Archive for the ‘Risk Management’ Category

Invention – Innovation – Opportunity – Is there a difference

Friday, March 5th, 2010

Innovation – Invention – Opportunity Capture – What’s the difference?

                                                                                                  © Roger La Salle 2010

 Change is the order of the day!

 There would be little doubt that businesses, whether large or small realise that in order to stay ahead of the game it is essential to be constantly renewing their offerings. Whether it is products, processes, services or simply the way you do business, change is essential.

 Long gone are the days when we could be complacent and expect things to continue as usual. If it’s not the internet and the rise of e-commerce, ever changing government regulation, the growth of credit cards, new technologies and materials, things are constantly changing. Further, the pace of change is ever accelerating.

 Many businesses challenged by the need to change have embraced “creativity” as a change medium. But what does this really mean – and can it be systematically applied to a business?

 I believe that “creativity” as a tool that endeavours to identify new opportunities is a little too generic. Just asking somebody to “be creative” really has no starting point.

 This is where the more focused approaches of Invention, Innovation and Opportunity Capture come to the fore. These are “hard tools” that are immediately applicable to any business.

 So what’s the Difference?

  •  Invention

 An invention, by definition requires an element of novelty in that there needs to be some part of the idea for which no “prior art” exists.

 Perhaps a good simple definition of Inventions is: “Products without precedent”

 Game changing inventions are often the result of Pure Research, such as the development of the semiconductor transistor, the laser, the early day vaccines that completely revolutionised medicine or new materials such as nylon, plastics and Teflon etc..

 Applied research, is work done to develop an invention with a clear target market in mind and is vigorously pursued by many large companies. But in this case, the outcomes are possibly best described as Innovations as their starting point was the knowledge of a real need if a solution to a particular problem could be found.

 The flat screen television is a classic example. Though the technology it embodies includes many inventions, the clear market aim was to “innovate” the large square box TV with the sure knowledge that a market success would be the result.

 How right they were.

  •  Innovation

 Innovation is best defined as “Change that adds value” and this is a call to action.

 This definition is founded on two important principles:

 There is nothing that cannot be changed in some way to add value, whether it is a product, process or a service, or simply the way you do business

Changing something that is already well accepted in the market place and making it even better is a sure way of almost risk free new business. Simply find any product, process or service that is in widespread use and make it better. In doing so you can almost guarantee that you will have removed the single biggest risk in business, that of market failure. Of course the flat screen TV is a classic example.

 The principles of Innovation are extremely simple, all that is needed are some simple tools and some people willing to explore anything you perceive to be in widespread demand – the outcome will be a clear winner in all but a few cases.

  •  Opportunity Capture

 This is what I like to refer to as the big picture as it encompasses both innovation and invention.

 Ideally with both invention and innovation we require a starting point, something on which to focus our attention.

 “Opportunity capture” offers just that, it’s the seed we need to spawns both invention and innovation.

 Opportunity, defined as “An observed fortunate set of circumstances” can easily be taught to people and systematic opportunity search methodologies can be put in place that not only teach your people to understand what an opportunity looks like, but moreover inspires them and provides the tools with which to search.

 Opportunity is the real game changer and perhaps a better term to describe what is presently referred to as “open Innovation, though even in that case the open innovation model still fails to put in place a systematic opportunity search mechanism.

 Where to from here?

 It goes without saying that the need to change is ever on us, research based invention is both expensive, risky and has in many cases has an extraordinarily long time to market.

 Innovation is both simple and relatively risk free, if done properly.

 The real secret that should underpin all change endeavours is that of structured opportunity capture, that’s the big picture.

                                                          **** END ****

 Roger La Salle, is the creator of the “Matrix Thinking”™ technique and is widely sought after as an international speaker on Innovation, Opportunity and business development. He is the author of three books, Director and former CEO of the Innovation Centre of Victoria (INNOVIC) as well as a number of companies both in Australian and overseas. He has been responsible for a number of successful technology start-ups and in 2004 was a regular panellist on the ABC New Inventors TV program. In 2005 he was appointed to the “Chair of Innovation” at “The Queens University” in Belfast. Matrix Thinking is now used in more than 26 countries.  www.matrixthinking.com

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Business Building – There’s only one way!

Wednesday, January 20th, 2010

Business Building – There’s only one way!

                                                                                                  © Roger La Salle 2010

 Traditionally

Business is best defined as: “Creating wealth through profitable transactions”

I came to this definition many year ago after having won a job as General Manager of a medium sized company and later boasting to a friend that revenue has increased three fold under my guidance. “Great he said, but what about profit”?

 This was a great question.

Business is about profits, and indeed every department within a business should be contributing to that, even if they are so called “off-line activities” such as perhaps the training manager or the IT Department.

 The Simple Arithmetic

In simplistic terms the profit and loss sheet tells the story of a business and is comprised of just three components:

Revenue less Costs = Profits

 Reduce costs and reap the benefit?

 There are just two ways to increase profit.

The first is to reduce costs, thus profits will naturally rise. But beware of the old adage:

“You can’t cost cut your way to prosperity”. This is so true.

Many initiatives such as “Lean”, “Continuous Improvement”, “Six Sigma” and a host of other efficiency measures target the cost elements of a business. Unfortunately, although these may make you more competitive they will not make you competitive against low cost labour countries, nor in general will they increase the landscape of opportunity. Put simply, they just allow for more profitable operations from the same revenue base.

 Business Building

The only way to increase your business in real terms is to focus on building the top line, the revenue, and there are only three ways that can be achieved.

 1        More Sales to the same market

This is easily achieved as a short term measure by the addition of sales staff, increased incentives and perhaps more advertising and promotions. But this is not a sustainable endeavour and is too easily matched by competitors. Indeed increased expenditure on sales endeavours may be seen as the reciprocal of price cutting aimed at increasing market share. In price cutting, the customer is the only winner. Furthermore this initiative is again easily matched by competitors.

 2        New Markets for the same products

Opening up new markets, perhaps exporting or entering places where products of your type have never before been sold is another way to increase revenues, but this is both expensive and can be extremely risky. Furthermore, once you have done all the work in creating a new market – guess what – you have now laid the perfect foundations for your competitors to follow. This alone is not a good sustainable strategy on which to build your business.

 So what’s the third?

The third and only way to continue to expand your business is to constantly provide new and improved products and services and new ways of doing business – this is innovation. The search for new ways must be sustained and endless or you can be sure business stagnation and eventual failure will be the result.

 Indeed, as stated is some of my earlier work, statistics from USA based research cite the life expectancy of a publicly listed company in the USA today as being less than ten years, compared with some 65 years in the 1920’s.

 Companies that fail to innovate, ultimately fail to exist.

 Innovation and Opportunity Capture is the Answer!

Most business people would acknowledge that innovation is the answer, but unfortunately many confuse innovation with the abstraction of “creativity” and have not given sufficient time to understanding the difference.

 In short, innovation when properly applied is a tried, proven and rigorous tool for business building.

Even less understood than innovation is the formal process of “Opportunity Capture”.

Indeed you can easily show your people how to embrace the exciting and systematic discipline of opportunity capture, and it’s all so easy.

 Where to from here

There can be little doubt that the third way of new and improved products and services and ways of doing business is the only way to reliably grow a business.

So after the cost removal processes have been initiated, it may be time to start addressing the top line.

 That’s the way to build a business.

                                                         **** END ****

Roger La Salle, is the creator of the “Matrix Thinking”™ technique and is widely sought after as an international speaker on Innovation, Opportunity and business development. He is the author of three books, Director and former CEO of the Innovation Centre of Victoria (INNOVIC) as well as a number of companies both in Australian and overseas. He has been responsible for a number of successful technology start-ups and in 2004 was a regular panellist on the ABC New Inventors TV program. In 2005 he was appointed to the “Chair of Innovation” at “The Queens University” in Belfast. Matrix Thinking is now used in more than 26 countries.  www.matrixthinking.com

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Do You Connect the Dots?

Monday, November 9th, 2009

Do you Connect the Dots?
© Roger La Salle 2009
www.matrixthinking.com

How do you operate?

Have you ever worked in a company where the boss or your manager hordes information? Unfortunately this is not all that uncommon. The old saying goes that “Knowledge is Power”, and those of us that are insecure in our abilities or feel threatened by those around us try to remain in control by hording information.

In fact I know of one company where the Managing Director actually leaves notes lying around with incorrect or inaccurate information. The aim of this of course is to retain power by keeping the troops in the “dark” or better still, confused. Can you believe that?

The question is: what’s your modus operandi?

Many businesses have embraced innovation and opportunity capture as an essential business tool to survive and win in these days of ever increasing information flow, market intelligence, and speed to market. There are many innovation/opportunity models including that of so called “Open Innovation”, and what is best described as internal or “Closed Innovation”.

Closed Innovation

In this case the company has all its innovation endeavours conducted and held tightly within, there is little sharing of knowledge and little interest in eliciting the assistance of outsiders to enhance their innovation initiative. Indeed the managers of these tightly controlled programs use their skills to drive the innovation program. Unfortunately, they may be missing a lot.

Open Innovation

In this case, though the business remains in control of its destiny and direction it enhances its innovation initiative by making connections to a seemingly disparate groups of outsiders and companies all looking to expand their horizons by building on combined know how.

These days, there are so many diverse technologies and specialties that it is simply impossible to have a grasp on what is happening on all fronts, thus the connected model has great merit.

Connecting the Dots

One of the great skills of clever entrepreneurs and innovators is to see the linkages between seemingly unrelated issues. This is where in the open innovation model, broadly skilled technologists and open minded thinkers come to the fore.

For example, suppose I run a lumber business. That is the business of cutting up trees to provide timber for the building industry. What possible connection does that have with mathematics? Perhaps none you may think, or certainly the old fashioned timber manager may have thought. But in fact linear programming, quite an old science these days, when employed in that industry can optimise the way timber is cut to provide massive additional profits. But in the closed model, such knowledge may never be acquired, or if it is, only by word of mouth with other operators who may have long since acquired the technique.
Similarly, the technologies developed in putting man on the moon. How could that possibly connect to the business of pots and pans? Teflon coating is the answer.

• Clocks and cell phones or radio paging, is there a connection? Indeed there is. Imagine having a clock equipped with a radio receiver to receive time signals and thus keep perfect time, and even update for Summer Time changes. Such clocks are now available in Australia.

• The packaging business and home insulation? Of course, use bubble wrap as the ideal insulator, it’s light weight, cheap and easy to install and fire retardant grades are available.

• Optics and home insulation? Of course, use a reflective coating on one side of the bubble wrap to reflect radiated heat.

• Physiotherapy and the reduction of carbon emissions?

• The tooth brush and ceramic crystals?

• Extruded plastic “core flute” sheeting and aluminium extrusions?

The reader can ponder the latter three, but the connection in each of these cases has spawned real businesses.

There is an endless list of these seemingly unrelated disciplines that can be connected with an open innovation approach that encourages a wide search horizon.

Indeed this is why the new paradigm of “Opportunity Capture” is now emerging as the preferred approach to the more narrow discipline of traditional innovation.

What’s the Message

Managers in the open innovation space do not need to be great technologists, as perhaps with the closed model. Instead they need to be great net-workers, able to build bridges between people and companies. This is quite a different skills set to that of the managers operating in the closed model.

Thus, stay open minded, expand your horizons and embrace the art of formal opportunity search, where the reach is unlimited.

**** END ****

Roger La Salle, is the creator of the “Matrix Thinking”™ technique and is widely sought after as an international speaker on Innovation, Opportunity and business development. He is the author of three books, Director and former CEO of the Innovation Centre of Victoria (INNOVIC) as well as a number of companies both in Australian and overseas. He has been responsible for a number of successful technology start-ups and in 2004 was a regular panellist on the ABC New Inventors TV program. In 2005 he was appointed to the “Chair of Innovation” at “The Queens University” in Belfast. Matrix Thinking is now used in more than 26 countries. www.matrixthinking.com

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Roger on Kochie’s Business Builders

Thursday, November 5th, 2009

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“Coupling” – A sure way to reduce new business risk

Friday, September 19th, 2008

Failure is the Norm

To anybody involved in the business of new venture, new products and new services the risks are well understood.

Indeed statistics would show that most new ventures fail, either totally, or in reaching anywhere near forecast revenue targets. Most of all, really new things have an alarmingly high failure rate.

Would you believe the facsimile machine was actually patented in 1898? That the personal computer would have been a flop had it not been for the development of word processing and spreadsheets; that the photocopier took more than 10 years to come into common use and the internet more than 15?

Whilst business is tough and fraught with risk; businesses founded on really new and novel concepts is even tougher.

Humans resist Change

It is common knowledge that people resist change, for change has the potential to disrupt life and the status quo and may lead into unchartered waters. Better to remain the same and let life go on. This is quite a normal outlook for most people and quite understandable, after all, who want to embrace the risk associated with change?

Innovation, which has as its underlying principle the value adding of incremental changes to things represents little risk for business and customers alike.

Just look at the motor companies, they are reluctant to completely redefine their models and bring about potential market disasters such as the infamous “sea change” model Edsel Ford on the 1950’s.

Instead, what car makers do is incrementally improve models. Make slight changes, and perhaps every four years, in step with their competitors, bring out slightly modified shapes, but most often retaining the same generic name, such as the Ford Falcon or Ford Mustang.

This is safe and people adopt such incremental change with little or no difficulty.

Whilst Innovation, defined as “Change that Adds Value” properly implemented can largely remove market risk, what is the risk mitigation strategy for really novel ideas.

The answer lies in “Coupling”

Would you believe that one of the most successful technology products in history was the Compact Disc, and what a new and novel technology this was, but its impact was immediate, despite its total novelty?

How did this happen?

The answer lies in clever marketing where the CD was not introduced as some weird “off the wall” contraption, but simply as a better vinyl record.

The novelty and newness of the CD was virtually eliminated by coupling it to the “common or garden” record. It was not new, it was just a better way of doing something we were all doing, purchasing playing and storing music.

This is a classics example of coupling.

Relate what it is you have to the market norm and sell it and simply a better way of doing things we are already doing.

There are countless examples of this, even simple ones such as the cordless phone; not a new contraption, but a common phone released from the shackles of its permanent wire connection.

What’s the message?

The simple message is that when launching something of high novelty try and remove some of the novelty be relating it in some way to things or products people are already doing or using.

Couple to the existing mindset and the risk of failure will be far reduced.

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