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, 17 February 2008
Issue 143

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. E-mail me at jeffreyb@jpb.com.

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

VALUE ADDED INNOVATION

With the current state of the economy, a lot of business innovation is focusing on cost cutting. Indeed, sometimes, innovation for this purpose is too strong a word. Rather business change is focusing on cost cutting through predictable methods such as laying off workers, closing production facilities and closing entire business units (see the last issue of Report 103 to learn more about the innovation threat inherent in lay-offs: http://www.jpb.com/report103/archive.php?issue_no=20090203 ).

This can be a mistake. Bear in mind that all businesses serve their customers. And while innovative cost cutting may indeed cut costs, it is unlikely to provide value to customers, unless your business is reducing sales prices in line with your internal cost cutting. This is usually not the case since current loss of revenue is the result of fewer units sold rather than less cost per unit.

If your competitors, however, are looking not only at cutting their operational costs but also at innovations that deliver value to their (and potentially your) customers, they are likely to increase their market share at your expense.

Clearly, a far better state of affairs would be for your company to be the one innovating in order to deliver more value to your (and their) customers; hence increasing market-share at your competitor's expense.

Fortunately, this is not a difficult task just now, because the truth of the matter is that most of your competitors are focusing their innovation on cost cutting. By all means, invest resources on innovative cost cutting exercises yourself. After all, if your firm goes bankrupt, you will not be able to deliver any value at all to customers. But be sure also to invest in innovation that delivers added value to your customers; new product and service innovation; new business model innovation and more.

Cost Cutting + Value Adding (CCVA) Innovation

Even cost cutting innovation can deliver value to your customers. You just need to bear your customers' needs in mind during the idea development phase. Toyota for instance uses innovation to improve the efficiency of its production process. This has enabled them to offer high specification cars at highly competitive prices. Moreover, the company is constantly improving their cars' features, ensuring they match or exceed the specifications of competitors' cars.

Let's call this cost cutting + value adding innovation (CCVA). CCVA innovation requires looking at cost cutting innovation not only in terms of the value it delivers to your firm, but also in terms of value it delivers to customers. Lay-offs do not usually enable you to reduce product pricing. Improving the efficiency of your production process, on the other hand, not only reduces your costs, but also enables you to reduce prices. Fewer production steps may also reduce the likelihood of defects and therefore improve the quality of your product – thus delivering even more added value.

Simplifying products, a topic that has often been discussed in this journal, usually not only reduces your production costs, but also reduces sales prices and makes your product easier to use and probably more reliable as there is less to go wrong.

This is an important lesson not only in times of economic slow down, but also in better times. Innovation that delivers added value to customers is always more likely to increase the number of customers than is innovation that only cuts costs. And if your competitors are performing value added innovation when you are not doing so, you will almost certainly lose customers to them.

Yet it would be much better if they lost customers to you, would it not?

GUEST WRITER

I am delighted to introduce you to Andrew Carey who has kindly contributed an article based on his experience with innovation teams at The Economist (one of my must-read publications). It is just below.

Incidentally, we always welcome guest contributors at Report 103 – you add value to this publication and present new and varied perspectives to the over 5000 subscribers of this eJournal as well as many more who browse it on the web.

If you would like to contribute something, send me an e-mail to describe your article. Purpose written articles and reprints are both welcome – but if you are submitting a reprint, please ensure that you have the right to authorise our publication of the story. Even if you wrote the article yourself, if it appears in a magazine or other publication, you may no longer own copyright to your work!

10 LESSONS ON INNOVATION TEAMS FROM THE ECONOMIST

by Andrew Carey

In April 2006, when The Economist’s Internet Strategy Group met to discuss ways of improving its presence on the Internet, the company was doing very nicely, thank you. Global circulation of the ‘newspaper’ had just passed one million; Roll Call, a sister magazine, had become the most widely read publication in the US Congress; and new titles had been successfully launched in China and India.

All in all, it was a time when most companies might have been happy to rest on their laurels or focus on what was already working. Instead, The Economist approved a proposal from their CIO, Mike Seery, to recruit a team of five people plus himself from within the Group, remove them from their current jobs, and give them $150,000 and six months to launch an innovative web-based product, service or business model.

The enthusiastic young team encountered all kinds of problems and challenges. Many would be immediately recognised by any innovation team. But, while the publicity they received was more than most teams might expect in a lifetime, the solutions they found were often ingenious and the lessons they learned could be applied in thousands of businesses around the world.

In a rare move, The Economist team invited me into their offices to observe them at work over the next six months. Here’s the condensed version of what I saw and learnt - for teamworkers, innovators and other readers in a hurry.

Team selection

Mike Seery recruited his fellow team members from across The Economist Group. He set out to attract people from editorial, sales, marketing and IT. He also managed to bring team members from around the world to the London-based project.

But gathering team members from such different backgrounds meant they had a lot of catching up to do before they were able to work together efficiently. For a long time, the techies’ knowledge of emerging technologies left some of the others floundering. And a lot of team-building needed to be done before the business of team-working could get under way. The Economist also kept open each team member’s job for the six months that they were on Project Red Stripe, and team members were recruited on the understanding that this wasn’t an opportunity for people who were bored with their jobs or wanting to leave.

Lesson 1:

Consider carefully whether it’s better to bring together a team who already know each other, share a common professional language and have skills in common – and then buy-in extra skills as needed. Or do you prefer a broad knowledge-base but allow extra time for team members to get used to one other?

Lesson 2:

Recruiting team members who want to return to their old jobs at the end of the project ensures that you don’t just get people who are bored at work. But loyal employees are not necessarily the most creative. The angry and disaffected may have some of the best ideas.

Crowdsourcing

Although team members brought their own ideas about what The Economist should do next, they began by asking readers and other interested parties. In so doing, they put their faith in ‘The Wisdom of Crowds’. In fact, ‘the crowd’ didn’t come up with anything the team hadn’t already thought of. So you could argue that the time they spent crowdsourcing was time wasted. But what if they had come up with something spectacular that way? How would you ever know without asking?

Lesson 3:

Think very carefully about who is best placed to identify the best innovation for your organization. Is it you and your team? Your customers? Experts? Or the world at large?

Freedom

The team had enormous freedom. There were no guidelines on what sort of innovation they should look for and they were free to launch the idea without first getting approval from the directors. In practice this caused a lot of headaches and the team weren’t willing to jeopardize the business by launching an idea they believed in without first getting approval from the top. And, when they asked for approval, they didn’t get it.

Too much freedom can also cause problems with creativity. The Project Red Stripe team could do anything. At one point, they were working with top NGOs and their advisers to develop a business that would help the UN achieve one of its millennium goals. When world peace is within your grasp, why would you consider a humdrum, commercial web venture?

Lesson 4:

Be realistic about how much freedom you can give an innovation team. It may turn into a millstone.

Lesson 5:

‘Thinking big’ is necessary for a major innovation project, especially as it’s notoriously difficult to get people to think outside the box. But giving people the freedom to try and change the world may leave them dazed by the enormity of what they might achieve.

Risk

Big companies are large because they’re successful and success is a barrier to innovation. Why try something new and risky when what you’re doing now works? If it ain’t broke, why fix it?

This was true at The Economist, which didn’t need a new business and didn’t need the two key ideas developed by Project Red Stripe.

Lesson 6:

Do a risk assessment. Is the sponsor organization under sufficient pressure to want to run with whatever idea the team comes up with?

Teambuilding

Early on, Mike Seery organized a number of teambuilding exercises. They worked well and were seen as significant moments in the team’s history and in the stories that it told about itself. But they also served to establish a particular mindset – ‘we’re good at this and this, but less good at that’.

Lesson 7:

The moments in a team’s trajectory when you most need to run team-building exercises (late on, when the team’s under extreme pressure) are, almost by definition, the moments when you haven’t got time to run them.

Drifting

From the outset, the Red Stripe team sometimes ‘wandered around’ without a clear sense of what was going to happen next and without clear rules about how it might be going to happen.

Instinctively, drifting seems like an appropriate thing for an innovation team to do; but it’s also an uncomfortable and anxiety-inducing thing to do. Some say that safety is a prerequisite of creativity. Certainly there were some members of the Red Stripe team who worked hardest and fastest when they knew where they were going.

Lesson 8:

Drifting ‘aimlessly’ can be creative, but it’s also scary. Participants (and Finance Directors) may want something more regimented. Rules and guidelines can offer direction or serve as blinkers. It may be important to have some clear guidelines in place before the innovation project begins.

Consensus

Most teams are likely to want to act democratically and move forward with general agreement that they’re on the right lines. In Project Red Stripe, different team members grew committed to different projects. That made getting a consensus for just one idea difficult.

Lesson 9:

Consider whether you should opt for ideas that excite everybody or simply for ones that command a majority. If you can’t find an idea that excites everybody, for how long should you keep looking?

Markets

An obvious question for any innovation team is whether to start by thinking about the problems faced by a particular group of people, or whether to think about improving existing products, services and skills. Theorists tend to prefer the former, but plenty of great innovations come out of companies finding new applications for existing technologies. (Think of classic innovations like 3M and Post-It Notes or NASA and Teflon).

While the Project Red Stripe team actively solicited ideas about what they should do, they did not solicit ideas about the group(s) for whom they should implement those ideas. Should they have invited an archbishop, an aid worker, a genetic researcher and others to pitch for a particular target market?

Lesson 10:

A deserving market may be motivational, even inspirational. But it doesn’t necessarily make for good business. The team may need guidelines for how to value a commercial priority against an ethical one in business.

The Economist’s Project Red Stripe succeeded in that it came up with a number of radical and innovative business proposals. It failed in that the company chose not to commercialize any of them at the time. It also succeeded in that it offered the business powerful learnings about its culture and about future innovation projects - just a few of which are shared here and may provide food for thought for other innovation teams around the globe.

Andrew Carey

For the full story behind The Economist‘’s project, and a wide ranging guide to launching a successful innovation programme, see Andrew Carey’s book Inside Project Red Stripe, published by Triarchy Press (www.triarchypress.com).

Andrew has worked as a writer, editor, marketing consultant, publisher, team facilitator and business development adviser. He is also a practising
psychotherapist.

THE BRUSSELS (OR ANYWHERE) IMAGINATION CLUB

One of my hobbies is running a club: the Brussels Imagination Club. Over the past few years this has evolved into an interesting club with a fascinating group of members. It is also something you could emulate locally if you are interested. It is well worth it!

The Imagination Club meets twice a month in Brussels to hold a short, experimental workshop or event usually associated with creativity. However, the emphasis here is not on creativity, but rather experimentation. Indeed, the one thing we do not want is for people to give slick business presentations or PowerPoint lectures. There are many places in Brussels – or in any city – where people can go for a business presentation. Experimental workshops, on the other hand, are much rarer and more interesting.

Experimental Workshops

Sometimes a professional trainer has a new idea that she wants to try out. We offer her a safe environment and a highly responsive international group (typically 15-25 people show up for an event). Based on the feedback from the group, the trainer can modify her workshop and prepare it for delivery professionally – or she might decide her ideas don't work so well in practice. Knowing this is also useful.

Sometimes non-trainers simply want to make a workshop around an issue for which they have a passion. They enjoy sharing their knowledge with others and getting feedback. And while they may not to be trainers themselves, they get valuable experience in public speaking and leading groups – something most of us need to do professionally - at least sometimes.

Everyone Benefits

The result is that everyone benefits. The trainer gets a chance to practice a new idea in a safe environment. She also gets feedback that helps her improve her skills. Participants usually take away new knowledge and skills. Most of us also like the feeling of participating in a creative experiment. Everyone gets a chance to meet new people – the 20 participants at any given workshop will usually come from at least a dozen different countries. Brussels is a very international city.

Finally, Andy Whittle – my good friend and co-organiser of the Imagination Club – and I thoroughly enjoy making the Imagination Club happen twice a month, learning from it and getting to know a lot of fascinating people. We also decided early on that we would not try to exploit the Imagination Club for business opportunities. We consider it 100% hobby. And that helps ensure the Club remains a place of experimentation for enthusiasts and that it remains fun.

Practical Details

The workshops take place on Wednesday evenings and run from 19.00 to 20.30, although people are welcome from 18.45 for a drink, a snack and a chance to meet others. After the workshop, people hang around until 21.00 in order to meet others. Often, an ad hoc group will go out to a nearby café or restaurant for a drink or dinner afterwards.

At each workshop, we have a small table with drinks, including red wine, juice and water as well as light healthy snacks.

We rent the space at very low cost from a ICA Brussels, a non-profit.

In order to cover our expenses, we ask each participant for a 10 Euro donation. Considering they get drinks, something to eat, knowledge and new acquaintances, it is awfully good value for money.

Best of all, an Imagination Club is not difficult to get started. It just takes a bit of determination and a lot of enthusiasm. So, if you would like to start your own Imagination Club, send me an e-mail. Andy and I would be more than happy to help you get started. If you are in Brussels on the second or fourth Wednesday of the month, come join us. You can find more information at http://brussels.imaginationclub.org/

On-Line Imagination Club

In addition to the Brussels Imagination Club, I also run an e-mail discussion forum called the Imagination Club. It's a group of people around the world with an active interest in creativity and innovation. We share creative challenges, discuss creativity and share ideas there. You are welcome to join us. You can find more information and a subscription form at http://forums.imaginationclub.org

FREE IDEA MANAGEMENT VS. PAID IDEA MANAGEMENT

During an idea management presentation today, I was asked why a client should pay for Jenni idea management (our product) when there are several free products now on the market.

I explained that the answer is simple: Jenni is cheaper!

Cheaper than Free

The reason behind this seeming mathematical impossibility is simple. All of the free 'idea management' tools that I am aware of are simple front end suggestion box tools. Users are invited to submit ideas on any topic. So there is no business focus of ideas whatsoever. Jenni, on the other hand, uses the ideas campaign approach to capturing ideas. Managers launch innovation challenges based on specific problems. As a result, ideas focus on current business needs.

To make matters worse, the free tools have little in the way of back end idea review functionality. Users of the system are expected to review each idea, one at at time, manually in order to determine whether the idea is worth taking further. Since ideas are unrelated, this is a highly time consuming process that often requires calling in experts in order to look at a single idea.

Jenni, on the other hand, provides a suite of evaluation tools that facilitate combining and reviewing ideas using proven business processes. As a result, related ideas can be combined and teams of experts can evaluate multiple ideas in one round.

What this all means is that with Jenni, you get more ideas that meet your current business needs and the process of reviewing those ideas in order to determine which ideas deliver the greatest value is highly efficient. That translates into significantly fewer human hours in order to generate and identify innovative ideas. Unless your company uses slave labour, those cost savings are far greater than the cost of Jenni. Moreover, Jenni comes with comprehensive innovation and user support as part of the package.

And that means that investing in Jenni is far less costly than using a free suggestion scheme software.

Want to know more about how Jenni works? Then check out http://www.jpb.com/jenni/ or contact your nearest Jenni representative to discuss your needs.

SELLING AND SERVICING JENNI

If you run an innovation consultancy or training business and would like to be able to offer Jenni (http://www.jpb.com/jenni/) to your clients, send me an e-mail (jeffreyb@jpb.com) and introduce yourself. Jenni is sold and service provided to clients through a global network of small, friendly and highly professional innovation shops. If you help firms innovate better and believe in fast client service, we would like to hear from you!

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 twice monthly eJournal 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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