Cracking the Innovation Code

How To Unlock The True Potential of Your Business To Grow Through New Products

Andy Wynn

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781000221640
• Edition: 1
• Topic: Negocios y empresa
• Subtopic: I+D

Author Dr Andy Wynn, along with contributions from leaders of some of the biggest companies on the planet (including DuPont, 3M, Johnson Matthey and Imerys), finally reveals the secret of how you can unlock the potential in your business to grow.

In the follow up to his book Transforming Technology into Profit, Andy takes you on a journey that explains how the organisation and culture within your business impact your company's ability to innovate.

Using his "Three Tiers of Successful Innovation", Andy reveals how to clearly identify what aspects of your business are holding back growth and how to use that information to transform your business into one that facilitates growth by revitalising the structure and culture of your business to focus employee behaviours on adding profitable new revenue streams.

Part sequel and part companion volume to his previous book, Andy finally "cracks the code" on how to unleash your business' ability to create and successfully commercialise new products.

Written in the author's trademark conversational style, Cracking the Innovation Code offers a refreshingly practical and real-world view, written by someone who has been there and done it, and enhanced by valuable case studies and contributions from numerous senior executives who have made life-long careers out of leading innovation, and with a passion for leading industrial manufacturing businesses.

1

Innovation Matters, So Why Do Businesses Struggle with It?

There is a huge gap between what works in the laboratory and what it takes to commercialise.

Mike Murray, Chief Technology Officer at The Vita Group

Innovation has been my life. I spent 30 years in industry developing new products, using technology to create competitive advantage and help customers improve their businesses. And if you’re one of those hundreds of thousands of people across the world involved in creating new technologies and delivering innovation, have no illusion: what we do matters.

I have been lucky enough to enjoy a varied career over the years. I have been involved in developing, designing or leading the development of numerous advanced material and industrial engineering solutions that delivered improved functionality and solved real, practical problems across a wide variety of industries including oil and gas, automotive, aerospace, iron and steel, aluminium, foundry, refractories, fire protection, power generation, energy and renewables, semiconductor and medical devices.

At times in my career I have been privileged to work on some extraordinary things. I have worked on really cutting edge, ultra-high purity chemical vapour deposition material solutions for billion-dollar semiconductor fabs. At other times, I have worked on life-changing medical device technologies, like ceramic hip joints, neuro-stimulation devices and cochlear implants. This last one is technology that helps deaf people hear again! How life-changing is that? Watching the videos of device trials and seeing the first time a deaf child hears its mother’s voice is one of the most heart-tugging moments I have ever felt in my career. I’m welling up now just writing about it. This stuff matters. Innovation matters. And when you’re sitting in the plush corporate headquarters of global giants like Intel preparing for a meeting, or sitting in Houston at the headquarters of one of the mega global oil corporations, it certainly feels good, it certainly feels like your career is on the right path, it certainly feels like what you’re doing matters.

But it wasn’t always like that. I started my career in far less sexy technology. I started out in refractories, developing refractory castable products (essentially, these are concretes for use at very high temperatures and in extreme corrosion environments). This is real formulation technology, working with ultra-complex mixtures of natural and synthetic materials and chemical additives – very complicated science. But when you’re a technologist in a laboratory mixing one grey powder with another grey powder, and casting hundreds of dull, grey three-inch cube samples, and doing endless physical testing and endless environmental testing on those cubes, life doesn’t feel so sexy. It doesn’t feel like innovation matters. Life feels rather dull and grey, like those test samples, and it’s hard to get excited that what you are doing really matters. Developing technology and remaining motivated can be a hard slog for those in the laboratory.

But what I have come to understand over the years, with the wisdom that only age and developing perspective seems to deliver, is that even in this area of technology, what you are doing really matters. Even though maybe I didn’t appreciate it at the time, the “dull grey powder” work I was doing really was making a difference. If you’re working in refractory castables, maybe, as was my case, the product you are developing is a new formulation that will allow customers in the petrochemical industry to line a new reaction vessel, running at much higher process temperatures, allowing them to significantly improve their process efficiencies, improving their yields and reducing their process times, and saving the industry billions of dollars in energy costs a year. How impressive is that? Such an innovation would make much more efficient use of the world’s resources. (I used this same example in my first book to illustrate the innovation barrier “dumbing down your products” [see the discussion of Transforming Technology into Profit in Chapter 2]).

Maybe instead of refractory applications, your “grey powder” lab work is aimed at developing a new ultra-high strength civil concrete formulation, one that would allow civil engineers to design and build taller and longer bridges, spanning previously untraversable valleys, joining hitherto poorly linked regions of a country. Such a material and such a capability could deliver a huge increase in trade and would result in significantly developing the local economies. Think of the billions of dollars of trade that could bring into a region. This would make a real difference to the quality of peoples’ lives and to the lives of their communities. Innovation matters, no matter what you are working on.

Innovation always makes a difference to peoples’ lives, either directly (like new medical technologies) or indirectly (like making better use of the world’s resources). Yet in the world of innovation, everyone always focuses on science and technology. They focus on the nuts and bolts of what it is and how it works. Industry conferences are littered with presentations of clever new products as part of marketing efforts, but they are largely focused on what it is and how it works. Why? Because it’s interesting, because it’s new, because it’s clever, because it’s cutting edge and because it’s sexy. And so people often don’t see beyond that. But what people often fail to focus on and fail to talk about, is what these technologies actually do, what new functionalities they deliver. This is what makes the difference to people and society, not what it is, but what it does. So whatever area of science and technology you find yourself working in, to maintain motivation, remember to focus on what it does, not what it is. What you are doing will genuinely impact the quality of people’s lives one way or another, either directly or indirectly. This stuff matters. Innovation matters.

Is the Innovation Industry Really Working?

So, if innovation is so important, and if innovation matters so much, then why are so many businesses so bad at it? Why do so many businesses struggle to grow through innovation and new products? A 2016 Bain and Company study concluded that a massive 89% of businesses struggle to grow, struggle to consistently deliver sustainable increase in profit and revenue. Yes, that does read 89%. This highlights just how difficult it is for businesses to grow. And if you are working in a business that is one of those 89% struggling to grow, then maybe you can take some comfort in the fact that you are not alone, not by a long way. And it’s not that these businesses are all run by incompetents. Most businesses are run by well-educated, experienced, professional, highly capable and highly driven individuals, many with MBAs and other high-level business management qualifications. So why is it that so many businesses struggle to grow?

When digging into the underlying causes of why the figure is so high, the Bain and Company study discovered that 85% of the executives they surveyed, and a full 94% of senior executives running companies with over $5 billion in revenue, considered “internal factors” as key impediments to profitable growth. And it is exactly those “internal factors” that we will be exploring in this book. What they are, how to identify them and what you can do about them. In this book, I will show that it is possible to analyse your own business, highlight what “internal factors” are holding your business back from growth and how to unblock them. This book is all about giving a name to those internal factors and taking a methodical, and proven, approach to dealing with them, so that you can unlock the true potential of your own business to grow by adding new revenue streams and new, saleable, profitable products. And it is my experience that these “internal factors” run right across most businesses, regardless of size, scale and complexity. I have seen these same challenges holding back companies turning over millions of dollars, tens of millions of dollars and hundreds of millions of dollars throughout my career, not just the mega-corporations.

And it’s not just the Bain and Company report that highlights and attempts to quantify today’s innovation growth dilemma. McKinsey, Boston Consulting Group, PwC and almost every other leading management consultancy firm have all done their own research and published their own reports on the subject. Whilst the absolute numbers might differ, the conclusions are always the same. All such reports conclude that the vast majority of senior executives agree that innovation is one of the key drivers for growth in their businesses, but in contrast to this, the vast majority of the same executives are also generally disappointed with their own innovation programmes and recognise that they have been largely unsuccessful or at least underwhelming. For example, the analysis reported by McKinsey found that 84% of executives agreed that innovation is important to the growth strategy of their business, but it also found that only 6% of them are satisfied with the innovation performance of their business, with very few of them claiming to know exactly what the problem is and how to improve their innovation and R&D capabilities.

But how can this be? There is so much published on all aspects of business innovation. There are hundreds of new books dealing with some aspect or other of innovation published each year, if you trawl through Amazon and Google. There are professors of innovation at all major business schools and universities these days. There are an ever-increasing number of innovation conferences and seminars taking place every week across the world. There are endless blog articles published daily from “experts” right across the internet, not to mention the innovation analysis reports from the big management consultancy firms I mentioned earlier. And you can even study to get qualifications in various aspects of innovation, both at business schools and through online learning. There is so much “expertise” on the subject, and much of it has been around for decades. So given that there are thousands of “experts” out there offering their services to help companies with their innovation programmes, tens of thousands of reference materials to study, and hundreds of forums to discuss ideas and get advice from, and have been for many, many years, why is it that today, 89% of businesses still continue to struggle to grow? And why do the vast majority of the executives running them openly admit that they have no clue how to improve the innovation performance of their business? There seems to be a very fundamental and serious issue with the innovation industry.

You could possibly argue that the innovation industry has so far only been able to focus on and support the 11% of businesses that are reportedly growing, but this seems very unlikely given the breadth and extent of the innovation industry these days, and the high profile company logos that almost every innovation consultancy displays on their website as their pool of customers they have helped. And of course, there are successes, surely someone would have noticed well before now if all these innovation support businesses weren’t delivering anything positive. But for 89% of businesses still to be struggling to grow, any such successes must be isolated. And the most telling thing to recognise of all is that those big global management consultancy firms that are reporting that 89% of businesses are struggling to grow (given that the Top Ten hoover up 56% of the global management consultancy market) are the very same consultancy firms that have been trying to help most of those companies grow; this suggests heavily that what they, and others in this industry, are doing is not working effectively. This is the scandal permeating through the whole of the innovation industry today, and this is why I opened this section with the title “Is the Innovation Industry Really Working?” But more on this later.

Despite all the advice and guidance from innovation consultancies, the reality that many businesses eventually discover, after pouring huge resources into innovation programmes, is that innovation is not easy, it is not simple and that there is no one-size-fits-all solution. Creating a new role with “innovation” in the title is rarely the answer. Launching a grand, new “innovation” programme is rarely the answer. These things can be a start, but the start of a long and difficult business transformation process that in reality needs to be fluid and managed through experience, not by following the “innovation-by-numbers” formula that too many “experts” follow. This is why identifying the “internal factors” that are holding back your business from innovation and from growth needs to be the first step. And those “internal factors” will be unique to your business, because every business is different.

You can read as many case studies as you want about how other companies have attempted to grow through innovation, but do not make the mistake of thinking that just because it worked at ABC Ltd, it’s going to work at your company. Every company is different: different products, different technology, different markets served and different channels to market, but above all, the biggest differentiator is the different people. People are everything in business. The way people interact and behave is a product of their personalities, the organisational structure within which they have to act and the way they are managed and rewarded. All of these things add up to a completely unique environment that exists within your business, and a completely unique culture. People are ultimately the reason why there cannot, and can never be, a one-size-fits-all solution to innovation, and why innovation programmes are extremely difficult to make a success of. And if you don’t start from that premise, you are very unlikely to succeed in growing your business through innovation and through differentiated new products.

Think back to all those industry conferences we mentioned earlier, to all the exciting and interesting new technologies and products they showcase: how many of those new products are actually commercially successful? How many are delivering, or are going to deliver, the profits that the business invested so heavily in to achieve? Just because the company’s innovation efforts resulted in something new, doesn’t mean that there is a real market need for it, doesn’t mean that it has the full buy-in of the top management to support it, and doesn’t mean that it is actually delivering sales. Announcing a new product is just another stepping stone on the long road to commercial success. To get to that point, they have surely had to deal with a whole bunch of “internal factors”, but their journey is by no means over.

The Innovation Process

To start to understand what these “internal factors” are and how they hold back business growth, we first need a quick reminder of how innovation works in a business. We need to remind ourselves of the “process of innovation”. My previous book, Transforming Technology into Profit, was largely built around this process, and used the well-recognised steps of the process to form the structure of the book, around which I could weave a narrative to explain some practical approaches for effective management of each step and to highlight many of the barriers that can and do create problems in trying to manage the process and deliver new products. The full set of steps that make up the “process of innovation” are summarised in the diagram below, along with the business systems used to manage each step. If you need more detail on any of the steps, or any specific terms or phrases used, please refer back to my previous book.

The process of innovation is well represented by the classic innovation funnel model, and is made up of the following key steps:

1. 1) Idea generation – this is the first phase of the process of creating new products, which involves collating a long list of ideas for new products and services to diversify and grow your business. These can incorporate enhancements to existing products or completely new products in your existing markets, or step change products in new markets, depending on the ambition you have set for your business in your strategy. Ideas can be pulled from multiple sources, both internally (including internal sales reports, new business project and portfolio reviews, technology roadmaps, brainstorming events) and externally (including technology scanning, intellectual property scanning, market intelligence, trade shows/exhibitions, industry working groups, competitive analysis/intelligence, direct customer contacts, voice of customer exercises).
2. 2) Idea selection – once you have built your long list of potential ideas, you then have to rank them in some kind of order that is relevant to your business and the markets you serve, such that you can create a priority list of which ideas are the most likely to deliver the growth you are looking for. Typical criteria employed for ranking ideas are as follows:

1. a. Strategic Assessment Criteria (e.g. strategic fit, ethics and EHS, new or me too, market need, potential annual sales value).
2. b. Technical Assessment Criteria (e.g. technical capability, technology protectability, technology disruption level).
3. c. Resource Assessment Criteria (e.g. estimated project cost, estimated timescale to complete, estimated investment cost, access to market).

1. Which criteria you choose for ranking and prioritisation will be influenced by the scale of ambition of your...