CHAPTER 15: FORMING YOUR INNOVATION TEAM

YOU CAN START NOW

"The moment one commits, then providence moves too.? Whatever you can do, or dream you can begin it. Begin it now." William H. Murray

A Seeming Crisis

I was a mid-level manager at RCA Laboratories in Princeton, New Jersey, responsible for a team of about seventy researchers. My teams focused on HDTV and Internet services with Citicorps and Nynex as partners. By industrial standards, I had a perfect job. Except for the one problem I was about to learn.

In 1986, GE bought RCA, and shortly after that, RCA Laboratories became part of SRI International, which created a separate enterprise called the Sarnoff Corporation. At RCA and GE, I had a multimillion-dollar budget for research each year. However, once we became a subsidiary of SRI, budget sources were neither automatic nor given. We went from working for a corporate research laboratory to working for a research institute funded by clients. We had to develop the business needed to support our people.?

This shift was a 180-degree turnaround. Unfortunately, like many managers of large companies, we knew little about systematic value creation, customer needs, business development, and business models. We knew even less about creating compelling products and services that people would pay for. We had a crisis on our hands. We did not know how to succeed. Only later did we discover that this would turn into the best opportunity of our professional lives.

Learn: When the merger was announced, my great colleague, Norman Winarsky, came in to tell me what had happened. I asked what our technical teams thought about it, and Norman said they were pleased. That was good, but being given millions of dollars of R&D to spend yearly was different than earning it. Critically, we didn't know how. Norman then said the magic words that defined our strategy. He said it was like everything we had ever done; we just had to learn. Learn. Norman is brilliant, so having a partner like Norman while learning was critical.

To learn, our team met every other week on Monday from 5:00 to 9:00 P.M. over pizza and coke to share what everyone had learned. Our colleagues, including Norman and me, stood up and gave short presentations to the group about concepts we had learned and our emerging business concepts. Then, the team would critique them. For the first few years, our progress was painfully slow. We read every popular business book, but none helped. The methods described were too vague, complicated, or business-unique. But we practiced, learned from each other, and improved. We began to succeed.

We recognized that we had to understand and develop basic innovative methods we could apply to our new jobs. We collected, wrote down, and shared our practices. Ad hoc presentations became NABC value propositions. Words like iteration and compelling customer value became part of our shared language so we could collaborate more efficiently. Our pizza meetings became Value Creation Forums based on reframing, comparative learning, and other improvement methods.

After a few years, significant results began to show. We were winning more and more substantial projects and rapidly growing. Others began to take notice. The successful innovation practices developed by our team began to spread to other parts of Sarnoff. Norman and I continued exploring new ways of creating value, eventually spinning out the first company from Sarnoff. Finally, at our team's insistence, we ended our Monday meetings earlier, at 8 P.M., so everyone could go home and watch Monday Night Football. Ending earlier was a significant symbolic victory on our path to success.

Your Innovation Team

Our experience proves that core value creation practices can apply within your team to improve performance. You don't require upper management's permission. As you can see from our pizza-meeting story, these ideas originated from a group midway down in a large company. There was no executive support or acknowledgment for these activities at the time. It was neither given, asked for, nor needed.

There are only two concepts that your team must embrace to get started. The first is the goal of creating and delivering the highest customer value in the shortest time. The second is to use core innovation practices to make that goal happen — the Five Disciplines of Innovation. Involve your team in the discussion and obtain their commitment.

In our search for effective value-creation practices, we have worked with many colleagues who share our passion for creating the highest customer value, including Herman Gyr, a world expert at creating organizational structures that allow enterprises to thrive. After I became CEO of SRI, these innovation practices were used across all parts of the enterprise. Everyone — and we mean everyone — was exposed to these ideas and used elements of the Five Disciplines in their work.

Your team may reside anywhere in the enterprise. You could be in public relations, marketing, finance, engineering, or the company's CEO. You can start with your team now. The next chapter will explain how to launch the Five Disciplines throughout the enterprise.

We have outlined the Five Disciplines that, over time, need to be embraced and deployed throughout your innovation team. First, focus on meaningful customer and market needs. If you have external customers, you must deeply understand your customers and the market's ecosystem, as described in Chapter 9. If you have internal customers, you start by developing a deep understanding of their needs and how they aid in the creation of customer value for others.?

Try a little test to see where you are. Within your team, have your team members write down who their customers are and what they think their customers' needs are, and then ask your customers to do the same. We predict that you will be amazed at how little overlap there is. We also guarantee that comparing the lists will trigger a valuable discussion.

Second, use the family of value-creation tools to create new customer value. The tools include NABC value propositions, NABC Action Plans, risk mitigation, market positioning, complete innovation plans, and holding regularly convened Value Creation Forums. Along the way, determine metrics for what "important customer and market needs" means to your activity and enterprise. Quantify customer value using Value Factor Analysis and other evaluation tools. Over time, recurring Value Creation Forums will help your team members improve their value propositions, share learning about business concepts, and gain additional skills.

Third, ensure that each innovation initiative has a Champion who steps up and keeps the team on track. Ensure this person is responsible for the overall initiative so that when difficulties arise, the Champion can take corrective action — whether that difficulty is motivating the team, clarifying the vision, synthesizing the solution, garnering financial support, or finding other Champions for parts of the project.

Fourth, as the project comes together, all the innovation team dynamics we have discussed will emerge. You must select the right team members, fully involve them, solve the inevitable concerns that arise, and move forward. Their words will tell you where you are in the process and help you identify issues to be addressed. You will hear comments like:

1. "We don't understand the need," and then,
2. "We get the vision, but it doesn't apply to us," and then,
3. "Okay, this vision applies to us but what is the plan?"

As we have discussed, these are gifts you should embrace to help you understand issues to be addressed to make progress rapidly. Critically, success is only possible if they are actual projects with motivated, dedicated innovation teams.

Finally, fifth, you must align your team for success. Then, as you begin to have success, slowly educate other players in the broader enterprise so that customer value becomes the central hub around which all activities turn.

Team Alignment

A team can only perform to its fullest potential if it is aligned with the goals of your innovation and the innovation with the goals of the enterprise. Alignment means that barriers to success have been eliminated, and the organizational support needed for success can be implemented. As listed above, team and innovation alignment starts by achieving the other four disciplines. Failure to achieve alignment within the project, the team, and the enterprise can lead to costly delays or outright failure. As barriers are identified in the project, team, or enterprise, they should become part of your innovation plan with actions to address them.

Removing Barriers

Barriers to success come in many forms. For example, putting a new initiative that conflicts with an existing product in the same department can fail. The inevitable organizational conflicts slow down the project and frequently kill it. The best success scenario is often creating a separate organization for the new initiative. For example, when Applied Materials decided to sell equipment for manufacturing solar cells, it was formed as a separate function from those building equipment for integrated circuits. Because of the potential business conflicts, they wisely created a new organization that does not report to the existing organization.

Sometimes, it is best to create an entirely new enterprise. At SRI International, we incubate significant initiatives within the organization. Then, when we have developed a complete innovation plan and raised the resources needed, we spin them out as new companies. This activity is necessary because SRI's core business is R&D and innovative products for others, not mass production and sales. Major innovations need dedicated teams and infrastructure to create specific products and services. Similarly, universities establish centers and institutes to ensure common focus and effort.

Many other barriers can occur within organizations. For example, can staff gain efficient access to financial and other resources? Based on commonly understood performance standards, are simple processes in place to obtain investments, hire staff, engage consultants, and build facilities? If not, the extra time and effort needed slows the initiative.

There are an unlimited number of issues that can prevent alignment. The key is to identify them quickly and then, when necessary, engage the extended enterprise to help remove them. We repeatedly discover that most self-protective "barriers" people believe stop them are not real. They are "red herrings." One common red herring is the belief that company-wide procedures prevent specific actions, such as a team holding Value Creation Forums. As we showed, all it takes is three to six teams and some pizza and coke over lunch.?

Another example is the perceived inability to get information from another part of the organization, which can be illusory. Unfortunately, if your experience is like ours, one of the hardest things for a junior staff member to do is visit and talk to staff in another division without direct authorization. You might think that talking to others should seem so hard, but if you remember the early stages of your career, you will realize that this simple act is a thousand times harder than it should be. It requires active support and enterprise-wide approval from management. If you are the supervisor, tell your people that if they need an answer from someone, they should ask. We have been in many meetings at leading companies when someone asked one of their team members, "Have you talked with Jane in the other division?" Invariably, the answer is "No."

Removing these psychological barriers to gathering information takes effort, but we have a simple tip. Please write down your NABC value proposition and show it to your supervisor, pointing out where you need additional information and guidance from, say, an executive across the enterprise. First, this shows you have done your homework and will save everyone's time. Second, it will reassure your supervisor that you are not doing an end run but rather that you have a legitimate business reason for talking to the other person.

Please write down all the barriers you see before you and present them as part of your initiative at Value Creation Forums. We have found that once the barrier is made clear, most staff across an enterprise will step up to help smooth the way. Never assume something is not possible; do your homework and ask. Next, we will discuss several other issues that aid in achieving alignment.

It's About Superior Results

Many enterprises introduce new ideas by discussing the need to change the organization's culture. We have worked with hundreds of individuals, and so far, no one has volunteered to have their culture changed. When management talks about changing someone's culture, it can feel insulting and catalyze resistance. Culture change is a by-product of developing new skills and demonstrating better results — it is not the starting focus of the Five Disciplines. We never talk about changing culture.

The objective is to deliver superior results. As our Sarnoff example illustrated, the Five Disciples do not initially have to involve the enterprise's management structure, political battles over titles and turf, or significant resources. The only thing required in the beginning is a modest commitment of time. But even here, all organizations have countless meetings. Many, if not most, of these meetings have incomplete agendas; they need to be focused on creating customer value. The employees must share the language, tools, and methods for quantifying customer value, and people must come fully prepared. Over time, as people learn the Five Disciplines, there will be significant efficiency savings because those meetings will become more productive. In addition, it takes little resources to create a regularly scheduled Value Creation Forum to focus on creating new value for your customers. Some money for pizza, soft drinks, and a few enthusiastic colleagues put you in business.

Another simple example is understanding customers' needs, the starting point for developing all new customer value. Even if you don't have a budget to put people on planes to visit customers, you still have a telephone, email, and teleconferencing, which allow you to interact quickly and efficiently to get needed information. These resources should be used aggressively.

The goal is steady, quantifiable progress toward implementing the Five Disciplines of Innovation. Within your current team, you have all the resources needed to begin.

First Steps

The best way to start is to find a buddy. At Sarnoff, progress would have been extraordinarily challenging if Winarsky had not been my partner. You will discover that having someone to discuss and adapt the Five Disciplines to fit your team's context is essential.

Second, as part of your work with your customers, find ways to evaluate the value you currently provide them — using, for example, Value Factor Analysis. It is always illuminating and often depressing to learn how far you have to go to do a superb job for your customers. When I was CEO of SRI, my key customers included all SRI employees. I needed to know if the organization was satisfying their needs. From surveys and various forums, we learned ways to improve our performance, including these hardy perennials. Constantly:

• Redouble efforts to communicate the vision, mission, strategy, and goals.
• Demonstrate how everyone fits in and is valued.
• Involve staff more in important decisions.

After I left SRI, I was told that the most critical action I initially took was to have lunch every day with a different employee whenever I was at SRI. I would sit with someone new each time, ask them why they came to SRI, what they wanted to achieve, and then ask them to describe their project. After that, I would define an NABC value proposition and ask them to help me write one on a napkin for their project. Those lunches were invaluable in helping me what was happening across the company. It also gave me the chance to reinforce our values. And, very quickly, everyone knew I would ask for their value proposition so that help spread the word about its importance.?

Improvement never stops.

Thoroughly engage your team as you introduce the Five Disciplines. You should first get agreement on the need to create greater customer value and then achieve this by using the core value creation practices. As you engage your team in using, ask at every step, "What is the alternative? Are there better ways to engage our customers and understand their needs? Are there better words and tools to capture customer value? Are there value creation processes that are more efficient?" Continuously identifying and using superior ideas is the essence of the discipline of value creation.

Engage the Best to Pull the Rest

As you progress, look for easy successes and engage the early adopters. Even with positive new ideas, only roughly 20 percent of the people will quickly engage, 75 to 75 percent will watch for proof to see if the concept works, and 5 percent may never join. You want to immediately engage the 20 percent who get it, help them achieve greater success, and then leverage their successes to engage the broader enterprise.

As you work with these ideas, you may discover that certain words or concepts are best modified to fit your environment. We mentioned earlier the BBC, who embraced the idea of NABC but added a small "a" out in front to represent the audience — aNABC. When people in the BBC read this, they say, "We must understand the audience needs (aN) to create our approach (A) for programming that will create the greatest public benefits (B) for the cost when compared with our competition (C) and all the alternatives people have today and in the future."

In addition, you will need to translate the examples in this book into ones appropriate for your enterprise. Examples from the automobile industry may seem different from a finance department, a nonprofit, or the government, even when the underlying principles are the same in every setting. You and your colleagues must create examples that resonate with your team. The advent of AI-Tutors makes this easier now.?

This book is about embracing core value creation practices throughout your team and enterprise. In addition to the ideas shared here, many methods apply to different functions within an enterprise. Examples include Design for Six Sigma, ISO 9001, and standardized work. Best practices often refer to current best practices; of course, you should copy best practices from any industry or enterprise with them. Toyota, for example, developed the idea of just-in-time manufacturing by noting that produce in grocery stores needed to be delivered precisely on time, or it would spoil [3]. Toyota asked, "Why can't we do that with automobile parts? It would cut down on waste and reduce costs." That was the beginning of a revolution in automobile manufacturing. Over time, strive to develop innovative practices unique to your enterprise that surpass anything others do.

Muda

A wonderful Japanese word for non-value-adding activities is muda [4]. Muda is the flip side of customer value. It is all the things that create waste and interfere with value creation. Everyone has, for example, been frustrated by going to endless meetings that didn't result in any action to help move the team forward. That is muda.

The wonderful thing about the word muda is that it sounds exactly like what it is. When your team members get to the point where they can look at one another and say, "That was muda," and everyone laughs, you are making progress. Muda also acknowledges that every time we create a new project, we must then clean up all the parts that are no longer relevant to move forward. It's like baking a cake. The cake may provide enormous customer value, but when done, you must clean up the dishes before creating the next one. One of your keys to helping eliminate muda is constantly discussing whether a given activity is important or just interesting. Occasionally, you will discover that some actions are not even interesting. They provide no value at all for the enterprise — just waste.?

Possible Mistakes

Mistakes will happen when introducing a new initiative involving how people work, like the Five Disciplines. Although you are introducing processes to help your team be more successful, it is a mistake to think you won't be challenged. Employees may fear that the proposed change will negatively impact their jobs. At every step, you will be tested and even misinterpreted. These challenges happen because people are initially unsure of your full intentions and play out their worries. You must involve them and listen to the feedback you get. You can move forward by continuously reframing their comments to confirm your understanding and then involving them.

A second mistake is making too big a deal about the value-creation practices before showing positive results. As your first act, don't buy everyone a T-shirt saying, "I'm a Champion" or "I Create Superior Customer Value." These unnecessarily flamboyant gestures will provoke the ire of some of your colleagues. And no matter how effective you and your program are, results take time to achieve. Promising more than can be delivered is guaranteed to make your job harder.

A third mistake is that parts of the Five Disciplines are misapplied or indifferently applied; thus, there is no progress. For some, this will prove that these value-creation ideas don't work. For example, we have found that most teams typically take seven or eight Value Creation Forms to see dramatic performance improvement. Be a Champion to help your team fully utilize the new skills and succeed. Preserve and create the customer value that will make your team the most valuable unit in your enterprise.

In the beginning, most members of your larger organization will likely disregard you. Then, when they see you succeeding, they may ask you to modify your practices to better fit their agenda. We had a dramatic example of this when we first started at Sarnoff.?

A vice president told us there was no future in what we were doing, and he would only focus on other parts of the business. We said, "That's okay. Thanks for telling us." Over time, our group grew twice as fast as the rest of the company. The same VP then showed up in my office for the first time, sat down, and said, "I have no idea how you folks are doing it. You keep talking about important problems, compelling customer value, and all that other stuff. But if you would just lower your standards, there's a lot of good, average work out there that we could get to help grow the business faster." He didn't get at all what we were about. I politely but firmly asked him to never, ever talk to any of our team members. Shortly after this meeting, he became frustrated with his lack of success and left.

Show Progress: Others Will Notice

You can start your team on the path to creating greater customer value without permission from anyone else in your organization. As you develop your value-creation practices, there will be many opportunities to influence your colleagues across the enterprise. If all your presentations are compelling, quantitative value propositions, all will notice. The opportunity to inspire your colleagues is easy because, in most enterprises, it is a rare presentation that starts with a quantitative description of the unmet customer and market need, a discussion of the competition and alternatives, and specific next steps.

When people notice your progress, it is time to ask for additional resources. For example, although our value creation processes do not require huge investments, having a small pot of money to buy pizza, send team members to visit customers, buy market reports, go to conferences to study the competition, hire outside Jungle Guides, and conduct limited experiments to mitigate risks is essential. Incredibly, in many big companies, one of the first things they do when they have a financial downturn is to cut the travel budget. Okay, but why are we cutting the travel budget for visiting customers?

The most valuable enterprise resource you have is your colleagues. Only by tapping into the full genius of your extended team can you respond fast enough in the exponential economy to thrive. Once they see that you are serious, most will help with your innovation.

Optimism is a Force Multiplier: Our perspective is inherently optimistic. This optimism is good business. People want to engage in things that matter and give meaning to their work. They want to do an excellent job because they desire to be valued and appreciated. They want to develop new skills to become more valuable, regardless of their position in the enterprise. And they want to have healthy relationships with others because they know it is both more productive and fun. Your best motivating influence is to tap into these basic human needs — the desire to achieve and contribute. You will be tested to see if you believe this. But deep down, most of your team members will hope you do because that is the direction they want to go in, too. Help them.

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