Who Are You?

“Who are you? Who, who, who, who?”

Apologies to Pete Townshend and The Who, but JC Penney’s customers have probably been asking the same questions since new CEO Ron Johnson took over. The retailer’s supposed savior has made several missteps since taking the reins of Penney’s in November of 2011, and its recently released fourth-quarter results are nothing short of catastrophic—a 31.7 percent same-store sales decline.

Who are you?

After Johnson arrived, without testing his new, no-more-sales strategy, no more coupons, he promptly alienated the majority of Penney’s existing customers. But, the retailer’s new stores within stores concept hadn’t been launched yet, except for a handful of locations, so there wasn't any new reason to shop at the store except to pay higher prices. And because the new concept hadn’t been realized, there was no reason for new customers to go to Penney’s. Isn’t this Consumer Behavior 101?

Now, Johnson’s done an about face and says that the retailer will have regular sales, but in the meantime, the once-loyal customer base Penney’s once had has found new places to shop like Kohl’s, Macy’s, and Target.

I really wanna know. Who are you? Who, who, who, who?

There’s no doubt that Johnson’s initial strategy was innovative, but where do you draw the line between concept and full-scale implementation? As Johnson reportedly said to somebody who questioned why they weren't testing the new concepts first before rolling them out to all stores, “We never did it at Apple.” About the only thing that Apple and JC Penney have in common are the letters “p” and “e.”

Maybe Johnson was desperate to make something big happen right away; maybe no one dared to tell the new Emperor he was making too poor of a wardrobe choice. One thing is clear: Sometimes when you bet the farm on a big idea, you can wind up losing the farm. While that’s not to say you don’t take risks, because anytime you innovate you’re taking a risk, you just need to assess how big a risk you can afford to take. If you’re essentially risking the entire business, doing some testing upfront is a good idea. How’s that for an understatement. And keep in mind that what people tell you in a focus group or online research isn’t necessarily how they’ll behave in real life; sometimes they have to have the actual experience in order to give an accurate read on how they’ll behave. In this case, it would have made a lot more sense for Penney’s to test its new pricing strategy in a few markets before taking it national.

Tips for 2013

As you start the new year, keep in mind some of these suggestions to improve your personal, team, and organizational innovation output.

1) Be open to the possibility. Nothing shuts down creative thought quicker than quickly ruling out potential ideas. No matter how wild or unlikely something might initially seem, give it a chance, because you never know when something good could result from stretching your thinking.

2) Mix up the team. Rather than having the usual suspects at every brainstorm meeting, invite people from different disciplines so you get different perspectives.

3) Mix up the meeting. Don’t use the same methodology for idea generation repeatedly. Consistency can be a good thing, but when it comes to generating ideas, if you use the same approach every time, it’s bound to get stale.

4) Take time to think. Take a tech-break for a day or two to give yourself time to think without the constant distraction of e-mail, Facebook, Twitter, Pinterest, etc.

5) Take time to explore. Expose yourself to new experiences, whether it’s taking a day to explore a museum, reading a magazine you’d never usually pick up, or listening to hours of Ted Talks.

6) Get out of the office. While this may go hand-in-hand with No. 4 or No. 5, changing your environment can change your thinking.

7) Generate lots of ideas. Go for quantity initially when you’re generating ideas because you never know what novel combinations may emerge.

8) Keep the dark clouds out. Exclude the naysayers from initial idea generation—nothing kills creativity quicker than someone who takes pride in always being the devil’s advocate. There’s plenty of time for that type of thinking when the process is further along.

9) Reward the effort. Whether it’s a financial gesture or just a thank-you e-mail, people will be more motivated to generate ideas if they know that their efforts are appreciated.

10) Remind yourself. Take this list out from time to time throughout the year and see how many of these things you’re doing. We all get into ruts, and consciously breaking patterns is always helpful to stimulate creative thinking.

3M Three-Peats on Global Innovation List

For the third year in a row, 3M has been named the third most-innovative company in the world, according to the Booz & Company annual global survey on innovation. No surprise, Apple retained the number one spot and Google stayed in second place. Following 3M were Samsung, GE, Microsoft, and Toyota. P&G and IBM tied, and Amazon rounded out the top 10.

The study also reaffirmed that there is not a direct correlation between spending on research and development, often thought to be an indication of innovation, and innovation ranking. In fact, Apple ranked 53rd in global R&D spending, Google ranked 26th, and 3M ranked 86th. The only companies that received top-10 status in both innovation and R&D spending were Toyota, which ranked number one in R&D spending, and Samsung, which ranked 6th in total R&D spend.

Even though Apple ranks number one when it comes to innovation, it has the lowest percentage of R&D-spend-to-sales, at 2.2 percent. 3M’s percentage was 5.3 percent, and the highest R&D-to-sales ratio among the top 10 was Samsung, at 13.6 percent.

Another interesting finding in the study: “There’s no long-term correlation between the amount of money a company spends on its innovation efforts and its overall financial performance; instead, what matters is how companies use that money and other resources, as well as the quality of their talent, processes, and decision making.”

In 3M’s case, its long history of allowing its scientists to spend 15 percent of their time on whatever projects they choose continues to be a key ingredient in the company’s secret innovation sauce.

How Long Can the Polish Stay on the Apple?

Is there any limit to the success that Apple can have? If you look at traditional innovation (there’s an oxymoron) research, there should be another competitor lurking in the weeds out there, ready to introduce a new technology that will leapfrog the market leader. But the old rules don’t seem to apply to Apple, especially when you consider that there have been 5 million-plus iPhone 5s sold since the product launched last week, and sales are expected to reach between 8 million and 10 million. At roughly $199 a phone, that’s not too bad.

Even though Apple is relying more on incremental innovation these days when it comes to the iPhone franchise, rather than taking the radical innovation leaps of past, the popularity of the latest version is evidence that sometimes the halo of innovation can continue to cast a bright glow—even when the actual innovation is long past its radical days.

The new iPhone answered a lot of criticisms of its previous edition by having a larger, longer screen and faster processor, and by being slimmer and lighter—all incremental changes and nothing radically new. Not that there’s anything wrong with that. Toyota’s built a very nice franchise on the back of incremental innovation. Nothing too fancy, but very dependable.

So, how long can the polish remain on the Apple? It seems indefinitely—but just as Apple was lying in the weeds when Xerox invented the personal computer and mouse, there’s another Steve Jobs out there thinking beyond the iPhone 5.

Trivial Pursuit

The title of this post doesn’t refer to the game Trivial Pursuit, but rather what author Nicholas Carr thinks about American innovation these days. Carr’s the author of The Shallows: What the Internet Is Doing to Our Brains. Suffice it to say, he’s not a fan.

 

In a recent op-ed piece, Carr claims that we’re becoming more interested in trifle innovation rather than the greater good, or the broader sweeping innovation from the past that changed business and society. By pointing to things like the $1 billion purchase of Instagram and designer drugs, he uses Maslow’s hierarchy of needs to basically say we’ve become a nation more focused on innovation for self. I can’t say I agree.

 

Sure, you can point to myriad things that have been developed to help make us happier, more focused, and to live longer—and what’s wrong with that? His argument about Maslow’s hierarchy, where self-actualization is the pinnacle of development, provides a convenient way to support his perspective. So, are we the Roman Empire, with ultimate fighting and ridiculous reality shows the equivalent of latter-day coliseum spectacles? Nah.

 

While we can point to plenty of innovation that’s self-oriented, there’s a lot outside of the new product box that speaks to other forms of innovation that in fact are geared toward changing the face of the physical world and society.

 

Like it or not, health care reform is an attempt at sweeping innovation. Reducing our dependence on oil and harnessing the power of the wind and sun speak to innovation with far-reaching environmental and economic change. The advances in medicine that allow members of society to live longer and with a better quality of life have implications and impact beyond just the individual.

 

OK, we may be developing a lot of stuff like Instagram and Pinterest, but the innovations we’re creating with regard to environmental, medical, and even political policies can have just the type of impact that Carr argues we’re ignoring. And that’s not a trivial pursuit.

Penney’s Innovation Doesn’t Mean Dollars

The two ex-Targeteers trying to turn J.C. Penney into mucho dollars for investors and themselves got a big dose of innovation reality this past quarter when their new strategy failed to resonate with consumers.

The former bullseye boys, Penney’s CEO Ron Johnson and President Michael Francis saw same-store sales decline 19 percent—ouch! Analysts were only expecting a decline of 13 percent, and the street doesn’t take very kindly to unpredictability, especially when the news is worse than expected.

The innovation reality lesson for Penney’s—other than the two top guys’ wake-up call that the company isn’t remotely like their former employers, Apple and Target—is that sometimes markets and people just aren’t ready for the innovation you want, think, and hope they are.

Research showed that consumers aren’t big fans of keeping track of coupons and sales in order to get the best prices when they shop. At least that’s what was in the pipe Johnson and Francis were toking when they devised part of the new Penney’s strategy: no more coupons and no more sales. We’re going to give you our best price every day—no gimmicks.

Not a bad idea, but tell that to consumers who have been trained their entire lives to shop for sales, often using coupons and other promotional tools.

It looks like it’s going to take more than a few expensive flights of television commercials to change consumer behavior to the tune of 19 percent just to get back to where the old Penney’s, excuse me, “JCP,” was prior to the strategy shift.

Sometimes innovation is too far ahead of where the market and consumers are willing to go. Based on initial results, that seems to be the case for Penney’s.

The other part of Penney’s strategy—transforming stores into groups of specialty shops within a store, with entertainment centers at the core—hasn’t happened yet, so the jury’s out on whether the complete strategy is going to resonate with consumers.

Apple can direct consumer behavior, or at least strongly influence it, and to some extent so can Target, when it comes to affordable fashion and “design for all.” (I mean, did anybody really need a Michael Graves toilet cleaner brush?) But not everybody can expect to do the same, especially a retailer like Penney’s, which derives somewhere in the neighborhood of 40 percent of its sales from couponing and promotional discounting.

Innovation can create and drive markets, but sometimes those same markets just aren’t ready for the particular innovation—regardless of what research says.

Penney for your thoughts.

I Know You. Now Get Out!

It seems like there’s a new book about creativity or innovation every week. Last weekend, the Wall Street Journal published an adaptation of a book by Jonah Lehrer, which will be released next Monday, about how creativity works. For anyone who’s been in the field, it looks like a collection of previously published studies and data with author comments; however, there was a mention of something that reminded me of an important part of the creative process.

The crowdsourcing website InnoCentive allows companies to post their most challenging research and development issues along with a monetary reward for anyone who can solve the problem. If you haven’t been to the site, it’s definitely worth taking a look. It’s an interesting idea for sure, and it works—but even more revealing is the fact that it illustrates a key factor in creative problem solving: new, outside thinking.

The book’s author posits that people close enough to a problem (say, a scientist with a specialty related to the area in question) but not too close to the problem (like an employee of the company posting the challenge) has an advantage. When we’re too close to a problem or issue, our knowledge can be the very thing that holds us back. As Lehrer points out, “It’s this ability to attack problems as a beginner, to let go of all preconceptions and fear of failure—that’s the key to creativity.”

I don’t know if it’s the key, but it’s certainly one of them. So the next time you’re having trouble solving a problem, try talking to someone with knowledge of the issue at hand, but not directly connected. Chances are their perspective will be different than yours and possibly provide the alternative view that helps you get to an answer.

Politics: The Innovation Curve in Overdrive

More serious students of innovation are familiar with the classic S-curve of lifecycle and market adoption. Perhaps nowhere is that model more accelerated than what we’re seeing in politics right now in relation to the Republican nomination process. Ah, all those early adopters that climbed on the Mitt bandwagon are now experiencing what happens when a new market entry emerges. Just when all those Romney supporters thought they had all the mass market Republican adoption they needed, along comes a more acceptable disruptive technology/candidate in the form of Rick Santorum that has some of the faithful questioning if they made a “mittstake.”

 

Of course, there’s the less acceptable, much less mainstream disrupter, Ron Paul, but some innovations are just too far ahead of their time, and some are just plain disruptive without any real benefit or functionality, but let’s leave our congresswoman out of it. Some brands that try to relaunch as new and innovative, but are really just the same old product dusted off, may enjoy some nostalgic popularity, but its usually not sustainable. And it doesn’t help if the brand’s got a bad name. There’s just something not very presidential about someone named after an amphibian.

 

There’s a good example in business for politicians. While you’ve got to be aware of your competitors, if you spend the majority of your time focusing on them and having to defend past mistakes instead of inspiring the market with new and innovative ideas, you’re bound to lose share and could very well see someone else take the lead.

 

At Your Best, But Maybe Not

We all have a time of day when we do out best, most creative thinking, and if you know yourself well, you know exactly that time of day.

 

You may be wrong.

 

Just when we think we’ve got answers, like knowing when we do our best thinking, some research comes along to dispel those firmly held beliefs. While one study doesn’t completely disprove longstanding beliefs, I’m open to the possibility that what I’ve believed all along could be counterintuitive to the facts.

 

Researchers in Michigan recently published in the journal Thinking & Reasoning the results of a study they conducted on “insight problems,” or the types of problems that require more creative problem-solving skills. The results were surprising.

 

Based on a questionnaire that identified someone’s optimal time of day, researchers asked participants to solve problems that required more creative problem-solving skills and found that people who were categorized as late-afternoon people did better on the tests in the morning, and morning people performed better in late afternoon.

 

Why?

 

We have what’s known as an inhibitory process, and that process helps us to reduce or eliminate distracting data, which is usually a good thing. When that process is performing less efficiently, like when we’re not at our peak or preferred time of day, we’re more open to random thoughts and, as the researchers speculate, more creative thinking.

 

The next time you have a creative problem to solve, you may want to tackle it when you’re not feeling at the top of your game.

Good Questions Frame an Innovation Agenda

This past Sunday, Samuel Palmisano stepped down as IBM’s chief executive. Given the transition that IBM has made to services and software during his tenure, you would imagine that Palmisano had a very complex strategic plan. In fact, in a recent interview, the former CEO laid out a framework that any company can apply to help ignite innovation.

There are four basic questions to his framework that helped shape IBM under his leadership, and if you press yourself for genuine, thoughtful responses, the questions beg for innovation.

1) Why would someone spend their money with you—so what is unique about you?

2) Why would somebody work for you?

3) Why would society allow you to operate in their defined geography?

4) Why would somebody invest their money with you?

If you can provide meaningful responses to all of these questions, you’re firing on all of the innovation cylinders. And if you deconstruct the questions a little more you’ll see that they deal with all of the foundation elements of business—all ripe for innovation: products/services, employee relations, community relations, and funding.