#201: The Great Big Innovation Vaccum

The 5Cs of Innovation, A Story of 2 Bells, and More...

Spring is here, and the sunshine is competing with allergens for your attention! I recently had the pleasure of presenting on the ‘Habits of Innovative Companies’ and this piece comes out of the thinking behind that session. Happy reading.

Ask any CEO whether innovation is important to their business and I'll buy you a lunch if any CEO says 'no'. Every business relies on innovation to create and secure its future. Innovation drives future businesses, customer value and retention, new revenues, cost savings, competitive advantage,

And yet when you actually observe how companies do innovation, there's a huge gap between intent and delivery. Many organisations don't have a single view of innovation, nor a structure. A lot of businesses believe it should be done by everybody rather an 'innovation team' but as I've argued before, good financial practice is also everybody's business but we still have a finance department.

It's probably worth establishing a simple definition here. Innovation is the idea of doing something new to drive business improvement. The heart of innovation capability is actually the ability to do new things effectively, rather than any specific tech or model.

So who does innovation in your business? Usually it's handed to somebody in the CTO organisation - this is not entirely out of place as a lot of innovation currently comes from new technology. But around this, there is very little of the framework that would allow innovation to flourish. I recently had the pleasure of presenting to one of our Banking clients and I put this together as the 'Habits of Innovative Companies' - which I've called the 5 C's of Innovation.

1. Clarity - Articulating clear goals for directing the innovation - do we want revenues? cost savings? New products? Improved customer experience? Without this articulation, innovation efforts become rudderless.

2. Commercial - how we fund innovation - usually a combination of venture funding models, and a portfolio ROI model, with money set aside for explorations and low cost experiments. Putting new ideas through traditional ROI models will mean you end up backing the wrong ideas.

3. Competence - innovation needs some specific sets of skills. Most organisations seem to find the closest available person who isn't doing something else and stick them in the innovation role, whereas what you really need are a mix of breadth and depth people, generalists and specialists, and a generally diverse skill and neurological mix. 

4. Culture: Addressing the innovation culture - organisations need to ensure their culture is innovation-ready. Most are not. New ideas meet with the same reaction as a the antibodies in your system deal with any new organism. They are attacked and quelled. This doesn't actually happen intentionally, but the as the truism goes, everybody wants change but nobody wants to change.

5. Creativity - a concept that is very alien in a lot of businesses. At the core of creativity is the permission to do something without an expectation of a return - a willingness to explore an activity or opportunity even before we know what it might lead to or become. This goes against the basic premise of corporate principles.

So if you're wondering why there's much more talk than action around innovation, it's probably because your organisation hasn't backed intent with the right kind of framework of clarity, commercial models, competence, culture, and creativity.

Research As a Super Power: A Story of 2 Bells

I've written about the role of research before. One of the most informative books I've read recently is the Bell Labs story - "The Idea Factory - Bell Labs and the Great Age of American Innovation" by John Gartner - which chronicles the story of one of the early industrial research environments - which gave us the telecom revolution but also radar, the use of silicon for transistors, information theory, and much more. Here's a paragraph from the book that illustrates this best.

"The scientists and engineers at Bell Labs inhabited what one researcher there would aptly describe, much later, as “a problem-rich environment.”8 There were no telephone ringers at the very start; callers would get the attention of those they were calling by yelling loudly (often, “ahoy!”) into the receiver until someone on the other end noticed. There were no hang-up hooks, no pay phones, no phone booths, no operator headsets. The batteries that powered the phones worked poorly. Proper cables didn’t exist, and neither did switchboards, dials, or buttons. Dial tones and busy signals had to be invented. Lines strung between poles often didn’t work, or worked poorly; lines that were put underground, a necessity in urban centers, had even more perplexing transmission problems..."

The industrial research complex set up by Bell Labs on the East Coast not only preceded the Slilcon Valley boom by half a century, but it also gave rise to the very discovery of silicon as a semiconductor and the creation of transistors. Along the way it also gave us Radar, the idea of 'bits' and many other innovations, along with its core research in building out the early telecom networks.

Research is the only option when you're looking to solve technical problems that haven't been solved yet. But do you have to be working in deeply engineering oriented industries to invest in research? The answer is a resounding 'no!' - here's an excellent example of how chemists, engineers, and innovators work together on materials, compounds, and nutrition to create food innovation. The people at Taco Bell research busy themselves with issues from the perfect tensile strength of a taco (it should break at four pounds per square inch pressure), to creating edible 'paper' that won't burn, but can hold a quesadilla together. I loved this article because it illustrates almost everything that innovation involves - research, engineering, behavioural science, testing, and constant experimentation.

Taco Bell Innovation (New Yorker)

Domain-Tech Plays

An emergent pattern of innovation in the digital era is where companies look to create technology led businesses, and end up creating an industry specific technology product. You might have heard the phrase 'every business is a technology business' - and this is the actual manifestation of that. Consider Octopus Energy. The Utility business is a tough business in many ways - your input prices are often out of your control and your prices are capped. You operated in a tightly regulated market, and customers only think of you when things go wrong. It's therefore quite creditable that Octopus's marketshare has grown from 1% to 11% in the past 5 years, and it has joined the ranks of the historical 'big six' of the UK energy market, that too with a completely renewable energy model.

But it didn't stop there. Octopus uses a completely digital technology stack which it has taken to market as a product. Kraken is already a major player in the global utility market and has 40% of the UK market, with majors such as E.ON already using this. Bear in mind that Kraken competes with majors such as SAP and Oracle. Octopus now has extended its tentacle into electric vehicles, and other businesses.

Octopus and Kraken

Reading List

Generative (and other) AI Corner

Philosophy of ChatGPT: A thoughtful piece on the philosophy of ChatGPT as the great averager and the eraser of the implausible, the provider of sentence shaped information. And generator of tokens, rather than words. The idea of how human learning is connected to our lifelong labour of understanding is also worth reflecting on. (Medium)

Building ChatGPT: This is a very good intro to how we got here with ChatGPT - from the early 'n-gram models' to pre-training and to the vast parameters. (TDS)

FinanceGPT: To practical matters - Bloomberg has built a GPT for Finance - this is an original tool trained on financial datasets, not the OpenAI product. (Medium)

Creative Tools: Products such as Adobe have started infusing Generative AI into their product range, with Firefly (Medium)

Education: Education's much heralded disruption by Generative AI - here's a look at the battle lines of competition vs cooperation in Education, GPT and AI. (Medium)

Policy: The Government in the UK has recently announced a £100m fund for a taskforce on the safe adoption of next generation AI. (Gov.UK)

Governance of AI - here's a useful resource for understanding all the thinking around AI and governance. (TDS)

Robotics

How can you train robots to play football (soccer) - including tactical positioning, physical recovery from falls, and more? That's what Deep Mind are looking to do. Fascinating to see the process and also how far for robots to become as good as humans at the beautiful game? (Google)

Thinking Systems:

System thinking 101 - if you've been wondering about what it is, here's a good start. (UXDesign)

Design Thinking: Levels of Zoom in service design - finally a new perspective on getting beyond the vanilla service design approaches. (Practical Service Design)

Forcing Functions: Forcing function and locus of control - a useful way to think about your work life. (BigThink)

Healthcare and Life Science

Making Babies: start ups are working on sperm injecting robots, egg holding pods, and other means of automating baby-making processes like IVF far more effective.

Other reading

Antifragile kids - how to build resilience in children? How can you help your kids practice independence? Hint - don't wait till college. (BigThink)

New Product: Substack has introduced 'Notes' an interesting new feature - could this be a more thoughtful twitter? (Substack)

Enjoy the sunshine and see you soon!