By now, if you’re in marketing you’re probably familiar with the concept of customer lifetime value. Put simply, it’s the idea that a customer is worth to the organization not just the value of a single transaction, but the collection of all of the transactions that they might make during their relationship with you. And when speaking of customer lifetime value, we generally don’t talk about any single customer, but speak about their value in aggregate, averaging out the high value (many, many purchases) and low value customers (one or a few purchases).
The concept is usually linked to discussions of how much you can afford to spend to acquire a customer and whether a particular advertising or marketing effort is worth undertaking.The concept has been even applied to non-profits (lifetime donor value) and even to social media ROI.
But what’s a good outside innovation partner worth?
As I was speaking with several of the innovation leaders at Intuit on their campus in Mountain View last year, it came to me that organizations should be seeking to build and strengthen relationships with their customers, suppliers, and other potential innovation partners in ways similar to their approach to traditional relationship marketing.
Having helped several clients with their relationship marketing strategies, it seems to me that there is no reason why the same principles can’t or shouldn’t be applied to your potential innovation partner community.
After all, as more and more companies begin to understand and engage in the practice of open innovation, then there will be an advantage accumulated by the organizations that do a good job of building strong and profitable relationships with the most passionate and prolific suppliers, customers, academics, etc. over those organizations that don’t.
What organization out there wouldn’t want to accumulate an innovation advantage, a growth advantage, a relationship advantage over their competitors?
But the real questions are of course:
Do you have the required internal innovation capability built already to support open innovation?
Are you engaging in open innovation already? Or are your competitors?
What are you doing to build strong relationships with you potential innovation partners?
Are you tasking skilled relationship marketers with creating and maintaining these conversations and building these relationships?
So, do you? Are you?
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In collaboration with IIR and the Back End of Innovation conference, I hosted a webinar last year titled ‘Mobilizing Your Innovation Army’ examining how organizations can engage the hearts, minds, and eyes of employees into the innovation efforts of the organization. Here is a video recording from the webinar:
Too much of the time the innovation conversation focuses on whether someone is innovative or not. We waste far too much time focusing on how people can become more innovative instead of stopping to think about the possibility that everyone is innovative in their own way.
The lone innovator myth needs to die.
Great ‘lone innovators’ like Alexander Graham Bell and Thomas Edison had teams of people surrounding them and helping them succeed.
Innovation is a team sport, and in this webinar we will take a look at how to engage your entire workforce in the innovation process by leveraging The Nine Innovation Roles to harness the different unique innovation capabilities that we all possess. We are all innovative in our own ways, and The Nine Innovation Roles help you evaluate your current workforce and provide insight into how to mobilize an innovation army.
In this recording of my webinar for the Back End of Innovation conference, I focus on:
The importance of building a common language of innovation
I do a lot of work as a social business and innovation speaker at events all around the world. If you’d like me to speak at your company or event, please contact me.
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I’ve been talking for a while now as an innovation speaker how crucial value is to innovation. It is no consequence as a result that value sits at the center of my definition of innovation:
Innovation transforms the useful seeds of invention into solutions valued above every existing alternative – and widely adopted.
In this definition you will also see that I draw a distinction between useful and valuable, and I develop it further in my book Stoking Your Innovation Bonfire – the following is an excerpt on the topic from the book:
“Often usefulness comes from what a product or service does for you, and value comes from how it does it. If you’re looking to truly deliver innovative products and services into the marketplace, then once you succeed at the designing and developing the ‘what’, don’t forget to also focus on achieving excellence in the ‘how’.”
One of my favorite example of the useful versus valuable distinction is the mousetrap. Despite the hundreds or thousands of patent applications submitted every year for new mousetrap designs, most people still purchase the same simple snapping mousetrap that you see in cartoons and that has been around for a hundred years. The mousetrap is a great example of how easy it is to generate innovation investment opportunities and how difficult it is to create something that is truly valuable.
This distinction between useful and valuable is one that you must seek to understand and by turning this into a lens through which you can look at the potential of your innovation investment opportunities, the higher the return you will have from your innovation portfolio.
Speaking of which, maybe we should stop talking about idea generation, idea management and idea evaluation and instead begin thinking about ideas as innovation investment opportunities. Just changing the language we use in talking about innovation can change the way we think about things and the outcomes that we are able to generate. The images we choose and the language we use is incredibly important and we’ll discuss this in more detail here in a moment. But first I would like to share my innovation equation to counter the popular (innovation = idea + execution) equation. I like to say that:
Innovation = Value Creation (x) Value Access (x) Value Translation
Now you will notice that the components are multiplicative not additive. Do one or two well and one poorly and it doesn’t necessarily add up to a positive result. Doing one poorly and two well can still doom your innovation investment to failure. Let’s look at the three equation components in brief:
Value Creation is pretty self-explanatory. Your innovation investment must create incremental or completely new value large enough to overcome the switching costs of moving to your new solution from the old solution (including the ‘Do Nothing Solution’). New value can be created by making something more efficient, more effective, possible that wasn’t possible before, or create new psychological or emotional benefits.
Value Access could also be thought of as friction reduction. How easy do you make it for customers and consumers to access the value you’ve created. How well has the product or service been designed to allow people to access the value easily? How easy is it for the solution to be created? How easy is it for people to do business with you?
Value Translation is all about helping people understand the value you’ve created and how it fits into their lives. Value translation is also about understanding where on a continuum between the need for explanation and education that your solution falls. Incremental innovations can usually just be explained to people because they anchor to something they already understand, but radical or disruptive innovations inevitably require some level of education (often far in advance of the launch).
Done really well, value translation also helps to communicate how easy it will be for customers and consumers to exchange their old solution for the new solution. My favorite example of poor value translation and brilliant value translation come from the same company and the same product launch – The Apple iPad. It’s hard to believe, but Apple actually announced the iPad with the following statement:
“Our most advanced technology in a magical and revolutionary device at an unbelievable price.”
This set off a firestorm of criticism and put the launch at risk of failure. But amazingly Apple managed to come up with the Out of Home (OOH) advertisements with a person with their feet up on a couch and the iPad on their lap (see above) by the time the product shipping. If a picture is worth a thousand words, this particular picture will probably end up being worth billions of dollars to Apple.
Never Forget!
Value creation is important, but you can’t succeed without equal attention being paid to both value access and value translation…
Because innovation is all about value…
Value Creation (x) Value Access (x) Value Translation = Success!
This is the first of a series of video and text interviews with innovation leaders at a range of companies that are seeking to create innovation excellence in their organizations. This interview, and many others with innovation leaders from trailblazing organizations around the globe, will build upon the foundation of the research and findings contained in my first book – Stoking Your Innovation Bonfire – and will form part of a case study on Intuit for my next publishing effort. This effort will be a highly collaborative and interactive endeavor looking at what is required to make innovation a deep capability in successful organizations.
If you think your organization is doing some really great work to create innovation excellence in your organization, please contact me.
I am excited to present the first innovation interview in this video interview series examining some of the topic surrounding the development of a deep innovation capability. I had the opportunity to interview Scott Cook, Co-Founder and Chairman of Intuit, at The Economist’s “Innovation 2011: Entrepreneurship for a Disruptive World” event in Berkeley, CA. In this video Scott talks about some of the key factors required in helping an organization become excellent at innovation. Below you will find the video and a written transcript.
Here is the innovation interview transcript:
Hello everyone this is Braden Kelley of Blogging Innovation. here with Scott Cook the founder of Intuit. Scott, I would really like to ask you about innovation and building innovation as a deep capability within the organization and as you started Intuit and as you look to grow and make it a successful company, what are some of the key things that you tried to do to help make innovation a capability in a continuous possibility for the organization.
Scott: Yeah that is something we have been spending a lot of time on over the last 4 years so I think a lot of the DNA we have on innovation is good in the company but we had lost some of the skill and capabilities. We hired new people, new managers so we went into a big rebuilding starting in 07. Things that have been very— I mean what you are trying to do, is change and improve the way teams do their daily work and the way managers, what they expect of teams.
So we worked it at all levels, so I work with teams from the top and it changes your expectations of what business unit leaders do with their teams and then we have innovation catalysts who work to couch teams and help teams when they hit innovation roadblocks or trying to leap and really change their thinking. We also work on skill building so one example is that a number of our executives had actually narrowed who we would hire from various companies, good folks but it never actually done innovation in a way that we teach people to do it.
So we took 2 days of an off site with just the top 18 people in the company and had our innovation catalyst come in and have them do the very process that we expect to our teams. Customer immersion with the customers and the executives did it, why we recruited customers as they came in. The nature of going broad that day— in a nature of trying to come to a key insight, testing that insight back with the customers then going broad, I don’t care with that insight, what could you do and then narrowing.
We made them go through the same steps that we expect as a team so they personally could have done it. I find it hard for leaders to lead to a destination, they have not yet been. So that is why we had to work on a leash up level but at the same time we were working on the team so how they work. So that is, we also do internal company broadcasts where we take teams inside Intuit and they tell their stories of how they did it step-by-step because we all learn from stories.
Another thing that we do is we teach by doing. We used to teach by preaching, talk at people. I don’t find adults learn from being talked at. They just retain the same habits they already have. So if we really want to change habits you have to get them to practice the new habits. So now when we do company meetings or leadership development sessions most of it is doing very little of it as listening. We get them busy doing the very things we want them to do or with homework in advance where they had to interview people who do what we want, then to do and learning from that and report back into a very doing process.
So that has been a big change we have made as from how we actually conduct the meetings where we want to use them to change habits so it is a series of things, note it happens fast step-by-step. Some teams move faster than others and we try to use those to inspire the rest but I think as I worked with teams now I see them— we are getting better outputs higher success rates with customers much higher than ratings of new products, fewer failures are pruned out early and cheap which is the whole goal. So I have seen the output metrics now finally after 4 years at working at this that you would project in the desire from making these sorts of interventions.
Braden:So in talking with other people in Intuit, it became very clear that when the company started small there was this idea of Follow Me Home’s, and then you know kind of follow me into the office and the catalyst programs sounds like one of the things that you are doing to try to instill some of these behaviors across the company and expose people to some of the ideas. And as I, you know talked with people at the organization it became very clear that the design for the like concept that you are trying to move across the organization is spreading farther and wider and then as you pursue that what are some of the key challenges that you found and that you have overcome over time in relation to trying to take some of the small company ethos as you have grown and maintain that those aspects of designing for a customer to like?
Scott: I want to say 2 things one is there is a challenge of team size. The team’s size when we started of course was small so everyone in the team was very close to customers. Our team size has grew and it grew and it grew and once you get a bigger team you move from 4 people working on a product to the 20 or 30 or 50, well then you have got some people in the team who go out and meet with customers. Other people say “Nah, I don’t need to do that, you do that, oh just listen to what you are saying” and suddenly you just get most of the team who has never met with customers or has not met in the last year with customers or with prospects.
And then you have much more communication problems, you don’t have shared vision, you don’t have shared understanding, a lot of things go haywire so key is to get back to smaller team sizes. So we have been busting up the team sizes sort of taking teams that used to be 30 or 40 and broken up some note in some cases no team bigger than 4. And we have to architect the work a lot more if those teams are truly going to be independent and that is our jobs as leaders. So that has been one very helpful thing. I think another. I would focus on learning from customer behaviors, not learning from customers, learning from customer behaviors.
Because the tempting tendency is for people on teams to rely on what customers say and maybe that works if you are selling to specialists. Let us say you are selling to a doctor who does cardiac surgery 8 hours a day, 5 days a week maybe that person can really tell you accurately what they are going to do if confronted with a new offering. But for regular people that just sell regular stuff to who might do taxes ones a year or might work with a bank ones in a week or pay their employees ones every 2 weeks. What they tell you, maybe half of it they will actually do, but you actually don’t know which half you are listening to.
So I learn much more reliable behaviors, trust observable behaviors that you can observe and measure either measure remotely through what happens in the web or you can measure by observing with your own eyes. The tendency though when you take people having them trained and send them out to meet with customers is they have got to interview customers. Well you just invented the word’s most expensive way to do a customer interview. If you are going to interview them call them on the phone or send survey, don’t do Follow Me Home.
Follow me homes are there so you can see with your eyes so shut up, say nothing, watch for an hour or two, or three then you can ask him about what you saw and then you are asking about behaviors. That is still an interview, not the most reliable but it will be better because you are probing about specific behaviors yourself. So I say that is the second thing that we have worked to re-instill this trust behaviors and behavioral data, not attitudes or words.
Braden:Very good, well I think the insight is very important and really and the taking the time to listen like you said is very important to innovation, I mean that is what we are all trying to do there early is the people that follow blogging innovation so on behalf of the readers and the viewers of Blogging Innovation, I think you very much Scott for your time and again this has been Braden Kelley of Blogging Innovation here with Scott Cook of Intuit.
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Is the era of innovation over? Or is the war for innovation just beginning?
I came across an article in one of Canada’s main newspapers — The Globe and Mail — by Barrie McKenna titled ominously, ‘Has Innovation Hit a Brick Wall?’
The article speaks to how the Canadian government sinks billions of dollars into research and development every year, yet the country remains an innovation laggard compared with most of its trading partners. The author refers to this as Canada’s “innovation deficit.” The article then goes on to examine some research from University of British Columbia economics professor James Brander that examines whether Canada’s problem is part of a much broader global phenomenon.
The conclusions that Dr. Brander comes to are less than comforting (if you agree with his view of innovation); his research found the pace of innovation to be slowing dramatically in four key areas: agriculture, energy, transportation, and health care.
As someone who works with companies to help foster innovation and whom frequently writes and speaks on the topic, I have a problem with Dr. Brander’s conclusions about Canada and the world in the same way that I have issues with the way that the U.S. Congress and President Obama approach innovation in the United States. In fact the American government’s approach to innovation prompted me to write the controversial ‘An Open Letter on Innovation to President Obama.’
I’m working on a white paper for a client, and as part of my research, I’m looking for a few people who are willing to share what the innovation imperative was for their organization to start innovating (or to increase their effort spent on innovation).
Why did your organization decide to make a commitment to innovation?
Why did management decide that they wanted to sustain an effort to make innovation a deep capability of the organization?
Or even, what was the fire that caused management to commit to an innovation project?
Ideally I am looking for people who are willing to be quoted, but if you are not, that’s okay too.
Sound off in the comments or use the contact form.
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Ideas are easy; innovation is hard. Ideas are exciting, but innovation is scary because it is all about change. The changes required by minor innovations are easier for customers and organizations to absorb. But the large changes generated by major innovations often disrupt not only the market, but the internal workings of the organization as well. This requires organizations to become increasingly flexible and adaptable. And companies that successfully innovate in a repeatable fashion have one thing in common: they are good at managing and adapting to change and complexity.
People often fail to imagine just how the change injected into organizations by innovation ebbs and flows across the whole organization’s ecosystem. Innovation creates a complex web of change not just for customers, but also for employees, suppliers, marketing, operations, and many other groups. Let’s explore some of the change categories visualized in this framework using an Apple iPod example from my book, Stoking Your Innovation Bonfire:
A few years ago I looked around the corporate and consulting landscapes and I noticed that there was a talent gap in both places. There are many occasions when consulting firms look to their bench and don’t have the talent they need there to fulfill a client need right away and so sometimes they lose business to their competition. And on the corporate side, there are many occasions when a manager or director has more work than they can possibly do themselves and what they really need is not a consultant but a smart, flexible resource that can parachute in and get up to speed helping them very fast. Having been called in to fill both of these kinds of gaps from time to time alerted me to the existence of these two market needs, and so I started to create extendedbench.com.
There is definitely a need for an ‘extended bench’ or a ‘talent stable’. Unfortunately I don’t have time to build out this business and in an effort to simplify my life, I thought I would put the web site and the associated domains and collateral, pitch decks, etc. that I’ve started up for sale to someone who has a passion for realizing the idea – probably someone from a staffing or recruiting background.
The following domains are included in the sale:
extendedbench.com
talentstable.com
Have a look at the web site, decide what these assets are worth to you to accelerate your entrepreneurial pursuit, and make an offer (no offer too low).
And if you think the idea is terrible, sound off in the comments about why.
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In support of my crowdfunding project over on IndieGoGo I am offering an incredible deal to the first TEN (10) individuals to grab this perk:
In exchange for each $500 investment, the first TEN (10) people anywhere in the world will get:
One of only TEN (10) spots in an online seminar where I will personally train you on how to facilitate a Nine Innovation Roles workshop or public seminar
A share of any Nine Innovation Roles Workshop leads that I can’t fulfill myself
A Nine Innovation Roles Seminar Pack – which includes TEN (10) Nine Innovation Roles Group Diagnostic Tools to use with your first set of workshop participants (a $199.99 value)
This is a great opportunity to add the Nine Innovation Roles Group Diagnostic Workshop to your roster of innovation services that you offer to clients. You should be able to charge between $2,000-$5,000 + expenses for each of the sessions you facilitate depending on the length and amount of custom content, so you should recoup your $500 investment after running your first workshop or public seminar.
The Nine Innovation Roles diagnostic workshop will create a fun, interactive experience for innovation teams or organizations to use to help people better understand what roles they fill on innovation projects, why the team’s or organization’s innovation efforts are failing, and how they can together improve the innovation performance of their teams or organization.
So, grab this Amazing Innovation Keynote and Nine Innovation Roles Workshop Deal and help your innovation teams be more successful in the future. Don’t wait. Be one of only TEN (10) people worldwide to get this perk, or pre-order the seminar kit and run run workshops or seminars on your own.
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We hear a lot about innovation today, but why is it so essential to sustainable business success?
Innovation is the oxygen of business. Fail to invest in innovation and eventually you will suffocate and be crowded out by a competitor or by an entrepreneur who identifies how to deliver a solution that creates more value than yours (and those of your competitors). Focus too much attention on efficiency at the expense of innovation and eventually you’ll end up getting really good at making stuff people no longer want.
To continuously innovate, companies must learn to manage a few key tensions that exist in every organization.
We hear a lot about innovation today, but why is it so essential to sustainable business success?
Innovation is the oxygen of business. Fail to invest in innovation and eventually you will suffocate and be crowded out by a competitor or by an entrepreneur who identifies how to deliver a solution that creates more value than yours (and those of your competitors). Focus too much attention on efficiency at the expense of innovation and eventually you’ll end up getting really good at making stuff people no longer want.
To continuously innovate, companies must learn to manage a few key tensions that exist in every organization.
First, there is the tension between the executive mindset and the entrepreneurial mindset.
The executive mindset is focused on avoiding failure and making the trains run on time. The entrepreneurial mindset is focused on pursuing new solutions and willing to risk everything to pursue their success. Resist the entrepreneurial mindset too much and you will turn potentially valuable intrapreneurs and their ideas into entrepreneurs and potential competitors. Pay the executive mindset too little attention and risk unprofitability.
Second: the tension between exploration and exploitation.
Invest too little in exploring for new potential markets and you will starve the firm of future growth. Invest too little in exploiting the potential of current solutions and rob the firm of revenue and income needed to fund future growth. Companies must strike a balance.
Building a strong innovation foundation requires that you conduct an innovation audit to understand where you are. Then, build a common language of innovation built around:
A shared definition of innovation
An innovation vision
An innovation strategy
Innovation goals
Together these will focus your innovation efforts and explain why and what kinds of innovation you are looking for (and not looking for) and how you plan to measure progress and success. Innovation can’t drive results without a clear plan and direction. Unfortunately too few companies take the time to do these things in a cross-functional, participatory way.
But innovation is not free. After building a solid innovation foundation, successful innovators set aside money to fund an innovation portfolio of projects of different risk profiles and time horizons, create the human resource flexibility necessary to staff innovation projects and learn how to instrument and execute innovation project experiments for fast learning.
At the same time the company must do a good job helping customers access that value through effective design, processes, retailing, and service. Meanwhile, powerful value translation must be created to help customers understand how a potential innovation will fit into their lives. Many companies spend large sums of money to create value, without thinking through whether they can do a good job at the value access or value translation for a potential innovation.
As an increasing number of industries become commoditized, innovation is already an important way to not only distinguish your company from the competition, but increasingly it is becoming a necessary investment just to maintain existing market position.
Most companies approach innovation ad hoc — only when their platform is burning. But it is possible to build an innovation system to power continuous innovation. An increasing number of companies are making investments in their innovation systems both here and abroad. Can you afford to be one of the companies that don’t?
By now, if you’re in marketing you’re probably familiar with the concept of customer lifetime value. Put simply, it’s the idea that a customer is worth to the organization not just the value of a single transaction, but the collection of all of the transactions that they might make during their relationship with you. And when speaking of customer lifetime value, we generally don’t talk about any single customer, but speak about their value in aggregate, averaging out the high value (many, many purchases) and low value customers (one or a few purchases).
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I’ve been talking for a while now as an 
This is the first of a series of video and text interviews with innovation leaders at a range of companies that are seeking to create innovation excellence in their organizations. This interview, and many others with innovation leaders from trailblazing organizations around the globe, will build upon the foundation of the research and findings contained in my first book – 
Is the era of innovation over? Or is the war for innovation just beginning?
I’m working on a white paper for a client, and as part of my research, I’m looking for a few people who are willing to share what the innovation imperative was for their organization to start innovating (or to increase their effort spent on innovation).
Ideas are easy; innovation is hard. Ideas are exciting, but innovation is scary because it is all about change. The changes required by minor innovations are easier for customers and organizations to absorb. But the large changes generated by major innovations often disrupt not only the market, but the internal workings of the organization as well. This requires organizations to become increasingly flexible and adaptable. And companies that successfully innovate in a repeatable fashion have one thing in common: they are good at managing and adapting to change and complexity.
A few years ago I looked around the corporate and consulting landscapes and I noticed that there was a talent gap in both places. There are many occasions when consulting firms look to their bench and don’t have the talent they need there to fulfill a client need right away and so sometimes they lose business to their competition. And on the corporate side, there are many occasions when a manager or director has more work than they can possibly do themselves and what they really need is not a consultant but a smart, flexible resource that can parachute in and get up to speed helping them very fast. Having been called in to fill both of these kinds of gaps from time to time alerted me to the existence of these two market needs, and so I started to create extendedbench.com.
