Posted on January 31, 2012 by Matthew E May
According to Scott Anthony, who directs the Asia-Pacific office of innovation consulting and venture-capital firm Innosight, “the seven deadly sins have very clear parallels in the world of innovation, serving as a useful and memorable way to highlight an innovator’s most common mistakes. He highlights those in his recently published book, The Little Black Book of Innovation: How It Works, How to Do It, and shows you how to avoid them.
1. Pride
The sin of pride innovation is forcing your view of quality onto the marketplace, which often results in overshooting. The easiest way to avoid the sin of pride is by taking an external viewpoint to make sure you understand how the customer measures quality. Make sure you are grounded in what the market wants, not what you want.
2. Sloth
Are your innovation efforts slowing to a crawl? That’s sloth. More often than not, innovation simply takes too long. By the time a company gets around to doing something, the window of opportunity has closed. Why does innovation take so long? It’s not really laziness. It’s that people work on the wrong activities, typically by prioritizing analysis over action. It’s all too easy to fill your day with activities that make it feel as if you are making progress tackling a problem.
Avoid it by releasing your inner Edison: “genius is one percent inspiration and 99 percent perspiration.
3. Gluttony
Gluttony is suffering from an addiction to abundant resources and leads to overly slow, overly linear innovation efforts. Deep pockets allow companies to spend too many resources following the wrong strategy. They throw bodies against a problem, but everyone knows that small teams typically move faster than large teams.Avoid it by practicing selective scarcity: constrain resources in the early stages of innovation to enable creativity.
4. Lust
It’s easy to get tempted and distracted by pursuing too many bells and whistles, too many bright, shiny objects. Avoid it by focusing your innovation efforts, remembering that destruction often precedes creation. Stopping is as important as starting. Lust after too many things, and you’ll find that you end up with nothing. Good innovators carefully choose the opportunities they go after.
5. Envy
Envy occurs when innovators inside a company proclaim themselves the chosen ones, and create an us-vs-them relationship between your main business and your new growth areas. Remember, without that core business, there is no corporate innovation. Actively celebrate the efforts and successes of both old and new business areas to avoid the sin of Envy.
6. Wrath
A wrathful leader punishes innovation failures, using lines such as “Failure is not an option.” But in innovation failure is most certainly an option. What kind of message does it send if you punish people who take well-thought-out risks that don’t pan out? Beautiful business plans don’t always turn into beautiful businesses. A void wrath by rewarding behavior, not just outcomes.
7. Greed
Greed has its advantage, but innovators need to make sure they are greedy for the right thing. Greed is sinful when you’re being impatient about growth, and can lead to prioritizing low-potential markets and opportunities. If you look for quick growth, you are forced to look to what exists. The best innovators avoid the temptation to go after large, obvious, immediate markets. These people can be patient for growth. They should absolutely be greedy for results that demonstrate that the approach they are following has merits.
Which of the seven deadly sins are blocking your progress? Do something about it by using the seven avoidance strategies above!
Wednesday, February 15, 2012
Monday, February 13, 2012
The 9 Most Common Start-up Mistakes
The 9 Most Common Start-up Mistakes
Mistakes are a great way to learn. But why not skip the pain and suffering yourself--at least on these 9 mistakes.
By Jeff Haden | @jeff_haden | Feb 8, 2012
Making mistakes is a great way to learn. Making mistakes is also not particularly fun.
It's a lot more fun to avoid them entirely.
Here are some of the most common mistakes entrepreneurs—and businesspeople in general—tend to make:
1. Think of a plan as an end result. Say you’re agonizing over a business plan; somewhere along the way you've forgotten your goal is to actually start the business. Establish goals, create long-range plans, make to-do lists, and get going.
Most successful people are solid planners and excellent adapters. Get started so you can start adapting.
2. Assume style indicates substance. Logos, identity packages, killer wardrobes, eccentric work spaces... none of those matter if you can't deliver. Businesses are built on go, not show. Your business or personal style will create a memorable brand as long as you deliver.
Just be you. And get to work.
3. Think of business as all-you-can-eat. Ideas are thrilling. Opportunities are tantalizing. Dreams are exciting.
Great, but execution is everything. Take on too much and you do few things well. Keep getting distracted by the latest trend and your best ideas get ignored.
Check out everything on the business menu, but only select a few items at a time. Don't be afraid, or have too big an ego, to start small. Small is almost always your start-up friend.
4. Underestimate the time required. Nothing ever goes as quickly as you predict; in a start-up, time passes in reverse dog years. Create timelines but always factor in scenarios and sensitivities. If you don't reach your estimated sales in six months, what will you do?
An estimate is theoretical. Plans are more concrete. Know what you will do if your timelines are wrong. They will be.
5. Assume perfection is required. Trying to create a product that meets every conceivable customer need? Sooner is almost always better than later, so do a Tim Gunn and make it work. Get to market and then start refining your products or services based on actual customer feedback.
6. Underestimate the money required. It’s easy to underestimate cost when you let hope creep into your calculations. A start-up, no matter how bootstrapped, always has unforeseen costs. Just because you really want something to work out doesn't mean it will magically cost less.
Apply sensitivities and create plans in case your estimates are wrong. Just like your time estimates, they will be.
7. Give up too soon. Success rhymes with excess for good reason: Entrepreneurs who succeed do so because they work harder and longer. Before you give up, take a step back and decide whether additional effort is all that's required to overcome roadblocks or hurdles.
Sometimes it's not the business or the market. Sometimes it's you. Never quit until you’re sure it’s not you.
8. Stop acting silly. If you’re like me your favorite childhood stories involve something stupid you did. (How else would I know the right mixture of sulfur and saltpeter will burn hot enough to turn a Tonka truck into a glop of metal?)
Business is serious enough. Every once in awhile, do something silly. Silly is memorable. Silly makes you feel like a kid again. Laughing at yourself will make the toughest day a lot easier.
9. Adopt expectations. We are all influenced to some extent by what other people think about us. But what do you want? What really matters to you? Live your life based on the opinions of others and you live their lives, not your own.
What matters most is what matters most to you. Always be sure you're living your life. It’s the only one you get.
Mistakes are a great way to learn. But why not skip the pain and suffering yourself--at least on these 9 mistakes.
By Jeff Haden | @jeff_haden | Feb 8, 2012
Making mistakes is a great way to learn. Making mistakes is also not particularly fun.
It's a lot more fun to avoid them entirely.
Here are some of the most common mistakes entrepreneurs—and businesspeople in general—tend to make:
1. Think of a plan as an end result. Say you’re agonizing over a business plan; somewhere along the way you've forgotten your goal is to actually start the business. Establish goals, create long-range plans, make to-do lists, and get going.
Most successful people are solid planners and excellent adapters. Get started so you can start adapting.
2. Assume style indicates substance. Logos, identity packages, killer wardrobes, eccentric work spaces... none of those matter if you can't deliver. Businesses are built on go, not show. Your business or personal style will create a memorable brand as long as you deliver.
Just be you. And get to work.
3. Think of business as all-you-can-eat. Ideas are thrilling. Opportunities are tantalizing. Dreams are exciting.
Great, but execution is everything. Take on too much and you do few things well. Keep getting distracted by the latest trend and your best ideas get ignored.
Check out everything on the business menu, but only select a few items at a time. Don't be afraid, or have too big an ego, to start small. Small is almost always your start-up friend.
4. Underestimate the time required. Nothing ever goes as quickly as you predict; in a start-up, time passes in reverse dog years. Create timelines but always factor in scenarios and sensitivities. If you don't reach your estimated sales in six months, what will you do?
An estimate is theoretical. Plans are more concrete. Know what you will do if your timelines are wrong. They will be.
5. Assume perfection is required. Trying to create a product that meets every conceivable customer need? Sooner is almost always better than later, so do a Tim Gunn and make it work. Get to market and then start refining your products or services based on actual customer feedback.
6. Underestimate the money required. It’s easy to underestimate cost when you let hope creep into your calculations. A start-up, no matter how bootstrapped, always has unforeseen costs. Just because you really want something to work out doesn't mean it will magically cost less.
Apply sensitivities and create plans in case your estimates are wrong. Just like your time estimates, they will be.
7. Give up too soon. Success rhymes with excess for good reason: Entrepreneurs who succeed do so because they work harder and longer. Before you give up, take a step back and decide whether additional effort is all that's required to overcome roadblocks or hurdles.
Sometimes it's not the business or the market. Sometimes it's you. Never quit until you’re sure it’s not you.
8. Stop acting silly. If you’re like me your favorite childhood stories involve something stupid you did. (How else would I know the right mixture of sulfur and saltpeter will burn hot enough to turn a Tonka truck into a glop of metal?)
Business is serious enough. Every once in awhile, do something silly. Silly is memorable. Silly makes you feel like a kid again. Laughing at yourself will make the toughest day a lot easier.
9. Adopt expectations. We are all influenced to some extent by what other people think about us. But what do you want? What really matters to you? Live your life based on the opinions of others and you live their lives, not your own.
What matters most is what matters most to you. Always be sure you're living your life. It’s the only one you get.
Why it is bad to fall in love with your own innovative ideas
I'll Never Fall in Love (with ideas) Again
With apologies to Burt Bacharach for liberating his song title, I want to develop the concept of the innovator as a cold hearted killer, a love 'em and leave 'm type more suited as the villain in a dime store novel more than the passionate, heroic leading man. Because people who fall in love with ideas, or products, often don't have the strength to do what they must. Create a new idea or new product that makes the old one obsolete.
Anyone who has worked as an innovator knows the risk. It's easy to fall in love with an idea. So many ideas are so perfect, so suited for the need or opportunity. But falling in love with an idea is dangerous. Falling in love with an idea means as an innovator you are too close to your ideas to evaluate them effectively, and will miss problems or conflicts in the idea. A good innovator must be as willing to rework ideas and yes, even kill ideas as he or she is to promote an idea. A detached aloofness is probably your best bet, emotion wise.
Falling in love with an idea, however, is an easily forgivable sin, while falling in love with an existing product or service is what stymies innovation and creates lethargy. Far too many organizations have far too many executives in love with ideas that, like fading soap opera actresses have starred in their roles for far too long. Falling in love with existing products or services isn't just dangerous, it's deadly. Look no further than Kodak for example. Kodak continued to stick with the fading actress of film, all the while courting the emerging actress digital, but never made the clean break. Too many people were entranced by film. Too many people were reliant on the business models, revenues and programs that film created. In the end, Kodak was wedded to a corpse, while a patient new bride waited to take its place. Now, that bride may find itself in the arms of another.
Innovators and executives need to be ruthless. In a training program today I asked the class "Who should force your own products into obsolescence?" There are only two possible answers - yourself or everyone else. If you fall in love with ideas or products, and ignore the signals of the market, you will suffer the same outcome as Kodak. If your innovation efforts can be as ruthless as JR Ewing, as cold hearted as Gordon Gecko and as decisive as Churchill, then your innovation efforts will not be in vain. If, on the other hand, you engage in a love affair with your ideas or your existing products, obsolescence will be your only friend.
Love the innovation process, love the creation of new ideas, love the exploration of customer needs. Act with reserve in the evaluation of ideas and be absolutely ruthless when considering the further life of existing products. Because that's how the firms seeking to disrupt your products will look at them.
With apologies to Burt Bacharach for liberating his song title, I want to develop the concept of the innovator as a cold hearted killer, a love 'em and leave 'm type more suited as the villain in a dime store novel more than the passionate, heroic leading man. Because people who fall in love with ideas, or products, often don't have the strength to do what they must. Create a new idea or new product that makes the old one obsolete.
Anyone who has worked as an innovator knows the risk. It's easy to fall in love with an idea. So many ideas are so perfect, so suited for the need or opportunity. But falling in love with an idea is dangerous. Falling in love with an idea means as an innovator you are too close to your ideas to evaluate them effectively, and will miss problems or conflicts in the idea. A good innovator must be as willing to rework ideas and yes, even kill ideas as he or she is to promote an idea. A detached aloofness is probably your best bet, emotion wise.
Falling in love with an idea, however, is an easily forgivable sin, while falling in love with an existing product or service is what stymies innovation and creates lethargy. Far too many organizations have far too many executives in love with ideas that, like fading soap opera actresses have starred in their roles for far too long. Falling in love with existing products or services isn't just dangerous, it's deadly. Look no further than Kodak for example. Kodak continued to stick with the fading actress of film, all the while courting the emerging actress digital, but never made the clean break. Too many people were entranced by film. Too many people were reliant on the business models, revenues and programs that film created. In the end, Kodak was wedded to a corpse, while a patient new bride waited to take its place. Now, that bride may find itself in the arms of another.
Innovators and executives need to be ruthless. In a training program today I asked the class "Who should force your own products into obsolescence?" There are only two possible answers - yourself or everyone else. If you fall in love with ideas or products, and ignore the signals of the market, you will suffer the same outcome as Kodak. If your innovation efforts can be as ruthless as JR Ewing, as cold hearted as Gordon Gecko and as decisive as Churchill, then your innovation efforts will not be in vain. If, on the other hand, you engage in a love affair with your ideas or your existing products, obsolescence will be your only friend.
Love the innovation process, love the creation of new ideas, love the exploration of customer needs. Act with reserve in the evaluation of ideas and be absolutely ruthless when considering the further life of existing products. Because that's how the firms seeking to disrupt your products will look at them.
What holds companies back from innovating?
Beyond Business as Usual
Posted on February 8, 2012 by Jeffrey Phillips
http://www.innovationexcellence.com/blog/2012/02/08/beyond-business-as-usual/
Models and Other Barriers That Stymie Innovation
When I wrote Relentless Innovation, I hoped to uncover some of factors that allow firms like 3M, Google, Apple, P&G and Gore to sustain innovation over time, while remaining efficient and productive. In the book I identify two factors that sustain efficiency and can become barriers to innovation: “business as usual” operating models and middle managers who sustain business as usual. In this article, I’d like to build on those two factors by examining other, less evident barriers and conflicts that a modern business creates for innovation.
Here’s the question I’ve set myself, hoping to expound: Does the existing emphasis on efficiency and short term profitability create barriers for innovation? Honestly, I think the answer is “yes”, based on my consulting experiences and my observations of the struggles many firms have to become more innovative. If the answer to the first question is “yes”, then the next question is: what is it about a focus on efficiency and short term profitability that creates barriers to innovation. In this short paper I’ll look beyond business as usual to examine some of the mental models and resource constraints that block innovation.
Expectations
The first barrier to innovation is expectations. Many firms have a well-defined operating model with very specific processes. This operating model has been constantly refined over time, and it is efficient because the model works to a consistent set of inputs and outputs. The processes and models expect simple concepts and are engineered to accommodate products, services and business models that are closely aligned to the products, services and business models that preceded them. The model will remain highly efficient as long as expectations are met. The more new ideas and new products look like and act like existing ideas and products, the more efficient the model becomes. Thus, there is an inherent bias toward incremental change or even more simply continuous improvement. Existing models begin to break down when expectations change dramatically. If customer needs change significantly or the market shifts significantly or new competitors force significant change, existing operating models can’t adjust, because they are tuned to work under existing expectations.
No one wants to inflict change on a highly structured, highly engineered operating model. Everyone recognizes the investments that were necessary to construct and optimize the operating model, so rather than force changes or change expectations, managers insulate the operating model from outside influences and unnecessary change. These actions simply reinforce the rigid structure of the operating model, and make it even more difficult to introduce radically new products and services. Operating models are creatures of our own creation, but just when we need to change them they work against change.
Perspectives
The second barrier is based on our perspectives. A focus on short term profitability (ie making the next quarter) has radically reduced the vision and time horizons most businesses seek to understand and achieve. As the time horizons shrink, efforts to understand and uncover future trends and market needs seem less important. The focus on short term profitability creates a vicious circle, placing less and less emphasis on future needs, opportunities and threats and reinforcing the ever smaller time horizon, to the point where many firms have little or no understanding of the emerging trends and potential significant market shifts or competitive threats. As time horizons and perspectives shrink, managers and executives become ever more comfortable in the predictability of the adopted time horizon, and become uncomfortable with exploring time horizons that are beyond their comfort zone. Yet no firm can control the externalities and changes even within its chosen time horizons, and all are buffeted by changes outside of their control and chosen time horizons. Rather than seek to understand the potential future, executives become comfortable with what appears to be far more predictable short term horizons, constantly surprised by the shifts that are just outside their perspectives.
Worse, the acceptance of short term horizons creates the expectation of a future that looks very much like the present, and people and ideas that question a static future are rejected. What’s more, anything that can’t be predicted or scheduled is considered to be “uncertain”, and our perspectives reject any uncertainty within the operating model. At a time when managers should be broadening their perspectives, the emphasis is on a short term perspective.
Attitudes
The third barrier is attitudes. Many commentators, me included, have accused tools such as Six Sigma and Lean as contributing to the barriers to innovation. Thinking more deeply, it is obvious that the tools aren’t to blame, but the attitudes the tools promote are to blame. Six Sigma, Lean and other management tools are focused on improving what exists, taking out costs and redundancy and improving efficiency and productivity. While there is nothing wrong with incremental innovation, your most significant competitors aren’t focused on small changes. The disrupters in your market don’t plan to overtake you one small feature at a time. They hope to completely upset the existing order. At the same time, market shifts, customer expectations and new entrants are changing the playing field. Continuous improvement and incremental innovation are valuable as long as the product life cycles are long and entry into a market is difficult, but these barriers are falling rapidly.
Our attitudes are based on competition, markets, economies, product life cycles and profit curves that were true in the 80s, 90s and into the turn of the century, but are increasingly being called into question or have already been overturned. Our attitudes about competitors, new entrants, markets and customers have been shaped by forces that are changing. Therefore, our attitudes must change as well.
Risk tolerances
The fourth barrier is risk. Over time the balance between risk and reward has been lost. Many businesses seek to eliminate risk, rather than explore the tradeoffs between appropriate risk and ensuing reward. As time horizons shrink and efficiency measures increase, managers believe they have eliminated or tamed risk. Instead, what most businesses have created are organizations that reject all risk rather than seeking interesting, valuable opportunities with acceptable risk. Increasingly, any and all risk seems dangerous, rather than representing potential opportunities to exploit. Every action a business takes has risk associated with it, but the only risk that seems to matter is the risk of introducing new products or the risk of change. The risks of status quo are de-emphasized or ignored. The risk of standing still while the pace of change in the environment is accelerating is actually the greatest risk.
Over time, expectations, attitudes and perspectives have led many businesses to reject risk, or to seek to contain it. Anything new, any change or change that introduces uncertainty is deemed too risky to pursue. What’s strange is that every business is born from a risky decision – the entrepreneurial idea – but many become inured to risk and seek to isolate themselves from risk, rather than embracing risk in appropriate ways and at appropriate times. Too many managers are focusing on the wrong risks, while ignoring the greatest risk of all, the risk of doing nothing.
Resource Availability
The fifth barrier is resources. A constant, persistent focus on efficiency has left most firms operating on the bleeding edge of productivity, with no resources or bandwidth available for anything other than achieving short term financial goals. There is no time, no money, no interest in exploring new ideas, and even within the few people who have an interest, there is no incentive to do so. Everything in the business is optimized to focus on short term achievement of financial goals, efficient and productive. There’s simply no room, no resource, and increasingly no skill or capability to explore something new. Even if, by some unseen accident a valuable new idea is created, there’s no funding and no ability to convert the idea into a new product or service, and no marketing funds or personnel to launch a new concept effectively. The modern organization is a paragon of efficiency, to its innovation detriment.
All the while, markets, customers, competitors, demographics, and other factors are shifting and accelerating, increasing the demand for more new products with far different capabilities and features. Time scales are shifting and new business models are emerging. We’ve built, in many cases, a perfect operating model to compete in the market conditions extant in the late 1980s and early 1990s, when we need a corporate model that can compete effectively in a time that demands more agile, creative, insightful firms that anticipate customer needs and produce new products, services and business models far more quickly, and on a far more regular basis.
Conclusion
I’ve established that existing corporate models are paragons of efficiency and short term achievement. The “business as usual” frameworks are built to sustain efficiency and, based on the discussion above, reject or tamp down innovation. Yet we also know that a handful of firms manage to innovate and remain consistently efficient in their operations, demonstrating that the efficiency/innovation spectrum does not have to be mutually exclusive. What can we learn from firms like P&G, 3M, Apple, Google and Gore that we can use and translate into other businesses?
I think the most important idea is that existing “business as usual”, focused on efficiency and short term profitability, is important, but must not become the sole focus of the business. Historically there’s been a better balance between efficiency and innovation, and the best firms understand that that balance must be restored and maintained. Firms cannot reduce their focus on efficiency, but must increase their focus and capabilities where innovation is concerned, restoring a balance between short term profitability and efficiency and longer term investments in innovation. The relentless innovators I’ve described above understand this and manage to instill what I call an “innovation business as usual” operating model. In this model, efficiency is important but innovation is also valued. Equal weight and emphasis are placed on both goals, so that the firm uses inputs and resources effectively but also consistently generates valuable, interesting new products and services.
The longer a “business as usual” framework is in place and the more it is reinforced, the more this outcome effects expectations, perspectives, attitudes, resource levels and risk tolerances. As Aristotle said, “You are what you repeatedly do”. To paraphrase the rest of his quotation: “Innovation, then is not an act but a habit.” Without intending to do so, corporate thinking, time horizons and risk tolerances have become cramped, based on an increasing focus on efficiency and short term profitability, choking off the potential for innovation. We can’t simply become more innovative by introducing new tools and methods, we must understand the existing attitudes, expectations and perspectives and influence or change them as well.
Posted on February 8, 2012 by Jeffrey Phillips
http://www.innovationexcellence.com/blog/2012/02/08/beyond-business-as-usual/
Models and Other Barriers That Stymie Innovation
When I wrote Relentless Innovation, I hoped to uncover some of factors that allow firms like 3M, Google, Apple, P&G and Gore to sustain innovation over time, while remaining efficient and productive. In the book I identify two factors that sustain efficiency and can become barriers to innovation: “business as usual” operating models and middle managers who sustain business as usual. In this article, I’d like to build on those two factors by examining other, less evident barriers and conflicts that a modern business creates for innovation.
Here’s the question I’ve set myself, hoping to expound: Does the existing emphasis on efficiency and short term profitability create barriers for innovation? Honestly, I think the answer is “yes”, based on my consulting experiences and my observations of the struggles many firms have to become more innovative. If the answer to the first question is “yes”, then the next question is: what is it about a focus on efficiency and short term profitability that creates barriers to innovation. In this short paper I’ll look beyond business as usual to examine some of the mental models and resource constraints that block innovation.
Expectations
The first barrier to innovation is expectations. Many firms have a well-defined operating model with very specific processes. This operating model has been constantly refined over time, and it is efficient because the model works to a consistent set of inputs and outputs. The processes and models expect simple concepts and are engineered to accommodate products, services and business models that are closely aligned to the products, services and business models that preceded them. The model will remain highly efficient as long as expectations are met. The more new ideas and new products look like and act like existing ideas and products, the more efficient the model becomes. Thus, there is an inherent bias toward incremental change or even more simply continuous improvement. Existing models begin to break down when expectations change dramatically. If customer needs change significantly or the market shifts significantly or new competitors force significant change, existing operating models can’t adjust, because they are tuned to work under existing expectations.
No one wants to inflict change on a highly structured, highly engineered operating model. Everyone recognizes the investments that were necessary to construct and optimize the operating model, so rather than force changes or change expectations, managers insulate the operating model from outside influences and unnecessary change. These actions simply reinforce the rigid structure of the operating model, and make it even more difficult to introduce radically new products and services. Operating models are creatures of our own creation, but just when we need to change them they work against change.
Perspectives
The second barrier is based on our perspectives. A focus on short term profitability (ie making the next quarter) has radically reduced the vision and time horizons most businesses seek to understand and achieve. As the time horizons shrink, efforts to understand and uncover future trends and market needs seem less important. The focus on short term profitability creates a vicious circle, placing less and less emphasis on future needs, opportunities and threats and reinforcing the ever smaller time horizon, to the point where many firms have little or no understanding of the emerging trends and potential significant market shifts or competitive threats. As time horizons and perspectives shrink, managers and executives become ever more comfortable in the predictability of the adopted time horizon, and become uncomfortable with exploring time horizons that are beyond their comfort zone. Yet no firm can control the externalities and changes even within its chosen time horizons, and all are buffeted by changes outside of their control and chosen time horizons. Rather than seek to understand the potential future, executives become comfortable with what appears to be far more predictable short term horizons, constantly surprised by the shifts that are just outside their perspectives.
Worse, the acceptance of short term horizons creates the expectation of a future that looks very much like the present, and people and ideas that question a static future are rejected. What’s more, anything that can’t be predicted or scheduled is considered to be “uncertain”, and our perspectives reject any uncertainty within the operating model. At a time when managers should be broadening their perspectives, the emphasis is on a short term perspective.
Attitudes
The third barrier is attitudes. Many commentators, me included, have accused tools such as Six Sigma and Lean as contributing to the barriers to innovation. Thinking more deeply, it is obvious that the tools aren’t to blame, but the attitudes the tools promote are to blame. Six Sigma, Lean and other management tools are focused on improving what exists, taking out costs and redundancy and improving efficiency and productivity. While there is nothing wrong with incremental innovation, your most significant competitors aren’t focused on small changes. The disrupters in your market don’t plan to overtake you one small feature at a time. They hope to completely upset the existing order. At the same time, market shifts, customer expectations and new entrants are changing the playing field. Continuous improvement and incremental innovation are valuable as long as the product life cycles are long and entry into a market is difficult, but these barriers are falling rapidly.
Our attitudes are based on competition, markets, economies, product life cycles and profit curves that were true in the 80s, 90s and into the turn of the century, but are increasingly being called into question or have already been overturned. Our attitudes about competitors, new entrants, markets and customers have been shaped by forces that are changing. Therefore, our attitudes must change as well.
Risk tolerances
The fourth barrier is risk. Over time the balance between risk and reward has been lost. Many businesses seek to eliminate risk, rather than explore the tradeoffs between appropriate risk and ensuing reward. As time horizons shrink and efficiency measures increase, managers believe they have eliminated or tamed risk. Instead, what most businesses have created are organizations that reject all risk rather than seeking interesting, valuable opportunities with acceptable risk. Increasingly, any and all risk seems dangerous, rather than representing potential opportunities to exploit. Every action a business takes has risk associated with it, but the only risk that seems to matter is the risk of introducing new products or the risk of change. The risks of status quo are de-emphasized or ignored. The risk of standing still while the pace of change in the environment is accelerating is actually the greatest risk.
Over time, expectations, attitudes and perspectives have led many businesses to reject risk, or to seek to contain it. Anything new, any change or change that introduces uncertainty is deemed too risky to pursue. What’s strange is that every business is born from a risky decision – the entrepreneurial idea – but many become inured to risk and seek to isolate themselves from risk, rather than embracing risk in appropriate ways and at appropriate times. Too many managers are focusing on the wrong risks, while ignoring the greatest risk of all, the risk of doing nothing.
Resource Availability
The fifth barrier is resources. A constant, persistent focus on efficiency has left most firms operating on the bleeding edge of productivity, with no resources or bandwidth available for anything other than achieving short term financial goals. There is no time, no money, no interest in exploring new ideas, and even within the few people who have an interest, there is no incentive to do so. Everything in the business is optimized to focus on short term achievement of financial goals, efficient and productive. There’s simply no room, no resource, and increasingly no skill or capability to explore something new. Even if, by some unseen accident a valuable new idea is created, there’s no funding and no ability to convert the idea into a new product or service, and no marketing funds or personnel to launch a new concept effectively. The modern organization is a paragon of efficiency, to its innovation detriment.
All the while, markets, customers, competitors, demographics, and other factors are shifting and accelerating, increasing the demand for more new products with far different capabilities and features. Time scales are shifting and new business models are emerging. We’ve built, in many cases, a perfect operating model to compete in the market conditions extant in the late 1980s and early 1990s, when we need a corporate model that can compete effectively in a time that demands more agile, creative, insightful firms that anticipate customer needs and produce new products, services and business models far more quickly, and on a far more regular basis.
Conclusion
I’ve established that existing corporate models are paragons of efficiency and short term achievement. The “business as usual” frameworks are built to sustain efficiency and, based on the discussion above, reject or tamp down innovation. Yet we also know that a handful of firms manage to innovate and remain consistently efficient in their operations, demonstrating that the efficiency/innovation spectrum does not have to be mutually exclusive. What can we learn from firms like P&G, 3M, Apple, Google and Gore that we can use and translate into other businesses?
I think the most important idea is that existing “business as usual”, focused on efficiency and short term profitability, is important, but must not become the sole focus of the business. Historically there’s been a better balance between efficiency and innovation, and the best firms understand that that balance must be restored and maintained. Firms cannot reduce their focus on efficiency, but must increase their focus and capabilities where innovation is concerned, restoring a balance between short term profitability and efficiency and longer term investments in innovation. The relentless innovators I’ve described above understand this and manage to instill what I call an “innovation business as usual” operating model. In this model, efficiency is important but innovation is also valued. Equal weight and emphasis are placed on both goals, so that the firm uses inputs and resources effectively but also consistently generates valuable, interesting new products and services.
The longer a “business as usual” framework is in place and the more it is reinforced, the more this outcome effects expectations, perspectives, attitudes, resource levels and risk tolerances. As Aristotle said, “You are what you repeatedly do”. To paraphrase the rest of his quotation: “Innovation, then is not an act but a habit.” Without intending to do so, corporate thinking, time horizons and risk tolerances have become cramped, based on an increasing focus on efficiency and short term profitability, choking off the potential for innovation. We can’t simply become more innovative by introducing new tools and methods, we must understand the existing attitudes, expectations and perspectives and influence or change them as well.
Five Essential Questions to test the Viability of an Idea
5 essential questions to test the viability of an idea February 8, 2012 | By Chuck Frey | Category: Best Practices
Send to a Friend Comments
Scott Anthony, author of the new book, The Little Black Book of Innovation: How It Works. How To Do It, has developed a set of 5 questions that he uses to gauge the commercial viability of any new idea:
1. Is there an important problem that customers can't address because existing solutions are expensive or inconvenient? Is there a high-potential job to be done?
2. Is there a disruptive way to solve the problem in a simpler, more convenient or more affordable way?
3. Is there a plausible hypothesis about an economically attractive, scalable business model? Answering this question doesn't require a detailed financial model, but it does require a sensible story that's at least conceivable - an a plan to turn that hypothesis into reality.
4. Does the team have the right stuff to course-correct according to in-market learning? Remember, the odds are high that the first idea isn't quite right. A team that is dogmatic and keeps trying to prove it is right is the wrong team for many innovation efforts.
5. Can early profitability be a choice? Ultimate success requires a profitable model. The sooner there is a line of sight to profits, the better.
Anthony adds that looking at patterns is often a way to get an accurate read on the potential value of an idea:
"If you are trying to figure out if your idea, approach or plan has merit, go back and look at history. Look at what you or other people tried. What worked or what didn't? ...ask the question, 'What does history teach us?'"
While looking to the past may sound antithetical to innovation, it does have some merit. You already know from past experience what types of ideas are likely to be accepted in your organization, and those which tend to go down in flames because certain leaders and managers simply reject them outright. You can learn from past idea-selling efforts, and tailor your presentation for your new idea accordingly.
Send to a Friend Comments
Scott Anthony, author of the new book, The Little Black Book of Innovation: How It Works. How To Do It, has developed a set of 5 questions that he uses to gauge the commercial viability of any new idea:
1. Is there an important problem that customers can't address because existing solutions are expensive or inconvenient? Is there a high-potential job to be done?
2. Is there a disruptive way to solve the problem in a simpler, more convenient or more affordable way?
3. Is there a plausible hypothesis about an economically attractive, scalable business model? Answering this question doesn't require a detailed financial model, but it does require a sensible story that's at least conceivable - an a plan to turn that hypothesis into reality.
4. Does the team have the right stuff to course-correct according to in-market learning? Remember, the odds are high that the first idea isn't quite right. A team that is dogmatic and keeps trying to prove it is right is the wrong team for many innovation efforts.
5. Can early profitability be a choice? Ultimate success requires a profitable model. The sooner there is a line of sight to profits, the better.
Anthony adds that looking at patterns is often a way to get an accurate read on the potential value of an idea:
"If you are trying to figure out if your idea, approach or plan has merit, go back and look at history. Look at what you or other people tried. What worked or what didn't? ...ask the question, 'What does history teach us?'"
While looking to the past may sound antithetical to innovation, it does have some merit. You already know from past experience what types of ideas are likely to be accepted in your organization, and those which tend to go down in flames because certain leaders and managers simply reject them outright. You can learn from past idea-selling efforts, and tailor your presentation for your new idea accordingly.
Subscribe to:
Posts (Atom)