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What we want
In yet another survey by another "famous brand" consulting firm, innovation is a top priority for CEOs worldwide. This isn't really news anymore. What is news is how little innovation work is getting done, given the fact that it is supposedly top of mind for many CEOs. We'd like to argue that the reason for this disconnect is the difference between "push" and "pull". Innovation Push
The good news is that many CEOs are getting on the innovation bandwagon. They see that firms that consistently innovate have higher margins, higher profits, a more engaged workforce and garner more marketing and media attention. The evidence on the ground is not quite as encouraging however. While it appears many CEOs are bought in, their teams or their culture, or both, haven't changed dramatically in order to bring new innovations to market. While CEOs are on board, they haven't yet been able to change their organizations enough to create the incentives for innovation. Primarily the problem is that CEOs have been using a "push" or advocacy technique. That is, they are talking about innovation internally and externally and expecting the business to align to their advocacy. I don't know about you, but I can tell my kids to brush their teeth, and comb their hair, and it may get done from time to time but not on a regular basis. Constant oversight and occasional rewards ensure these activities get done every day. In the business world, people and business functions do what they are evaluated on at the end of the year, and what they are compensated to do. Rather than simply advocate for innovation and expect change, it's time to create innovation "pull", much like many of the leaders in innovation do. What do the leaders do?
Let's look briefly at a few innovation leaders and how they incorporate innovation "pull" by changing the way the lines of business are measured and evaluated. 3M had an expectation that each business would generate a certain percentage of its revenue and profits from products created less than 2 years previously, and the business lines were measured on these goals. That, in turn, meant that the firm had to create new products and services and innovate consistently in order to generate new products which would drive new revenue. The CEO wanted innovation, and advocated for innovation, but also build measurable goals into the business plans so that each business could demonstrate its success or failure to innovate. When these goals were removed by the most recent CEO, who reinforced operational excellence and Six Sigma techniques, innovation tapered off as people understood that a different set of goals and measures had come into effect. Within just a year or two 3M's innovation dropped off dramatically. Clearly P&G offers another example of innovation pull. Arthur Lafley set a requirement for innovative growth, and a measurement for innovative ideas that would originate outside of P&G. These goals were measured at the corporate level and business unit levels and impacted compensations and evaluations in the business. This drove a greater emphasis on innovation within the business lines and created a "pull" for innovation skills, techniques and ideas. Creating Pull
So, how can your firm do this? Incorporate a goal for innovation in each business line and at the corporate level. For example, identify the revenue your firm seeks to have in three to five years and today's revenue baseline. Establish the "revenue gap" and require that each line of business detail the innovative programs and initiatives that will fill that gap, and detail at some level the innovative programs and projects that will help the firm grow. Then, incorporate these actions in an annual plan that dictates how people are evaluated and compensated. This will gain the attention of the senior and mid level managers who will understand the importance of innovation and seek new resources and techniques for innovation - creating innovation pull. Your organization can then provide innovation resources and techniques from an internal team, or identify the "approved" resources and capabilities to enable innovation from external partners. Conclusion
Innovation is too often considered a jaw-boning exercise - if we talk about it enough, someone will do it. While the concept of advocating innovation at the most senior levels is important, talking by itself doesn't create the necessary conditions for innovation to take hold. You can't "push" people to innovate. Instead, your team needs to create the conditions for innovation to succeed, and demonstrate that innovation is an expected, measurable action that's part of an annual plan or goal setting exercise. Then, when your team actually measures performance, it will become clear that innovation matters and you'll create innovation "pull". Once you've demonstrated that the management team expects and will measure innovation progress and results, you'll find the teams demanding resources and methods for successful innovation. Finally, if innovation is an important goal or outcome for your firm, and your CEO or a very senior executive is on board, get them involved in the day to day innovation activities. Ask them to demonstrate that their focus on innovation translates into action by participating in innovation initiatives and sponsoring innovation events. When others see the CEO or other senior executives actively participating in these events, they'll come on board as well. |
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Innovation Opportunities
For those of you who don't regularly attend the conferences on innovation (some of which are described below) you miss a great chance for learning about what's happening in the innovation space and how firms are organizing themselves to become more innovative. I recently had the opportunity to chair a track at the PDMA conference, and was very impressed with the breadth and knowledge of the speakers. One speaker in particular introduced a model for thinking about innovation that I would like to borrow and introduce to you. Four Quadrants
Yes, as my colleagues like to say, most MBAs like to break the world down into 2x2 matrices or four quadrants. Perhaps the concept of more than four options is beyond our ability to think or conceive, but the method seems to work fairly well. Rob Wallace of Wallace Church introduced a model that his firm uses when working with a client interested in innovation and I found it particularly useful. One axis of the model is what the clients "know" and another is what the client's "need". Defined that way, the four quadrants become:
Three other quadrants
Beyond the unmet need lies the "undiscovered" need, in the quadrant where the need is high but awareness is low. In this quadrant your innovation may require the customer to discover the need. On the other "side" of the matrix lie two opportunities: items the customers believe they don't need, and innovations they don't know they don't need. The first of these Wallace defines as a novelty, and uses the Roomba as an example. We don't really need a robotic vacuum cleaner, but that hasn't damaged the iRobot business model. Clearly this quadrant represents a novelty or gadget, but can also represent a great opportunity. Finally, the fourth quadrant is a true "blue ocean" - identifying solutions that the customer isn't aware of and isn't sure they need. In this case, an innovator has the opportunity to create an entirely new product or service, or open an entirely new market segment - and by doing so "own" the market segment. In Wallace's presentation, he positioned the Swiffer in this space. So, what can we learn from this
model?
The reason we felt it was important to highlight and discuss this model was that the model demonstrates a number of different innovation opportunities. Too often, we immediately gravitate to the easiest to define and deploy - the so called unmet need. However, that's the same goal and target of every other innovator in your space, so in reality, a lot of "innovation" work is focused on the same problem, solution or space. If we think more broadly about innovation - about discovering or uncovering new needs or opportunities, or in some cases actually creating a need, then there's more opportunity to shape the market and potentially "own" that market - at least for some period of time. It's as if by focusing only on the "unmet" need quadrant we are golfers who insist every shot should be taken with a three wood, ignoring the other clubs in the bag. Intent
The model also poses a question about your strategy and your intent. Clearly, creating a new need or market isn't simple, but if your firm intends to disrupt a market or establish a solid competitive advantage, innovating on the margins or focused solely on "unmet" needs clearly isn't going to get you there. You'll need to consider each quadrant and decide if it makes sense for your business to participate in one, several or all of these facets of innovation. |
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Update on the PDMA International
The PDMA International event was held September 15-16 in Orlando. OVO participated as a track chair and as an exhibitor. Overall the show was well attended considering the economy and disruptions in the market. There were some excellent speakers from a wide range of Fortune 500 companies and smaller companies, and at least 40 exhibitors with a broad range of capabilities. Business Innovation Conference
This new conference held its first event in Wheaton, just outside of Chicago in early September. OVO was a speaker on the third day of the event. The Business Innovation Conference is a model for what I think some innovation workshops and discussions can become - a local happening that allows people to come and participate and possibly build small communities of innovators in a geography, which is something the larger conferences can't offer. Much of the presentation material and the speakers were on par with what we see at the larger events, and since all of the attendees were local they could meet and discuss the topics and build networks long after the event was complete. Business Innovation Factory Event
We've attended this event for several years and find it inspiring and encouraging for innovators. The Business Innovation Factory sponsors a story telling conference and brings in innovation practitioners from a wide array of companies to talk about their experiences. A small, intimate program focused on lessons learned and the experiences of starting or running innovation programs. Innovation Immersion
This longstanding conference was originally organized by Joyce Wycoff, who is still part of the advisory committee. The Innovation Immersion conference is scheduled for October 20-22 in Phoenix, Arizona. Here's the link to this great conference. What kinds of seminars or conferences do
you want to see?
As a frequent sponsor and exhibitor at many innovation conferences, we'd like to know your opinion. What works best for you at a conference or seminar? Do you prefer a specific format? What's the "right" length of a conference or seminar? Do you prefer a workshop format or a presentation format? Considering the current economic climate, have your travel funds for events and conferences been reduced? Is a web seminar format acceptable? What topics or issues do you prefer to see discussed in a seminar or conference? Do you prefer to see other practitioners presenting or a combination of consultants and practitioners? Any insights or feedback you'd care to provide would be greatly appreciated, and shared with the organizers of innovation events. Send any comments or suggestions to OVO and we'll compile them and report back to you in our next newsletter. |
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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.
Sincerely,
Jeffrey Phillips
OVO
email:
jphillips@ovoinnovation.com
phone:
919-844-5644 x789
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