Pure-Play is dead! - It's always frustrating to see so called pure-play technology companies try to convince corporate would-be clients that Innovation is, at the heart of it, a very simple process - that it is simply being overly complicated by consultants. When will they learn that this subject is NOT about the technology. In fact - business and commerce as a whole is not about technology anymore.

Be it consumer electronics or business software, the leading products in each industry lead by adding value to the customer to give them an advantage/benefit above and beyond what is possible with just the technology alone. Take the iPod - one of the most cited innovation examples in recent history. At the heart of it, it's really not more than a glorified hard drive. What it's added however, is a clever design and some superb marketing to give status and desire that other companies focusing on sellign a technology alone simply aren't able to compete. That's not to say that the other technologies don't work - but they certainly don't deliver the level of benefit (in this case, coolness, status factor, etc) that the iPod delivers to its customers. People are making a big deal of the VideoPod now - but how many realise that Apple was not the first one to the market with this product? Creative, for example, have had a video offering for quite some time, yet were unable to make it as useable and desireable as Apple have been able to in one stroke.

The same goes for innovation software. The technology itself is, at least on the face of it, not exactly rocket science from a layman's point of view. Get some kind of input into a collaborative space, followed by an evaluation piece and see what comes out - right? Sounds really simple - but when it comes down to actual useage - the above system would fail abysmally. Why? Because the process isn't as simple as it seems - every company has different needs, different aims, and different cultural issues that will affect what can/can't be done. Not only that, but you have to then understand that innovation is, at the heart of it, a people issue - and people are anything but "simple".

So don't let pure-play technology companies pull the wool over your eyes. Any company that tells you that innovation is "simple" is just hiding their lack of understanding of the issues that you will face - which means you'll be on your own when the inevitable problems start happening. There are several reputable companies out there that understand this - so make sure to quiz whoever you use as to the depth of their understanding of the subject as the only thing "simple" about innovation - is how easy it is to screw it up....

The Innovation-through-Acquisition Strategy: Why the Pay-off Isn't Always There Prof Saikat Chaudhuri of Wharton writes an interesting article in this Konwledge@Wharton - which sets out to debate whether ot not an Innovation-through-Aquisition Strategy is a good one to follow or not. The shame is, whilst he makes some good points in describing the various risks of the strategy, he fails to make the most important analysis - the effectiveness of the strategy when compared to a strategy of Internal Innovation - and instead takes it as an all-or-nothing problem. In that respect, the dangers of innovation are exactly the same whether you're purchasing it outright from another company - or developing it internally. The very nature of innovation - essentially the management of new and unknown markets,products and processes - is rife with risk that needs careful analysis and development prior to full production - regardless of the source of that innovation. That's not to say that innovation shouldn't be done - but it needs to be done carefully and purposely - and analyzed and managed in the same way as any other business critical process would be.

It's an interesting read though - and well worth a quick gland at pages 2 and 4 to see what he sees as the Challenges, and the solutions to the problem.

How George Heilmeier Met the Future - BusinessWeek - Dec 12 2005 This interview with George Heilmeier (the man who invented the LCD amongst many other things - and soon to be recipient of the Kyoto Prize) is full of little interesting tidbits and insights from the legendary inventor. My favourite is a comment made to him by Vladimir Zworkyn - the chap frequently cited as the father of the black and white TV. When he asked George how he was able to come up with so many breakthroughs in the electro-optical fields, George admitted that he'd simply stumbled across some of them. Vladimir's reply was "Stumbled? Perhaps -- but to stumble, you have to be moving..."

Brilliant stuff! A good read for the innovation historians amongst you.

Newsday.com: Strategy in tough times: a new idea Kudos goes out to Charles V. Zehren and/or Professor David Willemon of Syracuse University - one of which coined what I'm sure will be the innovation catch phrase de rigeur for 2006 - "Does your company suffer from Innovation Deficit Disorder?" - symptoms include "stagnation, a scarcity of new products or services, a lack of growth and profits, slow development cycle times, projects delivered late and over budget, conflict over innovation failures, and missed market opportunities. Check for customer dissatisfaction, low employee morale, loss of valued personnel and "systems overload." - Let's see how quickly the consultants jump onto that one - $5 gift voucher goes to the first person to report a sighting...

Strategy + Business - "Money Isn't Everything" - 12/5/05 - So it turns out that Booz Allen Hamilton have released the results of a survey of what they call their "Global Innovation 1000" - in this case, the list is comprised of the top 1000 publicly held companies that spent the most on R&D in 2004. Ignore for a minute if you will, the ridiculous notion that all R&D spending is hardly a good measure of a company's ability to innovate - not least of which because innovation is FAR more than R&D - and there are some relatively interesting results here - some good - and some just funny...

The major (good) findings were:

1) It's the process, not the pocketbook - The survey showed that success was a function of the quality of the organization's process for innovation rather than the amount of money it actually spent pursuing individual projects.

2) Collaboration is Key - Enabling cross cultural and organizational groups to work together to, for example, commercialise a product is a crucial element of success

And the funny?....

1) Money doesn't buy results - Rather amusingly, their very first result is that there is absolutely "no relationship between R&D Spending and the primary measures of economic or corporate success, such as growth, enterprise profitability, and shareholder return." - In other words, they're either suggesting that, as far as they're concerned, innovation doesn't contribute to success, or it's an admission that maybe they just picked the wrong 1000 companies...

2) Size matters - Apparently being bigger helps....Why?...because if you're bigger (and make more money) - you can spend the same amount of money as a smaller company and it only represents a smaller proportion of your overall revenue! Duh....Why didn't we think of that?...

The report actually then goes onto a far more detailed version of the findings which actually has some interesting nuggets in it too - but only of use for those of you really looking at Product Development in depth.

Equating R&D With Innovation May Understate Actual Spending - Innovate Forum An interesting set of stats from the Confederation of British Industry based on a survey of 750 UK companies in this report.

The major thrust of the report is that R&D spending as a whole is a misleading indicator of the real amount of money companies are really spending on "innovation activities" - 2% vs 12%. Suggesting that the western world is ever more looking away from the recent trend on relying on technology to provide new improvements in the marketplace - only 20% of companies agreed that all innovation is dependent on technology developments. The major force instead seems to be the Service industries - which currently accounts for 70% of the UK economy. Interesting stuff.

I was talking to a recent Imaginatik client just yesterday who was telling me about a revelation that he had. When he told his colleagues that he was looking at getting Idea Management software, it elicited the response: "Idea Management - what do we need that for?". After thinking for a bit he said - "You guys already have an Idea Management system....it just SUCKS."

After wiping the tears of laughter from my eyes, I realized that, to an extent, he was absolutely right. All companies already manage their ideas in some format - just in most cases this system is horribly inefficient and erratic. Formalizing and enabling this process using software is really about making a process most companies still take for granted, and enabling it to produce regular (and valuable) results that drive future business profitability. Six Sigma that!

I can see the next ad campaign now....

So I am sitting here at the Forrester Exeutive Strategy Forum 2005 in Boston - and was half listening to "Ginny" Rometty, an SVP of IBM Global Services - when something she said finally grabbed my attention. As you can guess - it had to do with innovation - and she was talking about a recent string of mini-conferences IBM had been holding. During these meetings, it emerged that 50% of business executives ranked Innovation as the no.1 most important business capability to growing their businesses. No real surprise there, except that the next thing she mentioned was that she'd identified 3 (yes, only 3) different ways in which you could innovate - Product Innovation, Process Innovation, and Business Model Innovation.

Those of you who have read my comments in the past will know that Imaginatik has done work in the past that has identified more than 20 different ways in which you can innovate (btw - apologies for those of you who requested that paper via the research@ e-mail, turns out the paper wasn't publicly publishable in the format we had, and I simply haven't had the time to sanitise it to be able to send it out to you!). However, it got me thinking about that paper - something I brought up whilst chairing the innovateEurope 2005 conference in London recently (which was fantastically succesful by the way - outstanding speakers, some real deep insights from some of the world's leading innovators - the conference notes and video will be available soon, and I'd strongly reccomend that those of you who were unable to attend to purchase it from the conference website (http://www.innovateeurope.com) - and pay special attention to Art Fry, Ray Buschman, Dean Bellefleur, Mauro Pennella, Ciaran McArdle - hell all of them! Just a lot of great content there!) .

During one of my mid-session blurbs (I always like to give people some discussion topics during breaks - for discussion upon the return, I thought I'd challenge people to come up with as many different types of innovation as possible. Figuring that a group of lead innovators would come up with some interesting answers, I was shocked then with the very first answer I got from the audience upon their return.

"2,192" replied Howard Smith of CSC

"2,192? Pretty exact number....why did you come up with that number?" (seeing as he wasn't carrying a sheet of paper as long as a toilet roll, I was assuming that he hadn't written them all up and counted them up...

"Because that's roughly the number of discrete business processes and functions that are used by the average business" he replied.

BINGO! The real answer is that there is no part of the modern enterprise that shouldn't be trying to innovate, to change, to improve in order to achieve some level of competitive advantage as you never know where the next real advantage is going to come from. Look at the most successful companies in the world - very few of them are still doing what they started off doing. Nokia started off in Forestry products are rubber boots - now in Telecoms. IBM started off making computers - now mostly business services. New products and new business models are just the tip of the iceberg - what about marketing innovation, launch innovation, knowledge innovation, resource innovation - and the myriad of other places that competitive advantage can come from? Innovate globally folks!

Apologies.... - I have to apologize to all the Corporate Innovation readers for being so lax in keeping this blog up to date - the sheer amount of travel that I've been subjected to recently has prevented me from writing as often as I'd like to - but rest assured I'm back on the case - so stay tuned because a lot of new stuff is in the pipeline!

Gary Hamel's Idea Hatchery Ah, you gotta love journalists and their flair for trying to make old hat seem new. This time, it's BusinessWeek and well known author and consultant Gary Hamel, who has decided to start a "Management Innovation Lab" at the London Business School where he resides part time. Sounds cool doesn't it? Unfortunately the "lab" is a thinly masked way for Gary to get some publicity for his latest consulting offering - a two day workshop which essentially is there to get business leaders from Ground Zero, to the first steps towards creating a cohesive innovation strategy for that firm (Essentially the "Framing" stage of the Innovation Pipeline).

Not that I blame him for trying to make "a buck" as they say here in the US. In fact, he does actually make an interesting distinction for what he calls "A hierarchy of innovation":

'Economic progress is driven by three forms of innovation: institutional innovation, which includes the legal and institutional framework for business; technological innovation, which creates the possibility of new products, services, and production methods; and management innovation, which changes the way organizations are structured and administered. Management innovation has produced the most profound shifts [in business productivity].'

The article's not worth reading - but I'll be keenly watching to see if he writes more on the innovation hierarchy in the future.

Innovation Most Critical Factor to Success, Say U.S. Business Leaders; Cisco Innovation 2005 Study Although I have no idea as to why a company like Cisco is actually conducting this kind of study on Innovation (must be a marketing angle in there somewhere...I'm such a skeptic!), there were a couple of interesting stats coming out of this - for example:

"-- Innovation is clearly the most important factor in business success, according to business and technology leaders. Fifty-three percent cited it as having the biggest impact on competitiveness, while increasing employee education and skill levels was favored by 26 percent. Reducing wages (14 percent) and cutting corporate taxes (7 percent) were not seen as strong drivers of competitiveness.

-- Given the focus on innovation, it is not surprising that many business and technology leaders are seeking improvements in the education system. In particular, a solid majority cited a need for greater creative thinking and problem solving skills (58 percent) from students. A third of those polled called for stricter student requirements to accomplish this goal. Twenty-one percent proposed improved communications among teachers, parents and students while the same amount advocated broader access to global subject matter."

Interesting - not really worth reading in full though.

HBS Working Knowledge: Operations: Six Steps to Operational Innovation Seems like Michael Hammer has caught up to his old buddy James Champy (the two of them were behind the business process re-engineering craze of the mid-90s) in jumping on the innovation bandwagon - hey, better late than never!

In this article in HBS' Management Update, he sets out 6 key factors that make the difference between success and failure in the innovation:

1) Process focus - focusing your innovation efforts on a very small area, means that you are also limiting the scope of the benefits you'll get from innovation.

2) Process owners - Assign a process owner (a senior executive empowered to make the changes needed) to own the process for the whole enterprise.

3) Full-time design team - Use a full-time team to conduct the necessary process redesign rather than asking team members to do this part-time. Then invest in them - their education, methodology, etc.

4) Managerial Engagement - Actively engage the senior management team in the implementation process to make sure the projects don't languish in limbo and to ensure that departmental heads are released from their narrow focus to instead consider the end-to-end implications.

5) Building Buy-In - Engage participants throughout the redesign process so as to engage and enable buy-in into the process as it is developed, and to reduce the stress of future changes.

6) Bias for Action - Develop a solution that provides most but not all desired capabilities, get into the field quickly, and then enhance it over time. This approach allows concepts to be tested, builds momentum and credibility, and delivers early benefits that silence critics and sway doubters.

Overall an interesting short piece (he uses Scheider as a case study in this) that has some good, if slightly re-hashed, tips for change management and process design.

Champy: Get proactive about innovation It's always nice to see other people picking up on concepts you've been going on about for ages - and this article by James Champy is just that. In it he encourages companies to innovate - but not just on products. He then lists 3 other types of innovation - Business Model innovation, Process Innovation, and Experience Innovation. Short and sweet, this article is fine for beginners looking to start exploring beyond the narrow boundaries of product innovation - but falls well short of a comprehensive list. Imaginatik Research has identified more than 20 different innovation types for example - if you're interested in a presentation containing those - just send a request to research@imaginatik.com

NPR : Gates: U.S. Losing Advantage in Innovation Race This NPR interview with Bill Gates had Gates talk (amongst other issues) about an interesting dilemma his company has. He believes that the only time Microsoft sell a version of its operating system is when there have been sufficient innovations in the current version to justify them upgrading to the next version. As such, he believes that what Microsoft are really selling, in what is typically seen as a stolid monopoly market, is breakthrough innovations.

That comment got me thinking - especially with innovateEurope 2006 this year focusing on "Breakthrough and Beyond" (btw - 3M's Art Fry is a keynote speaker there in what I believe is his first ever appeaance in Europe, and certainly his first talk on innovation for many years!). In a monopoly market such as Gates', is a breakthrough innovation defined by a point of view? At what point do the cumulative incremental, or minor innovations add up to make a "breakthrough innovation" in his point of view? Then there's also the issue that you rarely purchase this "breakthrough" in isolation. How many times have you upgraded your operating system without upgrading any other component of your technology base? Personally, I find myself holding onto my version of Windows, until the cumulative increases in both Windows technology AND laptop technology have increased to the point at which I justify the cost of a new machine - so can a bundle of innovative products that go hand in hand constitute a single "breakthrough innovation"?

IndustryWeek : Pipeline = Lifeline IndustryWeek's John Teresko writes an interesting piece commenting on research that predicts that 70% of today's manufactured goods will be obsolete in six years. In addition, companies with strong enabling R&D strategies (read: those that still conduct significant R&D in-house rather than rely on outside sources to sell them innovative products) are 73% more profitable.

Compare those results then with a Deloitte study of 650 companies in North America and Europe that revealed that while manufacturers cite launching new products and services as the No. 1 driver of revenue growth, they also view supporting product innovation as one of the least important priorities.

Bizaare!

Teresko does also look at the trend toward "outsourcing" of innovation to developing and re-developing countries such as India and China - but in a twist that he neglects to notice - the companies he talks about are not conducting this outsourcing in the classic way being popularized in the media at the moment. They are not, in other words, relying on outside companies in those coutries to provide them with innovative products - but rather building R&D centers in those countries to take advantage of the unique human resource quality of the country's population (namely high education, low wages) without giving up the control over the IP and maintaining the competitive advantage of in-house R&D.

The advantages of capturing the brainpower from geographically and culturally dispersed intelligent people is not new though - Idea Management and Knowledge Management as disciplines have both looked into the role and value of diversity in the knowledge pool.

This is quite a heavy article that covers a wide range of topics and is certainly a great read!

Latest Imaginatik Research Study Finds Idea Central Yields Significant ROI on Innovation Initiatives Imaginatik Research's latest study is now available. Entitled "The Long Term Financial Benefits of Idea Management" the report, takes a close look at the return on investment (ROI) of 17 companies that have used Imaginatik's Idea Central idea management software for a period of at least two years. This study is the first accurate study to looked at the actual realised benefits accrued by companies using Idea Management software.

The study found that the average ROI in the first year of an Idea Central initiative was 251% with an average net return of $19,851 per 100 employees. The benefits and savings were magnified after year two to an average ROI of 927% and average net return of $104,983 per 100 employees.

TomorrowToday.biz : Failing your way to Innovation Success - March 2005 Raymond de Villiers picks up on the recent trend towards embracing failure in order to achieve innovation leadership. He argues that the perception that failure is always a costly exercise is holding companies back. He goes on to suggest that "There are a few things in your world that your competitors can never copy, and your failures fall into this category. Your failures are uniquely yours, so why not benefit from them?"

So what does he suggest?
1) See failure as an investment
2) Analyze failure and learn from it
3) Create a safe space to share failures
4) Focus on increasing the quantity of ideas generated, not just their quality
5) Distinguish between excusable and inexcusable failure

Online Extra: Commentary: Apple's Blueprint for Genius An interesting high-level look at Apple's Innovation program and what makes it different from its competitors. The answer? It's insistence on keeping key functions that give it competitive advantage, like design, internal rather than going to Asian outsourced design manufacturers - and Steve jobs - interesting stuff.

HBS Working Knowledge: Globalization: The Rise of Innovation in Asia Yet another article in the rising tide of news pieces looking at Asia, Outsourcing, and Innovation. This one looks at key findings from a recent conference on innovation at Harvard Business School. Some of these include:

- A survey of 200 companies found an "irreversible process" of traditional white-collar jobs being sent to Asia.

- Respondents said they are likely to send work to the following countries: India (69 percent); China (8 percent); the Philippines (5 percent); Latin America (5 percent); Eastern Europe (4 percent); and the Caribbean/Mexico (2 percent).

- More and more, the work being outsourced goes beyond call centers and similar services to include research, HR functions, and engineering services. Researchers expect organizations to create Web-based organizational structures that will help them compete globally.

Technology is again seeming to be the great enabler for asian companies - could the US economy be dying as a result of all the outsourcing? Japan used to rule the Innovation game in the 80's, the US in the 90's, could we now be in a Chinese dominated 00's?

SINA.com - 17 Feb 2005 For those of you who have been following the latest innovation discussion on the Corporate Innovation group site (and you should really check it out if you've missed it so far!) - here's yet another article that suggests China's growing potential in the global innovation arms race.

Senior Chinese ministers are talking about the building of a national innovation mechanism to spur more scientific and technological breakthroughs. Very much unlike the current US government's attitude, the Chinese are instead considering adopting new incentives to help nurse innovative ideas and human forces for scientific innovation.

What's most impressed me is the stress on not borrowing/buying the technologies needed from the developed countries - thus ensuring they have the intellectual capability to innovate beyond the current technologies... the debate continues..

Guardian Unlimited | Online | Where do you wear your thinking cap? - Jan 27 2005 The Guardian's Jamile Milne reports on new research that shows that 81% of people have their best ideas outside of the office - usually while in bed or in the car. The survey looked predominantly at men and woem n working in so called "progressive" areas such as IT and biotech.

Here are some of the highlights:

Where did you have your last implemented good idea?
- 25% whilst socialising
- 18% in bed
- 6% in the bathroom/restroom/lavatory

- 65% of people felt creative at their desks
- 80% thought meetings helped creativity
- Off site meetings were seen to be more creative by a majority, although fewer saw the need for outside influences or triggers for more creative ideas.

Interesting, if not amusing, results - the rest of the article looks at what to do with those ideas - although it's flawed by the typical British Government viewpoint that Innovation and Invention are one and the same - and as such, starts talking about getting marketing plans and the like ready for your idea...oh well.

Fast Company | Fast Take: Imagination This short blurb on how Boeing's Connexion subsidiary uses their imagination to gather insights and ideas for scenario planning that takes into account potential competitive moves is quite interesting.

Not in the respect that it's new - but in the respect that it signifies a growing trend towards the increasing use of ideas, and idea management, for many more uses than just product development. Many client companies of Imaginatik's Idea Central have reported using the software and the event process to regularly gather competitive intelligence, conduct scenario planning, high level strategic planning, conduct post merger synchronisation, and many other strategic topics like these.

The reality is that people are finally starting to explore the true value of what can be achieved when you harness the brainpower of your company's employees, suppliers and customers. And you know what? They're finding that value to be unbelieveably high.

Innovation Ships Out - outsourcing - impact on innovation and supply chains as big U.S. computer makers move R&D overseas - CIO Magazine - Jan 15,2005 For all those of you who didn't believe the predictions in the Jan/Feb issue of Corporate Innovation on how Innovation Outsourcing and the continuing strength of the Asian super-economies - have a look at this article.

CIO's Christopher Koch looks at the increasing trend for IT companies to outsource not only the manufacturing and fullfillment parts of the industry (as is the norm nowadays) - but to outsource their whole R&D function too to save money.

But might this this whole push to save money at any cost backfire in the long run? Already, spending on R&D by U.S. companies declined more in 2002 (3.9 percent) than it has since the National Science Foundation began tracking the number in 1953. In addition, according to the senior economist at the National Institute of Standards and Technology, most of the remaining spend has been on incremental improvements rather than original research.

What really shocks me is that for a country that built up its competitive advantage and economic wealth on a strong base of leading edge research during the industrial age - the US, and US companies, are being remarkably slow to react to what is really the outsourcing of one of the greatest sources of competitive advantage for them. Just how long will it take for the foreign companies who are providing the outsourced innovation services to turn the tables and take over more and more of the process until they are the powerhouses and not vice versa? Already some Far Eastern ex-allies have begun to retalliate - BenQ, a former supplier, has now begun selling its own cellphones and other equipment in the US under its own brand - offering good quality for a lot less price.

You've got to wander just what will be left of US companies - will they simply become outsourced sales and marketing organisations?...

Strategy+Business / knowledge@wharton - How Companies Turn Customers' Big Ideas Into Innovations - January 2005 In this jointly published article, the two publications jointly look at the factors stopping firms from improving innovation processes and list out the key characteristics of successful companies:

1) Employees use the product
2) They conduct vigorous market research of customer needs
3) The Engineers stay close to the market
4) Companies perform R&D around the world
5. Innovative companies seek understanding of customer behaviour and motivations

An interesting article, although a slightly long winded way of saying "listen to your customers"...

Triz Journal - January 2005 - Sustainable Innovation as a Corporate Strategy Anyone looking for a well written primer on Corporate Innovation strategy would be well served by this paper written by M. Rashid Khan and Mohammed Al-Ansari which was published in the TRIZ Journal. The authors do a pretty decent job of summarizing the basic questions around Innovation - including a reasonable evaluation of the differences between old-style innovation management techniques compared to those required for sustainable corporate innovation. Certainly a good starting point for people new to Innovation, but lacking in anything new for more experienced managers.