How Visionaries use Innovation to Dominate Markets

How Visionaries use Innovation to Dominate Markets

In 1987, I was hired by the Tandy Corporation to sell Radio Shack computers to small businesses. I knew next to nothing about computers, but I did know how to solve problems. I learned how to conduct a needs analysis and work with the computer center staff to provide cost-effective solutions. Most importantly, I discovered I had a knack for understanding the value a suggested solution would bring to the customer.

Soon after, a colleague found an ad for a technical recruiter at the Santa Cruz Operation, an internet pioneer in the Silicon Valley. The founders interviewed me (talk about running the gauntlet!) and hired me. It was the Wild West days of the Silicon Valley, the dawn of the 90s during the golden age of computer innovation. I was employee number 150, about to embark on a wild ride with one of the key implementers of technology that made the Internet available to the masses.

Approximately two decades later, I was hired by my son (who cut his teeth on SCO technology), Randy Bias, a recognized Cloud technologies innovator and thought leader. I helped him set up his organization and was his first salesperson (moms get called to multitask, you know). I pitched in any way I could until he had the funding to hire “professionals.”

My professional experiences are peppered with startups, ranging from technology companies to professional service firms. I have witnessed, first hand, the disruptions new innovations caused for multiple industries.

This blog post is a distillation of my perspective on the critical things to know about innovation if you want to transform your organization. I will use Toyota Boshoku, a driver of global innovation, as an example case to illustrate five key points:

  1. Strategy is communicated through the organization.
  1. Collaboration is essential to innovation.
  1. Reach beyond your corporate walls to harness the power of your ecosystem.
  1. Experiment, test and experiment some more.
  1. Invest in innovation.

In the beginning was Sakichi Toyoda — Toyota’s founding innovator. Did you know that the company we know as Toyota began as a loom maker? In 1890, Sakichi Toyoda, an inventor and innovator, focused on ways to improve the hand loom. His innovations, some of which were disruptive in nature, were built upon his observations, which lead to experimentation. The idea of observing what is happening and then experimenting to find new possibilities is one of the fundamental components of the Toyota Production System. This methodology encompasses continuous improvement and collaboration between employees, management and the supplier ecosystem.

How did the organization become a leading automotive innovator? The industrial fabrics woven on automated looms were used for automotive interiors. In recalling this history, the Toyota website states, “In the spinning and weaving business, Toyoda Boshoku faced frequent difficulties, but its diversification into automotive components enabled it to achieve a level of product engineering that satisfies customers worldwide, continually striving to develop new products and technologies in business fields related to auto interiors, exteriors and engines.”

Today, Toyota Boshoku is renowned for its innovations across the entire spectrum of automobile design and manufacturing.

Five key points about innovation

1) Think about how strategy is communicated through the organization.

In our example case, Toyota uses the methodology of hoshin planning to infuse strategy into the organization. It places the focus on the organization’s vision, rather than on current problems. “The Japanese phrase ‘hoshin kanri’ has been interpreted in several different ways. Two of the more frequent translations are ‘strategy deployment’ or ‘policy deployment.’” Toyota uses hoshin planning to bake the strategy into its organization at all levels. It is a vehicle to communicate corporate goals and to enable managers and employees to work together to meet those objectives within the context of their roles.

2) Collaboration is essential to innovation

It has been my observation and experience, that the ability to collaborate effectively is a sorely needed and rare skill. Toyota promotes and enables employee collaboration. By making collaboration between employees nearly effortless, it is able to leverage, harness and scale its intellectual capital.

To facilitate 200,000+ users working together, Toyota built a communication infrastructure to provide Microsoft Office 365 as a collaboration platform. This initiative enables employees to communicate seamlessly across all kinds of devices, regardless of location.  The Toyota Production System itself is based on collaboration.

3) Reach beyond your corporate walls to harness the power of your ecosystem.

Nine of the top company brands use crowdsourcing to generate ideas for innovation. Among these companies are McDonald’s, Apple, Coca Cola and … Toyota. The idea of going beyond company walls for inspiration may not be new, but it can be a daunting prospect to many. One stunning example of going beyond the walls is Toyota’s 2011 “Ideas for Good” campaign. Partnering with advertising powerhouse Saatchi & Saatchi, Carnegie Mellon University and rapid prototyping company Deeplocal Inc.

Toyota broadcast a global challenge, asking its consumers “how they would use any one of five Toyota technologies to create a new innovation outside of the auto industry. The choices for a platform to base the new idea on were the Total Human Model for Safety (THUMS), the Hybrid Synergy Drive (HSD), the Advanced Parking Assist, the Touch Tracer Display and the Solar Power Ventilation System.”  The idea campaign accomplished the primary goal of leveraging Toyota’s innovations for the Greater Good; at the same time, it was a PR tool counteracting negative publicity from its 2010 recall crisis.

Bottom line: to create an innovative culture, consider replacing bureaucratic hierarchies with the wisdom of the crowd. Let the crowd of your business ecosystem do the heavy lifting sorting through the innovative ideas to find the best ones to implement.

4) Experiment, test, and experiment some more.

Experimentation needs to be baked into your culture and workflow. Ideas need to be turned into prototypes or pilots, introduced and tested by users, employees and customers. At Toyota, experimentation is central to its cultural DNA. Often, when we think of innovation, we think about innovations in products or business strategies, but the Toyota Production System is key to its ability to practice continuous process improvements and innovations. Toyota employees, from line worker to executives, observe what is happening, moment by moment, looking for opportunities to reduce the “‘overburden’ on the worker — walking, reaching and other efforts” that don’t “add value to the product.” The goal is to look for the things that get in the way of the worker and lengthen cycle times, rather than focusing on waste. The process is worker-centric.

Proposed changes are structured as experiments at Toyota. The pace of experimentation is fast. Hypotheses posed on a Monday will have the results of experiments posted by Friday of the same week. The management culture is one in which precision is encouraged to find discrepancies of seconds in process changes, where deep probing and investigation into not only processes, but how each person studies and improves those processes, is embraced so that not only are processes improved, but the process of improving those processes is improved.

Experimentation — prototype or pilot — then testing is something all those who want to be more innovative can promote within their organizations. Create and nurture a culture where there is no such thing as a stupid question, where it is safe to challenge assumptions and offer ideas. Most importantly, resist the temptation to rest on the laurels of previous ‘game changing’ innovations. The game is played too fast. To win, you must go beyond continuous improvement, to continuous innovation.

5) Go big — invest for long-term, breakthrough innovation.

Status-quo, or “stage-gate” innovation methodologies are too slow to implement, and the resulting incremental innovations, while promising lower risks, divert resources from exploring those innovations with disruptive potential.

I had a client whose small business had experienced a 50% decline in one year. She was afraid to investigate a Blue Ocean (e.g. “innovative”) Strategy. She was concerned about what she would lose. Yet the trend was clear and even though she didn’t see it, it was a crowded market. She wouldn’t even invest the time to investigate breakout possibilities. Innovation involves risk, but it’s not as risky as doing nothing. The illusion of permanence is not only an obstacle to happiness (as Buddhists will tell you), it is dangerous for business.

Smart investment: Invest time. Discover what you already have at hand that will help you innovate.

Invest in your people. Use Google’s 20 percent philosophy, but cut it in half. Decree that all employees will take 10% of their time thinking about new things. Invest time in listening to those ideas. Encourage the formation of small teams to explore those ideas using the 10% rule. Reward these activities with recognition and encouragement. Encourage them to find ways to get an idea to the point of prototype or pilot.

Engage your ecosystem — employees, vendors, partners, etc. — to generate ideas. Let your ecosystem do the heavy lifting on selection and evaluation of ideas. Consider using crowdsourcing to move ideas from concept to prototype. Be creative in how you think about ways to innovate. Constraints actually promote creativity. Create your own constraints by using short timeframes and small budgets to see what the greater community can generate.

Invest in things that don’t cost money: your time and attention.

Whether yours is a company of 5,000, 500 or 5, you can become an innovator. Here are some of my favorite innovation resources to help you move forward:

 

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