Thursday, April 27, 2017

Seamless experience - innovation holy grail

Everyone's talking about innovation, which could be a good thing.  Except that while they are talking about it, they are often talking about the wrong things, or defining innovation too narrowly, or are too focused on tools rather than outcomes.  Sometimes, rather than doing something they are simply talking.  Talking about innovation is exciting, I'll grant you, because most corporate types don't get to do innovation, let alone talk about innovation.  They eat, sleep and dream about efficiency.  As Andy Cohen said at our conference they've Six Sigma'd the opportunity and then leaned it and then made it agile, then applied Six Sigma again.  Just to talk about innovation is a relief.

But when people talk about innovation they talk too expansively and without good definitions.  Innovation always reverts to whatever Apple did recently, whatever cool new technology or product someone produced.  We need to move beyond talking about innovation to actually doing more of it, and when we do it we need to do it with purpose and intent.  But beyond that we need to move beyond this narrow definition of innovation - a new product or service - to a much more expansive definition of innovation possibilities.

Innovators are like Astronauts

Right now we innovators are like astronauts who become fixated on going to the moon, when with a little more imagination and effort we could go to Mars, or Venus, or the asteroid belt.  We've allowed ourselves to become too enraptured, too fascinated by the possibility of new things, and not aware of or even talking about the possibility of new experiences or services or channels or business models.  There are several problems with the fixation of the near and the safe:
  1. It narrows the scope of exploration and discovery
  2. It suggests specific tools and outcomes and overlooks or ignores others
  3. It focuses far too much effort on far too little potential gain
As innovators we are like astronauts, exploring, going new places, discovering new things.  Some of these discoveries will be valuable and useful, some will be spectacular failures that others will harvest and find the value we missed.  But right now our focus is far too narrow, because we talk about innovation without shared meaning or goals, and we narrow our conversations and objectives without needing to.

Setting our targets too low

To me, we are doing this all wrong.  We are talking about easily achievable, tangible outcomes when we should be considering what the end objective is:  what customers want and are willing to pay for - even to switch providers to obtain.  And in a nutshell that isn't a discrete product.  Customers will change for a dynamic, interesting and complete customer experience that improves their lives, solves their challenges or gives them new capabilities they didn't have before.  When we innovate we should always be asking ourselves: what is the ultimate customer experience our customers need and we can create?  We can leverage techniques like "jobs to be done" but as I've written before I believe this should be superseded by "experiences to be had".  The best technical innovation does not win customers if it does not fit within their expectation or work in their environment or force them to change.  The sooner we start talking about how to deliver an incredible customer experience, in any project or in any setting, the sooner our innovation programs will generate the kind of benefit everyone needs.

We've lost the thread

Focusing too much on Apple's iPhone, or Tesla's car misses the point.  We don't buy the iPhone or the car, we are buying the totality of the solution and experience.  Tesla and Apple are just especially adroit and combining these into one package.  Sure the iPhone is nice, but no better than Samsung or LG.  It's just that Apple has managed to combine services and experiences and business models in a more holistic way.  And this is what we consumers are ultimately buying.  If we were buying a phone we'd buy based on the best reception, or the best coverage.  Instead we buy based on design, integration, style, beliefs about the company, and many other factors that make up customer expectations and customer experience.  This is where innovation should focus - not on the shiny new technology or object - but on the total customer solution and experience.  We must start with this in mind and work backwards to the technologies and component solutions that provide a total experience.  This is the holy grail, and once we understand that innovation will take off like wildfire.
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posted by Jeffrey Phillips at 5:46 AM 0 comments

Monday, April 24, 2017

Imposing Innovation or Exposing it

Sorry I've been a bit lax about keeping up the blog posts.  Between an open innovation webinar, a planned trip to Dubai to speak on innovation and a very successful innovation conference, (not to mention some customer work) I've been a bit busy lately.  But it was something I saw at our conference, and something I read today about Target that prompted this blog post.  Because I'm becoming convinced that you can't impose innovation from the top, it only gets exposed through internal cultural beliefs.

Lowe's at the Conference

We were fortunate to have a team from Lowe's (home improvement not grocery) speak at our conference.  This was the second year that a team from Lowe's provided us with insights on the opportunities and challenges of doing innovation in a large, distributed retail environment.  I liked the fact that the Lowe's team talked a lot about customer experience, starting their innovation activities with the customer's needs and jobs in mind, and framing everything based on experience.  In the discussion and Q&A afterwards, it became clear that a lot of Lowe's focus on innovation is cultural, embedded in the culture.  In fact one of our employees who worked at Lowe's while in college mentioned the discussion and how true it was for him - that Lowe's culture hadn't changed in 20 years and that it empowered people and encouraged them to make change and to innovate.

Retail at the crossroads

There's a lot to think about in the retail space, as news stories remind us that we have far more retail space than we need, and even ground-breaking shopping destinations like the leading malls are going underwater as people turn to online shopping.  Destination malls are suffering, and even retail strip centers are experiencing a drop-off in foot traffic.  Look at any strip center near a residential area and you'll see what was once a collection of shops, retail, clothing, food and hardware is now a collection of services businesses (dry cleaning and doc in a box) and restaurants.  Gone are the corner drug store, the corner hardware store, the small clothing boutique.  Whether we are talking about large malls or smaller shopping centers, retail is changing rapidly, thanks to Amazon, Wal-Mart and others.

What happens to Target?

Target, which was once one of the most interesting and unique large department stores, seems caught in a cross-fire.  It was able, years ago, to compete with Wal-Mart because it had better design and more interesting store brands.  It didn't necessarily compete on price but on value and style.  Those days are over.  Further, Target and other big box stores are feeling the squeeze as people are really busy and don't want to drive all over town, when they can order good like dish washing soap and have it delivered.  If you can't compete on quality and design, and certainly can't compete on price (versus Amazon and Wal-Mart) and people don't want the hassle of driving to your stores, what's left?

Target just announced today that its senior innovation leader is leaving so that Target can focus on "core business".  Mark today (April 24, 2017) on your calendar.  This could be the beginning of the end for Target.  It must either 1) improve its product lines and product value (innovation, but they are moving away from that) or 2) get closer to customers (who have already made it clear that they are happy online and don't want to visit stores) or 3) cut costs.  How do you cut costs and compete with Amazon and Wal-Mart?  Target is making a big mistake - it should be moving up market, creating new versions of stores and innovating its in-house brands, bringing value and style back.  Instead we're likely to get a Wal-Mart copy cat and/or a Amazon copy cat online from Target. 

Target is removing its innovation capability and focus at the moment it needs it most.  In many companies, innovation is what CEOs reach for when everything else has failed.  In Target's case, either the existing innovation wasn't working, or the CEO didn't see value in the outcomes, but in either case the CEO is working against industry and societal norms.  You can win as a brick and mortar store, but you've got to innovate in order to do so.

Lowe's and Target

Strange that two companies that actually compete in some segments see the world so differently.  Both are "big box" stores that typically stand apart, aren't in a mall but may be in a strip center.  Both are destination locations.  Both have significant and comparable competitors (Wal-Mart/Kohl's/etc) and Home Depot.  Both are taking radically different approaches.  Target lost its way years ago when it shifted its focus away from differentiated products, and the removal of the innovation officer only confirms this.  Lowe's is doubling down on innovation, with a focus on customer experience.  I think Lowe's is tapping into a core cultural phenomenon, while Target was finishing trying to impose innovation from the top.  While I'm not a Wall Street analyst, I have to believe that the investment by Lowe's in innovation will provide value, while Target will founder.
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posted by Jeffrey Phillips at 2:18 PM 0 comments

Tuesday, April 04, 2017

Innovation Evolution

I was asked recently to speak about innovation in a webinar and at a live conference.  These requests left me in a somewhat reflective mood.  When I'm asked to speak I want to provide the audience with valuable, useful insight, and that often requires ensuring a shared foundation before taking the audience where I think innovation is likely headed.  In my thinking for these two programs, I've developed a five step evolution for innovation in most organizations.

With tongue firmly planted in cheek I'll relate these evolutionary steps to famous Hollywood productions.  Perhaps you'll recognize your organization in one of these phases.  I'd love to hear about other innovation evolutionary phases that you've been through.


Lone Ranger

The "Lone Ranger" stage is one that many companies must pass through - in fact most startups and entrepreneurial firms are founded by Lone Rangers. These are people, like Steve Jobs, who have amazingly clear insight into what customers want or need and create products that meet the needs that established companies miss.  Lone Rangers work especially well in startups or entrepreneurial organizations, and strangely enough are often found in larger corporations.

The challenge for a Lone Range in a larger corporation is that they are often swimming against the tide.  Acting as a Lone Range in a large organization is exceptionally difficult, because unless or until the culture and prevailing processes bend to your will (or you bend to their will) it is difficult to get anything done.  Occasionally a Lone Ranger will succeed in a large organization, or an executive will appoint and sponsor a Lone Ranger when the executive desperately needs a new, innovative product or service.  But Lone Rangers, by their very nature, are lonely, often isolated and unappreciated.

Twelve Angry Men (or women, or both)

The next iteration of innovation in larger corporations is the stage I like to call Twelve Angry Men (taken from the excellent play and movie of the same name).  If you aren't familiar with the movie, it's about a jury brought together to decide the fate of a criminal.  The vast majority of the people on the jury don't want to be there, were coerced into serving and want to resolve the case as quickly as possible.  Only the daring of one juror causes the jury to stop and carefully consider the evidence, eventually leading to acquittal.  In the same way that the jury is brought together, innovation teams are often brought together, but with little preparation, few shared values or common goals and the desire to do the work as quickly as possible.  While collaborative innovation is currently all the rage, collaborative innovation based on teams that don't want to be there, who don't share common values and don't have experience, who simply want to do the work as quickly as possible and go home, doesn't lead to better outcomes.

The Martian

The next iteration or evolution of innovation in a corporation is similar to the book and movie The Martian.  For those not familiar with the Martian, astronauts from several different countries set down on Mars and establish a base.  After gathering scientific information, many of them leave quickly when a storm blows over their base, eventually stranding one of their own accidentally.  The "Martian" as he is called manages to thrive in hostile conditions and is eventually rescued.

The Martian represents the next phase of innovation evolution because placing a base on Mars and sending astronauts all that way represents a significant investment.  It has to be a conscious strategic investment to send people all that way, and in the same manner innovation becomes a conscious, strategic focus.  However, when trouble erupts (like a bad financial quarter or the failure of one new product or idea) the management team pulls the plug, not recognizing that through all of the work innovation has actually taken root.  While many of the innovators go back to their day jobs, some resilient souls remain behind and actually produce good ideas.  These are finally recognized and everyone acts and believes as if this was the strategy all along.

Ocean's Eleven

A parallel track to the Martian can emerge when executives are interested in the outcomes of innovation but not the investment or the publicity.  Ocean's Eleven is a movie about a gang of confidence men and thieves who plot to rob a casino. They do so by publicly fumbling around while at the same time smuggling a thief into the vault and then rushing in as firemen to save the day.

There are plenty of innovation activities that resemble Ocean's Eleven, where much of the work is kept under wraps, using sleight of hand to find resources and funds, and often even the outcome is difficult to celebrate because it was done under cover. 

Independence Day

What we innovators hope for is that innovation will be embraced in the same way that the people of Earth respond to alien invasion in Independence Day.  In the movie, aliens come and attack the Earth, and the people of Earth seem to have little chance to fight off the invasion.  Through insight, pluck, daring and sharing information, they manage to fight off the aliens.  This happens as everyone gets on the same page - they have no choice but to all share the same beliefs and values, to do what has to be done.

While desperation isn't the best driver for innovation success, getting the majority if not the entirety of your organization on board, focused on a common innovation goal is what is going to make your organization more successful and help it win in the innovation wars.

Conclusion

As innovation demand increase, the Lone Ranger model is too isolated, too hit or miss to produce innovation at the pace and size you need.  Twelve Angry Men take too long to coalesce and in some cases may not coalesce at all.  The Martian is a moon shot, and while you need these you need a range of innovation investments and types, and the courage to stick with it in the face of a storm.  The Ocean's Eleven approach is a stop gap, but you can't build on it or expect people to be comfortable doing the work under wraps.  It's only when you have a common purpose and recognize innovation as a tool for survival and eventually thriving that you can successfully innovate.

Which stage of the evolution are you in?  What would it take to get to the next and hopefully more valuable stage? What will it take to get everyone in your company bought in at the level of the characters in Independence Day?
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posted by Jeffrey Phillips at 6:46 AM 0 comments

Monday, March 20, 2017

Innovation is about finding and discovering

I've been thinking a lot about the challenges that midsized and larger companies face when trying to do more innovation. It's not a secret that they need to do more innovation; everyone knows this.  It's not really a secret what innovation is, or what the potential benefits might look like.  We've seen the results of good innovation in the marketplace.  It's not that people are stupid and don't understand how to innovate, although many are more comfortable with existing methods and tools, and haven't been trained in new innovation tools or perspectives.  But training and tool introduction isn't a major barrier.

No, the recurring theme of failing to innovate in a corporate setting has more to do with the failure to find things and discover things.  I'd like to address what you need to find and discover, because if we can name the barriers or challenges, we may be able to eliminate them and accelerate innovation.

What do you need to find in order to innovate?

  • The right problem or opportunity.  You've got to be solving an important problem or addressing an interesting opportunity, which means you've got to find the right opportunity or challenge.  This means you've got to align innovation to strategic needs and gaps that can't be addressed with standard tools.
  • The time you need.  Probably the biggest gap in corporate innovation is finding the time to actually conduct innovation the way it should be conducted, rather than adding it on to a team's other responsibilities or trying to shorten the activity to the point where innovation is simply abbreviated and useless.
  • The people you need.  This challenge in in multiple parts, because you need interested, creative, divergent people to create ideas, and you need capable, connected people to convert ideas into products and services.  Your company probably lacks the former, and the latter are very busy (see time you need).
  • A sponsor or champion.  In reality, you can innovate or work on an opportunity or problem all day long, but it won't go anywhere until some executive decides it is important or useful to them.  This means you need an engaged champion or sponsor, because you'll probably need to overcome objections and re-prioritize work.
  • What customers think they need.  Rather than simply create new innovations based on your technologies or capabilities, you need to find out what customers want and expect - even project what they are going to want or need in the near future. 
  • What the existing expectations and platforms are.  As we progress and products and services become more integrated, creating a discrete product or service that ignores the existing platforms and ecosystems is a recipe for failure.  You've got to find out what critical existing platforms and services exist and how you work with them to add value. 
 As Heinlein and others have said, TANSTAAFL.  There ain't no such thing as a free lunch.  You want to innovate, you say?  You need the ability, time and passion to find or discover all of these things.  Which is why innovation seems so daunting.  Doing your everyday job, meeting or exceeding expectations making existing products doesn't require you or your company do discover or find much of anything.  Innovation is new, real work, and new, real work that your team isn't familiar with.

If finding and discovery are so important to innovation, why do corporations and their staff do such a poor job finding and discovering?

  1. Finding and discovering aren't part of the normal job description.  Most people are paid, and paid well, to do the same things over and over again, and doing them more efficiently.  They aren't paid to find things, search for unknown information or embark on a voyage of discovery.  That's...
  2. R&D's job.  Most corporations believe that finding and discovering belongs to R&D, while everyone else should be focused on efficient delivery of what they know.  However, given the depth and breadth of innovation, R&D can't be the only group finding and discovering.
  3. Finding and discovering requires admitting that you don't know.  We pay people for expertise.  Asking them to find and discover new information means admitting they don't know, and that good ideas or information may be "out there".  This means that existing expertise may not be as valuable as new discovery.
  4. Time is a limiting factor.  Doing the same things more efficiently takes an ever-decreasing amount of time.  Looking, experimenting, finding, discovering and exploring aren't straightforward or predictable, and worse may not result in good ideas or information.  In a time constrained environment, seeking and finding is limited.
  5. The fear of what you may discover.  If we can find time to discover and explore, we may not like what we find.  You may find information that suggests your core capabilities are about to be swept away.  You may find that emerging needs don't align to your strengths.  Do you have the stomach to hear and understand what your teams discover?
These, and of course other reasons, are why so much emphasis is placed on incremental innovation, because incremental innovation requires so little true discovery.

Becoming innovative requires becoming a discoverer

So you say you want more innovation?  We've talked and written and philosophized about the need for cultural change.  Here's a place to start:  how much time is given over to finding and discovering new needs?  How much exploration is allowed?  If innovation is about finding new needs and emerging customer segments, and finding new solutions, then doing innovation will require creating an environment where finding, discovery, exploration and other less than efficient and quantifiable activities aren't just countenanced, they are encouraged and embraced.

This takes a different kind of thinking and often a different kind of person.  Columbus didn't discover America because he was bound by current map thinking.  He was interesting in exploration and discovery.  Moreover, he's a good example of an innovator, because he did explore, he did test a hypothesis and did discover something - something of value, but not what he originally set out to do.  Turns out it worked out well for his backers.  You don't just need to provide time and space to explore and discover, you may need to find new people who are willing to do so, when everyone else says they'll sail off the map.

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posted by Jeffrey Phillips at 6:19 AM 0 comments

Wednesday, March 15, 2017

The innovation knowing/doing gap

The more we learn, the more we discover that innovation is vital to renew businesses of all sizes.  Those that undertake significant innovation activities seem to grow and prosper.  Those that neglect innovation seem to wither away.  Executives understand this.  More importantly, markets understand this.  And when markets understand and signal something, executives get on board.  Innovation, therefore, is an important component of future success of many companies, and executives understand this.  That's the good news.

The bad news is that while the expectations and demands for innovation grow ever larger, the capabilities to conduct successful innovation haven't grown nearly as fast.  In fact the knowing/doing gap for innovation in major corporations is probably the largest its ever been.  People in the trenches simply don't have the time or the training to conduct anything more than incremental innovation.  Corporate reward systems, culture, inertia and a host of other factors simply resist taking big chances.

Which means that a yawning void is opening up - between the demands and expectations of consumers, executives and markets on one side, and the skills, capabilities and bandwidth of staff, employees and managers of those firms on the other.  This void is growing and something will fill it.  We know that nature abhors a vacuum, so something that cannot stand will not stand.

The real question now is:  what will fill that gap?  I think there are three possibilities:
  1. Rapidly emerging startups and entrepreneurs, especially in data or information intensive industries
  2. Existing companies from adjacent spaces
  3. Consulting firms filling the void for larger corporations
Let's look at what happens when each attempt to fill this growing void.

A startup does what you should have done

In many cases, companies recognize the need for innovation, and can even imagine what a new product or solution should look like, but for many reasons simply cannot find the time, permission or funding to create a new solution to fill the customer need or emerging opportunity.

Since nature abhors a vacuum, and there's economic opportunity in filling the gap, others step in.  In this case an entrepreneurial firm or a startup does what a larger firm should have done.  This isn't always a negative outcome for a larger firm willing to allow some experimentation by smaller firms if the larger firm is watchful and able to acquire the smaller firms that succeed.  While this is often the stated strategy, it rarely plays out that way because the smaller firm may gain traction quickly (and become too expensive to acquire) or the larger firm may acquire the smaller company and impose the bureaucracy and overhead that kept it from competing in the first place.

Adjacent Entrants

Most truly disruptive innovation happens when capable companies provide services to customers, need or opportunities that were just adjacent to their existing businesses - sometimes even in the same business with different business models.  NetFlix was adjacent to Blockbuster: both offered movie rentals but with different models.  Apple entered the music distribution business and disrupted Tower Records.  True disruption will most likely occur when a larger, more capable firm (more capable and more scalable than a startup) enters a market that slow incumbents ignore or overlook.  Once this happens the opportunity is often lost for good.  The incumbents cannot acquire an equal sized competitor and therefore lose the market opportunity.

Consulting firms bridge the void

Which leaves us with the option most large companies choose:  identifying a consulting company to understand the need, design and build a solution while the larger incumbent sustains the status quo.  This strategy may fill the opportunity in the short run, if filling the opportunity is defined as delivering a discrete product or service.  However, since the incumbent often isn't involved in the research or development of the solution, and doesn't work to integrate the solution into its suite of services, and further doesn't understand the total customer experience, this solution works to plug a gap in the short run but undermines the incumbent in the long run, because the incumbent cannot incorporate the solution or even fully grasp the opportunity, because inevitably the need or opportunity is larger than one product or service.

So, what's left?

We've explored three potential alternatives to the growing knowing/doing gap.  Hopefully I've convinced you that none of these alternatives is really a long term solution.  At best they are short term gap fillers, at worst they sacrifice an opportunity to an aggressive adjacent competitor.  What is actually needed is a cultural shift.  For too long large companies have focused on efficiency and at best incremental innovation.  Their cultures, structures, hierarchy, reward and recognition programs and other attributes are all aligned to efficiency, business as usual and incremental innovation. While the demands for more interesting, more diverse and more disruptive innovation continue to grow, the amount of focus, skill and experience in doing and delivering actual innovation hasn't changed much at all.  This is a growing gap, becoming a void, that will become a vacuum.  And we know what happens when nature identifies a vacuum - it gets filled.

I wrote a piece recently that suggested you could tell if your CEO was earnest in his or her desire to create more innovation.  To do that you could simply examine if the CEO was focused on cultural change to encourage more risk, more uncertainty and more innovation.  If the CEO expects innovation to be important to deliver new products, new services, new revenue and new profits, then he or she will engage in activities that first seek to change the culture.  Otherwise the knowing/doing gap will only increase, and others will have the chance to fill the void.
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posted by Jeffrey Phillips at 8:17 AM 0 comments

Monday, March 06, 2017

Turning the innovation tables

Last week I attended an interesting program co-sponsored by the University of North Carolina's health care innovation program and AARP.  The program was set up to bring together people who had an interest in solving problems relating to prescription drug use.  Far too many people are prescribed medications but don't fill the prescription or don't use the medications as prescribed.

The program bought together people from different universities, different industries and other organizations to try to generate ideas around solving the issue of non-compliance.  More interestingly, the organizers hoped that there would be enough interest and passion in the group that teams would form to consider methods or technologies that could address the problem.

It's clear that these kinds of "sprints" are growing in importance, and interesting when you consider that some of the teams that form are formed on the fly, built of people from different organizations.  Most of the people in attendance were there because they have an interest in helping improve medical prescriptions and use, which could lead to better health outcomes.  In other words, the attendees had a passion for solving the problem and to a great extent were mentally and emotionally engaged and intrinsically motivated.  As we know, these conditions are important for innovation in any setting.

But what really struck me about the event was the set up by knowledgeable experts.  The event was kicked off by folks from UNC who described the breadth and depth of the problem.  Non-compliance and non-adherence to drug prescriptions is a problem with a price tag estimated at over $300 billion per year.  A medical doctor described some of the challenges that patients face and the difficulties of understanding what people are currently taking, drug interactions as new medications are prescribed, and the lack of continuity as patients go home and either follow the prescribed medical path or fail to continue.

In other words, the people who have the problem are educating an innovation team of passionate volunteers.

Imagine a world...

Watching this unfold got me thinking.  We're doing corporate innovation all wrong, and the innovation sprint that UNC and AARP were conducting have got it right.  They have the ingredients correct and the order of activities correct.  Let's imagine for a second what this would look like in a corporate setting.

In a corporate setting today, executives intent on running the business day to day are occasionally interrupted and asked to weigh in on ideas that were generated by people throughout the business.  Since strategy isn't all that well communicated, the ideas that bubble up are rarely aligned to important needs or goals, and are often simply distractions to day to day efficient operations.  There's little engagement or buy-in on any side, and innovators have to plead for executives' time.

Now, imagine we can implement in a corporation what UNC and AARP implemented in a sprint.  In this powerful but so far imaginary case, executives present their most important needs and goals, the ones they simply cannot solve with existing tools, to a motivated group of innovators collected from across the organization.  The executive presents the problem, provides background and asks the innovators for help.  The innovators, who are capable and passionate people drawn from across the organization, review the problems and needs from several executives and choose which one to work on, moving quickly into a defined innovation process.

  • Rather than view innovators as distractions, executives should view innovators as a powerful resource that should be used effectively. 
  • Rather than having to "bubble up" ideas to executives, innovators should have important problems presented to them, that they can choose to solve if it meets their passion and interest
  • Rather than conduct innovation in out of the way places or under cover, we can conduct it out in the open, acknowledging that existing tools and methods don't address all the growth needs or concerns.
  • Rather than treat innovation as a sideline, we can incorporate innovation as simply another valuable tool to help achieve strategic stretch goals.
What stands in the way

Of course this story I'm telling has a lot of potential barriers.  Few executives will agree to take the time, or to even admit, that there are business needs or challenges that they need help solving.  Few companies are going to allow employees to simply drop their day to day work and contribute to innovation projects based on their passion and interest.  But what if we turned this unwieldy innovation process on its head? What if executives could communicate their strategies and needs, and could adequately communicate and frame the innovation activities they need?  What if employees could spend time on projects based on their interest and passion?  What if executives had to "pitch" their needs to innovators who could choose where to spend their time, rather than attempt to present ideas to distracted and often disinterested executives?

Yes, this reverses a lot of the power structure that exists, gives power and decision making to self-organized innovation teams rather than embed decision making with one or more executives.  It would force executives to think more clearly about their businesses and be able to distinguish what they can deliver with existing methods and tools, and what needs and gaps they have that cannot be filled by existing tools.  It would require executives to demonstrate how solving a challenge or problem is good for the company, good for the customer and good for the innovator.

Why the sprint works and what businesses can learn

The sprint works because everyone who attended the event is there on their own time.  The audience showed up, ready to help because they care about health care, or they believe they can create new solutions to solve an important problem.  They showed up because they know that the people who convened the sprint, UNC and AARP, can frame the challenges effectively and communicate solutions to organizations that can scale up good ideas.  The people who attended were intrinsically motivated (yes, there is some small payment for the best solution or idea, but nothing compared to the investment).  They have passion for the industry and the need, they are engaged, and they are properly prepared by understanding the challenges in the industry.

If AAPR and UNC can get 100 people to show up for pizza and soda for several hours of their own time, why can't businesses do a better job sponsoring innovation and tapping into the wealth of ideas and energy of their own people?


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posted by Jeffrey Phillips at 6:22 AM 0 comments

Thursday, March 02, 2017

Innovation failing to deliver

In what should come as no surprise to many of us working in the innovation space, a McKinsey study revealed in October 2016 that 84% of CEOs think innovation is important for their growth.  This is not new news and is actually a substantial increase from previous surveys conducted by BCG and others, where the numbers routinely suggested that anywhere from 66% to 75% of CEOs thought innovation was important.  The real news that McKinsey released has to do with results.  In the same survey McKinsey found that 6% of CEOs felt that their innovation efforts were satisfactory.  If the data is true this represents a complete and utter failure of innovation to deliver the value that the CEOs expected.  Even venture capital investors expect a 1 in 7 or at worst a 1 in 10 return. 

The 100 Meter High Hurdles

So, clearly we've overcome the first hurdle.  Everyone believes that innovation is important.  The challenge with this first hurdle is that, like the 100 meter high hurdle race in the Olympics, there are a number of other hurdles that need to be cleared before you reach the finish line and celebrate. 

The next hurdle, beyond believing innovation is important, is establishing the environment in which innovation can thrive.  Saying you want innovation and that it is an important component is valuable, but useless if we don't change perspectives, behaviors and rewards.  Corporate inertia is far more powerful that occasional pronouncements from on high.  The next hurdle executives must clear if they want more innovation is to change their culture and environment to encourage if not demand innovation.

There are, of course, other hurdles, including training people in new ways of thinking and providing tools that help them think differently, as well as changing compensation and reward structures so that doing innovation is less risky.  Defining what innovation is and what it means is also helpful.

Too often executives don't run the full race.  They clear a hurdle or two and think they've gone the distance.  Innovation is a real commitment not a one off activity.

Perceptions and Expectations

There's another problem, of course, that has to do with realistic expectations.  Everyone looks at Apple and wants to do what Steve Jobs achieved, the growth and profitability.  Yet few companies want to commit the kind of resources and maintain the kind of focus that Jobs had for over a decade.  In 1997 Apple was barely alive, but with the introduction of the iPod and iPhone and iPad he turned it around.  Now it's used as an example of innovation success, but few people really understand the depth of commitment and the lack of options that Apple had.  Executives may be unhappy with innovation, but do they have the right expectations about what innovation can deliver?  More importantly, do they have the right expectations about what their teams can deliver using innovation?  The answer is: probably not.

Reactive or Proactive

The biggest problem most larger companies face is that as they grow larger they become defensive, seeking to lock in market share and protect their customer base.  This leads them to constantly refine existing products and to compete by lowering costs rather than creating new products.  They become reactive and cost/efficiency conscious rather that proactive and innovative.  New entrants can either compete with what the incumbent does well or compete where the incumbent leaves them space.  So new entrants seek to innovate, create new solutions, new packaging, new channels, new experiences that have appeared risky to the incumbent, who is satisfied to let others experiment and believes they can move in after a new solution is proven.  In the old days of slow change that was a reasonable expectation, but not any more.  You can't innovate sometimes and in some places and hold fast in others.  Innovation, once you decide to do it, is a constant, 24x7 exercise where you are expected to lead the pack, not fiddle around the margins.  Too much innovation activity is haphazard and half-hearted, doing something for the sake of saying that they are doing innovation.  It lacks engagement and commitment, which is another reason it often fails to deliver.

Old news, new tribulations

So, the fact that CEOs are unhappy with the results of their innovation activities is old news.  Was true a decade ago and seems to be getting worse.  The real challenge is that the pace of change has actually accelerated.  Autonomous vehicles, AI, robotics and many other factors are becoming realities far more quickly than we anticipated. These and other technology introductions are creating sweeping change.  Add to that increasing globalization and societal shifts and every company faces a rapidly changing market with heightened demands and short attention spans.  Those dissatisfied with their innovation outputs may soon be those who are no longer in business.  Innovation failure may simply become the first sign of a faltering company, rather than a mistake in an otherwise reasonably profitable company.
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posted by Jeffrey Phillips at 6:31 AM 0 comments