BQF Innovation

We can broadly simplify innovations into two kinds – incremental and radical.  Incremental innovations are improvements to current products, methods, processes, services, partnerships and so on.  Customer complaints and suggestions are a good source of ideas for incremental improvements.  So are the people who work in the organisation.  If you ask customers how your product could be better or if you ask employees how their job could made easier they will come up with plenty of proposals.  Most organisations are good at incremental innovation – they make things better.  However, very few organisations are good at radical innovations.  As Gary Hamel puts it – businesses are good at getting better but poor at getting different.  Indeed Clayton Christenson in his book, The Innovator’s Dilemma, argues that it is very difficult for successful organisations to develop disruptive innovations that would threaten the basis of their success.  Often they are put out of business when some smaller company develops a radically new technology.  Which employee working in a booming telecoms company in the 1990s would have suggested that free voice over internet telephony would be something they should develop?  It took a start-up, Skype, to make a success of this radical idea.

How can you encourage your people to countenance drastic innovations?  One way is to run creativity sessions where the objective is to conceive them.  Ask the question, ‘Who killed our business?’  Get small teams to imagine entirely new business models that could deliver the benefits that your customers want.  Each team has to present a scenario of a force so powerful that it could completely replace you.  Starting with a blank piece of paper and none of the encumbrances that limit your organisation they design a super competitor.  They are encouraged to go to extremes and to think completely outside the current model.  The exercise is stimulating and can be very revealing.

Most organisations have natural defence mechanisms against disruptive or threatening ideas.  People immediately find reasons why they should not be considered.  It is difficult to change the culture to one where such ideas are not only heard but are actively encouraged and developed.  The ’Who killed our business?’ exercise is a good way to start.

Paul Sloane

The next meeting of the BQF Innovation special interest group will take place in Westminster on the morning of Wednesday July 30th.  The topic is competency traps and the main presentation will be given by Richard Granger, Senior Associate at Arthur D Little.  What are competency traps?  They concern the aspects of a company’s skills, experiences, competencies and successes which inhibit innovation.  In this session we will learn how to spot the traps and how to avoid them.  There will be an interactive element where delegates review the potential competency traps in their organisations.

You can see details of the event and book your place here:

http://bqf.org.uk/cgi-bin/eventdetail.cgi?Event_Code=728&ID=1688

Please book early as places are limited.  Members, guests and non-members are all welcome.

Paul Sloane

Last week I ran a session for GBPA corporate members where we discussed innovation metrics.  We reviewed the Boston Consulting Group 2007 research on the subject and the results of my innovation metrics web survey.  It was agreed that most organisations find it difficult to measure innovation in any satisfactory way.  The most common measurements are backward looking - e.g. % of revenue from products released in the last two years.  The BCG report recommends that you select a small number of metrics appropriate for your business and have some for inputs, process and outputs.  At the meeting we discussed which were the best metrics to use and here are some of our choices:

Input metrics:

• Number of ideas generated
• Resources allocated to innovation - people and budget

Process Metrics

• Average time from idea approval to implementation
• Number of ideas approved and number implemented
• Stage-gate pass rates
• Value of the innovation pipeline

Output metrics

• Number of new products or services launched
• Revenue from new products or services
• ROI on innovation spend
• Market Perception
• Number of new customers

We also found it useful to draw flow-chart diagrams of the innovation approval and pipeline processes and ask some searching questions about this.  Are we getting enough ideas coming in?  Is it taking too long for good ideas to be implemented?  Are we getting enough innovations out of the process?  Are our approval processes too complicated or too difficult?

It was agreed that everyone should have targets or objectives for innovation.  In collaborative ventures it is particularly important to agree goals, expectations and metrics for innovation at the outset.

There are no perfect measurements for innovation.  All the metrics are limited in value.  But that does not mean that you should not use them.  By choosing and applying a small number of metrics appropriate for your business you can add innovation to your balanced scorecard and give it the high level attention that it needs if you are to succeed.

Paul Sloane

We know that innovation involves taking risks.  Yet it often seems that the safe option is to turn down the risk.  However, turning down a risk is also a risk - the risk of losing an opportunity.  Just to remind us of how big that risk is we have here a list of some of the worst decisions in business history.

They include Decca Records turning down the Beatles, Western Union rejecting the telephone, Mars confectionery missing out on ET, Henry Ford refusing to change the Model T and Digital Research missing the opportunity to provide the operating system for the IBM PC.  It is very easy for us with hindsight to scoff at the business leaders who made these decisions but  I am sure that the choices seemed rational at the time. 

Of course most bands are not the Beatles and many have to be rejected.  But it is easy to become too critical too soon.  How many of the ideas and proposals that we have rejected were missed opportunities?  When we look at the costs of a risky venture we need to factor in the cost of missing the opportunity too. 

Paul Sloane

We had a successful meeting of the BQF Innovation Unit today in London where the topic was Knowledge Management for Innovation. Professor Michael Kelleher gave a comprehensive explanation of KM. Some of the points he made were:

• The cost of ignorance is high. NASA and the British Nuclear Industry both lost important early knowledge.
• You should align your KPIs to achieve innovation through KM
• Corporate Yellow Pages allow you to find key skills and experiences
• Employees need to be motivated to share expertise so put it into objectives and appraisals
• ‘After-action reviews’ and ‘lessons learnt’ need to be captured
• Organisational story telling is a key part of KM
• To help with innovation we need a searchable corporate memory of past failures as well as successes

Martin Fowkes, who is responsible for KM at Taylor Woodrow then covered what they are doing in this field. When it comes to innovation the Taylor Woodrow motto is - Think, Prove, Do. (Many other companies operate - Think, Analyse, Reject.) They promote innovation through physical innovation notice boards and an innovation buddy system. Before they bid on a new tender they search their knowledge base to look for relevant experiences. They then run workshops to generate innovative approaches.

There was a discussion on related topics. Many participants use Microsoft’s Sharepoint for KM. Blogs and wikis are increasingly important tools.

If you are a member of BQF then Pat Myles can supply copies of the Powerpoint presentations from the day.

Next Meeting will be on July 30th in London with the topic - Competency Traps - presented by Arthur D Little. More details will follow.

Paul Sloane

The UK Department for Innovation, Universities and Skills (DIUS) has recently issued a White Paper on how the government plans to help the UK ‘excel at all types of innovation.’

You can download the press release, the executive summary or the full report (all 98 pages).  The role of the Department is ‘to champion innovation across the board, working with partners across and outside government.’  The Secretary of State, John Denham, has made a number of commitments and proposals in the White Paper.  These include:

• Supporting businesses in tapping into the demands of new markets in the UK by bringing forward five new ‘innovation platforms’ to co-ordinate Government support and funding.
• A new initiative to provide at least 1,000 ‘innovation vouchers’ every year by 2011, helping support and fund small and medium-sized businesses to work with a university, further education college or research organisation of their choice to develop a new product or service;
• Doubling the number of Knowledge Transfer Partnerships between businesses, universities and colleges.
• Piloting of a new Specialisation and Innovation Fund to boost the capacity of further education colleges to unlock workforce talent and to support businesses in raising innovation potential;
• Expanding the network of National Skills Academies with one academy for every major sector of the economy.
• Piloting a new Innovation Index in 2009 to measure UK innovation managed by the National Endowment for Science, Technology and the Arts (NESTA).
• Sponsoring new Partnerships for Innovation bringing together venture capital with universities, business and other local partners to jointly develop innovative solutions.
• Establishing an Innovation Research Centre in partnership with the Economic and Social Research Council (ESRC), NESTA and the TSB.
• Boosting the ability of small firms to exploit their intellectual property by training Business Link advisors in IP management by the summer of 2009.
• A new Annual Innovation Review to provide a comprehensive annual assessment of promoting innovation in the public and private sectors. The first of these will be published this autumn.

I met a member of the DIUS who told me that they are looking for feedback on these ideas so please take a look at them in detail and add your comments here or directly to the Department.  I will comment on some of the plans in due course.

Paul Sloane