Re-publishing from Forbes.com (Original link).

 

What does innovation mean?

It used to relate mainly to products, and that’s still important. But over the last decade or so, businesses have been putting more and more emphasis on innovating new services and business models as well. In light of this, it’s time companies take another look at how they manage innovation.
Innovation is one of the least well-managed areas in most companies,says David Midgley, a marketing professor at INSEAD and author of The Innovation Manual. “This leads to wasted resources and costly mistakes. It’s not the effort that companies put into innovation that decides success. Instead it is how firms go about doing innovation that separates leaders from the rest.”

Most of the information about managing innovation available today is siloed, addressing specific issues such as technology or finance. But as the boundaries of innovation expand, more managers will need practical knowledge and tools that transcend these functional silos.

 

More than good electronics

In addition to providing this practical knowledge and the toolkit to go with it, The Innovation Manual examines what is known about innovation management and asks if it still applies today when an innovation may indeed be a product, but a product with a service attached and driven by a totally different business model than a few years before.

To illustrate this idea, Midgley uses the example of the Apple iPod. Apple has sold hundreds of millions of iPods since introducing them in 2001. But, he says, that success is not because the iPod is an innovative product as there are many similar devices. The real point behind the iPod is the service that allows the customer to easily download music and the business model that allows both Apple and the music industry to make money from those downloads.

“Apple negotiated a business model with the music industry that allowed everybody to get what they want — the music industry to get their royalties, Apple to sell downloads and the iPod itself, and the customer to be able to select the songs they want rather than putting up with the compilations the industry offered because of its previous business model,” Midgley says. “These are Apple’s real innovations – the rest is just good electronics.”

 
No longer simple

Back when innovation related only to products, it was easier for companies to manage. One group of employees designed the product and passed it on to another group who sold it. But the broader boundaries of innovation have complicated things for company managers responsible for delivering innovations to the marketplace.

Implementing an innovation today may require making major organisational changes. For example, implementing an innovative service could mean making changes to employee training programmes and company procedures. A business model innovation entails getting everyone to understand the new way of making money, or, if this is not possible, setting up a new business unit.

To understand what sort of organisational changes are required for an innovation, a manager first needs to understand what sort of challenge the innovation is going to pose. For Midgley, there are three categories of challenge – the customer, technology, and business model. Understanding which category the innovation falls into is the key to understanding what steps the company needs to take next.

“If it’s a customer challenge, then you need to orient your intelligence and services one way,” Midgley explains. “If it’s a challenge on the organisational side, then it’s another way. If it’s a breakthrough in all three then you might want to think it’s a big risk.”

The customer challenge addresses how far away this innovation is going to be from the way the customer usually thinks. For example, Nintendo designed the Wii video game console to appeal to an entirely new customer base, namely people who wouldn’t ordinarily think of playing electronic games.

“What’s interesting in the Wii is not the technology, which is fairly straightforward,” says Midgley, “and it’s not the business model, because it’s actually quite a traditional business model for the gaming world. The really innovative and creative thing is making games that appeal to the grandmothers, or to families or the people who don’t play ‘shoot-‘em-up games’ on PS3 (PlayStation 3).”

The second type, technology, asks how much of a challenge the innovation is going to be for the organisation. The PS3 posed a typical technology challenge for Sony because the company was inventing a new superprocessor for their existing game console and customer base. The business model challenge addresses how the company can get money out of the existing value chain. This is what Apple overcame with the iPod.

The beginning is the end

The ultimate goal of any innovation is to create value in the minds of the customers. Midgley identifies five key tasks the organisation needs to do to accomplish this and provides the tools for managers to use to accomplish the tasks.

The first task is organisational and involves setting the direction and fixing the rules for implementation. The second is setting up the team. Teams are key to success, so the firm needs to select the most appropriate team for the type of innovation.

Task three involves working with customers as co-creators. “You get much more mileage by working with the right customers at the right time than by suddenly popping up and saying: ‘Here’s our bright and shiny new thing, how do you like it?’” Midgley says.

Once the goal has been defined, the right team selected, and a solution defined that meets a strong customer need, the fourth task is to make the necessary organisational changes to deliver the solution. This is especially true for service or business model innovations.

The fifth task is to build momentum in the market for the solution. Managers need to design and create markets for innovations with a thorough understanding of how customers accept or reject them, which is something companies don’t always do right.

For example, the personal digital assistant (PDA) was a highly innovative product which flopped when it was first introduced by Apple, Tandy and Motorola. These companies didn’t choose the right target customer to get the market moving, nor did they understand how these customers would get best value out of the innovation. As a result, all three companies ended up emphasizing the wrong features of the product.

Palm then introduced essentially the same product but, by studying how their customers would use it, the company was able to market a feature with a strong customer appeal. In the end, their highly successful version of the PDA sold in the millions.

By Robert Goldsmith
For more on the Innovation Manual, go to: www.theinnovationmanual.com

[This article is republished courtesy of INSEAD Knowledge http://knowledge.insead.edu Copyright INSEAD 2008]

Original Forbes.com link is available here.

 

In last few days I have been fortunate enough to participate in the workshop for LEAN service framework. And thus, I am trying to share my experiences and learning on LEAN here.

The LEAN framework originates from the manufacturing system developed by Toyota called Toyota Production System [TPS] that pursues the principle of optimum streamlining throughout the entire system through the thorough elimination of waste and aims to build quality in at the manufacturing process while recognizing the principle of [ongoing] cost reduction. It also includes all the accompanying technology & tools necessary to accomplish those aims.  [Reference .. here]

The process that Toyota developed for Just-in-time production was called TPS until 1990. MIT researchers tossed the term LEAN in their 1990 book called “The Machine that Changed the World” to describe the principles of Toyota Production System. Thereafter, of course, the process was known to the world as LEAN Service Framework.

In a nutshell,

LEAN is an integrated system of principles, work practices & processes that empowers the operational users to drive the relentless pursuit of perfect customer value creation. 

Although LEAN was innovated and started in the manufacturing industry and especially at Toyota, it, over the years grown out of the manufacturing industry and into other verticals, not to mention the IT/BPO industry.

LEAN underpins 5 principles in the framework as follows,

 

Lean Principles

 

 

 

  • Eliminate Waste – As per the LEAN principles, the waste could be due to the idle time spent by the employees waiting for work, or spending extra hours to exceed customer expectations (without customer asking for it), excessive testing etc., activities and all such activities that do not add add direct value to the customers.
  • Eliminate Variability – This talks more about complexity of the work within the team. LEAN suggests eliminating the variability of work done by the employees so that activities & individual performances are streamlined to carry out typical activities. This also talks about the external work that comes within such as ticket trend, business requirements etc., and suggests to streamline.
  • Eliminate Inflexibility – This suggest more about the resources capacity and the work segmentation and align the efforts and create skill pools so as to better utilize the knowledge, performance & work practices against repetitive / common tasks.
  • Performance Management – LEAN suggests to compute the performance of the individuals as well as the team and making the results publish to the individuals / teams and discuss with them on a regular basis. LEAN recommends that regular performance discussions enhances the team morale, gives them goal to enhance performances etc.,
  • Involvement of workers – LEAN, more than a process is more of a philosophy and change in the thinking of the workforce and suggest to have the workforce participate and understand these principles so they themselves are aware of the waste being created around they can eliminate themselves.

 

Many IT companies have implemented LEAN successfully. IBM has been doing the LEAN implementation for the customers since last 3+ years. Over the years, being LEAN organization has been a selling point for the IT vendors and equally the customers have been demanding. 

The benefits of LEAN include reduce waste, reduction of inventory costs, cross trained employees, reduced cycle time & obsolescence, high quality & reliability and may more.

 

This, of course was a drop in the ocean of the knowledge of the LEAN framework, even for me. If you are interested in knowing more and reading more, suggesting the following reading

Principles of LEAN Thinking

Lean Manufacturing  &  Lean Software Development

What is LEAN?

Benefits of LEAN

LEAN – The Machine that changed the world !

Bye the way, if you have read the above carefully, the following video might tell you something.  Have a look (with audio ON) and let me know what you think ?

 

Caltex – going extra mile !

 

I have moved to a new hosted solution for my blog now.

Yes, its something I have been wanting to do for a very long time now.  Last few days I was busy in the installation & configuration of the new wordpress blog for my website, and hence the absence for last few days.

Anyways, so henceforth all the new blog posts will appear on the hosted solution and will no longer be posted on the earlier wordpress.com account. Anyways, the URL http://sollerthoughtscouk.thirdbuttonred.com has been ported successfully so it should be transparent to you all.

Hopefully the movement to the hosted solution will give me good capability to build even better blog site and add offer few more features on the website.

Cheerio !

Guess what .. this was a response given to me by a non engineering fresher graduate in response to a question, “where do you want to see yourself in 2 years time if you join us?” !

Of course, the person was not selected. Moreover, this was not the first time I got such an answer from the fresher non-engineering graduate who is aspiring to be an IT professional.

Its such a shame and probably now has come in a highlight because of the wonderful movie 3 Idiots, that our education system promotes only competition of marks and not of knowledge.

I wrote an article last year about the lack of innovation in India (not Indians) and the root cause in education system and for some reason, it was evident that the education system also gives importance to role or status of a person rather than the knowledge he has got within.

Another thing that made me unhappy about the answers I received during the interviews was the fact that none of the candidates gave me an answer that In next 2-3 years I want to be more knowledgeable and seek expertise in a technology and domain. 

Every one wanted to be A project leader .. in 2 years !

 

Recommended reading

Lack of innovation in India – Root cause in education system?

I am sure in the flood of wishes over the new year, quite a few of you would have received the wishes in the form of “BCC” email.  If yes, what was your reaction? Do you prefer receiving the wishes in the “BCC” ?

For some reason, I have not been a fan of either sending or receiving the wishes to your office colleagues in BCC. It just doesn’t feel right to me. I somehow feel it devaluates the wish and the person to whom you are wishing.

I know its more of the matter of convenience of sending everyone a wish in one single email without anyone knowing the final list of recipients. However, the convenience is for the sender than the recipient of the email.

There are some scenarios where you want to send email to a group of individuals where you do not want the recipients to see or know each other’s address or do a reply-all and start an email chain. Use of the BCC makes sense in such scenarios.

However, at times I have seen a manager using the team’s address in the BCC and sending wish emails to the team. This, to me, is utter silly and does not add value.  If you are anyways sending the email to the team using the team’s distribution list, why don’t just put that in the TO list and send the email?

If someone creates an outlook template (2 mins job) and tries to send the personalized wishes to everyone in the team, it would make everyone feel a lot better and feel bit more valued than receiving an email wish through BCC. Also, there are tools available in the market that would allow you to do so .. so why don’t just use them?

Any comments?