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Does Your Company Enable Innovation?

October 2, 2013
Related Topics: Leadership Development, Learning Delivery, Performance Management, Management, Capability Development, Blended Learning, Learning Delivery, Leadership Development, Innovation, Management, Performance Management, Technology
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Innovation is a key growth driver in today’s marketplace, but building innovation skills has become an issue for the learning community. It’s not enough to train and nurture these skills at the employee level; companies must build the code for innovation at the organizational level as well.

Two ideas shed light on how companies can build innovation capabilities among their employees. First, there are five key skills of disruptive innovators: associating, questioning, observing, networking and experimenting. These make up “the innovator’s DNA,” a set of behaviors that anyone can practice to consistently develop innovative ideas and become discovery-driven thinkers.

Second, to scale innovation from an individual to an organizational level, leaders must imprint their organizations with their own innovator’s DNA. Think about CEOs such as Amazon.com’s Jeff Bezos, Salesforce.com’s Marc Benioff, Procter & Gamble’s A.G. Lafley and Apple’s Steve Jobs — all coded their own discovery skills into the fabric of their companies.

To build innovation capabilities throughout an organization, leaders must systematically develop processes that train, reward and promote people who exhibit discovery-driven behaviors. Here are some examples of how innovative leaders institutionalize processes to encourage questioning, observing, networking and experimenting.

Questioning

By now, virtually anyone working in a manufacturing environment has heard of lean manufacturing or, as it is known in the automobile industry, the Toyota Production System, or TPS. TPS involves a five-whys questioning process requiring that an individual ask him or herself “why” at least five times to unravel causal chains and spark ideas.

To illustrate, in 2012 software company Intuit observed that some employees found it difficult to take advantage of their 10 percent unstructured time, the time they can use to work on projects outside of their usual scope that they are passionate about. When Intuit’s Grass Roots Innovation Program leader Jeff Zias learned of the trend, he and his team turned to the five whys questioning technique to identify root causes of why employees weren’t capitalizing on the program.

Question 1: Why aren’t you able to use your 10 percent unstructured time to innovate?

Answer: Because I don’t have time. I’m too busy.

Question 2: Why are you too busy?

Answer: Because I have so many projects on my plate that keep me so busy that there is no time.

Question 3: Why do your projects keep you so busy that you can’t use your unstructured time?

Answer: Because I just have so much to do that I haven’t been able to balance.

Question 4: Why have you been unable balance your work even though you decided earlier there was room for unstructured time?

Answer: Things come up at the last minute.

Question 5: Why do things come up at the last minute and override your unstructured time?

Answer: Because unstructured time is never protected enough on my calendar.

Zias determined that a root cause of underutilized unstructured time was employees’ calendars were filling up with ongoing activities; they were unable to make room for innovation tasks. So, they decided to develop unstructured innovation activities and placed them on calendars. They organized multiple innovation jams, hackathons and unstructured innovation events across the company to block out periods of time for unstructured innovation.

Unstructured time at Intuit more than doubled in usage. This increase also drove great business results. Scott Cook, founder and chairman of the executive committee, said, “Our most innovative new offerings are coming from the grass roots.”

Asking questions is key to the innovation process at Intuit for top leadership and rank and file. “It’s not what you know,” said Intuit CEO Brad Smith. “It’s the questions you ask that help you become a more effective and inspiring leader.”

Innovation catalysts, a network of employees distributed across the company who are trained in design-thinking principles, also use the five why technique as they work cross-functionally with teams on product development and company processes.

Observing

Leaders at Keyence Corp., a Japanese company that specializes in factory automation devices, make sure that 25 percent of the devices sold every year are new products more advanced than anything rivals can offer. New product ideas surface mostly from the hands-on experience of 7,000 salespeople who head to the production floors of some 50,000 customers to observe and gain insight into their problems.

For instance, by watching the production lines for instant noodle-makers, Keyence learned that noodle quality was compromised because they were manufactured at variable thicknesses. So the company developed laser sensors that could measure noodles to 1/100th of a millimeter. Instant noodle-makers now depend on these sensors to keep thickness consistent. Each year, thousands of observations like these lead to hundreds of new factory automation devices for customers.

Idea Networking

Innovative companies, like innovative people, are often great idea networkers. Innovators realize that by talking to people with diverse backgrounds they can get a different perspective on a problem. Or, they can find someone — often in a different profession or industry — who has faced a problem similar to the one they are trying to solve. By tapping into others’ diverse knowledge, innovators can stimulate new ideas in a fast and efficient way. The same is true for innovative organizations — especially when chief learning officers help facilitate formal and informal knowledge sharing within, across and outside organizational boundaries.

Internal networking: Most companies have processes for sharing ideas among employees, but innovative companies take it to the next level. For example, Google holds an Innovator’s Challenge four times each year. In this competition, employees submit ideas for top management review; winning ideas receive the resources necessary to maintain momentum.

Google also has a process to share new ideas internally that facilitates networking. Marissa Mayer, CEO at Yahoo and formerly director of consumer products and a champion of innovation at Google, would hold regular brainstorming sessions during which engineers had 10 minutes to pitch new ideas. Mayer and a group of 100 others would then discuss the ideas. These sessions were designed to build on the initial idea with at least one new complementary idea per minute. Through this process the group then decided which were refined enough to present to the company founders. Innovation at Google is democratic; it lets market forces determine which ideas move forward and which don’t. Once projects and ideas post to an internal electronic idea board, individuals throughout the company rate the ideas and provide feedback.

External networking: Companies increasingly look outside their own walls for new ideas. This process of “open innovation” has become critical to the success of many companies. To illustrate, when Lafley became CEO of Procter & Gamble in 2000, he established a goal of increasing the percentage of its new product ideas through external sources from 10 to 50 percent. By 2006, 45 percent of new product ideas came from external sources, and P&G had reduced its research and development from 4.8 to 3.4 percent of sales, while launching hundreds of products based on externally sourced ideas.
The company experienced this growth in external idea generation through its Connect + Develop, or C&D, initiative. Through C&D processes, P&G teams work with independent researchers, other companies and sometimes even competitors to generate ideas. P&G hired 70 technology entrepreneurs and placed them in six C&D hubs around the globe and tasked them with finding new product ideas.

P&G also gathers ideas from external sources by using third-party matchmakers that link companies with outside technology. These companies help P&G prepare technical briefs describing problems it is trying to solve and then anonymously sends these briefs to thousands of researchers around the world. The process brings P&G into contact with people providing services on a contract basis.

Experimenting

Companies with high innovation premiums also institutionalize experimentation, conducting experiments more frequently than those with a low innovation premium. Google CEO Eric Schmidt said, “At Google our philosophy is ‘Let a thousand flowers bloom.’” By allowing engineers to pursue pet products one day a week and supporting those that show potential through experiments and beta labels, Google is able to launch many new products.

Beiersdorf, maker of Eucerin lotion and other skin-care products, also invests considerable resources in new product experimentation and has done so since 1911, when it first launched Nivea facial creme.
Its Hamburg research center incorporates a test center to try new skin products on about 6,000 volunteers every year. The facility enables testers to use products under real-life conditions, and Beiersdorf researchers carefully monitor and document their effectiveness.

In one case, Beiersdorf discovered that testers weren’t getting the necessary UV protection from sunscreen because they weren’t applying it properly, and in most cases, they applied too little. By experimenting with customers using sunscreen, researchers made adjustments in consumer education and the products themselves to help customers achieve optimal protection. Beiersdorf’s experimenting processes help it launch between 150 to 200 new products and apply for 120 to 150 new patents each year.

“You need to do as many experiments per unit of time as possible,” said Jeff Bezos, CEO of online retailer Amazon. “Innovation is part and parcel with going down blind alleys. You can’t have one without the other. But every once in a while, you go down an alley, and it opens up into this huge, broad avenue ... it makes all the blind alleys worthwhile.”

Just as inventive people systematically question, observe, network and experiment to spark new ideas, innovative organizations encourage and develop these same discovery skills in their employees. By creating organizational processes that mirror individual discovery behaviors, innovative leaders can build an organization that acts different and thinks different, and by doing so, makes a difference in the world.

Jeff Dyer is a professor of strategy at the Marriott School, Brigham Young University. Hal Gregersen is a professor of innovation and leadership at INSEAD. They are co-authors of “The Innovator’s DNA: Mastering the Five Skills of Disruptive Innovators.” They can be reached at editor@CLOmedia.com.

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