By Peter Merrill
(originally published in Quality Progress)
Because this month's Quality Progress theme focuses on quality basics, it's worthwhile to revisit the innovation management principles. I first wrote about these principles in January 2017 after they were drafted at the outset of writing the ISO 56000 Innovation Management series of standards.
When we originally drafted the principles, we realized that while we might be able to outline them at the start of the standards project, we would need to go through the experience of developing the management system to be able to fully develop the principles. After we completed writing ISO 56002 Innovation management--Innovation management system--Guidance, we returned to the draft principles in 2019 and refined them with the experience from writing the standard.
There is widespread agreement that principles develop from experience. I was on the task force that redrafted the principles, and I can offer you the benefit of our experience. The eight principles are detailed in ISO 56000 and are briefly referenced in ISO 56002.
1. Realization of value.
"Value, financial or nonfinancial, is realized from the deployment, adoption, and impact of new or changed solutions for interested parties."
It's important to remember the difference in definition between "innovation" and "invention." Using the definition in ISO 56000, innovation is "a new or changed entity realizing or redistributing value," whereas an invention is simply "a new entity."
Good innovations solve problems, and they have a social and emotional aspect, as well as a financial impact. Circumstances often matter more than product or service attributes. We must understand people's emotions and what workarounds people have. We all hate the ER. That led to minute clinics or walk-in clinics. You can see value can be quite intangible. We ask what experiences people want to avoid. We must understand people's goals and what they want to achieve. Providing new value or benefit creates a competitive advantage and gives organizations longevity.
Leadership is required to make all this happen, which leads to future-focused leaders.
2. Future-focused leaders.
"Leaders at all levels, driven by curiosity and courage, challenge the status quo by building an inspiring vision and purpose, and by continuously engaging people tomachieve those aims."
In the early 1900s, the always-curious Henry Ford was searching for a solution for mass production. He found one when he toured a meat factory (he watched meat being transported between workstations by hanging it on hooks). For decades after that, car components hanging on hooks moved between workstations at Ford's factories. When Ford stopped being curious, General Motors took his business.
Challenging the status quo balances current customer focus with future opportunities and leads to the "future focus" of the principle. Innovation leaders clearly must be risk takers, but risk is calculated and based on knowledge. The innovation leader must pay close attention to culture and engage people by having an open mind, drawing on collective knowledge and being open to change. They set direction.
3. Strategic direction.
"The direction for innovation activities is based on aligned and shared objectives and a relevant ambition level, supported by the necessary people and other resources."
Notice the introduction of the term "ambition level". Stretch goals are essential, and remember the previous principle pointing to challenging the status quo.
When I consulted with IBM in the mid-1990s, IBM bought Lotus Notes, a software company that had developed an early version of email and electronic calendars. Company strategists saw the internet as a major force of the future, although at the time, few people outside universities used email. IBM saw the development of mobile handsets becoming a trend, but stayed away from hardware, which it saw as a future commodity.
The innovation strategy must be aligned with the entire organization's strategy. The leadership team narrows the focus as an initiative progresses, and the strategy will change as new knowledge emerges.
4. Culture.
"Shared values, beliefs and behaviors, supporting openness to change, risk taking and collaboration, enable the coexistence of creativity and effective execution."
You are starting to get a sense of the behaviors and attitudes needed for innovation, which leads to one of the biggest differentiators for an innovative organization. Innovation culture is complex and challenging, and leaders have a prime responsibility to develop culture. The coexistence of creativity and execution is critical. For innovation management, creative behaviors enable the creation of new ideas, while quality management focuses on delivery. We need both.
Within a creative culture, exploration, collaboration and experimentation are essential behaviors. Experimentation comes as a result of willingness to take risks and allowing failure to learn. Risk taking is a major aspect of a creative culture, and some of the most highly talented innovators have had their share of failures. Do you remember Apple's MobileMe, Google Glass and the Amazon Fire Phone? An execution culture, on the other hand, has lean processes, along with the speed of delivery, which comes from a quality management system.
5. Exploiting insights.
"A diverse range of internal and external sources are used to systematically build insightful knowledge, to exploit stated and unstated needs."
So far, the principles have largely been about planning for innovation. We now get into the "doing." The fuel of innovation is knowledge. This principle is about capturing knowledge externally and internally to find unmet needs and provide solutions. This requires a systematic approach, drawing on wide sources of knowledge. This also requires forward thinking about future needs.
When IBM bought Lotus, it was buying knowledge acquisition abilities. Hire people for their curiosity. These are the people who will gain new knowledge and insights. Google does this through questioning to test people's desire to learn. They want people who will ask questions, explore and collaborate.
Good innovators always look outside for opportunities. Each potential solution needs its risks calculated, and solutions must be prioritized for feasibility. But if you think of an idea or solution, it is likely someone else has the same idea. We must move with speed.
6. Managing uncertainty.
"Uncertainties and risks are evaluated, leveraged and then managed by learning from systematic experimentation and iterative processes within a portfolio of opportunities."
We discover that most of what we do in the innovation world is shrouded in uncertainty. We make assumptions, test assumptions to reduce risk and move closer to solutions. Apple was responsible for the failed Newton tablet, and Amazon with its botched Fire Phone. At the time, it was "too little, too late," but they were big learning experiences.
A portfolio of opportunities driving experimentation enables uncertainties to be managed. As the initiative advances, new knowledge reduces uncertainty and clear criteria must be in place to stop an initiative when the required return on investment cannot be achieved. Startups often do this badly because of their emotional attachment to an idea, and often they do not manage money well. There will be a key decision -- pivot or persevere -- that leads to the next principle.
7. Adaptability.
"Changes in the context of the organization are addressed by timely adaptation of structures, processes, competences and value realization models to maximize innovation capabilities."
As we gain more knowledge and generate new ideas, the direction we set earlier will change. This often will mean rapid change, which is a fundamental capability for an innovative organization. It is vital to be aware of potential external changes.
In this context, one of my favorite quotes comes from Sun Tzu's The Art of War: "No battle plan ever survives first contact with the enemy." This is especially true when it comes to innovation strategy. The art of the pivot is essential, and adaptability is often referred to as agility.
In 2001, a group of skiers, united in their frustration with the bureaucracy of business, declared the "Agile Manifesto," which contained the principle, "Welcome changing requirements, even late in development, for the customer's competitive advantage."4 Adaptability also leads to a more efficient use of resources and enables more rapid scaling after it's in the market. It may be necessary to restructure an organization to enable agility, and in an established organization, restructuring is likely.
8. Systems approach.
"Innovation management is based on a systems approach with interrelated and interacting elements, and regular performance evaluation and improvements of the system."
The elements of the system are people, process and technology, and people drive the system. While the structures and processes of organizations will change as new insights are uncovered, we must continue to operate as a system.
This final principle means the organization depends on processes being aligned toward a common purpose. Interaction between elements and managing these elements as a system enables knowledge flow and organizational learning.
Organizations that are serial innovators have a systems approach to innovation. Metrics evaluate performance and enable the evaluation of innovation impact. They continuously generate new ideas and can stop those that don't meet their criteria. They develop new offerings ahead of the market. They attract the best talent in design and marketing. They attract long-term investors.
Tata Consulting saw technology moving to the cloud and business services being delivered online. As a result, it closed its call centers. Netflix developed internet movies in 2007 well before the internet had the capability to deliver. It knew broadband was coming.
System thinking is not easy to understand, and leaders especially must acquire this understanding.
Hopefully this quick walk-through of innovation management principles reminds you of the basic thinking and essential practices that a good innovator should follow.