The Executive Guide to Innovation: Turning Good Ideas Into Great Results

By Jane Keathley, Peter Merrill and Tracy Owens

Is your organization's level of innovation where you think it should be today?

Now is the time to shape your future through innovation management. This book provides a wealth of information, tools, techniques, models, approaches, and methodologies that are all specifically designed for excellence in innovation, solution generation, and execution.

Within these pages you will find innovation concepts, methods, and case studies that build upon the quality body of knowledge to drive innovation. The successful application of these concepts will help you to be successful in the years to come.

In addition to the hands-on material presented, the book also provides advice and counsel on how to align a growth-based strategy with all functions of the organization, how to create a culture for ideas and growth, how to acquire and retain the right mix of resources, and how to sustain what you’ve built over time.

Innovation is quality for tomorrow. Use The Executive Guide to Innovation to conquer new challenges and seize new opportunities as you move into your future!

• Language: English
• Publisher: ASQ Quality Press
• Release date: Aug 26, 2013
• ISBN: 9780873892322

Jane Keathley

Jane Keathley became interested in the intersection of innovation and quality management while working with a maturing software development start-up company. Seeking insights into the challenges of balancing the open and nimble atmosphere of a start-up with the structure and standardization of a regulated industry, Jane became the founding chair of ASQ’s Innovation and Value Creation Technical Committee (now Innovation Interest Group), and with her colleagues there has developed numerous publications and presentations on the topic of innovation management (including this executive guide). Jane's professional background includes quality management positions in medical device software development, clinical research, biopharmaceutical manufacturing, and diagnostic microbiology.

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The Executive Guide to Innovation

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The Executive Guide to Innovation

Turning Good Ideas into Great Results

Jane Keathley, Peter Merrill, Tracy Owens, Ian Meggarrey, and Kevin Posey

ASQ Quality Press

Milwaukee, Wisconsin

American Society for Quality, Quality Press, Milwaukee 53203

© 2014 by ASQ

All rights reserved. Published 2013

Library of Congress Cataloging-in-Publication Data

Keathley, Jane.

The executive guide to innovation : turning good ideas into great results / Jane Keathley, Peter Merrill, Tracy Owens, Ian Meggarrey, and Kevin Posey.

pages cm.

Includes bibliographical references and index.

ISBN 978-0-87389-860-7 (soft cover : alk. paper)

1. Creative ability in business. 2. Technological innovation—Management. 3. Business enterprises—Technological innovations. 4. Success in business. I. Title.

HD53.K426 2013

658.4’063—dc23 2013023866

ISBN 978-0-87389-860-7

No part of this book may be reproduced in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher.

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Table of Contents

The Executive Guide to Innovation

List of Figures

Foreword

Preface

Acknowledgments

Introduction: Why Innovation?

Chapter 1: The Innovation Imperative

1.1 Building the Business Case for Innovation

1.2 What Is Innovation?

Product Innovation

Process Innovation

Business Model Innovation

1.3 Improvement versus Innovation

1.4 Types of Organizations

Chapter 2: Leading Innovation

Chapter 3: An Innovative Vision and Culture

Chapter 4—Case Study: Apex Composites

4.1 Take-Aways

Chapter 5—Innovation Strategy

5.1 Holistic Approach to Strategic Innovation

5.1.1 Multidisciplinary, Beyond the Board Room

5.1.2 Innovation As a Manageable Process

5.1.3 Both Breakthrough and Incremental, Intentional and Serendipitous

5.1.4 Innovation Potential versus Appetite for Risk

5.2 Determining the Firm’s Boundaries

5.2.1 Mission/Vision, Now versus Future

5.2.2 Core Competencies

5.2.3 Core Technologies

5.2.4 Competitive Advantages (Existing), Strengths/Weaknesses

5.2.5 Geographic and Geopolitical

5.3 Market and Competitive Analysis

5.3.1 Porter’s Five Forces

5.3.2 Competing on Innovation/Features versus Price

5.3.3 Signs/Metrics for Strategy Decay in the Forces

5.3.4 Constraints on the Firm

5.3.5 Environmental Scan

5.4 Positioning within the Market/Industry

5.4.1 Product versus Process Innovation and Product Maturity

5.4.2 Consumer and Customer Insight/VOC, Unspoken Needs

5.4.3 Threats/Opportunities

5.4.4 Industry Foresight/Emerging Trends and Opportunities

5.5 Organizational Readiness

5.5.1 Mission/Vision

5.5.2 Culture

5.5.3 Strategic Alignment

5.5.4 Innovation Roles, Internal/External, Open/Closed Innovation

5.5.5 Internal Processes and Disciplined Implementation

Chapter 6: Building the Innovative Organization

6.1 What to Build?

6.2 How to Build

6.3 Communication

Downward Communication

Upward Communication

Outward Communication

Inward Communication

6.4 Structure

6.5 Infrastructure

6.6 Style

6.7 Measurement

6.8 People

Senior Managers

Innovation Manager

Business Unit Managers

Quality Managers

Mid-Level Managers

Employees

6.9 The Innovation Infrastructure

Chapter 7: Case Study: Assessing an Organization’s Strategic Innovation Status

7.1 The Tools

7.1.1 The Innovation Quadrant

7.1.2 The Hothouse (Creativity) Assessment Instrument

7.1.3 The Innovation Diagnostic Assessment

7.1.4 Framework for Sustainable Innovation

7.2 Innovation Diagnostic Assessment Results

7.2.1 History of Companies A and B

7.2.2 Company A’s Innovation Assessment Results

7.2.3 Innovation Diagnostic Assessment

7.3 Assessment Conclusions

7.4 Determining Your Organization’s Strategic Innovation Status

Chapter 8: Dream into Action: Execution of the Innovation Strategy

8.1 Step One: Find the Opportunity

8.2 Step Two: Connect the Idea to a Solution

8.3 Tipping Point: Selecting the Solution to Develop

8.4 Step Three: Make the Solution User-Friendly

8.5 Step Four: Get to Market!

8.6 The People Who Are Committed to the Innovation Process

Chapter 9: Nessis Case Study

Chapter 10: Sustainable Innovation

10.1 Circumstance Dependent

10.2 Maintain the Innovation Culture

10.3 Maintain Balance

10.4 Integrate with Strategy

10.5 Manage Failures

10.6 Develop an Innovation Center of Excellence

10.7 Summary

Appendix: Innovation Tools

Affinity Diagram

Resource

Baldrige Performance Excellence Program (BPEP)

Resource

Benchmarking

Resource

Brainstorming

Resource

Cause-and-Effect Diagram (see Fishbone Diagram)

Contradiction Matrix (see TRIZ)

Cost–Benefit Analysis (see Value Factor Analysis)

Cost of Quality

Resource

Creativity Tools (see Mind mapping, TRIZ, brainstorming)

Decision Matrix (or Pugh Matrix)

Resources

Design for Six Sigma

Resources

Environmental Scan

Resources

European Federation of Quality management (EFQM)

Failure Mode and Effects Analysis (FMEA)

Resource

Fishbone Diagram

Resource

Five Whys and 5W2H

Resource

Flowcharting

Resource

Focus Groups

Resource

Force Field Analysis

Resource

Hothouse Assessment

Resource

Innovation Ambition matrix

Resource

Innovation Diagnostic Assessment

Resources

Innovation Metrics

Ishikawa Diagram (see Fishbone Diagram)

ISO 9004

Kano Model

Resource

Lean Start-Up

Resource

Mind Mapping

Resource

The Nine Windows

Resources

Nominal Group Technique

Resource

Pareto Chart

Resource

Porter’s Five Forces

Resources

Pugh Matrix (see Decision Matrix)

Quality Function Deployment (QFD)

Resources

RASIC Matrix

Resource

Risk Management (see also Failure Mode and Effects Analysis [FMEA])

Resource

Service Blueprinting

Resource

Six Sigma

Resources

SWOT Analysis

Resource

TRIZ

Resources

Utterback and Abernathy Model

Resource

Value Factor Analysis

Resource

Value Proposition

Resources

Endnotes

About the Authors

Jane Keathley

Peter Merrill

Tracy Owens

Ian Meggarrey

Kevin Posey

List of Figures

Figure 1.1 Innovation (1), improvement (3), or both (2)?

Figure 2.1 Leading creativity and execution.

Figure 3.1 Innovation: a change in cultures.

Figure 3.2 Creativity comes from inner knowledge.

Figure 5.1 Innovation ambition matrix.

Figure 5.2 Porter’s five forces.

Figure 5.3 Utterback-Abernathy dynamic model of innovation.

Figure 7.1 The innovation quadrant.

Figure 7.2 Company A innovation assessment.

Figure 7.3 Company A strategy map.

Figure 7.4 Company A hothouse (creativity) assessment.

Figure 7.5 Summary table of innovation assessment results for Company A.

Figure 8.1 The innovation process.

Figure 8.2 Movie demographic matrix.

Figure 10.1 Innovation center of excellence key functions.

Figure A.1 Affinity diagram example.

Figure A.2 EFQM model for quality management.

Figure A.3 Fishbone diagram example.

Figure A.4 Force field analysis diagram.

Figure A.5 The Kano model.

Figure A.6 Mind map example.

Figure A.7 Nine windows matrix.

Figure A.8 Pareto chart example.

Figure A.9 Quality function deployment matrix example.

Figure A.10 RASIC matrix example.

Foreword

Over the past four decades, we have observed the development and widespread implementation of quality control and reduction of process variation. Statistical process control, principles of total quality management, and application of Lean Six Sigma have provided a strong foundation for the quality sciences. The deployment of these quality sciences has improved outcomes such as product quality, service reliability, and human safety, and made the world a better place to live. Over the past four decades, the world has benefited from adequate resources to fuel our economies, with clear delineation of the roles played by customers, suppliers, and competitors. Both the quality sciences and product development process followed the linear road of identification, solution, application, evaluation, modification, and implementation.

The next four decades will demand that we further evolve the quality sciences to keep pace with a geometric rate of change that is fueled by economic and social globalization, advances in technology, and increased appetite for customization of products and services. The first Ford Model T car was painted in one color, shipped from a central plant in Detroit, Michigan, and the owner could employ a homing pigeon to share his stories about the car with distant friends. Today, customers can configure a customized car online that is produced through the integration of multiple manufacturing resources around the world, and the customer’s review of the new car purchased in Detroit can instantaneously influence a vehicle purchase in Delhi by the digital homing pigeon we call social networks. The boundaries of customers, suppliers, and competitors will evaporate over the next four decades as organizations cocreate with customers and make them part of their iterative and nonlinear research, design, and test process. Organizations will leverage the core competencies of companies previously considered as a competitor to improve value, speed, and distribution. Resources will become scarcer, zero-defect products will be table stakes, and the customer’s appetite will shift from customization to personalization.

The Executive Guide to Innovation provides a holistic framework for succeeding over the next four decades by building upon the quality body of knowledge with innovation concepts, methods, and case studies. This guide helps executives understand that innovation is a discipline—and not a random spark of genius—because it can be managed like other functions such as finance, marketing, or human resources. Important insights are offered by comparing and contrasting innovation with improvement, and defining levels of innovation from incremental to breakthrough. The Executive Guide to Innovation provides powerful tools—from 30,000-foot strategy maps to help define the direction of innovation, to ground-level creativity assessments that help construct a diverse team of innovators to execute the innovation strategy.

Innovation is quality tomorrow. Use The Executive Guide to Innovation to conquer the challenges and seize the opportunities of tomorrow!

John C. Timmerman, PhD

Chairman of the Board, American Society for Quality

Senior Strategist for Customer Experience and Innovation, The Gallup Organization

Preface

Are you among the increasing ranks of organizational leaders who believe innovation is critical for success? Have you built a business case for innovation? Does your organization innovate effectively?

This book pulls together current thinking on innovation management to guide executive leaders in developing an innovation-centric organization. Find out how you can establish a culture of effective innovation and build innovation into your strategic planning.

Innovation goes beyond just generating new ideas; thus, the book describes the entire innovation life cycle, along with resources and support that have been successful in other organizations. You most likely already have much of the talent and expertise you need, but identifying it, leveraging it, and managing it toward rapid and radical innovations may be the challenge. This book provides information and ideas on how best to capitalize on your innovation potential.

Jane Keathley

Coauthor and Editor

Acknowledgments

Many writers, speakers, colleagues, and personal experiences have contributed to the collective knowledge of the authors as conveyed in this book. As with any good innovation team, each of us has played a distinct role in the development of the book, and the book is stronger for the collaborative nature of its preparation. We are each grateful for the insights and contributions of our fellow authors. Notably, we have benefited greatly from the vision, writing skills, and guidance of Peter Merrill, as well as his materials on innovation, which he freely shared with us. Having this foundation of thinking on innovation allowed us to rapidly move into understanding what the executive leader needs to know about innovation.

We also wish to acknowledge the support and commitment of the American Society for Quality, Quality Management Division, whose leadership first commissioned the Innovation and Value Creation Technical Committee. We appreciate their foresight in recognizing the need for a greater understanding of innovation within the world of quality management. It was through this innovation committee that we, the authors, were introduced to each other, became committed to the advancement of innovation, and developed strong professional friendships with each other.

Introduction: Why Innovation?

It’s hard to avoid the word innovation in business today. You see it in almost every corporation’s annual report. You hear it being mentioned by nearly every CEO during shareholder meetings. Advertising abounds with mentions of how innovative an organization’s products are, and why you should care. Even not-for-profits are providing news stories about social innovation initiatives. Innovation, it seems, is unavoidable and inescapable.

But many ask, what exactly is innovation, and why is innovation so important?

The opening chapter of this book The Innovation Imperative addresses that key question and why innovation has become critical in today’s business world. We know it means something new, but is it just something cool, or does it have to be something useful? Innovation is not just about our products or services; it’s also about our processes and our business model. This is explained at the outset of this book.

Here’s a quick dose of harsh reality: businesses measure success through profit. This requires that organizations keep score. Scoring, in a business sense, is about measuring performance, and a primary key performance indicator of any for-profit organization is the Profit & Loss Statement. A successful organization generates profit in excess of costs in order to reward, invest in, and grow the future of the organization. However, to quote Peter Drucker (2006), we must not lose sight of the fact that the purpose of an organization is to create a customer.

A good leader knows that if you focus only on your score, your game will collapse. Focus on your game, and your score will grow. The innovative organization recognizes that its most important asset in winning the game is its people and its partners. That is where the ideas come from. Chapter 2 on leading innovation shows you how the innovative leader behaves. They are not the lonely genius. They bring together diverse people and bring together the many diverse functions of the organization.

To ensure that business and operational processes function at their most efficient and effective performance level, organizations have invested in quality management and continuous improvement. This has often evolved into a Lean Six Sigma methodology