A couple of weeks ago I was given an advance copy of a new book called The Other Side of Innovation: Solving the Execution Challenge, by Vijay Govindarajan and Chris Trimble, two faculty members from the Tuck School of Business at Dartmouth.  The publishing date will be September 2, 2010.

I'll start by saying that this is one of the most useful books on innovation I've read in a long time.  I want all of my clients to read it.  A few months ago, I wrote a post cautioning business leaders against expecting innovation to happen within their development processes.  In this book, the authors focus on this point, and provide clear guidance for developing innovative ideas that cannot (or should not) be developed within the existing development process.

The book is broken into four main parts:

In the introduction, the authors provide some good background information to help the reader to discern whether or not a new idea should be developed within the current development process, or whether a new process should be created.  They use clear examples, and illustrate which types of ideas the current processes should be able to handle, and show examples of companies that have executed both within new and existing processes.  In this section they also lay the groundwork for their basic premise that managing innovation is not a wild, maveric process.  It is a controlled, disciplined process that just happens to look very different from managing the day to day business.  The rest of the book discusses how to create and manage the new process once it is determined that the innovation cannot be developed within the existing process.

The next two sections present the heart of their recommendations for executing innovation.  The first section contains three chapters discussing how to build the team.  They call the team charged with developing the new innovation the Dedicated Team, and clearly point out how this is different from the team that is charged with managing day to day development, called the Performance Engine.  These designations are very useful, and the authors do an excellent job of describing how the two teams need to collaborate, how to select people for the Dedicated Team, and how to manage the partnership between the two.  They also make a nice distinction between the responsibilities and challenges the leader of the Dedicated Team will face, and the role of the senior executives who need to support them.  What I found particularly useful is that they identified just about every "pink elephant" that could be in the room when discussing these issues, and this book could be used as a guide to foster objective discussions about potentially sensitive issues.

The second of the two sections discusses the management of the innovation initiative itself, referring to the work of the Dedicated Team as running a disciplined experiment.  These chapters provide an excellent resource for illustrating how the work of executing innovation is very different from the work of the day to day development process.  It discusses performance metrics, and how Performance Engine metrics will be harmful to the execution of innovation initiatives.  They present an enlightening way to talk about planning, acknowledging that plans for innovation initiatives can only be based on assumptions.  The goal of the process is to focus on learning, considering the initial plan as a hypothesis, and adjusting it as more information is learned.  They also discuss the fundamental difference between this approach and the Performance Engine approach, which is to focus on results and adherence to plan.  Again many "pink elephants" are exposed as the authors point to the many ways it is easy to fall into the trap of using Performance Engine metrics when evaluating against assumptions.

The final section is the conclusion, and here the authors share several innovation myths, many of which center around one main idea.  Managing the innovation process is not the result of people breaking rules, creating crazy ideas, and throwing things against the wall to see what sticks.  This is akin to what I would call running a casino inside your company.  Instead, managing innovation requires just as much discipline and rigor as managing the Performance Engine.  In fact there is no room for running on autopilot, as the team needs to be on their toes constantly to evaluate what they are doing to see if they are getting closer to their goal.  The authors do a great job of calling out and dispelling these myths repeatedly throughout the book, and it's nice to see them listed out at the end.

Finally, this book is clearly for people looking to manage the execution of innovative ideas to make them real within an organization.  It is not for people who are looking create new ideas.  In fact there was only one statement I disagreed with, and it came at the end of the book.  As the authors were reiterating their point that innovation cannot happen without disciplined execution, they correctly point to the fact that most organizations focus most of their innovation efforts on the Big Idea Hunt.  They then say that the Idea Hunt may be serendipitous and difficult to manage, but that this random nature applies only to the Idea Hunt.  Here I strongly disagree.  In my work, I apply similar principles and discipline to the Idea Hunt.  What this tells me is that regardless of whether you are trying to create new ideas, or develop the most promising ones, developing innovative ideas is anything but random and Govindarajan and Trimble have presented an excellent guide for how to execute them.

I was thinking about the value of intangibles and the "knowing where to tap" story came to mind.  If you don't know it, it goes something like this:

A jet engine manufacturer was experiencing failures in one of their large turbine engines.  After trying everything they called in an expert turbine engineer to consult on the problem.  After studying the situation for a few minutes, the engineer asked for someone to bring him a ladder and a hammer.  He then positioned the ladder up against a section of the turbine, climbed to the top, and tapped the turbine several times with the hammer.  He then instructed them to turn on the turbine, and it ran smoothly.

A week later, the manufacturer received the invoice for the work, and was shocked that the total came to $5000.  He called the engineer and asked if he could break down the costs, as $5000 seemed like a large amount of money to pay for a task as simple as climbing a ladder and tapping with a hammer.

Another week later, the manufacturer received a new invoice.  It said, "For observing the situation, climbing the ladder, and tapping with the hammer  - $5.  For knowing where to tap - $4995.  The manufacturer then got the point, and paid the invoice immediately.

What is valued at your organization?  Does it reward the real value regardless of whether it is tangible or intangible?  The same can be asked of your consumers.  Do you know what they truly value?  Are your products and services representative of that value?

Most organizations have mastered the ability to deliver their products and services reliably and efficiently.  Remember the 99% lists?  As consumers we've come to expect excellence, and companies that don't deliver above and beyond this excellence won't last very long.

Organizations themselves also take these skills for granted.  I'm often reminded of this when I'm working with clients to develop innovation processes.  Many of the people within companies become frustrated that the organization's capacity for change is so low. 

At this point, it's helpful to step back and really think about what your development and manufacturing processes are expected to do.  If you work in a business where 99.9% isn't good enough (most organizations), then expecting the current process to accomodate breakthrough innovation is just not realistic.  Alternatively, expecting that the outcome of the innovation process will be products and services that fit neatly into existing systems is equally unrealistic.  Innovation efforts that implicitly carry either of these expectations will most certainly fail.

Innovation processes require room for experimentation, trial and error, incorporating unpredictable human elements, and all the other things that would bring current development and manufacturing processes to a screeching halt.  It's far better to separate each process, and let each one be what it needs to be.  Your innovation process should result in the identification of new opportunities that can be delivered in multiple ways.  Some may be able to work with slight modifications to existing processes.  Others may require completely new processes. 

Your innovation process should deliver market relevant opportunities.  Your development and manufacturing processes should deliver offerings to the market reliably and efficiently.  The real organizational challenge is managing expectations within the organization for what each process should deliver, and establishing the right connections between them (more on how to do that later).  But don't expect one to deliver on the expectations of the other.

I'm working on a project now where I'm trying to create a clear separation between the multidisciplinary team process for product implementation, vs product innovation.  On paper they look pretty much the same.  All the disciplines are represented, and the team is aligned around a common goal.

However, when you see the teams working together, something very different is happening between them.  The best analogy I've come up with so far is that the product implementation team behaves much like a soccer team.  The roles are clearly laid out, and the team members are executing specific tasks based on where the ball is at the moment.  On the other hand, the innovation team is operating more like a rugby team.  The roles are less clearly defined, and in a scrum, it's difficult to tell who's doing what, except that they all want to get the ball somewhere else and are working toward that end.

Implementation teams can work with clearly defined roles because the end product they are charged with making has been clearly defined.  Innovation teams are charged with figuring out what should be made. As such, clarity around roles is difficult, and it makes sense to have people who are more flexible and can fill gaps.

What are the characteristics you would look for if you needed to hire people to fill each type of team.  How are they similar, and how are they different?

Innovation requires your organization to do something new.  Not necessarily new to the world, but new to your company.  If you're doing something truly new to your organization, then it's impossible to know what the end result will be.  Every company is unique, so even borrowed ideas cannot be incorporated without careful integration.

One of my clients said "You can only operationalize what is known."  He is right.  And yet, I see so many companies looking for detailed innovation processes that will dictate the end result before a project actually begins.  There are even more consultants who are selling processes that promise to do just that.

Most companies make their money by setting up processes that can run on autopilot.  This only works if you know what you are making, and you have done it before.  You have a benchmark for improvement.  However, the results of an innovation process are not known.  There is no process, tool, or technique that can determine the answer for you.

A good process will show structure and rigor in guiding the thought process, but it will never dictate an answer.  An autopilot cannot make decisions.  It can only execute a preset response to a known set of inputs.  When you are in uncharted territory you need good people to make decisions based on the new information they receive.  It is irresponsible to think that this responsibility can be passed off by choosing a "process" that will make the decisions for you.

If your organization is like most, there are many processes in place that ensure no one can make a mistake that could cost the company vast sums of money, damage its reputation, or do other terrible damage.  While many of these processes are in place for a good reason, has anyone ever looked at the trade-offs that have been made as a result?

The reason I point this out is that I find it interesting that these processes are never, ever questioned.  Even though I've watched companies miss out on very lucrative opportunities as a result of blindly following existing processes, I have been left wondering why no one questioned what else could have been done to have avoided missing out on the opportunity.  A lot of effort goes into protecting the company from harm, which makes it all the more interesting that missed opportunities are seldom viewed as harmful.

I highly value thoughtfulness, and due diligence, and I am not advocating that companies abandon all existing processes to encourage people to chase after anything they want.  Far from it.  I just wanted to point out that it does seem a bit odd that questions about the value of missed opportunities are seldom, if ever, raised.  It would be interesting to see if there are some processes that are costing more than they save.

Do you know why all the processes at your company exist?  Would you know when their use should be questioned and/or challenged?

When I was in business school, I did an independent study thesis on the fostering design and innovation within corporations.  The process required selecting a department and a professor to sponsor the work.  When I first started business school, I thought that my independent study would best be sponsored by either the finance or marketing departments as I felt that lens would give me the holistic view needed to foster innovation.  I was wrong.  After my first two semesters, I realized that the key to successful innovation would be to understand how people and organizations work - beyond the org. charts.  As a result, I did my independent study under the sponsorship of the Organizational Behavior Department.  What I learned has proven invaluable as I guide my client organizations through the culture, structure, and power issues to realize the change required to innovate. 

When clients ask me if there are any reference materials on innovation, I start with a few articles that I still find invaluable to help me think through intangible organizational issues in a clear, structured way.  I suggest they start with these articles to provide a common language and shed light on issues they will likely face.  Most of them are fairly old, but I have found them to stand the test of time.  Here are the articles I use as a foundation:

Edgar Schein - Organizational Culture - For some reason I can't find a link to this one.  If anyone finds it please send it to me. (Excellent for discussing culture in a tangible and concrete way.  Allows you to pinpoint cultural contradictions.)

Edgar Schein - Three Cultures of Management: The Key to Organizational Learning  Available for purchase. (Great for understanding what motivates people's decision-making, beyond functional discipline.)

Steven Kerr - On the folly of rewarding A, while hoping for B (A great reminder on the true power of reward systems.)

Margaret Wheatley - Searching for Order in an Orderly World  Available for purchase.  (In undertaking innovation projects, it's a great help to understand the the contrasts in creating order in natural and unnatural environments.)

Maureen Scully and Debra E. Meyerson - Tempered Radicalism and the Politics of Ambivalence and Change  Available for purchase. (Any internal person responsible for innovation is put in the position of being what the authors call "Tempered Radicals".  It's an excellent primer for the issues they face.)

Deborah Tannen - The Power of Talk: Who Gets Heard and Why - (A good look at the differences in communication styles, and how our biases shape who gets heard, who gets credit, and what gets done.  It's focused on gender differences, but the ideas are equally important to the cultural influences we face in an increasingly global workplace.)

Kurt Lewin - He pioneered the "Unfreeze, Move, and Refreeze" model that underlies all successful change management programs.  I had a professor once who said that we could look at all the different change models and find that they could all be reduced to Lewin's.  He was right.

The other day I was having a chat with some colleagues about authenticity. Current wisdom suggests that brands and companies that are perceived to be less than authentic are doomed to fail. However, we know that brands, companies, and even people will behave differently in different situations. We even expect that they should. To lack the flexibility to do so would be socially disrespectful. So what is authenticity, and how to we ensure that others will perceive our work as authentic?

"To thine own self be true." That's the standard answer. If you are true to yourself, then you (meaning your brand, service, company, etc) will be perceived as authentic. However, I think that's only part of the answer. People can't judge how true you are to yourself. They judge how true you are to them, based on what they perceive. If you know what cues your market will respond to, then you can manage their perception consistently. This requires the ability to suspend what it means to be true to yourself, in order to fully immerse yourself in what it means to be true to someone else.

A few years ago, I was mentoring a person just starting out in his career. I imparted the standard guidance as he was doing his first solo project, and I asked him to periodically let me know what he thought was "cool", and why.  He did well on his project, and I learned a lot about how his social group thought about the world. One day, we were talking about why he shunned big, corporate brands, and he used me as an example.  "The coolest thing about you Ellen, is that you know how uncool you really are. Some big brands get that right, but most don't." 

Hmmm...who said authenticity was a good thing?

Walk into almost any company and ask a random employee what they do.  You'll likely get very specific answers.  "I'm in marketing", or "I'm a manufacturing supervisor", or "I'm a software developer."  They are all very clean, neat, and tidy, with little to no overlap.

Does this make sense?  I would say that when there is a problem in the product development process, it is usually because there is a problem with translation. By this I mean, how does someone within the company translate what they are doing to success in the market?  Companies spend a lot of time and money trying to integrate the disparate functions within the organization.  They focus on smoother hand-offs from one group to the next.  They focus on more integrated processes to bring everyone's interests to bear on the task at hand.

My question is, how often is the task at hand defined as a real market issue that needs to be solved?  Sales people are rewarded for pushing more stuff into the market, and some marketing people are rewarded to the extent that they contribute to this effort.  But how often are the engineers, software developers, and finance people rewarded based on an external measure?  How completely did the marketing person uncover and define a true underlying need in the market?  How well did an engineer or software developer do in coming up with a unique solution for that need?

Rather than focusing on pushing people together to try to integrate their competing interests, it may be better to pose a common challenge for the group to solve.  If this common challenge focused on an external issue, then focusing on the competing interests of different internal functions would be less relevant.  The group would naturally be pulled together, and the overlaps between their disciplines would be covered.

Now, how many companies actually reward their people for meeting these types of challenges?  My guess is that there is a lot of talking about cross-disciplinary functions, but the rewards focus on single discipline metrics. This even plays out in recruiting.  There is a time and place when you need strong functional expertise, and an equally important time and place when you need cross functional ability.  The right people for these challenges may not be one and the same.  Remember, there are people who live in the overlaps.  The challenge lies presenting the right challenges to the right people at the right time.  Easier said than done, but that's no excuse not to try. How are the overlaps covered in your company?

People often ask me how they can improve their consumer interviewing skills.  The thought being that if they can perfect the art of the one-on-one interview that they will have the key to understanding their markets.

I applaud the intention, and people who try to stick to a script rather than have a conversation with a consumer can surely improve their skills.  But it's important to remember that one-on-one interviews are only one tool in your toolbox.  Full understanding of what will drive consumer behavior in a given market requires a combination of qualitative and quantitative, primary and secondary, and generative and evaluative research tools.

How do you know which ones to use?  The answer to that question requires a clear understanding of the business decisions that need to be made.  Research should never be expected to give you an answer.  It is a tool to give you information that will help you to derive the right answer.  And the best way to ensure that you've arrived at the right answer is to collect information that will expose all sides of the issue you are dealing with, covering the proverbial blind spots.

Which leads me to the blind men and the elephant metaphor.  In the story, six blind men are asked to describe an elephant, yet each only touches one part of the elephant.  The man who touches the tusk thinks the elephant is like a spear, the man who touches the side things the elephant is like a wall, and so on.  They end up arguing that the elephant is most like whichever part they had experienced, without realizing that the elephant is made up of all of the elements, and is not at all like any single one. 

My advice is that the best way to improve consumer understanding skills is to figure out which perspectives and information will be necessary to paint the whole elephant. This can only be done by reconciling the results of all the tools used, rather than relying on any one to deliver the answer.  Which then means that the best skill to hone is critical thinking.