Category Archives: Management

Are you good enough?

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Are you good enough?Unless you have invented a completely new product or service, it is very likely that there are large competitors already in your marketplace, established competitors that you will be trying to outwit and outmaneuver. Even if you do have a completely new product or service, customers still have alternatives. For example, the Segway entered the marketplace with a “revolutionary product with no competition”, but the truth is that it entered a marketplace with a smorgasbord of alternative competition (walking, bicycling, roller-skating, skateboarding, etc.). This alternative or substitute competition has proven far stronger than any direct competitor ever could. So what can a small firm do to outmaneuver the big guys or outwit the sneaky substitute competition that is easy to overlook in the passion of the startup process?

The key to any startup outwitting or outmaneuvering the established players begins with strategic innovation. To create a strategic innovation you must first truly understand competition in your industry. Competition amongst firms in any marketplace is typically defined by a few key product or service features (value dimensions). In microprocessors the defining competitive feature in the minds of 90′s consumers was megahertz, while in assembled computers the keys were megahertz and megabytes. These two industries had yet to be fully commoditized so the arms race was along these dimensions of value. In a fully commoditized industry however, firms end up competing mostly on the value dimension of price. Why is this true?

The answer is that in a fully commoditized industry, consumers find the alternatives to be “good enough” on the value dimensions that matter to them and so the consumer generally selects the alternative with the lowest price. This behavior drives price competition and lower margins, and makes commodity industries generally not a nice place to be. So how do you avoid product commoditization or how do you create a strategic innovation in a commoditized industry?

Strategic innovations allow your organization to avoid or rise above commoditization. In addition to an in-depth understanding of your industry’s competitive environment, strategic innovation requires an intimate understanding of the customers. From this intimate understanding you are hoping to identify a value dimension that is incredibly important to the customer but woefully under served. This value dimension could be price, as Southwest Airlines proved in the airline industry, but most likely will be something else. Starbucks‘ strategic innovation was developed along the value dimensions of:

  1. A consistent and repeatable exceptional coffee experience
  2. A network of convenient locations

Strategic innovation requires that your product or service is “good enough” across the value dimensions that currently matter to customers, and creates “customer delight” on a value dimension that you identify through your extensive customer research as being incredibly important but woefully underserved (see Figure 1). Once you identify such a value dimension the difficult work truly begins. Now you must ask yourself how easy would it be for my competition (direct or substitute) to begin competing on this value dimension instead?

If it would be relatively easy for your competition to replicate your insights and the resulting product or service, then you have discovered a sustaining innovation – an innovation that takes the product or service to a higher level of value for the customer, but not capable of transforming your position in the industry. A true strategic innovation is powerful precisely because it will be incredibly difficult for the established competition to replicate. How did Southwest Airlines succeed by competing on price?

Southwest Airlines achieved strategic innovation not because they recognized that price was important to customers, but because they created an organization from the ground up that was capable of delivering low fares with great service. Their ground up organizational focus on people and cost ensured success where previous low fare carriers had failed. Established competitors have been unable to replicate their success. Delta with Song and United with Ted both crashed and burned in dramatic fashion. To get a better idea of what goes into a strategic innovation, look at Figure 2 to see a few of the key components of Southwest’s success:

Let’s shift back to you now. Once you’ve got that great product or service idea and possibly even a value dimension to build your company’s strategic innovation around, how do you get traction on that steep road to success?

Even if you have the greatest widget known to mankind, the likes of which nobody has ever seen before, you can’t just open a storefront and wait for the customers to walk in. You have to go out and effectively market your widget by first selecting who to sell to. Refuse to make this decision and you are doomed. Make the wrong decision and you will burn through valuable cash and potentially burn up any chance of creating success (no matter how good your product or service is). The key to gaining traction is identifying where the greatest customer pain solvable by you is, and for which customers are willing to pay a relative unknown to solve the pain for them (see Figure 3).

Encountering companies or consumers not willing to buy from an unknown is a key hurdle that some entrepreneurs never overcome, sentiment embodied in the popular phrase “Nobody ever got fired for hiring IBM.” This resistance may require you to seed your market by entering less than ideal arrangements with leading influencers in your target market. Being first is daunting for buyers and may require financial encouragement and hand holding, so that you have the opportunity to turn them into passionate advocates for your product or service in the future.

If you have created a truly valuable product or service, and ideally some level of strategic innovation to go with it, now hopefully you will have the time and opportunity to gain a foothold in your market and expand into other niches before the established competitors are able to replicate your success.

Build a Common Language of Innovation

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Twelve Days of Innovation

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Twelve Days of InnovationAs we are now in the middle of the Twelve Days of Christmas, I thought it might be fun to do a post from the innovator’s perspective of the kinds of gifts that might mean the most to an innovator during the holidays when it comes to their quest for innovation excellence. The song however does get quite repetitive so instead of running through it in song format, let’s look at the Twelve Days of Innovation as a list:

1. On the first day of Innovation, my CEO gave to me – Top Level Support for Innovation

There is no doubt that whatever the Chief Executive takes the time to talk about (repeatedly) and measure, is what people focus on and support in the organization. Having the CEO or even the whole top level of management talking about the importance of innovation by itself isn’t of course enough to make innovation happen. When we talk about Top Level Support, it may include the top level talking about their support for innovation, but it is more important that they show their support for innovation by giving the innovation efforts of the company a voice and making resources available to support them and in some cases even measuring and rewarding the level of innovation contribution of the staff in order to make it go.

2. On the second day of Innovation, my CEO gave to me – A Common Language of Innovation

What is your definition of innovation? We all have one, and they are all different. If your company hasn’t taken the time to define what innovation means in your organization or to lay out how you are going to talk about innovation internally and externally, and captured somewhere what kinds of innovation you’re after, then exactly what kind of innovation do you expect to get?

3. On the third day of Innovation, my CEO gave to me – A Chief Innovation Officer

While top-level support is crucial, it definitely helps to have someone in charge of organizing the innovation efforts of the organization. A Chief Innovation Officer (CIO) or VP of Innovation or Innovation Director or whatever you choose to call them is not responsible for coming up with all of the innovations for a company, but instead helps to organize and own things like the common language acquired on the second day, and the gift coming next on the fourth day. In short the CIO manages the process and acts as a facilitator to help put the right innovation resources against the right innovation projects.

4. On the fourth day of Innovation, my CEO gave to me – Separate Funding for Innovation Projects

If you try and fund innovation projects from within existing budget categories, usually you will end up only with incremental, product-group specific innovations. Having separate funding for innovation means that you can fund the promising innovation projects that your organization identifies and that you can be more strategic about the kinds of innovation projects that you fund. It also allows you fund the gift coming next on the fifth day.

5. On the fifth day of Innovation, my CEO gave to me – A Balanced Innovation Portfolio

The innovation needs of any organization are diverse, and that is what makes a balanced innovation portfolio so important. If you received enough dedicated innovation funding on the fourth day, you’ll have no trouble putting together a balanced innovation portfolio of innovation projects focused on a variety of innovation types, projects with different risk profiles and time horizons. A balanced innovation portfolio will allow you to manage risk and ensure that you always have innovations ready to launch.

6. On the sixth day of Innovation, my CEO gave to me – Access to Customer Insights

In the innovation diatribes of many authors they talk about the importance of engaging your employees in your innovation efforts while also talking about the importance of understanding the customer and trying to discover unmet customer needs when trying to come up with new innovations. The problem is that most organizations don’t share their customer insight or voice of the customer information beyond their market researchers, product managers, and possibly a handful of executives. The problem? Successful innovations are often deeply linked to a novel or reinterpreted customer insight. How can employees maximize their innovation contributions if they don’t have access to customer insight information? Organizations that help their employees better understand the organization’s customers stand to accelerate their innovation efforts. Just do it.

7. On the seventh day of Innovation, my CEO gave to me – A Global Sensing Network

Innovation insights and ideas can come from anywhere. So, if you’re only looking in a few different places and asking a handful of people, how can you possibly maximize your innovation efforts? The solution is to build a Global Sensing Network. The purpose of a Global Sensing Network is to allow an organization to collect and connect the partial insights and ideas that will form the basis of the organization’s next generation of customer solutions. This involves collecting and connecting customer insights, core tech trends, adjacent tech trends, distant tech trends, local social mutations, expert communities, and more. To actually build a Global Sensing Network you need to start from the inside out. You have to take a look around inside your organization and see what employees you have, what natural connections they have, and where they are currently located on the globe. This will get you off to a good start – I can help you if you would like – but this article can help too.

8. On the eighth day of Innovation, my CEO gave to me – An External Talent Strategy

Does your organization want to increase its speed to market? Is innovation on the minds of your leadership? Does management insist that the smartest people in the world work for your organization? Or, do they acknowledge that there are more smart people outside your four walls than inside? The truth is that the nature of the organization is changing from a talent ownership mindset to a talent attraction mindset. We now do business in an integrated, global economy with an interconnected web of suppliers and distribution channels where having a partner of choice mentality will be increasingly important. We also live in a world where in the near future the most valuable employees will be those that not only good work, but also who serve as a force multiplier for their organizations by being good at organizing the efforts of others who don’t even work for the company. As an organization you’ll want to evolve to a place where ideally, even those who don’t work FOR you, want to work WITH you. This will require that organizations craft an external talent strategy to maximize not only the productivity of their employees on their payroll, but also to accelerate their innovation efforts. A link to the free webinar I did with Innocentive on this topic is coming soon, along with a white paper on the subject in early January.

9. On the ninth day of Innovation, my CEO gave to me – More Tolerance for Risk and Failure

When I speak at corporate events and conferences around the world with innovation practitioners trying to champion innovation in their organization and do the hard work in the trenches, I often hear the comment that their organization struggles to innovate because the culture of the organization is risk averse, or even worse, failures are punished so severely nobody wants to do anything risky or innovative. This is a leadership and a management problem that requires the gifts from the first, fourth and fifth days because the fact is that some of your innovation projects will fail and ideally you want to have a balanced portfolio of innovation projects that sit outside the business units and product groups so that the eventuality of this is acceptable and manageable. AND, at the same time it is also equally important that you work to establish a culture where people do not obsess on their fear of failure or the risk they are taking but instead on how fast they are learning – from both successes and failure. When learning balances failure and when portfolios manage risk, you’ll create more room for innovation.

10. On the tenth day of Innovation, my CEO gave to me – A Flexible, Adaptable Organization

If there are two characteristics that should be at the top of any wish list of organization capabilities besides innovation – flexibility and adaptability should be in the running for the top two spots. Flexibility and adaptability are not the same thing. A flexible organization is able to move resources from where they normally sit in the organization to where they are needed most in the organization at any one time. An adaptable organization is capable of quickly adapting to changes in the marketplace based on changes in the competitive structure of the industry, changing customer preferences, or a myriad of other changes that require the organization’s strategy, policies, processes, and even structure to change to better serve their profitable customers. Think Nokia moving from making tires to making mobile phones, think about Amazon switching from being a traditional e-tailer to welcoming third-party sellers onto the site and starting a cloud services business. Flexible, adaptable organizations are capable of surviving massive marketplace shifts caused by innovation. Flexible and adaptable employees capable of coping with all of the change required by flexible, adaptable, innovative organizations will be in high demand in the 21st century.

11. On the eleventh day of Innovation, my CEO gave to me – A Long-Term Commitment to Innovation

It’s great that the CEO threw you a bone on day one and gave you some top-level support for innovation, but unless your organization is willing to make a long-term commitment to innovation at all levels, and continually work to put the common language, training, policies, processes, and funding in place to sustain your innovation efforts, you won’t be successful. A long-term commitment to innovation is required. One that will survive a few failed innovation efforts (that of course yield a lot of learning), and a few defections of top talent to other organizations as you build out your innovation programs (innovation talent will be highly desired by other organizations after all). Over the long haul, you must as an organization work to embed innovation capability across the organization and not only use your efforts to produce new innovations but to also innovate your innovation efforts themselves if you want to pursue innovation excellence and make innovation a deep capability of the organization. Innovation is a marathon, not a sprint.

12. On the twelfth day of Innovation, my CEO gave to me – Idea and Insight Management Software

And finally, if you want to engage your employees, or eventually your partners, suppliers, customers, or even the general public in your future innovation efforts, you are going to need to have a system for gathering ideas and tracking their progress through the evaluation and execution phases of innovation. But at the same time you should also look at how you gather and share your customer insights and evaluate whether you need a system to manage that important resource as well. Don’t let great insights or ideas fall through the cracks because someone misplaced them.

Conclusion

Of course there are more ingredients necessary for making innovation a deep sustainable, renewable capability of the organization, but for the innovator in our song, these would be a great start. Innovation is hard work, and the organizations that invest in deepening their innovation abilities AND capabilities will over time be more successful than those that don’t. Building a strong innovation effort takes time and dedication, so if you’ve already started – keep pushing! And if you haven’t started yet, what are you waiting for?

I hope you all have a great finish to the holiday season and a prosperous start to the new year!

Build a Common Language of Innovation

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Mobilizing Your Innovation Army – Redux

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We had some technical difficulties last week, so IIR will be re-hosting this free webinar this Thursday – September 15, 2011 at Noon EDT.

Too much of the time the innovation conversation focuses on whether someone is innovative or not. We waste far too much time focusing on how people can become more innovative instead of stopping to think about the possibility that everyone is innovative in their own way.

The lone innovator myth needs to die.

Great ‘lone innovators’ like Alexander Graham Bell and Thomas Edison had teams of people surrounding them and helping them succeed.

At Noon EDT on Thursday, September 15, 2011 I will present a FREE webinar titled ‘Mobilizing Your Innovation Army‘ as part of the Back End of Innovation conference that will take place October 17-19, 2011 in San Diego where fellow Innovation Excellence co-founder Rowan Gibson will be speaking several times on creating a sustainable corporate innovation system.

Innovation is a team sport, and in this webinar we will take a look at how to engage your entire workforce in the innovation process by leveraging The Nine Innovation Roles to harness the different unique innovation capabilities that we all possess. We are all innovative in our own ways, and The Nine Innovation Roles help you evaluate your current workforce and provide insight into how to mobilize an innovation army.

In this webinar, we’ll focus on:

  • The importance of building a common language of innovation
  • How to destroy the lone innovator myth
  • Ways to use The Nine Innovation Roles
  • Why big innovations often start small
  • How everyone can make a difference for innovation

I hope to see you at the FREE ‘Mobilizing Your Innovation Army’ webinar on September 15, 2011 at Noon EDT.


Build a Common Language of Innovation

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Nine Innovation Roles – A New Tool

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In my book Stoking Your Innovation Bonfire, one of the last tools I ended up adding has turned out to be one of the most intriguing parts of the book for people – especially in helping to build successful innovation teams. That tool is the Nine Innovation Roles, which I have written about before on this blog.

Now, after my latest innovation speech at the Farm Credit Services of America in Omaha, Nebraska and some conversations I had with the leadership there, it has become clear that people would like to have some additional tools to use to help identify which roles people tend towards on their teams so that they can use these tendencies as talking points and possibly to help organize effective innovation teams.

Nine Innovation Roles - A New ToolOne of the things that was discussed as a possibility was having team members fill out a simple worksheet to identify what roles they believe their teammates tend towards, while also self-identifying themselves. If the whole team were to complete this exercise it should yield some interesting and actionable data.

But why stop there with one organization?

I truly believe in the power of the Nine Innovation Roles, and because of this belief I’ve created and uploaded a simple worksheet for people to use. I only ask one thing in return from those who download and use the worksheet.

  1. Please send info at braden kelley dot com the data you collect (without the names)

  2. In exchange I will collect it and share it in aggregate at the end of every quarter

YOU MUST DOWNLOAD THE WORKSHEET FOR IT TO BE USEFUL

In case you missed it, the Nine Innovation Roles are:

  1. Revolutionary
  2. Artist
  3. Troubleshooter
  4. Conscript
  5. Connector
  6. Customer Champion
  7. Judge
  8. Magic Maker
  9. Evangelist

In addition to providing you a pre-built worksheet you can customize and send out to your teams, the worksheet also has embedded in it definitions of the nine roles and the columns on the data entry tab have comments with the definitions as well or people can click the column headers to jump to the tab with a definition (yes, there are tabs that define each of the nine roles).

Please also feel free to share any observations from your use of the Nine Innovation Roles in your organization.

For more information about the Nine Innovation Roles, please get some copies of my book Stoking Your Innovation Bonfire for your team or check out my previous article highlighting them.

Happy innovating!

Special Bonus

Download 'Stoking Your Innovation Bonfire' sample chapterIf you’ve read all the way to the bottom, then you deserve a free sample chapter from my new book Stoking Your Innovation Bonfire. I hope you enjoy the sample chapter and consider purchasing the book as a way of supporting the future growth of this community.

Download the sample chapter

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Will Death of Blockbuster Kill Redbox?

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Will Death of Blockbuster Kill Redbox?Let’s examine something that has been bothering me for a little while. I’ve been renting my movies from Blockbuster and Redbox for years, but now my local Blockbuster store is closing. When I’ve expressed this sadness to friends and colleagues, people just tell me to get Netflix.

Let’s dig quickly into the psychology behind the Netflix/Blockbuster/Redbox choice that each of us has been making. Now, I’m a big fan of technology, but it has its limitations. One of those limitations is that technology can isolate people from the real world. I know all you social media zealots and self-proclaimed experts out there are shouting ‘heresy’ back at me, but hey, that’s why there is a comments box down at the bottom of each article here—for people to engage in a wee bit of dialog.

While social media does serve to connect people, it also serves to disconnect them. To read more on the double-edged impact of social media you might want to check out the book Alone Together: Why We Expect More From Technology and Less From Each Other by Dr. Sherry Turkle.

Layered on top of the tensions between technology, psychology and social interaction is that people are as different as they are the same. As much as we like to think we’re all individuals, when it comes to market dynamics, we tend to be different. That’s why we segment our customers into groups for marketing purposes, test for personality types in team situations, and create separate brands for different groups of customers.

Given all of this, there is an impact of Blockbuster going out of business that I don’t think many people are anticipating, and that is the likelihood that Blockbuster’s demise will actually accelerate the demise of Redbox. This is because, unlike the assumption most people would make, Blockbuster and Redbox are more complements than substitutes. When Redbox emerged people used it as an arbitrage against Blockbuster to get cheaper rentals from Redbox while still retaining the pleasure of physical browsing and the selection advantage Blockbuster provides over Redbox.

Continue reading this article on the American Express OPEN Forum.

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