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.

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.

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!!!!

Six Sigma and Innovation – Can they co-exist?

My friend was proudly talking to me about how he had implemented Six Sigma in his organisation and how it has improved efficiencies all across. “In fact”, my friend was boasting, “we have made it such a controlled environment that our people don’t need to think anymore. Just focus on execution and eliminating waste”. The last statement made me react. I challenged my friend “Now even though I have utmost respect for Six Sigma, I wonder if it is a good thing to streamline operations so much that it does not make people think?. After all, your people are your biggest assets. Do you want to miss out on the opportunity of utilising this resource to the best of its potential by blindly asking them to follow instructions? Surely that is overdoing it and this was not the purpose of Six Sigma.” We had to cut short our conversation since my friend got a call from his home. But I decided to explore more on this topic.

Back at work, I read more articles on this topic which made me realise that there are some inherent contradictions between Six Sigma principles and Innovation. Six Sigma by its nature, is more focussed on operational efficiencies and so tries to eliminate risks (in terms of deviations or new work practices). So this could in the best case lead to small incremental innovation but nothing beyond that. On the other hand, innovation is all about finding new ways to do things and this will mean challenging all the existing assumptions and norms. This is the only way to achieve path breaking innovations.

The main problem is for the managers and employees involved in these programs. They have different charters and so it sometimes can become confusing and misleading. But everybody agrees that for an organisation to succeed, you need both Six Sigma programs and innovation programs to continue and complement each other. So do you run both these programs in parallel?

Here are my thoughts.

1. Understand the contradictions and plan accordingly. For Eg: We can run Six Sigma programs to make a process more efficient and while doing it if we realise or discover that there are more opportunities to explore more revolutionary or alternate ways of doing it, then spawn it off as a separate innovation project to explore that option. This way both programs can run in parallel without disrupting their daily schedules.


2. Rotate staff between both programs (especially senior managers) – This will serve 2 purposes:
   
   
   
   • Ensure that the resources have a well rounded experience in working in different kind of projects which will enhance their work experience and also free them from boredom generally associated with routine work.
   
   
   • Help them understand the other perspective. For Eg: It will make resources working on innovation projects understand the importance of being accountable and efficient and it will make resources working on operational efficiencies the importance of being creative and challenging all existing norms.
   
   
   
   
3. Plan for adequate training and support to help the transition for the different kind of profiles. For Eg: People who are well versed with Six Sigma should be exposed to training on creativity before they are put on innovation programs and vice versa. This will help them cope and deliver.
   


4. Demonstrate senior management commitment for both initiatives – It is important for both teams to understand how their contributions fit into the big picture from the company’s future plan perspective and so feel valued. The best way to achieve this is through effective communication and by rewarding top performers in both categories. This will ensure that each of the teams support and complement each other without inhibitions.
   


5. Have targets for growth from both categories so that performance is measured and rewarded – This ensures that the senior managers are made accountable and gives enough focus to both areas in the same way.
   

In conclusion, both these groups are like the two arms of the organisation and when both are well looked after and well oiled, they complement each other and work effectively. The Six Sigma programs ensure that the existing processes are efficient and well-tuned thus making the company profitable today. On the other hand, the investment in innovation programs ensures that the organisation needs of tomorrow are taken care of thereby securing the future growth of the company.

However remember both these programs need nurturing and support. Specifically the innovation programs needs more nurturing since it is focussed on the future requirements. Hence these programs should not be measured on the same parameters. But with a little effort and patience you can get both programs to work effectively for your organisation and get your company to prosper both today and tomorrow!!!

Crowds - Are you harnessing their knowledge?

So you have been tasked with coming up with the next generation killer product by your company. You have mainly two ways of doing this – get a killer team in place (hopefully with diverse skills), freedom to experiment and periodic reviews to ensure that work is progressing OR open out to your customer base and partners to work along with you to come up with the killer design

As you can imagine, the first approach was the traditional way of doing it and is still pretty popular amongst old generation companies. Car companies are the best example that comes to mind for this. Think of it. Every time a new car is launched, there is lots of effort which has gone into it. So it is really a pity if it is not well received by the people and has to be discontinued!!! That is a huge amount of money which is wasted. But companies are still happy to pursue this model and rely on 1 or 2 success stories ignoring all the other failures. You can argue that there are lessons to be learnt from all failures – while that is right; it is a pretty expensive way of learning. Look around and you will find this model being adopted by quite a few industries from software products to banking/insurance products. So what are the problems with this approach? The main one is that customer feedback is got only at a very late stage and can’t really be acted upon.

So, is there an alternative approach? Of course there is and it is slowly catching the imagination of the world. In this approach, the final product is developed by the company but with active participation from the customers and business partners in the design process. The most recent example of this is Nokia who opened up the design of the next generation mobile phone to all their customers or Cisco who has announced the iPrize to get some creative new ideas from the crowd which they will be implementing. The advantage of this approach is that you are getting ideas or suggestions from the people who are ultimately going to use the product and you can rest assured that these are passionate people who are very much interested in the domain. So while you can’t guarantee success every time following this approach, you do increase your chances significantly since you are working on the feedback of your lead customers in an agile kind of environment. While all this sounds good, are there any pitfalls with this approach? The main one is around the management of the various feedbacks received. Companies could find that they are overwhelmed by the response and it is certainly not possible to incorporate all of the feedback to please all customers. Hence companies need to invest in some platform to manage the responses and work with them.

Ideally I think companies should plan to use a mix of both these platforms. While customer feedback may be a very good way of getting incremental innovative ideas, it may not really work when it comes to coming up with radical or blue sky innovative ideas (those involving challenging all existing boundaries or parameters). So these are best approached with a traditional platform and by involving R&D staff (preferably through open innovation but that is the topic of another post). Also a few of the feedback may be totally impractical to implement given our challenging environment (budget constraints, time to market etc). However the strength of the customer feedback platform is the ability to get suggestions from the people who matter. In this context an example worth mentioning is about P&G. Apart from its famed “Connect & Grow” program, which was hugely popular in rewriting most of the rules about partnership, another program which is not talked about so much but is equally popular is the effort taken by P&G to actually design separate products for its new markets (China/India and other low cost economies) rather than trying to fit their existing product lines to these markets. P&G actually had their staff spend times at these different market environments observing how their product is being used by the people in the different countries and tweaking their product line appropriately. The customer feedback platform can be used for the same purpose and there is huge potential if this is used extensively.

So – for all you companies trying to come up with the next iPod killer, there is help at hand. There is a crowd out there whose knowledge can be leveraged to get the best benefit and create win-win situations. In the future I don’t think it is going to be a choice whether you want to use this knowledge or not – the case for using it is pretty compulsive.

A final word of caution – The engagement with the crowd needs to be done with the aim to create win-win situations for the crowd and the company. As I said earlier, the crowd will be happy to participate when they realise that there is something in it for them. It need not always be monetary benefits though that can be a very good starting point. But at the same time, they will be very quick to disappear if they realise that either they are being exploited or their contributions are not being valued. This is a very thin line and so care must be taken to ensure that this line is not crossed during the engagement. This is like an additional channel and these participants are like your extended employees. If you are willing to invest both your time and energy in this, it will prove beneficial in the long term. But it does need nurturing. However at the same time, if you push too hard or try to get too much benefits without demonstrating the value, you will risk closing this channel forever. The choice is yours.

I am sure you will choose wisely.

The Power of Diversity

I was reading aloud to my son yesterday, one of Aesop’s stories about the strength of unity in diversity. It was a trademark story about how a jungle has different animals with all different traits and how they all work together in a crisis situation. That triggered my thoughts and I realised how we all seem to have forgotten this simple message in today’s corporate world.

Confused? Don’t agree. Think about it. When was the last time you had staff from different departments from your organisation come together to work on a corporate problem? When did you last try to attack a pressing problem by bringing together people with different and varied skill sets? All of us are so busy with our day to day challenges that we are just running from one crisis to another without even time for reflecting. Also another major factor is that most of our organisations have now setup so many internal barriers that collaborating across them requires dedicated attention and time – something that all of us just don’t have in today’s competitive world!!! So we just organise teams with similar skilled people and encourage everybody to think “out of the box”. Unfortunately that is easier said than done!!!

Why is this important? Ask any trouble shooting expert or any innovation “guru” and he will vouch for the power of diversity. The more varied and different their skill sets are, the more diverse their thinking is and that will directly reflect in the creative solutions that they come up with. I am sure all of you have experienced a situation where you are stuck with a problem and can’t seem to find a solution even after spending a lot of time on it. We get out of such situations in many different ways – some people sleep over this situation, some people take a short break away from work, some people talk it over with colleagues/friends. But all of us agree that the best way to resolve these kinds of issues is by having a fresh look at it. Look around you today. You will find that diverse teams are very difficult to find. IT guys stick together, domain experts form their own circle and it is very rare to find a mix of these diverse fields.

So what can organisations do to encourage diversity? I think the first thing organisations need to provide is a platform where diverse teams can be formed and work together using their complementary skills. This is the biggest challenge, as of today, due to globalisation and the distributed way of working today. It is not uncommon today to find that the core technology team is based maybe out of India or Brazil while the domain experts are in US/UK or Australia given that their customer base is in that region. Finally the back office processing team could be in another geographical location. In such a scenario, getting teams to collaborate together is a huge challenge without a platform. Anybody who is currently working with teams in different time zones and geographical locations will know what I am talking about.

So assuming we have a platform in place for collaboration, what else do we need? The second and equally important requirement is motivation or incentive to collaborate. This could be either in terms of reward money or it could be also non-monetary incentives like a gift voucher or holiday for two or something popular enough to motivate the experts to contribute. Why is this important? The problem today is that everybody is as busy with their normal business as usual (BAU) activities that it is a challenge to get the brightest minds to collaborate without incentives. Also this sends a clear message to the group that this is an important activity which needs to be prioritised and creates a win-win situation.

Finally the last factor, which is important, is the definition of objectives and key result areas for domain experts and star performers. This should include participation in the collaborative platform and they should be encouraged to contribute. This will help in two ways.

1. This will help in maintaining the quality of the solutions being discussed since these are the best talent within the organisation.


2. They will act as role models and guide other staff while at the same time ensuring that the deadlines are not compromised. Over a period of time, this platform can help groom talent and identify potential high performers within the organisation.

So – are there any pitfalls to watch out for or avoid? Well – Some attention will be required initially to ensure that the platform is being used transparently and people are having healthy discussions. Care should be specifically taken to ensure that newcomers are encouraged and valued. But over a period of time, the group will become self-governing. Regular feedback and transparent evaluation will go a long way in encouraging people to contribute regularly and keeping them interested. But the true success of the platform should be measured by the creativity of the solutions generated. The platform should serve as an avenue to demonstrate the power of diversity and inspire everybody to achieve greater heights through collaboration and through partnership.


So what do you think? Do you know of any examples of such platforms being used today? Can you think of any reasons why they are not popular and some of the challenges these platforms will need to overcome?

Myths of Open Innovation

While there is lots of curiosity and discussion around this topic, there are also some major myths which need to be shattered before this is adopted fully by all organisations. The topic of this post is to discuss these myths and show how they are wrong.

1. Myth: Open Innovation is difficult to start and the organisation needs to implement many changes before it can be taken up.


Reality: Definitely a myth or an excuse. Actually an open innovation project can be started on any project initiative. If privacy is a huge concern, suggest you start with your less secretive projects. Ideally select projects which have been attempted before internally with limited success. You will be surprised by the responses. Changes are inevitable in any innovation initiative but open innovation needs more a change in mindset rather than any major organisational change.


2. Myth: I have a large internal R&D team and they will be jobless if I go with open innovation initiatives.


Reality: This could qualify as one of the biggest myths. Open Innovation initiatives do not totally eliminate internal R&D staff. Your internal R&D staffs are invaluable since they understand your internal environment the best. However they will be able to get some important perspectives and directions from the external world through open innovation. Open Innovation is NOT outsourcing.


3. Myth: All my innovation projects are very private and should not be visible to the outside world. Also I don’t want to run into patenting issues.


Reality: Definitely a myth. While some innovation projects are truly dealing with trademark and copyrighted information which cannot be disclosed to the outside world, the vast majority of them do not fall into this category and so can benefit from the experience of the outside world. Also it is possible to remove the confidential information from most of the secretive projects and present in such a way that the outside world will not be aware of the true application of this. This is additional work but well worth the effort. Patenting issues are a concern but am sure your company lawyer will be able to handle this by Non Disclosure Agreement and other patent agreements. As long as you involve the right legal experts from the beginning, this is definitely not a show stopper.


4. Myth: The suggestions/ideas from the outside world are not really applicable in our scenario since our company requirements are unique.


Reality: A myth again. Even though not all the ideas from outside will be always applicable, it is indeed surprising if all the ideas/suggestions from the outside world are not applicable especially on a repeated basis. This only means that maybe they are not being considered seriously enough or the people evaluating them are not “open” enough to consider the outside ideas/suggestions seriously.


5. Myth: Open Innovation initiatives are only applicable to very large organisations. Most of the small or medium organisations cannot benefit from this.


Reality: This is a myth. It is definitely true that large organisations, by the nature of their size and problems, can benefit more from open innovation initiatives. But that does not mean that the small or medium organisations need to be left out. All it requires is that the small and medium organisations choose the niche area they want to focus on and then work on innovating in that space. Of course, they would need to make it worthwhile by investing both money and resources. In fact due to their agility and with prudent use of Open Innovation, small and medium firms will be able to spring a good surprise on large organisations through open innovation.

This is by no means exhaustive but covers some of the top reasons I believe why organisations do not progress open innovation initiatives. The main difference or catalyst required, which will make a difference, is the buy-in of the top management team. All open innovation needs is a few members of the leadership team to embrace this whole-heartedly and believe in this completely. Once organisations discover the true strength of the external teams, they will be transformed forever.

Are you ready to tap the potential of the outside world and work out win-win relationships? So what are you waiting for? Go forth and break all barriers and boundaries. The world truly deserves innovative products and this will not happen until the best minds collaborate together.

Together, we can do it!!!! We owe it to our tomorrow!!!