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            Innovation
Prepared for The Chartered Institute of Marketing
                      by
         Karl Kalcher – MindFolio Ltd.

                     December 2001



                             Everything you need to know about e -marketing
              Objectives
• The Canon of Knowledge is a focused,
  dynamic reference and inspiration source
  for Marketers. The Canon covers a number
  of subjects – Innovation is just one of
  them.
• The aim is to identify and promote the
  information and knowledge about
  innovation, which is critical to successful
  marketing practice.
                                                Page 2
            Contents
• The basic questions.
• Innovation management.
• Inspiring innovators.
• Software for innovation.
• Practical innovation knowledge.
• …and what to know about creativity.

                                        Page 3
“The business has… two basic
    functions: marketing and
   innovation. Marketing and
  innovation produce results;
      all the rest are costs.”

           Peter Drucker


                                 Page 4
          Why Innovate?
• Innovation is a crucial source of competitive
  advantage:
   – Nokia, Intel, Sony, Seiko, Corning and Motorola
     have all generated sustained competitive
     advantage. These firms have generated 49% of
     their revenue through new products, versus
     11% for mediocre performers.

• Without innovation, core competencies can
  become core rigidities.
                                                       Page 5
        What is Innovation?
• A Choice of Definitions:
  – “Innovation is the sum of invention plus the commercialisation
    of that invention.” (D. R. Ireland)
  – “A major innovation is one that sparks further innovations and
    investment (e.g. the computer), as opposed to other
    innovations which are primarily improvements.” (N. Rosenberg)
  – “Innovation is a process by which a company:
     ♦ Builds insights about its customers.
     ♦ Identifies and evaluates unique market opportunities and prepares a
        plan to seize them.
     ♦ Develops a stream of winning products.” (J. P. Deschamps)

  – “An Invention is a new product; an Innovation is a new
    customer benefit.” (P. Doyle)
                                                                             Page 6
    What is Innovation?
• A Choice of Definitions:
   – “...the ability to look where everyone else is looking
     and see what no one else can see.” (R. J. Duggan)
   – Innovation is the practical application and use of
     creativity.
   – “Creativity is thinking up new things”. “Invention
     shows it can be made.”
   – “Innovation is making it commercially valuable.”
   – Research is the Transformation of Money into
     Knowledge – Innovation is the Transformation of
     Knowledge into Money.
                                                              Page 7
 What is Innovation?
                      Commercial
                      Commercial
                      Innovation
                       Innovation



  New
   New
Products
Products
             New
             New
           Services
           Services                    Business
                                        Business
                                       Processes
                                       Processes
                       Manufacturing
                       Manufacturing
                        Processes
                         Processes


                                                   Page 8
   What is Innovation? –
      Terminology
• “Dimensions” of Innovation:
  –   Product.
  –   Service.
  –   Process (manufacturing or service delivery system).
  –   Business process.

• “Degrees” of Innovation:
  – Incremental.
  – Radical/fundamental.


                                                        Page 9
    Where Does Innovation
        Come From?
While the sources for innovations are literally all around
us, there are two avenues to harness them:
• Formal Innovation Processes:
   – External innovation, such as innovation outsourcing, or a
     formalised external scouting structure/network.
   – Institutional innovation.
        • Internal Research and Development (R&D).
        • New Product Development (NPD) processes.
        • New Venture Division/Internal Venture Capital mindset.

   – Cultural innovation.
        • Innovation is at the centre of management efforts. (3M, Rubbermaid).

                                                                           Page 10
  Where Does Innovation
      Come From?
• Informal Innovation Processes:
   – Individual ideas and observations (often the
     source of entrepreneurship).

   – Innovation camps (professionally orchestrated,
     strategically directed, idea generation sessions).

   – Brainstorming sessions (‘let a 1,000 flowers
     bloom’; weird and wacky, all ideas are welcome).

                                                      Page 11
 Innovation
Management



              Page 12
        Managing Innovation
                                                  • Goals
                                                  • Communication
                   Innovation Strategy            • Technology
                                                  • Measures


Creativity/Ideas       Portfolio         Implementation
 Management           Management           (NPD, etc.)    Market
                                                          – Products
                                                          – Processes
                                                          – Services
             Human Resource Management

                                • Culture
                                • Motivation
                                • Appraisal
                                                               Page 13
        Innovation Strategy
• Has innovation been introduced as a fundamental part of your
  company philosophy and values?
• What is the role of technology in innovation?
• Does top management spend sufficient time supporting all
  stages of innovation?
• Are competitors’ innovation rates known/monitored?
• Are innovation goals/measures defined – for new products,
  services and processes?
• Is there a good balance of truly innovative projects as well as
  product improvements?
• Does your innovation strategy integrate all five areas of
  innovation management?

                                                                Page 14
     Creativity and
 Knowledge Management
• Are creative ideas collected on a regular basis
  from all employees?
• How many ideas for new products, services and
  processes were developed in the last 12 months?
• Do ideas originate from all departments, often from
  contacts with customers?
• Are ideas quickly developed into new product/
  service concepts?
• Are creativity techniques and workshops used?

                                                    Page 15
    Portfolio Management
• Is there a good balance of ideas for new products,
  services and processes?
• Are concept reviews held regularly?
• Are choices made quickly?
• Is there a good feedback mechanism from actual
  product performance to ensure screening decisions?
• Does the responsibility for screening decisions lie
  too high in the company hierarchy?

                                                        Page 16
           Implementation
• Is this a bottleneck stage, because too many projects
  are attempted?
• Are best practice techniques, such as simultaneous
  engineering, applied where appropriate?
• Is your time-to-market comparable to your competitors?
• Are manufacturing ramp-ups fast and efficient?
• Does manufacturing regularly develop new processes?
• Are project reviews effective and used to improve
  performance?

                                                          Page 17
Human Resource Management (HRM)
      – People Management
• Is the broad meaning and importance of innovation – new
  products, services and processes – understood by all
  employees?
• Are clear innovation targets set and known by all
  employees?
• Do human resource policies support a culture of
  innovation through stimulating a creative, problem-solving
  working environment? Are organisational structures
  flexible and effective?
• Is innovation covered by employees’ appraisals?

                                                          Page 18
                                               Innovation Strategy
 •   Has innovation been introduced as a fundamental part of your company philosophy and values?
 •   What is the role of technology in innovation?
 •   Does top management spend sufficient time supporting all stages of innovation?
 •   Are the innovation rates of competitors known and monitored?
 •   Are innovation goals – for new products, services and processes – defined?
 •   Is there a good balance of truly innovative projects as well as product improvements?
 •   Does your innovation strategy integrate all five areas of innovation management?

     Creativity Management                     Portfolio Management                 Implementation (NPD, etc.)
 • Are creative ideas collected on a    • Is there a good balance of ideas for    • Is this a bottleneck stage, because
   regular basis from all employees?      new products, services and                too many projects are attempted?
 • How many ideas for new                 processes?                              • Are best practice techniques, such
   products, services and processes     • Are concept reviews held regularly?       as simultaneous engineering,
   were developed in the last           • Are choices made quickly?                 applied where appropriate?
   12 months?                           • Is there a good feedback mechanism      • Is your time-to-market comparable
 • Do ideas originate from all            from actual product performance to        to your competitors?
   departments, often from contacts       ensure screening decisions?             • Are manufacturing ramp-ups fast
   with customers?                      • Does the responsibility for screening     and efficient?
 • Are ideas quickly developed into       decisions lie too high in the company   • Does manufacturing regularly
   new product/service concepts?          hierarchy?                                develop new processes?
 • Are creativity techniques and                                                  • Are project reviews effective and
   workshops used?                                                                  used to improve performance?

                                        Human Resource Management
• Is the broad meaning and importance of innovation – new products, services and processes – understood by all employees?
• Are clear innovation targets set and known by all employees?
• Do human resource policies support a culture of innovation through stimulating a creative, problem-solving working
  environment? Are organisational structures flexible and effective?
• Is innovation covered by employees’ appraisals?
                                                                                                                          Page 19
           Upstream Innovation
                                   Definition
Jean-Phillipe Deschamps argues that innovation can be managed as a
linear process and split into two major parts:
• Upstream innovation – the process of developing and cultivating ideas
    for new business creation and evaluating their merit.
•   Downstream innovation – the process of converting selected
    opportunities from concepts to market-ready products or services.
Most companies have a formal downstream process, but very few manage
the upstream process in a formal way, which creates fewer ideas and
fewer innovations linked to business goals. He details three stages to the
upstream process:
– Fertilisation: envisioning opportunities (usually a top management task).
– Seeding: generating and validating the idea flow (innovation teams, etc.).
– Incubation: managing the early feasibility process (budgets, feedback, time frame).

                                                                                 Page 20
       Upstream Innovation
      Some ideas for getting upstream results:

– The 3M example of allowing certain employees up to
  20% of their paid time on independent research efforts.
– Insist on working with people who have their ear to the
  ground, who ‘have seen the ocean’, and who have the
  ability to network with intelligent purpose.
– Professionally managed Employee Idea Schemes
  (caution: many fail because they are poorly conceived
  and managed).
– ‘Thinking Communities’ and ‘Knowledge Forums’ as
  Intranet’s within the organisation.
                                                            Page 21
      Upstream Innovation
     Some ideas for getting upstream results:

– Mixing cultures, skills, functions, age and gender
  within idea teams.
– Creating an intrapreneur structure/philosophy.
– Creating a new venture incubation unit/division.
– Innovation task forces for product, services,
  processes and technology.
– Setting strategic innovation goals as a major
  management focus (Rubbermaid’s goal is to have
  50% of their products less than 5 years old).
                                                       Page 22
       Upstream Innovation
               Some challenging views:

– Brian Quinn, Amos Tuck Business School, having
  studied GE, IBM, Polaroid, etc. found that not a single
  major product innovation has originated from a
  company’s formal planning process.
– Karl Kalcher, MindFolio Ltd., having worked with
  Clarks, LEGO, Motorola, HP and Polaroid on
  innovations, believes that companies must encourage
  rebels and missionaries, revel in managing creative
  tension, and strive to obtain results through a parallel
  process of quick experiments and disciplined
  innovation methodology. They must insist on managing
  a tight after-action review for every try.
                                                             Page 23
        Upstream Innovation
                Some challenging views:


– Motorola believes in creating new avenues through
  ‘learning by doing’.
– Most practitioners agree that ‘cross-functional project
  teams’ are the only way.
– Intel insist on ‘staying scared’, believing that they are,
  at all times, only two years away from bankruptcy.
– Dana requires employees to generate two ideas for
  process innovations each month (and supports them
  with corresponding training too).
                                                            Page 24
      Pocket Guide to ‘Poor
    Innovation Management’
Here is a choice of actions or omissions which will guarantee ‘The
Poor Innovation Management Prize’:
•   Do not communicate with employees about innovation objectives, goals, etc.
•   Make clear to staff that innovation is the task of R&D only and everyone else
    should just ‘work’.
•   Give R&D even more money, but because they are ‘creative’ they can’t be
    held to tight deliverables or transparent after-action reviews.
•   Don’t permit ideas to surface because they may threaten the existing
    business.
•   Close your eyes to the costly habits of ‘gilding the lily’, over-perfection and
    over-specification, all in the name of ‘good quality’.
•   Innovation is all about products; not services or processes.
•   Do believe that NIH – the ‘Not Invented Here’ disease – has been cured!

                                                                                  Page 25
   Pocket Guide to ‘Poor
 Innovation Management’
Send the Wrong Signals:
• “It’ll never work.”
• “We explored that thoroughly 10 years ago.”
• “Ok, if we can get somebody else to pay for it.”
• “We’re too shorthanded to work on blue sky ideas.”
• “It’s not in the business plan.”
• “It’s not your job to talk to customers.”

                                                     Page 26
     Pocket Guide to ‘Poor
   Innovation Management’

Rules to Avoid Innovation:
• Be suspicious of every idea that originated below you.
• Insist that people go through all levels with a new idea.
• Express criticism and withhold praise.
• Make a decision to re-organise in secret and maximise surprise.
• Be control conscious.
• Never forget that people at the top know everything.


                                                               Page 27
    Pocket Guide to ‘Better
   Innovation Management’
Rules to Improve Innovation:
• Increase base of knowledge upon which innovation can be based.
• Education should not focus on specific skills.
• Make change based on what you want.
• Blur distinctions between jobs.
• Base salary on what someone can do (potential).
• Don’t shield information – good or bad.
• Daily team meetings.
• Give logical and compelling reasons for change.
• Establish favorable workplace climate for change and trust.

                                                                Page 28
      Pocket Guide to ‘Better
     Innovation Management’
To Activate Innovation:
• You need to know where you want to go – VISION.
• You need to know where the rest of the world is going – FORESIGHT.
• You need ambition – STRETCH GOALS.
• You need freedom to achieve your goals – EMPOWERMENT.
• You need to draw from and work with others – COMMUNICATION,
  NETWORKING.
• You need to be rewarded for your efforts. There is nothing more
  rewarding than RECOGNITION from your peers.

                                                                    Page 29
Best Practices
in Innovation
Inspiring Innovators


                       Page 30
       Innovation in
   Manufacturing – Trends
• Manufacturing was focused on products, NPD
  processes and time-to-market.
• Now moving to more flexible NPD processes
  (faster, less formal); auditing innovation performance.
• Greater focus on choosing the right innovation
  projects (portfolio management).
• Clever use of process and service innovation to
  strengthen competitive advantage.

                                                       Page 31
     Innovation in Service
      Industries – Trends
• High level of interest in improving performance.
• Focusing on better/documented “living” processes.
• Conducting innovation audits to determine current
  performance levels.
• Moving to look at other types of innovation – not just
  product and delivery.
• Attempting to implement more effective
  cross-functional teams.

                                                       Page 32
   Inspiring Innovators: 3M
The Company:
3M is dedicated to the innovation of products in over 28 sectors – from
adhesives to products for cars. 3M is an American company with global
offices. Most employees are hired locally because they know their markets,
customs and culture better than anyone. Their global network helps bring
customers innovative and useful products.
                   Just some of 3M’s Products




              The Post-it Notes.                   The Inhaler.

                                                                         Page 33
   Inspiring Innovators: 3M
The Culture of Innovation:
• Innovation is encouraged from the top – 3M’s motto is “we are
  forever new”.
• Cross-functional teams work in the products sectors, e.g.
  automotive products, office products.
• New ideas are encouraged within those sectors.
• Constant tweaks are made to those products to fulfil customer
  needs.
• Ideas are sought from outside 3M to improve the quality of
  upstream innovation.
• There is continual measurement of the innovation process
  through the 6th Sigma software system.
                                                               Page 34
                                        Give a
                                    person a job
                        Give it        and the
                         a go        freedom to    Recognition
                        attitude         do it


                                                                   Tolerance
           Teams
                                                                  of mistakes


                                      3M
                                                                           Tolerance
Defiant
 role                                 THE                                      of
                                   CUSTOMER                               bootlegging
models




             Self-                                               Management
           appointed                                                 by
          innovators                                               walking
                                                                   around

                                                   30% new
                       15% rule       Growth        product
                                     with the         rule
                                     business




                                                                                   Page 35
Inspiring Innovators: Dyson
The Company:
Dyson emerged during the 1990s as one of the leading vacuum
cleaner manufacturers, through the creation and production of the
paperless bag vacuum cleaner – no other manufacturer’s vacuum
cleaner came close.
                           The Products




  The most powerful upright.          The only 2-drum wash action.
   45% more suction than
      a Dual Cyclone.                                            Page 36
         Inspiring Innovators:
                 Dyson
The Culture of Innovation:
•   Leadership: James Dyson, the creator of the dual cyclone vacuum
    cleaner and founder of Dyson, sets the tone for innovation at Dyson.


•   The teams: Design staff work in teams and wear casual clothing, so
    that they have nothing to hide behind. Ideas are continually
    brainstormed and then built accordingly. Every member of staff when
    they join Dyson has to build one of the vacuum cleaners.
    Design teams are within easy reach of the production lines, so they
    can walk over and talk with those manufacturing the vacuum cleaners
    to ensure that any problems are countered early on.

                                                                           Page 37
       Inspiring Innovators:
               Dyson
Control Mechanisms:
• Dyson vacuum cleaners are constantly taken to homes and
  users asked what their likes and dislikes are. Changes are made
  to the vacuum cleaners in accordance with the customers
  wishes. Design changes are made in the cross-functional teams.

New Products and New Ideas:
• In the words of James Dyson, you know the feeling when some
  everyday product lets you down. “I could have designed this
  better myself”. Each employee is encouraged to think in this
  manner. The product is then designed and redefined
  accordingly.
                                                              Page 38
       Inspiring Innovators:
             Converys
The Company:
Converys is a worldwide leader in innovative billing systems.
The billing software is used by large organisations to bill their
customers. Converys is renowned for the scalability of its
products.
In the fast moving telecom sector constant innovation is vital.
Organisations that do not innovate will die.

The Products:
• Software for billing. The products and business to business.

                                                                    Page 39
       Inspiring Innovators:
             Converys
The Culture
• A vision of innovation comes from the top.
• Cross-functional teams.
• Trusting culture in a market area where there is constant
  breakthrough innovation.
• The products are constantly tried and tested by customers, and
  the product is tweaked accordingly.

The Control
• Converys get constant feedback from customers and market
  research teams, such as the Yankee group. Speaking at
  conferences gives them the opportunity to discuss their products
  with others in the sector.
                                                                     Page 40
         Inspiring Innovators:
Maryland Bank National America (MBNA)

 The Company:
 MBNA is an American company specialising in lending credit card
 lending to consumer markets. Over the last 9 years MBNA has
 captured over 13% of the market in the UK and is still growing
 strongly.
 MBNA has been truly innovative in the way it has developed the
 customer service processes and channels to customer.

 The Products
 MBNA Credit Card                            Insurance

                                                                  Page 41
          Inspiring Innovators:
                  MBNA
The Culture:
•   MBNA believe that “employing the right people leads to acquiring the right customer”.
•   Employees are given a career path.
•   Salaries are well above the local and industry norms.
•   Customer service staff are empowered through training to give customers the right
    advice and solve their problems.
•   55% of customer service staff’s time is spent in training.

The Control Mechanisms:
•   MBNA monitors the activities in the Customer Services Department on a daily basis.
•   The Customer Service Department know how they are performing on a daily basis.
•   Excellent service is rewarded accordingly by the company.
•   Customers are constantly asked for their opinion. MBNA’s 5% customer attrition rate is
    the lowest in the business, it speaks for itself.
                                                                                         Page 42
        Inspiring Innovation
            in Insurance
                               Commercial
                               Commercial
First-to-market?               Innovation
                                Innovation

                                                       +?
 New Insurance
 New Insurance
   Policies
    Policies
                                                      New
                                                       New
                                                    Services
                                                    Services
    +
                                             +
 Customer
 Customer        +
 Profiling
  Profiling                         +    Channels
                                         Channels
                        Use of
                        Use of
 Pre-sales           3rd Parties
                      3rd Parties

                                                               Page 43
   Software
for Innovation
 Case Studies of
Software Support
                   Page 44
Software-based Innovation
• Software provides the critical mechanism
  through which managers can lower costs,
  compress time cycles, decrease risks and
  increase the value of innovations.

• Software can be used to:
   –   Define how people interact.
   –   Dictate the information they use.
   –   Determine what they communicate about.
   –   Identify where they can be located.
   –   Enhance the skills.
   –   It can become integral to the organisation.
                                                     Page 45
        Innovation Software
• What type of innovation software exists:
   – Innovation software exists to support the innovative thoughts and
     processes of the company. Usually software can only support one
     part of the process, either the initial ideas creation, the portfolio
     management or the new product development phase.
   – Creative and New Ideas: Software exists to assist a small team
     bouncing ideas off one another. Generating new ideas is often
     the biggest challenge for companies, so having innovation
     software gives the teams support and a structure.
   – Portfolio Management: Developing new ideas then leads to
     having to create a selection process by which only the best ideas
     get through. An example of this type of software can be found at
     Oxford Asymmetry, where software has been developed by
     Steve Davies to identify new compounds which are more likely to
     be made into drugs.
                                                                       Page 46
       Innovation Software
– Knowledge Management: Managing data and ideas within a
  company is another means of improving the quality of
  innovation. Software gives employees access to other
  employees documented findings. Companies such as PA
  Consulting, Cap Gemini and McKinsey specialise in developing
  and implementing such software.
– Measuring software: Software also exists for companies to
  pinpoint their progress on specific projects. Such software is
  developed by such companies as Q Management, Fishbone
  and Kaiser.
– New Product Development: The stage gate process usually
  requires various teams working in parallel and a considerable
  amount of resource allocation. Such software provides
  information on who is working on which project and also gives a
  cross comparison.
                                                                    Page 47
     Innovation Software –
           Selection
• There is a wide selection of software available, each has the
  potential to help with a different part of the innovation pathway.
  Some of the software is only suited to a particular size of
  company. A web site giving you a list of different types of
  software is: www.zdnet.com

How to decide to purchase software:
• Identify why you need the software.
• List the costs versus the benefits.
• What are the advantages of using software rather than other
  non-software processes?
• How long will the implementation take?
• Is the software suited to the size of the project?
                                                                       Page 48
      Innovation Software:
             Kodak
The Company:
Kodak produces films and cameras for both the commercial
and industrial markets. Such a company needs to constantly
evolve.

The Software:
• Kodak have a worldwide system, WIN. This is a database
  which generates cross-functional ideas. The company
  wanted to stimulate ideas in an informal manner.

                                                             Page 49
    Innovation Software:
           Kodak

What was the problem with WIN?
• 96% of the ideas generated through WIN were
  unusable.

• WIN was modified by installing “idea focus”,
  which served as an early filter. It focused on real
  customer needs, advocates and short proposals.


                                                        Page 50
       Innovation Software:
         Hewlett-Packard
The Company:
Computer company that constantly seeks to develop new
products for this ever burgeoning market.

The Software:
• To assist new concepts and ideas Hewlett-Packard use
  the Intranet. This system enables employees to exchange
  ideas, and the email was programmed so that if an
  employee wrote an email on a specific subject, they
  would be put in touch with other employees who had
  written emails on a similar subject.
                                                        Page 51
      Innovation Software:
Cap Gemini Ernst & Young (CGEY)
 The Company:
 CGEY is one of the largest management consultancy firms in the world,
 providing effective solutions through every part of the business cycle,
 from first ideas to long-term operations.

 The Software: Knowledge Management
 •   Employee structure: Professions divided into communities.
 •   Community Portals.
 •   Discussion forums set up where community members can share
     knowledge. These are priority primarily used to integrate and
     implement – gain access to knowledge on projects and clients.
 •   Components are generally purchased off the shelf from existing
     partners.
                                                                       Page 52
Practical Innovation
    Knowledge
     Starting with
     the Mindset
                     Page 53
  The Innovation Mindset
• Effective innovation management starts with you
  and your mindset. Here are some ‘Lessons Learnt’
  from practitioners who have developed many new
  businesses and products.
   – Innovation is a company-wide process involves all
     aspects of the Value Chain on an on-going basis. Too many
     managers have a very narrow view of innovation, i.e. it only
     concerns New Product Development or Research and
     Development.
   – Marketers carry the ‘Duty of Initiative’ for innovations.
     The key driving force for innovations is customer benefit,
     and therefore it is the marketer who should identify needs
     and galvanise the business to seek new solutions.

                                                                  Page 54
    The Innovation Mindset
– “Life is too short to wait for Eureka”. New thinking, idea
  generation and innovations, do not for the most part, rely on
  sudden flashes of brilliance. A disciplined, creative innovation
  process will yield surprisingly effective results, and will usually
  involve a multitude of people. As with most things, it’s about
  smart, hard work, rather than ‘hope’. Specialist Innovation
  Consultants can be valuable catalysts during a specific
  process.
– Constraint is the essence of creativity. In order to gain
  effective results from an innovation process, managers must
  clarify ‘essential constraints’, not just budgets. Most innovation
  teams will find solutions to the most difficult challenges if the
  ‘road map’ is clear from the outset. Moving goalposts several
  times during a process will usually kill spirit and outcome.

                                                                    Page 55
    The Innovation Mindset
– A generous budget is no substitute for poor or indifferent
  top management. Disunity amongst senior managers about
  the direction, or the priority, of a given innovation project, will
  sink any effort by the innovation team. It is essential, therefore,
  to ensure that consensus exists within the management team
  prior to project commencement.

– Essential innovation ingredients: ‘Hard Fun’, inspirational
  leadership, internal and external people with different skills and
  outlooks, a clear brief, reasonable funds against reasonable
  deliverables, some training about idea generation, effective
  creative processes and last, but by no means least, customer
  focus.

                                                                   Page 56
          Mindset:
     A New Spiritual Goal

In a world of rapid and continuous change,
we must have the courage and vision to
challenge our traditional assumptions, defy
prevailing business currents, identify
opportunities and go after them, changing
the rules of the game, to bring unlooked-for
benefits to customers.

                                               Page 57
Mindset: A New Spiritual Goal
           The Way Forward…


    Put imagination before experience
      (innovation not optimisation).

          “Go against the flow.”

            Create the future
             that we want.

                                        Page 58
Mindset: A New Spiritual Goal
 To Create Our Future We Must Be Prepared To...



• Challenge industry conventions.

• Challenge our own assumptions about
  the nature of the business we are in.

• Learn from others.


                                                  Page 59
Mindset: A New Spiritual Goal
 To Create Our Future We Must Be Prepared To...


• Create alternative pictures of the future.

• Create new customer needs, rather
  than merely satisfying existing ones.

• Leverage the inherent power of our
  brand.

                                                  Page 60
     Measuring Innovation
• A frequent weakness of management is to think through
  and set realistic expectations for a project. Good
  projects can thus be doomed to failure before they even
  get off the ground, and this prevents the spreading of a
  positive innovation culture.
• There are four categories of Innovation Measurement:
  1) Measuring the internal skill base/efforts:
        – e.g. patents per employee, R&D expenditure in relation to
          competitors etc.

  2) Measuring the results:
        – e.g. new products share of total profits, time to market,
          break-even time, etc.
                                                                      Page 61
   Measuring Innovation

3) Measuring innovation culture:
    – e.g. response times to competitor action,
      cross-functional projects as % of total etc.


4) Management accounts:
    – e.g. R&D costs as % of revenue etc.,
      innovation costs dedicated to core business,
      new business and early trials etc.

                                                     Page 62
        Protecting Innovation
– Intellectual Property Rights (IPR) come in many forms
  patenting a technical invention, protecting a design, trade
  marking a logo, product or service, or perhaps copyrighting a
  piece of creative work. The following sources can provide
  further assistance:
    – Patent Office        www.patent.gov.uk
    – Chartered Institute of Patent Agents, London, +44 020 7405 9450
    – Government           www.intellectual-property.gov.uk
    – EU registrations     Lovells-Boesebeck-Droste, Alicante, Spain
                           +34 96 514 41 05



                                                                 Page 63
     Outsourcing Innovation
The basic premise of innovation outsourcing is the fact that
no single company can hope to possess all the resources,
skills, eyes and ears, and especially time, to grow the
business successfully.
The decision to outsource is preceded by a strategic process,
in which the company examines their value chain, their
processes and activities, in order to determine the scope for
innovation outsourcing. The basic objectives are to:
•   Lower innovation costs.
•   Speed up development cycles.
•   Gain untapped knowledge.
•   Spread risks.
•   Know more and act faster than competitors.
                                                               Page 64
     Outsourcing Innovation
The most popular avenues for outsourcing are in Basic Research and
Supplier Integration. Cisco Systems is a much quoted example. Johnson
Control has led the car industry in forward integration, delivering evermore
complex sub-systems to car assembly lines.
Some ‘golden rules’:
• Give and take; the partner must benefit too.
• A chance for talented intrapreneurs to head the process.
• A cross-functional approach; superior communication facilities,
  accessible software process tools.
• Respect the ‘centres of gravity’; be very clear about the ‘what and
  when’, but be tolerant about the ‘how’.
Scanning for feasible new opportunities, or the management of certain
elements of the Innovation/New Product Development process, can be
provided by specialist innovation consultant firms or universities. Some
very large companies finance their own ‘scanning units’.
                                                                           Page 65
New Product Development
Detailed descriptions of NPD processes exceed the scope
of this Canon, save to say that the task remains a constant
battle for improvements for most companies. However here
are some useful hints for ‘Best Practices’:

• The Stage/Gate process is still amongst the most
  popular methods.
• There is an increasing focus on fast prototyping and
  accelerated exposure to customers.
• Cross-functional teams are de rigueur, however,
  accountability problems have dogged some teams. One
  response is to extend the responsibilities of the project
  team beyond the launch period.
                                                              Page 66
New Product Development
• NPD processes are notoriously ‘individual’, even
  undisciplined to the point of amateurish. Companies are now
  looking to invest in the ‘very best practices’, increasingly
  supported with software, and then insisting on standardising
  the process throughout business divisions.

• Innovation Directors, heading Project Offices, are new
  organisational positions to facilitate this development.

• Reflect on the study that shows it takes 3,000 raw ideas to
  equal 1 commercial success (G. Stevens).


                                                                Page 67
                Intrapreneurs
Defined as ‘entrepreneurs within a larger business’,
intrapreneurs are people who provide a strong stimulus to the
innovative (and/or commercial) activities of a company, by
leveraging the might of a big business, with the skills and
nimbleness of a self-employed business creator.

• Consider a company-wide programme to create a
  intrapreneur culture (but with transparent objectives, reward
  systems, exit conditions).
• It may be more important to search first for latent
  entrepreneurial individuals than for ideas, because it is their
  tenacity and commitment which may make the real
  difference.
                                                                    Page 68
                Intrapreneurs
• Train senior managers to recognise, tolerate and enjoy the
  potentially unconventional consequences of giving
  intrapreneurs a lead role.

• It is usually better to form teams of intrapreneurs, as they are
  likely to support and stretch each other.

• Critically, allow ‘good failures’, recovery and the re-start of
  another project.

• Protect intrapreneurs from the iron disciplines of big
  business, whilst insisting on disciplines for money and
  deliverables.

                                                                    Page 69
  Internal PR for Innovation
Innovation activities are not automatically welcomed by everybody!
Emotions can range from the fear of change, envy, disagreement
about priorities, to potential ‘turf wars’.
Here are some actions to minimise such potential sentiments:
• Clarify/classify all stakeholders.
• Briefly introduce the project/inform about rough purpose/time.
• Ask for advice.
• Invite visits/make visits (especially some prior to milestones).
• Create an internal PR plan:
    – Subtle.
    – ‘Low to no cost’.
    – Friendly tone; beware of arrogance, self-promotion etc.
• Share ‘Lessons Learnt’.
                                                                     Page 70
“The Thinking Comes Free”
• Creativity, says the Design Council, is about staying ahead of the
  game. Learning how to capitalise on rapid advances in technology,
  in the way we conceive, design and make products, requires a
  creative workforce. We need to set our thinking free. Find out more
  from the Design Council at www.designcouncil.org.uk
• Creativity, the ability to foresee new problems and then find solutions
  to them, to see objections to solutions and the ways of overcoming
  them, can be learned.
• Teaching brainstorming techniques to foster creative thinking by
  teams is extensively documented. Specific methods include Edward
  de Bono’s Six Thinking Hats.
• Other references include The Living Company by Arie de Geus and
  Surfing the Edge of Chaos by Richard Pascale. Both address the
  importance of creativity and innovation to an organisation’s survival.

                                                                      Page 71
Critical Attributes for Success
Innovation was identified as the key to improved business performance in
Living Innovation, a DTI/Design Council research study. The framework for
operating innovatively has three components. Energy and commitment are
needed. How does your company rate?
•   Do you inspire?
     –   Does the company have a clear mission?
     –   Does a culture of trust and respect pervade the organisation?
     –   Does the company reward and recognise talent and commitment?
•   Do you create?
     –   Is there a system for encouraging and capturing all ideas?
     –   Does the company’s team structure extend to external partners?
     –   Is intellectual property and competitive advantage well managed?
•   Do you connect?
     –   Does the business have a process for staying really close to its customers?
     –   Does the company turn regulation/legislation to business advantage?
     –   Does the company compete from strength with distinctive innovation?

                                                                                       Page 72
    Where to Find Out More
• Joint programmes to bring innovators and change leaders
  together include Creativenet (Design Council/Demos). This is a
  valuable resource to develop personal and organisational
  creativity. Go to www.creativenet.org
• Programmes linking companies and innovators include the
  London Business School’s Innovation Centre on
  http://iexchange.london.edu
• Design & Art Direction have a project on their web site –
  Creativity Works – which provides a series of case studies
  about creativity in business. Go to www.dandad.org
• The Living Innovation project has assembled detailed case
  studies. For more details and practical advice on how to
  innovate better, go to www.livinginnovation.org
                                                               Page 73
Seven Factors to Sustain Success
                              Slide 1 of 2
                               Research by The Talent Foundation in
                               partnership with the Design Council and
                               Hewlett-Packard, into 850 organisations
                               provides factual evidence that innovation
                               must be combined with other factors to
                               sustain business success. They are:

•   Balancing today and tomorrow – sharing a focus on the future at all
    levels throughout the organisation.
•   Innovating with flexibility – promote creativity and prepare for change.
•   Sharing knowledge via relationships – encourage strong relationships
    throughout the organisation.
•   Seeing potential – recognise the undeveloped potential and talents in
    existing employees.
                                                                           Page 74
Seven Factors to Sustain Success
                                   Slide 2 of 2
    •      Motivating through valuing – recognise and openly appreciate
           contributions.
    •      Building skills through informal learning – develop opportunities for
           on the job learning.
    •      Leading by cultivating – demonstrate visible leadership which
           enables and trusts.


                                              Read more about the evidence and
                                              action ideas in a free publication
                                              which includes a work mat
                                              discussion tool. Both can be found
                                              via www.talentfoundation.org



23/01/02                                                                           Page 75
This report is one in a series commissioned by CIM to contribute to the
E-knowledge Centre, part of the ConnectedInMarketing initiative.




The Chartered Institute of Marketing
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Cookham
Maidenhead
Berkshire, SL6 9QH, UK
Telephone: 01628 427500
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Web Site: www.cim.co.uk

ISBN: 0902130773

				
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