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Insights into Innovation

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Since the arrival of the commercial Internet 20 years ago, we’ve seen an upwelling of business model disruption in media companies—music, television, newspapers, and, to a lesser degree, book publishing. Both gradually and suddenly, companies couldn’t sell what they used to sell, or not to the same consumers, or not in the same way, or they lost a critical revenue stream. In other words, major disruption.

Soon, the formerly abstract word innovation (“You mean R&D?”) took on importance as the antidote to this disruption, a silver bullet that would protect a company from the ravages of business model collapse. It became, as well, the catalyst for an avalanche of new business books.

Now, unfortunately, like so many buzzwords, innovation is trending toward any meaning you would like it to have. There is a perfume called Innovation; every new car on the road is billed as completely innovative; CEOs across industries proclaim innovation as one of their core values; and innovation has been a subject seriously discussed at publishing meetings for the past several years. (Conveniently, the Harvard Business Review’s December 2014 issue has a story on how to innovate faster, cheaper, smarter that features a roll of duct tape as the cover art.)

When I facilitate meetings on digital strategy and innovation for the Conference Board and other clients, or lead webinars on those subjects, certain questions invariably come up. How do you make sense of the cacophony around innovation? How can you be productively innovative?

And how do you know what may be coming over the horizon that you should keep your eye on?

The Swimming-Upstream Scenario

Innovation in a business context involves a profound and sustained change in a marketplace. That change repositions companies vis-à-vis their competitors, and it can lead to significant new cash flow by delighting customers and creating shareholder value.

Apple is innovation’s poster child. Once a struggling computer company selling a particular (and expensive) brand of PCs, it became a globe-girdling giant by creating a whole set of new marketplaces and gigantic cash flow, outdistancing many of its former competitors. Similarly, Facebook went from being a little software package designed to let a few Harvard students tap into what their friends were doing to being … well, Facebook. By contrast, Kodak, which invented the initial technology for digital photography, couldn’t let go of film and is now failing. You get the point.

As per the Kodak example, the very notion of innovation in a successful organization is often distasteful. Inevitably, it means changing the status quo, which is like swimming upstream against a strong current. Companies are based on an established sequence of habits, and the successful completion of an established process is rewarded by the brain. There’s nothing like that little drop of dopamine to encourage you to say, “Oh, we wouldn’t do that here; we always do this.”

Managing innovation is not a walk in the park either. In essence, innovation is a sort of virus that infects a company and makes colleagues uncomfortable, irritable, and confused. But there are steps you can take to minimize barriers to productive innovation and maximize the benefits of embracing the work entailed.

Exploring Options

To begin, note that this is not a science experiment. Your company has a history and a brand that need to be respected and built upon. In other words, you are not starting from zero.

Then recognize that in practical business terms, there are several kinds of innovation, from near term (tweaks and product improvement), to adjacent (things you can do without too much disturbance), to “blue ocean” (the really far-out stuff).

Interestingly, group consensus about possible innovations is likely to produce better results than just one person floating in a virtual sensory deprivation tank trying to come up with the answers. It’s useful to include outsiders, and the more diverse the group is, the better. If possible, enlist a pain in the butt or two; friction lights fires. As James Surowiecki recently observed in a New Yorker piece about corporate employee diversity, research has confirmed that groups exhibiting greater diversity are consistently more innovative—even if not always the most comfortable to participate in.

To be effective, innovation has to be a serious, regular, ongoing process. It has to have a budget. And whether quarterly, bimonthly, or some other fixed interval works best for your company, it requires periodic meetings in a quiet room—no cell phones or tablets allowed—during which everyone is equal.

Here are four areas that independent publishers could explore in each session.

  • What do our authors want or need, even if they aren’t aware of it? (Better communications with us? With readers? More timely payments? More partnership in marketing?)
  • What can we do, or what more can we do, to put the customer—not Amazon, not B&N, not the independent bookstore, but the purchaser/end user/reader— at the center of our business? (As you may know, much has been written about this way of looking for innovation opportunities, known as design-centered innovation.)
  • What is our relationship to our partners in the supply chain? Where are the points of friction so engrained that we hardly notice them anymore? What change(s) could make a constructive difference?
  • What roles can our employees play? People intimately involved in a job know what is working and what isn’t. Have you tapped their expertise and insights? Do you allow them to experiment and fail without censure? Failures are often the first step to successes. Gripes hide opportunities.

Effective innovations don’t need to be giant steps. Quick fixes that streamline production processes or make things easier for the customer can make a real difference and lead to more radical insights about growing your business.

And if you decide to attempt a blue ocean initiative, don’t be surprised if the eventual “innovation” turns out to be quite different from your initial concept. Therefore, in the spirit of the HBR duct tape cover, make your first trials inexpensive and simple. Also, try to make your prototypes fail. It’s the boat you can’t sink that potentially leads to promising developments.

Seeing What’s Coming

It’s important to keep an eye fixed on the horizon, even if, at first blush, nothing there seems relevant to your business. Remember: The major impact of a core discovery will occur only after a long time. Consider GPS systems, for example. Now built into every automobile and used daily by hundreds of millions of people, they are based on a complex interaction of satellite communications originally designed for the military.

In other words, there are wild cards, game changers. Think 3D printing, now used to manufacture everything from guns to structures for internal organs to grow on and parts for commercial jetliners. Or think big data (the collection, aggregation, and analysis of increasingly granular information) and the Internet of Things, which will soon create huge new data flows based on the fact that any physical thing—even a book—could potentially be “smart,” having its own unique web address and 24/7 connectivity. Things so enhanced could number in the tens of billions by the end of this decade, and every digital book can already be monitored down to the page at which a reader left off on Thursday evening.

In dealing with these horizon events, you are not alone. Companies of every kind and size need to figure out which data flows to choose and how to analyze the data to pursue business value. In terms of business, it pays to remember that innovation is not about thinking up something that’s never been thought of before. Innovation is about looking at what everyone else is looking at, but seeing something no one else has seen, and building new business models to profit from it. And in the book business, an independent book publisher is just as likely as anyone else to pull that off.

Jim LichtenbergJim Lichtenberg is the founder of Lightspeed, LLC, a New York City–based firm focused on innovation and digital strategy whose clients include companies and industry groups spanning multiple industry sectors. His articles on technology, innovation and culture have appeared in The New York Times, the Seybold Report, Publishers Weekly, and other publications, and he is the editor-at- large of a book created by seven Fortune 100 companies about managing innovation. To learn more: JimLichtenberg@mac.com. John F. Blair, Publisher: blairpub.com.

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