Innovation Management Essentials (1)
“See inner relationships and make connections that others usually don’t see; we learn to think the unthinkable. On the other hand we may be uncomfortable with the insights that arise from from seeing the world differently. However, we need innovation and creativity that steams from seeing things differently […] I recommend that you start to manage your own dilemmas.” – Get There Early: Sensing the Future to Compete in the Present by Bob Johansen. 2007 Edition published by Berrett-Koehler.
“They preferred to think they worked not in a laboratory but in what Kelly once called ‘an institute of creative technology.’ This description aimed to inform the world that the line between the art and science of what Bell Labs scientists did wasn’t always distinct […] many of Kelly’s colleagues might have been eccentrics […] working within a culture, and within an institution, where the very point of new ideas was to make them into new things.” – The Idea Factory by John Gertner. 2012 edition published by The Penguin Press.
“He kept asking Kay and others for an assessment of trends that foretold what the future might hold for the company. During one maddening session, Kay, whose thoughts often seemed tailored to go directly from his tongue to wikiquotes, shot back a line that was to become PARC’s creed: the best way to predict the future is to invent it.” – The Innovators by Walter Isaacson. 2014 edition published by Simon & Shuster.
Inventions involve the creation of a novelty which is, therefore, something new and different. Note that innovations take matters further since they entail realization, introduction and adoption processes. I am fortunate enough to have experienced both. My research work is credited as either inventor or co-inventor in patents and awards. But that alone does not necessarily imply actual development. Getting into innovating as such came to fruition when undertaking product management responsibilities.
Those of us thinking of the commercialization of inventions and the so-called diffusion of innovations are attracted to qualitative and quantitative metrics. These are valuable insights and data speaking to the correlation between inventing and innovating, which leads to articulating best practices, processes, budget and resource allocations. However, it is also true that success can, often times, be powered by outliers.
As the “black swan theory” states: there can be easily dismissed and hard to predict impactful events that end up changing everything. Long story short, the art of serial innovation is a dynamic endeavor: just relying on what you think that you knew well can cloud and betray one’s otherwise better judgment. This is when “objects in the mirror are closer than they appear,” metaphorically speaking, and things just happen at unprecedented speed.
Most would agree that good ideation can come to the surface anytime and anywhere from subject experts, users themselves as well as unusual suspects. Inventing takes a higher commitment level to address how things should work… and there can be alternative and competing solutions to a given problem. Serial innovation becomes a greater challenge since is it measured by repeated success.
I created the above framework in the context of the high tech sector. It conveys a need for striking an equilibrium point between unmanageable complexity (right) and either self-defeating oversimplification or undifferentiated simplicity for that matter (left.)
Semantics matter: anyone can argue the merits and faults of simplicity and complexity. Though, delivering elegant sophistication displays consensus thanks to a clear level of quality and refinement, functional depth and differentiation, effortless operations and ease of use. One other thought: I would also like to claim that purposely engineering effortless ops and ease of use drives everyone’s energy to focus on value based activities. We democratize innovation in the process.
The first chart became a vehicle to discuss the difference between invention and serial innovation. Let’s now look at the difference between incremental and disruptive innovation.
Innovating drives changes. Nonetheless, legacy systems can continue to benefit from incremental innovation. This means bettering and further optimizing current technologies and operations. Existing footprint and know-how combined with economies of scale, as well as risk aversion, expensive switching costs when considering emerging tech and possible resistance to change… all favor that phenomenon. So, it pays to understand Daniel C. Snow’s teaching on “old technologies’ last gasp” when outlining transition and/or transformation plans.
The lower right quadrant is where new paradigms are set to deliver disruptive innovation. B2 is is clearly set beyond the reach of legacy systems: diseconomies of scale and diminishing competitiveness with declining returns being key reasons. B2 means that legacy tech is clearly outdated and superseded.
Disruptive innovation is the game changer. That’s the kind of paradigm shift that new entrants and green field players will take advantage of. The so-called industry establishment can continue to skim incremental innovation, though only up to a point at which they are rendered “old guard” and obsolete. That is the essence behind Clayton Christensen’s Innovator Dilemma.
The upper row shows quadrants A and B1, and an obvious intersection zone in between. Established players can operate hybrid environments to cross G.A. Moore’s chasm. They can gradually transform or fully re-invent themselves at that intersection. The above chart is designed to help leaders and management consultants plot portfolios in each quadrant as well as their evolution (e.g. course and speed.) based on KPI (Key Performance Indicators) or set phased discontinuity.
Quick recap. Incremental innovation delivers better (technical, operational, financial) performance, which is usually presented in the form of A/B (before and after) comparison tests. Disruptive innovation brings about unique capabilities that legacy systems cannot match. We are talking about emerging technologies, so capability and maturity models come into play. I will discuss that in one of my next posts on Lean Ops Redefined.
We have discussed insights around invention and serial innovation, incremental and disruptive innovation. My next tool is design to map out where value exists, new value is created and value migration across the two.
No doubt, disruptive innovation alters the landscape: value migrates (or circles back) to any of the above quadrants. Some markets are placing a premium in the upper right quadrant already. That’s where end-to-end solutions and services create new value and dominate, which commands higher margins. Service focus seeks understanding and developing customers’ experiences instead of a product push or pull approach. Solution focus forces a more holistic systems engineering approach encompassing the value (supply) chain and relevant ecosystems.
That combination delivers significant competitive advantages with the advent of virtualization and cloud computing technologies. Early draft versions of that chart showed a different breakdown, namely: hardware, platforms, applications and services. When testing and putting this kind of charts to work, I could plot everything by applying color coding, then size of the addressable market, revenue and growth would determine each circle’s size. In any case, that basic template can be customized as needed.
“Inventing the future” can certainly take unique instincts, skills, workstyles and eccentric behaviors. When acknowledging that talent is a critical success factor, we then need to get serious about quipping individuals to make a difference while understanding that it takes a cross-functional team to make things happen. Serial innovation takes foresight, situational awareness, leadership and organizational agility. I hope that the above tools helped with mapping and discussing concepts such as (c) defining value, (b) transformation, and (a) moving the needle with elegant sophistication as the defining delivery.
Wondering about the last chart on Lean Ops? That one is just a sneak preview in advance to an incoming post also centered on “Innovation Management Essentials.”
As usual, looking forward to comments and emails, as well as meeting at any of these venues:
- MIT Institute of Data, Systems and Society. Board Meetings. Boston, April 6-7.
- Toronto, April 14.
- NFV World Congress. San Jose, April 19-22.
- IEEE Communications Quality & Reliability. Stevenson, WA. May 9-12.