You can find my future posts on www.stefanlindegaard.com

Best regards,

Stefan Lindegaard

It started about a year ago and now Netflix and LG Electronics has announced that they will soon introduce TV sets that can screen Netflix movies directly from the Web without an external box. The idea is that Netflix subscribers who buy such a device can hook it up to their TVs to watch movies that can be downloaded from the Internet instantly, as part of their monthly rental plan.

Read more in this link from Reuters: Netflix and LG

China flagMax von Zedtwitz, a director and professor at Peking University raised the question whether China will adaopt open innovation as we start to see in the Western world.

Based on several visits and talks/workshops in China, it is my experience that Chinese companies has a steep learning curve to climb in order to understand – and execute – innovation. The good thing is that they have the will to make the effort and they learn quite fast.

The question made me draw a line to Africa. For years, the Western world looked at their almost non-existing telecommunication infrastructure thinking they will never catch up. However, they were able to skip a lot of steps and move directly to a wireless setup. Now the future looks a lot brighter.

The analogy here is that many Chinese companies can learn from the best in the West, adapt to their own culture and then execute on and harvest through one of the key elements in the future of innovation; open innovation.

Companies need two kinds of people to make innovation initiatives successful. They need innovation leaders who focus on building the internal platform required to develop organizational innovation capabilities. This is work on the strategic and tactical level.

Innovation leaders are often also involved as coaches and facilitators for the second group required for innovation, the intrapreneurs who turn ideas and research into new products and services. Intrapreneurs are much more operational minded, and they are rare within most companies. Usually, about 10% of white-collar employees have an intrapreneurial mindset and skills that enable them to contribute in one or more phases of a process in which the goal is higher than incremental innovation. With some efforts, you can train another 20-30% within your company.

How can you identify the intrapreneurs? Here are some ideas:

•  First, always remember that you’re looking for people who can make things happen rather than people who have lots of ideas. Most organizations have tons of ideas, but lack people who can turn those ideas into reality.

•  Ask candidates how they have created results as an individual. Most people will tend to hide behind a team effort. Ask for cases where they used passion and drive to make things happen. Inquire about how they overcame organizational, technical, or market obstacles. Ask how they make decisions even when they feel they do not have enough information.

•  Ask questions in a direct or even provocative way. Watch for behavioral responses in answers. If someone becomes defensive and combative, they may lack the optimistic attitude and openness required to drive innovation. Look for people who reply in a constructive way that persuades you they can successfully deal with obstacles.

•  Watch for a strong customer focus. This is especially important for intrapreneurs as they need to have a business mind that thinks about jobs to get done for customers. Check if the potential intrapreneur gets into customer focus by himself or needs to be prompted. It is not enough for an intrapreneur to say he focuses on customers; he must convince you he has this mindset. Some people try to fake this. If you get this sense, keep asking questions until you can decide whether the person is bluffing.

•  The design and innovation consultancy IDEO uses the term “T-shaped people,” which can be used to identify intrapreneurs as well as great people to work with. This implies you should look for people who have a principal skill that describes the vertical leg of the T – they may be mechanical engineers, industrial designers or have a deep knowledge on go-to-market strategies. But they should also have some depth in other skills that are needed to be successful. They should be able to explore insights from many different perspectives and recognize patterns of behavior that point to jobs that need to get done. You can look out for this by having potential intrapreneurs describe their own T-shape.

I have noticed three main ways in which leaders and managers fail on open innovation. These causes of failure focus on networking, ideas and x-vision. I also have a couple of suggestions on how to work with this. Read below and let me know what you think of this. 
 
1) They lack the understanding of why a networking culture is important for open innovation. In a world of open innovation, you need to be an expert at networking and building relationships. This holds true at the corporate as well as the personal level. So this is my question to leaders and managers; where is your strategy, commitment and structure needed to create a networking culture?
 
WHAT TO DO: First, leaders and managers need to “get” the importance of networking. As open innovation grows they will hear of many cases that showcases why a networking culture is important. This will help them get it.

You can also expose leaders and managers to organizational network analyses to let them know of organizational networking status. Check out Rob Cross and his work on: www.robcross.org.

Then they can initiate more operational minded initiatives. I know of a Vice President at a global company who is experimenting on this. The VP has identified 5 people from their innovation unit already having some external contacts within different fields. They have been given a budget and the very open-ended goal to spend 2009 establishing relationships that could lead to new kinds of innovation. They will learn as they go and adjust goals and budgets as they go.

2) They focus on ideas, not people. Companies can generate lots of ideas through idea harvesting campaigns internally as well as externally. They might have a problem on finding the right ideas and issues on how to qualify ideas. However, the biggest problem with ideas is that they do not attach the right people in the right phases to the ideas.
 
WHAT TO DO: Look for people who keep following up on the ideas they submit. You have scores of employees who submit ideas and expect others to deliver on this. Nothing happens in such cases. If you have a persistent and qualified contributor – and a good idea – things can happen fast. Leaders and managers should also be aware that there is a big difference between a core project and a new business project and they should staff new business projects with people having a mindset and toolbox that matches this different challenge.
 
3) They lack the X-vision. If you want to create significant innovation you must be able to work across business functions and with many types of innovation to turn ideas into profitable products, services or business methods. I call this X-vision. Leaders and managers are often promoted because they excel within just one business function such as R&D, sales, supply chain or finance. They have difficulties seeing across functions and to combine several elements within a value chain and innovation process. They lack the X-vision and they do not train their employees on this.
 
WHAT TO DO: This is very much about mindset and besides training and coaching, leaders, managers and employees can develop a better X-vision through job rotation programs.

How do you measure innovation? The question often pops up at our network meetings and at workshops. Recently, we also had a good discussion in our Leadership+Innovation community at LinkedIn and I want to share some of the key points.

The question was raised by Jimm Feldborg, who is R&D Manager at Grundfos in China. Jimm pointed out that a good start is to understand whether your indicator is a:

– Lag indicator. The results are lagged with weeks, months or years and cannot be changed. Some examples are rewards and the number of patents.

– Current indicator. The results happen right now giving you some possibillities to act and change and thus affect the future results. Some examples are the number of ideas generated and ongoing projects.

– Lead indicator. The results are predictive for the future. You can make radical change in your approach and thus affect the results. Examples are pretty hard to give here.

Jeff Murphy, an Executive Director at Johnson & Johnson, suggests that innovation metrics (and metrics for any deployment like this) need to be dynamic by design. He continues:

1) Initially, metrics should focus on engagement, training and participation of individuals.

2) Then, as you begin to build a critical mass of capable individuals, the focus of your metrics shifts to your innovation pipeline (active projects by stage, flow of projects through concept, development, launch or kill…) and early wins. This is in addition to item 1 metrics above.

3) Finally, as your organization’s initiative begins to mature, your focus shifts to the end goals – return on investment, successful new products or services launched, revenue from new launches, etc. as well as optimizing your development and commercialization process. This is in addition to the item 2 metrics.

If an organization gets ahead of itself in the metrics area, it can lead to unrealistic expectations during the early stages. On the other hand, if it gets behind on implementing the appropriate metrics and delays getting to #3, it leads to under performance, and activity without business results.

Jeff emphazises that the key is to match your selected metrics with your deployment life cycle. He also states that there are literally hundreds of metrics that you can choose from, but optimally, 8-15 metrics at any one time for an organization will be enough for senior management and/or the effective management of the innovation deployment. If any more granularity is needed, that should be done at the functional level.

Lessons from Intel

Personally, I keep getting back to a visit at Intel a few years back. It was interesting to get an inside view of this Silicon Valley giant, but it was also strange to sense how it was driven by control rather than creativity. I did miss a more creative sense, but I take my hats off for their ability to measure their innovation initiatives in which they track the following information.

– Number of innovation-related rewards and recognitions

– Numbers from various feedback mechanisms, showing employee acceptance and understanding of the initiative

– Results from the innovation self assessment capability maturity framework (survey measuring five levels of maturity related to innovation behavior)

– Percentage of our budget dedicated to innovation, research, and exploration of emerging technologies

– Shareholder value created from innovation activities. (Shareholder Value = IT Efficiencies + Business Value provided to the IT customers)

– Number of ideas generated in specific innovation harvesting campaigns

– Number of ideas harvested from the campaigns and turned into implementable projects

– Number of invention disclosure filings (IDFs)

– Number of Intel patent submissions

– Number of white papers published.

You can read further in this paper, Developing Systemic Innovation in an IT organization, that provides an overview of how Intel works to foster and encourage innovation through its IT organization.

Paul Chaudury, VP of Innovation at Sara Lee, mentions that he has successfully followed the below KPI creation and reporting process at his prior job:

1. Net sales from new products. Reported monthly.
% of net sales from new products at year 1 and the next three years

2. Projected value of the pipeline. Reported quarterly.
Risk adjusted year 2 sales value of all ideas and projects in pipeline.
Different probability rates for each phase in stage gate.

3. Average time to market from concept to launch date. Reported monthly.
# of weeks from exit of concept phase to launch date

4. Aggregate portfolio net present value. Reported quarterly.
Risk adjusted NPV of cash flow of all projects in pipeline from feasibility to
launch phase in stage gate process.

Paul mentions that most of the calculations were automated and that reporting was done to senior management. KPIs were part of the key annual objectives and performance review for all involved with innovation. After a year from implementation, the process was continuously improved to fit the needs and it became a part of the company culture.

Innovation metrics is a huge field. Here you got a taste of it from a couple of practitioners working with innovation in large companies.

In our Leadership+Innovation community on LinkedIn, Chris Thoen who is a R&D Director at Procter & Gamble, asked which elements are needed in order to create an open innovation culture. Our community had an interesting discussion and I want to share the key elements that came up.

– Willingness to accept that not all the smart people work for your company. We need to work with smart people inside and outside our company.

– Willingness to strive for balance between internal and external R&D. External R&D can create significant value; internal R&D is needed to claim some portion of that value.

– Willingness to give part of the control to others. We don’t have to originate the research to profit from it. We don’t need to control everything from the cradle to the grave.

– No need to always be first. Building a better business model is better than getting to market first.

– Dismiss NIH (Not Invented Here). If we make the best use of internal and external ideas, we will win. We don’t need to own everything ourselves and keep it under tight wraps. We should profit from others’ use of our innovation process, and we should buy others’ intellectual property (IP) whenever it advances our own business model.

– Open innovation requires people with the right interpersonal management skills to manage the relationships with customers and partners. We need people with agility and flexibility skills. The “soft” skills of emotional intelligence — fundamental social skills such as self-awareness, self-fulfilment, and empathy — are needed to complement traditional IQ skills.

– Willingness to reward effort and learning. Failure is a fact of life for companies that pursue innovation seriously, and a leader’s response to it has a huge effect on company culture and therefore on future projects. Innovation leaders know that failures represent opportunities to learn.

– As part of good leadership skills, a group or entity has to be willing to be a risk taker rather than being risk adversed while having a good dose of common sense with regards to balancing the risk level.

– Open innovation requires open communication. Work around the confidentiality and IPR issues in order to create an environment build on trust.

– Develop a job rotation program in order to help your employees build the knowledge and understanding of how an idea or technology becomes a profitable business. Consider engaging partners and customers in such a program.

Besides Chris and myself, the contributors for this list are Robert Falcone who is R&D Director at Nice Pak Industries, Benjamin Chaloner-Gill who works with New Business Development at Chevron and Rakesh Sharma who heads Strategy & Business Development at the Indian Sub Continent at Philips.

I am puzzled that so few people can describe the values that guide their daily actions. Think about it. These are the fundamentals that help you become successful as an innovation leader or intrapreneur as well as in personal life. No doubt some of you have spent time helping your company define its core values, which, if followed, will drive the organization toward success. Doesn’t it make sense to also define the core values that will also impel you to success? I want you to think more about this and start working on developing a better understanding of your values.

We all have values, whether we are consciously aware of them or not. Values are traits, qualities or beliefs that we find valuable. Personal values are also implicitly related to choice; they guide your decisions by allowing you to compare the associated value of each choice.

I find this useful in this world of ours where we often seem to be condemned, rather than blessed, by choices. This is perhaps particularly true for people working in the field of innovation, which can be likened to the candy store of the corporation. With so many exciting and appetizing choices in front of you, how will you know what to choose if you aren’t prepared to make values-based decisions?

Let me share my personal values with you. They are passion, trustworthiness, integrity and the willingness to help others. I need to be passionate about what I am doing as I believe this is the only way to become very good at what I am doing and to continuously enjoy what I do over the years. Passion makes things so much easier as you become more engaged and effective when you do things you really love to do. Hopefully, these things also have a financial potential. I really try to find the passion in whatever I do.

Trustworthiness is important to me as I want to build relationships with people whom I can trust and have them trust me. Of course, this is a two-way function that is often forgotten by some people. In the long run, people who aren’t trustworthy do not achieve success in either their business or personal lives.

Integrity is hard to describe and yet quite simple. The dictionary’s primary definition for integrity is the quality of possessing and steadfastly adhering to high moral principles or professional standards. But two secondary definitions are also informative: Integrity is the state of being complete or undivided and or the state of being sound or undamaged. Taken as a whole, these three definitions indicate that if we act with integrity, we will be whole and sound.

How does one put this into action? This is where I use my stomach and gut. If I really try to feel something, then I know what the right answer is or what the right thing to do is. Does a given thing feel right in my stomach? Can I feel the passion in myself and among the other people involved? Is there a strong element of trust involved? If not, I walk away. Intuition, which is interconnected with integrity, can be trained so try to trust your intuition more often. Integrity comes when you are committed to follow this gut feeling. Not just once in a while and not always (no one is perfect) but very close to always. I believe integrity has become necessary to survive in a world that is becoming so small while presenting more options than ever.

The willingness to help and be there for others is a double-edged sword for me. I live this value out to a very high extent in my business life. I always try to help others without expecting anything in return. I have learned this works well in the long run, and it cannot be separated from my networking mindset. In my personal life this is more complicated. I know I can give more to people in my close circle but sometimes I just don’t. Perhaps I feel more comfortable with my family and friends so I do not have to make the same effort. Perhaps I have used all my mental capacity for this value at work. I sense this is a mistake, and I am working to correct this.

I believe you can only be successful in the long run if you know your values and if you know what really matters to you. Furthermore, you need to live in a way that is consistent with your values. By sharing my values, I hope I can inspire you to start thinking about your own values.

successWorking with innovation, we often talk about critical success factors. Have you considered developing your personal success factors? What should they be? To become successful as an innovation leader and intrapreneur–and as a partner, family member and friend–you can explore these pathways to success:

•  Know your values. Often success at work is defined by others, which can cause internal conflict with your inherent values. Even if you haven’t taken time to delineate your values, you will feel stress when you take actions that go against them in an effort to please others. I assure you that knowing your values and living by them will eliminate this unfortunate situation.

•  Follow your passion. As you get to know your values you will also discover where your passion is. And you can only become successful in the true meaning of the word if you can live out your passion in the majority of your life. Passion is doing what comes natural to you and with a continued desire to learn and develop within this area. How do you let your passion out? How do you get the kicks that make life great? Why not plan for them?

•  Decide on your personal vision. We all know how important it is for a company to set a vision that makes concrete the results the organization aims to achieve over the long term. Similarly, you can define your own personal vision that combines your values and your passion into a brief but meaningful statement of what you desire to achieve in business, in your personal life and as a member of your community.

•  Set goals. Once you’ve defined your vision, you can determine what short, mid-range and long-term goals will get you there. Share your vision and goals with the people who are important in your life to help build in accountability to your planning for success.  Review your goals on a regular basis, making adjustments as you achieve progress or suffer setbacks. You will learn that working to the goals rather than achieving them is what makes you happy, so be prepared to set new goals when you reach your current ones.

•  Understand and respect your stakeholders. Who will help you achieve your goals and personal vision? It’s important to identify and understand your key influencers and what drives them. These are your stakeholders and you must make sure they understand what you bring to the table and also how they can help you achieve success–and how you can help them become successful.

•  Work on your T-Shape. Go deep in at least one skill area and have breadth and empathy for other areas. Thus you need to accept that you don’t know everything and have the courage to seek help and advice from others. Gain a broader perspective by learning from those whose experience and views differ from yours. If you have team members on whom you are relying to help you achieve your goals, be sure to share credit with them. Recognize the stakeholders in your personal life who make it possible for you to have the time needed to achieve success on your business goals; thank them for their role in your success.

 •  Stay current. While you’re working toward your own set of goals, the outside world will not be standing still. Make sure you keep on top of external developments that could impact your ability to achieve your vision.

•  Communicate yourself. How do you want other people to look upon you? You might not like this, but it does not really matter much what you think of yourself. What really matters is how other people perceive you. Build and nurture your personal brand and work on your personal messages.

•  Manage time. You might think that working hard for 60, 70 or 80 hours each week is what it takes to be successful. You might even think being a workaholic is a badge of honour. I have met many innovation officers and intrapreneurs who think like this. But in the recent years, some of them got reasons to reconsider how to manage and spent their time. One guy had a heart attack. Several people got divorced. Some realized that they went through life without seeing their kids grow up. They got to the other side where they understood they needed to manage their time rather than letting time manage them.

Outliers, the new book by Malcolm Gladwell is worth a read if you want to now more about success and what makes people successful.

I did loose some interest in the last chapters as they focused too much on math – not my favourite topic. But still an interesting and quick read in the same page-turner style as his previous best-sellers, The Tipping Point and Blink.

You can read more on this link: www.malcolmgladwell.com