In the Wall Street Journal today (March 23, 2012) there was a op-ed on the demise of Japanese companys' innovative drive, using Sony as anexample of a company that has lost its way.  The article states that the reason is that Sony, and other Japanese companies, stayed to focused on being the low-cost producer of products and services, but because of the natural evolution of its economic maturity, that model was no longer workable.  There was no way Japan could out low-cost South Korea and then China.  Possibly, but I believe there is another reason.  Go back to the 1980's and early 1990's, the business literature was full of books and articles about the Japanese economic miracle, and spelled-out how, I think, the real reason Japanese companies were so successful:  They understood their Value Chain, were able to identify the "Most Important Customer" in their Value Chain and truly understood the latend, unmet needs of their Most Important Customer.  The result was a plethoria of new products form cars, super tankers and electronics that put Japan at the head of the class.  For whatever reason, this deep understanding of latent customer needs appears to have been lost by the wayside.

But the South Koreans and Chinese were taking careful notes of the Japanese business model - not the low cost one, but the understanding customer needs one.  It will be interesting to see if as the economic maturity of these two countries progresses, they too will focus on low cost to keep production from going to less expensive Southeast Asian countries or the developing countries of Africa and South America or continue to focus on what's really important:  Understanding customer latent needs and executing on those needs.

H. R. (Pent) Penton

2012-March-23 

There has been a lot, I mean a whole lot, in the press over the past weeks about Kodak, with the latest news being that the company will likely file Chapter 11 within a matter of weeks, if not days.  So, what's going on with Kodak, a company that brought photography to everyone, not just the professional photographer.  In brief, they lost sight of the changing needs of their most important customer, the amatuer photographer.  They failed to recognize that the amatuer photographer did not want to wait days for their pictures to be developed, only to find out that their thumb was in front of the lens when they made the picture of their their three year old opening their birthday present.  Kodak's first encounter with "instant photography" was the Polaroid Land Camera.  Although not exactly instant, the Polaroid camera produced a finished photograph in about one minute.  However the Polaroid development process did not provide the high quality finish that the Kodak process provided so the Polaroid camera was never a real threat to the Kodak franchise of high quality pictures for the amateur photographer.  Which leads us to the ultimate downfall of Kodak, the digital camera.  The sad part of this story is that Kodak researcher's were the first to develop digital photographer in the 1970's, but the company shelved the technology, viewing it as a threat to its lucrative (at the time) film business.  This was not the first (or I imagine last) time that an American company had developed a breakthrough innovation only to shelf it because they did not appreciate the potential value of the technology, it would take them into a new and unfamilair market, or, as with Kodak, the technology was viewed as a threat to their existing business.  So Kodak made two big mistakes; first they made the business decision to shelf the digital camer technology so as not to threaten their film business and second, they failed to really understand the latent needs of their most important customer (or, even worse, understood the needs of their most important customer, but failed to act on them) and stood behind a dying business until it was too late.  The lesson from Kodak's problems is the need for all companies to fully understand their value chain, or chains as the case may be, correctly identify the most important customer in their value chain(s), and through value innovation methodology, fully understand the latent, unmet needs  of their most important customer and act on them.

Innovation Insights works with companies and organizations to help them fully understand their value chain(s), identify the most important customer in their value chain(s) and, using value innovation techniques, identify and act on latent, unmet needs of their most important customer.  Kodak should have contacted us long ago.

H. R. (Pent) Penton, Ph.D.

A question I ofter get asked at an Innovation Insights Workshop is "Is innovation a 'learned' skill or is it inate with only a few people really good at it?  My answer is that the ability to innovate can be learned.  Following-up on last month's blog on the KAI index, I agree with Dr. Kirton that all people are creative so "creativity" is an "inate" skill, but turning creativity into innovation is a learned skill.  So, what is my definition of innovation?  It's turing a creative idea into a concept that provides value.  And to provide value, one has to learn to (1) observe carefully to see what's there, but is not always obvious; (2) ask questions; lots of questions; (3) not be afraid to venture into unknown territory, and (4) look for ways to connect the dots of often unrelated things you have observed or identified through questioning.  In my experience, most people are hesitant to ask questions because they feel it will make them seem stupid.  But it is exactly those people that get over that false fear and concern and keep probing with questions that are the best innovators.  And in questioning, never ask a question that can be answered with a simple "yes" or "no".  Always use open-ended questions.  Typically an open-ended question will start with "What", "How", "When", and "Why", although be cautious with "Why".  In the English language, at least, "why" can sometimes put the perosn being questioned on the defensive making them feel they have to justify their response.  There is a great little book entitled "Little Green Book of Getting Your Way by Jeffrey Gitomer (FT Press, 2007).  There is an entire chapter devoted to open-ended questions and how to ask them to understand a customer's latent needs.

Innovation Insights provides half-day and full day workshops on uncovering customer latent needs.  These workshops teach the tools anyone can use to understand customer needs through questioning and observation, and using what you learn to create new innovative products and services to bring value to your customers, and, in turn, profits to you.

H. R. (Pent) Penton

October, 2011

In the September 19, 2011 Wall Street Journal, there is an article on page B1: Old Ketchup Packet Heads for Trash, describing Heinz's development of a new "Dip and Squeeze" ketchup container targeted for use in fast food restaurants.  We often think that old, mature companies, like Heinz, lose their innovation edge, and that innovation is the stuff of new wiz-bang companies, typically in the technology or biotechnology field.  But Heinz practiced Value Innovation, carefully studying the latent needs of its Most Important Customer (the fast food chains) and its ultimate end-user, the consumer buying French Fries at the drive-up window of a fast food restaurant and went to work to improve the experience in using ketchup.  Heinz didn't develop a new and improved ketchup (hey, it's already a great product), but innovated in how to better package ketchup.  Carefully observing how consumers used ketchup, the amount they used and the challenges of opening traditional ketchup packets in a vehicle, Heinz has come-up with a new "Dip and Squeeze" packet.  Observing how much ketchup a typical consumer used for thier French Fries and/or sandwiches, the new packet holds three times the amount of ketchup of the current packets (turns out in observing customers' using ketchup, they were using three of the conventinal packets/serving of fries).  It can also be openned in two different ways; either peeling back the top cover to be able to dip fries into the ketchup, or break off the narrowed end to squeeze ketchup onto a single fry (while driving, for instance) and eating one at a time.  Market trials in several fast food restaurant locations show the new packaging is being welcomed by consumers.  As the article shows, mature companies and organizations can be very innovative and trully understand the principal concept of Value Innovation - assessing and understanding latent customer needs and responding to them.

Is your company or organization a Value Innovation company?  Are you making the effort to truly understand your customer's needs?  Heinz spent three years understanding how consumers and fast food restaurants use ketchup and the packets ketchup comes in.  Yes, to truly understand customer latent needs (how many of us really knew we needed an improved ketchup package, but embrace it when when we use it?), the Value innovation company will take the time and effort to study how its customers use a product.  Take that time and you too can be a Value Innovation company or organization.

H. R. (Pent) Penton, Ph.D.

KAI (Kirton Adaptive-Innovation) Index is a reliable tool to determine if your creativity is adaptive or innovative.  Innovation Insights has found that an indiKAI is an excellent tool to determine the innovative and problem solving style of an individual, organization or entire company.  Developed by Dr. M. J. Kirton, provides a great deal of information on how we solve problems and how we innovate.  KAI index is determined by the response to 33 statements and the index can range from 33 to 160.  Before going any further, let me emphasize that there is no "wrong" or "unsatisfactory" KAI index.  In fact, the most successful organizations and companies employees have a range of KAI indicees.  Many of you are familiar with Myers-Briggs and DISC assessments.  Myers-Briggs tells us how we process information, DISC tells us how we relate to others.  KAI tells us how we solve problems.  At innovation Insights, we have found that KAI is a more reliable methodology to assess innovatin style.

As mentioned above, an individual's (or organization's KAI) index can range from 33 to 160.  The lower the index, our problem solving and innovation style becomes more "adaptive"; as the index increases, our problem solving and innovation style becomes more "innovative".  We are all creative; our KAI index tells us how we best implement that creativity.  An "adaptive" innovator prefers a structured environment, tends to have fewer ideas, but whose ideas are usually very successful.  An "innovative" innovator perfers a less structured environment, will tend to have a lot of ideas, but a lower hit rate on successful ideas.  A KAi index in the range of 33 - 95 tends to be more adaptive in their approach to innovation and problem solving; an index of 105 - 160 tends to meore innovative in their approach to innovation and problem solving.  Those with an index between 95 and 105 are considered "bridgers" and tend to demonstrate a blend of adaptive and innovative styles.

So how does Innovation Insights use KAI's.  When we work with a company or organization to develop strategy or identify new product or service opportunities, we use KAI to establish more effective teams in which a range of KAI indecees are part of the team.  We have found that teams with a range of KAI's are the most effective teams, whether developing a business, marketing or technology strategy, solving process problems or developing new products and services.

To find out more about KAI index or discuss Innovation Insights carrying out a KAI assessment on your team, organization or company, pleae contact us.

H. R. (Pent) Penton, Ph.D.

May 1, 2011

How many times have you heard this in your organization; or, even worse, said any of these comments regarding an innovative idea or approach:

1. "Yes, but..."
2. "We tried that before."
3. "That's irrelevant."
4. "Don't rock the boat."
5. "Don't waste time on that."
6. "It'll never fly."
7. "It's not in the budget."
8. "Put it in writing
9. "It isn't your responsibility."
10. "Stick with what works"
11. "What will people say?"
12. "If it ain't broke, don't fix it."
13. "you have to be kidding."
14. "No!"
15. "Be practical!"
16. "Because I said so"
17. "I'll get back to you"
18. ...A condescending grin
19. ...Dirty looks
20. ...Silence

These comments are a sure sign of an innovation-starved organization.  If you find yourself hearing or saying any of these comments or responding with the last three gestures, you need to take a step back and ask yourself "does the organization I am in, do I, really support innovation, and if not, why not?"  Any of these comments are warning signs.  But often, these comments are a default position to avoid innovation.  You may not even be aware you are saying them, and you have heard them so much, it is what you expect to hear in a meeting looking for new, creative and innovative ideas for new products, services or businesses.

Tell you what.  At the next opportunity you have to join a meeting in your organization to discuss innovation (in product, service, business model, management model), be on the watch for any of the statements or looks.  If you hear them or see them, you need to start looking for how to change the innovation behavior in you company.

Last month in this blog space, we took a look at 10 characteristics of a company or organization that is innovation-starved.  This month, we are taking a look on a more personal and individual level of how innovation can be killed in organizations.  Next month we will take a look at characteristics of companies that are recognized as being innovation leaders, and see the contrast with companies and individuals described in these last two blogs.

H. R. (Pent) Penton

In our last Blog, we discussed innovation killers.  This moth, let's present seven themes of a successful innovative organization:

1. Ambition and Commitment:  The organization has and is able to articulate clarity of its strategy, the role of innovation it its strategy and, most important, the senior management walks the talk.
2. A Simple and Easily Understood Strategy and Innovation Process:  Insight and long term foresight combine to deliver a clear strategy and innovation pipeline that is visable to the organization.
3. Capability development:  Innovation skills are enhanced through hiring, training, broad exposure and mentoring.
4. Support Mechanisms:  The organization has systems in place to facilitate strategic implementation and innovation flow.
5. Motivation and Empowerment:  The entire organization is engaged in strategic alignment and innovation process via time, resources and rewards.
6. Experimentation and Risk-Taking (4 components): 
   1. The organization creates space for ideas to fail
   2. The organization ensures tight feedback loops to learn from failures
   3. The organization re-injects learnings from successes as well as failures back into the innovation process.
   4. The organization creates a culture of trust that failure is not punished
7. Customer Insight:  And from an Innovation Insights perspective, the most important - The ability to understand and articulate trends and customer latent needs both short and long term.

Judge how your organization stacks-up to these seven traits of an innovative organization.  For each of the statements (and the 4 sub-statements of number 6, determine how closely that describes your organization.  Give each statement a score of -2, -1, 0, +1 or +2, depending on how closely your organization matches the statement (+2) to the statement is far from describing your organization.  For any of the statements that have a 0 to -2 score, start looking for how you can move the score to the positive side.  This is not an easy task as muchis dependent on organization culture, but others have done it (e.g., IBM and P&G); your organization can also.

H. R. (Pent) Penton

Welcome to Innovation Insights Blog on Strategy and Innovation.

April 1, 2011

Each month, Dr. H. R. (Pent) Penton or an Innovation Insights Associates will write an article on trends in strategy and innovation.  This first article discusses strategy and innovation killers.  Many organizations claim to have a strategic mindset and be innovative, but are they really.  Innovation Insights has identified 10 characteristics of an organization that are a strong indication that thay are far from being strategic in their thinking and innovative in their approach to business: