TACKLING THE WICKED PROBLEMS OF INNOVATION … · Tackling the Wicked Problems of Innovation in...
63
TACKLING THE WICKED PROBLEMS OF INNOVATION IN LARGE NEW ZEALAND ORGANISATIONS Insights and learnings from the CEOs of New Zealand’s biggest companies and most successful startups
Transcript of TACKLING THE WICKED PROBLEMS OF INNOVATION … · Tackling the Wicked Problems of Innovation in...
TACKLING THE WICKED PROBLEMS OF INNOVATION IN LARGE NEW ZEALAND ORGANISATIONS
Insights and learnings from the CEOs of New Zealand’s biggest companies and most successful startups
Tackling the Wicked Problems of Innovation in Large New Zealand Organisations
Insights and learnings from the CEOs of New Zealand’s biggest companies and most successful startups
A report by Previously Unavailable in association with Auckland Tourism, Events and Economic Development
bigilittlei.co.nz
2
About this study 5
Participating CEOs 6
Executive Summary 9
Part One: The definition & importance of innovation 17
Part Two: The wicked problems of innovation 23
How do we compare globally? 38
Laying a foundation for success: 6 top tips for (I)nnovation strategy & ideation 40
Part Three: Overcoming innovation’s challenges 43
Innoculating against innovation’s antibodies 53
Part Four: What can we learn from our founder CEOs? 54
Three principles for agile governance 60
Last word 63
About Previously Unavailable 64
About the authors 68
Contents
3
A word from our partner
Kiwis have always had an innovative streak. We’re known for thinking outside the square and coming up with world-class ideas. When you’re isolated from the rest of the world at the edge, as
we have been historically, you’re often required to come up with your own solutions.
But the need for our country, and the organisations and individuals that call it home, to continue to innovate has never been greater. The world is growing smaller every day, and we are competing
for talent, skills and investment with the rest of the globe.
Innovation is a key driver of economic and social growth, and critical to delivering a prosperous economy. But to be innovative isn’t easy; if it was, everyone would be doing it.
I share Previously Unavailable’s belief that New Zealand can become the world’s most innovative nation. In Auckland, we’re aiming to be recognised as an innovation hub of the Asia-Pacific region, and we’re on the road to achieving this. We have a great foundation of tertiaries and CRIs to build
from.
We are working with organisations large and small in pursuit of this goal, building a culture of innovation and entrepreneurship under the spirit of kotahitanga (or partnership), through
infrastructure like GridAKL, the AR/VR Garage, and the FoodBowl, and a set of programs driven across the eco-system with our partners like Grow North.
As a nation, New Zealand is good at innovating. The challenge is to be great at it including successful commercialisation and exits, not to mention developing unicorns. Initiating a
conversation about how to overcome the difficulties of innovating, as this report does, is an important part of this journey.
If we’re able to harness our innovative potential, our businesses will grow faster, and employ more skilled people in higher paid jobs. We need to be flexible and well positioned to take advantage of
emerging opportunities – both nationally and globally – for everyone’s benefit.
This report is a collection of provocations and insights, and a call to action. Thank you to James and the team for inspiring us to be great.
Brett O’RileyCEO, Auckland Tourism, Events & Economic Development
October 2016
Our special thanks to Auckland Tourism, Events and Economic Development for their kind assistance in making this report possible.
This report was conceived, planned, researched, written, designed and produced by Previously Unavailable with the
help of Jude Rutherford of Juice Research.
© 2016 Previously Unavailable
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the written
permission of Previously Unavailable
5
We’d go out and speak to every CEO of a major New Zealand organisation that would give us the time.
We would talk to them in detail about their highs and lows of innovation. We would understand their challenges. We would uncover their success stories.
And we would share the learnings among our clients and the wider New Zealand business community.
We believe that New Zealand can become the world’s most innovative nation. That being so would not only be in the interests of our clients, but in the interests of NZ Inc and indeed New Zealand as a whole.
We also believe that to accelerate that journey, we should share our challenges and learnings among each other – so that New Zealand organisations might all rise on a tide of growing innovation understanding and success.
In 2010, McKinsey surveyed 2,240 global executives on the topic of innovation. One of the most enlightening findings was that, while 84% said innovation was ‘extremely or very important to their companies’ growth’, just 6% said they were satisfied with their innovation efforts to date.
We started Previously Unavailable obsessed with this chasm between the importance of innovation, and large organisations’ ability to innovate successfully.
We have experienced that chasm during our two and a half years operating as New Zealand’s first innovation consultancy.
Innovation in large organisations is hard. We work with talented clients who have a true passion for innovation, and the ability to generate powerful innovation strategies and concepts. Yet they face seemingly unending challenges transforming their vision and passion into tangible outputs and results.
In order to be a more effective partner to the New Zealand business community, we wanted to explore this issue in a more concerted and structured way.
So we set ourselves a challenge.
About this study
Participating CEOs
Adrian Littlewood
CEOAuckland Airport
Ailsa ClaireCEO
Auckland District Health Board
Andrew GareyCEO
New Zealand Steel
Andy RoutleyCEO
DB Breweries
Barbara ChapmanCEOASB
Barrie SheersManaging Director
Microsoft NZ
Brian RocheCEO
NZ Post
Brett O’RileyCEO
ATEED
Cecilia RobinsonCo Founder &
Co-CEOMy Food Bag
Chris LitchfieldManaging DirectorCoca-Cola Amatil
Chris QuinCEO
Foodstuffs North Island
David McLeanCEO
Westpac NZ
Dennis BarnesCEO
Contact Energy
Derek McCormack
Vice ChancellorAUT
Fraser WhinerayCEO
Mercury
Gráinne MossCEO
Ministry for Vulnerable Children
Greg Davidson CEO
Datacom
Ian McCrae Founder & CEO
Orion Health
Jane HastingsCEO
NZME(former)
Kevin KenrickCEO
TVNZ
We are grateful to the 44 CEOs who gave their time and perspective to this study. We intentionally chose leaders of large organisations, or in the case of our founder CEOs, successful ‘startup’ companies.
Our panel spotlights an uncomfortable truth. Leadership of large organ-isations in New Zealand is a sea of male, pākehā faces. It is commonly noted that we do not currently have a single female CEO of an NZX 50 company, and ethnic diversity among senior ranks is even less common.
While our selection criteria was strictly about CEOs of large businesses, and thus slave to the realities of the makeup of that group, we sought out as many female leaders as would give us the time, in an attempt to balance the scorecard as best we could. We feel it important to note this lack of diversity as an area for improvement in our business community.
Neil CowieCEO
Mitre 10
Peter Chrisp CEO
NZTE
PeterCullinane
Founder & CEOLewis Road Creamery
Peter ReidyCEO
KiwiRail
Peter TynanCEO
Southern Cross Health Society
Rob Chemaly CEO
Liquorland
Rod DruryFounder & CEO
Xero
Rob LeeManaging Director
IBM NZ
Rod SnodgrassCEO
Spark Ventures
Russell StannersCEO
Vodafone NZ
Scott HadleyCCO
Independent Liquor
Scott Pickering CEOACC
Simon MoutterManaging Director
Spark NZ
Simon TongManaging Director
Fairfax NZ
StephenEngland-Hall
CEOLoyalty NZ
Steven CardenCEO
Landcorp
Stephen TownCEO
Auckland Council
Stuart McCutcheon
Vice-ChancellorAuckland University
Vaughan Rowsell Founder & CEO
Vend(former)
Wayne PickupCEO
Lotto NZ
Leon ClementManaging DirectorFonterra Brands NZ
Mark CallaghanCEO
Frucor Beverages(former)
Mark RatcliffeCEO
Chorus
Mike Bennetts CEO
Z Energy
9
Executive Summary
10
“
I’d love to say it’s everybody’s obligation to innovate,
but that’s probably more little ‘i’, like innovate to
improve. But the really big, what I’d call ‘capital I’
innovation, that tends to be at the more senior levels.
”
Brian Roche, NZ Post
11
Tackling the wicked problems of innovation in large New Zealand organisations
EXECUTIVE SUMMARY
What couldn’t be clearer from this research is that innovation is front of mind for the leaders of New Zealand’s large organisations. Most give innovation a 10 out of 10 in terms of importance to their near-term commercial performance.
But while we’re all making progress on our innovation journeys, most CEOs score their recent innovation performance as a 6 or under.
Innovation is not easy, and this study sought to understand the difficulties, and uncover clues as to how we might better overcome them.
One key insight is that innovation comes in two primary forms for large organisations – and that the two have very distinct requirements in terms of people, process, culture and structure.
We’d describe the first form as ‘creating new innovations - new products or services or offerings that meet customer or market needs to drive growth’. This is about inventing new things and commercialising them for the benefit of the customer (and then as a result, the business). This is very much about ‘what’ we deliver as a business, and what we could deliver to grow future sales revenue.
The second form could be described as ‘thinking innovatively about how we do what we do in new, smarter and better ways’. In classical terms, this is about ‘continuous improvement’ – everybody in the organisation challenging how they do what they do to find more efficient and effective ways of working. This second form isn’t about ‘what’ we deliver, but about ‘how’ we deliver it more proficiently.
In thinking about how to activate innovation, these two forms tend to cross over and often blend into one, leading to oscillating conversations about whether, for example, innovation should be everyone’s job, or that of particular experts.
In exploring this dilemma, NZ Post’s Brian Roche suggested an interesting categorisation:
“I’d love to say it’s everybody’s obligation to innovate, but that’s probably more little ‘i’, like innovate to improve. But the really big, what I’d call ‘capital I’ innovation, that tends to be at the more senior levels.”
In order to make innovation a little easier to talk about and problem-solve around, we propose categorizing innovation in this simple way – ‘Big I’ Innovation and ‘little i’ innovation.
12
world. And while the potential is certainly there, we can’t export little i innovation.
Nor would (i)nnovation have saved companies like Kodak or Blockbuster.
And when leaders in New Zealand talk about who they admire, it’s always the (I)nnovators. Air New Zealand. Xero. My Food Bag.
We believe we need to start a conversation around how to improve the (I)nnovation output of our large organisations.
It’s easy to feel innovative because we’ve made a few clever changes to our systems or struc-ture. But while we might be good (i)nnovators, we need to challenge ourselves to become great (I)nnovators.
Our large organisations have the clout to sell the biggest ideas to the world. But first they need to get those ideas through the bureaucracy and out the door. It was commonly acknowledged that the challenges around (I)nnovation rarely come from outside the organisation. We can be our own worst enemies in terms of suffocating and self-sabotaging our (I)nnovation efforts with legacy culture and process norms that are unsuit-able for today’s competitive environment.
This study highlights many of
the challenges our large
organisations face when it
comes to (I)nnovation.
There’s no lack of effort being
made in every one of the
organisations we researched.
But the problems are indeed
wicked ones, and the intention
of our research was to begin to
unpick them, to reveal stories
and learnings that will help
us to tackle them, and to share
those for the benefit of all New
Zealand organisations.
Big I Innovation is the development of new customer offerings. Little i innovation is finding new, smarter ways of operating.
Both are of commercial value. Little i innovation creates efficiency and ultimately leads to better margin performance or room in the system to allocate resource in new ways. Big I Innovation opens up new revenue streams and can even reorient categories in favour of the organisation.
Today, we over-index on little i. Many of the CEOs in this study reflected on little i innovation being much easier to activate than big I.
This sentiment is reflected in the research of Motu and the New Zealand Productivity Commission, who in 2015 reported that the innovation output of New Zealand companies has been decreasing over time, despite increased ‘inputs’ such as R&D. Their data shows the percentage of New Zealand companies introducing new goods and services declining, and consequently, sales of new goods and services also declining as a percentage of all sales.
This decline skews toward larger organisations. As is the case in most countries, the innovation output of the smaller, younger companies was higher.
While we might accept that smaller companies will always run a little faster, having innovation outputs in decline in our large organisations doesn’t bode well from an economic standpoint.
It’s our belief that for the good of NZ Inc and our economy, our large organisations need to improve their big I Innovation capability and performance.
While we champion and celebrate the inter-national success of our clever start-ups, we also need the world to be looking at our large organisations as impressive innovators. If New Zealand is to attract the best talent and be regarded among the most innovative nations globally, we can’t leave all the work to tech startups.
We talk about being a great test market for the
EXECUTIVE SUMMARY
13
Big I Innovation
(I)nnovationLittle i innovation
(i)nnovation
The development and commercialisation of new
customer offerings - products, services, experiences.
The commercial effect of (I)nnovation is top line growth -
opening up new revenue streams.
(I)nnovation is outwardly focused - uncovering unmet customer needs
or unsolved customer problems.
Good ideas can come from anywhere, but the process of
developing and commercialising (I)nnovation is best executed by dedicated, experienced experts.
The discovery and implementation of new and smarter ways to
organise or operate.
The commercial effect of(i)nnovation is bottom line growth - uncovering operational efficiencies.
(i)nnovation is inwardly focused - identifying opportunities to change the way we do what we do for the
better.
(i)nnovation is most effectively achieved when everybody within
the organisation is given the freedom and encouragement to
find new and better ways.
14
Creating smaller, cross functional teams
Startups run fast because they’re small, usually diverse teams. Replicating these inside larger organisations will lead to greater focus and higher collective accountability.
(I)nnovating in parallel, not serial
The reality that only some (I)nnovations will be stars means that we need to be placing more small bets earlier, rather than committing wholesale to doing one big thing at a time.
Taking (I)nnovation ideas more quickly into early prototyping and testing, to rapidly assess potential and prioritise
We suffer from paralysis by analysis, rather than having a clear process to quickly and cost effectively build and test prototypes with customers. Removing the subjectivity from evaluation would allow us to avoid the bureaucratic guess-ing and agonising that often leads to sluggish progress.
Creating a sense of crisis to change gear
Waiting for the platform to start burning has proven life-threatening to a multitude of once-great companies. Alibaba’s finan-cial services organisation (I)nnovates not with a sense of urgency, but a sense of ‘crisis’ which they consciously impose on themselves to insure against complacen-cy and low momentum.
Setting more ambitious in-market deadlines
The open deadlines on most (I)nnovation projects means there is always room to hesitate and delay. Rarely do companies arrive unprepared for their AGM or delay advertising past the date of the media booking – even though it is often a her-culean effort to coordinate these things in time. We need to impose equally strict and challenging (I)nnovation deadlines if we want to ensure (I)nnovation sees the light of day in time to capture the opportunity.
Getting closer to the customer
The spark of seeing a customer’s pain first hand and being hit with an obvious solution rarely happens when insights are Chinese-whispered from real life experience to focus group to PowerPoint presentation. (I)nnovation teams need to be connected to customers in a much closer, more authentic way than tradi-tional research allows.
Leaning in to the challengesof (I)nnovation
Our biggest challenge of all is speed. As the rate of innovation reaching consumers speeds up, it’s becoming apparent that the pace at which we’re moving is no longer fast enough.
There are many contributing factors, and the key challenges and actions we could explore fall into three broad categories: PROCESS, CULTURE and GOVERNANCE
EXECUTIVE SUMMARY
1 PROCESS
a
b
c
d
e
f
15
Defining the ‘massive’, and being okay with starting tiny
Good ideas often look like niche oppor-tunities at first – especially to companies that are used to mass scale. But every category-busting idea started small. We need to be able to see past the current state to properly evaluate the future potential of (I)nnovations.
Killing failures faster
It’s in our nature to persist, and killing projects puts the icing on failures we’d rather not acknowledge. We need to become more disciplined at reducing our (I)nnovation efforts back to those that are showing genuine promise.
Protecting (I)nnovation from the organisational anti-bodies
Corporate culture has a way of rejecting the foreign body of a new idea. Venturing units have their challenges, but the inten-tion of protecting (I)nnovative thinking is the right one.
Minimising ‘No’
As My Food Bag’s Cecilia Robinson puts it, corporate executives can often become ‘experts at saying no’. There is always a conceivable reason not to do anything, but we need a culture of ‘yes’ being the default position if we’re to change gear.
Deprioritisingconsensus
The long-held corporate practice of seeking broad-based consensus before moving forward removes most of the risk around collective decisions. But in an age where risk is an essential component of success, we need to become more com-fortable with only some people around the table agreeing at the outset.
Assigning responsibility effectively
We need to consider how responsibility for (I)nnovation is distributed. While (i)nnovation should be in everybody’s job description, we need to give (I)nnovation to people who are passion-ate about innovation, whose brains are wired in the right way, and who will make effective leaders of a difficult process. And they need to be given unambiguous accountability of getting the (I)nnovation to market.
Creating clear objectives and benchmarks
Some companies target a certain per-centage of revenue coming from new products. For many others, assessing innovation output is much more subjec-tive. What gets measured gets done, and we need to find ways of setting quan-tifiable targets around our (I)nnovation outputs to ensure we’re not contributing to New Zealand’s innovation declines.
We believe that New Zealand can accelerate its journey toward being the world’s most innovative nation. And we hope that this research inspires, provokes, and ultimately helps our larger organisations contribute even more successfully to that outcome.
EXECUTIVE SUMMARY
2 CULTURE
3 GOVERNANCE
gc
h
a
a
b
b
17
PART ONE
The Definition and Importance
of Innovation
18
Defining Innovation
The first question we asked CEOs was how they defined innovation.
As you’d expect, the answers varied consid-erably. Many, like Contact’s Dennis Barnes, noted that the concept of innovation can be nebulous: “I think ‘innovation’ is a bit like ‘sustainability’ - it can cover a multitude of activities.”
Some defined innovation very broadly. ‘Any pos-itive change’, ‘useful changes’, ‘new ways to do things’, ‘anything we’re doing that’s different’, ‘do-ing things smarter.’
For these leaders, the concept of innovation stretched to cover virtually anything their organi-sation did that departed from their norms.
Innovation as improvement
Many gravitated toward innovation as a pursuit of continuous improvement.
Like Toyota’s ‘kaizen’ programmes, this defini-tion of innovation seeks to optimize systems, processes and culture to create efficiencies in a company’s operations and delivery.
This is about thinking innovatively to do what they do better - innovating around ‘how’ they de-liver, more than ‘what’ they deliver.
In the journey of transformation, this continuous improvement is a powerful force, and an activity that can involve the entire workforce.
Many leaders spoke of programmes that involve their frontline staff - gathering insight and ideas and putting them through a process to integrate good thinking into the day-to-day of their organ-isation.
PART ONE
“
For us it’s about taking ideas
that our frontline people have.
We’re running a program
here called “High Performance,
High Engagement”, working
closely with our union
stakeholders and employees
about how we engage our
people in the front line to
improve the daily processes
and tasks. Ideas or inventions
from our teams that will
deliver cost effective and
higher quality outcomes,
improved reliability for
customers and build strong
working conditions for
our employees.
”
Peter Reidy, KiwiRail
19
“
A good example - someone
came up and said that, if you
need a blood transfusion we
normally give two lots of blood,
and well actually is that
necessary? So we had a whole
campaign of ‘why use two
when one will do?’, which
halved the blood budget. So
that came from someone
saying ‘I’m not sure that this
is actually necessary’.
”
Ailsa Claire, Auckland District Health Board
Sunday Star Times innovation. What I would con-sider innovation is a completely new business model, potentially a new business. That’s what I consider it to be. Innovation is about completely stepping off the ledge.”
“It’s about uncovering new areas of growth”, agreed others. “Innovation is something that is higher risk and something that is newer and out-side the category convention and norms.”
These leaders spoke of innovation more in terms of new products, services or experiences designed for customers to create new revenue streams.
In particular, the founder CEOs we spoke to de-fined innovation in terms of the creation of some-thing new, rather than simply doing something old in a different or better way.
“So, I would define innovation as bringing a new set of eyes to a category,” says Lewis Road Creamery’s Peter Cullinane. “And through seeing that category through new eyes, creating prod-ucts that others had not seen the opportunity for.”
They also showed a much greater tendency to define innovation by what actually reaches the customer.
“It’s basically getting ideas all the way through the process and shipped actually alive in custom-er sights,” said Orion Health’s Ian McCrae.
Big I and little i innovation
Of the two definitions, the former was the one we’re currently most comfortable with and adept at. It’s the latter that is more elusive, and subject to greater challenges. Innovation for growth - what we’ve labeled ‘Big I’ innovation - is where we have the greatest opportunity, and the greatest need for learning and progress.
As such, the remainder of our study focuses on the challenges and learnings around (I)nnovation.
We found many great stories of new efficiencies gained through this process of engaging employ-ees in a process of questioning and improve-ment.
Innovation as growth
At the other end of the spectrum, many defined innovation in much more specific and growth-re-lated terms.
“It is creating the new world for us,” says Fairfax’s Simon Tong. “So I don’t consider a revamp of the
PART ONE
20
ensure their organisations adapt.
There is also rising awareness that this ‘transfor-mation’ isn’t a one-off exercise. That the status quo for any successful organisation will be con-tinual transformation.
ASB’s reframing of themselves as a ‘tech compa-ny’ providing banking services is an overt com-mitment to changing the mindset of the bank, enabling the culture to step into a space of con-tinuous transformation by emulating the tech sector who are the most comfortable with this constant change.
Things will be different in the future, we know this for sure,” says Chris Litchfield. “Our defini-tion of innovation is change and it is incredibly important.”
Innovate or DieIt’s fair to say that innovation has become a major concern for the leaders of New Zealand’s large or-ganisations. 60% of our CEOs gave innovation a 10 out of 10 in terms of importance to their near-term commercial performance. 81% gave it an 8 or higher. While only 3 respondents of the 44 ranked innovation’s importance as a 6 or under.
Many talked of the need for innovation as being a matter of corporate life and death. “We’re dead without it… like survival stakes,” “if we do not in-novate we will dead in a decade’s time,” and “we have to innovate or we’re gone” were typical re-sponses when probed about the importance of innovation.
A ubiquitous push to transform
The need for innovation sits within a broader con-text of changing times. It was clear from almost every interview that CEOs not only recognize that legacy business models are in jeopardy, but are leading significant transformation efforts to
10
9
8
76 4 2
Average
8.9
How important (out of 10) do you consider
innovation to your near-term commercial
performance?
“
For a while we’ve been
reframing our language:
we’re not a bank, we’re a
technology company with a
license to operate in banking.
”
Barbara Chapman, ASB
PART ONE
21
A sea-change in customer expectations
New Zealanders’ interactions with world-leading companies like Apple, Amazon and Facebook is changing the expectations they have of every company they deal with.
In the old days, customers may have compared companies to others in their category. Today, they compare the experience they have with any company to the best customer experience they’ve had, full stop.
“They don’t measure us by virtue of any other bank,” says Barbara Chapman. “They say ‘if I can do everything self-service at Air New Zealand,
why can’t I do everything self-service at ASB? If I can do one-click at Amazon, why are you peo-ple insisting that I fill in all this paperwork and do all this silly stuff when you know me better than Amazon does?’.”
Naturally, our expectations are set by the com-panies we spend the most time with. And today, many New Zealanders spend far more time with Facebook, Apple, Google, Uber and Amazon than they do with their bank, supermarket, health care provider or council.
The implication is that if we’re not delivering a customer experience that lives up to those ex-pectations, we’re actively creating room in our industry for disruption.
For example, it’s commonly observed that, had the taxi industry proactively re-thought and improved their customer experience, there wouldn’t have been room for Uber to disrupt their category.
“
How do you take an
external view rather than
an internal view? We’re no
longer benchmarked with the
other utility companies. We’re
benchmarked against Air
New Zealand and Uber. So it’s
actually taking that external
perspective then working
back to what you have to do
to satisfy that.
”
Dennis Barnes, Contact Energy
“
If we’re not investing to
figure out how to play in
a world that’s going to be
heavily disrupted, we’re
just writing our death
warrant early.
”
Simon Moutter, Spark
PART ONE
PART TWO
The Wicked Problemsof (I)nnovation
24
“
A lot of people talk about innovation, but I’m not
sure a lot of people actually do innovation.
Innovation isn’t easy and if it was then everyone
would be doing it and we wouldn’t have these
studies tying to figure out how to do it better.
Because it’s hard.
”
Russell Stanners, Vodafone
25
The Wicked Problemsof (I)nnovation
PART TWO
While most CEOs rated innovation as an 8 or above in terms of importance, only 3 of the 44 gave themselves an 8 or higher when asked to rate their own innovation performance.
56% gave themselves a 6 or under when asked how they felt about their innovation outcomes over the past 3 years.
Kiwi humility? Perhaps. But the nature of most of the conversations centred around an acknowl-edgement that we’ve a way to go in terms of ac-tivating innovation successfully within our large organisations.
Why so hard?
Innovation’s challenges come down to an array of issues endemic in large organisations and relat-ed to the inevitable politics and complexities of scale. Z’s Mike Bennetts had an amusing descrip-tion of the biology of corporate life. “We take way too long… way too long,” he says. “It’s what I call corporate spread, a bit like middle age spread. The older you get, you pack on a few pounds,
How satisfied (out of 10) are you with your innovation success over
the last three years?
Average
5.9
10 8
7
6
5
4
3 2
“
If you’re a big organisation
like us, a big organisation is
like a biological organism, and
when a foreign body enters it,
it will surround it and it will
either make it look like itself
or it will expel it. So the anti-
bodies surround innovation
and either absorb it and make
it bureaucratised or resist it
and kick it out.
”
David McLean, Westpac
you get a bit lazier. We did a lot of really exciting stuff in the first 18 months, and then people just start to get fat, dumb and lazy. So I call it out as corporate spread and say I’m sick of it.”
Difficulties with innovation rarely come down to external forces. Nor do they tend to stem from functional restrictions such as lack of money or resource. Most often it was acknowledged that, when it comes to innovation, we tend to be our own worst enemies.
26
“I believe one of the most obvious things that could stop us, is us,” says Chris Litchfield. “If we are not careful we can allow ourselves to get in the way of progress. We can end up arguing the issue, rather than looking for the innovation and motivation to succeed. So there are no obsta-cles to prevent us from innovating – I believe it’s important to look at what we can achieve rather than limiting our objectives.”
Perhaps the main enemy of innovation in large organisations is a silent one. The quiet de-prior-itising of projects by individuals can, over time, deprive them of enough oxygen to put them safely off to sleep.
This resistance is often less to do with active op-position to the innovation, and more with reali-ties about workload and personal priorities. “You get to people’s day to day responsibilities and
“
You’ve got to take a lot of
people on the journey. And if
they don’t want to change you
can be faced with passive
resistance. That for us would
be a big blocker of innovation.
Making sure that we don’t
have passive resistance is
just another challenging
part of the journey.
”
Chris Litchfield, Coca-Cola Amatil
“
While there is an intent
across the organisation - they
want to see transformation -
it actually impacts on
individuals, teams or
operations areas. That’s when
there’s that resistance to
change. For us we’re very
mindful of that as a challenge
and a risk. I think that
actually goes across all
organisations - the courage to
unpack the way things have
always been done to drive a
way forward, when it may not
necessarily be totally proven.
That’s the risk factor that I
think is involved in any form
of innovation.
”
Scott Pickering, ACC
they just don’t see the rational for it, says Simon Tong. “You’ve given me this to do and now I’m supposed to help this guy out with some random idea that I can’t see any value in. Why would I do that when I have two outstanding roles here and you’re not giving me the headcount for it? You’re no help at all!”
The issue is complicated by the lack of silver bul-lets in terms of structure or process. “We’ve tried every flavour of ice cream,” says NZ Post’s Brian
PART TWO
27
We asked the CEOs to score their organisations on four key aspects of innovation – (1) strategy - discovering the right role for innovation and the right territories to innovate in, (2) ideation - com-ing up with innovation ideas for new products or businesses, (3) prioritisation and buy-in – effi-ciently achieving alignment around which innova-tion territories or ideas to move forward with, and (4) execution – producing and operationalising new innovations in a way that successfully fulfils the vision for those innovations.
Stra
teg
y
7.1
Ideatio
n
6.7
Prio
ritisatio
n
& B
uy-In
6.0
Ex
ecu
tion
6.6
How does your organisation rate (out of 10) on the
following four aspects of innovation?
PART TWO
Unpacking the Challenges
The attuned diplomacy of our CEO panel caused something of a regression to the mean, as most gave ‘7’ as their default answer – but within that abnormal distribution, it was clear that most or-ganisations are confident in the areas of strategy, ideation and to a slightly lesser extent execution.
The Prioritisation Challenge
Where they commonly marked themselves down was prioritisation and buy-in. While the average score was 7.1 for strategy, 6.7 for ideation and 6.6 for execution, prioritisation and buy-in dropped to 6.0.
Almost everyone felt confident in their strategic process and ideation. In fact, there was a sense that large organisations have more good strategy and ideas than they know what to do with.
“We have no shortage of ideas, just our capacity to do them all, which is why prioritising hard mat-ters,” says Auckland Airport’s Adrian Littlewood.
And the capacity issue tends not to stem from a lack of money. “Money isn’t necessarily our con-straint,” says Barbara Chapman. “Our constraint is prioritising and just the flow and the ability to make change.” While this may seem easy for a bank to say, the sentiment was echoed across most of the interviews.
The difficulties associated with getting stake-holders to agree what to move forward with tend to be more to do with difficulties prioritising inno-vation over the BAU emergencies which almost always appear more pressing than future-gazing.
Roche. “And, because, I think innovation – there’s an element of exploring. The only thing I know is there’s no golden way of doing this. There is an element of consciously exploring anything that adds to our core business and makes us either more efficient or differentiated from our compe-tition.”
Innovation tends to be a little like archaeology – we know we’re looking for treasure, and we have some idea of where to start looking, but we don’t know what we’re going to find and we don’t know how we’ll find it.
Trowels out!
28
“
Ideation, we’re probably a 15, there is never a
lack of ideas. But how do you prioritize and get
buy-in from across the organisation?
There are conversations about what might be
possible, there’s so much possibility. But once
you’ve figured out what’s possible you go ‘what
should we do? What must we do?’.
”
Stephen England-Hall, Loyalty NZ
29
“
We accept that at times there
are going to be differing
agendas. When we first
started offering our virtual
private cloud offering we
offered it to all of our
customer base. That
effectively cannibalised
everything we were doing
in product re-sell. It was
intensely frustrating for the
product re-sell guys that their
number one competitor was
internal. But having that
natural tension meant that
instead of us pushing
customers one way or
another, the tension between
the two produced a better
outcome.
”
Greg Davidson, Datacom
Although most leaders were confident of a lack of politics in their organisations, the realities of peo-ples’ personal investment in their own thinking persists. “If you’ve got twenty people in the busi-ness all who think twenty different ideas will de-liver on the strategy, simply by agreeing to 10 of them will require buy-in to be lost,” says Stephen England-Hall. “So when you get down to one, you certainly have a lack of buy-in because there will be people who were wedded to their ideas. 70% are usually on the bus. 20% are ambivalent to the bus. And 10% are standing in front of it.”
Sometimes conflicting agendas, however, pro-duce better results. Greg Davidson observed that, at Datacom, the natural tension created by having competing internal teams lead to a better outcome for the customer and in turn the busi-ness.
The Speed Challenge
Corporate teams are also used to making deci-sions with a greater basis of fact than innovation allows. What is ‘a good idea’ can seem highly sub-jective. Selecting a diving board from which to leap into the unknown can seem fraught enough to put people off entirely.
There’s also a question of politics and ego.
“
Technology has made the
world we operate in much
smaller…you just have to find
ways to stay ahead whilst at
the same time dealing with the
exponential speed of change.
”
Neil Cowie, Mitre 10
As the rate of innovation reaching the consum-er speeds up, it’s becoming apparent that the
PART TWO
30
“
I’ve always been of the view
that you never get stuff
perfect, it just doesn’t happen
in today’s world, especially if
you’re moving quickly. There’ll
be some stuff you get wrong
and we do get stuff wrong. To
be big enough to say, yep, we
got that wrong, let’s put it
behind us, forget about it,
move on to the next thing,
that’s really important in
my mind.
”
Rob Chemaly, Liquorland
pace at which we used to move is no longer fast enough. “I think a really critical part of success is speed,” says Kevin Kenrick. “And you can’t afford to have parts of the business running at an ana-logue pace in a digital race.”
The politics and bureaucracy surrounding priori-tisation and incremental approvals leads to inno-vation happening at a speed that simply isn’t fast enough to sustainably compete.
“I’d say it’s not fast moving consumer goods anymore,” said Frucor’s Mark Callaghan. “I think
it’s actually extra-fast consumer goods.”
And with the rate of change only increasing, solv-ing this speed issue seems critical. “I’m a great believer in ‘yesterday’s fast is this year’s slow’,” says Russell Stanners. “The game is always changing. We can’t do what was acceptable last year. We need to actually do a whole lot better this year.”
Besides the need for speed to competitively seize or defend opportunities, there was also consen-sus that the slower innovation goes, the less like-ly it is to make it into the world at all.
The reality seems to be that deceleration even-tually leads to stopping altogether. That slowing things down or putting things off, even for what
“
I want to help create an
environment where we can run
innovation cycles in parallel.
The frustration that I have –
and I think a lot of businesses
and organisations are like this
– is that initiatives happen in a
serial fashion. We’ve done some
things well, and we’ve executed
them well, but they’ve become
all encompassing. Before you
know it nine months goes by
and you may have delivered on
that program of change, but
what else could have also
happened at the same time?
”
Wayne Pickup, Lotto NZ
PART TWO
31
Alongside the complaints about not creating and executing fast enough was the same complaint about being too slow to kill innovations that aren’t showing returns. “The famous saying ‘fail fast, fail cheap’, which every big business quotes, but hardly any big New Zealand businesses ac-tually do,” says Simon Moutter. “Because we all get too wedded to our ideas, not being willing enough to make the big calls.”
Our reluctance to kill poor performers probably stems in part from our discomfort with putting the icing on failure. It may also have been drilled into us as kids, being chided for giving up on pursuits and praised for ‘seeing things through’. Pulling out of something just because we haven’t seen instant success feels flighty to many of us.
The outcome is not only poor performance, but also a build up of unnecessary workload.
seem to be the right reasons, sounds a death knell, especially for (I)nnovation projects.
There was a shared frustration about bottlenecks in corporate hierarchies that mean that innova-tions happen one at a time.
To compete in the future we’re going to need to learn how to activate much more innovation, happening side by side.
One of the major handbrakes is over-analysis, and waiting until all questions are put to bed or some-thing is perfect before moving forward.
“
We’re not very good at
stopping things that are low
value-add. So we tend to keep
everything going and then we
just keep adding stuff on top.
”
Stephen Town, Auckland Council
“
I’m a believer of ‘do it.
Contain the cost to do it, but
do it’. It’s incredible how
analysis can talk you out
of innovating.
”
Jane Hastings, NZME (formerly)
PART TWO
32
“
I often talk about fast failure. I have no
issue with fast failure. I’ve failed fast, and
slow-failed actually in my career. I use that
language because it’s language I’m familiar
with, but for some people around the public
sector, it terrifies them. Because in the public
sector, failing is getting your photo on the
front of the newspaper, or being named
and shamed in some way, it’s seen as
career limiting.
”
Brett O’Riley, ATEED
33
Transforming our processes from ‘building from the factory out’ to ‘designing from the custom-er back’ has become an ideal that’s widely em-braced, but still only occasionally achieved.
Being close to the customer is easier said than done. Although we expect all of our employees to think innovatively, it’s a huge challenge to have them regularly spending time with customers in real-life situations.
As Chris Quin points out, it’s not a lack of ability
The Failure Challenge
The idea of celebrating failure has become a core theme in innovation. The mythology suggests that Silicon Valley VC firms only embrace entre-preneurs with sufficient failures beneath their belts. And the ‘fail fast’ mantra of Lean Startup has been adopted wholesale into the vernacular of corporate innovation for its undeniable logic.
But failing remains an emotionally difficult place for most people. “Because there’s an ego as well, admitting you’ve made a mistake,” says Brian Roche. “In traditional business, when you make a mistake, you’ve failed. When you’ve failed, you’re vulnerable. When you’re vulnerable you’re in trouble. There’s a whole lot of human dimen-sions to it, so you persevere.”
Cultures of genuinely embracing and celebrating failure are still scarce, but creating them is on the agenda in many businesses. “One of the things that I’d like to see is that we remove that fear of mistakes, that fear of failure,” says Wayne Pickup.
And in many organisations, particularly in the public sector, it’s easy for leadership to talk about failure, but harder for staff to embrace it.
Changing the way we look for and respond to fail-ure is one important step. “One of the issues that we had is that failure finds a way to hide, and suc-cess finds a way to the MD’s desk,” says Chris Li-tchfield. “So culturally for us it meant leadership had to be prepared to look for failure, and then change our behaviour when we found it.”
And the language that goes around failure, to take the onus off individuals, can be powerful. “At Z we hardly ever talk about what’s wrong”, says Mike Bennetts. “We’ll ask what was missing. So if something doesn’t turn out the way we thought the first question we ask is what was missing here, not what went wrong.”
The Insight Challenge
Alongside innovation, customer focus is another core theme in the 21st century corporate zeit-geist.
“
If I’m a product or technology
person, there’s always
solutions. Solutions up the
wazoo. Can you build me one
of these? ‘Course I can. But the
question is ‘why?’ Now we go
‘why’, then ‘how’ then ‘what’.
Everyone used to go ‘what’,
‘how’, then they’d do the ‘why’
last, just to justify all the rest.
You really need to go ‘why are
we doing this, why do we
think we should do it’ then
‘how are we going to do it and
what would we do?’ You have to
start with what is the customer
problem you are trying to solve.
That will give you your ‘why’.
”
Rod Snodgrass, Spark Ventures
PART TWO
34
organisation, as it then implies that others aren’t expected to think innovatively, nor to share in the excitement of innovation.
“Innovation is about new and different and ex-citing. It’s about the future,” says Kevin Kenrick. “So if you’re saying ‘here’s a subset of the organ-isation whose job is the future’, the risk is you’re also saying everyone else’s job is about yester-day.”
But perhaps this reveals a bias in some CEOs’ thinking. Because they tend to be excited by in-novation themselves, they presume their people will be offended by not being treated as innova-tors.
In fact, for many, innovation is extra work that’s best left for those who are personally drawn to it. “People are flat out and are concerned about their existence and whether they have a job and they’ve got a sick child, or rugby practice or ballet
to think innovatively that’s holding us back, but a lack of insight to fuel that ability. “If you come back to that core belief that observation drives innovation, our problem is not that we have peo-ple who don’t wish to be innovative, our problem is we don’t have the observation that drives in-novation.”
Research companies surely help – but only in terms of connecting business with consumers in second-hand ways. The spark of seeing a cus-tomer’s pain first hand and being hit with an ob-vious solution rarely happens when insights are Chinese-whispered from real life experience to focus group to PowerPoint presentation.
The Measurement Challenge
It remains difficult for most businesses to assess whether they’re ‘doing enough innovation’. Anec-dotally from this study, most CEOs think they’re improving, but admit they’re still not doing enough. But they’ve scant ways of quantifying this, or of benchmarking their innovation in any sense beyond subjective guesses.
The packaged goods companies, however, have tidy enough metrics to be able to goal-set in a common sense way.
Perhaps there’s something in this for organisa-tions in other sectors.
The Responsibility Challenge
Perhaps the biggest challenge is deciding who is responsible for innovation and under what condi-tions they should be innovating.
Leaders oscillate between a very democratic view of innovation being ‘for everybody’ and the para-dox of ‘everybody’s job’ being nobody’s respon-sibility.
“I think your classic textbook answer would be ‘everybody’s responsible for innovation’,” says Leon Clement. “It’s important that we’re all think-ing about how we respond.”
Many leaders felt reluctant to give responsibili-ty for innovation to a person or team within the
“
How you define it? The
percentage of two years’ worth
of back sales value against
your total portfolio. So we
classify it as somewhere
between 12% and 15% of our
sales (in our category and
business) need to be in that
innovation space to keep our
business going.
”
Mark Callaghan, Frucor Beverages (formerly)
PART TWO
35
on the other side of the city or whatever it is,” says Simon Tong. Brett O’Riley agrees: “People are always very busy and have more to do than they have time. So there’s always the ‘what’s in it for me?’ mentality.”
Innovation does tend to call for energy and ef-fort beyond the day to day – and it takes people compelled enough to want to summon up those things. “Innovation requires people who want to go the extra mile, want to make a difference,” says Jane Hastings. ”Not everyone’s in for inno-vation.”
Even among those who are in, BAU realities persist.
There is also a reality that, willing or not, not everybody is built for innovation. Just as some people make great accountants and others make great salespeople, there are a set of natural skills and passions that make some people good at thinking innovatively.
Stuart McCutcheon observes: “Most people
don’t have the ability to step back and say ‘if this world was completely different what would it look like?’.”
Orion’s Ian Macrae, having run a highly innovative organisation for 23 years, has a keen sense of the kind of person required to conceive and deliver breakthrough innovation.
“You hire people who have their brains wired that way. It’s a certain type of person. I mean, the idea that everybody can be innovative, well to some extent that’s correct, but for the breakthrough product innovations, I don’t think you can really train that sort of unusual way of thinking. Those really big breakthrough ideas come from those really innovative people. The really innovative people can take what a customer says, instead of just doing it verbatim, they can actually then
“
There is a culture of appetite
for risk and new ideas. But I
think that is counterbalanced
by the workload problem.
There’s a lot on and people are
up for change but they’ve also
got to do their day jobs.
”
Stuart McCutcheon, Auckland University
“
I would say probably 80-85% of
the staff in most organisations
don’t often think about doing
their jobs significantly
differently. It’s only a few who
have the freedom, either
intuitively or explicitly given,
to think quite differently
about their roles, what
they’re doing, and the solution
that they’re after.
”
Steven Carden, Landcorp
PART TWO
36
Interestingly, we didn’t have one CEO tell us that they gave the job of innovation to those who were passionate about innovation.
Whatever their views on whether innovation is ‘everyone’s job’ or ‘someone’s’, CEOs tend to agree that ultimate responsibility lies with them and their executive team.
“The person who has to be ultimately respon-sible for innovation is the CEO,” says Rod Snod-grass. “Because if they don’t support it, have some passion for it, create the space for it, al-locate the funds for it, allow the sorts of people you need (who tend to be risk takers who chal-lenge the norms and can offend) it simply won’t happen. The organisational antibodies will take over and reject it.”
NZTE’s Peter Chrisp went as far as saying the job of leadership is no longer to run the organisation, but to change it.
say ‘well they’ve asked for that, but what they really want is this’. Innovation doesn’t happen from Monday to Friday. If you’re not Googling in the weekend about some topic you’re passionate about, then chances are being a product innova-tor isn’t your first calling. So the really innovative people, they come in Monday morning with all sorts of new ideas on things. That’s just the way it works. They’re always curious. You can’t be an innovator if you’re not naturally curious.”
The other inevitable danger of making innovation everybody’s responsibility is that it becomes no one’s.
“One of my initiatives for the year is to build an innovation hub in the business,” says Chris Quin. “Because in the end you have to have a place where innovation comes from, and it gets talked about and reported on and driven and has the spotlight on it. Because if you don’t, then that classic shared responsibility is no responsibility.”
“
The enthusiasm of a group
never rises above that of its
leader, and this is especially
true for innovation. Growth
hacking comes from
employees, so it is the
responsibility of the CEO to
be looking out for these within
companies and nurturing
wherever possible.
”
Barrie Sheers, Microsoft NZ
“
I’m very clear with our
leadership team, and we’re
all clear amongst each other,
that the purpose of the
leadership team is to change
the organisation. The purpose
of the leadership team is not
to run the organisation.
”
Peter Chrisp, NZTE
PART TWO
37
Though innovation’s responsibility might be dis-tributed right across the organisation, the ques-tion of whether to centre innovation projects within the business or outside of it quickly arises.
“So actually that’s a key question,” says Dennis Barnes. “Do you take the separate group report-ing to the CEO without any of the boundaries and controls of the existing business, or do you do it in the existing business? It really is a key question for us.”
Setting up New Ventures units that don’t operate by the same rules as the mothership has been a global trend, now being explored inside many of our large organisations. Although it comes with
“
We made a decision that the
innovation was going to come
from outside. It’s impossible
for us to maintain operational
excellence and focus on that
day-to-day and be experts in
innovation. So let’s partner
with people who actually
think about disruption or
innovation on a day-to-day
basis, and not build that
capability as part of our
day-to-day DNA.
”
Gráinne Moss, Ministry for Vulnerable Children(CEO BUPA at time of interview)
“
We’ve got a very large
membership, and access to a
unique set of information and
data. When we look to partner
with organisations, we look for
those that have fantastic ideas
about how we can use our data
in unique ways that add
greater value to our members.
”
Peter Tynan, Southern Cross
its cultural challenges. “Why are they getting a free run over there when I’ve got all these prob-lems?” says Simon Moutter. “Just the very exist-ence of Ventures happily spending money doing cool stuff while the rest of the business is going through massive cost cutting, to fund it, creates a few buy-in issues. We’ve navigated through them, but imperfectly.”
PART TWO
38
How do we compare? New Zealand organisations are not alone in their innovation challenges. Recent similar studies in the US and UK show many consistencies with our research.
What does this tell us?
The challenges that our large organisations face are common ones. However – these studies also reveal an opportunity for New Zealand. By comparison to ‘large organisations’ in the US and UK, we run relatively contained and nimble organisations in a small market with a very different risk profile.
Which is exactly why Heineken views DB Breweries as an incubator for their global business. DB can move at a speed that’s far greater than that of their bigger stablemates. As could most ‘large’ New Zealand organ-isations well outpace their global competitors.
We believe that applying this perception and mindset just might help us decide that it’s not so hard after all.
?WhatIf! Innovation Partners is the world’s largest inde-pendent innovation consultancy, headquartered in London and operating across Europe, North America and Asia.
In 2014, ?WhatIf! interviewed 400 leaders from the UK’s largest companies to complete their ‘Eyes Wide Shut: Leading for Innovation in Post-Recession Britain’ report - prvs.ly/wieyes
Just as we found that New Zealand organisations were better at (i)nnovation than (I)nnovation, so did they:
of UK leadership teams are better at
bottom-line efficiency than top-line growth
of UK leaders find it almost impossible to gain support to test
new ideas
68% of UK corporates take just as long, or
even longer, to innovate in 2014 than in 2009
Just as we found an abundance of ideas, with
enormous challenges taking those ideas forward, so
did they:
Just as we found a major struggle with speed to innovate, so did they:
Only 3% can get a new idea to market in 6 months or lessMost take at least a year just to prototype and test an idea
39
“
One of the things that we set
ourselves up to do for
Heineken here in New
Zealand is to be an incubator
market. A place where
Heineken can have a go, can
test different products and
concepts. And we’ve got one of
the highest innovation rates
across the Heineken world.
We aim to be very very rapid
with our innovation.
”Andy Routley, DB Breweries
Consulting firm Accenture carried out a similar study in 2015, surveying 500 executives with roles in innovation at large US companies to complete their report ‘Innovation: Clear Vision, Cloudy Execution’ - prvs.ly/auscvce
of US executives say their organisation is looking for the next silver bullet/single
market shifting innovation over
pursuing a portfolio of opportunities
of US executives say their organisation
tends to pursue product line
extensions rather than developing
totally new products or services
of US executives do not distinguish how they
innovate from how they go about achieving
incremental performance gains.
Just as we found that New Zealand organisations weren’t
in the habit of prototyping several innovation ideas ‘in
parallel’, so did they:
Just as we found a focus on (i)nnovation over (I)nnovation,
so did they:
Just as we found that leaders use the same thinking for (i)nnovation as they do for (I)nnovation, so did they:
And in fact, Accenture went on to recommend, as we have, that large organisations need to distinguish these types of innovation more clearly in order to more effectively pursue ‘Big Innovation’. They proposed two
‘engines’ of innovation, with distinct requirements in terms of speed, risk management, measurement and people.
40
Laying a Foundation forSuccess:
6 Top Tips for (I)nnovation Strategy & Ideation
With the accelerating rate of technology advancement, market disruption and escalating consumer expectations, it’s becoming increasingly challenging for businesses to know where to best focus their often constrained (I)nnovation resources. These vital ‘discovery and direction-setting’ activities at the beginning of any (I)nnovation journey are critical not only for defensive (I)nnova-tion awareness (early warning of coming disruption), but more importantly, for knowing where to direct front-footed (I)nnovation efforts (becoming the disruptor).
Corporates with the best long-term success rates all have well-established and effective (I)nnovation strategy and ideation processes, that serve to contin-ually identify potential opportunities and foresights relevant to both their current and future business ecosystems.
These are 6 things that companies looking to become (I)nnovation leaders should know when looking to get their (I)nnovation engine humming:
PREVIOUSLY UNAVAILABLE’SPOINT OF VIEW
The power of a reframe
Rethinking and reframing what business you are really in can be one of the most
powerful ‘unlocks’ for inspiring new waves of (I)nnovation, especially in long-
established industries. But this can’t be a desktop exercise. It’s important that this reframe comes from deepening insight into the broader role your products and services play in customers lives today as well as foresight about how this might change in the future. When done well, such a reframe will quickly and radically open up the set of challenges to solve
and opportunities where the business can create value in consumers lives. Ultimately,
that’s what (I)nnovation is all about.
Rethink your competitor set
Along with the new opportunities from a powerful reframe, comes a new set of competitors – some obvious and some
unseen. This isn’t as simple as identifying the big corporate players your looking to disrupt or the cohort of well-heeled start-
ups going after the same prize – which is of course critical to understand. This process should also be an expansive and creative exercise that’s grounded in the new in-
sights that can only come from deeper and more meaningful interactions with your consumers. It’s also a process of under-
standing who else occupies this space in your customer’s hearts and minds? What
individuals, brands or self-solved hacks are serving part of this new role today? Who
else has their attention at critical occasions and experiences? Answering these types of questions will ensure you have a 360° view of who, what and where your real
completion will be.
41
Turn fiction into reality
Identifying opportunities means nothing if you don’t turn them into action. And as
more businesses seek to build their (I)nnovation capability and the lines
between industries blur, big opportuni-ties don’t remain that way for long. As discussed in detail later in this report,
the ability to experiment, learn fast and successfully capitalise on the opportu-nity the fastest is possibly the biggest opportunity and greatest (I)nnovation
challenge NZ corporates face today. While it’s not always possible to create the future today, investing to build capability around the critical areas early is another common
theme among successful (I)nnovators - baby steps at a sprinter’s pace.
This isn’t a one-night stand
These cycling activities of reframing, horizon scanning, storytelling and taking immediate action cannot be a one-time
thing. The rate of change in local and global markets will continue to force busi-nesses, whether proactively or reactively,
through this exercise more and more frequently. The front-end (I)nnovation
process of discovery and direction-setting necessarily needs to become an ever-turn-
ing flywheel that keeps the business thinking three steps ahead. The inputs and outputs of this critical function should have
equal footing in Boardrooms and CEOs offices as the core businesses quarterly
operational and financial reporting. What gets measured, get managed.
Keep one eye to the horizon
Scanning markets and technologies for threats and opportunities isn’t a new
concept in business. However, widening competitor sets create more and varied
blind spots, and disruption is exacerbating this. The result? Horizons that used to be 5-years can now be 2-years or less. This makes horizon scanning more complex,
more involved, more assumptive and more important than ever before. The key is to
have structures in place to ensure the vital connections and collisions between teams,
data points and hunches happen quickly and often. This is fundamental to finding and capitalising on opportunities before
they become a published ‘trend’ – by then, it’s normally too late.
Start story-telling the future
When searching for opportunities on more ambitious horizons, it’s necessary
to transport yourself into future scenarios that don’t yet exist. Some of the biggest
(I)nnovation successes for corporate juggernauts like BP-Castrol, Electronic Arts
and Jaguar Land Rover have come from co-creating and colliding character-rich nar-ratives about the future ecosystems which
they hope to play central role in. For BP/Castrol’s InnoVentures group, the ‘Nexcel
Platform’ - an intelligent, closed-loop oil system, worth more than $20bn for
their automotive lubricants business and larger than their business at the time, was developed following such an exercise. For them, creating informed but currently fic-tional narratives about the future of green connected cities rather than the future of automotive lubricants was the key. What
futures are you living in today?
43
PART THREE
Overcoming (I)nnovation’s
Challenges
44
“Knowledge sharing or knowledge stealing,” says Derek McCormack. “Steal like an artist. We try and get our senior people out of the country visiting other places every year so that they’re seeing what’s happening.”
Although there is glory in invention, the success-ful commercialisation of new ideas doesn’t nec-essarily mean having those ideas. “We gave birth to the company’s new strategy to shift from in-frastructure company to digital services retailer in May 2013,” says Simon Moutter. “We published it for our investors, and said to them ‘one of the things I really like about this strategy is there’s not one bit of original thinking in it’. We copied the whole lot. We just looked around the world, saw what was working and said ‘well, we’ll do that then’.”
Create breathing space
There was widespread acknowledgement that legacy processes of multiple and incremental sign-offs suffocates innovation. Many organisa-tions are experimenting with ways of creating en-vironments in which their people can safely make faster progress.
“OK, if this is going to make a difference to health care and it’s within our values and it’s not going to bust us financially, have a go at it,” says Ailsa Claire. “We’ve got a devolved management pro-cess where people have authority, as close to the patient as possible, to make change within cer-tain parameters. So people can just get on and do some of these things without ever having to be logged.”
At Chorus, Mark Ratcliffe had a similar approach. “We try not to constrain people too much with rules around what they are and aren’t allowed to do. We prefer to let people experiment around with things and if they come up with something clever then we are willing to back it.”
The final question we asked our CEOs was what they’d learned about how to innovate more effec-tively.
Create a senseof crisis
Many spoke of impending disruption, but of the lack of a clear burning platform just yet. This cre-ates a feeling of little urgency around innovation. But as David McLean learned, companies at the edge can be much more adept at manufacturing urgency.
“One of our people went to Silicon Valley about 3 weeks ago and met a venture capitalist. He said ‘you banks are history’. And our guy said ‘why’s that?’ And the VC said ‘my funds have $5 billion invested in fintech start-ups which are going to push you out of business”. So you come back in a slight panic. So that’s good because it creates a sense of urgency. Actually, meeting Ant Financial (Alibaba’s Financial Services Group), we said to them ‘how do you get so much done, how do you get that sense of urgency?’. And they said ‘we don’t have a sense of urgency, we have a sense of crisis. Because Alibaba is only seventeen years old – and we have this feeling that we’re going to be out of business soon, any day, unless we keep running really really hard. We talk about running hard to stay in business.’ The average person in the bank will say ‘we’re making a lot of money, what’s the problem?’. That’s what the taxi drivers used to think.”
Steal like an artist
If one key role of innovation is to meet custom-ers’ evolving needs as best as possible with emerging ideas and technology, then a big ques-tion is whether it matters to innovate ourselves, or simply to arrange the right innovation from elsewhere around our customers.
Lessons to Learn From
PART THREE
45
“
More and more, I’m coming back to the
‘permission-less environment’. That you
actually have to let people do what they think
will improve things. If we said everyone’s got
to have 20 sign-offs before they do anything,
and it’s got to be worked through in detail with
internal audits and quality assurance etc, etc,
we wouldn’t get anything done. We’ve had to
go hard and fast, so the best way to do that has
been to let people, as far as possible, do what
they think they should be doing.
”
Derek McCormack, AUT
46
“
We have a mechanism where
small projects can get going
through a low-key dragon’s
den affair where you can take
ideas to that group and gain
some small seed funding for it.
So a bunch of wise managers
will say ‘that looks like a
pretty good idea, I can see
how that would work, here’s
this little bit of money to go
away with and develop it’.
”
Mark Ratcliffe, Chorus
PART THREE
Many leaders, like Mark, spoke of internal pro-grammes being run to surface new thinking from staff, and tentatively fund those ideas to see if they prove successful.
Aim big, start small
For most large organisations, early innovation ideas can seem like tiny opportunities with niche audiences. They’re overlooked, when in fact they’re often the seeds that will eventually be the category’s trees.
Fonterra looks not only at the immediate oppor-tunity, but has discipline around imagining the future opportunity so as to understand where to place early bets.
Learn by doing
Design Thinking and Lean Startup have a core principle in common which is about testing ideas through building rough, early mockups and get-ting them into the hands of customers.
In Design Thinking they’re referred to as proto-types. Lean calls them ‘minimum viable prod-ucts’.
Either way, the idea is that getting feedback to something tangible and useable is a far safer bet than pre-supposing what customers really want.
Evidence, both anecdotal and statistical, demon-strates consumers’ inability to predict their own behavior when asked to imagine new products
“
I’ve learned from start-up
thinking around ‘defining
your massive’. I think it’s a
really good challenge. It’s ok
to start small as long as you
can see a future that has
global domination around it
right? So this thinking is
really helping us sharpen
how we think about new ideas
and bring stuff forward.
”
Leon Clement, Fonterra Brands
47
PART THREE
and experiences in traditional research situations.
Z’s Mike Bennetts described to us how the Kiwi-owned service station’s famed forecourt service was a product of gut feel and piloting rather than using research to approve and then rolling out wholesale. (See page overleaf)
So it’s no wonder this new way of exploring inno-vation ideas has caught on. Prototyping is prov-ing useful across many businesses in terms of speed and buy-in. “If you want to change some-thing, you don’t talk about it, you bring a proto-type to the table and say ‘that’s what I think the direction is’,” says Peter Chrisp. “You bring an ar-tefact of what you want to change and you have a go and then you learn from doing.”
The other effect of getting ideas out early in pro-totype form is that it engages customers early in the product and can build an audience for the innovation even before money has been spent executing. This was one of the happy side-effects for ASB on their Clever Kash project...
“Everyone was really excited when we announced
“
All those little things can
add up to a huge amount.
The Waikato River in full
flow is a phenomenonal
sight, but it starts with
innocuous raindrops.
”
Fraser Whineray, Mercury
Clever Kash, but at the time, it was one of those rare examples where we talked about something before it actually happened. We wanted to test consumer response to Clever Kash while we de-veloped it for a commercial launch. So we said ‘here’s what we’ve got, if you want to be involved in the pilot, like us on Facebook. The response was massive and as well as receiving input into the design process, we created a community of pre-registered customers who were engaged and excited about the product.”
Another benefit of ‘doing to learn’ is that experi-mentation keeps the organisation learning, and keeps them ‘innovation fit’. “What allocation of your total spend is going to be something
“
I think it’s really important to
get started – we’ve done
things with sticky tape and
bits of string in the
background, to get trials
started, and then learned fast
how to do it. And in doing
that, we’ve learned what
really matters rather than the
classic, traditional approach
of ‘build the ultimate product’
or ‘the ultimate capability’
and then find out what you
didn’t need.
”
Adrian Littlewood, Auckland Airport
48
“
I’m sure you’ll find this in your research, what people
tell you that they do, often they don’t. They’ll say it to look
good, particularly in a focus group, and when they tell us
what they want and what they do, when we watch them on
camera in store they don’t do that. It’s not that they lie or put
a prettier picture on it, they’re just subconsciously behaving
inconsistently to what they think they do.
So when we did all the work around brand and strategy
back in 2010 we did a very, very large piece of research, big-
gest bit of research ever conducted in New Zealand in any
sector for at least a decade. We had 16,000 bits of interaction
that gave us insights into stuff. Putting service onto fore-
courts was not one of those things. It was gut that said, ‘the
forecourts, there’s something in this’. It never came through
in the research. But we just didn’t go bet the farm, we rolled
out ten pilot sites and gave ourselves 5 or 6 months to see
how that went.
”
Mike Bennetts, Z Energy
PART THREE
49
that is truly innovative and for the purposes of learning?” asks Kevin Kenrick. “So you’ve got the things that are going to drive the business. You’ve got the things that you’re really confident that are the future. And you’ve got to do some stuff that’s purely there to learn. And we’re con-stantly tweaking that.”
PART THREE
“
Trial small, engage your
customer base early. As an
industry dominated by
engineers, we can worry too
much about the technical
solution and the capital
implications. We don’t worry
enough about the market
suitability and market
feedback - so get it out early
in whatever form you can
and get that feedback.
”
Andrew Garey, New Zealand Steel
Put somebody in charge
Because innovation usually sits to the side of peoples’ day jobs, and involves a broad team, the potential is always there for responsibility to slip through the cracks. Though everybody may be able to participate, one necessary part of driving innovation is making somebody clearly account-able for outcomes.
“
There’s this DRI philosophy
that Apple has - a ‘Direct
Responsible Individual’.
There’s always a person
responsible for getting stuff
done. DRI is a very powerful
way, I think, to drive
accountability. There are
many large organisations that
don’t have anything close to
that - there are 20 people in
a meeting and no one’s got
the ball.
”
Simon Tong, Fairfax
Look for quality of people over quality of idea
“I think the thing that improves the probability of success is actually the quality of the leader of the initiative,” says Brian Roche. “His or her ability to both take people with them and tell people to get lost when they need to. There’s something about the strength of the character, because there are lots of good ideas - but lots of good ideas fail be-cause they’re not well executed.”
When startup accelerator programmes (like Tech Stars in the US or Lightning Lab here in New Zea-land) evaluate companies keen for a place, they
50
PART THREE
“
On average, we only select
about 1% of applicants. We
look for six things in order.
We think about them very
much in order, and so all
of our managing directors
that are out around the
geographies look at it the
same way. Those 6 things
are: Team, team, team,
market, progress, idea.
”
David Cohen, Tech Stars Founder
Tech Stars is considered the leading global startup accelerator programme,
having accelerated more than 800 companies and raised over $2.3B
in funding.
tend to focus on the quality of the team more than the quality of the idea.
This is because execution is much more difficult than ideation. Anyone can have ideas, but it takes a special kind of tenacity and talent to drive an idea through the minefield to execution.
Get closer to the customer
Virtually every CEO talked about the importance of understanding the consumer better. This wasn’t about data and research reports - but about buidling a genuine empathy for the cus-tomer and ability to put yourself in their shoes.
Educating our intuition about what customers will want and buy is difficult to do without spend-
ing time with them, and many leaders spoke of this being a key driver of successful innovation projects.
Invest to learn
Our growing start-up community in New Zealand provides a wellspring of learning for those want-ing to understand how to innovate at pace and without the constraints of legacy organisations. Observing them is one way. Jumping in and in-vesting sharpens the learning focus even more.
“
If you’re going to over invest
in anything, you should over
invest in speaking to the
consumer. Don’t just assume
that you know what they want.
We are so focused internally
that we probably lose sight of
what the real consumer looks
like. Consumer insights
coupled with our own instincts
and knowledge will guide us
down the right path.
”
Scott Hadley, Independent Liquor
51
“
I’m going to get all of my executive team personally
investing in start-ups, because you just want to
see it, you want to hear an eight-minute pitch, you
want to understand how that process works. If you
go into one of the shared funds you start getting
reports that show you eight or ten companies once
a month of how they’re proceeding, you start to fall
in love with one, you maybe go on their advisory
board. And I just think it brings skills back to us
that’ll be really cool.
”
Chris Quin, Foodstuffs
52
PART THREE
Encourage diverse inputs
Innovation studies have long shown the benefits of diversity (gender, cultural, sexual orientation as well as different areas of expertise) to innovative thinking.
“It comes back to setting up the right teams, and that comes back to diversity of thought and in-put,” says Fraser Whineray.
This diversity often brings fresh eyes, enabling an organisation to develop a new perspective on their industry.
“Half of our employees were not with the compa-ny on day one so we have this wonderful diversity of bringing people outside our industry in,” says Mike Bennetts. ”And that’s been deliberate. We didn’t need more oil people and we need other perspectives. So we had this wonderful diversity of skill and experience they brought to the table.”
“
Diversity is, and has always
been, core to IBM culture.
Having a mix of people from
all walks of life is a priority
for us – because when you
assemble teams you can get
really interesting and bold
ideas coming out. Blending
together the young and the
not-so-young, different genders
and different cultures provides
an organisation with new
and fresh perspectives to
problem solving.
”
Rob Lee, IBM
53
Closed model: keep it protected until the ‘point of
instopability’
Set up dedicated (I)nnovation teams, ring-fenced from the business. Include suf-ficient cross-functional and cross-disciple expertise to support discovery, iteration
and execution activities. Augment internal staff with a high ratio of external talent and experience. Partner externally and
white-label where possible – especially for prototyping and experimentation where pace and agility is essential. Engage the core business as little as possible in the early stages. Deliver the (I)nnovation to
the business only when it has reached the point of instopability – when the product, service or business model is sufficiently
validated and compelling there’s little ques-tion the business will support it.
Open model: empower every-one to support
and enable:
Make ‘enabling (I)nnovation’ part of every employees job description, regardless of
department, role or seniority. Either direct-ly (on the team) or indirectly (ensuring no roadblocks). Train the whole organisation on (I)nnovation mindsets, behaviours and
what’s expected when an (I)nnovation team comes knocking. Identify your
(I)nnovation secret agents that can act as culture accelerators and early road-block
removers. Align everyone’s incentives accordingly. Make (I)innovation projects
visible and tangible to everyone and celebrate the enabling teams who are
putting these values into action.
Innoculating Against the Anti-bodies
As many of our CEOs alluded to, the challenges of mixing traditional corporate and entrepreneurial innovation cultures can be like mixing oil and water. While there is no one silver-bullet structure to defeat the ‘organisational antibodies’ that Rod Snodgrass and David McLean observe, considering approaches at the two extremes can help shape the first iteration of your own innovation model.
PREVIOUSLY UNAVAILABLE’SPOINT OF VIEW
Ultimately, finding the right structure for enabling (I)nnovation in an organisation is much like the challenge facing the teams of (I)nnovators themselves. It’s a matter of prototyping, experimenting, learning fast and iterating the structures, systems, processes and people until a model is found that
works and you can continuously improve on. Leadership teams can indeed learn something from the (I)nnovators they are trying to enable.
54
“
Innovation’s not just about
making something slightly
better. It’s about trying to
imagine where things could
go on the horizon. Maybe 5
years, 10 years, or as far out as
you can comfortably project
yourself - try and figure out
what the trends are, where’s
everyone heading without
realising it? Trying to imagine
that future state then working
backwards and asking ‘how
could we fit in that future
world?’ That forces people to
take some pretty big leaps in
thinking. From a product point
of view, where is the industry
going? What do our customers
want in 10 years’ time? We
want to transform retail. So
we’ve got a really clear picture
about what that is.
”
Vaughan Rowsell, Vend
changing the playing field,” says Xero’s Rod Dru-ry. “So when you’re going into a big wide world, you don’t really want to compete with a me-too product. You may as well change what the mar-ket expects. Changing the goal posts is how we think about it.”
What can we learn from our founder CEOs?Alongside our large organisation CEOs, we also spoke to the founders and leaders of five of New Zealand’s most innovative start-ups.*
Xero’s Rod Drury, Orion Health’s Ian McCrae, Vend’s Vaughan Rowsell, My Food Bag’s Cecil-ia Robinson and Lewis Road Creamery’s Peter Cullinane each provided lucid insight into how they’ve managed to catapult their companies from a standing start to becoming some of the darlings of New Zealand business success.
*We use the term ‘startup’ loosely in this con-text as Orion Health and Xero especially are now enormous and very well established companies.
Skate where the puck is going
Each in their own way, the founder CEOs showed a natural tendency to project their thinking well into the future. They are consumed with what their customers will need in years to come, and preparing now to meet those needs.
“It’s about continually challenging ourselves around what we want My Food Bag to be in three years, five years, ten years’ time,” says Cecilia Robinson. “We’re third to Progressive and Food-stuffs, but if we’re going to close that gap we have to keep innovating, we have to keep being at the front line of our industry, and so that’s con-tinually challenging our product, challenging our people, challenging our packaging; every single aspect of the operation saying how are we going to do better, and so that just becomes funda-mentally part of how we operate as a business.”
“We think in very commercial terms about
PART FOUR
55
Speed up
Speed is of course an inevitable side effect of be-ing small. And the founder CEOs were adept at harnessing that advantage and exploiting it con-tinually.
Among them, they had three key ways of organ-ising and leading for speed:
“
Where we are good is that we
don’t take much time on
developing stuff. The chocolate
milk took sixty contiguous
minutes, probably. When
you’re up against (bigger
competition), the only way you
can win is to just be much
faster. Because they can
absolutely beat us on
distribution, they can beat us
on price, they can beat us on
trade merchandising, on trade
relationships, on all that sort
of stuff – but they can’t move
at anything like our pace.
”
Peter Cullinane, Lewis Road Creamery
LESSONS FROM OUR STARTUPS
Three ways toaccelerate
(I)nnovation
Our interviews with founder CEOs yielded three insights into how to promote speed
of innovation, and revealed three key ways to avoid slow progress:
1
Minimise ‘No’
My Food Bag’s Cecilia Robinson ensures that her organisation finds a way of seeing the good in ideas, and saying yes to them
2
Create Smaller Teams
Orion’s Ian McCrae has learned that getting bigger stifles innovation, and
has consequently created smaller, more autonomous units that can run faster
3
De-prioritise Consensus
Xero’s Rod Drury looks for consensus where possible, but not at the expense of
slowing down the innovation process
PART FOUR
56
“
Our culture around innovation is to say “yes”. Most
people find a reason to say no, and so we find a way
of saying yes. And I harp on about that, but so many
times we find a way to say no to innovation. When
you’re taking teams out of corporates, they’ve been
trained for so long to find the reason not to make
things work – they become experts at saying no. And
so you have to retrain them to actually find the rea-
son to make things work. So we challenge ourselves
to find a way to say yes. And it is challenging - that
culture of saying yes, the culture of thinking on our
feet, continually challenging them, ‘why can’t we do
that? If it’s what’s right for the customer, why can’t
we do it?’ If our customers say ‘we want a gluten free
bag’, and I go to my operations team, they’re
like, ‘good luck with that’. And I’m like ‘we’re just
going to find a way to say yes, right? We’re gonna
get this’. And so that’s the culture that we drive in
our team.
”
Cecilia Robinson, My Food Bag
PART FOUR
57
“
I do believe there’s an optimal
size. When you’re too small it’s
hard to be innovative, and
when you’re too large it’s hard
to be innovative; there’s an
optimal size. I believe the ide-
al size of an innovation unit is
20, 30, no more than 40 people.
When it gets bigger than that it
gets hard. We had about 500
developers in one big group,
and so it was very hard to see
who was accountable for
different products. There are
lots of meetings and sometimes
people can spend all day just
in meetings. So starting about
15 months ago we started
breaking the company up into
lines of business, with Line of
Business Owners, otherwise
known as LOBOs. And that’s
what we’ve done, we’ve tried to
turn them into smaller start-up
entities. Break it up, create
these independent business
units, give them lots of freedom,
and then just get on with it.
”
Ian McCrae, Orion Health
Create smaller teams
Bureaucracy creep happens everywhere, and the start-ups feel it even more keenly, remembering the days when they were tiny and things hap-pened at lightning pace. Breaking the organisa-tion back down into manageable units is one way to up the cadence.
Minimise ‘no’
For innovation to happen in large organisations, there’s normally a lengthy queue of people who all need to say yes. If just one says no, the chain is broken. Within traditional structures, a select few are given the power to say yes and signoff, but everyone is given a right to say no – creating a gauntlet through which few ideas survive. My Food Bag have tackled that tendency head-on.
PART FOUR
“
My presumptive tendency,
when I’m presented with a
new idea, is not to ask, ‘Is it
going to work?’ It’s, ‘well,
what if it does work?’ There
are people who are wired to be
skeptics and there are people
who are wired to be optimists.
And I can tell you, at least from
the last 20 years, if you bet on
the side of the optimists,
generally you’re right.
”
Marc AndreessenInventor of Netscape and partner in
Andreessen Horowitz, one of Silicon Valley’s most prestigious and successful
venture capital firms
58
De-prioritiseconsensus
David Ogilvy famously said “search your parks. You’ll find no statues of committees.”
In large organisations, consensus among broad groups of stakeholders has long been necessary in order to move forward. This committee men-tality is perfectly suited to managing the risk out of decisions. But in a world where risk is required to compete and survive, decision by consensus has become dangerous.
“All of our leadership teams come out of corpo-rates,” says Cecilia Robinson. “And the key thing that they’ve said to us has been “we go into a meeting, we decide something, and then we just expect everyone to leave and execute it”, and the team’s like “normally it’s a 3-month decision mak-ing process and we need to get sign off. And was that actually an instruction for me to go and build this? Do you actually mean that I’m going to go and do it?”. And so it can take some quite a while to just integrate into that. Initially it really freaks them out, I think initially they think it’s going to liberate them, but they go through a deer-in-the-headlight three-month period when they’re like “this is actually quite daunting”. So basically it’s James or me or both of us signing off and off we go and we just do it. I expect my team to speak up if they’ve got an issue or a concern about something. They speak up then and there, they don’t just sit on it, and so they learn that pretty fast. If you’ve got a concern, we’re all in the same room, we don’t have to fluff around, let’s just talk about it now. And if we’re all agreed, then let’s just go and do it. That’s basically the way we manage things.”
PART FOUR
59
“
You know, innovation always ends up
being designed out or takes too long. So we’ve
learnt not to necessarily get consensus. Give
the opportunity for consensus, but don’t let it
slow the business down. We don’t need
consensus to make a decision.
”
Rod Drury, Xero
PART FOUR
60
Three Principles for Agile Governance
It’s clear that prioritisation, buy-in and decision making in Corporate (I)nnovation can be fraught challenges that throttle the pace, risk appetite and entrepreneurial spirit needed for successful innovation to thrive.
The following three principles will help manage around these inevitable internal challenges:
PREVIOUSLY UNAVAILABLE’SPOINT OF VIEW
Ring-fence innovation
budgets and place lots of small bets
Corporates committed to delivering inno-vation protect innovation funding from the outset. Ring-fencing budgets intended for innovation ensures they are shielded from the inevitable pressures of BAU emergen-cies. Setting up appropriate governance
around these central or business unit budgets is a matter of balancing the need
for control with that of agility – all while having less certainty and data around investment decisions. This will almost
certainly mean different approval process-es, more responsive decision making, a higher cadence and a different mindset than those enabling BAU management. Leaders also need to approach funding with a portfolio mindset - placing lots of
small bets across different territories and time horizons. To some extent, investing in (I)nnovation is a numbers game – more small bets = more eventual successes. But unlike more passive investments, effective experimentation and agile execution can
greatly weigh the dice in your favour.
61
Invest in tranches but encourage
innovation’s split personality
Taking a leaf from venture capitalists play-books can further encourage momentum.
Committing investment in tranches allows you to progressively back the teams (and ideas) that systematically move through the list of hypothesis and learning cycles. It’s impor-
tant to note however that it’s not only about validation. Failure that results in constructive learning and the need to pivot an idea can be just as successful if it moves the team closer
to finding a viable business model. Investing in learning means no dollar goes wasted.
This touches on one of the dichotomies inherent in executing innovation. Successful (I)nnovators need to develop a split person-ality. On one side they need the resilience and determination to follow their gut and
vision in the face of the inevitable naysayers and setbacks. On the other side they need the humility and bravery to recognise when enough redlights have said stop and it’s time to move on. Experimentation, learning cycles and metrics can introduce guard rails to help
keep these competing personalities in balance. Knowing when to encourage and inspire each
personality then becomes a key role of innovation leadership and sponsors.
Learn cheap, learn fast and add rigor to
experimentation
The mindset of placing lots of small bets applies equally well within a specific oppor-tunity. Inside any new idea lies a long, and at times growing list of assumptions and hypotheses about what the idea actually
is, how customers are going to behave and how the business model will eventually
work. Breaking these assumptions into a prioritised and logical series of fast, cheap experiments ensures these learning cycles are deliberate and risks are managed. Every
learning cycle should start with a clear view of the hypothesis and what you are going to learn, the design of experiment, how it will be measured and what metric
indicates a success or a failure.
Adding some science to the madness of innovation helps cast a clear blue light on
the sometimes opaque and subjective parts of developing and validating innova-
tions. When teams and stakeholders know what measure or metric they are targeting,
it becomes clear what and how to move things forward.
62
“
We are constantly reminded that the magic
comes from creativity. If you can produce
something which powerfully and emotionally
engages people, the commercial side will
probably work itself out. If you’ve got something
which is purely driven from a commercial point
of view with no magic, it’s probably not going to
succeed. You can’t retrofit magic by sprinkling
a bit of fairy dust on it at the end – it has to be
hardwired into the beginning.
”
Kevin Kenrick, TVNZ
63
Last wordIn the end, though we can improve the process around innovation, there will always be an ele-ment of creative ‘magic’ that sits at the heart of successful new ideas.
“Sometimes miracles just happen and magic occurs,” says Barbara Chapman. “Clever Kash - it was just magic! And you’ve got to have a little bit of magic around. People love it.”
The events that lead to this magic don’t always happen in tidy, planned-out ways - as Stephen England Hall observes, arguing “that innovation can sometimes be the successful commercialisa-tion of some form of serendipity.”
While ‘luck’ and ‘magic’ are difficult things to plan for, it may be worth asking whether our organisa-tions are good at capitalising on them when they do appear.
Do we leave room for luck? Recognize magic when it appears? And do we nurture and make wise use of these things?
Because while we agonise over how to properly apportion the scarce resources of money, time and people, it’s worth remembering that those creative sparks are the scarcest resource of all.
64
We partner with organisations as
of new product and business innovations
We work with teams inside client organisations to conceive, develop and launch new product and business innovations
We bring specialist innovation skills, knowledge and experience to those teams – innovation strategy, design thinking and lean startup methodologies, technical &
creative capability, prototyping, commercial modelling and training.
Previously Unavailable is New Zealand’s leading innovation partner to the private sector. Based out of the GridAKL Innovation Precinct in Auckland’s Wynyard Quarter,
we work with many of New Zealand’s largest organisations including Fonterra, Spark, ASB, DB Breweries and Contact Energy.
About
We also work with startups and earlier stage organisations. We led
the brand strategy and product development behind Stolen Rum’s
market inception and ultimate majority stake sale to Chicago’s Liquid Asset brands for $21M. We also led the brand strategy and
product development of recently launched fintech disruptor
Simplicity KiwiSaver.
We’re passionate about sharing innovation insight with the New Zealandbusiness community through our free resources:
Our app, The Amazery, is a weekly video round up of the most innovative andinspiring new global tech, science, products, ideas and businesses. A fast weekly shot of what’s amazing in the world. Download at prvs.ly/amazery
Our weekly newsletter is an essential guide to the latest in innovation ideas,
trends and thought leadership from around the world.
Sign up at prvs.ly/puweekly
facebook.com/previouslyco .
twitter.com/previouslyco .
www.previously.co
If you’re interested in learning more about working with us, please get in touch at [email protected]
65
About the
Process
This process is our starting point. It’s designed to rapidly take you from ambition to viable business, while also creating the inspiration, buy-in and momentum needed to deliver impact in the market, in your organisation and in your customers’ lives.
The breadth, depth and robustness of each phase can be tuned to match the scale, scope and ambition of your innovation challenge. This includes adjusting for the time commitment available from your team and the innovation capability transfer you’re seeking. Each phase in our process can also be broken down into
discrete projects to suit a specific innovation need or intervention.
1MOBILISE & KICK-OFF
Establish the co-founding team, prepare and train them for the project proper
Align the vision with early stakeholder (‘Investor’) interviews and dive into existing insights or data
Create a shared bold ambition, clear scope and an aligned plan - the project’s ‘North Star’
IDEA & BUSINESS MODEL BLUEPRINTSBuild-out the leading ideas in more detail – what’s at the heart of the idea and what’s the business?
Agree the assumptions that underpin each blueprint – what do we need to learn or validate?
Create an early commercial model and understand early financial dynamics to focus value creation
PROTOTYPING & ITERATIONDesign experiments s to test the big and risky assumptions first
Design and build prototypes or minimum viable products (MVPs) for experimentation
Execute rapid sprints (plan-build-measure-review cycles) to iterate and validate ideas and models
BUSINESS BUILDING & LAUNCH
Augment and accelerate your founding team tobuild the business and execute the launch plan
Connect your internal teams, suppliers and Previously Unavailable’s local and global partner networks
Creative, branding and commercial services to support challenges and resource constraints
5
6
8
2INSIGHT & INSPIRATION
Getting out into the world with customers, partners and trailblazers
Gather deep consumer insights and market fore-sights that will underpin what comes next
Early mapping of potential markets, technologies or adjacencies, and their commercial backdrop
CONSUMER PORTRAITS & OPPORTUNITY TERRITORIESCollide the new insights, foresights, stimulus and data points together in expansive workshops
Create a rich set of opportunity territories – fertile and future-focused creative platforms
Create insight-based customer portraits, bringing colour and depth to our future customers and needs
3
IDEATION & CO-CREATION
Prepare inspirational stimulus around our opportunity territories
Deliver a series of high-energy, expansive ideation workshops with internal teams
Customer co-creation sessions to generate and iterate ideas – hackathon meets greenhouse
4
PITCH PACKS & GO TO MARKET
Develop compelling pitch packs that bring each opportunity to life for ‘Investors’ and stakeholders
Bring each business to life with prototypes and engaging experiences
Create a multi-horizon strategy and roadmap for building, launching and scaling the businesses
7
CO
NC
EIVE &
CR
EAT
E
DEV
ELOP
& LA
UN
CH
66
JAMES HURMANFounder, Previously Unavailable
James started Previously Unavailable in 2014 following a career as a strategic
planner in the advertising industry. In 2013 he was named the world’s #1
planning director, following many years as head of planning at Auckland ad
agency Colenso BBDO.
Having seen success with innovation and NPD projects for clients including
Westpac, DB, Goodman Fielder, Vodafone and Stolen Rum, James’ passion turned
from communications to innovation.
James has spent the last two and a half years working with many of New
Zealand’s largest organisations and brightest startups, helping them shape
their new products and businesses.
James is also the author of The Case for Creativity, a book about the link between
creativity and business success, described by The Coca Cola Company as “beautiful
words of wisdom”.
About the authors
CHRIS PAYKELPartner, Previously Unavailable
Chris joined Previously Unavailable in 2016 following 4 years in London at the
UK’s leading Innovation Consultancy ?What If! Innovation Partners. There he
worked with a range of global businesses including Electronic Arts, Jaguar Land
Rover and International Hotel Group (IHG) to set, invent and execute their innovation
and venture strategies.
Formally trained as a mechanical engineer, Chris enjoyed the first 5 years
of his career designing products at Fisher & Paykel Appliances before moving
into the Management Consulting and M&A world with EY, both in Auckland and
London.
Chris thrives on bringing these creative and commercial threads together with a healthy dose of entrepreneurial spirit to help our most ambitious and innovative
companies create the future.
