Incremental Innovation tool: Buyer Utility Map

In my earlier article titled "Dimensions of Innovation", I had mapped when one should pursue incremental innovation and when to pursue radical innovation.

Product managers are responsible for improving the product throughout the product life cycle. In order to enhance the product life, the company will invest in the product in form of 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. Product managers at Intel, Dell, Lexmark, Cisco, AMD, Lenevo, Nvidia, ATI, Adobe, Microsoft, Oracle, etc. survive solely on incremental innovation.

Product managers have a clear mandate in terms of innovation they can pursue - Incremental innovation, the challenge for the product managers is then to figure out what incremental steps to be taken. Identifying these steps are not easy. However there exists several systematic process or a method to identify opportunities.

One such method is: The Buyer Utility Map.

The Buyer Utility Map was developed by W.Chan Kim & Renee Mauborgne. It was first published in Harvard Business Review, September-October 2000.

Buyer utility map is a tool which helps product managers to identify which business ideas have real commercial potential, identify areas of incremental innovation - by enhancing customer (buyer) utility.

Mapping a product across the buyer utility matrix - will help identify the current positioning w.r.t competitive products. This will help create new products/services - that offer exceptional value for its customers and differentiate from competitive products. Understanding the utility of the product and reposition of existing products/services is vital for market segmenting & positioning.

What is Buyer experience cycle?

Buyer experience cycle refers to all the activities the buyer will do with the product - right from purchase to its disposal. The buyer experience cycle covers the total customer’s product experience. It is based on the customer resource life cycle and consists of six stages:

1. Purchase
   Purchase stage includes buying experience, product evaluation, Financing, negotiation, Contracts, SLAs, Pricing etc. Concentrating on each phase of the purchase experience will help improve the buyer experience. For example, Dell’s success to a great extent can be attributed to its ease of purchase via web or phone. Similarly, AOL succeeded initially by widely distributing its software (for free) at stores, with newspapers etc. The ease of purchase or easy availability has a significant impact on the buying decision.
   



2. Delivery
   Delivery stage is the one between the actual purchase to its commercial/actual use. This includes physical delivery, training, installation, on-site testing etc. The initial success of Amazon.com can be directly attributed to the delivery - i.e., customers could order rare or difficult to get tiles & have it delivered to their homes. Another success story is that of 1-800-FLOWERS. The company excelled in delivering fresh flowers anywhere in the US - thus making it a household name.
   



3. Use
   Use stage refers to actual use of the product/service for its intended purpose. Often times the user will be different than the purchaser - but user will have a high level of influence over the buyer in all buying descisions. Understanding how people use a product/service and knowing their pain points is vital for incremental innovation. (see Innovator’s Toolbox: Customer Anthropology ) Nokia became the world leader in cell phone handset market mainly by focusing on how customer’s use cell phones and then developing (incremental innovation) its products to make Nokia phones even more easier to use.
   



4. Supplements
   Supplement stage refers to how users use your product along with other products/services. Most products/services will need other supporting products. Knowing how your product/service works with other products and improving the interaction will make customers happy.
   
   Recently Microsoft made it difficult for "Google Desktop" software to function smoothly with its Vista software. Similarly, Apple made it mandatory for users of iPod to use iTunes as MP3 management software. These are the cases where companies which have monopoly in the market place create hurdles for competitive products.
   
   Today, companies follow standards to ensure ease of interoperability. Wi-Fi, WiMax, Bluetooth, Ethernet, etc., are the common standards which ensure ease of interoperability. Understanding the complete list of supplements that are needed for the customer to use your product gives you an edge in terms of incremental innovation. It allows you to improve your product such that the customer can eliminate the use of a suplemental product. This strategy has been adapted by Microsoft in is Windows product line. Microsoft initially included Internet explorer with its Windows operating system. This eliminated the user’s need for another browser - Netscape.
   



5. Maintenance
   Ease of maintenance & cost of maintenance is very important to all buyers. No user will buy a car that is difficult to maintain or that has a high cost of maintenance. Warranty & guarantee issues must be looked into at a great detail in order to identiy opportunities for incremental innovation. Understanding the maintenance issues helps identify various ways improve the product. The success of tubeless tyres, Michelin’s Tweel is a good example of captilizing on user’s product maintenance issue.
   



6. Disposal
   Disposing a product also includes: selling it off, recycling, upgrading the software, data migration etc. Today due to environmental concerns companies such as McDonalds, Caterpillar, Toyota, Honda, GM, Dell, HP, etc are spending time & effort to design their products that are recyclable. Auto manufacturers also help customers dispose thier existing cars through their pre-owned car sales teams.

These six stages represent the stages in which the customer is involved with the product. Developing successful products requires a deeper understanding of buyer utility levers during each stage of buyer experience cycle.

The Six Utility levers

The six utility levers are the ways in which utility can be offered to the customer.

1. Customer productivity
   This type of utility lever can increase customers’ productivity by helping them to do things faster, better, or in different ways. An example of increasing customer productivity is the financial information company Bloomberg. They made traders more efficient by offering instant on-line analytics. SAP’s ERP solution became a great success - despite its high cost, difficult to install & maintain - Mainly because SAP was able to improve customer productivity.
   



2. Simplicity
   This type of utility lever makes life easier for the user of the product or service. IRobot’s Verro - a swiming pool cleaning robot became an instant success because it make the task of cleaning the swimming pools so simple & easy for the user.
   



3. Convenience
   The convenience utility lever is a luxury, which lets a customer save time or frustration. ATM’s is an example of the convenience lever. It saves customer’s time and frustration, because he/she does not have to go to the bank anymore to get cash.
   Similarly, newspapers in the USA were able to hold-off competition from Internet & cable TV through the convenience of having the paper delivered to homes. GM took a note on the convenience factor when designing Saturn Cars - and developed a whole new way of selling cars though a chain of customer friendly dealers.
   



4. Risk
   Another lever which is the risk lever. Customers in general are risk averse. Developing a product/service that lowers risk will become a product differentiator. For example, Online tracking of shipments by Fedex and UPS gives customer the satisfaction of choosing a risk free alternative over the US Post - and for that, the customer is willing to pay a premium.
   
   In some cases, the adventure and thrill involed in high risks can attract customers. Adventure sporting companies have sprung up all over the world to cater to this need of the customer.
   



5. Fun and image
   The fun and image lever provides fun and image to the customer. Apple’s iPod is a good example of using this lever. Customers obtain a fun and a trendy image by buying one of the MP3-players from Apple. Manufacturers of luxury goods often rely on the Image factor.
   



6. Environmental friendliness
   This utility lever is providing friendliness towards the environment. For example, the initiative of fast-food chain McDonalds to recycle materials and reduce material content can be seen as usage of the environmental friendliness utility lever.

The buyer utility map process

The buyer utility map can be used for four main activities:

1. Locating new product



2. Improving Existing product



3. Positioning new product or repositioning existing products



4. Market research

Locating the new product Identifying current products within the buyer utility map is the fist necessary step. For example, take Nokia’s N-series cell phones & map it. This is an existing product and it can be mapped as shown in figure below.

Positioning a new product

Apple introduced a new cell phone which does not directly compete with Nokia’s N-Series or other cell phones in the market. IPhone’s position can be illustrated as:

If Nokia were to respond via incremental innovation, then it now knows what modifications it must do & how to reposition the product.

Closing Thoughts

Buyer’s utility map is a powerful tool to develop new products. These products can be developed through incremental innovation or radical innovation. But this tool is ideal for identifying incremental innovation opportunities.

A product manager’s job is to develop the product road map, identifying product improvement areas and position/reposition the new products. In these aspects, buyer utility map is a powerful tool to identify new opportunities, identify existing product gaps and develop new products.

Minimizing Risks in Innovation

Often times the main objection to implement innovation is the risks associated with it. People are afraid that innovation requires a hefty investment and the returns are not predictable. It is this risk on ROI forces companies to shy away from innovation.

To many managers, innovation appears as a vague process that comes with a hefty price tag and unpredictable return. In other words, it is fraught with risk - hence avoided.

Globalization and increased competition has made it absolute necessity for companies to be innovative. This places companies in a strange paradox. On one hand, the market is forcing them to innovate - while managers are reluctant to walk down the path of innovation.

To overcome this paradox, I recommend a proven process that will help manage the risk of innovation by approaching in a process oriented way. When this process is implemented with business acumen, businesses can produce highly innovative products/service while generating predictable results.

Five step process

I have studied several companies and their approach to innovation. These companies are generally considered to be high tech & innovative. During this study, it occurred that the fundamental process of innovation, at a vast majority of the companies all over the world, is very simple. All these companies have developed a disciplined approach towards innovation and implement their approach in five simple steps. ( The actual implementation itself may not be simple, but the fundamental principle is.)

Step-1: Start with the end in Mind

Innovation must start with an end in mind. The objective of the innovation exercise must be clearly defined at the very start. Having a clear definition of the end and clear definition as when to kill the project is essential. This will minimize the risks. Management will now know what the expect, how much it costs and when to expect. Ideally one must be able to clearly define the end product, the total budget, and the expected timeline.

One should also define the exit criteria. Conditions to exist the innovation project - such as: time overruns, cost overruns, changes in market conditions etc. Having a clear exist strategy is essential for successful innovation management.

Step 2: Develop Deep Customer Insight

Developing a customer insight is not as complex as it sounds. All that it takes is some basic listening skills to listen to the voice of the customer, experience in that industry, knowledge & technical skills and ability to draw parallels from happenings in other industries. Once a person has the above skills, developing a deep insight is a child's play.

Please note that developing customer insight is not the same as relying on customer's statements. Often times it does not make sense to follow the voice of the customer alone. This is because most customer rarely tell you what they want in the future and they may not always know what they really want, and they rarely know what is technically possible.

For example, if Apple were to purely follow the customer's voice, then it could not have developed radical products such as iPhone, iPod, iMac etc. For example Harley-Davidson developed bikes that could be easily customized - this was based on studying customer's behavior and satisfying their unexpressed need for a customized bike - that was mass produced. Toyota developed hybrid cars based on their insight on pollution: customer's need for a less polluting cars and the high cost of fuel in the future. Back in 1994, no customer would have told Toyota to develop a fuel sipping hybrid cars. Hybrid car technology at that time was only in research labs - and the knowledge of such cars was beyond the customer's grasp.

As a rule of the thumb: don't rely exclusively on the voice of the customer - but listen to what they have to say. You should also look at how customers are using your current product & your competitor's products, observe and document their behavior in the buying process. Understand the value of your current offerings as perceived by the customer.

This can be done by an anthropology study of the customer, customer's product usage and buying habits

Step 3: Feel free to Borrow Proven Ideas from other Industries

Almost all innovations in this world are based on existing knowledge. The challenge you are facing in your industry is probably solved in nature or in another industry. Therefore you only need to adapt that solution into your industry. For example CD was developed based on ideas from light detectors (LDR - Light detecting resistors) and the floppy disk technology. Idea for hybrid car was taken from diesel-electric locomotives.

The key here is to focus on the core issue and identify other industry that deal with similar issues. Often times people outside your industry will have the different perspective you need to help you move ahead. Most great ideas come from unlikely sources: Outsiders, consultants or people hired from other industries.

Applying techniques from one industry to your own is a key ingredient in rapid, risk-reduced innovation.

Step 4: Take a disciplined approach to Innovation

Companies that are new to innovation often have a wrong perception to innovation: Innovation comes from mad scientist or a nutty professor or a solitary person working in isolation - undisciplined people in an unfocused process. This image was created by Hollywood movies. This idea is often reinforced by artists & writers - who take a solitary approach to creativity - and then brag how they got the creative spark when they were thinking alone.

In the commercial world, the reality is far different. Innovation requires team work, structured approach and above all - discipline. Corporate innovation is based on the same principles as that of all other corporate functions - except that the risk tolerance needs to be higher for innovation.
The risks associated with innovation are the uncertainty & unpredictability of the outcomes. By approaching innovation with a systematic process - with solid project planning, one can accurately predict the outcomes. ( The end result is known - but the timeline may have little variance)

By saying the word discipline, I mean:

1. A disciplined rigor to define the destination:
   
   Clearly define the desired outcome. The management leaders should give a clear definition of the desired outcome. The expected outcome must be made known to all those who are involved in innovation. At Intel, this desired outcome was called as "landing zone" - i.e., it contained a list of acceptable outcomes within the defined parameters.
   For example, an automobile company may define the objective of its innovation efforts to be:
   
   Improve fuel efficiency by at least 20%
   
   Ensure safety of passengers when a collusion occurs at 45-60 Mph - while keeping the cost of manufacturing the same.
   
   
2. A disciplined methodology for technical innovation
   
   Innovation needs a methodology framework - framework that defines the series of steps involved, how to test the design in each of the steps, how to implement etc. Having a predefined methodology ensures that the innovation project does not go astray. It is important to define the methodology and then make everyone aware of it.
   
   During the innovation process if there came a need to modify the methodology, then the changes to the methodology must be managed through a change management process defined by the change management board. Any change in methodology must be taken very seriously and the need to change and the actual change must be studied in detail and approved - before the change is implemented. (For more details on change management please refer to IT Infrastructure Library)
   
   
3. A disciplined process to drive the required alignment within the organization
   
   Innovation requires involvement of other departments within the organization. For example if the development team is working on developing a new product line, then manufacturing must be involved.
   
   Large organizations often have problems getting different parts of the organization to cooperate and coordinate for a common innovation purpose. These issues must be cleared by the top leadership.
   
   
4. A discipline to stay the course when distractions occur
   
   Innovation often takes time. During that time, there will be several distractions. These distractions often make managers lose focus on innovation and the innovation project gets side tracked or suspended (and ultimately shelved).
   
   If innovation projects are managed in a professional way with a proper project plan, then the managers responsible for innovation will be able to keep their focus on innovation irrespective of other distractions.

Step 5: Create a Culture of Creativity & Innovation

When I go around and ask people - "According to you, what are the most innovative companies?" The answers are usually: Apple, Google, Nokia, Sony, Intel, Microsoft, IBM etc. These companies are successful and one of the main reason for that is they have lots of creative employees. If you were to talk to any employee of these companies, they will tell you how much they value innovation and how innovation is critical for their success.

An innovation culture starts at the top of an organization: the CEO. CEO must be a person who has enough authority and respect to oblige others across the company to think in a new way. If I were to look at the top management of the Google, Apple, Microsoft etc, the top leaders were innovators. The innovation culture starts at the top and spreads to every level. Innovation is a process that must involve the entire company.

Once a culture of innovation is built into the company, all employees will be monitoring what's going on in the world, what the trends of technology and marketing are and ask, "what is the next generation of products customers will want?" How can we improve the existing products? How can we enhance customer experience? How can we make this product more profitably?

Former Procter & Gamble chief executive, John Pepper led an effort to train 6,000 engineers and scientists to think in a more innovative way. He felt that if every one of those 6,000 employees worked 5% more innovatively, the company as a whole would operate much more effectively. How do you like that for a culture of innovation?

Closing Thoughts

If your company is at the early stage of walking down the innovation path, then you must think of steps to minimize risks. It is possible to lower the risks of innovation and at the same time keep the returns high. It requires an organization wide culture of innovation, strong leadership and good management skills. During the innovation process, one should not be shy to copy from other industries or even imitate the competition - Imitation is also a form of innovation.

Successful innovation is a disciplined, process oriented approach led by strong leadership.

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.

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:

Preparation

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.

Incubation

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.

Illumination

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.

Execution

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.