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, 1 July 2008
Issue 131

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.

EIGHT KEY INGREDIENTS FOR CORPORATE INNOVATION

Over the past few years, I have talked to a lot of people about their firms' innovation structure, I have advised a number of them on how to improve that structure, I have written extensively on innovation in this journal and have had the pleasure of corresponding with a number of readers on the topic of organisational (or, if it is in America, 'organizational') innovation. As a result, I have seen a lot of innovation plans, initiatives and strategies. And I have learned a few things.

Irrespective of what kind of organisation yours is, there are eight ingredients that are essential to any innovation system if it is to succeed. In addition, there are a couple of optional ingredients that make a big difference to the level of success. Let's look at the eight essentials first.

1. Top management buy-in

If senior management do not buy into your innovation process, no one else will. Obvious and simple, yet widely ignored. In many companies, the CEO talks the talk about innovation but demonstrates an aversion to any kind of change. Of course you cannot have innovation without change. So, employees quickly figure out that innovation is a slogan rather than an action and focus their efforts elsewhere.

On the other hand, when the CEO truly champions innovation, personally launches the initiative, demonstrates a real interest in the results of your innovation strategy and implements innovative ideas –- it quickly becomes clear that the CEO's firm is an innovative one and employees act accordingly.The exception to this rule exists in large companies with relatively autonomous business units. If the senior manager of such a unit takes the lead with innovation, then the business unit can often succeed in its innovation initiative irrespective of the CEOs actions. But of course, in such a scenario, the business unit is effectively a business in its own right.

2. Budget

Budget is intimately connected with the first ingredient. One of the most effective ways for senior management to buy into innovation is for them to allot budget for the initiative. This makes it clear that innovation is not just a slogan, but an investment for which a return is expected. Moreover, middle managers keen to get a portion of the budget will devote time resources to innovation initiatives in order to get a piece of the budget.

3. Communication

This is a bit of a no-brainer really. If no one knows about your innovation initiative, no one can participate. Hence, once your initiative is ready to launch, it is critical that people know about it, what it is meant to accomplish and how they should participate.

The main recipients of your communications strategy should, of course, be participating employees in your organisation. Nevertheless, an effective innovation communications strategy should also target investors, customers, business partners and the general public. The more all concerned understand that innovation is a critical component of your firm's identity, the more it becomes the case.

4. Rewards

Complementing communications is a rewards scheme for participating in your innovation activities. Rewards should be relatively small and recognise participation rather than good ideas. Rewarding innovation is a complex issue. For more information on rewards, see http://www.jpb.com/creative/rewards.php

5. Dedicated Innovation People

In many firms, once the CEO decides that innovation is important, an announcement is made and managers are expected to manage their own innovation initiatives. However, because innovation is not each manager's priority, initiatives are unlikely to be very effective. They will be designed to appease quickly top management rather than achieve results.

A much better approach, of course, is to assign an individual, individuals or a team the mandate of managing your organisation's innovation strategy.

When a manager's job description is exclusively to manage an innovation strategy, she is far more likely to design and implement a well thought out plan. Moreover, she has a substantial stake in the initiative's success and so can be expected to continue to invest in the initiative over the long term.

6. Collaborative Innovation Tools

Small companies in a single location can probably get by without collaborative innovation tools. In a small organisation, people can readily meet with each other in the office in order to share and develop ideas. But medium and larger enterprises need collaborative tools like Jenni idea management (http://www.jpb.com/jenni) in order to facilitate the collaborative generation, development and evaluation of creative ideas across the entire enterprise.

Some organisations get by without a purpose built idea management system. Usually, however, they use e-mail, shared documents or a simple in-house database tool for sharing ideas. While such tools enable some collaborative idea development, they tend to be labour intensive and fail to exploit fully the creative potential of employees.

In this ingredient, I have not included personal creativity and innovation tools such as mind-mapping tools and the like as these are very much a matter of personal preference. Some people find mind-mapping software to be a great creativity aid. Others feel it is an unnecessary gadget that gets in the way of creative thinking.

Each individual has her own tools and methods for creative thinking. Rather than demand the use of a particular personal creativity tool for all employees, firms should give employees the freedom to use the tools that work best for each person.

7. Effective Evaluation System

Assuming you have in place the ingredients I have described so far, you have the recipe for generating and developing ideas. The next step is to identify those ideas which have the greatest potential to become profitable innovations.

For all but small, incremental innovations, you will probably have a multi-step evaluation process in which each step acts as a filter that removes less promising ideas.

However, it is important that your evaluation process is not a purely critical one. It is easy for evaluators to find all the weak points in an idea. But this can result in very promising ideas being rejected. So, evaluators should be asked not merely to criticise ideas, but also to provide suggestions on overcoming the problems they have identified.

8. Willingness to Invest in Innovative Ideas

One of the consequences of an innovation strategy is the development of potentially innovative ideas. Surprisingly, many organisations invest in creativity and innovation tools, but then fail to implement the most innovative ideas they generate.

This is usually the result of excessive risk aversion, large approval committees, too much internal bureaucracy or a combination of these. Whatever is the cause, the result is a creativity programme which generates ideas rather than an innovation strategy in which creative ideas are implemented in order to keep ahead of the competition and increase income.

Bonus Ingredients

In addition to the essential ingredients to an innovation strategy I've described already, there are a few additional ingredients which, although not critical, are very helpful in insuring success.

9. Enthusiasm

Every now and then I talk with an innovation manager, in a prospective client firm, who is extremely enthusiastic about his or her job. What starts as a demonstration of Jenni idea management soon turns into a highly energetic, thought provoking discussion on organisational innovation in which we share ideas and get really excited about the possibilities.

I have learned that these managers are not only more likely to become clients than non-enthusiasts, but also that they are far more likely to lead successful innovation initiatives.

While enthusiasm is useful for any activity, business or otherwise, it seems particularly beneficial to innovation. Enthusiasm encourages participation in the initiative (always a challenge!), makes people feel good about their participation and tends to encourage more radical thinking. If employees know that their crazy ideas are enthusiastically welcomed, they are encouraged to push their creative thinking ever further.

10. Diversity

If your firm is full of young engineers from MIT, you doubtless employ some of the best engineers available. But when it comes to generating creative ideas, you will find that they tend to take a similar approach to problem solving. Their backgrounds will be similar, their training similar and their familiarity with each other too close.

On the other hand, if your firm employees a wide range of people with different educational backgrounds, different kinds of experience and of different cultures, your firm will have the advantage of breadth of knowledge, experience and thinking. That results in a wider range of ideas and a higher level of creativity. Assuming you have the eight essential ingredients of an innovative firm in place, those more creative ideas can become more incredible innovations.

Diversity is not essential to innovation, but it does facilitate a higher level of innovation.

So there you have it. The eight essential ingredients for an innovative enterprise. How does your firm stand? And what do you think? Have I missed an ingredient? Do you disagree? I'd love to hear from you!

BILL GATES THE INNOVATIVE NON-INNOVATOR

These days, there is a tendency in the IT world to look down on Microsoft as a non-innovative, out of date company that is chasing the latest technology trends rather than leading them. And indeed, Microsoft has had a better track record in implementing other people's and business's ideas than their own. Nevertheless, in the 1980s and 90s, Bill Gates led the company in developing and marketing a series of products that would create a whole new market and garner the company an effective monopoly in it. If that's not innovation, I don't know what is!

That Bill Gates is a technical genius goes without question. Yet his innovative vision was more about seeing a massive need in the marketplace, long before it ever existed, rather than being about a particular technology.

Bear in mind that until the 1980s, computers were huge complex devices made by massive firms like IBM, Burroughs (now part of Unisys) and Digital Equipment Corporation (DEC). Moreover, these companies also produced software as little more than components for their computers.

In 1977 Ken Olsen, then chairman of DEC, famously said: “there is no reason for any individual to have a computer in his home.” This pretty much sums up the corporate world's vision of the computer market at the end of the 70s.

However, when IBM produced the first PC and asked then fledgling Microsoft to provide an operating system for it. Bill promptly agreed. While IBM attached little importance to the OS, Bill quickly saw a future in which the PCs became the commodity and software the lucrative business. That's why he asked IBM to sign an agreement permitting Microsoft to sell MS-DOS, their first operating system, to other computer manufacturers rather than making it exclusively for IBM as was the norm in those days. And Bill didn't even have to write the code for MS-DOS. He bought the rights to DOS from a small company, reworked it slightly and resold it as MicroSoft Disk Operating System: MS-DOS.

Of course Bill was right. Soon almost every electonics manufacturer was building PC computers and loading MS-DOS into them.

Bill's next vision was a computer (full of Microsoft software) in every home. That seemed an outlandish goal. Computers were for businesses and geeks. They were far to esoteric to understand and offered little value to home owners – other than as game machines.

But, of course, he was right.

As PC computers became more popular, it was clear that the awkward commands of MS-DOS were not friendly to the non-technical user. It was also clear that the Graphical User Interface (GUI) operating system of another small computer manufacturer (Apple) was a lot more friendly. Microsoft quickly adopted its features for their operating system and created Windows. Although Windows versions 1 and 2 were disasters, version 3 quickly became the standard.

While this was happening, many small software developers were creating word processing software (Word Perfect was the market leader), spreadsheets (Lotus 1-2-3 was the business standard) and databases. Microsoft copied the best features of these and combined them into Office, a suite of business 'productivity' software which has become very nearly as ubiquitous as Windows. In part that was because Office plugged so easily into the Windows operating system. So even though other products were often better than Microsoft's, the latter quickly became the standard. And once it became a standard, the market for the competition dried up.

Bill had one more important realisation. By giving software developers information about his company's operating system and support in helping them design software that worked on Windows, he sparked off an entire industry, worth untold billions of dollars, that is utterly reliant on Windows.

In recent years, Microsoft has become slow to spot new trends and fails utterly to see them before they happen – as young Bill did 30 years ago. Indeed, Microsoft seems to be playing catch-up with Google rather than being the unassailable market leader it once was. Yet, we should not discredit the many innovations the firm has launched.

While Bill lacked a creative insight when it comes to software, he was truly visionary about the software market. That's why he's one of the richest people in the world today.

But Bill Gates has just stepped down from the helm of the company he founded in order to devote more time to the charity foundation he launched with his wife. Let's hope the new challenges there will inspire his innovative streak once again.

JENNI IN THE NEWS

Inventique, the newsletter of the Wessex Round Table of Inventors is an interesting read, covering a wide range of inventions and trends. I'm delighted to see that they have written an article about Jenni and Peter Eales of OI Solutions our main sales and service partner in the UK. You can download Inventique as full colour PDF newsletter at http://news.websfor.com/wrti/home/inventiquejuly08.pdf (PDF document) and find out more about the Wessex Round Table of Inventors at their web site http://news.websfor.com/

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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