The 2019 Innovation Research Interchange (IRI), held in Pittsburgh, brought together Chief Technology Officers, Chief Innovation Officers, Heads of R&D, Heads of Innovation, data scientists, engineers, researchers, and innovation storytellers to explore how digitization will impact the future of innovation.
Three Key Insights Uncovered at IRI 2019
- Digital transformation must begin with a focus on people, not technology.
- Lean Startup methods can work in large organizations, but there are certain keys to success.
- Innovative companies must embrace “brilliant” failures.
Let’s break these down.
Insight #1: Digital transformation must begin with a focus on people, not technology.
In the conference’s opening keynote, Bob Evans asked us to consider: “As billions of consumers go digital… is your company falling behind?” The key, he explained, to staying ahead of the digital transformation is to focus on customers.
Specifically for B2B companies, understanding our customers’ customers enables us to innovate on what really matters to end users, no matter how far back in the product development cycle we work.
For this reason, Evans stressed the importance of R&D collaborating with marketing to tell stories of innovation and ensure that improvements and discoveries are aligned with the needs of users.
Insight #2: Lean Startup methods can work in large organizations, but there are certain keys to success.
In a morning breakout session, James A. Euchner–former VP of Global Innovation at Goodyear Tire and current Editor in Chief of of Research-Technology Management–presented on Lean Startup in Large Organizations. Drawing on the Lean Startup methods developed by Steve Blank and Eric Reis, Euchner discussed the threats and opportunities for Lean innovation within BigCos.
The advantages that BigCos possess for successfully implementing Lean Startup innovation methods are: core business assets, an established customer base, broad expertise, brand, service network, and an established performance engine (lawyers, procurement, diverse talent, etc.).
Yet BigCos can also resist Lean Startup methods due to perceptions that they will threaten the core business, conflict with the performance engine (causing pushback or concerns about misalignment), and risks to careers for innovators. The threats to BigCos business models include: fear of chaos (because change can feel chaotic), fear of cannibalization (the idea that innovations will eat the core business alive), and fear of resource bleed (drawing resources away from the core business).
Euchner, therefore, suggests strategies for implementing Lean Startup methods successfully within BigCos:
- Start by working in aligned opportunity spaces (the sweet spot where corporate assets meet opportunity areas).
- Manage business model risk to address cannibalization by generating business model options, identifying risks for each model, prioritizing risks via stochastic modeling, de-risking through business experiments, selecting a optimal model and preparing for incubation.
- Organize for growth by setting aside sequestered funds that can only be utilized for incubating new businesses/innovation within the company and setting up negotiated agreements (sales relationships, costs of goods, and use of service network).
- Address fears of chaos and waste by setting up an innovation stage-gate.
Finally, Euchner argues that stage-gate processes are critical for effective, long-term innovation as they enable researchers to validate experiments and kill failing projects before they reach levels of epic failure.
And speaking of failure…
Insight #3: Innovative companies must embrace “brilliant” failures.
What is the role of failure in innovation? How can failures, in fact, be brilliant? How can we create organizational cultures that promote learning from failure? We’ve heard the wisdom of Tom Watson, IBM Founder, that, “If you want to succeed faster, make more mistakes.”
An impressive collaborative team conducted a literature review and thought leader interviews on brilliant failures: Stewart Mehlman (IRI Emeritus); Marcie Zaharee (MITRE); Laura Buen Abad (Sonoco); Preeti Chandra (Praxair); Candee Krautkramer (Kimberly-Clark); and Joel Schall (Henkel). Here are some of their key findings:
A brilliant failure is a well-intended and prepared project at the team level that does not achieve its original goal, because of something that was not knowable, but provides significant learning to the organization in the form of:
- Relationships amongst the team that lead to future success
- Improved processes to avoid similar failures
- Improved technology and related IP to address technical shortcomings
- Success in other markets
- Commercial success despite technical failure
- Technical success despite commercial failure
- A project held until monitoring reveals advances in enabling tech or id of new applications to achieve success
- Redirecting (pivoting) the project so it can succeed
While epic failures cost a lot and result in very little learning, brilliant failures cost little and result in a great deal of learning.
Communication and documentation are key to failure because the defining feature of a brilliant failure is its ability to contribute to learning. In brilliant failures, learnings are articulated, documented and shared throughout the organization to encourage a culture of innovation.
We are thrilled to share interviews with some of these innovators as part of our #UntoldInnovation series. Learn more about our innovator interviews and join the conversation.