Innovation is clearly a success strategy for businesses in the information economy. Once thought to be the domain of only the creative and gifted, there appear to be some simple rules that encourage innovation.Google Rules
Marissa Mayer is Google's innovation czar. In the June 2006 issue of Business Week's IN-novation quarterly, she lists her nine notions of innovation:
- Ideas come from everywhere and everyone. Encourage them.
- Share everything about innovation projects. Give everyone a chance to add to or comment on the process.
- If you're brilliant, we're hiring. If your company thrives on innovation, you can't afford to pass up talent.
- Give employees a license to pursue their dreams. Employees get one free day a week to work on whatever they want to work on. Half of new Google products come from this time.
- Prototypes vs perfection. Launch early, test small, get feedback, and improve until you converge on the best product.
- Don't BS, use data. Just because someone likes an idea doesn't mean its any good. As Motorola says: In God we trust, all others must bring data.
- Creativity loves restraint. Set boundaries, rules, and deadlines.
- Worry about users and usage, not money. If you provide something simple to use and easy to love (see Google's home page or our QI Macros SPC Software for Excel), the money will follow.
- Don't kill projects-morph them. Just like 3M's failed glue that made Post-it notes possible, there's always a kernel of greatness in a failed project.
Types of Innovation
In the Innovator's Dilemma, Clayton Christensen identifies two types of innovation: sustaining innovations and disruptive innovations. Sustaining innovations like DSL enables phone companies to carry more data over the same line that they carry phone service. Cell phones, however, are a disruptive innovation. Wires cease to be important when you can go wireless. Digital cameras make film cameras obsolete.
In Michael George's book, Fast Innovation, he suggests that every innovation effort has three imperatives:
- Differentiation - delivering a product or service that will touch the heart of the customer
- Speed to market - to gain first mover advantage
- Disruptive innovation - to make your competitors obsolete
If a picture is worth a thousand words, we've found that a good prototype is worth a thousand pictures. Tom Kelly of IDEO
Speed to market and touching the heart of the customer rely on rapid prototyping of the product or service and testing it with customers in small pilot projects, because people are better at reacting to prototypes than they are at coming up with ideas on their own.
Example: When we develop dashboards of performance measures for companies, we iterate several times to converge on the ideal layout for their measurement data. Then we reuse the templates in the QI Macros to create all of their graphs.
Religion of Reuse
Speed to market also depends on what George calls the Religion of Reuse. Toyota reuses 60-80% of the designs and parts in new models of cars. This makes it possible to bring new models to the market in half the time of their competitors. You can too. This kind of information led George to formulate the 80-80-80 rule: 80% reuse will cut lead times by 80% at 80% productivity of the innovators which results in:
- Shorter lead times (50-80%)
- Higher productivity because you can use smaller teams of highly focused individuals
Reuse can cover not just parts, but documents and ideas as well. Keep a lookout for kool ideas. When Taiichi Ohno saw how American supermarkets stocked their shelves, he immediately saw a way to simplify and streamline inventory in Toyota manufacturing plants.
Simplify for Speed
Brooks' law says that adding people to a late project will only make it later, because the communication costs go up exponentially.
George says that to accelerate the innovation process, reduce the number of projects, because you'll free up your critical innovation resources to focus their time on the key projects. One company that did so increased new products by 40% and reduced time to market by 40%.
Innovation isn't about cloning existing products and hanging a new name on them. Between 1996 and 1999 P&G reduced the number of "me too" product SKUs by 20% saving $2 per case or $3 billion annually. They cut the number of Head & Shoulders Shampoo SKUs by 50%, but sales per item doubled.
Measure Your Innovation Rate
As Marissa Mayer suggests, establish measures of innovation:
- Lead time for new products or services
- New products per year
- Revenue from new products per year
- Percent of product from reused components
Here's My Point
Innovation is a mindset. It can be learned. There are some simple ideas like prototyping and the religion of reuse that can be learned and applied immediately. What are you waiting for? Go out there and create the next big thing.