A Model for Innovation – The Edinburgh Fringe

edinburgh-346571_640Have you been to the Edinburgh Fringe?  It is a remarkable experience.  The Fringe is the world’s largest annual Arts Festival.  There are some 3000 different shows featuring comedy, theatre, music, dance, magic and improv.  There is no selection committee (in their terms it is unjuried).  Any type of performer with any type of act can participate.  This means that it has become an experimental playground and launching pad for emerging talent.  At the same time many well-established artists perform at the Fringe because they love being part of it.  Something like 2 million tickets are sold for the shows over the 25 days of the festival but many shows are free.  It runs every August and attracts visitors from all over the world.  It has launched the careers of many who went on to become stars including various members of the Monty Python team, Derek Jacobi, Rowan Atkinson, Stephen Fry, Hugh Laurie, Steve Coogan and Emma Thompson.

The success of the Fringe can teach us some lessons about innovation and entrepreneurship because each show is like a small business start up.  It may succeed or fail based on whether customers and critics like the idea and the performance.  What precepts can be taken from the festival to the business world?

1.  The Fringe provides a platform for experimentation.  Edinburgh in August is a place where artists can try out new, dangerous, edgy material with relatively low cost and low risk.  They are sure of some audiences and will get instant reaction and feedback.  The basic infrastructure is in place – there are venues of all shapes and sizes, a computerized booking system and most importantly lots of visitors.  The artist can focus on giving a great performance and leave the logistics to the organisers.  Every start-up needs time, space and exposure.

2.  It is a safe place to fail.  Artists whose shows flop one year may return the next and try again with a different approach.  They will get support and encouragement.  They quickly learn what works for audiences and what does not.

3.  Diversity stimulates innovation.  Performers from different genres, backgrounds and nationalities rub shoulders and see each others’ works.  New ideas and collaborations are spawned.

4.  The Spotlight is the reward.  Very few shows make serious profits at the Fringe.  The main benefits for the successful are exposure and coverage.  Many magazines and newspapers publish reviews of shows at the Fringe and there are a number of prestigious awards.   (See the list of Comedy Award winners.) These accolades can lead to further bookings for the shows and the artists and put them on the road to stardom.  Similarly many start up internet businesses crave viral exposure ahead of revenue.

If we want more entrepreneurs and more new businesses then the Edinburgh Fringe might be a useful model to follow.  We need safe places for creative entrepreneurs to try out their great ideas.

 

Paul Sloane

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How to Fight a Blame Culture

A culture in which people are blamed for their failures and mistakes is highly damaging for innovation and for learning. If staff are worried that the finger will be pointed at them for trying things that don’t work then they will not try them. And if people are scared of recriminations they will not own up to errors and mistakes which means that an opportunity for improvement and learning is missed.

This problem is particularly acute in the health care sector where a blame culture can discourage whistle-blowers and individuals who want to report errors – their own or those made by others.

Dr Gary Kaplan

Dr Gary Kaplan

The Daily Telegraph reported that in 2002 Dr Gary Kaplan, Chief Executive of the Virginia Mason hospital in Seattle visited a Toyota factory in Japan where he was surprised to see at first hand the company’s remarkable ‘stop the line’ philosophy.   Any worker on the multi-million pound production line can stop the line if he or she experiences an unexpected problem or difficulty. Senior technicians and managers rush over – not to berate the worker but to help them and to learn. That way they can improve the process for all workers and all Toyota plants. It is all part of the company’s famous ‘kaizen’ or continuous improvement concept.

Dr Kaplan wanted to introduce a similar process at the hospital so that staff would immediately report any incident which could be harmful to a patient. But he ran into opposition. The existing culture was ingrained. People did not want to go over the heads of doctors or to report things that might get colleagues into trouble. Doctors feared that admitting mistakes might lead to lawsuits.

It took a dramatic accident in November 2004 to trigger the change. A 69 year-old mother of four tragically died after she was injected with the wrong medication. The hospital immediately issued an apology and took full responsibility.

It made staff realise that Kaplan’s policies were designed to save patients and not to chastise staff. There are now about 800 safety reports every month revealing everything from tiny defects to major mix-ups. The reports are acted upon with the aim of improving the process so that the mistake cannot occur again. Blame and fear have been replaced with learning an improvement. The result is that Virginia Mason is now recognised as one of the safest of hospitals. Remarkably the change to an ‘owning up’ culture has led to a 75% reduction in lawsuits and a corresponding reduction in the cost of liability insurance premiums.

Two pertinent lessons for innovative leaders are clear from the story of Dr Kaplan and his hospital. First, a great way to innovate is to copy an idea from an entirely different field – in this case automobile assembly. Secondly, corporate cultures are remarkably resistant to change and it often takes dramatic actions to alter them.

If you have a blame culture in your organisation and you want to change it to one of transparency and honesty then here are some practical steps you can take.

  1. Focus the message on the benefits of innovation and continuous improvement and on the risks inherent in covering up failures.
  2. Senior executives and managers should lead the way by pointing out mistakes they have made and how similar errors can be avoided in the future.
  3. Whistle-blowers who point out serious flaws and failings should be singled out for praise (unless they wish to remain anonymous).
  4. You could invite an external speaker from an entirely different industry (e.g. Toyota) to tell their story.

Transparency will shine a spotlight on reckless or incompetent individuals. But that is not its primary purpose which is to enable continuous improvement based on all the little fears, problems and errors that clog the current systems and stop us from being more efficient and more innovative.

Paul Sloane

Spend time with your Unhappiest Customers

It is nice to meet and talk to happy customers. They like your products or services and often recommend them to others. As a business leader you get a warm glow from a happy customer – it seems to make all your efforts worthwhile. Unfortunately you do not learn a great deal from the happy client. They just confirm what you already knew – that you are doing a great job. They reinforce complacency. On the other hand, the unhappy customer is a mine of valuable information. They are dissatisfied with your current efforts. Consequently they are the best source of ideas for innovations and improvements in your product or service.

Each of Apple’s store managers allocates time for talking to customers who have complained. They have a target to call any unhappy customers within 24 hours. The results of these communications are fed back to other stores and to Apple headquarters where they form a vital input for developments and improvements. But there is a more immediate benefit. Analysis shows that on average the unhappy customers who spend time talking to store managers go on to spend substantially more on Apple products and services than other customers. Studies show that every hour spent in calling displeased clients resulted in over $1000 of incremental sales leading to over $25m in extra revenue per year across all stores. (Reichheld F (2011) The Ultimate Question, Harvard Business Review).

How can business leaders find and speak to really unhappy customers? One way is to spend time on the phone at your call centre or service department. Another is to search social media for critical comments and to reply both publicly to the group and privately to the individual. Find out what really bugs them, listen to their tirade of criticism and ignore the fact that they never read the manual. Do not argue; simply listen, sympathise and help them resolve their issues. If possible offer them some compensation e.g. a voucher or download. You may think that they are rude, lazy and ignorant (and you may be right) but they have given you something valuable – an insight into how customers think and act. For every customer who complains you may have ten others who have the same problem but keep quiet.

Many companies who are desperate to innovate add features to their products which their development teams think are really cool. But all this extra functionality may deter the average user. A better source of incremental innovation is the customer. If you keep making your product better and easier to use for him or her then you are adding value rather than just adding features. The unhappy customer is the place to start – so seek him out.

Paul Sloane

What KPIs can we use to measure success with Open Innovation?

Many organizations are adopting Open Innovation and Crowdsourcing as ways to generate new products or services. Opening up your innovation initiatives to outsiders is seen as more effective than relying solely on your internal R&D or marketing departments. However, because this approach is so new there is a dearth of guidance on how to measure the success of open innovation activities. This issue is addressed directly in a paper by Erkens, Wosch, Piller and Luttgens from Ernst Young in Germany and the University of Aachen. They point out that 90% of corporate innovation efforts do not result in new products or services so a tool to help us understand how to measure success is badly needed.

The authors advocate three principles:

1. Use separate metrics for each different OI method – e.g. leadusers, contests or broadcast searches.
2. Use measures for input, process, output and outcomes.
3. Use metrics in ways which are instrumental, conceptual and symbolic. (You have to read the article to understand what they mean by this.)

A GUIDE TO OPEN INNOVATION AND CROWDSOURCING_SLOANE_978074946307They carried out a survey among major European companies in different sectors and analysed 117 responses. They propose three different scorecards with up to 14 metrics on each depending on the type of OI initiative being used. Each scorecard has sections for initiation, implementation and overall KPIs with metrics for inputs, process, outputs and outcomes. The two most highly rated metrics on each scorecard might seem obvious but they are absolutely telling:

1. The degree to which top management is committed to Open Innovation
2. The customer benefit from the innovation provided.

The report is a valuable addition to the OI literature and the scorecards are very useful even if they are little over-engineered in my opinion.

Also recommended is the earlier work, A Guide to Open Innovation and Crowdsourcing.

Paul Sloane

Brainstorm Method – What’s on TV Tonight?

In this creativity exercise the challenge or issue is defined and then a TV guide is found with tonight’s programs listed. The group is divided into teams of say 4 or 5. Each team is given tonight’s listing from a different popular TV channel. The teams discuss their program lists and identify the key themes and motivations from each show. The challenge is then seen through the eyes of the characters in the TV programs and their responses or solutions are imagined and discussed. Say the challenge is how to attract more visitors to an art gallery and the programs that evening include:

A cartoon comedy series about a dysfunctional family
A game show where lucky contestants can win a fortune
A wildlife program about ant colonies
A crime drama series involving an eccentric detective and his partner.
A talent show for members of the public with a jury of celebrities

The team would first discuss how the characters in the cartoon comedy would tackle such a challenge and drop into the roles and personalities of the different family members in an exaggerated manner. If say the father figure is a macho sports fan then a whole series of extremely masculine and robust ideas to make the art gallery attractive to boys, men and sports fans might be suggested. How about an exhibition of photos of the great sporting moments in the history of the local football team? A little later the team might try to conceive ideas that involve some aspect of gamification, gambling, games of luck or skill etc. Next they might consider the ants and discuss ideas that involve mass community action. And so on.

The purpose is to force people to explore different approaches by getting each team to adopt the exaggerated characteristics of familiar TV shows and personalities from different genres. Not every program works – some will generate good ideas and some will not so it is important to have a good selection. A mix of serious and humorous programs, soaps, dramas and documentaries will help fire different ideas and proposals. This method was originally described in Jump Start your Business Brain by Doug Hall, 2004.

Paul Sloane

Hijack – Innovation and Gamification

Meat Pack is a shoe shop in Guatemala which has created a highly innovative mobile marketing campaign called Hijack which targets competitors stores.  Hijack uses location sensing and gamification to target and motivate customers to switch their purchase to Meat Pack.

Is the Internet an Enemy of Creativity?

George.MartinThe internet is a massive distraction for just about anyone trying to work, but it can prove especially challenging for writers and anyone who needs concentration for a creative process. Author George Martin fights back with a secret weapon. He has two computers: one to browse the internet, get his email and do his taxes, and then his “writing computer”, which is a DOS machine not connected to the internet. He uses Wordstar 4.0 as his word-processing system.

Read the report and see his video interview in the Guardian.

Do you ever disconnect completely in order to do creative work?  Maybe reverting to DOS is a little extreme but I can see the attraction of no distraction.

Paul Sloane

Can we get more Women involved in Innovation?

A rather shocking finding in report by the Kaufmann Foundation is that only 3% of technology start-ups are led by women. There are many theories for this remarkable gender discrepancy. Girls are less likely than boys to study science, technology and computing. Only about 18% of patents are filed in women’s names. It is more difficult for women to get startup funding. But a bigger factor seems to be that men are more likely to be risk takers and women to be risk averse. Whether this difference is due to nature or nurture is open to debate. According to a study by Alison Booth of the Australian national University and Patrick Nolen of the University of Essex teenage girls at girls-only schools were less risk averse than girls at mixed schools. They ascribed this difference to the absence of ‘culturally driven norms and beliefs about modes of female behavior.’ Upbringing and experience seem to encourage girls to play it safe and boys to take risks.

A controversial new book, The Confidence Code, by Katty Kay and Claire Shipman argues that men are naturally more self-confident than women. Women outnumber men in higher education and are well represented at middle management ranks but men are promoted faster and earn more. Kay and Shipman say that the main reason for this is women’s lack of self-confidence. They claim that women are more likely to:
• Carry criticism around for too long
• Stay inside their comfort zones
• Fail to voice their opinions
• Fail to take risks because of fear of failure

Furthermore Shipman says, ‘Testosterone probably gives men more of a natural confidence boost because it increases risk-taking.’ The authors cite various supporting evidence but their views are disputed by those who argue that discrimination is the main culprit.

The four traits listed above all militate against innovation in a corporate or a start-up environment. Innovators are risk-takers who move out of their comfort zones, strongly argue their case and shrug off criticism. So if Kay and Shipman are correct then it looks as if innovation as it is currently set up is a sport designed for men and not women. This might mean that we are excluding a large proportion of the best ideas and best talent from our innovation processes.

What can be done about this? At a national level there are steps in place to encourage more girls to study STEM subjects (Science, Technology and Mathematics). Also we need more women’s business networks and funding sources for women entrepreneurs. At a corporate level maybe we need to change the rules of the game in order to persuade more women to play. Can we make our new product and innovation processes less competitive and more collaborative? Many brainstorm meetings are poorly facilitated and dominated by the biggest egos (usually the alpha males). Radical ideas are subjected to fierce initial criticism so that only the thick-skinned or powerful continue to pursue them. Innovation projects are given to aggressive young cadets who are expected to fight their way through the corporate defences.

We could make our innovation efforts additive rather than competitive. We can use advanced brainstorming techniques that encourage everyone to participate rather than taken over by the noisiest. One such is the Nominal Method. Above all we need more female role models who can talk about the risks they have taken.

Although there are far fewer women-led private technology companies there is some evidence that the ones that exist are more successful. They are more capital-efficient, achieve 35 percent higher return on investment, and, when venture-backed, bring in 12 percent higher revenue than male-owned tech companies. That’s according to new research presented at a recent conference in San Francisco organized by Women 2.0, a media company devoted to women founders in the tech industry.

If we want more and better innovation in our firms and across our economy then we have to face up to the innovation gender divide and find innovative ways to remove it.

Paul Sloane

Seven Common Mistakes in Suggestions Schemes

Employee suggestion schemes can be a powerful engine for new product growth, for cost savings and for improvements in all areas of the company. Your staff can see all sorts of ways that things could be made better for the customer and the company. They have plenty of ideas for process improvements, produce enhancements and thrifty savings. So why not put all that creativity to work? Many companies have highly effective ideas schemes that generate huge savings every year. Toyota get around 2 million suggestions a year from their 300,000 workers and the large majority of ideas are implemented. So why do all companies not do it? Why do so many ideas initiatives fail? Here are the most egregious mistakes that companies make:

1. No Clear Goals.  If you just ask for ideas you will get a lot of “Wouldn’t it be nice to have a summer picnic” type suggestions. You have to clearly articulate would a good idea looks like e.g. it will increase customer satisfaction, reduce process times or save costs. Be specific about what you want and people will respond.

2. Too few Evaluators.  If you under-resource the evaluation side of the process then people have to wait a long time for a response to their suggestion and this kills motivation. One successful company makes every line manager an initial idea evaluator and they have to respond to a new idea they receive within 4 working days.

3. Complicated Approval Processes.  A common mistake is to set up an idea committee which meets once a month and reviews all suggestions. They argue over a few ideas and never get through the backlog. A handful of proposals get sent on to department heads where they wait in an in-tray for weeks. You need a much slicker approach with individual evaluators empowered to make fast decisions – especially on smaller value suggestions.

4. No Commitment from the Executive Team.  The leaders have to show their commitment to the scheme by backing it with resources – money and people. It is important that the best ideas are implemented and their success broadcast across the company. People believe actions not words and they need to see ideas turning into real innovations.

5. Too much Emphasis on ROI and Reward.  Some schemes offer big financial rewards for big ideas but this is not necessary and may be harmful. A long financial examination is made of the idea and the total first year savings are estimated. Eventually some lucky initiator may get a big reward but this can upset the people around him who contributed to the initial idea. Recognition and fast response are better than big reward and slow response. Many companies give a small award to any idea that gets initial approval whether it reaches final implementation or not. The really big successful ideas lead to recognition for the originator with enrollment in the ‘innovators club’ and lunch with the CEO.

6. No Campaigns.  Many schemes start with a fanfare of publicity, a burst of initial ideas and then they lose momentum and energy. The best way to overcome this problem is with a rolling set of campaigns through the year. One month you ask for ideas for recruiting staff. The next you ask for cost savings; the next for ways to delight customers and so on. Each campaign is supported with posters and messages emphasizing the importance of the request for ideas.

7. Trying to Do it Yourself.  There are many great software packages to help with idea collection and evaluation. There are also self-help groups around the world where you can get help and advice from companies large and small, public and private, who are running suggestions scheme. Try IdeasWorldWide.Net

 

An Energy company in the UK received a suggestion from an employee that all the printers should be set to print double sided not single sided. The idea was implemented and saved $400,000 in the first year. A telecoms company received a suggestion that it should auction off its old and redundant stock to staff. It did this with an internal auction that raised $100,000 but it led to savings in storage and insurance costs of over $1m in the next three years.

If you avoid the mistakes listed above and get some help from those who do it well then there is every reason for your suggestions scheme to yield big results for your business.

Paul Sloane

3D Printing – It is the Future

Picture by Mojo

Picture by Mojo

I spoke at an event for an Aerospace company recently and while I was there I saw an exhibition of some of the things they are doing with 3D printers.  They print in different plastics but also in Titanium, Aluminium and Stainless Steel.  They can print very complex designs which would be hard to machine or manufacture.  This is bad news for specialist engineering companies which supply parts or tools as these can now often be done quicker and cheaper by the 3D printer.  These devices can also make lighter components with hollow spaces.  Saving weight is very important in aircraft design.

I asked the engineer, ‘What can 3D printers not make?’  The answer was large items.  But this is just a matter of time.  It is possible to conceive of a huge printer on a gantry which makes the wings and fuselage of an airplane.  In terms of the important innovations in manufacturing the 3D printer might rank right up there with the assembly line, numerically controlled machines and the industrial robot.  It is a disruptive innovation which will produce winners and losers.  Maybe it is time to buy one for your company and start experimenting.

Paul Sloane