Why Innovation Champions Fail And What To Do About It IIR Return on Innovation Conference 12/4/03

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Why Innovation Champions Fail And What To Do
About ItIIR Return on Innovation
Conference12/4/03

• Jack Hipple, Innovation-TRIZ
• Tampa, FL
• jwhinnovator_at_earthlink.net
• www.innovation-triz.com

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QUESTIONS

• ARE YOU AN INNOVATION CHAMPION?
• IN WHAT CONTEXT?
• HAVE YOU SURVIVED?

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I. WHY IS THIS TOPIC IMPORTANT?

• Corporations are constantly looking for
  inventions, acquisitions, collaborations, and
  processes which can allow them to grow at a rate
  faster than the GDP of the country/world--and
  faster than their competitors!
• Many unsuccessful attempts have been made to
  sustain internal efforts to support these
  goals--nearly all have been terminated (sometimes
  restarted years later!)
• These efforts have spent HUNDREDS of millions of
  dollars!
• Perception that there are untapped ideas within
  the organization
• Even perceived successes have seen downsizings
  eventually

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WHY IS THIS IMPORTANT?

• Previous leaders of these programs, for the most
  part, are in successful consulting businesses or
  start-up companies--major corporations have lost
  them--probably forever
• Their clients frequently include ex-employers!
• Learnings? It seems we are starting all over
  again!

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THE AMI STUDY
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ASSOCIATION FOR MANAGERS OF INNOVATION (AMI)

• An informal group of 50 innovators, most of whom
  have (had) responsibility for innovation programs
  within large companies, government agencies, or
  non-profits
• Meets twice yearly with outside stimulus speakers
  and sharing of experiences
• Active since 1986
• Sponsored by Stan Gryskiewiecz at CCL

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AN OBSERVATION WAS MADE..

• A large percentage of corporate innovation
  managers had become consultants or joined
  start-ups, after downsizings and early
  retirements
• These were usually associated with termination of
  the function
• With further passage of time, the percentage rose
  more, with 15 people (out of 30-40 active
  members) identified
• Note trend has continued

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AMI DECIDED TO..

• Survey and study this phenomenon
• Jack Hipple, Innovation-TRIZ
• David Hardy, Bank of Montreal
• Steve Wilson, Eastman Chemical
• James Michalski, Eastman Chemical
• See if there were any learnings that could be
  shared
• Publish if possible

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Survey Questions

• MBTI, KAI profiles
• Funding mechanism
• Leadership/sponsorship
• Ideation process
• Tools used
• Personal insights

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RESULTS

• Study completed in late 2000
• Publication complete
• Chemical Innovation, 11/01
• Leaders in Action, 5/02
• Condensed versions on various web sites
• Presentation at World Future Society (7/01), CPSI
  meeting (6/02), ACA (7/02),Innovation Network
  (9/02), IIR (12/03)
• Input to Harvard Business review article on
  innovation
• Results can be shared anonymously
• Findings significant
• Additional data is supportive

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LEARNINGS FROM STUDY

• Significant differences between styles of
  innovation champions and norm around them
• KAI and Myers Briggs Type Indicator analyses
  can help assess
• Personal learnings and experiences--what would be
  done differently?

KAI is a registered trademark of M.J.
Kirton Myers Briggs Type Indicator is a
registered trademark of CPP, Inc.
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INSTRUMENTS FOR ASSESSMENT
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MYERS-BRIGGS (MBTI)

• A tool which measures our style of social
  interaction and how we analyze external
  information
• Extraverted/introverted (E/I)
• Sensing/intuition (S/N)
• Thinking/feeling (T/F)
• Perceiving/judging (P/J)
• 16 possible combinations
• Ex ESTJ, INTP
• Not equally likely

MBTI is a registered trademark of CPP, Inc.
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MBTI

• 90 of innovation champs were Ns, 70 NTs
• Less than 10 of the population are NTs
• gt80 of corporate senior managers are S,
  typically ESTJs
• This sets up major potential conflict

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IMPACT OF MBTI DELTAS

• Change always seems bigger to an S than an N
• Ns are more comfortable with change in general
• If desired change is not defined clearly,
  conflicts will result

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EXAMPLES.

• We need to do different things in this company
• Does this mean get into an entirely new business,
  make an acquisition?
• Does this mean we need to process existing orders
  more efficiently?

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A COMPANY CAN HAVE A CULTURE.

• SJ---Likes stage gates, continuous improvement
  teams
• NJ---Likes targeted breakthroughs
• SP---Continuous improvement, bottoms up
• NP---Internal venturing, sustaining ideas

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THE KAI INSTRUMENT
KAI is a registered trademark of M.J. Kirton
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WHAT KAI MEASURES

• MBTI measures how people relate to each other
• KAI measures how people relate to
  problems--their problem solving style
• Instrument sub-scales measure originality,
  rule/group conformity, and efficiency

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THE INSTRUMENT

• A 32 question assessment with a range of
  responses
• Range of score, 32-160
• (32 questions X (1-5) response
• 15-20 minutes to complete
• Highly validated across many areas and cultures
  globally
• Dr. Michael Kirton, Occupational Research Centre,
  Hatfield Polytechnic Institute, England
• Indiana State University, Terre Haute, IN

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KAI DIFFERENCES

• Managerial norm is 95
• Total norm around 90
• Average of innovation champs was 135
• Friction visible with differentials of 10-15 (at
  any point)
• Warfare visible with differentials of 30

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KAI DISTRIBUTION
NORM
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IMPACT OF KAI DELTAS..

• Replacing vs. improving
• Reaction to internal vs. external threats
• Appreciation for detail
• Right vs. risk

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OTHER TOOLS

• Alternative tools for evaluation
• BCPI
• 16 Types
• Gatehouse Alliance Discovery/Insights

BCPI is a registered trademark of Gerard
Puccio 16 Types is a registered trademark of True
Type Testing Insights is a registered trademark
of Andrew Lothian, Insights
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ACCEPTANCE OF PERSON AND THEIR IDEAS
DISLIKE
IGNORE
SABOTAGE
ATTITUDE TOWARD PERSON
SUPPORT ENCOURAGE
HELP
LIKE
HIGH
LOW
NOVELTY OF IDEA
Source Charlie Prather
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ACCEPTANCE OF IDEA
EQUIVOCALITY
LOW
HIGH
DISTANCE
MOTIVATION
BLACK HOLE
GRAND SLAM

DEAD IN THE WATER
LONG SHOT

HIGH
COMMUNICATION
LOW
Source National Center for Mfg Sciences Study
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WHATS BEEN TRIED?

• A specially funded enterprise, usually under
  the umbrella of the RD organization
• Funding usually (but not always) outside the
  control of existing business units and sometimes
  at the expense of these existing businesses
• Sometimes combined with other corporate
  initiatives in acquisitions or venture capital
  efforts
• Sometimes minimally funded for support staff
  only--cant fund and cant say no---primary
  responsibility was encouragement, moral support,
  and guidance
• Programs sometimes focused around a unique
  physical facility
• Leadership of program frequently in the hands of
  one key senior leader

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WHAT WORKED

• Ideas were stimulated and new businesses were
  started
• RD personnel were allowed to explore outside
  their normal focus area
• Special meetings, demonstrations, exercises
  highlighted the importance of the activity and
  demonstrated support
• New tools and techniques were introduced

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WHAT DIDNT WORK

• Ideas, in general, were not integrated with
  complete corporate business structure and
  environment
• New business not at the rate desired
• Ignorance of the amount of effort and investment
  required to change the corporate climate and/or
  business
• Business/commercial involvement after the fact
  caused priority conflicts and resentment
• Virtually no involvement of the sales/marketing
  organization
• Time horizons and impact poorly estimated
• Narrow and individual sponsorship
• get the bandit on board the train----Charlie
  Prather
• Lack of skill training

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CONSEQUENCES

• Subtle forms of sabotage
• Corruption of funding process
• Lack of staying power during economic downturns
• Program died with the loss of sponsor
• Maybe this wasnt such a good idea after all
• Uneven skill and tool training produced uneven
  results across an organization

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CONCEPTS PROVED VALID

• People within an organization DO have new and
  unique ideas
• There ARE new business opportunities which will
  not be discovered by normal business visions and
  processes
• Independent funding mechanisms, no matter what
  kind, can stimulate different activities

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CONCEPTS PROVED INVALID

• A single location (creativity centers), by
  itself, within an organization, can facilitate
  broad organizational innovation
• The RD function can do it alone, or in spite of
  other functions

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RECENT BUSINESS TRENDS

• Customer driven vs. technology driven ---the
  balance has shifted significantly
• Core competencies being used to identify focus
  areas and frequently used as shadow organization
  structures
• Alliances and strategic partnerships that are not
  necessarily permanent
• New problem solving tools
• scientific vs. psychological
• Business teams and organizations vs. functional
  leadership of activities

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RECENT PERSONNEL TRENDS

• Dramatic decline in loyalty, downsizings
• Increased specialization
• Temporary assignments and more rapid turnover
• Impact
• Capturing and broadening of intellectual property
  (not just patents, but know how) much more
  important AND difficult

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TECHNOLOGY ADVANCEMENT VS. TIME
Desired
Advancement
Actual
Time
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WHAT ELSE HAS CHANGED?
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A DRAMATIC CHANGE.
GENERATING
COST OF INFORMATION
Source Jim Palmer, PG
DISSEMINATING
TIME
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COST OF INFORMATION..

• Generation
• Must be right in the first place
• Must be focused on the right problem
• Problem definition more critical than ever
• Must be protected and provide value
• Dissemination
• Retrieval
• Access

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LONG TERM BUSINESS TRENDS (NOT CYCLES)

• Emergent Action Rational Action Constrained
  action

Charismatic Leadership
Creative Network
Conservation
CRISIS
CHOICE
Confusion
Strategic Management
Entrepreneurial action
Source Crisis and Renewal, David Hurst, Harvard
Business School Press, 1995
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REGARDLESS OF WHERE YOU ARE IN THE CYCLE.

• Innovation is ALWAYS NEEDED!

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HOW SHOULD WE DO IT RIGHT--IN AN ORGANIZATIONAL
SENSE?
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• Money isnt everything..but its right up there
  with oxygen
• Rita Davenport, Entrepreneur

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FUNCTIONAL INTEGRATION

• All innovation efforts and initiatives must
  include or have a mechanism to trigger inclusion
  of the commercial and manufacturing base of the
  organization
• Who is going to buy?
• How are we going to make?
• Do we have the required competencies?
• Should we license and/or find a partner?

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IDENTIFICATION AND ASSESSMENT

• These skills are not usually present in one
  individual--must be paired up early
• Can be a great mechanism to involve commercial
  organization
• Simple skills can be taught and learned by
  everyone
• What happens if this actually works as planned?
• The new monomer example
• The B-2 bomber

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Six months in the lab will save at least an hour
in the library
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LONG TERM TREND ASSESSMENTS

• What is affecting your customer? Their customer?
• What could put both of you out of business?
• What are the impacts of broad new trends?
• Lines of evolution from TRIZ methodology

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USEFUL TECHNIQUES

• Simulate emergencies, surprises
• Deliberate articulated strategies
• Expansion of core competencies
• Separate thinking from criticism (Six Hats
  process)
• Corporate crusades
• Meetings and visiting with totally unrelated
  people and technologies
• APTT and Edward DeBono organization

Six Hats is a registered trademark of Edward
DeBono and APTT
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Peter Drucker, 1982

• Innovative companies do not start out with a
  research budget. They end with one. They start
  out by determining how much innovation is needed
  for the business to stay even. They assume that
  all existing products, services, and markets are
  becoming obsolete--and pretty fast at that. They
  try to assess the probable speed of decay of
  whatever exists, and then determine the gap
  which innovation has to fill for the company not
  to go downhill. They know that their program
  must include promises several times the
  innovation gap, for more than a third of such
  promises--if that many-- ever becomes reality.
  And then they know how much of an innovation
  effort--and how large the innovative budget--they
  need as the very minimum

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Hamel and Prahalad

• Slimming down the workforce and cutting back on
  investment are less intellectually demanding for
  top management than discovering ways to grow
  output on a static or only slowing growing
  resource base. Cutting the buck is easier than
  expanding the band thus organizations prefer the
  former over the latter. Managers and operational
  improvement consultants must ask themselves just
  how much of the efficiency problem theyre
  working on. If their view of efficiency
  encompasses only the denominator, if they dont
  have a view of resource leverage that addresses
  the numerator, they have no better than half a
  chance of achieving and sustaining world class
  efficiency

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Hamel and Prahalad (2)

• Few companies seem to have asked themselves what
  is the opportunity cost of the hundreds of
  millions--or even billions-- of dollars that have
  been written off for re-engineering and
  restructuring. What if all that redundant
  brain power had been applied to creating
  tomorrows markets? Far from being a tribute to
  senior managements steely resolve or
  far-sightedness, a large restructuring and
  re-engineering charge is simply the penalty that
  a company must pay for not having anticipated the
  future
• Competing for the Future

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Desi DeSimone, ex CEO, 3M

• Why did you get into a position that you had to
  lay off a bunch of people? How come youre so
  smart now that youve laid off a bunch of
  people?
• Fortune, 1985

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HOW DO YOU KNOW IF ITS GOING WELL?

• You are getting unsolicited business plans
• People are making suggestion as to what might
  replace your existing business
• Ideas from strange places and meetings
• Hiring changes

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PERSONAL CHALLENGES FOR INNOVATION CHAMPIONS

• Recognize that your social style is most likely
  to be
• N (intuitive) vs. the S (sensing) which
• characterizes over 80 of corporate management
• You will be very comfortable with vague, broadly
• shaped exciting opportunities without
  necessarily
• being specific about sales and profit dollars
  and timing
• Those who are funding your effort, as excited as
  they may
• be about new stuff, will quickly want to know
  who is
• going to buy the new stuff, when they will start
  buying,
• what it will compete with, how much the plant
  will cost,
• and when it can start producing
• As you progress in this role, follow one of the
  well
• established quality rules and know what your
  customer wants---
• and frame your gut feels into hard data. If
  you need help
• to do this, get it!

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More challenges

• Recognize that your problem solving style is
  likely to be much more unstructured and not
  obvious to those around you, especially those in
  corporate management. This is your problem to
  deal with, not theirs
• They are the ones who will have to commit large
  sums of money at risk and it is important for you
  to recognize this. Our experience in this area
  is that a gap of 15-20 in a KAI score is
  sufficient to cause dissension in problem solving
  and communication
• The study of the failed corporate innovation
  programs showed that it is likely that the
  difference between your KAI profile and that of
  corporate management around you is closer to
  35-45 points, setting up a potentially
  significant communication gap in the area of
  technical opportunity definition and the
  perceived need for hard data and analysis, group
  focus, etc. Again, this is your problem to deal
  with
• Clearly explain how your data and information
  supports your ideas and conclusions, focus your
  meeting and communication processes. Again, if
  you need help to do this, find an adaptive KAI
  person and gain their insights. Study what these
  differences imply and use these differences
  pro-actively

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More challenges

• Be flexible in evaluating possibilities and
  options and help those around you do this as
  well.
• As opposed to the last generation of innovation
  efforts, the large scale of most significant new
  business opportunities and the focus of most
  large organizations on their core competencies
  argue for flexible commercial strategies
  including in-licensing, out-licensing, joint
  ventures, temporary collaboration, and global
  manufacturing options.
• Help those around you see all the possibilities
  out there, before large amounts of money are
  committed.

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And still more

• Use both inside-out and outside-in thinking and
  help those around you see the value in both.
  Though the days of heres what I have or can
  make, now go sell it are long gone, it is
  important to have external driving forces and
  current customer input balanced by considering
  what opportunities exist to expand the commercial
  impact of existing core competencies as well as
  talking with potential customers who might
  replace your current customers
• There may need to be some tact and diplomacy
  needed here, but it is imperative that these
  externally generated imperatives do not come
  solely from short term product improvement needs.

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• GOOD LUCK!
• Q and A

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YOUR ACTION PLAN FOR ORGANIZATIONAL INNOVATION
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QUESTIONS TO ANSWER

• What is the objective of the organizational
  innovation program? State clearly in relation to
  the current organizational or business objective.

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QUESTIONS TO ANSWER

• What is the current climate inside the
  organization?
• How do you know?
• How was it measured?

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QUESTIONS TO ANSWER

• What is the objective of the organizational
  innovation program? State clearly in relation to
  the current organizational or business objective.

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QUESTIONS TO ANSWER

• What is the current climate inside the
  organization?
• How do you know?
• How was it measured?

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QUESTIONS TO ANSWER

• What is the potential gap between the objective
  of the organizational transformation and the
  current organizational climate?

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QUESTIONS TO ANSWER

• Who is going to lead this transformation?
• What is their style?

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QUESTIONS TO ANSWER

• What is the style of the managers to whom this
  activity will report?

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QUESTIONS TO ANSWER

• How large is the gap between (4) and (5)?
• How do you plan to close this gap of behavior
  and understanding?

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QUESTIONS TO ANSWER

• How deep is the senior management support for
  this activity?

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QUESTIONS TO ANSWER

• How will success be measured?
• By whom?

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QUESTIONS TO ANSWER

• What is the time frame for implementation and
  impact?
• Who decided?
• How realistic is it?