The Innovation Roundtable? Summit 2017: Lessons Learned

Author: Mark Dahl-Jensen, Innovation Roundtable?

With 627 participants representing 236 firms, last year's Innovation Roundtable? Summit was designed around a highly interactive format combining insightful presentations with a variety of discussion sessions. In the following, the Innovation Roundtable? Research Team has delved into a few key insights within each of the Summit's six innovation themes.

The first theme covered the following topics:

The S-Curves of innovation — popularized by Clayton Christen in his book “Innovators Dilemma” — was a recurrent theme across presentations. A multitude of speakers emphasized that no company can rest on their laurels; they should continuously look to make the leap from one thriving business to another.

Based on Richard Foster's research at Yale, Dr. Chris Brauer, Director of Innovation at Goldsmiths, explained that, back in the 1930’s, companies would average approximately 85 years on the S&P 500 Index. Today, they average 15 years. This is indicative of an ever-shortening lifespan of businesses.

How should high performers then build capabilities to continuously jump S-Curves? Brauer stressed that companies should look to achieve organizational ambidexterity by setting up dual structures, with certain departments focusing on exploiting the day-to-day business, while others explore future businesses.

There are no clear guidelines to succeed in unknown terrain, for which reason large organizations must conduct continuous experiments in the space. Brauer said that Shell is a case in point — a company that he has collaborated with in conducting the world's largest experiment on driver behavior. While Shell is doing very well, there is a constant need to seek new opportunities, with electric vehicles and autonomous cars being considered game-changers in the not too distant future. With the introduction of autonomous electric vehicles, it’s very feasible that people will be doing a lot of their work in cars. Would Shell in this case evolve from being a fuels and retail provider to become a wellbeing center of sorts, focused as much on what fuels the human as the car? Such questions remain unanswered, exemplifying the importance for a company like Shell to conduct continuous experiments.

Bill Fischer, Professor of Innovation Management at IMD, probed further into how companies should accelerate S-Curve transitions. While corporations may be brilliant at applying stage gate processes in areas that are well understood, his suspicion is that this is very much a legacy skill. Though useful, it won’t be sufficient. An inside-out mentality is ingrained in its application; yet, the majority of major innovation achievements today aren’t uncovered in an R&D facility.

Today, customer experience lays the foundation for innovation. With design thinking and emphatic customer observation becoming foundational pillars at the front end of innovation, companies are already innovating for greater customer experiences.

Fischer explained that many companies find themselves arriving at a point where everything is seemingly running smoothly. This is the moment where companies should stop up and assess whether their customers’ lives are beginning to move faster than the industry’s ability to satisfy these customers. At this point, companies would typically also be beginning to see the emergence of niche competitors that are making attempts to address these same customers’ pain points. In Fischer’s experience, a lot of people within any given organization are already fully aware of these pain points, they have simply chosen not to do anything about them. He advocated taking a more proactive approach, summed up below:

The second Summit theme explored the following:

What would happen if a company funded every single new product idea from any employee, no questions asked? As an experiment, Adobe did exactly that. At the Summit, Mark Randall, Chief Strategist, VP Creativity of Adobe, shared how he led an innovation process that’s quickly becoming an industry model for igniting innovation, recognized as Kickbox.

Given his success as an Adobe intrapreneur, Randall was asked if he could teach other company employees to do what he himself was doing — in terms of creating new businesses. His idea was to build a product to help educate employees.

Kickbox is designed for people who aspire to innovate inside large organizations but find themselves failing due to corporate structures and bureaucracy. He described Kickbox as a “magic” red box that includes everything needed to be a successful enterprise innovator. The most notable component of the red box is a prepaid credit card with 1,000 dollars on it, used to fund employee ideas. Besides a few candy bars and a Starbucks card, hopeful intrapreneurs get their hands on a set of instructions, guiding them through a six-level process. While the goal with Kickbox is to generate innovations, Randall stressed that innovations don’t derive from a focus on the end product. What companies should truly aspire for in the long-term is building a culture of innovation through the creation of innovators, not innovations.

Randall’s first goal with the Kickbox process was to increase Adobe’s rate of failure. While this may sound counter-intuitive, the fact of the matter was that in an average year, Adobe was testing about a dozen or two new product ideas and found itself spending up to a million dollars on developing these ideas. From those figures, it would launch two to three products. It dawned on Randall that such hit rates were much too high, and that Adobe should pursue riskier endeavors. Adobe not only had to fail a lot more, it also had to do so at a much lower cost. After launching Kickbox, it went from testing twenty new ideas annually to over a thousand.

In making trial and error a non-catastrophic process for employees, Adobe hands out the red box to any employee that aspires to move forward with an idea. Randall noted that the 1,000 dollars handed out to prospective intrapreneurs actually saves costs compared to prior processes. When employees previously had an idea that required 1,000 dollars to move forward, a meeting would have to be put in place with top management. The cost of such a meeting would typically mount to an estimated 1,288 dollars in employee time and scheduling. Randall’s conviction was that every time a meeting didn’t need to be set up, simply providing Adobe intrapreneurs with the money instead, Adobe would save 288 dollars on average.

When Adobe intrapreneurs complete all six levels of the red box, they are awarded with the subsequent blue box. Every one of these is different, with every innovation and innovator being unique. While red boxes are more or less handed out like candy, only 29 blue boxes had been handed out at the time of the Summit.

A few of the benefits of the Kickbox process are summed up below:

The third Summit theme explored the following:

In a lab exercise at the Summit, Chris Brauer emphasized that his research on digital transformation with Microsoft indicates companies must demystify the fear many have of automation and augmentation. He argued that when the common societal narrative is focused on loss of jobs and humans being made redundant, it’s the same as saying that we won’t be able to innovate our way to a better future.

On the short term, he considers robotic process automation (RPA) to be of considerable benefit, representing the application of software to handle high-volume, deterministic tasks that previously required humans. Brauer is a firm believer that tasks characterized as monotonous and repetitious should be outsourced to machines. This will free up people’s time to focus on projects where characteristically human traits, such as creativity and intuition, are required.

Brauer claimed that, on the longer term, the combination of human intelligence and machine intelligence, also known as augmentation, will help companies become so-called “hyper productive” organizations.

Fear of the unknown is likely to exist within any organization. Brauer proposed companies look at opposing organizational resistance by communicating lighthouse examples of how augmentation works in practice — to get a grassroots movement going for digital transformation.

The fourth Summit theme covered the following:

In a previous article, the Innovation Roundtable? Research Team outlined a few insights deriving from the Summit in terms of building superlative corporate-startup collaborations. Amongst a multitude of findings, it was highlighted that corporations should look to focus on the distinct value-add that they can bring to the table to attract startups, align on expectations by fostering honest and collaborative communication, and set up dedicated units attending to startup collaboration.

Building and working within ecosystems naturally encompasses much more than large organizations working with disruptive startups. In a panel discussion, Bill Fischer highlighted that the most considerable change within the innovation sphere, as opposed to a decade or two ago, is that innovation is no longer predominantly an inside-out phenomenon. Having people change perspectives to embrace outside-in innovation is by no means an easy feat, especially as a lot of people have built experiences and capabilities profoundly based on a technology-push mindset.

In one presentation, Pierre Orlewski, Open Innovation Manager EMEA at Goodyear, spoke about how the shift from internal to external development required the company to reprogram its DNA from the not-invented-here syndrome to that of proudly-found-elsewhere.

Orlewski noted that it’s impossible to be open externally before you are able to break down internal silos. In fact, developing internal cross-functional relationships can be much harder than developing local, external relations — it is nevertheless a critical prerequisite to succeed. A vital task of the company’s open innovation managers is therefore to break silos and ease cross-functional interaction. He further highlighted that open innovation requires an emphasis on establishing relationships and alliances rather than simply focusing on transactional collaborations. Additionally, he advocated putting comprehensive criteria in place to evaluate open innovation opportunities. In Goodyear’s case, the company has come up with a technology in-boarding scorecard, which makes it possible for the company to move quickly from the initial monitoring stage to collaboration.

In the fifth Summit theme, the following was covered:

In a preceding article, drawn up by the Innovation Roundtable? Research Team, we touched on a few lessons learned from the Summit on design thinking. In particular, it stood out to us how design thinking is not considered just another process for innovation, it is used to facilitate the development of a customer-centric culture.

With design thinking being all about collaborative creativity, companies should distance themselves from considering it a siloed activity. Conducting awareness sessions, having design thinking ambassadors in various departments, and communicating cross-functional success stories were, from multiple sources, considered best practice ways of developing a human-centric mindset across an organization.

Speaking on customer-centricity, Daniel Cho, Head of Global Pricing & Competitive Portfolio Analytics at Philips, explained that he sees too many companies that bet on continuous improvement. One example is the shaving industry that for many years has competed on the “classic numbers game” by continuously adding more blades to razors, He, nevertheless, emphasized that customers are so spoiled for choice today that they don’t want to pay for mere incremental improvements. They are crying out for products that help solve pain points.

72% of all products don’t meet their revenue targets. One of the most significant reasons for this, according to Cho, owes to the fact that companies, in attempts to develop products that satisfy close to everyone, create products so complex that they become difficult to use. Companies need to resist the temptation of solving the pain points of several segments at once. To cash in on innovation, it’s vital to initially make a targeted decision on which segment to go for.

Based on such segmentation, companies should pick a problem to be solved, and the value proposition needs to be directly linked to this problem. When this comes to pass, it’s possible to shift from cost-based pricing to value-based pricing — predicating price on the perceived value to customers. 

For value-based pricing to work, it’s integral to communicate the exact value proposed to customers. This drives their willingness to pay the price a company has decided on.

Cho explained that to capture customer needs, the following questions come in handy:

The last Summit theme covered the following topics:

85% of C-suite executives say that their people are bad at problem diagnosis. When problems aren’t diagnosed correctly, innovation teams tend to spend a lot of time barking up the wrong tree — building on solutions that aren’t necessarily going to go anywhere.

Thomas Wedell-Wedellsborg, Author of “Innovation as Usual”, voiced that the problem with many of today’s problem-diagnosis frameworks is that people find themselves digging deeper into one problem space, rather than reaching another diagnosis. This is a notable problem, as the most innovative and creative solutions tend to derive from coming up with an alternative definition of the problem, as opposed to the most obvious one.

He advocated a nimbler approach to diagnosing problems than other frameworks: reframing. The point of reframing is not to find the one “real” problem. Problems are typically multi-causal and can be addressed in a multitude of ways. Being able to reframe problems during the front end of innovation enables teams to assess whether there is a better problem to be solved.

Diversity is one of the most powerful components in reframing problems. Within siloed teams, there may be the risk that everyone perceives similar realities. People from the outside may on the contrary have the ability to observe problems in a more unorthodox manner.

This approach to problem diagnosis doesn’t imply that you have to generate 500 different diagnoses and evaluate every single one. Its core power is primarily to break out from the first frame, so that people don’t get stuck there.

In facilitating an exercise at the Summit, where participants were asked to reframe a problem they have struggled with for a while, Wedell-Wedellsborg provided four techniques to help them along:

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