The room was hushed.
The presenter had completed a very thorough presentation of using their tool to develop a robust innovation program, with all the fixings: the goals were clearly set out, the right people were involved at every level of the organization (yep, they had not one but two executive sponsors), the plan to reward the inventors was fully fleshed out and funded, the processes used to capture and review the ideas was set, a plan to funnel those ideas into the product or patent pipeline was nailed, and the marketing plan to communicate everything was detailed out. The program was launched, ran well with only a few minor glitches, and both the prototype and patent pipelines were full of interesting ideas. Employees had enjoyed the program, competing and collaborating with each other to know out some fantastic ideas, which were now sitting, ready to be built in the product pipeline, and invention disclosure forms were being filled out for some of the more far forward thinking ideas, so that they could capture the IP even they weren’t able to build the products immediately. News of the program had leaked into the press, and even analysts were looking at the company in a new light – could they innovate their ways out of the doldrums they seemed to be in.
The snappily dressed presenter finished her presentation and asked “Any questions?”
There was a pause.
Suddenly, a man who had been sitting in the second row, stood up. He looked a bit like a reporter of old: jeans, white shirt, corduroy jacket, maybe a little disheveled. He gave his name and his company name, a large, well respected consumer goods company.
“Great presentation, thanks. But…” he said. Obviously, just buttering her up, because this is what he said next:
“Where is the value?”
I think I may have heard a collective groan from the crowd. The presenter looked nervous. The questioner looked pointedly at the presenter.
And the presenter started on what I call the good old “value of innovation song and dance”
- “Hard to quantify”
- “Intangible benefits”
- “Employee morale”
- “Number of products”
- “Number of patents”
- “Analyst feelings”
And the questioner kept hammering.
- “Waste of money.”
- “Waste of resources”
- “What’s the bottom line?”
- “Where are the revenues?”
- “Where are the savings?”
All of course, leading to the unasked question:
“Why should we innovate, if there is no direct link to the bottom line?”
Shortly, the presenters time ran out, and I’m sure she was thankful to leave the stage. I found her afterwards and told her that she did a pretty good job considering. We had a good discussion over the question – and it seems that yes: for some people, it is a tough question to answer:
So I thought: I love tough questions. Let me take a crack at this one.
Where Do You Want to Go Today?
I love this tagline. I think it was the tagline that Microsoft used back in 1995 when they first launched Windows 95 or some other version of Windows. It’s a simple question: tell me your destination, inferring that with Microsoft Windows, you can get there.
Tell me your destination.
How often do we hit the road without really knowing where we are going to go? Do you get dressed, put your shoes on, leave your house, lock your door, get in your car and just drive? Not very often, right? If we pretty much know where we need to go before we get in the car, why don’t we do the same before we launch innovation programs?
Why do we innovate? There are so many intangible benefits which come out of an innovation program, for some of us who understand how the intangible benefits far outweigh the tangible benefits, we groan when we hear someone talk about the value, or the connection to the bottom line. How can you put a value on innovation? It’s, like the old MasterCard ad, priceless.
Nevertheless, not everyone gets that. My hunch is that most of the decision makers within your organization are a bit more serious when it comes to results: if they spend X on an innovation program, unless it delivers a product which returns 10X or 100X, they aren’t interested.
Of course, its exceptionally difficult to capture all of the benefits of an innovation program which can be translated back to dollars: how do you capture the fact that your employees might spend a bit longer thinking out new ways to optimize your product to save you money, when they feel proud working for an innovative company? Or when they can tell you about minor improvements and new features which could improve the customer experience, leading to more referrals and new business.
Many, many of these paths are untraceable – innovation in general amps up everyone’s game – in so many ways, that you may never be able to say that my X spend brought us back 10X in revenues or 5X in stock price. You may not be able to trace everything.
But there are some things that you can trace. And you get to these by starting with that question Microsoft asked 20 years ago: Where do you want to go today?
Set goals, or outcomes if you will, which ARE traceable.
First, determine a few measures of success. Some are easy, and can be tracked with your even most simplistic innovation management system:
- Number of ideas generated
- Number of employees involved
- Number of comments received
- Number of ideas per employee (ideal in identifying your serial inventors)
- Number of patents filed (if you are looking to do this, or course)
- Number of ideas to prototype
I’m sure that there are a ton of other solid metrics you could capture. You can always try to look for the diamond in the rough, that single new idea, which when built and launched, pays for everything preceding it, but I’m afraid that’s pretty rare.
What will most likely happen: your company will be improved in many more immeasurable ways. These are hard, but not impossible to track.
What are your big goals for the program? Well, if you ask me, this ties back to what innovation means to you? So what does innovation mean to you?
- Develop real new products, some of which may make tons of money?
- File patents for products you might build or license? (which my eventually make ton loads of money)
- Look cool among your competitors? (which may make your stock look ton loads more attractive and maybe improve the chances of you hiring great people?)
- Playing with cool new toys, but not launching them? (not sure what this will do other than spend ton loads of time, unless all of your employees get to play with the toys too, leading to even more innovation and helping you to hire more cool people)
- Playing catch-up to your competitors? (which you should position as leapfrogging your competitors – if poor African countries can leapfrog the first world with cool new mobile apps and services, then you should be able to out-innovate your competitors to leapfrog in front of them. It’s happened)
- Motivating your employees? (make your employees super happy by listening to and doing something about the ideas they’ve come up with)
Or maybe it’s all of the above? Let’s look at each of these in detail:
Goal: Developing New Products
If your outcome is to develop new products, the metrics are easy on this one, simply track the number of ideas which make it through the pipeline from idea to actual product. If this is really your goal, then you need to invest the time, money and resources to make sure that these ideas get through the pipeline to actual product, or at least a prototype that you can throw into the marketplace (even a small, limited marketplace) and see what happens. Don’t spend all of your budget on the program itself, save some of it for the product development, marketing and management of the trial.
Another thing that is important do here is to be very cognizant of the operational voices, who will try to come in at this point and shut down prototypes, products and trials which will have no immediate perceived value proposition. If the founders of Twitter or Snapchat had done that, there would be no Twitter ($17B valuation) or Snapchat ($16B valuation). Make sure that you can spend the money to get the damn thing out the door, and let it ride for a while.
The founders of WhatsApp were thinking of shutting it down a few months before it went totally viral. Remember it was bought by Facebook for $22B. Would you let your operational voices (some people call these the corporate innovation immune system) shut down what could be a $22B product, all for the sake of a few bucks? We are shooting for the moon here – we should be allowed to spend a few bucks to get there.
In my experience, many enterprises let their operational voices shut down their innovative voices, expecting something for nothing, that unless the product is an immediate viral success with tons of traction and revenue, we should shut it down right away. I’ve seen too many awesome products go that way, only to be launched by a startup a few months later to huge traction and potential revenues. Don’t be that innovation program: be ready for the operational voices to throw up a very strong case to shut you down early, sounding the hue and cry that “you don’t make any money”. Don’t let them stop you before you’ve even started.
Goal: Filing Patents
This one is a little easier and a little harder. A little easier because you don’t need to think about actually building the product, a little harder because you need to make sure that you are developing something that a) is patentable and b) you will be able to extract value out of sometime at least 4 years from now. There is a cost involved as well, and your legal team will also need to be able to have the capabilities to manage outside counsel who will probably do most of the filing for you.
You can easily track this one as well: how many patents did you file? Some companies get into competition with their competitors on this one. Of course, it’s more important to have quality patents as well, but with patents, you typically never really know which idea will be really valuable when you are filing it – so number of patents is a good metric.
This is a tough one for some companies who don’t think long term. It will take about 4-5 years for your patent to be issued, and once its issued, you can then license it or sell it. The cost to file a patent is typically in a $15k range, unless your company files many patents already and they are able to get something like a volume discount, paying $15k per idea for something that “might” show some value 5 years from now (5 years is like a bazillion in tech years, no?) is sometimes even a harder nut to swallow for some companies than the product goal above.
Then there are the patentability criteria: novelty, usefulness and non-obviousness, and I’ll add one more which I like to look for as well, which is visibility. I’ll go into these in more detail in a future blog post, but in short the idea has to be new (no one else has really thought of this specific idea), useful (it has to do something which people will generally think is useful – this is why you can’t really patent a painting, even though they may be useful in calming your soul) and non-obvious (if your invention is something which is just an obvious extension of something someone else thought of – like using handlebars in your car instead of a steering wheel). I also like it to be visible – the idea is something that can be seen out there – for example you may be able to patent an algorithm for a better search engine, but if I can’t figure out if someone is infringing on your idea because I can’t tell, then the value of the patent is typically not very high.
However, if you are enough of a long term thinker to wait it out – this is a good strategy. Make sure that you also have a reward program for your inventors at filing, AND at issuance, so that they get rewarded at both ends – might even be an incentive for them to stay with you.
Goal: Look Cool to Your Competitors
This is an interesting outcome. But it shouldn’t be your primary goal.
Unfortunately, I’ve personally experienced something that feels like this: you have put together a very well thought out program, with seemingly the right people, processes and tools in place. You market the program, you run the program, get really great ideas out of the program, but then the ideas seem to just languish in the system without going anywhere. At the same time, you have many of the executives in the organization talking about how innovative they are, talk about some of the initiatives, like this one, talk about the great numbers of ideas generated and the amount of employees engaged.
But that’s as far as it goes. There isn’t even any real talk of any of the products generated, you just seem to hear the word innovation, innovative and innovator over and over again in the marketing materials, but nothing to back it up.
Where are the innovative products and services? What is this cool stuff that you are developing?
Of course, since the point of the program is to just look cool, its seems like you are just trying to out innovate each other by blasting the word “innovation” from every loudspeaker than you can.
Talk the talk, but no walking the walk.
Listen, I’m all for touting every innovative product that you’ve developed from the rooftops. But first let it be REAL. If you are worried about the IP – protect it via patent filing first.
Stop saying that you are being innovative and just BE INNOVATIVE. You don’t hear Google SAYING that they are innovative. You hear Apple saying it, though. And you probably already know my thoughts on Apple and innovation.
So by all means, innovate so that you can look cool in comparison to your competitors: it has many, many intangible benefits (and maybe a few you can measure)
- People will see your company in a new light
- It may become easier to hire more innovative individuals, thus generating more innovative products and services
- Many innovators prefer “doing cool stuff” instead of “big salaries” so you might even see some relief there
- If you are a public company, analysts might see you in a new light. If you are a large public company who may be seen as a has-been, overtaken by newer, cooler companies with more interesting products, maybe building some cool, new products and getting them out the door might go a long way towards revising their opinion of you. Innovation can even save you. Yahoo!, please take note.
- You will get more favorable press – everyone loves innovation. As an example, check out the latest video that Amazon put out about delivery by drone. They teased us with that back in 2013, but nothing came of it. Now we are seeing full on video demonstrations of a real drone supposedly delivering a new pair of shoes. This you can measure by reviewing your press mentions and “innovation”.
Goal: Playing with Cool New Toys, But Not Launching Them
It’s Christmas morning. You are 6. You could barely sleep thinking about all of the presents which might be under the tree. Is it that new BB gun you always wanted? Will Santa be good to you this year? Does your dad have a lamp sized present under the tree which looks like a crate labelled “fragilé”? Your mind races with the thought of all the cool new toys that might be under the tree. You’re under the covers, wide awake, waiting with anxious anticipation for the moment your Mom calls upstairs “Wow! Look at all the presents Santa brought!”. You fling off the covers and tear downstairs, only to be greeting with the most amazing site of your young life, the Christmas tree surrounded by what seems likes hundreds of presents!
You hope none of them are clothes.
Who doesn’t love playing with cool new toys?
Playing with cool new toys, if you ask me, is one of the best parts of running an innovation program. It’s an awesome side effect of working on the latest and greatest stuff. In fact, one of the main reasons I moved to Silicon Valley from the cold Great White North was not just to get away from the snow and ice in the winter and the blazing heat and humidity in the summer, but it was to work with or play with all of the coolest new toys – and help invent those cool new toys.
Playing with cool new toys/products/services is cool. Inventing them is even cooler! But is the main goal of your innovation program? Sure, it’s an awesome side benefit, and definitely a major draw for those innovators who love to work with the cool, new toys (as I mentioned above, I know plenty of people are more in the business to build new things, to make a dent in the universe, as opposed to getting a big chunk of cash in the IPO –that helps too of course.
Inventing the future is cool – inventing solely so that you can be the first to play with them, but not turn them into anything real, not so cool.
Think of it this way: you are a typical employee in a typical enterprise. You have an awesome idea for a new product, you submit it into the program, it gets accepted and built, and is being used internally to show off how cool your company is. How do you think that makes you feel?
In my experience, inventors would forgo almost any kind of reward in return for one thing: to be able to point to their product, in the real world, a living breathing thing which people are using, and say to themselves, their families, their children, their friends, three little words:
“I made that”
Help them to say that. Launch those cool new things into the world.
Goal: Playing Catch-up with Your Competitors
Alas, people and corporations can be similar in some ways. Just like you can come across people with low self-esteem, there are corporations with low self-esteem out there as well. Some of the companies I’ve worked with in the past – not to be named, of course, feel that they are so far behind on the innovation front, that there is no way that they can catch up with their competitors. They look at where their competitors are in relation to them: they may have much cooler, more modern products with a more up-to-date look-and-feel. Their competitors may have way more way more patent applications in the queue, as well as issued patents which they filed years ago, so it would be tough for them to file anything new in that space. Or they might look at their user base and realize that they are losing traction to competitors who maybe have much more uptake by up and coming demographics, like Millennials.
They feel that they are so far behind that there is no way that they can catch up. They feel that if they can at least have a product set which can match their competitors, then at least they may have a fighting chance to at least get some market share back. But if you ask me, they’ve thrown in the towel before they have even stepped into the ring.
Are you familiar by any chance with M-Pesa?
When I say Africa – what comes to mind? Starving children? Ethnic, religious and tribal strife? Terrible living conditions – rampant disease? Or do you think – “some of the most innovative products in the world?”
It’s the latter.
A number of years ago, most of Africa was the former. Poor telecommunications, poor infrastructure, a poor populace, ethnic and religious wars. Sure, there are still some areas like that. But, in many ways, they’ve leapfrogged us in the first world by being able to apply new technologies without the baggage that we have. They took a green field, and planted it with new mobile products and services. If you visited Nairobi, you might see a metropolis even more advanced than San Francisco or New York, with the inhabitants sporting cutting edge mobile phone technologies and products and services so forward thinking they’ve never fly in heavily regulated environments like the United States.
The Kenyans get it: they can innovate not just because they need to, they can innovate more effectively since they have less constraints on what they can and cannot do. Constraints which we simply impose upon ourselves when we say “we can’t” or “don’t go there.”
Did you know that the whole cable TV business was born in theft? When I first went to work for a Canadian cable TV company (which was eventually bought by Shaw Communications) they ran a little educational session about the beginnings of the cable TV industry. Apparently, way back when TV signals where transmitted over the air, you needed a pretty good antenna to capture the signal. Really good antennas where not that cheap, so people were stuck watching things with poor reception. Fuzzy screens abounded.
Some enterprising individuals bought their own antennas and were getting pretty good signal. So they thought, hmm. I’m getting pretty good signal. What if I ran a cable with the signal in it to my neighbor’s house? I wonder if they would pay for a share of my signal? Well he did, and his other neighbors did, and pretty soon the cable business was born: I grabbed signal out of the air via my big bad-ass antenna, then sold it to my neighbors.
Thing is, it wasn’t exactly legal: the operators were taking someone else’s broadcast and selling it – with nothing going back to the broadcaster. They were stealing signal and reselling it, but it wasn’t really formally enforced back then. By the time the government wanted to enforce it, the cable companies had gotten so big and made so much money that they could easily start to pay the broadcasters fees for distributing their content.
My point? Don’t simply think that innovation can get you to parity with your competitors – innovation can actually help you to fully leapfrog over your competitors into completely new markets where you can leave them in the dust.
Think out of the box you put yourself and your competitors in. With innovation, build your own box where you will crush it.
The 22 Immutable Laws of Marketing still prevail today. If you can’t compete in their box, make your own. And when you do, don’t be afraid to push to boundaries. You may eventually be as successful as a Comcast.
Goal: Motivating Your Employees
Let’s look at the life of Jane Employee, why don’t we? Jane wakes up at 4:30am every morning. Jane makes a cup of coffee at 4:45am. She leaves for boot camp at 5:15am. She does a Cross-Fit style boot camp from 5:30am to 6:15am. She goes home, showers, gets dressed, drives to the train station, gets on the train, starts reading a trashy novel on her Kindle for the hour long commute. She gets off the train, then takes the streetcar to the office. She gets to the office, pours herself another cup of coffee, and sits at her desk for 8-10 hours. She is so busy that she can barely ever step away for lunch, and her job is tedious to a fault.
However, she, like all of your employees, has a super quick mind, and continuously comes up with better ways to do things, better features and functions for your current products, and even new products that you could sell. But she works in accounting, and when she attempted to approach her boss to tell her about some of her ideas, she told her to drop them because they were just in accounting and no one on the product side of the business really cared about what people in accounting thought.
Replicate that with every other department other than the product side and you have a lot of unhappy, unmotivated employees, all with great ideas. Same goes for if you have one of those high-falutin’ “innovation labs”, you know those rare places with special people who only spend time coming up with new ideas – no one else innovates, or typically the C-suite “thinks” that no one else can innovate, when in reality everyone innovates, all the time.
Running an enterprise wide crowdsourced innovation program is a great way to motivate your employees – in addition to developing great new products and services, as long as the program is properly designed, developed and run, with all of the communications channels running smoothly, it can be one of the most effective motivational programs your company has ever run.
When else can you ask your own employees to help you design and define the future of your company? When else can your CEO connect directly with your entire organization and get feedback and ideas from every corner of the company? In what other way can you entice your employees to participate in a positive way and, with the proper communication in place, involve your employees in a deep and compelling way?
No other way that I can think of. It’s a positive, and even a message which may help present your upper management as more human and vulnerable, reaching out to say “we need your help”. What better way is there to tie your employee’s future into your corporate future by letting them participate in the future product development process?
So, motivating your employees is a fantastic secondary effect of designing and developing a robust, effective crowdsourced innovation program.
So there you have it:
The right goals:
- Developing real new products and services, or features to make your current products more compelling
- Filing patents for products you might build or license
- Motivating your employees
The wrong goals:
- Looking cool among your competitors
- Playing with cool new toys, but not launching them
- Playing catch-up to your competitors (when you can leapfrog them instead)
Now that you know which goals to set, you are ready to begin.