Report 103

Your newsletter on applied creativity, imagination, ideas and innovation in business – delivered to your e-mail box on the first and third Tuesday of every month.

Tuesday, 21 June 2005
Issue 60

Hello and welcome to another issue of Report 103, your fortnightly newsletter on creativity, imagination, ideas and innovation in business.

As always, if you have news about creativity, imagination, ideas, or innovation please feel free to forward it to me for potential inclusion in Report103. Your comments and feedback are also always welcome.

Information on unsubscribing, archives, reprinting articles, etc can be found at the end of this newsletter.

CREATIVE INVESTMENT: SPREADING THE CREATIVITY

I saw the latest Star Wars film, Revenge of the Siths, the other day. The special effects were stunning. The film was rich with all kinds of realistic inventions, floating vehicles, spaceships, weapons and much more. Moreover, the detail – down to the mud stains – was incredible.

Sadly, the story, plot and characterisation all lacked the creativity of the special effects. And while I was overwhelmed by the special effects (I'm one of those rare birds who sits up at the front of a cinema so that the screen fills my field of view and I can admire the detail work), I was actually bored by the film itself.

The problem with Revenge of the Siths is that George Lucas and company invested the bulk of their creativity in the special effects, rather than in the story and character development. In the end, of course, Mr. Lucas will make sacks full of money on his latest film – so it can hardly be classified as a failure. But it could have been so much better.

Poorly invested creativity is a problem in business too. While many firms invest creativity in developing new products and services, they often focus the creativity on a single aspect of their product: cool design but dull functionality; dull overall concept but innovative detail work; or innovative product but lacklustre marketing campaign which fails to promote product adequately.

In industry, two examples come to mind of products which demonstrated a great deal of creativity poorly invested in one aspect of the product development. Both are now defunct European car manufacturers: Daf and NSU.

Daf was a Dutch manufacturer of cars and trucks – and they still make highly regarded trucks today. In 1959, Daf introduced their first car and it featured their highly innovative Variomatic automatic transmission. Without going into excessive detail, a typical automatic transmission includes 3-5 gears and a torque converter which “feels” the torque going from the engine to the wheels and upshifts or downshifts gears appropriately. The Variomatic transmission, on the other hand, comprises two cone shaped gears and a belt that runs between them. The Variomatic automatically selects the best position of the belt between the two gears for optimum efficiency. The result is a phenomenally smooth automatic transmission Moreover, it was far more efficient than automatic transmissions of the time.

Unfortunately, while the Variomatic transmission was – and still is – a very innovative and efficient approach to automatic gearing, it was always Daf cars' main innovative feature. So, while potential buyers may have been intrigued by the Variomatic transmission – many were not compelled enough by the rest of the car to buy one. Daf was eventually bought by Volvo.

NSU was a well established manufacturer based in Germany. They started producing cars in the late 1950s and introduced the first Wankel rotary engined car in 1960. The rotary engine uses a huge, fast moving rotor where normal cars use pistons, to move the car.

NSU made the same mistake as Daf. They invested too much of their creativity on one component of their product: the engine. And while the Wankel engine theoretically is more efficient and simpler than the piston engine, NSU did not focus enough on quality control and so their motors were notoriously unreliable. Add the fact that cars that were otherwise uninnovative, and it is understandable why the public did not buy up NSUs in droves. Sadly, when NSU did put together an all round innovative car – the then futuristic Ro 80 launched in 1967 – they still did not put much effort into the quality control of their Wankel engines. As a result NSU did not make money on their car sales and were eventually bought by Volkswagon.

The lesson to be learned here – if you are not George Lucas with a successful film franchise behind you – is that when launching new products or services, you need to invest creativity across every aspect of the product development cycle: from initial concept, to pre-implementation development (concept, prototype, market research, trial runs,etc) to development and even marketing. Yes, marketing is critical too. After all, if you have the most innovative product in the world, but market it badly, you will never sell it. Indeed, 3M's post-its almost didn't succeed because the marketing team used their traditional industrial adhesive marketing approach to market their new Post-its. It was only when a new team introduced an innovative marketing approach that Post-its took off.

Needless-to-say, once the product hits the market, you cannot stop your creative investment. You need to continually improve your product and the marketing of your product to ensure sales growth.

Sticking to the motoring industry, two examples of companies that have successfully invested innovation are Toyota and Citroen. Toyota cars may seem less than inspiring to motoring aficionados. But, over the years, Toyota have introduced their fair share of innovative cars and car features– generally targeting families, young people or other groups. More importantly, Toyota have continually invested in all aspects of their product development, from designing competitive cars - that appeal in terms of practicality and reliability rather than sexiness and outright performance – to devising and improving the just-in-time manufacturing process.

Citroen has not been as successful as Toyota, and they are all but unknown in the US market. But, until they were bought by Peugeot (also not well known in the US market), Citroens were highly innovative cars designed by sculptures and engineered by creative engineers. Citroens were always stunning looking cars with incredible suspension systems and quirky functionality. Although Citroen was eventually bought out by Peugeot, Citroen is still a successful brand and part of their continual success is the result of their innovative history. Sadly, however, Citroens now are not as exciting as they were in previous decades. We shall see how this affects their future success.

The lesson is clear. If you want to reap the rewards of innovation, you have to make a creative investment across the product development cycle.

In case you are interested, examples of Science fiction films which invested creativity better than Revenge of the Siths, include: 2001: a Space Odyssey, Forbidden Planet, Dark City and – of course – the original Star Wars film.

CREATIVE INVESTMENTS: SOME BASIC CALCULATIONS

Creative investment in a project includes several cost points. The main one being people. Breaking them down, we get...

Project workers: The main creative investment in any project is staff time invested by the project workers in devising, developing, testing and implementing ideas. Very rarely can a good idea be implemented immediately. Often there is a need to develop and test ideas. For example, if a coffee mug designer has the idea to replace the traditional coffee mug handle with a knob, she will probably need to draw up some examples to see how the knob looks as well as make some prototypes. Very likely she will find that it is very hard not to spill a knobbed coffee mug when you hold it by the knob. Hence the idea must either be further developed or dropped all together. This testing and revising of ideas takes time.
Management approval: Most project teams must take their projects to senior management for approval. Even autonomous project teams will normally want to take radical ideas to top management to ensure their backing. Moreover, when innovation new concepts are proposed, it often takes managers longer to analyse the new ideas and approve them. This is because managers may be reluctant to take on creative risk (see below) or simply because an innovative new product or feature needs to be analysed in a different way than in the past.
Testing: Occasionally, a new idea is so obviously brilliant and a company so dynamic that a bold new idea can be developed into a bold new product and launched immediately. Very occasionally. More often, new ideas need to be tested via prototypes and market research. Sometimes legislation or ethics demand testing for safety or meeting specific industry standards. Testing is often carried out by outside suppliers who specialise in such testing.
Consultants, trainers and other outside thinkers: Consultants and other service providers can often bring new ideas to projects as well as train project workers to be more creative. Nevertheless, they do add cost to projects.
Tools and facilities: Tools such as Jenni idea management (http://www.creativejeffrey.com/jenni/) which solicit, capture, evaluate and implement ideas generally improve the cost effectiveness of capturing and evaluating new ideas. Nevertheless, there is a cost investment in such tools. Likewise design tools, creativity helpers, drawing paper, modelling clay, meeting facilities and other tools and facilities are necessary for developing creative projects.

Before you panic and decide you cannot afford the creative investment necessary to devise and develop innovative projects, bear in mind the rewards, which in business is usually increased income which comes from either or both of these sources:

Increased revenue: an innovative new product should result in increased revenue as your firm earns more money from selling a product the competition cannot match. If it is an all new product, there is a possibility of cornering a new market. If it is an improved version of an existing product, there is the possibility of capturing more market share as customers see your product is so much better than the competitors'.
Cost savings: very often, the benefit of creative ideas is not increased income, but reduced costs. If you can cut 10% from the cost of manufacturing your product, that can result in a 10% increase in the revenue generated by the product or the possibility to reduce pricing and undercut the competition – or a combination of the above.

If additional creative investment always resulted in proportionately increased income, the investment decision would be any easy one to make: invest as much as you can. Unfortunately, creative new ideas also carry a creative risk. Sometimes ideas are too radical for the market place. Sometimes, the creative investment is too focused (see above article). Sometimes a concept that works well in the prototype does not work so well in practice. Likewise, a cost-cutting idea may prove more complicated – and thus more costly – to implement and maintain than predicted.

As with any investment, creative investment carries a risk which must be analysed accordingly. Unfortunately, the most radically creative ideas not only have the greatest profit potential, but they are also the hardest to analyse as there are few if any comparable predecessors that can be used as a basis for measuring income potential.

We'll look at analysing creative risk in a future issue of Report 103. But I personally recommend taking the risk if the rewards are worth it and the consequences are not devastating. But if things go wrong, don't blame me!

JENNI VERSION 2.1 OUT NOW

Jenni version 2.1 includes a few new features that enhance usability.

Idea search: Jenni now boasts a more sophisticated search function that allows you to locate ideas by key words or phrases in the idea or the title of the idea.

Picture upload: Jenni now allows users to upload digital images that will appear above the idea. Although Jenni has always allowed users to upload attached files including images, the uploaded files have always been attachments whose links users click on to see. Now an image can appear with an idea.

Genius Directory pictures: Jenni's genius directory is a directory of all users of your Jenni implementation. The Genius Directory includes basic information about users together with links to their most recent ideas. It is a great way to learn more about – and network with - people who submit great ideas. With version 2.1, users can upload pictures of themselves to the Genius Directory.

User search: Jenni's genius directory, user management, campaign participation and other user interaction features can all now tap into Jenni's user search function which allows you to search for people by name, surname, department or location. This not only allows you to find people more easily, but also allows the manager of an ideas campaign to monitor innovation performance by department, location or individual.

By the way, because Jenni is a virtual software hosted on our servers, existing clients will get the upgrade installed automatically over the next two weeks – at no additional cost.

For more information about Jenni idea management, please visit http://www.creativejeffrey.com/jenni/.

INNOVATIVE CUSTOMERS DESIGNING THEIR OWN PRODUCTS

The Observer newspaper ran an interesting article this Sunday on customers who design their own products. It includes case studies on mountain bikes, electronic games and more. Read it at http://observer.guardian.co.uk/focus/story/0,6903,1509759,00.html

NEW SALES PARTNER IN NEW JERSEY

Also working with us is Dan Kenyon, president and founder of Gray Hare Sales, a New Jersey, USA based sales consultancy. Gray Hare Sales and Consulting has a multi-year history providing business consulting by developing sales and marketing strategies that help our customers grow their business.

Dan will focus on developing the New Jersey and New York markets.

For more information about Gray Hare Consulting, please visit http://www.grayhareconsulting.com/ or contact Dan on +1 732-868-1139.

PARTNERING OPPORTUNITIES

We work with a number of partners around the world in order to sell Jenni and, more importantly, ensure our clients receive a high standard of service.

We are specifically looking for innovation consultants and trainers in the USA and Canada who could provide support and training on a contract basis. Note this is not an employment offer. We are looking for small firms and freelancers.

I am also always interested in sales partners who can bring Jenni to their own markets (we have no in-house sales team and work exclusively with partners) as well as other creativity and innovation professions with whom we can work to mutual benefit.

If you like the idea of partnering with us, tell me about what yourself and/or your organisation.

Happy thinking

Jeffrey Baumgartner

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Report 103 is edited by Jeffrey Baumgartner and is published on the first and third Tuesday of every month.

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