Your newsletter on applied creativity, imagination, ideas and innovation in business.
Wednesday 1 June 2011
Hello and welcome to another issue of Report 103, your twice-monthly (or thereabouts) 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.
JEFFREY IS ON TWITTER: @creativeJeffrey
I have been playing with Twitter the past few weeks and am still trying to 1) find my voice there and 2) ensure I add mostly meaningful noise to an already very noisy place. My Twitter name is CreativeJeffrey and you can find me at http://twitter.com/creativeJeffrey.
COST OF NOT IMPLEMENTING AN IDEA
Imagine a great idea pops up in your company’s idea management system, in a brainstorm or over a beer after work. The first thing a manager will typically do is calculate the cost of implementing said idea. This cost will then be balanced against the value potential of the idea – usually additional income from increased sales or reduced operational costs. However, the more creative an idea is (and hence potentially innovative), the harder it can be to determine the value especially in monetary terms. As a result, many potentially very exciting ideas are not implemented simply because a manager has decided that to do so would be to costly.
While such managers can be very good at working out the cost of implementing an idea, they often fail completely to calculate the cost of not implementing an idea – and this can sometimes be far more expensive than implementing it, especially over the long term.
How Much Does It Cost Not to Implement an Idea?
Sometimes it is relatively easy to calculate the cost of not implementing an idea, particularly when the idea is expected to result in cost savings. Let us imagine you are reviewing an idea that promises to improve the efficiency of your production line. There would be a one time cost of €500,000 to implement the idea, but once this is done, it will reduce your manufacturing costs by €5 per unit. Let us further imagine you are now making 100,000 units per year.
The cost of not implementing this idea would be zero in the first year (cost savings equal the implementation cost) and then €500,000 in the next year. If you are expecting an increase in sales of 10% per year and a five year manufacturing life, the cost of not implementing this idea would come to more than €2.5 million. That is a far sight more than the half a million Euro it would cost to implement. In this light, not implementing the idea is an expensive mistake.
Not Always a Straightforward Calculation
In other cases, it can be a lot harder to calculate the cost of not implementing an idea. Let us imagine, for instance, that you run a company that is a global leader in cutting edge high-technology writing pens. Now imagine that one of your technicians comes up with a new technology that will allow a pen to read the user’s mind and write or draw whatever she is thinking. Such a technology would be expensive to implement and it would be hard to predict the sales potential. Worse, any significant market research, that you might perform in order to get insight into sales potential, would give away to competitors your plans – and might allow them to beat you to market.
So, let’s continue to imagine that the cost of implementing the idea will be €50 million. The revenue potential is unpredictable. It could be incredible or it could be minimal. After all, the technology is unproven outside the laboratory, it requires the user to wear a cap (to read the mind) and for all you know, mind reading pens might scare customers off.
With all that uncertainty involved in turning this idea into a reality, you might decide there is too much risk and opt not to implement the idea. But what about the cost of not implementing this idea? Sure, you save €50 million. But what might the costs be?
They are, of course, unpredictable. However, it is important to bear in mind that ideas seldom occur in isolation. If someone in your company has come up with a fantastic idea, sooner or later a bright spark employed by one of your competitors will dream up a similar idea. What happens when that happens and the competitor decides to implement the idea?
Well, their implementation of mind-reading pens might fail and cost them a fortune. But what happens if their product is an incredible success? They will earn hundreds of millions, if not billions of Euro. And those sales will come at your company’s expense. You lose sales, you lose market share and your reputation falls from being a leader to a follower in your industry as you desperately try to bring your own mind-reading pens to market.
In other words, the cost of not implementing the intelligent pen idea might well be permanent damage to your business and reputation!
Real Life Example
If you think this is an exaggeration, consider Polaroid Corporation. A generation ago, they were the cutting edge innovator in instant picture technology. If you wanted to be able to take a picture and see it within seconds, your only real choice was Polaroid. Indeed, “a polaroid” became a generic term for an instant picture.
Today, of course, virtually every camera can produce an instant picture and Polaroid, although they dabbled in digital imagery in the late 1990s, failed to exploit the technology. The company filed for bankruptcy protection in 2001. Today, the company is a shadow of it’s former self.
History is, of course, littered with companies which failed because they failed to implement and exploit innovative new ideas which either their competitors or nimble start-ups more successfully exploited to great profit.
Bringing It All Together
The lesson to learn here, of course, is that you when you calculate the cost of implementing a creative idea that has potential to become an innovation, be sure also to calculate the cost of not implementing the idea. Sometimes that cost can be far, far greater than doing nothing.
PROJECT PREMORTEMS, A FOCUS ON REDUCING FAILURE
By Richard Lawler
One of the concepts we find useful at my company are "premortem's". A premortem is similar to a post-mortem but it is done before a project and not after. The premortem helps companies gain a perspective on projects before they are attempted and can lead to a higher chance of a successful completion.
Firstly let us talk about it's cousin the post-mortem. After a project has failed a post-mortem evaluation asks why? Normally you generate a list of questions, send them around to your staff and then get every one together for a meeting to discuss the issues in an open forum. Smart companies know that this is not a blame opportunity, but a learning from our failures opportunity. You ask questions about what worked well and what did not. You ask “What could we do better next time?” and so on. As you can see the focus is on what was learned to help ensure the next project doesn't fail.
Now imagine having this meeting beforehand, as a premortem. (I tried to explain imagining to some engineers today and they just didn't get the concept.) We find it is one way to change our perspective, which is a constant aim (I am sure you will agree) of most people within the innovation and creativity space. A premortem helps give you a different, fresh view of a project.
Organising a Premortem
Organise your project team. Tell them you want to discuss the project as if the project was finished and had been a complete disaster. Make sure that every one is up to speed with the planed project.
Generate some scenarios where the project fails with disastrous consequences and it looks as if the team is going to be sacked. Ask them to generate some different disaster scenarios.
Ask people what they think caused the failures in the different scenarios? Spend some time on your own thinking about it.
Draw up a unique list from the results. You will have a list of everyone's concerns as possible reasons for failure of this project.
Take your project plan and review it in light of these possible failures - can you change anything to prevent any of these failures coming true? Is there anything that you might monitor during the project that you would not have otherwise considered, therefore preventing failure? Can you get your team to monitor the project for signs that these problems are beginning to take root.
Record everything in your preventative failure database for future projects.
While premortems are great project tools, you can also use them in every aspect of your business and even your personal life.
See this article in harvard business review for some examples http://hbr.org/2007/09/performing-a-project-premortem/ar/1
About the Author
Richard Lawler is Managing Director of StartInnovating, based in Dublin, Ireland. He has a background in innovation in financial services. StartInnovating promotes the idea that intrapreneurship can be an innovation driver for business and that this can be a meaningful way for businesses to grow in new areas and gain competitive advantage.
In his upcoming book Richard focuses on creativity and the role of the individual as a component of the innovation process within business. There will soon be a sample chapter of the book and preorder facility on the StartInnovating (http://www.startinnovating.ie) website
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PROBLEM SOLVING VIA CREATIVITY
I believe that one of the critical challenges facing corporate creativity – and therefore innovation – is people’s attitudes towards business problems of all kinds. When facing a problem or challenge at work, most people will immediately look up and follow corporate policy. If that does not provide an answer, they turn to Google to see what others have done when facing such a problem. Moreover, those with MBA degrees, which encompasses much of management, can often reflect back to their course books and case studies for answers.
On one hand, it is terrific that such readily available data, particularly as available on the Internet and indexed by Google, enables employees to find answers to complex situations in minutes. On the other hand, applying someone else’s tried and tested solution to a problem is hardly creative. Worse, when step by step answers are readily available, we have less need to learn how to actually solve problems.
Creative Problem Solving
There is a reason why the best known approach to creativity is called creative problem solving. It is because ideas do not just appear out of the air. Rather, they are almost inevitably the result of trying to solve a problem or achieve a goal. In fact, this more than anything else probably differentiates highly creative people from averagely creative people. When the former run into problems, they look for solutions in their own minds first. If there are no obvious solutions, they dig deeper. If others are involved in the problem or can become involved, the creative thinker may well collaborate with them to generate and develop ideas.
Of course creative thinkers also check on corporate policy and use Google to look for solutions to problems. But this is generally done after trying to solve the problem in their heads first. And even when an established solution is found for a problem, the creative thinker will be tempted to modify that solution to fit the problem. It’s the way creative thinkers are.
The Creative Advantage
The advantage to the creative thinker’s approach is, first and foremost, that it results in creative ideas. And the implementation of creative ideas results in innovation. However, in the process of mentally evaluating a problem in order to devise creative potential solutions, the creative thinker is likely to learn more about the problem. This not only facilitates creative solutions, but helps the creative thinker better analyse solutions that do not come from her own head.
Of course sometimes creative solutions are not viable or are not as effective as the tried and tested solutions the creative thinker might find on the web or the corporate intranet. But, interestingly, research has shown that trying to solve a problem yourself, before looking up answers, is a far better way to learn than having the correct answers given to you. This is particularly true when you are wrong in your guessed answer.
Changing Attitudes to Problem Solving
Clearly, if businesses want to be more innovative, they need to start by being more creative. As we have seen, the way such people approach creativity is by initially applying creative thinking to problems. Desk bound employees, and especially managers, should learn to follow this approach to problem solving. They need to learn to look for answers in their heads first – and not to worry about how viable those answers are – before seeking existing answers in the usual places.
This is not an easy transition to make. People who fear being wrong will not be comfortable with a creative approach and the resultant risk of mistakes. And in corporate cultures where mistakes are not tolerated employees will never risk being creative about solving problems.
But in work environments where it is understood that mistakes are part of a learning process and critical to innovation, knowledge workers need to learn to use their heads first and resources second.
JENNI IDEA MANAGEMENT SOFTWARE
Jenni innovation process management software allows your managers to set up and run massive on-line brainstorms with their teams, their departments or the entire company. They can even bring suppliers, business partners and other outsiders to participate.
With Jenni, your managers can run brainstorms to generate creative ideas for new and improved products; better packaging; process improvement or anything else.
At the end of the brainstorm, your managers can use Jenni's evaluation suite to assign evaluations, SWOT (strengths, weaknesses, opportunities and threats) analyses, income projection and idea development projects to subject experts. Jenni compiles all the information into easy-to-read scorecards and detailed reports.
These enable your managers to make intelligent decisions about which ideas to implement. This results in increased income and reduced operational costs that easily add 2-5% or more to your bottom line!
If developing and implementing better products, packaging and processes than the competition is critical to you, then contact us today and find out why Jenni is the only innovation platform that can do that for you.
Other innovation management software delivers random ideas. Jenni delivers solutions to your business problems. Which do you need?
I am speaking at two exciting conferences in the late summer this year!
In late August, I will be speaking on Open Innovation at the South African Innovation Summit. This will be an exciting event that brings together a number of top international and South African innovation experts in an exciting and thriving economy. If you plan to attend, let me know! I’d love to meet you. More information at http://www.innovationsummit.co.za/
Just a couple of weeks after that and I will be off to the Algarve in Portugal to deliver a workshop on non-verbal brainstorming at the European Conference on Creativity and Innovation. This exciting event will bring together Europe’s top thinkers in the creativity and innovation space and I am honoured to be included among them. If you are going, let me know and let’s meet up! More information at http://www.eaci.net/eccixii/index.php
And, of course, I can almost always be found at the Brussels Imagination Club every 2nd and 4th Wednesday of the month. More information at http://www.imaginationclub.org/brussels and http://www.imaginationclub.be/
I am also planning on speaking at private events in Europe and Africa this year and could lead a workshop or give a keynote speech at your company. If you want to help your employees think more creatively in order to help your company innovate more effectively, then contact me and let’s discuss your needs. I promise a creative proposal!
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Report 103 is edited by Jeffrey Baumgartner and is published on a monthly basis.
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