Saturday, July 25, 2009

Innovation Quotient

"Is there any quick way to check the innovation quotient of my organisation?" This was the question posed to me by a recent acquaintance of mine, whose firm had expanded quite a bit recently, and was looking to enter the big league. Hmm...Interesting question!!!

"As an example", he continued, "SEI-CMM or ISO is a measure of the quality processes in the organisation. The revenue and the Profit and Loss financial statements are a good measure of the health of the organisation. Surely we can devise some way to check the innovation culture in a similar fashion".

That set me thinking. Yes - we can look at the spend on R&D by the company or the amount of money got from new products introduced but that will need a fair amount of digging and you can never be sure of its accuracy. But is there any other quick or definitive measure?

Here are my thoughts:

The easiest and the best measure of the innovation culture of an organisation can be guaged by the reaction to these couple of situations:

  1. How are failures treated by the organisation when the failures are due to trying out different or new ways of doing things?

  2. How many top leaders and role models of the organisation believe in innovation and encourage people to try out new ideas and how much of freedom do they give to these initiatives?

Let us look at these points in more detail and I will explain my thinking.

The first point shows the creative spirit of the organisation and how open they are to trying out new and different things. You may think it is straight forward and simple to implement but try enforcing this to your middle management layers. The middle management staff are most concerned about productivity and effectiveness and frankly will not be very receptive to your ideas about improving the innovation culture. Now is that bad? Not really since really the immediate results are thanks to these staff and their measures. But the side effect of this is that people are equated to machines and told to just follow a process and not think differently. Also you only need to criticise a few failures and you will find that people are more than happy to go into their shell and follow the safe path. Ideally we need a mix of the two. A set of resources (ideally senior staff with enough experience and those who understand customer needs) should be given the charter to think of new ways and actively encouraged to fail and try different ideas. In the long run, some of these will surely be successful and that will make all the failures worthwhile for the organisation.

The second point is more about setting an example to the majority staff who will be junior. Not all managers and leaders realise it but they have tremendous power and influence over the junior staff in the organisation. They should be aware of this and need to use it effectively. As an example, if the top management staff in the organisation spend as little as 1 hour in a week meeting different teams and enforcing the message of innovation and openness, it will go a long way in encouraging staff to trying out different things and motivating them to break the shackles and think differently. Another equally important point is about freedom and the power to change. It is not enough if employees are asked to think new ideas and differently, equally important is the resources and freedom to implement a few of their ideas which they think is worthwhile. Again if the top leaders of the organisation encourage this, they can be assured that soon it will spread and everybody will be trying different and new things. Agreed that not all of them will be successful and there may be some resources and money wasted, but I am sure the few items which do become successful will pay for all the bad failures.

So leaders - what do you think? Do you have the courage to introspect and ask these bold questions? More importantly are you bold enough to take some corrective action or do you want to take the easier path and blame the lack of innovative ideas on your resources?

Can you think of more measures? Happy to get your thoughts and ideas on this topic.

Sunday, July 19, 2009

Innovation – How can Small and Medium organisations pursue it?

“Innovation – Is it not something for the large organisations to pursue? How can I, running a small organisation and still finding my foothold, invest in innovation?” -These were the questions that were raised to me by my friend who had just started his small organisation and who had a pretty good first year. “Well – big or small you need to pay attention in today’s world to retain your advantage”. I told him and gave him some examples of how innovation can open up some new opportunities for the small and medium organisations. Even though my friend agreed with me on the importance of innovation for all – there was still one pressing question - How can small organisations do innovation effectively with minimal investments? I did not have any direct answers for him and so decided to spend some time finding options and then giving him a detailed answer.

When I started researching, I understood the problems faced by my friend or other SMEs in their pursuit of innovation. How do they do it without spending huge amounts of money and by normal traditional means? For example - these options which are open to large organisations are not really open to them:

  1. Set up a task team to investigate new options - Large organisations can afford to have some resources engaging in research and other activities which don't yield direct benefits but small firms will struggle to do that since cash flow is a pressing and immediate concern for them.

  2. Work with partners to come up with solutions - Again large and established organisations will find it easier to partner with specialised firms who may hesitate to do so with small organisations since they are yet to prove themselves.

  3. Pay for consultants to come and help them with roadmap/strategies/studies etc - Since large companies have a larger portfolio they can afford to allocate some of their income towards consultants. Small firms will struggle to do this again because of cash flow concerns.

So the question is - what can small firms do in this scenario?

After doing some research, here are my thoughts and findings:

  1. Try to partner with other small firms in niche and specialist areas of innovation - The key here is to work out win-win relationships in complementary areas and such that they can leverage each other's area of specialisation. The challenge could be to find such symbiotic relationships but the benefit is compelling and can open more opportunities than through traditional channels

  2. Tap networks which are new but working on the areas the company wants to innovate thus exposing them to multiple channels but on a "pay for results" basis - Since small firms cannot afford to have task teams the next best option is try and partner with networks that tap solver communities that engage in research in certain areas on the basis of paying only for successful results. Thankfully due to the gaining popularity of Open Innovation, such networks are blossoming and it is definitely affordable. There is some effort involved in finding these networks and the initial engagement with them but over a period of time, the results will surely justify this investment.

  3. Use agility to engage with their customers and get them to dictate the areas of focus for innovation - One of the biggest advantages for small firms is that they are extremely agile and so they can use this opportunity to engage with their customers, listen to their ideas and work on implementing the ones which are most popular and which is doable without significant investments. This could be small steps initially but this can be used as a launching pad for all their future innovations

In summary, in this blog, we looked at some of the challenges faced by small and medium organisations in pursuing product innovation and also looked at some of the options available to them. I am sure all of you should have heard of the David and Goliath story - if you equate this to the fight between large firms and small firms, innovation is one of the big weapons in the small firms quiver using which it can spring quite a few surprises.

So small firms - learn to innovate and focus on product innovation on a continuous basis. Only innovation has the potential to level the playing field and also give an advantage to any small organisation as well, if done correctly.

Monday, July 13, 2009

Top Reasons for companies NOT to innovate

Reason 1: The decision maker says “Oh!! My company is committed to innovation but don’t know where to start”

Reality: This is by far the easiest reason to use. Agreed we don’t have too many tools or platforms dedicated to help companies to innovate. But that is not a good enough reason to put off this activity altogether. All it takes is to identify few focus areas within the company and get started. Of course, having started this initiative, the decision maker should encourage and nurture this area or you will find that your employees are quick to shun this and return to their more familiar territories.

Reason 2: The decision maker says “Oh!! But it is so expensive to invest in R&D labs and do innovation. Especially in these troubled times of recession.”

Reality: Innovation need not necessarily mean investing in huge R&D labs and making huge investments. In a simplistic form, innovation is looking at some of the current pain area or practices followed and trying to identify better ways of doing it. So we can always start small and get ideas. Just remember to get it from all the people involved – not just your R&D team. You will be surprised by what you get if you try honestly. You can then decide what is worth pursuing. You can take the simplest ones first if cash flow is a big concern for you at the moment.

Reason 3: The decision maker says “We have tried it in the past but have been rather unsuccessful. It is very difficult to keep pumping money into initiatives where there are no immediate returns. I need to face the shareholders every quarter”

Reality: This is a genuine concern. However this should be viewed like you would consider constructing a new building for your future growth. Even though these will be construed as expenses in the first few quarters, the benefit will be there for all to see in the future. Also there is an even bigger cost to bear if this initiative is not done at all especially considering that your competitors will not stand still watching you succeed. So the earlier you start, the better your chances of getting a big competitive advantage.

Reason 4: The decision maker says “My resources are all busy with other business as usual activities and so I really struggle to assign my top resources to this initiative”

Reality: Again a genuine reason especially in recessionary times like today. But in every crisis situation, there is an opportunity. If used well, this is a genuine opportunity to look at all your processes critically and identify areas for improvement. This will ensure that you are well positioned for growth when the market starts opening up. Also this is an opportunity to engage employees in slightly different activities from their regular job and they should enjoy this. A small incentive will also help in ensuring that it is done at the earliest given that it is going to be done along with the other normal activities.

Reason 5: The decision maker says “We have been thinking of entering into this new area to take our product to the next level but we are not sure how to start and we can’t hire new staff since there is a global freeze on hiring”

Reality: This sounds like a genuine opportunity to use Open Innovation concepts that you have been reading about but have not found the time to explore. It is now possible through Open Innovation to get ideas on your selected new area from experts without hiring them and at a fraction of the cost involved. These experts could be either within your partner organisation or elsewhere. It is up to you to decide your level of openness. Once you get these ideas, you can take this forward with your internal team who are best placed to appreciate the internal dynamics of your company. Try it and you will be surprised at the results!!!

In this blog, I have tried to highlight what I believe are the main reasons why companies don’t go all out for innovation. As you can see, it is a mix of some genuine concerns which makes them ignore innovation for now and some misconceptions which makes them believe that innovation is difficult to pursue unless they have huge resources at their disposal.

Hopefully this should help challenge some of their beliefs and help them re-evaluate their positions on this.

What are your thoughts on this topic? What are the other big reasons you have heard? How have you worked your way around them? Do share your experiences.

Sunday, July 5, 2009

How usable is your innovation and why you should care?

Think about this.

  • Apple was NOT the founder of the MP3 format or the first to introduce it but they definitely captured the imagination of the people with iPod and made it a huge success.

  • Google was neither the first to introduce internet search but definitely should be credited to making it hugely popular.

  • Microsoft was definitely NOT the first to think in terms of a graphical user interface for computers but should be definitely credited with making it hugely popular.

Wonder where I am going with this? What is common between all the three scenarios identified above? The main one, I believe, is that all the 3 companies were able to innovate on the user experience and use that to establish themselves as market leaders.

We normally associate innovation with cutting edge technology which changes the way we live or work. While that is true once in a while, innovation, simply, is a new way of looking at things and redefining existing landscape or assumptions.

Of course, we can argue that usability is not the only difference in the above 3 examples and there are lots of other supporting infrastructure which helped and also about market timing, marketing, product positioning etc. While all that is true, without usability, I don’t think, they would have achieved the scale and popularity.

So it begs the question – Why did others not think about it before? Why do we generally ignore usability when we launch something innovative or new?

There are many reasons but here are my main ones that come to the top of my mind:

  • First to market advantage: Companies are under constant pressure to be the first to release some cutting edge innovation. Due to this pressure, they sacrifice or compromise on the user experience in their race to launch first. As you can see from the above and countless other examples, this could prove fatal.

  • Geeky Product Managers: The main focus of the technical product staff is on showing off the technical advance or new features that they sometimes ignore the user experience. Again a faulty or risky strategy.

  • Eco-system or supporting infrastructure: Another aspect which gets ignored is the supporting eco-system for the user to make it complete. All the applications made available for Windows played a huge role in making it successful. Similarly iTunes played an important role in the success of Apple and iPod.

So what are the lessons to be learnt and how can we improve this for all our future innovations. These are my thoughts:

  1. Ensure that your product team has a mix of both technical and non-technical resources working together. The non-technical resource should be from the user community who will ensure that the usability issues are not ignored. I think it is best to involve them from the beginning to ensure that the final design is acceptable from a user point of view.

  2. Get the product team to spend some time actually watching how their product is being used by their end users and the challenges the users face. This will help them plan the future direction of the product.

  3. Plan for end to end testing. This not only includes the experience related to buying your product but also should look at other related factors like supporting environment, applications or any other factors involved in improving the complete user experience of owning the product.

In summary, usability, as a field, has got some attention these days as far as web site design goes. But it still has a long way to go before it is considered even for technical gadgets or hardware/electrical appliances or software products. This is not right and frankly all our innovations (whether it is a new music player or complicated software for scheduling or it is a new invention in the area of medicine) should focus on making it usable and enhance the user experience to achieve its full potential.

So the next time when you plan the budgets for your R&D projects and the “Go to market” strategy is being planned for your next killer innovative product, make sure that appropriate attention is paid to the usability side of things.

Make your innovation usable. The world deserves it and you stand to gain as well!!!!
Alltop, all the cool kids (and me)

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