Innovation is Dead, Long Live Data!
Introduction
Over the last year, Decoded has seen a natural shift away from company-wide ‘innovation’ skills towards data and advanced analytics.
Innovation transformation is a big beast and even with urgency of change at all levels of the organisation, it takes vast amounts of time and money to adopt.
Data is the backbone of all innovation. The volume of data in the world has exploded years surpassing the capacity of institutions to manage and make sense of it. For those that can it is a powerful force to drive innovation.
This data-driven mindset, unlike innovation transformation, is simple and quick to adopt. In this White Paper, Decoded discusses this approach — how harnessing the power of data across your business to adopt a data mindset and fostering the development of relevant knowledge and skills across your workforce will ultimately help to make better decisions and maintain a competitive edge.
So what do we mean when we say “Innovation?
Innovation means different things to different people in different concepts. For some innovation is the next startup idea, the next killer app, that new invention that will make your millions on Shark Tank or simply doing things better. Last month Apple invited people to their product launch using the tagline ‘by innovation only’.
In the corporate world innovation can often be confused with digital products, or sitting on bean bags or sticking post its to the walls and having whole team stand ups each day.
There have been several attempts to formally categorise innovation two of them are shown below.
Figure 1: Muckersie three distinct approaches to innovation (Muckersie, 2016)
Figure 2: The ten types framework overview (Ten types of innovation, 2015)
The reality is there is no clear definition of what innovation is. This is one of the challenges faced by “innovation” teams in large organisations. Sometimes nobody in an organisation (including maybe even the team themselves) knows what they are meant to be doing, what success looks like or how to get there.
Decoded have worked with organisations of all sizes to roll out better ways of working and improve “innovation” across the organisation. We tend to define innovation as: ways of working that lead to doing things better.
Clearly, that is something of a whitewash. The loose definition of “things” (products, services, policies, inventions etc.) and “better” (faster, more efficiently, more sustainably, more aligned with customer needs, delivering greater customer value, improving employee experience, etc.) mean that our definition is almost so broad as to be meaningless in itself. That is, however, the reality of innovation in the real world. Society is made up of collections of diverse people, fulfilling diverse roles in diverse ways.
Approaches to Innovation
Organisations have been trying to square the circle of corporate innovation for as long as organisations have existed. Whether this is the adoption of new technologies from outside or inventing things themselves or looking for new ways of working from the assembly line to agile.
Whilst there are several organisations that are often held up as beacons of innovative behaviour (General Electric, Spotify, Google to name a few), there is no single organisation that has done this completely right and no organisation should claim that they have finished their innovation program. Different organisations are at different places along that journey and different organisations will have different target end states. What works for a digital startup will not work for an international mining conglomerate because the challenges they face and the scale at which they face them are wildly different. That is not to say that both sides cannot learn from each other but they need to do so in a circumspect rather than wholesale way.
There are several pillars that have been widely adopted as being part of the innovation best practice, there are differences between them and sometimes they can conflict with each other but rarely do they give absolutely contradictory advice.
However, too often the world of innovation practitioners can tend towards tribalism. Individuals and organisations become disciples of a particular methodology to the exclusion of all others. The ceremonies, language, tools, templates and voodoo of a particular way of doing things can mask the end goal: doing things better.
The key to creating improved ways of working within an organisation is to take the parts of each of these pillars that work for that organisation, at that point in time, for that project or problem and apply them.
Lean Startup
Eric Ries published the Lean Startup in 2011 summarising his learnings from the world of startups and technology. The book outlines The Lean Startup Methodology which focuses on how new products are built and launched successfully. The methodology promotes testing ideas and features early with real customers to get valuable feedback and use that feedback to kill, pivot or persevere with ideas.
The Lean Startup also introduces the idea of Innovation Accounting as a way of measuring progress without the traditional measures of users base or revenue. It relies on collecting detailed information and data in as close to real time as possible.
Whilst the methodology was born out of digital products and startups there are several valuable lessons for any business or organisation. The book discusses many different methods of experimentation which allow you to get validated learning about your ideas and use that learning to decide which ideas to pursue.
Ries published a follow up book, The Startup Way in 2017 which focuses on applying the lessons from The Lean Startup to any organisation.
Six Sigma
Developed by Motorola and Bill Smith in the early 1980s Six Sigma is an innovation and improvement methodology that is focussed on eliminating defects in a product, process or service. The name refers to the idea that if a process has a numerical output (e.g. the number of smarties in a tube) with an upper limit (e.g. the maximum that will fit) and a lower limit (e.g. the published weight of the product) then the mean number of smarties and the variation in the number of smarties (the standard deviation) should be such that the mean is at least six times the standard deviation away from the nearest limit.
Implementing Six Sigma involves measuring the current state of a process, analysing the causes of defects in that process and then making gradual changes all the time measuring the impact of those changes on the success of the process until the process meets the “six sigma” requirement. Not all processes will reach that state but moving from a three sigma to a four sigma state would reduce the number of defects per million by 60,000.
The methodology is heavily immersed in statistical techniques and makes use of many techniques that would be familiar to economists, staticians and data scientists. These techniques include hypothesis testing, ANOVA and regression.
Six Sigma is the only innovation methodology to have its own recognised levels of qualification. Uniquely these are referred to in the same terms as the martial arts with practitioners beginning at the White Belt.
Six Sigma has been widely adopted by many organisations from Amazon to the United States Army with great success.
Design Thinking
The history of this methodology is slightly more convoluted largely because there is no one single way of “doing it” but rather it involves taking an approach to innovation and solving problems that brings to bear the tools that designers use to develop and design products.
The methodology was brought to prominence with the creation of the design studio IDEO which was formed in 1991. The Executive Chair of IDEO, Tim Brown, defines Design Thinking as:
“Design thinking is a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.”
One of the key concepts in design thinking is the use of convergent and divergent thinking to create new ideas and then narrow the options down to the best idea.
Figure 3: Divergent and Convergent Thinking
Source: https://www.ideo.com/post/design-kit
In 2005 the Design Council extended the model above into the “double diamond”. This was to illustrate the separate parts of a design process which starts with the problem before moving onto the solution.
Another neat way for defining design thinking is from IDEO again. They state that a service, feature or product must be desirable (customers need it), feasible (achievable and building on current strengths) and viable (can deliver a long term return).
Agile
The Agile Manifesto was published in 2001 and was the beginning of a different way of delivering complex projects. Initially focussed on software development it has now been widely adopted as an effective alternative to waterfall approaches.
Figure 4: The Agile Manifesto
Source: http://agilemanifesto.org/
The manifesto itself is wonderfully simple. Since its launch agile has become mired in a world of complexity by consultants, coaches and practitioners. A search on Amazon for books related to agile returns over 7,000 results. Agile is one of the methodologies most prone to those attempting to implement it becoming slaves to the voodoo rather than the principles. The irony of this occurring with a methodology that promotes individuals and interactions over processes and tools should not be overlooked!
Agile is too often sorely misunderstood, sometimes to the extent that in some organisations it can be thought of as a joke or a busted flush. The author recalls a time when attending a meeting at a large bank his host explained: “This is one of our agile floors, it’s all hot desks.”
Agile is a way of working in defined stages (known as sprints) to deliver a project incrementally rather than all at once at the end (aka waterfall).
The misunderstanding and misuse of agile is a shame as when done well (i.e. in a way that works for that situation, in that organisation, for that project) it can be an extremely effective way of delivering a project.
