Saturday, March 31, 2012

The Perils of "Innovation Cousins Kissing Each Other"

I just read an excellent post on HBR by Scott Anthony titled "Stop Innovation Inbreeding," in which he equates the long-term harm caused by the "introverted innovation efforts by most organizations to the pairing of harmful recessive genes that occurs with recurrent inbreeding within living species." Basically, innovation inbreeding endangers the long-term survival of innovation within an organization by recycling the same ideas from the same people with the same background. And just as harmful recessive genes eventually get paired in inbreeding among living organisms, so too do the worst ideas get touted as innovative in  organizational innovation inbreeding.

His three recommendations to avoid this are quite simple:
  1. Ensure that a healthy cross pollination of ideas occurs within your organization by forcing new internal connections. An example that he provides is IBM's "idea jams" that bring together thousands of disconnected employees, outside experts, and even external friends and family.
  2. Leverage external ideas even it means hiring new talent.
  3. Involve customers to ensure that you are really helping them with their ultimate "job" of whatever it is they are trying to accomplish with your product or service.  
Not surprisingly, and to my delight of course, these suggestions map perfectly to portions of my recent book, Living in the Innovation Age

Take, for example, the first suggestion. Chapter 8, "Leveraging the Medici Effect", is all about ensuring that an organization prevents "silo innovation" by ensuring diversity of workforce, diversity of ideas, and promoting a culture of strong collaboration among employees with different backgrounds. 

Suggestion #2 is neatly captured as part of Principle #4 (Chapter 5) that states that "Innovation Seeks to be Free." This is where I discuss the importance of unconstrained innovation techniques such as crowdsourcing and open innovation

Finally, I not only discuss the importance of focusing on the "true job" of the customer but the often overlooked perils of "too much involvement" as well in my discussion of the "Customer Centric Paradox" in Chapter 1.

The Bottom Line - Innovation inbreeding is harmful to an organization's long-term survival. Following the above simple suggestions, however, can go a long way is ensuring that "innovation cousins" in your organizations don't end up kissing each other! :)

Thursday, March 29, 2012

Innovation - It takes a "Culture"

This past Sunday, my 4+ hour plane ride to the Gartner CIO Leadership Forum in Phoenix, AZ, gave me the chance to catch up on some of my long overdue reading. One item on that list was the Winter 2011 edition of the Strategy+Business publication by Booz & Company. The highlight of that issue is "The Global Innovation 1000 - Why Culture is Key." Those of you familiar with my recent book, Living in the Innovation Age, might recognize just why I had to read this article... Chapter Seven of my book says pretty much the same thing; it's about the importance of "instilling a culture of innovation" within your organization.  

As I read  through the article, I couldn't help but completely agree with the message it was communicating very loud and clear - Successful innovation requires two key alignments: an Innovation Strategy that is aligned with the overall Corporate Strategy and an organizational culture that is aligned with the Innovation Strategy. Of course, this assumes that you even have an Innovation Strategy. Based on the authors' research, nearly 20% of the companies surveyed did not have an Innovation Strategy at all! Research has shown that a key reason why companies flounder at innovation is not because of a lack of quality ideas but an inadequate structure to follow through on the idea with the resources and commitment to implementation. A proper Innovation strategy fills that void by defining the principles, policies, procedures, and implementation structures to help get ideas through from an abstract concept to a concrete implementation.

As expected, the research showed no statistically significant relationship between the size of "R&D budgets" and the success of innovation efforts with only one top 20 spender, Roche Holding, claiming a spot on the top 20 innovators list.

The author's research reveals that companies who get the necessary alignment between their Innovation Strategy and Cultures are in for a treat with 30% higher Enterprise Value growth and 17% higher Profit growth than their peers with a low degree of alignment or a missing Innovation Strategy.

The research also revealed that successful innovators followed a fairly similar approach - connect with the customer, understand their true needs, and then determine which existing services and products could be leveraged to solve the customer's problem in a unique, proprietary, and sustainable way.

The Bottom Line - Innovation requires a strong alignment between a robust, well-grounded Innovation Strategy and the organizational culture. This alignment not only supports innovation but accelerates its execution and is ultimately the responsibility of the top leaders of the company. To gain traction, the alignment must be actualized with a tangible action plan clearly linked to a short list of focused, core capabilities (current or to be developed) that will differentiate you in the market.

Interested in learning more about spurring innovation in your organization? Part 3 of my book goes into quite a bit of detail on this topic with Chapter 7 dedicated to instilling a culture of innovation and a sound Innovation Strategy.

Thursday, March 22, 2012

A Mixed Bag of Innovation Items...

It's been a hectic two weeks but I am finally back. Rather than focusing on one particular item as I normally do in my blog entries, this time I am going to enumerate a few articles/blogs of interest:

The $2,000 Car, an HBR blog entry by Vijay Govindrajan talks about how innovations such as the Tata's $2000 "Nano" car, Logitech's $20 mouse, and Deere & Company's 35-horsepower tractor called the "Krish" are all sources for "upstream innovation" in more developed markets such as those in the U.S. and Western Europe. This trend, which is he calls "Reverse Innovation" is a prime example of Principle #3 of my book of "going where no man has gone before."

Look to IT for Process Innovation?, an HBR blog entry by Brad Power talks about how many of the developments within the depths of your IT organization such as "Agile Development" can be the source of far reaching business process improvements across the entirety of your organization. An interesting companion blog entry to read in conjunction with my chapter on Principle #5 "Innovation Has Many Forms."

Google Grows Up: A Necessary Evil?, an HBR blog entry by Joshua Gans talks about how Google's focus is shifting from being "all about the technology" to one of "core products." I talk about Google quite a bit in my book as a model for ensuring that "Innovation is Seen as a Journey as opposed to a Destination" (Principle #2). But alas, is Google growing up into yet another bureaucratic organization? Are the days of Google hiring smart people and empowering them to invent the future gone? Wasn't Google supposed to be different? Read this interesting blog entry to find out more.

Why IT says no to innovation, is an interesting blog entry by Jefferey Phillips in which he explains why IT has a bad rap for often saying "no" to seemingly groundbreaking and obvious ideas. He claims that not only do most people who run enabling functions, like regulatory, legal and IT, want to say yes to your ideas; they want to be more innovative themselves! But, if they aren't aware of your idea early, if they aren't funded to support new ideas, if their resources are stripped back to only support maintenance, they have no choice but to say "no". This lines up perfectly with my discussion in my book about "Making Innovation a Team Sport" and why "skunk works" initiatives often fall flat on their face.

Finally, an interesting article by Cheryl Perkins titled "China offers new approaches to innovation" in Cheryl discusses her recent trip to Shanghai China where she and her colleague Pat Clusman talked about innovation with Chinese companies, multinational organizations and government agencies at the China Institute for Innovation. An interesting contrast to another article I just read in the March19-March 25, 2012 issue of BusinessWeek titled "Hey China! Stop Stealing Our Stuff" that does an excellent job of pulling together many different intellectual espionage stories involving China and the resulting "transfer of wealth" from U.S. to China. 

I hope you enjoy these blog entries and articles...

Wednesday, March 7, 2012

China's trademark system baffles foreign firms (Reuters)

About three weeks ago I had blogged about the troubles Apple was having over the use of the "iPad" name in China. Here's an interesting article in from Reuters that discusses the complexities of the Chinese Trademark system and how it's even baffling Facebook as it contemplates reentering the Chinese market. The story is even more interesting in light of a report issued by Thomas Reuters that shows that China became the world's top patent filer in 2011, surpassing the United States and Japan. This is the first time that any country has surpassed the US in the number of patent filings. I bet China will not only expect but demand that its IP be protected worldwide. The situation reminds me of something Colonel Potter once said in the US hit TV series M*A*S*H "Just remember, there's a right way and a wrong way to do everything and the wrong way is to keep trying to make everybody else do it the right way."

Saturday, March 3, 2012

Leadership "Call to Action": Sustained Innovation Requires a Stable Ecosystem of Infrastructure

A question that keeps many an executive up at night is about how to ensure that their organization continues to stay relevant with innovative products and services. This is a question I address throughout my recent book, Living in the Innovation Age. My book provides practical advice on how organizations can spur innovation and embark on their innovation journey but ultimately places the responsibility for instilling an open, participatory, and collaborative culture of innovation squarely on the shoulders of top leadership.

I just read an interesting story about the rise and slow decline of the Indian global economic leadership in Businessweek (March 5 – March 11, 2012). According to Akash Kapur, the author of the article and the upcoming book “A Portrait of Life in Modern India,” the last couple of decades have seen two very different models of economic development in Asia. Known collectively as “Chindia”, China and India have emerged as the two economic powerhouses of Asia over the past two decades. Each, however, has achieved its result in a very different manner. China has gained world dominance through a state-led and subsidized system that relied heavily on manufacturing. India, on the other hand, has led through the development of the private sector relying on a thriving high-tech and service industry. Additionally, unlike China, from the very beginning, these private industries had little support from the Indian government.

So, how are India and China faring? While China is still very much a world power contender, the story for India has taken a turn for the worse. The Indian miracle that once was has now been interrupted. The contrast in stories could not be stronger - China has continued to succeed because of the state while India was surviving despite its government. Now it seems though that the government ultimately got the upper hand. As Kapur states, the country’s recent travails, have shattered the illusion that the private sector can thrive without a functioning state. Policy and regulatory confusion, and rising social and environmental problems, are all reminders that sustainable growth isn’t possible without an ecosystem of sound institutions and responsive government. In many ways it is now apparent that the advances of the last couple of decades were built on shallow foundations.

The same discussion applies to innovation. Innovation requires a stable ecosystem of infrastructure – policy, culture, people, processes, and technology – to survive and thrive in the long term. While innovative “onesies and twosies” can happen in almost any organization, a pipeline of continuous innovation requires top management to take a leadership role in investing, creating, nurturing, and sustaining an innovation ecosystem.

The United States too has been struggling with keeping up as an innovation leader in the world. I cited results from a report published in July 2011 by the Information Technology and Innovation Foundation in my book on the state of the innovation-based competitiveness of the US as compared with a group of 44 countries. The report rates the innovative abilities of the 44 countries using 16 key indicators from six broad categories – human capital, innovation capacity, entrepreneurship, IT infrastructure, economic policy, and economic performance. Overall, the news was not so good for the United States ranking fourth behind Singapore, Finland and Sweden and, worse yet, near the bottom of the list in terms of countries where innovation is seen as improving.

Still, there is a silver lining for the US. Based on the above discussion about the need for a robust ecosystem of infrastructure it would be premature to count the US out just yet. In a recent Harvard Business Review (March 2012) article titled “Choosing the United States,” authors Michael Porter and Jan Rivkin report the results of a survey of nearly 10,000 Harvard Business School alumni that they had conducted. The silver lining was that the survey revealed that while the US has many areas that it needs to fix or improve, it still was far ahead of any other country in terms of innovation infrastructure, intellectual property (IP) rights, quality of higher education institutions, and an environment that promotes and supports entrepreneurship.

The bottom line – The message to organizational leaders is clear. Take responsibility for innovation and proactively engage in creating an ecosystem of infrastructure that encourages and nurtures innovative ideas and the innovators who execute on them.