Innovation Profiles: Survey Report

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P A U L S C H U M A N N

InnovationProfiles

Results of Survey

2004 The Innovation Road Map, www.theinnovationroadmap.com

IntroductionThis report is a summary of the results of a survey

of 46 individuals who visited the Innovation RoadMap web site and chose to become participants.

InnovationInnovation is the means by which enterprises createwealth. Enterprises that learn how to integrate inno-vation into strategy, and strategy into the process ofinnovation, will gain a competitive advantage andoptimize the enterprise's creation of wealth.

Integration of innovation into strategy requires twotools -- the Innovation Profile and the InnovationRoad Map. The Innovation Profile provides a way to

analyze the innovation opportunities and threats ofthe market, strategy of competitors, capability ofthe enterprise, and desires of the stakeholders.

The Innovation Profile is a matrix of nine differenttypes of innovation. The Innovation Road Map in-cludes customers, competition, technology,stakeholders, enterprise capability and the enter-

prise's capacity for change. This Road Map enablesthe creation of multiple scenarios based on differentinnovation strategies that are necessary for strategic

wealth creation decisions.

What is Innovation?Innovation in marketing is also essential. Thereforebusiness really has only one basic function -- innova-tion. Innovation is the basis of all competitive advan-tage. Innovation is the means by which enterprisesanticipate and fill customer needs. Innovation is theway that enterprises utilize technology.

Innovation endows resources with a new capacity tocreate wealth or creates a new resource. Innovationresults from the enterprise's way of implementing newideas, of turning the creative concepts of its membersinto realities. It can cause change or it can exploit

change. Systematic innovation which exploits changeis generally the most effective. Strategic innovation isthe purposeful and organized search for changes, andthe systematic analysis of the opportunities andthreats such changes might offer for the creation ofwealth.

The Innovation ProfileEveryone in an enterprise must be innovative; that isthe only way that the enterprise will be able to changefast enough to meet the demands of its customers,stay technologically competent, effectively deal withcompetition, and respond to the pressures of changeboth from within and without.

To allow each person in the enterprise to be innova-tive, the enterprise must have a broad definition ofinnovation, one that encompasses all members of theenterprise. This definition must be able to transcendorganizational structures and be useful to every func-tion, from marketing through research to develop-

Business has only two basic functions:Marketing and innovation. Marketing and

innovation produce results. All the rest arecosts.Peter Drucker.


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resents.

Incrementalinnovations are those that reflect a rela-

tively small improvement over present products, proc-

esses, and procedures. These are advances that are alittle better, a little faster, or a little cheaper. In thetraditional S-curve, the relatively flat portions of the S-curve at its beginning and end have a high incidence ofincremental innovations.

Distinctiveinnovations are those that provide signifi-cant advances or improvements, but are not based onfundamentally new technologies or approaches. Themiddle portion of the S-curve when rapid progress ismade usually has a high incidence of distinctive inno-vation.

Breakthroughinnovations are those that are based onfundamentallydifferent tech-nologies andapproaches,and that allowthe perfor-mance of func-tions that werepreviously notpossible, orthe perfor-

mance of pres-ently possiblefunctions in a

manner that is strikingly superior to the old.

Breakthrough innovations result in a significant num-ber of distinctive innovations, and these, in turn, resultin a flood of incremental innovations. Breakthrough in-

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Breakthrough

Distinctive

Incremental

ment tomanufac-turing.

Members

of the en-terprise atall levelsmust beable tocommuni-cate effec-tively witheach otherabout in-

novation. These kinds of results can be accom-plished with an InnovationProfile.

The Innovation Profile shows nine different types ofinnovation. Along one axis is displayed the natureof the innovation. The other axis shows the class ofthe innovation. The natureof the innovation is clas-sified into one of three categories:

Productinnovations involve the way things interactwith things. Productinnovations are those involvingthe function provided to customers or the form thatfunction takes. Examples include improvements inindustrial machinery, consumer goods, software,and component parts. It can also refer to productsof the mind.

Processinnovations involve the interaction of peo-ple with things. Processinnovations are those thatinvolve the way a product is developed, produced,and provided. Examples include improvements inmanufacturing, distribution, and development sys-tems.

Procedureinnovations involve the way people inter-act with people. Procedureinnovations are thosethat involve the way in which products and proc-esses are integrated into the operations of the en-

terprise. Examples include improvements in mar-keting methods, administrative methods, salesterms and conditions, and requirements genera-tion.

The second dimension of the classification struc-ture -- the classof innovation -- indicates how greata change from present practice the innovation rep-

Product

Process

Procedure

Increm

ental

Dis

tinctiv

e

Breakthr

ough

IncrementalTime

Pro

duc

tiv

it

y

Incremental

Incremental

Incremental

Distinctive

Distinctive

Breakthrough


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novations cause changes from one S-curve to an-other.

Breakthrough innovation results in the creation of anew industry or class of technologies -- the creation

of a new set or clusters of subsequent, less signifi-cant distinctive innovations. A distinctive innovationis the creation of a new member in the set initiatedby a breakthrough innovation. Incremental innova-tions result in changes to distinctive innovations.

At the societal level, the development of the incan-descent light was a breakthrough innovation. Thechanges from carbon filaments to metal filamentsand from evacuated bulbs to gas-filled bulbs weredistinctive innovations. The development of newmetals and glasses that are more reliable and lessexpensive were incremental innovations.

When these two dimensions of innovation are com-bined into a matrix, a powerful innovation tool re-sults: The Innovation Profile.

Everyone within an enterprise can and should inno-vate in one or more areas in this map. The Innova-tion Profile is a very useful tool for discussions withindividuals and groups about innovations and theirgoals; it can also be used as a creativity enhance-ment tool.

Other Applications

If the innovation profile is sharply focused on a fewtypes of innovation, the organization is likely to beefficient. If that profile is focused on the require-ments of its market, the organization is likely to beeffective. If the innovation profile is very broad, theorganization is likely to be inefficient.

The priorities you scored can also be used to write ascenario for the organization, describing how theorganization works. They can also be used to de-velop the equivalent of an engine describing how

the organization reaches its innovation goals.

If the innovation profile is not the one desired, theprofile desired can be determined via the survey anda target profile developed. Once this is done, a roadmap can be constructed for the organization thatoutlines the path the organization can take to reachthe desired profile. This is developed by focusing on

the resources of the organization and the organiza-tion's enablers of innovation.

This same type of innovation profile can be used todepict the results of strategic market analysis show-

ing both the present and future innovation profilesrequired.

The innovation profile is another tool that can beused to describe competition. And, it can be used todescribe the history and potential future of an indus-try.

Results of SurveyThe determination of the innovation profile is basedon a selection of ten priorities (or values) in each oftwo categories vitality and quality. These are:

Vitality Self development Communication Environmental awareness Multiple skills Teamwork Vision Leadership Creativity Innovativeness Knowledge

Quality

Achievement Effectiveness Appropriate technology Service Productivity Efficiency Control Pioneering progress Community Self actualization

The definition of these values are given in the appen-

dix.

Each person taking the survey was asked to answersome demographic questions and then determinethe importance of each of the 20 values in their or-ganization. From the priorities selected, an innova-tion profile was calculated. Examples of the individ-ual profiles are given in the appendix.

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As expected, taken as an aggregate, the importanceof each of the 20 values was almost he same. How-ever, a few of the values stood out:

Achievement (65%), Effectiveness (58%) and Effi-ciency (47%) got the highest very important or

critically important scores among the quality values.Control (18%) was substantially lower.

Leadership (54%), Teamwork (54%) and Knowledge(48%) got the highest scores among the vitality val-ues.The innovation profile resulting from these values

indicates a strong focus on distinctive product inno-vations (for the organizations participating in thesurvey).

I expected to see sharp differences between organi-zations in different industries and some similaritiesbetween organizations within an industry. Thisturned out to be true as shown in the appendix.

For example, consider the two health care organiza-tions. The small health care organizations is a re-search organizations and the large health care or-ganization is a hospital. The research organization

has a focus on breakthrough products and the hos-pital has a focus on distinctive and breakthroughprocedures.

Look at the four professional services companies.Each has a focus on distinctive and breakthroughproduct innovation. Two have an added focus onprocedure innovations. These two organizations

may be trying to differentiate themselves from theircompetitors in the ways in which they deal with theirclients.

Note that the two information technology companies

have almost the same profile. A result like this could

be an indication of the strategy decay discussed byHamel in Leading the Revolution.

There were three industries that had three or morerespondents professional services, finance & insur-

ance and education.

Professional Services

Finance & Insurance

Professional service companies are heavily focusedon product innovations with an emphasis on distinc-

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tive product innovations. This may represent theprofessional services industrys continual search fornew products to respond to the ever changing needsof their clients and the ever present pressure ofcompetition (the need to differentiate themselves

from competitors).

Finance and insurance shows the split focus be-tween the need to develop new products like theprofessional services industry, but also new ways tointeract with their clients through procedure innova-tions. These companies seem to have a higher focus

on breakthrough innovations as well.

The education industry is like the finance & insur-

ance industry in that there is an almost equal em-phasis on product and procedure innovations. How-ever, education companies are strongly focused onincremental and distinctive innovations with littleemphasis on breakthrough innovation.

EducationTwo of demographics (size of organization and

amount of revenue) showed small differences withrespect to the values as shown below:Three of the demographics (length of expereince,length of service with current organization and hier-archical position within the organization) make senseonly to analyze with respect to the values selected.They do show some differences.

It is probably no surprise that control was at the bot-tom of everyones list. It was a surprise that creativ-ity was also at the bottom for professionals and man-agers. Whereas, creativity and innovativenss was atthe top of the directors and executives list. It is in-teresting to note that professionals and managersscored service at the top of their list (to make a con-

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Number of People 125

Value knowledge

higher

More product inno-

vation

Revenue $10M

Value communica-

tion and knowledge

more

Expereince 20 years

Higher scores on

almost all values

Highest score:

achievement

Lowest score: con-trol

Biggest difference:

scored creativity

and innovative-

ness; achievement

and effectiveness

higher

Service 10 years

Highest score:

achievement

Lowest score: con-

trol

Biggest difference:

Ranked vision, self

actualization &

community higher

Rank Professional

Manager

Highest score:

service

Lowest score: con-

trol & creativity

Director Execu-

tive

Highest score:

achievement

Lowest score: con-

trol

Biggest difference:scored innovative-

ness, creativity &

self actualization

higher


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tribution to society) while directors and executivesranked achievement at the top (accomplishingsomething desired by the organization). This mustset up some interesting dynamics.

For people with less than ten years of service withtheir present organization, effectiveness was rankedhighest whereas those with more than 10 yearsranked achievement highest. Both are results ori-ented, but the people with less than 10 years are

more interested in doing something worthwhile forthe market, whereas those with more than ten years

want to please the organization.

Those people with less than 20 years of expereincescored leadership the highest, whereas those withmore than 20 years scored achievement highest.

Four of the functional areas had three or more re-

sponses general management, information technol-ogy, product development and training.

General Management

Information Technology

Across industries, the general managers were clearin what they values distinctive product followed byincremental product and breakthrough product inno-vations. IT mirrored GM but added more procedureinnovations, i.e. New ways of working together andwith their clients in the company. Training also mir-rored ITs view of the need for procedure innovation

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General Managers Self development

TeamworkLeadership

Innovativeness

Achievement

EffectivenessEfficiency

IT Knowledge

Leadership

Teamwork

Achievement

Self actualization

Product Develop-

ment

? Effectiveness

Appropriate tech-

nologyService

Training Teamwork

Leadership

Achievement

Service

Community


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and while their focus on product innovation was thesame shape as the GMs, it was greatly reduced.

Training

You will note the conspicuous absence of productdevelopment. The result from product developerswas very curious. No two of the product developersresponding scored any of the vitality values higherthan a three (important) and therefore an innovationprofile could not be created. They had a better de-veloped sense of the quality values, but even in thiscategory, the scores were much lower. (There wereonly two 5s critical, among all the scores.)

The product developers who responded to this sur-vey value acceptance of what they develop in themarket, selecting or developing the best technology

to meet market needs and making a contribution tosociety through their work. But, they lack clear pri-orities on the class of innovation they are to de-velop incremental, distinctive or breakthrough.

ConclusionsWhile the innovation profile instrument has beenused successfully for years in workshop settingswithin companies, this was the first time that it hasbeen sued across industries and in an online formwith no chance for interaction. The results havebeen very promising.

The instrument appears to be discerning differencesin the innovation profiles of organizations and indus-tries that make sense. It has also uncovered somedifferences, i.e. Between general management andproduct developers, that could lead to serious prob-lems.

More expereince with the instrument is needed andgreater numbers of participants are required to pro-duce conclusive evidence.

For More Information

For more information about the innovation profileand its applications, contact Paul Schumann,[email protected], 512.302.1935,or visit the web site, www.theinnovationroadmap.com. The web site contains a blog, magazine andstore for promotional and educational products re-lated to innovation. You can also take the surveyand get for your organization and get an innovation

profile for $195 at our store. Go to http://store.yahoo.com/innovationroadmap/inprsu.html.

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Appendix Examples of Profiles

Professional Services Small

Professional Services Large

Finance & Insurance Small

Finance & Insurance Large

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Energy Large

Consumer Small

Education Small

Information Technology Small

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Information Technology Large

Nonprofit Small

Basic Materials Large

Health Care Small

Health Care Large

Appendix Values

Vitality ValuesSelf-Development: Acceptance of the responsibilityfor ones own future. The members of the organiza-tion feel that it is their responsibility to begin a crea-tive course of action or to act on their conscience for

self-development without external prompting.Communication: Effective and efficient transmissionand flow of ideas and factual data within and be-tween persons, departments, divisions and other or-ganizations. Selection of appropriate media for themessage is implied.Environmental Awareness: Perception and under-standing of what is transpiring in the world and how

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it directly or indirectly affects the organizations vi-sion, mission, goals, strategies, plans and actions.The environment is made up of current and futureperspectives of customers, competition, and technol-ogy within the context of social, political, economic,

scientific, and demographic driving forces forchange.Multiple Skills: A well-rounded, broad perspectivewith expert capabilities in several key skill areas.These areas must include life skills as well as organ-izational skills.Teamwork: Working effectively with and through oth-ers. Working cooperatively with one another suchthat the skills and qualities of one individual supple-ment, support and enhance the skills and qualities ofothers in the group.Vision: To perceive the purposes of an organizationand communicate that purpose to its members in

such a lucid manner that its members are able totranscend their limited personal perspectives andabilities.Leadership: The capability to translate intention intoreality. The personal organizational or conceptual in-fluence to motivate persons to take authority for theprocess of change.Creativity: The capacity for original thought and ex-pression that brings new ideas and images into anexisting reality or brings forth a new reality.Innovativeness: Ability to apply creativity. Innova-tiveness requires an understanding of the organiza-tion, its interaction patterns, and most importantly,how ideas flow within the organization to become ac-cepted.Knowledge: The accumulation and management ofproducts of the mind. Examples include -- patents,copyrights, trade marks, trade secrets, know-how,books, reports and standards.

Quality ValuesAchievement: Accomplishment of a desirable resultas defined by the organization.Effectiveness: The production of relevant results as

defined by the market.Appropriate Technology: Selecting the best technol-ogy to fulfill an application while minimizing the ad-verse effects on the surrounding systems.Service: The motivation to make a contribution tosociety (customers, community, and world) throughones work.Productivity: Generating and completing tasks and

activities that achieve externally established goalsand expectations.Efficiency: Thinking about and designing acts andpurposes in the best possible and least wastefulmanner before implementing them.

Control: Providing restraint and direction to achievemethodological arrangements of persons or thingsaccording to prescribed rules.Pioneering Progress: Originating and introducingcreative ideas for positive change in social organiza-tions and systems, and providing the framework foractualizing them.Community: Sufficient depth of commitment to agroup, its members and its purpose that both inde-pendent creativity and interdependent cooperationare maximized simultaneously.Self Actualization: The inner drive toward experienc-ing and expressing the totality of ones being

through spiritual, psychological, physical, and men-tal activities that enhances the development of onesmaximum potential.

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Innovation Profiles: Survey Report

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