Makinginnovationmore

At this point in business evolution, every CEO understands the need for more innovation.  After a decade of reading about it, getting pounded over the head with the Jobs/Apple story and watching new innovations disrupt entire industries, businesses are starting to react.  More and more of them are doing innovation, with drastically different outcomes.  Some are successful.  Many are making significant investments and have had little success.  Some are frankly abject failures.  What I constantly fail to understand is why innovation is treated so cavalierly, with so little regard for planning and integration to strategy.  In many cases it's as if executives throw up their hands and succumb to the idea that innovation is black magic.

Innovation does require creativity and expansive thinking.  It requires divergent thinking and exploration, the willingness to explore customer needs and market trends.  It can require creating new products or services or business models that don't align and may even cannibalize existing products and services.  It requires a new way of thinking, new expectations and often, new skills and tools.  But none of this is even remotely new, or poorly documented, or beyond the reach of many of the people you already employ.  Nothing about innovation is black magic, although many executives and decision makers continue to act as if it is - mostly from a lack of understanding or limited time to fully grasp the approach.

Language, as an example

Take for example the idea of creating a simple, consistent language for innovation.  Defining the terms you'll use to ask for and measure innovation activities.  For example, are the ideas you want "incremental" signalling small change to existing products and services, "breakthrough" or "disruptive" to signal increasing difficulty and impact.  These terms are reasonably well known and defined in the innovation canon, and using them consistently sends signals that help innovations do new and interesting things.

The definitions I've just provided also align to what many of us know as the "three horizons" model - the idea that innovations can have different impacts.  Incremental innovation is sustaining, extending the life and value of existing products and driving revenues, while disruptive innovation is transformative, seeking to create entirely new markets or segments or fill valuable but unmet needs.  The former is less risky and much easier to do with existing, conventional tools, while disruptive innovation takes far more research, takes longer to prove, is more likely to fail but when successful has outsized implications.

All of that should be relatively obvious so far.  If so, why don't more companies define an innovation portfolio and set intentional goals for the amount of innovation investment in a specific year, and how to divide that investment across the three horizons?  Certainly companies are good at product portfolio and roadmaps, making decisions on how much to invest in older technologies, how much to invest in newer products and the roadmaps and versions that should be developed.  Good product management requires that we consider the maintenance and investment to sustain older products and contrast that with the effort to develop and launch new products.  Product portfolios help rationalize opportunities and investments.  Product roadmaps help us think through how a product will morph and add value over time, to remain valuable for customers by adding new capabilities or features.  Most product management teams assign resources and plan projects based on the product portfolio, company objectives and roadmaps.  The question is:  why don't innovation teams do the same thing?  Where are the strategies, portfolios, investment plans for innovation?

Linking innovation to strategy

This last question raises several issues or objections.  The first has to do with linking innovation to strategy.  Often innovation becomes viable when companies decide that they need a compelling new product or service, to respond to customer needs or competitive threats.  Too often this is not in response to strategic planning but a reaction to something from the external market.    These reactions mean that innovation often isn't planned or budgeted, but reactions to market forces.

A number of reactions to market forces doesn't create a cohesive strategy, and usually isn't even good tactics.  Lacking a comprehensive plan or portfolio, and with few upfront financial resources, innovation is done haphazardly on a shoe string.  Without a holistic, comprehensive plan, innovation is done in fits and starts across the organization with wildly different outcomes.

Further, since there is often little definition or clear expectations of outcomes, most innovation outcomes are incremental, since that type of innovation relies most heavily on how things are done today.  This is why so much innovation work seems to fail to achieve expectations and ends up as modest changes to existing products.

Innovation Portfolio

Now, compare and contrast the haphazard approach with a company that defines an innovation portfolio plan.  In this it may determine that some portion of its innovation efforts will be incremental, some breakthrough and some disruptive.  These allocations are made based on expect competitive maneuvers, customer demands, the age and viability of existing products and so on.  Many companies use a "rule of thumb" to divide the portfolio into 70% incremental, 20% breakthrough and10% disruptive.  This ensures the majority of the innovation activity is focused on near term products that have a high probability of success but lower potential, but also ensures that the company is taking some significant risks and focusing on longer term and potentially more valuable opportunities.

With an portfolio in hand executives can ask about the importance and value of each innovation activity, and make determinations to increase the risk and uncertainty by pushing for more disruption when necessary, or identifying needs or gaps in the portfolio.  It's also helpful to use the portfolio as a way to manage product groups and teams.  First to understand if the team has done some successful innovation and if not, walk them through the steps from incremental to disruptive.  Second to measure the innovation goals they had at the beginning of the year and compare to actual outcomes at the end of the year.  Did the team achieve its expected allocation of incremental, breakthrough and disruptive innovation?  If not, why not?

Formalizing Innovation


If you are thinking that an innovation portfolio, budgeting process and roadmap seems like we are formalizing innovation, you are correct.  Innovation needs to become a recurring competency that we plan for.  We have tools like a portfolio to help frame the goals and discussion.  There's no reason to leave a valuable opportunity like innovation up to chance.  There's an important balance between locking innovation down with too much bureaucracy and overhead, and leaving it with little or no guidance at all.  The happy medium that provides guidance but leaves room for exploration is the portfolio.

We tend to be very short sighted, we corporate executives.  Our lifespans are relatively brief, all things considered.  There are over 240 years since the founding of the United States, and using a 20 year cycle for generations that suggests approximately 12 generations of people during that brief window.  Most of us work for approximately 40 years, but we rarely consider the events or recent history before we started working.  In fact there's very little rationale to think about history in many cases, except for some hoary old stories about the founding of a company and its emergent culture.  Most of our waking, productive time is focused on the now, the current quarter, the next quarter, because that's what we are evaluated on, compensated for.  There's little time to worry about what might happen in the future, and even less time to worry about what happened in the recent past.

It's this lack of context and historical appreciation that makes innovation so interesting, because our short term focus convinces us that the way things are right now is a permanent condition, when in reality it's a fleeting experience that will change again shortly.

A brief innovation history lesson of the US

From its founding in the early 17th century until well after the US Civil War, the vast majority of people lived in small, rural settlements.  Many of the people who lived in that period grew the food they ate, raised the beef or chicken they consumed and had little financial resources.  Very few companies existed and most "innovation" was in the realm of transportation - primarily moving goods and/or people on waterways (canals, steamships) or rail.  Other than the military and the emerging railroad business, there were few large organizations and even fewer models for how to build and manage a business.

After the Civil War and up to the Great Depression there was a significant flowering of major industries, building on the transportation infrastructure built earlier and on the idea of mass production.  Oil, steel, railroads and other monopolies emerged, and banking and financial services grew alongside these emerging industries.  Yet still the vast majority of people lived hand to mouth in rural settings.  Innovation in these days was often focused on communication - Marconi, the "wireless", radio and other devices reduced the distances and built common stories for the American public.

World War Two changed everything.  Washington DC, formerly a very small, sleepy city, grew dramatically during the war, and the federal government grew in importance.  As we entered the Cold War, the growth that the World War created was sustained by fears of Russia and a new emerging Cold war.  Innovation during this time was focused on technology - especially weaponry.  The nuclear bomb, the ability to deliver weapons at a distance, the space race.

The 1960s through the 1990s were boom years (discounting the Oil embargo) mostly due to dividends we reaped from the investments in technology and the space race.  The US emerged as the sole large economy undamaged by the Second World War and grew to dominate its allies.  The space race with Russia and military investments created a range of new technologies that were quickly converted into consumer technologies.

The 2000s and onward are less about product innovation and more about business model innovation and financial engineering.  Increasingly the US is becoming a high cost country in terms of labor and manufacturing, and outsourcing jobs to less costly locations.  We are focused on changing the terms of compensation and payment for services (Google funded by ads rather than licenses) and financial engineering in banking, financial services and other industries.  GM for a long time was profitable not because it built cars but because it financed them.

Up until the 1880s the vast majority of people were farmers, mechanics, craftsmen.  They worked with their hands, with deep, innate knowledge about their services and skills.  This model changed as Henry Ford and others created the mass production line, which has in many cases reached its logical conclusion, at least as far as human workers on the line are concerned.  We retain many of the measures and metrics of an agrarian economy - taking vacations in the summer, planning and budgeting around an annual cycle, reporting on a quarterly basis - that have no real meaning in today's knowledge based economy that competes on a global basis.

What emerges about innovation from this review of history?

1. In the past, a lot of innovation was driven by the most important impediment or challenge in a specific timeframe:  transportation of goods and people in the colonial era, banking and communications during the dawn of larger enterprises, communication technologies as the country grew, defense and technology as the country fought and was threatened with a cold war, business models and financial engineering as the technology investment petered out.
2. Innovation comes in waves and as one wave is peaking, another wave is just starting to emerge.Innovations take time to proliferate but almost always proliferate faster than we might expect.
3. There is a cyclical, repetitive nature to innovation, which we ignore at our peril.  Take for example the nature of retail.  Sears grew because it had a huge selection and could deliver goods anywhere.  The Sears catalogue is an analogue to today's Amazon website.  Sears modified its business model to move toward a physical retailing model as the US expanded and as people moved to the suburbs and seems to have forgotten its mass, virtual retailer roots.  Today, Amazon and other virtual retailers dominate, but we can imagine a future where hyperlocal retailers blending virtual and physical stores and delivery emerge.
4. Business models and business conditions are temporary.  The concept of mass production is an idea that may be relevant to exactly one century - the 20th century - for the US.  The fact that mass production worked then, in those conditions, does not mean that it should and must continue to work as an operative model now, because many conditions have changed.  The internet and ecommerce make it much more possible for individuals to be craftsmen (Etsy for example) or self-employed (Uber, AirBnB), which is simply a return to an earlier model, with much more technology underpinning.
5. Technology introduces change, customers and innovators change technologies into solutions that change the market.  Technologies change but unless they can be harnessed and adapted to create benefits and solutions that customers need and want, they aren't meaningful.  The transistor by itself is interesting, a smaller, cheaper portable radio provides a huge benefit to consumers.  We innovators fall in love with technology but fail to understand that it is the customer need and benefit that is paramount.
6. Much innovation in one era is built on the investments of a previous era.  Mass production isn't all that useful unless there is a good transportation infrastructure, as an example.  The dot com boom was based on research and technologies that were sparked during the Cold War.  Currently those technologies are reaching end of life, and we see far more innovation in services, business models and customer experiences than in technologies, and far more financial engineering than is probably good for the economy.  This is because we haven't had a real flourishing of either new technologies, new infrastructure or a real competitive threat like the Soviet space race.  In other words, we've coasted for the past 20 years, harvesting previous investments without laying a foundation that future generations can build on, unless they want to bet on sub-prime mortgages.
7. A lot of innovation was created by those outside the status quo - new immigrants (Andrew Carnegie as an example) or those outside the establishment, typically on the frontiers, who sought to solve problems faced by the emerging population, while the establishment was relatively comfortable.  The median age of the US was relatively low, and few people lived into old age.

What can we predict about innovation in the near future based on the past?

1. We should be on the cusp of some significant new emerging innovation, but for the life of me I can't figure out what that is.  It could be a continuing evolution of business models and customer experiences.  We lack a real compelling burning platform like the Soviet Space race and are more distracted and less unified than in previous generations.  Also, corporations spend less on R&D than in the past and the government is spending less on a percentage basis on technology and R&D.  This means that future innovation is less likely to be technology driven and more focused on experiences, services and hopefully business models.
2. The older command and control hierarchies and mass production thinking may give way to new organizational models, new governance and new ways of building companies.  As we move from an agrarian calendar and mass production models, new business models, relationships and organization models will emerge and may drive new innovation in organizational structures and customer relationships.
3. The individual or small business becomes as important to the economy as large corporations.  More people can work as craftsmen or knowledge workers on their own, leveraging virtual workspace technologies and the increasing value of knowledge work.  Larger business increasingly want to outsource work to find the best value for their money, retaining only the mission critical or activities that reflect competitive advantage.  The infrastructure in terms of software and ancillary services exists to support a larger workforce of independent contractors and small businesses.
4.  Past innovations were often launched by public works or investments by the government.  Transportation was either privately financed by large groups or by the government.  Defense, aerospace and technology were funded in response to the Cold War.  Future innovations will emerge from customer needs and those that can aggregate them quickly, and less from technologies or challenges identified by the government.  Indeed the government is becoming a consumer of commercial innovations rather than a springboard for future innovation, with the possible exception of healthcare, aging and green technologies.  This means a more distributed and diversified innovation future, less focused on one large population or government challenge and more competition over standards and protocols.
5. Immigration, like it or not, will play an important role in future innovation.  The resident population is aging, and less likely to be as active innovating and solving problems because of the wealth transfer to older populations through retirement savings and health care transfers.  More innovation is likely to come from immigrants who refresh the population at the lower end of the age scale, who face more challenges and difficulties than some of the native born population.  Aging populations by definition are less innovative, so to refresh the innovation spirit and energy we need to recruit immigrants who can create compelling new innovations.  As the country ages, and boomers retire, there will be far more emphasis on innovation in terms of products and services for the boomers, who are used to having their own way and will demand far better products and services than their parents did when they retired.
6. The pace and nature of innovation will accelerate as more people in more places become part of the global economy and more consumers achieve middle class status for the first time.  There are far more competitors in far more regions and geographies, which means more competition.  However, there are far more people entering the middle class who have buying power and will want new products and services. This means, though, that innovations must be conceived for global consumers, as the markets for new innovations will be in many more markets than just the US.  Our understanding of the needs and expectations of the US-based customer is poor; our understanding of needs and expectations of newly emerging customers in other countries is virtually non-existent.  We need to move faster, with greater urgency, to create innovations that meet global needs, not just US needs.

Those who don't study the past are doomed to repeat it

I started out this post commenting on the lifecycle of the average manager, and how narrow their time focus is.  While we live out our work lives over 40 years we do so in 90 day increments, often failing to appreciate how repetitive and cyclical business and innovation are.  The more we understand about how innovation has unfolded in the past, the more we are likely to be able to predict how innovation will emerge in the future.  There are two great quotes that are relevant here.

The first is Spinoza's quote:  Those who cannot remember the past are condemned to repeat it.  And we do, quite often, repeat the experience and mistakes of the past.

The second is Faulkner's:  The past is never dead.  It's not even past.


We can learn from the past about how innovation unfolds, and use that insight to determine how innovation is likely to emerge, and what the key drivers will be.  Doing so makes us smarter and more prepared to engage innovation as it occurs, and to use those innovation drivers to our benefit.

I'm a big fan of Geoffrey Moore's work on Crossing the Chasm, which is the idea that every market can be divided into segments: very early technology adopters, the early majority, the late majority and laggards.   It's clear from history that there are always people who will adopt a new idea or technology even while others think it is unfinished or even risky.  The vast majority will wait until the technology becomes a "whole product" and "crosses the chasm" according to Moore.  This means that instead of just a technology, the offering is now complete, with supporting services, information and support.

As a new technology matures and people become familiar with its uses, and the technology is simplified and becomes part of a solution, more and more people adopt the technology.  Any student of history can tell you this, and we believe it is a natural order - almost a requirement:

• first a technology or capability is discovered
• Adventuresome people use it in experiments
• The technology is incorporated into products
• More and more people adopt it
• The technology or capability becomes mainstream
• The majority adopt it
• The technology is eventually superseded by another technology

This is the reason many larger corporations will wait to see about emerging ideas and technologies.  They need to see that enough people will adopt it to minimize the risk of placing a new technology or capability in their products, and want enough of the unknowns to be removed in order to adopt it quickly.

That was then

From a historical perspective, this "wait and see" approach is best practice.  But what's happening right now in the innovation world is going to turn this approach on its ear, because there are multiple technologies and capabilities emerging and evolving, and waiting until they sort themselves out may leave a company so far behind that it will not be able to adopt the capabilities and solutions once they become "mainstream", assuming of course that they solidify long enough for the mainstream to catch up.

The complacent "wait and see" response to new technologies or capabilities relies on three assumptions:

1. The technology will eventually become mainstream and once it becomes mainstream has a long shelf life
2. Any company can adopt the technology or capability once it becomes mainstream and implement it effectively
3. Once a technology or capability becomes mainstream, there are still competitive positions available - companies aren't "crowded out" if they didn't adopt early.

But what if there are capabilities or technologies where this thinking isn't true?  What if the lifetime of a technology or capability is relatively short, or instead of reaching a "steady state" the technology or capability constantly changes?

Platforms and Ecosystems

Paul Hobcraft and I have been writing extensively about the impact that emerging platforms and ecosystems are having, and will have, on innovation.  As I wrote previously, we are in the same position with platforms that we were with "dot coms" and ecommerce in 1999.  Then there were thousands of alternatives and experiments to try to figure out what would work.  Now, much the same thing is going to happen at the platform level.  There's a reason Amazon, Facebook, Google, GE and others are trying to test out their platforms, and why other industries  like financial services want so desperately for their own platforms to prevail.

Many companies will be tempted to follow the wait and see approach I've outlined above, thinking that once the technologies and capabilities are selected and implemented, they'll adopt the chosen solutions and find ways to compete or scale.  Where innovation, ecosystems and platforms are concerned, that is a very risky proposition.

The only constant is change

Platforms are going to rework the way companies and industry partners integrate to provide seamless experiences for customers.  As they are formed, new, tighter relationships to customers are created, and companies that participate in the platform or as part of the ecosystem will solidify relationships.  Those that wait may find the opportunities to participate as part of a platform or as an ecosystem provider much more limited if they weren't involved early on.

Further, the pace of change in capability and technology, as well as integration and inter-operability is accelerating.  Companies that experiment and learn will be able to improve their pace of innovation and change.  Those that wait and see will fall further behind, unable to catch up with the speed and the increasing requirements to participate in the ecosystems that are emerging. Platforms and ecosystems will not reach a "Steady State" but will constantly morph, extend and grow.  Thinking that you can wait until the platform or ecosystem resolves is a fallacy.  By the time a platform or ecosystem slows or becomes "stable", it will be decaying.  Waiting to join is like showing up dressed for a wedding but arriving for the funeral.

As these platforms and ecosystems emerge and assert themselves, it is vital to start experimenting now and to keep experimenting.  Some platforms and ecosystems will succeed and grow organically, some will fail.  Innovators must hedge their bets across a range of platforms and ecosystems.  Waiting to see which ones win out may mean that there are no remaining slots in the ecosystem and that the platform has different protocols or standards than what the company developed.

Are you ready to innovate beyond the product?

Paul asks a similar question in his most recent post:  Are you ready to thrive in a world of innovation ecosystems?  Currently, many companies would be happy to generate a handful of discrete innovation activities leading to a few new products or services each year.  These innovation activities are still too inward looking, not really grasping the importance of engaging with emerging platforms and the ecosystems that will flourish around the platforms.  To be a successful innovator, you've got to fully engage your internal capabilities and insights, and mesh those with the emerging platforms and ecosystems that can provide a total, cohesive seamless experience.

As the fine print in many financial services firms reminds us, past performance does not guarantee future performance.  What was true in the past - the opportunity to wait for innovations or technologies to prove themselves and then adopt them - isn't as true anymore.  There are several reasons for this:  constant change, shorter product and even industry life cycles, fickle customers. The real take away is that you need to be discovering needs, experimenting with potential platforms and innovating constantly.  You can't afford to wait, because by the time a new technology or capability is proven, and customers have adopted it, the next iteration is already well on its way to commercial viability.  Meanwhile, waiting leaves you without any of the learning that companies fully engaged in experimenting with platforms and ecosystems are gaining, and in the end your company has its opportunities and profit potential dictated to it by the firms that have experience, and by the remaining opportunities in the platforms and ecosystems.  You will be robbed of strategic choice.

The new imperative


Call it what you want, if innovation has become a pariah within your organization, but you must be discovering needs and experimenting constantly with new technologies, platforms and ecosystems.  You must understand these capabilities and integrate them in a way that provides seamless customer experience.  If your corporate strategies don't address this urgent need, tear them up and start again.  Operating models of the past are not valid in a market where the old rules no longer apply.  Lean, fast, nimble, innovative companies who understand the totality of customer need and experience and are willing to learn and experiment will win.  This is what innovators must know about the very near future of innovation in corporations.

You may know that Paul Hobcraft and I are collaborating on a new blog entitled Ecosystems for Innovating where we focus on the emerging importance of platforms and ecosystems for innovation.  We've been exploring the idea that increasingly innovators must understand the ecosystems of products, services and business models that exist.  New innovations must either align to and integrate with, or must overthrow these platforms and ecosystems.  It's simply not possible to create a compelling new innovation that ignores existing platforms and ecosystems, unless that innovation also creates a completely new ecosystem.

We're making these arguments based on another idea:  seamless customer experience.  As basic product and feature needs are increasing met and in many cases exceeded, what customers want is products and services that work together effectively, cohesively and seamlessly.  New solutions or innovations must inter-operate seamlessly with the ecosystem.  Excellent features aren't enough.  Delivering a seamless customer experience requires a couple of interdependent components:

• Having an appreciation of the existing platforms and ecosystems and filling an important gap while ensuring seamless interplay with the ecosystem contributors
• Defining and understanding the customer experience journey, and understanding how all of the ecosystem contributors ensure a valuable and seamless experience across the journey, not just at the vital "touchpoints"

Throughout our posts we've examined a range of concepts, including the value of an ecosystem, detailed customer experiences journeys and the platforms that enable these ecosystems.

I thought it would be interesting to take a step back and place the discussion of ecosystems and innovation in context by examining the history of innovation, to demonstrate why ecosystems and platforms become important as a market or industry matures, and why innovators must engage ecosystems and platforms as they compete in a market.  Let's do that by examining a famous innovator and industry (Ford and the automobile industry) to see how ecosystems and platforms have changed.

Brief automotive history

 Ford was not necessarily an "innovator" as far as the automobile was concerned, since many other entrepreneurs were building cars at the same time.  Ford's innovation was really focused on the manufacturing process and mass production.  But for a moment let's consider the environment in which Ford introduced the Model T.

When the Model T and its other competitors entered the market, those vehicles were for the most part discrete products that could rely on very little infrastructure or supporting products and services.  Other than a few macadamized roads, most Model T's traveled on older wagon roads at best, and the drivers often had to become their own mechanics or hire a driver and a mechanic.  Further, there weren't a lot of dependable sources of fuel, and concepts like speed limits, insurance and other things that we take for granted didn't exist.  In other words, when the market was new and emerging, discrete products that met basic needs were valuable even when an ecosystem or platforms didn't exist.

Fast forward a few decades into the 1950s, as a nation wide platform (interstate highway system) and dependable ecosystem partners (gas stations, mechanics, financing for automotive purchases, government regulations and oversight) become more important.  Suddenly there are far fewer options for motive power (gasoline wins as a fuel over electricity and others), so engine innovation narrows while other innovations expand (safety, financing, and a growing motel and fast food industry built specifically around the car).  Here we can see that the ecosystem begins to dictate innovation options or choices(gasoline over electricity) and the ecosystem expands as the base product (the car) comes to some maturity by filling gaps around needs (fast food, inexpensive accommodations) that become needs as the car enables transportation.

Fast forward to the 1990s, when I worked in the semiconductor industry at Texas Instruments.  One project I led was the examination of the electric car market and whether or not TI should put more investment into semiconductor for electric vehicles.  In the early 1990s California dictated that a specific percentage of cars sold in the state were required to be zero emission vehicles.  We had to decide how quickly the electric car market would grow.  After a few months of analysis we recommended holding off, because the gasoline powered ecosystem meant the existing engine technology had an outsized advantage.  A driver could always count on finding gas stations within a few miles of almost any spot in California, while the owner of an electric, rechargeable vehicle could not predict with any certainty whether or not they could find a recharging station.  Even today, 25 years later, it can still be difficult to find charging stations.  Fortunately battery efficiency has improved.  The electric car is stymied by the lack of standards (batteries) and platforms (recharging stations).  Plus, the existing ecosystem doesn't fully embrace the technology or platform.

Fast forward a few years into the future.  While the major platforms in the past were factors like roads, bridges and fuel stations, we can see that an emerging platform and ecosystem will revolve around autonomous vehicles.  Today there is no preferred standard - different companies are exploring different versions of mapping, sensors and command systems for autonomous cars.  If this market is like every other market, there will be a shakeout, and a dominant standard will emerge for autonomous guidance.  Until that happens we can imagine a lot of innovation and investment in a new platform (autonomous systems) and the ecosystem that surrounds that platform (mapping, geolocation, sensors, smart systems, smart grids, big data, etc).  Notice however, that the core technology (the car itself) doesn't change all that much.  The platforms and ecosystems change.

Which is more important?

As a product matures, incremental product innovation becomes important because much of the real effort is in fleshing out and extending the ecosystems and platforms.  Existing supporters of the core technology or product don't want to risk their investment, and the ecosystems is dependent on integrating to a known technology.  Radical innovation on the core product puts hundreds of ecosystem partners and their investments at risk.  If Ford were to come back from the dead today, he wouldn't find the cars we are driving all that unusual.  He'd be surprised by the ecosystems that surround the acquisition, maintenance, financing and insurance around the car, and like many of us would boggle at the idea of autonomous cars.  This suggests that the platforms the core product relies on, and the ecosystems that sustain and extend the use and experience of the core product become as important, if not more important, than the core product.  And we can see this today, as major automotive manufacturers are partnering with internet, computer companies and sensor companies.  The automotive companies don't have the experience with data, sensors, mapping, geolocation and other factors that they need in order to succeed in a new, emerging platform.

Compare and Contrast

Ford didn't have to worry too much about platforms and ecosystems.  There were few platforms other than horse-drawn wagons and dirt roads.  He couldn't count on a ready supply of mechanics and fuel stations.  He created a discrete product that eventually attracted investments in ecosystems and platforms.  Today's Ford company cannot ignore the existing (and more importantly emerging) platforms and those sustaining ecosystem platforms.  To some extent their innovations are dictated by potential platform and ecosystem partners, who in some cases have far more knowledge and experience than Ford does.

Thus we can begin to formulate a way of thinking - not quite a rule - that suggests that the more mature an industry or market is, the more likely that incremental innovation is vital in the core product or technology.  Further, we can also say that much of the innovation is governed by and constrained by the platforms and existing ecosystems. In order to do really interesting innovation, therefore, an innovator must understand the core product and service capabilities, needs and opportunities, AND understand how to leverage the existing ecosystem or how to overturn it.

Why this matters

Today, most corporate innovators are happy and rewarded if they can create incremental or occasionally breakthrough product innovations.  While there is a lot of talk about innovation, it remains in its infancy in terms of capabilities and processes in many companies.  At the same time, the level of complexity and inter-relationships between products, platforms and ecosystems is growing steadily, as fast if not faster than internal innovation capabilities.  This means that many corporate innovators aren't gaining skills and insights fast enough to keep up with consumer, market and ecosystem advances.


We need to congratulate ourselves for the strides we've made, and encourage our corporate innovators to move more quickly to expand their thinking and understand where the true value lies - incorporating platforms and ecosystem thinking in their innovation efforts.

In my Twitter stream yesterday I found this nice article by Michael Schrage entitled Embrace your ignorance.  His slightly provocative title is meant to signal that perhaps you live in a self-satisfied bubble of assumed intelligence and knowledge about your customer, when in fact you should be happy to be humble about your ignorance, and act accordingly.

Schrage goes on to extol the values of experimentation and "big data" as methods to discover what customers really want, but here he loses me a bit.  I'd rather go back to an even simpler way of discovering needs, by asking and observing in real time where the real opportunities and pains exist, or where actual solutions fall short or have gaps.  Ethnography, getting close to the customer and their use of a solution or their experience, is what indicates where the opportunities and problems lie.  From those observations we can extrapolate and create potential solutions, which can become the basis for experiments, which will prove or perhaps disprove our hypothesis.  I worry that all the emphasis on "big data" will signal shifts that seem important but aren't, or miss factors that can't be captured in quantitative data.  As Einstein noted, not everything that counts can be counted.

Embracing your Ignorance

Good innovators are humble people.  I don't mean that they are people who grovel, or let others walk all over them.  Certainly Steve Jobs will never be known as a "humble" person in that sense.  What I mean is that they have the scars of experience, of making the wrong assumptions or even having the audacity to suggest they know what customers needed, and failing.  Humility comes when we recognize that customers decide the value and importance of our products and services.  No matter how valuable or important we think they are, customers determine the value.  The faster we understand this and learn to listen and observe, the more likely we are to create innovations that matter.

In our work we've identified a number of attributes that good innovators possess.  One of those we highlight is "beginner's mind" - that is, the ability to examine a problem or opportunity as if for the first time.  Too many times we approach a problem with the full suite of knowledge and experience, never recognizing that all the knowledge and experience narrows the potential scope of outcomes.  Knowledge and experience about candles doesn't open the door to electric light, it merely makes more effective candles.  To think differently and creatively about a problem or opportunity we need to think about it with a beginner's mindset, something that Jobs to his credit did well.  Rather than rush to apply everything we know, instead approach the problem as if for the first time.  In the absence of knowledge or experience, how might you solve the challenge or problem?

Losing your arrogance

Too often corporate innovators are guilty of unintentional arrogance.  They are guilty of assuming that they know what customers want, or worse, of simply creating new technology or new solutions with features that they either think customers want, or features that are simply better than what the competition offers.  This arrogance is often built on past successes that span years, so the arrogance can be earned, and in some cases even justified.  But increasingly the further a person is from a customer and their needs, and the longer it's been since you walked in that customer's shoes, the more likely you are arrogating - the word arrogance derives from - making undue claims in an overbearing manner.  Pride goeth before a fall, but I suspect arrogance goes shortly thereafter.

Ignorance or Apathy?

There's an old joke about education, where the individual in question responds with I don't know and I don't care (Ignorance and/or Apathy).  In the case of a modern day innovator, armed with social media, surveying tools, focus groups, big data, experiments and a host of other methods to gather insight, ignorance simply isn't plausible. There is simply too much data, too much information to plead ignorance about an opportunity.  That suggests apathy, which I'll also reject.  Most innovators I've come in contact with are passionate people, who want to do a good job and deliver value to customers.  What's left after ignorance and apathy?  Well, there are two remaining reasons why innovation discovery fails:  time constraints and arrogance.

The first barrier is a time or resource constraint.  Far too many people recognize the need for more customer interaction, more data analysis, more discovery and experimentation, but they simply cannot find the time.  Highly efficient processes leave little time and room for experimentation or new discoveries.  Thus many innovations are launched on a hope and prayer that the innovator guessed correctly, since they didn't have time to gather needs.  On the other hand is arrogance.  Too many innovators and their companies believe they know what customers need and deliver new technologies or features without ever discovering needs.  They might have the time but don't have the inclination.  This approach happens far more frequently in high tech or software industries, where adding new features is simpler, but it happens in all industries.  Arrogance is a real problem for innovators who assert that they know what customers want, or assert that new products and features are so compelling that they will override customer concerns.

Get rid of your arrogance, get rid of your ignorance


If you are willing to lose a bit of your arrogance, you can easily get rid of your ignorance.  Becoming a bit more humble, interacting with customers, understanding their needs and journeys, will open the door to new discoveries.  With these discoveries you become more knowledgeable about their needs and possible innovation opportunities, which you can test and validate through experiments.  Losing your arrogance helps you lose your ignorance.  Sustaining your arrogance sustains your ignorance and wastes valuable time and resources.

The title of this post is a bit provocative, and that's on purpose.  Every company wants to innovate, and further they desire that the limited innovation they accomplish succeed wildly.  This is of course whistling past the graveyard, as most innovations, like most venture capital investments, won't return the initial investment.  Instead, most companies demand innovation results on par with the iPhone while funding innovation with the equivalent of corporate bake sales.  But this post isn't intended to deride the often inadequate resourcing of innovation, it's meant to point out the reasons behind a rather uncomfortable fact:  even good ideas often fail in the marketplace.  This skips right over the outright failure of bad ideas and bad products, of which there are legion.  Those probably deserve to die an ignominious death.  But why do good ideas and products seem to have such a high failure rate?

There are plenty of reasons for good, innovative products to fail in the marketplace.  Perhaps the customers were too aggressive in their needs statements, or not aggressive enough.  Perhaps the innovator identified the right needs but was too early or too late in the market or technology window.  Perhaps the need exists but the effort for the customer to overcome inertia and actually make the change seems too high (this is my challenge with Slack).  Perhaps the product or service actually fills an important need, but there were other, more important or urgent needs that the innovator ignored.  In other words, there are plenty of reasons why good, well-thought out innovations can fail.  But none of these is as important as what Paul Hobcraft and I have been writing about recently.  One of, if not the most important reason good innovative products fail in the marketplace is because they don't fit within an existing ecosystem or plug into an important platform.  That is, they are independent, discrete products when a customer seeks a comprehensive, seamless solution.

The problem with discrete product innovation

Let's imagine that a company identifies customer needs and does a good job generating ideas to arrive at a new product innovation, which it then launches into the marketplace.  Having done everything correctly from their point of view, the innovation team waits with expectation to see how well the product performs.  The consumer, on the other hand, encounters the product, which has a number of new capabilities, bells and whistles, but doesn't integrate usefully or seamlessly into a set of products, services, business models, channels, data and interactions that the customer has already constructed, or had constructed for them.  While the new product outweighs and outranks the product it was meant to replace, the new product ignores connectivity, seamless integration and a host of other factors that the customer cares about to get their "jobs" done.  Jobs, you see, may be broken into discrete activities, but the customer really cares about the total experience or journey.  Optimizing one step in the process but failing to acknowledge the journey doesn't create value, it creates new work for customers, or forces them to change the work they've done.

Platforms and Ecosystems

The English poet John Donne wrote that "no man is an island".  He meant that we are mutually dependent on each other.  Likewise, in a highly integrated, hyper connected word, no product is an island.  It relies on other products, services, business models, channels, data and standards in order to operate.  There are two key ideas at work here:  platforms and ecosystems, and these must matter and shape innovation.

Platforms are simply agreed connectivity standards that become a backplane or common operating infrastructure to allow disparate products, technologies and services to interact.  Google, Amazon and others are creating these platforms where innovators will be able to plug in, interoperate and gain value from the other goods and services residing on the platform.

Ecosystems are comprised of the other vendors, technologies, data and ancillary products and services that offer the customer the full, integrated, cohesive and seamless experience they want.

Ignore these at your peril

So, back to the lone innovator.  Too often innovators, individual and corporate, are too myopic.  They identify one "job" to be done, and focus narrowly on accomplishing that task with more features, skills or elan.  While doing so the customer plays a role in describing the job or task, but often failing to connect the job to other jobs or tasks that are mutually intertwined or dependent.  Unless the solution sustains the seamless experience or "journey", the customer isn't likely to switch to a new product simply because it is slightly better in the abstract, but deteriorates the rest of the activity, journey or experience.

To be a successful innovator, one must understand the totality of the customers' needs, observe the platforms and ecosystems that provide the comprehensive solution that customers want, which is a total, comprehensive and seamless experience, and then decide what the key needs and features are that the innovator can contribute, and how the idea must be shaped to either fit within an existing ecosystem and platform, or how to radically disrupt the existing ecosystems and platforms and create something new and more compelling for the customer.   Placing a new and interesting discrete product that does not align to the expectations of the customer for a seamless experience or worse interrupts or detracts from an otherwise comprehensive solution is worse than not innovating at all.

Increase experience or reduce friction in the journey
The eventual failure of most good ideas isn't because of market windows or customer needs.  It isn't because the product fails to meet specific targets or price points.  It's because innovators don't open their apertures to understand the totality of customer needs, and in a very connected world don't understand the important platforms and ecosystems that the innovative product will enter.  Once you understand the interconnectedness and create products that sustain or improve that, or reduce friction in a customer experience or journey, your innovations will succeed.  No man, or idea, is an island, and in markets where connectivity and interrelationships are increasing and platforms and ecosystems are ever more tightly woven together, your innovation cannot stand alone.

Paul Hobcraft and I have been writing a series of blog posts about innovation, ecosystems, platforms and what we believe customers will ultimately demand:  seamless experiences.  As products and services proliferate and basic needs are met, customers become more sophisticated and more demanding, desiring products, services and business models that work together and don't require configuration, integration or effort by the consumer to "make them work".  Customers and consumers increasingly expect a seamless experience when using a new product.  If the product or service requires the customer to combine products, read manuals, acquire other products or services to make the solution work, the new product is likely to receive far less acclaim.

Understanding that, we should understand also that the tools that once helped innovators create new products aren't the same tools that we need today when customers demand seamless experiences.  Or, put another way, those original tools are still valuable, but by themselves they solve only a small portion of the overall challenge.  Take, for example, "jobs to be done" methodologies.

Jobs to be done

First developed by Clayton Christensen and expanded on by Tony Ulwick and others, "jobs to be done" is a nice methodology to understand customer needs.  Christensen and Ulwick propose the idea that customers hire products to do jobs for them.  If a product does the job well, it is "hired".  To help customers accomplish tasks, we need to understand the jobs they are doing.  This methodology has worked well for years to help innovators find unmet needs that can be addressed.  However, the focus for today's innovation needs may be too narrow. Traditionally, the "jobs to be done" were relatively discrete and narrowly focused, often leading to product features or benefits.  In a market where seamless experiences become more important, a too narrow application of "jobs to be done" risks solving only a fraction of the total customer need.

Paul and I have suggested that perhaps we should move from "jobs to be done" to "experiences to be had" - that is, widening the aperture of the question to encompass the entire experience, rather than narrowly focusing just on discrete jobs.

Whole Product

This is an "oldy but a goody" as my father likes to say.  Geoffrey Moore developed the concept of the "whole product" in the 1980s and the concepts are still true today, especially in high tech fields.  Whole product refers to the idea that the majority of customers don't want to buy untested, unproven technologies.  Early adopters and tech enthusiasts will buy new technology, but the larger market waits for demonstrated proof of viability, compatibility, product support, complementary products, good support services.  Thus, Moore suggests that a "whole product" is one that combines all of these capabilities and features.

We'd like to adopt this thinking by saying that customers want more than "whole products" they want "whole experiences".  The product focused thinking is valuable, but must be combined with the larger context of what the customer is trying to accomplish, what experiences they want or need from a new product and the ecosystem in which the new product or service must operate.  A fantastic stand alone product that fails to work within the customer's ecosystem of products and services, or one that forces the customer to make compromises or work diligently to integrate to other solutions is not going to be successful.

Customer Experience Journey

This methodology is increasingly gaining popularity because it requires an innovator to think about the entire "life span" of a customer's interaction with his or her products.  The journey considers the awareness, acquisition and use of a product, and done well also considers aspects like omni-channel experience and the eventual disuse and discarding of a product or service.  Customer experience journeys highlight "touchpoints" or moments of truth where the use of the product can be combined with experiential factors like additional material, contact by a support center, access to the product's web site and many other interactions that build the experience of the product.  Those touch points can improve a customer's experience or degrade it.  The customer experience journey is a valuable step toward understanding the experiential aspects of the product in the customer's life.

However, even this isn't enough because the customer experience journey can be a very narrow perspective, taken from the aspect of the product and not fully considering how the customer views the product in relation to its ecosystem and the experiences the customer is hoping to achieve overall.

Design Thinking

Increasingly, design thinking is percolating into the innovator's toolbox.  IDEO and others have been proponents of design thinking for years, and I'm happy to say that design thinking is growing as an innovation input.  The risk with design thinking is again that it becomes "product design" thinking, focused on the design of products, rather than design thinking meant to help innovators and customers design products, services and experiences.

A seamless experience is almost by definition a designed experience.  There are very few accidents that result in a perfectly seamless experience that meet or exceed customer expectations.  To do this effectively, we need to understand the customer's "whole experience" expectations and map customer journeys, and then use design thinking to craft the anticipated experience.

Once we understand the designed experience, we can then begin to understand how, or even if, such expectations can be met by the existing ecosystems and platforms.

Ecosystems/Platforms

Unless your company name is Apple, you are very unlikely to build a completely integrated, designed experience that is a closed ecosystem.  Apple did accomplish this by creating a small range of products (iPod, iPhone, iPad, etc) that are basically extensions of the same core product and surrounding them with the same sets of features and services (iTunes as an example).

Without this defined, closed ecosystem, most innovators must rely on third party partners, channels, data streams and other capabilities to provide the aspects of a seamless experience. This means that innovators must 1) understand what the existing ecosystem can offer and 2) reach accommodations and  partnerships with third parties to create more seamless experiences.  Thus, innovation isn't just about a new widget, its also about understanding the role the widget plays in a consumer's life and how to make that role as seamless as possible.

Innovating in the new expectation


All of this explanation ultimately means that any one of these tools simply provides a narrow glimpse into what customers actually want - we need to use them all.  Further, we need to move quickly beyond the narrow focus of product innovation to experience innovation, because that's where customers are moving - if they aren't already there.  The shift in the use of tools and techniques isn't overly difficult.  What will be difficult is the shift in mindsets, as innovators recognize that products play only a small portion in the expected experience.  This will mean that product organizations and budgets may give way to experience organizations, where companies craft experiences that products must fit into, rather than the other way around, which is the norm today.

In an earlier post on the Ecosystems 4 Innovating site I suggested that innovators must understand the expectations of customers.  As such that's not new or especially insightful.  Innovators are supposed to find new and unmet customer needs, and solve them for customers in ways that benefit the customer and create value for the innovator.

What's important about this idea is that innovators must begin to understand the maturity and expectations of their customers.  Henry Ford could offer an exceptionally basic black Model T Ford because there were no other options.  He was fulfilling the most basic sets of needs for his customer - efficient transportation.  When people didn't have cars, they didn't care much about the color or other features.  As other automobile manufacturers entered the market, they realized that the basic needs were met, and began to add features, colors, options and eventually a family of models and styles.  We can look back over 100 years ago and realize that customer expectations and needs morph as basic needs are satisfied.  Ford was overtaken by Billy Durant, who created a range of options and models.  Durant recognized that many consumers wanted more than basic transportation, so he solved those needs.

Over the years, automobile manufacturers created a wide range of different types of cars - convertibles, trucks, vans, SUVs, etc to meet the expanding needs of consumers.  Other factors became important - safety, as seat belts became an option, and then a requirement.  Or gas mileage, as the oil embargo of the 1970s forced customers to care about gas mileage. Or quality, as the Japanese manufacturers demonstrated a much higher quality vehicle in the 80s and 90s.  Today, we have very different expectations about our cars.  They are more customized to our needs, offer a wider range of choice and are more reliable, dependable and predictable than ever before.  What they don't yet do is meet expectations for seamless experiences.

As consumers move from basic product needs to elaborate product needs, they take another step up the needs hierarchy and shift from product needs to service and experience needs. GM, Ford and others are waking up to this now, and in fact have done some service and experience innovating before.  For years GM has made more money from financing and leasing cars than from building and selling cars.  Financing was one of the first and most logical steps the auto manufacturers addressed as the tangible products matured.  Strangely, they haven't gone much further.  Today we see the inklings of the next steps - lifetime maintenance, so the customer doesn't have to worry about servicing the vehicle. Why should a consumer care when the oil is changed?  Why don't the experts at the dealership do that for them? And we can go much further.

A truly seamless experience for a car owner would be to consolidate all of the aspects of car ownership, car financing, car maintenance, even car insurance, into one seamless experience. Why bother to shop for maintenance or insurance?  Why can't the dealers (or another firm) offer these features, along with roadside assistance?  What about parking for city dwellers?  A seamless experience would mean the car finds its own parking nearby.  Eventually, a seamless experience will be a car on demand, ready to take you to where you need to go.  Fractional ownership, billed by the mile or the hour, transportation as a service, with different vehicles available depending on your needs.

A truly seamless experience is increasingly what customers expect and what innovators need to strive for.  Providing a discrete product into a customer's life and asking them to integrate it with their other products and services simply frustrates the consumer, who expects more from product and service developers.  Apple and others have taught them the power of seamless experiences, and they've grown to expect the ability to "plug n play" anywhere and everywhere.  The companies that understand this desire and have the ability to "build, catalyze or join" ecosystems (to quote Stephen Elop) that provide these seamless experiences will be the winners.


Tesla could lead the way to this nirvana of seamless experiences.  Already they are changing the dynamic between company and owner, removing or at least attempting to remove the dealer.  As they experiment with autonomous vehicles one can imagine a day when your car picks you up, takes you to work and then goes for maintenance.  Or perhaps goes to serve someone else as part of fractional ownership, staying productive while you are at work, rather than parked and unused in the company parking garage.  Innovators who aren't tied to the past concepts of product-driven innovation, who understand the consumers' expectations for service and experience, will radically alter the nature of competition, and will do it by innovating services and experiences, leveraging ecosystems.

I'm pleased to announce that Paul Hobcraft and I will be working together on a number of posts that relate to some discussions we've had about innovation, more specifically how innovation must evolve from creating interesting but incomplete solutions to understanding how customers want to have interesting, seamless experiences.  Over the next few weeks we'll be writing posts on a new shared website that examine the state of innovation, and provide a reason we think so many innovation outcomes fail to achieve their goals.

From that assessment we'll look at what customers really want:  solutions and experiences, not discrete products.  People are too busy, too harried, have too little patience and cannot keep up with technology advances.  They don't want to be forced to "stitch" disparate solutions together, and expect products, services, business models, channels and experiences to work together to provide a complete solution.

In the course of several interrelated blog posts Paul and I will be talking about innovation, the necessary "ecosystem" for success, why good innovators won't think about products, services and business models in isolation, and how platforms contribute to greater innovation success.  If you are interested in:

• Disruptive innovation
• Ecosystems
• Platforms
• Seamless experiences
• Open Innovation
• The "whole experience"

This new site and our subsequent posts on the site will be on point.  What's more, we hope you'll contribute your ideas, feedback and suggestions on what we are talking about, what we get right and where you think we've missed a concept or an idea.

In the longer term I hope we'll convince you that interesting innovation relies on ecosystems and platforms, and disruptive innovation creates new ecosystems.  In fact we believe that along with a product manager, a new role or position will emerge that is equally important: the ecosystem manager.


But, one step at a time.  I hope you'll join us on our shared Wordpress site:  Ecosystems 4 Innovators, where we'll be publishing our thinking on these and other topics.  Paul has done a great job of pulling together some of our other joint material, which I hope you'll take the time to review.

OK, I don't have a self-driving car and already I'm sick of hearing about them and their potential.  Just like I don't have a virtual reality headset made out of cardboard and an iPhone, but I'm tired of hearing about virtual reality.  The reason I'm tired about hearing about VR and autonomous vehicles is that they are overhyped technologies that don't yet solve important problems.  And this is one of the biggest challenges that innovation faces:  creating shiny new technologies that are interesting but don't solve society's challenges or problems.

We can ask ourselves a few questions about VR and self-driving cars, as examples of overhyped technologies.  The first one is an old one: quo bene?  Who benefits from the constant stream of hype that emerges around Virtual Reality (which isn't even all that new) or autonomous vehicles?  Why, surprise, the hype is being driven primarily by the manufacturers of these technologies.  VR, which as a technology has been around for at least 20 years, has simply repackaged itself for a new audience unaware that VR wasn't able to solve many problems two decades ago, and has simply repackaged itself as a "new" technology released from the mainframes.  Like Google Glass, the overhyped technology that didn't solve a problem and left the wearer looking like a dork, Virtual Reality so far doesn't solve mainstream needs.  Of course there are niche applications for VR, but right now the backers are making a much bigger play - trying to bring VR into the mainstream markets, tying it to iPhones and Androids.  Noticed many people out in the street with the gizmo fixed to their faces?  Even an application like Pokemon Go, which might benefit from this kind of technology, relied on the basic handset, and even it's flash in the pan moment seems to be ending.

This is a big problem for innovation, and why so many corporations distrust innovation as an approach to create new products and services.  Far too often innovation is led astray, to create shiny new technologies or promote technologies that have been on the shelf for a while.  Rather than do the real work of identifying needs and building solutions that solve real world challenges, innovators and technologists often build what they want or desire and try to sell it as a cure-all, a modern snake oil salesman.  This discredits real innovation, which has its basis in needs identification and validation, building solutions that matter and create value for people.  Right now these innovations, like VR and autonomous cars, are packaging technology and a lot of marketing to convince you that you NEED these capabilities.  Will the masses come?  For VR the marketing spend is past and it looks like the answer is: no.  VR has real applications in niche needs and industries, but so far we haven't seen a broad societal need that VR fills effectively. That's also because VR is a technology and not a solution.  We innovators must remember that the availability or discovery of a capability or technology is not an end to itself.  Good innovations must "cross the chasm" in order to get to the larger and more valuable markets.  Google Glass is a great example of a product that caused the early adopters to swoon, and left the early majority cold.

For innovation to add value, you've got to start with customer needs and expectations, what others call the "job to be done".  Then, create new technologies or repackage and repurpose older technologies to provide the benefits, and finally create a solution that provides value, don't simply offer a technology.


There's an adage that marketing and advertising the price you pay for being unremarkable.  I'd say aggressive advertising is the cost you bear for promoting a technology, rather than addressing a problem or need.  What if only a fraction of the money spend on advertising these technologies was spent on need identification and good innovation practice?  The outcomes would be incredible.

I love innovation.  I love all facets of it: the discovery of new needs, the creativity to discover new solutions, the realization of those new ideas as new products and services.  What concerns me sometimes is the way in which we attempt to implement innovation, because we are likely to constraint it at just the time we need the most innovation.

You'll see a lot of talk about "innovation management".  This is not necessarily a wrong idea, but in the wrong hands will severely limit innovation activities and outcomes.  We managers and executives, trained in the school of efficiency and with our MBAs in tow believe we can "manage" anything.  In to some degree that is correct.  We can manage and improve things that are well defined and understood.  To some degree we can even put guardrails around things we cannot fully understand or define.  But the risk we run when we talk about managing innovation, is that we become entranced with the idea of "managing" and not with the idea of "innovation".

In many corporate settings where we've done innovation consulting we see this play out over and over.  Managers and executives want and need stability, repeatability, predictability.  They want the outcomes of exciting, disruptive innovation without the variability and costs associated with what happens in the wild.  As experts in managing things, their first habit is to codify, define, and provide governance and structure to an activity that most don't fully grasp or understand.  Rather than attempt to fully explore the innovation possibilities, managers first attempt to get a handle on what they believe innovation is, and how it should be conducted, managed and governed.

As I've said, this is a very fine knife edge to walk.  Large corporations cannot survive with wild hare ideas sprouting everywhere and little definitive structure or guidance.  They simply don't work that way, and funds and resources don't flow to exercises that reflect those attributes.  But on the other hand, focusing too much on the managing aspect leads to constraints, rules and bureaucracy that will close the aperture for innovation and result in a well-governed, well-defined process that cranks out predictable ideas.  Which sounds something like your product development process, and that's a problem.  Most firms can't get well defined solutions out of their product development process fast enough, much less generate new and interesting ideas quickly enough, yet their first notion is to place the same "management" and overhead on innovation as they do on product development.

Now, this diatribe may sound interesting from a person and team that has argued for years about defining an innovation process.  And that's the other side of the coin.  You need to have just enough defined process in order for people to innovate effectively without creating bureaucracy and limiting exploration and risk.  Since there's exceptionally little commonality about how people generate ideas or shepherd them into new product development cycles, some definition is needed, some skills and tools are required.  Perhaps we should call this "enablement" - we are enabling people to learn new skills, define new processes, explore new needs - rather than "management", which seems like adding overhead without adding benefits.


It's in our nature as managers, executives, experienced in the ways of business and pounded into our heads as MBAs that we need structure, process, governance, details.  These management attributes limit variability and exploration, and constrain innovation.  While we need just enough of these to be - wait for it - minimally viable for innovation, we also need enough enablement, expansion, divergence to allow people to come up with and explore great ideas.  There's more than enough management attitude in our genes and experiences, and not nearly enough enablement.

So, over my resistance, my teenage son encouraged, no demanded, that we go to see Suicide Squad, the latest in a series of "superhero" movies intended to entertain us and drive profits for Hollywood.  Much as I expected, the movie was poorly plotted, poorly acted, a virtual pastiche of every hero movie ever made.  You could basically predict every scene, what key actors would say or do.  The movie made no sense, had no suspense and key characters (what was that crocodile thing anyway, or why does a guy with a boomerang qualify as a superhero) had little or nothing to do.

This is what you get when you scour the back catalogues of comic books, looking for ways to extend the franchise just a bit more.  This is what it looks like when you've run out of good ideas, out of plot lines and say to yourself - well, we have a number of not so hot ideas, let's throw them into a blender and see if they look better all mixed together.  A good movie, The Big Short, noted that this same philosophy, mixing up a number of bad loans into a new package, is what caused the sub-prime lending disaster.

So yes, I come to complain about Hollywood, which has lost all of its sense of creativity and wonder in search of ever larger CGI work and explosions, who can take good actors like Will Smith and have them sleepwalk through their roles.  This increasing reliance on comic book characters fighting ever increasingly improbable extraterrestrial monsters has reached and surpassed the tipping point - we've exhausted the concept.  But I'm sure there's more coming.

This concept of a basket of weak or bad ideas is not practiced just in Hollywood, however.  Far too frequently we see the same concepts practiced in corporations and in governments, where people and processes are too exhausted to identify new needs and generate new ideas.  Rather, they scour the back catalogues and overlooked ideas to come up with a melange of past due or weak ideas that can be baked into a "new" concept and offered to the world as a new solution or idea.  It's often far easier to simply package a bunch of outdated and barely relevant features, concepts and options and pass it off as a new solution, rather than do the interesting and valuable work of understanding trends, gathering needs and generating new insights and new ideas.

I'm concerned that some of the firms that were once good innovators are heading in this direction.  Two decades ago Steve Jobs cut the lion's share of Apple's product lines and bet the company on the iPod, iPhone and iPad, along with major upgrades to the Mac.  Today, we are getting tired, repackaged "smart watches" and hints about Apple cars and other devices.  Did Apple runs its innovation course when Jobs left the scene?  Do they have the energy and enthusiasm to create some really incredible new products and solutions?  Time will tell, but the iWatch and the lack of pronouncements this year fuel speculation that Apple has exhausted its good ideas.

Why do firms, like movie production houses, balk at creating new ideas and go back to the well so often, relying on poorly conceived ideas that were passed over in previous projects?  Why does a movie company feature a number of second and third tier "superheroes" in a movie whose plot appears to be stolen from Ghostbusters?  The answer lies in misunderstanding the audience, and in the fear of failure.  First, the audience for movies has rewarded Hollywood in the past for good superhero stories, like the reboot of Batman and the first Iron Man movies.  These felt fresh, new, well conceived.  They were main characters that were reasonably well known, with a history and backstory.  In both cases the producers went back to the origins, showing how Batman and Iron Man were created and why they exist.  As we move forward in time, the movie producers lost focus, cranking out more and more superhero stories which have increasingly little empathy, backstory or even coherent plot.  They are exhausting themselves because they are offering what it appears customers wanted.  But we customers have become more sophisticated, and the superheroes have become less interesting.

But the main driver for Hollywood and other industries is the fear of failure.  They'd rather fail by overextending a storyline or overusing the superhero theme than in creating a new concept or story.  If a movie like Suicide Squad fails, the producers can act surprised and claim that other superhero movies have worked in the past, so this one should have as well.  If a new idea fails, then you've got little foundation or past to stand on.  These last few years all we've gotten from Hollywood are reboots, reworking of old movies (a new Ghostbusters as an example) but little that's fresh, interesting or new, and certainly nothing that's innovative or tells a good story.

We typically counsel our customers that the first activity of any innovation project should be to clean up the zombie ideas.  These are ideas that no one has been willing to fund, and no one has been willing to kill. They simply hang around, taking up space, requiring further review, without ever moving forward.  In any innovation activity management will first require the team to review and consider the zombie ideas, since they exist and are often like other, more successful ideas from the past.  The mere existence of the zombie ideas gets in the way of doing something new, and makes doing new ideas seem more risky than it really is.  Further, packaging a bunch of really meager ideas into a new solution and calling it innovation is almost certainly a recipe for failure, and not a good failure where you might take a chance and learn something.


At this point the movie producers either need to go way back and find new characters that can become interesting main characters and build a backstory and create a real story line, investing in the development of characters or stories, or perhaps find a new genre to mine and exhaust.  Perhaps its time to go back to Westerns or sandals and togas for a while, because repackaging minor superheroes seems tired and outdated, it isn't working.  It won't work for Hollywood and it won't work in other industries either.

I stumbled upon a nice article that deals with a very important issue for any corporate innovator:  how to communicate what you are doing, why you are doing it and why it matters to executives.  The article was published in the MIT Sloan Management Review and is entitled When innovation meets the language of the corner office.   The article notes that innovators often use different terminology when describing their work or tools (eg customer experience journey) and have different deliverables, project expectations and time frames than other, more traditional projects.  Because of these differences innovators may never succeed in communicating to their executive team or corporate executives or may simply sound like they are using new, unfamiliar languages when they seek financial investments or approval on new ideas.  Is communication a big deal?

I think so.  Paul Hobcraft and I built the Executive Workmat, which outlines 7 key factors for sustained innovation success.  While factors like Strategy and Culture were important, the factor that we found knit all the other factors together was communication.  Communication is a top-down and bottom-up issue, as well as a function to function horizontal issue as well.  Innovators, executives and others fail to communicate effectively in all of these dimensions.  The author of the article I referenced above is really only considering one aspect of communcation:  bottom-up, innovator to executive.  This communication is about planning, progress and accomplishment. Innovators must report regularly to executives, to identify projects, outline progress and report results.  Many times these communications are difficult, because innovators use new and unusual tools, have unusual deliverables.  Executives expect to hear about definitive outcomes and potential ROIs, so the two seem to talk past each other.  This communication failure is important.

Just as important, and not covered in the article, is top down communication, executive to team, which is about scope, priority, expectations and permission, communication that creates an opportunity for innovation and restraints or refocuses the culture.  This communication doesn't happen once, but should happen constantly if executives hope to build a culture and sustain innovation.  This means they need to be talking to innovation teams, of course, but also to the corporation at large.

The third type of communication that is important is what I'll call horizontal communication, team to team, function to function, which is often about setting expectations, getting help or assistance, understanding existing customer needs, helping to prototype ideas and attracting people to assist on an innovation activity.

Think about the plight of the corporate innovator.  It's a tough job, trying to create new things in an organization and process model that's honed to sustain existing things.  Expectations, language, rewards structures, strategies, personnel, everything is aligned for sustaining not inventing.  It may seem strange to focus on communication, but good communication is perhaps the most powerful motive engine.  What executives communicate, and follow up, changes what managers emphasize.  What innovators communicate (effectively) changes what executives invest in, regardless of other priorities.  Communication, top down and bottom up matters, because communication impacts culture, and culture influences both formal and informal decision making, resource allocation and a host of other activities.

When any team is doing something new and risky, they first perfect their language.  No one wants to be guessing about the meaning of a word or phrase in the heat of an important activity.  Clear, concise communication, readily provided and easily understood is critical.  Thus, if innovation introduces new language, innovators need to put their requests or communications into language that their executives understand.  Likewise, if communication influences culture, then executives must make clear where they stand on innovation and the risks and commitments they expect.  Good communication matters when setting the stage, establishing the need and communicating the results.

The problem with this is that no one "owns" language and everyone has their own interpretations about what words and phrases to use, and even their own definitions and expectations about what words or phrases mean.  If you doubt this, consider the last corporate meeting you attended.  Afterwards attendees picked apart the discussion and interpreted the meaning and nuance.  If this happens in the course of your regular, day to day operations, imagine how difficult good communication must be for innovation.  This diversity of opinion suggests that unless a company is INTENTIONAL about its language, unless it specifically sets out a way of communicating, defining channels, messaging and intent, language won't change, and communication will be less than adequate.

Good communication must be sponsored by the executive team, which is another bone to pick with the attached article.  Of course innovators must put their tools and methods into context, but there are many potential innovators and each faces a unique set of challenges.  One of the last things they are likely to think about is communication.  On the other hand there are few executives and they should be encouraging innovation.  Executives shoulder the larger communication burden when it comes to innovation, defining their expectations and outcomes, providing permission for people to try and fail.  If you want to know why executive commitment and involvement in innovation is so important, look no further than these three aspects of the Workmat:  Strategy, Culture and Communication.  If executives aren't engaged in these, they will not change.

In the spirit of the upcoming football season, I thought it would be interesting to look at the game of football and consider how innovation has dramatically changed the game over the last 20-30 years.

In the old days, before the American Football League, many sportswriters and commentators felt that a lot of football could be described by the title of this post:  3 yards and a cloud of dust.  Most football, at the collegiate and professional level, relied on running the football.  It was only as the new American Football league was created that passing the football became more popular.  In the old National Football League, it was often said that only three things could happen when you threw the ball, and two were bad.  By this they meant that the quarterback could 1) throw to a receiver and miss or have the pass dropped 2) could throw the ball and have it intercepted or 3) could throw the ball and have it caught for a substantial gain.  The first two, needless to say, are bad.  These negative potential outcomes and comfort with the established processes and thinking dominated and kept the game on the ground.

It was football innovators and showmen who opened up the offense, by encouraging the forward pass.  Building an offense around passing was an innovation, and completely within the rules.  The forward pass had always been an option, but it took some new owners desperate for an audience to open up the game.  Of course as the old NFL watched the younger league gain viewers, and build quarterback heroes like Joe Namath, they too wanted a piece of the action and started bringing more passing into their offenses.  Today, the percentage of passing plays versus running plays has reversed, with far more passing plays than running plays.  Perhaps soon we'll see another set of innovations from people who are trying to reinvent or revive the game.  The new innovators, strangely enough, will most likely come from the college ranks - for example you can look at what Oregon is doing with its emphasis on speed.  The NFL has become too profitable to embrace too much innovation - in fact one could argue that as it becomes more profitable it becomes more conservative.

Football and its adoption of the forward pass are a lot like corporate innovation.  Three yards and a cloud of dust was a safe approach to winning, when football was based on safe offensive and strong defense.  A running play normally net about three yards, and a consistent offense could move the ball rather predictably.  They may not score a lot of points but they wouldn't create errors or lose ground.  Three yards and a cloud of dust could just as easily describe the very incremental innovation that most firms are completely comfortable with.  The innovation most companies practice is safe, simple, repeatable and incremental, creating yet another revision to an existing product or service.  There are no great moonshots but no great failures.  Most larger corporations allow new entrants or third parties to do the real big innovation, and then they hope to copy, purchase or co-opt the innovation once the market demonstrates its interest, just as the NFL eventually merged with the AFL.

Executives are a lot like coaches:  they want to win at the least possible cost, and think that defense is safer than offense.  A lot of coaches with a number of sophisticated offenses have entered the NFL.  Only a few, including the New England Patriots, the Denver Broncos and a handful of others, have attempted to dominate on offense, and even then both the Patriots and Broncos have good defenses.  Similarly, corporations prefer to defend existing markets, products and share, rather than create new, risky products that customers may not like or that may be too early or too late in a market window.  Thus, it is thought better to provide an acceptable product and scale quickly to drive down costs, while amping up marketing and promotions, to defend existing products and customers.  Force the competition to introduce something new and interesting, to upset the apple cart, rather than disrupt your own markets and products.  What these companies fail to realize is that competition now comes in all shapes and sizes.  Some competitors will want to compete head to head, feature to feature.  Others will be happy to chip away at specific capabilities or features.  Others will focus on specific channels or geographies.  The existing defense is not nearly as good or as capable as it was in the past, not because your defense is lacking, but because the number of competitors has increased.  In football, it would be similar to a defense maintaining an 11 man team, while the offense keeps adding players beyond 11, some of whom don't even plan to follow the accepted rules.  The defense is left complaining about the change in rules or unfair participation, while the offense goes on to score repeatedly.

There's a few things we can learn from these football innovators. First, the things we used to fear may be the things we ought to embrace. Rather than resist the forward pass, it may be time to embrace it.  Second, as we and others embrace the pass, others learn to defend against it, so that means we'll need to innovate again in a rather short period of time.  And again after that. Innovation becomes a constant.  Third, defenses increasingly will respond more quickly to innovations than they have in the past, so any innovation is likely to be short lived.  Fourth, as the NFL show us, the more profitable you become, the more you may resist innovation, because it may cut into profits.

Unlike football teams however, who are restricted to a specific size field and a specific number of players, corporations can dramatically reshape the competitive landscape, attacking from multiple angles with a range of partnerships and channels.  Innovation should be happening across types, outcomes and timeframes, which could radically change the way customers perceive leading innovators.  Yet too often corporations act and innovate as if they can only work with specific field definitions, only in one direction, only with incremental innovation, only with the approved, allotted team.  Football is infinitely more innovative than most corporations, with far more restrictions.

Another factor about football that's instructive to innovation is the idea of synchronicity and teamwork.  For a play to work well eleven different individuals, with vastly different skills, all must execute their jobs in tandem, often reacting to events or actions by the opposing team that weren't expected.  Innovation teams must have the same ability to work closely, act quickly and be prepared for a number of different alternative outcomes, yet they rarely practice and are often filled with many people with the same experience and skills.  Thus, innovation is often a start and stop activity, as the team gathers itself to conduct another step in the process, rather than a fluid activity anticipating and reacting to events.


Corporate innovators could learn a lot about innovation by studying and implementing many of the ideas that flow from collegiate and professional football players, while carefully considering the emerging resistance to innovation that is occurring at the highest echelons of the league due to a desire to protect profits.

I read today a rather rambling and confusing piece in the New York Times about Dollar Shave Club.  The article, entitled $1 Billion for Dollar Shave Club: Why every company should worry, can't seem to hit its stride or find a point it wants to make.  At first I thought the piece was going to congratulate a disrupter, Dollar Shave Club, who, despite the odds, grew a startup business to the point where Unilever acquired it for $1 billion dollars.  Dollar Shave Club did this in the face of overwhelming odds, taking on a deep pocketed corporate behemoth (and noted innovator) in Gillette and P&G.  I was sure this was going to be a story about the new innovations unfolding in customer experience and business model.

Instead the author seems concerned that new innovators are capitalizing on technologies and (horrors) merging those capabilities and technologies into new offerings and solutions.  While acknowledging the idea of creative destruction, doesn't he recognize that these mergers and new products were bound to happen?  Were the past solutions somehow better?  The market and the demand generated by Dollar Shave Club indicate that better solutions and offerings were possible.  He notes how Uber succeeded based on smart phone technology, the internet and location tracking.  All of these technologies were available to the existing corporations and to any potential startup, and most have been evident for over a decade.  The winners were companies that managed to merge the technologies and capabilities in a way that addressed unmet customer needs.  This is classic innovation.  The fact that larger companies refused to see the opportunity, or worse, saw the opportunity and recoiled from the risks, is beside the point.  Good ideas will be implemented by someone, either an existing competitor or a new entrant.  The market is mostly agnostic to the individual or company that provides the prevailing service.

Or, look at this another way.  Perhaps Unilever saw the opportunity but let Dollar Shave Club become it's prototype, knowing that if DSC succeeded, Unilever could simply acquire the company, letting venture capitalists bear the investment risks.  Acquiring a rapidly growing company is smart business as well - who doesn't benefit in this scenario?

Perhaps my favorite paragraph is just at the beginning of the article, where the author writes:

The deal anecdotally shows that no company is safe from the creative destruction brought by technological change. The very nature of a company is fundamentally changing, becoming smaller and leaner with far fewer employees.

Is this actually news to anyone?  The more we automate, the more we streamline and the more we outsource key functions, the smaller corporations can become.  And, hopefully, the more flexible, more nimble, more responsive and more innovative they can become, because that's what's required to survive.  Rather than simply looking at the downside of the changing economic models, let's consider the upside as well.  Yes, automation, innovation, globalization will change the large, somewhat paternalistic corporate model.  Here's where the article makes a new point:  the problem is inequality.

The wealth will be spread among a few. Dollar Shave Club has over three million subscribers but only about 190 employees. Its razors were made in South Korea by Dorco. Distribution was initially handled in-house but eventually was contracted to a third-party company in Kentucky. What remained was a terrific design, marketing and customer service shop; and a business that was easily expandable to meet demand and that had a good niche with men who do not like to shop. These super-successful companies with few employees should worry an America struggling with inequality.

Ok, so the founders and employees and venture capitalists who took a big risk will get a nice reward.  Good on them!  The author doesn't note that for every startup that succeeds like DSC, probably 10 to 15 fail completely, leaving the founders worse off than before, never mind the other issues with inequality generally.  What's the solution?  None is provided in the article, but what we should be doing is trying to create far more innovators and entrepreneurs, removing and reducing barriers to creating businesses, finding new ways to get more venture capital into the hands of people who want to create companies and jobs.

But here, in fact, is my favorite sentence in the whole article:  But the internet, mass transportation and globalization destroy everything.  Really?  The internet, which allows us to interact with anyone on virtually any device anywhere, which enabled political revolutions and offered us such incredible solutions as Amazon and Facebook (I kid) destroys everything?  Or does it enable new products and services?  And what's mass transportation got to do with shaving?  Does the author dislike receiving his books, clothes and increasingly meals via UPS or FedEx?  And, of course, the final whipping boy, globalization.  What's the answer - to refuse to trade with other countries?  David Ricardo did the original work on comparative advantage over 200 years ago.  Work and jobs will flow where the costs are lower.  Globalization allows people around the world to compete, and it raises standards of living globally.  But we are told that the internet, mass transportation and globalization destroy everything.

We can rail at the coming of the night or we can harness the best of the change that's coming.  Rather than fight the innovators, let's enable them.  Rather than accuse the internet and globalization, let's embrace them, because we can make it so everyone benefits.  Creative destruction is real, but it is not a zero sum game. As has been true in the past, large corporations that cannot compete or reinvent themselves will be shunted aside for those that can.  Where is the anguish for Sears Roebuck, or Tower Records?  Does the author find that the innovations that replaced them are wrong or full of inequity?  Is Amazon terrible because it replaced Borders?  Who makes the call as to what is right or wrong?  Ultimately the consumer does.


What to do?  Create far more opportunities for innovation.  Expect disruption - as more people get access to more technology and more connectivity, more new ideas will be created.  Large corporations don't have a right to exist, they have a right to compete.  But the best ideas, from any origin, will usually win.  Inequality results from too little opportunity, not from too few ideas.  Through trade and globalization, the world is getting smaller, but we have access to many more consumers and markets.  There is significant opportunity out there for any innovator.