While growth is the No. 1 priority for most CEOs, roughly 90 percent of companies fail in sustaining growth over the long-term. Growth can be approached organically—by employing new and improved products and services to enhance revenue—or via mergers and acquisitions. Neither approach has a very impressive track record.
For example, a research study published by Businessweek in conjunction with Boston Consulting Group concluded that 61 percent of the M&As included in the study actually eroded shareholder value. And on the organic front, research has shown that approximately 75 percent of new products introduced by established companies fail.
Although it’s more difficult to quantify, many companies today are also struggling with the concept of innovation—what it means to them and how exactly it contributes to their growth. For those responsible for delivering results to shareholders, growth through innovation has generated a sense of risk and uncertainty.
At BMGI, we believe that the primary reason for this is that many organizations do not understand the key variables that affect innovation, growth and the creation of new market space. Fortunately, experiential data is now available to draw viable conclusions about how to accelerate growth through innovation, as well as how to mitigate the risk associated with unstructured innovation. Following are five key variables for successful innovation.Key #1: Develop a Balanced Innovation Portfolio
Innovation-elite firms understand that achieving uncommon industry growth rates means going beyond the traditional research and development focus. Companies that seek growth through innovation benefit from developing a balanced, comprehensive portfolio that spans many areas—products and services, processes, strategy and even the organization's core business model. These companies also vary the required degree of innovation, from incremental to significant to breakthrough levels.
Organizations that execute innovation projects in this way almost always generate higher return on investment than companies that limit innovation to new products. Also, companies that innovate simultaneously in multiple areas reap more rewards than those that innovate in a single area.
For example, Apple has experienced tremendous success with the iPod, a product innovation. However, the success of the iPod is largely due to the introduction of iTunes, a business model innovation. Through this combination of product and business model innovation, Apple created $70 billion in shareholder value in just three years. As Mark Stein of the Kaiser Associates research firm notes, "What is especially impressive about Apple's feat is that [Apple] did it with an R&D spend that is one-tenth the size of Microsoft's annual spend, and that they did it during a period of otherwise flat industry performance. This clearly demonstrates the approach, the techniques, the strategy, and the focus matter far more than how much [you spend]."
Companies can identify and manage their own balanced innovation project portfolio by using a set of growth and innovation opportunity assessment techniques. In addition to project prioritization and scope, these tools help organizations identify unarticulated, latent and underserved customer expectations that may indicate an unoccupied market space—and a potential direction for growth.Key #2: Build Effective Teams for Collaboration
The second key to innovation success is to assemble innovation teams that are capable of flawless and speedy execution, and then manage these teams for high performance and collaboration. This is easier said than done. To begin with, the best teams will be composed of people with diverse problem-solving styles.
In addition to a well-managed balance of problem-solving styles, effective teams must have a cognitive level (i.e., knowledge) and motivation level appropriate to the problem they are trying to solve. Companies can use a set of assessments, inventories and management approaches to assemble effective and collaborative teams for specific growth projects.Key #3: Deploy a Systematic Process for Innovation Projects
The third key to success is to make innovation repeatable, predictable and scalable. This means making it systematic using a consistent process that is applied by all teams (as DMAIC is applied by Six Sigma teams, for example). The process must also be robust enough to accommodate multiple innovation pathways; while some growth projects require “thinking outside of the box,” others require more structure within existing paradigms.
D4 is BMGI’s methodology for enabling consistent, results-oriented innovation projects. This flexible methodology consists of four project phases (Define, Discover, Develop and Demonstrate). D4 was specially designed to accommodate the natural flow of the innovation thought process. Thus, it encourages participants to agree upon a specific problem, and then depart enough from the current way of thinking that novel solutions can be discovered.Key #4: Apply Proven Techniques and Tools
The D4 innovation methodology provides a consistent approach to innovation. D4 practitioners must also understand how to apply a variety of tools and techniques that enable success in each project phase. For example, the main objective of the Define phase is to identify unmet customer expectations. Techniques such as ethnography, archetype research and heuristic redefinition all help capture the unarticulated needs of customers.
The Discover phase of D4 features tools designed to generate new innovative ideas you can use to meet the unmet needs of your customers. These tools range from random entry techniques to provocation and movement techniques to technical and physical contradictions.
The most promising ideas generated in the Discover phase of D4 are further investigated during the Develop phase using techniques and tools that enable the analysis of data and the subsequent design process. Techniques such as axiomatic design, function structure, conjoint analysis, design of experiments and Lean design enable smooth execution through this phase.
Finally, successful solutions are implemented in the Demonstrate phase using techniques and tools such as piloting, rapid prototyping and mistake proofing.Key #5: Establish a Climate for Innovation
One way to mitigate the challenges of innovation is by establishing a climate that is best suited for innovation; in other words, an organizational culture that promotes calculated risk-taking, collaboration and trust. Such a climate enables people to learn from their mistakes (instead of being punished for them). It also supports quicker execution of ideas and a more agile organizational structure, all of which minimize exposure from innovation risk.Section: Structure & Methods
Two years ago Massive Open Online Courses (MOOCs) were all the rage. Elite universities were lining up to partner with MOOC providers, such as Coursera, and they were free to boot. MOOCs had something new, cool, and disruptive to how larger institutions provided curriculum. But they also had one major flaw: Few people took them seriously, including me.
I would sign up for dozens of Coursera MOOCs, download some material, watch a few videos and call it good. Very few did I actually complete and even then I just watched the videos and took some notes, never engaging in any of the forums, discussions, or the exams. There was little true incentive to stay 100 percent engaged in the course. In fact, most people don’t. According to recent analysis of MOOCs, only 10 percent of registered students actually complete the course.
Still, with enrollment reaching hundreds of thousands, MOOCs are providing access to higher education to the masses—just maybe not the masses they originally expected to reach. As The New York Times article “Demystifying the MOOC” shows, most people enrolled in MOOCs already have a degree.
So with high numbers of enrollment from educated users, but low completion rates, what now? Until recently, no one had cracked that code. Now Coursera is making a run at it with Specializations—a series of classes strung together to provide an elite university certificate for a minimal fee, especially compared to if you took the same series at a local institution. For example, the Data Scientist Specialization through Johns Hopkins costs $470 or Data Mining through Duke University is $294, a bargain compared to other certificate programs or universities that might charge 10 times that much. This lends itself to an important question: Are MOOCs, for the first time, developing a model that could disrupt education as we know it?
If MOOC specialization skills become as valuable as the skills obtained from a regular university, this model will have the ability to disrupt what higher education has to offer, especially the ones positioned as continuing education. MOOC specializations are also competing against other traditional online universities such as University of Phoenix and Walden University. These MOOCs offer similar advantages compared to other major online degree granting universities while keeping costs down even more. The MOOC platform started out by offering individual courses, but now is extending into specializations. If this platform can be scaled to provide online degrees, it will be able to disrupt both campus-based and online universities.
You might be thinking, “True, but how will these specializations hold up in the real world, especially compared to a Data Scientist degree from say the University of California Berkley?” And you would be right to have that question. But remember the true reason you educate yourself in institutions and universities—to make yourself more marketable in the real world, so businesses find you valuable. And remember who makes that decision; it is the HR reps, CEO, your manager, etc. These days, where and how you get your education is becoming less relevant as a differentiator than it used to be. The business decides whether you fit the bill. Clearly, Coursera is recognizing this trend with its users—that they are taking targeted courses as part of their professional development to build their value to the business. Udacity is also shifting its focus to concentrate on fee-based corporate and vocational training.
So here is the big question: When will a business treat someone with a Data Science degree from Berkley the same as one with a specialization in Data Science and Data Mining from Coursera? I understand there are other classes and activities from a university that comprise an education, but will the business care? Or do they just want the best person with practical experience, application, drive, and relentless passion and curiosity? Then ask this: When will the $50,000 degree matter compared to the $766 certificate of Coursera specialization?
In my experience, it is as much about the person as it is the education, which leads me to my last point about the business model for universities and educational institutions: It is broken. This isn’t a model that should be fixed, it should be buried, and a new model created around the value proposition for universities and institutions. Universities are trying to compete based on the education they offer instead of focusing on the real value they can provide.
I always said my degree in engineering, even though I never used it professionally after school, was a great investment for me. But it wasn’t the degree that mattered; it was the life lessons it taught me along the way—time management, stress management, focus, and attention to detail, among others. The truth is universities and institutions are not in trouble just because they are failing to reinvigorate their business models, but because they lost focus on a value proposition MOOCs simply cannot, and will never be able to, give you—an education in life itself.Section: Business Model Innovation
Innovation appears prominently as part of almost any company’s strategy. Why then is it so hard to make it repeatable, scalable and lasting success? Scholars name key elements that bring innovation in sync, such as leadership, strategy and governance. Often, though, it’s not what organizations aren’t doing that causes a problem, but what they are doing—they’re tripping themselves up.
While there are many ways to trip, see if you recognize one of these three common ways in your organization. Fixing them can turn into a fast win and create the momentum necessary to get all the other pieces in sync.We Don’t Have problems; We Have Challenges
“I don’t want to hear about problems, show me solutions.” Sound familiar? There are multiple reasons why different corporate cultures come up with different terms to beat around the fact that problems exist. Some cultures use “challenges,” “hiccups” or “issues,” for example. I’m sure you can think of others. Language both reflects and shapes thinking and behavior. What does this do to the overall culture?
Let me introduce you to Alexej. He has been hired from a startup-gone-bust into product development for a large German corporation. His first weekly report is greeted frostily. He has identified a problem, but merely naming in a report is considered unethical finger-pointing because of a silent consensus on whose fault it was. This bright young man learns this lesson fast. His reports turn into a list of “last week’s accomplishments.” He hides from others the challenges he is working on and stays away from sharing the opportunities for improvement he comes across. This already siloed organization not only loses the creativity and enthusiasm of a highly skilled individual, but also foregoes the enormous potential residing in an all-one-team approach to tackling problems.
Organizations should acknowledge: Human life is problem solving. For people, any level on Maslow’s hierarchy of needs can quickly turn into a problem. Processes and entire departments are there to solve problems: “I don’t know next quarter’s financial results.” Industries solve problems, too: “I can’t communicate with a far-away person.”
The Russian innovation thinker Genrich Altshuller, inventor of the Theory of Inventive Problem Solving (TRIZ), observed: What sets the inventor apart is his or her ability to spot problems where the rest of us have grown accustomed to living with the hassle. Indeed, at times we don’t even notice that hassle anymore, that is, until someone comes up with the solution. Did anyone have a problem before the wheel was invented?
So firstly, from an organizational perspective, learn to recognize and acknowledge problems at face value, and to value the individuals who spot and communicate these problems.
The other two common ways organizations trip when it comes to innovation are adhering to the equation “innovative = creative = good” and overdoing the “let’s form a team approach.”
Read more about them in my full article on Innovation Management.Section: Structure & Methods
It seems lately that everyone is talking about increasing access to data, data and more data. In fact, no longer is there an issue of sourcing data, but instead a problem of what to look at, when and how to interpret it.
All well and good, you say—data is the lifeblood of intelligence and innovation! Well, not exactly. In order to convert data into knowledge, you need to process it. You need to connect the dots and turn information into meaning. Then you need to act on that meaning. As technology progresses, we are becoming better, not just at collecting data, but also at assimilating it. The challenge is that very few of us are good at or qualified to turn this assimilated data into decisions and strategy.
We see this in our personal life, in business and also in society. This article on the investment in “sci-fi tech” for the UK police is one such example. At first glance such equipment—including a range of wearable computers—seems like a great innovation designed to protect our forces and give them more live information for policing on the streets. But dig a little deeper and you will quickly find problems with utilization. The recent BlackBerry investment has returned much less than the expected ROI and I expect the wearable glasses and smart watch to come up against the same problem.
Compare this technology on a personal level with sports wearable tech. How many of you have running watches or devices that collate everything from heart rate to pace and even elevation but, at the end of the day, simply plug this into a social platform, turning the data into little more than a boast or at best a GPS track of your activity? How many of you read and assess the data in order to truly improve your performance?
Reflecting the same challenge back to policing, are we seriously saying it is productive for police to spend their time monitoring social feeds through a watch, rather than talking to individuals and using their eyes in order to know what is happening in their area? And if they were to do this, what would they be looking for? How would they respond? Would it not be better to have an intelligence team in headquarters dedicated to this?
In a business context, I recently had a conversation with a big data executive leading a company that acts as a “curator” for the wealth of data streaming into businesses today. They sort through the data, connect the dots and provide this back in a more usable and value-add form. This concept of curation is essential to turning the mass of data we continue to have at our fingers into knowledge, decision and actions. Even in business this is a relatively new concept that leaders are still getting to grips with.
Sadly it seems that many of the innovations in data technology will remain untapped and perhaps even counterproductive until the skills and systems for curating this new world of data are advanced and widely used. Personally I’d like to see more innovation in this field. Until then, I’m afraid, technology and data will only be as good as its wearer.Section: Product Innovation
Have you seen this equation: innovative = creative? Novelty always comes from “outside the box,” right? It’s a land of confusion to many, who then conclude they are just not the creative type. As a result, organizations lose out because being innovative is but one of a myriad of ways to being creative. All people can be creative—in their own way.
An organization’s ability to bring to best use the individual, team and collective creativity of its people is an important differentiator. That being widely acknowledged, organizations strive for diversity: diversity in gender, age, education, culture and so forth. The argument here is that they can’t overlook another type of diversity: that of being creative.The under-appreciated obvious
There is nothing new about the call for creative diversity. In December 2007, Coyne, Clifford and Dye published an article in Harvard Business Review entitled “Breakthrough Thinking from Inside the Box.” They stated the obvious that nobody seemed to have noticed: People who like to explore “inside the box” should not be under-appreciated.
This point is backed up by robust research in cognitive psychology. Since the 1970s, Dr. Michael Kirton has been exploring how people solve problems. Seen in the light of cognitive science, solving problems and being creative is one and the same thing. As Genrikh Saulovich Altshuller, inventor himself of the Theory of Inventive Problem Solving (TRIZ), observed: Inventors are able to see problems where the rest of us have grown used to living with the hassle.
Acknowledging these key elements, Dr. Kirton investigated how people actually solve problems. Complex problems are solved in teams, which comes at a price. If you want to solve a technical “Problem A” with your team, then you have to face the additional “Problem B” of managing that same team: finding a place and time to meet, going through the stages of team development and tackling the team’s diversity.
In his research, Dr. Kirton found that people tend to confuse two things: level and style of creativity. If someone’s style of being creative is different from yours, then you might conclude that their level of creativity doesn’t match yours. Examples abound: For some time, Tesla worked for Edison. Both are recognized to have been highly creative people, but creative with very different styles (see this study for more). To solve difficult problems, we need creative diversity in our problem solving teams, but then we struggle to deal with it.
Insights gained with the Kirton Adaption-Innovation Theory help individuals understand their own preferred problem solving style, appreciate their colleagues’ styles and manage diverse teams so that complex problems can be solved.
Read more, including three case study examples, in my full article on Innovation Management.Section: Culture & Teams
When we play, we create fresh and new meanings expressing our creativity. The deep connection between free playing, learning and creativity has been studied by researchers such as Csikszentmihalyi (2008) and Bruce (2005) and also by the LEGO Learning Institute (2010). As Bruce has noted, the nature of play is an active process that is intrinsically motivated.
During play, players explore alternative worlds through imagination which can lift their creativity to their highest levels of functioning. Creative activities enable players to demonstrate mastery or competence they have developed from previous experiences which may include struggles, manipulations and exploration. It is during these activities that they get a chance to reflect and become aware of what they know. The significance of play is that it provides a powerful mechanism to bring together what we have learned and to generate insights for future.
Both children and adults play in solitary or partnership mode. They often play to break from established methods and conventions, in order to experiment inside a rich world of imagination and to push themselves to find new frontiers. More and more companies are using playful learning as a desirable approach to simulate alternative realities and future scenarios in order to accelerate their product, process and business model innovations.
For example, many companies use the Lego Serious Play method to develop new business strategies and guiding principles. It is used as a structured and voluntary activity that involves and stimulates the imagination of problem solvers. With time and space as constraints, and structured by rules and conventions, participants draw on elements of fantasy and creative imagination to explore guiding principles of strategy development [See: The Science of Lego Serious Play (2006)]. Other examples of games often used by corporations include the Beer Distribution Game from MIT Sloan School of Management [Sterman (1989)] that simulates the supply chain optimization and the Manufacturing Game by Ledet and Paich (1994) that simulates the plant operations, as well as a range of other commercial and noncommercial business simulations and games.
Csikszentmihalyi (2008) introduced the idea of the link between creativity and a state of “flow.” According to Csikszentmihalyi, flow is the experience of being enjoyably immersed in a challenging task. These moments occur when a person’s body or mind is stretched to its limits in a voluntary effort to accomplish something both difficult and worthwhile. This is the essence of playful learning.
Read more in our full article on BMGI.com.
By Dr. Phil Samuel and Dr. Michael OhlerSection: Culture & Teams
Countless articles argue: To remain competitive, companies need to consistently build their innovation portfolio. Value-oriented improvement and new developments must permeate the business. This article discusses a structured approach, known as a Rapid Innovation Cycle, which brings a repeatable process to innovation, empowering individuals to contribute more and organizations to look beyond themselves—all leading to a higher success rate.
Whether your innovation challenge is product, process or business model oriented, business problems all benefit from a methodological analysis to separate experiential bias from business need. Continuous improvement methodologies such as Lean and Six Sigma (many more exist) enable practitioners to refine their existing solutions, but do not offer an effective conduit for management of novel and unconventional thinking.
While many still feel that a systematic approach to innovation is impossible, innovation practitioners know how repeatable processes can be applied to achieve innovation objectives. A Rapid Innovation Cycle provides a process for leading teams through the front end of the innovation journey.
Read more in our full article on Innovation Management.
By Dr. Phil Samuel & Riaan BritsSection: Structure & Methods