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OVO Views
Conversations about Innovation
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October 2007
- Vol 2, Issue 4
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In This Issue
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Quick Links
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Greetings!
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In this issue of our monthly newsletter, we
take a look at the front end of the "front
end of innovation" - gathering and
synthesizing trends and competitive
intelligence to determine your best
opportunities.
Also, we'll look at two recurring questions
that many teams ask. First, how is
innovation different from other projects or
initiatives. The short answer is "context" -
but you'll need to read the article to learn
more. Second, how do you decide whether an
idea is a continuous improvement idea or an
"innovation". See our STRIP acronym as a
decision making guide.
Finally, we highlight a person who has
succeeded at innovation within his company,
in some cases against the corporate culture,
through dogged determination and
perseverance. These stories are the ones we
like best.
Happy Halloween!
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We are frequently asked to help firms that
have Six Sigma and Innovation programs
underway to provide a method for making
decisions about ideas and whether they should
follow a Six Sigma approach or an Innovation
approach.
We distinguish Six Sigma and
continuous improvement programs from
innovation, because we think they solve
different problems and have different
objectives.
When called on to provide a method, we've
often used the acronym STRIP to provide a
means for decision making. STRIP stands for:
- Scope
- Timeframe
- Risk
- Investment
- Perspective
We'll look at each attribute and its
relevance to this problem below.
Scope
The scope of the problem or opportunity is
important because it dictates the size of the
change and the number of people impacted.
Continuous improvement or Six Sigma programs
should address smaller, more incremental
change, while innovation should address
larger changes to products, services or
business models. If one manager can make the
decision to move ahead and the decision does
not impact many people, then the idea is
probably best delivered as a Six Sigma idea.
Otherwise, it should be considered innovation.
Timeframe
Likewise, many continuous improvement ideas
are ideas that can be implemented quickly,
while innovative ideas usually have a longer
timeframe for implementation and payback. If
an idea can be implemented very quickly, then
the chances are that it should be implemented
as a Six Sigma idea. Innovation is more
relevant for ideas that will take longer to
unfold or more time to trial and test.
Risk
As it has been said here before, innovation
requires risk taking. If an idea has a
significant amount of risk associated with
it, then the idea probably belongs in the
innovation category. This risk can be market
risk, implementation risk, adoption risk,
financial risk or other kinds of risk. Six
Sigma and continuous improvement projects are
meant to make safer, more incremental change
happen and don't manage risk effectively.
Investment
Generally speaking, the higher the
investment, and the longer the period of
investment, the more likely the idea belongs
to innovation. Innovation should be focused
on breakthrough and game changing ideas that
require more investment, more time and more
resources. If an idea can be implemented
quickly with little investment, it probably
isn't innovation.
Perspective
From a perspective point of view, where does
the idea have the most impact? Within the
organization or outside the organization. If
the idea's impact is mainly internal, then
the idea probably belongs as a Six Sigma
idea. If the idea has an impact on
customers, prospects or the market at large,
then the idea probably belongs to innovation.
Conclusion
Innovation requires the ability to work
within some gray areas. Clearly, some ideas
belong to a continuous improvement program or
Six Sigma. Some ideas are so disruptive that
they clearly belong to innovation. Then,
there are the third group of ideas that could
belong in either camp. Use the STRIP acronym
to help determine where your idea belongs.
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Synthesizing trends for innovation insight
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If I told you today that there was a 70%
chance of a Democrat winning the US
presidency in two years, you'd probably
agree. The implications of the ascension of
a Democrat to the White House could be quite
dramatic. Would
you want to gather and start acting on the
likely trends now? Suppose your firm has
something to do with healthcare for example.
Don't you
expect that health care legislation, and
perhaps the way health care is provided,
delivered and paid for may change in a
Democratic administration?
Looking over the horizon
The scenario I depict above isn't a
conjecture - it's very likely.
What firms need to be working on right now is
what the likely outcomes and trends are if
this does happen. Creating
alternative futures and recognizing trends
and probable outcomes are exceptionally
important for innovation, yet very few firms
manage to do these functions well. Why?
Strategic Planning used to be a key corporate
capability, much like TQM or Six Sigma are
today. Over time, however, strategic
planning devolved into product planning and
eventually disappeared as a corporate
capability in many firms. The focus shifted
from longer term opportunities to more near
term process excellence. This shift is a
pendulum,
but the pendulum won't swing back - it turns
out we need to be good at both process
excellence and innovation. A firm cannot cut
its way to greatness. It must create new
offerings to stay relevant. However, an
innovative firm that cannot produce products
and services consistently will fail as well.
Signals and Road Signs
If looking at the future is important, what
should your firm do now? First, you should
begin to look at the trends that are just
beginning to express themselves. Clearly,
there's a trend toward environmentalism and
the green movement or sustainability. The US
population is aging and becoming more diverse
through immigration. Oil is heading through
the roof and we won't see a $60 barrel of oil
again soon. Do these trends have meaning for
your business, and can you use these trends
to identify new market opportunities? If
these trends aren't important to your
business, can you identify the trends that
are important and start capturing them?
Competitive Intelligence
What can your firm do to understand what your
existing competitors and likely competitors
are focused on? Competitive Intelligence is
the legal approach to gathering and
understanding information about the actions
and directions of your competitors. Simply
gathering information on your competitors
from customers, vendors or the mass media may
help to get a better picture of the intent of
your competitors and help you determine your
best course of action.
Delivering at the right time
Sometimes, serendipitously your firm may
create a product that anticipates a growing
market need or trend. Other than the
occasional "Tickle Me Elmo", few products by
themselves drive market trends, so you'll
need to understand the trends in the
environment and tailor your product or
service offerings to evolving trends in the
marketplace. Since most product life cycles
are more than two or three quarters at a
minimum, you need to be looking at trends
that will unfold in two or three years to
match your ability to service an evolving
trend with your ability to deliver a product
or solution targeting that trend. Who in
your business is looking at trends, market
data and competitive intelligence with a two
or three year minimum time horizon? If the
answer is "no one", you can expect to be
blind sided by at least one significant but
unexpected event soon.
Trend Watching Resources
We don't recommend outsourcing the capability
to identify, gather and synthesize trends,
but to help you get started there are several
resources on the web that may be of value to
you:
Websites
www.trendwatching.com
- releases one "megatrend" a month, primarily
targeting consumer goods
www.psfk.com -
this site focuses on emerging trends in a
number of industries.
Organizations
www.scip.org -
the society for competitive intelligence.
The thinking and approaches behind SCIPs work
are primarily for competitive intelligence,
but we believe many of the the methods are
useful for trend gathering and synthesis as
well.
Consultants
www.outwardinsights.com
www.fuld.com
Both of these firms have strengths in
competitive intelligence but also work with
identifying and recognizing trends.
Software
OVO Shuffle - we have an application to help
capture and manage trends and competitive
intelligence so your team can synthesize the
information and determine the best course of
action.
Gaze into the crystal ball
While some of this may seem a bit mystical,
identifying trends and competitive actions
can clear up a lot of the mystery surrounding
your strategy and the direction of the market
and your customers. Gathering and
synthesizing trends will improve your ability
to create and release new products and
services, at little cost but significant reward.
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Becoming More Innovative
There's no question that innovation is unlike
the other functions you do within your
business. Most processes are based on
consistent, everyday activities like creating
orders or paying invoices. These are
transactional activities and follow a
standard process. Outside of a purposeful
research and development team, however, there
are few consistent or persistent approaches
to innovation, so it is dramatically
different in many regards. What's different
about innovation?
The Innovation Team
In most organizations, it can be hard to find
the "innovation team" unlike say the
purchasing team or legal team. Businesses
form around consistent processes or
functions. Since innovation is usually not a
consistent process, and in most cases isn't a
function or a box on an org chart, few
organizations have persistent innovation
teams. This means that the size, complexion,
organization and permanence of the innovation
team will change each time it is formed, does
its work and disbands. Since there's no
consistent personnel associated with
innovation, this presupposes that excellent
documentation, predefined processes or deep
stores of knowledge exist to help the teams
get up to speed quickly.
Going to the well
Unfortunately, most firms don't have a deep
store of knowledge or well defined processes
when it comes to innovation. The fact that
teams aren't consistent or persistent doesn't
matter if there is a deep, readily available
body of knowledge or community of practice,
or perhaps some internal consultants with
experience managing an innovation initiative.
Without a persistent team and lacking a
consistent process or method, the teams will
form and create temporary processes and
methods to help them achieve the goals for
innovation at that point in time. This means
that each team identifies its goals,
processes, methods and outcomes locally, with
little regard to other teams or other work.
Context is King
If your teams aren't persistent and you don't
have a deep body of knowledge or consistent
processes, then you'll have to have great
context in order to be successful. By
context we mean a great definition of
innovation that aligns to corporate strategy,
and a clear understanding of the opportunity
or problem to be addressed with your
innovation. Your team will need to clearly
define the effort and costs involved, the
likely risks and the potential for success of
the new product or service you create.
In other words, without a consistent process
and experienced teams, repeatable,
sustainable innovation isn't possible, but it
is possible to innovate on a smaller scale,
if your company does an excellent job
communicating the context of the opportunity
or problem, risk tolerance of the
organization, investment profile and other
key information. Without this information
the team will flounder or simply make up its
own definitions.
Context in Organized Innovation
If your company has a consistent innovation
process and an experienced team to
participate or guide innovation initiatives,
context is still very important. Too often
innovation programs attack problems or
challenges that are not in alignment with
strategic goals, and are discounted because
they create ideas not in line with
expectations. Clear communication and well
defined scope from the senior leadership team
helps provide the context that defines the
important topics for the innovation teams to
use to succeed.
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In a recent conference I happened to
reconnect with an a fellow innovator who
works for a large chemical company. I like
to joke with him that he is the "free
radical" within his firm, as his firm is
exceptionally slow to change and feels
threatened by innovation. At this most
recent conference he reported that his
efforts, which have been downplayed over the
years, are gaining traction due to several
factors:
- His persistence over time
- The realization within the management
team that innovation is important
- The increasing commoditization of the
business over time
I'd like to share his story as an
encouragement to those of you who struggle to
make your executives more aware of the need
for innovation.
Timing is everything
We'll call this guy James, since that's his
name, but we won't refer to the name of his
company. Let's call it BigChem. BigChem is
in the chemicals industry and has been
successful but not very innovative. In fact
it has resisted change, and I think James was
fairly frustrated in his attempts to
introduce new thinking in the organization,
especially around innovations in products and
services. He had implemented some
brainstorming, some training programs and
worked with different teams to introduce new
ways of thinking and looking at the market,
without much success. James tried to
initiate a community of people who were
interested in innovation or new product
development and encourage dialogue within the
company, all with little result.
Managing the meeting
Without a lot of management commitment, he
was swimming upstream until two things
happened. First, new companies entered the
market and BigChem's products became
commodities. Second, James was asked to
chair a meeting of the marketing and product
management team. This provided an opening to
influence the way people thought.
Using the meeting and the problems of
commoditization, James introduced some new
approaches for thinking about customer
requirements and trends in the environment.
He used part of the program to offer some
training on innovative techniques. He
introduced a concept I thought was great -
trading cards. Each person who attended the
meeting received a stack of trading cards
with their picture on the front and strengths
or work experience. The attendees were
encouraged to exchange cards to get to know
each other better and understand interests
and strengths. This exchange proved so
popular that a community of interest was
formed, and James found himself getting
invited in to help organizations run
brainstorming programs and innovation
initiatives where previously he had run into
walls.
A tribute to perseverance
James is impacting BigChem through his
vision, his interest in innovation and his
determination. Several times he considered
leaving to find other firms with more focus
on innovation, but he felt there were
tremendous opportunities within BigChem for
innovation if only he could get
some traction.
I provide this story to let you know that
sometimes innovation happens from the top
down. Senior executives want innovation and
push down an emphasis or imperative for
innovation. Sometimes, however, innovation
sprouts from a few committed people who have
the persistence and vision to infect others
and grow the capability organically. Unlike
so many other capabilities and processes in
an organization, innovation thrives on
perseverance, heart, commitment and belief,
which may make many people within a business
shy away from it. There is a personal
commitment to innovation that is unusual in
any other part of the business, and if you
look at successful innovators - whether
single inventors like Edison or corporate
innovators like Apple - these people BELIEVE
in what they are doing and often simply
overcome the doubts of others.
Conclusion
Rome wasn't built in a day, as the saying
goes, and even if your team could rapidly
change your organization to become more
innovative, few firms could afford the
distraction, costs and risks
associated with such a change. Changing a
culture and implementing the techniques,
processes and methods associated with
sustainable innovation will take a
significant amount of time, since this
implementation will almost always be
conducted in parallel with the day to day
operations of the firm. Yet, innovation is
too important to exist as a "bolt-on" to your
organization or your strategy. Just as
innovation must become part of the way you
operate, it should also become a key driver
of your corporate strategy.
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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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