GUEST POST from Paul Sloane

Get the Customer to Do More

Online check-in for flights is a great innovation. Instead of standing in line at the check-in desk I can select my seat and print my boarding card at the computer on my desk (or on my smart phone). For me, the passenger, online check-in offers time saving, control and convenience. For the airline it means less administration, fewer check-in desks and competitive advantage (I would rather fly with an airline that offers it). It is an example of a service innovation where part of the task has been transferred to the customer. We are seeing this kind of idea from all sorts of service providers.

Take health care as an example. Patients themselves are increasingly turning to the internet and to self-help groups. In the UK NHS Direct gives advice and help to approaching 10m people a year by phone and internet. This saves many visits to the surgery where people have to wait their turn to see a doctor. PatientsLikeMe is an internet based user group that helps people to explore their symptoms, conditions, treatments and research reports. They claim that by learning from other patients and sharing the user experiences you can take control of your illness. Kaiser Permanente is a health firm that supports diabetes sufferers. It encourages them to undertake self-diagnostic checks which are analyzed by specialists who then advise courses of action over the phone. New York medical center Montefiore has reduced hospital admissions by 30% for older patients by using sensors which enable doctors to monitor their progress remotely. The combination of monitoring, self-help and remote specialist support has the ability to deliver improved health and lower costs.

IKEA has become a highly successful furniture retailer using a model where the client does much of the work. Not only do you have to assemble the kits yourself but you act as store man when you retrieve the goods in their warehouse.

Another celebrated case is the crowdsourcing pioneer, Threadless, which is a company that produces T-shirts. It gets its customers to submit designs for new tops and then to vote to choose their favorites. Threadless then produces the most popular designs and unsurprisingly they sell well.

Take a look at the processes involved in the delivery and use of your goods and services. Break it down into a series of steps. For each step ask the question – ‘Can we get the customer to do this?’ If you can transfer part of the task to the client you might end up with a win, win – better for them and better for you. Just like online check-in.

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GUEST POST from Paul Sloane

The traditional top-down structure in organizations can be a powerful inhibitor to innovation. It is a reflection of a command and control style of leadership where orders are issued at the top and followed by the ranks. People lower down the organization who have great ideas can feel inhibited about promoting them. They feel it is disrespectful to challenge the command chain. Most modern businesses try to overcome this with open communication and employee empowerment. But there is a more radical alternative – destroy the hierarchy altogether.

Oticon, the innovative Danish hearing-aid manufacturer, broke the conventions of corporate structure when it tore up the hierarchy and created what became known as a ‘spaghetti organization’. People are not allocated to departments but move from project to project. The system looks chaotic in a conventional sense but Oticon have achieved remarkable success with it over a period of ten years.

Another celebrated example of this approach is W L Gore & Associates, manufacturer of the world famous GORE-TEX® fabric. It was the first company to stay top of the The Sunday Times ’100 Best Companies to Work For’ list three years in succession.

Gore’s unusual approach involves teams forming for projects and selecting their own leaders. There is no formal executive structure and you are appraised by your peers. Associate John Housego, Livingston plant leader, explains: “You quickly learn what it means to be a real team player. Many companies profess to foster team spirit, but at Gore your contribution is rated not by an individual, but by your immediate team.”

There are many examples on the internet of communities that come together for a common purpose and largely manage themselves. Wikipedia is a good example.

It appears that successful organizations of the future will not resemble the hierarchical structures of the past. They will be fluid, adaptable networks. People will coalesce into teams to accomplish certain tasks and then reform into new teams. A useful analogy is a theater company. Everyone agrees a common goal – a vision of a brilliant team performance. Each person learns their part in the play and fulfills their role in a creative and high quality manner. Then there is a fresh objective – a new play with a new director. The actors and support staff have entirely different responsibilities. The person who was a star before is now in a supporting role. But everyone shares the common purpose – to put on a great performance and to delight their customers.

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GUEST POST from Paul Sloane

Try this exercise. Draw a flow chart diagram of your organization’s approval process for innovations. Pick an example for a theoretical new idea. Suppose it is a good idea to improve customers’ satisfaction that would involve significant spending and the co-operation of several departments. What levels of approval and authority would it need to see the light of day? Who are the key stakeholders in the approval process? Who has the right of veto? What levels of planning or business case development are needed to get it through the system?

Draw as detailed a flow chart as you can showing the go/no go decision points and the feedback loops where ideas are sent back for reconsideration. Now ask some questions. Is this process fit for purpose? Is it over-engineered? Do we have too many hurdles for new proposals to jump? Often when this exercise is done we find that the approval process has been designed for significant new product initiatives but it is unwieldy for smaller developments or process improvement proposals that still have to jump through all the hoops.

The National Audit Office in the UK examined innovation in the government sector and found that approval processes were inappropriate and deterred innovation. It was recommended that Government departments and agencies should ensure that:

1. Their review processes are purposeful and proportionate for the risks that the innovations pose.
2. Pilots are appropriately scaled for projects and analyzed.
3. Reversible innovations can be tested speedily and at small scale before being rolled out more widely.
4. Decision-making processes take appropriate account of the opportunity costs of delays, especially the foregoing of expected financial savings.

These recommendations apply to large and small organizations everywhere. Make more decisions faster. This will lead to more failures but if you fail often and fail inexpensively then you will also find winners sooner.

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GUEST POST from Paul Sloane

Imagine that you are planning a big surprise party. You want it to be entertaining, spectacular, memorable and different. You could plan and project manage every element of the party yourself: the theme, venue, music, food, drink, entertainment, games, diversions etc. Or you could involve a number of people to help you with their ideas and their skills. One person could manage all aspects of the venue, someone else could design special decorations, another person could put together a music mix and so on. If you do it all yourself then you are in complete control, you have sole responsibility and you can keep the whole thing a surprise but you have to remember to do everything and it is only as good as your ideas. If you bring in a group of friends and experts to help then you can harness their imaginations; you can bounce ideas off each other. You have to delegate tasks which involves collaboration, supervision, letting go and an element of risk. Keeping the whole thing a surprise is more difficult but can be done. The choice between doing it all yourself and doing it with a group is the choice between a closed and an open model.

There was a time not very long ago when companies primarily used closed models for all their new product development. They focused on their own resources – research, development, marketing, etc – to bring new products to market. This model gave them control and seemed to work well.

Nowadays most CEOs see collaboration as key to their success with innovation. They know they cannot achieve their innovation targets using internal resources alone. So they look outside for other organizations to partner with. A good example is Mercedes and Swatch who collaborated to produce the Smart car. When Mercedes wanted to produce an innovative town car they did not choose another automobile manufacturer, they partnered with a fashion watch maker. Each brought different skills and experiences to the team.

The next step beyond collaboration is open innovation; a concept developed by Henry Chesbrough to describe the process of harnessing external resources to work alongside your team to develop new products and services. This is something that many leading companies, including Proctor and Gamble, IBM, Unilever, Reckitt Benckiser, BMW, Nokia and Kimberly-Clark have focused on as a way of driving innovation. Open innovation replaces the vertical integration of processes within one company with a network of collaborators working on innovation projects. Using outsiders can speed up processes, reduce costs, introduce more innovative ideas and reduce time to market.

Kimberly-Clark reduced the time is takes to bring out new products by 30 percent through open innovation. It launched Sunsignals in just six months by collaborating with a smaller company, SunHealth Solutions. Sunsignals is a self-adhesive sensor that changes color when the wearer is in danger of burning in the sun. Proctor and Gamble aims to source 50 percent of its innovations from outside using open innovation. Early results include new products such as Mr. Clean Magic Eraser and Pringles Prints.

Crowdsourcing is an extrapolation of Open Innovation in which you throw out a challenge to a group of people that you may or may not know and solicit their ideas and solutions for your issue. Many web-based companies specialise in different crowdsourcing fields. So if you want a name for a new brand of product you can get many suggestions by using the crowdsourcing site Naming Force. If you have a tough programming problem you could use Topcoder.com who will set the challenge for ace freelance programmers from around the world. Similarly if you have a difficult technical or scientific challenge you might use Innocentive or Nine Sigma.

There is a powerful surge towards open innovation and crowdsourcing. These concepts hold the enticing promise of turbo-charging your new product development.

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GUEST POST from Paul Sloane

How can you break out of the group-think that affects most large organizations? How can you escape from the corporate frameworks that shape discussions and ideas?

Philips is moving from a high-volume electronics manufacturer to a design-led, lifestyle technology company. It needs help to get there so it set up a ‘simplicity board’. Philips reckoned it needed a fresh perspective from creative types with no ties to the company. So it formed the simplicity board, a group of external specialists in health care, fashion, design, and architecture. “Philips was too inward-looking,” says Andrea Ragnetti, Chief Marketing Officer. “To really embed simplicity into the company’s DNA, we needed an element of vision.”

For Philips, the promise of simplicity isn’t just about making products that are easier to use. The bigger challenge is rewiring the entire organization. The board’s primary contribution, says fashion designer and board member, Sarah Berman, is “using creative chaos to affect lasting change.”

Lou Gerstner was an outsider who was brought in to IBM as CEO to turn it around when the giant corporation faced seemingly impossible problems. He was able to change the embedded IBM culture because he could clearly see its strengths and weaknesses. Most of the loyal employees were so used to the way that things were done in IBM that it was hard for them to envision the fundamental changes that were needed.

Often we are so close to our own methods and products that it is difficult for us to see clearly. An outsider can bring a simpler, fresher view. How can you harness the creative input of outsiders to improve your innovation?

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GUEST POST from Paul Sloane

Many leaders of small firms focus on making their business work efficiently and on delivering high-quality customer service. There is absolutely nothing wrong with these objectives. They are both essential aims. However, if they lead to rigidity and the exclusion of variation then they can undermine the key advantage that small businesses have over large businesses – agility.

If you run a small business then your large competitors can outspend you. They have more resources than you do. But they cannot move as quickly as you can. The great thing about running a small business is that you can have a new idea today, try it tomorrow and see the customer reaction the next day. If it works you can reinforce and develop it. If it does not work then you can adapt it or drop it. You can introduce innovations in products, services, messages and methods more quickly and more easily than your larger competitors. Typically they have to go through layers of committees and approvals before they can bring a new concept to market.

So by all means focus on efficiency, customer service, operational excellence and so on. Make the current business model work better. But at the same time allocate some time, money and people to experimentation. Try some wacky ideas and quickly gauge customer reaction to them. You should try several new ideas every month. Many might flop but that does not matter. Some will have a small benefit and should be retained. But if you keep doing this then every so often you will hit a home run – a really great and novel idea that customers love. That then is your opportunity to really accelerate the growth of your business by seizing a new market opportunity.

Here are some ways to increase your agility:

1. Set a target for the number of new initiatives you want to try over the next 12 months
2. Ask your staff, your customers and your suppliers for ideas to improve your product or service
3. Run regular brainstorm meetings with specific objectives relating to innovation
4. Allocate a small budget for prototypes and experiments
5. Give people time and space to innovate – empower them to try new things
6. Celebrate success, learn from failure, punish inaction

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GUEST POST from Paul Sloane

If you want to be a better leader then take a look at the satellite navigation system, or GPS, in your car (Sat Nav for my UK readers). Here is what it can teach:

1. The GPS stays focused on the destination. Regardless of blocked roads, obstacles, traffic and diversions it continues to focus on finding a way of reaching the strategic goal – the destination. In the same way a great leader continues to focus on the vision and the strategic goal despite short-term tactical difficulties.
2. The GPS is flexible about how to get there. It is not committed to one way of reaching the destination; it is quite happy to find a different way when necessary. Likewise the leader should be committed to the goals but open-minded about how to achieve them.
3. The GPS stays calm no matter what. Even if the driver and passengers screw up all the instructions the GPS remains unemotional and supportive. It never gets angry or loses its temper. A good leader is calm and reassuring with his or her team even when they get things wrong or hit problems.
4. The GPS updates the driver on progress and directions. A good leader continually communicates with the team to emphasize the importance of reaching the goal, what the next steps are and how they can play their role in getting there.

Of course there are many other skills and attributes that a great leader needs. But staying focused on the goal, being calm, being flexible and communicating well are absolutely essential. Become a GPS Leader and take your team to its destination.

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GUEST POST from Paul Sloane

If you can identify your unique selling point, you’re in a position to stamp your place on the map and even make inroads into enemy territory. If you don’t have anything that differentiates you from others you’re in trouble.

For the Brits among you, imagine that I showed you photographs of the scenery at Brighton, Bognor Regis and Bournemouth and asked you which was which. Most people would find it difficult to tell them apart.

Now suppose I added a photo of Blackpool. Nearly everyone would recognize it. Why? Because it has an enormous iron tower that is well known around the world. The tower is not modern, not used by most visitors to the town and not particularly attractive, but it is easily recognizable.

Blackpool has something unique and memorable, which is one of the reasons why it gets 12 million visitors a year – more than any other seaside resort in the UK.

Try this simple exercise with your marketing team. Write the phrase “Only we can…” at the top of a flip chart and ask each member of the group to complete the sentence. They might describe anything from a product, a service, a feature, a market segment, a geographic area, a personality or a patent. But it must be something that only your organization can do or offer. What is your Blackpool Tower?

If nobody can think of anything that fits then you are in trouble. It means you don’t have anything that significantly differentiates you from other similar organizations.

Getting to this point should then provoke questioning such as “What can we do about this? How can we offer something unique?”

As Seth Godin argues in his book, Purple Cow, it is more important to be different than to be better. If you have a hotel that is a little better than most other hotels then that is a good starting point. But to boost your business you need to find something that makes you different from other hotels – even if it is something silly like a large plastic purple cow in the reception area.

If you do not have a differentiating factor then you should create one. Lager beers are very similar. To differentiate their product Heineken ran an advertising campaign with the slogan “Heineken refreshes the parts that other beers cannot reach”. It was a patently ridiculous claim yet it was highly successful. The adverts were humorous and memorable. The campaign ran for many years and the slogan became well known.

Maybe you can think of a shortlist of different things that only you can do. You should focus on this list and ask how you can use this to differentiate your offering in the marketplace – do your customers even know about it as a result of your marketing?

Could building on your list help you to move still further away from competitors – perhaps you should think about charging more for these factors, or targeting a more specific customer group that appreciates and desires what is unique to you.

The “only we can” element exploited by the Virgin Group’s marketing team is that they have Sir Richard Branson. So they use him extensively in promotional activities.

A recent “only we can” for ITV is The X Factor – its line?up of judges and their little arguments – so ITV ensures this aspect of the show gets plenty of press coverage.

We are all trying to move away from the cut-throat competition of commodity products and services. The “only we can” exercise helps you to focus on how to do that. Why not try it at your next marketing meeting.

Take Aways

1. With your team, create a shortlist of things that are unique to your offering and base your marketing strategy around them
2. If you can’t identify any differentiating factors then create some and make them the focus of an advertising campaign
3. Once you’ve recognized your unique selling points then build on them by highlighting customers who value these differentiators and consider charging more for them

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GUEST POST from Paul Sloane

The easiest way to crush creativity is to find fault with new ideas which colleagues and subordinates bring forward. The more clever and more experienced you are, the easier it is to shoot holes in any proposal You can show your superior intelligence and highly honed management analysis skills by pointing out all the flaws in their proposals. All the experts pointed out to Marconi that radio waves travel in straight lines and the Earth is a sphere so it was silly to think of transmitting a radio signal across the Atlantic. Yet Marconi defied the experts by transmitting across the Atlantic. The radio signals were reflected by the ionosphere. As those experts showed, intelligence and experience can give us all the ammunition we need to criticize innovative ideas.

All it takes is for a few crazy ideas to be shot down and people stop volunteering them. So the next time someone comes to you with a wacky, half-formed idea which you can immediately see is riddled with faults, bite your tongue and say the following:

‘That sounds interesting; how can we make it work?’

The let them talk. As they expand on their idea you will almost certainly see ways in which it could be adapted to work. Explore it constructively together and you stand a better chance of coming up with a winner. What is more the person who was courageous enough to suggest the idea feels motivated to improve on their idea and encouraged to come up with more in the future.

An atmosphere where ideas are criticized will crush creativity and deter people from coming forward. An atmosphere which welcomes ideas is a necessary prerequisite for an innovative organization. It is an essential foundation on which to build an entrepreneurial enterprise.

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GUEST POST from Paul Sloane

Imagine that you are planning a big surprise party. You want it to be entertaining, spectacular, memorable and different. You could plan and project manage every element of the party yourself: the theme, venue, music, food, drink, entertainment, games, diversions etc. Or you could involve a number of people to help you with their ideas and their skills. One person could manage all aspects of the venue, someone else could design special decorations, another person could put together a music mix and so on. If you do it all yourself then you are in complete control, you have sole responsibility and you can keep the whole thing a surprise but you have to remember to do everything and it is only as good as your ideas. If you bring in a group of friends and experts to help then you can harness their imaginations; you can bounce ideas off each other. You have to delegate tasks which involves collaboration, supervision, letting go and an element of risk. Keeping the whole thing a surprise is more difficult but can be done. The choice between doing it all yourself and doing it with a group is the choice between a closed and an open model.

There was a time not very long ago when companies primarily used closed models for all their new product development. They focused on their own resources – research, development, marketing, etc – to bring new products to market. This model gave them control and seemed to work well.

Nowadays most CEOs see collaboration as key to their success with innovation. They know they cannot achieve their innovation targets using internal resources alone. So they look outside for other organizations to partner with. A good example is Mercedes and Swatch who collaborated to produce the Smart car. When Mercedes wanted to produce an innovative town car they did not choose another automobile manufacturer, they partnered with a fashion watch maker. Each brought different skills and experiences to the team.

The next step beyond collaboration is open innovation; a concept developed by Henry Chesbrough to describe the process of harnessing external resources to work alongside your team to develop new products and services. This is something that many leading companies, including Proctor and Gamble, IBM, Unilever, Reckitt Benckiser, BMW, Nokia and Kimberly-Clark have focused on as a way of driving innovation. Open innovation replaces the vertical integration of processes within one company with a network of collaborators working on innovation projects. Using outsiders can speed up processes, reduce costs, introduce more innovative ideas and reduce time to market.

Kimberly-Clark reduced the time is takes to bring out new products by 30 percent through open innovation. It launched Sunsignals in just six months by collaborating with a smaller company, SunHealth Solutions. Sunsignals is a self-adhesive sensor that changes color when the wearer is in danger of burning in the sun. Proctor and Gamble aims to source 50 percent of its innovations from outside using open innovation. Early results include new products such as Mr. Clean Magic Eraser and Pringles Prints.

Crowdsourcing is an extrapolation of Open Innovation in which you throw out a challenge to a group of people that you may or may not know and solicit their ideas and solutions for your issue. Many web-based companies specialise in different crowdsourcing fields. So if you want a name for a new brand of product you can get many suggestions by using the crowdsourcing site Naming Force. If you have a tough programming problem you could use Topcoder.com who will set the challenge for ace freelance programmers from around the world. Similarly if you have a difficult technical or scientific challenge you might use Innocentive or Nine Sigma.

There is a powerful surge towards open innovation and crowdsourcing. These concepts hold the enticing promise of turbo-charging your new product development.

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