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MBA Innovation Week: IMD faculty on how to innovate

Top tips from IMD professors ahead of the Debiopharm-Inartis challenge
April 2018

From April 23-28, IMD will be running its intensive MBA innovation module. IMD MBAs with participation from students from ECAL, the renowned design university, and EPFL, the leading technology university, will be participating in the Debiopharm-Inartis challenge to improve the lives of healthcare patients, in which the winners of the challenge receive funding for their ideas to become further developed.

Over the course of the week, they will be meeting with experts, patients, healthcare professionals, experienced innovators and more through a series of visits, guest talks, group exercises and other activities.

The week is inspired by design thinking and action-based learning. Cyril Bouquet, Professor and leader of the week says: “I don’t think innovation can be taught in a classroom. Design thinking is about doing and making so we’re taking our participants out into the real world to discover challenges and to come up with new ideas.”

Ahead of the event, IMD Professors provide their top tips for innovation teams:

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Thoughts to keep in mind when innovating

“The word innovation has become overused, clichéd, and meaningless,” Andy Grove, former Chairman of Intel, once said.

According to Andrew Carnegie, Robber Baron, and Philanthropist: “It’s better to be a follower than a pioneer. The pioneers get scalped.”

Customers rarely buy a product or service because it offers something unique. Usually they buy the brand that they expect to meet their basic needs from the category – gasoline or strategy consulting or mortgages – a bit better or more conveniently than the competition. What customers want is simply better – not more differentiated – products and services.

If you are concerned because the direction of this advice seem counter intuitive, or certainly not following popular opinion, consider Apple, the widely acclaimed leading innovator which:

– Did not invent key technologies – it “borrowed” them from PARC and then added numerous improvements.

– Was not a pioneer: Lisa launched two years after the Xerox Star,

– Did not succeed first time. It learned from Lisa’s failure and quickly followed with a much better offer, the Mac.

– Has introduced a continuing stream of new Mac products over more than 25 years, all based on incremental innovation, including today’s iMac’s, MacMinis and MacBooks.

And yet, Apple has ranked #1 in BCG’s league table of the world’s best innovators every year since than ranking was introduced.

The bottom line isn’t innovation, it is innovation that matters to customers.

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No easy process

Innovation ain’t what it used to be. It was once the province of a department with a clear remit: new product development. Today, it’s everywhere. It concerns not only products and services, but also processes, technologies, business models, pricing plans and routes to market, even performance management practices – the whole value chain in fact. Yet, building an innovation capability is not easy. The anticipated benefits can fail to materialize – and when innovations do happen, companies often lament they fail to create much magic.

The “Eureka moment” maintains a powerful grip on our view of innovation, but it perpetuates a skewed view of the innovation process where the core challenge is to generate ideas. But while new ideas are clearly important, they are just the first step in a long sequence of activities that culminates in successful commercialization. Real problems occur in latter stages, where people have to work out how to experiment with their early concepts and iterate their ideas until they can work. It’s a lot of hard work, sustained over months if not years.

Top-down or bottom up, face-to-face or online, internally or externally- focused innovation approaches all have their strengths but also their limitations. Innovation is about finding the right mix of approaches – which means that companies must first be clear on the innovation challenge they face.

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Shaping and refining ideas

New ventures typically enter the market with an early version of a product or service (beta version) and adapt it according to customer feedback; this is also true for some disruptive technology-based innovators such as Google, Facebook or Apple. Innovators within larger organizations, however, often need to go through a series of tedious internal approval processes, which aim at eliminating failure. But in the end, it is exactly the dynamic, iterative cycle of shaping and refining ideas that allows for innovative products, services or business models to emerge and shake up industries. Hence, established organizations that want to become more entrepreneurial need to carefully orchestrate the different activities around innovation, the processes and how to best equip winning ideas with capital (human capital, financial capital and social capital).

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Creating psychological safety to foster innovation

Paying attention to relationships in a team is not only important for productivity and efficiency, but for innovation as well. Studies suggest that teams that focus on relationships have an important crucial ingredient called “psychological safety” (Edmondson, 2008). It reflects the notion that team members feel safe and supported by the team, are not afraid of making a mistake, and feel greater freedom to experiment. Psychological safety makes the difference between traditional efficiency-focused organizations and more innovative learning-focused companies.

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The tension between reflection and execution

In his best-selling book, Thinking Fast and Slow, Daniel Kahneman talks about two systems of cognitive processing: Type 1 and Type 2. Type 1 is the fast, execution-oriented processing. It relies on intuition and snap-judgments. But is also prone to the pitfalls that accompany cognitive biases and laziness. Type 2 thinking is the slower thinking – that which is more reasoned and deliberate.

High-performing innovative teams need both: the fast thinking to act on and execute the ideas. But also the slower thinking to carefully consider what actions to take. The slow thinking is particularly important when an innovation team faces a failure or error in their project. Inherent in innovation is experimentation. That is, trying something and seeing if it works and how it works. Also Inherent in this trial-and-error is, naturally, failure.

In the fast (and growing faster) world that our organizations are operating in, staying innovative is vital to remaining alive and successful. But innovation is not only about having good ideas, it is also about cultivating the best conditions in which our top teams can perform.

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Reengineer your conversations to be more innovative

Conversations, of all sorts — face to face, asynchronous, electronic, analog; any way you can think of for putting two or more minds together — are the motors that we rely upon for moving ideas around, keeping them in motion, and hopefully adding value.

So, what is it we should be thinking about if we wish to improve the way our conversations work? To start with, here are four very simple managerial choices to consider:

  • Who’s involved? Jim Rohn is credited with the observation that “you are the average of the five people you spend the most time with,” and the argument here is that your ideas are improved, or diminished, by the company you keep. What does your network look like
  • How do conversations within a meeting work? How do participants sit? Who sets the agenda? Who runs the conversations? A few small tweaks to conversational etiquette can change everything. At IMD, we have relied for years upon “buzz groups” — occasional punctuation of traditional front-to-back classroom conversations, rearranging them into many simultaneous, parallel processed conversations at separate tables, where ideas fly in any and all directions — in an effort to engage many minds and broaden our idea-horizons.
  • Is the meeting space conducive to honest and frank give and take? Place and space matter when it comes to better conversations. Many of the most memorable conversations have taken place in uncomfortable spatial arrangements, where evasion is difficult and where energies are focused on the topic at hand.
  • Are you managing the opportunities for surprise? Chance encounters appear in so many stories of great innovation that the best advice one can give is that serendipity is too important to be left to chance! Of course, we cannot plan such good fortune, but we can raise the probabilities of it occurring by when and where we time and locate our conversations.