IEEE-USA E-Books

Doing Innovation: Creating Economic Value

1 Perspectives on Innovation
Book
Book Book

2

Developing a Workable Innovation Process

Fostering an Innovation Culture

Book

What It Takes to Be an Innovator By Gerard H. (Gus) Gaynor

Retired 3M Director of Engineering President, IEEE Technology Management Council

Published by IEEE-USA Copyright 2009 by the IEEE. All rights reserved. Printed in the United States of America Edited by Georgia C. Stelluto, IEEE-USA Publishing Manager Cover design and layout by Josie Thompson, Thompson Design This IEEE-USA publication is made possible through funding provided by a special dues assessment of IEEE members residing in the United States. Copying this material in any form is not permitted without prior written approval from the IEEE.

Table Of Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Book I. Perspectives on Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Historical Background of Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Ambiguities Associated with Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Basic Concepts of Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Independent Innovators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Organizational Innovators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Bottom-up Innovators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Top-down Innovators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Technological Innovations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Management Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Continuum from Idea to Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Raw Ideas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Invention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Types of Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 How Innovation Takes Place . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Brainstorming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Creative People . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Problem Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Sources of Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Open Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Innovation as a Management Discipline . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Doing Innovation: Creating Economic Value Book I. Perspectives on Innovation

Introduction
oing Innovation: Creating Economic Value comes about from a concern that while innovation appears to receive considerable attention in the academic and business media, these so-called innovations provide little, if any, consistent and significant economic growth. Academia, government, and industry struggle to various degrees to translate ideas into innovations that not only provide for economic growth but also offer some social benefit. Articles that present Innovations-of-the-Year too often describe substitute products with new bells and whistles. These products took considerable effort and talent to market and while interesting, do not provide significant economic value. The Doing Innovation series will include four E-Books that provide the reader with an understanding of the fundamentals of converting ideas into innovations.

Book

1 Perspectives on Innovation

Introduction to innovation Considers the ambiguities associated with innovation Describes the basic concepts associated with innovation Differentiates between idea, concept, invention, and innovation Defines the types of innovation Identifies how innovation takes place Considers innovation in different types of organizations

Book

2 Developing a Workable Innovation Process

Teaches the fundamentals related to the innovation process Presents various models with their limitations Identifies the limitations of process models Describes the innovation design process Considers the issues in developing a process model Suggests a generic model Describes organizing for innovation

Doing Innovation: Creating Economic Value Book I. Perspectives on Innovation

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3 Fostering an Innovation Culture

Links organizational culture theory and practice Identifies and classifies cultures and their impact on innovation Differentiates the idealistic from the real world Considers what it takes to change a culture Suggests the role of managers in changing culture Describes some organizational cultures Suggests approaches to developing the appropriate culture

Book

4 What It Takes to Be an Innovator

Identifies the required personal characteristics and attitudes of the innovator Describes the required skills of the innovator Considers the role of the knowledge base of the innovator Links the innovator to the organizations culture Identifies the innovators challenges Presents the obstacles to innovation Doing innovation

These four E-Books provide the basics for gaining an understanding of what innovation involves, what it takes to be an innovator, and what it takes to develop a culture where innovation can thrive. Innovation involves thinking about thinking. It is multi-disciplinary. It is multi-functional. It involves individual and team effort. It requires systems thinking. Doing innovation is not a how to book series: its purpose is to learn and apply the fundamentals in the context of the organizations purpose and associated values. So, if youre looking to become an innovator, or participating in the innovation process, begin with Book 1: Perspectives on Innovation. Gerard H. (Gus) Gaynor

Introduction

Book

Perspectives on Innovation

nnovation occupies many pages of the business and academic press, yet under close scrutiny it is difficult to find innovation that provides economic value. We need to ask the question: Where are the innovations that have an impact on economic growth? Introducing new features to current products or processes dominates the innovation discussion. This situation exists because there appears to be much confusion as to what this activity we describe as innovation really involves. Innovation is not science or engineering, and it is not technology; it is about taking ideas and developing them into products and services and bringing them to the marketplace to generate new economic growth. At times, it appears that the innovations that drove economic growth in the past no longer exist. Innovations in the financial sector are not considered in this discussion, as we might conclude that financial innovations somehow missed all the requirements of successful innovations. Doing Innovation -- Book 1 explores: A brief historical background of innovation Ambiguities associated with innovation Some basic concepts associated with innovation A continuum from idea, concept, invention, and innovation

Types of innovation How innovation takes place Innovation in different types of organizations

Doing Innovation: Creating Economic Value Book I. Perspectives on Innovation

Historical Background of Innovation

n Search of Excellence,1 authored by Peters and Waterman and published in 1982, focused on the importance of innovation and entrepreneurship in pursuing business leadership. The authors reported on their study of sixty-two companies that were considered to be innovative and excellent by a group of management academics, business consultants, the business community, and the business press. In their study, the authors found that the excellent companies were brilliant at the basics, tools didnt substitute for thinking, intellect didnt overpower wisdom, and analysis did not impede action. These excellent companies worked to keep things simple in a complex world, persisted in pursuit of their objectives, insisted on top quality, valued not only their customers business but their product use expertise, listened to their employees and customers, and gave the innovators and their champions the opportunities to pursue the chaotic aspects of the innovation process. The study identified eight attributes that characterize excellent and innovative organizations as follows: A  Bias for Action emphasis on experimentation, try it do the last experiment first C  lose to the Customer learn from people you serve, theyre a source of ideas for innovation A  utonomy and Entrepreneurship innovation is an expectation, not a choice; risk taking with discipline P  roductivity through People people are the source of ideas, respect for the individual H  ands-On, Value-Driven make the first try, then the second, and as many as required, based on the agreed value system S  tick to the Knitting stay close to the businesses, technologies and markets where you have competencies, but dont fear becoming the pathfinder S  imple Form, Lean Staff simplify the organizational structure and watch the headcount S  imultaneous Loose-Tight Properties centralize and decentralize to fit the needs of the organization organized chaos precedes innovation

Doing Innovation: Creating Economic Value Book I. Perspectives on Innovation

A few years later, some of the organizations Peters and Waterman cited were no longer excellent, but that was no reason to disregard the impact of the eight attributes affecting innovation. It is difficult to argue against any of these attributes, however, Stick to the Knitting may raise some issues. But Stick to the Knitting does not imply that you forget about whats going on in the world. Henry Ford introduced the Model T, but the technologies that made it a success did not work in the post-World War II period. The idea that you could have any color you wanted as long as it was black no longer met customer requirements. Organizations need to stick to areas where their competencies allow them to perform effectively in their field of interest. It is doubtful that Boeing would wish to compete with 3M in producing Post-it Notes, and likewise, it is doubtful that 3M would begin investing in designing a leading edge aircraft. So, Stick to the Knitting implies that the knitting may need continuous monitoring and fine tuning. Peters and Waterman also provide an example of what hinders the innovation process. One product innovation they researched required 223 interviews and approvals from seventeen different standing committees to develop it from an agreed upon concept to the marketplace. Each of these 223 links may have made good sense but created a sort of macro nonsense. In this example, the management process defies logic.

Historical Background of Innovation

Ambiguities Associated with Innovation

nfortunately, it appears that it is almost impossible to agree on a common description of innovation. Peter Drucker reminded us in Managing in a Time of Great Change that every organization not just business needs one competence: innovation.2 Innovation does not come about from Eureka moments. If, by happenstance, that Eureka moment appears, it was most likely preceded by a significant amount of prior thinking about related thoughts. It was preceded by hours of attempting to formalize an idea into an understandable and workable concept. Innovation does not occur by following ten easy steps, or following the seven-step panaceas suggested by some innovation gurus who never participated in the innovation process. Innovation involves the willingness to live through the proverbial blood, sweat and tears required to accomplish a goal. It doesnt occur by watching the clock from eight to five, and spending the day on doing what one is told to do. It requires individual initiative, a sense of imagination, and a stick-to-itiveness to make it happen.

Innovation as a Management Discipline

Innovation requires freedom as well as a management discipline: it comes about from a disorderly process that searches for order and involves moving from an idea to a concept to an implementation or commercialization of the original idea. In more recent times, the word innovation seems to appear without any understanding of the meaning of innovation. Too often, the word innovation is used without any relation to real innovation. Innovation is often used interchangeably with ideas, concepts, and invention. Ideas and concepts provide little, if any, benefit, unless implemented in some manner. Inventions provide little, if any, economic value unless implemented. The following comments3 from those who have studied innovation provide different points of view, and some insight and will help us differentiate this continuum that includes ideas, concepts, inventions and innovation: Joseph Schumpeter: Mid-20th century economist described innovation as the first commercial use of a product or process that hadnt previously been exploited. Theodore Levitt: Generally speaking, innovation may be viewed from at least two vantage points: (1) newness, in the sense that something has never been done before, and (2) newness, in the sense that something has not been done before by the industry or company now doing it. Strictly defined, innovation occurs only when something is entirely new, having never been done before. Peter Drucker: Its [innovations] criterion is not science or technology, but a change in the economic or social environment, a change in the behavior of people as consumers or producers, as citizens, as students, or as teachers, and so on. Innovation creates new wealth, or new potential for action, rather than new knowledge.

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Edward B. Roberts The first generalization is: innovation = invention + exploitation. The innovation process covers all efforts aimed at creating new ideas and getting them to work. The exploitation process includes all stages of commercial development, application and transfer, including the focusing of ideas or inventions toward specific objectives, evaluating these objectives, downstream transfer of research and/or development results, and eventual broad-based utilization, dissemination and diffusion of technology-based outcomes. Gifford Pinchot III: Invention is the act of genius in creating a new concept for a potentially useful new device or service. In innovation, that is just the beginning. When the invention is done, the second half of innovation begins: turning the idea into a business success. Each of the descriptions of innovation focuses on different aspects of the many issues involved in the innovation process: none of them contradictory. Innovation must be viewed in the context in which it takes place. It may have different meanings in the activities that lie on the continuum from one end that may involve a solid state device, and at the other end, implementation of a macro system such as a nationwide electric grid. 3Ms Post-it Notes may be at one end of the continuum, the development of the Boeing 787 Dreamliner may be at the other end of the continuum. Innovation is differentiated from idea, concept and invention, because it involves execution, i.e., commercialization, or implementation. The following descriptions summarize what innovation involves as provided by comments of the five scholars previously considered: Schumpeter proposes commercialization Levitt focuses on newness in the sense that it has never been done before  Drucker requires changes in behavior in the economic and social environment, action, and creating new wealth Roberts suggest that innovation = invention + exploitation Pinchot III considers innovation as turning an idea into a business success. Innovation begins with an idea that is developed into a workable concept, and then hopefully, into an invention. A summary of these descriptions can lead to proposing that: Innovation = Invention + Commercialization or Implementation4 Invention is included in this description of innovation, because something new is about to emerge from the effort. Ideas lead to concepts to inventions. This theory does not suggest in any way that the invention would necessarily involve issuance of a patent: it may or may not, depending on the circumstances. Some organizations prefer to focus on confidentiality, rather than exposing details to the public through patents. Inventions may or may not involve some revolutionary discovery. In most cases, inventions provide for creating new combinations of what is already known into a new architecture. I have included commercialization and implementation in this description of innovation, because while the major growth objective may involve commercialization, there are innovations within the organization or its functional groups that are not commercialized, but are implemented. These innovations, although not being commercialized, will provide a significant benefit. As an example, innovations in those administrative and staff departments that provide significant savings by implementing innovative processes. To this extent, no organizational department can be excused from focusing on innovation.
Ambiguities Associated with Innovation

Basic Concepts of Innovation

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oo often, the concerns about innovation focus solely on technological innovation. Technological innovation is a misnomer because it is really technological invention. The commercialization of the invention is what makes this new invention an innovation. This concept is not just a play on words, but an attempt to avoid using invention to mean innovation. Innovation is not innovation is not innovation: it occurs in different environments and focuses on: Independent innovators Organizational innovators Technological innovation Management innovation

Independent Innovators
Innovation does not occur by an algorithm or some standard model: it deals with unknowns, unpredictable events, ill-defined and ambiguous goals. James Bryan Quinn5 considers innovation as controlled chaos from the innovators perspective, and focuses on the mental attitudes of the independent innovator and the corporate innovator. Quinn distinguishes between the independent innovators working in the garage or on the kitchen table, and the organizational innovators fighting the status quo bureaucracy. Independent innovators tend to operate informally: no long-range planning; can live with frustrations and setbacks more easily, since they are not subject to the innovation prevention department, except perhaps by a disgruntled spouse; are more optimistic than their organizational counterparts; and will spend a great deal of their time seeking adequate funding. These people are willing to fulfill their dream idea at all costs. The successful independent innovators play a major role in bringing new products to the marketplace. They are often a threat to major businesses, because they are generally unknown until they publicly announce some new product or service. They also provide a base for acquisition by major organizations. Much of the growth of the major producers of medical devices has occurred though acquisition of start-up companies. Similar situations have occurred in all industries.

Organizational Innovators
Organizational innovators involve two classes: those working on their own ideas that arise from the bottom-up, and those working on top-down ideas, in pursuit of an identified organizational goal. The two groups are subjected to different influencers.

Bottom-up innovators
Bottom-up innovation is what the name implies: innovation occurring someplace in the bowels of the organization. Everyone is welcome to participate. Bottom-up innovators think differently;

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ask many questions; have many interests and experiences; are dissatisfied without change; sometimes considered arrogant; ask why not more often than why; create problems for their first-level managers; refuse to take no for an answer; are not concerned about possible negative impact on a career; gain a certain satisfaction from rocking the boat; and disregard criticism, but determine to a great extent the future of the organization. These are the people who go through the laborious process of first convincing themselves of the viability of an idea, and then convincing several levels of management. Being a bottom-up innovator requires courage, collegial relations with colleagues throughout the organization, a track record, and above all, the ability to sell ideas. You might ask why anyone would choose to fight the corporate bureaucracy. The bottom-up innovator just accepts the fact that naysayers will exist until something is demonstrated, and then all will race to join the bandwagon.

Top-down innovators
Top-down innovation presents few roadblocks to the innovator. The project obviously has the blessings of some high-level executive who can run interference with other executives and managers, and will most likely become the sponsor of the effort, and who will take responsibility for the results. These top-down projects usually come about from either an unsolicited idea or proposal floating to the top of the organization and not having a home, or a play by some upper-level manager to exercise his/her authority with some pet project. The advantage of the top-down project is that the people in power set the pace, and while being forgiving in not meeting expectations, can at the same time be very demanding by their personal involvement. Detractors will most likely remain silent, unless they find the sponsor in a questioning mode as to progress, or as to continuing investment. Top-down projects usually have the benefit of receiving adequate funding without putting the innovator in the position to search for those funds. However, innovation funded from the top of the organization puts pressure on the sponsor regarding progress and especially from colleagues whose projects may not have been approved.

Technological innovations
Some technological advances do materialize into marketable products or services that meet all the requirements of an innovation. The test of technology is in the marketplace and not the laboratory. This statement does not in any way belittle technological advances. But, were talking about innovation and not invention. Bringing an innovative product to market involves the total support of the organizations resources. The product needs to be produced with involvement from all the manufacturing functions, like logistics, quality and procurement. Marketing and sales will be responsible for the success or failure of the product. The marketing group is responsible from the perspective of pre-introduction planning and placement, and the sales department from generating the expected income. The success of marketing and sales depends on whether the product entry was or was not encumbered by major product problems. In short, a successful innovation requires a management system approach.

Doing Innovation: Creating Economic Value Book I. Perspectives on Innovation

Management innovation
A vast body of knowledge has been accumulated in the past 50 years on this topic we refer to as innovation. But little, if any research, has focused on management innovation. Gaynor6 in Innovation by Design considers the need for innovation from all members of the organization based on their ability. Birkshaw, Hamel, and Mol,7 et al, have defined management innovation as:  the invention and implementation of a management practice, process, structure, or technique that is new to the state of the art and is intended to further the organizational goals. One would expect that no research would be required to convince executives that management innovation begins at the top of the organization; it is an organizational prerequisite for success. As we look at the U.S. auto industry, we could conclude that these organizations required implementation of some management innovation in the past. These companies have been undergoing reorganizations for what appears to be decades, but evidently not much has occurred to change the organizational dynamics.

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Basic Concepts of Innovation

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Continuum from Idea to Innovation

nnovation does not take place by a defined linear process. Its a matter of starts and stops, two steps forward and one step back. And sometimes, two steps forward and back to zero. The innovation continuum includes coming up with that raw idea and describing it, formulating the idea into a concept that can be verified and tested, doing the work of invention, and then bringing the result to the marketplace as a successful innovation.

Raw Ideas
Raw ideas provide no benefit, unless pursued toward some end. The Universal Industrial Success Curve8 shows a seven stage segmentation scale of ideas: from 3,000 unwritten ideas, 300 will be formalized in written form perhaps leading to one success. Thats not a very good result. One would think that 300 formalized and written ideas would yield more than one success. A raw idea is just what the name applies, a raw idea. It needs some hard thinking. According to Levitt9:  The trouble with much creativity today is that many people with the ideas have the particular notion that their jobs are finished when they suggest them: that it is up to somebody else to work out the dirty details and then implement the proposals. Typically, the more creative the man, the less responsibility he takes for the action. There is no shortage of creative people. There is a shortage of creative people who will be dedicated to take an idea, write it down, turn it inside out, outside in, upside down and downside up, and analyze it as to its viability. Ideas need to be framed within the context of the business. Its not sufficient or productive to vocally announce an idea. My experience shows that when people take the time to compose and commit the idea in writing, they very quickly recognize its flaws. But thats the beginning of the process, not the end. Somehow documenting the idea quickly brings out the inconsistencies and implementation problems and forces one back to consider some fundamentals of determining just what constitutes a viable idea. Raw ideas are only valuable if someone takes the time develop it into a concept.

Concept
Transforming an idea into a concept becomes an iterative process. Much iteration will be required, because this transformation is not solely about technology or marketing, but rather about the business that will arise from the concept. Its a business decision that will be based on insufficient information and, most likely, lack of understanding of those making the go-nogo decision. The work effort to make the transformation from idea to concept includes: Describing the deliverables clearly Identifying the internal and external resources Understanding the limitations of the organizations management infrastructure Assessing the organizational competencies and capabilities Managing interfaces

Doing Innovation: Creating Economic Value Book I. Perspectives on Innovation

Assuming that the idea has been clearly articulated, here are some issues that need to be explored:  How does the concept advance the organizations mission, objectives, and strategic direction? What would be the advantages to the organization? Has the concept been analyzed from a systems perspective? Are the required technologies available internally or externally? Are all technologies known and well defined? Are any required technologies unproved? What are the competitive issues?  What are the potential knockouts (those items or issues that would force cancellation, or result in failure of the project at some time)? Is there a preliminary financial analysis? Have risks and uncertainties been considered? Does a timeline exist? These are but a few questions that need a response before major investment of time and resources are allocated. You may ask, how can all of these questions be answered, and why? Responding to these questions is not done with mathematical or financial precision. The purpose is to get a feel for the potential benefit to the organization, if the next stage should go forward.

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Invention
The word invention does not need an extensive explanation, but it can be defined from different perspectives. The following descriptions come from a management scholar, an eminent educator, and an economist. Management scholar: We discover what before existed, though to us unknown; we invent what did not exist before.10 Eminent educator: The invention process covers all efforts aimed at creating new ideas and getting them to work.11 Economist: Every invention is (a) a new combination of (b) preexisting knowledge which (c) satisfies some want.12 All of these descriptions of invention have a common theme: invent what did not exist, getting ideas to work, new combinations of pre-existing knowledge to satisfy a want. These statements are very succinct, but upon reflection, require a tremendous amount of individual and team initiative, creativity, commitment of resources, and personal dedication to make something happen. Those components, assemblies, various types of mechanisms and software

Continuum from Idea to Innovation

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programs must all be designed, developed, tested to meet many different requirements, and integrated into the product, which is then tested and tested to meet specifications. Now, we have the results of an idea that was delineated to the level of a concept and concluded with a product the invention.

Innovation
Innovation involves risk-taking. Innovation involves commercialization or implementation of an invention (something new), but from a systems perspective. The process is not simple. Even a product innovation within a successful organization can create hours of needless discussion. Here are a couple of examples that require some serious though: A proposal is put forth to change a manufacturing process. Production people most likely will begin a campaign to dissuade management from giving it serious consideration. All types of arguments will be made as to why the proposal should not be pursued. The reasoning is quite simple. The production line is running and meeting expectations, so why take on a new workload, and possibly miss future production targets, even though significant savings are projected? It may take months or years to resolve the issue, and by that time, a competitor may have been gaining market share. This decision is not an easy one, but it will determine the future of the organization. Another example that comes to mind involves making obsolete a very profitable current product. What would occur if you proposed to management a replacement for this product? The response would most likely be negative. But everyone knows that, at some time, this high margin product will be replaced, the only issue is, when? It may be in five, perhaps ten years, but nobody knows. However, ignoring the proposal could create major organizational changes in the future, depending on the size of the organization.

Continuum from Idea to Innovation

Types of innovation

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he descriptions for types of innovation13 have grown over many years of attempts to dice and slice the meaning into finer and finer distinctions. Even with these many types of innovation, the differences become blurred. The literature provides the following categories: I ncremental innovation includes what I refer to as the nuts and bolts of innovation and involves modification, refinement, simplification, consolidation, and other enhancements to products, services and processes related to production, distribution, manufacturing, marketing and sales, and all the administrative functions. D  iscontinuous innovation discontinuous innovations diminishes the value of current knowledge and experience of professionals, including engineers, scientists, marketers, accountants, lawyers, and so on; obsoletes technologies, products and processes; and involves a paradigm shift. Examples would include transition of the horse and buggy to the automobile; the transitions from candles to gas lights to oil lamps to electric light bulbs; from manual type writers, to electric word processors of various types, to personal computers. A  rchitectural innovation reconfigures the system of components that defines the product, process, or service. The core design concepts are reconfigured in a new architecture. Examples would include the transistor as a replacement for the vacuum tube; material substitutions of various plastics for steel, aluminum, etc.; using jet engines in place of radial engines. Boeing, in its introduction of the 787 Dreamliner, totally changed the design architecture, use of new materials and introduction of new fabrication and assembly technologies. S  ystem innovation involves the integration of activities from multiple disciplines, functions, and organizations. It involves many different businesses, academic, and governmental activities that are plagued on many occasions with societal and government regulations, with the added difficulty in dealing with the interface problems. Examples would include implementation of communication networks, satellites, and the WorldWide Web. Systems innovations create societal difficulties, as well as opportunities. Automatic switching of telephone exchanges and switchboards forced the release of thousands of telephone operators. Satellites have raised issues of confidentiality, ownership of intellectual property, and access. The Web has served some noble as well as some questionable benefits, and of course the distinction becomes very personal. Radical innovation involves introducing new products or services that develop into a major new business, or spawn new industries, or cause significant changes in an industry. Examples might include the computer industry advancing from kilobytes to gigabytes and more. The banking industry moving to electronic banking or the Internet.

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D  isruptive innovation brings a new proposition, as suggested by Clayton Christensen in The Innovators Dilemma. Disruptive innovations generally underperform current products or services when introduced. These disruptive innovations have features that attract the group referred to as early-adopters. These are the people who want to be on the leading edge. They are not concerned about price, but do want to be recognized for their astuteness in working with the latest technologies. Examples would include the transition from silver-halide based photographic film and the introduction of digital photography. When the Mavica digital camera was introduced that performed well under the quality of silver-halide film based products, the paradigm shift to digital became obvious. But that Mavica digital cameras poor performance did not dissuade the earlyadopters from really acting as the first digital electronic quality control specialists. The minute Mavica was introduced, a marker had been set down to provide the demise of most silver-halide film products. B  reakthrough innovation are moments in history that set the stage for the future. They are as Nayak and Ketteringham describe: The act of doing something so different, that it cannot be compared to any existing practice or perception. Breakthroughs, whether in commercial enterprise, science, or politics are moments in history. Innovations are events behind the scenes that set the stage for history For all practical purposes, all of these categories need to be simplified. So, we consolidate all the categories into: Incremental innovations dominates the innovation scene New-to-the-market innovations combines discontinuous, systems, radical, and disruptive innovations into a single category, since they involve something thats new-to-the-market S  ystem innovations innovations that cross disciplines, involve massive investments and generally impact society B  reakthrough innovations are what the name implies, something that changes the game

Types of innovation

How Innovation Takes Place

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ow innovation takes place depends on the environment in which it is born. Some environments nurture innovation, others inhibit innovation. Innovation in governmentdriven organizations becomes a matter of following procedures and policies that are anathema to innovation. Innovation at the automobile companies is quite different from innovation at organizations like 3M, Proctor & Gamble, HP, and others who provide freedom to innovate and depend on innovation for advancing the organization. Innovation also begins in those non-descript garages, and by individual entrepreneurs who have an idea and pursue it with a passion, often without sufficient resources. But any environment requires a business discipline. Everyone cant just do as they please. The organization has a strategic direction and innovation needs to support that strategic direction. Situations do occur where proposals need to be evaluated, even though the proposal may be outside the strategic directions of the organization. No algorithm can make the decision. Such decisions are a matter of judgment, and thats why management must be sufficiently flexible to recognize opportunities that take it outside of its intended direction. The development of xerography provides an excellent example. After being issued a patent on xerography, Chester Carlson contacted many Fortune 100 companies, who not only turned him down, but often failed to even consider an interview. After all, what was wrong with carbon paper, or the spirit duplicator? Theoretically, everyone could be an innovator, although levels that span a continuum from incremental innovation to breakthrough innovation require different competencies. Very little evidence exists as to how innovation takes place. Innovation involves context. The iPhone may be identified as an innovation, but compared to the communication system on which it depends for performance, it could be considered inconsequential. The innovators of iPhone and the communication system function in totally different environments. The communication system innovators would need more than people skilled in technology they would need a vast number of people skilled in the management sciences, management, and those with competence to develop a system of systems. Innovation occurs through a two-stage process: Stage 1 includes ideation and the effort to convert the idea into a workable concept. The conversion of an idea to a workable concept presents many obstacles, and may fester in someones mind for long periods of time. Stage 1 generally involves the effort of a single individual to bring the concept to the table. This stage is not to suggest that colleagues and others may not be involved, but the effort focuses on the individual. Someone must be willing to take the lead, and have the courage to propose something that at first sight may appear to be of little consequence. Colleagues and others may add support, but the execution depends solely on the innovator. Articulating the concept, and doing the necessary proof of concept, signals the end to the innovation process. As mentioned, these are not Eureka moments, but are preceded by conscious thought regarding some nagging problem or opportunity. While ideas are plentiful, we need to be cautious in casually disregarding them, too often they go unexplored because of a lack of interest. Were all familiar with the person referred to as the idea generator, who somehow never takes the time to develop the idea into a concept worthy of examination.

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The Post-it Notes innovation provides an excellent example. Art Fry, a 3M scientist, sang in the choir of his local church for many years and saw those little pieces of paper that identified the hymns drop to the floor from his hymnal. Why, on this particular Sunday, did he decide there must be a better way? Im positive he thought about this issue many times over those many years. I dont know why Fry decided to focus on finding a better way to mark the hymns on this particular Sunday. Stage 2 activities focus on doing the work related to commercialization or implementation. This stage is not to suggest that issues wont arise where the concept may require redefinition, but in essence, much of the work now requires application of known project management principles. It is not possible to innovate successfully, if innovation continues throughout the life of project implementation. Stage 2 efforts no longer can depend solely on the innovator who fought the battles, and brought the concept forward for formal consideration. Stage 2 requires a team capable of reducing the concept to practice; defining future activities; developing product or service requirements; exploring manufacturing, marketing and distribution capabilities; and proposing a business or operational plan to bring the innovation to fruition. The innovation process will be covered in the second e-book in this series Developing a Workable Innovation Process.

Brainstorming
Innovation requires deep thinking. I explore organizing a group of people to generate ideas in reference to what goes on the innovation agenda for a subsequent meeting. We know that the more we think about an idea, the less we know about it, and that very often the developed concept has no relation to the original idea. Going through the thinking process raises issues that could not have been considered in the original idea. The thinking machine forces us to exit cloud nine and face realities. There must be a better way. Brainstorming in its many forms tends to yield quantity rather than quality. The problem is that ideas emanating from a brainstorming session limited to two or more hours will not yield the organizations next breakthrough innovation. Most sessions end with only a cursory, if any appraisal, of the ideas. While brainstorming may provide a benefit for focusing on resolving a specific problem by bringing in the people knowledgeable about the issue, bringing in people who have no knowledge of the topic only creates a distraction. Brainstorming sessions can be effective for innovation but they need more than the two-hour period the guidelines prescribe. Brainstorming sessions involve thinking. As an example, development of a new product, process, or some major change in organizational behavior requires a different format. As a practitioner, my brainstorming sessions usually included three to five days of concentrated effort at an offsite location, preceded by some preparatory work, and included people willing to work around the clock, with no personal agenda. Why around the clock? If you reach a point where the group achieves a certain rhythm, you dont want to go by the clock. If the group is on a roll, you need to take advantage of those moments to capture the thinking. That same environment may not be there by morning. However, if someone can no longer contribute to the discussion because of fatigue, that person may take leave of the group.

Doing Innovation: Creating Economic Value Book I. Perspectives on Innovation

Creative People
Keep in mind that innovation is not science: it involves taking what is known and packaging it to create economic value. Innovation does not develop new theories, and it does not search for the unknown. Innovation involves a put-it-all-together competence, where the knowns are reconfigured or architected in some new configuration. As an example, Chester Carlson invented the xerographic process in 1938. That was the invention. A copy machine was unveiled in 1948, but it took another decade before Haloid-Xerox was able to deliver the rotary-drum copier that provided an effective way of copying documents. Why did it take a decade to bring the rotary-drum concept to market? The technologies were available; there were no mysteries in resolving the issues. Difficulties, yes. But no insurmountable problems. Someone just didnt think about it, or if someone did propose the rotary-drum concept, management chose not to invest. Creativity as related to innovation involves doing. The artist must paint. The author must write. The musician must practice. The designer must design. The innovator must innovate. These activities involve not only knowledge, but more importantly, dedication, insight, foresight, and the ability to consider an issue from many different perspectives. Keep in mind that: Innovation = Invention + Commercialization or Implementation No commercialization or implementation, no innovation.

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Customers
Customers can be a source of new ideas, primarily in relation to product improvement, more so than providing the next breakthrough innovation. The academic community has written much about how customers have developed products through supplier customer relations. We need to be cautious here, because customers do not produce products. If they did, they would own the intellectual property, and that could create certain difficulties as to determining ownership. This is not to say that a customer may not suggest possible new product ideas and even develop concepts, but they do not provide marketable products. The controversy comes from the use of the phrase produce new products. Just what does the phrase produce new products mean? To me, it borders on completion, and not on suggestions or ideas. Early in my career as a young engineer, I had worked on a new product project for approximately 18 months, and was asked to report my results to a major committee. The review also included a demonstration of the product. The product was at the stage where it was ready to be introduced to the marketplace. Questions followed the presentation and the demonstration. In my presentation, I remarked that development was complete. What followed was one of my first lessons as an engineer, about what it means to use words like complete and finished. The Chair of the Board reminded me that I made statements that indicated that all the work was completed, and there were no loose ends that needed to be resolved. He said, Gus, what youre saying is that I can take this unit, put it under my arm, and go talk to customers tomorrow. I responded by saying that we had a few loose ends that needed to be cleaned up

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Problem Finders
Innovation requires problem finders and problem solvers. Unfortunately, it is much easier to find problem solvers than problem finders. Coming up with ideas and formulating them into concepts requires problem finders. Someone must be sensitive to those future needs and those future products, processes, and services required to support the organizations purpose. Problem finders, the innovators, are somehow endowed, or have developed, sensitivity levels to changing events, and take full advantage of the many opportunities provided to them in past experiences. They have powers of observation; they have many interests; they are inspired by the new and novel; and they can imagine the future. In addition, they are results-oriented, as demonstrated from implementing the innovation. Problem finders do need problem solvers to fulfill their expectations. Problem solvers provide that body of knowledge required for formulating and resolving a given problem: they do not identify the problem. It is unfortunate but too many professionals in all disciplines fall into this category. They have the necessary knowledge and experience to solve a problem, regardless of its complexity. As the innovator becomes more involved in the specific innovation, problem solvers take on a major role. The innovation has reached project status and the innovation stage is completed. Now is the time to do the work, and make it happen. These problem solvers will come from all the related organizational functions, and resolve those many unknowns, whether related to engineering, marketing, manufacturing, sales, or any other function.

Sources of Innovation
Too often, innovation is related solely to the organizations technologically related activities, such as research, product development, manufacturing, and information. The proof of innovation resides in the marketplace, not at the organizations headquarters, or the research facilities. Technological innovation only satisfies one part of the innovation equation. Any successful organization requires innovation from each of its organizational units, whether staff or operations. A product innovation without comparable innovation in the marketing and sales organizations will provide only a minimum benefit. A product innovation without related innovation in manufacturing fails to maximize the benefits. A product innovation without innovative ways to resolve customer service requests jeopardizes the organizations credibility. The product innovation falls into the system that requires innovations from supporting functions. Recognizing opportunities is the critical issue in innovation. Those opportunities involve not only implementing the new, but discarding old policies and practices that no longer provide a benefit. Those opportunities reach from the mail room to the executive offices. Im not suggesting that everyone becomes an innovator. Being an innovator involves risk, because it attempts to undermine the status quo. Proposing the elimination or consolidation of certain scientific or engineering functions to gain a competitive advantage may appear to be a logical step, but the scientist or engineer who recommends such action would require not only courage to propose the change, but also to face the criticism from colleagues who may be affected negatively by the action. Similarly, proposing the elimination of certain marketing or manufacturing operations, consolidating them, or moving them to a new location for improved performance would require a great deal of courage. Yet, that may be what is required to eliminate some organizational bottlenecks.

Doing Innovation: Creating Economic Value Book I. Perspectives on Innovation

Open Innovation
Open innovation allows organizations an opportunity to capitalize on the intellectual property and experience of customers, suppliers and the academic community, as contrasted to considering innovation as an internal propriety activity inside the organization. According to the McKinsey Quarterly,14 executives in a number of companies are considering the delegation of management of innovation to networks of suppliers and independent specialists that interact with each other to co-create products and services. Customers would be included in this process. McKinsey notes that more organizations are now using this innovation model, or its variations, not only to reduce costs but to reduce the total time to market. The challenges of implementing open innovation include ownership of intellectual property, increased operational risk, and losing the expertise that will be required to take the next steps. The fundamental question: Can you essentially outsource major innovation activities, even with appropriate controls? There is no doubt that products reach the marketplace through many participants in the value chain. In developing the 787 Dreamliner, Boeing outsourced major sections of the aircraft for design, as well as fabrication: it was Boeings major competitive effort in the airline industry. The Dreamliner introduced new technologies, new production processes, and totally new assembly processes; all could be classified as innovative. This approach for building aircraft was revolutionary. But the results are disappointing. The Dreamliner will probably reach the marketplace two years later than planned. Open Innovation is unknown territory. Customers, suppliers, academia, and possibly competitors can provide the intellectual property to move products to market more quickly, but what are the unintended consequences of such actions in the future? What happens when Company X has been bought out or merged with Company Y, and new management comes in with a totally different management philosophy?

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References:
1.  Thomas J. Peters and Robert H. Waterman Jr., In Search of Excellence, (Harper & Row Publishers: New York, 1982) pp. 13-16. 2.  Peter F. Drucker, Management, Tasks, Responsibilities, Practices (New York: Harper & Row, 1973) p. 788. 3.  Gerard H. Gaynor, Innovation by Design, (New York: American Management Association, 2002) pp.15-17. 4. Gaynor, Innovation by Design, p. 16. 5.  James Bryan Quinn, Managing Innovation: Controlled Chaos, Harvard Business Review, May-June 1995, pp. 73-84. 6. Gaynor, Innovation by Design, p. 4. 7.  Julian Birkinshaw, Gary Hamel, and Michael J. Mol, Management Innovation, Academy of Management Review, 2008, Vol. 33, No. 4, pp. 825-845. 8.  Greg A. Stevens and James Burley, 3000 Raw Ideas = 1 Commercial Success! Research Technology Management, May-June 1997, pp. 16-28. 9.  Theodore Levitt, The Marketing Mode, (New York: McGraw-Hill, 1969) pp. 155-170. 10.  Robert A. Burgelman, Modesto Maidique, and Steven C. Wheelwright, Strategic Management of Technology and Innovation, (Chicago: Irwin, 1966), p.1. 11.  Edward B. Roberts, Generating Technological Innovation (New York: Oxford University press, 1987) p. 3. 12.  Jacob Schmookler, Invention and Economic Growth (Cambridge; Harvard University Press, 1966) 13. Gaynor, Innovation by Design, p. 24-30. 14.  Jacques Bughin, Michael Chui, and Brad Johnson, The Next Step in Innovation, The McKinsey quarterly, June 2008.

Doing Innovation: Creating Economic Value Book I. Perspectives on Innovation

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