Third Module of Innovation Process: Systematizing Innovation
The module in the innovation process reflects on the systemic methodology that a company can adapt to be more innovative. In this paper, I hope to establish guidelines on how a company can implement processes for evaluating data for experimenting and testing new ideas; then polishing those ideas for further improvements.
There is an age old debate whether leaders are born or built; in the case of innovation, is innovation derived from innovative people can? Or can innovative be simplified as a process which helps companies create innovative products/solutions for their clients? The third module suggests that, innovation can be implemented as a system.
Knowledge brokering is a method by which old ideas are used to create new ideas. These brokers “serve as intermediaries, or brokers, between otherwise disconnected pools of idea.”[1] (Page 4) The brokers apply existing ideas to new fields/uses and “…implement[ing] it in a way that [is] accepted by the marketplace.” [2](Page 4) This cycle is four part: “capturing good ideas, keeping ideas alive, imagining new uses for old ideas, and putting promising concepts to the test.”[3](Page 4) Understanding that having a reference of old ideas that are best business practices, models and technologies that are proven, brokers use the existing goldmine to develop new ideas. As one of the greatest inventors of all time Thomas Edison said, “First, study the present construction. Second, ask for all past experiences…study and read everything you can on the subject.”[4] (Page 5) Mr. Edison also said, “To invent, you need a good imagination and a pile of junk.”[5] (Page 6) To collect this ‘junk’, companies hold internal and external forums to share, collect, and learn new ideas used in similar or different industries. The objective is to harness the imagination and methodology used by many different people.
The chaos of daily work life, dealing with personal life and other situation help us forget about the ‘junk’ one might use to create new ideas. To ward off this symptom, take field trips to different places like junk yards, toy stores, factories, etc. Also surround yourself in your office (and other places) with old ‘junk’ that helped you create ideas in the past. Keeping old ideas alive to better serve in creating new ideas can be a challenge as well. By having everyone involved in solving problems, with informal channel of open communication can allow for quicker solution and better products. Testing ideas without the presence of political pressures is a great advantage knowledge brokers bring to the table. As the final step the process, they test the idea solely on its merit and quickly move on if the idea doesn’t live up to testing.
Instead of working with an external Knowledge Broker, some companies opt to create internal departments to facilitate innovation. Innovation Program Office (IPO) at HP was one of these internal departments. The vision being IPO was to “create a business group-level separately funded organization to explore and develop innovation opportunities in adjacencies of that business group or even in entirely new areas that could extend its strategic reach.”[6] (Page 1) With 95% of the R&D budget going to existing products and only 5% going to develop new products, the IPO hoped to tap the innovative ideas from across the company and focus more on developing new products/services which will increase revenue. IPO leader Philip McKinney said, “we hoped by making an explicit focus on adjacencies and potential new growth areas, this would give R&D teams in PSG the impetus to create new businesses.”[7] (Page 3) The structure was set up as: a project needed a champion who would have unwavering faith in the project, ideas would be submitted via Idea Central with respond and feedback in less than 30days (but typically in two weeks), after passing the initial criteria by the team, approved ideas would be provided a team to fully develop the idea and work out the financials and operational side of the idea. The idea thus develops into further stages with specialist leaders helping guide the idea further down the tube. In the entire process, no idea is prone to be dropped if it fails to live through the tests. The main objective is to improve financial results of the company, thus ideas failing tests most likely will not contribute positively to the bottom line.
Rite-Solutions used another but similar method to tap the collective innovative power of its employees. Mutual Fun was introduced to Rite-Solution employees so to harness any “idea that might help the company, either by saving money, developing a product or service, or developing new technology, the employees could create a stock that would be listed on Mutual Fun.”[8] The central philosophy of trust drove this idea. The founders believed that “the currency of the company…the underpinning of everything we do.”[9] (Page 4) was trust. To have a open dialog, sharing of ideas, not punishing people for bad idea, rewarding for ideas that worked (profit sharing for first two years), and not applying blanket punishment of individual violations, served the company well. Along with financial incentives, the promotional structure was geared toward team work, collaboration and trust in fellow ‘citizens’. Although the company was mainly involved in defense contracts, it “was open to ideas for new products and leveraged extended their knowledge baste.”[10] (Page 6) It seems that decentralize control of which direction company can potential go was a good idea. Although management had final say on which project moved forward, the choices for the direct was present by the ‘citizens’. The method of this was: employees introduce idea as a ‘stock’, everyone was giving equal amount of money to start with and they invested their money in ‘stocks’ they liked, the highest ranking ideas was given ‘seed money’ to develop and profit was shared. People were rewarded just for participating on regular basis even though they did not personally develop anything. “Mutual fun also enabled everyone in the company to come up with ideas, and to nurture those ideas without facing immediate review.”[11] (Page 11)
The company also focused on fully understanding its workforce. Seeing employees as people instead of just workers created an intimate feeling for employees as well as managers toward the company. New hires were celebrated and their families were acknowledged with flowers, etc.
A manager or a CEO can push or encourage by providing tools for the employees to be innovative but it will not work if the entire structure and policies of the company do not support the effort. By it nature, innovation take trials and trials can lead to failure. “Learning by experimentation is fundamental to solving problems for which outcomes are uncertain and where critical sources of information are non-existent or unavailable.”[12] (Page 2) The fear of failure can be economical or social. If a company encourages employees to experiment but then punishes them for failure, it does not fully support its strategy. “Normative influences, such as organizational culture and espoused values, influences employee beliefs and behaviors by establishing norms and standards that define appropriate and inappropriate forms of behavior.”[13] (Page 2) Second type of influences is instrumental influences, “pertains largely to formal reward systems and incentives, instrumental reward influence the ‘instrumentalities’, or costs and benefits, of experimentations behavior.”[14] (Page 2-3) Keeping these pressures and aligning all policies will best benefit stated goals for any experimentation a company might wish to conduct. “The finding that inconsistency leads to less experimentation among those under high evaluative pressure is consistent with the idea that multiple organizational conditions should be aligned in the same direction to support desired behaviors.”[15] (Page 4)
The basic rules I understand from these readings is that:
- Provide a full structure for innovation where reward is provided and failure is accepted
- Trust people
- Keep an open mind about new idea
- Understand the pressures people face
- Observe
- Support employees in furthering their ideas
- Allow experimentation
- Tap the vast knowledge base of employees
As a young executive at a retail company, I faced a daunting challenge of turning around a company on the brink of bankruptcy. For the first few weeks, I observed the business as it was. I noticed employee reaction to clients, clients reaction to stores, client reaction to employees and merchandise, clients communication (verbal and body) with fellow shoppers, and I studies the existing merchandise to see what was working and what was not working. I took the findings and encourage employees to part take in merchandise selection and gathered feedback from clients. I found out what the clients wanted, how employees can deliver their needs and what clients were willing to pay. After synthesizing the information, I sought further input for older employees, the past experiences and what worked in the past.
I discovered that some things will never change: clients wanted good service, great materials, up-to-date style, and some classic looks. I also discovered that younger clients wanted to have hipper merchandise for work as well as for parties. Keeping this in mind, I created an entire new line of clothing which appeal to customers across the spectrum. Bypassing the traditional labels like Ralph Lauren, Calvin Klein and the likes, I introduced Giovanni was our personal brand. By producing this line, we were able to meet the price point which clients desired.
I took input from employees when developing the collection, which gave them an intimate connection to the line. I had never seen so much excitement seeing a new line as I did when Giovanni products were delivered to our boutiques. Although some pieces did not sell out, the over all result was positive. Most products outsold all competitor products in the stores and were a major contributor to saving the company from going under. In the next seasons, we increased employee contribution, as they were the front line of clients, to expand and better focus the product to meet our clients’ needs.
“The most important lesson from all this is that business leaders must change how they think about innovation and must change how their company cultures reflect that thinking.”[16] (Page 12) The personal attachment to the products, supported with higher financial rewards, and allowing failure but improving on the failure in the future, gave me valuable input from all employees and lifted Giovanni line to a higher heights.
[1] Andrew Hargadon, Robert I. Sutton, Building an Innovation Factory
[2] Ibid
[3] Ibid
[4] Ibid
[5] Ibid
[6] Robert A. Burgelman, Philip E. Meza, Innovation at HP: The Role of the Innovation Program Office (IPO)
[7] Ibid
[8] Hayagreeva Rao, David W. Hoyt, Rite-Solution: mavericks Unleashing the Quiet Genius of Employees
[9] Ibid
[10] Hayagreeva Rao, David W. Hoyt, Rite-Solution: mavericks Unleashing the Quiet Genius of Employees
[11] Ibid
[12] Amy Edmondson, Promoting Experimentation for Organizational Learning: The Mixed Effects of Inconsistency Organization Science, June 2004.
[13] Ibid
[14] Ibid
[15] Ibid
[16] Andrew Hargadon, Robert I. Sutton, Building an Innovation Factory
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