Bob Roitblat ~ Speaker | Author | Consultant http://www.roitblat.com Purveyor of Fine Ideas & Experience Sat, 24 Jun 2017 22:20:32 +0000 en-US hourly 1 https://wordpress.org/?v=4.8 98732480 ROI2 – Return on Innovation Investment – Is Just as Important as That Other ROI http://www.roitblat.com/roi2-return-on-innovation-investment-is-just-as-important-as-that-other-roi/ Mon, 05 Jun 2017 13:45:26 +0000 http://www.roitblat.com/?p=1846 Lord Kelvin said, “When you can measure what you are speaking about, and express it in numbers, you know something about it”[i] If that’s true, what measures can we use with innovation, to know more about it?

Standard metrics don’t seem to apply. With many ideas you have to review, filter and select ideas based solely on judgment. For true innovation, there are no concrete metrics, frames of reference, or direct precedents upon which to base your evaluation.

But just because it’s hard doesn’t mean we should stop trying. Return on innovation investment can be measured in a variety of ways:

Scott Anthony, writing in The Harvard Business Review[ii] sub-divided ROI2 into three separate metrics:

  • Innovation Magnitude – financial contribution divided by successful ideas,
  • Innovation Success Rate – successful ideas divided by total ideas explored, and
  • Investment Efficiency – ideas explored divided by total capital and operational investment.

Other possible metrics include:

  • Innovation Performance – percentage of funded ideas that produce revenue,
  • Innovation Sales Rate – ratio of sales from new products & services compared to sales from existing products & services,
  • Innovation Conversion Rate – new customers from new products or services compared to current customers, and
  • Idea Generation Rate – how many ideas you receive per month, per employee.

ROI2 measurement offers compelling benefits, but there’s no one-size-fits all. Choose which measures offer you the ability to unlock potential and create new value, while simultaneously minimizing the risk of change and the cost of innovation.

You can also measure the monetary gain or savings resulting from your innovation efforts. You might also calculate initial cost applied against internal savings, plus the increased sales in the implications of customer loyalty and brand image.

[i] Lord Kelvin (William Thomson) from his May 3, 1883, lecture on “Electrical Units of Measurement” (Popular Lectures, Vol. 1, page 73)

[ii] Scott Anthony (Innosight), “How to Really Measure a Company’s Innovation Prowess,” Harvard Business Review, March 21, 2013

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To be Successful, Participate in the Outcome Economy http://www.roitblat.com/to-be-successful-participate-in-the-outcome-economy/ Mon, 10 Apr 2017 12:17:19 +0000 http://www.roitblat.com/?p=1818 No matter what business you think you’re in, you’re in the tool business. Your customers are not buying a set of features. They’re hiring the tools needed to complete one or more tasks that produce their desired outcome. Customers hire products and services to get a job done.[i]

The real key to innovation success is to be outcome focused. Be clear on who the customer is, what job they’re trying to get done and what their implicit or explicit metrics for job success are. Then create or adapt your tools to meet those expectations.

Customers measure the effectiveness of your offerings to meet their desired outcome across multiple facets of three dimensions: functional, emotional and societal, with the weight of each varying by the job.

The functional dimension of the job-to-be-done (JTBD) includes all the practical and objective customer requirements, such as value and performance.

For example, products and services are often bloated by features that are useless to the job customers are hiring your tools for. The result your product or service is capable of producing and the result your customer wants to produce with your product or service are two different things. No matter how well designed those features are, from a functional viewpoint, those excess features are valueless to your customer.

The emotional dimension of the JTBD is how the customer wants to feel or avoid feeling while completing the job. It is personal and subjective.

For example, one customer will choose the traditional spring mouse trap because she wants those pesky rodents permanently eliminated. Another customer will choose an electronic mouse trap because it delivers a more humane kill. Yet another customer will choose a catch & release mouse trap model because she wants the mouse gone but doesn’t want to be an agent of death. Offerings that meet the customer’s emotional criteria are valued more highly than those that don’t.

How a person wants to be perceived by others while completing a JTBD is the societal dimension. It is also personal and subjective.

For example, a $20,000 Chevy Cruze will get the driver where she needs to go. One customer believes she will be perceived as frugal while driving the Cruze. That’s the perception she wants others to have of her—a desirable outcome. Another believes she will be perceived as less financially well off, which is not the perception she wants others to have—an undesirable outcome.

The first driver will place a high value on the Cruze along the societal dimension. The second driver will not.

Customers typically choose whichever product or service gives them more of their desired outcomes, across all facets and dimensions, and less of their undesired outcomes.

The better you understand your customers’ expectations across all facets and dimensions, and how satisfied (or unsatisfied) customers are with your and competitive offerings, the better you can create or adapt your offerings to be more desirable than the next best alternative. As the customer sees it, from their perspective.

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[i] The concept of job-to-be-done was first articulated by C. Christensen, S. D. Anthony, G. Berstell, and D. Nitterhouse in “Finding the Right Job for Your Product,” MIT Sloan Management Review, Spring 2007 2–11

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Innovation begins with an Eye http://www.roitblat.com/innovation-begins-with-an-eye/ Wed, 01 Mar 2017 13:51:29 +0000 http://www.roitblat.com/?p=1780 Leon Segal is quoted in, The Art of Innovation[i], as saying, “Innovation begins with an eye,” though it’s not so much about what you look at, but what you observe.[ii]

Sometimes the most helpful ideas are right in front of you, but you fail to notice them. Seeing — that is, perceiving with the eyes — is easy; observation — recognizing and understanding the data provided by your eyes — is much more difficult. You have to work at it, because observing is an acquired skill and it requires practice.

Observation is essential to understanding and creativity. For example, don’t just rely on what customers say they need. Watch the gyrations your customers go through in real settings when trying to use your product or service, rather than looking at the product itself.

When you observe the world around you with a keen eye and a “beginner’s mind” you begin to become aware of opportunities and possibilities that no one else is noticing, or are just taking for granted. This concept from Zen Buddhism, called shoshin, is about having an attitude of openness, eagerness, and lack of preconceptions when observing a subject, just as a beginner would.

 

“In the beginner’s mind there are many possibilities, but in the expert’s there are few.”[iii]

 

It is only through observation that you gain real insight.

[i] Tom Kelley, Currency/Doubleday, 2001, page 28

[ii] Henry David Thoreau, “the question is not what you look at, but what you see.” The Writings of Henry David Thoreau: Journal II, Chapter VII, 5 August 1851, page 373

[iii] Shunryū Suzuki, Zen Mind, Beginner’s Mind, Weatherhill, 1977, page 2

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Fixing Your Misaligned Innovation Strategy http://www.roitblat.com/fixing-your-misaligned-innovation-strategy/ Wed, 04 Jan 2017 15:47:13 +0000 http://www.roitblat.com/?p=1740 Successful innovation is only possible when an organization’s strategy, culture and capabilities are all aligned. An innovation strategy unsupported by or in conflict with either capabilities or culture is doomed to fail. The most challenging to align are strategy and culture.

Imagine Albert Einstein working for you. Or Thomas Edison. Would their ideas flourish in your culture—in your work environment? If you can’t imagine their brilliant minds reaching their full potential within your organization, as it exists today, how can you imagine anyone reaching their creative potential in your current environment?

Culture directs and rewards behaviors and traits that remain in compliance with deep seated organizational values—those everybody knows and shares, as well as those unspoken—and punishes those outside. As MIT psychology professor Edgar Schein writes in his book, Organizational Culture and Leadership, (Jossey-Bass, 2010) “culture determines and limits strategy.”

Many organizations like to proclaim they have a culture that supports innovation. More likely, they’re confusing intention with action. They want to have a culture that supports innovation, so they think they do. They don’t.

When their culture is aligned with a strategy for innovation, organizations make a point of recognizing and supporting employees who think creatively and share new ideas. They encourage experimentation, tolerate risk and accept that failures line the path to success. They even reward employees when their new ideas hit the jackpot.

Which do you work on first when culture and strategy are misaligned? Since innovation strategy will only ever be as good as the culture within which it exists, adopting innovative behaviors must come first. As Jonathan Groves and Carrie Brown wrote in their paper, The Lean Newsroom: A Manifesto for Risk, (Taylor & Francis, 2016) “Organizations must develop new routines that fit in the context of the existing culture and nudge members toward a culture that embraces innovation.”

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Innovation: You Can’t Get There From Here http://www.roitblat.com/innovation-you-cant-get-there-from-here/ Mon, 28 Nov 2016 22:42:28 +0000 http://www.roitblat.com/?p=1733 Innovation extends from our current knowledge, technology and ethnography into what theoretical biologist Stuart Kauffman coined as the Adjacent Possible.[i] Described by innovation theorist Steven B. Johnson[ii] as, “a kind of shadow future, hovering on the edges of the present state of things,” the Adjacent Possible “is a map of all the ways in which the present can reinvent itself.”

In other words, innovation only happens within the realm of possibilities available at any given moment. Beyond the Adjacent Possible lies theory and idea, and often radical innovation.

Think of radical innovation as the old cliché, ‘you can’t get there from here’—referring to the impossibility of traveling a direct route between certain points. You have to go somewhere else first or something else first has to happen.

For example, the helicopter, designed by da Vinci in the late 15th Century, had to wait until the early 20th Century for both engines with a high power-to-weight ratio and high energy density fuel to be developed.

The expansion of the highway system was necessary before cars could gain wide-spread use. Similarly, the wide-spread adoption of hydrogen-powered cars will have to wait until a hydrogen refueling infrastructure is in place. In contrast, Tesla recognizes this limitation for electric cars and has invested in developing the necessary infrastructure.

Mobile voice communications couldn’t get past the 3-calls-per-city limit of the 1940s to the 50,000-calls-per-tower density of the 1980s until packet switching technologies of the 1960s were developed. Streaming video wasn’t possible until high-speed internet was more readily available, also using packet switching technology, and video compression/decompression technology progressed to a sufficiently high density.

Uber, AirBNB and other digital matching firms only became technically viable with the proliferation of cloud computing, smartphones, and apps. But the digital matching firms also needed a sufficient number of people to embrace a sharing economy, both as consumers and as providers, before any of these firms could be successful.

The Adjacent Possible theory “captures both the limits and the creative potential of change and innovation[iii].” So, for the most effective innovation initiative, I recommend the following: That you invest the bulk of your time and effort towards exploiting current markets, technology and methods. Invest relatively less time and effort on ideas, technologies or markets that are adjacent to those that currently exist and are functionally possible in the near future. And invest some, but relatively little time and effort trying to get there from here—on developing radical ideas.

[i] The concept later adapted and popularized by innovation theorist Steven B. Johnson.

[ii] The Wall Street Journal, “The Genius of the Tinkerer,” Sept. 25, 2010

[iii] Ibid.

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The Report of Brainstorming’s Death has been Greatly Exaggerated http://www.roitblat.com/the-report-of-brainstormings-death-has-been-greatly-exaggerated/ Mon, 08 Aug 2016 13:55:50 +0000 http://www.roitblat.com/?p=1728 At least once a year some self-proclaimed pundit decries that brainstorming is ineffective. Is it? Or is it more likely that brainstorming just didn’t work for what it was asked to do in that instance. Brainstorming is not appropriate for every situation, and is only effective when used appropriately and properly.

Brainstorming is a free-form divergent thinking tool used most frequently to generate a wide range of ideas — including bizarre, silly, obvious or even ridiculous ideas. It is not about who has the loudest voice or about immediately shooting down ideas.

Brainstorming is about letting the ideas flow so that everyone can build on each others’ ideas and trigger more ideas, which are further combined, fine-tuned, and polished.

A successful brainstorm session begins before you gather people together, by thinking through the purpose of your session and by setting clear expectations of what you want out of the session. It also helps to provide some background information on the challenge to be solved, and any constraints that apply.

To get the most out of a brainstorming session use a facilitator to keep the brainstorming on task, to encourage participation and elaboration, and to remind participants to defer judgment.

Once you’ve identified the single idea or a handful of ideas that take you closest to your predefined and articulated goal, there’s more work to be done. Brainstorming is but one component of an effective innovation process.

Use brainstorming in a way that is most appropriate and you’ll reap the benefits.

Long live brainstorming.

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Innovation is a Team Sport http://www.roitblat.com/innovation-is-a-team-sport/ Mon, 23 May 2016 13:19:20 +0000 http://www.roitblat.com/?p=1722 Great innovations are not achieved by solitary work, created in a vacuum or emerge fully mature when first conceived. Innovations are not the product of a sudden brainstorm from a single individual—a light bulb moment, if you will. Those are sources of ideas.

And contrary to popular myth, great minds do not think alike; although great minds are open to exploring disparate ideas. In reality, innovation is a team sport where each member of a diverse group of people possesses a unique fragment of the puzzle the group is out to solve.

You reveal those fragments in two ways: by further developing and refining ideas already generated; and, by expanding upon the concepts, designs and sparks of others. One idea serves as a stepping stone for other ideas.

When someone else’s idea makes you think of something new, run with it—making sure that you modify and improve upon the original.

At the same time, other people can help develop your ideas. So share your ideas with others to see whether they can enhance them in different ways than you, or challenge you to expand upon your own ideas.

Innovation requires both divergent thinking and combinatory thinking. You tap into multiple reservoirs of knowledge and experiences to generate new, novel, and interesting ideas.

“Many ideas grow better when transplanted into another mind than in the one where they sprang up.” – Oliver Wendell Holmes, Sr. 

And by stirring together ideas, thoughts and opinions, you spontaneously reveal undiscovered connections between ideas or objects. These elements might not have otherwise been joined, and, like a scrambled egg, will never again separate.

Look at your ideas and ask, could any be adapted, combined with or connected to another idea to spawn a new, more effective solution?

Co-mingling of myriad viewpoints, collaboration, beats consensus any day. It is what drives development and ignites innovation.

Innovations are not manufactured, they are like children. They need to be cared for, nurtured, encouraged and protected so they can grow. Just as it takes a village to raise a child, it takes a village to raise an innovation — because innovation has many parents. Ideas only become innovations through collaboration.

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To Avoid Obsolescence Forget Everything You Know http://www.roitblat.com/to-avoid-obsolescence-forget-everything-you-know/ Mon, 09 May 2016 12:51:17 +0000 http://www.roitblat.com/?p=1716 Organizational Learning, the process of creating, retaining, and transferring knowledge within an organization, is a perennial management topic, but Organizational Unlearning is far more important. Intentionally forgetting old knowledge and old routines to make way for new learning, new ideas and new methods.

As Frank Lloyd Wright has been reported to say, “An architect’s most useful tools are an eraser at the drafting board and a wrecking bar at the site.”

When trying to solve new problems or capitalize on new opportunities, people and organizations often look inward and apply familiar mental models, tools and techniques that have worked in the past. When old strategies don’t work, these headstrong people often keep trying to make them work — maybe if they just use an old strategy with more gusto, things will pan out. But they don’t.

No industry lasts forever; no technology stays the same for long; no solution is universal. Contrary to the old cliché, insanity—in a constantly changing world— is doing the same things in the same way, and expecting the same results.

Static organizations seldom survive. Technological and societal changes eventually eat away at the core of any organization that refuses to make any changes that might disrupt their established business.

If you’re doing the same things five years from now as you do today will you feel as though you’ve advanced? If your answer is no, why are you doing today what you did five years ago? Or even one year ago?

You advance by discarding old routines, stale product lines, and ineffective relationships.

You may not want to abandon a product or service line that is currently profitable, and it takes immense effort to overcome the inertia of “That’s the way we’ve always done it.” But if you don’t abandon it on your timetable somebody else will kill it on their timetable.

“Even if you’re on the right track, you’ll get run over if you just sit there.” – Will Rogers

Practice Proactive Obsolescence by replacing your own successful products or services with fundamentally new solutions that provide a significant leap in customer value. In other words, it’s better to be the disrupter than the disrupted—even if you have to disrupt yourself before anyone else has a chance.

Committing to generating value for your customers and focusing on continuously adding value to your customers will always serve you well. Clinging to the products you currently produce or the services you currently provide will not.

Innovation is your only insurance against irrelevance, the only antidote to margin-crushing competition and the only guarantee of enduring customer loyalty. As James Morse wrote in Harvard Business Review, “The only sustainable competitive advantage comes from out-innovating the competition.” And innovation involves not only generating new ideas but letting go of obsolete ones as well.

Who’s focusing on what your organization should be letting go of? Who’s clearing out the old to make way for the new?

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Innovation: What You Think Matters Little http://www.roitblat.com/innovation-what-you-think-matters-little/ Fri, 15 Apr 2016 12:52:37 +0000 http://www.roitblat.com/?p=1707 No matter what business you think you’re in, you’re in the tool business. Your customers are not buying the set of features you offer. They’re buying tools that (they hope) will solve their problems and produce their desired results.

Often a gap exists between the results you believe your tools are capable of producing and the results your customer produces with your tools. The size of the gap varies.

It’s even possible that your customers are using your tools in ways you didn’t intend or imagine. And they’re not using some of your tool’s features that you imagined they would.

Too many products and services—tools—contain features that are useless to the job customers are buying your tools for. No matter how well designed those features are, they are a waste of effort. Useless features only serve to create product bloat and feature creep without adding any actual value.

“There is nothing so useless as doing efficiently that which should not be done at all.” –  Peter Drucker

Forget about the features you offer. What tangible results do your tools produce that your customers consider being of a higher relative worth, utility, or importance than their next-best-alternative? Think in terms of critical business measures such as productivity, operational efficiency, profitability, costs and time-to-market. That is the value you add.

In order to be of value, you can’t innovate in isolation. You have to see your tools in action and look to your customers for ideas.

In his study entitled, Lead Users: A Source of Novel Product Concepts, MIT professor Eric von Hippel coined the term Lead Users for customers whose present needs foreshadow general market demand by months or years. Lead Users modify existing tools in order to solve a problem, transform existing tools into new items that serve specific needs, or use existing tools in novel ways.  Your Lead Users are a great source of effective innovative ideas.

So, instead of focusing on the tools, focus on the help you need to supply to your Lead Users in the use of your tools to produce their desired result. Then incorporate what you learn into new products for your broader market.

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Disrupt Yourself before Anyone Else has a Chance http://www.roitblat.com/disrupt-yourself-before-anyone-else-has-a-chance/ Wed, 06 Apr 2016 21:21:17 +0000 http://www.roitblat.com/?p=1703 When trying to solve new problems or capitalize on new opportunities, individuals and organizations often look inward and apply familiar mental models, tools and techniques that have worked in the past. When these old strategies don’t work, these same individuals often keep trying to make them work — maybe if they just use an old strategy with more gusto, things will pan out. But they don’t.

No industry lasts forever; no technology stays the same for long; no solution is universal. In the words of early 19th Century French philosopher William Joseph Chaminade, “New times call for new methods.”

You advance by discarding old routines, stale product lines, and ineffective relationships. Static organizations seldom survive.

When you refuse to consider making any changes that might disrupt your established business, technological and societal changes will eventually eat away at your core. Any organization that fails to innovate is on the road to obsolescence. Or, worse, irrelevance.

You may not want to ‘upset the apple cart’ or ‘kill the golden goose.’ And it takes immense effort to overcome the inertia of “That’s the way we’ve always done it.” But if you don’t, somebody else will.

Even if you’re on the right track, you’ll get run over if you just sit there. – Will Rogers

Practice Proactive Obsolescence by replacing your own successful products or services with fundamentally new solutions that provide a significant leap in customer value. In other words, it’s better to be the disrupter than the disrupted—even if you have to disrupt yourself before anyone else has a chance.

Committing to generating value for your customers and focusing on continuously adding value to your customers will always serve you well. Clinging to the products you currently produce or the services you currently provide will not.

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