G8 Symposium on Innovation

During the recent G8 Summit in Russia a special session, the G8 Business and University Leaders Symposium on Innovation, was conducted to discuss issues related to universities and business http://en.g8russia.ru/page_work/25.html. The session brought together some great minds from the represented countries to discuss the issues they are confronting related to innovation and how they are confronting these issues.

The outcome of the session was a joint statement that was conveyed to the leaders of the represented countries:

WORKING MEETINGS SUMMIT2006
July 11Report to the Leaders place Moscow
Representatives of universities, government, and the private sector met in Moscow on July 11, 2006 to confirm their commitment to building global knowledge society in the 21st century.
In the new global economy, economic growth and social cohesion can be only sustained via production and commercialization of knowledge. This creates a crucial role for the universities that are uniquely positioned to produce new ideas, advanced skills and research, and to participate in industrial innovation. Building flexible, effective, and diverse tertiary education is a priority for the G8 countries which will provide tangible benefits to all the nations.

Building a global knowledge society is only feasible through a public-private partnership of universities, governments and corporations, effectively developing “innovational ecosystems” around the universities. Governments should focus on (i) providing incentives for entrepreneurship, flexibility and innovation within universities, and for cooperation between universities and corporations; (ii) providing global public goods such as support for fundamental research, mobility of faculty and students, and basic training in science, math, and foreign languages. Governments should encourage collaboration and diversity in higher education, provide autonomy to the universities, remove barriers for organizational innovation within academia, and promote new forms of university-corporation partnerships both within and across national borders.

To accomplish their mission of the cornerstone of the global knowledge society, the universities themselves should be at the cutting edge of innovation. They should build multi-faceted partnerships with the private sector, develop new programs, and adopt new formats and methods of learning. The successful universities will be those which recognize the corporations’ needs for applied research and the demand for skills from the corporations and the life-long learners and manage to exploit the synergies between traditional and innovative teaching, between fundamental and applied research.

The competitive advantage in the modern corporate sector is created through innovation in products, services and processes. The leading corporations will be the ones that attract the best talent and provide them with incentives for innovation. It is therefore in the best interest of the universities and the private sector to work together on designing and implementing new teaching curricula and research agendas.

The creation of "innovational ecosystems" around universities is an interesting challenge on four fronts:
1. Academics are often quite removed from the needs of business and are more focused on their "basic" research than on "applied" research.
2. Businesses do not want to take the time to get to know the capabilities of universities and would rather make donations to schools than spend their time.
3. Universities tend to focus more on teaching start-up entrepreneurship rather than "corporate entrepreneurship.
4. The issue of intellectual property protection/ownership looms large.

But, in fact, corporate entrepreneurial linkages between universities and business do exist and have been very successful. Some are:
Carnegie Mellon Center for Technology Transferhttp://www.carnegiemellonctt.com/
Uiversity of Warwick's Innovation Center http://www.warwicksciencepark.co.uk/properties/innovation_centres.html
The University of Iowa's Technology Transfer Center
http://research.uiowa.edu/techtransfer/tic_main.htm
and Georgia Tech's Enterprise Innovation Center http://www.edtv.gatech.edu/

Key to all of these is to "teach" the skills for corporate entrepreneurship, which is a much different set of skills and requirements than the "startup" mindset. What are these skills? How does a company go about creating the right "innovation ecosystems" to ensure ideas are not only recognized, but commercialized? What are the critical success factors for Universities?

Empathic Market Research Case Study: Printpack's Shopping for Ideas

Much has been written about the need to hear the “Voice of the Customer” as companies consider new business growth opportunities. There are those who insist product development teams spend time asking customers to communicate their most important needs (I agree with these folks) and those who suggest asking customers to communicate their needs only gets you a list of issues and problems with current products and does not open you to totally new high value ideas. These folks suggest it is better to observe customers or experience what they are experiencing (walk in their Nikes, so to speak) and I agree with these folks as well.

As stated earlier, to find growth opportunities companies must use a variety of what I call empathic market research or “market sensing” and “co-creation” approaches. It is not sufficient to just send out questionnaires to customers asking what could be better about your current products and services. This gives you some “baseline” information about the status quo, but doesn’t necessarily open your eyes to higher value ideas. Many companies are now applying more “empathic” approaches to understanding what will delight customers.

These empathic approaches range from Nokia’s “Developing Market Scouting Teams” (highlighted recently in Business Week’s March 27, 2006 issue) http://www.businessweek.com/magazine/content/06_13/b3977063.htm?campaign_id=search, JetBlue’s use of “Story Booths”, where customers can walk in and privately tell their best JetBlue stories http://www.jetblue.com/experience/schedule.asp, to BMW’s development of a Marketing Innovation Laboratory in Munich, Germany where marketing and sales people are trained in empathic approaches to better understand BMW drivers’ “dreams”.

Recently Printpack Inc., http://www.printpack.com/ the US$1.3 Billion packaging company based in Atlanta, conducted an Innovation Summit where 60 of their top product and business development professionals spent three days coming up with new packaging ideas for their various markets. At the end of the Summit a handful of ideas refined from literally hundreds of ideas surfaced the first days of the Summit were presented to Executive Management. After this review the ideas were prioritized and given resources for further development. What made the ideas compelling and easy to select and prioritize was work teams from Printpack conducted several months prior to the Summit.

During the weeks prior to the Summit, Printpack scouting teams were formed to “Shop for Ideas.” The teams were cross functional and represented various levels of experience. Each team was given specific aisles in stores to scout (for instance, the Pet Supply Aisle in a Grocery Store, or the Fastener Aisle in a Hardware store). The team asked permission from store managers to observe customer behaviors and interact with customers to better understand these behaviors.

Observations like customer movement in the aisle, customer attention patterns, item investigation and selection, were recorded. Customers were often interviewed to better understand behaviors. After each hour of observation the Printpack Scouting Teams reflected and debriefed their observations with their teammates and looked for more compelling patterns in their combined notes. These insights were then logged and shared with other teams in larger debrief sessions.

For instance, an observation in the grocery spice aisle was customers more often than not tended to buy the smallest quantity of a given spice. When several were asked why this was so they stated they had a recipe that called for that spice but they knew this may be the only time in years they would need this particular spice; they did not want to have excess in their kitchen that would take up lots of space and eventually go bad.

Shelf stockers were observed and interviewed to understand stocking issues. Inventory managers were observed and interviewed to understand inventory issues and numerous freight haulers were observed and interviewed to understand product conveyance issues and packaging’s role in these issues. The Printpack Scouting Teams even observed customer interactions with the packaged products in homes and restaurants.

Hundreds of insights and idea “stems” were collected and refined into “Key Insights.” These insights were put into a visual form that was easy to understand. The insights were crafted into idea selection criteria to be used at the Innovation Summit.

At the Summit the scouting teams presented their insights using content rich media to the Summit participants and the ideas flowed. While this appears straight forward, here are a few things companies should consider as they put their market sensors into play:

Make the outcome of market sensing part of specific idea generation sessions, like Printpack’s Innovation Summit.
Make sure you involve people from different functions and levels of the organization in the market sensing work.
Give strict timeframes for teams to work within and be clear your expectation is to come up with new insights, not just validation of existing assumptions.
Define the sensing tools you will use (observation, video, interviews, etc.) and make sure scouting team members are trained in the use of these tools.
Push your teams to come up with insights by combining various scouting teams in insight sessions.
Make sure you apply quantitative data analysis techniques to ensure a higher level of validity in your insights.

This form of proactive/multi-perspective market understanding is what will ultimately separate the commodity players from the true innovators.

Capturing value from ideas that don't fit...

Very often I find that companies dismiss ideas that do not fit their existing business processes or business models even though these ideas can have significant value. The ideas that do seem to move to development are those that "fit" a current business of the company and therefore do not cause significant turmoil in the company's daily operations. But these ideas are generally, because of this notion of fit, incremental in nature and not of higher value potential.

In fact there are companies' capturing higher value from ideas that don't "fit" their current business. The companies are utilizing innovative approaches and Launch Institute has defined these approaches in "Seven Strategies for Value Capture". These strategies take into consideration a set of factors that help to determine which model is best for which idea/concept.

Understanding the context, capability requirements, capacity issues, capital needs and commitment required for the idea/concept is the first step in understanding which strategy is best. If all of these assessment points are in place, then the idea probably fits well within the existing business. If not, the other options are available to develop and commercialize the idea.

Key questions here are: Are there more assessment points to be considered? What other strategies for value capture exist? Are there other creative examples of what companies are doing to develop and commercialize their "non-fitting" ideas?

The process of creation...

Once an opportunity has been identified through Insight Platform activities, ideas must be generated to take advantage of those opportunities. There are many techniques used to "brainstorm" a range of possible ideas, but I start with the notion that ideas can be stimulated and come at anytime (the morning shower perhaps?) and each company should have a way to capture these ideas on an ad hoc basis. There are many tools that can be applied to a company's intranet to do so, including MindMatters http://www.us-mindmatters.com/ and Imaginatik http://www.imaginatik.com/ A deeper review of sophisticated innovation tools can be found in MIT's Sloan Management Review article on the topic titled Capturing the Real Value of Innovation Tools. http://sloanreview.mit.edu/smr/issue/2006/winter/09/

Then there is the tools to be used when creation process must be stimulated. I believe the best idea generation is done in a social context, with individuals sharing, challenging and building on each others' ideas, as in an Innovation Summit. I offer as a source Chuck Frey's Innovation Tool Blog http://www.innovationtools.com/Weblog/innovation-weblog.asp which is a resource for interesting approaches. the Institute for the Future's Innovation Tool blog http://future.iftf.org/2005/01/innovation_tool.html where unique ideas and approaches to brainstorming are outlined.

Beyond these tools is the notion of Co-Creation with suppliers, customers, and even, sometimes, competitors. The premise, of course, is that collaborative development sparks creativity, ensures a closer fit with customer wants and needs, and improves the success rate for new offers.

Using the three Launch Platforms described earlier to understand where co-creation can take place in the innovation process, including: Insight into new opportunities, Creativity in putting together compelling offers to meet those opportunities, and Value Capture to bring those offers to market in a profitable way. In thinking about co-creation, the issue is how best to engage with customers, partners, and potentially even competitors in each platform.

The Creation Platform is where significant results can be achieved using co-creation. Tech companies actually co-create customized solutions with individual customers every day, but moving from those one-offs in the field to a more systematic approach to broader offer development is still more theory than practice. It is really hard for companies to get past their product-based approach which runs counter to the more collaborative, start-with-the-problem ideal of co-creation. You can hear more about my thoughts on the topic of co-creation on a podcast done at the recent Columbia Univerity Innovation Marketing Conference in New York by going to http://www.launchinstitute.com/.

So what more should we be considering in the creation process? What experiences are there with the involvement of customer, suppliers, etc. in the creation process?

How do we identify new opportunities?

The source of new ideas and the resultant innovations is elusive. In fact, it is my opinion many companies are too internally focused to see new opportunity areas. Many argue that businesses' obsession with cost cutting and efficiency using Six Sigma, TQM, etc. has hyper focused our internal perspective. What is needed is for organizations to sharpen their external perspective so they become more sensitive to customer and market needs and desires and the business opportunities that lie within.

More "empathic" techniques are being applied to create more market sensitivity by the worlds leading innovators (see World's Most Innovative Companies) http://www.businessweek.com/magazine/content/06_17/b3981401.htm?campaign_id=search. The empathic techniques utilize skills taken from anthropology, sociology and the like. They allow us to get inside the customers and users minds and develop new insights. The collection of tools, techniques skills and organizations that conduct this work is what Launch Institute calls the "Insight Platform", and many companies are in the process of establishing such platforms to guide their product and service development work.

A great discussion of Ethnographic approaches can be found in Bruce Nussbaum's blog "Ethnography Is The New Core Competence. The blog describes Intel's work with anthropologist Ken Anderson to "develop a deep understanding of how people live and work."

Many questions thus arise for me; How does this approach fit into the process of innovation and product design? Who should be part of a team to conduct this work? What are the techniques, tools and approaches being used to develop this understanding?

The need for innovation...

Welcome Los Andes students!

It seems that innovation is on everyone's mind. My interest is in helping established, more mature companies achieve higher levels of innovation. Yet there are many challenges.
The challenges in these relatively slow moving industries are multiple, according to Launch Institute (http://www.launchinstitute.com) director Mark Roser–
•Slower cycle times reduce the frequency at which organizations can learn through experience, trial and error (Need for nimbleness)
•Distance from the end-user clouds the ability to understand the future direction of the market (Need for extra-spective view)
•Strategic emphasis on quality and cost-reduction overshadows the need for growth (Need for innovation strategy)
•Limited R&D funding reduces willingness to invest in risky bets (Need for a balanced portfolio)
•A lack of understanding of and/or success with organizational change.

Aversion to “big bet” projects give way to systemic incrementalism. Yet there are companies lke Virgin, BMW and Eaton Corporation who pusing the innovation value equation.

So what is it that gives these companies the "innovation edge"? What can others learn from them? Why is innovation important anyway? Add your comments here.

About me...

David E. Sutherland II, Ph.D.
Founder and Managing Director, Launch Institute
Visiting Professor, Georgia Institute of Technology

Launch Institute
P.O. Box 8047
Atlanta,Georgia
31106
USA
Phone+1.404.312.6402
David.Sutherland@launchinstitute.com
The basic human need to invent and problem-solve is the foundation for Dr. David Sutherland's work. Sutherland works with established companies to help them achieve their growth objectives by unleashing their latent innovation potential. Sutherland focuses primarily on bringing “entrepreneurship” to established mature companies. He exemplifies the need for the "ethic of entrepreneurship" to be matched with the "discipline of innovation management."
In addition to teaching at Georgia Institute of Technology, Dr. Sutherland is the Founder and Managing Director of the Launch Institute (LI). He based the founding of LI on his 25 years of corporate experience which focused on business growth. He has been an entrepreneur (founding three successful companies), a corporate executive (formerly Senior Vice President, Computer Sciences Corporation) and a trusted advisor to a automotive companies that have achieved significant business growth success. These companies include BMW AG, Nokia, Siemens Corporation, Bank of America and Eaton Corporation.
Sutherland and his team focus on converging technologies through "cross-business innovation" developing product extensions, new product and service development, and new work processes. To achieve sustainable innovation capability they address three “platforms” essential for innovation:
• Insight Platforms: How do companies identify their best business opportunitys?
• Creation Platforms: How do companies develop business ideas to take advantage of the opportunities?
• Value Capture Platforms: How do companies and ultimately derive commercial results from their ideas?
Areas of SpecializationInnovation Management Corporate EntrepreneurshipEducationPhD, University of Virginia