Inspired by David Letterman, here is my Top 10 Signs You Need Help With Innovation Management.

Number 10. Just like a neurotic dog chasing its tail, you seem to be caught chasing a tail. You just can’t tell whose tail you are chasing: yours or your competitor’s.

Number 9. Your managements’ version of thriving on chaos feels more like the final hours on Titanic.

Number 8. Your company wrote the book on bureaucracy: the corporate barber offers volume discounts on pointy hairdos.

Number 7. You missed so many product launch windows that you are thinking about installing garage doors.

Number 6. Your product roadmap has taken its cue from NASA. You retired your core product without a replacement in the works, leaving your customers lost in space.

Number 5. Your data sheets read like John Kerry’s campaign speeches…

Number 4. Your employees refer to your idea management system as the roach motel. Ideas check in, and nothing checks out.

Number 3. Your strategic planning process resembles contestant elimination on a reality show.

Number 2. To reduce casualties, you erect a wall with security checkpoints between your R&D and marketing departments. Remember to use the buddy system: no one crosses the line alone!

And finally, Number 1. You are reading this blog

Happy weekend everyone!

I love the replicator technology from Star Trek. A replicator is a machine that can create and dispose of objects. Talk about easy meals and clean-up! Aside from food, the crew also used replicators to produce spare parts and everyday things.

Looks like theReplicating Rapid-prototyper (RepRap) team, which is an open source activity, has the objective to build a printer that can replicate and update itself. In that sense, RepRap is more like the Stargate Replicators, but hopefully not as deadly :). Using polylactic acid (PLA) the RepRap can duplicate itself, its own components, and other 3D objects. Though 3D printing technologies already exists, RepRap is unique as it is completely open source and can replicate itself. Just imagine the next generations’ science fair projects, or upcoming design meetings, or … Just as any innovation, it is the small steps that creates the giant leaps. Now, only if they came up with blog-writer.

Technorati Tags: RepRap

Our world is full of slogans, so why not use them for our customer-focused initiatives? Unfortunately, slogans are just words and they do not provide the essence of what is needed to build a customer-focused organization. Frankly, just saying something doesn’t make it so.

Every business wants happy customers and strives to turn them into best customers: ones that provide repeat business and becomes your biggest advocate. They work to ensure that the correct employees are in customer-facing positions, put in place reward systems to drive their customer-focused strategy and share customer feedback and stories with the organization.

In-depth customer knowledge is also a key requirement for innovation, commercialization and business success. It boils down to how you are contributing to the success and growth of your existing customers, and how you are positioning yourself for the success and growth of your new customers. So, what you share with your employees about your customers is crucial to your customer-focus strategy. Next time, spice up your team meetings with discussions on the following items.

Define your ‘value’ from the perspective of your customer

Businesses exist because they deliver value to customers through their products and services. Your customers do not buy your product; they buy what your product and firm offers them: a solution to a problem, improvement from their current solution, better performance and quality, feeling of comfort, security, image and overall value. The price premium that your brand commands and your competitive advantage is what your customers value and are willing to pay extra for. How are you incorporating that value into your product development process, your firms services and offerings?

Lifetime value of your customers

We are all human, and our natural tendency is to relate, personally and socially, and build lasting relationships. Your customers are not interested in one-time transactions: they want to know that they can trust you, that you will treat them fairly and that there is a mutual respect. At the same time, with globalization and the Internet, they also know that they have choices.

Lets say a new customer walked through your doors. Do you know the average lifetime value of that customer to your business? How about the cost of acquiring that new customer? Think about it, how many new customers has your business lost over few dollars, bad customer service experience, unintuitive website or misrepresentation of your product capabilities? More importantly, how do you share that knowledge with your employees?

Go beyond requirements

It is all too familiar: marketing requirements, functional requirements, architectural requirements, … But customers don’t buy requirements, they buy products and services to get a job done. They measure the benefits of your product and service against how well, how fast, how cheaply, how profitably and how reliably that job is done.

In What Customers Want: Using Outcome-Driven Innovation to Create Breakthrough Products and Services, Anthony W. Ulwick outlines that for an innovation process to be successful, firms must understand what jobs/activities/tasks are the customers’ pain point, what outcome they are wanting to achieve and the potential constraints that stop the customer from using your product and service. Aligning this knowledge with your firm’s brand value is the foundation for creating loyal customers. To obtain this intimate knowledge, one needs to go beyond the ‘voice of the customer’ and actually walk a mile in your customers’ shoes.

Know how your customers judge your value

Your development team needs to know your product and service’s performance measures to design and test the product against. Your customers may not be able to articulate this beyond some standard measures: Megapixels? I dunno, just want to take quality pictures with an easy to use camera. But, how do you define and measure image quality or ease of use?

I enjoy working with customers throughout the development process. Alpha and beta tests are also great way to collect and understand what customers value, how they use and interact with your product. However, they are late in the development cycle and can be a challenge on schedules. With that, how you incorporate and learn from your customer research is even more important for your learning organization.

Know all your customers

Do you know all your customers? How well do you understand their jobs, pain points and what keeps them up at night? Just think back to the last time you were at Staples looking at purchasing a printer. Even though those products are targeted to consumers, the distribution channel partner is also a customer. The lack of readily available information about these products in the store is amazing, considering how much this literature will help make a sale. Yet, the store should be concerned about making quick sales and providing good customer service without increases in staff or training costs.

The distribution channel partner is an obvious example. Your customers may vary between obvious, unobvious and opportunistic ones. Examples could include the kids that are buying products for their elderly parents or companies that want to utilize your services for their promotional needs, such as advertisement placements on buses. Think about all customers of your products and services, and address and balance their needs and pain points.

Grow with your customers

Life is about change. Stay connected with your customers and continue to deliver value as their needs, desires, values and tasks change and evolve. If you don’t, your competitors will.

Technorati Tags: customer knowledge, innovation

Previously I wrote about Gary Hamel and Lowell Bryan’s comments on innovation and how it will impact management practices and organizational design.

Now you can visit HBS Working Knowledge to read and comment about how you see the future of management changing: Where Will Management Innovation Take Us?

It is no doubt that innovation and the drive to continuously innovate is changing the way work is done and where it is done, how groups are led and organized, and how creativity is encouraged and tapped. Technology is also playing a key role in facilitating this situation, whether it is through social networks, forums, virtual meetings, development environments or knowledge management tools.

However, perhaps the biggest challenge to the future of management will be big corporations and all their bureaucratic bloated supporting departments. As important as the management process itself is to innovation, the alignment of the supporting organizational structures, such as the HR department, is just as vital in order to succeed.

Brought to you by the “Rambling Blogs” department of Kitetail.com.

Technorati Tags: future of management, HBS

One advantage of working for a large company is that they have all the resources, including a technology group that handles all the licensing activities. An advantage of self-employment is that I have the ability to dive into different interesting areas that I did not have the opportunity to before.

I talked about intangible assets before. Patents are one of the most quantifiable and perhaps most controversial forms of intangible assets. IBM is famous for its patent portfolio, and for maintaining the top slot for the number of patents issued year after year. Not to forget, their technology licensing revenue generates over $1B annually. If you are interested, check out IFI’s latest report on 2007 top patent owners.

Technology licensing can be a great revenue model for a small firm that does not have the resources to enter or effectively compete in its target markets, or where their technology is applicable to a number of industries. Technology licensing can also enable firms to derive additional revenues through their intangible assets, such as in the case with IBM, ARM, etc. Such licensing agreements can enable a firm to enter a new market quickly and/or reduce potential risks, such as with going into a foreign market. Technology licensing also plays a role in the establishment of industry standards, such as with Qualcomm and CDMA technologies. Through cross-licensing, firms can also gain greater freedom to develop new products and compete in new markets without worrying about potential litigation.

In simple terms, technology licensing is an agreement where one party (the licensor) owns valuable intangible asset(s), and gives another party (the licensee) the legal right to use, modify and/or potentially resell that intangible asset in exchange for some form of compensation. These valuable intangible assets, or intellectual properties (IP), could be patents, copyrighted materials, expertise/know-how, trade secrets, trademarks, and more. There are also many different types of IP licensing: patents, technology licenses, copyrights, trademarks to name a few. In summary, for an effective licensing agreement one needs:

• A licensor, who must have the ownership of the IP, and IP must be protected (or eligible for protection) by law.
• A license that indicates what rights are granted to the licensee.
• A compensation method (lump sum, royalty, cross licensing, …) that is clearly stated and agreed upon.

Technology licensing is certainly an untapped potential for many firms. It is a high margin business that can bring recurring revenue after the initial investment is made and development activity is completed. From a business perspective, building a technology licensing program should be strategically planned, carefully managed, aggressively marketed and legally protected. Below are some of the key building blocks relating to challenges of establishing a technology licensing program. In future articles I will get into some these in more detail. As always, drop me a note if any topics rings an interest with you.

View your technology licensing program as a business
IP, once viewed as a cost center, is now the focus of many firms as a potential revenue stream. However, to maximize their value, these intellectual assets need to be managed to become a profitable business. This process could be handled by establishing a licensing team (a combination of individuals who are intimately knowledgeable with the technologies, business people, product managers) that would have the responsibility to determine potential exploitation mechanisms for the technology. In addition to providing the IP rights, you may be required to develop a service business to support your customers. After all, if your customer is not successful, you are not successful. Whatever your strategy, make sure you establish a strategic intellectual property plan and process to maximize the value of your intangible assets.

Establish an effective organization structure to manage IP
Your organization structure will influence how effectively you can manage your IP. Smaller companies usually delegate the intellectual property asset management function to outside experts. Larger companies usually have their own departments for handling intellectual property asset management related functions, such as IP development, licensing and litigation. However, unless there is an integrated strategic plan and/or centralized management of all IP, it will be a challenge to maximize their potential value due to conflict of long-term vs. short-term focus. In addition to your organization structure, your organizational incentives will also determine how effectively you can build, support and grow your licensing business.

Utilize IP expertise
Licensing strategies differs from technology to technology, market to market, prospect to prospect, as well as US vs. foreign markets. In addition, your success depends on the successful outcome of the licensing negotiation. License terms capture conflicting interests between the licensee and licensor that require careful negotiation and trade-offs. So, get an expert to successfully navigate the unknown waters.

Know your legal protection rights
For your technology licensing business to be viable, you need to have technology that is legally protectable by law. So, whether you are utilizing patents, copyrights, trademarks or other methods, know how to protect them and what the process is in case of infringement. Also realize that litigation is quite expensive and takes time. So, do your homework and manage the risk.

Recognize you are in a marathon
You can’t just build your patent portfolio and stop. Technologies and markets move too fast. You need to build your innovation culture to keep churning new ideas and to build on existing ones to further improve their protection. Otherwise, it will be a short-lived business.

Remember to get paid
Licensing revenue leakage is lost revenue.Your license management program is the key part of your process to ensure you collect your royalties on-time. In addition, your program also needs to ensure that licensees are complying with the terms of the license and operating within the boundaries agreed upon.

Learn to value your intangibles
Putting a $ amount on your intangibles is perhaps the most challenging part of the process. How do you determine what the licensee would be willing to pay and under what payment terms? Understanding how your technology will benefit the potential licensee (cost reduction, competitive positioning, new markets, …) both financially and strategically, is an important starting point. Also, continuously evaluate your strategic market position and maintain your leadership status in the market to maximize your value.

Technorati Tags: technology management, intangible assets, intellectual property

I recently had the pleasure of experiencing Apple’s customer service. Think about it, what percentage of the population would actually use pleasure and customer service in the same sentence?

For their customer support and service, Apple has created multiple venues. One of which is their Genius Bar at an Apple Store. Ok, referring to something as ‘genius’ is a little presumptuous, but what are the other options, “Geek Squad?” My experience at the Genius Bar for diagnosing/acknowledging my MacBook issue was straightforward. First, you make an appointment online. Second, as soon as you walk in the door, they check you in to your appointment. At the Bar, they have large flat-screen monitors that regularly shows the names and the schedules of customers waiting for service. And if that’s not enough, someone will shout out your name when you get to the top of the list. So, I was in-and-out of the store within 30 minutes.

Since they weren’t able to resolve my issue at the Apple Store (lack of parts), I opted for Apple’s Mail-In Service. What an amazing experience! Less than 24 hours after calling Apple, DHL dropped off my Mail-In Service Box. Over the weekend, I packaged my laptop and called DHL for a pick-up, which went out Monday mid-afternoon. Tuesday morning, I received two emails. First one was the notification that they received my laptop. The second email, which came late in the evening, indicated that my laptop was fixed, shipped and that I should receive it in 2 workdays. Next morning, Wednesday, FedEx dropped off my laptop at 10:30am. In another words, within 2 days of leaving my house, my laptop arrived back at home.

Unfortunately such customer delight stories are rare in the industry. Yet, there are so many opportunities and touch points that are available to create value and competitive differentiation for the firm. Value in this sense refers to the amount the customers are willing to pay for what a firm provides them. A firm/product is profitable if the value it delivers exceeds the cost of developing and delivering the product.

Lets take a look at some of the generic models for examining various touch points for exploiting value for a firm. For a firm that revolves around delivering value to its customers, they will find innovative ways to create value in all aspects of these models.

Porter’s Generic Value Chain

Michael Porter introduced the concept of generic value chain model that describes a sequence of activities that are common to a wide range of firms. As shown in the figure, a value chain includes all the activities a product goes through, which also adds value to the product.

Note that each of the activities in the value chain is also linked. High quality assurance processes during technology development reduces the support/service costs in the field. This is also true from the perspective of procurement, where high quality assurance processes eliminate faulty parts, reducing the costs associated with debugging and maintenance later in the value cycle.

Note that no two firms, even in the same industry, making the same products, have identical value chains. So, how well a firm manages its value chain and its linkages determines the value they deliver and competitive advantage they gain in the industry.

Value Delivery System

Porter’s value chain concept can be extended beyond just an organization to describe the value systems. A value system includes the value chains of all the ecosystem players that collaborates to deliver value to the customers.

Think about the challenges of working with other internal groups in your company, and project it to your ecosystem of partners, suppliers, alliances and all. Don’t forget to factor in the cultural and value differences as well as conflicting priorities and goals. However, a firm’s position in this value delivery system will again differentiate it from the rest of the pack.

Customer Life Cycle

Customer life cycle describes the steps a customer goes through when selecting, purchasing, using, and all the way through disposing of a product or a service. As simple as it sounds, getting a potential customer’s attention in these days is quite a challenge. Given the availability of competing options and transparency of product information/reviews, firms need to pay extra attention to capturing the potential customers and turning them into paying and loyal customers.

Recently my husband discovered that Office Depot offers pre-paid electronics recycling boxes. You buy an empty box at the store (small, medium or large), fill it with old electronic devices, then bring it back to the store for environmentally friendly disposal. This service is certainly unusual, but for an eco-friendly person with too many old electronic gadgets and gizmos, it is certainly something worthy of TWO 40-minute drives.

Technorati Tags: value creation, Porter’s value chain, customer life cycle

reflections,
originally uploaded by binnur gul.

Amazing! Yet another year is done, when does it end? Wait, don’t answer that… Frankly, if it wasn’t for the calendar telling me otherwise, to me it is still 2007. Normally about this time of the year, I reflect on the past, wonder and plan for the future. Since every part of my senses still believe I am still in 2007, I have to manually kick start the reflection and pondering process. After all, it is part of the rejuvenation and renewal cycle.

Looking back, in my early years, I almost felt proud of the fact my brain was constantly on. Something about the phrase “I think therefore I am”… However, when I started meditating regularly, I became aware of how noisy and cluttered my thoughts are. Zen teachers often refer to this as having the monkey brain. Quite appropriate…

Is our mind our worst enemy? Think about it. What we see, observe and think is shaped by our life experiences and by our environment. How we respond to life changes and events is based on what we already consciously or unconsciously learned, know or intuitively observed. Our mind is our vessel for all of that knowledge and experience. It can move mountains or cause us to lose wars before the battle even begins.

Our brain is an amazing machine… Can I really, confidently define what is real and what is not? “If real is what you can feel, smell, taste and see, then ‘real’ is simply electrical signals interpreted by your brain.”

The Power of Impossible Thinking: Transform the Business of Your Life and the Life of Your Business has a quote from Francis Crick:

“What you see is not really there; it is what your brain believes is there… Seeing is an active construction process. Your brain makes the best interpretation it can according to its previous experience and the limited and ambiguous information provided by your eye.”

The authors of Made to Stick: Why Some Ideas Survive and Others Die, Chip and Dan Heath, talk about the curse of knowledge. This is the paradox (or pair of ducks, as hubby would say ) where the increased knowledge and expertise creates an undetectable containment field that interferes with our ability to create and innovate, and break out of the rut. (Quack, quack, quack…)

It is in our nature to classify and generalize. As a matter of fact, our economy is built on our ability to identify the target market and customer, and then exploit it to its fullest. Don’t get me wrong. This ability to classify and generalize is an important function of our survival. Through this amazing skill, which we fine tune through our life experiences, we can problem solve and intuitively deduce how to behave, respond and communicate. Yet, this amazing ability can also create invisible walls that can take a lifetime to break, if then…

Zen teachers talk about the importance of having a beginner’s mind. It is this openness, the attitude of possibility, curiosity and childlike brevity to question, wonder and doubt that enables us to see things as fresh and new. Next time you have the opportunity, just follow a child through his day, you may be amazed at the possibilities.

So, how is all this tied to innovation and technology management? Quite simple actually. Thru self-awareness and realization it is possible to reinvent oneself. And, I truly hope reinvention is not just limited to near-death experiences as the Forrester blog highlights. The reinvention, rejuvenation and renewal are all necessary aspects of innovation and creativity. Through persistence it is possible to move mountains, where we can even put a man on the moon.

As departing thoughts, also take a look at Think Simple Now’s article on 7 habits of highly innovative people. If some of the items make into this years resolutions, be sure to make them SMART.

Happy New Year everyone!

Technorati Tags: beginner’s mind, reinvention, rejuvenation

Johnny Chung Lee of Carnegie Mellon University had the idea and the insight to see how a Nintendo Wii remote can be turn any surface into a multi-touch screen. It is a very cool demo. You can download the software from Johnny Chung Lee’s page.

Below is the YouTube video. It is awesome to see such out of the box thinking using off-the-shelf materials, and repurposing a game remote for more professional use.

Technorati Tags: Nintendo, Wiimote, Low-Cost Multi-touch Whiteboard using the Wiimote

The article, “Tough CEOs Often Most Successful, A Study Finds“, was published in the WSJ.com last week. The research conducted by three University of Chicago business-school professors highlights that the ‘hard’ skills count more than ’soft’ skills when it comes to success.

In this research, hard skills refers to traits that “get things done”: persistence, efficiency, analytical thinking and setting high standards. Soft skills, on the other hand, include teamwork, creativity, persuasion, listening skills, enthusiasm and treating people with respect.

I have been chewing on these findings, and frankly I find the results conflict with my experience. I have found that innovation and technology management revolves around people: whether it is about motivating your team or pushing the diffusion/adoption of your new innovation and technology. Yes, to be successful one does need the hard skills mentioned here. However, I don’t believe it is possible to be successful nor establish a sustainable success without the soft skills, which are downplayed in the study.

Here are some highlights from my other postings on innovation and the need for soft skills.

• Innovation requires both sides of your brain — You can’t just be creative, but also need to be analytical to successfully exploit the opportunity. Think out of the box, look for connections even seemingly unrelated, be open to and seek new experiences and ideas, be observative and keenly inquisitive. Know that the future is unwritten and full of opportunities. Be positive, hopeful and optimistic, regardless of the current situation. But, while dreaming big, start small, simple and with focus. Iteratively build on your previous successes, and create your future one step at a time.
• Strategy and its execution requires ownership at all levels — This means everyone, from the CEO on down. Executive leadership must embed strategy in the organization: from its people, to its processes, to its culture and values. Any strategy, however brilliant, will fail unless people are emotionally committed to its success. In order to achieve unwavering commitment, people need to be involved in the strategy process early, they need to understand and believe in the strategy, and they need to feel included. The organization’s culture, values, incentives, people, structure and processes all contribute to how the existing internal environment will support its strategy.
• Innovation is change — In this case, change applies to all aspect of innovation process, not just the final output. Innovation is ambiguous and requires failures to achieve success. Innovation is also a change in behavior of customers, in how they work and produce something. Yet, market adoption and acceptance is a complex process where one rarely has the power to control or dictate.
• Innovation starts with people — Innovations do not occur by themselves: they are generated and sustained through the efforts of individuals and people. Creativity, commitment and persistence drives the innovation process. How well an organization cultivates and nurtures the creativity, knowledge creation and invention process plays into their innovation capability. Yet, it is important to note that these are necessary but not sufficient conditions for successful innovation; but they do make up the foundation that innovations are built upon.
• Your organizational culture is linked to your firm’s success — Various studies and surveys indicate the link between organizational culture and firm’s success. Denison Consulting’s 2006 study links high performance in key areas of the organizational culture (adaptability, consistency, mission and involvement) to long-term financial performance and short-term sales growth.

Innovation and top line growth is a concern for today’s CEOs. Yet at the same time, many will admit that only a small percentage of their innovative ideas, products and technologies are getting commercialized. Maybe this should not come as such a surprise, given that these CEOs are focusing on hard skills. Maybe even the successful CEOs are missing the crucial aspect of what it takes to innovate and drive innovation in their firms, limiting their true potential. Perhaps a follow on study should be made which compares/contrasts the successful and innovative CEOs in areas of character traits and skills. What do you think?

Technorati Tags: Tough CEOs Often Most Successful, innovation, soft and hard skills

The McKinsey Quarterly recently had a good discussion on the topic of innovation management (might require free membership to access the content). As Gary Hamel summarizes, the discussion is about the changes that are occurring with management practices and organizational designs.

How do you build organizations that are as nimble as change itself? How do you mobilize and monetize the imagination of every employee, every day? How do you create organizations that are highly engaging places to work in? And these challenges simply can’t be met without reinventing our 100-year-old management model.

Managing creatives, knowledge workers, freelancers, …, is not an easy process. It requires a careful balancing of freedom to explore and directing energies in a productive way that ultimately profits the firm and society. From Lowell Bryan:

These thinking-intensive people are increasingly self-directed. In fact, they’re directed as much by their peers as they are by supervisors. The management challenge is akin to urban planning. The art of it is that you must enable people to make thousands and thousands of individual decisions about how to live and work, but you have to create the infrastructure to make it easy for them to do so.

Insight from Gary Hamel:

The outlines of the 21st-century management model are already clear. Decision-making will be more peer based; the tools of creativity will be widely distributed in organizations. Ideas will compete on an equal footing. Strategies will be built from the bottom up. Power will be a function of competence rather than of position. In terms of the future of management, we’re at the beginning of what will be a fairly long journey. You can see some of the pieces starting to come together, but we’re not there yet.

And finally, Gary Hamel’s questions to the CEOs that are serious about innovation, which should be asked and compared at all levels of the organization:

• “How have you been trained as a business innovator? What investment has the company made in teaching you how to innovate?”
• “If you have a new idea, how much bureaucracy do you have to go through to get a small increment of experimental capital? How long is it going to take you to get 20 percent of your time and $5,000 to test your idea? Is that a matter of months or is it very easy for that to happen?”
• “Are you actually being measured on your innovation performance or your team’s innovation? Does it influence your compensation?”
• “As you look at the management processes in your company, do they tend to help you work as an innovator or get in the way?”

Enjoy the article.

Technorati Tags: innovative management, Gary Hamel, Lowell Bryan, McKinsey