Report 103
A weekly newsletter on creativity, ideas, innovation and invention.
Tuesday, 8 June 2004
Issue 20
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, idea innovation or invention please feel free to forward it to me for potential inclusion in Report103. Your comments and feedback are also always welcome.
THERE ARE NO BAD IDEAS: JUST IDEAS THAT DON'T WORK
I have written at length about the value of ideas. Thus far, I have focused on successful ideas. But unsuccessful ideas are extremely important too; not least for the amount of damage they often cause. Damage not from the ideas themselves, but from how badly organisations often deal with unsuccessful ideas.
Probably the most famous unsuccessful idea in recent business history was implemented by Coca Cola almost 20 years ago. Losing ground to Pepsi and seeing their new diet cola, with a different flavour than the traditional Coca Cola, gaining in popularity, Coca Cola decided to update the taste of their world famous drink. Being a huge multinational, they put their best food scientists on it, experimented thoroughly and conducted market research in a big way. By the rules of modern marketing, they did everything right.
But the idea failed miserably. Coke drinkers were more emotionally devoted to the old flavour than anyone had realised and complained bitterly. Sales of the new coke bombed.
Fortunately, Coca Cola executives of the time were a bright bunch (and presumably still are). They promptly admitted their mistake and relaunched the original Coca Cola alongside the new drink. Sales of the new drink fell sharply and sales of the original Coca Cola soon started growing again. There is a more complete, yet still concise description of the new Coke launch at http://www.snopes.com/cokelore/newcoke.asp.
In spite of their failed idea, Coca Cola did two things right, thus minimising their losses. Firstly, they realised that their idea did not work and dumped the bit that failed which, it is important to note, was the dropping of the traditional Coca Cola, not introducing a new drink. So, they relaunched the original drink.
When an idea looks good and we implement it, it is easy to become overly attached to the idea. When it does not work, and analysis shows that it is unlikely to do so, it is hard to drop the idea. It is harder still when you have invested money in the idea. There is the temptation to hold out in order to recoup your investment. Still, when an idea is not working and evidence shows that it will not start working, it is best to drop the idea and count your losses. Hanging on will only cost more. Imagine the losses to Coca Cola had they stubbornly refused to relaunch the original Coke and had only sold the new Coke.
The second thing Coca Cola did right was to learn from their mistake. They learned how amazingly devoted their customers were to the original Coke. They learned that the flavour of the drink was so sacred, in most people's minds, that they would not change to an alternative – even if the alternative tasted better. Doubtless Coca Cola learned a lot more which they presumably have been implementing in their marketing strategy since.
Indeed, Coca Cola came through their failed idea fiasco so impressively that there have been rumours that it was all a grand marketing campaign. I doubt that is true. But, over the long run, I would not be surprised if Coca Cola gained more from their unsuccessful idea than they lost. But this comes from handling a failed idea very well indeed.
It is a cliché to say that we learn more from our mistakes than from our successes. But it is entirely true. When an idea fails, it is important to learn why. Sometimes it is obvious, as was the case with Coca Cola. Other times it is not so clear. Often, we are too close to an idea to see why it will not work. In that case, it is useful to bring in an outsider to look at the idea and determine what went wrong. With small personal ideas, a spouse, friend or relative can be useful. For big corporate or organisational ideas, a consultant may be necessary.
In an organisation, it is important not to punish the person responsible for the unsuccessful idea. It is human nature to want to lay the blame for mistakes on someone else. And it all too often happens that the person who proposes an idea that fails is reprimanded. Sadly, such a reprimand is all to likely to make her reluctant to propose new ideas to the organisation. As a result, the organisation looses out on future ideas that the this creative thinker would otherwise have proposed.
Moreover, in any organisation, acceptance of an idea usually requires a number of people (no one person at Coca Cola simply said, “let's launch a new version of Coke,” and launched it all by herself). Implementation requires even more people. Thus the originator of a failed idea can hardly be held exclusively to blame.
It is better to involve the originator in the evaluation of why the idea failed. Compliment the her for the idea and encourage her to continue to contribute ideas. Chances are, another idea – from the idea originator - in the near future will more than make up for losses from the failed idea.
If your firm has implemented (or is implementing) idea management, it is extremely useful to archive with a report all implemented ideas generated via the system. In time, the archive will be a wonderful tool for learning what kind of ideas work, what kind of ideas do not, how failures were turned into successes and more. You probably will not be surprised to learn that Jenni idea management includes an archiving tool as a standard component of the system. To find out more about Jenni, visit http://www.creativejeffrey.com/jenni/.
LEVELS OF CORPORATE INNOVATIVENESS
In my experience there are five broad levels of innovativeness in business.
1. Hierarchical structure
The hierarchical firm is typically run by a family patriarch who holds all the
power and makes all the decisions. Any new ideas need to be approved by the
patriarch before being implemented.
Larger hierarchical firms have several levels of management. Communication must go from one level to the next according to specific rules. If someone within the firm has an idea, she must sell it to her manager, who must sell it to her manager and so on, until someone sells idea to the patriarch. Not surprisingly, few ideas make it this far. Moreover, the substantial amount of staff time necessary to sell an idea up through the firm means that ideas are expensive and unless the return on the idea is significant, it probably is a waste of time trying to sell an idea to the top. Hierarchical firms are usually the least innovative firms.
The irony is that a hierarchical firm is often highly innovative in its early years, because it is generally founded by a single entrepreneur with lots of ideas and bundles of enthusiasm. However, as time goes on, the firm grows and the founder is obsessed with retaining control. Moreover, when he retires, he generally hands the reins of the firm over to his eldest son,who is not necessarily the best person to run the firm and, since he achieved his position by blood rather than quality of work, is often insecure at the top and keen to retain total power in order to hide his weaknesses.
Firms like these are still very commonplace in Chinese Asia (ie. Parts of Asia where the ethnic Chinese generally run businesses: such as China, Singapore, Taiwan, Malaysia, Thailand, etc). This is because firms are often started by immigrant Chinese entrepreneurs who maintain Chinese social structures within the firm. So ingrained is such thinking that when I ran a firm in Thailand, I had to really push staff to share their ideas with me and give me honest feedback on my ideas. Otherwise staff assumed our company was like most other family owned firms in the country and therefore assumed I had little interest in their ideas or opinions. They were wrong.
2. Horizontal structure
Horizontally structured firms also have a hierarchy, however, communications
are horizontal in that people can share ideas with other people throughout the
firm without having to go through strict communications channels. This facilitates
the sharing of ideas, discussing issues relevant to the firm and ensures that
people in the firm have a better overall picture of how the firm operates. However,
such firms do not have any kind of idea management structure in place. As a
result, when someone has an idea, she must make an effort to sell it to the
decision makers – and there may be several - who can implement the idea.
Moreover, very few firms are truly horizontal in structure. Hence a big idea will still probably have to be sold upstream to the final decision maker
Clearly, an idea in a horizontally structured firm has a much better chance of becoming reality. However, there are still a number of obstacles that must be overcome along the way. As a result, a large number of ideas get lost and ideas are still relatively expensive.
3. Idea Friendly structure
Firms which do not actively encourage ideas, but which are friendly to ideas
can be considered idea friendly. They usually have some kind of rudimentary
idea flow system in place. Typically, this involves one person taking charge
of ideas for the entire firm in small to medium sized firms; or one person in
each department taking charge of ideas in medium to large firms. Staff in an
idea friendly firm know that if they have an idea, they should give it to the
idea person. The idea person will regularly review all ideas and take the better
ones to a committee which will review them and decide which to implement and
how.
Idea friendly firms allow people to propose ideas relatively easily and painlessly. Moreover, good ideas have a good chance of being implemented. However, because idea management has not been fully implemented across the firm, there are weaknesses in idea flow. Importantly, in larger firms, people can only submit ideas relevant to their work, people do not know what other ideas are being submitted and people cannot collaborate on ideas. Consequently, ideas are not as developed as they could be, similar ideas are often submitted simultaneously – adding to the workload of the ideas person – and numerous meetings are required to evaluate and launch an idea.
So, an idea has a good chance of being implemented in an idea friendly firm, but the cost per idea could still be improved and the system is less efficient than it could be.
4. Innovation driven firms
Still relatively rare, innovation driven firms are organisations which realise
that their prime competitive advantage is their innovative potential. Innovation
driven firms typically share these features:
- innovation is widely promoted internally and externally
- a well thought out and structured idea management system is in place and operational
- there is a high trust in management
- good ideas are rewarded
- people within the firm are very positive about the firm
Thanks to a structured idea management process, ideas in firms like these can be seen by all, are reviewed relatively objectively and can be implemented efficiently. This brings the cost per idea to a very low level. Even ideas which save a few thousand Euro can be implemented and can bring benefits to the firm.
Because staff are actively encouraged to submit ideas to help the firm grow, they also become enthusiastic about their employer and have a pride in taking such an active part in the development of the firm.
5. New micro-companies
Companies with fewer than ten employees are usually relatively new start ups.
They may be highly innovative, they may not. It largely depends upon the founders.
Nevertheless, in the early stages, communications are generally good, everyone
knows each other and many have a stake in the firm. Hence ideas can be shared
and implemented quickly and easily. In this respect, the cost per idea is very
low and the efficiency of implementing and idea can be very high.
However, as micro-companies grow, they will eventually become one of the four types of firms described above.
Where does your company fit? Where would you like it to be?
THE UNINNOVATIVE CANDIDATE
Watching the American election preparations, one cannot help but to notice that President Bush's poll numbers are falling as one problem after another is revealed with respect to Iraq, Al Qaeda and all that.
As the race currently stands, it looks like John Kerry may very will win by the simple virtue of not being George Bush. That's all fine and good, but some 290 million Americans can make the same claim.
Clearly, Mr. Kerry could do with a more innovative election strategy. Otherwise, he will have to rely on further blunders in the Whitehouse and continued dissatisfaction with President Bush. Needless-to-say, it would only take a bit of good news to put President Bush back in the public's good sight. Then, Mr. Kerry will have lost.
This lack of innovation is a shame, for Mr. Kerry is an intelligent, well travelled chap who doubtless has a lot of good ideas. I'd like to see him using those ideas to brand himself better – if only to make the US election more interesting.
Incidentally, if you see this Mr, Kerry, we'd be happy to provide you with some innovation consultancy at a 10% discount!
Happy thinking!
Jeffrey Baumgartner
