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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, 6 October 2009
Issue 157
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.
BACK TO THE BASICS
Following some recent discussions in the Imagination Club forum (http://www.imaginationclub.org/forum)
and with some friends in the innovation business, it has become obvious that
the innovation profession lacks something most other professions take for granted:
a common language. A good example given by one member of the club is two computer
programmers talking about their work. To people with little knowledge of computer
and software technology, it will seem like the programmers are speaking a foreign
language. They will use words unfamiliar to non-experts and use commonplace
words in strange ways. Yet they programmers will understand each other very
well. This is because both experts will know the terminology of their profession
and will not need to define these terms in order to have a deep technical conversation.
Yet in the innovation business, such a common language does not really exist.
Indeed, it can often be difficult to find two consultants who will even agree
on a definition for the word “innovation”. That is certainly not
a problem for computer consultants! They will both have a very similar notion
of what a computer is!
To make matters worse, a number of innovation consultants are making up their
own words in order to demonstrate their own innovativeness as well as to show
off a unique selling proposition (USP). This is essentially a good thing –
after all if an innovation consultant is not innovative herself, how can she
help her clients become more innovative? Nevertheless, this making up of words
adds to confusion in the field.
The Consequences
The lack of a consistent jargon and shared definitions of innovation related
terminology has serious consequences that affect innovation service providers,
who include trainers, coaches, consultants and software providers; as well as
the clients to whom they sell their services. Specifically, many highly competent
service providers are finding it difficult to sell their services. At the same
time, companies whose senior managers are keen to push forward innovation are
unable to make purchase decisions that would enable their firms to become more
innovative.
Let's imagine a company called Acme Inc. The CEO has been reading up on business
innovation, almost certainly subscribes to report 103 and has been talking to
associates and others. As a result, she has some ideas about the needs of her
company. She puts a manager, call him Mark, in charge of innovation. Mark then
does his own research, draws up what he believes to be the company's needs and
then contacts several consultancies and invites them to bid on consulting and
training projects.
Each consulting firm pitches their services with a slick, professional PowerPoint
slide show which defines what they perceive to be Acme's key weaknesses and
strengths in innovation as well as recommended plans of action. Each agency
is clearly competent and has an impressive list of clients. However, each consultancy
has described the problem, their approach and their aims differently. In some
cases, they seem to be talking about similar actions, but they are using different
words. In other cases, they are using common words to describe what seem to
be completely different activities!
No One Wins
As a result, Mark has a lot of information which has left him more confused
than he was before he began researching innovation! None of the presentations
matched his understanding of his company's needs. Nevertheless, he prepares
a report of the results together with his recommendations and a budget request
to the CEO.
She is also confused. She had her own clear ideas about her company's needs.
Yet none of the consultants nor Mark mentioned several of her chief concerns.
And the proposals are confusing and contradictory. In the end, the CEO may very
well decide that none of the consultancies can meet Acme's needs and decides
not to hire anyone.
However, all of the consultants may very well have described similar problems
and goals! But, lack of commonly defined terms meant that their proposals were
unclear, particularly when compared to each other and the expectations of Mark
and the CEO.
Based on conversations I have been having, this seems to be happening rather
more frequently than many of us realise. And it does no one any good!
Audacious Move
Fortunately, I have a solution! In what will doubtless be seen as an audacious
move on my part, I will over the next few months write about the basics of corporate
innovation in this journal. I will define some regularly used terms and describe
some standard processes. However, I also invite you to comment on my definitions
and descriptions and to disagree with me. Where relevant and possible, I will
publish your ideas here in Report 103 as well.
DEFINING CORPORATE INNOVATION
If we are going to get back to the basics of corporate innovation, the first
thing we need to do is to agree to a definition of “corporate innovation”.
Fortunately, this is easy. Before I do that, however, note that I am specifying
corporate innovation rather than innovation in general. This is because innovation
in different fields has different meanings. Scientific innovation is different
from innovation in the arts which is different to innovation in sport and so
on.
The definition of corporate innovation is very simple:
The implementation of creative ideas in order generate value, usually through
reduced operational costs, increased income or both.
That's it. Very simple! If you are in a hurry, you can stop reading this article
now. You know the definition of corporate innovation. But if you are interested
in the details, read on.
Breaking It Down
There are several key words in this definition that need to be explained. Firstly,
let's distinguish between creativity and innovation. Many people, including
professionals (and even myself on occasion, I am ashamed to admit) muddle these
terms. Creativity is largely an intellectual process. It involves combining
seemingly two or more unrelated concepts in new ways in order to create a new
concept or idea. This is important. Some people will claim that creativity is
thinking up an all new idea. But of course, there can be no such thing as an
all new idea. In order to comprehend and define an idea, we need existing concepts
and terms.
Thus, creativity is primarily about the ideas and innovation is about the implementation.
After all, in business an idea is worth absolutely nothing if it is not implemented.
The generation of value is also important. A company could replace every employee's
grey desk with a pastel coloured one having legs that look like duck feet. This
would clearly represent the implementation of a creative idea – but unless
it could be shown to generate value, it would hardly be innovative!
A Business Ultimately Exists to Turn a Profit
A business ultimately exists to turn a profit. Irrespective of any claims of
serving the community, caring for the environment or making the planet a better
place in one way or another, if a company fails to turn a profit for an extended
period of time, it will go bankrupt and cease to exist. Additional services,
such as making the planet a better place, are indeed noble and make the planet
a better place. But without profitability said firms will not do much to help
our old Earth.
Thus it is important that innovative ideas are not simply creative, but generate
value that directly or indirectly allows the innovating firm to reduce operational
costs, increase income or both.
Examples
For example, if it could be shown that the pastel coloured desks with duck
feet improved employee satisfaction, this idea could be considered innovative.
And this brings us to one last point. In the past, I have defined innovation
simply as the profitable implementation of creative ideas. But although added
value is usually demonstrated through increased profitability, that connection
can sometimes be tenuous.
For example, here in Europe, large banks need to deal with banks in other European
countries, compete with local banks and conform to new European Community legislation.
Sometimes, a new law will require that a bank changes the way it performs certain
operations. We've helped a couple of banks cope with this through creative problem
solving in order to devise methods for working around legal requirements in
order to continue to offer a service to clients. At first glance, it would seem
that here innovation has made it more expensive for the banks to deliver an
existing service. But without innovation, the same banks might have had to drop
an existing service all together (thus reducing income) or they would have had
to implement a very expensive method of complying with legislation, which would
have resulted in even less income. Hence, the innovative work-around saves income
over the alternative.
Likewise, a creative idea that increases employee job satisfaction, such as
the duck-foot desks, can be expected to result in improved productivity and
that will ultimately lead to reduced operational costs.
This will be true of every corporate innovation, it will have started as a
creative idea, been implemented and will generate value for the firm.
What do you think? In your opinion, is my definition of innovation incomplete?
Wrong? Let me know!
THE LEGAL SIDE OF OPEN INNOVATION
I have a confession to make: I do not entirely get “open innovation”.
On one hand it has been going on for ages. Corporate research scientists I know
tell me they have long worked with outside companies, experts and universities
in order to develop projects. Indeed, probably the main reason scientists attend
international conferences is not to listen to lectures about topics they can
read in journals anyway. Rather, it is to network, find out what others are
doing and develop new ideas on how to solve problems.
On the other hand, many of the new so called open innovation experts seem not
to have looked at the wealth of research and experience gained in corporate
innovation initiatives focused more on closed – or what I like to call
“in-house” innovation. That is, innovation which is performed by
employees of the company.
Moreover, a popular open innovation process known as crowd sourcing is often
managed by software that uses outdated suggestion scheme methodology and lacks
a structured back-end that would streamline and manage the evaluation of submitted
ideas. Reward schemes, motivation and other issues which I – or any of
my more competent competitors – could describe in detail are also missing
from most these software solutions and the initiatives for which they are used.
Yet, there is one area in which open innovation differs significantly from
in-house innovation: the legal element. Surprisingly, this is a subject seldom
discussed among open innovation experts. That's not good. The consequences of
ignoring the legal side of open innovation can be catastrophically expensive.
Let's look at an example.
Whose Intellectual Property?
Let's imagine a scenario in which Melissa submits to Acme Ice Cream's customer
suggestion web site with an idea about how to make an ice cream wrapper that
will keep individual ice cream snacks (such as ice cream cones, ice lollies,
etc) cold for days, even outside the freezer. Clearly her idea would have all
kinds of terrific applications.
Melissa gets a form-letter e-mail from Acme thanking her for her suggestion,
but hears nothing more. Then, six months later, she is stunned to read that
Acme is launching a new range of ice cream snacks in their patented “Keep-Kool”
wrappers which seem remarkably similar to Melissa's idea.
The new Keep-Kool product range is a hit and Acme earns gazillions of dollars
and its stock prices soar. Melissa, meanwhile, is steaming. She has earned nothing.
Not even a thank you. Finally she decides to sue Acme for her share of those
gazillions of dollars.
It seems like Acme has taken advantage of Melissa in the heartless way evil
corporations seem so often to do, doesn't it?
But in fact, Melissa made serious mistakes and no legal expert would be likely
to take on her case.
Look at It from the Corporation's Perspective
Melissa had to have been inspired somewhere for her idea. Let's assume it was
an article in a news magazine citing a recent paper in a scientific journal
describing a new material with near perfect insulation capabilities. Being an
ice-cream lover,Melissa was inspired by this article and so came up with her
idea. Fortunately, she studied chemistry in University and was able to draw
up some viable specifications for her idea, including some sketches. She submitted
all of this to Acme.
Meanwhile, back at Acme Ice Cream, you can be sure that at least one of their
food scientists read the original paper in the scientific journal, saw the opportunity
and began work on a similar idea to Melissa's. Moreover, Melissa was probably
not the only member of the public who had a similar idea about using this material
as an ice cream wrapper.
Indeed, the case of numerous people having nearly identical ideas at the same
time is far more commonplace than most of us realise. Ask anyone who has ever
managed an open suggestion scheme (that is one in which any idea can be submitted)
and they will confirm that one of the biggest problems they have is duplicate
ideas.
That's not surprising. Ideas are inspired by what we read, watch, look at and
hear. An item on a television news programme watched by millions of people is
likely to inspire many of those people in a similar way. As a result, thousands
of viewers have a similar idea which each believes to be very creative and original.
Thus, from Acme's perspective, Melissa was just one of dozens of people who
suggested the same thing. Moreover, all of these suggestions were submitted
long after Acme's research department had started developing Keep-Kool wrappers.
Moreover, Acme, with a team of highly paid legal experts on their payroll, promptly
applied for patents on Keep-Kool wrappers, thus protecting their intellectual
property.
Lastly, there is the fine print Melissa did not read. We will get to that in
a moment.
Contract Law
Of course the employees within Acme will not dispute the ownership of the idea
or the Gazillions of dollars in earnings. This is because every employee of
Acme and every contractor hired by the firm will have signed with the company
a legally binding contract stipulating ownership of all intellectual property
(IP) they develop while employed or contracted by Acme. And this contract will
almost certainly stipulate very clearly that the ownership of all patents, trademarks
and copyright and other IP belongs to Acme.
So, if Melissa had protected her idea, for instance through a provisional patent
in the USA (see DIY Patent Protection in the 17 October 2006 issue of Report
103 (http://www.jpb.com/report103/archive.php?issue_no=20061017)
or an i-Depot envelop in Benelux (http://www.boip.int/)
or a similar process in her legal jurisdiction (usually country when it comes
to IP law), she might have a case against Acme. Particularly if it could be
demonstrated that she applied for protection before Acme did.
On the other hand, if Melissa had submitted her idea in one of the open suggestion
schemes that several companies are using, she will almost certainly have signed
away ALL intellectual property associated with her idea together with the text
describing the idea and any illustrations she might have uploaded. She will
have signed away her rights when she registered to use the suggestion site and
agreed to the terms and conditions. Like most people, she probably just clicked
the box stating she agreed to the terms and conditions, without actually reading
them.
Be Careful with Your Most Potentially Innovative Ideas
In fact, if you have an idea which is a potential breakthrough innovation for
a company, I would suggest that you do not even think about submitting it in
an open suggestion scheme. By so doing, you will sign away all of your rights
to the idea, royalties and recognition associated with the idea. Moreover, most
public open suggestion schemes are so over run with trivial incremental suggestions
that people managing them do not even look at all of the ideas! They know that
the breakthrough ideas will not be submitted there.
Let us assume that Melissa and Acme are in the USA. Melissa's best course of
action would be to check for relevant existing patents and applications –
she can get started with Google's nifty patent search tool (http://www.google.com/patents).
If none exist she can apply for a provisional patent that will give her protection
for one year, after which time she will need to apply for a full patent. A provisional
patent will cost just US$100.
With this protection, she can propose her idea to Acme safe in the knowledge
that if Acme does exploit the idea she should benefit financially. And if Acme
does not give her royalties, she will have a much sounder legal case against
the company. And, assuming Acme does exploit the idea, their lawyers can take
care of the costly and time consuming process of applying for a full patent
AFTER a contract has been signed with Melissa guaranteeing her royalties and/or
other benefits.
Lesser Known Idea Submission Sites
While crowd-sourcing open innovation initiatives are attracting all the press,
in spite of their lack of any demonstrable value beyond capturing incremental
improvements in an inefficient manner (see Innovation Is Not Democratic in the
20 May 2008 issue of Report 103 to understand why: http://www.jpb.com/report103/archive.php?issue_no=20080520),
many large companies also have forms on their web sites for submitting real
innovative ideas. These forms will explicitly ask the idea submitter for details
on the IP protection the idea. Often these forms will not even allow submission
if no patent or other IP protection information has been entered on the form.
This is to protect the firm against IP based law suits.
If the firm does not have such a form, Melissa can contact the company directly
with her idea. Because it has been protected, not only can she feel safe discussing
it openly with people in Acme, but Acme will take her much more seriously as
well.
Danger to Small Companies
Medium and large companies have legal staff or legal experts on retainer or
both. They know they have to be careful with IP and so ensure that public suggestion
schemes include terms and conditions which assign all IP to the firm. They also
know to ignore unsolicited ideas, without IP protection, submitted through other
channels. This further protects them from accusations of idea theft.
Smaller companies run by enthusiastic entrepreneurs, on the other hand, are
less likely to be aware of the issues of IP and as a result are in danger of
running into potential IP disputes when they run open innovation initiatives.
And if they hire an open innovation consultant or service provider who is equally
unaware of the legal side of IP, they are putting their entire firms at risk!
If you are planning an open innovation initiative of any kind, be sure you
or the person managing it is aware of the legal ramifications of what you are
doing. And,if in any doubt, contact a legal expert.
REPORT: HOW TO IMPLEMENT OPEN INNOVATION
Speaking of open innovation, the Institute for Management Technology and Cambridge
University have published a report entitled How to Implement Open Innovation
which you can download in PDF formate from http://www.ifm.eng.cam.ac.uk/service/news/default.html#open_innovation
Frankly, I found that while the report contained a lot of information, it was
surprisingly short on any real conclusions or concrete advice for firms trying
to come to terms with open innovation. Nevertheless, it is probably worth reading
for the information and brief case studies in the report.
JENNI IPM – A CASE STUDY
A large equipment manufacturer recently ran their first ideas campaign with
Jenni innovation process management
(IPM). They were looking for a means of simplifying a commonly used part
in much of their equipment.
In addition to involving their own employees from several divisions, this company
also invited employees from a trusted supplier to participate.
The result? The teams generated a large number of creative ideas, several of
which solved the problem and promised to reduce manufacturing costs significantly.
The company champion of this innovation initiative delightedly told us that
even if they had brought all of the participants of this ideas campaign together
in a room, there is no way they would have come up with so many value-rich ideas.
Moreover, Jenni's suite of evaluation tools made it easy to identify which
ideas offered the most value.
Also important, was Jenni's team management function which allowed our client
to ensure that only members of specific teams could participate in – or
read the results of – this highly confidential ideas campaign.
They were also delighted by the close, professional coaching jpb.com provided
them. From helping them to formulate their innovation challenge to discussing
how to motivate people to participate, their jpb.com innovation coach was always
just a phone call or an e-mail away.
How about your firm? We're sure that Jenni can help you innovate better and
more efficiently. Contact us to discuss how we can get started on your success
story! Contact your nearest Jenni representative or find more information about
Jenni at http://www.jpb.com/jenni/ or
contact us here and someone
will get back to you in no time. We have representatives in Europe, North America,
South America, Australia and Africa.
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 (jeffreyb@jpb.com or +32 2 305 65 91 or
Skype Eurojeffrey) 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 your, your client and jpb.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!
ARCHIVES
You can find this and every issue of Report 103 ever written at our archives
on http://www.jpb.com/report103/archives.php
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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