Innovation interview: Gina O'Connor
This week’s guest interview is with Dr. Gina O'Connor, associate professor in the Lally School of Management & Technology at Rensselaer Polytechnic Institute, where she has taught and conducted research for more than 15 years. She is the co-author of “Grabbing Lightning: Building a Capability for Breakthrough Innovation.” She may be reached through the Grabbing Lightning blog.
1. Often, a client beginning an innovation program will expect "new to the world" ideas. Usually, though, they collect many incremental ideas, or ideas of lesser value. What's your definition of breakthrough innovation, and how does it differ from incremental innovation? Is one better than the other?
We define breakthroughs as opportunities that offer at least one of the following:
a) new-to-the-world performance features,
b) order of magnitude improvement (10x?) in known features, or
c) significant (50%?) reduction in cost.
The levels of improvement in features or reduction in cost will vary by industry. In some, a 3% improvement is huge, but in other industries a 50% improvement is necessary to be really meaningful. These last two categories are considered breakthrough because they open up entirely new applications of a technology or service that had never previously been considered possible.
Incremental innovations are small improvements or variations on known features.
The difference between breakthrough and incremental, from a management point of view, is that breakthrough innovations are associated with tremendously high degrees of uncertainty on many dimensions: market, technical, strategy/organizational and resource uncertainties are all high.
Neither is better than the other. To compete in the long run, companies need both. Incremental innovations keep your current customers happy and competitors at bay (briefly). But breakthroughs are necessary to open up whole new platforms of growth for the company. As product lines get commoditized and competitive entry gets tougher, breakthroughs help companies move into new domains, or redefine their current ones. Breakthrough innovations have been associated with greater-than-average profit over the long run.
2. When considering an enterprise approach to innovation, where does breakthrough fit in - is it something all employees can participate in, or is it best left to the strategy department?
I don't think it's for everyone. If everyone were doing breakthrough innovation, who would run the operation? While it's important for everyone to be involved in identifying opportunities or helping on projects as called upon, someone ... some group in the organization … must be responsible for breakthroughs. This is not something that can be done on people's spare time. It requires a distinctly different management system from the predominant system that drives companies, which is all about operational excellence and customer intimacy.
Just as we say that everyone in the company should be customer-oriented, even though there are clear definitions of sales and marketing roles, everyone in the company should be innovation-oriented. However, companies needs clear responsibilities, processes and structures for getting breakthrough innovations out the door.
And it's not necessarily appropriate for the strategy department. There's only been one strategy group that I've seen effective in managing the breakthrough innovation mandate for the company: IBM. Many strategy groups are focused on planning, not on executing. Breakthrough innovation requires both.
Frequently it's housed in R&D, but that's not the best approach either. R&D is great at discovering breakthrough technologies, but not prepared necessarily for incubating them into new businesses. I think we need an innovation group, or new business creation group, that works with both strategy and technology. It has to be one that ensures breakthroughs actually get commercialized in meaningful ways. We call this the new business creation group.
3. What are the levers for breakthrough innovation - what people, process and technology need to be in place for an organization to find those breakthroughs?
Complicated question! There are clear roles (idea hunters, developers of strategic intent, project coaches, portfolio leaders, innovation governance councils …) that are all necessary.
Processes need to be learning-based rather than budget- and control-based. People who can work in domains of high uncertainty and ambiguity are key. Leadership and culture must focus on articulating and socializing the breakthrough innovation mandate throughout the company. The breakthrough innovation system must have adequate resources … not just enough, but the right types as well.
Finally, reward systems must align with the high failure/high learning rates associated with breakthroughs. These are a few thoughts.
4. Once those levers are defined, how do you measure breakthrough (or know it is successful)?
We've identified three capabilities companies need to have in place:
- Discovery, which is about identifying and enlarging breakthrough opportunities,
- Incubation, which is about experimenting with those opportunities to identify how they can play out as actual businesses, and
- Acceleration, which involves growing those fledgling businesses to the point where they can stand on their own to gain resources and support within their ultimate organizational home, be it a division or a business unit.
If all of these capabilities are functioning well, there will be an active portfolio of Breakthrough projects, with reasonable churn rates and pipelines of progress. But beyond tracking project level progress, we know now that engaging in breakthrough innovation causes impact on the firm's reputation, on the firm's other project platforms, and moves the organization into new markets, new partnerships and new technology competencies that it may never otherwise have gained.
5. You've talked about the concept of Innovation Hubs - what is their function? How do they best enable an organization to innovate? How are the Hub responsibilities and the business owner responsibilities defined?
As mentioned above, I don't believe that everyone in a company should be responsible for breakthrough innovation. The hub is a focal point for this activity.
The hub leader oversees the portfolio of breakthrough projects, and connects it to the strategic intent of the company, to ensure it is relevant and not considered an exception or appendage. Business owners are responsible for nearer-term delivery of products and services that meet current customers' needs in as efficient a manner as possible. Those are two critically important functions in a company, but they differ dramatically from one another.
6. Many of our customers are utilizing innovation to support employee engagement. How do breakthrough innovation and employee engagement come together? And what is your best advice to those new to breakthrough, who may have been working on incremental innovation - or those who wanted breakthrough, but got incremental?
If by this you mean can we use innovation to keep people motivated by their jobs, the answer is, of course yes. What companies need to do, we believe, is to develop career paths for those interested in innovation.
Cultivate, reward, promote people for taking on risky assignments, even if those assignments don't immediately turn into profits.
The best advice I have for employees wishing to get involved is to seek out leaders who are committed to breakthrough innovation. Find the group in your company that is responsible for fulfilling the breakthrough innovation mandate in your company. And if you cannot find them, meaning that perhaps there isn't one in your company, raise that issue.
Learn/read about the management processes associated with breakthrough innovation. They really are different. The more educated people become, and the more able they are to manage differently, the more successful companies will be in commercializing true breakthroughs.
Many companies say they're doing breakthrough innovation, but they're really not. Honest discussion is needed in companies to ensure that the right practices are being applied to the company's true innovation objectives – and that the company's true innovation objectives are clarified.