Corporate Innovation Forum

Innovation Often Comes About by Using a Combination of Innovative Ideas

2007-10-25T15:12:00.000+02:00

Let me first say that I am not an employee nor a stakeholder in the following organization. I am a subscriber. The article referenced below was, I thought, one of the more articulate descriptions of an approach to a 'makeover' which I have read and that is the reason for bringing it to your attention.

The Globe and Mail, Canada's leading national newspaper, made use of work groups and innovative practices to complete a successful makeover the newspaper.

The article, published April 21, 2007, written by Globe Editor-in-Chief, Edward Greenspon, describes The Globe and Mail’s innovative approach to the makeover of their paper. While newspapers, in general, were having a hard time and worldwide circulation was trending down, the Globe and Mail was, on the other hand, on a roll. The internet was viewed as being a significant threat. The Globe’s attitude toward the Web was interesting; it was not viewed as competition but rather as a new means of telling stories to its readers.

The Globe and Mail did the following (slightly abridged from the original article by Edward Greenspon).

- in spite of being a leader in their business segment (The Wall Street Journal noted their success as a paper) the significant stakeholders took the initiative to launch a ‘reimagination’ process with a significant allocation of resources in terms of funding and peoples time. Risk that some or nothing might actually happen was present at the early stages.
- commissioned a large piece of market research and brought in experts to talk to everyone in the company
- asked for volunteers from its staff to participate in the process and one-third of the staff stepped forward
- organized the staff volunteers into teams and assigned a specific area of opportunity
- provided an overall vision (guidelines) for the ‘reimagining’ process that were clear; to be smarter, more accessible, more Web-page integrated, and more visually oriented.
- restated the culture that had historically won readership; strong reporting, great writing, seriousness of purpose.
- team members used a ‘reimagination’ room as a place to gather and work on the areas of interest in between their regular jobs.
- one special group called the ‘design group’ was asked to look at how people could work better in generating and presenting content. An important conclusion was that the process of people working together starts with the physical layout of the office. Communication amongst disciplines was to be encouraged. Openness and teamwork were to be encouraged.
- the group was initially isolated from the rest of the staff and kept so during the ‘incubation’ period and, significantly, later moved into the centre of the room with editors spread throughout.
- testing the concept as it developed – a ‘beta’ test – was part of the ‘reimagination’ process.
- embracing the new technology (the Web) was a fundamental challenge in the redesign and was a part of the vision enunciated at the beginning of the ‘reimagination’ process.
- management (and shareholders) took a long view as the process started in the spring of 2005 and the newly thought-out paper was issued on April 22, 2007; a period of two years between initialization and realization.

The Globe and Mail made use of a number of innovative ideas and linked these together to achieve a major breakthrough.

Innovation Radar

2006-09-13T14:47:00.000+02:00

What is innovation? Exactly? Although innovation is curently amongst the top-issues of many corporations, many executives have a wrong, too narrow view of it. They see innovation as synonymous with New Product Development or Traditional R&D.

To clarify this error, Professors Mohanbir Sawhney, Robert C. Wolcott and Inigo Arroniz in the MIT Sloan Management Review (Spring 2006) introduce their Innovation Radar. The radar features four major dimensions that serve as business anchors:

Offerings a company creates (WHAT).
Customers it serves (WHO).
Processes it employs (HOW).
Points of Presence it uses to take its offerings to market (WHERE).

Spread over these 4 main dimensions, companies can innovate their businesses far broader in scope than product or technological innovation: a company can actually innovate along any of 12 different dimensions, including the main 4 ones I already mentioned:

Offerings.
Platform.
Solutions.
Customers.
Customer experience.
Value capture.
Processes.
Organization.
Supply chain.
Presence.
Networking.
Brand.

The innovation radar can help to broaden the innovation focus in companies and to show that innovation is about creating new value, not about creating new products.

What Makes a Company Innovative?

2006-03-08T16:09:00.000+01:00

It’s not what you think. Innovation today is such an overused word, and often ill-defined, that we thought it was important to ask today's innovation practioners what they thought it took for their company to be 'innovative.'

More than creativity, the #1 thing that makes a company innovative is a climate that continuously fosters innovation. This is a shift in thinking from popular belief.

While most people view innovation predominantly as a creative exercise, results from futurethink's 2006 Innovation Tracker show that in order to be creative you have to have the right environment to do it. “Just tasking a team to ‘be creative’ won’t get you to be innovative,” says Steve Brown, VP of innovation for KitchenAid. “It’s having a corporate climate that gives people the space to experiment and take risks. Only then can you truly sustain it.”

So what makes a company innovative? Here are the results from the futurethink 2006 Innovation Tracker Survey:

Ability to create a climate that continuously fosters innovation
Creative thinkers
Excellent products/services design
Strong leadership
Breakthrough ideas
Ability to generate business building ideas
Constant product/service improvement
Ability to define process that helps identify the most innovation ideas
Having a clear innovation strategy that generates real results
A perceived WOW factor
Excellent PR and marketing
New products/services represents healthy % of revenue
Powerful brand name

What do you think makes a company innovative?

(full 2006 Tracker Survey is available at www.getfuturethink.com)

Crisis is good!

2005-08-26T11:39:00.000+02:00

A highly interesting article in the last issue of Fortune (Sept. 5, 2005, no. 15) explains how Jong-Yong Yun, CEO of Samsung, is relentlessly building a culture of perpetual crisis at Samsung Electronics.

The South-Korean powerhouse has become the worlds largest consumer electronics company.

Without a doubt, Samsung is also a leading company on innovation, registering 1600 patents in 2004 (more than Intel), and spending a whopping 9% of revenue on R&D. The company employs around 27.000 researchers, 40% of it's global workforce. It seems like Yun's strategy to control the core technologies of digital convergence simply ensures that the profits keep flowing in.

However, according to Yun, it is not the corporate strategy that made Samsung so successful. Rather, it is the corporate culture that support the execution of this strategy that's vital.

Yun actively and relentlessly spreads a philosophy which emphasizes that disaster is just around the corner:

Markets for today's cash cows may implode overnight.
Reinvigorated competitors such as Apple, HP, Intel, Microsoft, Motorola and Sony may bounce back.
Chinese companies will inevitably and aggressively take away the electronics commodity market (a strategy that Samsung itself knows very well from its history). Product innovation is the only remedy.
A constant obsession with cutting cost and complexity is needed to lead the innovation pace in consumer electronics and be first to market.
Success only increases the danger of complacency and eventual failure.

Is this way, the cultural ability to deal with crises can indeed become a competitive edge over companies that are less agile in dealing with disaster.

Innovating Globally

2005-08-18T21:46:00.000+02:00

According to Patricia Sellers a.o. in Fortune (Vol. 152, No. 2, July 25, 2005) operating globally involves more than reaching out to far-flung locales for needy customers, low-cost labor, and ready capital.
Increasingly, large companies are also globalizing innovation as well.

Jeff Immelt from GE is reaching out to try multiple ideas. To build a better wind turbine, it first built an international team of researchers in Germany, China, India and the USA.
A.G. Lafley from Procter and Gamble has improved R&D productivity by co-developing brands with other companies from around the globe.
Chinese engineers in the Beijing lab from Motorola conceived a Linux-based mobile phone, now a crucial part of its software strategy.
The revolutionary (non processor frequency based) technology behind Intels Centrino wireless technology was developed in Haifa, Israel where challenging orthodox ideas is rooted in the culture.
Swiss-based Novartis is developing new medicines in a Shanghai laboratory, specializing in ancient remedies.
Dutch electronics giant Philips got the idea for a core product, their new home heart defibrillator "HeartStart", via a US-based research lab.

Accessing the brains everywhere in the world is paying of for these companies apparently.

Business incubator directors explain best practices

2005-05-27T15:45:00.000+02:00

Hi, I just found an interview with some top innovation experts. It is a kind of list of best practices on what works in business incubators.
Some keywords:

Startups need believable and achievable strategies to attract funding, validate markets, acquire reference customers, build their technical and business teams and keep their infrastructure costs low.
Compelling customer solution first of all
Not necessarily the best technology
Drive and intuition of the team is crucial
They may be young, inexperienced scientists but still you can sense whether they are bringing value to the table
Objective factors
Subjective factors
Three-step selection process: screen out, screen in, validate
Government support or private money? Why?
Lean period of prototype and product development?
Impressed by detailed planning, consideration of alternatives and options, and an ability to consult with and listen to the other stakeholders
Extremely market-oriented from the start
Signs a company or project will succeed or is doomed

British firms leading on innovation

2005-03-17T09:51:00.000+01:00

THE UK is identified as a breeding ground for new ideas after a report finds it harbours a quarter of the world's most innovative companies.

Research by consultancy Innovaro found that five of the biggest names in UK business were outperforming their global rivals in areas such as growth, brand value and product launches in 2005.

Tesco was seen as more innovative than Wal-Mart - the world's biggest retailer - after a decade of rapid growth that included the launch of the UK's first customer loyalty card and moves into financial services and online shopping.
The research also found Royal Bank of Scotland leading the way in the banking sector,
BP ahead in energy,
Virgin Atlantic as the top airline, and
Reckitt Benckiser pipping US giant Kimberley Clark to the post of leading household products firm.

It marks an improvement on 2004 when Tesco and BP were the only UK firms to secure top rankings from Innovaro for innovation.

Innovaro, a consultancy based in London and Amsterdam, analysed the innovation of 1,000 leading companies across 20 sectors from aerospace, airlines and fashion to sports and pharmaceuticals.

It drew its conclusions from measuring firms against criteria such as strategic focus, product launches, growth, brand value and culture."

Outsourcing Innovation

2005-03-14T16:35:00.000+01:00

Today, the likes of Dell, Motorola, and Philips are buying complete designs of some digital devices from Asian developers, tweaking them to their own specifications, and slapping on their own brand names. It's not just cell phones. Asian contract manufacturers and independent design houses have become forces in nearly every tech device, from laptops and high-definition TVs to MP3 music players and digital cameras.
First came manufacturing. Now companies are farming out R&D to cut costs and get new products to market faster. Are they going too far?
Read on.

How and when collaborating can accelerate innovation

2005-02-17T14:00:00.000+01:00

An article worth reading by John Hagel III and John Seely Brown on the optimal conditions for achieving innovation through collaborating with other companies in this month' HBR. They explain that - although coordinating with other companies has [negative] friction cost (transaction costs as decribed by Nobel Prize winner Ronald Coase) - collaboration between companies also be very fruitful, in particular with respect to innovation. Productive [positive] friction.

To achieve productive friction, the authors recommend the following things when collaborating on innovation, which they call the 4P's: performance requirements, people, prototypes and pattern recognition:

Build a shared sense of what must be achieved (a. create a basis of shared meaning and trust, b. use forward looking incentives, c. avoid overemphasizing near-term cash rewards, d. define the concept 'trust' narrowly, e. trust-but-verify)
Parties must have relevant specializations and diverse perspectives,
Use a prototype (boundary object) to enable participants to see beyond the boundaries of their specialization,
Capture and disseminate the learning, leveraging various ICT systems.

Bestselling Business Innovation Books

2004-12-29T14:42:00.000+01:00

European I. Scoreboard 2004: EU losing to US & Japan

2004-11-29T13:05:00.000+01:00

The Commission's European I. Scoreboard 2004 indicates that the EU is still losing ground on the United States and Japan, but some member states are outperforming the two major global competitors.

Every year, the Commission publishes a European I. Scoreboard (EIS). This year's 2004 report covers the 25 EU member states, Bulgaria, Romania and Turkey, the associated countries Iceland, Norway and Switzerland, as well as the US and Japan.

Some major European I. Scoreboard 2004 results are:

On average, EU member states are less innovative than the US and Japan and the gap is expanding further, especially in the areas of patenting, working population with tertiary education and public R&D expenditure;
However, the Nordic countries are outperforming the US and Japan on several indicators and also Germany is a high performer amongst EU countries;
Portugal, Cyprus, Ireland, Latvia and Slovakia are the countries with the best recent progress in I. but they started from low starting points;
The correlation between I. performance and GDP is not always very strong and may point to the need for differentiated policy strategies to translate I. into economic growth;
The non-technical dimension of I. (changes in management or work organisation) plays an essential role in explaining the advance of the US over Europe on productivity growth;
There are large differences in the innovativeness of specific sectors: the electrical and optical equipment sector is the EU's most innovative one, where textiles is the least innovative sector.

The Commission "staff working paper" of the European I. Scoreboard 2004 can be downloaded via this link .

Creating I. Teams

2004-09-01T14:35:00.000+02:00

Does it make sense to have people from multiple backgrounds in your I. team or are cross-disciplinary teams not such a good idea as people think?

In a remarkable article highly worth reading if you have to deal with this subject, Lee Fleming in the September 2004 issue of the HBR says the anwer depends.

If you want to achieve a huge breaktrough I. with ditto payoff and you are prepared to take a big chance that nothing at all will come out you should choose for a group of people from very diverse disciplines. These kind of groups turn out to, though extremely rarely, achieve innovations with unusual high value.
But on the other hand, a group of people from very similar disciplines is much more likely to come up with something useful and delivers a more valuable result on average.

Mr Fleming, associate professor at Harvard, bases his findings on research he carried out on more than 17.000 patents. If other investigators confirm Flemings findings, this is a major contribution to a better understanding of I.

Innovating by scaling up

2004-07-15T15:56:00.000+02:00

Costas Markides and Paul Geroski once more write about colonizers and consolidators in Strategy + Business (Issue 35). They now recommend large corporations to stick with what they do best in I. : operating at large scale. So instead of treating discovery as the only holy grail in I. (as many consultants are advising them apparently), they argue scaling up is actually as innovative as discovery. More importantly, it is also creating a tremendous amount of value.
Moreover, the authors also explain the skills a company needs to excel in turning niche markets into mass markets. They are:
1. Focus on the price/performance trade-off (don't focus on creating a technically superior product but compete on a reasonable quality at an attractive price to mass consumers)
2. Get a bandwagon rolling (alliance strategies, merge with a major rival or use marketing to create the illusion that a design has already become dominant)
3. Reduce consumer risk in adopting the new product
4. Build a strong mass distribution channel
5. Create complementary products (or support complementary products from other parties).
Do you agree that large corporations are wise not to invest in discovering new products themselves?

Microsoft Appeals EC Antitrust Ruling claiming it undermines innovation

2004-07-05T12:56:00.000+02:00

Microsoft officially appealed the European Commission's historic antitrust ruling against the software giant, asking the court to throw out the decision, quash or cut the hefty fine imposed against the company and suspend a controversial penalty that would require it to ship a stripped-down version of Windows.
Microsoft said it had filed its appeal and urged the court to consider potentially harmful effects on corporate innovation and consumers. "The commission's decision ($600 million-plus fine levied against it for allegedly abusing its monopoly power) undermines the innovative efforts of successful companies, imposing significant new obligations on successful companies to license their proprietary technology to competitors, and restricts companies' abilities to add innovative improvements to their products," Microsoft EMEA Associate General Counsel Horacio Gutierrez said in a statement. "The legal standards set by the commission's decision significantly alter incentives for research and development that are important to global economic growth. Do you agree with Microsoft?

Kissing too many frogs

2004-06-30T11:23:00.000+02:00

As experienced venture capitalists point out, you have to kiss a lot of frogs to find a prince. In this month's HBR, Andrew Campbell and Robert Park do not agree with this saying for strategic innovation. Although many business books encourage managers to take more risks, fly more kites, and launch more ventures, the opposite is probably what’s needed. According to Campbell and Park, firms should institute much tougher processes for screening out wild ideas and new venture suggestions and companies may have to learn the skill of patience.
I'm not too sure this is the overall situation. Size matters here. In a very large company you can afford to and should kiss more frogs than in a small one. A bit of kissing doesn't hurt...

Profitable I. can't be bought

2004-06-25T13:11:00.000+02:00

According to Alexander Kandybin and Martin Kihn of BAH in S+B, the solution to I. anemia is not to boost incremental spending, but to raise the effectiveness of base spending — to increase the return on I. investment, lifting the firm’s “ROI.” In their interesting article: The Innovator's Prescription: Raising Your Return on I. Investment, they identify three principles to improve the return on I. investment: the three pillars of I.
1. Understand Your I. Effectiveness Curve,
2. Master the Entire I. Value Chain, and
3. Don’t Do It All Yourself.
Would you agree that the main reason for I. anemia can be found in poor ROI on existing I. investments? Or do you believe there are other reasons for it?

Orchestrating marketwide change

2004-06-23T16:23:00.000+02:00

Traditional mechanisms used to launch products — such as targeting unique customer segments or developing compelling value propositions — don’t work anymore. Chakravorti recommends to innovators in the HBR of 2004 to use game theory and orchestrate a marketwide change of behavior, unraveling the status quo so that a large number of players adopt their offerings and believe they are better off for having done so. He says by understanding how social, commercial, and physical networks behave, innovators can develop new tactics. Furthermore innovators should:
- reason back from a target endgame,
- complement power players,
- offer coordinated switching incentives, and
- preserve flexibility in case its initial strategy fails.
Do you agree that traditional product innovation strategies are becoming extinct?