Measure Innovation NOT InnovationS

March 24, 2009

Measuring innovation is very different than measuring innovationS (“s” capitalized for emphasis). Let me explain.

In our goal-obsessed society, we want to measure everything that moves. In doing so, we feel as though it gives us a grasp of the real world. But is this true? Do measures really provide a lens into reality?

A colleague of mine used to say, “You’ll get what you measure, but will you get what you want?”

This poses a very interesting question. What should you measure in order to get the insights you want and the behaviors you desire?

In the past I wrote a few blog entries on this topic.

In “How Do You Measure Success?”  I talk about how quantitative measures can be misleading indicators as many factors impact the numbers. Maybe qualitative measures provide more accurate insights. But how do you accurately capture this information?

In one of my favorite blog entries, “Innovation Lessons from the Apprentice,” I discuss how measuring hot dog sales, stopped one team from being creative. As a result, their competitor, who was not constrained by the numbers, made three times the profits of the numbers-driven team. Read this article. I suspect most companies are measuring hot dogs, not results.

When companies try to measure innovation, they are really measuring innovationS.

InnovationS have a start and end. You can measure the amount of effort put into developing these ideas and the value they produce. Some common measures are:

  • Number of ideas generated
  • Number of people who contribute ideas
  • Number of ideas selected and implemented
  • Economic value generated from implemented ideas
  • % of revenue from products introduced in the last year

The big question is: How do you know if your organization is innovative enough? How do you measure innovation (without the “s”)?

The answer: When your business achieves its overall performance targets. This is real innovation – innovation as a capability – and not just an innovation pipeline. This is embedded innovation that happens real time, and, as a result, is much more difficult to directly measure. The only real measures for this are business results.

At the end of the day, these are the only measures that really matter.

Are you measuring innovations or innovation? Or, in other words, are you measuring hot dogs or results?

P.S. Be sure to read my blog entry entitled “Is Your Organization Anorexic?” It explains why I chose the picture I did. In short, companies are obsessed with measures which causes them to get poor results. People too can become obsessed with numbers (e.g., weight) and miss out on what matter most (e.g., health).

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The Updated Innovation Bell Curve

March 10, 2009

In a previous blog entry on the innovation bell curve, I presented a bimodal distribution curve rather than a bell curve.  I did this because I wanted to clearly show the contrast between the existing model and the emerging model.  I also did this because I am “graphically challenged” and I could not find a way of illustrating the movements in one chart.  However, the changes are more subtle than a total shift to a bimodal curve.  After working with a talented graphic designer for the past week, we finally have a more accurate depiction of the movement taking place.

You see the 3 main movements:

  1. Value brands are increasing their quality (including ease of use) and are moving into the Mid-Market area
  2. Consumers are increasingly buying value brands (e.g., store brands) as a way of saving money
  3. Premium brands are reducing prices while also offering different, lower-cost products.

The result is pressure on the Mid-Market brands that is squeezing many of these companies out of business.

Be sure to read all of the articles on the innovation bell curve to get a better understanding of the shifting dynamics.

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Is Your Organization Anorexic?

March 8, 2009

The President of a $1 billion company once asked me to describe his organization in one word. My response?

“Anorexic.”

The Vice Presidents who sat around the table nodded in agreement.  They assumed that I meant there was no fat left to cut.  That is not what I meant.

Anorexics often have relatively “high” body fat percentages because their lean body mass erodes along with the fat.

This is what many organizations have done.  An an effort to cut costs, in addition to cutting fat, they also cut large amounts of lean body mass.

Are you thinking of further cost cutting?  If so, what are you eliminating?  Fat?  Bone?  Muscle?  Vital organs?  No company in history has ever “cut” its way to long-term success.

Exercise grows muscle while burning fat.

Innovation is exercise for businesses.  It helps grows the organization while also enabling cost efficiencies.

During the depression, Henry Ford said, “A man who stops advertising to save money is like a man who stops a clock to save time.”

The same is true for innovation.  Although cost cutting may be a necessary short-term tactic, it is NEVER a strategy.  If you are in cost-cutting mode, make sure that your cuts target fat and not lean body mass.  In addition, be sure to exercise your organization,  Invest in innovation now and you will be prepared for long-term growth and success.

P.S. I like this photo. It nicely depicts the obsession that many companies have with measuring everything in sight, yet in the end not measuring anything of value.

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Truck Accident Leads to Creative Ideas?

March 4, 2009

Today, while driving to New York, I sat in traffic for 30 minutes.  Why?  Because of the freakiest accident I have EVER seen in my life.  The pictures below have to be seen to be believed.  Click on the smaller version of each picture to see a blown up version.  Look at them one at a time.

In case you can’t tell…

A truck got stuck under the exit sign.  How?  I’m not exactly sure, but as you can see, the truck is “sitting on its butt.”

After posting these picture to my Facebook page, there was some interesting discussion the ensued.

Mark: I know people who park like that in Boston, not used to parallel parking ;)

Me: If it were possible to park like that, think of how much less space cars would take up in the street. We could eliminate city parking problems.

Mark: How about putting wheels on the back of the car, and have people balance on 2 wheels? we could fit 5x more traffic on the roads in a single stroke. Definitely one to be funded by the stimulus package (I think it is already in there…)

How would you continue the conversation?  What ideas do you have?  Or, if this does not stimulate a creative idea, maybe you can come up with a creative caption.

P.S.  According to WTIC radio…State police say a Mack dump truck had pulled onto the highway from the right shoulder after having dropped a load of dirt alongside the highway, but left the rear dump bed of the truck in the “up” position. The top of the dump bed struck the State Traffic Commission overhead sign for exit 63, the collision pulling the vehicle off the ground onto its rear end, with the cab extended into the air. The driver was not injured.

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Jefferson Loved Books Not Banks

March 3, 2009

Here is something courtesy of Barry Kibrick, host of the PBS TV show, “Between the Lines.”  I was on his show a few years ago with my Goal-Free Living book.  Barry is one of the best interviewers on television.

200 years ago today (March 3), Thomas Jefferson spent his last day in office as President. On that day he issued a special report to the Treasury focused on the Bank of the United States. It was a dismal report, for the nation at that time was in desperate financial straits due to an embargo that was hurting all aspects of the economy.

As most of us know, President Jefferson was no fan of the banks, big business, or of big government intervention, but he was a fan of books and the “capital” they provide. So, on that note I leave you with these words by our 3rd President.

“Books constitute capital. A library book lasts as long as a house, for hundreds of years. It is not, then, an article of mere consumption but fairly of capital, and often in the case of professional men, setting out in life, it is their only capital.” Thomas Jefferson – President of the United States, 1801-1809

Thanks Barry.

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Starbucks Fights Back

March 2, 2009

In my previous blog entry, I discussed the struggles of Starbucks and how the innovation bell curve predicted this. Their early response to increased pressure from McDonald’s and Dunkin’ Donuts was to reduce prices by bundling. Not a good move.

The other day they announced their new instant coffee.

Their press release describes VIA™ as “a transformational instant coffee that replicates the body and flavor of Starbucks® coffee in an instant form…(It) is made by adding hot (or cold) water to a cup, which brews the coffee in an instant.”

It comes in individual packets that cost under $1 each.

I like this idea because if the product is truly a high quality coffee and the price makes it more attractive, they will effectively leverage their brand while appealing to the left-hand side of the bell curve.  Instant coffee represents 40% of coffee sales, so it is a nice target market.

However, time will tell if this is a good extension of their brand, or if it dilutes their cachet.

P.S. In my previous article, I discussed McDonald’s forey into the higher-end coffee world with their McCafe offerings. Feedback from Starbucks junkies is that their products are as good – albeit appealing to a more mass-market palette.

P.P.S. My client gave me a Dolce Gusto machine. This capsule-based coffee machine makes cappuccinos, lattes, and espressos in no time with no effort or clean-up. Drinks range from $.50 to $1 each. The verdict? The cappuccinos are as delicious as those that cost many times more.  Much better than any instant coffee could ever be.  The only downside is that you have to invest in the machine.

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