Category Archives: Strategy

How to Put Innovation at the Core of your Business Model

We hear a lot about innovation today, but why is it so essential to sustainable business success?

Innovation is the oxygen of business. Fail to invest in innovation and eventually you will suffocate and be crowded out by a competitor or by an entrepreneur who identifies how to deliver a solution that creates more value than yours (and those of your competitors). Focus too much attention on efficiency at the expense of innovation and eventually you’ll end up getting really good at making stuff people no longer want.

To continuously innovate, companies must learn to manage a few key tensions that exist in every organization.

We hear a lot about innovation today, but why is it so essential to sustainable business success?

To continuously innovate, companies must learn to manage a few key tensions that exist in every organization.

First, there is the tension between the executive mindset and the entrepreneurial mindset.

The executive mindset is focused on avoiding failure and making the trains run on time. The entrepreneurial mindset is focused on pursuing new solutions and willing to risk everything to pursue their success. Resist the entrepreneurial mindset too much and you will turn potentially valuable intrapreneurs and their ideas into entrepreneurs and potential competitors. Pay the executive mindset too little attention and risk unprofitability.

Second: the tension between exploration and exploitation.

Invest too little in exploring for new potential markets and you will starve the firm of future growth. Invest too little in exploiting the potential of current solutions and rob the firm of revenue and income needed to fund future growth. Companies must strike a balance.

Building a strong innovation foundation requires that you conduct an innovation audit to understand where you are. Then, build a common language of innovation built around:

A shared definition of innovation
An innovation vision
An innovation strategy

Innovation goals

Together these will focus your innovation efforts and explain why and what kinds of innovation you are looking for (and not looking for) and how you plan to measure progress and success. Innovation can’t drive results without a clear plan and direction. Unfortunately too few companies take the time to do these things in a cross-functional, participatory way.

But innovation is not free. After building a solid innovation foundation, successful innovators set aside money to fund an innovation portfolio of projects of different risk profiles and time horizons, create the human resource flexibility necessary to staff innovation projects and learn how to instrument and execute innovation project experiments for fast learning.

At the same time the company must do a good job helping customers access that value through effective design, processes, retailing, and service. Meanwhile, powerful value translation must be created to help customers understand how a potential innovation will fit into their lives. Many companies spend large sums of money to create value, without thinking through whether they can do a good job at the value access or value translation for a potential innovation.

As an increasing number of industries become commoditized, innovation is already an important way to not only distinguish your company from the competition, but increasingly it is becoming a necessary investment just to maintain existing market position.

Most companies approach innovation ad hoc — only when their platform is burning. But it is possible to build an innovation system to power continuous innovation. An increasing number of companies are making investments in their innovation systems both here and abroad. Can you afford to be one of the companies that don’t?

This article originally appeared on The Atlantic

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A Creative Marriage Proposal

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I found this video via @MeghanMBiro and @berget and I just had to share it.

It’s a wedding proposal from an actor in my hometown to his now bride to be, and is a great example of re-imagining a traditional activity in our society – the marriage proposal.

The things I love about it are not the actual creative execution but the principles exemplified by the experience:

If you have a great product or service, people will be willing to help you sell it

If it’s really good, they may go out of their way to help you sell it – or even do so without asking your permission

Oregon fosters creativity 😉

Focus on more than the transaction – Make magic!

Skills can from other contexts can be valuable to the current challenge

Have fun with everything you do and you’ll have better results 🙂

Don’t just ask people to help, make it fun to help

Give people something to talk about and feel the love spread 🙂

Even if your customers or community do the sales pitch – YOU’VE GOT TO CLOSE

What magic are you making?

Are there boring transactional parts of your business that could use a little love and magic?

Don’t be afraid to invest in reducing the friction in your adoption process. You’ll improve the value access performance in your innovation equation:

Innovation Success (or even business success)
=
Value Creation
+
Value Access
+
Value Translation

For more, see Innovation is All About Value

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The Code for Successful Innovation

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The Code for Successful Innovation I had the opportunity to attend the Front End of Innovation a couple of years ago in Boston and of the three days of sessions, I have to say that unlike most people, my favorite session was that of Dr. Clotaire Rapaille. The author of “The Culture Code: An Ingenious Way to Understand Why People Around the World Live and Buy as They Do”, Dr. Rapaille extolled the crowd with his thoughts on ‘codes’ and ‘imprints’.

For me this particular session was the one that most synchronized with how I view the front end of innovation. For me, the front end has nothing to do with ideas or managing ideas, but instead is all about uncovering the key insights to build your ideation on top of.

Now, there are lots of insights that you can build your ideation on top of to create potentially innovative ideas. Consumer insights is one of the building blocks and the one that Clotaire Rapaille has built his empire on. Dr. Rapaille’s core premise is that there is a ‘code’ for each product and service that drives its purchase and adoption. That ‘code’ in turn is driven by the ‘imprints’ that people make when they first understand what something is for the first time and the sensations and feelings they associate with it.

For example, kids don’t grow up drinking coffee, but they grow up smelling coffee from a very young age, most often in the home. So, most of us imprint coffee to the home and our mothers and have a stronger feeling about the smell of coffee than the taste. What does this mean for coffee sellers? Well, instead of focusing on the taste to drive sales (the logical response), they are more likely to have success by focusing on the smell and on creating images that make the product feel like home.

Taking the concept of ‘codes’ and ‘imprints’ further, Dr. Rapaille spoke about how he doesn’t trust what people say, and so he instead focuses on what people do. If you look back at the coffee example, our logical brain would tell us to prefer the coffee that tastes the best, but the reptilian brain will prefer the coffee that smells the best because of the strength of the imprinting. And according to Dr. Rapaille, the reptilian brain always wins.

To make his point, Dr. Rapaille talked about how we remember our dreams – because the cortex arrives late for work. Translation? Our logical brains (cortex) arrive after a decision has already been made by the reptilian brain or the emotional brain and so the logical brain gets put to work justifying the reptilian or emotional brain’s decision with logical reasons. How else would you explain the purchase of a Hummer after all?

Sounds easy right? Well, it gets more complicated as culture gets involved. For example, another of Rapaille’s examples that was not shared at the event is how in the United States the code for a Jeep is ‘horse’ and so the headlights should be round instead of square because horses have round eyes, but in France the code for Jeep is ‘freedom’ because of the strength of WWII liberation imprints – meaning that the marketing strategy for Jeep in France is completely different than in the United States.

Because imprints happen in general at a very young age and given the reach of Dr. Rapaille’s work, you can see very quickly why so many organizations are marketing to children, even for products that are for adults – seemingly as a way to make sure that ‘imprints’ are made so that there is consumer demand to draw on in the future. Or is that conspiracy theory at work?

Dr. Rapaille at the Front End of Innovation also spoke about how when it comes to technology, people want to be amazed, people want the technology to be magical, and to use his favorite phrase – people want to say “wow!” For wow to happen in technology according to Dr. Rapaille, we must strive for simplicity – one magical step with no cables.

Meanwhile, in our organizations we must try and identify what our organization’s ‘code’ is and better leverage multi-disciplinary, multi-cultural teams to drive creativity, while also being careful not to change the code of the organization so much that people don’t recognize it, or trust in it. And finally to use one of Dr. Rapaille’s many generalizations, Americans love to try things (they learn that way), and they love the impossible, so don’t be afraid to ask them to do it.

When I distill all of what he had to say and what he has had to say other places, for me it boils down to one key insight about the limitations of innovation methodologies like:

Customer-led innovation
Needs-based innovation
Jobs-to-be-done

This insight is that the reason that asking customers what they want is problematic is because of the inconsistencies between imprints and intellect, between the reptilian brain and the logical brain, and between knowing and doing. Taken together this ties in nicely with something I have believed for a while now…

When it comes to driving adoption, it matters less what you say and more what you can get others to do. As marketers we are far too focused on trying to get people to ‘tell a friend’. We should be more focused on getting people to ‘show a friend’.

So, what is your code for successful innovation?

What do you want others to show?

Please think about it and let me know what you come up with in the comments.

For those of you who want to know more, check out this embedded via from PBS’ “The Persuaders” with Douglas Rushkoff:

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Managing Innovation is about Managing Change

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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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Directed Innovation for Strategic Success

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Directed Innovation for Strategic Success It seems like every organization has a vision and a mission statement, and some even have mantra’s. My personal innovation mantra is to make innovation and marketing insights accessible for the greater good.

At the same time organizations are creating their mission statement, many take the time to create an organizational strategy, only to then neglect the creation of an innovation strategy.

I believe that every organization should create an innovation strategy with the same diligence and precision that they attempt to create their organizational strategy with. Has your organization created an innovation strategy?

An innovation strategy, what’s that?

An innovation strategy sets the innovation direction for an organization. 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.

There are two main kinds of innovation – directed innovation (or intellectual innovation) and emergent innovation (or instinctual innovation). An innovation strategy benefits both types. An innovation strategy provides the contraints that the organization’s directed innovation needs, while also providing the focus that helps emergent innovation, well, emerge over time as members refer back to the innovation strategy.

Innovating Inside the Box Best practices indicate that innovation succeeds best when it is constrained. But for some people, it doesn’t make sense that innovation needs to be constrained. – “Don’t great ideas come from giving people free reign?”

The short answer is no. By giving people constraints, it actually sets their creativity free, but in a directed fashion.

A well-defined innovation strategy helps the organization define which innovation challenges to focus on and what tactics will best help the organization overcome those challenges. An innovation strategy provides a map to refer back to as projects and ideas are being evaluated.

An innovation strategy should communicate to the organization the kinds of innovation that will be most valuable to the organization in helping it achieve its corporate strategy. It is best practice for an innovation strategy to support the organizational strategy.

Without an innovation strategy, an organization can find itself pulled in many different directions, dissipating its innovation energy and preventing it from accelerating its innovation pace by combining the outcomes of strategically-related innovation efforts.

Finally, even those organizations that have successfully created an innovation strategy, often miss the most important part – to communicate it out very clearly to all members of the organization, so that members know exactly what the innovation strategy is and precisely how to contribute. If you’ve done a good job of this, you won’t be afraid to ask your members the following question – What is our innovation strategy?

Are you afraid?

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Keep Your Innovation Nerve

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Keep Your Innovation Nerve It is much easier to lose your nerve than it is to regain it, so better not to lose it in the first place. I have lost my nerve before and made decisions I regretted for a long time after they were made. Acting out of fear leads to poor decision making and a lack of leverage that, in turn, leads to unfavorable outcomes. That is why you must maintain your nerve and focus on the actions you need to take to create positive change, rather than allowing yourself to be overtaken by fear. Fear is one of those emotions that grows to fill the space.

When this downturn began, I had a client that wanted to extend our contract at half the previous rate in order to cut costs. Without any other projects in hand it would have been very easy to take their offer and hope that something better would come along. It’s much harder to walk away from guaranteed income and focus on winning new clients during the biggest downturn in a generation, but I did. The outcome?

Not losing my nerve, refusing this offer, and fully dedicating myself to revitalizing my business led to:

Signing my first two clients outside the United States

Signing a top literary agent to represent my book project and John Wiley & Sons to publish it (the five-star Stoking Your Innovation Bonfire)

Building upon my book Stoking Your Innovation Bonfire by creating the Nine Innovation Roles Diagnostic Tool to help companies improve their innovation team success

Becoming a popular innovation keynote speaker and thought leader

My personal innovation blog expanding to become the leading innovation blog on the web – Blogging Innovation – with more than 15 contributing authors and upwards of 200,000 monthly page views

Blogging Innovation becoming the foundation for Innovation Excellence, the world’s most popular innovation web site – a Top 1% site that now regularly generates 800,000+ monthly page views (before it was sold in early 2020)

Launching a new business focused on helping b2b companies increase their inbound sales leads and revenue through execution of customer journey research and creation of an effective b2b pull marketing strategy that includes the use of my proprietary single content input, multiple content output methodology

So before you lose your nerve and start asking yourself all those questions about what could go wrong, focus instead on asking yourself about the actions you could take now to make sure that things go right.

Are you going to be nervous in the downturn, or nervy? If you act fearful, your clients will be afraid to do business with you, but if you’re confident that you will do great things, then your clients will want to do great things with you.

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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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Broadcasting the Voice of the Customer

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A few years ago Business Strategy Innovation published a white paper to its web site on “Broadcasting the Voice of the customer.”

Here is an excerpt:

“Before the industrial revolution, most businesses in the United States were sole proprietorships or small family run businesses. In those days, every member of the business was in direct contact with the customers and had the opportunity to passively or actively hear the voice of the customer.

The voice of the customer tells us what about our product or service that customers find valuable, and what they find annoying or useless. By focusing on what customers found valuable and removing or reducing what they found annoying, these small businesses could accumulate financial success and customer loyalty.

In today’s interconnected world, we are in the midst of a customer revolution. Today’s customer has unparalleled access to pricing and product information to enable a more informed and economic purchasing decision. Today’s customer benefits from marketing developments such as mass customization, mass personalization, and micro-segmentation. In addition, they have unrivaled access to communication channels to make their preferences known. But, who is really listening?

Listening to the Voice of the Customer We live in a world of corporations and conglomerates, where most of the employee class has no direct access to the voice of the customer. The man or woman stitching up your clothing has no idea whether the stitching method worked well for you, or if you were happy with the product. They only know whether or not they made their daily quota and how much failed Quality Control. If the person stitching your clothing had access to the voice of the customer, would they do their job differently? Would they feel differently about their job?

In many of today’s companies, the job of listening to the customer falls to someone in the marketing department, possibly even someone who does nothing but focus on brand and customer research. This person usually works with product management and possibly research and development to inform product revisions and new product development. Often, very few people outside of that core team have access to the voice of the customer. But why restrict customer feedback to a select few?”

Download the complete “Broadcasting the Voice of the Customer” white paper in PDF form.

Or even better, hire me to create thought leadership for you to help increase your inbound sales leads, or to create a pull marketing strategy to increase your revenue.

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Strategic Innovation – Devil is in the Details

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Strategic Innovation - Devil is in the Details There is more talk about strategic innovation every day. As more and more industries enter their commodity phase, companies are looking to differentiate themselves and increasingly they are turning to strategic innovation to do so. The art of strategic innovation has been the subject of many books including: Dealing with Darwin, Blue Ocean Strategy, and Fast Second. Books on the topic detail the virtues of creating a strategy that separates you from your competitors’ strategies.

The devil is in the details though as execution is far more important than strategy, even when it comes to innovation. The reason is that when your industry is commoditizing, you are unlikely to be the only company trying to create a strategic innovation, and so multiple companies may end up pursuing the same strategic innovation. It is not the selection of a new strategy that creates innovation. It is the ability of an organization to execute upon that strategy better than anyone else and in a way that creates unique policies, processes, systems, and organizational dynamics that are difficult to imitate which creates the competitive separation necessary to sustain a strategic innovation.

So, if you decide to pursue strategic innovation, ask yourself these questions:

Does my organization have the skills to execute upon the chosen strategy?

Do we have the ability to change in necessary ways to achieve the desired strategic innovation?

Does my organization have the vision to identify the policies, processes, systems, and reporting necessary to create true competitive separation?

Do we have the will to fight our way over our internal barriers to change?

Can my organization successfully complete the transformation into the end result envisioned for the strategic innovation?

Hope you enjoyed this classic from 2007 surfaced to the top for you.

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Human-Centered Change and Innovation

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

Category Archives: Strategy

How to Put Innovation at the Core of your Business Model

Innovation goals

A Creative Marriage Proposal

The Code for Successful Innovation

Managing Innovation is about Managing Change

Who should own innovation?

Directed Innovation for Strategic Success

Keep Your Innovation Nerve

Are You Innovating for the Past or the Future?

Broadcasting the Voice of the Customer

Strategic Innovation – Devil is in the Details