Author Archives: Jeffrey Phillips

About Jeffrey Phillips

Jeffrey Phillips thrives at the intersection of strategy, sales, marketing and innovation, and enjoy helping companies grow and find new opportunities or create new products. Jeffrey also teaches part-time at SKEMA US, leading graduate level classes on strategy, new product development and digital marketing and is the author of “Make us more Innovative”, and innovateonpurpose.blogspot.com.

Brexit as an Innovation Opportunity

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GUEST POST from Jeffrey Phillips

I rise neither to praise the British exit from the EU or to condemn it. There are plenty of people on both sides of the issue who will praise or condemn exceedingly well. The British people have either fallen for a terrible lie or rid themselves of a burdensome bureaucracy.  This will either be excellent for the UK or terrible. Right now the markets are asunder because they hate uncertainty. Once the rules and process are understood and the actual outcomes are clearer, things will revert to a more normal condition. Which is what we as innovators should attempt to avoid.

In the US, many politicians are enamored of the saying that “you should never let a crisis go to waste”.  They say that because most people don’t especially like change, but a crisis may demand change. And when the crisis demands change, politicians, and their constituents should get all the change they possibly can before the crisis ends or is simply part of the social fabric, and people no longer clamor for change.

No matter how much people may dislike the status quo, they often fear change even more, which is why real disruptive and discontinuous innovation is so rare. It’s much easier to rail about the things we don’t have, the freedoms we lack, and so on then it is to encourage people to adopt new ways of thinking and behavior. Until a major crisis sets in and all the existing rules seem to be broken.

Innovators understand this implicitly. The amount of energy required to convince people to try out new products or ideas, and further the amount required to get them to switch allegiance from one product to another is rather daunting. Geoffrey Moore didn’t call it “the chasm” for nothing. Early adopters are easy to win but represent less than 10% of the population. The early majority, on the other side of the chasm, requires a lot more than a shiny new idea in order to switch. So we either expend an awful lot of energy convincing the early majority to switch or we move the chasm and force the early majority to make decisions. Which, perhaps unintentionally, is exactly what Brexit has done – moved the chasm and made the old rules and ways of governing untenable.

While the politicians and the established governing classes run around debating the future of the EU and what this means to the economic systems of the world, some really smart innovators should be waking up to the fact that now is an excellent time to innovate the way we govern. The UK, by the way, is used to this disruption. From the Magna Carta to the imposition of a Parliament to restrictions about the King’s prerogative, the English have remade their governing bodies many times, often in the face of adversity or conflict.

In fact, it should come as little surprise that Brexit happened because it’s kind of in the nature of the English to reject a distant, demanding governing body.

What we should be thinking about now is less how to put the broken eggs back together again, and more about how to use this instance to innovate the structure of government and how we intend to provide good governance to the people in the UK, in the EU, and more broadly what this event means in a global context.

There are a number of players involved, each of whom have opportunities to innovate.  Most clearly is the UK itself.  Where does it see itself on the global stage? What role does it want to take?  How do the people want to be governed? One could easily imagine that the people in the UK regain a lot of sovereignty that was delegated to the EU, and by gaining that further reject any involvement from the existing monarchy. Or, we could see a continuing devolution, where more and more power is moved from London to the regions and to Scotland, Wales and Northern Ireland.  As Labor is in shambles, the Conservatives are without a leader and the UK and EU are without a plan, real innovation could happen in how the UK governs itself.  This is the time for divergent thinking, testing different ideas and innovating the governance.

While the UK is doing those things (which as I noted come more naturally to the English) the EU should be doing the same things.  As Einstein noted, doing the same things over and over again and expecting different results is the definition of insanity. The EU was originally built to build closer ties between countries like Germany and France, specifically to curtail warfare and build a common market.  Much of that has been achieved.

Now the question is: will Europe become a SuperState, much like the US, where the countries take on subordinate roles to the EU governance, or will they continue to enjoy free trade but regain some individual sovereignty?  Why should Spain and Italy belong to the same union, with the same rules, as the Netherlands and Germany?  Perhaps we’ll see regional behemoths emerge, which same common culture – one could even imagine a Mediterranean country formed from Spain, Southern France, and Southern Italy, while Northern Italy, Austria and Germany link up due to shared goals. The EU need to consider its value proposition and innovate its governance models – now is the time to do it. The real question is:  where are the people with creative, innovative ideas about what governance should do and what its structure and benefits are?

More broadly, all governments should look at the Brexit and begin to think about what it entails. As people gain access to more information and more connectivity, they are able to compare their lives with the lives of others in other countries. It’s no wonder that people in Syria pick up and move to Europe, because the Europeans have lost interest in trying to help solve problems in the Middle East, and the Syrians and others understand the standard of living in Europe is much higher than at home. This could suggest that increasingly arbitrary lines on a map drawn after the First War (thanks Sykes and Picot) mean little to people who seek out a better life. These places have rarely been governed well, and increasingly aren’t governed at all.  People don’t want to belong to these countries but instead belong to tribes, clans or religions. The “state” such as it is, matters when it can provide services and benefits that are more attractive than those provided by clans or religions.

In fairness there are some experiments underway, including the concept of universal basic income in some pockets in Europe, which is simply the state providing the funds it would have spent directing people to specific activities, instead simply providing the money and getting out of the way. Both a bit autocratic and libertarian at the same time. Following this train of experiments, we can imagine countries that provide nothing to their citizens other than safety and a sound currency (what China is trying to do) or countries that basically offer a guaranteed floor of food, clothing and shelter (universal basic income) with little to no promise of advancement. These offerings seem to lead only to an increase in inequality, but time will tell.

In the US, instead of innovators and experimenters, we’ve managed to reduce the race to a person who seeks to maintain the status quo in the face of significant change (Clinton) and a person with no fixed outlook or policy (Trump). The first will resist the change and innovation that is clearly necessary, and the latter will chase any emerging issue, regardless of its value to the populace. At a time when we could dramatically rework and rethink our own governance and our relationships abroad, we have the two worst political candidates to take advantage of the emerging uncertainty and innovation opportunities.

This is a crisis that may go entirely to waste, when just a few innovators could make all the difference in how we govern each country, and increasingly how we stake out relationships across the world.

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Muhammad Ali: an analogy for innovation

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GUEST POST from Jeffrey Phillips

I’m a sports guy.  I like all kinds of sports. Grew up playing baseball, football and running track. When my kids came along naturally they adopted other sports than the ones I was familiar with so I’ve learned to “love” swimming and soccer. If you know swim meets you’ll appreciate the joke we pass around our family: I hope my last day on earth is at a swim meet because they never end.

I grew up in an era where boxing was first a BIG DEAL, full of outsized characters, but eventually became a pariah, because boxing can be so brutal and bloody. No boxer (at least not one played by Sylvester Stallone) commanded more attention and moved people more than Muhammad Ali. But, we come to praise Ali and not to bury him, as we remember his contributions to sport and to the way we live. Today I’ll argue that Ali embodies innovation, and his life is symbolic and perhaps an analogy for what innovators live and do. Consider:

  • Ali was born an African American in Kentucky during segregation and was a boxer by the time he was 12.
  • He refused entry to the draft during Viet Nam, ensuring the rage of many of his fans
  • He converted to Islam under the instruction of Malcolm X, becoming Muhammad Ali
  • He could “float like a butterfly” at a time when heavyweight fights were toe to toe slugfests
  • While he had a powerful punch he could take punches as well, creating the rope-a-dope fighting style to wear out opponents
  • At a time when most heavyweight fighters were stoic men of few words, Ali was his own publicist. He held his own with Howard Cosell, something few men could do.
  • After a lifetime of fighting, he became a figure beloved by many for his actions to help his fellow man.

I’m not Ali’s biographer, but it seems to me that Ali chose a different path in every opportunity, choosing to break with convention and to reinvent himself, his sport and if it’s not too much to say so the American experience. Ali invented or perfected a lot of new boxing techniques but also was a master of people outside the ring as well. Yet every break with convention led to difficulties.

His choice of a new religion, especially under Malcolm X, was problematic for many. His rejection of the draft was respected by younger people but rejected by many older people and many of his fans. His brashness and outspoken behavior went against the mores of the time when there was still a lot of oppression of the African American community. In all of this Ali demonstrates the traits and potential outcomes of an innovator.

He created his own path, often to his own betterment and eventually the betterment of others. His decisions we often misconstrued or unpopular, going against convention. He had confidence in himself when others doubted his purpose. He suffered for his decisions – losing several years of boxing during his prime because of his decision about Viet Nam.  Hundreds of boxers, other sports men and women, and entertainers in general, owe a debt to him that cannot be repaid because he created a completely new way to interact with the public. A man who had a lot of promise and who was constantly counseled to stay on the straight and narrow often took his own path, often bearing the burden of creating something new, seeing things that perhaps others could not see and maintaining confidence in himself.

A man who was often despised for his decisions in the moment, who stayed true to himself and his beliefs and who became beloved for his life and his actions. If this isn’t the experience of many innovators I’m not sure what is. Bill Gates and the guys from Google may have had a shorter run to fame and riches, but they experienced the same ups and downs along the way, working undercover in a technology lab. Ali did all that they did in a dangerous sport, in the public eye. He’s proof that innovation isn’t just about new products, but about creating new experiences and new ways of thinking about life.

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Can You Teach People to Innovate?

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GUEST POST from Jeffrey Phillips

One of my recent pet peeves is the proliferation of education options for innovation. One of my alma maters offers a “certificate” for innovation management.  While I cannot comment on the course, it is taught by two professors with little private sector experience who haven’t created a product. One of them is a psychology major, which I guess makes sense because innovation is often the product of new or unusual insights or perspectives.

You’ll forgive me for a startling lack of enthusiasm about many of these “educational” offerings.  There are several reasons for my skepticism:

  1. Innovation is strange, unusual work, very different from what most people do day to day
  2. It doesn’t require great insight or difficult tools, but does require working against considerable resistance in existing cultures and customer expectations
  3. You don’t educate someone in “innovation”, you educate them in a set of tools, expectations, perceptions and beliefs.  The combination of these factors enables innovation to occur.
  4. No matter how much you train people, they can only implement the tools and techniques if they are allowed to
  5. There is no commonly agreed innovation standard.  Perhaps the closest anyone has come is in Creative Problem Solving, which I would think is probably the best answer to innovation training.

We are what we do repeatedly

It is in our nature as corporate employees and those that serve them to follow well-trodden pathways.  One of these well-trodden and expected pathways is to “train” people on new tools and methods when introducing a new project or capability.  Most people in organizations are paid handsomely for their deep experience, and that’s what they deliver every day.  When forced to confront new thinking and new tools, most will demand training to assist them to provide more expertise.  However, since most innovation is “one and done”, the vast majority of people don’t regularly exercise their innovation skills and experiences.  Thus, training is often ineffective because the tools that are learned aren’t regularly engaged in consistent, repeated innovation activities.

The complete lack of standards

Imagine a world where every automobile had a different type of engine.  Your one goal in life is to become the best auto mechanic, yet every car that drives into your shop has a different engine. Some are four cylinder gasoline engines.  Some are eight cylinder diesel engines.  Some are hybrids, some are electric, some are powered by natural gas.  In this world you’d respond by becoming a virtuoso in one type of engine, say compressed natural gas engines, or you’d hire a plethora of people who could reasonably address a wide array of engine options.  Such is the nature of innovation activity today.

Without an agreed standard, and considering the wide array of potential outcomes for innovation (incremental to disruptive, products, services, business models, experiences and channels to name only a few), there is no one way to do innovation, and so many variations as to make training impossible, except in very narrow capabilities or tools.  I suspect it’s probably possible to become an expert in Voice of the Customer techniques, but this is simply one of several ways to get customer insight, which is just one of several phases of a complete innovation activity.

A completely new way of thinking

Innovators argue about the metaphor of “inside the box” thinking.  Some believe that using the concept of “inside the box” is helpful because innovation is always bounded by constraints.  Others believe that the concept of a “box” is difficult, getting outside the box helps expand possibilities and introduce adjacencies.  Innovation is enabled by specific tools (trend identification and analysis, scenario planning, customer insight generation, open innovation, idea generation, prototyping, etc) but give me a person with an open, curious and inquisitive mind and I can move the innovation world, even without any of the other tools.  A careful, cautious plodder who is deeply immersed in all of the innovation tools, who has every “certificate” known to man but cannot release the thinking bonds that constrain them is worthless on a true innovation exercise.  They are people who know everything and can apply nothing because their horizons are too small.  Good innovation requires the courage to conduct new thinking, explore new opportunities, question the status quo.  In fact that’s what innovation really is, questioning why we do things the way we do, and seeking opportunities to radically reshape how and what we do, to the benefit of customers and ourselves.  If you can’t think differently, all the training in the world is useless.

Born, or Made?

Now, if you are still with me, you might be thinking that I am going to make the argument that innovators are born, not made.  You’d be wrong on that point.  There is no innate innovation gene, although clearly some people have more interest in exploration and discovery.  Some people are more creative than others.  Some people are really good at dreaming up new stuff.  That’s all true as far as it goes, but neglects the fact that creativity and exploration must be linked to rationalization and implementation of the good ideas in order to solve a problem for a customer and to make money.  Innovators aren’t born but they are shaped, more by experience than by training.  Of course we can provide some training in any tool or technique, and try to enlarge the way people think when they encounter an innovation exercise.  But the best way to make an innovator is to give them an intractable problem and remove the constraining barriers.  Encourage them to think differently and come up with novel ideas.  And, once they’ve done that, do it again.  We can make innovators, but not just by training, but also through engagement.  Innovators are workers who get their hands dirty.  Does your certificate come with some washing up powder and examples of the innovations you created?  If not, you are an observer of other people’s innovation, and need to do some work of your own.

Can you teach people to innovate?

The answer to this question is:  no.  You cannot teach people to innovate.  You can teach them tools and techniques like TRIZ or trend spotting.  You can teach them process methodologies that lead them from customer needs to ideas to prototypes to customer validation tests.  You can teach them to think about innovation outcomes that are more disruptive or radical than incremental change.  You can show them Doblin’s Ten Types model to help them think through the potential outcomes of an innovation activity.  But until they understand that innovation is a holistic implementation of all of these factors, and requires them to release their fear, uncertainty and doubt, you are hammering jello to a wall.  It will not stick.  The wall must be removed as the knowledge is applied.

People can innovate.  What we can do is accelerate, simplify and make their innovation activities more productive and efficient through tools and techniques.  But what we cannot do is remove fear, uncertainty, corporate constraints and a lack of executive commitment.  We cannot force organizations to sustain innovation activities so the work is repeated until it becomes familiar and eventually second nature.  So the real question is: can we teach organizations and corporate cultures to innovate?  We know the answer to this is yes, but few companies have the time and patience to make the change that’s necessary.

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Beware of the ‘Hypenated’ Innovation Trend

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GUEST POST from Jeffrey Phillips

Devaluing Innovation with  Obfuscation

It’s almost inevitable that innovation will grow to become an amorphous blob of ideas, techniques, processes, “experts”, software and a host of other things.  It’s the natural order of economics that when an opportunity is available, everything rushes in to fill the vacuum, and as the market becomes crowded various offerings must differentiate themselves from the others to demonstrate value.

It’s like this with cheese, wine, beer (remember when there was only Budweiser and Miller?  Now you can have chocolate beer, artisanal beer, birch beer, pumpkin beer, beer from the mountains, from the coast, etc) and a host of other products and services.  Unfortunately, we are reaching peak innovation offering, which means we’ll soon see the dreaded ‘hypenated’ innovation offering.  We’ll know we’ve reached peak innovation insanity when someone writes the “Chicken Soup” for innovators souls book.  Coming soon to a bookstore near you.

This slight rant of mine was started when I saw a new software application talk about its ability to help its clients in agile lean innovation.  Agile is a word adopted from software development, which is really just about stripping away a slow, steady development process replacing it with short “sprints” to complete a few features at a time.  Lean is about stripping away unnecessary assets to focus on doing the most with the least.  In case you haven’t been around innovation very long, few innovation activities have too much funding and staff.  Most are already lean, but not intentionally.  And most are already sprints, because the people involved have other jobs they need to get back to. So the software purports to assist innovators in what they already do.

We can expect to see much more of this – the unintentional obfuscation of innovation.

As we pile on more modifiers and adjectives to define and differentiate innovation, we ought to take a moment to remind ourselves that the basic idea – developing interesting new products and services that fill a need that people have, and that those consumers want to buy – is not yet fully understood and incorporated as a strategic endeavor in many companies.  Sure, executives talk about the importance of innovation, but they don’t really know what it means.  Like the Supreme Court judge said of pornography, he may not be able to define it but he knows it when he sees it.  If the basic concept we are trying to modify isn’t well defined or understood, what’s the point of adding more adjectives and modifiers?  We simply risk creating even more confusion.

The Basics

Innovation, at least in the corporate world, should be defined in this way:

using creativity to create new ideas that address unmet needs that customers have and using those ideas to create new products and services that customers want to purchase, and which create differentiation for the company.

That’s a good, basic definition of innovation, and believe it or not most companies don’t have a common, shared definition.  Once one exists, it’s easier to get people to align behind it.  Only then should we modify the definition by noting that innovation can be incremental, meaning small changes to existing products or services, or disruptive, completely new concepts that radically change the existing market structure or change industry dynamics.

Further, innovation can result in a number of outcomes.  We definitely use innovation to create new products, but also we can innovate new services, new customer experiences, new channels, new value networks and new business models (attribution here of course to Larry Keeley).

Layering On

Once we define what the act of innovation is, and what some of the potential outcomes can be, then we can define the methods of going about innovation – the “how” if you like.  This is where terms like “agile” or “lean” can come into play.  We at OVO often talk about “rapid” innovation, trying to start, conduct and end innovation before the culture becomes aware of the activity.  You can talk about “open” innovation, which is simply working with external third parties to exchange ideas, technologies, intellectual property or other tangible or intangible goods to make or improve ideas.

As your definitions improve and your team grows competency, then you can add complexity to the innovation definition and process, leading to…

Full Obfuscation

Then, of course we can begin to combine adjectives, types and modifiers, so we can expect to see something like Agile Open Radical Customer Service Innovation.  This is of course a combination of process, type, outcome and degree.  The ultimate obfuscation will arrive when experts debate the merits and rankings of various types of highly modified innovation, much the same way as ancient theologians argued about the number of angels that could dance on the head of a pin.

All of this obfuscation is dangerous and does nothing to assist the average innovator or the executive who must make innovation choices and fund innovation projects.  There is no better or worse innovation activity, process or outcome:  each activity should be driven by corporate needs, competitive realities and strategy.  All innovation types and outcomes are viable and necessary depending on the circumstances.  Unfortunately, given all the hubbub and lack of clarity, most decision makers settle for the simplest and easiest innovation type:  incremental product innovation, because it’s easily understood and has little apparent risk.  But what you are doing is making decisions and setting policy based on the least common denominator?

When thinking about the language, definitions and modifiers that clog up innovation conversations, marketing and decision making, remember four important things:

  1. What outcome do we want to achieve:  a little more revenue, or make a significant “dent in the universe”
  2. What is the best method or process for us to achieve that goal:  working internally, working with partners, etc
  3. What type of outcome helps us achieve our goal: new product, new service, new business model, etc
  4. What do we as the leadership team need to do to see that the effort succeeds

If you can answer these questions, you will discover that each innovation activity deserves its own modifiers and adjectives, and the cycle should renew itself each time.

The more attention a market attracts, the more charlatans enter and the more obfuscation will be created.  Innovation, at its heart, is simple, but requires a lot of commitment and courage.  Like scaling sheer cliff walls, those who do it best use only a minimum of trusted tools.  Experts need very little accoutrements when they do their work.  Naive beginners lard up the process with every tool, trick, technique and process.  Go back to square one for greater success.  Beware of the constantly ‘hypenated’ innovation solutions.

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Why Business Model Innovation is so Compelling

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GUEST POST from Jeffrey Phillips

There’s a real sense that we in the corporate world are standing on the brink of an amazing transition, moving from relatively older, static models of competition based on corporate size and mass, to new competitive realities dictated by speed, agility and innovation. For at least a couple of centuries, as we look back over the dominant corporations of the past, we can see that size and scale were the predominant factors.

Whether we think about some of the original corporations (like those that governed the tea trade in India and England) or more modern corporations like the US automobile companies or banks, the prevailing wisdom has been to grow large and use size, mass and reach to defeat other competitors. Embedded in this thinking, or perhaps even dictated by this thinking, is an inherent business model: size matters. By growing large you can distribute costs more effectively, serve more customers from the same basic set of products, scale revenues and introduce efficiencies and command market power and dominate sales channels. In a market where size matters, only a few players dominate and the rest compete for the leftovers.

But as we know, large companies become defensive, complacent and inert, held in place by investments and past performance, overly risk averse. Their size and their business model ultimately become a barrier for new innovation and new growth. The very thinking and models that helped them grow become barriers for further development. And, of course, the models that got them to a specific position aren’t necessarily relevant as tastes, consumers and channels change.

It’s strange to think that Sears was once the largest retailer in the world, and actually made a significant transition from a catalog company (in many respects the world’s first Amazon) to a company that based its model on presence in shopping malls. Now that Sears is relatively undifferentiated, and consumers are no longer spending time at malls, the model based on stores in malls and a highly distributed assortment of low and mid range products doesn’t work. But Sears is locked into a business model that is exceptionally difficult to change. They can’t pull out of mall stores overnight. What was once promising as a model is now driving Sears toward a disaster.

This is both the promise and the danger of business model innovation. Commenters and consultants talk blithely about business model innovation as if existing companies can readily and rapidly change their business models on the fly. For existing companies, business model innovation is important, if for no other reason that change is more frequent and more disruptive, which leads to the invalidation of old models. Existing companies must learn to balance the efficiencies gained from existing models and the ability to constantly evolve their models to new competitive realities.

When we talk to clients about innovation, we like to say that we’ve got to build the plane while we are flying it. There’s no other option, and this is especially true for business model innovation. Sears cannot suddenly change its business model, abandoning stores, abandoning faithful customers and vendors. If you want to see how that plays out, go look at JC Penney’s attempt to innovate its stores and eliminate coupons and discounting. That experiment lasted only a year or two before Penney’s brought back its former management team.

Penney’s experience doesn’t suggest that you shouldn’t innovate your business model, only that you can’t suddenly change it and lose good, faithful customers who don’t understand the change. Business model innovation is something every company should be constantly experimenting with, and communicating to its employees and customers why these experiments are taking place and what changes they are expecting and planning for.

Business model innovation is so compelling because it is so unusual (at least to date) and so powerful. We can look at examples like iTunes, NetFlix and Airbnb as real business model disrupters. We can also note that every one of these was a new entrant into an existing industry, not bound by convention or past investments in the industry. Does this mean that incumbents should ignore business model innovation and simply wait to be disrupted? Absolutely not. In fact, many of the “innovations” that these disrupters introduced were opportunities that existing incumbents could have addressed but ignored.

Take for example Airbnb. What Airbnb offers is a reservation system to allow you to rent a vast array of properties, none of which they manage or own. But Marriott and Hilton don’t own many of the buildings they brand, and their reservation systems work just fine in those locations. What would have happened if Marriott or Hilton had expanded the definition of accommodations to include renting rooms or condos in the same way that Airbnb does? After all, the hotel chains have a captive audience who trust their branding and want points. It’s not such a stretch to think that Marriott or Hilton or other trusted, established brands could have done what Airbnb did. And this is only an example of a business model change that expands the opportunities, rather than a change like Netflix that completely disrupts the existing model and market.

Business model innovation is so compelling because it is so difficult for existing companies, but that’s not a reason not to do it. Existing companies should be examining their business models and understanding the impacts of business model innovation. Which innovations expand the market and model (like Airbnb)? Which disrupt or destroy the market (like iTunes)? What can/should we do to evolve, adjust, modify and move our models? Where are the testing grounds? How do we experiment with new models before the old models come under attack or become obsolete?

The real challenge is that most companies are barely cognizant of product innovation, which has its own challenges but isn’t as difficult or compelling as business model innovation. This is akin to going directly to high school, skipping elementary and middle school, foregoing the education and experience. Again, that doesn’t mean business model innovation should simply be ignored, because the pace of business model innovation is increasing as we get better and better connectivity, better payments tools and platforms and better information management and data analysis. These platforms will allow completely new business models, and will shift existing competition very quickly.

In fact, business model innovation is a lot like a terrible accident on the road, so heartbreaking and sad that you can’t look, and so compelling and awe-inspiring that you can’t help but watch. We need to get off the sidelines and get involved with business model innovation, but not in the way you’ve been told. Every company needs to start defining its existing business models, understanding potential weaknesses that can be exploited. They need to start experimenting with new business models and understanding new technologies and platforms. It’s naive and wrong to assume that established business models will sustain. Those that understand the impending changes and put in place the capabilities and mechanisms to experiment, learn and adapt will be the ultimate winners. Subscribe to Human-Centered Change & Innovation WeeklySign up here to get Human-Centered Change & Innovation Weekly delivered to your inbox every week.

Innovation Is Too Easy

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GUEST POST from Jeffrey Phillips

Hmm. I bet the post title got your attention, but of course in this modern age of digital content we bloggers need headlines that pop through all of the noise and gain attention. It helps, of course, that I’m of the opinion that the headline (provocative or outrageous) has, as Henry Kissinger once said, the added benefit of being true.

Innovation, as practiced today in most corporations, is far too “easy” and commercialization is far too difficult. What if that statement were reversed? What if innovation was challenging and difficult, and commercialization were easy? Let’s explore, shall we?

Innovation is easy, commercialization is difficult

Now, let’s get our language straight. When I write that “innovation is easy” what I mean is that innovation as practiced in many corporations is rapid, inexpert and quickly converges on a simple solution. Corporations assign teams without skills or experience, rapidly conduct “brainstorming” exercises based primarily on current opinion or past experience and move as quickly as possible to present a small handful of ideas to a wary executive team. Innovation rarely has the preparation, commitment or effort applied to it to really succeed. To many people, innovation appears to be a couple of meetings where they apply some unusual creativity tools, write some crazy ideas on a flipchart and return as soon as possible to their regular work. Innovation is a vacation from the day to day grind, but isn’t really expected to create meaningful results.

Without training, without skill development, without meaningful facilitation and without a well-defined scope and expected outcome, innovation is easy.

But commercialization is hard in this setting, for several reasons. First, since there’s not a lot of compelling new ideas, the existing products must produce more revenue and profits than initially expected.  Without a good pipeline of new solutions, the old solutions become more important, so companies look for methods to extend product life and add a few new features to existing products. This crowds the product development process and eliminates room for new concepts to enter. Second, since the few “ideas” that do make it to product development and commercialization are so poorly developed and defined, a tremendous amount of product definition that should have been done previously must be done in the product development and commercialization phases. Third, as the product development and commercialization teams get burned by inadequate or poor concepts from the innovation activities, these teams downplay and “back burner” new concepts and focus on existing products.

As long as innovation is easy (and the results are poor) commercialization will focus its attention on existing products and commercialization will seem difficult for innovators.

Let’s now consider the alternative, where innovation is “hard”, and commercialization is easy.

When I write “hard” I mean that innovation activities require careful planning, deep commitment from innovation teams, building skills and doing the work necessary to really generate great, valuable ideas. There is a sense of understanding market trends and competitive actions.  Innovation teams deeply consider customer needs and emerging opportunities. Internal ideas and external intellectual property are evaluated.  Prototypes are built, minimum viable products are constructed and tested. Consumers are quizzed about the solution and the value it provides. Specific product recommendations are made based on consumer feedback, confident ideation and product requirements.

This is hard work, and requires a deep commitment, skilled and trained people, an understanding of the process and the rationale for committing to this work, as well as financial and human resources. Innovation becomes more than a few sessions with a flip chart but an actual planned exercise to come up with game changing solutions, not just a few haphazard and interesting ideas.

If innovation is done effectively, can that make commercialization of the great ideas easier? I’m certain the answer is “yes” because we’ve seen this in action with our clients.  Product development and innovation become simpler for several reasons.

First, a trust reason: product development teams, marketers and others involved in commercialization have far more trust in a product or solution that’s generated from a defined innovation process, which has established its seriousness and its capability. Rather than carefully considering and then relegating ideas to the back burner, priorities are reworked to accelerate good ideas to market faster.

Second, a thoroughness reason. If the hard work is done in the innovation phase, product development and commercialization can do what they are supposed to do in their phase, rather than spend time reconsidering and reworking the product definition and requirements and confirming consumer demand.

Third, a pipeline reason.  If there are really compelling ideas that customers are clamoring for in the innovation pipeline, that can lead to more growth, more revenue and more profit.  This means that executives will prioritize good, new ideas over older, tired existing products.  Every firm wants a fresh, compelling but profitable pipeline of new products and services.  As soon as the “hard work” of innovation demonstrates it can create a pipeline of these solutions, the emphasis will be on accelerating them to market, rather than cautiously testing a small handful.

Resetting Expectations

For too long we’ve humored ourselves that a bare commitment to innovation would produce extraordinary results. You can witness this snide commitment in IBM commercials where entire “innovation” teams were lying on the floor in the dark, coming up with new ideas. Innovation is the most valuable, and probably the most difficult work within an organization, yet corporations constantly undersell the effort, under-staff it and move far too quickly and far too inexpertly. This is why Peter Drucker once said that marketing and innovation produce results, all the rest of business activity is costs.

We’ll know when corporations are serious about innovation not based on their words, but on the emphasis they place on doing innovation right, doing it well and doing it effectively. When innovation teams complain not about how difficult it is for ideas to be accepted, but how hard their executives work them to get the right ideas.

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The Problem with Corporate Innovation

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GUEST POST from Jeffrey Phillips

If that sounds like a pretentious title, you are probably right, but it’s time to start talking about the fact that so many companies simply cannot innovate effectively. Many long standing corporations in the US are simply withering on the vine, unable to respond to changing market conditions, new competitors or changing consumer demands. Past success does not guarantee future success, and by the time many of these firms recognize the need to innovate the opportunity has past them by.

Corporate innovation faces challenges that entrepreneurs can’t fathom. Entrepreneurs often wish they had the people and resources that larger organizations do, without realizing that all those people and resources are already spoken for. Larger organizations lack the freedom and agility that smaller organizations have. Larger organizations are very slow to recognize and respond to major seismic shifts, so comfortable in their day to day operating models. Industry conventions become first defensive barriers and then comfortable blankets, reassuring large organizations that they understand what the customer needs and what the industry will do.

Corporate executives face a really difficult challenge: on one hand they must meet the quarterly numbers, or heads will roll. Yet meeting quarterly numbers means an all hands on deck focus on day to day operations and ever increasing efficiency and effectiveness. Yet on the other hand they are expected to grow revenues, differentiate and create valuable new products and services. The difference is that the payoff for new stuff is all in the future and relatively uncertain, while cost cutting and efficiency is easily understood and implemented, and adds value to the bottom line immediately.

So corporate executives are faced with a couple of important questions. First, how much innovation should we do, and of what type? Second, how do we allocate resources and funds to innovation, and how do we oversee it and manage it? Third, do we have internal capabilities and bandwidth to do innovation, or should we build the skills or outsource the work? Faced with all of these questions, executives are often satisfied with small pilots or distributed innovation activities that may accomplish some incremental innovation but don’t build innovation capabilities or change the operating models or culture of the business. In other words, they are “innovating” but it doesn’t seem to accelerate growth. That’s because where there is little risk there is likely little reward. Further, even if the organization gets better at generating ideas, they haven’t resolved how to commercialize good ideas quickly, due to long decision making and product development processes. It’s not an either/or proposition. To get better at innovation you must design and develop a “front end” idea generation capability and link it to a product or service capability that is better at allocating resources to the best solutions.

Of course this demand for more innovation, and its incumbent investments and implementation timeframes, is happening at the same time as executive tenure shrinks. Executives need to hit the ground running, demonstrate real value in their positions or the corporation will move them on to other roles. Trying to “invest” in innovation capabilities and competencies isn’t a winning proposition when the results may not happen for several years.

So executives are faced with a dilemma: either use expert external partners who specialize in innovation to create new products and services, or build internal capabilities. Both are ripe with opportunity and risk. Outsourcing innovation means that the corporation becomes even more focused on day to day operations and may become blindsided by a new entrant, while paying top dollar for new ideas. Where does the money come from to fund the external innovation consultants? Can the ideas or concepts they generate enter the product development process?

On the other hand, if you try to build an internal innovation capability, that will mean designating staff to focus on innovation, and build skills and methodologies. That sounds a lot like an internal investment that won’t pay off in new ideas for quite some time, and even then may not generate valuable ideas.

So we are left with the classic tradeoff of money (outsourcing) or time (developing internally). Currently, money is cheap and time is valuable, so I believe we’ll see a turn to more and more outsourcing of innovation, which is smart in the short run and terrible in the long run. The more corporations outsource innovation the more insular and protective of their operating models they become. Innovation shouldn’t be thought of as an occasional activity to boost revenues but a consistent internal capability to constantly reinvent both the corporation and the industry itself.

Until executives decide what innovation is meant to do, its role and position within the strategic framework of the corporation, it will have only short term appeal in most organizations.

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Sprinkling Innovation Responsibility Like Pixie Dust

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GUEST POST from Jeffrey Phillips

There’s a fundamental problem in many corporations that keeps innovation from constantly delivering valuable results. The challenge probably isn’t what you imagine. While many of us in the innovation space will point at a lack of tools, a lack of innovation experience, low expectations and significant risk barriers as challenges for innovation, along with a lack of resources and inadequate planning and funding, those to some extent can be overcome. In fact these are all frequently overcome when an executive really needs, demands a new product and prioritizes innovation over the business as usual, day to day operations. But herein lies the rub: who is ultimately responsible for innovation? Who wakes up every day and goes to work knowing that their progression, their compensation and their success is measured on how innovation is accomplished on a day to day basis? The answer in many companies is: no one. And further, even in companies where there are people who are measured on these criteria, they often face the challenge of responsibility without authority, or are in the wrong place in the organization to affect constant innovation. Let’s explore.

“Everyone can innovate”

Let’s dispense with the trite but true concepts first. You’ll hear that “everyone can innovate” which is exactly true and mostly meaningless. Everyone can, and should, have the opportunity to innovate. They can generate ideas and participate in an innovation activity. A corporate culture should reward and encourage this behavior, although most don’t. But even if it’s true that everyone can innovate, the majority of people in most corporations don’t, for a variety of reasons. Perhaps they don’t think their ideas are all that great, or don’t understand how to develop their ideas, or don’t have the bandwidth to manage ideas and their day to day jobs. Further, if the don’t innovate, they don’t really risk anything. Since they aren’t measured or accountable for innovation, since it’s not part of their responsibilities and they don’t have the authority to do it on their own, they can’t be held accountable. You can’t sprinkle innovation responsibility across a broad swath of the company without also dictating some fairly specific measures and goals, and constantly evaluating achievement. When everyone’s responsible then no one is responsible.

The CIO is responsible!

In some companies, an individual has been named as the chief innovation officer, and in many cases he or she is nominally responsible for innovation. While we at OVO believe that a “center of excellence” is important to maintain innovation tools and capabilities, too often a corporate function focused on innovation is either a) too corporate and too removed from actual day to day operations to affect innovation in a product group or line of business or b) becomes an innovation center that generates ideas and solutions that aren’t important or relevant to the product groups or lines of business. We believe that innovation is a competency that must be sustained (hence the center of excellence) but at the same time innovation must be accomplished as close to the customer, or need, or opportunity as possible. Who understands the customer, the market and the opportunity better than the product managers, sales people and others in a line of business? Shouldn’t these people be active in the innovation? If so, what role does the CIO play in a day to day basis for innovation? Can they cause innovation to occur in disparate product groups and lines of business? Note that I’m not suggesting that CIOs aren’t important, just that they must be intimately connected with innovation at the grass roots level and not become an ivory tower. They must encourage innovation, and have budgets to help lines of business or product groups fund innovation activities. But who, ultimately, is accountable for innovation in this model? Either the CIO is, if his or her team is responsible for generating ideas, or product group leaders and business line leaders are, if we are to conduct innovation at the coal face. In the latter instance, the CIO is a funder, resource provider and cheerleader for innovation, but shouldn’t be dictating which projects are conducted. This means many CIOs have a lot of responsibility without a lot of authority.  However, having a common approach and methodology means there’s a greater chance of consistent innovation approaches and corporate learning.

Push it down into the businesses

If you buy into the idea that innovation should be conducted by line of business leaders or product executives, then you could argue that innovation responsibility, authority and accountability should rest with them, and in many cases I think this is actually the right place. Yet today few are measured on innovation, and few believe their executive teams will provide the space and opportunity for innovation. Most of these executives don’t have innovation experience, but they are at the right place with the right level of authority to decide which projects should be pursued and how much change needs to be introduced.

We believe that the more we can encourage these leaders to innovate, the more corporations can devolve responsibility and accountability for innovation to these individuals, and consistently measure their innovation activities and outcomes, the more likely innovation is to take root and to be conducted on a consistent basis. For this to happen, annual and corporate planning needs to change, to develop budgets for innovation at a product or business team level, and compensation and evaluation programs need to change, so these leaders can see how their promotion and progression are tied to innovation. At the same time, corporations need to ensure a relatively consistent approach to innovation, developing methods and processes that can be shared across these leaders. If every business unit leader or product team executive determines their own methods for innovation, you’ll soon have a cacophony of methods and styles, with little consistency and no comparability. Plus, each team will invest in its own set of processes, tools and external agents, rather than sharing tools and costs.

Responsibility, Accountability, Authority

So we’ll argue that the RESPONSIBILITY for innovation should sit where the AUTHORITY is greatest, where leaders who decide what customers to serve and what products to build are found. They need to be held ACCOUNTABLE for innovation by executive management which sets expectations and budgets linked to STRATEGY and growth targets, and regularly review progress against innovation goals. All the while a CENTER OF EXCELLENCE should support and sustain innovation through the development of common tools, methods, training and other activities to provide a common innovation approach for everyone in the company.

As long as there is uncertainty about who is responsible for innovation, and no one is actively measured on it, and no resources or funds are regularly budgeted for the activity, it will be difficult to perform innovation effectively. Pushing innovation down to line leaders or product executives without also developing budgets and evaluation criteria is meaningless. Naming a CIO who is removed from the day to day operations can create an innovation team that is disconnected from the every day work and creates interesting but ultimately ineffective innovation.

Far too many companies spread innovation responsibility like pixie dust, hoping that if they spread around responsibility, many people will innovate. The reality is that most people are far too busy getting their day to day work accomplished, and lack the accountability and authority to do much in the way of innovation, and can’t find the funds, time, resources or tools to do innovation competently. The sooner large corporations stake out exactly who is accountable, who has the responsibility and authority to do innovation, and the expected impact and frequency of innovation, the sooner we’ll see more interesting and more valuable innovation results.

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Innovation Should Change Your Perspective

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GUEST POST from Jeffrey Phillips

I’ve been thinking a lot about innovation lately. Well, I guess I’ve been thinking about innovation for over a decade, but for some reason the thinking has migrated from operational to philosophical. I’ve long wondered why innovation is considered a transactional activity rather than a engaging philosophy or “way of life”.

Too many people view innovation as something to do only in emergencies, when a competitor steals a march and wins new customers or introduces a new product. Otherwise it’s steady on, life as usual, and ignoring or avoiding innovation. I think some of focus on the everyday is brought about by rewards and recognition, some based on the emphasis we place on productivity and efficiency, and some of the perspective is caused by the way we look at innovation, as a transactional, occasional opportunity rather than a way of thinking or living.

Is innovation an interrupter or a way of life?

I was thinking about this recently because I had one of those “shower” moments. It happens I wasn’t actually in the shower – I think I was mowing my grass. But I had one of those minor epiphanies. It went something like this. Why aren’t we more concerned about the role our companies, our solutions and our products play in consumer’s lives, rather than the jobs we can do or the needs we fill? It’s almost another Maslow’s hierarchy, I thought: needs and jobs versus roles. The best analogy I can come up with is the difference between a hammer and a carpenter. A hammer helps me do one or a handful of “jobs”. That hammer can be replaced with others tools as situations warrant, and if the hammer is superseded by another device, the hammer is just an outdated tool. However, a carpenter has a vital role, offering broader solutions and doing more than filling in for just one job. A carpenter has a role to fill with me, creating better solutions, and if I build a relationship with that carpenter, he or she may create a role that sticks with me for a very long time.

We innovators talk about customer “needs” to fill, or using Christensen’s philosophy, “jobs to be done”. But I think we should be thinking about how we become indispensable in the ROLES that we fill in our customers’ lives.

But this requires a new philosophy

Is innovation meant to create new products or services, to fill unmet needs, or to help spot and suggestion solutions that drive to larger value propositions? The answer is yes to all three questions. The real question is: what is our philosophy about working with customers, and how we leverage innovation to drive more value. The vast majority of firms doing “innovation” today are trying to discover new products that solve a customer need. As soon as the customer has solved that need, another need will emerge that we and others will seek to satisfy. You get a little credit for solving a need, but like a tool in the toolbox you’ll need to prove your value proposition all over again when the next need arises. However, if you have a vital ROLE in the customers’ lives, you don’t have to compete with the occasional tools. But to take a vital role in a customer’s life, you’ve got to do more than satisfy one need, and you’ve got to migrate with the customer, or create solutions on a consistent basis even before the customer is aware of the need. This suggests continuous innovation – innovation as a way of life, rather than an occasional interruption from the everyday.

Innovation as a “way of life”

What would it look like if innovation was a “way of life” in your organization, rather than something strange and unusual that is thrust upon the organization periodically? Rather than resist innovation, it’s unusual tools and methods, your teams would gladly embrace innovation activities. They’d be comfortable using the tools and methods, and understand the rationale and scope of effort. They wouldn’t see innovation as a disrupter of regular processes, but a “way of life” and “how we do things around here”. This would mean, for many companies, a rethinking of the culture and perspectives that people have about their work, and their skills.

Clearly we’d need to understand how quickly innovation is occurring in our target segments and markets, and we’d need to match or even innovation at a slightly faster pace, constantly evolving but also anticipating the sudden forks in the road or disruptions that require an entirely new product or service. We’d also have to recognize that innovation is more broadly based than we like to admit, and we’d create new channels, new customer experiences, new business models and other solutions as readily as we create new products.

3 Philosophies on Innovation

What’s your team’s philosophy on innovation? There are really only a couple of answers. First and worst, that innovation is risky and someone else should do it. We’re “fast followers”. Abandon hope, all ye with this philosophy.

Second, and somewhere in the middle, is the recognition that innovation is important, but encounters resistance because it interrupts a really nice operating rhythm. We know we need to innovate, but gosh darn it we can’t find the time, and only innovate in emergencies.

Third, and frankly few firms are here yet, is a philosophical leap. We view innovation as a “way of life” and our teams have adopted this perspective. They believe that innovation is important, and is at least as important as good operating rhythm. We want to innovate consistently and take on an important role in our customers’ lives, not just settle for solving occasional needs or jobs.

If you buy into this philosophical change, your next question should be: OK, how does a leopard change its spots? How do we change the way our folks think about innovation? How do we adopt this idea of innovation as a way of life?

The simplest answer is: it’s complicated. Not because it’s necessarily difficult, but because it takes a long time. The message need to come from the top and be constantly reinforced. People need to see resources and dollars flowing to projects and activities based on this philosophy, and they need to see that over time, and in every corner of the business. You can’t expect to change the dominant philosophy with one project, in one small corner of the business, while everyone else ignores the activity or pretends it isn’t happening.

I’ve said it before but it bears repeating. Either innovation changes you, or you change innovation. The latter outcome dominates and causes so much of the grief that innovators feel.
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Train, Apply, Repeat

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GUEST POST from Jeffrey Phillips

So the question of the day is: can innovation be learned, or “taught”? The underlying assumption is that innovation is inherent, a creative spark that one is either born with or cannot hope to possess. The rationalist in all of us considers this unusual and unfair. Certainly everyone can “learn” to innovate, no?

This begs the question of whether innovation is simply a skill reducible to practice, which can be taught through instruction, application and repetition, or whether innovation is mystical and poorly distributed capability that few possess and even fewer can learn. And, to paraphrase Henry Ford, whether you believe the former or the latter, you are probably right. That is, if you believe that innovation is a capability that you simply don’t possess, then no amount of education or training will change the fact that you’ll struggle to innovate. If you believe that you have even the smallest spark of innovation capability, training and instruction will only magnify the skills you have.

But the real question should be not whether we are innovative or not, but how we can become more innovative. That is, let’s accept that we all have some spark, some inherent creativity or innovation potential. Once we accept that concept, how do we become better innovators? Is education enough? Can we find good training? What does it take to build and reinforce the skills so we become better innovators?

I’ve hinted at the answer above: instruction, application and repetition. No one becomes good at any vital skill without all three components. Sure, Mozart sat down at the piano and was a virtuoso from the start, but those types of savants are few and far between. You will need initial instruction, to learn the tools and techniques, as well as the necessary perspectives and mindsets. You’ll need to apply what you’ve learned to reinforce the tools and try them out. And then you’ll need to consider your successes and mistakes and repeat the process until it becomes second nature.

This is where basic “innovation training” gets it all wrong. Plenty of firms are popping up everywhere offering innovation training – over the web, in classrooms, instructor led or self-paced. Absolutely nothing wrong with getting training on tools and techniques, unless that training isn’t reinforced with application. Imagine learning to hit a baseball by reading about it in a book, but never going to the batting cage. That’s what a lot of innovation training looks like. Academic information with little practical application. We at OVO believe in innovation training – we believe that everyone has the innovative spark – but we practice “JIT” training. That stands for Just In Time. This allows us to deliver innovation training in the classroom days or weeks before an innovation team will attempt to use the tools in a real innovation project. Offering the tools and techniques without practical application means the concepts will be lost very quickly, as people turn their attention to their “day jobs”. Innovation training is a side show, and what little information is presented is quickly lost.

There’s one final component to real expertise in any subject or skill, and that’s repetition. Take our batting analogy. A good batter hits hundreds of baseballs a day, every day, under a lot of different conditions, in order to improve his swing. He watches film of his at-bats to identify weaknesses in strikeouts and good swings when he connects. He learns from mistakes and constantly repeats the skill, growing in confidence and moving from needing to think about the technique until the technique becomes second nature. How many of us can claim that innovation is “second nature” when we practice it so infrequently?

Instruction, application, repetition. If you want to “learn” innovation and grow in proficiency, these are the steps. As in many other facets of corporate business, we place far too much emphasis on the gathering of knowledge, and far too little on the application and repetition. And then executives wonder if “anybody here can play this game”.

So I come not to bury innovation training, but to praise it, if innovation training is followed rapidly by actual innovation work to put the tools just learned to use, and if the innovators themselves have the opportunity to try, to fail, and to repeat their innovation work. Everyone can be innovative, but few have the staying power to make it through the entire process.

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