Innovation by Numbers

A review of The Innovator's Guide to Growth by Scott D. Anthony, Mark W. Johnson, Joseph V. Sinfield, Elizabeth J. Altman of Innosight Consulting

Having toiled in the world of new product development, creating breakthroughs for highly successful Fortune 500 companies, I know all-to-well the tension between the need for measurability, scalability, predictability and repeatability on the one hand, and the voodoo, fairy-dust, alchemy, lightening-strike elements of creativity on the other -- both needed for successful innovation. And those who are charged with leading innovation on the client side tend to be adaptive (as in Kirton's KAI) by definition. After all, they function in a corporate environment, which likely requires such adaptive behavior and is one in which they are also held accountable for success as defined by return on investment, working within existing structures. As such, the fairy-dust piece of the process tends to scare the crap out of them. It's too unpredictable.

What to do?

To the rescue is the recently released book by Harvard Business press, The Innovator's Guide to Growth. The authors state, "This book attempts to provide practical tips and techniques to help channel your inner Edison. Innovation doesn't have to be shrouded in fog; nor does it require a lightning bolt of creativity. That is not to say innovation is risk-free and that creativity isn't important. Risks remain, and creativity is critical. But following a consistent approach can lead to more consistent results ... The fundamental message of this book is that using the right processes and principles can meaningfully increase your chances of creating growth through innovation." Their mission -- "to change the world of innovation from one of frustrating inconsistency to one of orderly patterns."

They describe their target audience for the book as "senior executives and middle managers within existing corporations that are seeking to create new growth business." Also anyone with "a vested interest in innovation."

The authors know what they are talking about. Their insights come from years of working with successfully innovative companies, including P&G, J&J and Motorola, to name but a few. Their focus is on how to create a business culture that tends to cultivate and advance "disruptive innovation".

And, you might ask, "Why is 'disruptive innovation' so important?"

The authors answer, "Of the companies [that showed the] best return to shareholders between 1970-2001, seven of the top ten were disruptors." So disruptive innovation is key to success, but what is also key is that disruptive competitions tend to be won by new entrants to the market. So, what is vital to established companies is to find a methodological and consistent way of being disruptive, as this is not their natural tendency.

What this book offers is a prescription for how to make it just that -- a natural tendency.The Innovator's Guide to Growth further asserts that there is a way to integrate the disruptive innovative dynamic into any organization. They define the present as an "era of pattern recognition" wherein wizened innovators are moving from a process of "random trial & error" to one of "predictable paint-by-numbers rules" that can provide consistent growth, with reduced risk, through innovation processes. The authors add, "While we are not yet at the point where innovation is [entirely] paint-by-numbers predictable, patterns of success and failure are coming into sharper focus by the day." They assist their reader by providing a book chock full of resources, including checklists, question guides, templates, tools, worksheets, activities "sprinkled throughout". They can also be found at www.innosight.com/resources.

Altman, Anthony, Johnson and Sinfield again emphasize that, "The fundamental premise of this book is that following the right steps and putting in place the right structures can allow managers and entrepreneurs to improve significantly their odds of creating profitable growth businesses. This view contrasts with the prevailing stream of thinking that innovation is random and requires creative genius. Our belief, backed by market evidence, is that following the right steps can enable any manager to create a growth business successfully." Equally key, "Senior managers who implement the right systems and structures can free internal innovators from the shackles of processes and policies that are not conducive to innovation."

They describe key elements that need to be in place for such an initiative to work are:

- The core business is in control

- A game plan for growth

- A mastery of the resource allocation process

Among they key insights the authors share that lend credence to what they preach:

- Innovation is less random than we think -- there is an innovator in all of us

- Creativity is important - but nobody needs to be a certain "creative type"; by following this process, you can be creative

- Innovation always occurs at the intersection of disciplines, as a result of different perspectives, not individually creative but collectively creative & collaborative

And they also suggest a three-step process for disruptive innovation essential to success:

1. Identify market opportunities

2. Formulate & shape innovative ideas

3. Take ideas forward

A key point of the book is that disruptive innovations are a different animal. Sustainable innovations tend to be incremental -- because they address the needs of the company's "best customers". As such, they tend to ascend a linear vector that takes innovation into more complex advancements, based upon the underlying prevailing model. Layered on that is a higher level of sophistication and complexity that is often more advanced than the consumer. While these innovations veer more toward complexity, paradigm-shifting "disruptive innovations" may move more toward aspects such as simplicity, acceptability, affordability, convenience -- they get into a broader, deeper, redefined space that finds a new type of consumer among their most "demanding customers".

As examples, the authors cite Wii, eBay, iPod and QuickBooks TurboTax, Skype and YouTube. TurboTax is a particularly enlightening example, as small business owners -- their customers didn't want more accounting, but really no accounting -- in short, a simple user-friendly way to insure that their businesses had sufficient working capital. That simple realization and designing the product to those needs, has resulted in an astoundingly successful business.

Other companies, like consumer products giant P&G, created whole new categories around the needs of demanding consumers, seeking new, simpler, cost-effective solutions - with products like Febreze, Swiffer and Crest Whitening Strips. Disruptive innovators, characterized by these P&G products are "Masters of the Art of Trade-offs. Their offerings typically aren't better along traditional performance dimensions. In fact, they are typically just good enough along dimensions that historically matter in the mainstream market. Disruptors redefine the notion of performance by pulling overlooked innovation levers. Simplicity. Convenience. Accessibility. Affordability. All these are hallmarks of disruptive innovation."

P&G runs its innovation out of a smaller group within Procter & Gamble called the Future Works Division. The authors assert that having a small group 100% dedicated to innovation is best. "100% of 10% is better than 10% of 100%" they say, referring to a smaller unit completely devoted to making disruptive innovation happen. Those wanting to create such an entity within their organization, must realize that it will take no less than a three year commitment.

Among the benefits that I see that their philosophy and mode of implementation offer are:

- Reducing anxiety among those charged with making innovation happen

- Moving those with adaptive behavior preferences to the right on the KAI scale to more routine innovative behavior (on roller blades with jet packs)

- Creating a common framework for dialogue, planning, process and collaboration for innovation teams, no matter what their expertise or style preference

- Establishing consistency and progress benchmarks so that innovation becomes part "of the routine" - establishing a method to the madness

- As in classic Osborn-Parnes creative Problem solving (CPS) it recognizes that everyone is creative

- Focusing on reliable, scalable techniques to create business growth

I believe this book -- and this is implicit in its target audience -- is more for the "non-creative" or the non "distinctively creative" person. It asserts that innovation is possible through well defined processes and the collaboration and convergence of diverse people working with a common cause in mind. I would also argue, that the "distinctively creative" type of person would also benefit by learning new modes of structure and behavior - and thus ways of communicating with their more adaptive-prone, left brain counterparts.

I would add as well, and I think the authors would agree, that innovation cannot happen without their creative spark and energy. But their point is well taken --not unlike The Wizard of Menlo Park -- Thomas Edison's observation that innovation is 99% perspiration and 1% inspiration, and that much can be accomplished through well-designed systems -- by not so exceptionally creative people -- in the way that we typically think of them. So while creative catalysts and ideational fluency may still be vital to success, a sound process will take you much of the way there.

Finally, in the authors' words, "If you want to redefine a market, create a new one, or defend against attack from below, disruptive strategies are essential to success ... [yet] this book is not really [just] about disruptive innovation, but rather practical tools and techniques that allow innovators to see and do things differently." I believe that the authors have succeeded in providing the modern innovator with a particularly powerful guide or recipe book to allow this to happen. In The Innovator's Guide to Growth, they have created a great resource.

DJS 10/08