Why Innovation Champions Fail And What To Do About It IIR Return on Innovation Conference 12/4/03

1. Why Innovation Champions Fail And What To Do About ItIIR Return on Innovation Conference12/4/03 Jack Hipple, Innovation-TRIZ Tampa, FL jwhinnovator@earthlink.net www.innovation-triz.com

2. QUESTIONS ARE YOU AN INNOVATION CHAMPION? IN WHAT CONTEXT? HAVE YOU SURVIVED?

3. Corporations are constantly looking for inventions, acquisitions, collaborations, and processes which can allow them to grow at a rate faster than the GDP of the country/world--and faster than their competitors! Many unsuccessful attempts have been made to sustain internal efforts to support these goals--nearly all have been terminated (sometimes restarted years later!) These efforts have spent HUNDREDS of millions of dollars! Perception that there are untapped ideas within the organization Even perceived “successes” have seen downsizings eventually I. WHY IS THIS TOPIC IMPORTANT?

4. WHY IS THIS IMPORTANT? • Previous leaders of these programs, for the most part, are in successful consulting businesses or start-up companies--major corporations have lost them--probably forever • Their clients frequently include ex-employers! • Learnings? It seems we are starting all over again!

5. THE AMI STUDY

6. ASSOCIATION FOR MANAGERS OF INNOVATION (AMI) • An informal group of 50 innovators, most of whom have (had) responsibility for innovation programs within large companies, government agencies, or non-profits • Meets twice yearly with outside stimulus speakers and sharing of experiences • Active since 1986 • Sponsored by Stan Gryskiewiecz at CCL

7. AN OBSERVATION WAS MADE….. • A large percentage of corporate innovation managers had become consultants or joined start-ups, after downsizings and early retirements • These were usually associated with termination of the function • With further passage of time, the percentage rose more, with 15 people (out of 30-40 active members) identified • Note: trend has continued

8. AMI DECIDED TO….. • Survey and study this phenomenon • Jack Hipple, Innovation-TRIZ • David Hardy, Bank of Montreal • Steve Wilson, Eastman Chemical • James Michalski, Eastman Chemical • See if there were any learnings that could be shared • Publish if possible

9. Survey Questions • MBTI, KAI profiles • Funding mechanism • Leadership/sponsorship • Ideation process • Tools used • Personal insights

10. RESULTS • Study completed in late 2000 • Publication complete • Chemical Innovation, 11/01 • Leaders in Action, 5/02 • Condensed versions on various web sites • Presentation at World Future Society (7/01), CPSI meeting (6/02), ACA (7/02),Innovation Network (9/02), IIR (12/03) • Input to Harvard Business review article on innovation • Results can be shared anonymously • Findings significant • Additional data is supportive

11. LEARNINGS FROM STUDY • Significant differences between “styles” of innovation champions and “norm” around them • KAI™ and Myers Briggs Type Indicator™ analyses can help assess • Personal learnings and experiences--what would be done differently? KAI is a registered trademark of M.J. Kirton Myers Briggs Type Indicator is a registered trademark of CPP, Inc.

12. INSTRUMENTS FOR ASSESSMENT

13. MYERS-BRIGGS (MBTI™) • A tool which measures our “style” of social interaction and how we analyze external information • Extraverted/introverted (E/I) • Sensing/intuition (S/N) • Thinking/feeling (T/F) • Perceiving/judging (P/J) • 16 possible combinations • Ex: ESTJ, INTP • Not equally likely MBTI is a registered trademark of CPP, Inc.

14. MBTI™ • 90% of innovation champs were “N’s”, 70% “NT’s” • Less than 10% of the population are “NT’s” • >80% of corporate senior managers are “S’, typically ESTJ’s • This sets up major potential conflict

15. IMPACT OF MBTI™ DELTAS • Change always seems bigger to an “S” than an “N” • “N’s” are more comfortable with change in general • If desired change is not defined clearly, conflicts will result

16. EXAMPLES…. • “We need to do different things in this company…” • Does this mean get into an entirely new business, make an acquisition? • Does this mean we need to process existing orders more efficiently?

17. A COMPANY CAN HAVE A CULTURE…. • SJ---Likes stage gates, continuous improvement teams • NJ---Likes targeted breakthroughs • SP---Continuous improvement, bottoms up • NP---Internal venturing, sustaining ideas

18. THE KAI™ INSTRUMENT KAI is a registered trademark of M.J. Kirton

19. WHAT KAI™ MEASURES • MBTI™ measures how people relate to each other • KAI™ measures how people relate to problems--their problem solving style • Instrument sub-scales measure originality, rule/group conformity, and efficiency

20. THE INSTRUMENT • A 32 question assessment with a range of responses • Range of score, 32-160 (32 questions X (1-5) response • 15-20 minutes to complete • Highly validated across many areas and cultures globally • Dr. Michael Kirton, Occupational Research Centre, Hatfield Polytechnic Institute, England • Indiana State University, Terre Haute, IN

21. KAI™ DIFFERENCES • Managerial “norm” is 95 • Total norm around 90 • Average of innovation champs was 135 • Friction visible with differentials of 10-15 (at any point) • Warfare visible with differentials of 30+

22. KAI™ DISTRIBUTION NORM

23. IMPACT OF KAI™ DELTAS….. • Replacing vs. improving • Reaction to internal vs. external threats • Appreciation for detail • “Right” vs. risk

24. OTHER TOOLS • Alternative tools for evaluation • BCPI™ • 16 Types™ • Gatehouse Alliance Discovery/Insights™ BCPI is a registered trademark of Gerard Puccio 16 Types is a registered trademark of True Type Testing Insights is a registered trademark of Andrew Lothian, Insights

25. ACCEPTANCE OF PERSON AND THEIR IDEAS DISLIKE IGNORE SABOTAGE ATTITUDE TOWARD PERSON SUPPORT ENCOURAGE HELP LIKE HIGH LOW Source: Charlie Prather NOVELTY OF IDEA

26. ACCEPTANCE OF IDEA EQUIVOCALITY HIGH LOW MOTIVATION DISTANCE BLACK HOLE GRAND SLAM DEAD IN THE WATER LONG SHOT HIGH LOW COMMUNICATION Source: National Center for Mfg Sciences Study

27. WHAT’S BEEN TRIED? • A specially funded “enterprise”, usually under the umbrella of the R&D organization • Funding usually (but not always) outside the control of existing business units and sometimes at the expense of these existing businesses • Sometimes combined with other corporate initiatives in acquisitions or venture capital efforts • Sometimes minimally funded for support staff only--”can’t fund and can’t say no”---primary responsibility was encouragement, moral support, and guidance • Programs sometimes focused around a unique physical facility • Leadership of program frequently in the hands of one key senior leader

28. WHAT WORKED • Ideas were stimulated and new businesses were started • R&D personnel were allowed to explore outside their normal focus area • Special meetings, demonstrations, exercises highlighted the importance of the activity and demonstrated support • New tools and techniques were introduced

29. WHAT DIDN’T WORK • Ideas, in general, were not integrated with complete corporate business structure and environment • New business $ not at the rate desired • Ignorance of the amount of effort and investment required to change the corporate climate and/or business • Business/commercial involvement after the fact caused priority conflicts and resentment • Virtually no involvement of the sales/marketing organization • Time horizons and impact poorly estimated • Narrow and individual sponsorship • “get the bandit on board the train”----Charlie Prather • Lack of skill training

30. CONSEQUENCES • Subtle forms of sabotage • Corruption of funding process • Lack of staying power during economic downturns • Program “died” with the loss of sponsor • Maybe this wasn’t such a good idea after all • Uneven skill and tool training produced uneven results across an organization

31. CONCEPTS PROVED VALID • People within an organization DO have new and unique ideas • There ARE new business opportunities which will not be discovered by normal business visions and processes • Independent funding mechanisms, no matter what kind, can stimulate different activities

32. CONCEPTS PROVED INVALID • A single location (“creativity centers”), by itself, within an organization, can facilitate broad organizational innovation • The R&D function can do it alone, or in spite of other functions

33. RECENT BUSINESS TRENDS • Customer driven vs. technology driven ---the balance has shifted significantly • Core competencies being used to identify focus areas and frequently used as shadow organization structures • Alliances and strategic partnerships that are not necessarily permanent • New problem solving tools • scientific vs. psychological • “Business” teams and organizations vs. functional leadership of activities

34. RECENT PERSONNEL TRENDS • Dramatic decline in loyalty, downsizings • Increased specialization • “Temporary” assignments and more rapid turnover Impact Capturing and broadening of intellectual property (not just patents, but “know how”) much more important AND difficult

35. TECHNOLOGY ADVANCEMENT VS. TIME Desired Advancement Actual Time

36. WHAT ELSE HAS CHANGED?

37. A DRAMATIC CHANGE…. GENERATING COST OF INFORMATION Source: Jim Palmer, P&G DISSEMINATING TIME

38. COST OF INFORMATION….. • Generation • Must be right in the first place • Must be focused on the right problem • Problem definition more critical than ever • Must be protected and provide value • Dissemination • Retrieval • Access

39. LONG TERM BUSINESS TRENDS (NOT CYCLES) Emergent Action Rational Action Constrained action Charismatic Leadership Creative Network Conservation CRISIS CHOICE Confusion Strategic Management Entrepreneurial action Source: Crisis and Renewal, David Hurst, Harvard Business School Press, 1995

40. REGARDLESS OF WHERE YOU ARE IN THE CYCLE…. Innovation is ALWAYS NEEDED!

41. HOW SHOULD WE DO IT RIGHT--IN AN ORGANIZATIONAL SENSE?

42. “Money isn’t everything…..but it’s right up there with oxygen” Rita Davenport, Entrepreneur

43. FUNCTIONAL INTEGRATION • All innovation efforts and initiatives must include or have a mechanism to trigger inclusion of the commercial and manufacturing base of the organization • Who is going to buy? • How are we going to make? • Do we have the required competencies? • Should we license and/or find a partner?

44. IDENTIFICATION AND ASSESSMENT • These skills are not usually present in one individual--must be paired up early • Can be a great mechanism to involve commercial organization • Simple skills can be taught and learned by everyone • What happens if this actually works as planned? • The new monomer example • The B-2 bomber

45. “Six months in the lab will save at least an hour in the library”

46. LONG TERM TREND ASSESSMENTS • What is affecting your customer? Their customer? • What could put both of you out of business? • What are the impacts of broad new trends? • Lines of evolution from TRIZ methodology

47. USEFUL TECHNIQUES • Simulate emergencies, surprises • Deliberate articulated strategies • Expansion of core competencies • Separate thinking from criticism (Six Hats™ process) • Corporate crusades • Meetings and visiting with totally unrelated people and technologies ™APTT and Edward DeBono organization ™Six Hats is a registered trademark of Edward DeBono and APTT

48. Peter Drucker, 1982 “Innovative companies do not start out with a research budget. They end with one. They start out by determining how much innovation is needed for the business to stay even. They assume that all existing products, services, and markets are becoming obsolete--and pretty fast at that. They try to assess the probable speed of decay of whatever exists, and then determine the “gap” which innovation has to fill for the company not to go downhill. They know that their program must include promises several times the “innovation gap”, for more than a third of such promises--if that many-- ever becomes reality. And then they know how much of an innovation effort--and how large the innovative budget--they need as the very minimum”

49. Hamel and Prahalad “Slimming down the workforce and cutting back on investment are less intellectually demanding for top management than discovering ways to grow output on a static or only slowing growing resource base. Cutting the buck is easier than expanding the band; thus organizations prefer the former over the latter. Managers and operational improvement consultants must ask themselves just how much of the efficiency problem they’re working on. If their view of “efficiency” encompasses only the denominator, if they don’t have a view of resource leverage that addresses the numerator, they have no better than half a chance of achieving and sustaining world class efficiency”

50. Hamel and Prahalad (2) “Few companies seem to have asked themselves what is the opportunity cost of the hundreds of millions--or even billions-- of dollars that have been written off for re-engineering and restructuring. What if all that “redundant” brain power had been applied to creating tomorrow’s markets? Far from being a tribute to senior management’s steely resolve or far-sightedness, a large restructuring and re-engineering charge is simply the penalty that a company must pay for not having anticipated the future” …Competing for the Future