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January 18, 2013
Issue 16 – January 18, 2013



    1.        Innovation in China.......................................................................... John and Doris Naisbitt

    2.        Managing Innovation in the Trenches ……..………………………..…...…. Geoffrey Moore

    3.        Managers are for Efficiency, Leaders are for Innovation ……..…..……… Jeffrey Phillips

    4.        4 Innovation Leadership Strategies for 2013 ..........................................…. Soren Kaplan

    5.        Innovate by Design .……………………………………..…………… Bradley (Woody) Bendle

    6.        The Value Elevator Speech for your Innovation …………………………. Stephan Liouzu

    7.        Why Jeff Bezos Is Our Greatest Living CEO …………….…………….….... Adam Hartung

    8.        Himalayan Innovation! …………………………...……………….……..…...….. Scott Bowden

    9.        Idea Challenges – you get what you give ………..………….....…..….….. Jan Martineverts

    10.       Removing Risk from Bold Aspirations ….……………………...….….…..… Rowan Gibson



                                     Your hosts, Braden Kelley, Julie Anixter and Rowan Gibson, are innovation writers, speakers and

                                     strategic advisors to many of the world’s leading companies.


                                     “Our mission is to help you achieve innovation excellence inside your own organization by making

                                     innovation resources, answers, and best practices accessible for the greater good.”




Cover Image credit:   Crying Baby
Innovation in China
Posted on January 13, 2013 by John and Doris Naisbitt




Legendary trend forecasters John and Doris Naisbitt have been analyzing global trends together since 2000, with a special focus on the

fundamental transitions in China’s social, political and economic development and its impact on the West. Their latest book is Innovation in

China: The Chengdu Triangle. They are currently working on a new book about the new global landscape. - Rowan Gibson, Co-Founder,

Innovation Excellence




                                             Pride goes before a fall. Pride estimates value, position and ability of oneself higher than those of

                                             others. Arrogance, pretention, illusion and blasé color a picture that does not reflect reality. Pride

                                             makes us blind. That’s what makes it so dangerous.


                                             We can experience it on personal levels, and we are about to experience it on a global scale. It is not

                                             irreversible, but most likely: the West, dazzled in the belief of its immovable supremacy, is in denial of

                                             losing ground against a rising east and new alliances of emerging markets. Based on obsolete

                                             pictures of the past the West overestimates its own ability and underestimates the potentials of the

                                             rising powers. The main players, the U.S. and China, are easy to identify. And while the next decades

                                             will be dominated by a bi-polar world of the fading and the rising star, the further future is foreseeable:

the hegemony of China, a nation that little more than thirty years ago was at the brink of economic, political and cultural collapse. It is part of the

pride of the lecturing West that it is in denial of what stood behind the rise of China: its eagerness to learn, its guts to utilize trial and error, and
the simplicity of adopting what works and dropping what does not. Mistakes are made, and it is not always the most elegant path China

chooses, but it keeps moving.


The belief in Western supremacy relies on three main pillars, Western democracy, market economy and technological leadership. If innovation

were given a citizenship, it would be American. China for its part is not about to continue as the executing branch of Western innovations. More

so, innovation in China has peeled off its limitation to technology and business, and embraces social-political developments, feeding economic

progress and technological advancements. It takes place in a fusion of strategic planning and flexible execution. Innovation in a state-directed

matrix? Yes and no. The city of Chengdu is a good example of how far innovative thinking can be stretched in China. New social economic

structures work in the interest of social stability and create a nourishing environment for entrepreneurial thinking and ideas.


Chengdu, with a population of 14 million, is the capital of Sichuan province. It is the city where paper money — a colossal innovation — first

appeared in 1024. The printing of the Buddhist canons “Four Books” and “Five Classics” made Chengdu the early center in the art of printing.

Innovative thinking is part of its history, and it is shaping its future.


Innovation in Chengdu is growing out of a strategically planned nourishing business environment and an entrepreneur-friendly administration in

a stable social climate. Following the principles of a well-run company, Chengdu’s leadership combines management and business acumen

with social consciousness and, to a much greater extent than we have ever seen in a Western local government, a service-oriented

administration. A good example of innovative service are the quarterly meetings, the Mayor holds, and in which every problem, request or

complaints must be solved or dealt with within three days. The first meeting was held in March 2003 and meetings have been held without

interruption since that time.


Unlike technological innovation, social and economic innovation cannot be created in isolation, but only in a context that engages the larger

society. It is likely that the absence of election driven thinking makes it easier to find common ground when it comes to changing obsolete

conditions and old thinking patterns.


The challenging social context in all of China is the abolishing of the dualism of its populations. It demands taking down the barriers which deny

rural people the same rights and economic opportunities as urban dwellers and to include citizens in basic decision making processes. All

made possible only by a large shift in thinking, a comprehensive transformation from a group and collective oriented society to an increasingly

individual oriented society.


All issues of change are linked with each other, and require that improvements are not made independently in each of them, but coordinated

among all of them. Innovation in Chengdu is about urban rural integration and access to economic progress for all citizens not on the base of a

welfare state, but by enabling rural people to climb up the social ladder by their own merits.


To reach that goal Chengdu has developed a comprehensive model, simultaneously embracing three areas: reform of property rights,

equalization of public service, and grassroots democracy. All three elements are building the legal foundation that will give more rights to the

individual. Innovation in each is stimulating the other two for a result greater than the sum of their parts. We call it “Chengdu’s Innovation

Triangle.”
Reform of property rights created favorable conditions for land trading and land pooling leading to a higher efficiency and a gradual

industrialization and modernization of arable land. The usual scattered and small lots of land did not allow efficient husbandry but as land

reform allowed trading of land, large scale crops farming was possible and higher efficiency brought higher revenues to the farmers. Farmers

who decide to join Chengdu’s city workforce can now lease or sell their land and work in industry or in the service sector. In this case the farmer

would have a fixed income plus the monthly wage with the opportunity to return to their land later in life.


Grassroots democracy — as elections in more than 800,000 villages in China is called — is a breakthrough in two directions: sharing

responsibility and taking responsibility. Ordinary people can take care of their own concerns through elected representatives, but at the same

time they are responsible for their choice. Elections in villages are not about political considerations but about economic considerations and

better and more responsive management of village affairs. Elections are about developing poor rural areas and bringing modernity into remote

areas.


To equalize public service between the favored urban and the disadvantaged rural population Chengdu abolished the “hukou” classification of

“rural household” and “non-rural household” and registered all the local households as “residential households” in 2004. By the end of 2012 all

residents of the city, rural and urban districts, will have equal access to education, health care and other services provided by the local

government. Equal access to education, be it one of the 55 vocational or at one of the 42 provincial and national key universities is utilizing a

previously neglected talent pool.


In this holistic view of innovation Chengdu has created favorable conditions for direct foreign investment. Not the least the excellent supply of

workforce has led 219 of the Fortune 500 companies located in Chengdu, including a 100 billion investment of Dell over five years. In addition

Chengdu is setting measures to support scientific development. It has adopted this strategy through the 13 industrial zones and set-up four

clusters of innovative companies will work on an industry-academic-research based model in which alliances instituted by industrial leaders are

developed along with research institutions, academies and industry peers. To summarize:
The first pillar of Chengdu’s reform is its wider focus which is not exclusive on industrial development, but on a whole range of investment

attractions. In its early reforms Chengdu was similar to other inland cities. Its orientation was toward foreign trade and active efforts to attract

overseas investment. But at a much earlier stage than other inland cities, Chengdu broadened its innovative activities to include market

elements, such as technology, labor force, knowledge, financial services, market development, and land reform with the underlying purpose to

raise local consumption levels and stimulate sustainable economic development in the region.


The second pillar of Chengdu’s innovation model is to seek to enhance the allocation and efficiency of “intangible assets.” To speed up

technological innovation Chengdu has set up international technological and economic exchanges. In recent years it has encouraged the

selective attraction of financial industries by inviting more than 50 domestic and foreign banks, insurance companies, securities companies,

trust companies, future and fund corporations, and more than 20 distinguished domestic and foreign financial supporting intermediary service

agencies to establish themselves in the city. All of this contributes to laying a sound foundation for Chengdu’s long-term economic

development.


The third pillar of the Chengdu model is bilateral exchange. Instead of inviting only foreign investment, Chengdu has sought to encourage

bilateral economic exchange. In this stage “Going out” becomes an important part of the innovative strategy. Chengdu is encouraging local
enterprises to reach outside their local area. Although Chengdu still lags far behind developed countries and coastal areas, it remains far ahead

of other inland cities in moving out in an ever-increasing scale.


Chengdu is dedicated to beat its innovation drums faster, louder and more insistently on all fronts. But Chengdu is only one of China’s many

ambitious and competitive cities. High Tech Parks are growing like mushrooms after a warm summer rain and lure with high wages and

$150,000 moving grant for top executives. Top-talents find support in Incubation Centers. Mentors, seed capital, offices and technological

equipment are part of the package. China’s “Thousand Talents Program” aims to bring back 2,000 talented Chinese paying salaries between

60,000 and 360,000 Euro. Up to the year 2020 China is dedicating 15 percent of its GDP to human resources.


The list could go on and yet, the answer of the West stays the same “Yes, but when is China becoming a Western democracy? When will China

improve on the implementation of the rule of law? When will it end corruption, solve its environmental problems, water shortages?” We agree,

the problems are there, including the need to find a decent way of dealing with divergent political opinion.


But — in its view of China, the West is fast in criticizing, slow in understanding, blind towards its own shortcomings, and in denial of the closing

technological advance. Pride comes before the fall and once on the ground, it is hard to get back up.


image credits: john and doris naisbitt; argo-navis.com




                        John Naisbitt is an acclaimed author and speaker whose book Megatrends sold more than 14 million copies.On the

                        New York Times bestseller list for more than two years, it was one of the biggest successes in publishing history.

                        Megatrends was followed by the NYT bestsellers Reinventing the Corporation and Megatrends 2000. He wrote about

                        the increasing importance of women in business in Megatrends for Women in 1992 and in 1995 Megatrends Asia

anticipated the extraordinary rise of Asia and China, which Naisbitt has been studying and visiting since 1967.


Doris Naisbitt, an observer of global social, economic and political trends, is the Director of the Naisbitt China Institute in Tianjin, China and

co-author of the bestseller Megatrends China: Eight Pillars of a New Society, co-autor of The China Model and author of Mai-Lin My China

(CITIC Press October 2010). She holds professorships an Nankai and Yunnan University, and at Yunnan Normal Universities in China.
Managing Innovation in the Trenches
Posted on January 13, 2013 by Geoffrey Moore


The first principle of managing innovation is that are three distinct returns on

innovation one can invest to achieve. They are:


         “Unmatchable” differentiation, which confers enormous bargaining

          power as customers who want what you have “must” select you and

          “must” pay a premium for your offer. We call this DIFF for short.

         “Speedy” neutralization, which catches you up to some new market

          norm set by a competitor, thereby enabling you to stay in the game

          rather than be eliminated for lacking this feature. This is NEUT for

          short.

         “Rigorous” optimization, which extracts high-value talent and other scarce resources from non-differentiating work in order to free up

          investment in highly differentiating work or high-speed neutralization efforts. This is OPT for short.

The second principle is that these three outcomes are mutually exclusive, meaning you do not want to combine any two of them into the same

work stream. Most innovation programs bind DIFF objectives with NEUT objectives, tying both to the same release cadence. This either slows

down NEUT or dumbs down DIFF, both of which outcomes are painfully counterproductive.


The third principle is that most innovation investment is wasted (which is actually good news, because it means you can get a much bigger

bang for your innovation buck once you learn how to avoid the waste). The three great sources of waste are:


         DIFF initiatives that do not result in “unmatchable” offers that create unequivocal customer preference. You end up being different but

          not different enough to gain real bargaining power.

         NEUT initiatives that take too long or go too far (or, more typically, both). Here the team has become obsessed with its competitor and

          is doing extra work that the customer will not value, meanwhile delaying the “good enough” state that the customer would value.

         OPT initiatives that do not address “sacred cow” resources. You end up moving around a lot of junior resources, meanwhile leaving

          the senior ones trapped in context instead of being deployed against core.
A corollary that can help teams avoid waste is to pay attention to their reference points.


         If your goal is DIFF, then your reference point should be a prospective customer’s use case, one where purchase preference will be

          determined by you achieving “unmatchable” performance in your key area of innovation.

         If your goal is NEUT, then your reference point is a competitor, then your innovation focus should be to get “good enough” fast

          enough.

         A behavior you must avoid is to use a competitor as a reference point for DIFF. The all too likely outcome here is that you will create a

          difference that the customer either will not notice, will not acknowledge, or will not value. Meanwhile, the competitor will debate the

          fact that you even achieved it or that it is relevant if you did.

Finally, in light of these principles, the role of the leader is to deconstruct the overall workload of the team to tease out the DIFF from the NEUT

from the OPT, and to charter specific work-streams accordingly. This rarely results in a perfectly pure outcome, but the more pure it is, the more

productive your team’s efforts will be.


image credit: geoffreyamoore.com; HarperBusiness.com




                    Geoffrey Moore is an author, speaker and business advisor to many of the leading companies in the high-tech sector,

                    including Cisco, Cognizant, Compuware, HP, Microsoft, SAP, and Yahoo! His latest book is Escape Velocity: Free Your

                    Company’s Future from the Pull of the Past is Moore’s sixth book for business leaders in the high-tech sector. His first

                    book, Crossing the Chasm addresses the challenges of gaining initial adoption for disruptive innovations.
Managers are for Efficiency, Leaders are for Innovation
Posted on January 12, 2013 by Jeffrey Phillips


                                                                 Time was, back when the railroads were built, that the military was basically the

                                                                 only management structure that was large, distributed and relatively effective.

                                                                 So the railroads and other rapidly expanding businesses adopted the military’s

                                                                 top down, command and control management philosophies.


                                                                 This was actually a driver for industrial growth, since many corporations were

                                                                 forming and needed a structure to allow them to grow, to expand and to control

                                                                 operations. The top down command and control organization wasn’t especially

                                                                 fast at making decisions, but was good at implementing the desires of the senior

                                                                 executives and good at repetitive work. This structure was especially valuable

when few people had much education, but could be taught relatively simple operations on a production line.


Fast forward to today, and the top down, command and control organization is rapidly becoming a thing of the past. First, it takes too long for

commands to filter down through the organization, so the responsiveness of a top down command and control organization is limited, when the

environment is changing rapidly. Second, the executives and leaders rotate through jobs and positions like a roulette wheel, in one slot and

then on to another slot every two to three years. This lack of longevity in any role doesn’t create much stability or desire for long term change.

Third, most workers in large organizations have far more training and education than their forebears, and are able to make informed decisions,

if they are informed of the goals of the organization.


The Cross Roads


Our businesses are at a cross-roads, in terms of existing structures and purpose, and future demands. Most command and control businesses

were designed and built based on a competitive model and framework that is dissolving. As trade barriers fall, competition increases and low

cost options shift from country to country, building an ever more effective command and control environment is like akin to “fighting the last

war”. Organizational structures need to change. But you know this already. Gary Hamel told you this in The Future of Management. The real

question is: do you understand the impact of this treatise when it comes to innovation?


Leaders, managers and visions, oh my!


Back in the day when command and control was the accepted and the practical alternative, executives created strategies but didn’t bother to

share them with their employees. They simply asked for specific tasks to be accomplished, and the employees acted accordingly. The

employees didn’t question, and didn’t bother to share ideas. Requests came top down, and results flowed bottom up.


But today, things should be different. With a far more educated and capable workforce, executive can expect far more than simply

acquiescence to commands. But do the communication channels exist to allow good ideas to flow both ways? Often, modern corporations
seem to represent the epitome of evolved learning, with empowered teams, active communication and deep training. But underneath all of this

evolved learning and management still resides, as an almost vestigial organ, a command and control mentality. Oh, we’ve received the training,

heard the message and nodded our heads at the sage wisdom, thank you, but we’ll still wait for the directions.


What we need is a clear vision for the company, and the right and responsibility to achieve it with our best capabilities and ideas, regardless of

their source. What we need is executives and leaders who harness our knowledge and channel capabilities and passions. While executives

have gotten much better at expressing “what” they want, the “how” part is often still missing, and in the absence of clear directions, staff will

revert to what they think is safe and reasonable.


The new paradigm


Greg Satell has written about this better than I can, so let’s link to his article, The Leaderless Organization. What you need to be consistently

innovative is to create very clear, compelling strategies and goals for your business, and provide the tools and techniques for your teams to

deliver. And be open enough to their ideas to encourage more innovation. This doesn’t suggest that organizations don’t need executives, just

that they need leaders even more than they need managers. Leaders are good for innovation, managers are good for efficiency. Both are

required in a modern organization.


image credit: the gap image from bigstock




                 Jeffrey Phillips is a senior leader at OVO Innovation. OVO works with large distributed organizations to build innovation

                 teams, processes and capabilities. Jeffrey is the author of Relentless Innovation and the blog Innovate on Purpose.
4 Innovation Leadership Strategies for 2013
Posted on January 12, 2013 by Soren Kaplan


                                                              The New Year brings about resolutions to redefine the status quo. It’s usually an

                                                              individual endeavor focused on fitness, relationships, or finances.


                                                              But great things can happen when we apply the catalytic energy of the New Year

                                                              to our teams and organizations. 2013 represents the ideal time to leapfrog our

                                                              mental models and innovate our way to business breakthroughs.


                                                              Here are four strategies any leader can use to jump-start the New Year with their

                                                              teams and organizations:


Strategy #1: Define Your “Leapfrogging” Opportunity


        promote big thinking that involves challenging assumptions and “changing the game” in whatever you’re doing. It’s all about

         leapfrogging existing solutions and the competition. Apple didn’t create the iPod because customers asked for it; they wanted it

         themselves. Target didn’t become “Tar-zjay” by emulating Wal-Mart; they decided to be known for incredible design and become the

         leader in “cheap chic.” Ask yourself: In what ways are we holding onto the status quo? What are the breakthroughs that we want to

         create and lead?

Strategy #2: Leverage Data, then Go with Your Gut


        When it comes to making resolutions, you instinctively know what you need to do. Breakthrough innovation isn’t much different; there

         are no maps for uncharted territory. Comprehensive data rarely exist. The goal is to use whatever information you can find, and then

         apply your instincts to fill in the gaps. A University of Amsterdam research study recently found that people made the best decisions

         when they actually ignored detailed data and? made quick decisions after “sleeping on it.” Ask yourself: Are we holding back because

         we’re missing data that can’t realistically be obtained in a workable timeframe? What do we know deep down to be true that data can’t

         tell us?

Strategy #3: Test the Waters with Your Pinky Toe


        Research from the University of Virginia shows that entrepreneurs get their ideas out into market as quickly as possible (even if

         they’re not perfect), test them, and change their fundamental assumptions as needed. And they’ll go through this same iterative

         process many times to get it right. The goal is to sponsor and conduct low-risk experiments to test and validate a variety of new

         opportunities. Using this approach provides room for learning and adapting while minimizing the risk of failure.. Ask yourself: What is

         the smallest step that would have the greatest impact? What big assumptions can be tested with the least effort or investment?
Strategy #4: Savor Surprise


        The unexpected is a natural part of innovation. And in today’s 2013 environment, uncertainty has never been greater. When

         unanticipated things occur, rather than fight them, listen to what they’re telling you.. The stronger our reaction – either positive or

         negative – the stronger our assumptions are likely being challenged or reinforced. Scott Cook, Founder of Intuit, credits this unusual

         mantra of ‘savoring surprise’ as one of the pillars of his company’s long-term success. Ask yourself: What surprises have we

         experienced that influenced where we are today? What can we do to remain open to the power of surprise when it occurs rather than

         resist it?

In many ways, “the soft stuff is the hard stuff” when it comes to challenging existing assumptions, processes, and ways of working. And these

strategies must be applied over time, through a journey that involves experimentation, setbacks and successes. 2013 is the year to recognize

that anyone who’s willing to push through to the other side of the status quo can become an innovation leader.


image credit: universitystarts!.com




                      Soren Kaplan is the author of Leapfrogging and a Managing Principal at InnovationPoint LLC where he advises start-ups

                      and also consults to Cisco, Colgate, Disney, Medtronic, Visa, and others larger firms. He led the internal strategy group at

                      HP and is an Adjunct Professor within the Imagineering Academy at NHTV Breda University of Applied Sciences in The

                      Netherlands. To learn about the book Leapfrogging or contact Soren visit www.leapfrogging.com
Innovate by Design
Posted on January 14, 2013 by Bradley (Woody) Bendle


The most successful innovations throughout history have one thing in common – they

are valued by consumers because they uniquely meet and/or exceed previously

unfulfilled needs. Occasionally, an innovation might succeed by accident; but more

times than not, successful innovations are the result of an organization employing a

purposeful end-to-end innovation process that begins with a deep understanding of

consumer needs. With uniquely solving consumer needs as a key for innovation

success, it is important to understand what a consumer need is; and that needs can

be functional and/or emotional.




Functional consumer needs:

Functional needs are generally more straight forward to understand. A functional need is best described as that which the consumer is trying to

get done. For example, a carpenter might need a hole in a wall stud in order to thread an electrical wire through it. Alternatively, a musician

might need a way to recall and replicate something that they just came up with while improvising. Emotional needs however, are quite different

from Functional needs and can be a little trickier to get your head around.




Emotional consumer needs:

Emotional needs can be thought of as how a consumer wants to feel; either intrinsically or extrinsically. As an example of an intrinsic or internal

emotional need, we might think about a bicyclist who regularly rides when it is dark outside. Being able to see where she is going and being

able to have others (motorists) see her serve true valuable functional needs. But, an innovation fulfilling these functional needs can also fulfill

intrinsic emotional needs like feeling safe, confident, responsible, etc. At the same time, if the innovation is some amazing, latest and greatest,

cutting-edge gadget, our cyclist may have been motivated by how she feels she might be perceived by others (i.e., she might want others to

think she’s: “with it”, “cutting edge”, “cool”, etc.).


In my opinion, one of the best ways to tap into emotional consumer needs is through design. And one of the awesome things about design is

that there is very little (if any) correlation between design and cost. Things don’t have to cost a ton to have awesome design. If you need some

convincing, let me share a recent occurrence in my household that was the result of an “emotional need” being triggered through design.




Hard to say no to compelling design:

I came home the other evening to find two Williams-Sonoma shopping bags on our kitchen counter. When I looked into the bags to see what

goodies we had gotten, I had to chuckle. Brand spanking new OXO measuring cups and measuring spoons. These weren’t new things
whatsoever – we already have things that performed these exact functions. But rather, these were new and improved versions of things we

already had in our drawers. Not only did we already have them in our drawers; we already had two sets of each of them. Now we have three!


                                                               These OXO measuring cups and spoons weren’t purchased because they all of

                                                               the sudden filled an unmet functional need; not at all. The ONLY reason these

                                                               were purchased was because their design spoke to my wife’s emotional needs

                                                               when she was at Williams-Sonoma to pick up something completely unrelated.

                                                               But here’s the deal, I admit it; they also speak to my emotional needs as well.


                                                               These OXO measuring cups and spoons are actually pretty cool! They look cool.

                                                               They feel cool. They’re a heavy brushed stainless steel with grippy rubber

                                                               handles. They’ve definitely got their own unique look and feel. They look like they

will hold up – maybe even last forever. They don’t look like something that everyone else would have in their kitchen. They look different – and I

guess that makes us a little different. They’re sort of unique – I guess that might even make us a little unique too. The design of these OXO

measuring cups and spoons spoke to my wife, and they’re now ours – in addition to two other (not so unique) sets that I’m not sure what we’ll

do with now.


So, the next time you are seeking innovation opportunities for your organization, don’t overlook design and the opportunity to spark your

consumers’ emotional needs! Superb design can do many many magical things for your brand!




Now, let’s get innovating!




                  Bradley (Woody) Bendle is Director, Insights & Innovation at Collective Brands, Inc. and formerly a VP of Marketing,

                  Customer Analytics & Strategic Systems at Blockbuster, and a consulting economist. His focus areas are: Brand & Market

                  Strategy, Product & Service Innovation, Consumer Behavior, Quantitative & Qualitative Research Methods, and Applied

                  Econometrics. (twitter – @wbendle)
The Value Elevator Speech for your Innovation
Posted on January 14, 2013 by Stephan Liozu


                                                               Are you able to clearly articulate the value proposition for your innovation, your

                                                               business model, or your startup? Can you recite in one quick minute this value

                                                               proposition and two to three value drivers that illustrate its power and monetized

                                                               differential value? If you are a business leaders in the trenches, a multi-tasking

                                                               entrepreneur or a busy innovator, chances are that you have not gone through

                                                               the exercise and are not ready for it.


                                                               I was recently participating in a top management conversation at a fairly large

                                                               high tech start up and I asked leaders around the room if they were able to

                                                               articulate the business model value proposition and their critical value drivers.

The question took them by surprise and generated some interesting internal discussions. I was invited to speak with them about their potential

pricing problems but we quickly realized that the problem resided in the business model fundamentals and the overall value proposition. The

conversation uncovered internal disagreements, some frustration among the various executives, and a real need to take a step back and

reflect.


Case closed! How can one have a creative and constructive discussion on pricing models without have a clear idea of what your innovative

business model is all about and what types of differentiating features you bring to your customers? This is fundamental exercise that every

marketing manager, business manager, innovator, and entrepreneur should go through to create a crisp value story that will create excitement

and interest for customer, investors and partners.


There are three critical elements to work as shown in the figure below.




The overall value proposition needs to reflect the main differentiating dimensions of your new business model or your innovation. It needs to

short and crisp and resonate with customers by using the vocabulary they are using. Then based on this crisp statement, you can extract a

maximum of three value drivers for your value offering. Focus on value drivers that are tangible and measurable but also that are the most

relevant for your customers. In other words, focus on the bang for the buck. Finally, for these three value drivers, you need to calculate and
extract the monetized value i.e. the financial benefits you will bring to your customers). These are typically cost savings or incremental

revenues.


Do not get me wrong! This is very difficult exercise but a very worthy one. It gets even more complicated when you consider a complex new

business model or an entire corporate strategy. But imagine the power of having an army of marketers and merchants being able to all recite

the same value proposition and promote the same value drivers for a new business model or a new product or service.


If you are an entrepreneur or an inventor in search of funding, you need to go through this exercise and practice the speech. Bankers and

investors will need to hear the differentiating power of your idea, concept or proposal. They need to see that you have confidence in your value

proposition, your value drivers and that you have gone through the exercise of monetizing your differential economic value. That is the rational

discussion they will need to have with you. Keep it short though. Simpler is better!


There has never been a better time to pay attention to value. Be bold! Innovate and join the value-based revolution.


image credit: printmediacentr.com




                     Stephan Liozu is the Founder of Value Innoruption Advisors and specializes in disruptive approaches in innovation and

                     value management. He is also a PhD candidate in Management at Case Western Reserve University and can be reached

                     at sliozu@case.edu
Why Jeff Bezos Is Our Greatest Living CEO
Posted on January 14, 2013 by Adam Hartung


The Harvard Business Review recently published its list of the 100 Best

Performing CEOs. This list is better than most because it looks at long-term

performance of the CEO during his or her time in the job – with many on the

list in service more than a decade.


#1 was Steve Jobs. #2 is Jeff Bezos – making him the greatest living CEO. It

is startling just how well these two CEOs performed. During Jobs’ tenure

Apple investors achieved a return of 66.8 times their money. During Mr.

Bezos’ tenure shareholders achieved a remarkable 124.3 times return on their

money. In an era when most of us are happy to earn 5-10%/year – which

equates to doubling your money about once a decade – these CEOs

exceeded expectations 30-60 fold!


Both of these CEOs achieved greatness by transforming an industry. We all know the Apple story. From near bankruptcy as the Mac company

Mr. Jobs led Apple into the mobile devices business, and created a transformation from Walkmen, Razrs and PCs to iPods, iPhones and

iPads – to the detriment of Sony, Motorola, Nokia, Microsoft, HP and Dell.


The Amazon story is all the more remarkable because it has been written in the far more mundane world of retail – not known for being nearly

as fast-changing at tech.


Lest we forget, Amazon started as an on-line seller of books frequently unavailable at your local bookstore. “What’s a local bookstore?” you

may now ask, because through continuous upgrading of its capability to build on the advances in internet usage – across machines, browsers,

wi-fi and mobile – Amazon drove into bankruptcy such large booksellers as B.Dalton and Borders – leaving Barnes & Noble a mere shell of its

former self and on tenous footing. And the number of small bookshops has dropped dramatically.


But Amazon’s industry transformation has gone far beyond bookselling. Amazon was one of

the first, and by most users considered the best, at offering a complete on-line storefront for

any retailer who wants to sell goods through Amazon’s site. You can set up your inventory,

display products, provide user information, manage a shopping cart and handle check out all

through Amazon – with minimal technical skill. This allowed Amazon to bring vastly more

products to customers; and without adding all the inventory or warehousing cost.


As digital uses grew, Amazon moved beyond the slow-paced publishers to launch the Kindle

and give us eReaders displacing paper books and periodicals. But this was just the first salvo
in the effort to promote additional on-line buying, as Amazon next launched Kindle Fire which at remarkably low cost gave people a tablet

already set up for doing retail shopping at Amazon.


As Amazon launched its book downloads and on-line services, it built its own cloud services business to aid businesses and people in using

tablets, and doing more things on-line; which further reinforced the digital retail world in which Amazon dominates.


And make no doubt about it, Kindle Fire – and the use of all other tablets – is the WalMart and other traditional brick-and-mortar retail killer.

Amazon is now a player in all pieces of the transition which is happening in retail, from traditional shopping to on-line.


Demand for retail space in the USA began declining in 2009 and has not stopped. Most analysts blamed it on the great recession. But in

retrospect we can now see it was the watershed year for customers to begin looking more, and buying more, on-line. Now each year growth in

on-line retail continues, while demand at traditional stores wanes.


Just look at this last holiday season. To (hopefully) drive revenue stores were opening on Thanksgiving, and doing 24 and 48 hours of non-stop

staffing and promotions to drive sales. But it was mostly in vain, as traditional retail saw almost no gains. Despite doing more and more of what

they’ve always done – trying to be better, faster and cheaper – they simply could not change the trend away from shopping on-line and back

into the stores.


                                                       For the last year the #1 trend in retailing has been “showrooming” where customers stand

                                                       in a store with a smartphone comparison pricing on-line (most frequently Amazon) to the

                                                       product on the shelf. Retailers were forced to match on-line prices, despite their higher

                                                       overhead, or lose the business. And now Target has implemented a policy of price-

                                                       matching Amazon for all of 2013 in hopes of slowing the trend to on-line purchasing.


                                                       Circuit City went bankrupt, which saved Best Buy as it picked up their lost business. But

                                                       now Best Buy is close to failure. Same store sales at WalMart have been flat. JCPenney

recruited Apple’s retail store wizard as CEO – but he’s learned when you have to compete with Amazon life simply sucks. Nobody in traditional

retail has found a way to reverse the on-line shopping trend, which is still dominated by Amazon.
We all can learn from these two CEOs and the companies they built. First, and foremost, is understand trends and align with them. If you help

people move in the direction they want to go life is easy, and growth can be phenomenal. Trying to slow, stop or reverse a trend doesn’t work,

and is expensive.


Second, don’t ask customers what they want, instead give them what they need. Customers may be on a trend, but they will frame their

requests in the old paradigm. By creating new trend-promoting products and solutions you can capture the customer and avoid head-to-head

competition with the “old guard” titans selling the increasingly outdated solutions. Don’t build better brick-and-mortar, make brick-and-mortar

obsolete.


So, what’s stopping you from growing your business like Apple or Amazon? What keeps you from being the next Steve Jobs, or Jeff Bezos?

Can you spot trends and provide trend-supporting solutions for customers? Or are you stymied because you’re spending too much time trying

to defend and extend your old business in the face of game changing trends.


image credit: smh & dispatching




                Adam Hartung, author of Create Marketplace Disruption, is a Faculty and Board member of the Lake Forest Graduate

                School of Management, Managing Partner of Spark Partners, and writes for Forbes and the Journal for Innovation Science.
Himalayan Innovation
Posted on January 11, 2013 by Scott Bowden


Many readers are familiar with Jon Krakauer’s harrowing account of

the climbing disaster on Mount Everest in May, 1996.


Beyond Into Thin Air, there are many other interesting works on

Himalayan mountaineering expeditions that chronicle the efforts of men

and women who took on the ultimate challenge of attaining various

great summits starting in the early twentieth century using a variety of

technical equipment and climbing strategies. From an innovation

standpoint, there are several attributes of high altitude mountaineering

that resonate with those of us working in challenging space of trying to

find creative ways of overcoming old and new problems for our companies and customers.


1. Himalayan Mountaineering Aspect – Roping together


Roping a team together is one of the most fundamental principles of mountaineering, and is particularly important for high altitude

mountaineering where every step, even in seemingly stable areas, could result in a dangerous fall. By roping climbers together, teams knew

that if one person slipped then the others could save that person by further securing their positions. Perhaps the most famous example of this

technique occurred on an American expedition to the summit of K2 (the second highest peak in the world) in 1953 when a team of four climbers

started to slide down a precipice of several thousand feet but were able to grab a rope that Pete Schoening, in an instant, was able to hold firm

via an ice axe belay to save the team from a certain death.


A more somber example of fixed ropes was the 1999 discovery of Robert Mallory’s remains on Everest. Mallory died during his summit attempt

in 1924 and his body, shielded for almost a century from decay by the dry and cold conditions on the mountain, had a detached rope wrapped

around the waist that was previously connected to his climbing partner, Sandy Irvine, who also perished in the summit attempt.


Innovation Approach


When we engage colleagues to take on an innovation challenge, we can benefit from mentally roping ourselves together as we run into the

typical obstacles that face innovators, such as bureaucratic inertia or set ways of doing business. As innovators we inevitably will challenge the

status quo, and only by working tightly together as a team can we overcome those obstacles. When approaching an innovation challenge, we

should think about who we are roped up with on our team. Perhaps the most interesting aspect of roping together is that each individual in the

team continues to work independently (climbing towards the objective), but by being roped together, each team member can climb or descend

with the confidence that a small mistake will not result in complete failure. That extra confidence allows each team member to move more

assertively, and it is precisely this assertiveness and confidence that the innovator needs to improve his or her performance.
2. Himalayan Mountaineering Aspect – Multiple camps and acclimatization


A casual observer would assume that a high altitude climber would simply start at the base and keep going until he or she reached the summit.

The reality of climbing is that a climbing team has to carefully plan an assault consisting of a series of camps set at different levels on the

mountain.


There are several reasons for the use of multiple camps. First, it takes several days of constant climbing to go from the base of a mountain to

its summit, and it would be impossible for a climber to carry enough supplies for this entire timeframe. Thus an expedition will set up a series of

camps at various altitudes along the way and use team members and local Sherpas to hike repeatedly up and down to those camps to

stockpile supplies for the summit attempt. Each camp is placed is a logical location along the path and contains tents and supplies and is ideally

sheltered from the high winds and rough conditions of extreme elevation. Expeditions always start with a large Base Camp and then will

establish hour or five other camps up the mountain (Camp) depending on the difficulties posed by a particular mountain. The highest camp is

meant for the summit teams to spend one night and then make their final push to the summit, followed by another night of shelter and then a

descent back down the mountain to reach the base.


A second reason for the use of multiple camps is the fact that the lack of oxygen at higher altitudes makes it difficult for humans to function

effectively for extended periods of time. As a result, the body needs to acclimatize to the conditions so that the climber is able to spend several

days at high elevations to make it to the summit. Without proper acclimatization, the mountaineer would not be able to survive, as would be the

case if a helicopter deposited a person on the summit of Everest (a Eurocopter has indeed accomplished this feat, though no one exited the

craft).




Innovation Approach


When we engage in an innovation session we often pressure ourselves to come up with fresh new ideas within a given amount of time,

adhering to the typical managerial directive to “be innovative.” While we sometimes can serendipitously stumble across a great new idea in the

course of our efforts, we more often end up identifying some interesting themes that require further pursuit at a later date. Perhaps we should

think about the multiple camp concept from high altitude mountaineering when we tackle an innovation session. We should establish our base

camp, with a set of guiding themes and principles that we can use as the foundation of all our efforts. We may next want to establish smaller
virtual camps along the way of our journey, focusing on the supplies we will need at each stage to continue our pursuit. We can then check into

those camps periodically in the future as we continue our innovation journey.


For instance, we might have a core team at the base then bring in different participants for different stages of our endeavor, depending on the

different perspectives we might need at different stages of the process. At a minimum, we could use the notion of multiple camps as an

organizational principle to help our teams understand the multiple steps required in our innovation expedition.


3. Himalayan Mountaineering Aspect – Summit Credit


In the more chivalrous era of mountaineering when there were Himalayan summits that had not been reached by climbers, there was a very

specific protocol around how credit for reaching a summit was assigned. Summit teams typically consisted of sets of two climbers who would

work together to reach the top, and the most famous team is Edmund Hillary and Tenzing Norgay.


Many of us recall that Hillary was the first person to reach the summit of Mount Everest. An unwritten rule among climbers was that it did not

matter which member of a two-person team reached the summit first, as both would receive credit for being the “first” to conquer a mountain. In

addition to being a more noble approach to demonstrate cooperation, this was also intended to remove any incentive for a climber to sidestep a

colleague in an attempt to “beat” that person to the summit. Both climbing members would receive credit for the achievement no matter who

actually set foot on the summit the first time, and in a team of multiple sets of two-person teams, all four would receive credit even if their

summit attempts were separated by a day. In fact, to this day it is not known whether Norgay or Hillary was actually the first to set foot on the

summit of Everest. The only picture taken at the summit was of Norgay, taken by Hillary, since the former did not know how to operate a

camera. Nonetheless, both are credited with the first successful ascent of Everest, though in Western lore we usually only hear about Hillary’s

name when the topic arises.


Innovation Approach


When working on a new idea as part of a team, there is a distinct human impulse that works contrary to the notion of free and open sharing of

ideas. After all, if a person has developed a concept that is truly innovative, he or she may want to receive full credit for the creation of that idea.

In the world of corporate innovation where intellectual property belongs to the company employing the innovator, this is less relevant, but the

concept of shared credit still is important, as each of us is presumably driven by a desire for recognition and success. The chivalrous sharing of

credit in mountaineering demonstrates the spirit of shared success that should drive our innovation efforts, where the input and work of multiple

team members is as critical to the end product as the one person who developed the new idea. Encouraging this dedication to the common

cause upfront can ensure that team members have the right attitude in their innovation sessions.




4. Himalayan Mountaineering Aspect – New ways to climb the same peak
One of the most significant measurements in high altitude mountaineering

is the 8,000 meter (26,247 feet) mark, and it just so happens that all

fourteen of the peaks topping 8,000 meters are in the Himalayas. During

the great era of mountaineering achievement in the 1950s and 1960s,

teams from across the world attacked these peaks one by one, starting

with Annapurna I in 1950 (summited by a team from France) and

concluding with Shishapangma in 1964 (summited by a team from China).

The two highest peaks, Everest (8,848 meters) and K2 (8,611 meters),

were conquered in 1953 and 1954, respectively. The first teams to summit

a mountain, not surprisingly, typically take the easiest route, usually

determined from extensive surveying of the location including, in some cases in the pre-satellite imagery era, overflight by aircraft.


Once a team has won the race to be the “first” to reach a summit, additional innovation is required as the mountaineering focus shifts to other

methods of reaching the same goal. Most ascents are done in the springtime before the start of the monsoon, which brings unpredictable heavy

winds and snows. Thus an alternative approach to summiting involves doing so in the winter, which increases the level of difficulty dramatically.

Indeed, three of the fourteen 8,000 meter and above peaks still have not been summited in winter (K2, Nanga Parbat, and Broad Peak). Other

teams would look at a peak and identify an alternative approach to the summit, such as the North Face of Everest as opposed to the easier

South Col.


Another approach would be to go up by one pathway and descend by another, which is extremely dangerous since the team cannot retrace its

steps and mountain snow and ice conditions are constantly changing. Many brave climbers choose to ascend without using supplemental

oxygen, thus substantially increasing the difficulty of the effort. The net of this is that half a century after the great expeditions of the 1950s and

1960s, there are still teams working on “firsts” in terms of these great peaks in the Himalayas.


Innovation Approach


A frequent refrain in the innovation space is the lamenting by some that all the great things have already been invented, or that we are nearing

the end of a great era of innovation. The high altitude mountaineers teach us that there are always new, creative ways to approach a problem

and that the era of discovery can continue no matter how many teams have reached a summit. There are always meaningful alternative angles

of attack for any challenge, and the key to finding those alternatives is to open one’s mind to the endless possibilities presented by the extreme

nature of the challenge itself. In other words, the greater the challenge, the more likely there will be multiple ways of overcoming that obstacle.


5. Himalayan Mountaineering Aspect – Getting down is the hardest part


Many climbers say that the most difficult part of any expedition is getting down from the summit. While working towards the summit, the

climbers are relatively fresh and focused on their objective. As the day grows longer and light diminishes, oxygen-depleted climbers sometimes

make grave mistakes on their way down from the summit. Many of the deaths in the Himalayas occur on the way down, so successful attempts
require just as intense of concentration on the trip down as on the trip up. In the case of the attempt on Everest by Mallory and Irvine, some

scholars speculate that Mallory and Irvine achieved the summit (and indeed were the first to conquer Everest) but perished on the way down.


Innovation Approach


Like a mountaineering team ascending to the summit, it is easiest for those of us working in the innovation space to focus our time and energy

on developing a new idea. The ideation phase of innovation is often the most exciting and energizing portion of the overall process. We are

sometimes less enthused about the hard work of taking our idea and turning it into a new product or service, or in transforming a business

process to improve operational efficiencies. In the case of the latter, the tedious work of convincing management to accept a process change,

building a return on investment model, documenting the new process, communicating it to process participants, and following up to ascertain

the success of the change pales in comparison to the exhilaration of identifying the solution to the big problem in the first place.




Conclusion


High altitude mountaineering presents numerous lessons for the modern innovator, though perhaps its greatest lesson is that of how human

beings can respond to great challenges through innovation. Other than the handful of pioneers who trek to the depths of the ocean (albeit

enclosed by sophisticated life-sustaining submarines), high altitude climbers demonstrate an amazing ability to survive and, indeed, accomplish

great objectives, in the midst of adversity. Although a climber is supported by a large team using modern materials (fabric, plastics, lightweight

steel ice picks, etc.), in the end there are still some humans who have climbed to the top of the highest mountain in the world without the

assistance of supplemental oxygen.


The triumph of the human spirit amidst adversity harkens to another innovation theme, which is that sometimes innovation can thrive in

challenging, difficult environments. Alexander Fields, an economic historian from Santa Clara University, notes that the Great Depression was

“the most technologically progressive decade of the century.” Significant innovations rose to the surface despite the economic destruction of the

period (harkening Shumpeter’s “Creative Destruction”). Innovators can derive interesting approaches to their craft by looking to the great

challenges that humans have overcome.
Sources: 1. Maurice Isserman and Stewart Weaver, Fallen Giants: A History of Himalayan Mountaineering from the Age of Empire to the Age of

Extremes (New Haven: Yale University Press, 2008). 2. Wade Davis, Into the Silence: The Great War, Mallory, and the Conquest of Everest

(New York: Vintage Books, 2011). 3. Jon Krakauer, Into Thin Air: A Personal Account of the Mt. Everest Disaster (New York: Anchor Books,

1997). 4. David Wessel, “Checking the Economy’s Pulse,” Wall Street Journal, January 2, 2013, p. A7. image credit: theage




                Scott Bowden works on Innovation Programs for IBM Global Services
Idea Challenges – you get what you give
Posted on January 13, 2013 by Jan Martijn Everts


                                                                  In contradiction to what many people think, Idea Challenges are not about

                                                                  getting, they are about giving. Your employees will not automatically start

                                                                  sharing great, useful and relevant ideas to your organisational needs. As an

                                                                  organisation, you must give a lot before you get anything at all. And I do not

                                                                  mean prizes or money.


                                                                  In this blogpost I will describe a number of important elements that you

                                                                  must give attention to when doing an ‘Idea Challenge’ amongst your

                                                                  employees. The extent to how much attention you give each of the

                                                                  elements, is a strong determinant for your initiative’s success.


                                                                  Give support: Senior management The first thing you should have covered

when starting an Idea Challenge is to have the support from senior management or equivalent. If your CEO does not agree with this new

method of gathering ideas or the fact that all employees will be spending some time on this activity, you are very likely not going to succeed. If

you can get senior management to endorse the initiative to all employees, you are half way to a successful Challenge.


Give a reason: Relevant Challenge theme When your organisation starts an Idea Challenge, you will get a lot of input from your crowd.

Therefore you should always have a good reason to start an Idea Challenge in order for the input to be useful. Do not start a Challenge simply

because your competitor is doing one amongst its employees too. You will have to give your crowd a good reason why you are looking for

ideas and how these will help everyone. Relevant themes for Idea Challenges are typically deducted from your innovation domains or your

organisation’s strategic goals.


Give a promise: Challenge sponsorship When asking your employees for ideas, there must be someone requesting the ideas; this is the

Challenge sponsor. The Challenge sponsor must promise that the crowd’s efforts will not be for nothing and that the ideas will all be taken

seriously and some will be further developed. The best way to do this is to show trust in the crowd by already stating in advance that budget will

be allocated and the best idea(s) will be further developed.


Give information: Challenge information Somewhere during the process you will need to inform the crowd what the challenge is about, what

you are and what you are not looking for, what the overall process will be like, how ideas will be evaluated etc. By communicating all these

steps in advance will give the crowd confidence that this time, they are being taken seriously. If these aspects are not communicated clearly, or

your crowd does not have enough information on what you are looking for, you will not only get many irrelevant and useless ideas you will also

disappoint your crowd by not using their input eventually. The Challenge question is the element that will be communicated mostly throughout

the crowd. This question must be triggering for people to be willing to participate, it must be broad to allow for diversity of ideas but not to broad

to spark irrelevant and useless ideas.
Give an example: Supporting Challenge team The Challenge team is there to streamline dialogues, activate the crowd and stimulate the growth

of ideas. They are an essential element in the success of an Idea Challenge. They take the role of the first follower in order to stimulate activity

to the tipping point for Challenge participation as well as idea enrichment.


Give a tool: User-friendly and intuitive software Obviously you must have a tool in place on which your crowd will be sharing their ideas and

knowledge with each other. Giving your crowd a user-friendly and intuitive platform will lower the barrier for participation and increase

participation and will raise the number of ideas. The more people you have participating in the Idea Challenge, the more valuable it can

become. Well designed ideation tools should allow everyone within your target group to participate without obstacles. Well designed software

should not only support high quantity of ideas by lowering participation barriers but also support increasing the quality of ideas. Idea Challenge

software suggests other contributors to ideas and allows for active crowd management. A low barrier of participation and high user involvement

will be another step forward to a successful outcome.


Give arguments: Idea evaluation An important element of the idea Challenge is to evaluate all the ideas based upon predetermined criteria.

Because you presumably cannot develop all the ideas that arose from the Challenge, you will need to make a well-founded decision on which

ideas to pursue and which ideas are going to be put on the shelve. Without sensible arguments on why certain ideas go through to the next

phase and why others don’t, you will lose the crowd’s moral and motivation for upcoming initiatives so be clear and transparent in this step.


Give action: Follow up of ideas Your employees have been putting a lot of effort in their contributions. Your crowd has been very dedicated and

they have not only kept to working hours. They have been active during the week, but they might have also submitted ideas late at night and

enriched other’s ideas during the weekend. Therefore you must always give a lot of attention following up the ideas.


Give a story: Communication One of the most important elements is a solid communication plan. It endorses many of the above mentioned

elements. A well thought through and executed communication plan will play a major role in making the Idea Challenge a success.


Get your success If all of the above elements are given enough attention and you have a dedicated and enthusiastic team, chances are high

you will get a successful Idea Challenge. You will probably not only get many great and useful ideas but you will also get a lot of highly

motivated employees who are feeling part of the innovation process and taken seriously. You have just created a sustainable crowd, one that

you have earned the favor of asking them for input on more challenges.


image credit: Jan Martijn Everts




                      Jan Martijn Everts is Innovation Consultant @ Innovation Factory in the Netherlands. Jan Martijn has worked on a

                      variety of projects, ranging from Heineken’s annual idea contests to PostNL’s ongoing innovation programme. Due to his

                      uncommon background of both Engineering Physics and Business Administration he has great association skills, is

                      creative and can give any challenge a creative twist.
Removing Risk from Bold Aspirations
Posted on January 12, 2013 by Rowan Gibson


The conventional wisdom about innovation is that companies should be less risk-averse. If this

means they should try to increase their share of courageous employees who are willing to

stand up and fight for ideas, then I would agree. However, when we move from the individual

level to the corporate level, the challenge becomes quite different. After all, do we really think

companies should be taking more risks? If anything, many firms have been far too willing to

make big, risky bets on ventures that ended up losing billions of dollars – GM’s ill-fated EV1

project and Motorola’s Iridium phone are two examples that come to mind. I would argue,

therefore, that the real challenge for organizations is not how to take more risks but how to de-

risk bold aspirations.


One way to do that is to work from the future back. At the outset, an innovation goal might be so big and outrageous that it almost seems

impossible. You need to break it down into a stepwise migration path that begins to make the impossible seem do-able. Ask yourself: What is it

going to take to reach that goal? What specific kinds of knowledge, experience, and skills do we need to acquire? And how do we stage our

way there by building and acquiring these competencies in a sequential manner? Search for the last few steps needed to get where you want to

go, and then fold the future successively back into the present, working out a series of realistic checkpoints for tackling these challenges one at

a time.


An analogy I often use is John F. Kennedy’s goal to “land a man on the moon and return him safely to the earth by the end of the decade.” We

may take it for granted today, but in the early 1960s that was an enormously bold aspiration which involved really huge risks. The only way for

NASA to take Kennedy’s ambition and make it reality was to stage the whole program in a series of mission-critical steps, working from the

future backward. Through the Mercury program, followed by the Gemini program, and ultimately the Apollo program, NASA successively tested

human spaceflight, earth orbiting, long-duration space missions, how weightlessness affected humans, how to dock two vehicles successfully in

space, the Saturn V rocket launch vehicle, the Apollo command module (first in Earth orbit then in lunar orbit), and finally the lunar module.

Along the way, they also created, tested and perfected a space suit that would allow an astronaut to get out of the pressurized landing craft and

survive in the lunar environment. Only after applying all the learning from these preliminary missions did NASA launch Apollo 11, which put Neil

Armstrong and Buzz Aldrin on the moon and brought them back safely back to earth, just a few months before the end of the decade.


In other words, NASA turned the “race to the moon” into a multi-stage experimentation process, de-risking it at every step, learning from the

successes and failures of each experiment and consolidating the progress, all the time making the end goal less and less daunting.


It’s the same approach many Olympic athletes follow when mapping out their four-year training path to a record-breaking gold medal. And it’s

exactly the same process you need to follow in business, when pursuing seemingly unattainable and potentially high-risk innovation goals.
Take, Toyota, one of the world’s undeniable innovation champions. As Hirotaka Takeuchi, Emi Osono, and Norihiko Shimizu point out in their

book “Extreme Toyota”, the Japanese automobile giant has found that the way to achieve near-impossible goals is to “think deeply but take

small steps” – breaking down a big goal into manageable challenges. This, for example, is how Toyota approached their hybrid motor project in

the early part of this decade, eventually resulting in them stealing the show in environmentally-friendly cars.


What we learn here is that to achieve revolutionary goals, you need to take a series of evolutionary steps. That’s an important way to minimize

the risk associated with radical innovation.




                 Rowan Gibson is widely recognized as one of the world’s leading experts on enterprise innovation. He is co-author of the

                 bestseller Innovation to the Core and a much in-demand public speaker around the globe. On Twitter he is @RowanGibson.
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Innovation Excellence Weekly - Issue 16

  • 2. Issue 16 – January 18, 2013 1. Innovation in China.......................................................................... John and Doris Naisbitt 2. Managing Innovation in the Trenches ……..………………………..…...…. Geoffrey Moore 3. Managers are for Efficiency, Leaders are for Innovation ……..…..……… Jeffrey Phillips 4. 4 Innovation Leadership Strategies for 2013 ..........................................…. Soren Kaplan 5. Innovate by Design .……………………………………..…………… Bradley (Woody) Bendle 6. The Value Elevator Speech for your Innovation …………………………. Stephan Liouzu 7. Why Jeff Bezos Is Our Greatest Living CEO …………….…………….….... Adam Hartung 8. Himalayan Innovation! …………………………...……………….……..…...….. Scott Bowden 9. Idea Challenges – you get what you give ………..………….....…..….….. Jan Martineverts 10. Removing Risk from Bold Aspirations ….……………………...….….…..… Rowan Gibson Your hosts, Braden Kelley, Julie Anixter and Rowan Gibson, are innovation writers, speakers and strategic advisors to many of the world’s leading companies. “Our mission is to help you achieve innovation excellence inside your own organization by making innovation resources, answers, and best practices accessible for the greater good.” Cover Image credit: Crying Baby
  • 3. Innovation in China Posted on January 13, 2013 by John and Doris Naisbitt Legendary trend forecasters John and Doris Naisbitt have been analyzing global trends together since 2000, with a special focus on the fundamental transitions in China’s social, political and economic development and its impact on the West. Their latest book is Innovation in China: The Chengdu Triangle. They are currently working on a new book about the new global landscape. - Rowan Gibson, Co-Founder, Innovation Excellence Pride goes before a fall. Pride estimates value, position and ability of oneself higher than those of others. Arrogance, pretention, illusion and blasé color a picture that does not reflect reality. Pride makes us blind. That’s what makes it so dangerous. We can experience it on personal levels, and we are about to experience it on a global scale. It is not irreversible, but most likely: the West, dazzled in the belief of its immovable supremacy, is in denial of losing ground against a rising east and new alliances of emerging markets. Based on obsolete pictures of the past the West overestimates its own ability and underestimates the potentials of the rising powers. The main players, the U.S. and China, are easy to identify. And while the next decades will be dominated by a bi-polar world of the fading and the rising star, the further future is foreseeable: the hegemony of China, a nation that little more than thirty years ago was at the brink of economic, political and cultural collapse. It is part of the pride of the lecturing West that it is in denial of what stood behind the rise of China: its eagerness to learn, its guts to utilize trial and error, and
  • 4. the simplicity of adopting what works and dropping what does not. Mistakes are made, and it is not always the most elegant path China chooses, but it keeps moving. The belief in Western supremacy relies on three main pillars, Western democracy, market economy and technological leadership. If innovation were given a citizenship, it would be American. China for its part is not about to continue as the executing branch of Western innovations. More so, innovation in China has peeled off its limitation to technology and business, and embraces social-political developments, feeding economic progress and technological advancements. It takes place in a fusion of strategic planning and flexible execution. Innovation in a state-directed matrix? Yes and no. The city of Chengdu is a good example of how far innovative thinking can be stretched in China. New social economic structures work in the interest of social stability and create a nourishing environment for entrepreneurial thinking and ideas. Chengdu, with a population of 14 million, is the capital of Sichuan province. It is the city where paper money — a colossal innovation — first appeared in 1024. The printing of the Buddhist canons “Four Books” and “Five Classics” made Chengdu the early center in the art of printing. Innovative thinking is part of its history, and it is shaping its future. Innovation in Chengdu is growing out of a strategically planned nourishing business environment and an entrepreneur-friendly administration in a stable social climate. Following the principles of a well-run company, Chengdu’s leadership combines management and business acumen with social consciousness and, to a much greater extent than we have ever seen in a Western local government, a service-oriented administration. A good example of innovative service are the quarterly meetings, the Mayor holds, and in which every problem, request or complaints must be solved or dealt with within three days. The first meeting was held in March 2003 and meetings have been held without interruption since that time. Unlike technological innovation, social and economic innovation cannot be created in isolation, but only in a context that engages the larger society. It is likely that the absence of election driven thinking makes it easier to find common ground when it comes to changing obsolete conditions and old thinking patterns. The challenging social context in all of China is the abolishing of the dualism of its populations. It demands taking down the barriers which deny rural people the same rights and economic opportunities as urban dwellers and to include citizens in basic decision making processes. All made possible only by a large shift in thinking, a comprehensive transformation from a group and collective oriented society to an increasingly individual oriented society. All issues of change are linked with each other, and require that improvements are not made independently in each of them, but coordinated among all of them. Innovation in Chengdu is about urban rural integration and access to economic progress for all citizens not on the base of a welfare state, but by enabling rural people to climb up the social ladder by their own merits. To reach that goal Chengdu has developed a comprehensive model, simultaneously embracing three areas: reform of property rights, equalization of public service, and grassroots democracy. All three elements are building the legal foundation that will give more rights to the individual. Innovation in each is stimulating the other two for a result greater than the sum of their parts. We call it “Chengdu’s Innovation Triangle.”
  • 5. Reform of property rights created favorable conditions for land trading and land pooling leading to a higher efficiency and a gradual industrialization and modernization of arable land. The usual scattered and small lots of land did not allow efficient husbandry but as land reform allowed trading of land, large scale crops farming was possible and higher efficiency brought higher revenues to the farmers. Farmers who decide to join Chengdu’s city workforce can now lease or sell their land and work in industry or in the service sector. In this case the farmer would have a fixed income plus the monthly wage with the opportunity to return to their land later in life. Grassroots democracy — as elections in more than 800,000 villages in China is called — is a breakthrough in two directions: sharing responsibility and taking responsibility. Ordinary people can take care of their own concerns through elected representatives, but at the same time they are responsible for their choice. Elections in villages are not about political considerations but about economic considerations and better and more responsive management of village affairs. Elections are about developing poor rural areas and bringing modernity into remote areas. To equalize public service between the favored urban and the disadvantaged rural population Chengdu abolished the “hukou” classification of “rural household” and “non-rural household” and registered all the local households as “residential households” in 2004. By the end of 2012 all residents of the city, rural and urban districts, will have equal access to education, health care and other services provided by the local government. Equal access to education, be it one of the 55 vocational or at one of the 42 provincial and national key universities is utilizing a previously neglected talent pool. In this holistic view of innovation Chengdu has created favorable conditions for direct foreign investment. Not the least the excellent supply of workforce has led 219 of the Fortune 500 companies located in Chengdu, including a 100 billion investment of Dell over five years. In addition Chengdu is setting measures to support scientific development. It has adopted this strategy through the 13 industrial zones and set-up four clusters of innovative companies will work on an industry-academic-research based model in which alliances instituted by industrial leaders are developed along with research institutions, academies and industry peers. To summarize:
  • 6. The first pillar of Chengdu’s reform is its wider focus which is not exclusive on industrial development, but on a whole range of investment attractions. In its early reforms Chengdu was similar to other inland cities. Its orientation was toward foreign trade and active efforts to attract overseas investment. But at a much earlier stage than other inland cities, Chengdu broadened its innovative activities to include market elements, such as technology, labor force, knowledge, financial services, market development, and land reform with the underlying purpose to raise local consumption levels and stimulate sustainable economic development in the region. The second pillar of Chengdu’s innovation model is to seek to enhance the allocation and efficiency of “intangible assets.” To speed up technological innovation Chengdu has set up international technological and economic exchanges. In recent years it has encouraged the selective attraction of financial industries by inviting more than 50 domestic and foreign banks, insurance companies, securities companies, trust companies, future and fund corporations, and more than 20 distinguished domestic and foreign financial supporting intermediary service agencies to establish themselves in the city. All of this contributes to laying a sound foundation for Chengdu’s long-term economic development. The third pillar of the Chengdu model is bilateral exchange. Instead of inviting only foreign investment, Chengdu has sought to encourage bilateral economic exchange. In this stage “Going out” becomes an important part of the innovative strategy. Chengdu is encouraging local
  • 7. enterprises to reach outside their local area. Although Chengdu still lags far behind developed countries and coastal areas, it remains far ahead of other inland cities in moving out in an ever-increasing scale. Chengdu is dedicated to beat its innovation drums faster, louder and more insistently on all fronts. But Chengdu is only one of China’s many ambitious and competitive cities. High Tech Parks are growing like mushrooms after a warm summer rain and lure with high wages and $150,000 moving grant for top executives. Top-talents find support in Incubation Centers. Mentors, seed capital, offices and technological equipment are part of the package. China’s “Thousand Talents Program” aims to bring back 2,000 talented Chinese paying salaries between 60,000 and 360,000 Euro. Up to the year 2020 China is dedicating 15 percent of its GDP to human resources. The list could go on and yet, the answer of the West stays the same “Yes, but when is China becoming a Western democracy? When will China improve on the implementation of the rule of law? When will it end corruption, solve its environmental problems, water shortages?” We agree, the problems are there, including the need to find a decent way of dealing with divergent political opinion. But — in its view of China, the West is fast in criticizing, slow in understanding, blind towards its own shortcomings, and in denial of the closing technological advance. Pride comes before the fall and once on the ground, it is hard to get back up. image credits: john and doris naisbitt; argo-navis.com John Naisbitt is an acclaimed author and speaker whose book Megatrends sold more than 14 million copies.On the New York Times bestseller list for more than two years, it was one of the biggest successes in publishing history. Megatrends was followed by the NYT bestsellers Reinventing the Corporation and Megatrends 2000. He wrote about the increasing importance of women in business in Megatrends for Women in 1992 and in 1995 Megatrends Asia anticipated the extraordinary rise of Asia and China, which Naisbitt has been studying and visiting since 1967. Doris Naisbitt, an observer of global social, economic and political trends, is the Director of the Naisbitt China Institute in Tianjin, China and co-author of the bestseller Megatrends China: Eight Pillars of a New Society, co-autor of The China Model and author of Mai-Lin My China (CITIC Press October 2010). She holds professorships an Nankai and Yunnan University, and at Yunnan Normal Universities in China.
  • 8. Managing Innovation in the Trenches Posted on January 13, 2013 by Geoffrey Moore The first principle of managing innovation is that are three distinct returns on innovation one can invest to achieve. They are:  “Unmatchable” differentiation, which confers enormous bargaining power as customers who want what you have “must” select you and “must” pay a premium for your offer. We call this DIFF for short.  “Speedy” neutralization, which catches you up to some new market norm set by a competitor, thereby enabling you to stay in the game rather than be eliminated for lacking this feature. This is NEUT for short.  “Rigorous” optimization, which extracts high-value talent and other scarce resources from non-differentiating work in order to free up investment in highly differentiating work or high-speed neutralization efforts. This is OPT for short. The second principle is that these three outcomes are mutually exclusive, meaning you do not want to combine any two of them into the same work stream. Most innovation programs bind DIFF objectives with NEUT objectives, tying both to the same release cadence. This either slows down NEUT or dumbs down DIFF, both of which outcomes are painfully counterproductive. The third principle is that most innovation investment is wasted (which is actually good news, because it means you can get a much bigger bang for your innovation buck once you learn how to avoid the waste). The three great sources of waste are:  DIFF initiatives that do not result in “unmatchable” offers that create unequivocal customer preference. You end up being different but not different enough to gain real bargaining power.  NEUT initiatives that take too long or go too far (or, more typically, both). Here the team has become obsessed with its competitor and is doing extra work that the customer will not value, meanwhile delaying the “good enough” state that the customer would value.  OPT initiatives that do not address “sacred cow” resources. You end up moving around a lot of junior resources, meanwhile leaving the senior ones trapped in context instead of being deployed against core.
  • 9. A corollary that can help teams avoid waste is to pay attention to their reference points.  If your goal is DIFF, then your reference point should be a prospective customer’s use case, one where purchase preference will be determined by you achieving “unmatchable” performance in your key area of innovation.  If your goal is NEUT, then your reference point is a competitor, then your innovation focus should be to get “good enough” fast enough.  A behavior you must avoid is to use a competitor as a reference point for DIFF. The all too likely outcome here is that you will create a difference that the customer either will not notice, will not acknowledge, or will not value. Meanwhile, the competitor will debate the fact that you even achieved it or that it is relevant if you did. Finally, in light of these principles, the role of the leader is to deconstruct the overall workload of the team to tease out the DIFF from the NEUT from the OPT, and to charter specific work-streams accordingly. This rarely results in a perfectly pure outcome, but the more pure it is, the more productive your team’s efforts will be. image credit: geoffreyamoore.com; HarperBusiness.com Geoffrey Moore is an author, speaker and business advisor to many of the leading companies in the high-tech sector, including Cisco, Cognizant, Compuware, HP, Microsoft, SAP, and Yahoo! His latest book is Escape Velocity: Free Your Company’s Future from the Pull of the Past is Moore’s sixth book for business leaders in the high-tech sector. His first book, Crossing the Chasm addresses the challenges of gaining initial adoption for disruptive innovations.
  • 10. Managers are for Efficiency, Leaders are for Innovation Posted on January 12, 2013 by Jeffrey Phillips Time was, back when the railroads were built, that the military was basically the only management structure that was large, distributed and relatively effective. So the railroads and other rapidly expanding businesses adopted the military’s top down, command and control management philosophies. This was actually a driver for industrial growth, since many corporations were forming and needed a structure to allow them to grow, to expand and to control operations. The top down command and control organization wasn’t especially fast at making decisions, but was good at implementing the desires of the senior executives and good at repetitive work. This structure was especially valuable when few people had much education, but could be taught relatively simple operations on a production line. Fast forward to today, and the top down, command and control organization is rapidly becoming a thing of the past. First, it takes too long for commands to filter down through the organization, so the responsiveness of a top down command and control organization is limited, when the environment is changing rapidly. Second, the executives and leaders rotate through jobs and positions like a roulette wheel, in one slot and then on to another slot every two to three years. This lack of longevity in any role doesn’t create much stability or desire for long term change. Third, most workers in large organizations have far more training and education than their forebears, and are able to make informed decisions, if they are informed of the goals of the organization. The Cross Roads Our businesses are at a cross-roads, in terms of existing structures and purpose, and future demands. Most command and control businesses were designed and built based on a competitive model and framework that is dissolving. As trade barriers fall, competition increases and low cost options shift from country to country, building an ever more effective command and control environment is like akin to “fighting the last war”. Organizational structures need to change. But you know this already. Gary Hamel told you this in The Future of Management. The real question is: do you understand the impact of this treatise when it comes to innovation? Leaders, managers and visions, oh my! Back in the day when command and control was the accepted and the practical alternative, executives created strategies but didn’t bother to share them with their employees. They simply asked for specific tasks to be accomplished, and the employees acted accordingly. The employees didn’t question, and didn’t bother to share ideas. Requests came top down, and results flowed bottom up. But today, things should be different. With a far more educated and capable workforce, executive can expect far more than simply acquiescence to commands. But do the communication channels exist to allow good ideas to flow both ways? Often, modern corporations
  • 11. seem to represent the epitome of evolved learning, with empowered teams, active communication and deep training. But underneath all of this evolved learning and management still resides, as an almost vestigial organ, a command and control mentality. Oh, we’ve received the training, heard the message and nodded our heads at the sage wisdom, thank you, but we’ll still wait for the directions. What we need is a clear vision for the company, and the right and responsibility to achieve it with our best capabilities and ideas, regardless of their source. What we need is executives and leaders who harness our knowledge and channel capabilities and passions. While executives have gotten much better at expressing “what” they want, the “how” part is often still missing, and in the absence of clear directions, staff will revert to what they think is safe and reasonable. The new paradigm Greg Satell has written about this better than I can, so let’s link to his article, The Leaderless Organization. What you need to be consistently innovative is to create very clear, compelling strategies and goals for your business, and provide the tools and techniques for your teams to deliver. And be open enough to their ideas to encourage more innovation. This doesn’t suggest that organizations don’t need executives, just that they need leaders even more than they need managers. Leaders are good for innovation, managers are good for efficiency. Both are required in a modern organization. image credit: the gap image from bigstock Jeffrey Phillips is a senior leader at OVO Innovation. OVO works with large distributed organizations to build innovation teams, processes and capabilities. Jeffrey is the author of Relentless Innovation and the blog Innovate on Purpose.
  • 12. 4 Innovation Leadership Strategies for 2013 Posted on January 12, 2013 by Soren Kaplan The New Year brings about resolutions to redefine the status quo. It’s usually an individual endeavor focused on fitness, relationships, or finances. But great things can happen when we apply the catalytic energy of the New Year to our teams and organizations. 2013 represents the ideal time to leapfrog our mental models and innovate our way to business breakthroughs. Here are four strategies any leader can use to jump-start the New Year with their teams and organizations: Strategy #1: Define Your “Leapfrogging” Opportunity  promote big thinking that involves challenging assumptions and “changing the game” in whatever you’re doing. It’s all about leapfrogging existing solutions and the competition. Apple didn’t create the iPod because customers asked for it; they wanted it themselves. Target didn’t become “Tar-zjay” by emulating Wal-Mart; they decided to be known for incredible design and become the leader in “cheap chic.” Ask yourself: In what ways are we holding onto the status quo? What are the breakthroughs that we want to create and lead? Strategy #2: Leverage Data, then Go with Your Gut  When it comes to making resolutions, you instinctively know what you need to do. Breakthrough innovation isn’t much different; there are no maps for uncharted territory. Comprehensive data rarely exist. The goal is to use whatever information you can find, and then apply your instincts to fill in the gaps. A University of Amsterdam research study recently found that people made the best decisions when they actually ignored detailed data and? made quick decisions after “sleeping on it.” Ask yourself: Are we holding back because we’re missing data that can’t realistically be obtained in a workable timeframe? What do we know deep down to be true that data can’t tell us? Strategy #3: Test the Waters with Your Pinky Toe  Research from the University of Virginia shows that entrepreneurs get their ideas out into market as quickly as possible (even if they’re not perfect), test them, and change their fundamental assumptions as needed. And they’ll go through this same iterative process many times to get it right. The goal is to sponsor and conduct low-risk experiments to test and validate a variety of new opportunities. Using this approach provides room for learning and adapting while minimizing the risk of failure.. Ask yourself: What is the smallest step that would have the greatest impact? What big assumptions can be tested with the least effort or investment?
  • 13. Strategy #4: Savor Surprise  The unexpected is a natural part of innovation. And in today’s 2013 environment, uncertainty has never been greater. When unanticipated things occur, rather than fight them, listen to what they’re telling you.. The stronger our reaction – either positive or negative – the stronger our assumptions are likely being challenged or reinforced. Scott Cook, Founder of Intuit, credits this unusual mantra of ‘savoring surprise’ as one of the pillars of his company’s long-term success. Ask yourself: What surprises have we experienced that influenced where we are today? What can we do to remain open to the power of surprise when it occurs rather than resist it? In many ways, “the soft stuff is the hard stuff” when it comes to challenging existing assumptions, processes, and ways of working. And these strategies must be applied over time, through a journey that involves experimentation, setbacks and successes. 2013 is the year to recognize that anyone who’s willing to push through to the other side of the status quo can become an innovation leader. image credit: universitystarts!.com Soren Kaplan is the author of Leapfrogging and a Managing Principal at InnovationPoint LLC where he advises start-ups and also consults to Cisco, Colgate, Disney, Medtronic, Visa, and others larger firms. He led the internal strategy group at HP and is an Adjunct Professor within the Imagineering Academy at NHTV Breda University of Applied Sciences in The Netherlands. To learn about the book Leapfrogging or contact Soren visit www.leapfrogging.com
  • 14. Innovate by Design Posted on January 14, 2013 by Bradley (Woody) Bendle The most successful innovations throughout history have one thing in common – they are valued by consumers because they uniquely meet and/or exceed previously unfulfilled needs. Occasionally, an innovation might succeed by accident; but more times than not, successful innovations are the result of an organization employing a purposeful end-to-end innovation process that begins with a deep understanding of consumer needs. With uniquely solving consumer needs as a key for innovation success, it is important to understand what a consumer need is; and that needs can be functional and/or emotional. Functional consumer needs: Functional needs are generally more straight forward to understand. A functional need is best described as that which the consumer is trying to get done. For example, a carpenter might need a hole in a wall stud in order to thread an electrical wire through it. Alternatively, a musician might need a way to recall and replicate something that they just came up with while improvising. Emotional needs however, are quite different from Functional needs and can be a little trickier to get your head around. Emotional consumer needs: Emotional needs can be thought of as how a consumer wants to feel; either intrinsically or extrinsically. As an example of an intrinsic or internal emotional need, we might think about a bicyclist who regularly rides when it is dark outside. Being able to see where she is going and being able to have others (motorists) see her serve true valuable functional needs. But, an innovation fulfilling these functional needs can also fulfill intrinsic emotional needs like feeling safe, confident, responsible, etc. At the same time, if the innovation is some amazing, latest and greatest, cutting-edge gadget, our cyclist may have been motivated by how she feels she might be perceived by others (i.e., she might want others to think she’s: “with it”, “cutting edge”, “cool”, etc.). In my opinion, one of the best ways to tap into emotional consumer needs is through design. And one of the awesome things about design is that there is very little (if any) correlation between design and cost. Things don’t have to cost a ton to have awesome design. If you need some convincing, let me share a recent occurrence in my household that was the result of an “emotional need” being triggered through design. Hard to say no to compelling design: I came home the other evening to find two Williams-Sonoma shopping bags on our kitchen counter. When I looked into the bags to see what goodies we had gotten, I had to chuckle. Brand spanking new OXO measuring cups and measuring spoons. These weren’t new things
  • 15. whatsoever – we already have things that performed these exact functions. But rather, these were new and improved versions of things we already had in our drawers. Not only did we already have them in our drawers; we already had two sets of each of them. Now we have three! These OXO measuring cups and spoons weren’t purchased because they all of the sudden filled an unmet functional need; not at all. The ONLY reason these were purchased was because their design spoke to my wife’s emotional needs when she was at Williams-Sonoma to pick up something completely unrelated. But here’s the deal, I admit it; they also speak to my emotional needs as well. These OXO measuring cups and spoons are actually pretty cool! They look cool. They feel cool. They’re a heavy brushed stainless steel with grippy rubber handles. They’ve definitely got their own unique look and feel. They look like they will hold up – maybe even last forever. They don’t look like something that everyone else would have in their kitchen. They look different – and I guess that makes us a little different. They’re sort of unique – I guess that might even make us a little unique too. The design of these OXO measuring cups and spoons spoke to my wife, and they’re now ours – in addition to two other (not so unique) sets that I’m not sure what we’ll do with now. So, the next time you are seeking innovation opportunities for your organization, don’t overlook design and the opportunity to spark your consumers’ emotional needs! Superb design can do many many magical things for your brand! Now, let’s get innovating! Bradley (Woody) Bendle is Director, Insights & Innovation at Collective Brands, Inc. and formerly a VP of Marketing, Customer Analytics & Strategic Systems at Blockbuster, and a consulting economist. His focus areas are: Brand & Market Strategy, Product & Service Innovation, Consumer Behavior, Quantitative & Qualitative Research Methods, and Applied Econometrics. (twitter – @wbendle)
  • 16. The Value Elevator Speech for your Innovation Posted on January 14, 2013 by Stephan Liozu Are you able to clearly articulate the value proposition for your innovation, your business model, or your startup? Can you recite in one quick minute this value proposition and two to three value drivers that illustrate its power and monetized differential value? If you are a business leaders in the trenches, a multi-tasking entrepreneur or a busy innovator, chances are that you have not gone through the exercise and are not ready for it. I was recently participating in a top management conversation at a fairly large high tech start up and I asked leaders around the room if they were able to articulate the business model value proposition and their critical value drivers. The question took them by surprise and generated some interesting internal discussions. I was invited to speak with them about their potential pricing problems but we quickly realized that the problem resided in the business model fundamentals and the overall value proposition. The conversation uncovered internal disagreements, some frustration among the various executives, and a real need to take a step back and reflect. Case closed! How can one have a creative and constructive discussion on pricing models without have a clear idea of what your innovative business model is all about and what types of differentiating features you bring to your customers? This is fundamental exercise that every marketing manager, business manager, innovator, and entrepreneur should go through to create a crisp value story that will create excitement and interest for customer, investors and partners. There are three critical elements to work as shown in the figure below. The overall value proposition needs to reflect the main differentiating dimensions of your new business model or your innovation. It needs to short and crisp and resonate with customers by using the vocabulary they are using. Then based on this crisp statement, you can extract a maximum of three value drivers for your value offering. Focus on value drivers that are tangible and measurable but also that are the most relevant for your customers. In other words, focus on the bang for the buck. Finally, for these three value drivers, you need to calculate and
  • 17. extract the monetized value i.e. the financial benefits you will bring to your customers). These are typically cost savings or incremental revenues. Do not get me wrong! This is very difficult exercise but a very worthy one. It gets even more complicated when you consider a complex new business model or an entire corporate strategy. But imagine the power of having an army of marketers and merchants being able to all recite the same value proposition and promote the same value drivers for a new business model or a new product or service. If you are an entrepreneur or an inventor in search of funding, you need to go through this exercise and practice the speech. Bankers and investors will need to hear the differentiating power of your idea, concept or proposal. They need to see that you have confidence in your value proposition, your value drivers and that you have gone through the exercise of monetizing your differential economic value. That is the rational discussion they will need to have with you. Keep it short though. Simpler is better! There has never been a better time to pay attention to value. Be bold! Innovate and join the value-based revolution. image credit: printmediacentr.com Stephan Liozu is the Founder of Value Innoruption Advisors and specializes in disruptive approaches in innovation and value management. He is also a PhD candidate in Management at Case Western Reserve University and can be reached at sliozu@case.edu
  • 18. Why Jeff Bezos Is Our Greatest Living CEO Posted on January 14, 2013 by Adam Hartung The Harvard Business Review recently published its list of the 100 Best Performing CEOs. This list is better than most because it looks at long-term performance of the CEO during his or her time in the job – with many on the list in service more than a decade. #1 was Steve Jobs. #2 is Jeff Bezos – making him the greatest living CEO. It is startling just how well these two CEOs performed. During Jobs’ tenure Apple investors achieved a return of 66.8 times their money. During Mr. Bezos’ tenure shareholders achieved a remarkable 124.3 times return on their money. In an era when most of us are happy to earn 5-10%/year – which equates to doubling your money about once a decade – these CEOs exceeded expectations 30-60 fold! Both of these CEOs achieved greatness by transforming an industry. We all know the Apple story. From near bankruptcy as the Mac company Mr. Jobs led Apple into the mobile devices business, and created a transformation from Walkmen, Razrs and PCs to iPods, iPhones and iPads – to the detriment of Sony, Motorola, Nokia, Microsoft, HP and Dell. The Amazon story is all the more remarkable because it has been written in the far more mundane world of retail – not known for being nearly as fast-changing at tech. Lest we forget, Amazon started as an on-line seller of books frequently unavailable at your local bookstore. “What’s a local bookstore?” you may now ask, because through continuous upgrading of its capability to build on the advances in internet usage – across machines, browsers, wi-fi and mobile – Amazon drove into bankruptcy such large booksellers as B.Dalton and Borders – leaving Barnes & Noble a mere shell of its former self and on tenous footing. And the number of small bookshops has dropped dramatically. But Amazon’s industry transformation has gone far beyond bookselling. Amazon was one of the first, and by most users considered the best, at offering a complete on-line storefront for any retailer who wants to sell goods through Amazon’s site. You can set up your inventory, display products, provide user information, manage a shopping cart and handle check out all through Amazon – with minimal technical skill. This allowed Amazon to bring vastly more products to customers; and without adding all the inventory or warehousing cost. As digital uses grew, Amazon moved beyond the slow-paced publishers to launch the Kindle and give us eReaders displacing paper books and periodicals. But this was just the first salvo
  • 19. in the effort to promote additional on-line buying, as Amazon next launched Kindle Fire which at remarkably low cost gave people a tablet already set up for doing retail shopping at Amazon. As Amazon launched its book downloads and on-line services, it built its own cloud services business to aid businesses and people in using tablets, and doing more things on-line; which further reinforced the digital retail world in which Amazon dominates. And make no doubt about it, Kindle Fire – and the use of all other tablets – is the WalMart and other traditional brick-and-mortar retail killer. Amazon is now a player in all pieces of the transition which is happening in retail, from traditional shopping to on-line. Demand for retail space in the USA began declining in 2009 and has not stopped. Most analysts blamed it on the great recession. But in retrospect we can now see it was the watershed year for customers to begin looking more, and buying more, on-line. Now each year growth in on-line retail continues, while demand at traditional stores wanes. Just look at this last holiday season. To (hopefully) drive revenue stores were opening on Thanksgiving, and doing 24 and 48 hours of non-stop staffing and promotions to drive sales. But it was mostly in vain, as traditional retail saw almost no gains. Despite doing more and more of what they’ve always done – trying to be better, faster and cheaper – they simply could not change the trend away from shopping on-line and back into the stores. For the last year the #1 trend in retailing has been “showrooming” where customers stand in a store with a smartphone comparison pricing on-line (most frequently Amazon) to the product on the shelf. Retailers were forced to match on-line prices, despite their higher overhead, or lose the business. And now Target has implemented a policy of price- matching Amazon for all of 2013 in hopes of slowing the trend to on-line purchasing. Circuit City went bankrupt, which saved Best Buy as it picked up their lost business. But now Best Buy is close to failure. Same store sales at WalMart have been flat. JCPenney recruited Apple’s retail store wizard as CEO – but he’s learned when you have to compete with Amazon life simply sucks. Nobody in traditional retail has found a way to reverse the on-line shopping trend, which is still dominated by Amazon.
  • 20. We all can learn from these two CEOs and the companies they built. First, and foremost, is understand trends and align with them. If you help people move in the direction they want to go life is easy, and growth can be phenomenal. Trying to slow, stop or reverse a trend doesn’t work, and is expensive. Second, don’t ask customers what they want, instead give them what they need. Customers may be on a trend, but they will frame their requests in the old paradigm. By creating new trend-promoting products and solutions you can capture the customer and avoid head-to-head competition with the “old guard” titans selling the increasingly outdated solutions. Don’t build better brick-and-mortar, make brick-and-mortar obsolete. So, what’s stopping you from growing your business like Apple or Amazon? What keeps you from being the next Steve Jobs, or Jeff Bezos? Can you spot trends and provide trend-supporting solutions for customers? Or are you stymied because you’re spending too much time trying to defend and extend your old business in the face of game changing trends. image credit: smh & dispatching Adam Hartung, author of Create Marketplace Disruption, is a Faculty and Board member of the Lake Forest Graduate School of Management, Managing Partner of Spark Partners, and writes for Forbes and the Journal for Innovation Science.
  • 21. Himalayan Innovation Posted on January 11, 2013 by Scott Bowden Many readers are familiar with Jon Krakauer’s harrowing account of the climbing disaster on Mount Everest in May, 1996. Beyond Into Thin Air, there are many other interesting works on Himalayan mountaineering expeditions that chronicle the efforts of men and women who took on the ultimate challenge of attaining various great summits starting in the early twentieth century using a variety of technical equipment and climbing strategies. From an innovation standpoint, there are several attributes of high altitude mountaineering that resonate with those of us working in challenging space of trying to find creative ways of overcoming old and new problems for our companies and customers. 1. Himalayan Mountaineering Aspect – Roping together Roping a team together is one of the most fundamental principles of mountaineering, and is particularly important for high altitude mountaineering where every step, even in seemingly stable areas, could result in a dangerous fall. By roping climbers together, teams knew that if one person slipped then the others could save that person by further securing their positions. Perhaps the most famous example of this technique occurred on an American expedition to the summit of K2 (the second highest peak in the world) in 1953 when a team of four climbers started to slide down a precipice of several thousand feet but were able to grab a rope that Pete Schoening, in an instant, was able to hold firm via an ice axe belay to save the team from a certain death. A more somber example of fixed ropes was the 1999 discovery of Robert Mallory’s remains on Everest. Mallory died during his summit attempt in 1924 and his body, shielded for almost a century from decay by the dry and cold conditions on the mountain, had a detached rope wrapped around the waist that was previously connected to his climbing partner, Sandy Irvine, who also perished in the summit attempt. Innovation Approach When we engage colleagues to take on an innovation challenge, we can benefit from mentally roping ourselves together as we run into the typical obstacles that face innovators, such as bureaucratic inertia or set ways of doing business. As innovators we inevitably will challenge the status quo, and only by working tightly together as a team can we overcome those obstacles. When approaching an innovation challenge, we should think about who we are roped up with on our team. Perhaps the most interesting aspect of roping together is that each individual in the team continues to work independently (climbing towards the objective), but by being roped together, each team member can climb or descend with the confidence that a small mistake will not result in complete failure. That extra confidence allows each team member to move more assertively, and it is precisely this assertiveness and confidence that the innovator needs to improve his or her performance.
  • 22. 2. Himalayan Mountaineering Aspect – Multiple camps and acclimatization A casual observer would assume that a high altitude climber would simply start at the base and keep going until he or she reached the summit. The reality of climbing is that a climbing team has to carefully plan an assault consisting of a series of camps set at different levels on the mountain. There are several reasons for the use of multiple camps. First, it takes several days of constant climbing to go from the base of a mountain to its summit, and it would be impossible for a climber to carry enough supplies for this entire timeframe. Thus an expedition will set up a series of camps at various altitudes along the way and use team members and local Sherpas to hike repeatedly up and down to those camps to stockpile supplies for the summit attempt. Each camp is placed is a logical location along the path and contains tents and supplies and is ideally sheltered from the high winds and rough conditions of extreme elevation. Expeditions always start with a large Base Camp and then will establish hour or five other camps up the mountain (Camp) depending on the difficulties posed by a particular mountain. The highest camp is meant for the summit teams to spend one night and then make their final push to the summit, followed by another night of shelter and then a descent back down the mountain to reach the base. A second reason for the use of multiple camps is the fact that the lack of oxygen at higher altitudes makes it difficult for humans to function effectively for extended periods of time. As a result, the body needs to acclimatize to the conditions so that the climber is able to spend several days at high elevations to make it to the summit. Without proper acclimatization, the mountaineer would not be able to survive, as would be the case if a helicopter deposited a person on the summit of Everest (a Eurocopter has indeed accomplished this feat, though no one exited the craft). Innovation Approach When we engage in an innovation session we often pressure ourselves to come up with fresh new ideas within a given amount of time, adhering to the typical managerial directive to “be innovative.” While we sometimes can serendipitously stumble across a great new idea in the course of our efforts, we more often end up identifying some interesting themes that require further pursuit at a later date. Perhaps we should think about the multiple camp concept from high altitude mountaineering when we tackle an innovation session. We should establish our base camp, with a set of guiding themes and principles that we can use as the foundation of all our efforts. We may next want to establish smaller
  • 23. virtual camps along the way of our journey, focusing on the supplies we will need at each stage to continue our pursuit. We can then check into those camps periodically in the future as we continue our innovation journey. For instance, we might have a core team at the base then bring in different participants for different stages of our endeavor, depending on the different perspectives we might need at different stages of the process. At a minimum, we could use the notion of multiple camps as an organizational principle to help our teams understand the multiple steps required in our innovation expedition. 3. Himalayan Mountaineering Aspect – Summit Credit In the more chivalrous era of mountaineering when there were Himalayan summits that had not been reached by climbers, there was a very specific protocol around how credit for reaching a summit was assigned. Summit teams typically consisted of sets of two climbers who would work together to reach the top, and the most famous team is Edmund Hillary and Tenzing Norgay. Many of us recall that Hillary was the first person to reach the summit of Mount Everest. An unwritten rule among climbers was that it did not matter which member of a two-person team reached the summit first, as both would receive credit for being the “first” to conquer a mountain. In addition to being a more noble approach to demonstrate cooperation, this was also intended to remove any incentive for a climber to sidestep a colleague in an attempt to “beat” that person to the summit. Both climbing members would receive credit for the achievement no matter who actually set foot on the summit the first time, and in a team of multiple sets of two-person teams, all four would receive credit even if their summit attempts were separated by a day. In fact, to this day it is not known whether Norgay or Hillary was actually the first to set foot on the summit of Everest. The only picture taken at the summit was of Norgay, taken by Hillary, since the former did not know how to operate a camera. Nonetheless, both are credited with the first successful ascent of Everest, though in Western lore we usually only hear about Hillary’s name when the topic arises. Innovation Approach When working on a new idea as part of a team, there is a distinct human impulse that works contrary to the notion of free and open sharing of ideas. After all, if a person has developed a concept that is truly innovative, he or she may want to receive full credit for the creation of that idea. In the world of corporate innovation where intellectual property belongs to the company employing the innovator, this is less relevant, but the concept of shared credit still is important, as each of us is presumably driven by a desire for recognition and success. The chivalrous sharing of credit in mountaineering demonstrates the spirit of shared success that should drive our innovation efforts, where the input and work of multiple team members is as critical to the end product as the one person who developed the new idea. Encouraging this dedication to the common cause upfront can ensure that team members have the right attitude in their innovation sessions. 4. Himalayan Mountaineering Aspect – New ways to climb the same peak
  • 24. One of the most significant measurements in high altitude mountaineering is the 8,000 meter (26,247 feet) mark, and it just so happens that all fourteen of the peaks topping 8,000 meters are in the Himalayas. During the great era of mountaineering achievement in the 1950s and 1960s, teams from across the world attacked these peaks one by one, starting with Annapurna I in 1950 (summited by a team from France) and concluding with Shishapangma in 1964 (summited by a team from China). The two highest peaks, Everest (8,848 meters) and K2 (8,611 meters), were conquered in 1953 and 1954, respectively. The first teams to summit a mountain, not surprisingly, typically take the easiest route, usually determined from extensive surveying of the location including, in some cases in the pre-satellite imagery era, overflight by aircraft. Once a team has won the race to be the “first” to reach a summit, additional innovation is required as the mountaineering focus shifts to other methods of reaching the same goal. Most ascents are done in the springtime before the start of the monsoon, which brings unpredictable heavy winds and snows. Thus an alternative approach to summiting involves doing so in the winter, which increases the level of difficulty dramatically. Indeed, three of the fourteen 8,000 meter and above peaks still have not been summited in winter (K2, Nanga Parbat, and Broad Peak). Other teams would look at a peak and identify an alternative approach to the summit, such as the North Face of Everest as opposed to the easier South Col. Another approach would be to go up by one pathway and descend by another, which is extremely dangerous since the team cannot retrace its steps and mountain snow and ice conditions are constantly changing. Many brave climbers choose to ascend without using supplemental oxygen, thus substantially increasing the difficulty of the effort. The net of this is that half a century after the great expeditions of the 1950s and 1960s, there are still teams working on “firsts” in terms of these great peaks in the Himalayas. Innovation Approach A frequent refrain in the innovation space is the lamenting by some that all the great things have already been invented, or that we are nearing the end of a great era of innovation. The high altitude mountaineers teach us that there are always new, creative ways to approach a problem and that the era of discovery can continue no matter how many teams have reached a summit. There are always meaningful alternative angles of attack for any challenge, and the key to finding those alternatives is to open one’s mind to the endless possibilities presented by the extreme nature of the challenge itself. In other words, the greater the challenge, the more likely there will be multiple ways of overcoming that obstacle. 5. Himalayan Mountaineering Aspect – Getting down is the hardest part Many climbers say that the most difficult part of any expedition is getting down from the summit. While working towards the summit, the climbers are relatively fresh and focused on their objective. As the day grows longer and light diminishes, oxygen-depleted climbers sometimes make grave mistakes on their way down from the summit. Many of the deaths in the Himalayas occur on the way down, so successful attempts
  • 25. require just as intense of concentration on the trip down as on the trip up. In the case of the attempt on Everest by Mallory and Irvine, some scholars speculate that Mallory and Irvine achieved the summit (and indeed were the first to conquer Everest) but perished on the way down. Innovation Approach Like a mountaineering team ascending to the summit, it is easiest for those of us working in the innovation space to focus our time and energy on developing a new idea. The ideation phase of innovation is often the most exciting and energizing portion of the overall process. We are sometimes less enthused about the hard work of taking our idea and turning it into a new product or service, or in transforming a business process to improve operational efficiencies. In the case of the latter, the tedious work of convincing management to accept a process change, building a return on investment model, documenting the new process, communicating it to process participants, and following up to ascertain the success of the change pales in comparison to the exhilaration of identifying the solution to the big problem in the first place. Conclusion High altitude mountaineering presents numerous lessons for the modern innovator, though perhaps its greatest lesson is that of how human beings can respond to great challenges through innovation. Other than the handful of pioneers who trek to the depths of the ocean (albeit enclosed by sophisticated life-sustaining submarines), high altitude climbers demonstrate an amazing ability to survive and, indeed, accomplish great objectives, in the midst of adversity. Although a climber is supported by a large team using modern materials (fabric, plastics, lightweight steel ice picks, etc.), in the end there are still some humans who have climbed to the top of the highest mountain in the world without the assistance of supplemental oxygen. The triumph of the human spirit amidst adversity harkens to another innovation theme, which is that sometimes innovation can thrive in challenging, difficult environments. Alexander Fields, an economic historian from Santa Clara University, notes that the Great Depression was “the most technologically progressive decade of the century.” Significant innovations rose to the surface despite the economic destruction of the period (harkening Shumpeter’s “Creative Destruction”). Innovators can derive interesting approaches to their craft by looking to the great challenges that humans have overcome.
  • 26. Sources: 1. Maurice Isserman and Stewart Weaver, Fallen Giants: A History of Himalayan Mountaineering from the Age of Empire to the Age of Extremes (New Haven: Yale University Press, 2008). 2. Wade Davis, Into the Silence: The Great War, Mallory, and the Conquest of Everest (New York: Vintage Books, 2011). 3. Jon Krakauer, Into Thin Air: A Personal Account of the Mt. Everest Disaster (New York: Anchor Books, 1997). 4. David Wessel, “Checking the Economy’s Pulse,” Wall Street Journal, January 2, 2013, p. A7. image credit: theage Scott Bowden works on Innovation Programs for IBM Global Services
  • 27. Idea Challenges – you get what you give Posted on January 13, 2013 by Jan Martijn Everts In contradiction to what many people think, Idea Challenges are not about getting, they are about giving. Your employees will not automatically start sharing great, useful and relevant ideas to your organisational needs. As an organisation, you must give a lot before you get anything at all. And I do not mean prizes or money. In this blogpost I will describe a number of important elements that you must give attention to when doing an ‘Idea Challenge’ amongst your employees. The extent to how much attention you give each of the elements, is a strong determinant for your initiative’s success. Give support: Senior management The first thing you should have covered when starting an Idea Challenge is to have the support from senior management or equivalent. If your CEO does not agree with this new method of gathering ideas or the fact that all employees will be spending some time on this activity, you are very likely not going to succeed. If you can get senior management to endorse the initiative to all employees, you are half way to a successful Challenge. Give a reason: Relevant Challenge theme When your organisation starts an Idea Challenge, you will get a lot of input from your crowd. Therefore you should always have a good reason to start an Idea Challenge in order for the input to be useful. Do not start a Challenge simply because your competitor is doing one amongst its employees too. You will have to give your crowd a good reason why you are looking for ideas and how these will help everyone. Relevant themes for Idea Challenges are typically deducted from your innovation domains or your organisation’s strategic goals. Give a promise: Challenge sponsorship When asking your employees for ideas, there must be someone requesting the ideas; this is the Challenge sponsor. The Challenge sponsor must promise that the crowd’s efforts will not be for nothing and that the ideas will all be taken seriously and some will be further developed. The best way to do this is to show trust in the crowd by already stating in advance that budget will be allocated and the best idea(s) will be further developed. Give information: Challenge information Somewhere during the process you will need to inform the crowd what the challenge is about, what you are and what you are not looking for, what the overall process will be like, how ideas will be evaluated etc. By communicating all these steps in advance will give the crowd confidence that this time, they are being taken seriously. If these aspects are not communicated clearly, or your crowd does not have enough information on what you are looking for, you will not only get many irrelevant and useless ideas you will also disappoint your crowd by not using their input eventually. The Challenge question is the element that will be communicated mostly throughout the crowd. This question must be triggering for people to be willing to participate, it must be broad to allow for diversity of ideas but not to broad to spark irrelevant and useless ideas.
  • 28. Give an example: Supporting Challenge team The Challenge team is there to streamline dialogues, activate the crowd and stimulate the growth of ideas. They are an essential element in the success of an Idea Challenge. They take the role of the first follower in order to stimulate activity to the tipping point for Challenge participation as well as idea enrichment. Give a tool: User-friendly and intuitive software Obviously you must have a tool in place on which your crowd will be sharing their ideas and knowledge with each other. Giving your crowd a user-friendly and intuitive platform will lower the barrier for participation and increase participation and will raise the number of ideas. The more people you have participating in the Idea Challenge, the more valuable it can become. Well designed ideation tools should allow everyone within your target group to participate without obstacles. Well designed software should not only support high quantity of ideas by lowering participation barriers but also support increasing the quality of ideas. Idea Challenge software suggests other contributors to ideas and allows for active crowd management. A low barrier of participation and high user involvement will be another step forward to a successful outcome. Give arguments: Idea evaluation An important element of the idea Challenge is to evaluate all the ideas based upon predetermined criteria. Because you presumably cannot develop all the ideas that arose from the Challenge, you will need to make a well-founded decision on which ideas to pursue and which ideas are going to be put on the shelve. Without sensible arguments on why certain ideas go through to the next phase and why others don’t, you will lose the crowd’s moral and motivation for upcoming initiatives so be clear and transparent in this step. Give action: Follow up of ideas Your employees have been putting a lot of effort in their contributions. Your crowd has been very dedicated and they have not only kept to working hours. They have been active during the week, but they might have also submitted ideas late at night and enriched other’s ideas during the weekend. Therefore you must always give a lot of attention following up the ideas. Give a story: Communication One of the most important elements is a solid communication plan. It endorses many of the above mentioned elements. A well thought through and executed communication plan will play a major role in making the Idea Challenge a success. Get your success If all of the above elements are given enough attention and you have a dedicated and enthusiastic team, chances are high you will get a successful Idea Challenge. You will probably not only get many great and useful ideas but you will also get a lot of highly motivated employees who are feeling part of the innovation process and taken seriously. You have just created a sustainable crowd, one that you have earned the favor of asking them for input on more challenges. image credit: Jan Martijn Everts Jan Martijn Everts is Innovation Consultant @ Innovation Factory in the Netherlands. Jan Martijn has worked on a variety of projects, ranging from Heineken’s annual idea contests to PostNL’s ongoing innovation programme. Due to his uncommon background of both Engineering Physics and Business Administration he has great association skills, is creative and can give any challenge a creative twist.
  • 29. Removing Risk from Bold Aspirations Posted on January 12, 2013 by Rowan Gibson The conventional wisdom about innovation is that companies should be less risk-averse. If this means they should try to increase their share of courageous employees who are willing to stand up and fight for ideas, then I would agree. However, when we move from the individual level to the corporate level, the challenge becomes quite different. After all, do we really think companies should be taking more risks? If anything, many firms have been far too willing to make big, risky bets on ventures that ended up losing billions of dollars – GM’s ill-fated EV1 project and Motorola’s Iridium phone are two examples that come to mind. I would argue, therefore, that the real challenge for organizations is not how to take more risks but how to de- risk bold aspirations. One way to do that is to work from the future back. At the outset, an innovation goal might be so big and outrageous that it almost seems impossible. You need to break it down into a stepwise migration path that begins to make the impossible seem do-able. Ask yourself: What is it going to take to reach that goal? What specific kinds of knowledge, experience, and skills do we need to acquire? And how do we stage our way there by building and acquiring these competencies in a sequential manner? Search for the last few steps needed to get where you want to go, and then fold the future successively back into the present, working out a series of realistic checkpoints for tackling these challenges one at a time. An analogy I often use is John F. Kennedy’s goal to “land a man on the moon and return him safely to the earth by the end of the decade.” We may take it for granted today, but in the early 1960s that was an enormously bold aspiration which involved really huge risks. The only way for NASA to take Kennedy’s ambition and make it reality was to stage the whole program in a series of mission-critical steps, working from the future backward. Through the Mercury program, followed by the Gemini program, and ultimately the Apollo program, NASA successively tested human spaceflight, earth orbiting, long-duration space missions, how weightlessness affected humans, how to dock two vehicles successfully in space, the Saturn V rocket launch vehicle, the Apollo command module (first in Earth orbit then in lunar orbit), and finally the lunar module. Along the way, they also created, tested and perfected a space suit that would allow an astronaut to get out of the pressurized landing craft and survive in the lunar environment. Only after applying all the learning from these preliminary missions did NASA launch Apollo 11, which put Neil Armstrong and Buzz Aldrin on the moon and brought them back safely back to earth, just a few months before the end of the decade. In other words, NASA turned the “race to the moon” into a multi-stage experimentation process, de-risking it at every step, learning from the successes and failures of each experiment and consolidating the progress, all the time making the end goal less and less daunting. It’s the same approach many Olympic athletes follow when mapping out their four-year training path to a record-breaking gold medal. And it’s exactly the same process you need to follow in business, when pursuing seemingly unattainable and potentially high-risk innovation goals.
  • 30. Take, Toyota, one of the world’s undeniable innovation champions. As Hirotaka Takeuchi, Emi Osono, and Norihiko Shimizu point out in their book “Extreme Toyota”, the Japanese automobile giant has found that the way to achieve near-impossible goals is to “think deeply but take small steps” – breaking down a big goal into manageable challenges. This, for example, is how Toyota approached their hybrid motor project in the early part of this decade, eventually resulting in them stealing the show in environmentally-friendly cars. What we learn here is that to achieve revolutionary goals, you need to take a series of evolutionary steps. That’s an important way to minimize the risk associated with radical innovation. Rowan Gibson is widely recognized as one of the world’s leading experts on enterprise innovation. He is co-author of the bestseller Innovation to the Core and a much in-demand public speaker around the globe. On Twitter he is @RowanGibson.
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