Open Innovation | Applied Creativity

How can we speed up the adoption of innovations?

Aside

How can we speed up the adoption of innovations?
Big changes are difficult to bring about. So far the spur behind them has been semi-public but independent bodies with their ability to take radical approaches – like these nine examples. Is it time for institutions and associations to take the baton?

Rolling out innovations for new technologies and sociologies is often seen as the job for entrepreneurs, their champions and their supporters – in the expectation that their focus on early-adopters will then lead on to more wide-spread useage. But it is hard to locate where that should be taking place and how to foster it, not least in those areas that involve behaviour change such as education and healthcare.
The UK’s Cabinet Office has held three competitions inviting organisations to bid for funds to run Accelerators in social enterprise and in healthcare (short periods of intensive development for a dozen or so carefully selected small teams); and the winning organisations will now have helped with over a hundred such startups.

Nesta’s Innovation Lab works with individuals and organisations to generate, develop and test radical new ideas to address social problems; and links innovative projects to advocacy and policy change – to transform whole systems; exemplified by its work on shifting healthcare towards more peer-support, social prescribing and prevention. The Lab’s objectives are about:
* creating solutions to solve specific challenges;
* engaging citizens, non-profits and businesses to find new ideas;
* transforming processes, skills and culture of government; and
* achieving wider policy and systems change.
The UK Cabinet’s Behavioural insights Team (the so-called Nudge Unit) was launched in 2010 to see how behavioral science might contribute to the achievement of policy objectives. It’s successes have been very specific eg in changing the unwelcoming nature of Job Centres; with redesigning communications to non-payers of income tax and fines and non-renewers of their driving licences; with reshaping the offer of loft insulation to include loft clearance. Its approach has been to identify the factors that lay behind the behaviour and then to set up an experiment using a faster, more attractive, social and timely approach.

Mike Bloomberg as Mayor of New York used special teams to develop and deliver new approaches on issues ranging from climate change to poverty and education, and his work spread new models that local leaders can use to generate and implement bold ideas.

New York’s iZone is one example: it is a community of schools committed to personalising learning around the needs, motivations and strengths of each child – an incubation lab for the city’s education department. MONUM, the Mayor’s Office for New Urban Mechanics in Boston is another. It aims to enable busy City Hall staff to run innovation projects – often done in collaboration with external entrepreneurs and internal government policy experts.

Copenhagen’s MindLab was launched in 2002 by the Danish Ministry for Business Affairs as an internal incubator for invention and innovation, inspired by Skandia, the Swedish insurance company’s Future Center (of which there are now a number, mainly in continental Europe). It embraces human-centred design; and aims to stimulate dialogue on transforming the public sector and creating a different interplay between state and local level, and create more systematic change. It is now owned by three ministries and works across employment, education, business and growth, and government modernisation.

MIT’s Media Lab is running numerous experiments of all sorts, among them research to measure the social and spatial settings of innovation in districts across the US to identify the factors that promote and sustain innovation in cities. In collaboration with the Austrian Institute of Technology it is running a study of the key persuasive strategies that enable, motivate, and trigger users to shift from high-energy to low-energy modes of transport. And its project aimed at enhancing entrepreneurialism in specific regions of the world is now in its third year.

InnovateUK has taken a different approach: it has spun off several ‘Catapults’ whose objectives are to transform the UK’s capability for innovation. Among these, one has focused on understanding what will stimulate change (Cognicity – new cities); another on tackling public issues that obstruct change (the Digital Catapult); and a third on launching initiatives that will directly stimulate the creation of new products and services (the Space Catapult).

Work in units like these does not fit easily into existing organisations, but is it time for institutions and associations to follow in the lead of the Young Foundation, which has been active in promoting social enterprise for many years, and spur their fields into accelerating innovation?

Five Ace Mentors – all of whom you may need: No 2

Aside

Five Ace Mentors – all of whom you may need

If the benefits of mentoring are only really appreciated after the experience, the mentors in this series tell us about the special contributions they have made to their mentees.

No 1 Concept development: coming up with something for which there is a real need and that is achievable, marketable and fundable. Jackie Young – in Life Sciences

No2 Strategy and management: determining objectives; getting there; and making and managing the team. JMD – in Fintech.

No 3 Technical: designing, creating and delivering the product/service. Jo Rabin – in Technologies.

No 4 Marketing and sales: attracting users, buyers, customers. Andrew Grant – in modelling.

No 5 Finance: managing the funds.

No 6 Mentor and support Manager –helping to identify issues and provide mentors; and running events – Thibaut Rouquette – Startupbootamp

No 2 Regular reviews of strategy and management – from an independent viewpoint

An evident contributor, likeable and enthusiastic, he brought a life-time’s experience of businesses (he recently retired as a Director of a major UK bank), and an effervescent clarity to issues that interested him.

He would ensure that there was a regular review system; he encouraged ‘plan B’ thinking; he was always a ready sounding board; as he was a difficult tank to stop when he thought change was needed.

He picked four turning points to which he had (or in one case had not) recently contributed.

I eventually persuaded a team of 30-year old young Turks based in Shoreditch whose finance man aged 50 lived miles away and had other interests, to let him go. Though he had some special assets, cash was becoming an issue, and other needs were being met only tardily. I gained the support of other Directors, and the separation was done elegantly.
Missed key milestones was the signal for me to try and persuade one company that they needed to woo not just one major customer, but several others. I had to hammer away at the issue, and I had no emotional attachment to the first strategy.
It took me four months and the occurrence of a sharply relevant Court case in Japan for me to persuade ‘African Exchanges’ (not its real name) to change its name as the company found itself increasingly drawn into trading in other currencies.
At a first meeting with one company, none of my thoughts and ideas went deeper than to get a mild brush-off. Both parties are looking for an instant link – that will suggest a fertile union. Like many young companies, they seemed dead-set on their plans; and perhaps they did not understand what they might get out of a mentor.

‘As a Startup, this is the biggest thing they have ever done, and they are of course passionate and determined about it. So to lose clarity is unsurprising. Moreover, consensus in the team is a vital factor, so there is also a danger of Groupthink. When passion becomes rigidity, it is time for a dose of adaptability. ‘

‘At least two qualities are important for a good mentor: that ‘he/she has seen it before’, and therefore the more he/she has seen, the better the mentor. And secondly, he/she needs to be (and in status is) dispassionate.’

Confessions of an talented mentor

The Business Growth Service itself needs scaling up

Aside

Undervalued and undersold, the Business Growth Service itself needs scaling up.

It has demonstrated the value of support for SMEs, but few make use of it; so why doesn’t the service concentrate in a big way on developing its market?

Innovate UK worked with the Business Growth Service to assess the value of offering to its grant winners access to this service free of charge. It showed that they benefitted substantially – in evolving their ideas and helping them in the marketing of their business, especially in filling gaps they did not know they had. The coaching, mentoring and training in entrepreneurial skills helped them to make better use of the grant, achieve higher growth and effect better communications (especially those from academia). However, it is not easy to induce young businesses to take up this offer, says Nigel Walker of Innovate UK; it is only afterwards that they appreciate just how valuable it is.

Accelerators (like Techstars, Seedcamp and Startupbootcamp), VCs (like Octopus Ventures) and the new Business Growth Fund have all highlighted the importance of mentors for early-stage businesses, providing ‘access to strategic support and advice – ideally from someone who had been there and done that and who carries the battle scars of business and has come out the other side. ’ Achieving a high rate of growth calls for support in many different areas, and those needs also evolve and change.

The bare bones of the scheme are these: the four organisations delivering this service:

seek out businesses with the potential for high growth
select those for whom this support is appropriate
provide an initial meeting with an adviser
offer from a database (not currently public) a choice of three coaches, advisers or consultants to fit the company’s specific needs
facilitate connection to local advisers and other local and central organisations.

The country-wide Business Growth Managers – the initial advisers (c.180) – are employed by the service, and are credible and experienced advisers, who have run their own businesses, and whose job is to reach a diagnosis about the opportunities for the business and the obstacles that it is facing – challenging thinking, identifying goals, and setting out a clear plan; and then to select three people who might work well with the company.

The coaches, advisers and consultants (c.5000) are independent, working specifically on client support and delivering the service. They provide new eyes, advice that is specific to the technical and/or industry context, introductions [eg to users, buyers, sellers etc], and strategic advice. And match-funding up to £2k is offered for leadership and management training for senior managers. One-to-one coaching and third party opinion are the aspects that are most highly valued; and a number of the beneficiaries go on to appoint non-executive directors.

The heart of the scheme is to be found in the help it has provided. Businesses that have used the service have been shown to have benefitted by notching up growth four times faster than the average SME. The highest proportion of barriers to growth are associated with Strategy and Management (53%), followed by Skills and Staff (39%) and Sales and Marketing (38%), and Finance (27%); and support has proved most effective where it has addressed strategy and sales and marketing.

The best sources of high growth SMEs must lie among those that are in Accelerators, Incubators, Science Parks, Innovation Centres and Tech Hubs, of which there are perhaps 15,000, and the service should be offered free of charge to these. In the two years to April 2014, ‘15,000 businesses engaged with the [Business Growth] service’, but the 6% of SMEs (repeatedly identified as the key source of growth in the UK) could number 300,000.

Moreover, we are seeing a geographical spreading of innovation Centres, Tech Hubs and co-working spaces, but their vital mentors, advisers and entrepreneurial communities are harder to catalyse. Coaches, advisers and consultants on the BGS’s database need to be made available online, and accessible either via Cisco’s National Virtual Incubator, or of course via Skype. What is needed is a national virtual network of business growth managers, which could be led by the BGS, to bring the service’s benefits to smaller clusters and local nodes of growth.

Is it time for Innovate UK to offer this service free of charge (or say for 1% of their equity) to all potentially hi-growth businesses?

The service needs to be run by a commercial board; it was set up by BIS and is ‘delivered’ by four organisations, but it has no commercial element to re-evaluate its strategy: when it comes to governance it lies in nomansland. What advice would it give itself?

Reversing a topsy-turvy approach to a better world?

Aside

Reversing a topsy-turvy approach to a better world

Focusing on major issues rather than relying on people with good ideas is likely to be a good source for the 6% of businesses with hi-growth potential (- and Unicorns)

Next: the Business Growth Service’s coaches, mentors and advisers are having a real impact for SMEs; it must be exploited.

Following: Five Ace Mentors – you may need all of them

Most of the commercial supporters of hi-growth businesses depend on who turns up with a good idea – for which they search keenly; yet many of those ideas are often limited, ephemeral and even trivial, and many of their protoganists far from suited to the heavy sweat of growing a business. Few focus on issues of strategic, technical or sociological importance – like basic needs, lifestyles or communities.

Among those that have done so are:

Village Capital in New York – which seeks to identify large scale needs in any country throughout the world, and then to match them with experts and funds designed to find and implement solutions.

Syncona Partners, a subsidiary of the Wellcome Trust, which identifies potential solutions to major healthcare issues that are of technical or strategic importance and matches experts (or sets up the necessary management) and funds for delivering their benefits.

BioCity Nottingham which runs a programme whose starting point is identifying major issues of organisations in its area, and then finds experts who may be able to help solve those issues; and goes on to provide them with intensive support for the development of solutions.

The provision by Innovate UK’s for its grant winners of free access to The Business Growth Service is a welcome focus on technological opportunities that have been identified in competition, and thus a well-directed initiative for supporting young businesses that have the potential for high growth.

Innovate UK’s Business Growth Workshops bring these grant holders together and illustrate the analysis that the service’s Growth Development Managers put together, and which they use to offer a choice of three coaches, mentors or advisers to the business involved.

The success of this service must be exploited by making sure that it is adopted for example in clusters and in innovation centres everywhere.

John Whatmore

October 2015

Accelerators attacking bigger issues?

If Accelerators can support hi-growth SMEs as well as startups, can they also be adapted to focus on tough problems and emerging opportunities in all sorts of fields? (http://wp.me/p3beJt-9e)

Hard-nosed sharing is the name of a new game

Aside

Hard-nosed sharing is the name of a new game
Sharing process is frequently and willingly done – especially in fast-developing fields, (this column is predicated on it); but sharing technology is a new phenomenon. Propelled by the need for speed, and by the ease with which sharing is now possible, strategies for sharing now have to be determined.

Next weeks: by exploiting collaborations, the new Digital Catapult Centre in London aims to tackle ‘obstructive problems’ whose solutions will unlock digital futures. And the Space Catapult is exploiting developments in space technology to chart new applications and facilitate path-finding initiatives.

‘To the new generation of technologists, moving projects and data fast is worth more than making everything in secret.’ ‘Technology for big computers, electric cars and micro-controllers to operate things like power tools and engines is now given away.’ The extensive sharing of once proprietary information would bring a traditional patent lawyer to tears.

‘The swapping of ideas has been commonplace for decades in software engineering. Open source projects like the Linux operating system revolutionised the Internet and tripped up companies like Sun Microsystems. Hardware was considered a tougher, more expensive business to enter until a few years ago. But now you don’t need a lot of people or a lot of capital to manufacture a prototype. PCH International, an Irish company with a development lab in San Francisco, has in the last 18 months made more than 1,000 prototypes for both big companies and small startups, producing 20-40 objects by 3D printer a day and over 50 working prototypes a week.’ And the global production of vast quantities of microchips has contributed to this facility.

Why do companies make software and hardware free? It can create competition for your opponent without spending money on a new product (as did IBM with its open source software); it can support your business by enabling suppliers to lower your costs or speed innovation (as has Facebook); it can help to develop the market for your own products, (as Tesla sought to do by giving away all the electric car company’s patents). But as Elon Musk of Tesla wrote, “Technology leadership is not defined by patents but rather by the ability to attract and motivate the world’s most talented engineers”.

The New York Times concludes that this does not herald a new world where everything is free and all ideas are open. “You have to figure out”, says one commentator, “where you are in business and what you want to own”. And you need to do so in a world in which collaboration is increasingly significant, as specialisation and interdependency increase.

‘Innovation without all the secrecy’, New York Times, 30 March 2015.

June 2015

If you have a tough tech problem, try a Hackathon

Aside

If you have a tough tech problem, try a Hackathon
As short and intensive mass meetings for designing technical solutions to current issues, Hackathons are in hi-growth mode. Used by professional developers and migrating rapidly in the US into the college community, they serve several functions simultaneously in the fast-moving hi-tech world.

Hackathons are the very latest in speed-innovation. In the UK they are to be found regularly now in specialised ‘innovation labs’ like IdeaLondon in Tech City, Level39 at Canary Wharf and the Digital Catapult. And they have become commonplace among professional developers in the US, especially in booming tech centres like San Francisco and New York, where they have emerged as prime places for networking, job recruiting, entrepreneurial pitching and, in many cases, winning cash/big prizes.

The goal of a ‘hackathon’ (part ‘marathon’, part ‘hack’) is not to obtain confidential data, but for teams to build a new piece of tech, either of their choosing or with code provided by one of the sponsors; and sponsors often encourage students to use their devices – a team of software engineers from Apple was at one hackathon to mentor students at all hours of day and night.

One team spent the week-end programming four of Microsoft’s motion-sensing Kinects with an Oculus Rift reality head-set to create an immersive 3-D video conferencing system. Another found sleep-deprived students participating in a 36-hour contest to program mobile apps, websites or hardware, including aerial drones and virtual reality headsets. At the end, the judges walk around as the programmers show off their projects. The winners of one hackathon had developed a robotic arm controlled by a motion sensor; and they won a free trip on a zero-gravity aeroplane as well as travel expenses and admission to hackathons in Taiwan and South Korea.

Week-end hackathons organised by and for students are surging in scale, size and frequency in the US. Only recently a sub-culture, now they are mainstream: last year there were some 40 inter-collegiate hackathons; this year more than 150 are expected. The longest-running was founded at the University of Pennsylvania in 2009 and has now ballooned to accommodate 1,200 students each semester; and demand is outpacing growth.

In most cases, sponsors underwrite the entire cost – upward of $300,000 – including travel, food and perks; as well as games – frisbee, laser tags, tug-of-war and yoga sessions. “It’s a big party”, commented the Director of one US university hackathon.

Hackathon-goers maintain that it is not the awards that motivate them, but getting off your butt forces you into situations where you learn new tech skills. They encourage students to tinker with new software and hardware and challenge themselves; and students teach one another – there are experts there on nearly everything. They acquire practical skills that college courses fail to teach them, and gain technical proficiency at a much faster pace. And some of them are spinning off their projects into startups and money-making apps.

Identifying coders who can dream big and thrive under pressure is particularly valuable to Silicon Valley. Since hackathons showcase some of the best, brightest and most motivated upstart programmers, the events have become a focal point for recruiting – some say they are essential for pursuing a career in tech. Likewise, students say that hackathons are an ideal way to test-drive the experience of working at a startup. But for venture capitalists, finding talent is only part of the appeal: they provide opportunities to spot emerging tech developments – with virtual reality projects now taking over from social media apps.

In the US, Hackathons, it is claimed, are instilling in young engineers a sense of life after college, and the feeling that they can accomplish anything. In the UK, for the moment, they are essentially intensive sessions for generating technical solutions to topical problems.

From an article in the New York Times, April 8, 2015

Red Riding Hoods should beware of the Wolf

Aside

Unilever and Canary Wharf both invite you to come and help them crack a world-wide problem, but… Corporates are seducing startups into giving them their good ideas, but the odds and the risks against getting your rewards are less evident than they should be. There is a solution. Next week: If you have a tough problem, try a Hackathon.

Here’s a new but increasingly familiar slant for startups – from a big corporate (Unilever). We’ll identify some specific key issues, they say, (in this case how data can be used to attract people to live more sustainably). You come along and work with our staff to suggest ways to crack such issues – at a Hackathon. Our staff will provide background – marketing, sustainability, IT and consumer research, together with one-on-one mentorship. One winner gets £5,000 in prize money, and may be invited to participate in a paid pilot with Unilever, with £31,000 made available to help develop and test their idea.

Level39 at Canary Wharf’s ‘Cognicity’ has launched a similar challenge. Smart City technology companies have been invited to apply for one of six streams – each about a specific aspect of ‘the city of the future’. For each stream, six teams were to be selected to enter an Accelerator with leading technology companies and Canary Wharf Group partners – to develop their technologies and solutions. In each stream, one would receive a £50,000 prize, and ‘pilot their solutions in the ongoing development of Canary Wharf and create a showcase connected city’.

It’s hard to tell whether these are impact enterprises or commercial ventures. Each competition has only one winner; and the costs and benefits of being involved in any pilot are unknowable. There is no mention of who owns the ideas nor who shall have the rights to them. And there is no one there to protect your rights. So if you have a good idea, you would be at risk of being seduced into a process in which, whether you win the prize or not, your ideas may have lost any protection.

Nesta, some time ago in an open innovation pilot, acted as intermediary for P&G by eliciting and selecting relevant ideas and then providing a period of support and development with the help of a VC for their originators (including ensuring adequate protection and the writing of a business plan) and enabling the best to be pitched to P&G. Ultimately, one of these was felt by P&G to have very considerable market potential. (http://www.nesta.org.uk/corporate-connect). This process, known as the ‘Air Lock’ is run regularly now for many different companies by its creaters in Nesta in ‘100% Open’: it builds up communication channels and trust, and it protects IP.

Young businesses in accelerator programmes run by organisations like Techstars and Startupbootcamp expect to get from idea to marketable proposition in 13 weeks (for which the latter take around 7% of equity in return). At that point they are in a position to negotiate with users as investors on a commercial basis rather than simply on the terms dictated by a corporate.

Accessing creative start-up talent is increasingly necessary for larger companies who want to capture the best ideas, people and technologies. As scouting by corporates for good ideas becomes more common, they must not be allowed to play the Wolf to Red Riding Hoods. They should recognize that they do not know what they will be able to catch in their fishing net: vagueness simply raises suspicions.

John Whatmore May 2015

Deloitte 2: the future of Innovation

Aside

The Deloitte Report, Part 2
Big business and the future of innovation

The R&D spending mix is expected to change – in two ways
If companies are seeking to align their innovation strategies with their business strategies and are seeking to gain better insights into customers’ stated and unstated needs, how are their strategies towards innovation expected to change in the future?

Over the next decade many companies plan to shift their R&D spending mix—from incremental innovation to new and breakthrough innovation, and from product R&D to service R&D.

All respondents to the Deloitte survey report that they plan to shift their current R&D spending mix from incremental innovations to more new and breakthrough innovations. Today, 58 percent of R&D spending is directed at incremental or renewal innovations, just 28 percent at new or substantial innovations, and only 14 percent at breakthrough or radical innovations. In 10 years, respondents expect the picture will look quite different.

Breakthroughs, for example, involve higher risk than incremental innovations, so it is important to make sure both that these innovation goals make sense given the company’s market position and strategy, and that the right risk management capabilities are established to handle a higher-beta portfolio. “New research projects will continue to involve more collaborators, including universities, suppliers, and other industrial partners. Ultimately, this will make product development more robust and enable greater technology leaps, while reducing risks and cost.”

Companies also expect to allocate more R&D spending to enabling services and less to creating products. The current allocation slightly favors product R&D, 52 percent to 48 percent. By 2024, respondents expect that relationship to flip—with R&D for services rising to 62 percent, versus 38 percent for R&D for products.

Need Seekers should hone their distinctive capabilities, which include their proficiency at directly generated deep customer insights, enterprise-wide launches, and technical risk assessment. One priority that Need Seekers cited in this year’s survey as being important to their future success—open innovation—complements their approach by enabling them to seek new ideas and insights from a networked community beyond the borders of the company and its traditional partners. They should ensure that their products and services are advantaged by seeking out new ideas from customers, suppliers, competitors, and other industries, as well as by building focused technical innovation networks across the business. They should exploit front-end digital enablers such as visualization and engagement tools.

Market Readers should continue to develop their capabilities in managing resource requirements and engaging suppliers and partners. Their goals should include customizing their products for local markets, and creating a culture of collaboration across functions and geographies to facilitate rapid, seamless response. They need to be good at assessing feedback from sales and customer support and traditional market research. Digital enablers such as monitoring tools and idea-capture tools are critical, and are consistent with the needs of this model.

Technology Drivers should continue to enhance their product life-cycle management capabilities. Their priorities are strategic platform management and gaining a detailed understanding of emerging product- and service-related technologies and trends. They need to excel at technology road mapping and interacting with the external tech community. Digital enablers will be particularly important for them, including big data, customer profiling, and co-design tools, as well as collaborative environments that connect far-flung teams, customer relationship management systems, and ERP platforms.

Of course, some key imperatives have surfaced in the Global Innovation 1000 studies that apply to all companies seeking innovation success: * Define your innovation strategy, communicate it throughout the organization, and identify the short list of innovation capabilities that will enable it. * Tightly align your business and innovation strategies. * Ensure that your innovation culture is aligned with, and supportive of, your innovation strategy. * Focus on developing deep customer insight by directly engaging and observing end-users of your product. * Ensure that the technical community has a seat at the table defining the corporation’s agenda. * Systematically manage the R&D portfolio, aggressively winnowing out low-potential projects and ensuring that the right risk management capabilities are in place to support big bets.

Despite the impressive growth of innovation spending in the software and Internet category, four other industries spent more absolute dollars on R&D in 2014: computing and electronics, healthcare, auto, and industrials In fact, three of them—computing and electronics, healthcare, and auto—have spent more on R&D than the software and Internet industry in each of the last 10 years. This shows that there has been and continues to be a huge amount of innovation spending going on outside Silicon Valley and other tech clusters.

Open Innovation’s innovations
Corporates are articulating their needs and opportunities for innovation; and using intermediaries to search for innovators with ideas, and to provide candidates with a period of intensive development. Jan 2015. (http://wp.me/p3beJt-9N)

Unilever and Canary Wharf both invite you to come and help them crack a world-wide problem, but… Corporates are seducing startups into giving them their good ideas, but the odds and the risks against getting your rewards are less evident than they should be. April 2015. (http://wp.me/p3beJt-aI)

Cambridge Service Alliance A global alliance between leading businesses and universities that brings them together to work on the complex service solutions of tomorrow. (http://www.cambridgeservicealliance.org)

The full version of the Deloitte Report can be found at www.strategyand.pwc.com/innovation1000‎

John Whatmore May 2015

Deloitte Survey: the future of Innovation

Aside

Deloitte Survey: the future of Innovation
Deloitte’s penetrating and authoritative Annual Survey of Innovation (‘Global 1000’) tells us how big business will do its innovation and what kinds of things they will do – and thus what kinds of things they will seek from early-stage businesses.
Next week: Part 2 explores the kinds of innovations that big business is seeking to fund.
The study reveals that first and foremost companies are seeking to align their innovation strategies with their business strategies, that where the business is going will increasingly determine the innovations they are looking for; and secondly they are seeking to gain better insights into customers’ stated and unstated needs. And it reveals that over the next decade many companies plan to shift their R&D spending mix—from incremental innovation to new and breakthrough innovation, and from product R&D to service R&D.

If you are an early-stage business looking to create rapid value for your business, there is no better indicator of your best strategy than to be working in those areas in which big businesses is working. If you can do what they want, and you can do it better than they can, you have a winning formula – alone or together!
*
Part 1
Where big business is heading with Innovation
“There has been a strong push over the last 10 years to align what you do in R&D with what you do in the business, and it has gotten better,” says Oliver Nussli, head of project and portfolio management at food and beverage manufacturer Nestlé. “Many companies have streamlined their R&D portfolios because there were too many things going on that were leading nowhere or had little chance of success.”

And over a three-year period, companies that directly captured customer insights had three times the growth in operating income and twice the return on assets of industry peers that captured customer insights indirectly, as well as 65 percent higher total shareholder returns.
The Need Seeker Advantage

In 2007, the Global Innovation 1000 study identified three fundamental kinds of companies, each with its own distinct way of managing the R&D process and its relationship to customers and markets. Every company tends to follow one of these three innovation models; it thus categorized companies as being Need Seekers, Market Readers, or Technology Drivers. Need Seekers, such as Apple, Procter & Gamble, and Tesla, make a point of using superior insights about customers to generate new ideas. They gain this insight through direct engagement with customers (for instance, Apple routinely learns from interactions at its retail stores) and through other means, including analysis of big data. Most important, they develop new products and services based on this superior end-user understanding. Their goal: to find the unstated customer needs of the future, and to be the first to address them. Their cultures encourage openness to new ideas from customers, suppliers, competitors, and other industries, and they prioritize directly generated consumer/customer insights and enterprise-wide launch capabilities. It is estimated that 25 percent of the Global Innovation 1000 companies are Need Seekers.

Market Readers, such as Samsung, Caterpillar, and Visteon, make up some 40 percent of the Global Innovation 1000 companies. They focus largely on creating value through incremental innovations to products already proven in the market. They use a variety of means to generate ideas; most involve closely monitoring their markets, customers, and competitors. This implies a more cautious approach, one that depends on being a second mover or “fast follower” in the marketplace. One of their specific innovation goals is customizing products and services for local markets, and they seek a culture of collaboration across functions and geographies. They prioritize capabilities for managing resource requirements and engaging suppliers and partners.

Technology Drivers, such as Google, Bosch, and Siemens, depend heavily on their internal technological capabilities to develop new products and services. They leverage their R&D investments to drive both breakthrough innovation and incremental change. They hope and expect that by following the imperatives implied by their discoveries, they will naturally meet the known and unknown needs of their customers. Their distinct innovation goal is to develop products of superior technological value, and their cultures reflect reverence and respect for technical knowledge and talent. Approximately 35 percent of the Global Innovation 1000 companies are Technology Drivers.

In general, the most important success factor is how well companies execute on their chosen strategy — whether they align their innovation strategy with their business strategy, whether they have prioritized the right capabilities, whether they have the right culture to enable their strategy, and whether they are using the tools that will help them develop new ideas and processes that are consistent with their innovation model. The quality of the alignment of all these elements is the key, and it trumps the amount of R&D spending.

Increasingly, the Deloitte Survey has come to believe that the Need Seeker strategy is inherently advantaged. Need Seekers, for example, report being better at innovation today than they were 10 years ago at a significantly higher rate than companies following the other two strategies, and they also more often indicate that they are financially outperforming their competitors.

In the 2011 study, Deloitte found that what sets Need Seekers apart is their ability to execute on their strategy—to combine all the elements of innovation into a coherent whole, with a culture that supports innovation. In a study in 2012 in conjunction with the Bay Area Council Economic Institute, Deloitte found that significantly more of the technical leads at companies classified as Need Seekers report directly to the CEO, and that their innovation agendas are much more likely to be developed and clearly communicated from the top down to the rank and file of the organization. They were also much more likely to point to product development as the function with the most influence on their company’s power structure. (That same study also revealed that Silicon Valley firms are almost twice as likely to follow a Need Seekers model than the general population of companies—46 percent versus 28 percent, a consequence of the startup/venture capital mind-set of tightly aligned business and technology strategies.)

While aligning business and innovation strategies will be the most important driver for innovation success, interestingly, this and other key areas are the same ones that Need Seekers are already focused on today.

Part 2 next week is on Big business and the future of Innovation
Open Innovation’s innovations

Corporates are articulating their needs and opportunities for innovation; and using intermediaries to search for innovators with ideas, and to provide candidates with a period of intensive development. Jan 2015. (http://wp.me/p3beJt-9N)

Unilever and Canary Wharf’s ‘Cognicity’ both invite you to come and help them crack a world-wide problem, but… Corporates are seducing startups into giving them their good ideas, but the odds and the risks against getting your rewards are less evident than they should be. April 2015. (http://wp.me/p3beJt-aI)

Cambridge Service Alliance
A global alliance between leading businesses and universities that brings them together to work on the complex service solutions of tomorrow. (http://www.cambridgeservicealliance.org)

The full version of the Deloitte Report can be found at www.strategyand.pwc.com/innovation1000‎

John Whatmore April 2015 (http://johnwhatmore.com)

Startups like Red Riding Hood should beware of corporate wolves

Aside

Unilever and Canary Wharf’s ‘Cognicity’ both invite you to come and help them crack a world-wide problem, but… Corporates are seducing startups into giving them their good ideas, but the odds and the risks against getting your rewards are less evident than they should be. There is a solution.

Nesta, some time ago in an open innovation pilot, acted as intermediary for P&G by eliciting and selecting relevant ideas and then providing a period of support and development with the help of a VC for their originators (including ensuring adequate protection and the writing of a business plan) and enabling the best to be pitched to P&G. Ultimately, one of these was felt by P&G to have very considerable market potential. (http://www.nesta.org.uk/corporate-connect). This process, known as the ‘Air Lock’ is run regularly now for many different companies by its creaters in Nesta in ‘100%Open’: it builds up communication channels and trust, and it protects IP.

John Whatmore April 2015

Applied Creativity

Turning ideas into Innovations

Category Archives: Open Innovation

Hard-nosed sharing is the name of a new game

Aside

Red Riding Hoods should beware of the Wolf

Aside

Deloitte Survey: the future of Innovation

Aside

Startups like Red Riding Hood should beware of corporate wolves

Aside