Medium 9781576754955

Driving Growth Through Innovation

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You’ve read creativity books before, but innovation, as bestselling author Robert B. Tucker explains in this groundbreaking book, is much, much more: it is bringing new ideas to life—to drive growth, profitiablity and competitive advantage. Innovation is fast becoming the critical business skill of the 21st century.
Driving Growth Through Innovation will take you behind the scenes to learn the winning methods behind some of the most exciting breakthroughs of our time. You will find out how innovators at Colgate-Palmolive brainstormed a product—Colgate Total—that unseated Crest to become the world’s leading toothpaste brand. Learn how Citigroup, the world’s largest financial services company, has used its global innovation initiative to generate fifteen to twenty percent of their revenue from products that have been introduced in the previous two years. Witness a highly unconventional, even controversial, focus group that Daimler Chrysler used to design the breakthrough PT Cruiser. Get the true story of how developers at Maytag used their experiences with designing the revolutionary Neptune washer to jumpstart growth in a mature market. And how Dana Corporation consistently elicits two ideas per month per employee with a stunning eighty percent implementation rate.
This second edition has been revised and updated throughout and includes a self-assessment instrument so that readers can evaluate the innovation culture and practices of their organizations, as well as a discussion of the newly emerging position of chief innovation officer.

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CHAPTER 1: What It Takes to Drive Growth

ePub

The old Borg-Warner would have said “you can’t
organize the innovation process, that’s impossible.“ The
new Borg-Warner says “we have a process for everything
else, let’s have one for innovation.”

Simon Spencer, Borg-Warner’s first
Innovation Champion

How will you drive growth in your company? That’s really the key question, is it not? Of course, your company is growing—most firms today are. The challenge is that there’s a gap between the rate of growth they’ve been achieving and the rate of growth they want and need to achieve to remain competitive.

A Corporate Strategy Board study reveals how few firms are growing at rates uncommon in their industry—and sustaining that growth—over time. Researchers analyzed 3,700 companies with half a billion dollars or more in annual revenues over a seven-year period. Of these, only 3-3 percent showed consistently profitable top- and bottom-line growth and shareholder returns. Result: fewer than 21 of the firms (in other words, less than one percent) 14sustained this growth over the past two decades. These 21 companies didn’t just grow top-line revenue; they also outperformed the Standard & Poor’s index during the same period, with a 26 percent compound annual market cap growth versus 13 percent for average S&P companies.

 

CHAPTER 2: Leading Innovation

ePub

Proctor & Gamble wasn’t a fun place to work in the early part of this decade. The company was struggling on all fronts. Growth had stalled, its brands were aging, and once-loyal customers were fleeing to lower-priced store brands. The business press was full of articles about how P&G’s leadership and stodgy culture were to blame. Analysts who covered the company for Wall Street seemed to relish pointing out that Procter hadn’t had a breakthrough product since 1963, when Head & Shoulders shampoo was introduced, and couldn’t seem to innovate no matter how hard it tried. In 2000, P&G’s board of directors ousted the CEO and replaced him with a company insider who was determined to get the company growing again—fast.

A.G. Lafley’s weapon of choice: innovation on all fronts. He shifted attention from commodity businesses in food and beverage, to higher-growth, higher-margin, lower-asset-intensive businesses such as health care, personal care, and beauty. He made a major commitment to accelerating growth in developing markets. And he put the word out that he wanted everyone to be involved in innovation. He began conducting annual innovation reviews in each business unit, and set stretch goals for internally generated growth. He and his senior team began giving out modest rewards in the form of stock options for creative ideas, and celebrated innovators and their achievements on P&G’s internal website.

 

CHAPTER 3: Cultivating the Culture

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I don’t want any “yes men” in this organization.
I want people to speak their minds,
even if it does cost them their jobs.

—Sam Goldwyn

Changing a company’s culture is not an easy task. Yet the good news is that with the right leadership, you can create a culture of innovation and growth. This chapter will provide you with the key factors to focus on and approaches you can use to develop a comprehensive strategy to align your culture with your innovation objectives.

Let’s start with a much-needed definition.

Culture refers to an organization’s values, beliefs, and behaviors. It is transmitted through subtle cues, through employees sharing their interpretations of events, and largely through the behaviors and attitudes of leaders that signal what is expected.

If an organization values “playing it safe,” making your numbers, and operational excellence, risk-taking is inherently discouraged. If it values 56cohesion, loyalty to the company way ,conformity, and blind obedience to authority, then it devalues their opposites. If it hires people that comfortably “go along to get along,” then it devalues those who are inclined to challenge rules and boundaries. If a culture is “cutthroat, competitive, and secretive,” as the once high-flying Enron has been described after its collapse, it cannot be also humane, collegial, or open.

 

CHAPTER 4: Fortifying the Idea Factory

ePub

If someone in your company has an idea, do they know what to do with it? And does your organization have a structured process in place, perhaps an idea submission portal on your company’s intranet site? Or do you leave it to chance?

InnovationNetwork, the global consortium of innovation consultants and corporate practitioners, surveyed their 8,000 members on this issue. They assumed that because their members were part of the innovation movement, they would hear of interesting programs. Instead, they received few well-defined responses and candid admissions that “my company’s efforts in this regard are woefully lacking.”

“We had some sort of program to solicit ideas,” said one respondent, “but I’m not sure what became of it.”

Despite the explosion of interest in innovation since that survey was conducted, I’m not so sure that things are much different today in most companies. But things certainly are changing in Vanguard firms. They know that without a system that solicits ideas from everybody and simplifies and streamlines the submission and selection process, there are ideas you will never even hear about.

 

CHAPTER 5: Mining the Future

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Making predictions is very difficult,
particularly about the future.

Yogi Berra

What methods do you and your company employ to detect changes that could spell doom—if appropriate action isn’t taken—or boom, if they are? How do you look for “white space” opportunities, those that don’t fall neatly into the purview of present operating units? How satisfied are you with your process for mining the future?

Many firms are tempted to put off rethinking and revamping this part of their innovation strategy. Unless their backs are clearly against the wall, they point to recent quarterly performance and say, “we aren’t doing that badly, just look.” Or “we know we need to improve our processes in that area, but right now we’ve got a lot on our plate that is more pressing.”

Listen to the head of a mid-sized specialty chemical company describe what happened to him.

“We felt we had the [market] niche sewn up because of our strong relationship with a leading customer, a textile manufacturer,” said this CEO. “Then a competitor came out with a less expensive substitute. Their product didn’t do everything ours did, but it did everything our customer needed. 98Within months we had lost the account, and no matter how hard we tried, we couldn’t get back in.“

 

CHAPTER 6: Filling the Idea Funnel

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Invention is by its nature a disorderly process.
You can’t put a Six Sigma process into that area
and say, well, I’m getting behind on invention,
so I’m going to schedule myself for three good
ideas on Wednesday and two on Friday.
That’s not how creativity works.

George Buckley, CEO, 3M Corporation

If you can’t schedule creativity, what can you do to ensure a steady stream of good ideas coming into your funnel? What are leading-edge companies doing to ensure this? These are the issues I’ll cover in this chapter. It turns out that there’s a lot you can do, and a lot you don’t want to try doing, based on the experiences of the Vanguard firms.

While breakthrough ideas can never be hatched on demand, you can create the conditions where an abundance of promising new products, services, process improvements, and strategic initiatives are coming to your attention—and then it’s your responsibility to select the most promising and move them on through the development pipeline. But because so many firms generate ideas haphazardly, just putting an ongoing process in place to keep filling the funnel puts you out ahead. This is no doubt why the Innovation 118Vanguard firms continuously refine and tweak, and sometimes completely rethink and reinvent the way they go about generating ideas.

 

CHAPTER 7: Producing Powerful Products

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People don’t pay for technology. They pay for a solution
to their problem or for something they enjoy.

Dean Kamen, Founder, DEKA Research
and Development Corporation

Last year, consumer-products makers churned out more than 31,000 new products, including multiple varieties of everything from tomato sauce to garbage bags to iPod cases.

Few of these products will survive. And fewer yet will become breakthroughs. The most optimistic estimate is that only one in five launches will succeed; the most pessimistic, one out of 671. Many failures result from basic miscalculations about what customers need. The product is developed for all the wrong reasons. It was the CEO’s pet project. The engineers fell in love with the “really neat” technology and assumed buyers would too.

Among the more egregious examples:

Consumer products makers aren’t alone in introducing such a high percentage of failures. Many firms today, both in the manufacturing and services arenas, struggle with developing new products that drive top- and bottom-line growth. The pressure to produce more new products with shorter time to market intervals and bigger payoffs is enormous. Attempts at product innovation by many companies bring to mind Samuel Johnson’s description of a dog walking on its hind legs. “It is not done well; but you are surprised to find it done at all.”

 

CHAPTER 8: Generating Growth Strategies

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Interesting and innovative ideas do not a business
make. Getting people to pay for innovative and interesting
ideas is what makes a business.

Michael Schrage, Co-director,
MIT Media Lab’s e-Markets Initiative

During 2006, the worst year of Ford Motor Company’s history, chairman Bill Ford sent an email to employees stating that “The business model that sustained us for decades is no longer sufficient to sustain profitability” Ford’s reversal of fortune was swift. The company went from profitable maker of SUVs, automobiles and trucks to losing $13 billion in a single year. Not only were its products out of favor, its business model was suddenly obsolete as well.

The speed with which Ford plummeted into a pool of red ink points to a change brought about by the global economy. No matter how favorable times are right now, somewhere out there, there’s a bullet with your company’s name on it. No business model is sustainable in an age of change, competition and disruption.

Business models now have shelf lives, like loaves of bread at the supermarket. Your customer’s definition of what constitutes “value” is a moving target; it is relative to all other value propositions they are exposed to, and the mind to paraphrase Oliver Wendell Holmes, once stretched by a superior value proposition, never reverts to being satisfied with the old one. Count on yours being imitated, copied, one-upped, attacked, diluted, and commoditized unless you fight back by constantly introducing ways to create new, unique, and exceptional value for the customer, and capture some of that new value for yourself. How to do this in your firm is the subject of this chapter.

 

CHAPTER 9: Selling New Ideas

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I never want to invent anything I can’t sell.
Thomas Edison

Sure, innovation is critical, but
it doesn’t amount to anything unless the
rest of the world does something with it.

Douglas Engelbart, inventor of the computer mouse

An innovation, by its nature, is something different. It requires getting used to. It requires a little “hand holding” to get the user “up and running.” Somebody has to help it “catch on.” And that somebody is the innovator.

Innovation has always been about selling ideas. Innovators throughout history have willingly and ably embraced the need to sell their ideas to a skeptical world.

Thomas Edison didn’t just develop direct current electricity. He trained a team of salespeople to go door-to-door demonstrating the advantages of lighting your home with electric lights. To lessen the consumer’s perceived risk, Edison promised prospective customers that if they weren’t completely satisfied, he would remove the wiring and reinstall kerosene lamps at no charge.

Walter Chrysler was frozen out by General Motors and Ford from exhibiting his maiden car, the Chrysler Six, at the industry’s annual exhibition. Undaunted, he quickly rented the lobby of the New York hotel where most attendees would be staying and exhibited his automobile there, creating even more attention for his launch.

 

CHAPTER 10: Taking Action in Your Firm

ePub

Innovation is ultimately not
an act of intellect but of will

Joseph Schumpeter

Having read this far, it is perhaps safe to assume that you are someone deeply involved in or concerned about the future of your firm. And having read all about what the Innovation Vanguard firms are doing, and having jotted down your own ideas as to how to best develop an innovation process for your firm, you now face a choice—whether you will act on your ideas or whether you’ll let your good intentions lapse.

The choice is what you will do with the ideas you’ve gained from investing your time in reading this book. It could easily be that the forward progress of your firm rests on what you decide to do at this point.

You could chose to file your notes away in a file marked “someday.” But that wouldn’t help you and your firm to address the Growth Gap we talked about in Chapter 1.

Fact is, no business consciously sets out to manage the past, to allow growth to lapse. No leader sets out to let this happen. Instead, it happens gradually. 184The world continues to change. Customers’ needs continue to change. The business keeps on serving up yesterdays ideas… until it’s too late.

 

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