UTEK Webinar Synopsis: Gary Hamel – “Innovation in Rough Times”

I had the good fortune to attend Gary Hamel’s webinar today on “Innovation in Rough Times”, and will now share some of the notes, quotes, and key insights I was able to capture.

Please NOTE: Because these are notes, they may be a little rough, but I’ve done my best to clean them up.

Gary Hamel has been called the world’s most influential business thinker by the Wall Street Journal, and his latest book, The Future of Management, was published by the Harvard Business School Press in October 2007 and was selected by Amazon.com as the best business book of the year. Gary Hamel was a founder of Strategos, which was acquired by UTEK in 2008.

Here are some of Gary Hamel’s thoughts:

The tide is running out and the only way for companies to outperform their competition and market expectations is to continue to innovate.

The companies that win will have to create highly differentiated products and services, or build a radically-different cost structure compared to their competition.

In this market, innovation on the cost side is also important.

In the present market, companies face:

  • Falling entry barriers (deregulation, digitization, new channels)
  • Growing buyer power (more choices, better information, falling transaction costs)
  • Hyper-efficient competitors (labor arbitrage, zero legacy costs, new business models)

There is no other area in business where the correlation is weaker between inputs and outputs than in innovation.

So how can you maximize your investment?

Five drivers of innovation efficiency (ratios):

  1. No. of Radical Ideas/No. of Ideas (or incremental ideas)
  2. No. of Innovators/No. of Employees
  3. Ideas from Outside/Ideas from Inside
  4. Learning/Investment
  5. Commitment/Time

Additional Commentary on Driver #1 (No. of Radical Ideas/No. of Ideas):

  • Most new ideas are incremental, but outlier ideas are the only ideas with the capaibility of delivering extraordinary profits
  • The need to increase the proportion of radical ideas, doesn’t imply taking radically more risk – there is not a direct correlation
  • Does it have the power to change customer expectations? (Paypal, online news, etc.)
  • Does it have the power to change industry economics? (eBay, IKEA, etc.)
  • Does it have the power to change the basis for competition? (does it wrongfoot the competition)

Additional Commentary on Driver #2 (No. of Innovators/No. of Employees):

  • Where does innovation come from?
    1. Challenging unexamined orthodoxies
    2. Exploiting unnoticed trends
    3. Leveraging unseen capabilities
    4. Meeting unarticulated needs

  • Only a certain number of employees are truly innovators
  • Key question – How many people have been trained to be business innovators?
  • The answer most managers give mystifies me
  • Every employee should be trained in the same way that Toyota trained every employee in quality control methodologies
  • Toyota received 540,000 suggestions last year for improvement
  • What is your company’s average number of ideas/employee?
  • 5-6 per employee per year should be the minimum but most companies are not anywhere close
  • Companies are generally disappointed with their new electronic suggestion boxes (very incremental or flights of fancy)

Advice from Braden Kelley: Companies should not set idea submission goals, but they should train all employees how to be business innovators and have the strategies, policies, process, and systems in place to encourage idea submission and more importantly, the infrastructure to support idea implementation and communication of results

Additional Commentary on Driver #3 (Ideas from Outside/Ideas from Inside):

  • View everyone as a potential partner
    • Leverage the competencies/assets of other organizations where possible
    • Recombination – Nike/Apple example

  • Create platforms for 3rd party innovators (Microsoft, Google Maps, Apple AppStore – 50,000 apps)
  • Get your customers to innovate (Dell IdeaStorm – 11,000 suggestions)
  • Troll the world for good ideas (entrepreneurs in residence around the world, trolling patents, IBM’s open-sourcing of its strategy)
  • Bid out problems – Innocentive – was mostly technology – but now Chicago Transit Authority and others are putting up business problems

Additional Commentary on Driver #4 (Learning/Investment):

  • How many things do you try?
  • How quickly do you learn?

Additional Commentary on Driver #5 (Commitment/Time):

  • Consistency over time is important, try not to have huge shifts in innovation effort
  • Commitment is about persistence and perseverence not how much you spend
    • Companies too often lose patience with an idea
    • Nespresso took about 20 years for that product to become a significant business for Nestle (lots of evolution in the business model, the product, etc.)

  • How engaged are people?
    • This varies by country (Companies in Asian countries tend to have highly disengaged employees in comparison with western countries)
    • People don’t tend to feel engaged – Less than 1 in 5 people feel highly engaged in their work

  • Obedience -> Diligence -> Intellect -> Initiative -> Creativity -> Passion
    • Those things at the top (initiative, creativity, passion) are gifts from employees
    • We are now in the creative economy
    • How do I build an organization that elicits these extraordinary gifts that these employees can give?

I hope these notes have given you a good idea of some of what was discussed in Gary Hamel’s presentation of “Innovation in Rough Times” and what the key takeaways were. Please also see my blog articles on Tim Jones‘ and Regina Lewis‘ portions of the webinar.

Happy innovating!


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Braden Kelley

Braden Kelley is a Design Thinking, Innovation and Transformation Consultant, a popular innovation speaker and workshop leader, and helps companies use Human-Centered Changeâ„¢ to beat the 70% change failure rate. He is the author of Charting Change from Palgrave Macmillan and Stoking Your Innovation Bonfire from John Wiley & Sons. Braden has been advising companies since 1996, while living and working in England, Germany, and the United States. Braden earned his MBA from top-rated London Business School. Follow him on Twitter and Linkedin.




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