How To Estimate Your Innovation Costs

There is no manual that says exactly how to do this or how much you are likely to spend innovating but here is a common sense approach that seems to work well. Imagine that you are a company that needs to introduce 5 new products into the market place. First of all you need to spend some time generating ideas. Without knowing your actual method of idea generation and until you have had time to calibrate your own process then this is a bit of 'wetted finger in the air' calculation. We know that the ration of truly wacky ideas to those that might be worth looking at is one order of magnitude i.e. 10 to 1. Similarly, the ratio of 'might be worth looking at' to 'definitely worth a look' is once again an order of magnitude.

So if we want to have just one idea that is worth pursuing then we should expect to generate at least 100 crazy ideas, thus our small company wishing to create 5 new products will need at least 500 crazy ideas. So far so good, but how do we generate the ideas? You could collect them in a suggestion box but the quality would be variable and it may take a while although the cost would be low. An idea generation session with a group of people could generate your ideas in less than a day. This would be more expensive and would only use a 'snapshot' of the expertise and knowledge available to you.

By now you should get the idea that we can roughly work out how many ideas are required, and how long this would take and the resources that would be used. Not all ideas make it to products so some extra redundancy needs to be built in, and then there are overheads such as management and the costs of prototyping and manufacture, but these should be aspects with which you are already familiar.

So there you are, a simple way of working out your Innovation costs. But hang on a minute, life is not quite that simple. Below is a list of other things that you might wish to consider:

• HR requirements (culture, motivation, working practices)
• Idea capture systems (how do you record ideas and avoid forgetting them)
• Knowledge transfer (what worked, what did not, avoiding reinventing the wheel)
• Feedback for improving all aspects of your process (including estimating costs!)

This is a simple guide but good enough to allow you to get some sort of handle on the cost of Innovation if you have never done anything quite like this before. Reality is a little more complex - good luck.

Innovation - a human race

I often get asked about the pace of innovation in different countries or their ability to innovate. Many such questions come from people whose awareness of global issues is sadly lacking and who represent so called developed countries. The answer I give to them is the same as the one I give to those in less developed countries who are seeking inspiration and motivation for their efforts.

My own personal definition of Innovation is purely based on Human Capital so I choose a metaphor that involves people. Think of Innovation as a race, but with a difference. Some runners have an advantage in that they start further ahead, perhaps because of a time or resource advantage and some start with varying degrees of disadvantage.

Those initially at the front may be well trained and have the latest sparkly gear but they are running almost as fast as they can - improvements being measured only in small amounts. Our runners at the rear will acquire the trappings of leading athletes such as running gear, coaches etc in due course.

There are still two very important factors to consider. How long is the race and how fast can those at the back run? The race we are in is, I believe, a long one with sustainability and resilience to crises being key. So, the longer race will provide greater opportunity for less developed countries to narrow the gap. If their natural talent is greater than developed countries, the race could be close.

My word of warning to those in the lead currently is never underestimate the opposition and look over your shoulder once in a while. My words of encouragement to those at the rear is to believe in your talent.

Creative Leadership For Tough Times

Surely we just need good strong Leadership in tough times not 'airy fairy' Creative Leadership? If you share this view then I think we have our wires crossed already. Let me explain.

In the current economic climate we do need strong (or should I say bold) Leaders but traditional Leaders (and I include those who are up to date with such concepts as transformational and situational leadership here) often have a Leadership toolbox that is comprehensive but perhaps identical to those carried around by other Leaders. So if we all have the same tools and we all operate in the same marketplace then we still have a stalemate.

And now for the Creativity bit. I am not suggesting that our bold Leaders walk around with an armful of creative techniques and nothing else, just that they should supplement their Leadership toolbox with a selection of techniques that provide alternative ways of analysing and solving problems, decision making, planning and communicating. Leaders then have a larger repertoire of business tools at their disposal from which they can select the most appropriate and most effective.

But why are Creative techniques particularly good for the tough economic climate that we are now faced with? In short they can:

• Provide competitive advantage as their usage often relies on tacit knowledge
• Are more likely to unearth solutions that no one else has thought of or tried
• Allow Leaders more time to focus on real business issues - these techniques can save time
• Permit greater buy in from colleagues and employees and thus less resistance to change
• Build intrinsic motivation amongst the workforce

Even in highly regulated industries such as Financial Services, Leaders can enhance their capability in this way. Remember it is only the outputs of your processes that may be regulated. Internally there are usually alternative ways of doing things!

Why Innovation Programmes Fail

There is only one real reason for your Innovation programmes to fail and that is the fact that you have taken no action at all! I’m sure, however, that is not what you want to hear and you will be shouting ‘not true’ at you computer screen. One of the components of any such programme is learning, so that even if you don’t hit the targets you set for yourself you will collect some knowledge on the way and thus not ‘fail’. The only way you can fail, therefore, is by not doing anything thus not making any progress and not learning anything.

If you have read much literature on the topic of Change Management then inaction will be a recurring theme. Many Managers mistake discussion, planning and specification for action thus they believe that an initiative may be underway when it is not. When asked what is happening they will tell you that the Innovation Task Force is meeting regularly and soon they will have objectives and a plan. Great in the early stages but you should ask the question ‘Have you actually done anything?’. In many cases the answer will be no. So no surprise that your initiative will be flagged as failing when it never actually started. To Innovate you must DO SOMETHING.

Readers will I’m sure like a few pointers as to why they have not made the progress they anticipated when they have taken action, so here are some potential reasons. Not all will apply to you but use them as a checklist:

• Employees do not know about your initiative – check communications
• Employees do not care about your initiative – check motivation and morale as well as management sponsorship
• Poor performance – did you identify any areas for training and development?
• Nothing is happening – have you officially kicked things off, have you changed what YOU do? Are others sabotaging your efforts?
• It all seems like hard work – do you have a team in place to help?

There are four broad categories of people to address when kicking off your innovation programme:

• Enthusiasts – no problem here, welcome them with open arms
• Disbelievers – ‘no that will never happen’, simply ‘do’ and conquer
• The Angry – ‘over my dead body’ hard work (see below)
• The Followers – ‘well if its going ahead I might as well tag along’, welcome these people also.

It is only the Angry (or Awkward) who pose a problem. What you need to realise is that a 70:30 rule applies here. If you run your innovation programme in an appropriate manner (you can borrow from Change Management here) then you will have 70% of your employees onside. There things aren’t so bad are they? So just DO, and you can’t actually fail!

Working With Generation Why?

History has defined a series of generations such as the Silent Generation, Baby Boomers, Generation X, Generation Y and now Generation Z. Generation Y are the children of Generation X and are now in their late teens to early twenties, the University and College students of today. As far as technology was concerned they went from geek to chic. Generation X grew up as technology and the internet was mushrooming and Generation Y simply went gadget mad. They grew up in times of economic prosperity and so created a different outlook on life. Don’t like your job, then go and get another? Want to work from home, no problem?

Generation Y is more brand and image conscious, they are more likely to have addictions and undesirable habits, they exhibit less loyalty to employers and their family units are prone to breaking down.

Next comes Generation Z, or ‘Generation Why?’ as I like to call it. The world has changed very rapidly of late. We have seen the power of developing countries such as India, China and Brazil as well as global warming, famine, the collapse of financial systems and now the election of a black American president. We are entering an age where things are less certain (and hence anything is possible) and which will breed a new classification of human being. They will be innovators in the true sense of the word, choosing to be adaptable and flexible in their home lives as well as at work.

Unlike their predecessors, Generation Why? Will be asking tough questions such as ‘Why must we do things in this way?’, ‘Why do we have to make a mess of the planet?’, ‘Why won’t you listen to me?’. They will be like constantly inquisitive teenagers and using their skills and imagination to get what they want. Being slightly less materialistic than Generation X they will be willing to put in more effort at work, but only if it matches their own goals and aspirations.

Sounds like a nightmare? Not at all. There is a generation who are able and willing to look at things differently and get off their backsides. Great things can be achieved but only if these people are ‘managed’ in the right way i.e. given the right resources, intrinsically motivated and contained within ‘light touch’ management systems. This will be a challenge for Managers and Human Resources specialists but the results will be worth waiting for and help is already at hand to start the process.

An afternoon of Strategy

Can Strategy really be put into the same category as a good book, your favourite CD or a celebrity chef? Can you really do it justice in an afternoon? The answer is most definitely yes and you can make it just as pleasurable with or without a teapot and a plate of custard creams.

No, I have not lost my marbles, I just believe that many organisations spend too much time sitting around a polished table poring over management accounts, making poor decisions and crafting strategies that they are unable to communicate to their workforces. And what is the result, a thick document that ends up in the shredder, and even worse does not help the organisation in any way at all.

So how is this feat to be achieved, read on.

First of all we have to make an assumption that those running the organisation are at least technically competent, even if their management and leadership styles are less than ideal. They should have a good idea of the state of the company, the competition, the environment and of course the employees.

Step 1, stare hard at your organisation and look at all aspects of it, not just the balance sheet or profit and loss account. How adaptable is it, have you got the right skills, is it too big or too small or perhaps suited for other markets? Record this information in a suitable fashion, maybe using sketches, mindmaps or pictures (you will see why shortly).

Step 2, gaze into the future (how far in advance is up to you) and create a really good idea of what the organisation needs to be like in order to fend off the competition, where it will be, how it will work, what markets it will be in. If your time horizon is short then you can simply extrapolate from existing data. If you have a long time horizon then you may need to consider scenario planning or some sort of Futures Programme. Don't be influenced too much by the present, your organisation should be succeeding on its own a a point in the future.

Step 3, create a storyboard. A simple version may consist of 6 boxes on a sheet of flip chart paper. Number the boxes 1 to 6 and put the output from Step 1 into box 1 and the output from Step 2 into box 6. This is easier if you use visual items such as pictures but adapt everything to suit yourselves. You can even add or remove boxes if you wish. By now you will have guessed that the Step 4 is to fill in the intermediate steps but going backwards from the future to the present, by asking 'how did we get here?' rather than 'how do we get there?'. This way you will always get to your desired end point!

The results of steps 1 to 4 is a storyboard that many in the creative industries will be familiar with. It tells a story which is how we prefer to take in information. It also allows others to add their own perspective without actually changing the story (try doing that with a strategy document). This raw document can also be used immediately by Human Resources and Marketing to communicate this strategy to employees and other stakeholders and it can be updated regularly.

This method really does work, why not give it a try?

Why Does My Organisation Need Creativity?

When was the last time you got into a difficult situation? Have you ever forgotten a present for a special occasion and found yourself making elaborate excuses? Well this is your creativity at work. Some people have more than others but we all have at least a spark. But why is this useful to your organisation?

Like people, organisations find themselves in difficult situations due to increased competition, global trading conditions or just increased pressure from stakeholders to perform better. There is no manual to escape, no ‘get out of jail free’ card. You will need to rely on the creativity of people at all levels within the organisation, not just management, marketing or your research and development team.

Unlike computers, people can process huge amounts of information instantaneously and then apply something completely illogical – intuition. Intuition is not crystal ball gazing but is decision making based on knowledge that cannot be currently expressed externally.

The three main drivers for creativity are knowledge and experience, frameworks and techniques and intrinsic motivation. To allow Creativity to flourish you will need to address these three areas. The interesting things is that if you have a Creative organisation you will have intrinsic motivation present amongst your employees but the converse is not necessarily true. If you have intrinsically motivated staff they may or may not be creative. Remember, a cat is a four legged animal but not all four legged animals are cats!

If you address all of the factors that affect organisational creativity then not only will you benefit directly from having a creative resource but you will gain an intrinsically motivated workforce for free. Perhaps it really is possible to get something for nothing.