Breakthrough Innovation

February 5, 2009

Theory vs Reality in Innovation

Filed under: Observations,Strategy — mosesma @ 8:13 pm

growing-old-postersThere’s the theory of innovation, the art of innovation… and the reality of innovation. And the truth is that innovation is very hard to achieve and maintain, as companies mature and processes become ritualized. Innovativeness and agility for companies is like being athletic and fit for people – that’s a goal everyone shares, but it’s the rare guy who is as fit in his 50s as he was in his 20s. Similarly for companies, growing older is not for sissies.

The most deeply innovative company I’ve worked with was Nokia. This is because the company HAD to be innovative to survive, like an elk in the icy winter or a Finnish resistance fighter. The company has reinvented itself four times, first as a manufacturer of boots, then televisions, then computers, and finally mobile phones. As a result of this, the company is very serious about innovation, simply because they realize that their survival depends upon that fifth killer product line. As a result of this, innovativeness has been written into the DNA of the organization.

So the most important question to ask is… how innovative does the organization really and truly want to be? Does the organization have “the fat gene” or does it have the willpower and stamina to stay lean and mean into maturity?

An incubator is like a speedboat, that serves the battleship. If that battleship doesn’t have what it takes to transform itself and go faster, all the incubator can do is get used to the idea of coming up with great products and sacrificing them on the altar of corporate mis-management. However, if the “mother ship” does truly desire to become more innovative, the key requirement is to get serious about innovation and start taking what might seem like drastic measures.

For a 50 year old man, getting serious about your health happens when the doctor says, “you need to work out more and lose weight, or you’re going to die of a heart attack.” For a corporation, it’s when a younger and more agile company starts to eat their lunch, or the economy turns on a dime, and they start raking in billion dollar losses and shrinking market share because they’re too fat, too slow and too greedy to survive.

ringing_phoneIf the CEO and Board have both received the wake-up call and there is a sense of urgency, then there is a honest chance that the organization can achieve true change and rewrite its fundamental DNA to become more innovative.

But if that wake-up call hasn’t come in yet, all you can expect is a lot of lip service about innovation, but no real change. Evolution only happens nature is cruel. Revolution only happens when drastic measures are needed. Layoffs are like liposuction – they do not enable lasting transformation or fitness.

This is the reality of innovation.

So what does it mean for a company to get serious? It means that the company, from top to bottom, is ready willing and funded to achieve comprehensive change that impacts every part of the company. I came up with this memory device, which I call the 8 C’s of change, that lists the individual shifts that need to happen. Just throwing some innovation management tool at the troops isn’t enough. For a company to truly change…

  • Constructive leadership that spreads the wake-up call
  • Evocative executive Communications that express true vision and leadership… and hammer home the message that change is coming
  • Most importantly, it needs to change how it Compensates business creativity
  • The company needs to learn how to deepen its Customer insight in order to find unarticulated needs
  • To learn how to truly Collaborate
  • To train Creativity throughout the organization via Continuous learning programs
  • and finally, it needs some Cool tools for innovation. Like the stuff we sell.

In other words, becoming truly innovative requires that the organization get serious about innovation – just like an out of shape and overweight 50 year old guy has to start working out seriously to change his body and state of fitness. Is your company ready to get serious? If it is, it’s time to start working out again and retraining your corporate body to be lean, mean and agile again.

February 3, 2009

Cargo Cult Innovation

Filed under: Observations,Strategy,Techniques,Technology — mosesma @ 12:12 am

The common view by business analysts is that the overall failure rate for innovation initiatives within corporations is 80%. And the failure rate of individual investments by Silicon Valley venture capitalists is around 90%. That’s almost as bad as starting a restaurant!

There are many reasons for such a high failure rate – being technology driven instead of customer driven, selling when you need to learn, focusing on requirements rather than experiences, giving all the power to gatekeepers, naysayers and the fearful.

Now, the typical advice that innovation consultants usually provide when facing such a high failure rate, is that you should fail faster. They usually quote Thomas Watson, the founder of IBM, who said, “The way to succeed is to double your failure rate.”

I disagree with that position. It’s really like a running a record business… you want a machine that reliably generates hits, not lots and lots of experiments and flops. Artistic creativity requires the willingness to take chances, but at the end of the day, you’re judged on your hit rate, on how many of your albums succeed vs how many end up in the bargain bin.

I believe that it is possible to continuously improve your success rate, by making three fundamental shifts at your company, in terms of instilling an innovative culture of success.

The three shifts are: First, you need to shift your methodologies for product design, which most likely requires that you “gather requirements” by only asking customers what they want, and not by digging deeper to understand their tacit and unarticulated needs. Second, you need to make innovation measurable and manageable at your company, because you can’t fix what you can’t measure and this is the key to continuously increasing your success rate. And finally, you need to stop doing “cargo cult” innovation. Let’s address these one at a time, starting with shifting your  methodologies for product design.

Ethnography means seeing from true perspective

Ethnography means seeing from true perspective

The first shift has to do with learning a new way to see. The top product development companies, like Apple, Sony & Nokia use a secret weapon called design ethnography. It’s about using techniques from anthropological expeditions, to detect disruptive product opportunities. It’s all about shifting the way you observe the customer, interview them, and more importantly to detect discrepancies between what your customers say and what they do, when you’re observing them.

I helped train and build one of the world’s first “enterprise services ethnography” departments at a major bank, which grew into one of that bank’s greatest success stories for generating customer insight.

Formulaic approaches to ideation, like TRIZ or other techniques, are useful but generally won’t work 100% of the time when it comes to uncovering disruptive opportunities – because innovation is actually an art, not a management technique.

Any art based on human skill, like learning how to paint with egg tempera, or learning how to play the piano, requires 5000 hours for the human brain to learn that skill. Ideation, the skill of creating ideas, is no different. Now, to be really good at painting or piano, you need to combine that skill with talent and inspiration… and even more hard work. There are no shortcuts to becoming a master of any art or skill.

One clue as to how to develop ideation skills is to look at how art schools teach students how to become artists. The first step is always teaching a new way to see. It may be through seeing negative space, or broadening the eye’s receptivity to color resolution, or seeing how any shape can be reduced into three color tones.

One of the great moments for a first time ethnographer is when s/he realizes that “innovation is suddenly seeing that something you thought was working, was actually broken, but you just couldn’t see it.” It’s like discovering a pocket of space-time hidden in the middle of your universe. This is only possible by becoming a trained ethnographer.

A dashboard from our Revolution innovation management system

A dashboard from our Revolution innovation management system

The second shift has to do with learning how to manage innovation, so it’s really about learning how to see progress. The reality is that innovation and ideation are very difficult to measure directly. However, it is possible to develop metrics and waypoints that insure you’re on the right path. One is to simply capture and count ideas as they are being generated.

Once you understand the  pipeline for innovation within your organization, you can create waypoints along that pipeline. For example, the number of ideas that  are promoted to pilot. And then the number of pilots that are successful. And then the number of ideas that eventually made it all the way, and what kind of return they generated for the organization.

If you think about it, how could a project manager within your company be successful without certain tools that measure the progress of a project? How could accounting be successful without cost controls and reporting? In the same way, innovation management requires tools, metrics, controls and reporting. However, it has to be done in a way that does not stifle the underlying fluidity of the process.

There is so much more to talk about when it comes to an innovation resource management system. If you’d like to read more about our Revolution system, click here to download the brochure.

Finally, do you know what the cargo cult is? The classic period of cargo cult activity was during and after World War II in Polynesia. During the Pacific campaign, vast amounts of war supplies were air-dropped into these islands during the Pacific campaign. But at the end of the war, the airbases were simply abandoned.

During this time, the native islanders had become accustomed to these supplies, and really wanted the planes to return. So they went about constructing mock airstrips, and made radios out of coconuts and straw. They staged drills and marches, using twigs for rifles and painting “USA” on their bodies to make them look like soldiers. But no matter what they did, no planes ever came back.

I first heard about cargo cults during a talk given by Richard Feynman, about “Cargo Cult Science”. After studying a number of companies attempting to be innovative, I realized that many companies actually practice Cargo Cult Innovation.

A cargo cult in Micronesia

A cargo cult in Micronesia

Like the islanders, Cargo Cult innovators use all the same buzzwords and expressions as true innovation… but when the chips are down, they’re usually the ones who put the NO in innovation. The harsh reality is that many companies fail when management entrusts innovation into the hands of people who have learned how to survive by the expert application of politics, the  rewarding of ego and empire-building, and the requirement of top-down control.

The position of Innovation Czar is a very sexy and desirable job for any executive, so it’s going to attract both the truly innovative as well as the cargo cult innovators. Usually, after the cargo cult innovation process fails to produce results, the organization can simply say, “hey, we tried and it didn’t work, so can we kill this innovation thing now and get back to work?”

In other words, the third shift is learning how to see reality when it comes to your own managers. Putting anyone politically motivated in charge of innovation will be the kiss of death to your initiative. The essence of true innovation is that it comes from the heart, so you need someone who has a lot of heart and empathy. You need to entrust innovation to someone within your firm who is willing to swing for the fences, who is willing to take chances.

Therefore, look for someone who is brilliant, but at the same time, humble. Look for someone who naturally uses the word “yes” more than “no”. Look for someone who believes in the potential of the human spirit, and instills confidence in his reports. Look for someone with true courage, who would be a good man in a storm. Look for someone who actually listens carefully, when anyone speaks… not just the boss. You know, someone like Barack Obama.

For innovation to be successful at your company, these are the first three steps to take. Specifically – (1) establish an ethnography training for your product developers, (2) install and pilot an innovation management framework, and finally, (3) pick the right manager to lead the innovation initiative.

There’s a lot more you have to do, but this would make for a terrific start!

January 29, 2009

So what does firewalking have to do with innovation?

Filed under: Observations,Strategy,Techniques — mosesma @ 2:21 am

Firewalking and innovation? What the heck?

Before I answer that, let me start with a question for you… what is the core of innovation? The most important factor or ingredient? Some would say it’s inspiration or pure brains. Others would say it’s perspiration or hard work. However, I believe that the true essence of innovation is courage… and in business, this translates into the rare ability to persevere when everyone around you is giving up. It’s about enjoying a persistence of vision so strong that virtually no hardship can deter you. Therefore, I believe that fearlessness is the true essence of the innovative spirit. The difference between a common and an exceptional life is the combination of courage and vision, and that is the difference between a common and an exceptional company as well.

firewalk1There’s a reason that motivational experts like Tony Robbins uses the firewalk, and in fact, has led over 200,000 people through the process. Because it works. For example, motivational coach David Fabricius reported that after leading the employees of a major bank through the firewalk process, one division at a time – every division reported a spike in revenues in the quarter directly following their firewalk event. An average of 130% greater revenues! Peggy Dylan, the founder of the Sundoor firewalking school, reports a similar jump in revenues after leading a national real estate chain had every brokerage office – one at a time – go through the firewalk process.

Therefore, the first reason for considering a firewalk exercise within the context of innovation training is because the firewalk is a remarkably effective tool for transforming the fear that limits the human mind. If every human being believed fervently that flight is impossible, then the possibility of flight could never exist. Add a little personal fear to the equation and it becomes a major paradigm that needs shifting. You need powerful tools to break through such rigid belief.

An innovator fundamentally needs to believe that the impossible is possible, which drives the need to push beyond his limits to prove he’s right. On the flip side, the greatest inhibitor to innovation is the inability to see that the thing that stops us from innovating is actually within ourselves. As long as we blame others for why we can’t innovate, we’ll never break through to true innovation. But that moment you successfully cross a bed of hot coals with your bare feet… you stand there knowing in your bones, that anything is possible.

It would probably be good to take a second and address the question you probably have on your  mind… “is this firewalking stuff for real?” The answer is yes. Firewalking is real, and it isn’t a trick. People do get burned at firewalks, but it isn’t anywhere near as dangerous as something like skydiving. The most colorful story about getting burned at a firewalk was when a TV physicist, Jearl Walker, set out to prove it’s a hoax… and ended up with second degree burns. With a certified firewalk instructor running the show, burns are actually quite rare.

The second question is probably, “how does it work?” The answer isn’t clear. As a former physicist, I’d say that there are many factors at work. For a shorter “training fire”, less than 10 feet long and with relatively cool coals, the Leidenfrost effect (steam formation separating your skin from the coal) and low heat conductivity through ash are in effect. But when you talk about walking over 40 feet of coals, or even over hot lava, like Huna shamans do in Hawaii, there’s clearly more at work. There’s definitely a bit of mind over matter happening, which needs to be experienced first hand to validate.

Third question, “who was crazy enough to think it up in the first place?” Actually, firewalking has been around for over four thousand years, practiced by Eastern Orthodox Christians in parts of Greece and Bulgaria during some religious feasts, to fakirs in India who live by begging and performance of such feats, to the Kung bushmen in the African Kalahari desert who use fire in their healing ceremonies, to young girls in Bali in a ceremony called Sanghyang Dedari – in which the girls are said to be possessed by beneficent spirits, to the Yamabushi sect in Japan – practitioners of Shugendo – an interesting mix of shamanism, Taoism and Buddhism, to Vikings who used to walk over red hot chains, to Hawaiian shamans who walk over molten lava. It’s one of the most prevalent ritual phenomena throughout the world… and now it’s arrived in America and taught by motivational speakers!

The more important question is why it was used as a ritual all over the world for thousands of years? Clearly, people used as fire ritual to unlock the mind’s healing power or as inspiration to find better luck for hunting and farming. But at a deeper level, I believe that people needed something physical to transcend their fears, to release that energy into movement and change, to validate personally their courage in the face of despair.

As a way of bringing this conversation back to innovation, let me talk about what I think was humanity’s finest example of courage in the face of despair – the Battle of Thermopylae. Maybe you’ve seen the movie 300? You know, it’s the one about the 300 Spartan warriors who held off the army of King Xerxes of Persian in 480 BC at the narrow pass by the sea. The army of Xerxes was so large – estimated by some scholars to be as large as a million soldiers – his soldiers would drink rivers dry. When his archers let fly, the arrows would block out the sun. To this, a Spartan warrior named Dieneces retorted, “Excellent, then we will be able to fight in the  shade.” This small band of 300 warriors held off the army of Xerxes long enough to allow Greece the time it needed to marshal the forces necessary to win the larger war.

sparta_final

My favorite quote from the history of the Spartans – when Xerxes tried to bribe the Spartan king, offering him all of Greece to rule, King Leonidas replied, “Tell Xerxes this. If he understood what is honorable in life, then he would no longer try taking things that belong to others. For me to die for my people is a far greater honor than he can ever offer.”

Now, imagine your company under the pressure of the worst recession in decades. Sales projections look pretty ugly. Your customers are going under. Another wave of layoffs is imminent. What does the rank and file do? Get scared and demotivated? Start sending out resumes just in case? Start drinking more heavily?

Now imagine what if – what if your 300 most courageous employees rose up, and formed a cadre of engineers and product marketers, to say, “we know there’s a salary and hiring freeze, but we want to help, we want to work harder, we want to increase innovation, we want to find ways to increase sales… please let us bring the battle to them!” What if your 300 best and brightest said to you, “when the economy hits us this hard, all we want to do is hit back harder!”

Now, wouldn’t that moment choke you up, just a little bit?

This is why we say that the core of innovation is courage. This is why we added exercises like the firewalk, walking over broken glass and breaking boards to our Breakthrough Innovation workshop. Sure, we also use a rational approach to managing innovation, complete with collaboration software solutions and more academic training. But because it’s because our goal is to help your employees and management break through fear, to the next level of energy and achievement, we have innovated by adding exercises that unlock the power of the human mind.

glasswalking

Moses walking over broken glass

Companies are like people. When they’re young, they are much more willing to take risks… whether it’s snowboarding or signing up for the SEALS, risk is for the young and macho. When people get older, they begin making excuses for resisting change and risk, for getting out of shape, for failing to learn new skills, for giving up.

Likewise, companies make excuses as well, which become part of a culture of reasonableness and maintaining a mission of only being “good enough”.  Innovation is actually about teaching older companies how to become young again. To be fearless again. To strive for its dreams again.


Note: Please do not attempt to perform these acts on your own. Moses is a certified firewalk instructor, having completed an intensive training from the leading firewalk school in the world, and has walked over fire close to 100 times.

January 13, 2009

The Value of Innovation during Recessions

Filed under: Observations,Strategy — mosesma @ 7:10 pm

There’s a saying that “entrepreneurs are like teabags – you never know how strong they are until you put them in hot water.” Well, we’re all in hot water now. The next year or two should provide us with a remarkable opportunity to test our mettle.

The funny thing is, despite all the grumbling that accompanies a capital crunch, lean years are actually good for new companies. Many major brands like 3M, General Motors, IBM, General Electric, Microsoft, and Sun Microsystems all got their starts during the lean times of recession. The worst recession since World War II was from 1973 to 1975, when the country’s gross domestic product dropped 3.10 percent. This is when both Microsoft and Apple were founded.

I believe that one of the reasons why better companies come out of recessions can be explained by the structure of the human brain. What I mean is that a group of people – working together – will sometimes mimic the underlying functionality of the human brain. There’s a term in neurophysiology called plasticity. Neuroplasticity refers to the brain’s capacity to modify its organization, pertaining to the acquisition of new skills and learning.

Several decades ago, the consensus was that the neocortical areas were immutable after a certain stage of development. However, recent studies have determined that environmental changes could alter behavior and cognition by modifying neuron connections in adults. Therefore, the adult brain is not static, but rather, can be reshaped by experience.

brain-squeezeIn this research, it was determined that stress is the key factor in altering plasticity in the nervous system. The research indicates that the application of mild to moderate levels of stress actually facilitates neuroplasticity, but on the other hand, severe and/or prolonged stress will impair “hippocampal- dependent” plasticity.

In other words, when the going gets tough, the tough start adapting and making new connections.  The brain says to itself, oh, my survival is at risk, so I’d better start adapting and learning really hard right now. It’s only when you have skin in the game, that you’ll really focus and learn.

Similarly, groups of brains will react in the same fashion. Under the stress of a recession, those groups of brains called companies sometimes react with an immediate urge to retract and contract, attempting to avoid becoming victims of natural selection.

But those groups of brains that respond by expanding their innovative capacity will probably not only survive, but will strengthen their skills of adaptivity through the experience, likely to reap extraordinary returns during extraordinary times.

So the normal corporate kneejerk reaction to immediately lay off staff, cut marketing costs, and postpone innovation initiatives – in other words, to batten down the hatches – may not be a surefire strategy for survival or success. Actually, there’s a pretty good reason for courageously increasing your innovation and strategic marketing efforts during a recession.

The reason is similar to the rule that Lance Armstrong uses to win Tour de France competitions – you always make your move on a hill.

tourdefrance1

In competitive biking, all riders begin together as part of the peloton – i.e., the bunching of riders formed during a cycling road race. Because riders remain tightly grouped in the peloton, only the few who are in the front at any one time face the full effects of wind resistance. Those drafting behind, like a school of fish or V formation of birds, can more easily maintain the peloton’s pace.

Usually, it is very difficult for those lead riders to escape the peloton, except when encountering a steep hill. This is because as the riders slow, the effect of drafting is lessened, giving a chance for the strongest riders to break away and outdistance the peloton.

The same goes for business, you often need a hill – in this case a recession – to breakaway from the herd and strengthen your brand. And there’s evidence to support this strategy. There was a study by McGraw Hill that found that advertising during a recession yields an amplification of sales growth for those gutsy enough to make their move, compared to competitors who cut back. The gain, or lift as they call it in the ad world, was found to be between 135% to 275% better if you stepped up advertising, than if you cut back. This means that advertising packs twice the wallop during a recession.

The most famous example of contrarian thinking comes from Adolph Ochs, the publisher of The New York Times during the early 1900s. Following the stock market crash in 1929, he issued a memo to his staff: “We must set an example of optimism. Please urge every department to go ahead as if we thought the best year in the world is ahead of us.” Sending out a memo like this today would like cause the Board to have the CEO committed.

It wasn’t easy for Ochs. Although major advertisers cancelled their contracts, Ochs mitigated employee layoffs opting to use a vital $12 million surplus he had built during the roaring 1920s to pay salaries. More importantly, he attempted to improve the editorial quality of the paper, even though advertising had fallen off. Amusingly, the paper also became a “better product” because it contained fewer advertisements!

Finally, he focused on positive stories rather than  spinning the financial horror story of the day. For example, he declared the most important story of 1929 to be Admiral Richard Byrd’s successful exploration of Antarctica. What an optimist, huh?

When the Great Depression finally ended, the New York Times found itself enjoying more readers than any other newspaper in the country… which translated into higher advertising rates. By the way, when Ochs bought the paper, it was only the eighth largest newspaper in New York! Ochs had the courage to breakaway and go for the gold.

So, do you have what it takes to breakaway? Remember, it’s a difficult but effective tactic, and the best time to attempt it… is up a steep hill! The steeper the better. And so, a recession is actually an opportunity… an opportunity not only to outpace the competition, but to prove what you’re made of! So man up and go for it!

Break away!

Break away!

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