Sunday 25 July 2010
Ideas can be scary stuff
Fatigue seems to be setting into many businesses after the GFC survival. Reform fatigue and innovation fatigue are the two most common (what’s the difference, anyway?). Perhaps it’s natural to breathe a sigh of relief after survival, much like a surfer who finally surfaces after bumping along in the sand beneath a huge dumper that takes him for one of those rides. You know the feeling, where your lungs struggle to hold in your last gasp of free air.
Of course, most of us know in our hearts that the best time to innovate is when other businesses are least prepared to do so. A multitude of surveys tell us so. One I like is the Arthur D. Little innovation excellence study, that found a 4% boost in profit margins, and 2.5 times higher sales of new products for top innovators. But perhaps I’m fatiguing you.
At the Australian Institute for Commercialisation (AIC), we preach innovation, but know from our own experience that in practice innovation is more easily said than done. Where does a company start with innovation?
“At the top” is the blithe answer, even if true, so let’s consider how innovation starts instead. Usually either with a problem the business is facing, or to pursue an opportunity it’s spotted. Which then begets ideas. Most organisations think innovation is about lab coats and R&D, whereas the IBM Global CEO Survey suggests that the richest sources of ideas are in fact your own staff and customers. That’s not to suggest that R&D won’t necessarily be required for executing those ideas, but the starting point is more likely to be ideas from staff and customers rather than the lab. Particularly if you’re a service business rather than a producer or manufacturer.
So perhaps the real crux of the matter is to ask ourselves the following questions:
• How does my organisation collect ideas?
• Does my organisation have a formal process for acting on them?
This is not rocket science. It’s simple stuff, and if you’re still reading this, you’ll also have heard it before. Our experience is that most managers will answer affirmatively to the first question. Yes, they say, we all ask our customers for their thoughts on our product or service, and invite our staff to freely make suggestions. But then these same managers will make grudging excuses around the second. As did I.
Where it gets scary is to institutionalise the entire ideas management process. The AIC recently did so, by developing our own ideas capture system and formalising the review and management process. It’s an online system where staff can enter their ideas, rate it for the benefits it brings and the effort to implement. It allows other staff to comment as well. The review process is formally managed, and a review committee evaluates ideas on a value vs. effort basis, manages the portfolio against the three-horizons (near, medium, and long term), decides on which ideas should be pursued further, assigns a budget and manager, and provides feedback to the entire company.
If you’re like me, perhaps you have been prevented from such a process by ultimately fearing your loss of control over the direction of your product portfolio. Or perhaps you fear that staff would suggest time off to play cricket in the corridors or to install a cappuccino machine in every office. Or that the suggestions would be so resource-intensive to implement that they would crowd out your (other) core business.
In fact, I needn’t have worried. Our system and process anticipated those issues, and the easiest and best ideas self-selected themselves. Even better, many of those ideas were great ideas that our management team hadn’t thought of before. Things we should have been doing, but hadn’t come up with ourselves. Ideas like changing our annual report to include an accredited economic impact statement, or improvements to our marketing documentation, our planning process, and our systems. To my great surprise, the suggestions that came out of woodwork were not only well reasoned, but didn’t consume the great quantum of resources I had feared. This was because we followed a few simple principles:
• Make it easy for staff to contribute ideas and suggestions, freely and non judgementally, and collect and post the ideas centrally where others can comment;
• Ask staff to suggest how their ideas could be implemented, by whom, and what the costs and benefits would be;
• Adopt a portfolio approach to managing the suggestions, rating them against the three horizons and into four value-effort quadrants;
• Follow a well thought through selection and implementation process that closes the loop with all staff.
Once again, I was reminded that two heads really are better than one, particularly my own. More heads are even better. It can be humbling. Although that can be pretty scary, it’s undoubtedly worthwhile.
Taken from a blog by Dr Rowan Gilmore, CEO, Australian Institute for Commercialisation.
If you’re interested in how the AIC manages and develops the ideas of its own staff through its “Ideas Zone” process, please contact us.
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