Business Intelligence usually aims at enhancing results. Normal business logic and common sense will do the job. There are however situations which ask for a different approach. For instance when the boundaries must be pushed, when something new must be introduced to solve the problem or outsmart competition. We often refer to this as innovation, but what is innovation exactly?
This is an updated version of a chapter of my book "Digital Relationships"
The dictionary gives us three possible interpretations;
Sense 1; invention, innovation -- (a creation (a new device or process) resulting from study and experimentation)
• creation -- (an artefact that has been brought into existence by someone)
Sense 2; invention, innovation, excogitation, conception, design -- (the creation of something in the mind)
• creativity, creativeness, creative thinking -- (the ability to create)
Sense 3; initiation, founding, foundation, institution, origination, creation, innovation, introduction, instauration -- (the act of starting something for the first time; introducing something new; (“she looked forward to her initiation as an adult"; "the foundation of a new scientific society'' )
• beginning, start, commencement -- (the act of starting something; “he was responsible for the beginning of negotiations'' )
The first interpretation is the introduction of a radical new design, mostly of a physical nature. The second refers to the creation of new concepts in thinking and the third to a change in appearance (age, organisation etc.) This of course is only part of what innovation is all about.
There are situations where a status quo is reached and there is a desperate need of radical change.
Is the renewal of a pricing schedule an innovation, is the change of packing material innovation or just a change in market approach?
First of all innovation – in every sense - should be driven by strategy, by a vision of the future, a master plan. This requires an enormous amount of awareness throughout the company. And there can be only one driving force, the CEO. Within the strategy two types of innovation can be recognised.
1. Introducing new initiatives on a strategy level,
2. Enhancing existing products, markets or services.
New InitiativesI think innovation requires the introduction of a radical new approach or technology. At the end of a products life cycle, when cost efficiency is the main driver, companies have to find a way out of the snake pit. They are used to work with the dynamics of their own market and it is hard to think out of that box. Common sense is not sufficient to solve the cost/investment dilemma. It is time for creation. Time for something new. See pictuyre for the entire Product-Life-Cycle and its stages.
It is well known that true innovations are seldom the result of activities of established companies. With the rise of new technologies the early adopters (often only one or two individuals) create the radical new design.
Can companies that are aware of their life cycle position create or facilitate an innovative environment? I truly think so!. But there are rules to follow.
Disruptive innovation
Every company is constantly trying to improve itself. Either forced by outside influences or by internal vision. This constant process of enhancement/ acquisition is often referred to as innovation or the innovative capability of a company. It is in fact their biggest challenge to pin point possible innovations systematically and at the same time choose the innovation with the highest probability for success.
In their HBS publication of August, 2004 on disruptive innovation, Anthony, Johnson and Eyring recognise three main areas of interest that need your attention on a constant basis.
Customer Diagnostic; They distinguish two segments in the customer focus. The over-served customer on one side and the non-served customer on the other in a disruptive customer base.Portfolio Diagnostic; which assesses the possible innovations, changes and acquisitions. A nice example of a low end innovation in a disruptive market is the iPod Shuffle. A certain segment of the market was actually over-served with Apple’s standard iPod systems. The request came from an Apple user community requesting a low functional and cheap solution with low capacity, exactly fitting their needs. Apple sold millions in a market segment otherwise left unattended.
Competitor Diagnostic; which analyses the strength and weaknesses of your competition. Can and will a competitor go in to the market we are planning to target.
For every possible innovation identified, these diagnostics should be performed selecting the most potential innovation. This initiative should be described in a sound business case before taking action.
Innovation is a risky business; you can only invest your money once. Many innovations do not pay-off. The use of a system as described here avoids over exposure, pitfalls and wrong investments or acquisitions.
Innovation process model
First of all you have to realize who you are and where you stand at any time so you will not be taken by surprise when your margins diminish. Secondly you have to have a vision of the future. A roadmap to achieve that future and a strategy framework that defines room for new initiatives and - last but not least - funding to move forces within or outside the company.
When you plan to organize innovation you should apply a kind of innovation process model, in which you define steps, targets to achieve and parties to involve. You’ll have to be aware that internal communication of these activities and participation of key personnel are paramount. Such An innovation is never a success in itself. Radical innovations have the character of a revolution. One must believe in the good cause because no standard business case exists proving the innovations success in advance. Communication therefore is one of innovations main ingredients. All innovations and even intermediate results should be presented both internally and externally, creating a sense of success with both customers and staff.
If you fail to install a mechanism that allows for participation and knowledge sharing you’ll probably end up spending money on a one-off project instead of adding permanent value.
Before starting formal processes, the basis for innovations is urgency and consensus within the organisation. Innovation is a practical process of trial and error of three steps forward and two steps back. It should be managed in short cycles.
This figure shows how a typical process model could look like. Every stage begins with the results from the stage before and delivers intermediate management information and information exchange with the standing organisation.
Change in management approach
Compared to traditional business processes a new approach is needed. Business processes that serve external digital relationships need to be managed differently. The main reason is that product and services are offered to customers in the context of business- or consumer portals.
The days of the ICT dominated projects are over. Portal creation is a multi disciplinary activity, requiring different management styles and methods. The whole complex of technology, media and content, business process etc. must be managed integrally.
When business process in portals and/or communities are behaving like networks, the way they are managed will probably be by a network type of organization.
Responsibility and hierarchy become less important than contribution. Authority within a project team will be based on contributed value. Projects become more complex and more political. This endangers the possible project output.
Strong strategy frameworks must be defined to keep all energy within the project targeted at the creation of value. Discussions of ownership and other issues related to change in processes needs to be the responsibility of the highest officer in rank.
Companies frequently ask for PRINCE II certified management. But these methods come from an ICT dominated age. In these multi discipline environments I’d rather use only the strategy and decision making frameworks provided, because managemnt of time, risk and cost in innovation processes require a more entrepreneurial approach, instead of an management methodology.
Laws of innovation
What do you think of John Thackara’s laws posted at www.openingdoors.com .
Power Law 1: Don’t think of a new product. - think social value.
Power Law 2: Think social value before tech.
Power Law 3: Enable human agency. Design people into situations, not out of them.
Power Law 4: Use, not own. Possession is old paradigm.
Power Law 5: Think P2P, not point-to-mass.
Power Law 6: Don’t think faster, think closer.
Power Law 7: Don’t start from zero. Re-mix what's already out there.
Power Law 8: Connect the big and the small.
Power Law 9: Think whole systems (and new business models, too).
Power Law 10: Think open systems, not closed ones.
I would like to add my own laws of innovation in an arbitrary order;
• Conceptualize ideas and then criticize them and put them to the test.
• A launching customer is only the beginning
• Human metrics dominate the success of new innovations
• Adoption of new services / products do overthrow the market with the speed of human aging
• Never innovate within the standing organisation, old and new will fade each other out, resulting in high costs and bruised egos.
• Life cycle behaviour (innovate & optimize, consolidate, produce ).
• Willingness of organisations to listen to its and other “consumers”
• New innovations at the end of life cycle are almost always integrated value propositions rarely created by the traditional market leaders.
And specifically for media companies
• The gravity of content reduces, due to the introduction of newer / smaller and more diverse carriers e.g. content will circulate faster. BREAK UP THE CONTENT BUNDLES and publish in niches with changing business models.
• Creator roles (as described in my blogpost “the value chain reversed) will be more distributed due to specific interest / target audiences
Open source innovation.
When radical new approaches are needed good logical thinking is normally not enough. New and creative angles have to be found. But how do you generate creativity? Can you stimulate people who run aground in a complex situation to think differently about the challenges they are confronted with?
Of course you can, but you need techniques and sources. Fresh views from outsiders, analogies from different markets, products, countries or, highly favoured in scientific circles find analogies in nature. The perception of someone confronted with a dilemma is usually limited to a small circle. Open source approaches can resolve this problem. See what user generated content does to the internet community.
