’s most successful employee ideation blitzes? Senior leadership sponsorship

If you follow innovation at all, most, if not all of these quotes are reasonable and mundane. Allow people to fail and learn from failure, get senior executives involved and committed, tap the entire employee base for ideas, find a “place” for people to innovate and think differently, use targeted campaigns. For innovators, this is the truth – but the mundane truth. Again – not beating up on Boris or anyone else leading the discussion, but this is preaching to the choir.

The real question is – if this is so mundane, why is it so difficult to do well in many firms. None of these actions is very distinctive or difficult, and none requires a significant investment or differentiated skills, so why is it so difficult to get them done? Why is it still the case that much innovation is based on individual acts of heroism in many firms, rather than on a consistent innovation capability?

To me, that’s what’s remarkable about innovation. It’s a task that anyone could do, given the time and resources, but one that only a few people actually do, often in opposition to the corporate culture, yet the outcomes are ones that everyone wants.

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GUEST POST from Jeffrey Phillips

In a new study on innovation just released by CapGemini, one chart in particular caught my eye. The chart is a stacked bar chart reflecting how aligned the executives believe their innovation work is with their strategic goals. You can register for the report at www.capgemini.com.

The background material on the study indicates that CapGemini received 189 responses from companies in 15 countries, and that most of the respondents were board-level and senior executives, as well as middle managers closely aligned to innovation roles. So these folks should understand their corporate strategies and how closely innovation is linked, or should be linked, to strategy.

What caught my eye is that across four major industry divisions – auto/aerospace/defense, Industrial Products, High Tech and Consumer Packaged goods and Retail – anywhere from 23% to 50% said they felt innovation was “somewhat aligned” or not aligned. As you’d expect CPG was the “best” of the group at 23% somewhat or not aligned, and Auto/Aerospace/Defense was the worst at 50% somewhat or not aligned.

This report should be given to all the CEOs and C-level officers of the firms that responded, and should then cause innovation efforts in many of those firms to come to a screeching halt. If anywhere from 25% to 50% of your company’s time and effort is being spent – in any initiative – on tasks that don’t fully align with the corporate strategies, you should be concerned. When significant innovation initiatives don’t align to corporate strategies, you should be, in the immortal phase from Network “mad as hell and not going to take it”.

What was even more shocking was that in most industries 10% or less of the executives responded that innovation was “completely” aligned to corporate strategy. In what other business effort or function could you achieve any success only 10% aligned to corporate goals? What on earth are these innovators doing? There are really only a few possibilities:

1. Corporate strategy isn’t well communicated or is unclear. Believe it or not this is more prevalent than you’d want to think
2. Innovators are “off the reservation” chasing ideas that don’t align to corporate strategies. These teams need to be corralled and directed to important corporate goals
3. Corporate strategy is clear but the goals and outcomes expected from innovation aren’t clear. Yes, we want new products – but should those products be incremental or disruptive? Should we rely on internal innovation capabilities or extend our innovation externally?
4. Innovation is intentionally disruptive and appears to run counter to corporate strategy. All companies should have some innovation that either considers cannibalization of existing products or entry into new markets or spaces, and that may seem to run counter to corporate strategy but in effect is actually very tightly aligned.

Only the last reason is even close to acceptable if innovation efforts and strategic goals aren’t in close alignment. The first three are symptomatic of bigger problems not necessarily related to innovation, but to management, strategic thinking, culture and communication.

How long will it take before senior executives recognize they have an important role to play in setting expectations and goals for innovation, and ensuring those efforts are “on track”?

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