GUEST POST from Jeffrey Phillips

Analogies are a powerful tool in an innovator’s arsenal. We use analogies to understand how other firms or other industries have solved a particular problem, and then evaluate that existing approach or solution in light of our challenges. Here’s an example. We were working with a firm that makes lawn mowers, and the goal was to improve the result of cutting your lawn. We wanted a smooth, even cut. One of the most significant aspects of a smooth cut is not under the control of the firm that makes the lawn mower: how sharp the blade is. That’s the responsibility of the owner, not the firm that made the mower, yet the blade sharpness drives a significant portion of the ultimate satisfaction of the lawn mower owner.

So we asked ourselves, what analogies exist for keeping a frequently used blade sharp with minimal interaction from the owner? Clearly we could have the owner intentionally sharpen the blade, or create some self-sharpening device. But the analogy that seemed the most apt was from the razor blade companies. Couldn’t we create a “disposable” blade for a mower that could be used several times and then thrown away? Analogies make for great idea generation techniques.

The analogy for today is about the difficulty of innovating, because innovation forces a team to choose. The original statement is “to govern is to choose” which is variously attributed to JFK, Charles de Gaulle and others. The origin is less important than the meaning. This statement is meant to indicate that governments have the duty to allocate the funds they receive according to the decisions they believe will best affect the country. Some factions will receive funds, some won’t – the choice is part of governing.

Innovation has a very similar conundrum. There are always far more good ideas than the resources necessary to fund and develop the ideas. Therefore, idea selection is about making choices in the face of limited information which could be wrong in hindsight. That’s one of the first problems with innovation – we ask people to make hard choices with limited information about products or services that may, or may not, be successful. Innovation has another challenge to most executives when it comes to choice: innovation requires a very different set of commitments and choices than the status quo.

Imagine an existing product or service. The product manager is usually confronted with choices about color, or packaging or pricing. Relatively distinct choices that will have incremental impact to the existing product. Now consider a product manager or executive asked to make choices about a product that doesn’t yet exist. Every choice he or she makes is risky and uncertain. Most executives are uncomfortable in this situation and seek to limit options and choices, seeking clarity and safety, or at least consensus. This is why most “innovation” seem so bland. Once we remove risk from the equation and bring consensus into the equation, we’ve watered down the product or service to the point where it’s not innovative anymore.

The risks associated with the choices were too great initially, and the compromises made to avoid hard choices watered down the final product. To innovate is to choose, much like Chicago voting – early and often – often with poor data and only a gut intuition. Perhaps beggars can’t be choosers, but innovators must be.

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GUEST POST from Jeffrey Phillips

During this most recent downturn, but similarly to other downturns, at least while I’ve been in the workforce, is the concept of “doing more with less” – that is, wringing more output or benefits out of the same, or often even less, inputs and resources. This idea hasn’t become a slogan, but a working reality for many businesses.

That’s the nature of the beast – it’s far easier to cut resources and costs to sustain a certain level of performance than it is to “invest” in new people or new products in the hope of increased revenues, especially as the economy has people pulling in their spending. For good or for ill, the new management mantra is “do more with less”.

In light of that admonition we need to understand how to get innovation done. US businesses can’t continue to cut, and cut, and cut, people, ideas and capabilities without doing long term damage to competitiveness and innovation. The economy will bottom out, will turn around and the firms that are investing – to whatever degree possible – in innovation will be the ones best positioned to take advantage of the upturn in the economy. As I’ve written before, there is no “good time” for innovation. When times are bad it’s easy to argue that the additional investment isn’t worth the cost. When times are good innovation risks distracting the team from its core purpose or takes dollars and resources away from the money making products and services. Frankly, it’s easy to make the argument that innovation costs too much or distracts too much in almost any market condition. Yet firms that fail to innovate will fail to survive.

So the question becomes, in an era of “more from less” when it is easy to dismiss innovation investments, how can innovation get done, since the alternative to no innovation is obsolescence. This gets us to the title of the post: in this economy, regular operations is doing more with less. Innovation takes that a step further to doing the impossible with nothing.

So then the question becomes – can we “do” innovation with little cost that has a big impact? Let’s assume for a minute that you can create really viable, really interesting ideas that will have a significant impact on your business. Now, what’s the investment necessary to:

1. Identify the idea
2. Manage it effectively
3. Bring it to market

Let’s deal with a few “truths” rather than myths.

First truth: Innovation does not have to cost a lot of money.

• For a recent client we led an innovation program, which included third party research and ethnography and had two full time and one part time innovation consultant on the team, combined with seven client team members. We generated hundreds of ideas that were managed, evaluated and prototyped. We arrived at ten practical, game changing ideas and implemented three of them. The total outlay for the client in “hard dollars” – that is, not counting their resources costs, was about $350,000. If any one of the three ideas selected and implemented does anything close to our expectations, the return will be over $50 million in new revenue. So innovation can be done rather inexpensively.

Second truth: Your team can do a lot of the work, if you’ll allow them to.

• Rather than “outsource” innovation, train your teams and engage your own people rather than teams of consultants and third parties. Or, use open innovation and work with your clients, partners and others to generate ideas. It does not need to cost a lot to generate a lot of good ideas, and your teams or your clients and partners can do this work with you and for you.

Third truth: Your teams should “own” this work.

• If you consistently outsource all of your innovation work, it costs more and has less chance of being implemented and accepted. If you can engage your internal teams and give them the freedom and tools necessary, innovation costs less and is more likely to be implemented and accepted. You get two wins: exciting ideas at less cost, and a more engaged workforce.

Fourth truth: You have to assign the “right” people and give them the best tools and training.

• When I say the “right” people I don’t mean the most experienced people or the people at the right level of the hierarchy. I mean the people willing to make change who have great ideas. Typically they aren’t the most senior people. The most senior people often have the most to protect, and aren’t willing to change. If you can find and assign the right people, then give them the right tools and training. Don’t ask them to do this work without some investment in the right innovation skills.

Fifth truth (and the one that is self-serving): Find a trustworthy innovation partner who will guide your team and train your team rather than asking them to “go it alone”.

• An analogy is in order: when the west was settled, wagon trains left regularly from St. Louis. While there were clear “wagon trails” and some maps, every team took a guide, who recommended where they should stop, what daily progress they should make, where the “rough patches” were and so forth. I suppose many people wondered if they needed a guide when they could follow the wagon tracks, and abandoned materials along the way. Similarly, I’m sure many organizations will argue that they can read a few books and attempt this without a guide. Many firms I’ve talked to that tried this approach ended up in logical but predictable dead ends. I’ll argue that it makes sense to acquire a guide, as long as you also intend to learn from him or her along the way.

The question eventually becomes – can we afford to eliminate our investments in innovation and simply rely on cost cutting? I think most firms will answer in the negative. If that’s the case, what’s the best investment we can make for minimal cost that can achieve great innovation outcomes? From our experience, if you are willing to invest the time of between five and seven people for six to eight months, and hire a guide, your firm can create really valuable innovation without a lot of cash outlay.

Clearly, we believe that every firm should have an innovation budget, just as many have an “R&D” budget. But in the absence of that, every firm should be investing in innovation. You can effectively manage your innovation investment and get great returns, but you can’t get a return if you don’t invest at all.

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GUEST POST from Jeffrey Phillips

Good artists borrow and great artists steal. Today I am a great artist, and stealing from another.

At a recent speaking engagement which I attended virtually through a Twitter stream, Rob Shelton described an innovation culture as being made of vision and metrics and motivation. I thought this was an excellent summation of the attributes of an innovation culture, and I’d like to tell you why. I’ll also tell you one other component I’m sure Rob talked about but isn’t explicitly in this list.

Even the order of the attributes is important. Vision is first. Vision in this definition describes some strategic goal for the organization that can be linked to innovation. This is where many firms fall down. Vision is such an ephemeral thing that we often skip right past it. Then we are left using innovation as a one time tool, rather than an ongoing capability. And as we’ve discussed here before, innovation is simply too risky and too uncertain to do well once. To define an innovation culture, you need an overarching strategic vision that is then linked to innovation goals and outcomes. No vision, no innovation culture. And if you can’t get your management team to document a vision, create and publish one of your own. The absence of a vision from above does not excuse the absence of an innovation vision and strategy at your team level.

I’d argue that in precedence order motivation comes next, and I’d describe motivation as composed of what people WANT to do, what they are COMPENSATED to do and what they’ll eventually be EVALUATED on. Note that these can be very different. I may want to innovate, but I am compensated based on the evaluations I achieve doing my regular job, creating a significant conflict. Part-time innovators are very familiar with this dilemma. They want to innovate, but their advancement and pay is based on the work they do in their “day jobs”, not the work they do in innovation. This is often very de-motivating.

Rob’s last attribute was metrics. We all know the old saw “what gets measured gets managed” and innovation, for it to become the consistent process we want it to be, needs to be quantifiable at some level and demonstrate regular, measurable results. I’ll argue that in the early stages of innovation we need different measures and metrics than we’d use in more traditional projects, but also that eventually we need to demonstrate a measurable return on the investment.

So, if I can create a consistent, sustained vision for innovation that links to strategic goals, and appropriately motivate my teams to innovate, understanding their need for clarity around compensation and evaluation, and I apply the appropriate measures and metrics, will I be able to create an innovation culture? You are certainly on your way, but there are two other things that are necessary. The first is simple. Can you sustain this effort for more than a quarter? Culture is created over time – you can’t wish it into existence in a matter of a few weeks. So a sustained commitment is important.

The second item is the one I wish Rob had included explicitly, and that is communication. While most employees in most firms feel inundated with messages from their management teams, I honestly believe you can’t communicate enough about innovation. Here’s why: innovation is risky and uncertain and ambiguous. People don’t like to work in those conditions. To lessen these issues, clear, consistent communication helps tremendously. Hearing the messages from the executive team, and the everyday management team, that innovation is important, sustains the team and reduces the ambiguity. Seeing the work rewarded, publicly, helps sustain that communication channel.

Your firm needs a culture that encourages innovation at the least, embraces innovation at best. Examine the aspects that Rob noted and I have detailed. Which one of these attributes is missing from your culture? Start with the most strategic – vision and strategy, and work your way through motivation and metrics. Once those are defined effectively, start communicating and sustain the effort. Your culture will shift, slowly at first, more quickly over time, to a much more eager embrace of innovation.

Editor’s Note: The event Jeffrey refers to is called Pipeline 2010, a free online event that took place November 10, 2010. The video sessions (including my closing ‘Stoking Your Innovation Bonfire’ keynote) are still available for FREE for 90 days after the event. Register here to watch them.

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GUEST POST from Jeffrey Phillips

I saw an article recently, highlighted by Richard Florida, that suggested that the incoming Republican-led House of Representatives will reduce spending on scientific research. The natural conclusion from that assertion was that therefore, there would be less funding for “innovation”. It’s interesting to consider how funding for basic R&D within government labs impacts innovation, and what role we want the Federal government to play in innovation. Further, it’s interesting to note that articles are being written which make assumptions about how funding will be allocated in the future, when we don’t yet know the priorities of the incoming legislators.

First, let’s put a few facts on the table. The Federal government has invested a tremendous amount of money in basic research – much of that in several key areas: health, space and defense. In the 50s and 60s, at the height of the race for space, and in the 80s during the height of the cold war, the government was responsible for driving a significant amount of new research, which led to new products and services. As a person who worked in the semiconductor industry, however, I can tell you that much changed in the late 80s and early 90s. Once upon a time the government would do the research and ask private industry to fulfill the vision with new products. Today, in many cases, private industry has far more capability than many in the research labs can conceive. The government in many cases is just waking up to “packaged” software rather than commercially “off the shelf” software, or COTS, as an example. In many areas the lead on innovation has shifted from the government to the private sector.

This shift coincided with a shift in budgetary priorities at the national level, beginning with a “peace dividend” in the Clinton administration. We “downsized” our military and our military investment, and with growing demands from Medicare, Medicaid and Social Security, the investment in primary research as a percentage of the budget has fallen. NASA has fallen on hard times and struggles to define its mission, leaving the US as a hitchhiker at best if we return to space. What’s more important now is that the government, once a funder of research and innovation, becomes the organization that defines the needs and establishes the environment for innovation, so that the private sector can respond.

The risk is that the opposite happens – that we follow Japan in a planned economy, with a federal bureaucracy picking industrial policy and technological winners and losers. In the 80s Japan’s famous MITI agency selected technologies and standards and directed innovation and research in key areas. This allowed countries like South Korea to steal a march on Japan. In this country, we run the same risk, with examples like the FCC picking and choosing frequencies and technologies. The government – at all levels – has a role to play in innovation, but it’s not the role they believe it is.

The role the government should play is to identify the big problems that must be solved, or the big opportunities that must be addressed, and create a playing field where anyone can respond. Today, to work with a federal agency requires the services of contracting agencies which understand the forms, bureaucracy and minutiae that the machinery demands. This is off-putting at best for innovators and blocks many individuals and firms from working on federal issues. Further, the federal government could encourage innovation by changing the treatment on the valuation of intellectual property and intangible capital. Today we have the ability to write off or depreciate physical assets, but lack the same clarity and rules about the value and timeliness of intellectual property.

While the government, whether that is the federal or state government, will continue to be a source of research dollars in many different fields, but the funds available will by definition dwindle as our governments tighten their belts and confront ever growing demands for services. The governments will have to make a shift from being a prime funder of innovation to communicating the important problems to solve, and creating the environment for innovators and entrepreneurs to succeed. This may mean freeing up the entrepreneur and changing the incentives and tax policies on smaller and larger firms, and creating different accounting methods to incentivize innovation. But for us to sit around and hope that more money will be available to drive more primary research from the federal labs is risky at best, regardless of the administration.

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GUEST POST from Jeffrey Phillips

There’s a good, short recent article in the Irish Independent which states that people want designed, not designer products. While I doubt that many people are going to rush out and give up their BMW cars or Breitling watches, I suspect that the notion of “designed” products, services and experiences is really the next big opportunity for innovation. And the real opportunity isn’t in the designed product as much as it is in the designed service and experience.

We still live in a mass customization world, so while your product may be mass produced it can be customized, and perhaps even designed, for you or someone like you, in your particular segment or market. What I believe can be even more readily designed, however, is your service, your experience and the solutions, extensions and offerings around the base product – what you might think of as the “total experience”. This is the real innovation sweet spot.

After all, any product that you acquire will eventually become older or lose its usefulness or charm. A new version will emerge or a new product will arrive to knock the existing product off of its “Feeds and Speeds” pedestal. If all you care about are the base features of the product, you’ll jump as soon as the new product is fast enough, or has enough new options. If, on the other hand, you experience a completely designed experience that wraps the product or service into a complete offering, replete with extensions, services and experiences, you may be less likely to leave an antiquated product that has linkages to a total solution for then next “feeds and speeds” winner.

Most companies miss this concept entirely. They spend their meager innovation dollars on creating the next features and attributes winner – what I am referring to (tongue in cheek) as the feeds and speeds winner. While that accomplishes some short term innovation leadership, it merely teaches the customer to look for the next inevitable winner of the feeds and speeds race. What we should be innovating – what’s more valuable and more differentiable – is the experience. Can we create a total experience, linking the product or service to other services, support, third party apps and other networks, that is so compelling that even if the product suffers a bit over time, the consumer remains committed?

Many firms over-innovate and over-engineer the “product” and under-innovate the services and attributes surrounding the product, trying to create the most “efficient” processes, support and services. This creates the worst of both worlds – customers trained to care about feeds and speeds who expect the minimum “experience” and usually get it. Feeds and speeds are easy to copy, experiences aren’t, yet other than Nordstrom’s, Virgin and a few other firms, most organizations simply don’t think about innovating experiences, much less designing them from the customer’s perspective.

Want a simple, powerful and sustainable innovation? Design the customer’s experience to delight and sustain the customer, rather than spending all your innovation effort on the speeds and feeds. As Microsoft Word demonstrates, we typically can’t consume all the features in the product, and they often get in the way of what we are trying to do. Microsoft would be much better off improving the help function, the user interface and extending the solution to new social media uses rather than adding new features. Plus, designing and building a sustainable customer experience is differentiable. While Target, Wal-Mart, Sears and JC Penney may compete with each other, they are all very similar in experience, while Nordstrom’s stands alone.

Increasingly customers want designed products, but take it one step further. Use innovation to create designed experiences.

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GUEST POST from Jeffrey Phillips

I think we’ve been thinking about innovation all wrong, at least conceptually speaking. I don’t mean that terms like “incremental” or “disruptive” are wrong, or that techniques like crowdsourcing or “open innovation” aren’t often effective. What I think many firms are getting wrong is their expectation about outcomes, regardless of the tools and techniques.

You see, what they miss is what innovation should produce – a new mindset, and what they expect – no demand – is far more tactical. A new product. What could become a complete transformative effort ends up as a Quixotic effort to squeeze out one small, discrete new product. And once that’s done, often the firm reverts right back to its existing methods and frameworks, having missed the much larger and more powerful opportunity.

It’s not all that hard to create a new product, and with the right set of people and the right conditions, it’s not difficult to create interesting and even radical new products. What’s difficult is to transform the way people think about the company and it’s reason for being – what it produces, what it’s opportunities are, what it’s place is in the market, and ultimately why it exists. Yes, I’ve gone all existential on you, but for a reason. Many would-be innovators are playing with tools and techniques they don’t fully understand, with a commitment level that will only achieve the barest hint of what’s possible. It’s as if we are tinkering with the blasting cap on top of the missile that contains a nuclear warhead. We may get a small bang but miss the opportunity to create exceptionally radical change that was available all the time.

I see CEOs and other corporate executives who talk about radical change for their firm and employee engagement all the time. They claim to want to set off the nuclear missile. But most of their innovation teams are so focus on creating just one new product that all they do in the end is tamper with the blasting cap. The possibilities are there for really interesting, radical change – not just one new product or service but a radically different, more engaged and more capable organization. One that isn’t tinkering with innovation to merely create an occasional new product, but one that is fully engaged and innovative, and spins off new ideas and new products as a matter of course. Yes, it’s the difference between the zen pupil and the zen master, but at least the zen student conceives of a different “state”. Most innovators think they’ve achieved enlightenment when they’ve created one new product – missing the fact that shifting the culture and expectations of the firm is the ultimate win.

What most firms really want – faster product development, insightful and valuable new products and services, closer ties to customers and engaged employees – are outcomes that can be achieved by moving much further as an innovative organization. You can’t achieve this in discrete innovation projects – occasional brainstorming doesn’t get you there. You can achieve it if the expectation for innovation is less about the product and more about the culture, the beliefs and the value propositions of the firm.

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GUEST POST from Jeffrey Phillips

Just when it seems Google has gone and jumped the innovation shark, the smart guys at Google demonstrate that they are still in the innovation game. I’ve just learned about Google Slam, and I’m here to tell you it’s probably one of the smartest innovation moves I’ve seen online in several years, if Google is doing with it what I think they are doing.

The title of the post refers to “Lead Users”, so let’s provide a basic definition for that before we unpack Google Slam. Lead Users are people who are solving a problem or addressing a new market using products and services that are already available, but they are extending those products and/or services in ways that haven’t been “approved” or considered by the firm producing the product or service. Think Make Magazine, or the folks who hack the Wii remotes to do interesting new things. Lead Users are people who are creating the “innovations” of the near future. Spotting lead users and understanding how they are using or manipulating your product or service can give your firm great insight into new needs, new trends and new opportunities. The concept of a Lead User was developed by Eric Von Hippl, and you can learn more about Lead Users here or in his book Democratizing Innovation.

So, if Lead Users are demonstrating solutions that may solve mainstream problems or address new markets or opportunities, the key question in most firms is: how do I find them? How do I find the “lead users” in my market or industry? Probably the best place to find them is at trade shows and conventions, especially those conventions where the consumers get to demonstrate their application or use of your product. A good example: Brickfest, a convention for adult fans of Legos. Here, adults who are hobbyists can demonstrate the things they’ve made with Legos. And the product managers at Lego can observe their consumers and what they are doing/making with Legos that wasn’t anticipated. Here the product managers can see how Legos might be used, and what new solutions the avid consumers are creating, and create new packaging or completely new products based on these creations.

OK, so what’s that got to do with Google Slam? Google Slam is a website that encourages Google users to show interesting and unexpected ways they are using Google products. One video shows two young women, clearly not of Indian descent, using Google Translation to order Indian food in Hindi over the phone. Another shows a band singing songs based on Google instant search. What Google is doing is providing a means for Google enthusiasts to demonstrate new and interesting, or even unexpected ways of using Google tools. What’s more, by creating a “competition”, Google encourages these avid users to record themselves and post their ideas or solutions where the Google audience can view the solutions. Google product managers are watching these as well, and I’m sure are taking away ideas for new features for existing products, as well as ideas for new products.

Most firms have to seek diligently for their lead users, if they can find them at all. The smart thing that Google has done is to create a “honeypot” for Google advocates who can compete to show off all the things they are doing with Google apps. All the while Google team members are having lead users deposited at their front door. This is either the smartest innovation ideas we’ve seen from Google in quite a while, or I’m asserting a solution that Google didn’t intend, but is sitting right there for all the world to see.

Innovations often happen when individuals “mash up” one or more existing tools or capabilities and create new solutions, new information or new insights. Lead users are people who do this kind of work because they want the best solution possible, even before their preferred vendor creates it. Now, Google can allow their most avid users to indicate products, solutions and features that will be valuable, and they are doing it as part of a competition or game. Nice move, Google. This innovation seems much more in line with what we’ve come to expect from Google.

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GUEST POST from Jeffrey Phillips

So it actually all comes down to this – my prospects and clients need to understand when the “right” time for innovation is. After all, what we usually hear from executives is that “this isn’t the right time” for innovation. Not that they don’t want innovation, or don’t need innovation, or that innovation is too risky or expensive. No, the usual response is that this simply isn’t the “right” time.

So, in the interest of public edification I decided to conduct a thought experiment, out loud. What, I asked myself, are the appropriate conditions so that one can identify the “right time” for innovation.

First I considered the most obvious time. That most obvious time for innovation is when the wind is behind you, the sun on your face and the markets can’t get enough of your products and services. In other words, the ideal time to innovate would seem to be when you are on top of the world. However, a note of caution creeps in. We don’t want to distract from our good run by taking good people and have them explore new ideas – that’s a distraction. We certainly don’t want to kill the golden goose by identifying new products and service that will cannibalize our best products and services, and we ought to “double down” on what’s making us successful right now.

So, even though these conditions would seem ripe for innovation, there are too many other activities consuming the management team to seriously consider innovation when they are on top.

What about the reverse? Is innovation a panacea for those firms that are desperate? Is the “right” time for innovate when there seems to be no other option? Hardly. Firms that are struggling to compete and keep their heads above water will occasionally throw the “Hail Mary” pass with innovation, but are usually cutting so fast that to invest in innovation seems difficult. Not to mention the fact that when a firm is struggling, having a small team think about big ideas seems unreasonable. It’s all hands on deck until the ship gets righted. Not to mention the overwhelming sense of urgency that pervades a firm when the days seem darkest. Few firms are going to place investments in ideas with long range outcomes when everyone is bailing water.

OK, so the right time isn’t in the good times or the bad times. What about the “in between” times? Periods when the firm isn’t struggling and isn’t on top. That should be most of the time in most firms. Yet there always seems to be an excuse. For example, we’d conduct an innovation initiative if only we could:

• Find the funding
• Find more people
• Be sure we’d get a return
• Get the executives on board
• Get the company on board

I guess my point is that there isn’t a “right” time to innovate. It’s actually a contradiction in terms. Perhaps the way to think about the “right” time to innovate is to stop thinking about innovation as a discrete activity and frame it as an ongoing exercise or program. As an example, when is the right time to start eating right, cut out the junk food and start exercising? Really, anytime you decide to do so. When is the right time to exercise consistent personal hygiene? All the time, consistently, otherwise you’ll be outcast from your home and your place of business.

This is the fallacy that many firms fall into. There is rarely a “right time” for a discrete innovation activity. It’s too risky, too uncertain, too dangerous and expensive, so the conditions are never right. However, if we ask the question differently – consider innovation as a consistent capability – a corporate hygiene concept – then the answer is: as soon as possible. If innovation is a discrete event, the risk, the training and the uncertainty hurdles are presented every time innovation is considered. If your firm understands how to innovate and does it consistently, the hurdles are removed and people conduct innovation business as usual.

The right time to start innovating is whenever you decide to create an innovation capability, not a discrete, stand alone, very risky innovation project that won’t be supported or sustained. Once your team has some experience and defined processes, innovation will become a consistent capability, so you won’t have to ask “when is the right time”, your folks will be doing it all the time.

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GUEST POST from Jeffrey Phillips

I’m back from a long trip to Kuala Lumpur and Dubai. I had the good fortune to lead several innovation workshops in those two countries, and I must say I really enjoyed my time in both places. The trip was a reminder to me that far too often we are certain of our own views and perspectives, and only when we are confronted with other perspective and other views do we really engage our brains.

I was asked in one workshop if operational excellence was a precursor or a requirement for innovation. For many of you, you know that I believe Six Sigma, Lean and operational excellence can be inhibitors to innovation, because they often become outcomes rather than tools. By that I mean that Six Sigma, Lean and other efficiency programs become more than tools to improve your processes, they become the mantras for success, and anything that runs in contradiction to those programs is a problem that must be snuffed out. However, I can tell you that innovation relies on consistent, well defined systems for success, for several reasons.

First, innovation often means creating something new – a new product, service or business model. Most firms don’t have processes for the “new” – they have processes for what exists. Since businesses are optimized to work on processes, they can easily handle the existing stuff, but quickly falter when working on the “new”. A company needs well-defined processes for new stuff, as well as for existing stuff.

Second, assuming the firm can embrace something new, people need definition and instruction on what to do with a new idea. Certainly it can’t be handled in the existing processes, so a new process must be defined, or perhaps the team can simply handle it as a one-off. In our experience the “one-off” creates far more work and faces far more uncertainty than necessary.

Third, since innovation requires change, risk and uncertainty, the team can relieve a lot of that uncertainty by following clearly defined processes. While the ideas may be risky, the processes and pathways CAN be well defined, but in most firms we have risky ideas following poorly defined – if defined at all – development processes. The worst of both worlds!

So, this poses an interesting dilemma. While it’s often the case that Six Sigma, Lean and operational excellence can pose roadblocks to innovation, it’s also the case that innovation requires excellent processes and systems to succeed. What is required is a good balance between the objectives of the programs like Six Sigma or Lean, which should be to optimize the process and make it effective and efficient, and the objectives of innovation, which should be to bring interesting new ideas to market more quickly. Good ideas can’t be commercialized if they can’t move through the organization effectively, which means innovation will rely to some extent on well-defined processes and systems.

However, the cultural attitudes that pervade Six Sigma and Lean must allow for radical and disruptive ideas to flow through the effective and efficient processes. Operational Effectiveness should be a tool, not a religion. Innovation should be an enabler to business outcomes, not an outcome in itself. If we keep the appropriate perspective on both operational excellence and innovation, they can support and sustain each other and further the cause of greater profits and lower costs.

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GUEST POST from Jeffrey Phillips

I recently conducted an innovation workshop in Kuala Lumpur. The energy and enthusiasm for innovation from firms that attended is really impressive. We had attendees from Malaysia and Thailand, as well as from Sudan. For all the firms represented, innovation represents a method to drive new differentiation and new revenues based on new products, new services and new business models.

It’s interesting to see how quickly firms of all types and all industries, in all regions, are understanding the importance of innovation. Whether it was an oil and gas company, a research firm, a cell phone provider or a firm that offers outsourced software development, all understood the power that innovation offers their business and the possibilities for future growth.

As I mentioned in my previous post, while they all understand how important innovation can be to their businesses, they also face some of the same constraints that innovators face in the US and Europe. Bosses who talk about innovation but don’t provide resources, competing priorities, cultures attuned to operational excellence rather than innovation face these innovators – here and across the globe.

Given the energy, excitement and enthusiasm here, though, I’m willing to bet we’ll see a lot of innovation from Malaysia, Thailand and other countries in Southeast Asia. The energy and dynamism is palpable, and change seems almost inevitable. These countries are ones to watch, as they strive to stay abreast of their larger neighbor to the north, and as each becomes a cross-roads for people and ideas.

There’s a strong belief that good innovation happens when many ideas or cultures meet. Malaysia, Indonesia, Thailand and other countries that welcome many people, many cultures and many ideas will be the starting points for many new ideas, as many people and many cultures mix.

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