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What is Innovation Management?

Innovation “Management” as a term, doesn’t sit well w/ me. Just like Knowledge “Mgmt”. KM failed in part b/c of the inherent controls

Sameer Patel, April 22, 2009

I thought this was a good comment by Sameer, as it reflects a couple things:

  • Nascent field of technology tools that specifically facilitate and improve corporate innovation is just becoming understood
  • Concern that the unpredictable and rough-edged aspects of idea generation will be smothered by ham-handed managerial controls

Seeing what’s happening with customers at Spigit, I can safely say that the field of innovation management is much richer and collaborative than the term might connote. It’s not so much “control” management as it is “optimization” management. It’s a recognition that companies have significant margin for improvement in their innovation processes and outcomes.

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With that in mind, I wanted to put forth eight elements that help describe “innovation management”. This list is by no means exhaustive, but it should give you a feel for what the field is about today.

#1: Innovation benefits from a range of perspectives

For most of our industrial history, innovation has been the province of an internal R&D team. Those smart geeky types who labored to create the next generation of products for big concerns. Fast forward to where we are today. With the rise of the Information Age, more people have a knowledge-based relationship with their employers.

Contributing what you know has become the dominant part of work in Fortune 2000 companies. Leveraging this trend into the innovation realm is a natural extension of employees’ work. And indeed, once done, it becomes apparent that so-called “line workers” have a lot of valuable knowledge, experience and ideas as well. You don’t need an advanced degree to understand a glaring customer issue or a better way to manage field operations.

Studies show that exposing ideas to a wider range of perspectives significantly improves them. In terms of management, the change for companies is elevating the importance of sourcing ideas from throughout the enterprise, as well as outside of it. One example: in this video on how it approaches innovation, Pfizer notes that “Ideas aren’t just sitting at headquarters. There are fantastic ideas all over the company.”

#2: Four of the most damaging words an employee can say: “Aww, forget about it”

What If I Fail cartoonIdeas come in various forms: disruptive, product and operational. And they hit employees at varying times as they do their work. Sure, a lot of these ideas won’t be feasible. But a lot will.

The problem for companies is that employees self-censor, either because (i) culturally they’re not encouraged to post ideas, even potentially bad ones; or (ii) there’s no way to easily capture these.

The recognition that there is valuable intellectual capital in the ideas that emerge from employees’ knowledge and activities is core to improving corporate innovation. Changing organizational focus to foster more ideas from all quarters, and providing the resources to capture these are core to what innovation management means.

#3: Create a culture of constant choices

Jim Collins spoke recently at the Front End of Innovation conference. A key theme from his speech was that great companies enable constant choices. By this, he means that external markets are constantly changing. Companies that are maintaining a good velocity of ideas are the ones that succeed long-term in industries.

This is actually a pretty significant cultural dynamic. Companies can be quite adept at execution, and throwing choices in front of everyone can disrupt that strength. So figuring out “their way” to create a culture of constant choices is really the hard work.

This is part of what is meant by innovation management.

#4: Looking at innovation as a discipline

Innovation is a Top 3 priority for companies, reports Boston Consulting Group. Indeed, BCG notes that innovation leaders generate 430 basis points more in shareholder returns than do average companies. So how does a company systematically address innovation as a discipline?

Companies apply resources and attention to a number of other disciplines: sales, customer relationship management, supply chain management, managerial accounting, etc. Looking at innovation from a similar perspective is emerging as an important strategy.

A number of large corporates have established internal innovation-focused executives. These aren’t employees who are supposed to dream up all the ideas. Their work is on establishing innovation as a discipline. Their charge is wide-ranging, including HR, executive attention, focus areas for innovation, internal communication, processes and selection of technology to facilitate. While I wasn’t around in the rise of the CRM era, presumably there was similar work by earlier generations of employees.

The work of making innovation a discipline is part of innovation management.

#5: Focus employees’ innovation priorities

Each of us knows a lot. From a variety of activities and interests. Work. Hobbies. Family. Locale. Life. I’ll bet you come up with ideas and encounter problems to be solved for a wide variety of things.

For corporations, this wealth of experience is an asset, but it does require some tuning. For ideas, you never know when someone’s personal church activities might have relevance to a product idea for the company. You want that variety of perspectives to inform and improve ideas.

At the same time, there needs to be a channeling of where employees’ ideas are focused. If executives don’t lay down directional areas for innovation, employees’ time on innovation will not be as valuable as it could be. Of course they’re going to have a range of ideas. But which ones are most pertinent to the company’s success in the market?

Channeling employees’ innovation focus is part of innovation management.

#6: Recognizing innovation as a funnel with valuable leaks

When one views innovation as not just game-changing disruptive ideas, but including incremental ideas, it becomes clear that innovation is fundamentally a funnel. Start with a large, ongoing quantity of ideas drawn from employees, customers and partners. As discussed in #2 above, you really want to get as many of these ideas as you can.

Ideas must then go through a winnowing process. Some will get stronger, and advance to projects. Some will fall away as not feasible.

And from all this intellectual activity around ideas, new ideas will emerge. It’s natural. Once employees are in the mode of generating and assessing ideas, it nwill be natural for new ones to emerge. Really, this arguably is the case for a lot activities that foster interaction among employees. But in this case, the social object around which they’re interacting is an idea. In terms of instilling a culture of constant choices, interaction around ideas promises to be a key part of achieving that.

Managing the funnel is part of innovation management.

#7: Establishing a common platform for innovation is a revolutionary step forward

Consider how employees innovate today. You have an idea, what are you going to do with it? Certainly you’ll sound it out with peers, which is illustrative of the fact that innovation is a social activity. Then what? Tell your boss. Email it. Enter it into a customer service database. Put it in a PowerPoint. Try to schdule meetings.

When you consider what employees must do today to move an idea forward, it’s really pretty daunting. Under this system, corporate innovation requires phenomenal acts of heroism to get anything done. Ad hoc, siloed applications make companies the poorer for the ideas they’re missing. Existing idea management processes don’t allow cross-enterprise visibility, which means collaboration among interested parties is limited. An unfortunate outcome is that the pace of innovation falters as ideas lose share of mind.

Creating the common community space for innovation is a dramatic leap forward in how companies foster innovation. The same mechanisms of departmental outreach and email are certainly still available. But now, ideas can get an audience of thousands, allowing them tap different reservoirs of experience and perspective. Senior executives csn see ideas that previously would languish in lower levels of the organization.

Creating this common platform is part of innovation management.

#8: Innovation must be more than  purely emergent, disorganized and viral

Innovation management today draws heavily from the themes of Enterprise 2.0. Key to the power of social computing is letting employees’ activities and knowledge apply itself naturally where it’s needed throughout an organization. For purists, this means get rid of oversight and managerial prerogatives.

To create ongoing, sustainable innovation, there needs to be a programmatic approach. Riding the pure emergent form of Enterprise 2.0, or continuing the current ad hoc, siloed approaches to idea management, is insufficient. Employees will be busy with projects and tasks they need to execute. Perhaps culturally, innovation hasn’t been a focus. There will need to be a push to raise the awareness of innovation. And some organization to channel it where it’s needed.

There will also be ideas that are valuable, but which may not resonate with a broader section of the employee base. Leaving the emergence of these ideas purely to viral dissemination means leaving some of them buried at the departmental level. Companies need ways to ensure valuable ideas are caught and surfaced systematically.

Combining bottom-up emergence with top-down priorities and organization is part of innovation management.

Wrap-Up

As I said above, innovation is a multi-faceted activity, with many moving parts and ways of approaching it. What I’ve listed here represent my way of clarifying what the field of “innovation management” is about. If you think I’m off or missed something, let me know in the comments below.

Thanks.

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Under this system, corporate innovation requires phenomenal acts of heroism to get anything done
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Tapping Communities to Accelerate Corporate Innovation

Jim Collins related a story back in 1999 that well-describes the problems with and opportunities for innovation inside organizations. In a Harvard Business Review article, he wrote about Phil Archuleta, a materials manager at a U.S Marines recruiting depot in San Diego.

The Marines would issue new enlistees a uniform on their first day in the service. After two weeks of intensive training, these recruits needed a new uniform because the initial ones no longer fit. Marine policy was that the recruits original uniforms were to be destroyed. That’s right, thrown away.

Archuleta thought that policy was daft, and that the uniforms could simply be washed and used for the next class of recruits. He asked his superior, and was told, “No. It’s against regulations. Forget about it.” Eventually, Archuleta got a new supervisor who thought he had a good idea, and promoted it up the military chain. The idea was well-received at the higher levels, and implemented across the Marines. It resulted in annual cost savings of half a million dollars.

How many ideas by the likes of a Phil Archuleta are buried inside organizations?

Tapping Communities to Accelerate Corporate Innovation

The presentation below is one that I gave for recent webinar with Oliver Young of Forrester. The webinar focused on deriving ideas from organizations’ communities: employees, customers, partners.

The presentation is built around four themes:

  1. Strategic importance of innovation
  2. Email <> community
  3. Corporate innovation is more than a popularity contest
  4. You can’t manage what you can’t measure

Strategic value of innovation

Certainly this qualifies as an obvious notion. Innovation is important to companies. It’s the source of organic growth. But in many ways, companies are not treating it as important as other processes, such as supply chain management and cost accounting. Thus, it is important to reiterate the obvious.

Boston Consulting Group analyzed the shareholder returns for companies in its Top 50 innovators list. It compared these returns to markets averages, and found that best-in-class innovators generated 430 basis points more in returns than did the market. Aberdeen Group surveyed 280 manufacturers, and characterized their innovation capabilities as best-in-class, average and laggard. Best-in-class innovators, who far more consistently hit new product revenue targets and launch dates, were 4.7 times more likely to create specific processes for idea generation.

No surprise then that senior executives rank innovation as a top 3 priority.  Accenture well-describes the goals and aspirations of companies: create repeatable and ongoing improvements in business performance.

Key, of course, is to consider innovation among the disciplines in which a company should excel. And create a program for it accordingly.

Email <> community

I’ve worked for large companies. I know how it goes when you have an idea. Jot it down somewhere. Talk it out with someone. Then email someone else about it. If you’re lucky, someone in that email will pick it up. Maybe.

More often than not, interesting ideas just sort of lie there, buried in the minutiae of the daily grind or not catching the interest of a particular individual. Which is what happened to Phil Arhuleta’s idea about the Marines’ uniforms.

Rather than rely on ad hoc, siloed forms of communicating ideas (like email), social networks provide a new way to tap communities. The diagram below shows the process by which innovation is fostered with a social innovation platform:

Ideas are the social objects for community interaction

Ideas are the social objects for community interaction

On the top left, it’s important that companies understand: ideas can come at any time, in any form. They’re rarely subject to scheduling. Once you have an idea, there’s needs to be an easily accessible, and easily usable,  site for the posting of those ideas. No more silos!

Creating a common site is critical aspect #1 of creating an innovation program. Employees, customers and partners should have a single place where each community can go to post the ideas that occur to them.

Critical aspect #2 is the ability of the community to provide feedback on an idea. Separating the good from the bad, and refining ideas to help them take shape are the heavy lifting of emergent, social systems.

In the upper right, the refinement of good ideas takes shape. This includes the feedback from the community, as well as offline activities around the idea, such as design work, marketing plans and financial analysis. Finally, in the lower right, the company selects an idea based on community feedback and refinement.

Aside from the benefit of actually knowing about a lot more valuable ideas, there’s another benefit to community-driven innovation management: ideas get better when they’re subject to diverse points of view and knowledge. See the earlier post What Enterprise Social Networks Do Well: Produce Higher Quality Ideas to understand that effect.

Finally, the graphic below describes the community innovation cycle:

Bottom-up innovation requires top-down support

Bottom-up innovation requires top-down support

I think the concepts of expand community and pipeline of ideas are relatively self-explanatory. And I just discussed the engage, access, refine, select part of the cycle. The other two are the top-down support needed to ensure the community feels their efforts matter.

Keep in mind that when people suggest ideas to companies, these aren’t just conversation starters with their fellow community members. People want to know that companies listen to good ideas and take action. That’s quite clear to a community when its ideas are actually implemented, and there is a reward and recognitions for its members.

Executives go a long way, particularly with employees, when they make the company innovation program a focus point. Employees will take their priorities from senior management, and executive sponsorship is an important factor for creating an ongoing, sustainable innovation program.

Corporate innovation is more than a popularity contest

The most common notion of community innovation is the principle of: one person = one vote. An idea that receives a lot of votes clearly is more useful and valuable than an idea receiving fewer votes. This “rule” works well with products that exhibit these characteristics:

  • End buyer requests
  • Lower complexity features
  • No concentration of buying power

That last bullet needs a little explaining. Dispersed buying power means that basically you can consider each vote to be the equivalent of one product purchase. If you have a few customers that generate a significant amount of your sales, their votes should carry more weight.

There are going to be plenty of ideas that require stronger stuff than basic popularity. I like the way Microsoft’s Haddow Wilson put it:

There are times when the collective wisdom is what we need. But what about those times when we need to make a strategic decision and only a few in the crowd have the necessary background and insight to help? How do we separate the knowledge from the noise? How do we know to whom to listen? How do we find them?

Innovation communities need a way to identify those whose opinions should carry greater weight. They essentially need reputation systems to identify members with greater standing among the community. This stature can be assigned or earned.

You can’t manage what you can’t measure

The ethos and value of Enterprise 2.0 focuses on the emergent, authentic nature of employee contributions. It’s historically been hard for employees to apply knowledge in a timely fashion. In this culture, “management” is often a loaded word, with connotations of over-processing and controlling the ways in which employees collaborate.

But that should not stand in the way of measurement. You can have measurement of outcomes, and inputs, and use that to guide the community generally in the direction you’d want to take an innovation program. On the flip side, if a community continues to generate ideas that aren’t squaring with the company’s vision of where it wants to go, it’s porbably wise to listen to them.

Either way, measurement provides a view into the health of the community (posts, comments, views, etc.), the sources of the ideas (groups, categories, product lines, etc.) and the traction that ideas put on the platform are getting (stages, implementations).

Measurement is also the basis for analytics used to surface the best ideas from the rest. One other thing measurement does is this: it positively affects the culture of companies.

Performance and Culture

Breed performance, change culture

The transparency that measurement on an innovation management platform provides is healthy. Everyone can see the bases by which ideas advance. Everyone knows how their own ideas are faring, and can do something about it. This happens because of measurement.

It’s about creating ongoing, sustainable innovation

Companies will benefit greatly once they establish an ongoing program of innovation. It’s too often takes phenomenal acts of heroism to get an idea through the ad hoc channels and processes that dominate corporate innovation today.

Time to treat innovation as a discipline worthy of its own resources and focus.