Tim Kastelle

Tag: innovation

  • Don’t Be an Innovation Gnome!

    Don’t Be an Innovation Gnome!

    There is often a gap between your aspirations and your actions.

    I was reminded of this at a strategy workshop where I gave a keynote speech last week. At the start of the second day, one of the participants said that the process reminded him of the Underpants Gnomes in South Park. If you haven’t seen it before, here it is (warning: it includes all of the usual South Park crudeness, so skip the video if that bothers you):

     

    Here is the summary. The Underpants Gnomes steal underpants. A lot of them. When the boys ask the Gnomes why, the response is that “Underpants are just phase 1!”

    Here is their complete strategy:

     

    Underpants Gnomes Business Model
    Underpants Gnomes Business Model (Photo credit: John Swords)

    The guy at the workshop was pointing out that their strategy had a similar hole in Phase 2.

    This is surprisingly common.

    This is another version of Nilofer Merchant’s air sandwich:

    An Air Sandwich is a strategy that has clear vision and future direction on the top layer, day-to-day action on the bottom, and virtually nothing in the middle—no meaty key decisions that connect the two layers, no rich chewy filling to align the new direction with new actions within the company.

    Phase 2 is that critical middle step – what do we do to connect our day-to-day actions to our larger goals and objectives?

    This is a problem in innovation as well. The Innovation Gnome approach looks like this:

    If you collect a lot of ideas and expect to end up with innovation, you’re in for an unpleasant surprise.  You need to have the middle step that connects ideas to outcomes.

    This is why it is important to have some kind of outcome in the way that you think about innovation. This disconnect between generating ideas and turning them into innovations is one of the key reasons that firms end up as bewildered innovators – with a high investment in innovation but poor results.

    Of course, I’ve also seen the opposite problem.  The most common place is in pitches from startups.  In this case, they get very hung up on the functionality of whatever it is that they’ve come up with – forgetting to connect their features to outcomes that are important for the customers.  In other words, they have plenty in Phase 2, but nothing in Phase 3.

    The bottom line here is that to innovate successfully, you need to have all three phases worked out.  As Jorge Barba says, you need a purpose for innovating.

    With that in mind, we can then start by defining value. Again, value means different things to different people. And here, is where it gets interesting because we are talking about an organizations value proposition. And, when we talk about innovation, we are talking about a different value proposition than that of what currently exists. This is when change really happens because you are changing the value proposition. Not the technology, not the branding, but everything that supports your value proposition.

    So, coming full circle. What you need to do, is define a set of criteria of how you will define that new value that you will create.

    But that’s not enough.  You also need to figure out what day-to-day activities will support this value creation, and how these activities link up to do so.  Jorge uses the example of Zappos:

    My guess is he thought about how Zappos could create a different kind of value putting customer service at is center, and therefore enriched its value proposition by focusing on delivering exceptional customer service.

    So here, exceptional customer service is Phase 2, and all of the actions that people at Zappos take on a daily basis are the Phase 1 actions that the whole approach is built on.

    When you’re building an innovation capability, experimentation is a critical Phase 2 skill to develop.

    You don’t want to be an Innovation Gnome – with a big gap between your daily activities and value you’re trying to create. To innovate successfully, think about how to address all three phases – that’s the best way to reach your goal.

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  • What is Innovation?

    What is Innovation?

    People often think it’s weird when they hear that I study innovation – even people in very innovative jobs.  The biggest reason for this is mistaking invention for innovation.  If you do this, then studying innovation makes no sense at all – what can you learn about the flash of insight, the stroke of genius, etc.?

    That’s why defining innovation is important – and why nearly everyone in working in the intellectual domain of innovation comes up with their own definition!  Here is the definition that I use:

    Innovation is executing new ideas to create value.

    Here is one way to picture it:

    Thinking of it visually emphasises that all three parts of the definition.  Everyone gets the “new idea” part of it.  But it’s not enough to have a great idea, you also have to execute it.  And even after you’ve done that, you’re not finished.  It’s not innovation if you’re not creating value for people.

    This is the foundation of the Innovation Value Chain idea.  John and I outline the research behind this concept in this paper – but  the main idea is this: if you don’t have all three elements in place, you don’t have innovation.

    At an organisational level, this means that innovation is a process – the process of idea management.

    To be an innovative organisation, you again need to be good at all three parts: generating great ideas, selecting & executing them, and getting them to spread.

    There are three important points about defining innovation to consider:

    1. Your definition needs to work for you.  I’ve given two talks on innovation to scientific groups over the past few days, and one of the guys yesterday said “Oh, you could also think of that as science, engineering and commercialisation.”  In their context, yes you can.  This raises an important point that Jorge Barba made recently – whatever innovation definition you use, you need to own it and it needs to work in your context:

      The end result, is that if you are an employee and you pitch your idea as a “true innovation that challenges the established order”, it might get rejected because it means the company is taking on an untested and unproven idea.

      In other words, if it doesn’t fit with the mental model of your leaders, it won’t get noticed.

      Point: Whether you believe innovation is something new applied, an increment or whatever, the bottom line is your organization needs to come up with collective definition of what innovation means to you. Not your competitors or anyone else.

    2. Getting the idea to spread is often the missing component. The two science organisations that I was talking with both felt that this is where they are weakest. This is a problem because both of them are doing outstanding science – and their ideas needto be adopted more widely.There are a couple of ways to address this. Within an organisation, you need to get people committed to getting their ideas to spread. As Ian Frazer says, “there’s no point curing mice.“The second path is to make sure that your ideas are solving real needs. Braden Kelly pointed out last week that his innovation definition explicitly takes this into account:

      Innovation transforms the useful seeds of invention into solutions valued above every existing alternative.

      That valued about other choices bit is important – you can’t do this if you’re not meeting genuine needs.

    3. Innovation by definition is uncertain. The last point to keep in mind is that for something to really be innovative, you can’t know in advance with certainty that it will work. Matt Edgar pointed me to a quote from Bruno Latour that captures this perfectly:

      …a project is considered innovative if the number of actors is not known from the outset.

      As always with Latour, the quote is both a bit loopy but also insightful. The key issue here for me is the emphasis here on uncertainty – without uncertainty right from the start, you’re not being innovative according to Latour.

    The misunderstandings about innovation that I run into most frequently arise through thinking about innovation as being the same as having ideas. If you view it that way, then there’s nothing for me to study, and nothing for you to manage.

    To be usable, a working definition of innovation must go beyond just having ideas. One way or another it also has to involve actually executing these ideas. And probably most importantly, it must involve creating value. If you don’t create value, then the idea will not spread.

    So that’s why I say that innovation is executing new ideas to create value.

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  • Are eBooks Really Books?

    If I am fortunate enough to get promoted again, I’ll face a choice. My position can either be Associate Professor, or Reader.

    It will still be a while before I have to make that choice, but Reader is a pretty tempting title.

    Why would an academic be called a Reader?

    It comes from the days before the printing press, when books were very rare. In the first universities, the Reader was the person that read the book out loud to the class.

    At the time, the idea of a book was quite different from what it is now. Books were rare, since only a few people were literate, they were mysterious, and the bestowed power to those that could read. They were big and heavy, and when they were read, the were placed on a stand and read out loud.

    At the International Schumpeter Society Conference here in Brisbane last month, David Lane gave a fascinating talk on innovation, and he talked about the point in time when the form and meaning of books changed – in Renaissance Italy. His talk here is very similar to the one he gave us:




    Artifacts and Organization: A Complexity Perspective on Innovation and Social Change
    David Lane

    I thought of his talk recently on a day when I picked up these two items:

    They are both reading devices. The book is the 1932 edition of A Handwriting Manual by Alfred Fairbank. The gadget is a Samsung Galaxy Tab 2.

    Lane tells the story of the invention of the physical object that looks like Fairbank’s book. It happened in Florence, with a new form of book called the Ottavo. This format unleashed an innovation cascade. It was the first form of book to be published in a language other than Latin. It used italic handwriting for the first time, and it was also the first time that punctuation was used.

    Punctuation is important, because it signals the more radical innovations in the cascade. These all came from how the new Ottavos were used. They were no longer read out loud – you could read it yourself. That’s why they needed punctuation.

    This also meant that you could read a book anywhere, not just in a library. And because they were written in Italian, not Latin, many more people could read them.

    All of a sudden, the meaning of the concept “book” changed radically.

    The new format led to new behaviours, which in turn led to a change in the meaning of both the object and the behaviours.

    The innovation cascade continued. With the new meanings and behaviours, new roles quickly followed. Now we had authors, publishers, printers, and booksellers. None of these jobs really existed prior to the Ottavo.

    At the same time, a bunch of jobs became a lot scarcer – like copyist and illuminator.

    Lane distinguishes between two types of innovation. One type makes things better, faster, cheaper. Evolutionary change, in other words. But revolutionary change comes when we innovate the meaning of things.

    So what does this mean when we start to do more of our reading on things like the Tab 2? It’s likely that are ideas of what a book is, how it works and what it does will change again, and probably just as radically as they did with the advent of the Ottavo.

    With highlighting in Kindle, or Findings.com, reading becomes social. This is as radical a shift as the one from reading out loud in a library to reading to yourself wherever you want to was.

    There will be other changes as well. eBooks are also changing what it means to be an author, and a publisher too.

    In some sense, then, eBooks aren’t books – at least they’re not books in the same way that we’ve been thinking about them for the past 500 years or so. Even when the words are identical, a book is a different thing on an e-reader than it is on paper.

    What will the consequences of this be? I don’t know. But there will be significant rewards if you can figure it out, or, better yet, if you can help shape what “book” means when it refers to eBooks.

    If you’re looking to create radical innovations, the best place to start is with meaning – that’s where the real action is. Especially if everyone else is still thinking about better, faster, cheaper.

    As for me, I’m going to take that Fairbanks book and practice my handwriting. It seems like a skill I could use if I ever get promoted to Reader. And blogging will be something different if I can figure out how to do it with a fountain pen…

  • Evolutionary and Revolutionary Innovation

    Guest Post: by Ralph-Christian Ohr


    Triggered by a couple of recent discussions, I’ve been pondering for a while now over the question how evolution relates to revolution when it comes to innovation. In the following, I’ll try to develop my view on this. Let’s define  evolution as continuous and incremental innovations of a firm’s existing business. Whereas revolution can be described as radical and discontinuous leaps to completely novel offerings, opening up new business and growth trajectories. Jeff Stibel writes:

    Evolutionary innovators ask questions based on the limitations of existing solutions; revolutionary innovators ask questions no one else has thought of. This sentiment was eloquently captured by Robert Kennedy when he paraphrased a quote by George Bernard Shaw: “Some people see things as they are and say why? I dream things that never were and say why not.

    I’ve noticed time and again that this issue often leads to either-or positions. It can be argued that evolutionary innovators can be highly successful with limited risk – in large part,  innovation returns come from evolution. Moreover, evolution accounts for the majority of innovation activities in most firms. The problem: evolutionary innovation only optimizes and exploits existing businesses and prolongs their trajectories. Revolutionary innovation, in turn, explores new-to-the-world opportunities and creates new business potential. Both types of innovation require dedicated conditions, capabilities and mindsets in order to thrive. Whereas evolution strongly depends on customer insght capabilites, revolution is mainly fed by visionary foresight. Revolutionary innovation is closely connected with high uncertainty as it addresses a future that doesn’t exist yet, but is going to emerge through the innovation itself. The concept of customer orientation can be considered twofold:

    • Evolutionary innovation focuses on orientation TOWARDS today’s customers
    • Revolutionary innovation focuses on orientation OF tomorrow’s customers

    Basically, firms need both, revolutions and evolutions in order to operate sustainable and profitable on the long term. At some point in time it becomes mandatory for every organization to operate „ambidextrously“. Those organizations are at risk of failing because innovations might be driven in the wrong system. Consequence: the existing business dies, the novel idea dies, or both. Organizational and individual capabilities to integrate opposing innovation systems prove to be increasingly crucial.

    According to Don Norman and Roberto Verganti, the complementary relation of incremental innovation (within a given frame of solutions) and radical innovation (change of frame) can be depicted as hill-climbing paradigm (see figure). They write:

    Although the hill-climbing procedure guarantees continual improvement with eventual termination at the peak of the hill, it has a well-known limit: there is no way to know whether there might be even higher hills in some other part of the design space. Hill-climbing methods get trapped in local maxima. Incremental innovation attempts to reach the highest point on the current hill. Radical innovation seeks the highest hill. (…)

    Without radical innovation, incremental innovation reaches a limit. Without incremental innovation, the potential enabled by radical change is not captured.

    Source: D. Norman, R. Verganti: Incremental and Radical Innovation – Design Research versus Technology and Meaning Change (2012) 

    “Revolutionary ideas rely on evolution to survive”, says Rieva Lesonsky in a great post on that issue. This important interplay also becomes obvious upon considering the innovation adoption cycle, as discussed by Greg Satell. He writes:

    When an early innovation comes to market, there will undoubtedly be a small amount of people who are excited about it. After all, it can do things nothing else has been able to do before. That’s cool and the “cool crowd” gets it immediately. They are enchanted by their new toy and start advocating it to friends. Adoption increases.

    There is, however, a problem. The new product doesn’t work very well, it’s hard to use and it’s expensive as many disruptive innovations tend to be. Many people can’t see the point in shelling out big money to buy a product that confuses them, makes them feel stupid and the final product experience doesn’t seem worth the effort.

    That’s when a change in the basis of competition happens. Success begins to become less a matter of features and functions and depends more on the interaction with the user. In other words, less on engineering (in the classical sense of the word) and more on design.

    The point is: at the outset, radical innovation attracts early adopters due to its novelty. In order to cross the chasm and capture the mass market, the innovation needs to get optimized in terms of customer needs and user experience. That’s accomplished through steady incremental steps, typically leveraging insights gained by employing customer-centered methodologies. Drawing on the model of Norman and Verganti above, launching a revolution is like leaping to a new hill. Eventually succeeding in the marketplace, however, requires climbing up the hill to the peak through evolutionary progress.

    Source: http://www.digitaltonto.com/2011/a-radical-shift-toward-design/

    Another take comes from Jeff Stibel:

    While both types of innovation play a vital role in the developmental ecosystem of technology, industry and business, it is the non-linear or revolutionary innovations that make the most significant advances. These are the ones that make the real difference. The really huge achievements in technology and the world at large are the result of visionary activists who imagine and then build something none of us had previously thought possible. (…)

    Reasonable people can debate whether a particular innovation belongs in the first category or the second. What is not debatable is that while both play a role in the ecology of innovation, it is the truly revolutionary innovations that make all subsequent incremental improvements possible.

    Takeaway

    Sustainable innovation isn’t about either evolution or revolution – it’s about both/and. Organizations are required to develop a “complementary innovation system” by integrating opposing approaches, capabilities and mindsets.

    • Evolution tends to optimize the world as is. Revolution aims at creating the world as it could be.
    • Evolution needs revolution in order to explore further potential to be tapped.
    • Revolution needs evolution in order to survive and thrive.
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