Wednesday, May 15, 2013

5 levels of innovation maturity

One feedback I and my co-author Rishikesha Krishnan have been getting in our talks/discussions is – Is there a way to assess where we stand on innovativeness based on the framework in 8-steps to innovation? That triggered us to create an assessment framework. In this article we present a broad outline of the framework and illustrate how organizations move from one level to the next in their innovation journey. We will use publicly available data from two organizations: Toyota and Cognizant. We really appreciate the detailed accounts created and made publicly available by Yuzo Yasuda for Toyota and Kumar Sachidanandam for Cognizant. We hope more organizations follow the practice in future.

From Ad-hoc to Foundation level: Level-1 called Ad-Hoc is no brainer – if you don’t track ideas in any form, then you are at level-1. To begin your journey from Ad-Hoc to Foundation level (level-2), you need to implement 3 core processes: idea management, buzz creation and training & development. However, to qualify you at the foundation level, you must get at least 10% of the employees to contribute at least one idea annually. This journey can take a few days to a few years depending upon the size of the organization. For example, it took Toyota 5 years and Cognizant  3 years to clear the 10% participation hurdle.

In the early phase, most organizations emphasize idea management process and also organize trainings. However, the process which needs special attention is the buzz creation process. Apart from rewards and recognition, it involves things like organizing events, running campaigns, publishing newsletters, success stories and dashboards, building communities of practice etc. In Toyota it involved organizing exhibition of implemented ideas, field trips and changing the tone of the communication from a formal to informal. In Cognizant, it involved creating a set of champions who facilitated igniter sessions, identified problems, mentored idea authors etc. Moreover, it involved organizing innovation fairs in India (4 in the 3rd year) and outside India (11 in the 3rd year), publishing innovation journal from second year and organizing innovation summit from the third year.

From Foundation to Engaged level: Level-3 is called “Engaged”. Getting 10% of the people engaged innovation activity is one thing. However, sustaining the engagement at 30% is something else. What are the people engaged in? People are engaged in various activities related to innovation, but at this point the two activities which matter most are experimentation and reviews. The metric also says at least 10% of the ideas should have prototypes created for them. Unfortunately, this data is not available from these organizations. However, we believe that creating a culture of experimentation is perhaps the most difficult aspect in this journey. For management, getting a habit of reviewing ideas / proposals and doing it effectively also takes time. For a services company like Cognizant, it may involve facilitation in getting a buy-in from customers. This is also a crucial phase when the treatment given to those whose ideas / experiments have failed sends a strong signal to everyone. If the organization can’t show tolerance for failure during innovation, it is difficult clear this level. For Cognizant, the 30% hurdle was cleared in 3 years since the program started. Note that another requirement to clear this level is to have business impact calculator in place. For Cognizant it was put in place in the third year.

For Toyota, it took 15 years cumulatively to clear level-3 and 10 years after clearing level-2. Getting middle management engaged is usually a challenge. Toyota mandated that for the second round of review of selected ideas, it is not the idea author (typically a shop floor worker) but his manager present the case. A self-organized community of gold-silver-bronze medalists called “Good Idea Club” made a difference.  

From Engaged to Aligned: Up to level-3 (Engaged) the innovation program can run within a division or function. However, at some point it needs to enable differentiation for the organization i.e. it should align with the strategy of the organization and perhaps help create one. This usually means two things: One, there should be one or more innovation sandboxes with dedicated teams created within a few strategic constraints and experimentation should go from low-cost high-speed to low-cost high-speed and high-volume within the sandbox. Two, there should be a healthy big idea pipeline e.g. Total potential impact of the big idea pipeline > 10% of revenue. For most organizations it also means having a few specialists who can think deep within their domains of expertise.

At Cognizant, creating a concept lab was a step in the direction. Specific focus areas were identified e.g. Text mining, Faceted browsing and Robotics and slowly expanded to include semantic web, big data analytics, autonomous computing, augmented reality etc.

Note that idea per person per year metric is expected to be at least 1 to clear this level. It took Toyota 19 years cumulatively to clear this and Cognizant may have cleared it the current financial year.

From Aligned to High Batting Average: This is the final and output centric level. Rate of success for implemented ideas especially for large impact ideas should be greater than 50%. We have borrowed this metric from what A G Lafley ex-CEO of P&G set for their innovation program. Similarly, it helps to see how much of current business comes from the innovations in the past 5 years. We have currently put 20% - similar to product vitality index of 3M which is currently at 33% and that of Eureka Forbes which is also at much higher than 20%.

This is our current view and it is evolving as we talk to more organizations. I keep updating this post with the latest version of the assessment chart. If you have any inputs and/or need any help in assessment, please contact us at:

Kumar Sachidanandam et. al, “Is managed innovation an oxymoron?” Jan 7, 2013.

Saturday, May 11, 2013

Using the navigation matrix in the innovation journey: from 8 steps to innovation

The title of our book “8 steps to innovation” can be misleading. It doesn’t advocate following steps 1 to 8 similar to a Do-It-Yourself kit to get a ready-made culture of innovation. Similarly, it is not meant to offer a basket of techniques to be used as per the taste of the user. It is more like a fault-diagnosis and service manual. It proposes an iterative approach involving diagnosis and corrective action to progress along the innovation journey. Let’s see how it works in this article.

In the diagnosis phase “8 steps” offers a 3x3 matrix to identify what problem you are trying to solve. It looks like this:

The two questions it asks are: (1) What to improve? and; (2) How to sustain the change? For the first question, you need to check whether your problem is primarily that of pipeline, velocity or batting average. Similarly, for the second question, you need to check if the problem you are trying to solve is a Rider problem (lack of direction) or an Elephant problem (lack of motivation) for one or more stakeholders. Elephant problem can be addressed by an activity appealing to the emotion and/or developing a structure/process that is easy to implement (shape the path). Now, let’s look at a concrete example depicted in the presentation below.

The situation was like this (Please see page 15 of the presentation). The innovation program was launched in December 2010 and within a month 40 ideas were received from 25 people. Management was supportive of the selected ideas and some of them moved forward. However, management felt that none of the ideas was “interesting enough”. It meant that none of them was promising to impact the business significantly. Was it an Elephant problem or a Rider problem? It was a Rider problem. People didn’t know which are the top problems facing the business.

One way to focus the creative energy of employees is to launch a challenge campaign. A first step in this direction is to create a challenge book (step-2). I facilitated a session of 15 managers / senior managers where a challenge book consisting of 20 business challenges was identified. We took the challenge book to the CEO who selected a challenge to be launched as a campaign. This time around 20 ideas came as a response. However, they were different from the previous ones in two respects. One, the quality of many of the ideas was much better. Detailed cost-benefit analysis was presented. Two, at least a few ideas involved cross-functional collaboration – say a supply chain executive teaming up with a sourcing executive etc. A cross-functional team led by a Vice President was formed to take the selected ideas forward.

The presentation depicts three more such examples involving different kinds of problems. Each example starts with a diagnosis of the situation, identification of one more steps as a response, a few experiments and finally an implementation. Monthly dashboard is a good trigger to start the diagnosis. 

Related article: If you want to know what the 8 steps are, please check out this presentation from my co-author Prof. Rishikesha Krishnan: 8-steps to innovation: An introduction.

Wednesday, May 1, 2013

Challenge book behind “8 steps to innovation”

One of the myths we talk about in “8 steps to innovation” is a belief that innovation begins with creativity. We observed in our research that most innovations begin with curiosity. This was true for James Watt, Gandhi and Mark Zuckerberg and for many other innovators.  Hence we propose that building a challenge-book – a place where we list the problems we are curious about – is a good beginning. Challenge-book is the second step in our 8-step approach. What kind of challenge-book did we as authors build whose response was the approach “8 steps to innovation”? That is what I would like to present in this article.

What are the sources of curiosity? We found 3 that cover majority of the challenges we came across. Those are: Feel the pain, Sense the wave and See the waste. Let’s see what kind of pains, waves and waste we came across that went into building our challenge book.

Feel the pain: My co-author Prof. Rishikesha Krishnan published his previous book “From Jugaad to systematic innovation: The challenge for India” in February 2010. The response from corporate India was – “This is all fine. Tell us how we can go from jugaad to systematic innovation.” Essentially, the managers were saying that they don’t know how to run innovation initiatives effectively in their organizations. They were also saying, “Don’t tell us to be like Steve Jobs or Ratan Tata. We know we can’t. Or don’t tell us to give 20% time free to employees like Google to do whatever they can. Our business model doesn’t permit it.” This became one of the key challenges for us to explore and address.

The second pain area of managers in India is presented succinctly by Baba Kalyani, Chairman Bharat Forge, when he said, “We are slaves in manufacturing;  we have to be our own masters”. This has been a growing aspiration among managers in India to go beyond operational excellence and contribute in the innovation journey of their organization.

Sense the wave:  We, as authors, began to surf two distinct waves. The first wave was related to the growing buzz around “innovation” everywhere but especially in India. We attended the first Innovation Summit conference held in Bangalore in 2005. President of India declared 2010-20 as the decade of innovation and formed National Innovation Council headed by Mr. Sam Pitroda. Tata Group, India’s laregest conglomerate, formed a group-wide forum called Tata Group Innovation Forum to foster a culture of innovation. Clearly more people in India started talking about innovation than ever before.

The second wave was that of behavioural economics that is shaking up the Rational-Agent model held closely by economists for the past few centuries. Daniel Kahneman getting Nobel in 2002 and then Malcolm Gladwell’s bestseller Blink creating debate around intuition helped. Right from Greenspan to Michael Porter began to admit that lack of frameworks for thinking rationally hasn’t been the key challenge for poor decision making. Kahneman and others were showing that the cognitive biases hardwired into our brain are the root cause. It was interesting to ask the question: What does all this mean for innovation management? Can the new understanding help manage innovation more effectively?

See the waste: First decade of this century saw explosive growth of mobile phones and wireless networks. And yet it also saw demise of large telecom companies like Siemens, Nokia, Motorola, Alcatel, Nortel etc. Most of these companies were spending huge money into research – considered by many to be the main ingredient for innovation. Is it possible that these companies were spending the money inefficiently? Perhaps there is a much better way to do innovation?

Another wasteful activity was related to ineffective innovation program management. One of the innovation program manager narrated to us how idea flow shot up right after the program launch. However, over the subsequent months the idea flow came down and finally became a trickle until everybody lost interest.