Practice of Innovation

At Innovation, a Lot

Innovation is the primary driver of prosperity, job growth, social responsibility, environmental sustainability, and national security.  Activities that improve the world’s innovative performance are major contributions to society.

Today almost every measure of innovative performance is poor.  My colleague, Len Polizzotto, often points out that more than 80% of new products fail in less than a year. They don’t fail because of poor technology; they fail because no one wants them.

For over twenty years we have held value-creation workshops with management teams and senior leaders from international companies, universities, governments, and non-profits.  During the workshop teams practice the concepts presented by working on their current “important” initiatives.  After all, it is a waste of time for professionals to spend time on toy problems that have no meaning.  By the end of the workshop the managers typically decide that only 20-30% of their “important” initiatives have any value for their enterprises.  We don’t decide; they do.  We just give them a way to evaluate the merits of their projects.

Surveys regularly indicate a dispiriting situation.  For example, Steve Denning recently discussed a survey of 150 firms with innovation teams that varied from less than a hundred to over a thousand staff.  The survey found:

· Only 5% said that innovation staff feel highly motivated to innovate.

· ~75% say their new ideas are poorly reviewed and analyzed.

· ~33% say they regularly measure or report on innovation.

· 81% say their firms do not have the resources needed to pursue innovations needed to say ahead of the competition.

· 16% believe their employers regard the development of intellectual capital as a mission-critical function.

· 51% believe they will receive any benefit or recognition for developing successful ideas.

Government laboratories have similar issues.  Talking to the director of one of America’s national laboratories, I asked what percent of the programs in the labs had any value for the nation?  He thought for a bit and then said, “About 10%.”  I have had that same conversation with heads of national laboratories around the world.  In public they all say they are doing amazing things but in private they admit their disappointment and lack of progress.  

Of course when you are spending billions of dollars each year you can always point to a success or two, but at what cost?  Remember when the fruit flavored drink Tang was being touted as a “success” to justify NASA’s budget?  It turns out that NASA didn’t invent it (or Teflon, Velcro, or other things often mentioned) and astronaut Buzz Aldrin eventually said, “Tang sucks.”  The NASA program was justified by its own remarkable accomplishments in space, not because of its unrelated “spin-offs.”

Most university “tech transfer” programs are also frustratingly unsuccessful.  Even the name is wrong.  If we know anything about innovation, it is that tech push (i.e., “tech transfer”) doesn’t work. Tech transfer initiatives generally suffer from the “Valley of Death” syndrome, where customer and market-driven value creation is not pursued aggressively or thoroughly enough.

I was having lunch at a prestigious university with the Vice-President of Research and the Director of the university’s tech-transfer program.  In public they said that they had one of the most successful university programs.  I asked what they wanted to talk about.  The VP of research said, “Our tech-transfer program isn’t working and we would like to discuss why.”  I discovered that they had twenty professionals going around the world selling the university’s IP portfolio. But by itself, most IP has little or no value until it addresses a real need.  They weren’t selling value; they were selling technology.

Even in Silicon Valley, the best innovation ecosystem in the world, most venture capitalists fail. In Peter Thiel’s wonderfully provocative book, Zero to One, he points out that only a few VCs walk away with almost all of the financial returns.

A common theme in all these failures is a lack of understanding of the fundamentals of innovation and people with the skills to apply them. For example, failure is too often preordained at the start of new initiatives. As Thiel points out, if you are a VC and you don’t invest in potentially major initiatives it is unlikely you will realize positive returns on your investments. When I was CEO of SRI International, we also understood this.  If you want to make an impact, you have to start with an important opportunity, not just an interesting one. Perhaps that sounds obvious, but most don’t do that.

Nevertheless, can innovative performance really be improved? It is obvious that many of the most important innovators like Edison, Jobs, and Gates were blessed with extraordinary intellectual capabilities, skills, and drive. And they were fortunate to be at the right place at the right time. Because of this many incorrectly believe that innovative success is a consequence of a person’s DNA or luck.  On the contrary, they are exemplars of how powerful the fundamentals can be.

These giants of innovation are just the visible peak of a mountain of innovators around the world. Without the thousands of innovations by others in software, hardware, materials, communications, production, and distribution, Edison, Jobs, and Gates would not have succeeded.  Millions of professionals are constantly making both incremental and disruptive innovations. If even a fraction of these professionals were given the knowledge and skills needed, the world would progress faster and more efficiently.  In our book, Innovation, we described the transformation that occurred when I was CEO at SRI International by fully embracing these ideas.  

Here is one simple example. When we hold a workshop we ask the participants — whether from a company, university, government agency, or non-profit — to write down definitions for important concepts, like innovation and customer value.  They then post them on the wall so everyone can see them.  Inevitably it is a Tower of Babel, with little or no team agreement.  That doesn’t stop progress, but this confusion slows down the team and reduces their probability of success.  Recently I did this excersise with an international group of innovation experts and discovered the same result.  The fundamentals of innovation are still mostly not taught and practiced.  

My experience at SRI and many other enterprises proves that innovative performance is greatly improved when professionals understand and apply the fundamentals of innovation.  Because today’s innovative performance is so poor, I believe innovative outcomes can be improved by 100% or more by working in a more productive way based on these fundamentals.  Even realizing a small fraction of this potential would create enormous new contributions to society.