Make the concept part of your organizational culture
by R. Dan Reid
The Experimental Prototype Community of Tomorrow (EPCOT) was a concept developed by Walt Disney near the end of his life. Of his new project, he said, "EPCOT will take its cue from the new ideas and new technologies that are emerging from the forefront of American industry."1
A sign posted at the EPCOT theme park in Orlando, FL, includes a quote attributed to Disney that ties into innovation: "Times and conditions change so rapidly that we must keep our aim constantly focused on the future."
The concept of innovation has been around for a while, but it has grown and evolved to become an issue of significant, if not critical, importance to organizations. It will likely be a key determinant of future success. Yet studies show that leaders in most organizations have not kept up with the evolution of this concept, often failing to effectively manage innovation as they would any other organizational function.
Not clearly defined
There is a lot of confusion over what innovation is and isn’t. One definition is that innovation is "the creation of better or more effective products, processes, services, technologies or ideas that are accepted by markets, governments and society."2 Another says it is "a novel solution to a new problem."3
There are many other definitions, including one from the Automotive Industry Action Group (AIAG) that promotes innovation as "the process of creating new value with a minimum of waste."4 New value is something that will benefit your customer and your organization, while minimum waste delivers that value with absolutely minimal cost and quality loss.
An invention is an innovation, but innovation is more than invention, and it is not specific to products. An examination of the current body of knowledge on the subject shows that innovation has many of the elements of a science:
- Foundation—patent research and the history of technology, business, markets and psychology.
- Language—ideality,5 resources, resource profiling, contradiction and secondary problems.
- Methods—five-step process, failure analysis, failure prediction, patent analysis, paradigm shifting, evolving systems and future mapping.
- Principles—more than 800 inventive and evolutionary
principles for all walks of life, such as science, engineering, business,
education and government.6
As a science, innovation can be learned and managed by individuals and organizations. Peter Drucker said, "Every organization—not just businesses—needs one core competence: innovation."7 In fact, it can be critical to organizational survival and sustainability.
Clayton M. Christensen examined why organizations fail despite being market leaders that are willing and able to compete with the best, and capable of continuous innovations within their industry.8 He—and others since—identified several types of innovation:
- Sustaining—an innovation that does not affect existing markets. Typically pursued by industry leaders.
- Evolutionary—an innovation that improves a product in an existing market in ways customers are expecting, such as fuel injection in the automotive industry.
- Revolutionary (discontinuous and radical)—an innovation that is unexpected but nevertheless does not affect existing markets.
- Disruptive—an innovation that creates a new market by applying a different set of values, and that ultimately and unexpectedly overtakes an existing market.9
Disruptive innovations are those that are either so much cheaper than current offerings that they open a new market or start in a niche the industry doesn’t care about because it’s too small. Often, the performance of the disruptive technology grows faster than users’ needs, eventually catching up to and surpassing the more high-end or mainstream technologies that are the domain of industry leaders (see Figure 1).10
Christensen demonstrated how disruptive innovations can put successful, well-managed organizations out of business—sometimes very quickly because their management principles adhere to conventional rules.
Often, these organizations are considered to be innovative by outsiders. They perform market research, are responsive to their customers and have excellent R&D capabilities. But they aren’t interested in disruptive innovations because there is no market for the technology or because these innovations have lower return on investment (ROI) and growth potential than the sustaining technologies they traditionally pursue.
The organization’s values, value chain, business model and structure greatly influence which ideas it will pursue. Marketing organizations will check with customers to test how receptive they are to new ideas, but often these customers are not interested in disruptive technologies. This is why the conventional wisdom to focus on the customer can be strategically counterproductive.11
Consider Motorola, which attracted many prolific scientists and engineers with the potential to create wildly successful products. But Motorola management increasingly failed to effectively channel the talents of and derive value from these employees, especially in the 1990s and early 2000s.
As a result, many well-known organizations—including U.S. Robotics, Research in Motion (RIM), Cisco and Garmin—were founded with help from ex-Motorola engineers. You could argue that some of those organizations never would have existed if Motorola’s approach hadn’t resulted in frustrated engineers leaving to pursue their innovations elsewhere because the organization rejected them.
Often, this is the case with disruptive innovations. The aforementioned organizations could have been new Motorola business units. Motorola, not RIM or Apple, could have led the smartphone and tablet PC categories, and produced the BlackBerry, iPhone and iPad. But Motorola failed to recognize the opportunity and the evolving needs of its customers in the same markets it originally created.12
Elements of success
To innovate successfully, organizations need to have structure, and strategic and tactical plans. The structure is needed to provide for oversight of the function—from idea generation to commercialization. But sometimes, organizations fail to recognize that innovation is no different than other business functions. It needs to have:
- Goals and objectives.
- Funding and accountability for ROI.
- Process, methods, tools and techniques.
- Process metrics.
- Subject matter expertise and talent.13
Some organizations have set up a separate function for innovation and created new job titles, such as chief innovation officer, innovation manager and innovation coach. Similar to quality, this function should report to the CEO and focus on disruptive innovation. As Christensen pointed out, the organization’s structure and current value chain can limit acceptance of new ideas. But sustaining innovation can remain in the current organization in areas such as R&D, marketing and engineering.14
A strategic plan is needed to identify and prioritize opportunities. Some organizations have developed technology roadmaps to articulate the future. These reflect sustaining innovations and carry the risk identified with disruptive innovation. The tactical plans are needed to provide solutions to complete the strategic plan.
Sticking to deadlines
Consumers are always demanding something better. The challenge is to anticipate and respond to these changes before your competition does. New products and services—often arising from technology that was not originally valued by the organization—can challenge the dominance of mainstay offerings. Disney prided himself on being an innovator, but he also recognized it needed to be managed, saying, "Everyone needs deadlines."15
AIAG has identified several models for creating innovation on demand. Some of these innovation models are more technical than others, and the tools and methods can be applied to business processes, as well as products and services, by practitioners, managers and executives. These tools will help individuals and organizations be more innovative—similar to how learning the types of waste enables organizations to pursue a lean strategy.
Work also has begun on developing a guideline to provide common tools and processes for creating innovation on demand. AIAG’s innovation work will be featured in several sessions at its annual Quality Summit in Detroit in September.16
Sun Tzu said, "You cannot stop innovation."17 So you might as well learn it and be part of creating it. As a process, it fits well with the current skill set of quality practitioners and could be a significant part of quality’s future.
References and notes
- Wikipedia, "Experimental Prototype Community of Tomorrow (concept)," http://en.wikipedia.org/wiki/Experimental_Prototype_Community_of_Tomorrow_(concept) (case sensitive).
- Wikipedia, "Innovation," http://en.wikipedia.org/wiki/innovation.
- Innovation Wiki, "Definition," http://innovation.wikispaces.com/definition.
- Automotive Industry Action Group, "Future of Quality: ‘Innovation as a Process’ Networking Session," www.aiag.org/staticcontent/files/future of quality innovation as a process 3-7-12.pdf.
- Ideality is the ideal state and is defined by all useful functions of a solution or system divided by all harmful functions. For more information, visit www.ideationtriz.com/source/2_ideality.htm.
- Dana Clarke, Structured Innovation: Foundational Elements, Applied Innovation Alliance LLC, 2005.
- Peter Drucker, Management Challenge for the 21st Century, HarperBusiness, 1999.
- Clayton M. Christensen, The Innovator’s Dilemma, Harvard Business School Press, 1997.
- Wikipedia, "Disruptive Innovation," http://en.wikipedia.org/wiki/disruptive_innovation.
- Christensen, The Innovator’s Dilemma, see reference 8.
- Peter G. Balbus, "Business Innovation as a Driver of Corporate Growth," presentation at the 2011 Business Innovation Conference, Oct. 10, 2011.
- Clarke, Structured Innovation: Foundational Elements, see reference 6.
- Christensen, The Innovator’s Dilemma, see reference 8.
- Only WDWorld, "Quotes From Walt Disney at the Magic Kingdom," www.onlywdworld.com/2010/08/quotes-from-walt-disney-at-magic.html.
- See the AIAG website at www. AIAG.org for more information on its innovation classes, innovation project or Quality Summit.
- iWise, "Sun Tzu," www.iwise.com/sun_tzu/page/5.