Report 103
Your newsletter on applied creativity, imagination, ideas and innovation in business.
Tuesday, 2 January 2007
Issue 97
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.
HAPPY NEW YEAR!
Best wishes to you and yours for a happy, prosperous and innovative 2007. If you have been thinking about innovation initiatives for your organisation, but have been slow to implement them – then may I suggest you make 2007 the year your firm embraces innovation in a big way? But do read the first article in this first Report 103 issue of 2007. In spite all my enthusiasm for creativity and innovation, they are not right for all firms.
If you are starting a new innovation initiative in 2007 and would like to share it with the 11,000+ readers of Report 103 (over 3,000 subscribers by e-mail and over 8,000 monthly downloads from the web site), tell me about it. Report 103 readers would doubtless be interested in monitoring your initiative as it develops.
If you would like to contribute an article to Report 103, do please contact me. In 2006, we had a number of quality contributions from professors, professionals and post-graduate researchers of innovation and creativity.
To discuss a contribution or sharing your innovation initiative, please contact me here.
IS INNOVATION RIGHT FOR YOUR FIRM?
Interest in innovation continues to grow among businesses. More CEOs than ever are claiming that innovation is one of their top priorities. Journals like Report 103 have been promoting the importance of innovation for a long time. Nevertheless, innovation is not right for all organisations. And this is important. Even though the number of innovation consultants increases daily and idea management solutions are improving all the time (with our Jenni the clear leader for simplicity of use, scalability and speed of results – see www.jpb.com/jenni/ - end of commercial ;-), a great many innovation initiatives still fail. Such failures are, of course, expensive and demotivating; leading to results that are worse than if no innovation initiative had been launched.
Many times, these initiatives fail because they are poorly thought out. But just as often, they fail because the company launching the initiative didn't really want to be innovative. Management was simply seduced by innovation's sexiness.
Let us look at what kind of organisations typically do not succeed with innovation initiatives – and why.
Government Administrations
Although politicians like to push the notion of innovation, most bureaucracies
are not very good at being innovative. There are three reasons for this. Firstly,
most government administrations are tied by rule of law to very strict processes.
As a result, you often see the situation where every employee knows a procedure
is inefficient, expensive and slow; but everyone is required by law to follow
the procedure.
Secondly, people join start-ups or fast growing companies in order to be innovative and reap the rewards of their ideas. People join government administrations, on the other hand, for secure jobs in a safe environment. They know that if they do their jobs competently they can expect a slow, but reliable climb up the organisation chart. In general, they are not keen on change and often believe that 'rocking the boat' may endanger their careers. Often they are right. In other words, civil servants are not generally keen on being innovative and are downright reluctant to share with their superiors a radical idea that could go wrong.
Thirdly, government administrations often have multiple layers of committees that must approve any change – no matter how trivial. Committees – particularly bureaucratic committees – are deadly with creative ideas.
Bureaucratic companies
Many large companies, particularly those in mature industries, are very nearly
as bureaucratic as government administrations. Some are even worse. Companies
which have bureaucratic processes and numerous approval committees should not
waste their time on innovation initiatives. Highly innovative ideas will never
make it through the committees.
Organisations such as government administrations and bureaucratic companies do periodically launch innovation initiatives. However, the result is inevitably the same: the number of ideas generated is relatively small and most ideas will not be particularly creative, although there will typically be a few creative exceptions.
However, as those precious few creative ideas are reviewed by multiple approval committees, they are inevitably rejected. In the unlikely event a radical idea makes it through the various committees, the idea is inevitably much changed in order to reduce risk. And whenever you reduce the risk of an idea, you also reduce its creativity.
Even moderately creative ideas are rejected or toned down. The result is few ideas make it past the committees. Those that do make it are not particularly creative and the result of the innovation initiative is the implementation of a few incrementally innovative ideas.
Regular readers of Report 103 will know that I have no objection to incremental innovation. Indeed, I believe it is much underrated by many of my fellow American and European innovation professionals. However, if you look at the above process, and imagine it implemented in a medium to large organisation, it quickly becomes very clear that the cost of generating ideas, most of which will be rejected; and running ideas past numerous committees in order to implement a small number of incrementally innovative ideas is a highly inefficient process in which the cost savings generated by any idea is less than the cost of processing that idea.
Such bureaucratic organisations, frankly, would do better by not even bothering with innovation initiatives. However, it is not only big, bureaucratic organisations that should be careful about innovation.
Small Family Owned, B2B Firms
Another kind of organisation that probably does not need innovation initiatives
– or which would probably find that such initiatives do not meet with
success - is the small to medium-sized, conservative, family owned B2B (business
to business) firm. In the mid to late 1990s when I was involved in e-commerce,
I worked with a number of such firms in Asia and Europe and a few in the USA.
Such firms, many in their second or third generation of family ownership, are typically built upon reliability and long established business relationships. Clients know precisely what to expect of such firms not only in terms of the product, but also in terms of associated services, delivery, negotiation and every aspect of doing business.
Family owners of such firms fear that dramatic change in their products or processes will scare off their well established clients. As a result, owners are reluctant to implement any kind of change. Indeed, when such firms do innovate, the ideas usually come from their clients..
Owners of conservative B2B firms are not at all like the creative entrepreneurs of Silicon Valley. The former see their firms as reliable, life-long income generators for their families and they view relationships with their clients and suppliers as sacrosanct.
This is not to say that all family owned B2B firms are innovation adverse. Many such firms are highly innovative. Indeed, some have a reliable reputation for being consistently innovative. Also, when management of such a firm is handed down from parent to child, it sometimes happens that the child wants to take the firm in innovative new directions. And thus a firm that has seen little innovation in decades becomes a serious innovator.
Nevertheless, if you run or work in a conservative, relationship-oriented family owned B2B firm, you are probably better off not investing in an innovation initiative. Although such an initiative may well generate good ideas, the chances are that management will not want to implement the best ideas for fear of resulting instability. Moreover, in such firms, the owner manager is often the sole decision maker. If she is not keen on innovative ideas – innovative ideas will not be implemented.
Of course many other kinds of firms are unlikely to succeed with innovation initiatives. Danger signs include lack of top management buy-in, poor communications, highly structured hierarchy, lack of operational transparency and excessive corporate politics.
LIFETIME OF AN IDEA
Thanks to business's current infatuation with innovation, not only is your firm likely to be adopting innovation initiatives, but so are your competitors' firms.
This has a number of implications for your innovation strategy, particularly in terms of new product and marketing innovation.
First consider your firm's innovative ideas:
1. How much of an advantage does the new idea give you over the competition? If an idea could readily be copied by the competition, then you need to push that idea further. Particularly if your competitors are better at marketing than you are.
2. How much of a head start does the new idea give you? Consider: you have a great new idea to implement on your widgets. However, it is clear that the competitors could implement a similar idea within 12 months. That means you need to improve upon your original innovation within 12 months in order to retain a lead over the competition. The faster you improve, the greater lead.
3. How long will it take you to implement your new idea? The implementation period leaves a window during which the competition could launch a similar implementation (either because they learned about your idea or, more likely, because they had a similar idea themselves). What options do you have during the implementation period? For example, consider an innovative series of product modifications. Is it better to take more time and implement all of the modifications in one go; or is it better to implement a few of the modifications at a time and launch a series of improved products? In the first scenario you have the advantage of surprise and perception of greater innovation. In the second scenario, you give the impression of continuous innovation and give less time for the competition to launch their own innovative improvements.
4. At what time do you announce your innovation? Traditionally, innovations are announced after they are implemented. The theory is that this prevents the competition from copying your idea. But what if the competition has a similar new product idea and announces their innovation before you have launched your new product? In some cases it might be better to announce your new product first – before you launch it – in order to get the 'first mover's advantage' (ie: being identified as the innovator behind a new idea or new product). If you run a good marketing machine, announcing the product to gain first mover's advantage may be worth it – even if it gives your competitors forewarning of your innovative ideas.
5. More broadly, how do you market and promote an innovative new product or product improvement? If you use the same marketing communications tools, themes and approaches you have used for years – there is a danger that your customers will not recognise the value your innovative new product offers. Hence it is critical to be as innovative in marketing your new product as you were in developing your new product.
Second, consider the competition's ideas. After all, if they are as into innovation as you are, they are also working on innovative new ideas. And probably the most annoying experience in business is to be out-innovated by the competition.
1. How do you react to your competitor's innovative new product ideas? You have three choices:
a) Try to copy their idea. This can backfire, however. Market leaders do not copy. They lead! And being a copycat does not give you first mover's advantage – unless you have an excellent marketing communications team.
b) Ignore their idea and argue that your existing product is better. Sometimes, telling clients that the new idea is not good and that your more established product is a better buy can be a safe bet. (Indeed, one of our competitors in idea management software provision has tried such a tactic; and because they have been around longer than us, they have had some success with it). However, this can also backfire, particularly if used more than once or twice. If your customers see that your competitor is consistently being more innovative than you, they will eventually take a close look at the competition's offering. And may will buy into that offering.
c) Innovate an even better product. This is the most challenging, but probably best option. If your competitors develop a better product than what you offer, make your product even better than theirs. A structured idea management process that focuses on continuous product innovation and improvement (among other kinds of innovation), is necessary to keep ahead of an innovative competitor.
2. How do you react to your competitors' reaction to your idea? This may sound convoluted. But think about it. You launch an innovative new product. Your competitors could take any of the actions described above. Have you got a plan to react to their reactions? An innovative plan, of course, is the best solution. Running ideas campaigns or ideation events on how to react to various scenarios can be an effective means of preparing your firm for whatever your competitors might do.
3. How will you react if your competitor has a killer idea, an idea so innovative it transforms the industry and leaves you looking obsolete? This happens. Digital photography has been disastrous to film firms like Kodak and Fuji although, to their credit, both have succeeded in adopting digital photography – but not without a lot of pain, loss of income and loss of jobs along the way.
Indeed, this last point is an excellent basis for an ideas campaign, brainstorming event or other ideation exercise. Ask your employees, “What innovative new product might our competitors develop that would be our worst nightmare?” Not only do you generate ideas about coping with radical innovation from your competitors, but you also may generate that radical idea first – and become your competitors' worst nightmare.
The best long term approach, of course, is a strategy of continuous innovation. Once you have decided to run with an innovative new product idea, it is already time to start thinking about further improvements and new products. Likewise, you should be focusing on constantly improving your internal processes and marketing efforts. After all, the most sustainable form of innovation is continuous innovation.
JENNI IDEA MANAGEMENT 3.0 UPGRADE
We are currently testing Jenni idea management software service version 3.0, which should be installed on our clients' implementations by the end of the month.
Version 3.0, like all our upgrades, is based on feedback from Jenni users and business partners. Improvements in version 3.0 focus on several areas:
1. Improved usability. Users of Jenni inevitably remark on how intuitive Jenni is. Nevertheless, they have given us feedback on how to improve usability – and we have listened. Navigating in Jenni 3.0 is easier than ever before. That means you can quickly find and use the tools you need to accomplish innovation tasks.
2. Improved functionality for large organisations. We've added a number of features that facilitate managing ideas in ideas campaigns that generate hundreds or even thousands of ideas. We have run tests on an ideas campaign with over 2000 ideas and found that the new functions make it easy to manage those ideas quickly. We have also tested Jenni with a user base of 180,000 users and again, Jenni copes very will with no discernible slowing of performance. Moreover, when we ran a programme in Jenni to install the 180,000 users, Jenni was able to install them in about 1 minute. The programme in question involved some 900,000 database queries and millions of transactions.
3. Improved information delivery. Jenni 3.0 makes it remarkably easier to compare ideas, determine income potential and even measure RoI.
4. Team management. Jenni's new team management tool allows you to quickly create and update teams for idea review, ideas campaign management and more. As a result, it is a snap for your managers to manage – and get results from – massive ideas campaigns involving tens of thousands of users.
5. Improved back-end efficiency. A big part of the upgrade has involved improving the back-end efficiency of Jenni. The result is better and faster performance.
If I may be immodest, we are very pleased and more than a little proud of Jenni 3.0. More importantly, we are sure that you will find Jenni to be the easiest to use, most cost effective idea management solution available anywhere. Whether you need an effective idea management implementation for 100 users or 100,000 users – Jenni can help.
Want to know more? Contact me directly on +32 2 305 6591. Better still, go to www.jpb.com/jenni/contact.php – and fill in the form or contact your nearest sales representative. For more information about Jenni, visit http://www.creativejeffrey.com/jenni/
LATEST IN BUSINESS INNOVATION
If you want to keep up with the latest news in business innovation, I recommend Chuck Frey's INNOVATIONweek (http://www.innovationtools.com/News/subscribe.asp). It's the only e-newsletter that keeps you up-to-date on all of the latest innovation news, research, trends, case histories of leading companies and more. And it's the perfect complement to Report 103!
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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