CHAPTER 1

Why Innovation Now? (When the Wind is Blowing, Raise the Sails)

Market leaders need innovation to sustain their lead. Disruptors need innovation to become market leaders. While organizations in all industries need innovation, few business leaders are creating ecosystems that are able to grow and cultivate innovation. Meanwhile, employees in these organizations are coming up with ideas daily on how to create and sustain growth. But these ideas aren’t being heard, or aren’t being acted upon. So, while any business leader will tell you people are their most important resource, they’re lying! They always prefer to go outside their organization to come up with big ideas that can help create and sustain revenue growth.

Since innovation is necessary, and an organization’s people are its most important resource, Infectious Innovation will teach you how to systematically collect employee ideas, and then turn them into improved and sustainable profits.

Intent

The intent of Infectious Innovation: Secrets of Transforming Employee Ideas into Dramatic Revenue Growth is to do exactly that: to explain to business leaders how to set up processes within their organization to turn employee ideas into actionable tasks. These tasks will then serve to dramatically increase company revenues.

Personal development experts continue to say, “Work smart, not hard.” Meanwhile, organizations are focusing far too much on the productivity side of the equation. They are working hard, not smart. The upstarts, which are run by the new generation of business leaders, are realizing that organizations may work smarter by encouraging their staff to innovate.

Changes

The more things change, the more they stay the same. The business world, as we know it, is similar in many ways today to what it was 60 years ago. Some businesses sell products and services to consumers, and some sell products and services to other businesses. Money, ideas, and people are the inputs for all businesses. Even children selling lemonade on a street corner need all three—money to purchase supplies, ideas to help decide when and where to sell the lemonade, and people to make and sell the lemonade.

The difference today is not the functions of business, but rather the form. Sixty years ago, money came in the form of cash or check. Today, cash and checks are usually acceptable, but so too is electronic transfer.

Sixty years ago, ideas were created using imagination and education. Education was from local radio, television, and newspapers and libraries, as well as from friends and family. Today, all three sources are available, as well as an online library with access to more information than one could read in their lifetime.

Sixty years ago, people in a business were needed to produce, deliver, and sell goods and services. As well, people were needed for finance, general, and administrative duties in order to ensure the business was making the best use of its money and people. Today, the same units are still needed.

While the general structure of a business has not changed significantly in the last 60 years (see Figure 1.1), the contents have changed dramatically. The value in most organizations 60 years ago came from tangible goods, while the value in most organizations today comes from intangible goods.

While a lot of the focus has come from new products, new services, new technologies, and new delivery methods, there continues to be pressure on revenue and profit growth.

Figure 1.1 Traditional organizational structure

Everybody is interested in growth. Senior management has bonuses associated with revenue and profit growth. Meanwhile, investors are looking for growth. In public companies, shareholders are looking for revenue and profit growth. With so many options available for purchasing stocks, an accessible global market, and an increasing demand on workers to look after their own retirement, shareholders expect growth or will sell their shares. Similarly, employees want to work for a company that is growing.

With senior management, investors, shareholders, and employees looking for growth, businesses need to grow!

In order to grow, what is needed? Since most global markets have been exhausted, innovation is the answer.

What Is Innovation?

Innovation is defined in the Merriam-Webster Dictionary as “the introduction of something new” or “a new idea, method, or device.” As this is a business book, the innovation being discussed here is innovation in relation to business. So a better definition as it relates to business innovation is “the introduction of something new in business” or “a new business product, service, customer relationship, or process.”

Innovation itself is nothing new. Humankind has been creative since its early beginnings. The assembly line, the airplane, and the World Wide Web have been innovations over time with dramatic impacts.

Attitudes toward innovation have been all over the map. Some people love innovation, while others are fearful. Some people profit from new innovations, while others suffer due to them. Automation has helped business leaders get their product to market faster with higher quality, but it has also put the people who previously performed the manual labor out of work.

In terms of business innovation, “the introduction of something new” may range from something small to something enormous. For the purposes of this book, “incremental innovation” refers to small changes while “explosive innovation” refers to large-scale changes. An example of incremental innovation might be a cell phone manufacturer upgrading their camera from a 32-megapixel to a 64-megapixel format. An example of explosive innovation might be a cell phone manufacturer moving into the development of financial software that helps sell more cell phones.

A business innovation, in terms of this book, refers to the introduction of something new to the organization that is introducing it. For example, currently there are many players in the autonomous vehicle industry. Blackberry announced recently it would be developing autonomous cars. This was not an industry innovation, but it was a business innovation since it was a new direction for Blackberry.

A business innovation needs to be something which is commercially available. It is quite different from an invention or an unused patent. New technology is not a business innovation until it is successfully commercialized. An invention is merely a product or service that may have some future purpose.

Best Time Ever to Innovate

Innovation excites many people, but causes skepticism amongst others. No matter which side of the fence you’re on, NOW is the best time ever to innovate. With current technology to drive change, and the current state of communications and social media to help business leaders stay on top of changes, the barrier to entry of businesses for innovation is smaller than ever. Small companies can start prototyping and grow to scale quickly. Innovators that have been financially successful are looking to help other innovators to grow quickly.

Today, the cost of introducing and commercializing innovation is less than it was 40 years ago. In the ’70s, five-sixths of the S&P 500 value was in tangible goods. Nowadays, that number has been flipped on its head. Five-sixths of the S&P 500 value is now in intangible goods. So the cost of materials and manufacturing has been greatly reduced for today’s innovations.

How companies incorporate innovation into their product streams has changed over the years. Large companies used to live off their fat. They would allow small companies to innovate, and then grow by acquiring the innovative small companies once they had proved their business model. This has changed dramatically over the last 20 years! The four largest companies in terms of market capitalization, Apple, Microsoft, Amazon, and Google/Alphabet, have become the most innovative. Apple has launched itself into the financial technology (fintech) sector with Apple Pay, while Amazon became a successful product manufacturer (well outside its main business stream) with the introduction of Alexa. Google renamed itself to Alphabet to represent the depth and breadth of its business ventures, and Microsoft continues to come out with business innovations.

Old-world companies are innovating to stay relevant. Lego was a toy that young people loved to play with before the video game era. While children (of all ages) continue to enjoy Lego, the organization has greatly expanded its brand to include movies and theme parks. It also has created a business strategy empire with its Lego Serious Play workshops. Consultants can be certified facilitators of the workshops, which help executives use Lego pieces to improve teamwork and develop new strategies.

Ideas lead to innovation, but innovation success does not depend on being the first to have the idea. The most successful innovators were usually not the first to have an idea. Google was not the first search engine. Facebook was not the first social media site. Yet Google and Facebook were able to become extremely successful by taking their innovations further than their competitors.

It’s never too late to innovate, despite what mature companies may think. When I was in my early twenties, I was playing rugby every weekend. One Saturday, our captain, who happened to be the smallest player on the field, was tackled aggressively. He was lying immobile on the ground and it wasn’t looking good for him. The referee blew the whistle, and we went running over to see how he was doing. One of the spares on the sidelines started warming up since he figured our captain could not continue playing. The trainer came over to look at him, and was hopeful since the captain was fairly alert, though not moving. The coach called over to the spare to come in, and the captain said, “Hey! I’m not dead yet.” He got up and continued to play.

If your business is still active, then it’s not too late to innovate and thrive. Never give up.

Every industry is capable of innovating, not just the high-tech industries that rely exclusively on an ever-increasing landscape of new technology. In my hometown, the construction industry is continually innovating to offer better products and services in less time. The abundance of technology advancements has created opportunities for innovation in every industry out there. That is why the Internet of Things (IoT) is becoming so mainstream. Everything, from household appliances to security systems to cell phones, is now connected and communicating.

With increasing innovation, market demands are evolving. Paradigms from the twentieth century are being abandoned for new world thinking. An example is the increasing demand for entertainment since it is now accessible anywhere, which wasn’t the case 20 years ago. Similarly, communication needs are always increasing as more and more people adopt cell phones and carry communication devices everywhere they go.

Just because innovation is all around us, does this mean all innovation is bound to be successful and eliminate the methods it’s replaced? Absolutely not. In the 1930s, there was research done to improve on the QWERTY keyboard, which is still the standard today (it is so named because the first six letters on the top left of the keyboard are QWERTY). A man named Dvorak came up with a better keyboard that studies showed allowed people to type much faster and avoid hand problems (see Figure 1.2). While people appreciated the fact that the studies were true, inertia kept them using the QWERTY keyboard, and the Dvorak keyboard became a footnote in the history of better innovations that never caught on.

In the mid-1980s, the banking industry introduced the method of collecting and distributing money through automated tellers. Thirty years later, there are still many people who use the human bank tellers to deposit and withdraw money, and have chosen to avoid the automated teller innovation.

Despite the risks of innovation, governments at all levels are looking to help business leaders innovate. They want their economy to do well, and innovation has been seen to be a major contributor to help employment levels. There is innovation funding available for incubators in most large cities. While Silicon Valley remains the mecca for innovation, many other cities are trying to copy its success. Many Canadian cities, including Calgary, the Toronto-Waterloo corridor, and Ottawa, call themselves Silicon Valley North in hopes of attracting good investment and good employees.

Figure 1.2 The Dvorak keyboard was proven to be superior

Innovation is never easy, especially explosive innovation. New products often require new policies. Autonomous vehicles, for example, require a new way of looking at insurance, licensing, and law enforcement. Policy makers want to have the policies in place before allowing the autonomous vehicles on the road.

Although innovation has its negative side, NOW is the best time for businesses in all industries to innovate.

More Important than Ever

Innovation is more important now than it’s ever been. Everyone is looking for growth companies.

With millions of baby boomers nearing retirement age to lead the way, investment dollars are being thrown into growth companies. Your company had better be growing! Shareholders are looking for their investments to grow, and the best way to grow is through innovation.

Employees are also looking for companies that are growing. In the early ‘80s, layoffs demonstrated a lack of employer loyalty. This in turn has created a lack of employee loyalty over the last 30 years. In order to keep the best employees, organizations need to continue to grow, and business innovation is the best tool for growth.

Many businesses, even industries, have disappeared over the years. Phone books used to be a staple in every home. The movie “The Intern” poked fun at how the 70-year-old character, portrayed by Robert De Niro, used to work in the same building that he is now a senior intern at. The protagonist had worked in the building for 30 or 40 years when it housed a telephone book manufacturer, but the building had been repurposed to house an online fashion start-up.

While the businesses have disappeared, in many cases the function of the business hadn’t changed. It was the form of the business that had changed. In the phone book example, the function was to have a method people could use to find out how to contact friends, family, and merchants by telephone. That function didn’t change; rather its form was transformed from a paper telephone book to a software app.

In order to continue to grow, business leaders should be looking at the functions the business is providing, and try to determine what the form will be like in the next few years. Blockbuster was the market leader in the ‘90s, by far, for video rentals. According to Netflixed, Blockbuster correctly identified that the video rental market was switching to an electronic delivery system, yet they felt too attached to their brick-and-mortar stores to make the proper investment in an electronic delivery system.

Meanwhile, as some industries adopt new innovations, related industries need to innovate to adapt. An example is the software support industry. When personal computers became available and popular in the ‘80s, owners of the personal computers were looking for software. The standard business model was that software would be sold on a one-time basis. As the hardware supporting the software rapidly improved, the software industry would upgrade their software for the newest hardware. This was also true with business software. In the late ‘80s, and through much of the ‘90s, computers were doubling their capacity every two years or so. So new, upgraded software was always being offered to work with the newer hardware. Businesses would not always be quick to get the latest and greatest software and hardware as soon as it was offered. When new software and hardware were purchased, businesses built support mechanisms to roll out the new software and hardware.

These support mechanisms were well-oiled machines for over 20 years as new software and hardware could be rolled out together. Then software providers started to realize that the banks had a great business model: Collect monthly subscription fees, paying which becomes habitual for clients. This software subscription model is known as Software as a Service (SaaS), and has many benefits to the end user. The support teams, however, have been forced to create innovations in their processes since the software companies can now roll out upgrades at any time, and support staffs have to prepare for them differently than before.

In a similar vein, the autonomous vehicle is an explosive innovation on the horizon, and has many businesses investing lots of money into it. The innovation offers benefits to vehicles that currently require humans to control. The trucking, shipping, taxi, and tractor companies are investigating how to innovate their business models to take advantage of the coming autonomous vehicle innovations. The companies which don’t innovate will be left behind.

There are also other industries looking to take advantage of the autonomous vehicle innovation. Telecommunication companies have been investigating the ability of cars to communicate with other cars, pedestrians, and the city’s infrastructure. Communicating with other cars and pedestrians will increase vehicle and pedestrian safety, while communicating with the city’s infrastructure has the potential to give the city feedback on traffic and road issues that require attention.

Even if a certain industry itself is not innovating, organizations in the industry can take advantage of other innovations to improve their market share. This is another reason why it’s so important that employees are given the chance to contribute to new products and services. There are so many innovations these days in so many industries, that it’s hard for a small team to keep up with them all. Employees at all levels should be given the chance to contribute their ideas. This will increase the organization’s ability to build on other innovations occurring around them.

Sometimes the friends or spouses of employees work at companies that are innovating, and the employees see a correlation between what the other companies are doing and how their own organization can innovate from it. These employees have voices that need to be heard!

Game Changers—Every Organization has them

Every organization has people with great ideas. There are the discontented who are never satisfied with current products and services. There are the dreamers who spend their time dreaming of a better service or product. And there are the inventors who are constantly trying new things to see what will happen. Every company has them, and they can be in any department.

Usually, the discontented employees, the dreamers, and the inventors come up with ideas to improve the organization but keep the ideas to themselves. There is no mechanism to forward their ideas to the “people that matter,” so they mope or dream or continue to invent their own widgets in isolation. Wouldn’t it be wonderful if there were a mechanism to gather their ideas and filter them down to the one or two that could make a difference? Imagine the effect it would have on the organization’s bottom line if employees were able to have their ideas heard, and then see one or two of these ideas go into production.

One of the reasons some organizations fear asking and encouraging employees to come up with revenue-generating ideas is that the employees might generate the ideas on company time, and then leave to start their own business based on those ideas.

This fear is possible, but highly improbable. So why wouldn’t employees with all these wonderful ideas just go and start businesses around these great ideas themselves? Some do, but most don’t. There are many reasons why an employee would be much happier sharing their ideas with their employer than starting their own business.

Having a great idea and running a business built on a great idea are two wildly different things. Sure the lady in the packaging department can figure out a better way of getting products out the door, but it’s a huge leap from telling people your wonderful idea to turning the idea into a new product or service.

If an organization’s employee decides to start a business of her own, then she would have to find sales and distribution channels, in addition to developing and perfecting a new idea and service. Then there are financing and customer service to worry about; and let’s not forget about product development!

The beauty of employees contributing ideas to their organization so that the organization can grow is that the organization already has the infrastructure to grow much more quickly. There are already customers, sales channels, and distribution networks that can get a new product or service to market quickly. There are also development teams that are able to turn ideas into movable products.

It’s a perfect mix: Creative employees and organizations that want to grow!

Employees also have a vested interest in their organization growing. While experts will tell you that new grads expect to move companies every five years, there is also a need for stability that many employees desire. Nobody wants to work on a sinking ship. When I worked with one of my clients, Costco Wholesale, their employee retention rates were phenomenal. The company rep told me that 93 percent of employees that make it through the first three months will still be there after five years.

It’s exciting when revenues are climbing and company leaders are excited. It’s exciting when you work in sales and can tell your customers about new products coming down the pipe.

Early in my career, I worked at Newbridge Networks, a telecommunications firm. Every three months, the company’s CEO, Terry Matthews, would give a quarterly report to all the employees. It was exciting to hear of the continual growth, and the CEO’s tone would motivate the staff to continue to work hard to meet increasing customer demand.

When an organization adopts a culture of innovation, the employees appreciate it. Many employees will want to get and stay involved in the company’s growth as much as they can. It’s up to the organization to allow them the opportunity.

How can you spot a game changer? It’s often more difficult than you would think. I once worked with a woman at a high-tech firm who had short black hair. Each month, she would paint a stripe down the middle of her hair in a different color. One month, the stripe would be white. The next month, it would be yellow. She seemed like the creative, out-of-the-box thinker that could come up with revolutionary ideas. If she was, she certainly wasn’t the type to share her ideas with anybody.

I’ve also worked with the most conservative young people you could imagine that had the wildest ideas on earth. You never know who has great business innovation ideas, which is why you have to allow everyone to submit their ideas.

Conflicting and Compounding Innovations

As the number of innovations continues to increase, there become conflicting and compounding innovations. Conflicting innovations have caused problems for market leaders while compounding innovations have helped market leaders.

Over the years, conflicting innovations have caused many companies to lose their market lead. This occurs when new innovations conflict with their current business model.

Modern examples of industries that have been slow to adopt conflicting innovations are large retailers like Sears that were slow to adopt the online retailing model because it conflicted with their retail outlet model. They have suffered greatly as the market moved to online retailing without them.

An example cited above was Blockbuster, which recognized that online video rentals was an innovation that the market would need in the future, but this innovation conflicted with their current retail outlet model. They were leery of the new form of providing video rentals and went bankrupt due to their desire to stick with their current form.

Similarly, the railroad companies were in the business of transporting customers from one location to another. When airplanes came along as a new innovation, the railway companies should have recognized the market demand and evolved. Instead, they stuck with their current form.

Hopefully, organizations in the future will learn from mistakes in the past. They will look at innovations that may conflict with their current business model, and use them to their advantage, rather than try to compete against them.

Compounding innovations, on the other hand, can help market leaders keep or grow their lead. This occurs when an organization innovates while also using an innovation from another industry. An example is the Alexa product from Amazon. They were looking for an innovative new product to ease the buying process for Amazon customers. They came up with a voice recognition system that would sit in the middle of your home and allow you to order Amazon products by speaking. While this was one innovation on its own, the Alexa product compounded this with the ability to ask Alexa questions, and the ability of the voice recognition system to respond to voice commands within one second instead of the standard three seconds. The compounding of these innovations has helped Alexa to capture a huge market lead.

Compounding innovations has the effect of also compounding the risk. This in turn also has the effect of compounding the reward, which is often worth the risk.

Raising Hope: The Infectious Innovation Process

Employees looking for opportunities to get involved will be thrilled with the Infectious Innovation Process. The process allows them to contribute ideas to the growth of the company. It gives employees hope that their voice will be heard.

There is a television show entitled Undercover Boss where the CEO or other senior official in the company disguises themselves and works for the company at the staff level. For example, the CEO of a fast-food restaurant chain would work as a cashier at one of the organization’s restaurants. At the end of the show, three or four staff members are rewarded for their hard work, and they almost always say the same thing, “It’s good to be appreciated for the work you do. It seems like no one is ever watching.”

Employees will be appreciated for contributing ideas. When other employees see the appreciation, they too will want to contribute.

Hope is a powerful thing. According to Greek mythology, the gods harnessed all the world’s evils and put them in a box so that no evil would be present in the world. They feared that one day the box may be opened, so they placed at the bottom of the box the only thing that could combat evil: hope.

When Pandora opened the box, the world’s evils were released and there was unrest for a while. But hope soon triumphed!

When employees have hope, they look forward to their day. They rush to work with excitement, and turn that excitement into energy.

Company growth gives employees hope. Permission to contribute gives employees hope. The Infectious Innovation Process allows companies to grow and gives permission to employees to contribute to that growth.

Over the next several chapters, the reader will see how the Infectious Innovation Process works, and what tools are available for the various stages. The five stages will be discussed in the chronological order in which they take place: Idea Generation, Idea Collection, Idea Triage, Idea Escalation, and the Pilot phase.

First, the Idea Generation stage will be discussed in Chapter 2. There are several methods to generate ideas, and then there are ways of capturing the ideas before they’re lost. Chapter 3 discusses the Idea Collection stage. There are continual and finite methods to choose from. The Idea Triage stage is discussed in Chapter 4, outlining how ideas are grouped and then rated. Chapter 5 discusses the details of the Idea Escalation stage. The importance of senior management and the tools to outline the business value of each idea are described. Chapter 6 discusses the final stage of the Infectious Innovation Process, the Pilot. Selection criteria, location, and timing of the pilots are detailed. The final chapter of this book puts the whole process together. It then outlines tools that organizations can use to determine how well they are doing, and feedback mechanisms they can use to continually evolve their success with the Infectious Innovation Process.

Readers can use this book in many ways, and it depends where their organization ranks in the Infectious Innovation Index, as outlined in Chapter 7. If a reader is new to the Infectious Innovation Process, then every chapter should be read in order. This will give the reader a good idea on the various stages and how to optimize each stage.

As the reader incorporates the Infectious Innovation Process in their organization, all the stages should be studied first. The “Getting Started” section in Chapter 7 can then be used to incorporate the optimum timing and sequence of the various steps.

If a reader is already using the Infectious Innovation Process, but not getting the results they expected, and unsure where the problems are occurring, then Chapter 7 should be looked at first. It outlines feedback mechanisms that will help the reader determine where the current issues lie. After determining where the issues are, chapter summaries at the end of each chapter can be examined, to determine which specific chapters can be referred to on an as-needed basis.

Summary

What is Innovation?

Best Time Ever to Innovate

More Important than Ever

Every Organization has Game Changers

Conflicting and Compounding Innovations

Raising Hope