July 2006 Archives

I'm looking forward to making a keynote speech at the Business & Process Innovation Summit, October 16-19, 2006 in San Diego.

An abstract:

Innovation at the Intersection of Media and Technology David Eckoff Tuesday October 17 - 4:45pm - 5:30pm

David Eckoff will present lessons learned from his experience taking new media and business ideas from early stage to launch and beyond. Learn how to see patterns of innovation; discover how "good enough" products win - and why perfection is the enemy of innovation; understand the challenge of analysis in markets that don't yet exist; and explore Darwin's principle of "survival of the most adaptable." Eckoff will draw on real life examples from his experience deploying a formal innovation initiative in a major media company; innovating in a less structured environment at RealNetworks; and leading at internet speed at Rivals.com.

"Innovation at the Intersection of Media and Technology" is for decision-makers from all types of businesses who desire to transform their company's approach to innovation.

In traditional product development, many ideas are thrown into a pipeline, most are filtered out along the way based in part on fit, and a few eventually become shippable goods.

An article today on News.com talks about "Open Innovation" - an approach in which good ideas that are developed internally by a business - but that don't fit with the company - are monetized through licensing.

How important is the concept of Open Innovation?

"Big companies, they are either going to have to learn from this or they are going to have to die," said Jim Huston, a former Intel Capital executive who's now a managing director for Blueprint Ventures, a Portland, Ore.-based company that helps big companies spin-out ideas that don't fit with their business plans.

Related Link: Open Innovation (Quick MBA)

Just read an article in Forbes titled "Are You and Innovator?", written by HBS professor and author Clayton Christensen.

According to this article, a 2005 survey by the Boston Consulting Group found that 90% of executives believed that their company's growth and success requires true innovation. However, as Christensen notes (and I think most people would agree) driving business growth through true innovation is easier said than done.

What makes it difficult? Christensen says:

The problem isn't bad management, as I explained in The Innovator's Dilemma. In fact, many companies get into trouble precisely because they follow the principles of good management. They listen to their best customers, innovate to meet those customers' needs, charge higher prices, report record profits and miss a transformational change innocently incubating at the fringes of their respective markets.

What to do? Christensen suggests the following:

1. Develop a balanced portfolio with different types of growth strategies.

The goal is to create an innovation portfolio that balances "core-sustaining" investments (better products that a company hopes to sell for higher prices to current customers) with those intended to create new growth businesses.

Christensen notes that when many companies examine their innovation portfolios, they discover that they are out of balance, with the vast majority of their efforts focused on sustaining improvements.

2. Allocate resources to achieve a balanced innovation portfolio.

3. Have a distinct screening and shaping process for different types of opportunities.

At many companies, new proposals must meet certain financial metrics - such as net present value or return on investment - before they're given the green light. This is similar to what I saw when I worked as a financial analyst at IBM - and can help streamline the development and commercialization of sustaining innovations.

However, these traditional financial metrics are often not as useful for disruptive innovation projects that branch away from the core business. Christensen suggests companies should develop a checklist of qualitative measures to which a new product should conform.

Start by looking at previous innovation efforts and assess what worked and what failed. Successful disruptive solutions, for example, might be simpler, do-it-at-home versions of a previously complex product. Often they have low overhead costs and high asset utilization, which allows companies to offer low prices or serve small markets. And in many cases, the pattern you identify can point the way to high-potential opportunities more reliably than financial metrics.

An interesting read in HBR: "The Accidental Innovator". In this Q&A, Robert D. Austin suggets that many innovations are the byproduct of accidents - and that the key is to be prepared for the unexpected.

Examples cited: the microwave oven was conceived when a scientist from Raytheon (where I worked from 1987-1990) noticed a candy bar in his pocket had melted when he was experimenting with a new vacuum tube; saccharin from an accidental chemical spill; and the Daguerre photo process via a shattered thermometer.

But are these innovations really accidental? Austin says:

"The innovation itself can't really be said to be "accidental," even though it involves accident. It takes a considerable capability to see the value in an accident, and to build upon it to create even more value."

Austin put part of his research focus on talking with artists to learn how they approach innovation:

"Artists think they develop a talent for causing good accidents. Equally or perhaps even more important, they believe they cultivate an ability to notice the value in interesting accidents. This is a non-trivial capability. Pasteur called it the "prepared mind." In 1960, Donald Campbell proposed that we think of creativity as "Random variation + Selective Retention." That is, we need two processes, one to generate things we can't think of in advance, and another to figure out which of the things we generate are valuable and are worth keeping and building upon."

What does this mean for the design of an innovation process? Austin concludes:

"If you think that most breakthrough inventions - blockbuster drugs, say - are arrived at through careful, scientific, deductive process, without accident being much involved, then you'd design one kind of innovation process. On the other hand, if you think there is a very significant overlap between accident and important innovations, you'd design the innovation process differently. You might want to design in some "accidents," and you'd want to nurture your capability for "selective retention" - your ability to know what to throw away and what to keep."

Related Link: White Paper: Accident, Intention, and Expectation in Innovation Process