Innovating To Win

Field Notes – April 2010

It’s good to have a bit of time back in the office to catch up on things.  In April, I was travelling for over half of the month; visiting with innovation teams at companies in France, Germany, Japan, the United Kingdom, the Netherlands, and South Korea kept me away.  Meanwhile, we have some great innovation projects in our pipeline that I’m particularly anxious to dig into.

Yet, visiting with innovation practitioners from around the globe is a terrific way to gain insights and take a pulse on what is going on in the broader world of innovation.  Here are a few of my takeaways from my April travels.

Innovation momentum is growing.
As the global economic climate stabilizes, more and more companies are starting to look beyond the survival mode mentality that took hold in the fall of ’08.  These companies see that they now need to refuel their revenue generation engines with new and differentiated offerings to the market.  New products for existing and new audiences are viewed as key to building market share and driving top line growth.  Companies need innovation now, and they understand with the ever increasing pace of market change, they need continuous innovation.  There is broad consensus that innovation capability is one of the key competencies that will distinguish winners from losers in the years ahead.

Many companies are still just arriving to the innovation party.
The number of companies that have taken a serious look at innovation and taken concrete steps to build innovation as a value driving core competence is still small.  Most companies are just beginning to question whether there is a better way than relying on serendipity for their innovation.  This means that there is a big opportunity for companies to take the high ground and drive their organization forward through innovation while the competition is still trying to figure out which end is up.

Companies are acting on, not just thinking about, innovation deployment.
Those companies that have internalized the importance and high-value of repeatable innovation best practices are not sitting on their hands.  They are seriously pushing awareness, innovation skills development, and IT infrastructure to support their innovation mandates.  These companies also realize that while grassroots acceptance is important, a corporate innovation initiative will never deliver to its potential if it isn’t backed by a top-down mandate tied back to corporate objectives.  Innovation is about change.  Developing a sustainable innovation culture requires a change in the corporate psyche and hence requires serious attention and management focus.

Innovation delivers value to companies that take it seriously.
Innovation takes many forms, but it always creates value.  Everywhere I went, I heard stories of how using repeatable innovation methods had overcome challenges, expedited time to market, and raised the value of key projects within organizations.  At Samsung for example, I was shown a new model of refrigerator.  The manager showing me this refrigerator pointed out a key feature in the product that was blocked by a competitor’s patent.  Using the innovation skills they have mastered over the years, Samsung was able to create an alternative non-infringing design that allowed them to find freedom to operate and with it a fast path to market.

So, what does all this mean to you?  The bottom line is that now is the time to get moving when it comes to getting your innovation engine firing on all cylinders.  The companies that invest in innovation today will emerge as the leaders with new revenue driving products in the future and create new market differentiation.  While those companies that choose to wait on innovation will be left behind as the laggards in the new economy, never regaining the luster they lost in this most recent recession.

Which will you be: leader or laggard?

Collaboration For Innovation: Why Can’t We All Work Together?

A recent article on ComputerWeekly.com noted that 80% of CIOs are increasing their investments in collaboration tools.  At the same time, many organizations are struggling with restrictions on which tools may be used.

For corporation innovation initiatives, this is an important issue.  Building a strong culture of collaboration is vital to fostering productive innovation.  To help build a healthy, sustainable innovation ecosystem in the enterprise employees must be provided with an environment that equips them with the proper skills, tools, and knowledge resources to improve their effectiveness.  Included in this support must be a practical framework for collaboration around innovation.

Too often, companies tend to build organizational silos that cut workers off from key information and from each other.  This is anathema to innovation.

Innovation thrives when knowledge flows through the enterprise to the workers that need it.  This knowledge is often not documented, residing in the minds of the workers.  This is why it is essential to enable the connection of people to people based on what they know.  The right collaboration framework can help make this happen.

Conversely, the wrong framework can create frustration as workers feel it is difficult to connect and share knowledge and leverage that knowledge in their work.  Many employees find that tools are not compatible and that it is difficult to capture their collaborative exchanges in a meaningful way that can leveraged.

A good collaboration framework is one that enables employees to connect without the need to leave the context of their innovation work.  The framework should make it easy to integrate the discussion into the innovation process and capture the tacit knowledge of the enterprise for reuse.  It must be simple for workers to engage with one another if you are truly going to unlock the value of the organization’s tribal wisdom.

Where to Open Innovation?

Right after I gave a talk at the Open Innovation Summit in Orlando on overcoming some key obstacles of open innovation, I had the chance to talk with Business Week’s Michael Arndt.  We had a great chat about future innovation trends, arenas to watch in the next 5-10 years, and the global dynamics of innovation.  A few of my comments appeared on Michael’s blog.

It is always interesting to see the reactions when a comment hits a nerve, and so it was that some rather vocal responses were elicited by my statement that the pendulum of favor for open innovation was beginning to return to the center.  Of course, it could be said I was drawing fire by saying that at an open innovation conference.

There is no question that open innovation brings value to many organizations, and open innovation is here to stay as part of the available tools and methods to formalize innovation practice.  However, there is no denying the hype around open innovation has built expectations to a point beyond the reality experienced by most companies.  Yes, there are some companies that have great success stories to showcase like Proctor & Gamble.  But, there are far more companies that are frustrated by the lack of results they are getting from their forays into open innovation.  This was expressed recently in the results of an Innovating To Win opinion poll.  To see how this sentiment is visible in the press, take a look at the recent Forbes article, “The Myth of Crowdsourcing.”   Companies feeling this frustration are learning about the challenges of open innovation and reassessing how to strike the right balance for their organization.

This shift can take many forms, but it generally includes recognition of some key aspects of the innovation process that must be internalized.  Is this a long term trend?  I suspect so given the strategic nature of innovation—innovation is just too fundamentally important for business success.  For an interesting view on what this could mean here is some commentary that appeared in TechCrunch by Sarah Lacy based on her interview with Shai Agassi.

The bottom line is that companies must use all the innovation tools that are available to them to compete in today’s rapidly changing environment.  This includes open innovation methods.  But, one size does not fit all when it comes to open innovation.  The approach that works for one company may not be a good fit for you given the dynamics of your market and company.  You will need to consider how to best integrate external constituencies into your innovation process, and how to keep control over your destiny and value by identifying which parts of the innovation process are your value-add.  Here is a podcast where Vincent Lyons of Leggett & Platt discusses how they have approached this issue.

Also, pay attention to the most common problem areas of open innovation: alignment, authority, and actualization, and use sustainable best innovation practices to address them.  In this way, open innovation will deliver value to your company.

Looking Ahead To A Good Year Of Innovation

I don’t like to wish time away, but I am glad to see 2009 is behind us.  It was a very challenging year thanks to one of the worst financial climates in decades.  No thanks to the blind squirrels in Washington, some hopeful signs that the worst is behind can be seen.  Let’s all hope that these signs are true indicators of an upward trend for 2010.

Looking back to 2009, it was a challenging but good year from my point of view.  What made it good?  Simply, the financial stresses and practical realities of the recessionary climate made the strategic importance of innovation palpable to businesses globally.  As a result, the conversation in many companies has moved beyond “We should do something about innovation,” to “How do we do something about innovation?”  Better still, many companies have taken concrete steps to transform themselves by moving down a path toward instilling innovation capabilities as a core competence.

The momentum for innovation that was built in 2009 should now translate into tangible action in 2010 as the climate for investment improves with companies slowly becoming more bullish about the prospects for the New Year.  Already, I see many signs among the global companies which I talk to that suggest this is a growing trend for this year.

In my own organization, this scenario has been mirroring the global trend.  In 2009, we took the change in global business climate as a sign that it was time to change the game, and so it was that we introduced game changing innovations in our products to help our global customers drive their own innovation initiatives even faster.  Looking forward to 2010, we are again undertaking many innovation projects that are redefining the limits of what is possible.  It’s shaping up to be a very exciting year.

What does the year ahead hold for you?  I’d love to hear about it.  While you’re at it, please take a moment to vote in the Vizu poll on this blog (look to your left) where the current polling question is: “V recession or double dip, what does the climate for innovation activity look like for your organization in 2010?”

Field Notes – November 2009

Coming off my company’s global user conference, I started November with a two week, round the world trip visiting clients and partners in nine cities and six countries (France, Germany, U.K., China, South Korea, and Japan).  Trips like this are great because they provide the opportunity to touch a broad cross section of industry, geography, and culture in the context of business and innovation.

Here are a few of the observations that I gleaned during these two weeks.

Companies are looking to the future
2009 has been an especially difficult year.  It began with concerns of slipping into a global depression, and as it draws to a close many are still speculating on the possibility of a double dip recession.  This all translated into a tough business climate where many companies aggressively cut expenses to maintain their financial performance.  Companies that are true leaders found ways to do this while maintaining their commitment to innovation.  Others back-burnered innovation for while.  Those that kept up their investments in the future are feeling very good about their position as we head into 2010.  Those that slowed down are now trying to ramp up and catch up.  If you haven’t been investing in innovation during the crisis, you had better figure out a go forward strategy to make up for lost time.  If you did invest, now is the time to redouble your efforts to capitalize on the advantage you have created and turn it into lasting market dominance.

More companies are beginning to understand the need to empower workers for innovation
Companies have found during this time that having smart people isn’t enough.  Everyone has smart people; your smart people are probably just average.  Innovation is hard.  Innovation stretches the organization and the people who it comprises.  In order to make innovation a corporate competency and a competitive differentiator, you must equip people with the tools for success.  This means investing in skills development and infrastructure to create the environment needed to drive innovation.

The gap between potential and realization can be wide
We all hear about the looming dominance of China in the future global economy.  We also hear about the innovation engine that is China.  Yet when I visit companies in China, the indicators suggest there is a long path of maturation that must be traversed before China will reach its innovation potential.  There are two primary indicators that lead me to say this.  First, companies consistently point to government policies that direct and constrain their investment and vision.  This climate must change to allow the intellectual freedom needed for a truly innovation oriented culture.  Second, the pervasiveness of dialectic materialism in Chinese thinking appears to have led to some unfortunate consequences.  Talking with Chinese business leaders, I found they would give any Missourian a run for their money when it comes to needing to see hard, tangible proof of a path before they will be willing to walk down the path.  This mindset is not always open to innovative ideas.  It also manifests in how product planners think of new product creation to the extent that at one company, they proudly show a presentation on their new product development method which began with “Step 1: Reverse engineer competitor product.”

Size isn’t everything
We don’t always think of South Korea as an innovation powerhouse, but in truth there are some top flight companies in this country including Samsung, Hyundai, LG, and Posco.  From what I see, these organizations get it.  They are investing in innovation.  They are working to establish a strong innovation culture.  They are building the infrastructure and processes to drive repeatable, sustainable innovation.  Their results reflect this.  We can all learn from their example.

The compelling need to connect with knowledge
A recurring theme in talking with the innovation leaders at global companies is the need to have integrated leverage of knowledge throughout the innovation value creation process.  This includes tapping into both the organization’s stores of information and global information.  However, an often overlooked resource is the undocumented knowledge in the enterprise.  Organizations understand the need to harness the power of this resource.  Consequently, they not only want to connect knowledge workers with information, they want to connect workers with each other based on what they know.  If you are designing your innovation infrastructure don’t forget to consider this need.

Obama and Innovation – What You Said

The old saying goes “Better late than never.”  So while the Innovating To Win poll on governmental economic intervention and innovation closed two months, here are the results of the poll.

The question put to you was “As economic signs turn upwards, what will be the effect on the climate for innovation of continued long-term or deepening government intervention?”  According to your responses, very few of us believe that interventionist policies are going to positively influence the climate for innovation.  In fact, over 77% of you felt that the impact of continuing government intervention would have either no or a negative impact on innovation.

This is a very important issue to consider in your organizations innovation strategy for 2010.  As we sit here today, the experts are split on whether we are starting to pull out the recession or we are going to see the second half of a W shaped recession in the coming year.  Given the current political climate still seems to favor quick action and intervention, what should your innovation strategy be?

What if a struggling competitor gets a shot in the arm?  (Think Ford vs. GM.)
What if a government program intended to help you industry actually creates some challenges? (Think Cash for Clunkers.)
What if a government program threatens to reach into your business operationally? (Think TARP.)

The list of question you can and should ask is very long.

Certainly, 2009 has been a year of challenge and opportunity.  By all measures, it looks like 2010 will also bring big challenges, but also big opportunity to those who prepare.  Are you prepared?

Along this vein, we have a new innovation poll starting today on Innovating To Win.  This pool asks what you see as the innovation activity trend for 2010 in your company.  Take a moment to respond, and let your voice be heard.

Reflecting On The Open Innovation Summit

Last week I spent a few days at the inaugural edition of the Open Innovation Summit.  Considering this was the first year for the event and that December is not a great month to host conferences in, I think it was well attended.

The conference had a single track of speakers, and most of them were very high quality.  Some of the speaker that I most enjoyed were: Phil McKinney of HP, Russ Conser of Shell, Pramod Reddy of P&G, Moises Norena of Whirlpool, Helene Rutledge of GSK, Ed Rinker of Clorox, and Greg Fox of Cisco.

Of course, these conferences are great for networking and meeting people, but I like to learn from others at an event like this.  Here are some of the key themes I heard at the event that are important lessons for us all.

• Innovation, open or otherwise, can’t succeed if it is viewed as an idea generation & capture process that is divorced from business execution.

• Executive sponsorship is vital not just to provide the funding and mandate, but also to provide air cover during the initial stages of an innovation initiative.

• Internal promotion of innovation is needed, but remember to promote the value of what has been accomplished, not what you plan to do. People find comfort in the concrete benefit of what is already done, but the fuzzy future finds factions fleeing for the doors.

• Don’t dismiss the intellectual property aspects of open innovation. Considered up front, they are easily managed, but left as an afterthought they can be an innovation killer.

• Equip your people with the skills and tools they need for success.

• Make sure you have sorted out you internal innovation before engaging in open innovation. The point of open innovation is to kick your internal capabilities into high gear by optimally integrating external constituencies into your process. This can be difficult if you haven’t first established your process.

Deloitte Poll Highlights Weak State of Innovation Practice

In case you missed it, a recent on-line poll conducted by Deloitte confirms the dismal state of innovation practice in companies.  At a time when companies need to produce more vehicles for value delivery to climb out the financial doldrums, innovation is a vital force that can be brought to bear on the challenge.  Yet, most companies are not prepared to meet the challenge.  In the Deloitte poll, 31% of the executives surveyed indicated that innovation happens by accident in their company, and only 14% said that innovation is clearly defined within their company.

It is no wonder that many companies are struggling to get their arms around this innovation thing.  Just last week, I visited with several leading companies, and questions around innovation, establishing repeatable innovation as a value-driving core competence, and building a sustainable, high-performance innovation culture were the key topics these companies wanted help with.  Fortunately for these companies, they recognize that fundamental change is need if they are to emerge from the quagmire of accident innovation.  Yet, many companies aren’t even aware that there is a problem in the organization and that there is a path to innovation success.

A couple years ago, an Innovation Practice Maturity Model was described in a post on Innovating To Win.  This model has withstood the scrutiny of practice, so it seems timely to review the characteristics of each of the four stages of the model.  Ask yourself, “Where does my organization fit in this model, and what should we be doing to advance our innovation capabilities?”

Stage I: Accidental Innovation
At this first stage, the organization has not begun implementing structured innovation.  Companies are generally unaware that there exist approaches to achieve repeatable, on-demand innovation.  Innovation is poorly, if at all, understood.  Because these organizations do not recognize innovation as a competence that can be developed and harnessed, there is no infrastructure to support good innovation disciplines and no sponsorship to promote such practices.  As a result, innovation is not repeatable, predictable or reliable, and ROI on investment in R&D falls well short of expectations.

Stage II: Situational Innovation
Organizations evolve to the second stage when awareness of structured innovation methods lead the organizations to test these methods.  Limited investments in tools and methods are made to support a specific test case.  A team is assembled to try out the new innovation methods in the context of a highly visible project.  Narrowly focused knowledge asset mining may also be done in support of the project as well.  While these initial projects are often highly successful, the momentum coming out of these projects is rarely leveraged because the organization is not yet committed to the path of innovation excellence.  As a result, innovation skills are often not retained and must be rebuilt with each new iteration of trying out the concept of structured innovation.

Stage III: Repeatable Innovation
In this stage of innovation process maturity, the successes with early trials have led to genuine enthusiasm for the broader deployment of innovation best practices.  The organization develops innovation specialists who become leveraged resources within the company and are assigned to projects on an as-needed basis.  Investment in innovation infrastructure grows as both the innovation specialists are equipped with the proper tools, and the general knowledge worker population is given access to innovation tools and knowledge research technologies.  While the company begins to experience the benefits of repeatable innovation, innovation is still opportunistic, targeting specific projects, and tends to be contained within pockets of the organization. 

Stage IV: High-Performance Innovation
In this final phase of innovation practice development, an organization is committed to establishing innovation a core competency.  Formal corporate programs for innovation best practices are created.  These programs help to integrate innovation as a key part of the corporate culture and the organizations established product development processes, providing an operational framework to unify strategy, communities, knowledge assets, and process.  A hierarchy of innovation practitioners is developed to optimize the availability and leveragability of innovation skills within the enterprise.  Innovation skills are widely deployed within the entire innovation worker population, with basic innovation practice training becoming an integral part of team and individual employee development.  In this stage of innovation practice development, corporations begin to broadly leverage knowledge assets.  Innovation best practices, supported by precise knowledge retrieval, become integrated into the organizational fabric.

Companies that make innovation a core competence are ready to take advantage of opportunity in good times and in bad times.  Do you see your organization in the four stages of the model?  Are you ready to wield the power of innovation on demand?

Harnessing Knowledge for Innovation – What You Said

Knowledge is the raw material of innovation.  When an opportunity is recognized, when the underlying challenge is understood, we leverage our knowledge and experience to synthesize the new concepts that are the core essence of our innovations.  The knowledge we use in this process comes from a variety of sources, both internal to our community as well as external.  Many companies are facing a serious challenge to developing their innovation edge.  Some of the most valuable knowledge they have is inside the enterprise represented in inaccessible documents and undocumented worker knowhow.  As we continue to make our way through the greatest generational turnover businesses have ever experienced, it begs the question “What initiatives are your organizations using to manage the outflow of corporate knowledge cause by generational turnover?”

This was the subject of our last Innovating To Win poll question, and you can see the results to the left.  These results are interesting from a number of perspectives.  Let’s look at a few aspects of the results and consider what this means for innovation.

From our results, it appears that there is no clearly dominant strategy for dealing with the innovation knowledge crisis that many companies perceive.  No single option has crossed the 50% threshold of diffusion.  This supports the notion that there is a lot of confusion in companies as to the scope of the problem and how to best address the issue.  This lack of clarity represents a serious risk to companies.  I recently talked with one company that acknowledged that there are losing 100 subject matter experts per month to retirement.  This is not a small issue for any company.

Of the selections in the survey, access to external knowledge clearly was favored as a mechanism to enhance the corporate innovation intelligence. While in the general context of enriching the innovation intelligence ecosystem and improving your innovation capacity by redefining the box external knowledge access must be a vital part of the innovation knowledge strategy, it is not a substitute for leveraging your internal knowledge.  People who don’t learn the lessons of history are doomed to repeat them.  This is a truism for innovation practitioners.  External knowledge provides you with fresh perspectives and new thinking.  But, your internal knowledge contains highly targeted concepts which capture both the foundational knowledge of the organization, but also the lessons learned so that you don’t keep reinventing the wheel or repeating the same costly mistakes.

This point is further highlighted by the relatively low score of traditional internal information dissemination techniques.  Not one of experience harvesting, sharing lessons learned, and internal knowledge management scored over 30%.  This is horrible testimony to the failures companies have experienced with traditional knowledge management initiatives.  But if information access is so important to the innovation process, why have these traditional methods failed?  In short, knowledge management has been a data centric, IT led initiative.  As such, it is doomed to fail from the start.  A different perspective is needed to successfully unlock the value of internal knowledge assets—a strategy that is user and purpose centric.  The communities that make up the enterprise innovation constituencies must be mapped to their roles, innovation tasks, and relevant information assets in order to define the shape of the innovation intelligence infrastructure needed so support innovation.  The innovation infrastructure must then be deployed in a way that knowledge enables every innovation worker and allows them to have knowledge seamlessly integrated into their every day innovation work.  Removal of the barriers to access of tradition knowledge management is key to successful mobilizing corporate wisdom and converting the sea of data into actionable knowledge.

It is for this reason, that the lagging take up of next generation technology as represented by internal Web 2.0 collaboration and passive collaboration frameworks is disappointing.  The future of innovation knowledge enablement is in connecting innovation workers based on what they know.  When you can get the right people engaged without taking them out of the context of what they need to get done, you have succeeded in accelerating the time to value for the enterprise.

It looks like we all have a lot of work ahead of us if we are serious about getting ahead of the looming knowledge drain issue that is already upon us.  We must do a better job of understanding where the information exists, capturing it, and then mobilizing it in an effective and timely manner.  When I was young, my parents would tell me that knowledge is power.  They were right.  Knowledge is innovation power.  Innovation power coupled with crisp execution is the secret sauce of business success.

Don’t forget, a new poll is now open.  The headlines are filled with news about the latest steps government officials are taking to turn around the economic malaise.  But are these the right steps for innovation or missteps?  This is the question for our latest Innovating To Win poll.  How do you assess the long range impact of current intervention policies?  Let us know.  You can find the poll in the left hand sidebar. Please remember to vote.

Sustainable Innovation at Boston Scientific

Here’s a very interesting podcast with Dan Kussman, R&D Manager for Boston Scientific’s cardiovascular group.  In this podcast, Dan talks about the role of sustainable innovation and the importance of making innovation an ubiquitous activity for everyone, every day.

Dan discusses how innovation must be more than a mere buzz word if an organization is going to survive in today’s ever more competitive world.  He also touches on the push-pull dynamic of innovation and the need to strike a good balance.  He also discusses the need for cultural integration and investments in innovation.

Watch the podcast below and hear some terrific insights from Dan on Boston Scientific’s approach to building a sustainable innovation environment.