To Uncover Great Ideas, Generate a Large Quantity of Them

by Paul Sloane

One of the great problems with the Western education system is that it teaches that for most questions there is one correct answer. Examinations with multiple choice questions force the student to try to select the right answer and avoid the wrong ones. So when our students leave school they are steeped in a system that says find the "right answer" and you have solved the problem.

Unfortunately, the real world is not like that. For almost every problem, there are multiple solutions that may solve the problem with varying degrees of effectiveness. In other words, in the real world, there is more than one "right" answer. We have to unlearn the school approach and instead adopt an attitude of always looking for more and better answers.

To be really creative, you need to generate a large number of ideas before you refine the process down to a few to test out. To make your organization more innovative, you have to increase the yield. Why do you need more ideas? Because when you start generating ideas you generate the obvious, easy answers. As you come up with more and more ideas so you produce more wacky, crazy, creative ideas - the kind that can lead to really radical solutions.


Real-world examples

The management guru Gary Hamel talks about "corporate sperm count" - the virility test of how many ideas your business generates. Many managers fear that too many ideas will be unmanageable but the most innovative companies revel in multitudes of ideas.

When BMW launched its Virtual Innovation Agency (VIA) to canvass suggestions from people all round the world it received 4,000 ideas in the first week. And they continue to roll in. You can even make your own contribution to BMW's idea bank.

The Toyota Corporation in-house suggestion scheme generates over 2 million ideas a year. Over 95% of the workforce contribute suggestions; that works out to over 30 suggestions per worker per year. The most remarkable statistic from Toyota is that over 90% of the suggestions are implemented. Quantity works.

Thomas Edison was prolific in his experiments. His development of the electric light took over 9,000 experiments and that of the storage cell, around 50,000. He still holds the record for the most patents - over 1,090 in his name. After his death 3,500 notebooks full of his ideas and jottings were found. It was the prodigiousness of his output that led to so many breakthroughs. Picasso painted over 20,000 works. Bach composed at least one work a week. The great geniuses produced quantity as well as quality. Sometimes it is only by producing the many that we can produce the few great works or ideas.


Putting these lessons to work for you

When you start brainstorming or using other creative techniques, the best idea might not come in the first twenty - or even in the first 100 ideas. The quality of ideas does not degrade with quantity. Often the later ideas are the more radical ones from which a truly lateral solution can be developed.

What do you do when you have a mountain of ideas and suggestions? You sort them, analyze them and try out those with the most potential. The really promising ideas are critically examined from the perspectives of technical feasibility, customer acceptance and profitability. If they pass these hurdles, they move rapidly to a prototype phase. They are then tested in the harsh reality of the marketplace, where a sort of accelerated Darwinism occurs - only the fittest survive. The interesting ideas should be kept in a database and allowed to incubate. When you revisit them later, you may well find that you now see a way to adapt or combine them into something worthwhile.


The venture capitalist's strategy for testing promising ideas

The most innovative companies have an approach to trying out promising ideas that is like the philosophy of a venture capitalist. The VC invests in a portfolio of different start-up companies, fully knowing that most will fail. A few may break even, and one or two may become successes. But one big success can pay back the costs of all the failures.

Even though he is smart, the VC does not know which ventures will succeed and which will fail, so initially he backs all of them. As time goes on, he cuts funding for the failures and gives it to the winners. It is the same with prototypes in business. The leading innovators run many different pilots and measure progress carefully. They cut funding the losers, but nurture the successful trials with additional resources. That way they are first to market with the real winners.


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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.

Building Up Innovation Capital

by Rowan Gibson

As usual it was Peter Drucker, the godfather of modern management, who said it first. Right back there in 1966 (!), in his landmark book "The Effective Executive", Drucker argued that companies would need to build a new kind of organizational capital as the industrial economy gave way to the knowledge economy. His famous proclamation was that, in future, brainpower would be a more valuable asset for wealth creation than factories and financial clout. All of which came true, of course. But that was not the end of it. Now, over four decades later, we are once again challenged to rethink organizational capital as we make the transition from a knowledge economy to an innovation economy. And that creates a new agenda for every single company.

For most of the last century, as well as the previous one, we looked at companies as if they were comprised of only two kinds of capital: financial and structural. Financial capital obviously refers to a company's balance sheet. Structural capital is the value of its physical assets - its networks, facilities, warehouses, plants, inventory, and so on. Thus, if we had gone back and spoken to the super-rich industrialists and financiers of the late 19th and early 20th century - such as Vanderbilt, Rockefeller, Carnegie, and Morgan - they would have told us that this was the only way to measure the worth of an enterprise. Move forward a few decades and the same would have been true if you had talked to great business builders like Henry Ford, Alfred P. Sloan, Thomas Watson Sr., or any of their corporate accountants. What counted back then was the tangible stuff that is easy to quantify and monetize on a financial statement.

In the 1980s and 1990s, that began to change. In large part because the stock market value of companies was beginning to get out of all proportion to the "book value" of their physical assets. Microsoft, for example, had an almost 8-to-1 ratio of market value to physical assets value. And when Philip Morris bought Kraft in 1988 for $12.9 billion, the "hard assets" of the firm were calculated to be worth only $1.3 billion. That means Philip Morris was paying a full $11.6 billion - or 89.9% of the transaction price - for "other stuff" that wasn't even on the balance sheet: intangible stuff like brand equity, marketing capability, and so on.

British futurologist Hugh Macdonald coined the phrase "intellectual capital" to describe these intangible assets. He defined it as "knowledge that exists in an organization that can be used to create differential advantage." And in a seminal article in Fortune magazine in 1991, Thomas Stewart wrote that "every company depends increasingly on knowledge - patents, processes, management skills, technologies, information about customers and suppliers, and old-fashioned experience. Added together this knowledge is intellectual capital."

From then on, we had three forms of capital - three basic kinds of assets - with which to measure a company's worth. But in a new, innovation-based economy, where value-creation is the new Holy Grail, the way we define, measure and manage organizational capital is again woefully incomplete. In 2001, strategy guru Gary Hamel argued that financial, structural and intellectual capital, by themselves, do not create new wealth. And I agree with his astute observation. Think about GM. If any company on earth ever had huge amounts of money, massive dealer and supplier networks, giant manufacturing plants, countless technological patents, well-oiled management processes, tons of customer information and decades of industry experience, it would have to be General Motors. Yet where is GM today? In effect, all of those assets have proven to be almost worthless in terms of creating new wealth.

Hamel's view is that the three traditional forms of capital are largely inanimate. In today's competitive era, they need to be animated or catalyzed by three new kinds of organizational capital if we want to translate them into wealth. He calls these "imagination capital", "entrepreneurial capital", and "relationship capital", all of which are different forms of human capital.

Consider the first one. Most companies would tell you that knowledge is a critical resource. Many large organizations have internal KM efforts aimed at sharing information and experience across the firm with a view to continuous improvement. But in a world where the pace of change has gone hypercritical, we're finding out that success has less and less to do with learning from the past, and more and more to do with imagining future opportunities. Knowledge has become a commodity. Let's face it, you can go online and find out almost anything with just one or two clicks. So the issue is not how much you know but how creatively you can leverage what you know. Today, the advantage increasingly goes to those firms that develop "imagination capital" - which is the capacity to dramatically reconceive what the firm is and imagine entirely new uses for its financial, structural and intellectual capital. Einstein's oft-quoted reflection that "imagination is more important than knowledge" becomes the mantra of the innovation economy.

Second, companies need to develop their "entrepreneurial capital", which means building the entrepreneurial spirit into many, many employees across the whole organization, not just in an incubator or some new venture division that exists out on the periphery of an otherwise orthodox company. It's about creating a cultural environment where the entrepreneurial spirit is everywhere; where ordinary employees can have the courage to experiment and try something new, where they can get unfettered access to the financial and human capital they need to push their ideas forward.

The third of these new kinds of capital is "relationship capital" (or what I would call "network capital"), which refers to the connections a company can make between previously isolated people, ideas, resources and domains - both across and beyond the organization. Innovation is so often about spotting the opportunities that come from recombining and blending all of these ingredients. The quality of a company's network of relationships - its ability to connect with individuals and organizations that have very different skill sets and capabilities - is becoming more and more critical to its own capacity to innovate.

Here's the sad reality: most companies don't have a clue about how to support
the development of these new forms of capital. So the challenging agenda for
organizations around the world will be to think about exactly what it takes to
build, measure, manage and exploit what amounts to their "innovation capital" - which is so essential to creating wealth in our times.

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Rowan Gibson is widely recognized as one of the world's leading experts on enterprise innovation. He is co-author of the bestseller "Innovation to the Core" and a much in-demand public speaker around the globe. On Twitter he is @RowanGibson.

Expanded Contest - Top 10 Innovation Articles of 2009

by Braden Kelley

Would you like a chance to win one of three copies of Gary Hamel's latest book "The Future of Management" ?

Well, if you've got a Twitter or LinkedIn account, then you've got an opportunity to maybe win one of three copies of this book.

To enter on Twitter:

1. Send an @reply message to @innovate with the URL of your favorite innovation article


2. Make sure that your tweet includes "2009 contest" in it


3. Submit your entry by the end of December 31, 2009 (GMT)

To enter on LinkedIn:

1. Submit a news article URL to our Continuous Innovation group on LinkedIn (1,700+ members) or add a comment to someone else's submission there


2. Make sure that you begin your submission title or comment with "2009"


3. Submit your entry by the end of December 31, 2009 (GMT)

I'll announce the three winners on January 1, 2010.

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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.

Contest - Top 10 Innovation Articles of 2009

by Braden Kelley

Would you like a chance to win one of three copies of Gary Hamel's latest book "The Future of Management" ?

Well, if you've got a Twitter or LinkedIn account, then you've got an opportunity to maybe win one of three copies of this book.

To enter on Twitter:

1. Send an @reply message to @innovate with the URL of your favorite innovation article


2. Make sure that your tweet includes "2009 contest" in it


3. Submit your entry by the end of December 31, 2009 (GMT)

To enter on LinkedIn:

1. Submit a news article URL to our Continuous Innovation group on LinkedIn (1,700+ members) or add a comment to someone else's submission there


2. Make sure that you begin your submission title or comment with "2009"


3. Submit your entry by the end of December 31, 2009 (GMT)

I'll announce the three winners on January 1, 2010.

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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.

A Day with Gary Hamel

by Braden Kelley

The day after the lights went down on the World Business Forum, the lights went up on an all day seminar with Gary Hamel across the street at the Time Life Building. It was great to be able to get down to the next level of detail below the talk that Gary gave at the World Business Forum.

My day with Gary Hamel began with a discussion of the accelerating pace of change and how:


"While we are in here bullsh**ting about strategy, something is happening out there."


Corporate Evolution

Gary spoke about how the biggest thing that may limit organizational success most going forward is our organization's ability to evolve their management models. But an even biggr handicap to future success may be the fact that our management models were not built to manage innovation but precision, stability, discipline, and reliability. So how do we create organizations that are great at efficiency but also incredibly adaptible?

Capable of transcending the inherent tradeoffs?

• Coordination without centralization


• Scale without inflexibility


• Leadership without formal heirarchy

Our organizations need to move from building competitive advantage to building evolutionary advantage over time, because no matter how good your strategy is, strategies die.

For the first time in the history of the world, each new generation is born into a new world with new technologies, new preferences, and new ways of communicating.

• Difficult for organizations to stay relevant


• Coke was late to sports drinks, late to new age drinks, late to water products


• Microsoft has been late to several markets as well

Gary spoke about the evolution of companies and how they start as attackers, then they grow, and if successful they become defenders. Usually when companies start playing defense, they're in trouble. There is no alarm bell to let you know you've crossed over. By this point the organization has become highly optimized for exploitation and doesn't spend enough time on exploration. And if the company enters a decline, remember, usually the first rats off the ship are the best swimmers. And, when a company has a crisis and loses its momentum, it takes about a decade to recover it - if you can recover it at all.


"Innovation is born out of a gap between ambition and resources."


Innovation Preparation

Organizations get into trouble when they don't change their offering as fast as the needs of their customers have changed. This is true for churches just as much as it is for companies. Often it is too painful to make management change so companies don't (i.e. GM's 20 years of benchmarking Toyota or Nokia's resistance to moving from candy bar phones). But, the longer you delay change, the more painful and expensive the change will be. Some key points:

• You have to seek out the dissidents and test and explore their hypotheses - Are you really open to change?


• Strategies die because they get imitated, they reach a natural limit, or cutomers destroy them


• Once you recognize potential problems you have to create options for strategic renewal (see Michael Raynor's great book "The Strategy Paradox" for more on this topic

When it comes to innovation, companies aren't comfortable with the venture capital model of it taking 1,000 ideas to identify 100 experiments that might yield 10 workable projects and only one big winner. But this is often what the pursuit of innovation requires. For example, Google runs 50,000 search experiments a year and about 500 of the ideas get implemented.


"Getting pregnant is considered a big success despite the millions of wasted sperm - so what's your corporate sperm count?"


Once you know which innovation ideas you are going to pursue, the biggest challenge is to realign talent and provide capital. Most organizations are so lean that there are no slack resources and among managers, to lose resources is to lose status. Another big limiting factor to innovation is that inside organizations ideas can only be sold up the chain of command - intrapreneurs only get one shot to sell their idea, unlike the outside world where an entrepreneur might get turned down 8-9 times before getting funded. For innovation to really work in organizations we need to create a network of internal angel investors to provide intrapreneurs more than one funding source.


"You have to combine scale with the spirit of small" - Audience member


Preparing to Change

Ultimately inflexible mental models are more of a problem than inflexible assets. People have the opportunity to choose either positive change or negative change, and often resist change out of fear. So, to make change happen, we should seek to create an opportunity for positive change so people will be excited about the possibilities and make the changes in spite of their fears.

Speed is important, but it is not everything. Keep in mind that if the first mover does it right, you're screwed as a fast follower. Better to be a smart mover. Move as fast as your knowledge allows and faster than competitors. Microsoft went from fast follower (aggressive) to slow follower (weak).


"People who have a stake in the old, will rarely embrace the new."


Seeking Innovation

Three questions to determine whether something is an innovation:

1. Does it have the power to change customer expectations?


2. Does it have the power to change industry economics?


3. Does it have the power to change the basis for competition?

Keep in mind that innovation is not always risky and it is not always fast. It took JVC 20 years to build a VCR that they could sell for $500 instead of $50,000. It took 20 years for the world to accept Australians' theory that bacteria could cause ulcers. Five years passed between the opening of Pret a Manger's first store and the opening of its second store (it was a new concept, lots of learning needed). Nespresso started getting patents back in 1970 (it was a 40 year overnight success). We must distinguish between how innovative an idea is and how risky an idea is.


"While imagination is not evenly distributed, it is widely distributed."


So, how can you increase the chances for innovation?

1. Challenge unexamined orthodoxies (Umpqua Bank, Pret a Manger, SAAS)


2. Challenge business model components


3. Exploit unnoticed trends (Nokia phones, Disaggregation of TV - Hulu, Blinx, Youtube)


4. Leverage unseen capabilities (Amazon's WebStore and other cloud apps)


5. Serving unarticulated needs (What does customer experience or life feel like?)

Innovation is just another skill. Companies train thousands of people in Six Sigma, why aren't we training people to be business innovators? We have prizes, solicit ideas from people, and don't train them?

When it comes to innovation, organizations have to be more open. Your job is to build a magnet that pulls in the best ideas, the companies that win will figure out how to build the biggest magnet and perservere (building innovation strategies, processes, incentives, management, etc.).

1. View everyone as a potential partner


• What external capabilities can you leverage


• Example: Ice cream bar partnering with Colgate to have a toothbrush-shaped stick inside with the Colgate brand on it


2. Get customer to innovate (Cisco)


3. Build platforms to innovate (Threadless)


4. Bid out problems (Innocentive, DARPA)


5. Open up your stategy process (IBM innovation jams)

"If people will laugh abut the current reality, there is an opportunity for innovation."


Keep in mind with your innovation ideas that it is never clear whether it is a marathon or a sprint. Keep in mind the question - Will increased investment make it happen faster? If you miss the window, increased investment won't let you catch up.

Jeff Bezos is committed to the Amazon Kindle and with each failure, the team asks themselves if they still believe, and if they do, then they have the energy to keep going.

Gary Hamel made it very clear several times during the day that he doesn't feel like he has the answers, but he wants to stimulate people to start thinking about how they could try and realize some management innovation in their organizations and to start experimenting.


"More and more of the work of managing will move to the periphery and we will have fewer and fewer managers."


Leading the Way

A leader doesn't tell people what to do. A leader helps people understand what needs to be done and brings the people and resources together to make it happen. To truly unleash human capabilities, we must focus on injecting a sense of:

• Freedom - Loosening the reins of control


• Community - Increasing the sense of belonging


• Purpose - Investing work with meaning

"We need to try and put Dilbert out of business."


So how does one go about trying to become a management innovator?

• First - Be Bold


• Raise trust and reduce fear?


• Second - Challenge Dogma


• What crazy assumptions do we see as sane?


• Challenge the orthodoxy of executives being the only ones to think strategically


• Challenge the orthodoxy of a crisis being needed to provoke change


• Concentrting strategy at the top helps to cause this


• Challenge habits, artifacts, and conceits


• We've separated people from customers, colleagues, the broader overall view, and leadership


• We've turned employees into children


• Heirarchical organiztions move slower


• It takes time to aggregate, sanitize, and communicate up


• We need to give people the information they need to make the necessary tradeoffs

"If life developed on earth according to six sigma principles, we would all still be slime, but damn good slime"


In pursuing innovation, we need to pursue it under the theories of biology and variety, while also employing the power of markets to allocate resources more efficiently than heirarchies. At the same time, we should consider having co-sponsors on idea submissions as a way of weeding out the stupid-stupid ideas. We need to be more democratic, even though democracies may not always be the most efficient systems. They do however allow for change to start from the bottom up. Thriving democracies tend to have a large number of activists. Why don't companies teach people to be activists (or entrepreneurs for that matter)?

Diversity and connectivity help to create innovation. So why do most companies have beige walls and create teams of people with similar backgrounds and ways of thinking? Why do organizations engineer out diversity? We need to learn from the positive deviants in organizations and create organizations that have:

• Variety (look to biology or life)


• Flexibility (look to markets)


• Activism (look to democracies)


• Significance (look to faith)


• Connectedness (look to cities)

Amongst other things we need to also find a way for people to choose what to work on, in order to avoid the frequent mismatch between passions and responsibilities. And from a workers perspective, as the labor market becomes more open, what happens when your vocation is competing against someone's avocation?


Conclusion

As you can see the day ended with more questions than answers, but often it is having the right questions in your head that allows to ultimately find the solutions that are appropriate for your situation. So, are you ready to try and create the positive change you would like to see in your organization? Are you ready to advocate for better innovation conditions in your organization? Are you ready to conduct management experiments in your organization to find the management innovations that will work for your organization and create evolutionary advantage?

Well, are you?

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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.

World Business Forum - Pulling It All Together

by Braden Kelley

I had the privilege of bringing you live tweets during the World Business Forum from a balcony full of friends and colleagues (new and old) as a member of the Bloggers Hub, and to now bring you this article.

The World Business Forum kicked off with Bill George (former CEO of Medtronic) speaking about leadership in the crisis. Bill George was a worthy last minute replacement for Jack Welch, and he spoke at length on some of the content of his book "7 Lessons for Leading in a Crisis". I hope to bring you an interview with Bill George later this week.

Bill George started by talking about how we are left with the aftermath of the financial storm - a healthcare, energy, environment, and jobs crisis. Of those, the jobs crisis is the most pressing. Ask Bill George what he thinks about the stimulus and he will tell you that we should be focusing on creating new jobs rather than trying to save jobs that will likely be lost anyway. Ultimately in a crisis you have to set aside your old financial plans, make new plans, and after re-calibrating your business, look to go on the offensive. Markets NEVER come back the same after a crisis. Companies have to anticipate change, have a defensive AND offensive teams during a crisis. An innovation team should be part of your offense. Innovation can help lead us out of this crisis.

Later in the conference a trio of financiers and economists took the stage - David Rubenstein, Jeffrey Sachs, and Paul Krugman. David Rubenstein set out the US economic problems at length and admitted there is no simple answer. He predicted a United States that will have higher taxes, lower social benefits, higher savings, lower dollar, and decreased growth. David Rubenstein hypothesized that the government is going to maintain its increased role in business for a while and probably reduce its support for entrepreneurs. He also predicted that New York City will lose its status as the financial center as its role becomes ever more diffused between London, Dubai, Sao Paulo. Emerging markets will be the future. It was funny that after all of this gloom and doom about the United States, that the later speakers from Brazil and Taiwan thought that the world is full of possibilities. His recommendations? Innovate around healthcare, emerging markets, and energy - AND innovate yourself.


Ultimately, perspective depends on whether you are climbing up the pyramid or sliding down.


Jeffrey Sachs spoke about a world bursting at its seams, with nearly 7 Billion people facing a series of crises. A world in which the sense of American predominance is fading - but this is not the same as saying the American empire is falling. Sachs spoke at length about American political failures to regulate finance and health care effectively, and the crumbling infrastructure in the United States. Jeffrey Sachs seemed to be saying that lobbying is killing the United States and that both political parties are at fault - they are happy to take the cash. Speaking of cash, the financial Sector has spent $3.7 Billion on lobbying in the last ten years. The number two lobbying group? You guessed it - Healthcare. For me the takeaway was the following - The system is broken and American taxpayers don't want to admit it. And after ruminating on Patrick Lencioni's talk, it's clear that American politics has moved to conflict around people. American political leaders need to re-capture their ability to build constructive conflict around issues, or nothing will change, in fact they'll get worse. But he didn't just speak about America, he also spoke about the big challenges that the world is facing. A world in which water is already becoming a limiting constraint on growth. A world in which greenhouse gas production, water usage, and land usage are not sustainable. Ultimately we will hit the carrying capacity of the earth, and so now it is up to us to improve how efficiently we utilize the resources that the world has to offer, and reduce the amount of waste of the system. Innovation has an important role to play in that.


"We have global scale problems that will require global scale cooperation." - Jeffrey Sachs


While David Rubenstein talked about our financial future, and Jeffrey Sachs on our political and global future, Paul Krugman focused more on trade. Krugman talked about the relatively recent shift in the majority of trade coming from developed countries to developing countries. He referred to this as a third phase of trade or "trade at a distance", and spoke about how higher energy costs in the future may slow the growth in this kind of trade. Krugman compared the 'Great Recession' to the Great Depression and spoke about how there has not been a big uptick in protectionism but at the same time the fall of the American economy has been steeper so far than in the early years of the Great Depression. Krugman believes that the trouble in the labor market will continue for some time and that this will be a drag on the economy. At the same time, Krugman seems to believe that financial innovation is bad and should be banned. I can't say that I agree, but I would say that it should be scrutinized and that risk shouldn't be allowed to be externalized and rated with a degree of safety that it doesn't deserve.

When I take the content of Krugman, Sachs, and Rubenstein together, one thing is clear, innovation is needed more than ever. For countries that want to stay at the top of the pyramid, and also for countries that want to continue climibing upwards, it will be incredibly important to find effective ways for governments, businesses, and non-profits to work together to create the building blocks for innovation and stimulate a climate that supports innovation better than the competition (in this case - other countries).

President Clinton's speech had several great examples and insights about the challenges we should think about. Here are ten of my favorites:

1. In under-developed countries, people will keep cutting down trees until you give them a reason not to.


2. We are now highly interdependent on a global scale.


3. The recession might be over in Economics 101 terms, but it is definitely not over for workers, and it might not be over if hiring managers get spooked


4. When President Clinton took office, there were only 50 web sites on the Internet. Period. Now Blogging Innovation ranks at about 300,000 out of 30,000,000 in terms of traffic (Top 1%).


5. We have a shared vulnerability to terrorism. The world shares the risk.


6. America must do something about the healthcare crisis. Climbing healthcare costs are driving America into an uncompetitive position in the world.


7. You hire a President to make the 10% of decisions where all your advisors don't agree.


8. The hardest thing about being President was making decisions that he wasn't sure were right, but there was a deadline to be made.


9. Solving the climate crisis and changing the way we produce and use energy is the only way to get job levels back up.


10. We need to focus on balancing the budget after we climb out of this recession - Shared Benefits, Shared Responsibility.

When you look at all of the challenges we face, it is obvious that our organizations (businesses, governments, and charities) need to change in order to support our new reality and these changes will not be easy or pain-free, but we must innovate, and each organization type must seek to innovate in concert with the others. Gary Hamel spoke at length about what management was designed to do versus what we now need it to do. Management was designed to get people to show up on time and do things with greater efficiency and sameness, but we have different needs now. Management is focused on managing operational efficiency not on managing operational change. This needs to change because we now need organizations capable of changing as fast as change itself. We need to move from managing to get employees to do more to managing to get employees to create more - this requires a different approach. The secret to management innovation is to challenge the assumed trade-offs. The trick is to separate the what and the how. But, you're not going to become a better company by looking at the Fortune 500 - you have to look on the fringes for innovation. And these fringes need to become mainstream fast because the best people from the next generation will not want to work for organizations that don't mirror the meritocracy of Internet. So, Gary Hamel implored the audience to conduct management experiments and report back with their findings because of course - if you're reading or listening to this, it's because you don't want to follow some other organization, but because you want to lead.

So, are you ready to experiment? Are you ready to lead your organization into these uncertain times and transform your organization into a more nimble competitor capable of changing as fast as change itself? Or do you want to sit back and cross your fingers that none of your competitors will. The world is changing, it always has been, and those organizations and countries that aren't constantly seeking to understand what changes are coming and aligning their resources to maintain their connection to the customers' and trading partners' needs, will find themselves sliding down the pyramid or out of the seats of influence and prosperity.

Which future are you ready to choose? Or will you let it choose you?

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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.

Live Coverage of the World Business Forum

by Braden Kelley

We will be bringing you live coverage on Twitter of the World Business Forum today and tomorrow (October 6-7, 2009) from the Radio City Music Hall in New York City.

Here is a partial list of the amazing speaker lineup:

PRESIDENT BILL CLINTON - Embracing our Common Humanity

PAUL KRUGMAN - The Future of the Global Economy

GEORGE LUCAS - A Conversation with George Lucas

GARY HAMEL - Management Innovation

IRENE ROSENFELD - Leading Transformational Change

JEFFREY SACHS - Economics for a Crowded Planet

T. BOONE PICKENS - A Conversation on Energy Dependence

PATRICK LENCIONI - Building Winning Teams

BILL CONATY - Talent Management

DAVID RUBENSTEIN - Global Economic Crisis

KEVIN ROBERTS - Branding


Here is a video from one of the speakers, Jeffrey Sachs, on "Lessons for the Future":



So follow along with us on Twitter and the rest of the people from the Bloggers Hub.

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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.

Why Don't Democracies Suffer Famines?

by Hutch Carpenter

In his keynote at the Spigit Customer Summit, Gary Hamel said that something that caught my attention: democracies don't suffer famines. Hearing this, I was intrigued and did some research.

Amartya Sen, winner of the 1998 Nobel Prize in Economics, made this empirical observation:

One of the remarkable facts in the terrible history of famine is that no substantial famine has ever occurred in a country with a democratic form of government and a relatively free press.


Why? In a paper from the John F. Kennedy School of Government at Harvard University, Sean M. Lynn-Jones puts forth two reasons:

First, in democracies governments are accountable to their populations and their leaders have electoral incentives to prevent mass starvation. The need to be reelected impels politicians to ensure that their people do not starve.

Second, the existence of a free press and the free flow of information in democracies prevents famine by serving as an early warning system on the effects of natural catastrophes such as floods and droughts that may cause food scarcities.


Isn't that powerful? Simplifying things, I distill those two reasons into these:

1. Organizational responsiveness


2. Distributed trend detection

Both of which describe the realm of what Enterprise 2.0 is about, albeit without the life-and-death issue of starvation. That in itself is interesting enough. But when you try to apply those findings to companies, you realize they don't quite mesh with today's corporate governance models.

Corporations Aren't Democracies

You, the reader, probably say "duh" to the observation that corporations aren't democracies. But to consider the benefits of organizational responsiveness and distributed trend detection, it's important to understand a crucial difference between democracies and corporations. The diagram below shows the corporate governance model:


In the context of making organizations more responsive, and distributing trend detection, where does that happen? It's the employees. They're the ones on the front line. They're getting creative to solve issues everyday. They hear things from the market before most do. They want to make a difference and see their companies progress.

This is the equivalent of the voters in a democracy. The ones who are experiencing issues firsthand. But employees aren't empowered to change their organizations. That's the C-Level suite: CEO, COO, CFO, etc.

The C-Level suite lives a life of leading employees, and listening to the Board of Directors. Well listening, and leading, the Board. And the Board serves at the pleasure of shareholders.

In this model, shareholders look at company results and estimate future overall growth in revenue and profits. Fail to hit the numbers, and they put pressure on the Board. Board feels the pressure, and begin to question the C-Level suite. C-Level suite makes changes, and/or is replaced.

Notice that train of actions - it's not the feedback from employees that drives changes. It's a look-back at the results by shareholders. This isn't to say that C-Level executives do not listen to employees. But the structural governance model sets the pecking order for who and what gets attention.

Bringing the Voice of the 'Governed' into the Enterprise Conversation

As someone who went to business school, I'm a firm believer in the accountability to shareholders governance model. Capital is scarce, and its efficient allocation across the economy is valuable for ensuring generally sufficient supplies of products and services needed by the population.

But that doesn't mean the C-Level executives can't change the way they manage to improve the prospects of their companies and returns for their shareholders. As has been pointed out before, companies are experiencing unprecedented levels of volatility in markets today. Sources of industry change come from multiple directions, and their speed of invasion is much faster.

Maintaining a model of listening only to their senior executives, their Board and their shareholders is becoming a risky strategy for CEOs. It means listening to people whose interests are certainly in seeing a strong, healthy company, but whose capacity to provide early trend detection and problem-solving creativity is limited. Shareholders aren't in the trenches of your company's operations. The Board of Directors is made up of C-Level executives from other companies, who need to worry about their own operations.

Gary Hamel discussed W.L Gore as a model of a company where employees are much more a part of the corporate governance model. From Fast Company in February this year, here's a quick update on W.L. Gore:

"Gore has spun a fortune from constantly reinventing the polymer polytetrafluoroethylene. In its 50th-anniversary year, the $2 billion-plus private company is on pace for record revenues and profits, thanks to a number of clever new products with a lot of potential."


An article in Sales and Marketing Management noted that employee teams help to hire new staff members, assist in determining each other's pay, and pick their own leaders. Crazy eh? But note the same article says this:

"An almost eerie optimism radiates through the hallways at Gore, which is best known for its Gore-Tex lining for weatherproof jackets, and which remains a private company despite its size, in order to protect its culture from outside interests."


Ouch! Here's a company that exemplifies a governance model of innovation, encourages employee innovation and distributed market intelligence. And it has to stay private to protect this culture?

My sense is that the Enterprise 2.0 movement in general is a vanguard toward improving the way companies are managed. Being a public company, used to a top-down order of things and paying a lot of money to outside consultants to understand the market, is hard to change overnight. But companies can begin to improve the way they engage their employees and leverage their vast, distributed know-how and creativity. There is a wide spectrum of how far companies can take this. The key is to begin understanding how new approaches can work in your organization.

Enterprise 2.0 as a movement, not a technology, is quite promising for enabling companies to improve their overall strategies and operations.

Alternatively, we can continue to do things the way we always have, with a limited set of decision-makers and market intelligence gatherers. As seen with the increased rate of companies gaining and losing positions in industries, this model is becoming less reliable.

Remember, there's a reason democracies don't suffer famines.

---

Hutch Carpenter is the Director of Marketing at Spigit. Spigit integrates social collaboration tools into a SaaS enterprise idea management platform used by global Fortune 2000 firms to drive innovation.

World Business Forum - Special Offer

by Braden Kelley

The World Business Forum is coming up soon.

It will take place October 6-7, 2009 at the Radio City Music Hall in New York City, with an optional Gary Hamel workshop on October 8, 2009.

September 25, 2009 is the last day to get the $610 early bird discount.

As a special service to my loyal readers I have negotiated an extra $100 discount when you register using the discount code - INNOVATE.

Sign up for the Day 3 - Gary Hamel Seminar at the same time using our discount code - INNOVATE - by September 25, 2009 and get the 3-day pass for $2,600 (a $2,210 savings).


Here is a partial list of the amazing speaker lineup:

PRESIDENT BILL CLINTON - Embracing our Common Humanity

PAUL KRUGMAN - The Future of the Global Economy

JACK WELCH - Execution

GEORGE LUCAS - A Conversation with George Lucas

GARY HAMEL - Management Innovation

IRENE ROSENFELD - Leading Transformational Change

JEFFREY SACHS - Economics for a Crowded Planet

T. BOONE PICKENS - A Conversation on Energy Dependence

PATRICK LENCIONI - Building Winning Teams

BILL CONATY - Talent Management

DAVID RUBENSTEIN - Global Economic Crisis

KEVIN ROBERTS - Branding


Here is a video from one of the speakers, Jeffrey Sachs, on "Lessons for the Future":



For those of you who choose to go, I hope you enjoy the savings and this event!

---

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.

Gary Hamel on Management Innovation and Enterprise 2.0

by Hutch Carpenter

Last week at the first-ever Spigit Customer Summit, I had a chance to listen to Gary Hamel live. He delivered the keynote for the event, "Inventing Management 2.0." If you're a reader of Gary's blog or his books, you know he's a big proponent of empowering employees and changing management paradigms. See his 25 Stretch Goals for Management in the Harvard Business Review from last February for a great overview of his thinking.

In his speech last week, he did not disappoint. In fact, he provided a distinct rationale and call to action for companies to embrace the Enterprise 2.0 movement.


Driving the Autobahn in a Model T

In his presentation, there were two distinct graphs that really drove home the point that it's time for new ways of managing companies. I've put them together below:



On the left, a conceptual chart outlines something many of us instinctively feel. The pace of change in our world is increasing. As Gary Hamel noted, year-to-year volatility in company earnings have been increasing exponentially the last 40 years. Those changes are manifestations of what we all experience. I thought he put it well when he said:

"What a company did in the past is now less predictive of its future."

Business Week in 2004 ran an article that nicely demonstrated the acceleration of change. It included these points:

• The number of Fortune 300 CEOs with six years' tenure in that role has decreased from 57 percent in 1980 to 38 percent in 2001.


• In 1991, the number of new household, health, beauty, food, and beverage products totaled 15,400. In 2001, that number had more than doubled to a record 32,025.


• From 1972 to 1987, the U.S. government deleted 50 industries from its standard industrial classification. From 1987 to 1997, it deleted 500. At the same time, the government added or redefined 200 industries from 1972 to 1987, and almost 1,000 from 1987 to 1997.


• In 1978, about 10,000 firms were failing annually, and this number had been stable since 1950. By 1986, 60,000 firms were failing annually, and by 1998 that number had risen to roughly 73,000.


• From 1950 to 2000, variability in S&P 500 stock prices increased more than tenfold. Through the decades of the 1950s, 1960s, and 1970s, days on which the market fluctuated by three percent or more were rare - it happened less than twice a year. For the past two years it happened almost twice a month.

On the right, the chart provides the major innovations in company management over the past 150 years. Current management systems reflect philosophies that were developed in an earlier era of greater stability. A quick primer on the different management ideas (note - cannot find information on McCollum):

Taylor: Frederick Winslow Taylor advocated: "It is only through enforced standardization of methods, enforced adoption of the best implements and working conditions, and enforced cooperation that this faster work can be assured. And the duty of enforcing the adoption of standards and enforcing this cooperation rests with management alone."

Sloan: Former GM CEO Alfred P. Sloan revolutionized the management of corporations through numbers: "Sloan oversaw the use of rigorous financial and statistical tools to profitably manage GM's far-flung empire."

McGregor: MIT professor Douglas McGregor developed Theory X and Theory Y: "In Theory X, management assumes employees are inherently lazy and will avoid work if they can. In Theory Y, management assumes employees may be ambitious and self-motivated and exercise self-control."

Deming: W. Edwards Deming was a professor and statistician credited with revolutionizing post-war Japan's manufacturing: "Dr. W. Edwards Deming taught that by adopting appropriate principles of management, organizations can increase quality and simultaneously reduce costs (by reducing waste, rework, staff attrition and litigation while increasing customer loyalty). The key is to practice continual improvement and think of manufacturing as a system, not as bits and pieces."

The point Gary Hamel drives home is that our business and economic environment has irrevocably shifted toward higher volatility and accelerated change. The sundering of companies from healthy industry positions to crisis mode in relatively short order demonstrates the need for updating management philosophies.


Need for Better Adaptability in the Post-Establishment Age

My own term for this is the "post-establishment age". In prior decades, change was slower, and companies could count on inherent advantages that helped them maintain their established positions. As Gary Hamel noted, protections came in the form of regulatory frameworks, monopolies (e.g distribution), capital access and other ways.

These protections continue to erode in our modern, WTO-governed society. The web and digitalization of content and processes are making it easier than ever for new ideas to be tested. Consumers have access to more information than ever. Social media ensures more people know about new companies and products more rapidly then ever.

Old protections are falling, while change and industry disruption is accelerating. What can modern companies do to manage in this new environment?

Gary Hamel prescribes two strategies for companies in the post-establishment age:

• Increased organizational adaptability


• Pushing innovation and decision-making out to employees

Adaptability is a critical strategy. It means that companies pivot as they learn new information about their markets, competitors and changes in customer behaviors. As noted in a recent Wall Street Journal article noted, companies can try more ideas faster and less expensively than ever:

"Technology is transforming innovation at its core, allowing companies to test new ideas at speeds - and prices - that were unimaginable even a decade ago. They can stick features on Web sites and tell within hours how customers respond. They can see results from in-store promotions, or efforts to boost process productivity, almost as quickly."

Gary Hamel then notes that senior executives continue to have a monopoly on strategy. This essentially makes companies dependent on a handful of executives' ability to adapt to change.

Yet employees are probably the earliest to know when something is changing. They also are faced with situations where they must come up with solutions. It is in this environment where companies will find their sources of adaptation. In an article for the Harvard Business Review, 25 Stretch Goals for Management, Gary Hamel included these two goals:

12. Share the work of setting direction. To engender commitment, the responsibility for goal setting must be distributed through a process where share of voice is a function of insight, not power.

17. Expand the scope of employee autonomy. Management systems must be redesigned to facilitate grassroots initiatives and local experimentation.

In the post-establishment age, these strategies are what distinguish leaders from those that will go through another disruption.


This Is Enterprise 2.0 Evolved

The cornerstones of Enterprise 2.0 include greater information visibility, tapping the emergent knowledge of employees and increased collaboration. Those are the foundational elements. Use them to create a company of higher adaptability and distributed innovation and decision-making.

As Gary Hamel concluded in his keynote:

"You can't build a company that's fit for the future unless it's one that's fit for human beings."

---

Hutch Carpenter is the Director of Marketing at Spigit. Spigit integrates social collaboration tools into a SaaS enterprise idea management platform used by global Fortune 2000 firms to drive innovation.

Top 10 Gary Hamel Insights (Spigit Innovation Summit)

by Braden Kelley

I had the good fortune to hear Gary Hamel of London Business School's Management Innovation Lab speak on the first day of the Spigit Innovation Summit on August 13, 2009.

Here are the top ten insights that I captured from Gary Hamel's speech:

1. We need to openly challenge our corporate management policies and processes, and experiment like we do in other scientific disciplines


2. The more consolidated the control of change is, the less resilient an organization will be


3. To come up with any really good idea, you have to challenge your deep orthodoxies - we need to do the same thing with our management principles


4. Two hard problems - (1) How do you do things at scale without being inflexible? (2) How do you have strong coordination without centralization?


5. "If call wait time is 30 minutes, how come I can't pay $2 and jump to the front of the queue?"


6. The future is not necessarily unpredictable, but it is often uncomfortable - As a result, management often fails to react


7. As knowledge becomes distributed across organizations and countries, it becomes harder to create sustainable differentiation


8. Not only is the pace of change going exponential, but business is getting a lot tougher because barriers to entry are falling, and things are changing so fast that by the time regulators understand something new, it's out of control


9. The time from leader to laggard in an industry is now sometimes measured in months


10. "We can create organizations that can manage incredible complexity, but with great inflexibility" - even though we complain about how organizations are managed, startups do it the same way only smaller

What do you think?

---

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.

Coming Next Week - Spigit Innovation Summit

Last week (July 28, 2009), I had the opportunity to attend Brightidea's Birds of a Feather 3.0 event.

Next week (August 13-14, 2009) I will endeavor to bring you live coverage of the Spigit Innovation Summit from the Four Seasons Resort Aviara in Carlsbad, CA.

Gary Hamel will be giving the keynote at the event, and will likely share his perspectives on corporate innovation gathered from his consulting work, his work with London Business School's Management Innovation Lab, and his research from his latest book "The Future of Management".

Over the course of two days, a range of innovation-related topics will be open for discussion with innovation leaders from a variety of companies. There will be sessions on best practices, use cases and internal innovation applications with specific examples provided by participants.

If you will be at this event and would like to share your thoughts about barriers to innovation (on or off camera), or discuss the possiblity of having your company's innovation case study included in an upcoming publication, please contact me.

---

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.

Further Q&A from UTEK Gary Hamel Webinar

I received some additonal notes from Hallie Middlebrooks of UTEK Corporation from the Gary Hamel "Innovation in Tough Times" webinar on February 17.

After cleaning up what I got, it is my pleasure to present these additional questions and answers from both Tim Jones, Ph.D., and Regina Lewis, Ph.D., below.

Q: In the Economist a couple of issues back, it was suggested that companies are pulling back from innovation and re-focusing on the bottom line and conserving cash. Are you seeing this in companies you consult with?

TJ: Yes in some areas but not in others. It differs both by market and my management stance: we are seeing steel companies proactively invest for the future even when laying-off staff and seeing FMCG companies cutting budgets at the same time as having highest profits ever

Q: How can FMCPGs take advantage of people tracking technologies - or will it only be for the retailer partners?

TJ: It is fully joined up opportunities that are being explored so that the product and the person are interlinked. If you combine RFID and mobile technologies together you can tell where both people and products are and so better understand useage etc. In addition people behaviour anlysis from tracking is highlighting unmet needs for new products

Q: What are the ways in which large diversified companies fund new innovations that cross several divisions or business units?

TJ: Several different approaches in play, but worth looking at the likes of Philips which has central design and R&D resources that work on projects dedicated to and hence supported by business units but also do about 30% of their innovation at a cross sector/cross business level - and this is where the interesting stuff is happening - white LEDs, integrated medical devices, etc.

Q: What do you think about competitions for idea generation? Can you give some best cases/learnings regarding competitions conducted till date?

TJ: Good but only if focused around a specific theme or challenge, otherwise a waste of time. We found that Marks and Spencer, Nestle and Nokia have all introduced good approaches over the years that others now emulate

Q: How do we build people to think about business cases when even the mention of it makes them very sick ie. Most people come up with ideas, but not really business ideas, or business cases. When we ask for business cases, they tend to shy away from that and so how do we tackle this issue to change the mindset of people in organizations? My question is: How can we change people to think about "business ideas" rather than normal ideas which has to be refined to a "business idea" to make it an innovation

TJ: Get over the idea of a business case as a heavy document - it is better as a compelling story which could be a simple diagram. Key issue with business innovation is to give people examples from outside their sector, discuss and then put thru filter of 'how could this approach help us' and then scope the concept. We run 1 day workshops with companies which typically use 10 different examples in the morning to engage and stimulate and by lunch we have three identified as being potentially relevant. The pm session is then spent working these up, pitching them and refining so that company has credible understanding of opportunity, ROI and roadmaps, etc.

REGINA: My feeling here is that every org should have a dedicated strategy team - or person, at the least -- that moves "ideas" along the continuum from being just that to being development initiatives. Someone must "own" the innovation stage gate process, with all of its go/no-go gates.

Q: Do you have any ideas what companies are going to make it through this economic downturn -- maybe have each person answer three companies they think...?

TJ: My top three are Nokia, Reckitt Benckiser and H&M but all those profiled on innovationleaders.org are well placed to be ahead of the pack
REGINA: Mcdonalds, Walmart, IHG.

Q: What should B-schools be doing differently to better prepare employees for the innovation and critical thinking challenges of today's workplace?

TJ: My opinion is that they should get rid of 50% of what they teach and get MBAs experimenting more - if you look at how Lego is working with the London School of Economics and Copenhagen Business School that will show you way people could gain new experiences that will be valuable in practice

Q: How do you differentiate between a fad versus a large unmet need (sustainable trend is probably better than large unmet need)

TJ: Fads tend to be short term, trends are medium term extrapolations of today - the new unmet needs are to be found in neither of these areas - cross sector foresight is where we see companies from P&G, Shell to the BBC getting real insights to drive innovation

REGINA: Any longitudinal "pulse taking" can give you a sense for the rates and which people are coming on board and actually changing their buying behavior. For example, I have been following the "greening" trend for quite some time... and so have understood its momentum.

Q: What advice do you have for small organizations trying to make a 'many small bets' innovation strategy work during a down economy?

TJ: Get rid of 75% of the small bets by filtering against global not local leadership and then focus resource on the 25%

REGINA: I advise against a "many small bets" strategy. I believe companies must focus knowledgeably on those few big potential wins.

Q: Do you believe that the current economic situation is a structural versus a cyclical shift? What will be the impact and fall-out on companies on and their product portfolios?

TJ: Depends on sector - for some like pharma and energy it is just a cyclic issue. For others like banking this is clearly a revolution opportunity. Others are in between and the winner will be those that use this as a catalyst for innovation

Q: How will premiumization and mass luxurization be impacted?

TJ: The me-too brands will suffer as authenticity rides high: Rolls Royce sales are not suffering as the rest of the sector plummets - the same is true in fashion, travel and wine

Q: What are the basic bare bones of innovation process that anyone could apply to be a successful innovator in current economy?

TJ: Lots of people have different views. I prefer the approach used by Reckitt Benckiser who is easily the most successful FMCG company around - take a look at their performance and profile on innovationleaders.org. Basically they have two decision points: is this a good idea that is better than what we had before and consumers will probably buy - that gets it into development. Then after development question is - is this an even better idea than before that offers a reason to believe for consumers that they will pay more for - that gets launch approval

REGINA: Know your customer. Understand their unmet needs. Be aggressive in solving for them.

Q: What roles do normal people in organizations play in terms of making management innovation happen?

TJ: Depends on organization but everyone can have a contribution depends at what level - look at Tesco for great cross organization innovation around continued customer focus and then look at others on innovationleaders.org like Virgin Atlantic for innovation coming from expert group

REGINA: Everyone can play a role in innovation via passion for the customer, and an enthusiastic belief that we can create change.

Q: What are the different methods and principles using in separating ideation and innovation management?

TJ: Loads on ideatools.com

Q: Is innovation in products, services, business models, etc. being pushed down in importance as companies are focusing on cash flow and preserving capital in the current economic climate?

TJ: Depends on sector - it differs both by market and my management stance: we are seeing steel companies proactively invest for the future even when laying off staff and seeing FMCG companies cutting budgets at the same time as having highest profits ever.

REGINA: At IHG, innovation is the "hot topic" of the year, as we want to be at the forefront once conditions improve.


@innovate

UTEK Webinar Synopsis: Q&A Session

I had the good fortune to attend a three-part UTEK webinar yesterday featuring Gary Hamel "Innovation in Rough Times", Tim Jones "Future Catalysts of Innovation", and Regina Lewis "Adopting an Innovation Strategy", and will now share some of the notes, quotes, and key insights I was able to capture.

Gary Hamel has been called the world's most influential business thinker by the Wall Street Journal, and his latest book, The Future of Management, was published by the Harvard Business School Press in October 2007 and was selected by Amazon.com as the best business book of the year. Gary Hamel was a founder of Strategos, which was acquired by UTEK in 2008.

Tim Jones, Ph.D., author of Innovating at the Edge, (published by Butterworth Heinemann) and Managing Director of Innovaro, a division of UTEK, will discuss the future catalysts of innovation.

Regina Lewis, Ph.D., Vice President of Consumer Insights for InterContinental Hotels Group, will wrap up this informative webinar with her discussion on the impact of adopting an innovation strategy and its benefits to InterContinental Hotels.

Please NOTE: Because these are notes, they may be a little rough, but I've done my best to clean them up.

Here are some of the key takeaways from the Q&A session:

(Gary Hamel)
Advice for small companies - Innovation is going to need to be radical in a startup in order to force your way into the marketplace

(Gary Hamel)
There is an optimal time to put resources beyond an idea (Hotmail-few months versus HDTV-20yrs) - Key questions to ask yourself

• Does infrastructure need to be built?


• Is there built-in consumer resistance?


• You can't push an idea faster with more money and you will have a hard time catching up if you get there too late by spending a lot of money

(Gary Hamel)
It's no longer first movers versus fast followers, it's smart movers versus dumb movers:

• Dumb movers don't learn from early experimentation


• You must learn faster per unit of input than your competition

(Tim Jones)
Every industry has its own natural clock speed

• Different industries move at different speeds (FMCG 18-24 mos, Energy 3+ yrs, etc.)


• OTC pharmaceuticals were one of the drug companies' strengths and now you will find more FMCG getting into the OTC pharmaceuticals space and these companies have faster clock speeds than drug companies


• Nokia is shifting from product company to a service company and if they use their 6-month cycle in the service sector this will give them a 3,4,5 times the speed advantage over their competition

(Regina Lewis)
It is important for us to innovate in more than a me-too fashion

• We have to look to leapfrog our competition


• How can we lead again?


• There are always going to be un-met consumer needs


• Anxiety and loss of control in traveling is one key focus area

(Tim Jones)
A lot of airports are trying to expand their capacity (Heathrow, Frankfurt, Schiphol)

• One limiting factor is the ability of the airport to process people through security


• One way to overcome this limitation has come from looking not at other airports, but from looking at Disney


• Queues for experienced people versus families versus novice people


• Disney focuses very heavily on queue management and getting people spending more money, etc.

(Gary Hamel)
The tendency over time is for a company to become more incremental because they start talking to the same consultants and measuring themselves against each other

• Ask your employees to tell you about their fundamental customer experiences in different parts of your production chain


• What are the companies that are making the most dramatic changes in customer expectations?


• The key is to look outside your own industry - What has changed your employees lives as consumers and investigate that

I hope these notes have given you a good idea of some of what was discussed in the Q&A session at the UTEK webinar and what the key takeaways were. Please also see my blog articles on Gary Hamel's and Tim Jones' and Regina Lewis' portions of the webinar.

Happy innovating!

@innovate

UTEK Webinar Synopsis: Gary Hamel - "Innovation in Rough Times"

I had the good fortune to attend Gary Hamel's webinar today on "Innovation in Rough Times", and will now share some of the notes, quotes, and key insights I was able to capture.

Please NOTE: Because these are notes, they may be a little rough, but I've done my best to clean them up.

Gary Hamel has been called the world's most influential business thinker by the Wall Street Journal, and his latest book, The Future of Management, was published by the Harvard Business School Press in October 2007 and was selected by Amazon.com as the best business book of the year. Gary Hamel was a founder of Strategos, which was acquired by UTEK in 2008.

Here are some of Gary Hamel's thoughts:

The tide is running out and the only way for companies to outperform their competition and market expectations is to continue to innovate.

The companies that win will have to create highly differentiated products and services, or build a radically-different cost structure compared to their competition.

In this market, innovation on the cost side is also important.

In the present market, companies face:

• Falling entry barriers (deregulation, digitization, new channels)


• Growing buyer power (more choices, better information, falling transaction costs)


• Hyper-efficient competitors (labor arbitrage, zero legacy costs, new business models)

There is no other area in business where the correlation is weaker between inputs and outputs than in innovation.

So how can you maximize your investment?


Five drivers of innovation efficiency (ratios):

1. No. of Radical Ideas/No. of Ideas (or incremental ideas)


2. No. of Innovators/No. of Employees


3. Ideas from Outside/Ideas from Inside


4. Learning/Investment


5. Commitment/Time

Additional Commentary on Driver #1 (No. of Radical Ideas/No. of Ideas):

• Most new ideas are incremental, but outlier ideas are the only ideas with the capaibility of delivering extraordinary profits


• The need to increase the proportion of radical ideas, doesn't imply taking radically more risk - there is not a direct correlation


• Does it have the power to change customer expectations? (Paypal, online news, etc.)


• Does it have the power to change industry economics? (eBay, IKEA, etc.)


• Does it have the power to change the basis for competition? (does it wrongfoot the competition)

Additional Commentary on Driver #2 (No. of Innovators/No. of Employees):

• Where does innovation come from?


1. Challenging unexamined orthodoxies


2. Exploiting unnoticed trends


3. Leveraging unseen capabilities


4. Meeting unarticulated needs


• Only a certain number of employees are truly innovators


• Key question - How many people have been trained to be business innovators?


• The answer most managers give mystifies me


• Every employee should be trained in the same way that Toyota trained every employee in quality control methodologies


• Toyota received 540,000 suggestions last year for improvement


• What is your company's average number of ideas/employee?


• 5-6 per employee per year should be the minimum but most companies are not anywhere close


• Companies are generally disappointed with their new electronic suggestion boxes (very incremental or flights of fancy)

Advice from Braden Kelley: Companies should not set idea submission goals, but they should train all employees how to be business innovators and have the strategies, policies, process, and systems in place to encourage idea submission and more importantly, the infrastructure to support idea implementation and communication of results

Additional Commentary on Driver #3 (Ideas from Outside/Ideas from Inside):

• View everyone as a potential partner


• Leverage the competencies/assets of other organizations where possible


• Recombination - Nike/Apple example


• Create platforms for 3rd party innovators (Microsoft, Google Maps, Apple AppStore - 50,000 apps)


• Get your customers to innovate (Dell IdeaStorm - 11,000 suggestions)


• Troll the world for good ideas (entrepreneurs in residence around the world, trolling patents, IBM's open-sourcing of its strategy)


• Bid out problems - Innocentive - was mostly technology - but now Chicago Transit Authority and others are putting up business problems

Additional Commentary on Driver #4 (Learning/Investment):

• How many things do you try?


• How quickly do you learn?

Additional Commentary on Driver #5 (Commitment/Time):

• Consistency over time is important, try not to have huge shifts in innovation effort


• Commitment is about persistence and perseverence not how much you spend


• Companies too often lose patience with an idea


• Nespresso took about 20 years for that product to become a significant business for Nestle (lots of evolution in the business model, the product, etc.)


• How engaged are people?


• This varies by country (Companies in Asian countries tend to have highly disengaged employees in comparison with western countries)


• People don't tend to feel engaged - Less than 1 in 5 people feel highly engaged in their work


• Obedience -> Diligence -> Intellect -> Initiative -> Creativity -> Passion


• Those things at the top (initiative, creativity, passion) are gifts from employees


• We are now in the creative economy


• How do I build an organization that elicits these extraordinary gifts that these employees can give?

I hope these notes have given you a good idea of some of what was discussed in Gary Hamel's presentation of "Innovation in Rough Times" and what the key takeaways were. Please also see my blog articles on Tim Jones' and Regina Lewis' portions of the webinar.

Happy innovating!

@innovate