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.

Why Corporate Culture is Important for Innovation

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GUEST POST from Jeffrey Phillips

A few days ago I wrote a post about why “environment” matters for innovation. Today, in a continuing series of posts, I want to take a look at why corporate culture is such a vital barrier or accelerator for innovation. I’m writing these posts to continue to expound on the Innovation Workmat series of articles Paul Hobcraft and I published a month or so ago. Those articles suggest that executives have a key role to play in building an overarching framework for innovation in any organization that hopes to succeed at innovation.

Corporate Culture

Corporate culture exists at the intersection of corporate memory, corporate history, business context and operational effectiveness. Corporate culture is what defines what a company is, why it does what it does, and in many ways sustains a presence and a facade to the outside world. Corporate culture is what directs how people work and think, what creates tangible and intangible restrictions, establishes risk tolerances and sets attitudes and behaviors. There’s probably no more powerful intangible force in any business than corporate culture.

Corporate culture can be a positive, when it reinforces activities and thinking that matter. 3M survived a CEO who attempted to introduce GE style thinking, and remained fairly innovative in the face of stack ranking and Six Sigma efficiency focus, mostly due to a long organizational memory and a strong innovative culture. They don’t say “culture eats strategy for breakfast” in jest.

Toxic Culture

The challenge in many firms, though, is that the culture is not based on an organizational memory of successful innovation, but on an organizational memory of tooth and nail survival. When the culture adopts and sustains short term thinking, incremental improvements and an aversion to risk and uncertainty, it can be difficult to introduce even modest incremental innovation concepts, never mind larger disruptive innovation or the risks associated with “open” innovation. And, since corporate culture is largely intangible and made up of attitudes, behaviors and past experiences, it is exceptionally difficult to change. That means that the firms that often need innovation the most face corporate cultures that are the least open to change. Firms that have viable corporate cultures that help them sustain operations in a competitive space often find those cultures are resistant, or even worse, toxic when it comes to making the significant changes necessary to embrace innovation.

What is an “innovation” culture

A culture that sustains and supports innovation is one that encourages reasonable risk and uncertainty in the goal of larger, more profitable products and services. It is a culture that is based on experimentation and discovery, because many good ideas or insights exist outside the corporate boundaries. That suggests as well that innovative cultures have porous boundaries – people, ideas and concepts flow into, and out of, the organization constantly. Innovative cultures understand that generating and developing new ideas is an iterative discovery process, which isn’t perfect and certainly doesn’t always create the product or service that customers want. Innovative cultures also understand that when failure occurs, rather than sweep the failure under the rug, the firm attempts to extract learning and new insights so that the “failure” leads eventually to a new success. Innovative cultures understand intrinsic reward systems, encouraging innovators to work on their ideas and to stay involved and engaged. They don’t “pay people for ideas” but recognize involvement is its own reward. Innovative cultures sustain innovation as a way of operations, rather than thinking of innovation as an occasional, sporadic process. Innovation cultures welcome different points of view, different perspectives and seek to association disparate ideas and technologies into new products and services. It will be rare to hear someone in an innovative culture say “we’ve never done that before” as a way to shut down ideas – rather, it will be considered a challenge worth pursuing.

How do we shift an existing culture

Corporate cultures respect Newton’s laws. They like to remain at rest, comfortable in their inertia, and will remain that way until acted on by a powerful force. Likewise, culture will resist the change force as a matter of course. That means that to change a culture you need constant force in a positive direction for a long period of time. This means that change to a corporate culture must be slow and steady, and the best change is change the culture wants to make, not feels forced to make. This means change begins by creating a vision about the future and telling a story that the culture can adopt. Once the culture and those individuals who keep and shape the culture believe the story, they will work to weave the new story into the fabric of the existing culture. Factors like what is recognized and rewarded, what executives say, and well as what they do, matter. Early in the shift, the culture will examine early successes and especially early failures to see what is rewarded and what is buried. Actions speak louder than words. Saint Anthony of Padua said it best: Let your words teach and your actions speak. Shifting a culture requires a significant commitment from senior leadership, but also buy-in from the people who are keepers of the culture. These are the people who collect and tell stories about the culture and reinforce the culture through their decisions, commitments and investments.

The three “R”s

We often talk about the three “R”s when shifting a culture:  reward/recognition, recruiting and retraining. If we want people, and therefore the culture, to do new things, we need to improve the skills and capabilities of the people who are on board (training) and recruit new skills and perspectives to help the company and the culture think in new ways (recruiting). Which is why your human resources or talent management team must be a vital contributor to the work of changing the culture. Recognition, rewards, evaluation, training and recruiting are all activities they are actively involved in, and which influence the corporate team and the culture.

How long does this take?

We are constantly asked by clients – how long will it take to change the focus and intent of our culture, to make it more innovative? This is not a change you can force in six months. After all, your corporate culture has been constructed and reinforced since the business began. You can’t simply whipsaw a culture in a new direction and new focus in a few months. GE famously attempted to shift from Jack Welch’s priorities (Number one or two in an industry or out) to Jeff Immelt’s (more innovation) by establishing corporate innovation funds to the tune of several hundred million dollars. In the first year of funding, not one business unit accepted the innovation funds, because the existing culture that Welch left was so predominant.

The answer is: it depends. It depends on the continuity and focus of the executive team. It depends on the vision you create and how the story associated with that vision is reinforced and propagated throughout the organization. It depends on how the people who are the keepers and reinforcers of the culture are willing to change and adapt. It depends on how risk and uncertainty is tolerated, on how open the organization is to change. It depends on introducing new perspectives, new skills and new techniques. It won’t be fast, but it can be effective.

Corporate culture is the most powerful and most intangible barrier to innovation. Place Thomas Edison or Albert Einstein in a corporate culture that resists innovation and we wait another decade for electric lights or special relativity. A good idea in a resistant culture is a scream in a vacuum. It simply won’t be heard. As an executive, a leader, a manager who wants more innovation, there’s no more important aspect to focus on, and none more difficult to influence. Nailing jello to a wall is probably an adequate metaphor. But it must be done. You can’t sustain innovation without changing the culture, and your business can’t thrive without sustained innovation.

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Why Environment Matters to Innovation

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GUEST POST from Jeffrey Phillips

I’d like to write today about the concept of environment, and why it matters so much to innovation. This blog post and others that will follow are meant to expound on the Innovation Workmat that Paul Hobcraft and I developed and published in Innovation Excellence. Within the “workmat” we identified 7 domains that executives and senior managers can influence which accelerate or limit innovation. One that I’ve dealt with recently, even this week, is the concept of “environment“.

In this context, environment has several meanings. The first is obvious, the environment in which you work. Is the physical environment conducive to innovation? The second context is the intangible environment erected by your corporate culture. This creates barriers and limits to thinking, to risk and uncertainty. Does your intangible environment block innovation? The third context is an internal/external environment.  How “far” does your environment reach? Do you have extensive interactions and networks with external partners, customers and prospects? The fourth context examines the fluidity of your environment. Does your organization have porous borders? Can you find a good idea or technology outside the boundaries of your organization and bring in “inside”?

Physical Environment

If physical environments didn’t matter to the human condition then we’d all live in the most simple, unadorned caves. Designers, architects and people concerned with interior design, spaces and human interaction understand that spaces and environments impact the thinking and behavior of the people in the environment. A dull gray regimented environment leads, more often than not, to dull gray regimented thinking. I had the chance to lead an innovation session with a client this week in a space purpose built for creativity and innovation. Several of the people commented as they entered the space “I feel more comfortable and creative already”. Their work environment (where the environment is built for efficiency) doesn’t support or sustain creativity. Space, environment, design of the physical meeting and idea generation space matters. Every firm that seeks to create more innovation ought to either create a more creative space in which its innovation teams can work, or find local partners who offer such spaces. Some we’ve worked with include Catalyst Ranch and the Magellan Idea Center.

Intangible Environment

While we interact with the physical environment – walls, floors, halls and cubes – we also interact with the intangible environment. By intangible environment I mean the attitudes, perspectives and organizational thinking and history formed by corporate culture. These create intangible “walls” as rigid and unyielding as physical walls. A risk averse, highly efficient firm can create an interesting new physical space, but it must also change its intangible environment – its culture. Any sufficiently powerful culture can impact how people think, the depth and breadth of their ideas, the amount of creativity they are willing to embrace and the kinds of ideas they can create. The intangible environment must be addressed at least as much as the tangible environment.

Reach of your networks

In the book the Innovator’s DNA the authors describe five qualities that many innovators share. One of them is the breadth and diversity of the individual’s network. Your corporate environment impacts the breadth and depth of your network, and by extension your ability to generate interesting ideas. It’s been demonstrated that good innovators have larger, more extensive and more diverse networks. They are influenced by ideas and technologies within their industry or geography, and by ideas that exist outside their industry or geography. These insights are refreshed by conferences, trade shows, customer interactions and their personal and professional networks. When companies limit travel or restrict access to trade shows or conferences, or provide marketing information on paper rather than as an engagement with live prospects, they limit the experience and the external environment, which limits the range and depth of insights and ideas.

How porous is your boundary?

Henry Chesbrough popularized the idea of “open” innovation, and it continues to be a source of great discussion. The real question for your organization and its “environment” is – how porous is your corporate boundary? Has your executive team come “on board” to the idea of open innovation? What types or approaches are acceptable? What potential partners or customers can contribute ideas, technology or intellectual property? What happens to the ideas as they cross the organizational threshold? Good ideas exist outside your organization, and may be within your innovation “environment” but your organization and its leadership must define the best partners and approved approaches, and must demonstrate that the origin of an idea is less important than its potential.

Environment matters

We live and work in a petri dish of physical walls and intangible expectations. Beyond our regular petri dish are other teams in other dishes working on similar and wildly different ideas and technologies. Realizing that the environment matters, adjusting both the internal and external environments to achieve more innovation, and integrating both environments for greater innovation exchange will drive far more innovation in your business.

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Reach Beyond Your Comfort Zone

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GUEST POST from Jeffrey Phillips

Lately I’ve met with a number of potential clients who are frustrated that their innovation efforts aren’t creating a bigger splash in the market. It can be difficult to identify the limiting factor in any new product or service. Perhaps the customer need wasn’t as strong as we anticipated, or we built features and attributes to appeal to the wrong need or client base. Perhaps the product is too early, and difficult to adopt, or too late and missed the market window. Or perhaps the concept was too narrowly conceived from the beginning.

Reach and Grasp – the Alligator Arms effect
The idea of reach is one I talk about often with my clients. In many organizations we have what football commentators call “alligator arms“. You’ve seen the phenomenon: when a wide receiver runs a route over the middle of the field and a pass is thrown his way, he may make a half-hearted attempt to reach out and catch the ball, but then immediately retracts his arms to protect his body. Rather than leave his torso exposed and catch the ball, he makes a quick but futile attempt to snatch the ball and then protect his body. All too often innovators have alligator arms when it comes to their vision. They know a big, interesting concept matters, but aren’t willing to push the idea for fear of rejection. So they pursue ideas that are less than compelling, and given the time, energy and resistance to overcome to commercialize a new product, they are never happy with the results.

Reach should exceed Grasp
Robert Browning wrote that “A man’s reach should exceed his grasp, or what’s a heaven for?” His concept is that people should constantly reach further than they think is practical or safe, or risk living a life that is unsatisfactory and cramped. In the same way innovators should constantly have visions of ideas that exceed their grasp. If you know exactly how you will implement a new idea or concept today, then your idea is too practical and too easily copied. If your idea doesn’t face some internal skepticism and headwinds, it is already too incremental. One of my other favorite sayings in this regard is: Don’t worry about someone stealing your idea. If it is truly new and original, you’ll have to ram it down their throats.

Houston: We have a problem
Many corporate innovators suffer from alligator arms, or have limited reach, which is unfortunate, because there is an increasing gap between what is expected and needed by senior executives and the market, and what is produced by innovators and product development teams. Many times I hear CEOs explaining that their staff must not be very innovative, because all they produce is safe, incremental ideas. We recently led an innovation activity in the insurance industry where the CEO kicked off the event expounding the need for real “game changing” ideas. Once he left the team to its devices, they reverted to real “small ball” concepts. Mid and senior level managers have been taught to pull their punches and rely on small, incremental changes, but the expectations and markets have shifted. CEOs desperately want interesting, differentiating ideas and products, but our reach is completely within our grasp. Many innovators and product developers are frustrated by the limited reach, but don’t believe new, interesting, disruptive ideas will be well received.

We have a solution
So we have a quandary: executives are asking for the big idea, the reach beyond the grasp, while innovators and product developers are still locked into small ball and incremental innovation. Paul Hobcraft and I developed the Executive Innovation Workmat to address the root cause of this issue:  executives saying they want innovation but failing to put the frameworks and programs in place to ensure its success. If your reach is limited to your comfort zone, if you are frustrated by the incremental ideas your team creates, contact us. We can create a framework that bridges the gap between expectation and capability.

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Ask Not What Your Customers Can Do For You

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GUEST POST from Jeffrey Phillips

I was pondering recently the risks associated with innovation. No, not the risks a firm bears to create a new product or service, but the risks that a customer bears when acquiring and using a new product or service. I wonder – do we realize what risks we ask a customer to endure to use a new product?

After all, innovators are experts at risk. Any new product or service that actually makes it to the market has been through the risk wringer. A good innovation process has examined the new idea for financial risk, intellectual property risk, the risks associated with the actual use of the product, reputational risk, and many other types and forms of risk. By the time the product actually emerges from the swamps of product development and legal review, it is often a pale shadow of what it was at conception. Most businesses are more sensitive to the risks associated with launching a new product or service than they are to the potential benefits of the new product.

But what’s interesting about all this fascination with risk is the seeming inability to understand risk from the customer’s perspective. If it is risky to create and launch a new product or service for a business, imagine how risky it is for a customer to acquire and use a new product or service. In most cases a completely competent product already exists and is widely used. It may not be the most effective or valuable solution, but it is known and trusted. Further, the introduction of a new product or service introduces change, which most people dislike and avoid if possible. There’s also the matter of distrust. We tend to distrust the new and untested, and rely on historical data and accepted products and services. Sometimes that distrust is based on good reasons, and sometimes it is based on outdated assumptions. But what a world of trouble we create for a customer when we introduce a new product.

Ask not what your customers can do for you

It’s usually just after the release of a new product when the grumbling starts. “Don’t they realize the benefits our product creates?”or “Can’t they see the value our new service provides?” Every new launch is accompanied by a litany of complaints about potential customers, who don’t share our enthusiasm for the new product. In many cases, that’s because the ideas have been shorn of any interesting features and attributes as they were processed through the internal “risk wringer” in the business. Further, many ideas were off-target from the beginning, having been birthed as a concept that was never tested and never fully validated with customers before becoming a new product. Too often ideas become products without a full investigation of customer needs and expectations. We expect customers to adapt to our way of thinking about their problems, rather than we adapting to their needs and expectations. What are you asking your customer to do?

Ask what you can do for your customer

Before the risk of launch, before the financial risks associated with developing a new product, before you strip out all the risk of a new product, there’s a risk you’ve overlooked. That risk is that you’ve become so confident understanding what your customers want that you neglect to ask. Or that you are so confident in market research that you neglect to dig more deeply. Or that you simply impose a new technology and assume customers will adapt and adopt. You see, the biggest risk of all in a new product or service isn’t intellectual property, or financial risk, or that your product will cause someone to lose an eye or a limb. No, the biggest risk is at the conception, when your team fails to engage with customers in a meaningful way to understand their true challenges and needs. When you fail to perform deep customer interaction, the risk in your product is baked in, and cannot be removed. No amount of de-risking or marketing can make a product that started life as unnecessary and unattractive more attractive to customers. What can you learn from your customers about their needs?

The best products and services don’t ask customers to change and adapt, so much as to engage and embrace. The biggest barriers to any new introduction are the amount of change necessary to adopt, the risk of an investment that does not provide benefits and inertia. What can your product do for your customers that cannot be accomplished by what exists, or substitutes? What is so compelling that they will overcome inertia to adopt? What are the key unmet needs or gaps that your product fills, and do those matter to customers enough to make them change?

Ask not what your customers can do for you, ask what you can do for your customers.

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Innovation – Activity, Tool or Competence?

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GUEST POST from Jeffrey Phillips

There is significant, and often damaging, dissonance about what innovation “is” and how it can be deployed effectively. Innovation is something every business wants, but most aren’t quite sure how to plan or implement innovation effectively. Innovation exemplars like Apple seem to be able to spin out exciting new products and services on a consistent basis, with minimal effort and maximum gain. Yet for many organizations, confusion reigns. Is innovation an occasional activity? Is it simply a set of tools? Is it a mindset or something that should be embedded in the corporate culture? Can it be harnessed effectively? Every management team is grappling with these questions. The answers will determine how successful your firm is in the long run.

Innovation is, unfortunately, a buzzword, meaning that the user defines the word in his or her own context, and often the hearer defines the word in a different context. We’ve been told that innovation created the success at Apple, and that innovation is also responsible for many “failures”. We’ve been told there are many innovation tools and techniques – Voice of the Customer, ethnography, idea generation. We’ve been introduced to innovation management, software to capture and distribute ideas. Open innovation is now in vogue, as a way to gather ideas from customers and partners. I often imagine that the land rush to settle Oklahoma looked a lot like what innovation does in the business world today. Everyone rushing to stake a claim, with little in common.

So, let’s answer the titular questions. Yes, innovation is an activity. Any business unit or product group can engage in innovation to create a new product, new service or new business model. Occasional innovation is the most frequently practiced, and one of the most difficult, because when innovation is attempted, it is often in response to a significant new need or gap in offerings. This means that the firm is attempting new techniques (innovation) in the face of significant threats. What do we typically revert to when something precious to us is threatened? Certainty and trusted tools. Trying to innovate occasionally in the face of significant risk or change is akin to placing a novice on the back of a bucking bronco. The ride will be short, painful and the rider is likely to be trampled in the end.

Innovation is a tool, or, more distinctly, a set of tools, each of which can provide tremendous value when used appropriately. I was recently talking to a potential client who described their “front end” as consisting of “voice of the customer”. While “voice of the customer” can be a useful tool for customer insights, it is simply one possible tool for customer insight. Further, the “front end” encompasses much more discovery and insight than voice of the customer. Using only one tool or technique is like describing a room while looking through a keyhole. Using only one tool or technique is probably more dangerous than beneficial. Innovation is a collection of tools and techniques. When applied correctly and in the appropriate order, they can create incredible insights. Used poorly or ineffectively, they are no better than guesswork.

Eventually, many organizations discover than innovation should be a core competence. This requires, of course, careful definitions and strategic alignment at the highest reaches of the organization, and a defined set of innovation tools structured in a manner to provide valuable outcomes. It requires people who understand the importance of innovation and who don’t face obstacles and threats when they attempt to innovate.  When we look in envy at 3M or Apple or Google, we often look past the investments that led to innovate success, and seek to point out the tools, or techniques, or individual leaders, that seem to create the success. It’s all of that, and none of that. The success of any capable innovator ultimately resides in the understanding that innovation requires continual focus, an engaged culture, people who understand and use innovation tools and insights successfully. In other words, the best innovators understand that innovation is an activity, a set of tools, but most importantly, a competence.

You can achieve that competence through strategic alignment within your business. Paul Hobcraft and I have defined an innovation workmat approach to help senior leaders align their goals and build innovation frameworks to sustain innovation as a core competency.

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There's No Innovation Without Experimentation

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GUEST POST from Jeffrey Phillips

Many times people will ask me what I think is “wrong” with so many companies. Why can’t they innovate? they ask. Where are the innovative new products and services. Many will look back to innovators like Edison, Marconi, Alexander Graham Bell and wonder why businesses today cannot seem to innovate the way these individuals did. Was there simply a spark of genius, or is something larger at work? I think one powerful answer is provided when we examine how many of these early innovators worked.

Perhaps my favorite quote (potentially apocryphal) from Edison is the statement than he knew 1000 ways not to make a lightbulb. Edison is famous for many inventions, but what is often overlooked is how many different paths he attempted to create the significant success. Edison was an inventor, yes, but at his heart he was a synthesizer and an experimenter. He learned by combining disparate technologies and concepts, and experimenting repeatedly. The failure of any given experiment didn’t block his work, it simply opened new areas for exploration and created new learning.

Contrast that approach to the work we do today. In many corporations, outside of research and development teams experimentation is a dangerous word. Experimenting has lost its luster and is often equated with “winging it”, rather than an attempt to extend insight and knowledge. In an environment where everything must be perfect the first time, experimentation loses and sameness wins. There are several reasons why experimentation is viewed with suspicion, and why sameness seems so compelling.

Experimenting

Good experimenting takes time, and is DIVERGENT. Divergent in the sense that as one experiments, one attempts new things and strays from the “straight and narrow” since discovery and learning is part of good experimentation. You can either experiment to prove something false, or experiment to learn something. The mentality matters. Good experimentation means you’ll have lots of failures, but obtain a lot of learning. However, no Six Sigma certified firm tolerates “lots of failures” for long. Too often that experimenting looks like “non-valued added” work which should be eliminated.

Outside of R&D most business functions don’t have experience with experimenting and don’t understand the value proposition. It’s as if learning or attempting some new functions or offerings is verboten. Only the fully expected and fully perfected are allowed. Yes, I know we’ve trained our customers to expect only perfection. Perhaps we should demonstrate for them why experimenting with new offerings, new services and new business models is potentially to their benefit.

Sameness is next to godliness

There’s another reason experimenting seems so dangerous and outdated. It is far safer and much easier to simply copy a competitor’s product, or channel, or business model rather than experiment with new offerings. While the returns are marginal when copying, there’s no “wasted time” or wasted effort experimenting to create something new and interesting, that is more than likely to “fail”. Since marginal success is rewarded and failure is punished, it should be little surprise that experimentation, no matter how small or insignificant, is rarely attempted.

The Reverse of Edison

What we have today is the reverse of Edison. Most organizations do so much research, so much perfecting of one product or service, and so little experimentation that they too can claim not to know hundreds of ways to deliver value to their customers, but not because they experimented and failed, but because they never experimented at all. As the amount of experimentation falls, awareness and knowledge becomes narrower. As the rate of experimentation falls, the organization becomes more conservative, isolating and fearing risk. And this simply feeds a vicious circle, to the point where experimentation seems difficult, dangerous and unlikely to add value.

On the contrary. Good innovators understand that experimentation is vital to gaining new insights and new knowledge. Many small, expected innovation “failures” based on experiments are far more valuable and tolerable than one large product introduction failure, but that’s the tradeoff many make. Experimentation doesn’t just belong in the R&D suite, but is increasingly necessary across all business functions. Experimenting doesn’t increase risk and inefficiency, it lowers failure rates and increases insight and learning. One of the first best questions to ask someone who wants to create new products is: what have you tried?

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Signals for Innovation Speed & Frequency

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GUEST POST from Jeffrey Phillips

How often / how fast should we innovate? This is a question our clients ask us quite frequently. What I like about the question is the realization that the firm must innovate more than once. What I dislike about the question is the often (implied) whining that suggests that repeated innovation is difficult, time consuming and distracting. So herewith, a short rubric for how “fast” or how often you should innovate.

Driver shifts

The first analysis should contemplate what I call the driver shift. That’s simply a way to describe the factors in your industry that are changing most rapidly. In many industries the driver is technology. For example, if your business has anything to do with technology, especially semiconductors, you’ll be aware of Moore’s Law. Moore’s law basically states that the power of computing will double every two years. Of course, given the nature of competition, you’ll need to be innovating on a far more frequent basis in that industry.

Other firms may face slower “driver” shifts. For example, many regulated firms may not see regulations change as quickly as technology firms see technologies change. But when regulations change, they often change in very dramatic ways, so the ability to respond as the regulations change, and repurpose or restructure an organization to respond to rapid, disruptive regulation change is also important.

Business Models, Channels

A look at NetFlix should tell you something about the nature of innovation and the required frequency and speed. Netflix was busy disrupting Blockbuster with its movies by mail offering. Suddenly the leader in the space, it was immediately threatened by streaming movies delivered on a variety of platforms. Netflix stumbled in its business model transition from mail to streaming, but did not allow itself to become complacent as the channels changed. Note that the end result – consuming movie content – did not change. What changed are the distribution channels.

Business models and channels, which once seemed relatively fixed, will undergo tremendous change due to the pervasive internet. We are on the cusp of a completely new delivery mechanism for a wide variety of products and services. You’ll need to innovate as rapidly as the internet introduces new business models, channels and customer interactions. And that will be fast – the rise, and rapid fall – of Facebook should attest to that.

Replacements, Substitutes

Yes, this is a classic Porter “Five Forces” assessment. Why? Because it works well. Even in industries that don’t see significant driver shifts, that are immune to technology advancements or rapid changes in business models or channels, innovation is happening. It’s happening from new entrants or disrupters who offer excellent services or features that replace or substitute for the existing offering. Banks will be displaced by many smaller offerings and features from firms like Paypal, Mint, peer to peer lending and virtual wallets. Being isolated from change doesn’t inoculate your firm from innovation, it simply creates blinders to innovation right under your nose.

Further, disruption never happens from within an industry – the key players have too much at stake to disrupt their own businesses. Every major industry acts like an oligopoly. Incremental innovation is all that should be expected internally. Disruption will occur when a new entrant forces the entrenched participants to change. Thus, a slow, incremental innovation program within the industry will be overthrown by rapid, disruptive innovation from an external actor, a new entrant or someone offering a substitute. If you are resting quietly in your safe cocoon, isolated from the disruptions and speed of innovation that is prevalent in many industries, don’t get lulled to sleep. Innovation, and the accompanying disruption and speed will spill over into your little niche.

Customer Expectations

Let’s say you are lucky enough to be isolated from rapid technology shifts, there are no new business models or channels and few new entrants or substitutes. You’ll be congratulating yourself about the minimum level of innovation and the slow place of change required in your space. And you’ll be whistling past the graveyard. While you may like to assume you are isolated from the need for innovation speed, your customers have higher expectations because they are aware of what’s going on in other industries or markets. Just as the citizens of the Soviet Union weren’t fooled by Potemkin villages and wanted the benefits of advancement that western citizens had, customers in your market or industry are aware of rapid change and innovation in other markets and will demand it in your industry as well.

Which is the driver?

The question isn’t “how fast or how frequently should we innovate” but “which of these drivers has the most impact to our business, and how do we align our innovation speed and frequency to that factor”? You’ll need to innovate at least as rapidly as the major driver in your business, and if your business is impacted by several of these factors (and few aren’t), these factors have a multiplier effect when they are imposed simultaneously.

Stop thinking about how frequently or how rapidly you should innovate. Your internal signals and decisions are too risk averse to give you good advice. There are plenty of external signals you can learn to read and interpret. You know this already, it’s just the information available is hard to believe.

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Performing Innovation Before the Norming and Storming

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GUEST POST from Jeffrey Phillips

There’s nothing quite as confounding and as thrilling as sitting in on an innovation kickoff meeting.  That’s because all of the issues that have been overlooked, all of the constraints that have been applied, all of the issues that have been ignored rise to the surface when an executive demands that his or her company become more innovative.  It’s a rare kickoff I attend that we actually talk about innovation.  Instead, we talk about all the things that block innovation, and are the reasons innovation is so difficult to do.

It’s interesting because many times I am a “fly on the wall” in these meetings, called in to talk about how to start an innovation initiative, which is almost always sidetracked by people who I believe are earnest in their desire for innovation but equally as earnest in surfacing issues, constraints, complaints and other factors that aren’t central to innovation, but which must be addressed before innovation can begin.  I often refer to these meetings as the forming and norming portion of innovation.  Unfortunately, many executives expect their teams to begin performing immediately, and don’t plan for or account for the time and energy necessary to process the forming and norming portions.  And we all know that no matter how urgent the performing is, many people cannot perform until they’ve said their piece, and “cleared the air” about decisions that haven’t been made, personnel issues that have been overlooked, etc.

In fact, I’d argue that perhaps the easiest way to get people to surface issues within an organization is to kick off an innovation program.  Many commentators wonder why firms don’t start innovation programs.  I don’t wonder, because starting an innovation program and overcoming the issues and inertia is probably the most difficult activity in a company.  Further, if innovation isn’t considered a long term capability, the work to get started and overcome inertia and submerged issues is far greater than the potential reward.  There’s a reason good innovators have been at it for a long time – they’ve overcome the inertia, issues and cynicism that probably existed at the beginning of their efforts.

What many executives fail to realize is that innovation is change, and change is risky.  Many senior managers and executives decide that if change is going to be thrust upon them, then now is the time to get all of the issues that have been constraining them, whether or not they have to do with innovation, on the table for discussion.  So in a meeting ostensibly about an innovation kickoff, one manager will want to discuss a problematic employee whose actions or poor performance has been overlooked.  Another will want to discuss cross-silo cooperation, which has been difficult in the past.  Another will want to surface issues with compensation or reward structures.   All of these are issues that could block or stymie innovation, but which should have been addressed before the kickoff of the innovation program.  That signals that the organization skipped the forming and norming, and moved immediately to the storming portion of innovation, hoping quickly to move to the performing portion.

I’ve been in many meetings like this where senior managers and executives are clearly frustrated because they hoped to lay out and engage an innovation action plan, but did not anticipate the long-submerged issues and resistance, the simmering personnel and compensation issues, the consistently ignored policies or procedures that have created dissonance.  Before the team is ready to make a big commitment towards innovation, they want the management team to clean up issues, communicate its goals and set a consistent infrastructure in place.  And this meeting, often the first face to face as we proceed to kickoff an innovation effort, is the first and perhaps last chance managers get to raise these issues before we lay on another key initiative, which rests uneasily on top of a number of other poorly defined, poorly supported projects and initiatives.

If you are a senior executive, or your senior executive wants to kick off an innovation program, please take note.  In any organization there are a number of recognized issues and subordinated challenges that many executives are aware of but have chosen to overlook or ignore.  Asking for commitment to a large innovation initiative, which imposes change and uncertainty, when many issues remain unaddressed simply creates far too much corporate dissonance.  Start talking with your executives and managers early about what the key issues that must be addressed before innovation gets started, and start the forming and norming activities early, so when your team is ready the storming and performing can begin in earnest.

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What Is Your Why?

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GUEST POST from Jeffrey Phillips

We corporate drones are actually pretty lucky. Many of us get to work sitting down, in the shade, for eight to nine hours a day. Compared to the work I used to do on the farm, my life is gravy. And so it goes for many people in the developed world. In fact, our work is so far removed from “work” – that is, the expenditure of blood or sweat, that we are fortunate.

In a cruel twist of fate, however, it’s becoming clear that many people aren’t excited or engaged in their work. Many corporate drones go to work for living and then participate in all kinds of interesting, engaging activities where their passions lie outside of work. Isn’t it ironic that at the peak of the knowledge work shift, many people have little engagement or participation in their work?

There are several reasons for this, I think:

First is the issue of compensation. Truth be told, if I could earn a 1% salary teaching high school kids history, I think that’s what I would do. I love history, and minored in it, but never pursued it because I didn’t think it would support the lifestyle I wanted. Likewise I know many accountants who can’t stand accounting, but do it because the money is good. Many of us pursue jobs or careers that aren’t in line with our passions – so how can we be fully passionate or engaged at work?

The second is the issue of control. The more structured an organization becomes, the more predictable it seeks to be, the more defined and constrained the roles and the work have to become. Most major corporations can’t afford significant failures or risks, and the processes that sustain those firms frown on even small deviations or changes, so jobs and roles are narrowly defined. People have little freedom to experiment or try new things. They repeat the same work over and over, and rarely expect to dramatically change their job, their organization or the products or services they create. Control reduces engagement and enthusiasm.

The third issue is one of focus or vision. Ask 100 people in any corporation why their organization exists, and 95 will say to make money or earn profits. Perhaps a handful will say their organization’s strategy is to create the best widget, or solve a key challenge mankind faces. Simon Sinek, in his book Start with Why, focuses on this. It is hard to be fully engaged or passionate when you are unclear about corporate goals or strategies, or if you simply don’t care about the goals or strategies.

Maslow’s employment hierarchy:

Time was, simply finding enough food was all that mankind cared about. Then shelter, clothes, food and eventually self-actualization. Maslow defined that for us. But it turns out there is a work related Maslow’s hierarchy as well. Time was that simply earning a paycheck that kept your head above financial calamity was enough. Now though, as many of us make more than we need, and we are removed from “work” work, we need more. We need to know our work matters. We want to make big change. We want to work on things that we are “passionate” about. We want workers who are “engaged”. Yet we define jobs narrowly, restrict failures and experiments, and display a marked inability to communicate strategic vision.

No wonder so many people are frustrated, and no wonder innovation can seem so difficult. We have a significant body of staff and middle managers who are not challenged and not engaged in their work, trapped in narrow cells of management structure who are yearning to break free and do things that add meaning and value. These people want to be deeply engaged, and find their engagement away from work rather than at work. It’s not just your best assets that leave every night – it’s also your best hopes, dreams and aspirations, which get spent on other things.

The “why” a business exists matters. It tells customers what we believe and stand for. It tells employees what we believe and why we matter. It aligns corporate culture and decision making. Without the “why”, things become about outcomes. Yes, commercial entities should drive profits, hopefully outsized, incredible profits. But if they do, those profits will be based to some great extent, on your “why” and what you believe, and what that says to your customers and prospects.

If this sounds hard, it is and it isn’t. Creating a why is easy. Being willing to stick with it is the hard part.  And so far, the discussion has just been about a general “why”. Imagine the difficulty of innovating without a “why” – without a shared purpose or focus. Now you know another reason innovation seems so tentative, occasional and ad-hoc. If regular, everyday business seems difficult in the absence of a “why”, innovation is only moreso.

It’s ironic, really. The more removed from real work we become, the more the work matters. Most knowledge workers I know get great satisfaction from mowing their own lawns. Mostly because they control the beginning, middle and end of the work, and can see the results immediately. What we do is becoming less important – why we do it is becoming more important. Executives need to understand that the “why” isn’t the icing on the cake, it is the whole cake. And innovators, take note. Working in the absence of the “why” is tough in regular, every day business, and many of you know how difficult any change is, or introducing new concepts. Trying to do innovation in the absence of the why is even more difficult.

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Christopher Columbus as a Model for Innovators

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GUEST POST from Jeffrey Phillips

I’ve had the chance to meet and speak with a lot of people who are interested in creating more innovation in their organizations.  Some of them have been asked to lead an innovation effort, and some are just interested in becoming more innovative themselves.

Most understand that innovation isn’t an activity or a project, but few understand the amount of investment, work and change management required to sustain innovation beyond an initial attempt.  In this way I think we can look to the past for figures who represent the challenges and opportunities that are presented to innovators.  Perhaps no figure represents the highs and lows of innovation like Christopher Columbus.  And few other figures demonstrate the consistency of purpose, dogged determination and singular focus that’s necessary for innovators to succeed.

Defining Innovation

We remember Columbus as the discoverer of the new world, when in reality, he was probably only the most celebrated.  Clearly, there were people already in the new world, indigenous people.  Also, there’s plenty of evidence to suggest that the Vikings discovered North America centuries before Columbus did.  Yet it doesn’t really matter, and the same thing is true with innovation.  Most innovators don’t discover something completely new.  It’s often the case that others have discovered a product or solution but didn’t recognize its potential.  Or, innovators import ideas and concepts from adjacent markets rather than attempting to create something entirely new.  Good innovators understand how to celebrate a victory and how to create good publicity.  Look no further than Steve Jobs or Christopher Columbus.

Seeing unexpected benefits

Beyond discovering the new world, we have to look at his original goals and what he declared as success.  Columbus was perhaps not the best at setting goals – few believed he could sail all the way to the Indies – but he did wash up on what he called a “new world” and was smart enough to declare it a victory.  In this Columbus was adaptable and able to help his clients see that the original intended goal was important, but so was what he found or created.  In this there are lessons for innovators – set clear objectives, but be flexible and able to realize when you’ve found or created something that is valuable but unexpected.  Also, realize that innovation, unlike the rest of the work in your organization, is unpredictable.  Be prepared to recognize unexpected benefits.  Columbus was able to turn a potential defeat – failure to reach the Indies – into a success.  We innovators need to be able to present our innovation wins – even when they don’t match initial goals – as victories that allow us to keep innovating.

Determination

Columbus is important in another way – his determination.  Columbus realized for all the acclaim that he had not achieved his original goals, and set out not once, not twice, but three more times on missions of discovery.  He did not allow an initial failure to stymie his goals, but sought to learn and capitalize on the previous missions.  We innovators need to learn that innovation will not always offer up the results we hoped for, but that’s no reason to stop trying.  Simply incorporate what you’ve learned and try again.

Engaged Sponsors

Columbus also understood what many modern innovators fail to understand – the need for a sponsor who has big needs or big goals.  Columbus talked with many monarchs about his goals to reach the Indies.  The Spanish were interested because they were late to the trading game and needed new markets.  They had recently united their country and were looking abroad for greater glory.  Other monarchs and sponsors had turned Columbus away.  Good innovators understand that a sponsor who has either vital challenges that must be overcome, or who has a big vision are vital to success.

Making the most of limited means

Columbus understood that even a committed sponsor like the Spanish could only offer him so much in terms of resources.  He accepted what his sponsors could offer and made the most of it, rather than decide not to attempt the journey.  As innovators we have to learn to live within limited means and resources, and demonstrate the benefits and value propositions.  In subsequent exercises we can obtain more resources based on the success of the first mission, just as Columbus did.

Believing his vision

Columbus and the people of his day didn’t believe they would “sail off the edge of the world”.  They knew the world was round.  The people who rejected his vision simply felt that he could not sail to the Indies heading west because of the distance involved.  If the western continents hadn’t existed, and Columbus had faced open ocean, the naysayers would have been right.  But this points out another characteristic of innovators – the belief in their own vision and the ability to stretch their thinking beyond what is known to be “true”.  The naysayers didn’t think there was any land between them and the Indies.  Turns out that the naysayers were right about the distance, but wrong about other “facts”.  These blindspots or “facts” that aren’t facts block many organizations from innovating, and require committed innovators to overcome.

Never Satisfied

Finally, Columbus was never really satisfied.  After discovering the new world, claiming an entire continent for Spain, bringing back new insights, new discoveries and opening the door to colonization and the eventual wealth of Spain in gold and silver, Columbus remained a discoverer.  He wanted more, he consistently went further.  We as innovators need to instill this passion in ourselves, but more importantly in our companies.  Too many firms believe that they must change, but when they make a change they can then rest on their laurels.  The competitive markets are moving much too quickly and consistently to allow that.  Our firms must be never satisfied, which means our innovators must be able to constantly and consistently innovate.

Conclusion

Columbus wasn’t perfect.  He didn’t arrive at his original goal, and probably didn’t discover the new world.  But his persistence, his ability to make the most of limited means, his ability to recognize and recruit sponsors, his ability to trust his vision and overcome the doubters, and his openness and ability to recognize success make him a model for modern innovators.

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