Editor | On 10, Jan 2008

Jack Hipple

It’s the New Year. What’s new? Innovation is still the “buzzword”, but I go to many presentations at meetings where the talks are not about innovation, but about astute business choices (plant locations, etc.). I’m afraid that innovation is becoming a buzzword without focus, in part captured by conference organizers who know it will get people’s attention. YOU need to decide what innovation is to you. Other than being something significantly different and a bit radical from what you are doing now, let’s consider some of the options. Traditionally we tend to think of innovation in a product or business sense–how can we get into a new business? Sell a new product? This focus may take us in the direction of analyzing how our R&D budget is allocated, acquisitions to be able to deliver a new technology to the market, a review of our hiring process and who we hire, how we physically locate our new efforts, or how we manage the reporting structure of the new “business”. How much innovation can you afford? Do you want? I’ve seen this latter question answered without thinking at all about the consequences to the existing core business. Not a good idea–lots of internal conflicts develop. Have you thought about the reaction and morale of the parts of your businesses that have a focus on “core” businesses? How do you keep their  enthusiasm up while you’re celebrating all the new stuff? Is your reward and compensation system going to be the same for the more risk taking folks? Have you promised that their jobs will be there if the new venture doesn’t go? Are they potentially going to be rewarded with new venture ownership if the new venture goes? Can this risk be traded for compensation? Look at the Thermoelectron (recently acquired by Fisher Scientific) model.

Innovation isn’t always about new products or businesses. It IS always about dramatic positive change. If you’re a leader in a commodity materials business like paper or chlorine, and you want to maintain your position, there are lots of paths for innovation. The most obvious is cost reduction. A second is a fundamental new process, protected by a patent firewall that can generate significant royalty income. There is nothing that can’t be done cheaper, better, and faster. What’s the process you use to collect ideas for process improvements throughout the entire organization, including the midnight shift operators? You’d be amazed at how many really neat ideas people have, but they’ve never been asked! Make them feel important and recognized for their contributions and see what happens! What about your legal and accounting functions? We generally tend to tolerate these functions and just deal with them, but people like Fidelity and Schwab have made a fortune by optimizing the simple business of collecting money, providing customers and potential customers the information they need, and reselling other firms’ products at no cost to the end customer. As was once said in the famous Watergate case, “follow the money” and see where some opportunities might be. What about distribution? If you could save a cent a pound on shipping a billion pounds of commodities, what’s that worth? We talk about “open innovation” nowadays, another new buzzword. Use other people’s brains.  Have you talked to the shipping companies you use? The packaging and shipping functions? Are you supplying your customers an over engineered package that takes time and energy to disassemble and throw away? The possibilities are endless! The term “open innovation” has come to characterize our rediscovery that we don’t know everything.

Parallel universes are some of my favorite topics. Who else, or who else’s products, perform or produce the same FUNCTION that you do (NOT the same product or business area). For example, in a recent innovation session, the connection between air traffic control displays and software/hardware interfaces was discussed. How many computer display conferences do you think the ATC designers had been to? How many FAA conferences on ATC displays did the computer display people attend? You guessed it–ZERO! Think of your own parallel universes to stimulate your innovation this year.

Innovation takes many shapes. Don’t let buzzwords and the most recent books warp your brain about what innovation is to you. Make sure it’s semi-radical, don’t downsize it because you’re not sure how to do it at first, and get input from others. Make sure you’ve thought about innovation in the context of YOUR business and what you want it to be. Don’t have blinders on when you do this thinking.

What about your people? If you’ve decided that an “innovation” effort is required, are you assuming that you can just send out an office memo? Remember that these may be the same people who have spent years streamlining and downsizing. What’s their profile as measured accurately by tools such as Myers Briggs, Kirton KAI(TM), or some other tool that you may have used? Can you really expect Myers Briggs ESTJ’s to think like N’s? Not possible!! How are you going to change this culture? How are you going to convince your people that your new found interest in innovation won’t disappear during the coming recession? How are you going to convince them that the effort will continue and only its focus may change? Memories die hard from your last downsizing. Have a plan as how you are going to build your credibility.

Have fun this year making innovation real and sustainable to you and your people.