The Four Quadrants of Innovation: Disruptive vs Incremental

I recently wrote up a post, Most Dangerous Innovation Misperception – The Silver Bullet Approach. In it, I discussed the issue of organizations myopically focusing on only disruptive innovations to the exclusion of more incremental or sustaining innovations.

In doing more research on the subject, I began thinking about the dynamics that apply when a firm pursues different kinds of innovation. A post by Venkatesh Rao, Disruptive versus Radical Innovations, was very useful for distinguishing between disruptive and radical innovations.

Building on that, I wanted a framework for delineating innovations based on their technology and business impacts. Because they’re not necessarily the same. The four quadrants below describe the dynamics for innovations according to their technology and market impacts:

In each quadrant, there are different rationales and issues that apply. Let’s take a look.

Existing Tech, Manage Existing Market

The lower left quadrant represent innovations that leverage existing technology, and service existing customers. This is every day innovation. The block-n-tackle innovation that keeps companies nimble and operating at rates above industry averages.

Example? See how Walmart improved the fuel efficiency of its vehicle fleet:

Wal-Mart has taken a number of steps, including the installation of diesel Auxiliary Power Units on all its trucks, and applying aerodynamic skirting. On the tire side, Wal-Mart is working with super single tires. and is testing nitrogen-filled tires and an automatic filling process to maintain constant tire air pressure.

Improving the customer experience is also a critical opportunity. In an era of social-media empowered customers impacting your brand, the consequences of failing to improve the customer experience are higher than ever.

But this quadrant is the one often pooh-poohed by many in innovation. I like the way PriceWaterhouseCoopers puts it in this blog post:

An unintended consequence of the Innovators Dilemma has been that companies have begun believing that unless they were pursuing a strategy of seeking disruptive innovations, they were somehow losing out.

Walmart’s efforts have paid off. The retailer has held relatively strong during the Great Recession, as seen in its stock price. And Toyota famously gathered over million ideas a year from its employees to emerge as a global leader in the automotive industry.

Existing Tech, Create New Market

In this quadrant, existing technology is leveraged to create a new revenue streams. This is the quadrant where the following phrase applies:

Good artists borrow. Great artists steal.

The simple application of a technology that serves one purpose toward a different purpose can be disruptive from a market perspective. It’s not a large technological leap. It’s the intelligent application of what’s already at hand.

Twitter is a great example. The technology itself is…simple. Web form. Subscription model. Limit to 140 characters. Yet it’s revolutionized the way people share and find information, causing Techcrunch’s MG Siegler to compare it to a modern day Walter Cronkite. All for a simple little web app. Here’s what WordPress founder Matt Mullenweg says about Twitter:

Whether the Twitter team intended it or not, they’ve built a killer and highly addictive reader platform with dozens of interesting UIs on top of it.

The thing with these innovations is that they are very much a market-determined disruption. This isn’t some sort of EUREKA! the moment the technology is rolled out of the labs. It takes the market to say that it’s disruptive.

Clayton Christensen (Innovator’s Dilemma) types of innovation will often fall in this quadrant. Existing technologies applied in new ways to address the lower end of the market.

Venkatesh Rao has a great perspective on this quadrant:

In fact, in most documented cases of disruption, the disruptive innovation was a minor/incremental change and well within the technical capabilities of the incumbent (and was often taken to market by a renegade spin off from the original company).

This quadrant is the best one for producing organic growth for companies. It has lower risk, but produces meaningful revenue growth.

Radical Tech, Create New Market

If any one quadrant defines the popular view of innovation, it’s this one. And that’s not without good reason. In the previous quadrant, existing technologies are applied to new markets. Well, existing technologies have to come from somewhere. That’s this quadrant.

This is the cool stuff that the press writes about. Check out AT&T’s Technology Showcase for a great example of some of these new technologies.

Amazon’s Jeff Bezos has done well in this quadrant. His latest innovation, the Kindle, is an example. It includes a new “electronic ink“. Ability to read text aloud. It’s incredibly thin profile.

And it’s paying off. Amazon reports that the Kindle set a new sales record this November. Which points to the Kindle as a strong new revenue stream down the road, and a new source of sales for Amazon’s book sales. A home run in this quadrant.

These types of innovations are important for maintaining the long-term growth rates of companies. They provide needed growth, replenishing changes in existing markets.

Which leads us to the final quadrant…

Radical Tech, Manage Existing Market

There are times a company’s business is under attack, and it needs to address changing behaviors in its market. Innovations in this quadrant share the high risk profile of the previous quadrant, but they have a defensive nature to them. They don’t seek to find new opportunities, they seek to address changes in customer behavior.

Hulu strikes me as an example of this. A joint venture of NBC, Fox and ABC, Hulu lets users view shows on computers. This initiative addresses the emerging market shift away from televisions to viewing on all sorts of devices. It’s a better answer for this shift than the music industry initially had for the proliferation of MP3 songs on various P2P sites.

Gary Hamel has noted the increasing volatility of markets across the globe. Customers have better access to information about new options, and are willing to shift their spending more quickly. With this dynamic, expect some increase in activity for innovations in this quadrant.

Companies Need a Portfolio of Innovation Opportunities

In a recent Accenture survey, 58% of executives said their organization is looking for the next silver bullet rather than pursuing a portfolio of opportunities. When I hear that, I think first of the upper right quadrant (radical tech, create new market). These types of innovations are incredibly important, and should be part of a company’s innovation efforts.

But there’s really a good basis for expanding that view to look at the other types of innovation: technology vs. market, disruptive vs incremental.

Kindle Breaks Record for Sales in a Single Month During November

My Ten Favorite Tweets – Week Ending 111909

From the home office in the restarted Cern Large Hadron Collider along the French-Swiss border…

#1: What Shaun White & Snowboarding Can Teach You About #Innovation http://ow.ly/E8h7 Get exposure for ideas early, so others can digest impact

#2: Managing Employee Innovation Communities (via Spigit blog) http://bit.ly/3SREBr #innovation #e20

#3: City of Manor’s “citizens’ innovation” project (using Spigit) is featured on WhiteHouse.gov blog: http://ow.ly/DURl #gov20

#4: RT @CarolineDangson #IDC Social Survey: workers say they use IM for ‘collaboration’ & social networks for ’sharing’ – thinking about diff

#5: RT @rotkapchen: RT @wimrampen Social Media Disrupts Decision-Making Process http://bit.ly/2KTUIz (via @GrahamHill)

#6:  RT @tjkeitt Starting the process of researching #e2.0 technology pushed into business processes (CRM, ERP, project management, etc.). This is the future.

#7: RT @kevinmarks says @Caterina “Google never got social software – Knol means you have to write a whole article; wikipedia combines tiny contributions” #w2e

#8: Pitching Sequoia? They want to know which deadly sin your company lets customers indulge in http://ow.ly/DGn1 by @glennkelman

#9: Checking out: The Awesomeness Manifesto http://ow.ly/DmID by @umairh Much to love in that one #innovation

#10: Time Magazine is apparently torn between naming Twitter or the Economy as its “Person” of the Year http://ow.ly/CRbB

My Ten Favorite Tweets – Week Ending 111309

From the home office in my watery swimming pool on the moon…

#1: RT @innovate: The 50 Best Inventions of 2009 http://ow.ly/BVB0 #innovation I like #40 Edible Race Car. #9 Tweeting by thinking?

#2: RT @lindegaard: Tough Questions and Great Answers: General Mills Steps Up to the Open Innovation Plate: http://bit.ly/2nEXSv

#3: Microsoft Bing team gets kudos for #innovation. First tweet search, now Wolfram|Alpha integration http://ow.ly/BrHC

#4: Is Twitter Trying to Lure You Back to Twitter.com? http://ow.ly/AfcU by @robdiana > Maybe a way to drive page views for ads?

#5: Regarding new Twitter retweet function, @stoweboyd has some good points about it http://ow.ly/AIl7 Inability to add text is a miss

#6: October was a slow traffic month for the social networks, in a detailed look by @louisgray http://ow.ly/BCgU Facebook still growing

#7: UK Guardian discusses how to deal when your boss is on Twitter (& links to my #cisco fatty blog post f/ March) http://ow.ly/Bkrf

#8: Check out: Driving Adoption is anti-2.0 http://bit.ly/1ksZAr #e2conf > Leave it to @rotkapchen!

#9: Do we create the world just by looking at it? http://bit.ly/1kdTOs “Human body is a just barely adequate measuring device” #quantumphysics

#10: Commentator on NPR this AM criticizes Californians for social liberal/fiscal conservative & not wanting taxes. Western libertarian strain!

My Ten Favorite Tweets – Week Ending 110609

From the home office along the former Berlin Wall in Germany…

#1: McAfee: Bad practice of #e20 evangelists = Declare war on the enterprise. Presents a bad msg to corporate buyers. #e2conf

#2: Frappaolo: His work finds that age has little to do with #e20 adoption. Creative thinkers span all ages. Org culture is the issue. #e2conf

#3: Yup, SharePoint 2010 is a platform: Microsoft To Offer Application Marketplace In SharePoint 2010 http://ow.ly/zYM2 via @rww #e20

#4: Google Wave product mgr. Best way to use #googlewave is for collaborative activities, not wholesale replace email. #e2conf

#5: RT @Brioneja: Google’s Wave Might Find Its Real Home Inside Company Servers http://bit.ly/2VJkxP #collaboration #software

#6: For #innovation, conflict is good. Conflict is right. Conflict works. Read @AndreaMeyer’s post to find out why: http://ow.ly/za7v

#7: Good take @zeroinfluencer: All User Centric Design is modeled around the ego. Good software design keeps that in mind. http://bit.ly/39gim3

#8: Gov 2.0 – City of Manor Taps Citizens’ Ideas for Improvement (via Spigit blog) http://bit.ly/4A1hNc #gov20 #innovation

#9: RT @zee RT @jestei I find twitter #lists weirdly, narcissisticly fascinating; they provide a rare window into how others would define you

#10: http://twitpic.com/noz7d – Tonight’s Jack O’ Lantern is a wink emoticon My 5 yo’s choice. Future geek.

My Ten Favorite Tweets – Week Ending 103009

From the home office, waiting for the Great Pumpkin in the pumpkin patch…

#1: NIH grants $12mm to create a national, Facebook-like social network for scientists http://ow.ly/xtAD Goal? Find collaborators

#2: RT @jowyang Ritz Carlton’s mktg chief says hotel mgt at each property spends 1 hour reviewing online convos each am –even tweets #forbescmo

#3: The Time I was Written Up for Blogging http://ow.ly/x3ph by @tacanderson Lesson on employees and social media

#4: Skating to where the puck will be – Apple & advertising http://ow.ly/xnXJ Apple has offered to rebuild a Chicago mass transit stop?

#5: Very cool: Los Angeles adopts Google e-mail system for 30,000 city employees http://ow.ly/x3hP Cloud makes inroads #saas

#6: 84% of firms say #innovation is important to firm success. 51% of firms do not have anyone who is steering the innovation ship. #iai09inno

#7: 10 examples of minimum viable products http://ow.ly/xbi1 Cool list of minimalist approaches to engage customers & build product

#8: Stuck trying to write that next blog post? 100 Ways to Find Ideas for Your Blog Posts http://ow.ly/wA1T from the LifeSnips blog

#9: Geek alert! RT @PaulSloane: @DougCornelius RT Awesome T-Shirts for twins: http://bit.ly/14LYeI

#10: OK, figure this one out. @gaberivera created a tweet that links to itself. See for yourself: http://bit.ly/2IIkJG

Bonus just for this week…

#11: Small change to my Twitter bio…I’m now VP of Product at Spigit. Carry on…

Innovation ROI – Why Every Enterprise 2.0-Enabled Connection Counts

In a recent post on the Spigit blog, Study – Collaborative Networks Produce Better Ideas, I described the research of Professor Ronald Burt. He found that employees who are better connected across the organization generate higher quality ideas than those with limited connections. Wider access to the ideas, knowledge, experiences and judgment of colleagues makes employees stronger in innovation.

I posted this write-up in the Continuous Innovation group on LinkedIn. One person made this observation:

Need to keep in mind that collaborative networks have little to do with technology. There are certain personality types that keep the organization connected. The proportions of those people in an organization is related to the specific corporate culture.

There’s a good alternative perspective. That really, the same people that connect via collaborative networks are those that would be doing it in an offline world as well. The rest of the employee population likely continues to work in a more insular world.

I see it differently though. First, I agree that there are people with natural connector personalities. They would span the different parts of the organization no matter what. Anyone think David Armano wouldn’t be one of those types?

But not everyone need be an uber connector to see benefits from plugging into a more connected network. My personal experience on sites like Twitter and FriendFeed tells me that everyone benefits from these online social networks. We may not all be uber connectors, but we do increase our degree of connectedness.

The graph below is my concept for how this effect manifests:

Assume a population of employees: 25 in this hypothetical example. The blue line is the level of connectedness for employees working the way they have for decades. Your connections tend to be local and departmental, with some tenure you gain a larger informal network. In Professor Burt’s terms, most workers are relatively insular in terms of who they access for information and ideas. But some broker connections across different corporate “tribes”.

The red line represents the level of corporate connectedness for employees including the ability to find others online. To me, this is a no-brainer. Of course people are going to connect with others they wouldn’t have otherwise. The number, diversity and depth of connections increase.

The gray zone between the red and blue lines represent that improvement. Some people won’t get too much increase. They really are in-person types of connectors. But others thrive in the online environment. They have more specific interests, and didn’t know who else in the organization held them. Through the social software, they find more people with interests similar to theirs. Or at least with experience relevant to their interests.

Don’t need to be an uber connector there. Just need to be able to make connections.

Next…the ROI math.

The Natural Logarithm Method

Take a look at the graph below. It shows the scatter plot of how ideas were rated for different employees (Y axis). The X axis represents the degree of connectedness for employees, based on actual social network analysis conducted by Professor Burt in his study:

The scatter plots show that employees who have a high diversity of connections across the organization provided higher quality ideas. The converse holds true as well.

Regression shows the equation that represents the observations:

Value of Idea = 5.51 – 0.91 * ln(Level of Network Constraint)

The equation shows that, on average, every increase in a person’s level of connectedness with different parts of the organization produces higher quality ideas. Note the natural log curve. The effect increases as connectedness improves. What I like about that is that the benefits increase, even if the work of increasing employees’ network diversity gets more difficult as you try to connect those last holdout groups.

Extrapolate the effect out to the organization at large. Raising the overall level of workforce connectedness will have a salutary effect on the average quality of ideas generated. In an era of ever higher levels of market volatility, improving the organizational “innovation IQ” is a critical aspect of surviving and thriving.

One thought on the accelerating benefit – increased idea quality – as connectedness improves. In a large population, would this have any correlation to network effects?

It’s not perfect, but Professor Burt’s analysis demonstrates a strong ROI basis for leveraging social software to increase the diversity of connections.

My Ten Favorite Tweets – Week Ending 101609

From the home office in a balloon 7,000 feet above Colorado…

#1: Well, this was unexpected. The Spigit funding news has hit Techmeme http://bit.ly/3ETPFp #e20 #innovation

#2: LinkedIn: 50 million professionals worldwide http://ow.ly/uq7s “Last million took only 12 days” Wow. Tipping point?

#3: RT @mwalsh: Seth’s best post of the year – get over yourselves…you’re not that cool, interesting or smart. http://bit.ly/3HwrV6

#4: Is Social Media the New Cigarette? asks @billives http://ow.ly/u8IY Looking at social media addiction

#5: RT @nyike First Jive, now Spigit building #e20 and collaborative functionality on top of Sharepoint http://bwbx.io/hina

#6: Within firms, collaboration technologies are dictated by most powerful person involved in the collab http://ow.ly/tJgf by @amcafee

#7: Just as interesting as this WSJ piece is, Why Email No Longer Rules… http://ow.ly/tZpj are the skeptical cmts left by readers #e20

#8: If companies like $GOOG and $MMM excel and incl employee 15-20% personal time for innovation, why haven’t others adopted same?

#9: Wind farm firm makes sure its wind mills are 30 miles away from nearest Starbucks. http://ow.ly/tRQP Why? Best way to avoid NIMBY’s

#10: When a company gets funding, all sorts of interesting “opportunities” emerge. Just got a solicitation for Spigit to sponsor a NASCAR driver.

Here’s to the Passionate Creatives

Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.

Apple ad, “Think Different”, 1997

Why did Apple’s ad resonate so well with you? After all, how much time do we spend disagreeing. Admit how happy it can make you when your manager praises you for executing well on an assignment. I know I feel it. No “think different”. More like “think excellence”.

But that Apple ad. It was damn good, wasn’t it? Seemed to reach inside us to something else beside the praise we get for doing an assigned job well. It was celebrating some thing in each of us.

John Hagel recently wrote A Labor Day Manifesto for a New World. The post is a call to action for work that better fits our human nature. Our desire for creating better ways to address problems, in ways that fit our personality, interests and skills. To reach our full potential. We’re not all doing this though.

Hagel terms people whose personalities and drive are based on making situations better than what currently exists as “passionate creatives”. There have always been these types, but recent changes in the global economy and shifting market dynamics (e.g. digital technology rewriting one industry after another) are increasing their importance.

Passionate creatives exist within organizations, and as independent entrepreneurs. For those inside firms, Hagel notes:

They experience deep frustration today with the institutional barriers that have been put in their way as they seek to more effectively achieve their full potential.  They want and need platforms that can help them connect with others and drive performance to new levels.

For many of us, even if we wouldn’t label ourselves “passionate creatives”, the point about frustration resonates. How often have you had an idea, but can’t attention for it, nor resources, nor figure out who else to work with? I’ve had jobs like that in the past. You know some things are not working well, and you can see how to improve the product/delivery/business model. But you can’t make headway on iterating through new possibilities.

Hagel’s manifesto is a great read. I want to hit on two points I take away from it:

• What is the role of “passionate creativity” in daily work?
• The gathering of passionate creatives at the edges and the accelerating rate of change in markets

The Role of Passionate Creativity in Work

Very few of us get to live a life of unfettered passionate creativity. The realities of the mundane trump the thrill of the new. And that’s not a fault of the system. If all we did was work on new stuff, there’d be no stability and no scalability. More like mass economic anarchy.

But that’s too heavy handed a look at it. We can be quite productive and help our companies, and careers, while working on tasks that hit our passionate creative sweet spot. A good question to ask is, how much of this passionate creativity infuses our work days?

Take a look at those two Venn Diagrams. They’re saying different things. The left one says that we all have to execute on tasks assigned by others, or assigned by ourselves for the role we fill. In some of that work, we’ll have the opportunity to reach deeper, to deliver creativity on an activity that animates us. But the primary focus is executing on the plans and processes already in place.

The right one indicates a job which is dominated by passionate creativity. Hagel’s call-to-action is more aligned here. We work primarily on things which stimulate and energize us regularly. But there is a twist to this notion. It doesn’t mean spending one’s time on only starry-eyed big picture thinking, producing little of tangible value for your organization. It includes work by those “who are searching for new and creative ways to do the most ‘routine’ tasks.”

Which model of work are we likely to see arise in the next decade or two? Both. Neither. Yes.

Hagel’s manifesto is not so much a clear-eyed plan for rearranging organizations. Rather, it’s a wake-up call to the corporate world that the nature of work and what employees seek is changing. As he says:

Why will more and more people evolve into passionate creatives? Because we live in a world that is shifting inexorably from an obsession with efficiency to an obsession with learning.  We have come to call this the Big Shift.

In that statement, I draw some conclusions that relate which model above will emerge. First, note that the Big Shift is a shift in “obsessions”. From efficiency to learning. That’s a shift in attention, and in resources. It’s a shift in the dynamics of the supply side of the equation.

What hasn’t shifted is the demand side of the equation. Consumers worldwide still depend on the massive efficiencies that Tayloresque methodologies have brought to our economy.

So there’s the quandary: if we’re all working on things that inflame our passionate creativity, who is minding the massive scalability store?

My sense is that the Venn Diagram on the left is closer to what we’ll see. Enlightened companies will follow the examples set by Google and 3M, encouraging employees to pursue initiatives outside their regular routines. This does a couple things:

• It provides an outlet for growing passionate creativity on a wider basis
• Some of those initiatives will turn into full-fledged projects

The second point then lets employees live a life in the right-side Venn Diagram.

Passionate Creatives at the Edges

Another point Hagel makes is that passionate creatives tend to occupy spaces that are “edges”:

Passionate creatives are everywhere among us, but they are not evenly distributed. They tend to gather on the edges where unmet needs intersect with unexploited capabilities.  Edges are fertile seedbeds for innovation.

Reading this, I was struck by how well this fits with the observation that Gary Hamel made. The pace of change in markets is faster now than it ever has been in history. What this means is that Hagel’s edges – unmet needs intersect with unexploited capabilities – will be more frequently found.

Companies need to get better in pivoting to meet changes in their markets. And this keeps CEOs up at night. IBM surveyed global CEOs in 2008, asking them about their view of changes in their markets. The results are eye-opening:

Collectively, CEOs set their organization’s ability to manage change 22 percentage points lower than their expectations for the level of change they will have to manage — a ‘change gap’ that is widening.

A wide ‘change gap’ there, isn’t it? If Hamel identifies the problem companies face, Hagel identifies the types of workers who will make a difference in addressing the problem. The passionate creatives.

The edges are places of opportunity and uncertainty. It’s hard to know what the demand dynamics are, and existing infrastructure and processes don’t address the changing market needs. New alternatives are emerging, it’s time for fresh approaches by existing firms.

Companies are best-served by allowing employees who are attracted to these changes to pursue innovative ways to address them. Why? They get energy. They get an experimenter’s mentality. They get a happier workforce. Let employees exercise some form of self-organization to accomplish this.

The alternative may be incumbent staffers who have fallen into routines, or have reason to protect the status quo. This does not help companies address rising levels of volatility. Free the passionate creatives!

Passionate Creativity Will Fall on a Spectrum

My sense is that work will evolve, over years and decades, to allow people to shift attention to work that energizes them more fully. It will happen on a spectrum, with daily jobs that fall between those two Venn Diagrams above. Society cannot get away from the requirements of predictability, efficiency and scalability. We’re all going to have elements of our jobs that are routine.

I think Hagel’s post is right on though. It will be a slow change where companies integrate the existing passionate creatives more effectively, and develop the passionate creativity in all employees. Companies doing it well will need to celebrated and publicized repeatedly for the value to be understood more widely in the market.Over time, we’ll see the change.

Note what G. Michael Maddock and Raphael Louis Vitón wrote in this recent Business Week article. Passionate creatives like to “follow the challenges”:

Stop and think about the last truly great person who left your organization. First think about what made that employee great. We bet you name such characteristics as action-oriented, driven, passionate, fun, and genuine.

Now think about where that worker went. Chances are, to a position with a perceived promise of putting his or her talents to better use—moving into a role with greater challenges and opportunities to learn and make a difference. It wasn’t about money.

It will happen. Here’s to the passionate creatives.

My Ten Favorite Tweets – Week Ending 100909

From the home office in Oslo…

#1: I’d like to publicly state for the record that I never accept sponsorship or freebies for my blog posts…because no one ever offers any…

#2: The Nobel Peace Prize for Obama is a signal to him, a very large signal, to keep doing what he’s doing. It’s not an achievement award.

#3: Did you see @defrag’s mashup of Gartner Hype Cycle & Moore’s Chasm? http://ow.ly/tr6d Social media/E20 in trough of visionary adoption

#4: Firms Need a System for Recognizing and Empowering Innovation Catalysts (via Spigit blog) http://bit.ly/RlMS8 #innovation #wbf09

#5: Slideshare Gets More Serious About Monetizing Their Business http://ow.ly/t79P Two options: Adshare, Leadshare

#6: Hamel: WL Gore manages T&E this way = all expenses posted online for peers to see. Outcome? No need for restrictions. #wbf09

#7: Lucas: “Never imagined people would go frame by frame in Star Wars, and tweet their friends about its [cinematic tricks]” #wbf09

#8: Pickens: I’m more powerful in Washington D.C. now because I have 1.6mm people signed up in support of my energy plan. #wbf09

#9: Lencioni: Need to be able to disagree on things. Need trust for this to work. Conflict without trust is politics. #wbf09

#10: http://twitpic.com/k68s4 – I’m at a wedding that starts in 10 minutes. My son is ring bearer.

From the home office in Oslo…

#1: I’d like to publicly state for the record that I never accept sponsorship or freebies for my blog posts…because no one ever offers any…

#2: The Nobel Peace Prize for Obama is a signal to him, a very large signal, to keep doing what he’s doing. It’s not an achievement award.

#3: Did you see @defrag’s mashup of Gartner Hype Cycle & Moore’s Chasm? http://ow.ly/tr6d Social media/E20 in trough of visionary adoption

#4: Firms Need a System for Recognizing and Empowering Innovation Catalysts (via Spigit blog) http://bit.ly/RlMS8 #innovation #wbf09

#5: Slideshare Gets More Serious About Monetizing Their Business http://ow.ly/t79P Two options: Adshare, Leadshare

#6: Hamel: WL Gore manages T&E this way = all expenses posted online for peers to see. Outcome? No need for restrictions. #wbf09

#7: Lucas: “Never imagined people would go frame by frame in Star Wars, and tweet their friends about its [cinematic tricks]” #wbf09

#8: Pickens: I’m more powerful in Washington D.C. now because I have 1.6mm people signed up in support of my energy plan. #wbf09

#9: Lencioni: Need to be able to disagree on things. Need trust for this to work. Conflict without trust is politics. #wbf09

#10: http://twitpic.com/k68s4 – I’m at a wedding that starts in 10 minutes. My son is ring bearer.

My Ten Favorite Tweets – Week Ending 100209

From the home office in Rio de Janeiro…

#1: When it comes to innovation, trust your intuition http://bit.ly/2SyYkz by @PaulSloane Question your logic before you question your intuition

#2: Title alone is enough: My Best Innovation Advice? Be Promiscuous http://bit.ly/oa4RL by Scott Anthony on Harvard Business

#3: I confess this NYT essay resonates with me: Why Good Writers Can Be Bad Conversationalists http://bit.ly/13L7Tf (via @berkun)

#4: This is cool: 25 Logos with Hidden Messages http://bit.ly/3hLQMq I’d never noticed the arrow in the FedEx logo

#5: Interesting discussion about Yammer’s fortunes currently on TechCrunch. @arrington hears it’s gangbusters http://bit.ly/1bIAhL

#6: RT @mdoeff A screenshot of the Twitterati 100 from July ‘08 http://bit.ly/V5EEd @kevinrose was #1 at 51K followers {so ol’ skool}

#7: Heard of auction site Swoopo? Users buy “bids” in advance, then can bid on items. Result is low winning bids (e.g. $10 for widescreen LCD).

#8: @kn0thing Wahoowa to you Alexis. Like seeing UVA guys mixing it up out there. Great job on Reddit.

#9: Men & healthcare: My wife just scheduled my physical, because I’d never do it. Asked bachelor co-worker when he last got physical: “college”

#10: Today is my 10th wedding anniversary. Last song of the reception that night 10 years ago: Come On Eileen http://bit.ly/wCMQs Random, eh?

My Ten Favorite Tweets – Week Ending 091109

From the home office in Athens, Santorini and Crete…

#1: Salesforce emerging as a competitor to Jive, Socialtext, Atlassian, Telligent? http://bit.ly/71hbn That’ll be tough #e20

#2: What Exactly is a Social Business? http://bit.ly/2g9u82 by @lehawes #e20

#3: 15,000 Thoughts per Day – Why We Need Constraints for Innovation (via Spigit blog) http://bit.ly/ltaxP #innovation

#4: “Innovation is one of the easiest & least risky areas that can be tapped by organizations” http://bit.ly/uLk6K by @dhinchcliffe

#5: RT @armano “innovation happen in the corners of an organization—they need to be connected” (we call this Ecosystem) #futurebiz

#6: McKinsey has created the “innovation performance score” http://bit.ly/2YWPQ9 It’s, of course, a smart analytical tool #innovation

#7: Love @fredwilson’s attitude here: The Foursquare “Crush” http://bit.ly/10g4kb Using his blog as valuable feedback for future investments

#8: RT @GraemeThickins Wall Street Journal & New York Times plan San Francisco editions http://bt.io/AwZ (via @thefutureofnews)

#9: RT @skap5 Is it possible to have an economy where everyone is a consultant?

#10: RT @Danny_DeVito I just joined Twitter! I don’t really get this site or how it works. My nuts are on fire.

Crowdsourced or Elite Unit Innovation?

A classic dilemma for companies is determining the best way to foster innovation. There are many good books with different approaches. Clayton Christensen’s Innovator’s Dilemma has influenced a generation’s thinking about innovation. He focuses management and entrepreneurs’ attention on the Big I: disruptive innovation.

One outcome of the popularity of Christensen’s book is the awareness people have that entrenched business practices can inhibit companies’ ability to recognize and address discontinuous innovations from new market entrants. Motorola, for example, is often held up as an example of this. The company continued to develop only analog cell phones even as the digital phones were getting traction. In clinging to analog, which it dominated, it fell far behind in the mobile phone market.

A key practice espoused by Christensen is for companies to tackle discontinuous innovations by creating separate divisions. These divisions have an R&D profile, meaning they are funded without requiring a financial return. They do not have to prove themselves to sales or other parts of the organization. This gives them the room they need to figure out how to approach the impending market shift.

The issue with the popularization of this framework is that it sets up a binary approach to innovation. You’re either addressing disruptive or discontinuous innovations, or you’re executing on yesterday’s business. It’s this dichotomy that obscures the value of innovations that move organizations forward, competing to increase market share and profits.

To that end, let’s examine two ways companies create work structures for innovation.

Integrated or Separate Innovation

The graphic below highlight two very different ways to approach innovation. And that’s a good thing.

Separate Division: As advised by Clayton Christensen, this approach is best for companies that need to address disruptive innovations. And all companies need to address disruptive innovations.These days, it’s not a matter of if, but when. For fundamental market shifts, too much is invested in the current operations for companies to address changes. Freeing a group of people from these constraints is critical, if the corporate culture is not open to big-bet innovations.

A couple examples of interest here. First, let’s go back to Motorola. Yes, the company muffed it badly on the transition from analog to digital. But there was something that it did right years before. Motorola researcher Jim Mikulski could see in the 1960s that existing cellular technology was insufficient for the emerging uses of the mobile technology. He had a new technology to replace it, and asked the head of Motorola’s communications division, John Mitchell to fund its development. Mitchell said “no”,

Arguing that 400MHz technology offered sufficient capacity and met consumer needs. The Communications Division current product line was the market leader, and a new product, which would likely cannibalize the current system, was deemed to be both unnecessary and potentially harmful to this business line.

So Mikulski found refuge in Motorola’s Corporate Research Laboratory. He worked on the new technology there, receiving funding for its development. When his view of the coming changes proved to be true, Motorola was ready with its new technology.

In other words, he addressed innovation that affected the communications division in a completely separate division.

Microsoft, on the other hand, has programmatically set up a separate division for innovation. The Microsoft Research group works on ideas that may never have commercial appeal. But some of their work has resulted in product features and direction for its new Natal gaming system, its Bing search engine, and an upcoming release of Outlook email.

They have a separate division, but the innovations arguably are of the sustaining variety, not disruptive.

Integrated into Daily Work: In this work structure, everyone is involved in innovation. The company sets expectations, and encourages employees’ to share ideas. Done right, this is in-the-flow stuff. Employees are encountering issues to be addressed daily, and they’re hearing new customer feedback all the time. They are well-positioned to come up with innovative solutions and products, if senior management makes that a priority.

Whirlpool is a good example of this. In 1999, then-CEO David R. Whitwam made the determination that Whirlpool needed to stop competing on price, and make innovation its central strategy. Fast forward to today, and the results have been stellar. Whirlpool has escaped competing as a commodity vendor, with $4 billion in revenue (21% of total sales) generated from its innovation efforts. Are they satisfied? No. CEO Jeff Fettig stated that while participation in innovation from 5,000 employees is good, he’s looking to increase it to 15,000.

That’s integrating innovation into employees’ daily work for sustaining innovation. In this case, sustaining innovation has been the source of growth and profits.

Another company where innovation is part of everyday work is 3M. The company is legendary for its innovation. And clearly, the encouragement of all employees to be part of innovation has taken hold. For instance, there was this story recently in Fast Company:

3M told a great innovation story at the ARF annual conference about a new product that started with a complaint call into customer care. The representative did his own research online, came up with a solution, filmed a video that he put on YouTube and re-contacted the customer to see if that is what he was looking for.

The sheer volume of ideas that employees have to improve companies’ existing businesses puts a premium on crowdsourcing ideas. And inevitably, some of that culture and the ideas emerging from sustaining innovation will relate to discontinuous or disruptive innovations.

Why Not Do Both?

Google is a good example of a company that does both. It’s 20% time for employees to devote to innovation is the stuff of business legend. And according to the company, half of its new products result from this employee time.

But then look at Google Wave. This project was done beyond 20% time. It was actually a completely separate project developed by a 5-person “startup” team in Australia, far from the company’s Mountain View, CA headquarters. Google Wave is transformative, and will likely usher new design principles into a host of software applications.

Google is a good example of an innovation-led company. They mix the elite unit approach to innovation with the everyday encouragement for employees to innovate.

There’s not this dichotomy of “all disruptive/discontinuous innovation, or you’re just falling behind”. Rather, it’s a smart blend of the strategies.