“Innovation” just means more new flavours, right?

Posted on 10 May 2010 by The Manufacturer

According to David Drew, it's as much about identifying what you'll stop as what you'll start...

I know that much is written in business about innovation, and it usually means developing a new product, market, or service which the innovator hopes will take the world by storm, and turn around an ailing company. Everyone from consumer goods manufacturers to budding entrepreneurs are looking for the “next big product” which will set the world – and their bank balances – alight.

I think that the problem with this kind of innovation is that it’s ultimately an unwinnable race. Start-up companies and entrepreneurs who have spotted a niche and moved quickly to serve it will of course do well – until someone else reverse-engineers their product, out prices them, or simply produces something that does the job better.

We tend to think of innovation as “doing new things,” whether it is developing new products or services, entering new markets, or refining the way products and services are delivered to customers. We assume that all innovations are things which didn’t exist before, and which exist now because we built them.

Wrong. I believe that this typical simplistic view completely ignores a critical element of the innovation equation; namely, that when we talk about innovation, we seldom talk about what we will STOP doing.

Addition by Subtraction

Human nature wants to build a better mousetrap. But, corporate realities often require a tighter control on what can be “new.” With ever-reduced resources in terms of dollars, people, and intellectual capital, companies can’t just ”product develop” their way out of trouble by adding new SKUs to their product line or new markets to their existing portfolio. Every new product or service line requires development and cost time and money.

Every innovation an organisation invests in consumes massive resources, not just in the pre-launch planning and development phase, but also in post-launch promotion, selling, maintenance, and support activities. Teams need to keep learning about new products and services.

Yet the organisations that most need to change are probably simultaneously reducing their headcount. So, the range of activities a recently streamlined business can support simply can’t keep growing. If some new activities are going to be approved for development and launch, companies will need to find time and money to be freed up in order to enable smaller teams and budgets to drive these new activities. Therefore, in addition to selecting new things to invest in, innovation now also needs to mean deciding what not to do any more.

Eliminating activities that don’t work will only free up some resources. Analysis tools can identify high-value existing activities for increased investment, and often turn up some valuable and surprising lessons. In addition, organisations will need to make some complex decisions about where to move resources around in order to focus on the most important priorities.

Coulda, Woulda, Shoulda

In 2002, when the European B2B telecommunications industry took a sharp downturn, one global telco was hurriedly scrambling to identify which products, services, and customers were profitable and which were not. Not only did the telco not know which ones were worth keeping but when the industry dipped the organisation had very little human capacity to review and resolve the issue, quickly enough. Internal resources were so stretched by supporting all the products and services on the books that no one had the time or knowledge to figure out which ones were viable and which ones weren’t.

If only the telco had regularly reviewed which products/services/customers were profitable and acted accordingly as a regular discipline, I believe it would have put itself ahead of the competition before the industry dipped, and emerged stronger as a result.

Stop Doing Stupid Stuff

It is clear to me that the organisations who will best position themselves for success are those who behave differently in terms of innovation – they will make a conscious decision to stop doing some things which no longer make sense strategically. Due to rapidly changing business conditions, organizations must be prepared to go through shorter and shorter decision cycles. I believe that this is absolutely a form of innovation, as it requires new behaviour at strategic, organizational, team and individual levels.

Instead of asking “what new products should we be developing?” organisations should ask “what should we be doing differently across the board,” and especially “what should we stop doing?” As a former colleague of mine privately puts it: “People need to stop doing stupid stuff.”

Innovation, then, is all about strategy. A tightly defined and validated corporate strategy provides a test bed for evaluating the myriad creative ideas any given population of people will generate. Organisation’s don’t actually need huge amounts of help with stimulating creative thinking or innovative ideas. The key to success is in:

• Correctly identifying which new activities merit investment
• Correctly identifying which existing activities need to be retired
• Simply getting on with doing it better than anyone else, which means faultless implementation.

The key to successful innovation lies in doing the following:

• Develop and articulate the best possible strategy
• Select what to do, and quickly get on with it better than anyone else
• Select what not to do, be very clear about it, and police it
• Engineer an organization-wide human performance system in which ”on strategy” behaviours and ideas are very visibly valued, and ”off-strategy” behaviours and ideas are visibly not valued
• Make ALL these activities as much a part of monthly/quarterly/yearly business calendar as forecasting, sales pipeline reviews and cash flow planning–because they are equally important and often overlooked

Brave New World

A final thought: innovation, in whatever form it takes, will by definition mean that the individual, team, or organisational ”performers” will be moving from the known to the unknown, and may do so with alarming regularity; change is the new status quo. Whether a new responsibility, job, project (for individuals and teams), new product, alliance, or vertical/geographic market (for an organization), the “performers” will be moving outside their comfort and expertise zones. In order to do this successfully or even to have a chance of success, the performer will need a toolkit to mitigate their incomplete content knowledge of the “new world” being entered.

What is required then is a set of tools/skills/protocols which will enable the “performer” to identify, capture, manage, and communicate what they do and don’t know, and put in place structured plans for “filling in the blanks.” A leadership skill set of critical thinking and analysis techniques gives individuals, teams, and organisations the confidence and energy required to move from the known to the unknown. It also positions those executives who possess the “toolkit” as true leaders who will motivate and inspire others by visibly demonstrating that moving into the unknown – even if it means stopping doing some things – is not something to fear.

David Drew is global director of marketing at Kepner-Tregoe, Inc., an international business performance improvement consulting firm.