beyondthemba

What is Innovation at Your Company?

I am listening to a podcast from the Harvard Business Review with A.G. Lafley. He is the CEO of of P&G and recently wrote a book about innovation. He is discussing innovation at P&G and how it permeates all the way through the business. It is far beyond just innovating product and extends to shopping experience, cost and supply chain. Of course, for anyone who has worked with P&G, this is very believable. I have dealt with their transportation people before and it showed clearly they were trying to innovate even in a "back office" function.

In talking about how to review innovation, he discusses the following:

1. Develop with the consumer. Develop products with people who most likely will buy the product.
2. Use posters not briefing books. He discusses how their innovation process is actually fairly low tech and simplified. Think of the "high school science fair" where you walk around the poster and talk / discuss and not brief.
3. Use of an "innovation team leader".
4. Are we dealing with the "killer issues". Don't go to the easy solution first. Go to the one or two issues which will either make the project win or kill it.

The leader's involvement is critical. The leader needs to attend all meetings and needs to be actively involved. Not involved like most where the leader is getting "briefed" and is there to act like a king but actively involved from the perspective of helping, coaching and mentoring. The CEO became the CEO presumably because they know a lot. They need to impart that wisdom.

I have always been amazed by the P&G culture and how they continue to be a great company. This is one way they have shown their strengths.

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Tags: Proctorand Gamble, Lafely, innovation

Innovation - GE and Proctor and Gamble are Setting The Standards

Just happened to read a great article in Business Week called "How to Build Innovative Companies" by Bruce Nussbaum (August 1, 2005 edition). I cannot link to it as you need to be a subscriber but you should find a way to get this article. It discusses a few main topics:

• The commoditization of the "Knowledge Economy" and the rise of the "Creativity Economy"
• Innovation as the mother of all creative works.
• The ability to anticipate what the customers want not just follow.

The author shows examples of how Immelt at GE and Lafley at P&G are leading the way in this transition. P&G even has an "Innovation Gym" which is a lab of sorts where they train managers on innovation. The buzzword for this type of innovation is CENCOR (Calibrate, explore, create, organize and realize). Businessweek has even started its own innovation website.

The top 5 innovative companies according to the Boston Consulting Group:

1. Apple (by a factor of 2)
2. 3M
3. Microsoft (Huh?? What have they invented since they became a monopoly?)
4. GE
5. Sony

Categories of Innovation

From the pages of The Innovation Advantage comes a good discussion of the categories of innovation. They break innovation ideas into three categories:

1. Incremental - These are the items which are part of "continuous improvement". Lower value add and certainly lower risk.
2. Substantial - This has the prospect of significantly higher value add however it requires a much larger investment and must be incorporated into an overall innovation strategy.
3. Radical - This is the type of innovation that "stands an industry on its head". Flash drives are the example used in this article.

There are 3 types of companies when it comes to innovation:

1. Pioneer - Toyota is an example of a pioneer. They generally are the first to do things which then become "industry standard" to model. They are doing things no one has thought of or no one had the ability to market and monetize.
2. Fast Follower - These are commodity businesses who wait to see what the pioneers are doing. Once they see what the pioneers are doing, they will then try to quickly copy if the "business case" is present.
3. Opportunistic - These are companies who make investments in innovation but for the most part source it from third parties.

For my perspective, the key is that a company needs to pick a strategy and develop it. Far too often, innovation is a "flavor of the day" as executives are educated at business schools but as soon as the fire heats up, they will back off of innovation.

What I find interesting about this is that everyone aspires to innovate like the companies we all benchmark (Toyota, Dell, etc.) but most are unwilling to incur the pain and expense to make the innovation work. Innovation must be part of the business strategy if it is to be successful.

BTW, it is not a "requirement" to innovate in product. For example, the true innovation for Dell was to drive logistics' efficiencies to the point that they are able to be highly successful in a commodity market. I would also argue that Wal-Mart is an innovator in logistics not in retail. Innovation comes in all shapes and sizes but the key findings seem to be:

1. It must be part of your strategy
2. It must be a long term commitment. Companies generally cannot innovate "part time".
3. Innovation does not mean invent a new product. As Dell has shown us, innovation can come in the "back office" of a very commoditized market.

Innovation or Invention?

Good article from my daily read of Fast Company. The question is if there is a difference between innovation and invention. The proposed answer is yes: Invention just creates something new. Innovation creates something new that also creates value (i.e, it is marketable and something you can make a profit at). It think this is a very good summary of the difference.

An invention is nothing more than a hobby unless there is a real use for the invention. How do you know if there is real use (and thus real value)? Someone is willing to pay more than the cost of the product and that difference is the "value add".

RSS Feeds May Be The True Innovation

The issue with the internet since its founding is the that the idea of "surfing", while interesting and fun for your 15 year old, is a productivity hog at work. Along comes RSS feeds.

For those who do not know (If you are reading this, you must know) a RSS feed is basically a XML publication of your website, blog or other internet presence. You "publish" the RSS feed and readers "subscribe" to it and bring it into an aggregator like Bloglines or Newsgator. 

Globelogger has an entire site dedicated to this phenomenon and discusses how RSS feeds will make the CEO more efficient and it will make the push of Corporate Information more efficient. Brian Carroll discusses how to push sales leads out from Salesforce.com to the sales force. Why have them hunt and peck for leads when they can get a published feed sent to them as it is updated?

There is a big future in blogging and at least as big of a future in RSS feeds (especially when it becomes fully integrated into major collaboration software tools). Your homework: Think of the following collaboration streams and how this technology can apply:

• Customer -  Supplier
• Corporate - Associate
• Associate - Associate

Do You really Think it Is A Commodity?

The enemy of innovation is when you think you have a commodity and there is nothing else you can do. If you hear a company say that then you know they have just about given up. Some may call it Corporate Constipation.

From Innovation.net comes a great story about Spalding and the Infusion Basketball. Here, an innovator researched why people may be displeased with their basketball and found most had to do with inflation (ever need to inflate your kids BBall and could not find that little needle?). Well, the innovation here was to solve this problem by putting an inflator right into the ball.

Their market share went from 32% to 64%. That is amazing. So the next time someone in a meeting tells you there "nothing we can do", use this example of how you can innovate a round leather ball.