Audacious Ideas

With most ideas, there is a correlation between how audacious or risky an idea is and its potential for economic reward. Disruptive or radical innovation produce  ideas which disrupt industry and dramatically change a business sector. These are audacious and highly risky but if they work out as hoped, they bring huge rewards.

Niklas Zennström and Janus Friis developed their own voice over Internet protocol (VoIP) and then built a business around it - Skype. They offered free telephone calls over the World Wide Web as well as cheap calls via the Web to ordinary telephones. Their business model was audacious. A couple of unknown Swedish guys took on the world's telephone service providers. Their idea was both innovative and seriously risky. Potential users might well have decided they did not trust  VoIP or Internet Service Providers who  might have tried to block Skype calls. In which case, the two Swedish guys would have lost a lot of money.

Skype has been a huge success story. There are more than 100 million Skype users around the world and the two founders sold their company to eBay for USD2.4 billion. Not bad for an audacious idea.

To visualise the importance of audaciousness in business innovation, imagine a simple graph with X and Y axis. The right end of the X axis is marked "Audacity", the left end is marked "Boringness". The top of the Y axis is labelled "Risk/Rewards". The bottom is labelled "Stability". Next, draw a narrow diagonal bar from the bottom left corner of the graph to the upper right corner. This bar represents the range where most business ideas fall. Audacious business ideas are risky yet innovative. Boring business ideas are safe and not very risky. But they do not bring high rewards. Most business ideas, of course, tend to fall near the axis.

There are several useful things we can learn from this exercise.

1. In Europe and America we tend to favour highly innovative ideas, but it seems that a handful of boring business ideas resulting in incremental innovation can also bring benefits. You should not focus all your innovative efforts on big, disruptive innovation. A number of smaller, moderately innovative ideas should be mixed in.
2. Many companies have an overly strict review process that requires every single dea pass a number of hurdles before it is implemented. All too often committees reduce the risk of the idea. They seek to protect the company against risk or most likely they seek to protect their own jobs by not sanctioning risk projects. By reducing risk, they are also making an idea more boring, less innovative and reducing the potential reward.
3. Conversely, an idea can often be pushed to be more audacious, thus increasing its reward potential - but also its risk. Bear this in mind the next time you brainstorm ideas. When you get a few good ideas, don't stop there. Push the best ideas further.
4. If an idea is very boring and of low risk, its reward potential is also low. Thus you need to be certain that the cost of implementing the idea will not be greater than the rewards it brings in.

So, the next time you have a business idea, go on and be audacious. Push the idea to the limits and don't be afraid to go with it.

Doing Creativity the Steve Martin Way

These thoughts were inspired by some works of the comedian Steve Martin and have been toned down a little!

"All knowledge is or is about to become old-fashioned. There is room for something new".

Remember that all but the greatest theory, most of the data and knowledge acquired by scientists will become increasingly irrelevant as it is supplanted by new theory and applicable data. Someone has to provide that new theory and data, why shouldn't it be you?

"There is no harm in charging oneself up with delusions between moments of valid inspiration".

It's OK to fantasize about success. Dream your wild-ass dreams. Creativity is often manic. Just remember that there is a reason folks talk about manic depression. In the end, most of your ideas won't work out. That's normal. Creativity is about generating 100 ideas, so that you can recognise just one good one.

"It was easy to be great. Every entertainer has a night when everything is clicking. These nights are accidental and statistical. Like lucky cards in poker, you can count on them occurring over time. What was hard was to be good, consistently good, night after night, no matter what the abominable circumstances".

When you find your niche, when you have your business idea, make sure that you are consistently good at what you do, no matter what the circumstances or market conditions.

Do you belong to the Ideas Cult?

The Cult of Ideas is a dangerous body lurking within the field of corporate innovation. It is a disturbing grouping in which members worship massive numbers of ideas above all else. On the surface, this seems a good thing. After all, innovations are founded on ideas, are they not? So, if a company wants to innovate, the more ideas it creates the better. Sadly, however, the truth is that the cult of ideas can actually stifle creativity and inhibit innovation.

The cult manifests itself when Starbucks proclaims that they have received over 100,000 ideas from their on-line suggestion web site or when IBM boasts of Idea Jams that generate many tens of thousands of ideas.  It is easy to understand why the Cult has grown so powerful. Most senior managers come from analytical backgrounds, often with MBAs from prestigious academic institutions.

Unfortunately, finding meaningful numbers in the innovation process can be tricky. Technology and pharmaceutical companies can count their patents - and many do. But patents fail to measure efficiency and business model innovation, which are also important. Moreover, many innovative firms take out few patents. The number of new products launched every year, or the income generated by products introduced in the past five years is another approach for measuring product innovation - but it also fails to recognise other forms of innovation. A visit to any supermarket suggests we must question whether the introduction of new products truly represents innovation. A look at all the variations of washing up liquid or soap powder, many of which claim to be "new", for instance, is hardly indicative of product innovation.

So managers have latched on to the counting of ideas and the assumption that lots and lots of ideas must be a good thing. This has been enhanced by innovation service providers who also espouse the notion that more ideas are better than fewer. And from this situation has grown the Cult of Ideas which is further fuelled by the efforts of Innovation consultants and vendors of Idea Management solutions.

So why is this cult bad? Ideas on their own are good but it is the pursuit of ever increasing numbers that is not so good. We tend to forget what we are supposed to do next! If we do not actually implement ideas but simply sit around and make plans then our innovation programs are guaranteed to fail. Ideas must be put into practice and economic value created. Companies such as Google and Apple rarely brag about how many ideas they generate. They demonstrate innovation. Take a look at Fast Company's list of most innovative companies (http://www.fastcompany.com/most-innovative-companies/2011/). Those at the top of the pile are recognised for their innovations and not for quantities of ideas.

Innovation - Food for thought

If you search Amazon for "Innovation," you'll get over 43,000 book titles with many more ebooks and blog articles scattered around the Internet, many of which I am responsible for. So what are these volumes all about and why so many for such a simple word - Innovation?

The challenge starts with the definition of innovation. Most of the definitions I've seen are overly complicated and do nothing other than help persuade the man in the street that Innovation is too complicated and should be left well alone. It can be made complicated but need not be.

The founder of the low cost airline JetBlue said "Innovation is trying to figure out a way to do something better than it's ever been done before". And Thomas Edison's said "There's a way to do it better-find it". Which just about covers it all.

So far, so good. Our high level definition opens up innovation, and makes it accessible, regardless of industry sector or function. Let us move on to some basic principles, what I call the Three Pillars of Innovation:

1. Ingenuity.　Ingenuity is human creativity plus application, idea plus execution. Ideas on their own are invention and execution is simply working harder not smarter. We need both.
2. Perfection.　Imperfection is what drives innovation, because nothing's perfect. Perfection is a pursuit, a journey, not a destination. The destination is a place called "Better." We may have to know when to call it a day and move on to our next challenge as we can never actually attain perfection.
3. Fit.　Any innovation has to fit with your customers, market and expertise. There is no point creating something just for the sake of it. Or to put it another way, if you have the best mousetrap that the world has ever seen, you must have a really big issue with mice!

There has to be some element of each of the above for an Innovation to be successful. The big challenge for businesses is to ensure adherence to these key principles on a daily basis.

The Paradoxes of Creativity

I like this list of paradoxes of creativity from leading creativity thinker Michael Michalko (author of Thinkertoys).

He states that to create, a person must:　

1. Have knowledge but forget the knowledge.
2. See unexpected connections in things but not have a mental disorder.
3. Work hard but spend time doing nothing.
4. Create many ideas yet most of them are useless.
5. Look at the same thing as everyone else, yet see something different.
6. Desire success but learn how to fail.
7. Be persistent but not stubborn.
8. Listen to experts but know how to disregard them.

Innovation series - Coke's answer to the iPad

Coke's new Freestyle vending machine offers a range of up to 125 different drinks and is expected to transform the business through its ability to gather vast amounts of customer data each day.

Coke was aware that the US consumer wanted more variety from Coke's dispensers than it was providing but they could not foresee how much variety was being demanded."We initially thought it might be 20 or 30 different drinks," says Coca-Cola Freestyle general manager Gene Farrell. "The research came back and told us it was more like 100."

This is a huge leap from traditional vending machines that usually offer half a dozen or so variants out of the 500 brands that Coca-Cola actually owns. "The same research told us that the customer didn't want a bartender to serve them from behind a counter in a restaurant," says Farrell. "They wanted to be able to mix their own drinks."

Coke customers can put together their own drinks combinations using the machine, so if they want to, they can combine the eight flavours of Sprite available in the US, including bitter lemon citrus grapefruit, and lemon and lime. Coke also reacts to feedback. They noticed customers writing on Facebook that there were only two flavours of Coke Zero, so they added the full array of flavours."

In developing the self-serve drinks mixer, Coca-Cola called in some external expertise in the fields of software, technology and design from the likes of Microsoft, Apple, Ferrari and BMW. That industry collaboration seemed to ensure the Freestyle's success, according to Farrell. "Consumers love it. We've been in the market since 2010 now and we're seeing double-digit increases in sales. Our restaurant customers are telling us that their Freestyle machines account for increases in traffic."

All the machines are connected via a wired network and each downloads consumption data by brand and day-part for every restaurant they are in. "We can gather all that data and look at it by region, by customer type and by channel. We're using that data in different ways. For example, we've developed a free iPhone app that allows the user to create their own drink by mixing the choices available. We're putting a barcode reader into the machine so that it can talk directly to your mobile device," says Farrell. New products can also be tested via the machines and geographic and lifestyle data can be captured also. No longer is Coke a 'one size fits all' product.

This type of thinking looks set to revolutionise Coke's business, what can it do for yours?

Dare To Be Different,Innovation In Banking

Retail banks can no longer assume that the growth and returns that they once enjoyed will continue. Amid a host of banking competitors - including new market entrants, forward-thinking incumbents and non-banks - banks need to differentiate themselves in ways that are not easily copied. To restore confidence and realise strong future returns, banks must set the stage now.

Here are some stories from a few (five) years ago that illustrate potential innovations in banking (thank you to IBM's Business Value Institute for this material). Some are with us today. What do you think banking will look like 5 years from now?

Samson lives in Soweto and works at one of the big factories near Johannesburg, South Africa. With Soweto's high crime rate, he is pleased to make small payments free of charge from his account using his mobile phone. Samson can now keep less cash in his pocket, finally making banking affordable, safer and convenient for him.

Luis, in his San Diego office, reads with interest an e-mail from his online bank that shows him how to better manage his finances. It provides a series of steps he can take to improve his credit rating over the next four months, and outlines the potential savings on his outstanding loans and credit debt.

As he walks past a new electronics megastore in Bangalore, Anil receives on his mobile wallet a credit offer to buy a flat panel television. Interestingly the offer is from a U.S.-based bank taking advantage of the booming consumer credit market in India.

Heather, at home in London, is delighted that her bank finally lets her transact across different financial products - even different institutions - through the bank's own portal. No need to visit multiple sites to check account balances or transfer money among institutions. And, it's easy to optimize bonus points earned through her personalized loyalty program.

All of these people share one thing: their banks were giving them useful tools that were tailored to meet their particular needs. These futuristic scenarios demonstrate how retail banks can step beyond the expected; for example, by doing more than just improving the speed of existing processes and offerings.

Today, banks are pushing the limits of organic growth, and of growth via mergers and acquisitions. Increased competition and more discerning clients around the world mean it's more important than ever to stand out in the marketplace. So, how can retail banks differentiate themselves and continue to grow?

To distinguish themselves, banks must look beyond new product introduction and spread accountability for innovation throughout the organization. Shareholder value will be created by those that nurture the capabilities that support ongoing innovation, not just within bank walls, but also by looking outside the institution for new ideas, including partnering opportunities.

Innovating On A Budget

The current recession is a problem. It is hurting businesses of all sizes in all sectors. The solution is innovation. Innovation can help you to cut costs, improve margins, retain customers, acquire new customers, gain market share and  ultimately to survive. But when you are cutting costs and squeezing resources in all areas how can you find the people, time and money for innovation? Since experiments are not guaranteed to succeed it can look wasteful to fund large innovation projects.

Here are five tips to help you innovate on a budget:

1. Tell people that you want their ideas. Tell your staff, tell your customers and tell your suppliers that you want ideas that will help streamline the business, improve service, cut costs or delight customers. Tell everyone! If you do not have an effective suggestions scheme then set one up. Listen to all suggestions with an open mind and evaluate them constructively.
   
2. Allocate a budget for innovation. You do not get innovation for free. You must allocate time, people and money but you do not have to be extravagant. The most important thing is to give people some time and space to generate, evaluate, select and test Ideas. Google famously gives all employees one a day a week for this sort of activity. You do not have to be quite so generous - maybe one afternoon a month will work for you. However you do it you allow people to have ideas and experiment.
   
3. Move quickly. Once you have selected a promising idea move rapidly to building a model that you can show to people. This might be built in Lego, it might be a series of sketches or a role play. Once you show it to selected customers or other stakeholders you can quickly get useful feedback and of course funding.
   
4. Kill the losers. Set standards for innovations - e.g. Can we make money at this? Is there a real need? Can we make it work? Can we win with this? If the answers are negative then be prepared to cancel the project and move onto something else. Resources are limited and should only be devoted to potential winners. Be ruthless!
   
5. Pinch other people's ideas, we call this 'creative swiping'. A low cost way to innovate is to copy ideas from other industries or other places and to try them in your business. What are they doing in other countries to solve this kind of problem? What can you use that is new to you but has been proved elsewhere?

Make innovation a priority and add it to people's objectives. You have to make the current model work better and at the same time find ways to replace it with something better. Continuous innovation is demanding but rewarding, and is the best way to survive.

Innovation - Asking The Right Questions

Asking the right questions can often get us off to a good start. Below is a list of some questions that you might like to ask yourself either as a group or as an individual. The questions might provide useful answers or lead you to explore other avenues.

1. What is the biggest (avoidable) hassle that our customers have to put up with?
2. Are there any recent changes in rules or regulations that affect our customers?
3. Who does/does not use or products/services?
4. Who is prevented from using our products/services?
5. Where do our products/services perform unexpectedly well/badly?
6. Does anyone use our products/services in ways that we never intended?
7. Who does this the best/worst? What can we learn from them?
8. How could this be improved if I had all of the resources that I needed?
9. Can we improve our products our services by changing people, materials or technology?
10. What are our top 5 sources of business?
11. What facilities are least used/most used?
12. Can we make our offerings easier to understand/buy?
13. Do we know the cost structure of our offerings?
14. Who benefits the most from our products/services?
15. Do we have all of the skills that we require?
16. Do we understand the competitive landscape?
17. Are we duplicating our efforts in any way?
18. What could we do better with more training?
19. Do we have the right resources/sufficient resources?
20. Can we bend the rules? Have we tested the rules?

When is a change not a change?

This is not a trick question. Many of us have undergone change programmes over the years and many have not worked or had no effect. Why is this? The answer is quite simple, the initiatives have not been Change programmes, they have mostly been renaming exercises. The phrase ‘rearranging deckchairs on the Titanic’ springs to mind here and it is most unfortunate that such exercises have largely been carried out in the public sector in the UK since the economic downturn began to bite.

So what has actually been happening, particularly in our councils and Civil Service? Luckily for employees, the public sector currently has a policy of no compulsory redundancies, which means that only costs other than labour can be cut which in turn leads to the desire for greater efficiency. The desire for greater efficiency then leads to the reorganisation of people. Structures, responsibilities and titles change but job descriptions, behaviours and attitudes do not.

Why does this matter if the organisation has not had to shed employees other than through voluntary schemes, after all efficiency has been addressed and costs cut! Let us go back to the reasons for change, to alter the way in which the organization works (effectively and efficiency) and ensure that it is fit to face the future. To do this we have:

• Shed staff, often indiscriminately
• Adopted best practice from external sources
• Changed the organisational structure chart
• Amended job titles

What we have also done is:

• Lost valuable knowledge and experience
• Failed to communicate the reasons for change and expectations
• Addressed any necessary changes in behavior
• Failed to address insecurities regarding the future

We are likely to end up with an organisation that wants to work as it has always done (but when it has let valuable employees go) but which its masters want to go in a different direction. Think of a train running on tracks with the Chief Executive running alongside shouting ‘no, over here. Go this way’. Many will say that this is all that can be achieved in the current climate in a short space of time. My point is that the work should have been carried out properly over a longer period of time if those in power had the skill and foresight to begin the changes a couple of years ago.

This all sound very negative but is easily sorted by:

• Ensuring a transfer of knowledge when staff leave
• Employing change agents within the organisation to help with real change
• Engage the employees at the ‘coalface’ – in a hierarchical organisation you could be ignoring 80% of the workforce
• Focus on required behaviours rather than simply changing job titles
• Encourage transparency wherever possible