GUEST POST from Paul Sloane

Very often the best way to test an idea is not to analyze it but to try it. The organization that implements lots of ideas will most likely have many failures but the chances are, it will reap some mighty successes too. By trying numerous initiatives we improve our chances that one of them will be a star. As Tom Kelley, general manager of the design and development firm IDEO, puts it, “Fail often to succeed sooner.”

Recognizing the Importance of Failure

Deborah Bull is the creative director for the Royal Opera House in London. She is keen to encourage small companies of artists to come out with mad ideas and to try them. As she noted in a Financial Times article in 2006, “We need to get away from the idea that everything has to be a hit at the box office and a hit with the critics. If everything we do succeeds, then we are failing, because it means we are not taking enough risks.” Although it is arguable that an artistic bent almost certainly assures this viewpoint, Bull’s point is transferable to any industry.

For example, Honda Motor Company entered the U.S. market in 1959 with its range of low-powered motorcycles. It endured failure after failure as it learned the hard way that little motorcycles popular in the Tokyo suburbs were not well received on the wide open roads of the United States. Honda eventually brought out a range of high-powered motorcycles that proved popular in the new – and far different – marketplace. Soichiro Honda, the company’s founder said, “Many people dream of success. Success can only be achieved through repeated failure and introspection. Success represents the 1 percent of your work that results from the 99 percent that is called failure.”

What made Silicon Valley so successful as a center of high-tech growth? It represents a Darwinian process of failure. Author Mike Malone puts it like this: “Outsiders think of Silicon Valley as a success, but it is, in truth, a graveyard. Failure is Silicon Valley’s greatest strength. Every failed product or enterprise is a lesson stored in the collective memory. We don’t stigmatize failure; we admire it. Venture capitalists like to see a little failure in the resumes of entrepreneurs.” Silicon Valley is known as a center of significant success, but also significant failure; the one goes with the other.

In order to develop the concept of the benefits of failure, Penn State University instituted a course for engineering students – Failure 101. The students have to experiment, which inherently involve taking risks. But in this course, the students do not pass over their errors – the errors and mistakes are opportunities to learn, create and innovate. The more failures the students make, the sooner they can get an A grade!

Many great successes started out as failures. Explorer Christopher Columbus failed when he set out to find a new route to India – he found America instead. Champagne was invented by a monk (named Dom Perignon) when a bottle of wine accidentally had a secondary fermentation. 3M invented glue that was considered a failure – it did not stick. But the glue’s failure to adhere became the basis for the Post-it note, which proved a phenomenon.

Failing to Succeed Tips

There are five things that companies must know – and effectively communicate to their employees – to create an atmosphere in which failure is not only respected, but encouraged:

1. Distinguish between the two kinds of failure:
   • Honorable failure: an honest attempt at something new or different has been tried unsuccessfully and
   • Incompetent failure: people fail for lack of effort or competence in standard operations.
2. Recognize – and communicate – that when you give people freedom to succeed, you also must give them freedom to fail.
3. Do not criticize honorable failures.
4. Have employees admit to, or even boast, about failures they have had where they tried something innovative that did not succeed. Make these into learning experiences.
5. In a culture that is very risk averse and keen to apportion blame tackle the issue head on by rewarding honorable failures. Publicly praise and reward those who have had them.

Conclusion

Even if an individual failure does not lead directly to a success it should be seen as a step to success. Inventor Thomas Edison’s attitude to “failure” is salutary. When asked why so many of his experiments failed he explained that they were not failures. With each “failed” experiment, Edison discovered a method that did not work.

The innovative leader encourages a culture of experimentation. An innovative company must teach its employees that each failure is a step along the road to success. To be truly agile and successful in the long-term, a company must give people the freedom to innovate, the freedom to experiment and the freedom to succeed. That means you also must give employees the freedom to fail.

Editor’s Note: You might also

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GUEST POST from Paul Sloane

Generating a large number of ideas is a key part of the creative thinking process. The more ideas you come up with the more likely you are to find something truly innovative. But having a long list of ideas creates an issue. How do you select the best ideas to carry through to implementation?

Have you ever been in a brainstorm session where you filled flip charts with ideas and then the manager said, ‘Thanks very much, leave those with me and I will analyze them later.’ And then you never heard anything again? The ideas on their own are just the starting point. Without proper evaluation there will be no follow through to completion.

For brainstorms and creative thinking sessions the evaluation phase of the process is critical and typically needs as much time and attention as the idea generation stage. In evaluation we switch from suspending judgment to exercising critical judgment in order to whittle down the ideas to a short-list of actionable items.

Selection Criteria

How do you evaluate the ideas? By setting some selection criteria. The criteria should be reasonably broad but not vague. ‘We are looking for good ideas,’ is too fuzzy – all sorts of things can get through. ‘We want ideas we can implement immediately with no extra resource,’ is almost certainly too tight and will result in good ideas being rejected.

Say you were analyzing ideas for new products. The criteria you agree might be:

• Will customers like it?
• Is it technically feasible?
• Will it make money?

Each idea is then assessed against these measures. A recommended general set of criteria for all sorts of ideas is the FAN method from Synectics. Are you a FAN of the idea? i.e.:

• Is it feasible?
• Is it attractive?
• Is it novel?

The third criterion here is important to ensure that fresh ideas are valued highly.

The British retail giant, Tesco, uses the following criteria for selecting ideas in brainstorms or suggestions sessions.

• Is it better? (For customers)
• Is it simpler? (For staff)
• Is it cheaper? (For Tesco)

Any idea that is better, easier and cheaper is likely to be a good idea and will probably be approved. Putting the criteria into context – e.g. simpler for staff – makes it easier to understand and apply.

Choose the criteria you want and then apply them rigorously to the ideas on your list.

Group evaluation methods

If you are working in a group and have used the criteria above to construct a short list here are some methods for selecting the best ideas to implement:

1. Each person is given 5 ‘ticks’ they can spend. They come to the front and puts ticks next to their favorite ideas. The ideas with the most ticks go forward. This method is quick and energetic but it does mean that some of the more obscure ideas may be overlooked. Their potential may be developed if they are discussed. Another possible drawback is that in controversial or political situations people can be inhibited or influenced by the opinions of others.
2. There is a secret ballot and people write on slips of paper their favorite ideas. This overcomes the problem of political correctness where people may be afraid to support controversial ideas or may be influenced by the more powerful voices in the room. There is no discussion during the ballot but once the ideas are ranked the group discussion can begin.
3. Each person in turn states their favorite idea. The facilitator goes around the room and gives everyone the opportunity to speak. This is quick and interactive but it means that the people who speak later can be unduly influenced by what has gone before.

Summary

It is important to remember to separate the two types of thinking used in the two stages of the brainstorm process. We use divergent thinking while generating ideas. We suspend judgment and generate a long list of ideas including silly and unreasonable ideas. When we have enough ideas or when we have exhausted our creative process then we use convergent thinking to select the best ideas. We can now be critical and analytical. We compare the ideas against clear criteria and make judgements as to which will succeed and which will not. Many people mix the two methods and apply convergent thinking to eliminate lines of enquiry as they go along. This is fatal; many potentially fruitful ideas will be killed at birth. Stay divergent in idea generation and only use convergent thinking when you move to the evaluation phase.

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GUEST POST from Paul Sloane

Brilliant thinkers and innovators are very comfortable with ambiguity – they welcome it. Routine thinkers like clarity and simplicity; they dislike ambiguity. There is a tendency in our society to reduce complex issues down to simple issues with obviously clear solutions. We see evidence of this in the tabloid press. There have been some terrible crimes committed in our cities. A violent offender received what is seen to be a lenient sentence. This shows that judges are out of touch with what is needed and that heavy punishment will stop the crime wave. The brilliant thinker is wary of simple nostrums like these. He or she knows that complex issues usually involve many causes and these may need many different and even conflicting solutions.

Routine thinkers are often dogmatic. They see a clear route forward and they want to follow it. The advantage of this is that they can make decisive and effective executives – up to a point. If the simple route happens to be a good one then they get on with the journey. The downside is that they will likely follow the most obvious idea and not consider creative, complex or controversial choices. The exceptional thinker can see many possibilities and relishes reviewing both sides of any argument. They are happy to discuss and explore multiple possibilities and are keen to challenge conventional wisdom. People around them and subordinates can sometimes consider this approach to be frustrating and indecisive.

Albert Einstein was able to conceive his theory of relativity because he thought that time and space might not be immutable. Neils Bohr made breakthroughs in physics because he was able to think of light as both a stream of particles and as a wave. Picasso could paint classical portraits and yet conceive cubist representations of people.

How can you welcome ambiguity? First by admitting that there are few absolute truths and that for most common beliefs the opposite view might also be true. If the general view is that you can either get high quality or low price the brilliant thinker will ask, ‘Why can’t we get both? How can we deliver great quality at really affordable prices?’

Cognitive dissonance is the concept of holding two very different ideas in your mind at the same time. This is something all the great composers do when they think of two melodic themes and how they can intertwine, adapt and combine them. We would find it very difficult to whistle one tune while thinking of an entirely different one but that is the sort of thing that Beethoven or Mozart would consider trifling.

When we mull over the interaction of two opposing ideas in our minds then the creative possibilities are legion. A wind-up clock and an electrically operated radio are two very different concepts but by imagining their combination Trevor Bayliss was able to conceive of the clockwork radio. Most of us would dismiss such an idea out of hand. It seems incongruous to have a large mechanical winding device inside a small radio. And we can immediately see the drawback that the programme we were listening to would stop when the winder ran down so that we would have to get up and wind the thing again. That appears a very tedious operation.

But Bayliss saw beyond these limitations and considered the needs of people in the developing world who did not have access to reliable mains electricity and who could not afford batteries. For them winding up a radio is a minor inconvenience. The clockwork radio has transformed their lives.

If we want creative solutions and real innovations then we should welcome ambiguity. We should explore the possibilities of two different things interacting together. We should let opposites play.

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GUEST POST from Paul Sloane

Most business managers go through the annual ritual of budgeting. We plan the next one or two years based on the actual results of the most recent year. We draw up a spreadsheet and plan line by line – sales revenues up 10% and costs held to a 5% increase means a modest improvement in profits.

We should have learned by now that this is a sterile process. The past is a poor guide to the future and its innovations. In 1972 the Club of Rome published “The Limits to Growth.” It was a model that predicted what would happen to energy, food, population, environment, etc. It concluded that essential resources like oil would run out in the 1990s and that economic growth was unsustainable. It extrapolated the future based on the past. And it got it wrong precisely because the future is not like the past.

Blocking out innovative ideas

The planning straitjacket means that we are restricted to small incremental increases in revenues and we are squeezed on expenses. There is no scope for the radical improvements that the business so desperately needs. By thinking in terms of last year plus 10% we are blocking out big ideas. The motor car was not the horse-drawn carriage plus 10%, Amazon was not Barnes and Noble plus 10%, and the Smart Car is not your average sedan with an extra 10%. Each was a leap, an innovation, a different approach.

Nokia started as a wood pulp mill in Finland in 1865. It made paper products, rubber products and became an energy company before moving into consumer electronics and becoming the world leader in mobile phones. Virgin was founded by Richard Branson as a record label. It now offers a range of products in travel, entertainment, finance and communications. These successful companies did not get where they are today by modest incremental steps, but by combining efficiency with bold ventures into new arenas.

Who killed our business?

I use an exercise in my creative leadership workshops to shake people out of incremental thinking and planning. The team imagines that they are sitting in the room six years from now asking the question, “Who killed our business?” The premise is that some powerful force has put their company out of business. Individually and in teams they have to conceive of changes in technology, processes, fashion, competition or demographics that might completely replace their current business model.

There are many examples of how the unexpected has devastated businesses. Typewriter manufacturer Smith Corona was wiped out by word processing software on PCs. Polaroid was sideswiped by digital camera technology. MacDonalds has fallen victim to the rise of anti-corporatism and the power of the book, “No Logo.” Downloading music on the Internet is hurting music companies. A loss of reputation demolished Arthur Anderson. Accounting scandals killed Enron and Parmalat. Laser eye surgery is a threat to makers of spectacles and contact lenses.

Starting with a blank piece of paper, people have to imagine a major new trend or approach which would eliminate them and at the same time meet the needs of their customers better. Once they have agreed on some possible scenarios they need to design ideal companies to exploit the new approaches. Instead of starting from today and planning forward, they start from the future and plan for the future.

You can aid the process by first discussing fashion trends, technology developments and demographic movements. The purpose is to startle people out of a complacent and comfortable view of the future and to consider instead a vortex of dangers and opportunities.

Spreadsheets are great tools for recording figures and for trying different assumptions in an existing model. But among all the many menu bars and commands in Excel there is no instruction for “use your imagination” or “conceive entirely new possibility.” Try getting your team together and brainstorm some radical ideas. Develop scenarios that are imaginative but possible. Build some prototypes to test new products or business methods. Test them in the marketplace. An experiment will teach you far more than any spreadsheet. It is by systematically testing boundaries and pushing into new areas that companies like Nokia and Virgin succeed.

Conclusion

Of course every business needs a budget as a yardstick to measure against. But the budget is not a strategy for success or even for survival. Leadership means taking the business from where it is today to somewhere new and different. It means using imagination and innovation to design a better tomorrow.

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GUEST POST from Paul Sloane

One of the great problems with the Western education system is that it teaches that for most questions there is one correct answer. Examinations with multiple choice questions force the student to try to select the right answer and avoid the wrong ones. So when our students leave school they are steeped in a system that says find the “right answer” and you have solved the problem.

Unfortunately, the real world is not like that. For almost every problem, there are multiple solutions that may solve the problem with varying degrees of effectiveness. In other words, in the real world, there is more than one “right” answer. We have to unlearn the school approach and instead adopt an attitude of always looking for more and better answers.

To be really creative, you need to generate a large number of ideas before you refine the process down to a few to test out. To make your organization more innovative, you have to increase the yield. Why do you need more ideas? Because when you start generating ideas you generate the obvious, easy answers. As you come up with more and more ideas so you produce more wacky, crazy, creative ideas – the kind that can lead to really radical solutions.

Real-world examples

The management guru Gary Hamel talks about “corporate sperm count” – the virility test of how many ideas your business generates. Many managers fear that too many ideas will be unmanageable but the most innovative companies revel in multitudes of ideas.

When BMW launched its Virtual Innovation Agency (VIA) to canvass suggestions from people all round the world it received 4,000 ideas in the first week. And they continue to roll in. You can even make your own contribution to BMW’s idea bank.

The Toyota Corporation in-house suggestion scheme generates over 2 million ideas a year. Over 95% of the workforce contribute suggestions; that works out to over 30 suggestions per worker per year. The most remarkable statistic from Toyota is that over 90% of the suggestions are implemented. Quantity works.

Thomas Edison was prolific in his experiments. His development of the electric light took over 9,000 experiments and that of the storage cell, around 50,000. He still holds the record for the most patents – over 1,090 in his name. After his death 3,500 notebooks full of his ideas and jottings were found. It was the prodigiousness of his output that led to so many breakthroughs. Picasso painted over 20,000 works. Bach composed at least one work a week. The great geniuses produced quantity as well as quality. Sometimes it is only by producing the many that we can produce the few great works or ideas.

Putting these lessons to work for you

When you start brainstorming or using other creative techniques, the best idea might not come in the first twenty – or even in the first 100 ideas. The quality of ideas does not degrade with quantity. Often the later ideas are the more radical ones from which a truly lateral solution can be developed.

What do you do when you have a mountain of ideas and suggestions? You sort them, analyze them and try out those with the most potential. The really promising ideas are critically examined from the perspectives of technical feasibility, customer acceptance and profitability. If they pass these hurdles, they move rapidly to a prototype phase. They are then tested in the harsh reality of the marketplace, where a sort of accelerated Darwinism occurs – only the fittest survive. The interesting ideas should be kept in a database and allowed to incubate. When you revisit them later, you may well find that you now see a way to adapt or combine them into something worthwhile.

The venture capitalist’s strategy for testing promising ideas

The most innovative companies have an approach to trying out promising ideas that is like the philosophy of a venture capitalist. The VC invests in a portfolio of different start-up companies, fully knowing that most will fail. A few may break even, and one or two may become successes. But one big success can pay back the costs of all the failures.

Even though he is smart, the VC does not know which ventures will succeed and which will fail, so initially he backs all of them. As time goes on, he cuts funding for the failures and gives it to the winners. It is the same with prototypes in business. The leading innovators run many different pilots and measure progress carefully. They cut funding the losers, but nurture the successful trials with additional resources. That way they are first to market with the real winners.

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GUEST POST from Paul Sloane

Directors constantly strive to increase efficiency, implement best practice and deliver increased shareholder value. They seek to improve cash flow through efficiencies of scale and cost reductions. But there are limits to cost saving. In a global economy your competitors in lower-cost countries can beat you at that game. The best way to create value is to innovate your way ahead of the competition. You need to create temporary monopolies where yours is the only show in town. You can do this by harnessing the creative power of your greatest asset, your people. The goal is to turn them into opportunistic entrepreneurs who are constantly looking for new ways of doing business.

A copy-machine operator at Kinko’s, a major chain of outlets providing copying and document services, noticed that customer demand for copying dropped off in December. People were too pre-occupied with Christmas presents to do much copying for the office. So he came up with a creative idea. Why not allow customers to use Kinko’s color copying and binding facilities to create their own customized calendars using their personal photos for each of the months? He prototyped the idea in the store and it proved popular – people could create personalized gifts of calendars featuring favorite family photos. The operator phoned the founder and CEO of Kinko’s, Paul Orfalea, and explained the idea. Orfalea was so excited by it that he rushed it out as a service in all outlets. It was very successful and a new product – custom calendars – and a new revenue stream were created.

This kind of creative energy should be the goal for every organization. How can you make all your staff into creative entrepreneurs like the operator in Kinko’s? How can you energize people to see problems not as obstacles to success but as opportunities for innovation?

To build a truly innovative organization you need to have a vision, a culture and a process of innovation.

The key elements of creating a truly innovative and entrepreneurial organization can be summarized in the following eight steps:

1. Paint an inspiring vision.
2. Build an open, receptive, questioning culture.
3. Empower people at all levels.
4. Set goals, deadlines and measurements for innovation.
5. Use creativity techniques to generate a large number of ideas.
6. Review, combine, filter and select ideas.
7. Prototype the promising proposals.
8. Analyze the results and roll-out the successful projects

Painting the vision

You start by painting a vision that is desirable, challenging and believable. If you can do this then there are three big gains for the organization:

First, people share a common goal and have a sense of embarking on a journey or adventure together. This means they are more willing to accept the changes, challenges and difficulties that any journey can entail.

Secondly, it means that more responsibility can be delegated. Staff can be empowered and given more control over their work. Because they know the goal and direction in which they are headed they can be trusted to steer their own raft and to figure out the best way of getting there.

Thirdly, people will be more creative and contribute more ideas if they know that there are unsolved challenges that lie ahead. They have bought into the adventure so they are more ready to find routes over and around the obstacles on the way.

At GE the vision is “We bring good things to life.” The Ford Motor Company vision is “…to become the world’s leading consumer company for automotive products and services.” Vision statements should be short and inspiring. They should avoid vague and woolly clichés about outstanding customer service. The vision should not be restricted to today’s type of business. It must set a goal that gives employees enormous freedom in finding ways to achieve it. The pharmaceutical giant Glaxo Smith Kline has a mission “to improve the quality of human life by enabling people to do more, feel better and live longer.” They do not define their mission in mundane terms of drugs or medicines or markets but in inspirational terms of helping people do more, feel better and live longer.

Just painting the picture is not enough. It quickly fades from view if it is not constantly reinforced. Great leaders take time to meet staff. They illustrate the vision, the goals and the challenges; explain to staff how their role is crucial in fulfilling the vision and meeting the challenges. They inspire people to become crusading entrepreneurs finding innovative routes to success.

Empowering

You cannot deliver the change on your own. The best source for the idea-generation and creativity needed for innovation is the team within your organization. To turn them into entrepreneurs who are hungrily looking for new opportunities you have to first empower them. The purpose of empowering people is to enable them to achieve the change through their own efforts. They need clear objectives so that they know what is expected of them. They need to develop the skills for the task. They need to work in cross-departmental teams so that they can create and implement solutions that will work across the organization. They need freedom to succeed. And when you give someone freedom to succeed you also give them freedom to fail.

People want to understand and agree what is expected of them. The scope of their freedom and their responsibility must be agreed. They need training, coaching, reinforcement and encouragement. They need support in acquiring creative problem-solving skills and encouragement to be brave enough to come with radical innovations. Above all, empowerment means trusting people. It is by giving them trust, support and belief that you will empower them to achieve great things.

Overcoming Fear

People are anxious about change. Change is uncomfortable. Change means winners and losers. It is natural that people will prefer to stay within their comfort zones rather than risk an embarrassing or costly failure. You should spend time with people encouraging them to undertake risks and reassuring them that those risks are necessary and worth taking. Fear of failure often inhibits people from pushing themselves to new limits. You have to show that doing nothing has its risks too; that staying in the corporate comfort zone is a dangerous option. You have to reassure them that they will not be punished for taking risks, for worthwhile failures, for bold initiatives that do not succeed. Of course taking risks means taking calculated risks not wild risks. Every employee who is undertaking a risky initiative needs freedom but they need mentoring and guidance too.

Once again communication is the key. Informed people don’t fear change. As Dick Brown, Chairman and CEO of EDS put it, “People are not afraid of change. They fear the unknown.”

Using Innovation Techniques

Can creativity be taught or is it a rare talent possessed by a handful of gifted individuals? The answer is that every one of us can be creative if we are encouraged and shown how to do it. We were all imaginative as children but gradually most people have their creative instincts ground down by the routine of work. With proper training people can develop skills in questioning, brainstorming, adapting, combining, analyzing and selecting ideas. They can be the innovative engine your organization needs.

The process of finding creative solutions is something that can be built into the culture of the organization. This is done by techniques, methods, workshops and a pervading attitude of encouragement for crazy ideas
.

The goal is to change the organization; to achieve a metamorphosis from a routine group of people who are doing a job to a highly energized team of entrepreneurs who are constantly searching for new and better ways of making the vision a reality. We want to use creative techniques to drive innovative solutions to reach the goal. But just encouraging innovation is not enough. You need to initiate programs that show people how they can use creative techniques to come up with new solutions. People need training in order to learn the skills and to develop the confidence to try new methods.

The innovation process involves the generation of many ideas in response to a given issue or challenge. The ideas are then whittled down to the most promising. The key then is to move rapidly to prototyping the best ideas. Businesses that are fast to market carry out quick pilot tests rather than spending months in “paralysis by analysis.” For new products, innovation projects go through a number of evaluation “gates” that test the feasibility, attractiveness and payback. Those that pass through the gate are given more funding.

The innovative organization is constantly trying new products, new processes, new business practices and new partnerships. Its people share an open, questioning, empowered and entrepreneurial culture. They know that innovation is the only way to remain agile and ahead of the competition. After all, it is the innovation of today that becomes the best practice of tomorrow.

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GUEST POST from Paul Sloane

People will not follow an unenthusiastic leader. They will follow someone who has a vision and is passionate about it. Winston Churchill, Martin Luther King and Nelson Mandela showed great passion for what they believed – it was what made them outstanding leaders.

The sales training expert Robin Fielder says, “Never, ever forget that people are more persuaded by your convictions than by your arguments.”

Jim Collins puts it like this; the good to great companies did not say, “Okay folks, let’s get passionate about what we do.” Sensibly, they went about it the other way round entirely: We should only do those things that we can get passionate about. Kimberley-Clark executives made the decision to divest other businesses and focus on paper-based consumer products in large part because they could get more passionate about them.

Here is an exercise that we sometimes conduct on leadership courses. Think for a moment about a key component of your vision for what you want to achieve for the business this year. Choose a single important goal that you as a leader want to accomplish. Now imagine that you expressed that goal to your people in a dull, boring, unenthusiastic way. What would happen? Now consider how you could communicate the goal again, but this time with passion, with energy, with commitment, with enthusiasm. If you were receiving those two kinds of messages how would you react? Which message would inspire you to change your behavior, to do something extraordinary, to go the extra mile?

Focus on the things that you want to change, the most important challenges you face and be passionate about overcoming them. Your energy and drive will translate itself into direction and inspiration for your people.

It is no good filling your bus with contented, complacent passengers. You want evangelists, passionate supporters; people who believe that reaching the destination is really worthwhile; people who are on a mission to make the world a better place. This drive and enthusiasm starts with the leader. If you want to inspire people to innovate, to change the way they do things and to achieve extraordinary results then you have to be passionate about what you believe in and you have to communicate that passion every time you speak.

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GUEST POST from Paul Sloane

Let’s be clear, business is not war. But if you are operating in a fierce marketplace then it can feel like it. Many of the methods we use in our sales campaigns, marketing strategies and competitive tactics are based on military analogies. So what lessons can business leaders today learn from the history of warfare? Here are some that seem particularly relevant.

David vs. Goliath – 1000 BC?

Goliath was a giant and the Philistine’s champion at man-to-man combat. David was a young shepherd boy. Goliath expected to overwhelm his opponent in a sword fight but David chose to fight on different terms. He defeated Goliath by using an unusual weapon, the sling, with pinpoint accuracy.

Lessons: It is no use going up against someone who has an 8-ft spear with a 4-ft spear. You need a different weapon. If you are smaller you have to be agile and different. If your competitor is the giant in the market, you need a radical approach so that you can strike rapidly and accurately. This is what Direct Line did when they used telephone technology to sell car insurance directly while the major players were using brokers.

Battle of Crecy – 1346

The English army of about 14,000 men under Edward III had ravaged northern France. They were finally confronted on August 26, 1346 by an army of some 40,000 Frenchmen under Philip VI. Battles were normally fought by knights on horseback and the French, with such a numerical advantage, felt confident. But the English had a new and superior technology, the longbow. Their archers were trained in rapid fire and could sustain a rate of over 10 arrows per minute. Each arrow could penetrate armor. It was the first time that such a mass volley of arrows had been used in warfare. The French attacked in waves and they were cut down relentlessly by the power, speed and range of their opponents’ archers.

Lessons: One of the best ways to beat an established competitor is with a new technology. Innovation can overcome a strong opponent. Focus your firepower on the target. Amazon used internet technology to directly address the needs of book buyers and to run rings around the established high street vendors.

Battle of Trafalgar – 1805

Traditionally, naval battles were fought by lining up two fleets in parallel line so that they could deploy the maximum firepower from their canons. At the battle of Trafalgar, Villeneuve, the French admiral, formed his fleet of 33 ships into a line. But Nelson did not line up in parallel. He split his 27 ships into two squadrons and attacked at right angles to the French line. In the hectic battle that ensued Nelson died but the British were victorious and established a naval supremacy that lasted over 100 years.

Lessons: If you do not have a superior force or superior technology then try a different tactic. Surprise your opponent with a fresh approach. Virgin, Benetton and Body Shop are examples of businesses that used surprise tactics to disrupt incumbent market leaders.

First World War – 1914 to 1918

The scale of the slaughter of soldiers in World War I was appalling. Over 8 million military personnel died. The main tactic on the western front was to repeatedly attack strong defensive positions with waves of men. They were massacred. It was believed that with sufficient artillery bombardment and pure weight of numbers a breakthrough could be achieved. But the way to overcome barbed wire defenses and machine gun posts is not with lines of infantrymen. What was needed was the rapid development and effective deployment of the tank.

Lessons: Effort, courage and hard work are not enough. If you are competing with a well-entrenched opponent who has a strong defensive position then you need a new technology or approach to achieve a breakthrough. A long war of attrition debilitates both sides. Retail banking was a stodgy business until Egg, First Direct and Cahoot came along to shake it up and take millions of accounts away from the big players.

Maginot line – 1940

The British and French high commands assumed that the new war with Germany would be similar to the First World War, with huge static armies facing each other. The French built a massive defensive line along the entire border between France the Germany, the Maginot line, consisting of enormous fortifications. But when the Germans attacked in May 1940 they did some lateral thinking. They used fast-moving armored divisions and paratroops. They swept through Holland and Belgium and around the Maginot line. The British and French were outmaneuvered and France fell in five weeks.

Lessons: Assuming that new contests will be similar to previous ones is dangerous. The best way to combat an opponent who has a strong defensive position and barriers to entry in a market is to go around those barriers and find a new way to the market. This is what Direct line, Amazon, Netscape and Easyjet did.

Battle of Britain – 1940

After the fall of France, the British retreated across the Channel, leaving most of their equipment behind. The German army, having raced across Europe was rampant while the British army was demoralized and under-equipped. The Germans planned an aerial assault followed by an invasion, and many thought that Britain would fall as quickly as France, Holland or Poland. But the British had some things that the others had not – the channel, the Spitfire, radar and Winston Churchill. Churchill gave the people a vision, purpose and belief that enabled them to sustain the blitz, oppose the might of Germany and eventually triumph.

Lessons: In tough environments, winning CEOs are those who have a clear vision, can communicate it to their people and motivate them to achieve the goal. Sir Arnold Weinstock, Bill Gates and Jack Welch are recognized as this type of visionary leader.

Defeat of Hitler – 1945

After his great successes in the early part of the war, Hitler was convinced that he was a military genius and the German Wehrmacht could overcome any obstacle. When he attacked Russia in the summer of 1941, he was so confident of victory that there were no plans for a winter campaign; no winter coats for the soldiers and no winter oil for the tanks. He ignored the advice of his generals and pushed his forces down towards Stalingrad and then refused to allow them to withdraw or regroup when the communication lines became overextended. His arrogance and overconfidence built a barrier to criticism and meant that he never used the full talents of his team. Eventually Germany was overwhelmed by the weight of Russian, American and British forces.

Lessons: A narcissist CEO will lead the business to disaster. Plan a fallback scenario. Strong vision and belief are essential but a leader who blocks constructive criticism, ignores the input of his team and fails to build consensus is doomed. To mention them by name would be libelous but take your pick from the CEOs who have led mighty companies to disaster in recent times.

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GUEST POST from Paul Sloane

We tend to think that the best way to innovate is to add new features to our products or services. What can we add that increases the appeal of our offering? This route can easily lead to extra cost, feature overload and customer fatigue. Sometimes a better answer lies in subtraction.

Michael O’Leary, the founder of Ryanair, looked at the business process of passenger flights and built a new model by subtracting all the frills that meant extra cost. He subtracted:

• Travel agents – you book direct over the Internet so the middlemen and their costs are cut out.
• Tickets – you show your passport and quote your reference number. Subtracting tickets saves costs.
• Allocated seating – you choose a seat when you get on the plane – just like on a train or bus.
• Free drinks and snacks – if you want a drink you have to buy it.
• Customer care – Ryanair has one-tenth the number of customer care attendants per passenger mile compared to BA. If you have a complaint the answer is generally – ‘hard luck but what did you expect with such a cheap flight?’

(Editor’s note: In the U.S., JetBlue, Virgin America and Southwest Airlines operate using a very similar model)

What can you take away from your current business process in order to save cost and simplify operations? Can you unbundle your product into separate components? Can you strip out costs or processes that not all customers want? Can you bypass a middleman on the route to your customer – as Direct Line, Amazon and Ryanair did? Egg and First Direct offered on-line banking and made it cost effective by cutting out all the branches that burden the traditional banks.

Sometimes you can get the customer to do something that you do right now. The supermarket was a remarkable innovation in the 1920s. The key new idea was to get the customer to serve themselves rather than having an assistant serve them. A modern updating of the idea is provided by IKEA. Not only do customers act as assemblers in putting the furniture together, they also act as store men in collecting the flat packs from the warehouse.

The whole do-it-yourself business was built on the back of getting individuals to do what tradesmen had done for them in the past. eBay has built a business that runs like clockwork by getting the clients to place their own advertisements, hold their own stock, sell their own goods and give each other recommendations. It is a triumph of transferring services to clients.

Next time you face the challenge of how to refresh your product don’t just think about adding new features or services. Think about what you can cut out of the process or product. How can you make things simpler, less costly and more appealing to customers?

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GUEST POST from Paul Sloane

The problem is the recession. It is hurting businesses large and small. The answer is innovation. Innovation can help you to cut costs, improve margins, retain customers, acquire new customers, gain market share and ultimately to survive. But when you are cutting costs and squeezing resources in all areas how can you find the people, time and money for innovation? Experiments are not guaranteed to succeed so it can look wasteful to fund large innovation projects.

Here are five tips to help you innovate on slender means:

1. Tell people that you want their ideas. Tell your staff, tell your customers and tell your suppliers that you want ideas that will help streamline the business, improve service, cut costs or delight customers. If you do not have an effective suggestions scheme then set one up. Listen to all suggestions with an open mind and evaluate them constructively.

2. Allocate a budget for innovation. You do not get innovation for free. You have to allocate time, people and money but you do not have to be extravagant. The most important thing is to give people some time to generate, evaluate, select and test ideas. Google famously gives all employees one a day a week for this sort of activity. You do not have to be so generous – maybe one afternoon a month will suffice. However you do it you have to create some slack for people to brainstorm and to experiment.

3. Move rapidly to prototypes. Once you have selected a promising idea move rapidly to building a model that you can show to people and review. This might be built in play dough, it might be a software mock-up, it might be a role play of a new service. Once you show it to selected customers or other stakeholders you can quickly get useful feedback.

4. Kill the losers. Set standards for innovations – e.g. Can we make money at this? Is there a real need? Can we make it work? Can we win with this? If the answers are negative then be prepared to cancel the project and move onto something else. Resources are limited and should only be devoted to potential winners.

5. Pinch other people’s ideas. A cheap way to innovate is to copy ideas from other industries or other places and to try them in your business. What are they doing in Singapore or Holland or California to solve this kind of problem? What can you copy that is new for you but tested elsewhere?

Make innovation a priority, put it onto people’s objectives, add it to your balanced scorecard. You have to make the current model work better and at the same time find ways to replace it with something better. Continuous innovation is very demanding – but it is the best way to survive.

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