The Innovation Blog

I've just returned from an incredibly stimulating four days with one of the worlds premier packaged goods companies.  As with many of our clients, their ultimate objective is to transform their innovation efforts and culture in ways that will dramatically enhance their ability to stimulate growth.

As we are finding time and again, one of the critical stumbling blocks to innovation is the lack of a common language regarding innovation -- basic terms that are shared by all within the enterprise to discuss what they are working on, how to classify it, and therefore how to make resource decisions between options.

In our experience, and again in this session, it has been proven that an enterprise needs at least five basic definitions in order to succeed.  These five definitions must form the common language for discussion of innovation, goal setting and decision-making.  The five key definitions are:

1. Innovation what is it?  Is it new products and services, or is it more.  Do we expect innovation in core processes? business models? go-to-market strategies? etc.  
2. Incremental (or sustaining, or core) innovation.  The base level.  How do we define the minimum ante?  And therefore, what do we expect from riskier, larger opportunity efforts?
3. Breakthrough Innovation.  Larger opportunities that will significantly grow our business or our franchise with the customer?  Efforts in this area require different approaches, different decision tools, and normally, different resources.
4. Transformational innovation.  How do we differentiate the really huge, long-term types of innovation that truly transform not only our business, but the world?
5. Platforms.  Because platforms are often part of the differences in definitions, we need to understand what we mean by a platform.

One of the great things about being an innovation consultant, working with Fortune 500 firms is that I get a chance to participate in conversations and debates over things like this with a wide variety of smart and experienced people.  So I always learn something new.  That was the case again last week.  The experience has helped me to add clarity to my thinking about innovation terms, and hopefully to help others by sharing some of that learning.

The key to innovation definitions is not what others in the world say or think.  It is about creating a language that works for the unique organization in which you are operating.  It's not enough to create these definitions, they must be recorded, leadership must be aligned around them, and they must be communicated.  Most importantly they must be useful distinctions that fit your unique needs.  So here is my latest thinking based on these conversations:

1. Innovation

Business Innovation is the process of envisioning and successfully implementing new ways of doing anything that creates value for an enterprise and its stakeholders.

There are several keys in this definition that I hope will be useful to you.  First of all, it involves strategy and creativity ("envisioning" requires both).  Second, it is not innovation until it is successfully implemented.  Until then, it's just creative thinking or a nice idea.  Third, it must create value for someone important to the enterprise (stakeholders can be the enterprise itself, its employees, shareholders, customers, consumers, etc.).  Finally, it is a process.  There are five phases or steps in business innovation (discussed in separate blogs -Our Process >).

The next three definitions are critical to resourcing, decision-making, and creating portfolios of innovation.  To be useful, they must be:

1. Simple and easy to understand
2. Clearly distinguish one level from another
3. Useful (test them out with your own people using some list of your own projects or examples from the marketplace.  Refine them until they actually help distinguish differences)
4. Shared broadly within your organization

2. Incremental Innovation

Not all innovation achieves the same goals for an enterprise.  And unless everyone understands that there are different levels and that different levels require different resources and approaches, the enterprise will find itself "innovating" but not growing at rates it desires.  Incremental, sometimes called "sustaining" or "core" is the base level.

My recent experience helped me clarify, and simplify my own definition:  

Innovations that keep your existing offering competitive.

• Sustains (or minimally enhances) market share
• Targets primarily existing customers of your business or the category
• Extends current platforms
• Usually addresses needs the market can currently articulate

3. Breakthrough Innovation

• Creates new market share
• Targets new customers or new usage occasions
• Leads the market with needs that are clearly emerging, but may not yet be articulated by the target
• Creates a new platform (this is less part of the definition than a key criteria for most business innovation.  Breakthrough is risky and resource intensive.  To be worthwhile, it should have fertility and long-term usefulness)

4. Transformational Innovation

The third level.  Some innovation is generally recognized as "paradigm shifting".  New products, services or ways of doing things, that once the market recognizes, they will never go back to the old way of doing things.  They transform the world, our behaviors and create new purchase habits.  Electric light bulbs, automobiles, etc.  Because transformational are easier to recognize after the fact, it is difficult to plan for or to pursue them.  However, it is useful to recognize them in the conversation.

• Creates a new market
• Creates new spending
• Creates a new industry or category

Most strategies will lean toward a break between expectations for incremental and those of breakthrough or transformational.

5. Platform

At its basic level, platform thinking seeks to leverage some investment over time and multiple revenue streams.  That investment may be technological, channel, manufacturing process or equipment, markets or brand equity.  There are many examples.  The point is, to be attractive, higher risk, more expensive efforts require leverage -- in terms of longevity and/or revenue streams.  This will frequently help distinguish between incremental and breakthrough, because incremental generally leverage some existing investment (platform), whereas breakthrough generally require some new investment (platform).

A family of related offers that leverage an initial investment, technology or assets across an envisioned roadmap of revenue streams.

They must:

• Be BIG -- whatever is big for you in terms of revenue.
• Leverage a clear asset or investment
• Be Fertile -- you must be able to envision a developmental roadmap that unfolds over time, creating multiple families of incremental derivatives
• Have long-term viability
• Further the Vision and Strategy of enterprise

There are many more definitions that are useful, and many variations on these themes out in the world.  The key is to adopt or create those that best work for you, then align all your stakeholders around them and communicate them to everyone who participates in innovation.

At Creative Realities, we call ourselves "the innovation management collaborative."  We do that as a result of  some brand equity research we commissioned about a year ago to find out what value our past and current clients found in us versus the competition.  We were in the midst of creating a new "Brand Expression" for ourselves with a cool company called blackcoffee.

The world of innovation has become extremely crowded since we opened our doors 20 years ago.  From single practitioners who focus on facilitating a meeting or session, to large global consulting firms who have taken interest in this space and believe their model translates here.  Many of our clients have experience with a wide range of innovation consulting resources.  So we wanted to know why they continued to come back to us, some for our entire 20 years of business life.  What is our unique value proposition?

Innovation, Management, Collaborative

Those three words defined our unique value proposition.  This morning, the "collaborative" part is on my mind so I'd like to share some thinking with you.  Innovation is nothing without collaboration.  It is the extremely rare situation where one person has all that's needed to identify an opportunity, conceive the solution, and successfully implement it without help.  Some entrepreneurial situations come close, but everyone needs help.  In large organizations, collaboration is absolutely essential.  It begins with an internal collaboration.  A team of people with diverse expertise, points of view and who impact and can tap into the organization in different ways and different places.

The M.A.S.H. Mentality

It's about how you organize your group into a team and then how you work and think together.  Here's some tips for creating an innovation team:

Diversity isn't just an Human Resources term.  A powerful team will have a range of diverse perspectives.  We all come from different backgrounds, which create different contexts through which we hear and filter information.  A key ingredient for innovation:

• Diversity of function/expertise.  The ideal small New Product or New Business team has at least one technologist, one marketer and one business manager.   Why these three?  In most situations the new solution will be addressing an unmet or unexpressed need (the marketer), with some form of technical solution (the technologist), in a way that creates a successful business (the business manager).  If technology is not as critical, then it may be operations or some other relevant expertise that occupies that seat.  The point is that your core team should have necessary and relevant expertise and be able to tap into others within the organization of similar bent.  Networking influence is critical.
• Naivete.  I can't begin to tell you how often the breakthrough for innovation comes from the person who doesn't know why they are involved, because they "don't know anything about this."  But the so-called experts are too often bogged down by all the things they tried and failed at previously, or too caught up in what they think the idea is to see a somewhat different, very elegant solution.  (Quick story:  In a session with all double and triple PhD's from places like Sandia Labs, Bell Labs, etc.  we once brought in a 70+ year-old Grandmother.  When the client asked "Why?" we said "Don't know."  In one day, 25 patent applications were completed.  The client credited 20 as being driven by insights from the "Grandmother.")
• Demographic diversity.  Yes, the HR aspect is at play here too.  Age, race, gender are all important.  We find this to be true everyday.  I'm a Boomer, I see things through the eyes and the historical experience of a Boomer.  It amazes me how differently my Generation X or Y colleagues see things and the very different types of connections they make.
• Diversity of thought process.  Here's where you need your "Klinger."  Regardless of demographic, or expertise, you need at least one person who out and out thinks differently!  Someone who says something that makes you go "Huh?"  Klinger's are constantly shaking you up, forcing you to think again, try a new perspective.  The last thing you want is to have everyone thinking the same way, going to all the same places, etc.  Klingers often don't fit well within large, bureaucratic organizations.  They tend to get "weeded out."  Sad, but true, one of our largest clients just a few years ago, in answer to the question "Who are your Klingers?" responded "We don't have any.  We killed them all."  It took a little while, but they've got a few again!

With diversity often comes communication issues.  Frankly, we all see and hear things differently.  And too often, we talk right past each other.  We are communicating based on how we process information.  Meanwhile, the other person is listening the way they process information.  We don't even know we aren't communicating.  People get upset that the other one doesn't listen.  There are a number of personality profiling techniques that can help us understand this and adjust our team communications accordingly.  There are several you can use to help with this team communication building.  One we like to use, because they even have a "game" that you can use to generate some beginning insights is HBDI (Hermann Brain Dominence Instrument™).  We use it in our early team compact meetings to help point out the differences and begin to help members understand the various communication needs of the team.

Along with the composition of your team, you're going to need some different ways to make decisions.  We favor "Championed Teamwork" which I'll leave for another day.  We also have a range of "groundrules," tips and techniques for helping the M.A.S.H. unit work like a well-oiled team rather than an ad-hoc group.  Check out the article listed on the side of this blog titled "M.A.S.H. Mentality: Prescription for Success for more helpful information.

Some years back I wrote an article for R&D Innovator on this subject: M.A.S.H. Mentality: Prescription for Success.  You can also find the article on our resources page.  As I'm blogging this morning, it came to mind, so I searched it out and read it again for current relevance.  I was pleasantly surprised by how well it stood the test of time.  So I made a few changes to the introduction, and am republishing it here.  If you're getting ready to start an innovation effort in your company, building a team, or having some collaboration struggles, I'm hoping something in this article will be of help to you.