about innovation
“Innovation is a new way of doing something or "new stuff that is made useful". It may refer to incremental and emergent or radical and revolutionary changes in thinking, products, processes, or organizations. Following Schumpeter (1934), contributors to the scholarly literature on innovation typically distinguish between invention, an idea made manifest, and innovation, ideas applied successfully in practice.”
I’m giving a talk about innovation this afternoon and I’m thinking of adding the below chart, which I just created. As part of my presentation, I would like to spend a few minutes discussing the following:
- inventions are about creating something that is new; the novelty might be based on (1) being able to do something with it that couldn’t be possible done before (a breakthrough), or about (2) enabling a significant performance improvement (economic, usability, scalability, etc.) when compared to existing stuff, which would yield incremental and disruptive innovations depending on the case;
- establishing a pole position in the market is key to innovating; entrepreneurs realize FMA, first mover’s advantage, benefits by being ahead of the competition; it is a high risk / high reward play since being first to succeed in the market can involve wrestling with unchartered territories;
- creating something new and being first to make it available does not automatically translate into innovating unless customers embrace the value that is being created and consumer adoption follows, that becoming proof of an “invention successfully applied in practice”.
As usual, I will welcome your comments and emails on this subject, especially those that I can leverage to improve this afternoon’s presentation ;-)
J. de Francisco blogging from Chicago on Feb 4, 2010
Innovation’s accidental enemies: logical fallacies
“When faced with a new idea, the boardroom impulse is to ask for proof in one of two flavors: deductive and inductive (…) But for breakthroughs, there is no rule or pool of past data to provide certainty. So when a CEO demands evidence that an idea will succeed, he is driving innovation away”.
Innovation’s Accidental Enemies by Roger L. Martin and Jennifer Riel. BusinessWeek.
In spite of today’s understanding on the fact that innovation is a top business priority, many still wrestle with what that really means. To keep it simple and manageable, think of the fact that innovating implies both:
- launching a new invention
- and realizing first mover’s advantages by entering the market ahead of anyone else.
And that, chances are, you would also like your enterprise to become a lean serial innovation machine to further develop and sustain the enterprise. Otherwise, your venture can end up becoming a one pony trick.
Innovating not only demands confidence, conviction and the kind of perseverance that helps you and your team navigate unchartered territories. You need to be able to make a good case for others to work, support and invest in what’s meant to be a new product or service, which has not yet been battle tested. This is even more important when market data might not yet exist to back you up. So, expect questions such as:
- if this is going to be so good, how come no one has tried to do it before?
- we have tried and failed in the past, why would your stuff do any better?
- there already is a technology addressing the same space, why do we need another one?
- how is this any better than what’s already out there?
- what is it that people would be able to do with your product which they couldn’t do without?
You should also entertain questions that start with “looks good, but…”:
- do you really think that consumers are going to change the way they do things today?
- this is not really aligned with the company’s product portfolio and strategy.
- there are other investment opportunities that are far more promising.
- we have already been investing in something else and cannot divert efforts to embrace a different solution that can end up cannibalizing that project.
- it doesn’t really matter if you are creating a new product category, you would still need the support from one of our product groups.
- you guys have been working on this for a long time already, wouldn’t that tell you that this technology is actually untractable and that you should move on?
Any of the above questions can be leveraged to kill not just bad projects but also worthy initiatives. You can face the following issues:
- logical fallacies: these being faulty yet logical sounding reasons, such as thinking that if no one has done it yet that’s just because it doesn’t make sense doing it.
- point of no return: this would apply decision makers who might have very little or no room to maneuver, yet they would still like to make everyone believe that a go/no-go decision is going to be made on the basis of a well thought out process, thus generating unnecessary overhead.
- perennial antibodies: some really believe that just playing devil’s advocate is good enough to put a new proposal to the test, instead of getting their expertise to work also in constructive ways.
- misguided financials: decisions purely relying on financial metrics that penalize innovative projects to favor short term results at the expense of the company’s future.
The bottom line it that it is worth spending time putting together a communications plan that addresses the above issues. This will save you from being caught of guard, becoming overlay defensive and loosing face at the time of having decisive conversations on your project. Hope this helps and, as usual, will welcome your comments and emails.
J. de Francisco blogging from Chicago on Jan 23
Wishing you all the best for 2010
This is just a quick post to wish you a prosper 2010 and to share the latest updates to my website.
Once there, you will be able to quickly access to the networking services I’m using these days in the left column. I’m sharing my content in the right column, some of that is of restricted access. For instance, the “project portal” can only be accessed by Alcatel-Lucent employees on the corporate network.
Note the “add this” located at the bottom right, which supports a number of social media destinations. At the time of writing this, “updates” (see top menu) covers last year’s highlights, as a far public information and appearances are concerned.
I’ve already been approached to participate in a few events this new year. One of them being the Business Innovation Conference where I’ll be presenting. Once again, thanks for following this blog and all the best for 2010!
J. de Francisco blogging from Chicago on Jan 17
Marketing World 2009. Chicago, Nov 2
“An arsenal of fresh ideas and best practices to uncover new customer and market opportunities to drive future growth (…) a one-day in-depth immersion into the critical marketing challenges you face day-to-day.”
Last Monday I participated in Frost & Sullivan’s Marketing World as a thought leader on social media. The role of the thought leaders is to share practices and insights as part of interactive sessions. The one on social media was faciliated by J.K. Rohrs, VP of Marketing at ExactTarget.
Social media is better known by the growth of user generated content and online social networking services. What’s relatively new is the fact that businesses are paying attention to public discussions taking place on the web which can positively and negatively impact the company’s brand equity and sales.
Most marketing executives are still wrestling with understanding how relevant any of these emerging communication tools might actually be to their company’s top line. If that’s your case, I suggest considering the following:
- Some forms of social media have achieved a level of professionalism that now rivals traditional marketing and communication channels.
- Traditional media is embracing blogging, open online discourse and cross-platform syndication (share this) for messaging and content which used to be confined to the company’s official corporate site.
- Many marketers feel overwhelmed by the number and scope of the online dialogs, these being social media conversations which involve their brands.
- Embracing the level of openness that social media entails is seen as counter productive when customer complains overpower a silent majority of happy customers.
- Conservative practices mostly relying on mass marketing and traditional market segmentation might no longer to a good enough job. While some forms of social media will come and go, the fact is that its underling communications paradigms have already permeated mainstream marketing.
As a result, tools addressing: social media listening, data mining, analytics, semantic search and social graphs across online platforms will help marketers reach a higher level of customer engagement through significantly improved recommendation and social communication engines.
Patricia Hursh, President and Founder of SmartSearch Marketing, discussed how to make the most of available search tools to gather customer insights. Her presentation included a reference to SM2 from Techrigy, whose service covers: real-time social media monitoring, sentiment analysis, clustering and customized reporting.
Basically, this means that we have to through not just more but also better, smarter technology at this new opportunity. Having said that, technology alone will not do the trick, innovative marketing will.
J. de Francisco blogging from Chicago on Nov 8
VoIP Conference & Expo. October 28-29
Last week I gave a talk on emerging communication trends and technologies at IIT’s VoIP Conference. I would like to take this chance to thank everyone attending my session as well as those of you who have contacted me since.
I started the discussion by sharing my mind map on VoIP, which I thought it would be best visualized as a tag cloud, since from that point I focused on putting VoIP in the context of today’s 2.0 trends and multimedia communication technologies.
I would like to highlight the fact that our industry is shifting from a techno centric mindset to user centric innovations. A new paradigm shift has emerged by which systems and network engineering are now driven by human factors engineering. As an example, metrics addressing QoE, the end user’s quality of experience, set QoS, quality of service, requirements. This means putting people first and understanding that there is more to communicating than just enabling voice over any given network.
To be able to convey that and quite a few other points, I have created a simple framework (below) which I use when studying emerging concepts, trends and technologies. By definition innovations involve changes and, therefore, paradigm shifts occur. Needless to say that understanding the nature of these shifts helps identify new business opportunities. But, a careful analysis of any change often uncovers paradoxes which, in turn, bring up unexpected chances to further innovate and make a difference.
Leveraging this framework, I proceeded to address key implications regarding network and service infrastructure.
I also shared a vision for a near future in which user generated applications become as popular as today’s user generated content as a result of greater levels of service personalization and ease of mashup. To better illustrate that point, I introduced ALU, the amazing learning unit, a concept that I crafted to help visualize the points I made in the first half of the session.
I used about 15 visuals to support my presentation and was glad to hear that this session was of great interest. I would like to thank Lizette Velazquez and Carol Davids for having given me the opportunity to share the above and exchanging quite a few other insights at this year’s VoIP Conference.
Go to Slideshare or browse my presentation below:
Relevant links:
- IDC’s Newsflash on Alcatel-Lucent’s HLN – Highly Leveraged Networks
- Alcatel-Lucent’s webpage on AE, Application Enablement
- Alcatel-Lucent’s Carrier VoIP, Voice and Multimedia
- Alcatel-Lucent’s company overview
J. de Francisco blogging from Chicago on Nov 5
IIT’s BIC, Business Innovation Conference
“CE, Corporate Entrepreneurship, is the strategy and practice of conceiving, fostering, launching, and managing new business –not just products or services- that are distinct from but make significant use of a company’s current core assets, market position, or capabilities (…) A company that does not innovate to create new growth opportunities will be reduced to a purveyor of commodity products and services on its way to oblivion.”
Grow From Within by Robert Wolcott and Michael Lippitz.
Yesterday I managed to attend a couple of the talks delivered at IIT’s BIC:
- Grow From Within: Mastering Corporate Entrepreneurship and Innovation by Michael J. Lippitz
- Raising Money for Innovations by Nik Rokop
Michael’s talk discussed four models addressing corporate entrepreneurship, three of which are captured by the below table which was published by MIT Sloan Management Review back in 2007:
The missing fourth model is “the opportunist.” This means there is no formal corporate entrepreneurship program in place, yet the company manages to innovate. However, the opportunist’s ad-hoc approach is hardly a recommended model for corporations looking into enabling a serial innovation practice.
Nik talked about IIT’s KNAPP Entrepreneurship Center which provides resources to help create and grow new ventures. This initiative taps into a wealth of talent involving IIT’s students, professors, staff and Chicagoland’s entrepreneurial community. The Knapp Center assists entrepreneurs at every stage of development and growth:
The following video is not related to BIC but I it is about entrepreneurial innovation and is worth including in this post. Aaron Patzer shares what it took Mint, a start-up that Intuit acquired for $170M, to get off the ground. This presentation was delivered at Juice Pitcher, a startup competition event held by TheFunded and Vator.tv on the Microsoft campus.
J. de Francisco blogging from Chicago on Oct 8
Innovator dilemmas: modeling real options
“The solving of real options problems has two parts. The first part is “spotting options” and the second part is valuing options”. To spot options, we need to have a deep understanding of the whole decision landscape (…) when a decision maker is considering all possibilities, it is helpful to sketch [them]”
Adrew Metrick’s Venture Capital and the Finance of Innovation.
Understanding one’s options is key to modeling and, therefore, business case development. Most of the literature on real options discusses decision tree charts, which entrepreneurs can use to assess alternative paths and outcomes.
I crafted the above picture just to illustrate some of the basic decisions worth considering. Let’s start figuring out whether your business will deliver point or end to end solutions. Most typically, a point solution can be a single product or service, while and end to end solution involves systems integration, this means the seamless assembly of a number of products or services which, in turn, enables the supplier to become a one stop shop. Example:
- Point solution: a software application
- End to end solution: turnkey solutions encompassing servers, applications and networks
In today’s high-tech industry, whether your business delivers products or services has more to do with your choice of business model than with the actual technology. In general terms: products happen to be sold and, as result, the title of that asset is legally transferred from the supplier to the buyer, who becomes the new owner; a service model can enable the supplier to retain the title to that asset, while the costumer pays for the right to use the product within a given timeframe; the concept of multi-tenancy is often part of this picture since more than one customer would be leveraging the same asset. Example:
- Product: servers and data centers (capex play)
- Service: shared cloud computing infrastructure (opex play)
Just based on the above, the chart’s quadrants get you to discuss four different business models:
- The inner spheres help visualize and compare the revenue forecast for these different options.
- The outer circle portrays the size of the revenue opportunity in any subsequent years or at the end of the planning horizon.
- Needless to say that just discussing revenue alone would not do the job, so I have also added a couple of other metrics such as % of market share and growth (i.e. CAGR)
- The clocks should be set to clearly show the time that it would take to launch the product or service (time to market) or to acquire the first customer, how long it would take your venture to reach: a given share of the market, the breakeven point, specific profitability metrics and/or any other time related benchmark.
The intent of this one chart is just to help entrepreneurs visualize, brainstorm and work with others on how to go over figuring out high level business models. By the way, if you think your business is limited to selling products, you might like to think twice: Rolls Royce, a leading supplier of jet engines, is succeeding by charging airlines for the amount of hours an engine is in service (cost per flying hour).
“Rolls got there in part by creating what BusinessWeek called "one of the world’s most sophisticated help desks," which "continuously monitors the health of some 3,000 engines for 45 airline customers." In addition, because its service guarantee is so comprehensive, Rolls is now more focused than ever on making sure the engines don’t fail in the first place”.
Tim Manners’ Dare to be Different.
*In case you wondered: the size of the spheres and circles as well as the clock’s arrows are provided just for illustration purposes and, therefore, they are neither related to a specific business case nor representative of a specific business model.
J. de Francisco blogging from Chicago on Oct 7
Innovation tournaments
“Many business have been trained to try to eliminate variability, driving toward highly consistent, repeatable outputs (…) It also happens to be the wrong way to think about innovation (…) Although randomness and serendipity clearly underlie the fate of any particular opportunities (…) an innovation tournament can introduce professional rigor to the innovation process.”
Innovation Tournaments by Christian Terwiesch and Karl T. Ulrich. Harvard Business Press, 2009.
A couple of years ago I blogged about enterprise programs such as Yahoo’s Brickhouse process and IBM’s Innovation Jam as examples of corporate initiatives reaching out to all employees for the purpose of growing the pool of innovative product concepts.
Back in the nineties I participated in Honeywell’s Futurist Competition, being fortunate enough to be one of the four European finalists awarded scholarships for graduate studies in the U.S. And, at the time of writing this post, I’m getting ready to join Alcatel-Lucent’s Entrepreneurial Boot Camp, which I am involved in as semifinalist and finalist for two different projects. The following video discusses this program:
As stated in C. Terwiesch and K.T. Ulrich’s book, innovation tournaments create abundant raw material and often comprehend multiple rounds of screening. As an example, Honeywell’s competition handled more than 1000+ project submissions in the first round. These were first screened by local panels in each country. The European final was held in The Hague and just involved about 20 of us.
This kind of corporate tournaments attract individuals who are not only motivated enough to moonlight, but also to take the risk of spending personal time and efforts despite of the odds. Good ideas and persistence alone is not enough: being able to make a case and effectively communicate the value of the project can be a decisive factor.
The competition’s objectives and screening criteria yield a funnel of projects which are either aligned with the company’s strategy or deliver out of the box initiatives leading to new growth… or both.
J. de Francisco blogging from Santa Monica, California, on Sep 25
Introducing next generation technologies
"”People are only willing to change and accept new technologies when the pain of their current situation outweighs the perceived pain of trying something new. Most potential users are afraid of new technologies, and they need a great reason to change. If you don’t give them the reason, then forget it.”
The Change Function, Why Some Technologies Take Off and Others Crash and Burn by Pip Coburn.
“When superior technologies emerge, old ones usually don’t simply fade away. To the contrary, their performance often leaps suddenly, thereby extending their lives and slowing the adoption of the new technologies.”
Beware of Old Technologies’ Last Gasps by Daniel C. Snow.
Back in the late 90s, a number of analysts in the telecommunications industry thought that the so-called 3G, third generation cellular networks, would achieve rapid market adoption in light of the higher data rates enabling end users to experience the “mobile internet.”
While 3G is now becoming widespread in many countries, it has somehow taken a decade for the market to reach this point. As a matter of fact, quite a few mobile network operators had opted to first deploy 2.5G In hindsight, some experts also claim that Wi-Fi had partly managed to steal the 3G show.
This is an interesting case study because 3G was engineered to offer compelling improvements over 2G and the kind of ubiquitous access and seamless roaming elusive to Wi-Fi, which happens to rely on unlicensed spectrum.
So, there were good reasons for network operators to leapfrog inferior mobile data technologies. However, a basket of other critical factors impacted 3G’s introduction and rollout:
- uncertain macro-economic prospects and high tech bubbles
- regulatory environment: country specific licensing terms and costs
- unrealized gains from recent infrastructure investments and growing network operator and supplier debt
- economies of scale hard to achieve by new infrastructure in a capital intensive industry looking to shift capex to opex
- significant ecosystem gaps in some cases (such as the slow introduction of affordable 3G devices) and extensive fragmentation due to the number of mobile platforms and lack of portability, thus rising application and content development costs
- not enough attention to usability, QoE, the quality of the end user experience and, therefore, overlooking human factors engineering to deliver user centric services instead of technology driven products
- unresolved nethead vs. bellhead discrepancies impacting access, application and content delivery as well as business models leading to the monetization of emerging online services
- the overall industry’s marketing hype leading to over-committing what 3G could actually do on day one: note that today’s 3.5G is technically closer to those expectations.
The question that I’m trying to address is, what does it really take to successfully introduce a next generation technology, generally speaking? At first, I would think that the newer technology would have to deliver some clearly differentiated and demonstrable:
- performance improvements showcased by metrics obtained from comparison testing under both good and bad day scenarios;
- unique capabilities that legacy and existing systems cannot possible deliver, such as specific applications or efficiencies which wouldn’t otherwise exist.
From a change management perspective:
- do the benefits of introducing a new technology outweigh the challenges within the planning period?
- what does it take to swap out legacy systems and is the cost of switching worth it?
- any old technology last gasps worth considering?
- are there any competing alternatives or substitutes in a colliding course?
I would also look at the value to the ecosystem of users, service providers, suppliers, investors and policy makers. In other words:
- is there an ecosystem to work with?
- what’s in it for everyone? is it worth the change?
- are goals and roadmaps aligned?
Let’s say that you have good answers for all of the above questions. There would still be a need for addressing how your company gets that business in today’s competitive marketplace:
- vision and thought leadership?
- clearly differentiated value proposition?
- time to market and first mover advantages?
- innovative operations and business models?
- partnerships and alliances? open systems?
- M&A? vertical integration? industry consolidation?
- best of breed? end to end systems integration?
- quality and total cost of ownership?
- other?
Last but not least, what’s the degree to which the introduction of a next generation product relies on a push vs. pull market strategy? What would the extent of the new market creation effort be?
- who are the early adopters, power users and influencers?
- who are the lead users willing to tamper with the technology and innovate in the process?
- what’s the necessary critical market mass and how long does it take to get to a point of no return?
“the causes of last gasps have major strategic implications for firms in industries where technology transitions are occurring. A danger for new-technology firms is underestimating how long the last gasp will delay them from becoming profitable. In a study of the semiconductor industry, I found that this miscalculation caused numerous tech start-ups to founder (…) the new appears, the old improves.
Beware of Old Technologies’ Last Gasps by Daniel C. Snow.
Back in July I joined Harvard’s course on Leading Product Innovation, where Professor Snow addressed the subject of product transitions, which prompted me to write this post. As usual, I will welcome your comments and emails on the subject.
J. de Francisco blogging from Chicago on Sep 20
How do you communicate at work?
“Thoughts on Twitter; evolves as real-time search engine (…) How do you foresee that as a potential threat to Google? (…) Poor man’s email systems. They have aspects of an email system but don’t have full offering. Do they fundamentally evolve as sort of a note phenomenon, or storage, identity, etc. Or do email systems evolve? In Google’s case, we have a very successful IM product.”
Google CEO Eric Schmidt’s comments during a fireside chat with Mary Meeke at Morgan Stanley’s tech conference earlier this year. Read Dan Frommer’s article, which delivers the full transcript.
For the past few months, I’ve been mapping out how I use the various communication technologies at my disposal:
- I’m showing group communication tools in blue, one-on-one in orange and real time voice and video in purple. The horizontal axis shows the degree to which my communication involves simpler or more complex content. The vertical axis portrays whether the communication involves real time interaction or not.
- I’ve developed a preference to use microblogging tools such as WordPress’ Prologue and Yammer over IM, email and voice mail. I am very keen on Prologue.
- I’m not only sending out less emails, they are also becoming shorter. I now try to keep them brief, down to just bullet points dealing with need to know stuff. I then add a link to my blog where I provide the next level of detail and information as well as links to relevant presentation materials.
- When I get more emails on a given subject, I first update my blog post on that topic; then I reply with quick message, which includes the link to that post. This way, I save myself from either oversimplifying or writing long emails which many may not inclined to read.
- Interestingly enough, I get my emails in my Blackberry way before they show up on my desktop. Needless to say, that’s also the case when I get to my office and fire up my laptop, which now takes ages to boot. So, I’m getting into the habit of using mobile email even when I’m in the office.
- I am also working on minimizing meeting time by recording my presentations in advance. This allows me to forward a link to a media file that people can download and review prior to a meeting. The goal is to make the best use of meeting time and conference calls by focusing on Q&A and action items.
As usual, I count on your feedback to make updates to the above graph.
Other posts of interest:
- Twitter’s search for a business case
- Web strategies that cater to customers
- Mashup tools (user generated applications)
J. de Francisco blogging from Chicago on Aug 29
