Innovation framework – The abstract basics that Managers should know
It was the last day of the annual conference of B&M International. All the general managers and heads of all the departments were present. The previous two days each department had reviewed their performance and presented their ideas. Richard Havell, the CEO, stepped up to the microphone and said “Good morning everyone. I decided to deviate from the schedule today. As you know we have been growing steadily but what we need to look at as non-linear growth. We have been creative coming up with faster products and better service but this will not be enough in the years to come. What we need is a new type of Innovation that is relevant for the turbulent and dynamic period that is ahead. I have invited eminent Prof Clayton Christensen to present some new ideas to us. “.
“Hello everyone”, Prof Clayton started. “Let us start by defining the problem. When we look around us we see traditional product boundaries are blurring, competition are crossing over into other areas and customers are demanding more integrated capabilities and problem definition itself becomes a problem. I will call this Problem-X. So how does one plan and execute a strategy to solve Problem-X? I will try to provide a framework for your consideration. Let us call this the Innovation Framework”
“The Innovation Framework hangs on four interconnected threads. These are Immersion, Convergence, Divergence and Adaptation” he continued. “Given that opportunities may lie hidden but right in front of us, we need to immerse ourselves in the environment to get deeper understanding of customers, competition, complementary products and services to your existing ones, technology and retail trends and finally your own organisation competencies. One way to go about this is to form a multi-vector team composed of your most knowledgeable and brilliant people from all parts of the organisation. The team needs to collect and also absorb all the information that they can collect on all theses dimensions. Without this Immersion you will not be able to recognise the goldmine idea that you seek” he said.
“The next, Convergence, is leveraging all aspects of your organisation to build the concept. You need to understand the ‘Ecosystem’ in which the prospective product or service will exist. For example, the Kindle had an ecosystem of the reader, the communication capability AND the online store to easily procure reading material. The other aspect of Convergence are the ‘Touch points’ where your company and the customer interact starting from the time your customer hears about your offering , buys it and uses it. You have to ensure all the touch points work together smoothly. Think about Apple!“ Prof Clayton continued.
“The challenge is that many ideas look promising and how does one choose. ‘Divergence’ is about reaching outward to new customers, newer markets, expanding your product and service portfolios. You need to have a complete understanding of your company’s strengths in competencies, intellectual property and knowledge gathered over previous products and services. And your understanding of customer needs will be crucial as you leverage this Divergence perspective to help decide the best idea to invest in.”
“The final thread is ‘Adaptation’. The characteristic of Problem-X is that it is not fully understood at the outset and is also constantly evolving. So also your innovative idea has to adapt and change to newer insights and understanding. You need to be flexible in evolving your new offering and also have a strong feedback loop to listen and respond to the feedback. Instead of rapidly prototyping individual components you should attempt ‘rapid systeming’ in which the whole system is built together so that your understanding of the problem and solution domain gets stronger. Then as the new offering enters the market you should have a strong feedback mechanism. You can use proven tools to gather feedback using trade reviews, usability evaluations, surveys, focus groups. Invest in your customers getting feedback from your valuable customers, observing customer behavior as they come in contact with your products. This is your unstructured data that needs to be analyzed and acted upon. Build a data-warehouse and encourage data mining to the extent that it shows positive returns. Be brave to cut the thread when the returns are diminishing. “
“Now all these ideas are the components that you can use to develop your strategy. There are no right or wrong answers. Gaining understanding and identifying opportunities will require the skills and collaborations of many people. Many companies frown on small skunk works initiatives but one has to realize that even a failed attempt may give valuable understanding that will fuel the next successful idea. A case in point is 3M’s post it notes. I will conclude with four basic truths. Customer experience is paramount and everyone must tune into this valuable knowledge asset. Do not get hung up being able to measure everything in order to proceed. Metrics are good but not everything; select the one’s that help you in strategic and operational decision making. I would encourage to follow Balanced Score Card approach for metrics. You need a mix of talented individuals, both the visionary and the steady plodder, idealist as well as pragmatists. So build your teams on this mix – just because some are not part of high visibility projects, does not mean the Managers or the teams would want to look down on your production services team’s work or the front line worker bees. The final truth is that when you engage with Problem-X things will become stressful and confusing but the leadership needs to embrace it and set the tone. While the journey is turbulent the results can be out of this world. Thank you” Prof Clayton finished to a standing ovation.