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, 20 May 2008
Issue 128

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.

INNOVATION IS NOT DEMOCRATIC

Last week following a meeting of a new social networking society in Brussels, I met a chap who works for a well known CRM (customer relationship management) software firm. When I told him about our work in idea management, he bragged that his firm also had an idea management add-on. I am familiar with this add-on which is a poorly conceived suggestion tool and something of a joke among creativity experts. But my father always taught me to be polite, so I explained that his product was a suggestion tool and tried to clarify the difference. He then told me proudly that his company's add-on included voting to choose the best ideas and asked if Jenni (our product) did the same. Clearly he had not been listening to my explanation just seconds before. So, I told him I feared he had got innovation and democracy confused and then re-explained the peer review evaluation tools in Jenni.

The truth is, decision making in innovation should follow the example of a dictatorship rather than a democracy. In terms of participation in the total innovation process, we would normally start with an individual or a small team establishing an innovation challenge, this is followed by a collaborative idea generation phase which should involve a large number of people. This done, a small group of experts should evaluate the ideas in order to indicate the most promising. Lastly the initial individual or small team should decide on which ideas to implement.

Why Dictatorial Decision Making is Best

To understand why, let's play pretend. Imagine that 35 years ago a soft drink manufacturer opens a public suggestion scheme on a public bulletin board (the web, of course, did not exist then). They get ideas for various flavoured carbonated and non-carbonated drinks: banana soda, grape soda, mango drink and so on. One clown suggests: “let's take our already clean and mineral-rich tap water, run it though an additional filter to remove some minerals, put it in a plastic bottle and sell it at the same price we sell our other soda products.” Someone else suggests “I always put a slice of lemon in my cola and it so much fresher tasting. Let's make a cola drink with a hint of lemon in it!”

Which of those two ideas would get the most votes? From customers, you can be sure they would favour the latter idea. One can imagine lots of people thinking, “Yeah, I like my cola with lemon too”. And the former idea sounds rather like a scam anyway.

Even inside the soft-drink company, it seems likely that most employees would feel that the former idea is something of a joke. You can imagine people saying, “our customers would never pay cola prices for essentially the same water they get from their taps.”

In an evaluation environment that involves voting, the mineral water in a bottle idea would almost certainly be rejected. Whereas the cola with a little lemon flavour idea would almost certainly be accepted. The radical innovation would lose out to the incremental innovation.

On the other hand, if a small team of experts evaluated the idea by a criteria set including

1. How profitable could this idea be?

2. How easy would it be to bring this idea to market?

3. How big is the market potential of this idea?

4. How well does this idea complement our existing product line?

5. Is this idea free from potential intellectual property or other legal issues?

The bottled water idea would in fact have received a high evaluation score, signalling strong innovation potential. (For more information on evaluating ideas, please take a look at the 6 May issue of Report 103).

Of course, in the mid-70s, putting filtered tap water into bottles was the more innovative idea. Indeed, it has been one of the biggest money earners for soft drink manufacturers in recent years. Clearly, an expert evaluation would fare better in terms of determining the idea with the greatest profit potential while voting would determine an incremental innovation with incremental profit potential at the cost of the more innovative idea.

The Public Is Just Another Committee

I have often remarked that committees are notorious for killing creative ideas for fear of their riskiness. And asking the public or any large population to vote on ideas for implementation is essentially putting ideas before a mega-committee. And while some members of the mega committee will see the value of radical ideas, overall, there will be a tendency to approve the least radical ideas because the appease everyone a little and offend no one. More radical ideas, on the other hand, excite a very small group and tend to offend the masses initially.

The conclusion to all of this is that while the innovation process is collaborative and should involve lots of people, the evaluation process should be the work of a small expert team. Moreover, the decision making process should involve an even smaller team, if not an individual. Indeed, this is one major reason why small firms tend to be more innovative than much larger firms, even though the latter have more resources, more people and more tools. A single decision maker can decide to implement a radically innovative idea and just do it. Committees and public approval groups, that plague large organisation, tend to choose less risky ideas and hence less creative ideas.

TEN CHARACTERISTICS OF AN INNOVATIVE LEADER

Organisational innovation requires a top-down approach. If the firm's managers are not taking the lead with innovation, employees further down the corporate ladder are unlikely to be motivated to participate in innovation initiatives either. Moreover, without innovative leadership, customers, business partners, stakeholders and the public are unlikely to see a firm as being innovative no matter how much the communications manager uses the word 'innovative' in press releases.

Being an innovative leader requires a combination of being creative as well as bringing out the creative potential of employees. In addition, the innovative leader needs to champion and implement creative ideas in order that they become profitable innovations.

Here is a list of the main characteristics of an innovative leader.

1. Be Creative and Show it.

Sharing creative ideas is risky. The most creative ideas often sound absurd at first. And absurd ideas often sound creative. If leaders are not willing to take the risk, why should anyone else in the firm?

The innovative leader can participate in the firm's idea management process, take part in other idea generation initiatives and discuss her ideas openly with others. Participation in brainstorming events is good, but only if she can be perceived as being an equal to all other participants. If the facilitator defers to her or other participants are watching how she reacts to their ideas, the innovative leader should probably leave. These are all signs of people squelching their creative ideas in favour of ideas they believe their leader would prefer to hear.

2. Be Willing to Make Risky Decisions from Time to Time

If sharing a creative idea is risky for an individual, implementing one is even riskier for the firm. If the idea fails, it could result in losses. Worse, in some firms, the person behind the decisions could be in danger of reprimand or even dismissal.

On the other hand, if the creative idea succeeds, it is likely to be highly profitable. Nevertheless, creative ideas are more likely to fail than less creative ideas which, in turn, usually have lower profit potential. As the saying goes: “No risk, no gain”.

3. Be Willing to Kill a Creative Idea Implementation Early on

Just as the innovative leader needs to be willing to take risks with creative ideas, she needs to be willing to kill those ideas early on if it is clear they will not achieve their potential.

Because it is necessary to invest a lot of time and effort in implementing a creative idea, there is often a reluctance to kill an implementation and admit defeat. Idea champions want a return on their investment and may well fear reprimand or ridicule if their idea fails. Hence they tend to keep pushing their idea even after it is apparent the idea will not reach anything near it's profit potential. The innovative leader realises this and is willing to cut her losses and invest in the next creative idea.

Needless-to-say, she reprimands no one and sees the failure as a learning experience (more on this below).

4. Bring Together a Diverse Support Team

Insecure leaders like to surround themselves with like-thinking lieutenants from similar backgrounds. Such team members are unlikely to be critical of the leader and will support most of the leader's actions. Yet we only need to look at President George Bush to see what a disaster such a team can make. The innovative leader, on the other hand, thrives on differing opinions and appreciates that a diverse team results in a wider range of knowledge, experience and thinking. That translates into a higher level of creativity which results in more and more profitable innovation.

5. Recognise that Hiring Better People Equals Growth

David Ogilvy (a co-founder of the Ogilvy and Ogilvy Advertising agency) once said: “If each of us hires people who are smaller than we are, we shall become a company of dwarfs. But if each of us hires people who are bigger than we are, we shall become a company of giants.” A good leader is not afraid to add to her team people who are more intelligent, more creative, more experienced and more skilled than she is. She knows that only through hiring such people can she ensure the firm grows beyond her capabilities. Quality + Diversity = Tremendous Innovation Potential.

6. Delegates and Assigns Goal Oriented Tasks

If a leader brings together a diverse team, yet micromanages each member, she will completely fail to exploit the potential of the team. The innovative leader recognises this and delegates tasks to team members, defines the goals rather than the methods and trusts those in charge of tasks to carry them out in the best way possible. Nevertheless, the innovative leader makes herself available to advise and support her teams.

7. Greets Every Suggestion with a Challenge

The innovative leader knows that every idea, no matter how absurd it may first seem, is a potential innovation blockbuster. As a result, she doesn't kill it with criticism. Rather she challenges the suggester of the idea to think it out and grow it. She knows if the idea is a blockbuster the suggester will get back to her. If it is not, the suggester will learn from the challenge.

8. Knows that Compliments Are More Motivating than Criticisms

The Insecure leader often uses criticism of her subordinates in order to push them harder. As a result, her people act to avoid criticism. The secure and innovative leader uses compliments in order to push her subordinates to work harder. As a result, they act to win compliments. Since many people are already reluctant to share their wildest ideas with colleagues out of fear of ridicule, it is clear the leader whose subordinates strive to be complimented – and who know they will be complimented for creative thinking - is likely to get the best, most creative ideas from her team.

9. Pushes People to Stretch their Thinking

In any idea generation activity such as brainstorming, it is rarely the first idea that is the most creative. Indeed, it is only after generating many obvious ideas that the more creative ideas start to show themselves. Nevertheless, when looking for a solution to a problem, many people tend to use the first viable idea that comes to mind.

The innovative leader recognises this and pushes her people to think longer and harder. She challenges people to push their creative ideas and develop them further. Because she knows that's how the most innovative results are achieved.

10. Is Not Afraid to Fail (Occasionally)

The innovative leader, willing to take risks and try out creative new ideas on a regular basis, is not afraid to fail. Rather she sees failure as a learning exercise and grows from each failure. Likewise, she does not reprimand her subordinates when they fail. Rather she works with them to learn from their failures and profit from them. A failure may result in the loss of income, but has the potential to result in a gain of knowledge.

There you have it. Everything you need to know about being an innovative leader!

INNOVATION REPORTING

One of the biggest problems the innovation manager or consultant faces is getting people in her organisation to participate in innovation initiatives. The most widely heard employee complaint about innovation is: “I don't have time”. But any full time employee has 35 or more hours per week – and usually significantly more – of time. So what they really mean is “Innovation is not important enough to me to fit it into my schedule.”

There are three things that organisations need to do in order to increase the importance of innovation to employees: (1) leadership needs to take the lead in innovation (2) management has to provide a budget for innovation. After all, if there is no money for innovation, it cannot be that important to management (see Where's the Money in the 6 November 2007 issue of Repor 103), and (3) require that each division draws up an innovation plan and regularly reports on their progress. Let's look at innovation planning and reporting.

Step 1: Innovation Planning

Although many company leaders talk about the importance of innovation, they often do not offer any budget, provide any direction, give any goals or demand any reporting from divisional managers.

Thus, the first step is for senior management to set out an overall innovation plan for the organisation. This needs to define what innovation means to the firm, what the goals are, what the budget is and what tools will be provided.

Once this is published to the organisation, every division should prepare its own innovation plan. This plan should describe how the division can contribute to the firm's overall innovation plan as well as the intra-divisional goals for that division. Each plan should be published on the Intranet for other divisions to see and learn from.

It goes without saying that the innovation plans are organic and flexible. They should be revisited from time to time and developed further as teams participate in innovation initiatives and better understand how innovation benefits the firm and how they can effectively participate in the initiative.

Steps 2, 3, 4 and so on: Innovation Reporting

Once the innovation plan is in place, each division should prepare a regular report (monthly would be nice, but quarterly is probably more realistic!) indicating progress in achieving goals, explaining results and indicating innovation return on investment. Issues in the original innovation plan should be addressed in particular. At the same time deviation from the plan should also be explained. And it is important to bear in mind that deviation from the plan is not a bad thing in innovation. In fact it is often a very good thing.

Once divisional managers are getting budget to support their innovation initiatives and are required to publish regular reports on their progress, you can be sure that they will take innovation a lot more seriously. Moreover, they will ensure their subordinates, to whom many of these tasks will doubtless be delegated, will find time to innovate.

As a result employees will have to find another task not to have time to perform because they will be too busy innovating.

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

---------------------------------------------------

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.

You may forward this copy of Report 103 to anyone, provided you forward it in its entirety and do not edit it in any way. If you wish to reprint only a part of Report 103, please contact Jeffrey Baumgartner.

Contributions and press releases are welcome. Please contact Jeffrey in the first instance.

* Notes

1. you may unsubscribe at any time by e-mail.

2. We use the double opt-in process. This means you will receive an e-mail which you must reply to in order to subscribe. Although this is a minor inconvenience, it ensures that only people who want to receive Report103 actually do receive it.

3. We will not share your e-mail address with anyone else or send you any e-mails other than Report 103 unless you contact us first.