Monday, July 30, 2007

Creating a Sales Buzz for Boring Products

All over the world, very few salesmen are blessed with hot sexy products: iPod, iPhone, Blackberry, Absolut Vodka, Red Bull, Sony, Xbox etc. These products are so well received in the market that the customers are eager to buy - and the salesman does not need to push for the sale. The reality in the market place is that the vast majority of products are not sexy or hot - many are outright boring. Therefore most salesmen are stuck with selling some arcane product or some boring product - which requires a lot of push.

Recently, a friend of mine who is a salesman complained that it was way to hard to sell his product. He sells an arcane enterprise software - which only a select few data center administrators appreciate & understand its worth. His major problem was that the users are not the buyers of his product. The buyer or the decision maker does not understand the product or its benefits - and that makes it a hard sell.

Being a marketer, I could not resist the challenge: "How to sell boring products?"
The first story that hit my mind when I heard his problem was that of Adventures of Tom Sawyer - where Tom sells the idea of painting the fence to his friends. If the chore of painting a fence can be made attractive, I am sure with some imagination one can sell any product in earth.
Unfortunately, innovative thinking is not something everybody understands or appreciates. As a consequence, companies that sell arcane products to rely on presentations that load up on features, specifications, and statistics. The exercise is repeated day-in & day-out and with every customer. This repetitive work kills all enthusiasm in the sales force and generally wears them out.

My experience and knowledge in marketing tells me that there is no reason why every company can’t deliver an exciting image to its audience and generate the kind of buzz and excitement that is usually associated with products like iPod or Segway or Victoria's Secret. So let me begin with explaining some of the basics.

BET Model

Identification of the market opportunities should be the core force that drives the marketing process. A market opportunity exists when there is a gap between what is currently available on the market and the possibility for new or significantly improved products. A product successfully fills a product opportunity gap only when it meets the conscious and unconscious expectations of consumer and is perceived as useful, usable and desirable. Successful identification of a market opportunity is a combination of art & science. It requires a constant monitoring of factors in three major areas:

1. Business
2. Economic
3. Technology

BET model is applicable only in a business to business sales. BET model can be illustrated as:

The buyer’s decision is primarily driven by these three factors. Some of these may drive towards a buy - while other factors oppose it. Identifying the right set of factors is an art. However, identifying the right set of factors influencing the buying decision is the key to success. At this juncture, it is important to do a force field analysis - explanation of force field analysis is beyond the scope of this article.

As you can see Product opportunity gap varies from organization to organization. Identifying the product opportunity gap and positioning your product as the one which fills the gap is the surest way to generate the kind of buzz and excitement usually associated with companies like Apple, Google, Benetton, Absolut Vodka, and Sony.

Emotional Connect

To create a hype, the product needs to have an emotional connection with the buyer. (Both customer & consumer) If an emotional connect can be established, then the sale is only a matter of time.

Creating emotional connection is not always easy. It requires identification of customer’s pain point, providing a solution to customer’s pains - and the customer realizing the benefit of the solution. This requires quite a bit of research, bit of investigation, probing and negotiation skills.

For example, Home Depot ran a series of advertisements with a husband showing his wife a series of power tools that he wanted.

Rather than try to convince his wife, and by association all the wives in the audience, that he needs another expensive toy, the husband points to each tool and states, "this is your new shelving unit" and "this one is your new kitchen"—a far more dramatic and effective way to make the case for a new purchase.

Another good example is that of Kleenex - paper tissues. The company makes a commodity product. Customers have a choice of various store branded products which are cheaper than Kleenex. To win in such a market place, Kleenex chose to create a video that connected very well with the buyer (often the women in the house hold)

The Kleenex campaign features prominent videos of articulate people telling their personal stories, all resulting in the need touse a facial tissue.

A pregnant woman discusses the emotional impact of having a child, and as her eyes begin to tear up the interviewer hands her a Kleenex. A second video features another well-spoken woman talking about her return to New Orleans after the devastation of hurricane Katrina. Again, as the woman becomes emotional and begins to cry, the interviewer hands her a tissue.
Nothing more needs to be said; this is very powerful storytelling that connects to the audience and delivers an image of the brand as caring and sensitive—the exact kind of impression the company wants to portray.

Use Technology to Connect

It is possible to generate a whole lot of excitement for arcane things like industrial abrasives, data management software, accounting services, and the like. Use of latest technology - You-tube, Web2.0, blobs, Videos, etc. Thanks to the Web and its extraordinary ability to deliver multimedia content, even the most mundane offerings can get hearts racing.

Company which wants to sell data backup products can create a very powerful emotional connection by showing the video of 9/11 attack or Kobe earthquake etc. and then showing off how the company was benefited by having a complete data backup or data mirroring.

Another good way to sell arcane products such as software's needed to run data centers would be to show a video of a fictional story - some thing in the lines of "Enemy of the state" - where the data center manager is portrayed as a super hero who saves the organization.

Videos can convey a very powerful message which emotionally connects with the customer. If these videos are made available on the web, it will create a buzz in the user community.

Six Steps to Turn Boring Into Exciting

1. Use people to sell to people

There is no substitute for people. Human beings are capable of communicating with an enormous degree of nuance and subtlety, using voice, expression, body language, and gesture; no animation, avatar, or artificial substitute can take the place of a real person for communicating meaningful, memorable marketing messages.

With relatively easy-to-use production tools, anyone can create a video, but not necessarily one that delivers the message or image that your company wants to present. We have seen far too many poor quality efforts both on the Web and even on local television, where company presidents with bad haircuts and ill-fitting suits uttering nonsense-riddled scripts in zombie-like performances expose themselves to audiences that are expecting so much more.

Skilled performers communicate in very subtle ways to an audience, and only the well-practiced professional has the experience and capability to deliver the intended experience. The cost of saving money by doing it yourself or with amateurs can result in delivering an unintended message that may undermine the impression and image you are trying to create.

2. Perception is reality, so use scripted professionals

You will notice that I described the women in the facial tissue videos as articulate. Now I cannot tell you whether they were actors or whether their powerful presentations were scripted; but if I had to guess, I would say these very effective videos were about as carefully produced and constructed as the latest episode of "Survivor." That by no means makes them any less effective.

The point here is that perception is reality, and the professional filmmaker knows how to tell a story and communicate a message; and that is not the same thing as being able to turn on a video camera.

3. Tell a memorable story

When we talk about a company's telling its story, it is important to distinguish between the company's history and the emotional experiences generated by the product or service.

Company histories can make for interesting videos and can produce a sense of trust associated with being in business for a considerable length of time, but that sort of presentation does not speak to the underlying emotional and psychological factors that actually trigger a sale.
It is difficult but imperative that businesses understand that marketing is not about you, or even the product or service; it's about the audience.

Like the Kleenex videos and the Home Depot commercials, every product and service that is purchased from your company represents an experience, a story that relates to your audience's aspirations and needs. It is the audience's story that demonstrates credibility, clarifies purpose, penetrates memory, and makes the message compelling.

4. Create an emotional experience

The vast majority of decisions we make are colored by the emotional relevance associated with those decisions. No doubt rational factors figure into our decision-making process, but the pivotal factors that attract the use of one product over another are emotional.

If you're not connecting to your audience on an emotional level, then you are left with a commodity that can only be sold on price and features, and unless you're a monopoly there will always be some competitor willing to offer your customers more for less.

When presenting your product or service, it is important to tap into an emotional element that your audience can relate to as its key purchasing-decision factor. When people purchase boring accounting services and software, what they're really buying is an improved lifestyle for their families.

It really doesn't matter what you sell, if you look hard enough you can find the emotional benefit that should be the central element of your marketing message.

5. Create a believable relevant personality

Part of the process of connecting with your audience is creating an appropriate personality for your company. Many corporations today believe in the cult of management personality, but this is a dangerous game. Your company needs a personality of its own, one that is distinctive and that will stand alone and not be dependent on senior management's ego and self-promotion.
Web-video marketing campaigns provide a vehicle that allows companies to create appropriate personalities that engage, inform, and entertain your audience in ways that establish your identity and create the basis for a prosperous business relationship.

Clever marketing can create a corporate personality, but it is imperative that you follow through and deliver that personality in all aspects of your relationship with your audience. Producing a campaign that promises one thing—and a website, staff, and product that deliver another—is one of the easiest ways to alienate customers.

6. Deliver a critical hot-button moment

Web-video presentations need to focus on single issues that are driven home by the addition of a hot-button moment or punch line. Remember, you are telling your audience a story that needs a beginning, middle, and an end. That story should build to a climax and deliver the point in a single memorable moment.

Closing Thoughts

If you are a salesman using power point slides - then consider yourself obsolete. There is no way you can create the kind of buzz and attract customer to buy your product with power point slides. Instead, use creativity, innovative approach to selling. Start with the benefits - and then connect the benefits with people emotions. Next connect the emotions with the business need. At this point, the customer will be able to connect the economic necessity and technology factors for buying the product - and la viola you have a super seller in your hands.

Use of BET model, Product Opportunity Gap & force field analysis helps you to identify the right customer base and once you have identified the right customers, work on creating the right emotional connection between the product’s benefits and the customer. Remember that features and technology mean nothing to customer unless customer perceives a value and benefits of using your product.

Innovation - Measuring Success

Globalization has forced many small & medium companies to look for innovative products/services/solutions in order to be competitive. In India, several large and medium sized organizations are commiting serious money for innovation. Several senior managers and executives are seriously concerned about the effectiveness of their investments for innovation. Many managers are looking for the business link between innovation and performance metrics.
BSI Global Research Inc conducted a survey covering 355 firms in the USA. The results of this survey will be a good pointer for other managers.

Nearly half of the 355 private-company CEOs queried make an effort to link innovation to metrics. They measure the success of their innovation effort by:

Its impact on overall revenue growth - 78%
Customer satisfaction - 76%
Growth in revenue from new products or services - 74%
Increased productivity - 71%
Earnings/profit margins - 68%

Much smaller percentages examine its impact on recruitment and retention 34% and market capitalization 17%.

Companies have to use multiple measures to track success. Use of multiple paramters enables cross-analysis as well as period-to-period comparisons.

Innovation has had a positive impact for these companies in many areas, with the greatest impact being felt in new product and service development (83%), followed by revenue (80%), earnings or profit margins (77%), and efficiency (72%).

Innovation is more valued during lean times.

The survery also shows that during lean times, despite cutbacks and shrinking revenues among technology companies, innovation is still highly valued. The survey of CFOs and managing directors found that 81% of top technology industry executives say innovation has been made an organization-wide priority in their businesses. And of that group, 54% rate their business' level of innovation as superior to that of their one or two strongest competitors -- 17% say "much better," and 37% say "somewhat better." Also, this group expects to grow revenues over the next year 25% faster than their peers who have not embraced innovation.

The rational for this investments during lean times is that:- Today's continuous, rapid advances in technology make innovation critical not only for individual businesses, but also for our entire economy. Fresh ideas lead to new and better products and services that are worth a premium to customers. Moreover, innovation is freeing workers to do their jobs more efficiently, creating additional value for their employers.

The survey was conducted by BSI Global Research Inc.

Monday, July 23, 2007

Creativity for Business - Understanding Various Stages of Creativity

Today's hyper competitive environment has pushed all organizations to institutionalize a culture of innovation. Innovation within an organization is however dependent on individual employees creativity. This implies that the company must create a culture that promotes individual creativity - and that is a huge challenge for most organizations.

Creativity among employees and as an organizational culture is often a daunting task for managers. Creativity often involves challenging the old existing norms/rules/mores - and these were comfortable & perfectly working ways of doing business. Managers are trained not to take unnecessary risks - "Don't touch it if it aint broke" attitude. For organizations committed to build a culture of innovation & creativity - the managers & leaders must understand the creative process and commit to policies that support the creative process.

The Four Stages of the Creative Process:

Dr. Teresa Amabile at Harvard Business School describes creativity as a four key stages - In order to make it easier to understand. But inside a human brain, these four stages happen simultaneously or randomly.

The Four stages are:


At first the creative person or team is exposed to the problem. Creative individuals in the team then become immersed in the problem - and start with a data gathering exercise. If the team is newly formed, then the team goes through the "forming", "norming", and "storming" process. The entire process can sometimes come to a dead halt - especially when large amounts of information has to be gathered or when there are lots of possibilities or options yield no immediate, transformative insights.

During this stage, the leader must intervene only when requested or when he feels that the entire process has come to a grinding halt. The leaders role is to present the problem to the creative team or individuals - without narrowly defining the problem statement. The leader must then move quickly out of the way and watch the process from the sides intervening as rarely as possible and only when intervention is absolutely required.


Once the problem is understood, individuals tend to mull over the issue silently. For an outsider it may appear that the problem is neglected or forgotten or be on the back burner, even forgotten or neglected, but the creative mind is still at work. In case of teams, the group may not meet regularly - but all members of the team will still be thinking or generating ideas. During this stage, the left brain - that part of the brain that is responsible for dreams, synthesizes, and makes new, weird, original connections will be at work. Team members will rarely like to meet and Individuals appear to either skulk or ignore the problem.

During the incubation stage, the leader must convey regular meetings and create knowledge sharing sessions - this forced meetings may spark creativity through cross pollination of ideas and may lead to the "Eureka" stage. The leader must encourage individuals to document and share their ideas with others - this will help generate more ideas and create a platform for collaboration.


Eureka moments can occur without warning. Ideas & innovations can come at any time during the "incubation" stage. Most often, these "aha" moments occur with ideas that don't have the killer instinct - i.e., the idea at first does not appear to solve the problem, but the creative individual has a gut feeling that the final solution lies somewhere within this 'eureka" idea - and along with it comes an immediate urge to work - and work endlessly looking for that final solution.

In a team setting, members may suddenly call for a meeting and "WOW" - the spontaneous exchange of ideas can bring forth an idea that no one member could articulate alone.

During this stage, the role of the leader is to congratulate the individuals for the ideas, encourage individuals and teams in their search for the solution after the "eureka" moment. The leader must be careful not to criticize or shoot down any ideas, instead he must welcome all ideas - irrespective of how wacky or irrational it sounds. The leader must encourage documenting the idea as & when it appears and then play a pivotal role in sharing/distributing the ideas.


This is the final stage that separates creativity from successful innovation. New ideas generated during the eureka stage needs action, stubborn determination to be converted into reality. This involves building coalitions for those who believe in the idea and marketing the idea to critical skeptics. This stage is the toughest stage in the creative process - as it needs lots of courage & persistence. Moreover execution of an idea requires more complex social skills - rather than technical skills. Creative individuals often face this stage as a great challenge - as they usually lack the social skills or the political skills needed to execute the idea.

The leader plays a very important role in this state - more than in any other stage. The leader must encourage the individual to continue, fight the marketing battles, win over the skeptics and arrange for adequate resources needed for the implementation of the idea. The leader must take the organizational responsibility and manage the implementation process.

Closing Thoughts

Leaders must understand the creative process and perform the required roles during each of the stages. Sometimes the leader himself can be a creative individual or may be part of the creative team. In such cases, the leader must play a dual role. Leaders who are not familiar with the creative process must take time & efforts to know how creative individuals work and also understand that creativity takes its own sweet time. Trying to hurry up the process does not work - and in most cases it will derail the entire creativity process.

Leaders must consciously play a supportive role and provide guidance only when needed. Care must be taken to document all ideas and share ideas among the team. Leaders must be careful not to criticize any idea and must always strive to encourage, motivate, cheer the members - by constituting adequate rewards, kudos and encouraging words and actions.

Dimensions of Innovation

Recently a senior executive of a manufacturing company asked me a question "Should we pursue Radical Innovation or Incremental Innovation?" At that moment, I did not have a clear one line answer. Innovation is a complex subject and the choice between incremental innovation or radical innovation is never straight forward. Individual companies, or group or even employees can choose between the two depending on their strategy, risk tolerance and competition.

Innovation can be seen in two dimensions:

1 Competitiveness

2 Risk Tolerance

All the innovations that happen in industry today can be explained in terms of these four quadrants.


Competitiveness is an innate feature of the individual or that of the organizational culture. Some companies have a strong competitive nature. For these companies - status quo is not acceptable - and they not only want to win but also ensure that the competition loses.

In most businesses, the culture of competitiveness is primarily driven by the nature of the competition in the market place. If a business does not face intense competition, then over a period of time the culture of the company tends to fall into complacency - and tends to take a reactive action towards innovation i.e, they will innovate only if the competition does so. For example GM considered developing hybrid technology only after Toyota released Prius. Ford & GM are yet to develop the clean diesel engine technology - but Honda, VW, Toyota already have clean diesel engine cars in the market.

Another possibility that emerges with lack of competition - but with a high level of commitment to innovation is that company starts to engage in Anticipatory or exploratory innovation - mainly research. NASA, Bell Labs, a large part of IBM research, Lawrence-Livermoore Labs, Government funded research - all fall into this category.

Risk Tolerance

Risk Tolerance is often a measure of how much money (as % of revenue) a company is willing to spend on R&D without knowing how much benefits it will be getting back. Often company leaders have a higher risk tolerance - This is driven by their personal trait and that trait often rubs onto the entire organization as well. Companies such as Apple, Google, Tata Group, Arcelor-Mittal, Reliance Group, ICICI, Microsoft all have the company leaders driving innovation through their personality.
Sometimes, the high risk tolerance is built into the corporate culture itself. For example, Exxon-Mobil, Texaco, Total, KKR, Blackstone, Texas Pacific Group, (Private Equity firms) Norwest Ventures, Intel Capital, (All Venture Capital firms), Hedge Fund firms, IBM, HP, GE, Bell Labs are the best examples where the high risk tolerance has been built into the company culture.

The four Quadrants

  1. Reactive

  2. Incremental

  3. Anticipatory

  4. Radical

Reactive Innovation (Low Risk Tolerance & Low competitiveness)

This is probably the most common form on Innovation - often seen as imitation. Company A will do anything that the company B does. Coca Cola introduced Zero Calorie cola, Pepsi does the same, Pepsi introduces flavored cola, Coca Cola does the same. Another situation will be that the company innovates only when the regulatory norms change. For example Indian companies adapted 4-stroke engines only when the government enforced a stricter emission rules. It has been observed that most companies tend to fall into this category - this is mainly due to competitive pressures and low risk tolerance. Managers are often forced to react when the competition innovates. Often times managers simply get by imitation or outright copying just to stay competitive in the business.

However, being reactive is not a bad thing. Being a fast follower, one can avoid the mistakes done by the lead innovator and at the same time capture more market share or get higher ROI.
Japanese companies are the masters of imitation as innovation. Throughout 1960’s to 1990’s Japanese firms built their competitive advantage by imitating the best in US & Europe. It was during this imitation process, Japanese companies discovered their own advantages. Indian IT, Pharma firms: TCS, Ranbaxy, Dr. Reddy Labs, Wirpo, Cipla, Infosys, Satyam etc. are also following the reactive innovation process. This has ensured that they have a higher ROI. (see Indian style of Innovation).

Incremental Innovation

Incremental Innovation is primarily driven by very high competitive pressures and low risk tolerance. Companies that rely on technology based products (or manufacturing process) often tend to follow incremental innovation. Intel, Dell, Lexmark, Cisco, AMD, Lenevo, Nvidia, ATI, Adobe, Microsoft, Oracle, etc. survive solely on incremental innovation. Incremental innovation is best exemplified by Moore’s law (The number of transistors one can put in a chip will double every 18 months).

Intel follows Moore’s law to the word and has consistently come out with successful products: Pentium, Pentium-II, Pentium-III, Pentium-IV, Xeon, Itanium, Itanium-II, Centrino, Centrino Duo etc.

Another reason for incremental innovation arises when an imitator decides to leapfrog the competition by a series of incremental innovation. Toyota Lexus is a good example of incremental innovation designed to leapfrog competition.

A good think about incremental innovation is that the ROI on R&D investments can be predicted with reasonable accuracy. The entire computer industry today practices incremental innovation and companies which cannot keep pace with competition lose market share. The key to succeed with incremental innovation is to know what the customers want in the future and then provide it.

Anticipatory or Exploratory

Organizations which pursue anticipatory or exploratory innovation are often disconnected from the business. These organization have a very high risk tolerance and have a low competitiveness. Most government sponsored research labs - NASA, Lawrence-Livermoore labs, DRDO, NAL, ISRO, BARC, C-DAC, C-DOT, CPRI, CFRI etc. fall into this category. University funded labs - Caltech, MIT, etc. also fall into this category.

Many large companies usually have dedicated a certain % of their annual revenue for R&D and these R&D projects were not usually tied to any products or to any particular time line. These R&D labs also fall into this category. Examples of these are several.

One of the best examples is Bell Labs. While all the cutting edge research was done by Bell Labs - an this was all anticipatory innovation. R&D work done at Bell Labs during this phase were highly exploratory and had little commercial implication. As a result Bell Labs spent several billions of dollars with very little to show in terms of benefit to the customers. For all the money spent by Bell Labs - it completely missed the Internet revolution and it also missed the cell phone revolution. But Bell Labs deserves the credit for developing several path breaking innovations in Fiber Optic technologies, Digital technologies, UNIX etc. These innovations were purely anticipatory - i.e., the rational driving these innovations is that Bell Labs expected the technology to move in that particular direction.

Another good example will be Xerox’s PARC. Palo Alto Research Center was created with a certain budget - but with no clear mandate. Xerox’s business managers were expected to pickup some of the technologies developed by PARC and commercialize it. Over a period of time PARC developed several innovative technologies: Ethernet, GUI, Mouse, Post Script printing etc.

Radical Innovation

Radical innovation is probably the rarest kind. Mainly because of the factors that drive it - high risk tolerance and high competitiveness. But in the recent times, there has been lot of radical innovations - the Silicon Valley’s tech sector thrives on radical innovations.
Radical innovation is not easy. It requires high risk tolerance and a high market competitiveness. The company leadership should have a high competitive spirit, must intimately know the market requirements, have the right kind of technological capabilities and have a huge appetite for risks - and also the ability to manage the company is the product/service fails in the market. All these characteristics at the same time is difficult to manage and sustain for a long period of time. Often times radical innovations need a completely different business models. Even highly successful companies find it difficult to sustain radical innovation over a period of time.

The best example of Radical innovations are: Apple Inc., 3COM, Palm Computing, Juniper networks, @Home, Casio, SMART car, Google, Pixair, Segway, Disney Studios, IDEO, Illumination & Light effects, etc. Even these companies find it difficult to sustain radical innovations over a period of time. The biggest challenge in sustaining such radical innovations is managing failures - when a product fails, shareholders revolt against the management - thus killing potential future radical innovations.

Companies in developing countries - BRIC (Brazil, Russia, India & China) today are looking at radical innovations as the means to become globally competitive. In India, Tata Motors has launched an ambitious project to build passenger cars for less than $2500 (Rs 1 lakh) - this is a perfect case of Radical innovation. Ginger Hotels have also developed a radically different business model for a completely self service hotel. ICICI bank has developed innovative services to cater to India rural masses, Reliance Communications and Bharti have developed radical solutions to manage their communication network - which offers the world’s lowest cost of cell phone communication services - and being highly profitable at the same time. Cemex in Mexico has developed a radically innovative business model to sell cement to small & medium customers.

Implications for Indian Firms

Indian companies have to realize that the competition for them has increased exponentially. Market deregulation and globalization has altered the competitive landscape completely in the last decade. Indian firms - mainly manufacturing firms are slowly realizing that if they need to survive they need to innovate. Their old ways of doing things are no longer valid. Companies need to find ways to innovate - and being innovative is going the critical factor for success. It does not matter if you are reactive, incremental, anticipatory or Radical - all types of innovations are better than no innovation.

Indian IT firms - mainly TCS, Infosys, Wipro have developed a radical business model for Global IT service delivery - the "on-site, offshore model" and today are experimenting with several new ways of delivering service.

Indian pharma & Medical companies are developing new & innovative methods to deliver medical services to patients worldwide. If these experiments succeed, India will become a global center for medicine and medical services.

On the other hand, progressive Indian businesses have adapted Radical innovation wholeheartedly - Tata Group, ICICI, Reva, Reliance Group, Bharti Telecom etc. have developed new business models to meet the requirements of radical innovation.

Yet, there are thousands of Indian companies that are yet to wakeup to the new world of competition through innovation - and these companies are in real danger of dying.

Closing Thoughts

The dimensions of Innovation model was conceived to help companies and managers understand their core abilities and develop innovation strategies which is more inline with their capabilities and market conditions. The model helps companies understand their best chances of success with different styles of innovation - and can help leaders/managers build the necessary capability to manage innovation - both in terms of technology development and business models.

Leaders & managers can look at other firms which fall under their innovation models and learn how to manage more effectively. For example, If the company wants to pursue radical innovation - then its managers are better of studying about Apple or google and then mapping the factors/capability required to develop radical innovations - i.e., build capabilities to know and intimately understand customer’s future requirements, learn how to overwhelm competition with new products, manage high risks etc.

Leaders and managers must understand that innovation projects within their company can fall into several quadrants - but the overarching goal/objective or guiding principle of innovation can lie in only one quadrant. Knowing which quadrant is most beneficial for them is critical for long term success.

Friday, July 20, 2007

Cultural Diversity & Affirmative Action

Infy turns to more states for affirmative action for SCs
India's Affirmative Action Rocks the Boat

Private companies in India are slowly waking up to the new corporate responsibility - Affirmative Action. Public sector in India and the government has been promoting affirmative action in form of forced reservation through the ‘quota’ system for decades. But only now, private companies have started to look at taking an active step towards voluntary affirmative action.

A voluntary affirmative action will be tough to manage for most Indian organizations. To begin with, most organizations are not exposed to the concepts of affirmative action - most people confuse affirmative action with reservations and have a negative mindset towards it. Given the recent public backlash to reservations at IIM & IIT, the private sector in India can expect similar backlash from their own employees to affirmative action. In addition, most employees are not aware of how to handle & manage affirmative action. Almost all Indian companies do not have policies and procedures to handle affirmative action. There is virtually no grievance cell to handle any discrimination cases and the list goes on. Implementing affirmative action implies a radical shift in company’s policies.

Thus implementing a voluntary affirmative action will have a deep impact on Indian organizations. It is therefore very important to understand the how people react to cultural differences - before embarking on a plan to improve cultural diversity via affirmative action.

Reactions to Cultural Diversity

History shows that throughout the entire human civilization has repeatedly demonstrated four distinct reactions to cultural diversity:

  1. Genocide

    Genocide represents that the society is willing to kill other human beings who are culturally dissimilar with that of the society. Genocide is usually the first animal instinctive reaction to diversity, or the most primitive of the human reaction. As the society advances and develops, the society realizes that Genocide is not a good option - and the reaction evolves into segregation.
    In India for example, there has been several examples of Genocide. By Genocide I mean demonstration of extreme anger or discomfort or even killing. In an extreme cases, whole groups of people may be killed. In India, there has been no recent instances of large scale murders - but caste based massacre is quite common in rural India. In office environment, an example of Genocide may be that of extremely public demonstrations - strikes and public intimidation of the minority groups.

  2. Segregation

    Segeragation is the isolation of minority group within the organization. Large organizations will often have several groups of people - with each group having its own cultural identity.

    Segeration in the corporate world can take several subtle forms - such as glass ceiling, blaming, racial slurs etc. In India however, segregation is still common. Though caste based discrimination has reduced, but the society is yet to evolve into a truly integrated one. Segregation is more prevalent in the rural areas and in areas with low education standards.

    Segregation in form of "Glass Ceiling" is also prevalent all over the world - especially at the higher end of the organization - i.e., senior management levels. India is no exception to it. Almost all ~100% of Indian CEOs are from the upper castes.

    Segregation is the second stage of social evolution. Once a society learns that it cannot destroy the ones which do not conform to its norms, the society will tolerate it - but will maintain an arms length distance.

  3. Assimilation

    Assimilation is next phase of social evolution. This occurs when the society learns that it can no longer afford to keep the cultural minority group segregated - it will try to assimilate it - i.e., try to make the minority group accept the norms and practices of the majority group and see to it that there are no/little cultural differences.

    France, in year 2006 passed a bill banning all public display of religion. This is a perfect example of forced assimilation.

    In the corporate world, the power to assimilate a minority is so immense that it usually succeeds at least at the surface level. For example, In US, all holidays are centered around Anglo-Saxon culture. People from Asia, Africa are forced to accept that. Hindus, Buddhists & Muslims do not have the option of taking a different set of holidays which are in-line with their religion. In India, corporate too have the same problem.

    Normally assimilation will be welcome if the minority group is really small or negligible But as the population numbers of the minority group grows, there will be resentment. But this resentment will be demonstrated by small gestures - such as celebrating their local cultural events publicly etc. For example look at how the Irish Society in the US displayed its culture during St. Patrick's day during late 1800’s. Or see how Indians in Silicon Valley or Indians in London display their culture during Divali.

  4. Integration

    Integration is the final and the most evolved phase of the society. In this phase, both the majority & minority groups will have build a mutual respect & trust. This takes a lot of efforts from both sides. But once it is achieved the society is very stable. In Corporate India, several castes and religious groups have been successfully integrated. But these are mainly forward castes, and a few backward castes. Getting to a total social integration in India will take some time.

Closing Thoughts

Corporate India is now embarking on the inevitable, irreversible path of social integration by means of voluntary affirmative action. Company managers - especially HR must tread cautiously. Organizations must research the possible implications of voluntary affirmative action and then develop plans to mitigate any adverse reactions before implementing the plans.

Voluntary affirmative action is not enough, companies must make plans to integrate the entire organization in a phased manner - and have plans, procedures and practices inplace to avoid any segregation. Mistakes in this process will lead to lots of negative publicity, low employee morale and high attrition - and this will inevitably lead to losses.

Indian corporates can look at some of the best practices at the Tata Group, Wipro and see how these companies have fared at social integration.

Thursday, July 19, 2007

Fast Innovation - The new imperative for Indian Firms

Several medium sized Indian companies are waking up to the new reality - that they have to innovate or perish. Unfortunately these companies do not have time on their side and are hard pressed to develop new products, expand into new markets and develop new line of services in the shortest period of time.

Knowing Indian firms and managers, I know that these companies are capable of executing rapidly - especially when there is a fire. This ability and the dire need to innovate makes a perfect case for companies to make a case for Fast Innovation.

Fast innovation can create substantial impact to the existing business. It can result in:

  1. Fast time-to-market for a new products.

  2. A highly differentiated product or service offering

  3. Cause major disruptions in the market place.

Fast innovation - i.e. The need to speed up the innovation cycle can dramatically alter the business environment. For example, if Toyota decided to fast track the development of its hybrid technology and committed to its commercialization way ahead of its competitors. This fast move - even when it was done in full sight of everyone caught Toyota’s competitors off-guard. Detroit’s big three were still of the opinion that Hybrid technology will not be economically feasible when Toyota introduced Prius in 1997. It took a solid seven years for GM & Ford to release their hybrid vehicles.

In India, Mahindra & Mahindra (M&M) fast tracked the development of its SUV Scorpio. The rapid development and commercialization of Scorpio enabled M&M to become leaders in the luxury SUV market in India. M&M’s main competition Tata Motors, Hyundai, Toyota could not respond to M&M in time - and Toyota abandoned its SUV product line - Qualis in India.

The new Imperative

Firms all around the world can adapt fast innovation - and bring about dramatic improvements to their revenue & bottom line. However implementing a fast innovation requires a dramatic change in internal operations & management skills. But the benefits are worth the efforts. Fast innovation is particularly useful for companies that have traditionally worked in a stable business environment - but are facing increasing competition.

Reducing the Time-to-market for new products

In most stable industries, every company in that sector knows the product roadmap and knows when a new product will be introduced. If one of the players decides to speedup its innovation and bring a new product ahead of the competition, then it will potentially catch everyone by surprise. Bringing a new product early into the market will have another advantage - win customer’s mindshare and also gain the first mover’s advantage. A possible side effect of reducing the time to market is that it reduces the total negative cash flow required for the development cycle and make it possible to attain a positive cash flow from the product earlier than expected.

Another advantage of reducing the time to market is that it results in a highly differentiated product in the market.

A highly differentiated product or service offering

Introducing a highly differentiated product has several benefits. The foremost benefit is to win customer’s mindshare and wallet share. It is also observed that customers are often willing to pay a premium for a highly differentiated product or service. For example, people are willing to pay a high premium for Apple’s iPhone.

Companies that take the risk of introducing a product ahead of its times will reap good rewards in terms of higher margins and greater marketshare. However, it is difficult to repeat and sustain such high margins over a period of time. So when competition comes out with a similar product, the market innovator can drop the price and still maintain market share.

Cause major disruptions in the market place

Speeding up product introductions can cause major disruptions in the market place. By leaping ahead of the competition, the company has the opportunity to re-write the rules of business and can shape the market place to its needs. For example, introduction on PC made Intel, IBM & Microsoft dominate the PC market for a long time. During this period, these companies were able to write the rules for the PC business. Intel & Microsoft have been able to hold on to their pole positions and have retained the ability to influence the market place. RIM's Blackberry rules the roost when it comes to business cell phones. This was possible only because RIM was able to introduce a new technology - that was way ahead of the competition. Blackberry caused a major disruption in the marketplace for business cellphones.

Major disruptions in the market place often upsets the existing players - thus force them to cede market share and profitability

Closing Thoughts

Fast Innovation is need of the hour for companies that are stuck with intense competition and are engaged in a bloody battle in the "Red Ocean". Successful implementation of fast innovation projects will give companies an opportunity to define their own "Blue Ocean" and define the market rules for it.

Several medium sized companies in India are looking at Innovation as a means to gain competitive advantage should look at fast innovation - and speed up new product introductions. Companies such as Eicher Motors, Ashok Leyland, TVS group, SPIC, Bajaj & others are the best candidates for such fast innovation.

Wednesday, July 18, 2007

Best Practices to Bring out Innovation in any Organization

Business leaders today want to create a culture of innovation in their organization. Building a culture of innovation is not easy. Like all cultural changes, creating an innovation oriented culture will take time. Leaders must understand this and also understand that there are several steps of creative process before reaching the world of innovation. It takes strong leadership to build an innovative culture.

To build a culture of Innovation, leaders should implement to the following business practices, institutionalize them in the culture - by training managers in these practices and then doling out promotions and rewards to those who employ them (the following best practices) successfully.

Practice-1: Select the most creative individuals to lead the innovation efforts

Organizational innovation is dependent of individuals who can drive creative ideas into innovation. It is therefore imperative that the creative persons lead the innovation efforts. This is best done by selecting the "innovation champion". Innovation champion is the person who is creative, has adequate experience and leadership skills. The innovative champions must then be provided with adequate resources to develop creative ideas and carry it to innovation.
Leaders must explain this step clearly to all managers - so that they understand the stages of the creative process. It is vital that all managers understand the process of innovation and their roles in the process, else internal office politics can kill all efforts towards innovation.
Innovation champions must be chosen on the person’s ability to promote creativity within his group, capture the ideas and motivate the team to completion of the creative idea into innovation.

Practice-2: Create a Neutral Zone

Creative ideas requires lots of protection from the nay sayers when the ideas are in the early stage. This implies that the innovation team will need a kind of protective cocoon within the organization. This implies changing policies and procedures a bit, providing the tools and resources and ensure a hassle free work environment.

The innovation champion and the leader share the responsibility to go through the preparation stage and see that the group is adequately equipped. This "cocoon" must be protected from rest of the organization during the initial stages of its formation - else the business pressures will destroy all creativity among this group.

Practice-3: Give your innovators space & time to "play"

The innovation group will take some time to come up with creative ideas, play around with it and sometimes even mess up a bit. These activities may look like waste of time & resources. But during this incubation stage, these frivolous activities are all necessary to allow activating the deeper parts of the brain to solve a problem and make new connections. For a typical results-oriented executive, this can be hard to do - especially when the creative team happens to be a team of is expected to work in creating new blockbuster product or a dramatic business process. The senior executive who may have assigned the task may be hard pressed to let his innovative team have the time and space to produce truly transformative solutions. The key to letting people have room to "play" is to refrain from judgment of their activities or methods.
It is the responsibility of the leader to provide executive protection during the "play" time of the innovation group.

Practice-4: Resist the temptation to look for immediate results

As a leader if you are looking for immediate results, then you do not need an innovation team. Almost anybody & everybody in the organization can come up with incremental solutions or recommendations. There is no aspect of the business that can’t be improved through study and modification. If you are looking for immediate results, then opt for incremental improvements - improvements that can be executed by the existing teams in the organization.

If you are looking for a radical innovation, then the leader has to be prudent in setting deadlines. It is true that setting some kind of time pressure is essential to create focus among the creative teams and this will result in timely innovations. However, overusing of deadlines and results oriented management practices will kill all creativity. The best practice is to have close communication with the innovation teams so that leaders can develop an acumen for setting a beneficial timelines.

Practice-5: Give your personal commitment to implement the best ideas

Innovators seldom have any salesmanship. Given a choice they would prefer to work in isolation, play with their ideas and or generally rub others who are less creative the wrong way. Leaders who encourage innovation must act as the first line filter to test the best ideas and solutions, choose the ones that are that should be implemented. This must be done with consultation with the innovation champion and the innovation team. Once the ideas are chosen for implementation, then the real work of the leader begins.

The executive leader must commit resources of internal sales and marketing to promote the project within the company, build the ground support for the project and create the necessary momentum necessary to bring the new idea into fruition. This takes strong leadership skills: courage and persistence, and an ability to work the political and social process involved in getting others to adapt to innovation. Once the project is successfully implemented, the innovation team must be publicly rewarded to encourage other innovators and rest of the organization. Such public display by the top leadership will send the correct signal to rest of the organization about the value & importance of innovation.

Practice-6: Build the creative talent

Leaders who encourage innovation must also take a personal interest in building the necessary talent required. Leaders must be involved in selecting the members for the innovation team - even in the recruitment process. In addition, the innovation team may require additional training and skill enhancement. Executive leaders must take an active role in all phases of building this creative talent.

Closing Thoughts

Leaders who want radical innovation - must be willing to walk the whole nine yards. Making a statement or sending a memo or ordering a team to innovate will not deliver the desired results. If one looks at the most innovative organizations, (Google, Apple, HP, Toyota, etc), one can see several leaders within these organizations who are driving the innovations. These leaders themselves are not the innovators - but they know how and when to develop the creative talent and that brings about those wonderful innovations.

How Innovative is your Organization?

Organizations tend to lose their creativity and creative energy over a period of time. This is especially the case when the company makes mature products. So older the organization and more mature their products, the less innovative will be the company. There are exceptions but in general this observation holds good.

For example, take a look at the present state of Radio Shack - once it was such a vaunted company. But today it is struggling to survive. Radio Shack has been a mall based retailer and till date it does not have a strategy to effectively compete with big discount stores. The company is unable to change to this new paradigm - As a result it will suffer a slow painful death.
Ford, GM, Crysler - all the big three from Detroit are struggling today. These auto majors have spent enormous amount of money on R&D, and have lots of innovative ideas within their R&D groups - unfortunately these ideas are not being converted into products. Just look at their 2007 model cars and compare them with Toyota or Honda or VW.

When I see these companies, the phrase "Innovate or Perish" sounds very true.
In Indian context, "Innovate or Perish" is also true. Free market and global trade has forced Indian companies to be very competitive. Reacting to this change, Indian companies in general have responded favorably well - and have developed several business innovations to compete with the well heeled global giants. The best example will be Tata Motors (TELCO). The company is facing competition from global giants in every segment of its product lines and the company has responded through innovation: Tata 407 LCV, Tata Pickups, Indica, Ace, Indigo etc.

Among the dying & dead companies in India are those companies that failed to innovate: Hindustan Motors (HM), PAL, Standard Motors, Ideal Jawa, Coal India Ltd, LML, Koday’s, Syndicate Bank, Canara Bank, Vijaya Bank, Indian Airlines, and the list goes on.

It is in this context, a senior executive asked me a question "How do you know the innovation potential of an organization?"

It is easy to see if there are innovations in an organization. But in case of an old organization the potential to become an innovative organization may be there, but it may not be obvious at first. So this question set of a thought process - and developed this eight points to measure or gauge the innovative potential of an organization.
  1. Defining Goals: See how clearly the ogranization has defined the goals & objectives. If the current goals & objectives are well defined and is easily understood, then the organization can also clearly define its innovative objective.

  2. Generating Solutions: Pose a problem statement to the members of the organization and see how they generate solutions. If the solutions are novel and instantaneous then the organization has a great innovation potential. If the ideas are the usual ones, then pose a challenging hypothetical question which needs unusual answers.

  3. Choosing Solutions: As a continuation of the above step, ask their management to choose solutions to the hypothetical solution. One can also see if the management’s risk tolerance in choosing the solution.

  4. Implementing Solutions: A good measure of the organization’s innovation capability is to look at thier execution track record. See how the organization has executed various projects in the past. If these projects are successfully executed and implemented, then the organization has the ability to implement & carry through innovative ideas.

  5. Conflict Resolution: The skills needed to reslove conflicts within the organization is vital for an innovative organization. If the organization in the past has demonstrated good success in conflict resolution - and does not have a adverseral approach with its vendors, employees and contract labor, then the organization has the ability to resolve issues internally.

  6. Change Management: Innovation is often accompanied by massive changes needed within the organization and also changes to the business environment. If in the past the organization has successfully demonstrated its ability to manage change, then the organization is ready for innovation.

  7. Recruitment Process: Innovation requires diversity. Having a culturally diverse workforce is a good sign. See how the organization is handling its recruitment process. See if the organization is open to recruiting people with diverse backgrounds. As a thumb rule, greater the diversity - greater the innovation potential.

  8. Organizational Culture: Innovation requires stong individual leadership. The organizational culture which promotes individualism will also wmpower creative individuals and teams. Organizations which have a strict hierarchy in decision making - with the "boss" being the final authority often fail in innovation.

Closing Thoughts

These eight points give a good indicator of the organization’s ability to innovate. Often times organizations - especially old and established organizations are often assumed to be "innovation challenged". But if the organization demonstrates these eight points successfully, then the organization as such is ready for innovation and proably has lots in innovative ideas - but is being currently held back due to leadership issues.