Executive Summary

Whether we are supporting the core technology of our Company’s Products or Implementing or Improving core Applications and Systems that support our Company’s Business Operations, Innovation is a critical aspect of every CIO & CTO’s responsibility.

This Blog Article will cover the following concepts in parts, as applied to Innovation:

• Types of Innovation
• Approaches to Innovation
• Techniques to Encourage Innovation
• Fostering an Innovative Mindset
  

Part 2 - focuses on the Approaches to Innovation.

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Approaches to Innovation

There are two fundamental approaches to Innovation:

Improving the Existing

This is the easiest and most common approach, as you are taking an existing Product, Process, or Business Model and simply improving upon it, typically in small increments over time.

Example:  Gillette Razors and Planned Obsolescence

While Gillette is a Consumer Products company, they have done a lot of Product Marketing research over the years and know exactly when a particular model of Men’s Razors and more importantly the Blades will start to decline in Sales. So, they focus their Product Innovation work on improving the Razor and Razor Blades in regular increments, so that they can launch the new “Models” just as Sales start to decline in the older “Models”.

Because of this they strategically plan for the Obsolescence of a particular Model. They even go so far as knowing which geographical markets are still buying the older models, where the Sales curve is not declining. This allows them to maximize the profitability of both their older models and also their newer models.

Their Innovations are typically incremental enhancements, such as adding a tilting head, a ball joint to the head, or even an extra blade.

Technology Example:

Apple didn’t invent the Graphical User Interface (GUI). They famously copied the GUI that Xerox Labs had built as a research project. What was truly Innovative was Steve Job’s ability to see how it could be used as the main GUI that end users worked with, and seeing the vision of how they would interact with it.

Benefits & Considerations

• Lower Risk - as Changes in Systems, Applications, and Processes are normally smaller
• Lower Costs - as you are making Incremental Improvements
• Lower R&D & Analysis Time - as you are only adding to an existing System, Application or Process, you aren’t inventing or implementing something brand new

• At some point, continuing to improve an existing System, Application, or Process, no longer makes sense:
• You can’t quantify the business value for making these improvements
• The improvements are starting to cause the framework of the System / Application to collapse under its own weight
• Remember Newton’s 2nd Law of Thermodynamics (Law of Entropy) - the more we build up a system and make it more complex, the greater the chance of it failing.

• So, at some point you will need to move to a New Innovative System, Application, Architecture, Business Model, or Process.
• You also have to consider External Factors that may force you to change tracks and implement a New Solution, rather than Incrementally Improving what you already have.

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Creating the New

This is much more difficult, risky, time consuming, costly, and yet, can also be massively successful and profitable; or alternatively end in disaster.

Benefits & Considerations

• Possibility of Leapfrogging the Competition
• First Mover Advantage
• Replace Legacy Systems that may be causing significant Productivity Issues, Additional Costs, Lost Revenue, or simply can no longer be Supported
• Implementing Large Enterprise Class New Application is always difficult and challenging, don’t underestimate the work involved or the timeframe
• If it is a pure R&D Innovation, where you aren’t simply replacing an existing System with a New System, but actually creating it from the ground up, then you need to carefully consider the various options and approaches.  On average most Pure R&D efforts only have a 3% to 5% success rate.  This is why companies like Google, 3M, etc. purposefully give their employees time off to come up with Innovative Ideas and suggestions.  As you never know when the next great idea may come from.

Example:  Hershey’s Implementation of SAP

As part of their Y2K Strategy, Hershey famously undertook a brand new implementation of SAP, Siebel, and Manugistics, to replace all of their older Supply Chain systems, which were not Y2K compatible.  This supposedly was completed in August 1999, plenty of time before the Halloween Season.  However…

• In September 1999, the CEO disclosed that
• They were having significant problems with their new $112 million dollar system
• And that they would not be able to ship and deliver over $100 million in Cady products by Halloween due to these problems

• Hershey’s Stock crashed 8% that same day
• News of the debacle hit the front page of the Wall Street Journal

Example:  Toyota Production System (Lean Manufacturing)

This is a great example of an organization transforming their business Processes by creating a brand New Process and Implementing this Innovation within their entire organization.

The revolutionary Toyota Production System changed not only most major Manufacturers, but ultimately even the Software Industry. It involved a combination of Kanban Squares on the shop floor to control the flow of Work In Process goods in a Pull Model, as well as the concepts of Kaizen (Continuous Improvement), to greatly improve the productivity of the team, process flow, feedback loops, and quality of the finished product.

In the late 1990’s, these concepts were also applied to the Software Industry, which ultimately evolved into today’s modern Agile Software Development Methodologies, like Agile Scrum, Agile Kanban, etc.

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Conclusion

In this Blog Article - Part 2 - we have discussed the:

• Approaches to Innovation
  

Next in Part 3:

• Techniques to Encourage Innovation
• Fostering an Innovative Mindset
  

So, go forth and conquer… create the New, Improve upon the Existing, and foster a Culture of Innovation.

We hope you enjoyed this article,

Thank you.

David Annis