The world we live in is changing at a dizzying rate and sectors including the energy, technology, entertainment, communications, finance, sports, manufacturing and engineering sectors are all experiencing change on a seismic scale. Many of the innovative advances of the past ten years, from smart phones to digital cameras have become commoditised and creativity has become the currency of success.
In a study in 2012 over 1,500 CEOs ranked creativity as the number one leadership attribute needed to drive prosperity. Creativity is the lifeblood of sustainable competitive advantage but unfortunately most companies, particularly smaller ones fail to leverage the human capital in their organisations to their advantage.
In this article I show you how large and small organisations alike can build lean, agile, high performance innovations teams.
Build the Right Team
Throughout the innovation process people are your biggest asset, closely followed by insight and data. Innovation is as much about learning as it is creating and there are few other business initiatives that rely as heavily on recruiting the right people. As a senior stakeholder you want to create a new innovation team because you want to make a commanding difference to your organisations future prosperity and earnings so you must recruit the best people, anything less and you could end up disappointed.
When I talk to my customers and ask how they put their innovation teams together I often find that many of the people were appointed. Typically a senior stakeholder will have dictated that each line of business has to be represented and managers then scramble to find people who are available and the least likely to embarrass them. Commonly the best employees are almost always busy working on different projects so inevitably you find innovation teams that are made up of mediocre performers and unwilling participants. If this is your starting point then you’re already crippling yourself.
Innovation teams must be made up of insanely curious, empathetic, committed, passionate people who lead by example. Overall you need three types of people and should be made up of a cross section of stakeholder communities that can, and should include a cross section of your own employees as well as customers, partners, academics, analysts and industry experts to name but a few.
Have a vision
If you command your team to ‘Innovate’ you’ll invariably see them scatter in a variety of different directions. As with all teams you need to provide them with a clear vision that is tied to your own business objectives. While you don’t want to be too prescriptive you similarly don’t want to leave it so broad that your team tries to take on too much and end up diluting the final innovations.
For example, a vision statement can be as simple as “Design a solution that helps our customers automate their operations”. A vision along these lines gives your team a clear mandate which they can then use to uncover genuine customer needs and begin gaining insight.
Build a culture of Innovation
Your people are your greatest assets and they are the interface with your second greatest assets – your customers and partners and because they’re already on your payroll if you use them effectively then you can find new inspirations, design new solutions, increase your returns and make your employees feel empowered all without increasing your expenditure.
Building a culture is simpler than many people think. All it requires is one person to change and the effects ripple out from there like a stone being thrown into the water. However – we all live in the real world and while this one by one approach has its merits it can also be tediously slow. The fastest way to enable organisational change is by Executive order but the CEO sending out a blanket communication will do little. The new changes have to be programmatic, championed and acted upon at all levels of the organisation.
Businesses will always have discussions about whether it’s better to create a dedicated innovation team or whether it’s better to make innovation part of everyone’s job and while there are pros and cons if managed correctly your employees can help dig up ideas and then funnel them through, typically via an open innovation portal, to the innovation team whose job it is then then start filtering and developing them into marketable solutions.
For example, three years ago I was head hunted for roles within IBM (whose strap line is “Think”) and HP (whose strap line is “Invent”) so you could argue that either way I was going to be faced with a tough choice of which one to pick. Over the course of twelve interviews, six with each, with a veritable mix of senior European VP’s and Directors I was able to gauge the difference in Executive culture between the two organisations. Three years on I believe I can say that the cultural chasm between the two organisations is ultimately one of the cornerstones responsible for HP’s collapse in share value – and I’m not alone. When I first interviewed HP shares were trading at $46.30, today they have collapsed by 64% to $17.01. IBM’s shares on the other hand were $172.98 and have now increased by 19% to $204.42. So what was the cultural difference?
IBM is renowned as being one of the world’s most innovative companies and throughout the interview process Executives were very specific that they wanted me to help them change the game and be disruptive. Meanwhile across at HP the tone was very different. They were very clear that you come in, do your job and then leave at the end of the day. One of the senior European Sales Directors even went as far to tell me that he’d entered the company nine months previously and he hadn’t been able to enact any changes. If the senior executives don’t feel empowered then it’s fair to say that their teams will feel similarly disillusioned.
Role centred behaviour will kill your organisation
The greater majority of today’s businesses operate traditional role centred management hierarchies that leave very little room to foster the creativity or collaboration needed to inspire organisational innovation. Employees are slotted neatly into the organisations structure and ascribed a specific job functions and specific targets both of which are typically at odds with the innovation process where people need to be free to employ creative lateral thinking and be given the freedom to go beyond their job roles.
For example, it’s not by chance that Steve Jobs penned his now infamous quote:
“Here’s to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes… the ones who see things differently – they’re not fond of rules… You can quote them, disagree with them, glorify or vilify them, but the only thing you can’t do is ignore them because they change things… they push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do.”
Trust me – you need Trust
Trust. Unfortunately most organisations would find it easier to visualise what life would be like without it rather than with it so consider where you and your organisation would be if there was no trust.
Without it your customers would desert you and your sales would erode, analysts and shareholders wouldn’t believe your statements and your staff would feel trapped by their own toxic opinions. Psychologists liken the absence of trust to cancer because it eats organisations from within so it’s not by chance that all of the hyper growth organisations have trust deeply embedded into their cultural psyche. If your organisation doesn’t have a culture of trust then you’ve already eroded your growth potential and given your competition the upper hand.
Trust is the freedom to communicate opinions and observations in a civil manner without the fear of persecution and it’s the cornerstone of every successful innovation strategy. It enables and encourages partners and colleagues alike to collaborate more intimately, share richer feedback and insights and pose new radical ideas in a safe environment and without these you’re designing in the dark.
Feedback is the life blood of innovation and trust gives you a lens that you can use to uncover issues, find common themes and identify future trends. Just as important though is the fact that some of the feedback and insights you will receive may be unnerving but it’s important that people can air them and it’s equally important that you listen carefully – you can filter it, prioritise it and respond to it all later.
Find the Need
Once you have created your teams vision you have to find and address a genuine, qualified Need that people care about and will pay money to solve.
There are millions of needs so finding one isn’t as hard as you think and your vision will define your areas of interest. Once you have found one your passionate, empathetic team need to spend time digging into and clearly understanding the 360 degree needs of all of the stakeholders who are ultimately going to use and pay for the new solution as well as those people who are directly, or indirectly going to be affected by it. While this can sometimes feel like trying to mix oil and water together if done successfully then your new innovation will be able to meet everyone’s requirements without distilling its original essence.
Sometimes I find that the teams I work with, particularly those in larger organisations live in an Ivory Tower – they only consider the needs of the Executive stakeholders or Board members. If this is where you start and finish then it’s highly likely that you will rush out a low quality, overpriced, mass market solution that is cheap to develop but fails to meet any real consumer needs. These types of solutions are unlikely to set the world or your revenues alight and over the long term their lack of success will do more damage than good and undermine the organisations willingness to invest in R&D.
For example, I recently worked with one of the world’s leading sporting authorities and their CEO simply told me to “Innovate” their sport. When considering just what to innovate I could have just played to the Chairman’s needs which was to increase the governing bodies earnings, improve the sports appeal to boost recruitment and improve grass roots performance. Simple enough. However not satisfied with that and knowing that I could deliver more I took a 360 degree view and worked to understand how I could innovate something that mattered to everyone –the Executives, the Coaches, the players, the sponsors, the public and the press. Once I understood all of the needs I was able to spot common themes and ended up designing a mobile application and a white labelled Cloud hosted analytics solution that the governing body could resell for a low monthly subscription which improved every player’s performance, consistency and welfare. Why? The Executives wanted to promote the sports profile while increasing earnings so they could invest more in improving the sport but wanted to minimise the upfront capital investment. The Coaches wanted to be able to identify up and coming new talent, monitor the wellbeing of their players when they were at home, keep their A players fit and on the pitch for longer and improve their game strategy so they could win more matches and become the club of choice for top flight talent. The players wanted to improve their on the field performance and welfare. The sponsors wanted to support ethical, high performance, winning teams which reflected positively on their brand image and helped them increase sales. The public wanted their grass roots squads and National team to win everything all the time which in turn would boost the sports uptake and the press wanted good news stories and in depth game analysis.
Many organisations believe that the cost of creating and resourcing an innovation team is going to be one of their biggest barriers to entry but while this might be true for startups in highly regulated and technologically advanced industries like aerospace it’s not a universal rule. Today the world is littered with innovations that were developed without the need for any capital investment where plucky entrepreneurs scrounged parts and called in favours from friends and while their first prototypes, whose costs you can reduce even further by using sketches and storyboards, might not have been elegant they showed the art of the possible and proved the concept.
For example, at one end of the scale the sports industry is packed with low or zero cost innovations such as the skateboard which was first developed in the 1950’s and is now a $2.5 Billion a year industry while at the other end of the scale the Federal Government, long renowned for seeking cutting edge capabilities and spending tens of billions of dollars to acquire them, now demands that every new capability, from Defense to Social Security, is constructed by integrating low cost, commodity off the shelf products which not only reduce the cost of assembly but also the acquisition and running costs.
Innovate at Speed
Many people think that creating a new innovation and taking it to market takes time but it doesn’t have to. How does 12 weeks sound? Having access to the right ecosystem of resources will always help you innovate faster but wrapping the innovation process into a rapid programmatic initiative will dramatically accelerate it.
For example, Extreme Blue. Extreme Blue is an IBM innovation initiative that condenses the innovation process, from conception to market, into 12 weeks and what’s more there’s a twist in the tail because the people who lead the process aren’t hardened IBMers. They’re University students. So how do we do it and does it work?
Twice a year we offer a select number of gifted students the opportunity to work for IBM for a period of four months. We then break them into teams and assign each team three mentors – a business mentor, a technical mentor and an IBM R&D mentor who acts as their interface into the regional IBM R&D center. We then encourage a mix of IBM customers with real world business problems to issue a challenge. The teams then have 12 weeks to create a ready to go to market solution.
In a recent example CapitalOne challenged us to help them increase their two way trust with customers using their mobile channel. After a week of brain storming and research we concluded that eliminating passwords from their mobile apps would not only help increase trust but would also increase customer satisfaction so that’s what the students did. Eliminating passwords from a mobile banking app would normally have regulators and CISO’s climbing the walls but we worked with a mix of cross line of business customer stakeholders that included the business, IT, security, risk and regulators and created a fully compliant mobile app that didn’t rely on passwords to authenticate the user. So how did we do it? If you’re a CapitalOne customer you’re already using it but for those of you who aren’t we used a mix of geolocation tagging, environmental monitoring and tactile cue’s that when combined give us varying degrees of confidence that the person using the app is who they say they are. As a result of the initiative not only did we eliminate passwords and create a seamless ‘frictionless’ customer experience but customers now log into the CapitalOne banking portal ten times more often which, for a brand that doesn’t have a retail presence means that they have ten times more opportunity to ‘talk’ to their customers. Win, win and as they say – win!
Make something bad exceptional
Many organisations that I speak to initially feel that their ability to innovate is beyond them. I’ve heard all the reasons – they don’t have the time, the money, the resources, the wisdom, the insights, the infrastructure and so the list goes on.
There are two distinct types of innovation – Primary, where an organisation creates something new from scratch and Secondary, where they take an existing solution and simply fine tune it to increase its efficiency and effectiveness. When it comes to the latter you don’t have to be a highly resourced, creative genius to find ways to improve many of today’s solutions and while it is often difficult for people to visualise what ‘Good’ looks like most of us knows what ‘Bad’ looks like so if you have a relatively inexperienced innovation team select a solution and get them to pull it apart. Once they’ve drawn out the solutions failings and weaknesses they can then work out ways to turn it into something truly exceptional.
For example, NEST is a US based company that has recently been hitting the headlines because they have redesigned the common a garden household thermostat. Originally designed in 1883 the thermostat has become a ubiquitous, dull grey box that makes your wall look ugly but late in 2010 it caught the attention of Tony Fadell, father of the iPod, and two years NESTs sleek new intelligent thermostat is pushing past $20 million in annual sales.
Create a War Room
Organisations can control the end to end innovation process but there is one thing that they can’t control – Competition. Many organisations make the mistake in believing that competition is only external. Competition is pervasive and it attacks you from many angles – including internally. Once the market needs have been clearly identified your next step should be to create a War Room which runs parallel with the innovation process.
The War Rooms objective is to provide the Innovation teams and senior stakeholders with unbiased real world competitive views, opinions and insights which will help the Innovation team create more rounded and robust solutions and Go to Market strategies that have proven communicable value and are flexible enough to adapt to a continually evolving, competitive environment.
The competition will come at you from every angle so you need to gather as much insight as you can. Get inside their heads, understand their access to resources and see the world from their perspective. Asking the right questions and analysing your insights after you’ve finished designing your solution is too late. At best your company will end up having to invest extra resources and money reworking it and at worst by the time it’s finished, for the second time, you may have also lost your first mover advantage.
War Rooms are made up of four teams of experienced volunteers taken from the audiences they represent. Temporally these teams should provide insights that span the whole marketing life of the solution so, for example, if your solution has a marketing life of three years your teams should take a three year view of the market.
Team One should be comprised of handpicked individuals from your target customers. Team Two represents your rivals and can be divided into sub teams which represent a mixture of competitors – while you will never get your rivals working with you there are still ways you can get wide range of insights into their world so this team can be made up from a mix of industry analysts, bloggers, new employees who recently worked for your competition, freelance consultants, industry partners and trusted channel partners. Team Three represents your organisations own business and should have both senior and junior participants from each of the lines of business who will be responsible for warehousing, shipping, marketing, supporting, financing and selling the solution. Organisations that are vertically integrated are particularly prone to internal conflict so understanding the agendas and dynamics of your own organisation cannot be over stated enough. Finally Team Four is your Innovation and R&D team and they need to listen and interpret the opinions of the other three teams and integrate the findings in to the final solution. One additional consideration you must account for, particularly if you are developing a solution for a global market is cultural bias and again this can be incorporated into your War Room.
Of all the ideas submitted at the beginning of the innovation process it’s a well known fact that only a handful will ever make their way through to the end to become marketable products and services. While many ideas never get past the starting blocks there are still myriads of stronger ideas that fall out in the latter stages because they don’t fit or align with the objectives of the core business. Larger organisations typically try to spin these ideas off as separate divisions or businesses, with varying levels of success, or, as is more often the case shelve and abandon them.
Being able to validate which innovations to take to market is as equally important as being able to validate which ones to fail and the faster you can fail them the more time and resources you have to invest in the stronger ones.
Love your Cannibal
One of the common mistakes that organisations make is developing a new product or service only to shelve it part way through the innovation process because they fear it will cannibalise the sales of an existing top selling line.
Time has shown us over and over that companies who have quashed such cannibalistic innovations have themselves eventually been disrupted by the very competitors that their new innovation sought to dislodge but by the time they’ve realised their mistake and started the process of bringing it to market they’ve already lost first mover advantage. Organisations who embrace disruptive innovations enter and dominate new markets faster so while fear of the unknown is a powerful detractor the right leadership team will know how to dovetail the new monster into a fit for purpose go to market strategy.
Stopping the development of a new product is always going to be simpler than trying to create a new cohesive sales and marketing strategy that allows it to coexist in harmony with its kinfolk but if your new innovation is that good an improvement on the old one then you owe it to your customers and your shareholders to find a way to take it to market in manner that let’s you grow organisation revenues and profits at an accelerated rate.
For example, history has shown time and time again that organisations that stay still fail faster as new entrants take market share. Where would Kodak be now if they had embraced digital technology rather than trying to defend their camera film empire? What’s more ironic is that by the time the company entered into Chapter 11 they had one of the most comprehensive digital patent portfolios in the industry which was eventually bought by Apple and Google for $532 million. Innovation is no good if it is left on the shelf…