July 18, 2008
Finding Sources of Innovation
By Tom Ryan
It isn’t enough to have an active research-and-development department to drive ideas. The most innovative companies look for inspiration from a multitude of sources, including employees, customers, and other innovators, according to the consulting firm, Prophet.
That was one of the core messages from Prophet’s recent 2008 Best Practices Study: The Making of World-Class Innovators. The report was based on input from more than 150 senior executives at major corporations committed to driving organic growth through innovation.
Writing in Advertising Age, Kevin O’Donnell, a senior partner at Prophet, says innovation starts from a commitment from the top. As an example, he points to the way Procter & Gamble CEO A.G. Lafley serves as a role model in spreading innovation-fostering behaviors and attitudes throughout his organization.
“In exemplifying the ‘do as I say and do’ philosophy, he’s been known to do his own hands-on ethnographic research, living with customers himself for a short time to see firsthand how they use P&G products — the better to gain insights for inventive new offerings,” writes Mr. O’Donnell.
According to the survey of “model innovators,” eighty percent tend to encourage employees to be curious, 76 percent systematically encourage risk-taking; 64 percent make it a priority to provide time and space for the development of new ideas; and 60 percent have incentive systems encouraging employees to contribute to innovation efforts.
“The study found that 92 percent of the model innovators in our sampling view innovation as a team endeavor, leading them to work hard at cultivating the right internal attitudes and behaviors,” writes Mr. O’Donnell.
But “model innovators” also look far outside the company for ideas, whether in the academic and scientific communities or among their vendors and suppliers. According to the study:
- Three-fourths of the model innovators surveyed actively involve their vendors
and suppliers in new product development; - Nearly two-thirds are committed to customer co-creation, and the same percentage
have found they achieve the best results on this front through “test-and-learn” (or
in-market-experimentation) approaches; - Nearly half make more use of newer, more progressive sources of inspiration,
such as the internet and blogs.
Concludes Mr. O’Donnell, “Sources of inspiration in the quest to meet the innovation imperative are almost endless.”
Discussion Questions: What’s the key to creating a culture that drives innovation? Which approaches should companies use more? Personally, what are some “innovative” ways you’ve found to drive new ideas?
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To drive innovation, companies and their management need to first be open to receiving new ideas and then be prepared to act on them. Many companies pay lip service to change or have managements that are too closed to hearing suggestions for improving company products or efficiency. The book “Mavericks at Work” highlights a number of companies that embrace openness and interaction with employees, consumers and outside resources. It’s hard to be open to new ideas, but it usually pays off.
I agree with all of the above comments about the importance of the culture of innovation and of not “killing the innovators”. The great thing about retail is that it’s easy to limit the risk when testing innovation. As the study says, a Test & Learn approach achieves those goals.
We’re lucky in retail — this isn’t true of every industry. If someone has a crazy idea for improving performance in an oil refinery, and the idea fails miserably, the refinery blows up and people get hurt. In retail, I may risk a little bit of sales on the margin in some test stores in the case of failure, but I can reap the huge gains networkwide if successful. The upside and downside are asymetrical, which means that even just 1 success for every 5 or 10 attempts will achieve massive value creation for the enterprise.
While most of the innovation “action” is in middle management, the Test & Learn culture is built from the top. It requires Senior Management commitment. Retailers and consumer goods companies who achieve that culture have a significant innovation advantage.
The first rule of innovation is to encourage a culture that encourages and celebrates innovation. The second rule of innovation is not to kill the innovators when they do what you’ve asked them to do.
If you think of an organization like a cell, then innovation needs to be able to penetrate the cell membrane. In organizations with a strong not-invented-here attitude, a fear of failure, aversion to risk taking, a strong silo mentality, and rigid definitions for job responsibilities, innovative ideas have little chance at penetrating the “membrane.” Being receptive to innovative ideas requires a culture that is open to and explores for new ideas at all levels of the company.
There is nothing like a tough economy to create the need to drive innovation and smart thinking. But will the majority of companies faced with a downturning market really make the investment needed in R&D, collaboration with suppliers, or make the RIGHT internal transformations to drive innovation? When people are in job protection mode, what really happens? Hasn’t the tendency, when times are tough, been to reduce expenditures and put projects on hold to try to survive the downturn?
External companies and consultants are a great way to drive the improvement and innovation effort. They bring a wider perspective and an ability to take risks and decisions that most employees might not be able or willing to take.
Mr. Percy couldn’t have said it better – period!
Here we go again, thinking that nothing will happen unless we “manage” it. Natural systems (like our brains) will effortlessly and automatically reach their fullest potential if nothing gets in the way. When it comes to innovation the very institutions claiming they want it also ‘manage’ to sabotage it.
Just look at the wording in this piece: Among “model innovators,” eighty percent have to “encourage” employees to be curious. (Think of this – no parent has to encourage a child to be curious, school unfortunately beats that natural relfex out of them.) Then we find that 76 percent “systematically encourage” risk-taking. What the heck does that mean? What are we, machines?
The more desperate organizations become the more leaders plead for people to “think outside the box.” Of course they won’t admit they put the people IN the box in the first place.
Here’s the #1 enemy of innovation…it’s fear. All bureaucracy and all policies are driven by fear. That doesn’t mean we don’t need some of that but generally we have way too much and it’s sucking the life out of people. Until you can significantly reduce fear, you’ll have to be content with looking for “best practices” which are ideas that come from other organizations with less fear than yours. Fear and innovation cannot co-exist.
Innovation really doesn’t become a culture within any organization unless there is process and budget to support it.
Once those things are established, it can be fostered from every level within a company. It allows employees to be open to “adaptive” thinking that helps them apply aspects of many diverse experiences to situations and problems, knowing there is a path to follow to actually get their ideas into someone who has the okay to evaluate and act on them.
Talking with seven year old kids is pretty enlightening for innovation as well. It is the age of pure response. When stymied, it’s fun to try to think like a seven year old.
For most companies, innovation is a proprietary activity conducted largely inside the organization in a series of closely managed steps. Over the last decade, however, a few consumer product, fashion, and technology businesses have been opening up the product-development process to new ideas hatched outside their walls–from suppliers, independent inventors, and university labs. Executives in a number of companies are now considering the next step in this trend toward more open innovation. So write authors Bughin, Chui and Johnson in The McKinsey Quarterly (June 2008), which I cite and quote at length in the current issue of Growth Strategies:
Increasing numbers of organizations are now approaching innovation as a convergence of like-minded parties, or distributed co-creation, to use its technical name. LEGO, for instance, famously invited customers to suggest new models interactively and then financially rewarded the people whose ideas proved marketable. The shirt retailer Threadless sells merchandise online–and now in a physical store, in Chicago–that is designed interactively with the company’s customer base. In the software sector, open-source platforms developed through distributed co-creation have become standard components of the IT infrastructure at many corporations. What facilitates this new approach to innovation is the rise of the Web as a participatory platform….
Even the most advanced businesses are just taking the first few steps on a long path toward distributed co-creation, conclude the authors. Companies should experiment with this new approach to learn both how to use it successfully and more about its long-term significance.
I disagree with some of these points. Seems to me that innovation is fostered from an executive commitment, but the real action happens at the middle manager level and the on-the-street sales force level. For example, P&G’s Swiffer line came from marketing managers investigating individual household cleaning habits. The secret to an innovative culture, especially for retailers, is in the harvesting of innovation. Employees need to know they have a system to advance innovative ideas, a confidence that these ideas will get a hearing, and a process by which they might be rewarded. The CEO can talk about innovation all day, and some do. Good companies put their money where the digital suggestion box is.
So, only 60% of the much-trumpeted “model innovators” provide financial incentives to their risk-takers. Just over half.
Seems low. When you think of the grief involved in changing a traditionally structured company: the organizational inertia, the politics, the bitter infighting, the fiefdoms. Why would a creative genius want to engage all *that* for a flat salary?
Nothing talks louder than money. It’s the best lever for organizational change, but a whopping 40% of the “model innovators” don’t use it. Odd.
Ian Percy nailed it. In retailing, financial controls are often so tight that no innovation is allowed. Because no risk is allowed. Not $1 of extra expense is allowed. Not even for testing. It’s not in the budget.
Innovation? I believe everyone has the innate skill to innovate. The problem, as Mr. Percy suggested, is too few exercise these muscles, therefore they remain dormant.
For retail operations everywhere, it’s time for associates to get off their respective assets and start inventing the future!
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To drive innovation, companies and their management need to first be open to receiving new ideas and then be prepared to act on them. Many companies pay lip service to change or have managements that are too closed to hearing suggestions for improving company products or efficiency. The book “Mavericks at Work” highlights a number of companies that embrace openness and interaction with employees, consumers and outside resources. It’s hard to be open to new ideas, but it usually pays off.
I agree with all of the above comments about the importance of the culture of innovation and of not “killing the innovators”. The great thing about retail is that it’s easy to limit the risk when testing innovation. As the study says, a Test & Learn approach achieves those goals.
We’re lucky in retail — this isn’t true of every industry. If someone has a crazy idea for improving performance in an oil refinery, and the idea fails miserably, the refinery blows up and people get hurt. In retail, I may risk a little bit of sales on the margin in some test stores in the case of failure, but I can reap the huge gains networkwide if successful. The upside and downside are asymetrical, which means that even just 1 success for every 5 or 10 attempts will achieve massive value creation for the enterprise.
While most of the innovation “action” is in middle management, the Test & Learn culture is built from the top. It requires Senior Management commitment. Retailers and consumer goods companies who achieve that culture have a significant innovation advantage.
The first rule of innovation is to encourage a culture that encourages and celebrates innovation. The second rule of innovation is not to kill the innovators when they do what you’ve asked them to do.
If you think of an organization like a cell, then innovation needs to be able to penetrate the cell membrane. In organizations with a strong not-invented-here attitude, a fear of failure, aversion to risk taking, a strong silo mentality, and rigid definitions for job responsibilities, innovative ideas have little chance at penetrating the “membrane.” Being receptive to innovative ideas requires a culture that is open to and explores for new ideas at all levels of the company.
There is nothing like a tough economy to create the need to drive innovation and smart thinking. But will the majority of companies faced with a downturning market really make the investment needed in R&D, collaboration with suppliers, or make the RIGHT internal transformations to drive innovation? When people are in job protection mode, what really happens? Hasn’t the tendency, when times are tough, been to reduce expenditures and put projects on hold to try to survive the downturn?
External companies and consultants are a great way to drive the improvement and innovation effort. They bring a wider perspective and an ability to take risks and decisions that most employees might not be able or willing to take.
Mr. Percy couldn’t have said it better – period!
Here we go again, thinking that nothing will happen unless we “manage” it. Natural systems (like our brains) will effortlessly and automatically reach their fullest potential if nothing gets in the way. When it comes to innovation the very institutions claiming they want it also ‘manage’ to sabotage it.
Just look at the wording in this piece: Among “model innovators,” eighty percent have to “encourage” employees to be curious. (Think of this – no parent has to encourage a child to be curious, school unfortunately beats that natural relfex out of them.) Then we find that 76 percent “systematically encourage” risk-taking. What the heck does that mean? What are we, machines?
The more desperate organizations become the more leaders plead for people to “think outside the box.” Of course they won’t admit they put the people IN the box in the first place.
Here’s the #1 enemy of innovation…it’s fear. All bureaucracy and all policies are driven by fear. That doesn’t mean we don’t need some of that but generally we have way too much and it’s sucking the life out of people. Until you can significantly reduce fear, you’ll have to be content with looking for “best practices” which are ideas that come from other organizations with less fear than yours. Fear and innovation cannot co-exist.
Innovation really doesn’t become a culture within any organization unless there is process and budget to support it.
Once those things are established, it can be fostered from every level within a company. It allows employees to be open to “adaptive” thinking that helps them apply aspects of many diverse experiences to situations and problems, knowing there is a path to follow to actually get their ideas into someone who has the okay to evaluate and act on them.
Talking with seven year old kids is pretty enlightening for innovation as well. It is the age of pure response. When stymied, it’s fun to try to think like a seven year old.
For most companies, innovation is a proprietary activity conducted largely inside the organization in a series of closely managed steps. Over the last decade, however, a few consumer product, fashion, and technology businesses have been opening up the product-development process to new ideas hatched outside their walls–from suppliers, independent inventors, and university labs. Executives in a number of companies are now considering the next step in this trend toward more open innovation. So write authors Bughin, Chui and Johnson in The McKinsey Quarterly (June 2008), which I cite and quote at length in the current issue of Growth Strategies:
Increasing numbers of organizations are now approaching innovation as a convergence of like-minded parties, or distributed co-creation, to use its technical name. LEGO, for instance, famously invited customers to suggest new models interactively and then financially rewarded the people whose ideas proved marketable. The shirt retailer Threadless sells merchandise online–and now in a physical store, in Chicago–that is designed interactively with the company’s customer base. In the software sector, open-source platforms developed through distributed co-creation have become standard components of the IT infrastructure at many corporations. What facilitates this new approach to innovation is the rise of the Web as a participatory platform….
Even the most advanced businesses are just taking the first few steps on a long path toward distributed co-creation, conclude the authors. Companies should experiment with this new approach to learn both how to use it successfully and more about its long-term significance.
I disagree with some of these points. Seems to me that innovation is fostered from an executive commitment, but the real action happens at the middle manager level and the on-the-street sales force level. For example, P&G’s Swiffer line came from marketing managers investigating individual household cleaning habits. The secret to an innovative culture, especially for retailers, is in the harvesting of innovation. Employees need to know they have a system to advance innovative ideas, a confidence that these ideas will get a hearing, and a process by which they might be rewarded. The CEO can talk about innovation all day, and some do. Good companies put their money where the digital suggestion box is.
So, only 60% of the much-trumpeted “model innovators” provide financial incentives to their risk-takers. Just over half.
Seems low. When you think of the grief involved in changing a traditionally structured company: the organizational inertia, the politics, the bitter infighting, the fiefdoms. Why would a creative genius want to engage all *that* for a flat salary?
Nothing talks louder than money. It’s the best lever for organizational change, but a whopping 40% of the “model innovators” don’t use it. Odd.
Ian Percy nailed it. In retailing, financial controls are often so tight that no innovation is allowed. Because no risk is allowed. Not $1 of extra expense is allowed. Not even for testing. It’s not in the budget.
Innovation? I believe everyone has the innate skill to innovate. The problem, as Mr. Percy suggested, is too few exercise these muscles, therefore they remain dormant.
For retail operations everywhere, it’s time for associates to get off their respective assets and start inventing the future!