Three Domains of Corporate Innovation

Being able to strategically engage creative thought and implement the results is what generates business value. Innovation in this context is the process of envisioning and successfully implementing new ways of doing things. This involves strategic foresight, plus creativity, plus the ability to implement. A graphic view of the strategic innovation sweet spot for most corporations is shown in the figure “Three Domains of Corporate Innovation”.

Getting to this corporate sweet spot is a matter of aligning all three hierarchical levels of a traditional organization. These are the project managers, middle management, and senior management. They are respectively involved with the tactical decisions, operational results, and strategic direction of the corporation. Studies have shown that the number one reason for failed innovation efforts is usually misaligned agendas between these levels of an organization.

Thus, what prevents companies from creating the future is: an installed base of thinking, unquestioned conventions, a myopic view of opportunities and threats, and the unchallenged precedence that comprises the existing managerial frame. People talk about the need to create a “learning” organization, but that this is only half of the solution. Just as important is creating an “unlearning” organization. In fact, this is actually more than half the battle because learning is much easier than unlearning.

Maslow Hierarchy of Needs

Why innovation and creativity is such a difficult task is probably best explained by looking at the “Maslow hierarchy of Needs” figure. It isn’t until one has completely fulfilled the bottom needs of the hierarchy that one starts to approach cognitive, aesthetic, and self-actualization needs. These are ones associated with truly innovative individuals and organizations. From an organizational standpoint if a corporation is not meeting the physiological, safety, belongingness and esteem needs of employees, it is in trouble. If the company’s leadership is confused, or misalignment between mission, vision and values exists, the innovation part of the organization is going to struggle to produce business success.

Three Intelligences: Access, Strengths, Weaknesses
Interactions of Three Intelligences: Positive and Negative Impacts

The “Three Intelligences” figure describes the characteristics of the three intelligences needed for breakthrough innovation. Leaders need to access all three intelligences and also need the ability to discern which intelligence or combination of intelligences best fits the issues they encounter. However, many organizations do not give sufficient attention to all three intelligences. For most leaders the analytical intelligence is well-developed both because of academic training and continued work experience. In the past decade the concept of emotional intelligence is been widely accepted in many organizations. A significant number now work to develop their leaders’ emotional intelligence through training programs. The capability of many leaders is adequate but not exceptional in this regard. When it comes to innovative intelligence very few organizations have invested in the development of its leaders’ innovative intelligence or their ability to access it. Likewise very few organizations and leaders focus their development on the integration of all three intelligences to develop holistic leadership. Leaders not only need to develop their own capabilities but also need to be able to create a working climate in which all employees and teams can access all three intelligences in order to deliver maximum value to their customers, stakeholders, and employees. As the “Interactions of Three Intelligences” figure shows, individuals and teams with mixed strengths and combinations of the intelligences have both positive and negative impacts. Having leaders and teams become aware of thinking about the way they think and understand how to make choices about which intelligence to apply in any given situation is critical. Thinking about thinking is an integral process to help employees and teams solve problems.

deBono Thinking Hats

There are many systems which separate thinking into different functions and roles. The most popular method was developed by deBono. In his system each thinking role is identified with a colored symbolic “thinking hat” as shown in the “deBono Thinking Hats” figure. By mentally wearing and switching “hats,” individuals can easily focus or redirect thoughts, the conversation, or a meeting. Making sure teams are comprised of individuals who have innately diverse thinking styles is a key component of divergent innovation processes.

Smart Skills Details

A similar system was developed by SmartSkills. They use a model comprised of three primary types of thinking.
The first thinking type is JUDGE. It’s about what’s right and what should be. It focuses on rationale and opinions. It makes judgments and assessments. It demands to be convinced before deciding. It asserts personal values. It drives to come to closure.
The second thinking type is DESCRIBE. It looks for what’s true. It’s about what is or what was. It’s fact-based and goes into the details. It listens and watches with total awareness. It gathers and organizes data. It communicates clearly with others. This thinking type is neutral when it comes to making a decision.
The final thinking type is about CREATE. It focuses on what’s new, what might be. It looks for ideas and suggestions. It generates many ideas and finds creative ways around problems. It creates what if scenarios. It uses analogies and metaphors. This thinking type is not committed to a singular actionable answer.
The details can be seen in the “Smart Skills Details” figure. Like the DeBono thinking hats this is another way in which individuals can be assessed for their divergent thinking styles. Making sure the teams are diverse in this respect is also helpful.

KAI Differences

Another way to segment individuals for ideation work is to use Myers-Briggs scores. Although the Myers-Briggs types to not correspond well to creative thinking per se, having diverse Myers-Briggs types on innovation teams will ensure that as the team progresses through ideation and onto commercialization processes, Myers-Briggs diversity will be helpful. For thinking creatively, an associated indicator is the Kirton Adaptive Index type. This is a very powerful tool that is often used to segment team members when going on Thinking Expeditions. From a leadership standpoint it’s important to note that the differences in KAI scores and the perceived member competence show up in various team member behaviors, see the “KAI Differences” figure. Leaders have to be cognizant of these factors when putting together innovation teams.

The topic of creativity within an organization cannot be complete without mentioning Innovation Midwives, a role in the organization identified by Lanny Vincent. In large organizations the innovator’s culture is oriented to explore a wide range of new ideas, trends, and technologies and transform those explorations into useful, practical inventions. Creative individuals push the envelope of the business boundaries. In contrast the senior management’s culture is different. These higher level executives may provide support and resources to the innovation subculture but seldom if ever become directly engaged in the work of innovators themselves. Innovation in the sponsor’s culture is understood as financial investments in some process or set of people, or both, from which there is an expectation that a financial return commensurate with the risk will occur. Innovation Midwives translate between these two cultures in the organization. In fact in large organizations a network of Innovation Midwives or Gatekeepers could be seen as a third culture that views innovation in a more Darwinian fashion, as a portfolio of mutations generating a sufficient variety ideas to enable a robust selection and retention of innovations to serve the organization’s sustained growth. Innovation Midwives appreciate the immediate business realities and the need for control while at the same time understand the need for innovation and the challenges and realities innovation management represents. Such Innovation Midwives can be identified by studying network communication diagrams in large organizations. Communication nodes are often the midwives, who although they have no formal role within the organization, are keys to companies sustaining an advantaged competitive position. Smart executives are careful to identify and protect Innovation Midwives.

Organizations also have another form of resource that rests on the ability to blend different types of resources in ways that multiply the value of each. What is critical is not just possessing discrete skills but also an organizaation’s capacity to blend those technologies to create a world-class engine. This requires technology generalists, systems thinking, and optimization of complex technical trade-offs. Absolute leadership in a narrow range of technologies may count little, and the resources expended in that quest may remain substantially under-leveraged, if the firm is not good at the subtle art of blending. When it comes to leveraging resources, the capacity for technological integration and harmonization maybe just as important as a capacity for invention.

A company must also be balanced. Blending and balancing are different, as one involves the creative interweaving of disparate skills and the other involves taking ownership of resources that multiply the value of the firm’s unique competencies. Balance is between three elements: a strong product development capability, the capacity to produce products and deliver services at world-class levels of cost and quality, and a sufficiently wide spread distribution, marketing, and service infrastructure. In short, a capacity to invent, make, and deliver. Without balance, a company can become a research division for another organization. This happened in the 1990s at Eastman Chemical where they invented many unique new polymer products yet it was Shell and Dow that patented around them and commercialized and distributed those products to the marketplace. Needless to say the financial performance of Shell and Dow significantly outperformed that of Eastman Chemical.

To assure successful innovation, a typical program involves four phases:
Phase 1 is planning for successful innovation. It often involves senior management interviews to identify bottlenecks to success in obtaining their buy-in. During this phase the team that is going to do the work is often introduced to the tools and techniques of creative problem solving and spends time determining the outside resources that they wish to engage. This was covered in the sections above.
Phase 2 has two parts. It usually involves the development of a strategic vision and identification of key opportunity areas, followed by specific new business opportunities. These developing opportunities are refined and the appropriate action plans determined. It is wise to use external thought leaders here to act as catalysts and stimulate the strategic vision process. As we saw above with Joe Coates’ work, it’s important to integrate new information and perspectives on emerging trends, dislocations that the industry is likely to experience, as well as world economic trends and changes into the plans. Through a facilitated process consensus is built, the opportunities ranked, and the leading opportunities selected.
Phase 3 involves exploring and maximizing consumer research efforts. This phase probes consumers and users in different geographic markets and watches consumers’ reactions to new concepts. This often involves prototypes.
Phase 4 involves innovation through implementation. The results of the initial market research involving real consumer feedback is presented to senior management for approval to move forward and put together the resources to fund scale up of the business.
Although the process is simple it is wise to use experienced outside resources to ensure project and program success. Remember we’re working at levels where the solution is not known to the world.

Leader’s Role

The Leader’s primary role in such innovation processes is shown in the “Leader’s Role” figure. There are four areas in which all leaders of innovative work need to be effective. 1. They need to leverage the added value of teams. 2. They need to encourage and model the use of innovative thinking. 3. They need to understand when to focus on innovation when to focus on stability. 4. They need to ensure that the leaders at all levels of the Corporation are ready to commercialize the results of innovative efforts.

Sources of Innovation

It is important to remember that innovation can take many different forms. The “Sources of Innovation” figure shows some classes of innovation. We’ve discussed the technology changes but one can also innovate with respect to the organization and the processes it uses, the channels by which it reaches its customers, the way in which markets are combined, redefined, truly unique and different business models, and finally altering and redefining brands and trademarks.

In his book “Fourth Generation R&D”, Bill Miller outlines the role of Chief Innovation Officer as contrasted to Chief Technology Officer so that innovation in each of the six domains occurs. It is this change in the way of innovating new products and services that has made this century’s business significantly different from the work of the last.

The reason behind having someone responsible for innovation is that for each level of innovation there is a corresponding Level of Fear within the organization. Fear is driven by reverse thinking, what could go wrong as opposed to what could go right. The Levels of Fear surface rapidly during a Thinking Expedition as a group moves up through the seven levels of change and their corresponding seven levels of thinking. The corresponding seven levels of fear are: .

LEVEL 1: PARALYSIS. Fear of doing the wrong things. Doing nothing.
LEVEL 2: INEFFICIENCY. Fear of wasting time. Fear of doing the right things wrong.
LEVEL 3: CATASTROPHIZING. Fear of things getting worse. Fear of bad weather. Seeing only the worst case.
LEVEL 4: HOLDING ON. Fear of letting go. Focusing on the 80% that only brings 20% of the value. Fear that stopping “just do something” will be a mistake. Just in case fear “let’s take everything just to be safe”.
LEVEL 5: SELF-DOUBT. Fear of not being physically able. Fear of not copying the right thing. Fear of copying the right things wrong. Fear of being laughed at. Fear of criticism. Fear of self.
LEVEL 6: NORMALCY. Fear of being different. Fear of being noticed. Fear of being laughed at. Fear of rejection. Fear of tradition. Fear of trying different things that might not work. Fear of the unexpected. Fear of getting hurt. Fear of exposure.
LEVEL 7: DISBELIEF. Fear of the unknown. Fear of no basis of comparison. Fear of problem size. Fear of believing. Fear of a weakness in the system below you. Fear of total failure. Fear of the point of no return. Fear of death, not coming back alive. Fear of others dying. The sum of all fears.