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If I had a dollar
Since Six Sigma and continuous improvement programs have become so pervasive and so accepted as management tools, we are constantly asked to address how these two capabilities or tools interact or overlap. Speaking with a colleague in a firm that is recognized as innovative but has a strong Six Sigma focus as well, he described how they addressed a problem recently. He indicated that the team first used Six Sigma tools to address the problem, and exhausted all the possibilities, then turned to innovation. My recommendation to him was that Six Sigma and Innovation weren't mean to work in a serial fashion - and often aren't meant to solve the same problems. My suggestion was that many firms will find success using both. Deeply embedded
There are good reasons why a firm may first turn to Six Sigma or continuous improvement for many problems or opportunities. First, Six Sigma is deeply embedded in many firms, having been used as a tool for close to a decade and greatly endorsed by such management icons as Jack Welch. Second, Six Sigma has a very practical, no nonsense feel to it. There are methods to measure the problem and result. Third, many firms have experienced practitioners who have gained green or black belts, demonstrating their experience with the approach. In contrast, innovation often seems a little less structured, perhaps driven more by luck or personality than "science". While Jack Welch and other hardnosed executives support Six Sigma, Steve Jobs and the guys at Google seem to advocate innovation. This raises the question - is innovation a capability or simply better insight or timing? Second, innovation requires throwing off some of the "science" of the firm and doing some things that aren't as logical or rational - ideation, brainstorming, taking risks, changing the product line or perhaps even the market. These actions are not in line with a logical, safe, step by step approach. Third, most firms don't have deeply experienced innovators. When is the last time you met your organization's innovation "black belt", or any belt for that matter? Given these factors, is it any wonder that many firms attempt to use Six Sigma approaches and techniques when innovation is called for? Using the right tool
Frankly, sometimes firms use innovation techniques when they should be using Six Sigma, and the opposite is true as well. Think about the kinds of problems Six Sigma and continuous improvement were meant to solve. Most of those challenges have to do with existing inefficiencies in corporate processes - can we save time or effort by changing an existing process or technique? Can we eliminate variations, defects and errors? That's the origin of Six Sigma. Now, contrast that with the kind of problem that innovation should solve. What completely new product should we create? Can we disrupt an existing market? What do the longer term trends tell us about where we should be heading with our business models? Note that Six Sigma is focused on near term, existing challenges in current state processes or products, while innovation should be focused on products, services or business models that most likely don't yet exist. Use Both
As innovators, we see real value in use Six Sigma - when the problem or opportunity applies to the capabilities of the tools and techniques Six Sigma brings to bear. However, most opportunities and challenges that have to do with creating something new, attacking a new market segment or creating a new business model are not aligned to Six Sigma techniques and tools - they are innovation challenges and should be approached with a different toolbox and mindset. The real question is - what can your firm do to determine when Six Sigma is the "right" tool to use, and when is innovation the "right" tool to use in each circumstance? STRIP
We've written before about an acronym we call STRIP that may help you determine which tool is most appropriate. STRIP stands for:
If the scope of the problem is tactical and easily defined, then Six Sigma is probably the right tool. If the scope is strategic or difficult to define, innovation is probably the right tool. If the timeframe to solve the problem is short, Six Sigma is probably better. If the timeframe is longer or the problem will take a long time to define and solve, innovation may be the better tool. I won't review the entire model here but you get the point. Both Six Sigma and Innovation are relevant to any business, and both should be used when circumstances dictate. Conclusion
In our experience, this is not an either/or proposition. Both tools have exceptional value and should be used to address the challenges and opportunities that are most suitable for their use. Innovation tools are probably not required for smaller, simpler, more tactical issues, and Six Sigma is simply not constructed to create new products and services, so each tool has a clearly defined area where it adds the most value. The "gray" area in the overlap between the two tools will always exist, and in that area the STRIP model or other decision making tools may help your teams determine the best approach. |
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Three levels of commitment
Innovation isn't a new phenomenon in most businesses, but the concept of managed innovation or sustainable innovation is new. What many firms now recognize is that they can more readily tap the great ideas of their employees, customers and business partners to create new products and services. While those ideas were there for the taking before, there was not the sense of urgency or the dramatic changes in the market that make innovation so necessary and important now. With that said, we believe there are at least three different types of focus or commitment to innovation from a management perspective. Your job is to understand what level of commitment the management team is willing to make and act appropriately. We'll call these levels jawboning, next door neighbor and Christopher Columbus. Jawboning
In some firms, the management team realizes that innovation is a topic that Wall Street and investors appreciate and will value. The management team decides that rather than implement difficult changes or create risky new products, it will declare innovation as a key corporate pillar or initiative. By doing so, the management team appears incisive and demonstrates leadership, and encourages investors and customers to consider the firm an innovator. But these firms have little intention of doing anything more than jawboning - talking up the initiative but not investing or funding innovation. To recognize this tactic in your firm, watch the outcomes of the announcements about the new focus on innovation. Does innovation become a key corporate initiative but lacks resources, definition and funding? What is the medium and long term plan for increasing innovation in your firm and encouraging more idea generation and idea capture from employees, customers or prospects? If your instincts tell you that this is another paper tiger, you may be right. Many firms are talking up their capabilities but aren't changing their stripes. If you are an innovator in a firm that's using a jawboning strategy, don't expect a lot of change or new investment. Next Door Neighbor
The second strategy many firms follow is what we call the Next Door Neighbor strategy. This strategy is engaged when a firm recognizes that its competitors are innovating and perhaps scoring points with new products or services. Therefore, the management team buys into innovation as a strategy. This approach does not mean that the management team is sold on leadership of the industry, but does believe that other firms have found a way to innovate successfully and does not want to be left behind. In these firms, the management team will declare innovation as a key corporate initiative, and will provide some resources or funding to start up an innovation capability, or will provide more resources to existing product teams. Management teams in this category are looking for safe innovations that can be forecast and planned, but aren't necessary afraid to spend some money. Your task as an innovator in this firm is to build an innovation process and capability that can deliver on the limited goals of the firm, and begin to stretch your management's expectations and willingness to take on risk. As you demonstrate success with your first efforts, ask for more leeway to create more disruptive products and services. Christopher Columbus
Some firms have visionary leaders who embrace innovation as a key capability and want their firms to be the leaders in their fields. They are willing to create sustainable innovation capabilities and examine a wide range of ideas. These leaders can arise in any industry, and can be individuals who grew their knowledge from a more reactive posture (see above) or those who are the "true believers". As an innovator in these firms, your job is to demonstrate that innovation can stretch the firm and create a number of new products, services or business models, but also to demonstrate that it can be managed effectively - innovation doesn't have to be a crap shoot. Winning and losing
Ultimately each management team is going to keep score. Winning for the jawboning firm is simply to be recognized for talking about innovation, without having to invest. If an industry magazine notes the firm has a new focus on innovation, or if the stock price ticks up because the firm has declared an innovation program, that's a win. Most of these firms won't lose in the short run, since they don't plan to invest in innovation anyway. Winning for the "Next Door Neighbor" management team is keeping up with the Joneses. Creating some new products and services, and getting recognized for doing so, without a tremendous cost, is winning for these firms. Don't expect to disrupt the industry or create the next iPod, but winning will entail creating some new products or services. Losing for these firms is defined by a high investment in innovation with nothing to show for it. These firms desire to be more innovative, but don't have a long burn rate. Finally, winning for Christopher Columbus firms is dominating and disrupting an industry, generating new products and services on a consistent basis and attracting a lot of attention. Losing for one of these firms is defined as slipping behind a competitor in the eyes of the market and not generating new products or services consistently enough. As an innovator in any firm, you need to understand the intentions of the management team and what they are willing to invest, their timeframes and their expected returns. You will enjoy greater satisfaction if you understand what commitment levels the management team has, and act accordingly. Trying to create disruptive innovation in a firm dedicated to jawboning can happen occasionally, but only at the margins and only with a very small investment. What they expect of you
What's also important is to recognize what the management team expects of individuals in their teams. Every firm wants some innovation - they just differ on how willing they are to invest in it and how much risk they are willing to bear. As an innovator, you have a responsibility to your firm to understand and work within the expectations of the firm, but also to act whenever possible to continue to expand the thinking of the management team and encourage them to focus on innovation and resource the capability to the extent they are willing to do so. |
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If you can't get enough
We're pleased to note that innovation articles by OVO are appearing in a number of locations over the next few months. See the links below for recently published articles, and stay tuned for even more commentary and advice on the innovation front. Real Innovation Real Innovation (www.realinnovation.com) is running a series of articles by OVO. Loosely entitled the "Seven C's", these articles are based on successful evaluation criteria to use to judge ideas. These criteria include items like consumer control, choice, convenience, community, and several other important aspects to consider when evaluating an idea. This approach provides a useful, consistent, general evaluation framework to consider your ideas, before examining them against very specific client or market needs. Real Innovation will publish one article a month for the next few months on each "C" factor. Here's the link for the first article on choice and control. Look for new articles each month. Pure Insight
We're pleased that Pure Insight has accepted several of our white papers on innovation as part of their "Quick Insight" publications. See our five part series describing the importance of a central innovation team, and the challenges and opportunities with distributed innovation, in our articles entitled Where Innovation Happens. Read More
Find links to these articles and other articles, blogs and video logs from OVO at our website. |
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