INNOBLOG

On Tuesday, I attended the Front End of Innovation conference in Amsterdam. It was good to see innovation leaders from a wide range of companies in attendance — to me it was a small but important sign of an increasingly stable global economy. 

I provided a few thoughts in the morning, and then heard a fascinating presentation from Patrick O'Riordan — global director of innovation at Anheuser-Busch InBev. Here are some of his lessons for innovators:

Explain strategic objectives in simple terms. AB InBev is the world's largest beer company. Its strategic objectives are to increase SOB (share of beer) and SOT (share of throat). It can achieve these objectives by getting consumers to switch to its products, consume its products in new locations, or attract new consumers. I'm guessing that the simple and immediately memorable language brings great clarity to AB InBev's innovation efforts. Importantly, it clarifies things that InBev won't do, which is an overlooked innovation enabler.

Have defined types of innovation strategies. Patrick described two basic innovation strategies. "Renovations" involve strengthening existing product lines through new marketing campaigns or mild formulation changes. "Innovations" involve completely new products. Patrick noted that you needed both. As he said, "You wouldn't add an extension to your house if your foundation was crumbling."

Again, I bet you most people in AB InBev could recite these strategic choices easily. My experience suggests that clarity about strategic intent helps to spur productive dialogues around innovation.

Have a clear but robust innovation process. AB InBev breaks innovation into a front-end process — which involves consumer discovery work, idea formulation, idea qualification, and so on — and a back-end process. The front-end process doesn't have fixed stage gates given its "fuzzy" and iterative nature. The back-end process is, appropriately, more rigid.

Draw insight from non-obvious places. Patrick showed a slide describing the evolution of the Apple iPod. Clearly Apple isn't in the beverage industry. But the point was that Apple followed a clear platform strategy that mixed line extensions, new product forms, and supporting services, which allowed the company to realize the full potential of the iPod. Patrick described how AB InBev similarly seeks to develop beverage platforms.

I think the message of clarity that comprises AB InBev's innovation efforts is well worth remembering.

• The Promise (and Perils) of Open Collaboration by Andrea Gabor | Strategy + Business

  Article looks to the quality movement for clues as to how open innovation, particularly open collaboration, can find wider adoption and greater success.

• Is This the Light Bulb of the Future? by Eric A. Taub | NYTimes.com's Gadgetwise Blog

  Phillips is the first company to enter the U.S. Department of Energy's $10 million contest to create a viable LED-based alternative to a 60-watt light bulb. Article discusses how the DOE plans to use the contest to come up with a technology that will address the faults of the launch of CFL bulbs.

• InnoCentive: A Market for Ideas | The Economist

  Discusses the initial success of Innocentive's partnership with the charitable Rockefeller Foundation to use Innocentive's approach to help solve problems posted by non-profits working in poor countries.

• Netflix Awards $1 Million Prize and Starts a New Contest by Steve Lohr | NYTimes.com's Bits Blog

  Article details the collaborative nature of the Netflix contest whose goal was to identify technology to better predict movie matches among users: "The way teams came together, especially late in the contest, and the improved results that were achieved suggest that this kind of Internet-enabled approach, known as crowdsourcing, can be applied to complex scientific and business challenges."

• Tips on Innovation & Entrepreneurship From Jeff Bezos by Om Malik | GigaOm blog

  Comments from on innovation an entrepreurship from Amazon's founder during a recent interview, such as "The trick to being an entrepreneur is to know when to be stubborn and when to be flexible: Be stubborn about the vision, but flexible about tactics."

• Innovation Perspectives for August, by multiple authors | Blogging Innovation

  Roundup of blog posts by six authors answering the question, "please describe the importance of innovation strategy to the success of an organization's innovation efforts."

• The 21 Heroes of Data Visualization by Maria Popova | BusinessWeek

  Slide show of interesting and inspiring visualizations of data sets by top designers illustrates the value of pattern-seeking.

• The New, Faster Face of Innovation by By Erik Brynjolfsson and Michael Schrage | MIT Sloan Management Review via Wall Street Journal

  Article on the ramifications of technology that makes innovation initiatives both speedier and cheaper to produce. Will this result in more disruptive innovation or will companies still be tempted to speed up incremental innovations?

   

When making a pitch for your idea be sure to describe how the business will become big and be specific in your ask.

Shark Tank is an adaption of the Japanese television show Dragon’s Den, which gives entrepreneurs the chance to pitch their plans to venture capitalists (“the sharks”) with the goal of securing investments to pursue their ideas.

The show provides useful lessons to not only aspiring entrepreneurs but to any innovator who needs to pitch a new product idea to their bosses for continued exploration.

When we conduct workshops at Innosight we have teams present their ideas in short pitches answering the following questions, much like on the show.

1. What problem are you solving for consumers?
2. What is your idea?
3. What is the business? How will you make money?
4. What specifically are you asking for?

People in our workshops and people on the show do quite well on the first two questions. They have personal stories of how they identified the needs (or Jobs) in the marketplace and have creative and compelling presentations of their ideas (songs, prototypes, samples).

The area where we have seen the biggest room for improvement is in the third area, demonstrating how they will make money and make the business big. The “Sharks” (and your bosses) want to see that there is real interest from customers in the innovation and a clear path to develop a big business. Questions you should be prepared to answer are:

• Do you have sales? How many units have you sold?
• How do you know people are interested in this product?
• Who is the customer? How much do you expect them to pay?
• How many stores are you in? Have you shown this to a retailer who said “I like this, I want to sell this”
• How do you know people will buy that?

The other shortfall is not being specific enough in “the ask”. People who ask for money to build the brand so they can then go to trade shows or retailers do not fare well. Whereas people who ask for money to fulfill production for orders they have in place already do well. Be specific. You need to show how what you’re asking for will help build the business and help make them money.

As you pitch your innovation ideas be sure to describe why the business is compelling and make a specific “ask”.  To see the process in action check out the show (Sundays on ABC at 9pm EDT).

Last week Harvard Business Publishing hosted an audio conference on my forthcoming book, The Silver Lining. The 90-minute discussion included some great dialogue with moderator Angelia Herrin and the audience. There were a handful of questions that I didn't get a chance to answer during the course of the discussion that I thought would be generally interesting to readers here.

Q: Why are "defined processes" considered "innovation killers"?

This question refers to a slide that made the case that many of the perceived advantages of big companies are actually quiet innovation killers. As such, a silver linings of today's tough ties is it scarcity will force companies to do what they should have been doing already.

The basic problem is that sharply defined processes can stymie innovation. ...

Read the rest at Scott's Harvard Management blog.