Monday, November 17, 2014

Innovating the Department of Defense

I listened with great interest to the recent announcement by Defense Secretary Chuck Hagel's announcement of the new passion for innovation within the US Department of Defense.  There are few organizations that have relied so heavily on research and development, new technologies and innovation as the United States military.  Hagel spoke eloquently about the bipartisan focus on defense modernization that started with Reagan, which led to a very well-equipped and prepared fighting force.  That energy and passion has decreased after several very expensive wars in Afghanistan and Iraq, and the increasing realization that the government can't afford to spend as much as it might like to on the military.

As many commentators have noted, most armies prepare to fight the "last war" - that is, they take the lessons they learned from previous wars and project them into the future, assuming that future wars and conflicts will resemble those from the recent past.  This is why we in the US still have a heavy mechanized army, which is intended to fight large conflicts against an easily identifiable enemy.  Meanwhile, our adversaries have long understood that the US has too much technology and capability to fight toe to toe in open conflict.  Increasingly we face adversaries who blend into the local population, who use small arms conflict, guerilla war and terrorism rather than a single large army fighting to retain terrority.  ISIS's call for "lone wolves" who can attack within the US is a good example of an adversary seeking to disrupt our fighting morale through low intensity combat.

We know all of this, but the US military is still engaged in thinking, developing and deploying large scale response.  Of course we seek to shock and awe our opponents, and to never fight on an equal footing, but our thinking, planning, weapons and deployment systems must change.  The battle in the future may be as much about data and information as it is about territory or lives.  We have to learn to fight house to house, with minimal casualties, while demonstrating that our way of war is less invasive, less destructive and morally sound, versus what our adversaries fight.

As the pace of change has accelerated in the private sector, many corporations have adopted a number of techniques to respond, from scenario planning to ascertain the future market conditions to deeper market research and insights into emerging markets and segments.  The new defense initiative should start here, forecasting the likely battles and adversaries to determine what they need to defend against, and what they may need to proactively destroy.  In the US we've become too complacent about the superiority of our technology, and many of the battles we are seeing now are being fought with old military technology and new social media and information technology.  Superior arms aren't enough, especially when you fight an adversary who don't fear death but use it as a recruiting tool.

While the US military is a colossus, we have lost touch and don't understand geographic needs and local conditions on the ground.  We need better insight and intelligence, and better, more trustworthy allies.   As a recent book by John Nagl points out, the fight in Sunni Iraq was intense until the military realized that by paying and arming the Sunnis, the intensity of the fight could be reversed.  The military as a blunt weapon of force won't be able to pay dividends in the future.  We may not have those kinds of fights.  Meanwhile, the adversaries we do fight will morph and change.  They will likely be non-state actors, like ISIS or Al Qaeda, who may decide to hold territory but who really want to wreak havoc and upset some of our allies and adversaries in the Middle East and other locations.  The pace of change and the intensity of the fight are increasing.

Meanwhile our military is bound by acquisition rules that slow purchasing and that favor large integrated contractors who don't seek to bring the best ideas to the table, only the projects that can win.  And how do they win?  By ensuring that any large project has components made or assembled in a large number of congressional districts so that each congressperson can point to "new jobs" in their district.  The planning and acquisition process for the military is exceptionally slow, artificially obtuse and difficult to enter for any firm that is new to the defense market or who is not familiar with the contracting process.  This slows innovation in the form of new technologies and new products.  Likewise, a focus on the lowest total price on the contract, rather than the best solution, often awards firms who focus only on cutting costs, which is antithetical to good innovation.  Further, as has been documented frequently, there is a relatively high fear of risk in the military - often one "mistake" no matter how well intended can ruin a young officer's career.  The military has a hierarchical culture that doesn't allow a lot of freelancing (and often rightly so) and expects people to stay in line and wait their turn. Again, the culture will resist innovation.

Hagel's decision is a good one, but I wonder if he will incorporate the best people to assist in the implementation.  If good innovators have been helping the private sector, will he and his team turn to good innovators and consultants for advice?  (hint hint)  Will they push autonomy and creativity down to the average soldier, or isolate "innovation" in a new "long range" planning organization, creating yet another ivory tower to spawn more messages about innovation that cannot be implemented effectively by the fighting force?  Will they recognize how much the battlefield and the adversaries have changed?  Will they understand that the future of warfare is as much about bits as it is about bullets?  Can we rationalize our planning and procurement process?  Can we infect the culture of the military with more risk taking, change management and innovation?

Hagel has done the right thing - the military-industrial complex needs to innovate. But this should be defined as a radical overhaul of the entire structure, not just a way to get a few more platforms to the warriors more quickly.  There are a lot of moving parts that must coalesce in order to really infect the military-industrial complex with the amount of change and innovation necessary to move to the next "offset" position.  Reagan and the congress in the 80s were fortunate in their enemy - a monolithic Soviet military machine.  We today are far less fortunate, because our military will be faced with small, nameless, faceless, stateless adversaries, a rising China, issues spawned from a lack of water and arable land, global warming, international criminal gangs that take over entire countries or regions and many more factors.  As interconnected as the world is, and as broad as our relationships and dependencies are, we will be forced to fight in many places simultaneously, sometimes with people, sometimes with drones and sometimes with data.  These changes and the options they spawn demand a much more active and nimble military structure supported by a much more flexible supply chain and information partners.  Will Hagel's review and new offset provide such innovation?

Here are a couple of things to watch for.  First, will Hagel and the military recognize and reward mid-grade officers who have original thinking?  Second, will the review consider new contracting and new weapon development options that speed up development and cut time and cost?  Third, will the review recommend to eliminate some pet projects to free up funds for other uses?  Will the review spend as much time on systems, data, information and predictive analytics as it does on other factors?  Fourth, will the commission call on external innovation experts who have worked in the commercial fields, or will it rely solely on historical defense contracting partners for new ideas? Finally, will we see a reworking of the entire military-industrial complex?  Reagan's work solidified and cemented relationships between the military and large government contractors.  For speed, nimbleness and new ideas, the military in the future will need to be open to far more "open innovation" with unfamiliar partners.  Will that happen?  Time will tell.
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posted by Jeffrey Phillips at 5:59 AM 0 comments

Friday, November 07, 2014

The first steps on the road to innovation success

Every day I'm not on a client site I come in early, to catch up on what's going on in the world.  More often than not I'm doing that by scanning Twitter, to see what the folks I follow are writing about or linking to.  I think of Twitter as my curated news stream, bringing me more information and news about innovation and new product development than I could possibly find on my own.

One of the things that troubles me about the Twitter stream is the frequency of the word "why".  Yes, I know that starting with a question is click bait, and any Tweet or post that can answer a meaningful question is likely to get opened and read.  But I think there's another factor at play.  Many of the people I follow on Twitter are experts or at least interested in innovation.  And the fact that so many of them feel that so often they must start with "why" isn't a nod to Simon Sinek, but follows on the notion that they must educate their audience.  If those of us in the innovation choir feel the need to continually educate our audiences and each other, what does that say about the state of innovation evolution? 

Using Tweets to describe "why" innovation works, or "why" a specific tool is interesting, or "why" a specific company did something is meant to educate and inform, to explain.  If we are still explaining why things work or are valuable, we don't have a lot of time or even need to describe what's more important - "how" things work.  This predominance of "why" in the innovation Twitter stream leads me to believe that either we on Twitter are underestimating our audience's knowledge of innovation, or that we are still on the first steps on the road to innovation awareness.  I'm afraid it's the latter.

You see, Twitter is not a normal news channel.  It's a channel for people who are highly attuned to a specific field of inquiry or who have a passion for some narrow field of study.  In my experience the vast majority of my clients, and prospects we talk to, don't read or follow innovation tweets.  Not because they are disinterested, but because they don't have time.  Their days and nights are full of work, family, other interests.  This isn't to say that they aren't on Twitter, just that their focus is on other things. 

We innovators have a long way to go to educate and build awareness for innovation.  There's a maturation process that any learner must proceed through, which looks something like this:  awareness, interest, education, experimentation, implementation, knowledge, experience.  The fact that so many of us feel led to talk about "why" innovation is valuable or important leads me to believe that our audience is still in the awareness and interest phases of innovation discovery, rather than in the experimentation, implementation and knowledge phases.  Or, perhaps many of the readers think they are in the "knowledge" phase but their knowledge is so thin, their experience so topical that they miss the greater power of innovation. 

Why are so many still so poorly engaged or have such a shallow understanding of innovation?  One factor lies in the fact that innovation is really poorly defined and has few agreed conventions or standards.  There is no singular authority on innovation, and anyone can hang a shingle and create a methodology and declare that he or she is an expert in innovation.  Another factor is the overwhelming focus on short term profits and efficiency.  Most managers have no time in their day for anything not on the immediate calendar.  They don't want to learn new skills unless those skills will be implemented regularly as part of the day to day job.  Innovation is uncertain, disruptive and distracts from important day to day operations.  And that leads to the final reason we are still using the word "why" a lot:  conversion.

We innovators have a set of beliefs that have been developed over time and passed down from Alex Osborn and others.  We use and believe in a set of tools and methods that are strange and unfamiliar to others, who only occasionally attempt solutions using a handful of these tools, and then using them inadequately or with poor preparation.  Innovation seems a bit uncertain, mysterious but promises a big payoff.  Frankly, innovation sounds a lot like a religion, and what we need is more conversions - people who move from doubt to belief.  That's another reason why so many Tweets about innovation start with "why".  We are trying to overcome the resistance and disbelief.

Perhaps we should ask why we need to start with why.  Why is there an abundance of doubt or resistance?  Why do so many people doubt or distrust innovation that we innovators must constantly defend its worth?  Too often innovation, like religion, has been used to justify a decision or an action that others don't find appealing, or was used to sway opinion. Innovation has frequently been used to over-promise and under-deliver, so there's a healthy sense of skepticism, even among those of us who profess to believe deeply in innovation's power.  And innovation charlatans and mystics abound, unfortunately.  We can't seem to sweep away the mystery and expose the pure underlying power and simplicity that innovation can offer.

Many, many companies are still on the first steps on the road to innovation success, limited by the depth of doubt and mistrust, held back by the lack of time and investment, and skeptical based on previous experiences.  We'll do more to advance innovation by sweeping away a lot of false promises and exposing more of the simple truths, and building experience and confidence broadly rather than retain innovation magic in some high priesthood. 
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posted by Jeffrey Phillips at 6:30 AM 0 comments

Wednesday, November 05, 2014

We need a moonshot

Now that the election is over in the US, we can finally turn our attention to an important question:  where are the big challenges we want to solve, the big opportunities we want to conquer?  For JFK it was reaching the moon.  For LBJ it was eliminating poverty (still working on that one).  What big goals or challenges should we take on next?

The last decade in the political sphere in the US has been all about managing expectations.  We've played small ball.  Even when the Democrats focused on remaking the US healthcare system, they took an incremental approach that hasn't achieved universal coverage.  And yes, I realize that politics is the art of the possible.  But can't it also be about defining big challenges and overcoming them?

Two recent stories illustrate this for me. The first is the recent explosion of the rocket that was sending provisions to the International Space Station.  NASA has "outsourced" the ability to reach Earth orbit, and both this explosion and the issues with Branson's space plane call into question whether or not our government should be leading the research into how to continue to take men and women into space.  But more importantly, what are our goals?  Why do we need a space program at all, if we have no clear goals?  It's not as though we aren't interested.  Movies like Gravity and Interstellar prove that space travel is interesting, and perhaps important for the future of mankind.  Yet we have no clear goals, which leaves us trying to boost rockets into space using 30 year old Soviet rocket technology or witnessing the crash of the Virgin Galatic Spaceship.  The government is at best a cheerleader and at worst a complete bystander in this new space race.  Crashes and explosions are expected when we go into space - it is not without risk.  We must regroup and rebuild, and demand the best technology.  But money and technology follow vision and opportunity.  What is the big goal?  Where is the big opportunity?  Who is making this case?

Another story illustrates the opposite side of the story.  NPR ran a recent story on the Army's research into 3-D printing of food.  While the Army is very high tech, as long as we require human soldiers the Army will run on food, and lots of it.  The story suggested that the Army was interested in manufacturing food specific to an individual and their caloric and nutritional needs, customizing food for soldiers.  This demonstrates that the Army has a big vision - a complete overhaul of the care and feeding of its soldiers, to provide them with the fuel they need to work effectively.  But the sentence I liked the most came from one of the researchers, who said:  It's not being done, so it's something that we will investigate in our project.  "It's not being done" - in other words, there's a huge opportunity here and we feel compelled to explore it, to see what we can create.  If only we had more visionary goals across the government, and the will and the means to fully engage that kind of desire.

JFK launched the race to the moon in response to fear that the Soviets would beat us, but he also challenged the collective capability of the government, American industry and technology to address a huge challenge.  To a lesser extent the Army is trying to use 3-D printing to create really tasty meals that provide the right benefits to soldiers just as they need them.  It's a small example, but one the Defense Department should point to as new emerging opportunities that they are using innovation and passion to explore.

Where's the passion for new solutions?  Why on Earth is the most technologically advanced country in the world using 30+ year old Soviet technology to launch a rocket into Earth orbit?  We need our government to focus on a few big things and do them exceptionally well.  We need our politicians and leaders to work together to solve important problems, rather than bicker over incremental changes.  We need more passion for solutions, and solutions that matter.

What's the next "moonshot" that we as a people should take on?  Whether it's affordable and truly universal healthcare, creating far more jobs and opportunities for everyone, declaring energy independence through a combination of fossil fuels and renewables, or some other big goal, our country more than ever needs a big goal that rallies everyone, rather than dividing everyone.  Identifying a big opportunity and challenging the US to achieve it, using our creative capabilities, innovation, the power of the collective government and the ingenuity of the American people, that's what we need right now.  What's our moonshot, politicians?
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posted by Jeffrey Phillips at 5:55 AM 0 comments

Friday, October 31, 2014

Whose job is it, anyway?

In every major corporation today, people are going to work.  They are focused on processing invoices, holding meetings, launching a new marketing campaign.  They are working hard to ensure that the actual results meet the forecasts, and that the spending is equal to or less than the budgets.  These folks have more than enough work to do each day, and on top of that they are constantly in meetings to update their managers on their progress.  What's more, they have families and lives that occasionally conflict with the work day, and work that occasionally interrupts their family life.

On top of this hyperactive work schedule, executives become aware that innovation is vitally important, and somewhat absent from the schedule of work or activities.  What to do?  Why, we'll simply layer on an added expectation that each team create some "innovation" on top of their already busy schedule.   There.  That's done.  But the question arises, "whose job is it to innovate?"

The Bromide and the Reality

As with many issues in life there isn't one easy answer.  In fact there is a range of answers, depending on how serious and how committed the management team is, and in fact many of the answers are correct depending on implementation and strategy.  On one hand you have the answer that "innovation is everyone's job" - that innovation should be a part of the daily routine and everyone should be responsible for generating new ideas.  As my favorite quote from the Incredibles goes:  "when everyone's special then no one is special".

On the other hand it's entirely possible to isolate innovation in very small teams, where they are the "experts".  This can happen in a skunkworks or often in an R&D environment.  The concept is to create almost a "high priesthood" of innovation that the rest of us merely gaze on in wonder.

The concept that "innovation is everyone's job" is what I call the bromide.  A bromide is "A trite and unoriginal idea or remark, typically intended to soothe or placate".  When you hear an executive say "innovation is everyone's job" ask yourself the following questions:  when am I going to get the training I need to do innovation well? What priorities can I set aside to pursue innovation the way it ought to be pursued?  Does the culture support the idea of everyone examining needs and coming up with new ideas?  Of course you've probably already asked these questions and come up with the logical answers:  Not soon, none, and not really.

Innovation can be everyone's job, but that goal requires a significant cultural change.  We have to give people permission to create new ideas, time to experiment and explore, and tools to do this effectively.  We also have to create processes and filters to manage all the ideas that we'll receive if everyone is truly innovating, because we can't possibly pursue them all.  It's entirely possible that everyone can innovate, but not without a lot of change.

On the far opposite end of the spectrum is innovation in the ivory tower.  Small, isolated experts generating new ideas while the rest of the organization merely responds and implements.  There are a number of challenges with this model as well.  First and foremost, isolated experts rarely create ideas that are meaningful and valuable to customers.  They simply fall in love with technologies or their own ideas, rather than understanding and fulfilling customer needs.  Another reason this model fails is in "ownership" of the ideas.  A small team cannot successfully toss ideas over the transom into product development and hope that their ideas will be implemented successfully.  Truly radical ideas require education and sponsorship. 

While it's clear that either of these answers can potentially be true, it should also be clear that neither are ideal.  If "everyone" is responsible for innovation, then eventually no one is truly responsible, and the energy to change a culture to truly enable everyone to be responsible for innovation is far more than most executives are willing to expend.  If small expert teams are responsible for innovation, you will generate good ideas, but rarely implement any of them,due to conflicts between the innovation teams and the rest of the business.

What's missing from both of these extremes is ownership and leadership.  Innovation requires teams to do new things and do them differently, while still maintaining the status quo products and processes.  It requires the desire to dig deeply into new ideas while still understanding and managing existing products and services.  It requires experimentation and investigation while fully understanding how to cross the bridge from idea to product development, and product development to successful launch.  Someone or some teams need to be held accountable for innovation.

The people who should be held accountable and responsible for innovation - the people whose job it is - are mid and senior level managers who lead lines of business, who lead product groups or product teams.  Unless and until these folks are held accountable, and become if not experts at least champions for innovation, there will be little real output or outcome.

Once we understand who is accountable for innovation outcomes, then we can begin to decide how to allocate the work of innovation, how to establish priorities, how to decide who gets the innovation training and how their time and focus will be reallocated.  

Saying that it's everyone's job dilutes the responsibility and leave no clear authority.  Placing all innovation in an expert team risks isolation and estrangement.  If executives want innovation, they need to place the responsibility where it belongs, on their management team.
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posted by Jeffrey Phillips at 5:36 AM 0 comments

Monday, October 27, 2014

The Innovation Clock

If you are a sports fan, you'll recognize that many, if not most, team sports are time-driven.  Football (American and otherwise), basketball, hockey and others all have a definitive, set time for the match.  Baseball is probably one of the few sports that doesn't have a set timeframe, just a set number of chances for each team to have an "at bat".  In most games, time isn't a factor until the end of either half, and suddenly it becomes precious. That's why in American Football and in basketball "timeouts" are hoarded and used strategically, to manage the clock, to plan the final plays.  Time is of the essence, and using the precious time effectively matters to coaches.

But the vast majority of us live on corporate time, not sports time.  We don't compete in televised events on the weekends, but instead compete every day, every minute to drive more revenue and more profit for our employers.  Time is just as precious in this setting as it is in the sports world, and how we use the time allotted to us each day matters.  More important, I think, is how we decide to divide the time we have, and how we strategically determine what to do with those allotments.  For many firms, the division of time comes down to two critical segments, first, driving short-term revenue and profits, and second, generating ideas to drive future competitive advantage and profits.  If our "game" is divided into two halves or segments, one based on efficiency and short term profitability and the second on innovation, how are we determining the time investment?

In football, basketball and baseball each team gets an equal opportunity.  Once one team has had the ball and made its plays, the opposite team gets to attempt its strategy.  Equal number of opportunities does not mean equal time or equal outcomes.  A poor football team may conduct three plays and then punt the ball back to their opponent, who may methodically take the ball down the field and score. But even in games where the teams are significantly mismatched, the weaker team gets to possess the ball every other time.  In the business world the division of labor is even more pronounced.  In many organizations it can be difficult to find anyone who has a full time "innovation" role.  Just about everyone is focused on efficiency, effectiveness and short term profits.  When innovation is attempted, we draft some of the people who already have a full time commitment and ask them to conduct an innovation exercise.  These folks often don't receive the training they need, and have divided loyalties between their everyday job and their innovation tasks.

The question becomes:  how do we plan and allocate resources for two very important tasks:  keeping the efficient operations churning to generate short term profit, and developing new ideas to fuel future earnings and growth.  Both have to occur - it's exceptionally difficult for a business to ignore developing new skills or new products for future earnings.  Yet there are few rules of thumb or methods for an executive team to capably divide the two important deliverables, and its innovation that suffers.  And when innovation is neglected, it's often the case that we see executives forced to call a "timeout", when their products are disrupted by a new entrant.  At that point the executives will place people on a very urgent, short term activity to fix the fact that innovation was ignored. But as must of us sports fans know, trying to dig out from a deep hole late in the game is very difficult.

What's your innovation clock?  Are you adequately dividing your time between the efficient operating processes in place today and the innovative insights and skills needed to develop new products for tomorrow?  How do you decide how much time and resource commitment is necessary to spend in each area?  How do you signal to your teams that time must be spent on innovation activities on a regular basis, rather than signalling time out late in the game, faced with an insurmountable lead?
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posted by Jeffrey Phillips at 6:23 AM 0 comments

Friday, October 24, 2014

Opening the innovation aperture



Today a brief tip of the hat to Larry Keeley and his team at Doblin Group, for their concepts of "Ten Types" of innovation.  Keeley and his team created a very nice graphic that captures many of the different types of potential outcomes of an innovation activity.  That is, innovation can result in a new product, a new service, a new business model, a new process, and so forth.


This concept is important, because when most of us think of "innovation" we think of new, tangible products.  In fact much innovation work is simply the "front end" to new product development.  Using innovation just to create new products is like using a computer to only surf the web - it's power and capabilities are limited unnecessarily.  What's more, product innovation in many cases is obvious and somewhat boring, unless the goal is "disruptive" and the team fulfills that goal.

Further, many people will argue that they have plenty of products.  What they need are new services, new channels, new customer experiences and new business models.  In fact many of the "big" innovations in the last few years are more likely to be business models (Software as a Service as an example) or customer experience innovations (anything Apple has made).  There's a pent-up demand for things that are new, valuable and unusual, not just tangible products but solutions that provide value.  Getting a company to think beyond the product is important, and Keeley and his team have presented us with a nice framework for thinking beyond product innovation.

I've surreptitiously introduced another dimension as we think about opening up the innovation aperture.  The concept of a spectrum of innovation from small tweaks to existing products (incremental innovation) to completely new products and solutions that create significant change (disruptive or breakthrough innovation).  This is another way to think about opening the innovation aperture.  Not every product or service needs incremental innovation.  In a baseball analogy, we should be good at hitting singles and doubles (incremental) but we also need to take purposeful swings at the fence (disruptive).  As we open the aperture, we give people more clarity about the desired solution - the "what" of innovation.  A disruptive new customer experience can be just as valuable as a new product, and often more difficult to copy.  But being able to describe the anticipated goal, and get the team to understand and work to that goal is what's really important.  Because our ability to communicate limits the dilation of the aperture.

I've yet to meet an executive who only wants incremental product innovation.  They all want a range of innovation outcomes, both in terms of incremental-disruptive and in terms of Keeley's range of outcomes.  But they often don't know how to state what they want, or don't do a good job defining the desired outcomes.  When communication is poor or lacking, people hear the demand for innovation but don't understand the depth or breadth, so they choose a safe set of parameters and settle for incremental product innovation.  It's no wonder that so often new "innovations" look a lot like existing products.  Without better instructions, that's what the culture will lead people to create.

We can go further with this idea of the aperture, to think about the "how" of innovation. It's often not clear how much investigation or discovery of needs should take place, or how much research is necessary.  Teams often don't understand whether they should trust in their own ideas and technologies or open up to external firms, using so called "open" innovation.  The more we set out in our "what" and "how" conversations about innovation, the better the resulting outcomes can be.  Conversely, the less said about what and how, the lower our expectations should be.

Who ultimately controls the dilation of the aperture?  It's not just executives, not just managers but it's the entire organization in thrall to a culture of risk avoidance, consistency and efficiency.  All it takes is one strong voice to demand more clarity about the potential outcomes and activities to cause the entire organization to rethink how innovation is conducted.  Until that voice - or hopefully voices - rises up, innovation is conducted through a very narrow aperture, leading to very incremental solutions.
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posted by Jeffrey Phillips at 6:28 AM 0 comments

Tuesday, October 21, 2014

Open to adjacency

We work with a lot of firms to build innovation processes and culture, hopefully leading to the development of what we call an innovation competency.  Trying to get a larger, complacent firm to embrace the risk and uncertainty of innovation is not easy.  There are often many preconceived notions about what the firm and its people should do, where they should spend their time, what's "important" and what isn't.

But the truth is with the right coaching and a good set of tools and methods you can overcome a lot of learned avoidance, and actually create some good ideas.  Good ideas, that is, up until the point where someone asks the question:  Is this what a firm in (fill in the blank) industry should do?  What we have here is a predicate question - asking whether or not the firm should solve the problem, often before or instead of understanding if the customer has a need, and whether or not that need should be filled.  Whether or not a firm in a specific industry or market  segment "should" solve the problem is beside the point.  Either it will or it won't.  If it decides that the solution or offering is outside it's capabilities, well and good.  If the need is pressing and customers are willing to solve it, someone or some other firm will solve the problem.

Where this thinking matters is when an innovation team starts every discussion with:  is this what our firm or industry should do?  Too often there are preconceived, and very powerful notions, about what an organization should, or shouldn't do.  These notions argue that once a business model or industry focus or customer segment strategy is developed and perfected, all future opportunities should be viewed from this lens.  Nothing, my friend, can be further from the truth.

Imagine, since Apple is always used as an example, if Steve Jobs had said, "well, we are in the PC business, so no matter how terrible those little MP3 players are, and no matter how terrible managing music becomes, we can't solve that.  We are a PC company, after all!"  I didn't have the privilege to meet Jobs, but I'd like to think that he was able to see problems and needs in markets adjacent to his own, which he had the vision or technology to solve.  He believed that these needs were important and that customers wanted solutions.  He then asked:  even if we aren't in that business, do we have the underlying technologies, capabilities and relationships to be credible in that space?  He found that the answer was yes.  He didn't allow the fact that Apple was a PC company to keep it from identifying and solving vital and interesting customer needs.

Now, there's a fine line here between identifying and solving "adjacent" needs or extending capabilities or business models to new customers, and entering completely new lines of business.  Richard Branson is probably the only person I've heard of who succcessfully enters completely new lines of business.  He is innovating marketing and customer experience, rather than products and business models, so his model may be a bit easier to replicate.  But back to Jobs.  There are two other things that make this story compelling.  First is the fact that one of his first acts upon returning to Apple was to cut about 80% of the product line.  He simplified the product suite to focus more attention on fewer products.  So in some regard he compressed and consolidated the space he thought Apple should be in.  But then he looked for opportunities to use Apple's design capabilities, its customer experience, its ability to integrate and bring disparate items together to solve a number of problems, from the iPod to the iPhone and the iPad.  Apple wasn't initially a phone company, or a MP3 player company and many of its initial attempts to enter consumer electronics had not been successful (see the Newton).  But he didn't allow the organization to simply reject good ideas that solved customer needs that were outside of its cultural purview.  The other thing that Jobs didn't do is focus Apple on things it clearly couldn't and shouldn't do, however.  He understood the proximity of consumer electronics, cellular phones and tablets, and the distance between Apple and other factors like toaster ovens.  But one last thing you'll notice is that every innovation opened the door to another adjacent space.  For example dominance in handsets now means that Apple is relevant in payments and has released perhaps the most secure payments mechanism for individuals.  Would Apple be relevant in payments as a PC company?  Probably not, but it is relevant as a payments provider with a dominant marketshare in the handheld space.

On the other hand, almost every corporate innovation team I work with rejects a lot of innovation opportunities out of hand.  It's not in our business model, they'll say, or a "blank" company doesn't do that, or wouldn't be accepted if it did "X".  So they leave behind the most urgent needs customers define to pursue ideas that both they and their customers have less investment in. 

Can your leopard change its spots?  Can your teams identify and continue to contemplate opportunities outside your defined business model or sweet spot without complete cognitive dissonance?
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posted by Jeffrey Phillips at 8:01 AM 0 comments