Innovate On Purpose™
Search
Home About Us Services We Provide Thought Leadership Marketing Contact Us
Innovation Newsletter from OVO
All-Star
OVO Views
Conversations about Innovation
April 2010 - Vol 4, Issue 4
In This Issue
Sign Up
Quick Links
Greetings!
OVO logo

In April it would be easy to focus on taxes or the emergence of spring, but in this issue we'll focus on executive management and how it helps, or hinders, innovation.

First, we'll look one of the classic questions in innovation - how to "sell" innovation to your boss. Some innovators are lucky and have innovation sponsors. If that's not true in your case, let's look at what it takes to sell innovation upward.

While we are on the topic of innovation and management, we should also consider why "top down" innovation is so difficult. One hint: virtually none of the senior executives in your organization achieved his or her position by being an innovator.

Speaking of executives, I had the opportunity recently to interview Lem Lasher, the Chief Innovation Officer at CSC. Our discussion was interesting, and you'll be surprised by the intentional focus and investment CSC is placing on innovation. I'll recap my conversation with Lem.

I've had a chance to read "Seizing the White Space" by Mark Johnson of Innosight, and will be part of a blog/book tour in early May. I'll give you a preview of my review of the book.

Finally, I'd like to look at innovation tools that help you use time to your advantage. Scenario planning, innovation portfolios and innovation investment plans help your team spot emerging threats and opportunities, develop a range of options to address those threats and opportunities and use time to your advantage.

We'd like to know your thoughts about the innovation space. What topics are of most importance to you? What information can we provide to help you accomplish your goals? Please feel free to contact us as we continue to bring you some of the best commentary on the innovation space.

The value of innovation

Few initiatives proceed very far in any Fortune 500 organization unless there is significant management buy-in and funding. The prevailing challenge is that there are far too many opportunities to pursue with too little free cash and few free resources so difficult investment choices have to be made.

Some innovators are lucky in this regard. These innovators have CEOs or executive sponsors who believe in innovation and set the expectation for innovation from the top down. Innovators in these companies have very little work to do to "sell" innovation to their executive teams. Innovators in these firms simply need to indicate what they'll do with the money they receive and how the firm will benefit. But innovators in other firms have a much bigger challenge: how do you "sell" an innovation effort or initiative to a skeptical management team?

Selling innovation upward

There are few executives today who aren't aware of the pressure to generate new revenues and protect the core assets of their business. Additionally, there are few executives who haven't been lured to the concept of innovation as a driver for new growth and profits.

Being aware of innovation as an alternative, and actually funding an innovation effort, however, are two very different things. Given the reluctance of executives to spend on new and creative ways to create new products and services, how can you effectively convince your management team to innovate?

When is innovation necessary?

For innovation to be a viable alternative strategy, the executives must be convinced it is an important alternative and necessary for future success. This means innovation is compelling when:
  • Another firm has achieved a significant first mover advantage and now we must catch up or surpass that offering OR
  • We have created a technology or concept so unique that we'll gain first mover advantage OR
  • We have insights about the future that are so compelling that we can literally change the way our markets work
A recent survey from BCG and Businessweek indicates that 83% of executives surveyed said innovation is a key part of their strategy to benefit from the coming economic recovery, and 72% surveyed listed innovation as a top 3 strategic priority. There's a lot of emphasis on innovation, so even if your management team doesn't want to "lead", it needs to be prepared to follow quickly.
Typically, if your organization does not have a consistent innovation process, then you'll need a significant disruption to crank up the innovation engines. Those disruptions can be ones that your firm creates and seeks to exploit, or disruptions the market forces on you.

Three legs of the selling stool

Selling an innovation initiative, however, requires more than a disruption or radically new or different idea. We believe there are three factors to consider when selling the idea of innovation to your executive team, if they aren't "on board" or already sponsoring innovation. Those three factors are:
  1. Linking innovation to corporate strategic goals
  2. Demonstrating the emerging opportunities and competitive threats in the marketplace
  3. Building irresistible momentum within the organization to generate and develop new ideas

If we can demonstrate that the innovation work we do links to corporate strategy, especially driving organic growth, creating differentiation or deflecting a disruption, we'll create urgency for our innovation efforts. Educating the executive team on immediate threats or competitive opportunities in the market, and the value those opportunities offer, demonstrates market opportunity. Finally, rather than simply waiting for the OK to proceed, generating momentum by creating and working ideas creates a process that is easy to embrace and hard to stop. You may need to ask forgiveness, and stop waiting for permission to build your innovation process.

Waiting for innovation

Waiting for innovation is not a strategy. If you want to engage in large scale innovation, start small and build momentum, keeping the competitive landscape in sight and linking closely to corporate strategy. What will eventually happen, sooner than you might believe, is that an executive will need new ideas. If your team has to start from scratch, the effort to overcome fear and inertia may simply be too great. If there is a process and momentum underway, many executives will gladly grease the wheels to move your ideas forward even more quickly, since your team may be the only ones with the foresight to generate ideas before they seemed necessary.

Availability, Availability

In the real estate market, the mantra is location, location, location. When it comes to ideas, nobody needs ideas until somebody suddenly needs ideas desperately. In that event, the individual or team that has experience generating ideas and a process that can be quickly implemented will be the winner. Small, consistent investments now will pay off later.

Selling innovation to your boss isn't easy, but we can prove that it doesn't have to be expensive and can add a lot of value. Solving strategic problems using a consistent innovation process will attract attention from your boss, and eventually, your organization.

Give the market what it wants

In our recent innovation conference, one speaker noted that "the market gets what the market wants". We need to understand that no one "wants" innovation - they want the benefits provided by new products, services and business models. If that's what they want, that's what we need to offer. This provides another viewpoint into how to sell innovation to your boss. Talk about the benefits the ideas and solutions will offer internally to cut costs and speed growth, or externally to attract new customers.
Give me some innovation. Now!

Probably one of the saddest parts of our jobs as innovation consultants is to watch the reaction when an executive asks his or her team to bring some innovation to the table as quickly as possible. The "deer in the headlights" look we see in the eyes of our clients is far too easily recognizable, and also easily avoidable.

In this article we'll look at the reasons top down innovation is so difficult, and what you can do to work with executives to achieve their goals and yours.

Lack of common language

Anyone who reads business periodicals, analyst reports or books about innovation understands the rising importance of innovation. Unfortunately, like pornography it is so poorly defined that most people can't define it and only "know it when they see it".

Since most organizations don't have active innovation programs, there are few good definitions or strategies about innovation. What executives "know" is that innovation is a method to create new products and services. What they don't know and don't realize is that no one is really sure what "innovation" means and they need a definition to help them succeed.

Here's what you should do: stop waiting for someone in your executive team to define what they mean by innovation. They don't have a crisp definition, and the journals they read and information they receive provide very different definitions and meanings for the word. If you believe you have a sense of what innovation should mean in your organization, write it down and start circulating it to anyone who will read it and give you feedback. Then, when an executive does come asking for innovation, gain agreement on your definition so everyone has the same interpretation.

No experience

Over the last twenty years, most businesses have had major strategic focus on cost cutting, outsourcing, Six Sigma and Lean concepts. This means that your executives by and large have demonstrated the ability to adhere to corporate objectives, cut costs successfully and live within very tight tolerances with little variation. Few if any achieved their positions through innovation and they may not have the skills or tolerance necessary for innovation to thrive. In fact, many of the factors that made them successful are now barriers to innovation. While the tools and techniques of innovation are generally understood, most executives don't understand how to link them together to achieve consistent innovation. They've simply never had to do that before.

Here's what you need to do: if you believe that innovation is important, start defining a process that your team can follow when innovation becomes important. Without a defined process and agreed set of tools and techniques, innovation can be very hard to start because there's no clear path to a successful end goal. Don't wait for the executives to define the appropriate methods and innovation processes because they don't have that experience. They will welcome your definitions when they become aware of the need for innovation.

Also, start using innovation tools and techniques as part of your regular workday. Using the tools and gaining familiarity with them will ensure your team is trained to use the tools effectively before the burden of an innovation requirement is placed on them.

No rewards

Most organizations have strong cultures that reinforce an approved method for doing work that's based on historical success and achievements. Since most organizations aren't innovative, the culture doesn't reward divergent thinking, creativity, experimentation and fast failure. The incentives, evaluations, rewards and recognitions that most of the executives are familiar with don't support or sustain an innovation project, and in fact many times work against innovation. Rather than keepers of the culture executives are often "creatures" of the culture, and will need help understanding why rewards, recognition and other cultural barriers must be changed for innovation to succeed.

Here's what you can do. Create rewards, recognitions and incentives that reinforce innovation, creativity and risk taking. These may be noting more than simple recognition ceremonies, but they'll change the way people are recognized and reorder the incentives long before the executive team gets to work restructuring the compensation models to incent innovation.

No visibility

There's an expectation within many firms that senior managers have the good ideas and the rest of the organization should implement those ideas. From an innovation point of view, little could be farther from the truth. Most senior executives are well removed from actual customer interaction and rarely network with people from other industries or engage in face to face interactions with customers or competitors. Most executives spend countless hours in internal meetings and with rare exceptions never meet customers. Much of their understanding of customers is filtered through many layers of the hierarchy.

These executives must understand the value of obtaining customer insights from the customers themselves or assessing customer needs from individuals close to the customers in marketing, sales and customer service.

Here's what you need to do. Request ideas, insights, trends and needs from the people closest to the customer and most aware of their needs, rather than the people highest on the organizational chart. Run your own focus groups, market research and qualitative assessments to gain the insights you need into customer wants and needs. Provide these insights in an unfiltered fashion for the executives. Nothing is more insightful than a video of a customer talking about your product or service.

The higher you climb

It's an interesting paradox that right now we expect executives who climbed the corporate ladder with an emphasis on Six Sigma, outsourcing and lean processes to provide clear guidance and direction to organizations that need to innovate. Many of these executives don't have innovation experience and aren't comfortable with the language, tools or methods to support an innovation activity, especially when many of the best ideas will come from people who are closest to the customer. What we need from executives is that they either immerse themselves in the theory, methods and processes of innovation, or recognize that there are capabilities within the organization and work to support those individuals and teams.

If you are an executive: Executives may not be able to "manage" innovation or communicate their goals and needs completely, but they can play an important role to support and sustain the individuals and teams that do have the skills, knowledge and insight to innovate. The best executives can create the environment and atmosphere for innovation success, which will be more changing the culture rather than dictating the outcomes.

Bruce Nussbaum at Businessweek wrote a short article on this concept which he called Cultivating Innovation and Creativity, not managing it.

Establishing the Context for innovation

What executives can do now is establish the context and conditions for innovation to thrive. This entails encouraging risk taking and innovation activities, tools and cultural changes, creating an environment where ideas can bubble up from customers, business partners and engaged employees. Executives still need to provide clear goals and strategic direction, but then they need to allow a number of different techniques and strategies to flourish to create an atmosphere where innovation is valued.
An intense innovation focus

I was a bit surprised to be approached by the PR firm for CSC to talk about innovation. While I've had a chance to visit 3M and talk with innovators at Dell and other firms, I don't usually think of large consultancies as hot beds of innovation. My image of CSC was of a large business and government consulting firm, primarily focused on outsourcing and large government contracts. That image informed my expectations: a slow moving organization just kicking off an underfunded and misguided innovation focus.

Since I have experience working in a large consulting organization, I know how difficult it is to build and sustain a new capability or competency, so I have to admit I was pleasantly surprised at the focus, investment and work that the Office of Innovation within CSC has accomplished in the last few years.

CSC's Office of Innovation

CSC formed its "Office of Innovation" just about five years ago based on the recognition that a consulting firm needs to bring new thinking and new ideas to its clients, as well as using innovation to reinvent itself. While other large consulting firms like Accenture, EDS and Deloitte have made some attempts to become more innovative, CSC has clearly invested a significant amount of time and resources, and has created an innovation capability and focus within the Office of Innovation and throughout CSC that makes CSC a leader in its space. The Office of Innovation's scope is to generate ideas and develop intellectual capital for CSC. It offers its services throughout the corporation and reports to the chairman of CSC.

Lem Lasher helped to develop the Office of Innovation over five years ago, The office has several key focus areas:
  • the Leading Edge Forum which conducts research
  • the Ideation Practice which runs ideation events internally and with clients
  • a Catalyst group which acts as an information depository and knowledge management center
  • a fully developed idea management and social media application
  • Extensive relationships with over twenty academic institutions and other third party partners

CSC is actively engaging its employees, staff, customers, academic partners and third party partners to participate in its innovation activities, and doing its best to communicate its findings with this same network.

Distributed Innovation Focus

CSC has a highly distributed model of innovation. The Office of Innovation emphasizes open innovation and is responsible for setting the stage for innovation. In this role it creates tools and techniques and supports the lines of business for innovation. Through its partnerships with academic institutions and software/hardware partners CSC generates a lot of research and insight into future trends and new ideas. The Office of Innovation has over 70 staff members. Many of these people work not only with internal innovation efforts but have "line jobs" as well, to assist CSC's clients with innovation. This is a significant investment in innovation. Lasher believes that over 10,000 people within CSC have participated in innovation events and activities. This demonstrates a broad commitment to innovation throughout the organization.

What makes Innovation?

From Lasher's point of view, innovation is the result of four factors that converge:
  • Focus on a problem
  • Fresh ways of thinking - creativity
  • Working within Constraints - discipline and rigor
  • Bringing various subject matter experts to bear

I was interested in his focus on creativity, which isn't a capability usually ascribed to large consulting firms. Lem suggested that "good management kills innovation because it focuses on risk reduction" so creativity must be reinforced through leadership, organizational structures, process and enablement. He is a fan of de Bono's Six Thinking Hats philosophy and trains his teams accordingly.

CSC doesn't offer "15% time" like Google or 3M, rather 50% of the innovation CSC pursues is proposed by employees. Those ideas selected can be funded by Lasher's office, which relieves the employee from some of his or her billable work.

Focus on the theory

Lem believes that innovation is strongly rooted in intellectual theory, and often presents this theory to his teams and his customers. His recommended thinkers on innovation include Clayton Christensen, Henry Chesbrough and Joseph Schumpeter, along with works by Senge. He believes that grounding the innovation work in this theory gives it credence and establishes a framework, which creates a language and taxonomy.

The Innovation Paradox

Lem left me with one other concept, which he called the innovation paradox. That is, on one hand, most innovations fail, which could lead a firm to shy away from innovation. On the other hand, most firms that don't innovate die. So innovation is clearly important.

I came away with a very different impression of CSC than I had previously, CSC has clearly staked out a focus on innovation and is actively building deep innovation capabilities, for internal use and to offer to its customers. It has active engagement with a large percentage of its staff and is heavily investing in an internal team, training and capabilities. CSC has developed a number of relationships with academic institutions and other partners and is seeking to become an innovation thought leader. In just five years, it has transitioned itself from a stodgy government contractor and outsourcer to a leading advocate for innovation.
Strategy and Innovation

Many books about innovation focus on a specific tool or technique, or examine the opportunities for innovation in a specific industry or business function. Mark Johnson from Innosight has written a new book - Seizing the White Space - that is about focusing on innovation in the green fields where there is little or no competition. This is one of the first books I've seen dedicated to the concept of innovating in such a proactive way.

To be clear, this book is really about the strategy of pursuing innovation and entry into a new "white space" for the business, and it spends a lot of time examining the business models and strategies of the firm, rather than talking about innovation tools and techniques. Johnson believes that there are four significant factors within a specific business model that must be considered when innovating in the "white space". These factors are:
  • Customer Value Proposition
  • Profit Formula
  • Key Resources
  • Key Processes

Any of these factors can be a barrier or an enabler to white space innovation. Understanding what they offer and how they support your existing business models and the change necessary to support new ideas is very important.

Within, Between and Beyond

Johnson then defines three kinds of "white space" - within an existing industry framework, beyond the industry framework and between two markets or industries. In each instance, a firm must decide how to attack the specific "white space" and what impacts or changes must occur to the four factors identified above.

Given the change necessary for business model innovation, "Seizing the White Space" isn't really a book about innovation tools or techniques, but a book about corporate strategy and the implications of innovation to key factors of business models and strategies. This is a book for the chief strategy officer or the CEO, not a book that will help innovation teams accomplish their goals.
Time is an important factor

Typically, the closer we are to an event, the more information we know and the more confidence we have that the event will unfold the way we expect it to. Given that most of our businesses demand a very clear understanding of a new product introduction, and given the emphasis on quarterly results in a publicly traded business, time becomes a critical factor for innovation.

Often, time is a limiting factor in our willingness and ability to investigate radical or disruptive ideas. OVO understands this challenge, but believes time shouldn't limit an innovator from looking at a longer term roadmap. In this article we'd like to consider three tools for innovation help an innovator use time to his or her advantage.

Innovation Investment Plans

We encourage our clients to pull together a two or three year innovation investment plan. This strategy considers all or most of the existing product and service portfolio, to identify where incremental innovation is necessary in the existing product suite, and where there may be gaps in the offerings. In this way a firm can determine where it should invest innovation dollars to update existing products and services within the current suite of products and services (incremental innovation) and where completely new products and services are needed (radical or disruptive innovation).

You'll note that this work isn't necessarily tied to the annual planning process, since that effort usually only considers investments a year at a time. There are two reasons to consider your innovation plan separately from the annual plan: first, the time constraints within the annual plan are too constricting and second, concepts under consideration in an annual plan must be airtight. Too often innovative concepts and ideas are crushed in the detailed assessment necessary within the annual planning cycle.

The innovation investment strategy provides a means to consider short term innovation investments, updates to existing products and services, and the identification of gaps in your product and service offering. This strategic review helps prioritize limited investment dollars for new product and service development and launch.

Innovation Portfolio

We build innovation portfolios with our clients over a three to five year horizon. This portfolio helps place all of the active and proposed innovation projects within a framework, to determine where the firm is investing its innovation dollars and resources, and where there may be gaps in the innovation strategy. While many firms have a defined product portfolio, few have an innovation portfolio.

We use a three to five year horizon for the innovation portfolio because many firms have a rather lengthy product development and commercialization process. Ideas today may not become products and service for 18 months to two years or more, so we need to look at ideas further out than our ability to build and deliver. As ideas ripen and are validated, they can move to the innovation investment plan noted above.

The portfolio allows your team to assess an innovation pipeline that addresses short term and longer term innovation opportunities. It provides a means to map ideas to opportunities and ensure there are no gaps in your strategic investments over a longer term horizon.

Scenario Planning

Successful innovators constantly capture and evaluate trends and build scenario plans based on those trends. These scenario plans are usually focused on a five to ten year future. The scenario plans simply help us describe alternative futures and understand the implications for the business, uncovering emerging opportunities and potential threats. This information is then fed into our idea generation processes, to help us shape innovative thinking and address emerging opportunities or threats effectively.

The scenario plans consider a five to ten year horizon because significant demographic or societal change takes time to ripple through the economy and drive demand for new products or services. We need time to spot the opportunity, allow consumers to become aware of the changes in their environment, and for our firms to develop new products and services.

The scenario plan allows a firm to understand what may happen in the future, and become more proactive to those evolving changes, rather than simply react once the change is upon them.

Strategic Timeframes

The findings from a scenario plan inform the development of an innovation portfolio. The decisions and investments within a portfolio inform near term product and service investment and resource decisions. All three of these timeframes and techniques are interlinked, and information should flow from the future into the present as we've described.

Innovation is often thought of as an event or a project, but in reality it is a perspective and a point of view, with special emphasis on the future and how it will unfold. If your firm isn't actively developing scenario plans and using these to populate an innovation portfolio of ideas, and using the portfolio to select the best possible new products and services for your business, then you are missing a great method for innovation, and don't understand how time factors into an innovation process.

If you'd like to discuss how OVO can work with you to improve your innovation strategies, ideation sessions, innovation processes or software, contact us today at our website or (919) 844-5644 x789.

If you have a topic you'd like to see us cover or a question you'd like to have us address, please let us know via the website above.

If you enjoyed this innovation newsletter, please pass it along to your friends. If you wish to unsubscribe, please see the link below.

Sincerely,
Jeffrey Phillips
OVO

phone: 919-844-5644 x789