More Innovation stats - Boston Consulting Group A press release by BCG has given some interesting stats on corporate innovation (study of 500 execs, 47 countries, all major industries):

- 73% of companies will increase innovation spending (64% in 2004)

- Average increase in spending = 15%

- Consumer Products and Technology lead spending increases, Telecoms lagged.

- Asia Pacific area will see most increase in 2005

- 67% of companies ranked innovation as one of their company's top 3 strategic priorities

- However, only 49% said they were happy with the financial return so far

The 3 biggest problems they've identified so far?:

1) Moving quickly from idea generation to initial sales
2) Leveraging suppliers for new ideas
3) appropriately balancing risks, timeframes, and returns

"It's a positive sign that companies continue to invest heavily in innovation," said Jim Andrew, a Senior Vice President at BCG, a global management consulting firm. "The problem is that if the returns continue to disappoint, senior executives may begin to rethink their plans. Unless companies improve their approach to innovation, increased investment may in fact lead to increased disappointment."

KM World's Judith Lamont looks at some of the emerging software solutions for idea management, and has a nice mini-case study on Sun Life Financial as well as some good insights on idea management from Sun Life's Jay McBurney

What is... Idea Management? - Editorial - CMO Magazine Elaine Cummings pens this excellent primer on Idea Management, which concisely tackles the questions most people ask when they first hear of the term "idea management". If you're only just starting to research this area, a brief look at this article will serve you well!

How Their Garden Grows - CFO IT - Winter 2004 Issue - CFO.com WR Grace talks about how they've generated new product ideas over the last year that have the potential to achieve sales of $6 million.

Six Sigma 101 With Six Sigma being applied and referred to in the same breath as innovation more and more, it's useful to know exactly what Six Sigma is - and this introduction to the subject in Sales and Marketing magazine does an admirable version of a 101-type class - enjoy!

Fast Company Innovation Awards - December 2004

It seems like Fast Company and Monitor Group have joined forces to come up with an Innovation Scorecard with which to rate companies' innovation past and present to find out what are the top innovation companies in each industry. This series of reports (published once every 3 months) will look at one industry at a time, and for its inaugural version, has chosen the Telecoms industry to look at.

As Monitor's CEO says, "Competitive advantage roots best in soil nourished by disciplined, sustained innovation -- in assets, their configuration, the offerings they make possible, and the business models that support them, but such discipline is impossible to sustain without rigorous -- and relentless -- efforts to measure and improve performance along all relevant dimensions." - an admirable, and totally correct, statement.

It's a shame then, that having understood the importance of measurement to innovation, that they've developed and applied such a badly thought out and sloppily applied scorecard.

According to the article, they (presumably Monitor Group) assessed 119 public companies on "three 'crucial' criteria":

1) How they fared over the past five years?

2) How do the next five years look?

3) How have companies invested in R&D? and what are expectations for growth?

oh yes - and 4) What is their capacity for innovation?

Now, besides the inability to count criteria, there are several problems with the above statements. For starters, Financial performance bears little direct correlation to innovation capability and capacity, neither past nor future. Although innovations in themselves can affect a company's bottom line in profound ways, financial measurements alone can be too easily affected by one-off blips, accounting treatments, lucky accidents, and external factors. For example, US companies that are have significant presence in Europe, are currently getting a nice rise in their expected earnings from the weakness of the dollar in comparison to the Euro. A sale over there is counting for far more than it used to. Seeing as the dollar seems unlikely to regain strength any time soon, financially, things would look pretty good for these companies too. Now does this mean that these companies are more innovative all of a sudden? Of course not, yet financial results and forecasts dominate the Scorecard's criteria..

Their other main criteria is R&D Spending as a % of Revenue. The problem with this is that it assumes that R&D will provide all the innovation, and as such, is a very blinkered view of innovation within a company. It ignores a company's ability to innovate around it's marketing, packaging, business models, internal processes, etc.

For example, Apple, although occasionally innovative on the product side (which would be reflected in the R&D spend), it is far more innovative on the marketing side, where it bulges its biggest muscles. Dell, hardly innovative in products nor marketing, has exhibited most of its innovations in the area of Business Model Innovation. For both commpanies, their true innovation capacity and capability would be totally underplayed by a simplistic look at its R&D spend.

There's a train of thought that used to pervade in the Knowledge Management market that says "it doesn't matter if it's not 100% accurate, it's more important to at least get started just measuring something" - it seems like this scorecard has embraced that concept in full...

Fortune Magazine - November 29 2004 - Get Employees to Brainstorm Online Although short, this excellent article by Fortune's Anne Fisher is full of interesting data. Some bullet points?

- According to a study by PricewaterhouseCoopers, almost half (45%) of lucrative ideas—whether breakthrough products or services, new uses for old ones, or ways to cut costs—come from employees.

- Grace's chemical-manufacturing division has run 34 online campaigns to solicit employee suggestions. From those efforts a total harvest of 2,685 ideas has yielded 76 new products and 67 distinct improvements in how things get done

- Employees, responding to a campaign called Customers Do the Darndest Things, reported that customers were telling them about unexpected uses for existing products, leading the company into new markets that have boosted annual revenues by as much as $3 million.

- At Georgia-Pacific, management zeroed in on shaving the cost of the cardboard tubes inside rolls of paper towels. The company spends about $30 million a year on the components, that the "consumer really doesn't care about." Mill workers from among the company's 16,000 North American employees quickly responded with little changes that shaved about $1.2 million a year, or roughly 4%, off the cost of the tubes.

Some great benchmarks for all corporate innovators!

EUbusiness - November 25 2004 - Innovation is Europe's answer to China challenge: report This year's European Competitiveness Report, published by the European Union, touched on an important global trend that threatens the major industrial nations of the Western World. According to the report, the recent trend of countries such as China, which used to focus on labor-intensive goods and low-skill industries, to now become low-cost providers in high-skilled industries, is changing the face of the global economy.

As a result, the EU has identified that if it is to compete in this changing environment, it has to do so through supporting a strong knowledge based economy in its member countries - and in specific, EU companies need to excel at innovation in order to compete.

Fast Company - December 2004 - The Care and Feeding of the Creative Class Fast Company's Linda Tischler talked to the managers of several creative enterprises to find out what the secrets of managing a truly creative team was all about - this is what she found:

1) Recruit for diversity, but hire for philosophy - you want your team to be diverse to spark ideas and generate energy - but you must make sure everyone's aligned on what drives them with the direction you want to go in

2) Rehab the neighbourhood - change the team's surroundings to encourage them to do things a little bit different. "Light, space, wall art, and goofy toys are critical to the alchemy of the creative process"

3) Within limits, let them make the rules - Understand that the creative process is not linear and that treating creatives like line workers will backfire. Allowing them input into the setting of their own deadlines for example will have them more committed to delivering ontime.

4) Keep their eyes on the prize - make sure people are committed to finishing what they've started

5) Feed their heads - Keep stimulating creative's imagination through the introduction of outside stimuli: outside speakers, art and photo exhibits, and social events for example.

6) Teach them a new language - Communication is key - being able to communicate your idea to people outside your area of competence can make the difference in having your idea accepted. For example, Try giving your technical staff basic "business-speak" courses and vice versa

7) Allow time for blue-sky thinking - give people time to take creative leaps by giving them to work on projects of their own choosing - even those that aren't technically part of their jobs

8) Protect your team from creativty killers - "The essential difference between creative workers and everybody else is that their work product is a personal expression of who they are. As a result, they're more emotionally exposed than other workers and more vulnerable to criticism". It's important to explain why some ideas are no good so creatives have an understanding of where they went off the rails -- and how to improve.

9) Add libral doses of fun - "Fostering an environment where fun isn't viewed as goofing off is absolutely critical"

eWeek - November 9 2004 - BPM Helps Grace Chemical Innovate eWeek's Michael Caton visited Grace Performance Chemicals to see how this leading edge innovation company used Idea Central. As he reports, "The division started using Idea Central two years ago. Since then, the division, based in Cambridge, Mass., has used the software to host 25 campaigns involving one-third of the company's employees to generate 2,500 ideas, according to Paul Westgate, director of innovation and the division's director of marketing. Of those 2,500 ideas, the company has acted on 131, with 76 resulting in new products and 55 resulting in new processes, Westgate said."

When it comes to ROI, Grace's Director of Innovation, Paul Westgate said " it might be bigger than can be calculated"! Not bad for a company that's only been using IdeaCentral for 2 years and whose typical opportunity cycle runs between 1-3 years in length..

BusinessWeek - October 2004 - The Seed of Apple's Innovation There are some real interesting comments in BusinessWeek Computer Editor Peter Burrows' interview with Apple's Steve Jobs - here are some of my favourite bits:

"Q: What can we learn from Apple's struggle to innovate during the decade before you returned in 1997?
A: You need a very product-oriented culture, even in a technology company. Lots of companies have tons of great engineers and smart people. But ultimately, there needs to be some gravitational force that pulls it all together. Otherwise, you can get great pieces of technology all floating around the universe. But it doesn't add up to much. That's what was missing at Apple for a while. There were bits and pieces of interesting things floating around, but not that gravitational pull.

People always ask me why did Apple really fail for those years, and it's easy to blame it on certain people or personalities. Certainly, there was some of that. But there's a far more insightful way to think about it. Apple had a monopoly on the graphical user interface for almost 10 years. That's a long time. And how are monopolies lost? Think about it. Some very good product people invent some very good products, and the company achieves a monopoly.

But after that, the product people aren't the ones that drive the company forward anymore. It's the marketing guys or the ones who expand the business into Latin America or whatever. Because what's the point of focusing on making the product even better when the only company you can take business from is yourself?

So a different group of people start to move up. And who usually ends up running the show? The sales guy. John Akers at IBM (IBM ) is the consummate example. Then one day, the monopoly expires for whatever reason. But by then the best product people have left, or they're no longer listened to. And so the company goes through this tumultuous time, and it either survives or it doesn't.

Q: How do you manage for innovation?
A: We hire people who want to make the best things in the world. You'd be surprised how hard people work around here. They work nights and weekends, sometimes not seeing their families for a while. Sometimes people work through Christmas to make sure the tooling is just right at some factory in some corner of the world so our product comes out the best it can be. People care so much, and it shows.

I get asked a lot why Apple's customers are so loyal. It's not because they belong to the Church of Mac! That's ridiculous.

It's because when you buy our products, and three months later you get stuck on something, you quickly figure out [how to get past it]. And you think, "Wow, someone over there at Apple actually thought of this!" And then three months later you try to do something you hadn't tried before, and it works, and you think "Hey, they thought of that, too." And then six months later it happens again. There's almost no product in the world that you have that experience with, but you have it with a Mac. And you have it with an iPod.

Q: What's the CEOs role in all of this?
A: I don't know. Head janitor?

Q: How do you systematize innovation?
A: The system is that there is no system. That doesn't mean we don't have process. Apple is a very disciplined company, and we have great processes. But that's not what it's about. Process makes you more efficient.

But innovation comes from people meeting up in the hallways or calling each other at 10:30 at night with a new idea, or because they realized something that shoots holes in how we've been thinking about a problem. It's ad hoc meetings of six people called by someone who thinks he has figured out the coolest new thing ever and who wants to know what other people think of his idea.

And it comes from saying no to 1,000 things to make sure we don't get on the wrong track or try to do too much. We're always thinking about new markets we could enter, but it's only by saying no that you can concentrate on the things that are really important."

Steve's made some really interesting points here - especially with the need for internal processes to make innovation efficient - and the need to become more product focused as a company - cool article and worthwhile the read.

Tribnet.com - October 2004 - "New 7E7 a composite of ideas" - Continuing in the trend to uncover new innovational capacity by looking at the intersection of various subjects, and industries - Boeing's new 7E7 aeroplane, due out in 3 years' time owes several of its innovative qualities by borrowing from several unconventional places.

For example, in the past, they have borrowed production-line tricks from a coffin company to cut waste from its fabrication methods. This time, The News Tribune's John Gillie discussed their latest efforts at borrowing composite construction techniques from a company that makes high-technology sails.

Pretty interesting stuff - but don't bother going into detail in this article unless you're seriously into the technology aspect of this - this article is more focused on that than on process.

BusinessWeek Online Extra - October 11 2004 - At P&G, It's "360-Degree Innovation" an interesting interview with P&G's Chief Technology Officer, Gilbert Cloyd, discusses the ways that P&G's innovation efforts are changing to match the changes in society and industry such as the ever increasing pace of innovation in consumer-driven markets (and not just there!), increasing competition from an increasing number of established brands, and more a more informed consumer base.

In response, P&G has had to look beyond their own backyard and blend their own internal innovation efforts with efforts aimed at soliciting ideas from outside the company. Internally, this means encouraging the cross-fertilisation of ideas and concepts internally to take advantage of the innovative power of intersections between differing concepts. Externally, the internet has proven a powerful tool to allow them to exploit the entrepreneurial spirit and the tremendous intellectual capability that exists outside the company.

An interesting article, worth the quick read.

Research at Rice - September 2004 - "Bad, rather than positive, moods may spur creativity under certain conditions" - In an article in the Journal of Applied Psychology by Jennifer George and Jing Zhou of Rice University's Jesse H Jones Graduate School of Management - it seems that positive moods may not, in fact, encourage creativity. Rather, negative moods may actually enhance it more effectively than positive moods.

The report focuses on the relationship between employees' moods and the conditions or context in which they perform their tasks, the role of recognition and rewards, and the extent to which employees know and understand their feelings.

Their results suggest that, dependant on several factors, employees may use their current mood to judge their progress on a creative task - "good moods signal that good progress has been made and that current efforts are sufficient" says George.

Although far from conclusive as the data was based on questionnaires and rating forms from only 67 helicopter company employees - hardly overwhelming - this actually supports soon to be published work by Imaginatik Research based on interviews with 45 managers and consultants that suggest that managers in the current innovation economy face a tough task ahead of them.

One the one hand, in order to encourage the collaborative and knowledge-sharing environment that is necessary to achieve an effective innovation climate, employees must be happy within their environment and with the company they are working for - with confidence that their creative and collaborative work is desired, valued, and of actual implemented value to the company.

On the other hand, in order to be motivated to innovate around a subject, there must be a certain amount of dissatisfaction with the status quo around that subject in order for people to be motivated to be creative and come up with alternative solutions. Keep an eye out for the new research when it comes out in the Corporate Innovation Newsletter and also at http://www.imaginatik.com/research

London Free Press: Business Section - Innovation needs to be promoted Articles like this one from the London Free Press' Business section are increasingly showing up in the media. As a bellweather of trends to come, the media is usually quite slow to pick up on emerging trends - which means that the importance companies are placing on innovation in Europe is already much larger than people currently think. That's also why conferences like "innovateEurope" are making such ingrounds - and if you're working in an innovation-related area, I would make sure to attend this conference to find out what else is coming up in the European market. Watch out US - Europe's coming up strong!

HBS Working Knowledge: Innovation: The Innovator's Battle Plan - September 2006 Seems Clayton Christensen is the hottest thing in innovation at the moment - the result? Yet another book - it seems he's over the writer's block that spanned the years between Innovator's Dilemma and Innovator's Solution all of a sudden as "Seeing What's Next: Using the Theories of Innovation to Predict Industry Change" comes out on the market, much to the anticipation of Clayton's growing fanbase.

This article on HBS' Working Knowledge website excerpts from his new book which is co-written with fellow Innosight partner Scott Anthony and McKinsey consultant Erik Roth and looks at the interesting scenario of what happens when companies with asymmetrical abilities compete against each other. Specifically, the article focuses on 3 topics:

1) How asymmetries propel disruptive entrants

- The authors explain: "Asymmetries allow disruptive attackers to enter a market, grow without incumbent interference, and mitigate the incumbent's response when it is finally motivated to counterattack." They go on to say that this disruption tends to follow a 3 step process:

Step One - Entrants enter behind a shield of asymmetric motivation; early incumbent response leads to "cramming"

Step Two - Entrants grow and improve; incumbents choose flight - ie, the incumbent chooses to cede the new market space to the attacker because it continues to deem the market unattractive

Step Three - Entrants utilize the sword of asymmetric skills - what was initially a small market/attacker, has now become a big one - however, as the attacker still has the advantages of its asymmetrical skills, the incumbent has trouble adapting to compete because it find itself lacking the ability to adopt the new business model necessary. What was once the incumbent's strengths - successful products and processes are now its weaknesses.

2) Identifying the firm with the sword and the shield of asymmetries

A company given the space and time to create a new market and/or attack the lower tiers of a market with no competition from and incumbent has the potential to develop competitive advantage through different skills and business models. They have "asymmetric motivation". The authors identify three factors that contribute to that motivation:

a) A small opportunity that might be interesting for a small company, might well look uninteresting and too small for a larger incumbent

b) Opportunities such as these typically involve customers that are considered to be undesirable, non-existent, or in an unprofitable minority to be served directly by the incumbent

c) Smaller firms are able to utilize disruptive business models that would not fit the classic ways in which established firms make money.

3) Circumstances in which high-potential disruptive development will prove disappointing

There are of course, many situations in which the disruptive process is not followed through on. In these cases the incumbent is able/forced to come back and is usually caused by one of 2 circumstances:

1 - The flight response for incumbents is really only an option when they have a decently sized market to flee to. Firms might either not be able to flee to another segment or current majority customers might decide the new market is more attractive for them. This causes incumbents to fight for that share - sometimes before the entrant has time to develop the asymmetrical skills necessary to create competitive advantage.

2 - The entrant's use similar methods/business models/etc to the incumbent's (ie doesn't develop the unique skills to create barriers) - or develops a business model that is not unattractive to the incumbent - in that case, the barrier to directly competing is reduced and , once the entrant proves to the world that the market exists, the incumbent's reaction changes from flight to fight - without the advantages of developed asymmetry, the incumbent has a lot of advantages in the battle ahead.

This is an excellent article that should be read by everyone involved/interested in corporate strategy - which clarifies some great subtleties in the corporate battlefield for new markets. Looks like Clayton will have yet another hit on his hands! He's obviously not getting tired of book signings yet... :)

Mass High Tech - Imaginatik puts software under new management- August 23rd 2004 Written by staff writer Christina Torode, Mass High Tech wrote this piece on how Grace Performance Chemicals, a division of WR Grace, use their Idea Central product. Paul Westgate, Grace's Director of Innovation said of his company's implementation of the software: "we not only benefit by coming out with new products, but we are able to get our employees focused, companywide, on a particular subject”.

Businesses Online- August 19, 2004 - Jeff Bezos: "Blind-Alley" Explorer In the Business Week interview with Jeff Bezos he talks about Amazon.com's need to stay on top of their market. Although it's a little light on innovation insights, he does talk about the importance of being able to try out new concepts quickly and easily as possible - by organizing teams into "two pizza teams" (the number of people that can be fed on two pizzas - is teams of about 6) - Amazon keeps product development teams agile and flexible, driven, and able to handle many projects. The malleability of the internet is also a huge boon, as they're able to do things such as show one customer one thing, and show another customer an alternative to market test concepts quickly and easily.

The Hindu Business Line - Defining innovation - August 19th Consultant R.Sidhar puts together this interesting collection of quotes along with the obervation that one of the things that differentiates innovative orgnaisations from the rest is that they have a shared vision of what constitutes "innovation". Our favourites? :

- "Innovation is going outside the box (framework) to create solutions and implementing them. It's creating opportunities and the environment for change and learning." - Smithsonian Institution (Office of Finance and Administration)

- "Innovation is the transformation of thoughts to new ideas, the application of these ideas to fulfil goals and therefore improve the current business or create new business." - R.J. Reynolds Research & Development

- "Implementing creative ideas to produce new and improved processes and products is innovation. This includes better ways of doing our jobs and new tools to make us more productive." - The Clorox Company, Research & Development

Sidhar goes on to explain that many people create confusion by interchangeably using words such as idea, creativity, and innovation. His differentiation of these three words is actually quite good :

"An idea is a prescription for action. By definition, an idea must change people, places and situations. Creativity is about new ways of looking at issues. Therefore, a creative idea is a new way to handle people, places and situations. Innovation is implementing the creative idea and benefiting from it. Implementation is the key to innovation. "

His article goes on to discuss the various barriers to innovation - and there are a lot of exposed deep insights in the quotes he's collected - this is a useful read for anyone in the innovation area!

News 14 Carolina - HEADLINES - Tracing origins of innovation Although I don't know how long this link is going to remain active, it's amusing to see the pictures of scientists poking this 18 year old kid full of electrodes to see what happens in his brain when he has "an insight" - you have to wonder what the practical applications of such research will be. - "Doctor, I seem to be having trouble coming up with ideas for my date with Peggy next week", "No worries son...ZAAAAAP!...how about now?" - Keep your eyes open for new office chairs with built in "Thou Shalt Innovate" headrests....

HBS Working Knowledge - A Diagnostic for Disruptive Innovation - Scott Anthony, Mark Johnson and Matt Eyring pen this interesting piece that claims that, by conducting a series of diagnostics on the opportunities in your pipeline, you can quickly identify the highest-potential opportunities.

There are 3 diagnostics they propose:

1) Customer Diagnostic - You look for signs that the existing market is "disruptable" - ie, those in which consumers are either overserved or are "unsatisfied non-consumers". Overserved consumers buy a product but don't use or don't need all the features and functionality that is offered to them. Non-consumers lack the ability, wealth, or access to use the product as they would desire.

2) Portfolio Diagnostic - You now look at your current portfolio of current and upcoming innovations to see if any of those can serve the needs of a disruptable group.

3) Competitor Diagnostic - Assess competitors to ensure that the selected opportunity takes advantage of their weaknesses and blindspots to check if the competitor will be motivated to respond to the innovation, and if so, how effective they might be at it.

Certainly an interesting article with some good insights - and if you're a fan of Innosight's and Clayton Christensen's work - then a brief look at this article will serve you well.

IM-BOOT - Innovation Circle Imaginatik CEO Mark Turrell is interviewed by IM-BOOT's Steffen Konrath, and asked about his favourite ideas and how he gets his "flashes" of insipration.

Boston.com - Customer demand drives innovation alliances Although the title of this article by the Globe's Robert Weisman is on how consumer demand is driving innovation - the real focus of the underlying basis for this story - Forrester's recent report on 'Innovation Networks' is the real juice here as it taps into an emerging trend whereby companies are learning to expand their innovation capabilities beyond the immediate domain of their internal enterprise, and are looking around to other sources for ideas and innovation capacity to help them compete. Be it via outsourcing to India and China, or collaborating on innovations with customers and suppliers - Corporations are learning to balance internal and external innovation to come up with their competitive advantage and get products to market faster.

How to run a brainstorming meeting - UIWEB.COM Uiweb's Scott Berkun put together this useful primer on how to run face to face brainstorm meetings that looks at the when and where to conduct brainstorms and offers tips on how to make it successful. Definitely worth a read if you're thinking of doing a session sometime soon.

HBS Working Knowledge: Business History: How Tide Cleaned up the Competition This excerpt from the new book "Rising Tide" by the HBS Press, details the process by which P&G famously changed its industry and then itself through a single innovation - namely Tide, the first commercial synthetic detergent.

In a story that will be all too familiar to many corporate innovators, Tide (or "Product X") as it was then called, nearly died in the labs. When asked how long it would take to take the product to market, the initial estimates were upwards of 2 years. However, in a shock move, P&G execs decided to break the traditional rules, bypassing the usual consumer and manufacturing tests to try and get a 2 year head start on their potential competitors. This gamble, which exposed P&G to some major risks for a company coming fresh out of a depression and only making $500 million in annual revenues, paid off - and it launched a company not previous geared for speed into a commanding first-mover advantage position.

The story is a classic innovation story - and is pretty well written - will be interesting to read the whole book!

HBS Working Knowledge: Innovation: Why Innovations Sit on the Shelf This HBS WK article is pretty interesting in its assertion that a lot of companies fail to innovate due to an inability to conduct candid conversations about internal problems. It goes on to say that most traditional change initiatives to foster this kind of conversation usually fail quite early, giving instead, the offering the following 4 point-process:

1. Advocate, Inquire, Repeat - "It's the leader's job to point managers and team members in a specific direction but to make sure it's a direction they can respond to. To effect innovation, a leader must advocate, then inquire, and continue to repeat these actions as necessary"

2. Cut to the Chase - "Energizing an initiative requires that the conversations about it focus on only the most significant factors facing the organization—the company's ability to carry out the initiative and any obstacles to performance"

3. Be Open and Inclusive - "Fundamental business innovations almost always require changing the worldview and the behaviors of a whole set of interdependent players—the CEO, the senior leadership team, and managers down the line. This won't happen without a collective, public conversation."

4. Strive for honesty alongside low risk - "By encouraging honesty, then rewarding it, leaders can demonstrate to all levels of the organization that candor is valued."

All of this is a little optimstic in its real-life assessment of risk and the ability to be open in the manner they ask for - but none-the-less, some interesting ideas

Innovation Becoming Higher Priority in Global Companies The Conference Board did some sort of survey of 100 global companies which has had some interesting results:

- 70% hold innovation in high regard

- 90% say innovation is integrated into strategic goals

- 55% (only??) have expanded their definition of innovation to include business model, strategy and process innovation.

- Although 80% of surveyed companies have central R&D units, on average, only 55% of innovation originates from inside the companies themselves

- Companies are encouraging a wider array of employees to collect information from their customers and solicit ideas from the broad employee population (nothing new there - this has been a common practice for quite a while now amongst leading innovators)

- Globality is becoming more important - 40% say that internal teams have global membership (presumeably then, overcoming problems in language difference is becoming increasingly important)

- 60% of HR people say they have a formal process for gathering ideas from employees, and the number of ideas (as well as the financial payoffs from implementation) are increasing.

- About 40% of firms now say they have someone who fills the role of a Chief Innovation Officer - although in many cases it is the head of R&D or the CTO...

BRW Magazine - "In a word" This article by Darryl Bubner comments on Australia's misguided policies that are designed to, in theory, boost innovation, but in practice, do anything but.

For example, govt. funding for textile companies to upgrade equipment id given under the guise of innovation - but seeing as this is the same equipment everyone else buys - where's the innovation? Or the "Innovation Insights" program that aims to help manufacturing companies share best practices - something that is undoubtedly a good thing - but something that is undoubtedly contrary to the principles of innovation. As the author so rightly points out - "it is adoption and adaption, not innovation".

This article inadvertently though brings up some further fundemental problems that are starting to creep into the innovation "industry": that of increasing misdirection. Every new consultant and academic wishing to make a name for himself, starts off by taking the common set of terms and definitions for innovation, and renaming them to suit themselves. In that way, we now have little i vs Big I, Incremental Innovation vs Radical Innovation, Procedural Innovation vs Disruptive Innovation, and the list goes on. The words are all essentially saying the same thing - but using different terms - and the net effect of this is to create confusion (confusion I'm sure many consultants have no trouble solving for clients for a nice fee!). InnovationNetwork's Joyce Wycoff recently started up an initiative to try and come up with a set of common definitions and models, and whilst I applaud her desire and effort to do this, the sceptic (or some would say realist) in me fears it is a doomed effort as there is no money to be made in uniformity and clarity.

What will it take to solve the solution? Send us suggestions to research@imaginatik.com - we'll print any good ones we get :)

European Business Forum - Secrets of the Shower Head Joel Kurtzman, former HBR editor, writes this funny piece that suggests that what countries with a self-confessed 'innovation problem' need is to get a little messier. His contention - that countries like Switzerland and Japan are characterised by their inability to handle conflict and disorder, are also stunted in their innovation capacity because people cannot think beyond the current order. Amusing and short - worth a read!

Give Creative Personalities a Chance Susan Solomon looks at how to deal with 'Creative types' and offers some tips on how to manage them. Full of interesting facts:

For example, The author ranked America's major cities by number of creative workers, innovation, diversity, and several other factors.

- The cities Most Favoured by creatives? San Francisco, San Diego, Austin
- Least Favoured? Norfolk, VA, Memphis, TN, and Las Vegas
The author also contends that creatives are frequently not the kind of people you'd expect but rather thinkers who "acquire their own arcane bodies of knowledge and develop their own unique ways of doing the job.". Imaginatik client Grace Perfomance Chemicals has a group affectionately called 'the crazies' who are people identified as being particularly creative that are now invited to almost every idea capture event to bring their particular brand of creativity to that event!

How to manage that talent? Keep these top tips in mind:

- Creative work takes time - giving impossible deadlines will often yield stunted work

- Creative people are their own worst critics - don't be surprised if they ask for their work back to tweak it some more

-Creative people bend the rules - and you need to allow them the leeway to do so. Enforcing a 9-5 attitude, risks getting you a 9-5 product as a result..

Interesting stuff!


Interesting stuff!

Reuters.com - Is Six Sigma no longer enough? an interesting short article that claims that whilst Six Sigma is a great tool to improve existing business - it cannot create innovation. Although many companies continue to rely on Six Sigma to ensure profitable growth, people like Michael Hammer, founder of Hammer & Co., say that its overemphasis on the bottom line will hinder any innovation efforts.

Personally though, having spoken with several Imaginatik clients who are deeply involved with Six Sigma, I can't see why this has to be an either/or. I would instead say that Six Sigma and Innovation are two major tools for improving a business - and tools that should be given an equal weighting of emphasis to ensure not just an enduring profitable business, but also to ensure a constant supply of new businesses adding to that bottom line.

Raising Your Return on Innovation Investment Authors Alexander Kandybin and Martin Kihn make the observation that simply spending more money on innovation won't make R&D investments pay off - instead (insert breaking news...) you should be trying to raise the effectiveness of that spending.

To that end they have developed 3 pillars of innovation which they believe will improve the return on innovation investment of any company.

1) Understand your Innovation Effectivess Curve - Simply put, their research has found that increased spending on R&D is subjet to the law of diminishing returns - ie, each dollar more you spend gets you less than the previous dollar. Plotting this curve out allows you to then decide upon the point at which to cut off future spend in this area.

2) Master the Entire Innovation Value Chain - According to the authors, an innovation capability requires owning or sourcing 4 critical sets of capabilities - Ideation, Project Selection, Development, and Commercialization. Mastering these 4 elements will raise your Innovation Effectiveness Curve.

3) Don't Do It All Yourself - Superior innovators are learning to outsource segments of the innovation value chain and obtaining ideas and inventions from outside sources - usually smaller companies who have spotted a small niche that is initially too small or not profitable enough for larger companies.

Boston.com / Business / When innovation supersedes short-term results A very interesting review from Globe staffer Robert Weisman on Analog Devices Chairman Ray Stata's recent article in the MIT Sloan Management review. In it, he asks how can managers ready the next generation of products/services whilst still effectively managing the ones that currently generate sales and profits. He suggests that it may be more important for companies to measure their learning rather than focus on short-term financial gains which frequently don't live up to management expectations. As Ray himself says "''The challenge is to balance a culture of accountability in established businesses with a culture of learning in experimental businesses,". With business lifecycles getting shorter every year (current Fortune 500 company lifespan is 40-50 years and falling apparently!) - the companies that succeed are the ones who can transition in and out of new businesses and markets several times. This means accepting that you can't measure all your businesses by the same metrics. Instead, Strata says "''Companies need a system that helps them continuously refine judgments regarding the likelihood and timing of success, and also accelerates learning so that failing strategies can be quickly modified." - a good quick read.

CORDIS: News service: "EU15 Community Innovation Survey" - Funny, it seems almost like someone read my previous post on the NZ survey and went out to address my concerns over the size of company vs innovative actions comments.

In this EU15 survey, looking at data from companies between 1998 - 2000, only 44% of the overall companies undertook some form of innovation activity - with Ireland and Germany leading the back at 65% and 61%, and Greece (28%), Spain (33%) and the UK (36%) surprisingly as the trailers.

With regard to company size however, small companies (10-49 employees) came in at 39%, medium sized companies (50-249 employees) came in at 60%, and apparently a whacking 77% of large companies (250+ emplyees) displayed innovation activity.

However, seeing as the greatest complaint to what most hampered survey participants' innovative performance was that 'innovation costs are too high' - maybe that sheds another reason why larger companies are coming out trumps on these surveys...they have more money to spend on it. Comments anyone?... send an e-mail to research@imaginatik.com

The New Zealand Herald - Innovate and make money, says survey A Statistics NZ survey of over 11,000 companies with more than 10 employees has turned up some interesting results:

- 60% of the respondents had invested in equipement or trainig aimed at developing or introducing innovative products, processes or services

- 91% of respondents said they'd embarked successfully on innovation related activities
- 80% of those said they had increased their range of goods/services as a result
- 79% reported higher profitability
- 75% reported improved efficiency

In a somewhat more counter-intuitive finding, innovation activities were also seemingly more pervasive in larger companies - however, as the survey's definition of larger companies is "more than 50 employees" (which would still be classified as a small company in Europe and the US), I'm not sure that all their survey found out was that companies that had been more successful (and thus had grown larger than the others) were more likely to be innovation-intensive companies. Nevertheless - some handy stats to keep in mind.

The Management Roundtable - Phase Gates - How Many Are Just Right? An interesting piece here by Curt Raschke of Texas Instruments, who outlines his company's approach to product development using phase gate process templates (they use customised versions of the PACE methodology) - certainly a reccomended read for anyone engaged in similar type of projects as its always good to know what other companies are doing in this area - and TI take their NPD seriously - as the vast bulk of their revenue has to come from products less than 3 years old, thanks to Moore's Law and demanding consumers everywhere.

Fortune.com - Careers - How to Encourage Bright Ideas A cute little article by Anne Fisher who talked to Alan Robinson and Dean Schroeder, authors of "Ideas are Free", it makes a couple of interesting arguements for already proven best practices.

For example - why shouldn't you offer financial incentives for great cost-cutting/revenue boosting ideas? "Consider: A worker in a European wireless company stumbled across an error in the billing software that was costing $26 million a year. He suggested a simple fix, but his boss blocked it. Why? The company's reward system would have entitled the employee to a fat check and a lot of fanfare—and what boss wants that kind of attention drawn to his mistakes? " There are of course, many, many other reasons - several far more compelling for companies with more advanced idea management processes (for example - cash also kills collaboration - and collaboratively developed ideas are exponentially more likely to be great ones than those without input from other participants) - but it's a frequently unheard arguement.

There are other equally interesting arguements - including a rather lengthy baseball one to show that companies shouldn't just focus on "blockbuster" ideas - all in all worth reading as it only takes about 3 minutes..

TheStar.com - General Electric sheds shining light on innovation An interesting short article on General Electric - of particular note is that GE is putting an end to the classic "big corp" strategy of regularly rotating their executives to give them exposure to several parts of the company. The reason for this change? The thought that a certain level of market understanding and instinct in order to be able to innovate within that area more effectively.

I wonder however, whether a balance of both wouldn't be better. The variety of experiences involved in the rotation strategy allows for not only a deeper understanding of the overall business picture - but also is more conducive to the sharing of best practices between business units. Also - the different viewpoints and perspective changes the manager is exposed to in his travels around the company would probably help them be more innovative as they apply the various viewpoints to existing problems. Interesting dilemma...

San Francisco Chronicle - March 29 2004 - "Innovate - Or get used to a lower standard of living" An interesting article here by Burton Richter and Jerry Jasinowski talks about the way the US is falling behind the continuing race for global economic leadership - and blame a large part of that on the weakening of the US's ability to innovate - shown, in part, by the declining number of scientific discoveries, the increasing number of US patents being filed by foreigners - who incidentally also dominate modern scientific literature, and the decreasing number of Americans pursuing science-based careers.

The authors believe that with the decline in the number of American-originating inventions and the shrinking of the US manufacturing base via outsourcing and other reasons; that the manufacturing innovation process will eventually shift to other countries - leading in turn to a decline in the US standard of living.

To overcome all this, the US - and US companies specifically - need to strive to maintain their position as the most innovative nation in the world. To do so, the authors list these 4 steps:

1) All Industries - not just those based in science - must maintain healthy invetments in applied R&D.

2) Companies also need to invest more in training to develop the skills of their workforce

3) The Fed. needs to maintain a healthy diversity in its long term research portfolio

and 4) Policy makers need to examine all aspects of global cost competition to find out how they are achieved

HR Gateway.com - Testing Times - The Innovation Potential Indicator I think we're getting to the point where new psychometric tests are being churned out almost as quckly as Cosmo comes up with self-help surveys. However, that's not to say that there isn't value in looking at the theory behind some of these.

The Innovation Potential Indicator was developed by Professor Fiona Patterson and aims to identify those individuals in your organisation who will most contribute to the implementation and business success of ideas and innovation initiatives in your company.

The main dimensions she's decided to measure this with are:

- Motivation to change - their intrinsic motivation to seek out and adopt change

- Challenging Behaviour - How comfortable are they to challenging other viewpoints?

- Adaptation - Problem solving behaviour - Use existing/Invent new?

- Consistency of Work Style - structured / flexible work environment preference?

And the ideal innovation agent profile? Someone who scores high on "Motivation to Change" and "Challenging Behaviour", and scores low on "Adaptation" amd "Consistency of Work Style". In other words, non-conforming, intellectual curiosity, seek original solutions and flexible in their work styles.

ORIGINAL RESEARCH The Secret of Good Ideas

What is the secret to getting lots of high quality ideas with Idea Management? Is there any magic formula to guess in advance how many good ideas you will get, and what those ideas will look like?


Imaginatik Research has some good news, and some bad news. The bad news first: it is almost impossible to predict how many good ideas you will get, and what those ideas will be like. There is no way to know, for example, whether the brainstorm session you attend next week will yield no useful ideas at all... or the next Post-It Note.


The good news is that the odds are on the side of the angels. Research has shown that the Idea Management process, supported by appropriate software, yields 2.5 excellent ideas per 100 ideas collected to a 95% degree of confidence. This means that from a given sample of 100 ideas, 2.5 will prove themselves to be truly novel, unique, useful and implementable. Moreover, the event-based approach yields 10x more ideas overall compared to simple ongoing programs, and 30x more high impact ideas than ongoing programs.


To translate these figures into real life, Mott's Inc., a consumer goods company with 1,700 employees (and a client of Imaginatik), has used Idea Central since December 2001 to collect ideas and insight on a range of topics, from brand naming to process improvement. During this time they have run 30 time-limited events, typically lasting 4 weeks each, and one always-open event, "What's On Your Mind". The ongoing event has collected over 400 ideas, and the time-based events average 200 ideas each. With over 6,000 ideas in total, they estimate they have collected well over 100 excellent ideas that have been consumer tested or implemented in the business, including some product ideas that will be launched in 2003.


To understand the secret of the approach, we have uncovered the five key reasons for success:


1) Purpose - the yield of high quality ideas is significantly higher with a clear business purpose and a supportive business sponsor. The most successful Idea Management projects have a senior manager who is directly responsible for that particular idea gathering initiative, and for taking the best ideas forward to implementation or further development. Best practice is to state the goals as clearly as you can, without narrowing down the scope too much, and to try not to be too wordy as people skim read.


2) Timeliness - the difference between a great idea and a so-so idea is often time-based. There is often a narrow window of opportunity for an idea to be considered, which explains why many ongoing systems struggle with the random nature of suggestions.


3) Diversity - the pool of contributors needs to be broad, usually broader than you intuitively think. It is impossible to get great ideas by asking the same people the same questions over, and over again.


4) Perspective Change - the very best ideas come through individuals looking at things in a different way, such as visiting a supermarket and watching kids buy chocolate, instead of analyzing focus group reports and sales data.


5) Collaborative Development - the majority of ideas received in a formal Idea Management program tend to be seed ideas, containing a kernel of a good idea but requiring additional development. A collaborative environment, where people can comment and build on ideas, significantly increases the overall yield of high impact ideas. A new study by Imaginatik Research is comparing the difference between collaborative and non-collaborative systems, and the initial results show that the number of seed ideas goes down, but the overall number of excellent ideas goes up.


With these elements in place, companies can look forward to a high yield of top quality ideas that make a real difference in the business.

USATODAY.com - Google founders keep 'top 100' list of new ideas a short article written by a Reuters staff agent talks about the "Google Top 100" - an internal list of the company's top ideas for development kept by the founders to keep innovation at the top of the firm's mindset. Employees are then encouraged to spend 20% of their time working on whatever they think is the best to do

The Innovator's Advantage: Using Innovation and Technology to Improve Business Performance (Accenture)A recent study finds that innovators make better use of information technology (IT) – not necessarily spending more, but understanding what it can do for them, and taking advantage of its capabilities. Among the results: 64% of systems installed by innovators had been successful in meeting their objectives versus 28 percent of systems installed by less innovative companies.
77% of innovators “widely consider IT” when developing new business strategies (versus just over 40 percent of non-innovators).
More than twice as many innovators see IT as a source of competitive advantage than non-innovators (63 percent versus 27 percent).
The full report can be downloaded as a PDF.

Press Release - Deloitte Study Analyzes 'Innovation Paradox' Launching New Products Is No. 1 Driver of Revenue Growth; Innovation Remains Dangerously Low Priority - I'm starting to wonder why so much research is being distributed in the middle of press releases nowadays - but stuck in the middle of this one for Deloitte and Touche are a few nice stats that - although not surprising - are always nice to have up to date numbers for. D&T did a study of 650 manufacturing companies worldwide and found that:

1) Manufacturers cite launching new products and services as the No. 1 driver of revenue growth

2) They also view supporting product innovation as one of the least important priorities. (Nice little contradiction there, eh? Although to be fair - I've seen several of reports citing Innovation process as no1 amongst CEO priorities - could this be just a Manufacturing industry issue - or a reflection of whom in the companies D&T were talking to?...)

3) 50 to 70 percent of all new product introductions fail. (I've had figures as high as 80% quoted to me in the past)

4) New product revenue will jump to 35 percent in 2006, up from just 21 percent in 1998. (Although if none of them are supporting their innovation process, it'll be interesting to find out where they think all the new products required to generate that will show up)

5) By 2010, products representing more than 70 percent of today's sales will be obsolete due to changing customer demands and competitive offerings.

NSF - OLPA - PR 04-10: Beyond Feng Shui: Designing for Innovation Umot Toker of the National Science Foundation posted this article which talks (albeit briefly) on the topic of building design on innovative capacity. In short (er), you should try to layout your offices in such a way as to increase the opportunity for chance encounters with people - the general premise being that it is these encounters that give you the innovative spark.

This idea is not particularly new however - the very same concept was being talked about in the Knowledge Management circles some 7-8 years ago for example. Professor Clive Holtham of the Cass School of Business used to talk on the subject of the environmental impact on knowledge flows within an organisation - and several buildings in the UK were even designed with this in mind - The British Airways headquarters, just outside of London was designed with glass covered atriums, cafes, and several communal spots to encourage people to accidentally meet and thus enhance the flow of knowledge from one individual to another. Nevertheless it's interesting seeing some old ideas from one subject re-emerging in another.

Intelligent Enterprise Magazine: Practical Tools for New Ideas - The second part of a series by Stewart McKie on Innovation Management, this article gives a great overview of the different types of technologies that are being used to automate parts of the innovation process

Topics covered include:

Environmental scanning - "the acquisition of information about events, trends, and relationships in an organization's environment, the knowledge of which will be of assistance to top executives in identifying and understanding strategic threats and opportunities,"

Road Mapping - a technique that helps create a combined strategic, product, and marketing perspective for the stakeholders involved in delivering innovation. Road-mapping software is important to innovation because it helps to define, update, and visualize the route toward realizing an innovative product, service, or organizational change.

Creative Thinking - technologies that either help you with the process of brainstorming or help to increase the quality of your brainstorming sessions

and finally Idea Management - which unlike the other "upstream" technologies instead looks at the "downstream" end of the innovation cycle by helping companies develop ideas so they can eventually be monetized.

Stanford Business School Study Cautions Innovators to Beware the Ties that Bind Wow, who would've thought that press releases would contain so much actually useful information?? This one focuses on a study by Martin Ruef, a faculty member at the Stanford Graduate School of Business, into how to enhance individual creativity and innovation adoption (Actual title : "What leads people to establish organizations that employ radically new routines?"). His overall recommendation is nothing groundbreaking - "Broaden your social horizons, and you might come up with the next crazy idea that sparks an industry" - in other words, expose yourself to more outside influences to inspire more "dynamic moments" (see Imaginatik Research White Paper on Dynamic Knowledge Systems for more).

What is far more interesting however - is the difference that Ruef found in the effects of different depths of relationships. Using data from 766 entrepreneurs and Stanford Alumni, Ruef concluded that the most creative entrepreneurs spend less time than average networking with business colleagues who are friends and more time networking with a diverse group that includes acquaintances and strangers.

Reuf explains: "Weak ties -- of acquaintanceship, of colleagues who are not friends -- provide non-redundant information and contribute to innovation because they tend to serve as bridges between disconnected social groups," he says. "Weak ties allow for more experimentation in combining ideas from disparate sources and impose fewer demands for social conformity than do strong ties."

This is of particular interest when you take into account the amount of interest currently being focused on Communities of Practice as an Innovation enabler by the Knowledge Management industry - the crux of which is to strengthen ties between people with similar interests to the point where they become a regularly communicating community of professionals. Ruef's study would seem to suggest that there might not be as much benefit (in terms of innovational ability) in this activity as previously thought - and any benefit that might be had, will be short lived as the longer the relationship continues, the ties will strengthen.

Another interesting finding was that people tended to be more creative and innovative when they were new to an industry - a great argument for increasing idea capture events to as wide a net as possible. However he also points out that " Career tenure is not a bad thing necessarily, because extensive experience can contribute to more profitable business in other ways. "Veterans just don't come up with wacky or creative ideas that can really spark a new industry. " "

Increased Innovation Spending - Boston Consulting Group Study This press release from the Boston Consulting Group discloses the result of yet another study that supports the trend towards a greater concentration on Corporate Innovation activities worldwide.

According to the study, more than 60% of global companies will increase spending on innovation activities in 2004. Other interesting statistics included that almost 69% of executives ranked innovation as a top-three business priority and 57% of them say they are unhappy with the return on innovation investments made to date.

This discrepency would presumably suggest that a lot of spending so far has been misdirected in the wrong places, and BCG follows it up with the statement that "Ultimately, in order to turn ideas into economic returns, organizations and their executives need to shift their perception of
innovation from one driven largely by creativity to goal oriented, coordinated projects directed toward developing new ideas that boost the bottom line."

The study surveyed 236 senior executives in 30 countries across all industries.

Innovation - Where to look for it The CSSP's Denise Harrison looks at several broad ways in which to search for new ways to innovate your products and services such as:

- Assessing customers' unmet needs and preferences for new items
- Assessing your own strategic competencies to examine if lessons you learned in one industry/market segment could be applied to another
- Analyzing emerging trends to look for those that might be complementary to your company's goals
- Analyzing technology in other industries to try and capitalize on developments that could be tailored to your needs

She illustrates her poits nicely with an interesting case study on the history of Water Pik Technologies from their start making oral irrigators to the invention of "Original Shower Massage". An interesting case worth a read.