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Innovation from a Standing Start

Not long ago, an employee at a reputable telecom company told me a story that ranks as one of the biggest new service-development mistakes I've ever heard. Ready to launch a promising innovation that had been in the works for close to a year, the team suddenly discovered the company had no capacity to bill for it.

How could something like this happen you ask?

Developing systemic innovation capabilities requires concentration on four management areas, or "buckets": Leadership, Process, People, and Leverage. Each of these buckets contains issues that must be tackled and mastered, each highly interdependent on the others. For example, it's virtually impossible for a company to build a "culture of innovation" (which I put in the People bucket) without adequate Leadership to make it happen. Doing deals with outside parties (a common practice for innovators that I bucket under Leverage) would be extremely difficult without Process to bring things together into an operating agreement.

Building a well-oiled innovation machine takes years, if not decades, precisely because the elements themselves are inherently dynamic and the interdependencies require constant tweaking. Most product companies know this condition well. Ask a 3M (MMM) or a Procter & Gamble (PG) or a Samsung, and they will tell you how complicated their innovation-management systems are to orchestrate. It's a full-time activity that requires an ongoing commitment, year in and year out.

MULTIPLE CHOICE. Working with large service companies, I sometimes see brilliant cases of industry leaders building their innovation "engines." However, I have also been astonished by the "innovation desolation" that exists in many big financial institutions, as well as health-care, insurance, and media companies.

Many of these companies have little, if any, innovation capability. They have no innovation agendas, no leadership, no budgets, no process, no knowhow, no initiatives, and no collective consciousness around the value and execution of an innovation strategy among the management team. That means middle managers are expected to perform miracles with little support.

Management-consulting firm PRTM recently performed a study of innovation within the service industry and concluded that service companies were a full 10 years behind the average product-based company. Why? Could it be that

(a) growth through M&A and sales activity has been adequate to appease Wall Street?

(b) innovation isn't relevant to service companies?

(c) companies are waiting for their chief competitor to declare innovation a major initiative before they themselves jump in? or

(d) or is that ignorance is bliss?

DESIGN FOR THRIVING. In the two and a half years that we've been working on the Global Service Innovation Consortium at Peer Insight, I've seen all of these conditions at work in one way or another.

For innovation practitioners working for great companies that haven't yet made a serious commitment to innovation, there's still hope -- but it does require a bit of change. If you're working essentially from a standing start, an innovation agenda exists, and you're in a position to influence how it's tackled, your best bet is to institute an innovation process.

The innovation process can make or break success. And yes, the other elements I mention above are also critical, but of all of them, this may be the most important. Here's why:

MARKING THE WAY. A robust innovation process will guide your efforts from information gathering through launch activities. You won't be tempted to launch after concept generation because you'll know that the details of the service must still be worked out by a multidisciplinary team during the development phase.

The activities, milestones, and metrics used to move through the process will create an important level of shared vocabulary and knowhow within your ranks. Teamwork can be fostered. Shared experiences will create shared values, which run very deep when it comes to generating the passion to solve hard problems.

If you have a good process, you can improve it or improvise upon it. If you have no process, you also have no hope of doing either of these things, both of which are critical if systemic innovation is what you're after. I heard Elyse Allan, president and CEO of GE (GE) Canada, sum this up well at the recent Guru conference put on by the Rotman School at the University of Toronto: "Imagination without discipline is chaos," she said.

LEARNING EXPERIENCES. Much has been made of the notion of using design-led processes to solve business problems. I couldn't be a stronger proponent of this idea. The award-winning firm IDEO, where I worked for many years, has a process that's burned into the minds of all its employees: understand, observe, visualize & predict, evaluate & refine, implement. It's simple, it explains where projects are and what's going on at any given time. As practiced, it's robust and flexible. And best of all, it's trustworthy.

Again and again, projects that go through this process come out the other end in a successful state -- at least from a design perspective.

While this is a fantastic example of a design-led process, it's far too simple to shoulder the overarching need most businesses have to execute successfully. An important overlay needs to be included that adds discipline to this creative process. For service businesses, much can be learned from the conventional wisdom found in the product-development domain -- perhaps 75% or so is applicable.

Looking further, successful service companies need to build into the process an IT platform strategy, customer-experience design, business-model development, service prototyping, service delivery planning, and HR training for anyone at a customer touch-point.

DRIVE THAT METAPHOR. I haven't seen two companies yet that use the same process. Each is an idiosyncratic affair -- customized for the business and supportive of the culture a company's leadership team wants to drive. As such, creating the process deserves attention at the highest level.

Once this piece of an innovation engine is built, it becomes a critical lens through which to understand the role of other parts. Process may be responsible for combustion, but leadership surely is the fuel. The people element accounts for the level of octane in the fuel. And the leverage element the amount of mileage you can get from your engine.

Now ask yourself, is your company a 1969 VW Beetle or a 2006 Ferrari?

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