American innovation expert Langdon Morris will teach Kiwi companies the secrets of 'agile innovation' at a series of workshops around the country next week.
Morris is recognised as one of the world's leading thinkers and consultants on innovation and his most recent how-to books, Agile Innovation and the Innovation Master Plan, form the basis for the workshops organised by Callaghan Innovation.
The Agile method was developed in 2001 by US software programming teams in response to a spate of failed projects and cost over-runs. Agile Innovation simply takes that method of accelerating software development while still reliably producing high quality work, and adds in good innovation management principles.
Morris says innovation has become a critical competitive factor for all companies, whatever their size, as the rate of world change has sped up. Typically companies are good at collecting ideas but it usually happens in a random way that doesn't lead to sifting out the best ideas and speedily bringing them to market, he said,
"To innovate you have to do things differently to the way you do things in a normal corporate environment which is about how to get things to scale, repeatability and eliminating variation. Innovation is the opposite, it's about how to do things differently and get a shift in culture and the way companies are run and how people are trained," he said.
The four basic steps to becoming an agile organisation include designing the right business processes to out-innovate your competition, combining quality and speed. The second step is reducing the inherent risks in innovation while investing in the right ideas, generating ideas that are better than anyone else's by engaging a larger group of people - the entire company and the broader eco-system such as customers, and great leadership to revolutionise thinking.
Morris said there's typically two key sticking points. One is a mindset with staff often resistant to changing the way they have traditionally done things. The other is senior staff lacking the skills needed to effectively commercialise innovation because it wasn't included in the education of those aged over 30 years, who tend to be in management roles.
He said agile innovation can be easier to introduce in smaller companies where the leadership is much closer to their customers and can feel the urgency for change because they're getting the feedback that "what cut it last year, won't cut it again this year".
Larger organisations tend to have senior leadership that are more removed from customers and therefore slower to respond to their needs. On the other hand, once a large organisation spots a new opportunity, it has more resources to throw behind bringing it to market quickly ahead of competitors compared to their smaller counterparts, he said.
"The smaller ones can find their own niches in the eco-system possibly so they're not frozen out. Smaller companies can gain access to capital and innovate in a low-cost way that can see them go faster than larger corporations traditionally achieve. There's room for both," Morris said.
His latest book features case studies of companies which have successfully implemented agile innovation, including Wells Fargo, one of the top five American financial services companies. It took a small sales team through ethnography studies - essentially teaching them how to better listen to their customers and uncover innovation opportunities. The team visited customer sites for several days, camping out to observe how they went about their jobs and interacted with financial services.
Wells Fargo provided free feedback on the ethnography studies but found long-term every customer that had participated ended up buying more of its services, which generated an estimated US$20 million in additional revenue. The process also helped it identify a problem hundreds of its customers had managing billions of dollars of cash worldwide which it solved by innovating a new treasury management workstation.
The bank said having a deeper understanding of its customers' core needs accelerated delivery of the new product by 12 months and saved millions by not adding unnecessary features that customers didn't want.
(Businessdesk is funded by Callaghan Innovation to write about the commercialisation of innovation).