Incremental vs Radical Innovation - Do Consumers Care

I was reading yet another article on innovation on the web when a short sentence caught my eye:

Do consumers sincerely differentiate between incremental and radical innovation?

The author went on to describe the difference between the two

As I see it, incremental innovation... is most times, short-term and more profit-oriented. Furthermore, incremental innovation is used by larger corporations who might not have the right tools, creativity or knowledge to create new original cutting-edge products/services yet have the financial capabilities to execute and implement them!

It's true that most radical innovations are actually discrete accumulations of much smaller improvements yet they have the ability to be life changing, and those seem to have seized to exist these days!

In a nutshell, it seems in his view, radical innovation is what happens when you do a lot of incremental innovation. Sooner or later you reach a Tipping Point, where the next iteration is a radically new idea. (For further discussion of Tipping Points read Malcolm Gladwell's fascinating book of the same name.)

In some sense I would have to agree. Often radically new ideas are iterations of ideas already being explored, but aren't seen by the general public. And this is where I would diverge form the author's opinion.

I actually DO believe that big corporations have the " .. right tools, creativity or knowledge to create new original cutting-edge products/services... ". They also have the financial wherewithal to launch them. What they don't have is the ability to take a huge risk.

Large companies are risk adverse by nature (unless you are a financial institution apparently given how we've been watching them implode over the last year.) Large companies often come up with radical new innovative products but for one reason or another choose not to launch.

Sometimes this is due to how destabilizing the innovation would be to current products. Sometimes it is because of entrenched political positions against this type of innovation. Sometimes it's just that the champion is not well connected. (He or she has been known to leave said big company and go out on his or her own for just that reason and successfully launch the radical new idea.

But back to the question: Do consumers care if a new idea is radical or just an incremental innovation? No, I don't think so. Consumers are motivated by products and services that meet their needs. If that need can be met by making a small change - great. If it requires a radical change- that's fine too.

True consumers get a lot more excited about a radical innovation, but there's a place for both in any well run business. Why, because radical innovation is much riskier. For every success there are hordes of failures.

A well run company pursues both strategies. Incremental innovation builds the infrastructure for radical innovation and provides the fall back when things don't turn out quite like planned.

Which happens rather more often that one would wish.

Tackling Telecom: Innovation at Telus

This month we're featuring an interview with Bob Petrovic, Director of Services Planning at Telus. In his role at one of Canada's leading telecommunication companies, Bob has been closely involved with managing innovation and sheparding new communication products through the new product process.

As Bob is at the forefront of one the fastest growing segments in virtual communication, mobile services, I was interested in his take on managing innovation. Huge capital expenditures are common in the telecommunications industry, so Bob has a common challenge on a bigger scale, in these economic times - trying to manage long-term investment with short term risk.

In times of financial crisis where companies of all sizes are challenged with funding projects, innovation tends to come from those smaller, more nimble and less capital intensive companies. However, on the telecommunications front, where building the infrastructure takes massive amounts of money, larger companies with legacy systems have the advantage.

In my interview with Bob I was particularly struck by his comments regarding the disconnect that often occurs between Marketing and R&D. In a technology company, in particular where new product development tends to reside with those involved in technology development, this

communication gap can mean the difference between being first to market with an innovative and successful product and time spent developing products that don't meet consumers' needs.

I've talked before about how crucial I believe it is to develop strong working relationships between Marketing and Product Development. Cross-training and working groups comprised of members of both departments tend to improve communication and prevent "orphan" products. I've seen this time and time again, where a great technology product lacks a champion in marketing and so languishes in development stage or the reverse, when marketing research uncovers a consumer need but, without R&D support never moves beyond the idea stage.

In the fast moving and competitive telecommunications marketplace, this type of disconnect can mean the difference between being first to market, and obtaining critically important patents and scrambling to play catch-up as the industry moves forward. Marketing is tasked with correcting identifying the drivers that rule the market is critical and communicating that to those responsible for developing products to meet those needs. When this type of communication breaks down, the result is lost time and lost opportunities.

Bob points out in our interview how critical it is for those of us on the forefront of innovation to reach out beyond out own industries for new ideas and expand beyond our computer screens for ideas on managing innovation. I know you'll enjoy reading his thoughts on managing innovation in this critically important time.

What is your role at Telus?

My primary responsibility at TELUS is for consumer services planning. The scope of the role is broad, ranging from development of product strategies through to incubation of new mobile and broadband services. The goal for these activities is to align activities across the organization & assess emerging opportunities.

In your opinion what are the key trends affecting your industry?

Economic conditions are obviously a key consideration for network operators, impacting a range of decisions from market planning to capital spending. This will be an ongoing consideration for mobile and wireline service providers for the foreseeable future.

In terms of technology trends, it's fair to say that the rise of 3G adoption, driven by smartphones and mobile applications, is a key mobile trend. Video continues to be a key theme in the home with an increasing number of options for time & placeshifted viewing. As with any trend, there are opportunities and risks that need to be understood and acted upon.

How do you measure innovation success?

Commercial endeavors are ultimately measured by profitability and I don't think innovation can be treated differently. Successful innovations will be those that drive usage and adoption in a sustainable way - they have to fulfill a need and be convenient so that people will want to use them. While forecasting commercial success for new initiatives can be tricky, convenience, as measured across economic (price, cost) and esthetic (ease of use) dimensions, is usually a pretty good indicator of future performance.

What is a biggest pitfall that impedes successful innovation?

In any industry, a disconnect between technology and marketing organizations is probably the greatest hindrance to innovation. Opportunities that arise in one area may not be fully appreciated in the other. Maintaining an on-going conversation across these groups goes a long way to realizing opportunities appropriately by managing priorities & expectations.

What is an example of an innovative company that people have never heard of?

In my industry (and hometown), Teradici stands out as a company that's using technology to solve some real problems today with a great vision for the future. They develop thin client solutions that push computing power into the cloud efficiently and transparently.

Outside my industry, I really like what folks like HippoRoller and Kyoto Energy are doing by creating low-cost, simple solutions to real-world problems for emerging nations. Both are applying innovation in a way that increases convenience for the basic needs of life.

List a few of your favourite sites on innovation.

I find myself gravitating to books more than websites for understanding the art & science of developing ideas - I really liked Blue Ocean Strategy and find myself going back to it often.

Lightreading.com is a great site for telecom developments and they do a great job of covering startups which helps me keep a pulse across a wide range of my industry's topics.

-------------------

Bob Petrovic is the Director of Services Planning for TELUS Consumer Solutions. In his decade with TELUS he product managed the mobile computing services portfolio from early telemetry to mobile broadband. Prior to joining TELUS, he launched a number of industry-first solutions for Internet developers. Bob has a Bachelor of Mathematics (Computer Science) from the University of Waterloo. He lives in Vancouver with his wife, 2 kids, and some fish.

Telling stories through numbers - An interview with Stewart Marshall

Stewart Marshall photo courtesy of Kris Krug

This month we are featuring an interview with Stewart Marshall, self-styled, "financial storyteller". I was intrigued by his description of himself as so often we are presented with numbers that, recently frankly are quite appalling. As we struggle to understand the meaning behind these numbers, we look to financial storytellers to interpret them for us.

The good ones put striking numbers in context and, beyond just helping us to interpret them, get us excited about what they mean for the future. Understanding the past is the first step, understanding what this means for the future and the opportunities it opens up for us personally and for our businesses is the next, key step.

As we are constantly bombarded with numbers and headlines about those numbers that can be misleading, the role of the financial storyteller becomes even more important.

The storyteller these days need not only be an expert at his or her craft but also at intersecting with technology in such a way that the word gets spread efficiently to the key people who need and can use it.

I’ll give you an example of a quote in an article I saw just the other day. "Contrary to popular belief, sales of green products are not tanking in a down economy". While this opening line makes me feel good about the opportunities in the green economy, a few paragraphs later (after many readers would have lost interest) I found the following paragraph:

...sales of green products are up 4.1 percent, driven mostly by price increases, as unit sales in this category dropped 6.6 percent in 2008.

This information, of course, leads one to the exact opposite conclusion, hence the need for not only storytellers, but trusted ones. And as we are all increasingly wired, we look to storytellers who can not only tell our story, but also have the social media savvy to disperse that information across the web using the most effective social media tools to reach our target audience.

As business owners, we all struggle to get our message across in a way that is effective and interesting. Creating interest leads to increased understanding and demand, whether for our product or to invest in our companies.

Using the multitude of new tools available on the web from Flickr and YouTube to Slideshare and Twitter we look to financial storytellers to help us get the message across to our stakeholders in an away that is interesting, creative and above all trustworthy.

Who were your early role models and what were the main things you learned from them?

Sir John Harvey Jones, MBE. He rose through the ranks to be Chairman of ICI and turned it around - proving you can run a successful company and have time and respect for everyone. In fact this is a key ingredient to his success. I remember he talked about riding in a company truck for a week just to learn about the problems his drivers experienced. Later, his Troubleshooter TV series showed me the challenges of being a change agent; what an outsider can bring and what they have to face.

Another person who inspired me early in my career was Sir James Dyson. His story about inventing the bagless vacuum cleaner demonstrated how hard it can be to convince people of your ideas and how important perseverance is in achieving your dreams. In a similar vein I was impressed by inventor Sir Trevor Baylis, who found his inspiration for the wind-up radio in the tragedy that is AIDS.

In more recent times, I've been following the fortunes of Starbucks CEO Howard Schultz and to a lesser degree, Michelin Award winning chef Gordon Ramsay. Both demonstrate a sense of values which I aspire to and show that the age-old idea of honest hard work can pay off.

Links:

Sir John Harvey Jones: http://news.bbc.co.uk/1/hi/business/6285160.stm

James Dyson: http://www.ideafinder.com/history/inventors/dyson.htm

Trevor Baylis: http://windupradio.com/trevor.htm

Howard Schultz: http://www.myprimetime.com/work/ge/schultzbio/

Gordan Ramsay: http://www.gordonramsay.com/corporate/theman/biography/

Why do you call yourself a financial storyteller?

The succinct answer is that I help organizations tell their story with numbers. The aim of a successful story is to increase understanding. Numbers on themselves tell you little. It is only when you label, reference and put them in context with words and pictures that they make mean something: witness the rise of the pie chart in the late 1980s and 1990s. If you put the numbers together with the narrative and mix in some imagery, then you have a story which will resonate.

In my experience, many people struggle to make the connection between what they want or see is happening and the numbers they have available to them. Whether it's making a pitch to investors as a start-up, evaluating an investment appraisal, understanding business performance or even understanding your customer; there is a financial story to tell. Too often we can get wound up in the detailed financials and miss the bigger picture.

As a financial storyteller I can help you connect what you need in terms of facts and numbers with the meaning and underlying story to increase your understanding.

What is an example of an innovative company that people have never heard of?

BatchBlue Software out of Rhode Island - makers of BatchBook, an online CRM tools designed for small business. I've been impressed by their use of social media to connect with a growing customer base and the speed this gives them when responding. What's more I love the product!

More locally, Anthony Nicalo of Farmstead Wines is doing interesting things around wine making and farming. Anthony enables you to connect with artisan farmers who make rare, handcrafted fine wine. I had the pleasure of meeting Anthony recently when he described his goal to make farming sexy! How innovative is that?

Links:

Batchblue: http://www.batchblue.com/

Farmstead Wines: http://www.farmsteadwines.com/

What key trends do we need to be aware of?

The online world is in many ways a paradox. Through technology we can connect and reach more people. On the flipside, this can make us more insular and locked to our keyboards instead of getting out in the world and meeting people in person. I see a trend for connecting these two pieces so that one feeds the other. Social gatherings of Twitter users demonstrate this, I don't remember groups of MSN Messenger users or AOL Messaging having such impromptu and informal events.

This leads to an increasing trend of people returning to fundamentals. Technology is exciting and can in itself be exciting. What is more exciting and holds more promise is what use this technology can be put to. The world is in a state of transition and people are either through choice or necessity returning to things which don't necessarily require a constant internet connection. This could be spending time with friends, taking more exercise, growing their own food etc. Where it does involve technology, there has to be more of a specific purpose. Whether it's for business or pleasure, technology is now starting to target specific markets instead of a general populous of early adopters.

List a few of your favourite sites on innovation and business.

It feels like a simple answer but I have to mention TED. A wealth of ideas both inspiring and practical delivered in bite-sized chunks. Apartment Therapy is always throwing up new ideas in terms of design. For business related sites, I've been following Robert X Cringely for almost 20 years and I still find his columns, blogs these days; enjoyable.

Links:

www.ted.com

http://www.apartmenttherapy.com/

http://www.cringely.com/

Stewart Marshall's bio is available http://www.linkedin.com/in/stewartmarshall

Time to Get Innovative

There's a lot of buzz out there about the impact that this most recent economic downturn will have on innovation. Historically, great innovative ideas have traditionally gained traction as an economy comes out of a recessionary period. That means, of course that the brainstorming, development and initial launch happened during the downturn itself.

A New York Times article, cautions now, It's No Time to Forget About Innovation and like many in the field, we agree. Yet, frequently, those groups with little to show for themselves, i.e. no sales associated with the group and no direct P&L responsibility seem often to be the first areas cut. Rather than look forward when cost cutting is required, most companies look to dissolve those business units that would cause the least harm to the present operations to the company.

In a short sited way, this makes sense. Often companies that create business units focused on innovation that operate in their own silo. As we said before, this does not take advantage of the inherent creativity that abounds within the various operating units themselves and... is tempting to cut during downturns.

The fact is, innovation is inefficient. Hours and days of brainstorming often result in few if any workable ideas. Thousands of engineering dollars spent doesn't guarantee a real success. Innovation is, in some ways, a model of inefficiency. And there's the rub.

Wild market gyrations, frozen credit markets and an overall sour economy herald a new round of corporate belt-tightening. Foremost on the target list is anything inefficient. That's bad news for corporate innovation, and it could spell trouble for years to come, even after the economy turns around.

As creative pack up boxes and head out the door to home based sites and coffee shops, they take their innovative ideas with them. This is, perhaps one of the reasons innovative ideas often come from entrepreneurial ventures. And in bad times, the ranks of entrepreneurs swell and those lone operators often have time on their hands for the inefficient task of innovating.

David Thompson, chief executive and co-founder of Genius.com Inc., based in San Mateo, Calif., says that innovation "has a bad name in down times" but that "bad times focus the mind and the best-focused minds in the down times are looking for the opportunities."

All of this speaks to the issue of managing innovation in a downturn, especially for large corporations invested in producing short term profits, or at least limiting losses, for their shareholders. How to keep the innovative minds in a company from going out the door is an issue faced by most companies in this economy.

What Does It Take To Lead In Open Innovation

We've mentioned the benefits of open innovation on this blog before. We're fans of it if used correctly, which isn't all that easy sometimes. When established organizations attempt to innovate, they usually go down the tried and true path of structured, bureaucratic, top down innovation, from brainstorming to launch.

This is, as we know, not always effective in producing truly innovative results. Pure innovation is often the purview of entrepreneurial firms with no structure of which to speak and a rough and tumble environment. Out of this very model has come though, a prototype for effective leadership in an open innovation system

...open innovation communities provide an opportunity to develop theories of human and social capital in a novel context that lacks pecuniary incentives, hierarchical authority, and formal structure.

A post, Leadership in Open Innovation Communities, builds upon that opportunity and discusses several types of leaders that are present in open innovation communities and takes a stab at which is more effective.

Leadership in such communities depends more on the trust and mobilization of peers than on approval of superiors. To wit, members cannot be fired or forced to participate in any activity, nor can they be compelled to pay attention to any other member. Ascendancy in such relationships relies purely, to borrow a phrase from politics, on "the power to persuade"

The post goes on to discuss "brokers", calculating and politically-savvy operators those most likely to have made it to the top of traditional organizations. And "boundary-spanners" defined as well respected guardians who redirect crucial information both within and outside the firm. Each of these leadership styles has its merits, but boundary-spanners tend to be more respected in an open innovation environment.

This is, of course, obvious. In an open innovation situation, where leadership is determined by the group rather than by upper level management, participants will be most likely to look to the one who garners the most respect AND has the ability to lead.

Unfortunately, far too often, those with a repository of knowledge are not in leadership positions in a corporation, which means for open innovation to truly work, the management structure needs to be broken down. Participants need to disregard title and seek knowledge and innovative thinking, which may be why creative product development groups in corporations tend to be people with young employees not yet as aware of the hidden power structure within the corporation.

Is it possible to change this paradigm? Can we create open innovation working groups in large corporations by assigning group members from various functions and expect them to ignore position and title?

Well. Yes. Maybe. The make-up of the team, in terms of personality and ability to lead or follow plays perhaps a bigger role than in traditional work terms where expertise is valued. In some ways a Machiavellian approach to putting together a team of personalities seems to be in order. Careful consideration of how team members will interact and who might emerge as a leader seems appropriate.

Does this follow true to the spirit of open innovation? I don't know, but it's one avenue for large, established corporations to follow.

Interview: Rodney Gainer

I have been very fortunate to be in touch with Rodney Gainer over the last couple of years. He has worked as the Director of Business Enhancement for the Innovation Resource Centre for more than four years. During his time there, he assisted new inventors and established entrepreneurs on their commercialization efforts.

Rodney holds a business administration diploma from the college of New Caledonia and currently works as web developer for Noratek Solutions, one of the largest technology companies in North-Central BC.

I had the opportunity to interview Rodney about the Innovation Resource Centre and innovation in general. Here are his responses to these questions.

What is the Innovation Resource Centre?

Innovation Resource Centre enables economic growth and diversification based on the commercialization of innovative technology in the Central Interior of BC. We provide support to new and established entrepreneurs through both one to one advising as well as workshops and seminars. We organize networking and idea exchange opportunities and pursue an active communications and research program that creates a broader, better understanding of the role of technology in our economy.

Who were your early role models and what were the main things you learned from them?

Ray Savidan the owner of a forest company. I learned not only to work hard but to work smart. Physical strength only get you so far. Ray taught me to work smarter not harder and to trying new things, not to be afraid to think outside the box.

Dawn Miller, former Executive Director at Innovation Resource Centre, taught me to know my limits and how to work within them. By knowing your limits you learn when to ask for help before you actually need it. Also the ability to be a good listener and how to look at he big picture.

In your opinion what are the key trends affecting the innovation landscape?

Available talent and connectivity are keys to innovation.

The current labor shortages changing how people do business. They are embracing more automated systems that are able to do the jobs that used to be done by a person. The simplest example is the voice mail I got left the other day about the latest Canadian Blood Services blood drive campaign.

Connectivity is more than just a connection to the Internet. It is also to your personal and business networks. It is not only what you know it is who you know who has access to the resources that you will help you achieve success.

What is an example of an innovative company that people have never heard of?

Alterna Energy Inc. believes the world should strive to maximize the value from precious natural resources. Hence the question most often heard around Alterna, 'Why combust when you can carbonize?' Most biomass energy conversion systems take biomass such as wood waste and process it to produce heat energy and ash through combustion or gasification processes. Alterna's 'enviro carbonization' process will produce high quality carbon and heat energy which can be converted into electricity. Carbon is found in all biomass and is used in hundreds of valuable carbon products used by people around the world. Carbon for medicinal use. Carbon for filtering our water. Carbon for use as a reductant in the metal smelting industry. Carbon is a key element in our complex world and can also provide a renewable source of green energy.

What is a biggest pitfall that impedes successful innovation?

People. Many inventors and entrepreneurs are very short sighted when it comes to the success of their inventions and businesses. They believe they can do everything to make their product or service successful which makes them their own worst enemy. To achieve success people need to work with people who can get their innovation to the next level. Is it better to have 100% of nothing or 10% of a million dollars?

List a few of your favorite sites on Innovation.

www.changethis.com - Change This ' uses pdf's, blogs and the web to spread important ideas and change minds.

www.sethgodin.typepad.com - Seth Godin's blog - the agent of change.

www.innovationtools.com - Innovation Tools - a collection of resources on business, innovations, creativity and brainstorming.

www.thecis.ca - The Centre for Innovation Studies - a non-profit in Calgary, Alberta that focuses on research, networking and education.

Thanks Again Rodney!

Protect Your Cleantech - IP May Play A Role In Determining Who Leads The Pack

With Vancouver named one of the top 10, "New Silicon Valleys" of the clean tech industry, worldwide that is, the role of innovation and the associated pitfalls is on my mind these days. Burnaby based, Ballard Power Systems may be said to have pioneered the fuel cell industry and ex employees are busily creating new companies and uses for the technology.

In the midst of all of this activity certain essential tasks associated with successful innovation can be overlooked. In any rapidly evolving industry, inevitably innovation will overlap and application of existing technologies will tend to be "discovered" by several, if not many different companies. So, it is in cleantech.

That activity that will play such an important role in the ultimate success of a clean technology product turns out to be protection of intellectual capital.

I've written before about the importance of intellectual property protection. A post Mass High Tech.com, Energy, Clean Tech and IP: Protecting Innovation, speaks specifically to the challenges firms in the cleantech industry face.

While an important component to any technology-based company's success, intellectual property is especially important for "clean tech" ventures encompassing energy or environmentally related technologies.

For clean tech companies, it's important to note that investors consider strong IP essential for both first to market companies and those that follow (to protect a key technology for later market entry or licensing/acquisition.)

Cleantech is, of course, an umbrella term that encompasses a wide variety of technologies and spans a variety of different industries. The rationale for application of intellectual property protection therefore varies by industry. Does it promote investor confidence? Is it important as a defensive strategy? Can it be used to encourage licensing down the road?

Clearly, whether or not the reason is immediately obvious, innovators in the space need to take steps early on to protect technological innovation and continue to revisit the applicability of those technologies as the company grows and the discovers new uses for existing patented processes.

Similarly, don't dismiss patent protection for clean tech ventures with a long time-frame to market or long technology lifespan. Strategic patent filing approaches may be available in some jurisdictions, increasing patent enforcement life, for example, until the effort reaches a certain state of commercial viability. It's also possible to file initial applications relating to core aspects of the technology, then stagger subsequent filings for incremental changes.

Like the early days of the dotcom boom, intellectual property protection will play a big role in who turns out to be the winners and the losers in cleantech. Those companies which use forethought and innovative thinking, in every aspect of their business, including legal protection, will be much better positioned to be on the winning end. As new uses for the current technology, as well as, new applications for technologies currently in development arise, appropriate intellectual property protection will be key.

I know I sound like an advertisement for the legal profession, but in an industry highly dependent on break through innovation, the appropriate IP may be the deciding point between leadership and second place.

You Just Don't Understand - The Conflict Between Corporate And Business Unit Innovators

One of the challenges that every large business seems to face is developing an actionable innovation strategy. In smaller companies innovation often happens naturally. Company employees and founders gather in a room to discuss day-to-day operations. The conversation veers off into a brainstorming session; everyone gets excited. Tasks to make the innovative new idea happen are assigned and off everyone goes to implement the latest great idea, often dropping other initiatives along the way. But, that's OK.

In larger organizations with more developed job descriptions; bonus structures tied to quarterly or annual performance and clear lines of communication drawn, taking an innovative idea to fruition can be frustrating and hampered by conflicting priorities.

So, it was interesting when I ran across this article The difference between corporate and business unit innovation at Innovate On Purpose I don't think you can be any clearer than

... the corporate team and business unit teams are a lot like a pushmi-pullyu - both want to innovate, for different reasons and purposes and have different motivations and concerns.

Corporate strategist are often the champions of innovation. They may be innovators at heart or they may just realize that the key to growth goes beyond continual improvement. Stellar growth requires a constant parade of new products and new ideas, as well as, improvements on existing ones.

However, corporate strategists, while great at cheerleading are rarely in a position to implement innovative strategies. Sometimes they are in advisory or ancillary roles and not in a line position with the authority to allocate resources. If they are responsible for a business unit, they may be so far or so long away from actual tactical responsibility that they may not be aware of the enormous resources needed to actually create and launch an innovative product or service. More importantly, they may not have the authority, which often comes directly from the top, to change priority so that time and resources can be given over for innovation.

Bottom up innovation is stymied because clear lines between business units and the corporate power brokers may be limited or, more often, corporate executives feel powerless or do not understand that a priority shift is needed to accomplish the goal of innovation. Worse, those with the power to allocate resources to innovation may they themselves have conflicting priorities. But there are options to break this gridlock.

- a corporate team focused on longer term disruptions that are suggested by the business units that simply don't have the time or bandwidth to focus on what's next, and a corporate team that provides trends and strategy insights to business unit teams to extend their visibility. A corporate team can provide resources and funding to assist the business units with their mid and longer term innovation needs and take on the creation of new markets or "blue oceans".

In my opinion, this outline has possibilities. It does however veer away from the traditional path toward innovation - setting up separate innovation teams. Managers pulled from various business units and assigned to a group tasked with developing innovative new products. While I agree that corporate innovators have their place. Engaging them in the process and more importantly, getting them to back the project and free up resources I think is a better role for them to play.

Real innovation travels up the corporate ladder, not down. Just give a cross functional innovation team the resources they need and the power to make things happen and get out of the way.

Finalists anncounced for the 2008 Burnaby Business Excellence Awards

The Burnaby Board of Trade announced their finalists for the 2008 Burnaby Business Excellence Awards. Congratulations to the nominees!

The finalists in the 8 award categories include:

Burnaby Community Spirit Award Finalists:
- Best Buy Canada Ltd.
- Brentwood Town Centre
- Scotiabank
- Vancity South Slope Community Branch
- Westminster Savings Credit Union, Metrotown Community Branch

Business Innovation Award Finalists:
- Day4 Energy
- Icron Technologies Corp.
- M&R Environmental
- Snap Technologies Marketing
- Web Tech Wireless

Entrepreneurial Spirit Award Finalists:
- Icron Technologies Corp.
- Image Path Printing Solutions
- Imagine Redesign
- MetroLeap Media Inc.
- Rock.Paper.Scissors Inc.

Environmental Sustainability Award Finalists:
- Day4 Energy
- Encorp Pacific (Canada)
- Jacques Whitford AXYS Ltd.
- M&R Environmental
- SFU Facilities Services

Non-for-Profit Organization of the Year Award Finalists:
- Basketball BC
- Bonsor Seniors Society
- The Neil Squire Society
- L'Arche Greater Vancouver
- Progressive Housing Society

Business Person of the Year Award Finalists:
- Keith Beedie, The Beedie Group
- Richard Davies, G&F Financial
- Don Hardman, 2007 FIFA U-20 World Cup
- Randy Hnatko, Trainwest Management & Consulting
- Coro Strandberg, Strandberg Consulting

Small Business of the Year Award Finalists:
- Binary Stream Software, Inc.
- Jubilee Cycle
- Petal Pushers
- Simba's Grill
- Snap Technologies Marketing

Business of the Year Award Finalists:
- ABC Recycling
- The Beedie Group
- Best Buy Canada Ltd.
- Kin's Farm Market
- Stormtech

Management by Not Having Any - A Key to Innovation?

I just attended a workshop co-hosted by Ralph Kerle of the Creative Leadership Forum and was struck by his discussion of Arup.

Who?

Well, if you spent a significant amount of time watching the Beijing Olympics this year you may have seen their work: The Water Cube- The National Aquatics Center where the swimming events were held. Other projects to their credit include The Sydney Opera House and the Millennium Bridge in London.

Arup is an engineering firm... of sorts. Actually it is an organization held in trust for its 9000 staff members including engineers, architects, designers and consultants in over 37 countries. There are no shareholders and no discernable management structure. Yet, they manage to work on over 10,000 at any one time and build some of the most memorable and innovative structures in the world today.

One might call them innovators.

As Ralph Kerle wrote in his article Creative Leadership and the Water Cube at the Beijing Olympics,

... innovation in the building industry is very difficult... Every building is a prototype that mustn't fail. In structural engineering, you just cannot fail or the building will fall down.

This might lead to the conclusion that engineering firms must remain risk adverse at all costs, but risk adverse doesn't mean and mustn't mean forgoing innovation, for one important reason.

The production of the basic building materials on which our civilization exists is depleting our natural resources. As the global population rushes towards 9 billion, our consumption is exceeding our resources. The destruction of the rainforests, the depletion of oil supplies, the failure to find reliable energy alternatives and food shortages offer compelling evidence of this occurring.

The lead in changing the risk-adverse paradigm in the building industry therefore falls to innovative firms like Arup. Founded by Ove Arup, a philosophy and mathematics major from Copenhagen, Arup is unique in its management approach and its business philosophy which might just be little different than what I claimed here was one of my favorite quotes:

"Opportunity is missed by most people because it is dressed in overalls and looks like work." Thomas Edison.

At Arup, new employees are introduced to the firm philosophy and encouraged to go and seek out projects that hold his or her interest. The new employee is expected to be innovative and creative and a full fledged partner in the project, as all team members are.

Ove Arup's philosophy is the guiding principle that enables the company to create such beautiful, innovative and practical structures.

Arup recognised individuals as being innately creative. He reasoned if you provided employees with the simple humanitarian conditions of self organisation and creative freedom, an employer gained loyalty, respect and integrity from the employee, these values became recognised and respected by stakeholders and as a consequence the organisation was seen as reasonable, reliable and ethical.

Is this philosophy transferable to other types of companies? Of course and it must be because we are all faced with a global crisis in the making, as our natural resources are depleted.

Is this philosophy and management structure the only way to create innovative products. Of course not, but providing employees with an environment where they are valued for their creativity; their input is solicited and where they work on projects they like is certainly one way that's worth trying.

Insights from Honeywell's IP Expert in India

We were delighted to recently become engaged in a dialogue with an engineer and intellectual property expert, Suddha Basu, from the Honeywell Technology Solution Labs in India. He is nothing short of an IP junkie, having responsibilities at HTSL that include: intellectual property research analytics, patent mapping, IP mining, technology clustering, IP licensing analysis, IP led business growth, planning and strategic innovation counseling.

Honeywell is a large and diverse manufacturing company that is primarily the 1999 merger product of US defense giant AlliedSignal and the well branded consumer products manufacturer that made products like home heating thermostats. Wikipedia describes the company as "a major American multinational conglomerate company that produces a variety of consumer products, engineering services, and aerospace systems for a wide variety of customers, from private consumers to major corporations."

Before joining HTSL last year, Suddha worked for Wipro, serving multiple Fortune 500 clients as an IT OEM specialist. He also hosted a radio show at Entertainment Network India which isn't something common to most engineers and IP experts.

Suddha was quite willing to share some things about himself, some trends to be mindful of, current examples of innovation successes in India, how to measure innovation success and avoid a common pitfall. Here are his responses to these questions.

Who were your early role models and what were the main things you learned from them?

When I was younger I thought that conceptualizing a scientific principle or manufacturing novel products with great lot of complex math behind them, are the most critical factors in determining the success or failure of that invention, little did I think about the usefulness of inventions which were never commercialized or inventions which never became an innovation, ( i.e. a new stuff which did not become popular to its end users en masse) In my high school days, my school teachers, various discovery channel science shows and the Indian IT boom of the 1990s, made me realize that consumer needs and /or wants when get satisfied in a product or service, creates an innovation. And that is not always necessarily related to difficult mathematical equations. As we all know great things are always simple in their concept.

What key trends do we need to be aware of?

When a highly experienced researcher or a veteran marketer who is an expert in his / her area or market, working for a big university or a multi billion dollar corporation, suddenly quits his/her job and creates or joins an obscure startup company; is an example when you should expect a trend to emerge in a small and niche technology / market gap. Mere patent numbers, financial or market research data don't give you any real trend. It's the people behind all those numbers who can show you the future of science, society and money!

What is an example of an innovative company in India that people have never heard of?

Till date human civilization has showed us a model with industrial production, human migration for economic prosperity and proprietary knowledge owned by the wealth creators.

However, in the coming years a more socially committed innovative business model (but also with great profits after tax!) might be showcased by India or any country with an emerging economy. I believe where there are more problems with fewer resources but with more creative heads to think about such problems, then innovation flourishes there. Nimbhkar Agricultual Research Institute (NARI) is a non profit research organization developing very low tech but promising bio-fuel technologies of the near future! http://nariphaltan.virtualave.net/

How do you measure innovation success?

This could be measured if we notice, high market share with high profits, growing and varied product line and very less engineering or technology input costs. For Example; Google and Coca Cola, these two companies have the lowest budget for their global intellectual property protection needs. And as I previously mentioned innovations are not always inventions and thus are not necessarily measured by patent strength, patent activity or trade mark portfolio.

What is a biggest pitfall that impedes successful innovation?

For a knowledge intensive business, to impede a successful innovation, a lack of either or both the factors of, Organizational culture and individual mindset of each and every of all the employees, (and not only the VPs and the chairman,) matter the most. In such a situation, everyone stops thinking as being the primary beneficiary from an innovative product or service launched into the market by their company. This employee isolation is not good for innovation. All R&D employees should think of themselves as a scientist and also as a marketer, all at the same time. A less rigid job role / hierarchy help in achieving this impediment.

What advantages does Honeywell gain from having a major global R&D lab now based in India?

Indian engineers, scientists and managers who had previously lived in foreign countries for their jobs or education are usually happy to work from the Indian soil, while still being associated with an R&D giant like Honeywell.

Thank you Suddha for sharing these insights with us.

Why Vancouver - The City's Surprising Rebirth as an Innovation Centre

Does Silicon Valley in California come to mind when I mention innovation? How about Boston or the Research Triangle in North Carolina?

How about Vancouver?

Traditionally a western outpost far from the major city centers of Toronto and Montreal, In Canada, Vancouver as often played second fiddle. Yes, it's a large metropolis but, compared to the large companies of Eastern Canada, Vancouver was a backwater devoted to mining and timber.

No Longer.

Increasingly fast growing high tech companies are locating major operations in Vancouver. Microsoft recently opened a new development center where software engineers and developers will work on over half of Microsoft's products. And of course, Vancouver is home to a thriving cleantech community.

Sure, Vancouver's proximity to high tech centers in Washington and California plays a part, but that's not the only reason. So, what makes Vancouver so special? The cost of living is high as compared to many Canadian and US cities. It's a long way from San Francisco and New York. It's not all that well known on the international scene, though that is changing.

Probably the better question is what makes any city good for innovation.

Jeffrey Chu, of Fast Company in a podcast discusses some of What Makes a City Fast. Chu cites a confluence of different factors including diversity and in migration. Both of which characterize Vancouver. He goes on, in a specific piece, Fast Cities - 2007 discussing Vancouver, that besides being named one of the world's most livable cities in a Mercer survey...

Its EcoDensity initiative aims to focus that growth by developing more crowded neighborhoods at the city center. The dual goal: to build sustainable neighborhoods with the scale to make green energy technologies affordable and to preserve surrounding forest and mountain ecosystems.

Our take is that Vancouver has much of what is needed to support thriving companies. Our diverse population brings an international flavor. Like many West Coast cities, proximity to the Far East and Far Eastern manufacturing centers has brought a highly educated foreign workforce to our shores. The relatively mild climate has made them stay, bringing diverse perspectives on life and on business, a key for successful innovation as we've mentioned in previous posts.

Vancouver's highly skilled workforce and established technology companies like Electronic Arts has attracted other and often younger workers to the city and created a cultural center with nightlife and activates that attract still more workers.

Vancouver's proximity to major tech centers in the US plays an important role as well as we've mentioned, but there's more. Canadian government support for development of newer, innovative industries and the spotlight that has turned to Vancouver, as host of the 2010 Olympic Games has encouraged companies to take another look at the city.

We believe that cities that are prepared to host innovation in the 21^st need to be diverse, green, creative and influential. Vancouver is certainly one of them.

10 Key Ingredients to Corporate Innovation

Yesterday in the midst of scanning a variety of articles on innovation, as I do on a regular basis, I came across this post on Now Europe listing the top eight, actually ten, attributes companies that successfully innovate share. I've summarized them below, but you can read the full article here.

1. Top management buy-in

If senior management do not buy into your innovation process, no one else will.

2. Budget

One of the most effective ways for senior management to buy into innovation is for them to allot budget for the initiative.

3. Communication

Once your initiative is ready to launch, it is critical that people know about it, what it is meant to accomplish and how they should participate.

4. Rewards

Complementing communications is a rewards scheme for participating in your innovation activities. Rewards should be relatively small and recognise participation rather than good ideas.

5. Dedicated Innovation People

Assign an individual, individuals or a team the mandate of managing your organisation's innovation strategy.

6. Collaborative Innovation Tools

Enterprises need collaborative tools. Each individual has her own tools and methods for creative thinking, but rather than demand the use of a particular personal creativity tool for all employees, firms should give employees the freedom to use the tools that work best for each person.

7. Effective Evaluation System

It is important that your evaluation process is not a purely critical one. It is easy for evaluators to find all the weak points in an idea. But this can result in very promising ideas being rejected. So, evaluators should be asked not merely to criticise ideas, but also to provide suggestions on overcoming the problems they have identified.

8. Willingness to Invest in Innovative Ideas

Surprisingly, many organisations invest in creativity and innovation tools, but then fail to implement the most innovative ideas they generate.This is usually the result of excessive risk aversion, large approval committees, too much internal bureaucracy or a combination of these. Whatever is the cause, the result is a creativity programme which generates ideas rather than an innovation strategy in which creative ideas are implemented.

9. Enthusiasm

.Enthusiasm encourages participation in the initiative, makes people feel good about their participation and tends to encourage more radical thinking. If employees know that their crazy ideas are enthusiastically welcomed, they are encouraged to push their creative thinking ever further.

10. Diversity

..., if your firm employees a wide range of people with different educational backgrounds, different kinds of experience and of different cultures, your firm will have the advantage of breadth of knowledge, experience and thinking. That results in a wider range of ideas and a higher level of creativity.

What I like about this list is that it covers a wide spectrum of necessary "ingredients" that will result in effective launches of great innovative products... over and over again. Too often companies manage to develop and launch an innovative new product in spite of their corporate culture rather than because of it.

Large companies often embark on an innovation campaign, throw a few creative people at it and railroad an idea through and, if they're lucky, the product is a success. But too often it IS luck that plays the largest role in the achievement, which makes the whole process... unrepeatable.

To create a true innovation machine a company needs to look closely at its culture and determine what changes need to be made to re-energize the business and direct it toward innovation. This isn't an overnight process, which may be why the most innovative companies tend to be those that are smaller, newer and have not yet developed the stagnant corporate culture that typifies large businesses on this side of the Atlantic... or perhaps everywhere.

Not to say that it isn't possible for a large company to become innovative. Many of the steps listed above are easy to implement and should be applied across the corporation. Others require wholesale change which may be a bit difficult in an established company. (Who wants to fire half the workforce and hire on new to meet point number 10, Diversity?)

Other changes may need to be made on a smaller scale in a separate operating unit, dedicated to innovation. Many organizations have found success this way. This strategy too will fail though if only lip service is paid to innovation in the larger corporation.

Every company needs to determine the best way to create an innovation strategy that works best with their particular challenges and within or at least compatible with their own corporate culture. We've helped clients from a variety of different segments to reach these goals by keeping this fact, and the 10 ingredients for innovation success, in mind.

Watching And Waiting For Early Adopters On Web 2.0

The credit for the explosion in Web 2.O companies goes to early adopters and Web 2.0 companies' ability to reach them. Unlike the Web 1.0 companies of the early part of the century which, diverse though they were, focused on one to one interaction with consumers, Web 2.0 companies focus on multi user platforms.

Web 1.0 companies were selling something; supplying something; providing something for individual users. Web 2.0 companies are providing platforms for users to create their own experience…with other users. Think Myspace, Facebook, Twitter, FriendsFeed, Flickr, blogs and wikis.

Early adopters, that is, the technologically savvy have played a big role in driving the popularity of these new companies. When you're a tech or Internet Company, your early adopters, the ones that eventually drive your business or sometimes are your whole business, are easy to find.

But there are ramifications of Web 2.0 and the companies it spawned for traditional companies, old line manufacturers, service providers and even offline retailers too. Web 2.0 companies have made it much, much easier for many traditional companies to find innovators and early adopters for their products and reach them with marketing messages...maybe.

While frequently early adopters are associated with technological products, the basis for the theory Everett Rogers developed that segments users across a bell curve based on how quickly they adopt innovations, is applicable to just about any category of product.

Two key challenges marketers face is finding and communicating with early adopters and crossing the chasm where momentum picks up and the product gains acceptance by the early majority. Web 2.0 solves both of these problems for many companies.

If you follow Lazarfeld and Katz' Two Step Flow Model, which goes something like this:

... mass media information is channeled to the "masses" through opinion leadership. The people with most access to media, and having a more literate understanding of media content, explain and diffuse the content to others.

You can see why the new way of communicating, creates a funnel which smart marketers can use to direct marketing messages to the wider market. Opinion leaders have always played a key role in the success or failure of new products. In the 21^st word of mouth marketing is becoming one of THE key strategies used to launch a product.

Seth Godin writes this week in The Myth of Launch PR (which by the way, I found when it popped up on Socialbrowse) about companies that passed on the big media spend usually associated with a new product launch: Starbucks, Apple, Nike, Harry Potter, Google, William Morris, The DaVinci Code, Wikipedia, Snapple, Geico, Linux, Firefox and yes, Microsoft. (All got plenty of PR, but after the launch, sometimes a lot later).

Many of those names you'll recognize because... someone told you how wonderful the product was. Today that's even easier and happens at a much faster speed through social networking sites, blogs and other Web2.0 companies.

Finding and exploiting that user or users that can spread the word about a new innovation, cheaply and quickly is the Holy Grail of marketers in the 21^st century. But, the quest is not without its challenges.

Social networks and book marking sites frequently rise and fall before anyone has a good grasp on the audience they serve. Unlike the mainstream media, potential reviewers are fickle. They agree then choose not to review a product. (OK, sometimes the mainstream media does this too, but less often.) They create a big presence and attract a large following ...then disappear because life gets in the way. They get lost in the shuffle overshadowed by tech savvy, early adopters of the Web 2.0 TECHNOLOGY.

Just as marketers scrambled to try to determine how most effectively use Web1.0 technology, we'll struggle with Web 2.0 in its nascent stage. We know that early adopters are much easier to find now…if we could only figure out how to locate them. :P

Burnaby Board of Trade's Know You Neighbours

1. Full name and position/title: Tatsuya Nakagawa, President and CEO

2. Company/Organization Name: Atomica Creative Group

3. Company website: www.atomicacreative.com

4. Education/Credentials:

University of San Francisco, University of British Columbia

5. Average meetings per month: 20

6. Name a skill or talent you possess that is not in your job description (i.e. marketing background; can speak 3 languages)

Tennis Coach and NCAA Division 1 Tennis Player

Brown Belt - Karate

7. What makes your job fun?

New and innovative products and technologies.

8. Personal Peeves?

Bad cell phone manners

9. Favourite quote?

"Opportunity is missed by most people because it is dressed in overalls and looks like work."

- Thomas Edison

10. Name one person of influence who is in your professional network

Steve Wozniak, co-founder of Apple.

11. Who inspires you? Any mentors or role models?

Thomas Edison. Tiger Woods.

12. Imagine you had a working lunch with three prominent (or fictional) people.

Richard Branson, Virgin Group

Russell Simmons, Rush Communications

A.G. Lafley, P&G

13. Your favourite website is:

LinkedIn.com

14. Name one thing you cannot live without:

Family

15. List committees, organizations, or boards you sit on or have been a part of.

Burnaby Board of Trade, Board of Director

Japan-Canada Chamber of Commerce, Former Director

BC Export Awards, Steering Committee

BC Supply Chain Career Network, Former Director

16. What are you currently reading? Any favourite books?

Tipping Point, Malcolm Gladwell

Innovators Dilemma, Clayton M Christensen

Unleashing the Idea Virus, Seth Godin

17. What would be the professional legacy you'd like to leave behind? (i.e. increase sales by 300%; make corporate social responsibility a natural business practice; introduce technology that changes our lives).

To help change the global corporate innovation success rate from 25% (currently) to over 50%.

Creativity at Work: Linda Naiman on turning ideas into reality

Our approach to innovation has been somewhat focused on the industrial side. We're always looking for ways to help innovators avoid pitfalls and apply processes to improve their returns from innovation activities. It hasn't been as inclusive of the creative aspects that we recognize are crucial to innovation.

To help bridge the gap, I approached Creativity at Work^TM founder Linda Naiman whose approaches toward innovation come from a different point of view. We've been in regular contact for the last 2 to 3 years, updating each other on our work. Linda was happy to share some insights as she is preparing for a creative leadership forum she is co-hosting in Vancouver from September 16-18 along with Ralph Kerle, CEO of the Creative Leadership Forum, Asia Pacific.

Linda has her own definition of creativity that ties in nicely with our approach that focuses on achieving predictable and measurable results from innovation activities. She defines creativity as "the act of turning new and imaginative ideas into reality. Creativity involves two processes: thinking, then producing. Innovation is the production or implementation of an idea. If you have ideas, but don't act on them, you are imaginative but not creative."

Here are Linda's responses to a few questions I asked her recently.

Who were your early role models and what were the main things you learned from them?

My earliest role models were my parents and art teacher in grade school. My parents both encouraged me to be an artist, my father took me to museums and cultural events, and from early childhood we engaged in lengthy discussions about art, life and politics with an emphasis on analysis and strategy. My mother was always an athlete and a naturalist and she gave me a taste for travel and adventure. My grade 5 art teacher, Fritz Brantner taught us to be Cubists, and through him I learned to think in the abstract, and find the essence of the subject matter at hand - a useful problem-solving skill.

What key trends do we need to be aware of?

Innovation, innovation, innovation. It's not just about R&D and new product development. A recent global study of CEOs conducted by IBM reveals that the scope of innovation spans the entire enterprise, but with a focus on the business model and the customer. 40 percent of CEOs report they are changing their enterprise models to be more collaborative, and the study reports extensive collaborators outperform their competitive peers. "Partnering has shifted from tactical 'Enter a new market' to strategic 'Access to capabilities'," explained one CEO from Hong Kong. Collaboration with external inventors and customers plays a key role in nearly 50 percent of P&G's products.

Social Networking is another trend. Flickr, Second Life, and YouTube, are pioneering a new form of collaborative production that will revolutionize markets and firms.

Innovation requires a change in management styles that must shift from a command-and-control model to one of designer and coach. Organizations world-wide are discovering the merits of artistic and creative training. The arts-based skills transfer directly transfer to management: how to take risks, what motivates people, and how to engage your audience. Companies like P&G and Unilever have brought art and design principles into the practice of management and leadership to increase market share.

What is an example of an innovative company that people have never heard of?

Three companies who provide an innovative service online: Seattle-based TeachStreet, helps Seattle-based teachers and students connect. Students can search for teachers across more than 25,000 courses and filter the results according to location, ratings from other students, teacher availability, promotional pricing and more.

San Francisco-based Carrotmob aims to organize consumers to provide an economic incentive to companies for making positive environmental changes. The group hopes to begin by creating a broad network of consumers and forming partnerships with other larger advocacy groups. Next, it plans to implement campaigns focusing on different industries. Carrotmob will then approach the companies in each industry with suggestions, and invite them to make the changes they have identified.

Toronto-based Parkingspots.com connects those who have parking spots to rent out with those who need them on a monthly basis.

How do you measure innovation or creative success?

Two possibilities are Michael Porter's Innovation Capacity Index, and Richard Florida's Global Creativity Index.

Michael Porter says, "Innovation intensity depends on an interaction between private sector strategies and public sector policies and institutions. Competitiveness advances when the public and private sectors together promote a favourable environment for innovation." United States is number one followed by Finland and Germany. Canada is 10^th on the list.

In the Flight of the Creative Class, Richard Florida outlines what he coins the Global Creativity Index, which captures the ability of a country to harness and mobilize creative talent for innovation, entrepreneurship, industry formation and long-run prosperity. It measures technology, talent and cultural tolerance. Top of the list is Sweden, followed by Japan, Finland, US and Switzerland.

We'd like to thank Linda for helping bridge the gap between creativity and measurable innovation results. This helps us turn great ideas into reality.

Innovation Under The Golden Arches - What is McDonald's Up To?

Idris Mootee often spots trends in innovation that have somehow have ended up under the radar of the mainstream media. His recent piece, McDonald's innovation in Europe, caught my eye because this latest move by McDonald's is less an iterative change or a nod to cultural differences than a wholesale rethinking of their overseas business and perhaps their worldwide business model.

What McDonald's is doing is (finally) catering specifically to the tastes of the countries in which they operate by offering such staples as porridge for breakfast in the U.K. and soup in France. Denis Hennequin, president of McDonald's Europe, the first non-American to hold the post, is behind all of these new innovative ideas and he has his chefs in Munich cooking up even more to come for the 41 European countries McDonald's Europe serves.

One wonders if this is a reaction to the increasingly skeptical way in which those around the world view all things American. Where once The USA was the golden land and all things American were lapped up with enthusiasm, a confluence of events in recent years has led to a healthier view of America and American companies' role in world affairs - that is as a player, not necessarily THE player.

Or perhaps the alarming rate of obesity with its loose links to consumption of fast food has provided the wake-up call. Either way, we're seeing fast food chains innovate in a variety of ways to combat this change in worldwide eating habits, competitive pressures and a recessionary climate.

While fast food chains in the US struggle with consumers tightening their pocketbooks, overseas McDonalds is taking a more innovative approach and perhaps they are once again leading the pack.

... the whole fast food industry is ripe for a complete makeover, not a botox job. It needs to redefine its customer experiences and take a hard look at what "fast food" means. Fast food doesn't need to be "junk food". I think everyone in the industry better start looking at what is needed to transform this industry.

In other ways, McDonalds is bringing a new customer experience to the fast food customer, though, perhaps lagging a bit behind popular chains like Starbucks. While fast food has long been a staple of budget minded young people. McDonalds is just now testing wireless internet access and linger-friendly environments with comfy seating and larger tables. Could McDonalds replace Starbucks as the "office away from the office" for the budget minded set?

Whether all of McDonalds new innovations take hold remains to be seen. The various scenarios being tested seem to focus on two trends - targeting and addressing the needs of a younger market... one more wired and more health conscious; and integrating McDonalds more into the culture of the countries in which it operates. Both are tried and true strategies, so in that way, the approach is not innovative. But as I have mentioned before, innovation isn't necessarily about "new to the world" inventions, but often is achieved by applying existing knowledge in a new way.

Why not spend money on a Patent?

Success rates for new products, including patented ones, are shockingly low. For even the world's largest and most sophisticated companies, the numbers are about 25% - certainly below what most managers and owners would like.

There are several references that give the failure rates for new product introductions. The normal range is typically from 70 to 80%. These sources include:

1. Various studies cited by Advertising Age,[i]
2. A study[ii] by Linton, Matysiak & Wilkes, Inc. of the top 20 food companies reviewing 1935 new products,
3. A Booz Allen Hamilton study[iii] on new product management that claims one out of seven product ideas yields a successful product,
4. Boston Consulting Group vice presidents and directors James Andrew and Kermit King claiming 60 to 85% in an article[iv] titled 'Boosting Innovation Productivity',
5. Some college textbooks[v] claim 80%.

A study[vi] by the Product Development and Management Association titled 'The PDMA Foundation's 2004 Comparative Performance Assessment Study (CPAS)' shows 40% rather than the higher 70-80%. The PDMA figure appears to be based just on the post-commercialization or post-launch failure rate. It does not include all products that go into the development pipeline, rather just those that make it to the launch pad. Including all the steps from idea generation, the PDMA study failure rate is over 80%.

Companies stay alfloat because the products they sell, including new products, rarely rely on patented subject matter. Companies derive about a quarter of their sales and profits from new products, only some of which are patented. The other three quarters of a company's sales and profits come from yesterday's breadwinners that still have years left in their product life cycles.

So what happens if a company stops innovating? In most cases, it will slowly die. Companies operating in a competitive marketplace need to continually introduce new products or products that are better, faster, or cheaper in order to stay in business. They don't need to overdo it with innovations, but there is a need to have something in the works. Companies that are leaders in innovation become the pacesetters for the rest of the industry. The other players are forced to keep up or get knocked out of the never-ending race.

Another factor that stimulates the corporate innovation process is the tantalizing prospect of huge profits from world-beater innovations. For the few innovations that become blockbuster commercial hits, the rewards can be great. Companies that come up with such innovations and exploit them well can end up dominating their industry categories and raking in huge profits.

Does this mean small businesses need to come up with ideas and file patents on them? Let's look a little closer at the numbers as they apply to small businesses rather than Fortune 500 companies.

Only about one quarter (1/4) of the products that go into the development process end up being successful. This is a deplorably low figure that applies across a wide range of industries. The data comes mainly from well-established companies, typically the top ones in the various industries. In other words, one in four successes is currently accepted as the best that can be done in terms of converting ideas introduced to the development process into successful products.

What happens in the case of start-up companies? For these companies which are usually quite small, there is a whole other set of failure rate data involved. U.S. and Canadian statistics reveal that only about one third (1/3) to one half (1/2) of new companies remain in business for at least 3 to 5 years.[vii]^,[viii]. About a third of them make a profit during that time, another third break even and the remaining third lose money. Many of the companies that close their doors within the first few years do so because of business failures. Running a profitable business is obviously not easy.

Let's multiply the survival probability for a start-up company with the new product success probability. This makes the overall likelihood of success for a start-up company successfully developing and commercializing an invention or new product small. The math looks like (1/3 to 1/2) x 1/4 = 1/12 to 1/8 overall likelihood of success. Since the probabilities are not entirely mutually exclusive, the more forgiving 1/8 figure will be used. Determining what influence one of these variables might have over the other is beyond the scope of this article. In any event, a 1 in 8 or 12.5% chance of success seems somewhat risky which is why venture capitalists and finance people generally have a hard time dealing with start-up companies based on a new product idea. However, a well managed start-up company with a highly successful product can generate a phenomenal return.

From these numbers, it appears that the vast majority of patents are not worth the paper they are printed on. Here are five reasons a small business should look twice before calling a patent agent:

1. It usually costs between $5,000 and $20,000 to obtain a patent. These costs include the fees paid to the patent offices in one or more countries and those fees paid to the patent agents, many of whom are attorneys. These do not include the internal costs for having your key people sitting in the patent agent's office or working on the patenting aspects.

2. It normally takes about two or three years to obtain the patent and can take much longer if there are problems. Some innovations become worthless in three years, much less than the 15 to 20 years covered by a typical patent.

3. A patent gives a complete disclosure as part of the requirement for obtaining it. In other words, your competitors know exactly what you are doing and how you are doing it. This is especially so with recent changes to the U.S. patent rules that publicly disclose the entire contents of the applications 18 months after application, regardless of how long it takes for the application to get processed.

4. Most patents don't offer any real protection since they are often narrowly defined and easily circumvented.

5. The patents become extremely expensive when they become litigated. Usually the patent owner is the one who initiates the litigation. This is because, in practice, a patent is little more than a right for the patent holder to sue an infringing competitor. These costs can run into the hundreds of thousands or millions of dollars. After years of expensive and complex litigation, the infringer often does not end up paying much, if anything, to the patent owner.

Spending the same time, money and effort on your up front marketing would be a much better approach for most small businesses. Up front marketing does not include promotional and sales expenses but does include going out to determine what the real market is for the proposed or actual product. It includes focus group testing, trial selling, surveys, tradeshows, etc.

Look before you leap when you have an idea that might be patentable. At least you should do the math first.

Peter Paul Roosen has an engineering background and is co-founder of Atomica Creative Group , a specialized strategic product marketing firm. He has co-authored Overcoming Inventoritis: The Silent Killer of Innovation now available.

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[i] Brock, D. (1997). Getting the most out of your new product introductions. Partners in Excellence. http://www.excellenc.com/articles.htm

[ii] Linton, D.B. (1997, July 1). Market study results released: new product introduction success, failure rates analyzed. Frozen Food Digest 12(5), 76.

[iii] Dean, B. (2005, March 28). Case study: Incorporating focus group research into the product development process. DM News, Article 32310. www.dmnews.com/cms/dm-news/e-commerce/32310.html

[iv] Andrew, J.P. & King, K. (2003, April). Boosting innovation productivity. BCG opportunities for action, April 2003. http://www.bcg.com/publications/publication_view.jsp?pubid=847

[v] Friedman, H.H. (2000). Product policy; new product development. http://academic.brooklyn.cuny.edu/economic/friedman/mmproductpolicy.htm

[vi] Adams, M. & Boike, D. (2004, July). PDMA foundation CPAS study reveals new trends. Visions, XXVIII:3, 26-29; and: The PDMA Foundation’s 2004 comparative performance assessment study (CPAS). PDMA Foundation. www.pdma.org/cpas.php

[vii] Knaup, A.E. (2005, May 1). Survival and longevity in the business employment dynamics data. Monthly Labour Review 128:5, 50-57.

[viii] Baldwin, J., Bian, L., Dupuy, R., Gellatly, G., Statistics Canada (2000, February). Failure rates for new Canadian firms: New perspectives on entry and exit. Minister of Industry / Statistics Canada Catalog no. 61-526-XIE. www.statcan.ca/cgi-bin/downpub/freepub.cgi

Innovation and The Vancouver Olympics

Next Up: Vancouver. For many Canadians, watching our athletes perform in China is only half the attraction of the Beijing Games. Sure, it's great to see Canadian athletes pick up medals but with the 2010 Winter Olympics scheduled for Whistler, there's more than just an interest in sports.

Expected to give a big boost to business and spotlight some of the rapidly growing, B.C. based companies, the Winter Olympics and how to capitalize on them is of top concern to many executives in the area. A number of executives from a variety of companies traveled to Beijing this year to assess the opportunities.

While it's the sport and spectacle of the Olympics that will be in the public spotlight for the next 17 days, a cadre of B.C. business leaders is headed to Beijing with more than secondary interest in the behind-the-scenes activities.

Game organizers and those responsible for ensuring the events go smoothly, as well as local tourism departments, will be watching to see how well the games are orchestrated. Number crunchers will attempt to quantify the costs and benefits of bringing the games to British Columbia. Business, large and small are looking at Beijing as a jumping off point for the high profile coverage they can expect to obtain when the Olympics make their way to Canada.

Many 2010 sponsors are also in Beijing, or on their way, to honour their obligations as supporters of the Canadian Olympic team, and to learn about ways they can roll out their own hospitality programs a year-and-a-half hence.

"We're hoping our presence there will help our profile as a company," said Doug Horswill, senior vice-president for environmental and corporate affairs at B.C. mining firm Teck Cominco Ltd.

The bad news for local businesses is that the Beijing Olympics disappointed. The anticipated surge of activity failed to materialize. One Chinese business owner put it succinctly:

"Everybody thought the Olympics would be great for business," he said. "It turned out differently."

A combination of tight security, high prices and the big unknown of China combined to keep tourists away. Will this also be true in 2010? Canada, an established, industrialized, capitalistic country isn't quite as exotic as China and most probably won't elicit the same level of concern from tourists, but the two big unknowns, the world economy and the security situation, i.e. any new terrorism or conflicts could impact how much benefit the Olympics will bring to British Columbia.

Investing in Olympic licenses and developing Olympic related promotions is expensive and risky. Huge sums of money are spent every 4 years to create tie-ins for the few weeks of Olympic season in the hope of lasting benefit.

What can innovators do to maximize the exposure and reduce the risk? Our take is simple. Integrate Olympic based activities into the business plan. Think both inside and outside the box. Create solid, programs that mesh closely with your company's mission statement and overall business strategy. Team up with closely related athletes or activities - think long term relationship.

The 2010 Olympics my only run 17 days but the benefits could last quite a bit longer.

Moving From Marketer To Content Creator Drives Sales In a New Era

Often lost in the discussions about innovation is the role that enlisting consumer, especially key influencer, support is in determining the success of a new product. Despite hours spent in labs and on exacting market research, many an innovative discoveries fail because of ineffective launch strategies.

Identifying and building relationships with opinion leaders is something we try to do in all of our projects from well before the product launch. This is, of course something that the software industry does on a regular basis, enlisting developers in the early stages and releasing beta versions for testing.

In the consumer products arena however, this is used somewhat less often and frequently results in lower visibility and ultimately less success. In an age when consumers are easily accessible through the internet, it seems almost irresponsible to ignore this opportunity to involve them in the early stages of development and create an active community of supporters prior to launch.

An article, How to sell Vodka, discusses how one company, using limited resources, created a hot new product by using the power of the internet and word-of-mouth marketing to build a winner in the distilled spirits category.

"We can't do things with more money or more people. Our aspiration is to find people - customers - who are discoverers and disseminators."

In an era when budget cuts force companies to look for creative ways to market products, innovators are changing focus from top down marketing to content creation.

"We have gone from being a marketer to being a content provider," Phillips said, and he wasn't referring to the contents of a cocktail glass. "Our job is to create photos and tools and content that others can use to build our brand."

How to implement or even initiate this strategy leaves established marketers scratching their heads and grasping at straws. This is, perhaps why it is often the purview of smaller, quicker, younger companies filled with entrepreneurs not MBAs.

Working the web, filled with social networks, blogs and message boards can be a daunting task for the uninitiated. Navigating the realm of social marketing in search of key influencers requires an understanding, not of strategy, but rather of tactics of the web that may be unfamiliar to mainstream marketers.

But that's where the innovators of the product adoption cycle reside these days - on the internet.

Word-of mouth marketing is rapidly replacing aspirational marketing as the tactic of choice for rapidly growing companies. Yes, celebrity endorsement still has the power to drive sales, but a positive review from a well-known blogger can often add legitimacy to a product claim. Viral marketing campaigns and well-executed online PR campaigns reaching key influencers often perform just as well as a mass media ad buy, particularly in smaller fragmented categories. Original content, particularly amusing YouTube videos can raise awareness faster than broadcast ads (though reposting those on YouTube works well too) as they rapidly spread from user to user.

As companies, large and small, scramble to refocus established marketing departments in the new era of Web 2.0, creative strategies evolve to become personal. Content creation becomes the goal. And it is, of course, not your "father's" content. Hipper, of course, but more honest and interactive as consumers play a greater role in influencing product design.

Innovation Going Green - B.C. Government Helps

By now, those of us involved in innovation, no wait, everyone, whether involved in innovation or not, knows that green inventions are the hottest new thing. It seems that the Canadian Government knows too... at least in B.C.

As I've written about before:

Canadian companies are very reliant on the Natural Resource Sector - the drill it, mine it, chop it mentality.

So, it's not terribly surprising that this government effort is focused on energy. The B.C. plan offers a 30% tax credit to early-stage investors in companies engaged in the research and development, commercialization and/or manufacture and processing of clean technologies in British Columbia and employing B.C. workers.

"Innovative clean technology reducing GHG emissions will play a key role in helping to grow B.C.'s green economy," said Technology, Trade and Economic Development Minister Ida Chong today. "The tax credits will lever up to as much as $25 million annually in venture capital to support clean tech companies that can offer exciting employment and investment opportunities to British Columbians."

The goal is, obviously to get on the cleantech bandwagon. Moving from old line energy producing industries makes sense as a diversified economy is in the best situation to ward of the impact of the possibility of unemployment driven by the almost certain recession soon to come.

British Columbia is already home to the third largest Cleantech cluster in the world, growing at an annual rate of 11% a year. Naikun Wind Energy Group Inc., which plans a wind farm off the coast of British Columbia, had one of the best ROI in Canada in the cleantech field.

Companies in British Columbia conduct research and development in a variety of fields including: transportation, energy efficiency, wastewater clean air and fuel cell development. More are in early stage development or searching for investment capital.

And, with the increased interest in green, that is sure to continue.

There are now close to 100 cleantech companies listed ion the TSX Venture Exchange, (The TSX Venture Exchange is Canada's public venture capital marketplace for emerging companies). Market value of these companies is more than $13 billion. But hard times could be coming.

The creaky economy and the booming successes in 2007 has led to a slump in 2008 in the TSX Venture Exchange. Entrepreneurs and established companies are struggling to maintain the growth rate enjoyed over the last few years. Investors are leery of banking on new technology in an era when consumers and businesses are hunkering down and payouts may be years in the coming.

Will this tax incentive make a difference?

We think it will. As evidenced by the Abenga Solar case in the U.S. tax credits can make a big difference. Without tax credits, a clear sign of support from the government, funding for risky, new technology projects can easily fail.

In an already tight credit environment, tax credits can make the difference between private funding of a project or not. Investors clearly see the benefits of investing in a field supported by those government entities charged with economic growth.

What Canada Can Learn From Israel About Innovation

I've written before about our concern that Canada is experiencing an innovation void.

In my opinion, Canadian companies are very reliant on the Natural Resource Sector - the drill it, mine it, chop it mentality. This could be holding them back from innovating. To fully embrace a culture of innovation Canadian companies need to learn from their counterparts to the South and take more chances.

Recently we posted an interview with Mark Krupnik who earned a PhD in applied mathematics from Technion - Israel Institute of Technology. Now, I ran across an article in the Globe and Mail that looks deeper into what makes Israelis so innovation focused and what is holding Canada back.

Interestingly, it's not lack of innovation that seems to keep Canada consistently behind those countries with reputations for not only developing, but also commercializing innovation.

Our national output of discoveries is impressive. University of Toronto professors, as just one example, are third in publication totals world-wide, exceeded only by Harvard and Tokyo. But the commercialization record of Canadian universities is modest. Our best performers generate far less revenue than their U.S. or Israeli counterparts. And, when it comes to turning discoveries into popular products and services, our outputs are underexploited.

Israel by comparison has strong connections between researchers and business and government support and direction - all focused toward the future. Israel, unlike Canada, is a country virtually devoid of natural resources and so, perhaps has a greater incentive to develop an array of innovative industries to support its economic growth.

On the other hand, in less than a generation they have been able to go from exporting primarily agricultural goods to exporting primarily technology. Can Canada, or should Canada take the same route, de-emphasizing our export of natural gas, timber and oil and focusing solely on technological innovation? Probably not, but a future focused innovation strategy has its benefits.

In Israel, as in most countries leading the innovation parade, there are close connections between those involved in pure research and business leaders that can take these products to market. Funding for new research is backed by and encouraged the government and generous grants, both public and private are available for good ideas with good foreseeable, as well as unforeseeable commercial application.

In Canada by contrast, while innovation is heralded as a way in which to fuel our economic engine, the focus, too often has been on incremental changes to our major existing industries. One might consider that giving lip service to true innovation.

To truly take its place in the roster of countries leading innovation in the 21st century, Canada needs to refocus and rethink about the connections between industry and government. It needs far seeing entrepreneurs, as well as, leaders in established industries to advocate a change of course as T. Boone Pickins has in the U.S., rattling an industry entrenched with and supported by the current presidential administration.

Until Canadian companies re-evaluate the roles they play in innovation and our path toward the future, unfortunately Canada will lag behind.

Predicting the Future - Interviewing Retalon's Mark Krupnik

Retalon develops and markets inventory management and forecasting tools that helps Gillette, InterTAN (Circuit City), Danier Leather and other retailers and distributors accurately predict demand. The net result is improved overall profit margins and performance. This is achieved by optimizing the price, quantity and discount levels over time.

We interviewed Retalon's co-founder and president Mark Krupnik who has earned a PhD in applied mathematics from Technion - Israel Institute of Technology. He has worked as a forecast scientist and project manager at Stirling Douglas Group, and later at NCR (Teradata) after it acquired Stirling. Retalon was founded in 2002. We managed to catch up with Mark in Toronto to find out what he had to say about innovation and how he and his technology-based company approaches the subject.

What are some of the ways you quantify success in innovation at Retalon?

We have three different indicators that would tell us about success in innovation. All three indicators need to work together.

1. We should like it ourselves. Our people need to feel like they are involved in something big and interesting. We should be excited about it. This is less quantifiable than our second indicator.

2. We have a proof of value exercise that mathematically gives higher gross margins for a retailer. Our business is in helping retailers optimize their ordering processes to manage price, quantities and discounts to their benefit. We use before and after comparisons to determine success for our customers. We do this by taking a piece of data for the past few months and comparing it to the next period. This is highly quantifiable.

3. We track the number of converts. When you bring new technology, the more people who buy in, the more people like it, the better. This is not as quantifiable.

What type of internal systems or strategies does Retalon use to foster innovation?

Our company has very strong ties with universities and consultants. We work with Ryerson, University of Toronto and the University of Waterloo. Also consultants from Lakewest, IBM, CGI, etc.

Our approach is that we try to go to a customer and seek to understand what they need. Sometimes they cannot express it clearly enough because they only understand the existing technology. Then we go through the university and consultant group, gather the research and match it with the customer needs.

We have two independent streams: the customers and the university & consultants. By staying on top of the research, we know what technical possibilities there are that can be applied to the customer needs. Likewise, we can use customer needs to give more direction to our research efforts.

Who does Retalon look to as being leaders in successful innovation?

I don't want to offend any particular company, but we divide innovation into two groups:

1. Strategic - something that is completely new and that others don't see. Examples include Apple, Google and RIM (Blackberry).

2. Tactical - technological development. They innovate methods and are kind of predictable. Examples include Adobe and Agile.

Do you have an example or two of best practices Retalon has learned from other companies?

For best practices, we like Microsoft and Google. The user interfaces give small numbers of options or features. Exactly the right stuff at the right time. We imagine the same interface as to what will be next. If you are our customer, you will find the next thing in your dynamic needs. The options and features change proactively but they represent what you would need at each stage of your work.

We have good things to say about IBM. There is something from IBM that I have on my wall that describes the five stages of innovation.

Five stages of adopting of an innovation:

1. People deny that the innovation is required.

2. People deny that the innovation is effective.

3. People deny that the innovation is important.

4. People deny that the innovation will justify the effort required to adopt it.

5. People accept and adopt the innovation, enjoy its benefits, attribute it to people other than the innovators, and deny the existence of stages 1 to 4.

(Editor's note: sometime after the interview, Mark emailed the above 5 stages quote to us.)

It is sad but reality.

What areas would Retalon like to improve?

We would like to put more structure into the innovation process. It does not need to be a contradiction. Innovation is creative, yet we need to set boundary conditions. We don't want to kill the creative process but, simultaneously, we want to put some structure into it. It is a delicate balance.

The marketing is one of the important factors to dictate where we should draw the line.

We would like to again thank Mark for taking time to share his views and Retalon's approaches to innovation.

Innovation Stigma

Reading this post, Innovation Stigma, reminds me of the IBM ads, like this one starring innovation man or this one describing the perfect space for innovation, as if there was one. They play perfectly into the mystique surrounding innovation.

People are conditioned to believe innovation requires "skunk-works" in a specially-designed room to pursue "white space opportunities." Innovation is voodoo.

While creativity and the ability to visualize is key to brainstorming and identifying new ideas, in reality, innovation can be an exacting science, especially when it comes to executing a workable idea. What many, if not most people associate with innovation is but one step in the process.

Like many projects, those dedicated to generating new products for the company, start with one or several people and grow to include a group of people. Like in most projects, the broader the range if ideas, the more likely the right one will be discovered.

And so, what marketers consider the initial stages of innovation - brainstorming and idea generation, too many people consider all of innovation. This is a clearly not the case, to which those of us in the field can attest.

Innovation, in the early stages does require creativity but, successful innovation processes are often not led by managers wearing funny glasses. More likely the process is led by managers well versed in accounting, finance, marketing and often with experience in sales.

Knowing up front the challenges in implementing and selling a new product CAN result in the quashing of good ideas, but those good at innovation know better than to do so. Innovators have the ability to allow a long list of ideas to see the light of day and evaluate each one, over a period of time, outside the room filled with Frisbees and Slinky toys. More often or not, the evaluation process takes place in front of a computer or in a room filled with engineers and finance types.

Unfortunately, the former vision of innovators as "altruistic dreamers" is perpetuated by of all people, the innovators themselves. This is, of course, self defeating and leads more self styled, buttoned up types to be leery of innovators.

One executive described innovation champions as necessary but had low expectations of actual results. Of more concern is the perception executives have about themselves in this role. My sense is business people shy away from championing innovation because they believe the stigma of failing at innovation is more career-damaging than failing at other ventures.

As Drew Boyd concludes in his article, innovators need to drop the mystique and pull aside the curtain. More respect needs to be paid to classic innovators and classic innovation techniques - hard science and solid research.

Corporate leaders need to understand and be involved in the innovation process. Without innovators at the helm of a company, a corporation can easily lose its way and move away from its core competencies and true mission.

Those capable of leading effective innovation programs, the rare mix of analytical and creative skills can be difficult to find, but those who should be involved in the process and champion are and should be legion.

Consumers Choose "New" - It's More Than Just a Word

Last week I wrote about how sometimes it pays to be second to the market with a new idea. Those of us involved in innovation try to look at all angles.

But what is it about developing new products that makes it worthwhile? Why do companies large and small put massive efforts into creating new products? The answer is that new products make money. Sure, the vast majority of new products fail, but those that make it, often make it big, bringing millions of dollars of profit to successful innovators.

A recent post, The Power of New, at Marketing And Strategy Innovation Blog delves a little deeper into the why of new products. Why do consumers like new products? Why do we keep changing the products we buy? Of course, technological advancement drives new product efforts in techie fields, but why do we feel the need to keep changing cereals?

Because it gets us high; that's why! Choosing something new releases dopamine, the same pleasurable sensation associated with a "runners high".

The UK Telegraph, reports that:

Scientists in London have found that we all possess the key brain region which acts on the same pleasure pathways that make drugs addictive. They discovered that people are programmed to try out something new, such as a familiar product in an unfamiliar package or one that boasts a new formula.

Consumers are drawn to the word "new, as well as a change in packaging or product design that convinces the brain that it is looking at an unknown.

"Seeking new and unfamiliar experiences is a fundamental behavioral tendency in humans and animals," says Dr Wittmann. "It makes sense to try new options as they may prove advantageous in the long run. For example, a monkey who chooses to deviate from its diet of bananas, even if this involves moving to an unfamiliar part of the forest and eating a new type of food, may find its diet enriched and more nutritious."

The neuromarketing message, then, seems simple - making a product "new" in some way may give it a boost when compared with competing products.

As professionals involved in innovation, keeping in mind the power of "new" certainly makes sense. However, we do not believe this necessarily should impel companies to step up their new product efforts or slap "new and improved" on existing products that boast incremental changes. Yes, consumers are preprogrammed to seek out the new, but mindless product development and poor execution can still hamstring the most well financed new product effort.

Innovation or Imitation - Sometimes The Answer Might Surprise You

Much as we laud true innovation, in the real world, the word, "new product" often means "line extension" rather than "new to the world". The reasons are obvious.

"It is estimated that there were over 50,000 new products introduced into the consumer products sector last year, up 77% from 10 years ago. Since the typical store has only 40,000 SKU's, it can be pretty difficult for a consumer products company to succeed today!"

The cost of true innovation can be staggering and the risks inherent in following that path can tip the balance toward business as usual. This is one reason often truly new ideas seem to percolate up from the ranks of entrepreneurs with little to lose and large industries with extensive regulatory protection (i.e. drug companies, etc.)

But, an alternative approach, as discussed in this post, Am I Better Off Being An 'Imitvator' Than An 'Innovaor' ? is to be a speedy second.

"Speed doesn't necessarily mean being first, you can be choose to be a strategic fast follower and there are plenty of advantages to that."

The first mover advantage is often exaggerated or blatantly wrong. In many cases the company that seems to have been first to market actually has followed in the footsteps of innovators with strong product ideas, but inadequate execution.

Since good innovation is often an iterative process, this makes sense. Despite extensive exploration into consumer buying behavior and eliciting of consumer opinions, it is good to remember that... research can be wrong. The history of marketing is littered with research failures, the most famous perhaps being New Coke.

The advantage in being second is in the opportunity to improve. Often the errors made in the product development process are not clear until after the initial launch, when it becomes glaringly obvious that a feature was left out or usability is less than desired.

Similarly errors in marketing execution become obvious only after launch. A great product supported with a lousy marketing plan is doomed to failure. While the first mover struggles to correct those errors a nimble second to the market can move into first place with a sharp and rapid launch.

Peak Products, a local Richmond, British Columbia company that was a fast follower providing low cost, but high quality - product and package design - copies to big box retailers, is a good example. Coming second to the market, but improving upon design and supporting the launch with a strategic sales and marketing plan, Peak Products has now been able to position themselves as an innovator. It has become part of their core business.

A key component of innovation is the ability to think outside of the box. Sometimes that means looking beyond pure innovation and toward improvement. While "me too" products and line extensions abound, finding success by being second requires looking beyond the obvious to what might have been.

In our innovation sessions we pay particular attention to competitive products, possible products and newly launched products. Often a pipeline product has already been introduced by a competitor. That isn't necessarily a deterrent. Rather it could be an opportunity.

Group Blogs, Wikis and FriendFeed- Participation Drives Innovation

A post, Using FriendFeed Rooms for Work: What's Needed?, by a fellow blogger, Hutch Carpenter, started me thinking about how the web can and often does play a role in the innovation process... and what could make it better. As I've discussed in this blog and with my clients, we at Atomica believe that strategic new product development requires participation by managers from a variety of different department. Often that is neither practical nor possible with far flung divisions and busy schedules.

Early solutions to this problem included conference calls and later, video conferencing. These options is of course subject to the same types of challenges as in house meetings are- schedule conflict, tardiness and inattentiveness. Some issues relate to the off-site nature of these gatherings. The distraction of interruption by phone or physical presence... by those who disregard a closed office door and the temptation to multi-task when one is cozily situated at one's desk staring at a full inbox.

Newer web based solutions have started to surface and, in general have allowed managers to overcome some of the drawbacks of both virtual and actual meetings. The asynchronous nature of most web applications allows users to overcome the drawbacks mentioned earlier of unfocused attendees in teleconferences and video conferences. Multi tasking, contrary to popular opinion, actually results in a loss of productivity, not a gain.

By allowing workers to access the group site in their own time, the propensity of group members to concentrate solely on the activity at hand increases. This leads to more and responsiveness and better communication.

An early web application, group blogs, has turned out to be excellent for brainstorming. The open nature of a group blog allows participants to express their thoughts and comment on others, building upon one or several central ideas and keeping a running record of the conversation. They do, however, tend to favor those participants with the strongest writing skills, often the marketing folks who tend to try to run the show anyway. This can lead to minimal input from those with a more technical bend, often the engineering folks who have the basic information required to make the project a success.

Wikis, popular in many companies for group projects, solve some of the problems related to document exchange and provide a forum for users to post messages and comment on them. Rather than digging through the overcrowded in box for email messages pertaining to the project, group members have one central storage place for everything. There are some drawbacks though.

The land of wikis is well developed, but most of them suffer from only emphasizing multiple user changes to documents and revision tracking. They lack the interactive participation that makes FriendFeed so compelling.

Friendfeed however, shows real possibilities. This application allows sharing of a variety of different types of media including web pages, documents, image files and videos and provides rooms for group meetings. Adding wikis to Friendfeed would offer the best of both worlds and greatly improve the level of participation of various users in group projects. Hutch Carpenter offers some ideas on how to do this effectively.

Rooms already have three key elements for making them into wikis:

- Ability to manage who the room members are

- Room-specific search

- RSS directly into rooms

Here are my four features for wikifying FriendFeed rooms:

1. Better handling of RSS feeds for document changes

2. Sticky setting for entries

3. Timestamp comments

4. New comments and entries notification

Because participation is key to effective innovation and we live in a world where distance increasingly is meaningless, we must come up with better ways to enable managers to effectively interact. As the web continues to evolve, I'm sure we'll continue to see better applications.

On the other hand, there will still always be that one member of the group that never contributes his share.

Survey Ranks U.S. Tops In Fostering Innovation - But Rest of The World Gaining

A recent survey recognized the leadership role that the US has played in innovation over the last century , but notes how other countries are gaining.

"The U.S. maintains the top spot as the global technology leader in innovation," said Mark Jensen, national managing partner of Deloitte's Venture Capital Services. "While the U.S. isn't losing ground, the globalization of innovation is underway. The rest of the world is finding out what they're good at, and venture capitalists recognize where those strengths lie."

In Europe, the focus is on life sciences and clean technologies, two high growth areas that are attracting capital and a growing legion of workers. In Asia, technological innovation has moved to the forefront, though selected life science research centers are becoming common as private and government funding in Asian economies increases.

In Singapore, for example:

A key focus of the economic strategy has been the subsidized attraction of investment by multinational companies, and later in the period the lower employment cost of foreign workers. As the economy grew, labor became limiting, and immigration policy became a key economic growth tool.

Taken as a whole, it is policy, culture and strategic planning that results in effective innovation, for not only countries, but for individual companies. Often ignored by entrepreneurs and more often by large corporations, is understanding how innovation fits into the framework of the existing company.

While out-of-the-box thinking often results in new products and services that change the world, that thinking is usually most effective when it exists with the underpinnings that make an effective launch possible. We see this in failed and successful innovative ventures around the world.

"The Japanese government was one of the first to recognize the value of developing and maintaining a pervasive, high-speed broadband infrastructure throughout the country, fueling significant innovation around the next generation of broadband applications,"

Hence Japan as has attracted venture capital and interest from growing internet firms like Yahoo!. As more firms capitalize on this framework, more innovation results.

In Germany, a country that has a long history of interest in all things green, new eco technology innovation is thriving.

"Germany is the beneficiary of a well conceived, stable public policy that has ensured attractive markets for alternative energy technologies. This combined with a strong general technology base, has fostered substantial innovation in the space," said David Prend, partner, Rockport Capital. "As a result, for example, Germany, a country with marginal sun, is a leader in solar photovoltaic technology that they export to the rest of the world. Venture capital follows quality technology and innovation."

But don't worry about the U.S., venture capitalists still view the US as the leader in innovation. Whether or not that will continue to remain the case, remains to be seen.

Innovation Opportunity In The Beverage Industry - Niche Marketing

We are fans of niche marketing. Innovating effectively means creating new products and services that will sell to a particular consumer. In today's crowded arena that market is often a small but growing group of consumers. An article in Food Navigator discusses this trend and explains some of the impetus for niche innovation driving the beverage industry.

Fragmentation in consumers' needs and preferences has stimulated the growth of American niche beverages, according to analysts.

The sale of flagships products has stagnated, forcing beverage companies to broaden their portfolios, said Stephen Rannekleiv, vice president for Rabobank's beverage, food and agribusiness research and advisory division.

The niche demand is a significant new trend in the beverage industry, he said, speaking in a company podcast. Another new trend is the desire for products that are better for the environment.

Large beverage companies, with their eye on emerging trends, are aggressively developing niche products. This is making it very hard for small to medium sized beverage companies to complete. Large companies however have the challenge of brand identity, developing an effective niche marketing strategy then sometimes means forgoing the flagship brand as Coke did when launching Dasani Water.

Alternately large brands can stick closer to home and explore niche markets complementary their flagship brand. Gatorade recently signed a deal with Tiger Woods to license his name on a new drink. Will Gatorade be attempting to increase market share among golfers or with the multitude of younger athletes who are Tiger fan? Gatorade isn't saying just yet.

Smaller and medium size companies, on the other hand are perfectly positioned to explore niche markets too small as of yet for the big players. While larger companies pile on the emerging trend in healthier drinks, smaller companies are free to explore niches within that niche.

Some promising trends that have been identified include beauty food. Already big in Japan the market for natural beauty enhancers is growing. Topical ointments and creams are available to the in the U.S. but beauty and enhancing food and beverages are limited.

Other areas of growth are children's health food, mood enhancing and functional foods and beverages that deliver specific health benefits. These categories are, as of yet too small for major beverage manufacturers to capture but are perfect for smaller and medium sized-companies.

Both large and smaller companies will do well to keep an eye on the growth of functional beverages. As Westerners continue to be exposed to a wide variety of food from all over the world, the health benefits of those foods become better known. An aging population in much of North America and Europe means more health problems and greater interest in ways that lifestyle can impact longevity.

Exotic fruits and regionally popular extracts are making their way into Western culture. Super fruits from South America should soon be joined by emerging exotics from Africa. Flavoe profiles are changing too. Unfamiliar flavors, to the Western palate at least are slowly making their way into the mainstream. Green tea is being followed by varietal flavors of popular fruits such as orange and grape.

All of these trends are becoming popular on the fringes, many will find a solid niche and some will become as popular as the once "hippie food" yogurt, spawning their own niches in time.

The Canadian Innovation Void - Is It Holding back The Economy?

A Nova Scotia Chronicle-Herald article starts off with a thought that is of concern to many of we Canadians in marketing.

THE BIG QUESTION in Canada is, why are businesses performing so poorly as innovators when compared to their American and many other foreign competitors?

They are? Well yes.

In the early 1990s, output per hour of working in the Canadian business sector was close to 85 per cent of the U.S. level.

It is now down to about 75 per cent of the U.S. level, reflecting differences in innovation, which comes from bringing on new products or services or finding better ways to do things.

The article goes on to say that much of the difference in innovation comes down to management. Canadian companies are less enterprising than their counterparts in the U.S. and in many companies in Europe. While the government is often blamed, it is rather that Canadian companies are more focused on cost cutting to improve profitability than on inventing new products and services to grow their businesses.

While cost cutting, American style tends toward restructuring resulting in a leaner, more agile and risk taking environment, in Canada, lean manufacturing is not on the radar for over 1/3^rd of all companies (as compared to only 18% of companies in the U.S. and Europe.)

So why is this? In my opinion, Canadian companies are very reliant on the Natural Resource Sector - the drill it, mine it, chop it mentality. This could be holding them back from innovating. To fully embrace a culture of innovation Canadian companies need to learn from their counterparts to the South and take more chances.

We need to take greater risks in manufacturing, in exporting, in business development. We need to restructure organizations and cut out the fat. While the United States model of wholesale elimination of levels of management may be too drastic for Canadians to consider, European models, particularly those in Germany and Scandinavia may have ideas that can be implemented effectively.

As we struggle with the concepts of lean manufacturing, risk taking and innovation, we fall behind countries who have adapted these concepts to their own particular culture and political environment. As we fall behind we become not only less competitive but also risk continuing to grow our economy.

Finding the right answer is vital to our future because without more innovation, and the higher productivity it brings, we will have a tough time sustaining a prosperous economy and a high quality of life.

Amen.

Innovation Inspired By Other Industries - When Existing Ideas Are New

Building an organization focused on innovation often requires realignment of priorities and focus on a new approach to doing business. Unfortunately in the quest to do something new and different, innovators often forgo looking at what's already out there for inspiration.

Innovation doesn't necessarily happen in a darkened room. Often it occurs when an old or existing idea in a different environment takes on new life.

A video that recently appeared in Martin Lindstrom's column in Ad Age online, Where to Find Inspiration for New Marketing Concepts- Watch Industries Other Than Your Own, discusses one way effective innovators find new ideas.

Pointing to an unusual exhibit in the Museum of Modern Art that electronically maps New York City's global telecommunications traffic, he notes that one of the best sources of new marketing ideas is in industries outside of your own.

Lindstrom goes on to discuss how the map of incoming and outgoing calls in NYC gives us a snapshot of where business activity is happening around the globe. This is, of course, of interest to other industries beyond telecommunications - such as the airline industry. An increasing number of calls to a locale means increased business there which requires more flights. By viewing the work of the telecommunications industry, airlines have a head start on developing new routes.

While the example Lindstrom gives borrows the marketing research conducted by one industry and applies it to another, there are countless ways to benefit from the successes and failures of other industries.

As I mentioned in a post Innovation: Old Often Becomes New, that appeared in Fast Company: originality is overrated. As successful marketers and innovators we know that the path from inspiration to effective execution contains many pitfalls, mistakes and miscalculations. That's why, in many cases, the most effective way to innovate is to recast an old idea in a new way.

By looking beyond your own industry, with which you surely are familiar, you bring added brain power to the search for inspiration. The quest for ideas for new products and services happens in all industries. Both success and failures in an industry not your own can provide inspiration for ideas that can work or work better in your industry.

One approach that I like to take is to look at an industry that is more progressive than your own. This may be one that is more consumer focused or more fashion forward or simply more consumer driven or less.

Retailers, often frustrated with inappropriate packaging or displays often guide potential vendors to manufacturers from another industry for ideas. This shortcut saves time and energy that industry-centric companies often waste trying to reinvent the wheel and frequently enables the innovative company to gain entry into new channels smoothly and quickly.

Technology companies, especially in the consumer hardware space, frequently hire designers and marketing folks from other industries to help them understand the needs of their target market. While early adopters are drawn to the technology, later on in the product adoption curve, consumers look more to fashion and "coolness", hence the need to "borrow" ideas from fashion industries.

Manufacturers selling to many small resellers and service providers do well to look at companies with similar channels of distribution both inside and outside the industry served. Often a change in the distribution landscape in one industry is the harbinger of a change in another.

Being truly innovative doesn't mean just coming up with new ideas. It means using all of the tools at one's disposal to come up with new, effective and executable ideas. Sometimes that means just looking at what already exists.

User-Generated Innovation - Nokia does it You Can Too!

Many people think of innovation as occurring when one genius, alone with his or her thoughts, suddenly leaps into the air with an, "A Ha!" and heads down the path to success. Most of those of us involved with innovation know that this is rarely the case.

In truth, innovation, as we mention in our book, happens in lots of different ways. Though coming up with a unique idea in that "light bulb" moment is the romanticized idea held of innovation, in fact, most good ideas and many of the great ones, result from obtaining input from a variety of different sources, including consumers.

Soliciting and then acting upon user input can not only produce new ideas it can make good ideas great ones. At Nokia, an experiment with opening up a new application, Sports Tracker, for user input turned into a whole new way of streamlining the product development process for the Finnish cell phone maker.

Sports Tracker, designed to benefit runners and cyclist, allowing them to use Nokia phones' GPS capability to capture workout data was downloaded by over one million users when a beta version was posted on Nokia's web site. What surprised Nokia and led to a new way of thinking about the innovation process was the sheer variety of people who downloaded the software - from paragliders to balloonists - and how they used it. Users, it turned out found hundreds of different uses for the software, uses well beyond those the developers had considered.

As a result, Nokia developers are realizing that aiming the application at amateur athletes was too narrow. They are thinking of rebranding the application as a kind of life-tracker.

Since Nokia launched their Beta Labs site, where Sports Tracker was featured as the first application, Tom Vilkarmo, manager of Nokia Beta Labs has a happy problem - managing all of the feedback generated by the over 1 million page views the site garners each month.

But, to Vlkarmo, his managing all of that feedback adds one more step to the process of getting consumer feedback to the software developers. Though he currently blogs about Nokia's new products,

Vilkamo's plan is to turn blogging responsibility over to software developers, so they have direct contact with customers. "Before, there were too many middlemen between developers and users," he says.

This is just one example of a company harnessing the power of the internet to create community, drive innovation and provide direct support to those responsible for innovation. While it's not uncommon for software companies to solicit key users or developers for beta testing, Nokia's strategy of encouraging anyone with an interest in the product, which, incidentally tends to be heavy users, led to more creative thinking, created a community of users and is currently breeding even more new product ideas.

An inventor sitting alone in a room or even discussing new ideas with like-minded colleagues is at a disadvantage when a whole world of ideas is just a mouse click away. Rather than worrying about theft of a good idea, true innovators should worry more about missing the great idea that soliciting user input can reveal.

Do you have a terrible idea?

I just finished my #2 speech for Toastmasters. Let me know what you think.

Speech title: Do you have a terrible idea?

How many of you have watched Dragons Den or American Inventor? These shows feature entrepreneurs and inventors all pitching their ideas to get financing from these business experts.

Like these experts on these shows, we see a lot of ideas too. It's funny because we actually have talked to many of the same people.

People regularly ask me, "What do you think of our product or idea?"

I tried all sorts of tactful ways to answer this question (and believe me I tried many)

I finally found the perfect answer.... (Click Play if you are interested)