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Innovation Outlook 2022

BlueCallom is officially a year old now. In the past three years, before we started, we learned so much from neuroscience that it turned our perspective of innovation upside down. In 2021 we hosted several Innovation Thought Leader Roundtable events and learned about how innovation is done in most enterprises today. We learned about the struggle to be more innovative and heard from many that the lack of innovation culture is a considerable challenge. Also, in 2021 we completed our first version of BlueCallom DEEP, our cloud-based neuro innovation management solution, and conducted our first Deep Innovation Design training. BlueCallom has released two critical white papers: “Innovation is a CEO Mandate” and “Innovation Master Plan.” Now it is time we look at the innovation outlook for 2022.

From randomness to strategic innovation

One of the biggest frustration for CEOs is the random experimentation with no results. The fact that all enterprises have the same challenge doesn’t set anybody apart. But that is the goal for several enterprises for 2022. Most innovation centers today end 2021 with several improvements but no genuine innovation. While almost all of today’s innovation methods help manage ideas to get to the prototype stage, non have reached the market. In a few cases, it did but died within a few months. It’s time to get strategic. There are 800 unicorns, bolstered with a billion $ or more, ready to disrupt whatever market they are looking at. One CEO asked, “Why did I never see a unicorn in the making? I saw hundreds of startups, but most didn’t make it.” An excellent question. We answered: “Because you saw only those who ran around from startup event to startup event, trying to raise capital.” A unicorn is far more strategic than most people think. They are relentless executors, have brilliant talents, and run faster than any other business. Many enterprise leaders have yet to learn what it takes to bring innovation successfully to the market. But there are several who just now do that – with a dedicated innovation development strategy.

From improvement to genuine innovation

Another early shift we saw for 2021 is that enterprises realize that improvement is not innovation. Improvement has been made for 200 years in every R&D center. Some enterprises have already learned the hard way: an R&D center is not an innovation space and cannot be just “tasked” to be done. Using improvement as a step-by-step path to innovation is like a sailor using a lake to prepare for circumnavigation. One major force to make a clear decision to engage in innovation is the CEO. Without a clear direction from the CEO, innovation cannot happen in any enterprise. That shift to genuine innovation bares the question, “Should that innovation center remains a department, be a business unit, or even a separate company?” The trend is already seen by companies like Kärcher who separated the innovation activities into a legally separate unit which is still owned by the mothership. There is a slew of advantages included above and beyond the risk mitigation. Those separate units don’t have to be integrated into the massive bureaucracy of the main enterprise, they may have different legal contract frameworks and more.

From Students to top-level teams with exceptional cognitive abilities

Another interesting trend comes actually from the innovation consultant space. Very often, students had been hired to innovate for a company. The task was simple, “find a great idea”. It has been that way for quite some time because innovation was associated with a brilliant idea. Only now do we understand that a brilliant idea is always coming from solving an existing or in the future envisioned problem. Today we know that a human is producing thousands of ideas every year. We are even drowning in ideas. Ideas are of no value. Solving a problem is a hard and complex task and the solution may be considered a brilliant idea. When Elon Mask hires people, he still focuses on people with exceptional abilities. When Amazon employs people, they spend more time on soft skills than hard skills. The search for people with exceptional cognitive abilities for the innovation job is on the run. Several software companies emerged from this trend, like Pymetrics, which exclusively focuses on a hiring process for those soft skills.

2022 Summary

In the past two corona years, businesses of all sizes learned to be far more agile or suffer enormously, if not pushed out of business. Innovation has shown its positive effect on some companies where it resulted in innovation efforts that brought even significant improvements to the market capitalization on the stock exchange. We see even a trend of amplification in innovation efforts as the past growth also encouraged investors and the capital market.

In 2022, we will see

  • More enterprises investing in intelligent and strategic innovation, away from random experimentation.
  • More explicit use of the term innovation by refraining from using “gradual innovation” as an excuse.
  • A big challenge is finding talents with innovation-related soft skills.
  • A surge in upskilling teams to gain innovative thinking and become more entrepreneurial.
  • Finally, by the end of 2022, we may see some significant innovations created by enterprises.

We, the BlueCallom team, wish you all a happy, healthy, and innovative 2022.

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Key Thoughts: Innovation Thought Leader Roundtable | November 2021

In November BlueCallom hosted its fourth roundtable where the primary goal was and still is, making innovation a better-understood practice. The whole idea of the Innovation Thought Leader Roundtable is the exchange – dive deeper into the innovation processes. 

Axel Schultze opened the roundtable with a topic that has been current for some time among the BlueCallom community: Innovation is a CEO Mandate. What do CEOs need to do to empower their teams to become truly innovative? 

In the first place is clear communication between the C-level managers and innovation teams i.e. define the innovation goals, directions, and methods. We have already mentioned several times the importance of identifying team members with unique abilities to move the team and project forward. 

How to identify innovative minds? 

When we talk about successful innovation, execution is a part of it. As Christian Weh, Senior Director Innovation & Global Projects at Johnson & Johnson, said: “all successful innovators are playing an important role in the execution process.” The Maverick traits of a person are always visible through their independence, creativity, and experimentation. Truly talented individuals exist and they are the ones who always tend to be the best performers in the organization. Christian also mentioned capability building training as a part of human resources management, where organizations provide talent programs, incorporate continuous learning and improvement which is focused on specific capabilities. This tool is used to identify innovative talents. Ambition is another powerful trait and its impetus for success and achievement since ambitious people are goal-oriented and always strive for the next achievement.

Luuk Houtepen, Director of Strategic Partnerships and Innovation at SThree, sees exponential thinking as one of the important factors when it comes to recognizing talent. Individuals who possess this trait can envision the future and reveal new opportunities. We need to start visualizing the future to harness the potential of technology and positively impact our lives, not just in five or ten years, but also in a few generations.

“If you are really driven to make a change, to prove yourself, you won’t just settle down. You will be ambitious enough to push forward, to identify problems, and opportunities,” said Christian. He gave us an example, “Amazon did disrupt the book industry with audiobooks and Jeff Bezos can be described as an ambitious leader who set his targets and went beyond the next business plan.” 

Innovation is not only the CEO Mandate, it is also a CEO Task

Instead of having more and more innovations, most of the organizations are just followers with no concrete business plans. And this is the reason Luk said that “Innovation is not only the CEO Mandate, it is also a CEO task to open people’s minds up to where the world is going.”

Axel Schultze agreed that innovation is a CEO task, but when we look at their daily life, which includes political ambitions, involvement in the investor industry plus running a company, there is very limited time left for an extra assignment. But if innovation becomes the core of a business, the CEO has to give his/her best to encourage the innovation team and support the innovation project. 

As Luuk already said, exponential thinking is important, I would like to point out the following: 

Exponential thinking brings us to innovation and the BlueCallom Equation, G = I * E² (Groundbreaking Innovation (G)  = Ideation (I) * Execution(E)²), where the brilliant ideation plus exponential execution describes the foundation of any innovation process. 

Culture of Failure

A culture of failure is something that should be present in most organizations. Failure also means learning and if we want to make a change and personal progress, we need to be willing to identify our weaknesses and maximize our strengths. Luuk explained that we, unfortunately, don’t have the “Culture of Failure” and therefore most people are afraid to make decisions – it is less risky not to make decisions at all. 

What Axel has noticed is when it comes to large organizations where the CEO makes decisions, there is a risk that some decisions are not good which can result in job loss. On the other hand, making no decision because of the risk is a good idea.  It turns out that making no decisions is the best thing a CEO can do. Unfortunately, this is a common practice in the western world. 

Even when we look into the eastern societies, Asian countries, the decision-making process is also a long process. They might be faster in the decision-making than Europeans and the reason for that is that the whole team is included in the decision-making. Also if it turns out the decision was right and the first results are visible, employees are getting the rewards. 

The biggest advantage of startups over enterprises is that the decisions are made by people who have invested their own money. As soon as you hire a CEO, very rarely that person will become a decision-maker. 

When a company is determined to make groundbreaking innovations, that division has to be extracted as a separate legal identity. In this way, the innovation team has, so to say, “free hands” to do things and make decisions without being controlled. 

Summary

When it comes to the innovation process the most important is to have the right team on board. Innovative minds can be found in any organization and the CEO’s task is:

a.) recognize innovative minds 

b.) nurture innovative minds

c.) encourage innovative minds 

People with an innovative mindset think ahead, are creative, are likely to experiment, and are visionaries. These professionals involved in the day-to-day running of an organization can overcome obstacles, idealize, and generate truly disruptive processes, products, and services.

If you are interested in joining our next roundtable by-invitation-only event, please send us an email: tanja@bluecallom.com

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Axel Schultze

Cognitive abilities to groundbreaking innovation

It takes unique cognitive abilities or so-called soft skills or talents to get you to groundbreaking innovation.

Talents or Soft Skills matters – in some cases, even more than hard skills. One of those cases is with Innovation Development. Creating a groundbreaking innovation needs a new perspective, open-mindedness, creativity, courage, and other cognitive abilities deeply ingrained in a person’s mind. We prefer ‘Talent’ over ‘Soft Skill’. A skill is something people can get by training on. Talent is something that has evolved early in a person’s life, beginning as a newborn. For the sake of this post, let’s use talent as something we are looking for when attracting innovation team members.

Cognitive abilities as a Critical Success Factors of Innovation Teams

About ten years ago, we asked ourselves, what critical skills an innovative mind should have? After many long discussions, we realized: No skills at all. We learned that 20-year-old innovators with no developed skills could quickly create unique ideas and form a company. An early reaction was that age is a crucial factor for innovators. Startups should be run by young people that are unbiased and can change the world. Later on, we all learned that 50-year-old Elon Musk unfolded his full potential in the mid-30s. Regardless, all highly successful innovators have a few things in common, independent of age, skills, or educational background – TALENTS.

Those top innovators are without exception highly curious, very courageous, continuous, or relentless in their execution and exceptional collaborators. While looking deeper into the fabric of the innovator’s talent, we discovered eight key aspects: Curious, Courageous, Continuous, Collaborative, Creative, Communicative, Confident, and Connected. You may wonder what about PASSIONATE? We put it consciously out. Passion is not necessarily a specific talent or wiring in one’s brain – it is a result of a particular neurological trigger. Any person can be extremely passionate about something. Passion is undoubtedly a success factor for innovators but not a talent.

The 8 Cs of innovation talent

Curious, Courageous, Continuous, Collaborative, Creative, Communicative, Confident, and Connected

Curious - important talents or cognitive abilities(1) Curious

We learned that new ideas are composed of past experiences. Unrelated experiences to solve a problem or create a new solution are especially valuable. People who are curious above average have more and broader spread experiences than others. Curiosity is also an essential talent when learning how customers work today and what it may take to make a significant improvement. In some cultures, curiosity has a slightly negative connotation as it is used for people snuffing around other people’s private life. However, curiosity is a key driver in knowledge acquisition driven by an interest and not so much by an external force to learn something. That mind-driven curiosity makes a person find out things to satisfy the overall interest or the interest in the context of a purpose.  Why want people to get faster with their car? What distances do they go? How important is it to be on time? What do they do while driving for 5 hours? What are the alternatives? What would be the most convenient way? Even if we don’t have fast trains, would they use it if ……? In the innovation space, innovation teams need to ask questions that may have never been asked. They need to construct their own paths to acquire knowledge that may not be available in that form. What is the max width of a train trace to make narrow curves at 300 miles an hour? This is not about having ideas – but all about asking related or connected but unrelated questions.

Courageous - important talents or cognitive abilities(2) Courageous

When radically new thoughts get created, it takes a lot of courage to share them with others. It takes courage to stand your ground, despite others laughing at you. In an enterprise, it takes courage to push for a change and, at the same time, take the risk to get fired. Courageousness is the basis for bold thoughts. It allows to break any rule except the law. And if the law is hindering innovation it takes courage to make all efforts to change the law.  Innovation is not just inventing new products but also building new business models. Should it be necessary to question the current business model, then it needs to be discussed. If the company’s structure is in the way to bring radically new processes forward, it takes courage to say so and not only mention it but make every possible attempt to make it happen. Genuine innovation is touching many people; employees, customers, partners, vendors, alliances, unions, and possibly many more. It takes courage to not stop at this overwhelming undertaking but to work through all the groups, interests, and aspects that may need attention. Enterprise employees are typically best when they follow the rules, don’t question the set structure, and get great results fast. Courage is not part of the recipe to success – but it exists in many people without using it in business but in sports or hobbies.

 

Continuous - important talents or cognitive abilities(3) Continuous

Brilliant ideas are just an episode in the entire innovation effort. Relentless execution makes innovative ideas and concepts a genuine innovation. Missing that duality between ideation and execution is why so many innovation projects failed. Successful innovation is the entire work from pre- ideation market observation to a multi-year engagement to scale the new solution globally. Innovation teams, therefore, need to be continuous in their work. Never give up and never surrender. Once an idea is found the innovation team will want to validate the idea, make sure to finance the project and then bring it successfully to market. There is no known case where the existing organization was able to bring an innovation to market. The only exception may be if the company is virtually dead and has nothing to sell anymore and the innovation is their last hope. The innovation process is a 5 to 10 years marathon. Look at any significant innovation created in the past 50 years; you won’t find a single one that became globally successful in less than five years. It simply takes time to make a dream a reality. It isn’t because all the teams so far were slow – it is the adoption time of conservative buyers, which represents the most significant part of almost any market.

 

Collaborative - important talents or cognitive abilities(4) Collaborative

Sharing ideas, not owning them, is part of a strategic ideation process component called Idea Confluence. Working with others to extend the brainpower and accumulate more ideas is critical in the ideation process. Also, when ideas are realized or brought to market, the innovation team needs to be highly diverse but also collaborative in every aspect of their work. When in exchange mode, ten brains produce more than ten times as much value than just one time ten. The time of solopreneurs or isolated researchers or engineers is over. Not that they cannot come up with good ideas, but they won’t outperform a diverse team of ten amazing brains. And a well-assembled team is usually 5 times faster in the market than a single expert – no matter how smart he or she is.

Moreover, collaboration is far more than a team sport. Innovation terms need to know their limits and quickly pull external experts, science, research into the operation. If an innovation team member is not collaborative, their knowledge and experience would not be shared, discussed, extended, and so forth, and therefor that team member is far less valuable in an innovation team.

 

 

Creative - important talents or cognitive abilities(5) Creative

Creativity has very many faces. In the innovation space, creativity is not only creative ideas but also creative business models, creative ways to produce things, creative ways to finance development, get to the market, and more. Creativity in the innovation space means going ways nobody else went. Creativity is the talent to connect many unrelated things, thoughts, or experiences, construct them in their head, and come up with a structure, shape, process or anything of that order that has just not been done but at the same times provides a significant advantage over what exists today. Creativity to be different is of no help in the innovation space; however, when created in a collaborative effort, it may trigger new ideas and new structures in somebody else’s brain. Creativity, in a collaborative process, is what makes innovation work. An innovation team member lacking creativity will very quickly feel uneasy, not contributing, and not successful.

 

Communicative - important talents or cognitive abilities

(6) Communicative

Compared to other biological life forms, one of the most significant advantages of being human is communicating thoughts and visions for the future. That talent is needed in every phase of innovation, every collaborative event or meeting, every ideation session, and every other collaborative engagement. The more communicative a person is the more content of their thinking gets across. A big innovation dilemma is that the human brain can think extremely fast and has a large number of thoughts and ideas within milliseconds but can’t communicate them at the same speed. Communication talent is key for every innovation team member. The best thoughts, ideas or brain constructs are rather limited of value when they cannot be communicated. Communication talent is not only important during the ideation processes. Communication becomes extremely important when it comes to involving others. Those “others” include early customers when it comes to idea validation, the management team when it comes to approval financing of the concept, business partners when it comes to the early building and production validation, the market when this radical innovation needs to attract its early adopters.  

 

 

confident - important talents or cognitive abilities(7) Confident

Confidence is needed in communication, motivation, investment phases, and in the interaction with the market. Confidence is derived from very well-thought-out solutions and concepts that have been explored from hundreds of different aspects. Confidence is not about convincing others but transforming a vision into a realistic model that others can adapt as well. Confidence is needed by every innovation team member as the new “thing” needs to be explained with confidence to attract others. Confidence is an essential connection in the brain between a variety of aspects of a brand new solution. In particular, knowing it will help many people, realizing it is possible to build what is shown, and knowing that even if not everything works today, it will be possible to make it work in the coming years. Confidence is a form of being visionary by translating all that is known about that envisioned future today will be possible through certain actions that are yet to happen. At the same time confidence is not being afraid to say that there is no guarantee about the anticipated outcome.

 

 

Connected - important talents or cognitive abilities

(8) Connected

And finally, a strong networking ability connects a person with relevant people from all backgrounds and levels. Connection skills are critical when unique expertise is needed to augment an innovation team. Ideaconfluence sometimes requires very rare experiences or skills that are not present in the innovation team. Making those connections in timely order – typically on the same day is a talent that every innovation team member should have.  Well-connected people are inherently open and open-minded, involving others in whatever needs to get done.

Isn’t Passion a Cognitive ability?

So what about passion? Being passionate is not a soft skill to qualify for an innovation team member in general. People can be passionate about anything – they can even be obsessed about anything. We learned that passion or obsession kicks in if a specific action or environment, religion, or people captivates one so much that they can’t stop being engaged. Suppose everybody can develop passion about what they care about most. In that case, it is not a soft skill to probe for – but – it is utterly essential to find out in an interview process if innovation in your space would be a passion for the candidate.

Open-minded and other traits

In our research, we found that people with the above eight Cs are inherently open-minded. Openness is a relatively fast identifiable characteristic of a human but doesn’t necessarily include our talents. But to the contrary, people with the 8 Cs are always open-minded. Otherwise, those specific abilities would not show. This is true for many other soft skills that seem to be important in innovation but indicate some of the other talents we mention here. However, we want to clarify that we are just at the beginning of understanding the brain’s ability to compose ideas and what it takes to get there. We continuously research behaviors during innovation processes and learning as fast as possible, including using tools like AI to improve our work and results.

Testing Talents /Cognitive Abilities

Unlike well-trained and adopted hard skills, it seems that testing soft skills or cognitive abilities is not so easy. Exploring the soft skills of a job candidate is far more difficult today as there is only little experience. Hard skills are trained and the person will need to repeat what they learned or applied and then get tested on the results. Those repeat/linear jobs are rather easy to test while lateral activities like being curious, communicating, being creative, and so forth have no exact outcome as they have no exact input.

Here are a few tips for testing a candidate for specific soft skills. Instead of having multiple-choice questions or questions that you expect either a right or a wrong answer, try to understand how they behaved in certain situations by asking questions about their experience in various situations.

  • Ask them to remember a situation or time where they had to solve a problem that they never had or don’t know anybody who solved it.
  • Ask them to remember a scene where they had to help another college while they were under stress themselves.

We will publish a separate blog post just on soft skill testing and probing.

Where to find the best talents?

Most business managers tend to hire their innovation dream team from the outside. Reasons may include that they don’t trust their own culture, don’t know anybody who has the right profile, or fears that the organization already blinds them. However, our research indicates that most enterprises that desire to innovate have the top talents already in-house. We have seen amazing creative and ingenious people in all kinds of departments within enterprises. Attracting talents from within the organization has various advantages. It would help if you did not fear that they may already be blinded by the way things work in the company. If they have the 8 C’s as soft skills they will make a better organization and culture faster and with more intensity than newcomers.

Summary

  • Make yourself familiar with the value of the 8 C’s
  • Look inside your own organization first
  • Make sure you have a very compelling offering
  • Be aware that you will deal with exceptional talents that other companies will try to hire away.
  • Don’t protect your talents, give them a dream environment
  • It takes teamwork to make a dream work

Looking for a career in the fast-growing innovation space. Take the Innovation Talent Test to see if you have the 8C’s to start your innovation career opportunity.

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Innovation Culture

Tackling a main corporate “Innovation Blocker”

When we talk about innovation culture, the first thing that comes to mind is a work environment where people can develop their ideas. To hear more about this topic, I would like to share amazing insights from Erik Wirsing, Vice President of Global Innovation at DB Schenker, the latest guest on the Navigation of Ingenuity podcast. 

What is Innovation Culture? 

Innovation culture is all about bringing new knowledge into the organization. As Erik pointed out knowledge has to be shared among the people, let them learn something new, and encourage them to create new ideas and solutions. 

One thing DB Schenker is proud of is their innovation department – a place where they bring experience to the right people, train them, empower them and let them be creative. When you create an environment of constant change, networking, agility, and collaboration, employees’ motivation brings increased productivity and higher levels of output that will help organizations reach their important goals.

The biggest obstacle to innovation is having too much guidance and instructions that have to be followed. Put all this aside and give employees the freedom to work independently. This is the recipe that makes DB Schenker successful in their industry – logistics. When empowering team members it is important to provide them with resources, funds, time, and place but keep in mind that this might fail. 

How do you encourage your team to be innovative?

Team members and employees need to feel confident and comfortable to express their thoughts. Therefore the right communication style is the answer to this question. 

We also have to mention the importance of team diversity since their varied backgrounds and experiences allow them to bring broader ideas and new perspectives. Curiosity, openness, and emotional intelligence are crucial when it comes to empowering. It’s not all about monetary incentives and the best way for empowering your employees is to enable them to reach their full potential. Just like Erik said: “Help them to shine”. Erik tells us the story of how DB Schenker’s sparked innovation within their organization:

When Eric joined the company, he was responsible for global innovation and all the innovative activities. Since he had no idea how to run this globally, one of his team members came up with the idea of an innovation magazine that collects stories from colleagues and their experiences. Since everyone wanted to be a part of this magazine, the idea was very well accepted and the storytelling approach got more popular over the years. With time, the sales team recognized the value of the innovation magazine for their customers, which resulted in the new format – an external magazine. With the approach of bringing people together and promoting their success through the “Innovation Champion of the month” column, DB Schenker continues to be a leader in supply chain management and logistics solutions.

What was your last innovation?

As Erik stressed, it is not about establishing something completely new but adopting from different industries. 

His last innovation was not planned, it just happened accidentally at one event he participated in. Talking to one of the attendees who work in the roofing industry he found out about a special paint which keeps the roofing firm. Erik realized a potential use for the paint and adopted it in the logistics industry. As a result, we have a transport vehicle whose floor is coated with this paint to prevent the movement of cargo while driving. Now customers are using it for the forklifts. Such an easy and spontaneous idea provided benefits for different industries.

Creating the next groundbreaking innovation

We also asked Erik if there is one thing he wants to invent or see invented, what would it be? This is what he said: having one device (ie smartphone) with the possibility of the screen adjustments just like we do with Windows on the PC. He wants to stop traveling with his phone, tablet, and computer, one device that can expand or contract based on the use. Other great things he would like to see in the future are self-driving vehicles and space tourism available for everyone. 

Bringing different innovative minds together and being able to manage a big global innovation culture it is important for all the team members to know that within organizations there are people who are going to support their “crazy ideas”. Structured organization, developing a business model, and taking into consideration customer feedback is the foundation for tackling a main corporate “Innovation Blocker”. 

We thank Erik Wirsing for being a special guest on the Navigation of Ingenuity podcast. With certainty, I can say we all learned a lot from his experience in the innovation world. To listen to the episode please visit: https://bluecallom.com/podcast/

Authored by: Tanja Sopcic

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Main Innovation Challenges

The business world has gone through a drastic change in the past few years, boosted by the Covid-19 pandemic – a whole new world full of opportunities, changes, and challenges, especially innovation challenges. To be able to reach or to stay on top of the market one thing is key – groundbreaking and genuine innovation. The pressure to innovate has risen dramatically in the past 10 years. The term innovation itself is used in many ways, as a mantra, as working style, or simply as a marketing campaign. Bringing disruptive innovation to life has always been a challenge, but what exactly are the main hurdles you and your team must overcome to successfully innovate?

During the past 6 months, we were able to chat and interview influential innovation leaders from companies such as ROCHE, DB Schenker, Sony, LG Electronics, Siemens, Coca Cola, and many more. Obviously, every innovation team has different subjects and issues they are facing, but comparing the general conflict, each company has similar problems in the innovation space.

By being able to speak to these different innovation team members we concluded that the overall main “innovation blocker” is the so-called innovation culture, better said, the missing innovation culture.

Innovation Culture

When talking about innovation culture, we are talking about norms, values, ​​and attitudes, shaping the behavior of all employees, especially those who are involved in the innovation process. Since the innovation process is not limited to the core innovation team and this process is cross-sectional, the innovation culture as such can be described as a cross-dimensional culture.

Describing the key points of the culture is easier than establishing this value system. So,  when talking about innovation culture – what are the main challenges why innovation gets stuck? We defined four challenges:

(1) Top-down approach

Successful, groundbreaking innovation is determined by the ability of the team and their culture. To bring out the best you have to push and give room for these norms, values, and attitudes to grow and to become the standard. Therefore, Innovation is a CEO mandate. Only the CEO and their board can take the much-needed decision in time, capital, and structure.

“Innovation success is not about an idea creation team and taking it to market by the existing organization. Creating an innovation center independent of the corporate organization that is responsible for identifying a viable innovation opportunity and bringing it successfully to market can only be made by the C-Level.”

– Axel Schultze

(2) There is no time to innovate

In many cases, the cross-dimensional innovation team, from the CEO to the working student, is fully stuffed with finding new ways of improving current products or services. They are too busy to think of innovation in a way where opportunities are discovered, reviewed, developed, and validated. Unfortunately, innovation has even been outsourced quite a lot to universities or startups.

(3) Fail and fail fast

Obviously, the pressure to innovate and stay relevant in the market has risen in the past years. Managers tried different techniques, took closer looks at the startup world and how their management is innovative. This led to experimenting with playgrounds, where innovation team members are hunting for inspirations and the next big thing; pivoting, brainstorming, and massive prototyping. These newfound Innovation Hubs, which tend to go back and forth with ideas – prototyping, idea – prototyping, and so forth with every little long-term success. By changing the process into a more structured way, combining research and customer feedback before prototyping, the team is able to save a lot of time, money and is not limited to just “experiment”.

(4) The initial value of an idea is zero

Your idea or my idea?  We are living in a world where recognition for something is key. With this value in the back of your mind, people tend to keep ideas secret because they are scared that somebody is stealing their intellectual property. BUT in a successful and inspiring innovation culture, it should not matter who had the idea first.

“The innovation team must know that all ideas come from past experiences and are composed of millions of impressions, often co-produced by other people. […] Teammates should be rewarded for ideas but also equally rewarded for building new ideas based on previous ideas from other teammates or anybody else for that matter.”

– Axel Schultze

Groundbreaking innovation is not only about the original idea, it’s about what you and your team do with this idea. The value of the idea is created through relentless execution and open innovation by taking into consideration what your customer wants.

Despite these main challenges, genuine innovation can still be created with the right innovation culture and innovation mandate. Rethink innovation from the ground up and discover why innovation is a CEO mandate in our latest whitepaper, “Innovation is a CEO Mandate.”

Authored by: Anna Ranke

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Axel Schultze

How Failing to Innovate Affects the Market Cap of Enterprises

Enterprises don’t need to fear disrupters,
but the disruption in the capital market

A growing number of enterprises feel the headwind from capital markets. Up and coming businesses get valuations far above conventional businesses that may be more than ten times as big. Those warning signals all too often are simply ignored. But that could become a fatal mistake.

Innovation takes 7 to 10 years

Theoretically, enough time for any established market player to respond and fight back. But it isn’t quite that easy. If you look at the early years of the then, new automaker, Tesla, you notice that the established players sold more cars in some metropolitan cities in a month than Tesla sold globally in an entire year. Airbnb sold so few vacation rentals a year that established hotel chains didn’t even notice. Early freelancer platforms connect some inexpensive workers with businesses who had a short-term need in a way that the established recruiting firms didn’t even take the time to understand their business. Now, some people may say this is ignorance. But taking the sheer number of companies and enterprises that have tried something and failed into consideration, an enterprise cannot respond to any brain spark that may happen in this world. However, one group does take that time and effort for a very different reason.

Financial Market Analysts get Extremely Smart


In the past years, top investment firms completely disrupted the financial market. Yet it went almost unnoticed. With far more detailed insights, more intelligent tools, and evolving algorithms, they are able to predict the success probabilities of new market entrants/enterprises to a degree that was unimaginable just a few years ago. CEOs, Board Members, Unions, Investor representatives, and enterprises as a whole will need to shift gear when it comes to innovation. Future-oriented investment decisions drive market caps (value of a company) into new directions. It’s no longer only in the tech space but now also in all other industries like the auto industry, the tourist and hospitality industry, in the business services where a substantial shift is happening: The capital market favors innovation over profitability and size. One newcomer in that market is investment management company ARK-Invest who states on their website “We Invest Solely In Disruptive Innovation”. And the reason is obvious; in the next 10 years, it is more likely that those new and innovative businesses will win, than the established and slowly evolving companies.

Innovation is Entering all Industries

We randomly choose Hospitality, Automotive, and Business Services in our research. You can see how companies with rapid growth into a large industry segment, while there is no or no adequate response from the current market leaders are seen by the capital market today.
AIRBNB
2007 first 3 guests – the company was founded
2009 21,000 guests
2018 300 Million guests
2021 market cap $93 Billion *
2021 Hilton market cap $36 Billion *
TESLA
2012 2,000 or so cars
2015 35,000 cars
2020 1,000,000 cars
2021 market cap $570 Billion *
2021 Daimler market cap  $84 Billion *
FIVERR
2010 Some 1,000 jobs at $5 each
2012 estimated $6 Million
2018 estimated $100 Million in revenue
2021 market cap $7 Billion *
2021 Kern Ferry market cap $3.1 Billion *
at $2 Billion in revenue
* = June 15, 2021

Is the world insane? Then, what was with the market caps of Intel, Cisco, Microsoft, Google Facebook, and so forth. What happened to their competitors like DEC, Amdahl, Zilog, Alta Vista, AOL, or MySpace? Today the disrupters are identified much earlier and get evaluated much earlier to higher levels. Not to help them and not to kill others. The new behavior is only a logical consequence of the desire to be in a rising giant early. The advantage for established enterprises: They get a brand new early warning system. But even then, there is a potential for huge mistakes as you can see in our mini case study below.

Innovate or Get Disrupted

Trying to counter-attack a market intruder that has a disruptive business model or disruptive product, by trying to build something better is not leading to any success. A weak attempt to focus on “Gradual Innovation”, which is nothing but improvement, is definitely not an adequate response either. The only way to counter an innovation from a competitor, no matter what size or age, is by another groundbreaking innovation. Improvement is important – but it isn’t withstanding an innovation. Trying to be better than the new innovator is only an improvement and makes the former leader a follower of the new innovator.

MERCEDES BENZ CASE STUDY
The Daimler AG was an investor in Tesla. But eventually lost interest and sold the shares. Tesla was built on 5 unique aspects: 1) A very fast electric motor 2) New high capacity batteries 3) A big display giving space to all kinds of information 4) A digital experience that went far beyond the proprietary “Board Computer” and 5) A customer experience not seen from the conventional carmakers.
The competition only saw the electric motor and battery. They also did not see the timeline that it took 5 years from introducing the first Tesla to getting it at least a bit off the ground. Chevrolet killed its EV short after launch because they thought the market does not exist. Mercedes ignored it completely, then began to invest and built the EQ series. But it was only the replacement of the motor and tank for an electric motor and batteries.
Only with the EQS, Mercedes finally pushed the innovation button in many ways – BUT – chose not to really talk about it. Still, a market leader by the volume of cars they produce, Mercedes became a follower and did not push their innovation but what Tesla has since 10 years: Motor, Battery, and a “hyper display”. The digital experience and also the customer experience fell behind. And the innovation they made was not even mentioned. When the tough gets going the going gets tough.

Instead of standing their ground and continuing rejecting a large display in or on the dashboard and introducing their innovative head-up display – they competed in a space that has no future for both cars. Instead of drumming up their real innovation, they ignored it because they did not understand what customers want. The innovative MBUX system with a large display mirrored on the windshield, supported by a perfect and unique augmented reality system was not part of the competition. The leader turned into a follower and the capital market recognized it. How is this possible?

Things you can do to correct the current direction

Innovation is everything but a small club of thinking and researching innovators playing in their innovation labs.
1) It needs an innovation mandate from the CEO.
2) It needs a robust innovation strategy that is blessed by the board
3) It requires innovation managers with exceptional talents and abilities – not skills.
4) An innovation process that empowers the team to develop brilliant ideas and then conducts relentless execution.

THE FIRST STEP however is an innovation readiness assessment that makes sure enterprises have the foundation for what is coming.
BlueCallom offers free Innovation Readiness Checks with no obligation at all.

WHY DO WE CARE EVEN BEYOND OUR OWN BUSINESS
Part of that first step is the understanding that by 2050 we will want to change our energy supply, the energy grid, or whatever we can create, we need renewable energies and tap into energy sources we don’t even think of today. We will want to create transport infrastructure for people, goods, and service infrastructure that is far beyond our today’s abilities. We need to have digitized commerce, business transactions, return services, and handling that is far more intelligent than today. We want to make sure that our health systems, health understanding, and sources for health failure are much better structured, organized, affordable, and available. While we could theoretically feed all people on earth even with a 20 billion population it works only if we can integrate those 20 billion people as contributors to our global society, economy, and humanity. Today only a handful of people seriously try to engage in terraforming mars or build a lunar station. That is far too less to be effective and far too less to prevent new monopolies.

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Axel Schultze

Innovation Opportunity for Enterprises

Innovation opportunity for enterprises. What worked for startups can now also work for enterprises. Even the innovation process would be the same. And purpose and reasoning should be the same too. The only difference is the leadership structure. And that requires a new understanding of what actually makes the difference between the two company types today.

No – it has nothing to do with size or capital, And yes both are driven by human beings.

Over the past four years, we learned so much about the difference between innovation in corporations and in startups that we today realize: Enterprises had not even a chance to be innovative even when acquiring a startup.  The full details can be downloaded as a Whitepaper. 

HOW ARE INNOVATIVE IDEAS CREATED
When thinking of innovation it is most helpful to understand how homo sapiens is performing the creation of innovative ideas. Without knowing how innovation is done, it is hard to manage the process and innovation remains to be a process. The key learning is that ideas are composed by our neurons from past experiences. There is no mechanism that just “creates” ideas.

INNOVATION PURPOSE
Without exception, the most innovative solutions were created in an attempt to solve a problem. Random experimentation and hoping to find a great idea never led to groundbreaking innovation. Innovation is an outcome – it cannot be a desire.

RETHINKING INNOVATION
When we know how innovation is created, we can request certain results, request to provide insights, and measure and manage the effort. Most importantly executives know what they are asking, even where and what to innovate.

INNOVATION READINESS
When you know the “what and how”, you can make sure that your business is ready to innovate in the first place and prevent unnecessary costs and delays.

INNOVATION MANAGEMENT
After all – innovation management can be performed like most other mission-critical activities, teams can be selected in accordance with the requirements and tasks and results become predictable and timely.

INNOVATION FINANCING
Successful innovations consumed more than $100 Million in funding, some reached into two-digit billion-dollar investments. Obviously, this is done in stages and in line with progress, KPIs, and timelines. Comparing it with a $500,000 startup would be a huge mistake because that was only their starting point.

FOLLOWING IS NO INNOVATION
Obviously, you can catch up with the market to survive. But the financial market will recognize it accordingly. A follower will not beat the innovator – not on the market cap.

RELENTLESS EXECUTION
Innovation is one of the intellectually most demanding jobs. Not only does it take 100% focus, it also requires relentless execution and the motive to do so. The Innovation Culture, team selection, and motivations are the ultimate driver of successful innovation.

The BlueCallom Deep Innovation Design method was modeled and shaped based on all the findings from our research and our own experiences, building 4 innovative businesses and helping hundreds of startups to get there too.

Whitepaper Download here.

 

 

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Axel Schultze

10 Things that Change with Neuro Innovation

Neuro Innovation – How ideas get created

Neuroscience had the single biggest impact on our modern understanding of innovation, in particular Neuro Innovation. One key aspect is the realization that ideas don’t come randomly and there are no “magic ideas out of the blue”. The brain composes ideas from past experiences and those compositions represent the power and the limit of our creativity.

Linear vs. Lateral

Your innovative brain thinks lateral. Your logical brain thinks in linear processes. That’s why almost all business tools are built in a linear manner – step by step.  But in recent years one business process has sneaked into our business life: INNOVATION. Yet, this creative process is still handled in a linear way: step by step. For instance “Empathize”, “Design”, “Ideation”, “Prototyping”, and “Testing”.  To make it more flexible, iteration is part of the process but that is still between modules and still not lateral.

Every idea ever created

Knowing how the brain is actually composing, processing, and fine-tuning ideas, has a profound impact on any type of innovation management process. Today, we know that every idea ever created, was a composition of past experiences. Our brain cells or neuron cells can not create any new idea from scratch. We also know that brainstorming has never created a single disruptive business model. We know that disruptive innovation takes on average 6 weeks to create. It will not happen on any hackathon weekend.

Deeper insights are provided during the education programs of the BlueCallom Innovation Management Academy.

Let us now explore the 10 things that change with Neuro Innovation.

1) Lateral Thinking

The good news is that we do not need to train anybody with lateral thinking. It is an integral part of our brain’s superpower. All we need to do is creating awareness of what exactly lateral thinking is and how it behaves. Simply speaking, instead of looking at things in a linear process (step by step | learn and repeat), we look at things in parallel and don’t repeat or iterate until it works. When you drive a car you steer the car, look at the street, once in a while in the rear mirror, on the speedometer, hear music, keep an eye on the remaining fuel, look at the scenery – all at the same time. Your conscious, sub-conscious, and motoric minds, work all in parallel. When you watch movies, you follow the story, wonder if certain things are possible, manage emotions, listen to theatrical music, and more.  When you THINK – any thought – you do that in parallel. When you “create”, meaning build and craft anything your brain works many tasks in parallel. Lateral thinking is a very fast back and forth of thoughts, verifications, and more.

Innovation is taking lateral thinking to perfection.

Attempts to make innovation, in particular ideation, a linear process is a perfect way to kill the outcome. The major episodes in the innovation process are linear and one builds on top of the other, but within the episodes, lateral thinking is the way to go. And one group of humans does it pretty well: startup-teams.
Creating a lateral thinking environment.

2) What should we innovate?

Instead of watching competitors – a far more effective way to innovate is to watch customers. The first question an innovation team should have an answer for is where and for whom they innovate. We know that disrupters could come from anywhere and can change the way an industry segment does business in just a very short period of time. But there is absolutely no magic involved. They simply found out what the respective audience has trouble with – whether they can articulate it or not. So why not do the same for your business? Moreover, you sit right in this market. The best way to find out is to conduct very specific research in your market. No questionnaire and no interview with countless questions. Just a well-guided casual conversation.
Creating leaders not followers

3) Innovation instead of improvement

instead of settling with improvements – focus exclusively on disruptive innovation. In our research, we discovered that the only difference between searching for a disruptive innovation versus settling with an improvement is the time and the way we interact with our brains. So there is no reason to accept an improvement if you can get to disruptive innovation. The first step is to get rid of brainstorming. While brainstorming was a great first step in leveraging the brain in the ideation process, it produced only very obvious ideas. And instead of hoping for a great idea that may strike you like a lightning bolt – our brain is able to get to amazingly disruptive ideas over a sequence of sessions that stimulates new and different searches. The final composition with a highly diverse team can be reached in 4 to 8 weeks of very specific exploration tasks.
Getting truly creative literally and laterally ;) 

4) Leveraging thousands of ideas

Instead of selecting one or only a few ideas from brainstorming – Neuro ideation produces thousands of ideas and idea pieces during a project. You will want to use them all – and you should. A complete disruptive innovation concept has never been just a single idea. Aggregating thousands of inputs including idea pieces, opinion, customer feedback, and research data can no longer be managed with colorful stickers and whiteboards.  You will need computer power to capture all the data, rate and rank them, sort and store them, and finally, analyze them. Looks like work but billion-dollar businesses do not come for free.
Creating full concepts not only ideas

5) In-market idea validation 

Instead of random experimentation in a lab – validate the “idea-success-fit” in your market. There is no better validation than exploration sessions with future clients. The added value of having your audience not only help validate the idea but also help shape it to the real-world application is priceless. To this point, there was not wasted a single penny in prototyping, experimentation, or testing. And please do not fear that somebody can steal your idea. Only weak and obvious ideas can be stolen. Little improvements can easily be stolen, so keep them for yourself – but please do not call them innovation.
Not wasting time, nor money

6) Innovation comes with team diversity

Instead of working only with experts – assemble a highly diverse innovation dream team. Having more of the same experience is of no value in innovation. But having a greatly diverse team brings far better results than the best expert team in the world. Experience diversity is the new order in innovation. On top of all, involve your customers and business partners in the process.
Producing the best possible outcome

7) Market born products

Instead of building prototypes and testing them in labs, use a unique “market born” product design method.  A Minimum Viable Product (MVP) that shows only one feature is more important than a shiny but mediocre improvement. There is no lab that can compete with real user experiences. A lateral collaboration model with your customers and early adopters is bringing you more insights faster than any internal team ever can.
And still – no funding needed so far

8) Innovation financing

Current estimates show that 90% of innovation projects won’t make it to get funding. And the more innovative and disruptive a concept is, the less likely the approval to go forward. This, theoretically insane behavior, stems from the way disruptive ideas get perceived. In particular, finance people are conservative thinkers. Therefore, at last, one finance person should be part of the innovation team. Collaboration with the finance department on a bi-weekly cycle is highly suggested. Also here, neuroscience is an important guide on how to involve the executive bench in innovation projects to prime their thinking with what you are doing. Keep in mind that the next billion-dollar product line will need maybe a 100 million and more investment over time. To get such a financial commitment, the innovation management system must provide an extraordinary set of data to be able to defend an innovative concept. The fifty most innovative businesses from the past 20 years consumed more than $500 Million in funding before they became profitable. And investors worked with the management team on a weekly or monthly basis.
CFOs need relevant financial data – and learn to be an investor

9) Innovation to market

Instead of conventional market introduction, leverage neuroscience to select perfectly matching early adopters for creating a successful path into global markets. Innovative products will NEVER be purchased by 75% of your customer before the first 5% of early adopters got very excited. Most industry segments fail to innovate even with extraordinary solutions because they never had to do this in the past 20+ years. When IBM decided to go with an innovative computer into the market, they created a completely autonomous company: the “red IBM” but still did not manage to really scale it.
What every startup does due to the lack of a customer base

10) Executive level reporting

Executives need to understand every process in an enterprise – no matter what. And the way this is done today is simply through data. The Deep Innovation Design process, when run with the corresponding software provides on average 25,000+ data points to analyze and feed an entire KPI framework. When moving from LINEAR to LATERAL thinking and corresponding methods, we gain an incomparable amount of data. The data ranges from real-time budget consumption along the way, various timelines such as Time-to-Innovate TTI, Time-to-Validation TTV, Time-to-Market TTM, and ROI data that may be even dynamic based on the progress. The data also deliver qualitative data such as Ideation-Network data measuring the degrees of ideation connections and ideation stacks as well as quantitative data like idea contribution volume, contributor network size, or idea validation levels and volume, and more.
Neuro innovation and lateral thinking are the two keys to profoundly different innovation data.

10 things that change with Neuro Innovation

All in all, some of the topics in Neuro Innovation have not even been part of the conventional innovation processes, so that means no change, only additional learning. In other words, we don’t touch existing neuro pathways but help build new ones. Summarizing the new ones:

  • What should we innovate?
  • Innovation Financing
  • Innovation-to-market

Neuro Innovation is a key factor in ideation, idea validation, innovation financing, and innovation-to-market processes.

Deep Innovation Design Training

All the above is part of a new, one-week training: Deep Innovation Design Champion starting Feb 22
See the full program here:

https://bluecallom.com/bcdm-training/

Innovation is no serendipity – Earth is no disk. :)

 

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xwpadmn

4 Strategies to Foster an Innovative Work Environment

Innovation_at_Work
What can be done to make your organization more innovative?

The COVID-19 pandemic is changing the rules for conducting business. Now more than ever, innovative behavior is one of the essential characteristics that a company needs to develop in order to stay competitive in the changing economic landscape and new trends in consumer behavior. In order to keep your customers happy or attract new customers, the introduction of new business services, products, or processes will be the key to ensuring your organization’s future success. So, how do you foster a working environment that supports innovation within your organization?

In this post, I’ll discuss four proven strategies to enhance the innovative dimension of your company.

1) Embrace a ‘Freedom to Fail’ Culture

Let’s consider 3M, a multi-billion dollar American company, as a shining example of an enormously successful company that is known for fostering an innovative work culture by allowing employees the Freedom to Fail. As pointed out by Art Fry, the inventor of the Post-It Note at 3M, companies that wish to empower the innovative minds within the workplace need to provide freedom to employees: the freedom to fail and freedom to learn from the missteps.

The lesson that freedom can open the door to innovativeness can also be applied to the design of job roles. 

As research shows, flexible job roles can engender more participation in innovation. For example, If you are in the position to hire, instead of creating a bulleted and rigid job description, consider providing room for the next person you hire to mold their responsibilities as they grow into the role. When given the space to think outside-of-the-box of a job description, people will notice opportunities for innovation that they might not have recognized otherwise. The idea is to support everyone in your organization on the quest to identify areas of innovation and provide the space for exploration. 

2) Promote Cross-Functional Communication

When it comes to innovation, cross-functional collaboration in the workplace leads to a greater exchange of thoughts and expertise that can spark the creation of novel ideas. As Gary Hamel said, “too many companies define themselves by what they do rather than by what they know”. Bringing cross-functional teams together to solve company problems is one excellent way to tap the innovative potential of your organization. 

Multi-disciplinary collaboration and coordination are necessary for a new business idea to succeed in concept development and become an innovation. Companies with siloed business departments face an extra challenge in implementing new business concepts since the responsibility to produce innovation is split across different units. If these units experience poor communication, the odds that a new product or service is quickly (or successfully) brought to market are marginal. Both cross-functional and open communication are critical to fostering a culture of innovation in the workplace.

Next, we’ll dive deeper into the importance of differing perspectives when it comes to innovating. 

3) Spark Creativity through Diversity

Creativity includes more than innovation, but innovation inherently includes creativity. At BlueCallom, creativity is treated as the ability to compose ideas by searching the mind for correlations between various lived experiences. Being creative allows us to develop novel concepts. In order to foster an innovative workplace, individual creativity should be celebrated as an organizational resource. It is no secret that when people of different backgrounds and skill-sets are brought together, they can collectively generate great new ideas.

But, what is actually happening through this exchange that enables the creation of potentially breakthrough ideas? Creative abrasion, which is described as a process where different, sometimes clashing, perspectives are integrated (Source: HBR). In a nutshell, this means that in order to cultivate a working environment that leads to innovation, it’s absolutely critical to avoid an innovation monoculture of experts.

At BlueCallom, the Innovation Dream Team is a stage in the Innovation Journey which supports your team to assemble a diverse group of people to support your innovation vision. BlueCallom’s neuro innovation management software will help guide you through this team assembly process with a focus on diversity. 

Regardless of how innovation is handled in your organization, whether it’s a separate unit or a decentralized program, ensuring that people with diverse backgrounds and starkly different approaches are included in the innovation generation process is a productive step towards building a culture of innovation. Unleashing creativity through the diversity of thought is key.

4) Implement an Innovation Management Process

How do you get from a great idea to a tangible innovation?  The answer lies in designing a process that supports innovation within your organization, in other words: innovation management. It’s proven that having a structure and a set of common guidelines in place supports innovation. 

While most existing innovation process models are catered to producing incremental innovations, meaning modest improvements to existing products or services,  BlueCallom has developed a twelve-step innovation methodology with the goal of generating breakthrough innovation. The core of the BlueCallom innovation methodology lies in the ideation process and a technique called Neuro Ideation. Neuro ideation is a brain-stimulating ideation process that unlocks ideas by harnessing collective creativity from individual experiences. To learn more about neuro ideation, you can check out this webinar or this blog post. 

Are you interested in more actionable insight into managing innovation? We welcome you to explore our Deep Innovation Design online course. 

Thank you for reading! Is there any strategy that has worked well for your company that was not mentioned here? If so, please add your comment.

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Axel Schultze

Big Five Innovation Types

Innovation is an extremely counterintuitive business.

For most people outside the innovation space, Innovation means radically new or significantly improved products. Interestingly enough, product innovation is the least successful model. There are various ways to innovate. Highly successful and radically disruptive innovations today come from business model innovation. For instance, in my old company, Computer 2000, we changed the business model for tech distribution from the ground up. With our tiny startup in the 1980s, we took on competitors of multi-hundred million dollars in revenue. It looked like the chance to survive is exactly 0.00%. Today it is a $37 billion business leading the tech distribution in the world. And still, most competitors did not notice the difference and why we could become a global market leader. It was a business model disruption that went unnoticed. Another example is Airbnb. The company caters to travelers’ needs to stay in a more individual apartment or house instead of a small room in a hotel. Hotels, however, perceive the competition as a price war since there are less expensive apartments too. The hotel industry managers, who never understood the competition, fought back with legal acts and did not compete on the service. As a result, they never brought their services in alignment with customer needs. Zappos, an online shoe dealer, changed both. Their business model and commitment to organizational innovation. Soon thereafter, they also started an experience innovation project and became a great example of multi-facet innovations. Let’s explore the big five innovation types.

The Big Five Innovation Types

Obviously, the topic can split even further. Still, we realized that these five innovation types need different approaches, different methods, have different financial or operational impacts, and call for a different innovation team composition.

Product Innovation

Focused on the product side. This is the classic way to innovate and the most obvious to be recognized by the market. However, it is also the easiest to copy and to outperform quickly. Product innovation offers room for different degrees of innovation like a profound improvement of a product that changes the way users work or introduces a radically different product that may change a whole industry segment. Competing with product innovation is oftentimes done by starting a price war, and very quickly, the innovator may be forced to reduce pricing, increase marketing effort, or take a much longer time to grow market share. Alternative products as such innovation can quickly substitute product innovation is the most obvious, the most visible, and the fastest to understand. In the past 20 years, business model innovation, experience innovation, or organizational innovation continuously won over product innovation. Probably one of the best examples is the automobile industry. Companies fight on the product level: electric motor or combustion engine. One company, Tesla, does not lead on the product level but uses one of the hardest nuts to crack, multi-facet innovation.  On the surface, it is, of course, the electric car. But when looking under the hood, not literally speaking, it is the business model innovation, the organizational innovation, and the experience innovation that makes the company the market leader despite having a much smaller production volume. While the global awareness for Tesla was achieved with its super fast and wide-ranging electric car plus its early engagement in autonomous driving, the whole wide-angle view of the Tesla management, including building the charging stations and the gigantic innovation on the battery side, came from an organizational innovation thinking, the way the cars can be configured and ordered and how easy it is to understand what a user gets is part of the experience innovation, the whole pricing pressure, initial losses and ways the cars get sold is part of the business model innovation. No other car manufacture in the world was so innovative on all fronts and took the automobile no longer as a single product – but a part of holistic user experience. Another example is Microsoft. It’s no news that Microsoft never invented a single product. The operating systems, DOS, and Windows have been acquired, and so were all the office products, the SQL server, and other tools acquired. So one could say Microsft is the least innovative tech company in the world. All they did is integrated all the products and sold them under their own brand. Many are still not fully integrated – 30 years later. Instead of putting all the resources, time, and money into building the solution, they needed to fulfill the vision they acquired. Microsoft’s real innovation is to create a user experience through integration and seamless exchange of data that nobody else saw as important. Nobody else did as well as they did. The experience innovation did not need a product but an architecture. The other innovation was a business model innovation. From the very early days, they committed not to build their own computers but pushed computer manufacturers to use their software. The non-compete commitment from Microsoft was compelling enough to get an exclusive commitment from the computer vendors. And knowing that all the office apps will need their operating system was good enough to give the OS away for peanuts. Business model innovation and experience innovation were strong. Understanding how the company operates and what they offer was so confusing for most competitors that nobody cracked their dominance – till today. As we will discuss other innovation types in the following posts, you will see the difference of those innovation types relative to the ‘good old’ product innovation. You will see that product innovation is not going away – it’s still an important part of an innovative business. Product innovation is becoming a commodity – but is no longer a differentiator.

#ProductInnovation

In the next parts, 2, 3, 4, and 5, we will go into the other innovation types details. Here is just a quick snapshot to put the above in context.

Experience Innovation

The most effective way to innovate, only recognized by users and communicated through advocacy. Experiences include general customer experience all the way to entire entertainment solutions such as theme parks or highly interactive restaurant types, and lately, space travel. Experience innovation is very hard to copy and very hard to compete with. Usually, it takes highly creative minds to piggyback on a concept and develop a different model that makes the experience unique.

#ExperienceInnovation

 

Business Model Innovation

The most successful way to innovate with a big impact on the industry. Typically, business model innovation goes hand in hand with experience innovation. It is the hardest innovation type for any competition to copy, even to compete with. Changing a business model is hard enough for a business to develop – it takes years for the competition to emulate and follow. Business model innovation has been the most successful type of innovation in the past 20 years. The biggest number of business model innovations emerged from the US.

#BusinessModelInnovation

Organizational Innovation

Innovation within the organization, mainly for process acceleration, customer experience, resulting in increased profitability. It is tough to copy (if not done by consultants), making it very hard to understand from the outside and even the inside. Organizational innovation often requires a deep injection of new processes, different employees, and often a different management team. In large organizations, hundreds or even thousands of people may be affected by organizational innovation when they cannot unlearn and learn new ways of conducting their work. One question quickly rises to the top: “Is innovation killing jobs or the wrong team killing innovation?”

#OrganizationalInnovation

Structure Innovation

Supra-Enterprises, companies bigger than 25,000 employees, seem to have the hardest time creating truly ground-breaking innovation. In particular, in the western world, Top Executives, boards, Investor representatives, Unions, Industry associations, local government representatives, and maybe more have to agree on creating a new leadership structure to bring innovation forward. Inventing disruptive solutions often require major changes in the current teams as skills and experiences may shift significantly. Disruption in the automotive, energy, food industry requires knowledge and deep experiences in those industries not only on the enterprise side but also in external structures. A startup as a small company can go under the radar – a public company cannot.

#StructureInnovation

Learn more about the General Innovation Type Differences.

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