Backstage pass into innovation in emerging markets: the experience of an innovation consulting firm in developing countries. Plus marketing, new product development, creativity and other related fun info.
2010 finally ends, being a difficult year of “getting-back-into-track” for the world and for innovation investment itself.
I want to end this year with happy Latin R&D news provided by the Instituto Nacional de Tecnología Agropecuaria (INTA) in Argentina, where scientists after 6 years of research presented their“supermilk”, as the author of the investigation Ing. Gerardo Gagliostro has called it. The “super milk” is a healthier dairy product created by the combination of cow and goat milk, which is said can help prevent heart diseases, diabetes and tumors.The secret of the “supermilk” relays not only in this mixture, but on the special nutrition given to the cows and goats (such as soy, oilseeds and fish oil) in order to reduce saturated fats and achieve higher levels of conjugated linoleic acid and vaccenic acid in their production. It has no chemical additives and is all based in natural products, continuing the healthy life style trends. INTA states that their product, although not a medicine, it can strengthen the immune system and prevent the formation of tumors such as breast and prostate, diabetes and fat accumulation in the inner walls of the arteries. The “supermilk” is already being sold in Buenos Aires, Argentina, and other supermilk-based products have been already evaluated, such as yogurt, butter and cheese. The bad part is that there are still no news comments about the taste,we'll have to try that for ourselves.
I guess happy well fed cows and goats create happier products.
Happy new year and I wish you all readers a healthier, safer 2011... just like childhood days...
This past week, as many of you should know, Wikileaks divulged internal documents and messages from US diplomacy that made reference to different world leaders. The one I liked best was the one referring to German Chancellor Angela Merkel, who was criticized as “risk averse and rarely creative” in a 2008 message. "Rarely creative"? I think that is the first time I hear someone is "officially" classified as non-creative. You would imagine that for someone to become Chancellor some creativity must be needed. I was worried then to see if our presidents are creative or not. How can you tell?
Of course you can analyze new government reforms, the way a problem is attacked with a different approach, new forms of creating value for the country, and so on. But that is probably a colaborative government appreciation, not a personal matter. Maybe Chancellor Angela Merkel was, as the message states, risk adverse and therefore could be close-minded or square-minded. Or maybe she was just not doing what the US wanted to.
But don't worry Latin America, our presidents have tought us they are really creative... in their own ways. Infact, we should be worried of them being "overly-creative", making up stories, finding ways to "juggle" money and new political tricks.
Take as an example Venezuela's "overly-creative"President Hugo Chavez who released his own music CD called "Canciones de Siempre", with rancheras and folkloric music from Venezuela, sang by...him (who else?), taken out of his radio show "Aló, Presidente." Maybe next CD can be a duet with Ecuador's Rafael Correa who is also known for singing. Creative? YES! Chavez also has great quotes, like in 2006 UN assembly when stepping up to the podium he said "ayer el diablo estuvo aquí, huele a azufre todavía"(the devil was here yesterday, it still smells like sulfur), referring to US president George W. Bush. Creative? YES YES!
For Argentina's Cristina Fernández de Krichner, on Wikileaks documents, US diplomacy puts her "mental health" in doubt. Sometimes creativity comes with madness, right? Lets give her an overly-creative point for that!
A strong, successful, independent woman. Worldwide, older and new generations respect her as a pop icon. Even for her age, 52, she looks great. Who else could we be talking about? Of course, Madonna.
Today it was the inauguration of the first Hard Candy Fitness (HCF), Madonna's new fitness center. I loved the name Hard Candy since it has the "I'm tough", but "I'm sweet and femenine" feel that some women like. It is also a very "pop" name. It makes me remember the commonly used phrase: "Tough cookie". The logo and image of course target an affluent market with a more sophisticated jet simple concept.
The theory behind Madonna's new gym? I think it is quite clear for what she represents, her admirers and her great physical condition. Choosing Mexico City for her first location? Not quite that clear.
Madonna said she chose Mexico City because of the "energy" she felt from her concerts two years ago in her "Sticky & Sweet tour". Although that could be a valid answer from Madonna who is known to be a mystical girl with her Kabbalah and $10,000 USD water habits, the answer doesn't quite convince me . She also said she admired Mexican culture, its music, architecture, food, and everything-you-should-say-about-the-hosting-country. She also stated that she was not afraid of security for HCF (although you should see the bodyguards she brought for inauguration).
Here is a theory: do you know the guy standing next to Madonna in the picture? You probably don't. That's no pop star, it is Marcelo Ebrard, Mexico City's president who is a possible candidate for Mexican Presidency in 2012. He is from the left wing party PRD, which up until today has internal issues in choosing its national candidate. Do I need to say more? This image is going to be in almost every newspaper in the country, and is infact today a Trending Topic in Twitter. Maybe I should have named this post: Ebrard's 'Candy'-dacy.
The funniest part is that HCF hasn't gathered the entire business permissions to operate at Bosques, that if by Friday December 3rth documentation is not complete it may close up temporarily. Don't worry it won't happen: Carlos Slim was in the after-party and Ebrard seems happy too.
Ebrard, I hope HCF is not your idea of bringing foreign investment to the country, we will need a lot more than that... and if you are having problems taking control of your candy-dacy, just remember HCF's slogan: "Harder is better".
Photo taken from: El Siglo de Torreón. http://www.elsiglodetorreon.com.mx/noticia/579583.html One Tough cookie T-shirt photo taken from: http://www.girlytops.com
There is a very important question when diagnosing a company’s innovation processes:
Do you have a planned process to submit and review ideas (internal and external)?
Sometimes the sad answer I hear is: THE SUGGESTION BOX.
Oh yes.. the good old suggestion box... most of the time unattended an empty, like the mailbox in Gabriel Garcia Marquez short story “El Coronel No Tiene Quien le Escriba” (an old Coronel that waits for a letter throughout the whole plot).
When working as an operations consultant for a bank, evaluating different branches and bank centers, I did an experiment.I left a note in the suggestion box of one of the smallest and farthest away branches. The note read: “If you are reading this, please notify immediately to (and I wrote my company’s mail).” The answer did come back… 3 months later.
I have a small client, who literally, uses the client’s suggestion box to store the day’s income. It is the “secure and unexpected” place where the clerks leave him the money. Sure it is good to treasure ideas as money, but the thing is the suggestion box is merely representative. Since nobody uses it, it is an excellent hide out!
Suggestion boxes are good for giving confidence for anonymous internal information but I am highly critical about them, probably because most of the time I’ve seen them as a “get out of the way” solution.For external information (clients, users, suppliers), often they comment or complain directly to the personnel and few are the ones that actually get a pen a write their opinion on the spot. Suggestion boxes do not work when employees or clients have no trust that their idea is going to be promptly reviewed and taken into account. Suggestion boxes can actually kill innovation if not used correctly and with other alternatives.
If you are using a suggestion box, think of the following:
Is it really an effective tool? See if employees and clients are using it correctly, with good ideas now and then, and not using it for rumors, gossip, and even pranks… or not using it at all. Make sure it is visible and in good conditions (not dusty as most of them).
Be sure you have a process created to pick up and review ideas, with a quick response. There must be people responsible for the process and the follow-up throughout the entire organization.
Take action accordingly, if someone submitted a positive idea, make everybody see the results . If negative (such as an anonymous co-worker complaint) investigate with privacy.
Encourage its use with prices such as “the best idea of the month” or some kind of motivation that shows you do care about the suggestion box.
Also, try to considering other alternatives that can be done all together:
Many employees express their opinion better with up-front evaluations, for example, asking directly what they think about a process or their job. Include suggestions in your periodical evaluations. There can also be anonymous ways of giving information through evaluations. For clients, do post-service evaluations.
Try new media, maybe internal networks, innovation software or collaboration spaces on internet that allow submitting ideas (and even generating). For external suggestions, look up “open innovation”, that will be a matter for another post.
Make sure employees feel confident in using proper ways of personally presenting an idea according to your processes and structure.Employees must not be afraid or adverse in talking to their boss or higher-levels about a new project. If they are, then something is going wrong. Same works for external suggestions through a customer service department.
Make sure you also have collective personal spaces for submitting ideas, for example creative sessions, internal focus groups or even brainstorming sessions. When someone feels they have a good idea they probably want credit for it (and don’t want to be anonymous). Sometimes saying it privately to a superior is not proper (the other can take credit for it, or maybe there is personal or professional adversity).Create the spaces for people to give their ideas to a group, and for others to build upon them. Some companies even do innovation camp-outs.
What do your employees and clients think about your suggestion box? (maybe they have suggestions for the suggestion box!)
This week the Mexican government approved the federal budget for 2011. This got me thinking about innovation budgets in companies. You must budget what you value, what's the price on new business ideas?
For what I’ve talked to clients or potential clients, most of them agree with the strategic benefits of innovation and would like to venture in new projects. But of course, there is always the budget issue. How much should I spend in pursuing a new idea? As it is said, it can't be called a strategy until there are money allocation decisions involved.Most PYMES (small and medium companies which are the most important for Latin economies) have a “cero budget” methodology where first the idea is presented, and if it is good: “we’ll see if we can get the money.” It is a way of not compromising resources with the employees and keeping centralized control by the owners.
Other companies, especially medium size ones, have a “bucket” budget methodology, placing a budget to different departments or areas. Even with this methodology, most of the time it is not divided into smaller classifications, such as innovation. Some might think: “A budget for innovation? If innovation is making improvements then I would have an innovation budget for each area, production, marketing, etc.”There are a lot of ways to plan effective innovation budget control according to each company, not only R&D, and it is part of doing a proper diagnose. For some companies it is better to keep the “cero budget” approach while for others they might even have budgets and metrics according to types of innovation, such as incremental or radical innovations.
Whenever I ask a client about “how much budget have you considered for this project?”, most clients always reply “There is no budget.” or “I don’t have any money left in the budget”. It is a cultural business paradigm that if you tell an external company (or outsourced services) an initial budgetamount, then they will raise costs or provide services that will cover every single cent. In ChromaticWorks it’s quite the opposite; our services are focused on making the organization more profitable. But I can’t blame clients for this type of defensive mechanism. After a while of working with us, clients start to understand the importance of information transparency.Winning their trust is part of our job. Trust can only be gained by having security measures for sensible information ourselves, from financial aspects (such as the budget) to the new product or service ideas themselves.
Innovation budget does not only respond to the company’s financial state, but should be diagnoses according to the innovation strategy, policies and portfolio management. Make sure you integrate the creation of new forms of value into your budget or else you will find starting innovation management even harder. It is the tough first step.
People often ask me what is the difference between creativity and innovation. Basically, innovation is applied creativity in order to get some kind of practical benefit or result among previous offerings. An idea can be creative, but if it doesn't create some form of real value in a new way, then it is not an innovation.
I came up with an example to illustrate the difference...
The Argentinean Doctor Antonio Nores Martinez planned to breed a new dog species that would be the most adequate for hunting native animals such as wild hogs, peccaries and foxes as well as the perfect dog for dogfighting (back in 1930s). The “super dog” would need to be muscular, strong, courageous and tireless, with great endurance and agility for the dense Argentinean vegetation. It had to be able to pick up the scent, follow and capture a pray, also hunting in pack. The dog also had to be an excellent guard dog, being able to differentiate family from strangers. These were the value proposals Dr. Antonio Nores had in mind for his breed. He achieved his goal by breeding the “Old Fighting Dog of Cordoba” which is a stem of Spanish Mastiff, Bull terrier, Bulldog and Boxer, with other Bull terrier, Pyrenean Mastiff and Pointer traits. The “Dogo Argentino” or Argentinean Mastiff is a proud “invention” and innovation for this Latin American country.
As for creativity… well we have other two examples of “dog” breeds:
INTRODUCING THE MEXICAN LION…
And THE MEXICAN PANDA…
Fun… but useless. Get the difference between creativity and innovation?
How comfortable do you feel talking back to your boss when you think he or she has managed something the wrong way? Think about it, do you enter his office and say “Bob, I think you really blew that one” or perhaps you slightly knock on the door and wait for the right moment in the conversation just to almost unperceivable say “Perhaps, in my own opinion, we could have done it differently.” Direct confrontation or sugar-coated words?
Believe it or not, the way we cope with authority is not only determined by our own personality orthe personal relationship we have with others, it is also a cultural aspect.According to the Dutch psychologist Geert Hofstede and his work on how cultures differ from one another (Hoftede’s Dimensions, 1960s and 1970s) every culture has what is called a “power distance index”, which shows its attitudes towards hierarchy. For example, in the competitive work environment in the US, with a culture who has the individual rights, equality and freedom of speech well rooted into the culture, you will find people commonly speaking out loud their beliefs without any kind of mitigation in their words, promoting equal hierarchy. In fact, confronting hierarchy and authority is even expected. If you want to achieve professional goals, you will fight for the power, no one should step on you or take any kind of advantage even if you are in the lowest rank of the organization. You win your place. Bosses sometimes even play-it-low in order to be perceived as an equal among the group and get better results. This means having a low Power Distance Index.
Now think of Latin American culture. From Spanish and Portuguese conquests to modern day dictatorships, Latin Americans have had to “pay respect” to higher power ranks… or die. Of course we have had our own burst of rebellion, with independence wars and revolutions, but still we are used to having (even as a result from those wars) an elite class in control of an uneven , poorly distributed society. This is manifested even in our governments that have poor accountability. We don’t even have in Spanish a word for accountability! (you usually say something like: “rendir cuentas”, which are two words). We are used to ranks, and worst of all, we are used to adulate, ask for personal favors (of course in exchange of another), and/or pull-strings with ranks in order to achieve our goals. Those who have power often misuse it and do not tolerate those who confront their points of view… and sadly we are ok with that. Having a high power distance index means we respect hierarchy a little too much compared to other cultures.
In Malcom Gladwell’s book “Outliers” (1), the author talks about the Power Distance Index very interestingly, showing how cultural heritage affects personal success. For example, he talks about how an Aviacsa flight crashed due to the way the Colombian pilot and copilot communicated “poorly” (without a perceivable sense of urge) to the pushy American control tower due to power distance aspects and mitigation of speech. Gladwell also quotes the top and low 5 countries with PDI (1 having high power distance index):
1. Brazil
2. South Korea
3. Morocco
4. Mexico
5. Philippines
15. United States
16. Ireland
17. South Africa
18. Australia
19. New Zeland
But what effect does power distance have on innovation?As always, it can have pros and cons depending on the situation, although in general having a low-power distance index is better for innovation (which doesn’t mean each country does not innovate accordingly to their own PDI). Think of the following:
Horizontal organizations as well as small multidisciplinary special innovation teams have proved to be more effective for innovation. Both structures often involve people in the same rank where everybody needs to feel and act equal, with high empowerment, responsibility and accountability, and speaking up ideas. Innovation is driven in a creative environment. Low PDI is positive in the way of treating others in the first stages for innovation where creativity must rule and people should be confortable participating with their opinions and motivated to keep on. Being too harsh, judgmental or upfront in early stages could have a negative effect on others, you don’t need authority, you need to be equal in hierarchy so that ideas can also be equal in hierarchy and come from anyone.
In later stages of innovation, you do need more authority and decision taking, where hierarchy distinction does play an important role. Remember innovation can cause everyone to feel a protagonist, and everyone would like their opinion being included on the final result. Most innovation projects, because of their novelty nature, do not have enough information to take concrete decisions therefore personal opinions and hunches can differ greatly. One of the main problems in portfolio management is not killing projects in time or not killing them at all. Imagine working for the R&D department, investigating a new formula that hasn’t given results for years but that you feel close to having an achievement and suddenly being cancelled for underperformance, how would you react? Would you still be motivated the next day? Probably a culture with high PDI would go on with their job easier, respecting the order from above. Innovation stages should have milestones and clear objectives in each gate, understood by everyone, in order to reduce what can be considered authocratic or imposed decisions.
What can we do then to manage cultures with different power distance index in innovation projects? First of all, be aware of them. Multicultural groups are great for innovation due to this type of cultural differences! If you are the project leader, perhaps the Korean who hasn’t spoken a lot in the brainstorming session has the best ideas in his mind but hasn’t been able to communicate them properly. Encourage him! Make him feel comfortable in order to close the power distance gap. And if he speaks… listen closely. Same for Latin Americans, if they say something like “In my personal opinion…” or “Maybe there is a chance of…” take it as a direct opinion and not a doubtful comment.The latin using euphemisms might have such a strong opinion as the American who is almost yelling it at you.
In the other hand, as a member of a culture with high power distance index, try to speak up when necessary and trust yourself. Be sure your boss, peers or project leader knows clearly what you are thinking, even (and especially) if you think they are mistaken. Identify euphemisms and do not use them if they are going to make you seem shy, unsecure or doubtful. Of course, be respectful, and learn to identify the “tone” of the entire group and the organization’s own work culture and language. Do not let anyone step on you and truly believe in individual merits and opinions even if the company you work for doesn’t seem to value them. Someone, or somewhere else, will.
(1) Gladwell, Malcom (2008) "Outliers, The Story of Success". Little, Brown and Company. US.
Picture taken from http://blog.madeirawindbirds.com/organizational-chart-from-a-birders-point-of
