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Innovation culture over Innovative mindset

A lucrative option for an organization could be to build an innovative mindset automatically, among its existing employees and new joiners, without any planned induction program or through some formal teaching method. Does this proposition sound like an utopia? Well to my mind it is not, as it probably could be achieved through creation of an "innovation culture". Though I am not saying that formal teaching is not an effective tool in such cases, but my intention is to highlight the fact that this hardship can be circumvented with minimal effort. The best part of this innovation culture building process is, it is self-sustaining and brings forth an increasing return scenario, where participants learn by themselves and exhibit behaviors that contributes towards reinforcement of the innovation culture. Let us take an example to understand the role of “culture” first. In Indian government office buildings, if one takes the staircases to climb up he/she would most probably notice the red dots painted on the corner of the walls at each turning, these are nothing but the spitting of employees and visitors who are in a habit of chewing “paan” (betel leaf) and don’t care about the aesthetics of these places. This has been the culture for long and people take up these spitting habits in public places without giving a second thought to it. If asked why, they would probably reply “chalta hain” i.e. “it’s the way it is”. The whole environment acts as a motivator for any new visitor to catch this spitting habit. Now take the example of the metro stations in India, millions of people commute in these subway trains each day but not a single such spots (roughly) could be visible. So what makes the same (similar) people to change their actions? Does anybody taught all of them not to do so? Certainly not, the culture of a metro subway plays the trick, it becomes the invisible teacher. Hence the metro culture acts like a magnetic field and induces certain traits on individuals. In this example both the "government office" and "subway station" shows the power of culture that drives people to exhibit traits aligned to the prevailing environment. Similarly a culture of innovation and entrepreneurship could bring the desired changes in people that are needed in current organizations. But how do we build such culture? I would next highlight three key attributes which when fine-tuned could be effective in regulating the culture itself.

The three attributes I am talking about here are “Leadership”, “Routines” and “Values”. All three together constitutes an essential part of the culture of any individual, organization or a nation. Organizations could establish (and regulate) all of them in a desired way through implementing proper strategic guidelines injected at different stages of its journey from inception towards maturity. According to the age and scale of the organization the time lag, for the changes to take effect, may vary. Like in start-ups, changes would take shape rapidly compared to big old multinationals.

Leadership
Recently I was reading one of the blog called “The Magic Pill of World Class Innovation”*, where the author (Kamal Hassan, President and CEO of Innovation 360 Institute) has described “innovation culture” as the magic pill, which constitutes the success factor for companies like Google, Apple, GE, 3M, Nokia, P&G etc. In his blog he gives example of three types of innovation cultures based on leadership styles, namely “Idea market place culture”, “The visionary leader culture” and the “Systemic innovation culture”. The “Idea market place culture” encourages innovation initiatives from bottom up (as in Google and 3M where employees take the initiative and management inspires employees to be innovative), the “The visionary leader culture” takes a top down structure where innovation is primarily driven by top leaders (as in Apple or Microsoft) and lastly “The systematic innovation culture” taking a combined perspective of the previous two (as in GE, P&G or Nokia)

In all companies it is the leadership that decides how they are going to build their innovation landscape and some of them like the ones describe above (which are considered to be the benchmark among innovative companies) are superior in building such culture due to their superior leadership skills. The leadership plays a crucial role in recognizing, facilitating and implementing effective principles and guidelines and sets the direction in which they want to take their organization. Taking the gaming parlance, I could say that the leadership must engage itself until preparing the playing field and its rules (values) and then must refrain from interfering during the actual game or only interfere at times when players break the rules. The players (employees) would automatically choose the game (organization) they want to play and then would adjust to the rules themselves by setting their own routines.

Routines
These are the activities that the employees of an organization develop by repeated practice. These routines provide consistency, accuracy and efficiency to the activities performed. It constitutes the tangible part of the organization culture that people can see and get inspired by. Through these routines the culture of the organization becomes visible to the outside world and they help the new employees to align their habits with the organization culture. Hence I considered it to be the functional part of the culture, i.e. culture at practice. Though essentially it is the employee prerogative to build (adjust) his/her own routines in accordance with the company culture but the Leadership and Values are the two forces that act (intangibly) on this routine building process.

Values
This is the fundamental force that associates company’s culture with its employees. These are the guidelines or unsaid rules that the employees share as the cultural tenets within organizational premises. Some examples of values in innovating companies could be openness to new ideas, tolerance towards failure, celebrating creativity, sharing ideas, judging outcomes rather than people, freedom of speech etc. The values are essentially set at the inception of a company through guidelines (mission, vision) set by the top management or leaders, who themselves then comes under the diction of the prescribed values along with other employees. But through setting interim guidelines these values can be adjusted over time, but it may take some time to establish a shift in value system once organization becomes mature and big.

To conclude I must say that building the right culture is probably the only way to motivate people to achieve an innovative mindset in a sustainable manner. Leadership, routines and values are the parameters that constitute the crux of the organizational culture which can be fine-tuned according to need. The good news is that we only need to concentrate on building the innovative culture and it would then take care of the rest.


*http://www.business-strategy-innovation.com/wordpress/2010/08/the-magic-pill-of-world-class-innovation/

How an innovation ecosystem may look like

An ecosystem is a self sustaining system where its member organisms can flourish and grow through a complex process of interdependence among themselves and their surroundings. Similarly an innovation ecosystem could be envisaged as a system which supports the birth and growth of innovative activities in a self sustaining manner. In this context I would like to state some of the components and their interdependence that such an innovation ecosystem is composed of. This model that I am going to present here would provide a partial resemblance of a more complex system that in reality could affect the successful implementation of an innovation paradigm. By saying partial resemblance I would invite addition/deletion of elements to the model as and when suited keeping the basic framework as is. To start with I would divide the system in five fundamental parts; they are “Actors”, “Resources”, “Process”, “Outcome” and “Drivers”. Here “actors” are the entities, which provide the “resources” and support the “processes” for innovation. These actors could be “Government”, “Industry” or “Institutions” (legal, financial, educational). The “resources” we are talking about here are the fundamental ingredients of any innovation cycle; they are “human capital”, “money” and “existing infrastructure” (labs, facilities, transport, IT etc.). Coming to “process” it can be said that these are the activities which are implemented by the “actors” through engaging the “resources”. The important processes pointed here are “networking”, “IP management”, “decentralization of activities”, “coordination between actors”, “spread of innovation awareness” and “addition of supporting infrastructure”. The “outcomes” represent the end results of the entire system in place. For example we could adjudge “new inventions” as one of the end results which is generated by engaging the human capital, money and infrastructure supported by the processes listed above. Here I would like to highlight the quintessential role played by the “drivers” for mobilizing the “resources”. “Resources” are primarily driven by combination of such “drivers” to produce the “outcomes”. For example “new inventions” are influenced directly by drivers such as “motivation”, “competition” and “pride”, whereas “entrepreneurial ventures” are directly affected by drivers like “motivation” and “pride” and indirectly through “competition”. Each “outcome” can further influence a “process” (new invention affects effective IP management), a “driver” (new invention affects competition, increased standard of living affects pride), an “actor” (wealth generation affects Government revenue, new market affects the industry) or another “outcome” itself (new invention affects entrepreneurship, entrepreneurial venture affects employment, societal absorptive capacity affects new market formation).

Let us now discuss about some of the specific elements which may cause ambiguity in explaining the model. First I would mention the role of decentralization and how important a process it could be to spread innovation awareness. Once the infrastructure building are decentralized i.e. the supporting facilities are created or renovated at different parts of the region, automatically a broader section of people start getting curious about the activities (as they see it expand locally) and eventually come to know about the initiatives. Decentralization in turn necessitates stronger networking and coordination between actors. Second, we would see what is meant by societal (knowledge) absorptive capacity, it is the knowledge accumulation among the society as a whole by which they can easily adapt innovative products (technologically advanced) and use them. Hence the “time to get used to” is minimized for innovative products giving rise to new markets (For example, in developed regions like Scandinavia people are more used to technologically advanced products and its frequent up gradation, also there is a huge scope for such absorptive capacity development in developing country like India, opening new market horizons). Third, I would discuss about the role of pride as a driver. Here pride should be understood as an awareness of being part of a group with superior skills (like German pride about their engineering capability or Brazilian pride of being a great footballing nation), which helps in creating a mindset that drives people to have a natural inclination towards the pride factor (in the example “engineering ” for Germans or “football” for Brazilians).

The above figure depicts an overall picture of all the parts and influence individual elements have on others.

The vicious cycle of connectivity, data generation and innovation

In the last one and half decade or so the world has seen a boom in data volume. Information Technology sector has grown leaps and bounds and it has invaded practically all other field of study and work. The main reason behind this deluge of data has been the improvement in connectivity tools, its geographical reach, low cost storage and transmission. Digital technology powered by computers and the internet has just destroyed the barriers of distance for data sharing. I hardly remember when I have last visited the post office to send a letter to my beloved ones. Mobile technology has complemented by adding mobility to this exchange phenomenon. It’s truly mind boggling to see so much change in such a short time. Now what has been the consequence of this phenomenon among people? Well, the benefits are there for all to see. By sitting inside home we can now send and receive hundreds of mails to/from different people in a jiffy, can organize group conference including people located at different corners of the world, socialize with friends and unknowns through social sites and a lot more. People are becoming increasingly aware about the distant world and getting exposed to new practices and cultures, the volume of which was almost unthinkable 30 or 40 years back. One of the most important changes this data boom has brought about is empowering the rural world by extending its reach to the rural populace. Rural population (multiple in number than the urban population) in remote areas are now being informed about the change in political and market conditions within hours or minutes of its occurrence. This super connectivity is having an impact on the political and industrial landscape of nations and globe. As people are getting empowered by information (patterns of data) politics is reshaping to adjust the new demands of the collective mass. Initiatives like “Inclusive growth” are being discussed in the political as well as academic circles. Similarly, industry (corporations and firms) is being exposed to a new kind of challenge i.e. to weather the accelerating “change” in market demand and technology frontier.

The key point from the about discussion are presented below in a logical sequence
1. Connectivity among people are increasing
2. The more we connect the more is the data generation and exchange
3. People getting more informed and hence more discerning (smart)
4. Smart people are more demanding than before
5. More competition among firms to serve the smarter people
6. Innovation through connectivity




So this is a non-stop positive loop of increased connectivity resulting in data overload. But the question here is how to tackle this?

There is no single panacea to the problem. But a probable answer to this question, I would say, may be to focus at those components in the loop that can be manipulated easily and which in turn could influence others. The two components that could be the subject of manipulation are, data handling (stage two) and bringing novelty to the market through innovation (stage 6)

Interpretation of data: Regarding data all firms have a big role to play, why? Because the interpretation of data is subject to individual mind and each firm is composed of human resources of different caliber. A set of data does not have any special significance unless it is interpreted in a meaningful way, giving rise to knowledge. Though all firms are generating knowledge from the same data pool (which is mostly common nowadays, as data is available to all), but this knowledge is not necessarily same for different firms. The competitive advantage lies with the firm that generates more pertinent knowledge given a particular context.

Innovation through connectivity: The job is not done by merely interpreting the available data, the key is to use that knowledge and coming up with new ideas by taking help of the existing and new networks. These ideas are then screened and processed to generate new product and services (Innovation).

The cycle depicts how innovation is aligned with the ever increasing connectivity and data generation. They all have a positive correlation.

Ideation: catching or generating ideas?

All innovations start with an idea, and the process of generating, developing and communicating that idea is called ideation. Indeed this is one of the accepted definitions of the term, but here I would try to look at the first part of it from a slightly different perspective. My contention is with the term “generating” ideas. Do we really generate ideas? If so then why do we come across phrases like “seek an idea” or “catch an idea” or even “come up with an idea”. In all these phrases either we are looking for an idea (seek), grabbing an idea (catch) or trying to bring an idea to our mind (come up with). The term “generating” essentially conjures up in our mind the image of processing or transforming a given set of inputs to a desired output, like the way we generate electricity from coal or generate public opinion through calculated political discourse. But while talking about a new idea it is always a spark and something unique that suddenly comes to our mind, the idea itself is a serendipitous outcome that we have never planned for. So I would term it as “catching” instead of “generating”, which is done through reflection of our mind on varied things. It could be proper to state here that, though an idea is something we catch by chance, but we can probably set a context or create an atmosphere to catch them. Let us now see the other two parts of ideation i.e. developing and communicating ideas. They form the stages of natural progression after we catch an idea. Development could involve screening an idea, with the help of already existing knowledge, to check its feasibility i.e. to know if it is in tune with the current context. If so, then more accessories and add-ons are combined to further mold it to a satisfactory level. Once fully built, the idea is then communicated to the next stage.

In the present day organizations the need to catch and develop new ideas are growing. This trend is concomitant of the rapid progress in technology, shift in consumer needs and ever increasing competitiveness. Any organization, irrespective of its size and reach, is challenged by this idea shortage (which ultimately hinders innovation and growth). Without a process of ideation in place a firm could well ruin its future prospects and even that to the extent of its obsolescence. Now let us draw an analogy of this process of idea capturing with that of fishing. In solitary fishing expeditions a fisherman, with his fishing rod dipped in the water, waits for an indefinite period of time, before he experiences to his delight, a sudden pull on the reel. Also the fisherman have no preconceived notion about what fish (size, type, quality etc) he is going to catch. On the other hand things he could be cognizant about are his preparations i.e. if he has a strong rod, strong thread, attractive bait and an efficient hook. Knowledge about the fishing environment like the pond, lake could provide some general idea of the catch but never the exact one. In a similar way a small organization or a start-up catches ideas through its individual employees (ex. entrepreneurs), by constantly looking around. The entrepreneur needs to be patient and vigilant before he, to his joy, comes across an idea. He could not anticipate before, like the fisherman, the quality of the idea. The more receptive is his brain, the better is the catch. But this is an one man show and not a concerted effort. Coming back to the fisherman story let us now look into the organized fishing expeditions in the deep seas. While venturing deep sea the group of fishermen face the same problems as the solitary fisherman i.e. they don’t know exactly what type of fish they are going to catch, the yield rate or the time it may take to catch them. Additionally they face another problem i.e. the problem of coordination among themselves. Hence along with preparation and possession of proper fishing equipments there arises an additional need for some kind of management process to synchronize the group. But this collective effort produces much greater yield and more profit than a solitary fishing venture. Similarly a large organization also needs to be prepared for the idea catch in a systematic way. As only human mind can catch ideas, hence making a connection between them and facilitating the free flow of thoughts would be essential. A well collaborated effort with proper management support would create an efficient network (idea net) where the ideas would get trapped eventually, whereas several uncoordinated and scattered "one man shows" would leave enough holes for the better ideas to slip through. The bigger is the human network, the heterogeneous is the mix the wider and stronger is the idea net.

A clue here, for the starters, would be to focus more on building the idea net rather than counting the ideas, that will follow suit anyway.

The innovation funnel

The innovation funnel is a well known representation of the innovation process discussed widely in variety of innovation journals and articles. Let us see briefly what it means and how it helps in managing the new product development process. Simply put this structure is a quite straightforward approach, which consists mainly of five consecutive stages namely; idea generation, concept screening, analysis of selected ideas, development (or prototype building) and launch (market diffusion). All these stages are separated by stage gates and are ideally independent. But in practice there could be overlaps between two adjacent stages as well.


I would not get into details of different stages and their activities here, which is quite broad and each stage would necessitate separate discussion, but would like to point out some simple and important facts observed in this model. This model beautifully summarizes the contradiction between flexibility and efficiency i.e. it attempts to combine the structured part with the unstructured part of new product development. First, the stage gates present in this process (ex gate 1, gate 2 … etc) impose the restrictions (process guidelines) that check the whole process from going out of control (provides efficiency), whereas within the individual stages there exists freedom for participants to show their creativity and talent (but within the prescribed guidelines of that stage). The second important thing to observe here is the gradual shift from chaos towards a structured process. As we could observe in the idea generation phase there exists highest uncertainty, so the need of utmost flexibility and freedom for the participants, and the goal is to involve people from varied field (external or internal) to generate as much ideas as possible. Any control here would limit the creativity. In the next stage, i.e. concept screening, the goal is to select few good ideas from a bounded pool of ideas, thus putting a restriction on the number from which the choice should be made. This “bounded pool” is an example of one of the initial restrictions/controls imposed on the process. Moving further in the analysis stage, the objective shifts towards expanding/building the selected ideas by taking into consideration the relevant resources available and also the existing market conditions (these are additional restrictions put in place). Next in the development stage the expanded concept(s) is/are subject to strict production practices and any slack in this part is consciously avoided (full restriction and a control process in place). The launch stage involves a highly calibrated (structured) approach for diffusion of the product in the marketplace (little margin of error to achieve commercial success). In the above discussion we could observe the stage gates, acting as regulators, are gradually facilitating the random process to turn into a stable outcome. The guidelines they use are normally derived from a strategic plan.

The outcome (quality) of the whole funnel is thus influenced by three fundamental parameters. First the efficiency of stage gate regulators (rules and guidelines as part of the strategy), second the quality of ideas generated at the initial stage (efficiency of the ideation process) and third the time span for each stage of the process. Hence we can summarize the discussion as:

Innovation quality (ex. for NPD) = function (regulating strategy, idea generation, time)

What is Innovation?

In contemporary times the term innovation could be interpreted in many different ways by different sections of people. For example to a scientist any new discovery could be an innovation, to an engineer a newly developed design could be an innovation, to a software professional a new piece of code featuring unique algorithm could be an innovation and to a marketing guy new market discovery could be an innovation and so on. But, wait, could these (unique) achievements alone be termed as innovation by definition? Well, according to the innovation management scholars and practitioners they are not. Then what is the actual drawback or missing link among all of them that restricts them to be called as true innovation? It is the utility of these new achievements and their associated market value. So, in this example when the scientific discovery, engineering design, software algorithm or the newly found market becomes commercially viable by generating value among its users then only they are called Innovation. Hence in short Innovation is the discovery of a new thing or new way of doing things plus the commercial value generated by its utility in the market.

Innovation = New thing or New ways of doing thing + commercial value

The definition derived above is one of the most fundamental descriptions of innovation and any further discussion on the subject would always hold this understanding associated with it.

Innovations could be stretched in its magnitude, and with this variation of scale, all innovations are either categorized as incremental or radical. In reality this variation could have many nuances and it might be little fuzzy sometimes to use these terms in their absolute sense. For example a patent created by any large organization could be one of its incremental improvements but the same patent in a smaller firm could bring a radical strategic change. But in general (taking a broader picture) innovations that change the equation of any industry or any market and sets new rules of the game are termed as radical innovations (digital photography, electric bulb or computers). On the other hand small improvements on the existing products and services are termed as incremental (upgraded versions of any software).

Though an effort was made to understand the term innovation above but it’s just not enough, rather it’s only the tip of the iceberg. The true essence of the term could only be captured by repeated discussion about its application, attributes, types, scale, process, management, relevance and implications on modern industry, market and society at large.