Show me the money: It is a common belief that employees come out with ideas only if the ‘what is in it for me’ aspect is taken care of. In other words offer carrots to employees that are usually a percentage of benefit accrued due to the Idea.
Often this arrangement backfires. It is usually hard for corporations to exactly measure the benefits and this can result in lot of heartburn. In fact there are many lawsuits filed in US over the ‘percentage dispute’ – a high profile case to quote involved an United Airlines employee suing the company, claiming that the percentage calculated was unfair and the case went on for 20 years.
Vijay Govindarajan in his book Ten Rules for Strategic Innovators warns that linking pay too closely to hard innovation measures may tempt managers to game the system. A metric such as the percentage of revenue from new products, for instance, can lead to incremental brand extensions rather than true breakthroughs.
In addition, innovation is such a murky process that targets are likely to change. To quote ‘Ideas are free’- "It is one thing to realize that employees don’t have to be bribed to give in ideas. But one might think that the prospect of getting a share of benefits from their ideas would only increase their natural motivation. In practice, most such schemes backfire. The more money a company dangles in front of its employees, the fewer ideas it gets, and more problems it creates for itself."
Monday, October 29, 2007
Sunday, October 28, 2007
Perspective # 7 - Innovation Tools
Innovation Tools: Many walk into the ‘tool’ trap, hoping that one can unleash creativity at workplace by buying a tool. As the saying goes ‘A fool with a tool is still a fool’.
If your creative arteries are clogged, tools cannot help. Tools can complement a thriving innovation culture but they can never be substitutes.
There are two broad categories of tools: Creativity tools and Idea management tools. Creativity tools are used to spark creativity and induce lateral thinking among employees. Examples are Bono Po, Mind Mapping, KAI, TRIZ and Stage-Gate. Idea management tools can help track and manage employees’ ideas till execution by providing progress dashboards. Enterprise idea management tools like Imaginitik or Energi™ can help manage employee ideas and are useful in managing large number of ideas across the enterprise. To reiterate, a tool can support the process of innovation but can never be the innovation.
If your creative arteries are clogged, tools cannot help. Tools can complement a thriving innovation culture but they can never be substitutes.
There are two broad categories of tools: Creativity tools and Idea management tools. Creativity tools are used to spark creativity and induce lateral thinking among employees. Examples are Bono Po, Mind Mapping, KAI, TRIZ and Stage-Gate. Idea management tools can help track and manage employees’ ideas till execution by providing progress dashboards. Enterprise idea management tools like Imaginitik or Energi™ can help manage employee ideas and are useful in managing large number of ideas across the enterprise. To reiterate, a tool can support the process of innovation but can never be the innovation.
Perspective # 6 - Volition pays
Volition pays: Another common perception is that innovation happens only when you have enough ‘think time’, are relaxed and have time to introspect. The stereotype of the relaxed R&D department reiterates this mental model.
It has been proven again and again that a sense of urgency and intrinsic motivation will accelerate innovation. The greatest innovations of the world have happened under acute pressure. Yes-necessity is the mother of invention. The best Russian literature emerged during the oppressed days!
In A bias for action Sumantra Ghosal and Heike Bruch introduce the concept of volition. They exhort us to ‘cross the Rubicon’, the threshold between simple motivation and true volition. That is when action happens.
Out of 2,600 people died at the 9/11 attacks 125 died at the impregnable Pentagon! In one of the worst forms of ‘criminal innovation’ of our lives, planes were transformed to guided missiles! Though there is a great report about this incident the simple answer lies in volition.
"It's a miracle in Pakistan, where we can't even make a bicycle chain, where we can't even make a sewing needle.” A.Q.Khan father of Pakistan atom bomb said. That is the power of volition. The power of mantras – the chants of 'atom bomb, atom bomb' on Pakistan National Day is so powerful enough to invent miracles!
Big money does not payoff always. Volition does.“Last year Microsoft invested in excess of $6.5 billion in R&D but we have not seen any game changing products yet!
It has been proven again and again that a sense of urgency and intrinsic motivation will accelerate innovation. The greatest innovations of the world have happened under acute pressure. Yes-necessity is the mother of invention. The best Russian literature emerged during the oppressed days!
In A bias for action Sumantra Ghosal and Heike Bruch introduce the concept of volition. They exhort us to ‘cross the Rubicon’, the threshold between simple motivation and true volition. That is when action happens.
Out of 2,600 people died at the 9/11 attacks 125 died at the impregnable Pentagon! In one of the worst forms of ‘criminal innovation’ of our lives, planes were transformed to guided missiles! Though there is a great report about this incident the simple answer lies in volition.
"It's a miracle in Pakistan, where we can't even make a bicycle chain, where we can't even make a sewing needle.” A.Q.Khan father of Pakistan atom bomb said. That is the power of volition. The power of mantras – the chants of 'atom bomb, atom bomb' on Pakistan National Day is so powerful enough to invent miracles!
Big money does not payoff always. Volition does.“Last year Microsoft invested in excess of $6.5 billion in R&D but we have not seen any game changing products yet!
Saturday, October 27, 2007
Perspective # 5 - Collaborate, Collaborate, Collaborate
Collaborate, Collaborate, Collaborate: Traditionally innovation is the ‘job’ of the R&D department. Frederick Taylor advocated 100 years ago that it was management's job to ‘think’ and the worker's job to ‘do’. Though this would have made sense 100 years ago, in today’s competitive world every employee should be the listening post for new ideas and opportunities.
Many of us also believe in the ‘hunters’ and ‘farmers’ concept. Hunters are categorized as people who welcome challenges and enjoy the thrill of identifying new opportunities. Farmers on the other hand are characterized as people whose forte is the maintenance and growth of existing customers. These characterizations are terribly simplistic and unfair. This perspective has been the basis for the policies, structures, and operating practices of most business organizations that need change.
The challenge here is to create an Innovation culture that spans the entire company. Any employee should be able to pickup market cues, collaborate across functions and make the innovation happen. Many organizations are waking up to the power of collaboration and are organizing face to face meetings across functions.
Southwest Airlines recently gathered people from its in-flight, ground, maintenance and dispatch operations. For six months they met for 10 hours a week, brainstorming ideas to address a broad issue: What are the highest-impact changes we can make to our aircraft operations? Innovation cannot happen and be sustained just by one department or one set of workers; it is a collaborative output between the ‘hunters’ and the ‘farmers’.
Many of us also believe in the ‘hunters’ and ‘farmers’ concept. Hunters are categorized as people who welcome challenges and enjoy the thrill of identifying new opportunities. Farmers on the other hand are characterized as people whose forte is the maintenance and growth of existing customers. These characterizations are terribly simplistic and unfair. This perspective has been the basis for the policies, structures, and operating practices of most business organizations that need change.
The challenge here is to create an Innovation culture that spans the entire company. Any employee should be able to pickup market cues, collaborate across functions and make the innovation happen. Many organizations are waking up to the power of collaboration and are organizing face to face meetings across functions.
Southwest Airlines recently gathered people from its in-flight, ground, maintenance and dispatch operations. For six months they met for 10 hours a week, brainstorming ideas to address a broad issue: What are the highest-impact changes we can make to our aircraft operations? Innovation cannot happen and be sustained just by one department or one set of workers; it is a collaborative output between the ‘hunters’ and the ‘farmers’.
Friday, October 26, 2007
Perspective # 4 - Measuring Innovation
Measuring Innovation: The logic is simple: if you can’t measure you can’t improve.
Measuring innovation was a much debated topic at the Ben Franklin Forum on Innovation at the Wharton School recently. As per Jim Andrew, Senior Vice President and Head of Innovation at the Boston Consulting Group, many different ways exist to measure innovation, “We have found in our work that companies should measure three main things, First, you should track the outputs of the innovation process. Next, you also need a set of measures to track the inputs. This is where innovation can be most precisely measured. People track the amount of money they spend on research, and they also track specific people. In our experience, human capital is in much shorter supply than financial capital. The scare resource is always your best people. The third area is the effectiveness of your process. To sum up, you’ve got to measure inputs, outputs, and process performance.”
Authors Tony Davila, Marc Epstein and Robert Shelton present in their book Making Innovation work a measurement system based on Balanced Score Card. As per this system, one should measure the following:
Inputs: resources devoted to the innovation effort. People, money, equipment, office space and time, plus intangibles like motivation and company culture.
Processes: combine the inputs and transform them. These are real-time measures that track the organization's progress towards the creation of outputs and can be used to help keep its innovation initiatives on course.Outputs: are the results of the innovation efforts.
Output: measures describe what the innovation efforts have delivered and are focused on key characteristics such as whether the company has superior R&D performance, more effective customer acquisition or better customer loyalty.
Outcomes: while outputs describe quality, quantity and timeliness, outcomes describe value creation. These measures capture how the innovation effort has translated the outputs into value for the company and the net amount of the value contribution.
Measuring innovation was a much debated topic at the Ben Franklin Forum on Innovation at the Wharton School recently. As per Jim Andrew, Senior Vice President and Head of Innovation at the Boston Consulting Group, many different ways exist to measure innovation, “We have found in our work that companies should measure three main things, First, you should track the outputs of the innovation process. Next, you also need a set of measures to track the inputs. This is where innovation can be most precisely measured. People track the amount of money they spend on research, and they also track specific people. In our experience, human capital is in much shorter supply than financial capital. The scare resource is always your best people. The third area is the effectiveness of your process. To sum up, you’ve got to measure inputs, outputs, and process performance.”
Authors Tony Davila, Marc Epstein and Robert Shelton present in their book Making Innovation work a measurement system based on Balanced Score Card. As per this system, one should measure the following:
Inputs: resources devoted to the innovation effort. People, money, equipment, office space and time, plus intangibles like motivation and company culture.
Processes: combine the inputs and transform them. These are real-time measures that track the organization's progress towards the creation of outputs and can be used to help keep its innovation initiatives on course.Outputs: are the results of the innovation efforts.
Output: measures describe what the innovation efforts have delivered and are focused on key characteristics such as whether the company has superior R&D performance, more effective customer acquisition or better customer loyalty.
Outcomes: while outputs describe quality, quantity and timeliness, outcomes describe value creation. These measures capture how the innovation effort has translated the outputs into value for the company and the net amount of the value contribution.
Perspective # 3 - Innovation is not Invention
Innovation is not Invention: Innovation is sometimes confused with invention. Innovation is the successful exploitation of invention to solve a real-world problem. In other words, innovation is in the consumer’s eyes.
Many firms boast about the number of Patents they have but are silent about their business value. Guess what is United States Patent 5934226? Bird Diaper!
NEC has more than 70,000 Patents and IBM has more than 50,000! Invention is their patent scorecard and the resultant application is Innovation. The Rockwell example is well publicized. They found that October was their most innovative month of the year in terms of patent filings as employees could enjoy their vacation with their patent bonuses!
The justification that many patents may not be applied today but may be useful in future is debatable. For example look at Microsoft patent no 6,754,472 for ‘the method and apparatus for transmitting power and data using the human body.’ Wonder whether it will be ever used!
Many firms boast about the number of Patents they have but are silent about their business value. Guess what is United States Patent 5934226? Bird Diaper!
NEC has more than 70,000 Patents and IBM has more than 50,000! Invention is their patent scorecard and the resultant application is Innovation. The Rockwell example is well publicized. They found that October was their most innovative month of the year in terms of patent filings as employees could enjoy their vacation with their patent bonuses!
The justification that many patents may not be applied today but may be useful in future is debatable. For example look at Microsoft patent no 6,754,472 for ‘the method and apparatus for transmitting power and data using the human body.’ Wonder whether it will be ever used!
Monday, October 22, 2007
Perspective # 2 :Product Innovation is not the only innovation
Product Innovation is not the only innovation: When we think of innovation, many think of product innovation – like iPod, Moto Razr or Google.
The fact is, you can innovate anywhere – in business models, in customer service, in processes, in strategy, in execution and the list goes on.
Yes, there is more visibility in product innovation. The semiconductor industry is a classic example. Last year the world produced more transistors (and at lower cost) than grains of rice. Yes - the Moore’s law is going strong even after 40 long years!
Though service innovation or business model innovation or reinventing business processes is unglamorous and does not have the visibility and high street resonance of a new product discovery, but it certainly counts.
A. G. Lafley, CEO of Procter & Gamble who are reinventing themselves with innovation and aiming towards the goal of attaining 50% of the revenues from new products, said to his teams. ”I want innovation across the spectrum — in how we market, manufacture and distribute.”
IBM CEO Samuel J. Palmisano, also makes this point, “The way you will thrive in this environment is by innovating -- innovating in technologies, innovating in strategies, innovating in business models.” This is the message every CEO needs to convey.
The fact is, you can innovate anywhere – in business models, in customer service, in processes, in strategy, in execution and the list goes on.
Yes, there is more visibility in product innovation. The semiconductor industry is a classic example. Last year the world produced more transistors (and at lower cost) than grains of rice. Yes - the Moore’s law is going strong even after 40 long years!
Though service innovation or business model innovation or reinventing business processes is unglamorous and does not have the visibility and high street resonance of a new product discovery, but it certainly counts.
A. G. Lafley, CEO of Procter & Gamble who are reinventing themselves with innovation and aiming towards the goal of attaining 50% of the revenues from new products, said to his teams. ”I want innovation across the spectrum — in how we market, manufacture and distribute.”
IBM CEO Samuel J. Palmisano, also makes this point, “The way you will thrive in this environment is by innovating -- innovating in technologies, innovating in strategies, innovating in business models.” This is the message every CEO needs to convey.
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