Monthly Archives: September 2009

Innovation [2009-09-21]

Another week and another collection of interesting ideas from around the internet.

As always, thoughts and/or comments are greatly appreciated.

This issue:

Innovation should not be the race for the new-new thing

Note: This post is part of larger series on innovation, going under the collective name of Innovation and Art of Random.

We’re all searching for the new-new thing. Be it a product or a method, we’re looking for that innovation that will let us stand out from the pack, because in a world where we are all good, we need to be original. If an idea becomes a trend before we’re involved, we are not a leader. When we’re first to market, if we capture first mover advantage, then we can define the rules of the game. But how can we tap into valuable ideas for products, services or method before they are seen as trends, when they are just … random?

In today’s hyper-competitive business environment being good, being operationally efficient, has become the price of entry. We’ve leveraged methodologies like TQM, Six Sigma, LEAN to optimize our businesses, and while we might carry some baggage from our past, we are good at what we do. In this environment, it’s the ability to be original, the ability to innovate, that will let us stand out from the crowd. Innovation, though, is random. At least it often seems that way. A chance connection or unlikely insight takes someone on a journey to create something new. New developments, new product and services based on original ideas, seem to come out of the blue.

A product which created its own product category
A product which created it's own product category

Think of the first time you saw breath strips; small, minty strips that dissolve on your tongue, eliminating pre-meeting (or pre-date) bad breath. Where did they come from? Most of us can’t quite put our finger on their origin. We heard about them one day, and the next they seemed to be in every shop we walking into, anywhere around the world. A new market segment had been created, and its creator had captured most of the value.

The race for the new-new thing seems to have created an innovation arms race. We want to be the first to find an idea, nurture it, and turn it into a competitive advantage. This has made innovation—the search for new opportunities—into a race for more. More ideas, more connections, more investment, more involvement. If we can see more ideas, get access to more content, get more of our team involved, if we can get it earlier in its lifecycle, then we might be the ones with first mover advantage.

We’re starting to take this to extremes, industrialising the quest for more. Conferences (some of which are rapidly becoming media empires in their own right), such as TED, are creating idea smorgasbords for us to graze on. The industrialization of ideas has us all drinking from the same (soda) fountain. This is driving incremental improvement in our businesses by sharing best practice, which is a good thing, but it’s not going to help us find the new-new thing, the innovative product that will help us stand out from the crowd.

The challenge when managing innovation is not in capturing ideas before they develop into market shaping innovations. If we see an innovative idea outside our organization, then we must assume that we’re not the first to see it, and ideas are easily copied. If innovation is a transferable good, then we’d all have the latest version.

New ideas rarely just pop into existence though; technology, the development of ideas, is an evolutionary process. New, novel ideas, are simply combinations of existing ones, driven by someone’s desire to solve a problem. Breath strips, for example, were the chance connection between mouth wash, a Japanese trend for a dissolving sweets and our (western) desire for fresh breath, a connection made by a western executive on a business trip to Japan. As new ideas are simple combinations of existing ones, the technology we thought of yesterday might might be more valuable tomorrow, as the key component in a new solution.

Each small step of innovation is the result of someone, somewhere bringing together a collection of previously unconnected ideas to solve a problem. This is a pull, rather than a push process. Solutions are not created in search of a problem, but in response to a problem. A new idea is the result of a series of small, incremental steps from the ideas we have to the idea we need. The net result of this incremental development is huge. What makes innovation surprising, and seemingly random, is the fact that we often only see the end result, and not the journey.

Innovation, the ability to be original, comes from inside, not outside of our organizations. The real challenge is synthesis: understanding what problems are interesting, selecting the ideas which bring value to a solution (as not all ideas are created equal), and then bringing together these ideas to create something new. How do we create space and time to help our team synthesize these new, innovative ideas when presented with a challenge?

Tesco’s looking outside the building to predict customer needs

Tesco is using external weather data to drive sales
Tesco is using external weather data to drive sales

Tesco, the UK’s largest retailer, has started using weather forecasts to help determine what to stock in its stores across the UK.

Traditional approaches to stock management use historical buying data to drive stock decisions. This has worked well to date, but the increasing unpredictability of today’s weather patterns — driven by global warming — has presented business with both an opportunity and a challenge. An unexpected warm (or cold) spell can create unexpected spikes in demand which go unserviced, while existing stock is left on the shelves.

In Tesco’s own words:

In recent years, the unpredictability of the British summer — not to mention the unreliability of British weather forecasters — has caused a massive headache for those in the retail food business deciding exactly which foods to put out on shelves.

The present summer is a perfect example, with the weather changing almost daily and shoppers wanting barbecue and salad foods one day and winter food the next.

Tesco’s solution was to integrate detailed regional weather reports — valuable, external information — with the sales history at each Tesco store. A rise of 10C, for example, led to a 300% uplift in sales of barbecue meat and a 50% increase in sales of lettuce.

Integrating weather and sales data will enable Tesco to both capture these spikes in demand, while avoiding waste.

(Largely adapted from the article in the Times Online.)

Innovation [2009-09-07]

Another week and another collection of interesting ideas from around the internet.

As always, thoughts and/or comments are greatly appreciated.

This issue:

The Boundaryless Value-Chain

I’ve uploaded another presentation to SlideShare. (Still trying to work through the backlog.) This is something that I had been doing logistics companies and a few public forums, such as The Open Group.

How real-time computing will transform supply chain decision-making

This presentation will provide a plain-English account of how real-time computing will transform supply chain decision-making and control. Peter Evans-Greenwood will illustrate the emerging leading practices with lessons learned from case studies, featuring clients across the globe.

The biggest challenge for today’s supply chains is to be adaptive. While tremendous gains have been made over the last thirty years, today’s applications are not as flexible as promised. New tools and techniques are required to capture and automate the non-linear, exception-rich, business logic that we currently rely on employees to deliver. Extending the technology stack will allow us to leverage the higher capacity of technology to deliver globally optimal solutions and to introduce innovations such as the moving warehouse into all our supply chains.