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Full Transcript: Applying Sun Tzu's 'Art of War' to Today's Business Challenges

12/10/2007

Richard Platt on IT Innovation


Listen to Part 1 (15:53) Download file


Listen to Part 2 (18:30) Download file


Participants of this webinar are ebizQ's Gian Trotta (GT) and Richard Platt (RP), former corporate innovation manager and senior instructor for innovation methods, Intel Corp.

GT: Welcome to the second podcast in a very special series on the Role of Innovation and Agility in Today’s Enterprises. I’m eBizQ’s Gian Trotta. Our guest today is Richard Platt, the former Corporate Innovation and Program Manager and Senior Instructor for Innovation Methods at Intel. Richard’s primary focus has been on the broad scope of innovation as it relates to strategy, management, infrastructure, economics, business units, R&D and the psychology and philosophy of competition in all its forms.

That’s a very broad scope but Richard’s Podcast series on eBizQ.net website will be accompanied by numerous presentations that will illustrate the many references he’ll make to up-to-the-minute sources, statistics and case studies. We hope you’ll enjoy this look at the drivers of innovation -- from China’s first dynasty to current business giants like Samsung, Proctor & Gamble and Apple Computer. Welcome, Richard and thanks for joining us.

RP: Thank you, Gian.

GT: Richard, last week we got a grounding on corporate innovation via your presentation entitled: “How IT can Enable Innovation Across the Enterprise”. Let’s take the next step on the path to innovation-fueled agility by going back in time. A book published 2500 years ago, Sun Tzu’s “Art of War” has become a kind of latter-day Bible for today’s hyper-competitive business managers. Why is it still relevant to today’s business environment?

RP: Good question, Gian. Let’s back up a second and think about it in this term. Let’s look at what the business environment is about. It’s about competition and, you know, if you go to Webster’s Dictionary, basically it says “the struggle amongst organisms for food, space and other vital requirements” and if you put it another way, competition is the wrestling for resources or having desired relationships. The really good thing about it is that, you know, if we think about things in terms of the animal kingdom, they explain a lot of the mechanisms that we see going on now when it comes to competition for resources. But it doesn’t provide us any rules or guidelines and so, if you look at human history what is the form of competition that is most prevalent, a lot of people think sports and they are right in that but are there any guidelines for that that is generic across all sports?

Power Podcast Pack

1. Read Richard Platt's Bio/Send him an email
2. Read an Executive Summary of this Podcast
3. Hear/Download  the full 30:04 Podcast

More Richard Platt Podcasts

Hear or download Richard's How Can IT Help Overcome Barriers to Innovation

More Richard Platt Slide Shows

1. View/Download 'How Does IT Become an Enabler of Agility Across the Corporate Enterprise?'
2. View/Download 'Reflections of a Corporate Change Agent'
3. View/Download 'What are the Skills of a Chief Innovation Officer'

I didn’t find any; again, you have to keep in mind my background as a researcher and as a technology developer, one of those things that I’ll often dig into research. One of the things I found and realized was that warfare is really the ultimate competition and it’s all of those same things, you know, the struggle amongst humans, amongst themselves for food, space, other vital requirements, I mean, men have gone to war for women, so, again, it’s been over, to get those desired relationships. It fell into that category when I looked into what competition was all about. And so, it’s really hard to refute in that sense because it really describes a lot of things that goes on in the business environment sort of analogously and I want to use it in those terms as analogous sort of way.

I have heard people argue against this whole warfare mentality and it’s militaristic and it’s male-chauvinist, etc. etc. The truth of the matter is that a lot of these arguments seem to be based off of what is politically correct or utopian ideals and this is one of the things is people wishing the world to be one way when it’s another so there’s a failure to almost accept reality on the part of the loop who profess this.

But there are guidelines, there are rules and principles for warfare and there’s even non-rules, I mean, you’ve heard the saying “all’s fair in love and war”, right but one of the things that I came away with very clearly from my research into this was that, in fact, he who wins is the one who is most adaptable and so I then began to ask, “what are these rules for adaptability” and especially if we start thinking about it in terms of business, is there something we can use as some guidelines with an ever-changing environment which it seems to be the issue that we deal with in business.

And so, from there, I, you know, went, well, what’s the best fit model for adaptability? And, you know, quite recently, I mean, a lot of people have said this business is Darwinian, survival of the fittest and what do we mean by when we say that? Most adaptable fit that, biggest, smartest. Now if we want to use the animal analogies, sharpest toothed, you know, whatever, right? But, again, going back to our animal analogy, typically it’s those who get to eat first, procreate first, garner the largest amount of resources and actually get the resources that they need to survive, those are the alpha of their species or the alpha dominant ones that dominate other species, Lions are a classic example. But the reality is is this sort of perspective in looking back and that’s all the animal mechanisms when we look at them analogously, they only give us hindsight, they don’t give us a direction to look forward into the future to be able to create it. For that, you need to have tools. So, anyway, that’s my best way of sort of putting that out there for you.

GT: OK, I would say, Richard, again as you mentioned, some of our listeners might think that a militaristic analogy doesn’t work in an era where projecting a benevolent corporate image and a sense of environmental activism are increasing part of business strategy. Why is your metaphor still relevant?

RP: Well, I think it’s a classic misunderstanding about when you’re applying this what we’ll call the analogy of warfare or the art of war into the business environment. This warfare is not a war against customers but it’s about winning hearts and minds and then also it’s about gaining competitive advantage. Again, getting those desired relationships with customers and there can be multiple battlegrounds for this. But primarily, it’s in the mind of the customer and then in the marketplace and it’s about market share, and your influence in the mind of the customer that’s a key fundamental. You might also be competing against a brother or sister company in the innovation space, or in the core competency space and there are multiple versions of this. There’s a guy, Langdon Morris, who back in 2003 did some really great analysis. He looked at the Fortune 500 over a 46-year period, he looked at the Forbes 100 over a 70-year period and the S&P 500 that was originally 90 companies and then expanded to 500 in 1957, he looked at them from 1957 onwards.

Well, here’s the three things that they found out that Langdon found out was that when it comes to the Fortune 500 that literally one-third between the period of 1979 and 1983 actually fell off the list of Fortune 500 or actually went out of business and, in fact, 30 companies left the company every year which is a 6% turnover per year, that’s a pretty hard-core number.

And if we looked at the Forbes 100, it starts to look even, almost as bad from 1917 to 1987 so we’re talking what 70 years, 61 companies of the original 100, gone, right, average 1 company per year dropping off their list and then if we look at the S&P 500 data, you know, of the original 500 in 1957, only 74 of the original 500 were left. The average mortality rate, 10 companies per year, you get knocked off the S&P 500 and the average lifespan decreased from 50 years to 25 years and the thing about it is by 2020, this is his forecast was that ¾ of the S&P 500 will consist of companies that don’t exist today. I mean, companies that don’t exist today; that means providing new functions. The real question that this pops us in my mind is “why?” and that’s where I’m going to leave that for the moment. Hopefully, I’ve answered your question.

GT: Ok, thank you, that’s a sobering trend. What conclusions can we draw from this corporate carnage?

RP: Well, sobering is the right word because if you extrapolate this data and you project it forward slightly different than the way Langdon had done, actually, I’m looking at Richard Foster and Sarah Kaplan’s book that they wrote: “Creative Destruction” written back in 2001. They said that about 1/3 of today’s major corporations will survive as businesses for the next 25 years and they went on to say that most will die or be bought out and absorbed because they’re basically just too slow to keep pace with the change in the environment and so, you know, when I look at that, again, in trying to answer the question of why, it’s like it’s a change conspiracy, we’ve got accelerated change, increasing competition, increasing complexity.

I don’t think anybody is going to argue with this, particularly in the IT domain. I mean, the reality is that we’re looking at drastically compressed planning horizons for every company and the need for fast response. So the root cause is an adaptability issue, going back to what I looked at before and saw that those that were, you know, the best war fighters, right, were, they were better at adapting. I mean, you could look at Iraq right now and the trouble the American army is having in dealing with those folks in Iraq, it’s the same thing, these guys are able to adapt because they’re more fluid. It’s irregular warfare that they’re having to work against and it’s quite a challenge.

GT: Richard, what type of poor corporate habits are causing organizations to become unadaptable like the Neanderthals were?

RP: Well, great question. The truth of the matter is Joseph Schumpeter, the economist, six years ago said, “change isthe common condition, not stability”, right, I mean, there’s a whole bunch of Heisenberg principles and a whole bunch of the ones, all saying the very same thing. But Schumpeter basically said the very nature of market evolution is actually some companies while creating opportunities for others. And, if that’s taking place, then, you know, you’ve got to be able to be able to adapt, you know, to the market evolution of things. The big issue is, and here’s the poor habit, is it’s instinctive for people to actually look backwards to the past and use it as a guide to looking forward into the future and absolutely that’s an incorrect approach to take, especially if things are changing, right because the old rules that existed no longer are relevant or they become much less so. And, so, you have a change conspiracy on your hands. And, so, this, again, Langdon Morris also pointed this out, they’re very adept, I thought, capture the issue where he makes a comment: “This misplaced focus in usually only evident in hindsight when market share, jobs or stock value have already been lost.” I mean, it’s like trying to close the barn door after the cows have already got out. I mean, that’s the issue and so you have to get a little more proactive at that point.

GT: Right. How do the principles specifically mentioned in “The Art of War” come into play here?

RP: Alright, great question. Ok, so let’s talk a little it about basics first, here, right, so, again, keeping people, we give them a better, clearer understanding about it. First off, the highest form of competing, according to “The Art of War” by Sun Tzu is to win without fighting. I mean, this is the equivalent of getting to the true win/win, right.

GT: And hearts and minds, I might add.

RP: Absolutely. Because that’s what it’s all about, again, when we talk about a business, it’s about winning customers’ hearts and minds, right. So, this is the true win/win. The other thing that’s also the main emphasis within the Art of War is compete where your competitor is not. And you actually need tools for this. And the first tool that I’ve found that was actually being used in business was called “Blue Ocean Strategy” and I think it’s one of the best. I’ve actually used it a couple of times. There are a lot of case studies, they’ve come up with a really good approach, I think for finding and competing against, instead of doing “Red Ocean” which is, you know, head to head, bloody in the water, right, again, they’re also speaking to that analogy with animals and competing and it being difficult, right, that’s one of the tools that I would highly recommend.

The other one, actually is a step back even further, it really gets into the assessment thing. And it was actually done by a Colonel in the Air Force who was a fighter pilot by the name of Col. Boyd and he came up with this thing called the O-O-D-A Loop which stands for Observe, Orient, Decide and Act. And basically, it’s the same approach that fighter pilots use, martial artists use, and other who are familiar with martial warfare or the martial arts in general. But, basically what it is is a framework on how competition actually unfolds and provides a capability that we’re looking at here that basically, to look at the competitive landscape then adapt to it. And, you know, this is fantastic because if you look at Boyd’s Cycle and how and what, you know, we’re talking about here is some of the things are basically baked into the observe, and the orient phase is quickly understand what’s going on and you’re looking at different things like genetic heritage, cultural additions, analysis of the data, and a few other things along those lines, right like new information that’s taking place and this is all sort of happening dynamically, this doesn’t happen sequentially.

Then you got the you’ve got to know what to do so that’s the decision and it’s actually a working, in process hypothesis that you’re actually doing and you’re learning from the experience because being able to do it and then act and test out this hypothesis is an ongoing thing that the marketplace feeds back to you which thus in turn justifies what you and I were talking about last week, Gian, which was the whole thing in rapid prototyping.

You want to test out concepts as quickly as possible so that you’re not going to have an issue with your refined product on the back end because you’ve only done one iteration and you shove it into the market, you’re basically betting the farm that you’ve got all those parameters correct and you correctly identify what the customer wants. That’s unwise, at best.

If we look at this from an agility standpoint, right, we’re really looking at culture, organizational culture, and a climate of trust that actually encourages people to actually use their initiative and further the goals of the organization. And, it’s when people have that, that’s when they actually solve technical problems. I mean, agility in the O-O-D-A Loop environment, right, is time-based, strategy for your operational success and it’s not based on size. It’s also a relative concept and, so it’s not absolute, so things are changing all the time so it helps you; you’re, again, using this framework helps you to sort of adapt. And, the agility of aspect of it is an important attribute for even the projects’ success, I mean, the small or large size and I’m speaking specifically about rapid prototyping. My recommendation there to your listeners is actually read Michael Schrage’s “Serious Play” how you know, the most successful companies simulate to innovate, I mean, it’s an exceptional book, goes into deep, deep detail on just that particular part right there but at the end of the day, it’s about organizational culture.

GT: Right, going to last Podcast, you mentioned some companies and do you have any proof of this and proof of John Boyd’s circle with specific companies?

RP: I do as a matter of fact. Real quickly, one of the things that Boyd said was that when you’re really good at this it’s like you’re watching your competition moving in slow motion and let me point out a couple of key elements that are going to be important for you to understand as I tell you these examples. He also comments that it’s like you’re commanding both sides. That’s pretty powerful stuff. And there’s two key principles here that are important to mention right at this point which is known as “chang” which is actually, you know, called orthodox or the expected thing. And then there’s “chi” which is unorthodox, shocking, irregular, right, these are the two concepts that are going on here and that are part of helping assist the operator that is using this type of methodology or this type of framework to actually enhance their decision making and make it easier actually to exploit this orthodox vs. unorthodox approach and so let me give you some examples might be a better way of sort of illustrating this.

Oh, let me back up one second, one thing I’m going to add. George Stalk and Tom Howell who wrote the book “Competing Against Time” made this comment “A time-compressed company does the same things as a pilot in the O-O-D-A Loop, it’s the competitor who acts on information faster who is in the best position to win.” So it’s like the minute you get information and you can respond more effectively with that, the more effective you can be in out-competing your competitor. So, what do I mean by that? Well, the best, most illustrative example of this probably is the Honda/Yamaha war that took place way back when, right? It was an 18 month war, basically Honda did two times the number of designs for the marketplace, essentially, they were testing in the marketplace and they out-innovated Yamaha, right. They both started with about 60 designs, right, at the start. At the end of the 18 months, Yamaha was actually left with 12 months of unsellable inventory, they lost and, again, the issue is that they got the test, Honda actually got to out tested Yamaha in the process.

Some other examples:,Toyota production development systems are essentially, for the most part, two times faster than most of their competitors. Dell’s supply chain is shorter in time than its competitors.

And one of the big ones, you know, utilizes Boyd’s Cycle or some of the elements within it is the Apple iPod what Steve Jobs did was he took advantage of a situation, this is another one of the tenets within the Art of War which is you really can’t win, your competitor has to give you the opportunity meaning your competitors are paying attention to the customers and this is exactly what Steve Jobs did. He’s a really actually a pretty good competitor because what he did was, I mean, there were already MP3 products in the market, what he did was he took the iPod, you know, and they’re pretty much a design user-centric kind of organization, he’s one of the few CEOs that is and then he, when he saw that Napster was tanking it because of their poor relationship with the recording industry which is a major stakeholder and once they were down and out, he went and sort of crafted his own iTunes thing and then created relationships with all these folks in the recording industry, you know, he already had the relationship, I think, going on with Disney at that point because of his whole little Pixar thing that he had going from way back, I mean, this guy was set up for success as far as seeing all this stuff but the truth of the matter is what he’s done is he’s taken advantage of his competitor who was Napster to come up with, you know, a really compelling combination and it was only through the compelling combination that actually enabled Apple to be successful -- at least in my opinion.

GT: I think that the respective fate of Yamaha and Napster are sobering but nevertheless it’s an inspiring presentation on the whole. In Part 2 of The Art of War for the Enterprise, we’re going to look at more strategies including, but not limited to new corporate structures, what role industrial innovation can play, commoditizing markets effects on innovation, the uses of systematic innovation methods and how to map them to specific problems and most of all, and perhaps most importantly, how to speed new product development. If you’d like to send a question or comment to Richard in the meantime, visit www.ebizq.net/blogs/firstlook. This is Gian Trotta of eBizQ.net signing off with a sincere thank you for all of you for your time and your feedback.

GT: I’m eBizQ’s Gian Trotta and I’m welcoming you to our second half of The Art of War for the Enterprise Podcast. It’s part of a special series on achieving innovation and agility in today’s hypercompetitive global market let by Richard Platt. He’s the former Corporate Innovation and Program Manager and Senior Instructor for Innovation Methods at Intel Corp. Rich’s primary focus has been on the broad scope of innovation as it relates to strategy, management, infrastructure, economic, business units, R&D and the psychology and philosophy of competition in all of its forms. That’s a very broad scope but Richard’s Podcast theories on the eBizQ.net website will also contain links to numerous presentations that reflect and refract many references he makes here. Welcome back, Richard. Thanks for joining us, once again.

RP: Thank you, Gian.

GT: Richard, the first half of this Podcast we identified why companies cannot remain competitive without innovation. We also identified some enduring barriers to innovation rooted in corporate structure and how some strategies based on Sun Tzu’s “Art of War” have let Toyota, Apple, Dell and Proctor and Gamble thrive while other companies fall behind and face total failure. How do you enable change at the corporate level to meet these challenges?

Power Podcast Pack:

1. Read Richard Platt's Bio/Send him an email
2. Read an Executive Summary of this Podcast
3. Hear/Download  the full 30:04 Podcast

More Richard Platt Podcasts:

Hear or download Richard's How Can IT Can Help Overcome Barriers to Innovation

More Richard Platt Slide Shows

1. View/Download 'How Does IT Become an Enabler of Agility Across the Corporate Enterprise?'
2. View/Download 'Reflections of a Corporate Change Agent'
3. View/Download 'What are the Skills of a Chief Innovation Officer'

GT: I’m eBizQ’s Gian Trotta and I’m welcoming you to our second half of The Art of War for the Enterprise Podcast. It’s part of a special series on achieving innovation and agility in today’s hypercompetitive global market let by Richard Platt. He’s the former Corporate Innovation and Program Manager and Senior Instructor for Innovation Methods at Intel Corp. Rich’s primary focus has been on the broad scope of innovation as it relates to strategy, management, infrastructure, economic, business units, R&D and the psychology and philosophy of competition in all of its forms. That’s a very broad scope but Richard’s Podcast theories on the eBizQ.net website will also contain links to numerous presentations that reflect and refract many references he makes here. Welcome back, Richard. Thanks for joining us, once again.

RP: Thank you, Gian.

GT: Richard, the first half of this Podcast we identified why companies cannot remain competitive without innovation. We also identified some enduring barriers to innovation rooted in corporate structure and how some strategies based on Sun Tzu’s “Art of War” have let Toyota, Apple, Dell and Proctor and Gamble thrive while other companies fall behind and face total failure. How do you enable change at the corporate level to meet these challenges?

RP: Really good questions, Gian. First off, I think you have to look at the structure of the corporation and how innovative ideas actually move through it. The truth of the matter is the corporate infrastructure in and of itself tends to be a barrier as it is naturally set up particularly when senior management sets the expectation that middle-level managements kind of vet out good from bad ideas before it actually gets to them.

And so, decisions made by mid-level management can be rather difficult and tenuous because you get into political aspects and if, to any degree at all, a company is siloed, then you don’t get good sharing and then people trying to hide stuff and so, it actually works against them and so, you know, for the individual or the group that sort of comes up with a really neat idea and they’re starting off at the bottom of this pyramid of the corporate structure and sort of walking it through, I mean, you’ve got to be wearing track shoes for the bloody thing and the, you know, from a corporate standpoint, I mean, this isn’t really a system or a pipeline for innovation, this is a trial by fire because it’s not set up for it, not appropriately.

And, this is what in fact passes for an innovation pipeline in companies today. The impact to this is corporations in and of themselves aren’t set up structurally, organizationally to actually effectively integrate nor to exploit innovation opportunities because even profitable ideas don’t make the cut, political element takes, you know, more sway over the data driven decision-making. There’s actually inadequate or insufficient or actually no resourcing whatsoever of good innovative ideas, I mean, you also lose momentum and speed of implementation if it’s not outright even stopped and then, like I said before, it becomes silo’d.

The one thing is that was, you know, was identified right from a research proposal was out of this was that it was only those that were actually sponsored by senior-level management that had the funding, you know, air cover type of thing so that, you know, they didn’t run into political, you know, difficulties. That was the only way that these concepts got all the way from the bottom of this pyramid all the way to the top. The result being is that these things are still in play, right. Few new strategies to enable the corporations and new markets and profitability is, is totally hampered, I mean, it’s we’re a bureaucracy now rules so, and especially so if it’s only the ones at the top can come up with the good ideas and sometimes that type of thinking prevails, not in all companies but in some and so, you have to watch out for this, you actually have to put in place a process.

GT: What are some of these new strategies and specific processes?

RP: Really, what you’re getting at there, Gian, is actually what’s industrial innovation or commercial innovation as it’s also known? And the definition of that, really is very simple: something that people will value and are willing to pay for and actually if you go into systems engineering type of stuff or actually into some other innovation methodologies, there is what is known as the value function or value formula or the ideality formula which basically says functions over cost and so what you get with that actually is when you look at this when you have functions in the numerator and costs in the denominator, right, and you sum up those functions or those useful functions that you’re getting in the numerator and those costs and those harmful things in the denominator and you start playing with the formula a bit, you can see that, you know, reducing the harmful effects, i.e. cost, noise, problems, etc. actually improves the value.

If you increase the number of functions offered to the customer, again, it improves value. If you improve parameters associated with the functions, you enhance value. If you do both by improving the functionality and lowering the cost or take away the harmful thing -- again, improved value. You improve the functions more than the harmful effects so you’re overcompensating for them, again, you improve value. Or you decrease the harmful effects more than the useful effects are being, you know, decreased, then again, you enhance value and so this becomes a really useful way of approaching it.

Why is it important is the other thing that’s worth mentioning here. Technology and service-based businesses commoditize over the long run, global competition drives down the price. My former company I worked for, Intel, that’s what they deal with now. They are competing in shrinking margins, this is not uncommon knowledge. But basically, what we’re looking at from an innovation, the real issue with that is it drives down price and when it drives down price for the, you know, the company that’s providing that product in the market has a margin that’s being eaten away and so the thing here is that innovation in and of itself the value provided to the customer, again, going back to our little formula we just mentioned, right, this is the fighter of product and service price deflation and this is where your margin lives so you’ve got to go do this and it’s actually, once you see it for that, then you realize that innovation is actually a core competency.

Caveat, though: strategy and innovation are actually inextricably tied together and unless you have strategy actually pulling everything together, without it, innovation is rudderless over the long term. It becomes innovation for innovation’s sake.

Some other reasons why you might have problems is that you can have aging product or service lines. You can have just outright business decline, customer defection and just the bureaucracy of large enterprises can cause this and so this is one of the challenges, but, I mean, here’s the thing: for people to sort of argue and complain about globalization – pointless, you’ve got to join, you’ve gotta deal with it, it’s just one of the competitive aspects of the environment. Hopefully, I’ve answered your question, Gian.

GT: You have, let’s go a little deeper. Who is doing industrial innovation and what specific problems are they solving?

RP: Great question. So, well, basically I did a lot research and I had to because that was my job as Innovation Program Manager at Intel, I mean and I did it three times over the last four years that I held that position. But basically speaking what it does is, these, looking at innovation methods in and of themselves, which of the ones are most effective. But then I began to back up and ask myself a more fundamental question which is this: “who’s actually doing this?”

Well, turns out when you start digging into some of these innovation methods that, and you look at Business Week and they’re probably the best place to start because they have their top 25 most innovative companies thing that they do and then I began drilling into, you know, what some of these systematic innovation methods were and we’ll get to them in a second. But it turns out that actually 1/3 of the top 25, they were using it and in fact ½ of the top 10 were using it, ½ and that was the part I went, “whoa” this is compelling in that sense in and of itself, a lot of them are using it.

And then I started to look at, well, what sort of results were being derived and I have another presentation that talks about corporate innovation culture and that’s on Samsung, that’s another presentation that’s located ere on ebizQ, that people can access and it has a number of case studies in there if people are interested in looking at that. But, some of the ones I have on here, obviously Samsung and Proctor & Gamble, my old company – Intel, Ferrari, Nokia, Panasonic, HP, GE, Boeing, Toyota, Siemens, Whirlpool, Nissan, I mean these are all top players, BMW, 3M, these are all using systematic innovation methods.

Power Podcast Pack

1. Read Richard Platt's Bio/Send him an email

2. Read an Executive Summary of this Podcast/Send Richard a Comment

3. Hear/Download  the full 30:04 Podcast
More Richard Platt Podcasts

Here or download Richard's How Can IT Can Help Overcome Barriers to Innovation
More Richard Platt Slide Shows
1. View/Download 'How Does IT Become an Enabler of Agility Across the Corporate Enterprise?'

2. View/Download 'Reflections of a Corporate Change Agent'
3. View/Download : 'What are the Skills of a Chief Innovation Officer'

The problems that they’re solving, well, this is where I went back to my own experience at Intel, I trained about 850 engineers myself personally and plus and so I had, what about 4 years under my belt doing that, and then I went and got ahold of a friend of mine named Dave Verduyn who, he and I got together and collaborated on our shared experience in problem solving and using systematic innovation methodologies and he had quite a few clients, where we actually came up with a matrix that we actually created and so this is a combination of both myself and Dave’s work which is about 25 years worth of experience. Dave has far more experience than I did and I leveraged a lot of it.

But, basically speaking, what we did was we actually created a matrix of identifying what are the typical types of problems, and we came up with 15 of them and then we mapped in well, what are all the different systematic innovation methods and even the ones that weren’t systematic but were like brainstorming and stuff like that and sort of, how do we evaluate their effectiveness. And we looked at it from an impact standpoint which ones give you the greatest amount of benefits and from that we identified a bunch of what are known as structured, systemic innovation methodologies, also known as “TRIZ” which is a Russian acronym for the theory of inventive problem solving, actually come from Russia originally and then we looked at psychological methods, then we also looked at methods that are actually come from IDEO that they’ve become most recognized for which is Ethnic Graphic Analysis and Discovery tools and so we mapped these against which had the highest impact based off of our experience in using these methodologies.

There’s a whole boatload of examples that are out there that we could talk about but I think this type of matrix probably does a better job, in my opinion, of actually sort of pointing directly to systematic innovation methods themselves because if I tried to do a case study by case study on each one of these, some of it’s, most of it’s confidential information, can’t get access to it so this is another way of displaying the data without talking about the proprietary solutions that have come up within companies.

GT: Right, I understand. Is there any data behind what increases growth and speed?

RP: Absolutely. I actually talked to Vice President of Sigma Breakthrough Technologies very recently at the Process for Innovation conference, name’s Joe Piccolora, great guy. Anyway, he provided me with a wonderful little presentation that he has on an analysis that was done with new product development techniques that were evaluated across 9 different techniques, by the way, across 233 manufacturing firms which that’s quite a bit of data, I mean, quite frankly, it’s statistically significant going back to my Q&R background, I mean, this isn’t some hokey, sort of, “well, this is what we think it is.” It was statistically verified.

The idea behind new product development approaches and, you know, methodologies is the same as systematic innovation methodologies and, even for that matter, what, you know, Boyd’s Cycle is telling us which is compress time as much as possible and, take advantage of that, well, the key finding is that they were looking at pioneers, fast followers and what sort of, type of competitor were you but at the end of the day, you know, and let me mention the nine approaches first before I go rolling into this. The nine approaches they looked at were:

  • Supplier Involvement (SCI)
  • Lead User Involvement (LUI)
  • Acceleration of activities and tasks (AST) and more than likely, you know, this is about compressing time, you can probably almost bet that that one is going to be at the top of the list
  • Reduction of parts and components (DFA), also known as design for assembly
  • Training and Rewarding Employees (TRE)
  • Implementation of Support Systems and Structures (SST)
  • Stimulating Cross-Functional Cooperation (XFC)
  • Customer Emphasis (VOC) or also known as Voice of the Customer, Mind of the Customer, and then
  • Simplification of organizational structure (SOS)

    Well, and here was the really interesting thing: the data verify everything that I had learned from my lean design for Six Sigma background plus my background in using innovation methods that shorten the time to solution, shorten the time to concept, shorten the time, you know, to any product going out the door when you did rapid prototyping and I only picked one of the slides so when people are looking at this presentation deck, know that there are more slides that go into more detail about some of the other players and how they behave but what this does is merely verify what I’d already sort of intuitively realized which was that when you listen to the customer and the end user both speedy and more profitable is what the result is when you’re using Voice of the Customer and user involvement.

    The AST stuff scored very high on the speed side of things and, again, anything that increases speed is goodness, right? They also looked at supply chain involvement, again, it’s about increasing the speed of supplier response also they looked at, you know, simplifying organizational structures and training and rewarding employees, companies that don’t do this, you know, train and reward employees or are too bureaucratic, they don’t get the speed, they don’t get the benefit and even if you’re a matrix organization, you can still have internal politics taking place which will actually slow your speed, so they make all these recommendations plus the fact they also point out if you don’t have a structure for innovation you’re going to have reduced profitability.

    That’s what the data tells us. It’s not an unreasonable thing to extrapolate from this data. And so, it’s been very interesting to see data like this confirm what I had sort of worked out through my research and work in other areas that sort of verified, in fact it validates, you know, the very direction that, you know, Boyd is getting at is, you know, in the O-O-D-A Cycle of things, compress time and you’ll gain benefits.

    GT: That’s positively Einstein-ian and I think, and relative and I think on that note, I think we’ll head off for our next Podcast. I want to thank you again for an informative, inspiring presentation.

    RP: You’re very welcome, Gian.

    GT: I think in coming weeks, Richard, I believe we’ll be looking at the advantages that come from being both the first and the second mover in a market.

    RP: We could do that if you wanted to, Gian, I guess it depends on the response of the, you know, of the people here on the ebizQ if they want to see that.

    GT: Yeah, right, I think that would pull together a team that if one can be both an innovator and a fast follower in this hypercompetitive market, I know you’re well-armed on that front and have a load of information.

    RP: Yeah, we can talk about that.

    GT: The other one is something that I’m intrigued with is, it’s you’ve developed a presentation on the role of the CIO but not the CIO that many of our members are used to hearing about. Could you’d talk a little about that?

    RP: Well, I actually did a presentation on, we’re talking about Corporate Innovation Officer vs. Corporate Information Officer, right?

    GT: Yes, yes indeed.

    RP: OK, so, yeah, I did a presentation that’s sitting up on the ebizQ little links out there on the side where you’ll find this podcast which is the Skills and Role of the Corporate Strategy and Innovation Officer, again, Strategy and Innovation are inextricably tied together and on top of it, this type of role has been around for quite some time but if people want some detail, the presentation’s out there for folks and Gian, if there’s enough response we can actually do a Podcast about it.

    GT: That’s be great. I’ll take this opportunity to remind everyone, every one of Richard’s presentations and Podcast landing pages have a comment box where you can send him your questions, comments. We want this presentation series to serve you and your current corporate needs. Again, I thank you, Richard and we should be talking to you next week.

    RP: Thank you, Gian, appreciate it. Take care.

    GT: I’m Gian Trotta, thanking everyone for their valuable time and as we can see, even more valuable and desired feedback. Good night to all.

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