How To Estimate Your Hidden Innovation Costs

There 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. It is hence relatively simple to get a handle on your innovation costs by calibrating your innovation pipeline in this way.

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 is a little more complex – good luck.

Harnessing The Amazing Power Of Rebels

The Royal Society is known the world over for the contribution of its members in the field of Science. The Royal Society is celebrating 350 years since its founding to promote science, technology and engineering and it numbers many famous names amongst its fellows including Christopher Wren, Stephen Dawkins, Stephen Hawking and Tim Berners Lee. This small band is well known for their achievements and perhaps not so well known for being cantankerous, awkward and in some cases downright dangerous. It demonstrates the power of rebels.

Back in 1752 a man flew a kite into a thunderstorm in an attempt to harness the electricity present within the clouds. Luckily he succeeded and his efforts led to the lightning conductors that we see on tall buildings today. The gentleman’s name was Benjamin Franklin, a name well known in the USA today.

At the same time as he was working within the bosom of the scientific community and harnessing the power of lightning he was also a thorn in the side of the British government, trying to gain independence for the colony and developing relations with France. So what, I hear many ask?

Many of our advances have come from such ‘pressure cookers’ where questioning and sometimes rebellion are tolerated and even sometimes encouraged. In order to capture this genius we need to learn to recognise and then manage these situations In particular, being able to live with ambiguity, tolerate high degrees of risk and practise hands-off management are high on the agenda for those wishing to make use of such talents within their businesses.

Can Creativity flourish in your working environment?

Here are some golden rules that you can use as a checklist to see if a) creativity could flourish if you are looking to embrace it or b) to find out why your best efforts at being creative are failing dismally.

Here are some rules for dealing with things on a personal level:

Mindsets must change, even if the changes are small
Explore the ‘givens’, the problem boundaries
Look at the broad picture AND details
Value play
Build up, say ‘yes and’ not ‘yes but’
Learn to live with ambiguity
Don’t force creativity on people, nurture what is there
Involve other people
Be receptive, watch and listen
Know what your objectives are
Cycle often, close late – don’t just plump for the quickest option
Manage the process, if you don’t it will be a playground

… and here are some things from the wider environment:

Whatever you do must be fun!
Manage interpersonal differences, they will come to the fore
Manage status differences, these will appear too
Manage expectations, be realistic but have goals
Inhibition and risk need to minimised, people need to feel comfortable
Minimise group and critical pressure, use the first checklist to help here
Ban distractions, ban laptops and mobile phones for a day if necessary
Logistics, pay attention to small things such as decor, refreshments etc

Pay attention to the above and you have a good chance of succeeding. Now all you need to know is WHAT to do!

Making Good Use Of Institutional Failings

Normally we tend to diagnose institutional failings and then combat them with remedial programmes that often dismantle and then rebuild certain aspects of the organisation. Note that these characteristics are independent of the individuals that work within the organisation.

A well publicised example of such a failing was the accusation of institutionalised racism that was leveled at the Metropolitan Police here in the UK. No one individual was accused of being racist but the structure, processes, distribution of power, expressions of vision and beliefs was deemed to be supportive of racism.

So what might some of the characteristics of an institutional failing be and how can they be used to help us? I have alluded to one or two already but here is a short list:

- Strong beliefs and a mechanism for communicating them
- Well or clearly defined structures and processes
- Power centred on a few individuals
- An active ‘grapevine’ for informal communications
- Well aligned communications, trust and advice networks
- High degree of focus (not necessarily concern for) on people

This is not an exhaustive list but is representative of many undesirable institutional failings. Our natural tendency is to remove such characteristics through one or more change programmes and possibly staff development of some sort. For a large organisation the changes must be far reaching, difficult to plan (and control) and of course expensive. Had we been looking at undesirable furniture or waste paper then we would automatically think of recycling. Why not recycle these unwanted organisational characteristics and use them for a positive purpose?

One possible idea might be to create ‘institutionalised creativity’, a type of creativity that is inbuilt and pervades every part of the organisation in such a way that employees do not consciously think about it. Lets make use of a strong beliefs system (but change the beliefs), take advantage of clearly defined structures (but turn them into looser frameworks), use the company grapevine (as part of this process), be focused (but change this slightly) and make use of the centres of power (but make these sponsors of creative or innovative behaviour).

Such a programme may not be easy, but is it better than turning a whole organisation upside down?

Why Innovation Programmes Fail

There is only one real reason why Innovation Programmes fail and that is the fact that you have taken no action at all! I’m sure, however, that is not what you want to hear and you will be shouting ‘not true’ at you computer screen. One of the components of any such programme is learning, so that even if you don’t hit the targets you set for yourself you will collect some knowledge on the way and thus not ‘fail’. The only way you can fail, therefore, is by not doing anything thus not making any progress and not learning anything.

If you have read much literature on the topic of Change Management then inaction will be a recurring theme. Many Managers mistake discussion, planning and specification for action thus they believe that an initiative may be underway when it is not. When asked what is happening they will tell you that the Innovation Task Force is meeting regularly and soon they will have objectives and a plan. Great in the early stages but you should ask the question ‘Have you actually done anything?’. In many cases the answer will be no. So no surprise that your initiative will be flagged as failing when it never actually started. To Innovate you must DO SOMETHING.

Readers will I’m sure like a few pointers as to why they have not made the progress they anticipated when they have taken action, so here are some potential reasons. Not all will apply to you but use them as a checklist:

Employees do not know about your initiative – check communications
Employees do not care about your initiative – check motivation and morale as well as management sponsorship
Poor performance – did you identify any areas for training and development?
Nothing is happening – have you officially kicked things off, have you changed what YOU do? Are others sabotaging your efforts?
It all seems like hard work – do you have a team in place to help?

There are four broad categories of people to address when kicking off your innovation programme:

Enthusiasts – no problem here, welcome them with open arms
Disbelievers – ‘no that will never happen’, simply ‘do’ and conquer
The Angry – ‘over my dead body’ hard work (see below)
The Followers – ‘well if its going ahead I might as well tag along’, welcome these people also.

It is only the Angry (or Awkward) who pose a problem. What you need to realise is that a 70:30 rule applies here. If you run your innovation programme in an appropriate manner (you can borrow from Change Management here) then you will have 70% of your employees onside. There things aren’t so bad are they? So just DO, and you can’t actually fail!