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, 5 May 2009
Issue 148

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: BACK TO BASICS

With everyone and her aunt now involved in innovation and a never ending stream of articles, blog posts and books being published on the topic, we need to be sure we are clear on the basics of innovation, particularly corporate or organisational innovation.

Before we continue, I should point out that my professional interest is in organisational (or, if you are American: organizational) innovation. In other words, I am not very interested in how individuals innovate, rather I am interested in how populations, such as the employees of a company, the public or other defined group innovates. It is also important to bear in mind that at least 99.9% of corporate innovation is organisational in nature. Innovation is almost never the result of a single scientist having a eureka moment and single-handedly implementing it.

Rather, innovation is the result of collaborative creativity in terms of devising and developing an idea into a viable concept, followed by a collaborative effort to turn that concept into reality and implement it as a product, service or process improvement.

The Profitable Implementation of Creative Ideas

But we are getting ahead of ourselves. First let us define innovation. In the corporate context, innovation can be defined as the profitable implementation of creative ideas.

Profitable implementation means that the ideas, once implemented, have to deliver value to the organisation. For instance, a new product will generate additional income for the company, a process improvement will reduce operational costs and therefore increase profitability.

Although non-profit organisations and governments are, by definition, non-profit, the same notion holds true. A charity can be innovative – for example – by devising ways to deliver food aid to people more cost effectively. This increases its profitability. However, because it is a charity, that profit is returned to the organisation and enables it to help more people.

In some cases, innovation does not provide a clear and direct path to profitability. However, it will add value to the organisation or its customers and that indirectly profits the organisation. For instance, an improved method of providing customer service may not reduce costs, but may make customers happier. Hence, value is realised. Moreover, happier customers are likely to buy more often and recommend your firm to others. This, of course, is beneficial to profitability.

Creativity is Combining Two or More Concepts in New Ways

At this stage, we should also define creativity, which is essentially combining two or more existing concepts in new ways. In this definition, “new” is from the perspective of the individual or the group that is developing creative ideas. Because creative ideas are based on existing concepts, multiple people and groups who don't know each other often come up with similar and even identical ideas, often simultaneously. Provided those ideas were generated by combining concepts – rather than stealing developed ideas – they should be considered creative irrespective of whether or not they are new to the world.

Innovation, on the other hand, generally needs to be new at the global level – or at least within the marketplace of the company that is implementing the innovation.

A Lot of Corporate Innovation Is Really Creativity

What is immediately clear here is that a lot of activities that are described as being innovation are in fact creativity. Idea, generation, for instance, is a creative process. Only when those ideas are profitably implemented might they be considered innovations. Nevertheless, creative idea generation is part of the overall innovation process, hence many experts who specialise in supporting ideation describe themselves as “innovation coaches” or consultants. And who can blame them. “Innovation” is a tremendously sexy business term these days. “Creativity” is still considered a rather arty-farty activity normally performed by advertising people and designers, but not proper business people.

This is too bad. Creativity is a critical component of the innovation process and if clients can better understand what creativity is and how it fits the innovation process, they can be better served by innovation.

Nevertheless, the difference between creativity and innovation is an important distinction to make. A firm can be thick with creative thinkers who generate lots of highly creative ideas. Yet, if those ideas are not implemented, the firm will never be innovative. Indeed, many advertising agencies can be perceived as highly creative: constantly generating creative advertising ideas for their clients. But they may well not be at all innovative.

It is also important to bear this in mind when shopping for innovation consultants and innovation tools. Consultants who support ideation may well help you generate great ideas, but if you do not have the processes for implementing highly creative ideas – which often need different processes than less creative ideas – you will be wasting your money on such consultants.

Likewise, so called “Idea management” software products that focus on facilitating the generation of ideas but do not support the evaluation and implementation of the ideas should be considered creativity tools rather than innovation tools.

This is not to say that these tools or people are in any way flawed. Only that managers need to be aware of what they are purchasing and what more they will need to turn creative ideas into innovation.

Innovation Is Problem Oriented

It is also important to bear in mind that innovation is almost always problem oriented. Ideas seldom fly into the windows of your office, presenting themselves for easy implementation. Rather, they are the result of generating creative ideas that solve problems or help achieve set goals.

The Apple iPod, which is considered a very innovative new product, was not suddenly devised by Steve Jobs while he was sitting in a hot bath. Rather it was the result of a concerted effort by creative teams at Apple who had very clear goals in terms of devising and developing an easy to use portable music player.

The Google search engine was not the result of a sudden aha inspiration by Sergey Brin and Larry Page. Rather it was the result of trying to solve a very specific problem: how to build a search engine that delivers relevant results. And anyone who used search engines in the mid 1990s will appreciate what a relevant problem that was!

Once Sergey and Larry realised they could use the concept of citations in research papers and apply it to the importance and relevance of web pages, they had a creative idea. But no innovation.

They then had to work out a way to apply their idea technically and then build it. Only when they had created the first instance of their search engine, which came to be known as Google, could their creative thinking be considered innovation.

A Great Idea Is Only the Beginning

Thus a great business idea is only the first step in the long path to innovation. But it is a critical first step!

BREAKTHROUGH INNOVATION NEEDS BREAKTHROUGH FOLLOW UP

It has been about two years since Steve Jobs introduced the Apple iPhone at MacWorld, an annual conference and exhibition glorifying Apple products. Steve claimed on that day that, "Today Apple is going to reinvent the phone."

The iPhone was indeed an innovative mobile telephone. So it is not surprising that fans of Apple (makers also of the iPod and the seminal MacIntosh computer), gadget freaks and many others flocked to buy iPhones as soon as they hit the market.

But many people who acquired the first round of iPhones on two year contracts will soon be free to choose new telephones. Today the market is rich with alternatives that match or even beat the iPhone for features.

Usability Innovation that Is Easy to Copy

The real innovation of the iPhone was not technical, but usability. Rather than force the user to do everything on a small numerical keyboard, as is the case with most mobile telephones, the iPhone allows the user to use a larger touch screen. This enables her to type out messages on a keyboard, select items on menus and drag items across the screen. The result is a huge improvement in mobile telephone usability and makes it easy to add additional non-telephone applications to the iPhone.

However, most of the leading mobile phone manufacturers have noted the success of the iPhone and have launched their own, high-end touch screen telephones. These companies include Nokia, Samsung, LG and Palm.

Moreover, Microsoft and Google have both come out with mobile phone software that enables other manufacturers to produce easily mobile phones with similar functionality to the Apple Phone.

Good Money but no Market Domination

Apple has sold over 20 million iPhones since they launched the product in 2007. That's not bad. Indeed, Apple raked in US$34 billion last year, the bulk of that coming from the sale of iPhones and iPods. But, during the same two years, some 1.5 billion mobile phones were sold globally. Thus iPhone garnered just over a half a percent of the mobile telephone market.

Of course Apple probably had no intention of becoming the dominant player in the mobile telephony sector. Rather, they sought to capture the high end of the market (iPhones are not cheap!). Unfortunately, they are in danger of losing even that bit of the market.

Although their initial iPhone was arguably a breakthrough innovation, they have not had sufficiently innovative follow up to ensure that the iPhone remains a clear cut above the competition. And as users' mobile telephony contracts run out and they flock to other brands, there is a real danger that Apple will see reduced sales in what is an extremely competitive market.

One Innovation Wonders: A Common Problem

Apple is not the only company that has had a breakthough innovation which ultimately withered in comparison to the competition. In 1983 Chrysler launched an innovative new automotive concept: the minivan. The minivan combined the utility of a van with the size and handling of a car. It could fit seven or eight people inside, but could park in a normal sized parking space.

Clearly it was a winning concept. Today's roads the world over a thick in minivans. Yet, although Chrysler has continued to improve on their minivan concept, they have failed to out innovate the competition, which copied Chrysler's concept and continue to improve upon it.

A few days ago, Chrysler went into bankruptcy. Their cars are considered big and boring. Had they continued to innovate, they might be in better shape now.

Incidentally, Renault in France had a similar concept at the same time and launched their Espace minivan in 1983. The French car maker went through similar financial problems a few years ago, but continues to innovate. Their Espace is considered one of the best minivans in Europe and other cars in their line-up sell well. As a result, Renault is doing far better than Chrysler during this economic crisis.

Conclusion: Keep Innovating

Clearly, the lesson to be learned here is to keep innovating. One breakthrough innovation will give you a big chunk of market-share very quickly. It might even transform your company overnight. Minivans played a big part in rescuing Chrysler from a previous spell of near bankruptcy and Apple's profits jumped tremendously as a result of the iPhone and equally innovative iPod.

But you need to keep innovating at a rapid pace. If you successfully launch a highly innovative new product, you can be sure your competitors will copy the concept and have their own competing products – very possibly technically better products than yours – on the market as soon as they can. If you can't out-innovate them, you will lose market-share as quickly as you gained it. So, keep innovating or else!

PROMOTING CREATIVITY IN YOUR FIRM

With the economic slow down and many companies laying off staff, employees increasingly feel the need to demonstrate their value to their employers. This may be done by taking on more tasks that deliver concrete, measurable results, focusing on more administrative work and generally looking busy. Their logic is that people who appear to be busy are likely to be perceived as more important to their firms.

Unfortunately, being creative tends to deliver fuzzy results, is non-administrative and often looks more like playing than working. Unless your firm actively encourages such behaviour, you may find that employees are spending less time on creativity – which leads to innovation – and more time on administrative work – which seldom leads to innovation.

As a result it is important for senior management in your firm to emphasise the importance of creative thinking and its role in producing innovative results.

Simply telling staff to be more creative or announcing that innovation is critical to the firm is not enough. Top management needs to demonstrate that they are spending time on creative thinking themselves. If senior managers are clearly using creativity tools, then people lower on the corporate ladder will feel safe in emulating their actions.

Senior management also needs to reward people and teams who come up with creative ideas, irrespective of whether or not those ideas are viable. And they need to promote creative thinking activities. Running brainstorming events, ideas campaigns and other ideation activities with rewards based on participation are all effective methods of encouraging creative behaviour in the workplace.

And you need to encourage creative thinking if your firm is to remain innovative during the economic downturn.

THE INNOVATION PROCESS MANAGEMENT WEB APPLICATION: JENNI

With more and more idea management, suggestion scheme, crowd-sourcing and other idea capture products coming onto the market these days, choosing the right innovation solution can be a challenge. Fortunately, if you are looking for a comprehensive innovation process management product that not only facilitates the capture of ideas, but lets you focus innovation on business needs; provides web 2.0 collaboration options, enables scientific-like evaluation of ideas and facilitates the development of ideas using your existing business tools, there is only one option: Jenni.

Jenni is a highly flexible innovation process management web application that can provide the backbone of your innovation process, irrespective of whether you have 100 employees or 100,000. And because it is a web application, we can normally have your implementation of Jenni up and running within a day of your go-ahead. Sooner if need be!

In addition, if you are keen on crowdsourcing, we now have a crowdsourcing option available with Jenni. Contact us to learn more!

For more information about Jenni, to arrange a demo or to talk to an expert near you, visit www.jpb.com/jenni.

We look forward to helping you manage your innovation process efficiently and effectively.

ARE YOU AN INNOVATION CONSULTANT?

If you are providing innovation services such as consulting, training or coaching and want to add a great idea management software solution to your portfolio of products and services, contact me and let's talk about how Jenni can help your clients innovate better – and help you gain new clients.

You benefit from our generous commission programme, marketing on the popular www.jpb.com web site (over 150,000 page hits/month) and collaborating with a fantastic global team of innovation, marketing and sales experts (http://www.jpb.com/about/index.php). In addition, by packaging your services with Jenni, you can provide your clients with value added innovation services that help them increase profitability.

It's a fantastic win-win-win scenario for us all!

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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