BQF Innovation

It is that time of year when we wipe the slate clean and set ourselves new resolutions and goals.  I expect that like me you have some personal resolutions.  Have you turned them into targets that are measurable and given yourself dates by when you want them done?  Whether it is losing weight, getting fit, saving for your pension, writing a book or learning a language you need to turn vague resolutions into hard metrics.

When it comes innovation the same approach applies.  It is no good just planning to be more innovative - either for yourself or your organisation.  You need to set targets.  Here are some typical corporate style goals:

1. Implement a new idea generation and evaluation scheme by 15 April 2008.
2. Run creativity and innovation workshops for 50 staff in the first quarter.
3. Have everyone allocate at least one day per month to innovation initiaitives.
4. Select 10 promising ideas each month for trial.
5. Implement 10 new products and 6 new services this year with at least 60% success rate.
6. Improve the ROI on our innovation projects by 30%.
7. Reduce the time from evaluation to implementation for new products to under 5 months on average.
8. Over 30% of this year’s innovations to have started outside the organisation.

Choose a small number of targets that suit your environment and then articulate them clearly.  Get buy-in from senior executives.  Translate the targets into objectives for individuals.  Measure progress.  Reward and celebrate success.

Let me know what targets you set and how you get on.  I will be happy to advise and to join in the celebrations!

Have a great and innovative year in 2008! 

Paul Sloane

In

In this article in Businessweek, Jeananne Rae analyses what makes leaders in service innovation successful.  Her consultancy carried out detailed studies of 12 leading US service companies to see what common patterns emerged.  There is a detailed report.

‘Key findings of the report included the Internet emerging as an important distribution channel in almost every case. The services era has ushered in service availability whenever and wherever you like. Although the majority of these companies were not dot-coms per se, investments in cultivating online business were the norm for this group of innovators.

In a larger context, information technology has become the new factory for service businesses in that automation helps to “productize” (i.e., make more repeatable) innovative concepts. IT also helps scale services. We saw relatively small investments in the development of IT engines beget enormous returns because of the potential to add new customers and transactions globally at very low cost.

One other key finding is a pattern in which the customer replaces the direct competitor as the dominant reference point for strategy and innovation. There are three underlying reasons for this shift.

First, competition is coming from new and unexpected sources, so disruption from someplace—and not necessarily a place you’d expect—is a given.

Second, customers are more sophisticated and demanding than ever before. Expectations are regularly informed by outside benchmarks such as how fast you can order tickets online or how easy your iPod is to use, not necessarily accepted industry standards. (For example, as financial-services firms have introduced Web services, they’ve realized their customers demand a level of service set by Amazon (AMZN) and Google (GOOG)—not by their industry peers.)

Finally, the proliferation of systems allows for information-driven business models that can provide a user with much more control, and control is a big deal these days given our hectic lifestyles. For the businesses we studied, the main source of insight in developing control points was referencing the needs of end users, not the competition’s offer. ‘

Paul Sloane

It is increasingly fashionable for large businesses to put significant resources into Corporate Social Responsibility programs. They dedicate staff and money to worthwhile causes.  They tell stakeholders and applicants how responsible and caring they are as they boast about their worthy projects.

Maybe businesses should focus on what they are good at and stay out of dabbling in worthy causes.  Why? Well quite simply, if an oil company does an excellent job at extracting, refining and delivering oil products then it will fulfill its obligations to society. It will employ many people - who all pay taxes. It will give business to many suppliers. It will pay corporation tax. It will boost the economy and fund the taxes and social programs of the elected government.

We would not expect a school, a hospital or a police force to put their scarce resources into CSR programs. They should focus on educating pupils, helping the sick or catching criminals. So why do we expect banks and pharmaceutical companies to divert resources into ‘good causes’? Shouldn’t they leave that to the organizations dedicated to those causes?

Of course businesses should act ethically. They should treat their customers, their employees and their suppliers well. They should take care with the environment they affect. This is all good business practice that helps corporate improve the performance. Consider this.  A bank spends £10m on buildng a nature reserve in its CSR program.  If that £10m went into profit instead then it would pay an extra £3m in tax - which would pay for more teachers, nurses and policemen. It would pay say an extra £3m in dividends - which would be better for shareholders and pension funds paying pensions. It would retain say an extra £4m for investment in research or innovation or to strengthen the reserves. Where does the £10m serve society better?

Is CSR a worthwhile focus for corporate time and effort or is it a palliative, a smokescreen or a PR exercise?  Perhaps businesses should do well what they do well and leave doing good to the proper agencies. Paul Sloane