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Video - Innovation Awards (Globe Forum). Each Innovator has just 60 seconds to persuade the audience to back him.  Chaired by Patrick Dixon, Chairman of Global Change Ltd, co-author of SustainAgility, and Innovation Coach. Interview with Johan Gorecki.

The Puzzle of Innovation

(Article on Future of Innovation by Patrick Dixon, Chairman of Global Change Ltd, and advisor to many multinationals on innovation, change management, trend spotting and related issues. Also below: INNOVATION FORUM structure, lectures and videos on Innovation)

Here is a strange paradox: many CEOs complain about lack of innovation, but their own workers often say their leaders are hostile to new ideas.  That’s why I find innovation workshops are often so electrifying, as they unleash all this frustrated creative power.

The first thing to do is change your culture.  For example, always reward those whose ideas are used, honour them publicly, give them ongoing profile, show them why their innovation has made such a difference, and before long you are likely to see more innovations.

Give people a clear vision and focus on the problem

When people have a clear vision of where you are going, and are passionate about making it a reality, you can’t stop innovation and you also encourage agility:  great ideas, concrete solutions, practical down-to-earth immediate actions to get great results.  You are also more likely to get huge co-operation, rapid agreement, solid effort, readiness to change and astonishing progress.

Give people space, allocate time as a team, encourage wild unusual thinking, think the “unthinkable”, don’t interfere, be slow to criticise an early idea, use every suggestion as a learning opportunity, expect answers may come from unusual approaches – they often do - and HAVE FUN!

People often don’t bother because they don’t understand the bigger picture, think the benefit is likely to be small, that someone else will do it, that there will be no demand for the idea, or because they are worried about failure and being blamed for trying something “stupid”.   So do make really sure your mission is clear, that people know why their work is really important.

CEOs behave differently in agile and innovative organisations.  For example they may promise to respond to every e-mailed idea from anyone at any level in the organisation.  Anyone whose idea is used should be regarded as a hero. It takes courage to get out there and market a new idea, risking a mistake,  or that some people might think you a fool.

Innovation – focus, focus, focus

Successful global companies which grow organically rather than by buying other companies, do so by devoting most of their energies to refine what they are already doing, and develop a small number of breakthrough ideas.

Only 80 of Fortune’s Global 500 companies managed annual average growth of 5% from growth of their own sales, rather than through buying up competitors.  Organic growth champions such as GE, BMW, Nestle and Samsung gave their shareholders almost double the financial return than other Global 500 companies.

Concurrent innovation has been a common feature in such companies.  Progress in one area triggers changes elsewhere, and provides new resources for a third area.  For example, when Peter Brabeck-Letmathe became CEO of Nestle in 1997, he focussed first on making the company more efficient.

He then used the money he saved to double research and development.  One of the results was Nespresso, which created a new market for portioned-coffee systems, with average sales growth of 30% over 8 years - $2.2 billion by 2009.

When GE launched Ecomagination in 2004, their first task was to cut the number of new initiatives in GE Global Research from more than 2,000 to just 80 – but each  had potential for at least $100 million sales over three years.

GE sends new ideas to a review board which includes CEO Jeffrey Immelt, to assess potential and investment needed to take each one to the next stage.  Usually only 8-10 are in the pipeline at any time, each sponsored by top managers and defended fiercely against budget cuts.

Half the new projects are usually to change how existing products are produced and delivered – for example combining 44 commercial finance sales teams into one. Ecomagination revenues and orders now exceed $17 billion.  GE’s is investing $1.5bn a year.

In the same way, Procter and Gamble focuses research and development on just 8-10 key areas and Nestle supports only the 10 most promising innovations, with progress personally tracked by their CEO.

Open Innovation – share ideas faster

All great business innovation is about doing things differently to serve customers better.  Innovations often come from unique combinations of ideas, from unrelated disciplines.  Cross-fertilisation is vital, yet most innovators work only with people inside their own companies, and are fiercely protective of their ideas.  They may be secretive: not sharing their ideas even inside their own organisation, maybe in competition with other departments or business units.

So-called “Open Innovation” is a radically different approach, linking different groups together in a less formal way to solve complex problems faster.  We see many examples of open innovation in the online world.  For example, Wikipedia is an open encyclopedia, written and improved by hundreds of thousands of contributors, who give away their knowledge in order to be part of something truly great.  Anyone in the world can change any sentence in a few seconds on almost any page.

Google has been using open innovation to help solve complex global challenges. They recently gave a call for “ideas to change the world by helping as many people as possible”.  Thousands of people from more than 170 countries submitted more than 150,000 ideas. They noticed common elements in the responses which they wove together into innovative approaches to solving some very pressing problems.

Online communities are agile, rapidly evolving, open to influence.  For them, open innovation is as natural as they air they breathe.  They communicate 24 hours a day at the speed of light, forming and reforming new specialist networks and interest groups, sharing common problems and finding answers together in a form of “collective intelligence”.

This new generation of digital natives is already creating huge pressures on companies and governments.  They trust the opinion of strangers who are part of their community far more than politicians or CEOs or marketing claims.  They are punishing companies online for cover-ups, secrecy, deception, antisocial behaviour, careless acts or wrecking the environment.

“Open source” software is another example of open innovation. Anyone is able to read the computer code and to make improvements, which they can share with their wider community.  The Linux operating system and Joomla website database software were developed this way.

Most innovative manufacturers are also using Open Innovation to one degree or another, whether they fully understand what they are doing or not.  Life is too short to try to find answers to complex manufacturing or research problems if someone else has already developed an answer, and is willing to co-operate with your company to develop it rapidly.

Faster innovation through wider networks

Many companies get their own scientists and engineers to develop all new products from research to strategy, only contracting out very small parts of the process (if at all).  In theory, such a strategy is very efficient. However, it has led to tens of thousands of "me-too" products, mere extensions of existing products.  Radical breakthroughs are rare.

Take the pharmaceutical industry.  The top 10  companies have research and development budgets which are as large as the combined GDP of 130 nations, yet 70% of ground-breaking new products over the last five years have been developed outside of big pharma teams, by some of the world’s 4,000 small biotech companies.  As a result, large pharma companies are now spending much of their research budgets buying up or licensing other people’s innovations. They each had a choice:  innovate more openly or die.

Pfizer used a collaborative model in their deal over the blockbuster Lipitor. The drug’s creator, Warner-Lambert, partnered with Pfizer to turn a good product into a blockbuster success, using Pfizer’s strong marketing and sales teams (Pfizer later merged with Warner-Lambert).

Likewise, GE has developed open innovation in partnerships with Universities. For example, they have developed a pathology scanner to digitise slide images in partnership with the University of Pittsburgh Medical Centre.  GE is also collaborating with Eli Lilly and the Memorial Sloan-Kettering Cancer Centre to develop new data analysis tools.

IBM is also a major supporter of open innovation, working with universities, but at the same time collects more patents each year, for its own use, than any other company.  Many IBM innovations have their origins in some kind of collaboration.

Proctor and Gamble is well known as a champion of open innovation.  As a result they often get to hear about innovations before their competitors.  A key aim of open innovation is to position yourself as partner of choice when a smaller company is looking to sell or license an innovation or to work in partnership.

Deutsche Telekom has spun off several new start-ups, backed by venture capital, since adopting Open Innovation in 2004, when they set up Deutsche Telekom Laboratories in 2004 as a research institute affiliated to Berlin Technical University. Similar partnerships developed with Ben-Gurion University, Israel, and in Silicon Valley, and the number of researchers and scientists doubled to 300.

Apple has a closed innovation programme for hardware and basic operating of devices like the iPhone, but encourages open innovation in development of  applications.  Google has opened up the Android operating system to thousands of collaborators and is also encouraging open innovation in development of applications.  Google is one of the most innovative companies in the world. Every employee is given a free day every week to innovate, which does not have to be confined to their own business unit.

Procter and Gamble has a strategy to harness the talents of 1.5 million scientists with relevant research who are outside the corporation, combined with the intellectual fire-power of their own 8,600 research team.

Open innovation does not always save money.  It shifts the costs of innovation from an internal research and development, to legal and intellectual property teams and to business development teams.

Isolate or integrate innovation teams?

In some ways the opposite of open innovation is the black box or skunkworks approach, where an innovation team is working in isolation from the main business, protected by support from very senior leaders.

The benefit is that rapid innovation can take place without opposition from those in other business units whose very existence may be threatened if the project takes off.  However, it can be hard for the rest of the organisation to feel any sense of ownership if the project takes off, which can create huge problems later on.

Take hold of the future, or the future will take hold of you.

Article adapted from SustainAgility book.

Innovation Workshop

PATRICK DIXON IS AN INNOVATION AND TRENDS AUTHOR: Author of 14 books with over 500,000 in print, including latest book SustainAgility - how smart innovation will help solve the world’s greatest challengesFuturewise, and Building a Better Business – how to lead more effectively, motivate teams, drive change, and encourage rapid innovation. BUSINESS SCHOOL TEACHER: contributor to wide range of executive education programmes and MBA courses.  INNOVATION DRIVER:  Turning 2020 vision into practical action: longer and shorter term assignments to transform innovation, strategy and speed of change.  Patrick Dixon has led / facilitated Innovation Workshops / Programmes in the following areas:  health, biotech, pharma, insurance, travel, call-centres, banking, green technology.

THEME: All great innovation is about doing things differently to serve customers better, and all great leaders are passionate about innovation. 

All the innovative ideas you need are probably already in the minds of your teams. The issue is how to release them right now, to turn them into profit. Right now.

So how can you drive more rapidly the next wave of innovation in your own teams, to fulfil your 2020 Vision?

STYLE AND APPROACH: Interactive, visually rich, entertaining, high-impact and provocative presentation to help set up the most important issues / themes / topics for following days.  Highly customised content on innovation, developed in close collaboration with senior team, with specific links to the territories, business trends and product ranges most relevant to the 20 participants.  This is a small group so the style will be informal, encouraging full participation and engagement right from the start, with optional Innovation Master Class.

PARADOX OF INNOVATION: CEOs often complain about lack of innovation, but their own workers often say that their leaders are hostile to new ideas.  That is why Innovation Workshops are often so electrifying, as they unleash all this frustrated creative power. 

VISION AND STRATEGY: When people have clear vision of where you are going, why it matters, and are passionate about making it a reality, you cannot STOP innovation – great ideas, practical solutions, immediate actions for great results. 

CASE HISTORIES: Nestle – Nespresso; GE – Ecoimagination; Proctor and Gamble.

INNOVATION MAP: First we need to understand about how your own consumers and competitors are changing: where and why you need innovation right now.

-    Product innovation – range, extensions of existing products, radical steps to better future for customers
-    Packaging innovation – cost / environment saving
-    Brand innovation – style / image / labelling / tone of communications
-    Marketing innovation – eg new channels, social networks, mobile marketing
-    Manufacturing innovation – synergies, operational efficiencies
-    Logistics / distribution innovation
-    Franchise / partnership innovation – new business models
-    .... and so on

INNOVATORS AND INCUBATORS: create an environment to drive innovation.

-    Great practical ways to generate innovative ideas from your team
-    How CEOs encourage creative, innovative culture while managing risk
-    How to adapt your own leadership style to accelerate innovation
-    How to convert great ideas into business strategy (incubator)
-    How to create strong sense of ownership with all those who matter
-    Common barriers to innovation and how CEOs can overcome them

OPEN INNOVATION: how companies are using a Wikipedia-style model to solve problems rapidly using the brain-power of communities outside the corporation (crowd-sourcing).  CASE HISTORIES – Google, Pfizer, IBM, Procter and Gamble, Deutsche Telecom, Apple, Roche, Nokia, Sony.  What Open Innovation may mean for Coca-Cola in your country, to help solve key problems faster.

TIME FOR ACTION: Optional Innovation Master Class: (1-3 Hours - or extend to whole day)

1)    Different business / team leaders share problems they need innovative answers for
2)    Group selects which problem(s) to work on
3)    Brainstorm possible solutions – using techniques learned
4)    Evaluation and Idea Stretch
5)    Next steps

Presentation Slides on Innovation and related themes

Technology Convergence - Shaping our Future Innovation keynote presentation to South Korea technology audience.  Nanotechnology, biotechnology, next generation digital, open innovation and crowdsourcing, future of manufacturing, logistics, telecommunications.  What it all means for tomorrow's consumers.

Future of IT Security and Digital Change - Symantec client event - keynote to CIOs and CTOs on impact of clouds, crowds, convergence, connections (mobile) and controls needed to make it all safe.  Steps that all CIOs need to take today.

Future of Manufacturing - Business Week / Siemens client event in Boston for manufacturing industry analysts.  New markets and technologies in manufacturing.  Impact of credit crunch.  Nanotechnology and biotechnology, future of the pharmaceutical industry and space technology.  Divergence and convergence.  Impact of global warming, energy costs and worries about sustainability / climate change Outsourcing, offshoring trends reversal, emerging markets as consumers and manufacturers.  Innovation in manufacturing.  Listen to i-pod audio and watch slides.

Future of the Pharmaceutical Industry and Health Care Trends - for ICPM - medical directors of research in Pharmaceutical companies on innovation, new patterns of health care, challenges in drug development and drug discovery. New regulations, government and insurance remuneration policies. Patient expectations and unmet needs.  Over the counter therapies and prescription only treatments.  Health care costs, patents, generics and manufacturing, patient safety and future of clinical trials.

Book Patrick Dixon to run an Innovation Workshop with your own team. Crack complex problems, find practical solutions, invent your future.

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Thanks for promoting with Facebook LIKE or Tweet. Really interested to hear your views. Post below.

Ann Williams
November 23, 2014 - 15:47

Great post,
well presented.

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