Breakthrough innovation - one step at a time

I have been thinking about A.G. Lafley and Ram Charan’s new book The Game-Changer: How You Can drive Revenue and Profit Growth with Innovation (Crown Business, 2008). I agree that establishing a disciplined, repeatable, and scalable innovation process; creating organizational and funding mechanisms that support innovation; and demonstrating the kind of leadership necessary for profitable top-line growth as well as cost reduction is right on.

My problem is with the intriguing and strong statement that the “Consumer is the Boss”. Such statements need to be provocative – Martin Luther King captured attention by saying “I have a dream”, rather than saying “I have a few ideas!!”… but I think this statement is misleading as far as breakthrough innovation goes.

If the “Consumer is the Boss” is really a company’s mantra, breakthrough innovation wouldn’t happen. Customers are thinking about “now” …..the problems they are experiencing on a day to day basis. Indeed that is important for companies to think about, but I believe the “Change the World” opportunity of breakthrough innovation stems from idealizing customers and envisioning problems and better solutions. Yes you place the customer center stage but you stretch your imagination about making them stars.

One of my students, Parul Raj Lodha, just returned from the TechCrunch50 Conference in San Francisco. Its Parul’s first time in the US, and his passion for entrepreneurship resulted in his skipping a week of classes for this event. Knowing the culture of the Lally School, it didn’t surprise me to find Parul hopelessly sleep-deprived after attending 3-days of what he calls a pure adrenaline rush (accompanied by an equal number of nights of staying awake to get his assignments submitted on time).

Parul brought back a wealth of experience from the TechCrunch50(TC50) Event, but most enlightening were his observations on a demonstration by the folks from Swype Inc, a company that demonstrated their product at the event and was shortlisted to the final three for the coveted TechCrunch50 Best Presenting Company Award.

Swype is the brainchild of Cliff Kushler and Randy Marsden. Cliff co-invented predictive text-entry that got 2.4 billion users addicted to texting on mobile phones after Tegic Communications began licensing the technology in early 1997. Randy developed the onscreen keyboard included in Microsoft Windows (read Don’s post), which has an installed base of over a half a billion units.

Sharing his experiences from TC50, Parul observed that the predictive text solution developed by Cliff was perfect even when it came out over a decade ago. It did everything that the user wanted and basically had no competition for 11 straight years. It’s a no-brainer that Tegic, which was eventually acquired by Nuance, made a fortune off the licensing deals.

So, what made the inventor of such a great product, work even harder in the same space to create another revolutionary product, raising the bar even further? Watch the video on Swype to get a feel for what Cliff and Randy have created - its unlike anything you’ve ever seen before. And as the Swype website mentions, “With one continuous finger or stylus motion across the screen keyboard, the patented technology enables users to input words faster and easier than other data input methods—at over 50 words per minute. The application is designed to work across a variety of devices such as phones, tablets, game consoles, kiosks, televisions, virtual screens and more.” Basically, it will change the way people enter information. The keyboard will be history.

Parul told me that he had the good fortune of interacting with Cliff and quizzing him on what drove him to create a better version of something that was already considered the best. An interesting story emerged. The predictive text technology originated out of an experiment to make it easy for quadriplegics to enter text, given their physical limitations. However, when Cliff and his co-inventors had a working prototype they realized that this technology could change the way humankind enters information.

What is even more amazing is that the idea behind Swype was not born overnight. It emerged out of years of research in developing superior assistive technology and alternative computer input. It’s interesting that Cliff and team aren’t the only people researching this space. But the fact of the matter is that he got it right the first time, and again, over a decade later, a second time. As Parul ecstatically narrated the rest of his amazing experience at TechCrunch, he rightly remarked that there are no shortcuts to cutting-edge state-of-the-art innovation.

BTW, here’s Parul’s list of top ten + 1 reasons why wannabe entrepreneurs should attend the TechCrunch Conference next year:
i) Three days at TC50 were the equivalent of Cliff’s notes on every entrepreneurship course you wish you’d taken.

ii) Your linkedin account gets populated by the who’s who of Silicon Valley. Great people attend that event to find other awesome people.

iii) In addition to the 50 Demopit companies that have been shortlisted after a rigorous selection procedure, there are a host of partners and exhibitors that are scouting for talent.

iv) Watch the Demopit presenters get grilled by the people who first invested in Google, Facebook, and the future of the web. If you’re an entrepreneur-in-waiting, attending this event will give you some perspective of what kind of problems you should have thought through before announcing your product to the world.

v) Talk to entrepreneurs like yourself, and discuss how they solved common problems that you will most likely also face.

vi) Accidentally learn about jobs like the Entrepreneur-in-residence: Get paid to be associated with a VC firm, getting ample time to work on your own business idea, and get immediate access to the very people who could potentially fund your big idea.

vii) Practice pitching your ideas to a group of crunched-for-time investors. Actually, practice the art of getting their attention first, like, in one sentence. And reflect on how you can improve it further.

viii) As Bill Kaiser of Greylock Venture Partners remarked “when I hear about a company once, I often ignore it, when I hear about it twice, I pay attention, when I hear about it for the third time, I take a meeting”. Make your presence felt. The VCs attending TC50 are a close-knit group. They bump into each other all the time (the camaraderie was evident at the event). It helps if you can bump into them enough times to get their attention (assuming ofcourse that you have a truly great idea).

ix) Meet folks like Martin Obert who showed up at Mike Arrington’s door uninvited, made a pitch, and got himself written about on Techcrunch.com, resulting in a million hits on his website. The people attending a TC Conference are a different group of individuals. Get inspired.

x) Get lucky in partnering with the companies at the event. Suggestion Box offered all the demopit companies one year’s subscription to their service for free. Entrepreneurs are good people. Be nice to them, and they will be nice to you. But first get connected.

xi) Wake up to a culture other than your own. I’m sure there was representation from a lot more countries other than the US; I met entrepreneurs from Israel, Japan, India, United Kingdom, Mexico, France, Switzerland, Turkey,and Germany. Ain’t it sweet that most of them have an office in the Bay Area now!

Two things happened to me last week that might give pause to those of us who really want innovation to become a fixture in organizations. One wasn’t so great. But the other was absolutely great.

First, an acquaintance of mine from the Industrial Research Institute stopped in. If you’re not familiar, the members of the IRI are R&D directors, managers and CTO’s of Fortune 1000ish companies. They’re concerned with understanding how to ensure that industrial R&D is managed wisely, and how government policy impacts their budgets. Among the many, many services they provide to their membership, they oversee research projects on managing innovation, and they’ve sponsored ours since 1995. So these guys understand the concept of breakthrough innovation, and live its challenges every single day. The friend who stopped in has worked for several years in a new business creation group within Central R&D of one of the best known firms in the communications industry worldwide. He’s been with the company pretty much his whole career. When he walked in, I could see things had changed.

“Fifty months,” he bluntly stated as he sat down. “What???” I asked. “We lasted 50 months…we beat the average of 4 years by a measly 2 months.” He proceeded to tell me that the New Business Creation group had been shuttered, the CTO had left, the CEO was gone, and all 25 people in his group had been laid off.

Sadly, this is still happening in companies, I guess. Why haven’t we learned? Why don’t companies take advantage of what we’re learning out there? The evidence is mounting, as my new friend Venkat can tell you even if he does think our book is “tedious”!!!!  Innovation needs to be institutionalized…made permanent in organizations. Not a 4 year junket. It’s too wasteful.

But then something positive happened. Got a note from a Prof at Syracuse University who’s planning to use Grabbing Lightning as a text for his MBA and MS in Engineering course on managing innovation. I’m sure he’s using others as well. That’s fine. In fact, it’s wonderful. If we teach people who are students all about an innovation function, when they are persons of influence in their companies someday…..maybe they’ll remember what they’ve read…if it wasn’t too tedious, that is!

Scott Berkun wrote a post on ‘Why Innovation is Overrated’. He argues that successful organizations are successful not because they’re great innovators, more so because they are excellent at ‘making good things’. Indeed, none of the companies that he’s discussed were first in their field:

Apple did not invent the cell-phone, Motorola did. The first touchscreen was created in 1971. Archie, the world’s first Search engine was running in 1990, and pay-per-click was pioneered at Goto.com. And yes, the first motion picture was created by Edison in 1889.

I agree with Scott’s statement that ‘Making good things people love is the true spine of these companies successes’. But ignoring breakthroughs? I’m not sure if I get the drift? Everything that can be invented has been invented?

The DynaTAC, “The brick“, weighed 2 pounds, and offered just a half-hour of talk time for every recharging. Sure, it was a good thing, but it wasn’t good enough. In fact you wouldn’t even call it a cell phone. I’d blame a lot on innovation. ‘Merry Christmas’, the first text message was sent in 1992. NTT DoCoMo, a company that invested heavily in R&D came up with the ‘i-mode‘ to offer internet and email to its subscribers in 1999. Sometime in Y2K, the first Mp3 Phone was announced. And then in 2001, Sharp introduced the first Megapixel camera-phone. And you know what, now that we have e-books, Polymer Vision recently announced the Readius.

Now, while I agree that these are all truly great things, how did all those technologists come up with all those brilliant ideas? It would be tempting to lean on the powerful words in the vocabularies of those visionaries - problem, experiment, solve, exploration, change, risk and prototype. Sure, but don’t these very words lead to that one great thing - innovation?

Scott suggest that we don’t need to ask ourselves toothless questions such as ‘How can we be innovative?’ But, in fact, if we don’t…..we fall into a commodity trap. Price wars. Advertising wars. The fact is, we need innovation….processes and systems that take technological progress, discoveries, inventions, and bring them to commercial reality. If that didn’t happen, neither Scott nor I would be blogging today.

One of our innovation crazed MBA students, Pete Smith, commented on my recent post about good ideas and no follow up. In his internship this summer, he’s getting great exposure to some very senior folks (CEO!!) at a large established company that’s completely focused on R&D but acknowledges that they have little incubation capability. They ream every last drop out of slowing markets….

Poor Pete (our energized student) could barely restrain himself…but he needled that senior leader just a bit. Couldn’t help it. Had to. He’s learned about the need to think further out than next quarter, or next year, or the next three years. And he knows how to incubate new businesses. I’ve seen him do it twice already.

On the other hand, he’s dealing with having to be diplomatic, and that’s a critically important lesson. When to ease up. How to deliver the message in a manner that senior leaders can hear it. Sometimes it takes awhile. Sometimes you have to be painfully loud, but other times that’s just not the right approach.

So Pete….the grade is A. You knew the answer, and you knew that now was not the time or place to deliver it. Change in organizations takes time. We chip away at some of them bit by bit. But others get it today. So Pete and his colleagues in MBA programs have to decide: Do I want to work at a place that already gets it and is trying to steam forward…or do I want to work at a place where I can leverage what I’ve learned to educate my bosses??????? It’s all good, and it’s all necessary.

See you in a couple of weeks Pete!

Was reflecting on the second MIT Sloan Management Review article that I read, “Oops! Accidents lead to innovations. So, how do you create more accidents????”

This article is all about opportunity generation, stimulating creativity, etc. It highlights Xerox PARC. ..and suggests that corporations “keep PARC of the early 1970’s in mind as they consider the ideas that emerge unexpectedly.”

I would caution that  PARC contributed very little to Xerox’s growth. Is the issue really getting great ideas (i.e. Grabbing the Lightning)…or what to do with them once you’ve got ‘em????

Back from vacation …refreshed and renewed. Catching up on old news. July 7’s WSJ’s section devoted to reprising articles from MIT’s Sloan Management Review. Two articles picque my interest. This post is about the first one: In Search of Growth Leaders, describes a study of middle managers who actually make things happen in large bureaucratic organizations.

No surprises, but just want to point this out, because it’s absolutely true. Waiting around for senior leadership to ‘get it’ won’t work. Most of the companies we’ve studied who have built innovation capabilities initiated them from the middle management ranks. These guys WANT the company to grow, do well, achieve organic renewal. Many have energy, brilliance, and great leadership strength. As I mentioned before….it doesn’t have to start from the top. Ultimately, however, the top guys have got to become converts.

The article went on to describe these people in terms of their experience bases (extremely broad-ranges, diverse, allowing them to migrate ideas and solutions from one context to another), strong internal network, and strong held beliefs in their ability to change the world around them. Need to temper this with a reality check, to prevent ego maniacs from taking hold. We’ve seen it happen and it’s way too counter- productive to allow. But we also encountered, as these authors have, managers who really can get things done, and are confident. These are treasures in your organization.

The article’s sub-head is “Most companies have managers who can turbo-charge results. The trick is finding—and nurturing—them.” Unfortunately for readers, this last point…how to nurture them, is not addressed. But here’s what we find: They do NOT need equity participation in those businesses that they start. They want visibility with senior leadership. The usual sort of credit. They’re not the same as start up entrepreneurs who may be primarily driven by the promise of huge financial returns. These people want to see their organization’s continued success, and see its contributions adopted by the rest of us.

With soaring fuel prices, the $4 cuppa is probably unattractive as ‘everyday coffee‘. Starbucks plans to close 600 stores laying off 12000 employees. Downsizing and cost-cutting are popular moves exercised by Top Management to control costs in a receding economy. In most cases, the innovation function is also hurt badly owing to budget cuts and lay-offs, making way for quick and easy solutions that apparently, improve the upcoming quarter’s bottomline. But, in a weakening economy, should innovation really stall?

A while ago I wrote a piece about innovating around cost that is certainly one approach to the problem. Indeed this is a good time for Starbucks to further research their ‘everyday coffee’ product. Can they actually make the coffee affordable? Or should they focus on another demographic in this economy?

Another approach is to put their discovery competency into gear and analyze the new trends in more detail… what is the nature and distribution of rising food and fuel costs? Who wants coffee the most and what implications does this have about their business. Or is this really about coffee or something else?

Recently Howard Schultz was brought back as CEO to revitalize foundering Starbucks. Schultz intends to use Ideas to change his company—to instill what he calls “a seeing culture.” In an effort to execute Schultz’s intentions, Starbucks launched MyStarbucksIdea.com. Here customers can make suggestions, other customers can vote on and discuss them. Seemingly as a result of this effort on Apr. 8, about twelve weeks after Schultz’s return, ‘Pike Place Roast’ was launched amidst much media hype.

As BusinessWeek noted, Starbucks ‘Everyday Coffee’ is an effort to Dunkinize the brand a bit. Perhaps, this was one way of demonstrating that Starbucks was listening to its customers but Starbucks so far hasn’t reinvented coffee, or pastries, or the experience.

Following the bandwagon is not the same as innovating. Shultz in an interview about his new effort said “this is hard”. Yes innovation is hard and it takes patience and speaking to your customers, customers you don’t have as well as your existing customers.

We’ve often mentioned how important it is to have a key individual responsible for driving innovation in a corporation. Everyone is now wondering how much Microsoft’s focus and fortunes could change. The Economist, like multiple other publications, has published an article titled “After Bill” where there has been some discussion on Microsoft’s newfound interest in Cloud computing.

So how important is the CEO profile for sustaining a highly innovative company? While the business literature often cautions against having founders run companies too long, there is evidence that in some instances its these very folks that are needed to sustain innovation. Steve Jobs returned to revitalize Apple and he did with the iPod and iPhone. Jamie Houghton brought Corning back to life after its nose dive during the Telecom bust. Michael Dell returned to assist a foundering Dell Corp., and Howard Schultz too has reclaimed his CEO role at Starbucks.

On Friday, Bill Gates stepped down and left the helm to Steve Balmer a long time friend and colleague who has worked with Bill at Microsoft for 33 years. Balmer is known for his ability to digest large chunks of data. His sales and marketing prowess complemented Gates’s technical acumen as Microsoft grew. Is one side of this duo enough? Will Balmer’s math excellence turn into number crunching and away from innovation?