The Innovation Equation: I = C x PE x BM

Creativity

So its Saturday night and you are sitting at home with a couple of friends/colleagues. The second margarita has been savored and it is impossible to not talk a little bit about work...

"I bet the Boss is on their way out"

"Huh?"

"Have you seen the numbers? I mean the real numbers about our market share in the business segments that rule our business? They are soft, real soft."

Somewhere in the middle of the third margarita, someone says:

"Well the solution is obvious. At least it would be obvious if people from Sales, Engineering and Legal got together as often as we do, although the 'ritas help. If we take advantage of the regulatory cycles, design for the new user and get it through the pipeline fast, we can totally crush the other guys. We've talked about the products a hundred times."

"Who are the other guys? The competition across town or the suits in our own headquarters?"

Pause for a moment of introspective silence.

So, the conversation now devolves into the actual details of a creative approach to solving a strategic need. You have just had a taste of how the first variable in the equation, Creativity, usually happens in cross-functional conversations.

Process Excellence, the Second Variable

"If we could leverage the presence and logistics of our present employer, it would hugely increase our ability to succeed. They need to see a bullet-proof business plan and reduce risk to close to zero before they'll greenlight this idea. They want a sustainable business that helps the company...not a money pit."

"Yeah, but doing it for one quarter or even one year is not enough. This has to be a sustainable business for a long time, years. Everybody across town will be after us. So we have to figure out how to scale fast and well. Its gonna take that Lean Manufacturing stuff they keep talking about in Production. Anybody know someone over there?"

And so it goes. We go from a creative idea to the practical reality; that every creative idea needs stable legs to last through the inevitable storms of adversity;Process Excellence. And that stability matters, because even the most creative idea will not survive poor Process Excellence, but a mediocre idea with some stability might just eventually find a profitable home. So, Process excellence trumps Creativity, and both are best. But wait, there's more...

Business Acumen

So now we have our great idea humming along. It is successful in the market, we have some good numbers in terms of margins, quality and customer sat. Remember those folks across town?

They just introduced a new product/service package combo at a price that completely changes the rules of the game. Your game. In a moment, your success at the conventional way was upended by a game changing development somewhere else. Kind of like how you started this business originally.

And that is how the third variable, Business Acumen, plays a part in Innovation.If and when we figure out how to play the end game in a new way, we can rewrite the rules. That's why Business Acumen trumps Process Excellence. If we can deploy process-proven technology/services to fulfill a brand-new need, we can reap the benefit of both an open field and a reliable delivery platform. All three are best and virtually nobody nails all three. Air Liquide? Starbucks? Maybe.

Innovation = Creativity X Process Excellence X Business Acumen

Of course there is much more. That's Innovation.

Margaritas and an interesting conversation, anyone?

Originally posted here.