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Internal vs. External Innovation


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There is a lot of debate about the scope of innovation management, principally, whether it should include “external” participants or just “internal” participants.  So, are you missing something if you focus your innovation efforts inwardly?

There several good reasons for working only with internal people. First, it tends to be easier to manage innovation from internally-based sources because you know the work environment and control management, resources, rewards, and other organization-based factors.   Secondly, there is typically less junk, less quantity, more focused innovation, and better understanding of the total competitive environment.

There are also many good reasons for including external participants as well.  First, there is a significant amount of research that concludes  “outsiders” are better able to solve problems.  Second, the perception organizations become stagnant and aren’t capable of creativity unless new people/ideas are brought into the mix.  Let’s examine both of these reasons.

Outsiders Solve Problems better than Internal People

I don’t dispute that external people are better able to solve problems and inject creativity, however, even these “outsiders” have peripheral knowledge of the problems at hand.  That is, if you are trying to solve complex electrical engineering issues, then you will most likely have to include engineers.  While you have a very good chance of solving the problem by uninterested, distant people (i.e., a mechanical engineer who spent time with electrical engineers or an accountant who used to work at an engineering firm), they still have to grasp the nature of the problem.  Two pieces of research capture the essence of this thought:

  • At the Harvard Business School, Karim R. Lakhani created a process for “broadcasting” tough scientific challenges to outsiders.  They found that people with expertise on the margins of the challenge quickly offered tenable solutions; almost a third of the “unsolvable” challenges were solved.
  • It’s a time-tested phenomenon. In the book, See New Now: New Lenses for Leadership and Life, de Jaager and Ericson report, “A study of the top fifty game-changing innovations over a hundred-year period showed that nearly 80 percent of those innovations were sparked by someone whose primary expertise was outside the field in which the innovation breakthrough took place.”

Internal People are Stagnant

Another aspect of internal vs. external is the notion that long-term employees are not capable of coming up with new solutions because they are jaded on past experiences, i.e., “We already tried that”, and the problem overcoming the not-invented-here syndrome.  However, consider an organization with 10% turnover per year.  In five years, approximately 40% of the organization will be new.  There are new positions, new thoughts, information on competitors, new information on technologies, and so on.  So with this many new people, how much not-invented-here mentality will you really have?  You can have it, but management has to actively promote it.  Also, many long-term employees become disillusioned with management’s lack of follow-through, lack of resources, and low priority for innovation.  These are issues that are much easier to solve internally.

In conclusion, the difference between the results you’ll get from internally-based innovation versus externally-based innovation can be very similar.  If it’s not, then look to your management to instill a better innovative culture.

Best Leadership style for Innovation

A recent bit of research by Jack Zenger and Joseph Folkman in the Harvard Business Review looked at the types of leadership qualities most likely to spur employee engagement, or in other words which employees were the most happy/(or not) with their jobs. Generally, they grouped individual leaders as either Drivers or Enhancers. Specifically,

Drivers are very good at establishing high standards of excellence, getting people to stretch for goals that go beyond what they originally thought possible, keeping people focused on the highest priority goals and objectives, doing everything possible to achieve those goals, and continually improving.

Enhancers, by contrast, are very good at staying in touch with the issues and concerns of others, acting as role models, giving honest feedback in a helpful way, developing people, and maintaining trust.

They drew on research from nearly 150,000 interviews (with approximately 30,000 leaders). Not surprisingly, employees believed that the leaders who were the best enhancers were considered to be the best at engaging employees. However, after carefully reviewing the survey results, they discovered that the leaders who had the best employee engagement scored highly in BOTH areas–as drivers and enhancers.

From an innovation perspective, this fits neatly with much of what I’ve seen in many organizations.  Leaders in innovation must get people to focus and stretch on important goals, while acting as role models and providing feedback.  The Challenge methodology provides a framework for building and maintaining this structure and helps guide organizations to innovation success.

It Wasn’t Raining When Noah Built the Ark

noah_arkAnd so goes innovation.  It’s easy to dismiss it on a sunny day, but once the floods start, it’s too late.

Innovation is an underlying cultural strategy.  Because it requires the coordination of many different aspects, such as management, human resources, and work processes, the foundation must be established before results can be seen.

Low workplace motivation remains a clear and present danger to productivity in 2013, and according to multiple studies/articles/research, employee engagement continues to remain at very low levels.  Perhaps the fear of looming layoffs, being skipped over for a raise, seeing an important project cut due to budget constraints, or some other factor, has caused the disconnect.   The end result is that it is impacting innovation.

In order for innovation to work, these issues must be addressed continuously.  Think about this simple example.  An airline pilot trains repeatedly on flying an airplane when one or more of the engines are not operating.  They learn how the airplane handles, what the procedures are, and the best way to solve the problem.  In reality, most pilots will never have to face the issue.  But, when they do, solving this problem is second nature, because they have done it so many times before.  (Read about the Gimli Glider which is even more amazing the the landing on the Hudson.)

In order to build a culture of innovation, use this methodology to drive innovation from the top of the organization:

  1. Engage a key decision maker in your organization on the need to solve one of their pressing problems.
  2. Meet with experts and flesh out all of the details of the problem. Make sure that
    the statement is understandable and “visible”.
  3. Advertise your problem (and process) in company newsletters, web home pages, bulletin boards and meetings.
  4. Review and comment on submitted solutions.
  5. If you’ve been successful, then you should have no trouble finding and assigning accountability to the ideas that should be implemented.
  6. Award your submitters. To figure out the best motivators for your
    organization, answer the question: “What’s in it for me?”




A Fictional Example of Innovation

Tara had just finished visiting with her largest customer, a network of 13 hospitals in her county. She had met with many people that day, but one meeting in particular had stood out. She had met with Dr. George Freeman, chief of surgery, who explained the problem they were having with their aging set of surgical instruments.   Dr. Freeman explained that they have the budget and are prepared to buy new sets, but they have one major reservation with the ones that Tara’s company makes.  They are uncomfortable for left-handed surgeons, and George happens to be left-handed.  He goes on to explain that without something different, the sale will go to Tara’s competitor.

Tara knows that this is a major problem.  This hospital system is a major customer and purchases millions of dollars of products from her company.  Letting her competitor get an advantage like this could be devastating.  Tara takes her problem to her supervisor.
Tara works in the marketing department and presents her issue to the group.  She explains Dr. Freeman’s problem, and how they’ll lose the sale without a change.  Tara champions a suggestion made by Dr. Freeman, which simply involved moving the finger clasp about 20 degrees off center.  Tara is familiar with her company’s manufacturing capabilities and realizes that although this is a significant change, they can (and have) made this accommodation in the past.  After they talk with a few others in marketing, they realize that this is their only chance to make the sale, and take their issue to the engineering department.

A few days later, a meeting is scheduled with engineering, and they make their presentation.  The engineering group has assembled their senior engineers, and they’re joined by the company’s controller and manufacturing VP.  Tara prepared slides outlining the issue, and she documents how sales will likely increase substantially as a result.  No one else has instruments with this capability.  Engineering spends a few days and designs a new set of instruments, noting that the clasp should only be moved 19 degrees off center.   Preliminary mock-ups prove the point, and the change to manufacturing is estimated at $850k (a fraction of what the potential sales will be).  Finance approves the money and the project is started.

Tara’s company is responsive, voice-of-the-customer oriented, and innovative.  They addressed the need of a major customer, secured new sales revenue, and improved their product.  But did they really do the best that they could?

Tara’s company has repeated the missteps of many organizations.  They answered the question for an important sale, but they really didn’t innovate.  Find out how using MindMatters’ processes and the Innovator™ software system can make supercharge your organization.  Click here to request a copy.

Problem Based Learning and Innovation

Problem-Based Learning (PBL) is fast becoming the preferred method of teaching students in medical-related fields, and I was struck by the similarity between PBL and innovation.  I had the opportunity to talk with Susan Hawkins (MSEd., PA-C) and Mark Hertweck (M.A., PA-C) of Chatham University about how their PBL program works and how it relates to innovation.

PBL was implemented in the late 1960s for use in the medical school program at McMaster University in Canada.  The approach was created to address the traditional medical school teaching methods which many perceived as being of little benefit in the practice of medicine.  Instead of teaching chapters from a book, and forcing lots of rote memorization, PBL was centered around “real-life” case studies in which a typical patient aliment was presented.  Students would work to solve the patient case–a more realistic scenario.

The consensus on PBL is that compared with traditional teaching methods, it’s more effective, and students are more likely to come away better prepared for the rigors of their profession.  The traditional learning method is very similar to the way innovation has been addressed for decades.  Groups would get together to brainstorm ideas around a wide topic, such as, “How to increase sales revenue.”  The ideas were vaguely directed at the goal, but were oftentimes so unrelated or outlandish that it was difficult to see the value to the organization.  Learning, like innovation, is much harder without a goal.

From an innovation perspective, the most interesting facet is that students in PBL start with a problem.  Specifically, a real world problem–exactly the kind of situation facing many organizations and their innovation programs.  Challenges, like PBL cases, are focused problem statements that are important to the organization.  A challenge should be important to the organization, and it should have real benefits to being solved.  This is similar to a PBL case in which the patient and his/her ailment are important (potentially life-threatening) with the benefit being a cure/treatment.

Problem-Based Learning is just another example of how the innovation challenge paradigm is being employed in other disciplines for similar improvements and value-add.  So, when you begin to think about organizational innovation, consider including some of the elements of both challenges and problem based learning, such as focusing on an important problem, encouraging collaboration, using a transparent evaluation process, and providing rewards–it really works!

Comparison of Innovation Challenges and Problem Based Learning:

Innovation Challenge PBL Case
Presentation Focused challenge that the organization is facing Patient with a complaint/ailment
Time Limit Set by Organization, typically 3-5 days Set by School, typically several days
Support Management/Executives Facilitator
Rewards Recognition, Promotion, Money Recognition, Good Grade
Evaluation According to analytics determined by organization, usually based on ROI According to specifics of patient presentation, usually based on correctly identifying and treating problem

Whenever a theory appears to you as the only possible one, take this as a sign that you have neither understood the theory nor the problem which it was intended to solve.–Karl Popper

People with Glass Houses Shouldn’t Throw Stones

The old adage that “people with glass houses shouldn’t throw stones,” suggests that not everyone is perfect, and that before you criticize your neighbor for doing something foolish, you should think about whether you have acted similarly.

Did you ever go to a restaurant and watch parents try to manage a group of rowdy kids?  They’re making noise, throwing food, and causing a general raucous.  I know more than once I’ve rolled my eyes and thought how I would easily be able to control “those kids!”  But, unfortunately, I’ve been that parent trying to control my own children during a particularly rough day.  It’s easy–from a distance–to see the solution, “I’d just sit those kids right down and tell them that if they didn’t behave themselves, I’d….”  In many cases, you’d probably be right.  The farther we are from the problem/situation, the easier it becomes to find a solution.

A recent article by Psychologist Yaacov Trope posits that the further we move in distance from the issue we are trying to solve, the better our thinking/creativity and decision-making become.  And distance is not just physical.   It can be imagining yourself either at a future point or historical point in time, looking from a different dimension (up/down, left/right), the distance between two people in terms of social connections (my best friend versus an acquaintance), or even hypothetical, such as what might have happened.

The article suggests that the farther we move from the issue, the more general and abstract our perspective becomes and we are able to consider solutions from a wider angle.  Conversely, the closer we are to the problem, the more concrete and practical our thinking becomes.  Think about how easy it is to solve other people’s problems, and you’ll understand exactly what the article is getting at.

This is one of the principles of innovation as well.  People often think that they should only challenge engineers with technical problems, and only marketing people with sales problems.   Using these principles in the article, and based on many years of experience, I can tell you, that you should definitely open up your problems to a wider audience.  You’ll be drawing on different experience/knowledge bases, but you’ll also be creating distance–they key to problem solving.

Most Creative Time of Day to Solve Problems

Do you consider yourself a morning person or a night person? If you’re a morning person, you probably think that your most creative time of day to solve problems is in the morning–you’re wide away and ready to take on the world. Conversely, if you’re a night person, you might believe that the night time is your most creative time of day to solve problems. However, in both of these instances, you’d be wrong.

Recently published research suggests just the opposite: that morning people are most creative at the worst part of their day–evening, and night people are most creative in the morning. Even though your mind is foggy, your creative abilities are at their highest. The researchers hypothesize that, “Insight-based problem-solving requires a broad, unfocused approach. You’re more likely to achieve that Aha! revelatory moment when your inhibitory brain processes are at their weakest and your thoughts are meandering.

They tested their theory by recruiting subjects and having having each group perform tasks at their “highest point” and their “lowest point” in the day. Surprisingly, people were able to solve intuition-based problems at a higher percentage at the low point of their day–when they were the groggiest. (Analytic tasks were performed equally well throughout the day). The bottom line for you morning people is to start staying up late, whereas you night people need to start getting up early!

However, if you’re just looking for analytical problems, then your best time is the late morning as your body temperature continues to rise and peak.  During this period, up until about the middle of the afternoon, working memory, alertness and concentration improve.  Check out this article from the Wall Street Journal with more information about your body’s natural rhythms.

A More Innovative Way to Pursue Goals?

Researchers examined how people pursue their goals by imagining either 1) how far they had already come, 2) or what was left to be accomplished. The bottom line is that thinking about was was left to be accomplished is much more effective.

Link: Click here for the HBR article

Deliver Innovation Overnight

Learn how the Dutch company, PAT Learning Systems, uses short, timed events to achieve innovation, a concept completely embodied in our Flagpole software system. This methodology, illustrated in my book, helps eliminate some of the human aspects of innovation, namely procrastination, while enhancing competition and socialization.

Link: Click here for article

Customer-Centric Innovation: Challenge Yourself!

There’s no lack of opportunitiesfor businesses to “create” – creating new products or service offerings,creating new marketsto pursue, creating new advertising,and so on. But “creation” doesn’t always mean you’re innovating. The difference between creating and true business innovation is that the latterinvolves taking a serious, hard look at the needs of your customers and doing only that which you know will change the game for them and for your business.

For this reason, you only wantthe innovations that aregoing tobe meaningful to your customers andprofitable to you -two things that are not typically mutually exclusive.Creative endeavors are a crucial piece of this model,butif it doesn’t make a measurable impact on some aspect of your business and drive you to get more customers, then why do it?

Customer-centric innovation begins withexamining every point at which you interact with customers (current, repeat,and prospective) and asking yourself this set of questions:What are the barriers that stand in the way of how this person or businessbecomes our customer,obtains our product, etc.? What can I do to eliminate that barrier and make it easier for them? How can I do this in such a way as to remain true to my business’ core values, and stayfocused on our critical essentials? How can I do this with thefewestcomplications (a.k.a.keep it simple)? How can Ido itbetter thanany of my competitors? When you can answer all of these questions, you’re firing on all 8 innovation cylinders.

These things goMUCHdeeper than “let’s create ournext big product because our customer is asking for it.”Take the time to look at things like: pricing, delivery methods, your suppliers, materials costs, systems in use, inventorization, materials, your investors, your accounting,your sales methods, your marketing team,and everything else you can possibly think of. If it seems like too muchwork, just remember:this iswhat your competitors are already doing. You’ll quicklyfind ways to improve quality in all of theseareas, and these improvementswill aggregate to impact how your customer becomes yourcustomer, and how you keep them as your customer.

Assign people in all of these areasto create “challenges” for their teams on how to improve something in their department. These can be as simple as “How can we improve ourpurchasing practices?”, “Has anyone seen a better system that we can use for billing?” or “How can we save money on shipping?”, “How can we fill orders faster”,and so on.

Allow their teams to answer the challenges with ideas and suggestions. Take time to encourage these folks to vote and comment onideas received. Make sure to follow throughimplementing the best ones, andreward folks for sharingthem. After all, the best solutions and improvements will invariably come from thepeople who deal with the issues you’re trying to solve on a daily basis.

The key is asking the right group with the right expertise to answer your challenge. The possibilities for “challenges” are limitless, just likethe areas for improvement ina company.

Some of the innovations that you find and implement using challenges may impact your customers or improve their experience in ways they will never even know about,and that’s just fine! Let them just be thrilled to be your customer andwonder how you do what you do so well!

Flagpole is an inexpensive, easy-to-deploy application built around the above-described challenge model. You can use it to query your employees, partners, even customers out in the marketplace to find focused, impactful ideas and innovations to implement.