Tag Archives: managing innovation

Leadership, Management & The Rising Tide

Wave by Lee Fenyves

Wave by Lee Fenyves

A leading businessman told me something remarkable last week. More than 30% of people are looking for a new job.

He wasn’t talking about those “between jobs”. He meant 30% of people in jobs.

On average around 13% of employees are looking for a new job at any point in time, but that number has jumped nearly 150% in the past year

Among the would-be movers there were 3 reasons for the urge:

1. my company is going nowhere and management has no idea what to do about it;

2. our bosses keep beating us up because they keep getting beaten up by their bosses;

3. my company retrenched so many people that I can’t stand working here any more.

The majority of people want a new job because their managers are too useless, too awful, or have damaged the company too badly to work with them any longer.

There has been a consistent theme in this downturn, summed up wryly by Warren Buffet as: “It’s only when the tide goes out that you learn who’s been swimming naked.”

That vivid mental image applies to more than just banking and derivatives. It sums up how we are recognizing all the bluffers, muddlers and office politicians who have risen to their highest level of incompetence and beyond.

Anyone can succeed in management in the good times when nearly everything seems to make money and there’s enough of it sloshing around to cover up one’s mistakes.

That all changes in a recession.

Managers run to find costs to cut. Real leaders, not having surplus costs, have no need to cut and know that one can’t cost-cut one’s way to market leadership.

Managers feel lost in a crisis because their plans were built on “more of the same” from the good times. Real leaders are used to innovating around what their organization is and does so are used to managing change and creating successful options.

Real leaders know where their costs are going and their profits are coming from. They can defend everything they have without their staff even knowing they had to be defended. Their staff often think the recession isn’t nearly as bad as everyone else is saying.

We all have to do some “management”. It’s the administrative part of any leadership role; part of tracking one’s progress in leading an organization. It’s also the protective equipment we use when running a subsidiary or division of a company with its headquarters and focus elsewhere.

As the “green shoots of recovery” grow taller, leaders will increase their pace of innovation and build even greater advantage; managers will breathe a sigh of relief and go back to what they were doing before the downturn.

The rising tide will lift all the boats again. However, talented people will jump ship to better organizations and wise captains will lead superior crews, in better equipped craft, to greater glory when it does.


Does Your Company “Immune System” Kill New Ideas?

Macrophages & T lymphocytes by Dennis Kunkel

Macrophages & T lymphocytes by Dennis Kunkel

Innovation is almost always the difference between success and failure.

That difference is between increasing share and margins on the one hand and producing at parity in an over-traded market for negligible profits on the other.

The ability of any company, big or small, to innovate is tied to three things.

The company Leadership

The company Culture

The focus of the Business

Leaders who are outward looking, who send clear signals that they expect and reward innovation, are usually rewarded themselves in two ways.

– They attract smarter, more talented creative people who are much better to work with and;

– Those people have better ideas that make the business more successful.

Company Culture which encourages exploration and differing views, which accepts the occasional mistakes and costs that go with those, is more likely to produce significant innovations and to keep doing so.

A Business Focus on looking for significant changes to alter the landscape of the industry and how it addresses the needs of its customers, instead of fine-tuning small changes over a long period, is more likely to pull the rug out from under its competitors.

None of this is a surprise. Nothing written here is new. So why aren’t more companies doing it, especially now?

One reason is a lack of leaders empowered to do their jobs this way. This is a shareholders and supervisory board problem. If your company is hogtied this way abandon hope; abandon ship.

However, the biggest innovation killer is often harder to fix, more sinister and rooted in the very success of a company.

As businesses grow, they start to believe their own bullshit about why they are doing so well. That in turn starts to form an ideological immune system which reacts against anything unexpected from outside The Company Way. The watch-phrase in those organizations goes something like this:

“No, that’s not how we do things around here.”

Think about your company. Is an ideological immune system becoming part of your culture? If it is, fix it fast if empowered to, or abandon ship if you’re not.

The only time a company can ever condone that statement is when a type two hiring error proposes canceling innovation, abandoning reason and copying what the competition did last season.

Are you going Head-To-Head into Oblivion?

In my previous post I said that perfecting what we already know and do merely drives our industry to parity with thin margins.

Innovation is about doing something different to get the opposite result.


Right now we’re all seeing a whole new game where Google and Microsoft are slugging it out on each other’s respective turf. It has the makings of an interesting and long-running drama and the way things are going I’m glad I don’t hold Microsoft stock and I’d think about shorting Google too.

Google pioneered advanced algorithmic search then discovered a pot of gold at the end of the rainbow, called Paid Search.

Microsoft, never known for innovating, had built a very lucrative business on the Windows operating system, which OEMs pay for the privilege of loading onto machines they make and sell. The current incarnation of Windows, Vista, is a bloated, hackable, buggy colossus which chews up hardware resources and user patience. A lesser source of income for Microsoft has been Office. Apart from that pretty much everything Microsoft makes or even touches loses money.

Google Docs

Nobody at Microsoft seemed to pay much attention to Google Docs, essentially a cut-price online competitor to Office. Perhaps they were too busy trying to work out how to build a search engine and make money from it. They even seemed too busy to notice that Google launched their own browser, Chrome. Smart move by Google in case Microsoft does something Balmerian and fiddles with the functionality of Google in a forthcoming IE upgrade.


Bing launched to muted applause and when everyone in Redmond was able to have a look around and take in the recent developments, they suddenly noticed that Google had announced an operating system – Chrome OS – initially for the hottest, trendiest type of computer, the NetBook. Again, the strategic imperative of Google was clear. If Microsoft tweaks Windows 7 to benefit Bing and inhibit Google a long, drawn-out court process is not going to help Google in the short term. With Chrome OS it was suddenly all too clear that Google had started playing on Microsoft’s turf while Microsoft was trying to learn how to play on Google’s turf. The shock was powerful and the reaction dramatic.

Chrome OS

Of course Microsoft is not the only one who should worry about Chrome. As Nitrozac and Snaggy put it so well in The Joy Of Tech, Apple’s OSX is under threat too. When elephants fight the ants get trampled.


Look at the different businesses those two companies have built from. Now consider the imperatives both are working with in going after the other’s territory. To make sense of it and to show you how you can approach innovation in your own business, I’m going to take you back to about the same time that Yahoo lost their way and made Google their search engine.

10 years ago W. Chan Kim and Renée Mauborgne published a superb article in the Harvard Business Review called “Creating New Market Space” which sums this up very well. From there they went on to write their 2004 break-out title “Blue Ocean Strategy”. I’ll leave the bestseller building idioms aside to focus on the insights from their foundation work and use those to show you how to approach innovation for your own organization.

Before I do I need to make one really important point. Innovation is not an individual event. It is very much a team sport and you need to work well with your best and brightest at all levels in your organization to be good at it. Innovation is not the product of an inspired genius in a garret, although Edison loved to paint himself as one while running a large innovation laboratory housing dozens of scientists.

Right, now here are the 6 main ways in which you can seek innovation to build market space for your business.


Head to head competition focuses on your rivals within your defined industry. You will keep improving your profits, reducing your costs, trimming your price until you all land up producing pretty much the same thing at the same price. Look across to substitute industries for ways to develop new market space. Look for unoccupied space which represents a real breakthrough in value for your customers. You may find new markets this way or new methods for your current markets. Google Docs. Chrome. Chrome OS. Android too for that matter. To Google this is not tangential adventurism. It is all linked back to their core business – search and providing maximum information of the maximum quality to the maximum number people.


Most companies going Head to Head focus on their competitive position within their strategic group. A strategic group is made up of companies providing pretty much the same price and performance in what they produce. Look across the other strategic groups in your industry to go and compete with others or create a new strategic segment of your own.

The iPod didn’t merely compete with other MP3 players in taking business away from the Discman and Walkman. Together with iTunes it changed the way people buy music.

Google didn’t stick to competing with Yahoo and whoever was left flailing around in search and online email, they went into being an ASP in the office documents space and into operating systems. That’s quite aside from Google Earth, Picasa and the rest.


Head to Head focuses on providing better service to your current buyer group. Instead, redefine the buyer groups within your industry. Look along the entire chain of purchasers, users and influencers. Look to what each of those really values, then completely re-assess your distribution chain. Question every aspect of the prevailing wisdom in your industry about who can and should be the target customer.

Remember when search was the business every web-user needed and nobody in Yahoo, Alta-Vista, Excite etc could figure out how to make money from? OK, Google came up with paid search. They created buyers. Got the picture?


Head to Head focuses on maximizing the value of product and service offerings within the bounds of your industry. Look across to complimentary products and services that go beyond the bounds of your industry. To get there, pull back and look to the total solution that buyers are looking for around the needs your product or service addresses. This can be something needed which you add in or something undesireable which you engineer out.

Google email pioneered unlimited storage when attachment sizes were getting so big people were deleting old emails in Yahoo and Hotmail to receive new ones. Add Google search and “conversations” and who needs to waste time filing their emails?


Head to Head focuses on improving price/performance in line with the functional-emotional orientation. Create new market space by rethinking the functional-emotional orientation of your industry by looking to add or remove emotional drivers or functionality. Think luxury and fashion with much higher margins. Think lower costs/ lower spec practical alternatives with a bigger volume potential.

OK, just for one example, Google Docs for a few bucks versus the buggy slow-loading, easily-crashing bloatware of Microsoft Office.


Going Head to Head focuses on adapting to external trends as they occur. Companies gradually adapt through incremental change. Innovating jumps a big step further. Look to the future and how current trends will play out in the price/performance offers and market structures that will benefit your customers in the future, then jump to that future stage now. Think of the recorded music industry. Think of the lighter, faster Google Chrome browser and the coming lighter, faster Chrome OS for NetBooks which are low on specs but big on convenience and fashion. Now think Microsoft Windows 7 and IE 8 and all the disasters they will entail for light-spec NetBooks.

It’s easy to make excuses. It’s harder to innovate and get results that put your company ahead of the competition. It’s your choice, but I’ll leave you with one last thought – what if your competition is already changing the game on you? What if you are proudly being Microsoft while somewhere in a garage out there, someone is about to pull a Google on you.

Good luck!

Innovation: Perfection Vs Discovery

NASA discovery: Sun is not perfect sphere

NASA discovery: Sun is not perfect sphere

Innovation is not about perfecting what we already know and do. All that does is bring our industry to parity on thin margins. Innovation is about doing the opposite and getting the opposite result.

Innovation is about going out to discover what we do not know, then applying that to our business opportunities in a way which makes our ideas make more money.

There is a natural tendency among managers in times like these  – credit crunch/financial meltdown/global rip-off/call it what you will – to hunker down and play safe.

Fear makes us back away into what we know, expect and feel comfortable with. Of course that means avoiding risk and, as any first year business student knows, risk and reward are positively correlated. So, right now, all but the brave are headed away from opportunities to increase rewards, profits and their own reputations.

Many of these are the same people who will have panicked and sold their shares and properties in a falling market and will now wait too long to buy back in.

On the other hand there are those who always seem to come out of a downturn better off than ever.

The difference comes down to outlook and how you act on it; to whether we are:



Searching for DISCOVERY

How does those different orientations affect our decisions and the likelihood of a profitable outcome?

Well, when we are judging or feeling judged against PERFECTION we are driven by:

Right and Wrong

Judgement by ourselves and others

Probability and fear of failure

Unwillingness to take risks

Anxiety and ultimately


On the other hand when we are searching for DISCOVERY we are motivated by:

Inquiry and creativity

Acceptance (the ability to get over it and grow)

Learning from successes and mistakes

Willingness to take risks

Excitement and


Companies like Procter & Gamble have an end-to-end innovation process which starts with the DISCOVERY outlook at the ideation stage and phases it out until it is totally replaced with the PERFECTION outlook as the project passes into the implementation stage.

P&G does not stop there. They also have an Open Innovation approach through which actively seek innovators outside the corporation with whom they can partner or from whom they can license or buy innovations outright.


In his book Tribes, Seth Godin wrote that:

“Organizations that destroy the status quo, win.”

To do that you can’t stay hung up on perfecting the known. You need to be discovering the new.

If you’re avoiding taking some of the risks involved you’d probably better pray that your competitors are just as reluctant and just as unambitious.

(With thanks to Michael Charles)