Category Archives: Management

Managing Innovation is about Managing Change

Managing Innovation is about Managing Change Innovation is about change. Companies that successfully innovate in a repeatable fashion have one thing in common – they are good at managing change. Now, change comes from many sources, but when it comes to innovation, the main sources are incremental innovation and disruptive innovation.

The small changes from incremental innovation often come from the realm of implementation, so the organization, customers, and other stakeholders can generally adapt. However, the large changes generated by disruptive innovation, often come from the imagination, and so these leaps forward for the business often disrupt not only the market but the internal workings of the organization as well – they also require a lot of explanation.

The change injected into organizations by innovation ebbs and flows across the whole organization’s ecosystem:

Innovation is Change

Let’s explore the change categories visualized in this framework using the Apple iPod as an example:

Changes for customers – Any disruptive innovation requires a company to imagine for the customer something they can then imagine for themselves. Go too far past your customers’ ability to imagine how the new product or service solves a real problem in their lives, and your adoption will languish.

Customers had to try and imagine Apple as more than a computer hardware manufacturer, and begin to see them as a company to trust for reliable consumer electronics. They also had to imagine what it might mean to download music digitally (without any physical media).

Changes for employees – Disruptive innovations often require employees do things in a new way, and that can be uncomfortable, even if it is only your employees imagining what you are going to ask them to help your customers imagine.

Employees had to acquire lots of new knowledge and skills. Apple support employees had to learn to support a different, less-technical customer. Other employees had to learn how to effectively build partnerships in the music industry.

Changes for suppliers – Innovations that disrupt the status quo may require suppliers to work with you in new ways. Some disruptive innovations may require suppliers to make drastic changes akin to those they had to make to support just-in-time manufacturing.

Apple had to work with suppliers to source components at the higher volumes and shorter lead times required for success in consumer electronics. This meant finding some new suppliers who could handle the new volumes and market requirements.

Changes in distribution – Often big innovations disrupt whole distribution channels and this can cause challenges for incumbent organizations (think Compaq and big box retailers versus Dell Direct).

Going into consumer electronics meant that Apple had to build relationships with the big box stores including people like Target, Wal-mart, and Costco. They also had to build a completely new distribution system – iTunes – for distributing digital music.

Changes in marketing – New products and services (especially disruptive ones), can require marketing to find and build relationships with completely different types of customers and/or require marketing to speak to customers in a different way or to reach them through different channels.

Marketing had to begin moving the brand from computing to lifestyle, including changing the company name from ‘Apple Computer’ to ‘Apple’ in 2007.
Marketing also had to learn how to connect with mass market consumers, and help them imagine how this new hardware/software combination would enhance their life – no small task.

Changes in operations – In addition to changes in the supply chain, the organization may have to adapt to disruptive innovations by hiring different types of employees, re-training existing employees, accounting for revenue in a different way, or going about production in a new way.

The Apple iPod was an experience sell, which highlighted the fact that Apple didn’t really have a place where they could help customers experience their products. This led to the opening of Apple retail stores. Apple’s finance and operations had to adapt to the change from low volume, high price items to high volume, low price items. Apple also had to build out a resource-intensive online operation that didn’t exist before (lots of IT investment).

Push Pull Relationship Note that the chart has arrows going in both directions, but not simultaneously. There is a push-pull relationship. At the beginning of the innovation process the satellites influence what the innovation will look like (new production capabilities, new suppliers, ideas from partners/suppliers, component innovations, new marketing methods, etc.). But as the innovation goes into final commercialization, the direction of the change becomes outwardly focused.

You can see that as an organization is imagining how to take their creative idea and transform it into a valuable innovation in the marketplace, they also should be imagining all of the changes that are going to be required and how they will implement them. This is no small feat, but with proper planning, organizational learning, and adaptation over time, any organization can improve its ability to cope with and even anticipate the change necessary to implement its next disruptive innovation.

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Who should own innovation?

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Innovation Leadership

When I think about who should ‘own’ or manage innovation, and where it should reside in an organization, I believe the answer is obviously “It depends.”

There cannot be a single answer for these questions because every organization’s strategy and specific culture of getting things done could be different. But, the one thing that I can say for sure is the following:

“Every CEO must own innovation, but not manage it.”

The CEO must own innovation because he or she is responsible for approving the strategy that the organization is going to pursue. At the same time, managing innovation is an emerging specialty of the same level of complexity of human resources or finance, and so CEO’s are not qualified to manage it outside of deciding who should manage innovation in a manner consistent with the organization’s strategy.

The most relevant variable from the organization’s strategy in determining how innovation should be managed is whether or not an organization is committed to being an innovation-led organization. If the organization intends to be an innovation-led organization (attempting to improve every component and offering of the organization through innovation), then a dedicated innovation organization should manage innovation. If the organization would prefer to pursue innovation as a periodic or product-focused effort, then Marketing or R&D should manage innovation.

Another way of looking at who should manage innovation is to ask yourself the following question:

“Who is going to be asked to, allowed to, or encouraged to contribute innovation ideas?”

Your answer determines who should manage innovation. Here are some answers and their implications:

1. Our Scientists

In a research-led organization, R&D should manage the innovation efforts of the company with input from Marketing, Finance, HR, and Legal. R&D should be responsible for providing the appropriate innovation training to the R&D department. Marketing-led organizations should see #2.

2. Our Customers, Partners, Suppliers (or all three)

Marketing should manage the innovation efforts of the company with input from R&D, Finance, HR, and Legal. Marketing should be responsible for providing the appropriate innovation training to people managing the process.

3. Our Employees

A new centralized innovation group should manage the innovation efforts of the company with input from Marketing, R&D, Finance, HR, and Legal. Marketing should be responsible for providing the appropriate innovation training to the Marketing department.

4. A Combination

As soon as the combination includes employees, a new centralized innovation group should manage the innovation efforts of the company with input from Marketing, R&D, Finance, HR, and Legal. Marketing should be responsible for providing the appropriate innovation training to the Marketing department.

Innovation Fund The reason that almost every scenario ends up with a centralized innovation group managing innovation is because of the complexity involved in properly managing innovation. A centralized innovation group has the opportunity to continually evolve the innovation understanding of the organization and cascade that knowledge through a set of innovation champions, distributed throughout the organization. A centralized innovation group can also remove most of the innovation management burdens from other groups by taking responsibility for managing the policies, processes, systems and training needs for idea generation, selection, funding, and development. This allows other groups to focus on achieving excellence in their day jobs and coming up with great ideas.

And, after all isn’t that what we’re all after – great ideas to turn into marketplace innovations?

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Announcing the Nine Innovation Roles Group Diagnostic Tool

Are You Innovating for the Past or the Future?

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Are You Innovating for the Past or the Future? I had the opportunity to meet and chat with local ethnographic researcher Cynthia DuVal about the role of ethnographic research in the innovation process, and she shared an insight that I thought I would share with the rest of you.

She mentioned that it is important for a good ethnographer or researcher to consider the timeline of the development process when extracting insights. Why is this important?

Well, if you’ve got a 12-18 month product or service development process to go from insight to in-market, then you should be looking not to identify the insights that are most relevant today, BUT the insights that will be most relevant 12-18 months from now. If you can go from insight to in-market faster than that, that’s fantastic, but the point still holds.

If your research team takes all of the data they’ve gathered and extracts insights for today, then you are innovating for the past, and if they develop insights too far along the time continuum then you are innovating for the future. You can’t really innovate for the past (your offering won’t be innovative and will be beaten easily by competitors). If you innovate for the future, then adoption will be slow until customers become ready. The trick is to task your insights team to provide guidance for the future present.

Innovating for Future Present

The ideal of course is to design a product based on customer insights appropriate to the time of the product launch to maximize the useful life of the customer insights.

The product or service are an expression of the customer insights, and it is the useful life of the insights that we are concerned with, not the useful life of the product or service (a post-purchase concept). When the insights reach their sell by date, sales will begin to tail off, and you better have another product or service ready to replace this one (based on fresh insights).

Now, extracting accurate customer insights for the present is difficult enough. Doing it for the future present is even harder. But, if your team starts out with that as its charter, they will likely rise to the challenge, for the most part.

Because the team will likely only get the insights mostly right, it is important that your go-to-market processes include a great deal of modularity and flexibility. In the same way that product development processes have to design for certain components that are ‘likely’ to be available, but also have a backup design available that substitutes already released components–should the cutting edge components not be ready in time.

To innovate for the future present, you must maintain the flexibility to tweak branding and messaging (and even the product or service itself) should some of the forecasted customer insights prove to be inaccurate and require updates. It is also a good idea to evaluate, as you go, whether or not a fast follower version (e.g. iPhone OS v3.1) of the product, service, and/or branding or messaging will need to be prepared to address last minute customer insight discoveries that can’t be incorporated into the product or service or branding/messaging at launch.

So, will your team have the flexibility necessary to innovate for the future present, or will you find your team innovating for the past or the future?

Build a Common Language of Innovation on your team

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Instinctual Innovation versus Intellectual Innovation

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One of the best Twitter names that I’ve come across in the past few years is @ShowerThinker – almost as cool as mine – @innovate. It’s an account for an inventor that makes post-it notes for the shower called Aqua Notes.

This Twitter name captures a well-understood fact – that a lot of great ideas (and ultimately innovations) come to us not from brainstorming, but from the connection to our subconscious that occurs in the shower (or pretty much anywhere else in the bathroom). If so many great ideas come to us when our active mind is elsewhere, then why is such little attention paid to this source of innovation.

A lot has been written about creativity and the brain, left brain vs. right brain thinking, and how often the brain just needs to get out of its own way for creativity to occur as there is no single creative area of the brain.

In my own cuarto de bano moment, I came up with this contrasting phrase to help us frame the conversation – Instinctual Innovation versus Intellectual Innovation.

Intellectual Innovation begins with active efforts to capture and develop ideas using techniques such as brainstorming, greenhousing, etc.

Instinctual Innovation springs forth from a collection of sometimes un-connected information that collects in an individuals brain. Often ideas that form the basis for instinctual innovation rattle around as part of a collection of problems in search of solutions for a long time before emerging.

I’ve created this table to lay out some of the differences:

Instinctual Innovation versus Intellectual Innovation

Innovation has garnered a lot of attention in the press over the past couple of years, and many executives have the word rolling off their tongues quite easily now. In some organizations this has translated into employees being trained to be better intellectual innovators, or into creativity consultants helping stimulate the organization’s intellectual innovation for a particular project.

But much less attention is being paid to instinctual innovation. To build sustainable instinctual innovation you have to train members of your organization to be business innovators. You also need to provide members with a set of clear and actionable innovation goals along with a simple visual framework to decipher them. And, most importantly you have to invest in the organizational change necessary to create a culture of continuous innovation.

Then, and only then, will instinctual innovation be best able to emerge from any part of the organization on its own timeline and integrate with the intellectual innovation that is also going on at the same time.

Intellectual innovation can help drive the short-term growth of an organization. But, when combined with instinctual innovation, the two together can create an innovation engine to power the organization now and into the future.

What do you think?

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Creating a Culture of Continuous Innovation

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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Human-Centered Change and Innovation

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

Category Archives: Management

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A Brief History

Shared Goals, Different Outcomes

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Define

Measure

Analyze

Improve

Control

Conclusion

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