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.

5 Principles of Creativity - Why it Works - Part 4: Cross Domains

This is the next post looking at why the 5 principles of creativity proposed by this blog work as they do. This post examines cross domain thinking.

Of all the creativity techniques, getting use to cross domain thinking can be the most rewarding and can sometimes lead to quick results.  It can also make you look slightly crazy. In short if you are looking to increase your creative output in the shortest time, with the least effort, then cross domain thinking is the best way to do this - as long as you are comfortable coming up with some fairly 'left-field' ideas.

So why is cross-domain thinking so important.

First off is that much of creativity is about the recombination of ideas. There a very few ideas that are truly original. Asking someone to come up with a creative idea that has not been thought of before is an extremely difficult assignment. It's a lot easier, and a lot more productive to look around at ideas in use within other fields.

The second reason that cross domain thinking is so valuable is because chances are, the problem you are trying to deal with has already been solved somewhere else - and solved well. Someone somewhere HAS to get that little irritating problem that you would like to solve right. For example, if you have a quality issue, then look to the airline industry - where they NEED to get quality right. If you have a rapid response issue then look to law enforcement. Again, what may be a valuable need for you is essential for them. Cross domain thinking provides ready access to well understood and mature best-practice solutions.

The third reason is that cross domain thinking (once you get used to it) is a lot easier than delving deeper into one domain. The learning load of continuing to expand knowledge deeper into the crevices of a single discipline is high whereas a large amount of potentially useful concepts and information can be gathered from a different field in a very short period of time.

Finally with cross domain you are more likely to come up with a unique combination that hasn't been tried before. If you want an example of how combining apparently unrelated concepts can be hugely rewarding just think of mixing wizards with boarding school and the success of the Harry Potter franchise.

There appears to be a growing interest in the value that generalists can provide to an organisation and a slight stepping back from super specialists. The benefits of cross-domain thinking may in fact be behind this new found interest in generalists.

5 Principles of Creativity - Why it Works - Part 3: Effort

This is the next post looking at why the 5 principles of creativity work as they do. This post examines the concept of learning the rules before you break them.

What this section of the post is actually talking about is effort.  Achieving a creative breakthrough is almost always the result of a lot of effort. History abounds with examples of creative individuals who put significant time and effort into an area to achieve a breakthrough.

Thomas Edison's workshop, when assigned a problem to solve, would spend considerable time and effort to go out and learn everything that they could about the problem area that they had been assigned before they attempted a solution. The reason that this is effective are:

1. it reduces the chance of simply attempting something that has already been tried before. In the modern world, there is a significant amount of prior history in most fields. For those new to a field or discipline, the chances that they could attempt to repeat something that has already been done are high.
2. unless you know the basic disciplines of a filed you won't know what is appropriate to break. For example if you were looking to innovate in the field of avionics, there is a required safety threshold (as well as regulatory expectations) that you would be required to meet. Ideas that breached these rules would have little value.
3. understanding a discipline ensures that you can best leverage any creative insights. The world is full of highly educated professionals and often the difference between good and great is less than 5%. If you know a field well, you will be able to understand if a creative idea is going to make that difference.

The issue of effort is often under-rated because hindsight makes ideas seem simpler to come up with than they really are. Given the busy nature of modern work environments, getting time for the deep and original thinking required to generate great creative ideas is a big ask.

5 Principles of Creativity - Why it Works - Part 2: Define the Problem

This is a second post in the series that looks at the five principles of creativity to explain why these work. This post examines why failure to properly define and distill an issue is more problematic in large organizations.

Large organizations may struggle to be creative because the 'problem' is often couched in terms that make it difficult for employees to come up with creative solutions for. There is a disconnection between what the organization wants and how the employees can contribute.  For example asking individual employees to find creative solutions to 'increase shareholder value' is a poor problem statement - even though it may be a key outcome managers are trying to achieve. There are a number of reasons for this, as follows.

Firstly this type of problem statement is too open. This makes it difficult for employees to work out where to start. If it is unclear what the problem is, it increases the risk that the creative ideas miss the mark. In short it may be difficult for employees to find ways to directly connect what they do to this high level outcome.

Even if people can draw a connection between what they do and shareholder value, in most large organizations, individual employees may view that their individual actions only have a minor effect on shareholder value. Employees may struggle to see the point in being creative as the difference they make on the top line measure is small. It takes a lot of mental energy to be creative so there needs to be a meaningful reason for people to want to expend that energy.


The solution to this belongs with the manager. One of the roles of managers in a creative organisation (or any organization) is to bridge the gap between corporate strategy (the 'increasing shareholder value') statement and the work that individual employees do. For example in a service industry the managers may be better setting a specific objective of finding ways for customers to report that they feel more valued. Having customers report that they feel valued will add to shareholder value but is also specific enough for employees to work with. More importantly, it is something that they feel they can control and may be worthwhile putting the effort into.

In short managers need to be able to clearly direct the issues that they want employees to put their creative effort into.

5 Principles of Creativity - Why it Works - Part 1: Define the Problem

The post 5 principles of creativity outlines a number of principles to be creative. This is the first in a series of posts that attempt to explain why these principles work to encourage creativity.

The first principle is to "define and distill the problem".

The reasons that defining and distilling a problem is so important for creativity is because of the underlying social nature to creativity. People are natural problem solvers. The problem for managers is that they will mostly focus on the problem that provides the greatest reward.The signals that an organization can send an employee may overwhelm what a manager wants the employees to focus on. As an example, organizations that continually load work onto employees will find that they have employees who are very creative at managing work volumes but have no creativity effort put into the quality of the service that they provide. Tightly defining a problem re-sets employees views of what is being asked of them.

Also, many employees who are perfectly creative when pursuing hobbies in their personal life may not be creative at work. Again, this is due to social factors - specifically the emotional risk (of ridicule) that people subject themselves to when they put forward creative ideas. Having a well defined and distilled problem reduces this risk as the ideas will be tightly focused and likely to be seen as off-the-wall or frivolous.It creates a 'safer' environment for people to put forward ideas.


The article above also explains that failure to define and distill an issue explains why brainstorming often fails - they are simply to unfocused. This is backed up by studies which, when examining the effectiveness of brainstorming have come to the conclusion that better results are obtained by asking people to come up with ideas individually (the exception to this is electronically facilitated brainstorming). 

The next post will look at why failure to define and distill a problem is particularly an issue for large organizations.