Thursday, June 15, 2017

What accelerates innovation

Lately I've been reading about the efforts to build or create innovation accelerators.  Universities, businesses and even cities and regions are talking about innovation and the need to create accelerators or innovation enablers.  I'm glad that everyone is excited about innovation, and that they want to provide the means to help it flourish and help it move more quickly. But the thing is, like most late arrivals, they've got the wrong end of the stick as the Brits like to say.

Buildings, programs, artificial meet ups and other activities that are being put into place as accelerators aren't going to accelerate innovation.  These solutions will accelerate interaction, perhaps, but not innovation.  To accelerate innovation, we need to do a couple of important things that are being overlooked or ignored.

First, describe an important or interesting problem or opportunity.  Most cities and businesses are overwhelmed by opportunities and problems, yet they spend little time adequately defining and describing these problems or opportunities so that innovators can place them in context and begin to imagine solutions.  Rather, we build buildings or create "accelerators" where people work on random ideas that have little importance to the people who built the accelerators.

Second, describe the benefit to the organization, business or community of an incremental change and/or a radical or disruptive change.  What are the outcomes we seek?  Without a clear understanding of the potential end game, innovators and other participants will end up on one end of the spectrum or the other, either creating very marginally different ideas from the status quo, or seeking to overthrow everything and start afresh immediately.  Neither of these is practical or valuable, especially at the start.

Third, give the innovators and entrepreneurs a stake in the outcome.  This is especially true in business settings.  What rationale do innovators have to work on interesting or disruptive ideas if they have no stake in the outcome? We ask them to take risks through the innovation process for a small reward or some recognition if the idea succeeds, and the potential they might lose their job if the innovation fails.  This is why there is far more innovation in startups and entrepreneurial companies and programs than large companies.

Fourth, encourage exploration and experimentation.  Elon Musk can talk about hyperloops and tunnels under Los Angeles because he can afford to experiment and explore new ideas.  We allow successful people and visionaries that freedom. We restrict that freedom from everyone else.  A good example is the difference in startup culture in Silicon Valley and the East Coast.  In Silicon Valley the fact you've lived through a startup that crashed and burned makes you more credible.  In the East Coast it can make you a pariah when seeking new funding. 

Fifth, consider who the judges are.  Frequently when incubators, innovation accelerators or other programs or enablers are created, the "judges" of such activities are often the more established leaders in the community.  These are the people who would scoff at Uber or AirBnB, who don't understand texting or emojis, who are uncomfortable with ideas or solutions that upset the status quo.  So they reward and recognize small, incremental ideas that align to existing infrastructure and investments and ignore and fail to fund really interesting or radical ideas.

Finally, don't worry about the money.  If the innovators have any marketing or social media savvy, they'll be able to publicize their ideas broadly and quickly with little cost.  There's enough money around that good ideas and good teams will attract funding, plus, working under tight constraints makes innovators face the real world and forces them to be more creative.  Money will come into play when the idea or solution needs to scale.  Only then will the idea need to move to where the money is - and that's when a business or community will be forced to make decisions.  Startups move to Silicon Valley because that's where the funding is in the later rounds.  If you want to be a real regional player in the innovation and entrepreneurial world, create or foster a critical mass of venture capital, which can encourage startups to stay local. Then perhaps you can build a critical mass.

The focus on accelerating innovation is a good one, but in many cases the solutions are the wrong ones.  Buildings, programs, incentives are all helpful and may accelerate some portions of the innovation process, but the facts above: critical mass, evaluation and judgement, easy exploration and cultural acceptance, clear definitions of the problem or challenge and having a stake in the outcome are most important. 
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posted by Jeffrey Phillips at 6:45 AM 0 comments

Monday, May 22, 2017

Innovation and creativity: the lasting competitive advantage

I wrote recently about my last trip to Dubai, and the impact it had on me.  Dubai is unusual because it combines a number of factors - an energetic leadership, a country and region hungry for growth and transformation, a significant investment pool, and a real "can do" spirit.  Clearly things are changing quickly there, and everywhere.  During the conference where I spoke we had several other speakers who were futurists, including Matthew May.  He and others talked about what they believe is about to unfold as we move ever more quickly into the future.

Pause to acknowledge Daniel Pink

I'd like to pause here and tip my hat to Daniel Pink, who wrote a really good book that is becoming ever more prescient.  Daniel Pink wrote a book entitled A Whole New Mind in 2005, and at the time the book had a nice reception.  His key points in that book were that automation would increase, replacing repetitive labor.  Anything that can be reduced to an algorithm will be described, defined and encoded.  If it can be automated, it will be automated.  His further argument was that we needed to be focused on training people in skills that can't be reduced to algorithms.  Dan's book, published in 2005, deserves a re-read at this time, 12 years later, because a lot that he talked about is happening.  People are being replaced by algorithms, machines and artificial intelligence.

Where automation and AI are taking hold

McDonalds, that trusted first employer of many a teenager, is testing automation and robots to take orders, make food and complete orders.  It's possible within a few years that many McDonalds restaurants will be fully automated, finally achieving the original McDonalds brothers goal of speedy, efficient service.  Check out the movie "The Founder" to see how choreographed the original McDonalds were, and think about how those patterns and repetitive activities can be reduced to automation, machines and AI.

While I was in Dubai I was speaking with an executive of a firm that reviewed intellectual property.  20 years ago the firm had hundreds of US lawyers on staff, but shifted these jobs to a large Indian location where hundreds of Indian engineers and lawyers reviewed intellectual property claims and patents.  His belief was that within 5 years algorithms and machine learning would mean that he would not need many, if any, humans to review patents.

Wall Street is under attack as well from automation and machine learning.  Already there are stock funds managed almost exclusively by algorithms and machine learning, and a significant portion of stock trading is already done by software.  Machines can recognize patterns and act far more quickly than humans can - so you can imagine that a significant amount of trading and money management will be automated in relatively short order.

What does that leave for humans?

As automation, artificial intelligence, machine learning and robotics grow in capability, humans doing simple, repetitive jobs will be crowded out.  Robots are much more expensive initially but don't strike, don't get sick and do things exactly the way they are programmed.  They don't get overtime.  So what's left for humans?  Perhaps this will be a golden age - where increasingly we are removed from the drudgery of manual labor and repetitive jobs and are finally freed up to explore the unlimited creativity that we possess but have never been able to fully harness.  There may be far more Faradays and Einsteins in our midst who can fully recognize their creative potential as we are freed from boring, mundane and repetitive tasks.

Pink suggested in his book that the "right brained" people would rule the future. This is because machines aren't artistic or creative - yet.  We humans still possess far more creativity and the ability to assimilate and create in ways that can't be reduced to an algorithm.  We must take advantage of these gifts and differences.

But that doesn't mean that engineers, mathmeticians and scientists are doomed.  Someone will be needed to dream up the next AI, investigate black holes, explore space and perhaps discover how to travel at the speed of light.

What needs to change?  Everything

All of these factors mean that our educational system needs to change, to reinforce creativity and expansive, divergent thinking.  When we needed people on production lines who could do rote work, we taught in rote methods.  Now and in the future we need a completely new way of thinking, that frees up and encourages creativity and innovation.  But it's not just elementary schools, high schools and colleges that must change.

Our traditional hierarchical top down management models, first organized around the military and the railroads, must change and morph as well. We don't need to pigeonhole people into exceptionally narrow jobs, and we need to eliminate siloes and accelerate the best and most creative ideas to market as quickly as possible.  I write this on a day when Ford Motor fired its CEO, even after record breaking sales, because the firm isn't making enough money and its stock price is tanking.  Ford and the automotive manufacturers must shift their thinking from building cars to financing vehicles to providing transportation. 

Will we leverage the power and performance of AI and machine learning and automation and robots to free people up to create even more incredible ideas and products - to add value where AI and robots can't?  Will we prepare our children to compete in a world where creativity and divergent thinking become more important than rote memorization?  Can we rethink our business structures and processes to embrace more divergence and creativity? 

Innovation and creativity are the lasting competitive advantage, for individuals, for cultures and for businesses.  The sooner we realize that and act on it, the better off we all are.

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posted by Jeffrey Phillips at 6:31 AM 0 comments

Wednesday, May 17, 2017

What Dubai gets right about innovation

I've just returned from a trip to Dubai to speak at an innovation conference there. This is my third trip to Dubai, and I come away consistently amazed at what the people and the government are doing in Dubai.  When I return to the States people ask me what Dubai is like.  I joking tell them that I was visiting the future.

In my three visits to Dubai, spanning only a couple of years, the development and progress has been really quite astonishing.  I've had the good fortune to lead innovation programs and workshops in a wide range of countries and regions, from Western Europe to South Africa to South America and in many locations in Asia.  There's no other place moving as quickly and with such purpose as Dubai. 

In our event we heard stories about the decisions taken to place Dubai on the innovation map, where the sheikh asked his people to visit Singapore and Hong Kong, places with few natural resources that were thriving.  These insights were brought back to Dubai and I think have accelerated the growth of the region and the city.

Innovation attributes/factors
Dubai has a number of factors that help it move quickly, including the fact that they started from a relatively basic standard of living and moved quickly to become a world class city.  Moving quickly is easier if you have less invested infrastructure.  In a recent article for Popular Science, one of the ministers leading the transition talks about the dirt roads he grew up with, which are now 8 lane highways.  Starting from a very humble base, Dubai has moved quickly to develop its air transportation (Emirates), its port, tourism, health care and other economic factors.  We will watch to see if Dubai can maintain speed and nimbleness as it grows and matures.

Dubai also benefits by being new and small.  It is still a relatively small city-state and as such is relatively nimble.  It has the ability to test and experiment with ideas, governance and technology at a pace that few other larger countries can manage.  As long as it keeps this nimbleness and flexibility, it will remain an innovator. Good examples of experiments and concepts are drones for personal transportation, a potential hyperloop and massive solar investments.

Dubai also benefits from its location.  It sits near a significant amount of oil, much of which is transported through the Gulf, right by its front door. Dubai and the middle east are also the half way point between Western Europe and India/China, making Dubai a natural transportation hub.  And we won't even mention its proximity to Africa, which when it develops will simply mean more transportation and logistics opportunities for Dubai.

Dubai benefits from two other attributes as well.  It has a forward thinking ruler, who has the ability to quickly implement his vision. This forward-thinking trickles down throughout the population.  Everyone seems infected by this vision and wants to know what's next.  There's a real sense of possibility, of seeking to overcome obstacles.  The sense of energy and optimism is pervasive.

Lastly, one of the factors that drives innovation in Dubai is a sense of openness, inclusion and tolerance.  I asked several of the conference attendees what they thought Dubai was doing well, and to a person they all mentioned engaging people of different perspectives, openness to new ideas and tolerance of different people, nationalities and ideas.  To quote the Popular Science article, "the sense of mutual tolerance is palpable, almost joyful". Many innovation commentators have noted that innovation thrives when diverse ideas and people interact in a place that can implement and accelerate them. Could Dubai model itself after Venice in the Renaissance?

Why these factors matter

These factors - tolerance, engagement, optimism, nimbleness, speed, location - all matter for innovation.  Tolerance and engagement mean that the best ideas will be considered, regardless of their source.  Optimism is vital for innovation, because new ideas are constantly failing, and that may become an opportunity for risk avoidance and pessimism.  I was surprised when one speaker at the conference talked about an idea failing and his company starting again.  What was surprising was the fact that the attendees applauded him for failing and trying again.

The government has a very forward looking posture and encourages experimentation.  It's organization and structure will reinforce nimbleness and speed as long as these factors remain top of mind.  Additionally, the government has demonstrated that it will fund trials and experiments that solve key challenges.  Solar farms and desalination programs are underway.

You may think of Dubai as a place for tourism, or to see the tallest building, or to ski indoors on a 100 degree day, and you'd be right.  But don't miss what they are doing to build an experimental platform for innovation as a city-state.  The whole city and government are moving quickly and it will bear watching to see what's next.
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posted by Jeffrey Phillips at 7:18 AM 0 comments

Monday, May 15, 2017

What autonomous cars tell us about the future of innovation

May you live in interesting times.  This is supposedly an ancient Chinese saying, replete with both opportunity and a veiled threat.  Interesting times can introduce great new innovations but can also inaugurate great conflicts.  Nowhere is this more evident than the evolving phenomena of autonomous vehicles.

Innovators across the globe, from the large (Amazon, Google) to the small are all working on autonomous vehicles.  Futurists are already predicting the demise of the long distance truck driver, whose job will be eliminated momentarily by autonomous trucks spanning long distances.  Soon, we are promised, we'll commute to work reading our morning papers - except there won't be papers - while the autonomous vehicle takes us efficiently and safely on our way.

If you are reading a hint of sarcasm in the above scenario, you are right.  We are reliving all of the hype about electric vehicles, circa 1991, when California demanded that 5% of all cars would be zero emission vehicles within 5 years.  They may reach that threshold in 2020. The promise and excitement of technology often ignores significant barriers to adoption.

Technology is the answer not the problem.

Thanks to Moore's Law and other advances in technology, we know that the bulky, unwieldy stuff welded onto prototype autonomous vehicles will be miniaturized and made more robust.  This will take time but it will happen if the markets are there.  The costs which are a bit prohibitive today will also fall.  The combinations of big data, real time analytics, sensors, on board processing, all linked to a very responsive processor connected to the engine and drive train will provide a safe and simple journey.  The technology won't be the problem.  But just like the electric vehicle, we'll discover the real barriers to innovation:  invested infrastructure, risk and regulation.

Invested Infrastructure

One of the items that slowed the adoption of the electric vehicle was the ubiquitous gas station.  When you have to carefully plan your trips to swing by electric charging stations, the overhead associated with driving an electric vehicle can be a bit overwhelming.  As battery lives improve and more charging stations are developed, driving an electric vehicle will be more predictable.  But we still face the challenge of deeply invested infrastructure that does not fully support electric vehicles.  And this is a dilemma that innovators always face - they must work within the existing infrastructure and compatibility or disrupt it.  And if they disrupt it they better have a fully operational highly capable alternative ready to go for the masses.  That was easier for Jobs and iTunes than it will be for fueling cars.

The invested infrastructure favors human drivers who are somewhat unpredictable, who must stop or yield at intersections.  The infrastructure favors drivers because we have significant investments in parking lots - where stupid cars wait on their drivers.  Autonomous cars don't require close in parking lots, because they can drive themselves or do other chores rather than sit in the lot.  Existing investments could become catastrophically obsolete when cars are smarter - this means some interests gain, while others stand to lose dramatically.

Risk

The organizations most likely to block rapid adoption of autonomous vehicles are the insurance companies.  We know what human drivers are likely to do in a car based on decades of historical data.  We know the frequency of accidents, the cost of those accidents and so forth.  With an autonomous vehicle there are several challenges.  First, where's the past data to build models on?  We don't have a lot of historical data so estimating and pricing will be difficult.  Second, who is responsible for an accident?  The vehicle, or a subsystem, like the navigation or data processor or the sensors?  Is there joint and several liability?  Third, what are the rules? Will the population revolt if autonomous cars (which are in fact robots) accidentally take a human life, ignoring Arthur Clarke's three Robotic laws? Risk is a terrible thing for insurance companies, and until they can quantify and validate the risk associated with autonomous vehicles they won't create insurance at comparable prices to cars with drivers.  No insurance, no autonomous vehicles.

Regulation

So, here's a question.  Suppose you are driving in Silicon Valley in your autonomous vehicle and you are crossing political boundaries - say you are driving from Palo Alto, where autonomous vehicles have been approved, and you cross over into San Francisco or some other municipality where autonomous vehicles aren't approved.  Given the Byzantine number of local, regional, state and federal regulations and approval bodies, you may never be able to leave your local municipality in an autonomous vehicle.  Existing regulation is often a barrier to any radically new innovation, and it will be with the autonomous vehicle.  Until all the municipalities agree or California and other states provide uniform regulations for autonomous vehicles, they are interesting museum pieces.
Regulations will have to change, and when regulations change there are winners and losers.  The organizations and companies that think they have something to lose - bus drivers, truck drivers, delivery people, etc - will put pressure on their representatives to slow or stall new regulation.

Finally, what does the innovation force to occur

In reality, there's one other barrier to innovation that the autonomous vehicle signals - the required changes once the innovation is accepted.  In reality, once a few autonomous vehicles are on the road, we'd all be a lot safer, more than likely, if all the cars were autonomous.  This would lower unpredictable driving and reduce accidents.  But that means than one can't be a little pregnant.  Either there are no autonomous vehicles or they all are.  Innovations, once accepted, often cause secondary and tertiary effects, and this is another reason there is resistance to innovation.  People can't always voice their concerns but innately they know that new technologies have knock on effects, and therefore they resist new innovations because of the unknown and unexpected consequences.

The knock on effects are both knowable and unknowable with autonomous cars.  Some scientists have speculated that autonomous cars could reduce the need for stop lights, because the cars and algorithms could sequence cars more effectively.  But this sequencing and hive mentality also suggests that a simple glitch or a hack could disable thousands of vehicles simultaneously.  Imagine a huge fleet of autonomous vehicles hit with a "WannaCry" like virus that shuts them all down with no warning.  Innovation offers great benefits but also secondary and tertiary knock on effects that must be understood, especially when human life is at stake.

What this means, generally

The autonomous car has a lot of promise, but some peril as well.  As an innovation, it is a good example of the factors that will block or become barriers for innovation.  Risk, especially when someone else bears the cost (like insurers) will always be a barrier to adopting new innovations.  Regulations will be as well.  The more disruptive the innovation, the more it will upend existing infrastructure and that will cause significant grief to a large portion of the population.  As innovators we must recognize that the value and benefit of an innovation must be measured in proportion to its impact on existing infrastructure, risk and regulation, because these factors can delay adoption.  We must also understand the secondary and tertiary effects of innovation, to understand potential barriers or resistance from those who will "lose" if the new innovation is adopted.

Some innovations, Facebook as an example, didn't encounter many of these issues.  There were few existing examples except printed facebooks at colleges.  There are few regulatory issues and little knock on effects.  However, when you innovate in a space where there is a lot of history - over 100 years of  automotive usage - then you're going to encounter resistance from those who have a stake in the status quo, and from regulation that exists to manage and sustain the existing way of life.  This should lead to a conclusion:  when you choose your targets and opportunities to innovate, choose carefully, because some innovation opportunities are much easier to realize than others.
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posted by Jeffrey Phillips at 7:30 AM 0 comments

Thursday, April 27, 2017

Seamless experience - innovation holy grail

Everyone's talking about innovation, which could be a good thing.  Except that while they are talking about it, they are often talking about the wrong things, or defining innovation too narrowly, or are too focused on tools rather than outcomes.  Sometimes, rather than doing something they are simply talking.  Talking about innovation is exciting, I'll grant you, because most corporate types don't get to do innovation, let alone talk about innovation.  They eat, sleep and dream about efficiency.  As Andy Cohen said at our conference they've Six Sigma'd the opportunity and then leaned it and then made it agile, then applied Six Sigma again.  Just to talk about innovation is a relief.

But when people talk about innovation they talk too expansively and without good definitions.  Innovation always reverts to whatever Apple did recently, whatever cool new technology or product someone produced.  We need to move beyond talking about innovation to actually doing more of it, and when we do it we need to do it with purpose and intent.  But beyond that we need to move beyond this narrow definition of innovation - a new product or service - to a much more expansive definition of innovation possibilities.

Innovators are like Astronauts

Right now we innovators are like astronauts who become fixated on going to the moon, when with a little more imagination and effort we could go to Mars, or Venus, or the asteroid belt.  We've allowed ourselves to become too enraptured, too fascinated by the possibility of new things, and not aware of or even talking about the possibility of new experiences or services or channels or business models.  There are several problems with the fixation of the near and the safe:
  1. It narrows the scope of exploration and discovery
  2. It suggests specific tools and outcomes and overlooks or ignores others
  3. It focuses far too much effort on far too little potential gain
As innovators we are like astronauts, exploring, going new places, discovering new things.  Some of these discoveries will be valuable and useful, some will be spectacular failures that others will harvest and find the value we missed.  But right now our focus is far too narrow, because we talk about innovation without shared meaning or goals, and we narrow our conversations and objectives without needing to.

Setting our targets too low

To me, we are doing this all wrong.  We are talking about easily achievable, tangible outcomes when we should be considering what the end objective is:  what customers want and are willing to pay for - even to switch providers to obtain.  And in a nutshell that isn't a discrete product.  Customers will change for a dynamic, interesting and complete customer experience that improves their lives, solves their challenges or gives them new capabilities they didn't have before.  When we innovate we should always be asking ourselves: what is the ultimate customer experience our customers need and we can create?  We can leverage techniques like "jobs to be done" but as I've written before I believe this should be superseded by "experiences to be had".  The best technical innovation does not win customers if it does not fit within their expectation or work in their environment or force them to change.  The sooner we start talking about how to deliver an incredible customer experience, in any project or in any setting, the sooner our innovation programs will generate the kind of benefit everyone needs.

We've lost the thread

Focusing too much on Apple's iPhone, or Tesla's car misses the point.  We don't buy the iPhone or the car, we are buying the totality of the solution and experience.  Tesla and Apple are just especially adroit and combining these into one package.  Sure the iPhone is nice, but no better than Samsung or LG.  It's just that Apple has managed to combine services and experiences and business models in a more holistic way.  And this is what we consumers are ultimately buying.  If we were buying a phone we'd buy based on the best reception, or the best coverage.  Instead we buy based on design, integration, style, beliefs about the company, and many other factors that make up customer expectations and customer experience.  This is where innovation should focus - not on the shiny new technology or object - but on the total customer solution and experience.  We must start with this in mind and work backwards to the technologies and component solutions that provide a total experience.  This is the holy grail, and once we understand that innovation will take off like wildfire.
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posted by Jeffrey Phillips at 5:46 AM 0 comments

Monday, April 24, 2017

Imposing Innovation or Exposing it

Sorry I've been a bit lax about keeping up the blog posts.  Between an open innovation webinar, a planned trip to Dubai to speak on innovation and a very successful innovation conference, (not to mention some customer work) I've been a bit busy lately.  But it was something I saw at our conference, and something I read today about Target that prompted this blog post.  Because I'm becoming convinced that you can't impose innovation from the top, it only gets exposed through internal cultural beliefs.

Lowe's at the Conference

We were fortunate to have a team from Lowe's (home improvement not grocery) speak at our conference.  This was the second year that a team from Lowe's provided us with insights on the opportunities and challenges of doing innovation in a large, distributed retail environment.  I liked the fact that the Lowe's team talked a lot about customer experience, starting their innovation activities with the customer's needs and jobs in mind, and framing everything based on experience.  In the discussion and Q&A afterwards, it became clear that a lot of Lowe's focus on innovation is cultural, embedded in the culture.  In fact one of our employees who worked at Lowe's while in college mentioned the discussion and how true it was for him - that Lowe's culture hadn't changed in 20 years and that it empowered people and encouraged them to make change and to innovate.

Retail at the crossroads

There's a lot to think about in the retail space, as news stories remind us that we have far more retail space than we need, and even ground-breaking shopping destinations like the leading malls are going underwater as people turn to online shopping.  Destination malls are suffering, and even retail strip centers are experiencing a drop-off in foot traffic.  Look at any strip center near a residential area and you'll see what was once a collection of shops, retail, clothing, food and hardware is now a collection of services businesses (dry cleaning and doc in a box) and restaurants.  Gone are the corner drug store, the corner hardware store, the small clothing boutique.  Whether we are talking about large malls or smaller shopping centers, retail is changing rapidly, thanks to Amazon, Wal-Mart and others.

What happens to Target?

Target, which was once one of the most interesting and unique large department stores, seems caught in a cross-fire.  It was able, years ago, to compete with Wal-Mart because it had better design and more interesting store brands.  It didn't necessarily compete on price but on value and style.  Those days are over.  Further, Target and other big box stores are feeling the squeeze as people are really busy and don't want to drive all over town, when they can order good like dish washing soap and have it delivered.  If you can't compete on quality and design, and certainly can't compete on price (versus Amazon and Wal-Mart) and people don't want the hassle of driving to your stores, what's left?

Target just announced today that its senior innovation leader is leaving so that Target can focus on "core business".  Mark today (April 24, 2017) on your calendar.  This could be the beginning of the end for Target.  It must either 1) improve its product lines and product value (innovation, but they are moving away from that) or 2) get closer to customers (who have already made it clear that they are happy online and don't want to visit stores) or 3) cut costs.  How do you cut costs and compete with Amazon and Wal-Mart?  Target is making a big mistake - it should be moving up market, creating new versions of stores and innovating its in-house brands, bringing value and style back.  Instead we're likely to get a Wal-Mart copy cat and/or a Amazon copy cat online from Target. 

Target is removing its innovation capability and focus at the moment it needs it most.  In many companies, innovation is what CEOs reach for when everything else has failed.  In Target's case, either the existing innovation wasn't working, or the CEO didn't see value in the outcomes, but in either case the CEO is working against industry and societal norms.  You can win as a brick and mortar store, but you've got to innovate in order to do so.

Lowe's and Target

Strange that two companies that actually compete in some segments see the world so differently.  Both are "big box" stores that typically stand apart, aren't in a mall but may be in a strip center.  Both are destination locations.  Both have significant and comparable competitors (Wal-Mart/Kohl's/etc) and Home Depot.  Both are taking radically different approaches.  Target lost its way years ago when it shifted its focus away from differentiated products, and the removal of the innovation officer only confirms this.  Lowe's is doubling down on innovation, with a focus on customer experience.  I think Lowe's is tapping into a core cultural phenomenon, while Target was finishing trying to impose innovation from the top.  While I'm not a Wall Street analyst, I have to believe that the investment by Lowe's in innovation will provide value, while Target will founder.
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posted by Jeffrey Phillips at 2:18 PM 0 comments

Tuesday, April 04, 2017

Innovation Evolution

I was asked recently to speak about innovation in a webinar and at a live conference.  These requests left me in a somewhat reflective mood.  When I'm asked to speak I want to provide the audience with valuable, useful insight, and that often requires ensuring a shared foundation before taking the audience where I think innovation is likely headed.  In my thinking for these two programs, I've developed a five step evolution for innovation in most organizations.

With tongue firmly planted in cheek I'll relate these evolutionary steps to famous Hollywood productions.  Perhaps you'll recognize your organization in one of these phases.  I'd love to hear about other innovation evolutionary phases that you've been through.


Lone Ranger

The "Lone Ranger" stage is one that many companies must pass through - in fact most startups and entrepreneurial firms are founded by Lone Rangers. These are people, like Steve Jobs, who have amazingly clear insight into what customers want or need and create products that meet the needs that established companies miss.  Lone Rangers work especially well in startups or entrepreneurial organizations, and strangely enough are often found in larger corporations.

The challenge for a Lone Range in a larger corporation is that they are often swimming against the tide.  Acting as a Lone Range in a large organization is exceptionally difficult, because unless or until the culture and prevailing processes bend to your will (or you bend to their will) it is difficult to get anything done.  Occasionally a Lone Ranger will succeed in a large organization, or an executive will appoint and sponsor a Lone Ranger when the executive desperately needs a new, innovative product or service.  But Lone Rangers, by their very nature, are lonely, often isolated and unappreciated.

Twelve Angry Men (or women, or both)

The next iteration of innovation in larger corporations is the stage I like to call Twelve Angry Men (taken from the excellent play and movie of the same name).  If you aren't familiar with the movie, it's about a jury brought together to decide the fate of a criminal.  The vast majority of the people on the jury don't want to be there, were coerced into serving and want to resolve the case as quickly as possible.  Only the daring of one juror causes the jury to stop and carefully consider the evidence, eventually leading to acquittal.  In the same way that the jury is brought together, innovation teams are often brought together, but with little preparation, few shared values or common goals and the desire to do the work as quickly as possible.  While collaborative innovation is currently all the rage, collaborative innovation based on teams that don't want to be there, who don't share common values and don't have experience, who simply want to do the work as quickly as possible and go home, doesn't lead to better outcomes.

The Martian

The next iteration or evolution of innovation in a corporation is similar to the book and movie The Martian.  For those not familiar with the Martian, astronauts from several different countries set down on Mars and establish a base.  After gathering scientific information, many of them leave quickly when a storm blows over their base, eventually stranding one of their own accidentally.  The "Martian" as he is called manages to thrive in hostile conditions and is eventually rescued.

The Martian represents the next phase of innovation evolution because placing a base on Mars and sending astronauts all that way represents a significant investment.  It has to be a conscious strategic investment to send people all that way, and in the same manner innovation becomes a conscious, strategic focus.  However, when trouble erupts (like a bad financial quarter or the failure of one new product or idea) the management team pulls the plug, not recognizing that through all of the work innovation has actually taken root.  While many of the innovators go back to their day jobs, some resilient souls remain behind and actually produce good ideas.  These are finally recognized and everyone acts and believes as if this was the strategy all along.

Ocean's Eleven

A parallel track to the Martian can emerge when executives are interested in the outcomes of innovation but not the investment or the publicity.  Ocean's Eleven is a movie about a gang of confidence men and thieves who plot to rob a casino. They do so by publicly fumbling around while at the same time smuggling a thief into the vault and then rushing in as firemen to save the day.

There are plenty of innovation activities that resemble Ocean's Eleven, where much of the work is kept under wraps, using sleight of hand to find resources and funds, and often even the outcome is difficult to celebrate because it was done under cover. 

Independence Day

What we innovators hope for is that innovation will be embraced in the same way that the people of Earth respond to alien invasion in Independence Day.  In the movie, aliens come and attack the Earth, and the people of Earth seem to have little chance to fight off the invasion.  Through insight, pluck, daring and sharing information, they manage to fight off the aliens.  This happens as everyone gets on the same page - they have no choice but to all share the same beliefs and values, to do what has to be done.

While desperation isn't the best driver for innovation success, getting the majority if not the entirety of your organization on board, focused on a common innovation goal is what is going to make your organization more successful and help it win in the innovation wars.

Conclusion

As innovation demand increase, the Lone Ranger model is too isolated, too hit or miss to produce innovation at the pace and size you need.  Twelve Angry Men take too long to coalesce and in some cases may not coalesce at all.  The Martian is a moon shot, and while you need these you need a range of innovation investments and types, and the courage to stick with it in the face of a storm.  The Ocean's Eleven approach is a stop gap, but you can't build on it or expect people to be comfortable doing the work under wraps.  It's only when you have a common purpose and recognize innovation as a tool for survival and eventually thriving that you can successfully innovate.

Which stage of the evolution are you in?  What would it take to get to the next and hopefully more valuable stage? What will it take to get everyone in your company bought in at the level of the characters in Independence Day?
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posted by Jeffrey Phillips at 6:46 AM 0 comments