Tools for Innovation
Date Added: 23rd September 2014 from The University of Auckland
In the legend of the battle of David and Goliath, when a shepherd boy with a sling slayed a heavily armoured giant, we wonder at the courage and ability of the underdog to prevail against seemingly insurmountable odds. Often businesses in New Zealand have much in common with David as they face the scale and ability of their international competition and seek the same success as David. What can we learn about innovation from this victory of David over Goliath?
It was the different choices of the tools for combat by the two combatants that was the crucial difference in this battle. Goliath chose the traditional armour and tools for close fighting typical of a heavy infantryman of that time. David rejected armour and instead chose as his tool a sling. A sling is capable of hurling a rock accurately over a distance of 200 meters and deliver the equivalent impact of a 45mm bullet. David had the advantage that he could strike with deadly force from a distance because of his choice and application of tools.
There are tools for innovation. These tools can be applied to all stages of the process for innovation from idea generation through to delivering value with the same thoughtfulness and effect as David's sling. No longer do we need to consider innovation to be the unexplainable result of wishful thinking or the act of gifted individuals with extraordinary gumption. Research into innovation shows it to be a process that can be subjected to many of the same disciplines we normally associate with other business functions such as accounting, manufacturing and sales.
For fifteen year in New York I was Director of Product Development and Vice President of R&D for International Paper Company. The company's brand required being not only the largest but also the most innovative in its industry. The brand gave our customers confidence in our ability to support the development of their business and gave us a perfect position to understand their "gain and pain" points. For example, we were able to play a critical role in the conversion from celluloid to digital photography by leading the development of papers which could produce photographic quality images from personal printers; we replaced glass bottles with paperboard cartons as the preferred packaging for fruit juices by developing barriers with extraordinary resistance to a combination of moisture, oxygen and essential flavours; we also designed and produced the skin for the stealth bomber in the basement of our corporate research laboratory in New York. These were exciting times for our staff and of extraordinary growth for our company.
Based upon this international perspective and more recently experiences as CEO of UniServices, a New Zealand company responsible for commercialising technology form The University of Auckland, I have observed that remarkable ability of New Zealanders to generate ideas with great business potential. However with a few notable exceptions, we generally seem to be out of practise with the tools for innovative needed to realise their full value. This is unfortunate, because ideas are becoming increasingly ubiquitous in this increasingly connected world and their reduction to practice has now become the key differentiation for corporate competitiveness.
Perhaps our remote location has up to now insulated us from the extreme levels of competition in other developed nations where survival has demanded the rapid evolution of these tools for innovative. The seemingly inexorable increase in globalisation is gradually eroding this insulation, particularly as our own ambitions for increased exports of high technology products have increased. We are more and more feeling the heat of international competition which often seems to have the edge when it comes to innovation. How often do we see a great new product or business model and find ourselves saying: I had the same idea and wish I had done something about it?
Some have argued that these international competitors are advantaged because of their proximity to market demands. However, this explanation doesn't seem to have much traction, since geographic distance is becoming less relevant to our connection with others and we live in a developed nation which experiences many of these same market demands. Others have argued that the small scale of our local entrepreneurial ecosystem restricts innovation, to which I would respond that the many of New Zealand's most competitive companies have taken a different attitude by considering the Pacific Rim, which is one of the most diverse and progressive in the world, as their ecosystem. What hasn't received a lot of attention is our general inexperience with applying the tools of innovation.
It is fortunate that our foreign competitors have already developed and practiced a range of business tools to transform ideas into valuable new products and services and that these are broadly published.
For over the past 25 years, as a member of the Industrial Research Institute, I have participated in the development and application of a series of tools, such as voice of market, stage-gate management, portfolio analysis, intrapreneurship, business model canvas and open innovation. These are examples of tools for managing innovation which have become common place in the business practices of many of today's great global companies. These companies have integrated these tools into a comprehensive process for innovation.
Voice of market is a technique for developing a comprehensive view of multiple aspects of a target market by integrating the voices of several components including those of customers, competitors, collaborators, supply chain partners, etc. The resulting holistic view provides a firm foundation for identifying and testing the possible relationships between your product features and the benefits they might provide.
Stage-gate management is a term coined by Robert Cooper for managing product development who researched the subject extensively and published his results in his book "Winning at new products: Creating value though innovation". As the name, stage-gate, implies this a process for managing product development in a series of managed stages separated by gates involving go/no-go decisions predicated upon predetermined criteria.
Portfolio analysis is a tool for integrating product development with the business strategy as might be established by the Board and shareholders. In its most recent form Portfolio Analysis enables staff with their own views of front-line activities to influence strategy.
Intrapreneurship is the practice of bringing entrepreneurial practices, which are normally associated with more nimble start-ups, inside existing companies.
The Business Model Canvas is a template for developing new or documenting existing business models. It is a visual chart with elements describing a firm's value proposition, infrastructure, customers, and finances. It assists with matching innovative business models with innovative new products. The Business Model Canvas is described by Alexander Osterwalder: "Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers".
Open innovation is a concept first made popular by Henry Chesbrough in his book published in 2005, entitled "Open Innovation: The New imperative for creating and profiting from technology", and subsequently built on by successive generations of practitioners. Open innovation and a more recent manifestation of the same premise, co-creation, have been adopted by many companies to network with a world of creativity beyond their corporate boundaries in a way that is not overwhelming but tuned by strategy to invigorate and support their corporate. These companies include many recognised for their successful product development, such as Procter and Gamble with their Connect and Development methods to publish product challenges in order to attract a world of problem solvers and GSK with their Consumer Healthcare Open Innovation programme for scientists, innovators, researchers and start-up technology companies to commercialise their health-related ideas. This is a global phenomenon not restricted by geography and both companies have benefitted from connections with New Zealand. The reverse is equally possible.
Implementing the right tools
This might seem to be an overwhelming set of tools but it generally turns out that a company only needs to learn how to add a select few of them to their existing core capabilities to become a world-class innovator in their industry. Of course, it is important to identify what this select few tools should be for a particular business.
A call to action:
- Identify what additional tools will have the greatest impact by analysing the underlying shortcomings of current innovation processes through a set of critical inquiries. For example: if a business finds it lacks a healthy backlog of breakthrough new product concepts, it might choose to practice open innovation; if a business finds it has an overwhelming backlog of ideas but struggles to get the vital few into the market, it might choose to implement a gated process for managing their development; if the new products that are developed don't align well with business strategy, it might be time to look at implementing portfolio management.
- Adapt the processes to the scale and form of the businesses to ensure the tools are fit for purpose. Invariably the initial effort to customise new and improved tools for innovation quickly returns dividends not only in competitive position but also productivity.
- Integrate the new tools seamlessly into existing processes including human resources, financial controls, business planning schedules, etc. with minimal disruption by engaging affected staff with the change process. An effort to improve processes can serve as an important signal from senior management to staff about what is important for the company. Better processes enable greater employee engagement and morale. They are powerful means for establishing culture.
- Finally it is important to establish a routine that ensures the new processes become established and continuously improved, because even the best tools are ineffective unless used regularly and proficiently.
With this approach more of our New Zealand based businesses can face their international competition with the same confidence as David versus Goliath and expect the same outcome.
Dr. Peter Lee is currently adjunct professor, lecturer to MBA students about commercialisation at The University of Auckland and coach to New Zealand companies. He has demonstrated through practice that tools for innovation can be adapted to our local circumstances and increase our international competitiveness. He can be reached at firstname.lastname@example.org.