Report 103

Your newsletter on applied creativity, imagination, ideas and innovation in business – delivered to your e-mail box on the first and third Tuesday of every month.

Tuesday, 4 December 2007
Issue 118

Hello and welcome to another issue of Report 103, your fortnightly newsletter on creativity, imagination, ideas and innovation in business.

As always, if you have news about creativity, imagination, ideas, or innovation please feel free to forward it to me for potential inclusion in Report103. Your comments and feedback are also always welcome.

Information on unsubscribing, archives, reprinting articles, etc can be found at the end of this newsletter.

RUN YOUR COMPANY LIKE AN R&D UNIT

Innovation has traditionally been the preserve of research and development (R&D) units in most companies –- particularly manufacturing and engineering firms. And that makes sense. After all, R&D units are responsible for introducing innovations that keep their products ahead of the competition.

Now that innovation has become a sexy business concept and is being introduced across entire enterprises, it is surprising that many organisations are not looking to their R&D units for innovation models. And that does not make sense.

Too many innovation initiatives focus solely on soliciting ideas of all kinds. Others go to great pains to focus innovation on business needs -- through ideas campaigns, for example -- but ignore the most radical ideas and focus instead on those that are incremental improvements on existing business processes and activities.

The R&D Model

A simple R&D model actually makes an excellent model for organisational innovation as well.

1. Start with a Fuzzy Goal.

For a team of research chemists specialising in washing powder, their goal might be to improve the cold water cleaning properties of product X. The goal is provides a clear target while being fuzzy in detail. It does not demand the researchers meet any precise requirements such as being able to remove X grammes of oil per minute at 30 degrees Celsius. By not putting precise limits on goals, you give researchers substantial room to exceed defined metrics as well as to make other discoveries along the way. Perhaps chemical X cleans better than chemical Y, but chemical Y is fully biodegradable and so is better for the environment. Hence, chemical Y, while not precisely meeting the goal, is a better solution overall.

In firms which give their R&D people some freedom to experiment, researchers may often adopt even fuzzier goals. For instance, a chemist interested in the properties of a particular chemical, may experiment with it without a clear destination. She may simply want to see how the chemical affects the performance of the washing powder. Of course, being a chemist she doubtless has some ideas – but she is also keeping an open mind. The result of her experimentation, however, might be to give a new and unexpected property to the company's washing powder.

2. Collaborative Idea Generation and Development

Once the goal is defined, the research team typically does a bit of brainstorming to come up with possible solutions. This should be a combination of individual thinking and research together with collaborative meetings to explore and develop ideas. Thanks to high speed internet and software tools that allow on-line collaboration, this can happen even when research and development people are spread across multiple locations.

3. Experiment.

This is the fun bit where the team tries various chemical combinations, records the results, tweaks the mixture and tries again. Sometimes research can reveal unexpected properties that bring added benefits. Sometimes accidents and mistakes can prove highly profitable. The most famous incident of this nature is Charles Goodyear's discovery of vulcanised rubber which supposedly happened when he spilled rubber on a hot stove. As experimentation shows that certain chemicals and mixtures bring better results, the team focuses on adjusting quantities and other details in order to improve further those results and find the optimum solution.

4. Implement the Demonstrated Best Ideas.

In an ideal world, once the best solution is found, it is packaged and sold to the company's profit. More realistically, of course, the research team leader will present the results to top managers who may decide the the best solution is too costly or that some properties of the new washing powder would make it harder to market – perhaps the optimum mixture is an ugly brown colour. So, most likely, the research team will need to modify their best solution to meet other needs. Later, packaging design, marketing and other decisions must be made before the product is put on the market.

Note: My apologies to research chemist readers of Report 103 (I know there are at least a few of you) for over-simplifying your procedures!

Other Divisions Can Learn from R&D

Clearly there are lessons other divisions in your company can learn from the research and development approach to innovation. Indeed, other divisions should go so far as to become more like their R&D colleagues in their work, particularly when it comes to innovation. Consider each of the processes I've described earlier.

Start with a Fuzzy Goal

This is very much what innovation challenges are about – and this is a topic that has been covered in Report 103 numerous times in the past. Instead of simply opening a suggestion box, so to speak, and asking for ideas, focus innovative thinking on specific, yet fuzzy goals, or “innovation challenges” as we call them. For example: “In what ways might we improve operational efficiency?” “How might we reduce our customers' needs to contact us for support?” and so on. Like researchers' fuzzy goals, innovation challenges should be fuzzy rather than precise.

Good: How might we increase the percentage of sales leads we close?

Bad: How might we increase our sales lead closure rate from the current rate of 32.5% over six weeks to 50% over four weeks?

Moreover, sometimes you can set challenges that are even fuzzier and more experimental in nature. Your marketing division may look at new advertising media – such as mobile telephony – and explorres ways that it might be used as part of the company's overall marketing mix.

Collaborative Idea Generation and Development

This is one R&D approach more and more companies are adopting through the use of idea management products and services (such as Jenni idea management software service: http://www.jpb.com/jenni/), brainstorming activities and other innovation initiatives. It is also an area that we have dealt with in detail in Report 103 over the years. So we will not dwell here. If you are interested in collaborative idea development techniques, take a look at the Report 103 archives at http://www.jpb.com/report103/archives.php and our creativity and innovation library at http://www.jpb.com/creative/.

Experiment

This is an area of innovation where many companies are weak – at least outside of their R&D divisions. It shouldn't be. Experimentation should be a key component of your organisational innovation strategy. But it involves a few key cultural changes, one of the biggest being that mistakes should be considered beneficial, provided you learn from them and kill them off at a suitably early stage.

The idea of R&D people mixing chemicals together and experimenting with the results in order to find the best solution to a problem seems normal, does it not? Now, consider your sales division.
Imagine them brainstorming a problem and coming up with several radical ideas about how to sell your product. Perhaps one idea is that sales people should sing the sales pitch while playing guitars. Another is that sales people should dress up as clowns. Another is that overweight women are likely to see better sales than thin woman and all men.

So, the sales division divides up into smaller teams. One writes several songs based on their sales pitch and then goes out to meet prospective clients. They try various songs and note which seem to generate the most sales.

Another team dresses up as various kinds of clowns and does the same – again making notes about which clown gets the best results. They then tweak the make-up and behaviours and try again and again, each time noting their results.

Finally, several women fatten themselves up – at least those who are not already overweight and go out to meet prospective clients. Likewise, they note results, tweak their degree of being overweight and try some more.

In the end, all of the results are recorded and the entire team adopts the best results.

Sounds silly, doesn't it. The first problem, of course, is that most sales people are partially – and sometimes fully – compensated based on performance. This may be a combination of salary and commission or it might be a salary plus bonuses based on meeting specific targets. Moreover, sales people are normally judged by their sales figures. As a result, few sales people are likely to want to gamble their reliable income package on experimentation – even if the eventual gains from that experimentation might result in significantly higher remuneration a year or two in the future.

Thus, the organisation that wants to increase sales through innovative new selling techniques would need to restructure is compensation package and culture to encourage creativity and experimentation. Moreover, those sales people who experiment with new techniques that do not succeed must be rewarded every bit as much as those whose techniques do succeed. One approach is to reward teams for overall results, rather than reward individual results.

Implement the Demonstrated Best Ideas

If businesses do not experiment with a variety of ideas to determine which bring the demonstrated best results, their choice of ideas to implement is likely to be based on excessive analytics and the assumptions of senior managers.

Unfortunately, when ideas are truly innovative and new, they are difficult to analyse, market research becomes unreliable and fears of failure tend to cause decision makers to be overly conservative. Thus, when offered the choice of radical new ideas and incrementally improvements – most managers are likely to choose the latter.

Of course if those radical ideas had been subject to experimentation that demonstrated their superior potential, it would be easier for decision makers to authorise them.

Clearly, then, if organisations are willing to run all – or even many – of their divisions more like R&D units, the potential for innovative success will be much higher.

So, if you are thinking about making your company more innovative, why don't you start by looking at your research and development operations?

JENNI CASE STUDY

I have had a number of people ask for a case study of an organisation using Jenni idea management software service (http://www.jpb.com/jenni/). The following case study is based on a real company's experience with Jenni. However, in accordance with their regulations, we cannot and will not reveal their name in this article moreover, certain unimportant details have been changed to protect their identity. Our clients' privacy and security is one of our major concerns.

A very large snack food company contacted us not long ago about using Jenni to help facilitate their innovation process. The company already has a strong reputation for innovation. Indeed, it was clear form the beginning that they knew what they were doing and did not need much help from us – particularly in view of how easy it is to get started with Jenni.

Nevertheless, I personally oversaw – and continue to oversee – their project.

As we were configuring their implementation on our secure server, their innovation leader sent me information about four ideas campaigns they wished to run. These focused on traditional areas, including new product ideas and new packaging ideas. Indeed, every manufacturer that uses Jenni runs ideas campaigns about new product and packaging ideas – so we are not giving away any secrets here!

As the world becomes more concerned about health and increasing obesity levels, processed food makers of all shapes and sizes need to focus not only on producing healthier foods, but also on demonstrating those healthy properties to consumers in supermarkets where packaging seems to positively scream at you. At the same time, people often don't want to lose the snack food flavours that often come from unhealthy ingredients such as oils, sugars and chemicals.

Getting Started

I helped them formulate four challenges designed to stimulate employees and get the kinds of ideas they needed. They were delighted with my proposals and used them without modification.

Meanwhile, this snack food company knows a thing or two about motivating employees and had already devised a comprehensive reward programme that ensured that every idea submitter received a reward irrespective of the quality of her ideas. This is critical in the early stages of implementing an idea management process. You should always focus on quantity of ideas rather than quality. That's because you want people to participate, learn how to use the system and acknowledge the importance of idea sharing as one of their job responsibilities. Rewarding only the best ideas, on the other hand, encourages people to focus on thinking up ideas they think managers will like, rather than creative ideas. Quality is indeed important, but first you want to have lots of ideas to choose from. Quality can be added in later.

Results

The result of these first campaigns was a relatively high level of participation -– even though it was this company's first go with Jenni. Indeed, within six weeks, they had generated ideas, evaluated ideas and performed SWOT Analyses of ideas, leaving them with a couple dozen viable ideas that have now left Jenni and are being tested and developed following the company's usual procedures.

In upcoming months, some of the products, inspired by the company's first ideas campaigns, can be expected to reach the market. Indeed, the next time you spot an innovative new snack food in the supermarket and buy it, there's a chance that Jenni played a part in the conception of that product.

And if just one of those products is a mild success – it will cover several times over the cost of their investment in Jenni, the cost of their rewards programme and the time they invested in using Jenni. If more than one is a success – which seems likely in view of this company's history... Well, let's just say that Jenni will prove to have been a very wise investment from a very innovative company.

Furthermore, I was delighted that they have given us a number of great suggestions on how to improve Jenni. Some of those suggestions have already been implemented in recent upgrades. Others are on our to-do list.
Bon Appétit!

MIXED SEX TEAMS INNOVATE BETTER

Research published by the Lehman Brothers Centre for Women at London Business School last month found that teams comprising an equal mix of men and women are best when it comes to innovation. Of course it is no secret to innovation specialists that mixed teams generate the most creative results. But most specialists have looked more at a mixture of backgrounds, specialisations and expertise rather than a mix of genders.

This research shows not only that a mixture of sexes generates more innovative results, but that the mixture should include an equal number of men and women. If the mix is not balanced, members of the minority sex tend to feel less confident and are likely to contribute less to the group.

At the same time, the researchers found that gender differences can affect group performance owing to “spillover” of personal issues into the work space. Positive spillover –- when group members are feeling good about their home life -- positively affects their performance which, not surprisingly, benefits the group. Stress at home, on the other hand, results in negative spillover as does the stress of trying to balance home life, raising children and performing well at work proves too much. Interestingly, it is men who are far more likely to bring such stress induced negative spillover into the work based teams. Women, according to the report, are more realistic in planning families and work balances whereas men are more likely to believe they can manage everything and get stressed out when they cannot.

You can download the 25 page report in PDF format from http://www.london.edu/womeninbusiness/articles.html or download the report directly at http://www.london.edu/assets/documents/Word/Innovative_Potential_Nov_2007.pdf.

It is worthwhile reading.

INNOVATION AND JENNI IN THE MIDDLE EAST

I am pleased to announce that Dr. Stephen Sweid, occasional contributor to Report 103, has joined us as a consulting partner for the Middle East. Based in Dubai and working throughout the region, Stephen brings to our group over 15 years international consulting experience, fluent Arabic and an in-depth knowledge of the region as well as European and American business and innovation practice. Although Stephen's main focus will be consulting and training programmes for business, he is also acting as a Jenni idea management business development agent for the region. You can contact Stephen on +971 6 556 8990.

LATEST IN BUSINESS INNOVATION

If you want to keep up with the latest news in business innovation, I recommend Chuck Frey's INNOVATIONweek (http://www.innovationtools.com/News/subscribe.asp). It's the only e-newsletter that keeps you up-to-date on all of the latest innovation news, research, trends, case histories of leading companies and more. And it's the perfect complement to Report 103!

Happy thinking!

Jeffrey Baumgartner

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Report 103 is a complimentary weekly electronic newsletter from Bwiti bvba of Belgium (a jpb.com company: http://www.jpb.com). Archives and subscription information can be found at http://www.jpb.com/report103/

Report 103 is edited by Jeffrey Baumgartner and is published on the first and third Tuesday of every month.

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