Report 103
A weekly newsletter on creativity, ideas, innovation and invention.
Tuesday, 27 April 2004
Issue 14
Hello and welcome to another issue of Report 103, your weekly newsletter on Creativity, ideas, innovation and invention.
As always, if you have news about creativity, please feel free to forward it to me for potential inclusion in Report103.
BIG AND LITTLE INNOVATION
Since “Innovation” became a sexy word for big business, companies have been tripping over themselves to become more innovative. Some merely take a marketing approach and add a slogan that emphasises innovation without bothering to actually become more innovative. Others struggle without succeeding.
One reason is that most of these companies are looking for a big innovation: that earth shattering new product that will leave the competition in the dust. Such companies overlook small innovations which bring incremental additional income or – more likely – result in relatively small but nevertheless significant cost savings.
Fortunately, the solution is simple: recognise the value of little ideas. Consider what is probably the world's most innovative car manufacturer. It is not BMW or Porsche (although they make wonderfully engineered cars). Rather it is Toyota.
Toyota's innovations are generally small and are often about improving the efficiency of their just-in-time logistics (that is getting parts delivered to factories just before they are needed, thus reducing storage costs). But the results have been very big: Toyota is consistently one of the most – if not the most – profitable car companies in the world year after year.
Toyota also boasts one the longest established and most effective idea management systems around. Every year since the 1970s, the company has received over a million ideas from its employees. Over 80% of those ideas have been implemented. Toyota has not only created a culture which actively encourages everyone in the organisation to contribute ideas, but also has got people thinking about the right kind of ideas for the company.
DaimlerChrysler is another company that has come to appreciate the value of many small ideas. In 2001, their web-based idea management system received some 69,000 suggestions – which resulted in a total savings of 62 million Euro.
Clearly, the lesson to be learned here is that you should not put all your innovative effort in finding that next earth shattering idea. Even if you find it, you may not recognise it (see article below). Rather focus on maximising the overall innovative environment of your company.
There are three steps to achieve this.
Firstly, you must actively encourage and promote innovation across your entire organisation. Everyone from the mailroom clerk to the vice president of innovation has ideas about improving processes in the company. Encourage them to share those ideas. This is not easy and requires total commitment from top management. (This topic will be covered in more detail in a future issue of Report 103. Meanwhile, see previous issues of Report 103 for articles related to developing a more innovative company: http://www.creativejeffrey.com/report103/archives.php)
Secondly, you need to implement an idea management system that captures employees' ideas and provides tools for evaluation, implementation and, ideally, collaboration. I of course believe our Jenni enterprise idea management solution is the best (http://www.creativejeffrey.com/jenni/) – but there are other good tools in the market as well.
Thirdly, you need to implement publicly the ideas that come in. Amazingly, we have seen companies implement suggestion box schemes and idea management solutions; but who either never implement suggestions or are so secretive about the implementation that no one knows about it. As you can imagine, if employees do not believe you will implement their ideas, they will soon learn not to share those ideas with you any more.
If you would like more specific advice on how to make your company innovative one, call or e-mail me for a no-obligation and completely confidential initial discussion.
(This article was inspired, in part, by an excellent article: Special Report Business Innovation in the Economist magazine; 24-30 April 2004 issue; also on line at http://www.economist.com/business/displaystory.cfm?story_id=2610485.)
MARKETING BY THE NUMBERS
In recent years, marketing departments of most large companies have become so analytical, they have lost the ability to be truly creative. As a result, when research and development departments come up with innovative new products, marketing departments fail to market those products in an equally innovative ways. Worse, marketing departments, relying on customer surveys, focus groups and customer relationship management (CRM) tools, are often unable to see the new products' potential. Thus innovative new products are not even brought to market by their developers.
Rather, nubile small companies soon discover the same products and, lacking the budget for sophisticated marketing tools, bring those innovative products to market successfully.
Likewise, when large companies promote less than innovative products, which are nearly indistinguishable from the competition's, they are marketed very much like the competition's. After all, the marketing departments of both companies are full of people with MBAs from the same schools, using similar market surveys, focus groups with similar participants and identically specified CRM tools.
In large part risk is to blame for this unfortunate state of affairs. The cost of launching a new product is so high today, that large companies are fearful of failure. By relying on established marketing tools, companies can be reasonably sure that new product launches will not fail. However, they can also be reasonably sure new product launches will not be wildly successful.
Great products, product launches and marketing campaigns cannot be designed by focus groups. They cannot be tested against similar campaigns (which do not yet exist). They cannot be constructed by CRM tools. They can only come from inspiration, instinct and daring.
This is not to say that marketing tools are no good. Indeed, they are critical. Likewise, those MBAs that litter marketing departments do have value. However, if companies want to launch exciting new products effectively; if they want to truly differentiate their products from the competition's similar products; companies need to be every bit as innovative in their marketing departments as they are in their research and development departments.
This can be done by bringing to the marketing department people with diverse experience and training to complement the existing staff. It can be done by encouraging people across the company to contribute ideas about marketing products (which can be readily facilitated with an idea management tool or suggestion box actively soliciting marketing ideas). Most importantly it can be done by sometimes running with a wild and crazy marketing idea just because you – as the manager in charge – feel in your heart that it's a great idea.
Sometimes such an approach will fail. But sometimes it will result in the kind of smashing success your competition can only dream about.
It is a risk you have got to take.
ENVIRONMENTAL INNOVATION AT XEROX
Last month (9 March: see http://www.creativejeffrey.com/report103/archive.php?issue_no=20040309), I told the story of Xerox's Palo Alto Research Center (PARC) which devised some brilliant products, but failed to bring them to market. So, it seems only fair to look at a recent innovative success at Xerox – focusing on small innovations.
Xerox established the Earth Awards programme, which was an ideas campaign to encourage “innovative ideas to help protect the environment and improve the performance of the company's operations.” The result? In 2003, the company saved US$5.5 million.
This just goes to show how a focused ideas campaign can result not only in substantial savings to the company, but also a strong pro-company team spirit that benefits the organisation in many ways.
Read more about Xerox's Earth Awards programme and results here.
AVOID BEING OFF-SHORED: BE INNOVATIVE
An interesting article in InformationWeek argues that if you fear your job may be outsourced overseas, you should reinvent yourself as being more innovative. This makes sense. The argument behind sending jobs overseas is that undemanding, to-order work is done in low cost-of-labour countries while the more demanding, innovative work should be done at home. If you can demonstrate you are part of the innovative workforce, you should be able to go far in securing your job for the long-term future. The article is oriented towards IT people, but contains valuable advice for anyone in fear of being off-shored. http://www.informationweek.com/story/showArticle.jhtml?articleID=18902816
Jeffrey Baumgartner
