Category Archives: Culture of innovation

P&G – Extraordinary Results from Innovation Acceleration

Many of you will know that Procter & Gamble is one of my favourite companies when discussing innovation acceleration. The latest Harvard Business Review (June 2011) contains an extremely important article on the impact that innovation has had on P&G recently. We all know of the Connect and Develop program that was kicked off some years ago, but where is P&G now, and where are their innovation efforts? To be honest, I was unbelievably excited when I read this article, and I think you will be as well.

Here are some of the facts reported by HBR that really impressed me:

From 2004 to now, P&G looked to carry out the following:

a) Teach senior management and project members the mind-sets and behaviours that foster disruptive growth

b) Form a group of new-growth-business guides to help teams working on disruptive projects

c) Develop organisational structures to drive new growth

d) Produce a process manual – a step-by-step guide to creating new-growth businesses.

e) Run demonstration projects to showcase the emerging factory’s work.

The challenge that they found in 2008 was that they were burdened by a number of smaller projects that were not necessarily disruptive. This scenario is very common – the organisation establishes an Innovation program and soon people ask – “So where are the Big Ideas?”. So Bob McDonald (then the COO) and Bruce Brown (then CTO and coauthor of the article in HBR) drove three critical improvements:

a) Increase emphasis on an intermediate category, transformational-sustaining innovations, which would deliver major new benefits in existing product categories

b) Strengthen organisational support for the formation of transformational sustaining and disruptive businesses. P&G created several new business-creation groups whose resources and management are kept separate from the core business – dedicated teams with a separate General Manager. What is really interesting is that there is one group, FutureWorks, solely dedicated to enabling different business models. This to me is tremendous and a lesson for other companies – while “tiger teams” might be formed to boost sales and win deals, it is rare that they are formed specifically for new business models.

c) Revamp its strategy development and review process. Innovation and strategy assessments had historically been handled separately. Now the CEO, CTO, and CFO explicitly link company, business, and innovation strategies. What a great lesson!

Lessons learned include:

  1. Closely coordinate the factory and the core business
  2. Promote a portfolio mindset
  3. Start small and grow carefully
  4. Create new tools for gauging new businesses
  5. Make sure you have the right people doing the right work
  6. Encourage intersections – successful innovation requires rich cross pollination both inside and outside the organisation.

There are other significant lessons learned from the above cited in the article. And many more initiatives that you should read for yourself that are truly remarkable. Here, though, are some of the business impact metrics cited:

  • In 2000 only 15% of its innovation efforts met profit and revenue targets. Today the figure is 50%. The past fiscal year was one of the most productive innovation years in the companyʼs history, and the companyʼs three- and five-year innovation portfolios are sufficient to deliver against their growth objectives. Projections suggest that the typical initiative in 2014 and 2015 will have nearly twice the revenue of todayʼs initiatives. Thatʼs a sixfold increase in output without any significant increase in inputs.
  • In 2009 P&G introduced the wrinkle-reducing cream Olay Pro-X. Launching a $40-a-bottle product in the depths of a recession might seem a questionable strategy. But P&G went ahead because it considered the product a transformational sustaining innovation. The cream and related products generated first-year sales of $50 million in U.S. food retailers and drugstores alone.
  • In 2010 P&G refreshed its C+D goals. It aims to become the partner of choice for innovation collaboration, and to triple C+Dʼs contribution to P&Gʼs innovation development (which would mean deriving $3 billion of the companyʼs annual sales growth from outside innovators). It has expanded the program to forge additional connections with government labs, universities, small and medium-sized entrepreneurs, consortia, and venture capital firms.
The HBR article can be found here. I seriously urge you to read it, digest it, look at what your organisation is NOT doing, and gather senior leaders of your organisation together in a war room to form an action plan to close the gap. NOW!.
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The Rise of Generation C: Implications for Innovation Acceleration

Excellent report by Booze&co. on what they call Generation C: People born after 1990, digital natives, highly connected, living online, using social networking as second nature, being able to consume vast amounts of information, and living in what Booze calls a “personal cloud”. The premise is that by 2020 an entire generation will have grown up in a primarily digital word, with technology as we know it today just part of their life, rather than an add-on. Booze says the C in Generation C stands for Connect, Communicate and Change.

You can read the full article here.

What are the implications for innovation acceleration if this is the case? If you endorse the premise – as I strongly do – that innovation is powered by collaboration and connectedness – that innovation acceleration happens just by the fact that people are connected in an ecosystem, then we are in for a meteoric rise is the innovation capability of Generation C. Do you agree?

And if this is the case, what structures, if any, do we need to put in place to capture and harness this creativity? Can the corporation as we know it cultivate and environment where all of this innovation potential is harnessed and exploited?

The answer is – not today. Next year? or 2020?

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What Conventional Wisdom about Innovation No Longer Applies?

Interesting article in the latest MITSloan Management Review. It addresses the question:

What conventional wisdom about innovation no longer applies?

It comes up with 5 Takeaways:

  1. Most innovation efforts fail not because of a lack of bright ideas, but because of a lack of careful and thoughtful follow-up. Smart companies know where the weakest links in their entire innovation value chain are, and they invest time in correcting those weaknesses rather than further reinforcing their strengths
  2. Online forums are not a panacea for distributed innovation. Online forums are good for capturing and filtering large numbers of existing ideas; in-person forums are good for generating and building on new ideas. Smart companies are selective in their use of online forums for innovation
  3. External innovation forums have access to a broad range of expertise that makes them effective for solving narrow technological problems; internal innovation forums have less breadth but more understanding of context. Smart companies use their external and internal experts for very different types of problems
  4. Rewarding people for their innovation efforts misses the point. The process of innovating – of taking the initiative to come up with new solutions – is its own reward. Smart companies emphasize the social and personal drivers of discretionary effort, rather than the material drivers
  5. Bottom up innovation efforts benefit from high-levels of employee engagement; top down innovation efforts benefit from direct alignment with the company’s goals. Smart companies use both approaches, and are adept at helping bottom-up innovation projects get the sponsorship they need to survive.

You can read the entire article here.

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Why does Israeli Innovation Contribute $2.4 Billion To The Massachusetts Economy?

A study has been released released at the New England-Israel Business Council’s 2010 Life Sciences Summit at Brandeis University in Waltham, Massachusetts revealed the scope and impact of Israeli related businesses on the Massachusetts economy. This is an astounding amount of money – imagine if this was scaled to other states and countries around the world. Indeed, imaging if the entrepreneurship spirit of Israel was also replicated in other countries! The impact would truly be astonishing.

The new study, “The Massachusetts-Israel Economic Relationship,” conducted by Stax Inc., an independent global strategy consulting firm, shows the impact of Israeli innovation and entrepreneurship on the Commonwealth’s economy, and underscores the importance of Israeli relations to the state, especially in the area of life sciences and high-tech.

Highlights of the study include:

* Nearly 100 companies in Massachusetts are founded by Israelis or offer products based on Israeli technology.
* These businesses generated $2.4 billion in direct revenue in Massachusetts in 2009.
* In total, the direct and indirect revenue impact on the Massachusetts economy was $7.8 billion.
* From an employment perspective, these businesses directly generated 5,920 jobs in Massachusetts.
* 50% of these businesses focus on information technology, 29% are in life sciences, and the remainder in other industries.
* Israeli entrepreneurs chose Massachusetts over other U.S. destinations to launch or grow their enterprises due to the deep talent pool of educated workers, the opportunity to be part of an industry cluster, world class universities and outstanding business infrastructure.

The Stax study, which surveyed Massachusetts business executives of companies based on Israeli innovation and entrepreneurship, also found that other states are aggressively pursuing linkages with Israeli businesses. The analysis also details ways that Massachusetts can strengthen its economic ties with Israel and compete with other states.

“The Massachusetts-Israel Economic Relationship” study was released at the New England-Israel Business Council’s 2010 Life Sciences Summit hosted by Brandeis International Business School. “The Massachusetts-Israel Economic Relationship” study was commissioned, in part, by the Combined Jewish Philanthropies.

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Bosses should definitely NOT kill ideas

Bob Sutton, Professor of Management Science and Engineering at Stanford University, posted a blog on Harvard Business Review entitled: If you are the Boss, start killing more ideas.

His point is that in order for some ideas to flourish and become disruptive, many others need to be killed, and we are not good at doing that

I don’t have a problem with the concept of killing ideas, but I do have a problem with any “Boss” killing any idea.

I posted the following on the blog:

I don’t think any boss should ever kill any idea. The challenge is to have a filtering process that is set up properly to filter all of the ideas, and sort them appropriately. And it should be both the “crowd” that does the sorting, as well as a cross-functional team. In the work that I doing in Innovation at Cisco, we have both – and the ideas that percolate up through either the crowd or the cross functional team are the ones that are considered for progression, with the others being potentially incremental, not disruptive innovation.

I have a problem with any one individual “killing” anything. If an idea is floated, and an individual, especially of a “higher rank”, tries to squash it, I push back enormously. Killing of ideas by an individual on qualitative bases is a recipe for innovation destruction. With proper filtering by the crowd and a cross-functional team, the discussion becomes focused on those ideas that really have potential, and the only reason they are “killed” is that further research demonstrates that they are not viable – and this becomes obvious to all.

And certainly, ideas should never be killed by anyone because they have a higher “rank” than the idea originator – the thought of that makes me exceptionally anxious

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The 10 Top Reasons Why The 10 Top Reasons Don’t Really Matter

You have to love this……… from The Heart of Innovation blog.

10. Analysis paralysis.
9. Reason is highly over-rated.
8. If you need more data to prove your point, you’ll never have enough data to prove your point.
7. You already know what to do.
6. You’re going to follow your gut, anyway.
5. “Not everything that counts can be counted; and not everything that can be counted counts.” (Einstein)
4. By the time you put your business case together, the market has passed you by.
3. “Conclusions arrived at through reasoning have very little or no influence in altering the course of our lives.” (Carlos Casteneda)
2. The scientific method came to Rene Descartes in a dream!
1. “Time flies like an arrow. Fruit flies like a banana.” (Groucho)

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The “How” of Open Innovation

I want to alert you to an recent excellent report on the “how” of Open Innovation. The report is a product of two years work within the Cambridge Open Innovation Network. This network is funded by Unilever and the Cambridge Integrated Knowledge Centre. The report aims to answer the question “I want to implement Open Innovation – where should I start and what should I do?”. It provides and overview of existing approaches to Open Innovation and outlines how a company can start to implement a strategy to match the organisation’s needs.

Unilever has been a long-standing proponent of Open Innovation. Not only does this report talk about the theory of Open Innovation, but it draws on Unilever’s experience, and contains the results of 36 interviews and workshops.

An excellent document. Download it now.

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