The World Innovation Forum took place in New York last week. Paddy Miller was a speaker, and his presentation will be outlined in a separate post. Here we summarize the thinking presented at the Forum this year, which touched on design, disruption, ecosystems, customization, culture, leadership, and conventional management getting in the way of innovation.

Disruptive Innovation

Clayton Christensen opened the forum with a talk on disruptive innovation. He suggested that a reason previously unassailable companies fail is that they follow principles of good management and seek profit in higher-end markets. It is in the area of lesser performance, however, that there is opportunity for disruptive innovation, for simple products for those who couldn’t afford them before, he said. He cited the idea that Japan is lost because it is focusing on the high-end only and has lost ground to other Asian countries. Japan doesn’t have the labor market mobility and venture capital structure that exist in the U.S., Christensen said, and the U.S. should continue stoking its microeconomic engines for macro stability, lest it end up like Japan. Christensen also criticized the exhortation by business schools to focus on core competence and outsource the rest, because it looks at the past rather than at what is needed to be good at tomorrow. The second part of his talk focused on healthcare, where he advocates moving away from an over-expensive reliance on experts to decentralizing, commoditizing and personalizing healthcare.

Ecosystems

Larry Huston, who headed Procter & Gamble’s Connect+Develop open innovation initiative, said he wanted to talk about how to make money with open innovation. He gave examples of companies that had opened up, such as a mining company that put details of its land online and requested analyses for where to drill; Pringles chips searching outside for a method to print ink onto chips; and a medical center in China opening up to bring in intellectual development.

The vertical model is gone, Huston said, and the new economic model is partnering. The return on investment with connected innovation is twice what you would get developing it yourself.

Huston said the main questions to ask when seeking innovation are: who is the customer, what are their needs, and what does it take to fulfill their needs. There’s tons of money to be made in the total experience approach, Huston said, and he suggested that pharmaceutical companies should be looking at healthcare. Companies should make a list of ten innovation needs, he said, as otherwise they don’t know what they are looking for, and scouts come back from innovation fairs with nothing. Get the innovation needs down to ten, Huston said, then you have an innovation strategy.

M.S. Krishnan talked about business model innovation that is based on tapping a global network of people and resources. He started by asking whether innovation fits in a world that recently went through a crisis and where companies are still conserving cash. It depends on what is meant by innovation, he said, and if it means more R&D and hiring PhDs, which are capital-intensive, then less so. But if it’s about rethinking business models to leverage the capital you have to create unique customer experiences, yes it does, Krishnan said.

What is the locus of idea generation—which is a proxy for innovation in terms of where innovation is coming from, Krishnan asked, and listed the trends that he and the late CK Prahalad had identified: 1. Ubiquity / connectedness; 2. Digitization of business; 3. Convergence of technologies, and hence industries; 4. Emergence of social networks. Take all this and overlay it with globalization, globalization cannot be defied, Krishnan said.

Krishnan then outlined his “new approach to value creation” which is based on N=1 (sample size of one; creating experiences for one customer at a time) and R=G (resources are global; connect to resources instead of owning them).

As examples of businesses using such an approach, he spoke of TutorVista, which offers individual tutoring for U.S. students via the Internet by tutors located in India; Groupon’s bulking the requirements of specific customers; American Express’s moving from spending on technology to spending more on its people and getting more information on user needs when taking calls; and Airtel’s outsourcing functions to IBM and paying Ericsson by minute of use, in a move away from the “I built it, you use it” model.

The question is, how do you leverage global resources for a new business model, Krishnan said.

Design Thinking

Roger Martin’s talk was about how people think in organizations. He suggested that the type of thinking needed for creative solutions is design thinking, which is based on adductive logic, the logic of what might be that is proven by future events. He contrasted this with the more common analytical and intuitive types of thinking. Analytical thinking relies on logic, induction and deduction, and with it you get reliability, whereas intuitive thinking involves judgment and with it you get validity. If you rely on analytical thinking you won’t create anything new, Martin said, whereas if you depend on intuitive thinking you won’t be around long. Designers bridge the two, using adductive logic, to come up with creative solutions. An absence of data should not be confused with an absence of logic, Martin said.

Martin suggested five things designers can do in hostile turf: 1. Take “design-unfriendliness” as a design challenge (he gave the example of a camera that fits in the hand being an exciting challenge); 2. Empathize with reliability needs; 3. Speak the language of reliability (because corporations are scared of creators and creators are intimidated by corporations); 4. Use analogies and stories; 5. Bite off as little as possible to generate proof.

Paola Antonelli, a senior curator of architecture and design at the Museum of Modern Art in New York, also spoke of getting two groups that are wary of one another to work together for innovation—those of scientists and designers. She spoke of a show MoMA put on three years ago that featured such collaborations, which focused on transforming innovations into life, feeling them on your skin. The show featured nanotechnologies, protein marking, synthetic biology, tissue design, and biomimicry. She spoke of an upcoming exhibit about the communication between people and objects, which will feature creative solutions such as an eye-movement scanner that enables a Lou Gehrig’s disease sufferer and graffiti artist to spray-paint by moving his eye—and pointed to the implications of this for people with disabilities, where one experiment amplifies to the rest of humanity.

Antonelli noted that sometimes having a new concept as well as a new method of presenting it can be too much novelty, so one should use an old method of expression to make it easier for people to understand. Asked whether innovation in design has to be disruptive, she replied that while technology and innovation can be disruptive, designers find a way to integrate them into life, make them simpler to make them acceptable to people.

Leadership

The MIX Session panel featured management innovators, who had tackled problems such as government’s measuring success in a way that did not translate into good service, for example. Conventional management doesn’t work as it focuses on cost rather than on managing value, a panel participant said, adding that 95% of variation is in the system, and that the system, rather than individual people, needs fixing. One of the panelists was Jordan Cohen who was awarded for starting pfizerWorks. Asked for an insight each for innovators, the panelists offered: 1. Fortitude and belief you’ll see it through; 2. Study, learn, change; 3. Instead of saying someone should do something, do it; 4. You need to make it interesting for people, to want to innovate, to understand why; 5. Be Machiavellian, understand power, will you be Caesar or Spartacus.

Regarding leadership in innovation, speaker Greg Hall, who led the effort to rescue 33 trapped miners in Chile last year, suggested that his leadership had to do with saying “trust me, let’s try this” in situations where a major problem arose. He related wanting to try to use an innovative new drill head that no one had used before in the rescue, and as he had worked in Chile for 20 years and had the trust of the government there, they allowed him to use it.

Motivation, Purpose, and Culture

Tony Hsieh, the CEO of Zappos, made much of the idea of purpose, passion, pleasure, and, in a nutshell, happiness. He had left his previous company as it had become not fun to work in as it grew beyond being a start-up. With Zappos, he said, he wanted to create a company to be happy in. He decided that Zappos should be a service company that happens to sell shoes. Having the best customer service comes from having the right culture, he found, and suggested that “If you get the culture right, all will follow.”

Hsieh quoted from the movie Notorious, “Don’t chase the paper, chase the dream,” to suggest that money is not the primary motivator, passion is. Motivation takes care of itself if the values are there, Hsieh said. He went on to amalgamate all these ideas into one word, he said, which is happiness, the elements of which are perceived control, perceived progress, connectedness, and vision/meaning. It’s about pleasure over profit, Hsieh said.

Daniel Pink similarly argued that money is not the best motivator, and that what fuels talent today has more to do with having a sense of autonomy, mastery, and purpose. He talked of the sense of progress in one’s work as being an important motivator, where rich instant feedback rather than an annual review motivated people at work. It’s about purpose over profit, he said—the purpose motive delivers a better outcome.

Pink gave examples of companies that allow for more self-direction around time and management at work. Employees can choose what to work on and with whom to work, or are given time to work on independent projects, or “non-commissioned works of art,” which he contrasted with “commissioned” works that are usually less creative, although all work is commissioned, Pink said.

Jeanne Meister, whose talk focused on the workplace of the future, spoke of how millennials want purpose in their work as well as to use social technologies at work. She spoke of companies incorporating these preferences into their hiring processes, by sending hires to Africa or Asia, including gamification in the hiring process and more social experiences in work, and allowing people to decide on the configuration of their own workspace or work with team members to decide what collaboration will look like. She said that four things companies need for the 2020 workplace are: 1. More planning and analytics; 2. Be heavy users of social technologies; 3. Be user of vuja de—to be innovative, change mindset, look with new eyes.; 4. New skills are social media and personal branding.

Polly LaBarre of MIX closed the Forum with three points that stood out from the two days:

1. It’s not about company vs. company or industry vs. industry, but the right ecosystem at the right time. It’s time to redefine competition, and what it means to win. As Larry Huston said, how are you a protagonist in your customer’s win.
2. What does it mean to be open. As Huston said, escape the tyranny of the leader having the plan, top-down. More like a bottom-up architecture of participation. What is your invitation and method for harnessing contribution.
3. It’s not so much about a statement of purpose but a practice of purpose. A well-communicated purpose and values replace rules. How do you practice purpose.

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