OVO | August 2007 Newsletter

OVO Views

Conversations about Innovation

August 2007 - Vol 2, Issue 2

In This Issue
	Balancing Utility and Experience Guest Article from Madan Birla Building a culture of innovation Frost&Sullivan Innovation Conference

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Greetings!

Welcome to the OVO innovation newsletter. It's August and that means we're all getting back into gear after summer vacation. Between work and family, creativeness and practicality, near term and longer term results, it can be hard to keep in balance. In this issue, we seek to find balance - balance between utility and meaning or experience, balance between work and life. Balance is important for your mental health, growth, creativity and innovation success. See our article on balancing utility and empathy. Everyone "knows" that corporate culture can be quite a roadblock to innovation. What can you do to make your culture more accepting of innovation? Read more on creating a culture of innovation. We welcome Madan Birla as a guest contributor this month. Madan was a senior executive with Fedex, and wrote the book Fedex Delivers about innovation at Fedex. He is currently at work on a second book about key factors for innovation success. OVO will be sponsoring the Frost & Sullivan Growth and Innovation conference in September and the PDMA Innovation conference in October. Come see us at both events!

Balancing Utility and Experience

What do you want? In most of the developed world, we can honestly say that most of our basic needs are met, and in many cases (looking at my waistline now) our needs are amply met. However, even though our needs are fully met, we still clamor for new products and services. Often, when new products are created, we are interested in the utility of the new product - what costs it eliminates, what benefits it adds, what features it provides. One additional consideration we need to add when thinking about new products and services is the "meaning" or experience a new product creates. Creating an experience While it's important for a new product or service to satisfy a need, increasingly it is also important for a new product or service to provide "meaning" or experience. A new product that is purely functional, with high utility but no empathy or "meaning" is easy to reproduce and is not defensible. A solution that combines meaning or experience can create an entirely new user community, and one that is tightly bound to that solution. As we noted earlier, most of our physical needs are met, so we seek products and services that satisfy psychological, tribal, emotional, demographic or other needs, or that align us to specific causes. The "green" movement, increasing environmental sensitivity, design aesthetics and other factors contribute to creating an experience that can have more meaning. Creating meaning or experience is important when developing new innovations. What's meaning go to do with it? I know what you are thinking - this sounds good but is a bit too "touchy-feely" for me or my management team. Besides, can creating meaning or experience add to the bottom line or to customer loyalty? The simple answer is yes to both. Let's look at Whole Foods as an example. Whole Foods started up as a small grocery chain, competing with co-ops and organic markets. They've focused on providing fresh, organic foods and healthy products. There's not much difference between an apple from your local grocer or the apple purchased from Whole Foods, but the impression that the apple from Whole Foods is organic, or locally sourced creates meaning and loyalty. And guess which grocery chain is the most profitable? Yep, Whole Foods - or as some of us call it - Whole Paycheck. Another example of creating meaning with a product or service is the Body Shop. The Body Shop has a full line of cosmetics, health and beauty aids, but has a purpose and mission beyond beauty. It focuses on sustainability and environmentalism. Customers are assured that the ingredients are sourced from local farmers and villagers in remote locations, and that no testing is performed on animals. For individuals seeking meaning from their products, the Body Shop demonstrates its values. Delicate Balance There's a delicate balance between utility and meaning. A new product or service that has high utility and little or no experience or meaning will be adopted, but can be quickly copied, so the life expectancy of the product is short. On the other hand, products and services with too much focus on meaning or experience that don't satisfy a key consumer need won't find a large enough audience to sustain the solution. The balance is in identifying opportunities to meet an undermet or unmet need, while providing some meaning or experience as part of the solution. Patagonia creates excellent outdoor and adventure gear focused on people who want more than just rugged equipment - they want to be part of the environmental movement. If Patagonia products were shoddy or ineffective, their impact on the market would be small. Since Patagonia makes products that are rated as some of the best outdoor gear, and they have an environmental focus second to none, they attract die hard customers who will ignore other brands to purchase Patagonia. Beyond the product Truly innovative products and services will combine high utility with high meaning or experience. As your team begins its innovation initiatives, think beyond the utility of the product or service and consider the values of your organization and the prospective customers. Is it possible to create a meaningful experience using your new product or service? Can you create a new market or market segment by adding more meaning to your product?

Guest Article from Madan Birla

Each month we try to feature an individual or firm that we believe has a unique viewpoint or an interesting insight for innovation. This month Madan Birla is our featured contributor. Madan was a senior executive at Fedex and helped it achieve its phenomenal success. His first book, Fedex Delivers, looks at the innovations Fedex introduced and how innovation played a key part in the success of Fedex. He is currently at work on a new book about work/life balance and shares his thoughts on the importance of this balance for innovation. As he explained in a recent meeting, people who have balance in their lives have more energy and are more creative. He advocates four key criteria for people to achieve balance in an organization. We'll examine those in more detail. Five factors for innovation success In the research for the book Innovation and Balance, Birla and his researchers identified five characteristics of individuals and cultures in innovative companies. Those people were: Engaged Growing Secure Collaborative which made them Committed Let's look at the first four - which are really inputs - and their impact on innovation in a little more detail. Note that by achieving the first four, we gain employees who are in balance and who are committed to the success of the firm. Engaged When an individual employee's mind becomes engaged, all his mental energies are simultaneously focused on developing and successfully executing his company's business growth strategies while fulfilling the responsibilities of his position. The engaged mind is fully present and eager to both anticipate and understand the changing business environment and the opportunities presented by these changes. And the engaged mind taps its natural creative capabilities to develop innovative solutions that take advantage of these new opportunities. When the collective mind of the organization is engaged in the enterprise, employees work as a team across departments and disciplines to develop and implement creative ideas - the natural by-product of engaged employees working toward a common goal. Growing With the mind engaged, employees are now eager to make contributions to the enterprise through the generation of new and creative ideas by the mind. But that's not as simple as it may seem. Knowing that creativity is the ability to connect seemingly unrelated variables (the dots we keep stored in our minds) in imaginative ways, it becomes clear that the mind needs updated knowledge and imagination from which to draw. And with the fast pace of changing technology, employees' knowledge bases must be continually updated. Secure The mind is engaged in the enterprise. It has updated knowledge base - new dots - and using its power of imagination is generating creative ideas. Any creative 'what-if' cannot be fully developed unless the person feels secure internally to voice it, especially in front of the manager and higher-ups. We all have egos and the higher up we move on the corporate ladder the bigger the ego seems to become. If the proposed idea is different than the manager's own preferred solution then the manager has to feel secure and ego-free to accept the 'what-ifs'. The less secure one feels internally, the greater the need to control things externally. That can often translate into controlling others through criticism, withholding approval, making all decisions and creating an "only do things my way" mentality. This behavior gets in the way of providing effective leadership needed to create a thriving innovation culture. For a creative idea to become a fully developed innovation it has to be accepted by both the manager and the people involved in developing the idea. Collaborative Now we have an employee with an engaged mind, an updated knowledge base that has used its power of imagination to developed several creative ideas. The employee has a secure mind and feels secure and has shared his or her "What if" ideas with his managers and peers. The idea is a good one and like by all. But like any creative idea it is raw and needs to be developed. It will affect several areas in the organization. To develop the idea into a viable solution ready for implementation it needs active collaboration between knowledgeable people from all affected areas. Committed For developed ideas to become innovation they have to be applied throughout the organization. People who were involved in accepting and developing the idea will naturally be excited about implementing the change. But others who were not involved in the generation and acceptance steps of the innovation process, while intellectually understanding the need for change, may feel frightened by the change on a personal level. Employees' commitment to the organization and commitment to their managers are the keys to overcoming this fear of change. A committed employee will say, "I don't fully understand this change. But, I trust my manager and am willing to give it a try. I know if it doesn't work out she will support me." One of the keys for FedEx's success has been its ability of its leaders to tap employees' discretionary effort, the difference between compliance and commitment. The leadership practices to create the previous four conditions - engaged people, growing people, secure people, and collaborative people - also lay the foundation for gaining employees' commitment. Putting it all together All five dimensions of the innovation culture are mutually supportive of each other. An engaged mind is more receptive to learning and growing. Employees have an intrinsic need to learn and grow. And, when the organization and its managers actively support employees in meeting their growth needs, employees are motivated to become more engaged in the enterprise. Leading for Innovation The innovation process is a people process. Managers at all levels of the organization must successfully fulfill the following five leadership responsibilities in order to create the conditions of a thriving innovation culture. Engage employees in the enterprise and create clear expectations for active involvement in the innovation process Expect and help employees to continually grow their knowledge and skill base Create a secure environment for expression and acceptance of creative ideas Encourage collaborative development of raw, creative ideas Tap employees' commitment for successful implementation of the developed idea Read Fedex Delivers

Building a culture of innovation

Becoming More Innovative Most organizations we talk to are interested in becoming more innovative. With decreasing product life cycles and increased competition, it is important to generate ideas and move those ideas through a process to become new products and services more quickly. In our experience, the biggest challenge to innovation is probably the one given the least amount of attention - the corporate culture. Oh, in every presentation someone will make mention of how important the culture is and how urgent it is to "change" the culture, but there is rarely any information on what to do. Like a lot of innovation literature, there's a significant amount of advocacy and little practical information. So, let's look at several key factors that you can influence to change your corporate culture to accept more innovation. These "bricks" can help you build a strong and secure foundation for innovation success. Executive Management The executive management team is probably the most important factor you can influence to encourage more innovation and a more innovative culture. The good news is that most executive teams are champions for innovation - they want more organic growth and differentiation. It's important that they "walk the talk" - that is, sponsor innovation with resources and dollars in conjunction with the verbal advocacy to the company and to outside customers and partners. However, they often don't have good information about what it will take to become more innovative. You can help. In most firms, it's almost impossible to generate, capture, evaluate ideas and launch a new product or service in less than 3 or 4 quarters. So, innovation will take a lot of time to bear fruit. Second, innovation is inherently risky. It is important to have a number of ideas "in the funnel" since many ideas that seem good on the surface will not pan out. Using historical information, show the timeframes and investments necessary for innovation to succeed, and communicate these requirements to your executive team. Armed with this information, executives can make good decisions about the importance of innovation and the resources necessary to sustain it. If your executive team thinks innovation is a "bumper sticker" campaign, then your team will struggle to create new products and services. Compensation and Motivation While it may not seem true of all your co-workers, most people are rational actors and will do what brings them recognition, compensation and rewards. It's exceptionally difficult to attract people to risky projects that aren't well identified or funded without a change in the compensation. Without a corresponding change in compensation or significant management cover, your team members will pay lip service to innovation and return to their regular jobs, working on items that align to their compensation. To be successful changing a culture, you'll need to change the way people are motivated, compensated, recognized and rewarded. You can change your culture by changing the way people are compensated, since they'll spend time working on tasks that align to their compensation. Adding representation from Human Resources to your innovation team and constructing compensation schemes that support innovation will impact the corporate culture. Measurements and Metrics "What gets measured gets managed" is an old management saying. If you want to indicate what's important to an organization and have it ingrained in the culture, you'll need to set goals, measure results and report the achievement of those goals. Early in your innovation initiative, set goals for "throughput" and timely processing of ideas. In the longer term, establish methods to identify the return on investment of those ideas that succeed in the market. Training Organizations can also change the culture by training people in new techniques, new methods and new processes. The investment and focus on these new approaches will indicate to the organization that the executive team is serious about its commitment to innovation. Communication The last lever to move the culture is communication. When every executive speaks with the same vision and purpose, when every presentation includes a focus on innovation, when it is clear the senior executives sponsor and promote innovation, then the teams below them will climb on board. Communication - from top-down, through every channel and using every media available - will make a big difference as you begin to change your corporate culture. Conclusion Most of us shy away from any activity or project that requires cultural change. Changing a corporate culture is time-consuming, frustrating and all-encompassing. But in the case of innovation, cultural change is a necessary and vital component to becoming more innovative consistently and sustainably. Use the levers we've identified above to help you. Ensure your management team is informed and committed, and is willing to communicate its commitment through messaging and investments. Align metrics and compensation, and help people achieve more through training and consistent communications. Once that's accomplished, the rest is blocking and tackling. See our white paper on changing corporate culture

Frost&Sullivan Innovation Conference

We at OVO are pleased to sponsor the Frost&Sullivan Growth and Innovation conference in Mid-September. Frost&Sullivan is a well-regarded industry analyst firm located in Boston, Massachusetts. For several years, Frost has conducted a conference on innovation, and OVO is chairing a panel with leading innovators to discuss innovation processes. Conference Details The conference will be held September 16 - 18 in Monterey, California. If you are interested in participating, I encourage you to review this link and the Frost&Sullivan website and register to attend. If you are interested in attending, please click here to register and receive a $250 discount when you register. Use the code GilOVO to receive your discount.

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

email: jphillips@ovoinnovation.com

phone: 919-844-5644 x789

web: http://www.ovoinnovation.com