Stealth Innovation

If somewhere deep in the corporate hierarchy an innovator has a very daring and promising innovation idea, the traditional advise is to first obtain top management commitment, in order to overcome the resistance that is to be expected later on during the innovation project.

However there are several issues associated with this traditional approach:
- You often get only one chance to pitch your idea at the top. If your idea is not convincing enough, not only are the executives going to say "no", they are probably going to remain negative indefinitely, due to anchoring bias and confirmation bias.
- Political power plays
- Forced to follow extensive corporate procedures
- Distortion by certain stakeholders with differing interests
- Pressure for short-term result.

That is why Paddy Miller and Thomas Wedell-Wedellsborg in their article "The Case for Stealth Innovation" in the Harvard Business Review of March 2013 recommend another route:
- Stealth Sponsors: initially present your idea 1 or 2 levels below the C-level, provided they are powerful enough to get the project started.
- Stealth Testing: First create a proof of concept, collecting evidence of the value of your idea.
- Stealth Resourcing: Use funding from surrounding projects or departments with spare capacity.
- Stealth Branding: Create a cover story to develop your idea 'under the radar', for example by telling curious outsiders that it is part of some other project.

Although I can agree with the reality of the issues of traditonal innovation approaches that the authors mentioned, and although I appreciate their good intentions, I would still recommend to share your intended stealth approach at least in broad terms with a board member.

Big-Bang Disruption

Big-Bang Disruption (BBD) is a term recently coined by Accenture gurus Larry Drownes and Paul F. Numes in "Big-Bang Disruption", HBR Mar 2013.
Lately, technological innovation started out from the low-end. Initially cheap and simple substitutes of traditional existing, more complex products are offered. From this starting position, disruptive innovators work their way up, improving their product until they can capture higher-end clients as well.

But now that platforms such as Android and iPhone have become so powerful, simple to use and omnipresent, a new type of disruptive innovation is enabled: 'big-bang disruptions', wiping out entire markets almost overnight. Big-bang disruptors don't start anymore with attacking the low end, they attack all users at the same time.

The authors argue that the total length of Roger's Innovation Curve has now been compressed a lot. And not only that, his 5 customer segments (innovators, early adopters, early majority, late majority and laggards) are now obsolete for such markets and should be replaced by a model with just 2 type of users: trial users and everyone else.

The authors have 4 tips for incumbents - none of them seems very easy to achieve...:
1. See it coming - recognize early warning signs.
2. Slow the disruption down - delay their profitability and form alliances with partners they need.
3. Prepare for immediate evacuation of current markets and getting rid of physical assets.
4. Try a new kind of diversification - have many experiments at the same time on extendable platforms.

First thoughts cast the die

Creativity emphasizes that almost all our thinking is heavily influenced by our past experiences. Even when we think we are thinking afresh, we are simply taking forward 'work in progress'. This dependence of today on yesterday is what needs to be countered by various techniques.
By sheer coincidence, I have come across a most apt and interesting description of this dependence. Read this excerpt from the book 'Art and Fear' (http://www.amazon.com/exec/obidos/tg/detail/-/0961454733/qid=1088439806/sr=8-1/ref=pd_ka_1/102-5120109-5978557?v=glance&s=books&n=507846), which I highly recommend:

'The artwork's potential is never higher than in that magic moment when
the first brushstroke is applied, the first chord struck. But as the
piece grows, technique and craft take over, and imagination becomes a
less useful tool. A piece grows by becoming specific. The moment
Herman Melville penned the opening line. "Call me Ishmael", one actual
story – Moby Dick—began to separate itself from a multitude of
imaginable others. And so on through the following five hundred-odd
pages, each successive sentence in some way had to acknowledge and
relate to all that preceded. Joan Didion nailed this issue squarely
(and with trademark pessimism) when she said, "What's so hard about
that first sentence is that you're stuck with it. Everything else is
going to flow out of that sentence. And by the time you've laid down
the first two sentences, your options are all gone."

It's the same for all media: the first few brushstrokes to the blank
canvas satisfy the requirements of many possible paintings, while the
last few fit only that painting – they could go nowhere else.'

Innovation Often Comes About by Using a Combination of Innovative Ideas

Let me first say that I am not an employee nor a stakeholder in the following organization. I am a subscriber. The article referenced below was, I thought, one of the more articulate descriptions of an approach to a 'makeover' which I have read and that is the reason for bringing it to your attention.

The Globe and Mail, Canada's leading national newspaper, made use of work groups and innovative practices to complete a successful makeover the newspaper.

The article, published April 21, 2007, written by Globe Editor-in-Chief, Edward Greenspon, describes The Globe and Mail’s innovative approach to the makeover of their paper. While newspapers, in general, were having a hard time and worldwide circulation was trending down, the Globe and Mail was, on the other hand, on a roll. The internet was viewed as being a significant threat. The Globe’s attitude toward the Web was interesting; it was not viewed as competition but rather as a new means of telling stories to its readers.

The Globe and Mail did the following (slightly abridged from the original article by Edward Greenspon).

- in spite of being a leader in their business segment (The Wall Street Journal noted their success as a paper) the significant stakeholders took the initiative to launch a ‘reimagination’ process with a significant allocation of resources in terms of funding and peoples time. Risk that some or nothing might actually happen was present at the early stages.
- commissioned a large piece of market research and brought in experts to talk to everyone in the company
- asked for volunteers from its staff to participate in the process and one-third of the staff stepped forward
- organized the staff volunteers into teams and assigned a specific area of opportunity
- provided an overall vision (guidelines) for the ‘reimagining’ process that were clear; to be smarter, more accessible, more Web-page integrated, and more visually oriented.
- restated the culture that had historically won readership; strong reporting, great writing, seriousness of purpose.
- team members used a ‘reimagination’ room as a place to gather and work on the areas of interest in between their regular jobs.
- one special group called the ‘design group’ was asked to look at how people could work better in generating and presenting content. An important conclusion was that the process of people working together starts with the physical layout of the office. Communication amongst disciplines was to be encouraged. Openness and teamwork were to be encouraged.
- the group was initially isolated from the rest of the staff and kept so during the ‘incubation’ period and, significantly, later moved into the centre of the room with editors spread throughout.
- testing the concept as it developed – a ‘beta’ test – was part of the ‘reimagination’ process.
- embracing the new technology (the Web) was a fundamental challenge in the redesign and was a part of the vision enunciated at the beginning of the ‘reimagination’ process.
- management (and shareholders) took a long view as the process started in the spring of 2005 and the newly thought-out paper was issued on April 22, 2007; a period of two years between initialization and realization.

The Globe and Mail made use of a number of innovative ideas and linked these together to achieve a major breakthrough.

Crisis is good!

A highly interesting article in the last issue of Fortune (Sept. 5, 2005, no. 15) explains how Jong-Yong Yun, CEO of Samsung, is relentlessly building a culture of perpetual crisis at Samsung Electronics.

The South-Korean powerhouse has become the worlds largest consumer electronics company.

Without a doubt, Samsung is also a leading company on innovation, registering 1600 patents in 2004 (more than Intel), and spending a whopping 9% of revenue on R&D. The company employs around 27.000 researchers, 40% of it's global workforce. It seems like Yun's strategy to control the core technologies of digital convergence simply ensures that the profits keep flowing in.

However, according to Yun, it is not the corporate strategy that made Samsung so successful. Rather, it is the corporate culture that support the execution of this strategy that's vital.

Yun actively and relentlessly spreads a philosophy which emphasizes that disaster is just around the corner:

• Markets for today's cash cows may implode overnight.
• Reinvigorated competitors such as Apple, HP, Intel, Microsoft, Motorola and Sony may bounce back.
• Chinese companies will inevitably and aggressively take away the electronics commodity market (a strategy that Samsung itself knows very well from its history). Product innovation is the only remedy.
• A constant obsession with cutting cost and complexity is needed to lead the innovation pace in consumer electronics and be first to market.
• Success only increases the danger of complacency and eventual failure.

Is this way, the cultural ability to deal with crises can indeed become a competitive edge over companies that are less agile in dealing with disaster.

Innovating Globally

According to Patricia Sellers a.o. in Fortune (Vol. 152, No. 2, July 25, 2005) operating globally involves more than reaching out to far-flung locales for needy customers, low-cost labor, and ready capital.
Increasingly, large companies are also globalizing innovation as well.

• Jeff Immelt from GE is reaching out to try multiple ideas. To build a better wind turbine, it first built an international team of researchers in Germany, China, India and the USA.
• A.G. Lafley from Procter and Gamble has improved R&D productivity by co-developing brands with other companies from around the globe.
• Chinese engineers in the Beijing lab from Motorola conceived a Linux-based mobile phone, now a crucial part of its software strategy.
• The revolutionary (non processor frequency based) technology behind Intels Centrino wireless technology was developed in Haifa, Israel where challenging orthodox ideas is rooted in the culture.
• Swiss-based Novartis is developing new medicines in a Shanghai laboratory, specializing in ancient remedies.
• Dutch electronics giant Philips got the idea for a core product, their new home heart defibrillator "HeartStart", via a US-based research lab.

Accessing the brains everywhere in the world is paying of for these companies apparently.

British firms leading on innovation

THE UK is identified as a breeding ground for new ideas after a report finds it harbours a quarter of the world's most innovative companies.

Research by consultancy Innovaro found that five of the biggest names in UK business were outperforming their global rivals in areas such as growth, brand value and product launches in 2005.

• Tesco was seen as more innovative than Wal-Mart - the world's biggest retailer - after a decade of rapid growth that included the launch of the UK's first customer loyalty card and moves into financial services and online shopping.
• The research also found Royal Bank of Scotland leading the way in the banking sector,
• BP ahead in energy,
• Virgin Atlantic as the top airline, and
• Reckitt Benckiser pipping US giant Kimberley Clark to the post of leading household products firm.

It marks an improvement on 2004 when Tesco and BP were the only UK firms to secure top rankings from Innovaro for innovation.

Innovaro, a consultancy based in London and Amsterdam, analysed the innovation of 1,000 leading companies across 20 sectors from aerospace, airlines and fashion to sports and pharmaceuticals.

It drew its conclusions from measuring firms against criteria such as strategic focus, product launches, growth, brand value and culture."

Outsourcing Innovation

Today, the likes of Dell, Motorola, and Philips are buying complete designs of some digital devices from Asian developers, tweaking them to their own specifications, and slapping on their own brand names. It's not just cell phones. Asian contract manufacturers and independent design houses have become forces in nearly every tech device, from laptops and high-definition TVs to MP3 music players and digital cameras.
First came manufacturing. Now companies are farming out R&D to cut costs and get new products to market faster. Are they going too far?
Read on.

How and when collaborating can accelerate innovation

An article worth reading by John Hagel III and John Seely Brown on the optimal conditions for achieving innovation through collaborating with other companies in this month' HBR. They explain that - although coordinating with other companies has [negative] friction cost (transaction costs as decribed by Nobel Prize winner Ronald Coase) - collaboration between companies also be very fruitful, in particular with respect to innovation. Productive [positive] friction.

To achieve productive friction, the authors recommend the following things when collaborating on innovation, which they call the 4P's: performance requirements, people, prototypes and pattern recognition:

1. Build a shared sense of what must be achieved (a. create a basis of shared meaning and trust, b. use forward looking incentives, c. avoid overemphasizing near-term cash rewards, d. define the concept 'trust' narrowly, e. trust-but-verify)
2. Parties must have relevant specializations and diverse perspectives,
3. Use a prototype (boundary object) to enable participants to see beyond the boundaries of their specialization,
4. Capture and disseminate the learning, leveraging various ICT systems.

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