strategic innovation – Page 3

How to grow innovation elephants in large organizations

Driving innovation in large organizations is like herding elephants. Big and small elephants. – How so?

Big Elephants in the Back-Office

In large organizations, departments gravitate to sub-optimize their core business. Silos form under local management to run their department more efficient – following the old mantra: do more with less.
(Read more about silos forming at Leadership vs Management? What is wrong with middle management?)

Although all business functions are affected, corporate Information Technology (IT) departments often lend themselves as best examples for a “big elephant” world: they are critical enablers in a pivotal position of every modern organization. Even though the success of practically every business function hinges on IT, also IT is not immune to this silo-forming phenomenon in large organizations.

Over time and with ‘organizational maturity’, the IT department tends to end up focusing on what they do best: large back-office projects that cannot be funded or run by any business function in isolation, since they span across disciplines or impact the entire enterprise. Just one examples for a “big elephant” project is implementing a comprehensive Enterprise Resource Planning (ERP) system across multiple locations internationally.

This is the back-office domain and comfort zone of IT with technology know-how, big budgets, long duration, high visibility, rigid governance and clear processes to follow.

Small Elephants in the Front-Office

In contrast, the front-office typically comprises Marketing, Sales and Product Development. Here, a small tweak or agile change (that requires some IT input) can go a long way and have significant impact on organizational effectiveness and business results. – These micro-innovations are “small elephants” as recent Gartner research coined them.

These little disruptions to the slower-moving big elephant world easily trigger the “corporate immune-system” that favors large elephants and suppressing small emerging ones.

Typically, most projects in large organization aim to reduce cost in some way. Only a minority of projects address new business and growth opportunities that tend to come with uncertainty and greater risk.

While big elephants are typically incremental improvement project to save cost, it’s the small elephants that are more likely to be disruptive drivers of growth and future business opportunities: the much needed life-blood of sustaining business and future prosperity.

Barriers in the Big Elephant World

IT departments tend to struggle the farther they move away from their ‘core competency’ meaning leaving the big-elephant back-office and dealing with the myriad of small needs of the customer-facing units in the small-elephant front-office.

Many reasons contribute to say “No!” to emerging small elephants:

Small elephants are disruptive to the big elephant world, perhaps even threatening to the establishment
It is hard for the back-office to accept that there cannot be much standardization around these small small elephant solutions by the very nature of their scope and scale
It is cumbersome to plan and manage resources scattered across small projects that pop up left and right without significantly impacting big elephant projects. Unfortunately, pressure to save cost only fuels the focus on fewer, bigger elephants.
Gartner brings the dilemma to the point: “[..] the focus on optimization, standardization and commoditization that underlies IT’s success in the back office is contrary and even detrimental to the needs of the front office.”
Insights in front-end processes and customer needs are essential (and not usual IT back-office competencies) to seize small elephant opportunities, which are often disruptive and driven by the agile intrapreneurial spirit that makes full use of the diversity of thought and understanding customers deeply.
– See also The Rise of the Intrapreneur
On top of it all, the challenge for IT is to understand the potential and pay-off for initiatives that rely on IT in a domain outside of IT’s expertise: In the mature world of big elephants, ROI projections are demanded upfront and based on models that apply to mature organizations. These models typically do not apply well to measure project ROI in the emergent worlds of small elephants, which puts the small elephants at a disadvantage; another disconnect that easily leads big elephant organizations to reject proposed small elephants.

As a bottom-line, for large IT departments it is simple and convenient to say ‘No!’ to requests for “micro-innovations” coming in from employees scattered across the front-offices. And, sadly, often enough this is exactly what happens. Despite the lasting impact of “No!” (see also How Intrapreneurs avoid “No!”), turning ideas and proposals down too fast also leaves out opportunity for huge innovation potentials (see also 10x vs 10% – Are you still ready for breakthrough innovation?).

What happens to IT without small elephants?

Ignoring the need for micro-innovations and not supporting them effectively will not serve IT departments well in the long-run. With only big-elephant focus IT departments are at high risk to lose sight of the needs of their internal customers. Consequently, IT undermines and finally loses its broader usefulness, acceptance and footing in the business functions they intend to serve.

When small elephants are neglected or blocked, it practically forces the front-office to look for other resources sooner or later in order IT-services providing resources to get their needs taken care of. Over time, the big IT department drifts to become more and more obsolete, and finally replaced by agile and responsive agencies and contractors that deliver on their front-office customer needs.

After all, IT’s general role is one of an enabler for the core businesses rather than being perceived by its customers as a stop-gap.

How to raise Small Elephants

So, what can a mature yet forward looking IT organization do to support micro-innovations – or ‘balance the herd,’ so to speak, to include a healthy number of small elephants in the mix?

Brad Kenney of Ernest&Young recommends limited but dedicated resources (including time) for micro-innovations in Ernest&Young’s 2011 report “Progressions – Building Pharma 3.0”;
for example, dedicate 10% of the expert’s time to implement micro-innovations
Test changes in emerging markets first, if possible, where agility is high at a lower risk of jeopardizing the bottom line or threatening the established organization and its investments in mature markets
Establish effective collaboration platforms that make it easy for employees to openly and conveniently share content among each other as well as with external parties.

How Intrapreneuring helps

A systematic approach to Intrapreneuring can go a long way to help move these micro-innovations forward. It starts with systematic intrapreneurial skill-building for employees across all levels of hierarchy and includes:

Understanding how innovation happens in large organizations, i.e. large and small elephants and the need for both to exist
Helping employees become aware of and overcome their own mental barriers and silo-thinking
Attracting, inspiring and engaging employees to take their idea forward knowing there are obstacles in their way
Training skills that help to frame, develop and pitch ideas to potential supporters and sponsors
Building and presenting a business case for review and improvement by peers and management
Enabling and empowering employees to bring their small elephants to life and sharing the story of their success to inspire others
Working to gradually change the mindset of the organization, its culture, as needed, to become more balanced on the elephant scale, to unlock the resources within the own workforce and to seize opportunities for growth and the future of the business.

Just as out there in the wild, without raising small elephants the life-span of organizations with only big elephants is limited.

Podcast on Innovation in Large Organizations, Intrapreneurs and Corporate Venturing

futurethink spoke with Stephan Klaschka, Director of Global Innovation Management at Boehringer Ingelheim, who is responsible for encouraging disruptive innovation within the firm. He spoke about creating “intrapreneurs” in large organizations by instilling an entrepreneurial mindset into employees and ways to use partnerships to get to new ideas.

Click here to get to the podcast.

Stephan will be leading the session “Reassessing the Organizational Culture to Better Engage Corporate Venturing Prospects” at the upcoming Corporate Venturing in the Life Sciences Conference November 13-14, 2013 in Boston, MA

How Intrapreneurs avoid “No!”

Say “No!”

Books teach us how to say “No!” – they fill up entire shelves in bookstores to help us achieve professional success and personal freedom. Rejecting requests from others helps us de-clutter our busy day and protect us from time-suckers and commitments we immediately regret.

On the other end, we are asked to delegate more to boost our productivity. This comes easier for your client or boss, who has a mandate or authority over what we work on and what process to follow. And then there are Intrapreneurs: champions of ideas they want to turn into reality within large organizations without mandate or authority. (Read also The Rise of the Intrapreneur)

The “No” trap for Intrapreneurs

Intrapreneurs are driven by their passion and belief in the idea they develop and seek support for. They also often stand outside the ordinary structure and processes of the organization. Intrapreneurs need to pull voluntary favors from people they have no control over in order to find support, funding, protection, expertise or whatever else their project requires to get off the ground or move forward.

For Intrapreneurs, avoiding the “No” becomes even more crucial: once they received a “No” to their proposal or request, it is hard to change their mind no matter how much sense the project makes.

– Why is that?

Why it’s hard to say “Yes” again

Put yourself in the shoes of a potential sponsor, lets say a manager, executive or technical expert: this Intrapreneur, a person you may or may not know well, walks into your office and requests resources, money, time, or whatever to fuel an uncalled for project with an uncertain outcome that was not budgeted for and that disrupts your operations.

The safe and easy thing is to say “No.” When rationalizing in retrospect, you just saved the company diverting and possibly wasting resources on this crazy project that may even have felt like a surprise attack! – And so you feel good, right?

Now, when the Intrapreneur comes back later to try his or her luck again, perhaps equipped with more data, what can you do? If you said “Yes” this time around, wouldn’t you be inconsistent with your previous position and possibly even undermine your own authority?

Subconsciously, you may already be biased and seeking a face-saving way to get over this discussion. So it’s safe again to stay with “No,” and remain consistent – and feel good! After all, it’s human nature!

“No” doesn’t turn to “Yes” easily

As an Intrapreneur, coming back to ask for a “Yes” again is an uphill battle, a double sell. You are basically wasting your energy fighting human nature rather than helping your cause effectively. Chances are you will not be able to turn around a previous “No” into a “Yes,” no matter how much more data and other good arguments you throw at the aspired sponsor. When seeking voluntary support from others, hearing a “No” is a huge obstacle that is hard to overcome.

So, for an Intrapreneur, the million-dollar question (perhaps literally!) is, how to avoid the “No” in the first place and get support for the idea.

How to avoid “No” and thrive your project

For an Intrapreneur, it is most important to listen closely and be open to the questions and concerns the sponsor to-be brings up: they may just as well uncover valid flaws or complementing areas to be addressed to make the idea succeed in the end.

Gifford Pinchot, the author of the best-selling book Intrapreneuring, suggests these nifty tactics for Intrapreneurs to approach helpers or sponsors in a non-threatening or overly demanding way that would trigger the negative response. A small step forward is better than a full stop of the “organizational immune system” kicking in. Don’t ask bluntly for resources of sorts. Instead, ask for advice or a reference to a co-worker!

People love to talk about themselves and being asked for their expertise and opinion. This works with employees on all levels of the hierarchy no matter if you seek a sponsor or advice from an expert.

By asking for advice, there is no Yes-or-No dead-end involved. It’s just a factual discussion among professionals about an idea and what it would take to improve it and to move it forward. Even softer is the question for help to find someone else, who could help or whom the Intrapreneur should talk to next. Even if not interested in the idea themselves, it allows the potential sponsor or expert to refer to another person, who is possibly better suited or more interested without losing face or appearing unsupportive.

Thumbs up all around

In case the idea or project tanks, as the expert/sponsor you didn’t waste any resources nor will you be held accountable. If, in contrast, the idea has a positive outcome down the road, you may even claim having supported it at an early stage or have made a key introduction that led to the project’s success. Now, that feels good no matter what happens with the Intrapreneur’s idea or project, right? That’s human nature too.

From the Intrapreneur’s perspective, for starters, you achieved to avoid the “No” kiss-of-death. You may have even got another lead or hint on what to improve or consider, something you overlooked or were not aware of before. Addressing this may require some more research, data or conversations, but for now, it drives your idea forward to take the next step, which is good and helpful.

It’s not really rocket-science but rather dealing with human nature in a resourceful and constructive way that keeps the intrapreneurial project moving forward.

How intrapreneurs find executive sponsors

Finding a sponsor can be frustrating!

Have you ever had a great idea and went to your manager for support but found they were just not interested in it? Did nothing come out of it in the end, and you were disappointed? Perhaps, you just turned to the wrong sponsor for your project, a common mistake of intrapreneurs. Here are some thoughts on whom to turn for with ideas to make them happen within an organization.

Intrapreneurs are ‘executive champions’ that connect people with specific ideas (‘technical champions’) to ‘business champions’ who can provide the resources to make this idea happen; typically an executive sponsor providing funding and political support. More on intrapreneurship at The Rise of the Intrapreneur and the intrapreneurial role of the executive champion at How to become the strategic innovation leader? (part 2 of 3).

Managers and leaders innovate differently

Let’s look at the ‘business champion’ or executive sponsor. It is crucial to understand the motivation of executive sponsors for a simple reason: only if your idea or proposition fits their agenda are they be willing to listen to you and getting actively involved. Consider that they take on risk too in supporting as poor results also reflect on them. You need to know whom to turn to for what kind of idea to find adequate support.

For an intrapreneur, it is critical to understand the nature of the executive position. More specifically if you approach a manager or leader to find support for an innovative idea.

Managers and leaders look at innovation differently, hence both groups innovate very differently and for different reasons. It translates directly into their understanding of what ‘innovation’ is, its risks and rewards, and consequently their willingness to listen to you. Turing to the wrong executive easily gets your idea rejected and you may not even know why.

Let’s take a look how the views of managers and leaders differ and how this molds their understanding of innovation and what kind of change. On a side note organizations need both, managers and leaders. Each role serves a different yet necessary purpose in the organization; see “Leadership vs. Management? What is wrong with middle management?”

Managers focus on predictability

Managers are charged with running the daily business smoothly. They manage a well-oiled ‘machine’ of people, tools and processes to deliver a certain output, a product or service, reliably and at a fixed cost ceiling.

The paramount goal for managers is business continuity – it is the daily bread and butter of the organization and what pays your employee salary today. Running a fast-food restaurant is a good example, the expectation here is predictability: to deliver food to the customer at a specific quality level with as little variability as possible at a defined cost and within a certain time. A competent manager delivers this predictability reliably over and over again.

With operational targets clearly defined, the appetite for improvements focuses on speeding up the process or cut cost here and there without compromising quality. Favorable changes to the status quo are small, gradual tweaks. This is the world of optimization and continuous improvement.

Little risk, little gain

Managers need to keep the risk small to fail or to jeopardize the production process with its predictable output. The low risk of disruption comes at a price though as it limits also returns.

Here innovations are primarily of non-disruptive nature, they are incremental or evolutionary. This approach is process driven. It lends itself to automation as it aims to make the process repeatable, reliable, predictable. No senior executive needs to be closely involved in operations to keep this ‘machine’ running; it comes down to the floor manager executing.

This is also the environment of a conventional development project, the ‘next version’ of something and ‘getting it right the first time.’

With an incremental change in focus, managers tend to look for ideas in their own organization, think ‘suggestion box’. It means following a clearly defined and detailed process with development stage-gates or other review mechanisms that filter ideas typically the criteria of cost, time, quality and, more recently, variations thereof such as customer satisfaction and being ‘green’ and sustainable.

Managers are interested in learning about ‘best practices’ from outside the organization but are often enough reluctant to adopt and implement them if they appear to be risky and disruptive.

Leading in uncertainty

Leaders face a different challenge. They ask: what needs to be done to prepare the organization for success several years down the road with much uncertainty ahead? – Well knowing that the answer may disrupt the established organization.

It is this uncertainty that opens up the so-called ‘fuzzy front-end’ (FFE) to develop entirely new products or services: It is too early to know exact specifications of a solution at this time, the future markets and technologies are yet unknown. Leaders focus is on getting a deep understanding of the problems that customers face to develop the technology and capability to address and monetize them.

Disruptive transformation

What we talk about here is, for example, a completely new product line, a major (adjacent) product line extension or a new (transformative) business model entirely. Think how Apple’s iTunes Store started selling digital media and apps has changed the way we use technology and whose devices we use (hint, hint) – this gamble worked out for Apple and was based on a deep understanding what customers are willing to pay for.

With nebulous solutions in far sight, a tightly governed development process with stage-gates makes little sense because this development model is designed for incremental change and tuned for refinement. It stifles the creative and broad view necessary to create something completely new in an unpredictable and yet undefined scenario of the FFE where much imagination, creativity, and flexibility is needed.

Creative with discipline

However, flexibility and creativity do not thrive only in the absence of discipline or some sense of order. The early-stage research or design process does not need to be chaotic – it’s quite the opposite. A company like IDEO, for example, operates successfully in this space and is famous for their disciplined process and methodology in producing creative and tangible prototypes over and over again.

Note, we are not talking about final products ready to go on the self in your neighborhood store tomorrow. Check out this case study on how IDEO works in more detail: What does it take to keep innovating? (part 1 of 3)

This transitional step narrows down the broad funnel of uncertainty to develop a range of concepts towards increasingly detailed specifications of the final product. The development of the final product itself is better left to the established development organization – back to the managers to cross the t’s and dot the i’s, if you will.

Active sponsorship needed

With disruption and revolutionary change comes high risk. The outcome is unpredictable and the reward uncertain, failure is likely. Yet, if the gamble works out the rewards can be enormous and the key players ‘rainmaker’.

When exploring which direction to go, the serial intrapreneur’s approach is trying many things. Expect to fail most of the time. See what ‘sticks’ and explore this option more.

Rather than rigid procedural guardrails, intrapreneurs need to secure top executive sponsorship for their continued active support, political weight and funding. Thus, for a unique and exploratory venture what you look for is a leader, not a manager. There is no staged process to follow really, only success determines what was right or wrong.

Maxwell Wessel’s blog for HBR on “How to Innovate with an Executive Sponsor” has some good practical tips for especially if your project takes the company down the disruptive, transformative route.

What kind of sponsor to you need?

Distinguishing the professional motives of managers and leaders comes down to the question of ‘Innovation Strategy: Do you innovate or renovate?‘

In general, leaders act more as strategic innovators and game-changers assuming the role of a Sponsor or an Architect while managers take more renovation-associate roles such as a Coach or an Orchestrator. Follow the above link for a more detailed description of these roles and when to chose which role.

What is my idea again?

Start by taking a hard look at your idea first to find out which category it falls into. Then decide what kind of sponsor, a manager or a leader, is best suited to approach and is, therefore, most likely to listen and catch interest.

Even better if you can already identify the role associated with the nature of your project (Coach, Orchestrator, etc.) which helps you framing and pitching the idea or a specific project to the appropriate executive sponsor in your organization.

Mastering the connected economy – key findings of IBM’s 2012 CEO study

In IBM’s 2012 CEO Study, top leaders identified openness and collaboration as the critical areas to master change in the coming years – how do leadership and employees prepare for the new challenges?

About the CEO study

IBM conducts a ‘CEO Study’ every other year, interviewing more than 1,700 CEOs and public sector leaders from around the world on their views. The top leaders identified openness and collaboration as the critical areas to address and master our ‘connected economy’ over the coming years.

Two years ago, the focus of the 2010 study was on managing the increasing complexity raising the question: Complexity is the 2015 challenge! – Are leaders ready for ‘glocal’?

What’s new in 2012?

This year’s CEO Study looks into the future of 2015 to 2017. The focus shifts to leveraging the softer factors, namely people and innovation, to navigate and connect in an increasingly technology-driven world that reshapes the workplace and the marketplace. The CEOs agree that change is the only constant. There is no ‘normal’ anymore – say good-bye to a stable status quo and expect unpredictability!

Let’s look at some key findings:

Pivotal technology

Technology is the enabler for relationships and collaboration in the new age. What has changed is how people interact with others as well as with and within organizations. Technology now ranks number one of all external factors that influence organizations – surpassing people skills and market factors, which reflects a dramatic shift over the past years. This makes technology the driver and single most important differentiator for successful organizations as 75% of CEOs agree – and a field that organizations cannot afford to fall behind in.

Outperforming organizations prepare for the convergence we see in the “digital, social and mobile spheres – connecting customers, employees, and partners in new ways to organizations and to each other.” Thus, the driving forces for success in organizations remain with innovation and people to master and leverage technology.

Future leadership traits

What does this mean for leaders? What are the traits looked for in leaders to master the challenge?

Organizations look for leaders that inspire. Leaders who are obsessed with understanding their customer as a persona and what drives their individual behavior. Leaders who work as a team across the C-level suite to align and combine the organization’s assets and strengths.

Half of the CEOs expect social channels to be a primary way to engage customers. No wonder that outperforming organizations are those who have the ability to translate data effectively into insights and insights into action, or so 84% of the study responders believe.

These organizations manage change better. They are open to venture into other industries or explore even more disruptive innovation by creating entirely new industries and business models. Strong analytical capabilities to uncover patterns are only one side of the coin, where the other is creative and connected minds that can answer questions no one thought to ask in the first place.

Innovation dilemma

But what if your organization is not the out-performer? What does it take your organization to get there?

It is no secret that large companies tend to lose their innovative momentum; see Starting an ERG as a strategic innovation engine! (part 3 of 3). To compensate the lack of creativity within, they buy start-ups, for example, or focus on hiring only the best and brightest (a.k.a. ‘war on talent’) to fuel their future idea and product pipelines.

What happens in reality, however, is that hiring managers like to look at the ‘odd-ball’ applicant, the out-of-the-box thinker they acclaim to look for, but then play it safe when it comes to decision time and go with a ‘lower risk’ candidate instead.

This leads to the next dilemma: Job applicants noticed the trend and adapted. There is new truth to the survival of the fittest: When you look at applicants for management positions, you may notice that their resumes and interview responses became increasingly similar over the past years. They present themselves homogenous and ‘smooth’ with as little personal ‘edges’ as possible that may stick out and cause controversy. The common theme you hear is the mistakes the candidates would not make – rather than articulating what they would do in their new role.

Risk-avoidance wins over leadership taking charge. This mindset works its way down the hierarchy and across the organization. You can notice it in narrow job descriptions, many detailed rules, and processes full of ‘red tape’. It does not surprise that innovation perishes in large organizations and management turns to buy fresh ideas from the outside in one way or another.

Innovation from within

Innovation means taking risks; yet we tend to hire ‘safe’ and complacent managers and leaders that don’t rock the boat too much. What we get in the end is a somewhat harmonized workforce that lacks diversity of thought ‑ despite possibly matching more visible and publicly promotable diversity criteria (see also How to create innovation culture with diversity!).

Reinventing innovation from within an organization is not always easy. It requires top management commitment to build a strong internal framework and foster intrapreneurship throughout the workforce. It takes establishing a reliable, predictable, and continuous innovation process with room to experiment and learning from failure. For a simple reason, all this is necessary to succeed: you cannot leave your workforce behind if you seek creative ideas that lead to the next discovery and breakthrough. – Read more on How to become the strategic innovation leader? (part 2 of 3).

Employees of the Future

Ever-new technological advances shifted change to the unpredictable: pervasive smart-devices, mobility, virtual social networks and the ‘big data’ flood this combination generates, new business models they enable, and so on. Organizations cannot even anticipate anymore what skills their workforce will need in only three or so years from now.

Consequently, rather than looking for specific skills (which is the starting point for the “war on talent”) they look for flexibility in employees to create and respond to disruptive innovations and change to new businesses and business models. The most valued future employees must be comfortable with change and ambiguity, able to adapt and even reinvent themselves while leveraging their personal networks for professional success. This is why human capital is seen most important (by 71% of CEOs) to make connections that fuel creativity and innovation for sustained economic value and growth.

The 2012 ‘Pulse of the Profession’ study by Project Management Institute (PMI) comes to similar results from a project management perspective: It notes that organizations seek to become more agile by placing more importance on change management and project risk management as well as on talent management to grow and conquer new markets.

Lead with openness and values

It requires more than inspiration to tap into employees effectively and on a deeper level than what their job description outlines. Setting tight rules proves counterproductive, since the surrounding ambiguity makes it impossible to foresee and regulate all possible cases.

Quite the opposite is needed: opening up and establishing a framework of values that guide employees in their response and dealing with unforeseen situations and customer interactions. This value framework provides a bed for ideas to flow freely but also to connect with employees and let them to bring their whole self to work ‑ including their social networks.

Yet, in an increasingly connected world, innovation cannot come from inside of the organization alone. Out-performers take risks by accepting and inviting innovative sparks from outside their own organization in ‘win-win’ partnerships that amplify innovation for growth. Within, they communicate a clear purpose and mission with ethics and values that resonate with and guide their staff while fostering a collaborative environment.

Innovation Partnerships and Alliances

Many have tried to make it to the top alone but only few organizations truly understood how to integrate and control their entire value chain in sustainable ways. As a lesson to learn from, Apple stands as an example for a company that was close to losing everything but learned from its mistakes. Apple famously re-invented itself to become to most validated company worldwide (read more how Apples did it in Innovate to Implement!)

Success requires a broad organizational open-mindedness and flexibility to think and act disruptive were needed. The CEOs see the future in innovation partnerships and close alliances where organizations share their data and collaborate on a deeper level than before without holding tight control.

– Are you ready to taking the leap to open up?

Innovate to Implement!

Innovate to Implement!
Creating value through new products is not enough. Capturing the value requires equal attention on the innovation process. Focusing on creativity and neglecting execution along the value chain is a costly mistake.

It’s all about creating and capturing value

Innovation is about new products (or services) that create value for an organization as much as it is about capturing this value. While there seems to be no shortage of ideas and even products, what differentiates successful companies from others is that they are able to capture the value of what they created.

Capturing value is a process that complements the product by looking at all aspects of the value chain seeking ways to maximize influence and revenue streams. Thus, capturing the value has to be well thought out and built it into the solution – rather than addressing it in an after-thought.

A new product may bring competitive advantage but this is temporary and will last only as long as the competition needs to catch up. To sustain, an organization needs to develop agility and differentiating capabilities to sharpen the competitive edge continuously and reliably in a fast-paced, competitive, and ever-changing environment (see also “‘Complexity’ is the 2015 challenge! – Are leaders prepared for ‘glocal’?”), while reaping the fruit of their work.

Capturing value –or- Who owns the customer?

The aim of capturing value is to ‘own the customer’, i.e. a customer who is willing to pay a premium or accept shortcomings in some areas in order to buy or use the product (or service). Only then does a company own the customer and the competition remains locked out.

Apple, for example, has perfected this customer ownership: Its loyal customer base values the customer experience with Apple products and identifies with the Apple branding. They purchase every new gadget at a premium with little regard to the actual technical specifications or product offerings from other manufacturers. (See section “Fuzzy values? – Here are some how-to examples” in my previous blog “How to become the strategic innovation leader? (part 2 of 3)”)

Apple effectively controls all aspects of the value chain and generates revenues from different streams from hardware, apps, software, and content, for example. Just to give you an idea, here is an overview on some of the revenue streams Apple has created along the value chain (from Bertrand Issard’s Blog):

Apple Value Chain (found on Bertrand Issard's Blog)

As a bottom-line, products create the value that needs to be captured just as much. Hence, it is important to focus also on the process that ensures value is captured throughout the value chain.
– So how does this relate to innovation?

Innovating the value chain

Innovating the value chain to capture value requires thinking far and wide beyond the product considering all aspects relating to the:

Business model – what is the revenue model? What partnerships add value without sacrificing too much control?
Processes – what are the core processes of the organization? What are value-adding enabling processes?
Offering – what do you offer the customer? – For example, a product concept (think: iTunes, App store), quality/cost/performance optimization (Intel or AMD chips), a product system (Google), or a supply chain (Fedex or UPS)
Delivery – how do you deliver your product or service? – For example, are you forming alliances with partners to complement the in value chain in areas outside your own organization’s competency or field of business? If so, make sure you have a well thought-out marketing strategy with win/win profit sharing that creates incentives for stable and lasting partnerships.
Examples here are the coffee distribution approaches of Nespresso or Keurig’s (single cup coffee brewing), the focus on customer experience of Harley-Davidson (motorcycles), or the brand communication of Red Bull (energy drink).

Two parts of one whole

The innovation process consists of two parts, the invention and the implementation part. Typically, the invention revolves around creativity and ideation that tends to get more publicity and attention than the implementation, which requires focus, discipline, and persistence to execute.

The creativity has the ‘Wow!’ factor – no question about it. Brain-storming of sorts and creativity techniques can be quite fun, social, and engaging. Nonetheless, new ideas are cheap and come by the dozen. That is, perhaps, why innovation literature and models seem to focus (and sell better) on the creative front-end; not so much on the back-end (execution). Yet, it is flawless execution where the rubber hits the road and the value is captured.

Even worse when the innovation process starts out with generating ideas around a specific solution for a new product or service without exploring alternative approaches and then trying to find an application and market for the product. The more mature way to start is with a focus on the problem and then develop and narrow down solutions to find the one(s) that best meet(s) the underlying needs of that problem.

Focusing on the problem first and understanding it thoroughly leads to better results, i.e. develop a product (invent) to sell it (implement).

Focus on the problem before building a solution

The point here is that both parts are equally important and require to same amount of attention for an innovation project to succeed. Invention without implementation does not help; neither does implementing something immature that and doesn’t work.

Innovation process

This is what an innovation process looks like if you break it up (left to right) into the two parts, invention and implementation, and the process steps:

Eleven “i” for Innovation (process spectrum)

A new product alone is not enough

New product development (NPD), for example, draws from both parts, typically in a series of steps with cycles between them: Ideation, Initiation, Incubation, and finally preparing the Industrialization ‑ but this is not where the implementation process ends.

It requires a few more process steps to make the solution work in the real-life production environment and deliver results reliable and consistently. A clean hand-over introduces and integrates the change into routine operations, i.e. the production environment and processes of the organization, for example. Failing here means failing the innovation project.

Unfortunately, innovation leaders on the front-end tend to be crushed or steamrolled in a rigid and back-end-heavy organization in a clash of creativity (front-end) and execution (back-end).

It requires discipline, persuasiveness, and persistence to push forward and overcome the obstacles that emerge from a production environment optimized for efficiency when innovative change knocks at their door and disrupts the rhythm of a fine-tuned process flow. It also requires courageous leadership and an intrapreneurial spirit to do what is right for the company overall and necessary for future success.

In a nutshell

What innovation comes down to is the creative part of collaboration to come up with a new product as well as the implementation that captures the value throughout the value chain with the goal to ‘own the customer’ through differentiation. Focusing on the creativity and neglecting the implementation and execution is a costly mistake that lets even the best idea fall short of its market potential.

The Rise of the Intrapreneur

The Rise of the Intrapreneur
How to become an ‘Intrapreneur’? Why are Intrapreneurs needed? What is the difference to Entrepreneurship? – The future of innovation within large organizations lies within, if you know how to tap into it with intrapreneurship!

What is Intrapreneurship?

Did you know that ‘Intrapreneur’ and ‘Intrapreneurship’ are not new terms but were coined nearly 35 years ago by Elizabeth and Gifford Pinchot in 1978?

As a definition for our purposes, an intrapreneur takes responsibility in large organizations for turning an idea into a profitable finished product through assertive risk-taking and innovation. In contrast to an entrepreneur, the Intrapreneur operates within an existing organization with an internal focus. Intrapreneurship requires an organization of considerable size for an intrapreneurial role to become applicable in the first place.

What is the difference to Entrepreneurship?

‘Intrapreneur’ is not as well known as the more established term ‘Entrepreneur’ which it derives from. It even takes a deliberate effort to pronounce the word Intrapreneur so doesn’t sound like and get confused with Entrepreneur.

The word ‘Entrepreneur’ has been around since the 19^th century with its functional roots reaching even farther back into the 16^th century. According to the original definition, an Entrepreneur is “one who undertakes an enterprise […] acting as intermediatory between capital and labour” or in other words, to “shift economic resources out of lower and into higher productivity and greater yield.” (source: Wikipedia)

The role of an Entrepreneur is not so different from the Intrapreneur but many differences exist relating to the environment they operate in and the approach they take. An Entrepreneur founds a new venture, a business, or company, as an independent economic entity. This new entity then typically competes for profit in a market with other companies. Today, Entrepreneurship has fanned out to include specializations such as lifestyle, serial, or social Entrepreneurship that also expanded in markets (in lieu of a better word) previously dominated by non-for-profit, clerical or government institutions.

As a bottom-line, Entrepreneurship roots in competition between companies or organizations by introducing and building a new entity that grows as a company to stand alone in an economic marketplace – while the Intrapreneur connects “capital and labour” using somewhat entrepreneurial methods within an existing organization. You can even see Intrapreneurship as a downstream evolution for a successful and matured entrepreneurial venture.

Why do we need Intrapreneurs?

With increasing size, an organization slows. Inertia and paralysis set in to replace agility and effectiveness. This is often caused by the organization’s own success: The focus shifts towards delivering with increasing efficiency (cost, time) and consistency (quality). You can easily observe the results in many organizations – it looks somewhat like this:

Business functions specialize and sub-optimization to become more efficient and productive; they thereby form ‘silos’ with communication and interactions thinning between them to the detriment of the organization as a whole.
Hierarchical structures become steeper to manage more employees; they effectively disconnect the executives on the top from the workers at the bottom of the hierarchy.
Promising innovation ideas from the grassroots don’t get through to the executive level for backing or funding to be developed and implemented; the ideas starve and innovation suffers overall.
More rules and procedures regulate the growing workforce and detailed aspects of work processes; governance, red tape, and bureaucracy pour over the organization like concrete and become obstacles to change.
Career paths become linear, job profiles and responsibilities narrow, entailing an equally narrow view and mindset of the staff that eats away motivation and creativity over time.
Talented and creative employees are the first to leave or become hard to retain, as they are always in demand and easily find interesting work elsewhere.
Innovation suffers while competitive pressure increases when nimble competitors and start-ups outpace the organization.
Management used to command-and-control eagerly seeks fresh talent and ideas externally, i.e. ‘hiring the best and brightest’, to reanimate the organization – yet the leaky pipeline continues bleeding talent, as also the new ‘super stars’ find themselves trapped and escape to new adventures elsewhere.

It takes a jolt to overcome this inertia, revive it, and get an organization moving nimble again ‑ this is the hour of the Intrapreneur!

Time for Action - Clock — Time for Action – Clock

How to become an Intrapreneur?

It takes a new role in the organization to jump-start it, so we “Innovate to Implement“. Sometimes, a new CEO is hired to turn the corporate ship around from the top; sometimes it works. The Intrapreneur, however, also considers working bottom-up by pulling the loose ends together and connecting people again across all functions and levels of hierarchy. The Intrapreneur bridges the various gaps within the organization vertically and horizontally.

It takes a different approach to include, and engage all employees in ways outside their immediate job description that makes best use of all dimensions each individual brings to the (work) table. The Intrapreneur inspires and spreads a new sense of enablement throughout the workforce.

The Intrapreneur looks differently at how we conduct our business and unlocks innovative value chains, new business models, or propositions. It takes a strategic lead to become a facilitator for the organization, to adapt continuously and make best use of the changing environment. The Intrapreneur builds networks and alliances to help actively moving the organization towards its business goals.

The Intrapreneur is a much-in-need and critical role within the matured organization. It can come in different flavors too! Being the ‘Executive Champion’, for example, is an intrapreneurial role (see “How to become the strategic innovation leader? (part 2 of 3).”

As an Intrapreneur it is important to be aware what hat to wear and when. Sometimes an ‘architect’ is needed and an ‘orchestrator’ at other times, for example. ‑ For more details see: “Innovation Strategy: Do you innovate or renovate?”

Risks becoming an Intrapreneur

Now, as a word of warning, being an Intrapreneur is not always easy: You tent to step on many people’s toes if you want to make a difference. It can be so risky, that Gifford Pinchot even formulated The Intrapreneur’s Ten Commandments starting with: “Come to work each day willing to be fired.”

So brace yourself because there are many obstacles to innovation and change out there that the Intrapreneur will face. Intrapreneurship is most and foremost a leadership role, which has a natural tendency to conflict with managers (see “Leadership vs Management? What is wrong with middle management?”).

Prepare to hit the obstacles to an innovation environment that Irving Wladawsky-Berger in Business Week calls “indifference, hostility, and isolation” – I couldn’t agree more!

The bottom-line

It is not always easy to become an Intrapreneur. It takes skill and persistence as well as courageous leadership and risk taking. Truly making a difference and reviving an organization though is rewarding in itself – at least you will learn a lot and make new friends. ‑ Most of all make sure you have fun!

Can movies innovate with only seven stories to tell?

Can movies innovate with only seven stories to tell?

How innovative are movies really – if at all? While AVATAR and THE ARTIST appear to be polar opposites, they share a similar story, so where is the innovation?

Following my passion, I happened to visit the ‘Berlinale’, the international film festival in Berlin/Germany last week: Over 20,000 accredited participants from around the world share their professional passion and trade movies in one of the world’s biggest market places for films.

In midst the bustle, I couldn’t stop my mind from wandering off and asking myself this question:

Is a movie an innovation?

Each film is an entrepreneurial venture, a financial and personal risk that filmmakers take and often sacrifice years of their lives for. As the audience, we enjoy to immerse in ever-new stories and characters to touches our minds and emotions.

However, is a movie really an innovation? One can argue.

The generic definition of innovation from the “What does it take to keep innovating? (part 1 of 3)” post states: “innovation is different from a novelty: it is the combination that translates a novelty into a marketable product (or service), so an innovation brings together the newness, the value it creates and the adoption to something marketable”.

Therefore, also a movie would have to demonstrate these same three requirements in order to be innovative. So let us look for a match along the lines of:

Novelty
Creating a value
Capturing value in a marketplace.

Seven stories to rule the world

First, is a film a novelty? Of course, you may think. Every film is new and different, even a re-make!

What I find interesting though is that many experts agree there are “seven stories that rule the world” as Matt Haig lays it out. It means that there are only seven plots, which are being re-told in different ways over and over again. ‑ How can this be innovative?

Avatar vs The Artist – similar but yet so different!

AVATAR – a high-tech pinnacle

AVATAR, for example, took 3D cinema to a new technological level and colorful experience for the audience just a few years back. James Cameron made this movie “with the intention of pushing the boundaries of what was possible with cinematic digital effects (…) blending live-action sequences and digitally captured performances in a three-dimensional, computer-generated world.” (Read more: James Cameron’s Avatar – 3D and CG Movie Technology With Avatar – Popular Mechanics)

The humongous $500 million total investment was a huge risk to take but the gamble of this big Hollywood production worked out: AVATAR broke the sales record (formerly held by TITANIC) by earning nearly $2 billion within 39 days at the box-office. Not a bad 1:4 return of investment (ROI) ratio!

Looking at our definition for innovation, AVATAR meets all three requirements by inventing new technology and processes for an enhanced viewing experience and by meeting an audience demand as we proven by its commercial success. It is not surprising to see the sequels AVATAR 2 and AVATAR 3 already on their way.

Nonetheless, the AVATAR story is based on the ancient ‘rebirth’ plot of the protagonist and put little emphasis on artistic performance of its characters.

THE ARTIST – so old, it’s new again?

Now look at the ongoing award season: THE ARTIST keeps racking up one trophy after another. Both movies, AVATAR and THE ARTIST could not be more different: THE ARTIST comes in black-and-white and is a silent movie from France!

Neither the story line of an artist’s comeback (yes, it’s the ‘rebirth’ plot again, just like in AVATAR) nor the century-old cinematic format bears any news. Is this really an innovative movie? One can argue.

Let’s look at value creation and value capture first; this is an easy one: The commercial value of THE ARTIST reflects $60 million or so in box-office sales the last time I checked. It draws crowds of paying audience and proves to be a very successful production (with the same 1:4 ROI return ratio as AVATAR) on the original $15 million investment! It is also the runaway winner converting nominations into awards internationally. Check.

Certainly, producing a silent movie for theatrical release these days is an enormous risk and considered unthinkable before THE ARTIST came along. In fact, it came at a high risk for the filmmaker, Michel Hazanavicius. He was not even taken serious and was laughed at when he presented his idea to raise funds for the project. It looks like a hopeless project from the Stone Age compared to AVATAR!

Let’s face it; movies have become a commodity that is available anytime and anywhere and on every gadget like smart-phones or gaming consoles. As mass-marketed products, movies often don’t even make it to the theater screen anymore; instead, they go directly on DVD or on-demand channels with only little returns for the filmmaker and investors.

What is new about an old concept?

With THE ARTIST, we have a movie that follows a plot line known for centuries and shot in the old-school and boxy 1.33 celluloid format about as old as the movie industry itself. Yet it became a smash success overnight as the first theatrical silent movie release in 35 years. Remember Mel Brooks’ SILENT MOVIE comedy in 1976? ‑ Something must be different! What has happened?

What it comes down to is the question whether a black-and-white and silent move has innovative potential in the ‘novelty’ category.

THE ARTIST gave ‘rebirth’ to this narrow and thought-dead category of silent black-and-white movies at a time where technology over-kill ruled the house! THE ARTIST brought back the glamor of the old Hollywood to present day: A glitzy world of the famous and the beautiful, celluloid dreams on the silver screen. It reminds us that movies can be special and not just a commodity.

Thus, the plot may not be new, but the way it is presented can very well be original. This is where we find the novelty of innovation or, as Matt Haig puts it: “It comes from style and voice and the imagination that brings language and characters and settings to life (…) It’s how you carry these universal plots into the present age that’s the challenge.”

It is not the plot alone that attracts the audience but the unique way to tell a story with high artistic quality and at the right time, when the audience matured and is ready for it. THE ARTIST re-discovered the glamor, elegance and artistic focus that seemed lost and brought it back to life. It answers to the silent yearning of its audience and lets us feel the magic of movies once again.

The Bottom Line

No matter if you agree or disagree with me that movies can be innovations, if you have not seen THE ARTIST yet, watch it and enjoy. It is just magical and delightful like movies are meant to be!

Innovation Strategy: Do you innovate or renovate?

Innovation Strategy: Do you innovate or renovate?

Not everything new is an innovation and some are more renovation than in innovation. Here is a framework that helps to distinguish an innovator from a renovator and works for entrepreneurs and intrapreneurs alike. It is important to understand which role to play and when; it all depends on what you need to achieve and critical to reaching your goal!

Innovation confusion

The word ‘innovation’ is used inflationary; few seem to understand though what they mean when they demand or offer ‘innovation’ in an organization. What adds to the confusion is that not everything new is also innovative.

Let’s continue with the generic definition of innovation from the “What does it take to keep innovating? (part 1 of 3)” post: “innovation is different from a novelty: it is the combination that translates a novelty into a marketable product (or service), so an innovation brings together the newness, the value it creates and the adoption to something marketable”.

So, where does the ‘renovation’ come in and how does it affect your role as an innovator?

Goal clarity comes first

Whether you are an innovator or not depends on several criteria and mostly along these four dimensions:

Objective – “what” is your starting point? Are you creating a totally new business or reinforce an existing business?
Scope – “where” you focus on: Are you looking into (specific) new products, processes, and services, or into (general) new business models or systems?
Intensity – “how much” you change the status quo: Are you taking incremental steps (evolution) or bringing about a radical change (disruptive)?
Boundaries – “with whom” you are collaborating: Are you using resources and partners within your organization with or without tactical out-sourcing? Or, perhaps, you collaborate with external partners to complement your internal capabilities strategically?

Innovation Strategy: a Matrix of Roles

We introduced and discussed the role of the ‘Executive Champion’ in the post “How to become the strategic innovation leader? (part 2 of 3)”. The Executive Champion fills the organizational gap to connect the Technical Champion and the Business Champion, so ideas become reality.

As an Executive Champion, you take an active part in the process – but even as the champion, there are different roles needed for different scenarios. The four dimensions (Objective, Scope, Intensity, and Boundaries) open up a matrix that points to four different roles, one of each suited for a specific scenario:

“Sponsor” – You are a sponsor when you create a totally new category of products or services. This role focuses on the bigger picture, the vision, and sees it through within the organization (which includes tactical out-sourcing). A sponsor guides this endeavor while nurturing and empowering the staff.
For example, broad usage of the MP3 format revolutionized the music industry in unforeseen ways. MP3 players where a disruptive technology that made your CD collection obsolete, which has had replaced your cassette tapes and vinyl records markets some time ago.
“Architect” – It takes an architect to build a new and never-before business model or system. The architect forms coalitions, alliances, and strategic partnerships with the big picture in mind and providing win-win incentives for all players in the business model.
While entrepreneurial examples come to mind easily, less obvious is an architect who operates within an organization as an intrapreneur. For example, the NxGen business model (as outlined in “Build ERGs as an innovative business resource!” and “Starting an ERG as a strategic innovation engine! (part 3 of 3)”) disrupted the common paradigm and mental model of “how-business-is-done” within a company by engaging and leveraging employees in new ways.
“Coach” – You need a coach to get a new-and-improved product or service on the way within an organization – just like this tough but supportive sports coach you remember from school or try to forget…
A new car model, for example, has more bells and whistles than its predecessor and may outrun the competitor’s model by a tad. In the end, however, it remains to be a car. It offers the same common way of transportation we are already used to, i.e. it is an evolutionary, an incremental improvement.
“Orchestrator” – Imagine a conductor directing an orchestra: The orchestrator brings to life a new-and-improved business model or system in concert with strategic partners outside the organization. It takes skill to interpret and continuously integrate the moving parts.
Ducati it an Italian high-end motorcycle manufacturer well-known internationally for its performance bikes that consistently win races. Very early on, Ducati outsourced nearly all company functions to focus on their core competency: design and engineering. Even manufacturing is outsourced! Ducati became the first company to offer a new motorcycle model exclusively on the internet – and sold its entire production before the first bike was even built! This does not only prove the enormous brand power and marketing skill, Ducati also proved they can be a leading and very successful motorcycle company by engineering and outsourcing.

Innovation Strategy Roles Matrix (roles) — The 4 roles in strategic innovation

So, do you innovate or renovate?

The core of innovation and entrepreneurship is around creating new businesses around completely new products or services, or even entire business models that are disruptive to the status quo. So, this points directly to the roles of the Sponsor and the Architect as strategic innovators and game-changers.

In contrast, reinforcing or enhancing an existing product, system, or business model with incremental steps is a renovation, just as you would renovate an older house to bring it up to modern standards. It is the Coach and the Orchestrator role, who fix to improve or come up with the next new-or-improved product or way of doing things.

Innovation Strategy Roles Matrix (innovate vs renovate) — Innovation strategy: innovate or renovate?

Final thoughts

Now, there is nothing wrong with being a renovator. It is most important to be clear about what it is you are trying to achieve and remain flexible, so you can deliberately assume the best role to get to your goal. Consider also that these roles are not mutually exclusive, so over-stepping boundaries at times might just be what you need to lead your venture to success!

Next-generation ERG learn from U.S. Army recruitment!

What do Generation Y (GenY) oriented Employee Resource Groups (ERG) share with the military? – More than you expect! A constant supply of active members is the life-blood for any ERG to put plans into action and prevent established activists from burning out. The U.S. Army faces a similar challenge every year: how to attract and recruit the youngest adult generation? Next-generation ERGs listen up: Let the U.S. Army work for you and learn some practical lessons!

The U.S. Army brand

Everyone knows the U.S. Army. This American icon has been around for well over 230 years!

The ‘U.S. Army’ is more than a well-known military force. We recognize it as a brand. Just like ‘Coca-Cola’ or ‘IBM’ portray and advertise a certain company image to sell its product, the U.S. Army needs to constantly appeal with a unique value proposition for new recruits to enlist. The ‘product’ offered if what the recruit expect to get out of it along the lines of ‘what is in it for me’ (WIIFM).

From this commercial perspective, it seems only natural that the U.S. Army hires world-class advertisement agencies to help meeting recruitment targets. Marketing and advertisement gained importance especially since the U.S. Army turned into an all-volunteer force in 1973. This is similar to a voluntary ERG membership.

Aiming at a moving target

We distinguish four generations at the workplace today. Each comes with different motivations and characteristics. The collective personality or zeitgeist influences each generation’s behavior and values. These need to be considered to adapt and effectively connect with each generation in its own way to maximize their potential and productivity for the better of the organization overall.

You can easily find this spectrum of generations reflected in the historic recruitment campaigns of the U.S. Army. The U.S. Army ‘brand’ changes over time and adapts to appeal and attract fresh recruits.

Let’s take a look at these recruiting campaigns for the four generations before we move on to extract the practical benefits for ERGs today:

1. Veterans, Silent or Traditional Generation (born 1922 to 1945)

I admit, in practice this campaign hardly affects today’s ERG anymore since most of this age group has already left the workforce by now.

Nonetheless, using the ‘propaganda’ flavor in this message proved very successful in both WWI and WWII.

‘Uncle Sam’ captures the essence of a generation of disciplined conformers with much respect for authority and an ingrained understanding that duty to the country is an obligation.

2. Baby Boomers (born 1946 to 1964)

The U.S. Army became an all-volunteer force in 1973, which changed the recruiting game entirely. Not being able to rely on a general draft anymore, the U.S. Army needed a new approach to attract a steady stream of voluntary recruits.

This coincided with an upcoming new generation of the younger Baby Boomers generally characterized as full of optimism and thirst for social engagement. To tackle the new challenge of effective marketing, the U.S. Army brought in a professional advertisement agency.

The first ads to the “Today’s Army wants to join you” campaign (1971 to 1980) suggest membership in a nice group of people sharing many similarities.

Also, women were now encouraged to enlist. It’s all about optimism, getting together and being involved!

This was a gutsy and somewhat liberal first step to attract a volunteer force. Though thinking ‘out-of-the-box’ it did not work out all that smoothly as indicated by changes following quickly.

"Join the People who Joined the Army" — All serious in 1973

This ad (1973 to 1976) is like a pendulum swinging back to the opposite extreme!

Tone and focus changed dramatically in this newer version of “Join the People” emphasizing the seriousness and commitment of being a soldier while also highlighting personal benefits.

The message is clear: No more playing around here, responsibility and duty is back, no more football on the beach!

Finally, the U.S. Army settled on a more balanced campaign.

Here is an example for “This Is the Army” campaign ads. The headlines read “In Europe You’re on Duty 24 Hours a Day, but the Rest of the Time Is Your Own” or “Back home, I wouldn’t mind doing the work I’m doing here” influenced also by a loss of military reputation after the Vietnam war.

One campaign or another, the U.S. Army missed its recruitment goal by more than 17.000 in 1979. This announced a new generation, GenX, coming with a different background and values that required the U.S. Army to re-think and find a new approach.

3. Generation X (born 1965 to 1980)

Birthrates cut into the recruitment pool. In addition, the smaller Generation X turns out to be tough to target.

This generation came with an inherent distrust of authority originating from geopolitical change as well as changes in western society and family structures. Despite GenX’s dominant drive for independence and self-reliance, this generation is also looking for structure and direction in life.

6 Be all you can be ad — Personal growth

“Be All You Can Be” (1980 to 2001) emphasizes a personal challenge and an opportunity for self-development, i.e. taking charge of your fate to become a better individual. Note that the “we” is gone, it’s all about “me” for GenX.

The benefits offered by the U.S. Army included significant education support. (The U.S. military remains the largest ‘education organization’ in the U.S. in terms of funding tuition, in particular.)

Self-reliant GenX

The succeeding “Army of One” campaign (2001 to 2006) hits the true core of the independent GenX by underlining the single person in their message.

However, the campaign was also short-lived because a focus on the independent individual appeared contrary to the idea of teamwork that any military organization relies on and cannot work without.

Facing demographic decline, recruiting advertisement reached out into Spanish-speaking ‘markets’ (in a campaign known as “Yo Soy el Army”) to tap into the increasing Hispanic population.

Image result for image top gun free online — Top Gun (1986) movie

The U.S. Army made more use of TV advertisement to reach GenX, a generation brought up in front of a TV.

Perhaps the boldest recruitment stunt was the 1986 smash movie “Top Gun” – sponsored by the Pentagon in need of a major image boost. And it worked! Think about it: Tom Cruise is a self-reliant ace who has a problem with accepting authority – a poster-boy Gen-Xer. In the end, he became a valuable team player for the greater good meeting the military’s needs and got the girl.

4. Generation Y or Millennials (born 1981 to 2001)

The ongoing “Army Strong” campaign builds on a proposition of lifelong strength through training, teamwork, shared values and personal experience. – What a change from the previous focus on independence for GenX!

“Army Strong” also suggests contemporary leadership, personal empowerment and strength building that found on shared values.
(Read more on managing Generation Y at Generation Y for managers – better than their reputation?)

Here, ‘strength’ is meant literally: The U.S. Army overhauled the fitness training to ‘toughen up’ this generation. Weakened by a more tranquil lifestyle (such as video-gaming), GenY-ers often lack experience with physical confrontation that is unavoidable and crucial for effective warriors.

Perhaps confusing for older generations, “Army Strong” caters to GenY’s interest in making a difference not only in their lives but also for their extended communities. Work is less central in this generation while individuality and leisure value high.

The campaign milks the social ties deliberately addressing not only recruits but also the people who love and support them, i.e. the people who influence the recruits’ decisions such as family and friends as well as the broader public.

Print ad for "Army Strong" — GenY pride and social values

Consequently, the U.S. Army presents itself more as a responsible and somewhat selfless social service in advertisements by highlighting how soldiers serve their communities and for their nation beyond executing force during a conflict.

The U.S. Army adapts its spectrum of communication channels to keep up with GenY, a generation for which technology serves as an extension of their personality and their physical selves. Constantly online and connectedness with an appealing adventurous fun-factor, the U.S. Army is present across the entire landscape of noteworthy social media these days – it even entertains its own video game to warm up GenY.

Targets on the demographic curve

Next-generation ERGs and the U.S. Army both aim to attract a specific demographic: The U.S. Army targets 17 to 24-year-old recruits, looking at the lower end, while ERGs typically look for the older end, i.e. young adults with professional training, perhaps a college degree and some work experience.

Thus, the U.S. Army’s target demographic starts just a few years younger than the typical employees entering the (civilian) workforce, so the U.S. Army operates a bit ahead of the age curve that becomes relevant for ERG membership recruitment.

Let the U.S. Army do your research!

Using this time difference to their advantage, next-generation ERGs, in particular, benefit from the U.S. Army doing the heavy lifting with regard to generational research. With the U.S. Army’s advertisement contract worth more than $200 million each year (or $2,500+ per recruit) don’t fool yourself: an ERG will never have funds anywhere close to hire a top-notch advertisement agency for attracting new members … unless you are perhaps the guys who invented Google or so… J

From a next-generation-ERG’s perspective, here is what you can reap:

Target Characteristics

Using its marketing dollars, the U.S. Army identifies the characteristics of your future demographics for you – for free! Look at how the U.S. Army is targeting today. It gives you a clear picture of what the characteristics are of your next ERG generation tomorrow.

The U.S. Army shares its findings publicly. This includes a sharp outline of the specific characteristics of the youngest employees that enter your workplace now or it in the near future. So, keep an eye on the U.S. Army’s next recruiting campaign and time is on your side!

Trial-and-Error without getting hurt

It gets even better. The U.S. Army provides you with field test results on whether their findings hold true in practice: The U.S. Army’s annual recruitment figures serve as a success criterion for the recruiting campaign. These figures are available in the public domain and found easily online within seconds.

The early warning signal

If the actual Army recruitment figure exceeds or falls short of the target figure (somewhere around 80.000 recruits each year), you get an idea what worked and what did not. The latter reflects not only that the campaign lost effectiveness but may also indicate that the next generation has arrived with a changed set of values and characteristics. – Use this as a free early‑warning system for your ERG!

Note that over the past five years the U.S. Army’s number of “accessions” (=recruits) exceeded the “mission” (=target value); note though that the “mission” bar was lowered in 2009 and 2010.

When the U.S. Army misses its recruitment target in the future, the next campaign is just around the corner. A significant change in the core message targets the next generation. So, here comes your next lesson and opportunity for the ERGs!

Back to the Future?

If the U.S. Army is not for you, don’t worry. Choose any military branch of your liking – they all face the same challenge. You don’t need to love the military to learn from it, and the lessons are valuable.

As a general yet effective approach to strategic innovation, keep an eye on industries and organizations that face similar challenges earlier than you do. Learn from them and prepare your business and ERG for the change.

How to become the strategic innovation leader? (part 2 of 3)

What is an innovation leader? Is this role similar to an innovator? (The answer is ‘no’.) – Recognize the three key roles in innovation, how to find an approach and avoid critical pitfalls.

Typically, the innovation leader is not the innovator but there are exceptions such as founders of innovative companies that start out as innovators and remain innovators; think Steven Jobs of Apple, for example. However, let’s focus on more common organizations that need innovation leaders often more than they are aware of…

Conquering the world from your garage?

We all heard the stories of the sole genius inventing in a garage and a few days later they run one of the most influential companies in the world like Apple or HP. However, strategic innovation cannot rely on a one-time-wonder hoping to be repeated over and over again. Organizations become too large, technology too complex and the competitive clock-speed ever faster to leave innovation to a single genius sitting in an ivory-tower coming up with all the good stuff for the rest of the organization. Nobody is an expert in everything or savvy enough to cover all necessary angles. Even more so, many people have great ideas that can contribute to better innovative products, so make use of this critical resource!

Strategic innovation requires governance and collaboration to succeed continuously. What it takes is a process, a framework, a ‘system’ that delivers innovations consistently, timely and sustainably.
‑ Unless you believe that Steven Jobs developed your iPad all by himself, right?
He understood how to turn Apple into an ‘innovation machine’ and –over time‑ how to effectively capture the value it generates.

(To get a better flavor where I’m coming from, please check out my previous post “What does it take to keep innovating?”)

Champions for innovation

What organizations need when they ‘grow up’ beyond the ‘innovation garage’ stage is many innovation leaders in different functions. You can distinguish different innovation leaders or ‘champions’ in an organization by how they contribute to the innovation process.

In general, there are three essential kinds of champions:

The technical champion holds the technical know-how for innovations.
The business champion comes up with the funding to develop an innovation into a product of sorts.
The executive champion “follows the fellow who follows a dream” as a professor of mine put it, and this is what we will focus on shortly.

The roles of the technical and the business champion need little explanation. Let’s assume for now we have identified or (perhaps more likely) unidentified technical champions in our organization somewhere (try the R&D function) and will also find a business champion (in the C-level suite) to fund a great idea that has potential to produce a significant return-on-investment.

Are you an executive champion?

As the leaders we are or want to become, let’s focus on the executive champion as the critical and most complex ingredient in the continued innovation process. Perhaps, this is where you can shine as an executive champion in your organization!

The good news is that anyone can be an executive champion and propel the organization forward! Yet few are aware of what it actually takes to be an effective executive champion. I found it surprising that even people in professional jobs with fancy ‘innovation’ job titles often simply don’t know this! So let’s move on.

Executive champions focus on the value

The executive champion understands the difference between creating value and capturing value of innovations. No worries, it took even Apple years suffering through the consequences of bad decisions to finally get it right…
Creating and capturing value are not the same. A company can create value by developing new technologies, for example. However, at this stage this novelty by itself has no value for the organization unless it can also reap the profits from the novelty.

It takes innovation leaders to ensure this crucial step is taken deliberately and effectively. They ensure the idea or prototype makes it all the way to a marketable product and the company rakes in the profit.

Steps to success

How does the executive champion operate? What does an executive champion do to succeed?

First and foremost the executive champion promotes an innovation broadly, which includes to

Articulate a clear vision
Develop an actionable strategy
Develop capabilities that power the innovative thrust of the organization such as capabilities to build and foster specific skills, behaviors, creativity, values or a mindset.
Steer execution to not only generate the newly created value but also capture it throughout the value chain. This may include analysis of the value chain and its players, initiating projects, controlling project portfolios, driving the commercialization of creative products or services, establishing entry barriers for competitors, measuring performance, etc.

Fuzzy values? – Here are some how-to examples

Do you find all this ‘value talk’ too abstract? Then let’s look at an example how ‘capturing value’ works in real life where Apple, for instance, controls each layer of its vertical value chain to a point where it ‘owns the customer’:

Let’s take the phone and data network for iPhones in the USA: iPhones come only with the AT&T network which is inferior to the Verizon network. ‑ Trust me, I know and experience it every day!

Why would Apple chose AT&T over Verizon? Because customers want an iPhone so badly that they will literally walk out of a Verizon store and straight to AT&T to get the iPhone that Verizon cannot offer. Customers don’t pick another Verizon phone and use the superior Verizon network. Instead, they are willing to swallow the (AT&T) toad because Apple owns the customer! This way Apple holds a much stronger position over AT&T than it could ever have over Verizon, i.e. Apple controls this tier of the value chain. Too bad only for the iPhone customers stuck with AT&T like myself *sigh*… the gamble worked out nicely though for Apple.

The simple rule here is that if you don’t own the customer you don’t make the money!

The message is clear: It is not enough to have an innovative product like an iPhone. You need to know how to capture the value and this goes far beyond a fancy piece of technology! This can be the most challenging task of the executive champion to consider and figure out.
And, yes, I know there are mobile phones out there with better technology and features but they don’t have the same ‘love factor’ that continuously attracts Apple customers and locks in their loyalty.

Why innovations fail

We have seen many times that when even the most promising innovation flopped, a flabbergasted management falls short to explain why. Therefore, let’s take another perspective and a quick look at what can go wrong (and did go wrong in Apple’s past too but Apple learned over time).

Innovations can fail for many reasons. Here are the basic pitfalls to look out for in reality:

1. Failure to create value that the customer recognizes.
Often the inventor or manufacturer sees a value in an innovation that is not shared by the customer because the customer does not recognize the value, i.e. the customer is not willing to pay premium for the special feature but only spend for what they clearly see and value.
This is a frequent trap for a technology champion and can lead to products with incremental improvements towards a state of perfection that the future target customers just don’t value.

Also business champions can make the mistake to get inspired too much by the technology and fund the product development without thinking through the value chain.
You have guessed it: the technology champion and the businesses champions are the ones that lack the explanation for the failure – that’s why we need the executive champion!

2. Missing to erect effective entry barriers for competitors.
Entry barriers are an interesting chapter on their own and widely discussed, so I’ll keep this short. Since Apple is such a rich source for examples, here is another one:
The iTunes store sells apps and other content like audio and video in proprietary formats. This is a great example how Apple established an effective entry barrier for its competition by establishing itself as the sole source. It can even control the content while raking in the profits. Other companies try the same approach but find it hard to compete with Apple’s dominance.
Victoria’s Secret, the successful lingerie company, took a different approach: They fended off competition by creating apparently competing lingerie stores under a different brand in the vicinity of Victoria’s Secret stores; this led competitors to believe the market was saturated and entering it was not attractive and attracted more customers to shop in either store adding to Victoria’s Secret bottom line – smart!

3. Failure to capture the value with vertical channel innovation.
Honestly, this is a complex and tricky topic that I might dedicate a future post also extending into strategic marketing. What it comes down to is this: how you can control the vertical value chain with the question to answer at each tier ‘who owns the customer?’ ‑ The right answer is: ‘it better be you!’
For now, let’s just say it requires cooperation and offering incentives for your channel partners to remain loyal and supportive to your strategy. The iPhone network example gives you a flavor or think of the apps providers for iTunes that engage in a symbiosis with Apple.

Leading without mandate

Bottom-line, more innovation leaders tend to be better for an organization than less. An organization cannot leave innovation to individuals or an ‘innovation department’ somewhere. Everyone can and should contribute to innovation! – Take your chance and drive it, it’s fun!

‑ Please share your thoughts or questions!

References and additional reading

How strategic innovation works: “What does it take to keep innovating? (part 1 of 3)”
Starting an ERG as a strategic innovation engine! (part 3 of 3)

What does it take to keep innovating? (part 1 of 3)

Can strategic innovation rely on creative chaos? – To make a long story short, the answer is: No!
Read here what it takes to consistently innovate and give you a very cool example too.

Creativity ≠ Innovation

Let’s first be clear about what we talk about when we use words like ‘innovation’ and ‘creativity’.

In this context, creativity refers to the novelty or ‘newness’ of a product idea. However, novelties can exist without a real-world application. There is usually no shortage of new ideas in your organization but merely generating ideas alone does not lead to tangible innovations. Most creative ideas do not come to fruition because they are not feasible, too far ahead of their time or just not developed effectively to take the next step towards realization.

This is where an innovation is different from a novelty: it is the combination that translates a novelty into a marketable product (or service), so an innovation brings together the newness, the value it creates and the adoption to something marketable – or as my professors calls it: “where the rubber hits the road!”

The application gap

Some people believe that new ideas can only emerge and take shape in an environment of creative chaos or in an anarchic workplace. This may bear some truth; nonetheless, it takes more than that to propel an idea through the organization to develop it to become a marketable product.

This is where so many organizations fail and the bigger the company the bigger the challenge: good ideas emerge from employees but they get stuck and starve somewhere in the middle layers before making it through to the decision-makers in executive management. Too often there is a disconnect between ideas, decision-making and implementation.

So, what does it take to bridge the gap? What is needed to ensure ideas with potential make it through to the top to become the innovations that will drive an organization’s future success?

Bringing structure to the creative chaos

It comes down to creating a balance between the creative space and focus on the future application. Innovative organizations manage to establish a rigid process or ‘production system’ that allows their staff to be creative by harnessing the process in a way that it delivers innovations reliably, continuously and within a specific time frame. – If you don’t believe that creative chaos generates cutting-edge ideas and leads to tangible output in a clearly defined productions system: here comes the example!

The IDEO shopping cart example

A company that masters this balance between creativity and structure consistently is IDEO, a successful company and innovation leader that makes its living by developing products for others. IDEO’s successful strategy is actually quite simple and straight forward; it focuses on innovation, speed and tangible prototypes.

To get the most out of this, watch the video first before reading on. It takes 8 minutes or so and your time is well spent! In the example, IDEO’s challenge of the week is designing a new shopping cart – a product that we all know and hardly anyone seems to give a second thought about how it could actually be improved much…

While you are watching, see if you can make out how IDEO’s process works in what they call ‘the deep dive’. The guy that reminds me of Groucho Marx is actually the boss of IDEO.

So, please watch this video before you read on: http://www.youtube.com/watch?v=M66ZU2PCIcM&feature=youtube_gdata_player

Learning from IDEO

What did you observe about how IDEO works?

Let’s compare. Here are some elements of IDEO’s process that you might have noticed and that are essential to their innovation process:

The team runs one project at a time. There is focus and no distraction by other projects or interferences.
The creative work is done in a playful environment that helps to getting to fresh ideas faster. The staff has the freedom to design their working environment themselves, the creative space.
All customer interactions take place outside this creative space and don’t interfere with the creative process.
I bet some customers might be quite shocked to see how IDEO actually works if they could walk around and observe the process.
There is no hierarchy, no ‘boss’, just a commitment to follow the given creative process or framework.
The accepted attitude within the company is to dare and ask for forgiveness afterward rather than asking for permission upfront. It invites to trying out things instead of being reigned by (real or assumed) constraints from the beginning.
The team first identifies several critical dimensions then splits up to build several separate mock-ups in parallel before consolidating and converging to the final product. Trade-offs come late in the game after basic requirements have already been incorporated.
The team goes out to meet experts to learn from about relevant facts faster and shares all insight and findings they come across with the others.
The discussion or ‘deep dive’ of a team is focused and non-judgmental to allow for creative ideas to surface in a safe and trustful environment. Only one person speaks at a time and the team members support each others’ ideas while deferring any judgment.
Chaotic as it may look, the team actually follows a strict protocol or process with much discipline. One person, called the facilitator, keeps the team moving forward and was selected for the ability to be good with people, not for expert knowledge. This facilitator ensures the team remains on track, focused and follows the framework of the creative process.
There is a strict time constraint for the project to force teams to produce results. Occasionally, the facilitator acts somewhat autocratic by forcing group decisions to keeping the team on schedule.
Teamwork and trial-and-error succeeds over the plans of a lone genius.
Every team needs to produce a tangible product like a prototype or mock-up. A merely ‘theoretical result’ does not suffice. The prototypes are tested in real-life environments by the end users.
All team members vote for the best and feasible ideas while everyone contributes working towards the final product.
‘Adults’ coordinate the overall process to ensure the teams meet customers’ expectations in the end.

What you do not see in the video but you might be interested in is how IDEO selects its people, the company’s most important asset and success factor. The teams are deliberately composed of members with mixed backgrounds and expertise. Much effort is put on the recruiting process and it takes 17 or so interviews before one gets to work for IDEO. These interviews focus on the culture fit and attitude of the interviewees. Performance evaluations found on peer reviews.

Oh, and don’t miss this one: IDEO deliberately hires people that would not listen to their boss!
Imagine that in the places you and I work!

So, what does it take to innovate?

What are the essential and generic characteristics of the innovation process?
Here is what it comes down to in summary to systematically and continuously innovate in an organization:

Open and conductive environment and company culture.
Carefully selected, highly motivated and diverse teams
Process aligns creativity and discipline
Leaders who demand and promote innovation.

As IDEO puts it, they are experts of the process, not of the product they start working on. – This is the (open) secret of IDEO’s success.

Still want more?

There are more free videos on IDEO and how they operate as well as on their shopping cart project publicly available on YouTube, for example.

In case you want to get involved yourself in innovating with IDEO, check out their open innovation network!

I plan to discuss more aspects of strategic innovation soon such as what it takes to be the innovation leader in your organization…

– Stay tuned and please share your comments!

References and additional information

Home page of IDEO, the highly successful product design company
The IDEO innovation process using the shopping cart example: http://www.youtube.com/watch?v=M66ZU2PCIcM&feature=youtube_gdata_player
The IDEO open innovation network that you can participate in!

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