A Simple Model for Innovation

by Thomas Petersen

Finding the next big thing is probably one of the biggest challenges in the world of startups. Countless companies, entrepreneurs and VC's spend a considerable amount of time plus money figuring out where and what to invest in. Yet often the game changers seem to be coming out of nothing and from unexpected areas. Is it luck or do those who change the world know something we don't?

In my last post I talked about some principles that can be used to design better digital products. In this post I will look at a model to map and explore what different kind of product you should do.

Most of the businesses spawned in the first bubble, where based on the belief that taking any business from the physical world and putting it online was enough to be successful. Any assessment regarding logistics, economy of scale, or competition with offline brands, was naively optimistic if not absent. A lot have changed since then.

It's easy to be a wisecrack in retrospect. There is no shortage of expert analysis for why something became a success after the fact. It's much harder to know what products or services will become a success before they hit mainstream. Yet some people seem to be doing just that. Do they know something that we don't or are they just plain lucky?

Even though luck does have something to do with it (timing?) it's not all just random. As a matter of fact there are some very good models to help you better understand the art of innovating. Some of them complex others rather simple. The one I find most useful is this two-way matrix which covers four different types of innovation.


Exploring opportunity by mapping your idea on this matrix.



Do what others do, but do it better.

This is the most popular category to invent within. The basic premise is to create something that outperforms either on price, features, ease-of-use or performance. For instance: Sony Ericsson and Nokia competing on features or MS Office and Sun StarOffice competing on price (Free vs. expensive) This category is the easiest (on paper) to compete in, but also the category with the fiercest competition. With the introduction of the free price-tag this haven't gotten easier

Advice: Be better by being different. Think about how your product solves the jobs that your customers are trying to get done with your product, rather than simply thinking about what jobs you are solving. See what Steepster did for tea-connoisseurs


Do what others do, but do more.

This category is a little bit trickier. The basic idea here is to create an ecosystem for your product or service. The category takes advantage of easing the usage of a given product or service on different platforms.

Take the iPod as an example. You don't only get a music player. You also get the software to create play-lists plus access to buy music. Recently with the introduction of the iPhone and the AppStore this have created an even stronger ecosystem.

Another example is HP digital cameras, HP Snapfish for online picture storage and HP Snapfish print service that allow you to create albums with your own pictures and get them printed.

For a pure digital ecosystem Google is a good example. Google Search, AdWords and Google Analytics.

This category often has some "hero" product (the iPod, Google search, or the HP Camera) and often with a mixture of hardware and software and services.

From a company point of view this is often called vertical integration. Simplified meaning that a given company, own all the parts of the production that are needed to deliver to their customers.

The challenge with this category is that it often requires a successful product to build the ecosystem around. For a startup this is a difficult area to deliver in.

Advice: But even though you often do need a hero product, there are ways around it. Create an API that allows others to interfaces with your product. Then they will help you build your ecosystem. You won't necessarily have complete control (vertical integration) but you will become an important part of it.

37 signals API, FaceBook API and Google API all provide opportunity for interfacing with their products.


Do what others do, but for a new audience.

This is the most interesting type of innovation IMHO. Basically you are trying to find non-consumers and turn them into consumers by either making the product affordable or by making the product less specialized so that non-experts can use it.

An example on the latter is WYSIWYG editors such as Dreamweaver from Adobe. Mint.com took the idea of managing your own money to a new level allowing people without financial skills to suddenly understand their money in a different light. SalesForce.com basically created a SAP like product and broke it into pieces thus allowing access to the power of data-warehousing without the price that normally comes with it.

Leasing is an example on the former with its different financial plans are used to give non-consumers access to products they couldn't originally afford. The subsidizing that comes with most cell-phones is also an example of giving non-consumers access to your products.

Sometimes technologies that have previously been available for government or the scientific community find its way to the consumer market. It is interesting that rarely the original usage of the technology that ends up being the way consumers use it.

The very Internet we are using right now is an obvious example. GPS is another, both originally military systems.

But perhaps the best example is in the mobile industry with SMS (Texting if you're from the US).

Originally used by technicians to send test messages around the network. Then mobile customers began sending messages between each other. Later someone figured out a way to turn the SMS messages into commands that a server would understand (Look at any reality show). Then banks started using SMS for mobile banking (Large parts of Africans access their banks primarily through their cell-phone). Lately I have been buying ferry tickets with my cell. Ring-tones can be purchased through SMS. And last but by no means least, Twitter turned SMS into a broadcasting service.

Basically this approach to innovation is ripe with possibilities. Either a market has been proven (HTML editors, accounting, car markets and housing market) or an infrastructure is in place (Internet, GPS, Mobile net, Fiber).

This means that a lot of the hard work has been done already and you can focus on exploring different alternative uses of these to turn non-consumers into consumers.

Advice: Look around you and find areas that are served by only one type of customers and see if you can make that product available for what what previously non-consumers. As an example wordy.com to quote: "Let professional copy-editors check your text for grammar, spelling, punctuation and structure". Looking at the amount of typos, spelling and grammar mistakes, I normally do, be sure to sign me up when it's available!


Do what no other is doing

This is normally considered to be the holy grail of businesses innovation. Inventing something new that does not exist on the market already.

Classic example would be the light bulb, the car, the computer, the telephone. But also many types of software and services such as the OS and the spreadsheet. The innovations either create a demand or tap into jobs people are already trying to accomplish but with arbitrary tools.

It's hard to find something new, but not impossible.

By using the 2way matrix you can start to think more methodically about your startup. It won't guarantee success but it will help you gain a better understanding of your products and thus allow you to better explore different approaches to become a success.

To dig deeper and get a firmer understanding of innovation without the marketing hype I suggest you read some of the work from Clayton C. Christensen, Tony Ulwick or Peter F. Druckert.

And remember. The art of innovation is not just about finding something completely new but as much to connect two known areas in new ways.


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Thomas Petersen is the co-founder of hello, a digital creative agency that designs and develops products and services. He writes on Black&White^TM and on twitter @hello_world.

Winning the Gold Medal

by Holly G. Green

I love the Olympics. I am fascinated by curling (although like most of you I can't quite figure out the rules). I love the thrill of the downhill, the luge, the speed skating, hockey, and the snowboarding events. And I am especially enthralled when I watch the Olympic athletes visibly get clear on winning.

Did you notice Lindsey Vonn at the top of the slope? Eyes closed, arms moving, legs bending as if she were already traveling down the slope in just the manner necessary to win? She was using a practice known as 'success visioning'. She was imagining the course, every twist, every turn... and how she would successfully meet the challenge of it and win the race. Olympic athletes have used success visioning for decades; since the time Roger Bannister broke the world record for running the mile in less than 4 minutes in 1954.

Premier athletes the world over know the power of getting clear on winning BEFORE they get in the race. They imagine it. They get clear on what it looks like, what it feels like, and what they must do. And it works because your brain is amazingly powerful. Once you are clear on winning, your body will follow. In many ways, it can't not follow. Your brain does not know you can't run faster, ski quicker, make higher jumps... it only knows what you tell it and your body steps up to deliver.

Winning also requires practice. Winning for an athlete means he/she is in top condition. It is likely they have practiced their race thousands of times. They are eating the right foods, taking care of themselves, and making progress almost every day towards their goal. Lindsey did not just sit around for a year, jump up, and ski her race. She got clear on goals, met them, and then set new ones. She spent her time and energy towards achieving them. She stopped doing things that got in the way. She stayed focused.

Are you clear on winning in your business? Do you know what it looks like at the end of 2010 when you have been insanely successful? What are the key operating achievements you will have accomplished; what will your company culture be including in regards to the attitudes, beliefs, values, and operating principles; what skills/knowledge/abilities will exist in your organization; what organizational structures will be in place; what work processes and metrics will be used; what tools, systems and technology are necessary; what products will be in market (existing and new); what products will be in development; who will the customers be; who will the competitors be/what types of companies will you compete against; what will the brand represent?

Get clear on winning, your body will follow.

Is it obvious to you and everyone on your team and in your company what it will take to win a gold medal? If not, what race are you running?


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Holly is the CEO of THE HUMAN FACTOR, Inc. (www.TheHumanFactor.biz) and is a highly sought after and acclaimed speaker, business consultant, and author. Her unique approach to creating strategic agility, helping others go slow to go fast, will change your thinking.

Microsoft and Creative Destruction

by Scott Berkun

A recent NYT article by former Microsoft VP Dick Brass has caused quite the stir, but for the wrong reasons. Every follow up article I've read, including one from Microsoft, gets much of it wrong some key things wrong.

The premise: The core point of the Brass article is how the introduction of middle management and bureaucracy has killed innovation at Microsoft.

My counterargument: Microsoft has always been a conservative, platforms company. Visionary design and creative leaders think in terms of great products, which Microsoft has never been good at. Brass assumes the challenges that hampered Tablet PC were new and local, but they have always been there. Microsoft's best, and most creative, work has come when a competitor forced one of the few Renaissance-VPs (VPs who were not over-promoted engineers but actually had a diversity of management skills) to take product design seriously.

My credentials: I worked at MSFT 1994 to 2003. I was on the IE 1.0 to IE 5.0 team among others (Windows, MSN, and MSTE/Best Practices, where I worked with many groups across the company). I wrote a bestselling book about Innovation and I've spoken and consulted with various groups at the company dozens of times since I left in 2003.

My take:

1. The primary problem at Microsoft regarding good design & innovation is the diffusion of creative authority. The problem is not the numbers of people at the company, or the layers of management, as many gripe about. Layers don't help, but it's not the problem. The real issue is the inability to grant creative authority to the few people worthy of it. Microsoft has always been a place that gives way too many people a say in matters of design, vision and user experience, and it shows in the pervasive mediocrity of the majority of its products. Films need directors. Orchestras need conductors. But if you divide things into 30 pieces and ask 30 people to play creative visionary, mediocrity ensues. The better products at Microsoft are the ones where VPs modify the distribution of authority to create clear creative authority.


2. Few VPs are qualified to be creative leaders, at Microsoft or elsewhere. And there is no creative lead role at Microsoft. There never has been. This is not new, it has always been true (at least since 1994 when I started). This is why when brilliant, genius type software designers come to the company, they are baffled by how little creative power they can earn, so they retreat to research or future thinking groups that have no skin in the game (e.g. Bill Buxton, Steve Capps, Ray Ozzie, Jim Gray (RIP), etc.). Microsoft is simply a hard place for to accumulate wide authority over design, which is required to make coherent visions, user experiences and innovations come true. Worse, it's rare for leaders to acknowledge death by too many cooks since those who have never worked elsewhere, and have no conception of creative process, can't imagine any other way. The culture has always been a heavily consensus/collaboration driven place for managers, which waters down ideas, and shifts what goes out the door heavily towards conservation.


3. Management at Microsoft is fat with inbred managers who are not worthy of their title, but this has always been true. If you are hired to manage version 5 of something, you inherit a host of decisions made with skills you do not have, yet get credit for anyway. If the team you inherit does good work, and you happen to be the manager, you receive credit, regardless of how little you did. Entire unprofitable, failed divisions, funded by the rest of the company, promote people out of corporate obligation, creating the existence of middle managers who have never actually successfully managed anything in the marketplace. For the 90s, this was MSN and Consumer products, which were perennial failures. The quality pool of people who managed in those divisions was below average and as the company aged more of these groups were born. Microsoft, like all companies, has suffered from the Peter principle, or worse, perhaps the Paul Principle (people who are lousy at even simple management skills but inherit mediocre projects they don't understand, and simply manage not to get fired via their team's noble but unheralded efforts, which hide their shortcomings). As a result, there are line level managers at Microsoft who are more competent than some middle or senior managers. But this has always been true, given the diversity of the company. It's worse now because of the size.


4. Real layoffs would be a blessing. In 1999 when I left the Internet Explorer team (before the ill-fated IE 6.0 release), I looked around the company for other teams to work on. I couldn't believe how many lost, misguided, sad, self-destructive teams I saw. This was in 1999! The company has more than tripled in size since then. Mini-Microsoft is so clearly on the mark about his core ambitions. I don't wish unemployment on anyone, but I'd say a) the ratio of managers to programmers is insanely out of whack b) The number of projects and divisions that have never made profit and are market laggards is obscene. If the company were split apart, few groups are competent enough to survive a year. This defeats the "strategic value" these properties supposedly have, as dumping of buckets of money earned by Office and Windows profits into their bonfires of incompetence does not a strategy make. You need basic leadership competence, which all too many groups at Microsoft don't have (and many never did).


5. Microsoft's best and most inventive work has often been driven by competition. A visible and serious threat is the only situation where leadership, historically, was forced to be creatively aggressive, giving a chance for creatives to obtain enough power to do good work. Windows 95, Office 95, Internet Explorer 5.0, MS Natural Keyboard, XBOX 360 were all excellent products by most standards, and were made possible by strong competition. The question executives need to ask is why divisions like Mobile & MSN,or the entire Vietnam like 15 year history of imploding efforts of web search (there is a great book to be written by someone about this), have been disasters despite clear and strong competition - this is the analysis to post on every office door at the rest of the company.


6. It's lazy arguing to assume an organization of 10,000 or 100,000 is uniform in any way. Groups at Microsoft have a different culture, and some have been wildly more successful than others (e.g. Office vs. MSN/Live/whatever it's called this week) in part because their leaders have developed superior cultures that diverge widely from other groups. Windows 7 is an excellent product no matter how it stands in comparison to Apple's work, and the turnaround from Windows Vista, which many heralded as the end of MSFT, was beyond noteworthy. If Windows 7 or XBOX 360 is made in the same company that makes all the products you hate, you have to realize the limits of painting broad strokes. This is where many critiques of Microsoft fall short, including the one by Brass. They assume uniformity, projecting a local set of experiences in part of the company as the model for the entire company.


7. If you talk only to people who quit and were disgruntled you can't possibly have the whole story. I've never met Dick Brass, but I know the Tablet PC was a commercial failure. As smart as Dick is, its likely he never understood how IE beat Netscape (it was more than the monopoly stuff), or Office beat Lotus/WordPerfect etc. He also might not know the long history of Windows and Office rejecting most requests from most other teams as a matter of both basic sanity and arrogance. Specific to Tablet PC, it started as a Bill Gates pet project. Working with Bill, who Dick curiously never mentions, was no treat, and unlike Steve Jobs, his direct involvement in matters of design is likely not a godsend. Articles like this one reads too much into corporate policies, as many of them are old (e.g. the review process) and good managers have always had ways to work within these rules to reward good employees. I'd agree the processes could be improved, but all the good VPs find ways to bend rules into loopholes.


8. The greatest disease at Microsoft is lack of sharing lessons from failure, especially where innovation is concerned. Microsoft has made many big, visible bets. Many of them have failed, but that's par for the course. The problem is these expensive lessons are swept under the rug, encouraging others in the company to repeat the same mistakes. Everyone loves to make fun of Microsoft Bob, but few can articulate why it failed. If you don't understand why it failed, you don't have any reason for laughing so hard, and you likely aren't half as smart as you think you are. A case study on Vista, MSN Search, Microsoft Bob, The Tablet PC, etc. should be produced by an outside consultant, and stapled on the forehead of every manager at the company, once a day, until they read them all word for word. Then they'd take advantage of Microsoft's so called experience and wisdom. Otherwise, they are being set up to make the same expensive mistakes again and again.


9. The idea of Innovation, and Innovation Systems, is a distraction. Success in the market is a better scorecard and the most reliable source of criticism. Innovation, as the word is used in these articles, is a matter of taste. You can be very inventive and still get your ass kicked. Or do a great job with mostly conventional ideas, and kick more interesting competitors off the field. Apple, if you study their choices, doesn't pull things out of the sky (digital music players, cell phones, and tablet PCs were all established ideas). They enter games others are already playing and kick their ass. But innovation is the least useful lens. The best criticism of Microsoft's management is how, or how not, they've done against their competitors in terms of customer satisfaction. If innovation matters as much as people seem to claim it does, it's well reflected in either market success or customer satisfaction, so worry more about those solid measures, rather than the ethereal notion of who is innovative and who isn't.

Editor's Note: Scott Berkun will be speaking at The Economist's event - "Innovation Fresh Thinking For the Ideas Economy" at the Haas School of Business at the University of California, Berkeley on March 23-24, 2010. As an added value for our loyal Blogging Innovation readers, we have negotiated a $150 discount when you register using our discount code - "BLINN" - register now.

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Scott Berkun is the bestselling author of "The Myths of Innovation" and "Confessions of a Public Speaker." His blog and lectures can be found at scottberkun.com.

Cisco Announces $250,000 iPrize Competition v2.0

by Braden Kelley

Cisco has announced its second Cisco iPrize Competition. At stake is a $250,000 Grand Prize that will be awarded after eight selected finalists have the opportunity to present their innovation idea to Cisco's selection commitee using Cisco Telepresence.

The first Cisco iPrize was awarded to an idea focused on reducing the energy consumption in the electrical grid. This idea is currently undergoing development in Cisco. But the winners are back at it again and have entered an idea in Cisco iPrize v2.0.

I had the opportunity to do a video interview with Sharon Wong, Director of Business Development in Cisco's Emerging Technology Group about the competition:

Interview with Sharon Wong about Cisco iPrize from Braden Kelley on Vimeo.

In this open, global competition entrepreneurs submit proposals and collaborate to create the seed idea for Cisco's next billion-dollar business.

You have until April 30, 2010 to submit your idea. Idea submissions should fall in one of four categories:

1. The Future of Work: New solutions that accelerate and change the way we do business


2. The Connected Life: Technological inspirations that dramatically improve living conditions and disseminate culture


3. New Ways to Learn: Next-generation solutions that transform when, where, and how people learn.


4. The Future of Entertainment: New solutions that change how people play together

Below on the left you'll find a video of Marthin De Beer announcing the Cisco iPrize Competition and on the right you can watch Guido Jouret speak about some of Cisco's views on what makes a big idea:



You can submit an idea by yourself or you can work together as a team. Once ideas are submitted, iPrize community members can vote for the best ideas, and otherwise engage with the community of people who have submitted ideas. For complete rules and other information, please check out the Cisco iPrize Questions and Answers.


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Braden Kelley is the editor of Blogging Innovation and founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy. Braden is also @innovate on Twitter.

Exploiting the Competition for Innovation

by Mike Myatt

Whether you want to admit it or not, competition is part of your world, and likely a bigger part than you'd care to admit. Granted, exploiting the competition is not a novel concept. Even so, it is still very common to hear many executives adopt a competition neutral position. These executives simply don't believe competition to be a significant factor in the execution of their business plan.

While this may make for a nice sound bite, I don't buy it, and if they're truly honest with themselves, neither do they. In business you can either choose to deal with your competition (even if that means partnering with them), or you can opt to stand idly by and let the competition eat your lunch. In today's post I'll share my thoughts on the proper way to view your competition and how to identify competitive threats...

While some companies talk a good game with regard to competitive strategy, in my experience very few businesses actually address the issue in adequate fashion. I suppose much of my perspective on competition was formed during my days as a soldier and athlete. In the military we valued intelligence, studied our enemy's strengths and weaknesses, developed a battle plan around a solid strategy, and executed our tactical mission as if our lives depended on it - because they did.

Similarly, in my days as an athlete, our game plan each week was refined based upon the strengths and weaknesses of the team we were playing next. If we didn't study films and scouting reports, develop plays that would exploit match-ups, and execute our game plan we would lose... it was as simple as that. Dealing with competition in the business world is really no different than dealing with enemies on the battlefield or competitors on the athletic field... you either win or lose based upon your state of preparedness, desire and commitment.

How well do you know your competition? No, really... Not how well do you think you know your competition, but how well do you really understand them? Do you have a business intelligence platform? When was the last time you conducted a formal competitive study? Do your R&D and innovation programs evaluate the competitive landscape? Do your marketing, PR and branding initiatives exploit the competition? Do you stack-up as well as you think, or have you just adopted a position out of convenience?

The first step in developing a competitive strategy is to identify your current and potential threats, and then to prioritize said threats based upon perceived risk/reward and cost/benefit scenarios. The following list is clearly not exhaustive, but it is representative of the main competitive threats to a business. As the following list indicates, competition can come in the form of any one or combination of the following potential threats:

1. Existing or potential direct and indirect competitors.


2. Existing clients or end-users that could either become competition or strengthen your competitors if they have a change in loyalty.


3. Current or former employees who could become competition.


4. Vendors, suppliers or distributors that could become competition, or provide an edge to your competition.


5. Competitive innovations in process, management, talent, pricing, efficiency, etc. that can cause disruption in the market.


6. Strong changes in brand perception via news, PR, branding, litigation etc. can create changes in the competitive landscape.


7. Competitive technology innovations that could adversely impact your business.


8. Competitive mergers, acquisitions and roll-ups that could adversely impact your business.


9. Political, legislative, regulatory, or compliance actions that could create a competitive imbalance in the market.


10. Changes in general market dynamics that could create competitive changes in the market.

Once all areas of competitive risk have been identified and prioritized it will be much easier to develop a strategy for stacking the odds in your favor regardless of when, where, or how you encounter the competition.

The key to successfully exploiting competition over the long haul is linking your competitive strategy to the discipline of innovation and the mindset of custom centricity. A sustainable competitive advantage is not found by creating minor advantages in product features. Long-term competitive separation is created by innovating around the needs of your customers and clients with a focus on long-term value creation.


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Mike Myatt, is a Top CEO Coach, author of "Leadership Matters...The CEO Survival Manual", and Managing Director of N2Growth.

Don't Be A Rule Fool

by Holly G. Green

Wait your turn. No pushing in line. Yield to pedestrians. Treat others the way you would like to be treated.

Certain timeless rules are better obeyed than broken. But in today's topsy-turvy business world, many of the rules that informed and guided previous generations of business leaders no longer apply. If you're not breaking rules on a regular basis, your customers and markets have probably already left you behind.

Most business leaders intuitively know that they need to do things differently. But they struggle when it comes to determining which rules to hold onto and which rules to cast aside for newer ways of thinking.

In working with clients around the world, I have found two areas in particular where throwing out the old rulebook is essential for keeping up with today's frenetic rate of change. One involves the skills, attitudes and mindsets required to manage people and work processes. The other has to do with how you go about analyzing and assessing your competitors and your markets. In these two areas, I highly recommend forgetting most (or all) of what you think you know.

For example, from a people/process perspective:

Old rule: Strive to maintain the status quo, but react quickly when change happens.
New rule: Don't wait for change to hit you. Anticipate it, plan for it, and make it happen on your terms.

Old rule: Management's job is to make decisions.
New rule: Management's job is to facilitate decisions made by those closest to the customer.

Old rule: Avoid conflict.
New rule: Rock the boat! Purposefully create conflict and manage it in a constructive manner.

Old rule: Tell employees what to do, when to do it and how to do it.
New rule: Give employees the resources and support they need. Then stand back and let them do their jobs.

From a competitive analysis perspective:

Old rule: Focus your research on competitors inside your industry.
New rule: Stretch your horizons. The next competitor that causes your world to implode may well come from outside your industry.

Old rule: Markets have predictable life spans and earnings curves.
New rule: Today's markets can (and do) disappear overnight.

Old rule: Strategic planning involves creating a 5-year plan.
New rule: Look 12 to 24 months (at most) into the future. It's almost impossible to accurately predict what will happen after that.

Perhaps the most important new rule for today's chaotic market realities is to constantly challenge what you think you know about your business and the world in general. Don't allow yourself to get comfortable with the status quo. Don't allow yourself to get stuck thinking that what has made you successful so far will continue to make you successful in the future. And if you haven't re-evaluated your customers' wants and needs within the past six months to a year, do so now!

Letting go of rules that have served you well in the past can be difficult, but holding on to them can be fatal. What rules are you holding onto that you should be letting go?


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Holly is the CEO of THE HUMAN FACTOR, Inc. (www.TheHumanFactor.biz) and is a highly sought after and acclaimed speaker, business consultant, and author. Her unique approach to creating strategic agility, helping others go slow to go fast, will change your thinking.

Battlefield Innovation Lessons for Business Leaders

by Paul Sloane

Let's be clear, business is not war. But if you are operating in a fierce marketplace then it can feel like it. Many of the methods we use in our sales campaigns, marketing strategies and competitive tactics are based on military analogies. So what lessons can business leaders today learn from the history of warfare? Here are some that seem particularly relevant.

David vs. Goliath - 1000 BC?

Goliath was a giant and the Philistine's champion at man-to-man combat. David was a young shepherd boy. Goliath expected to overwhelm his opponent in a sword fight but David chose to fight on different terms. He defeated Goliath by using an unusual weapon, the sling, with pinpoint accuracy.

Lessons: It is no use going up against someone who has an 8-ft spear with a 4-ft spear. You need a different weapon. If you are smaller you have to be agile and different. If your competitor is the giant in the market, you need a radical approach so that you can strike rapidly and accurately. This is what Direct Line did when they used telephone technology to sell car insurance directly while the major players were using brokers.

Battle of Crecy - 1346

The English army of about 14,000 men under Edward III had ravaged northern France. They were finally confronted on August 26, 1346 by an army of some 40,000 Frenchmen under Philip VI. Battles were normally fought by knights on horseback and the French, with such a numerical advantage, felt confident. But the English had a new and superior technology, the longbow. Their archers were trained in rapid fire and could sustain a rate of over 10 arrows per minute. Each arrow could penetrate armor. It was the first time that such a mass volley of arrows had been used in warfare. The French attacked in waves and they were cut down relentlessly by the power, speed and range of their opponents' archers.

Lessons: One of the best ways to beat an established competitor is with a new technology. Innovation can overcome a strong opponent. Focus your firepower on the target. Amazon used internet technology to directly address the needs of book buyers and to run rings around the established high street vendors.

Battle of Trafalgar - 1805

Traditionally, naval battles were fought by lining up two fleets in parallel line so that they could deploy the maximum firepower from their canons. At the battle of Trafalgar, Villeneuve, the French admiral, formed his fleet of 33 ships into a line. But Nelson did not line up in parallel. He split his 27 ships into two squadrons and attacked at right angles to the French line. In the hectic battle that ensued Nelson died but the British were victorious and established a naval supremacy that lasted over 100 years.

Lessons: If you do not have a superior force or superior technology then try a different tactic. Surprise your opponent with a fresh approach. Virgin, Benetton and Body Shop are examples of businesses that used surprise tactics to disrupt incumbent market leaders.

First World War - 1914 to 1918

The scale of the slaughter of soldiers in World War I was appalling. Over 8 million military personnel died. The main tactic on the western front was to repeatedly attack strong defensive positions with waves of men. They were massacred. It was believed that with sufficient artillery bombardment and pure weight of numbers a breakthrough could be achieved. But the way to overcome barbed wire defenses and machine gun posts is not with lines of infantrymen. What was needed was the rapid development and effective deployment of the tank.

Lessons: Effort, courage and hard work are not enough. If you are competing with a well-entrenched opponent who has a strong defensive position then you need a new technology or approach to achieve a breakthrough. A long war of attrition debilitates both sides. Retail banking was a stodgy business until Egg, First Direct and Cahoot came along to shake it up and take millions of accounts away from the big players.

Maginot line - 1940

The British and French high commands assumed that the new war with Germany would be similar to the First World War, with huge static armies facing each other. The French built a massive defensive line along the entire border between France the Germany, the Maginot line, consisting of enormous fortifications. But when the Germans attacked in May 1940 they did some lateral thinking. They used fast-moving armored divisions and paratroops. They swept through Holland and Belgium and around the Maginot line. The British and French were outmaneuvered and France fell in five weeks.

Lessons: Assuming that new contests will be similar to previous ones is dangerous. The best way to combat an opponent who has a strong defensive position and barriers to entry in a market is to go around those barriers and find a new way to the market. This is what Direct line, Amazon, Netscape and Easyjet did.

Battle of Britain - 1940

After the fall of France, the British retreated across the Channel, leaving most of their equipment behind. The German army, having raced across Europe was rampant while the British army was demoralized and under-equipped. The Germans planned an aerial assault followed by an invasion, and many thought that Britain would fall as quickly as France, Holland or Poland. But the British had some things that the others had not - the channel, the Spitfire, radar and Winston Churchill. Churchill gave the people a vision, purpose and belief that enabled them to sustain the blitz, oppose the might of Germany and eventually triumph.

Lessons: In tough environments, winning CEOs are those who have a clear vision, can communicate it to their people and motivate them to achieve the goal. Sir Arnold Weinstock, Bill Gates and Jack Welch are recognized as this type of visionary leader.

Defeat of Hitler - 1945

After his great successes in the early part of the war, Hitler was convinced that he was a military genius and the German Wehrmacht could overcome any obstacle. When he attacked Russia in the summer of 1941, he was so confident of victory that there were no plans for a winter campaign; no winter coats for the soldiers and no winter oil for the tanks. He ignored the advice of his generals and pushed his forces down towards Stalingrad and then refused to allow them to withdraw or regroup when the communication lines became overextended. His arrogance and overconfidence built a barrier to criticism and meant that he never used the full talents of his team. Eventually Germany was overwhelmed by the weight of Russian, American and British forces.

Lessons: A narcissist CEO will lead the business to disaster. Plan a fallback scenario. Strong vision and belief are essential but a leader who blocks constructive criticism, ignores the input of his team and fails to build consensus is doomed. To mention them by name would be libelous but take your pick from the CEOs who have led mighty companies to disaster in recent times.

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Paul Sloane writes, speaks and leads workshops on creativity, innovation and leadership. He is the author of The Innovative Leader published by Kogan-Page.

Competing Outside the Box

by John Karlson

While their competitors advertise holiday clearance bargains, Best Buy is running full-page newspaper ads to inform customers that they "...promise to be there for you and whatever you bought for as long as you need us." Wow, Best Buy's got your back (if you're a customer).

These are not simply platitudes. The campaign goes into tangible detail about an extended no-hassle return and exchange program, help with set-up and even recycling when it's time for new stuff.

Why all this altruism? It's easy. The low price purchase factor big box retail relied on as a reason for being and eventual domination is going away. Retail pricing is quickly becoming transparent. Online shoppers regularly use sites like PriceGrabber.com and CNET.com to scour the web for the best deal. More dramatically, it's not unusual to see shoppers in a Best Buy scanning UPC codes using smart phones equipped with apps like RedLaser or ShopSavvy for instant price transparency at the shelf.

When you use these digital shopping tools, you'll note that Best Buy rarely wins the low price race against no-frills online outlets like Abe's of Maine or NewEgg.com. It used to be just the geeks or hyper analyticals who used these tools. I've noticed that bar code scanning is a popular smart phone bragging point this holiday cocktail party season.

So if you can't win on price, you had better change the game. Best Buy is doing just that with its Buyer Be Happy campaign. The tone speaks to a bigger end game than simply changing the rational context of a purchase decision. Best Buy's language signals a fundamentally different social contract with the consumer. They are not just there to deliver a low price or even a better usage experience. They are promising to act with what I term, "social integrity" - essentially "pledging" to treat their customers, employees, communities and even their supply chain with an eye toward a long-term, mutually beneficial relationship. Is all that worth an extra $150 on a flat screen? Time will tell.

When what you buy is pretty much the same from store to store and the pricing is instantly transparent then how you behave as an organization becomes a more important point of differentiation. Maybe the "best buy" is not necessarily the "best price." Let's see if Best Buy can turn the super tanker that is our current shopping paradigm.

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John Karlson is the owner and principal at Karlson Consulting, Inc. A recovering advertising executive/start-up veteran, John helps businesses grow in the post mass-media world.

Should We Revive Dying Brands and Companies?

Or are we better off creating new ones? Does "The Circle Of Life" apply here?

by Idris Mootee

We make assumptions that it is the management team responsibility to extend or prolong the life of any companies even they have fewer reasons to exist. Management is different from practicing medicine, although sometimes I am called the strategy doctor. Instead of wasting resources and energy to save a company or a brand, should we just take whatever assets and redeploy them? In life, the cycle of life is the natural order of things.

Although we do live longer now, death is inevitable. Technology is the same. Should corporations be the same? Saab is at the end of life. Should it deserve a second life? Apple had its near death experiences and came back stronger. Many argued at that time Apple should be sold to Sony. Wang Computers thought they were beating IBM and could become the next IBM. IBM was also close to disappearing from the scene just 15 years ago.

Management consultants usually have a keen preference for prolonging corporate life. I guess to keep them spending. The pharma companies don't want patients to die, just stay sick. Why do we care about extending the life of large companies or big brands? Is it because they can afford our fees? Or we have a love for them. Yes, build to last. Business schools love transformation stories because they make great business cases, and portray CEOs as heroes. For many large companies, transformation and renewal is the only source of survival.

The world of fashion has a lot of comeback stories, although they are generally not sophisticated from a management capability perspectives compared to the GEs of the world. Think how Burberry, Adidas, Dior, and Abercrombie & Fitch all have found prosperity in their new life. Many business school case studies have been written about of how brands were "brought back from the graveyard." Unfortunately, however, the lessons are often so idiosyncratic. There 100 times more cases where companies tried revitalizing old brands by hiring new CMOs and advertising agencies and throwing big money towards advertising, hoping to rebuild a great brand even when there wasn't a relevant product or service or a sound business model behind it.

For those fashion companies, it is about hiring the right designer (call Tom Ford or Marc Jacob) and for other businesses, whom do you call? The designer is often viewed as the critical component to reengineering a brand, and total attention must be paid to the brand in an effort to return to its essence and reason for being successful in the first place. It used to be case that you could recruit a top CMO and things will work out. This is not working anymore. You need a master strategist, a great storyteller and a change agent, all in one person (call Indra Nooyi or Steve Jobs). In fashion, you go back to the essence of the brand. In other business what do you do? How do you rediscover your core or find a new core?

Successful transformation and re-invention rests on two major premises: first, that our time is characterized by a rare confluence of new behavior and economic disruption, and second, that the "new global reality" is turning toward a "whole new emphasis on innovation". I was speaking to a group of graduating Ivey MBAs on global strategy. You can check them out at slideshare below:

Ivey Lecture Global Strategy Short

View more documents from Idris Mootee.

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Idris Mootee is the CEO of idea couture, a strategic innovation and experience design firm. He is the author of four books, tens of published articles, and a frequent speaker at business conferences and executive retreats.

Scouting for Innovation

by Stefan Lindegaard

Nerac is a global research and advisory firm for companies developing innovative products and technologies. Two of their employees, Kristy Lutz Ulmer and Margaret Fiore, recently published a report on how companies scout for innovation.

I just got to read it and I find this to be great stuff that I want to share with you. You should also download the full report here - Innovation Scouting For 2009

The findings in the report fit well into a key thing being discussed in the open innovation community right now; the real effects of open innovation are due to behind-the-scenes activity rather than flashy portals and idea-generation campaigns.

The report has lots of great insights and the authors want to highlight these conclusions:

• Innovation scouts acknowledge a general lack of formal knowledge of the process of scouting, including how to find and evaluate ideas.


• The more integrated a company's products are into other companies' products, the higher the likelihood that scouting is considered important.


• There are many different approaches for implementing innovation scouting, with companies using internal innovation scouts, external partners, third party scouts, and consultants.


• Most companies operate with a small cadre of scouts, usually fewer than six resources.


• The scouting role is not always confined to internal R&D departments within an organization, but instead is often jointly sponsored across multiple business units.


• Innovation scouts use many methods for finding new ideas, with competitive intelligence the most prevalent source of ideas.

As we can see from the snippets below, the report is full of data and interesting conclusions:

Usage of Innovation Scouts:
Of the nearly 600 companies surveyed, approximately 30% of the respondents knew that their companies use innovation scouts. Another nearly 8% were aware of plans to begin using innovation scouts. Surprisingly, just over 42% were unsure whether or not their company employed scouts, so the usage rate could actually be higher.

Age of Scouting Program:
When asked how long scouts had been in place, 37% reported their companies have used innovation scouts for over five years, followed by another quarter that have used scouts between two and five years.

Size of Scouting Program:
Most companies operate with only a handful of innovation scouts. Our survey found that of the respondents who use innovation scouts, nearly one third have fewer than three employees in this role. Only 14% have more than 25 scouts.

Objectives of Scouting Programs:
The most important driver cited by 70% of respondents was "early identification of disruptive technologies." This is followed closely by building the product pipeline, leapfrogging the competition, and creating something novel.

Sponsorship of Scouting Program:
38% said that scouting was sponsored by their R&D organization. Another 24% reported that it was sponsored by Business Development followed by 21.8% respondents that indicated their scouting was jointly sponsored by several executives or groups.

Scouting Resources:
Our survey sought to identify norms regarding how scouting programs are staffed. We found that the most common staffing approach (at 63%) is to tap company employees on a part-time basis. However, over 25% have full time employees in this position. Over a third of the respondents characterize their scouts as technically oriented, and over one quarter as business/marketing oriented.

Scouting Methods:
We found the most common techniques for uncovering external ideas include conducting competitive intelligence (76%), attending relevant conferences and tradeshows (72%), leveraging academic connections (71%), and exploiting their network of innovators (55%). Other, less common methods include the use of third party networks (41%), innovation "bounty" challenges (18%), and crowd sourcing (8%).

Knowledge Gaps of Scouts:
Our survey asked an open-ended question regarding the biggest knowledge gaps or primary training needs for innovation scouting. The most common response, by a measure of over 3:1, was a lack of understanding the "process" of scouting, that is, how to actually go about doing the job.

Successes and Failures:
More than two-thirds of respondents rated their innovation scouting programs as just "moderately successful," with only 12% rating their efforts as "very successful." While a majority of companies surveyed feel their scouting programs are successful, this indicates there is certainly room for improvement.

Great job by Kristy and Margaret of Nerac! Check the full report here: Scouting For Innovation 2009

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Stefan Lindegaard is a speaker, network facilitator and strategic advisor who focus on the topics of open innovation, intrapreneurship and how to identify and develop the people who drive innovation.

Open Innovation Summit - Day Two

by Braden Kelley

The first edition of the conference was held in Orlando, Florida at the Crowne Plaza Orlando Universal. The second annual Open Innovation Summit will be held August 11-13, 2010 in Chicago, IL.

The second day of the conference kicked off with Robert Brands. Here are some of the key takeaways from Robert and the other speakers on the second day:

Robert Brands (InnovationCoach) - Creativity x Risk Taking - There is a multiplier effect if you have the courage. Internal innovation projects need a champion to overcome corporate antibodies and those champions need to be part of other teams. Too often we forget to train our people on the basics of doing proper project management, meeting management, new product development (NPD) next practices, etc. Innovation accountability is critical. Robert Brands is right, many companies don't effectively manage projects or meetings - lots of lost $$$ and time as a result. A survey of 100 firms found the most challenging practices in innovation to be risk-taking, accountability, and inspiration.

Stephen Shapiro (Innocentive) - The worst thing we do for innovation in organizations is hire for competency and chemistry. We need diversity in teams. Organizations have personalities too and these dictate how people work with each other in the organization. Organizational personalities tend to be action/planning focused and idea people tend to get squeezed out - hurting innovation.

Ed Rinker (Clorox) - Clorox has embedded Open Innovation teams that pursue business unit opportunities and a centralized Open Innovation team to pursue breakthru ideas. We use a lot of data and our stage gate process to better evaluate which projects to fund and which to continue. Clorox focuses open innovation efforts on Tech Brokerage, Growth Networks, and Global Stewardship. Growth Networks looks for the holes in our growth plans and focuses on external networks to try and fill the holes. Clorox cross-functional innovation teams include tech brokers, external networkers, designers, sales/mktg, market/consumer research. We make up for our disadvantage in patents to P&G and others by leveraging the IP of external partners who have more IP than P&G.

James Todhunter (Invention Machine) - People think that Open Innovation is about creating new pathways for getting ideas from outside into the organization - not so. Open Innovation is about integrating our external relationships into our internal processes and capabilities. People who are focusing on Open Innovation as idea generation are finding that the signal to noise ratio is quite high. In Open Innovation, partner relationships are often unstable and pose risks to brand equity if not managed well. Companies run into problems with innovation because they are focused on idea and don't have good processes to support innovation. Alignment, authority, and actualization are needed for successful Open Innovation.

James Todhunter (Invention Machine) - In Open Innovation you have to be careful about a partner going and working with a competitor instead - Have you considered this risk? People need to really think about whether their innovation is coming from an idea-first approach or a needs-first approach. In a needs-first innovation approach, you can do directed-ideation. To address alignment issues, you need to engage constituencies in a needs-first innovation dialog. Open Innovation will not work without bi-directional value. Focusing Open Innovation on extracting value is doomed to failure.

James Todhunter (Invention Machine) - People that submit ideas don't always have all of the insights and knowledge to create fully-formed, valuable ideas. Don't ignore the power of secondary research and bring the information you have together in a cohesive way to drive innovation. Use knowledge-enabled innovation processes, research universe of knowledge, and bring in experts to help break through inertia. Don't forget to do anticipatory failure analysis as part of your innovation process. From Ideation to Product Innovation = Ideation -> Capture -> Research -> Rank/Qualify ->Validate/Refine -> Productize.


"3 F's of Innovation - Fit, Feasibility, Finance" - James Todhunter (Invention Machine)

"Leverage power of Innovation Intelligence Ecosystem" - James Todhunter


BONUS: Here is my video interview with James Todhunter - CTO of Invention Machine - recorded live at the Open Innovation Summit





Greg Fox (Cisco) - The back of every Cisco badge has the principles of Cisco's culture on it. Cisco is looking at new ways to partner - both growing ecosystems and compartnering (comfortable with competing and partnering). Every market adjacency we are seeking to address requires a partner ecosystem. We will compete aggressively with orgs like Microsoft, but at same time we will collaborate with them for good of the customer. Cisco alliance approach = Evaluate -> Form -> Incubate -> Operate -> Transition -> Retire.

Greg Fox (Cisco) - Cisco is trying to move from a culture of competition to a culture of shared goals. Every organization in Cisco (including councils) has a Vision-> Strategy -> Execution captured and communicated. Out of 1,000 potential acquisitions identified, Cisco contacts about 100, does due diligence on about 30, and closes about 9 deals. Cisco has a well-defined acquisition strategy - focus on similar core values, people, technology, and where effective integration is possible. Cisco has alliance extranets to link with partners and share joint business and marketing plans.

On the second Intellectual Property (IP) panel, they spoke about how there is no standardization amongst university tech transfer offices - Some have to get governor approval. Another big problem companies have in working with universities is that they act as if they have an innovation, but no, they usually only have an invention, and they tend to price an invention as if it were an innovation. Many universities make crazy demands in selling IP - sometimes even IP that hasn't issued a single patent yet.

Most university tech transfer offices want to sell the next Gatorade - they need to focus on hitting singles and doubles instead. University tech transfer offices often don't take into account all of the work it will take to commercialize an invention's IP. People who are interested in tech transfer office rankings should check out "Innovation U" - you can Bing it. University of Wisconsin-Madison is an innovator in tech transfer. Eugene Buff made an audience comment that most university tech transfer offices are more focused on faculty retention than on revenue. Carrington Smith says Air Products focuses on university professors in starting their IP licensing process - not on tech transfer offices.


"When world is flat, you don't have to emigrate to innovate" - John Tao (Weyerhauser)


John Tao (Weyerhauser) - Drew a distinction between baseline, trending, control, diagnostic and planning measures vs. results & in-process metrics. Weyerhaeuser also has innovation metrics on leadership & culture. Their metrics for Open Innovation include the percentage of revenue derived from alliances.

Linda Beltz (Weyerhauser) - Measurements are only as good as your measurement capability, and measurement needs change over time. Early in Open Innovation maturity, the cultural measures are most important. Later the financial measures are more important.


"Open innovation is not about outsourcing." - John Tao (Weyerhauser)


Stephen Hoover (Xerox) - It took a decade for Xerox to further develop Chester Carlson and Battelle's IP into the successful product that gained traction. Innovation and Open Innovation are leaky funnels and that's okay because you can't do everything. Open Innovation efforts should start with suppliers, partners and customers, but of course don't ignore other innovation sources. Xerox focuses on dreaming with our customers - "What if you could print on magnets?" - Now we sell paper shaped magnets for fridges.

Stephen Hoover (Xerox) - We look at customer empathy (latent needs), trend analysis, market surveys, focus groups and non-customer analysis for innovation. Xerox created a CTO-led Open Innovation Council with P&G. We're finding value with P&G that we didn't initially anticipate in the original agreement. He showed partner example with XMPie and Multi-Media personalized Imaging - very cool stuff. Next step is to take personalized imaging to digital - personalized web page linked on a DM piece - 5-10x response improvement.

Stephen Hoover (Xerox) - Too many organizations don't instument to test (or to educate or to market) in the online environment - Don't forget this! Open Innovation helps to share the risk - We only invest in 1 in 10 reasonable ideas. Nothing wrong with collaborating with competitors on foundational research at universities - shared risk - government pays attention. When we go to the state and universities with our competitors saying that a research area is important - we get their attention. Faculty members will get the rest of the system to follow along with what they want to do so.

Stephen Hoover (Xerox) - Xerox is really pushing services innovation research because services is the fastest growing part of the economy. Almost every company has outsourcing partners - UPS or FEDX are your shipping department if nothing else. Sharing the risk by balancing financial investment versus skills investment by partnering with others. How do we respond to competitive copying? - We focus on trying to make it easier to partner with us - It's a race to be faster!

Stephen Hoover (Xerox) - We have done our best to keep projects alive in the downturn with our partners so that we have projects in 12-24 months.

Overall it was a great conference, and it reinforced how important senior leadership support is to successful innovation, along with other things like good processes, cross-silo communications. I look forward to the August Open Innovation Summit in Chicago.


Check out the Open Innovation Summit - Day One wrapup here.

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Braden Kelley is the editor of Blogging Innovation and founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy. Braden is also @innovate on Twitter.

Open Innovation Summit - Day One

by Braden Kelley

Earlier this month I led a workshop at the Open Innovation Summit on identifying and removing barriers to innovation with special guests: Greg Fox (Cisco Systems), Helene F. Rutledge (GSK Consumer Healthcare), and Hutch Carpenter (Spigit).

The first edition of the conference was held in Orlando, Florida at the Crowne Plaza Orlando Universal. The second annual Open Innovation Summit will be held August 11-13, 2010 in Chicago, IL.

After the workshop I covered the rest of the Open Innovation Summit on Twitter as @innovate - check out the #OIS09 transcript courtesy of @renee_innosight.


"Press has done a good job of turning innovation into the buzzword of the decade." - Philip McKinney (HP)


The conference kicked off with Phil McKinney of HP, and he was followed by innovation leaders from companies such as CSC, Shell, P&G, Whirlpool, Clorox, Xerox, and more. I don't think there was a single company speaking at the conference with an open innovation effort that didn't also have an internal innovation effort as well. Personally, I believe that it is imperative to launch an internal innovation effort first in order to work the kinks out and build up your capabilities internally before opening yourself up to the outside.

Some of the key things that came out of Phil McKinney's talk included the idea that companies and countries will have to choose whether they will be focused on creating ideas or on implementing ideas. Also, as knowledge becomes a commodity and work is off-shored and verified on-shore, creativity is becoming the key to creating value. At the same time, there is often an innovation gap as many ideas submitted are not well thought-out, but at the same time the stupid ideas are often the only ones radical enough to generate big returns.

Never forget that creativity is not a gift, it is a skill that can be developed and strengthened. Ask "killer questions" to force people to look beyond the obvious, and try to prevent people from stopping after they hear the first reasonable solution. Companies do a variety of things with the people who submit selected ideas, HP plucks teams that submit successful ideas out of the business and puts them into innovation project teams focused on creating a successful launch. Change is hard for middle managers. Don't tell them what you are going to do, tell them what you did. Final point - ideas are becoming the oil, the gold - the highly valued - So, does this mean that ideas are becoming a commodity then?


"Ideas without execution are a hobby" - Philip McKinney (HP)

"Innovation results from the creative application of intellectual capital in a disciplined manner to a problem." - Lem Lasher (CSC)


Other conference highlights:

Lem Lasher (CSC) - How do you define innovation when employees have different first languages? - Answer: Use lots of visuals

Lem Lasher (CSC) - Innovation is difficult because most innovations will fail. But obstacles are put up because our mindset is to 'not fail'. "We kill innovation by trying to eliminate risk."

Lem Lasher (CSC) - "While management is focused on the seeds of innovation, they get rid of the water, they get rid of the sunlight, the oxygen, etc." - Great management understands innovation tension and focus on improving the quality of the supporting ecosystem. Great innovation leaders create an innovation agenda that is just provocative enough to enable change without stimulating corporate antibodies. CSC focuses on incremental and adjacent innovations, consciously avoiding breakthrough or radical innovation.

Lem Lasher (CSC) - Revolutionaries hate change so much that they seek to create their change with violent efficiency (so they don't have to change). Who is putting their career on the line for improving innovation process and culture in your organization?


"None of us went to school to learn how to fail. The more we try to succeed by innovating, the more we are destined to fail." - Lem Lasher (CSC)


Raj Aggarwal (Rockwell Collins) - Open Innovation for Rockwell Collins is the augmentation of internal R&D efforts with innovation from outside the company. "Internal R&D is a development process, while open innovation is a discovery process." Open Innovation is critical but requires changes in processes - companies that try to force Open Innovation into existing processes will fail.


"75% of firms expect 40% of innovation to come from external sources by 2012." - Raj Aggarwal (Rockwell Collins)


Russ Conser (Shell) - Shell talks about revolutionary versus evolutionary innovation. Revolutionary innovation looks less attractive in the beginning. Innovations follow an S-curve - don't look good early, but in hindsight their value is clear. GameChanger works to try and use different people, process, criteria, etc. to get different outcomes than core business. It's not about the idea, it's about the people and helping them make their idea real.

Russ Conser (Shell) - Shell invests not all at once, but in tranches, and evaluates submissions against six criteria - Potential Value? Could it work? Novelty? Why Shell? Sustainability? Doable Plan? The crazy ideas more likely to get funding. At the same time, your innovation program should be both transparent and below-the-radar. Too much attention, and the corporate antibodies come out.

Ed Harrington and Adam Hansen (Ideas to Go) - Everyone can be trained to be creative, but find the ones who are better at it and train those people instead. Accelerate ideation by bringing in metaphorical thinkers. Insightful people are generally self-revealing. They are happy to share their ideas. Innovators are not always the ones who come up with ideas, but they have a talent for knowing what's valuable.

Ed Harrington and Adam Hansen (Ideas to Go) - With Open Innovation, some people submit, some people have trouble expressing idea, others have no ideas but want to participate. Open Innovation is not a perpetual motion machine... We advocate an episodic approach as opposed to an always open approach when it comes to Open Innovation. Duplicate submissions are one of the key problems to solve for when you go to wide-open innovation. When it comes to duplicates in open innovation submissions - "Let the best expression win."


"I as a business person want to know what my competitors want to own." - Jackie Hutter (Hutter Group)


Jackie Hutter (Hutter Group) - If you are not communicating to General Counsel and IP lawyers what you expect from your IP portfolio, then you're leaving money on table. Some companies prevent people in business from doing patent searches, they fear that somehow it will taint things (create risk). You should be tracking competitive patents because they tell you where competitors are making technology investments. When it comes to patent searching you must frame the question properly so that it yields a narrow & relevant result set. Patent searching can also help you identify ideas that are 'half-baked' (in a good way) that you can acquire and finish off.

Carrington Smith (Air Products) - Keep in mind that by the time it shows up in a patent search tool, host organization has been working on technology for a while. I'm surprised that more companies don't integrate the out-licensing of IP and insourcing of IP and Open Innovation into one team. Many organizations don't look sufficiently at what value their patent portfolio actually has.

Pramod Reddy (P&G) - P&G has 9,000+ people in R&D but there are 2,000,000 researchers working in science areas of interest to P&G. Anything outside the inner circle of project teams is considered part of P&G's Connect + Develop program. The second deal with the same partner takes half as long and is worth twice as much as the first. The speed of review is very important to Open Innovation success, as is communicating to people "no thank you" instead of no response. P&G has done joint ventures with competitors. Why are others so afraid to do the same?

Pramod Reddy (P&G) - P&G is now undertaking proactive approach to Open Innovation through developed networks of potential providers. P&G is now trying to make it so that Connect + Develop (C+D) is the way we work, not a separate program with success stories. Team of 70+ technology scouts around world and must have broad technology understanding and good social skills for networking.

Moises Norena (Whirlpool) - Check out this article for presentation details


"Innovation is all about Enablement" - Robert Zivin (J&J)

"Innovation is Polytheistic" - Robert Zivin (J&J)


Robert Zivin (J&J) - When choosing to pursue innovation, you are choosing internal disruption - we have to be in the business of disrupting ourselves. We have to manage the disruption of ourselves. We have pharma, medical devices, and over the counter stuff too. The more it costs to manufacture a product, the easier it is to do Open Innovation. Capital costs are a hurdle to IP theft. We train a co-operative of people to help respond to the external Open Innovation submissions and help triage. We have a 30-day SLA on our Open Innovation web site - We've got to get back to people (even with a "no") rather than say nothing. The John Hopkins/J&J/Entrepreneur/Philanthropy partnership they've created, could serve as an alternative to the typical University tech transfer process


"In early stage innovation, relationship trumps ownership" - Youseph Yazdi (Johns Hopkins)


Helene Rutledge (GSK) - GSK looked at Samsung, Apple, Roche, P&G, and others in building their approach to Open Innovation. The GSK Open Innovation Model is Want -> Find -> Get -> Manage. The GSK Consumer Innovation Team workspace - The Hub - has people sit in different desks every day in an open plan flexible workspace. GSK's Open Innovation Model requires idea to have scientific proof, solid business case, be unique & have competitive advantage.

Helene Rutledge (GSK) - Aquafresh Isoactive was an Open Innovation example that involved partnering with four different external partners, and idea came from adjacent industry (shaving gel). 'What's In It For Me?' applies to open innovation as well. Hiring for open innovation at GSK involves finding people with a balance of technical licensing and product development experience.

Cheryl Perkins (InnovationEdge) - The soft things are often the hardest when it comes to innovation culture change. Iceberg of Organizational Culture - below water you have norms, unwritten rules, shared assumptions, values, and shared beliefs.


"The future of innovation strategy is all about optimizing relationships." - Cheryl Perkins (InnovationEdge)


Overall it was a great conference, and it reinforced how important senior leadership support is to successful innovation, along with other things like good processes, cross-silo communications. I look forward to the August Open Innovation Summit in Chicago.


Check out the Open Innovation Summit - Day Two wrapup here.

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Braden Kelley is the editor of Blogging Innovation and founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy. Braden is also @innovate on Twitter.

Is Collaboration or Competition Better for Innovation?

by Stephen Shapiro

At the Open Innovation Summit last week, I had a lively conversation with a few individuals. The debate was about which model of open innovation is most effective - competitive or collaborative.

Kevin Boudreau and Karim Lakhani wrote an excellent article earlier this year in the MIT Sloane Management Review on this very topic. They looked at the merits of each form of open innovation. I encourage you to read the article as it addresses factors like intrinsic and extrinsic forms of motivation.

InnoCentive uses both forms of open innovation in different environments.

Their 'marketplace' model is competitive. That is, when posting challenges to their network of 185,000 experts, the solvers cannot see any of the other solutions. One reason for using this model is that the intellectual property needs to be protected.

This is in contrast to InnoCentive's @Work product which is used to broadcast challenges internally to employees. With this product, solutions are provided in a collaborative fashion where solvers can see all responses. Given that only employees are participating, intellectual property issues are not as critical.

The competition/collaboration debate reminds me of the Miller Lite commercials - "Tastes Great...Less Filling."

It also reminds me of the hand dryer versus paper towel debate (in terms of efficacy - not impact on the environment, which is a different debate).

After much experimentation, I have the long awaited answer: Use paper towels first followed by the hand dryer. The paper towel gets off most of the water so that the hand dryer can quickly evaporate the remaining liquid. The best solution for drying your hands is not one approach, but a combination of the two... in the right order.

I believe that the answer is the same for the competition versus the collaboration debate. It is not an either/or proposition.

From my experience, you start with competition followed by collaboration. Here's why:

If you start with collaboration, you end up with "group think" very quickly. That is, as soon as the first idea is thrown out, it tends to influence the thinking of the other contributors. This narrows the set of ideas that are typically generated. Therefore, if you start with a competition, you get the broadest set of ideas possible.

Then, after selecting the winners of the competition, you take the best ideas and allow a collaborative community to flesh them out. This gives you get a much richer solution in the end.

This approach models the most effective way of running brainstorming sessions. It works best when you first have each person independently write down their own creative ideas. Only after everyone generates their own list does the group come together. Then they share ideas, select the best ones, and expand upon those best ideas collaboratively. Individual thought followed by group throught. Competition followed by collaboration.

IMHO, the same is holds true for open innovation.

Of course there are a variety of factors that may require the use of one approach over the other (e.g., intellectual property protection), but there are even ways to address that. But more on that in another blog post.

P.S. I'm serious about using paper towels first followed by the hand dryer...
P.P.S. If you are not aware, I am InnoCentive's Chief Innovation Evangelist.

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Stephen Shapiro is the author of three books, a popular innovation speaker, and is the Chief Innovation Evangelist for Innocentive, the leader in Open Innovation.

Five Ways to Prepare for 2010

by Matt Heinz

I can't believe it's already December, and 2009 is almost gone. That means it won't be long before the holidays are over, and we're staring at a brand new month, quarter and year. Before January hits you unprepared, spend time in December both catching up and getting ready. Here are five specific things to get you started:

1. Read

• That backlog of blog posts sitting in your RSS Reader? The stack of magazines on your desk? Dig into them. You don't need to read every single article, but take time this month to catch up a bit on the reading you've wanted to do. I guarantee you'll find inspiration many times over.

2. Learn

• What skill have you wanted to learn? What new sales or marketing strategy have you wanted to get smarter about before testing for your organization? There's something youve been putting off, because you simply don't have time. What if you devoted the next 30 days to reading, practicing and testing that skill? How could that make you smarter and more successful in 2010?

3. Brainstorm

• Pick a handful of important problems or challenges. They can be things facing you personally or professionally, individually or with a group. Feel free to brainstorm on your own, but also pull friends, family or colleagues (whichever group is most appropriate) into a room with a white board to help. Even if you just take 30 minutes (our team takes as little as 10 minutes depending on the topic), with a bit of mental isolation and focus, you'll come up with something highly useful.

4. Secret Shop

• Which competitors - big or small - are creeping up on you? Which ahead of you might be within reach? How can you dig deeper, directly, into how they do business to learn what they're doing well, where they're weak, and what you can do differently to accelerate past (or further away from) them in the coming months?

5. Plan

• You've probably done some of this already for 2010, at least for your organization overall and/or for your department. But have you done it for yourself? For your career, or other professional and personal goals? What focus areas and milestones will be important to you in 2010, and what do you need to do starting in January to achieve them? Then, what do you need to do in December to hit the ground running?

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Matt Heinz is principal at Heinz Marketing, a sales & marketing consulting firm helping businesses increase customers and revenue. Contact Matt at matt@heinzmarketing.com or visit www.heinzmarketing.com.