Sutherland on Innovation

CEO of the Decade

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Mon, 04 Jan 2010 20:25:00 +0000

Recently Apple’s Steve Jobs was named Fortune Magazine’s “CEO of the Decade”. Fortune cited Job’s many accomplishments since re-taking the reins at Apple in 2001, including his successful shifting of Apple into new industries including Music, Video and Communications while still managing to introduce state of the art technologies in Computing. During the past decade I was fortunate to see Jobs speak and to participate in sessions where Jobs described the underlying “magic” that is Apple and the role innovation plays.
Jobs acknowledged the fact he has surrounded himself with very bright people who have a passion for “creating new futures”. His leadership team is not satisfied with the status quo and they constantly push the edges of businesses in which they are comfortable to find new less comfortable zones of business opportunity. The story of his introduction of Apple’s possibility to recreate the Music Industry by introducing the basis for the iPod and iTunes to his senior team is legendary. The idea was not met with typical skepticism or questioning (or, even more dangerous, the positive head nod masking underlying skepticism). The idea was met with enthusiasm, a sense of possibility and a keen interest in planning how the opportunity could be met.
Job’s sees his primary responsibility supporting innovation and business growth is to ensure the vision for new business opportunities is challenging his leadership team. He doesn’t leave the “wild ideas” to the R&D and product development organization alone. He knows that unless his leadership team is excited about creating new ideas the potential of profiting from new ideas is low. At Apple, creating the future is everyone’s responsibility, and the leadership team owns market sensing and new business creation activities. Jobs knows that if his leadership team is only focused on managing current business they would be stuck in the status quo and therefore barriers to new ideas rather than mentors of new ideas.
From the lessons of Jobs and our understanding of Apple’s practices, we at Launch have developed a tool to assess the degree of engagement of leadership teams in innovation and business growth. In 2010 you might want to ask your team to discuss the questions to give you a sense of how they see their role in innovation and business growth. You can access a questionnaire by clicking here:
http://www.surveymonkey.com/s/LeadershipforInnovation

We at Launch wish you a very successful and happy 2010.

National Curriculum for Educating Innovators: The Four C’s

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Mon, 02 Nov 2009 18:14:00 +0000

I was recently asked by Cecilia María Vélez White, the Minister of National Education in Colombia, to speak at a conference dedicated to the Ministry’s 2009 theme “Innovation and Competitiveness”. The conference was most impressive, with over 8,000 individuals participating at the event or through television broadcasts or streaming video online. Speakers included individuals from Colombia, the US, Canada, the EU, Asia, and other South American countries.

Minister Vélez initiated the conference with a passionate speech outlining the critical need for Colombia to leverage innovation to compete in the global economy; to date Colombia has limited exports beyond natural resources, but the Ministry of Commerce, Industry and Tourism has identified 18 market segments in which it is investing to lead Colombia forward. It was clear Minister Vélez understands the importance of early and life-long education to prepare the foundation for this transformation.

Having taught in Colombia for five years now (MBA and EMBA programs at Universidad de los Andes in Bogota) I have developed an admiration for the youth of Colombia; they are highly educated, motivated, and globally aware. Many of my MBA students at los Andes speak several languages (in addition to Spanish and English), have traveled the world, and have a keen interest in entrepreneurialism and innovation. In fact, several students who have attended my classes have developed world-class technologies that are now being marketed on a global basis.

So when I was asked by Minister Vélez to speak, I had to consider the elements of an Innovation and Competitiveness pedagogy. “How do we develop the skills needed for global competitiveness?” and “When should these skills be developed?” and “Where are there good examples of this pedagogy?” were my driving questions.

I started to consider examples; I referred back to the US National Innovation Initiative sponsored by the US Council on Competitiveness earlier in this decade and results reported in 2005. The survey highlighted a lack of scientists and engineers entering the work place in the US and a lack of entrepreneurial management skills being taught. Although there are pockets of innovation and entrepreneurship education in the US, there is no national level curriculum effort at this time.

I then referred to the work in Singapore to develop national innovation capabilities, including skills, financing and recognition. Singapore has developed a National Education Curriculum that has as on of its general foci as “thinking skills and creativity.” When I researched the curriculum, I could see that throughout the education process (pre-school to Life Long Learning) in Singapore skills are being taught that develop the innovative and entrepreneurial mind. Although Singapore is one of the most developed national curriculums that have a focus on skills for innovation and entrepreneurship, a similar program is being initiated in the EU according to my conversations with Maruja Gutierrez Diaz, Advisor to the EU Directorate General for Education and Culture, European Year of Creativity and Innovation.

What I developed from my research and conversations is what I am calling the “4 C’s of Education for Innovation and Competitiveness”. Briefly, these are communication Competencies, Creativity, Collaboration, and Convergence. I feel if these can be included in a national curriculum it would be a foundation for innovation and competitiveness.

In Communication Competencies, I feel we should ensure Students have the skills to communicate their ideas and points of view. Reading, writing, problem solving, and self expression are essential. These skills are necessary to ensure successful participation in all aspects of life, but are critical to innovation. These skills are developed from the years one to eight in life.

The second C, Creativity, is based on self expression. It enables students to generate and extend ideas, to suggest hypotheses, to apply imagination and to look for alternative innovative outcomes. Students must be given the opportunity to express themselves using different forms of expression, including art, dance, music and film. We should focus student creativity between the years three and nine.

Collaboration is the third C and takes place when individuals share information and points of view to solve problems and define new ideas. Collaboration requires a respect for diversity of culture, experience and thinking styles and the necessary skills should be developed between the years five and twelve.

Finally, as expertise is developed, we must focus on Convergence to achieve innovation related to more complex problems. Convergence is achieved when deep expertise and points of view are brought to bear on these complex problems and opportunities and participants in the innovation process understand how to utilize diverse expertise. The Convergence process is dependent on the skill level developed in the other three C’s. Convergence skills are developed from ages 11 to 17.

Embedding skill development into curricula supporting the Four C’s would create a foundation for innovation and competitiveness. But without these skills in addition to skills in business, engineering and the sciences, countries will struggle to be competitive in global markets.

In the US, it would make sense for the newly formed Office for Entrepreneurship and Innovation under the Department of Commerce (http://www.commerce.gov/NewsRoom/PressReleases_FactSheets/PROD01_008444) working with the Department of Education would be a good place to start discussions about such a national initiative.
As always, I would appreciate your thoughts and comments here on the blog or through email.

Innovation through Social Networking: Implementing Idea Networks

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Mon, 29 Jun 2009 17:18:00 +0000

At Launch we have always considered innovation a social function. Ideas are shared, critiqued, built upon and realized through the interaction and collaboration of individuals. Often organizations bring people together to share insights, brainstorm ideas and delve into deeper concept development and implementation planning and work. At Launch we have facilitated Market Sensing activities to gain new insights into customer needs and new business opportunities, Innovation Summits where groups share these insights and brainstorm ideas for new products, services and business models, Design Bursts to further develop concepts from selected ideas, and Deep Dives where concepts are realized and commercialization plans developed.

But these activities are episodic; they take place at a pre-determined time and place. This type of episodic activity is essential but not sufficient to develop a sustainable innovation capability and culture. Interactions between individuals are ongoing and a natural aspect of work in the most innovative companies and at Launch we have added to our work the concept to Social Networking to support ongoing interaction between individuals focused on idea generation and development; a phenomenon we have termed “Idea Networks”. We have found that Idea Networks are supported through Social Networking in three ways; individual employees meeting face to face, individual employees meeting virtually, and individual employees meeting with individuals from outside the company meeting face to face and virtually.

Let’s describe how some companies have harnessed these three forms of Idea Networking.

Bringing individual employees together outside of scheduled meetings and events happens regardless of what we do. The image of the “water cooler” as a point of what we call “coincidental interaction” is an image that easily comes to mind. Employee A goes to get a cup of water and encounters Employee B and while hydrating discuss a potential new product idea for some time and then return to their work spaces. The idea germinates and the two agree that at the next staff meeting they will present the idea for consideration.

The water cooler as point of Idea Networking is great, but what if we increased the chances for coincidental interactions and made these interactions a main stay in our company’s innovation process? Take the example of Borg Warner http://www.bwauto.com who when they built there state of the art Power Train Technology and Design Center in Auburn Hills, Michigan, they built community kitchens at the end of each floor that became inviting spaces for individuals to make a coffee, prepare a meal and interact with colleagues. Or the example of Printpack Corporation http://www.printpack.com/ where each floor of their new headquarters and innovation complex has a “Town Center” complete with Café, tables and comfortable lounge areas for people to interact, which is an expected part of work, collaboration and idea generation.

Probably the best example for bringing individuals together specifically for Idea Networking is BMW’s Idea Cafe in their design and technical innovation Zentrum (Center) in Munich, Germany www.bmwgroup.com . At the BMW Idea Café you can grab a meal, a coffee or beer and interact with individuals from the various technical and design areas. But to use the Idea Café means you are committing to collaboration. It is expected that you will work on an opportunity or issue while you are there. In fact, around the room are screens with questions, thoughts and ideas to which you are expected to add your two cents. The walls are electronic and your input can be “penned” directly on the walls. The content of the walls can be seen at any workstation in the center, and the questions, thoughts and ideas can be entered from any workstation in the center allowing for an idea “give and take” to occur on an ongoing basis.

This leads us then from face to face interactions to more virtual forms of Idea Networking. Many companies have implemented software to support idea exchange and development, but few have actually taken the precepts of Social Networking into consideration. Most often these software applications are implemented to solicit ideas and allow individuals to share ideas on-line through some sort of portal. These ideas are then collected and a team of people sort through, prioritize and assign actions to the better ideas.

In Social Networking the precept would be that individuals, not only the company management, know which ideas are the most needed (eliminating the need for “idea solicitation”) and these individuals are also the best to generate and select ideas to be further developed. The key is to create the Social Networking platform that allows for this more organic and less directed approach. The team responsible for innovation and new business development would monitor conversations for new ideas, subtly interject thoughts to stimulate idea generation and to quickly move strong ideas to action.

An example of this approach to Idea Networking is being used in the company Hot Topic, a retail chain of 690 stores for teens in all 50 states http://www.hottopic.com/ . On the company’s internal Social Networking site 6000 employees share data and create ideas. The site was custom developed by Socialcast http://www.socialcast.com/, a company specializing in developing Social Networks for companies. eWeek magazine has said “Socialcast is like a secure Twitter for the enterprise.”

Finally the third form of enterprise Social Networking for ideas has employees interacting with individuals and institutions outside the company. This usually is a portal on the company’s website that invites non-employees to interact on topics of interest and concern to the company. In this approach companies tend to be very careful with what can and cannot be shared by employees, and the companies also tend to be very explicit about expectations and limitations of the interactions.

Take for instance Choice Hotels http://www.choicehotels.com/ use of IdeaScale. “In the competitive world of hospitality lodging, it’s not just enough to simply solicit customer feedback — there needs to be a mechanism to turn that feedback into real business intelligence that can be quickly incorporated into our various properties,” said John Thompson, Director of Hotel Performance Training for Choice Hotels. Vivek Bhaskaran, CEO and Founder of Survey Analytics, the company that developed IdeaScale http://www.ideascale.com/ , puts it this way, “Our goal with IdeaScale is to help facilitate an authentic conversation between companies and their most important constituency - their customers,” says No company can succeed in the long term without actively listening to what their customers want and now with IdeaScale, any company can put the power of real-time feedback to work for them.”

Another classic example for Idea Networking outside the company walls is BMW’s Virtual Innovation Agency or VIA, a portal that solicits and interacts with selected ideas. http://www.bmwgroup.com/via . Via has been intricately constructed to ensure ideas of relevance to BMW’s business strategy are selected through a series of screening and IP protection (both for BMW and individuals from the outside) filters.

So there are a variety of approaches to using Social Networking to create a powerful Idea Network. The key is to start by setting your technology strategy to best support your business objectives. After this, a few considerations are essential.

Do you have specific business growth targets/areas you see a form of Social Networking supporting?
Have you mapped your Idea Network, or the individuals and institutions you might want to support with Social Networking?
Have you determined if your Idea Network should include just internal employees or should it include individuals external to your company as well?
If the network you want to create includes externals, can you protect sensitive information and IP flowing to and from the network?
Do you have the innovation management capability to monitor the Idea Network you create to ensure you can “manage” the conversation and to ensure top ideas get the attention they need?

All in all, the technology exists to build powerful Idea Networks; the only thing holding you back is some planning and the will to try something very new! And, as usual, let me know thoughts, ideas and experiences.

Brain Dominance and Innovation

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Wed, 29 Apr 2009 18:00:00 +0000

Years ago I was immersed in thinking styles and brain dominance theory and practice, in particular the work of Ned Herman, Bernice McCarthy and Betty Edwards, and I have applied these concepts in my work for thirty years. The basic theory is that people have different thinking styles, often simplified to a “Right Brain-Left Brain” distinction, with Right Brainers being more intuitive in their thinking and Left Brainers being more logical in their thinking. There are many research reports and resources available on the subject http://en.wikipedia.org/wiki/Lateralization_of_brain_function. In fact, various on-line tests exist to determine your preferred thinking style. You can do a quick analysis at http://www.launchinstitute.com/content/view/158/32/ .

The application of this information is critically important in the management of innovation. Have you ever worked on an innovation assignment with a team and experienced the gnawing feeling your ideas were just not good enough? Worse than that, you had to submit the ideas you had come up with knowing they could have been better. If so, it is quite possible you and your team were not operating with what I call Cognitive Agility. Where Launch Institute has used methods related to Cognitive Agility, we have seen much stronger individual and team results and more “Strategic” or game chaninging innovations. These innovations were inspired by uncommon connections and were enabled by high levels of mental flexibility, openness, and vigilance; the core elements of Cognitive Agility.

Three things are required in the application of methods to stimulate Cognitive Agility: 1) A basic understanding of the theories of brain dominance and thinking styles, 2) an appreciation of one’s own personal Cognitive Agility Profile, and 3) the dynamics of intersections (teams) of Cognitive Agility Profiles.

A case in point is a recent small team (18 people) innovation session Launch facilitated. The focus was on a new technology for the Department of Defense (DoD) and the participants were DARPA program planners, DoD engineers and others. Prior to the session each team member was given a set of readings (research reports and case studies) related to Cognitive Agility. They were also asked to use the Launch “Cognitive Agility Profiler” tool to document their personal degree of Cognitive Agility which they then submitted prior to the session.

Launch developed individual and team profiles. It was determined the individuals in the group were predominantly left-brained and highly analytical yet flexible in this thinking style as well as highly vigilant but they would not be open to other thinking styles or more intuitive approaches to finding solutions. Based on the goal of the session (a breakthrough in technology) it was determined that a better “mix” of styles would be necessary and session activities would need to be designed to ensure a higher level of Cognitive Agility was achieved. So we brought in a set of “Cognitive Ringers” to create a more balanced team profile.

The session resulted in four technologies that facilitated the desired breakthrough idea which is now being prototyped. Almost every participant asked for Launch to create profiles for their regular work groups to achieve better understanding of each other and, when this is applied, better work results.

Feel free to download the assessment above. Pass it around and enter the “Brain Dominance” discussion with your team. You will achieve new insights that will lead to bigger and better innovation results!

Manage Innovation From Your Value Fulcrum

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Tue, 31 Mar 2009 13:54:00 +0000

A recent article appearing in Accenture’s “Outlook” series (Outlook How to Capture the Essence of Innovation:) suggests Innovation Management should be directed by the organization responsible for the learning and knowledge management function through an “innovation network”. This network is meant to connect the nodes of knowledge in the organization leading to collaborative insight and ideation.

At Launch, we are strong believers in collaborative innovation structures and the use of core institutional knowledge as a basis for development of insights and ideas, but we feel it is critical that ownership of the Innovation Process and organization be at the fulcrum of value creation in the company, the company’s chosen “Value Discipline”.

We use the model created a decade ago by Michael eacand Fred Wiersema in their book The Discipline of Market Leaders. In this work a model identifying three potential Value Disciplines (Operational Excellence, Product Leadership and Customer Intimacy) are described. eac and Wiersema’s key message is that a company chooses one “Value Discipline” as its key focus for differentiation while maintaining market competitiveness in the other two.

In our work we identify the chosen differentiating Value Discipline of our clients and then determine the optimum means of managing innovation including where in the organization accountability of innovation should reside; in an Operational Excellence company it should be managed in the area most responsible for efficient operations (manufacturing center, distribution center, etc.) and headed by the Chief Operating Officer, in a Product Leadership company it should be managed at the point of New Product/Service Development and should be lead by potentially the Chief Technology Officer or her equivalent, and in a Customer Intimate organization innovation management should reside where the focus is on the customer experience and their needs and should be lead by the Chief Marketing Officer or similar role.

It is critical that innovation be managed from the right place in the organization to ensure this work has credibility, timeliness and the proper knowledge and resources applied. If it not managed from the right place, political tug-of-wars occur, resources are ill-spent and differentiating ideas make it to the market too late if at all.

The Chasm Detroit Must Cross

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Mon, 29 Dec 2008 15:06:00 +0000

In recent days we have heard much about the potential bailout of the “Big Three” automakers, while at the same time foreign auto manufacturers in the US are in hiring mode. The prime reason given for the Big Three Bailout is millions of jobs are at stake and the potential for the Big Three to default on $100 billion in loans which is affecting the financial sector of our economy. The Big Three CEO’s have come to Washington to plead their case, and Congress responded. “Show us a plan,” they said or “we cannot show you the money”. And in this plan it is expected that the Big Three outline how they will innovate to future success.

In the past Detroit was seen as a source of innovation, but as a recent BusinessWeek article described the current Chrysler (currently lead by Robert Nardelli, former HomeDepot CEO) is in the “innovation basement” lacking vision, design clarity and banking on old technology. This holds true for the other Big Two, and how they got here is clear to me. Innovation has become a chasm between the American Automotive Industry and the market.

I work on innovation issues in the auto industry, including OEMs, suppliers, engineers, designers, financial and marketing people. I have worked with US automotive companies, European automotive companies and Asian automotive companies and I have come to understand a key difference between US automotive companies and the others related to their ability to innovate: Automotive companies outside the US have a design mentality that permeates their enterprises.

What becomes clear to me with foreign automotive companies is the presence of what I call the “designer’s eye” in every aspect of the enterprise, a sense of aesthetic and function that instills a human appeal to the products they create. Whether it is the smallest component to be placed in the vehicle or the design of the vehicle itself, the designer’s eye is constantly present. This eye is present even in the most ardent engineer.

This is very counter to how American automotive companies approach their work. First of all, engineering is seen as a problem solving activity. Problem solving is based on a mindset that is reactive (responding to what is) rather than predictive (generating what could be). This reactive mindset precludes an aesthetic orientation, which is ultimately needed, so the ideas for new technologies and products are engineered and then handed off to designers to “package” and make functional and appealing, an activity often described as “design by committee.”

Second, the walls between engineering and design in American Automotive companies not only add to product development cycle times, but inhibit the sharing of the designer’s eye. Chris Bangle, the Chief of Design at BMW’s Design Center in Munich, Germany (an American, by the way) puts it this way, “At BMW we work with cross-functional teams from the start, with representation from design, engineering, human resources and financial controlling.”

A more fundamental issue may be influencing this designer’s eye; education. Schools in Europe and Asia place equal emphasis on the Arts and the Sciences. Students in Europe learn as much about the Master Painters and Architecture as they do about Physics and Differential Equations. I believe this emphasis creates a balanced perspective that is brought to the job.

So what should we look for in the Bailout Plans of the American Automotive Industry?

First, we must see that there is intention to instill higher levels of innovation in the products and technologies they produce. They must show concrete steps, including the integration of design and engineering, and having the courage to try new things. The challenges of the future are clear; meeting rising energy costs, reducing carbon emissions, and dealing with ever increasing congestion on our nation’s highways.

Second, we should see that the American Automotive Industry is willing to develop ideas that are less reactive and challenge consumer assumptions. Too often they have kowtowed to the whims of the American consumer (large SUVs) rather than developing compelling ideas and designs that are right for a changing world. This is evidenced by the fact that the Toyota Prius and other hybrids have taken the market by storm even though the American Automotive Industry introduced alternative vehicles years ago, but withdrew them when a small group of critics, including the Oil Industry, emerged.

Finally, the American Automotive Industry must be willing to challenge the constraints placed on it by related industries; in particular the oil industry. The influence of the oil industry has done much to direct the development of the American Auto Industry and it is imperative that for the American Automotive Industry to survive, the two must work together and address the challenges to both industries and the world.

Give customers what they need, not what they want…

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Thu, 13 Nov 2008 15:42:00 +0000

In today’s column by Thomas Friedman "How to Fix a Flat" he eloquently (and passionately of course) speaks to the requested bailout of US auto companies and the tie to innovation (or “un-innovation” as he terms it). In setting out his logic for the “Big Three Failures” he states the un-innovation, “led to a situation whereby General Motors could make money only by selling big, gas-guzzling S.U.V.’s and trucks. Therefore, instead of focusing on making money by innovating around fuel efficiency, productivity and design, G.M. threw way too much energy into lobbying and maneuvering to protect its gas guzzlers.”

What Friedman says is all true, but the lingering question for me is “Why did they make gas guzzlers in the first place?” The answer to this, according to my marketing contacts in two of the Big Three, is, “We gave the customers what they wanted.” The American love affair with power and size drove the decisions made, and Detroit was not willing to challenge the customer mindset that desires the power and size that guzzles gas. Then, when the magic number of $4.00 per gallon came to be, customers stopped buying the guzzlers, and dealers were left with huge inventories of super-sized vehicles.

The fact is years ago trend research and future scenarios existed showing the $4.00 per gallon reality. In fact, at Launch Institute we played out this price scenario five years ago with Eaton Corporation’s Truck Division. Out of this work came the “Four Buck” Truck scenario resulting in the current Eaton Hybrid Electric Truck program, reducing fuel consumption for mid-sized delivery trucks (think the Fed Ex truck that brings packages to your door) by 35% and reducing emissions (another key innovation driver) by 45%.

At the time of this design work, fuel was under $2.00 per gallon, and the pressure to save fuel costs was not as intense as it is today. But at Eaton, under the visionary leadership of Eaton Truck’s President Jim Sweetnam and their Chief Technology Officer Tim Morscheck, the concept was incubated, prototyped and developed with several partners, included another visionary company, Fed Ex. Now the technology is being used in trucks, buses and will soon come to construction equipment.

If Eaton Truck had just listened to their customers they would have continued to make the same products and battled to keep the price for those products competitive. They were not satisfied to do this, and knew that their future lay would be built on ideas that met unspoken customer needs. Eaton takes the time to “play with” the future, and in this the see opportunities.

Back to Friedman’s point, what is the basis for Detroit’s un-innovation? I suggest it is two things; the lack of a capability to “play with” the future, and the absence of the anatomical parts to challenge their customer’s desires and by doing so ensuring a more successful future. They need to get it right this time, and we should demand this as criteria for any taxpayer dollars going to their aid.

Reinvigorating Your Innovation Process

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Fri, 10 Oct 2008 14:50:00 +0000

Many organizations are finding their innovation process and toolset have become stale. The process has become routine, with accountable individuals routinely conducting the expected activities and applying tools and techniques that have overtime become more habitual and less inspirational. All this leads to less than exciting ideas and smaller return on our innovation dollars invested.

The fact is, we must continue to refresh our innovation processes and toolsets. The very reason we instituted these in the first place was to create a higher level of interest and engagement from our teams by doing things differently. Once our innovation work becomes routine, it fails to serve our needs.

At Launch Institute we have worked with organizations on their innovation processes and toolsets for years, observing the ebb and flow of ideas and results. We have observed three key areas where, with attention and focus, we can ensure the ongoing vitality of our innovation work. These areas include leadership, techniques and timing.

In the area of leadership, the innovation process most often originates at a high level in the organization; if not at the CEO level somewhere very close to that level. Over time, accountability for the process is delegated down in the organization where it becomes less leveraged and increasingly insulated from the corporate vision and ambition. Take for instance the company where the innovation process was established by the CEO and Chief Technology Officer to (successfully) support the development of a well envisioned breakthrough technology and within three years accountability for the same innovation process resides four levels below “C Level”, insulated and working on more incremental projects.

When organizations first utilize innovation techniques such as market sensing, brainstorming and idea development, they are considered unique and engage team members at a very high level. If the techniques are not refreshed and new techniques introduced, they become routine and team members blindly conduct the activities without putting their best thoughts forward. Another issue here is the use of internal company consultants who tend to be comfortable with a set of techniques rather than combining this with outside consultants to add some “spice” to the work.

We have observed this in an organization that has utilized the same techniques (no changes) for two years. The time frame for the sessions have been cut in half; not because the sessions have become more efficient (quality of ideas is worse) but because the interaction/discussions of the participants have narrowed to quickly filling in templates rather than deeply exploring the opportunity area and challenging each others assumptions.

The timing of innovation activities can also be a reason innovation work becomes routine, while initial innovation events were scheduled based on specific needs and hot topics, When the innovation process becomes de rigueur, yearly schedules are set and topics pre-selected, giving participants the sense much has been predetermined and the need for new ideas minimal. There should be a healthy mix of prescheduled events with events that are more spontaneous and timely. Higher level events such as scenario planning and opportunity identification should be prescheduled while more focused events such as identifying new product or service ideas should be conducted when the time is right.

A few suggestions on reinvigorating your process would be:
1. Conduct an audit of your current state of innovation work. Interview participants and those accountable and compare their comments to best practices in innovation management.
2. Be intentional about introducing new tools and techniques to keep participants stimulated and challenged. Include outsiders to add spice to tools and techniques as well as content.
3. Mix your events with prescheduled as well as “just in time” events that focus on timely needs.
4. Reengage senior leadership in the work of innovation, not only in the legitimization of the process, by looking to them for challenges and vision and ensuring their involvement in decision making processes.

Again, we must be vigilant in maintaining the creative edge of our innovation process and techniques to ensure the proper return on our innovation investment.

When Industries Converge: The Power of Coincidental Interaction

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Tue, 19 Aug 2008 14:44:00 +0000

One of the prime sweet spots for new ideas is when industries and areas of specialization come together. Most often, these encounters are spontaneous and downright accidental. But more often companies are intentionally planning these encounters with the explicit intention of identifying quid pro quo business opportunities; creating new synergies and at times disruptive new technologies, products or services.

The next few entries in this blog will be related to industry convergence as a source of insights and new business ideas. I will describe programs companies have introduced to specifically find convergence opportunities but will start with the more spontaneous.

Take the case of BMW’s application of an iPod dock in its vehicle offerings. The story goes that an engineer from BMW’s Palo Alto Technology Office was sitting at a bar one evening waiting for his dinner partner and while at the bar met an Apple representative. As they described what they each were doing the vision of an iPod dock in every BMW emerged. The two traded cards, parted that evening and the rest is history.

Now this idea of an iPod dock will not solve world hunger and it certainly has only marginal effect on either BMW or Apple’s turnover, but it highlights the importance of “coincidental interaction” in the business innovation process. And although this encounter occurred totally by accident, some conditions existed that moved the interaction from an interesting coincidence to a business offering.

First of all, the two individuals met in Palo Alto a hotbed of innovation.. In 1997 BMW intentionally situated itself in the heart of Silicon Valley when opening their Palo Alto Technology Office (PATYO). The purpose of this opening was to put creative engineers from BMW in touch with others developing new technologies. This gives BMW a “launch pad” to develop not just great ideas but new relationships as well.

Second, the BMW engineers arrive at PATYO with specific project ideas on which to work, but they are also expected to “sense” opportunities beyond their specific projects. They attend seminars, interact with customer communities, and link up with those who know the pulse of Silicon Valley, such as researchers, R&D centers, venture capitalists and start up owners.

Finally, each BMW employee knows that he or she has a role in identifying and developing new opportunities. Given this expectation they are constantly scanning for new opportunities and know where to take the idea once they have it to ensure specific actions are taken.

Innovative companies are quite similar in this coincidental interaction capability, but, as outlined above, certain conditions must exist for the ideas to take form and a powerful relationship between two industry power houses to take shape.

To learn more about the BMW Apple innovation go to:
http://www.apple.com/pr/library/2004/jun/21bmw.html

Open Innovation at Muhtar Kent’s Coca Cola

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Tue, 24 Jun 2008 16:09:00 +0000

One of the advantages Launch Institute clients find is our passion for open innovation and our rich “Network of Innovators” from which we put companies in touch with each other. The Network allows companies to “converge” their capabilities, create even higher valued ideas. Muhtar Kent, next Coca Cola CEO, will need such convergence to grow Coke.

As Kent takes the helm at Coke, the company finds itself with 2% growth (expected to be flat this year), decreasing world-wide sugared carbonated beverage sales (much due to an increase in consumer health awareness), water sales slowed (in large part due to environmentalists opposition to plastic bottle packaging), and a slowing global economy. But as with all challenges there are tremendous opportunities for Coke (make lemon aide when given lemons, as some say), especially if they broaden their perspective and truly embrace open innovation for business growth.

Some points in case:

First of all, healthy carbonated alternatives to sugar saturated syrups are available. In fact, Coke is doing well with teas and vitamin drinks; the key will be to make sure these alternatives are healthy (not just positioned as healthy, as in Coke’s Glaceau Vitamin Water) and then exact higher margins in proportion to the health value of the product. In open innovation, it would be good to see Coke partnering with health organizations, clubs, and such to develop better products and actively position alternative drinks with buying communities.

We know that water will be the resource (after oil) to be in critical demand in the next century. To be so near sighted as to hyper focus on the topic of consumer convenience as the key “water design issue” is folly. The fact is potable and agricultural water where it is needed, when it is needed and how it is needed is a larger issue and must be considered by beverage companies. Technologies exist to extract potable and agricultural water but investment is needed to create the markets. Coke could certainly be in the mix, along with water infrastructure visionaries such as the Walt Disney Corporation, The Small Community Water Infrastructure Exchange http://www.scwie.org/ , and The World Bank.

Then there is the packaging issue; the image of containers in landfills for decades is not a good one. So Coca Cola should embrace this challenge as a business opportunity. They should investigate ‘reverse vending” technologies like Envirobank’s http://www.envirobank.com.au/ reverse vending machines that take in your bottles and cans and pay you for your refuse, or partner with the likes of Dow Chemical and Printpack http://www.printpack.com/ who are partnering of technologies to convert packaging waste to energy.

Coke has already partnered with one of Launch Institute’s clients, Eaton Corporation, to introduce hybrid delivery trucks into the US market http://www.csmonitor.com/2007/1130/p03s02-usec.html . Imagine Coke’s image and message if they took these delivery trucks to other parts of the world; Coke could be a trend leader in other parts of the globe, positioning itself in foreign markets as a friend of their environments.

The challenges for Mr. Kent are significant, but the opportunities that lay within are of equal significance. The key for Mr. Kent and Coke is to embrace Open Innovation, create a powerful “Network of Innovators”, and transform the current culture of Coke to not just talk about the changes needed, but to become the difference.

Creativity

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Tue, 06 May 2008 16:33:00 +0000

Much has been written about creativity. It seems to often take on a mystical air, particularly as it relates to business innovation.

There are several basic elements to creating new ideas in businesses. The first is to have strong insights that identify unique business opportunities coming from your Sensing work. The second is to make sure your criteria for selecting ideas are clear. The third is to have a diverse team of individuals generate ideas from many points of view.

Making sure you have good “filters” to select from the wide range of ideas comes first. These filters represent your organization’s strategic ambition, market and financial goals. Launch helps you develop a set of Innovation Filters to use in idea selection and decision making.

At Launch Institute we use our world-renowned Innovation Summits to help generate a range of new product and service ideas and also build business models for those ideas. The Innovation Summits are links between the sensing and putting the rubber on the road and involve individuals who represent many points of view related to your creation objectives.

Once new product and service concepts are selected, they are taken through a Design Burst. In the Design Bursts we establish processes in your organization that nurture and refine your new ideas to the point where they become business cases ready for decision making.

To keep the new business plan from being compromised to fit your existing model, Launch Institute introduces the Launch Laboratory approach. In the Launch Labs, Cross-functional teams work independently in a series of Deep Dives utilizing Launch Concept Development tools to ensure the design integrity of the new ideas is maintained.

Having process and structure for innovation may seem counter-intuitive, but it is essential for creative progess in today's business enviornment.

Some Gurus Finally Get It

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Tue, 15 Jan 2008 18:13:00 +0000

In the October 13-19, 2007 issue of The Economist there was a special report on innovation

http://www.economist.com/specialreports/displaystory.cfm?story_id=9928154

A few insights emerged for me as I read it.

First of all, there is a recognition that “open innovation” is the most formidable force in the creation of sustainable business growth. What this means is ideas can come from anywhere, and the companies that have their antennae tuned to the outside will be the ones who find the next great thing, not companies who are only internally focused.

This is exciting, as the article states, for developing nations because they can be the source on ideas to open innovation companies. No longer is innovation solely the realm of the white coated R&D types. But then, some of us have known this for some time.

Second, within the realm of open innovation, we are beginning to experience the capabilities of Chinese and Indian innovators. As the article states, “there are now over 400 firms designing chips (semiconductors) in China,” with new chip innovations on the horizon. Another example is Tata Motors and their “Nano” vehicle selling for less that $2500, a price approachable by 70% of the world’s population who here to for could not afford a vehicle. (The next question is “what innovations will be derive to deal with all these new cars on the roads?”)

Finally, in the section of the article titled “A Dark Art No More,” a consensus from the innovation gurus such as Clayton Christensen and Larry Keely states “the innovation process is steadily becoming a practical science to be measured, taught and managed.” This has been the core of Launch Institute’s business for 11 years; building, managing and measuring our clients’ innovation processes to achieve higher levels of organic growth. Our clients (Nokia, BMW, and P&G among them) have known this for years and in this knowledge have developed world-class growth engines that are killing the competition.

Its nice to know the “gurus” finally get it!

Design Innovation Centers: Space for Creative Thought

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Fri, 10 Aug 2007 17:33:00 +0000

This month a long time Launch Institute client, Printpack Inc., a $1.3 billion packaging technology company (www.printpack.com), moves into a new office building in the prestigious Vinings business district of Atlanta, Georgia. For two years, Printpack has refined its design innovation process and organization and upon moving into the new building there will be a specific space for the conduct of design innovation work at Printpack; the Printpack Innovation Center.

Printpack’s Innovation Center (architected by DFab Design Fabrications) will be on the ground level of the new high tech five story headquarters (some details below). In fact, upon entering the main lobby of the new building, visitors will be “seduced” by a curved hallway and graphics to enter the Innovation Center. The Innovation Center is set up to represent Printpack’s value chain, its history of innovation, and the emphasis Printpack is placing on design innovation.

While Launch Institute advised Printpack during the design of their Innovation Center we used our experience working on other design innovation centers, such as the work we did with BorgWarner designing their Tech Center in Detroit, establishing NCB’s “Alternative Work Environment” and BMW’s innovation center in Munich. We have also worked in other innovation centers at 3M, Apple, Nike, Sony, P&G, McDonalds and Royal Dutch Shell.

One thing we have learned is that as a company’s design innovation process matures, it becomes important that an associated physical location is established for several reasons. The first reason is to create a physical identity for design innovation work. When entering a design innovation center it signals a difference in work orientation, expectations and gives “permission” for participants to play with ideas.

Second, a design innovation center is highly visual and as such conveys what is strategic and important to the company. In the center are representations of company needs, current creative efforts to meet those company needs, and sources of insight from which ideas can be generated. By being highly visual (pictures, graphs, multimedia, etc.) it makes important information accessible in a rapid timeframe. Visual information also conveys content at a more emotional level which is important to stimulate higher levels of creativity.

Third, a design innovation center displays the important work being conducted by the company to maintain a robust portfolio of projects that are the basis for the company’s future growth. Certainly the confidentiality of certain projects must be maintained, but the “IP teasers” delight not only employees using the center but visiting shareholders, customers and suppliers as well.

Finally, a design innovation center is a source of assistance and facilitation to employees looking for unique team work processes and problem solving techniques. The center is staffed by individuals who understand creative processes and techniques and often provides space and support technology for teams to use in their creative work.

The Printpack Innovation Center
Several key elements of Printpack’s Innovation Center stand out. First of all, the layout ensures a sense of freedom and movement. The curved walls, use of natural light and access to “interaction space” invites individuals to think openly and collaboratively (Figure 1).

Figure 1: Printpack Innovation Center

Access to the latest in multi-media technology encourages individuals to share and build upon each others’ ideas.

The Innovation Center will also convey the historic timeline of Printpack’s innovations. The use of a graphic timeline leads visitors into the central courtyard of the Center. This ensures individuals are grounded in the fact that Printpack has a history of innovation and this is a foundation to build upon. In the heart of the Innovation Center are packaging displays (displayed to emulate retail environments), supplier and customer displays and specific technology displays, all on a rotational basis to ensure timeliness (Figure 2).

Figure 2: Printpack Innovation Timeline and Product Center

The presence of a design innovation center says “We are serious about design innovation.” Some of our clients have utilized more temporary “Design Innovation Studios” to focus their creative work rather than outlay the capital necessary to build a more permanent center but, either way, establishing space to conduct creative work will have significant results for companies.

Economist Intelligence Unit: Innovation Report

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Mon, 30 Jul 2007 16:41:00 +0000

In a recent article in the Economist, “Innovation: Transforming the way Businesses Create”, a report on global innovation research conducted by the Economist Intelligence a pattern for the need for organization systematic approaches to innovation emerges.

First of all, the research showed that of the 485 international companies surveyed 87% stated innovation was important or critically important to their business’ long-term success. The survey also found that in companies where innovation is viewed as critically important to company success 46% state they are performing better than their peers.

A question then of these companies is “How many of these companies have a sustainable, systematic innovation organization and process? “ In total 46% of those surveyed they set up dedicated teams who were not distracted by current business activities. This is a high number given the difficulty of shifting resources from existing business or projects to new projects. But is does show that successful innovation companies do make such changes.

In Geoffery Moore’s 2004 Harvard Business Review article “Darwin and the Demon: Innovating Within Established Enterprises” he highlights the need to “deconstruct” non-performing business areas and shift those resources to new high potential projects. This reapplication of critical resources enables an organization to form necessary teams to take on innovative business projects; the difficulty is in getting those resources reapplied. It is my suggestion that managing such business deconstruction must be a policy of the company and procedures to do such should be part of every organization’s Value Capture platform.

Second, the Economist article states that the most cited step companies take to ensure success of business innovations is the assurance of senior executive support to the venture. This support is not just acknowledgement of the project, but includes the financial and administrative support needed to see an idea to results. My experience has been that without this executive support, particularly when ideas are of higher risk or don’t fit the standard business of the company, the ideas fail more than 90% of the time.

The article is full of insights on innovation management and the role nations play in innovation and is a must read for those supporting design innovation in any capacity. You can find the article on the EIU website at www.EIU.com.

Making the most of misfits

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Tue, 27 Mar 2007 15:27:00 +0000

There is something to be said for the "out-of-the-box" thinker; the one who comes up with the wierdest (but sometimes most interesting) idea. Often the individuals who come up with these ideas are considered "misfits", either socially or cognitively seperate from the rest of the us; the loaners, the drifters, the contrarian.

And we don't have much tolerance in companies for these folks. We tolerate fit; those who match the norms of our organization and in doing so we limit the "degrees of variance" in our ideas because everyone in the company tends to think alike. We fit a mold; a sort of "Stepford" approach to insight and creation. In this mold we are limited to incrementalism in our ideas, never seeing the more "radical" idea that might not fit but could have great potential.

But some companies have realized that managing misfit in the creative process brings what is sometimes called the "abrasive" ideas to the mix that stimulate thinking beyond incrementalism. They embrace the misfit (even if only for a short time) as part of their creative process and give them equal standing. Below are some means for initiating such an effort.

1. Create a studios where misfits can participate.
Recently we have been establishing "Design Innovation Studios" for our clients. These studios are run by outsiders (individual designers, small design firms, creative consultng teams) and include individuals from the client company for key activities. The studio heads themselves are "misfits", but they are incouraged to include others in the mix and so invite "free radicals" to participate in key activities such as brainstorming sessions.

2. Invite contrarians to the party.
Every company has them; those who never see good in anyone's idea but their own. And sometimes they do have a better idea but are so poor at expressing that idea they alienate others. If you invite contrarians to the party, manage their involvement. If you allow them to constantly step on others ideas it will lead to no good. Instead, put the contrarian into "time out" by asking them to take a flip chart, go to a corner, and diagram their idea. Then have them present the idea to the group and see what it stimulates.

3. Develop a language for your work
Some misfits are just on a different cognitive plain than the rest of the group. This can be as basic as a very bright "nerdy" individual who doesn't fit to an autistic savant; brilliant but unable to communicate. In these situations time must be taken to develop a means of communication, a language for team members to share insights and ideas. Designers often call this a "design language" that conveys the subtlties of the work in a "shorthand" that is understood by all involved.

I would be interested in your thoughts on managing misfits. Please let me know them.

Innovation in Colombia

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Thu, 04 Jan 2007 20:29:00 +0000

Chris Kraul writes about Colombia's significant growth in the January 2 edition of the LA Times.
http://www.latimes.com/business/la-fi-latinecon2jan02,1,3954095.story?track=crosspromo&coll=la-headlines-business&ctrack=1&cset=true The fact is much of South America is a growth and expansion mode and much of this is being driven by a focus on innovation and entrepreneurship. I am very excited by what I see in Colombia and other countries in South America.

I was recently asked to write an article for an issue of Dinero magazine http://www.dinero.com/ about my views of Colombia's innovation hopes. I reproduce that article here (in English):

Innovation: The Lifeblood of a Free Society
David Sutherland, Ph.D.
Founder and Managing Director, Launch Institute
Visiting Professor, Georgia Institute of Technology, Atlanta, Georgia
__________________________

I was recently asked what the role of innovation is in the maintenance of a free society. This is not a trivial question and I did not give it a quick response. Upon reflection three things came to mind and I then thought of these in relation to Colombia.

First, healthy innovation provides individuals with financial opportunity. The fundamental purpose of innovation is to come up with new things (technologies, services, business models, etc.) that generate value. When this value is developed in a free society it is distributed among the owners, shareholders, workers and associated companies and communities.

Second, a healthy flow of innovation provides individuals with job options. A flow of new ideas provides a diversity of jobs which in turn necessitates more variety in education, fluidity of location, and heightened market awareness. “Choice” becomes a beacon that attracts an innovative population to challenge the status quo and explore new areas of opportunity.

Third, healthy innovation fulfills a fundamental human need; the need to create. Whether we are being creative at our job, in our hobby, or at home, every one of us finds an outlet for the creativity that resides within us. When these creative outlets are constrained in the business world, bureaucracy takes over and citizens become cynical. When such a cynicism forms over time it becomes increasingly difficult to change.

My recent relationship with companies and individuals in Colombia has excited me. In my discussions with mature companies, I was exposed to their understanding that to grow and maintain corporate independence these companies must develop new ideas. With Colombian entrepreneurs I feel an excitement for “the possibilities” and great energy about getting started. With the Colombian students I have taught I see their great pride in Colombia and their understanding of Colombia’s potential in the Global Marketplace. A foundation exists for great innovations to develop in Colombia.

The skills and capabilities of Colombian students and entrepreneurs match those of any nation. Many of my Colombian students have studied in foreign institutions, including Europe, Africa, Australasia, and North America. They have a deep understanding of other cultures, including needs and market opportunities. The perspective and insights developed from the foreign experiences of these students must be considered as the Colombian Government considers where to invest its growth support; as these students know, global opportunities exist.

On the other hand, these same discussions give me concern; I see companies that understand their need for new ideas but they are constrained by bureaucracy that, like concrete, has hardened over time. I see entrepreneurs with great ideas but little support for developing those ideas. I see students with great pride in Colombia but an equally powerful need to create and succeed, and a global job market that will provide them with this opportunity if Colombia does not.

Making strong connections between Colombian businesses, entrepreneurs and students should be a primary objective of the Colombian Government. Alternative business models that confront the current bureaucratic business models must be demonstrated. First, businesses need to be committed to this change. This change will be easier when these companies see alternate market opportunities; most of these opportunities will be outside the current markets these companies serve, so support to “sense” new markets around the world should be provided by the government.

Second, when new opportunities are identified, resources must be available to “create” new offerings. Combining the scale of existing businesses with the energy of designers, entrepreneurs and the insights of the students will be a strong basis for the “creation” of new technologies, products, services and business models. But on this point I have a warning; the seduction of “Free Trade Agreements” will open new markets to companies, but often the opportunities in these agreements are low value orders to be fulfilled constraining work forces from innovating. Colombia must invest new wealth from open trade arrangements into innovation.

Colombian businesses must commit to the conduct of innovation work in their organizations. Best Practice innovation companies have innovation as a core process in their businesses, with individuals accountable for a portfolio of novel business ideas and a process to develop and commercialize these new ideas. A great example of such is BMW’s Global Innovation Process, with an innovation facility and organization in Munich with “trend scouts” and Innovation Satellite Offices around the world identify both unique customer needs and unique differentiating technologies.

Reflection on my experience in both developed and developing economies indicates that this is a critical time for Colombia; it is a time that requires choice, commitment, and action. The first choice is about Colombia’s ambition to be a national, regional or global player (with the later requiring significant change). Once the first choice is made, the second choice is about which industries and capabilities to position in which markets. Please understand these choices will be made for Colombia over time through the whim and dynamics of the marketplace or the choices can be influenced by the insightful review and analysis of Colombian business development agencies.

With the choices made, a commitment to support companies and entrepreneurs must be made. This commitment must include investment in international business relationships (the Irish Development Agency is a great example of this), support of scientific and technology development, and the establishment of “incubators of innovation” such as innovation centers, business and technology development parks, etc. All this will require funding, but the most important commitment is the commitment to change, and this will never be easy without examples of new models of incubation and entrepreneurship.

Finally, action must be taken. With the “incubators of innovation” in place new ideas must be developed and commercialized. These ideas need to be recognized by national awards (Singapore’s National Innovation Awards are a great example of this) and taken to international trade shows to showcase Colombia’s role in the global market. All action should be aligned with a shared vision of a future Colombia that provides individuals with financial opportunities, job options and the chance to create.

In future analysis the success of Colombia’s entry into the global market place as a serious economic force will depend on the actions described above be taken in the next three years. The world economy is moving forward aggressively. Colombia must carefully choose the actions it takes.

Organic Growth Pitfalls at Acquisition Companies

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Fri, 27 Oct 2006 12:38:00 +0000

The Differences

Yesterday’s Atlanta Journal Constitution article (“New Focus Leads to ChoicePoint Loss”), related to ChoicePoint’s shift in growth strategy, highlights the peril of companies that have in the past grown through acquisition and suddenly shift to the identification of new growth opportunities from within their own ranks (organic growth). The pitfalls are not always apparent, and if they are not understood they can lead to less than desired results.

Obviously specific pitfalls differ for various types of companies (manufacturing companies, consumer products companies, retailers, etc.) because their acquisition requirements are not the same. But there are some common themes that cross these companies that can be overcome. And there are examples of companies that have overcome these pitfalls.

First of all, let’s understand that the acquisition approach to growth is distinct and different from the organic approach in several ways:

One, the mindset of acquiring companies is generally focused on increasing market share by absorbing companies in markets they want to be in. This mindset is somewhat “hyper-focused” on specifics and doesn’t tolerate the ambiguities found in organic growth initiatives. Generally the acquiring company has a set of screens and criteria that are set and vary little from acquisition to acquisition. In contrast, organic growth work must have a high tolerance for ambiguity and include a degree of unfocused activity.

Two, capital is the general fulcrum used as leverage in an acquiring company’s toolkit. Frankly the price must be right for a deal to go through and generally a great deal of effort goes into capital access and negotiation with the seller. Often “relationship ability” is a highly valued skill in the capital arena and this ability often incites power positioning. In the work of organic growth egos must be held in check and not be allowed to hinder good ideas.

Three, the capability valued most in an acquiring company is integration. The masters of integration can bring a newly acquired company into the fold effectively in a short period of time; getting the acquisition on board and generating results is the goal. Much of this work is business model, systems and process focused; highly internally focused. Organic growth requires a high degree of external focus to identify new opportunities.

Four Keys to Incorporating Organic Growth into an Acquisition Company

In Launch Institute’s work with acquiring companies going organic we have learned that attention to certain areas lead to higher levels of success. These address the pitfalls emerging from the differences highlighted above:

Understand the Differences
As described above, the differences reside in market orientation, business operating model, capabilities required and degree of involvement of employees. When Bank of America realized its need to add organic growth to its acquisition strategy, it gathered a very senior group of execs whose purpose was to understand the differences. This group immersed itself in the literature of innovation and organic growth, attended pertinent conferences, invited innovation “gurus” to meet with them and developed a “From-To” map that highlighted the differences and potential pitfalls. Once the “From-To” map was created the needs and implications were cataloged and specific projects were identified to be the “proving ground” for an Organic Growth Operating Model that needed to be compatible with the still ongoing Acquisition Operating Model.

Clarify the Goals
Helping the organization be clear on the purpose of the Organic Growth work is key to highlighting the differences as well as setting some specific objectives for the work. When BorgWarner defined significant growth objectives in 1999 of US$1.3 Billion over a five year period, they realized $700 million of this growth could come from acquisitions but $600 million would need to come from totally new ideas. This then set the ambition of the organic growth work. After this, strategic “Opportunity Zones” were identified in which the organic growth work
was focused.

Implement a Design and Innovation Process and Organization
To address the operating model change issues and ensure focus on the organic growth objectives companies have developed a process and organization. One of the best examples of this is BMW’s Global Innovation Process. The goal of this five step process is to identify unique technologies and features that fit into a set of five to seven “Innovation Fields”. The process starts with scouting for ideas and ends up with working prototypes that can be demonstrated to development engineers. The organization supports all activities in the process and ensures good ideas are swiftly moved into series production and this includes the inclusion of new acquisitions like MINI Cooper and Rolls Royce.

Address what you “Don’t Know You Don’t Know”
The primary work of acquisition is to manage what you know and to quickly answer the questions pertaining to what you “know you don’t know.” Organic growth comes also from exploring what you “don’t know you don’t know”. The best ideas often come from new questions, not addressing the same questions you have been addressing in the past. In this area of “exploration” companies must be willing to challenge their existing assumptions, to put their egos aside and admit a degree of “ignorance” related to the business and its markets, another reason to have a strong design and innovation process. A great example of this is Nokia’s use of “scouting teams” made up of senior engineers, designers and business development executives
temporarily living in the communities for whom they are designing new ideas.

Certainly ChoicePoint’s rapid movement to an internal “organic” growth strategy makes sense in light of its need to better focus its business. But key to their success will be the integration of their acquisition prowess with a new and distinct organic growth capability.

Innovation and Culture Clash: Koch Industries and Georgia Pacific

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Wed, 30 Aug 2006 15:50:00 +0000

In a recent “interview” with Georgia Pacific’s new CEO Joe Moeller, (AJC February 23, 2006) he stated that a key transition challenge he is facing is the development of a culture of “principled entrepreneurship” at G-P. Having worked with both Koch Industries http://www.kochind.com/default.asp (recent acquirer of G-P) and Georgia Pacific on technology projects and having spent the past 15 years focused on corporate entrepreneurship and organic business growth, I can see tremendous opportunities and significant challenges for Mr. Moeller.

Mr. Moeller states he will instill “principled entrepreneurship” at G-P by leveraging these capabilities currently found within the Koch companies. As has been the experience of many M&A programs, the integration of core capabilities, particularly capabilities related to corporate entrepreneurship and innovation, are difficult at best and down right destructive at their worst. Remember the “Carly” adventures and the failed integration of the HP and Compac business operations and cultures.

Certainly Koch, being a privately held enterprise, has advantages. Decisiveness can be (and is at Koch) swift and focused. The “open collar” Koch culture Mr. Moeller mentions is not representative of a “laid back” West Coast culture. Quite the contrary, Koch is an “open your collar, roll up your sleeves and get to work” culture. Project teams I was associated with at Koch were akin to a Kansas posse with each “cowboy” clear on the objective, tuned into the directing leader and giving 100% of the energy and skills they possessed. Somehow the term “Git-er-done” (with principled entrepreneurial tactics) comes to mind.

Koch to me is the epitome of a company that values the ability of individuals within the company to be the source of significant business growth, what is sometimes called “organic” business growth. In fact, Koch rewards corporate entrepreneurs by paying them a portion of the long term value they create. You can get rich (and some have) by having valuable ideas as a Koch employee.

Georgia Pacific, on the other hand, suffers the malaise of many publicly traded companies; the demon of corporate inertia. While Koch leadership makes hard decisions with focus and speed, G-P’s culture is studied and slow, and this is counter to a culture that understands the need to deconstruct non-performing businesses to provide resources for new businesses. The debate at G-P related to its less-than-stellar Consumer Products business is a case in point and I assume quick action on this and other G-P assets will free resources to be applied to the development and commercialization of new business offerings.

It is in this ability to identify and create new business offerings where the cultural differences between Koch and GP will be most evident. Whereas Koch’s approach to innovation is guided by its Market Based Management and autonomy of leadership, GP’s more institutional approach (for instance, GP’s “Innovation Institute”) smacks of control and risk aversion while at the same time providing a channel for the company’s capabilities and knowledge to be brought to light and exploited.

And here lies the organic growth nugget available to Koch; G-P is a treasure chest of technical capabilities and market insight that, when combined with Koch’s capabilities and insight, will unveil significant growth opportunities. The key will be to combine the best G-P talent in the culture of Market Based Management and principled entrepreneurship by quickly engaging together to create the future; not by endlessly analyzing potential and giving in to the corporate inertia this engenders.

For Koch to be successful I suggest the following:

The mantra of the new G-P must be “Move quickly, show results”. By applying MBM and principled entrepreneurship, decisions will be made, leadership will emerge and the strong will survive.
Mine and converge the technical skills and capabilities of G-P with those of Koch where the best business opportunities lay. Koch’s approach to knowledge management and leverage will overcome the “siloed” knowledge of G-P where I have often heard the statement “if only G-P knew what G-P knows.”
Find synergies in the technology and product portfolios of the two companies AND identify market white space where new value can be created through focused innovation work.
Impugn the current G-P culture by ensuring accountability and rewards for ideas that source significant value for customers and Koch.

I for one am excited about the “new” G-P and look forward to its future growth.

Large Group Innovation Summits

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Mon, 21 Aug 2006 16:42:00 +0000

At Fortune Magazine's recent Brainstorm conference Launch Institute tools were used to ensure the ideas of the large group of attendees (a group with VERY large egos!) were heard, considered and built upon ( brainstorm.fortune/index.htm ) to see attendees click here (fortune_archive/2006/08/07/8382578/index.htm). I have a strong bias for group based idea generation; with a high level of diversity in the group, sources of alternate points of view and challenging mindsets that are not satisfied with the status quo better ideas will develop. But if you are to ask such diverse individuals to gather, it is critical that technique and tools are available to stimulate idea development, work the ideas to create even more powerful ideas, and finally to select the top ideas for further work after the gathering.

Launch Institute works with companies to conduct multi-day Innovation Summits where a group of individuals representing diverse insights (including external experts) come together with the specific purpose of developing new business ideas related to products, services or business models focused on a specific business opportunity or need. These sessions generally are attended by a group of from 35 to 70 individuals (although members of Launch Institute coordinated a two day brainstorm with 5400 Pepsi Managers at the Dallas Convention Center; 2.4 acres of breakout tables!).

See how Eaton Corporation uses Innovation Summits by clicking here to view the video overview of their Innovation Process by clicking http://www.arclightning.com/eatonvideo/

Here are some general principles Launch Institute uses when conducting one of our Innovation Summits:
1. Define the objective and scope of the Innovation Summit.
Sessions where there are no boundaries or starting expectations have their place (we call them White Space Summits), but most of your innovation work is guided by business goals and objectives you are looking to achieve. Linking the work of your innovation team to the needs of the business and the business strategy is essential to business focused innovation.

2. Ensure senior executive commitment.
We often encounter situations where executives state they will review the ideas developed in some meeting after the Innovation Summit or gathering. To us at Launch, senior executive commitment is being involved as the Summit is being planned to ensure the objectives of the Summit are aligned with business strategic needs, the senior executive committing resources for the further development of the ideas selected at the Summit, the senior executive showing up at the start of the Summit to give the group gathered its marching orders and set expectations and then attending the final presentations of the top ideas to allocate the committed resources. There is nothing worse in my opinion than asking individuals to share their thoughts and ideas and then do nothing with those ideas.

3. Establish your current understanding of the Innovation Summit topic area
It is important to acknowledge that there is current information and points of view related to the topic of your Innovation Summit. This information can be gathered from previous projects or efforts, market information and research, customer interactions, etc. At Launch Institute we select a small team, the “Insight Team”, to spend some of their time collecting this information and, at times, adding to this information. Prior to the Innovation Summit this team generally collects this information in a form they can share before and/or at the Innovation Summit.

4. Prepare participants for the Innovation Summit
It is important that people know why they are attending a Summit, have some background on the topic of the summit, and see how their point of view will be important at the Summit. Generally the goals and objectives are forwarded several weeks ahead of the Summit along with readings, websites to visit and other pertinent information.

5. Hold the Summit at an inspiring location
There is nothing worse than asking a group to give you their best creative thoughts and then conduct your event in a stale corporate conference room. Location is important to giving individuals a sense of importance and engaging their various senses needed for the act of creativity. There are many great locations available for such sessions, including museums, monasteries, brand centers, and institutes.

6. Conduct the Summit with discipline but remain flexible
It is important to understand when individuals begin to work in the area of “what they don’t know they don’t know” whole new lines of thinking emerge. As these lines of thinking surface they must be acknowledged and nurtured for it is from these new lines of thinking breakthrough ideas emerge. In fact, the event agenda might change. The facilitators must be able to spot these changes and then have the tools to redirect the work of the group as needed.

7. Ensure follow-through and communicate
After the Summit make sure the “next steps” identified for each idea at the Summit are adhered to and communicate progress to the entire organization. Again, it is important that people know their ideas will be taken care of

For more on Innovation Summits please feel free to contact us at Launch Institute.

G8 Symposium on Innovation

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Wed, 19 Jul 2006 14:19:00 +0000

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

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Mon, 10 Jul 2006 16:35:00 +0000

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...

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Fri, 07 Jul 2006 21:34:00 +0000

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...

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Thu, 06 Jul 2006 16:00:00 +0000

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?

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Wed, 05 Jul 2006 14:31:00 +0000

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...

david.sutherland@launchinstitute.com (Sutherland on Innovation) — Tue, 04 Jul 2006 18:08:00 +0000

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.