Category Archives: Innovation

The Input-Output Continuum of Innovation Metrics

Much has been said about the need to measure innovation and how companies must have input and output measures for their innovation programmes. Yet, only about a third of Fortune 1000 companies have any formal metrics for innovation. As more and more companies institute innovation programmes and focus on making innovation an integral part of their strategy, the appearance of innovation related metrics on corporate dashboards is increasing.

Output metrics, aka impact metrics, have always been an important part of measuring business outcomes from innovation. But input metrics, including activity/ process metrics or organisational capability metrics, have also gained significant currency. Now, a third bucket, called leadership metrics, is on the rise. Whereas output metrics speak to the commercial outcomes for a company, and input metrics drive investment, resources, processes and behaviours, leadership metrics indicate the intensity of executive learning and focus on innovation programmes in the organisation.

Companies have used a mix of all three types to drive their innovation agenda. But what is the right mix? Can it be a common mix for all corporations? Should there be an equal proportion between the three types?

Peter Drucker famously pronounced, “What gets measured gets managed.” To address the above then, the right question to ask is, “What do you want to manage?” At the end of the day, the aim is to make innovation systematic and sustainable.

Defining the innovation intent (not unlike strategic intent) of a company is a good starting point. Does your company want to increase revenue from innovation in the short-term? Focus on the input measures related to incremental innovation and output measures for revenue from new products. Does your organisation want to be seen as a thought leader in an emerging space? Drive input metrics related to experimentation and knowledge management, output metrics related to creation of intellectual property, and leadership metrics related to executive sponsorship of incubators. Does the corporation want to transform its culture? Build input metrics into individual performance contracts and maintain a wide-ranging dashboard of leadership and output metrics.

The balance between the three types of metrics has to be an evolving one. Even within each type, the metrics that are relevant to a particular situation may not be so in others. 3M applied the Six Sigma model to its creative process and were none the better for it.

The balance must shift as an organisation matures in its integration of innovation into its strategy, structures, processes and systems. As an organisation grows and matures in its innovation capability, so must the balance between metrics. It is important to frame the priorities between different types of metrics based on the maturity of innovation capability in an organisation.

In the early days of the innovation journey, when a handful of innovation programmes are identified with some budget allocated to such programmes, the highest priority for an organisation is to activate the right resources and incentivise the right behaviours for innovation. Do bear in mind that input metrics introduced in a phased manner are likely to find greater acceptance than an all-at-once approach. This is also a time for leading innovation from the top. Hence, leadership must be seen as driving programmes intently. While incremental innovation is possible in short cycles, breakthrough and radical innovation can be tracked only in the medium-long term, over 3-5 years. Thus, the metrics portfolio should be skewed largely towards input metrics with a moderate dose of leadership metrics to highlight the extent of executive sponsorship or support. So as not to lose sight of strategic business outcomes, it should include a few output metrics too.

Once the innovation-related activities have gathered some momentum, where innovation has been woven into key strategic initiatives and funds clearly earmarked for innovation programmes, the focus of senior executives becomes more critical to sustain and institutionalise innovation in the organisation. Input metrics remain important, particularly with respect to training people on innovation skills and deploying them appropriately for enhancing output. Output metrics could start taking on a bigger role on the dashboard of innovation metrics. Thus, the metrics portfolio should have a healthy balance between leadership and input metrics and a smaller but significant presence of output metrics.

As the innovation machine in the organisation becomes well oiled such that all employees are accountable for innovation, and the funding for innovation programmes is seamless with the budgeting process, the benefits of building a culture that values innovation truly start accruing. Since the innovation agenda is also the strategic agenda and innovation outcomes the strategic outcomes, output metrics take centre stage. The role of leadership could now transform from sponsorship to new business development due to the opportunities for radical and white space innovation. Input metrics would require reduced focus because alignment of resources is embedded in the performance management system and the code of conduct by this time. Hence, the metrics portfolio should be skewed towards output metrics, with renewed leadership metrics and a token presence of input metrics.

The key to the usefulness of any measurement scheme is the inherent success of the activity being measured. Thus, it is critical to capture the aspect that matters most to the innovation philosophy of your organisation.

 

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Old Economy, New Businesses: #RuralWork in India

Judging by the comments and enthusiasm that my post on #RuralLiving drew, it seems to me that the idea of living in India’s villages is romantic enough for many people. Therein lies the irony – it is romantic, but is it achievable? After all, one can’t subsist on clean air and water (seeing as India is not turning socialist anytime soon). However, therein also lies the opportunity. Let me elaborate.

 

On the one hand, it may be true that today every other graduate of the hallowed IITs/ IIMs/ Ivy League or such other institutions is not a jobseeker but a (wannabe) job-creator and going down the entrepreneurship route. On the other hand, one in five 30-something yuppies, wants to turn farmer in the second innings of her/his career.

 

Not too long ago, becoming a farmer was the final resort for the lowest of the low offspring of a farmer and even (s)he would have considered at least one other avenue before signing up for it. The lure of city-life, with its bright lights, shopping options, a service culture (unheard of in the villages), and above all, a much higher income, was something every child who was born towards the end of the Cold War period yearned for.

 

And yet, for the same reasons that #RuralLiving is a massive innovation opportunity, it is also a tremendous business opportunity. It is possible to make money in our villages too, and not simply through the so-called (real estate) “development” projects (perhaps the last thing rural India needs at the moment, but that discussion could be the subject of another post). Expectedly, the two key sectors to focus on are agriculture and services.

 

India continues to be known as an agrarian economy but agriculture is rapidly losing its place as rampant labour-drain from villages forces people to look to other sources of livelihood. After all, how can you till the soil if there’s nobody to till it? Yet, if ever there was a time for agriculture to own its moment in the sun, it is now, what with question of food security looming over our heads in the near future. Of course, the challenges for agriculture in India have changed and so the strategy and methods for agriculture must change too. It needs to be accorded the same level of importance as any other science.

 

What agriculture in India misses is more than simply labour – it lacks a sound systematic knowledge base, appropriate technologies, a focus on scalability, a focus on financials, models to rationalise producer-to-consumer hops, and models to allow non-farmers to participate in the process, to name just a few challenges. But these gaps are precisely where new businesses can flower. Hosachiguru is one such catalyst in the agriculture paradigm that is now being defined.

 

Scalability or the lack of it has been pointed out too often as the chief culprit in the non-story that Indian agriculture has become. But one look at Desai Fruits & Vegetables will tell you how focus, perseverance and horticultural technology can work wonders and still leave the space open for several more F&V kings. Encouragingly, corporates like Mahindra have taken the leap in the dairy sector. But with agriculture being so vast, there are many such opportunities not just in horticulture and dairy, but also in floriculture, pisciculture, cattle rearing, etc.

 

Let’s look at the services sector then. Most people seem to believe either that people in rural areas don’t need services or that a service provider will not thrive there. But, consider this. Over half of the upper income households in India live in rural areas. A higher proportion of rural households are D-I-N-K than urban households. The demand-pull for automobile ownership (passenger vehicles) is expected to be equal for rural and urban areas in this decade. Rural incomes and rural discretionary spending have been rising at a faster clip than urban incomes and similar urban spending.

 

Yet, the rural population is forced to take this discretionary surplus to the cities because there simply aren’t enough avenues, not even essential services, in the rural areas to spend on. A vehicle owner in a rural area must travel at least 50 km, to the nearest service workshop, to get his/ her car serviced or repaired. She must visit the next city to get a salon treatment. He must plan his next city trip such that he can make a visit to the laundry to drop off his ‘dry-clean only’ wardrobe items. She must do justice to her aggregated shopping list for clothes, shoes and beauty essentials when she visits the sole cinema theatre in the city to catch the latest Bollywood release, which will run only for a week at the theatre. Even routine maintenance and repair activities requiring the skills of a plumber, electrician or carpenter require dialing into a city directory for summoning required help.

 

These simple enough routine activities for an urbanite require significant planning, long-distance commuting and an enormous amount of time for the upper income ruralite. Admittedly, it would take an innovative business model, novel channel marketing tactics, and a long-term horizon to make services economically sustainable in the rural areas. But surely the reward should be worth the risk once a solution to the aggregation and scalability challenges is achieved.

 

More power to our villages!

Missed Opportunity: Innovation for Rural India #RuralLiving

#Cities, #Urbanisation, #SmartCities, #SustainableUrbanisation, niche markets, the urban upper middle class… It seems to me that every ‘new’ idea is about the ‘urban’ consumer. In and outside of my work, I am surrounded by entrepreneurs who see the ‘vast urban population of India’ as their key market. Then there are the ‘innovators’, who want to make ‘urban living’ smarter, cleaner, more social, more efficient, more human.

 

Reality check: 68% of India’s population of 1.31 Bn people is rural. That’s almost 900 Mn people. Shouldn’t that be a huge market opportunity?

 

Urban living brought with it several conveniences, not the least of which is that one doesn’t have to worry about who will remove the trash from one’s doorstep. Unfortunately, while it raised our standard of living, it also led to the green-house effect, congestion, pollution (air, land, water and noise), stress and lifestyle related health disorders, and an overall decline in quality of life.

 

Now, if only we could marry the convenience of urban living with the pristineness of rural life. This is where India truly needs innovation, a la #SidewalkLabs, to turn the ‘forgettable’ mess… or mass into a world-changing opportunity.

 

The key advantage of training the lens on our villages, 638,000 of them, is that a number of the sins of urban living need not be ‘repaired’ before a solution for higher quality living can be employed, thus, leapfrogging the gestation curve. Also, the fragmented numbers lend themselves to rapid experimentation and potentially rapid scalability too, with enough room for customization and, thus, further innovation.

 

Five areas stand out as test beds for ‘quality of life’ innovation in the Indian rural landscape:

 

Water, water, where art thou? Supply of and Access to Water

The most basic necessity for viable human existence, availability of and access to clean water continues to be right at the top of the list of ‘needs’ to be fulfilled in the vast rural hinterland of the country. Themes such as conservation, rain harvesting and desalinisation have been part of government schemes for long but organizing channels to supply clean water still remains a challenge. One should take a leaf out of Israel’s book on water management technology.

 

Not just electrifying but energising: Sustainable Generation of and Access to Renewable Energy

Our villages have probably done more in terms of experimenting with methods for harnessing renewable energy than urban areas, even if and especially on a micro level. The challenge remains huge but so does the opportunity. It is not unthinkable for a village to meet its energy requirements wholly from renewable sources, whether solar, wind, hydro, oceanic or organic. Imagine replicating such models over 638,000 villages!

 

A Roof with a View: Unique and Localised Forms in Construction

One of the lures of the countryside for the urbanite is the unique architecture of our villages peculiar to each geographical region. Unfortunately, with the misplaced grandeur of and love for everything glass and concrete, the ability to create building structures from naturally, locally and readily available materials has become a dying art form. I witnessed this first hand while painstakingly seeking skilled labourers to construct a family home, a sloping-roof structure, in our native village using the chira (aka jambha) stone, a red laterite variety specific to the coastal belt of Maharashtra.

 

This remains a fantastic opportunity for innovation as well as reviving our cultural heritage. UNIDO has listed several environmentally friendly Indian building material technologies for housing. (Funnily, I didn’t hear of a single one of them from the contractors who built our family home.) Mahindra Lifespaces has dabbled with creating special bricks that are lighter, stronger, cheaper, longer lasting and environmentally friendlier than conventional ones for some of their projects.

 

An Opportunity Not to be Wasted: (Solid) Waste Management

When I first came to Mumbai, I could think of just one word to describe the city: ‘filthy’! As a long time resident of Mumbai now, I’ve grown accustomed to seeing piles of garbage being generated by our urban lifestyle and what it does to the potential charm of this city. But it irks me no end when I see our rural neighbours go one step further in their flagrant use of non-biodegradable materials, all because their standard of living has ‘improved’, and an even greater disregard for what such use does to the delicate ecosystem of the villages. With no civic setup or system for organised garbage removal and/ or treatment in our villages, any and every spot could be a garbage landfill.

 

To my mind, this self-destructive habit needs to be nipped in the bud. When countries such as Norway and Sweden are importing trash to be able to keep their recycling and energy programmes going, it would be a shame if we allowed this multi-billion dollar opportunity to go to waste, both figuratively and literally! We need and can make a Terracyle in India! In the meanwhile, take a look at what this nodal agency in Vengurla, India, has done with their waste.

 

More Highways, Information and Tarred: Communication & Connectivity

That human beings crave connection with other human beings was never more apparent than it is today. The rural populace is no exception to this rule. It craves the same connection and sense of belonging as the next urbanite. In the virtual world, despite Internet usage in rural areas still remaining abysmal (and hence, another opportunity), the access to smartphones has enabled this to a large extent. In the physical world, however, a lot remains to be done to connect remote parts by road/ rail/ water ways. Admittedly, it involves working alongside rather than in competition with the nodal bodies.

 

Time to make our villages more livable!

The Four Legs of a Holistic Model for Corporate Innovation

From being considered a downright accusation, to connoting invention, the term ‘innovation’ gained currency in its contemporary form, thanks to Joseph Schumpeter, in the 1940s.

For the corporate world, it has since meant a luxury, a tool for growth, a tool for differentiation, and more recently, the only way to lead and stay relevant in the market. In this context, the animal called innovation architecture requires four legs. In my work, I often deal with one or more of them and the questions they pose.

 

  1. The Agenda

The Innovation Agenda of a firm is closely connected to its brand position. What does the firm stand for? Why has the firm chosen this path? How is it different from any other firm out there?

 

  1. The Strategic Vision

The strategic vision includes the sketch of what innovation should achieve for the firm. What are the main goals of the business – for the long, medium and short term? What type(s) of innovation will the firm focus on – product, process, business model, delivery? Where could innovation draw inspiration from – technology, customers, partners, internal synergies? How will innovation be measured and monitored – metrics that take into account new products, new markets, productivity gains, financial gains, and intellectual property?

 

  1. The Process

The innovation process is the engine that keeps the focus on outcomes detailed in the vision. What is the method for ideation and funnelling of ideas? What are the rules for team-formation, collaboration, resource authorisation and crisis management? What is the planning and measuring mechanism for prototyping and in-market launches? What is the mechanism for risk management? What is the mechanism for ensuring sustainability of the new introduction?

 

  1. The Enablers

These are the behind-the-scenes workers, often termed the ‘input factors’ for innovation. What are the knowledge management systems and learning tools for the enabling innovation? What is the common language used for innovation within the organisation?What are the elements of organisational culture that are conducive to innovation; how are these being inculcated and multiplied? What are the organisation structures and governance mechanisms that allow innovation to germinate, proliferate, and become self-sustaining? What are the reward mechanisms for those who contribute to the innovation economy of the organisation?

 

For most companies, building this architecture is a serendipitous journey. And with each successful journey is born a successful model of innovation.

Design Thinking: The Key to a Superior Service Experience

I had the opportunity to visit the office of the Registration and Stamp Duty Department of Government of Maharashtra recently. If it had not been for the signboard outside the office, I would have thought that I was in a waiting room at a local railway station. As a consultant who routinely deals with process redesign and efficiency improvement, I took a keen interest in observing the layout of the place and the movement of people in and out of the office.

 

The non-air-conditioned room, which had a single unmanned entry/ exit point, was about 20 feet long and 15 feet wide, with a partition halfway along its width and a pillar in the middle of one of the halves of the partition. Rows of four-seat benches squeezed into the space on either side of the pillar. The pillar had extendable shelves, which served as tabletops for persons who had forms to fill out at the last minute, sticking out towards the benches. The combined width of the pillar and these shelves formed a narrow passage for persons streaming in and out of the room, about forty people at a given moment. A part of the other half was enclosed for an unknown purpose – there were no signs on the enclosure. There were no washrooms, pantry, or even a water dispenser visible.

 

A door, vaguely marked ‘Office’, at the edge of the room led to the space where the actual registration procedure took place. A small indicator on the outside announced the token number of the person next in queue. I could not make out how the tokens were generated or when and where one procured them. Inside the ‘Office, all the three walls facing the door were lined with unmarked open racks and shelves of paper files, almost reaching the 18 feet high ceiling.

 

About six officious staff sat at the two desks facing the door, surrounded by a dozen clerks, peons and service staff. Apparently, these persons knew where they should be positioned in this vague room without any signages (barring the printed pages announcing that one of the services was now available online). There were persons who came in when their token was announced and looked around inquiringly as to where and how to proceed; these were the hapless ‘customers’ of the Registration service.

 

Another group of about half a dozen apparently important persons flitted in and out of the room and occupied the space in front of the desks. They seemed to know what was going on and who was responsible for what. They also ushered the ‘customers’ to the appropriate seat at a desk as required. I reckoned that these were the ‘agents’, the ‘know-alls’, the ‘catalysts’ that kept the process flowing smoothly, the ‘oil’ that greased the government machinery. Without them, the so-called ‘system’ would collapse.

 

The 10 feet by 15 feet space of the office was, hence, teeming with over thirty people at any point in time. A 1.5 ton capacity air-conditioner tried in vain to cool the air.

 

I wondered… for a service that apparently processes about four thousand documents in a day, valued at about INR 30 Crores (US$ 4.5 Mn), is this the best state of infrastructure and process that the government could provide?

 

Contrast this with the experience at the spanking new processing centres of the Regional Passport Office in Mumbai. Online access and registration for appointments, tight security and screening at the entry gates, clearly designated and marked zones for different parts of the processing cycle, viz. presentation of documents, checking of documents, approval of passport, authorization of passport, issuance of passport, and exit clearance, all in a seamless manner. There are also water coolers, washrooms with access for the disabled, a well-stocked cafeteria, a baby-care area, a photocopier, and stationery supply. Many thanks to TCS, who streamlined the process and possibly designed the layout for the facility.

 

Process design always fascinated me but these two experiences at opposite ends of a spectrum really got me thinking about how critical design is to a great customer experience for any service provider. These six key aspects typically go into incorporating design thinking in processes for a service:

 

  1. Separate areas for distinctly different activities

Activities could be different in that they require different equipment, skills, lead times, validation times, mechanical inputs, authorization, etc. It is best to mark these separately. The Passport Office exemplifies this beautifully. Retail banks have always followed this practice.

 

  1. Separate entry points from exit points

This is an extremely critical requirement where movement of persons is concerned, especially in areas that require high security. But the biggest advantage served by this tactic is the avoidance of jams in the process, creating a more equal service experience for all. Think about an airport or a subway system.

 

What struck me most when I first travelled on the London Underground (now called the Tube, but I’m old-fashioned like that) was how I never had to be apprehensive about somebody running into me from the opposite direction. It was such a refreshing experience after several years as a commuter on Mumbai Local Trains.

 

  1. Maximise the output of bottlenecks by reducing redundant processes

Bottlenecks can often derail a process. Airlines have tried and often succeeded in managing this. Take the airline checking-in process, for instance. Undoubtedly, the most time-consuming of all airline processes (if we leave out security checks at JFK!), this process has been made leaner by resorting to options such as online check-in & kiosk check-in, and separate counters for frequent flyers or premium class flyers or passengers with special needs. Of course, there is tremendous scope for improvement.

 

  1. Signpost important areas, especially ‘special needs’ areas

Regardless of how inefficient a process a may be, this simple trick can alleviate a lot of customer chagrin. Human tendency is to control one’s environment as far as possible. Just the thought that one knows where one is relative to another place puts an element of control into the customer’s hands. Munich Airport does this very well. It is also one of the few hub airports that cares to put out enough recliners and mark quiet zones for long layover passengers.

 

On the other hand, a baby products retailer that I happened to visit seemed to have missed a critical opportunity because its circulation space was too narrow to allow the passage of baby strollers that it retails! As if that were not enough, its baby care room had neither any ventilation nor an air-conditioner, not even a fan!

 

  1. Mark designated spaces to catch the overflow

Any process could be subject to overflows every once in a while, where its throughput gets challenged. It helps to think ahead about such eventualities and design spaces that can handle the spillover. Kokilaben Dhirubhai Ambani Hospital has combined this challenge with addressing a real customer need, when including a large cafeteria with several options of cuisines. It automatically reduces crowds loitering in passageways while giving people a sense of comfort and caring. Dubai Airport, on the other hand, has channelled this opportunity into a revenue earner. One would be hard put to find a place to sit at this airport. By making most of its circulation space a shopping zone, all spills generate bills!

 

  1. Make space for public conveniences

The need to ingest and expel are two of the most basic human needs. Making these facilities available to those you serve shows thoughtfulness. An unexpected benefit is that you are likely to meet a more amicable customer rather than an irate/ frustrated/ desperate one.

 

Whether a business is offline or online, the customer and her needs remain the same. Great service design could significantly differentiate your value proposition.

 

 

Guard Against These Eight Myths to Fuel Corporate Innovation

Anybody who has had the good fortune to work in a startup as well as in a corporatised environment will know that corporate innovation is an animal by itself. To make that animal move and keep it going, critical myths must be busted.

 

Myth #1: Innovation is all about ideas.

 

Truth: Innovation is as much about knowledge-sharing, collaboration and execution. As innovation becomes ‘the’ way of doing things for firms, the emerging structures of team formation and work allocation demand increasing openness of channels for communication and feedback. The devil, of course, remains in the details. Hence, systematic follow-through of ideas and their execution determines success.

 

When structuring the innovation process, bear in mind that there is a grimy and messy back end beyond the warm and fuzzy front end of innovation.

 

Myth #2: Innovation must be disruptive and create a white space.

 

Truth: While this could be true for an entity that is looking to establish itself as a player in the market (check out RentSher and MealTango) for the corporate engine that wants to weave innovation into its DNA, it is more likely to be incremental, addressing the core business.

 

Encourage employees to make incremental improvements to routine activities. The impact of innovation activity is only magnified when even the mundane gets a productivity boost.

 

Myth #3: Innovation means creating new products.

 

Truth: Early literature on metrics for corporate innovation is responsible for the belief in this myth. In reality, innovation also includes creating new processes and business models. Doblin, the innovation consulting firm, has in fact noted ten types of innovation in three categories. Some of the highest impact innovations have come about through business model innovation (think #Uber) and process innovation (think Aravind Eye Care).

 

Look beyond just product development. The gold could be elsewhere.

 

Myth #4: Innovation is the domain of R&D departments.

 

Truth: A corollary to the previous point, innovation can also be brought about by other functions. You can only build a culture of innovation in a company if all employees believe that they have a role to play. Just as innovation does not comprise product development alone, it is not the reserve of R&D teams alone.

 

Get all hands on deck.

 

Myth #5: Innovation happens at the grassroots.

 

Truth: Innovation requires a linkage of bottom-up and top-down approaches.

Innovation does require a willingness to defy convention, an attribute that tends to decline with increasing seniority. Hence, the bottom-up approach is necessary to fuel innovation. However, complex pivot points that involve decision-making accompany innovation projects. These are perhaps better addressed in a top-down fashion. Note, however, that the person who ‘knows’ more is not necessarily the person who innovates better.

 

Define scope and authority for the teams at the bottom as well as the executives at the top.

 

Myth #6: Innovation requires highly creative and intelligent workers.

 

Truth: In reality, innovation more often requires highly networked workers. Innovation success comes from carefully structuring the process for consistently better results. In fact, superior talent could serve to mask organisational inefficiencies. Instead, a well thought out innovation process would lead to more predictable results despite variability in talent.

 

Break processes down into well-defined steps; then talent will not matter much.

 

Myth #7: Innovation should be remunerated monetarily to increase employee motivation.

 

Truth: Innovation thrives on increasing degrees of empowerment – self-directed use of time, resources (human and capital) and authority. The battle between intrinsic and extrinsic motivation can be best seen in the case of innovation projects. In the long run, and a company is concerned with the long run, it is factors that help build intrinsic motivation that keep the innovation engine going.

 

Cater for serendipity and blurring of boundaries. Monetary rewards are an afterthought.

 

Myth #8: Innovation requires large capital outlays.

 

Truth: Innovation is often most successful when capital is constrained. Constraints engender creativity and novelty. They also foster sustainability and endurance. But most of all, they help focus efforts on the problem that must be solved rather than on administrative detailing.

 

Give your innovation project teams enough to work with but not everything they ask for.

 

Corporate innovation is a marathon, not a sprint.