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Innovation Newsletter from OVO
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OVO Views
Conversations about Innovation
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November 2006
- Vol 1, Issue 6
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In This Issue
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Quick Links
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Greetings!
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Welcome to the OVO innovation newsletter.
It's November and that means that many of us are
finalizing our budgets and plans for 2007. In this
issue we'll recommend adding a line item to your
2007 plans for
innovation training and why that can have such an
impact on your business. Also, we'll look at an
emerging consensus on how to define the innovation
org chart within your business.
We'll take a quick look at the "white space"
for innovation. That is, where is innovation
currently being implemented, and where are the white
spaces where innovation is concerned?
Finally, we'll continue our focus on the important
"C's" for
innovation success. Last month we looked at Choice
and Control. This month, we'll look at Convenience
and its place as a driver for innovation success.
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For most businesses, especially corporations
with multiple business units or product groups, a
significant challenge for corporate innovation is the
question of structure. The "million dollar"
question for innovation in many of these firms is:
how should an organization build the structure for
innovation? What should the org chart look like?
What should "corporate" do and what should the
business units or product groups do?
This organization challenge
hinders a lot of firms from
taking the natural step from small, decentralized
innovation projects to implementing an enterprise-wide
innovation culture. Frankly, any firm can
have innovation projects within the business units
or product groups with little interaction from
"corporate" - but until the entire organization has
a common language and framework for innovation,
these innovation efforts are separate, disconnected
and locally optimized efforts.
Two strong views exist about innovation structure
and organization - the view of the "corporate"
team and the view of the various business units or
product
groups where innovation will take place. Both of
these groups have a significant stake in getting the
organization and assignments right.
The "corporate" team and senior management have a
important stake in innovation. They are frequently
talking with customers, shareholders and the press
about innovation and its importance to the firm.
They are the ones who want more innovation, since
innovation is a clear differentiator and can drive
increased revenues and higher
profits. However, most senior management teams
and
"corporate" executives have a hard time
defining innovation, and shouldn't be involved in
the innovation projects on a day to day basis.
Product groups and business units have a significant
stake in innovation as well, since their next
products or services will spring from innovation.
These groups often struggle because they are
expected to innovate while also achieving the
quarterly sales plan. Too often the focus in a
business unit or product group is drawn to quarterly
results and away from focus and investment in
innovation. Product groups and business units often
don't have enough people or resources to innovate
consistently, so innovation becomes periodic or
episodic, rather than a sustained effort.
Clearly, both organizations have a vested interest
in seeing innovation succeed, but neither has the
complete solution available.
A new model is emerging based on the capabilities,
resources and needs of these two groups. We
believe that innovation should be a
shared commitment, with both groups providing the
tools or resources they are best positioned to
provide.
The corporate team can provide the inputs that it
provides for many other business functions: a
standard
approach, common language, training, shared
resources and
tools, strategic alignment, and funding. Business
units and product teams can use these shared
resources to innovate more consistently. These
shared resources provide strategic and tactical
depth and allow the business units or product groups
to create and manage ideas and leverage a corporate
innovation capability rather than create the means
in each business unit.
Why does this model make sense?
Corporate can be involved earlier in the innovation
process, providing a common approach, language and
framework across the business units. This means
that people and ideas can move more freely across
the organization, and there's less redundancy and
rework across the organization. Corporate will also
receive increased visibility into the idea pipeline.
The business units or product groups benefit as
well. Rather than creating an innovation process
that has no leverage, an "institutional" process
exists and can be reused. Training helps get people
up to speed more quickly and there are other
innovators within the organization to call on for
help. The corporate resources may also provide more
people and funding to work on ideas, and help align
ideas to corporate strategy.
As we've noted previously in our newsletters about
innovation tools, the shared model defined above is
not new. Most large organizations centralize the
definition and implementation of software and
provide the software as a central resource. Few
firms would last long if each product group or
business unit purchased its own CRM and ERP
applications. Likewise, a central innovation
process, approach and toolset which is provided to
each business unit or product group makes sense and
creates an enterprise-wide innovation capability.
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Building Culture through Training
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As we identified in our previous article, corporate
teams can play an important role where innovation is
concerned as they define and deliver training for
mid and senior level executives on innovation. We
are seeing this happen in a number of larger
organizations, and we believe innovation training
can add a lot of
value to innovation if done correctly.
At first glance, innovation approaches probably seem
obvious. Most of us have participated in a
brainstorming session or generated ideas on our own,
with little formal training. The challenge for
consistent innovation, however, is not local
optimization but consistency and frameworks that
span the organization.
A training program that creates a consistent
innovation approach, language, strategy and tactics
will begin to shift the dialog and the culture of
the organization. Such a program will indicate the
seriousness of the management team about
innovation
and the possibilities inherent in an innovative
company.
If we accept that innovation training is a good
idea, what should we teach, how should we teach the
concepts and who should attend?
We'll stipulate that our recommended approach is a
corporate initiative, which trains mid and senior
level managers from product groups or business units
in a common language, approach and format, and
sends
these trained individuals back to their product
groups or business units with the tools necessary to
sponsor innovation locally.
This definition outlines a "management development"
training program where innovation is concerned. It
should focus on aligning innovation to the corporate
strategy to ensure the work is beneficial and
supports the direction of the firm, and provides the
concepts and tools necessary for these managers to
become innovation leaders in their respective units.
This training should combine "academic" classroom
lecture with "real world" activities and exercises.
In many cases, it will be more valuable to send
managers off to interact with customers and
understand their unmet and unspoken needs, rather
than to simply lecture them about ethnography. This
training should recommend specific reading
(Christensen, Tucker, Drucker, etc) and philosophies
about innovation. It should broaden the mind of the
manager to look at innovation beyond simply
introducing new products to changing the way
services are delivered or creating completely new
business models.
The ultimate goal of such a training program is to
populate the organization with individuals in
leadership positions who understand the value of
innovation, will sponsor innovation initiatives in
their business units, who understand the tools,
processes and techniques necessary to foster
innovation and make it consistent in their
organizations. Also, to stitch together and
identify the "innovation" leaders across a business
so there is a ready cohort of people a manager can
turn to when facing an innovation challenge.
A training program can be problematic, however, if
corporate teams use the training to enforce rigid
models as to what a "good" innovation might look
like or if the corporate team tries to influence or
seed the idea pipeline. The training program's goal
should be to build a community of innovators who
have the knowledge and tools to sponsor innovation
in their business units or product groups, and
recognize the common set of tools available for them
at the corporate level.
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I first learned of the concept of "white space" when
working with Texas Instruments. At TI, we felt we
understood our products and offerings very well, but
it was clear to us that there were gaps in our
offerings. Those gaps existed between various
product groups, and in the new, developing markets
as well.
Innovation is one way to fill the "white spaces"
that your organization has in its strategic
footprint. Innovation itself has "white space" as
we'll review in a minute. The two questions we want
to ponder in this article are:
- What are the white spaces in my business and how
can innovation help fill those white spaces?
- What white spaces exist in my market where
innovation is not being applied to critical problems
that I can take advantage of?
First, let's look internally. Innovation should be
a tool your organization is considering for new
product and new service development to open a new
market or bring new products to market. Innovation
is also one of the approaches to use to extend your
existing product and service portfolio. How does
innovation dovetail with your corporate strategy?
What white spaces exist in your business and your
market? Have you considered all aspects of the
market - product, service and business model
innovation?
What's important to recognize about innovation is
that the concept and strategy of innovation is new
as a management focus, and much of the work
quoted
to date has taken place only in one small quadrant
of the innovation space. In our graphic above, we
divide the world into a neat, 2x2 matrix. If we
plot a horizontal spectrum with physical products on
the left edge and intangible services on the right
edge, and a vertical spectrum with business to
consumer solutions at the bottom and business to
business solutions at the top, we can see that many
of the examples of innovation fall in the lower left
quadrant - innovations that represent physical
products targeted at consumers. Increasingly there
are some innovations targeting consumers with new
services or business models, but services innovation
is even less mature than innovation as a management
focus.
The true white space for innovation in our opinion
is in the business to business sector. There are
very few examples of innovation from either a
services or products point of view in the B2B space.
Clearly there are innovation efforts underway, but
innovation is a more readily grasped concept when
delivering products to a consumer audience expecting
the next great thing. Many firms in the B2B value
chain feel locked into the value chain and unable to
innovate, fearing their customers will reject new
products or services that don't line up with
expectations.
Consider your market opportunities, customers and
product/service lines. Where can your firm create
the most sustained value from innovation? What are
your competitors doing and what do your customers
expect? Innovation is almost a given in the
B2C/product space, but still early in these other
sectors. Your firm can stake out a leadership
position in these other sectors if it acts boldly.
A good example of bold leadership is DPR. In an
industry not necessarily known
for innovation, DPR holds a significant edge over
its competitors due to its innovative thinking and
service approaches. DPR was written up in the new
book Mavericks at Work, where some of its
philosophies are discussed. Most important to note
about DPR is that almost one third of its business
is awarded with no other competitor considered.
That's leadership and differentiation, as a result
of some innovative thinking.
In our opinion, there is a significant amount of
"real estate" not fully explored where innovation is
concerned, in the services sector and in the
business to business sector. The services sector of
our economy is growing quickly, and we are starting
to see more research and emphasis on innovation in
that sector. Even less work has been done in the
business to business sector of the economy. Firms
that pioneer innovation techniques in that sector
can take and hold a leadership position for quite
some time to come. Innovation will continue in the
consumer sectors, but a significant amount of work
and research has been expended there. The
expectation now is that innovation will become a
sustainable, repeatable process rather than an
episodic event.
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Innovation Success - The "C" Factor
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In the last newsletter we introduced the concept of
the Seven "C's" - success criteria for innovations,
all of which begin with "C". The concept is to
establish a framework to evaluate your ideas to
determine which are most likely to be accepted and
successful after market introduction.
Last month we looked at two "C's" that are
intertwined - Choice and Control. This month we'll
look at Convenience.
For an innovation to succeed, it must provide
the consumer more choice than what's currently
available without a loss of control
or sacrifice of options. Choice is clearly
important to the consumer, as we see ever
fragmenting market segments that demand products
and
services tailored to specific needs. Choice also
becomes important as a solution in itself - helping
a customer choose the right product or service is in
itself an innovation.
Successful innovations offer more convenience than
the products they supplant.
In this regard, convenience is defined as requiring
less time to complete a task, making a solution more
accessible or user-friendly. Given how
overscheduled most people are and how jam packed
our
schedules are, we have little time to learn about,
much less experiment with a new innovation, so it
must have a compelling convenience factor. That
means it must demonstrate dramatic improvement
over
an existing alternative solution in terms of
convenience before most people will even consider
trying it out.
Consider the diaper industry, an example often used
in innovation discussions. In the 1960s, families
relied on cloth diapers for their infants. Cloth
diapers were the “state of the art” but were fairly
inconvenient. Cloth diapers had to be washed out,
creating a significant addition to the family wash
load – or generating costs through using a diaper
delivery service. In the early 1970s, the
disposable diaper was introduced and dramatically
changed the diaper industry, mostly because of the
convenience factor. Families which had seen their
work load increase due to dirty diapers could now
simply purchase and dispose the diapers. This
provided a great increase in convenience.
Consider also the i-Pod. Apple was clearly not the
first firm to create a portable music player – Sony
did that with the very popular Walkman. Apple did
not create the MP3 player either. Several firms
came to market before Apple did. However, Apple’s
real innovation was the combination of the iPod with
iTunes and the Mac, which made it exceptionally
convenient to find and download music. Due to its
convenience and coolness factor, Apple rapidly
became the MP3 product to own.
A counter example is the e-book. One of the reasons
physical, tangible books are still so popular is
their convenience. Technologists and inventors have
tried for many years to invent a technological
counterpart to the book, but have not succeeded.
The primary reason is that a book is exceptionally
convenient, doesn’t require batteries and is very
durable. The closest we’ve come to replacing the
physical book is the recorded book, but even that
pales in comparison to a real book for those who
enjoy reading.
Sometimes convenience is combining several functions
into one function. In this regard I think the
Swiffer is an excellent example. The Swiffer
attacked a fairly stagnant market by combining the
best features of a broom with the best features of a
mop. The Swiffer was more convenient, however,
since the user does not have to clean the mop head
or be concerned about where to store the mop until
the mop head dries out. The Swiffer probably does
not clean quite as well as a regular mop, but due to
its convenience, it is easier to use the Swiffer
more frequently and it can be used in less time.
When we think about convenience, however, the
service or offering we provide must provide
convenience to the consumer, rather than the
company. ATMs are a great example of promoting
convenience while lowering service. ATMs offered a
tremendous
amount of convenience when they were first
introduced, but most banks have not added any new
services or features to ATMs in over 20 years, while
ATMs have proliferated in other locations. ATMs do
offer some measure of convenience to consumers, but
over the last few years many banks have moved
interaction with their customers to the ATM rather
than an interaction with a teller.
This transition from a human interaction to
interaction with an ATM is
beneficial from the bank’s point of view from a cost
savings perspective, but is not a real benefit for
the consumer. The ATM, once an innovation in
banking service, has lost its panache and become a
convenience for the bank, rather than a convenience
for banking customers. What's interesting in the
market where several of us bank is that one bank is
now offering an innovation - staying open late in
the evenings and opening on Saturday. This is a no
brainer in my opinion and one the banking industry
has taken a pass on in many markets for years.
As you conceive new innovations, ask yourself if
they provide the prospective users more convenience
than the existing alternatives. Given that people
do not like change and will adopt new products and
services only when there is a significant benefit to
them, the convenience of the new product or service
must be evident in order for the innovation to
succeed in the market.
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Low Cost, Low Risk idea management
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OVO has recently announced that its
software -
specifically Spark
and Incubator
- are now available
as a hosted service. What this means to you is that
your team can get started very quickly and easily
generating and capturing ideas in a hosted model,
for much less cost and effort than you might
expect.
Spark, a web-based application for brainstorming,
ideation and whiteboarding, is priced in the hosted
model at $20 per concurrent user per month.
Incubator, a collaborative idea management system,
is priced at $40 per concurrent user per month.
These are powerful software applications offered at
a price that
means you should act now to get your innovation
teams started generating and capturing ideas in a
consistent application framework.
There are two real innovations in this offer: the
concurrent software model and the ability to move
quickly from a hosted version to an internally
managed licensed version.
OVO offers its hosted software in a concurrent
model. This means you can license the software in
blocks of 5 concurrent users, but sign up 5 users
for each concurrent license. For example, if you
buy 5 concurrent users, your team can establish as
many as 25 registered users. Any 5 of those
accounts can be active at one time. You'll pay less
but
provide the functionality to a much broader audience.
OVO also offers the ability to quickly move from a
hosted model, where we host and manage the data
for
you, to an internally managed and licensed model,
where your team hosts and manages the software.
This means your team can get started quickly, often
within a day or two, using the hosted model, and
bring the management of the ideas and software in
house when the time is right.
With this offer there is simply no reason to wait -
your team can access powerful software and get
started using that software very quickly at an
exceptionally affordable price. Robert Tucker, in
his book "Driving Growth through Innovation"
recommends using a collaborative idea management
system as one of the first steps towards becoming
more innovative. You won't find a more powerful
application that provides you with the flexibility
and capability that OVO offers right now.
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If you'd like to discuss how OVO can work with you
to improve your innovation strategies, ideation
sessions, innovation processes or software,
contact us today at our website or
(919) 844-5644 x789.
If you enjoyed this innovation newsletter, please
pass it along to your friends. If you wish to
unsubscribe, please see the link below.
Sincerely,
Jeffrey Phillips
OVO
phone:
919-844-5644 x789
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OVO | 220 Horizon Drive | Suite 117 | Raleigh | NC | 27615
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