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Innovation Newsletter from OVO
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Conversations about Innovation
July 2011 - Vol 5, Issue 6
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In this newsletter, we focus on improving the innovation process, by introducing a compelling new innovation platform, by examining the "gauntlet" that ideas have to run and by thinking more broadly about failure. There's something here this month for everyone.

A powerful and surprising innovation platform Have a distributed team? Want to conduct powerful idea generation and prototyping sessions? Want to accelerate innovation and lower costs? We have the platform and process for you.

Improving the idea journey Does it seem like your ideas have to "run the gauntlet"? What you can do to commercialize products that seem as interesting as the original ideas.

Creating a standard innovation framework. Along with Paul Hobcraft of Agility Innovation in Europe, we've published what we hope can become an innovation reference model. I encourage you to check out our thinking, and engage with us to remove some of the mystery that surrounds innovation.

The many types of failureWe all know that "failure" is a part of innovation success, but there are failures and then there are failures. Let's categorize innovation failures and learn which are completely avoidable, and which must be embraced.

As always, feel free to contact us to exchange ideas, ask for innovation help or suggest topics you'd like to see discussed in the next issue.

What your innovation teams face

As innovation becomes more important, it does so in an environment of already heightened expectations and demands. In many businesses, people, teams and processes are working long hours, trying to maintain efficiency and effectiveness. Trying to get together to innovate, especially for a distributed team, is difficult. Traveling to distant locations, where team members meet in the same grey walled cubes or conference rooms barely seems worth the time. After all, even if the team generates good ideas, it often doesn't have the means to prototype the idea or test its effectiveness quickly and easily.

Until today, that is. Yes, I know what you are thinking. A platform that allows a distributed team to meet with little cost or overhead, changes their perspective, helps generate and manage ideas and test those ideas, that sounds like the solution every firm has been looking for. And, we argue, the platform has been there all along, hiding in plain sight.

We have written an article that explains our approach and success using this platform. You can find that article on Innovation Management.

Second Life

The platform we are talking about isn't an idea management tool, but is a powerful IT platform in its own right. No, the platform in question is Second Life, the immersive virtual world typically thought of as a "gaming" platform. What's interesting about Second Life is how well it can be aligned to the needs of an innovation team. Consider:
  • A customizable meeting space - check
  • Easily accessed and secured - check
  • Where anyone can meet and interact, anytime - check
  • Where individuals can interact with each other - check
  • In a space designed to generate more ideas and offer more creativity - check
  • Where ideas can be quickly prototyped and tested - check


What's interesting about Second Life or other immersive experience platforms is that they offer everything an innovation team would like to present to its participants, and those participants can meet as a distributed team in a common space that's intentionally designed to drive creativity and new ideas. Further, with the right team on-board, ideas that are generated can be quickly prototyped and tested by the innovation team, or by others invited into the mix to interact with the prototyped ideas.

Can that work for us?

I know what you are thinking. Sure, that may work for a really hip design firm or a software company, but can Second Life work as an innovation platform for us?

The answer is, absolutely. Many large firms have experimented with Second Life, primarily as a marketing exercise. What has been missed about Second Life is that it is a virtual world, which means you can create meeting spaces that mimic your physical world, or craft meeting spaces that engender more creativity. You can have your team meet live and "in person" or really "in avatar" any time of the day, and they can interact with each other and in the creative space. Second Life has been used to design new hospitals (see the Palomar news story) and by several of our clients to design new physical retail spaces. These aren't hip game players in first person shoot-em-ups, but real business people using a platform to get a deeper understanding of the needs of their customers and prospects.

But wait, there's more

We knew that these distributed teams would be able to create more ideas in spaces that were designed for their needs, in a virtual location that allowed them to interact while still distributed. But what we didn't expect was the power of real-time prototyping and role playing. In the virtual space we were able to develop and prototype ideas much more quickly than we would have been able to in the "real world". We could prototype, gain feedback and make almost instantaneous adjustments. This "real time" prototyping sparked new ideas and brought the team closer to the best ideas much more quickly than we had thought possible.

So, what are you waiting for?

If I were to tell you that a platform exists which can help distributed teams generate more and better ideas in less time and with less cost, test the ideas quickly and obtain feedback, and can be a training or role playing platform as well, you'd probably say "sign us up". That platform exists.

What's more, there's not a steep learning curve or an outrageous expense to get started. You will need someone with Second Life authoring skills and perhaps a facilitator to get started, but your innovation teams can do amazing things using this platform. And yes, other "big" firms like the US Army, IBM and Intel are using Second Life, so you can avoid having to be the first to use what seems like a gaming platform for "real work". Om Malik's GigaOm site recently wrote about the enterprise uses for immersive technologies.

You need to see this in action to fully grasp the possibilities. Contact us if you have questions or would like more information on a platform that can radically accelerate your innovation capabilities.
The innovation gauntlet

If you'll stop to consider the path that many ideas follow in your organization, and the trials and tribulations of idea development and commercialization, you'll soon agree that for many firms, ideas run what can only be described as an innovation gauntlet.

If you aren't familiar with the concept of a gauntlet, let me illuminate you. A gauntlet was used to punish soldiers who were guilty of cowardice or thievery up until the end of the 19th Century. Prisoners and enemy soldiers were made to run through two lines of soldiers who whipped, beat or struck the individuals running the gauntlet. Often, if you made it through alive, all debts were erased. On the other hand, many never made it through.

Innovation Processes

At first, comparing an innovation process to a gauntlet may seem a bit extreme. After all, the innovation path and process in an organization is simply there to validate the best ideas and to improve them, not to punish the ideas or restrict them, right?

A deeper investigation of many innovation processes and idea management methods may encourage you to reconsider this thinking. After all, as an idea moves through these systems and processes, people work to mold and trim ideas to their specifications and needs. Rough edges are filed away. Ideas are constrained by existing products or services. Many different teams with diverse goals and reward structures impact the idea. Suddenly, at the end of the process, an idea that seemed very valuable, that would radically change the status quo in a business, is now a safe, acceptable, me-too product. That idea, while it hasn't "died", has definitely been through the gauntlet.

The deciding factors

Clearly, the concept behind an innovation process isn't to punish the idea, but hopefully to improve the idea and to ensure the firm can commercialize it. But bad outcomes are possible with even the best intents. That's because while the idea was originally generated to solve a customer need or address an emerging business opportunity, the rest of the innovation process evaluates the idea based on existing rules, existing regulations, existing products and existing funding mechanisms. These existing features and attributes whittle away at the idea, "improving" it and ensure it fits within the existing internal frameworks, ignoring the fact that the idea was intended to solve a customer or market need that may, or may not, care about internal politics, funding or decision making.

Starting with the end in mind

Clearly, the firm must be able to commercialize the idea, but the innovation process should take as its first goal that ANY suggested change is considered with the customer need or market opportunity in mind. Does the suggested edit, modification or change improve the idea and ensure the idea can achieve its original value proposition? As decisions are made about internal barriers, constraints and conditions, ideas get watered down. Instead, what we should be considering is how to get the new product or service that achieves the original goals and expectations of the customer as completely and in its entirety as possible.

How to keep a radical idea radical

There are several ways to ensure an interesting, radical idea stays true to its original meaning. None are easy, but the outcome is very important.

First, you can nominate an idea champion. This is a person who actively supports the idea through the entire idea management process. He or she acts as a coach for the idea and a staunch supporter for the original intent of the idea, and fights to retain the original intent of the idea. An idea champion faces two significant challenges. First, as the defender of the idea he or she can become blind to real problems or challenges the idea presents. Second, few people have the skills or mental fortitude to play this role more than a few times.

Next, you can require that any change to idea must be documented. In the documentation it must be demonstrated why the change is necessary and that the change doesn't impact the ability to produce the original intent of the idea. If every team is held accountable to achieve the idea as close to its original concept as possible, then they will reconsider how they evaluate and implement ideas.

Third, you can appoint an executive sponsor for an idea whose responsibilities are to remove roadblocks to the commercialization of the idea in its truest original form. When the idea encounters teams, actions or processes which seek to confine or limits its appeal, the executive can mediate between existing expectations and the best outcome for the idea. A sponsor who hopes to implement the idea in his or her product or service area has a lot riding on the beneficial and rapid implementation of the idea, so this approach is typically the best one.

More refining, less gauntlet

Over time, the best analogy for an innovation process should be "refining" - that is, taking out the dross and leaving an even better, even more valuable idea behind. The gauntlet seeks to restrict or minimize the idea. Refining seeks to burnish and improve the idea, to make it even better than it was originally. That's a concept worth pursuing.

Here's a simple question you can ask yourself about your innovation process: the longer ideas stay in our innovation process, the more ______ they become. Ideally, your firm fills the blank with words like "more valuable" rather than "more incremental".
Cottage Industry

Imagine, if you will, that each state in the United States had its own electricity "standard". You'd need a different plug, adapter or perhaps an entirely different device from state to state. That would make it more likely that electronics firms would focus only on large states, or that some states might have their "own" electrical appliance firms that only worked to their standards. This would mean that options would be limited, and products would be expensive. If this sounds a bit like traveling in Europe, well, you get the point.

Fortunately for us, most large industries eventually coalesce around a standard - the IBM PC standard for personal computers, or the TCP/IP standard for data transmission over the internet, or gasoline burning engines in cars. Standards mean that the products can be scaled up and firms are free to base their designs on a common platform and differentiate in other ways. Consumers know that products that follow the standard are relatively transferable and can be quickly adopted and used effectively anywhere.

So the question we started asking ourselves is: if innovation is so important, why is the approach still so fragmented? Why does innovation lack a common approach? A standard? And without a standard, is innovation still a cottage industry?

Why a standard would matter

We believe that innovation still has a significant amount of mystique attached to it. There's several reasons for the mystique. First, there are a number of competing approaches, pushed by different factions. All of the methods you read about are viable and appropriate based on certain needs and situations, but many of the backers of the methods or approaches argue that their approach is a cure-all for all innovation needs. Second, innovation and its outcomes are tied to the ability of the teams, and the depth of their engagement and sponsorship, at least as much as to any method, so its unclear how much emphasis to place on the method and how much on other factors. Third, innovation is notoriously difficult to measure, and it is hard to ascribe much weight to any input - consultants, methods, teams, circumstances, serendipity.

We believe a collaborative, transparent reference model would solve a lot of these problems. First, such a model doesn't remove the value proposition of any innovation tool or method - those tools or methods could use the reference model as a benchmark and demonstrate the rationale for the differences between them. Second, a transparent reference model removes a lot of the mystery about different approaches and provides one common starting point for any innovation team. Third, a common starting point ensures that more people can gain more experience in a common approach, thus ensuring far more people with experience in a broad innovation set. These factors and more would accelerate the adoption of innovation by more corporations, as the uncertainty and risk falls away, and creates more opportunity for more innovation work, thus benefiting everyone involved in the definition of the reference model.

Collaborative Innovation Reference Framework

To that end, Paul Hobcraft of Agility Innovation and Jeffrey Phillips at OVO Innovation have defined a model we call the Collaborative Innovation Reference Framework. It is our goal to develop this model collaboratively and out in the open. Working with innovation practitioners who are willing to help augment and extend the model, we seek to create a collaborative reference framework for innovation that any firm can adopt, and adapt.

The model is in three parts:
  1. Innovation Business Architecture
  2. Innovation Reference Framework
  3. Innovation Types in Context


Each of the words in the description matter.
  • Collaborative - developed with the input of many
  • Innovation - focused on innovation
  • Reference - the beginning of an agreed standard
  • Framework - not a fixed model, but something to build on

Innovation Business Architecture

From our experience it is easy to see that many firms attempt to add innovation as a "layer" on existing business architecture, without fully understanding the many subtle layers and interactions. In this segment of the model we "peel" the onion to look at the impact of innovation on strategy, people and processes. In this model we conclude by defining a reference framework based on core capabilities.

Reference Framework

Based on the work done "peeling the onion" we identify five "areas" of the business that must be considered for innovation to succeed:
  1. Strategic Context
  2. Trajectories, Discoveries and Insight
  3. Systematic Innovation Process
  4. Go To Market Capabilities
  5. Enabling and Scalable Infrastructure
Strategic context is relatively self-explanatory - what impact will innovation have on your strategies, management imperatives and communications?

Trajectories, Discovery and Insight examines the so-called "front end" of innovation. How does your organization evaluate trends and understand the unfolding opportunities and threats? How does it gather customer insight and assess that insight to identify unmet or unarticulated needs?

Systematic Innovation Process examines the defined workflow that helps your team generate, evaluate and manage ideas effectively. This includes the processes necessary and the people who support and sustain the process.

Go To Market capabilities examines how you convert ideas into new products and how you launch new products in the market.

Enabling and Scalable Infrastructure examines the skills, processes, knowledge, software and other "infrastructure" you need in order to sustain innovation activities and scale the activities to include more people and a greater breadth of ideas.

In any innovation effort your team must consider the strengths, capabilities, experiences and readiness in each of these five factors in order to innovate successfully.

Types in Context

The final component of the model uses the Reference Framework and evaluates a number of innovation "types" or approaches in the context of the reference framework. For example we examine:
  • Business Model Innovation
  • Open Innovation
  • Needs-based Innovation
  • Service/Experience Innovation
  • and others

Within the context of the reference model, to identify which of the five capabilities or focus areas is most important when innovating using each "type".

Conclusion

It's clear that developing a "standard" innovation method or model is difficult if not impossible, but it is also clear that any industry that subscribes to standards, or any effort that aligns to standards is more broadly successful than those that can't define a standard or refuse to agree on one.

Whether you agree with the approach we've established or not, we ask for your involvement, engagement, comments, suggestions and extensions. You can get involved by reviewing the suggested models, providing your comments and suggestions, participating on our wiki site.

In return we agree to republish the model on a regular basis incorporating the ideas and suggestions of others, and you are welcome to use the model within the constraints of the creative commons license attached.

In addition you can read more about the models at InnovationTools.com or InnovationManagement.se.
If you aren't failing, you aren't trying hard enough!

As awareness of innovation improves, most people approaching an innovation effort know about failure and that "failure" is a vital part of innovation. Firms that are intolerant of "failure" are often intolerant of innovation. Firms that embrace a learning methodology and quickly incorporate the learning from "failure" into a new initiative are often very successful.

But the fact is that many firms think of innovation far too narrowly. "Failure" is defined and limited to products that were launched but didn't take root in the marketplace. I'll argue that that definition is far too narrow, and that many innovation failures can be linked back to poor strategy and other management oversights or shortcomings, more so than the failure of an idea.

Five Innovation "Failures"

I'd like to submit that there are at least fives kinds of innovation failure, and that each of these failures has a significant impact on any business. The "failure" we most readily associate with innovation, the failure of a new product or service, is perhaps the most noticeable but perhaps the least damaging!

The five failures are:
  • Markets/Needs we don't notice
  • Opportunities/Needs we notice but choose to ignore
  • Talking about innovation but not innovating
  • Trying to create an innovation but failing
  • Products or services that fail in the marketplace


Let's examine each of these a little more closely.

Markets or Needs we don't notice

This first failure is in my mind perhaps the most important. This is a failure to notice important shifts in your market or important needs and wants in your customer base.

Once established, many organizations become complacent. They forget that they exist to meet the needs of customers. Many organizations seem to believe that customers exist to buy their products. Far too often inertia sets in, certain perspectives are established and assumptions become reality. Few firms do a good job of scouting trends, interpreting the trends and spotting shifts in customer needs.

Compare and contrast Sony and Apple in the late 1990s. Sony had a large consumer electronics division, years of experience in personal music systems (Walkman) and a large base of recorded music. Apple was still struggling to re-establish itself as a PC manufacturer. Yet it was Apple that created the iPod and, more importantly, iTunes, while Sony lost tremendous market share in both electronics and music. Why? Because Sony fell victim to inertia and "straight line" futures. That is, the future needs of customers will look much like the needs today.

This isn't an "innovation" failure, since no new products or services were dreamed up. It is a failure to address important, vital markets. What was missing is any proactive action to investigate trends and customer needs and create new offerings and new markets. This failure lies at the feet of the executives who didn't see or recognize the opportunity.

Willful Blindness

In the first instance, a firm is blindsided because it had no inclination about the value and importance of new needs or markets. Where willful blindness is concerned, a firm simply chooses to ignore shifts in its market, waiting to see what will happen.

The health insurance market is an excellent example of what I'll call willful blindness. Several years ago (Pre-Obama) it was clear that the Republicans were going to lose the White House, and any Democrat that won (Obama, Clinton) would force changes in health care and how it is paid for. Most insurance companies decided to wait and react to whatever happened, fully aware that changes were coming, rather than take a proactive stance that may have allowed them to influence legislation by demonstrating new ideas.

Willful blindness, noticing but not acting, is perhaps the worst failure, but is one that impacts an organization long after the individuals who were leading the company at the moment of decision are gone.

Talking not acting

A third failure point for innovation is the yawning chasm between what executives say about innovation and its importance, and what the rest of the organization does. Far too many firms are guilty of talking the talk but not walking the walk where innovation is concerned.

In a recent survey, over 70% of executives identified, for the umpteenth year in a row, innovation as a top three priority. New research from the NSF found that in 2006-2008 only 25% of manufacturing companies and 8% of service companies reported releasing a new product or service. Either the talk is simply a front for inaction, or organizations aren't listening to their executives.

The problem with this gap is that it creates cynicism. While they may not believe it, employees listen to their executives. If it appears the executive is telling the street and customers that innovation is important, but isn't internally supportive, then cynicism sets in. If the executive is sincere in his or her demands, then clearly the organization can't or won't innovate, which leads good people to abandon ship. This failure is a failure of communication, follow up and transparency.

Trying to create something innovative

I'm willing to wager that in almost every company, someone, somewhere in the organization is dreaming up a new product or service. The barriers and obstacles that get in the way of transforming that idea from a mere concept to a new product or service represent the next failure - the inability to manage and develop ideas.

In what may be surprising news to many people, ideas don't develop on their own, like crops in a field. They need daily attention, care, feeding, research and further development. That means innovation programs need people, and methods and processes. In the absence of these support mechanisms, ideas will die due to lack of attention or poorly defined decision points and processes.

Many organizations encounter this failure, and blame it on the people or ideas, rather than the lack of capabilities and techniques.

Failing in the marketplace

The final failure, and the one that executives are most aware of, is launching a product that fails in the marketplace. Every year thousands of products are launched that don't achieve established goals. Many of those products are pulled from the market within a year of launch.

This is certainly a failure, and an important one. After all, the costs associated with generating and developing an idea, developing the product or service and launching that product or service in the market are substantial. The reasons for this failure are three-fold: either the idea was watered down through the development process (too incremental), or the idea didn't address an important or relevant customer need (didn't solve a need), or the idea missed the market window (a timing problem). All of these are failures, but they are cascading failures based on the other four failures. They demonstrate a poor understanding of the market, or poor innovation methods.

Which failure is the worst?

Most people will identify the failure of a new product or service in the marketplace as the worst failure, given the investment in development costs. I'll argue that the worst failure is not noticing a significant shift or noticing and not acting. While the failure of the market is costly and near-term, it doesn't typically impact the long term viability of the company. Ask Tower Records about missing the integration of music and the player to ascertain just how large a failure it is to miss an emerging market opportunity.

If you'd like to discuss how OVO can work with you to improve your innovation strategies, ideation sessions, innovation processes or software, contact us today at our website or (919) 844-5644 x789.

If you have a topic you'd like to see us cover or a question you'd like to have us address, please let us know via the website above.

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Sincerely,
Jeffrey Phillips
OVO

phone: 919-844-5644 x789