Change & Innovation Study Guide

What is the power of dreams?

"Dreaming is an act of pure imagination, attesting in all men a creative power, which if it were available in waking, would make every man a Dante or Shakespeare." -H. F. Hedge • Dreaming is one of the five emotional drivers. • Dreams are the skill to invent commercial realities from diverse knowledge of the world. • Dreams offer a source of ideas, a learning mechanism for innovators. • Dreams accelerate growth that leads to learning for the innovator and for the organization. • Night dreams and daydreams are a way for people to learn through creating possibilities, reflection, and insights that may not be available to them in the waking hours. • Modern social science has shifted focus from dreamer to dream and this shift to dream itself becomes the practical shift that takes the mystery out of dreams and looks at them as insights or sources of information that will help create solutions. • THE IDEA MULTIPLIER EFFECT The more dreamers, the more dreams. The more dreams, the more insights. The more insights, the more intersections among them. The more intersections, the greater the possibility for unique ideas. The more unique ideas, the more innovations. • BOTTOM LINE- Source of ideas / Inspire hard work / accelerate growth / lead to learning

What is creativity?

"Whatever creativity is, it is in part a solution to a problem." -Brian Aldiss • Creativity is one of the five emotional drivers • A key principle underlying embedded innovation is that people are inherently creative and have the desire, skills, and need to create and innovate. • Whirlpool defines creativity as "the ability to solve problems that are worth solving, It is the ability to create knowledge • Creating is the action that turns dreams into reality. • Creating is the way that people engage in the innovation process and put into action what they dream about and have learned. • Creating can take many forms: new products, services, features, buying experiences, or ways to serve customers, trade partners, the local community, and the larger world.

What is a non-customer/overshot customer/undershot customer? What are signals of these different customer groups? Give me an example or two from the cases/guest speakers we've had in class (be sure to clarify the industry and why the group you've chosen are non-customers)...

(important to know the grid on page 5 in Christensen's book) 1. Non-customer: people who lack the ability, wealth, or access to conveniently and easily accomplish an important job for themselves Signals: -product/service that helps ppl do more conveniently what they are already trying to get done -explosive rate of growth in new market or new context use 2. Overshot customer: customers who stop paying for further improvements in performance that historically had merited attractive price premiums. Signals: -specialists enter the market -emergence of rules and standards 3. Undershot customers: consumers who consume a product but are frustrated with its limitations; typically display a willingness to pay more for enhancements Signals: -improved products & services introduced to existing customers -integrated companies thrive; specialist companies struggle

What are the key differences between sustaining innovation and disruptive innovation? Give me an example...

(see page xvi in Christensen's book) Sustaining innovations- what move companies along established improvement trajectories. Improvements to existing products on dimensions historically valued by customers. [i.e. modifications on airplane parts] Disruptive innovation- they either create new markets or reshape existing markets. Two types: low-end (when existing products are overpriced and innovation offers lower cost) & new market (when created new growth beyond existing products). [i.e. the introduction of low-cost airfare with airline deregulation]

What is the purpose of 3M's Innovation Pipeline? What are its pieces?

-3M's Innovation Pipeline is the machine that produces marketable innovations -It is one of the scaling mechanisms to ensure that innovation thrives Components: 1. Idea screening: ensures that ideas meet business screen 2. Concept: experimentation to prove concept has innovation potential 3. Feasibility: costing phase to determine cost to produce 4. Development: from concept to larger market test and greater funding requests 5. Scale-up: go-to-market plans and full funding requirements 6. Launch 7. Post-launch: focused on cost and quality of production and market execution (Picture of cone)

What is "embedded innovation" and why it is a key part of the Whirlpool story? How has it changed Whirlpool?

-Embedding innovation into every system, process, strategy, meeting, metric, product, service, and person at Whirlpool -Every aspect of embedded innovation is directed at developing a sustainable business system that creates a predictable cadence of innovation -Whirlpool uses both rational and emotional drivers to embed innovation as a core competency, infusing them into every aspect of the company -Embedded innovation is what brought Whirlpool so much success What changed? -Whirlpool transformed itself into a consumer-focused company with innovation as a core competency -Whirlpool reengineered their management system, developed an innovation pipeline, set conditions for innovation, and trained and supported innovators -As of 2007, Whirlpool is the leader in an $80B global industry

What are three lessons of embedded innovation from Whirlpool?

1. The interplay between the rational and the emotional is critical • Embedded innovation creates sustainable and differentiated business results by enabling innovation from the rational framework of business while creating an environment that sanctions and reclaims our human need to create. In embedded innovation, strategic architecture acts as the skeletal structure that gives the effort form and direction. Our human need to create, dream, and win are what truly drives innovation during the good times and the bad. o Rational drivers: strategic architecture, management systems, the I-pipe, innovators, and I-mentors, and managing execution and results o Emotional drivers: learning, dreaming, creating, the mythology of heroes, and the spirit of winning 2. Innovation creates a new culture • Culture changes when the organization is transformed; the culture reflects the realities of people working together every day. At Whirlpool, implementing a direct innovation initiative proved to engage people to try new and different behaviors, managers to take more risks, share resources, and embrace diversity of opinion. Culture changes through actions that work and that can be seen and adopted by the collective. The way to create a culture that supports innovation is to innovate. 3. Flexible and committed leadership is key • The ability to stay the course is an important quality for top management to posses. Responsible leaders also take succession planning seriously to allow for smooth transitions and less disruption to the organization. The innovation effort at Whirlpool required like-minded, long-term focus and commitment with a high degree of flexibility and adaptability. In their case, the complete focus on the customers' needs and the mantra that innovation is possible from anyone anywhere enabled focus and direction for the long-term.

What are the five questions that Whirlpool asks as they define new innovations?

1. What economic trends are emerging in the world? 2. What is changing in the home? 3. How are people living and working? 4. What demographic changes are predicted over the next twenty years? 5. What problems are my customers trying to solve?

What's the "cash curve" and why do some companies use it to measure innovation? What are "smart innovations" in this context?

A cash curve is a plot of the cumulatiive cash expended over the phases of the I-pipe from concept to post launch. Begin with planned costs and as it progresses add actual costs. Smart innovations generate positive cash flow sooner. (ALSO VIEW IMAGE ON STUDY GUIDE)

Why is spirit the most profound emotional driver? What promotes engagement?

Another word for spirit is engagement (The Spirit of Engagement). When people are truly engaged in an activity, they feel more alive and they show characteristics essential to spirit. Engaged employees show conviction and connection and work with passion, while those who are not engaged just go through the motions. According to Gallup research, workplace engagement is a powerful factor in fostering innovative and creative thinking to improve management and business processes as well as customer service. Whirlpool found three main categories that promote employee engagement: great jobs, great leaders, and an inclusive environment. Great Jobs: Great jobs are those that are considered meaningful by the people in them. They empower employees to make a positive and visible contribution to the company's success. Embedded innovation at Whirlpool helps everyone have access to a great job, in that innovation can be a challenging and meaningful component of every job. I-mentors or others who have participated in innovation activities feel that their the education and development they have gained from the use of innovation tools has provided them with a broader range of skills to make a difference inside of the company and an avenue to work to something bigger than themselves. Great Leaders: These are individuals who others will follow and who care about their development as well as the goals of the company. Engagement starts at the top, and leaders are key to creating an environment where new ideas are welcome and innovation is valued. Innovation itself is something everyone can rally around, and its success at Whirlpool has given leaders confidence to take risks, which has created a culture there that is both open and forward-thinking. Inclusive Environment: No one feels engaged in an environment that does not welcome ideas and participation. Full engagement, of everyone from everywhere, requires an environment that values and respects diversity of thought and ideas and fosters participation. Inclusion and diversity of thought are powerful drivers of innovation, and appear to have the power to generate more creative and innovative ideas that win in the marketplace.

What is "Commander's Intent" and how does it help the business of the battlefield? How does this concept "fit" with Elisabeth Kantor Ross's "Classic Traps" article?

Commander's Intent is the end goal-desired state of an operation.

Why did the "Don't Mess with Texas" campaign change the behavior of the "Bubbas" who were littering their highways?

Dan Syrek a researcher on littering created a campaign called "Don't mess with Texas" by using pro athletes, musicians typically associated with the "Bubbas" to get the message of littering across. One of the campaigns involved two Dallas Cowboys players stepping towards the camera asking: "you see the guy who threw this out the window... you tell him I got a message for him." Other players steps forward with a beer can. " I got a message for him too!" Crushes the can threatenly. "Well, I kinda need to see him to deliver it." "Don't mess with Texas." Compelling message, "Real Texans don't litter."

What are four perspectives from which to measure innovation results?

Financial results Customer feedback Employee feedback Business processes (Just listing these is okay)

What is job mapping and how can it influence innovation?

Job mapping: -Job mapping breaks down process from beginning to end; innovation can be found in every step of the process -All jobs have a universal structure; innovation mapping looks at every step of the process -Jobs are separate from solutions The power behind job mapping: -Deconstructing a job from beginning to end - Provides a framework to identify metrics -Identifies what customers are trying to get done at every step

Please list and define the five emotional drivers described in the Whirlpool story.

Learn -Potential innovators have a basic and insatiable need to learn -It occurs at the level of the individual, team, and organization -Three types of learning: expansive learning, idea forming, and problem solving (Phase I: Collecting insights -> Phase II: Idea Generating and Screening -> Phase III: Converting Ideas to Innovations -> Phase IV: Providing Unique Solutions) Dream - Dreams are inherent; it is an important element in driving our careers -Dreaming is deeply rooted in our lives, yet many people do not feel comfortable sharing their dreams, especially in a work setting -Dreams are a part of the human experience and dreamers can find an outlet in innovation when it is available to everyone Create -"The ability to solve problems that are worth solving -It is the ability to create knowledge" -Creativity is necessary but not sufficient for innovation Heroes -Refers to the people (both individual and teams) who innovate -They are necessary to sustain embedded innovation over time -Heroes are "gifts" and the best you can do is to create the environment and rational framework that enables innovation and allow the heroes to find you Spirit -Spirit--particularly the spirit of winning--is really the primary emotional driver of embedded innovation -The spirit of winning more than anything else led us to embed innovation in the first place -People who are full of spirit are enthusiastic and full of life; they have a can-do attitude

Explain the difference between new knowledge and institutional knowledge. Why are these often in conflict?

New Knowledge - Chances for innovation and improvement to the way a company works. Bringing in from an outside sources Institutional Knowledge- What already exists and works New knowledge might threaten RPVs. Sometimes existing value chains are threatened. New ways of doing business or something that is in conflict with the ways they have always done something. Existing value chain is threatened with New Knowledge.

What is the "Curse of Knowledge"? In what ways does this impact innovation?

Once we know something, it is hard to remember what it was like not knowing it. Two ways to beat the curse of knowledge: (1) Not to learn anything. (2) Concept of S.U.C.C.E.S.s. If a leader or manager can't effectively teach a concept it can hurt the company because how is anyone going to know what the boss really wants. It's hard to recreate the knowledge we know.

Craig Harris talked about one thing that fundamentally disrupted/birthed the age of "Big Data". What was this innovation and how did it change history?

Parallel processing- Presentation is on Eureka. Distributes computing power to cut processing time. Made it open source for everyone to use.

What do elite athletes have in common? How does this relate to leading innovation? Ch. 12 (near end).

Patrick Chon, a sports psychologist, suggests elite athletes have a set of four characteristics in common: competitiveness, confidence, composure, and focus. A spirit of winning and competition in sports can lend itself to such a spirit in the business world. The four qualities are important to sustaining spirit in either realm. Competitiveness: According to Cohn, top athletes love the heat of the battle. Testing their skill against competitors motivates them, and they push harder because of their desire to win. Innovation in a corporation is all about competitive advantage. Embedded innovation at Whirlpool has been a proven success in the marketplace. A competitive spirit was especially important in the early years of embedded innovation when they were far from the breakthrough point on the S-curve. Confidence: Cohn says self-confidence in athletes is key. When athletes believe in their ability to perform and see themselves as winners, they think, act and behave in confident ways. Leaders must develop an organizational culture that exudes confidence from every level: self-confidence, confidence in each other, confidence in the system, and the confidence of external investors and the public that their support is warranted. At Whirlpool, embedded innovation was established on a confidence in their people's ability to perform. That confidence empowered Whirlpool's people to use tools and apply them to creative innovation and to create value in for the company, their group, and the community. Composure: According to Cohn, composure has two aspects: how well you handle pressure and how you deal with mistakes. At Whirlpool, composure was especially important during the early years of embedded innovation. By definition, innovation involves attempting new things and going through a period of trial and error. If you have spirit, you can stay composed through the inevitable setbacks. Focus: The ability to stay focus on important goals and not be distracted is critical in the business and sports realm. Cohn says giving attention to what's important and refocusing quickly when one gets distracted is a key component in sports.At Whirlpool, the long-term goal of embedded innovation brought focus to their strategy and was critically important during the early years when progress was slow. They didn't get distracted by setbacks or by the pursuit of instant hits, but instead their goal provided a target for competitive drive that everyone could rally around.

Why does Ron Gallo suggest that the "non profit" world should be relabeled as the "social sector"? Who are the players in innovation in the social sector?

Philanthropy is the study of love. Gallo believes that the term "non-profit" gives it an unfortunate negative connotation. Because philanthropy, according to Gallo, is simply "human beings actualizing what it means to be a human being" this idea of using the term "social sector" proves to be more true and attractive. Players: -Not-for-profits -Government private sector -Churches -Businesses -Basically it's BIGGER than not-for-profits -Intersection of all of these things (think of it as a Venn diagram) (ALSO VIEW IMAGE ON STUDY GUIDE)

What is the secret sauce of IDEO's product development process?

Shopping cart project company. UNDERSTAND the market, the client, the technology and perceived constraints. OBSERVE people in real-life situations to find out what makes them tick, what confuses them, what they like, what they hate, where they have latent needs. VISUALIZE new-to-world concepts and the customers who will use them. EVALUATE/REFINE PROTOTYPES in a series of quick iterations. IMPLEMENT the new concept for commercialization.

What's a "schema" and how does it help ideas to be "sticky"? Can you give me 1-2 examples of a schema?

Somebody's reference or understanding of an idea or concept. Memory schemas could be used to make ideas sticky. Example: It is hard to remember J FKFB I, but not JFK FBI. Another example is "Skin damage is like aging." Or "a pomelo is a super sized grape fruit."

What's the Embedded Innovation "S" curve? Why is the scaling part of the process so difficult?

The S curve is a predictive guide of the phases of the execution of innovation embedment. There are 6 phases 1. Launch - time of discovery and planning and seeing if the approach aligns with the company's business initiatives 2. Proof-of-Concept - test the approach, or "pilot" it 3. Scaling - Maximize future output and minimize current input. How to leverage the tools of innovation across the enterprise and to sustain it long enough to gain momentum. What makes it difficult is that you are trying to fit the innovation to unique needs, and companies can quickly go off track because of impatient money, leadership changes, or halting the initiative due to business downturn before hitting the breakthrough. it's a lot financially with not a lot of reward. 4.Sustaining - ensuring innovation continues to thrive 5.Value Creating Results - create a virtuous cycle that begets more innovation in other aspects 6. Continuous Improvement - re-evaluate the effort and determine what changes need to be made on both a macro and micro level.

What is S.U.C.C.E.S.s? How does each piece of this concept influence the adoption of new ideas?

The acronym and concept for beating the curse of knowledge. S= Simple: keep ideas simple to get message across. U= Unexpected: Nordstrom stories about employees helping with everything from ironing a shirt for a customer needing it for a meeting in the afternoon to wrapping a gift for a customer bought at Macy's. Gap Theory, Curiosity happens when we open up a gap in knowledge. C= Concrete: Concrete rather than abstract to get an idea across. Ex: "Brown eyes, blue eyes." Jane Elliott, elementary teacher divided up her class by eye color to explain the death of Martin Luther King. "Brown-eyed" superior to the Blue-eyed. Blue eyed had to sit in back of classroom, brown eyed got more time at recess etc. Second day she said she'd been wrong and the blue-eyed were now superior. Elliott turned prejudice into an experience. C= Credible: The Sinatra test, song New York, New York. Heath brothers advocate for the one test that can make your idea completely credible. Statistics use to illustrate a relationship, not to remember numbers. BELIEF AND AGREE E= Emotional: The goal of making a message emotional is to make people care. Ex. To illustrate emotions vs. reason a group studied the effect of soliciting funds for starving children in Africa with two appeals: One based on statistics and one focusing on a single child, obviously the latter won. Power of association: Form an association about something people care about and don't care about. Another way is to appeal to self-interest. Features over benefits, use word "you" over a generic word such as "people." DONT MESS WITH TEXAS S= Story: Stories engage mental stimulation. Challenge plot, and connection plot. Most good stories are collected and discovered. Ex. story about Jared, a man who lost 245 pounds by eating Subway sandwiches. Challenge plot is the classic underdog element. Key element is that the obstacle seem daunting to the protagonist. Connection plot: a story about people who develop a relationship that bridges a gap. They want us to help others. Creativity plot: mental breakthrough, solving a long-standing puzzle.

What are the benefits of getting metrics "right"?

The benefits of getting the metrics right include: -Communication of the innovation process -Marshalling support both from leadership and from potential innovators -Focusing resources on highest-priority areas -Tracking and early detection of problems -Proving that the innovation process works -Once you establish a baseline, you can use metrics to establish goals for improving the entire innovation process

How is learning both a process and an outcome?

The i-pipe offers learning throughout the process. Phase 1 is expansive, creative, and "out of the box thinking. Phase 2 is idea forming and helps select which ideas to pursue, or fuzzy ideas into a specific concept. Phase 3 turns the innovations into problem solving and bringing the innovation to the market. It is an outcome because by going through learning as a process, you teach people how to react to change and innovation . learning how to create and sell change is a valuable outcome! People get passionate about learning

What is the Innovation Pyramid and why is it important?

The innovation pyramid helps winning innovators prioritize and balance their investments in new or improved products and services. Big gambles at the top, a wider set of fresh prototypes and ventures in the testing stages around the middle, and a broad range of early-stage projects and improvements on existing ideas or products at the pyramid's base. The Innovation Pyramid allows managers to monitor quickly their portfolio of risk. The idea is to have a variety of new concepts in play with varying degrees of risk and returns.

The chairman of Whirlpool was quoted as saying, "Innovation is unique, but the way you execute it is not." What is he saying? (p. 136)

The same rigor, discipline, and thought leadership are required to drive embedded innovation as are required to conduct other strategic initiatives. In that sense, innovation is rather pedestrian/dull

In what ways does Air BNB "disrupt" the hospitality industry?

They made it more accessible for people to book vacation stays for cheaper prices. Most of what they do is disruptive; they have a totally different business model: they don't have to buy hotels. They don't have any on-site staff. "Playing by a different set of rules." -They frustrate incumbents

Two different campaigns were developed to influence youth smoking. They both developed television ads - the "Truth" campaign had 22% recall and the "Think" campaign had 3% recall. Why did the "Think" campaign fail?

Think campaign failed because it gave room for analyzing and thinking; need to take off the "Analytical hat." SUCCES's.

What's W.I.I.F.Y. and why is this important for ideas to be "sticky"?

What's In It For You: people are constantly thinking about themselves and the benefit they can gain. Sticky ideas need to know the customer/audience and be upfront about why it is important for them.

Peter Drucker outlines sources of innovation both inside and outside of companies. List two sources INSIDE companies and two sources OUTSIDE companies that you feel make a big difference. Why do you think these are important (examples)?

a. Sources of innovation INSIDE companies i. Unexpected Occurrences: Look to see if a particular product or service has been in greater or lesser demand than anticipated or if it is being used in a way different than expected. If so, ask, Why? What would it mean to us if we exploited the unexpected success? What would we have to do to convert it into an opportunity? Set aside time to discuss unexpected success or failures. Example: Computers, Everyone thought they were designed for advanced scientific work, but business and libraries showed an unexpected interest in the machines at the onset. The industry incumbent, Univac, dismissed business applications, but IBM redesigned their machine for such mundane applications as payroll, and within 5 years became a leader in the computer industry. ii. Process Needs: This one is task focused rather than situation focused. A process is perfected or redesigned or a weak link replaced. iii. Changes in Perception: Changing a manager's perception of a glass half full to half empty opens up big innovation opportunities. A change in perception often occurs as the result of a change in mood rather than fact, but it is still concrete and can be exploited. Despite the fact that Americans' health has improved with unprecedented speed in the last half century, never before has there been so much concern with or fear about health. This has created an entirely new market for health care mags, exercise classes, equipment and the health foods industry, where the opportunity for innovation clearly exists. b. Sources of innovation OUTSIDE companies . Industry and Market Changes: Changes in industry structure have created massive innovation opportunities for American health care providers. During the past 10-15 years independent surgical and psychiatric clinics, emergency centers, and HMOs have opened throughout the country. When an industry grows quickly--usually around 40% growth in ten years or less--its structure changes. New opportunities rarely fit the way the industry has always approached the market, defined it, or organized to serve it. This creates an opportunity for undisrupted innovation for a long time. i. Incongruities: A discrepancy between what is and what should be. How does one find incongruities? Listen for customer complaints. These indicate that what the supplier or producer values is different from what the consumer values. This values shift indicates a change in the market that creates an opportunity for an innovation that is specific and has a good chance of success. Drucker's trademark example: In the early 1980s a midwest securities firm did not assume that people invested to get rich and to play the market. Small business people and successful professionals who had modest spending habits were approached in respect to investment opportunities, to preserve their wealth not to trade. They took the bait. Eventually, money market funds were invented for this type of investor. The big securities firms thought all investors wanted to trade. They didn't. ii. Demographic Changes: Changes in population, age structure, educational status, income. During the 1970s, everyone knew there was a baby bust and a population explosion. Young people were staying in school longer, which meant the number of blue collar workers in manufacturing was bound to decrease by 1990. Everyone knew this but only Japan acted on it, and now they have a 10-year in robotics.

What's innovations biggest dilemma in existing companies?

• Big companies want large blockbuster results in all of their innovations. "Putting all of their eggs in one basket" • Too narrow of a view! You try to fit your RPV to a certain innovation. • Innovators will want their idea to succeed so badly they will force the issue into a box that it is not fit for. • The tension between keeping and maintaining the current business and innovating at the same time!

Why does Elisabeth Ross Kantor warn against creating two classes of corporate citizens?

• If leaders try to be too controlling then it is worse off for the people on the ground and even harmful. • Commander's intent- Have an end goal but need to let troops on the ground make the best decisions needed based off battlefield conditions. • Structure- when companies separate new and existing business it can be toxic -- when innovators and milkers are separate people feel distant • Even when a new venture is launched within an existing business, culture clashes become class warfare if there are two classes or corporate citizens -- those who have all the fun and those who make all the money. • The designated innovators, whether an R&D group or a new-venture unit, are identified as creators of the future. They are free of rules or revenue demands and are allowed to play with ideas that don't work yet. • Their colleagues are expected to follow rules, meet demands, and make money while feeling like grinds and sometimes being told they are dinosaurs whose business models will soon be obsolete. • This is the reason Kantor warns against two classes of employees and especially if there is no structure to connect them that can bring them together to focus on the customer rather than focusing on each other. • embedded innovation is an answer

Paul Bradford talked about SB startup "Callwave". What was the disruption that caught Callwave by surprise?

• In the time of dial up phone and internet • PROBLEM- people using their internet would miss calls because they couldn't do both at the same time • CALLWAVE SOLUTION- they would intercept the call and put a caller ID pop up on the persons computer and the person could choose to exit internet session and take the call then the Callwave system would connect them! • DISRUPTION- The transition from dial up to broadband allowed for the use of the phone and the internet at the same time which created a large problem for Callwave as it eliminated the problem that they solved.

Are transformative new ideas always products? Where else can you find transformative new ideas within a company?

• NO transformative new ideas are not always products they can be any number of things but the more common alternatives are services, lines of business, and refining processes.