Intersections in Innovation – Q&A with Jeff Lavers and Laura Dunham
After the April 2012 Intersections in Innovation event, speakers Jeff Lavers and Laura Dunham graciously agreed to answer additional questions posed by the audience.
Innovation for products and services seems to trump innovation in such areas as business process, training and administrative infrastructure. Do you agree with this observation, and can you share any examples of what you have seen?
Jeff Lavers: I would say that innovation for products and services is more widely known and used, but innovation in processes is a key to moving forward. Examples I am aware of include new go-to-market models such as web-based commerce, click-to-chat service models, etc. Fields to watch include online training and education – I think these fields are going to explode as we see an entire reshaping of the educational system.
Laura Dunham: I strongly agree with Jeff. Applying innovative thinking to internal processes is critical for improving a firm's efficiency, effectiveness, speed to market and quality. Furthermore, it is internal process innovation that allows companies to successfully create new business models. For instance, Walmart’s business model has been driven by its innovations around supply chain management. Netflix unseated market leader Blockbuster through a business model built on internal process innovation around fulfillment, proprietary customer recommendation software and inventory management. And finally, smart, innovative companies continually refresh their own internal processes around innovation itself. A case in point is the interesting work that P&G has undertaken to build open innovation into its new product development processes, an initiative it has called Connect and Develop.
How do you establish an environment that encourages risk-taking in a business that has been shell-shocked by deep, paralyzing loss?
Jeff Lavers: I believe it starts with incubation. You have to allow a process of isolation and sheltering to permit an area to break free from the conditions in the rest of the business. The classic example of this is IBM, which was getting hammered in its main business – large data infrastructure. Its CEO laid out a plan to build a service business. He placed a small team in Florida and told them what he was looking for, provided seed money and left them alone. This now accounts for more than 60 percent of IBM's business and ultimately saved the company.
Laura Dunham: An important challenge for all companies is to develop processes for managing the risks of innovation. Without question, innovation entails high uncertainty, which means failures will occur. All firms, no matter their circumstances, need to develop strong internal guidelines and protocols around managing failure intelligently. This means learning how to “fail early, fail often” in order to accelerate learning and decrease uncertainty around their innovation initiatives. It means having a disciplined approach for identifying critical assumptions and sources of uncertainty at an early stage. Carrying out quick, low-cost experiments to test assumptions and generate learning. Sharing and acting upon the learning in order to refine the concept and plan. And, finally, quickly repeating the cycle until “proof of concept” is achieved and larger scale investments are more likely to yield successful outcomes.
Managed properly, this process actually reduces risk by ensuring that failure – and, more importantly, the learning from failure – happens early, cheaply and quickly and is used to improve chances of success. So developing a clear set of guidelines, protocols, and tools around this kind of process is a critical first step to making innovation possible in risk-averse environment.
It sounds like innovation and ethics have some things in common, including willingness to share, avoidance of possessiveness of ideas and caring about the "common good." Do you agree? Can you share an example?
Jeff Lavers: I very much agree. The fundamental elements of innovation and ethics are both seeded in one's ability to essentially do the right thing. True innovation rarely comes from an isolated idea of one person, but rather the collective wisdom of a few or many. At 3M, virtually all of our large breakthroughs came from someone who had an idea that flourished after partnering with others to bring it to life. These collaborations usually start from uncommon connections – many times chance meetings. These meetings, however, are born from the simple understanding that one has to share in order to advance concepts.
Laura Dunham: True innovation – creating real value for customers and other stakeholders – should be seen as an inherently ethical enterprise, as innovators seek to bring better products and services to market that address unmet needs, solve customer and societal problems and improve the quality of life. Bringing about true innovation also requires a way of working that has many ethical values at its core. For instance, the kinds of creative collaborations that underpin innovation processes require a commitment to respect for the individual, integrity and generosity. Without these elements, team members will not forge the sense of interpersonal trust and respect that allows the kind of open, often dissenting, and “out-of-the-box” discussions that lead to radical new insights and novel solutions.
Innovation yields change. What do you consider the most important aspect of change management?
Jeff Lavers: Without a doubt, the ability to follow your assumptions in an environment that allows it to happen. Innovation happens best in one of two ways: nurturing culture or sheer necessity. Both allow the innovator the opportunity to experiment. That ability to experiment happens in environments that allow risk. Nurturing environments reward risk takers and encourage them to keep pushing. Necessity environments force the innovator to challenge the status quo.
Laura Dunham: I think a powerful first step for a leader seeking to manage a change toward greater innovation is to take on the role of innovation champion and proactively work to develop one or more quick success stories. This does not mean actually leading a particular innovation initiative, but rather finding a couple of promising initiatives and entrepreneurial managers already within the organization and then working to support and accelerate their development.
Getting the right people on the project team, serving as coach and sounding board, removing organizational barriers when necessary and providing the resources necessary for a team to work through a disciplined but rapid process of new concept development, testing, learning and adapting – these are the critical roles of the leader seeking to manage a change toward innovation. These are the actions that make a leadership mandate for innovation become real and authentic in the eyes of employees. In the long run, innovation requires a systems approach.
Having a clear innovation strategy, the right people, appropriate processes and tools, aligned metrics and the right culture – these things all need to work together and reinforce each other. And it's the leader’s job to build that system over time. But leaders can jumpstart that process by taking actions that make their commitment to innovation immediately real and believable.
With 3M's HOT process, when the 3M group is embedded with a customer, how is IP ownership determined?
Jeff Lavers: The key is observation without interruption or interference from the customer. While it sounds like a distant process in this regard, it is essential to understanding the unarticulated need. This freedom to invent from observation minimizes IP issues. When you actively engage customers, there will always be the potential for IP issues. We generally look to clarify these prior to engagement via nondisclosure agreements or other tools.