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The Randomness of Corporate Innovation.


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February 20, 2006

The Randomness of Corporate Innovation.

Bruce Nussbaum

The big consulting firms, such as Deloitte, McKinsey, BCG and Mercer, are doing more and more in the innovation and design space. So far, I still hear complaints from top corporate managers that what they mostly get from their consultants is analysis presented through heavy "decks" and books that sit on their desks with few actionable takeaways (sorry for the jargon) and precious little operationalizable advice (more jargon). Managers feel they need to move fast in innovation and they can't act quickly off the information the big consulting firms are providing.

True enough. Yet the analysis from consultants is often first rate and worth noting. Take Deloitte's research--Gambling with the House's Money: The Randomness of Corporate Innovation, for example. Deloitte had a recent webcast in which it presented a new survey that showed that more than half of all big, game-changing innovations inside big companies take place outside the formal, in-house development procedure for creating new products and services.

Here's a quote: "The most effective innovations are the result of formal product development teams in less than 50 percent of cases. The rest of the time, effective innovations stem from rogue inventors or "under the radar" skunk works."

Here's another quote: "For all the effort that companies pour into establishing a capability for repeatable innovation, they have precious little to show for it."

The Deloitte study says that innovative ideas are denied funding for three main reasons: they don't show sufficient profitability down the road, they are not consistent with existing core competencies and they are not aligned with current strategy.

Kind of breaks your heart to read these survey results, doesn't it? So what to do? Create informal skunk works inside companies and allow them to do their thing? Reshape formal innovation methodologies to increase effectiveness and productivity? Both?

Yep. Both. And try and remember that incremental innovation in the things you already do well will not meet new unment consumer needs and make you vulnerable to competitors who do.

07:07 PM

innovation management

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Bruce,

This is just Clayton Christensen's classic "Innovator's Dilemma" playing out here.

See Geoffrey Moore's "Dealing with Darwin" for how incumbant's can respond: http://www.dealingwithdarwin.com

-Doug Turner

skype: dduuggllaa

Posted by: Douglass Turner at February 21, 2006 12:57 AM

I'm not distrubed by these findings: they just articulate what everyone knows. Innovation and creativity are inherently random and wasteful.

Many companies institutionalise this knowledge: they have skunkworks built into them, with gatekeepers who decide when and how to productise which ideas that emerge from them.

Speaking of random design, ever get the feeling that cutting-edge design is often just a serendipitous variation of a known formula?

Check out www.genometri.com

Posted by: Parth Vaishnav at February 21, 2006 01:50 PM

Let me ask this in return: how will you fare if you were let loose in the pacific ocean with no knowledge of swimming?

I think that there is another way to look at the whole problem, which is that given our lack of clear understanding of Innovation as a discipline, as a business process and as a practice, it is amazing that even 40% of the companies achieve success through their innovation structures. We do not know how to swim, yet we are managing to stay afloat in the pacific.

See http://extremeinnovation.blogspot.com/

Posted by: amit sharma at February 23, 2006 06:30 AM

I was actually very intrigued and encouraged to read this article and learn of Deloitte's research as I work with an innovation consulting firm (Idea Champions) that has created a brainstorming salon specifically designed as a corporate event away from the office.

We've been around for twenty years and have taken numerous surveys as to where people get their best ideas. As you may have guessed, it's not at the office (think shower, when waking up, exercising). People also stated they had their best ideas while eating or with friends. So we created, "The Breakthrough Cafe," an ideation event with methodologies and tools to help attendees dig deep on an Intention/Issue and end their time with us with a long list of actionable ideas.

Here's the thing--we understand that the context of where you work on your ideas is as important as the process itself. If people can get out of the box (or cubicle) and 'storm' amongst friends in a creative environment, they can take their learning back to their companies once their Cafe is over.

Just a thought.

John C. Havens

www.ideachampions.com

Posted by: John C. Havens at March 31, 2006 10:50 PM


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