Despite all you read, innovation is really quite simple. It consists of five key steps:
 
1. Create a range of workable concepts (i.e create, enhance and evaluate your raw ideas).
 
2. Test these as quickly and as cheaply as you can.
 
3. Measure what happens.
 
4. Learn from how consumers or users react to your new product, service, solution or concept and
 
5. Share this learning around the organisation, so that you don’t keep repeating your mistakes and others may learn from your work.
 
And most importantly, action these five steps (or cycle) faster than your competitors, faster than you have ever done it before and faster than customers expect it.
 
As I said, it is simple really.
 
Yet when leaders ask me how to enhance their innovation efforts I direct them to this cycle and ask them how are they at each of these five steps (and the connections between these). Over many years of asking this question, do you know the one area they say they are very good at?
 
Measurement. That’s right. Management today is all about measuring things. To be sure, this is important but what about the other four steps?
 
Most leaders admit that their team or business is not good at creating new ideas (perhaps not allowed to or encouraged to?), nor can they test these concepts quickly. Nor it seems, are they adept at learning from their actions and certainly don’t share this learning across the different functions or teams across the organisation.
 
It is no wonder that most organisations struggle with innovation. You need all five steps completed at lightning pace to thrive today.
 
Ask yourself, what steps in the innovation cycle are your brand or business good at?
 
If you have answered this question honestly then you are half-way towards improving your innovation results.
 
Let me know your answers.

Yours in ideas,
 
Dr Ken Hudson

This quote is from a book, The Act of Creation by Arthur Koestler (page 230). This 700 page classic was written in 1964 and is still (I believe) the best book on creative thinking ever written.

Koestler’s basic idea is that the creative act is a "bisociation" which happens, if two (or more) apparently incompatible frames of thought ("matrices") are brought together by an ingenious mind (Wikipedia). For example, it was only a few years ago that someone had the idea of placing a cafe within a car-washing place. This is such an obvious idea, have a coffee whilst your car is being washed buy no-one had thought to place these two concepts together. Note there is nothing original about car-washing nor a cafe but putting these together for the first time is a classic example of what Koestler calls ‘bisociative thinking’ i.e thinking in two planes not one.

 

It seems that this Hungarian borne essayist, novelist and journalist was way ahead of his time. Recent research by  Professors Jeff Dyer of Brigham Young University and Hal Gregersen of Insead, conducted a six-year study surveying 3,000 creative executives and conducting an additional 500 individual interviews. During this study they found five "discovery skills" that distinguish them. These are:

 

1. Associating–a cognitive skill that allows creative people to make connections across seemingly unrelated questions, problems, or ideas (see the connection with Koestler’s work?). 

 

2. Questioning — an ability to ask "what if", "why", and "why not" questions that challenge the status quo and open up the bigger picture.

 

3. The ability to closely observe details, particularly the details of people’s behavior.

 

4. The ability to experiment — the people we studied are always trying on new experiences and exploring new worlds.

 

5. And an ability to network with smart people who have little in common with them, but from whom they can learn.

 

The researchers suggested that the ability to make novel and original associations as the most important of these discovery skills (for the full interview click on:  http://blogs.harvardbusiness.org/hbr/hbreditors/2009/09/how_do_innovators_think.html)

 

To create profitable opportunities for your brand or business it is essential to try to escape what I have called the incremental cycle. Incremental targets are set (what we did last year plus 3%). This leads to incremental thinking, ideas, actions and ultimately results. It is safe but ignores potential opportunities to grow at a much faster rate. It also assumes that your competitors are satisfied with growing at a similar, incremental rate.

One way to break free of this cycle is to create a BHAG (big, hairy, audacious, goal) for your brand. For example, I recently completed a BHAG exercise with each of the brand managers of a well-known soup company. In this situation the marketing director was convinced that they could achieve more than the limited growth they were achieving. By pushing each of the brand managers to develop their own brand BHAG, as a group they could decide which brand has the greatest potential for growth and invest accordingly. Their category BHAG was to position soup as ‘the 21^st Century sandwich.’ Thinking of soup as a complete, all year round meal has lots of implications for new product development and who the competition really is. For example, does soup have to be liquid? Can it come in a sandwich form? Could you have soup on the go? Could you develop a Breakfast proposition?

 

  

How to use this tool:

 

But how do you create a compelling brand BHAG? The originators of this concept, Collins and Porras (1) remain silent on this point. However, there is a way forward:

 

a. Form a diverse team of 6-16 people.

Form a diverse team, which can commit to spending a half a day together. In our group there were marketing people, advertising agency staff, sales managers, market research, media and senior managers. Have a BHAG champion but ensure that you invite people who have a limited knowledge of the brand. The challenge is to create interactions between a diverse range of perspectives. It is also a good idea to vary the team design for each meeting (i.e. have a core group and other invited participants) and to select an external venue.

 

b: Ensure everyone has a working knowledge of the brand

This step ensures that everyone has a working knowledge of the brand, its profitability, competition, any market trends etc. The BHAG champion (usually the brand manager) should conduct this overview. This should be sent out before the meeting so participants can come prepared and re-presented at the beginning of the workshop. Importantly every participant should be asked to develop his or her own BHAG and bring it to the meeting. In this way you have many different starting points and participants have to think and engage in the session.

 

c. Ensure that everyone understands the concept of a BHAG

Another vital step is to clarify and discuss what exactly is a BHAG and why it might be beneficial to the brand. In our first meetings this stimulated much discussion as we argued what were example of good and bad BHAG’s. Our consensus was that a powerful BHAG had to engage our collective ‘heads and hearts’. It needed to be measurable (e.g. to double our business in five years), needed to stretch us, fit within the vision of the business and also to engage our imagination and emotions (e.g. to be the most talked about brand among teenagers). At the end of the day however the workshop should be primarily focussed on creating a new BHAG for the brand not trying to solve any specific issue (that is a later session). Participants should be concerned with ‘what’ the brand is trying to achieve not ‘how’ at this stage.

 

d. Start with each participant’s BHAG.

The next step is to discuss and review each participant’s BHAG. Each BHAG should be placed up on the wall for all to see and various variations of the BHAG’s can be discussed. In this way everyone has an opportunity to contribute and sometimes a winning BHAG can be created from taking elements of a number of different ones. It is useful at this stage not to get bogged down in exact wording but trying to organise and prioritise like-minded concepts.

 

e. Move out of your comfort zone

This is the most critical stage in the process. BHAG’s by their very nature are non-linear so the challenge is to move out of the group’s comfort zone to explore new possibilities. One technique we used to achieve this is by asking each participant to create at least three original questions about the brand (you do not have to solve these, it is simply to create a new perspective). For example, why don’t people love our brand? The more provocative and left-field the questions the better. The group is then asked to decide on the five most surprising, unexpected questions and asked to develop a BHAH to address this question. This process is repeated a number of times until a new set of more insightful BHAG’s emerge.

 

f. Evaluate

Again this is a critical step that takes courage and creativity. You have to fight the temptation to throw out the outrageous BHAG’s because they make everyone feel uncomfortable. By definition that is exactly what you are trying to achieve. Try and develop a short list of similar concepts then try and prioritise them. In this way you can at least agree on the main thrust of the winning BHAG then begin crafting each word so it can be as powerful as it can possibly be. If it is too rational, give it some emotion (e.g. love, crave); if it is too subjective, inject an objective measure (e.g. by when? how much?). In our sessions we developed an evaluation criteria which covered consumers, the company, trade, the brand, competition and our own gut-feel. In this way we examined the new BHAG from many different perspectives.

 

Developing a BHAG is a powerful new way of starting your brand planning process. It is rewarding because it provides an illuminating beacon but the journey itself can also be productive as you begin to challenge your preconceived notions of a brand’s potential. You find yourself asking such questions as: Why can’t this brand double in size in the next five years? What are the barriers? Are they real or imagined? When you start to ask these types of questions you begin to unlock many new opportunities for your brand and your business.

In my doctoral research on Organisational Creativity I spent some time researching the Four Corners program at the ABC (in Australia). During this time I conducted many interviews in the staff canteen (when the ABC was at Gore Hill) and I noticed something that became an important insight in my research. The staff canteen was perhaps the most creative place and space at the ABC. It was a hub of spontaneous interactions, with people (literally) bumping into one another which might prompt a new thought or connection.
 
These interactions were fun, informal and often quick. People met in a casual way and discussed their new ideas over a sandwich. There were no barriers as the so-called stars of the network had to line up for their lunch like everyone else.
 
My message? In the quest for innovation, most managers only concentrate on building a formal, stage-gate system and tend to ignore an equally important part–the informal system. This is where new concepts can emerge outside the formal structure and it directly influences culture. It is no use creating a big, bold idea if no-one is open to a new direction or of the culture is risk-adverse.
 
Whenever I work with a new organisation I always try and feel the informal part of their innovation system. If this does not feel right then no amount of tinkering with the formal innovation process will work.
 
In short, staff canteens and other informal meeting places really matter–protect and encourage these.

Where are the informal innovation places at your work? Are these valued and nurtured?

Coming up with a new, different idea is the start of the innovation process. But an underrated part of this process is to build a stronger, workable concept. I have found that by asking the following six questions you can transform your raw idea into something that can create more value for customers and your shareholders.

1. Can the idea better meet a customer or user need?

2. Can the idea be made simpler?

3. Can the idea generate more revenue?

4. Can the idea be made more original?

5. Can the idea save more money?

6. Can you test the idea quickly, simply & cheaply?

I read with considerable interest that enrolments in MBA courses were on the increase ("MBA seen as a recession buster", AFR, April 6). While I have a lifelong love of learning, I can think of nine reasons why doing an MBA is a bad idea.

1. The current financial crisis was caused by the best and brightest MBA graduates.

2. MBA courses don’t teach ethical behaviour.

3. Nor common sense.

4. Nor creativity.

5. They rely on out-dated case studies.

6. George Bush Junior has a MBA.

7. Business people should spend more time with their family.

8. MBA schools slow down thinking and action.

9. They complicate rather than simplify everything.

Ken Hudson

 

How fast is your business?

Is it faster than the competition?

 Can it keep pace with the changes in the marketplace? If not, then you better quicken up because you will increasingly be left behind.

A business manager that is fast to think, act and learn is the blue-print for success today.

Being fast enables your business to:

- Compete with the big guys who are slow to respond and adapt. In the fast-food industry for example, being able to accelerate the drive in service can directly impact sales and profitability (drive in is now up to 70% of all sales).

- Keep up with customer expectations–they want it fast, accurate and high quality. When selecting a new car for example, the speed of response to an enquiry online affects the perception of a car dealer and impacts on the perception of what car brand, consumers might select.

- Create new market segmentation opportunities–perhaps there is a group of customers that will pay more for a faster service.

- Deliver a better customer and employee experience. When the customer wants or needs a response then you should be able to deliver it. With insurance claims, for example, consumers want the claim settled quickly and this factor above all drives their sense of customer service and loyalty.

- Differentiate yourself and win more business. Speed for example, is the number one factor for consumers considering switching broadband suppliers.

- And finally, it enables your leaders and managers to learn more quickly.

Speed in the new battle-ground for business leaders today. You need to be able to think faster and better and establish processes to accelerate what you do. Don’t hesitate-just do it!

Ken Hudson

 

Many companies spend literally hundreds of thousands of dollars on market research. Some of this no doubt is well spent but i suspect the great bulk of it tells business people what they already know. I think there is a better way, it is simple, quick, practical and powerful.

Just ask your front line staff what frustrations customers have in dealing with their business. Using Speed Thinking (i.e. nine responses in two minutes) means that people do not filter their responses. I conducted this type of workshop with an airline yesterday and the group came up with the following:

- Long ‘Q’ delays

- Fare rules that are too rigid

- Poor food in flight

- Delays in plane departures

- Waiting for luggage

- Lost luggage

- Slow check-in.

- No-one who could help when a customer needs it

I have only listed the most common ones but you can see that they were honest, authentic and provided an objective starting list of issues to tackle. The message, ask your front-line staff, they know what is going on and then involve them in the design of a solution. It will be better, they will be more committed and it can be done quicker and cheaper.

Ken Hudson

 

Well-known customer loyalty authority Fred Reichheld, in his recent book The Ultimate Question (Harvard Business School, 2006) has suggested that there is one single question which has the strongest statistical correlation with repeat purchases and referrals (and ultimately profitable growth).

 

The question is this:

How likely is it that you would recommend company X to a friend or colleague? (on a zero to 10 point scale).

 

This is an intriguing, effective and fast way of assessing consumer’s reaction to your business. So we asked the same question of two different groups that have participated in The Introduction to Speed Thinking Course (one a PR company, the other a public course).

 

Our NPS was 78% for the public course and 83% for the In-house one.

 

The NPS is obtained by taking the percentage of detractors (score 0-6) from the percentage of customers who are promoters (score 9 or 10).

 

Although it is only two courses and the numbers are small, our NPS would place us in the very top tier of all firms highlighted in Reichheld’s book.

 

If you can, I would recommend that you try the NPS approach. It is backed by research and the aim is to drive business growth rather than artificial customer satisfaction scores. Also it is simple, smart and quick-everything we love about a new way of working.

 

What is your Score?

 

Best Wishes

Dr. Ken Hudson