Archive for category The Innovation Matrix

Don’t Follow Your Dreams, Follow Your Effort

Posted by Tim in innovation strategy, The Innovation Matrix on 9 February 2012

We repeatedly see survey results that say that CEOs think that innovation is a top priority for their firm. And yet, these same surveys also say that most CEOs are unhappy with their innovation efforts.

Why is this so?

Here’s an example – a report from a couple years ago in McKinsey Quarterly. They surveyed over 1500 C-level executives. 15% of them said that innovation was the top priority for driving growth in their firm, and over 70% listed innovation as one of the top three priorities.

But what are firms doing about it? The report says:

But the way companies manage and govern innovation doesn’t reflect that importance. For instance, although executives say corporate performance is most likely to be affected by breakthrough innovations, they also say their companies generally focus on innovation in areas such as product or service development. Only 36 percent of top managers—and just over a quarter of other executives—say innovation is part of everything the organization does. Further, although more than a third of top managers (those at the senior vice president level and above) say innovation is part of the leadership team’s agenda, an equal number say their companies govern innovation in an ad hoc way.

There are a couple of key points there. First, note that there is a disconnect between the number of CEOs that say that innovation is part of everything their firm does, and the number of lower ranking executives that say this. Second, it appears as though for many firms innovation is on the agenda, but there is no process in place to support getting better at innovation.

Mark Cuban recently answered reader questions on the Freakanomics blog, and he had this to say to someone who asked if he should follow his dream and try to get involved in major league sports:

Never follow your dreams. Follow your effort. It’s not about what you can dream of. That’s easy. It’s about whether or not it’s important enough to you to do the work to be ready to be successful in that business.

I would say that a lot of these executives are dreaming about being more innovative. And why not? Innovation does drive growth. But they’re not putting in the effort.

This is a big part of why I worked out The Innovation Matrix:

Executives talking about the importance of innovation is one of the first steps towards increasing your innovation commitment. It’s great that CEOs want their firms to innovate more. But that’s just a dream.

To improve your innovation, don’t dream about it. Increase your innovation efforts. Get better at actually executing ideas.

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Innovation Mistake: Thinking Tools Will Fix Your Problem

Posted by Tim in book riffs, The Innovation Matrix on 24 January 2012

I had lunch a while back with two executives from an organisation that the Business School does a fair bit work with. They wanted to improve innovation and that’s what triggered our meeting.

We talked for a couple of hours about what was happening in their organisation. We talked about innovation as a process, the different forms of innovation, incremental versus radical – all the big topics. It seemed like we were making some progress towards figuring out how we might be able to work together.

Then at the very end of the lunch, the one that’s actually in charge of innovation there leaned over and said “Look, just tell me what piece of software to get and I’ll get it.”

I was dumbfounded, because it had seemed as though we were on the same wavelength. However, theirs is a common innovation mistake: thinking tools will fix your problem.

They won’t.

Tools are great, but to fix an organisational problem, you need to figure out how tools interact with people and processes. If you don’t address all three, you won’t fix your problem (see for example, this, this, this and this).

This is where The Plugged-In Manager: Get in Tune with Your People, Technology, and Organization to Thriveby Terri Griffith comes in.

Griffith is an expert on organisational design, and her book is very useful. She talks about how to integrate people, processes, and technologies. Her definition of a plugged-in manager is one that is able to perform this integration successfully.

The guys that I was talking with were connected, but not plugged in.

Here is how Griffith describes plugged-in managing:

… organizational success more likely occurs when all three critical dimensions – technology, organization, and human capabilities and dimensions – are taken into account concurrently. There are no silver bullets. Even excellent management actions, if restricted to a single dimension, can never have the same success as when all three dimensions are managed together. Fredrick Brooks, summarizing the issues in a classic 1986 article, notes “There is no single development, in either technology or in management technique, that by itself promises even one order of magnitude improvement in productivity, in reliability, in simplicity.

And here is John Hagel in the forward to the book:

In a world increasingly entranced with technology, this is a powerful antidote to the claims of technology evangelists who attribute miraculous powers to their favorite new technologies. The truth that Terri’s book drives home is that technology in isolation is useless and perhaps even dangerous. Only by integrating technology effectively into a specific social and business context can we release its latent power.

If Hagel likes the book, you probably don’t need my recommendation on top of it. Nevertheless, I will say that it is well worth reading, particularly the second half, which is filled with outstanding case studies of how to make this work. There is also a quiz to test how plugged-in you are, which you can also take online.

This interaction between technology, people and process is a big part of what I am trying to get at with the innovation matrix. Technologies usually come into the innovation process as part of an increasing commitment to innovation. This is why I was having lunch with those guys, and that is why they wanted to know which technology to use.

However, the skill at actually executing ideas comes from people and process. In order to improve innovation, you have to both increase your commitment to it, which often includes adding tools, but you also have to improve your processes and the skills of your people. You have to move up both dimensions of the innovation matrix.

Tools don’t solve innovation problems, people do. You can use the principles of plugged-in management to integrate tools, people and process more effectively. Doing this will help you avoid a common innovation mistake.

Disclaimer: I know and like Terri, and I received a free copy of the book. I also bought my own copy. I’m writing about the book because of its quality, not because of who wrote it or how I got it.

(Photo from flickr/AndyArmstrong under a Creative Commons License)

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Searching for Unicorns: The Innovation Matrix

Posted by Tim in innovation strategy, The Innovation Matrix on 22 June 2011

Thanks to everyone that has made comments and suggestions on The Innovation Matrix Reloaded. I’ll continue to incorporate your thoughts and ideas as the concept evolves. With that in mind, today I’d like to ask for some help.

First, let’s take a look at the Innovation Matrix again – I’ve highlighted the two categories I want to talk about:

Organisations that are innovative without having any commitment to innovation are interesting. Who falls into these categories?

When I first started thinking about this, one example immediately came to mind. A few years ago John and I started a big research project looking at innovation networks in project-based firms. One of the companies with whom we’ve done a lot of work on this project is a big mining company. Early in our relationship with them we had a meeting with several of the knowledge-management people in their main office. When we asked them about innovation, their response was “we’re not innovative.”

We were a bit surprised by this, but if they said it, it must be true, right? But as our research progressed, we discovered something interesting. When we went out to visit their mines and started talking to people, we found out that they are generating and executing innovative ideas all the time. True, nearly all of them are incremental, but still, in practice, this firm is actually reasonably competent at executing ideas – despite the fact that their upper management thinks that they are non-innovative, and in fact provides basically no support of innovation at all.

This is the kind of firm that I was thinking of as Accidental Innovators.

There are a few other examples of organisations in this category. Jürgen Stäudtner commented yesterday that firms with a strong focus on meeting customer needs can also be Accidental Innovators. They might not be consciously trying to innovate, but in meeting needs, they end up generating new products and services. This is similar to a comment that Rohan Hine made on the first version of the matrix, when he said that firms that are just starting out might not have a formal innovation process in place, but that in the course of figuring out how to survive in the market they may generate and execute innovative ideas.

So I can think of a few examples of organisations that fit into this category in the matrix. I think that in most cases these types of organisations will be limited to executing incremental innovations. However, with some added commitment, they also have the potential to become very good at it. They already have some skill at executing ideas – and this is one of the most important factors in innovating.

But this leads to the help that I need from you:

Where are the Unicorns?

Are there organisations that you can think of that have no commitment to innovation, yet are excellent at generating and executing new ideas?

Here’s another way to think of it: what’s the biggest innovation you can think of that came from an organisation that you would normally not think of as being innovative?

I’d love to hear your thoughts on this. If we can find some Unicorns, I might have to change the name of the category. On the other hand, being the first to actually find a mythical creature would be pretty cool…

(Photo from flickr/ranil under a Creative Commons License)

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The Innovation Matrix Reloaded

Posted by Tim in evolving economic entities, innovation strategy, The Innovation Matrix on 17 June 2011

Since I put the Innovation Matrix together last year, we’ve been experimenting with it to see if it makes sense. I’ve used it in a couple of classes, and John and I have discussed it with a number of people that are actually responsible for innovation within their organisations. We’ve learned that the basic principle seems to resonate pretty strongly with people. We’ve also learned that the original configuration could use a bit of work (conversations with Mark Dodgson and Kate Morrison also helped in this regard).

Here is the new version of the Innovation Matrix:

This is a bit of a distillation of observations over time. I thought of it because I think that a lot of people that are trying to improve innovation within an organisation think that they can go from the bottom left (No Innovation Capability) to the top right (World Class Innovator) in one jump, simply by introducing some sort of innovation program. I think that this is impossible – that you actually have to make the trip in a number of steps, and that there are many different paths that you can take.

The table has two increasing dimensions. Across the horizontal axis there is increasing commitment to innovation. This can include things like talking about how innovation is important, including it as a core value, putting in systems to support and improve innovation, and explicitly earmarking time, money and other resources to innovation. This is measuring innovation inputs.

Going up the vertical axis shows an increase in innovation competence – mainly the ability to generate and successfully execute new ideas. This measures innovation outputs.

Here is a brief description of each box:

No Innovation Capability: these firms don’t innovate. This isn’t necessarily bad – there’s no value judgment being made. They can be successful if they have strong positions in stable industries, or they can be average performers or struggling in other circumstances. I think we can probably all think of examples for this category.
Thinking About Innovation: firms in this category are starting to talk about the importance of innovation. They might add it to their list of core values, or have a CEO that is starting to talk it up. Regardless of this increase in awareness and commitment, they are still not very good at it. This is often the first step that organisations take in trying to improve innovation.
All Talk, No Action: is a self-explanatory category. They are talking the talk, with official innovation programs, commitment of time and resources, etc. But they’re still lousy at actually executing ideas. They may have an excessive focus on ideation, a bad selection process, or just not be very good at executing.
Accidental Innovators: These would be firms that innovate under some other name – so they might be really good at process innovations through a continuous improvement or lean program. They are able to execute ideas reasonably well, but they don’t have any structure in place to support it, nor do they think that they’re innovative. They innovate through stealth.
Average at Everything: these firms have some structure in place to support innovation, and they are getting better at doing it. Several firms that I work with have gotten to this level after moving first to Talking About Innovation.
Potential Stars: there are two paths to get to this point. Along on, these organisations are good at innovating, and they are putting more resources into getting better at it. They have top-level commitment to innovation, good processes in place, and dedicated resources for innovation. They are reasonably good at executing new ideas and have the potential to become extremely good. The other path is to be very good at executing new ideas, but with less structure. These organisations aren’t sinking huge amounts of resources into the process, but they are consciously trying to innovate. Because they lack full commitment to innovation, it might not become systematized, but they also have the potential to be extremely good.
Unicorns: the problem with making a matrix is that you have to put something into every box, even if it’s mythical.
World Class Innovators: Another self-explanatory category. In these firms innovation is deeply embedded in the culture – everything is oriented around innovation. Think Google, Apple, 3M, Procter & Gamble etc.

How to use this:

Here are some things that I think we can do with this:

Use it to make a better picture of how firms improve at innovation: Many of the people in my classes are in firms towards the bottom left, and many of the examples that we use to illustrate points are from firms in the top right (Google, P&G, 3M, etc.). This might be too big a conceptual jump. Not every firm can get to the top right, and neither should every firm aim to. It is more productive to think of this as an incremental process of steps, rather than one big jump.
Track the evolution of firms: we can learn about how to best manage innovation by tracking how firms progress through this matrix. For example, one firm I work with started with No Innovation Capability, then started talking about it and moved to Thinking About Innovation, and now that they are getting better at it they are Average at Everything.
Realise that there are multiple targets to shoot at: Like I said, not every organisation can be Google. Thinking about innovation with this matrix, you can see that all of the categories in the top row are excellent at innovation. However, the farther you go to the right, the more resources you have to commit to build and maintain this level of excellence. There are many situations where you can try to be an excellent innovator with a more bottom-up, less resource-intensive system in place.
Think About the Best Path to Follow: Almost everyone starts by increasing commitment. The danger with this is that you can end up in the All Talk, No Action category. I wonder if we should be figuring out ways to improve capability rather than commitment. Or is this even possible? It’s an interesting question, and you can certainly make a strong argument in favour of increasing capability before you increase how much you talk about innovating.

The main point with The Innovation Matrix is that improving your innovation performance is a journey of many steps, not simply one big leap. The matrix is designed to help us think about this more accurately, and to be more successful at improving our innovation performance.

If you have any thoughts on this, we’d love to hear them.

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