Avoiding the Seven Chronic Innovation Problems

The last thirty years have revealed a continual shift in R&D spend and innovation from large organizations to small firms containing fewer than five-thousand employees.¹⋅²  To illuminate why, we identified seven chronic problems that we see trip-up innovation efforts in large organizations daily.

Over the last few weeks my co-author of The Chief Innovation Officer’s Playbook, Bill Poston, has drilled into each of these chronic innovation problems in an effort to help executives spot symptoms in their organizations.

As a Chief Innovation Officer, you should identify where these problems reside in your organization and the impact they have on your innovation performance.

I highly encourage you to use the links below to see what Bill has to say about these problems and what you should be doing about them.

 

The Seven Chronic Innovation Problems

1. Lack of an innovation strategy
   • What are our organic growth growth goals?
   • How much should we invest in innovation?
   • What is our tolerance for risk?
2. Lack of cross-functional alignment
   • Do functional business leaders recognize the value of innovation?
   • Is innovation “thrown-over-the-wall” from function to function?
3. Overloaded product development pipelines
   • Are resources booked over 150% capacity?
   • Are projects getting stuck in our pipeline?
   • Is there never enough time in a day to focus on fun, high-value projects?
4. Rampant incrementalism
   • Do incremental projects comprise over 70% of our portfolio?
   • Do we balance sustaining core business performance with long-term growth from innovation?
   • Do we use different evaluation metrics for innovation initiatives and ongoing operations?
5. Unclear accountability for results
   • Who has accountability for innovation results?
   • Where do they sit in the organization?
6. Short-term orientation
   • Is employee role turnover impacting project success in-market?
   • Is “innovation” something that only happens after the urgent work has been done?
7. Lack of skills
   • Do our employees have the knowledge, experiences and competencies to innovate successfully?
   • What is the average age of our technical and commercial resources?
   • Are we actively grooming innovation leaders?

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¹ National Science Foundation, Science Resource Studies, Survey of Industrial Research Development, 1991, 1999, 2001, 2013.
² Joseph Schumpeter, The Theory of Economic Development [Cambridge, MA: Harvard University Press, 1934].

 

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Chief Innovation Officer’s Retreat Miami

[Download 2014 Retreat Summary & Key Takaways]

Last weekend, months of careful planning and workshop development was realized in Kalypso’s first Innovation Officer’s Retreat in Miami Florida. Side by side with an exclusive group of innovation executives and notable thought leaders, Chris Trimble and Karl Ronn, we dedicated two days to collaborating, sharing, and working through the tough innovation challenges faced in large organizations.

When the working sessions concluded, we shifted our focus to exploring Miami with a private tour of Wynwood Walls, spray painting with local graffiti artists, informative scotch tastings, and rocketing around South Beach in a modified racing boat.

The small, intimate group size allowed for the meaningful knowledge sharing and the development of tightly-knit relationships. Bill Poston kicked off day one defining the Rising Role of the Chief Innovation Officer. Chris Trimble then broke the ice by weaving the group together using his “How Stella Saved the Farm” parable as a catalyst for conversation and hands on discussions around breakthrough innovation execution and innovating outside the core. Day two began with Mike Friedman painting a picture of the innovation results transformation journey, followed shortly after by Karl Ronn introducing a series of tools for setting innovation strategy and thinking though business model innovation.

Working with my team to deliver an event like this is immensely gratifying. When participants tell us that our event shifted their thinking and inspired them to take action, I know we have delivered real value. I wish the weekend didn’t have to end, but I’m excited to do it all over again in the years to come.

Leading Innovation in Large Organizations: Should Rebels be in Charge?

by Amber Lyons and Sean Klein

 

The rebels of history and in business make good stories. But while rebel innovators make great leaders in small startups that focus on fewer products and maintain flat hierarchies that are “often only one or two layers deep – adaptive, and flexible,” not all rebel characteristics carry over to the innovation leader in a large company.

The innovation leader in a Fortune 500 company must have the skills necessary to work with leadership, policy and culture to influence existing business and not work against it. Here are some attributes we feel the innovation leader of a large business must have, that a rebel may not.

The individual leading innovation in a large company is responsible for developing a culture supportive of innovation. They are held accountable for delivering results from innovation. This position may be the Chief Innovation Officer or some role that reports directly to the CEO. It goes without saying that large companies must be operated differently than small ones.

The attributes of the individual needed for this role is not the typical startup innovator. The environment is too different, with a unique set of challenges and required skillsets. The most obvious difference between the large and small firm is the necessity for tighter controls on budget, processes, policies and leadership. The attributes necessary for the innovation leader in a large firm are distinctly different to those of the rebel innovator in a startup. Those differences must be acknowledged.

Article Review: How to Kill Creativity, by Teresa Amabile

How to Kill Creativity, 5/5 Sparks

[Purchasing link]

Teresa Amabile is a Professor of Business Administration in the Entrepreneurial Management Unit, and the senior associate dean for research, at the Harvard Business School in Boston, Massachusetts.  Dr. Amabile received her Ph.D. in psychology from Stanford University and has produced over 150 scholarly publications. Additionally Dr. Amabile has published two books, Creativity in Context (1996) and Growing up Creative: Nurturing a lifetime of creativity (1989).  [Harvard bio]

Main Points

• Creativity is not a fluffy or abstract force, rather, it is the capacity to develop novel and useful ideas and results from the combination of three distinct influences; expertise, creative thinking skill, and motivation.
• Management can improve the creative output of their employees through actions and procedures that enhance the effectiveness of these three influences.

Review

How to Kill Creativity is a must read for any manager or executive who desires to increase the number of novel, appropriate and actionable ideas generated by their employees. In her article, Dr. Amabile successfully disperses the mystified disillusions surrounding creativity and then provides concrete procedures and practices management can undertake to improve the creative output of their employees.

Stop Giving Innovation Preferential Treatment: it’s time to tighten the reins on your company’s innovation function

by Amber Lyons and Sean Klein

 

Corporations are incredibly efficient at managing traditional business functions and scouring them for any remaining signs of waste. Manufacturing lines are expected to be statistically free of defective parts. Supply chain logistics and tracking are tighter than ever before with data driven forecasting and inventory management. Sales forces are expected to close 40 percent of the time and deliver 115 percent of revenue goals each period. Call centers are optimized to complete 400 calls per hour with 90 percent of issues resolved within the first 20 seconds. Finance managers scrutinize profit and loss statements, and you better believe that Human Resources tracks sick days.With such clear expectations and accountabilities around the performance and optimization of other business functions, how is it that we do not set the same standard for investment in innovation? The truth is, in Fortune 500 companies innovation is largely unmanaged and mostly unmeasured.  For us to hold core business functions accountable for their performance and not expect the same from the innovation engine is unacceptable. Innovation is the last big unmanaged business function, and those that refuse to move beyond the impromptu approach to innovation will find it increasingly difficult to compete. If large companies are to remain relevant, they need clear accountabilities and performance metrics for innovation.

Establish formal accountability for innovation results

Often the most visible differentiator between innovation and other business functions is the absence of a formal leader responsible for performance. Research shows that having a leader who is formally accountable for innovation dramatically improves a company’s innovation success rate. Unfortunately, according to a recent innovation leadership survey conducted by Capgemini Consulting, only 43 percent of companies surveyed had such a position. Worse over, only 16 percent of those companies had a formal organizational structure for innovation. While we’re not saying that all companies need someone with the title of Chief Innovation Officer, due to the cross-functional nature of innovation, it is important that you hold a single individual accountable for results from innovation. These individuals should likely report directly to the CEO.

By establishing a leadership role that is accountable for innovation results, you send a strong message to shareholders that you are serious about driving growth from innovation. Show your investors that innovation means more to you than annual report rhetoric, by treating innovation as its own business function with accountability for its results.

The Chief Innovation Officer: Is It CIO, CNO, or CINO?

by Bill Poston and Sean Klein

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The great Chief Innovation Officer acronym confusion has obscured a much more important conversation. Just what is a Chief Innovation Officer? I don’t care what acronym becomes the norm, but I am concerned about the number of executives claiming the mantle of Chief Innovation Officer without having the requisite scope of responsibilities to do the job well.

A Chief Technology Officer can’t just change their title and expect to dramatically improve their organization’s innovation results from within R&D. Likewise, simply changing “Information” to “Innovation” in your title doesn’t fundamentally alter your role. The “New CIO” is not just a more creative version of the Chief Information Officer. At their core, these roles are radically different.

The role of the Chief Innovation Officer is to drive innovation capabilities across functions and geographies to deliver better business results. In large, multinational, multi-business unit companies, this role typically has limited positional authority. A successful Chief Innovation Officer is a master of influence. They formulate strategy and establish a coalition of individuals across business units, functions, and geographies to improve the execution of all types of innovation. This includes innovation beyond products to include service, business model, channel and commercial innovation. Importantly, they also lead the development of domain expansion and incubate disruptive innovations that might not survive in an established business.

In my opinion the Chief Innovation Officer must be a member of the corporate executive team, preferably reporting to the CEO. The best people in this role lead small dedicated teams and are charged with the following set of cross-functional responsibilities and accountabilities:

• Improve and deliver business results from innovation
• Lead the measurement and analysis of innovation results
• Formulate and communicate innovation strategy
• Identify disruptive threats and opportunities based on trends
• Shape and manage the corporate innovation portfolio
• Cultivate and sponsor breakthrough innovation initiatives
• Evolve innovation business disciplines and competencies
• Create and nurture a culture conducive to innovation
• Develop innovation roles, talents, and career paths
• Define and monitor innovation metrics and measures

This is a big job. One that we wouldn’t want to adopt the title of unless chartered by the CEO and had the staff, funding and executive support necessary to tackle these responsibilities effectively.

With this full scope of responsibilities considered, we think you will agree that, unless your company’s value proposition is delivered through information systems, this role is beyond the reach of the Chief Information Officer or even the Chief Technology Officer. The cross-functional nature of the role, and the broad skillsets required, necessitate someone with a balance of commercial, technical, and managerial experience.

So let’s stop worrying about the right acronym and let’s stop using the title inappropriately. To be a legitimate Chief Innovation Officer you have to be able to sustain superior returns on you firm’s investment in innovation. In most large organizations this will require a transformation in the way products are developed, businesses are created, and innovation is delivered.

Like we said, this is a big job – regardless of what you call it.

For collaborative articles by Bill & Sean please visit: The Chief Innovation Officer.com

 

The America Invents Act is Coming: Three IP Management Capabilities You Need Before March 2013

Leading companies strategically manage intellectual property (IP) and use these assets to generate significant revenue streams. But the rules in the US for protecting your IP are about to change. Now more than ever, companies need to critically access their IP processes and strategy, because the America Invents Act is coming.

Continue Reading at Kalypso.com

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New Product Development and Lean Innovation

In both operations and manufacturing, the concept of “lean,” has earned its reputation as a powerful toolset that drives down cost and improves cycle-times. Lean manufacturing achieves this value through a focus on eliminating waste, standardizing processes, and creating value from an end customer standpoint. As companies strive to increase growth and profitability from their New Product Development (NPD) and innovation investments, some executives are looking to apply lean concepts in this area. But when it comes to the more creative and fuzzy practices of innovation, following lean practices without strategic direction from portfolio and pipeline management (P&PM) capabilities can have unintended consequences including: stifling ideation processes, focusing only on customer requests and not the next big innovation, over-standardization, and speeding up the wrong projects.

From our experience, lean NPD efforts without P&PM often prove ineffective because they:

• Are unable to effectively communicate the value proposition and need for efficiency improvements to the NPD audience
• Become too binary with metrics – occasionally canceling lower “value” but strategic projects
• Expend energy improving processes that aren’t the constraint or that don’t deliver results
• Distract from delivering large scale, high growth innovations simply because these are not “repeatable”

Combining P&PM processes with lean practices for NPD and innovation shows companies where to focus their efforts for maximum impact, and once established, creates processes that can be further improved. P&PM ensures that companies stay true to delivering results by providing visibility into what is most important. They can then apply tactical lean approaches to help get there.

Book Review: The Art of Innovation, by Tom Kelley

The Art of Innovation, 3/5 Sparks

[Purchasing link]

Tom Kelley is IDEO’s general manager. Tom has overseen IDEO’s business development, marketing, human resources, and operations. Tom currently has two best-selling books, The Art of Innovation (2001) and The Ten Faces of Innovation (2005). [Company Bio]

“IDEO is an award-winning global design firm that takes a human-centered approach to helping organizations innovate and grow.” IDEO specializes in helping organizations “build creative culture[s] and the internal systems required to sustain innovation and launch new ventures.” [About IDEO]

Main Points

• Aim to create an experience that is valuable to the customer. Good product and service innovations stem from the careful observation of, and empathy for, lead users.
• “Innovation does not occur in a vacuum”. Effective innovation necessitates an environment that combines specific conditions, cultures, and activities, with a prototyping mindset.

Review

The Art of Innovation is a testimony to successful defiance of hierarchical management styles and to the value of human-centered design. Author Tom Kelley, firmly believes that “sometimes only a real-life story will show you how the process actually works” [114]. The Art of Innovation manifests this notion. The book is read as a narrative of IDEO‘s successful projects that requires its audience to read between the lines to pull out the interlaced methodologies. Due to this structural choice, the majority of The Art of Innovation’s content functions as promotional material for IDEO and lacks counter perspectives, lessons learned from failure, and in-depth tips for implementation. Nevertheless, the book retains its value with five resource-packed chapters; 3-7. These chapters pair procedures and concrete management tools with real-life examples.

Topics covered by these chapters include:

• Human-centered design
• The brainstorming process
• The importance of strong teams
• The value of prototyping
• The architecture of innovation-friendly environments

One of the cases referenced in the book is an ABC Nightline broadcast where IDEO is challenged to innovate the traditional shopping cart within a week. This video broadcast by ABC Nightline is embedded at the end of my review.

How to Implement Challenge-Driven Innovation

Delivering on the Promise: An interview with David Ritter [link]

Interviewee David Ritter is the Chief Technology Officer at  InnoCentive . “Since 2001, InnoCentive has helped corporate, government, and non-profit organizations to better innovate through crowdsourcing, strategic consulting services and internal Software-as-a-Service offerings. The company built the first global Web community for open innovation.” [Link]. Some of Innocentive’s clients include Procter & Gamble, SAP, Eli Lilly and Company, SCA, GlobalGiving and the Rockefeller Foundation. David oversees product management, R&D, and IT operations functions.

Main Points:

• “Open innovation is a way to efficiently take advantage of resources irrespective of where they may be.” [Ritter, 4:00]
  
• Successful innovation is not deploying innovation projects or events.  Successful innovation is developing long-term and sustainable innovation capabilities within your company.
• Idea management platforms and social media tools require clear and concise problem statements, incentives and systematic implementation to successfully drive innovation.

Review:

In this  interview by Custom Solutions Group’s Bill Laberis, InnoCentive’s CTO David Ritter shares his experiences with the successes, failures, and best practices of companies turning to IT as an engine of innovation. David argues that while social media, groupware and intranets provide useful platforms for collaboration, without systematic implementation, incentives, and clear and concise problem statements that include solution criteria, these tools are doomed to fail.