30 Years of Innovating: Lessons Learned

Editor’s Note: Lanny Vincent has been working in and studying the field of corporate innovation management for 30 years. The art of innovation management has evolved over this period. Despite the recent “noise” about innovation, a few sustained signals of wisdom have emerged through the years. The following are Lanny’s reflections on lessons learned from three decades of client assignments and 15 years of collaborative research with the Innovation Practitioners Network. We invite your response. ­— JG

Admired economist and innovation expert Clayton Christensen recently put his finger on why the current state of innovating is so weak. In articles in the New York Times and Forbes, Christensen lays blame on a combination of the wrong metrics, misguided teachers of entrepreneurship, and misinformed tax incentives, all of which erode a proper balance among three different types of innovation, which he labels empowering innovations, sustaining innovations, and efficiency innovations.

Empowering innovations are those that transform expensive products into affordable ones, create jobs and take 5 to 10 years or more to come to the market. The Ford Model T, Sony’s transistor radio, the personal computer, and cloud computing are examples. Sustaining innovations are those that replace older products with newer, improved versions, create few new jobs and take much less time to move from conceptualization to commercialization. Most of what people think of as innovation are of this type like Apple’s iPhone and iPod, and Toyota’s Prius. Efficiency innovations reduce the costs of making and distributing existing products, eliminate jobs and take the least amount of time to implement. Efficiency innovations “emancipate capital” which can be, but is not necessarily, reinvested in innovating. Toyota’s just-in-time production system is a prime example. 

Christensen makes the case that these misguided metrics, teachers and tax-incentives favor efficiency innovations over the other two types. As Vincent & Associates, Ltd. has been geared toward empowering innovations in corporate settings, we applaud Christensen’s observation.

As a result, the following retrospective on managing innovation efforts in corporate settings over the past 30 years is biased toward empowering innovations, and intrapreneurial more than entrepreneurial contexts. Here are the top ten lessons learned from each of the past three decades in a chronological sequence.

The 1980s: ATTACKER'S ADVANTAGE  

Lesson 1: Nothing happens except out of relationships.

Innovating is not a solo act. The lone inventor or entrepreneur is a persistent myth. Look more closely and you will see a relationship. Steve Jobs and Steve Wozniak. Roy and Walt Disney. Bill Hewlett and Dave Packard. Bill Gates and Paul Allen. HP recognizes this wisdom in its new business creation efforts by pairing a technologist with a business person where both together lead the early effort.

Lesson 2: Insight about users without invention is science; invention without insight is clever.

“No wine before its time” was a slogan made famous by Ernest and Julio Gallo.  Similarly, idea generation before its time turns into either sour grapes or fresh wine in old wineskins. Either the ideas fail to ferment to a satisfying vintage or the corporate skins can’t contain them. Either way, idea generation is best done after an immersion in new realities gleaned from investigating the end-users’ context. This requires from innovators empathy and identification with the end-user before generating new ideas.

Lesson 3: Process follows content just as form follows function.

Toyota surprisingly turns out to be agnostic about methods and techniques used in their development system and slow to implement software solutions. They are rigorous about principles, however, and this is one of them.

Lesson 4: The new is always at first rejected. If it’s not rejected, it’s probably not new.

Many companies seek to avoid rejection, and look for safer adjacencies to capitalize on their go-to-market capabilities. This safekeeping produces imitations more often than innovations.

The 1990s:  KNOWLEDGE-CREATION

Lesson 5: Innovation is “learning applied to creating value.”

The late Al Ward (an expert in Toyota’s development system) described innovation with this phrase. Peter Drucker, the father of modern management theory, made a similar point when he called “ideas the least reliable source of innovation.” Ikujiro Nonaka reminded us that what enables a company to create new value and wealth is not what it knows so much as it is its ability to create new knowledge. Knowledge-creation (learning) is the fundamental phenomenon of innovating, even more basic than idea generation. This is particularly true for empowering innovations.

Lesson 6: Learning comes from safe, productive failures more than from success.

Fail early, often and in the field, where the truth of failures can teach us much. The biggest mistake is to try something and end up relearning what was already known. This is one of the more difficult things for corporations to do: create safe, productive failure zones where the learning curves are steep.

Lesson 7: Profits accrue to innovators more than inventors.

David Teece’s study for the Commerce Department in 1988 showed that “complementary business assets” are the key enablers to generating profits, even more than inventions. The implication? A company’s willingness to adapt and flex its go-to-market business models comprises the larger portion of success in innovating. As important as inventions are, getting them to market is even more profitable. Sometimes this requires the company to get out of its own way.

The 2000s: INSULATE (not isolate)

Lesson 8: “Success is the enemy of innovation.”

Peter Chernin, COO of Fox, said this in a meeting we facilitated. Many companies launch their innovation programs with the naïve notion that everyone in the company will welcome the new. However, sibling rivalry for resources and management attention is inescapable in a corporate setting. Our Innovation Practitioners Network actually mapped this paradox and found effective mechanisms companies use to address it. Sponsors, midwives and innovators all are necessary to avoid costly and unnecessary mistakes of innovating from the inside out. Empowered innovating is an outside-in job.

Lesson 9: Types of innovations and innovating vary depending upon context and business architecture.

Innovating in contexts of high volume, standard products is one thing; innovating in the context of a complex system architecture is quite another (think consumer packaged goods versus an enterprise IT system). What is true about innovating in one is not necessarily true for the other. And there are many different types of innovations from technology platform innovations to basic product innovations; from manufacturing and business process innovations to marketing innovations. Cross-context generalizations about innovating are dangerous.

Lesson 10: Networks, communities of practice, and organizations each play a role in parenting innovations.

The social architectures of networks (designed for transferring information) are fundamentally different than the structure of communities of practice (designed for creating new knowledge). Both differ from the basic architectures of organizations (designed for executing efficiently and effectively). Innovating takes all three, but progressively, and in stages. It takes a village.

LOOKING FORWARD

The 2010s: INNOVATING SYSTEMS

As we progress into this current decade, we anticipate gaining fresh and relevant wisdom on innovating principles from systems thinking. Already our Innovation Practitioners Network has developed two models with which we will begin simulations this winter. Some additional lessons are already starting to show themselves. 

Lesson 11: Innovations emerge, as do innovators.

In complex and even complicated contexts—where most of us spend our time—innovating efforts may need stage-gate resource management schemes. However, we should never think that innovations develop in a flow. They morph within and between phases. So phase changes are the worst time to conduct stage-gate reviews.

Lesson 12: Corporate innovating efforts need leading more than managing.

Our systems analysis work is revealing that companies tend to be quick to manage their innovating efforts, but slow to lead them. Just the opposite should be the case, as innovations—particularly empowering ones—tend to redraw boundaries and attract the creation of new resources where before there were none. Boundaries and resource creation are governing issues more than management tasks. Leaders create powerfully positive effects on their innovator communities when they express convictions describing why and where innovations are needed. When this is done well, leaders will have more than enough compelling options from which to select.

Lesson 13: Break through often requires a break down.

One reason a break through comes so infrequently is that most of us resist letting go of what worked in the past. Empowering innovations require releasing the rigid containers of our current core competencies and reframing what we know in light of the new and relevant requirements emerging from the company’s immediate external ecosystem. Discovering these new requirements is possible, and surprisingly, not with that much effort.              



© Vincent & Associates, Ltd. 2013
This article was originally published in Innovating Perspectives in January 2013. For other back issues of our newsletter, please go to www.innovationsthatwork.com or call (415) 387-1270. 

Innovation and Auto-Immunity

Success breeds its own orthodoxy.  When an innovation defies the odds and not only survives but succeeds, it is perfectly natural to want to continue that success by perpetuating what is believed to have contributed to the success in the first place.  What those contributing factors were, however, may be more subject to multiple interpretations and perceptions than some might first admit.  This is where the next “orthodoxy” starts to sneak in.

We have been working with a company recently whose success has attracted many competitors on the outside.  Success has also required internal attention and effort to order, control and focus the innovation-born success on the inside, the need for which is not unrelated to the intensifying competition on the outside.  The dilemma facing this post-entrepreneurial stage company now is how to protect, defend and perpetuate its success while at the same time continuing to fulfill its vocation of providing innovative value to current and new consumers.  Sound familiar?

As whole companies or even product divisions seek to extend their success, they naturally develop “immune systems” designed to maintain the health of the organization.  Just as our physical health depends upon a robust immune system – a complex network of cells and molecules that normally work to defend the body and eliminate infections caused by bacteria, viruses and other invading microbes – business “fitness” depends to some degree on a corporate immune system.  These corporate “immune systems” can be comprised of a complex set of management attitudes (e.g., focus), decisions (e.g., resource allocations) and controls that serve to protect, defend and perpetuate the value proposition for customers and the resulting profits for the corporation.

However, when organizational fitness becomes more important than business fitness, orthodoxy can set in, creating conditions for the corporate “immune system” to attack the corporation’s own innovation efforts, mistaking these efforts as threats or “antigens.”  Just as immune cells can mistake our bodies’ own cells as invaders and attack them, internally developed or externally sponsored innovations can elicit “friendly fire,” in some very subtle ways.  In other words, well-intentioned and otherwise necessary corporate “immune systems” can sometimes unintentionally turn on the host and become what the medical profession refers to as “autoimmunity.”

“Corporate autoimmunity” frequently happens when the organization’s own need for order becomes more important than its purpose of providing (new) value to customers or consumers.  A classic example of an “autoimmune” response to an early stage innovation effort is when a large corporation seeking to innovate disqualifies an effort based upon size of market.  “We are only looking for billion dollar businesses,” failing to remember that the billion dollar business they are currently defending once started with relatively small and more humble beginnings.

Clayton Christensen points to four subtle, but deadly “autoimmune” responses to innovation in his new book The Innovator’s Solution.  Christensen says there are at least four reasons in established companies that cause managers to target innovations that are not aligned with the way that customers live their lives (page 86).  “The first two reasons – the fear of focus and the demand for crisp quantification – reside in companies’ resources allocation processes.  The third reason is that the structure of many retail channels is attribute [rather than customer] focused.  The fourth reason is that advertising economics influence companies to target products at customers rather than [their] circumstances.”

In other words, both internal (e.g., resource allocation) and external (e.g., comparisons to competition or conformity to the way retailers organize their aisles) orthodoxies that grow up around attempts to perpetuate an innovation’s success, frequently cause us to take our eye off the “ball” of opportunity – what Christensen describes as a “sharp focus on jobs that customers (or consumers) are trying to get done.”

Might this be the place to discover “heresy” with which to break out of the orthodoxy of success and start the next innovation in new value to customers?

This article was originally published in Innovating Perspectives in November 2003. For this and other back issues of our newsletter, please visit our website at innovationsthatwork.com or call (415) 387-1270.