Quest for Innovation

This 2006 American Management Association study “The Quest for Innovation” has an amazing amount of information and a lot of good metrics for benchmarking your organization.  Below are a few results that out found interesting:

  1. Customer and competitors drive innovation:  Top two factors (Page 69).
  2. Innovation strategy and plans are difficult: Lack of definition around innovation, an innovation strategy and plan are key impediments to innovation. (Page 70)
  3. R&D is not the driver: Only 27% of the executives surveyed felt innovation occurred in R&D (Page 74)
  4. Being good at innovation is hard: Only 15% of the executives believed their firms are good at innovation (Page 73)
  5. Collaboration is key: Collaboration with external entities and effective team work second most important factor in innovation (Page 66).
  6. Identifying and evaluating innovation is difficult: 46% of the companies do not have a standard process (Page 72)
  7. Rewarding innovation is difficult: 26% of respondents felt innovation is not rewarded.

There is a lot more to the study (its huge).  Please check it out when you have some time.

What are some of your observations around innovation and R&D in general.  One of the companies I worked at had a great process for assessing ideas and ferret out innovation, but there was no strategy or plan to drive it further.  Funding for innovative projects kept getting cut for near term fires…

Recognition approaches (other than bonuses)

Conference Board has another interesting list and a good reminder of what else can be used to reward team members (beyond bonuses):
  1. Tokens of Appreciation
  2. Public Acknowledgment
  3. Development Opportunities
  4. Perks

Personally, I have found that all rewards work best when they are backed up by a thorough evaluation of the contribution.  Nothing kills morale more than recognizing people who have not really contributed.  Also, depending on the age (or experience level) of the employee, 2 and 3 work better than other. 

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Pitfalls of Project Portfolio Management implementation

Computer World has an interesting IT Project Portfolio Management (PPM) article that is equally applicable to R&D management – just read R&D when they write IT :-).  They point out three dangerous myths of portfolio management:
  1. PPM is IT’s lookout
  2. Right tools drive PPM success
  3. The best starting place is PPM Best Practice
 In my experience, even the organizations that do PPM on R&D portfolios, often fall into some of these traps (I am not certain what fraction of companies have formalized PPM.  May be we will do a poll on this soon).  PPM is sometimes delegated to CTO or Engineering.  This has a negative impact on R&D team members because there is no clear customer for what they are developing.  
Another key problem is too much focus on tools and best practices.  I myself fell into this trap at one PPM implementation.  I was unaware of how little the organization new about their project portfolio (most were legacy R&D projects that had gone on for many years).  It was not wise to even attempt to implement PPM when there was no clear portfolio to begin with!

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Experiements boost productivity

Here is another article that suggests that well planned experiments and statistical data can help boost productivity and drive productive discussion.
However, in my experience, meaningful experiments are rather difficult to do in R&D Management (as opposed to R&D itself).  Unlike manufacturing, where you can build the same widget multiple times and compare results using statistical analysis.  Since R&D is a process of generating knowledge, once development is complete, it rather difficult to do it again in the same way.

The same is true for companies, too – as many people who have presented management with information that didn’t fit the bosses’ worldview can attest. One way to cut through such problems is to use the same sorts of statistical methods that economists use to tease out the lines of cause and effect in complex situations.

What do you think?  Any examples on meaningful experiments in R&D management?

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Do CEOs really know what they want from R&D?

Results of another industry survey – this one from Diamond – are actually the opposite of the IBM survey (CEOs want more creativity).  This survey shows that as the economy tumbled, companies were more focused on gaining market share rather than exploring white spaces and coming up with innovative products.

Looking for ways to recover from the recession, 57% of the companies surveyed by Diamond Management & Technology Consultants, Inc. plan to pursue a market penetration strategy that risks driving price competition and threatening profitability.

Innovation, often promoted as a panacea for surviving a downturn, is cited as a primary objective of only 16% of the respondents. And despite the economic climate, few companies (15%) see cost reduction (15%) and margin improvement (9%) as their primary objectives.

The other interesting finding of this study was that beyond the workforce there was little agreement amongst executives on what made them competitive!

Senior executives were asked what they believe are their companies’ top strengths and weaknesses. Most see their people as their major competitive strength–61% rated it first or second. But beyond that, there was surprisingly little consensus about what capabilities keep their companies competitive. Only 14% cited the “ability to deliver” on corporate programs and other initiatives as a top strength. Furthermore, customer understanding (10%) and market understanding (10%) ranked unexpectedly low as major strengths, given all the money companies invest in customer research and data analytics. 

 The press release then goes on to talk about Diamond’s service offerings and their value.  The lesson for me was about how little do these high level surveys actually produce.  In my experience, both innovation and incremental development are required.  Companies need to penetrate markets and enter new white spaces.  The actual task of achieving that requires hard work by R&D managers.  It is very difficult to get to that level of detail in a survey.

Why don’t businesses experiment more

In a very interesting column in the Harvard Business Review, Dan Ariely writes about why organizations are willing to listen to experts and consultants but not do some experiments themselves and find the best answer:

I think this irrational behavior stems from two sources. One is the nature of experiments themselves. As the people at the consumer goods firm pointed out, experiments require short-term losses for long-term gains. Companies (and people) are notoriously bad at making those trade-offs. Second, there’s the false sense of security that heeding experts provides. When we pay consultants, we get an answer from them and not a list of experiments to conduct. We tend to value answers over questions because answers allow us to take action, while questions mean that we need to keep thinking. Never mind that asking good questions and gathering evidence usually guides us to better answers.

This is a very interesting observation.  I have often wondered why people higher such highly paid consultants.  One point that Dan does not make is an ability to CYA – the consequences of failure are much lesser if someone else (an outside expert) made the decision.  I guess people are recognizing this:

Despite the fact that it goes against how business works, experimentation is making headway at some companies. Scott Cook, the founder of Intuit, tells me he’s trying to create a culture of experimentation in which failing is perfectly fine. Whatever happens, he tells his staff, you’re doing right because you’ve created evidence, which is better than anyone’s intuition. He says the organization is buzzing with experiments.

Car Makers – A complex Web of Alliances

Here is a cool graphic from Financial Times that shows the complex web of alliances between various auto makers (registration required). 

The question in my mind is how do you synchronize and manage R&D is this environment?  Any learning whether from innovation or from risk/failure in one organization has to filter through to all related – because their products, subsystems and components are tied together at the hip.  How does one keep track of all of that?  Maintaining that flow  Managing IP and all the confidentiality will also be a nightmare.

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Team recognition (as opposed to individual)

Recognizing teams for their contribution and balancing that with individual recognition has always been rather difficult.  The Corporate Executive Board has a nice list to factors to keep in mind.
  • Recognize team behavior and accomplishments. It’s one thing to recognize a team for achieving a particularly difficult goal. It’s another to hold them up for the way in which they achieved that goal. Whether you are giving the team an award, acknowledging their accomplishment on the intranet or in a newsletter, or simply saying job well done in a meeting, talk about the specific behaviors that enabled them to achieve what they’ve done together.
  • Do team reviews. Teamwork can often fall apart at review time when people are most concerned with their individual performance. Conduct a team review where you bring the team together to talk about their progress. Ask questions, such as: how did we perform as a team? Did we meet our goals? This may be done at the end of a project or at important milestones in a project.  Take this opportunity to recognize the team for the work it has done together.
  • Encourage employees to recognize peers. Recognition from superiors isn’t the only form of recognition that matters, or motivates. Knowing that your team thinks you’re doing a good job is important to keeping people engaged. Encourage team members to recognize each other for a job well done. Allow a few minutes at the beginning or end of team meetings for team member to recognize their fellow team members who have gone above and beyond.

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Mentoring

In an comprehensive article on mentoring (When Mentoring Goes Bad), WSJ provides some really good hints on how mentoring can work and what can go wrong.  Clearly, since the mentor has more experience, they need to decide how to choose the protege and how to guide them.

Questions to Ask Yourself

1. If you are mentoring someone, are you giving them enough of your time and interesting work?

2. Are the personality and work habits of your protégé similar to yours, and if not, are you able to make sure that doesn’t get in the way of working together?

3. Have you and your protégé clearly outlined his or her professional-development goals?

4. If you are being mentored, is the work interesting, and does your mentor give you credit for any projects you complete for him or her?

5. Do you feel like part of a team, and are you treated in an open, respectful manner?

Mentoring in R&D management is quite difficult to begin with.  Quite understandable becasue the disciplines invovled are so diverse and questions so broad.  I have had mixed luck with being mentored.  One of my mentors still helps me move ahead despite the fact that he has moved on to a completely different division of the company.  It has been great to have his counsel.  One of my bosses just wanted to show off and talk about how great he was.  I was asked to start producing results without ever suggesting ways in which I could actually do that.  Any experiences you could share?

Borderless Innovation

Just like Open Innovation, there is another new trend in accessing innovation outside the captive R&D organization – Borderless Innovation.  The article proposes four different models:

  • The Orchestra Model, which is highly structured and centralized. It is typically focused on upgrading an existing product or service that dominates a market, with tightly controlled ownership of intellectual property. Examples include the iPhone, whose developers have been releasing roughly 10,000 applications a month for use with it, or India’s ultra-low-cost Tata Nano car, which uses a localized network to manufacture units from a fixed design.
  • The Creative Bazaar Model, which is based on leading players in a particular market that want to acquire new ideas from small companies or individual inventors in order to broaden their range of products and market position. A case in point is Dial. The soap manufacturer aims to find 30% of its new ideas from outside the company through a program called “Partners in Innovation” that it launched with the New York-based United Inventors’ Association, an organization founded in 1990 to foster education and support for inventors. 
  • The MOD (“MODification”) Station Model, in which ideas come from a broad, global community, with the goal of coming up with new uses for existing products. One example is Mappr, a photo service developed by Stamen, a company in San Francisco. As users of Facebook and other social networking sites tag open-source photos, they help to build a database that Mappr uses to create photographic guides to different geographic locations.
  • The Jam Central Model has the loosest organizational structure and mission, often involving experts asked to solve problems that might not fit well into a large corporate profit strategy. For example, for the Tropical Disease Initiative, volunteer scientists are using open-source collaborative software to address Third World health problems, such as malaria and dengue fever. The medicine needed to cure these diseases does not have the recurring revenues that pills for chronic conditions have, so it attracts little attention from the big pharmaceutical companies.

 These are interesting models and each one if implemented effectively can bring significant benefits.  However, much is left unsaid about implementation.  Accessing innovation outside is not sufficient, organizations need processes, tools and cultures to mature the idea once brought inside.  This is easier said than done.  R&D teams frequently have Not-Invented-Here foreign body rejection of outside innovation (sometimes necessarily so because of the sense of pride in their team).  Also, developing maturation plans and resource requirements for outside ideas gets more difficult the more out-of-the-box the idea is.  Finally, these innovation seeds need special attention from the R&D managers to make sure they develop into successful products.

In summary, Borderless Innovation is a very good idea – if the organizations have processes, tools and metrics to manage it effectively.  A strong intellectual property management skill is also needed to protect all this innovation.

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