7 myths of business innovation

Managing Director at Fast Bridge Consulting
Mar. 30, 2012

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7 myths of business innovation

  1. What is innovation? 2 Creativity is about new ideas Innovation is the profitable implementation of these ideas
  2. In Fortune 500 companies…  New products account for 50% of revenues  And 40% of profits 3 Why it is important …
  3. companies value innovation, are innovative The perception gap: of companies think they had a major innovation in the last 6 months. of consumers agree The hard road from ideas to impact of valuable ideas do not reach their full implementation
  4. A warm up exercise 1000 40 1000 30 1000 20 1000 10 5,000 90 % of business executives agree
  5. Paradigms = models, patterns the basic way of perceiving, thinking, valuing A dominant paradigm is seldom if ever stated explicitly; it exists unquestioned… transferred through culture and unspoken business practices William Harmon- An incomplete guide to the future
  6. 7  It is about what we do behind closed doors  Innovation just happens  We need to reward innovation  It is about working harder  Innovation is about big ideas  We need our brightest and best on the case  It is all about selecting the best ideas and doing more The Innovation Paradigm
  7. Test Layout 8 These are comfortable, logical business ideas and what we have been taught…. But, they are not the whole story
  8. 9
  9. 10 It is about opening doors and listening Myth: It is about what we do behind closed doors
  10. Innovation = Size ^ power value Power value Cities Companies 1.3 0.7 Innovation output 1 100% 100% Size 5 690% 309% 25 4759% 952% Innovation per person 1 100% 100% Size 5 138% 62% 25 190% 38% Source: Geoffrey West: The surprising math of cities and corporations Test Layout 12 The Power Laws of Innovation As cities grow and contact increases… innovation increases (25 X bigger = 2X more innovative) Why: contact increases … As companies get bigger and have more resources… innovation falls (25 X bigger = 60% less innovative ) Why: contact decreases
  11. Test Layout 13 Imagine this… BMW has some of the best designers in the world and sells their designers by the day below cost Why: to build creativity…
  12. 14 Innovation is something you make happen Myth: Innovation just happens
  13. Test Layout 15 Innovation is about  Being committed to better satisfying unmet unarticulated needs  Working to build insights  Staying focused on consumer (customer) value  Habits
  14. Test Layout 16 Needs first, not ideas first ! Develop a solution Find a need Find a market Ideas First Success Rate* 5-10% Find a need Develop a solution Find a market Needs First 70 % * According to Strategyn research on outcome driven innovation…
  15. 17 It is more than talking to consumers today’s business Mobile phone Computers Internet…
  16. It is about hard questioning… You can't just ask consumers what they want and then try to give that to them. Sometimes (actually often) they don’t know what they want It is often about “golden questions” 18
  17. 21 More importantly you need to reward good failures Myth: We need to reward innovation
  18. 22 The danger of the Internet… Is there anything someone hasn’t done on the internet ? A big idea Look it up on the internet Someone has done it already
  19. The big innovation Paradox Whoever Makes the Most Mistakes Wins Richard Farson & Ralph Keyes 23
  20. Introduction 24
  21. Introduction 25
  22. Introduction 26
  23. “Reward excellent failures. Punish mediocre successes.” Phil Daniels, Sydney exec
  24. 28
  25. 29 No, it is about working smarter Myth: It is all about working harder
  26. Introduction 30 “90 % of what we call ‘management’ consists of making it difficult for people to get things done.” – Peter Drucker
  27. Your new creativity office Test Layout 32
  28. The test, solve a difficult task while… Reading emails or smoking marijuana… Test 1 Test 2
  29. A few simple ideas  Stop the email notifications  No internal email Fridays  5,10,20% time like 3M, Google  Get people to block (and keep) time for creativity in their agendas Test Layout 35
  30. 36 Real innovation is about the adjacent possible Myth: Innovation is about big ideas
  31. Introduction 37 How many people think Apple invented the MP3 player ? Almost 50% of US consumers
  32. Introduction 38 More memory More features Better song management Simplicity and coolness
  33. More Examples
  34. Managers increasingly need to take “ors” and turn them into “ands” Roger Martin The design of business
  35. 41
  36. 42 Actually, what you need is people that think differently Myth: We need our brightest and best on the case..
  37. 43 Two Groups Best 20 agents Group 1 Random 20 agents Group 2
  38. 44 The IQ View Alpha Group 121 132 155 139 135 137 Diverse Group 121 84 111 105 135 95
  39. 45 The Toolbox View Alpha Group ABD ADE BCD ABC BCD ACD Diverse Group AHK FD AEG EZ BCD IL
  40. 46 “Bringing new members into the organization, even if they’re less experienced and less capable, actually makes the group smarter simply because what little the new members do know is not redundant with what everyone else knows.” James Surowiecki author Wisdom of crowds..
  41. 47 A UCLA MFA 3 X harder to get into than Harvard MBA The bigger surprise… Average starting salaries for MFAs are now higher than MBAs * MFA = Masters of fine arts
  42. What you can do… Diversity Independence Aggregation + + =
  43. What you decide not to do is just as important Myth: It is all about selecting the best ideas and doing more
  44. “Fail . Fail again. Fail better.” – Samuel Beckett
  45. “With so many things to do and so many great ideas… what we decide not to do is infinitely more important than what we decide to do” – Steve Jobs
  46. Research on innovation 211 companies Worst Avg Best Top vs. bottom % of revenues from new products 17% 28% 47% 2.76 % of profits from new products 11% 25% 44% 4.17 % of products that meet profit targets 43% 48% 66% 1.53 Go / Kill criteria set up front 26% 57% 85% 3.28 Decisions are objective / fast based 15% 42% 57% 3.85 Decisions are made in review meetings 26% 51% 60% 2.32 Cooper, Robert G. "Perspective: The Stage‐Gate® Idea‐to‐Launch Process Update, What's New, and NexGen Systems*." Journal of Product Innovation Management 25.3 (2008): 213-232.
  47. Let’s have some fun and exercise your innovative muscles…
  48. And let’s be honest …. Many of you have products / ideas only a mother could love !
  49. The biggest 3 mistakes of Entrepreneurs/ Innovators 1. Investing in the wrong business 2. Staying too long in the wrong business.. (after you should know it is time to change…) 3. People don’t buy your product or service ‘cause they understand why they should…
  50. I will see it when I believe it VS. I will believe it when I see it
  51. An example: global warming Hot summers Warm winters Evidence of global warming Cold summers Cold winters Evidence of global warming
  53. You’re not alone ! ‘‘More than nine out of ten consumable products launched in the last ten years offered absolutely nothing new to the consumer. More than eight out of ten new products fail. You don’t need to be a statistician to realize there’s a correlation between the two numbers.’’ – Robert McMath
  54. A checklist for ideas…  Is there a benefit (real or perceived)  People willing to pay (enough)  Cost of cut-through acceptable  People will see the benefit buy again / recommend to others  Will someone hate it
  55. A simple evaluation system… Kosmo Petrock Flooz Webvan Is there a benefit (real or percieved) People willing to pay (enough) Cost of cut-through acceptable People will see the benefit buy again / recommend to others Will someone hate it Kill Puppy (0 = kill, 1 = love)
  56. 63 Pet supplies via the internet Save big, save time Stay at home
  57. 64
  58. 65 Instant delivery of products purchased via the internet in big cities Order a wide variety of products, from movies to snack food, and get them delivered to your door for free within an hour.
  59. We hate all the senseless, wasted time on employee motivation and un-founded optimism We imagine you do to, buy our products and show your true colors 66
  60. 67 Continuous effort is the key to unlocking your potential Winston Churchill
  61. 68
  62. The new place to buy toys. Find you want on the internet 69
  63. 70
  64. 71 Pets take a lot of time and energy. Your kids can have almost as much fun with a pet rock. We even include a care guide
  65. Flooz 72
  66. Buying groceries should be easier. With webvan you can get all your groceries, so you have time for other things 73
  67. 74
  68. Now the most important question Why would this business fail … Kosmo Flooz Webvan Why will this business fail…
  69. 76
  70.  Arguing the other direction… Why is this a bad idea… If it fails, why will it fail…  And then deciding what can be done about it…
  71. Moving forwards…
  72. What you need is a bit of innovation magic… Magic Make innovation Central Thinking Different Good ideas in Bad ideas out
  73. A summary…  Getting people out of the building asking the right questions  Structuring your innovation process around customer needs  Changing the reward systems to encourage good failures  Changing the organization so people have time to be innovative  Helping your team leverage opportunities in the “adjacent possible”  Building team diversity/ better ways to work in teams  Creating systems to kill bad ideas so you have more time for good ones
  74. What is the real danger ? Flavor of the month… Suggestions:  No announcement of a big new innovation program/focus  Building enthusiasm for innovation from the bottom up
  75. The solution… go slow to go fast… build on what you have… you don’t need to change everything to be innovative