GUEST POST from Paul Sloane

Here is a report drawn up by the IMF, OECD and the UN to rank international innovation competitiveness. The authors constructed an Innovation Capacity Index (ICI) that draws on a range of available data to correlate the wide-ranging set of relevant factors, policies, and institutional characteristics which play a central role in boosting a nation’s capacity for innovation. In its 2010/11 edition, the ICI covers 131 countries and identifies over 60 factors that are seen to have a bearing on a country’s ability to create an environment that encourages innovation, such as a nation’s institutional environment, human capital endowment, the presence of social inclusion, the regulatory and legal framework, the infrastructure for research and development, and the adoption and use of information and communication technologies, among others.

The top 25 countries with their ICI scores are:

1. Sweden – 80.3

2. Switzerland – 78.1

3. Singapore – 76.7

4. Finland –  76.1

5. United States –  74.8

6. Denmark – 74.3

7. Canada – 73.6

8. Netherlands – 72.8

9. Taiwan – 72.5

10. Luxembourg – 72.2

11. South Korea – 72.1

12. Norway – 72.0

13. Hong Kong – 71.4

14. New Zealand – 71.3

15. United Kingdom – 71.3

16. Japan – 70.2

17. Australia – 69.4

18. Ireland – 69.1

19. Iceland – 69.0

20. Germany – 68.9

21. Israel – 67.5

22. Austria – 66.7

23. Belgium – 66.1

24. France – 65.3

25. Estonia – 60.5

And the bottom three are:

129. Haiti – 28.3

130. Chad – 27.4

131. Afghanistan – 27.4

It is notable that China does not do well – it comes in at number 64 with a score of 49.9.

The Executive Summary contains many interesting insights.

krev

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GUEST POST from Paul Sloane

Let’s play a game. It costs you $1 to play. We then roll a dice once. If it comes up 6, I pay you $10 otherwise you lose. Do you want to play? Most likely you will agree to play. You have a one in six chance of winning $10 for a $1 bet.

Now let’s make it $1 million to play. Once again we roll the dice just once. If it comes up 6, I pay you $10 million. Do you want to play? The probabilities are exactly the same and so it should be an easy decision. But most people would decline. Would you risk your home and life savings for a one in six chance of winning $10 million?

Now let’s imagine you are the CEO of a business which turns over $50 million and makes $2 million profit every year. You have say $2 million cash in the bank. Joe, your VP of Marketing, comes to you with a proposition. He wants to enter an exciting new market with an innovative product. It will cost $1 million to develop and launch the product. There are many imponderables but if it is successful he estimates it will add $50 million in turnover and $10 million in profit over the next three years.

You cannot forecast what the competition will do but taking a cautious approach your conservative estimate of the chances of success are 1 in 6. Should you go ahead? Let’s assume that you have no better uses for your cash and there is no cheaper way of testing the market. What would you do?

Most CEOs would make the decision based on how they felt about the product idea and how much they trusted Joe. Let’s say you go ahead and after one year the product has failed. Some unforeseen difficulties with the technology or marketing or distribution or competition meant that you could not make it a success. You learn what lessons you can and move on.

Now Joe comes to you with a different idea. Strangely the figures are exactly the same as before – $1m investment gives a 1 in 6 chance of a $10 million return in profits. You examine all the assumptions and they check out. Would you agree to Joe’s request? The probabilities are exactly the same so you should make the same decision but most CEOs would hesitate. You decide to go ahead and unfortunately the product flops.

What happens when Joe comes to you a third time or a fourth time? In theory you should expect failure 5 times out of 6 and keep faith with Joe. However, in human and emotional terms it becomes very difficult to keep placing bets after a string of losses. Most likely you would say to Joe, “Sorry, but your track record on these projects is poor. We cannot keep risking that kind of money.”

You might find that Joe quits and starts his own business. You focus on your current business and the company enters a long period of decline because it lacks new sources of revenue growth. Eventually you sell the company to a larger competitor for a disappointing price.

What are the lessons here? Innovation is a risky business and often involves many failures. Even with the best market intelligence and research it is impossible to forecast exactly how things will turn out. Should you roll the dice, risk your scarce resources and face the pain of failure?

Wherever possible you should test prototypes in small experiments so that you can learn lessons quickly and cut your losses on failures – but that is not always possible. It is important to recognise that you cannot avoid risk. Doing nothing is risky; you will get left behind. Courageous leaders keep taking calculated risks even after a string of setbacks. Eventually you will roll a 6.

imagecredit: researchdigest & inc.com

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GUEST POST from Paul Sloane

It is common to approach suggestions schemes, brainstorms and ideation meetings from a competitive point of view.  So we might say that we want a large number of ideas and then by a darwinian process we will eliminate the weaker suggestions and choose the best.

People might vote on the proposals and the most popular win through. This approach will work if the challenge is clearly stated in terms of desired outcomes and evaluation criteria, and if the process is well facilitated.  However there is another approach which can sometimes give more focused and therefore better results.  Start with a small number of broad concepts and ask for ideas which add to the understanding, appeal or feasibility of the concepts.  The initial concepts can be situations, challenges, proposals or ideas. People work in a supportive and collaborative mode; typically to build out the concepts and improve on them.

So in your suggestions scheme or ideation process you can start with a situation and ask for input, insights and deeper understandings.  You can state some desired outcomes and ask for advice and ideas on how to get there.  People from across the organisation can contribute to the ideas or issues that interest them and constructively comment or add to the discussions that they see.

One way to use this technique in a brainstorm meeting is by using the phrase,  ‘Building on this….’.   You state the challenge and then each person silently develops a radical idea or an ideal solution.  These are shared.  Then we take the first idea and everyone in turn has to add to it by starting their contribution with the words, ‘ Building on this idea…..’.  More and more ideas are added to the initial concept to make it different, more appealing, simpler, more effective or better.  Then we move on to the second idea and repeat the process.  Every initial idea is developed in this way and then we move into convergent mode and select the best proposals based on our evaluation criteria.

For your next brainstorm meeting why not try this method?  You will find that it leads to a more collaborative, constructive and additive atmosphere which often results in successful and creative outcomes.

imagecredit: onlineinvesting & twospiresmktg

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GUEST POST from Paul Sloane

Have you seen The Artist?  The film recently won the best film award at the Oscars.  It is a charming tale about the transition from silent movies to talkies.  It is remarkable for a number of reasons – not least because it is a silent movie in black and white with unknowns as stars.

It seems to me that we can learn some innovation lessons from this film and its appeal to audiences.

First, the story relates how success is transitory and those who cling to what worked before are rendered obsolete when the market moves onto to new products, services, methods or technologies.  If your success is based on what happened in the past rather than what clients will demand in the future then you are at risk of the same fate as the stars of the silent movies who could not adapt to talkies.

Second, the film deliberately discards current fashion and heads in a completely new direction.  Many modern films rely on big stars, fast action, computer graphics or 3D.  The Artist has none of these.  It tells a simple but powerful story about human emotions and it does it without spoken dialogue or even colour.   It purposefully avoids current paradigms in order to make itself unusual and distinctive.

If your competitors are adding new features and technologies then perhaps you should innovate by moving in the opposite direction by making your product or service simpler and easier.  Can you appeal to basic human emotions in a more direct way?  Can you plunder the past to find something which is different and distinctive in the present?

Please see the movie and then ask yourself how you can apply its lessons to your business.

imagecredit:newsok & moviefone

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GUEST POST from Paul Sloane

Asking a Different Question Leads to Innovation

Across the world millions of babies die within the first week of birth. Most could be saved with the use of incubators, which are widely available in the developed world but not in under-developed countries. Much of the medical equipment that is donated to hospitals in these countries falls into disuse because of the lack of spare parts or shortage of trained technicians. There is also a common problem with interrupted power supply.

The conventional approach to this kind of problem would be design a low-cost robust incubator with some redundancy and some spare parts. However a company called Design That Matters (DTM) took a more lateral approach. Instead of asking the conventional question ‘How can we build a low cost incubator that does not break down?’ they asked ‘What equipment if any is easily maintained in the third world?’ The answer to that question is cars – more specifically Toyota cars. Most towns have garages with mechanics who can service and repair Toyotas. So DTM designed an incubator made out of car parts.

‘Some incubator parts-where the baby lies, casters in the front for braking and steering, and a chrome handrail for carrying – are standard issue’ says Tim Prestero CEO of DTM. ‘But after that, the car parts come in. The incubator prototype functions using electricity, but has a motorcycle battery as a backup in case the lights go out. Car headlights generate heat, and an HVAC (heating, ventilation and air-conditioning) fan blows it around. An engine-intake filter removes dust, bugs and pathogens. Latches and gas springs have been repurposed to open the incubator hood. BMX tires help maneuver the incubator over rough floors (hospitals in developing countries may not have smooth floors), and the bassinet portion is detachable, to transport the baby up the stairs when there are no elevators. Lastly, turn signals function as visual alarms if the baby is in trouble.’

This is a fine example of lateral thinking in business – by taking a different starting point it is possible to come up with a radically different solution.

More details on Scientific American and the Design that Matters sites.

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GUEST POST from Paul Sloane

Thinking the Unthinkable

We can broadly simplify innovations into two kinds – incremental and radical. Incremental innovations are improvements to current products, methods, processes, services, partnerships and so on. Customer complaints and suggestions are a good source of ideas for incremental improvements. So are the people who work in the organization. If you ask customers how your product could be better or if you ask employees how their job could made easier they will come up with plenty of proposals.

Most organizations are good at incremental innovation – they make things better. However, very few organizations are good at radical innovations. As Gary Hamel puts it:

“Businesses are good at getting better but poor at getting different.”

Indeed Clayton Christenson in his book, The Innovator’s Dilemma, argues that it is very difficult for successful organizations to develop disruptive innovations that would threaten the basis of their success. Often they are put out of business when some smaller company develops a radically new technology. Which employee working in a booming telecoms company in the 1990s would have suggested that free voice over internet telephony would be something they should develop? It took a start-up, Skype, to make a success of this radical idea.

How can you encourage your people to countenance drastic innovations? One way is to run creativity sessions where the objective is to conceive them. Ask the question, ‘Who killed our business?’

Get small teams to imagine entirely new business models that could deliver the benefits that your customers want. Each team has to present a scenario of a force so powerful that it could completely replace you. Starting with a blank piece of paper and none of the encumbrances that limit your organization they design a super competitor. They are encouraged to go to extremes and to think completely outside the current model. The exercise is stimulating and can be very revealing.

Most organizations have natural defense mechanisms against disruptive or threatening ideas. People immediately find reasons why they should not be considered. It is difficult to change the culture to one where such ideas are not only heard but are actively encouraged and developed. The ‘Who killed our business?’ exercise is a good way to start.

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GUEST POST from Paul Sloane

Many CEOs and leaders talk about the importance of innovation in their organizations. But often their words are bland and vague – just a form of management-speak. If you want people to really believe then why not explain exactly what you mean with a Declaration of Innovation. The Declaration of Innovation is a statement of commitment and intent. It should contain the following elements:

1. An explanation of why innovation is critical for the organization.
2. A list of some of the key areas where innovation is needed – e.g. launching new products or services, breaking into new markets, replacing processes with better ones, finding new ways to source materials, reducing costs, recruiting and motivating people, partnering and so on.
3. A request for every employee to contribute his or her ideas.
4. A commitment to listen and respond to all ideas.
5. A commitment to allocate resources – in particular time, training and money – for creativity, idea development and innovation.
6. An idea management and evaluation process.
7. A determination to look for ideas from all sources including outside the organization.
8. An affirmation of a positive attitude towards risk and failure. In particular employees will not be criticized or blamed for honest innovative endeavors that do not succeed.

The Declaration of Innovation becomes a manifesto for change in the organization. It endorses the vision, culture and processes of innovation. It is made available to all employees. New starters get it as part of their documents of employment. It is available on the intranet. It is a powerful reminder to everyone that innovation is not just a buzzword; it is part of the DNA of the organization.

Taken from The Innovative Leader published by Kogan Page

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GUEST POST from Paul Sloane

The Disney Method is a parallel thinking technique which has some similarities with the Six Hats. It is particularly useful as a group analysis tool for an issue and it leads to idea generation and idea review. The team adopts four different thinking modes as outsiders, dreamers, realisers and critics.

Initially the group thinks as outsiders and review the facts, data and external viewpoints regarding the issue at hand. They might take the roles of consultants, customers, suppliers or competitors in order to get a more rounded view of the issue.

The group then leaves the room and re-enters (or goes to another room) but this time as dreamers. They strive to imagine an ideal solution without any constraints. They brainstorm all sorts of ideas to resolve the problem using divergent thinking. No criticism or judgment is allowed. Many ideas are generated and written down.

The group leaves the room and then returns as realisers – realists with a practical, constructive mindset. They review the ideas that the dreamers generated and apply criteria to converge on the best ideas. Once they have selected the best idea they work it up into a project plan with costs timescales, risks and benefits.

The group now turns to the fourth thinking style and everyone becomes a critic who reviews the plan in order to identify problems, obstacles and risks. They are not negative or cynical but critical and constructive. Their objective is to spot the issues with the plan and to make it better.

At this stage the process might be complete or you might want to go back to one of the other styles in order to get an outsider’s view of the plan, to dream of new or enhanced plans or to work as realisers on the details of the plan.

Some people find this method easier to use than the Six Hats. It will generally deliver good ideas and a well-considered project plan.

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GUEST POST from Paul Sloane

Nine Tips to help you get Approval from your Boss for your Innovative Idea

A common complaint that I hear when I run innovation workshops is this, ‘I have plenty of really creative ideas but my boss just isn’t interested in trying anything new. What can I do?’ Let’s leave aside the possibility that this view is itself distorted and take it at face value. It is a tricky situation that most of us will experience at some time. What can be done? Here are some approaches that can prove helpful:

1. Understand his objectives and motivations.

Selling an idea is like selling any other product. You have to understand the needs, motives and priorities of the customer. What are your boss’s ‘hot buttons’? What are the issues that really worry him? Is he motivated by pride, ego, money, career advancement, power, recognition or does he want an easy life? If you can discover his goals and his motivations then you can try to present your idea in a way that plays to them. Stress the outcomes of the idea that will help him in one or more of these fields. (Of course your boss can be male or female but for simplicity the boss is referred to as ‘he’ rather than ‘he or she’).

2. Understand his decision making style.

How does your boss make decisions? Does he prefer numbers, reference from trusted sources, evidence of proof elsewhere, avoidance of risk, logic or emotion? Does he make quick decisions or does he like to chew things over for a while? A recent article in Harvard Business Review by Williams and Miller identified five different styles of decision maker. If you know which style fits your boss then you can tailor your message to give it the best chance of success.

3. Align your idea with corporate objectives.

It will help if you can show that your idea fits with current corporate objectives. Show clearly that the suggestion will benefit the larger organization.

4. Choose the right time.

Don’t barge into your boss’s office at the end of a hectic day and buttonhole him with your great idea. Chances are he will simply say no. Instead ask him for some time to discuss an important issue and mention the benefit. ‘Can you spare 20 minutes first thing tomorrow morning to review an idea to significantly improve departmental productivity?’ Don’t give the idea away now – you need his full attention to cover it properly.

5. If he is risk averse sell risk avoidance.

Sell the benefits of the idea and try to match them to his needs and priorities. Show that you have thought about the risks, costs and downsides. If your boss if risk averse then stress the risks of not implementing the idea. ‘If we don’t seize this opportunity now, other departments could step in ahead of us and gain an advantage.’

6. Don’t ask for approval, ask for suggestions.

With some bosses it is better not to present a fully formed plan but simply to introduce the concept and ask for his input and advice. Do this if he prefers to discuss things and shape them rather than review and approve. This way you can let him form his version of the idea and claim the credit. You will have the quiet satisfaction of knowing that it came from you.

7. Build a coalition of supporters.

With some ideas it is better to gain some initial support before asking for approval. Who do you need on your side to help push the idea through? Have a chat with them first. ‘I checked with Betty in IT and with Bob in HR and they agreed that we can resource this if it is approved.’

8. Try the company suggestions scheme.

If your boss shows no interest (and probably never will) then you can always try the official suggestions scheme. The evaluator may see the merit of the idea. In any event it is registered and that means it can be discussed in the open.

9. Build it anyway.

This is the ultimate act of confidence and bravado. Do it in your own time as a ‘skunk works’ project and then you can demonstrate the prototype to garner support. Present it as a fait accompli and boldly shrug off any notions that it needed prior approval.

There is considerable evidence that middle managers block innovations. So if you want your idea to succeed you will need a clever way of gaining approval. Don’t give up; your organization needs innovators!

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GUEST POST from Paul Sloane

Companies that want innovative and imaginative new ideas are increasingly working with outside scientists or even students says Carly Chynoweth in this article from the Sunday Times.

Builder’s Breakfast crisps, Olay Regenerist skin cream and Red Lake gold mine in Canada have one thing in common: they are all based on ideas developed by outsiders. A trainee midwife came up with the crisp flavour in response to a competition held by Walkers; the second combines research from French company Sederma and Procter & Gamble and Goldcorp found gold at four out of five sites suggested by winning respondents to its online competition.

I am interviewed in the article as is Rajesh Chandy, academic director of the Deloitte Institute of Innovation and Entrepreneurship at London Business School, and Miles Eddowes, associate director of open innovation at food group Kraft.

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