The past few months have been interesting, to say the least. From the near Grexit and the impact that has had on stock markets around the globe, to the impending campaign for president in the US, there is a lot of change and turmoil in the air. Recently there have been a number of surveys of CEOs and senior executives on innovation. These surveys suggest that while some innovation is happening, a lot more is needed. We’d like to get your take.
Day to Day innovation opportunities and challenges
We are interested in learning about the day to day opportunities and challenges for innovation, and to get that information from you, the people who are doing innovation regularly. What are the opportunities for innovation? What are the challenges? How satisfied are you with the pace of innovation in your organization?
Find a link to the survey here.
We’ll summarize and post the results of the survey in mid-August. The idea is to get enough information to feel confident putting forth the thoughts and opinions of the people actually doing innovation-day to day. We want to hear from you, and if we do you’ll certainly see the final results from us.
You are doing innovation backwards
Most companies engage in innovation activities starting with projects, then moving into building skills and then finally focusing on their culture. While this seems reasonable, it is completely backwards. We’ll explain why.
Innovation is about exploiting and exploring
Too often we relent in discussions that contain either/or assumptions. We are too satisfied with the “or”, choosing one alternative over another when both are possible. We’ll discuss why you should be exploiting existing strengths and exploring emerging opportunities when you innovate.
Taking the pulse of day to day innovation
For your reading pleasure
Leading consulting, advisory and journals regularly survey CEOs for their take on innovation. For example, PwC recently published a survey of 1757 executives.In late 2014 BCG published a survey of over 1500 global senior innovation executives.GE regularly publishes the Global Innovation Barometer.
Here’s a link to the 2014 publication.What each of these surveys have in common is a top down look at the goals and aspirations that senior executives have for innovation. What they lack or fail to capture is the gap between what executives want from innovation, and what their businesses can actually do day to day. We’d like to augment that insight with a realistic look at what’s happening day to day.Our survey is targeted at people who “do” innovation, day to day. We want to find the opportunities and challenges, and take a pulse of the state of innovation currently. Not a top down aspirational look, but a realistic look at what’s going right, and what challenges or barriers remain, for corporate innovation. And who better to hear that from than you, the innovation practitioner?
The OVO 2015 Innovation Pulse Survey
Our survey is 25 questions long, and takes about 10 minutes to complete. It is completely anonymous. We hope for a significant number of responses so we can have some statistical validation to our data. Please find the link to the survey here.
Posting Results
Results from the survey will be posted on the Innovate on Purpose blog by mid-August,and also as part of a follow up email newsletter by the end of August.Please forward this newsletter or link to anyone you know who is active in day to day innovation activities or has responsibility for innovation. Weare interested in a timely, realistic look at the state of innovation in the corporate world in 2015.Thanks in advance for responding, and if you missed it, here’s the link to our survey again.
Doing innovation backwards
Starting with an analogy
We’ve made a pretty significant assertion in the title of this article, that you are doing innovation backwards. I’d like to ask that you allow me to illustrate my point with an analogy.
Early Childhood learning
When you were born, your life revolved around eating, sleeping and the other necessary functions. All day you watched your mother, father, siblings, caretakers walk back and forth to deliver food, clean clothing and other necessities to you, or to lift you up to carry you to another location. While you didn’t yet have the power or capability to walk upright, you were surrounded, immersed in the experience. Even at a very young age as you were learning about life, it was evident to you that the cultural norms were for people to walk. Everything witnessed reinforced the idea that you, too, would eventually need to walk. Thus your experience taught you about the importance of walking long before you ever had the skills, or could even attempt it yourself. Then, one day your parents or someone else brought in a sling, or a walking toy, or something else that allowed you to attempt to walk in a supported contraption. In other words, you got to simulate walking even before you could walk. Much like an experiment, you were carefully supported and learned to exist in an upright position, somewhat supported by your two legs, but always in a protective shell or sling. Eventually your parents or siblings led you around, helping you move your legs in a walking pantomime while they supported you. Finally, one day you climbed up, held steady by a chair or table, and took your own first tentative steps without assistance. At this point you’d completed your transition from inert lump to fully mobile toddler. So what can a short story about learning to walk tell us about how we should learn to innovate? That for the most part many of us are starting to innovate in ways that contradict the experiences and learning demonstrated in our childhood.
Bridging the analogy
If you’ll allow me to make connections between learning to walk, and learning to innovate, then hopefully the analogy becomes clear.
Cultural Cues
As a child we are surrounded by cultural cues that tell us that walking is the predominant means of transportation, at least within the house.Everythingis set up to support and sustain that means of locomotion, and as a young child you witnessed it, learned from it and were driven to copy it. Cultural cues reinforced your actions. Do cultural cues reinforce your actions as you innovate?Now you may assert that you are no longer a baby, unable to control your limbs, and cultural cues and learning aren’t as important since you have experience in your work. But I’ll argue that culture is perhaps the most powerful force in an organization. They don’t say culture snacks on strategy, they say “culture eats strategy for lunch” for a reason. As humans, young or old, we mimic the prevailing cultural cues. If those support innovation, we innovate. If those cultural cues support efficiency, that’s what we do, and people who don’t follow cultural cues are counseled, reallocated and eventually relegated to meaningless positions.
Building skills and experience
Note that the child, once they’ve accepted that walking is the cultural norm, then begins to build skills, learning how to walk. Children are encouraged to place weight on their legs and feet at an early age, to develop leg muscles. They do this in a number of safe contraptions that allow them to remain upright and supported while placing some weight on their legs. Their parents and siblings also encourage this behavior by “walking” the young child around, holding on to its hands for support. In this manner we are teaching the child how to walk. In the same manner young or nascent innovators need to gain skills. It is very difficult to shift perspectives from efficiency to innovation, because it requires a new way of thinking as well as new tools and methods. You cannot simply switch on an innovative thinking part of the brain, you need to train it and exercise the thinking, and introduce new tools. All of this requires training.
Experimenting and implementing
Finally, a child is one day ready to take the first tentative steps on its own. The child pulls himself or herself up on a char or table, turns and takes a few steps toward an expectant parent, and then once the child does this a few times it quickly masters walking, leaving the parents wishing it had never learned to walk. Notice that this transition from lying still to crawling to walking occurred in the context of encouragement and cultural cues, sustained by repetition and training, and completed by experimentation, with the expectation of building a lifelong capability or habit. In most corporations, innovators are thrust unprepared and untrained into a difficult job with unrealistic expectations in contradiction of past experience and cultural cues, being asked to do something that is a “one off”, not to build a future skill set but to quickly complete a task that they aren’t prepared for and aren’t comfortable executing. Is there any wonder why innovation rarely achieves its goals?
Reversing the activities
Sure, you’ll respond, we probably should do innovation the way you’ve defined it, by aligning the culture, building rewards and incentives, developing skills and then executing innovation projects, but who’s got time for that? Shareholders want results quickly. The markets reward those with low costs. Rather than invest the time and effort to build a capable innovation team, we’ll mimic the innovation activities we know are important, hoping to get lucky. We’ll place great pressure on unprepared and unwilling participants to deliver disruptive new products in a short time with little training or experience, and consistently fail to recognize that we are setting up teams for failure.Yes, reversing the tasks in an innovation capability will take some time. But until you acknowledge the power of existing cultural norms and their ability to block innovation success, you’ll never get really interesting ideas and will never have full commitment from the innovation teams. Until you build skills, the use of innovation tools will be haphazard and inexpert, leading to frustration and ideas that closely resemble existing products and services.Asking someone to innovate against cultural norms and without training or experience is akin to expecting a newborn to get up and walk unaided. It’s simply not going to happen. The real challenges for businesses are the high costs associated with innovation, and more importantly the longer term costs of failing to innovate.Let’s examine what happens when a company innovates in reverse. An important need is identified and a team is constructed. They receive little training and recognize that the culture and reward system emphasizes their existing jobs and tasks over the innovation roles. Executives hope that the team learns about innovation from the projects and influences the culture in a positive way. Instead the team completes the “innovation” activity as quickly as possible, reverts back to known and trusted roles and tools, and the culture exerts far more influence on the project than the innovation activity does on the culture. Keats gave a great analogy on his tombstone, to the effect that he felt his name was like one written in water – a brief recognition that would fade as quickly as the water returned to its surface tension. The same is true with existing cultures. They will endure an innovation project and simply revert to past experience once the effort is complete, all the while placing inordinate pressure on the innovation teams and constricting project timelines and scope.
Building for a lifetime
What I really like about comparing innovation with the act of learning to walk is that the baby is expected and expects to learn to walk, and to use the ability for a lifetime, not a one time event. Yet few corporations approach innovation as a skill or competency to be used repeatedly. They treat innovation as a one-off activity, staffed with unprepared and often unwilling participants who are concerned about existing reward structures and corporate culture and who aren’t provided much in the way of new tools or training. Why learn to walk, why risk the work and effort, if walking isn’t the cultural norm?Until innovation is the cultural norm, people won’t take the time to learn the skills they need to do it well. Until innovation is rewarded and encouraged like other activities, people will remain in their safe, secure roles. Until people can experiment and learn about innovation and be encouraged to consider it an important, vital skill for their development, they won’t spend it on the skills and won’t make even the smallest attempts that deviate from the existing norms.
Time for a choice
So, let’s admit many companies are doing innovation backwards, and the results prove the point. It’s time for a choice: do you continue to conduct what should be strategic, vitally important work in a poorly planned and poorly executed way, or do you reverse your innovation activities to focus first on culture, then building skills and eventually conducting vibrant innovation activities. We already understand the likely outcome of the former path – many of us live those outcomes every day, where innovation is viewed as a dismal failure. There’s little risk and a lot of potential return waiting if we take the second approach.
Exploiting AND Exploring
Both/And
Too often our vision and commitment about innovation is too cramped, too constrained. Recently there’s been a lot of discussion about the idea that innovation can serve to help a company “exploit” its existing strengths and opportunities or “explore” new opportunities, new markets, new technologies. We all recognize that this is not an “either/or” but a “both/and” conversation. Good innovators are using innovation to exploit short term opportunities and explore emerging opportunities and needs. Let’s describe what that looks like and how to do both, simultaneously.
Exploiting
The majority of innovation work done today by corporate innovators is focused on “exploiting” existing strengths and opportunities. This means that companies are rightly doubling down on existing products, adding new features, extending capabilities, entering adjacent markets with existing products and services. Innovation in this case is “incremental”, based on building and extending existing products, services and business models, often in the hope of adding incremental revenue or gaining greater efficiencies. Exploiting existing strengths and opportunities makes great sense, because short term revenue and incremental market gains are valuable. However, exploitation of existing strengths should not be the only focus for innovation, because there is always a new entrant or an emerging need or segment that must be served. Ignoring the emerging for the present creates a cul-de-sac which looks great at first but eventually becomes a dead end.
Exploring
Conversely, most organizations don’t do a good job, and certainly don’t do enough innovation work exploring new opportunities, identifying new emerging markets or needs or creating new technologies or business models. Any innovation that requires “discovering” new needs or new customers becomes a daunting experience, full of risk and uncertainty. Exploring is an unfamiliar experience, not based on existing products, processes or practices, but potentially carving out new solutions or even business models. Exploring requires a different perspective, new tools and techniques, and a willingness too serve and learn.While it’s easy to describe the challenges of exploring, we should also point to the potential rewards. Discovering and fulfilling important unmet needs leads to greater profits, recognized market leadership and differentiation. In this case the returns clearly outweigh the risks.
Building a Portfolio
But the real question becomes, how can a company do both effectively – exploit and explore? How does it build skills and depth to allow it to simultaneously exploit near term strengths and opportunities while identifying longer term needs and gaps that may require new skills and experience? First, start with a strategy.The strategies we recommend are often based on portfolio thinking. How much time and effort should be spent on exploiting versus exploring? The answer you give should be predicated on the amount of change in your market, the speed of technology or business model change and adaptation and other factors. The “rule of thumb” would suggest that approximately 80% of your innovation bandwidth and resources should be dedicated to exploiting, and 20% to exploring. Of course this is a baseline. If your markets face extreme competition, or contracting product lifecycles, or many new entrants or substitutes, you’ll want to spend more time in exploration. But until you establish a definitive split between exploiting and exploration, you are likely to find that all innovation becomes exploitation, and none focused on exploration. That is, without a definitive strategy and careful reporting of commitment of time and resources, people will revert to what they know and trust, increasing the focus on exploiting while leading you into the cul-de-sac we describedpreviously.Once you have a strategy, define the tools you want people to use in both settings. Exploitation tools will be familiar while exploration tools may be new and unusual, which will require training. Most people have great familiarity with incremental activities but lack the knowledge and skills to support disruptive innovation or exploration work.Finally, identify the best people to enact each strategy. People who are good at exploitation often struggle with exploration, and the reverse is often also true. Place people in the roles and perspectives that align to their skills, and build their knowledge of tools to help them succeed. Then you can perform both exploitation and exploration simultaneously.
If you enjoyed this innovation newsletter, please pass it along to your friends.
Sincerely,
Jeffrey Phillips
OVO
email: jphillips@ovoinnovation.com
phone: 919-844-5644 x789
web: http://www.haystax.com/netcentrics/ovo-innovation/
If you’d like to discuss how OVO can work with you, contact us today
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