3 Things Most Organisations Miss About Innovation

innovation-illustration live outside the box
There are probably more definitions of innovation than there are books about management, but I have my own favourite definition. It’s simple, and it says “Doing more with less”. To put it more technically – it’s shifting the input/ output curve. Imagine that it takes £100 to build each floor of a house, so a 10-storeyed house would require and investment of £1000. Let’s also suppose that it takes £50 per month to maintain the house. A business with a budget of, say 2000 could expect to build a 10 story house and maintain it for 20 months. Or it could build an 8 story house and maintain it for 24 months. This is the kind of resource allocation choice which most people make routinely in the course of their daily work. Usually the choices are more complex, but they follow the same principles. Innovation is the process where you can bring the cost of building per floor down to say, £80, so now your choice curve has shifted. You can build a 12 story house, and maintain it for 24 months.

So far so good, and so obvious, you might say. But now consider the following questions:

What if your closest competitors are already able to build houses at £80 per floor. Are you still being innovative? What about if companies elsewhere in the world are doing it, but not your competitors?

1: Benchmarking & Exploiting Safe Innovation.

This is the first key thing that people often miss. All innovation needs to work off a baseline. Before we try to do more with less, we need to understand what the benchmark is, at present. And that benchmark needs to consider your company, your competitors, your industry and even at a global level, depending on the area of innovation. In a remote village where people have never heard of pulleys, and people manually pull water out of wells in buckets, the arrival of a pulley may represent a local innovation. But of course, to the outside world, it’s not an ‘innovation’ per se. This is both good news and bad. The vast majority of companies are doing ‘catch up’ innovation of this kind. After all, once something has been done once, it really isn’t innovative any more. It’s just imitation. It’s not innovative to go direct to consumer once Nespresso has shown us the model. It’s not innovative to build an App Store – now that we can just copy Apple. And it’s not innovative to build a ‘wiki’ for your next project. Perhaps this is a harsh view and may be your organisation poses some specific challenges. Actually, on the positive side, this means that there’s enormous innovation opportunity in this catch up space. I call this ‘safe’ innovation, because it’s relatively low risk. The key risk is execution related. Somebody else has proven the model.

So when you next think about innovation, step 1 should be to conduct a benchmark, and identify the safe innovation opportunities based on your competitors, industry, region or global examples. Only once you’ve achieved parity with the benchmark do you really need to step into unchartered territory. And although I don’t have data on this, I’m willing to bet that safe innovation offers much higher risk-adjusted ROI than venturing into new areas.

2: Find A Problem First

Necessity, we know, is the mother of invention. It turns out therefore that Innovation and Invention are actually close siblings. The current thinking on innovation is that you shouldn’t have an innovation department or team. But equally you should first identify the problem you want to solve, in order for innovation to be effective. This is why you get the most innovation in resource starved communities. This is why the Indian ‘jugaad’ style of innovation is getting airtime now. In New Delhi, taxi drivers sometimes use a fake seat belt strap which can be slung over the shoulder at short notice to suggest to any law enforcement official aka policeman, that the driver is wearing a seatbelt. Less ethically cloudy, is the example of the fake steering lock, which is a cheap but realistic plastic decoy which looks just like a metal steering lock, the kind often used in India by owners when the leave a car parked. The plastic decoy acts as a deterrent, and costs a fifth of the actual lock. Or indeed stories about creating post natal incubators out of auto parts so they can be easily maintained.

The resource may not just be money – it may be time. Thus is is that the pit-stops for formula 1 cars have evolved dramatically from 67 seconds to 3 seconds over the past 65 years, and is now proving the inspiration for surgeons in operating theatres.

Resource constraint is often a key problem but identifying a specific business problem or opportunity also helps. The role of serendipity should not be understated – considering the history of 3M post its and many useful tools are the result of a ‘solution in search of a problem’ – notably the flash drive. But almost always, the original effort was aimed at solving a problem – even if it ended up solving a different problem.

Invention and innovation are also connected by concentric ripples – usually a new invention sets off a ripple of innovation as people start to use the invention in newer and unplanned ways. Some of these lead to further inventions but others live happily ever after as great innovations. Almost everything we see on the web today represents innovation around the core invention of the world wide web and a few other key inventions. You can expect to see great applications of graphene over the next few months and years, and everybody knows the story of text messaging, invented for one purpose, but made famous for a completely different reason.
What is common though, is the application of innovation thinking to a specific problem or opportunity. Not just throwing people and resources into a blue sky mode of ‘let’s think of some cool stuff’. That’s usually the least effective way of getting returns on innovation investment.

So the next time you think about innovation, spend the time upfront to ask the difficult questions like ‘what’ and ‘why’ and ‘which’ until you land on a specific problem that needs to be solved. Then unleash your innovation.

3: Where Is The Creativity?

90% of the literature and discussions around innovation focus on how to manage the process. Including methodologies, how to allocate funds, how to build teams, how to nurture ideas, how to measure them, and so on. Yet at the very heart of innovation lies creativity, and there’s not enough discussion about this.

Creativity is often a personality trait. Some people are creative – usually by nature, and often by virtue of the breadth and variety of their work and life experiences. Others are not. Do you employ creative people? Do you employ a variety of people? Do you encourage the variety of experiences? Every time a bank hires an employee on the basis of his or her banking experience alone, it loses a bit of creativity. Obviously, the majority of people working in any industry should be experts in that industry, but creativity is often about introducing an element of managed entropy by adding people who bring a different set of experiences, mindset and thinking to the organisation. When I was first offered a job in a technology company, I said that I knew little about technology. I remember clearly the reply: “I have hundreds of people who know about technology, don’t worry about that” (thanks Pradeep!)

Beyond the individual, the culture and environment play a big role. The physical manifestations of this are easy to achieve – most companies have labs or spaces intended to foster creativity. The harder part is to build an organisational culture that fosters creativity. This means an ability to encourage risk taking, thinking differently, the ability to evaluate a problem through multiple lens, the willingness to continuously look outside of the business for ideas and perspectives and interestingly, a trade off with productivity at some levels. Call it the breathing space for creativity. Steven Johnson calls this the primordial soup, as exemplified by the natural environment where new species flourish. Remember, you can’t process your way to innovation, but you can significantly improve the probability by fostering the right environment.

The third requirement for creativity is the quick feedback system that recognises and rewards early and good outcomes, instead of killing them because they don’t fit the current model. You have to be prepared to be wrong, when you innovate but you also have to rely on being recognised when you’re right. And often, right and wrong can be quite confusing if measured against the yardstick of the past or even the present. The only measure should be – does it solve the problem, and does it do it in a more resource efficient way? No better example here than Kodak, which had created digital cameras long before they were popular, but chose to ignore them.

Bottom Line

So the next time you sit down to think of innovation, in your business or industry, or even in a small group, ask yourself these 3 questions up front.

1. What’s the problem we want to solve

2. What is the currently accepted and best way of doing this, and are we doing that already?
3. Are we bringing creativity to the mix in order to get different outcomes?

Around this you can wrap all the well known lean and fast-fail processes and build structures and systems to scale your innovations. But missing these three things can lead to the creation of a shell of processes without the spark of innovation to actually deliver results.

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