Tucker is president of The Innovation Resource, and an internationally recognized leader in the field of innovation. Formerly an adjunct professor at the University of California, in Los Angeles, Tucker has been studying innovators and innovative companies since 1981. His pioneering research in interviewing over 50 leading innovators was published in the book Winning the Innovation Game in l986. Since then, he has continued to publish widely on the subject, including his international bestseller, Managing the Future: 10 Driving Forces of Change for the New Century, which has been translated into 13 languages. In his most recent book, Driving Growth Through Innovation: How Leading Firms Are Transforming Their Futures, Tucker describes the emerging best practices of 23 innovation vanguard companies. As one of the thought leaders in the growing Innovation Movement, Tucker is a frequent contributor to publications such as the Journal of Business Strategy, Strategy & Leadership, and Harvard Management Update. He has appeared on CNBC, CBS News, and was a featured guest on the PBS series, Taking the Lead.
Note: This interview was conducted three years ago the KnowledgeLeadership@ThomasGroup magazine. Tucker is now in the process of updating it.
Morris: What were the most significant developments in 2006 for the field of innovation?
Tucker: For me, the most significant event was the declaration that China made that 2006 was the year of innovation. The Chinese government kicked off a drive to transform its companies to not just the world’s 800-pound gorilla of low cost manufacturing but an innovation powerhouse. They committed to spending $115 billion a year on research and development, and on transforming their culture to be the originator of breakthrough ideas and technologies. We’re already seeing the result of this shift: A Chinese company, Lenova, bought IBM’s PC division, and Chinese companies are making cars, major appliances, consumer products for export and you and I haven’t seen anything yet.
Morris: Do you think the field is in danger of becoming overheated and over-hyped?
Tucker: There are certainly some faddish elements, but remember, this is the business mega-trend of the 21st century. I find American managers especially tend to discount the impact of this trend and think of it as just a flavor of the month or a theme. Every year I lecture at 50 or so conferences and conventions around the world and you see how conference planners think: Let’s see, we did the leadership theme last year, we’ve done innovation this year, so what theme should we pick for 2007? But innovation is more than a theme and you can’t possibly cover it in a single conference. I’m still learning all the time and often feel like a grad student on finals – things are moving so fast.
Morris: What’s your message when you speak?
Tucker: Well first of all, I don’t have a one-size fits-all message that I get up there and deliver. We have a customization process that I’ve developed over the years that clues me in to what my message will be to that audience on that occasion. I think of my presentations and workshops as mini-consulting projects where you do an assessment and a diagnosis before you prescribe any solution. Executives and managers are my main audience and their lives are stretched to the max; so it’s my job to synthesize the latest research, case examples, and take home value mega points and really leverage their time with news they can use.
My message to CEOs as you might imagine is: you’re in an innovation arms race; it’s the strength of your process versus your competitors’ process. A cost reduction strategy alone will not cut it. I disagree with Rosabeth Moss Kanter when she says (in a Harvard Business Review article) that interest in innovation comes and goes in seven-year cycles. It may have in the past, but not today.
Morris: And why is that?
Tucker: Simply because it’s tough to pull it off. CEOs of publicly traded companies, in the U.S. at least, have attention deficit disorder when it comes to innovation. Look, who can blame them? Their average tenure is a short three years. Either they drive growth and meet their quarterly numbers and get the stock price up, or they’re out. Thirty-five percent of departing CEOs left involuntarily in 2005, according to the Wall Street Journal! So I think a lot of them look at innovation as planting trees that will bear fruit – for the next guy or gal, not for them, so they’re of two minds.
You ask them, how important is innovation and they come back 72 percent of them that it’s one of their top three priorities. But then the knowing-doing gap kicks in. They “know” they have to improve. But what they “do” is often piecemeal, ad hoc, seat of the pants. If innovation was a company, and you and I were assessing growth prospects, I’d say there’s still a lot of growth to be had because most companies are still at the beginning of their journey. I wrote a piece in my e-newsletter called, “Is There a Ford in Your Future?” about how Ford, which lost over $7 billion in 2006, is suffering a classic disruption of its business model, just like Wang Labs, Blockbuster, Kodak, Montgomery Ward, and dozens of other companies. The response to that article was typical. We heard from managers who wrote, “I fear if we don’t do something in my company, we’re quickly going the way of Wang.” They want to know what to do.
Morris: You talk about how tough innovation is to pull off. A study by the Doblin Group says that only 4% of all innovation initiatives are deemed successful by the companies that implemented them. Why do you think this percentage is so incredibly low?
Tucker: Well first of all, I’d like to see that study and to know when it was conducted. To my knowledge, Doblin has never published it, yet people frequently quote it. It’s out there. If the study accurately reflects results, it means those of us in this field are selling snake oil because a lot of those initiatives were ones Doblin and Strategos and Gen3 Partners and independent consultants like myself were involved in. So we obviously over promised and under delivered.
There’s a risk that any bold initiative will fall short of expectations. But what about the risk of inaction? You can almost hear the naysayer in the boardroom quoting from Doblin’s research and saying, “there’s a bit possibility we might fail so let’s not bother.” Maytag said that at the beginning of the decade; they tried to cost-cut their way to prosperity. And Whirlpool at the same time said, let’s launch an all-enterprise innovation initiative to get growth going and empower our people. Well, five years later Maytag was so weakened that Whirlpool bought ‘em up at fire sale prices – Maytag is gone!
Other studies I’ve seen that have been published indicate that there is greater achievement of return on innovation. In my book, we cited an Arthur D. Little survey of 669 global executives (conducted in the late 1990s), which suggests, “fewer than one in four believe they have fully mastered the art of deriving business value from Innovation.” And Boston Consulting Group’s survey of 1,070 senior executives last year in 63 countries found that almost half were satisfied with the returns on innovation. While that’s hardly where you’d like it to be, it shows improvement. When compared against the S&P 1200 Global Stock Index, the 25 most innovative companies that BCG identified (MICs) had a mean margin growth of 3.4 percent annually, compared to a .4 percent increase among the total index. And MIC stock returns averaged 14.3 percent, compared to 11.1 percent for the mean index. So I think we’re seeing improvement in what innovation initiatives deliver to companies.
Morris: What trends do you see emerging in 2007?
Tucker: The big movement I see is a broadening of the definition of innovation. Yes it’s those process improvements that you need to cut costs. Yes it’s new products – but it’s also what I’ve long called strategy innovation and which some people call business model innovation.
Strategy innovation concerns everything you do that touches your customer that’s not your product, and doesn’t have to do with your back-office processes that the customer never sees. This area is extremely hot for the simple reason that your new breakthrough product can and will be copied, knocked off faster today than ever before. Patents are increasingly less effective in preventing this, and technological innovation gives your competitor a multitude of ways to workaround and duplicate [your invention] without outright violating. But if you can come up with a unique way of adding value, especially if it’s coupled with a breakthrough product – think iPod and iTunes – you’re much more likely to be on to something sustainable. So companies are coming to us wanting to brainstorm not just new product concepts, but new ways of going to market, new ways of entering new or adjacent channels, new value-adding services, and new ways of anticipating unarticulated customer demands.
Morris: What companies are doing interesting new things in the area of innovation?
Tucker: I’m impressed with what Bank of America is doing with its Innovation & Product Excellence Group; they’ve innovated their way in 2006 past Citigroup to become the world’s largest bank by stock market value. They have come up with a new twist called Voice of the Associate, where they gain valuable feedback from their own employees, before they even pilot a new idea. I think BMW is on to something with its Listening Posts satellite trend observation teams in places like Palo Alto and Tokyo and Shanghai. I think what IBM did last year with its 2nd Innovation Jam was outstanding.
In fact, there are a lot of interesting new methods being developed, new ideation techniques, new mind mapping or idea management software. Our toolkits are evolving rapidly today, as practitioners and consultants alike continue to experiment with what works, and what doesn’t. Innovation is still such a new field that only now is it becoming clear that there are five or six key areas where you need to focus in order to build an innovative capability – how will we harvest enough big ideas at the front end, how will we “manage” ideas, how do we select the most promising ones and allocate resources, etc.
Identifying these buckets isn’t difficult; addressing them equally well is. The only thing worst than doing nothing about improving innovation in your company is doing the wrong things, the things that sound good, but that evidence shows don’t work. And unfortunately, a lot of people just want to “get creative” and try to reinvent the wheel, rather than doing the research into what other companies have learned through experience. That was what led me to develop Inside the Innovation Elite: Practices of the World’s Most Innovative Companies. It’s about adopting what works and not going down blind alleys.
Morris: You noted IBM’s Global Innovation Jam. Wasn’t that mostly a publicity effort?
Tucker: Well, it did generate a lot of free publicity for IBM, no question. But what IBM did was unprecedented in scope and scale. In the interest of full disclosure, IBM is a big client of mine, so far be it for me to bite the hand that feeds me (laughs).
But look at what they did. In July 2006, they issued an online brainstorming invitation to their 330,000 people in 173 countries around the world, but also to IBM clients, business partners, and even family members! They said we want your ideas. They exposed their advanced projects to these people in separate web sites to give participants information about emerging technologies from supercomputing to avatars. IBM managers then used automation to winnow the 37,000 ideas they received down to 300 defined ideas. Finally, more than 50 employees spent a week at IBM’s Watson Research Center in New York, further combining and trimming ideas down to 30. And they’re spending $100 million to develop ideas that came from the Jam. I was in Asia Pacific working with IBM’s country officers and it was the talk of the town.
Morris: What’s your impression of the open innovation movement? Is it here to stay, or just a fad?
Tucker: Here to stay – I just wish I’d named it (laughs) instead of [UC Berkeley business school professor] Henry Chesbrough, who’s been such a great advocate of it in his books and lectures. [Click here.] Open innovation is a powerful tool to force collaboration both within and outside your company and it works. IBM’s biannual survey of over 700 global CEOs showed clearly that companies with higher revenue growth report using external sources significantly more than the slower growers.
What open innovation does is give management a tool to break up the monopoly of where ideas come from. Before, they came almost exclusively from R&D and marketing and new product development. Open innovation practitioners like Procter & Gamble CEO Allen Lafley are saying to their people, you no longer have that monopoly. Lafley wants 50 percent of ideas coming from outside the organization. Don’t you know that this creates healthy competition for breakthrough ideas in the company! What leader directed collaboration is about is not letting grass grow underneath your patents – either use them or lose them. If you haven’t used them before a certain date, you have to sell them off to somebody who can.
Morris: What are the benefits of getting customers involved, either directly or indirectly, in the innovation process?
Tucker: The benefits can be enormous. The innovation vanguard companies I monitor — and in some cases advise — are figuring out how to gain customer insights in amazing ways. I’m impressed with what John Deere developers in their turf division did to listen for their customers’ unarticulated needs. They used our friends at Product Genesis [consulting] out of Boston to help them do extensive Video Voice of the Customer; went out and interviewed golf course groundskeepers and superintendents and asked them what they wanted in a mower. They also watched them cut grass, lots and lots of grass. They were looking for unique insights, not just “you could add a cup-holder” kinds of suggestions.
They noticed how the guys doing the mowing had to work around the golfers during the day, and how they couldn’t mow at night if it was near houses because of all the noise. They came up with the idea of the silent mower, and their breakthrough hybrid mower was the result.
See, what’s lacking in innovation today are folks in these giant companies who have a well-honed intuitive feel for their customers, the way a Bill Clinton knows how to read voters’ minds, or the way a Sam Walton knew how to tell if something would fly with customers or store managers. Managers are so busy these days answering email and going to meetings that they have no feel for the customer. They don’t get out there and develop these chops. So all these methods – ethnography, customer case research, and voice of the customer – are essential for creating a way to clue in to what your customers’ needs and wants and aspirations are.
Morris: When you first got into the field, you observed that mavericks and outliers didn’t get much respect. Is it really different today?
Tucker: Some of those mavericks are running their own companies today, and laughing all the way to the bank. But seriously, while there’s greater respect for highly creative people in many organizations, there will probably always be a tension between those who want to change the system and those who want merely to improve the system, whatever system you are talking about. It’s just that today companies are figuring out ways to unleash bottled up creativity while also being good at execution.
Morris: What do you wish that companies understood about innovation?
Tucker: That it’s a journey not a destination. That you can’t order up a new approach that you can plug in and play like a new flat-screen TV and that creating what I call innovation literacy takes time; that you’ll get out of it what you put in to it in terms of capital and resources; and that if you don’t have senior management buy-in, you don’t have traction and you’re going to be fighting an uphill battle.
Morris: Looking ahead five years, how will the practice of innovation be different?
Tucker: If you go back to the five key buckets we talked about earlier, they’ll still be there. But what will be vastly different are the tools and techniques we’ll be using. I don’t think coming out with a breakthrough product or service will be any easier though. The consumer will be met with a plethora of new offerings and will struggle with upgrade fatigue in a lot of purchase categories. It should be interesting to see who wins, who gets above the clutter and gets adoption.
Morris: What should innovation managers and leaders focus upon now to prepare for that future?
Tucker: One trend we haven’t talked much about is the Chief Innovation Officer trend. I’m seeing a lot of companies going this direction and I think it’s great. You really need somebody high up in the organization other than the CEO to drive it on a daily basis if it’s going to be an imbedded, systematic process and not a blip.
Morris: Any parting predictions?
Tucker: This is really the age many of us once talked about back when we’d get together in small groups. I’m personally having a blast. I mean what a great field to be part of. As for predictions, I think someday we’ll look back at the business world in 2007 and say the emergence of innovation – and the importance of what it can produce — was a turning point. Undergraduate and graduate schools will one day teach an entire curriculum around managing innovation. Companies will teach it at their internal universities. Those companies that make a substantial investment in strengthening this core competency have nothing to fear from the future, and everything to gain.
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Tucker invites those who wish to subscribe to his free newsletter to visit http://www.innovationresource.com.