Larry Keeley - Setting an Innovation Direction

BIF Research Advisor recently visited BIF and shared his framework for building a sustainable platform for innovation that will increase any organization's chance for success. What's the secret sauce? Forget brainstorming, says Keeley. Instead, get clear on your innovation "intent," make discipline the norm, and focus all engines on creating a leadership platform that keeps you moving forward.

An obsessive investigator into the root causes of innovation failure, Keeley believes that "almost everything about the way innovation is taught and practiced and asserted is wrong." After all, since innovation fails about 96% of the time, he wonders why people even bother ever to listen to innovation "experts."

But listening to Keeley was easy for those who participated in the February 20 LEARN event at BIF, where Keeley was the headline presenter. Participants, including leaders from Design Continuum, Hasbro, Equity National, Innosight, MetLife, and Blue Cross Blue Shield, were given several big ideas to chew on about innovation fundamentals and simple tools that can help even unlikely innovation candidates succeed.

The session began with an interesting conversation about whether we live in the most intense time of change in human history. It's a hot topic debated by sociologists across the globe. And it quickly became apparent why the answer matters so much in relation to innovation effectiveness.

One of the key themes of the workshop was something Larry called "stuck in the battleground." We are living in a time of fertile change and tremendous anxiety. And most firms are fighting like mad to compete on product innovation. According to Larry, that's the wrong place to be. This might explain why innovation efforts have such a pathetic hit rate. (The global success average, across geographies and industries, is a paltry 4%.) So imagine if you could increase that rate by 9 – 17 times the global norm?

It's not far-fetched. But first, you have to blow up many cherished myths about innovation. As Larry quipped, get over the "Kabuki dance of innovation."

Take creativity for example. "We say it's time to ‘think out of the box,'" explained Larry, "but this is only likely to yield a vast array of bad ideas that we then spend months analyzing before we discard." He believes most brainstorming efforts are a force of chaos that distracts a company, giving only a vague sense that they're innovating when in fact all they're doing is being random.

Getting back to the "battleground," according to Larry, new products are a distraction—"an overly emphasized, not-very-important basis for innovation." Larry's research suggests that many other types of innovations, from changes to channels or brands or customer experience, to changes in processes or service systems or business models, are more likely to give you sustained advantage.

Through 27 years of research, Larry and his firm, Doblin, Inc., have determined there are 10 types of innovation that a firm can focus on. Using these 10 innovation types strategically will lead to a shift in value creation. In other words, platforms rule! (According to Doblin research, fewer than 2% of projects produce more than 90% of value.) So it makes sense to focus on more than one type of innovation. In fact, according to Larry, if you focus on five or more of the 10 types, your innovation success rate should increase to 35 – 70%. (If you really want to amplify your return on investment, Larry suggests focusing on your business model and delivery model – a place where few dare to tread but will yield far greater returns.)

Take Apple for instance. They achieved seven types of innovation with the introduction of the iPod. Effective innovation is not invention – instead it comes from using what's already out there. (Something his fellow research advisor, Andrew Hargadon, calls recombination.) Companies like Apple are very adept at removing the obstacles for experimenting with others. But it's hard work. (It took 200 lawyers and 2 years to bring the iPod's software to market.)

Through ample example though, we learned that all the important stuff cuts across companies and markets. In other words, platforms rule! (Check out Larry's article in BusinessWeek "The Greatest Innovations of All Time." All of them are platforms that transcend enterprises, industries and political borders.)

What else did we learn? Innovation is a high protocol process. Larry gave us several innovation protocols to help us do "what is most useful in the heat of battle." Although it sounds like it ought to be self-evident, he finds that "the absence of good innovation protocols means that the average innovation team is forced to make up both what they will address and how they will address it—a prescription for failure."

He then presented us with a discipline model that anyone can follow. It begins with diagnostics. His methodology includes assembling the right combination of:

• Customer needs (most of them unmet and subtle); with
• Competitive patterns, those actions being taken by the players in an industry (Doblin's proprietary Innovation Landscape diagnostic tool was very cool); with
• A company's own capabilities

Getting to the author initiative stage of the model requires integrating these three types of insights—customer needs, competitive patterns, and a company's own capabilities—to produce a business concept ready for evaluation. But first you need to bring your concept to life.

Prototyping a business concept in the early development stage can "help all your talent imagine, foster, and improve concepts effectively." We were then presented with two types of business concept illustrations – both of which should be done in tandem. First is prototyping the brand and business experience – developing a step-by-step scenario of the consumer experience. Ask yourself how will the customer feel? Second is the business operational concept – what is the value proposition and clear operational consequences? In other words, how will it work?

Doblin clients routinely find success with key programs more than fifty percent of the time. What did we take away from our afternoon with Larry Keeley? Innovation represents opportunity, growth, and a better way to deliver value. We just need to get smart around our sense of opportunities - but it's not mysterious. There's nothing squishy or ethereal about the innovation process. Instead, with hard-work and discipline, innovation can be implicitly understood so that anyone who wants to can not only participate but also succeed.