Report 103
Your newsletter on applied creativity, imagination, ideas and innovation in business.
Tuesday, 18 November 2008
Issue 139
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.
INNOVATION STRATEGIES FOR A RECESSION
As the world dips into what is now being described as the worst recession since the 1930s, many businesses are revisiting their innovation strategies. Some, sadly, have decided to drop innovation activities all together. This strategy will only work -- and to a limited extent at that -- if their competitors adopt the same strategy. On the other hand if a company stops innovating while one or more of their competitors continue to do so, it's clear who will come out of this recession more successful.
The most obvious innovation strategy for hard times is a classic one: cutting costs. Indeed, we (as an idea management service provider) have seen a growth in business this year from companies investing in cost cutting innovation. After all, innovation is not exclusively about sexy new products and services. It's also about operational and logistical efficiency. But there are other approaches that should be included in your recessionary innovation strategy. Let's look at some of them.
1. Promoting Your Product's/Service's Value in a Recession
The very first thing you need to do is to communicate to your clients how important your product or service is and how buying from you will help your customers survive the economic slow down better than not buying from you. If your customers are slashing their budgets, that means less money to spend on your products as well as other products. As a result, not only are your competitors trying to get a piece of that dwindling budget, but so too are many companies you would not consider competitors. You need to ensure that your customers know your products and services are more important than other products and services.
For instance, the advertising industry always takes a hit in times of economic slow down. As a result, whenever times are tough, the ad industry reminds their clients that it is critical to continue to advertise and ensure their advertisements are widely seen by the buying public. The ad agencies can also point to research demonstrating that firms that keep up their advertising spend during a recession can expect to come out of the recession in better shape than their competitors who slash advertising budgets.
How about your business? Are orders down? Are clients harder to find? If so, the very first thing you need to be innovative about is a marketing argument for why your products and services are essential during this recession. You know your clients need to buy from you. But do your clients? Making this clear requires marketing communication innovation.
2. Better Utilise Your Resources
I am always amazed at the amount of wastage I find in the average office. Lights are kept on all night, people print out e-mails in order to read them once - and then throw them away. Large company cars are used to make trips that could be done just as well by public transportation (allowing the employee to be more productive as well) and little effort seems to go into separating rubbish for recycling.
Look deeper and you find that employees are cc'd into e-mails that they never read, but are not informed of critical issues. Meetings take up the time of your most expensive employees, but most of those meetings are unnecessary.
The list goes on. Many of these problems have easy and not particularly innovative solutions. Other problems are more industry specific and require innovation. One of the most profitable sequence of ideas campaigns (or other idea generating events such as brainstorming) you can run is one designed to identify areas of wastage and then generate ideas to reduce that wastage -- or possibly even profit from exploiting the wastage.
In doing so, it is important to remember that people in your firm are highly valuable assets. If their time is being wasted, that is costing you money. But the issue of time efficiency needs to be balanced against employee satisfaction. If you become overly strict about how employees use their time, there is a danger of igniting employee dissatisfaction, which will lead to a hard-working, yet unproductive and less than happy workforce. And that will do your innovation activities no good at all.
3. Deliver More Value to Customers
If there is one thing your customers desperately want now it is more value for their money. Ideally, they would like to derive that value without investing more in your products. Fortunately, it is likely that there are many ways your products can be used - ways that are not described in your instruction manuals. As a result, your products can often deliver additional value without any modification. You just need to communicate these new uses to your customers. But before you do that, you need to identify new uses for your products.
There are several ways to generate innovative ideas about deriving additional value from your products. Consider the screw driver. Its main purpose is to insert and remove screws. Yet a screw driver can be used as an ice pick, a nail removal device, a small crow bar, a weapon, a drink stirring stick and much more. Indeed, if you were to spend 30 minutes brainstorming ideas on creative uses for a screwdriver, a creative thinker like you could almost certainly come up with 50 or 100. You can also do the same for your products - and indeed you should on a regular basis. If you can demonstrate to your prospective customers that your product can do much more than the competitors', you will soon be selling much more than your competitors too.
In other cases, modest changes to your products enable them to deliver significant additional value at a minimal additional cost. A screwdriver with interchangeable heads only costs a little more than a fixed head screw driver, yet enables people to use it on a wider variety of screws.
Running ideas campaigns or brainstorming events to generate ideas on new product features can generate lots of ideas. But a better approach might be to run an ideas campaign on what wild and crazy things you could do with your products. Ensure that participants understand that ideas may incorporate any product changes they wish (you can worry about practicalities of implementing those changes later).
Even if you are selling a service, the chances are that you can find ways that enable your service to generate more value to your clients. For instance, a training business might provide additional course material at a discount, so that the client can distribute this material more widely. A trainer might also widen her repertoire of training packages, allowing the client to derive more value with minimal increase in investment.
Nevertheless, since services are priced on time rather than item, the degree to which you can offer additional value with minimal additional cost is limited. However, if you can deliver your services in different ways, for instance a long term contract that generates cashflow or on-line delivery of your service, you can give your customers additional value at comparatively low cost.
4. Creative Partnerships with other Struggling Companies
With many companies struggling to stay afloat and buyers looking to reduce cost or get additional value at the same price, this is a great time to build partnerships with firms offering complementary products and services to yours. This is particularly true in the B2B environment. If you can offer a package of useful services this provides benefits to your customers who do not need to source all of the varied services from different suppliers. Moreover, you can exploit each others' sales teams and marketing communications to build business faster.
But don't just look for obvious partnerships. Your less innovative competitors are doing that already. Instead look for unusual partnerships that will provide unusual value. For example,if you run a coffee shop, don't just look at the obvious partnerships to serve food or additional drinks in your shop. Think about partnering with private language schools (that could offer lessons in your shop and in whose school you could serve coffee), secretarial services (that could provide telephone answering, faxing and photocopying services to all the independent professionals who work out of laptops in your coffee shop) and so on.
5. Establish Better Ways to Collaborate
In large service industries, collaboration is important. But it can also be expensive. Flying highly paid professionals from one office to another isn't cheap. Maintaining video conferencing facilities is a substantial investment. Sharing MS Word and Excel documents with a dozen people via e-mail, asking each person to give feedback is a horrendously inefficient means of collaborating on a document.
There are better ways of collaborating and many great tools that facilitate collaboration (I like to think we make one of those tools! - see advert below). But tools don't solve the problem unless you have a methodology and structure to govern their use. In the early 2000s, I saw a number of companies invest in collaborative knowledge management tools without giving a thought to how the tools would be used. Not surprisingly, they simply weren't used!
So, the first step is not to buy the tools. Rather it is to do some creative thinking and generate innovative new ways that you and your colleagues can collaborate effectively within the confines of your needs, limitations and culture. Once you've established the method and define the structure. Then you can look into developing or buying tools.
6. Keep It Simple Sweetheart (KISS)
Simplification almost always reduces costs. Simpler to make products are also less costly to make. Moreover, they are typically more reliable as there are fewer bits to break down. Simple operational structures are less costly to run. Simple to use products keep your customers happy.
For more on this topic, read Keep Innovation Simple, Sweetheart in the Tuesday, 22 November 2005 issue of Report 103 (http://www.creativejeffrey.com/report103/archive.php?issue_no=20051122).
Putting It All Together
A comprehensive approach to innovation is the best way to innovate - always. But in times like these, when the economy is slowing down and the future is uncertain, a comprehensive approach to innovation is critical to your survival. Remember: your cleverest competitors will certainly be trying to innovate their way through the recession. If you don't do the same - but better than them - you could be in trouble!
IDEAS CAN HAVE CONSEQUENCES
For those of us in the innovation business who get excited about ideas, it is easy to forget that they can have consequences at every step of the way. Worse, those consequences can have consequences! If you are involved in any kind of innovation initiative, it is important to bear that in mind. Because those consequences can kill even the best designed initiative.
Young, Raw Ideas Are Fragile
When a person or a team first has an idea, that idea is very fragile. It is easily destroyed through direct or indirect criticism. Consider the team member who suggests a radical new idea to her team mates. If they laugh at the idea or immediately criticise it, there is a very good chance that the idea will die immediately. It is fragile. Likewise, the person who suggested the idea will have had her first lesson in idea sharing in the team: it has unpleasant consequences and, as a further consequence, she is less likely to share ideas in the future. This is unfortunate. The idea she first suggested might have been brilliant. It might have been the spark of an industry changing disruptive innovation. It probably was not. But it might have been. However, the team's laughter will largely ensure the idea will not be developed by them or by their employer. Worse, many more potential ideas become far less likely to be suggested in the future.
And there are further consequences. As other team members see that radical ideas are likely to be laughed at, they learn to keep their crazier ideas to themselves. And that's a shame, because the most radical ideas are sometimes the most creative and those are most likely to turn into the most powerful innovations.
How Do You React to New Ideas?
Unless a company has an idea management system or suggestion system in place, most young ideas -- whether devised by individuals or teams -- soon come to the attention of the immediate manager. Sometimes ideas are suggested formally with presentations and more. Such ideas are typically taken more seriously. Sometimes, particularly with wilder ideas, they are informally suggested to the manager as a first step. The idea initiator is very likely concerned that her new idea is a bit to radical and she wants approval from her manager before going further.
Unfortunately, informally suggested ideas are often met with informal criticism. "You must be crazy!", "we don't have the budget for that!", "Management would never go for that!" and so on. Even a raised eyebrow and shake of the head can indicate a rejection. And this prevents a potentially very creative idea from being developed and presented as a formal idea. So the idea dies.
And as happened with teams, so happens with bosses. The employee and her colleagues soon learn that sharing radical ideas with the boss is a losing proposition. Better to focus on mundane ideas which are never laughed at or rejected rather than risk another rejection.
Better Developed Ideas Can Have Costly Consequences
Let us assume that the manager understands the principles of the Three Cs (see Report 103, 15 April 2008 issue: http://www.creativejeffrey.com/report103/archive.php?issue_no=20080415) and not only encourages radical ideas, but challenges their owners to push those ideas further. What happens if an idea is developed into a business case complete with colourful PowerPoint slide show and presented before senior management?
If senior management reject the idea out of hand -- using the vague language we've seen already, such as "our customers would never buy it.", "we don't have the budget", "it might offend our customers" and so on -- the individual or team who presented the idea are likely to be demotivated. Moreover, a quick and shallow pseudo-analysis of an idea like this is all too likely to reject one of those terrific potentially disruptive innovations. At the very least, management should repay the idea owners with a little respect by considering the idea in detail. If it must be rejected, it should be rejected with a structured argument. Such a rejection is not much fun either. But it gives the idea owner a real understanding of why her idea was rejected and enables her to better prepare ideas for presentation in the future.
Implemented Ideas that Fail Have the Most Costly Consequences
If an idea somehow survives the review process, is implemented and succeeds, it is wonderful. But if it does not succeed, there may be tremendous consequences -- and these have to be handled well by senior management to prevent them from causing more damage than necessary.
Most obviously, an implemented idea that fails usually results in a financial loss. If that idea is a product line for which factories have been fitted, moulds made and employees hired, the loss can be huge. For start-ups launching a new business based on a radical idea, the consequences can be devastating.
But what of the people behind the idea? If they have invested substantial time in the development of the idea, they may have very strong negative feelings of having failed; of having invested time and conviction in a project that did not work. If their firm does not understand the value of failure, they might find themselves losing out on promotional opportunities or possibly even losing their jobs!
Indeed, for this reason, teams developing ideas often keep pushing their ideas long after it is clear the ideas will not succeed. Like the gambler who is sure the next game will win her a fortune, the idea champions are sure that success is just around the next corner. This situation is worse in organisations which are harsh on failure.
What Can You Do?
As a manager, your job is to minimise the consequences of: sharing ideas, developing ideas which are rejected and implementing ideas which do not succeed. The cost of time wasted in developing an idea that does not pan out is a fraction of the cost of losing out on many unborn innovative ideas because employees are afraid of the consequences of voicing them.
JENNI IDEA MANAGEMENT
In my article above on innovating in a recession, I made repeated references to ideas campaigns. That's because ideas campaigns are the most effective method of capturing ideas to solve your business problems, evaluating theideas and identifying those which have the greatest potential to become profitable innovations. Jenni is a highly collaborative idea management software which we can deliver as a web service to your organisation. Jenni enables you to manage a comprehensive, sustainable idea management process based around cyclical ideas campaigns.
Jenni is remarkably easy to use, yet powerful in its results. And thanks to our international network of business partners serving clients, we can and will help you ensure your idea management programme is a success.
For more information about Jenni or to talk with us, please 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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