Innovation - The Need for Creativity and to Keep an Open Mind! (Part 1)



Dan Morris
09/25/2014

By Dan Morris and Rod Moyer

Business transformation is based on creativity and innovation. Without these traits, any change project can only make small improvements and benefits are usually much less than they could be. This column is the first of a two part series that will look at innovation and what drives it. In this column we will look at creating the environment needed to promote and deliver innovation.

Clearly everyone wants to innovative. Good goal, but is it obtainable?

Innovation is one of those terms that everyone knows, but may also be defined a little differently by each person. In reality it means somewhat different things depending on how it is used – the context. In IT, innovation has a double meaning – breakthrough technology and innovative ways to use it. The same is fairly true of manufacturing. In business operation we have to separate innovation and transformation – although they are often found together. In all these cases, innovation is scalable. You can have small fairly isolated innovation and large, high impact innovation. So, innovation can be noticeable or somewhat hidden in the details of the operation. That is a lot of variation.

Interestingly, Webster defines innovation in the following word variations:

  • Innovate as "to introduce as new"
  • Innovator as "to effect change"
  • Innovation as "the introduction of something new"; " introducing or using new ideas or methods; " having new ideas about how something can be done"

I also looked at definitions from other dictionaries. Interestingly, none mention, breakthrough thinking, fundamental change, or many of the characteristics many of us consider to be part of innovation.

For me, these definitions are a little anemic. I look at innovation is a fundamental change in concepts and capabilities. These are changes that improve the way the business operation is considered (such as BPM/BPMS), or IT technology (such as social media/big data/cloud), or a new way to look at how to manufacture something.

I would venture to say that others also have their own view of these terms and the concepts that are built around them.

But, to cut through all the variation, let’s just say that in this column, innovation means "the introduction of a significant new approach, method, concept or technique that may or may not be supported by IT or production technology. These changes will vary in scope and impact, but should provide a noticeable return on investment".

Foundation for Innovation

Because innovation is not formula based or something that can be obtained by providing staff with a certain type of training, it is more of a creative application of knowledge and skill than a "science". Innovation has two basic requirements. These are in addition to foundation requirements – budget to innovate, true management desire to innovate. These two requirements are:

  1. Creativity
  2. Willingness to have an open mind and truly listen

Creativity is not something that can be taught. It is something a person has or doesn’t have. It is also something that a business operation has or doesn’t have – depending on who it hires. But, it can be encouraged and refined.

A culture for Innovation and Creativity

Every organization has creative people. If you look, you will find them. This natural ability can be encouraged and improved in people who have this gift. But, it can also be stifled easily when people feel unsure of themselves, when they fear ridicule, or when they have already had ideas, observations and/or suggestions rejected or ignored previously.

Innovation requires creative people and a culture that is open to new ideas. This culture of creativity drives innovation. But in order to pursue any idea, the company will first require the recognition of what is involved and then a financial commitment to research and trial and error concept testing – learning from both success and mistakes. It also requires the freedom to fail and the ability to talk about what was learned from failures.

Creating this culture is reliant on progressive senior management that sees value in supporting innovation and understands that any idea is only a starting point. Once an idea is accepted, the work really begins – there is a lot of effort between an idea and the implementation of that idea into the business, IT, or production.

In most companies this foundation will need to be built. This is where a manager must champion the cause for innovation and then sell it upward to the highest levels of management. If this level of support becomes an issue, the promoter of creating this culture of change will need to obtain approval to mount an internal marketing and sales campaign. This will need to be focused on convincing the appropriate senior managers of the need for and value of this environment.

Depending on how the company is structured, it may also be possible to move a level or two down in the management chain and focus on winning support for a more narrowly focused cultural change. Once this is completed and success and value have been proven, it may be possible to gain acceptance by peer managers and repeat the process. In this way you may be able to gain enough momentum and visibility to open doors to the executive suite.

This sale includes the creation of a type of lab that will look at ideas from any source, identify what will be tested and then have the freedom to test in simulations of the operations.

Creating this culture includes:

  • Encouraging ideas and observations – and actually showing that you look at them and then act on some of them
  • Separating cost reduction goals from staff reduction
  • Building trust in the staff that innovation will not simply mean that they or someone else will lose their job – staff paranoia is still alive and well in many companies
  • Moving the management style from one of "rule by fear" to one of "working together to succeed" – yes, there are still managers who believe they have to rule by fear
  • Building a capability to simulate changes and test them
  • Using performance management to improve rather than punish

Are all ideas worth following up on?

No! Innovation that costs more to build, test and deploy than the benefit it delivers is of questionable value. Because of the trial and error that is needed to move from an idea to a testable change and then a refinement through simulation, innovation is often costly. It can also be disruptive to implement. So, innovation as applied to small improvement is only worthwhile if the innovation is inexpensive and has a great impact.

While this situation is unlikely in the narrowly focused changes of improvement, it is still possible. But here, even good ideas must be viewed based on financial return and an improved ability to compete. It is possible for a small innovation to be ineffective in reducing cost but highly valuable in improving customer interaction and other worthwhile objectives. So each potential innovative idea needs to be considered based company goals.

Innovation applied to significant improvement or transformation is usually a different story. Here the improvement is usually so great that the benefit outweighs the cost of creating, testing and applying the innovation.

Changing to a culture that values change

Change is one of the hardest things for people to accept. Everyone likes to get comfortable in the status quo – even if they don’t like the way things work. This is because they are successful following the current ways and change introduces the possibility for personal failure. So, it is resisted. Today, unfortunately, given the drive for cost reduction, change has also too often meant downsizing the staff and forcing those who are left to shoulder more and more work. We feel the impact of this everywhere, including not having the time to actively listen to ideas or help others evolve their ideas. But, organizations can be evolved into "change ready" groups. When this happens, change becomes the norm and continuous improvement becomes a common goal.

Example

A large insurance company needed to improve its claims processing operation. There were problems everywhere. Most were somewhat minor but together the result was a dysfunctional operation. We needed to engage the staff to change the culture and hit the performance targets we were given. We found the big problems and issues fairly fast – most were obvious. But, we also wanted to move the operation to continuous improvement so the gains would not simply slip away over time.

We established a Kill a Shark a week program. We also named big issues Dragons and they were definitely on the list of things to "kill". Everyone was expected to find problems and raise them in a short weekly department meeting. For an idea that led to killing a Dragon, the person or group submitting the idea received a small payment and a certificate (suitable for framing) that they had helped to solve a Dragon sized problem. For ideas that led to killing Shark level problems the person or group again received a certificate and a shark tooth on a neckless. There were formal presentations and formal acknowledgments. We made getting a certificate a big deal. Before long everyone had to have a shark tooth and everyone wanted to kill a Dragon. It became a status symbol of creativity that separated people and everyone wanted to be seen as being in the creative group.

We listened to everyone’s problems and we listened to everyone’s solutions. No one was cut off. No one was turned away. We encouraged management to consider what everyone had to say and look for the gold nuggets. Creativity was king and everyone was initially asked to come up with ideas on how things could improve without changing IT. Later we added IT changes.

The results were amazing and over a few months, many tens of millions of bottom line improvements were made – and the operation became self-improving - focused on continuous improvement.

Innovation Incubator

Most companies do not have a culture that promotes trial and error testing and solution evolution. Innovation in these companies is limited to "easy to do" change. Innovation here is based on "obvious" and "no brainer" investment. Testing of new ideas is often limited or not done. Investment in creating an ability to change quickly is often minimal and technology that could be used to create this change ready environment is generally simply used for production or focused support. Creativity is often somewhat limited in these companies and it is really given little value aside from slogans and signs.

In companies that really do value creativity and innovation we find a very different attitude. However, this different attitude is often applied unevenly in the business with a focus on new product innovation and a very different attitude toward business operations.

The simple fact is that while product innovation is an absolute necessity for all companies who wish to remain competitive, it is only one side of the business. There are at least two others – depending on how you lump functions. The first is the core business activities that must be there – finance, legal, HR, IT etc. The second is customer facing – sales, customer service, social media based apps, etc.

This is just my opinion, but product innovation should be viewed separately from business operation innovation. On the business side, I suggest that you apply new technology in all areas to save money and increase flexibility first, then focus on innovation in product related activity and in how you interact with customers. The reason is that operational improvement and customer interaction deal with customer retention and acceptance – that equals market share.

To gain operational flexibility and an ability to change quietly, quickly, inexpensively and with little risk, the past perspectives will need to be partially abandoned and a new foundation for innovation created.

Foundation

I suggest that you consider creating "innovation incubators" to take the ideas of creative people (who are encouraged to observe and then create improvement ideas) analyze them, keep track of good ideas and then combine them to form possible improvement – even at times innovative improvement. These incubators have the ability and resources to simulate change and then test the new ideas. This is a relatively inexpensive way to constantly focus on finding game changing innovation or creating it by combining ideas or parts of ideas from people in the company. This group should also track industry improvements and trends and look at how they can be leveraged creatively in your company.

These incubators are also called "model offices" and a variety of other names. They are essentially a copy of a part of the business that the innovative ideas will affect. This copy includes IT and maybe a capability for customer focus groups. The idea can be fully evolved in this environment and following BPM approaches, it can be iterated and tested in simulation. It can thus evolve to the point where it will deliver maximum value. Among the many benefits of this incubator approach is the fact that nothing will be released into production that can hurt the operation and the testing environment provides a solution that can itself be used in training.

As always, I hope that you enjoyed this discussion and I hope it will give you something to think about. Please contact me at daniel.morris@wendan-consultingwith comments, or call me at 630-290-4858. I always enjoy talking with my readers.