Category Archives: Management

Creating a Culture of Continuous Innovation

Creating a Culture of Continuous Innovation In this economic downturn there is more pressure than ever on executives to find new sources of growth, and as a result leaders are increasingly talking about innovation. In some organizations the leader may say “we need to be more innovative” or “we need to think out of the box” and stop there. While for other organizations it may become part of the year’s goals or even the organization’s mission statement. Only in a small number of cases will there be any kind of sustained effort to enhance, or create, a culture of continuous innovation.

By now everyone has probably heard of six sigma and continuous improvement, and maybe your organization has even managed to embed its principles into its culture, but very few organizations have managed to transform their cultures to support innovation in a sustainable way. For most organizations, innovation tends to be something that is left to the R&D department or that is thought of on a project basis. Some organizations create new innovation teams, but it is rare for an organization to invest in transforming their entire culture. There are many reasons for this:

Support from top leadership is required

Challenge: Most executive teams are focused on short-term results and transforming organizational culture is a long-term investment of financial and leadership resources.

Clear goals and guidance are needed

Challenge: This is a bigger barrier than you might think. Most organizations struggle to understand how to set innovation goals and to provide a vision for employees on how they might get there. Goals to ‘be innovative’ or ‘think outside the box’ are not specific enough to be successful.

Every organization is different

Challenge: The starting place, needs and barriers to creating a culture of continuous innovation are different for every organization – making easy implementation of best practices impossible

Most companies lack a shared vocabulary for innovation

Challenge: People in different parts of the organization use different terminology, methodologies, frameworks, and have different understandings of what innovation is. The lack of a shared vocabulary prevents organizations from achieving shared success.

Change is painful

Challenge: Creating a culture of continuous innovation threatens the power base of a critical few, and disrupts the way people think about their jobs and the organization. Even if change is for the better, people tend to want to avoid change.

Change needs to be managed

Challenge: This means pulling employees off of their day jobs or hiring consultants to commit to the leadership and communications surrounding the change effort. This investment may prove challenging in the current economic climate.

Change takes time

Challenge: Organizations seeking to create a culture of continuous innovation must realize that the transformation will not happen overnight. People can only absorb so much change at once. The transformation will likely have to be broken up into separate phases with discreet goals (don’t try to do it all at once).

Make sure to stop and share the successes of each phase, and also to identify what you’ve learned that can be implemented in the next phase.

Visualize the outcomes of participation

Challenge: Often people withdraw and choose not to participate in organizational transformations because they don’t believe that their participation will positively impact their daily lives. If those who choose to participate don’t see an impact from their early efforts, might choose to disengage as the process continues.

You must celebrate participation and highlight the impact of individual contributors throughout the process.

New systems and processes may be required

Challenge: To innovate continuously, you need to be open to receiving great ideas from anywhere in the company, and must have systems and processes to manage idea gathering, evaluation, and development. Often this requires a financial and personnel investment.

Change efforts require lots of communication and storytelling

Challenge: You have to bring the change to life for employees. This requires involvement of employees early and often in the communications surrounding the goals and outcomes of the cultural transformation

Create a story that is easy and fun to tell – this will make it easier to cascade the change downwards through the organization

This should give you a better idea of why very few organizations embark upon the difficult work to enhance or create a culture of continuous innovation. It may not be an easy or a short journey, but creating a culture of continuous innovation is the only way to increase your chances of avoiding organizational mortality.

Successfully creating a strong culture of continuous innovation also represents a huge opportunity for an organization to attract the best talent, to lower costs, to continuously add new revenue streams, and to better achieve competitive separation.

Is your organization ready to invest the hard work towards achieving the rewards of a culture of continuous innovation?

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Six Sigma versus Innovation

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Six Sigma versus Innovation Are Six Sigma and Innovation inherent enemies or powerful allies?

Some would say that Six Sigma and innovation are diametrically opposed goals for an organization to pursue. Some say that organizations cannot excel at both and would point to the issues that 3M has run into with its ability to innovate after a CEO James McNerny came in and introduced Six Sigma into the organization.

I disagree that it is not possible to pursue a dedication to continuous improvement and reduction in variability while also challenging the organization to identify ways to deliver greater value to customers through innovation.

I am happy to take the opposite position and say that Six Sigma can in fact accelerate an organization’s ability to innovate. How can this be?

Well, given the cost cutting efforts throughout organizations across all industries of the past couple of decades, most employees are incredibly overworked and struggling to keep their heads above water. American employees work more hours per year and take fewer days off than any employees in the world. The result is that employees often do not have the time to devote to activities related to innovation because they are buried in the execution of administrative and other urgent tasks. Why is this important?

Creative thinking requires the mind to explore different perspectives and possibilities in order to come up with innovative approaches to solutions. This requires time, usually blocks of uninterrupted time. If workers don’t have the time to devote to innovation pursuit, then organizations will struggle to deliver anything other than incremental improvements.

The power that Six Sigma holds to accelerate innovation is through its inherent focus on continuous improvement. By a disciplined approach to Six Sigma methodologies, efforts can be focused on identifying the heat sinks in employee workloads (those activities that require a large time investment but deliver low return). Projects can then be prioritized for maximum employee workload reduction. Utilizing Six Sigma methodologies, organizations have the potential of reducing employee frustration while simultaneously increasing the employee energy available to focus on innovation.

Despite most people’s contentions that Six Sigma and innovation are natural enemies, I believe they can be the best of friends, but it would take a disciplined, integrated approach on behalf of the organization. Does your organization have the discipline, vision and commitment?

If you enjoyed this 2007 classic, you’ll enjoy my more recent article on Six Sigma and innovation titled – DMAIC for Innovation

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DMAIC for Innovation

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DMAIC for Innovation Below is a rough draft of an article I wrote for the current issue of iSixSigma magazine.

Can the popular Six Sigma framework be adapted to look at innovation?

Much has been written about how a formal Six Sigma approach and a formal approach to innovation cannot co-exist. But is that really true?

On the surface these two formal approaches personify the natural tension between exploitation and exploration activities within any organization. Six Sigma is generally thought of as an exploitation activity, while innovation is usually associated with exploration. When I speak of exploitation, I’m not speaking of child labor and deforestation, but of optimizing the transformation of organization’s inputs into profitable outputs under its existing business model. And when I speak of exploration, I’m referring to the organization’s efforts to pursue new potential business models, new product or service areas, or both.

Let’s look back before we look forward.

Continue reading the rest of this article on Innovation Excellence

A Brief History

The Six Sigma methodology is celebrating its 25th anniversary this year after being developed by Motorola back in 1986 and popularized by GE and others. As many of you know, Six Sigma began as a methodology focused on improving quality, but over time organizations have adopted and adapted the methodology to encompass activities focused on continuous improvement and on cutting costs.

Innovation meanwhile, dates back nearly 500 years as a term to the Latin innovare which is often interpreted to mean “to renew or change” and the most often referenced godfather of innovation is Joseph Schumpeter (1930). So despite being focused on the new, the philosophy of innovation is actually older than that of Six Sigma.

But, so what?

The people who see innovation and Six Sigma as compatriots and not combatants are correct. This is because in some cases Six Sigma can actually be seen as an innovation approach – but not in every instance.

Say what?

Let’s look at my definition for innovation and then dig a little deeper, and this ambiguity will make more sense:

“Innovation transforms the useful seeds of invention into widely adopted solutions valued above every existing alternative.”

Shared Goals, Different Outcomes

I think we can all agree that both Six Sigma and innovation are focused on creating improvement. However, while Six Sigma is focused on achieving improvement by decreasing variability, innovation is focused on achieving improvement by increasing value. Sometimes an increase in quality through a decrease in variability does create increased value for the customer and sometimes it doesn’t.

Say what?

When would an increase in quality through a decrease in variability not lead to an increase in value for the customer?

Well, one important component of my innovation definition above was the end bit – “valued above every existing alternative – and widely adopted” – which is the real key. New solutions have an obvious increase in value that the inventor always sees, but at the same time they generally have an accompanying decrease in value for the customer that often an inventor fails to see that prevents their solution from being widely adopted (and thus staying an invention instead of graduating to become an innovation).

It is therefore possible for a new solution to deliver increased quality but actually destroy value for the customer – and not be widely adopted as a result. This is why things like the incandescent light bulb and traditional mousetrap stay around for so long despite the introduction of other potential solutions.

Natural Conflict

You should see by now that while Six Sigma and innovation are not mortal enemies at their cores, there are differences that create natural conflicts. This requires managers to be aware and to consciously manage how they are going to use these two approaches together (if at all) in their organizations.

The main tension between the two approaches is that Six Sigma at its core requires accurate measurement. How else will you know whether a Six Sigma project has resulted in decreased variability and a sustainable improvement? On the flip side, the more radical or disruptive an innovation project is attempting to be, the more difficult it will be to accurately measure both the expected risk of the project and the expected profitability and adoption possibilities. A great example of the difficulties of forecasting risk and outcomes is the Segway. Imagine you were in charge of the project back in 2000. How would you size the market for personal transporters? How would you forecast what the media response would be? How would estimate the risks to the project posed by sidewalk regulations? How would you measure consumer readiness accurately? We all know that most forecasts for the new are based on the old, and that this measurement approach is flawed, but it loses all credibility when applied to disruptive innovation projects – and we have to accept that. This inherent uncertainty is why successful innovation is often the result of finding the right questions, while success at Six Sigma is often the result of finding the right measurements.

The mindset created by the need for accurate measurement is congruent with the executive mindset, which brings me to another of my favorite tensions in business – that between the executive mindset and the entrepreneurial mindset. Often not effectively managing this tension, more than any other, prevents organizations from being able to successfully innovate in a sustainable manner. Let’s compare these two mindsets:

The Executive Mindset – Executives typically are focused on what they can do to avoid failure. Executives tend to focus on doing everything they can to make the trains run on time (so to speak).

The Entrepreneurial Mindset – Entrepreneurs typically are focused on trying to do whatever they can to create success. Entrepreneurs tend to ask questions like, “Why a train?”

These natural tensions mean that managers have to be careful not to make adoption of Six Sigma methodologies too widespread. Otherwise, there is a real possibility of stifling the un-structured thinking in the more creative areas of the business, such as Design and R&D. This is especially true where the initial stages of idea discovery take place – when partial ideas need to be collected and connected to form strong innovation candidates.

Linking Six Sigma to Innovation

In organizations using Six Sigma and Innovation, there are real opportunities to use the two together. Maybe it is in using Design for Six Sigma (DFSS) in the later stages of your innovation process to ensure that your new products and services deliver the same level of quality as your existing product or service portfolio. Or, with open lines of communication between your innovation and Six Sigma groups, maybe there are opportunities for:

Six Sigma groups using an expanded methodology focused on continuous improvement to pass interesting improvement ideas that are a bit too radical to be accurately measured, or just a bit too variable. The innovation group, on the other hand, might be able to collect and connect the dots, or to challenge the right other areas of the organization or its partner/supplier/customer ecosystem to find a workable solution.

Innovation groups enhancing, evaluating or developing ideas might be able to reach out to people in the Six Sigma group for help in either identifying better ways of measuring potential performance of different ideas, or possibly even for help in knocking down certain obstacles that might arise in the commercialization of ideas.

Six Sigma groups to leverage the innovation group to help them identify solutions that can achieve six sigma results when they can’t identify potential solutions internally capable of producing the requisite level of quality within accompanying tolerances for variability.

DMAIC for Innovation

Given that people have expanded the use of the DMAIC methodology (Define, Measure, Analyze, Improve, and Control) beyond strict use on improving quality and reducing variability to be used on continuous improvement projects, I thought why not stretch it a bit further and create a DMAIC for Innovation. Let’s have a look at what such a creature might look like.

Define

Imagine that you work for an automobile manufacturer and I were to task you with solving the following technical challenge: “How would you make our automobiles use less gasoline?” Think about what your approach would be. Now, some of you might focus on making the automobile lighter, others might focus on making the engine more efficient, still others would focus on making it more aerodynamic, and a few of you would think about ways to make an automobile that ran on something other than gasoline altogether. Ask the innovation question in the wrong way and you will get different innovation results than you expect. Here are some key things to consider:

Any successful innovation effort begins with a cross-functional innovation leadership team sitting down and defining what innovation means for the organization, establishing a common language, and communicating this out to the organization in a clear manner.

While it may be good sometimes to have people going off in lots of different directions, that needs to be a conscious choice, otherwise the innovation energy of your organization will dissipate and little will be achieved. You must focus the innovation energy of your organization and that is done by defining what innovation means to your organization and what the common language around innovation will be. At the same time it is important to establish an innovation vision and strategy.

An innovation vision provides the focus employees need and a vision is about the “where” and the “why,” not the “what” or the “how.” Jack Welch, former CEO of General Electric, once said, “Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.” An innovation vision can help employees answer questions like – “What kind of innovation are we pursuing as an organization?” or “Why should employees, suppliers, partners, and customers be excited to participate?”

An innovation strategy is not merely agenda for new product development or a technology roadmap from R & D. Instead, an innovation strategy identifies who will drive a company’s profitable revenue growth and sets the innovation direction for an organization toward the achievement of its innovation vision. A well-defined innovation strategy helps the organization define which innovation challenges to focus on and what tactics will best help the organization conquer those challenges. At the same time, it serves as a map to refer back to as projects and ideas are being evaluated, so that ideally a link can be maintained between the organizational strategy and the innovation strategy.

Measure

While it is often harder to estimate the market size for true innovations than it is for line extensions or product improvement projects, it is still important to measure certain things related to innovation. When looking to begin a formal approach to innovation, here are some key measurement questions that need to be asked:

What are the organizations innovation goals?
What is the capacity for innovation in your organization?
What is the organization’s appetite for risk?
What is the organizations ability to finance innovation projects?
What is the ability of the organization to be flexible and adaptable?
How will we measure the success of our innovation program?
How will we instrument our innovation projects for learning?

Analyze

Innovation requires a great deal of analysis. This includes analyzing what the key insights are that you can drive your ideations off of, analysis of the brand equity and capabilities of the organization that can be leveraged, and analysis of what direct and adjacent competitors are doing now, and analysis of the future strategic actions that we expect our competitors to take. In coming up with these key insights it is useful to use a methodology like Rowan Gibson’s four lenses from Innovation to the Core:

Challenging orthodoxies: Questioning deeply held dogmas inside companies and inside industries about what drives success.
Harnessing discontinuities: Spotting unnoticed patterns of trends that could substantially change the rules of the game.
Leveraging competencies and strategic assets: Thinking of a company as a portfolio of skills and assets rather than as a provider of products or services for specific markets.
Understanding unarticulated needs: Learning to live inside the customer’s skin, empathizing with unarticulated feelings and identifying unmet needs.

The analysis phase is not, of course, just about generating the insights, but also about generating the ideas. And when it comes to ideas, people don’t realize that often their great idea is actually only a partial idea. So, another important and often underappreciated part of the analysis phase when it comes to innovation is the collection and connection of partial ideas to create potential complete solutions. And, there is also a great opportunity for collaboration during this phase to take the raw ideas and make them better BEFORE the final part of the analysis phase. The crescendo of this phase is the analysis of all of the potential ideas that you could fund, evaluating them using cross-functional teams, and picking which to fund.

Improve

The improve phase is about actually creating the innovation. It’s about getting down to business and beginning to develop the selected ideas. This includes prototyping, market testing, customer feedback, and most importantly – learning and iterating. A key part of this iteration as we discussed earlier is finding the right questions to highlight reasons for potential market success or failure. Embedded in this of course is finding the right answers that will turn a potential invention into a widely adopted innovation success.

But there is another part of innovation that is often under-appreciated, and that is the role of communications. If you are truly bringing an innovation to market, then you are bringing new value to customers that they may not intuitively understand that they have the need for. Too often companies fail at innovation because they ignore the importance of communications:

Internally to make people inside the organization passionate believers and supporters of the ideas (instead of roadblocks).

Internally to improve the inputs into the idea development process. How can you contribute to the improvement of an idea if you don’t understand what it is or the magnitude of its impact?

Externally to either explain the new value for an incremental innovation, or to educate the customer about the value of a disruptive innovation.

Control

Control is of course about making innovation repeatable, sustainable, and successful in the organization. How do you make innovation a deeply embedded capability of the organization? The organization must move from pursuing a firefighting approach to innovation and create a continuous process with organizational commitment at every level. This means that you build a foundation on:

An organizational psychology with improved tolerance for risk and an understanding that failure is a real possibility, and that instead of avoiding failure, we will seek success and mitigate failure through a portfolio approach and by embedding an ability to learn fast from failure OR success.

Building an organizational structure and policies that enable resource flexibility and movement of resources to projects where they are needed most.

Creating a culture and systems that support the free flow of information to employees about customer insights and the value of innovation and amongst employees to enable stronger collaboration on ideas and partial ideas.

Providing the leadership commitment, the processes and tools, the rewards and recognition, the skills training, and other elements of creating a sustainable innovation process culture.

Conclusion

Six Sigma and innovation can co-exist. They both bring value to the party and while the languages may be somewhat different, it is possible to create a shared vocabulary and a shared understanding of how the two approaches to creating positive business change can work together. It is always a question of finding balance. Find that balance between chaos and structure. Find that balance between exploration and exploitation. Innovation and Six Sigma are not enemies. In fact they have a lot in common. In much the same way that it requires organizational commitment and a professional approach to achieve high levels of quality, it requires organizational commitment and a professional approach to achieve continuous innovation. If you can embed quality into your products, you can embed innovation into your organization.

Happy innovating!

If you’d like to share your thoughts about the intersections or interplay between innovation and six sigma, please sound off in the comments below…

This has been a rough draft of an article I wrote for the current issue iSixSigma magazine – to see the finished version – subscribe.

Sources:

Kelley, Braden (2010). Stoking Your Innovation Bonfire. USA. Wiley & Sons. ISBN 0470621672
http://en.wikipedia.org/wiki/Six_sigma
http://www.businessweek.com/magazine/content/07_24/b4038406.htm (link broken)
McKeown, Max (2008). The Truth About Innovation. London, UK: Prentice Hall. ISBN 0273719122.

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Innovation QuickStart Guide

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Innovation QuickStart Guide You know how sometimes when you order a product you get this inch-thick instruction manual that you never read, but also how there is sometimes a QuickStart Guide of 5-10 simple steps to get you up and running quickly?

Well, Stoking Your Innovation Bonfire is the instruction manual that an increasing number of organizations are ordering for teams to help them with their innovation efforts. But, I’m sure companies could also use an Innovation QuickStart. So, here is one you could use (excerpted in part from my book):

10 Steps to Get Your Innovation Efforts Off to a Good Start

1. Conduct an Innovation Audit

How can you know where you are going to go with innovation if you don’t first know where you already are? For this reason I created a 50 question innovation audit and linked it to an Innovation Maturity Model from Karl T. Ulrich and Christian Terwiesch of Wharton Business School.

2. Define What Innovation Means for Your Organization

Here is a simple exercise you can do next time you get together in your organization to talk about innovation. Have everyone in the group write down what their definition of innovation is, and then compare that to the official definition of innovation for the organization (if you have one) and the innovation definitions of others in the group. Defining innovation as an organization is important because it helps you determine what kinds of innovation you are focusing on as an organization, and what kinds of innovation you ARE NOT focusing on.

3. Create a Common Language of Innovation

Creating a definition of innovation is the first step in creating a common language of innovation. The importance of creating a common language of innovation is that language is one of the most important components of culture. If people in your organization don’t talk about innovation in a consistent way and see communications reinforcing the common language, how can you possibly hope to embed innovation in the culture of the organization? Ensuring consistent language in presentations, emails, etc. and having people read the same book on innovation or taking the same training courses are just some ways to help create and reinforce a common language of innovation.

4. Define Your Innovation Vision

A startup begins life as a single-minded entity focused on innovating for one set of customers with a single product or service. Often as a company grows to create a range of products and/or services, the organization can start to lose track of what it is trying to achieve, which customers it is trying to serve, and the kind of solutions that are most relevant and desired by them.

Jack Welch, CEO of GE once said, “Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.”

Vision is about focus and vision is about the ‘where’ and the ‘why’ not the ‘what’ or the ‘how’. A vision gives the business a sense of purpose and acts as a rudder when the way forward appears uncertain. An innovation vision is no less important, and it serves the same basic functions. An innovation vision can help to answer some of the following questions for employees:

Is innovation important or not?
Are we focusing on innovation or not?
What kind of innovation are we pursuing as an organization?
Is innovation a function of some part of the business?
Or, is innovation something that we are trying to place at the center of the business?
Are we pursuing open or closed innovation, or both?
Why should employees, suppliers, partners, and customers be excited to participate?

When people have questions, they tend not to move forward. For that reason it is crucial that an organization’s leadership both has a clear innovation vision, and clearly and regularly communicates it to key stakeholders. If employees, suppliers, partners, and customers aren’t sure what the innovation vision of the organization is, how can they imagine a better way forward?

5. Define Your Innovation Strategy

Many organizations take the time to create an organizational strategy and a mission statement, only to then neglect the creation of an innovation vision and an innovation strategy. An innovation strategy is not merely a technology roadmap from R&D or an agenda for new product development. Instead, an innovation strategy identifies who will drive a company’s profitable revenue growth and what will represent a strong competitive advantage for the firm going forward. Under this umbrella the innovation goals for the organization can be created.

An innovation strategy sets the innovation direction for an organization towards the achievement of its innovation vision. It gives members of the organization an idea of what new achievements and directions will best benefit the organization when it comes to innovation. As with organizational strategy, innovation strategy must determine WHAT the organization should focus on (and WHAT NOT to) so that tactics can be developed for HOW to get there.

6. Define Your Innovation Goals

Just as managers and employees need goals to know what to focus on and to help them be successful, organizations need innovation goals too. Clear innovation goals, when combined with a clear innovation strategy and a single-minded innovation vision for the organization, will maximize the instinctual innovation that emerges from employees and the intellectual innovation that occurs on directed innovation projects.

While an innovation vision determines the kinds of innovation that an organization, and an innovation strategy determines what the organization will focus on when it comes to innovation, it is the innovation goals that break things down into tangible objectives that employees can work against. Let’s look at P&G as an example to see how these three things come together at the highest level:

Innovation Vision

Reach outside the company’s own R&D department for innovation

Innovation Strategy

Create a formal program (Connect + Develop) to focus on this vision

Innovation Goal

Source 50% of the company’s innovation from outside

The 50% goal gives employees and management something to measure against, and it sets a very visible benchmark that the whole organization can understand and visualize how big the commitment and participation must be in order to reach it. It is at this point of communicating the innovation goals that senior management also has to communicate how they intend to support their efforts and how they will help employees reach the innovation goals.

7. Create a Pool of Money to Fund Innovation Projects

Product managers leading product groups and general managers leading business units typically have revenue numbers they are trying to hit, and they will spend their budgets trying to hit those numbers. As a result, there are often precious little financial resources (and human resources) available for innovation projects that don’t generate immediate progress toward this quarter’s business goals. As a result, many organizations find themselves setting money aside outside of the product or business unit silos that can be allocated on the future needs of the business instead of the current needs of the product managers and general managers. This also allows the organization to build an innovation portfolio of projects with different risk profiles and time horizons. But, however you choose to fund innovation projects, the fact remains that you need to have a plan for doing so, or the promising projects that form your future innovation pipeline – will never get funded.

8. Create Human Resource Flexibility to Staff Innovation Projects

Some organizations allow employees to spend a certain percentage of their time on whatever they want, but most don’t. Some organizations allow employees to pitch to spend a certain percentage of their time on developing a promising idea, but most organizations are running so lean that they feel there is no time or money for innovation. Often this is true and so employees sometimes work on promising ideas on their own time, but they shouldn’t have to. And if you make them do so, it will be much more likely that they will develop the promising idea with others outside the company and the organization will gain nothing from these efforts.

Don’t turn your motivated intrapreneurs into entrepreneurs.

You must find a way to create resource flexibility. Organizations that want to continue to grow and thrive must staff the organization in a way that allows managers to invest a portion of their employees’ time into promising innovation projects. One model to consider is that of Intuit, which allows employees to form project teams and to accumulate percent time and then schedule time off to work on an innovation project with co-workers in the same way that they schedule a vacation. This allows the manager to plan for the employees’ absence from the day-to-day and allows the employee to focus on the innovation project during that scheduled leave from their workgroup. But that’s just one possible way to create human resource flexibility.

9. Focus on Value – Innovation is All About Value

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…

Innovation = Value Creation (x) Value Access (x) Value Translation = Success!

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.

The key thing to know here is that even if you do a great job at value creation, if you do a poor job at either value access or value translation, you can still fail miserably.

10. Focus on Creating a Culture of Learning Fast

There is a lot of chatter out there about the concept of ‘failing fast’ as a way of fostering innovation and reducing risk. Sometimes the concept of ‘failing fast’ is merged with ‘failing cheap’ to form the following refrain – ‘fail fast, fail cheap, fail often’.

Now don’t get me wrong, one of the most important things an organization can do is learn to accept failure as a real possibility in their innovation efforts, and even to plan for it by taking a portfolio approach that balances different risk profiles, time horizons, etc.

But when it comes to innovation, it is not as important whether you fail fast or fail slow or whether you fail at all, but how fast you learn. And make no mistake, you don’t have to fail to innovate (although there are always some obstacles along the way). With the right approach to innovation you can learn quickly from failures AND successes.

The key is to pursue your innovation efforts as a discrete set of experiments designed to learn certain things, and instrumenting each project phase in such a way that the desired learning is achieved.

The central question should always be:

“What do we hope to learn from this effort?”

When you start from this question, every project becomes a series of questions you hope to answer, and each answer moves you closer to identifying the key market insight and achieving your expected innovation. The questions you hope to answer can include technical questions, manufacturing questions, process questions, customer preference questions, questions about how to communicate the value to customers, and more. AND, the answers that push you forward can come from positive discrete outcomes OR negative discrete outcomes of the different project phases.

The ultimate goal of a ‘learning fast’ approach to innovation is to embed in your culture the ability to extract the key insights from your pursuits and the ability to quickly recognize how to modify your project plan to take advantage of unexpected learnings, and the flexibility and empowerment to make the necessary course corrections.

The faster you get at learning from unforeseen circumstances and outcomes, the faster you can turn an invention into an innovation by landing smack on what the customer finds truly valuable (and communicating the value in a compelling way). Fail to identify the key value AND a compelling way to communicate it, and you will fail to drive mass adoption.

Click the image to download a PDF flipbook:

Summary

When you start with an innovation audit and creating a common language of innovation (including a definition of innovation), it sets you up well to create a coherent innovation vision, strategy, and goals. And then if you build in the financial and human resource flexibility necessary to create a focus on value creation, access and translation – and support it with a culture that is focused on learning fast – YOU WILL have built a solid foundation for your innovation efforts to grow and mature on top of. Are there more things that go into embedding innovation into your culture and creating sustainable innovation success? Absolutely. But, if you work diligently on these ten items you will get your innovation efforts off to a strong start.

What are you waiting for?

Image Credits: Stoking Your Innovation Bonfire

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Nine Innovation Roles Card Deck Coming Soon

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People have been asking me to do more with The Nine Innovation Roles since I started speaking about them at conferences and events around the world, and now I am finally doing something to answer these requests.

I am pleased to announce a crowdfunding project on Indiegogo to fund the creation of an interactive card game focused on The Nine Innovation Roles – after finding out innovation is not allowed on Kickstarter.

At the same time there is a $500 design contest underway on Crowdspring to create the designs for the card deck – and possibly posters too!

I am trying to raise $2,500 on Indiegogo to cover the design contest prize and fees, and the initial printing costs for 1,000 Nine Innovation Roles Card Decks.

You can show your support for this project by pledging any amount or by picking any of the great perks available for as little as $15.

If you are an innovation product seller or service provider, for $300 you can reserve one side of a card in the deck to be your very own in every pack sold (starting with an initial print run of 1,000 card decks), or for $500 you can have a whole card to yourself (FRONT and BACK).

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How Leading Organizations Manage Their Open Innovation and Crowdsourcing Efforts – Part One

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How Leading Organizations Manage Their Open Innovation and Crowdsourcing Efforts - Part One Although there are simple and cost effective ways to jumpstart your efforts – for example, leveraging a company like InnoCentive to host prize-based challenges in order to rapidly find solutions to your most pressing problems – leading organizations that wish to truly embrace open innovation and crowdsourcing do so through careful planning. When seeking to engage external talent, one of the first of many questions you must first ask yourself is: Why are we doing this? What do we hope that external talent can achieve for us that our internal talent cannot (or should not) achieve, and how do we integrate the two together?

The second question leading organizations in open innovation ask themselves is: Why will they care? And one good place to start in answering this difficult question is to ask: What kind of organization do you have? Do you have a product-driven organization like Microsoft that is very much organized around products? Do you have a customer-driven organization like Hallmark that is organized around customer moments instead of around products? Or do you have a purpose-driven organization? While it does not technically matter what kind of organization you have, the key is to find something that not just your employees will engage with, but that your customers and partners will engage with as well. This could be purpose, but it could also be love for a brand or a well-designed, emotionally-connected product.

External Talent Strategies for a Global Talent Pool

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Why Having an External Talent Strategy is Becoming Increasingly Important

External Talent Strategies for a Global Talent Pool The old way of winning the talent wars was to search for and hire the very best talent and keep them inside your own four walls by offering them competitive compensation, benefits, and perks. Your hope was that your talent is better than your competitors’ talent. But over the last couple of decades, companies have increasingly found that employees who pursue what they do with passion will outperform an employee with a gun to their head every time. Circuit City learned very publicly that people are not commodities and went out of business from treating them as if they were. At the same time, we know that diversity is very important and hard to foster internally. And so it is to get to this diversity of thought in order to accelerate product launch and innovation timelines that companies must open up – it is a global economy with a global talent pool.

The question becomes: what is happening at the micro level with this global talent pool? Well, the world continues to move away from being a place where employees expect to have jobs for life, and fight against any change to this paradigm, to a world where portfolios, personal branding, and project-based work will become more common in an increasing number of industries. The evolving world of work is becoming a world in which individuals will need to be really good at collaborating and playing well with others, while also honing their skills at standing out from the crowd. At the same time, the external perception of your network value will expand from a focus on internal connections to also include the talented minds you might know outside the organization that can be brought in on different projects or challenges.

At the macro level, we are also confronted by an economy right now that is characterized by high unemployment – especially for the young. And for those that have jobs, many are underemployed. Meanwhile, at the other end of the age spectrum, many baby boomers will continue to look to make money and stay involved in the workplace in significant numbers. And for those not retiring who still have jobs, many employees now are doing more work but feeling less engaged. When you combine the macro and micro pictures, you can see that there is an army of talent out there looking to build their resumes or their balance sheets by working on interesting challenges and projects.

As your organization opens up and crafts a formal external talent strategy, there are several ways external talent can help benefit your organization.

Increased Speed:

External talent networks can form an expanded rolodex of experts that you can consult with to expand your knowledge on a particular search area or market and give you a running start instead of a standing one.

You can use your external talent strategy to find existing solutions from outside your industry. One example of this is a tire company adapting existing technology for cutting cheese to cutting rubber. Another is InnoCentive client OSRI, who used concrete construction principles for the purpose of oil spill cleanup (see sidebar).

To accelerate innovation and product development timelines, many companies strategically partner with external talent to advance their projects and help fight through roadblocks or work on other components when the lead team is off the clock. Dissecting work and distributing it to the individuals, groups, or partners that can best complete the work is an essential component of open innovation strategy.

Increased Success:

You can form a relationship with a particular expert and work together to solve a problem, to evaluate a range of potential solutions from internal folks, to tap expertise you lack currently in your organization, or to add diversity of thought.

You can use your external talent strategy to engage a large number of potential solvers on a tough problem. Through open innovation and crowdsourcing, Roche found a solution to a problem it had been struggling with for fifteen years by engaging the InnoCentive global solver community. At the same time, the company validated that the approaches it had already tried were the logical and correct ones.

When you engage external talent, you can collect lots of little ideas from outside, and connect them internally, uncovering some really big ideas that properly applied and executed can lead to some great new breakthrough innovations.

Increased Learning:

An under-appreciated and under-utilized benefit of working with external talent is to use it to learn new problem solving techniques by analyzing how the external talent solved the problem, to learn new technical skills not held internally by having external talent train internal talent, and by encouraging information sharing from the outside-in from external talent working in different disciplines.

Teamwork and Collaboration:

An increasing number of problem solvers are working together to solve challenges posed by organizations and this collaboration and teamwork is yielding higher quality solutions. Research by EMC into their own internal innovation challenges has shown that teams were more likely to successfully create winning challenge entries. InnoCentive, for instance, has responded to this behavior by creating more collaborative features for its global solver community to use in responding to challenges.

Consider scale for a moment. A person delivering a ton of value does not need a ton of headcount anymore if they are employing an effective external talent strategy. In an era where organizations are focused on increasing productivity and output without changing the number of headcount (focusing on revenue or profit-per-head), smart employees and business units will increasingly focus on being a force multiplier – getting more work done with the same number or even less headcount.

Two of the most important job skills in this new world of work will be the ability of the individual and the organization to deconstruct the work into portable units that can be executed by a mix of internal and external talent, and construct a project plan for distributing, aggregating, integrating, and executing the component parts to achieve the overall project goal.

But to maximize the efficiency and effectiveness of your work with outsiders – as well the output – you need to be strategic in your approach because the speed of adaptation (your ability to adapt and integrate work from outside into the inside) will become more important. And the flexibility you show as an organization and the ability of your employees to execute under immense market and customer pressures will become increasingly important as well. You must be strategic because ultimately you want to design scalable external talent strategies, policies, and processes.

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Following the Line to Innovation

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Following the Line to Innovation OK, it may not really be an innovation, but I appreciated the following operational efficiency anyway:

Going to check out of the Hilton New York City, there was a queue in spite of the several available kiosks and multiple employees staffing the counter to help customers with various requests. Hilton had obviously invested in some business process consulting (or possibly listened to an employee suggestion) because in addition to the kiosks and the employees staffing the counter, they had an employee staffing the line to identify the needs of guests while they waited in line.

In my case, she asked how my stay was and I told her the story about how I had difficulty with the WiFi not allowing me back into my work e-mail after the connection went down and came back up again. I told her that the first night it worked fine and that I expected not to pay for the second night because it didn’t work properly (leaving important time-critical messages stuck in my outbox). She was sympathetic, but I halfway expected to have to tell the story all over again when I got up to the counter (as this is the typical bad customer experience on the phone or in person). I was surprised and impressed when she told the counter person to take off the second night’s WiFi and that I was ready to check out. Thankfully, I didn’t have to tell the story again.

This is good operational practice for a couple of reasons:

It gave them a way of increasing throughput during busy times when they would otherwise be limited by the number of computer workstations.
It provided a good customer experience. I only had to tell the story once.
I was on my way much more quickly as a result, and the counter person was on to their next customer more quickly as well
The poor person behind me didn’t have to wait while I told my story again, and potentially argued with the counter person because this had already been taken care of while we were both waiting in line (except no arguing was necessary).
If the customer has no special needs, the employee can direct the customer to an available kiosk.

This example, while more about good operational practice and customer service than innovation, does provide the opportunity to identify process innovation opportunities if we look at our own business through a lens of separating the customer experience into the following parts:

Information Gathering
Information Evaluation
Information Processing

Are there times in your business when your customers are waiting? Why are they waiting?

Do you have certain resources that reach capacity quickly or for sustained periods during busy times that you can’t expand easily?

Is there a way to utilize that waiting time to separate out the information gathering or information evaluation components of a customer interaction, to allow for a division of labor that can be more easily flexed to accommodate demand spikes?

In a phone scenario, could you not implement an interactive voice response phone system that notifies the customer how long they can expect to wait and then transitions to a “While you are waiting…” message and then asks the customer for their name, account number, and phone number to either be played for the agent before transferring the call, or maybe even trying to do some kind of speech to text and facilitate a record-lookup using that information?

Maybe you need to allow your skilled people to focus on information evaluation and processing, while lower skilled people focus on information gathering. Or, maybe in your industry the skilled people are at the front end, focusing on information gathering and evaluation and need to be separated from the information processing tasks.

In a manufacturing environment, while we don’t talk about information gathering, evaluation, or processing, we still use the same logic to evaluate the overall system throughput. Then, break it down into components so that we can identify and manage critical constraints and manage them in a way that maximizes throughput.

So whether you are in a manufacturing or a service environment, are you constantly looking for ways to optimize throughput and maximize profits or customer service (or maybe even both)?

What are your favorite stories of process innovations that have led to improved customer service or manufacturing efficiencies?

P.S. Continue reading on this topic by reading – Followup – Following the Line to Innovation at Costco

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Retained Innovation

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Retained Innovation As a provider of innovation coaching services along with training and innovation speaking, I try to talk to as many other fellow practitioners as my schedule allows to keep abreast of what others are experiencing and doing. What I have found in the area of billing clients is that there are a myriad of ways of receiving compensation for the work that we do. Everything from traditional hourly/daily/weekly to at-risk payment types like graduated rates, milestone payments, equity stakes, contingencies based on achieved savings, royalties, and even retainers.

Of all the different methods that I’ve seen, I think that royalties and savings contingencies make the most sense in revenue augmentation and cost reduction scenarios. Companies should be willing to reward those practitioners that deliver real revenue increases and cost savings, and practitioners should be willing to accept lower compensation if they don’t.

But when it comes to looking at innovation projects and innovation process then I think that the retainer model is the best way to go. Innovation is about competitive advantage and in today’s competitive environment, companies can’t afford to wait around until their favorite practitioner is available to fully engage, and at the same time they can’t afford to go with whoever is available regardless of quality and fit.

I believe the retainer model works best for innovation projects and innovation process because the guidance is there when you need it. It can be as proactive or reactive as the needs of the client dictate, and it provides the continuity necessary to keep program improvements on track. The retainer model also allows the company to access their practitioner a few hours at a time, something that would be unworkable for both sides if a new contract was needed each time.

The retainer model also can be quite useful to companies who would like to have a Chief Innovation Officer (a steward of the innovation process and culture for a company), but can’t justify the overhead of a full-time resource.

But regardless of how a company chooses to resource their innovation capability, every company should have an innovation strategy, and that should include continuous re-evaluation and improvement using both inside and outside resources to preserve freshness and to introduce new thinking.

So what is your innovation strategy?

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Interview with Retired President X

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Interview with Retired President X I had lunch in 2009 with the recently-retired president of a multi-billion dollar company and had a great conversation about innovation, leadership, and culture. The insights are still relevant and he enjoys his private life so I won’t be naming any names, but I will share some of the key insights and advice for innovators that came out of the conversation.

Don’t be afraid to pay people well. When people aren’t busy worrying about money, they can focus on how to get more money into the business instead of trying to figure out how to get more money out of the business for themselves. Removing money from the equation also increases the chances that employees will bring their best ideas to the business instead of leaving to create a startup based on them.

If you are an innovator and want to develop your idea within the company you are working for (whether it is an incremental innovation or a radical innovation), try to take it to someone who can say yes. There are far too many people in organizations that are trained to say no, and far too few who are equipped to say yes. Unfortunately, most organizations reinforce the importance of saying no, without empowering enough managers to say yes.

Run as flat an organization as possible is crucial to innovation. Flatter organizations have fewer people in the middle to say no, and flatter organizations require managers to push more decisions to the edges of the organization. Pushing decisions to the edge of an organization tends to result in better decisions. The farther removed you are from all of the factors in decisions, the less successful you will be in making them correctly.

Echoing former Halliburton CEO John Gibson’s thoughts – people brought in to help re-make the organization will ultimately be defeated by the processes and culture of the organization. Organizational change must occur from within and will generally occur quite slowly.

Big ideas should be separated from the main organization into a new organization funded by the board of directors and reporting directly to them. They should also be staffed with employees from outside the main organization as well (except maybe Finance to enable consistent reporting). When you try and keep these potential radical innovations within the main organization, inevitably conflicts of interest will emerge between funding the idea and funding other transitory short-term leadership priorities.

Upper management doesn’t generally know the best ways to effectively improve individual components of the organization. One approach to maximizing incremental innovation and improvement possibilities is to give the employees (not management) of a factory, a business unit, etc. a pile of money to use to improve the organization. You will be surprised how quickly employees can self-organize to determine the best uses for the money, how good they will be in selecting the best improvements to fund, and how fast stories about such an effort will spread to other parts of the organization.

When people have an idea, they often just jump in and start developing the idea (even those ideas that others have had before), often reinventing the wheel and repeating many of the mistakes of those who have gone before them. To reduce waste and to accelerate success, consider having people submit a short research paper on the area of innovation they plan to pursue (to show that they have researched those that have gone before them). At the same time, somehow we have to find a better way of capturing the learnings from failed efforts for those undertaking new projects to learn from.

Finally, President X expressed that he would encourage anyone about to rise to the top job to take a break before assuming the top job to refresh, reflect, and to bring renewed energy and insights into the job. Whether or not you are in the top job or several levels down, I think there are some interesting insights to ponder here.

What do you think?

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Human-Centered Change and Innovation

Innovation, change and transformation thought leadership, lovingly curated by Braden Kelley

Category Archives: Management

Creating a Culture of Continuous Innovation

Six Sigma versus Innovation

DMAIC for Innovation

A Brief History

Shared Goals, Different Outcomes

Natural Conflict

Linking Six Sigma to Innovation

DMAIC for Innovation

Define

Measure

Analyze

Improve

Control

Conclusion

Innovation QuickStart Guide

10 Steps to Get Your Innovation Efforts Off to a Good Start

Nine Innovation Roles Card Deck Coming Soon

How Leading Organizations Manage Their Open Innovation and Crowdsourcing Efforts – Part One

External Talent Strategies for a Global Talent Pool

Increased Speed:

Increased Success:

Increased Learning:

Teamwork and Collaboration:

Following the Line to Innovation

Retained Innovation

Interview with Retired President X