Evan Davis, OUBS Visiting Professor and guest speaker at the Innovation Masterclass, talks about the relationship between innovation and economic growth:
Guest blogger:Professor James Fleck, Professor of Innovation Dynamics at The Open University Business School.
At the beginning of the Innovation Masterclass, I proposed to run a challenge for examples of an innovation that does not involve technology.
Definition of innovation:
“Innovation is the practical implementation of a new idea or invention for intended economic impact.”
1. There is a distinction between innovation and simple change: essentially we are considering innovation as a business and economic category.
2. Involvement of any technology: existing or old – does not have to be new; simple or basic – does not have to be complex.
3. An innovation may well be based on a natural phenomenon, but it has to include an extra element to make it into a human idea or invention.
4. There is a distinction between innovation as we have been discussing (essentially a business and economic category) and artistic or cultural innovation.
5. Innovations in process look like the most promising candidates, although most modern processes do in fact depend on ICT (information and communication technologies).
6. Innovations in policy look promising, but until they are practically implemented, usually as processes with determinable outcomes, they are not really innovations in the business sense.
There were 21 submissions in total. The best answer won a bottle of champagne. More detailed observations are noted under each suggestion.
Comments on submissions:
1) The wheel
Well, this is surely the archetypical innovation and if a wheel is not technology, what is?
2) The abolition of slavery (disappearance of the feudal system)
This certainly represents a major societal change, and is more a combination of many other changes than a singular change. But would slavery have been possible without ships, weapons and other instruments of oppression? There is an interesting thesis about feudalism which suggests that it is a society that results from the invention of the stirrup (which enabled the technology of horse-based warfare to underpin the emergence of a class of horse owning overlords).
3) Gay marriage
Not sure that this is a new idea, and don’t think any economic impact was intended. It’s more of a cultural change. Also see general points 5 & 6 above.
4) A choral work, performed for money
An interesting one, but more of an artistic/cultural change. Also, unless purely voice, without any musical instrumental support, then technology certainly is involved (musical instruments are technology).
5) Organised religion
Not sure what the specific idea is that is being practically implemented; not sure what the intended economic impact is, and not sure that it is in any way new. This is more of a cultural change – see general point 5 above.
6) Innovation in dementia care (a “feelings-based” approach involving quality interactions instead of task completion)
Not sure what is new about this. Surely more a reversion to what historically has been the essence of good family-based care. Perhaps the industrialised “task completion” approach, dependent on the technology of time-keeping and efficient division of labour, was the innovation?
7) The introduction of “total football” by the Dutch in the 1974 World Cup (where each player shared a posting on the field)
An interesting one – an example perhaps of a process innovation (see general point 5 above). But what about the pitch and the stadium, the football, specialist boots, TV and all the other technologies that make the modern World Cup what it is? Also, sport perhaps is more part of the artistic and cultural domain in its essence as a game. And increasingly, modern innovations in sport are in fact based on technology (goal line technology for instance).
8) The behavioural management of safety
This is very cryptic and not sure what the key innovation is. Appropriate behaviour has always been an important ingredient in safety. In its modern manifestation, I think it does depend on technology, that of monitoring and recording as well as a range of training tools to impart correct safety behaviour (I am thinking here of the programmed instruction about computer work that I have to undergo as an academic).
9) A new technique in knitting transferred from grandmother to mother
But knitting needles are technology, albeit a very simple and basic one.
10) Having children (Adam and Eve)
Mmmm. An entirely natural process. No new ideas or inventions (well…) (In the robotics literature there is a joke about how human beings are the only robots made by unskilled labour).
11) In nature where mutations occur which result in increased longevity of that species
Another natural process. No new idea and no practical implementation. But once there is practical implementation for intended economic outcomes, then perhaps you do have an innovation. Artificial selection for breeding?
12) Free entry to museums about 10 years ago leading to a massive increase in visitors and attendant cultural benefits
A clear example of a policy innovation (see general point 6 above). Not sure how new this was as museums were always free when I was a boy. Also not clear what the economic impact has been.
13) Sigmund Freud
Not sure where the practical implementation is. And perhaps there is a distinction between factually based new ideas and imaginative new ideas? Clearly an artistic/cultural example (see general point 4 above).
Another very interesting example. Originally money emerged as a universal barter commodity, such as salt. But the real innovation when money became money in the modern sense, was the invention of coinage with symbolic value indicated on its face. And this of course depended on the technologies of metallurgy and minting. Even with salt and other barter goods, some means of measuring or weighing the quantity of the goods was required.
15) “Kissing it better” innovation in child and health care
As with example 6 above, not sure there is anything new in this. This is rather a reversion to ancient family based approaches.
Is this in itself an innovation? The effective control and harnessing of fire surely is the basis for innovations, and these all constitute technologies such as design of hearths, furnaces, chimneys etc.
17) Change from counter-service to self-service in shopping
I think this does necessarily involve a range of technologies, from effective tagging systems for the goods purchased, scanning systems for the checkout points and the design of the checkouts themselves so they are easy to use by a range of customers.
18) Agile methodologies
A good example of a process innovation (see general point 5 above) but rather generic and difficult to consider in the abstract. And surely it intrinsically involves technology especially in its practical implementation? As I understand it, it is a software development methodology, and is software not a technology? Moreover, various other supporting software technologies are required for monitoring and managing the overall process.
An interesting example, but one which necessarily ultimately depends on all the technologies involved in the modern financial system, even though the front end might be a very low technology of local paper records.
20) The way in which we now queue in one line rather than many, thus avoiding choosing the wrong line
21) The post office queue from many lines to one, saving frustration
These two suggestions (20 & 21) both capture a key idea arising from the formal mathematics of queuing theory, namely that one queue feeding many servers is far more efficient than many queues each feeding their own server. In essence it requires no technology as it could be implemented in any situation although to be purist, usually various technologies are involved (barriers to direct the lines; checkout technology in the servers etc).
Nevertheless, this impressed me as the best example of an innovation that does not involve a technology, and so the two people proposing this example shared the bottle of champagne. (And very kindly, they offered me a glass as well!)
What is innovation? – Professor James Fleck
Innovation and technology – Adrian Simpson, SAP & Imran Razzaq, Microsoft
Innovation and leadership – Ken Keir, Honda Motor Europe & David Harrison, True Potential
Guest blogger:Bridget Grenville-Cleave, Open University Business School MBA Alumnus, MAPP graduate of the University of East London, is a UK-based positive psychology consultant, trainer and writer
I recently had the privilege of attending an Open University Business School Masterclass and networking event at which Ken Keir, the Executive Vice President of Honda Motor Europe, talked about the way innovation, the lifeblood of the Honda company, drives its success.
Even though he focused on Honda’s R&D philosophy, explaining for example how, in recessionary times, the company goes against the tide and invests more in R&D rather than less, by the time we reached slide 5 of the presentation on the Honda strategy, vision, values, and behavior, it was pretty clear to me that here is a company founded on positive psychology principles.
What intrigued me was that Ken Keir didn’t mention positive psychology once. For all I know, he has never even heard of it. However, if you look at how Honda operates strategically, how it works day-to-day as well as the kind of language it uses to describe the business, it’s pretty clear that it’s a strengths-based company through and through.
How did I reach this conclusion?
An Organisation Based on Three Joys
Quite simply, Honda is a company which lives and breathes its values.
Back in 1951 the founder, Mr Soichiro Honda, outlined in a Management Policy document the principles on which the Honda Company is based.
It may surprise you to discover that these are:
- The joy of making
- The joy of selling
- The joy of buying
Now many corporate leaders might raise their eyebrows at this point and baulk slightly at the use of the word joy. If you’ve worked in the corporate environment you’ll know how pretty much any mention of emotions is unwelcome, especially positive ones like joy, kindness, and awe. The only time emotion really gets its foot over the corporate threshold is when we’re talking about that rather rational and sanitized topic, emotional intelligence. The difference here is that Honda brings these three values alive. It lives and breathes them in everything it does. You could say that the Three Joys are its raison d’être.
The Joy of Making
Take the joy of making. Ordinarily engineering isn’t a term which lights many fires, unless you happen to be an engineer. Engineers are not known for their people skills nor their positive emotion. In fact engineering tends to be perceived as a bit dull. Dry even. And definitely dusty. Engineering is a highly technical, specialized domain, dominated by deep-thinking, serious left-brainers.
But just read Soichiro Honda’s explanation of the first joy:
“the joy of producing…is a joy known only to the engineer. Just as the Creator used an abundant will to create in making all the things that exist in the natural universe, so the engineer uses his own ideas to create products and contribute to society.”
So what does this tell us? Firstly, that the joy of making, the engineering that is at the heart of the Honda company, is its strength. Secondly, that Honda encourages its engineers to embrace and play to their strengths, rather than try to be something they’re not. Thirdly, Soichiro Honda clearly saw that using this strength in the service of something greater was crucially important to the success of his company. More than half a century later positive psychology research tells us that this is the essence of finding meaning and a key to flourishing.
Mr Honda continued,
“This is a happiness that can hardly be compared to anything else. Furthermore, when that product is of superior quality so that society welcomes it, the engineer’s joy is absolutely not to be surpassed. As an engineer myself, I am constantly working in the hope of making this kind of product.”
Not only does he refer to joy, but also to happiness and hope.
The Joy of Selling
The second joy, the joy of selling, arises naturally from the creation and manufacturing of high quality, high performing, reasonably priced products.
“…it goes without saying that the people who engage in selling it will experience joy… What sells well generates profits, as well as pride and happiness in handling those items…”
Students of positive psychology will have come across the study by Martin Seligman that suggests that optimistic sales people are more successful at selling. What sales people wouldn’t be passionate and optimistic about selling a product that they knew would delight their customer?
The Joy of Buying
The third joy, the joy of buying, is the sole preserve of the customer, the person who buys a Honda, whether that’s a motorbike, a lawnmower with a Honda engine, or a car. I’m currently driving my 4th Honda, so I can personally vouch for the joy of buying. The way Soichiro Honda describes this third value makes you believe that other people’s happiness is the sole reason the company exists:
“It is neither the manufacturer nor the dealer that best knows the value of the product and passes final judgment on it. Rather, it is none other than the purchaser who uses the product in his daily life. There is happiness in thinking, “Oh, I’m so glad I bought this.” This joy is the garland that is placed upon the product’s value. I am quietly confident that the value of our company’s products is well advertised by those products themselves. This is because I believe that they give joy to the people who buy them.”
So in these three, deceptively short and simple values, we have a whole positive psychology philosophy, culture, and way of doing business. As Soichiro Honda concluded,
“The Three Joys form our company’s motto. I am devoting all my strengths in order to bring them to reality.’
Learning from Honda: Creating Your Own Company Joys?
So what can we learn from Honda’s Three Joys? I’d suggest the following:
- Stick to what you’re good at! Allow, encourage and facilitate all your employees to play to their unique strengths. This assumes that a) you know what their strengths are and b) you need these strengths in your company.
- Don’t shy away from positive emotions at work. They have a place in every successful company. If this seems a bit scary, you could start by looking at how to create a more healthy balance of right brain and left brain, feeling and thinking, intuition and analysis. Alternatively, if you had to suggest Three Joys for your company, what would they be and why?
- Make meaning important. People want to know how the work they do benefits others, especially customers, clients, patients and society generally. Help them make those connections and find ways to reinforce them.
When I heard Ken Keir speak, I was expecting only to find out about Honda’s innovation and creativity. Instead, I also discovered a company imbued with positive psychology principles. Every time I drive my Honda I’ll be thinking about the Three Joys. And every time I meet an engineer I’ll be reminded of why you should play to your strengths.
(This article was originally published on PositivePsychologyNews.com on 3rd Dec 2012.)
Bridget Grenville-Cleave, MAPP graduate of the University of East London, is a UK-based positive psychology consultant, trainer and writer. She is author of Introducing Positive Psychology: A Practical Guide (2012), and The Happiness Equation with Dr Ilona Boniwell. She regularly facilitates school well-being programs and Positive Psychology Masterclasses for personal and professional development. Find her on LinkedIn, Facebook and Twitter @BridgetGC. Website. Full bio. Her articles are here.
Honda, Soichiro (1951). The Three Joys. Honda Monthly #4.
Britton, K. (2009). Laugh-o-Meters Needed at Work. Positive Psychology News Daily.
Seligman, M. E. P. & Schulman, P. (1986). Explanatory style as a predictor of productivity and quitting among life insurance sales agents. Journal of Personality and Social Psychology, 50(4), 832-838.
Honda the power of dreams courtesy of by S1m0nB3rry
You meet the nicest people on a Honda courtesy of gingerbeardman
It was great to see a full house at our first Business Perspectives event. The thought provoking insights from our speakers sparked a series of lively discussions around organisational innovation at strategic, operational and product level. The energy and enthusiasm of the day carried into the evening when Evan Davis challenged our thinking on the economics of innovation, and Ken Keir introduced us to innovation Honda-style. I was impressed by the way our students and alumni enriched the debate with their experience and knowledge throughout the event. Their contributions confirmed just how diverse our network of practising managers is, in terms of background, industry, role, level and location.
One example of this diversity is Salvatore, who I had the pleasure of meeting over lunch: He started his MBA studies with us in his native Italy; he continued in Sweden where his career had taken him. Now he’s working and studying in the UK.
Meeting other delegates during the day confirmed that this level of commitment is a distinguishing characteristic of OUBS students and alumni. That’s why I was so pleased to hear David Harrison – a member of our expert panel – say that as an employer, he considered an OUBS MBA helped candidates stand out from the crowd. This wasn’t simply as a demonstration of their academic achievement, but as strong evidence of determination, resilience and stamina!
Feedback from the event suggests that the combination of speakers, discussion and action learning sets was well received. It’s a formula we’ll be following for future Business Perspectives master classes. I very much hope you’ll join us.
— Professor Rebecca Taylor, Dean and Director of Studies, The Open University Business School and Law School
Following the successful Innovation Masterclass held in London on 15 November we are holding a free webinar on Tuesday 4 December at 19.00. The webinar will offer our global alumni network the opportunity to hear video perspectives on innovation from many of the event’s speakers. The facilitated event will also allow delegates to participate in Q&A and interactive sessions.
The hour long webinar will include:
- What is innovation? A perspective from Professor James Fleck
- Technology and innovation: perspectives from both Adrian Simpson, Chief Technology Officer, SAP and Imran Razzaq, Microsoft Central East Europe Cloud Lead
- Leadership: what are the qualities that foster innovation? Perspectives from Ken Keir, Executive Vice President, Honda Motor Europe and David Harrison, Entrepreneur and Founder and Managing Partner, True Potential.
To register for the event, please email email@example.com
Did you miss the inaugural Business Perspectives event at the Cumberland Hotel in London last week? Do not despair as we intend to bring highlights and insights from the day at a webinar on 4th December. Full details of the webinar and how to sign up will be posted here shortly.
The event itself was attended by over 100 practising managers, industry leaders and business academics, and provided a thriving hub of perspectives on innovation, both in the room and on Twitter (#ou_bp).
During the evening session our Visiting Professor and BBC Economics Editor Evan Davis was joined by Ken Keir, Executive Vice President, Honda Motor Europe, whilst Professor James Fleck then joined them both for a lively question and answer session.
The daytime masterclass considered the organisational structures, strategies and cultures needed to cultivate and support innovation, with insights and perspectives from Adrian Simpson (SAP), Win Dhat (Kates Kesler), David Harrison (True Potential), Dr Leslie Budd (OUBS), Imran Razzaq (Microsoft) and Professor James Fleck.
Were you there? How about sharing your perspective of the event on our blog site?
– Shasha Wang, Digital Development Manager, OUBS
Guest blogger:Ourania Koumi, The Open University Business School MBA student
A rich pipeline of potentially marketable drug compounds is the lifeblood of the pharmaceutical industry and the first thing that used to come to mind, when as student, I was applying to companies for jobs. When I was labouring day and night against a lab bench playing paper chase, the thought never occurred to me that one day I would be following the advice of my academic teachers, that is to swap a career in academia for one in a drug company. They warned me that any new ideas I had would have to mould into more restrictive and complex norms, depending on company size. I would have to adapt to corporate culture less forgiving to sudden bursts of innovative trial and error approaches to decision making. But, the magic world of reinvested profit back into research for new drugs could have put the worries of any researcher for funding to rest.
Of course, in my mind, innovation was only synonymous to successful drug development.
I later discovered only part of this held true. It is not enough that a company needs to invest in a costly 15 years of research to decide on a potential new drug. Marketing a newly developed compound is a bumpy road, not for the faint-hearted. It involves many issues; an increasingly demanding regulatory approval process, and a short five-year period in which the compound needs to render profit for the company before patent expires. All bets are on, in a rapidly changing external market which pushes for more at a lower cost, driven by growing generics competition.
Thus, examples of innovation are contingent on dynamic market demands.
- Optimising Research & Development (R&D) spending: The industry has been blamed for falling behind on drug design innovation1. Small biotech companies, which are beginning to take over from big corporations in producing high quality, innovative compounds targeting niche disease areas, do so due to their focus on science, agile decision making processes, inspired talent management and rigorous financial restraint1. As one example, Vertex is on its way to marketing yet another compound shortly after the launch of a first innovative therapy for cystic fibrosis in Europe, while partnering with GSK and Jansen to market new Hepatitis C compounds2.
At the same time, bigger companies seem to be in a state of constant regrouping, where there is room for improvement in communication and in the development of the right mixture of metrics, which can boost productivity and reduce costs. As Knott hints at in her recent HBR article last May3, one reason why ‘R&D spending does not correlate with market value or growth’ lies in the way companies fail to measure productivity of the R&D. Even with universal, uniform and reliable metrics based on Edwards Demings’ TQM system, Knott points out that big companies will have to reduce R&D costs to make up for patent erosion, while simultaneously managing for increased R&D productivity. But for most, the new metrics system may actually justify greater R&D budgets3. While R&D spending optimisation seems to be work in progress3, there are still some successful open innovation strategies like Merck’s initiative of employee idea crowd sourcing to encourage such transformational innovations 3,10.
Companies that are doing better, tend to follow a mixture of strategic imperatives coupled with optimal risk averse financial management in continuous innovation, e.g. polypill design or administering an existing compound in a new drug delivery system, like Ceglene’s Abraxane approved to treat breast and lung cancer4.
- Technology boosts productivity at less cost: Business analytics also present a hot new technological innovation, useful in contributing to cutting costs and improving productivity across the value chain of new product development and marketing. For example, Vertex designs clinical trials in record time using analytical business tools to help minimise errors in trial design and consequently cut costs, optimising the probability of high quality end trial outcomes5.
- Organisational restructuring to offset patent erosion: The more successful companies have followed what Christensen calls disruptive innovation strategy in organising a separate business unit, or independent subsidiary company, to continue marketing their own branded generics, e.g. Novartis’s Sandoz6. In that way, although the subsidiary is functionally and organisationally separate from the mother company, the profits are kept in house6. A hybrid of that strategy is to flexibly diversify business activity according to the needs of the market, as Abbott did after buying Piramal to start selling cheap, generic drugs in India7.
- Marketing strategy optimisation: Fast and effective new customer segmentation and targeting can also be achieved by the use of social media platforms, an effective way of bringing the company closer to its customers and consumers. A social media platform developed to inform, educate and interact with patients was developed by Lilly & Co, which combined YouTube, Facebook and Twitter and was launched in September 20108, despite regulatory impediments that the company faced. Over the last 3 years, more than 74%9 of companies have adopted this addition to their communication strategy, thus bridging the gap between the company and its end-users, in the hope of drawing marketing and competitive intelligence insights and improving corporate image.
Pipelines may have helped thus far6, but investors are not optimistic that results may be as encouraging in 2013. It may be that under extreme pricing pressures the innovation imperative for drug companies in Europe and the US seems impossible to tackle, while sales of new products hardly cover losses from patent erosion in a competing generics market and an external environment driven by regulatory and pricing pressures. Rather than a deviation from the classic Ansoff framework, Nagji and Tuff10 suggest that a winning strategy may be a combination of innovative approaches at the right equilibrium. Managing existing drug/expiries, expanding adjacent ‘new to the company’ business, and developing new drugs covering the ever growing epidemiological needs, especially in the emerging markets, within the same company, may be mandatory.
Total innovation management has worked for Technology and Telecommunications’ markets10. It may be the right survival tactic for pharmaceutical companies, as just having a pipeline of new drugs, just maintaining existing customers with face-to-face sales calls, just relying on marketing to cover for R&D delays, or selling in just Europe or the US, does not seem to cut it in today’s drug market.
1. ‘Pharma 2020: Which Path Will you Take?’, (2007) PricewaterhouseCoopers Pharmaceuticals: ConnectThinking: 1-48
2. Vertex Q3 2012; http://investors.vrtx.com/releases.cfm
3. Knott A., (2012) ‘The trillion dollar R&D fix’, HBR, May: 77-82
4. Abraxane SPC; http://www.abraxane.com/hcp/
6. Novartis Q3 2012 Results; http://www.sandoz.com/media_center/news/2012/press_releases/2012_10_25_Q3_results.shtml
7. The Economist (2012) ‘Battling borderless bugs: Western and emerging-market drug firms are invading each other’s turf’, 12 Jan: Business print edition; http://www.economist.com/node/21542410
8. Ghinn, D. (2012) ‘Pharma gets social’, Jan: http://www.pharmaphorum.com/2012/07/17/pharma-social-lillypad-provides-platform-lillys-corporate-engagement/
9. Cognizant Report (2012) ‘74% of Pharma companies have adopted Social Media…’; Jan: http://www.cognizant.com/InsightsWhitepapers/Adaptive-Social-Media-in-Life-Sciences.pdf
10. Nagji, B. & Tuff, G. (2012) ‘Managing your Innovation Portfolio’, HBR May: 5-11
Disclaimer: The views posted in this article are the result of personal reflective thinking on the already published articles, analyses and reports stated in the References; the current conclusions hypothetical and subject to change in light of new, openly published evidence. The author is currently an MBA student at The Open University and bears no relationship, commercial or otherwise, with the companies mentioned, which she has used randomly to exemplify innovation strategies.
David Harrison, Managing Partner of True Potential LLP, The Open University MBA alumnus
Edited transcript of Business Perspectives Video: Innovation or innovators?
“Most of the organisations I see, they train everybody”
“I have observed first hand that it’s about selection. I’m not necessarily a nature versus nurture addict if you like, but if I was, it would be nature. But if you look at any elite organisation in the world, it will probably be down to selection. So if you look at British Special Forces, as an example away from financial services, they don’t train people until they’ve selected them, on a course of selection criteria which rules out just about every human being possible. The ones that get through, they train them.”
“So what people do is set criteria, some sort of hurdle that most people can’t get over, “therefore they are weak, and let’s train that weakness”. And I don’t. I think I ignore weakness, I work with strengths. One strength can be innovation that you have within individuals in an organisation, but there will be other individuals who don’t have that as a strength. People then tend to get angry and say “everyone is creative”, “are you saying I’m boring and dull or whatever?”. And if you are in finance, you may say “I wanted to be in finance, boring and dull, I didn’t want to make a mistake and cost everybody millions of pounds”. So there has to be those people, and those people, I believe, are happy doing that job, because they are naturally endowed with the ability to be careful, to be numerate, to do the things which other people may find boring. They probably think that all creative people are glib, they are chaotic, they create a real mess for these people to tidy up. And I think it’s just recognising in an organisation that there are different people. And I want to separate that form of creativity, that form of real innovation, which may find you in a different market, with a different product and so on and so forth, from what I call the ordinary everyday creativity, which most people have, which can also lead by the way to big leaps, such as improving a process we’ve already got.
So if you look at the organisation we have got, we have got lots of people, they are mostly partners, and I think that helps creativity because essentially what they are doing is, if they bring something to us, then it is to their advantage as well. The more they do of that, the more shares they are likely to have, the more important they are going to be in terms of value for the organisation.”