Innovation Versus Vision

Innovation Versus VisionTake a look at the “Home” and “About” web pages of the world’s most innovative companies such as Google, Facebook, Twitter, Apple and Gore. There is a word you will seldom, if ever, see on their web pages: “innovation”. That is because these companies do not strive to be innovative. Now look at averagely innovative companies, the ones that come up with new products that aim to compete with products developed by leading innovators. Most likely you will see the word “innovate” and its derivatives, such as “innovative” and “innovation” all over the place. That’s because these companies are striving to be innovative.

So, what’s going on here? The truth is, truly innovative companies, those the come up with breakthrough products and services, those that are game-changers in their sectors or that create new sectors, do not aim to be innovative. Rather they relentlessly strive to follow a unique strategy. Facebook originally aimed to create the ideal social network. Now they are trying to become an alternative to the world wide web itself. Apple has relentlessly focused on making beautifully engineered and designed gadgets such as mobile telephones, computers and pads.

Visionary Leaders

Their leaders, such as the late Steve Jobs and Mark Zuckerberg, are not innovators. They are visionary leaders who so focused on their strategies that they are probably dreadfully boring at cocktail parties! But, by sharing their visions and their enthusiasm for their visions with their employees and business partners, they enable their companies to innovate. However, that innovation is focused on achieving unique strategic aims, rather than innovation for innovation’s sake.

In such environments, employees understand that top management is eager to implement ideas that help them in the pursuit of strategy. Indeed, the sole purpose of most teams is in one way or another to achieve strategic aims. Middle managers in visionary companies know that their jobs depend on working towards strategic goals. Innovation, on the other hand, is not important to them. That may seem ironic as they are following the best practices of innovation. But the key is that their aim is not to be innovative. It is to meet strategy based goals.

Unique Strategy

What do I mean by unique strategy? Many companies, especially large companies involved in varied business lines, tend to have bland strategies, such as to be the best in every sector in which they operate. Their strategic statements tend to be generic and could be used equally effectively by just about any company – even one in a completely different sector.

Visionary companies, on the other hand, tend to have much more specific strategic aims. For instance, Google’s original strategic aim was to produce the most relevant search results by using a special algorithm in their search engine. Gore aims to manufacture revolutionary products to solve specific industrial and medical problems.

Averagely Innovative Companies

Averagely innovative companies on the other hand tend to have blander strategic aims, such as to make high quality products. Their web sites are littered with the word “innovation”. Lenovo, for example, makes fine quality computers that can be found in households and businesses globally. It is an admirable, growing company. But it is not a particularly innovative company. As a result, the words “innovation” and “innovative” appears numerous times on their “About” page.

I have never worked with Lenovo, so I do not know what their situation is like internally. But I have worked with similar companies: quality, well run businesses that have recently decided to become more innovative. One of the first steps such companies take is ti use the word “innovation” more frequently in corporate documentation. This is followed by hiring people to be innovation managers and to launch programmes to promote innovation.

Idea management software, or at least suggestion scheme software, is installed to capture ideas. Very possibly innovation consultants and trainers are hired to help guide the innovation initiative.

As a result of these activities, the company does indeed become more innovative. However, the innovation efforts tend to be unfocused. The result is usually incremental and medium level improvements on products, services and processes. It is extremely rare that these initiatives result in breakthrough innovation.

This is not a bad thing. Often, averagely innovative companies produce products that are better in many respects than the innovators. Apple may have led the pack with their innovative smart phone. But now many averagely innovative companies have produced smart phones that better Apple’s iPhone in various ways – and often for a lower price. Moreover, not everyone wants an iPhone. Many people want simpler, cheaper or less stylish telephones.

Being Realistic

If your company is not an innovative leader, if it is not focused on relentlessly pursuing a unique strategy, you need to be realistic about where innovation can take you. In theory, you can transform your company into a visionary company that becomes a true innovator like those cited at the beginning of this article. This tranformation will probably mean replacing your CEO with a visionary leader who is willing to make drastic changes to every aspect of your company, starting with its strategy. She will probably need to sell off vast chunks of your business, transform the way you work and get rid of a lot of employees. Those who remain will need to learn to work in new ways. They will also need to legitimise their activities in line with strategy. Budgets, project management, approval methods and much more will need to be changed.

If you work in a medium to large company, you are probably smirking to yourself right now, thinking “Jeffrey is crazy. That’s never going to happen in my company!” And you are right. It is extremely rare that a company, except a very small one, will make such drastic changes. The board and shareholders are unlikely to authorise such actions. Even if an innovative leader is taken on as CEO, employees reluctant to change will do everything that they can to impede her changes and guarantee their jobs. After all, when things change in large companies, most people worry about their own stability and future rather than their employer’s innovation potential.

Not surprisingly, such change is extremely rare. The closest example that comes to my mind is Nokia, which started life as a rubber works and eventually became a Finnish industrial conglomerate involved in many industries. It was only in the 1990s that Nokia rid itself of many of its lines and focused on mobile telecommunications. And, during the 90s, Nokia was an innovative leader in GSM technology.

Innovate

Most likely, you are not going to transform your company into an innovative leader. But, as I have said, there is nothing wrong with that. Most companies are not innovative leaders. But, by focusing on incremental and medium level improvements to products, services and processes, you can nevertheless have an extremely successful company. In fact, in many industries, such as fast food, soft drinks and construction, there has been little breakthrough innovation in recent years.

Moreover, you can learn from innovative leaders. Most importantly, review your strategy. Is it unique to your firm or is it the kind of strategy that just about any firm could claim. If so, make it better.

Once you have done this, do not launch an unfocused innovation initiative. Rather, ensure that your innovation initiative is aligned with strategy. This can be done through brainstorming, ideas campaigns and other activities that generate ideas to solve specific strategic problems.
do not simply focus on being innovative. That tends to result in a lot of small ideas that improve bits and pieces of your operations, but do not make a big difference to your company. Rather focus on your strategy and use innovation as a tool that enables you to do that.

By Jeffrey Baumgartner

Innovation Quote

Larry Keeley, Doblin Group, 2007
“With the pace of innovation heating up, any enterprise that fails to replace 10 percent of its revenue stream annually is likely to be out of business within five years.”

What is the goal of innovation?

If you want to innovate, you need to innovate. This means your focus should not be on the number of ideas generated, but the value generated through implemented ideas.

The Innovation Process

The Innovation ProcessBy Jeffrey Baumgartner
The innovation process, in the business context, is a structured action that is remarkably easy to implement. It begins with a problem and ends with profit. As such, it is the ideal business process. So it is remarkable that so few businesses have actually implemented this structured innovation process. Fortunately, all you have to do is read this and implement it in your firm!

Step by Step
1. Begin with a problem

The innovation process starts with a problem or possibly a goal. However, the fact that the business has not already achieved the goal might be considered a problem. So, we can safely say the process begins with a problem. All businesses have problems. Sales could be better, products could be better, processes could be more efficient, costs could be reduced and so on.

2. Convert the problem into a challenge

Once a problem has been identified, it needs to be converted into a challenge. A challenge is a short, terse question that invites creative solutions. Example challenges include: "In what ways might we improve product X?" and "How might we reduce wastage in our manufacturing process?" A challenge may also be in the form of a call to action: "Sketch design ideas for product X" or "Use building blocks to demonstrate ways in which we might combine processes in manufacturing." Formulating a good challenge that addresses your problem is critical to the innovation process. If your challenge does not properly address the underlying problem, you may get a lot of ideas -- but they won't solve your problem and therefore are unlikely to become innovations!

3. Challenge colleagues to suggest creative solutions

Once you have a terrific innovation challenge, you need to communicate it to colleagues -- or others such as business partners, customers or even the public -- so that they can generate ideas. How you communicate depends on the method of idea generation you will use for each instance of the innovation process.

4. Collaborative idea generation

Idea generation might be in the form of a brainstorming activity, through the use of real idea management software (one like our Jenni, which uses ideas campaigns based around innovation challenges) or a team may be assigned to devise and develop ideas. You could even generate ideas yourself, but as a general rule, diverse teams generate more creative (both in terms of quantity and quality) than individuals -- at least in the right circumstances.

Whatever method of idea generation you use, it should ideally be in a collaborative environment in which people can work together to develop ideas. Ideally, there should be no criticism, censorship or destruction of ideas during this phase. You want to encourage people to think creatively and be unafraid to suggest ideas. Early criticism of any kind will only make people reluctant to share ideas, especially their most outlandishly creative ideas (in other words, the best ideas), for fear of also being criticised.

Note: lots of people think that idea generation is the most important element of the innovation process. It's not. A great idea, unimplemented, is worthless to business. Nevertheless, you do need ideas to keep the process going and creating an environment for generating creative ideas means that the resulting innovations will be more.. innovative!

5. Combine and evaluate ideas

With lots of ideas in the pot, the next step is to combine similar ideas into idea clusters or big ideas. Each idea cluster can be processed as a single idea, thus making the next steps of the process more efficient.

This done, you can then evaluate ideas with an evaluation matrix in which promising ideas are compared to relevant business criteria. The better the idea meets each criterion, the higher its score. In the end, those ideas with the highest evaluation scores are taken to the next step.

Note: evaluators tend to be overly critical of ideas. Hence it is important to ask them not only what does not work with an idea, but also to ask them how these problems might be dealt with in order to improve the idea.

6. Develop ideas

How you develop ideas depends on the innovation challenge and the kind of ideas generated. New product ideas might be developed into prototypes. Process efficiency ideas may be modeled. Marketing ideas may be evaluated in consumer surveys and so on. The purpose of developing ideas is to test them in the business environment and, if no insoluble problems are discovered, prepare them for implementation.

In the case of highly creative ideas, it is usually best to create a prototype if at all possible. A prototype makes it easier to sell a radical idea to managers, committees and other dingalings who will be tempted to kill it off.

7. Implement ideas

Finally, you are now ready to manufacture your new product, restructure your processes or do whatever is necessary to turn the evaluated and developed ideas into implementations that generate value for the organisation. It is at this step that creative ideas grow up and become innovations.

If ideas are radically different to business as usual or if they require substantial investment, it is wise to implement them with a series of milestones along the way. This enables you to review the implementation of the idea in order to ensure it is either delivering value or retains the potential to deliver value at a future milestone. Although many organisations today make it difficult to implement radical ideas, once those ideas are launched as projects, the responsible teams are often remarkably reluctant to stop the implementation for fear of reprisals, losses or other consequences. You need to minimise those consequences so under-performing ideas can be killed and resources can rapidly be reinvested in promising new ideas.

A Scalable, Repeatable and Effective Process
There are three terrific qualities of the innovation process. Firstly, it is scalable. An individual freelancer can use it to innovate in her business, small teams can use it for innovative projects, business units and even entire companies can use it. Although, with large groups, specialised idea management software is needed to capture and facilitate the processing of the ideas efficiently.

Secondly, the process is repeatable. A company can have numerous instances of the innovation process in action at all times. A team leader can launch new challenges once the ideas from old challenges have been implemented (or even sooner in some instances).

Thirdly, the process is effective. It is based on a combination of Creative Problem Solving (CPS) and standard business processes. It has been proven again and again. Indeed, it should be clear that the innovation process enables you to align innovation with strategy, focus creative thinking on current business needs and combine multiple ideas in order to develop comprehensive solutions to all kinds of business problems.

And, as we stated in the beginning, it is a simple process; one that can readily be implemented in most companies. Although, you will also need to have something of a culture of innovation in place in your firm in order for the process to work. If new ideas are routinely criticised from conception and committees are so risk adverse they are afraid to cross the street (as is typically the case without a culture of innovation), there is little hope for the innovation process.

On the other hand, if new ideas are always welcome, the CEO really believes in innovation (rather than just makes bland statements about it) and the company is willing to invest resources not only in innovation, but also the implementation of radical ideas, the innovation process will perform wonderfully!

The eight steps of Innovation Process Management

The eight steps of Innovation Process Management
Published on June 30, 2009 in Business innovation.

With the growing popularity of innovation initiatives, ever more companies are launching their own actions. However, many are going forward in a piecemeal fashion, running a brainstorming event here, trying out an ideas campaign there and promoting innovation in vague ways in marketing communications. Such an approach works, somewhat, but it is not ideal.

The best approach is to have a comprehensive innovation process management (IPM) structure that treats innovation as a series of cycles that run within a grand, enterprise innovation process cycle.

The Innovation Process Cycle

An innovation process cycle combines creative problem solving (CPS) with scientific peer review evaluation and some typical business tools.

1) The Challenge
The cycle starts with a problem or goal which needs to be formulated into an innovation challenge. Once this is done, the challenge is presented to the problem solving group. This may be done in the form of a brainstorming event, ideas campaign or other activity. The group problem solving group may be a team, all employees in the firm, the public or any other group of people.

2) Collaboration
In order to maximise the creative potential of the problem solving group, the idea generation activity should be collaborative in nature. This can be accomplished in many ways. Idea management and innovation process management software often provides on-line collaboration tools, while facilitators of brainstorming and other ideation events should promote collaborative idea development.

3) Combination
Because an innovation process cycle starts with a challenge, ideas tend to be interrelated and many are complementary. Hence, before going further, it is best to combine such complementary ideas into larger, more sophisticated ideas so that they can be handled as a single package. This makes the next steps in the cycle more efficient.

4) Scientific Peer Review Evaluation
Here is where a lot of innovation initiatives break down: choosing the best ideas. Many poorly thought out approaches use voting, which is a good way to identify the most popular idea, but an appallingly ineffective method for identifying the most potentially innovative idea. I have also seen organisations put a great deal of effort into idea generation, leaving the final decision to a manager who basically picks out her favourite idea. Assuming the manager has suitable business expertise, such an approach is better than voting – as it is based on expertise rather than popularity – but it is typically far from perfect.

The scientific approach of peer review by expert, on the other hand, is ideally suited for identifying the most promising ideas in a cycle. Instead of basing selection on popularity (can you imagine Einstein sending his special theory of relativity to the public for a vote in order to determine its validity?) or the whim of a manager, you apply a set of business criteria to the idea and rank how well the idea meets each criterion. If an idea achieves a sufficiently high ranking, either as is or through additional modification, it should be developed further.

5) Testing and Development
Ideas identified as being potential innovations are now ready to be tested and developed. Here is where typical business tools come in useful. A business case is a useful means of hypothetically implementing an innovative idea and projecting the potential results. Of course it is not perfect, but it indicates possible issues in the implementation of the idea, as well as benefits that may not have been obvious to the original idea developers.

Prototypes are an excellent means for testing ideas. Not only do they allow you, your colleagues, customers and others to see how an idea would actually look in implementation, but building and playing with a prototype is a good method of further improving upon the core idea. Prototypes are, of course, ideally suited towards material ideas such as new products. But more abstract ideas, such as new services, process improvements and other concepts can often be prototyped through role-play, building structural models and making diagrams.

6) Implementation
Ideas that make it through testing and development are ready to be implemented. Unless the idea is a radical change from your usual activities, you don’t need me to tell you how to do this!

7) Review
Once ideas have been implemented, they need to be reviewed, probably against an ongoing series of milestones. If an implementation does not achieve a milestone, it needs to modified or killed. Moreover, even the most spectacularly effective and profitable breakthrough innovations need to be improved on a regular basis.

8) New Needs and Inspiration
Hence, reviewing the implementation of new ideas should indicate new needs which can be transformed into challenges which, in turn, start a new innovation process cycle. Likewise, implementations can inspire new corporate goals. Again, these can be turned into new challenges and new cycles.
Integrated Innovation Process Management

An innovative company, however, should not have a single innovation process cycle in operation. Rather it should have many of them! Large cycles are suitable for enterprise-wide innovation. Meanwhile, business units can run somewhat smaller innovation process cycles in order to manage their own ideas (although it should be noted, collaborative groups need not be limited to employees of that business unit). Teams, departments and any other group can also run their own innovation process cycles.

Multiple innovation process cycles create the process

However, these innovation process cycles should not be in isolation. Rather they should inspire and feed other cycles elsewhere in the organisation. For instance, the implementation of a new product idea should inspire innovation cycles in the marketing, sales and customer service divisions as well as at the enterprise level.

Managers should watch their colleagues’ innovation process cycles and ruthlessly copy ideas as inspirations for their own cycles.

The Result: a Highly Innovative Organisation

By applying innovation process management across your entire organisation, you can transform it into one which is innovation driven. And that is a sure way to keep well ahead of the competition, survive this financial crisis and make your firm a great place to work. Is there anything more you could possibly want from work?

Silicon Valley may be too smart for its own good

Silicon Valley may be too smart for its own goodJanuary 7, 2012 | Rocky Agrawal

Silicon Valley’s greatest asset is the brilliant minds that roam the buildings and inhabit the coffee shops. Since moving back to Silicon Valley in June, I’ve met a lot of amazing people. On average, they are the smartest people I know. I have conversations on a regular basis that I just can’t have anywhere else. Yes, I’ve worked with smart people in other places, but the concentration here is unique.

But that brilliance comes with some blinders. Instead of figuring out how to adapt to real users, we too often expect them to adapt to us.

In a post last week about car-service Uber’s outlandish New Year’s Eve surcharges, I made the seemingly innocuous comment that the multiplier Uber used to explain the pricing was confusing to casual users; that it’d be better to display a rate in dollars or the minimum charge at a given time. A number of people responded that a user can do the math, so it’s not a big deal.

Yes, an Uber user who knows the regular rate could multiply it by the multiplier and figure out what the current rate is. But why should they have to? A computer can do it better and faster. One of my core design philosophies is that you shouldn’t make users do work that computers can easily do.

Although Uber claims to have tested price elasticity on New Year’s Eve, what they really tested was the ability of drunk people to comprehend a bad user interface. If they had truly tested price elasticity, there should have been no complaints about the surge pricing because the people who paid 6x the normal rate would have been satisfied with their decision.

I hear similar tone-deafness when it comes to things like screen size, compute power and connectivity. We Silicon Valley types are sitting at 24″ monitors with the latest hardware connected to 20 Mbps pipes designing products that are used by people with five-year-old computers at DSL speeds or worse. Not everyone has the desire (or the money) to upgrade their computer or phone every year. I see many products that while beautiful and elegant in the right environment, wouldn’t work well in many homes.

I recently met with EverFi, a company that provides online learning tools to high schools. EverFi actually ships discs with Flash files to some schools because their connectivity is so bad that an entirely online experience wouldn’t work well. That’s the kind of thinking I like to see, but more commonly, companies would take a “Let them buy iPads” approach.

Many in Silicon Valley often miss the fact that most of the population does not dramatically change behavior overnight. Behavior changes gradually over time.

I spend a lot of time talking with small businesses and entrepreneurs who are trying to sell into small businesses. Inevitably, entrepreneurs will tell me how they plan to wow small business owners with the reams of great demographic data they can generate, if only the business will switch its operations to a new platform. They’re shocked when I tell them most small businesses don’t give a shit about data. That’s not how they run their business. They will, some day. But not now.

I’ve met with business owners who run daily deals that don’t use computers on a regular basis. In some cases, they can’t even tell if a voucher was redeemed because tracking is done with pencil and paper. In Silicon Valley, we live and breathe data, so this is hard to fathom.

It’s not because they’re country bumpkins who live in flyover states. Anyone trying to sell in to small businesses should read what it takes to sell to a restaurant by Jonas Luster, who describes himself as an “uneducated Southern hick,” though he is anything but.

I worked at a startup that sold unified communications services. If you don’t know what that is, you’re not alone. The initial product was designed by a team of rockstar telecomm engineers who had left Lucent. It did everything you could ask for. But consumers weren’t asking. We dramatically simplified the product into services consumer could understand — fax, phone, voicemail. We nearly doubled our prices and got more people to buy.

Too many people in Silicon Valley are enamored of technology for the sake of technology. Two of my favorite companies — GrubHub and Savored — use decidedly low-tech ways to accomplish their goals. GrubHub sends orders to many restaurants via fax machine (gasp!). Savored creates the impression of dynamic pricing for restaurant reservations, even though in reality discounted tables are manually blocked off based on typical traffic patterns. Savored could have focused on developing the ideal yield management system, but their approach works today and provides at least 80% of the value.

Square, another great company, uses 1980s technology because that is the technology used on hundreds of millions of credit cards that are in consumers’ wallets. People who have never used a computer can pay a Square merchant by pulling out a piece of plastic. At the same time, Square innovates with products like Card Case, which allows more tech savvy consumers to pay just by saying their name. On the merchant side, Square is getting people hooked with an elegant solution that solves an immediate, easy-to-understand need (payments) and then slowly inching them into other more sophisticated products like point-of-sale systems.

People in Silicon Valley are passionate about their products — which is great. They should be. But you can’t assume that your users are. Most consumers aren’t going to read every email you send them, follow you on Twitter or read your blog. The product needs to stand alone. It needs to get people excited.

The competition for most startups is not the 10 other companies that are doing essentially the same thing, but NFL football, American Idol and the billion other things that people could be doing.

“The truth is, startups design stuff for people like themselves, not for the mass market,” wrote Cynthia Schames, a friend from outside the Valley. “And they expect everyone to put up with a half-baked, unreliable ‘product’ just because TechCrunch wrote about it.

“It’s almost like they’re too smart for their own good; like that guy at a cocktail party who refuses to speak in anything but hedge fund terminology … he’s not getting a date, because she can’t tell what the hell he’s talking about, and also because he’s an insufferable ass.”

When things go wrong, the reflexive action in Silicon Valley is to blame the consumer instead of taking at least partial responsibility. Uber’s blog post in response to the surge pricing is arrogant. The tone is “You just don’t get it. We’re really, really smart.” AllThingsD asked if New Year’s Eve was Uber’s “Netflix moment.”
I don’t think it is — yet.

Uber didn’t make a giant mistake. There isn’t a fundamental business model problem. The company provides a valuable service that some people are willing to pay a premium for. It has users and drivers who love the service.

It can get past this: Fix the UI, offer no-questions-asked refunds of the New Year’s Eve surcharge to customers who feel they were misled and move on.

Tech writers aren’t immune from Silicon Valley’s blinders. Too many blog posts repeat vanity milestone statistics released by companies instead of asking tough questions like “Do real people actually use this?” “Is there a business here?”

Instead of being critical and pushing companies to be better, we do glowing profiles of founders. We snicker at “idiots” who don’t understand pricing strategies that were deliberately designed to be confusing. They’re not idiots. They’re real people with real money to spend.

And as special a place as Silicon Valley is, we sometimes forget that not everything innovative happens here. After my piece on demand-based pricing and Uber, a friend from Minnesota called me out for using the San Francisco demand-based parking meter experiment as an example when other cities have been testing it, too. Such reporting helps foster the impression that there is nothing of value anywhere else and gives people in the Valley a bigger head, he said. Tech blogs should use more examples from outside the Valley.

He’s right. GrubHub is based in Chicago and EverFi is based in Washington, DC.

Rocky Agrawal is an analyst focused on the intersection of local, social and mobile. He is a principal analyst at reDesign mobile. Previously, he launched local and mobile products for Microsoft and AOL. He blogs at http://blog.agrawals.org and tweets at @rakeshlobster.

Leadership Quote

"The best leaders, almost without exception and at every level, are master users of stories and symbols."
-Tom Peters, management expert