BQF Innovation

Here is a marvellous little video clip that I got from Frank Calberg.  See what you think.

Paul Sloane

There is an interesting report on leadership and innovation on the McKinsey site.

Based on a recent survey they say that most senior executives are dissatisfied with their  ability to stimulate innovation.  They recommend a that a disciplined focus on three people-management fundamentals may produce the building blocks of an innovative organization.  A first step is to formally integrate innovation into the strategic-management agenda of senior leaders to an extent that few companies have done so far. In this way, innovation can be not only encouraged but also managed, tracked, and measured as a core element in a company’s growth aspirations.  Second, executives can make better use of existing (and often untapped) talent for innovation, without implementing disruptive change programs, by creating the conditions that allow dynamic innovation networks to emerge and flourish.  Finally, they can take explicit steps to foster an innovation culture based on trust among employees.  In such a culture, people understand that their ideas are valued, trust that it is safe to express those ideas, and oversee risk collectively, together with their managers.  Such an environment can be more effective than monetary incentives in sustaining innovation. 

The sample of 600 managers and professionals indicated that the top two motivators of behavior to promote innovation are strong leaders who encourage and protect it and top executives who spend their time actively managing and driving it.  Indeed, senior executives believe that paying lip service to innovation but doing nothing about it is the most common way they inhibit it.  The report says leaders should:

1. Define the kind of innovation that drives growth and helps meet strategic objectives.

   
2. Add innovation to the formal agenda at regular leadership meetings.

3. Set performance metrics and targets for innovation.

4.  Build innovation netwworks

5.  Develop a culture of trust

Paul Sloane

If you are looking for product or process innovations then you could take inspiration from the middle row of your computer keyboard. The letters A S D represent add, subtract and differentiate.  What can you add to your product, what can you take away and how can you differentiate? 

Let’s look at how Ryanair used this approach to take on the established airlines.Michael O’Leary, the founder of Ryanair looked at the whole business process of passenger flights and built a new model.  He started by subtracting all the frills that meant extra cost.  He subtracted:

 Travel agents – you book direct over the Internet so the middlemen and their costs are cut out.

 Tickets – you show your passport and quote your reference number.  Subtracting tickets saves costs.

 Allocated seating – you choose a seat when you get on the plane – just like on a train or bus.

 Free drinks and snacks.  If you want a drink you have to buy it.

Customer care – Ryanair has one-tenth the number of customer care attendants per passenger mile compared to BA.  If you have a complaint the answer is generally – ‘hard luck but what did you expect with such a cheap flight?’

Then O’Leary added some new ideas with the aiming of supplementing revenues:

·        Advertising on the outside of aeroplanes

·        Ancillary deals with hotels, car hire and bus companies whose tickets are sold on Ryanair flights

Finally Ryanair differentiated its approach with:

·        Smaller regional airports who offered low prices to get the traffic volume that Ryanair could bring.

·        Cheap in-house marketing featuring controversial advertising (one ad featured the pope) and outrageous PR stunts.

·        Buying aircraft cheaply – by choosing times such as just after 9/11 when demand and prices were very low.

What can you take away from your current business process in order to save cost and simplify operations?  Can you unbundle your product into separate components?  Can you strip out costs or processes that not all customers want?   Can you bypass a middleman on the route to your customer – as Direct Line, Amazon and Ryanair did?  Egg and First Direct offered on-line banking and made it cost effective by cutting out all the branches that burden the traditional banks

What can you add to increase the value and attractiveness of your proposition?  Is there an equivalent to a little bag of salt added to a packet of crisps that would make your product more tasty for consumers?  Linda Brava is the Finnish classical violinist who appeared on Baywatch and in Playboy.  By adding glamour to violin virtuosity she has created a unique brand.

What can you do to differentiate your approach?  If you are competing with strong well-established market leaders then a me too approach will not get you far.  Coca-Cola and Pepsi dominate the soft drinks market.  When Virgin competed head on with Virgin Cola they struggled.  The successful new entrants have used lateral approaches and differentiated themselves – Snapple with fruit drinks, Tango with black cans and in your face advertising and Red Bull with a stimulant mixer.

Sometimes you can combine all three techniques – Mercedes added Swatch designers to create the most differentiated and unusual town vehicle – the Smart car.  They subtracted something that had previously been considered non-negotiable - half the length of an average car.  Anita Roddick made the Body Shop a great success by cutting out the expensive packaging on traditional toiletries and using plain plastic bottles – she added a new appeal based on an environmentally friendly approach.

Nest time you are faced with the challenge of how to refresh your product offering think mathematics.  The way to multiply your sales is by addition, subtraction and differentiation.

Paul Sloane

The next meeting of the BQF Innovation Unit will be on the morning Feb 5th in London.  It is kindly hosted by Royal Mail at their offices on Old Street in EC1.  We will discuss innovation in services and processes.  Robin Mar of Royal Mail will present on their experiences.  There will also be a workshop session on Transformers, a powerful technique to generate innovative ideas for service and process improvement.  There is no charge but places are limited so please book early to avoid disappointment.

See you there.

Paul Sloane