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Innovation Newsletter from OVO
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OVO Views
Conversations about Innovation
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February 2009
- Vol 3, Issue 6
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In This Issue
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Quick Links
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Greetings!
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Let's call this the "innovating in a
recession" edition. While we are in this
downturn, it's incumbent on all of us to
think clearly and carefully about the
benefits of innovation and how to apply
innovative tools, methods and techniques
during the downturn, rather than revert to
traditional cost cutting and operational
excellence.
If your team is like many in this
environment, it is "waiting" for more
"visibility" before taking action. What this
means is that there is so much uncertainty
that no one is willing to act until economic
conditions are more stable. Use
this time effectively to introduce a scenario
planning exercise in your business. We'll
detail the steps below.
Training without investment
We are strong believers in training the
innovation team. Recognizing that the
current market conditions have cut training
budgets and travel budgets, we'll identify
five books that can kick start your
innovation team and stand in for training
until the budgets improve.
Putting Blue Ocean concepts into
practice
One of the tenants of Blue Ocean Strategy is
that innovation can happen by identifying new
opportunities where customers are underserved
or not served at all, or even overserved.
When innovating in a downturn, shouldn't we
look at innovation that strips away
unnecessary or unimportant features to
provide products or services at a lower cost
or make them available to new markets? We'll
examine "reducing" and "eliminating" as tools for
innovation in a recession.
Community, Challenge and Collaboration
These are the three key factors in when
building a sustainable innovation capability.
I'm borrowing some of these ideas from Chris
Townsend, who was an analyst with Forrester
Research. Chris originally suggested the
intersection
of these three capabilities idea in a
discussion. We'll elaborate and
investigate his premise.
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.
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Gaining Innovation Clarity
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In these times
OK, so you don't need me to tell you it's
tough out there. Metaphorically speaking,
business planning in this economy is like
driving in thick fog on a twisty road with no
headlights. Most drivers have pulled over to
wait for the fog to lift so they can see
where they are going.
The problem with the analogy is that given
all the forces at work, the road is changing
as well. The conditions when the "fog" lifts
will be different, and will require a
different set of expectations and
assumptions. Rather than simply wait on the
sidelines, use this time to create some
insights into the future by creating scenarios.
Scenario Planning
Scenario planning is a qualitative
examination of a range of possible futures.
When we conduct a scenario planning exercise,
we aren't seeking to identify the one "right"
future, but the conditions and environmental
aspects which will shape the most likely
future. It is critical to start thinking
about the trends and environmental conditions
that are at play in your industry and to
determine how they will impact your mid to
long term future. Scenario planning can do
that for you, and give you a much better
sense of the best places to be investing now.
What is the best approach?
In this newsletter, we'll provide you with an
overview of the steps we'd suggest. In the
next article, we identify one "must read"
book on the subject, and at the bottom of the
article we provide links to Shell's scenario
planning document for further
investigation.
There are seven key steps to conducting a
complete scenario planning workshop:
- Identifying and framing the "right
question"
- Gathering information about the
environment
- Identifying trends and key drivers
- Building scenarios based on existing
factors and trends
- Analyzing and fleshing out the scenarios
- Defining the implications of each
scenario
- Ideating to identify opportunities and
challenges presented by each scenario
We'll look at a few of these in more detail.
Framing the "right" question
It's important to understand and frame the
scenario exercise around a small set of
questions or topics that the business
believes is crucial to success, and aligned
to key strategies and goals. Framing that is
too general, or not strategically aligned, or
ideas or topics that are poorly framed will
cause the scenario work to suffer.
Identify trends and driving forces
Scenarios are based on the extrapolation of
existing conditions and the expected impacts
of key driving forces or trends. What
happens if the government nationalizes the
banking system? What happens if the green
revolution fails to take off? These kinds of
questions will dictate the identification of
trends (involvement in the banking and
financial services community, possibility of
additional federal regulation, entry of more
foreign firms into the US banking
environment). Identifying the key trends and
extrapolating them over a chosen time frame
helps to identify a possible future state.
Build and Flesh out scenarios
Once the important trends and driving factors
are identified, a team should build several
scenarios. Too often these become "worst
case", "best case" and likely case, with only
one or two factors at variance. Rather than
merely forecasting one or two variables and
assuming an otherwise steady state
advancement, the best scenarios consider
widely varying alternative futures, seeking
the factors and environmental conditions that
exist in each of the alternative futures.
The more frequently a condition or trend is
present in these alternative futures, the
more likely that trend or factor will
influence the scope and direction of your
business in the near future.
Implications
Here's where many scenario planning exercises
fall down. Scenarios are built, but the
implications of the scenarios aren't fully
explored and translated back into
opportunities or challenges for the business.
If a particular scenario seems likely, what
are the implications for the business? What
should the business do to position itself for
success? Start generating ideas that can be
evaluated within your business, informed by
the scenario.
Conclusion
You can pull to the side of the road in this
economic climate and wait for visibility.
What you may find is that when the fog lifts,
the road will have shifted and the
competitors may have changed. Get ahead of
the competition, and create more clear
signals about the future of your business by
engaging in scenario planning now.
Scenario planning does not have to be
expensive, and can provide valuable insights
that allow your organization to move
effectively while others are waiting for the
horizon to clear.
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Innovation Training on your bookshelf
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Growing your skills
For many firms, training and extraneous
travel are some of the first items that are
cut when belt tightening occurs. Yet your
teams need to learn new skills in order to
succeed. Einstein said that we needed new
ways to think when we wanted to solve new
problems, and who are we to question a genius
like Einstein?
Your team has access to a range of training
materials right on your bookshelf or your
virtual bookshelf (Amazon.com) where you can
find the following books that will give your
team real insights about building an
innovation capability and the tools they need
to succeed.
Creativity
There's no better book to consider than A
Whack
on the Side of the Head by Roger von
Oech. This book has been a favorite for
individuals and teams that are trying to
introduce more creative thinking in their
organization. Along with the book, von Oech
has the "Whack Pack" - a card deck full of
methods to help your team think more
creatively.
Scenario Planning
As mentioned in the article above, probably
the best book on Scenario Planning is The
Art of the Long View, which I wholeheartedly
recommend as a primer for scenario planning.
This book lays out the strategy and defines
the methodology for conducting a scenario
planning workshop.
Innovation Process
Two books that stand out in this regard are
The
Innovator's Guide to Growth by Scott
Anthony and Make
us more Innovative by our
own Jeffrey Phillips. Both do an excellent
job of defining the innovation process, from
idea generation to commercialization.
Innovation Roles and People
Tom Kelley's book the Ten
Faces of Innovation
is probably the best book about the roles
that are necessary for innovation to thrive.
Sadly, there's not enough written about the
changes necessary to encourage a culture to
embrace and support innovation, although a
number of success stories do point out some
critical elements.
Other books we like
There are a number of other books we like,
focused on specific topics within innovation.
Those include:
- Group Genius by Keith Sawyer
- Think Better by Tim Hurson
- The Future of Management by Gary Hamel
- Blue Ocean Strategy by Kim and Mauborgne
- Making Innovation Work by Davila and
Shelton
- Driving Growth through Innovation by
Tucker
- Democratizing Innovation by von Hippl
Coming up to speed
Recognizing that you may not be able to gain
the approval for training or for travel, you
can still gain a tremendous amount of insight
based on these books. Start a book club with
other interested innovators - read and
discuss just one of these books every week or
so, and you'll definitely build your skills
as an innovation team.
Conclusion
To innovate effectively, we all need new
skills. In the current economic environment,
there's little money for training or travel.
Rather than simply wait for the conditions
to change, take advantage of the wealth of
information at your fingertips and build your
innovation skills using the books we've
listed above, and find even more information
on the author's websites and newsletters.
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Reducing, Eliminating as innovation actions
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In tune with the times
Usually, when we think about innovation, we
think about a new product or service - the
iPod for example, or Keep the Change from Bank of
America. These are usually splashy new
products and services that meet an undefined
or unmet need. As we continue in this series
of articles, however, we are looking at
innovation in a recession, so new product
introductions may be a bit hard to come by.
However, if we dive deeply into Blue Ocean
Strategy, we'll see that the authors
recommended a number of ways to innovate,
which include reducing the importance of a
feature, or eliminating it all together. If
the recession has curtailed spending, it
hasn't curtailed needs. Perhaps we can put
this thinking to work and align with market
and economic forces to innovate and create
value for consumers along the way.
Blue Oceans
The authors of Blue Ocean strategy argue that
there are "blue oceans" - opportunities that
are not contested, and they can be found by
introducing new products that have new
features, or by carefully considering the
existing products and services and
dramatically modifying one or more
attributes. In this manner you should be
able to increase the importance of a factor,
decrease the importance of a factor or
eliminate a factor all together. These
actions have the potential to open new
opportunities or new markets.
Southwest Airlines
Southwest Airlines was able to disrupt the
larger carriers because it intentionally
placed much less emphasis on points of
differentiation the other carriers
emphasized, like seat choices, airport
lounges and frequent flier miles. By doing
this it opened up flying to a population that
was more likely to drive or take a bus.
Southwest innovated by reducing or
eliminating factors that the rest of the
industry thought were important. What can we
learn from that in this environment?
Nintendo
A great example of innovating by reducing or
eliminating is the Wii from Nintendo.
Traditionally, video games were about
resolution and graphics. A user had to be a
Jedi master to even begin to play a video
game. The Wii took a very different
approach, creating very basic graphics and
introducing games and activities that anyone
can learn quickly. By reducing the focus on
graphic detail, and by reducing the emphasis
on complexity, they opened up an entirely new
market that was shut out of most gaming
platforms. Who knew the big rage in
retirement homes would be Wii Bowling?
Innovating in a downturn
While many consumers and businesses are
pulling back on spending and investment, many
of the same needs exist as did before.
Perhaps we can innovate by stripping away
features or attributes of products or
services that seemed so necessary six months
ago but may not be as important or urgent
now. Can we bring a portion of the consumer
base back into our market by offering a
reduced set of features or services at a much
more compelling price point? Can we reduce
the influence of more or more product or
service attributes and open an entirely new
market segment? In this environment, an
innovation that can be based on an existing
product or service, but parlayed into a new
offering or new segment is a much less risky
proposition than an entirely new market
entry. Examining key product and service
attributes and asking what would happen if
they were reduced in importance or eliminated
may identify unmet customer needs or segments
that have moved to the sidelines and can be
brought back into the game.
Conclusion
As with any management tool, we can adjust
our innovation tools and techniques to match
the needs and requirements of the prospective
customer. In good times, new, flashy,
encumbered products and services are welcome
as innovation. In this environment, perhaps
we can best innovate by using tools to reduce
or eliminate what appear to be key factors to
create new product and service offerings.
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Key Innovation Components
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Fitting the puzzle pieces together
There are four key factors to building a
successful innovation capability in a
business, we believe, all of which begin with
a "C". Let's take a look at each of these
and see why they are mutual reinforcing and
why each piece is critical for the ongoing
success of an innovation capability. The
four factors are: Community, Challenge,
Collaboration and Culture. We'll define each
of these separately below.
Community, Challenge, Collaboration and
Culture
Community - a community of practice, educated
and trained in innovation tools. A team that
meets
periodically to exchange ideas, evaluate the
ideas of others and advocate innovation in
the business.
Challenge - directed ideation and idea
generation, focused on specific challenges or
opportunities aligned to the strategic needs
and strategic intent of the business. We
publish challenges to small and large teams
to obtain their insights and ideas.
Collaboration - the interaction of the
community and other interested parties on the
ideas, to vet them, rank them, incubate them
and eventually evaluate them and select the
best ideas for further investigation or
commercialization.
Culture - the unwritten rules, methods and
expectations within the organization that
govern what people do and why. A culture can
embrace innovation efforts or work to thwart
innovation efforts.
Are all of these really necessary?
Can we state unequivocally that all of these
factors are necessary and important? I
believe we can. The best ideation happens
when we are addressing key corporate
opportunities or issues, so "challenges" and
directed ideation are very valuable. A
community of interested participants, who
understand the purpose and goal of
innovation, add great value to ideation and
to the eventual consideration, evaluation and
commercialization of ideas. These
individuals and teams need to collaborate to
share their ideas and to improve the ideas
that other team members have. Finally, even
if all of these other factors are in place,
if the culture of the business does not
support innovation, then very little actual
innovation work will get done.
Can we start small?
Often we are asked by our customers - can we
start small and scale these factors.
Absolutely. Adjust the cultural
expectations, rewards and recognition for the
small team of collaborators who will do the
initial innovation work. Give them the
ability to interact and form a working team
(a community). Direct them to solve specific
problems or address specific opportunities
(challenge). Allow them to collaborate and
work together to nurture the best ideas.
Once these factors are proven, you can then
scale the solution.
Conclusion
Your team won't need to implement all of
these factors if you plan an innovation
project. However, if you plan to build and
sustain innovation capabilities, you'll need
to address each of these factors before your
team can sustain innovation within your
business as a core competency.
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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
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Innovate On Purpose™
