Innovation by the numbers

Here at Spigit, our company is run on a quarterly sales cycle, as are most American-headquartered organisations. The quarterly cycle causes us some disconnects here in Europe where things don’t run in quite the same sort of way, but they do create urgency and an imperative to deliver results.

This morning, as I was having my usual stress (more of a heart murmur than an attack)  about whether we were going to make our numbers by the end of the quarter, I realised something.

I have never seen an innovation programme or an innovation team that has much of an of urgency mechanism.

I have never seen one that’s had to meet quarterly revenue targets. There is hardly ever a requirement to manage a pipeline of new things to completion in order to meet a number. I’ve not seen much of any dynamic at all that makes sure that innovators are delivering results early and often to the numbers.

 

The innovation programmes I’ve been responsible for have never had that kind of urgency. Oh, we had to deliver, but to a hard financial number every quarter? I think not.

We got away with it because we managed to delude people into thinking that softer metrics – like number of ideas we’d collected – were a reasonable proxy for progress.

As you know, I’m one of the people who think the only innovation that matters – as in really matters to business people against whom innovators have to compete for resources – is the kind that makes money or takes out cost. The other stuff is all a nice to have once the money is coming in.

So it strikes me as odd that I’ve never noticed the lack of urgency mechanisms before this. It is something of a revelation.

I know this thought must, by now, be driving some readers here mad.

“You can’t get innovation by the numbers!”, I know one ex-colleague of mine will be thinking, as they rant about how mechanical I want their creative process to be.

There’s another – whose name I dare not mention – who will argue that innovation is an overhead cost of the business which must just be carried by everyone else. “Innovation is everyone’s job”, he would say, implying that it cannot, therefore, be a formal line in anyone’s accountabilities.

Why is it innovators think they can get away with not delivering revenue by the numbers when other business disciplines have no such luxury?

When I was writing Innovation and the Future Proof Bank, I noticed most bank innovation programmes were cancelled after about 18 months. Their corporate sponsor moved on, and lacking any reasonable justification for existence in their own right, they had their resources pulled. They simply weren’t operating as businesses that deserved to stick around: they were the guarded special interest of someone powerful.

I think it reasonable and right that innovation teams be assigned hard financial metrics against which their performance can be judged.  I think, furthermore, they should be compensated in the same way as their sales colleagues. Yes, I do mean a commission plan against what they achieve in terms of hard numbers with a weighting towards variable rather than fixed compension.

Innovators are salespeople. They are the ones that have to get their organsiations to adopt and implement new things (how is that different from a typical vendor salesperson, anyway?). Salespeople have to manage a pipeline and deliver hard benefits.

Once, when I inherited an innovation team from someone else, all the innovators found other jobs when I asked them to act more like salespeople than inventors. They didn’t like it one bit.

I can’t imagine the reaction I’d have gotten if I’d tried to put in quarterly numbers and held them to account. But now I think about it, I would likely have had much more success in that job if I’d done it.

I didn’t have the correct urgency mechanic to ensure I was getting financial results, then. I know better now.

What do you think? Can innovation really be treated as a business process that can stand up and be counted? Or are we always destined to be poor cousins to real business, scrounging for resources and begging for senior attention?

 

8 Responses to“Innovation by the numbers”

  1. April 11, 2011 at 1:09 pm #

    James,

    I think that you are right in part (probably 90%) and your “example” innovators are right in the remaining 10%.

    Having extensive background as a programmer, i don’t like very much the Software Factory model, but i understand that in the current market (and specially with the current programming demand), the Factory model is a method of INDUSTRIALIZING software development. Software Factories are run by the numbers. Incremental change is the key here.

    Getting to the place where most businesses have an Innovation Program requires industrialization too. That, i think, is what you are talking about and you are (90%) right.

    But it is also true (in part) what your example innovators say. In my experience, Software Factories fail at getting something very innovative from scratch (yet i admit that i’m only looking at my own experience and that is most likely biased by my own personality and work). The main problem, i believe, has to do with decision making (doing the outrageous is almost impossible for many organizations). For these activities, a few factories i know hire external programmers. The external hire makes sense by “lack of internal expertise”, but it allows the hire to work like a rogue and do quantum change.

    I think that most of the time, Incremental is not just “good enough” but the only way change is accepted by most people. Yet, sometimes new and outrageous is needed and healthy.

    Regard,

    José Luis

  2. Alicia
    April 14, 2011 at 9:30 am #

    I think that normally innovation is run by a number: the budget assigned to the team, and that it is measured by results: if it does not deliver within a certain period of time (changes by industry, in banking you need more time than in new media for example) the team goes home.
    The same way you maintain a support team and measure it by costs and not by sales, innovation should be measured with its own metrics, including its impact to revenues or cost reduction (depends) but not simple and plain immediate sales figures.

  3. Stephen
    April 14, 2011 at 9:06 pm #

    Hi James, this piece made me think of the pipeline processes used by big pharma, e.g. I think there are specialist firms used by the big drug companies to effectively manage the drug discovery process. Perhaps the macro processes of venture capital or day trading are similar in that a ‘Return on capital employed’ is needed? The productivity of innovation process and the investment rules surrounding it, was partly covered in your work ‘The Little Innovation Book’? Perhaps there is another title there e.g. ‘Investment rules and management principles for innovation efforts’?

  4. Dan
    April 16, 2011 at 7:29 pm #

    I think this is a very general topic but I have a question because I have some disagreements with some parts of your blog!
    If you really have a team that needs to deliver new things and come with new ideas, designs etc. I mean to be a really innovation team, in this moment if you go and add the financial/number pressure you can lose the team, you can lose the innovation and in this moment I would ask you what is more important to meet the financial goal or to keep the team and have some results at the end ?

  5. Mike Broomhead
    April 17, 2011 at 1:18 pm #

    The problem with commission payment is that people don’t always act in the best interest, occassionally even act ‘unaturally’. The obvious behaivours in this scenario being to stuff an ideas-pipeline with junk, or back an idea into pilot without due diligence to ensure success.

    Frankly Salespeople have a very mixed rate of being ‘trusted advisors’ if incentives are high. I’m lucky that I don’t have this motivation and baggage – though I do work alongside salespeople.

    So how to get urgency into Innovation ? I agree it’s an important aspect. The obvious recommendation is a higher profile — even up to annual company results, since any Innovation should be the centre of differentiation, growth, and cost containment. But that generally can’t work until too late, ie ‘after the event’, because the content is secret sauce. Giving its programs a generalised high profile could address this but doesn’t make VPs / CEOs look good or generate excitement. Internal briefings can help where there is trust in the employe base.

  6. August 26, 2011 at 2:13 am #

    A really usefull article – Thank you very much I hope you will not mind me blogging about this article on my blog I will also link back to this post Thank you The reason internet marketing services software is so prevalent on the web is that it’s probably the most lucrative businesses online. Many web marketers prey on the beginners and build killer sales material to profit on the inexperience. How would you assess if you actually need internet marketing services software? Once you begin internet website marketing and building your internet site you should attempt to make the best of your own research and do a great deal of work as it is possible to through free sources before purchasing any internet marketing services software systems. In case you are new, it’s hard to know what you’re buying and exactly how it can benefit you if you do not comprehend what you are doing. When you take on tasks with no shortcuts you happen to be gaining valuable knowledge and teaching yourself what works and what doesn’t before you decide to waste any cash.

  7. hello there and thanks for your information ? I?ve definitely picked up anything new from right here. I did alternatively experience several technical issues the use of this website, since I experienced to reload the site many instances prior to I could get it to load properly. I were pondering in case your hosting is OK? Now not that I am complaining, but slow loading cases instances will often have an effect on your placement in google and can harm your high-quality score if ads and ***********

  8. April 12, 2012 at 7:39 pm #

    i’ve been looking for this information on other websites, but your articles are awesome and better than the others.http://www.capitaocaverna.net

Leave a Reply

Your email address will not be published. Required fields are marked *

(Required)

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Proudly powered by WordPress   Premium Style Theme by www.gopiplus.com