Call for March 'Innovation Perspectives'

March's opportunity to contribute your Innovation Perspectives is now here.

This monthly feature presents our loyal readers with different perspectives on a single topic all in one place - from several different authors. It gives our innovation community the opportunity to compare, contrast and discuss them in the comments here on Blogging Innovation and with the 2,300+ people in the Continuous Innovation group on LinkedIn.

Here is this month's topic for publishing the week of March 29-April 4, 2010:


How should firms develop the organizational structure, culture, and incentives (e.g., for teams) to encourage successful innovation?

• Thank you to Drew Boyd for submitting this month's topic


• Thank you to Brightidea for sponsoring Blogging Innovation this month. Find out more about Brightidea here.


• The submission deadline is midnight GMT on March 27, 2010

Several contributing authors will be writing articles on this topic, but you are also welcome to submit an article. The process is simple:

1. Submit your article using our contact form


2. I will e-mail you back with a request for a 1-2 sentence author byline and a photo like those on Blogging Innovation

We look forward to sharing March's Innovation Perspectives with you and hearing your thoughts!


If you missed February's Innovation Perspectives, you can find them 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.

What's the Best Environment to Improve Innovation?

by Michael A. Dalton

I had an interesting discussion recently with a company vice-president that asked me what he could do in terms of facilities design to make the work environment more conducive to innovation. Anyone familiar with my Theory of Constraints (TOC) based approach to innovation improvement will know that my response was to ask him if the facility was his innovation bottleneck. After getting an unsure look, I continued and asked what one thing was most constraining his organization's new product throughput.

He pondered my question for a second or two and replied, "I guess I'd have to say that it's finding more impactful new product ideas."

That made my response simple. "Then if you want to create a better environment for innovation, get out of yours and into theirs."

He stared at me with a puzzled look for a moment then smiled. "So the internal stuff isn't where I should focus."

Bingo - one of the most impactful things a leader can do is to keep their organization focused on high leverage activities. But internal facilities were far from his biggest problem.

Of course, it's the era of design. So I don't mean to completely dismiss the role that the physical environment and culture can play in fostering creativity. If you're putting up a new building, it's probably worth considering. Having worked in situations where R&D and marketing were located in separate buildings and where they were co-located, I can say that locating them together definitely helps people interact and problem solve more easily. Similarly, I've worked in some cutting-edge facilities from a design and aesthetic view. Who could argue against having views that inspire, lots of open spaces, and ample team meeting areas?

But for most companies, it's really missing the point to make the R&D and office work environment the focus of your innovation improvement efforts. Instead, the important thing is to get people out of the office more often to visit customers and end users in their work environments. That's where the actual problems exist and where the real inspiration for new products will come from!

The best new products solve customers' problems by simplifying or eliminating costly, difficult, time consuming, or unpleasant tasks. These kinds of ideas aren't likely to come to your people while they're in the office. These problems live out in the market. An entire discipline of ethnographic research has grown out of watching users in action to identify these problem tasks. When researchers see these problems firsthand, they get additional insights into the problem that lead to a better solution.

The 3M Post-it is a great example of the how getting out of the office can help create great new product ideas. 3M Scientist, Art Fry, was a singer in his church choir and was frustrated when the little bits of paper he used to mark pages kept falling out of the hymnal. Unfortunately, he couldn't use any of 3M's tape products because that would have torn the pages. Fry invented Post-its when he recalled the poor adhesive one of his colleagues had accidentally cooked up and began using it to make his hymnal markers easily removable.

Customer focused innovation works best when researchers can get out and see the problems firsthand. When SC Johnson researchers observed consumers problems with cleaning the shower, they invented the Scrubbing Bubbles automated shower cleaner as a way to simplify the job. Push the button on your way out of the shower and it keeps the shower clean for you. Sometimes it takes development people with a strong understanding of the technology to see the customers' problem and at the same time envision how they can solve it.

Many companies will struggle with this advice because they leave the customer interaction to sales and marketing. But limiting your R&D group to work on the ideas that others bring in is like asking them to work with part of their brain tied behind their back. Often, these companies come to me saying that they have plenty of ideas, but they just aren't seeing the results they had hoped for out of new products. Well, it's no wonder. Most sales and marketing people focus on selling what's available today. Occasionally they look for opportunities to tweak or customize products. That can create new business but rarely results in high growth new products.


The Simple Bottom Line:

Work environment plays a role in innovation and creativity, but if your constraint is in finding better opportunities, you'll do better to focus externally on the customers work environment. That's where the problems are. If you can connect your development with those problems, that's also where you'll see the most new product impact.


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Mike Dalton is the Chief Innovation Coach for Guided Innovation Group and the author of "Simplifying Innovation" and the Simplifying Innovation Blog. Guided Innovation Group has a simple mission - helping companies turn their new product innovation into more bottom-line impact.

Growing a Garden of Innovation

"Companies are actually living organisms, not machines. We keep bringing in mechanics, when what we need are gardeners." - Peter Senge


by Mitch Ditkoff

Sustainable innovation, the endless effort to find a better way, cannot be achieved by robotically lining up best practices and imitating them. The real catalyzing agent for renewable innovation is the ground from which these best practices spring - the confluence of purpose, people, and processes better known as culture.

From where will the next wave of groundbreaking innovation come?

Not from organizations mechanically mimicking each other's best practices, but from organizations with the authentic commitment to take their stand on ground that has been cultivated for breakthrough.

If you check the contents of the most popular books on innovation, the same topics show up again and again: strategy, systems, process, leadership, customer focus, risk, speed to market, prototyping, metrics, mass collaboration, market intelligence, technology, and creative thinking.

Clearly, all of these topics are important. But none of them can take root in an organization without one fundamental element being in place - a consciously created culture of innovation.

Is such a culture simple to create? Yes. Is it easy? No. And the reason why it is not easy is because the ground of most organizations is hard, untilled, and in major need of clearing.

The metaphor that most clearly conveys the effort required is creating a garden.

To experienced gardeners, the steps needed to create a garden are simple. To the inexperienced gardener, it is a tangle of complexity.

Yes, gardening demands sustained and methodical effort. And yes, sweating comes with the territory. But getting a yield - something to harvest - is a fundamentally straightforward task.

If your company is clear about the effort required, creating a culture of innovation (lets just call it a garden of innovation) is simply a matter of taking the time to execute each step thoroughly 0- in the time honored way gardeners have always practiced their craft.


1. WHET THE APPETITE

If you are serious about being a gardener of innovation, the first thing you will need is hunger - a real appetite for results.

Growing a garden takes sustained effort. It is hard work - most of it unglamorous and unappreciated. Hunger for a yield is the serious gardener's real motivator. Yes, the serious gardener likes being outdoors and, yes, the serious gardener likes getting exercise, but the ultimate product of his/her labors - the harvest - is what it is all about.

Without this level of commitment, the gardening effort remains only a hobby and does not have the roll up your sleeves and get dirty quality so essential to reaping a result.

If your workforce has no appetite for innovation, you will need to find a way to whet it. If you choose not to, people will sit idly by, waiting for R&D, senior leadership, or the tooth fairy to lead the charge. And while they may talk about growth, shovels, and the need for bulk purchase of mulch, talk will not put food on the table.

Fortunately, somewhere, deep inside everyone in your organization is the impulse to create. This impulse is innate. Your task is to awaken this impulse and help people own the effort to innovate. If they do not own the effort, the only thing you will be eating at harvest time will be your own words. (P.S.: Winter is on the way.)


2. STAKE and PREPARE THE GROUND

Amateur gardeners, fueled by visions of ripe tomatoes, have a tendency to plant before they are really ready. Unclear about how large a garden they can sustain, unsure about what is needed to prepare the ground, unable to resist the impulse for a quick yield, they rush in willy nilly.

The result? Lots of wasted effort and the kind of sweating that signifies almost nothing. The same holds true for organizations who claim they want a culture of innovation.

The antidote is a simple, two step process (though the description of the process is much simpler than the execution).

First, an organization needs to get clear about the scope of the effort they want to make. It needs to stake its territory or, more precisely, define the fields in which it wants to innovate. (If it tries to innovate everywhere, all the time, it will only deplete its resources and exhaust its workforce.)

Secondly, it needs to prepare the ground for planting.

This task includes removing obstacles that will interfere with growth, as well as enriching the fertility of the soil. Weekend gardeners cringe at this kind of preparatory effort. It does not feel like fun and there is nothing immediately to show for it. But without this effort there will be no foundation - no ground - for future success.


3. FIND THE SEEDS

You can have ample space to plant a garden. You can know exactly where that ample space is. And you can have lots of fertile soil in this ample space. But unless you have healthy seeds to plant, space is all you will ever have.

If you want a garden of innovation, you need seeds. Not just one kind of seed, but many. Indeed, the more varied seeds you have, the greater your chances for an interesting yield.

In the realm of innovation, ideas are the seeds. All innovation begins with an idea. Ideas are the fuzzy front end of the innovation process - the alpha and omega of new growth. No ideas, no innovation. Its that simple.

The big question, then, is this: Where will your company get its new ideas? Is there an existing process? And if so, is this process working? Can you count on your workforce to deliver high quality, game changing ideas? Or is there something else you need to be doing in order to tap their brilliance?


4. PLANT THE SEEDS

While it is true that some seeds, spontaneously carried by the wind and landing on fertile soil, find a way to plant themselves, most gardens require that seeds be planted in a more dependable way.

If your company is sincere about its intention to create a culture of innovation, it will need to refine its seed planting process. More specifically, it will need to establish a more effective way for the carriers of seeds to increase the odds of those seeds taking root.

Yes, aspiring innovators will need to become more adept at pitching/planting their ideas. But at the same time, the people to whom new ideas are being pitched will need to become more receptive to the possibility that something new is worthy of taking root.

Having a silo of healthy seeds is a good start, but ultimately those seeds need to be planted - and they need to be planted in a way that will radically increase the odds of them growing into seedlings.


5. FENCE THE GARDEN

If you have ever planted a garden, you have experienced the phenomenon of uninvited predators showing up at all hours to devour your tender, young seedlings. Deer, raccoons, moles, rabbits, and a host of other unidentifiable varmints seem to have no other mission in life but to downsize your dreams of winning the state fair or, at the very least, eliminate all possibility of you having fresh lettuce for dinner. It comes with the territory. And it will continue to come with the territory unless you fence your garden.

Organizations of all shapes and sizes experience the same phenomenon.

Promising new business growth ideas - the tasty indicators of breakthrough innovation - are routinely devoured by ravenous corporate naysayers. That is, unless the organization finds a way to protect their aspiring innovators.

Your role, as a gardener of innovation, is to fence your garden and protect your people from the overly acidic scrutiny, doubt, and premature evaluation of predominantly left brained, metric driven, analytical inhibitors of innovation. It can be done. It must be done. And you are the one to champion the process.


6. TEND NEW GROWTH

Conceiving a garden is relatively easy. It requires no special skills, discipline, or education. Anyone can do it. Indeed, anyone does do it every single Spring and Summer. Getting a harvest, however, is an entirely different matter. It is not so easy - and unlike conception, requires skill, discipline, resources, and the ability to learn on the job.

In the same way, conceiving new ideas is relatively easy. It happens every day of the year to millions of people. Bringing them to fruition is not so easy. Along the way, they get neglected, mishandled, and trampled on. What starts out as a brilliant new possibility, often shrivels on the vine. Most organizations have no conscious process for nurturing the growth of new ideas.

As a result, many powerful, new ideas never mature.

They may break new ground, but they do not necessarily flower and bear fruit. The good news? It does not have to be this way. With the right kind of sustained effort, gardeners of innovation can dramatically increase the odds of exciting new ideas becoming part of the harvest and making it to market.


7. THIN and TRANSPLANT

Inexperienced gardeners, intoxicated by their need for a big harvest and overcompensating for their fear of having nothing to show for their efforts, tend to plant too many seeds too close together. Their fear usually dissipates in a few weeks when the first sprouts emerge, but then another challenge surfaces - what to do with the apparent bounty of new growth?

While the profusion of greenery certainly looks good to the untrained eye, the reality is different. New seedlings start competing with each other for water and nutrients. Roots entangle. Left unaddressed, the results are disappointing - row after row of stunted, scraggly plants.

Savvy gardeners respond quickly, thinning out new growth to make room for a select number of the healthiest plants to flourish.

Really savvy gardeners go one step further - transplanting the healthiest of the thinned out plants to new, roomier locations.

Organizations trying to raise the bar for innovation face the same challenge. Intoxicated by their need for impressive growth (and wanting to involve as many employees as possible in the process), they get overwhelmed by a profusion of ideas and initiate too many projects - ideas and projects that end up competing for the same, finite resources.

The result? Scraggly, stunted, and undeveloped ventures.

The antidote? A clear strategy for how their organization will evaluate, select, and fund new initiatives - along with a process for identifying promising new growth to be transplanted for future development.


8. CELEBRATE THE HARVEST

All cultures around the world have a holiday, ritual, or ceremony dedicated to expressing gratitude for the bounty of the harvest. In their bones, they understand the purpose, power, and privilege of giving thanks. Their recent harvest may have fed the body, but the collective acknowledgment of the harvest feeds the soul, strengthening everyones resolve to begin the growing process again the next season.

Corporate cultures could learn a lesson or two from this age old practice.

Historically, organizations have been severely lacking when the time comes to acknowledge the harvest and the people whose efforts were essential to manifesting that harvest. The endless demand for output drives most business leaders to conclude that acknowledging successes is a waste of time - a luxury no bottom line watching organization could afford. Somehow, deep within the collective psyche of senior leaders, lurks the fear that celebrating successes will invariably lead to a fat and lazy workforce.

Nothing could be further from the truth.

People flourish when their efforts are acknowledged - not only individually, but as an entire workforce. If you are serious about establishing a sustainable culture of innovation, remember to take the time to acknowledge your gardeners. For their effort. For their resilience. For their collaboration. And for whatever harvest they are able to manifest.

Food for thought?


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Mitch Ditkoff is the Co-Founder and President of Idea Champions and the author of "Awake at the Wheel", as well as the very popular Heart of Innovation blog.

Five "Must-Haves" for a Strategic Plan

by Holly G. Green

Strategic planning methodologies are like shoes - one size does not fit all.

Some companies use a top-down, autocratic approach, where the plan gets created by a small group of senior managers and handed down to the rest of the organization. Some prefer a more democratic approach, with employees at all levels contributing their ideas and input to the plan. Most companies employ a hybrid of these two models.

The best approach for your company depends on several factors, such as size, industry, culture, type of workforce and management style. Regardless of which approach you choose, however, every strategic plan needs five key elements in order to achieve the intended results.

1. Mission. This defines why you exist as an organization. Specifically, it tells others (not just those in the organization) why you exist. Ideally, it describes some noble purpose that is both inspirational and aspirational, so that it instills pride in all those connected with the organization.


2. Guiding principles. Also called organizational attributes, these describe how you expect people to behave with each other and with other stakeholder groups. Guiding principles broadly define which types of behaviors are acceptable and which behaviors will not be tolerated. In particular, they describe how you will behave when faced with difficult situations or challenges.


3. Value propositions. These explain the value you provide to your organization's different stakeholder groups, both internal and external. For example, why do customers buy from you? Why do employees come to work for your organization? What kind of return can shareholders expect? How does your community benefit from the work you do?


4. Destination points. These identify where your organization wants to go within a specified time frame. This is perhaps the most critical element in the whole process because the more clearly you define your desired end state, the greater your chances of getting there.


5. Areas of focus/strategies. These define, in a broad sense, how the organization will get to where it wants to go. They are the three to five areas everyone should be focused on to get to the destination points. What cuts across several destination points; where should the majority of energy be focused; what must everyone keep in mind as they make investments in people and other resources; and, what guides you on what to do and not to do are the core questions answered.

These five elements form an essential foundation for the strategic planning process. If even one of these bedrock elements is missing, your chances for success become marginal at best.

Once these elements are in place, the next step involves action planning and breakthrough modeling to determine what it will take to get to where you want to go. Here is where you get down to the nitty-gritty to figure out what organizational capabilities (systems, tools, processes, people and technologies) are needed to reach your destination points. Effective strategic planning also requires that you set goals and define team and individual accountabilities, as these link the big picture to individual goals and competencies.

Ultimately, strategic planning is like a jigsaw puzzle - all the pieces must be in place in order to complete the picture. The mission and guiding principles inspire and energize employees, while creating pride and connection throughout the organization. The value propositions provide a touchstone for staying focused on what matters to stakeholders. The destination points provide clear goals and milestones that provide the big picture employees want and need. And the strategies/areas of focus create alignment and ensure that everyone in the organization is working toward the same goal.

Have you got your five must-have's in place? And is everyone clear on what they are?


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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.

Innovation From the Inside Out

by Mitch Ditkoff

These days, almost all of my clients are talking about the need to establish a culture of innovation.

Some, I'm happy to report, are actually doing something about it. Hallelujah! They are taking bold steps forward to turn theory into action.

Still, the challenge remains the same for them as it does thousands of other forward-thinking companies - and that is, to find a simple, authentic way to address the challenge from the inside out - to water the root of the tree, not just the branches.

In today's process-driven, OD-centric, Six-Sigma savvy organization, the tendency is to focus on systems as opposed to people - as if systems were sufficient to guarantee change.

Guess what? Systems are not sufficient to guarantee change. In the words of Oliver Wendell Holmes, "Systems die. Instinct remains."

This is not to say that organizations should ignore systems and structures in their effort to establish a culture of innovation. They shouldn't.

But systems and structures all too often become the Holy Grail - much in the same way that Six Sigma has become the Holy Grail.

Unfortunately, when the addiction to systems and structures rules the day, an organization's quest for a culture of innovation degenerates into nothing much more than a cult of innovation.

Organizations do not innovate. People innovate. Inspired people. Fascinated people. Creative people. Committed people. That's where innovation begins. On the inside.

The organization's role - just like the individual manager's role - is to get out of the way. And while this "getting out of the way" will undoubtedly include the effort to formulate supportive systems, processes, and protocols, it is important to remember that systems, processes, and protocols are never the answer.

They are the context, not the content.

They are the husk, not kernel.

They are the menu, not the meal.

Ultimately, organizations are faced with the same challenge that religions are faced with. Religious leaders may speak passionately about the virtues their congregation needs to be living by, but sermons only name the challenge and remind people to experience something - they don't necessarily change behavior.

Change comes from within the heart and mind of each individual. It cannot be legislated or evangelized into reality.

What's needed in organizations who aspire to a culture of innovation, is an inner change. People need to experience something within themselves that will spark and sustain their effort to innovate - and when they experience this "something," they will be self-sustaining.

They will think about their projects in the shower, in their car, and in their dreams. They will need very little "management" from the outside. Inside out will rule the day - not outside in. Intrinsic motivation will flourish.

People will innovate not because they are told to, but because they want to. Open Space Technology is a good metaphor for this. When people are inspired, share a common, compelling goal and have the time and space to collaborate, the results become self-organizing.

You can create all the reward systems you want. You can reinvent your workspace until you're blue in the face. You can license the latest and greatest idea management tool, but unless each person in your organization OWNS the need to innovate and finds a way to tap into their own INNATE BRILLIANCE, all you'll end up with is a mixed bag of systems, processes, and protocols - the husk, not the kernel - the innovation flotsam and jetsam that the next administration or next CEO or next key stakeholder will mock, reject or change at the drop of a hat if the ROI doesn't show up in the next 20 minutes.

You want culture change? You want a culture of innovation?

Great. Then find a way to help each and every person in your organization come from the inside out. Deeply consider how you can awaken, nurture, and develop the primal need all people have to create something extraordinary.


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Mitch Ditkoff is the Co-Founder and President of Idea Champions and the author of "Awake at the Wheel", as well as the very popular Heart of Innovation blog.

Is China an Innovative Society?

by Stefan Lindegaard

I tapped into an interesting discussion on LinkedIn. Chris Gelken, who is host and co-producer of Today, a live news magazine, asked whether China is an innovative society.

Personally, I find the development of China to be both fascinating and a bit frightening seen from a Western perspective. Based on several visit, my take is that if China avoids too many financial bubbles, then the drive and ambition of the Chinese people to climb the value chain ladder will turn it into an innovation hotspot sooner than many think.

There are many great comments in the discussion and I have inserted snippets from a couple of them below. Check out the rest for yourself: Is China an Innovative Society? (requires group membership to China Networking Group)


Zhiyun Chen, Vice President at Pixelligent
I think as indivduals Chinese are very creative. It is result of strong natural selection by firece competetion in a closed society. The problem, though, is Chinese society still lacks mechnisms to channel the creativity of individuals into constructive innovations.

Edward Eng, Copywriter at Getchee
Rather than ask if China is innovate or not, people should focus on how China needs to improve its global marketing skills. The reason why many people think China isn't innovate is because no one knows what they are doing in China. People and businesses in China have great ideas and products but sometimes they just don't know how to effectively market them to the global consumer market. This is where China needs to strengthen its innovative juices.

John Walmsley, MD at Scot Lift Systems
They have the ideal situation for innovation as the Universities concentrate on designing and developing products which will meet a market need and not play around learning things which do not relate to Industry and Commerce. Where there is a gap is in Product design where they seem to lack the skills in making their products look modern and appealing. If they get that right then look out World.

Stephen DeKuyper, Managing Principal at CresaPartners
My experience tells me an overwhelming "no". Good at copying, good at driving costs down, but not innovative. I would be interested in seeing how many patents are applied for out of China. I guess it would be very low. I think with the size of the population, it will go up, but on a per capita basis, I think it will remain low. This does not equate to being smart or not. I just don't think there is an environment for innovation.

Bill Dodson, Principal at TrendsAsia
China excels at innovation, but not disruptive Innovation. "Small i" innovation is about patching and work-arounds. "Big I" Innovation is about changing the course of markets and even of societies. Chinese culture and history have always been supportive of "small i" innovation, due to the capricious nature of local government policies and decisions; and due to dramatic turns of events - revolts, revolutions, banditry, dynastic dissolution - that quickly destroy the fruits of labor. Hence, the tendency of so many constructions and creations in Chinese society to be just "good enough"; after all, who knows how long such works will be able to stand?


What do you think? Is China an innovative society?


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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.

Real Reason Amazon Should Acquire Netflix

by Ric Merrifield

Amazon and Netflix might be great together, but not for the reasons you might think.

The way I see this, it's a little bit like peanut butter and chocolate, two great tastes you might not expect to go well together. People are talking about the possible acquisition of video company Netflix by Amazon, and they are speculating that it has to do with movies and streaming media. Maybe, but I don't think that's why this acquisition would be so powerful, and I am frankly surprised I haven't heard more people talking about this.

Here's why.

One of the biggest mistakes I think Amazon has been making all along is ignoring the buying history of customers. They never recommend anything to me based on my buying history. They tell me what other people have bought when I buy a certain book or a tent or a squash racket, but they don't seem to really pay attention to what I buy and what I like. And I buy a LOT on Amazon. They are crazy to have ignored this for so long.

By contrast, Netflix has the most incredible recommendation process ever. While I do have to make the effort to rate movies I have watched (irrespective of whether I watched them through Netflix) based on what I have liked and what I haven't liked, they have the ability to say, for example, that for a movie like Pulp Fiction, while the average viewer gave it three and a half stars out of five, based on my history and preferences, they think I would like it much more, on the order of four and a half stars. What's amazing to me is that they are always right, and I have really unusual taste in movies.

Back to peanut butter and chocolate - if Amazon could use the Netflix recommendation engine innovations to do a better job of tracking my purchases and preferences and recommending everything from books to movies to music to running shoes, it would be amazing.

Is it worth it? Well as of today, Netflix is worth about $3.22 billion, according to Wall Street, and Amazon is about 16 times bigger at $52 billion and to have this incredible way to connect with customers and help them find what they will really like even before they know about it, that would be a huge, much needed, boost for Amazon. The lift in revenue would be significant - just ask anyone in retail about how much upselling is done at the point of purchase.

Overdue rethinking at Amazon, but a great match. I really hope it happens.

P.S. It makes for an interesting side note that if Amazon does buy Netflix, that would probably put founder and CEO Reed Hastings on the board, and he's already on the board of Microsoft. Would he stay on the board of Microsoft?


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Ric Merrifield is known at the "Business Scientist" at Microsoft Corporation in Redmond, WA and is the author of "Rethink". He blogs about ways to rethink through getting out of what he calls "the 'how' trap".

Will Cadbury give Kraft indigestion?

by Steve McKee

After months of intrigue, Kraft finally made a successful bid for venerable British candy maker Cadbury, leaving archrival Hershey's on the sidelines.

Kraft management predicts that the $50 billion combined company will be able to save $675 million over three years, but that's not the primary reason for the merger. It's all about global distribution and access to developing markets. Cadbury has it, Kraft wants it. Makes sense on paper.

Most mergers do make sense on paper, yet many become spectacular failures. The reason? A lack of appreciation for just how difficult it is to integrate not only global operations, but two proud and independent workforces.

Kraft is going to face this problem in spades with Cadbury. Todd Stitzer, Cadbury's CEO, said that Hershey's would have been a better cultural and operational fit. The company's Chairman, Roger Carr, took it a step further by saying Kraft is "an unfocused conglomerate" with "unappealing categories" and management that "underdelivers." Carr went on to say, "There is no strategic, operational, managerial or financial reason" for the merger.

Sure, Carr's statement may have been a bit of strategic bluster to raise the value of the offer (which he succeeded in doing), but it sounds pretty categorical to me. And it was telling that not a single Cadbury executive was present on the conference call with analysts to discuss the deal. Hmm.

Kraft estimates it will take $1.3 billion to "integrate Cadbury." I'm not sure exactly what that means or who came up with the number, but I don't know how anybody could forecast the costs associated with the fear, resentment and internal jockeying with which Kraft and Cadbury managers and employees are now having to deal. The fact that Britons consider Cadbury a national treasure that has been overrun by ugly Americans sure won't help.

Let's hope Kraft doesn't end up with a stomachache.


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Steve McKee is a BusinessWeek.com columnist, marketing consultant, and author of "When Growth Stalls: How it Happens, Why You're Stuck, and What To Do About It." Learn more about him at www.WhenGrowthStalls.com and at http://twitter.com/whengrowthstall.

Innovation vs Commoditization

by Steve McKee

You can hardly turn around these days without running into some sort of reference to innovation. Dozens of books about the topic line the shelves at Borders and Barnes & Noble, from "The Art of Innovation" to "The Myths of Innovation." Innovation is rapidly becoming the latest business buzzword.

But before you dump 'innovation' into the jargon dustbin along with 'reengineering', 'rightsizing' and 'paradigm shift', consider this: the need for innovation has never been greater than it is today.

Doug Hall is founder and CEO of Eureka! Ranch, an organization that helps companies define, refine and improve their new ideas. In an interview with SmallBiz magazine, Hall defined innovation as that which:


"moves companies and their offerings along a continuum from providing commodity products or services to having a monopoly that is extremely difficult to combat."


Hall's definition is spot-on, and made even more significant by the fact that no company's position along that continuum is static. If you're not actively moving your company away from commoditization, it's destined for it. The extent to which any business proposition or value equation is achieving success in the marketplace is the extent to which it will attract competitors who want what it's got. There's simply no free pass to sustainable success.

If you're making money you're making noise, and competitors are bound to notice. They'll deconstruct your products, mimic your pricing structure, duplicate your distribution system, infiltrate your customer relationships, and do anything else they can to take your margin and market share. In so doing, they'll be creating acceptable substitutes for your products and services, which without intervention will inevitably lead to a price war in which no one wins. Unless you can stay ahead of the game through continuous renewal and change (i.e. innovation), your competitors will commoditize you right out of business.

As frightening as this prospect might be, many companies are intimidated by the concept of innovation. They somehow think it's the purview only of organizations with massive R&D departments funded by equally massive budgets, not the typical small- or medium-sized business. But this reflects an incomplete and unrealistic understanding of what innovation is really all about.

One of the reasons executives think this way is because we tend to associate innovation with breakthrough leaps forward - advances that change the playing field, shift competitive dynamics, make the covers of Forbes and Business Week and end up as business school case studies. Certainly, big innovations can be big news, and for good reason (Doug Hall's research shows that major breakthroughs are worth four times as much as minor innovations). Naturally, they're the ones that get the most press.

But the systematic introduction of even small improvements along the commodity-monopoly continuum can compound to deliver just as much (if not more) impact as a single big breakthrough. Popular Science says of innovations:


"The objects don't necessarily need to be beautiful. They don't have to be eco-friendly. They don't even have to be difficult to build. They just have to push past what we thought was possible just twelve months ago."


To that I would add that they don't have to be big. They just have to be consistent.

If you spend just a few hours critically analyzing your industry from a customer's perspective (perhaps even involving customers themselves), you'll identify dozens of pain points about which somebody ought to do something. Airline seats should be comfortable. Take-out orders shouldn't be wrong. Physician's handwriting should be legible. The better you can anticipate what customers will be wanting/needing/expecting down the road, the more likely you can be the leader that first addresses the issue. No one, as they say, ever asked for a microwave oven. Or even a curved shower rod.

Want to keep commoditization at bay? Focus on innovation. No matter what size, shape or form your company is.


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Steve McKee is a BusinessWeek.com columnist, marketing consultant, and author of "When Growth Stalls: How it Happens, Why You're Stuck, and What To Do About It." Learn more about him at www.WhenGrowthStalls.com and at http://twitter.com/whengrowthstall.

Org Chart Kool Aid

by Mike Myatt

Since Organizational theory is a hot topic these days, I thought I'd poke a bit of fun at that old corporate tradition that is the Organization Chart. Over the years I've seen every type of org chart in existence. Some have come and gone only to come again. Every year or two the latest revolutionary thinking in corporate organizational theory spawns a new form of charting. The dynamics of corporate organization are so revered by B-school professors and management consultants that an entire generation of corporate management has drunk the org chart Kool-Aid. These managers often rush to adopt the latest thinking without any consideration for whether or not the new form of structure is even appropriate for their business. So powerful is this dynamic that entire companies and numerous products have been built to support these latest trends. In the time it has taken to author this musing it wouldn't surprise me if Visio had a new product release.

So, is an org chart a corporate asset or a waste of time? The answer depends on the purpose behind its creation, the process used to create it, and the corporate purpose for the existence of the chart post creation. The following list contains my top 10 reasons not to create an organizational chart:

1. To give the CEO an opportunity to view his name at the top


2. Because you need to beef-up your management presentation and you have room for an extra PowerPoint slide


3. Your management consultant told you to create one


4. The business planning software you purchased has a template for one


5. Your CFO just read a new article on corporate organizational theory


6. You just attended an off-site where someone drew an off-the-cuff chart on a dry erase board and it looked good


7. When reviewing your competitor's website you noticed they had one, and well your website needed updating anyway


8. There wasn't anything better for the intern to do


9. Someone got a promotion


10. It just seems like you should have one

Putting the satire aside, a business should in fact have an organization chart. A sincerely motivated, properly constructed, and actively implemented organizational chart can in fact help refine the operational aspects of any business. The development of an org chart should be a serious initiative born out of solid underlying business logic, process and methodology. Culture and environment are considerations that are often times completely ignored in the design of and org chart while perhaps representing the most critical architectural elements.

The most common mistake made by corporate management is that the organization chart is created way too early in the process before business rules and logic are aligned. Much like the order of operation principles that apply to an algebraic formula, if you get the sequencing wrong you can't solve the problem. An org chart is not where you start the process, but is rather the culmination of many processes helping to insure a certainty of execution and clarity of direction by creating a road-map to be followed.

There's an old joke in business circles that says "every company has two org charts... the one that's put into graphical form and incorporated in the business plan, and the one that never gets published but is actually representative of how things really work." The process of corporate organization is most succinctly and easily understood by using the following order of operation which I developed more than two decades ago:


"Values should underpin Vision, which dictates Mission, which determines Strategy, which surfaces Goals, that frame Objectives, which in turn drives the Tactics that tell an organization what Resources, Infrastructure and Processes are needed to support a certainty of execution." - (Mike Myatt 1988)


The org chart should enter the organizational construction cycle as deep into the cycle as possible to avoid the joke that led off the preceding paragraph. By waiting to create your organizational paradigm until there is at least some level of maturity in the business, a clear picture of who, what, when, where, why and how will begin to develop. It is only at this stage that you can properly align expectations, with process, culture and environment. It is then and only then, that you should address the need for, and deployment of, your human capital assets.

The bottom line is that I have observed all types of organizational structures (in vogue, antiquated and otherwise) succeed, and I have also seen them fail. It is not the "type" or the "style" of chart used that works or doesn't, rather it is the process of design that was used in creating the org chart that will determine its usefulness, functionality and adoption. That said, my personal preference is to build a very flat organization, and where a hierarchical framework is necessary, to drive complex decisioning down as low as possible within the organization structure.


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

Culture Doesn't Trump Strategy

by Mike Myatt

I was checking Twitter yesterday while getting ready to board my flight when a quote attributed to @zappos (Tony Hsieh, CEO of Zappos) came across my timeline. It read "Culture Trumps Strategy." I did a double-take on this as it just didn't resonate with me. Then my timeline started to get peppered with Retweets of this quote from some very bright people. Okay, maybe I missed something here... I really respect Tony Hsieh, and the people Retweeting this quote are some very smart people, I better read it again - "Culture Trumps Strategy" - it still didn't resonate with me. What did I do next? I Googled the phrase "Culture Trumps Strategy" and found that Stanford offered an Entrepreneurship Lecture by this title, I found several CEOs using the phrase in speeches, press releases, etc., I even found a few blogs espousing the mantra of "Culture Trumps Strategy." Could this just be an issue of semantics? Maybe it's just a nice politically correct soundbite that gets some good play, or is it simply flawed logic?

Since when are a healthy culture and sound business strategy bifurcated? Great corporate cultures are built by design. While I suppose that a great culture could somehow evolve by default or osmosis, I have yet to observe it. Creating a healthy culture is a matter of making it a focus point within the corporate values, vision, mission and strategy. Put simply, a corporation's strategy that ignores, or only pays lip service to culture, will be the beneficiary of the toxic culture they deserve. Back in the dot.com days I watched many a young enterprise suffer from placing culture ahead of strategy, or worse, even focusing on culture in lieu of strategy. When the marketplace began to see through the spin and the vapor, all the fun and games in the world couldn't save a flawed business model. The fun was over and the culture ceased to exist.

Every vibrant, healthy, inspiring, innovative, and positive corporate culture I've witnessed has occurred not because culture has been placed ahead of strategy, but because it has been a key driver of the corporate strategy. Why does everything in today's world have to be framed within an exclusionary either/or proposition? I've consistently found that the best scenarios are the ones that allow you to have your cake and eat it too. Why separate culture from strategy to their mutual demise, when culture is secured, enhanced, and sustained by sound strategy?

So, back to my original source of confusion... How could such bright people seemingly be taking exception to the thoughts Ive shared above? The more I pondered the statement "Culture Trumps Strategy" the more I thought I may understand what it was these bright people, whom I respect immensely, were actually trying to say... I just disagreed with how they were saying it. So I dug a bit deeper and found a New York Times interview with Tony Hsieh in which he described his experience with building corporate culture, and how it impacted his current philosophy. My suspicions were confirmed. As I read the interview I found that contrary to the quote which was attributed to him, culture was actually woven in to the very fabric of his strategy at Zappos. Moreover, the corporate values of Zappos are foundational to creating their corporate vision.

Bottom line: I'm not sure that Tony Hseih and the collective body of those who Retweeted his quote actually disagree with me on anything other than how we chose to express our views. Therein lies my caution... I'm fearful that people who don't have the experience or intuition to read between the lines of a short quote, or a 140 character Tweet, might be misled by the simplicity of the appeal. This is why I took the time to author today's post. In reality, Culture does not Trump Strategy, rather they work together to enhance the success of one another. What say you?

P.S.
Our closet is adorned with many a pair of shoes from Zappos. Their customer service is the best I've experienced anywhere, and I remain a fan of Tony Hsieh.

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

Realistic Impossibilities

by Kathy Robison

Being on the wrong end of the continuum between realistic and impossible is what plagues many of today's large multi-national corporations. The fear of failure by employees who are only partially engaged and don't entirely feel like valued members of the team, will always translate into goals and ideas that are mediocre and achievable and never ones that are innovative or impossible. In the 21st century, which is fraught with global economic adjustments, global-interdependence, developed world saturation, and a consumer base that is rapidly changing, creating the impossible is the only way to break away from the competition, ensure success and create a meaningful impact on the world.

Unfortunately most large companies live in the land of the realistic. It has permeated their business model, their culture, and the expectations of their customers. Many of these companies are starting to realize that creativity, thinking differently, and innovation are the keys to success in the future, but they feel stuck in how to achieve such goals. Hopefully some will view them as impossible and find the courage to achieve them anyway. You see, if you want to create a culture that reaches for the impossible, despite the odds, it must begin at the top and it often begins with an updated and innovative business model.

Designing an innovative and exciting business model with impossible goals is often a much easier and less expensive way to creating a culture of creativity and innovation that trying to dictate it. Processes, procedures, and changes in organizational structure can be dictated; innovation and creative thinking must be experienced and nurtured. The act of dictating, making rules, and imposing your will on others are the very things that have turned off our creativity, thinking, and innovative traits in the past. It was OK in the last century where the goals were to build, duplicate, and be efficient. The difference now is that we are moving from a world of industrialization and knowledge to one of conceptualization and connection.

Yes, there will be impediments and unforeseen circumstances that get in the way of creating the impossible, but they must be viewed as learning and growth opportunities. And, yes, there is always the possibility of failure, but failure is not altogether a bad thing. We must learn to accept failure as a part of the process of success. Unfortunately, many corporate cultures are so anti-failure that they no longer reach for anything exciting, tantalizing, or remotely interesting, which are the very things that improve productivity, reduce turnover, attract talent and create cultures that regularly innovate.

The disillusionment with big business and the realization that job security was really an illusion anyway is the fuel for new competition that will come charging out of the gates with all of these new attributes in tact. During the next 50 years, we will see some of the biggest companies in the world come crumbling down as well as the birth of some of the greatest companies in the world. It will be an interesting game to watch and fascinating to see the rules of play take a completely new direction. Here are a few of my favorite new perspective one-liners to start 2010:

• Do as Wayne Gretzky and "Skate to where the puck will be"


• Have the capacity to collaborate with the most unlikely of players


• Create something larger than the products you sell


• Lead with the tenacity of an underdog

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Kathy Robison is the CEO of YURU, (The Guru Is You), dedicated to assisting businesses to realize the full potential of their success through innovative business strategies, executive coaching and leadership development.

Creating Conditions for an Innovation Culture

by Jeffrey Phillips

I've been thinking a lot lately about "creating a culture of innovation", which is what a lot of firms suggest they want to do. Of course this is a very lofty goal. Changing a corporate culture doesn't happen easily, and it certainly doesn't happen overnight. Yet clearly one of the most significant barriers to innovation is the entrenched culture of effectiveness and efficiency, of risk-avoidance and following rather than leading.

So, that led me to think about when teams and groups within an organization can be innovative, and what the conditions were when that happened. We regularly lead teams on trend spotting and scenario planning exercises that create some really radical future scenarios, with little resistance, and often lead ideation and brainstorming programs that achieve a large number of disruptive or radical ideas. These small programs demonstrate that innovation can happen in any organization under certain conditions. Let's first look at what makes these small programs effective.

We find that we can be most effective with these discovery and idea generation programs when we set very clear expectations about our goals and prepare the team carefully for the work, setting out specific rules and expectations. Typically when we go into the work, we'll close the door and tell the team that anything that happens in the room is fair game, and open for discussion, and we aren't bound by the "normal" rules. This helps get the team out of the "day to day" thinking and encourage their creative thinking. They know that no one will be allowed to ridicule an idea or submit challenges that will block the consideration of an idea. For those few moments or days, we have created a "micro-climate" for innovation, probably akin to a hothouse in the wintertime.

So, if we can create some assorted micro-climates where teams can spot opportunities and emerging trends, and effectively generate ideas, can we build on the "micro-climate" concept to create more areas where conditions are ripe for innovation? Using the flower analogy, can we move the ideas from one hothouse to another, gradually exposing the ideas to the elements and improving the chances for survival, while we try to change the conditions of the organization at large (change the cultural attitudes to innovation)?

I'd like to suggest the first step may be to create a number of "micro-climates" - safe locations to generate, develop and evaluate ideas that exist specifically to give ideas the necessary environments to grow. Some firms use a designated space for innovation. Perhaps the best way to change the culture is to start small, with several micro-climates that establish conditions for innovation and allow the process to prove its worth.

Eventually the idea needs to be exposed to the conditions, and planted where it will bear fruit. That is, it must make a transition from an interesting idea to a new product or service, and that means it must work its way through the product or service development process. There are two considerations here: either the existing product or service development process must be adjusted to accept and manage new, possibly more disruptive and fragile concepts, or new product and service development models must be developed for more radical ideas. To carry the plant analogy further, any farmer worth his salt will cover plants in the field that are susceptible to a killing frost or unexpected conditions. So, too, must an organization provide more cover and care for a radical idea as it moves through a traditional product development process.

The point here is that too many times we talk about "changing the culture" and immediately reject the concept, since it is such a Herculean task. Perhaps what we should do is establish small teams and locations where the conditions are beneficial to innovation - small micro-climates where ideas can succeed, and string them together. Once we've demonstrated success, we won't have to worry about changing the culture, because slowly the organization will recognize success and begin to adapt to the best concepts that the conditions in the micro-climates offer them.

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Jeffrey Phillips is a senior leader at OVO Innovation. OVO works with large distributed organizations to build innovation teams, processes and capabilities. Jeffrey is the author of "Make us more Innovative", and innovateonpurpose.blogspot.com.

Do you have a Corporate Innovation System?

by Rowan Gibson

Co-authored with Peter Skarzynski, CEO of Strategos, in close collaboration
with well-known strategy guru Gary Hamel, I believe that "Innovation to the Core" (Harvard Business School Press) is by far the most important thing I've ever done.

Lots of people have been asking me for a synopsis of the book, so here goes...

Could you describe your company's "corporate innovation system"? Ask this question inside most organizations and all you get is a blank stare. It's obvious that, in the vast majority of firms, innovation is still more buzzword than core competence.

Yet a few leading-edge players - including GE, IBM, P&G, Whirlpool, Shell, Cemex, Best Buy, and W.L. Gore - are demonstrating that large industrial organizations really can tackle the challenge of innovation successfully in a broad-based and highly systemic way.

What these companies understand is that it's entirely possible to make innovation an "all-the-time, everywhere" capability, something that becomes part of the organization's bloodstream - just like quality, for example.

Instead of ascribing innovation to a mysterious mix of happenstance, individual brilliance and the occasional bolt of lightning, the first thing we need to do is demystify the innovation process. If you want to create a high-performance "innovation engine" inside your organization, you need to recognize and address three cultural preconditions for making breakthroughs happen: creating time and space in people's lives for reflection, ideation and experimentation; maximizing the diversity of thinking that innovation requires; and fostering connection and conversation - the "combinational chemistry" that serves as a breeding ground for breakthrough ideas.

Next, you need a methodology for systematically generating novel strategic insights - these are the raw material for innovation breakthroughs. There are four specific kinds of insights that enable innovators to discover new and unexploited opportunities of real value. These are: company and industry orthodoxies that deserved to be challenged, trends and discontinuities that could potentially reshape the business landscape, competencies and assets that could be leveraged to create opportunities beyond the boundaries of the existing business, and emergent but as yet unaddressed customer needs.

Once your company has built a foundation of novel strategic insights using these four "lenses of innovation", the next step is to "crash" various insights together to see if the collision opens up new opportunities for innovation. Radical business innovations are almost always the product of "creative collision" - i.e. they are based on a combination of insights, ideas and domains that don't usually belong together. It is also imperative to examine each component of your company's (or your industry's) business model, using insights from the "four lenses" to uncover opportunities for industry reinvention.

In addition to this ongoing insight discovery and ideation work, which should engage as many minds as possible across your organization, the goal is to open up the innovation process to your extended network of customers, suppliers and partners, involving all of these constituencies in the search for new growth opportunities.

Once your company is using all these available means to improve the quantity and the quality of new ideas entering its innovation pipeline, you should make sure you are employing the right evaluative criteria at every stage of the opportunity development process, so that you avoid prematurely killing off potentially valuable ideas. The most important question to ask first, for example, is not "What's the expected ROI?", but "How BIG is this idea?" - based on the understanding that it is radical (rather than incremental) ideas that tend to deliver breakthrough performance.

It is also crucial to build mechanisms for rapidly reallocating resources behind new growth opportunities, as well as an "innovation architecture" that gives strategic coherence and consistency to your opportunity portfolio. You want to make sure your innovation pipeline is robust enough to nurture, manage and commercialize the ideas your organization decides to pursue, and that it is capable of managing growth opportunities with very different timescales and risk profiles. You are also going to need a comprehensive set of metrics (linked to management compensation) that is designed to measure innovation performance - including inputs, throughputs, and outputs.

Finally, to drive innovation to the core, you need to put the necessary systems, structures and processes in place to make innovation a self-sustaining enterprise capability and a tangible core value. This requires four interdependent and mutually reinforcing components that need to come together to institutionalize innovation: visionary leaders and organization aligned around a common vision of innovation; a disciplined approach to building innovation capabilities across the organization; a systematic approach and supporting tools to enable idea generation, pipeline and portfolio management; and a collaborative, open culture that rewards challenging the status quo.

Do all of this and your innovation outputs will soar!

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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.

The Paradox of Innovation from 30,000 Feet

It's About the Journey, Not the Destination

by Robert F. Brands

In the C-suites of corporate America, innovation has become a mandate. Executives - from CEOs to marketing officers - believe that to innovate is to embrace the Holy Grail of 21st Century business.

But is innovation alone the answer? Is the end - innovation - capable of surviving solely as a mandate?

Or is innovation a process, journey that seeks a destination refined and polished along the way? "Total Innovation" is a sojourn that mandates a total approach philosophy.

However, to create the Culture, foster Ideation and sustain a focus on thoughtful New Product Development, innovation requires a complex combination of and continued adherence to imperatives that must be introduced, embraced and nurtured. Innovation imperatives must start at the top, the CEO. They must be written into the Mission Statements; "Innovation" must have the backing in the strategic plan.

To thrive, Innovation must have the support of long-term growth objectives and capital support. Beyond support, Innovation must gain Inspiration from leadership, who will create and foster a Culture of innovation and motivate the organization. Leadership must acknowledge the role of Risk, and understand the possibility and benefits of failure.

For without such inspiration and continued communication, Innovation will not survive. It will become little more than a once-promising concept left to wither on the vine of fanciful corporate initiatives that never quite took root.

Therein lies the paradox of innovation. Companies cannot succeed without innovation. Yet few executives understand how to introduce, nurture, or capitalize on the promise of innovation within the organization.

Planned well, the Imperative of Innovation can impact the New Product Development process. It can encourage fertile Ideation, welcoming input from associates to customers and users alike. It feeds the machine, providing methods of collecting, vetting, ranking and considering the Next Big Idea or future new products or processes.

The Innovation Imperative insists on Ownership and Accountability. It requires a Champions - and Chief Innovation Officer, if you will - be named to oversee teams Trained, coached and mentored to shepherd projects through the system, all the while adhering to each Imperative.

The Imperative requires Observation and Measurement of performance and results to ensure they deliver Net Result and Reward, and that they meet or remain focused upon an established set of objectives - and those involved are recognized accordingly.

Ultimately, innovation done well leads to Value Creation - for the organization, its stake holders and customers.

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Robert F. Brands is President and founder of Brands & Company, LLC. Innovation Coach Robert Brands has launched a new site - www.RobertsRulesOfInnovation.com - to complement his upcoming book.

Detroit's Decline and Fall

by Rowan Gibson

In March 2008, British Airways discontinued its decades-old daily service between London Heathrow and Detroit. Not exactly world-shattering news, you might think. But BA's decision was quite significant. They made it because passenger numbers had dwindled so pathetically low that the flights were no longer profitable. It's just one of a whole kaleidoscope of symptoms that signaled the Motor City's dismal decline. Then, Detroit's "Big Three" automakers were forced to beg for billions in bailout money to stave off bankruptcy (although Ford opted out). Yet, as far as I can see, not one of them seems to have a credible plan for long-term viability. All of which begs the burning question: How could such powerful car giants ever get in this sorry state?

Over twenty years ago, auto-industry analyst Maryann Keller wrote a book called "Rude Awakening: The Rise, Fall, and Struggle for Recovery of General Motors". It recounts hair-raising stories of GM's arrogant excesses. One story involved a sales VP attending a regional sales meeting who insisted that his hotel room have a refrigerator filled with soft drinks. Since the hotel couldn't get the fridge up the stairs, GM's local people persuaded the hotel to take out the room's window and part of the wall, then use a crane to insert the fridge through the hole! Another story involved a junior GM staffer who was assigned to stand for ages outside a hotel in a snowstorm, just so he could be there to open the door for an assistant general sales manager who was flying in from Central Office. GM even bought one of the hotel elevators and blocked it off so that this manager would have his own private elevator to use. And, as if that wasn't enough, the kitchen staff was instructed to test his glass of morning orange juice with a thermometer because Mr. Important wanted it served at a particular temperature!

This was the kind of insane stuff that continued to go on while the Japanese were stealing percentage point after percentage point of GM's U.S. market share. Fast forward to today, and we found that the five best-selling automobiles in North America in 2008 were (in this order): the Toyota Camry, the Honda Accord, the Toyota Corolla, the Honda Civic, and the Nissan Altima. And, bailout or no bailout, the prognosis for Detroit was not looking good.

It seems the Big Three have taken an excessive, heavy-handed approach to almost everything they have touched over the last few decades. Including innovation. While Toyota, for example, took a careful, staged approach to building alternative powertrains (and scored big with its hybrid technology), GM famously blew billions of dollars on its massive but so far failed forays into electric and hydrogen-powered vehicles. In the late 1980s, Ford's top brass tried to push the company's engineers to be more innovative by setting up a high level "Committee for Creativity". Yet rather than making the cultural environment more conducive to innovation, this initiative actually had the reverse effect. When engineers were brought in to report to the committee, they found that they were being judged, criticized, and ordered to work on their boss's pet projects. It became just another example of the massive hand of authority imposing itself and intimidating people. Instead of fostering or facilitating creativity, the committee was trying to command and control it. No wonder the structure was eventually scrapped.

In 1994, I had a conversation with strategy guru Gary Hamel about the state of innovation in Motor City. His gripe was that 'there has not been one fundamental strategic innovation in the automobile industry in the last 40 to 50 years that has come out of Detroit'. A couple of years later, I related this to a former top manager at one of the Big Three. At first, his response seemed to contradict Hamel's view. He said, 'Rowan, some of the most important and innovative ideas in the auto industry came out of Detroit'. But then, with a look of deep frustration and despair, he added, 'Very few of them were implemented'. The reason? People couldn't get the resources, the investment and the support they needed to make their ideas happen. As The New York Times put it last year, 'GM's biggest failing, reflected in a clear pattern over recent decades, has been its inability to strike a balance between those inside the company who pushed for innovation ahead of the curve, and the finance executives who worried more about returns on investment.'

Of course, uncontrollable external events in the U.S. economy have rapidly worsened Detroit's woes over the past couple of years. But, let's be honest, the Big Three have been hemorrhaging billions of dollars for years. In 2006 and 2007 alone, Chrysler lost over $3 billion, Ford lost over $15 billion, and GM lost over $40 billion! Nobody can blame those numbers on the U.S. economy, because it was growing briskly for six straight years from 2001 through 2007, as were the sales figures of Detroit's Japanese and German competitors. Instead, the accusing finger is increasingly being pointed at the failure - particularly of GM - to successfully innovate; to continually come up with and commercialize new ideas (and new vehicles) that create meaningful value for customers.

GM candidly admitted this for the first time in a one-page advertisement that ran a year ago in Automotive News. In this open letter, entitled "GM's Commitment to the American People", the company frankly acknowledged that it had "disappointed" and sometimes even "betrayed" U.S. consumers with its lackluster products. Instead of innovating in response to shifts in the marketplace (come on, guys, the writing has been on the wall since the 1973 oil crisis, for crying out loud!), GM has been impossibly slow at adapting its cars to changing customer needs.

If, then, it's essentially an ineptitude at innovation that has driven Detroit's once-great industry leaders down the toilet, I would argue that companies of all shapes and sizes should sit up, take note and, more importantly, take action to make innovation happen inside their own organizations.

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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.

Does your Innovation have a story?

by Jeffrey Phillips

Imagine if you will, somewhere in the distant recesses of our existence, a group of cavemen huddled around a fire. The wiseman of the group gathers the tribe around the fire and regales them with stories of their ancestors - how they fought the neighboring tribes, how they found the food necessary to survive. The shaman passes on the wisdom of the tribe, and teaches in the process.

Stories are the best way to learn, and the best way to communicate. For some reason, we've lost the sense of story in business. Rather than use stories we opt for hard and fast "facts" that often miss the root causes or issues. There's no story telling class in an MBA program, yet most of the best leaders understand the importance of storytelling, and they lead others by telling and retelling stories. Some of those stories are myths, meant to reinforce the culture. Some of those stories are true, meant to teach and instruct.

I've just had the opportunity to read Michael Margolis' new book "Believe Me", which he calls a "storytelling manifesto for change makers and innovators". It is a small, slim book with a lot of good ideas about why story matters and how to reclaim it.

What strikes me about stories in regard to innovation is how little emphasis we place on a story or a narrative. Too often an innovation project is created, but there's no linkage to past work or existing issues. The project seems to exist outside of the framework of the business, and doesn't have a strong linkage or narrative to drive it. Margolis identifies 15 storytelling axioms and notes that storytelling is especially important to innovators. There are a few axioms I'd like to point out:

1. If you want to learn about a culture, listen to its stories. If you want to change a culture, change the stories. I've found that culture is always a barrier to innovation, so changing a culture is important when innovating. Identifying the stories and changing the stories will make innovation more acceptable.


2. The power of a story grows exponentially as more people accept your story as the truth. This axiom played out for us on an innovation project, when we introduced qualitative research to a firm that had not used ethnography successfully before. Our story about our findings and the value of our findings spread through word of mouth and created an entirely new perspective on the use of ethnography.


3. Storytelling is like fortune-telling. The act of choosing a certain story determines the probability of future outcomes. If we choose a story line that we are a simple, safe, slow moving company then that informs the culture and defines who and what we are. If we choose a story line that defines our organization as a risk taking, insightful innovator, that's what we can become. Your story drives your results.

As an innovator, I'd like to start with the story, which will drive the culture to adapt to a new view of itself, and anchor the work within a narrative that we can spread through word of mouth to others. There's a need for a formal communication network, but powerful stories, repeated throughout the organization, do far more to get people on board.

Check out Michael's new book and think about what your story says about your organization, and how you can use story to your advantage.

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Jeffrey Phillips is a senior leader at OVO Innovation. OVO works with large distributed organizations to build innovation teams, processes and capabilities. Jeffrey is the author of "Make us more Innovative", and innovateonpurpose.blogspot.com.

Building an Innovation Engine in China

by Stefan Lindegaard

I recently made another trip to China. My purpose was to meet with innovation leaders in order to build further on my understanding of the Chinese innovation community and thus on my global perspectives on innovation.

I had a couple of meetings and I did an improvised session at a company. Having met about 15 people and having spent 5 days in Beijing, I have to say that my expectations of what will happen in China grew even higher. The reason for this is the innovation people of China.

They are hungry, bright and very eager to learn. Yes, they still have a lot to learn. And many of them do not seem to have the creative mindset and the ability to think in a more holistic way which I believe is necessary in order to make innovation happen. These are tough things to learn and many Chinese people will never get this.

Despite such significant issues, I still believe that Chinese people will be major contributors to innovation in the coming years. You can get a long way by being hungry, bright and eager to learn. In order to tap into this resource, China-based companies - whether Chinese or multi-nationals - must continue to provide the framework for these people to grow. This actually brings us back to what it takes for any company to build an innovative culture including:

Have a strategy for innovation. I have said this many times before. You need to develop an innovation strategy that sets the direction and this strategy must be aligned with the overall corporate strategy.

Focus on people before processes and ideas. People drive innovation. Your first thing to do is to identify and develop the people who can make innovation happen. Upon this, you need processes that match these people with the right ideas and provide a way to turn the ideas into revenues.

Use a TBX(O) approach. Nothing happens without top management (T) just as well as nothing happens without the employees (B). Middle managers (X) are a great obstacle towards innovation so you need to work around this. Today, we also need to include outsiders (O) in our innovation process. More about TBX(O) here.

On top of this, China-based companies - as well as many Western-based companies - also need to deal with their authority driven system. I still remember a visit to Alibaba three years ago. Alibaba, founded by Jack Ma in 1999, is among other things the world's largest online B2B marketplace.

We met with a group of engineers and we asked how they dealt with innovation. No answer. We asked again and this time we got a short answer - "Jack knows." My point here is that innovation is a team-sport where everyone has an opportunity to contribute; not a game played by lone geniuses.

I will visit China again early 2010 hosting a Next Stop: Open Innovation session. I really look forward to work further with these interesting Chinese people on developing their innovation mindset and skills.

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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.