Monday, June 01, 2009
Innoviation Authors Panel - MIT Enterprise Forum Chicago
I took a lot of notes at the MIT Enterprise Forum Chicago meeting on May 20th. The meeting was both inspiring and informative. Four authors of books on the topic of “innovation”, all of them consultants for companies of varying scale, answered questions about their approaches to bringing creativity to business. They addressed product and process innovation, in theory and practice.
Alexis Driscoll, a Principal at Outpoint Consulting, was the moderator, and asked about a third of the questions. The rest were provided by the audience, which kept the audience engaged and the conversation lively. The authors were:
Gupta talked about trying to create “Breakthrough Innovation”, he wants to bring out the brilliance in everyone. He wants you to let out “your inner Einstein.”
When asked why his latest book is a novel, Hickman said “Sometimes you can only tell the truth in fiction.” He cited a highly litigious business world that is also, in his words “highly corrupt”.
Caldicott echoed Gupta’s comments, “every one is innately creative.” The challenge is to unleash people’s talents to move science forward. To do that you have to understand who has the skills to create and, just as importantly, to connect with the resources to implement.
In his opening remarks, Hartung was more bold. “If people continue to follow the ‘core and focus’” message that has been so popular in recent years, he foresees “massive failure.”
WHAT WOULD YOU DO IF YOU WERE CEO OF GM?
Gupta was eager to take on this one. He referenced Tom Peters “If you can’t change, you have to kill it and start over.” He referred to the “trash value” of GM’s R&D. GM has the wrong focus, you have to commit to growth and not just profit. “The rest of the world is cheaper than us.” Honda is known for innovation, Toyota is known for reliability, Volvo for safety. “US car brands are known for nothing”.
Caldicott agreed, saying that in her observations there is “no passion for cars at the senior levels. No connection between management and people who assemble cars.” It may be a contractual issue, but union members are not utilized to find better ways to make cars. She came back to Edison, who she says “knew the factories and was passionate about what he made.”
SHOULD YOU KEEP YOUR IDEA SECRET, OR SHARE IT?
Gupta quipped “Bill Gates said the life of Intellectual Property is equal to that of a banana.” He advocated for “open innovation”. Caldicott suggested that people need to find your communities who can help you develop your product.
WHEN DOES INNOVATION BECOME CORRUPTION?
This question was right in Hickman’s sweet spot. “It happens all the time. Deceit, abuse of power.” Innovation becomes corrupt when it becomes all about the competition. When the focus is on competitors and not on customers. True innovation builds solid advances in products and services. Maneuvering against the competition is false, not true innovation.
An audience member asked if Hickman’s test was “focusing on the competition vs. focusing on core competencies?” and Hickman agreed. Hickman recommended article Managing Our Way to Economic Decline, http://hbr.harvardbusiness.org/2007/07/managing-our-way-to-economic-decline/ar/1.
WHEN AND HOW DO WE DRAW THE LINE BETWEEN INVENTION AND INNOVATION?
Edison was known as an inventor, not a “scientist,” said Caldicott. He believed “utility is success.” Invent something and it will sit on a shelf. Edison preferred to take inventions out to the marketplace. That said, Edison was always doing basic scientific research, asking “How does it work?” Edison always combined the basic science with Applied Research.
Caldicott went on to describe how most institutions separate basic research and applied research. “Research” and “Development” are not together and, she said, “need to be together.” She identified three distinctions that need to work together: “Creativity” is having an idea. “Invention” is when you make something. “Innovation” is when it sells.
HOW DO COMPANIES CREATE AN ATMOSPHERE FOR INNOVATION WHEN SO MANY ELEMENTS CONTRIBUTE TO RISK?
Hartung says that the only way to innovate is to set up a separate place in the organization to develop innovation. He gave the example of GM’s electric car program. The people testing loved the cars. GM had to sue to get the cars back from the testers. But when the project came back to GM, it didn’t meet GM’s requirements and was terminated. Hartung’s take was that this project needed to stay in the “white space”, so that they could start from scratch and "fail until you succeed".
Gupta added that “failures do cost money”. Projects need a scorecard optimized for profitable growth and a will to overcome failures. The CEO must inspire people to do their best, managers must create structures for success, and employees must be free to innovate. Management must give room for innovation.
HOW MUCH WHITE SPACE DO YOU NEED?
Hartung said that IBM’s PC development lab at Boca Raton was a success. Xerox PARC failed because it lacked one of the skills Caldicott had touched on earlier, the ability to connect the “invention” with the business’ go-to-market capabilities. Argon and most U.S. basic research facilities fail.
Hartung’s objective is marketplace disruption. For big companies, the business process is locked-in. They can easily expand and do variations on a theme, but they can not change the underlying process. Thus, Xerox PARC ended up giving away the Graphical User Interface and Local Area Network technology that was developed there. They could not innovate into a completely new field. Caldicott said that Edison would sell off discoveries or inventions that he did not see his company taking to market.
Hartung says he has 10 rules for strategic innovation in his book. The “whitespace” company needs to come back and “eat” the parent company. Actually, it’s the people who need to be innovators, people willing to disrupt. He pointed at Hospira, the Abbott spin-off, as having a good mix of people willing to disrupt their processes. Caldicott talked about businesses having a mix of characteristics relative to innovation, and that it tends to be a bell curve. 10% looking to try or make new things, 10% looking to make our things better and 80% looking to be followers of defined “best practices”.
Hickman brought up a concern about the dogma of “Control or be controlled”. This works in promoting “best practices”, but fights innovation. It creates corruption in hierarchies where people have bought into being the followers.
Speaking of corrupt hierarchies,
ILLINOIS POLITICS: CAN WE INNOVATE OUT OF THE PAY-TO-PLAY ENVIRONMENT?
Hartung says that business has fewer rules, but just as GM can’t innovate from the inside, neither can state government. The federal government will need to come in and change the game. Others agreed.
ARE THERE COMPANIES THAT ARE TOO BIG TO FAIL? CAN BIG COMPANIES INNOVATE?
The question used the term “sustainability”, which some people took to mean “sustained growth” and others took to mean “environmental sustainability”, often called “green business”. Gupta took the lead on the question, and split the difference, giving the example of how Ford spent a lot of R&D money on “green” and sustainability initiatives for their cars and facilities, but didn’t know how to build new cars, only to adapt. GM, he said, “stands for Greatly Mature. Their time is gone” GM has a 5% success rate with innovation. Today, companies need to create, to manage for disruption, to innovate fast, in real time.
Not all companies can sustain innovation. There is a culture and there are structures. Caldicott discussed four models for innovation:
1. Compliant – “I will innovate if the market makes me”.
2. Dabbler – Creates teams to dabble in innovation outside core functions of the business.
3. Continual Improvement – Six Sigma adherents, incremental improvements
4. Innovative Enterprise– Constantly open to change and innovation across the enterprise.
She gave the example of the rare Innovative Enterprise as Edison’s West Orange Laboratory.
Hartung says that the problem for big companies is that their focus on profits. “Profits are result.” You need to innovate to solve problems, not maximize for profits. “When you look only at profit, you do stupid things, like selling all the parking meters at one time.” Profit squeezes are not sustainable.
HOW IS THE INTERNET AND SOCIAL MEDIA CHANGING INNOVATION?
Caldicott says that the new medium is opening collaboration to occur across the world. Companies need to harness the concept of Open Innovation and develop competencies. She referred to 3M studies on how their scientists interact on social media. They have a mandate to share information across scientific and marketing audiences. They can see clusters of information and see who the connectors are. About a dozen people are the core glue that keeps people connected and information flowing.
Gupta says that this approach has changed the whole innovation process. The building blocks of innovation are moving from big companies to smaller groups of networked individuals. Companies that understand this get the benefits. For 3M, it takes six years to get a return on investment. For Google and Apple, it is just over a year. For Nintendo, ROI is $ 3.50 – or around 90 days. And, he added, “for GM, never”.
HOW CAN PEOPLE INNOVATE ON BUSINESS PROCESSES?
Caldicott talked about the World Innovation Forum earlier this month (May 5). Business Processes played a big part in that discussion. She believes that businesses will move from a pyramid to a flatter structure. Generation Y will be the largest population on the planet. Next year Cisco will employ more Gen Y than Baby Boomers. Gen Y is more collaborative and engages in “horizontal collaboration”. This will give rise to more business processes to share information about markets and products, needs and uses.
Hickman added that hierarchies are easily corrupted because of a concentration of power. The power has to be dissipated and shared. Corruption is hidden. People must be empowered for innovation to take place. This is also critical for democracy to work.
WHERE DO YOU SEE THE ROLE OF GOVERNMENT IN INNOVATION? IS IT COMPATIBLE WITH THE U.S. CAPITALIST APPROACH?
Caldicott pointed at Argon labs. Their mandate only allows them to go to a pre-commercial phase. Thus, Argon’s battery technology ends up only at Toyota. Argon needs to open up. Their charter needs to change, though she didn’t say to what.
Gupta talked about four types of research:
1. Fundamental Science, done by universities and government
2. Platform Research, done by the largest, though sometimes mid-tier, companies
3. Derivative Development, done by most companies
4. Variations or Incremental, done at the individual level
If we want innovation, teach people to ask questions and to be creative. That value on creativity and innovation comes from governmental programs.
LARGE CORPORATE MANAGEMENT HAS SHIFTED FROM PEOPLE WITH ENGINEERING BACKGROUNDS TO MBAS. HAS THIS RESULTED IN THE DEATH OF INNOVATION?
Hickman responded that the rise of entrepreneurs is critical to innovation. “Control” has become an extreme dogma and closes opportunity. The biggest obstacle to innovation is management.
As a final note,
Gupta: We think people are not creative. This is not true. We are all born creative. Learn to challenge the status quo.
Hickman: Not all innovators are the same. We mostly do just a passable job of putting the right people in the right places so that we can use all available talents.
Caldicott: It is not true that innovation takes a lot of people. A great team is 3 to 8 people. Not 25-50. A team of three people invented optical fiber. Their competition was a team in Japan had 50 people and failed.
Hartung: It is not true that innovation comes from deep knowledge of a subject. Deep knowledge leads to incremental improvements. Innovation comes from lateral thinking.
And that's quite enough from me. As always, please contact me with any questions or corrections.
Alexis Driscoll, a Principal at Outpoint Consulting, was the moderator, and asked about a third of the questions. The rest were provided by the audience, which kept the audience engaged and the conversation lively. The authors were:
- Adam Hartung, author of “Create Marketplace Disruption”
- Sarah Miller Caldicott, author of “Innovate Like Edison” and granddaughter of T. A. Edison himself,
- Craig Hickman, author of many more than a dozen business books and recent author of a mystery suspense novel with a business setting,
- Praveen Gupta, editor of Editor-in-Chief, International Journal of Innovation Science and author of "Business Innovation in the 21st Century".
INTRODUCTIONS
Gupta talked about trying to create “Breakthrough Innovation”, he wants to bring out the brilliance in everyone. He wants you to let out “your inner Einstein.”
When asked why his latest book is a novel, Hickman said “Sometimes you can only tell the truth in fiction.” He cited a highly litigious business world that is also, in his words “highly corrupt”.
Caldicott echoed Gupta’s comments, “every one is innately creative.” The challenge is to unleash people’s talents to move science forward. To do that you have to understand who has the skills to create and, just as importantly, to connect with the resources to implement.
In his opening remarks, Hartung was more bold. “If people continue to follow the ‘core and focus’” message that has been so popular in recent years, he foresees “massive failure.”
WHAT WOULD YOU DO IF YOU WERE CEO OF GM?
Gupta was eager to take on this one. He referenced Tom Peters “If you can’t change, you have to kill it and start over.” He referred to the “trash value” of GM’s R&D. GM has the wrong focus, you have to commit to growth and not just profit. “The rest of the world is cheaper than us.” Honda is known for innovation, Toyota is known for reliability, Volvo for safety. “US car brands are known for nothing”.
Caldicott agreed, saying that in her observations there is “no passion for cars at the senior levels. No connection between management and people who assemble cars.” It may be a contractual issue, but union members are not utilized to find better ways to make cars. She came back to Edison, who she says “knew the factories and was passionate about what he made.”
SHOULD YOU KEEP YOUR IDEA SECRET, OR SHARE IT?
Gupta quipped “Bill Gates said the life of Intellectual Property is equal to that of a banana.” He advocated for “open innovation”. Caldicott suggested that people need to find your communities who can help you develop your product.
WHEN DOES INNOVATION BECOME CORRUPTION?
This question was right in Hickman’s sweet spot. “It happens all the time. Deceit, abuse of power.” Innovation becomes corrupt when it becomes all about the competition. When the focus is on competitors and not on customers. True innovation builds solid advances in products and services. Maneuvering against the competition is false, not true innovation.
An audience member asked if Hickman’s test was “focusing on the competition vs. focusing on core competencies?” and Hickman agreed. Hickman recommended article Managing Our Way to Economic Decline, http://hbr.harvardbusiness.org/2007/07/managing-our-way-to-economic-decline/ar/1.
WHEN AND HOW DO WE DRAW THE LINE BETWEEN INVENTION AND INNOVATION?
Edison was known as an inventor, not a “scientist,” said Caldicott. He believed “utility is success.” Invent something and it will sit on a shelf. Edison preferred to take inventions out to the marketplace. That said, Edison was always doing basic scientific research, asking “How does it work?” Edison always combined the basic science with Applied Research.
Caldicott went on to describe how most institutions separate basic research and applied research. “Research” and “Development” are not together and, she said, “need to be together.” She identified three distinctions that need to work together: “Creativity” is having an idea. “Invention” is when you make something. “Innovation” is when it sells.
HOW DO COMPANIES CREATE AN ATMOSPHERE FOR INNOVATION WHEN SO MANY ELEMENTS CONTRIBUTE TO RISK?
Hartung says that the only way to innovate is to set up a separate place in the organization to develop innovation. He gave the example of GM’s electric car program. The people testing loved the cars. GM had to sue to get the cars back from the testers. But when the project came back to GM, it didn’t meet GM’s requirements and was terminated. Hartung’s take was that this project needed to stay in the “white space”, so that they could start from scratch and "fail until you succeed".
Gupta added that “failures do cost money”. Projects need a scorecard optimized for profitable growth and a will to overcome failures. The CEO must inspire people to do their best, managers must create structures for success, and employees must be free to innovate. Management must give room for innovation.
HOW MUCH WHITE SPACE DO YOU NEED?
Hartung said that IBM’s PC development lab at Boca Raton was a success. Xerox PARC failed because it lacked one of the skills Caldicott had touched on earlier, the ability to connect the “invention” with the business’ go-to-market capabilities. Argon and most U.S. basic research facilities fail.
Hartung’s objective is marketplace disruption. For big companies, the business process is locked-in. They can easily expand and do variations on a theme, but they can not change the underlying process. Thus, Xerox PARC ended up giving away the Graphical User Interface and Local Area Network technology that was developed there. They could not innovate into a completely new field. Caldicott said that Edison would sell off discoveries or inventions that he did not see his company taking to market.
Hartung says he has 10 rules for strategic innovation in his book. The “whitespace” company needs to come back and “eat” the parent company. Actually, it’s the people who need to be innovators, people willing to disrupt. He pointed at Hospira, the Abbott spin-off, as having a good mix of people willing to disrupt their processes. Caldicott talked about businesses having a mix of characteristics relative to innovation, and that it tends to be a bell curve. 10% looking to try or make new things, 10% looking to make our things better and 80% looking to be followers of defined “best practices”.
Hickman brought up a concern about the dogma of “Control or be controlled”. This works in promoting “best practices”, but fights innovation. It creates corruption in hierarchies where people have bought into being the followers.
Speaking of corrupt hierarchies,
ILLINOIS POLITICS: CAN WE INNOVATE OUT OF THE PAY-TO-PLAY ENVIRONMENT?
Hartung says that business has fewer rules, but just as GM can’t innovate from the inside, neither can state government. The federal government will need to come in and change the game. Others agreed.
ARE THERE COMPANIES THAT ARE TOO BIG TO FAIL? CAN BIG COMPANIES INNOVATE?
The question used the term “sustainability”, which some people took to mean “sustained growth” and others took to mean “environmental sustainability”, often called “green business”. Gupta took the lead on the question, and split the difference, giving the example of how Ford spent a lot of R&D money on “green” and sustainability initiatives for their cars and facilities, but didn’t know how to build new cars, only to adapt. GM, he said, “stands for Greatly Mature. Their time is gone” GM has a 5% success rate with innovation. Today, companies need to create, to manage for disruption, to innovate fast, in real time.
Not all companies can sustain innovation. There is a culture and there are structures. Caldicott discussed four models for innovation:
1. Compliant – “I will innovate if the market makes me”.
2. Dabbler – Creates teams to dabble in innovation outside core functions of the business.
3. Continual Improvement – Six Sigma adherents, incremental improvements
4. Innovative Enterprise– Constantly open to change and innovation across the enterprise.
She gave the example of the rare Innovative Enterprise as Edison’s West Orange Laboratory.
Hartung says that the problem for big companies is that their focus on profits. “Profits are result.” You need to innovate to solve problems, not maximize for profits. “When you look only at profit, you do stupid things, like selling all the parking meters at one time.” Profit squeezes are not sustainable.
HOW IS THE INTERNET AND SOCIAL MEDIA CHANGING INNOVATION?
Caldicott says that the new medium is opening collaboration to occur across the world. Companies need to harness the concept of Open Innovation and develop competencies. She referred to 3M studies on how their scientists interact on social media. They have a mandate to share information across scientific and marketing audiences. They can see clusters of information and see who the connectors are. About a dozen people are the core glue that keeps people connected and information flowing.
Gupta says that this approach has changed the whole innovation process. The building blocks of innovation are moving from big companies to smaller groups of networked individuals. Companies that understand this get the benefits. For 3M, it takes six years to get a return on investment. For Google and Apple, it is just over a year. For Nintendo, ROI is $ 3.50 – or around 90 days. And, he added, “for GM, never”.
HOW CAN PEOPLE INNOVATE ON BUSINESS PROCESSES?
Caldicott talked about the World Innovation Forum earlier this month (May 5). Business Processes played a big part in that discussion. She believes that businesses will move from a pyramid to a flatter structure. Generation Y will be the largest population on the planet. Next year Cisco will employ more Gen Y than Baby Boomers. Gen Y is more collaborative and engages in “horizontal collaboration”. This will give rise to more business processes to share information about markets and products, needs and uses.
Hickman added that hierarchies are easily corrupted because of a concentration of power. The power has to be dissipated and shared. Corruption is hidden. People must be empowered for innovation to take place. This is also critical for democracy to work.
WHERE DO YOU SEE THE ROLE OF GOVERNMENT IN INNOVATION? IS IT COMPATIBLE WITH THE U.S. CAPITALIST APPROACH?
Caldicott pointed at Argon labs. Their mandate only allows them to go to a pre-commercial phase. Thus, Argon’s battery technology ends up only at Toyota. Argon needs to open up. Their charter needs to change, though she didn’t say to what.
Gupta talked about four types of research:
1. Fundamental Science, done by universities and government
2. Platform Research, done by the largest, though sometimes mid-tier, companies
3. Derivative Development, done by most companies
4. Variations or Incremental, done at the individual level
If we want innovation, teach people to ask questions and to be creative. That value on creativity and innovation comes from governmental programs.
LARGE CORPORATE MANAGEMENT HAS SHIFTED FROM PEOPLE WITH ENGINEERING BACKGROUNDS TO MBAS. HAS THIS RESULTED IN THE DEATH OF INNOVATION?
Hickman responded that the rise of entrepreneurs is critical to innovation. “Control” has become an extreme dogma and closes opportunity. The biggest obstacle to innovation is management.
As a final note,
WHAT SINGLE MYTH ABOUT INNOVATION WOULD YOU LIKE TO DISPELL?
Gupta: We think people are not creative. This is not true. We are all born creative. Learn to challenge the status quo.
Hickman: Not all innovators are the same. We mostly do just a passable job of putting the right people in the right places so that we can use all available talents.
Caldicott: It is not true that innovation takes a lot of people. A great team is 3 to 8 people. Not 25-50. A team of three people invented optical fiber. Their competition was a team in Japan had 50 people and failed.
Hartung: It is not true that innovation comes from deep knowledge of a subject. Deep knowledge leads to incremental improvements. Innovation comes from lateral thinking.
And that's quite enough from me. As always, please contact me with any questions or corrections.
