Tag: idea generation

What Is The Cost Of Innovation?

cost of innovationThere is no manual that says exactly how to estimate innovation costs but here is a common sense approach that seems to work well.

Imagine that you are a company that needs to introduce 5 new products into the market place. First of all you need to spend some time generating ideas. Without knowing your actual method of idea generation and until you have had time to calibrate your own process then this is a bit of ‘wetted finger in the air’ calculation.

We know that the ration of truly wacky ideas to those that might be worth looking at is one order of magnitude i.e. 10 to 1. Similarly, the ratio of ‘might be worth looking at’ to ‘definitely worth a look’ is once again an order of magnitude.

So if we want to have just one idea that is worth pursuing then we should expect to generate at least 100 crazy ideas, thus our small company wishing to create 5 new products will need at least 500 crazy ideas.

So far so good, but how do we generate the ideas? You could collect them in a suggestion box but the quality would be variable and it may take a while although the cost would be low.

An idea generation session with a group of people could generate your ideas in less than a day. This would be more expensive and would only use a ‘snapshot’ of the expertise and knowledge available to you.

By now you should get the idea that we can roughly work out how many ideas are required, and how long this would take, and the resources that would be used.

Not all ideas make it to products so some extra redundancy needs to be built in, and then there are overheads such as management and the costs of prototyping and manufacture, but these should be aspects with which you are already familiar.

So there you are, a simple way of working out your Innovation costs. But hang on a minute, life is not quite that simple. Below is a list of other things that you might wish to consider:

  • HR requirements (culture, motivation, working practices)
  • Idea capture systems (how do you record ideas and avoid forgetting them)
  • Knowledge transfer (what worked, what did not, avoiding reinventing the wheel)
  • Feedback for improving all aspects of your process (including estimating costs!)

This is a simple guide but good enough to allow you to get some sort of handle on the cost of Innovation if you have never done anything quite like this before. Reality can be a little more complex.

There are often reports published of how much some larger companies spend on Research and Development (R & D). This is not strictly the same as Innovation but allows us to get a handle on it. The figures vary a little but figures of around 1% of turnover are not uncommon.

So a company turning over say $100 million would expect to budget around $1 million then?

Maybe but not necessarily. I once helped a company with such a turnover and the budget per annum was probably closer to 0.1% of turnover.

How come, you might wonder? Well for a start I used some tools to measure the capacity of the business to innovate which meant that when we identified areas for improvement we did not have to spend money across the whole of the company. Investment in training and development activities was targeted.

Because we rotated staff through the Innovation ‘centre of excellence’ we had the opportunity to work with all staff eventually and the postings were seen as beneficial, something everyone looked forward to. Not only that but it was an ideal way to spread know how gained back into the business as a whole.

This is a complicated topic but you can find further reading on Innovation Not Spots and Innovation Measurement by clicking on the links. Please get in touch if you would like to know more.

How Much Of Your Brain Do You Use?

99% of your brain activity is responsible for your creativity. The trouble is that you are only likely to be aware of the other 1%!

Research suggests that all of your conscious thought makes up less than 1% of your brain activity. The the old saying that “you only use 10% of your brain” is most definitely false. But, it’s amazing that the vast majority of your brain activity is actually going on without you knowing about it.

The generation of new ideas is one thing which happens under wraps . Ideas are generated when your brain takes existing knowledge and memories. It then forms new neural connections which did not previously exist.  Thus it links together and builds on concepts in a new way. This can sometimes generates a solution to a challenge (a new idea).

Your brain works at varying levels during the course of a day. The linking of new neural connections (and hence the generation of ideas) happens best when your brain is in a  more relaxed state . If you are extremely focused on something,  then these activities actually put your brain in a higher level of activity and require greater energy resources. This in turn hinders your brain’s ability to form new connections and generate ideas. So if you work long hours or remain focused for long periods of time  you’re harming you brain’s ability to come up with creative ideas. It is this idea of being relaxed/focused behaviour that has partly led to the creation of the left brain/right brain model.

To improve your idea generation ability, it is therefore important to give your mind an opportunity to get into a relaxed state. Many of history’s eureka moments  have occurred  when no one was expecting them due to their mind being elsewhere. Using brain scans, scientists have been able to show that our brains are more able to generate ideas and come up with better solutions to problems when it has been rested. Here are just a few things that might help your brain attain that relaxed state:

  • Sleeping
  • Showering
  • Exercising
  • Daydreaming
  • Doing anything that  lets your mind wander

You might not be conscious of how much of your brain you use. However, you are actually using all of it. By relaxing a little you might get better at generating ideas. Give it a try!

Creativity – Why Inefficiency Pays

This seems an odd thing to be calling for, especially when trying to sell the idea of creativity to businesses. Generating ideas for a purpose consists of divergent and convergent phases but our brains cannot handle divergence and convergence simultaneously without exploding!! Have you ever tried sitting in a group brainstorming to solve just one problem. It probably failed, partly because you selected the wrong technique but also because you were trying to do 2 things at once. Separating these phases will help but will introduce inefficiency. You will generate many more ideas (good) but you may have to spend more time sorting them out (not so good).

We also tend to build a framework around our idea generation sessions, partly because we wish them to be focused. But these restrictions on the problem/process will also have an effect on ideas and solutions generated. If you lead people down a particular path, do not be surprised if their ideas only reflect the scenery observed from the path! People must be allowed to wander off piste a little.

There is also pressure to jump from the normal state of creating relatively practical ideas to creating wacky ideas. If this is what you need to do then you will need to build up to it. People need a little practice in the techniques that they use and also some time to realise that they have permission to leave normality behind. For this reason I find that a 2 day session is better than 1, the most useful being day 2 and day 1 almost being a warm up.

To obtain maximum inefficiency:

  • Allow time for distinct divergent and convergent phases
  • Ensure suitably provocative stimuli
  • Create an appropriate idea management system
  • Use an experienced facilitator

 

Innovation – forget the words Open Innovation and Crowdsourcing

Open Innovation and Crowdsourcing have become buzz words of late which is a shame as it encourages those who blindly adopt best practice to jump on the bandwagon. It is often said that to truly understand a situation you must know enough to be afraid and there are too many consultants pushing concepts on unsuspecting businesses and organisations without really understanding what they are telling organisations to do.

The thing is that Open Innovation and Crowdsourcing really are valuable tools in our quest for Innovation. When innovating we have a dilemma, do we try to keep the fruits of our labours secret for as long as possible to secure as great a competitive advantage as possible, or do we throw our net outside of our organization to gather the maximum number of ideas and encourage communications/interactions with outside (and possibly competitor) organisations?

There are many issues surrounding Open Innovation, such as how to manage it, how to select the participants/collaborators and exploiting the results. Much of this is common sense if you have your wits about you. Essentially you have a choice, keep it in house or look outside, perhaps even conducting your business in public as some educational establishments do. The aim though, is to understand, not blindly follow the ‘How To Innovate For Dummies’ guide.

The fuel for Innovation is ideas and to generate ideas we need people to interact with each other. The more debate and creative tension, the higher the quality of ideas generated and the greater their number will be also. To get to this stage we need more bodies, a crowd. Crowdsourcing is effectively outsourcing the generation of ideas and the solution of problems to a crowd. The UK government’s attempt to gather ideas for policies via their website is an example of this. Your crowd can communicate remotely or be in the same location (see the Open Space technique) and interaction fuel debate or facilitate building of ideas.

Once again there are issues such as managing your crowd and capturing ideas, but once you are aware of the principle of Innovation then everything is pretty much common sense.

So please forget the words Open Innovation and Crowdsourcing but do learn as much as possible about them, understand the concepts and employ them properly. If you really do know enough to be afraid then you understand the concepts fully enough to be able to employ them to create success for your organisation.

Creativity – It’s All About Perspective

As Albert Einstein noted, a problem cannot be solved within the same frame of reference in which it was created. This does not mean that we have to employ Einstein’s methods and shift ourselves into outer space or become time travellers, it simply means that our problem must be reframed or looked at in a new way. You can get someone else to look at your problem or just change your own perspective.

My good friend Gerardo Porras, based in Mexico, created a very useful metaphor for this very situation. We are inside our house looking out and what we see is governed by the shape of the window and the colour of the glass. To add to this metaphor, our view through the window is also governed by the laws of physics, we can only see what is in our line of sight so to look in a different direction we must choose a new window.

We could, of course, leave our ‘house’ and take in all of the scenery by turning around and looking in every direction. If we were exploring then that is exactly what we would do, but within organisations we need to make decisions and too much information can make those decisions difficult to take. So whilst we might need to change the way we look at a problem in an organisation, generating too many options or business ideas may be unhelpful.

So how can we change our perspective in a simple way? There are many creative techniques that you can use, many of which are known by different names but you can use the some of the approaches below:

  • Random stimulation – introduce a random or bizarre objector thought which will give your brain a shock (what happens if I paint it yellow?)
  • Experience the problem – create a model and walk around inside it
  • Look at the problem boundaries and then change them or blur them
  • Increase or decrease the amount of knowledge available – introduce your problem to older people or even children

Once you get the idea, you can soon work out your own ways to change your perspective.