|Welcome to the Creative World of Jeffrey Paul Baumgartner!||
Your newsletter on applied creativity, imagination, ideas and innovation in business.
Tuesday, 20 November 2007
Hello and welcome to another issue of Report 103, your fortnightly newsletter on creativity, imagination, ideas and innovation in business.
As always, if you have news about creativity, imagination, ideas, or innovation please feel free to forward it to me for potential inclusion in Report103. Your comments and feedback are also always welcome.
Information on unsubscribing, archives, reprinting articles, etc can be found at the end of this newsletter.
IDEA MANAGEMENT IS FOR WINNERS
A lot of people in the innovation business attach RoI (return on investment) figures to innovation processes and tools. This is particularly the case with idea management which is understandable. After all, few businesses are likely to invest in a business tool that does not promise a positive and significant RoI. However, RoI is not the reason you should invest in an idea management process.
No. The reason you should invest time and budget into an idea management initiative is in order to keep ahead of the competition and increase that lead over time. And if you are not already ahead of the competition, it is imperative that you launch an idea management initiative as soon as you can – before your competitors increase their lead.
Keeping ahead of the competition essentially guarantees you increased profitability. A very strong lead almost inevitably allows you to earn larger margins on your sales. Microsoft earns huge profit margins – well in excess of 70% - on their Windows and Office software products. That's because there are no competing products that are even close in the market place (Open source fans do not need to remind me about OpenOffice. I use it myself. But it is not yet a viable competitor to MS Office in the marketplace). It goes without saying that increased profitability and higher margins normally translate into very attractive RoI figures.
Followers Are Never Leaders
One of the maxims of marketing is that you can never become a market leader if you are a follower. That seems obvious. Yet many companies focus on keeping up with the market leader rather than trying to out-innovate the market leader. For years, Samsung Electronics (a part of the Samsung Group) was a poor man's Sony. The South Korean company made many of the same kinds of products that Sony did: televisions, radios, mid-range stereophonic gear and other electronic goods. But while Sony was perceived as an innovative leader in consumer electronics, Samsung Electronics was seen as a copycat producer of low cost electronic goods.
In the 1990s, that changed as the Samsung Electronics invested heavily in research and development and aimed to become an innovative market leader. They have succeeded and continue to grow. Samsung electronics is no longer a poor man's Sony. Rather they are makers of innovative technical products in their own right. Indeed, Samsung is now the world's largest manufacturer of DRAM chips, flash memory, optical storage drives and other cutting edge products. And Samsung overtook Sony in terms of revenue in 2005 to become the market leader.
Keeping Ahead of the Competition Is NOT only about Products
When we think of companies that trounce the competition with their innovative new ideas, we tend to think of innovative new product development. That's not always the case, Dell rapidly expanded from a dorm room operation of University student Michael Dell to become the world's leading PC computer maker.
However, PC computers are made from a number of standardised components (such as processor board, memory, hard drive, etc). So there is not much room to innovate in the product itself. Michael's initial innovation was to sell his computers directly to consumers, cutting out the middleman. This enabled him to reduce the final cost of his computers while maintaining good margins. It also allowed customers to order computers with exactly the specifications they wanted, rather than having to accept what was available in the local shops.
As time went on and his innovative model succeeded, Dell was able to improve the efficiency of its inventory and manufacturing systems. Since people order Dells by telephone and the Internet, there is no need to make display computers for shops or to manufacture machines for anticipated future sales. Dell computers are not normally manufactured until they are ordered and paid for. This enables Dell to minimise inventory. Better still, Dell gets its money up front to pay for the materials (which are typically invoiced and paid for after delivery) that will make those computers.
Perhaps unfortunately for Dell, their demands on suppliers to provide just in time delivery of components helped the entire industry and Dell has recently fallen from market leader to second place just behind HP. Nevertheless, Dell is a major manufacturer of computers and Michael is one of the world's richest people.
Disruptive Innovation and Incremental Innovation
Another common misconception is that you need massive or disruptive innovation in order to develop an innovative product or process that puts you ahead of the competition. This may be the case to start with. But, thereafter you need continuous incremental innovation in order to keep the lead. Toyota, for instance, mixes major innovations - such as the Prius hybrid (Petrol-Electrical power) car - with incremental innovations that ensures it retains a market lead in quality and efficient manufacturing. Toyota is by far the world's most profitable car manufacturer.
All these Innovations Have to Come from Somewhere
The innovations that enable Samsung, Dell, Toyota and other companies to establish and increase their lead in their respective markets comes from ideas. The initial big ideas have often come from the company founder (in the case of Dell) or a creative thinking CEO. But that initial idea does not last long if you do not continue to innovate.
That's where idea management comes in to play. Jenni idea management (http://www.jpb.com/jenni/), for example, allows companies to solicit business ideas from employees (or even business partners, suppliers or the general public) and it provides tools that enable managers to identify the ideas most likely to be most profitable.
In addition to a tool like Jenni, companies that want to increase their lead over the competition need to establish a culture of innovation which actively promotes creative thinking, collaborative idea sharing and experimentation. Also necessary is a continuous, sustainable flow of ideas (via ideas campaigns in the case of Jenni – see article below for more information).
The good news is that this is all possible and not as difficult as you may believe. The bad news is that it requires commitment, change and budgeting for additional risk. The best news is that we can help. Together with Jenni, we can provide local support (in your language) in your sustained idea management implementation in the USA, the UK, Australia, Norway, Denmark, Brazil, Belgium and the Netherlands. Contact us to learn more.
SUSTAINABLE IDEA MANAGEMENT BY IDEAS CAMPAIGNS
As regular readers of Report 103 will know, my vision of idea management as implemented in Jenni idea management (http://www.jpb.com/jenni/index.php) is based on ideas campaigns. Ideas campaigns are short term cycles which start with an innovation challenge (eg: “in what ways might we improve product X?”); followed by a period of collaborative idea development; followed by peer review evaluation; followed by implementation.
This approach is very effective – indeed, most users of Jenni are generating ideas within days of getting started and have evaluated and selected a set of viable ideas for further development within six to eight weeks. That's not surprising. The ideas campaign approach is based on the principles of creative problem solving (CPS), which is a proven method of creative thinking and innovation.
Many organisations without Jenni or other specialised idea management tool still run innovation initiatives using a similar approach in which a challenge is broadcast to employees who are, in turn, invited to submit their ideas. Typically, some kind of reward will be offered as motivation for participation.
The Potential Problem with Ideas Campaigns
The problem is that some organisation see ideas campaigns as linear events. For example, a consultancy runs occasional ideas campaigns for new business opportunities based on technology trends. They generate ideas, review them and end up with a few hot ideas to implement. Often there is a period of several weeks between ideas campaigns.
Although the result for this consultancy is profitable new business ideas that keep them ahead of competitors, they are not maximising the innovation potential Jenni and their employees offer.
In fact there are two problems. The most obvious is that of missed opportunity. By not running ideas campaigns when they have an effective infrastructure, this company is not generating as many innovative ideas as it could. Secondly, and possibly more detrimental, is the difficulty of maintaining enthusiasm and motivation between infrequent campaigns. Ideas campaigns are most effective when well promoted within the organisation. Rewards, competition and the like encourage participation and creative thinking. And that leads to innovative ideas.
However, if there is a period of several weeks between one ideas campaign and the next, people get out of the habit of participating. Their enthusiasm wanes and they need to be motivated anew in order to participate in a new ideas campaign. This leads to more work on management's part to encourage participation.
The solution, of course, is to run regular, continuous ideas campaigns, perhaps even multiple simultaneous ideas campaigns. Think of ideas campaigns not as linear one-off events, but as part of a grand innovation cycle within your organisation.
That is easier said than done and it is important not to run ideas campaigns for the sake of ideas campaigns. Employees should feel that their ideas are wanted and will be used to solve real problems. (In fact, this is what destroys many innovation initiatives, especially those based on suggestion schemes which lack challenges. Employees feel that nothing is happening to their ideas and so participating in the initiative is a waste of time. Don't let this happen!)
Nevertheless, there are three strategies which can be combined to ensure a firm like yours has a sustainable, on-going ideas campaign based innovation programme.
1. Incremental Ideas Campaigns
In America – in particular – and Europe, there is a tendency to feel that innovation should be about big ideas. New products, major improvements to existing products, overhauling existing processes and so on. Certainly, big innovation is more fun. But mixing big innovation with small – or incremental - innovation helps keep your company ahead of the competition and ensures regular use of Jenni (or whatever tool your firm is using).
Thus, in addition to campaigns on new product ideas, you might run related campaigns for ideas on improving manufacturing methods, packaging concepts, environmental friendliness and so on. You can also run ideas campaigns on less commercial issues such as what new foods to serve in the staff canteen, how to make the main reception lobby more attractive or where to hold the Christmas party. Such campaigns may not make a significant difference to the bottom line, but they keep employees' creative minds exercised, the resulting ideas will make the workplace more pleasant and employees will feel they have a say in the work environment. These are all good things.
2. Far Out Ideas Campaigns
At the opposite extreme from incremental innovation is radical innovation. From time to time, you can liven up your idea management process and really push people to think creatively by running ideas campaigns based on far out, thought-provoking issues such as: “What is the most frightening (for us) thing our main competitor might do next year?”, “What new business areas might we explore?”, “How might we restructure X process from scratch?”, “What might we do to double our market share overnight?” and so on. Devising appropriate radical innovation challenges really depends on the nature and operations of your company. What is a potentially radial action for one company might be normal business for another.
3. Divisional Ideas Campaigns
Very often one division in an organisation will take the lead in their firm's idea management process and run most – if not all – of the ideas campaigns. With Jenni, this is often the Research and Development division as Jenni appeals to R&D people.
A good way to bring other divisions into the process as well as to maintain a sustainable innovation process is to schedule ideas campaign periods across the enterprise. Each division is given a month. During that month, they are expected to run an ideas campaign. The following month they are expected to evaluate ideas and by the end of the month, write a report or make a presentation of the campaign, the best ideas and the implementation plan. Your in-house innovation people – or external innovation experts (such as a member of the jpb.com network) can help each division's managers understand the ideas campaign process, how to craft a challenge, how to evaluate ideas and so on. Demanding an implementation plan ensures that division managers do not simply run ideas campaigns because they are supposed to do so, but that they run campaigns for ideas they expect to implement.
With a tool like Jenni that allows multiple ideas campaigns to be run simultaneously, there is no need to limit each division to running a single ideas campaign only during their scheduled month. They should be permitted to run additional ideas campaigns according to their needs – and with full support. However, they should still be expected to run that big ideas campaign on their assigned month.
Such regular, structured ideas campaigns help maintain employee awareness of your innovation initiative and its importance to the organisation.
The Combination = Sustainable Innovation
By combining, incremental innovation, far out innovation and divisional innovation, it is easy to develop a sustainable innovation cycle of ideas campaigns that generate innovative ideas that can be implemented across your enterprise. And that, of course, is what the perfect idea management deployment should be about.
If you would like to discuss a sustainable ideas campaign based innovation programme for your company, e-mail me or contact your nearest representative (http://www.jpb.com/jenni/contact.php).
IMAGINATION CLUB BRUSSELS WORKSHOP
If you are based in or near Brussels and have nothing planned tomorrow, why don't you join us for an Imagination Club Brussels round-table workshop on “Female Energy and Wholeness”. It promises to be a thought-provoking event.
Date: Wednesday 21 November 2007
The next workshop will be on Personal Branding and will be held on Wednesday 5 December.
If you can join us or want to know more, please contact me. If you cannot make tomorrow's workshop, but would like to be informed of future events – we hold experimental workshops on the first and third Wednesday of every month as well as run occasional other events – please e-mail me. The Brussels Imagination Club's web site is at http://brussels.imaginationclub.org/
THE BRUSSELS IMAGINATION CLUB AND YOUR IMAGINATION CLUB
The Brussels Imagination Club (http://brussels.imaginationclub.org) is a group that meets twice a month for experimental short workshops related to creativity and innovation. They provide an opportunity for facilitators to try out new ideas, for participants to learn something and for everyone to meet a fascinating international group of people with a shared interest in creativity and innovation. If you live in or near Brussels, why not join us? E-mail me to be put on our mailing list.
If you are doing something similar, please add it to our very short list of global imagination clubs. If you would like to set up something similar, take a look at the documentation at http://brussels.imaginationclub.org/clubs/index.php and let me know.
IMAGINATION CLUB ON-LINE
In addition to the Imagination Club Brussels, we also support the Imagination Club on-line discussion forum. The discussion forum is a place to share ideas, stretch your imagination and talk about creativity and innovation. Imagination Club members come from around the world and are a rather amazing bunch. More info at http://www.imaginationclub.org/
LATEST IN BUSINESS INNOVATION
If you want to keep up with the latest news in business innovation, I recommend Chuck Frey's INNOVATIONweek (http://www.innovationtools.com/News/subscribe.asp). It's the only e-newsletter that keeps you up-to-date on all of the latest innovation news, research, trends, case histories of leading companies and more. And it's the perfect complement to Report 103!
Report 103 is a complimentary weekly electronic newsletter from Bwiti bvba of Belgium (a jpb.com company: http://www.jpb.com). Archives and subscription information can be found at http://www.jpb.com/report103/
Report 103 is edited by Jeffrey Baumgartner and is published on the first and third Tuesday of every month.
You may forward this copy of Report 103 to anyone, provided you forward it in its entirety and do not edit it in any way. If you wish to reprint only a part of Report 103, please contact Jeffrey Baumgartner.
Contributions and press releases are welcome. Please contact Jeffrey in the first instance.
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