Wednesday, June 6, 2012

Front End of Innovation 2012 Recap: What Does it Take to Innovate? 7 Principles

"Innovators: People with disruptive world-class ideas, technologies, or programs that show great promise in making tangible and impactful progress for society in...key...areas." -- Diane Powell, NASA

Over the course of the FEI 2012 Conference, there were a lot of productive discussions about how companies can be innovators, but there were seven principles that stood out as being keys to innovation:

1) Be honest with yourself and your company
2) Think outside the minute hand
3) Ideas can occur ex nihilo...innovation doesn't
4) Be comfortable with failure
5) Create a focused portfolio, and build and value it correctly
6) Harness the power of "Yes...And!"
7) Don't be too serious!

Principle 1: Be honest with yourself and your company

As Barry Calpino pointed out, "Innovation is not for the faint of heart."  Those companies who want to innovate are going to need to take hard looks in the mirror and foster honest and frank discussions.  People need to be honest about the fact that the company simply cannot do everything, and thus must focus on where the company is actually strong (as opposed to where some may wish the company were strong).

Honesty also requires acknowledging the factors that facilitate the aversion to risk, which can include egos, the ease and comfort of status quo, and incentives not to innovate (this often involves meaningful glances/comments in the direction of the C-suite).  Frequently, companies also need to extract embedded assumptions, which requires brutal honesty during prototyping and a willingness to deal with surprises.

Principle 2: Think outside the minute hand

The two major roadblocks on the road to innovation originate in the company's strategic purview and aversion to risk.  Too often, companies focus on short-term results, which in turn concerts efforts towards incremental innovations and diverts resources from the long-term projects that could lead to disruptive innovation.  As Peter Koen noted, some of the most innovative products, like the iPod and Nespresso, took a very long time to capture a significant share of the market.

But, waiting requires a comfort with risk that does not fit the pervasive immediate-ROI strategy that most companies have, and thus companies' strategy tends to lack innovation goals.  Even the companies that have some semblance of an innovation strategy often make it either a sideline or a bunch of small-time operations that lack the resources to get off the ground.  When companies want to innovate, the C-suite needs to lead the way by giving resources to innovative ventures, and having the long-term vision to include them in the company's strategy and see them through.

Principle 3: Ideas can occur ex nihilo...innovation doesn't

Idea generation tends to be relatively easy, in and of itself, and there are plenty of techniques, companies, and consultants that can help out if a company is faltering on that front.  But, even though ideas can come out of nowhere, it takes serious resources and support from the C-suite to innovate.  It also takes buy-in from all the stakeholders involved, and that requires talking to everyone from the customers to the CEO, and perhaps even beyond them.

In this, diversity is a boon to innovation (more here), and companies need to be comfortable talking to those with different perspectives and opinions (in practice, much harder to do than it sounds!).  Moreover, companies need to work with stakeholders to think outside the minute hand and into the long-term needs to customers.  It is not just about what customers want now, but what they will want in the future, and the needs they have that they may not even be able to articulate (more here).

Principle 4: Be comfortable with failure

As prototyping is a critical part of innovation, as is using small experiments, companies need to be comfortable with the possibility of failure.  Even though failure can be minimized through honest discussion, long-term strategy, and consistent prototyping, it is still going to happen, and accepting is part of acknowledging and accepting the risks inherent in innovation.  But, failure really does depend on how one looks at it and how one defines it.  Every failure can contain a treasure trove of information that can lead to success, but only if failure is viewed as part of the path to innovation, and as a teacher that can highlight the many ways to (and to) innovate.

Principle 5: Create a focused portfolio, and build and value it correctly

It is important to focus on what the company does well, and to put the big bets behind the big brands.  Even though diversifying a portfolio has advantages, an overly-diversified portfolio is the analog of the jack-of-all-trades who is a master of none.  Innovation requires mastery and a clear strategy, and it requires finding committed stakeholders, selecting the "golden egg," hatching it, and accelerating it (more here).  In the process of selecting the right prototypes with which to move forward, it is helpful to use a comprehensive and transparent evaluation system, such as Real Options.

Principle 6: Harness the power of "Yes...And!" 

One of the hallmarks of honesty is acknowledging what is there.  But, acknowledging what is there as if it is supposed to be there (or at least, undeniably there), and then adding to it, can lead to high levels of synergy.  This perspective requires embracing surprises, and then capitalizing on trust, creativity, enthusiasm, and partnership to add to them and inspire new realizations (more here).

Principle 7: Don't be too serious!

One of the major hallmarks of innovative companies like Google is the opportunity to play.  Too often, companies get bogged down in bureaucracies and an over-dependence on rules and regulations, which, as Jaspar Roos noted, can impede creativity and innovation.  Perhaps companies need a Chief Humor Officer, or perhaps they need to have a fun Fed-Ex Day (for some advice, look here and here).  Maybe they need the freedom to be honest, or they need to make their employees happy (see my blog post for how to do that).

Whether through positive psychology (see my working paper for more [executive summary here]), improvisation exercises, or other techniques, companies that want to innovate need positive cultures and fun workplaces (Orin's aside: for more on this topic, see Barbara Fredrickson's research on the Broaden-and-Build Theory and Keith Sawyer's research on creative teamwork).

Needless to say, there are tomes upon tomes of information about how to be a company that innovates, but following these seven principles can make a great start.

Go change the world!

About the Author

Orin C. Davis is the first person to earn a doctorate in positive psychology. His research focuses on flow, creativity, hypnosis, and mentoring, and it spans both the workplace and daily life. He is the principal investigator of the Quality of Life Laboratory and a freelance consultant who helps companies maximize their human capital and become better places to work.

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