2019

INNOVATION IMPERATIVE

Fundamental Reflection

7 basic principles of innovation

by Peter Merrill

ISO 50501 is a new standard being developed that focuses on innovation management. As a member of the International Organization for Standardization technical committee that’s writing ISO 50501, I remember the first questions the committee addressed were about the basic principles of innovation.

Because the principles are still a work in progress, I won’t review the draft principles. Instead, I’ll go over the seven principles that have been agreed on so far, explaining the thinking behind them and showing examples of how they’ve been previously applied.

Realization of value

Realization of value shows how innovation is driven by changes in technology and by social change. Be careful in reading value as referring to money. Perhaps, value should be read as benefit. Social change and cultural change are as much drivers of innovation as technology and social benefit are major outcomes of innovation. Innovations in healthcare, travel and communications have made our lives easier. People use these advantages to push themselves to do more and move faster. Examples of innovations that created social benefits are:

  • Drip irrigation, which uses 40% less water and 15% less energy than conventional irrigation.
  • No-till agriculture that places seeds directly into the soil, reducing energy use, erosion and carbon emission.
  • Laser-leveled fields that reduce erosion and fertilizer runoff.1

Future-focused leaders

It takes courage to lead innovation. It means taking risks, and the payback for an organization may be well into the future. Innovation leaders are explorers and adventurers, but they also realize the process is a team sport.

Good leaders will engage their people to gain the benefit of collective knowledge. Courageous leaders will challenge the status quo and encourage their teams to do the same.

To do this, however, there must be a willingness to change, and leaders should recognize that people like change, but dislike being changed. This means people must be engaged in the change process.

Twenty years ago, for example, Lou Gerstner became IBM’s CEO and used future-focused leadership to redirect the organization. During this process, few people understood where he was going. He carried out one of the greatest examples of business model innovation in history.

In the early 1990s, IBM was in serious trouble. It was primarily a computer-hardware organization being dominated by off-shore competition in a brutal marketplace.2

In April 1993, Gerstner was appointed CEO. Two years later, IBM purchased Lotus Notes, and 10 years later, it sold its computer business to Lenovo. Today, IBM is a knowledge business and one of world’s most innovative organizations as it works on the future of artificial intelligence.3

Purposeful direction

Leaders must align innovation activities in their organizations. There is a tendency to think innovation should be chaotic because it involves free thinking during the early creative phase. Innovation starts with an opportunity that’s created by unmet customer needs.

Innovation must align with an organization’s business strategy. This doesn’t mean direction is permanently set. As new knowledge is gained, new opportunities are found, and the organization must be capable of addressing those new challenges.

Google has been known for its "20% time"—a policy that encouraged employees to spend 20% of their time working on any project they think will benefit Google.4 3M has a similar policy—called the "15% rule"—and its people "do their own thing," but they do so aligned with the direction and strategy of the organization.5

Google’s 20% time allowed ideas such as Gmail to emerge, which aligned with Google’s strategic direction.

Innovation culture

Most organizations recognize culture as one of their earliest innovation challenges. Organizations must realize that an innovation culture is more than just a creative culture. It also embraces an "execution culture."

Failure should be seen as an opportunity to learn. A peaceful coexistence of creativity and execution is not just a cultural challenge, but also an organizational challenge. Creating an organizational structure that allows this coexistence also is a challenge. Many organizations seek cultures of innovation while recognizing their entire pattern of behavior must change to successfully innovate.

This is, in part, because the focus to create a quality culture during the last 20 years has been on creating a culture with lean processes. This often has led to Taylorism, in which people become adjuncts to machines and lose the ability to think.

Organizations such as Google and 3M encourage their employees’ minds to expand, give them time and embrace creativity.

Exploitable insights

Because opportunities and solutions come from many sources, an organization must seek opportunities and harvest new knowledge internally and externally. Potential new customers may not even realize they have unmet needs, and solutions often lie in other totally unrelated business sectors.

To integrate this principle, exploration is vital. Insights may seem glaringly obvious after they occur, and afterward people often say, "Why didn’t I think of that?"

History is full of stories about how great insights came to fruition. Archimedes’ insight into the concept of specific gravity came while he was taking a bath and the water overflowed.6 Thomas Edison’s colleague at Menlow Park was unscrewing a drink bottle when he got the idea to use a screw fitting to attach a light bulb.7 Henry Ford’s solution for moving car parts around a factory using hooks came to him after seeing how meat was moved through a meat factory.8 The common thread running through these insights is that people were not forcing a solution: They were relaxed and thought outside the box.

Mastering uncertainty

Risk is understood far better than it was 20 years ago, but with this understanding comes a risk of becoming risk-averse. Calculating and understanding risk is a fundamental aspect of the innovation process. Building a portfolio of opportunities and associated risks that stretches well into the future is what good innovative organizations do.

Risk increases as we look further into the future, but the future also is full of new opportunities. "Fail early" is a maxim for innovators. Keep testing and be ready to pivot as you gain new knowledge.

At Intel, it is said that if you’re not getting 10 failures for every success, you’re not taking enough risks. You can calculate and prioritize risk, but you also must decide how much risk you’re prepared to take.

Apple, for example, has a low risk tolerance, but it knows a good idea when it sees it. The Fraunhofer Institute in Germany invented MP3 technology, and Apple adapted it for the original iPod.9 What Apple does well is execute. Many would not regard it as a leading innovator.

Adaptability

The "pivot" has become an increasingly used word in innovation. This means that it’s not just people’s minds that pivot, but also the organization and its resources. The larger the organization, the more difficult this is.

Structure, systems and processes will change when you pivot. The cost of restructuring is not cheap, especially in a large organization.

People in an organization tend to think that today’s structure is good forever. This makes being adaptable one of the most significant challenges for organizations. W.L. Gore and Associates provides one of the best examples of how to overcome this.

Its structure includes fabric, medical, industrial and electronic manufacturing divisions. W.L. Gore has support through HR and IT, but it has a flat, three-layer structure that includes a CEO, leaders and associates.

Associates work in teams of eight to 12 people who operate on a campus of dispersed buildings, which avoids the corporate tower. W.L. Gore’s manufacturing facilities house 150 to 200 workers, and the sales staff is in the same building as R&D and production staffs. They talk to each other so the organization can pivot easily when it must.

These principles are aimed at reminding you of a few innovation fundamentals. As we look forward to a new year, it’s good practice to occasionally step back and reflect on your profession’s basics.


References

  1. Peter Merrill, Innovation Generation, ASQ Quality Press, 2015.
  2. Martha Lagace, "Gerstner: Changing Culture at IBM—Lou Gerstner Discusses Changing the Culture at IBM," Harvard Business School Working Knowledge, http://tinyurl.com/culture-change-qp.
  3. Ibid.
  4. Jillian D’Onfro, "The Truth About Google’s Famous ‘20% Time’ Policy," Business Insider, April 17, 2015, http://tinyurl.com/qp-20-percent-time.
  5. Vijay Govindarajan and Srikanth Srinivas, "The Innovation Mindset in Action: 3M Corporation," Harvard Business Review, Aug. 6, 2016, http://tinyurl.com/hbr-3m-innovation.
  6. Wikipedia, "Archimedes," https://en.wikipedia.org/wiki/archimedes.
  7. Merrill, Innovation Generation, see reference 1.
  8. Ibid.
  9. Mary Bellis, "The History of MP3," Inventors.about.com, June 13, 2015, http://tinyurl.com/qp-mp3-innovation.

Peter Merrill is president of Quest Management Inc., an innovation consultancy based in Burlington, Ontario. Merrill is the author of several ASQ Quality Press books, including Innovation Never Stops (2015), Do It Right the Second Time, second edition (2009), and Innovation Generation (2008). He is a member of ASQ, previous chair of the ASQ Innovation Division and current chair of the ASQ Innovation Think Tank.



Excellent approach to the basic principles of innovation management. I am a quality consultant, ASQ senior member and master in Innovation Management in Brazil.
--Valeria Montandon Silveira, 08-01-2017

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