Beyond “Innovation”

Tim Brown and Tom Kelley run IDEO, one of the best innovation consulting companies around.  Tom has a new book out, The Ten Faces of Innovation , and the company is getting a lot of play in the business press.  I have had a chance to spend time with both of these gentlemen, as well as with Tom’s brother David, who runs the D School (for Design School) at Stanford, and all three are the real deal.

And that, in a way, is the problem. 

Firms like IDEO are so charismatic in their approach and so delightful in their outcomes that they tend to preempt the whole space of innovation.  In fact, however, they occupy a relatively small corner of that universe, specializing in a certain strain of innovation that has its greatest applicability in mature markets for consumer goods.  That is, these firms are world class at sparking what we call enhancement innovations for volume operations offerings targeted at consumer markets.  But there are thirteen other types of innovation in our overall innovation model, and every one of them plays out very differently in the B2B enterprise model of complex systems versus the B2C consumer model of volume operations.  So there are twenty-eight trajectories of innovation all told, and we need to keep the other twenty-seven in view.

To be valuable from a business point of view, innovation must provide a deviation from the norm that creates differentiation in the company’s offering which in turn leads to customer preference at the time of a buying decision.  In this light, the big challenge may not be coming up with the initial deviation—there are usually lots of good ideas in play.  No, the real challenge is coming up with all the supporting innovations that reinforce the initial vector, aligning all the other functions in your company to reengineer their processes in such a way as to further accentuate the new value proposition, thereby creating a sustainable differentiation that can generate deep and lasting competitive advantage.

This doesn’t happen in creativity labs or at offsites, although it can gets it start there.  Such systemic reinforcement of a single vector of differentiation represents instead a deep commitment from top management to align the entire enterprise, supported by a careful cascade of strategy down through each function, each being asked to show how it can reengineer some aspect of its work to further the differentiating effort.  Such plans are then reinforced through resource allocation prioritization, through balanced scorecard metrics, through compensation incentives, and through constant reiteration of the differentiating line of innovation being pursued. 

People like to say that innovation has to bubble up from below.  Maybe at the start.  But lasting differentiation cascades down from above.  Innovation management, in other words, is as much a part of the outcome as the initial spark of innovation itself.

Comments

[Vinay]

Hi Geoff
I somehow stumbled upon this. 'innovation' MUST be the most oversold word in the world. Any well thought out work, well grounded, approached from first principles, and executed just as the visionaries wanted it - is what the world needs. They call it innovation. Innovation is not a process. It is nothing more than a (desirable) outcome. The second most sold word is 'Design'. Everybody says they are doing design (IDEO of course IS). Design is a 'process' or a 'non-process' or an outcome. Buying/ doing/ practising Design are meaningless phrases in English.

That said the most innovative results come from organisations which are not built on layers and layers of processes, and people have both the incentive and freedom to come up with something new or to bring a top management vision to fruit.