GUEST POST from Jeffrey Phillips

If you came of age during the great technology marketing wars of the 80s and 90s, you’ll recognize the acronym “FUD” – fear, uncertainty and doubt. Marketing’s goal in most cases was to create enough fear, uncertainty and doubt about a competitor’s products or services that the buyer remained loyal to his or her incumbent. IBM has been credited with making FUD a sales and marketing tactic, as in the statement “No one ever got fired for hiring IBM to do a job”.

Basically FUD argues that what’s known and experienced should have more weight in a decision process than what’s new or unknown. It argues that consistency in decision making and loyalty to the status quo are more valuable and more defensible than change. The problem with this line of thinking is that change occurs all around us, and remaining true to a vision, whether that’s our vision or a vendor’s vision, risks missing valuable information. FUD has been, and will remain, a valuable marketing tactic whenever there are gray areas about decision making.

Unfortunately FUD has permeated the way many executives make decisions about anything, and that attitude has permeated most organizations. If you could boil down all the arguments about innovation, for example, you’d find that most of the barriers could be reduced to fear, uncertainty and doubt. Let’s look at why these three factors are barriers and what your firm can do to change them.

Fear

Why are we afraid of innovation? Clearly, when done well innovation offers the promise of valuable new products and services that drive growth and profits. But innovation isn’t a given – we can’t promise that a new product or service will return what we hope it will return. And, since existing business processes and products seem relatively predictable, we allow our fear of change and risk to limit our innovation investments. Even when firms do attempt to innovate, they tweak the ideas to make them “safer” and easier to implement, but often with less reward.

Fear is a cultural phenomenon, brought on by the fact that one significant failure in a career is all you get. Most people understand that mediocrity is typically rewarded, but taking significant risks for big gains is fine as long as you succeed. We need to re-introduce to many cultures the concept of taking more risk for greater reward. As competition increases and global trade barriers fall, doing the same things and expecting even the same results is insanity.

Uncertainty

To work in many large organizations today, you almost have to be a zen master to decode what’s said, and what’s meant. I think many executives are intentionally vague in their statements so that if a project is implemented and unsuccessful, they can point the blame somewhere else. When strategies and goals are uncertain, people do what they know best – maintain the status quo. To improve innovation outcomes and investments, we must eliminate uncertainty.

You can’t eliminate the uncertainty that surrounds whether or not a new product or service will be successful. The market drives that. But you can eliminate the uncertainty about the value of innovation, or who should be innovating, or what kinds of innovation would be valuable in your organization. Good strategic direction and consistent communication from executives in all levels will go a long way to reducing uncertainty.

Doubt

Doubt is created when there is Fear, as described above, or when uncertainty exists, as described above, or when people don’t know the answers and aren’t willing to ask. Doubt arises when executives and leaders aren’t able or willing to provide leadership. In the absence of good leadership, people begin to doubt their own judgments and will, again, revert to the status quo. It’s amazing how easy it is to create doubt in an organization, and how difficult doubt is to overcome.

To overcome doubt, we need forceful, direct leadership, consistently communicating and in the forefront of the innovation effort. Not a disinterested bystander but an active participant. Generals for many centuries led from the front, to demonstrate what they wanted from their troops. We need more leadership from the front where innovation is concerned to dispel doubt.

Fear, uncertainty and doubt were tools used by marketers to remain an incumbent. Unfortunately these attributes have infiltrated the way many organizations manage their work and their teams. While FUD is great at maintaining a status quo environment, a circle the wagons mentality can’t create new, valuable products and services. What we need is a new mantra – Unafraid (rather than fear), Certainty and Leadership. While LUC doesn’t have quite the same ring as FUD, hopefully some of firms will start to embrace LUC and implement its concepts to embrace innovation.

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GUEST POST from Jeffrey Phillips

This is the time of year when analysts and consultants make predictions about the upcoming year. The folks at Trendwatching.com have just released their Top 11 Consumer Trends for 2011. Almost seems like a Spinal Tap moment. Anyway, we at OVO are no exception. Each year we publish predictions based on what we believe will happen in the upcoming year. You can register for the email newsletter here. In this blog post I’m going to explore one trend we think will be important, and why you should be acting now.

As you may have guessed from the title of the blog post, we believe customer experience innovation is one of the most compelling opportunities in 2011. This is based on a number of market conditions, trends and innovation needs. First, as anyone paying attention to the economy can tell you, consumer spending is down as people pay off their mortgages, credit cards and other debt. That doesn’t mean that people won’t spend, just that each purchase matters a little more than it did before. Therefore, firms that improve the customer experience, not just in purchasing but in all aspects of the customer’s engagement with your product, service or company will benefit. Increasingly, people are seeking more than a purchase. They are seeking a relationship with a brand or a company and expect to be engaged and rewarded by the relationship.

Beyond what customers want, however, is what firms can create effectively and with lower costs. New product innovation is risky and expensive. The vast majority of new products that reach the market fail to return the investments made to create them. In this current market, few new big bets are going to be made on new products or services. But experiences – how we interact with a customer or a consumer, in all channels and touchpoints – that can be done with far less risk and less cost. Innovation around a customer experience is less risky and has less cost associated with it. Therefore it will be easier to implement in this economic environment. So we have a coming alignment – consumers seeking more engagement and “meaning” in their relationships and acquisitions while firms seek to sustain innovation with lower costs and less risk.

There’s a reason customer experience innovation isn’t more ubiquitous, however, and that’s because while it’s not expensive to accomplish, it’s not easy to accomplish. Customer experience innovation requires understanding what customers value in the “touchpoints” and interactions with your products, services and your firm, and placing the right investments on the most important and valuable touchpoints. Customer experience needs to consider each “channel” a customer may use to interact with your firm: retail locations, telephone, web, email, direct mail, advertising, etc. The total customer experience cuts across a number of vertical silos within many organizations, including sales, marketing, products and customer support and service.

Note that you don’t have to be perfect in all situations and in all channels, and you don’t have to do everything internally. Your customers and clients will work with you to identify weaknesses in customer experience if you are genuine in your intent to improve their experience and let them help you improve those touchpoints.

Innovation matters, but right now and in the near future innovation focused on improving customer experience matters more. The combination of reduced spending on the customer side, compounded by a reduction in conspicuous consumption and an improved sense of meaning and relationship, and a need for innovation on the business side while holding costs low, means that customer experience innovation sits in the sweet spot of those two intersecting sets. Start placing your bets now, because customer experience innovation should be in high demand in 2011.

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GUEST POST from Jeffrey Phillips

While this post is slightly tongue in cheek, I wanted to explore with you, my gentle readers, one of the most insidious barriers to innovation, the lowly calendar. While other challenges to innovation may appear more robust, it is actually the calendar that has the most subtle power.

First, consider the power of the calendar on the way most business people think about results. In any publicly traded company, our time yardsticks are 90 days and one year. Ninety days is the duration of a quarter, when businesses report their increases or decreases in their business. In any business of any significant size, very little can actually get accomplished in a quarter, but that’s the reporting timeframe we are stuck with. The quarterly reporting timeframe means that few things that will impact costs or revenue in a quarter will be worked on aggressively in that quarter. The yearly or annual report is another yardstick which seems too short and outdated as well, but we persist in its use. What I find interesting is that many businesses start planning for the upcoming year six months before the year starts. Many businesses spend almost half of the measurement period planning for the period. And we wonder why it is so hard to get innovation done. These calendar items distract from interesting innovation work at best and at worst encourage managers and executives to ignore innovation, since it is difficult to achieve results in either of these time periods that will impact the top line or bottom line.

Another tyranny of the calendar is simply attempting to schedule meetings and events with an innovation team. Most innovation teams include many people who have “day jobs” and the attempts to schedule time to discuss trends, or generate ideas, or interact with customer panels is almost impossible. Everyone in business today is overscheduled, and every item on the calendar seems of dire importance. I had a client recently tell us that the innovation project we were working on was of the utmost importance, yet we couldn’t schedule a meeting of the innovation team for almost six weeks due to scheduling conflicts. What’s more important, innovation or the calendar?

Calendars present another barrier to innovation in that many firms still operate on a “calendar” year, starting their business year in January and ending it in December. This means that not much gets done in January as the year kicks off, then there is a flurry of activity to get things done by the end of March, which is the end of the first quarter, so innovation in the first quarter is difficult without momentum coming out of the previous year. Then, in a period seemingly ripe for innovation, the rush is to get something started before the mass vacations start in the summer. Forget about kicking off big projects in July and August. That leaves September and then planning season really kicks in until the fall holidays, when everyone is trying to wrap up the year and eat up all their unused vacation time.

Finally, one more reason why calendars are insidious for innovation efforts. Businesses plan and budget expenditures on a calendar basis, often setting spending plans in September or October for the following year, with limited flexibility on changes in spending for the next year. Innovation projects face two conundrums based on that budgeting. One, good ideas may occur out of sequence with the annual budget, meaning that while we generate good ideas we may not have the funds allocated to implement them in this year. Second, many innovation projects can span more than one year, meaning that the program has to be funded in two annual cycles. In firms where the average product development cycle is 18 months to two years, an idea may be part of two, or even three annual planning cycles, each one an opportunity for the idea to be defunded.

Clearly, the best time to have started an innovation project is “last quarter”. We innovators need to recognize and ensure our executives recognize that innovations aren’t governed by a fixed calendar, and that busy calendars get in the way of doing good innovation work. The calendar has become a barrier for our work rather than a tool to assist our work, and we need to put the calendar back in its rightful place.

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GUEST POST from Jeffrey Phillips

I’ve struggled for years to understand why innovation is often stymied by what appears to be poor communication, until a recent incident demonstrated why innovation is so difficult. It’s not just that we need new ideas and the ability to translate ideas into new capabilities, we often need new methods to bring those ideas to reality. And that becomes the crux of the problem.

Recently I was working with a client, creating new ideas to radically transform a portion of their business. The executive sponsor was exceptionally happy with our work, and the small team we had pulled together was enthusiastic about the ideas and eager to continue the next steps. To do so meant bringing in a larger team. Just before we did so, I asked the executive sponsor to speak with the new members, to convey how important these ideas were and how urgent it is to implement the ideas quickly, and he did so. That, I felt, checked the box we always focus on called “communication”.

To my surprise in the first meeting with the expanded team, the new folks were already talking about how the ideas should be implemented, and how quickly they could be implemented, and how the ideas could be adjusted to fit existing programs and processes. It was a complete disconnect. We adjourned the first meeting rather quickly, because we discovered that what the new folks had heard was that they should create a quick success with the new ideas, and they interpreted that to mean that they should use existing processes and methods. What was communicated, and what was heard, were two radically different things.

The new folks on the team assumed that while the ideas were radical, they could be aligned and softened to work within existing frameworks, projects and processes. They had already discussed how to change the ideas so that they would fit within some existing project parameters, without realizing that the reason the ideas were so different was that they sought to create an entirely different value proposition. I realized later that I had failed the senior executive sponsoring the project. He didn’t need to communicate just the value of the ideas and his goals for implementation – he also needed to communicate the fact that the ideas should change as little as possible, and the existing frameworks and processes should change to adapt to the ideas, rather than changing the ideas to adapt to existing processes and thinking. It wasn’t enough to have very compelling ideas that we tried to implement quickly – we also had to implement new methods or processes since trying to force the ideas through existing corporate frameworks and processes meant they would have to be watered down.

This is a classic case of hearing what correct but incomplete communication. What the new folks on the team heard and interpreted was: implement these interesting ideas as quickly as possible. They interpreted that to mean: do so within the existing processes, frameworks and approval programs that exist today. What the executive meant was: implement these ideas as quickly as possible, as close to the form they have now as possible, and rework the existing processes or invent new ones if necessary.

There are at least two good learnings to take away from this:

1. What we consider good communication is often incomplete communication. Innovation requires good, timely and complete communication, leaving nothing to be assumed or interpreted. Whether that is the scope of the effort, the range of ideas desired, the timeframe of the effort or how the ideas should be evaluated and commercialized, everything should be communicated effectively. And the comprehension of the communication should be demonstrated as well.
2. People are creatures of habit. Even when confronted with approved, interesting ideas, most people will revert to existing processes and methods to develop and implement the ideas, or will try to fit the ideas into existing projects or initiatives. This almost always results in watered down ideas that didn’t seem worth the trouble.

Innovation needs more than new, dramatic goals. Clearly the ideas you generate must create significant change to your clients or customers. But probably just as importantly, ideas once generated often need new methods and processes to become the great new products and services they were meant to be. Forcing radical new ideas through existing “business as usual” processes will result in dissatisfaction far too often.

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GUEST POST from Jeffrey Phillips

Zombies, or the concept of the undead, seems really potent right now. We’ve had a number of movies featuring zombies lately, and a new well-received TV show on AMC highlights the zombie phenomenon – The Walking Dead. I’m not sure why there’s a sudden resurgence of interest in zombies, but I am sure that zombies are damaging your innovation capabilities.

Remember that on TV and in the movies, zombies are people who are undead – not really living, and not really dead. They seem to resort to cannibalism and pursue the living. Most zombies move lethargically and don’t really threaten the living until there are a large number of zombies crowding our heroes, which is when the fun begins. Everyday objects like chain saws or electric guitars become the equivalent of light sabers in zombie movies.

But in real life, especially in your innovation efforts you face dangerous zombies that threaten good ideas and good intentions, and crowd out your best ideas. These zombies are the “undead” ideas – ideas that didn’t get approved or funded, and no one bothered to kill. By my estimate most firms have hundreds of these undead ideas laying around, just waiting for the right opportunity to spring up into that quasi-undead status.

When executives say “we have plenty of ideas” they are usually referring to these zombie ideas, only they don’t recognize them as zombies. Since they are still “on the books” or in the pipeline, executives assume the ideas are still viable, when the rest of us know they are zombies at best that should have been killed outright long ago. These zombie ideas crowd out good ideas, distract the teams and enthrall the executives, so that innovation becomes much more difficult.

What’s needed in most firms is a good zombie killer – perhaps like the role Woody Harrelson played in Zombieland. Using a wide array of instruments he killed more zombies in more ways than the plague in London. What you need is to find your Woody Harrelson, the person who can make decisions and actually kill all the zombie ideas that are clogging up your innovation pipeline. By conservative estimate 75% of most innovation pipelines are ideas that have been killed previously or should have been killed, and these ideas continue to attract attention and investment. And with what appears to be a relatively robust pipeline, why generate or work on more, new ideas?

Whether your firm is just getting started in innovation or has had an innovation effort for a long time, one good way to start your work is to first kill all the zombies. Then you’ll have a real sense of the breadth and depth of your innovation portfolio and you’ll know where to start. By killing all of these useless ideas you open up opportunity and oxygen for new thinking and new ideas.

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GUEST POST from Jeffrey Phillips

Sometimes, as an artist or writer you have a great idea and you have the chance to be part of the creation. Sometimes you’ll find that others have beaten you to the idea, and your job is to extend the idea, improve it and make others aware of the original contribution and your offerings.

Some days I’m a creator. Some days, today for instance, I’m publicizing Gary Hamel’s recent post in the Wall Street Journal about Innovation. Not that Gary needs a significant amount of assistance with publicity, but when someone gets it right, we need to point it out. Not with a flashlight but with a search light so everyone can see.

Gary started his post poking fun of some of the innovation lists – which firms are the “most innovative”. As he notes this is like comparing dancers – which is “best” – ballerinas or people who dance the tango? Square dancers or break dancing? Are we talking about classical interpretations or best new introduction? Sometimes I think this is akin to the arguments about how many angels can dance on the head of a pin. Anyway, the real value of Gary’s piece lays hidden over two thirds of the way down, when he starts talking about what limits innovation in established companies. He says:

• Few, if any, employees have been trained as business innovators
• Few employees have access to the sort of customer and industry insights that can help spur innovation
• Would be innovators face a bureaucratic gauntlet that makes it difficult for them to get the time and resources they need to test their ideas
• Line managers aren’t held accountable for mentoring new business initiatives or lack explicit innovation goals
• Innovation performance isn’t directly tied to top management compensation
• The metrics for tracking innovation (inputs, throughouts, outputs) are patchy and poorly constructed
• There’s no commonly agreed-upon definition of innovation and no way to compare innovation across teams

These are his words, pulled from his post. The words I’ve highlighted with italics and bold and underlining (perhaps overkill) are the key ones. If I were to take Gary’s words and place them in order of sequence and significance, I’d say:

• Define what innovation means and how it aligns to corporate goals and objectives
• Establish an innovation strategy – Need Seeker, Market Reader or Technology Driver
• Establish metrics and measurements for innovation
• Incorporate innovation goals and measures into annual plans linked to evaluation and compensation
• Train people throughout the organization on the tools and techniques of innovation
• Establish a well-defined innovation process that all ideas follow
• Encourage trend spotting and scenario planning as a way to gain insights

If you look at this list it seems daunting, and unreasonable if you want to create one new product or service. Yet the additional work to change the culture and make it more innovative, beyond the work necessary to simply grind out one new innovative product, is not that pronounced. Doing the least expecting the most is rarely a positive strategy. If you want to be truly innovative, plan to do more to get more.

But you know this already. The difference between creating innovative products and services and wanting to be more innovative is commitment.

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GUEST POST from Jeffrey Phillips

Here’s an interesting question. Why is there so much innovation around internet browsing? Why is it that we have Internet Explorer, Firefox, Chromium, Safari, and now RockMelt, and sure to be others right around the corner? Why so much innovation in viewing web content? What does innovation in the browser space tell us about innovation in general?

After all, it’s not like we haven’t been here before. Netscape was the original internet browser, and worked reasonably well, but was overwhelmed by Microsoft when it decided to get serious about browsers and incorporate a browser in its operating system. Firefox and other open source browsers were a response to IE when the open source market really took off, and now Firefox represents a large proportion of the browser marketplace. Google entered with Chromium, but really hasn’t had the impact I’m sure they wanted. It will take firms like Rockmelt and others to extend the Chromium platform and break away from the Google mothership before people get too invested. Why create another Internet Explorer monopoly tied to Google rather than Microsoft?

But that’s all history. The real question is – why is there so much innovation in what should be a relatively uninteresting space? Most browsers are free or exceptionally inexpensive, so the return on the development is relatively low. Developing a new browser isn’t necessarily difficult, since the builds for Firefox and Chromium are available as open source projects, but I suspect maintaining a good code base and incorporating the changes necessary over time for the browser is difficult. Customers are certain to be demanding as the browser – whichever type or version – is becoming the real operating system of work within computing, especially mobile computing and work in the cloud. Clearly the number of potential customers acts as a driver for new development in the browser space. Let’s examine the browser market and see what it portends for innovators.

Looking forward: Trend Spotting and Scenario Planning

If you are interested in building a browser, you have to compete with at least three established entities: Microsoft’s IE, Firefox and Safari. However, you also have to understand the incredible changes that are occuring in the IT space. People are using the web, and accessing the web, from everywhere and every device. That means the browser has to do more, and in many cases do less, on a wide range of devices. Trends suggest this will only increase as we access the web from our phones, mobile devices and eventually our cars. Why isn’t there a browser built into my car now? Certainly there will be shortly. These trends tell us that browsers need to be more flexible, lighter weight and able to run on a number of platforms. However, at the same time they need to be able to connect to and run social media applications that are growing and becoming more complex. Rockmelt’s theory is that the browser is the social media operating system, and Rockmelt is built specifically to integrate with Facebook and other social media applications.

The nice aspect of the browser space is that there is a lot of change, and more than likely, a number of secondary market segments. Browsers for cars or vehicles, browsers for mobile devices, browsers for kiosks and stand alone computing centers. Browsers for people who are active social media users, browsers for people in corporations that can’t connect to social media applications. There are a significant number of market niches and it will be interesting to see who identifies the critical needs in each niche and solves those needs successfully.

Which brings us to: Customer Needs

Innovation is about solving a customer need in a new and interesting way, or solving a need customers weren’t aware of. Rockmelt is trying to do both – improve the browser and reduce the “back and forth” between tabs or screens. Can Rockmelt reduce the overhead associated with your contacts, your friends and your social media interaction within the browser? Will that integration be important to you? That will be the $100 million dollar question. When does the browser become more than an operating system component? What customer needs are the most important? For example, Safari on the iPhone doesn’t support Flash. Will that eventually hamper the iPhone as a platform, or will new applications arise to fill the void left by the absence of Flash on the iPhone? Will Android or other platforms and browsers win? What are the important customer needs?

I’d argue that we need a better lightweight browser on the mobile devices that loads quickly but is robust enough to handle most sites that provide high data throughput and high picture resolution or video streaming. But we also need browsers that reduce the back and forth, toing and froing across tabs.

Once Rockmelt, Safari and Firefox developers spot new trends and understand new customer needs, they can generate ideas for new products and then develop those new browsers. Once the development is near completion, they can then test those browsers. And here, the browser developers have an advantage – easy beta testing.

Prototyping and Piloting

This is something that Google learned a long time ago: create a team of believers willing to try out the code, and make it dead simple for them to use it and give feedback. Of course it helps Google that most of their code doesn’t even need to be installed. Rockmelt will need to be installed on your machine, but you have the opportunity to try it out in a limited beta. This rapid prototyping and piloting, combined with customer feedback, means Rockmelt can distribute the testing and final production of the browser and gain valuable feedback quickly.

Will Rockmelt succeed? Have they spotted a need in the browser space that must be filled? It’s pretty clear that the browser is becoming the operating system interface rather than just a component. Does Rockmelt effectively combine the operating system nature of the browser with tight and seamless integration to social media? Is that valuable to a large number of consumers?

We get to watch and witness the attempt to create a new browser and document a case study on innovation. Rockmelt represents all of the factors necessary for innovation:

• A committed team of individuals
• Who have spotted what they believe is a relevant, important need
• Aligned with industry and societal trends
• Developing ideas
• Quickly prototyping and piloting the product with customers
• Gaining feedback and insights
• Preparing the final packaging

The question remains – is what Rockmelt offers different enough, and valuable enough, and easy enough to acquire and use that it will make a big difference in the browser space?

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GUEST POST from Jeffrey Phillips

As the economic downturn settles in for its second year and promises to hang around like a slacker twenty-something on the couch, there is a growing divide between the innovation haves and have nots. Firms that were relatively innovative before the economic slowdown have for the most part sustained a high level of innovation investment. That’s not uniformly true, however. You can easily find firms that were investing more heavily in innovation before the downturn that have significantly reduced that investment. However, the firms that weren’t investing in innovation activities previous to the downturn are now even more unlikely to start a program or initiative until they see the faint rays of light at the end of the downturn tunnel.

This means that the innovation winners – firms that get all of the attention like P&G, Apple, 3M and so forth – will continue to pull away from their nearest competitors and gain more market share and higher returns, not to mention better market returns. When the economy turns a corner and begins to rebound, the differences in product and services offerings will become even more apparent, as firms that have been cutting and “holding on” won’t have much new on offer. Their only real opportunity will be to cut costs to attract customers as they can’t compete with new products or services, so will become a permanent second class.

History also tells us something about recovery from recessions or depressions. These downturns inevitably spawn many new startups. You’ve heard previously about many leading companies, Dupont for example, that were created in the dark days of the Great Depression. These firms are birthed in the most difficult and trying times, and they are optimized to thrive in the dark days, and have their finger on the pulse of customer needs in a way that only a firm struggling to offer one product or service in a downturn can achieve. Right now, all around the globe, thousands of people are being asked to leave their jobs in large, established firms and are pursuing their dreams or passions out of either vision or desperation, and those individuals are creating innovative new products and services, born out of the ashes of this downturn. Some will make it, some won’t. But what’s true and has been demonstrated before is that these innovators will take a significant portion of the market as it recovers. That means the firms most likely to be successful in the next few years are firms that are heavily investing in innovation now, and firms we aren’t even aware of right now, the new innovators.

If this logic holds, then innovation is the key to survival for larger firms, and the driving force for growth for new firms. Coming out of the recession – and it will end – those firms with an active passion for innovation will accelerate away from the firms too focused on efficiency and cost cutting. Innovation is the competitive advantage.

We can also predict a few other things based on history and downturns. Coming out of the recession, many things will change. Out of any major downturn, people will question the status quo, what was received wisdom before and during the downturn. For example, look no further than the size of the average house in the US. Recent surveys indicate that respondents believe they can be happy with a house over 20% smaller than what was indicated just before the downturn. Out of any downturn people recalibrate their needs and expectations and shift their behavior. We can expect that there will be a return to thrift, a demand for more meaningful experiences and less conspicuous consumption for quite some time after the recovery. Firms that understand these shifts – those firms in existence today and those just getting started now – will move quickly to position themselves to offer innovative products, services and experiences that meet these customers in their new expectations. Firms that are right now holding on and cutting investment in innovation will offer products and services that were deemed appropriate before the downturn to customers with new expectations and wonder what went wrong.

Innovation is also important for our state and federal governments. After several years of spending on a number of important new programs and foreign wars, the growing deficit and looming federal debt are forcing us to consider changes in policy and programs. Currently most of the response is tinkering around the edges – we aren’t in enough pain yet. But it’s not hard to forecast that what’s happening to Greece and Ireland can happen to us, especially if many countries continue to proceed down the path to what lead to the Great Depression – currency devaluation and trade sanctions. Our state and federal governments need new thinking and innovation to reset expectations and offer the appropriate services within budgets we can afford.

In the US, our university system has been the envy of the world, but over the last decade or so seems to have lost its way. The fundamental lack of innovation in entities that should be a crucible for innovation is astonishing. Many universities are facing severe cutbacks in state funding and are forced to raise tuition, while the overhead and administrative costs have grown dramatically. Many have fought the advent of distance based education and “for profit” universities, while many students have sought out these more innovative solutions. Universities need to turn the focus inward to consider how to innovate their models, which for the most part are unchanged from the 11th century. Costs rising twice the pace of inflation are simply unsustainable, and with an average four year graduation rate dropping as low as 50%, these are investments that aren’t worth the cost. Universities should be open, dynamic, flexible organizations for innovation and change. Instead they’ve become closed, fixed, inflexible machines that sustain long tenured administrators and faculty at the expense of new ideas and growth.

To a certain extent, all the major organizations of our economy are standing around, waiting for something to emerge, a savior from the distance. The solution is here, right in front of us, for every industry, academic program or institute of higher learning. We need innovation in our businesses, in our governing institutions and in our academic settings. The needs are obvious, the demands only rising. Rather than scanning for longer term impossible solutions, let’s get busy with something we know that works. Innovative thinking and applied creativity translated into new products and services for businesses, new programs and new ways to govern for political entities and completely new ways to teach and to learn for academic institutions. This isn’t a pipe dream – it’s a requirement. The amount of pain we endure is based on how long it takes us to understand that innovation will be what creates the new value propositions that we need.

And yes, I’m guilty of asserting that many of our needs can be solved with just one tool. If that makes me a snake oil salesperson, I’ll wear it with pride. Einstein, quoted here many times before, said that you can’t solve new problems with old ways of thinking. To solve new problems, you need new ways of thinking. We aren’t asserting the solutions, just challenging everyone to assert new ways of thinking to create the new solutions. It’s time to get innovative people.

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GUEST POST from Jeffrey Phillips

I chose the title of this point tongue in cheek, because I have a great friend in the military and his signature is FINAO – Failure is not an option. In the military, when every decision is life and death, that mantra is correct. In innovation, however, failure must always be an option.

I’ve been scanning Twitter posts and other blog sites and I see that many commentators believe that acceptance of failure and “failing forward faster” is imperative to innovation, and for the most part I agree. What’s missing is a deeper investigation into the issues surrounding “failure”. How does an organization “accept” some failure when FINAO in most cases? You know a subject is getting some attention when the cartoonists have something to say about it.

The problem with failure – either accepting it or rejecting it – is in defining it. Today, in most firms, failure can be defined in using these criteria:

• No one wants to fail because it reflects badly on them and their careers
• Failure is a one time deal – it’s cataclysmic and ends badly
• Failure is an end point – a terminal destination
• Failure is ridiculed, mocked and reviled. We tell cautionary stories about previous failures
• The culture rewards success and ridicules failure
• Failure is costly
• Failure is unpredictable

In these instances, only success is viewed as a reasonable outcome. Status quo is accepted with some grumbling and toleration, and any other outcome is means for dismissal. And that’s what potential innovators face in many organizations. If we can’t guarantee success, go back and try again, or worse, do something to cut costs or increase efficiency.

When you hear people talking about the importance of failure, or when you read people writing about the importance of failure, they are correct but incomplete. We all understand that failure is important to innovation, but we need to understand how to create the conditions in which failure is acceptable. Clearly, if failure is considered a worthless, terminal condition then it can never be acceptable. However, if we can establish some of the characteristics I’ve listed below for failure in an organization, then we may be able to create meaningful failure:

• Failure is contained and inexpensive
• Failure is considered a likely outcome
• Failure is not an end point and isn’t terminal to the effort
• Failure is considered part of the process of learning and developing
• Failure is predictable – in fact we assert the likelihood of failure
• Because it involves learning, advancement and was predicted, failure is accepted or celebrated

Think about the shift in mindsets revealed by the different thinking and reactions to failure. The cultural bias toward catastrophic failure can be tempered by a smaller, contained failure that is part of the learning process and ultimately leads to new insights, knowledge or a new product. Rather than one big, risky, unplanned failure, we create experiments with lots of small, contained and somewhat predictable failures that lead to greater success.

Strangely, the situation I’ve described is what we’d expect in an R&D lab, but don’t plan for or tolerate anywhere else in most organizations. Controlled experiments that advance our knowledge and prepare the first to make better decisions leading to better products – that’s valuable. Perhaps we just need to reframe our language. Rather than “failing forward faster” we need “rapid, controlled experimentation”.

No matter how many times innovation experts tell you that failure is important and must be part of the process, that doesn’t really matter until someone tells you how to make failure more acceptable in your organization, so that you can be allowed to fail occasionally. What managers hate more than failure is uncertainty, unexpected costs and risks. If you can demonstrate that your experiments remove uncertainty, reduce costs and risks, controlled failure will be tolerated or even accepted. Heck, you may even win an award for it.

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GUEST POST from Jeffrey Phillips

Let’s face it. Innovation isn’t hard, it isn’t complicated, it isn’t unattractive work. Innovation is really difficult because it is new and fraught with uncertainties. Since we’ve been trained to abhor vacuums and uncertainties, many firms shy away from innovation, and use excuses like “It’s too hard” or “The pay-off is hard to predict” or a number of other arguments, which are all really about uncertainties.

I’m a great artist again today, stealing the concept of “Five Uncertainties” from Patrick Lencioni’s Five Dysfunctions of a Team. There are probably more than five uncertainties where innovation is concerned, but that sounded like a good, round number. Today we’ll examine five key uncertainties having to do with innovation, why they block innovation, and how to deal with them for innovation success.

1. Strategic Uncertainty

Probably the most common cause of “innovation failure” is strategic uncertainty. This is fairly easy to recognize and occurs in one of two forms. Either the corporate or business unit strategy and goals are vague, or the innovation team ignores clear strategy to pursue its own goals. The first case is the most common, and the strangest to me. Why do we pay gobs of money to senior executives who are so poor at communicating their strategic goals? An innovation team that cannot obtain clarity about strategic goals typically spins its wheels, since all paths and all directions seem equally viable. Without a clear strategy, there’s no clear targets or goals.

Solving this uncertainty is easy and dangerous. First, ask the executive sponsor of the innovation effort to clarify the corporate strategies and goals. If he or she can do that, you are in the clover. If they can’t, no worries, the team merely needs to assert what it thinks is important and ask for acceptance. If you can’t receive clarity about strategic goals top down, assert them back at the executive(s) and tell them you’ll start the project on based on your sense of what’s strategic in two weeks if no answer is received. Whether you create it or the executives create it, you need a clear strategy.

2. Outcome Uncertainty

What we are calling “outcome” uncertainty deals with what the team is supposed to produce. Incremental products or disruptive services? It’s not enough to say that a team should create something innovative – the team needs to understand the acceptable range of options. If the executives want a new physical product to sell, then say so. Narrowing the scope actually helps the team. Allowing the scope to remain broad and poorly defined is a recipe for disaster.

Someone – the sponsor of the project, the potential implementer of the solution, needs to indicate what kinds of products or services should be delivered in the project, and how incremental or disruptive the solution should be. Again, if you can’t get that information from the executive team, then the innovation team must assert it. Otherwise your result will be a jumble of incremental products which appear uninteresting or disruptive services which appear to be impractical.

3. Communication Uncertainty

This is one of the strangest uncertainties – when an innovation team is formed and tasked, but no one bothers to communicate goals or outcomes to the rest of the organization. Everyone not on the team is constantly sniffing around, trying to understand if the innovation team will cannibalize or disrupt their sacred cow. Most interact with the team with high suspicion at the least and active disregard at the worst.

Your team can’t work well in isolation and won’t work well in active competition with the rest of the organization. Communicate your purpose and goals quickly and continuously. Better to have one or two active enemies who fear your team will disrupt their activities than an entire organization suspicious of your intentions. This one always boggles my mind – surely we receive far too much communication, but on unimportant topics, while we avoid talking about or communicating about strategic topics.

4. Success Uncertainty

As we all know by now, innovation often means failing, and hopefully learning something new that can be used in the next product or service. That’s easy to say and very difficult to accept. Most firms are very comfortable implementing projects and activities that have a high likelihood of success, which is why many firms do the same things over and over again with diminishing returns. They understand how to do them and can count on at least some minimal, but almost guaranteed success. Nobody wants the black mark of “failure” on their permanent record.

We can’t guarantee success, and we can’t eliminate the uncertainty that haunts an innovation project, but we can reduce the uncertainty of success by building in the processes and techniques that will make innovation more effective, and doing the research necessary to spot important trends and emerging markets. In other words, we can increase the likelihood of success by investing in the right tools, techniques and methods, and perhaps partners, who can make innovation more successful.

5. Commitment Uncertainty

Another one of my favorite uncertainties about innovation is commitment uncertainty. This is the queasy look that many innovation team members get when they realize how much learning and work is required to do a good job on an innovation project, and they sheepishly admit that they have a “full time” day job, and that innovation is something they can commit about 4 hours a week towards. They are forced to choose between a commitment to an interesting project they know is important but probably won’t impact their compensation or evaluation, and the pressing needs of day to day business which is far less interesting and valuable, but how they’ll be compensated and evaluated. At this point only the true believers still have the fire in their eyes.

Your firm can eliminate commitment uncertainty by recognizing the people who are on the innovation team and ensuring they can commit the time necessary to be successful on the innovation project. You can assure yourself of greater commitment by recruiting volunteers, who may not have the “right” titles but want to be part of something larger than their day job. You can eliminate commitment uncertainty by building in a measure of innovation into the evaluation forms, so people need to demonstrate innovation skills and outcomes to advance.

Conclusion

So there you have the five innovation uncertainties and how to address them. As I noted at the beginning of this article, innovation isn’t really all that difficult, doesn’t require tremendous expertise, and has well defined methods and processes. While these and other reasons are given for avoiding innovation, I firmly believe that the ultimate barrier for innovation is the tremendous amount of uncertainty that swirls around the effort.

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