Thursday, December 27, 2012

Capital Ideas

One of the most dominant criteria used to judge a new product and technology innovation is whether it fits with the corporation’s strategy, core competencies or operating philosophy. Most companies have some explicit or implicit measures of relevance to judge a new product, process or technology innovation.  Although this criteria is expressed in different ways, it usually asks the question, “Does this new idea – if implemented properly and effectively – fit”? 

There are ample reasons for asking the question of corporate fit because eventually the corporation – or one of its business units – will need to adopt, nurture and raise the newborn innovation if it is to succeed.  The adoption, nurturing and rearing of a newborn creates a demand on resources, and it competes for management time and attention against existing operations.  So at first glance, asking the question of corporate fit makes sense.

Yet a growing number of companies are recognizing that the question of fit my have been applied too narrowly in the past.  Many of these companies are now viewing their competition in different ways.  Instead of seeing them as simply threats, many companies are viewing their competitors as potential sources of revenue.  Thus the former question of whether an innovation fits with where the company is headed is, for these companies, evolving into a question of whether the particular innovation fits with where the industry or market may be headed.

If an idea, discovery or invention conceived by a corporation’s R&D fails outside the corporation’s strategy or competencies but represents potential value to others in the industry, it is no longer dismissed as quickly as it may have been on the original criteria of fit.

The innovation may represent new intellectual capital with the potential to generate revenues without requiring the company itself to commercialize and/or implement the innovation.  Corporate fit may be giving way to “strategic industry fit” as the measure of relevance for many companies.

In his new book, Intellectual Capital, Thomas Stewart cites the experience of Dow Chemical Corporation which sought to do a “spring cleaning” when it created the position of Director of Intellectual Asset Management in 1993.  “The idea was to turn a passive function – central record-keeping for Dow’s 29,000 patients – into active management of the opportunities patients represent by cleaning up the portfolio and seeing what additional licensing revenue might be obtained from them.”

Gordon Petrash, who holds the position at Dow, found that not only did the company exploit fewer than half of its patents, but “most were orphans; no business unit was responsible for commercializing or licensing them.”  Petrash found that Dow was not alone.  Most companies have a high percentage of unused, unattended patents, which not only cost a lot to maintain, but also represent significant underutilized potential.

Dow and several other companies are starting to do something about these “ideas for others.”  Over ten years, Petrash figures, Dow will save about $50 million in tax, filing, and other maintenance costs.  Even better: by bringing valuable but unused patents out from the corporate attic, he estimates that the company will increase its annual revenue from licensing patents from $25 million (the 1994 total) to about $125 million by the year 2000,” according to Stewart.

Those of us involved in product and technology innovations may want to rethink the parochial question of “fit.”  Having good ideas for others may represent a source of revenue that rivals the revenue derived from ideas that only fit our own company’s strategy and competencies.

This article was originally published in Innovating Perspectives in September 1997. For this and other back issues of our newsletter, please visit our website at or call (415) 387-1270.  

Tuesday, December 11, 2012

More Data, More Doubt: How “data-addiction” leads to more imitating not innovating

Just as “cloud computing” has made its way into our vocabulary, “big data” seems sure to follow.

Enabled by ever-more capable and abundant digital storage systems, access capabilities, and bandwidth, it seems big data comes with the underlying assumption that it is always better to have more data. After all, data is crucial to sustain any endeavor. Whether the data we amass is numerical, statistically valid, qualitative, or even anecdotal; the more data we have the better.

My own experience leading a team reinforces this. When I was managing a small team of consultants, data turned out to be essential in the team’s success. Actually, it wasn’t just the data that was so helpful. It was also its collaborative collection, frequent updating and visual display. Even in creative endeavors “connecting the dots” is often about seeing correlations between previously unassociated data points. Data is essential to both operating and innovating.

However, data is always derived. It comes from direct experience and observation. The biologist, chemist and market researcher alike generate data to prove or disprove their hypotheses. But it is their hypotheses that drive the generation and analysis of the data in the first place. And solid hypotheses come from personal observation and direct experience, infused with empathy and imagination.

Observation and experience may be more nutritious to innovating than data. Don’t get me wrong. Data and analytics are necessary contributors to every successful innovating effort. But while innovating may be informed by data, knowledge-creation and understanding are driven by personal experience and direct observation.

This might sound like an obvious observation, were it not for the fact that innovators are faced with an ever-present challenge: anticipate the future. Innovating requires lead times, sometimes long lead times. Innovators must innovate in the present but for the future. Delays require anticipatory behavior. Like hockey’s Wayne Gretzky, innovators must skate to where the puck is going, not to where it is.  

The future looms large in the thinking and acting of innovators. But the future is always both “data-less” and “experience-less.” Innovators cannot rely completely on data or their own experience. Something else is required, something that “one person cannot directly communicate to another,” i.e., faith. (See Prisoners of Hope: How Engineers and Others Get Lift for Innovating.)

“Data-addiction” is one reason many hosted innovating efforts prove less than satisfying and never really get beyond “creative imitating.” If innovating is allowed to be driven by data, it will likely end up more imitation than innovation.

Just as the new is surrounded by considerable and unavoidable uncertainty, so also is the future. Uncertainty is perhaps the future’s signature. Attempts to avoid uncertainty by searching for assurance from more data can lead us away from innovation and toward incremental improvements. Improvements are not without value, but let’s be honest with ourselves, they are not innovations either.

Recovering from data-addiction requires innovators to cultivate the art of advocacy—a phrase I learned from Larry Plotkin at Hewlett-Packard Company some 15 years ago. Plotkin, an innovating engineer, was taking part in a five-company study we were conducting on how companies manage to both operate and innovate at the same time. Plotkin was very clear about the need for innovators to learn the art of advocacy—what the ancient Greeks referred to as rhetoric. 

Aristotle said rhetoric was comprised of three essential elements: logos (appeals to logic or reason), ethos (appeals to conscience), and pathos (emotional appeals). Lest you think ancient is “old and out-of-date,” consider the recent discoveries of neurology that suggest emotionless thought is a myth. All thinking is processed through the amygdala, wherein emotions are “processed” as well. Pathos. And when innovators are directed to targets of opportunity, where the need is fulfilled with a compelling solution, little additional incentive is needed. Ethos. The examples of logos are legion. More recently, in his book Changing Minds, Howard Gardner (theorist of multiple intelligences) gives us a more tactical and practical look at what are essentially Aristotle’s three basic dimensions of rhetoric. 

Thirty years ago it was well understood that innovators would run into resistance from their own “host” organizations, not to mention, in the marketplace. In anticipation of this resistance, innovators were thought to need deep conviction—passion—if they were to have any chance of success. Today, I don’t hear or see much of this understanding among my clients or in the literature. Have we become too reliant upon data, because we are not stretching ourselves enough. Perhaps we are not confident enough in our own convictions or appreciative enough of the courage it takes to innovate? 

The remedy is not more data. Nor is it more logos. We have plenty of both. Instead, the remedy is to bring to our unavoidable advocacy more ethos (conscience) and pathos (conviction). This requires innovators to be willing to go deeper into the unknown and let go of what we think we know. As Dee Hock, founder of VISA International, said in his book, The Birth of the Chaordic Age, “the problem is never how to get new, innovative thoughts into your mind, but how to get old ones out. Every mind is a building filled with archaic furniture. Clean out a corner of your mind and creativity will instantly fill it. Once you got the old ideas out of your mind, new ones come automatically.”

Perhaps this is what we need to keep our heads out of the clouds (computing and big data) and to keep our feet firmly planted on innovating that works.    

This article was originally published in Innovating Perspectives in November 2012. For this and other back issues of our newsletter, please visit our website at or call (415) 387-1270. 

Tuesday, November 27, 2012

Searching for Attitude

Creating the right chemistry in an innovation team is more art than science.  Whether you are assembling a team for a two-hour brainstorming session or a two-year skunk works project, you obviously need the right mix of technical expertise for the task.  Relevant expertise and diverse perspectives are critical components in selecting team members for any innovation effort.

Of equal importance to expertise, however, are the more attitudinal characteristics of the individuals being considered—their “softer” skills and qualities—their attitudes, the way they think, and how they work with others.  This may also apply when you are recruiting qualitative research subjects.  Here are a few characteristics to consider:

People who act not only to achieve results, but also to learn from them.

My high school algebra teacher used to tell us that it was not enough to get the right answer; we needed to learn how and why we got the right answer.  The logic of the formula was even more important to learn than getting the right answer.  Now I am beginning to understand my teacher’s admonitions.  Much later in life I encountered Peter Drucker’s counsel that the primary source of innovation for a company is its own unexpected success.  “No other area offers richer opportunities for successful innovation.  In no other area are innovative opportunities less risky and their pursuit less arduous.  Yet the unexpected success is almost totally neglected; worse, managements tend actively to reject it.”

We can look at success in one of two ways: either as something for which we are proud and can take credit, or as a teacher offering us something from which we can learn. How often we take successful results to be the goal more than the guide to our future contributions.  People who view success as a teacher rather than a trophy provide a very positive catalysis to any innovation effort to which they contribute.

People who have the ability to use all their senses for gathering intelligence.

When it comes to innovation – especially the “fuzzy front end” of innovation efforts – awareness and knowledge of the leading indicators frequently come more through qualitative rather than quantitative forms.  New insights that identify the first awakenings of a trend before it is generally recognized as  trend, come from creative connection-making with what initially seems like a lot of irrelevant information.  Once an insight begins to form, however, information that is “relevant” starts to emerge from the “irrelevant,” like text can emerge from context.

People who have the ability to make creative connections between seemingly irrelevant pieces of diverse information act like great artists who tap all their senses and seem to be able to make ideas come alive.

People who are more practiced at interpreting than predicting.

Several months ago Forbes’ ASAP ran a column based on an intriguing though curious analogy.  The article gave a tongue-in-cheek explanation for why Silicon Valley continually outperforms Route 128 (Boston/MIT area).  The article compared how the East Coast experiences relatively predictable seasonal changes every year, whereas the West Coast experiences little seasonal change, but instead lives with largely unpredictable natural events (e.g., earthquakes, wildfires and mudslides).

As a result, the author boldly suggested that people on the West Coast have learned a management and planning orientation that is not based on prediction, like their counterparts on the East Coast.  It is based on “resilience” – an ability to quickly recover and use unforeseen events as catalysts for seizing and exploiting opportunity.  Although the analogy is a stretch, the point is an intriguing one, especially when considering what qualities to seek in a teammate for an innovation effort.  The ability to recover, reorient, interpret and reinterpret as new information becomes available may be more valuable today than the analytical ability to predict with precision what will happen.

Aside from an individual’s technical proficiencies and experiences, the most useful quality of an innovation team member may be their attitude toward change.  After four people told me recently to read the book, Who Moved My Cheese, by Spencer Johnson, M.D., I picked up a copy.  It is a great little parable of four characters, each of whom responds quite differently to the reality of their storehouse of cheese being “removed.”  There’s Sniff, who smells the wind before looking for more cheese.  Scurry, who runs up and down the maze looking for clues to the next store of cheese.  Hem, who denies that things have changed and waits for the cheese to return. And Haw, who overcomes his denial to face the new reality and learns to love the question for “new cheese.”  Perhaps the teams we create for our innovation efforts need the right mix of Sniff, Scurry, Haw and yes, even a little Hem.

This article was originally published in Innovating Perspectives in September 2000. For this and other back issues of our newsletter, please visit our website at or call (415) 387-1270. 

Monday, November 5, 2012

MAVERICK: More than Just a Word

By Dick Cheverton

Samuel Augustus Maverick (1803-1870) was a scion of Southern aristocracy who headed west and helped invent the place (and state of mind) that is Texas.  In the process, he lent his name to a uniquely American conceptthe maverick.

The word “maverick” defines both a unique individualin the herd, yet apart from it; and a less “pasture-ized” free range.

In the mid-1800s, the free range was a fragile moment and place in history, a fissure between wilderness and the fence. It was a place of supreme danger, and virtually unlimited opportunity. It attracted the brave (and the foolhardy), dreamers (and outlaws), and pioneers (and fugitives). It was the habitat of mavericks. It was the wellspring of American greatness.

We are working on a book that seeks to explore the elusive character and characteristics of the free range and the maverick; not of Texas, but of corporate innovation. We are using the experience of one mana master maverick who brought new ideas, fresh thinking, a host of new products (and millions in profits) to the Kimberly-Clark Corporation. How this man, Bill Wilson, survived and prospered is a most fascinating untold story in recent American business history. The man was, pure and simple, a maverick to the core of his being.

Discovering Wilson’s story has prompted us to dig deep into the concept of corporate innovation.  What have we learned? First and foremost, we have renewed our appreciation for a key variable in innovation managementthe role of the corporate free range (time and place): the uncharted territory of ideas, opportunities and innovations. It is largely invisible, yet it exists, we believe, within and outside every organization.

To the conventional mind, this free range seems unformed, unfocused and unsafe. It is a subversion of the organization-chart; an assault on strategic plans; a heresy against the very concept of “management.”

The maverick, however, is able to roam this intellectual territory freely from free range to pasture and back again. The maverick seeks the uncertainty of the limitless. He happily trades the lush grass behind the fence for the brambles and cacti of unfettered freedom.

The maverick seeks not “freedom from,” but “freedom to…” Freedom to dream. Freedom to turn dreams into powerful realities…new ideas, new products, new opportunities. The maverickthe ultimate subversivecan bridge the gap between the wilderness of untested ideas and the pasture of products. The maverick lives in the space where innovation becomes real.

This is not a “job description.” It is not a position that can be designed into a consultant’s system du jour. The maverick can’t be recruited, trained or mandated.

The maverick just is. The challenge for managers is to recognize the mavericks among the branded; and then work to protect them.

Find out how mavericks survive and thrive on the “corporate free range.” 

This article was originally published in Innovating Perspectives in September 1998. For this and other back issues of our newsletter, please visit our website at or call (415) 387-1270. 

The Maverick Way: Profiting from the Power of the Corporate Misfit was subsequently published in 2000. To order a copy of the book, please call (415) 387-1270 or order on Amazon. 

Richard E. “Dick” Cheverton is the author of The Maverick Way along with Lanny Vincent and Bill Wilson. Chev was a top editor at the Orange County Register for 16 years. The newspaper, based in Santa Ana, California, was noted for its continual product and organizational innovations.

Monday, October 22, 2012

The Real Value of Innovating

Innovating is about value—either adding value or creating new value altogether. While the debate continues whether innovating is more about improvement or disruption, the more important question may be how we think about value.

Often “values” and “value” are used interchangeably, though a colleague often corrects me when I get too close to using them in the same sentence. Values, he contends, are about what is held important to a person or a society, whereas value is an economic attribution placed on an object, product or service. He believes the two terms must be kept separate and distinct.

While I understand his viewpoint, I wonder whether our insistence on separating these two connotations of the same word unintentionally masks an underlying link: a link between extrinsic value with intrinsic value?

While I am unschooled in axiology (the study of value), in economics Adam Smith called out two types of extrinsic value—value in use and value in exchange—in his fourth chapter on money in his famous The Wealth of Nations. Smith observed that things with the greatest value in use often have little or no value in exchange, while things with great value in exchange frequently have little or no value in use. Take water as an example. Perhaps nothing is more useful than water, but it will purchase scarcely a thing. (Adam Smith was not a Californian, clearly.) On the other hand, diamonds have little value in use (except for specialized industrial uses), yet they carry significant exchange value. Smith went on in his next chapter to comment on prices and monetary value but stayed with these two types of extrinsic value.

It is noteworthy that Smith thought his greater opus was not The Wealth of Nations, the book for which he is most noted in our time. Instead, Smith regarded his previous work, The Theory of Moral Sentiments, to be his masterpiece. In Moral Sentiments, Smith puts forward a morality based on proportionality or aesthetics. What is just, good and right is that which is appropriate. And what is appropriate is that which the “detached” conscience of an individual discerns to be a proportioned response. Many historians suggest that Smith’s notion of the “invisible hand” of the marketplace is actually derivative of this “detached” observer theory.

Were Smith alive today he might suggest that when it comes to value there may be an inherent connection between intrinsic and extrinsic value. Yet when this essential link between the two becomes so difficult to perceive, or in the case of my colleague, important to keep separate and distinct, we as a society begin to give ourselves over to a transactional foundation wherein the exchange of value and the means of that exchange (e.g., money) is divorced from intrinsic value.

What does all this have to do with innovating—the creating of new value or the improvement of existing value? If the two—intrinsic and extrinsic value—are inexorably linked, then we cannot avoid the tough questions: Are we focusing our inventive and innovating energies where we should? Where is our precious engineering talent being directed? Is it toward purely extrinsic value improvements? Are we willing to take on creating new, original, intrinsic value?

Is there a link between the moral economy (typically confined to close-knit communities) and innovating? Are shared moral values the moist rich soil nurturing the collaboration of innovators? Does intrinsic value reflect moral values?

Covance, headquartered in Princeton, NJ, is one of the world’s largest and most comprehensive drug development services companies. Beyond its extrinsic value—a highly profitable $2 billion worldwide company—it has more than economic reasons for being. I spoke recently with John McCartney, a member of the Covance Board. He indicated that several at Covance are driven not merely by economic performance, which is considerable, but by a passion for best-in-class productivity cycles times. With these cycle times, Covance helps large pharma customers get medicines to market faster, thereby improving human health. This intrinsic value­—improving human health—may be more related to Covance's extrinsic value (e.g., market capitalization, profitability, etc.) than we realize.

Richard Rohr, in his recent book Falling Upward, tells of Thomas Merton, the American Trappist Monk who pointed out that “we may spend our whole life climbing the ladder of success, only to find when we get to the top that our ladder is leaning against the wrong wall.”

Innovating is ladder climbing of sorts, whether climbing to add or create value. Some efforts are short like stepladders, while others are like extension ladders. In the former we are likely improving on the value already there. With extension ladders, our innovating should be creating some original value, otherwise we would not take the risk to climb up the extension. In these cases, whatever wall we are leaning against as innovators, I hope we are on the solid footing of intrinsic value. 

This article was originally published in Innovating Perspectives in July 2012. For this and other back issues of our newsletter, please visit our website at or call (415) 387-1270. 

Monday, October 8, 2012

“Pregnant Pause” for Innovation

By now many veteran innovators have become accustomed to the immune system metaphor to describe what many of us previously referred to as the “not-invented-here” syndrome. The metaphor is increasingly being used in innovation and management discussions and literature, and for good reason. It fits.

That organizationsespecially companies with established revenue streamshave immune systems (implicit cultural norms, management practices and/or explicit policies or metrics) that can attack and ultimately reject (or kill) innovations is generally recognized and understood. That these immune systems themselves can adapt and evolve, and how these systems work, is less well understood.  However, current medical research in immunology might give us some clues.

Just this week our old friend, sage and master consumer scout Leo Shapiro alerted us to a developing field of medical research. This research is asking why a mother’s immune system does not reject the baby during her pregnancy. This caught our attention as we might learn something suggestive of solutions for corporations that have over-active immune systems which do not seem to pause when “pregnant” with an innovation, particularly a disruptive one.

Here’s what we discovered in our search for the best current thinking of medical research on why and how a mother’s immune system takes a ‘pause’ during pregnancy. See what connections you make.

“According to some experts, infertility, recurrent miscarriage, premature delivery and dangerous complications of pregnancy may all, in some cases, be linked to immunological abnormalities” (Nature, November 21, 2002). Three areas currently being investigated by immunological researchers include what could be called preparation, buffers and a two-part view of the immune system.

Apparently proteins carried by semen chemically signal the woman’s immune system, thereby preparing the system in such a way as to avoid rejecting the embryo. In addition, one of the functions of the placenta is to manage the chemical and hormonal interface between the mother’s system and the embryo’s systemessentially acting as a buffer against the mother’s own T-cells (those that otherwise would attack what is foreign or threatening). Finally, some researchers contend that the mother’s immune system itself has two parts. During pregnancy, one part—the part that would otherwise harm the fetusbecomes disengaged, while the other part stays active to protect the mother from diseases during the pregnancy.

Might there not be some lessons here for how we handle our host corporation’s immune system and its effect on innovation?

Advanced preparation of those people who might perceive the innovation as disruptive is warranted.  However, simply waltzing in to the office of an operating manager and giving him or her a ‘heads up’ about the innovation is not what we mean by preparation. Asking that manager about the issues and opportunities that are on the horizon of his business might be a better start to discovering where the potential connections might be. As we discovered in our previous five-company study (Soft Systems for Hard Cores), always, always, honor the core. Larry Plotkin, a veteran in innovation management practices at Hewlett-Packard, uses this agenda-less approach to gaining a greater sensitivity to what is going on in the core business. This enables him to be much more artful in preparing the core for the new.

“Buffers”whether in the form of separated teams or dedicated project leaders with sponsors, mentors and/or midwivesare an essential ingredient in protecting development work. Experienced R&D managers know how to be both transparent with what they are doing and protect certain efforts from the more adult-rated demands and rigors of the operating realities being addressed in the mainstream business. Some degree of structural separation is generally regarded as necessary to protect exploration and development efforts, and to protect the interests of the core operating business at the same time.

The two-part view of the immune system suggests that there may be parts or dimensions of the corporation’s immune system that can be temporarily “turned off” without threatening the rest of the immune system as a whole. What might those parts be? A current effort of one of our clients suggests that a sub-group of a core operating division may have a greater receptivity to an innovationeven if that innovation is disruptive—when that innovation uses familiar competencies and contributes self-evidently to a business challenge (e.g., competitive threat) the core business is facing.  Timing may be everything, and in this case, it was.

Preparing, buffering, turning off one parteach of these alone is likely insufficient to address the immune response of the host.  In combination, however, we are more likely to ensure the health of both the “mother” and the “child,” which should make for better innovations that work®.

This article was originally published in Innovating Perspectives in May 2004. For
this and other back issues of our newsletter, please visit our website at or call (415) 387-1270. 

Tuesday, September 25, 2012

Darwinian Innovation and The Maverick as a Chameleon

Most of us attribute the concept of “survival of the fittest” to Charles Darwin.  Yet, according to the recent book Driven, Darwin actually never used the phrase.  Rather, Darwin’s ideas on evolution had more to do with survival of the most adaptable and less to do with survival of the strongest.  Survival goes to the species that can generate variations, select the best one and retain it for future generations.  Isn’t this what corporations are attempting to do when they seek to innovate?

Unlike the entrepreneur, the established corporation has to deal not only with this sometimes tumultuous evolutionary process in the market, but also it has to deal with variations, selection and retention internally as well.

Dealing with what Arie de Geus (The Living Company, 1997) calls the corporate immune system is a chronic management challenge for established companies seeking innovation.  Corporations, just like the human body, can and will produce antibodies that respond to innovation efforts as threats to corporate health.  Some corporations anticipate this immune response and turn to mavericks, their mentors and their methods for a way out.

The accompanying articles lend some insight and perspective on the corporate immune response system and the growing interest in mavericks, their mentors and their methods as a practical management framework for these challenges.

In addition, Vincent & Associates is planning a pilot study with younger and more mature companies to map out how they are dealing with their organizations’ immune response systems. If you have interest, please call Lanny Vincent for a prospectus of the study.

The Maverick as a Chameleon

By John Raley

Discontinuous innovation is defined as new innovations that are tangentially related to a company’s current business, which offer substantial opportunity for company growth and renewal.  An essential player in the arena of discontinuous innovations is the maverick.

The maverick finds discontinuous innovations by exploring outside the company’s “comfort zone” of products and technologies.  When the maverick finds a potential connection between something new and the company’s core competencies, the maverick is now faced with the challenge of how to bring the innovation back into the company.  And the challenge is a significant one.

By the very fact of the innovations being discontinuous and outside the company’s normal sphere of operations, the maverick cannot assume that others will see the same connections and value to company growth.

So how does a successful maverick bring a new, discontinuous innovation back home?  The secret is that a successful maverick must e a chameleon, one who is able to change how they relate to individuals depending on the functional orientation of the individual.  And the maverick must do so in a believable and credible manner.

When talking with technical people, the maverick must be able to effectively discuss the technical aspects of the new innovation and how it is tangentially related to the existing competencies of the technical organization.  When talking with marketing and business people, the maverick must be able to describe how the new innovation is compatible with the overall vision of the company.  When talking with financial people, the maverick must be able to conceptually discuss the dollars and cents of what it would take to implement the innovation and the financial benefits to the company. 

Not only does the successful maverick have to be somewhat fluent in discussing different aspects of the innovation, but also the maverick must be able to do so convincingly.  This requires credibility throughout the company that can only be obtained over time via ongoing interaction with the different functional areas.  The credibility that is developed not only aids the maverick in bringing new innovations back home, but it also aids the maverick in discovering innovations by viewing possibilities from a variety of points of view.

If you are looking for a successful maverick in your organization, look for someone with a broad range of interests and who networks well with different functional areas.  This is the person who is most likely to be able to see new, discontinuous innovations for your company and also efficiently and meaningfully explain the discovery to others.

John Raley is a business leader with state-of-the-art experience in global intellectual asset management. He is based in Maple Grove, MN, and can be reached at

These articles were originally published in Innovating Perspectives in March 2002. For
this and other back issues of our newsletter, please visit our website at or call (415) 387-1270. 

Tuesday, September 11, 2012

New is Necessary, But Not Sufficient

The characteristics of novelty may occupy center stage in the way accounts of innovation are told. However, what goes on backstage may contain the real gems.

Over 20 years ago, publications on innovation management splashed onto our reading lists with Foster’s Innovation and Entrepreneurship, Pinchot’s Intrapreneurship, etc. The past five years that splash has been subsumed by a flood of new titles on innovation, some of them destined to become classics, like Christensen’s Innovator’s Dilemma, Utterback’s Mastering the Dynamics of Innovation, and Nonaka’s Knowledge Creating Company.

In the process, our definition of innovation itself has begun to shift, for better or for worse.  In the past, the distinction was often made between creativity and innovation; the former being associated with newness, the latter being allied with reducing what is new to practice (i.e., commercialization.  Recently, I believe this old “black and white” contrast between innovation and creativity has been transplanted by a more precise and rich spectrum of “color” contrasts.  Some might even say that “innovation” has lost its meaning from such frequent use (or misuse).

The term innovation—in the context of innovation management theory and practice—is now used to include any one of the “particles or energy” that make up the “atomic structure” of innovation.  Discovery, invention, reduction-to-practice and diffusion, individually or collectively, are now what I believe practitioners have in mind when they use the term innovation.

This “atomic” metaphor is useful in pointing out that the nucleus of focused, creative collaborations may be at the heart of successful innovation. In other words, while novelty gets the press, it is the formal and informal process of the right mix of people, collaborating, that makes innovation happen.

Peter Drucker hinted at this when he observed that the “bright idea” is the least reliable source of innovation.  He says, “Bright ideas are the riskiest and least successful source of innovative opportunities. The casualty rate is enormous. No more than one out of every hundred patents for an innovation of this kind earns enough to pay back development costs and patent fees.  A far smaller proportion makes any money above its out-of-pocket costs. The entrepreneur is, therefore, well advised to forego innovations based on bright ideas, however enticing the success stories.”  (Innovation and Entrepreneurship, page 130.)

The central place that “newness” holds is not unlike the potential over-emphasis we place on entrepreneurs, intrapreneurs, champions and/or inventors—the individual heroes and heroines of the innovations we hear about. Most mental maps of innovations reserve large and influential space for these individuals. However, the actual terrain of innovation, I suspect, involves the less sexy, often unseen, combined efforts of many “common” folk.  The persistent passion and vision of the entrepreneur may be necessary, but it may not be sufficient to bring the new into reality.  That requires the sustained and focused creative collaborations of many others. 

This truth came to our attention recently when Erik Eidsmo directed us to an article by Malcolm Gladwell in The New Yorker (July 22, 2002) entitled, “The Talent Myth: Are Smart People Overrated?” The article takes a look at the “deep-seated belief that having better talent at all levels [of the organization] is how you outperform your competitors.”  For those of us with an interest in innovation management, the article concludes on a note that should give us all a moment to pause.  Citing the management culture and philosophy of Enron, McKinsey and even Gary Hamel as the prime examples, the article concludes, “looking for people who had the talent to think outside the box, maybe it was the box that needed fixing.”

Gladwell makes this fundamental point: “The broader failing is the assumption that an organization’s intelligence is simply a function of the intelligence of its employees.  This assumption is understandable because our lives are so obviously enriched by individual brilliance. Groups don’t write great novels, and committee didn’t come up with the theory of relativity. But companies work by different rules. They don’t just create; they execute and compete and coordinate the efforts of many different people, and the organizations that are most successful at that task are the ones where the system is the star.”

Just as intelligence is necessary, but not sufficient for leading an organization, so novelty may be necessary, but it is likely, in and of itself, not sufficient.

This article was originally published in Innovating Perspectives in November 2002. For this and other back issues of our newsletter, please visit our website at or call (415) 387-1270. 

Tuesday, August 28, 2012

Strategies for Discovering Innovation Opportunities

One of the most difficult challenges for the R&D professional is to identify and uncover a new or emerging need.  A veteran product developer often reminded me that “we humans are coping animals.”  We put up with the way things are until we believe there is an alternative.  Without the belief that there is a better way, we simply cope.  This coping tendency makes it hard to discover new or emerging needs in the market.

How then can the R&D professional listen to customers or end-users who are not able to articulate their needs very well, if at all?  How can we listen for new and emerging needs when we are not certain that the end-user for tomorrow’s new product will be the same one as today's?

We have observed three strategies for listening to end-users who are not as “articulate” as we wish they would be.  The strategies are called ideation, foresight and insight.  All three strategies require R&D to invest time and effort up-front in the identification and understanding of opportunities before rushing to invent and develop solutions.  However, each strategy takes the R&D professional into a different set of activities and methods, each with its own inherent strengths and weaknesses.

Ideation Strategy

The ideation strategy relies heavily upon the generation of ideas.  Here product developers generate and develop new product concepts and use them as “hidden microphones” to listen for the symptoms of new and emerging needs of end-users.  These concepts are used to stimulate reactions from end-users or customers with the hope that new and emerging needs will be expressed.

One advantage of this strategy is that it uses common and accessible tools and techniques of market research (e.g., focus groups).  Having new concepts to test gives you more of a reason to talk to customers, and conversing with end-users within this context is familiar and safe.

One disadvantage of this strategy is that the generators of the concepts often become wed to their ideas, and so the concepts become the ends rather than the means of discovery.  Even when concepts are regarded as “listening probes,” R&D professionals often wonder whether potential areas of opportunity were missed because the concepts were so limited in scope.

Foresight Strategy

The foresight strategy uses trends to uncover new and emerging needs.  The rationale is that new and emerging needs come from new attitudes and behavior, which are derived from trends.  If you identify and understand a trend, you are in a better position to identify a new need.

Given the lead time it takes from concept to commercialization to develop a breakthrough new product or innovation, many try to uncover and anticipate new needs for enough in advance to have time to prepare.  The foresight strategy is attractive to many because even with mediocre marketing, you should be able to succeed if your new offerings are aligned with the momentum inherent in the path of development.

In practice though, we have seen a lot of R&D efforts become distracted with the identification and analysis of trends.  People often place too little emphasis on making creative and solid associations between the trends, their company’s core competencies and the new and emerging needs.  They often over-indulge (in time and dollars) on trend identification, while underestimating the importance of doing trend analysis from the perspective of their company’s unique technical and market strengths.  Therefore follow-through and internal integration efforts tend to fall short.

Insight Strategy

The insight strategy, the least understood but perhaps the most potent of the three strategies, uses in-depth interview and ethnographic methods of observation to discover new and emerging needs.  Carefully selected subjects – both existing customers as well as “leading edge” users and even non-users – are interviewed and observed in their “native” environments.  They are even invited into the interpretation of their own behavior and attitudes.  This is a good method for originating proprietary end-user insights – perspectives on the end-user that your competitor is not likely to see.

The insight strategy is not for the faint of heart.  It requires organizational patience, a long leash extended to those involved in the research, and a special tolerance for ambiguity, characteristics which are not often found inside our organizations.  While it takes patience and discipline, the payoffs can be quite large – total new “competitive spaces,” as 3M calls them, have been discovered with this strategy that have led to new categories of products.  The elusive “big idea” may result from this strategy more than any of the others.

Ultimately, each team will want to consider its own combination and variation of these three strategies.  Whichever strategy is taken, the identification of new and emerging needs is best done by R&D professionals intimately familiar with the technical capabilities of their company and with what is technically possible.  Surround technically-savvy R&D professionals with ideas, foresight and insight regarding existing and potential end-users, and watch them help the market find the words for needs that had previously remained silent or hidden.

Listening requires ears.  Hearing requires empathy, understanding and imagination.

This article was originally published in Innovating Perspectives in April 1997. For this and other back issues of our newsletter, please visit our website at or call (415) 387-1270. 

Tuesday, August 14, 2012

Opportunity’s “Eye of the Needle”

Discovering an emerging need and filling it is a bit like threading a needle. If we assume we will get it on the first try we are setting ourselves up for disappointment.

The persistence of this “first try” expectation is as striking as it is common and chronic, particularly among companies with established revenue streams. Perhaps it is because some of our companies have become so successful for so long that we have lost our institutional memory of those earlier entrepreneurial times. Perhaps our very focus on competitively differentiating our product offerings blinds us, at least in part, to subtle shifts in the needs, values and behavior of our end-users.  Many have succumbed to the seduction of the competition, beating a rival, but have lost touch with the very needs of the people we seek to serve.

Some principles for addressing this “first try” expectation can be found in Stefan H. Thomke’s book, Experimentation Matters (HBS Press, 2003).  Thomke suggests both how important and how difficult it has become for companies to get out from under the tyranny of their own success.  “True experimentation is all too rare in successful companies.” So-called “productive failures” – those that produce significant technical and end-user insights – become increasingly rare in organizational cultures of success. The central message from Experimentation Matters – a manifesto for learning from early experimentation (and exploration) efforts – is simply “fail,” first, fast, frequently and in the field (our paraphrase).

Beyond Thomke’s principles for experimentation and exploration, however, are at least two other principles for threading the needle of discovering emerging needs upon which to base future growth.  Both of these principles, and their associated practices, aim to discover needs that are robust and resilient enough in the first place to sufficiently motivate further experimentation and the patience to withstand the inevitable resistance.

One is to actually slow time down.  What may be right under our noses can be more easily revealed when we watch the routines of people in which we have an interest, in slow motion.  Several years ago in an engagement with a client in the facial tissue business, we experimented with consumers, one-on-one, asking them to describe in slow motion what they were doing and experiencing when they reached for a facial tissue.  Though it was awkward for people to do so – asking them to slow something down that is so routine, unconscious and automatic – the results were profound.  It actually led to the discovery of proprietary (at the time) insights that, in turn, lead to a whole new and more dynamic test and measurement framework from which several new successful products emerged.  Ezra Pound put it succinctly years ago, “Glance is the enemy of vision.”

Another principle is to change your point of view.  Landscape painters and photographers practice this principle when they try out different angles from which to view, capture or render the “truth” of what they are seeing.  Several years ago Eli Callaway had already committed to a state-of-the-art golf ball production facility, but needed a fresh reason for golfers to be interested in golf balls.  We knew that conducting traditional qualitative market research (e.g., focus groups) was unlikely to turn up anything new and different.  In our search for the right point of view, we went to a handful of non-celebrity (to avoid the “pose” factor) experts – a golf course architect, a veteran equipment salesman-turned-teaching professional, and a few others – and asked what we thought was a fairly innocent question – why do people keep playing the game?  Their reaction to our question – “All these years in the business and no one has ever asked me that question before” – suggested that we were on an interesting track.  We had simply changed our point of view from the conventional.

We were speaking with Dick Sperry of The Sperry Group, Inc., recently about how he “gets a vision.”  Unlike the typical image many of us have that the visions come up front and instantly, Dick described a much longer, more iterative process of observing end-users, trying something out with them, watching what happens, and trying again.  What struck me about what Dick said was that vision isn’t finished until well into the development process, even to the point where a customer nicknames the new tool.

Many of us – particularly those of us who are process-oriented – believe that first comes a discovery of a need and then comes the invention of a solution to that need.  However, actual experience suggests that the discovery of a need is more closely coupled with the invention of a solution.  We seldom, if ever, get it on the “first try.”  It requires empathy, imagination, patience and understanding.  Ironically, we can actually accelerate our time-to-market, if we just slow down early in the front-end exploration and change our point of view.

This article was originally published in Innovating Perspectives in September 2004. For this and other back issues of our newsletter, please visit our website at or call (415) 387-1270.