March 27, 2013
I subscribe to the 20/80/80 principle. The idea behind this concept is to focus your energies on the 20 percent of those activities that create 80 percent of the value. This can mean concentrating on the customers that create the highest revenue potential or on the products that provide the greatest leverage return. Once mastered, you can spend your 80 percent on other activities that produce even more long-term value. But how do you know what those activities are?
In my book Best Practices Are Stupid, I describe a model called “The Innovation Targeting Matrix,” which helps business owners evaluate their business activities and put each into one of three categories: support, core and differentiating. Doing this helps them determine which areas are worth focusing their 80 percent on.
Activities that fall into this category are those that help you run your business, but are not the business itself. Although many assume that human resources and finance fall into this area, the reality is that there are parts of every function that are “support” in nature. What distinguishes these activities is that customers don’t pay for or value them, and they don’t create direct value for your business either. Therefore, your strategy should be to outsource these activities to a low-cost provider. Or, if they are truly low value, eliminate them altogether where possible. For example, I hire someone overseas to handle my audio transcriptions. Although I could eliminate this activity, I have deemed enough value to continue with it.
The next level represents your “core” activities, which are any activities that create direct customer value. They typically range from shipping and customer service, to sales and new product development. For core activities, consider simplifying, automating, improving (e.g., Six Sigma) or, in some cases, outsourcing to a strategic partner. If outsourcing, look to hire organizations or individuals for whom this work is a differentiator. For example, I’m not a marketing expert and my clients don’t pay me for my marketing expertise, so I retained an Internet marketing company because its results set it apart in the marketplace. In this case, strategic outsourcing makes the most sense. It’s important to note that just because something is a core function—like sales—does not mean that everything a salesperson does is core. Related administrative work may be a support function, while other aspects of sales may be differentiators.
At the highest level are your “differentiating” activities. These are what separate you from the competition, and they represent the unique reasons why customers buy from you and not someone else. What makes you different? Is it some particular aspect of your service? Do you have a unique pricing model? Are you able to give customers access to something they can’t get elsewhere? Do you provide a feature no one else can offer? Any activity can be differentiating. There are aspects of HR, for example, that enable your organization to stand out. Identify these activities in every department. Spend your time on those activities that set you apart from your competition, and innovate where you differentiate.
In addition to using the Innovation Targeting Matrix, entrepreneurs should ask themselves the following questions to help focus their energies on the most important tasks:
- Am I the best person to execute this activity? If not, get someone else to do it. When possible, only engage in activities that you deem to be your strengths. I hired a branding company because branding is their strength, not mine.
- Is this activity something I enjoy doing? If not, consider having someone else to do the work. Creating strategic partnerships is essential to my business, but I find the work exhausting, so someone else handles this responsibility on my behalf.
- Is this activity something I need to do? This is often a tough question. From my experience, much of the work we do provides negligible value; however, we convince ourselves it is necessary. Surfing the Internet, being sidetracked by emails all day long and other distractions disguised as opportunities should be eliminated.
- Does this activity give me leverage? This is a critical question. Think about it this way. For some activities, an hour of work rears an hour of value. When my income is based solely on speaking to groups, there isn’t a lot of leverage. I’m limited by the number of hours in the day. Personal/executive coaching often has even less leverage because you’re having an impact on only one person at a time. When I license my work to others, there is greater impact as they do the work and I make the money with minimal effort. In this case, one hour of work on my part can lead to hundreds of hours of value. Selling can be leveraged too. Instead of selling once and making one sale, find a channel whereby they can create dozens or even hundreds of sales for you.
Why invest in activities that don’t yield the greatest return? There are only so many hours in a day, so focus your energies on activities that you enjoy, that are differentiating and that create leverage. Using these strategies will help you stay one step ahead of the competition.
March 27, 2013
Here is the transcription of my interview with Theo Androus on the “Voices of Experience” CD, which is sent to professional speakers around the world. Alternatively you can listen to the audio recording.
THEO ANDROUS: We kickoff this month’s edition of VoE with speaker, author, and innovation expert Steve Shapiro. Steve’s latest book is titled “Best Practices Are Stupid,” which has me questioning the title of this segment, and VoE, in general. Steve is an innovation evangelist, and has done some pretty innovative things with how he delivers his message and how he leverages his content. Join me now as Steve Shapiro shares with us how he does it.
STEPHEN SHAPIRO: I do my speaking a little different, even though I’m a keynoter, I’ve gamified my speeches, if I can call it that, so we actually play.
THEO: Steve, you can call it whatever you want. Be innovative. You’ve gamified your speaking. What does that mean?
STEPHEN: When I do a speech, instead of it being me up there talking and people sort of falling asleep in a dark room, we’ve created a game, in fact multiple games, multiple experiences, multiple things people do. One of them is called Personality Poker®, as an example. So imagine a room with a thousand people, everybody shows up and they get five poker cards. They look like regular poker cards.
THEO: Sounds like my kind of party.
STEPHEN: No betting, you can’t lose.
THEO: Oh, no.
STEPHEN: Well, you can lose if you don’t have a personality. What happens is on these poker cards, they’re specially designed, there are words that will describe particular behavioral traits, attributes, innovation styles, and we get people standing up, trading cards with the objective to get five cards where the words best describe how you see yourself. You can also gift cards to other people so they get to see how others perceive you. When you’re done with the trading, based on the five cards you have in your hand, the combination of the suits, the colors, and the numbers will tell you all about your personality. We spend the rest of the time having an interactive conversation about the difference styles, the different colors, the different numbers.
THEO: Audiences must love this.
STEPHEN: They do. Because we’re talking about them and it’s unlike most personality tests, if you want to call it that. You have to go take a test beforehand, or you go take the tests afterwards. Here, it is done real time, literally in five minutes every person has taken the test. And then the cool thing is it’s not just about the result but it’s about the process. So what we’ve found, especially with people afterwards, what they’ll do is they’ll take the cards and they’ll have conversations. “Hey, do you think I’m overly sensitive?” “Do you think I’m bossy?” “You know, I got five bossy cards when I played personality poker, is there something people should be telling me?” There’s just this great insight and epiphany that people have in a fun game.
THEO: What are the personality traits on the cards? How many of them are there?
STEPHEN: There’s 52 poker cards.
THEO: Are their 52 personality traits?
STEPHEN: It depends on how you slice it. So there’s four primary innovation styles which tie back to the four steps of the innovation process, which tie back to the four suits.
STEPHEN: Within those, there are actually two different versions. So, for example, the clubs are all about getting things done. Two types of clubs though. There’s one set of clubs based on the numbers which are much more about planning and being organized and being methodical, where another set of clubs, the 10 through ace of clubs are all about the action, result, the bottom line. So they don’t care so much about how it gets done, as long as it gets done. So the suits have meaning, the numbers have meaning, and then also the colors have meaning. The black cards are a little more what people would refer to as left brained, whereas the red cards are more right brained. And we do some things. We actually give the whole room reconfigured where on one side of the room are all the people with black cards, all the red cards on the other side and it’s a fantastic snapshot of what the organization’s makeup is. Instantly, we can see it visually. It’s very cool.
THEO: You wrote a book called “Best Practices Are Stupid“.
THEO: Let’s talk about that because our audience is speakers, and we are always looking at what’s working for other speakers, but I gather from your title of your book that you don’t support that idea, that strategy.
STEPHEN: I’m not so much against best practices, but there are two issues that I do have with them.
STEPHEN: The first one has to do with the fact that if you are replicating someone who, especially is a competitor, or is in a close enough space, and they’ve already done something, if you’re trying to do what they’re doing, by the time that you’ve implemented it, they’ve moved on to the next thing, so you’ll never catch up. It’s a game of catch up. But the bigger issue is that what works for one person may not work for another person, what works for one organization may not work for another organization.
You know, I want to run my business a very particular way. I listen to other speakers, and if I started to implement what they did, maybe I’d be successful, maybe I wouldn’t be but it might be a conflict with my personal values and beliefs in terms of how I want to run things. So it’s important to recognize that there’s not a one size fits all strategy. And I guess I’ll throw in the last point which is the breakthroughs. Breakthroughs are a fundamental game changer. The speaking industry needs some game changing right now. It’s been an incremental growth path and I think we can really do some massive change if we recognize the fact that these big innovations come from fundamentally different domains of expertise. Not from speakers, but could be entrepreneurs. I hang out with people in multi-level marketing. I hang out with people who are in real estate. I hang out with people who are in so many different disciplines because I learn more from them about how to improve my speaking business, than by hanging out with speakers.
THEO: What are the innovations that the speaking industry needs to adapt?
February 14, 2013
In yesterday’s blog entry, I suggested that (if you are an entrepreneur) putting less effort into your business would yield greater results in the long-run.
By focusing on the 20% of your business that generates 80% of the revenue, you can then invest your freed up 80% on new business models that have greater long-term potential. (please read this last sentence again…this philosophy is not about taking a pay cut in order to lounge around; it is about freeing yourself to create even greater income potential while having a more enjoyable life)
Many people (as expected) pushed back.
Their response, “That’s easier said than done.”
Well of course, everything is easier said than done! It is easier for me to say, “I’m going to tie my shoes,” than it is to actually tie them. But I still do it.
We look for excuses as to why we can’t do something. We blame our parents. We blame our circumstances. We blame the government. We blame our family. We blame our employer or boss.
Instead of finding reasons why something won’t work, get creative about how to make it work. Ask yourself, “How can I apply the underlying principles to my specific situation?” Even if you can’t apply the concept in its entirety, look for the nuggets that you can use.
Don’t put the NO in inNOvation!
The point of yesterday’s blog was to get you thinking about your business and where you invest your time, money, and energy.
According to Jeff Olson, author of The Agile Manager’s Guide to Getting Organized, “Perfectionism costs 50% or more of the total effort to squeeze out the last 10% or so of quality.” Never strive for perfection. Avoid the 100% mentality.
Ditch your worst customers - Look at your customers. Instead of trying to get more customers, ask, “Which customers should I get rid of?” Admit it, there are customers that generate less income than others, yet take up most of your time. I find that the customers that are most price sensitive are also the most difficult. I spend more time with them than I do with my best customers. The solution? Ditch the 20% that are sucking up your time. This not only frees up some hours in your day, it frees up your mental energy. Stress is created by your worst customers, not your best. Ok, I realize that when money is tight, this can seem like a risky proposition. Well, it is! But admit it, you intuitively know that attempting to keep 100% of your customers 100% happy will keep you working 100 hours a week and ultimately limit your true growth potential.
Ditch your lowest return activities - Look at the work you do. Look at your to do list. You will never get 100% of the work done, even if you had 200 hours in a week. Regardless, we still strive to get 100% done. Again, this mentality limits your growth potential. Instead of asking, “How can I get as much done as possible?” ask, “What should I stop doing?” or “What are the things I must do?” Or better yet, ask, “What is the one thing that will unlock the greatest growth potential for my business? What gives me leverage?” Be honest. What would happen if you got one less thing done off your to do list? Two less things? Find the sweet spot of where you can get the optimal return. And as mentioned in yesterday’s article, delegate, automate, or eliminate. Only do what you need to do, and get the rest off of your plate. And no, you are not the only one who can do most of your activities. It might feel that way, but it is not true. And believing it will kill you.
Ditch unnecessary clutter and belongings – Worried about money? Look at your life. Instead of keeping 100% of what you have, ask “What can I get rid of? What do I really need?” My Monday Morning Movie provided some great tips for this. And tomorrow’s blog entry will share some interesting statistics on how clutter can be sucking up a lot of your time. Freeing up your personal life frees you up professionally, which in turn further frees up your personal life.
Freedom is the name of the game. Don’t let perfection be the enemy of a good life and a successful business.
August 23, 2012
“Work smarter not harder.”
This dreadfully overused phrase is meant to address the apparent lack of time, money and resources we experience in our work and personal lives. But how do we translate these words into something actionable? Here are three methods I have used in my business to accomplish this:
1. Focus on what matters. Over the years, I have studied numerous organizations and have found that only about 30 percent of the typical day is spent on activities that directly create value. For example, sales representatives devote on average only one-third of their day with prospects. The remainder is allocated to administration, travel, meetings, and other less valuable activities. The same is true for almost every other “knowledge worker” in an organization.
To get more done, focus on the critical tasks while eliminating, delegating, outsourcing, or automating less important activities. I have seen many individuals go from 30 percent to 50 or 60 percent with little effort using this method.
While working at a major computer manufacturer many years ago, I was able to cut my 80-hour a week workload to less than 20 hours simply by using this strategy. It took only a weekend of analysis and implementation. This allowed me to focus my energies on activities that really matter, while helping others find time saving strategies.
2. Leverage sales channels. The ultimate goal is to maximize results with the least amount of effort. You can accomplish this through leverage: generating disproportionately large returns with a minimal investment.
Let’s look at selling again. Traditionally, to sell more, you identify prospects, create sales collateral, develop marketing materials, and then directly solicit potential buyers. This is a linear strategy. If you make a sale, it is one sale.
To create exponential growth, consider working with businesses that already have the relationships you want to build. One partnership with the right distribution channel can lead to hundreds or thousands of sales, without any extra effort on your part…
April 13, 2012
…and guess what, you don’t really listen. In fact, while reading this article, you are not really reading what I intended it to mean…
Last month, I was on a flight from Orlando to Boston that had a bit of a problem.
An hour before our scheduled landing in Boston, the pilot announced the main braking system was not functioning properly. Although the backup system would most likely work fine, the pilot and flight attendants were preparing us for the worst.
They carefully described the emergency procedures. They were very similar to the ones frequent travelers have heard many times before. But this time, you could hear a pin drop as they walked us through what would happen. Everyone was paying attention.
Although I am on nearly 100 flights a year, I was listening in a way I never had before. The truth is, I rarely pay attention to the emergency procedures when we are not in an emergency situation.
This got me thinking: Do I ever really listen?
The answer is no. And regrettably, I am not alone.
Unfortunately even when you are trying to listen, you are still likely not really hearing properly.
Psychologists call this “confirmation bias.” We are naturally wired to filter and interpret information to conform to our underlying belief structures. And very simply put, these beliefs cloud how we hear. We only take in those pieces of information that align with our beliefs, and we disregard anything that contradicts them.
Understanding confirmation bias can have a significant impact on your ability to have effective relationships. And as a small business owner, it can have a profound impact on your success if you’re not hearing the true meaning of what your customers and colleagues are saying.
In the corporate environment, I’ve seen brilliant ideas proposed by recent college graduates that were completely dismissed by more senior people. But when those senior people said the exact same things, others thought they were geniuses.
A friend of mine recently attended a weeklong training class. When asked about the class, he responded that he was less than impressed with the instructor. When I asked why, he said, “It’s hard to listen to him. He’s dressed like a slob. His hair was a mess and his shirt was never properly tucked in.” The instructor’s appearance impacted how he was heard. Amusingly, on the last day of the class, his perspective changed. When pressed to understand why, I discovered the instructor had gotten a haircut and was wearing a stylish suit and tie. The change in appearance impacted how my friend heard the instructor. He claimed the instructor now “sounded more intelligent.”
As you read this article, I can assure you that your judgments are impacting how you receive what you are reading. If you want to actually absorb the value of what someone is saying, you need to know your natural biases. This will impact your ability to innovate.
The first step to listening better is to recognize the fact that you don’t. Ask yourself the following questions:
- Are you really hearing what others are saying? Or are you only passively listening?
- Are you focused on their words? Or are you thinking about what you will say next?
- Are you putting yourself in the shoes of the other person? Or are you only interested in meeting your own objectives?
- Do you ask a lot of questions? Or are you doing all of the talking?
- Are you hearing what they are really saying? Or are you too colored by your own perceptions, judgments and filters?
This last question is critical. If you are honest, you will most likely begin to see that your filters are getting in the way of communication. By recognizing that you even possess these filters, you can become more aware when they begin to color your interpretations. This allows you the choice to set them aside so you can create an effective opening to listen.
Think about what your customers try to tell you…
March 3, 2012
This article originally appeared on the American Express OPEN Forum
The way we frame our business world can significantly impact our success. Frameworks are useful, but they can also be limiting. Perhaps it’s time to rethink the way things have been done in the past.
One useful framework is often called the product funnel or the accelerant curve. This framework typically refers to speakers, consultants, Internet businesses and those who create “intellectual property.” But the concept can be applied to any business, especially small businesses.
The general philosophy of the product funnel is to have products and services that increase in value so that you can continue to up-sell over time.
In this framework, customers enter your pipeline to buy a low- or no-cost item. This helps you to build trust, which in turn, lets you provide more robust solutions to your customers and put more money in your pocket.
I work with a lot of professional speakers. They would probably draw the curve as it is depicted to the right.
Most speakers offer a $25 product, typically a book. This is the low end of their curve. And, at the high end, they deliver a speech for which they charge $25,000.
Given this framework, the natural tendency is to fill in the curve with products priced in between. This might include CDs, DVDs, membership sites or coaching. They create a $250 product, a $750 offering and a $2,500 service.
The boundaries established by this framework—$25 and $25,000—delineate how you think about innovation.
While this tends to be the practice of most people who offer such services, looking at the curve this way may limit your true growth potential. Instead of $25,000 being at the top of the curve, what if it were actually near the bottom?
What if the top of the curve is closer to $1,000,000, or higher? If that is the case, you need to create products that are more than $25,000, not less. These could include assessments and diagnostics, consulting arrangements, sustainability programs that bring a speech to life over an extended period of time, or anything else that adds value.
From this example, you can see how the framework you create dictates your production. A small framework produces only the results that fit within that structure. Expanding your view opens up possibilities for greater value and financial gain.
This concept can apply to any business.
Are you a plumber? Maybe your typical project generates around $2,000. You may be tempted to offer a lower-cost option, perhaps a do-it-yourself kit, for only $200, which is valuable.
But what if, instead of $2,000 being the high-water mark for your services, you created a $200,000 offering? This would certainly get your creative juices flowing. Maybe, instead of selling your services to individuals, you target condominium associations, selling them an all-inclusive deal for every unit. It would challenge you to think bigger than you have thought before.
Are you a restaurateur? So many businesses offer their customers low-cost meals through Groupon or Restaurant.com. These may be reasonable entry points for your product funnel and are effective for driving new traffic.
But instead of focusing your efforts on smaller “transactions,” what if you shift your view to incorporate a higher-value, higher-dollar, relationship-driven option? How can you create a $10,000 meal?
Think big. Consider catering or developing an annual diet program that delivers meals to your customers to meet their dietary needs. Who knows what you will think of? But it is time to think big.
When you think small, you produce small.
You could even sabotage the business that you already have. I recently purchased a Groupon deal for a cleaning service. The owner’s hope was that Groupon would help her acquire new customers. She has been in business for seven years, but this low-price mindset might have killed her company. So many people subscribed that she could not adequately service her regular customers, let alone the new ones, and she risked losing them.
No matter what your business, avoid the “transactional” mindset. Find ways of engaging with your customers by providing both lower- and higher-priced offerings that will ultimately create a long-term relationship. But even more importantly, think big. Find ways of creating massive value, beyond anything you have considered before. Redraw your funnel or your curve by blowing the top off it.
How will you rethink your business?
Extra added bonus content:
When I originally posted this article on my Facebook page, someone commented that,
“The assumption that you are even worth $25,000 is a stretch for many folks. And for product companies, like shoes, for example, why spend hours thinking about a $200,000 shoe? Certainly that time would be better spent figuring out how to lower costs or enter new markets.”
Great point! Here was my response:
“The usefulness of this concept depends on the evolution of your company. Regardless, it is a useful thought exercise. Most small businesses get stuck with a mental model which limits their thinking. I have this product, so this is what I sell. Just asking the question, ‘What product/service could I offer that is 10x what I offer today?’ can get a mature and established business thinking about bigger opportunities with greater leverage.
“And sometimes it is not about a bigger product. For example, with my self published book, it is easier for me to sell 500 books to one client than it is to sell 500 books to 500 individuals. There is no leverage in the latter. Instead of a $15 sale, I discount and sell 500 in bulk for about $4,000.
“The question isn’t necessarily even new products but maybe different sales channels/methods for increasing $$ per sale.”
February 6, 2012
It is the Monday after the Superbowl. While scanning the TV stations and flipping through the radio channels this morning, it seemed as though everyone was discussing and analyzing (and analyzing and analyzing…) the football game. Everyone is a Monday morning quarterback.
Come on, get a life! Stop living your life through someone else.
Tom Brady does not care about your life. Why should you invest so much emotional energy in studying his?
Instead of being a fan of someone else’s life, be a fan of your own life.
Be a Monday morning quarterback on what worked and what didn’t work last week…for your business. Study your statistics to decide if you are moving in the right direction. Invest in you and your greatness.
I invest my money in me: my education, the development of my business, the hiring of the right talent, personal development, etc. I rarely invest my money in what others are doing. In fact, I almost never buy stocks. If I invest in me and my business, I am confident that in the long run I will have a higher return on my investment.
Start investing time, money and emotional energy in you and your business.
Don’t get me wrong. I enjoy watching the New England Patriots (even when they lose). It is entertaining and inspiring. Their drive and determination always jazzes me up and has me perform better in my life.
But I would not call myself a fan of any sports team.
I prefer to be fanatical about my life; doing what I can to make it as amazing as possible.
[end of rant]
January 9, 2012
My book, Goal-Free Living, was featured on the cover of the November 2005 issue of O, The Oprah Magazine. Two full pages were dedicated to my goal-free concepts. (If you check out the cover left, you’ll see the headline “What the happiest people know for sure.” That is my article.)
Although this was one of the proudest moments in my life, surprisingly, this type of publicity actually had a negative impact on my business.
You must be thinking: How is this possible? Doesn’t everything Oprah touch turn to gold?
Yes, typically. But my situation was different. My core buyers were (and still are) innovators within corporations. As much as I personally admire Oprah and her work, my clients were not as enthusiastic.
For example, after putting the Oprah mention on my website, my bounce rate (the number of people who immediately leave my website) went through the roof. I had potential clients say that they chose someone else who appeared to be more focused on the needs of corporations. They proceeded to share that the Oprah mention made me seem less “serious.”
I even had one client tell me, just as I was about to go on the stage, “If you mention Oprah, we won’t pay you.”
Apparently, the combination of my “self-help” book and the magazine publicity caused confusion. It was no longer clear that my main business focused on the needs of corporations. In this moment I discovered that the old mantra was true: “A confused buyer never buys.”
There is a lesson in this for every small business.
Know your audience. Know their needs—explicit and latent. Speak their language. Understand what gives you credibility in their eyes.
When you innovate, don’t alienate your current market. You can expand to other markets, but continue meeting the needs of those who have been loyal fans.
Innovation is about shifting your business in a new direction at the right speed. Think of the degree of change as a compass setting.
Reinvention is different than innovation. Reinvention (what I attempted when writing Goal-Free Living) is when you move your business on a 90-degrees (or even 180-degrees) turn. It is a pretty radical change. Your customers may not understand the shift and you may lose them in the process.
On the other side of the compass, there are many businesses making only 5-degree turns. They focus their time on incremental innovations. Although these improvements are valuable, on their own they are not sufficient to sustain long term growth and prosperity. You can ride your past success for a while, but eventually your competition will out-innovate you.
So the big question is: What is the right level of innovation? What is the correct compass setting for your business?
Typically, a 5-degree turn is too little while a 90-degree shift is too much. Forty-five degrees should be just about right.
What does a 45-degree turn look like? It is exploring how to tap into your existing market with new offerings, new services and new products, while also expanding into adjacent markets.
My business just turned 10 years old and I am in the process of rethinking my current model. As it stands today, I primarily convey my innovation messages via speeches and books. My objective in 2012 is to leverage my current intellectual assets by finding new ways of delivering my content.
For example, in 2012, I will be expanding the licensing of my content to corporations, training organizations and individuals who can deliver my work. The more I can tap into the reach of others, the more I can grow my business.
For this, I am not changing my message or products. I am primarily deepening the content and making the process of delivering it “replicable.” Instead of content changes, I am exploring different distribution channels such as eLearning systems, membership sites and other digital platforms.
Additionally, while others are delivering my content to my current target audience, I can explore how to extend my existing content to new, tangential markets. For example, my Personality Poker assessment tool has been largely focused on the corporate market. It can also, however, be positioned to provide value anywhere collaboration is beneficial: relationships, families, negotiations, ventures and so on. Expanding in these directions still positions me as a collaboration expert (a key component of innovation) and would most likely not alienate my core market…
Read the rest of this article on the American Express OPEN Forum
(please leave comments on the AMEX site and “like” the article if you in fact like the article…thanks!)
September 22, 2011
In one week (September 29th), my new book will be available in book stores, online, and on the Kindle. It is published by Penguin’s Portfolio imprint. For those of you who are new to this blog, here’s a description…
Best Practices Are Stupid:
40 Ways to Out-Innovate the Competition
Well-intentioned leaders, in their attempts to boost innovation, are inadvertently destroying it.
What if everything you know about creating a culture of innovation is wrong? What if the way you are measuring innovation is choking it? What if your market research is asking all of the wrong questions?
It’s time to innovate the way you innovate.
In Best Practices Are Stupid, I offer forty counterintuitive yet proven strategies for boosting innovation and making it a repeatable, sustainable, and profitable process at the heart of your company’s culture. They include:
- Hire people you don’t like. Bring the right mix of people to unleash your team’s full potential.
- Asking for ideas is a bad idea. Define challenges more clearly. If you ask better questions, you will get better answers.
- Don’t think outside the box; find a better box. Instead of giving your employees a blank slate, provide them with well-define parameters that will increase their creative output.
- Failure is always an option. Looking at innovation as a series of experiments allows you to redefine failure and learn from your results.
I will show you that nonstop innovation is attainable and vital to building a high-performing team, improving the bottom line, and staying ahead of the pack.
Other powerful strategies include:
- The performance paradox. When organizations hyper focus on their goals, they are less likely to achieve those goals.
- Expertise is the enemy of innovation. The more you know about a particular topic, the more difficult it is for you to think about it in a different way.
- The Goldilocks principle. Challenges can’t be too big or too small. They must be “just right” to maximize the likelihood of a workable solution.
- Learn from Indiana Jones. Real treasure can be found when you leave your office, don your fedora and bullwhip, and study customers with your own two eyes.
- Use the reality TV show model. Competitions are as much about generating buzz and stimulating interest in innovation as they are about finding specific solutions.
You can pre-order NOW on any of these sites.
June 16, 2011
Open innovation and crowdsourcing promise to revolutionize the way companies innovate and develop new products, create marketing campaigns and solve problems of all kinds. Unfortunately, there is more confusion than clarity about how to best utilize these approaches. Recently, I had the opportunity to interview Dwayne Spradlin, CEO of InnoCentive, one of the early pioneers in the open innovation market. He is the co-author of a new book on open innovation and he shared his perspectives with me.
Q: Your book is called The Open Innovation Marketplace. From my experience, there are many definitions of open innovation. What’s yours?
A: Open innovation (OI) is essentially not traditional or closed innovation, the latter having been the dominant mode for companies throughout the 20th century. In the closed innovation model, innovating relies on internal resources, problem solvers and experts to solve problems or capitalize on opportunities, whereas in OI, problem solvers and knowledge are widely dispersed and may reside outside the company. Additionally, closed innovation is often practiced by rigid “not invented here” cultures that focus too much on who solves problems, whereas companies that have embraced OI tend to have more open and collaborative cultures that embrace external ideas with the focus on finding solutions to key opportunities and challenges.
It’s the notion of challenges, in fact, which lie at the center of OI from our point of view. Challenges are specific, detailed, and actionable problems or opportunities. Via rigorous methodology, problems that matter are defined, prioritized and converted into discrete challenges. These challenges are then formulated and configured for specific channels (e.g., internal groups or divisions, external crowdsourced communities). The tail end of the challenge process involves submission evaluations and triage, legal and intellectual property treatments for the chosen solution, and awarding winner(s).
Q: Large companies like P&G, Eli Lilly, and even NASA using open innovation. How do you see open innovation being used by small businesses and startups?
A: From our experience, some of the best examples come from the nonprofit arena. These organizations are small and have limited resources similar to that of any small business. Nonprofits such as the Chicagoland Chamber of Commerce, Oil Spill Recovery Institute (OSRI), and Prize4Life have leveraged open innovation to great effect by focusing their efforts on specific challenges or a series of challenges that, with their limited resources, they could not tackle and solve alone. The beauty of open innovation is that it enables all companies, big and small, to leverage the same diverse global communities of problem solvers.
One of my favorite examples of a small business leveraging challenges is Precyse Technologies, a firm that specializes in radio frequency identification (RFID) technology. Like many emerging high tech companies bringing cutting edge products to market, Precyse sought to improve the performance and battery life of its mobile computing products. A challenge was posted to InnoCentive.com and more than 500 problem solvers from 64 countries contributed their ideas and technical expertise to help solve it. Within 90 days, Precyse received 33 relevant submissions—several which offered novel, innovative solutions. The winning solution, which was truly a breakthrough, entailed harvesting energy from radio waves to significantly extend the battery life of Precyse’s RFID tags. The overall experience for Precyse was extremely positive, as the solution enabled the company to get to market faster, lower costs and improve overall utility to its clients in what is a highly competitive market.
Q: What are the mistakes that many companies make when implementing open innovation?
A: The biggest mistake we see is when companies try to “bolt it on” to existing innovation practices and processes. They try to dip a toe in the water and often achieve mediocre outcomes as a result. Or, they approach OI only tactically, and in some cases myopically, as they don’t understand the broader implications of what OI can do to transform their cultures and their businesses. It’s particularly hard for companies that are very rigid and set in their ways. It’s a corporate mindset issue more than anything. The companies that tend to use OI successfully are those that are willing to embrace and combine both traditional modes of innovation (i.e., internal innovation, stage-gate) with newer forms (e.g., open innovation, crowdsourcing), but do it with an integrated set of new processes and reward mechanisms. You can’t keep rewarding people only for solving problems when their job should be finding solutions (inside or outside).