Report 103
A weekly newsletter on creativity, ideas, innovation and invention.
Tuesday, 8 June 2004
Issue 20
Hello and welcome to another issue of Report 103, your weekly newsletter on
Creativity, ideas, innovation and invention.
As always, if you have news about creativity, idea innovation or invention
please feel free to forward it to me for potential inclusion in Report103. Your
comments and feedback are also always welcome.
THERE ARE NO BAD IDEAS: JUST IDEAS THAT DON'T WORK
I have written at length about the value of ideas. Thus far, I have focused
on successful ideas. But unsuccessful ideas are extremely important too; not
least for the amount of damage they often cause. Damage not from the ideas themselves,
but from how badly organisations often deal with unsuccessful ideas.
Probably the most famous unsuccessful idea in recent business history was implemented
by Coca Cola almost 20 years ago. Losing ground to Pepsi and seeing their new
diet cola, with a different flavour than the traditional Coca Cola, gaining
in popularity, Coca Cola decided to update the taste of their world famous drink.
Being a huge multinational, they put their best food scientists on it, experimented
thoroughly and conducted market research in a big way. By the rules of modern
marketing, they did everything right.
But the idea failed miserably. Coke drinkers were more emotionally devoted
to the old flavour than anyone had realised and complained bitterly. Sales of
the new coke bombed.
Fortunately, Coca Cola executives of the time were a bright bunch (and presumably
still are). They promptly admitted their mistake and relaunched the original
Coca Cola alongside the new drink. Sales of the new drink fell sharply and sales
of the original Coca Cola soon started growing again. There is a more complete,
yet still concise description of the new Coke launch at http://www.snopes.com/cokelore/newcoke.asp.
In spite of their failed idea, Coca Cola did two things right, thus minimising
their losses. Firstly, they realised that their idea did not work and dumped
the bit that failed which, it is important to note, was the dropping of the
traditional Coca Cola, not introducing a new drink. So, they relaunched the
original drink.
When an idea looks good and we implement it, it is easy to become overly attached
to the idea. When it does not work, and analysis shows that it is unlikely to
do so, it is hard to drop the idea. It is harder still when you have invested
money in the idea. There is the temptation to hold out in order to recoup your
investment. Still, when an idea is not working and evidence shows that it will
not start working, it is best to drop the idea and count your losses. Hanging
on will only cost more. Imagine the losses to Coca Cola had they stubbornly
refused to relaunch the original Coke and had only sold the new Coke.
The second thing Coca Cola did right was to learn from their mistake. They
learned how amazingly devoted their customers were to the original Coke. They
learned that the flavour of the drink was so sacred, in most people's minds,
that they would not change to an alternative – even if the alternative
tasted better. Doubtless Coca Cola learned a lot more which they presumably
have been implementing in their marketing strategy since.
Indeed, Coca Cola came through their failed idea fiasco so impressively that
there have been rumours that it was all a grand marketing campaign. I doubt
that is true. But, over the long run, I would not be surprised if Coca Cola
gained more from their unsuccessful idea than they lost. But this comes from
handling a failed idea very well indeed.
It is a cliché to say that we learn more from our mistakes than from
our successes. But it is entirely true. When an idea fails, it is important
to learn why. Sometimes it is obvious, as was the case with Coca Cola. Other
times it is not so clear. Often, we are too close to an idea to see why it will
not work. In that case, it is useful to bring in an outsider to look at the
idea and determine what went wrong. With small personal ideas, a spouse, friend
or relative can be useful. For big corporate or organisational ideas, a consultant
may be necessary.
In an organisation, it is important not to punish the person responsible for
the unsuccessful idea. It is human nature to want to lay the blame for mistakes
on someone else. And it all too often happens that the person who proposes an
idea that fails is reprimanded. Sadly, such a reprimand is all to likely to
make her reluctant to propose new ideas to the organisation. As a result, the
organisation looses out on future ideas that the this creative thinker would
otherwise have proposed.
Moreover, in any organisation, acceptance of an idea usually requires a number
of people (no one person at Coca Cola simply said, “let's launch a new
version of Coke,” and launched it all by herself). Implementation requires
even more people. Thus the originator of a failed idea can hardly be held exclusively
to blame.
It is better to involve the originator in the evaluation of why the idea failed.
Compliment the her for the idea and encourage her to continue to contribute
ideas. Chances are, another idea – from the idea originator - in the near
future will more than make up for losses from the failed idea.
If your firm has implemented (or is implementing) idea management, it is extremely
useful to archive with a report all implemented ideas generated via the system.
In time, the archive will be a wonderful tool for learning what kind of ideas
work, what kind of ideas do not, how failures were turned into successes and
more. You probably will not be surprised to learn that Jenni idea management
includes an archiving tool as a standard component of the system. To find out
more about Jenni, visit http://www.jpb.com/jenni/.
LEVELS OF CORPORATE INNOVATIVENESS
In my experience there are five broad levels of innovativeness in business.
1. Hierarchical structure
The hierarchical firm is typically run by a family patriarch who holds all the
power and makes all the decisions. Any new ideas need to be approved by the
patriarch before being implemented.
Larger hierarchical firms have several levels of management. Communication
must go from one level to the next according to specific rules. If someone within
the firm has an idea, she must sell it to her manager, who must sell it to her
manager and so on, until someone sells idea to the patriarch. Not surprisingly,
few ideas make it this far. Moreover, the substantial amount of staff time necessary
to sell an idea up through the firm means that ideas are expensive and unless
the return on the idea is significant, it probably is a waste of time trying
to sell an idea to the top. Hierarchical firms are usually the least innovative
firms.
The irony is that a hierarchical firm is often highly innovative in its early
years, because it is generally founded by a single entrepreneur with lots of
ideas and bundles of enthusiasm. However, as time goes on, the firm grows and
the founder is obsessed with retaining control. Moreover, when he retires, he
generally hands the reins of the firm over to his eldest son,who is not necessarily
the best person to run the firm and, since he achieved his position by blood
rather than quality of work, is often insecure at the top and keen to retain
total power in order to hide his weaknesses.
Firms like these are still very commonplace in Chinese Asia (ie. Parts of Asia
where the ethnic Chinese generally run businesses: such as China, Singapore,
Taiwan, Malaysia, Thailand, etc). This is because firms are often started by
immigrant Chinese entrepreneurs who maintain Chinese social structures within
the firm. So ingrained is such thinking that when I ran a firm in Thailand,
I had to really push staff to share their ideas with me and give me honest feedback
on my ideas. Otherwise staff assumed our company was like most other family
owned firms in the country and therefore assumed I had little interest in their
ideas or opinions. They were wrong.
2. Horizontal structure
Horizontally structured firms also have a hierarchy, however, communications
are horizontal in that people can share ideas with other people throughout the
firm without having to go through strict communications channels. This facilitates
the sharing of ideas, discussing issues relevant to the firm and ensures that
people in the firm have a better overall picture of how the firm operates. However,
such firms do not have any kind of idea management structure in place. As a
result, when someone has an idea, she must make an effort to sell it to the
decision makers – and there may be several - who can implement the idea.
Moreover, very few firms are truly horizontal in structure. Hence a big idea
will still probably have to be sold upstream to the final decision maker
Clearly, an idea in a horizontally structured firm has a much better chance
of becoming reality. However, there are still a number of obstacles that must
be overcome along the way. As a result, a large number of ideas get lost and
ideas are still relatively expensive.
3. Idea Friendly structure
Firms which do not actively encourage ideas, but which are friendly to ideas
can be considered idea friendly. They usually have some kind of rudimentary
idea flow system in place. Typically, this involves one person taking charge
of ideas for the entire firm in small to medium sized firms; or one person in
each department taking charge of ideas in medium to large firms. Staff in an
idea friendly firm know that if they have an idea, they should give it to the
idea person. The idea person will regularly review all ideas and take the better
ones to a committee which will review them and decide which to implement and
how.
Idea friendly firms allow people to propose ideas relatively easily and painlessly.
Moreover, good ideas have a good chance of being implemented. However, because
idea management has not been fully implemented across the firm, there are weaknesses
in idea flow. Importantly, in larger firms, people can only submit ideas relevant
to their work, people do not know what other ideas are being submitted and people
cannot collaborate on ideas. Consequently, ideas are not as developed as they
could be, similar ideas are often submitted simultaneously – adding to
the workload of the ideas person – and numerous meetings are required
to evaluate and launch an idea.
So, an idea has a good chance of being implemented in an idea friendly firm,
but the cost per idea could still be improved and the system is less efficient
than it could be.
4. Innovation driven firms
Still relatively rare, innovation driven firms are organisations which realise
that their prime competitive advantage is their innovative potential. Innovation
driven firms typically share these features:
- innovation is widely promoted internally and externally
- a well thought out and structured idea management system is in place and
operational
- there is a high trust in management
- good ideas are rewarded
- people within the firm are very positive about the firm
Thanks to a structured idea management process, ideas in firms like these can
be seen by all, are reviewed relatively objectively and can be implemented efficiently.
This brings the cost per idea to a very low level. Even ideas which save a few
thousand Euro can be implemented and can bring benefits to the firm.
Because staff are actively encouraged to submit ideas to help the firm grow,
they also become enthusiastic about their employer and have a pride in taking
such an active part in the development of the firm.
5. New micro-companies
Companies with fewer than ten employees are usually relatively new start ups.
They may be highly innovative, they may not. It largely depends upon the founders.
Nevertheless, in the early stages, communications are generally good, everyone
knows each other and many have a stake in the firm. Hence ideas can be shared
and implemented quickly and easily. In this respect, the cost per idea is very
low and the efficiency of implementing and idea can be very high.
However, as micro-companies grow, they will eventually become one of the four
types of firms described above.
Where does your company fit? Where would you like it to be?
THE UNINNOVATIVE CANDIDATE
Watching the American election preparations, one cannot help but to notice
that President Bush's poll numbers are falling as one problem after another
is revealed with respect to Iraq, Al Qaeda and all that.
As the race currently stands, it looks like John Kerry may very will win by
the simple virtue of not being George Bush. That's all fine and good, but some
290 million Americans can make the same claim.
Clearly, Mr. Kerry could do with a more innovative election strategy. Otherwise,
he will have to rely on further blunders in the Whitehouse and continued dissatisfaction
with President Bush. Needless-to-say, it would only take a bit of good news
to put President Bush back in the public's good sight. Then, Mr. Kerry will
have lost.
This lack of innovation is a shame, for Mr. Kerry is an intelligent, well travelled
chap who doubtless has a lot of good ideas. I'd like to see him using those
ideas to brand himself better – if only to make the US election more interesting.
Incidentally, if you see this Mr, Kerry, we'd be happy to provide you with
some innovation consultancy at a 10% discount!
Happy thinking!
Jeffrey Baumgartner
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