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Sunday, August 19, 2012

Playbook #4: Innovation

Playbook #4: Innovation:
Over the last 10 years I’ve been heavily involved in 4 different businesses, Teamstudio (Software), ETM Manufacturing (Precision Engineering), ADMET (Materials Testing Systems Manufacturer) and Net Atlantic (Email Marketing). The first three achieved Inc 5000 status (fastest growing businesses in the US) with growth rates between 40% to 1800% and Net Atlantic’s growth would have put it in the top levels of the Inc list if it had applied!
Based on that experience and observations from successful innovators, we created an Innovation Playbook. A collection of principles and ideas that help stimulate innovation.  Some of the key ingredients are captured below:
  1. Innovation is as much about improving the old not just inventing the new (Jeff Bezos of Amazon in a recent FT article)
  2. Innovators aren’t exceptional as much as they are confident. (David Kelley, founder of design firm IDEO)
  3. Innovation is teachable. Innovation must solve a real life problem, by first defining the problem through research and direct observation. Second step involves “ideation” – visualalize and brainstorm potential solutions. Thirdly prototyping, build, test, iterate, rebuild and test again. Fourthly, Collaboration – a team with radical different views  learns the most and leads to the best results. (David Kelley and George Kembel founded the Hasso Plattner Institute of Design at Stamford a nondegree d.school with $35m from SAP founder Hasso Plattner.)
  4. Hal Gregersten of INSEAD & Clayton M. Christensen of  Harvard Business School interviewed 100 innovative entrepreneurs for their  book – The Innovator’s DNA and discovered 5 key skills:
    • Cognitive skill – associating – the ability to make connections across unrelated fields
    • Behavioral skill – questioning – the ability to diagnose
    • Behavioral skill – observe – the ability to spot the signals
    • Behavioral skill – network – the ability to collaborate
    • Behavioral skill – experiment – the ability to try, fail, iterate, modify, try again
  5. When Brad Smith came to Intuit as the new CEO in 2008, the company was struggling to get new products to markets. Overly complex, the R&D teams hadn’t been reorganized in 27 years. He implemented a highly successful new agile system forming teams as small as two people.
  6. Booz Research showed that in 2009 the top 10 names out 1000s of public companies included Microsoft, Nokia and Roche. However at #70 was Apple. A company everyone thinks as innovative. The research revealed that to deliver effective research, management need to align spending tightly with strategic goals. It could certainly be argued that Apple secures a much higher bang for their buck at $1.8Bn than Microsoft’s $9Bn.
  7. And Innovation can come from Tweaking an existing idea! As brilliantly illustrated by Malcolm Gladwell in The New Yorker diving into the new biography on Steve Jobs by Walter Isaacson. Gladwell highlights the role of Jobs as a tweaker of an idea, then a transformation of that idea into something better, for example:
    • Existing music players sucked so Jobs introduced the iPod
    • Smart phones sucked so he introduced the iPhone
    • He borrowed the main features of the Macintosh from the engineers at Xerox PARC after his visit in 1979.
    • After being harassed by a family friend who was a Microsoft engineer, claiming that the Microsoft tablet PC software would transform the world, he was inspired to produce the iPad.
  8. Gladwell also highlights the impact of tweakers on the Industrial Revolution based on the work of economists Meisenzahl & Mokyr. It could be claimed that England’s unusually dominant influence was caused by a preponderance of tweakers. Samuel Crompton invented the spinning mule but that was tweaked by no less than 5 more geniuses. As Gladwell writes -” Henry Stones, of Horwich, who added metal rollers to the mule; and James Hargreaves, of  Tottington, who figured out how to smooth the acceleration and deceleration of the spinning wheel; and William Kelly, of Glasgow, who worked out how to add water power to the draw stroke; and John Kennedy, of Manchester, who adapted the wheel to turn out fine counts; and, finally, Richard Roberts, also of Manchester, a master of precision machine tooling—and the tweaker’s tweaker. He created the “automatic” spinning mule: an exacting, high-speed, reliable rethinking of Crompton’s original creation”
  9. My own experience – Innovation can be created across your organization by deploying versions of the following principles:
    • Create a mini University and teach your staff the essential skills they need to fulfill the requirements of their role. In addition teach them about other departments in your business. Bring them to a deeper appreciation of the diverse skills in your company.
    • Teach your staff to be curious. Rarely is the software bug solved first time by the obvious answer. Rarely is the financial variance explained away by the simple version of the truth. Rarely is the explanation offered up by the salesman the real reason for a deal not closing.
    • Teach sales professionals that they are defined by the questions they ask not by their product knowledge.
    • Pull together multi-department teams to launch new products, execute major acquisitions, install new IT systems.
    • Use Swot teams with diverse skills to investigate that new market, improve internal controls, look for efficiency improvements.
    • Test early the look and feel of that new web site, or early versions of that new product to really experience the end product in the real world.
    • Use scenario planning to visualize various versions of your business model, or various versions of your business. Be courageous. Imagine what is possible to define and dominate your unique market. Dream big.
    • Bring innovation to all aspects of your business by asking the right question:
      •  eg – regular meetings – ask – what question is this meeting answering?
      • eg – sales – what business result can I deliver for this prospect?
      • eg – new products – what is the size of the potential market I’m attacking and what itch am I really scratching?
    • When launching products remember to keep all relevant departments in line. I call it the DSMO. Development, Sales, Marketing and Operations should all be part of the launch team. Each with their own timetable for success but aligned to make launch day a success.
Summary 
Innovation can happen everywhere. Don’t be contrained with inventing the next big thing. Think about some of these principles and make sure you keep investment closely aligned to your Positioning. Create a buzz, a curiosity, a sense of purpose in your organization, and you will create an innovative culture.
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