Be A Good Corporate Parent!

One of the hallmarks of good parenting is to desire that your children live a better life than you have lived, even if that life has been a good one; you want them to be happier, better educated, more successful, or at least you should.  However, sometimes parenting falls on one side or the other of this ideal: some parents say “if it was good enough for me, it’s good enough for my kids”. The other side of this is personified by the many, many children of rich, famous, wildly successful people who, all too often, are given so much that they lose any impetus to succeed on their own terms, but instead coast along for a lifetime on a famous name or a trust fund. Getting the balance just right is a never ending challenge, and that balance is just as important when it comes to corporate succession planning.

Let’s make the reasonable assumption that those in charge of corporate succession planning intend that the company do better in the future than it has in the past, however successful the past has been. Let’s further assume that the growing importance of innovation to corporate growth (and indeed survival) is understood, at least theoretically within the ranks of executive. If both these assumptions are true, then it would seem to be a no-brainer that most corporate succession planning should place innovation – the ability to inspire it, recognize it and manage it – front and center. I wonder if this is what’s actually happening though.

To return to the parenting analogy, if you’re like Apple executives and have a Steve Jobs at the helm, do you have the same problems as the parents of the wayward children of the rich and famous, whose children either have no motivation to be successful in their own right, or who find the thought of trying to compete against their parent’s oversized myth so overwhelming that they don’t even try? What about the other side of the parenting analogy? It is probably the more common scenario given that most companies don’t have a Steve Jobs-like leader. Do most executives believe that the methods used to spot and nurture their own talents are good enough for the next generation of leaders as well?

Currently, when deciding who this next generation of leaders will be, executives look for high performance and high potential, but there may need to be a change in perspective when considering the components of both performance and potential. Too often, a review of past performance only uses success as a metric, but failure is an important component of innovation, “fail early, fail often”. Is there a positive metric around failure when assessing performance? When considering potential, how much weight is creative potential given, or at least the potential to nurture other people’s creativity?

Innovation must begin to take front and center in most corporations’ succession planning; to do otherwise is to not do a good job of parenting the next generation of executives.

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Companies Need All The Innovation They Can Get

In a recent Bloomberg article entitled “Why Companies Need Less Innovation”   Pat Lencioni makes the case that companies should not be asking employees to be innovators.  He goes as far as to say that leaders should not even be open to more ideas from their employees and that only a few people really need to innovative.  He suggests that rank and file employees should not try to innovate but simply “do their jobs and satisfy customers in the most effective and charismatic way possible, but within the bounds of sound business principles.”

Lencioni has a far too limiting view of innovation.  Let’s start with the definition of innovation itself.  While this is widely debated, I always fall back to the simple dictionary definition:

Something new or different introduced

Too many innovation writers, try to complicate a simple concept.  Innovation is simply doing something new.  It doesn’t have to be revolutionary or disruptive to be an innovation, an innovation can simply be a new way of doing something.  PwC is a professional services firm and our goal is to deliver value to our clients.  The goal of our innovation program is to encourage all 30,000 of our people to come to work each day and ask themselves the question, “What can I do differently today to deliver more value to my clients?”  The creation of new or additional client value should be the goal of every corporate innovation program.

The value created can be both large and small. Successful innovation programs usually take a portfolio approach to innovation, which nurture both small incremental innovations as well as more dramatic innovations.  Toyota has taken this approach in developing the “Toyota Way” corporate culture.  Toyota claims that their success is the result of thousands upon thousands of small innovations, most of which were created by employees at all levels of the organization.

Other innovation gurus, along with Lencioni, have suggested that it is not productive to have everyone within an organization focus on innovation.  They site many studies which have found that only 10 or 20% of a random population are really interested or talented enough to come up with new valuable ideas or innovations.  Unfortunately I believe experience has shown that it is not easily possible to pre-determine which 10 or 20% are the right people to ask to innovate.  Lencioni’s suggestion that a firm’s leaders “are the keepers of innovation” defies most people’s experiences.  It is rare that a firm’s leaders are the best innovators; the exact skills which enabled them to climb the corporate ladder probably keep them from being the most creative people.

A secondary benefit of encouraging everyone in an organization to think about innovation is the effect on culture.  In many companies, young people learn that their ideas are neither valued nor appreciated and they quickly stop sharing them.  Innovation programs must strive to unwind this behaviour and attempt to create a “Culture of Ideas.”  A Culture of Ideas is one in which ideas are judged on their potential value, not on the salary or staff level of the person who suggested it.  Corporate executives help make this change by communicating that they are interested in ideas from anywhere in the firm.  Innovation programs must set up mechanisms for collecting, evaluating and implementing appropriate ideas in order for this to work.

Anyone within an organization can come up with an innovation which delivers more value to their clients.  Innovation programs must be designed to encourage and capitalize on everyone.

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PwC iPlace – Recognition is Something Special

There is a phrase I once heard – “being part of something special makes you special”- and our approach to recognition celebrates just that, being special.  Innovation at PwC requires the unique talents of our people.  By recognizing how special our people truly are motivates them to participate and contribute to something that is not only special for them, but also for our firm. Recognizing innovation in a way that is celebrated both individually and collectively has helped us to drive behaviors of sharing, collaboration, and brainstorming, which are key to successful innovation.  As such, we developed a multifaceted approach to recognition as a way to not only recognize people individually, but to also recognize their efforts collectively.

Early on when we started mapping out our approach to recognition, we held some focused discussions with our people to hear what truly motivates them to innovate and feel special.  To be honest, we all had our bets…would it be cash or prizes?  Interestingly enough, the overwhelming majority said it was neither, but that professional development and networking opportunities were the real motivators.  Using this information, we devised a recognition program devoted to awarding unique professional development and networking opportunities to our most active participants.

Our three focus areas around recognition include:

Personal Recognition – Be part of the club and get some status. Everyone loves receiving airline and hotel points, so why not receive points for innovating?  We first developed a points program based on participation and activity within PwC iPlace.  Points are awarded based on the contribution of ideas, comments, and votes.  As points accumulate, one can achieve certain status levels – bronze, silver, gold, and platinum.  These levels of achievement provide benefits focused on opportunities for professional development and networking.  Types of benefits include performance notes from leaders, lunches with market and office leaders, participation in leadership innovation meetings, and networking events with other innovators across our firm.

Local Recognition – The office where everyone knows your name. Being recognized by the leadership of one’s practice, office, and local market is key to motivating our people.  Local leadership is provided a quarterly report of active contributors and innovative ideas from people in their market. Office leaders will often recognize these individuals through newsletters distributed to the market, town hall events, and other office related functions.  For example, leaders have invited these innovators to lunches and networking events to share their ideas in a public forum.

National Recognition – Be a leader among peers, everywhere. Being recognized on the national stage is important to creating an innovative culture and motivating participation in the innovation process.  Leadership has taken this as an opportunity to recognize both people and ideas, recognizing that both quantity and quality are an important balance to innovating.  Being that innovation is key enabler to how we continue to deliver value and remain relevant to our clients, people and ideas help us create competitive advantage.  There have been various communications recognizing teams and individuals who have contributed to innovation through sharing their ideas and collaborating on others.  People have been recognized for efforts related to implementing ideas that help drive greater efficiencies and create opportunities.  For example, our Senior Partner has launched three national campaigns for ideas in the past year, and with each campaign, participants receive personal recognition notes and selected ideas are discussed in firm-wide communications and events.

Recognition no matter how big or small makes everyone feel special.  Being special in the eyes of peers and leaders reinforces key behaviors which contribute to innovation.  This approach also encourages new people to participate as they see innovators being recognized for their efforts and want to be part of something special.  We have over 120 people across our firm who achieved an elite innovator status, and the number continues to climb.  From our newest associates to our partners, together these individuals are contributing to something special and making a difference in how we deliver value to our clients and firm.

So how do you make your people feel they are part of something special?  What are some other ways you are recognizing innovation that have proven to be successful within your organization?

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The 3 Tensions of Internal IT Innovation

Internal IT innovation is all about converting ideas, those specifically supported by new technologies, into business value. These innovations often focus on needs such as improved internal processes or alternative and creative ways to support market activities. Four years into leading PwC’s IT innovation efforts, I’ve certainly observed enough of what works and what creates challenge to write a book on the subject.  For this blog posting I’m going to briefly discuss an element of what I’ve experienced. It’s what I will call the 3 tensions of internal IT innovation.

1.  Technology is inherently innovative, so why have an IT innovation team at all?

When I formed our IT innovation team, this was the first question that needed to be answered. It’s a core tension: IT already innovates so don’t create confusion or competition by introducing a separate innovation team. It’s true that by default, deploying technology in an organization usually results in innovation. The existence of that new technology generally brings new capabilities and as a result new value is derived.  However, there is an important characteristic of IT innovation that makes it unique. It is the quality of embarking on an effort when there is a significant chance of failure. Normal, business-dependent projects never kick-off with this premise. It would be unacceptable.  Since IT innovation projects often deal with speculated outcomes and unproven, immature technologies, most of the time you’re spending money with the knowledge that the purpose of the effort has more value beyond successful deployment. If you can get this to work within your existing IT structure, then you’re more progressive than most organizations. In my experience, the separation of the team is essential to strike the right tension. The takeaway here is to get your leadership and participating teams to understand and accept the premise of this tension from the outset.

2.  IT innovation projects fail more often than they succeed creating a negative perception of value.

The previous tension provides the necessary background to this second tension.  Simply stated, if we accept that the value of IT innovation often transcends successful deployment, then we must manage the incorrect assumption that failure is bad. If those writing the checks only measure IT innovation project success by deployment success, then a negative, ultimately destructive, tension will exist.  To strike the right positive tension, I believe IT innovation success must be measured in ways not normally associated with technology projects. By its very nature, IT innovation has many unknown characteristics, for example: will it even work, will people ever use it? By engaging in an IT innovation project we hope to answer these types of questions regardless of the desired outcome. These insights can create competitive advantage and should be used to inform decision-makers and feed into other projects.  To get this tension right, you have to proceed with project success in mind, but balance it with communicating the value of the spin-off insights that result from failure.

3.  Essential IT projects to run the business almost always trump internal IT innovation projects.

There is likely no organization that exists where the available IT supply exceeds the demand. More likely, every IT organization deals with a magnitude more of user needs than they could every meet.  This is why effective IT project governance that results in prioritization is so important. The most valuable projects are given preference which often results in the more discretionary and apt-for-failure IT innovation not meeting the priority list.To address essential business needs while also spending on speculative IT innovation is probably one of the hardest of the tensions to reconcile.

In my experience I’ve seen at least two prominent approaches. The most common is to have a separate budget for IT innovation. This way, they get to operate without the burden of producing elaborate return-on-investment projections and competing with projects that run the business. The challenge is, of course, that every group wants its own dedicated budget and singling out the IT innovation team can cause an organizational backlash that relegates the IT innovation team to the periphery of the action. On the other hand, the benefits if you can make it work are abundantly obvious.

The second approach is to have the IT innovation project proposals go through the standard IT projects governance process.  The premise is that IT innovation project proposals should be subjected to the same evaluation and diligence as every other project and move forward based on relative value. Where do I stand on this?  While a brief response can’t address the deeper discussion here, I believe that you need both approaches but with specific demarcation.  IT innovation teams should have a budget just enough to cover the analysis and feasibility of an effort. Often this is sufficient to glean the insights that make more work unnecessary. However, if money is needed to build a prototype or to run a pilot, then I think it’s reasonable to run the proposal through the IT governance process.  A great internal IT innovation project proposal should sell itself on its merit.  Positive tension in this instance is getting decision makers to carefully balance necessity with speculation.

Let’s be clear, understanding and addressing these three tensions in the right manner will largely depend on your organization. But I’m confident you have had to or will have to address some manner of them. While certainly not an exhaustive list, at least if you can get these three right early on, you have a good foundation for future success.

What has been your experience with these three tensions?

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Spotting the Gorilla in the Room

While attending a company training seminar a couple of years ago, I was part of a group shown a video. The video showed six people – three in white shirts and three in black shirts-passing basketballs around. We were asked to keep a silent count of the number of passes made by the people in white shirts. At the end of the video we were asked what our counts were. We were then asked how many of us had seen the gorilla walk into the frame, stand there, pound his chest and then walk off; along with about half the group, I hadn’t seen the gorilla. Those of us who hadn’t seen the gorilla, didn’t believe it had been there. In fact, showing increasing skepticism, we were convinced that we were the victims of an elaborate prank. We were shown the video again, and the presenters swore it was the same video, and what do you know, a gorilla walked through the scene.

This video turns out to be the “Gorilla Experiment” which, as explained by the creators of the experiment, reveals two things: “that we are missing a lot of what goes on around us, and that we have no idea that we are missing so much.” I think that much the same could be said of innovation within a corporation; often companies are missing what is right in front of them and don’t even realize it. As this article points out, “breakthroughs are less about the act of inventing new things than they are the art of recognizing “happy accidents”.

Now that innovation is the new hot topic, a lot of money is being spent on innovation experts, innovation software, innovation methodology and these all have a lot of value. However, perhaps many companies have everything they need to be more innovative in front of them already; they just need to do a better job of nurturing, recognizing and capitalizing on those “happy accidents”. Because at the end of the day, if a company doesn’t have the internal processes and structures in place to spot the happy accidents already taking place, why will it do a better job recognizing any new, great ideas that it receives through crowdsourcing, open innovation efforts or other methodologies?

There can be all sorts of reasons that the management of a company are missing what goes on around them: silos, poorly structured incentives, a lack of a collaborative culture, to name just a few. Until those underlying issues are addressed, any innovation efforts are unlikely to deliver the desired results. Once those underlying issues are resolved, perhaps everyone will suddenly notice that a gorilla has been standing in the room all along.

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Innovation Horizons

In the book Innovation Tournaments (link), Christian Terwiesch and Karl Ulrich, introduce the concept of innovation horizons.  I have found their three horizons very helpful in thinking about the management of innovation.

What struck me in thinking about this chart is that developing innovations for each horizon requires different approaches and that most companies co-mingle all three types in a single innovation organization.  This may explain why many organizations are not satisfied with the results of their innovation activities, as they are confusing their goals and their approaches to innovation.  I believe that different, and perhaps independent, approaches are needed to create innovations for each Horizon.

Horizon 1 Innovations. These types of innovations are incremental by definition.  The vast majority of innovation projects fall into this category.  This is not surprising since if you ask 100 of your current customers, “How can we improve our product?” probably 90 of them will answer by saying, “Make it better, faster or cheaper.”  There is nothing inherently wrong in pursuing Horizon 1 innovations, since they are exactly the types of innovation which will make your current customers most happy.  They are also the most achievable ones.  Companies need to consider how to best identify and implement Horizon 1 innovations.

A crowd sourcing model which solicits ideas from employees and customers through an idea management system is highly effective for Horizon 1 innovations.  The people most familiar with the needs of the existing customers and deployed technologies are in the best position to identify opportunities for incremental improvements.  The Toyota model of innovation operates this way.  Toyota employees are encouraged to submit their improvement ideas and thousands do.  Toyota claims they have implemented tens of thousands of these innovations over the past decade.  Our own experience here at PwC supports this.  Our idea management system (iPlace) had sourced over 2,000 ideas over the past year from our staff of which over 20% are under consideration for implementation.

Horizon 2 Innovations. According to Terwiesch and Ulrich, Horizon 2 innovations are next generation products serving existing or adjacent markets.  Depending on employees and customers to define new products is probably a risky proposition.  Employees and customers, in general, may not have the time or skills necessary to evaluate new technologies and determine their potential for new product development.  Nor would they have access to the market research and competitive analysis which are a part of any product development process.

There are many formal and informal techniques applicable to the new product development process.  Whether you use brainstorming, detailed market research, or hire an outside product development company is based on the particular situation of your firm.  However, it is important to note, that in most cases, the development of new products (Horizon 2 innovations) is most effective using different techniques from Horizon 1.

Horizon 3 Innovations. These innovations are often described as “breakthrough” innovations, or discontinuities.  They are not directly related to existing markets or technologies, but represent totally new products or services which are not extensions of existing ones.   These are the “out of the box” types of ideas that many business leaders seek.

R&D labs have historically focused on these types of innovations.  There are many successful R&D models but there are some common characteristics.  They often involve both people from within a business with deep experience in the business and researchers with limited specific business experience but deep knowledge of the new technologies.  Successful R&D incorporates failure as a normal event, with the expectation that not every idea or even prototype product will be successful.

Again the key point here is not what specific R&D techniques your firm chooses to apply, but that they are substantially different from the techniques of Horizon 1 or 2 innovations.

Conclusion. Companies need to recognize that they need different approaches, techniques and even management styles for each Innovation Horizon.  It is not necessary to pursue all three types of innovations, but it is necessary to define which Horizon(s) you are focused on, and apply the right techniques for each Horizon.

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PwC iPlace – Six Factors Behind Our Success

It is becoming increasingly important to accelerate innovation by discovering, developing, and implementing ideas that increase the speed of delivering new products and services.  Here at PwC, and as in other organizations, people are bubbling over with ideas and creative ways to deliver more value to clients.  There is a great opportunity with the use of social media to tap into the collective knowledge of people.   We wanted to take advantage of this opportunity and created a way for our people to share, collaborate, and expand on ideas.  As Thomas Edison once said – “There’s a way to do it better—find it.”  And find it we did.

Just one year ago, we launched our firm’s first online idea management platform, PwC iPlace, and provided a way for our people to share ideas and find inspiration in an open and interactive online forum.  As they say, “if you build it they will come”, and boy…did the ideas come.  In just one year – the response has been tremendous as we’ve generated over 2,000 ideas, 10,000 comments, and 40,000 votes.

So why did we have such great success in the first year?  Here are six key factors we think are why:

  1. Leading the way.  Leadership endorsed PwC iPlace right from the beginning – not only through words, but through action. Our US Chairman, Bob Moritz, hosted a firm-wide challenge for ideas around a particular business opportunity on the very first day PwC iPlace launched. We received over 150 ideas in less than 2 weeks, and that was just the beginning.  Bob, along with firm leaders from across our business, leveraged iPlace to solicit ideas.  In this first year, we have now launched over 15 idea challenges focused on creating new products and services, driving greater efficiencies, and developing better business models – just to name a few.  These challenges have driven over 65% of all ideas submitted to date. PwC iPlace would have never been such a success without the support and belief from top leadership.
  2. Simplicity is best.  It was critical for the overall PwC iPlace experience to be very user friendly and easy to navigate.  After conducting focus groups and interviews, we found the main attraction to be the PwC iPlace’s design simplicity.  This simple approach allows the user to perform one of only three actions – provide an idea, post a comment, or vote.  In our first year over 25% of the firm contributed in one of these three ways.
  3. Meritocracy works.  Taking a meritocratic approach gave everyone a voice by removing the typical barriers of organizational hierarchy (i.e., title, role) and years of experience (i.e., responsibilities).  In PwC iPlace, your only identification is your name – nothing else.  By leveling out the playing field gives everyone an opportunity to participate without hesitation – from new hires to leadership.   The biggest misconception is that participation is driven by our less experienced, younger employees.    We have found that of those who have participated in PwC iPlace – over 55% are from our more experienced Managers, Directors, and Partners.  It is great to see that iPlace has become a place for everyone to share ideas across our firm – irrespective of location, competency, or staff class.  This has created a culture of focusing on the idea, rather then who originated it.
  4. Living up to a promise.  For each idea submitted by an ideator, an implicit social contract promises that a senior leader, along with members of his/her team, will assess and respond to the idea.  This promise is critical for those contributing to the idea since it communicates that the ideas will be seriously considered by the people who can make it happen.  Living up to the promise of assessing and responding to each idea has proven to be more important to the individual than selecting their idea for implementation.
  5. Work the process.  With every idea being evaluated by a member of senior leadership, we had to develop a defined and clear process to manage each idea.  Leadership and their management teams work to triage and assess each idea within 30 days of submission.  Timely assessment is important not only to the person with the idea, but also for our firm’s ability to bring high-impact, high-value ideas to reality.  This process is carefully managed in order to accelerate innovation and collaborate with our people.
  6. Transparency is key.  Providing people with the status of their idea helps them understand the evaluation process, and gives them an appreciation for how companies make business decisions.  People do not necessarily care if their idea is implemented, but they do want to understand how their idea was considered and why the resulting decisions were made.  Sharing the reason for why an idea will not be implemented has served to be just as important as sharing the reason for why an idea is implemented.

These six key factors were critical to the success of our first year with PwC iPlace.  We have found that by involving everyone in the process and by creating a way to share, collaborate, and evaluate ideas, one can accelerate innovation by implementing the most valuable ideas.  Just in the first year alone, we were able to implement over 50 ideas and are now working towards implementing over 200 more!!  These ideas are inspiring new ways of thinking, developing new approaches, creating ways to be more efficient and effective, and providing enhanced services in the marketplace.

We have tapped into the power of 30,000 people in an effort to deliver more value to our clients, communities, and firm.  So what are you doing to inspire your people to contribute their ideas and creativity?  How are you tapping into their collective knowledge to accelerate innovation?

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Innovate, Or Go Home

How much new value did you provide your organization today? Did you suggest creative ways to go about a common task that resulted in better outcomes? Are your work behaviors keeping you relevant? If these questions are not top of mind for you yet, they will be. Your future gainful employment may depend on being able to answer them with resounding positivity. Intrigued? Read on.

Much of the discourse on innovation has been focused on that which takes place within the enterprise. Innovation as a personal behavior has not nearly received the attention it deserves. For one thing, it is imminently relevant and personal to every American and not simply an abstract concept that they can mostly only observe and barely influence. In previous blogs I’ve argued that enterprise innovation is increasingly essential, but I’ve not addressed the most intimate of all innovation: that of personal innovation.

So what is personal innovation? It contains much of the same elements of organizational innovation: qualities such as converting ideas into value; creating new ways of doing things; and creative problem solving. It’s about taking these concepts and applying them in a personal, individual manner. Testing personal innovation is about asking these types of questions and answering in a position fashion: Do I add new and increasingly more value each day? Do I use creative thinking to solve complex problems? Am I perceived by others as an innovator in how I go about my work? And one of my favorites: Am I looking for ways to regularly reinvent and brand myself consistent with the needs of my organization or the marketplace in general?

The author Daniel Pink (link) argues convincingly that the future of employment in American will increasingly rely on qualitative right-brained thinking.  That is, thinking that is highly creative in nature and not that of the left-brain which is rooted in repetitive, process-driven activities. The premise is that left-brained work is ripe for outsourcing since it can be easily replicated outside of the U.S. Right-brained activities on the other hand; tasks such as creative problem solving and idea generation are difficult to package and ship offshore and therefore hold the key to gainful employment in the long-term.

Those in left-brained work must consider whether an evolution to right-brained work makes sense.  In our new business environment reality, personal innovation becomes paramount. If you aren’t creating new value, if you aren’t reinventing yourself on a regular basis, and if you’re not being creative in how you approach problems, you are certainly increasing the possibility that you may become irrelevant. And if you’re irrelevant you might as well go home. And that, my readers, is my point; future success in our post-industrial society will rely on each of us innovating as a core behavior. Therefore, it’s completely possible that If you’re not innovating, you might as well do yourself a favor and go home.

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Set Your Future Free

As the global economic crisis forces businesses to operate leaner, competition continues to accelerate at lightning speed. Simultaneously, consumers are clampingdown on discretionary spending and demanding more value and options in the purchases they make. Innovation management—or finding and realizing new sources of value—is key to helping businesses keep up with this constantly changing economic and competitive landscape.

A transformation that began quietly at leading-edge organizations promises to revolutionize the way companies develop and realize the benefits of innovation as a corporate competency. This transformation—using collaborative, Web-based technology to reach the “Long Tail” of innovation across and beyond an organization—not only changes the way businesses innovate, but also recasts IT from a supporting role to a strategic one.

In his article “The Long Tail,” Chris Anderson, editor-in-chief of Wired magazine, describes the potential of great profitability existing not in the head of the demand curve, but in its Long Tail.1 The Long Tail concept asserts the benefits of offering a large selection of hard-to-find items to a broad base of niche customers, as opposed to mass marketing the most popular items to the mainstream consumer. Amazon, eBay, and Google have all based their business models on the Long Tails of their chosen markets.

Leading companies are starting to realize that the concept of the Long Tail can be applied to create an open innovation model that delivers new sources of competitive advantage. With innovation, the Long Tail is a source for ideas or enhancements that bring incremental benefits instead of the next great blockbuster breakthrough. Over time, these incremental innovations can add substantial value and create a managed platform for sources of sustainable innovation. Innovation’s Long Tail is found not in corporate research and development (R&D) labs, but in the untapped knowledge that resides within a company’s employees and its customer and partner base. For most companies, these sources of inspiration, ideas, and insights are an untapped wellspring of continual improvement and sustainable competitive advantage.

But unlike other strategic transformations that came before, this aspect of innovation management is entirely dependent on IT. Why? For years, ideas for incremental improvements largely sat dormant in the Long Tail, where they were smothered under too much institutional weight. The technology that is available today can set these innovations free. This technology is the conduit that enables companies to reach the Long Tail through collaborative, social media dialogues. Without IT and these technology tools, businesses cannot connect with the Long Tail efficiently, if at all. Collaborative technology is catapulting innovation management to the forefront of modern business. It offers an unprecedented opportunity for CIOs to have a hand in shaping their companies’ future and forever changing their role and position to that of a value creator.

The question isn’t whether organizations should leverage the technology that delivers today’s innovation management models, but how. IT, as the owner of the engine behind innovation, must emerge as the leader. With careful thought, planning, and ingenuity, IT can help businesses move from a closed innovation model to an open one, playing a pivotal role in capturing an increasingly elusive competitive advantage.

To download the full position paper, click here.

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Can Cost-Based Innovation Help Solve Our Debt Crisis?

Each of us are painfully aware of the new economic reality in which we find ourselves: national, state, and local government debt is skyrocketing. Simply put, it costs a lot more to provide and maintain government services than is taken in through taxes and other sources of revenue and thus we are forced to borrow to cover the difference. Every commentator on this subject offers essentially only three near-term solutions to the problem: raise taxes (there’s also a good argument for lowering taxes), cut services and programs, and reduce the civil service payroll.  And while all of these have historically played an important role in some form of debt remediation, I’m struck by the absence of the role of innovation in this national discourse. I’m not talking about entrepreneurial innovation which of course is a considerable generator of income and taxes; I’m talking specifically about cost-based innovation.

Cost-based innovation is all about applying ideas to reducing the cost of a product or service while still providing a similar or acceptable outcome. For example, during the great recession businesses didn’t stop having regional and national meetings (although they had less), they did them differently. Instead of flying all participants to a location and paying for the transportation, lodging, and food costs, they had participants attend the meetings virtually (more than ever, cost-based innovation often relies heavily on technology innovation). The outcome resulted not just in considerably lower meeting costs, but staff enjoyed the convenience of attending from their office, and businesses could claim an attendant reduction to their carbon footprint.

States are struggling with the costs of critical services such as healthcare, education, fire services, welfare programs, and infrastructure upkeep. With a public increasingly opposed to tax increases (I often remind my friends that when America was booming in the 1950’s, the highest tax rate was over 90%), governments have been reduced to eliminating services, programs and cutting payrolls (might there be higher unanticipated costs in the long run as a result?). Okay, so it may be prudent to cancel some nonessential programs. In many cases that’s the right thing to do even when the economy is good! However, instead of such radical measures, where possible, could we ask some probing questions: can the service be provided differently? How can we approach the problem from an entirely different perspective? Cost-based innovation is used in business all the time where it is often applied as a matter of survival. Shouldn’t the same principles apply to government?

Let’s assume most of our politicians are bright and well-intentioned individuals and let’s assume that they largely hire competent and energetic teams. Even these great leaders and teams may not have all the solutions. For this I propose that they ask the electorate for ideas. This is called open innovation. Granted, many governments are experimenting with this approach, but it remains as yet a largely untapped strategy. To solve the BP oil spill, people from all over the country have been submitting thousands of creative ideas. We are increasingly seeing business after business tap into their customers for ideas on improving and creating new products and services. This combination of cost, open, and technology innovation offers great potential to help solve our debt crisis. And don’t stop there; let’s use this approach to solve lots of problems. For every problem that our country or state has, I’m willing to bet people have good ideas to address them.

The problems we face and those we anticipate in the future will not be solved by business-as-usual. Regardless of political persuasion, all of us and our elected officials are going to have to do things differently. And doing things differently is what innovation is all about.

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