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Archive for March, 2010

Risk = opportunity?

The innovation community is  developing ways of building innovation into  organisations.  Not surprisingly, the community is keen to innovate in this area, and to find new ways of  incorporating innovation into daily working life.

There is one promising avenue that is very straightforward, and hardly warrants the label of ‘creative swiping’. It is said that the Chinese word for risk also means opportunity.  Like so many sayings, this is not entirely true.  However, the principle applies.

The risk management world has come together to produce a single standard for risk management, ISO 31000:2009.  The Institute for Risk Management (IRM) has produced a guide to Enterprise Risk Management and the standard.

The IRM Special Interest Group on Innovation, Value Creation and Opportunity has produced several publications on how risk management can be adapted to manage opportunities for innovation.

A risk management approach to managing innovation  might not seem very innovative, but it may well appeal to a large number of organisations.  It is likely to be effective because of its familiarity.  Russell Ackoff pointed out that most accounting systems penalise people for doing things that don’t work out, but there is no penalty for inaction with adverse consequences. A system that tracks opportunities declined could change that.

Update: There seem to be a number of definitions for opportunity risk; the definition for lost opportunity risk below definitely relates to the risk of not innovating through a “safe” do-nothing strategy.

Opportunity Risk: The risk that a better opportunity may present itself after an irreversible decision has been made. (investorwords.com)

Lost opportunity risk: Delays in approval result in failure to implement a policy, program or project where the optimum window of opportunity is time-limited or situational. http://www.fin.gov.bc.ca/pt/rmb/ref/4_Risk_Dictionary.pdf

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Now that innovation is the new black, there are lots of conferences.

Blogging Innovation has published its top ten conferences.

RealInnovation has a list of training events and conferences.

ISPIM has a list of its events and a calendar of events.

Today is the closing date for the INNOVA Partnering Event in June.

Big Potatoes is bound to be cooking something up.

The 3rd International Multi-Conference on Engineering and Technological Innovation: IMETI 2010 is in Florida in June.

Lift and FEI have multiple events, of course.

The European Association for Creativity and Innovation (EACI)
has an annual conference.

The CPSI conference is in Buffalo, NY in June.

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A colleague laid low with a stomach bug commented on the last post that the UK got it wrong with the aviation sector. Bacterially-induced pessimism. The UK is doing very well with engines thanks to Rolls-Royce, and is still (!)  doing well with avionics and equipment.  Maybe it could have succeeded with the BAC 3-11 and the FD3, and we would have a US/UK aviation race rather than a US/EU race, but that was a political matter beyond the reach of people in the sector.

What is the relevance today? Defeatism in the face of recession is a narrative to be countered.  Jeffrey Pfeffer recently had an important piece on the myths of layoffs   at a company level.  People concerned with innovation at a national level have pointed out that space elevators and all sorts of major improvements represent a small cost compared to bailing out banks, such as this article.   It would also appear that the EU recognises the threat of the ‘Europe in decline’ narrative and is trying to counter it.

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On this day in 1956, Peter Twiss in the Fairey Delta FD2 became the first to fly at over 1,000 mph in level flight.  This was rightly hailed as a wonderful achievement, and  as a schoolboy, I had a picture of it on my bedroom wall.  Later, I had the privilege of learning my trade as a designer from the people who had designed it.  As an instance of the importance of narrative in engineering knowledge management, here is the story I learned of what happened at the record.

  • A British aircraft breaking the record (by 300 mph)  embarrassed the Americans (who had been spending a fortune on tiny increases in speed), and hence the Foreign Office.
  • It embarrassed Rolls-Royce because it showed that “Mac” at Fairey understood their engine better than they did when it went supersonic.
  • It embarrassed the Air Ministry who did not want to buy the FD3 for F.155.
  • The aircraft had not been particularly stripped out for the attempt and  was still accelerating through the tailgate.  Three big enemies and they weren’t even trying!

Subsequently, the drawings (and jigs I think) were given to Marcel Dassault by the UK Government in the interests of Anglo-French co-operation. He built over 3,000 Mirages.

Prof. David Edgerton at Imperial College has written a very thought-provoking and dispassionate monograph on this era, which both captures the spirit of the times and examines it. England and the Aeroplane: An Essay on a Militant and Technological Nation .pdf can be downloaded for free.

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This is an update to  the  earlier post on EU “Innovation Union”. The US is proposing a joint  innovation plan. A challenging concept, and a surprising one. No joint  comments from Boeing/Airbus as yet ;-/

James Woudhuysen has a book review of ‘The Venturesome Economy’ by Amar Bhidé which gives a good many insights into innovation at a national level.  It is worth reading the whole article. A quote to illustrate:
“But while technological knowledge is an important and ever-more influential part of modern economies, the forces that are decisive in economic performance remain profitability, the making of value and the exploitation of the working class. Looking for state handouts to different parts of industry, US techno-nationalists exaggerate the power of R&D, just as much as Bhidé underestimates it.”

For me, the take-away points discussed were:

  • The timescales for building a technologically powerful economy (the time taken to destroy one is not discussed, but relative decline is).
  • The role of economic analysis (as opposed to other forms of analysis).
  • The role of R&D vs. the general state of wages and taxes.
  • The role of companies and the state.

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The single best diagnostic to see if an organization is innovating, learning, and capable of turning knowledge into action is “What happens when they make a mistake?” Pfeffer and Sutton

Dealing with mistakes and failures is also important for safety, and is researched under the heading of ‘resilience engineering’.  One of the key criteria in Ron Westrum’s Safety Climate is the treatment of people who bring bad news.  In a Pathological organization, messengers are shot.  In a Bureaucratic organization messengers are listened to if they arrive.  In a Generative organization, they are trained.

While Grumman was testing the Lunar Excursion Module, its spider like landing gear frequently collapsed during simulated landings. This was a total surprise since the gear was designed with a generous safety factor. One evening while reviewing his work, the engineer responsible for determining the landing gear loads discovered that he made a simple yet large mistake in his calculations – resulting in an under-engineered landing gear design.
The next morning the engineer is in his boss’s office showing the mistake that he made. The boss then THANKED the engineer for finding his mistake quickly and bringing it to his attention. What behavior did the boss’s reaction encourage? It gave a clear message to the entire design team that he wants their energy focused on discovering problems and quickly fixing them as a team. He knew his team could not afford the time and energy needed for denial, cover up, and excuses. (h/t Mark Edmondson)

BusinessWeek has a wonderful article on Radio Flyer failing to make a folding wagon. A short quote:

Few executives talk about failure, but it is part of every company’s story. And a willingness to risk failure and learn from it is the hallmark of an innovative company. Since 2004, Chicago-based Radio Flyer has adopted methods to kill projects earlier and take lessons from its mistakes. And it shows: From 2005 through 2008, sales have grown 57%, while product introductions jumped from seven in 2004 to 20 this year.

Do read the whole article.

Google’s ’20-percent time’ allows new ideas to be pursued with enthusiasm.  Perhaps just as importantly, ideas that won’t work can be killed easily.

One place where I worked  put in a tender that was critical to the future of the company.  And lost. The next day, the CEO put out a memo to all involved saying “this was the best losing bid I have ever read. Don’t worry, we will win yet”. The impact of support from the top was massive.  The company did win in the end, too.

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The EU Lisbon Agenda finishes this year.  You may have noted that 2009 was the European Year of Creativity and  Innovation, which produced a manifesto (.pdf).

Innovation is at the centre of the growth strategy that will replace it, with Europe 2020 as the slogan. The new post of a Commissioner for Innovation has been created, and is filled by Maire Geoghegan-Quinn.

President Barroso has coined the phrase “Innovation Union” and  has now launched the new growth strategy.  Information on Europe 2020  can be found here.

This article by Ann Mettler of the Lisbon Council think-tank has some insightful observations.

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