You have the best job in the world

Last week, I was in a meeting and, as you do, I handed over my business card. I got what has become a very typical response: "Head of Innovation? You must have the best job in the bank!"

Whether or not I have the best job is immaterial here, of course. The real sum of this statement is the perception that innovation equals exciting.

The fact of the matter is a lot of what we do in our innovation team is rather boring. And, as the financial crisis flows around us, we're doing way less of the exciting work. I don't regret this, actually. It is the mark of decent programme, I think, that it is able to prioritise its investments in any way that makes sense considering the business climate.

And from our perspective, that means two things. We have to keep the business running, firstly, and secondly, we have to integrate our latest acquisition and release synergy benefits for shareholders.

Now, obviously, the kind of innovation you want with such priorities is quite different to that you'd generate if you were in different economic times. Today, the name of the game is short term wins, ones that don't distract you from your key objectives, and making sure you can demonstrate a return on innovation investments.

The best way to do that is focus on small, incremental things.

No innovator worth their salt gets up in the morning and imagines that today, they'll move a checkbox on a form, or investigate how to cut half a second off the queue length in the call centre. These things might not be ground-breaking, but they help pay the bills.

So, when I'm asked if I have the most exciting job in the world, my response is almost always "yes, but I try to make it as boring as possible". This usually gets me a raised eyebrow.

Whilst our bread and butter – as innovators – is the truly new, dealing with newness is a routine matter if you do it all day every day. Nothing there to get excited about. An idea arrives, it is evaluated, and it either executes or not.

What you have, when you have "the most exciting job in the world", is the complete opposite. Emotional engagement in specific initiatives. An ability to "drown the puppy" when things go wrong. And, above all, too little time to process enough stuff to get to scale.

Comments

[Graham Hill]

Hi James

A very challenging post.

Most companies recognise that they need to continue to innovate if they hope to have even half a chance of thriving after the recession is over (assuming they survive it that is). And as you say, it is much easier to concentrate on small-I incremental innovation rather than BIG-I radical innovation.

Small-i innovation can be very successful. Just look at Toyota. Toyota came #3 in the recent BCG/Business Week survey of the World's Most Innovative Companies. It took the #3 spot for its process innovation though, not for its product innovation. Although Toyota is perhaps most famous for its Toyota Production System process, it gets just as much value out of its Kaizen incremental innovation process. Toyota managers reckon that it has made over 20 million incremental improvements to its business using Kaizen over the past 40 years! Indeed, at Toyota Kaizen is daily business for the majority of staff. For example, when I was Head of CRM for Toyota Financial Services a while back, the team made as many as 50 incremental innovations a year to some of the marketing programmes. Each incremental innovation only had a small effect by itself, but together the innovations were enough to lift results by as much as 50% in some cases.

Maybe small-i innovation is enough for most companies to survive the recession. But I don't think that it is enough if you hope to thrive once the recession is over. And that means investing in innovation now so that it is ready to go to market when the recession is over. For that you need the oomph that only BIG-I innovation can bring. The challenge with BIG-I innovation is that it has a rotten record of success. For most businesses, inventing new products fails on average 80% of the time. According to Harvard Business School's Professor Clayton Christensen, 75% of this is due to not really understanding customers' real needs; in terms of the jobs they are trying to do and the outcomes they desire from doing them. And according to Strategyn's Tony Ulwick, understanding customers needs in this way can increase innovation's success rate up to 80% or more. That is quite a difference.

BIG-I innovation is a difficult but necessary investment for companies even in a recession like the one we are just entering. As Wharton Business School’s Professor George Day wrote in a recent article, ‚’Sustaining Corporate Growth Requires 'Big I' and 'small i' Innovation’. The real challenge is increasing the odds of BIG-I innovation being a success in the market. For that you need to really understand customers’ needs. It’s time to find out what jobs customers are trying to do and what outcomes they desire. It's time to harness customers to drive BIG-I innovation.

Graham Hill
Customer-driven Innovator

Further Reading:

George Day, [email protected]
’Sustaining Corporate Growth Requires 'Big I' and 'small i' Innovation’
http://knowledge.wharton.upenn.edu/article.cfm?articleid=1662

[James Gardner]

Graham,

I agree with your points entirely. But one must be realistic. Just because a firm needs Big-I innovation, does not make it politically possible to do it right now. And just because everyone knows that innovation is what's needed in the future does not make it the obvious investment when the mother ship business itself is under threat.

Professor Day - whom I very much respect - lacks the perspective of a practioner in my view. It is all very well to opine that innovation is important, but just *try* to get a project of the ground with an 80% chance of failure in the present climate. There are better, more certain, ways to use scarce resources.

Failing to recognise this is one the reasons, in my opinion, innovators often lack credibility in large corporations.

In my forthcoming book I make this point extensively. You have to earn the right to play before you're allowed to do Big-I. It is as much about the politics of the situation as anything else, and an innovator who tries to snatch the main prize before he or she has done the legwork will almost always be cut down.

[Graham Hill]

Hi James

You point is well made.

But don't you think it places you squarely in the middle of a business paradox: You need to innovate in order to thrive after the recession is over, but you can't because you are struggling to survive the recession!

Innovation, (small-i and BIG-I) obviously covers a broad range: from products, through services, through experiences through capabilities (including your own innovation capabilities) all the way through to business models. The further along the continuum you innovate, the greater the rewards, but the higher the cost (and sometimes the risk).

Without the advantage of your inside view of what is happening at your bank, I still feel that there are probably BIG-I innovations that you could and should be making - based upon a solid view of important, unmet customer needs - that would help you thrive in the future and not get in the way of surviving now.

The real challenge is in understanding customers' needs (and using the insights provided to significantly reduce the risk of innovation failure). So that you can go from an 80% failure rate to an 80% success rate. My experience of most companies with large numbers of customers and huge amounts of transaction data (banks, telcos, utilities, etc) is that they have all too often subordinated understanding customers' needs and innovating around the new opportunities presented, to analysing customers' transactions and inventing new solutions to the old opportunities identified. This makes innovation of anything other than the small-i type very difficult.

I greatly admire what you are doing at your bank and your willingness to discuss it in this open format. I hope that you are able to return to more BIG-I innovation soon.

Graham Hill
Customer-driven Innovator