In her on-demand webinar, “Innovation Models Across Industries: A Linear or Complex Path?” Cutter Consortium Senior Consultant Katia Passerini considers innovation across many of the key sectors that are being — or will be — disrupted by technology. She focuses on the role of disruptive technology and how the process of innovation can drastically differ from what companies consider to be good business practices, as well as from what some individuals are comfortable with. How is “disruptive innovation,” introduced by the late Clayton Christensen in The Innovator’s Dilemma, going to affect your organization? What strategies can and should you use to increase creativity and innovation in your organization? How can you use digital technologies to master transformation and innovation in your industry? In this Advisor, we share some of the questions addressed in the Q&A portion of the webinar.
Q: How is an innovative company defined? By number of patents awarded? By number of products introduced into the market?
The answer depends on which statistics and which classification you’re looking at. Any organization that does ranking by innovation will set up the criteria it uses differently. That's why, when you look at rankings, you sometimes find different companies listed.
Patents is an interesting metric to explore because it's not just the number of patents that's essential. The higher the number of patents, the higher the intellectual property generation of your organization. So, the number of patents is definitely one of the metrics to follow, but you also have to look at the related metrics.
There is another metric related to patents that’s called “citation-weighted patents,” which means how many times the patents you use are being cited or are generating revenue. It's a complexity of measures around areas of innovation in terms of new products brought to market, innovation in processes, and organizational structure. Depending on the ranking and ratings that you're looking at, those metrics might vary.
International organizations, such as the Organization for Economic Cooperation and Development (OECD), also provide a lot of useful information. The OECD performs company-level innovations, including very dynamic benchmarks and charts. You can download these for free from the OECD website, and you can see there how innovation is measured across not only organizations but also across countries.
Q: Is it a question of methodology or is it a question of mindset?
It’s both methodology and mindset. In academia, we're using design thinking across the curriculum because we want all students to graduate using this type of approach and methodology. We want them to reacquire the mindset that enables them to really leverage those skills rather than framing them in a context of methodologies and templates that then kill their creativity.
Having said that, the difference between a good idea and a better idea is in implementation. An implementation is very much driven on methods and processes, so you have to have a mix of both and you need to understand when you stop one and start the other, because you really don't want to work with a lot of creatives who will not be able to get anything done, as they are always in the innovation stage. That is one of the drawbacks of this approach. That's why it's critical to work with teams that include those who are planners and those who are the completers, finishers, and executors.
The reason you see a lot of different approaches to encapsulate the design thinking process is because of the need to make sure that a divergent and creative process is then structured into a convergent and executable outcome. I only mentioned the traditional three steps: inspiration, ideation, and implementation. If you look at IBM, the company has transformed this into five steps (emphasize, define, ideate, prototype, test). There is always a process that you need to follow through with to be able to drive the creative process to its conclusion. So, it's really a mix of both: developing the mindset and applying the methodology.
Q: Please discuss the role of structure and discipline (i.e., architecture versus free imagination and creativity).
The approach is a combination of both structure and discipline, and it's also both linear and complex; they feed on each other. That's why we start with creativity and innovation, then bring in something entrepreneurial. The structure comes after the creative process. You can have a moment of creative disruption that questions everything.
One of the typical methods that I suggest is the “100 item list.” In your brainstorming for new ideas or solutions to problems, come up with 100 different solutions. Do this separately, and then bring everyone’s lists together. It isn’t unrealistic to think that there are 100 different solutions to a problem, but that's really where the creativity part comes in. You have to think of the possible and then bring it together through the process of elimination. You can use reduction methods to come to the synthesis that then enables you to implement the best idea that is selected, and which you continuously test.
Toyota had a methodology where it would charge three different teams of engineers with the same problem and have them compete and select the best solution out of the three. That's a very interesting structure because it creates some competition across teams, and you doesn't rule out the possibility that there are other solutions or other processes that could enable solving the problem or creating the products that you're bringing to market.
Q: How can the knowledge management function support a firm’s disruptions and proliferate an innovation mindset?
There are fundamentally two tasks in an organization’s knowledge management function. One is related to codified and explicit knowledge, which is helping institutions (corporations as well as government agencies and non-profits) organize what they already know — creating structures or using information systems, intranets, or enterprise systems to codify existing explicit knowledge. This is not real innovation; it's organizing in the hopes of being able to generate new ideas by reviewing what you already have. Of course, it is possible to generate new knowledge by consistently indexing what you know.
The other task in knowledge management is more important and often overlooked. It is the tacit-to-tacit exchange of knowledge — having a socialization process and having people share their ideas and come up with a solution. That is not necessarily codified, but it is codifiable. The knowledge management function can ensure that you can bring people together so that there is this socialization aspect — the tacit-to-tacit knowledge exchange. Then it can capture that informal exchange through a process of codification and organization of know-how.
Consider companies like Google and Facebook that offer free meals and snacks to their employees all day long. Especially in places like New York City, where it's expensive to go out for lunch/dinner, employees spend long hours in the office and tend to stay past dinner time. Yes, these companies are spending money on food, but they're really bringing people together at the workplace — mixing teams, providing teams with the opportunity to be with people from different units — just bringing people together in a casual away, discussing problems. In that environment, there may be an opportunity to identify a solution to those problems. Another thing that you can do in structuring initiatives for the knowledge management unit is to hold an innovation fair — bringing people together to compete to solve problems. These are tacit-to-tacit types of initiatives that you can then channel toward innovation.
It is important to distinguish the two functions: one is the codification of existing knowledge, which is more at the operational level. But part of the knowledge management process is the creation of new knowledge without reinventing the wheel. There is a lot that can be done in this area by looking at the socialization and externalization processes.
Q: How do you distinguish between innovation and creativity?
Creativity, as Einstein said, is really your intelligence having fun. It's the free flow, complex, and unstructured process, whereas the innovation portion is still creative but it brings you to a single or convergent solution. Innovation is your ability to take your invention, which comes out of the creativity stage, and transform it into a product — making it practical. Innovation is commercializing or monetizing the invention and making it market ready.
Q: What successes can you share if an organization or team/teams believe they're already innovative yet they are unable to deliver 50% or more of their sprint commitments over time using scrum. The team members are generally intelligent, articulate, and experimental — so much so that they don't accept delivery as a requirement of them. How can innovation — disruptive or not — occur under these conditions?
That's a complex question. The setting is using the scrum method to keep track of deliverables and interim outcomes across your project cycle and you have a team that is either too proud of themselves to accept feedback or they really think that they're delivering to perfection. That is counter to the notion of scrum because the whole point of scrum is to bring people together so that everybody can see where they're stuck so they can improve.
I think that resistance always exists because of accountability fears. People don't really want to show the interim product until they're done, and that's one of the reasons scrum has been difficult to implement in some organizations. But that is something that can be solved with time by showing the benefits of the continuous feedback loop.
If, however, the team is perceiving that its output is already at the level that is required, you have to reframe the challenge. It may be true in the context in which that team is operating that they are meeting requirements, but you reframe to a different context — for example, a meeting with a different team or group that has better deliverables. You could also go to another organization and see if they have a similar scrum process with better outcomes. That's usually a very effective way.
Sometimes, we are very comfortable in a routine and familiar environment because the challenge is clear and we know what we're dealing with. When you put yourself into a completely different environment that is a step above where you are, you gain new insights and may learn that you need to raise your proficiency to become better and be comfortable in other environments.
In my organization, we are just coming out of a session where we're looking at how much we improved from last year. We’re very comfortable when looking at the comparison to last year because we can see that we've improved x and y — except that we’ve forgotten that the challenge is not internal. We’re not challenging ourselves just to improve over how we did last year. We have to look at how our competitor does compared to us and the data from last year. And if that's not enough, how did somebody else in a completely different industry do compared to us. So, I think it's reframing the interactions that the teams have, and making sure they step out of their comfort-zone is important: if the challenge is not enough internally, you can reframe it in a more demanding context.