For firms, both large and small, the ability to be ambidextrous in their innovation efforts is essential. Innovation ambidexterity is the ability to be effective at not only exploiting current technology and product/service lines, but also being skilled in realizing truly new opportunities. Unfortunately these skills are rare. All too often we cite Apple, but beyond it’s over citation, their last 15 years remain the business case study of our generation. Diverging into new markets (e.g. iPod and iPhone), creating new services (e.g. iTunes), improving and enhancing high margin staples (e.g. the iMac and MacBook lines) and rethinking how those products and services touch the consumer in new ways (e.g. Apple stores and the Genius bar) have taken Apple to new heights in profitability and market capitalization. There are other examples as well, like BMW. As one of the world’s most profitable automakers, they have done an amazing job at exploiting existing platforms into different segments (e.g. all the variants of the 3 and 4 series) while investing heavily into exploratory R&D resulting in vehicles like the electric/hybrid i Series (e.g. i3 and i8). There are new venture examples as well, from Tesla to the now Google-owned Nest.
In innovation research, we look to see how these firms, large and small, new and established, can acquire, hone, and leverage their ability to be effective and efficient at both exploitation and exploration of their assets. Over the last decade, our research with both new ventures and established firms has pointed to a key attribute in developing these skills. That attribute is an embracing of lean innovation.
Lean innovation is a combination of three main methodologies. Each one of them is powerful by itself, but it is their combination that can be transformative. The first is the ability to identify new opportunities through the use of design thinking. Design thinking, popularized by design firms such as IDEO, enables individuals and groups to obtain a deep understanding of the user and their context, and through observation, to uncover unique and non-obvious insights that can translate into opportunity. Within this methodology are ways to perform structured brainstorming, near zero cost prototyping, and approach user research not from a traditional perspective of quantitative data, but to understand problems in their natural environment. I recently had the opportunity to be involved in a design thinking workshop at Kaiser Permanente innovation labs in Oakland, CA, with leading practitioners and academics. The work being done surrounding healthcare innovation using design thinking was truly inspiring, from rethinking hospital room layout to changing the interaction between doctor and patient. Here at Northeastern, the School of Law has used design thinking to develop a law innovation lab, the first of its kind. The potential to leverage design thinking methods to uncover new opportunities has potential in all industry and governmental sectors.
The second methodology is the ability to quickly, and with few resources – develop, prototype, learn, validate, and improve solutions that may leverage an opportunity discovered during the design thinking process. Several years ago a prominent Silicon Valley entrepreneur wrote a book that has greatly impacted how new firms approach the development of a new business opportunity. The Lean Start-up is now required reading for any budding entrepreneur. And rightfully so, as it’s lessons are simple and powerful. However, the concept of fast learning iterations, early validation, and minimal prototypes that illustrate key, but bare-bones functionality are not new. The Wright Brothers, the Apple I computer from 1976, and Microsoft’s early efforts with both MITS and Apple are all examples of a ‘lean start-up’ methodology. Within large firms, these philosophies are starting to take hold. Apple’s iPod was developed by a small, empowered team comprised of individuals both inside and outside the corporate walls. Project Purple, which spawned the iPhone, was run in a similar fashion. Firms like EMC have enacted a systematic innovation process that seeks new ideas, funds winners, and allows these teams to pursue their projects through commercialization. Information technology firms like Constant Contact and Citrix are also exploring how internally funded start-up teams can create new businesses. So far, the results have been promising. Through our research, one thing is clear; setting-up idea hunts and having winning teams is the easy part. The hard part is establishing an engrained innovation ecosystem that funds, mentors, empowers, and rewards individuals and teams for these efforts. Building an innovation space and hoping the new ideas come is a sure fire way for the effort to run a short course, and have it fall into the bone yard of failed corporate initiatives.
The third method is the most familiar to existing corporations, but no less important. That method is lean processes, and not just Total Quality Management or Six Sigma. Those efforts are well established and have a track record for success. Applying lean processes, which are their core, are the reduction of waste and continuous improvement and allow innovation teams to tear down some of the bureaucracies and processes that inhibit innovation. All too often promising projects are encumbered by onerous procedures, stage-gates, MS Excel forms, and meetings that detract from value added work. Former Ford CEO Alan Mulally was dismayed at the dysfunction of Ford’s product development process upon taking the reign of Ford in 2006. As a project manager and lead engineer in the automotive industry, at least half of my time was spent preparing documents to be reviewed in stage-gate meetings. And when the time came to present progress, managers were loathe to hear about any issues in the ‘red column.’ Alan Mulally noted the ‘sea of green’ status reports in many of those meetings early in his tenure, acknowledging that there must be a better way. In 2001, I began an investigation into product development at new ventures, those firms that either succeed with scant resources or die trying. From biotechnology to consumer products, we sought to understand key traits in a successful process. We found that the best firms, those that made it to market and were successful, despite overwhelming odds, embraced a few common sense principles. Less paperwork, targeted and effective meetings, fewer decisions points and gates, and an embracing of milestone management were common traits regardless of industry vertical. These firms did not manage the innovation project to a prescribed process, but rather to managed goals. This is one of reasons why SpaceX has developed rockets and spacecraft in a far shorten timespan and with fewer resources than both NASA and Boeing.
So what does this mean for your corporation? Combine and embrace these three methods: design thinking, lean start-up, and lean processes to develop a sustainable lean innovation process. This can enable you to be ambidextrous at beneficially leveraging your existing products and services, while having the process in place to explore truly new opportunities.
At D’Amore-McKim School of Business, we have sought to be a leader in lean innovation, which impacts both research and education. In research, we have spent the last decade studying new and established ventures and the factors, variables, and tools that influence the successful implementation of lean innovation. This has resulted in both practitioner and academic publications, ranging from the influence of design firms, the benefits and pitfalls of digital design and prototyping, the importance of architecture and product platforms on innovation exploitation and exploration, the role of collaborative information technology and social media to manage and inform the innovation team, to the use of outside resources to accelerate new venture creation. This continues today, with embedded research within a variety of firms developing new technologies, products and services. An upcoming product line in a global technology firm has experimented and implemented the findings of our research over the last three years. For the first time, they will launch a new product line on time and under budget. The results will be published next year.
In terms of education, lean innovation cuts across D’Amore-McKim School of Business undergraduate, graduate, and executive education. In 2009, we launched an experimental course combining design thinking, lean start-up methods, and traditional lean. In partnership with the Massachusetts College of Art and Design, five teams developed look and feel and functional prototypes for a small investment in a very short time span. We learned a lot, and through lessons learned, the course was launched to undergraduates through the DMSB undergraduate entrepreneurship minor the following year. Although we had only 10 students, many went on to form their own start-ups after graduation. Now, the course combined with a Design Studio fund managed by the Northeastern University Center for Entrepreneurial Education, gives students in multiple course sections the ability to seek opportunities, hire designers and engineers, and develop prototypes over the course of a semester. The most fully realized version of lean innovation education is a centerpiece of our new Masters of Science in Innovation program. Over the course of an intensive week residency, students work through opportunities, apply design thinking and lean start-up methods to create business ideas and prototypes in a little over two days. Two weeks ago in Seattle, our current cohort developed projects that ranged from Internet-of-things devices and apps to manage autism to new types of consumer products. These projects form a capstone, which integrates concepts from all MSI courses into a final culminating event. In terms of executive education, we have implemented lean innovation efforts at large pharmaceutical firms, held design thinking workshops, and are expanding efforts into multiple industries.
The combination of research driving innovation in the classroom and in corporations with tangible needs is a model with which DMSB is uniquely positioned. We look forward to sharing our insights and progress as this segment of business research and education advances and matures.
How does your firm approach lean innovation? What challenges or opportunities do you see? How can we help you implement a lean innovation system?
For additional reading on our research and other applications, please feel free to me at firstname.lastname@example.org.