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October 28, 2005
October 28: Innovation Linkage
A Conversation with Malcolm Gladwell: Thinking Sideways [NextD Journal 8.2]
A Market for Ideas: Patents and Technology [The Economist]
A Creative Constitution [Don the Idea Guy]
The Economics of Peer Production [Dave Pollard via Business 2.0]
What Should I Patent? [Michael Osofsky on Innovation]
Too many terms for innovation [Broken BULBS]
What are the innovations? [Innovation Challenge audioblog]
Thai innovation [Bangkok Post]
(Graphic: "Massive Change" by Bruce Mau Design)
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Formula One and the formula for R&D success
At what point should a company stop spending on R&D? The issue has been debated recently, especially after a Booz Allen Hamilton study showed "no discernable link between research-and-development spending and nearly all measures of business success, including growth, profitability, and shareholder return.." At some point, argued the report, increased spending on R&D will yield little or no incremental value when it comes to financial growth or profitability.
As if to punctuate the point, yesterday's Wall Street Journal had an in-depth page one story about the R&D war between French tiremaker Michelin and Japan's Bridgestone. Over the past five years, the two companies have battled for "the right to brag they produce the world's fastest Formula One racing tires." Yet, even with both companies pouring tens of millions of dollars into Formula One racing tire R&D, there's no clear evidence that these research dollars are translating into greater profitability:
"Both companies say Formula One helps them sell more regular tires. But from a marketing standpoint, it is unclear whether either company is winning anything. Michelin spends about $70 million a year on Formula One, Bridgestone more than $100 million, people familiar with the numbers say. Neither company can point to hard evidence of an impact on sales or profit."
The head of a marketing strategy company interviewed for the article puts the two companies' efforts into perspective:
"The money spent by Michelin and Bridgestone is "staggering." He compares their competition to an arms race. "I suspect many companies feel deep down they are wasting their money," he says, "but that if they get out their competitors will take over."
(photo credit: Michelin)
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Are you smart enough to work for a Japanese company?
Companies like Microsoft are famous (or infamous, depending on how you look at it) for giving potential job candidates brainteasers and logic games to weed out candidates who lack the brainpower to succeed in a hyper-competitive, innovative environment. (Check out Microsoft's Cult of the Puzzle by William Poundstone) It's not just tech companies, either - any MBA grad can tell you horror stories about the brainteasers cooked up by consulting firms and investment banks.
In Japan, apparently, companies have also devised a number of fiendishly complex logic games and IQ tests to find the best candidates. Here's an IQ game ("Everybody Has to Cross the River!") that some Japanese applicants have to take when applying for corporate jobs in Japan. The objective of the game is deceptively easy - to get eight people across the river. However, there are a few ground rules to keep in mind: Max 2 people on the raft; Mom cannot be with boys without Dad; Dad cannot be with girls without Mom; Thief cannot be with anyone without Cop; and only Dad, Mom, and Cop can operate raft. Plus, you only have 30 minutes.
If you finally admit complete and utter defeat and have given up all hope of ever working for a Japanese company, Chris DiClerico has the solution - and the screenshot to prove it.
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Daydream believers
In a keynote address delivered to Canadian business executives, Brian Guthrie, director of innovation and knowledge management with the Conference Board of Canada, highlighted the importance of innovation to future competitive success within any industry. In a story about 3M, he mentioned the importance of daydreaming to the innovation process:
"Changing the way individuals work within a company is one of the keys to sustainable innovation. He pointed to 3M, as an example. Known for their Scotch tape and yellow Post-it notes, 3M allows its employees to spend 15 percent of their work week staring up at the sky, dreaming of new ideas and thinking outside the box."
The 15% rule seems to work for 3M. In fact, if you check out 3M's Website, the tagline for the front page is "The Spirit of Innovation: That's 3M."
(graphic: 3M)
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When strategic design leads to strategic innovation
Mark Vanderbeeken, a senior partner in the new experience design company Experientia, points to a new thought piece on strategic design from two design experts in Copenhagen: "The Innovation Toolbox: A Guide to New Design". The 4-page PDF document starts off with a discussion of the dramatic transformation occurring within the strategic design industry:
"Front runners among strategic design agencies are working in increasingly complex projects and are starting to redefine their role and services in relation to corporate clients. This development is taking place along with an increased demand in the market place for new thinking and new ways of innovating. In the face of globalization, successful corporations can no longer attain growth through optimisation of processes alone instead they must accelerate their innovation rate. Several professional design agencies have been aware of the existence of a new opportunity for quite some time and have been working hard to become strategic innovation partners for corporate clients."
There's a lot of meat packed on those PDF bones - including highlights from several strategic design firms that are using knowledge gleaned from fields like anthropology and psychology to become strategic innovation partners: Bruce Mau Design (BMD), IDEO, Humantific/NextD, Basadur Applied Creativity, Doblin Group, The Idea Factory and Stone Yamashita Partners.
Keith Yamashita, Chairman and CEO of Stone Yamashita Partners, will be one of the featured speakers at the upcoming Fortune Innovation Forum in New York, where he will be discussing ways to "Unlock Your Company's Innovation DNA." He will also be offering a closer look at corporate innovation through sessions at the very cool-looking Fortune Innovation Lab.
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Idea seeding as an alternative to brainstorming
Kevin Cheng, one of the co-illustrators of the OK/Cancel comic strip, says that traditional notions of brainstorming are outdated. Instead, he proposes a new concept called idea seeding. For Cheng, the results of using the new process have been spectacular:
"Altogether, we ended up with about 7 quality comics in the span of 90 minutes. This normally would have taken us 14-28 hours to accomplish under the old system. A marked improvement to say the least. What’s surprising is that the quality of our comics, at least in our opinions, has been at least on par if not better than the comics written using the old system."
In discussing the merits of seeding vs. storming, Cheng describes the advantages of the idea seeding process:
"Instead of starting from a blank slate and working together to come up with a final product, we document some idea seeds. These have numerous advantages. Firstly, as the name suggests, a seed helps to give some direction to the discussion. Even if the initial idea for the comic is bad or incomplete, it may establish enough of a seed to spark ideas from others... Unlike group brainstorms, there is also certain pressure within the sessions to produce quality ideas when you know that your respected peers are going to be looking at them."
(graphic: A Dark and Brainstormy Night, OK/Cancel)
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The innovation alchemists
In a wide-ranging discussion of how to build an innovative enterprise, Paul Schumann, editor and publisher of the Innovation Road Map site, has formulated a new definition of innovation: "Innovation is the way of transforming the resources of an enterprise through the creativity of people into new resources and wealth."
As Schumann suggests, this definition of innovation evokes the early alchemists, who believed that they could transform lead into gold:
"The proto-science of alchemy sought, among other things, a process to change "base metals" into gold. The tool thought to be the key to this process was called the "Philosopher's Stone." In my new definition of innovation given above, it is innovation that transforms resources into new resources and wealth, and the equivalent of the "Philosopher's Stone" is the creativity of people."
Schumann extends this analysis with discussion of how an innovative enterprise creates a "virtuous circle" of innovation, and describes why synthesis ("fusion") leads to more innovation than analysis ("fission").
(photo credit: Paracelsus via University of Bristol)
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October 27, 2005
Five steps to creating a culture of business experimentation
Earlier today on this site, James Cash of Harvard Business School highlighted the importance of creating a culture of business experimentation within a company, pointing out examples from a broad spectrum of companies: Wal-Mart, Capital One and General Electric. Creating this culture of business experimentation is harder than it sounds, since you can't always know whether or not an idea will work until you put it into action, and most companies are not prepared for the downside risk of failure.
Renee Hopkins Callahan of IdeaFlow, who recently shared her thoughts on business innovation in a Q&A for the Fortune Innovation Forum, has provided a detailed analysis of Cash's thinking about business experimentation, adding a five-step plan for creating a culture of experimentation:
The article by James Cash on business experimentation contains some interesting comments on failure tolerance and the need for a “culture of experimentation. For example, Cash says:
"It's not an easy feat to create an environment that walks the line between so-called failed experiments—where the discipline of data collection, analysis and iteration results in learning even if the experiment itself doesn't produce a desired result—and the frivolous waste of resources, where ideas are tested in an undisciplined manner."
Here's my guess at what a culture of experimentation might look like: Experiments would be fashioned from specific innovation challenges framed to meet certain strategic objectives. (For more on framing innovation challenges, see this IdeaFlow post) The resulting concepts would be prototyped in successive iterations, each designed to get closer to the "finished" product or process. At each prototype level an evaluation would take place using criteria developed out of the original objectives. The decision to kill the concept or develop it further would be made. If the decision was to kill, then a full report on what worked and what didn't would be made.
Here's what's most important:
1. Set up a specific process for experimentation and identify experiments as such from the start so that projects that don’t go through the process aren’t allowed to “bring down” the process.
2. Start the process with a specific challenge tied to strategic objectives – this kind of disciplined approach will ensure the relevance of both the process and the results.
3. Make evaluation criteria as specific as possible and relevant as well (which it will be if it’s tied back to the strategic objectives). This is critical to a disciplined approach, and it’s also critical to avoid blame and finger-pointing when failures do occur.
4. Subject all prototypes to rigorous analysis. The ability to build on what’s working and change what’s not is based on the understanding that would come from such an analysis.
5. When a project is killed, document all possible learnings, including things that can be learned about the process itself.
For a picture of how this might work, consider a recent Fast Company article (OXO's Favorite Mistakes) about OXO International’s ability to learn from its failures. There’s not much in the article about process and experimentation, but the descriptions of how missteps and mistakes behind products such as a bagel slicer that would only work with thick New York bagels are a great illustration of how to learn from failures.
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MIT's best and brightest will turn your company into an innovation powerhouse
It looks like MIT's Industrial Liaison Program (ILP) is helping to turn MIT into a customized R&D factory for Corporate America: the program has signed up more than 200 member companies that would like to tap into MIT's human and intellectual capital in order to spark innovation. According to the MIT Web site, there are all kinds of offerings that can be tailored to any company's needs - facilitated interactions with faculty members, access to proprietary knowledge bases, and full access to campus resources (i.e. the library). One of the success stories cited by MIT is Mars, Inc., which tapped into the MIT ILP program to optimize its M&Ms manufacturing process and fine-tune the company's intellectual property strategies.
The ILP program was founded in 1948, but a number of recent trends - like the desire by universities to speed up the commercialization of technologies and the need by companies to get products to market faster than ever before - are really accelerating the growth of these types of programs at universities across America. Just like companies like IBM are "renting" their R&D researchers to other companies, top-notch universities like MIT are also "renting" their professors and researchers to companies.
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Why passive-aggressive organizations stifle creativity and innovation
The Economist points to an article in this month's Harvard Business Review: The Passive-Aggressive Organization. (According to The Economist, the article is actually an excerpt from an upcoming book (Results: Keep What’s Good, Fix What’s Wrong and Unlock Great Performance) that explores the impact of organizational DNA on creating different types of organizations.) In this case, the organizational DNA has created the passive-aggressive organization:
"Passive-aggressive organizations are friendly places to work: People are congenial, conflict is rare, and consensus is easy to reach. But, at the end of the day, even the best proposals fail to gain traction, and a company can go nowhere so imperturbably that it's easy to pretend everything is fine.
Such companies are not necessarily saddled with mulishly passive-aggressive employees. Rather, they are filled with mostly well-intentioned people who are the victims of flawed processes and policies. Commonly, a growing company's halfhearted or poorly thought-out attempts to decentralize give rise to multiple layers of managers, whose authority for making decisions becomes increasingly unclear. Some managers, as a result, hang back, while others won't own up to the calls they've made, inviting colleagues to second-guess or overturn the decisions."
Reading through the book review on Amazon, it appears that the book offers an overview of 7 different kinds of organizations - from the "passive-aggressive" one detailed above to the "military-precision" one to the "just-in-time/skin-of-the-teeth" type. Each of these organizations requires a different approach for pushing through innovative ideas.
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A mashup of Swedish style and Japanese manufacturing know-how
Corporate innovation is increasingly a cross-border affair, mixing design elements from one culture with the manufacturing know-how of another culture. Check out Snapazoo, the design mascot for Swedish Style Tokyo: "It can be transformed by folding and snapping into over 25 different creatures. Fun, educational and cuddly, Snapazoo does not require batteries but runs on the best energy of all – your imagination! The limited edition Swedish Style 2005 Snapazoo is redesigned and repackaged by Swedish design unit Next Century Modern and produced by Japanese toy manufacturer Laughtoys." (Hat tip: Shift blog)
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Blue Oceans and Ukrainian Bandits
On the Creating Blue Oceans blog, Gabor George Burt continues to provide fascinating examples of companies and organizations that are implementing Blue Ocean Strategies. The basic rule of any Blue Ocean Strategy is that a company must search out and find uncontested market space (the "blue oceans"), thereby making the competition irrelevant. That means companies should avoid constraining themselves by manufacturing products or providing services within certain industry limits: "Businesses should be in the business of providing comprehensive solutions to customers, even if that means overstepping traditional industry boundaries." And what better way to illustrate the point than with an example of Ukrainian bandits in Eastern Europe?:
"In the 90’s, scores of Ukrainians would pack into buses headed for Central European destinations such as Budapest, where they could buy all kinds of western consumer goods for the first time. These elaborate shopping excursions caught the attention of the Ukrainian underground. Packs of modern-day bandits started raiding the buses in mid-journey, knowing that they were full of cash on the way out or full of goods on the way back home.
As this ritual evolved, empathetic bandits began issuing certificates to their victims which stated that they have already been robbed. This way, if the bus was to be intercepted again, the passengers could prove to the next group of robbers that they have already been cleaned out and were not trying to hide anything. As such, the certificates saved time and confusion, and by overstepping traditional boundaries of banditry, much improved the overall experience of the victims."
At the upcoming Fortune Innovation Forum in New York, W. Chan Kim (one of the co-authors of Blue Ocean Strategy) will be speaking as part of a panel discussion on how to make the competition irrelevant through Blue Ocean Strategies. However, no Ukrainian bandits will be attending the conference.
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The breakfast burrito innovation dilemma
Over at BrandShift, Jennifer Rice explains how and why companies need to involve their customers in the process of innovation. Quite simply, customers can often serve as the inspiration for a number of "small but critical" innovations that may not be immediately obvious to senior executives in the marketing department. She illustrates the point with an example using breakfast burritos:
"I was thinking about innovation this morning when making my breakfast burritos. I'd purchased Mission brand tortillas... ugh. I'll never buy them again. Not because the tortillas taste bad, but because they didn't put plastic sheets in between each tortilla so they wouldn't stick to each other. You can just picture the brand manager's scratching his or her head, trying to find out why they're losing market share... doing taste tests and evaluating product placement. And all the while, it's because of some silly little plastic sheets that make customers' lives easier."
(photo credit: MexGrocer.com)
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Top 10 innovation books for business practitioners
Manny Valencia, an IBM consultant in London, has posted a list of the Top 10 innovation books on Amazon. There are a number of best-sellers on the list - The Innovator's Solution by Clayton Christensen and The Medici Effect by Frans Johansson - as well as some books that are not as well known. At #3 was The Design of Things to Come : How Ordinary People Create Extraordinary Products, co-authored by two professors at Carnegie-Mellon and a design expert at the University of Cincinnati. Bob Lutz, Vice Chairman of GM, has written a nice review on the back of the book:
"A product's design is what forges an immediate, emotional connection to the consumer. For better or for worse, from automobiles to toasters, a product's design is a commentary on the degree of quality and performance contained therein. The authors clearly understand that true innovation is innovation that adds value for the consumer, and they cohesively illustrate how to express that innovation in design."
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Business experimentation as a source of innovation
James Cash, a professor at Harvard Business School, has written an interesting article in CIO Magazine about the importance of "business experimentation" as a source of ongoing innovation:
"Executives, including CIOs, are beginning to understand the power of a well-defined business experimentation process as a way to increase the pace of organizational learning and thereby accelerate the development of new or extended products, services and processes.
Companies such as Capital One have been able to invent entirely new business models using experimentation. Much of Wal-Mart's success over the past 30 years can be traced to its well-honed competency at business experimentation. And General Electric has publicly committed to 8% organic growth (a very high number for a large, mature company, translating into $13 billion in new revenue per year, on average), which depends on an experimental approach that it calls "imagination breakthroughs." Learning how to innovate quickly and cost-effectively in the areas of services, processes and products is the core concept of business experimentation."
Thus, it's not just low pricing and efficient supply chains that have sparked Wal-Mart's growth - it's the company's ability to experiment with new business processes and new services. In the article, Cash lists a number of examples, such as providing in-store financial services and using elderly greeters within the store to reduce shoplifting ("nobody wants to steal from their grandparents").
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October 26, 2005
Nokia: product design as a key to continuous innovation
The current issue of Fortune magazine has an interesting article on Nokia CEO Olli-Pekka Kallasvuo ("OPK"), who has transformed innovative design into a central focus of the company's core business strategy. Customers are already buzzing about Nokia's new $700 phone (the Nokia 8800) and the company is already planning the rollout of a new BlackBerry-like device with Wi-Fi capability sometime early next year. Investors are buzzing, too: Nokia's stock price has jumped 25% in the past few months. The key, says Fortune writer Nelson Schwartz, was "unleasing a torrent of creativity" that resulted in 50 new cellphone models this year alone.
Design is a hot issue in the world of innovation, and as part of an upcoming Fortune Innovation Forum in New York, a number of design experts - like the Director of BMW Group Design and the Creative Director of Target - will be discussing why design matters more than ever. When business executives think like designers, they can implement the type of business strategy that leads to continuous innovation.
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The two questions every innovator must ask
Lois Kelly of the Foghound blog shares some lessons about innovation from a recent Business Innovation Factory conference in Rhode Island. There are about five different takeaway lessons listed by Lois - including a brief item about the two questions that every innovator must ask:
Innovators ask why, and then they ask why again, and again and again, and again. Ask “why” 5 times and you’ll begin to get into possibilities and obstacles. John Seely Brown suggested that we also ask “Why Not?” five times as we explore possibilities.
Yep, that's it. Two questions: "Why?" and "Why Not?"
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Innovation landscapes
Innovation strategy firm Doblin has generated a series of visually-striking Innovation Landscapes for understanding the competitive terrain of any industry: "Innovation Landscapes show the overall shape of the terrain that leaders need to understand and manage. They show 10 types of innovation and reveal that the most sophisticated innovation strategies combine these in thoughtful ways. They permit a view over time that allows basic innovation patterns to leap out. So you can tell at a glance how intense an innovation challenge is (the heights of the peaks), how diverse it is (the numbers of peaks) and how it is changing (new peaks forming or changes in slope for any of the peaks)." Here, for example, are the innovation landscapes for the computer industry and the commercial banking industry:
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Overcoming resistance to innovative ideas
Alfred Essa of the NOSE: Innovation and Technology blog has a great post about the problem of overcoming resistance to innovative ideas within any organization. Essa begins with a quick analysis of an article written for CIO Magazine by Michael Schrage, a researcher at the MIT Media Lab. In The Key to Innovation: Overcoming Resistance, Schrage wrote that the idea implementation process is often a lot more difficult than the idea generation process, hinting that companies should spend less time on hunting for new ideas, and more time on fine-tuning the implementation process:
Experience teaches that aspiring IT innovators don't need better ideas that make more sense. They need better implementations that make — or save — more money. If organizations can boost their "return on innovation" by investing more in good implementations than in good ideas, then that's where their capital should go... the solution to the "innovation challenge" lies in overcoming cultural and organization resistance: "Resistance, not ideas, is the most powerful lens for viewing innovation behavior."
While agreeing in part with this viewpoint, Essa points to Clayton Christensen's Innovator's Dilemma, which explained why many world-class companies are completely unprepared to accept disruptive innovations. Instead, according to Christensen, these companies prefer incremental, sustaining innovations that didn't rock the boat. What about companies that want to experience truly disruptive change? asks Essa. In that case, the resistance to implementing change may be impossibly high, and the implementation process may not even matter:
Schrage does not provide an answer to the CIO who is worried about stimulating a culture that leads to disruptive innovations... Schrage's point is that culture and overcoming resistance are important in realizing innovation. Of course. Christensen's counter point is that in the case of disruptive innovations the cultural and organizational barrier, particularly in incumbent firms, might be almost insurmountable. Why? Because the incentives and organizational culture that reward sustaining innovations can be and often are contrary to the those that lead to disruptive innovations.
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Renee Hopkins Callahan: "Never underestimate the power of limitations in driving innovation"
Renee Hopkins Callahan writes the popular IdeaFlow blog on creativity and innovation and is the Director of Innovation Services at Arlington, Texas-based Decision Analyst, a company on the cutting edge of the customer co-creation concept. Recently on IdeaFlow, she has written about the Wall Street Journal’s technology innovation awards, Chuck Frey’s new Mind Mapping e-book, the power of dumb ideas, and Apple’s business model innovation.
In coordination with the upcoming Fortune Innovation Forum in New York (November 30 – December 1), Renee has generously offered her views on innovation and creativity within large corporations.
Who should be responsible for innovation inside of a large corporation? Why?
Renee: Ultimately, the CEO is responsible, for a number of reasons – because that person is responsible for setting both culture and strategy for the company. Companies need to promote innovation at both the specific and the general level. In the specific sense - innovation won’t happen unless a specific, strategic framework for it has been set. In the general sense – innovation won’t happen unless there has been a culture established that promotes innovation, as a value and as something that every employee can and should practice in the relevant context of his or her position.
What is the most important thing that needs to happen before innovation inside a company can occur?
Renee: There needs to be an understanding of how innovation fits the company’s strategy. What are the main drivers of innovation for this particular company? Once that’s known, innovation efforts can be focused and scattershot results can be avoided.
Is there an innovation success story that you are most proud of?
Renee: We are very proud to be on the cutting edge of customer co-creation – we were the first company to develop an online panel of innovative consumers and successfully do idea generation online. The ability to access the creativity of a large number of diverse, truly creative individuals offers a wonderful opportunity for companies that are interested in customer co-creation.
Is there a formal process for tapping into the knowledge of your workforce?
Renee: As a company, we generally rely on informal processes. But when occasion demands we will frame a specific, focused innovation challenge that will offer employees the opportunity and the means to share their knowledge.
What innovative companies do you most admire?
Renee: Apple, Whole Foods Market, Ikea, W.L. Gore, Google.
How much do you rely on research and analysis to guide the development of new innovative services and products?
Renee: For both ourselves and our clients, we believe that research is critical in framing an innovation strategy, which is the first step in any innovation effort. In order to truly be free to reach as deeply as possible for ideas, the innovation must be as focused as possible. This focus can only be accomplished by thorough knowledge of the “space” in which the innovation is to take place, and research and analysis is how that knowledge is gathered.
Can you innovate without having access to large amounts of capital?
Renee: Not having large amounts of capital can in and of itself drive innovation. It depends on the areas in which a company is trying to innovate. Using Doblin’s “Ten Types of Innovation” as a reference, I’d say that innovation around processes and channels may lend themselves to low-capital innovation efforts more readily than some other areas. But never underestimate the power of limitations in driving innovation.
How can failure lead to innovative breakthroughs in business?
Renee: Failure and its associated emotional baggage is a huge problem in developing a corporate innovation culture. It’s become facile to say that failure’s OK if we learn from it. The problem is that the culture of blame and negativity around failures comes from within and starts before a person ever gets into a position where his or her company says it’s OK to fail, or that “failing upward” is acceptable. The reasons we need to fail are 1) creative problem-solving tends to be recursive, and 2) many of the best ideas are a result of inventive recombination. The ability to pull the best ideas out of a failed concept and reuse them elsewhere is invaluable. There’s currently a trend in innovation to bring “design thinking” into innovation, even for non-designers, and the best concept being put forward by this trend is that all ideas and concepts should be prototyped. If we thought in terms of prototypes, we could leave the word “failure” and all its baggage behind and truly embrace the recursive and recombinant aspects of innovation.
Does the importance of innovation to your organization vary depending on where you are in the business cycle?
Renee: If companies could take a more big-picture view of innovation, what would change according to business cycle wouldn’t necessarily be the importance of innovation, but perhaps the specific areas being innovated. There are so many ways a company can innovate. How valuable would it be for a company with a solid innovation culture to be able to focus that innovative ability on cost-cutting when finances are tight? Innovation is about so much more than just R&D and new products. Innovation has the potential to be transformational -- both for individuals and for organizations.
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From Russia, With Innovation
Ever wondered how the Soviet Union beat the U.S. into space? How the Russians seem to come up with breakthrough solutions to some of the most vexing problems in nearly every realm of human technical endeavor - chemistry, physics, biology, aviation? The answer could be TRIZ, a problem-solving and innovation process invented by the Russians nearly 60 years ago. In fact, in June 2003, Business 2.0 called TRIZ the "it" innovation concept around the globe and offered a unique peak at how TRIZ concepts migrated from Russia to some of the largest companies in the world:
"Genrich Altshuller's theory of inventive problem-solving, or TRIZ (the acronym for the Russian-language equivalent, pronounced trees), is fast becoming the innovation "it" concept around the globe. Engineers at Dow Chemical are developing new polymers with TRIZ. United Technologies's Otis Elevator division has used it to prevent escalator belts from wearing. Samsung Electronics recently brought four Altshuller disciples -- two Russians, one Belorussian, and one Ukrainian -- to South Korea to teach its scientists the TRIZ gospel. Boeing senior engineer Don Masingale, who studies TRIZ "on weekends and vacations," estimates that more than 450 of his colleagues are TRIZ-trained and credits TRIZ-inspired designs with selling Boeing's new 767 refueler jet to the governments of Italy and Japan."
TRIZ linkage:
Examples of the TRIZ method of creativity & innovation [The TRIZ Journal]
TRIZ resource center [Innovation Tools Weblog]
The Innovation Algorithm [book by Genrich Altshuller]
(photo credit: Jimbus Green on Flickr)
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InnoCentive = Innovation + Incentive
Around the globe, companies are helping to democratize the process of innovation by tapping into leading-edge innovators in unlikely or undiscovered places. Working with these "lead users," world-class companies are able to create breakthrough new products and services. In fact, Eric von Hippel (a speaker at the upcoming Fortune Innovation Forum) recently wrote a book on this revolutionary concept of Democratizing Innovation.
One of the examples usually cited is InnoCentive, an e-business venture of Eli Lilly. InnoCentive is a Web-based community matching top scientists to relevant R&D challenges facing leading companies from around the globe; as such, InnoCentive provides an online resource for major companies willing to reward scientific innovation through financial incentives.
For example, one of the featured R&D challenges is a method for separating DNA molecules. If you can solve it by February 2006, there's $40,000 in cash waiting for you in unmarked bills.
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Product innovation is nice, but what about customer innovation?
Chris Lawer, founder and CEO of The OMC Group in the U.K., has an interesting post that looks at the dynamics of customer innovation:
"Customer innovation incorporates a number of emerging concepts and practices that help organisations address the challenge of growth in the age of the empowered and active customer (both business and consumer). It demands new approaches to innovation and strategy-making that emphasise rapid capability development, fast learning, ongoing experimentation and greater levels of collaboration in value-creation...
For me customer innovation is not only an important perspective on value-creation but a whole new strategy discipline that organisations must embrace if they are to pursue growth successfully in the future. Put another way, customer innovation impacts the fundamental means by which value is created and growth sustained."
It's quite a thought-provoking idea - that instead of thinking how to create new products and enter new markets, companies should also think about ways of tapping into customer innovation - especially at companies where customers are active, knowledgeable and ready to collaborate.
Lawer references a recent piece in the McKinsey Quarterly co-authored by John Hagel (a speaker at the upcoming Fortune Innovation Forum in New York), which explores the difference between "push" and "pull" innovation mechanisms. The article also hints that customer co-creation can become a "powerful engine for innovation" - the key is opening the innovation process to a much wider, much more diverse, group of participants.
For anyone interested in learning more about customer innovation, The OMC Group recently released a new white paper (available as a PDF): Achieving Customer Innovation: Fast Strategies and Tips for Switching from Inside-Out to Outside-In.
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October 25, 2005
W. Chan Kim explains how to make the competition irrelevant
W. Chan Kim, a professor of strategy and international management at French business school INSEAD and the co-author of Blue Ocean Strategy, is a guest speaker at the Fortune Innovation Forum in New York on November 30 - December 1. At the conference, W. Chan Kim will be part of a panel discussion on "Innovation, Growth and Value: Making the Competition Irrelevant.” (Please click here for more information on this speaker, or to register for the conference.)
With almost five weeks to go before the start of the conference, W. Chan Kim has generously offered an overview of some of the key concepts outlined in the book Blue Ocean Strategy...
Who should be responsible for innovation inside a large corporation?
W. Chan Kim: The chief architect of innovation is the CEO. This is so because the key formulation and execution process for innovation should embrace a functional, hierarchical, and geographical cross-section of an organization.
What is the most important thing that needs to happen before innovation inside a company can occur?
W. Chan Kim: The most important thing that needs to happen before innovation is to build a shared strategic mindset among key players of your company. The critical messages in this exercise are: 1) Innovation is the key to future growth. 2) Innovation strategy is that I, the CEO, will personally drive it. 3) We will be a victim of our environment if we are driven by an environmentally deterministic view of strategy. We will reconstruct existing market boundaries and create a blue ocean. 4) Stop benchmarking the competition or competing head-on. We will make the competition irrelevant by creating a blue ocean.
What innovative companies do you most admire?
W. Chan Kim: Innovative companies today can be non-innovative ones tomorrow and vice-versa. As stated in our book Blue Ocean Strategy, high performing companies today can be low performing ones tomorrow. We don't believe in innovative companies per se, rather we believe in innovative strategic moves. To illustrate, Sony has not always been innovative so we cannot necessarily call Sony an innovative company that connotes permanency. But Sony's strategic move that produced the Walkman was innovative. The strategic implication here is not to learn about Sony as an innovative company per se, but to learn about how Sony created the Walkman.
Can you innovate without having access to large amounts of capital? If so, how?
W. Chan Kim: If innovation is based only on rocket science, large amounts of capital may be needed. However, many innovations that we admire are not the result of big resources, but big ideas. These are what we call value innovations. We should not forget innovative ideas such as Cirque du Soleil, Starbucks, Home Depot, and Dell Computer came to fruition without large amounts of capital.
Is there a formal process for tapping into the knowledge of a company's workforce?
W. Chan Kim: Yes. Our book, Blue Ocean Strategy proposes a four-step process for this. This is what we call the visual strategy making process that embraces Visual Awakening, Visual Exploration, Visual Strategy Fair, and Visual Communication. This is an alternative approach to the existing strategic planning process that is based not on preparing a document but on drawing a strategy canvas. In our research and consulting work, we have found that drawing a strategy canvas allows teams to quickly and clearly share their knowledge, insights, and ultimately develop their future strategy. The process keeps managers focused on the big picture rather than becoming immersed in numbers and jargon and getting caught up in operational details. This approach consistently produces strategies that unlock the creativity of a wide range of people within an organization, open managers' eyes to blue oceans, and are easy to understand and communicate for effective execution.
How much do you rely on research and analysis to guide the
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