Point: Get quick wins by encouraging small experiments throughout the organization. They’re fast, inexpensive, and reduce the fear of failure.

Story: One of the biggest obstacles to innovation is fear of failure. Rarely do people want to bet their careers or companies on what might — or might not — be the next big thing.  But fear of failure becomes a self-imposed obstacle to success.

As Amazon’s CEO Jeff Bezos says, “Innovation is part and parcel with going down blind alleys. You can’t have one without the other. But every once in a while, you go down an alley and it opens up into this huge, broad avenue. And that’s so satisfying and, from a shareholder’s point of view, so successful, that it makes going down blind alleys worthwhile.”

The key twist isn’t to avoid failure but to avoid high costs from failure.  To reduce those costs, institute and encourage ongoing little experiments throughout your company.  For example, Google does this by testing more than 5000 software changes a year. Amazon does it by continuous A/B testing.  And CEO Scott Cook made experiments common practice at Intuit. In Cook’s experience, 89% of experiments don’t lead to a breakthrough or even to an improvement, but that doesn’t make them a “failure” — the experiments simply provide data on what doesn’t work.

These little bets cost little in terms of time and money. They don’t require weeks of planning; rather, they’re tweaks to an idea that can lead to eventual, substantive breakthroughs.  Ever hear of a company called Odeo? Most people haven’t, because Odeo was a small podcasting company of little distinction until its CEO, Evan Williams, gave employee Jack Dorsey two weeks to develop his idea of a short messaging system. That quick prototype developed into Twitter.

Action

• Don’t use uncertainty of success as a filter — the more you don’t know about your chances, the more you can learn by trying.
• Do consider how you might inexpensively look down a possible avenue to see where it leads.  You might use a A/B testing, co-innovation with a lead customer, or a quick minimum-viable prototype.
• Test fast, test often, but pay attention to the results, especially if the unexpected happens.
• Learn what you can from any failures — not just that the idea failed, but why it failed and what it says about your customers, your markets, or your business environment.
• Use each test of a new avenue to scout for other avenues. Even a blind alley can have a side-passage that leads somewhere wondrous.

For more information:

Dave Gray, The Connected Company

Bloomberg BusinessWeek, “Jeff Bezos: ‘Blind-Alley’ Explorer.”

Peter Sims, Little Bets and “What are Little Bets?“

Point: Create an internal venture fund to incubate revolutionary ideas.

Story: This week’s Innovation Summit at the Shell Technology Center Houston (STCH) highlighted the need for innovation and collaboration to solve society’s most pressing challenges. As the world’s problems become more complex, the best way to tackle them is with a cross-disciplinary approach.

What are some ways that companies can foster this multidisciplinary collaboration to achieve breakthrough innovation? One way is to create an open mechanism inside the company that solicits promising ideas regardless of where they come from — including outside the company — and offering seed funding that’s outside of the company’s traditional R&D programs to give them time to develop.

GameChanger

Shell is doing this with its GameChanger program, headed by Russ Conser.  GameChanger seeks out and invests in early-stage ideas that could potentially revolutionize the energy industry. GameChanger plays the role of an angel investor; a panel screens ideas and selects ones to fund. Idea submissions can come from any Shell employee as well as from outside the company.

Shell actively solicits ideas from academics and entrepreneurs alike through its web site www.shell.com/GameChanger.  Ideas that pass the initial screen receive seed money — $25,000 to develop a robust proposal and on up to $500,000- $1 million a year to actually test and develop ideas that graduate into projects.

Example

For example, Erik Cornelissen, a research scientist, was in a toy store looking for a gift for his nephews when we saw a science toy that many of us have seen before: a dinosaur that grows in size when placed in water. A nifty, fun gift. But Erik made a connection back to a perplexing problem that had plagued Shell and other oil companies for a long time. Specifically, oil wells contain water, not just oil. Over time, more and more water gets pumped up relative to oil.  Not only does that make the well less productive, but it pumps water that increasingly is becoming a scarce resource itself. The question is, how to detect that water and prevent it from mixing with the oil?

Erik realized that the same principle behind the dinosaur toy — a material that expands upon contact with water — could be applied at the oil well. Erik needed to identify a “swellable elastomer” that would seal off the pipe when water started to mix with the oil flowing through it. The idea was not difficult to articulate or explain, but finding this kind of material proved long and difficult. GameChanger provided Erik with the time and funding he needed to go through hundreds of experiments to find the elastomer that fit the demanding conditions at the oil well site.

Results

About 40% of Shell’s core Exploration & Development R&D portfolio has evolved from ideas submitted to GameChanger, and 70% of the GameChanger portfolio includes collaboration with people outside of Shell.

Since its inception in 1996, GameChanger has funded 3000 ideas, investing $350 million and resulting in 250 commercial projects, said Gerald Schotman, EVP, Innovation, R&D and Chief Technology Officer at Shell.

Action

• Publicize clear and explicit selection criteria, so external submitters know what you want and will fund.  For example, GameChanger uses 3 primary criteria:

1. Novelty: is the idea truly and fundamentally new and different? (There’s no point in funding ideas that would qualify as traditional R&D projects.)
2. Value: Could the idea create substantial new value if it works? (Wild ideas are welcome, but ultimately they need to deliver value if they come to fruition.)
3. Credible Plan: is there a plan to manage risks prudently? (New ideas are risky, but many risks can be identified up front and plans can be put in place to stay ahead of them.)

• Have an end game for how you’ll commercialize an idea that demonstrates feasibility. For example, GameChanger uses 3 commercialization strategies:

1. Move the idea into the company’s internal R&D portfolio.
2. License the idea externally.
3. Spin off a new company to bring the idea to market.

Point: Looking at the opposites of everyday constraints yields new opportunities for innovation.

Story: Companies typically see time, space and matter as constraints. That’s not surprising — those three elements define the boundaries of our everyday reality. But what if we  saw them not as constraints but as malleable resources for innovation?

That’s the mind-bending proposition Joe Pine presented at Dassault Systèmes’ 3DEXPERIENCE Forum. Lest you dismiss Pine as a wide-eyed dreamer, recall that his book, Mass Customization, introduced a seemingly impossible paradox when it was released in 1992, but that concept is now so widely implemented that it’s a de rigueur business practice.  The fusion of opposites provides opportunities for innovation.

So how do we utilize time, space and matter for innovation? Pine lays out the steps in his latest book, Infinite Possibility. The way forward, Pine says, is to play with the opposites of time, space and matter, namely no-time, no-space and no-matter.  Whereas time, space and matter constitute our usual realm of Reality, no-time, no-space and no-matter constitute a new realm of pure Virtual Reality

If we fuse reality and virtual reality in various mix-and-match combinations, then we can come up with a host of new products, services and, most importantly, customer experiences.  Using these three dimensions, Pine details an eight-realm new universe (“multiverse”) that pairs eight combinations of time vs. no-time, space vs. no-space, matter vs. no-matter.

Let’s start by exploring a realm that is only one step removed from reality, what Pine calls “Augmented Reality.”  Compared to reality, which has time, space and matter, Augmented Reality has time, space and no-matter.  The “no-matter” condition refers to the information that is overlaid onto reality.

Here’s an example: say you’re driving down the street in a city unfamiliar to you. You are in a real space and in a real time. But, you can use a device to overlay information (“no-matter”) onto that current reality. That is, you can use a GPS navigation aid to show you where the nearest bakery is.  The GPS gives you data (“no-matter”) that you can’t see yet in the real world (a bakery around the corner a few blocks away). With that information, your reality is augmented — you can navigate to the bakery and get the cupcake you crave. 

Companies can apply these concepts to new product development. For example, what new products or enhanced experiences could you create in Augmented Reality? Dassault Systemes’ CEO Bernard Charles demonstrated one such product, 3DParis.  With this app, you can stroll the streets of Paris and see an overlay of your current street in olden times — 2000 years of Parisian history showing you how the street you’re walking down looked, say during the time of the French Revolution in 1789.

That’s a playful consumer app; the same principles apply to hardcore business operations, such as airplane repair.  Consider an app that lets mechanics point an iPhone at a distant airplane on the tarmac and get an immediate overlay of the maintenance and repairs that need to be done for that specific plane. 

Action

• Look for ways to virtualize your product, service, or business along one or more of the three dimensions of time, space and matter.  Break the constraints on the “when,” “where,” and “what.”
• Consider ways to replace or enhance the matter of a product, service, or business with data, graphics, and manipulated versions of reality