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 3^rd year) and outside India (11 in the 3^rd 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: vinay@catalign.com. 

Source:

Yuzo Yasuda, “40 years, 20 million ideas”, Productivity Press, 1990.

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

8 steps to innovation: in action from vpdabholkar

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.

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.

3 things I liked in Richard Rumelt's “Good strategy, Bad strategy”

I have known Prof. Richard Rumelt of UCLA primarily through his interviews and carry a lot respect for his perspectives on strategy. I have found his metaphors like predatory leap and strategy as surfing a wave useful. It is no surprise that I enjoyed reading Rumelt’s “Good strategy, bad strategy (GSBS)”. In this book, Rumelt has condensed his wisdom of five decades and made it accessible to people like us.

In an earlier article I have written about the 3 challenges in implementing strategy that was based on the “bad strategy” part of GSBS. Here I want to focus more on the “good strategy” part and present what I liked about it, a few things I thought are missing and finally a few places where GSBS intersects with our book “8 steps to innovation”.

These are the 3 things I liked about GSBS in my first reading. I hope to visit the book again to discover more nuggets of wisdom.

1.     “Challenge” emphasis: I like the way Rumelt emphasizes the importance of “challenge”. He says – A good strategy honestly acknowledges the challenge being faced and provides an approach in overcoming them. This may look like an obvious statement. But ask yourself the question to state the topmost challenge you or your team is facing today and you will realize the difficulty. It involves a choice – a focus among tens or hundreds of problems you are facing and that is not easy. I liked the emphasis on stating the challenge because it can become a first checklist item to see if there is indeed a strategy. Is there a clearly identified challenge?

2.     Proximate objectives: Strategic goals can easily become blue-sky objectives (“We want to become number one player in our chosen market”) or Dog’s dinner list (“Our strategic plan has 7 strategies, 20 tactics and 234 action items”). None of them is helpful. To avoid this trap Rumelt suggests that the strategic goal should have a proximate objective – a feasible goal you are going after right now. If your objective is to send a spacecraft on the moon which can do soft-landing, your proximate goals could be to design something that will do soft-landing on the earth first. Similarly, for Indian Railways, to turn profitable was a distant goal in 2004. Instead, the slogan “heavier, faster and longer” provided more feasible goals in each of the three categories. Rumelt calls these categories – domains of action. This idea is so important according to Rumelt that he contemplated titling this book "The Proximate Objective"

3.     Strategy as a hypothesis: I was glad to see Rumelt acknowledge the role of experimentation in strategy – even if it meant waiting till “chapter 16”. He says – A new strategy , in the language of science, a hypothesis and its implementation is an experiment. This creates a new set of questions typically not found in the strategy textbooks – how do you design a good experiment? How to sequence experiments? How to build experimentation capacity? I believe that the language of experiment can add a rich set of vocabulary to strategy lingo dominated by “rollout” and “balanced score card”.

There are two things conspicuously missing in the book: (1) role of communication and (2) role of bright spots.

Role of communication: Rumelt rightly emphasizes the role of “coherent action” in a good strategy. However, he doesn’t mention the role metaphors and stories can play in generating coherent action. I feel that there is a lot of good work done in this area by people like Chip & Dan Heath in designing a good communication (e.g. Make to stick) that strategy world can use.

Role of bright spots: What is already working well perhaps in pockets may provide a good starting point. It is not so much about finding your strength as finding the situation that is working to your advantage. For example, when Intel was at crossroads and getting beaten in the memory business, microprocessors was a bright spot waiting to be spotlighted. We don’t know if in tough situations, every organization can find its bright-spot. However, I feel it is one of the most important techniques for designing culture-friendly approaches.

“8 steps to innovation” is not about strategy. However, it complements GSBS in many places like step-2 (challenge book), step-4, 6 and 7 (design of experiment and sandbox) and step-8 (create a margin of safety).

I feel “Good strategy, bad strategy” spanning close to fifty years of work in strategy is a must read for anyone interested in developing strategic thinking and implementing it.

image source: directorship.com

Building a challenge-book (step-2): An example from an IIMB session

Prof. Rishikesha Krishnan and I co-facilitated a session on innovation at IIMB week before last based on our “8 steps to innovation” book. Participants in this session were entrepreneurs or second-third generation business owners. Businesses varied from Agarbatti (supplying to 80 countries) to clutch gears to Agro-products to Medical equipment to jewellers to payment gateway – in short quite diverse. One of the exercises we did was to generate a challenge book.

One thing that struck me is that each of these participants had a lot of clarity about the key business challenges. For example, the power problem in Tamilnadu and union problem in West Bengal is reflected in the challenge book. When we do a similar exercise with mid-level managers in large companies group, they don’t necessarily exhibit similar clarity. This may be so because they are far removed from the business decisions. We had explained to the participants about the 3 characteristics of a good challenge statement (1) emotional appeal (2) concrete goal and (3) hooks for imagination. The first draft of the challenge book we generated is shown in the picture above.

My analysis of how some of the challenges (selected randomly) fulfil the three characteristics is given below.

A few observations about the challenge book:

A challenge meeting all three characteristics: “Prototyping in a non-IT startup takes a few weeks. Can the time be brought down to 3 hrs?” This challenge appears to meet all three characteristics. The challenge author also had know-how about how much a 3-D printer costs and how much it can bring down prototyping time etc.

Blue-sky challenge: Enhancing customer satisfaction is an important challenge for many businesses. In fact, “customer delight” is part of core values for most of my customers. However, it hardly reflects in the actions demonstrated on a day-to-day basis. This is the reason a challenge to “enhance customer satisfaction” may be looked upon as an empty rhetoric. “How do we connect with international customers?” is a challenge meant to reach out and satisfy international customers better. It looks more focused.

More solution, less challenge: “ERP” gives an impression that there is a need to implement ERP solution. This could very well be the case. However, why that is required is not clear. Perhaps information about which parts are coming / when is not available easily. Perhaps products delivered are not reaching on time. It might be a better idea to focus on the challenge than on the solution.

The analysis is not meant to judge the challenges as good or bad. It is only meant to give an indication of further improvement – perhaps by framing the challenge better.

I asked the author of the challenge “General rural employment through sustainable business” if this was related to his business. He said it is not. However, he said he is passionate about this challenge and would like to pursue it along with his family business.

My reading list for the rest of 2013

My reading has been poor in the last few months. So I did a bright spot analysis. i.e. went hunting for situations when I did good reading in the past. That is when I recollected that last January (2012) I did systematic reading of “Thinking, fast and slow” – one chapter per day and drew a one-pager chapter-map after each reading. I still refer to the map-book.

Now, I have decided to focus on a chapter at a time – not the entire book. And I have already made progress. I have a tendency to reflect a lot when I read. Hence, the reading speed is slow. I have come to live with it. Here is what I have planned to read in the rest of the 2013. Let’s see how it goes.

Good strategy, bad strategy: Among the strategy gurus my favourite is Richard Rumelt – I don’t know why. The first time I wrote a blog referring to Rumelt’s work was 5 years ago (titled “Predatory leap metaphor of Prof. Rumelt”).  My friend and collaborator Prof. Rishikesha Krishnan also an authority on strategy has recommended this book to me. I am currently on chapter 3 and enjoying it. I am also finding very interesting intersections of this book with our book “8 steps to innovation”. I hope to finish this book in April.

Against the Gods: The remarkable story of risk by Peter Bernstein: Today I met Rajiv Mody, CEO of Sasken, my ex-employer and a man I carry a lot of respect for. He strongly recommended me this book. He felt that one reason why we Indians are not very innovative is because we haven’t paid attention to systematically assessing the risk. It also meant collecting data systematically, validating it etc. One of the three myths about innovation we emphasize in our book is the saying “innovation is about risk taking”. We argue that it is not just about risk-taking, it is also about risk assessment and risk mitigation. I want to see if this book can shed some more light (one way or the other) on our hypothesis.

Uncontrolled: The surprising payoff of trial-and-error for business, politics and society by Jim Manzi: I have been sharing my blogs and getting useful feedback from Prof. Stefan Thomke of Harvard, an authority on experimentation. He has been generous in giving endorsement for our book. Thomke has suggested me this book last October. He said that it has a thoughtful treatment of business experimentation. Helping organizations (for-profit & not-for-profit) build experimentation capacity is really at the heart of what I do. I hope this book will give me a fresh perspective.

Strangers to ourselves: Discovering the adaptive unconscious by Timothy Wilson: Daniel Kahneman referred to this book in “Thinking, fast and slow”. I had made a mental note of this while reading TFS. And then I forgot about it. Last week Sukumar Rajgopal, SVP, CIO and Head of Innovation at Cognizant mentioned to me that he enjoyed this book very much. I am captivated by Kahneman and hence sometimes I feel that a fresh perspective on the topic will be useful to have.

Anti-fragile: How to live in a world we don’t understand by Nassim Taleb:  I have been deeply influenced by  NNT's The Black Swan. Black Swan was more philosophical than practical (how-to). The only chapter in Black Swan which talks about what to do is chapter 13. Anti-fragile is primarily about “how to”. Or so it seems. I would like to find out.

Five books in nine months is roughly a book in two months. I feel it is a reasonable target. Only time will tell…

Highlights of “Systematic Innovation” workshop for technical experts

I facilitated a 2-day workshop on innovation for technical experts at Hotel Grand Mercure, Bangalore last month. The participants were Senior Engineers, Architects, Product Managers, Engineering Managers and entrepreneurs. I have been facilitating such workshops for the past six years. However, this workshop stood out for following 4 unique things.

Challenge book from technology-trend: Unlike in the Design Thinking workshop where we build a challenge book through “pain”, we began our challenge definition journey from technology trends (“wave”).

Each participant identified a technology trend (s)he is excited about and then mapped it on the Gartner’s hype cycle (See the picture). Some of the trends that showed up were: brain-computer interface, geriatrics (early phase), Big Data (peak of inflated expectations), Video analytics (trough of disillusionment), cloud computing (slope of enlightenment).

Then each participant did a secondary research and made a presentation on: (1) What makes the trend interesting today? (2) What were the breakthroughs for the technology trend? (3) What are the key challenges? (4) What adjacent skills do you possess?

Prototyping through storyboarding: During this session, participants explored various forms of early stage prototyping. One such form was storyboarding – perhaps one of the simplest form of prototyping. Each participant presented his idea through a “Before” and “after” scenario expressed in the form story. You don’t need fancy drawings. A lot can be done just using the stick figures.

Idea socialization through blogging: During this session we explored blogging as a medium to socialize your idea. For most of the participants, they were writing a blog for the first time. We followed 3 simple rules: (1) curiosity before content (e.g. Is the problem definition clear?) (2) options before solution (e.g. have you discussed options and trade-offs before proposing a solution?) (3) Prototype is the best presentation (e.g. have you given a glimpse for the reader to experience the idea?) Each participant also commented on at least one blog. Here we followed a simple rule – bright spot before grey spot – i.e. do you have anything good to say about the article before you talk about improvements? Please check out the blogs we wrote.

Chat with industry experts: We were fortunate to have two informal discussion sessions with two industry experts: Dr. Milind Bhandarkar, Chief Scientist at Greenplum (EMC) and Hadoop evangelist and Dr. Dinesh Nair, Chief Architect at National Instruments. Milind graciously agreed to skype from Bay area and gave us an overview of his career from CDAC’s Param to SUNY Buffalo to UIUC to Yahoo to Greenplum etc. He told us what it meant to be part of the founding team of Hadoop at Yahoo and how it helps to have a competitor like Google to get internal buy-in for a new technology like Hadoop. As a leader of the Big Data consortium Milind also shared some of the key challenges and opportunities associated with the technology.

 

Dinesh heads the Center of excellence on vision and machine learning at NI Bangalore. He belongs to the rare species which has stuck with a single company in his career. A prolific inventor (holding over 30 patents) Dinesh shared his experiences on variety of topics such as role of patenting and prototyping, role of blogging in socializing ideas, how he tracks technology trends, how one needs to let go of an idea when the time is not right and a bunch of other things.