Daily Archives: March 27, 2012

Relentless Innovation, A Review: Part I: Setting the Stage

This is Part I of a review of Jeffrey Phillips‘, VP Marketing of OVO Innovation, recently published book on Relentless Innovation, his guide for transforming your organization from one that innovates occasionally, at best, to one that innovates constantly.

Before we get into the core of what relentless innovation is, or why your organization needs it, we’re going to set the stage by reviewing the astutely pointed out innovation myths, the biggest barriers to innovation in an average organization, and the problems with the average organization today — as detailed in the first four chapters of the book.

According to Jeffrey, some of the biggest myths in innovation that pervade an average organization, and prevent it from being relentlessly innovative, are the following:

  • Individual, innovative leadership accounts for the majority of a firm’s success.
    The truth is that sustained innovation goes beyond visionary leaders (who are often a one- or two- trick pony).
  • The level of industry competition dictates the amount of innovation (required).
    Industry competition might foster innovation, but it doesn’t guarantee innovation (leadership).
  • It is possible for firms to copy the product or service offerings of market leaders while retaining competitive advantage through low costs or higher service. There are a host of problems with this fast follower mindset. First, it’s not always possible to be fast enough in markets where products have life-spans of a year or less. Second, the more one follows, the less one leads, and the less likely one will be able to innovate. Third, the lack of (time for) market research prevents a following organization from differentiating what features make the market leader’s product or service attractive. Fourth, by the time the product gets out, a majority of market share could already be gone!
  • Due to changes in a globalizing world, no firm can sustain innovation leadership over the long term. The truth is that the primary drivers of sustained innovation are under an organization’s control.

But more importantly, the biggest barriers are the BAUMMs (pronounced Bombs) that are present in every organization — the Business As Usual mindset and the Middle Managers. Yes, those dreaded middle managers that everyone says you should right-size as soon as possible as they aren’t leading and they aren’t delivering products or services. (But, in fact, you shouldn’t really right-size them, just put them in the right mindset, but we’ll discuss this in a subsequent post.) These two barriers are the worst because they dictate what work is done, and how such work gets done. (Sustained) Innovation requires that the right work be tackled in the right way — so it’s natural that a BAU mindset that dissuades innovation in the hands of risk-averse middle managers is the best way to guarantee that innovation does not occur in an organization. Furthermore, any attempt to force-fit innovation into a BAU model that was not designed for innovation will fail.

The worst thing about a BAU that dissuades innovation is that any action that delays innovation starts and continues a viscous cycle that will delay innovation until the organization is on the verge of bankruptcy, obsolescence, or both.

So why are Middle Managers the biggest threat to innovation in a traditional organization? They have the most at stake when a threat emerges to the operating model that they are compensated against. If they miss their metrics, they will lose money in the best case and their job in the worst case. So they will look to squash any effort that is not 100% in line with the business-as-usual mindset that, generally, promotes efficiency, cost-reduction, and risk-minimization — three factors innovation projects in an early stage generally do not possess.

And innovation is desperately needed in an average organization. As Jeffrey reports, in 2010, a survey found that while CEOs consistently ranked innovation as one of their top three priorities, less than 25% of manufacturing organizations in the US innovated a new product in the last three years and less than 8% of service organizations innovated a new offering in the last three years! The fact that only 1 in 4 manufacturing organizations can innovate a product in 3 years and that only 1 in 12 service organizations can innovate a service offering in 3 years is telling!

Presumably more than 1 in 4 tried, but failed. Why? Probably for one of the following four reasons outlined by Mr. Phillips:

  • Poor strategy communication.
    This dooms just about any project to failure.
  • Lack of resources.
    Innovation does require enough resources to get the job done.
  • Demands for quarterly results.
    Not all projects finish within the quarter, or even the year. Sometimes a big up front investment is needed for a huge payout later.
  • Fear of uncertainty and risk.
    Aggressive innovation projects can present some of the biggest risks an organization faces internally.

And even those that succeeded probably couldn’t reliably replicate the effort because:

  • There was no plan.
    A plan that says what the organization will, and won’t do, is needed to keep things on track.
  • Not enough time was allocated to (the) subsequent project(s).
    Innovation not only requires enough people (who must be dedicated to it) and resources, but enough time to get the job done.
  • A Project Mindset was applied.
    As a result lessons learned that could be applied to other innovation efforts are not documented and lost.
  • A Control Focus was maintained.
    Middle managers try to “control” the project as they would a manufacturing project to “minimize” risk and, in fact, do the exact opposite!
  • The effort was too isolated from business as usual.
    While skunkworks sometimes works (when the team is dedicated 100% of the time and given all of the time and resources they need), it generally doesn’t. Support is typically required for success.
  • The innovation effort was outsourced.
    This is a crapshoot.

In other words, innovation is rare and relentless innovation, a trait Jeffrey claims is going to be necessary for organizations to survive in today’s ever-changing marketplace, is rarer still. So what can an organization do? That will be the subject of Part II.