Innovation Cafe
In today’s Wall Street Journal, there is a good article about South Bend, Indiana-based Memorial Hospital’s Innovation Cafe. The article starts off…
Hungry visitors to Memorial Hospital here sometimes cross the street to its Innovation Café, lured by the outdoor patio with white metal tables and chairs. Inside, however, all they find is fake food and a blackboard listing “recipes” such as “Basic Ingredients for Innovation.”
The Innovation Café is an unusual teaching laboratory created by Philip A. Newbold, the veteran chief executive of this midsize community hospital and health system. He converted a failed delicatessen into a venue where staffers and outsiders can learn to craft new ideas.
In the middle of the article, there are some interesting facts and figures…
He persuaded his employer to become the first U.S. community hospital with an innovation research-and-development budget. The board committed up to 1% of annual revenue for innovation activities. That equals about $4 million a year. The hospital ended up spending just $195,000 in 2005, $622,000 in 2006 and $711,000 in 2007 on innovation efforts such as venture start-up costs and staff training. But the increase in related operating profit was as much as three times the annual expenditure.
These innovation incubators are a great idea.
But, as the article mentions, the one challenge that can result is too many ideas. That is why I am a proponent of combining this concept with an Innovation Center of Excellence and “challenge-based” innovation. To learn more about these concepts, read my article in the European Business Forum. In fact, while you are at it, read all of my innovation articles.
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Articles in Thai, Danish and Dutch
Today’s blog entry gives you three feature articles with my thoughts on innovation. Unfortunately, I have no idea what they say!
One article is from “Computerworld” in the Denmark (scanned in by a colleague there). Another is from “High Tech Analysis” in the Netherlands. And the last is the cover story from “inMarketing” in Thailand. If you can read any of these languages, you might enjoy the articles. If not, you might just enjoy the pictures.
Computerworld (Denmark) (pdf – scanned from original)
High Tech Analysis (Netherlands) (pdf – click here to view original online flash version)
inMarketing - Article #1 (Thailand) (pdf)
inMarketing - Article #2 (Thailand) (pdf)
(click cover to view larger version)
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Logical, Emotional, and Creative Thinking
We often make decisions based on emotion rather than logic. Especially in times of crisis (like our current financial situation), we choose options that address our “pains.”
Most people are feeling a pain at the pump with gas prices topping $4 a gallon in the United States; higher in other countries. If you own a gas guzzling car, you are really feeling the pain.
Newspapers have reported the following:
- SUV owners are selling their trucks and buying more fuel efficient cars to save some money.
- Chrysler is offering a $2.99 a gallon for 3 years deal with a new car (up to 12,000 miles a year).
- The Toyota Prius is selling at record levels and can not be kept in stock.
Given high gas prices, these all seem like good ideas.
But (from a financial perspective) are they really?
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What Innovators Can Learn From Vegas Card Counters
Which will help your business be more successful: statistics or probability?
Underwriters at insurance companies use statistics to assess future risks. This is based on years of collected data.
Probability is what card counters in Vegas use to increase their odds of success. This is based on real-time, real-life experience.
If you want to play it safe, use statistics. If you want to win big, use probability.
There Are Lies, Damned Lies, and Statistics – Mark Twain
Businesses are increasingly using statistics to manage decision making, as evidenced by popular books like Tom Davenport’s Competing on Analytics and the boom in CRM system usage.
The belief is that if we gather more data we can make better decisions. But this may not be true when it comes to innovation.
If you are crunching numbers, you are probably gathering information from existing customers. This will give you insight into their buying habits, usability behaviors, and other patterns. But most likely you are only gathering data on YOUR customers. This represents the middle of the bell curve or the norm. This information may be useful in “incremental” improvement, but it will rarely lead to significant innovations.
When you move beyond the norm to the far ends of the bell curve, you will find the real interesting ideas.
Being normal is not a virtue; it denotes a lack of courage
On the far right-hand side of the curve are the market leaders; the advanced users. They may not be your customers because you can’t meet their high-end needs. Or maybe they were once your customers and they left. When someone is not a customer it is difficult to gain insights into their wants and needs. If you could somehow understand their perspectives, you may find opportunities for “advanced” innovation and insights on where the industry may be going in the near future. These innovations would be more radical, yet continuous in nature. Think of this as the Blu-ray improvement on the standard DVD (we’ll save a discussion on the demise of HD DVD for another time).
On the far left-hand side of the curve are the laggards; the less sophisticated users. Your products/services may be too advanced, too complicated, or too expensive for their needs. Again, you are probably not gathering statistics on these individuals or organizations. But here lies the greatest opportunity for discontinuous innovation. Or as Clayton Christensen would call it, disruptive innovation. If you can find a way of “dumbing down” your offering, you might find new and untapped sources of revenue. Quite often these products become the de facto standard, much like when PCs replaced the more sophisticated mainframes and mini-computers.
The problem is, it is very difficult to get data about the ends of the bell curve. Focus groups, surveys, and other traditional data gathering techniques are useless. I love this quote from Scott Cook at Intuit: “For every one of our failures, we had spreadsheets that looked awesome.” We can use numbers to justify anything we want. But quite often they justify the wrong actions.
The Probable is What Usually Happens – Aristotle
If a statistics-driven innovation model does not work, what would a probability-based model look? Probability tells me that if everything is equal, the more bets I have, the more likely one will be successful. The odds of 1 success out of 200 are greater than 1 success out of 20.
But how can you have more bets without diluting your effort and potential returns? The key is to learn as you go. This is exactly what card counters to.
Let’s contrast a more statistics-driven model with a probability-based model. To do so, we will use two exceedingly simplistic examples. With innovation model #1, you make a few “big bets” based on analytics you gathered from your customers (a statistics-driven model). Innovation model #2 is a more experiential “learn as you go” model (a probability-based model).
In both examples, let’s assume you have $100 million to bet, woops, I mean invest in innovation.
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Quotes in CIO Magazine
Today I was quoted in CIO magazine’s article entitled, “The Role of IT in Innovation: Friend or Foe?” (click the title to read the article)
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