Managing Innovation - Innovation Strategy: Part 3

The components of an innovation strategy can include the following:

Goals: These are the general outcomes that the company is trying to achieve. These can represent the mission or vision statements that define what the company stands for and what it is trying to achieve. These need to be simple and clear so that staff within the company can understand the direction that the firm is trying to take so they can align their efforts to this.

Arena: This defines the general parameters of the environment in which the company intends to compete. The purpose of this section is to define the scope of the strategy. The arena covers a number of areas and should not simply be viewed as defining a market in which to compete. Other aspects that need to be considered is the technology and product positioning relative to competitors (e.g. low cost or high differential). The arena needs to be broad enough to ensure that there is sufficient space to grow but narrow enough to ensure effort is not dissipated too broadly. 

Mechanism:The mechanism defines how the company will approach innovation relative to competitoors in the market. The standard mechanisms (made famous by Miles & Snow) can include:

• Propector: These firms aim to become the first mover with new products and services and attempt to use first in the market as a means to secure an advantageous position in the market. 
• Analyzer: These are also known as the fast followers. They don't attempt to be first to market but instead attempt to follow quickly when trends are identified. They take the approach second but better and can capitalize on the mistakes of the prospectors.
• Defender: These can include companies which already have a sizable market share and are aiming to retain a stable niche in the market. Generally these companies look to grow through innovations in efficiency rather than new products.

Platform: Many innovations may be built on a platform. An example of this is Boeing's airframes that can be used for everything from carry presidents to carrying mail. There are very few companies don't utilize some form of common basis for their competition. Boeing is an extreme example, but consulting firms rely on the expertise of their staff, telcos generally build their business around their networks and investment in switching infrastructure. A platform centric approach builds a solid foundation product or service to which new developments can be added quickly. This has the bonus of low cost, high speed development as well as leveraging any branding value with the basic platform. The disadvantage is that a strong platform can be restricting or dangerous if the platform looks like it will be succeeded by new technology.

Collectively these elements give the firm a good understanding of where it will compete, how it will compete, and what will form the basic reusable components within their innovation strategy.

Managing Innovation - Innovation Strategy: Part 2

This post outlines the two key purposes of an innovation strategy.

The first of these is to connect the high level company strategy (x% of revenue from products less than y years old) to the decision criteria required to manage a portfolio of projects developing new products. The important thing to understand is that a good strategy requires a portfolio approach. At the most basic level, the process of managing product development is to a large degree a process of managing risk. Product development has a lot in common with investing. Diversification is the key and high return often comes with high risk.

The second key purpose of an innovation strategy is to focus effort. Companies have limited resources and therefore need to select what that expend effort on. Also, the innovation strategy helps to focus effort but creating a sense of direction for those people within the company charged with implementing the strategy.

The next post will explain the components that an Innovation Strategy may cover.

Research: strategies for increasing the creativity of employees in large organizations

This is my research report completed in the last half of 2012. The topic is strategies for increasing the creativity of employees in large organizations.

The short version is there are a lot of factors that influence creativity but if you want some shortcuts then (1) focus on creating positivity, and (2) understand that creativity is more of a social phenomenon and therefore focus on building a social environment that is supportive of creativity.

Also, here are the slides that were used for the verbal presentation though admittedly they could use some notes.

Managing Innovation - Innovation Strategy: Part 1

There are three main ways that organizations grow, these are acquisition, organic growth, and innovation.

Acquisition is the process of buying sources of revenue, in most cases sources of revenue are customers but sometimes acquisition includes capability that the acquiring organisation doesn't have.Effectively this method of growth is the same as investing in the share market - spend money on a going concern to make money.

Organic growth is perhaps the most common method for growing a company. Organic growth is where a company attempts to increase the number of customers who purchase that companies existing goods or services.

Innovation is the third method of growing. This is where the company produces new goods and services and makes these available to the market. One view of innovation is that changes and modifications to existing products and services is also growth through innovation. Basically where an organization is providing a good or service that is not previously available, then this can be perceived as innovative growth. This means that the line between organic growth and innovation can be a grey area. For example, for some a price change can be viewed as a product change while for others this would be seen as organic growth. Your strategy really needs to be clear about what constitutes innovation.

There are various views on how to measure innovation but at a strategic level, this becomes very simple. View the three methods of growing revenue as bars in a graph. A innovation strategy is be interested in how high the innovation bar is in proportion to the remaining methods of growing revenue. In short what is of interest to an innovation strategy is the percentage of new revenue that comes from new products and services.This is the starting point for an innovation strategy as it determines how much (or little) effort is put into innovation.

The detail of the strategy will be interested in what constitutes those new products and services. The next section will cover some of the details that an innovation strategy should include.

Doing two things at once

I have the challenge of wanting to do two things with one block of time. Firstly I want to keep this Blog up to date and secondly, I want to draft up a training module about creativity and innovation in organisations. In the spirit of wanting to have my cake and eat it too, I will draft the training post by post into this blog.

There will be a couple of posts that sort through the rough outline, then I will populate the topcis themselves.

Today's view of the outline is:

1. Definition of and difference between creativity and innovation
2. Potentially the potted history of creativity research
3. Basic outline individual views of creativity (include in other box thinking)
4. Basic outline of organisational models of creativity
5. Factors that encourage or inhibit creativity as individuals
6. The special role of motivation
7. The role of progress in meaningful work
8. Factors that encourage or inhibit creativity within social settings (organisations)
9. The role of leaders
10. How to promote creative ideas within teams

I will need to include a couple of exercises, which will need to be placed somewhere

1. An exercise that demonstrates how a heirarchy screens out creativy ideas
2. An exercise to pull apart a creative innovation so people can see how innovations are made up if upstream pieces of innovation
3. An exercise in divergent thinking? Followed up by a focus on a creative problem.

5 Principles of Creativity - Why it Works - Part 6: Keep at it

This is the next post looking at why the 5 principles of creativity work put forward but this blog as they do. This post examines the concept of 'keep at it', more commonly known as persistence. Edison himself said that success is "90% perspiration 10% inspiration".

Creative ideas being new have a high chance of failure or at least partial success. Persistence is the attribute that allows people to continue to apply creative thinking to overcome these initial obstacles. There are very few creative ideas that have becomes successful without some form of modification. Persistence is the factor that has allowed these ideas to overcome these initial hurdles and become the major break throughs that they are.

5 Principles of Creativity - Why it Works - Part 5: Hedging Bets

This is the next post looking at why the 5 principles of creativity work as they do. This post examines hedging your bets.

What this is trying to say in the nicest possible teams is expect failure. What we tend to regard as the result of creative efforts is major innovations and changes, What we don't notice is those innovations that didn't quite have the same impact or those that failed. We may also fail to notice that what seems like one big change is actually the result of a series of small changes.

When being creative you need to expect that not all ideas will pan out. This is the major concept behind portfolio management in the field of new product development. Mix a number of low risk low return projects along with higher risk, higher return projects. Overall the portfolio should balance out and you have the possibility of some major payoff if some of the high risk projects are successful. The alternative (when trying to minimize risk) is a string of projects that are low risk but also now return and that lead to very little change.

For leaders and decision makers in organisations, this has to be the key lesson. Find a way to hedge bets so that you can take the odd risk on a creative idea. The alternative is at best a stable of creative ideas but no innovation or change as a result.