“Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service. It is capable of being presented as a discipline, capable of being learned, capable of being practiced.”
Peter Drucker 1985
Aside from my personal experience in business I've learned a good deal about innovation from Peter Drucker and Clayton Christensen and owe a nod of gratitude to them for much of what you'll read here as I've applied their concepts to media and publishing.
In my AAN presentation, I emphasized innovation as the primary focus of an organization's efforts. Rarely is it a flash of genius or being kissed by the muses. It's systematic hard work and over the past twenty years or so much has been learned about how to go about it. The practice of innovation has to be built into the DNA of your organization. If culture sets the stage for inculcating the value of innovation and to welcome it, strategic development starts the process of putting meat on the bones.
First, I'll offer a couple of quick, super-compressed definitions of innovation and strategy development.
Innovation, whether applied to a product or process, i.e. a resource, changes the yield of that resource. Meaning it increases the value obtained from that resource by a consumer or end-user. For example, an innovation applied to an internal process creates a higher yield for the end-users, or internal consumers; something that enables them to better perform their job or derive greater satisfaction in some meaningful way to them. The same applies to your external customers. It warrants stating, innovations are more than just improvements. Think of innovation as being super-improvements or bundles of improvements that fundamentally alter something. (That being said, don't lose sleep over whether or not your improvements merit the name innovations. Just keep aiming high and increasing value.) Innovation starts with demand-side thinking—the consumer.
Strategy development has two primary parts. The creative ideas that respond to demand-side needs and create the supply-side solutions in the form of products and processes. Secondly, the operations and ability to implement those ideas effectively, and routinely measure your efficacy.
For the first part, two kinds of employees are critical. You need real public-facing, market savvy people who have an intuitive sense of what consumers and advertisers want and need. They are the visionaries. They also know where to dig to substantiate their findings. The second type is an inventor; someone who understands what the technology of any product or process requires and can think outside the box to create never before used concepts. And by technology, I'm not just referring to high-tech, but to related techniques. This is the person who discovers new possibilities.
On the operations front, you need the ability to implement the best ideas in a coordinated fashion that everyone can grasp. These are folks who know how to manage resources of the company and get the most out of them. They can also set up accurate and timely measurements to reflect progress or lack of it and move to action to correct, abandon or strengthen accordingly.
Depending on your culture, your approach to starting the strategy process will vary. Since I advocate whole organization mobilization, I favor a process designed to include management and staff from the beginning. There are two steps in preparation to get everyone on the same page. Establishing a historical perspective on what your company has accomplished over the years, successes and failures, and where you are now informs everyone with the same knowledge—a common recorded history. This is particularly helpful for newer employees who may have only a vague sense of connection to your past.
Next you have to define the scope of your plan by knowing your major objectives. I think mission and values statements are important, but it's the objectives that make them actionable. Where do you want be in two-to-three years? Click on the image to get a list of important questions to ask at this stage of initiation.
It's worth spending a moment on reconsidering what growth means, since that's usually the main objective that pops up in strategic development. It has, after all, been the driving force in American economics and business. "Grow or die" is the mantra. Growth in that conventional sense means expansion, or getting bigger.
This is the perfect time to reevaluate that standard. Growth metrics for newspapers— circulation, pages, and sales income—are either slowing or declining. (I'll suggest that net profit, operating cash flow and return on assets are more useful metrics in the post on financial thoughts). The natural reflex is to spur growth again using those metrics, which means more or less revitalizing old strategies. The problem is that the decline is driven by the demand side; meaning that growth (stated in the terms above) becomes increasingly more difficult and costly.
Taking a whole organization view, what else could growth mean? What new definitions of growth and new metrics would support innovation?
Learning new things is an example of growth. Of course your organization has to value learning in order for everyone to know it's encouraged. It can't be confusing. Experimenting with new ideas and making mistakes is a part of learning. You have to dedicate time and resources. If the pressing urgency of the 'old' (legacy products and processes) commands all the attention and learning and trying new things gets pushed aside, then learning is not really important and employees won't do it. The more companies face financial tightening and job insecurity rises, the more employees will take their cues literally.
Shedding or getting rid of things is another measure of growth. Nearly every organization has systems and processes that either serve a purpose that no longer exists or are ineffective in getting that thing done the best way. Take an example of getting rid of things in a room in your house. That same room looks bigger and in most cases is more useful after you purge the things you don't really use that much.
Intensifying is another. The Japanese are wonderful at this. The Chinese invented the fan and the Japanese pleated and folded it. They did the same things with electronics through miniaturization. Artists do this by combining inexpensive and common materials into creative expression that produce an end product worth many times its parts. The aim of all this intensifying goes beyond efficiency—it's about quality and creating something of lasting value or beauty. That fundamentally changes the value of resources.
Once you loosen the straps of a one-dimensional definition of growth—getting bigger—you're more likely to pursue strategies that contribute to your long-term success. It's not a choice between growth or no-growth; it's more about redefining growth.
The next two images (35, 36) underscore the importance of generating ideas for better serving customers and non-customers. Check out the Newspaper Next website for some great tools in doing this. They've worked closely with Clayton Christensen. While they are focused on dailies, the tools and concepts are very helpful in understanding the process. I use my own tools developed over the years, and really the main thing is to have a systematic process.
I offer the example shown in the two images (37, 39) of a magazine client of mine that publishes an annual directory of resources for readers in which the advertisers buy enhanced listings and display ads. An idea sprang from the sales department that they could create an online directory to complement print. We defined how it would be useful and valuable to both sets of customers. In that you'll find assumptions and risks that have to be sorted and resolved. Then it has to meet financial criteria—is it worth allocating resources to this? Using simple break-even analysis spreadsheet tools, we concluded it was and it's now in development. This process doesn't have to be lengthy, complicated or costly. But it does have to be methodical and thorough on the points important to the organization.
These days strategy needs to be thought out in a relatively short period and measured, evaluated and adjusted in shorter cycles than is the convention of yearly. I like quarters or using project management milestone cycles (more later in a post dedicated to project management). My hope is that you grasp the importance of creativity and systematic process required for innovation, and that your strategic development harnesses innovation.
hello there
i am majid khan conducting research on the impact of CSR on strategic development. sir i need further knowledge about strategic development. kindly send me that i shall be highly obliged.
Posted by: majid khan | January 01, 2012 at 01:12 AM