Australians are indeed clever

Australian engineers and scientists are indeed world class, much like New Zealanders we “punch much above our weight”. Numerous examples could be cited including the Interscan Microwave aircraft landing system of the 1970’s that beat all comers, including the USA and Germany in demonstrating the best technology. Cochlear and Resmed are other examples and it is pretty well accepted that we excel in the biomedical sciences.

Australians are great technologists but still our economy relies on the recourses sector and with the decline in our manufacturing base, a growing emphasis on tourism and services in general.

The Governments part

In an endeavour the inspire innovation and investment in the sciences and “brain work” the Government over many years has provided accelerated investment allowance in the form of tax claims as R&D incentives. One may well ask if this is working as a real research incentive? Further, one may well ask just how easily it can be rotted by unscrupulous would be entrepreneurs?

The problem with the present system is that it comes at a great cost to Government whether successes are generated or not. Further, if you do happen to success with a new endeavour, you get punished.

Yes, in Australia we pump money in to the front end at great risk, then if you do succeed you get punished with a tax on your profits.

A Better Alternative

The search for an alternative should be made with the mindset of SME’s, not that of big businesses, these should not need incentives to research and innovate.

The system embraced should strike at the very heart of business by rewarding success and encouraging profit.

Thus a better system may include the following attributes:

• No cost to government
• Ultimate reward to Government with taxes on wages if the innovation is an export success that creates employment
• Clearly focuses innovation at export markets
• Can be readily audited

Such a system may seem like “snake oil”, but perhaps could be implemented with the following guidelines:

• No government money is used in seeding new initiatives and there are no accelerated investment write offs
• A tax holiday will be provided for a period, (suggested 3 years) for all income generated from exports where sales have been made to places where patents or formal IP protection is claimed (This could include registered designs, copyright and plant breeders rights)

If such a system were to be introduced I believe the shift in the mindset of SME’s and entrepreneurs would be almost instantaneous, focused and profound.

In short they would be saying – “Find me an export opportunity that I can protect with IPR and let me at it”.

The Naysayers

Doubtless there will be an endless stream of critics to the above suggestion, but one may question if the present system really works? Is it achieving its aim, what is the cost to Government and for what return and finally, is it being rorted?

Where to from here?

Let’s start the debate!

**** 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 four 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 and licensed to one of the world’s largest consulting firms. www.matrixthinking.com

In my previous article I challenged innovation practitioners to examine the return on their innovation investment. If your innovation initiative is not providing returns greater than its cost, then the very existence of the program needs to be questioned.

Having said that, one may well ask what is an appropriate time scale to obtain this return? Months, years or maybe even a decade as we wait in vain hope for the breakthrough initiative that seldom ever comes!

So let’s examine the possibilities and find the low hanging fruit.

If you can have an early win with innovation then you can be sure more budget will be forthcoming and still greater achievements can be obtained.

Where to start?

Essentially there are just four ways in which innovation may be tackled:
• Product innovation
• Service Innovation
• The broad landscape of systematic opportunity capture
• Process Innovation

The first three above mentioned approaches herald the introduction of innovated products, services and perhaps the implementation of a new captured opportunity. Without doubt it is with these that we can build the top revenue line of a business. Put simply, this is really the only way to build a business. Businesses grow on increased revenues and by no other means.

Having said that, the implementation of any of these involves some degree of risk, technical in the development phase, but much more significantly, risk in the market place. Will the market be as large as you forecast? Interestingly if you embrace proper innovation practices market risk can also be largely mitigated, but of course never completely removed.

With the above in mind, perhaps the early innovation initiative should be focused on the one with the least risk, Process Innovation.

What is Process Innovation?

Process Innovation is about finding better ways to do whatever we are doing. Process innovation, unless it means tinkering with the sales process or sales model really carries little if any risk and in my experience I have found that there is almost always room for process improvements.

Further, any improvement in a process translates dollar for dollar to the bottom line, thus measuring the gain compared with the cost or perhaps the ROI is relatively easy.

Governments both state and federal push process improvement, Lean, Continuous Improvement, 5S and Six Sigma as their way of encouraging innovation in businesses. They do this I believe because these are somewhat tried and tested methods but also because improvements can almost always be made and cost benefits determined with little downside risk. Furthermore the benefits of process improvement are easier to understand and articulate.

However, even so, these extremely simple methods are still somewhat shrouded in a mystique that makes them unnecessarily complex, much more so than they need to be.

For many large multinationals with subsidiaries in Australia, unfortunately there is neither the opportunity nor appetite for innovation except in processes. Consequently this is where the bulk of attention is paid.

In the case of utilities such as water, gas and electricity where this is little scope to actually “innovate” the product there is still scope for service innovation and opportunity capture. In such organisations that are largely process driven and with many people doing the same thing, the gains possible from process innovation are almost unlimited.

Keep it Simple

I like to keep things really simple and in process innovation there are really only two things that need to be addressed:

• Costs – how much does each and any activity cost in cold hard cash, from telephone bills to rents, interest, labours and raw materials, including the cost of work in progress?

• Cycle Time – how long does each activity take? This includes the process of getting an incoming order into the system right though to collecting the money from the customer.

If the above two are addressed in a systematic manner, consistent with the maintenance of quality, the process innovation business is pretty straight forward. It simply commences with an activity that maps and measures where you are now with each process and then works to make improvements in the two above mentioned places.

This is not rocket science and is very low risk.

So what’s the time scale?

With process innovation leading your innovation initiative it should be possible to make real cost benefit gains within six months at the most and, of course as stated, any savings go straight to the bottom line.

But I emphasise again, removing costs or improving processes does not build the revenue line, however the extra funds provided by such improvements can now be applied to where the real business building action can take place, product and service innovation and of course “opportunity capture”.

That’s where the real game is.

**** 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

© Roger La Salle 2010

A revealing statistic!
In a recent book called “Creating Wealth” by Lester Thurow some interesting statistics are cited.

“…..In the 1920’s the life expectancy of a publicly listed company in the USA was some 65 years, by the 1990’s this figure has fallen to less than ten years. Of the companies forming the original list of the Standard and Poor’s Index, only one, General Electric still survives today, and to do so GE has had to constantly re invent themselves to remain relevant.”

Innovation versus Invention
Interestingly, some of the less initiated in this business often use the word innovator interchangeably with inventor. This is often done in a polite and misguided endeavour to differentiate the person in question from the classic stereotypical inventor, represented as some excentric weirdo with fuzzy white hair wearing a white dust coat.

In fact innovation and invention are different.

Whereas innovation may be defined as “change that adds value”, invention may be perhaps best defined as something “new, novel and without precedent”.

Notwithstanding the above, most inventions are in fact created by making improvements to existing things. Indeed there are few totally new inventions.

However, whereas novelty is an essential part of an invention, novelty is not an essential part of an innovation.

Big ‘I’ and Little ‘i’
When it comes to understanding innovation further, some texts refer to so called big ‘I’, and little ‘i’.

The former refers to big or disruptive innovations that totally change the landscape of a business, its products or the dynamics of the market. In contrast, little “i” refers more to incremental changes or improvements to businesses and products.

In theory, or more likely with the benefit of hindsight, many thinkers and writers on the subject refer to big ‘I’ as essential for businesses to survive for the longer terms. The push is for businesses to “disrupt” themselves and radically change for the better following in the footsteps of companies cited as case studies that have successfully done so.

Rear Vision is a wonderful thing!
NOKIA is one exceptional example of a company that successfully migrated its core business from timber to electronics. They did this after they saw the growing resistance to the use of the dwindling natural timber resource and the emergence of the new mobile phone business with almost unlimited market potential. This is a wonderful success story operating on the big “I” model.

General Electric is another company that has reinvented itself to become strong in the financial sector. However, in doing so GE took the safe option in that whilst creating its new enterprise it did not turn its back on its traditional engineering business, instead it used its brand strength to underpin the new endeavour.

Many texts refer to these case studies as a blueprint for the future and an endorsement of big “I” as the means to renewed riches as companies model themselves on the NOKIA style of rebirth. Unfortunately, all of these case studies are just that, studies in hindsight of a few “stars” that have successfully crossed the bridge to new horizons.

Rear vision is a wonderful thing, but if one looks at the history of disruptive pioneers you will find the path littered with the corpses of those who dared to be first with disruptions but failed, as is so often the case. The problem is that these pioneers are seldom heard from.

Consider some of the so called disruptive technologies that have either failed, or undergone a very difficult and expensive birth.

The ill fated COMET jet passenger airliner, a revolution in its day, plagued with technology problems whose ultimate solutions enabled Boeing, untarnished by the pioneering COMET failures, to win the world market for passenger jets. Concorde is another example of a technology before its time. Ultimately supersonic passenger transport will become commonplace, but not to the benefit of the Concorde pioneers.

Even the ubiquitous computer took many years to be adopted by the greater community. Indeed had it not been for the development of both word processing and spreadsheets, computers today would be little more than scientific novelties and platforms for games.

So too the computer mouse which was a complete novelty when first conceived in 1968. In fact it was some 13 years before this disruption in the way we use computers was actually commercialised.

Similarly for the internet, this was possibly one of the most disruptive technologies of the 20th century and has revolutionised the way business is conducted worldwide. But it was the application developers, not the creators, who have won the rich spoils offered by this disruption.

Failure is more the norm
There are countless examples of pioneers who failed with disruptive ventures and seldom rate a mention in the end game. Unfortunately, too often we are encouraged to follow the path of the very few successful winners who steal the limelight, as they should. But be warned, these people are few and far between.

What about little “i”
The “incrementalists” are the little “i” operators and there would be no better example than the car makers. Incrementally these people release face lifted new models with perhaps just one tiny added feature almost annually. They do this for no other purpose than to render your current model obsolete and to keep you continually upgrading to the newer one.

The cell phone and computer games companies are also wonderful exponents at this art, and what abut Microsoft? None of us can even use all the features of Windows 98, yet we still get a new, non backward compatible supposedly more featured version every couple of years. Indeed Microsoft even today, still owns this market and drives it through incremental innovation.

There can be no doubt that little “i” is far easier to manage than big ‘I’; and little ‘i’ carries far less risk.

So what is it to be?

For my money, little ‘i’ wins pretty well every time. However, if you do wish to have a go at investing in a disruption, use the tried and tested “outrigger model”, as discussed in my previous insight, as this certainly mitigates much of the risk.

**** 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

in another guise?

                                                                                                   © Roger La Salle 2010

 Background

Some months ago I sent out an article that mentioned “Open Innovation”, finally this is starting to get some traction, and it’s about time. However let’s not let the boffins turn this into “rocket science” as so many have done or attempted to do with innovation.

Keep it simple, that’s the message.

I recall speaking at a number of conferences and repeating that in reality innovation is really pretty simple, only to later be asked to stop saying that. If it’s simple, we can’t charge enough I was told.

Nice one I thought, but why make something that is fundamentally easy seem difficult?

 On Open Innovation

Open innovation is about looking beyond your own horizons and connecting with parties where the sum of the two is far greater than the individuals. However, in some cases people are wary of this model, and maybe for good reasons that may include:

• Loss of control
• IP and ownership disputes
• Risk, both financial and career

These risks can be managed if there is first awareness and a collaboration model plainly laid out in advance. Too many collaborations can end up in disaster if the rules of engagement are not first well though through. Just ask many who have started a business as a partnership only to see it later fail in bitter dispute.

I also refer to a previous article I wrote on “Connecting the Dots”. May I suggest this is simply open innovation in another guise, so too is “Opportunity Capture” a subject I have been speaking on for years.

I include a brief extract from the article on “Connecting the Dots”. I wonder who may have connected these dots, as each connection is a business opportunity just waiting to be grabbed:

Physiotherapy and the reduction of carbon emissions?

• The tooth brush and ceramic crystals?
• Extruded plastic “core flute” sheeting and aluminium extrusions?

Going Forward

Even if the dots are marvellously connected many initiatives still fail in the gestation and commercialisation phases.There three ways of going about this most important phase:

• One party takes the lead role
• Joint venture
• The “Outrigger” model.

Especially for large organisations it’s this latter model that I see as the one that works the best. Indeed IBM was a great exponent of this model when it decided to move from just “Big Blue” to developing and selling PC’s.

Ownership of a project, direct responsibility, fast nimble action and competent management is the ideal model. Further, this is a model where so called “disruptive” innovations can be tested without serious risk to the host body.

The Input

As with data processing, rubbish in equals rubbish out.

The key to success is first a good idea, all successful businesses start with a good idea.

This is where “Opportunity Capture” comes right to the fore. Call it open innovation if you like, but I have still yet to see a formal open innovation model that actually provides a structured search mechanism for an opportunity.

May I suggest “Opportunity Capture” is just that!

In conclusion

An extract from a past article on this very subject a few months ago:

Opportunity – the Next Wave

In addition to innovation, a new wave is starting to build, that of Opportunity capture and the systematic search for opportunities.

In this domain opportunity is defined as: “An observed fortunate set of Circumstances” ©RLS 2000

You can teach your people to become opportunists, teach the important things to observe and move your people from being mere operators to become opportunists.

There is little doubt the wave of “opportunity” is gathering momentum.

                                                   **** 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

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